Food Delivery for Japanese Office Workers - Pros and Cons - Research Paper Example

Food delivery marketing investigation Table of Contents Executive Summary………………………………………...3 Introduction………………………………………………….5 Economic Factors…………………………………………….6 Legal………………………………………………………….8 Culture Issue…………....…………………….…………….. 8 SWOT Analysis……………………………………………....9 Marketing Mix………………………………………… …..10 Social Responsibility…………………………………… ....11 Balance Sheet…………………………………………….......12 Funding…………………………………………………….....13 Appendices…………………………………………………....15 References………………………………………………….…16 Executive Summary A critical examination of Japan indicates that it is among the countries around the world that has the fastest living rhythm. The number of unemployed people is decidedly less ranging at around 1.6 percent from the statistics presented by the ministry of labor. This is to tell that almost everyone in Japan is engaged in doing something to uplift their economic status. Hence, the Japanese people are busy most the times, have less time to eat especially lunch meal, and long working hours during the day. The fact that the Japanese people lack time to find lunch or any other meals especially those working in busy companies gives a business opportunity to deliver them food. Food delivery industry to workers in Japan has not taken root like it is in America. Earlier merchants realized the opportunity and even tried to sell the idea of “Skip the dishes” that is practiced in North America but this never happened easily due to high charges imposed. Indeed this is the business I would like to take to the international market in Japan. The idea of food delivery services is indeed saleable in Japan following the enabling factors such as economic, social, cultural, political, and legal. The economic factors are facilitated by the country having a strong Gross Domestic Product of $4.872 trillion yearly. Nippon Ginko is the central bank based in Japan and has been productive when it comes to regulation of the interest rates hence allowing cheap transaction by bank customers. It makes it possible and cheap for the businesses established in Japan to borrow loans for business us at low-interest rates. The Japanese as well have distinct social and cultural practices when it comes to food. They have not the specific choice of what to eat but rather eat what looks good to them. The legal framework of the country also allows safe and right food with the required content to be served to the Japanese people. Setting the right platform to make a marketing decision will work on the advantage of our business of delivery services. The product itself is suitable in the market based on the way of living of Japanese people. The services will be offered at affordable prices to clients depending on factors such as distance. The business shall stand in place of sellers and consumers to ensure services are offered effectively. The promotion will facilitate the creation of awareness through advertising, social media, and giving incentives to clients such as discounts. The funds for the business to start will include bank loan and borrowing from creditors, and owner capital. Introduction Due to the public investigation, Japan is one of the countries with the fastest living rhythm in the world, with only 1.6% of the unemployment rate (Ministry Of HLW of Japan, 2017). Whatever the school students or the clerk in the company have a busy schedule for their job. This increased their proportion of working time in a day. 7.4% of the people work for more than 60 hours a week, the average rest time for the lunch is approximately 17 minutes (Ministry Of HLW of Japan, 2017), which means they don’t have enough time to get their lunch. From the investigation of the YTV in 2016, 74% of the employee in the company eat instant noodle instead their lunch. This was defined as unhealthy food by lots of the scientists. The food delivery services now become more and more popular in Japan. There was an successfully program we could reference as “Skip the dishes” in North America, which also operate their services in Japan. But the main problem with them is just like what Visa and Mastercard faced in Japan--The service charge for the merchant is too high, with a rate of 30%. Only the big food producers such as McDonalds could have the chance to negotiate the rate with the delivery company. So the small merchants will not be interested in the delivery service that is why we can only get the American fast food from Skip the dishes or Uber eats in Japan--They could afford the rates applied to them. Our purpose is to make a connection between the food sellers and the consumer, it will be similar as what costco are doing right now, with the membership fee, we could still get the money for our operating management and profit. And this will be the first of its kind in the food delivery. Japan is an highly industrialized and modernized country, with over 1,460,000 of the restaurants (any size) and lots of demand for the lunch or dinner delivery. An study by the Japan Kyodo news in 2016 shows that 74.2% of the workers using instant noodles to instead their lunch. The reason that currently the uber eats and skip the dishes in Japan wasn’t highly accepted by the merchants because of the charges, with a percentage of 30% worldwide for the small merchants. From the success of 7-eleven in Japan we could find out that they will prefer the prepaid membership with low rates instead of paying the 30% to the delivery company, we believe we will be the most favourite brand of delivery by the merchants. Japan have an minimum salary of 766 Japanese yen (Figure 1)(CAD $9.37) per hour, compare to Ontario which is 14.00 CAD per hour, the minimum hourly salary will be much lower. The highly developed bicycle lane and public transport system means the personal automobile for the employee isn’t necessary. The operating cost will be much lower for a food delivery company compare to Canada. Overall, this will be an successful business, with both benefit for each of the participants. Economic Factor Japan GDP in the year of 2017 is 4.872 trillion USD, which is the 3rd largest of the world. (Canada hit a rank of 10th, which was 1.687 trillion USD). The central bank of Japan is Nippon Ginko (TYO:8301). With the central bank’s consent, we could find out the way that the bank setting the interest loans: “We estimate interest rate pass-through in the loan market using an individual bank-based panel dataset from Japan. Previous studies using data from European countries have presented a number of common Öndings, including that banks with a high proportion of relationship lending tend to set lower pass-through. In this respect, we have obtained similar results using a dataset for Japan going back to the early 2000s. We further examine the ináuence of borrowing Örmsí balance sheet characteristics on loan interest rate pass-through, and Önd that these factors are also important determinants for pass-through dispersion. However, we also Önd that after the recent global Önancial crisis, even banks with a high proportion of relationship lending have largely lowered loan interest rates by raising pass-through, and that pass-through has not necessarily been determined in accordance with borrowing Örmsíbalance sheet characteristics. These results differ from those of recent studies on European countries. Possible background factors explaining this change are that (i) pressure to lower loan interest rates has risen due to extensive monetary easing and greater lending competition among banks, while Japanís banking system as a whole has maintained its resilience in the post-crisis period; (ii) demand for bank loans has increased substantially due to disruptions in the market for alternative funding sources, such as commercial paper and corporate bonds; and (iii) public measures to increase bank loans have been broadly introduced in Japan (Tomiyuki, 2015, p.1)”. In the recent five years, the benchmark interest for Nippon Ginko has remained the same, with a percentage rate of 1.475% (Figure 2), compare to Canada with a percentage of 1.75% by the bank of Canada, the interest rate for Nippon Ginko is much lower.This indicate a good investment environment created by Japanese government, we could easily find out that now Japan government is welcoming foreign investments. However, for the foreigner business loan, the commercial bank will add for one of the 3 different level of interest rate on the benchmark interest, which could be vary between different business. Which depend on the last year’s fiscal report, we are operating a new business in Japan, so we are not expecting a new business to get a low interest loan. The maximum loan amount allowance for business according to law is 720 million (8.79 million Canadian Dollars) in 2018. The loan application process in Japan are similar like in Canada. In order to get a lower interest rate, we need to perform a good fiscal report for it. Our main focal point for the customer is the white collars works in the office buildings, which doesn’t be really sensitive about the prices and they are more willing to add the tip on their order. Our wages customer is an 5% rebate to the delivery employee plus any of the tips. Which will encourage them to deliver more order an preform a high quality service. 5% for delivery is a high percentage commission in Japan. What we need to know for Japanese customer is that the credit card fraud in Japan is very serious, with approximately 0.2% of the transaction. According to the law, we couldn’t ask for the processing fees on customers. Social and Cultural Factors We might consider that food delivery is an luxury services for normal person, but in Japan, food delivery could be an “universal services”. The only problem that the Japanese consumer are facing is they don’t have any choice other than the american fast food, that would be a good chance for us to grow the local merchants which serve other cuisines. It have been said that Japanese people “eating with their eyes”, they are fastidious about their food appearance---Which means it should be looking good. It means we are looking for a high quality package, it will significantly increase our cost, and the environment by the package will be criticized. Japan is a country which have 47% believer of Shinto, and 13% of Japanese are vegetarian, we need two different box for normal food and vegetarian. This is important for the customers. As Japanese young people’s habit, we are going to accept bitcoin for a payment method for our service. Political and Legal issue During the regulations of the Japan MHLW (Ministry of Health, Labour and Welfare). The label of the food should be created if it was in an purpose of the take out. Even for the food delivery, these following information is required on the food delivery website as well as the label on the container. For processed food: ● Product name ● Use-by-date/best-before-date ● Name and address of manufacturer (importer, if imported foods) ● Storage instructions ● Raw materials ● Amount contained ● Additives ● Nutrient components (calorie, protein, fat, carbohydrate and natrium/sodium) ● Country of origin (applicable only to 15 specific kinds of food prescribed in the Ordinance) ● Other items required for specifically categorized food (see also sections on GM foods, nutrition content claims and health claims and mandatory warnings and advisory statements). For fresh food: ● Product name ● Place of origin ● Other items required for specifically categorized food (see also sections on GM foods, nutrition content claims and health claims and mandatory warnings and advisory statements).The rules above applied to the food production company as well as the restaurant take out. According to this, we need our merchants to upload their ingredient and the sensitization source, everytime the service providers want to change their menu, we need them to give a formal report about the information required above. According to the Japanese criminal law, the employee who working on the public service sector shouldn’t have any criminal record. Which required us to make a clear background check for all of our employee from the delivery to the customer service. Japan tax is called VAT, which will be included in the prices of the services or goods, but it should be clearly labeled. For small business, Japanese government do give a tax return to encourage them, but not for us. When customer using any kind of the “non-cash” transactions, the VAT will be automatically deducted before it comes into our business bank account. This is a major difference for the tax law between Japan and Canada. Our services is based online, so all the revenue for us is after taxed. Tax evasion in Japan have serious result. So we will decline any kind of cash payment in order to make the accounting job become clear. SWOT Analysis Strength: -We provide a lower rate than the current delivery service -We are going to provide lots of opportunity for the unemployment people and the local merchants, which they will more likely to participate. Weakness: -We currently need a lot of promotion and to negotiate with lots of merchant in order to get the customer’s satisfaction. -The bank interest loan will be too high for the new business. -The new brand needs lots of money to promote which could be painful for the investors. Opportunities: -The new concept of the “Delivery Membership” could make a huge changes for the whole industry Threats: -The business perform need a long time to show its results, which will make the investors being concerned. Marketing mix It is a fact that by initiating delivery services in Japan where the idea never used needs one to develop smart ways of selling the product or service to the new market. Therefore, to accomplish objectives in the target, it is essential to consider marketing tools that allow one make a decision on the product, price, place, and promotion (Borden, 2004). The success of the new business in the new market will depend on the marketing decisions stakeholders make concerning these four tools of the marketing mix. For this marketing plan, we intend to have a market strategy that is decentralized to capture a large area. The widespread within Japan will facilitate the business achieve the pull strategy where many clients will be brought on the board. Thus, the four marketing tools will be essential in making determinations on critical matters. Product About our marketing plan, the business will be to offer food delivery services. Food delivery services will involve getting the ready food to customers who would subscribe to the idea. The services would capture mostly the employees working in business companies or areas as well as the student who learn at the same time work (Borden, 2004).. The company shall not prepare food for delivery, but it will offer pure delivery services on behalf of the food sellers who could not reach some customers due to multiple factors. Thus, food delivery services will create the connection between the food sellers and consumers. Our delivery services will involve food packaged in two different boxes. One will be for processed food and the other for fresh food. The processed food box contains food that has been prepared, cooked, and packaged ready for consumption while the fresh box is foods such as fruits and snacks. However, there is no available product life circle and other statistics since there have not been such services in Japan. Food Delivery services in Japan offer a competitive advantage based on multiple factors, but the outweighing factor is that delivery services are strange services offered in Japan market. Many merchants who earlier tried to borrow an idea from American to Japan failed following high service charged. Also, Japan is a busy country where people have no time going for lunch an issue that will advantage food delivery services. Price Price indicates the rate at which the delivery services will be charged to our customers. It is important to note that prices will only be charged on food sellers, not consumers if food. The rate, however, shall depend on the distance covered when delivering food. Our clients shall pay a monthly membership fee of 10,672 Japanese yen. For the shortest deliveries offered at any time whether lunch or dinner, the price for every trip will be 4,520 Japanese yen while the most extended delivery will be paid at 5,466 Japanese yen for every trip made. The rating for the prices indicates that the cost of transportation shall play a crucial role in the sense that long distances indicate the high costs involved. Place Food delivery services will involve taking ready food from the sellers to customers in their various places of work (Cravens, & Piercy, 2006). Thus, in the middle of food movement from seller to consumer will be our business of food delivery indicating that the channel of distribution is not long. However, services will involve delivering food at long and short distances. Promotion Since food delivery services will be almost a new idea in Japan, much effort will focus on promotion to create awareness of our services. The first strategy we shall consider is the use of social media which include Facebook, twitter, and instagram. Social media provides a modern platform where people meet easily from all corners of the world. Advertising will also do the business a great deal which will involve using electronic media such as television, radios; print media such as newspapers, and creating a website. We shall also use incentives such as offering discounts to our first and loyal clients. Financial Analysis Table: Beginning Balance Sheet (in Japanese yen “000”) Particulars Amount (Japanese yen) Assets Current Assets Cash Japanese yen 200,000 Membership fees 1,000 201,000 Non-current Assets Office equipment 45,000 200 Cars 200,000 245,000 Total assets 446,000 Liabilities Current liabilities Creditors 60,000 Bank overdraft 76,000 136,000 Long-term liabilities Bank loan 80,000 Long-term debt 20,000 100,000 Total liabilities 236,000 Equity Equity capital 210,000 Liabilities + Equity 446,000 Funding Setting a food delivery services business at the international market can only become a reality if a large amount of money is committed to funding the acquisition of assets. For this marketing plan to be successful, at least Japanese yen 200 million is needed in addition to equipment worth Japanese yen 45 million. Additional, since it involves delivery services that entail moving from the sellers’ place to the consumers, 200 cars are needed at Japanese yen 1 million each. All these assets need to be financed to jump-start the business to attract investors. Thus, the possible source of fund for a beginning business is bank loan of worth Japanese yen 80 million. Also, bank overdraft is another good source of funds for the business that is payable within a specified short period. The advantage of the bank overdraft is that it is interest-free so it also depends on the goodwill of the bank client. For a bank loan, however, it is procedural and payable interests, and normal goes beyond one year of payment. The funds can as well be borrowed from creditors who may give cash or regarding assets. The owner’s capital is another source of funding for the business to acquire assets. References Borden, N. H. (2004). The concept of the marketing mix. Journal of advertising research, 4(2), 2-7. Cravens, D. W., & Piercy, N. (2006). Strategic marketing (Vol. 7). New York, NY: McGraw-Hill. Appendices Figure 1: Japanese Minimum Hourly Salary By Region(WageIndicator, 2018) Figure 2: Nippon Ginko Benchmark Interest from Jan 2014-Jul 2018 (CEIC, 2018) Read More