The Vietnam Coffee Venture - Example

Task Background information The Vietnam coffee venture requires a comprehensive financial plan that entails details of the marketenvironment of the coffee in the US and information of all the facilitating factors, which includes the price of advertising, transporting, packaging and branding. In essence, Mr. Quentin needs adequate information to enhance proper decision making, which will make the venture profitable. This financial plan intends to examine the retail venture of flavoured gourmet coffee beans from Vietnam to the US market. In addition, Quentin’s cash flow based on the $450,000 will be prepared in accordance to the anticipated expectations. Products and services The foremost revenue source for the business will come from the benefit retirement fund. The continuous revenue will come from the direct sale of the Vietnam flavoured gourmet coffee beans in the US market. In addition, the business will sell 180kg of ground coffee. Quentin seeks to offer a range of coffee products through blending of diverse types of coffee beans. These blends may include Italian Roast African Roast Bistro Blend French and Columbian Dark blends The sales assistant will offer service related to the sale of ground coffee. On the other hand, the Quentin will offer all the managerial and administration services through the online system. Financing Mr. Quentin seeks to use his retirement benefit amounting to $ 450,000 as starting capital. No interest rate, however there is 30% income tax. Mission It is Quentin’s mission to offer the best selection of the Vietnam. Through apt usage of the online system of marketing and selling, Quentin will exceed all his competitors. Objectives Quentin’s primary objective is to build awareness of the brand and excellent customer service in a bid to expand the sales. Quentin should apply the following strategies to achieve these goals Develop an excellent menu of diverse coffee blends Offer an excellent service experience relative to the customers’ expectations Control the traditional Italian roasting techniques to enhance market access with the best brand products possible. Start up Summary One workstation PC and one central file server Office furniture and equipment Computer software such as Peachtree accounting and Microsoft office A refrigerator Hobart scale Keys to Success Quentin has to identify at least three keys, which will be instrumental to the venture’s success. These aspects may include the development of the finest coffees from the imported one. The second aspect is to develop a high notch customer service to ensure a stable customer base, whose expectations are met. In addition to this strict and high level, financial controls should be established to ensure transparency and accountability. On a similar note, the venture should be analyzed relative to the attributed risks such as duration of expiry, warehouse loss, delays in transportation, inefficiency of the supply channels. These keys are fundamental in ensuring that the business transactions are well recorded in a bid to establish a foundation for a fiscal success. Moreover, the aspect of sustaining the initial market and expanding it is fundamental to ensure continuity of the business. For instance, it is expected that 100kg of coffee will be sold during the first month and the trend will continue to 600kg per month. This is an implication that the market is expected to expand. This follows that market factors such as competition in terms of quality from Starbucks and Dunkin brands should be considered. This will enhance superior product differentiation which will put Quentin’s product at bar with other players in the market. It is imperative to note that, the aspect of business continuity represents the primary objective of any entrepreneur. Let us consider the following budget relative to the expected financial plan. Key: I$ = 21225 VND Cost of 1kg of coffee = 80,000VND = $3.679 Transport per kg = 60,000VND =$ 2.827 Selling price = $ 13.50 per kg Packaging and shipping = $1.50 per kg Salary = $ 3000 Ground coffee = $12.50 per kg 30/100 of 600 = 180kg of ground coffee Grinding and packaging equipment = $1500 Ground coffee assistant = $2000 Tax on income = 30%, 30/100 *450,000 = $13500 Sales in the first month, 100kg, target 600kg per month The selling price = $13 Budget Income ($) Expenditure ($) Retirement Benefits 450,000 1 kg of coffee in retail $3.679* 100 = $367.9 Transport per kg for the first month $2.827*100 =$282.7 Total cost of 1 kg for the first month $ 6 .506* 100 =$650.6 Cost of 1kg of ground coffee $12.50*180 =$2,250 Refrigerator $ 9,000 Website $ 3500 Market study $6000 Salary for ground coffee assistant $2000 Quentin’s salary $3000 Packing and shipping $1.50 $1.50*100=150+ $1.50* 180 = 270+150 = $420 Income tax 30% of income $13500 Miscellaneous $5,000 Total 450,000 $45, 320.70 Quentin’s graph of starting up the business appears as follows Particulars Amount Expenses 45, 320.70 Assets 450,000 Investments 0 Loans 0 The following section considers the expenditure pattern on various aspects of Quentin’s budget. Expected Expenditure on the market study Essentially market study refers to the structured effort to gather information about target market and customer base. This is a fundamental business strategy particularly on a new venture. Market research can be done in two ways, which include qualitative and quantitative. The following factors need to be investigated during the market research process. Market information Market information is a special instrument, which help in finding out the prices of diverse commodities in the market. In addition, the aspects of demand and supply should be determined and the respective curves used in making appropriate decision on the quantity of coffee to be supplied. For instance, the current market prices of coffee are extremely high and introduction of new products such as the Vietnam flavoured gourmet coffee beans should be done through the emphasis of affordability, taste and enjoyment. This will change the consumer routines towards the new products. In essence, Quentin needs to ascertain the age bracket that may form a good customer base. For instance, in the US citizens aged 18-48 years form a potential customer base. Similarly, the social, legal and technical facets relative to markets should be analyzed and interpreted. I approximate a total of $ 1500 to be used in carrying out research on this aspect. Market segmentation This is the division of the market into small niches with analogous motivations. Such aspects as product variations, geographic and demographic differences should be used in subdividing the market. Market segmentation is a fundamental aspect in making a decision on the type or brand of coffee to be supplied to the various market niches. For the case of B2B segmentation, then firmographics should be used. This process will require $1500. Market Trend This refers to the increasing and decreasing movement of a market over a period. This aspect may be difficult to measure based on innovation and this will necessitate deriving of figures and data relevant to the trends from potential clients or niche. This information will be used in predicting the prevailing and future market trends. Approximately $ 1000 will be spent in this process. SWOT Analysis This analysis should be used in the creation of the business and throughout the life cycle of the business entity. The whole process of will take a share of $2000. Strengths The present coffee market in the US is competitive with high prices. The average cost per kg of coffee beans is $16. This implies that Quentin’s coffee will gain advantage in terms of price since the selling price is expected to be $13. This aspect of relatively low price serves as strength over other brands in the market. Weakness The fact that Vietnam flavoured gourmet coffee beans is a new venture; it may require a lot of research on various aspects relative to the market to ensure a viable decision is made. This will take a lot of time and it follows that creating a market niche big enough for the anticipated quantity of coffee will take some time. On a similar note, the issue of online marketing, which is the primary selling channel, is new. The clients need to be reached and informed on the new coffee product. This implies that a lot of investment in terms of finance and time is required to enhance creation of a potential customer base. It is imperative to note that, the aspect of marketing and selling a new product through new selling channels is a weakness, which will reflect low sales in comparison with established brands in the market. This downward trend results from a limited customer base. However, it is notable that extensive marketing and apt configuration of the online selling channels will slowly increase the market base. Hence, this weakness will be solved by the gradual growth of the brand over time. Opportunities Many opportunities exists in the US market for the Vietnam flavoured gourmet coffee beans. Despite the existence of numerous coffee brands in the US market, there is room for a new venture to gain a market niche if, the cost, flavour and enjoyment of the coffee brand is considered. The cost of the new product should be relatively low in comparison with the market price. In addition, the flavour and enjoyment should meet the expectation of the market niche, which this study has established to be of age between 18-48 years. Threats This includes the universal global supply and demand curve in relation to the consumer trends on the coffee consumption. It is noted that despite the increased global consumption of by 13% in 2013, the trend remains unpredictable (Zdzisław, 13). This follows that if the downward shift occurs, the Vietnam flavoured gourmet coffee beans may not achieve the expected market niche target. This may slow down brand acceptance in the market. Summary of expenditure on market Research Particulars Amount Market Information $1500 Market Segmentation $1500 Market Trend $1000 SWOT analysis $2000 Total $6000 Selling Quentin expects to sell 100 kg in the first month with anticipation that; the trend will gradually increase to a target of 600kg per month. The selling price per kg is $ 13. Let us consider the monthly sales for the first one-month, then six months and 12 months. The first one month Month Sales Kg Amount($) Total ($) January 100 13 1300 The first six months Month Sales Kg Amount($) Total ($) January 100 13 1300 February 70 13 910 March 90 13 1170 April 110 13 1430 May 110 13 1430 June 120 13 1560 Total 600 7800 The first twelve months Month Sales Kg Amount($) Total ($) January 100 13 1300 February 70 13 910 March 90 13 1170 April 110 13 1430 May 110 13 1430 June 120 13 1560 July 130 13 1690 August 150 13 1950 September 170 13 2210 Month Sales Kg Amount($) Total ($) October 200 13 2600 November 200 13 2600 December 220 13 2860 Total 1670 21,710 The above upward trend depends on the fact that the marketing strategy is working well towards increasing the market niche of the coffee brand. This implies that, more clients increase the sales. It can be anticipated that, Quentin will expect his sales to increase to 400kg per month in the third year and up to 1000kg in the sixth year. This follows that more employees will be recruited and the online selling system will be reconfigured to accommodate multiple selling channels and other applications. Year Sales Kg Amount($) Total ($) First year 1670 13 21710 Second year 300* 12 =3600 13 46800 Third year 400*12=4800 13 62400 Fourth year 450*12=5400 13 70200 Fifth year 500*12=6000 13 78000 Total 21,470 279,110 Conclusion and Recommendation The above figures indicate that Quentin’s business will continue expanding its client base, which will consume 21, 470 kg of coffee per month in the fifth year. It is imperative to note that proper management, apt marketing strategies and financial control is fundamental in the growth of Quentin’s business. However, more effort is required in upgrading the online selling system to enable it accommodate more complex accounting management software. Work cited Fedorowicz, Zdzisław. Financial Planning. Warsaw: Central School of Planning and Statistics in Warsaw, Research Institute for Developing Countries, 2013. Print. Read More