Investment Analysis and Appraisal in Oman - Case Study Example

Investment Analysis and Appraisal Name Institution Tutor Date Introduction The main aim of any business person is to make a profit. For a business to be profitable, the business entrepreneur should have a proper business plan and idea on how to conduct the business. He/she needs to take into consideration all factors that will enable the business to thrive. The intention is to compete favorably with other competitors in the market and be successful. This can be achieved by consulting experts to provide a proper business proposal for the company. This paper provides a prospective investor in Oman with the suitable business plan and how the proposal can be a success to the investor. Suitable Business Proposals Tomato production Tomato is an edible red berry. It has several varieties and is widely grown. Tomatoes can be grown in greenhouses in the cool climates. It can be consumed is several ways, including when raw, as an ingredient in dishes, salads, sauces, and drinks. It is rich in lycopene that is beneficial to human health. The investor may decide to produce tomatoes due to its high demand by the consumers. They can earn more profits from the sales of tomatoes. Tomatoes can improve the life of individuals living in Oman in several ways. Foremost, it is rich in vitamins and minerals; vitamin C prevents humans against cancer-causing radicals from causing damage to the body. Again, the lycopene in tomatoes also helps in scavenging cancer free radicals. Tomato also improves the vision of different individuals; this is due to the production of vitamin that helps improve vision. Many individuals will buy tomatoes since they use it daily in their meals. The cost of starting the tomato firm is also low. Yogurt production Yogurt production is a better proposal for the investors. Yogurt is a dairy product that is made by blending of the fermented milk using several ingredients that provide color and flavor. The investor can produce varieties of Yogurt including no-fat and low-fat, creamy, bio-yogurt, baby and drinking yogurt. With the introduction of new yogurts such as the cream pie and chocolate, the investor can attract more customers.Yogurt has a low-fat level of between 0.5% and 4%. Yorgut also contains artificial sweeteners that gives sweetness and at the same time reduce calories. The investor can invest in yogurt made from with milk from fed cows called organic yogurt. The yogurt is more nutritious than other yogurts. This yogurt is rich in nutrients since it is made from milk. This yogurt will help improve the life of people living in Oman. The milk also contains vitamins and proteins and is reach in calcium. In addition, to the nutritional characteristics, yogurt has more health benefits. Individuals who have difficulty in digesting milk can use yogurt since it encourages artificial bacteria in the gut. The sales of yogurt will enable the investor to accumulate more profits since the people living in Oman will be aspiring to acquire the product due to its nutritive value (Ramesh and Kilara 2013). Honey Production The investors can also take part in the honey production. Honey is sweet food made by the bees using nectar from various flowers. The commonly used honey is the honey produced by the honey bees. Honey can be a perfect substitute for sugar in various soft drinks. It contains about 69% fructose and glucose. This makes it be used as a sweetener, and it helps improve the human health. The investors will be able to retain more profits by selling honey since individuals find it healthy to use. It provides individuals with benefits such as loss of weight since it helps in digesting fats stored in the body. Honey is also a source of energy to humans. Many people use honey as a source of energy. Honey is also anti-fungal and anti-bacterial, many individuals will use it to protect their body. Honey production is cheap to the investor since the bees are not cared for or fed; they look for food by themselves and nectar from different flowers. Honey will improve the lives of people living in Oman (Ethel 2013). Cabbage Production Cabbage is a vegetable that is relative to the turnip family and the mustard greens. Cabbage is used as food and as a medicine to a variety of diseases. The leaves of the plant contain glutamine that is anti-inflammatory substance. Cabbage is hardy and grows well in fertile soils. Cabbage is easy to grow if suitable varieties are selected, and pests are managed effectively. It is a source of vitamins and prevents several diseases. Cabbage can withstand any adverse climate, and it is the best opinion for full year delivery. This will make the investor have a steady supply of cabbages throughout the year. This will make them earn more profits yearly. Due to its benefits, many individuals in Oman will be compelled to buy the product. This will be of great importance to the investor (Dagmar and Hermann 2011). Cheese Production Cheese is made using pasteurized or raw milk. Cheese made from raw milk impacts different flavors to the finished cheese. Cheese is a major source of nutrients. During the production of cheese, the insoluble milk components such as the milk protein remain in the curd. The water soluble constituents such as salts, carbohydrates and proteins are left in the way. The nutrients are of great benefit to the individuals living in Oman. Production of cheese is profitable to the investor and by producing cheese; the business will be able to get more profits (Fox 2004). (B) Systematic indexing analysis Tomato Factors weight age AV AG P(2) Vp Score in percentage profitability 0.4 O.1/1.4X100=7.14 availability O.2 0.2/1.4X100=14.28 risk 0.1 0.5/1.4X100=35.71 Adequate market 0.2 0.2/1.4X100=14.28 compatibility 0.5 0.4/1.4X100=28.57 TOTAL 1.4 100 Yogurt production Factors Weightage AV AG P (2) VP Score in percentage profitability 0.5 0.5/1.6x100=31.25 Availability 0.5 0.5/1.6x100=31.25 Risk 0.1 0.1/1.6x 100=6.25 Adequate market 0.3 0.3/1.6x100=18.75 compatibility 0.2 0.2/1.6x100=12.25 TOTAL 1.6 100 Honey production Factors Weightage AV AG P (2) VP Score in percentage Profitability 0.2 0.2/1.2x100=16.67 Availability 0.1 0.1/1.2x100=8.33 Risk 0.5 0.5/1.2x100=4.66 Adequate market 0.3 0.3/1.2x100=25 compatibility 0.1 0.1/1.2x100=8.33 TOTAL 100 Cabbage production Factors weightage AV AG P(2) VP Score in percentage Profitability 0.2 0.2/1.6x100=12.5 Availability 0.3 0.3/1.6x100=18.75 Risk 0.4 0.4/1.6x100=25 Adequate market 0.5 0.5/1.6x100=31.25 compatibility 0.2 0.2/1.6x100=12.5 TOTAL 1.6 100 Cheese production Factors Weightage AV AG P(2) VP Score in percentage Profitability 0.1 0.1/1.7X100=5.88 Availability O.3 0.3/1.7X100=17.64 Risk 0.4 0.4/1.7X100=23.53 Adequate market 0.5 0.5/1.7X100=29.41 Compatibility 0.4 0.4/1.7X100=23.53 TOTAL 1.7 100 The best product with high profitability, availability and low risk is yogurt production. (C) Market analysis The investor should conduct the proper market analysis. This can be done by getting relevant information. This includes information from the locals. The investor can also get the information from the internet source. The information is relevant to the investor in that he can locate their business in safe and secure places (McNeil 2005). The inventor can also divide his market into various segments. This is dividing the market in terms of homes, businesses, government, and educational organizations. Dividing the market into segments can help the business address particular market needs, pricing patterns, and media. Segmentation will help the inventor to target specific group and satisfy their needs. Different market segments need different terms of service (McNeil 2005). The investor needs to be aware of the size and growth of the market. He needs to measure and quantify his market. If the locals are part of the target group, the investor should be able to count the members. Through this, the investor will be able to keep clear records of their customers and evaluate the value of their business (McNeil 2005). (D) Location of the proposal The location is very important for any business organization. The investor needs to consider several factors before deciding on the best location for their business. They should choose the site with cheap land or buildings. This will enable the company to incur less cost in paying for the buildings. They can buy land cheaply and construct their buildings (Vipin and Kamala 2007). The business should also be situated where there is a source of labor. The investors need to identify a strategic place where they can be able to get human labor for their firm. Labor is essential for the business to meet its set objectives. The business needs skilled labor that can operate the business efficiently (Vipin and Kamala 2007). Another critical factor is the availability of raw materials. Raw materials are very core in any organization. The company needs to have adequate supply of raw materials. The investors need to locate their business near dairy farms where they can get milk for making yogurt. Raw materials will make the company operate successfully and realize their goals (Vipin and Kamala 2007). Finally, the investors should locate their firm next to the good road network and infrastructure. The business needs to access good roads, railway links, ports and good telecommunication services. This will ensure the company can meet delivery deadlines and receive the raw materials in time (Vipin and Kamala 2007). As to this, the best site for locating the business in Oman is at the port of Salalah. Salalah has good communication network, port, and excellent railway network. This will make the investor successful in his business. (E) The best business ownership for the project is the Limited company. LLC is a business entity that has characteristics of a corporation. Even though Limited Liability Company is a business entity, it is also a type of unincorporated association but not a corporation. The main feature it shares with the corporation is a limited liability. The main characteristics LLC shares with a partnership is the availability of a pass-through taxation income. LLC is always flexible than a corporation. LLC is suitable for companies with a single owner. In case there is no express guidance of statutory, most courts in America have suggested that members of the limited liability company are always subjected to the same common law as corporate shareholders (Spadaccini, 2007). Limited Liability Company has few formalities to maintain. The members of the limited liability company are accorded a great level of protection by the use of charging order mechanism. This charging order always limits the creditor of a debtor member or debtors partner to the share of debtors contribution without granting the creditor any management or voting rights. The members of limited liability Company in some circumstances incur personal liability when distributions to the members render the Limited Liability Company insolvent. The business proposal will be will be able to use this limited liability company because of its suitable characteristics, it is good for single business investors and the investor will receive full protestation of their rights. The flexibility nature of the limited liability company will be an added advantage to the investor (Spadaccini, 2007). (F) Proposed business structure Is Sole Proprietorship A Sole proprietorship is the simplest and the most common way to start a new business. An individual owns it or the married couples operate the business themselves. A Sole proprietorship is simple to operate and form. There are few legal formalities involved, and few taxes are paid. However, the business owner is liable for any incurred debt by the business. This type of business structure will be suitable for the new investor since the business is new and being in partnership may lead to losses. The new investor needs to operate his business alone and enjoy the profits before involving other business partners (Spadaccini , 2007). Sole proprietorship structure (G) Advantages of sole proprietorship One advantage of a sole proprietorship is the tax simplicity. Sole proprietors declare their business income on their personal form of income tax instead of having a separate tax form (Roger 2012). Another advantage of a sole proprietorship is that the owner of the business owns the business 100%.The owner is controlling the business without any direction from others on how to manage his business (Roger 2012). Again setting up cost and administrative cost is easy and inexpensive. The owner does not need to register the business, but even if they decide to register the business, sole propriatorship is less expensive compared to corporations (Roger 2012). Again there is easy handling of money. Handling money in a sole proprietorship is easier as compared to other legal business structures. There is no payroll required pay the owner to pay himself or herself. To make the business operation easy, the owner may decide to keep the business funds separately and avoid mixing personal and business activities (Roger 2012). Again there is less government regulation or rules affecting sole proprietorship. The business need not to comply with the requirements licensing. The company pays little or no attention to the local regulations. There is no payment of corporate taxes in sole proprietorship (Roger 2012). The investor can own the business as long as he or she wants. He or she can as well cash in or sell the business when he or she feels like. The investor can pass the business to the heir since he or she has the full authority over the business (Roger 2012). Disadvantage of sole proprietorship The investor is legally responsible for any liability in the business. The company is considered to be part of the investor; he assumes all the responsibilities of his business. If in any case the business fails, any assets of the investor including his personal assets are seized and used to pay for the liability incurred (Roger 2012). Another disadvantage is that, even though there are several tax benefits to the investor, the main challenge is that the investor has to pay the self-employment tax. Again other taxes may not be deducted such as the employee’s health insurance premiums (Roger 2012). There is a lack of continuity in the business. If the owner of the business becomes ill or incapacitated, the company will collapse. Upon the death of the investors, the business is liquidated and distributed to the beneficiaries. This may result in heavy taxes on the beneficiaries due to estate taxes and inheritance taxes (Roger 2012). The investor has difficulty in raising capital. The investor must provide the initial funds of starting the business. This is a major challenge to the investor. In sole proprietorships, there is no issuing of stock or money generating projects like in corporations (Roger 2012). In conclusion, it can be stated that the proposed business is appropriate and should be adopted by the investor. References Ramesh C and Kilara A, 2013, Manufacturing Yogurt and Fermented Milks, Hoboken, John Wiley & Sons Dagmar M, Hermann W, 2011, Vegetable Production and Marketing in Africa: Socio-economic Research. United Kingdom.CABI Ethel E , 2013, The World History of Beekeeping and Honey Hunting, Routledge. Fox. P, 2004, Cheese: General aspects, Waltham, Academic Press  Efren F, 2008, Decision Support Systems for Greenhouse Tomato Production, ProQuest Vipin G, Kamala G,2007, Business Policy And Strategic Management: Concepts And Applications, Delhi , Phi Learning Pvt. Ltd   Spadaccini M, 2007, Business Structure: Forming Corporations, LLC, Partnership, or Sole. USA .Entrepreneur Press, Roger M, 2012, Cengage Advantage Books: Fundamentals of Business Law: Excerpted Cases,Cengage Learning   Yildiz F, 2009, Development and Manufacture of Yogurt and Other Functional Dairy Products, Boca Raton. CRC Press Green S, 2008 , Vegetable Gardening, Phil Zuckerman, Applewood Books  McNeil R,2005, Business Market Research,UK. Kogan Page Read More