Comparing Two Business Plans - Case Study Example

Comparing Two Business Plans By Insert Your Name Presented to Instructor’s Name, Course Institution Name, Location Date Due Title “Comparing two Business Plans” 1. Executive summary 2. Introduction A. Pamperzhou Day SPA and Waleed Coffee Shop Overview 3. Strong Components A. Pamperzhou Day SPA strengths 1. Start-up funding is well outlined 2. Market Segmentation targets clients within 5 miles from Crowne Plaza in Dubai B. Waleed Coffee Shop Strengths 1. The competitive environment encompasses snack and non-alcoholic beverage industries 2. Pricing strategy emphasizes on providing clients with best tasting coffee 4. Weak components of the business plans A. Pamperzhou Day SPA weak areas 1. Competitor Analysis is weak 2. The buying and competition for SPA services fails to target needs of clients 3. Implementation strategy fails to emphasize on significant marketing B. Waleed Coffee Shop Weak Areas 1. The rationale for business start-up does not focus on fastest growing section 2. External environment faces challenges pertaining to social norms 3. Key people and their responsibilities have not been properly outlined 5. Prevailing Challenges A. Failing to present and structure document correctly B. Challenge of outlining origin and progress of businesses C. Lack of outlining the burning problem faced by clients 6. Lessons about business planning A. A business plan helps to encapsulate key competitive advantage B. Business plan helps to articulate vision for growth C. Helps inspire confidence among the management team D. Helps to detail business solution clearly E. A business plan helps to make viable financial projections 7. Competencies demonstrated A. Building relevant business B. Developing appealing executive summary C. Understanding client needs D. Project management skills 8. Conclusion A. A business plan is key to a firm’s success B. Business plans helps to utilize a firm’s resources optimally Executive Summary Pamperzhou Day Spa and Waleed Coffee Shop implement their business plans in two distinct ways. They have both their strengths and weaknesses in terms of their business planning initiatives. The strongest areas for Pamperzhou target market segmentation, marketing strategy, and start-up funding. For Waleed Coffee Shop, the strongest areas target competitor analysis, market size and growth, and pricing strategy. The two companies also have weaknesses in terms of their business planning process. For Pamperzhou Day Spa, the weak areas include competitor analysis, buying patterns and competition, and implementation of strategy. Conversely, the weak areas for Waleed Coffee Shop target rationale for business start-up, external environment, and key people and their job roles. By improving their business plans in their weak areas, the two firms will succeed in their planning strategy. Table of Contents Executive Summary 3 Table of Contents 4 Brief Description (Introduction) 5 Strongest Components for Business 6 Pamperzhou Business Plan 6 Market Segmentation 6 Marketing Strategy 6 Start-up funding 7 Waleed Coffee Business Plan Analysis 7 Competitor Analysis 7 Market Size and Growth 8 Pricing Strategy 8 Weakest Components for Business Plans 9 PDS Business Plan 9 Competitor Analysis 9 Buying patterns and Competition 9 Implementation of Strategy 10 Waleed Coffee 10 Rationale for Starting Business 10 External Environment 10 Key People and their Job Responsibility 11 Suggestions for Improving Business Plans 11 Waleed Coffee Shop 12 Challenges Faced and Means of overcoming them 13 Statement of Five Lessons about Business Planning 14 Competencies Demonstrated 15 Conclusion 16 Bibliograpy 17 Brief Description (Introduction) Pamperzhou Day Spa (PDS) is a company that has been newly formed and it specializes in providing its customers with a variety of services that combine facials, body treatments, massage as well as treatments related to anti-aging. The services that it provides are tailor made for use by women and men, and ensures that it delivers the latest products and therapies that are related to skin care.1 Conversely, Waleed Coffee Shop is a limited liability company that embarks on the sale of coffee and other beverages as well as snacks. It operates on a 3,700 square feet coffee shop that is situated close to the University of Muscat. The major investors in the company comprise of Zaed bin Zafaar and Rahim Saifullah, who own 80 percent of the company.2 This paper will undertake a comparison the business plans of both Pamperzhou Day Spa and Waleed Coffee Shop to help bring out their strengths and weaknesses. Strongest Components for Business Pamperzhou Business Plan Market Segmentation The primary targets for the company are those who are found within a radius of 5 miles from Crowne Plaza in Dubai, and who have household revenue of approximately $25,000. The secondary market will target those visitors who come to reside in the local hotels. Within Dubai, more than 20 percent of the population has never been subjected to massage therapy. In this case, the assumption will be that 70 percent of the two categories have ever been subjected to massage, and they would like to go through it again, especially if it offered pleasant services at a price that is appealing. Segmenting the market in this manner has made it possible for the business to identify its potential clients. Marketing Strategy In terms of marketing, the company hopes to make seasonal promotions to local newspaper advertising, grand opening parties and local fliers. It also anticipates to embark on local networking in that it will target women’s groups, charities, weddings, and country clubs as well as be associated with the Chamber of Commerce at the Metropolis. Taking advantage of healthy referrals is also a viable option for the company because it help boost its marketing initiatives. Prior to opening, the company will work with the prevailing contacts as well as create new ones with the healthcare providers in the region. The company will also emerge as one of the providers for the health insurance companies in the areas, especially those that offer alternative care to their followers. This marketing strategy has helped the company to attain a sufficient client base.3 Start-up funding The following table serves as an outline of the start-up expenses that will be associated with leasing, start-up and build out during the opening of PDS in Dubai. Equipment for massage table $3,795 Aesthetician equipment $2,800 Décor and furnishings $13,000 Signage $3,500 Back bar supplies $5,000 The funding analysis has clearly portrayed all the necessary equipment for carrying the operations of the company forward. Waleed Coffee Business Plan Analysis Competitor Analysis In the case of Waleed Coffee, the plan reveals the statistics that were carried out in 1997 by the Muscat Food Service and Statistics revealed that that Muscat had a total of 45 snack and non-alcoholic beverage bars that were able to realize sales amounting to RO 1.4 million. The other major establishments that provide their customers with coffee comprise of Muscat’s full-service and limited restaurants. The direct competitors for Waleed Coffee will include the other coffee shops that are situated at the University of Muscat. These comprise of Café Roma, Starbucks, and UO Bookstore among other food establishments that serve coffee. Here, the company has managed to compete effectively in the marketplace, and attain a substantial client base. Market Size and Growth The Oman coffee shop industry comprises of approximately 2,000 stores. These shops are able to generate a combined annual revenue of approximately RO 45,000,000. The major players in the industry comprise of International Coffee and Tea, Caribou Coffee, Starbucks and Peet’s Coffee. The industry is highly concentrated, and the top 10 companies are able to generate more than 10 percent of the sales made in the country. Approximately 15 percent of the adults in Oman consume coffee on a daily service. Omanis are popular for spending money on nondurable goods, and thus an indication as to why coffee shops were able make 4.8 percent coffee sales rise on December 2011 while compared to the same month the previous year. In this case, there is potential for the company’s growth and success in the marketplace.4 Pricing Strategy Waleed Coffee Shop will provide its customers with the best tasting coffee in the region. This will be realized through making use of high quality ingredients and following the preparation guidelines in a strict manner. The layout of the store, marketing initiatives, and listing of menu will be designed in a manner that will facilitate to maximize the sales, especially in the case of the espresso drinks that are of higher margin. In line with the espresso drinks, brewed tea and coffee, together with other beverage refreshments will be sold at Waleed Coffee Shop. The shop will also provide its customers with pastries, sandwiches, and small salads. In the case of the gourmet clients who prefer to prepare their own coffee at home, then Waleed Coffee Shop will sell them high quality coffee beans. With this pricing strategy, the firm has been able to attract a substantial client base in the region.5 Weakest Components for Business Plans PDS Business Plan Competitor Analysis For PDS, the competitor analysis is a weak one. The competitive edge of PDS lies in its capacity to undertake effective marketing and bringing in clients in a creative manner. The company then backs that initiative up with the top-rated service and quality products that the market offers. Additionally, the company combines a unique range of services and has selected an appealing condition that facilitates easy access and interaction with the consumers. This has allowed the company to emerge as a big success.6 Buying patterns and Competition Most clients are known to demand for spa services based on their need to commute effectively on a daily service or based on the quality of service that has been offered to them. PDS combines a wide variety of services that it expects to remain dominant in the spa market. This is because there is no direct competitor in the region where the company is relocating. The closest competitor however is Heavenly Spa that operates as a hair salon that specializes in offering additional as well as limited spa services. Additionally, the Hyatt Regency Hotel is also known for offering treatments that are related to massage, but it mostly specializes in offering its services to visitors who come to the area as opposed to the local people.7 Implementation of Strategy The strategy that PDS will implement is focused towards significant marketing and schmoozing in Dubai. This will then be followed by adopting the best practices in the industry. The prices that the company charges are competitive. Its personnel plan is astounding, as is comprises of a pool of skilled, and aestheticians and therapists who are well-commissioned. These are anticipated to give the company a financial advantage over the prevailing competitors in Dubai. Waleed Coffee Rationale for Starting Business Coffee shops are regarded as being among the fastest growing section of the restaurant business. They have the potential to realize up 7 percent growth rate annually. The production of coffee in the world is estimated to be approximately 110 to 120 million bags every year. The estimated coffee consumption by the Omanis every year is 1,800,000 every day. Coffee shops sell approximately 230 cups in a day. The general trend towards quality, especially among the Omani consumers has played a crucial role with respect to the growth of gourmet coffee around the country. External Environment Oman is a country that is dominated by a Muslim society, and hence the local customs that it adopts should be greatly respected. Their mode of dress is conservative. This means that it should cover the shoulders, top of arms, and extend beyond the knees. It is not appropriate to photograph people, especially women. Therefore, one should first seek for permission while deciding to take photographs. Since the abuse of misuse of alcohol may make one to commit an offense, it is not appropriate to consume alcohol in public places, unless these places have been provided with licenses.8 Key People and their Job Responsibility The Waleed Coffee Shop majority ownership goes to Zaed Zafaar and Rahim Saifullah. Mr. Zaed in in possession of a Bachelor’s Degree in Business Administration that he obtained from the University of Muscat. He has worked for a number of years, where he has served as an independent business consultant. He was the previous owner of the ABC Travel Agency, which he sold at a profit 4 years ago. Mr. Garfield has a wide range of business contacts in Muscat, and he can leverage on this advantage in order to provide room for the success of the venture. Mr. Rahim, who holds a Bachelor of Psychology Degree has worked as a manager at XYZ Ristorante, which is a successful Italian restaurant that is based in Muscat, Oman. Under the management of Mr. Rahim, the restaurant has managed to increase its sales on a consistent basis, while sustaining a lower than average level of expenses.9 Suggestions for Improving Business Plans Pamperzhou Day Spa (PDS) Understanding the nature of competition is vital for every business enterprise. In this case, it is appropriate for a firm to undertake research on the competitive environment in the market so as to know the appropriate pricing and marketing strategies to adopt so as to win a significant number of clients in the market. In the case of Pamperzhou Day Spa, the owners should evaluate the pricing strategies that the rivals in the market have implemented to be able to set prices that are appealing to clients. Moreover, by comprehending the state of competition, PDS would be able to know the appropriate marketing and promotion tools to use to capture the attention of clients in the marketplace.10 Buying patterns is also a major issue to consider when devising a business plan to enter a certain market. PDS has not demonstrated an understanding of the buying trends in the market. In this case, the company needs to undertake research and interview clients regarding the prices that would be appealing to them. Also, the company is supposed to analyse how clients purchase from the other market players to know whether it is capable of succeeding in the new market.11 Implementation of strategy is a vital tool to consider while developing a business plan. In this case, it is appropriate for PDS to evaluate its financial standing to know whether the funds available to it can help it meet the market needs. Also, it needs to make consultations with other successful firms in the region to understand the best ways in which it can unleash its products to the new market.12 Waleed Coffee Shop Understanding the rationale for starting up a business is one of the vital challenges that most enterprises face with respect to developing an effective business plan. Here, it is appropriate for Waleed Coffee Shop to undertake a market study regarding the new market to understand the diverse needs of clients in the market. As such, it would manage to provide the clients with products and services that meet their needs appropriately. The external environment determines whether a business will succeed in a market or not. This is especially the case with understanding the social norms of the new society as well as abiding to the government regulations. Here, it is appropriate for Waleed Coffee Shop to undertake a market research regarding the tastes and preferences of clients in the new market. This way, it would manage to introduce products and services that address the needs of clients appropriately.13 In a business enterprise, it is crucial to ensure that it defines specific tasks for its key people. In the case of Waleed Coffee Shop it should start its operations by hiring people who are professionals in the roles that have been assigned to them. This way, the firm would manage to start its operations successfully, thereby allowing it excel in the market regardless of competitive pressure that is prevalent in the new region.14 Challenges Faced and Means of overcoming them Acquiring relevant information about the tastes and preferences for clients in a new region is challenging for many businesses. This is the case for both Pamperzhou Day Spa and Waleed Coffee Shop. For these firms to succeed in the market effectively, they need to invest heavily in gaining sufficient information about clients to know whether the products they offer will succeed in the market.15 Competition is another challenge that both Pamperzhou Day Spa and Waleed coffee shop have to cope with in the new areas that they want to undertake their operations. There are other firms that are well-established thereby posing challenges with respect to market penetration for the two firms. To succeed, they need to gather sufficient information about other firms that offer similar products and services to help them devise effective market penetration and pricing strategies.16 Regulations by the government pose challenges for the two firms. They lack sufficient information about business laws in the regions where they pursue their activities. In this case, the two firms need to gather information about how the government regulates business activities to help them devise practices that will address the market needs efficiently. Failure to do this would lead the government to deny them business permits or cancel their contracts.17 Statement of Five Lessons about Business Planning Business planning plays a vital role for the operations of Pamperzhou Day Spa and Waleed Coffee Shop. One of the ways in which business planning can assist the two firms define what they are and what they will be over time. It clarifies both their purpose and direction to know the needs that can help them identify what they should do to move forward. Business planning also helps the two firms to understand their future direction. Since businesses evolve and adapt over time, business planning helps firms to factor future growth strategies to the plan, which would help them to devise effective ways for future growth by incorporating revolutionary innovations.18 Financing is a vital tool for a business to consider while entering a new market. By developing a comprehensive plan, a business can know whether it has the potential of realizing profits over time. Attracting team members is vital for an enterprise. By designing a comprehensive business plan, the two firms are capable of attracting professional employees, since it would convince them that the enterprise has potential for success. Moreover, a business plan reveals the manner in which an organization is structured. By constantly referring to the plan, it would be possible to know whether it is on course with respect to addressing its goals and objectives.19 Competencies Demonstrated After analysing business plans for both Pamperzhou Day Spa and Waleed Coffee Shop, the major competency realized is to structure the documents in a logical manner to know if it has the potential of making a business succeed. Secondly, I have realized ways in which to outline the plan to help reveal the origins and progress of an enterprise. Thirdly, the business plans have assisted me in revealing the burning problem that target clients encounter and means of addressing them. Moreover, the documents have assisted me in understanding the manner in which a firm can attain competitive advantage in a new market. Lastly, the business plans have showed me ways in which to articulate and support visions for growth. Conclusion After evaluating business plans for both Waleed Coffee Shop and Pamperzhou Day Spa, it is true that businesses encounter problems with respect to formulating strategies that can help them to succeed in the market place. Pamperzhou Day Spa, for instance, encounters challenges with respect to understanding the nature of competition, buying patterns of clients, and how to implement the strategy. Conversely, Waleed Coffee Shop encounters difficulties in terms of understanding the rationale for start-up, the external environment needs and defining specific tasks to key people in the enterprise. Therefore, to succeed in the marketplace, the two firms should ensure that their business plans are comprehensive in nature, and treat every issue with utmost importance to operate efficiently and consistently. Bibliograpy Abrams, Rhonda. The Successful Business Plan: Secrets & Strategies. San Diego: The Planning Shop, 2003. 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