Business Feasibility: Terrific Experience Tourism Company - Essay Example

Business Feasibility Study: Tourism Company Name Institution Table of Contents Table of Contents 2 Executive Summary 3 Technology 4 Market environment 5 Competition 6 Industry 7 Business model 8 Marketing and sales strategy 9 Operating requirements 9 Management and Personnel requirements 10 Intellectual property 11 Environmental issues 11 Critical factors 13 Financial projections 13 Balance sheet projections 13 Income statement projections 14 Cash Flow Projections 15 Break-even analysis 16 Capital requirements and strategy 16 Recommendations and Findings 16 Conclusion 17 References 19 Business Feasibility Study: Terrific Experience Tourism Company Executive Summary Terrific Experience Tourism Company is a business idea that has been borne out of the need investing in the numerous opportunities in tourism industry. This report gives a feasibility study with the aim of convincing investors and other stakeholders to support the idea. The report describes the services that the company will engage in and how it will generate revenues for its operation. Market environment and competition looks at the external macroeconomic factors that will affect the operations of the business. The feasibility study represents the business idea in full explaining how every challenge and need will be met. Environmental conservation will be part of the crucial area that the company will have to pay attention to. Environmental activities and the government are always keen on ensuring enforcement of environmental policies. The financial projects section gives the estimates of balance sheet, income statement, and cash flow of the company. Recommendations and findings give an overview of want should be done. The report ends with a conclusion and it is accompanied by a list of references. Product or Service The company known as Terrific Experience will provide travel services and accommodation to local and international tourists in the area. The company will organize travel tours and excursions in the interior of the country. It will be important to specify that the company will not deal with physical products but majorly services. These services will include travel tours, accommodation, guides provision, sporting activities, and introduction to other parties that the visitors may interested in. The company will provide opportunities for excursions for companies who want to give a special treat to their employees (Carkenord, 2008). The tourism industry has opportunities for investment following the renewed interest in people to understand the environment in which they live in through excursions. As people look for affordable leisure joints and activities, there is need to come up with the kind of service that will satisfy them besides being affordable. This concept will widely target local citizens but will also blend with international tourists who are seeking opportunities for holidays in the country. The company will be known as Terrific Experience Tourist Company. Technology Sophisticated technology has been widely used in the tourism sector. The tourism market is selective, knowledgeable, demanding, sophisticated, demanding, and more experience is needed in its operation. The company will have to employ the latest technology in ensuring that the guests receive high quality services but at an affordable price. Solar systems of heating water for bathing will be encouraged as a means of ensuring environmental conservation. The hotel rooms will have to be fitted with CCTV cameras to enhance surveillance by security teams. The latest dishes of connecting main channel service will also be acquired. The company will also have to use electronic or online registration for quick registering visitors. Databases for storing every client’s information will have to be developed to store more information. In adverting, the marketing department will use sophisticated ways of communicate to the general public. Technology plays an important role in launching the activities of the company. Market environment The target market will be low income earners who would like to engage in recreational activities that are affordable. Many tourism investors concentrate on high income earners who can afford expensive services. The low income earners are left with few opportunities for recreational activities. The company will design activities that will interest low income earners among the local tourists and more so target high income earners among the international tourists (Nagle, 1999). Variety, flexibility, and affordability will be the driving points of focus for the company recreational activities. Sporting activities will be provided and small competitions organized where winners will be given souvenirs to take back to their countries. Explorations escapades into the country’s interior will be the major activity that the company will focus own. The company will target the low market owing to the increasing economic hardships that has led to many people to lose jobs. Absence of stable jobs and substantial income compel people to look for cheaper ways of meeting their needs. In the leisure and entertainment sector, Terrific Experience will be ready and willing to offer affordable and quality services for tourism activities within the country. These services will be offered majorly to individuals and corporate bodies that want to organize excursion tours of adventures for their employees. Competition Growth in the tourism sector has tremendously increased competition. There are many players that have invested in the tourism industry with the aim of making profits. The tourism company will face stiff competition from well established market leaders who offer similar services to tourists. Well established companies have build brand loyalty and have a large market share. Quality, flexibility, and variety are major selling points in the tourism industry. It challenges to dislodge market leaders from their position in the market, but with proper planning and detailed long term strategy, the company is able to gain popularity through concentrating on market niches (Carkenord, 2008). Provision of high quality of service is also important for the business. The reputation of the company will grow because of identifying a niche and offering high quality services. Market intelligence will collect important information from competitors and therefore know ways of dislodging them in the main market. Competition will be both direct and indirect. For direct competition there will be similar companies offering the same services as Terrific Experience Company. For indirect competition there will be other events that tourists can engage in instead of taking part in the tours organized by tourist companies. Barriers to entry in the tourism sector include the huge startup capital that one needs to put up the required facilities for hosting of tourists. A tourism company also incurs increased overheads in terms of advertising and other promotional activities like price cuts. The company looks forward to entering the market as a unique provider of services at affordable prices. The local cuisine will be prepare in the company’s hotels and sold to tourists. Flexibility and variety will be the emphasis of the promotional activities of the company (Glaesser, 2006). The company will concentrate on low income earners who want to have an affordable experience in the country. Many of the tourism companies target heavy spenders who are in the country for lavish holidays. The company will serve local people and low income people who will want to have adventure in the country but they can only afford very little money for their leisure. Majority of people who would want to go for holidays are not affluent and have a small salary. If all these people are considered as a unique niche in the market, there would a huge customer base that would eventually turn out be profitable. Industry Tourism fall under the service industry and these include things like hospitals, schools, hotels, repairs, home cleaning, child day care, and massage therapy. The service industry has seen increased sophistication that has led to many players falling out due to the increase in competition. Tourism as one of the service industry is not spared with the intensity of competitions. Tourism companies are expected to over high quality and competitive services in order to maintain their customers and win others (Urry, 2003). The service industry is being choked by congestion that has resulted into saturation of the market. Consequently a lot of creativity is required to make sure one wins clients at the expense of competitors. Continuous advertising and other promotional activities have to be in place to ensure that there is a positive growth in the value of a firm. Tourism has shown positive growth in the face of financial crisis. Seeking for fair weather and sporting avenues has led to many tourists trooping into the country. The tourist industry has been supported by both local and international customers. Local people use tourists’ resorts especially during the off-peak seasons where the peak seasons see many international tourists cruising into the country on luxurious yachts. The increasing trends of locals of exploring their environment have boosted interest into local tourism (Lew, 2008). Terrific Experience Company will take advantage of this trend and tap into the large domestic market consisting of local tourists. Most of the tourists save money before they make voyages to tourists’ destinations around the world. It will be very appealing to come up with a strategy of providing services to tourists which are affordable. Business model Terrific Tourism Company will liaise with custodians of game parks, game reserves, snake parks, animal orphanages, and zones with the aim of securing permission to these places. The company will attain permission of taking tourists at these places at a negotiated fee. The fee will be passed on to the consumers plus small capital margin. The company will provide travel vehicles for visiting the named points at a specified fee (Riley & William, 2005). The tourists will be required to pay for their own money for additional services at these avenues. The company will provide accommodation for tourists at affordable fee. Families and couples will get bonuses as compared to individuals. The food and refreshment will also be served at the hotels owned by the company. The company will also put services like massage therapy at the hotels and charge a few for it. The company will further organize internal competition where participants will be required to pay participation few. All these activities will seek to generate revenue for the company. Marketing and sales strategy The company will mostly use social media to get the message of its existence across the entire society. Terrific Experience will put up billboards along major streets in town with the message about the services being offered to the tourists both domestic and international tourists (Wickham, 2004). The company will use major entry points into the country as important places of adverting. Promotional agents will be positioned at these places to offer guidance to the tourists and suggest that they come to Terrific Experience for terrific time program while in the country. The company also expects that clients who will find the company’s services to be of high quality will refer other people to come (Nagle, 1999). The company will have to set aside a substantial amount in the budget for the purpose of advertising. Newspapers and magazines are also places where the company will from time to time place advertising explaining the services being offered by it. The company will also be compelled to offer price cuts on the services being provided. It is expected that costs for promotional activities will be for the first one year before the company gains an important position in the market. Operating requirements The company requires premises to run its business. The company will either buy of rent a premise where it will have its operations. The hotel and lodge have to be located at place lose to the entertainment joints where tourists can enjoy the breathtaking scenery. Terrific Tourism Company will need several locations for at least five hotels that will be well equipped with swimming pools, therapy parlors and relaxing benches (Blais, 2011). The hotels will a have specious balconies, eating places as well as joints for hard and soft drinks. The management will also look for entertainment activities to keep the visitors busy. Apart from the premises, Terrific Tourism Company will need travel buses to transport tourists to recreational facilities. The buses will hired or bought. The buses have to be in good condition. The company has also an alternative of enlisting the services of travel and Tour Company to transport its visitors. The travel and tour company will split the proceeds with the tourism company (Thompson, 2003). The company will need pool tables and places or playing darts. The company will need security avenues for the protection of the tourists. Management and Personnel requirements The company will need to hire competent people to facility realization of the company’s objectives. The company will have to hire chauffeurs and guides to take tourists on excursions and visits. It will be important to have a well developed resource management department in the company that will be in charge of attracting, recruiting, and selective qualified individuals to take up job positions within the company. Training and development is very important in any organization (Singh, 2008). The management has to be prepared to put in place means of developing skills and talents of the employees. The top management can be hired through a recruiting firm whereas interviews can be conducted to hire the rest of the workers. The top management has to possess high skills of strategic management and be after to work in a dynamic environment (Hara, 2008). Problem solving is an important skill that all the managers must possess. Cleaners will be needed for cleaning the hotel rooms. Room services will be provided by special workers that will be employed specifically for providing such services. Guards will be needed to oversee the security of the entire premises of the company (Beaver, 2002). There should several receptionists to receive visitors and also hotel managers to oversee the functioning of the hotel. Cooks will be needed for preparing high quality dishes for the visitors. Messengers and drivers will play an important role in the existence of the company. Messengers will run errands for managers and also help the guests to settle in their rooms. They must ensure that the visitor have everything that they need. Recruitment will be done competitively and every qualified individual will have a chance of presenting himself to the panel of interviewers. The company will be an equal opportunity provider. Intellectual property It will important to register the name of the company to protect it from being duplicated by rivals or other startup companies. Registering the name will give the company the opportunity of advertising itself as the sole provider of the services outlined in its mission statement. The company will be known as Terrific Experience Tourism Company (Hoagland & Williamson, 2000). It would be upon the management to ensure that the company complies with every set rule in order to retain the name of the company. Having an identity gives the clients an easy time of identifying the company from the pool of other companies. Terrific Experience Tourism Company has to be registered and none of the colleagues or workers will use the name in transacting any business or their own. Environmental issues Tourism is supported by the wonders of nature that include natural vegetation, climate, mountains, hills, desert forms, peoples’ culture, and variety of animals. Maintenance of the natural setting of these aspects is very important for the welfare of the company. Tourists have to maintain what they use in order to make it available when they need it next time. It would be the priority of the company to have well trained guides who will adequately explain the laid down rules for the tourists (Urry, 2003). If the tourists camp somewhere for the weekend, they will need to clean up and carry the refuse to the wanted places. It will be bad if the contaminate the environment through poor waste disposal. .Portable toilets would be used to avoid people going into the bush to relieve themselves. This waste is later carried down into rivers and dams and therefore causing harm to other responsible citizens. The company will participate in environmental conservation activities like tree planting and organizing education clinics on the importance of responsible living. The community should be affected negatively by the activities of tourists (Singh, 2008). The company will also outlaw spot hunting. In order to conserve animals in their natural setting, it is important not to allow tourism to kill animals just for fun. The tourists’ tours will not in any way try to destroy or alter the natural habitat of animals. The company guides will emphasize the importance of responsible waste disposal to the tourists. The company will lay down rules that will be followed by every tourist who will use the services provided. It is important for the company to ensure that guest do not go against regulation that have been set by the government. The company has to comply with government agencies in regard to protection and conservation of the environment (Nagle, 1999). The company will bear full responsibility if any of the guests engages in unlawful acts that will jeopardize the environmental conservation efforts. It will be the desire of the company of ensuring that every person behaves responsibly. Critical factors In the wake of increased need for security, the tourism sector is threatened by terrorism acts that are meant to instill fear and submission. Following the September 9/11 attacks in the U.S., many countries have wakened up to the realization that terrorism has to be combated jointly. Issues concerning security are very important since they affect the growth of the tourism sector. Diseases breakouts also play a significant role in changing tourism trends (Lennon & Foley, 2000). Swine flu, Ebola, and other airborne diseases have threatened to keep off tourists from the affected areas. Nevertheless these problems are not expected to be challenge in this country. There many measures put in place by the government to ensure stability. Financial projections Balance sheet projections $ $ $ Long term assets Capital 640,000 premises 820,500 Net profit 120,000 Motor vehicles 450,000 Long term debt Furniture &fitting 80,000 10% loan 520,000 Short term assets Short term liabilities debtors 57,000 Bank over draft 75,000 prepayments 34,500 creditors 64,000 accruals 23,000 162,000 Totals 1,442,000 1,442,000 Income statement projections Revenue 1,034,000 Less Returns 135,000 899,000 Less finance cost 45,000 854,000 Less costs Salaries and wages 345,000 electricity 30,000 Food and refreshment 102,000 fuel 73,000 Insurance 93,000 Rent & rates 54,000 Operating costs 37,000 Net profit 120,000 Cash Flow Projections $ $ Bal of cash b/f 123,000 Operating activities purchases (115,000) Receipts from customers 400785 Tax paid (170,000) 115,785 Investing activities Proceeds from sale of vehicle 45,500 Vehicle repairs (20,000) 25,500 Financing activities Proceeds from capital contribution 57,500 Proceeds from loan 115,000 Payment of loan (85,450) 87,050 Cash at the end of the period 351,335 Break-even analysis Break-even is a point where the costs used to start up a company equals to the revenue made by the company in that there is no profits not loss. Terrific Tourism Company will have to operate on a deficit for the starting years due to the huge expenses of starting the business. A lot of overheads costs are incurred before the company starts making any profits. After the market share has increased and the company has stabilized in the market, it is possible for profits to be realized (Bangs, 2000). In the first two years the costs will be more than revenue before profits are realized in the following years. Capital requirements and strategy The company has to have both debt capital and equity capital. The combination of the two is very important for the survival of the company. The company will present its business concept to potential investors who include financial institutions like banks or wealthy individuals with the aim of asking for financial support (Blais, 2011). The borrowed capital should not be more than twenty percent of the total capital. The company needs a substantial amount of money to start operations. It will be a long time before the company offers its shares to the public. The company Recommendations and Findings Running a tourism company is not an easy task since there are so many things which are involved. Consequently it is crucial for one to come up with excellent way of gathering information concerning the current trends in the market. Staying ahead of competitors is always an added advantage. Knowing want is going on gives the opportunity to the management to come up with counter strategies of fighting off competitors. Price strategy can be used to enter the market but it normally not sustainable because the business has to make profits. Lower income earners have the advantage of numbers and having a large customer base can lead to increased sales. The company cannot directly compete with leaders in the market just upon entering the tourism industry. Targeting a niche gives the company a chance to showcase its ability to the willing customers. As the customer base expands, the business has the chance of getting into pre-existing market and act as a market follower before increasing its energy of competing head-on. Human resource management is very important to any organization. Getting high skilled employees will mean that the company has to offer attractive remuneration in order to attract highly qualified individuals. The company has to be strategic and avoid spending colossal sums of money trying to outdo competitors. The best thing to do, it to introduce uniqueness and Conclusion Terrific Experience Tourism Company is a noble business idea that would require support from all stakeholders in order to ensure its reality. There are many things that have to be learnt about the market prior to the initiation of the company. Information about market trends and competitors is very important to the management. The company will have to seek the services of highly qualified individual for offering the best services to guest. It is expected that an experience with the company by any customer will be described as Terrific! However, all the steps have to be followed to ensure success of the business idea References Hara, T. (2008). Quantitative Tourism Industry Analysis: Introduction to Input-Output, Social Accounting Matrix Modeling and Tourism Satellite Accounts. New York: Routledge. Riley, L. & William R. (2005). Nature’s Strongholds: The World’s Great Wildlife Reserves. Princeton: Princeton University Press. Bangs, D. (2000). The Australian Business Planning Guide. Warriewood: Woodslane Pty Ltd. Hoagland, H. & Williamson, L. (2000). Feasibility Studies. Kentucky: University of Kentucky. Thompson, A. (2003). Understanding the proof of Business Concept. Perth: Best Entrepreneur. Wickham, P. (2004). Strategic Entrepreneurship. Essex: Pearson Education. Glaesser, D. (2006). Crisis Management in the Tourism Industry. Melbourne: Butterworth-Heinemann. Beaver, Allan (2002). 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