Content
1.
Introduction
2.
Business ownership
3.
Location
4.
Target market
5.
Division of labour
6.
Promotion
7.
Type of competition
8.
Competition
9.
Method to attract consumers
10. Budget
11. Conclusion
12. Price List
Introduction
The concept of opening this shop is because of economic
recession. Public purchasing power is reduced. People tend to
purchases less luxury and the demand of relatively cheaper
goods and services will be more. Therefore, establishing a
noodle shop can attract a lot of customers because its relatively
cheaper price noodle is reasonably suitable for some
middle-class. Besides, establishing a noodle shop is simple and
the cost of running this is lower in comparison with running a
big beverage. Though profit maximaization, can gain from this
kind of shop. There are several partners come to join hand in
running this business, the risk of running the shop can be shared.
Business Ownership
During the economic recession, starting up a firm is so risky.
So we will decide to start up the business in the form of
partnership.
A partnership means a relationship between persons carrying
on a business to make profits or shares losses. The members
often draw up an agreement, which outline the nature of the
business and the rights and obligations of each member. In
additiopn, the co-owners of partnership may jointly contribute
capital to and share in the management of the business. The
reasons of choosing this form of ownership are,
(1) Ease of organization
It is very easy and convenient for members to start up the
business in the form of partnership. The organization
process is very simple. The members only need to register
with the Inland Revenue Department and pay a business
registration fee. The business registration certificate will be
given and can start the business.
(2) Low cost of organization
Since the legal for militias and requirements for starting up
a partnership are simple and can handle by the members.
The setup costs of a partnership are not required. Also, the
setup costs involved are mainly for purchasing equipment
and inventory. Depending on the nature and the size of
business, the startup capital can be as low as several
thousand dollars.
(3) Wide source of capital and risk sharing
With more than one owner in a partnership business, there
are moraines to provide equity capital of the business and
thus the financial risk associated with insolvency can be
reduced.
(4) Better management
In a partnership, the management burden can be shared
among the partners and the skills and expertise of each
partner can complement those of the others. Also, division
of work can be achieved which greatly improve the
efficiency of the business.
(5) Close contact with employees
In addition to attractive salaries, commissions and other
non-financial rewards partnership can maintain their morale
and retain good employees. Moreover, partners also know
the needs of our customers for whom we can provide
suitable goods and services.
(6) Strong working/profit incentive
As partnership have unlimited liability, every partner is fully
liable its debts if a partnership goes bankrupt. Therefore,
partners are motivated to work efficiency and avoiding
making losses.
Location
We decided to establish the noodles shop in Aberdeen Main
Road. The reasons are as follow:
(1) Residential buildings
There are many residential buildings in Aberdeen Main
Road, so that we can make a lot of consumers in it,
especially the housewives.
(2) Industrial buildings
There are 2 major industrial buildings which are called Full
Agar Industrial Building and Shing Dao Industrial Building.
As they are near to our noodles shop, we can have many
customers.
(3) Schools
There are 2 secondary schools in Aberdeen, such as Pui Tak
Canossian College and St.Peter Secondary School. During
lunch time, students may go to our shop for lunch.
(4) Others
In Aberdeen, there are many sole proprietors such as music
studio, stationary shops and shopping mall, e.g.ABBA
Shopping Mall and Jumbo Center. So that, we can earn
money through the take-away service.
Target Market
Our mainly customers are housewives, students and industrial
workers. Firstly, there are 2 secondary schools, except the
summer holidays, the students will go out for lunch. As the price
of foods in Aberdeen are relative expensive, we can attract many
customers in lower price. During the tea-time, there are a lot of
housewives since they have to buy food for dinner. They prefer
to enjoy a high tea before shopping in the market. As a result,
we can make profit in it. Also, there are industrial buildings near,
so that we can earn money since we have take away service.
Division of Labour
As our shop is small in size and with its simple structure, we
will not hire too many employees. Also, we decide to separate
the working hours into 2 parts. One is lunch time and the other
is dinner. In the afternoon which is included lunch time and
teatime, we will hire 6 labours. (include 2 employees as a cook,
2 employees in the dining area, 1 person in drinking preparation
area and 1 is responsible to wash dishes.) At night, we will
reduce one person who is working in the drink preparation area.
As customers will not drink any coffee and tea at night in
general, they are mainly drink soft drinks. About the division of
labours for shareholders (i.e. the partnership), we decided to set
a time-table for them to work and their duties are working as a
cashier and supervisor.
The criteria of hiring employees are different as jobs nature is
different. For example, in the drink preparation area, he should
have more experience that at least 5 years. The workers in the
dining area should have 1-2 years experience, talkative and is
better for them to live in Southern since we can reduce to teach
them and it is easier for them to adapt the working environment.
Promotion
We decided to use 3 methods:
(1)
Leaflets
- separate to the Southern district.
(2)
Posters
- stick them to different industries and shops.
(3)
Free-trial
- During the open day, we will make the food to the
consumers and it will be free of charge.
Type of competition
We are facing monopolistic competition. There are large
number of buyers and sellers in the same district. We are not the
only business selling noodles. We just have a small share of the
total market. We have to face a sharp competition from rival
business producing similar products. That is there are close
substitutes in this district. We are the price searcher, we need to
find a suitable price.
The effect on price and earning is uncertain, so we are not
facing price competition only. We also engage in non-price
competition. The non-price competition based on product
quality differentiation, service differentiation, etc. Then we need
to add extra expenditure to cost such as expenditure on
promotion, better services, and good quality. So we can attract
more customers.
Competition
Although there are too many foodshops in Aberdeen, such as,
the fast food shops (include Café De Carol, McDonald’s and
Pizza Hut, etc), the Chinese Restaurants (e.g. Kam Moon Lau
Restaurant, Kam Tao Restaurant) and some noodles shops (Nam
Kee Spring Roll Noodles Co.Ltd and Tse Kee Shan Lun Fishball
Co. Ltd), we still have advantage in it.
Firstly, the fast food shops. Its products are unhealthy and oily.
Students and children may get obesity easily when they ate too
much this kind of food.
Secondly, the Chinese Restaurants. Their price is too high and
turnover is low. So the people have to wait for a long time. As
their lunch time is not long enough, they may not prefer to go to
the restaurant during lunch time, especially the industrial
workers and students.
Thirdly, the other noodles shops in Aberdeen. Although they
have a standard quality, it is expensive.
* We have already put our price list at the end of the project.
To conclude, we can attract many customers and it will make
profit. That is the reasons for us to run a noodle shop in
Aberdeen.
Method to attract customers
As we are facing price and non-price competition, we have
different method to attract more customers.
Firstly, our selling price of the noodles is low. This is our
method to face price competition.Our noodles only cost about
$10 each. It is cheap and many people can afford. This can
attract students to come. They can have a meal at a lower price
and can save money. Our economy are not very good now, many
people want to save money. They will go to a cheaper shop to
consume. So we can attract them.
Secondly, we have a service which we will deliver the
noodles to customer’s home or working place. Some of the
customers may not free to go out to have their meal, we can
deliver to them. Such as the workers in shopping centers who
need to keep an eye on the shop, they are not allowed to go out.
It is very convenient for these customers.
Lastly, we have a longer business hour than the other shops in
this district. We have our business from 11a.m to 12a.m. This is
good for the people who come back late. Many people have to
work until night time, they may feel hungry when they back
home.
Also some people want to eat something in the night time. As
we can see, there are not many noodles shop open until
mid-night in this district. We can attract these customers also.
Budget
Cost Budget:
Advertisement (handbill 2000 pcs)
$140
Refrigerator(1 large and 1 small)
$12000
Furnace(boiling and gas)
$10300
Sink & drainage
$20000
Fine fighting appliance
$10000
Tables(5) and Chairs(25)
$900
Cash register
$5000
Shelves
$500
Drink preparation area expenses(include all the
$10000
necessary items,e.g.the cold & hot water machine)
Brand
$1000
Decoration
$30000
Electricity(e.g. air-conditioner)
$10000
Business registration fee
$350
Utensils(e.g.bowl,chopsticks)
$1000
TOTAL
$111190
Monthly Expenses:
Rent
$25000
Wages & salary
$56000
Electricity & drainage expenses
$30000
Fuel
$4000
Stock (e.g.drinks,food,etc)
$25000
Sundry expenses(e.g. maintenance, detergent)
$5000
TOTAL
$145000
Sales Budget:
Opearting hours: 11:00a.m-12:00a.m (13 working hours)
Busy hours
Suppose the stock turnover is 4 times per hour that means
each customer stay about 15 mins to have their meals during the
prime time. (We assume there are 15 people come to our shop in
15 minutes) So:
Lunch(12:00-2:00)
15people x 4 times x 2 hrs 120people
Tea Time(3:30-4:30) 15people x 4 times x 1 hr
60people
Dinner(7:00-8:00)
60people
15people x 4 times x 1 hr
TOTAL 240people
Non-busy hours:
Suppose the stock turnover is 4 times also and 4 people come in
15 minutes.
4 people x 4 times x 9 hrs = 144 people
Total customers a day 144 people + 240 people = 384 people
Suppose
50% people buy the meal set
$2880
→192 people x $15
2% people only buy drinks
$40
→8 people x $5
5% people buy noodle with oyster sauce
$399
→19 people x $21
43% people buy just 1 bowl of noodle
$1980
→165 people x $12
TOTAL
$5299
Take out sales: 30 people a day = 30 people x $12 = $360
Drink sales: 40 people x $9 = $360
Other sales (fresh vegetable) = $100
TOTAL AMOUNT OF MONTHLY SALES
=$(360+360+100+5299) x 30 DAYS
=$183570
The amount is low because most of customers prefer to buy
the meal set which include drinks/vegetables. The MUV of
buying a meal set is higher than the MUV of just buy a single
bowl of noodle.
Capital budget:
Share of capital:
A
$271000/5=$54200
B
$271000/5=$54200
C
$271000/5=$54200
D
$271000/5=$54200
E
$271000/5=$54200
Profit budget:
Monthly sales: $183570
Monthly expenses: $145000
Net monthly profit=$38570
Share of profit:
A
$38570/5=$7714
B
$38570/5=$7714
C
$38570/5=$7714
D
$38570/5=$7714
E
$38570/5=$7714
Payback period (each of the partners):
Month
(Share of capital-Share of profit)
January
$54200-$7714=$46486
February
$46480-$7714=$38772
March
$38772-$7714=$31058
April
$31058-$7714=$23344
May
$23344-$7714=$15630
June
$15630-$7714=$7916
July
$7916-(-$1856)=$9772
August
$9772-(-$1856)=$11628
September
$11628-$7714=$3914
October
$3914-$7714=($3800)
From the above table, the payback period is 10 months.
Because of the summer holiday, the customers who are students
will drop. The amount of sales will have a little drop, say just
80% of the normal sales. Then the sales of July and August will
be $183570 x 80% = $146856 and will have a little loss of
$1856.
We can consider the following methods of generating funds:
(1) Borrow from commercial bank
(2) Borrow from partnership
(3) Trade Credit
In case, the AVC is lower than the MR that is, suffering losses.
We may consider controlling the expenses more tighten. So that
the whole set of cost curve will drop. We can achieve the
break-even objective.
Conclusion
To conclude, we will establish a noodle shop in Aberdeen.
Since there are many advantages, such as the location,
population and stable supply of stock, we will set the noodles
shop here.
Price list
Each of the following noodle = $12, Noodles with sauce = $21,
Double favor = $18
Noodle in soup: Beef ball, Fish ball, Cuttle-fish ball, Spring roll,
Dumping, Fish-skin Dumping, Won-ton, Beef, Beef triple,
Strewed beef, Pork trotter, Chicken wing
Soft drinks $5 each bottle
Hot drinks $8
Cold drinks $9
Milk tea, Coffee, Ovatin, Lemon tea, Lemon water, Chocolate,
Soya bean milk
Fresh vegetable $8, Noodles in soup $5
Special price
– Meal set ~ one bowl of noodle + drink/fresh vegetable = $15
Just for stay here.
Extra $1 for take away service. Thank you and welcome.
Member list
6C
Lau Siu Kai
Lee Yan Yan
Choi Kwan Lok
Tang Chi Ching
Wong Ka Wai
28-6-2002