Business Plan Evaluation Assignments

Business Plan Evaluation Assignments

Business Plan Evaluation Assignments

Introduction

This report includes the evaluation of the business plan proposed by The Pasta Tree which is the manufacturer and retailer of paste in Springfield city located in western New England. The business plan of the company relates to expand its production facility and increase its distribution to other major supermarkets in the city. The scope of the business plan is limited to expansion of its existing production facilities and operations and acquire larger market share in the city itself. The objectives of the business plan includes maintain good control on costs and operations during the expansion plan implementation. This is a good opportunity for Pasta Tree since the demand of pasta products is very high in Springfield and to meet the demand the company will have to double its production. Also with fifteen major supermarkets which operate in Springfield and more than thirty five small grocery and retail stores which serve metro and other expanding suburban communities, the company will be able to increase to sales manifold under the business expansion plan which will be up to $420,000 by the end of year 3. Through this business expansion business strategy Planning the company will be able to establish itself in the food industry sector and increase the brand value of Pasta Tree in Springfield.

Market Analysis

Industry Analysis

The food and grocery sector in Springfield is a wide market with 15 large supermarket chains and more than 35 grocery stores all with high demand of pasta products. These stores serve not only the customers within the metro city but also the expanded suburban area outside the boundary of the city. The consumers of pasta products mainly comprise of the urban professionals and these stores serve 60% of the urban population in the city. Also the growth rate of supermarkets in the city is 5% with CAGR of 6.09% and that of grocery stores is 5% and CAGR of 5.28% as per the market analysis report. In this way the food industry of Springfield is a growing sector with ample of opportunities for Pasta Tree. The rates of paste products both dry and prepared is such that which is affordable by most of the shoppers and thus, the demand of pasta is likely to rise in the future also. The other aspects of these segments is that they include other speciality stores like wine shops and fish markets which helps in attracting the  customers to the store consequently increasing the demand of pasta also as the customers visiting the stores are most likely to purchase the pasta while they visit these stores. Apart from this the large urban population visiting the supermarkets regularly is also an advantage for the company to attract more customers for the products. These aspects of the market segments of selected industry by Pasta Tree for its business expansion plan will help the company in effective positioning of its products and increasing its customer base significantly (Cho & Lee, 20110.

Competitor Analysis

The competition for the Pasta Tree products will be the other food products and grocery items in the store which could be purchased by the customers over the pasta products. The food items will be in direct competition with the readymade pasta whereas the grocery items will be in direct competition with the dry pasta. In the supermarkets, the pasta tree products will be displayed through deli case which will give rise to the other products lines which will be displayed with attractive packaging. Due to the transportation issues the packaging of pasta products by The Pasta Tree Company is being made in containers. An air-tight colourful plastic package container is used for the packagingby Pasta Tree. However the customers at the supermarkets and stores will not be willing to buy products with fettuccine folding, therefore the plastic container packaging will provide a competitive advantage to the company. Other competitors of the company will include the pasta products supplied by other pasta manufacturers in the city which supply the pasta products to other supermarkets to whom the distribution is not made by the company (Brian et al, 2012). This competition exists since the products are not supplied by Pasta Tree to these supermarkets but under the proposed business expansion strategy of the company which relates to supplies to be made to other supermarkets also, the company will be able to face and overcome the competition.

Target Market

The population growth rate of Springfield has been 5% since the past five years with the present population of 250,000. For the next three years the population for the city is likely to grow and therefore the target market of the business expansion plan of Pasta Tree which comprises of the extended suburban areas as well as the other supermarkets and grocery stores throughout the city is justified to support the expansion of its production facilities. The growing population of the city and the increasing demand at the supermarkets and retail grocery stores will create high demands for company products and thus with the extended production facilities the company will be able to double its production output to meet the demands of the target market. The upscale shopper which has been selected as the target customer by Pasta Tree is also having a high customer base to accelerate the sales and demand of pasta products of Pasta Tree. The target market is planned to be segregated into two segments by the company which are as follows:

Supermarkets– The supermarkets of the city are 15 in number and each of them have a high customer base due to high urban population who are the regular visitors at these stores. Thus this market segment of the company mainly focuses on the urban population which includes professionals as well as students purchasing from these stores. The average price of pasta products at these stores is $3 which is affordable price for the majority of population and thus this market segment will involve creating highest demands. 

Small grocery and retail stores –These stores are 35 in number in the city and offer a wide range of products to attract the customers. These are the retail outlets which are within the easy access and reach of the customers and thus it is preferred by many customers. Contrary to the supermarkets these stores are located throughout the city covering the suburban and rural areas also. Thus this market d=segment focuses on other customers than the urban population for increasing the customer base of the Pasta Tree. Through this market segment the company will be able to expand its supply of the manufactured output and create demand in other communities also.

Marketing

The Pasta Tree offers a range of pasta products include prepared pasta products as well as dry pasta products. These products include many products such as fettuccine, linguini, Spaghettini, Spinach linguini, tomato fettuccie, tricolor fusilli, New Mexico chile linguini, black linguini, basil spaghettini, cayenne tagliolini, and black and white sphagettini. This range of pasta products is very wide and diversified enough to meet the demands and requirements of the different categories of customers of the company which are differentiated on the basis of their taste, quality, choices and preferences. The customers of the company comprise of both urban and rural population and therefore the choices and taste are different as a result of cultural diversities. The different variety of products offered by the company are such that all types of tastes are covered in the recipes such as spicy, salty, etc. This enables the company to achieve the customer satisfaction levels targeted. The packaging of the products is proposed in plastic air tight containers which will provide ease of transportation and will also prevent the pasta from getting rotten. The brand and packaging is clearly defined under the business plan of the company with logical reasons. The idea of product offering is original since variety of tastes and choices is the core element for the food products to attract customers. The promotion methods are not discussed in the business plan however the delivery methods and pricing of products is mentioned (Drouvere & Ehler, 2011). The delivery will be made by the company through transportation of packaged containers to the stores and supermarkets and the priceis planned to be $3 for serving two people. The price is placed by the company at the affordable rates and is sufficient to generate profits for the company.

Strategies and tactics

The pasta tree is the retail producer in the city of Springfield. The market strategy is the orientation of the develop market plan. Our most popular sellers Fettuccine, linguini, and spaghettini are initially pushed by the strategy of the pasta. It aims to introduce lines so that sales increase.

Marketing Strategy

To achieve the maximum profits and sustain the business marketing strategy should be fetch from market research. To get peculiarity in the supermarkets it would give 20% discount on regular price during the first month. It would get attract the customer to buy pasta and also it use store display which helps to attract customers towards coupon. For children’s cancer research it will be a major sponsor of city’s canal runs that raises money for it. This strategy would be helpful to amplifies market. In the Springfield, there are fifteen major markets and thirty five grocery stores which serve the metro and suburban communities. To meet the target of demand of the company needs to produce double production. 1 page mock-up of a print ad or other promotion image is not involved under this strategy. Company should make this relevant information.  Yes them logical for the solution and if company produces double production with good quality and generate coupon facility. Definitely it will get good response which will generate funds (Fahad et al, 2015).

Sales Strategy

The purpose of sales strategy is to get customers to purchase your products and services. It only focuses on making the sales. And yes it is original and it would be meaningful purpose of selling because it followed all strategy which has been given. Company made sale forecast chart monthly and yearly. It will help to make funds accordingly that how much production needed to deliver to grocery and supermarkets. By following this strategy company would be able to sale their products in a meaningful way. It is clearly based upon message map because sales strategy is based according to requirements of the company that is to extend markets and increase sales with good quality.

Financial Plan

The financial plan for the business plan has been prepared by The Pasta Tree for the period of three years. The planned sales of $420,000 have been achieved by the company in the planned income statement at the end of three years since the revenue planned for the third year is $419,000. The net profits for the third year are expected to be very high and the net profit percentage is likely to be 6.56%. The net cash flows are expected to be positive for the first and third year but during the second year the net cash flow is likely to be negative amounting to $9,335. The planned investment for the production facility operation of the company is $50,000 which will be procured by the company through secured loans. This amount will be invested spending $10,000 for preparation of new production space, $30,000 for purchase of equipment and $10,000 to upgrade its existing packaging equipment to support the operations to fulfil the high demand requirements. Thus the planned investment is sufficient for the company to implement its business plan. Apart from this the break even analysis has also been done by the company under its financial plan which will be helpful for the company to identify the level of production which is essential for the company to achieve with the view to avoid and prevent losses. This will also be helpful in identifying the economies of scale which will result in high profits for the business. The estimated monthly revenue for the company is $24,989 which is approximately $300,000 for the year. The planned revenues during the next years are $360,000 on an average and are higher than $3, 00,000 for all the three years. This means that the level of sales for the company during all the three years will be higher than the breakeven point of revenues and thus the company will operate in profitable situation for the three years. Thus, the financial plan of the company is within its planned budget and the expenses planned are logical and real. These expenses will require to be incurred by the company for the expansion of the operations. The financial plan for the implementation of business operations is effective and viable (Kunz & Dow, 2015).

Critical Risks

While implementing a business plan whether it relates to development and launch of new products or expansion of existing operations or diversification, there are many risks attached with the plan. The consideration and evaluation of critical risks is very important to successfully implement the business plan. The pre assessment and evaluation of risks will help in the smooth performance of business operations and dealing with the risk outcomes and overcoming the losses effectively. The risk management strategy has not been prepared by The Pasta Tree for the identification and assessment of risks attached to its business plan so that the solutions and techniques can be identified and incorporated by the company in its operations in order to mitigate and reduce the risks. There are many risks associated with the expansion of production facilities and increasing the supplies such as low production levels to meet the demands, lack of demand in the target market, non-acceptance of pasta products by rural and suburban population etc. In absence of risk management plan, the solutions will not be identified by the company to deal with these risks which may consequently result in high losses for the company (Gupta & Turban, 2012).

Research

For the development of the business plan, extensive research has been conducted by Pasta Tree which is evident from the statistical data provided under the plan for the market trends, customer trends, product information, figures about number of stores and supermarkets in the city, market segmentation information etc. These evidences have been obtained by the company from appropriate sources which comprise of secondary sources such as statistical reports, internet sources, websites, government publications etc.  

Conclusion and recommendations

From the above discussions with regards to the business expansion plan of The Pasta Tree for expansion of its production facilities and increasing its supply chain, it can be concluded that the business plan of the company is effective and appropriate to achieve its strategic marketing and business objectives. However there are some limitations of the business plan as there are many areas which are not covered under the plan. The promotional strategy and promotion methods are not discussed in the plan. Also the risk management strategy has not been prepared. The land has been prepared in accordance with the evidences gathered from the research and in accordance with the business strategic objectives. By implementationpalnand monitoring of this business plan the company will be able to increase its production output as well as supplies.

References

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