The Happiness Travel Limited Company - Case Study Example

Entrepreneurship assignment part 1B happiness travel agency business plan Executive summary The happiness travel Limited Company is categorized under travel industry. Being in this industry, the company bearing the name Happiness was basically given so as to assure its customers quality services in travelling sector. In regard to this, customers are assured with safety this will make the customers to be happy in the entire travel. The company is branded with the name Happiness travel so as to be able to assure safety to its customers thus achieving its objectives. As a company specialized in travelling, Travel Company will be able to offer a number of services which include; selling and booking tickets for train, airline and ship, the serviced hotel, packaged holidays touring, travelling insurance among other services. The Happiness Travel Company started its operation with the target of three markets comprising of students travelling, families on trips, and businessmen who in one way or another may find it necessary to travel. Families therefore find it secure to travel with the Happiness Travel, as based on the name. Good naming of a company is quite beneficial since a name means a lot to customers. In Australia currently, the number of students travelling abroad has increased drastically. This has consequently impacted on the company. The number of students is increasing annually thus calling for market expansion. Although this target market seems seasonal, it contributes a lot to the company (Akwetey, 2011). Technology development global-wise has forced entrepreneurs to travel all over the world to look for favorable markets for their products, as a result, the happiness travel has benefited in the long run due to this technology improvements. Businessmen have been noticed to travel from Sydney to Melbourne and other cities within the continent. Operation of the company will be basically being manned by one manager who will supervise five staff. Selling and booking of tickets will be operated through phone calls or internet. As the company operates locally and at the continental level, phones as well as online booking will be used. In the financial plan, the owner is opting to invest up to A$20,000 which will be used to purchase items such as phones, furniture and computers which will be used to serve its customers. From his earlier investment, the owner will raise the entire capital without any borrowings. Being a travel service provider, happiness Travel Company is aimed at meeting the interest of its entire community, its employees and stakeholders. The main objective of the company is to offer high quality services to its customers who will finally make customers to be happy, ensuring the local economic status in fully improved through job creation and other related issues. The company has employed skilled labor who will ensure that the success of the company is achieved thus making admirable profits. The company is a start-up company that will mainly specialize in the travelling sector ranging from selling and booking of tickets through phones and internet. The happiness travel company is expected to commence on January 22, 2012. Introduction Mission Happiness Travel Company is an agency that has specialized in travelling. Basically, the company is aimed at offering consultations and custom travel arrangements and packages. The main objective of the company is to offer high quality services to its customers who will finally make customers to be happy, ensuring the local economic status in fully improved through job creation and other related issues. The company has employed skilled labor who will ensure that the success of the company is achieved thus making admirable profits (Kutz, 2010). Keys to success In order for happiness travel company to meets its stated objectives, they have set on key guidelines that will aid them strive towards them. First, the company is aiming at securing segmenting its market basing on the rate at which they are being targeted. For instance, students travelling in any part of the Australian continent will be categorized under the same niche, families who travel to explore the beautiful sceneries within the continent will be grouped together and finally, business who travel for business matters are grouped together. On the second guideline, the happiness will position itself as a specialist in the travelling adventures. This will have a great impact to the customers as they will have trust in the company in that their services will not be divided on different services. Thirdly, the agency intends to have a clear network of communication where differentiation and quality on how the company offers its services will be done through personal contact and media. A customer care will be introduced so that customers willing to forward their queries will visit the company’s website or come in person. Finally, happiness Travel Company is planning to come up with a repeat business base of loyal customers. Company summary The happiness travel industry is an agency that deals with selling and booking of tickets to students, families, business entrepreneurs and other classes of people who may be willing to travel by ship airline or train. The company has panned to place itself as a specialist in the travel sector. The company will mine most of its income from the segment. Company ownership The company is a sole proprietorship and is operated by Sammy Johnson in the town of Sydney in Australia. As it is a solely owned, the owner is looking forward to a partnership after twenty months of its operation. Start-up summary The happiness total start-up capital is approximated to be A$20,000. The owner will finance the company through his personal investment. The details of the start-up will include; expenses which will comprise of rent, office supplies, insurance, and fees of consultants and purchase of computers being the largest start up expense. Table: Start-up Start-up Requirements Legal A$450 Stationery A$600 Brochures A$900 Consultants A$1800 Insurance A$400 Rent A$2000 Equipment A$10000 Others A$500 Total start up expenses A$16650 Total assets A$3350 Total requirements A$20000 Location and facilities Happiness Travel Company is located at 273 Swanston Street Melbourne Victoria, 3000 Australia and is between 750 and 900 sq. ft. After its successful completion, the company will be among the 26 travel agencies in the entire Australia but considered the immediate specialist in the area. Marketing Marketing analysis summary The happiness is aimed at addressing the issues of customers in the entire Australian continent. Its services which are adventures are categorized under the leisure travel which contributes up to A$40 billion every year to the county’s economy. Being an adventure travel, it is a sub-branch of leisure travel which can further be subdivided into soft and hard adventure travel. In the hard travel annual, Australia’s economy realizes an approximate of A$42 million and another A$13 million form the hard adventure travel. Marketing segmentation The target markets for happiness Travel Company are students who will be traveling across the continent for learning purposes and may require booking a flight. There are also students who may be studying and may be travelling abroad and may need that they secure a ticket for themselves. Second groups of target market are the families. During a given seasons, families feel that they should travel for pleasure. They always demand for a quality travel that will guarantee them happiness in the long run. Other families work or study abroad and therefore have to travel. The last group is the group of individuals who always travel for business reasons. Entrepreneurs travel at a given of period regularly. It will be the duty of the company to monitor their mode of travel so that the customer care function will ensure that the always choose happiness travel company for a happy and quality travel. Generally, the percentage of travelers will also be analyzed basing on gender. 51% of the total expected to travel will be men and 49% women. This clearly indicates that men spend more on travelling than women. Target market segmentation Happiness is strategically placed in 273 Swanston Street Melbourne Victoria, 3000 Australia. This is a location where majority of people will be expected to travel. The town has a larger population which will mean that the chance of people travelling is quite high. Being a town that consist of various forms of businesses, the happiness travel company will be at their reach just incase they need to travel. The town too has numerous learning institutions. Going out for research reasons is their order of the day, this happens seasonally. Market needs Research reveal that majority of customers are not sure of where ought to reach. This is also another responsibility that happiness Travel Company should look into by ensuring that it gets to grasp all the destinations. Customers are always dependent on the travelling agency on competitive prices. Happiness travel company will ensure that it beef up skilled personnel who will make sure that customers’ needs are well met. Time being an important factor, Happiness Company is able address on all the customers timely considering money factor and assuring customers of their vacation. Market trends There has been an increasing deregulation in the travel industry. This has called for differentiation thus reducing the prices of airfare and other services within the travel sector. Other trends include large airlines have increased caps on agency commission, adventure travel increased, profit margins being reduced. Statistically, 50% of the population of Australia has taken an adventure trip in their entire life according to analysis done five years down the line. Out of these, 40% are students and 38% are businessmen and the rest are families. Market growth The travel industry is seen to grow regularly. The growth is contributed by factors such as stable growth of domestic economy. In addition the currency have been devaluated in others regions making travelling cheaper and affordable to all classes of people in Australia. In the travel industry, leisure has increased by 2.3% in 2011 and is expected to further increase by another 3% in 2012. The economy of the country that has stabilized has improved the business sector thus improving the business travel domestically. In 2011, the business travel increased by 8.4% and is estimated in increase by another 6.3% in 2012. The annual growth of adventure travel is calculated to be at 12% is regarded one of the sectors of the economy that grows at a fast rate in the travel industry. Statistically, 2,000 Australian companies offer adventure packages that brought in A$2billion in 2011. Between 2008 and 2010, the executive participation in adventure was recorded with an increase of 56%. Service business analysis Tourism and travel has been ranked the third largest industry in the entire continent. Forecasts have been made that by 2015, the industry will be on the lead. For one decade now, the travel industry has increased its revenues to an approximation of 100%. For every financial year the travel industry produce at least A$100 billion as revenues annually. The travel industry has been categorized into two distinctive groups leisure and business travel. On a further note, business has been categorized into large to medium corporate account and independent entrepreneurs. Leisure is base on the level of income, age and the kind of trip that one makes. This type of category is mainly students and families. Leisure travel has been categorized into four primary groups: high income travelers, families and students, adventure and honeymoons trips, and budget-conscious travelers. Business participants Like any other industry, travel industry takes part similarly. It involves large national chains, small business enterprises, and consolidators on the internet. The quantity of participants in the market is mostly indicated by travel related associates when referring to membership numbers. The Australian Society Travel Agents (ASTA) recorded 20,000 members in 90 countries majority being small business enterprises. In addition Association of retail Travel Agencies (ARTA) has made another 15000 members. Moreover, there are other small agencies which are not affiliates with these associations which have at least 20 travel industry organizations within the continent. Immediate competitors of Happiness Travel Company id estimated to be 30. Distribution patterns The primary pattern of distribution that is witnessed in the travel industry is supplier to agent and finally to consumer. Between the supplier and agent is a conference system that regulates them. Airline reporting corporation (ARC) and International Airlines Travel Agents Network (IATAN) are the two conferences that help agencies to access into air travel providers. They can be contacted through CRS (computerized Reservation system). Blank airline tickets are sent to the travel agencies by the CRS. Collection, storing and voucher payments are only made by the agency. This too applies to the shipping and train sector; though the Australian ports Reporting Corporation and Australia railway Agency respectively. Competition and buying patterns There exist numerous forms of travel and activities that are available for people opting for an adventure vacation. All substitute products are one form of competition. Some of them include; cruises, theme parks and motorhome trips. Other substitutes will range from self-planned, less-expensive, and trip geared trips. The money may otherwise be invested by customers other than spending them on vocational trips. Alternatively, competition may rise from other agencies that have specialized in adventure industry in Australia. Factors that tend to affect the mode in which decisions are made by customers concerning travelling are their lifestyle, disposable income and age. Main competitors Global Adventure Travel: it was established in 2005 and they have fully established themselves in the travel industry. It has position themselves by ensuring a well network of communication and good governance. It is located in Sydney. Sundance Travel: it has been in the market for the last one decade. It is therefore aware of any problems that are related with the industry and how to cope with them. Operation Happiness Travel company offers both individual and group travel to corporate and leisure clients. Happiness travel company operation range from consultation of travel, arrangement tours, custom packages, reservation for lodging, cars for rental, rail passage among others. Happiness Travel company is trying its best to look to differentiate its services from other travel agencies in the entire Australia. Service description Happiness Travel company provides 100% services and sells standardized travel agency products such as airfare and travel packages. Furthermore, it offers other services such as passports assistance, proving access to supply of top of the line equipment, accommodations, superior provision of terrain and other activities and entertainment. The value added for happiness Travel Company is competitive rates, knowledge and expertise thus resulting into customer satisfaction. As earlier stated, adventure travel is categorized into two; soft and hard adventure. Both categories comprise of active involvement and athletic activities. Adventure is made mostly to families and students which constitutes a larger percentage of those who travel. On the other hand, businessmen also involve themselves in the travel with the aim of securing better markets for their products or looking for better markets to purchase their products. Businessmen in most cases use train and ship to transport their luggage. As they explore the market, many prefer air because it is faster unlike the rest which are very slow. Trains are only used on land and ship is only used in water travel. Competitive comparison The market of travel agency is quite competitive and its mode of operation has been drastically changed by technological innovations such as the internet and Computerized Reservation Systems. Research performance and other related operations after the internet was brought into the industry both to individual and agencies have found it easy afterwards to use the new technology. Online selling and booking of tickets through the internet have imposed on discounts. This has become the main advantage that agencies have looked into when purchasing tickets. Price has remained to be more and more competitive due to the development of computerized reservation systems. Efficiency and speed have been enhanced by the use of those latest innovations during customer transaction. The older ways of transactions were very slow and tiresome to customers. Those hoping to start an enterprise within the same line have found it costly thus making it more competitive. In addition, competition that has erupted in the travel industry and increasing number of travel options availability have forced small travel agencies to specialize themselves into smaller travel agencies meeting a given type of travel. This is witnessed in happiness Travel Company since it has positioned itself as an adventure travel specialist. This has reduced the number of competitors whom the company might have otherwise faced. It is not necessarily that an agency be an adventure so as to make bookings on an adventure travel trip. The happiness Travel Company is assured of the few competitors left in the market that it will finally emerge the winner in the Australian market. Sales Literature Companies for car rental, travel locations brochures, entertainment can be acquired from wholesale houses and service provides that has close relation with happiness Travel Company. Happiness travel company’s brochures are bone by local graphic arts company which will be mailed to those customers who are having the potential and have requested for. Utilization of direct mailing, sales promotion materials and print ads will be ensured at the time of need. A database will be made so that customers’ details will be store so that they will be drawn when needed. Fulfillment The happiness Travel Company has ensured that they built a strong relationship with providers of travel related products. Among these are two major airlines, one railway agency and a shipping agency who have been chosen as main ticket providers since the do not cap the profit on tickets of the agent. This will make us achieve 10% margin on ticket sales that has for a long time not been achieved in the industry. Through marketing research we have been in a better position to establish a good working relationship with other service providers across the globe. Happiness has moved an extra mile to identify on those opportunities that will capture margins of up to 20% from given parties. Sourcing will be evaluated progressively. Happiness Travel Company will ensure that it maximizes on trade shows, travel industry publication and other useful information that will boost the productivity of the company. Technology For any sort of client reservation, happiness Travel Company will strictly embark on Computerized Reservation Systems. In adopting this, the agency will be in a position to tell what the customer requires and ensure that it is accessible with ease. Speed and efficiency at which happiness Travel Company will be communicating with its suppliers will be increase. It simplifies data retrieval for customers and storage too. in addition, the internet will aid the agency in undergoing more research and communication. Future operations Happiness Travel company will in future extent its agencies to more locations. Since the travel market is growing, it will at one time reach maturity, the agency will participate in other segments within the market. The researches that the agency is currently performing are to identify if there are future opportunities in future sales. Its long-term objectives is aimed a establishing an international recognition in provision of top of the line travel. This does not deny Happiness Travel Company the chance of engaging in other segments. Finances This section gives detailed information of the financial plan. On the preliminary estimates reveals that Happiness travel company will experiences a slower growth for its first quarter after the entry. This is because it is a start-up company and have not ye built popularity in the market. Another factor may be due to seasonality of the industry. Happiness Travel company is secured adequate funds to curb the negative cash flow cases that may experience in its initial stage. Important assumptions Happiness travel industry assumes that there is accuracy in projecting market growth for the travel industry, there will be no decline in national economic situations and that it will favor the travel industry. Finally, Happiness Travel Company assumes that there will be a conducive environment for travel service providers globally so that it will enable Happiness Travel Company to build strong relationships with other related organizations. Break-even analysis The table below gives detail information on break-even analysis for happiness travel company with monthly sales break even points. The calculation on break even has assumed a 20% gross margin being a conservative estimate and that development of strategic relationships will be improved. Break-even point= where the line intersect with zero Table: Break-even Analysis Monthly units break-even 7 Monthly revenue break-even A$6818 Assumptions Average per-unit revenue A$950 Average per-unit variable cost A$741 Estimated monthly fixed cost A$1500 Projected profit and loss As Happiness Travel Company proceeds with its operation, its profits improve especially from the third quarter and to the first year of its operation. During the first one year, its gross margin will be 20% and increase by two percent in the second year. The information is revealed in the table below. Projected cash flow The table below illustrates monthly cash flow. Projected balance sheet The following is a planned growth on pro forma balance sheet. Bibliography Akwetey, L.M., 2011. Business Administration for Students & Managers. Trafford Publishing. Albrecht, S., Wernz, G. & Williams, T., 1995. Fraud: bringing light to the dark side of business. Irwin Professional Pub. 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