The primary objective of business planning in this particular task is to evaluate the development of a planned small business venture, specifically, a café in Bedford City. The report constitutes evaluation of the business environment and all the elements that would affect business outcomes. Moreover, the evaluation will also include a discussion of theories in business management, business models, and the results of analysis tools that will be used to assess the viability of the planned business in the current landscape of commerce. The Ansoff matrix was used to determine the viability of the planned business venture and the company’s possible growth based on potential opportunities for product diversification and the targeting of new markets. The business model adopts the dynamic model influenced by entrepreneurial strategies, which will make it easy for the business to adjust depending on the needs of the market. For the planned business venture, the company will aim to offer a unique experience for consumers by taking advantage of diversity in the city and the UK. The café will be influenced by culture and social lifestyles inherent in targeted locations. For the business to work, planning will focus on market research and product development strategies in order to come up with products and services that will set the business apart from dominant established corporations like Starbucks and Costa Coffee.
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The planned small business venture is a café in Bedford City. The objectives in writing the report and conducting evaluation is to determine the viability of the business venture considering the various factors or elements that could influence business outcomes. Initially, the business will be evaluated using theories and concepts in business management and entrepreneurship. To support the outcomes of evaluating the planned small business venture through theoretical models, the current landscape of the marketplace and the proposed business plan will be put together to prove whether it is possible and advisable to put up the business as planned and determine probable outcomes. The process of reviewing academic resources and evaluating the marketplace and all the other factors that will possibly affect the business venture should lead to the development of a comprehensive and effectual business plan.
Small Business Background: Theories and Models
The planned small business venture was put together based on the evaluated positive outcomes of innovation. According to Schumpeter (1996), innovation harnesses economic development because breakthroughs in the business industry lead to the discovery not only of new products, but also of new markets and methods of marketing or producing. Innovation, at this point, is being viewed as an agent of change within the static and dynamic theories discussed by Schumpeter that show how business patterns affect the economy. According to Schumpeter (1996, p. 296), “The impact of innovation on the static model is that it changes the data of an economy from within, alters the existing channels of the economy, and causes peculiar disturbances known as ‘business cycles.’” Therefore, the point is that innovation changes the static equilibrium of businesses because it introduces new methods and approaches in all aspects of business management, such as marketing, production, and financial growth, among others. Although the outcomes of innovation may be positive and negative to economic growth, it is generally beneficial and contributive to small businesses.
Moreover, Sheshinki, Strom, and Baumol (2007), successful small business grow because of innovation. Revolutionary breakthroughs are responsible for the entry, growth, and sustainability of small businesses because they are able to set their business apart from other established companies and allow them to compete in the cutthroat industry of commerce. Tellis et al. (2003) also discussed the contributions of innovation and the introduction of new products to business outcomes. In Europe, the success of small businesses relies on their ability to innovate and introduce new products that meet high demand of consumers. Companies achieve this goal by developing R&D teams and constantly evaluating the needs and demands of the market. Moreover, Tellis et al. (2003) assert that the European market is more attentive to new products or services and that the rapid development of technology and constant innovation has changed the interest of the market. Nowadays, consumers are looking forward to the next best thing – products or services that are improved and better than the existing ones. Consumers also demand products that would either allow them to do their basic tasks, work, and other activities with the least amount of work or effort and the best possible outcomes, elevate their socio-economic status or lifestyle, and improve their way of life in general. Consumers keep up with the pace of modernization. Therefore, businesses, especially small ones, should adopt innovation and R&D strategies (Tellis et al., 2003).
In the planned small business, innovation was taken into account, guided by another theory proven by Tellis et al. (2003) as characteristic of the European market. Aside from innovation, Tellis et al. (2003) also identified culture as a factor that influences the entry of new products in the European market. Thus, in the planned small business, culture was considered as a main factor in the selection of products and services that will be sold in the café. The café is influenced by Middle Eastern culture. The coffee that will be served in the café are from Arabic blends and the café will have a separate section where customers can use Arabic shisha. The nature of the business, was of course evaluated, by considering the local market at Bedford City based on culture. Moreover, the viability of the business was evaluated using the Ansoff matrix. The capacity of small businesses to deliver innovation enables them to achieve competitive advantage. However, small businesses must also look into options for growth in their chosen industry. Ansoff (1986) presents measures, which businesses should be able to achieve in order to ensure the growth of the business.
The Ansoff matrix , created by Igor Ansoff, provides “a blunt structure for thinking about the dimensions of market and brand position, and for plotting an appropriate strategy” (Pringle & Field, 2008, p. 35). The matrix evaluates the new and existing potential markets and the new and existing products and services. The Ansoff matrix below contains the planned strategies for the small business venture.
-The café aims to become a competitor, a new choice or option for existing consumers who are looking for new or unique experiences compared to existing shops like Starbucks, Costa Coffee, etc.
-The café offers a more authentic experience for the existing consumers of coffee and pastries with servings of exotic Arabic blends
-The café will have a special section where customers can consume Arabic shisha
-Expansion to other locations inside or outside the city
Since the business is small and new, the entrepreneurial strategy by Mintzberg (1978) is deemed appropriate as a strategy in developing the business. The entrepreneurial strategy may be defined as a strategy by which “the entrepreneur formulates the strategic vision. It has express intentions and a vision of the future, it is prone to being halted or altered according to the entrepreneur’s whim… and is tightly controlled by the entrepreneur” (Carter, Clegg, Kornberger, & Schweitzer, 2011, p. 127). The planned business will follow the entrepreneurial strategy. Since the café industry is saturated with coffee shop chains and small businesses, the planned café at Bedford City should be flexible to changes and new diversification strategies. For instance, the first store may be established as a coffee shop with Middle Eastern influences to offer a place with a unique and exotic ambiance for customers looking for new consumption experiences. Expansion could be controlled by the entrepreneur through the establishment of stores and by developing another café influenced by another culture or concept that differentiates its services and products from other stores.
The business, as a means of diversifying and expanding its target market by setting up multiple themes in other stores that will be opened after the launch of the café in Bedford City. In this way, the business model that will guide the establishment of the small business venture incorporates lifestyle and social interests, and the planned expansions means the venture aims to become a franchise. However, unlike common franchises of cafés, the planned business venture will cater to various lifestyles. Starbucks, for instance, has established a common theme or lifestyle attributed to the story. Moreover, Starbucks has established its involvement in charities and other causes that support coffee farmers. The company has an identifiable logo worldwide and offers unique products that consumers can only purchase from their stores. The small business venture, on the other hand, will also aim for franchising and nationwide or worldwide expansion in the next ten years, but the company will be known to offer diverse services and products that are culture-centric that mirrors the composition of the market in the U.K. As a melting pot of various cultures, the café will offer products and services that are distinct to a specific population. Initially and as previously discussed, the café will be influenced by Middle Eastern culture. The stores that will be opened subsequently will adopt other cultures, such as a café influenced by Oriental culture with products that include different types of Chinese and Japanese tea and the inclusion of fortune cookies on the menu.
Targeting both culture and lifestyle are emerging strategies in business. The business model is considered as “a representation of a firm’s underlying core logic and strategic choices for creating and capturing value within a value network” (Kazmi, 2008, p. 242). In the planned business venture, the company’s core will be based on culture, lifestyle, and other social factors that influence the interest of consumers. Nowadays, consumers are more aware about the value of their involvement and support of businesses. Thus, for consumers, it is important that corporations represent good morals and fair and respectable regulations that contribute to social development. Organizations need to develop and implement Corporate Social Responsibility (CSR) in the workplace by incorporating socially sensitive and responsible practices to the overall mission, goals, and operations. The consumers make up a large percentage of a company’s stakeholders. Therefore, if consumers demand that organizations display a certain level of social involvement, like with the development of regular projects and other events that aim to support social causes, companies are more likely to submit to those demands. The same principle applies to the planned business venture (Crane, . Since the business is a café, it will benefit the company if it will aim to support common causes that other businesses in the industry support, like fair trade and the implementation of solid labor regulations.
Established coffee shops have supported fair trade and employment regulations, which are valuable to their success. The café plans to adopt the same practices in order to gain the trust of the consumers and establish a good and trustworthy brand. Fundamentally, the basic framework of the organization follows the usual or traditional business models adopted in other cafes. However, when it comes to the business’ brand image and product offerings, the store can set itself apart. Therefore, in the planned business venture, innovation, research, marketing and resource management should be the primary concerns of management. Supply chain and financial management, and other technical areas in the operation of the café follow traditional models and processes, but the café must be able to focus on diversification and product development – follow the dynamic business model and keep innovating in order to catch up with social trends and the fast paced way of life.
The previous section in the report focused on the theoretical bases of the planned business venture, specifically the concepts that influences the basic business model of the café. The section on business planning, on the other hand, will focus on the specific details involving the development and maintenance of the business. As previously discussed, the planned business venture is a café in Bedford City. The café will offer the usual kinds of coffee, snacks, and cold drinks, but the store is also influenced by Middle Eastern culture. Arabic coffee will be part of the menu and the store will have a separate section where consumers can use the Arabic shisha. The café will be named Café Di Veris, the term rooted from the word “diverse,” because the business is expected to expand shortly with the opening of other cafés in other locations inside or outside the city. The themes and influences for each store will be different, aiming to target a diverse market to take advantage of the cultural melting pot that is the U.K. The U.K. population constitutes a diverse population hailing from different continents like Asia, North and South America, and Africa. By focusing on major influences, Café De Veris is expected to draw in individuals from different cultures and lifestyles. Moreover, established franchises offer common products and services. Café De Veris aims to offer unique experiences by allowing consumers to experience different cultures. The location of the stores will depend on the dominant population in a given area. For instance, an Oriental inspired café will be put up near a locale where most Asians live, etc. Aside from the diverse themes and influences, the café will offer other forms of entertainment. Televisions will be put up in the store as well as Wi-Fi connectivity. Moreover, a charging station will be put up in the café so consumers can charge their electronic gadgets, from mobile phones to tablets or laptops, for a small fee. Offering services that make the consumers’ lives more convenient will increase the value of the store’s products and services.
In terms of equipment, the store will have coffee brewers and grinders, an espresso machine, ice machine for cold drinks, blending equipment, and a refrigerator. In the store, there will be glass case where pastries will be stored. The store should have basic facilities like barstools, separate booths, chairs and tables, and basic necessities and fixtures for two separate comfort rooms for men and women. Additional fixtures or décor will depend on the planned theme and design of the stores. For the first store in Bedford City, for instance, a Middle Eastern influence will require the use of bold red, yellow, and gold coloured drapes and designs. In the separation section where consumers can use shisha, it will be concealed by coloured drapes and the booths or spaces will be designed such that consumers sit on Persian rugs around low tables. As previously discussed, the designs for each store will vary to capture the kind of culture that they will aim to portray.
In terms of employment, the store will require a pastry chef, two baristas, two cashiers, one assistant for the separate private section and two waiters for the common area. The store aims to enable its employees to establish a career with their involvement with the company. Therefore, the store will offer leadership programs where employees can work their way up to obtain managerial positions and other relevant work experiences. The initial number of people in the small business will include a general manager, a marketing manager, human resources manager, and the eight individuals in the staff.
On the first day of the business, the employees in the store should be prepared in fulfilling their basic duties, and most importantly, their responsibility in generating a solid market base. The role of the manager and the employees during the first day is primarily to offer good and satisfying services that would encourage consumers to come back. However, more importantly, the most important part of work on the first day of the business is marketing. The manager and the employees must be trained to introduce to consumers the image of the business, what it stands for, and what it is willing to offer to consumers. A good marketing strategy would be to offer discounts during the first day so consumers can experience all the products and services that Café De Veris offers. Another marketing strategy would be to hold an open house before the actual opening day where customers can come in and taste samples of the store’s coffee concoctions and pastries. Based on the equipment needed, training, employment fees, taxes, rent, and other monthly fees projected, the startup cost would be £200,000 to £300,000, and the cost will be gained after five years. The business can be opened after eight months to one year of planning and development.
Since the business will apply an entrepreneurial strategy, such that the theme for each store varies depending on the dominant culture and lifestyle in a given area inside or outside the city, R&D and marketing research are vital to the growth of the organization. The marketing manager should be in charge in determining first, the common or usual practices of cafes in a given area, and second, determining the unique services that the café can provide for the locals that would differentiate the store from others. Hence, it is important that the marketing manager work on determining the dominant culture in a given area, including their lifestyles and interests, and incorporate cultural and social themes in the design, product development, and services offered by the café.
Based on the planned business venture, the development of cafes where the industry is saturated with established companies, research and development and innovation are more important. In other businesses, the technical details of conducting the businesses are carefully planned, such as supply chain management and logistics. However, since the planned business venture is in competition with large corporations, business planning should focus on market research and product innovation. The exercise highlight the need for prioritizing aspects of business planning depending on the particular needs of the business.
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