Evaluation Of Business Plan Assignment Sample
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Executive summary
This business plan is about the Pasta tree which is one of the major pasta retail producers in City of Springfield. This business is performing well since last three years and mainly selling pasta products. The prime reason for the success of this business is its effective marketing strategies to attract customers. Sales growth is recorded more than 15% per year and expected that this business will continue to grow at the same rate. Under this business plan, Pasta tree has decided to expand its business through a supermarket. The company has decided to increase its sales more than $300,000 which needs proper planning. Company management has decided to make an initial investment of $80,000.
Under business expansion plan whole city will be covered through supermarket chain. This city has fifteen supermarkets and more than 35 smaller grocery stores that serve the suburban communities. For business expansion, pasta tree management has decided to take the loan for increasing its food production. Sales projection for next three years based on the past sales and as per the changing market condition in Springfield. This business plan considering that sales revenue will increase by $420,000 in coming next three years.
The Pasta tree has its manufacturing unit in 3,000 square feet area which facilitates to inventory and production unit. For expanding a business, there is a need of additional 2200 square feet area which cost $10,000 and additional equipment cost will be $30,000 to manage the entire city demand for pasta three products. Packaging equipment will also add cost in the business operation of approx $10,000.
This business plan is dedicated to expanding business operation to cover large market through supermarket and grocery store. Front space will be chosen in store to attract more customers. The company will also the market is product through its social responsibility program by donating its share to Canal Run which raises funds for children’s cancer research.
Objectives
Business expansion objective of this business is to
- Expand market and production with good food quality.
- Strong distribution channel in supermarket and grocery store.
- Managing cost of operation while expanding the business operation.
Mission
The Pasta Tree’s mission is as follows:
- Quality: high product quality and fresh pasta available for customers in our all stores.
- Value: Customer delight is the prime objective of this business with the different flavor.
Company Summary
This company has the good reputation in the market since its starting because it has maintained its food quality to attain sustainable development in the business. It offers more delicious, fresh and nutritious pasta products. This business is mainly run by the partnership of two business entrepreneur namely Jill Forman and John Wingate. These are the two strategic pillars of Pasta tree business.
Company History
Initially, this business was started from the Kitchen of Jill Forman. She was prepared fresh pasta that was used as part-time catering business which was operated by John Wingate and herself. This business started growing when special order placed for pasta products from the market. By analyzing their cooking quality, they have decided to pool the gap between demand and quality and open pasta tree. Pasta tree shop has been opened and starting selling publically. John successfully started this business as the store in city natural food to increase the demand for pasta tree products. Pasta tree product becomes popular and becomes a natural food for people in Springfield.
Pasta tree business plan is to grow this business to large level and currently, they are focusing on the expansion of this business into the entire city. Primary location of pasta tree is 1234 Main St. with the area of 3000 square feet of which 2/3 is dedicated for, producing food. In order to expand a business, a company has to add more area for production and need fund to manage all its expanded services.
Market Analysis Summary
Market analysis is essential to understand the trend in a market. Since the product is existed and has good demand than the current trend is also sufficient to assess the demand and ability of consumers to use pasta tree products (Schroder & McEachern, 2005). the Market analysis comprises analysis of consumers’ behavior, spending nature and growth rate which enables marketers to design its marketing strategies in order to lead more demand for products in a market. A market is a place where buyers and sellers come together to exchange their needs, demands, and desire. For pasta tree products, a market is Springfield and locations are supermarket and grocery store to fulfill consumers demand in the suburban area (Guthrie, Lin & Frazao, 2002). Market trend provide an idea for management about consumer preferences to make changes in taste and quality of a product. Market growth in terms of population is 5% per year and the current population of this market is over 3,00,000. It is estimated that population in coming three years will reach to 350000 and will give more opportunity to serve Pasta tree.
In business expansion marketing objective, Pasta tree management targeting supermarket and grocery store that is located in the highly populated area so that it can cover major market segment in Springfield. Young people are the dynamic consumer segment for pasta tree products and they raise demand in the specific season like spring. More than 60% of the supermarket and stores serve the people those are living in suburban and mostly are professional. A major segment of the market is the upscale shoppers that have easy reach to consumers are used as the point of sale. Pasta tree will choose front space in these stores to demonstrate its product to consumers in a single watch to attract a majority of consumers in the new market (French, Harnack, Jeffery, 2000).
Market Segmentation
Market segmentation is a division of the market on the basis of different factors so that effective marketing strategies can only be implemented on a target group of customers. The target market for pasta tree products is to the major market segments from where consumers will be served in expanded market.
- Supermarkets: there is a-a good opportunity in this market for pasta tree products because large numbers of consumers visit these stores for fulfilling their daily needs. These stores are big and have more capacity to hold customers for the longer time period which is essential to look products range available in the shop (Jeferry, Baxter, McGuire & Linde, 2006). As pasta tree already decided to show its product on front space in a supermarket so that consumers have direct look on it, this will give the positive result in sales of pasta tree products (French, et. al 2001). The supermarket has a potential to each market share of small stores and number of visits are increasing in these stores rather than the small store which serves as an opportunity for pasta tree to come in front of the large population every day in Springfield. Dry pasta demand will increase in these stores because the price of a product is $3.00 for a serving two is higher than dry pasta products and allow most of the marketers to serve the consumer in an affordable manner.
- Smaller Grocery Stores: These stores have different consumer target because they are located in small communities and have limited access among consumers. Some special stores like wine shops and fish market where the demand for a product will also increase sales and demand because ready to eat pasta will be demanded in these areas (Dry pasta as snacks).
Market Analysis
| Market Analysis | ||||||
| 2017 | 2018 | 2019 | 2020 | |||
| Potential Customers | Growth | CAGR | ||||
| Supermarkets | 5% | 15 | 17 | 19 | 20 | 7.09% |
| Smaller Stores | 5% | 37 | 39 | 41 | 43 | 6.28% |
| Total | 5.53% | 52 | 56 | 60 | 63 | 6.53% |
Estimated market growth in this area is expected to grow by 6-7 % in coming three years. This will give more opportunity to cover large consumer segment and will give new hike for business.
Target Market Segment Strategy
Marketing strategies to increase demand for products in the market is essential to get the competitive business advantage. Since pasta tree has its the own brand image in a market still there is a need to deploy effective marketing strategies to lead consumer perception in a positive manner. A business plan is to expand the market and customers are new hence target group of people is urban professionals those has less time to prepare dinner due to short time and like the freshness of Pasta tree products (Park, 2004). As clear that pasta tree products are ready to eat in comparison to dry pasta (one to three minutes) and this will raise competition in snacks market because pasta tree will cater the need of consumers those are in hurry and wants some fresh food to eat. Pasta tree has to offer good quality to maintain good relationships with consumers in the new market and also offer lesser price with attractive offers so that market share can be grown in short time period. Consistent quality is essential to continue growth with the higher rate and this must keep in mind all batch of a product has same taste and quality in order to delight new customers.
Operation management
Operation management is the essential to the function of business to link varieties of activities for collecting material and sending after processing to the end user. Pasta tree has identified the group of suppliers for material and they have good relationships with Pasta tree management. Suppliers’ power is low in this market because a material is easily available for making pasta tree product in the open market (Schroder & McEachern, 2005). Supply chain management and production of pasta tree products are two major operations in this business. Pasta tree products will be prepared at existing location and will be supplied to new 15 supermarkets and stores through vehicles. There is two main products form will be prepared in pasta tree, one is fresh pasta and another is dry pasta which has more life in comparison to fresh one. Competition is very low in this market because only countable numbers of companies are serving customers in Springfield. Pasta tree operating its business from local market and packaging is done by itself to offer fresh pasta to maintain better quality for a longer time period (Duffey, Gordon-Larsen, Jacobs, Williams & Popkin, 2007).
Marketing strategies
Marketing strategies are not only helpful for making products popular in a market but enable marketers to build the good relationship with customers.
Products
Pasta tree products are itself creating its brand image in market because of its delighted taste and quality. Large numbers of product line has been introduced by pasta tree to attract customers. These are as given below
- Fettuccine;
- Linguini;
- Spaghettini;
- Spinach linguini;
- Tomato fettuccine;
- Tricolor fusilli;
- New mexico chile linguini;
- Black linguini;
- Basil spaghettini;
- Cayenne tagliolini;
- Black and white spaghettini.
In order to improve the pasta supply chain and minimizing cost of transportation, packaging will support this business. Pasta tree products cannot fold but packaging is done in airtight colorful plastic boxes. This kind of presentation looks attractive for consumers and they consider company is more delighting its customers by offering fresh pasta in good packaging. Company packaging is playing major role in marketing of pasta tree products because it has attractive color and designing which makes customer happy to buy this products.
Financial projection
Cash inflow and outflow are the two main concern of financial investment while making planning for any project. This project is already giving profit for company and expansion of new market is also projected expected return.
Capital investment
| Particular | Amount |
| Building | $30,000 |
| Machinery | $10,000 |
| Operation management | $10,000 |
| Total | $50,000 |
Monthly Working capital
| Particular | Amount |
| Food material and packaging | $5,000 |
| Salary and wage | $3,000 |
| Transportation | $1,000 |
| Total | $9,000 |
Total investment in first month of production will be $70,000 and capital investment will be cover in next three years. Monthly capital recover will be 1390. Hence company costing for every month will consider $10090 to achieve breakeven in coming three years.
Expected Cash inflow
Sales Amount
Supermarkets $9,000
Grocery stores $4,000
Total $13,000
Marginal profit for starting month will be
Operating profit =Cash inflow – cash outflow
Operating profit=13000-10090
Operating profit=$2910
Conclusion and recommendation
Conclusion
It is concluded that company will get profit by expanding its business because of the good demand for pasta tree products in Springfield market. The supermarket is one of the best opportunities to sell pasta tree products in a market. it is observed that less attention focuses on promotion and advertisement because the company has its own brand image due to best quality and packaging.
Recommendation
It is recommended that
- Pasta tree focuses over advance promotional tool like social media, internet marketing.
- Company management should sponsor in various gaming program in Springfield to attract a large number of customers.
- Managing quality is only factor to maintain good relationships with customers and Pasta tree will always ready to fulfill changing demand of customers.
References
- Duffey, K.J., Gordon-Larsen, P, Jacobs, D.R., Williams, O.D. & Popkin, B.M. (2007) Differential Associations of FastFood and Restaurant Food Consumption with 3-Y Change in Body Mass Index : The Coronary Artery Risk Development in Young Adults Study, American Journal of Clinical Nutrition, 85(1), 201-208.
- French, S.A., Harnack, L., Jeffery, R.W. (2000) FastFood Restaurant Use among Women in the Pound of Prevention of the Study : Dietary, Behavioural and Demographic Correlates, InternationalJournal of Obesity, 24(10), 1353-1359.
- French, S.A., Story, M., Neumark-Sztainer, D., Fulkerson, J.A., & Hannan, P. (2001) FastFood Restaurant Use among Adolescents : Associations with Nutrient Intake, Food Choices and Behavioural and Psychological Variables, International Journal of Obesity, 25, 1823-1833.
- Guthrie, J.F., Lin, B.H., & Frazao, E. (2002) Role of Food Prepared away from Home in the American Diet, 1997-78 versus 1994-96 : Changes and Consequences, Journal of Nutrition Education and Behaviour, 34(3), 140-150.
- Jeferry, R.W., Baxter, J., McGuire, M. & Linde, J. (2006) Are FastFood Restaurants an Environmental Risk Factor for Obesity?, International Journal of Behavioural Nutrition and Physical Activity, 3(2).
- Krishnaswami, O.R. & Ranganatham, M. (2007) Methodology of Research in Social Sciences, Himalaya Publishing House, Hyderabad, pp. 338-339.
- Park, C. (2004) Efficient or Enjoyable? Consumers Values of Eating Out and FastFood Restaurant Consumption in Korea, InternationalJournal of Hospitality Management, 23, 87-94.
- Schroder, M.J. & McEachern, M.G. (2005) FastFood and Ethical Consumer Value : A Focus on McDonalds and KFC, British Food Journal, 107(4), 212-224.
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