Business Plan

University Degree Business and Administrative studies

BUSM2368_Business Enterprise 1 Business Plan

Facilitator: Mr. Peter Tran Charlie’s Angels Team

RMIT International University Vietnam

Bachelor of Commerce Program

ASSIGNMENT COVER PAGE

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Located in the Viet-Sing Industrial Park (Binh Duong Province) with a total area of 1,000 square meters, “2 IN 1 ORAL SOLUTION CO. LTD.” will commence operations in July 2007. Being part of the dramatically growing oral hygiene industry in Vietnam, our company manufactures the unprecedented “2 in 1 toothbrush”, which is a highly convenient and premium-quality combination of toothbrush and toothpaste into one single product, thus providing customer with an integrated oral hygiene solution. Distinct opportunity exists for our “2 in 1 toothbrush” due to the increasing need for convenience among consumers, especially travelers and office workers; the increasing awareness of life quality, health and personal care; the existence of market gap and strong market growth.

“2 in 1 toothbrush” consists of 3 components: a complete toothbrush, a rubber toothpaste tube and a toothbrush cap, fitting nicely with one another. Our company offers two types of toothbrush catering for customers’ short-term and long-term needs of our product: NORMAL TOOTHBRUSH, which is priced at 10,000VND / unit and can be used in a maximum of 2 weeks, which is ideal for most travelers; and SUPER TOOTHBRUSH, which is priced at 20,000 VND/ unit and can be used for approximately 1 month, which is quite appropriate for office workers. Our product prices contain about 185.71% mark-up on the unit cost of each kind of product, which is 3,500 VND/ unit for Normal Toothbrush and 7,000 VND for Super Toothbrush. Besides the core products, “2 in 1 Oral Solution Co. Ltd.” also offers an additional service called free Dental Consultation Service.

It is our intention to target “2 in 1 toothbrush” at two market segments in HCM city: local travelers in the 15-49 age brackets and office workers from 23 to 60 years old, especially “front office workers” and company executives. The local traveler market size in 2005 was estimated at 3,224,740 people with the average growth rate of 20 - 30% per annum, whereas the office worker segment was estimated at 1,128,909 people with the average annual growth rate of 15 - 20%. Our total targeted market size could be estimated at 4,353,649 people (2005 figures). Based on current market size and the forecasted market growth rate, estimated sales revenue in the first year for our NORMAL 2-in-1 TOOTHBRUSH (which aims at local travelers) is 13,930,880,000 VND, and for SUPER 2-in-1 TOOTHBRUSH (which aims at target office workers) is 2,985,960,000 VND. After one year of operation, we expect to obtain a market share of approximately 2.32%; this figure is expected to increase to 4% in 2010.

The competition for manual toothbrushes in Vietnam is very concentrated among three major players – Unilever Vietnam, Colgate-Palmolive Vietnam and Oral-B, who combined account for a total of 64% of the market share for manual toothbrushes in Vietnam in 2005. Their success in the oral hygiene industry is attributable to their heavy emphasis on new product development and strong marketing efforts to boost sales. However, none of them has so far come up with the idea for “2 in 1” toothbrush to cater for consumers’ increasing need for convenience, which definitely presents an advantage for our company.

In terms of the economics of our business, the break even period for our company is calculated to be 7 months and 11 days, whereas it takes about 10 months for us to reach positive cash flow. Our gross margin and operating margin are estimated at 63.92% and 17.78%, respectively for the first year of operation. Total net profit at the end of the first year will be 2,625,468,480 VND, which represents 16% of sales. This figure is expected to grow and reach 4,299,010,866 VND at the end of year 3.

The overall marketing strategy of “2 in 1 Oral Solution Co. Ltd.” is to position our product as a symbol of convenience, quality, and functionality at a justifiably reasonable price. This will be realized through 5 main approaches: extensive use of flyers, brochures and leaflets; strong advertising campaigns on various means of media such as newspapers, magazines and television; organizing special advertising and promotional events; e-advertising and advertising through cooperation with key travel agencies and corporations. The total advertising and promotion budget for the first year is estimated at 2,983,500,000 VND. Some major sales tactics of “2in 1 Oral Solution Co. Ltd.” include establishing partnership with key retailers; collaborating with these retailers on launching customer-oriented sales promotion campaigns; and investing heavily in advertising right from the start. In addition, our company will negotiate with the retailers for cooperation to implement the warranty policy that satisfy both end-users and retailers. Our distribution channels consist of supermarkets (such as Metro, Coopmart, Maximart, Big C), department stores and convenient stores. The means of transportation that will be used to transport our products to these key retailers are company vans and trucks.

Currently, the design of “2 in 1 toothbrush” has been finalized. We need to continue the process with the suppliers to produce the prototype and test it before actually launching the products. The products will be frequently improved with modern technology by Research and Development department. The future products may include KID and ECONOMIC toothbrush to target the two potential market sectors: schools and hotels. To prevent unexpected proprietary issues in the future, our company needs to gain the copyrights of our product’s design, the company name, logo and the brand name of the toothbrush

In terms of manufacturing policy, the hours of operation for factory workers is five days per week, whereas the other department’s employees need to work on Saturday morning in addition to the five weekdays. They will receive overtime premium in case they work extra time to respond to high product demands. As far as the operating cycle is considered, the credit term given by suppliers is equal to the credit terms we offer retailers and bulk buyers, which is 30 days. In addition, it takes 1 day to make to product and 1 day to sell and distribute it. Therefore, from the point we purchase raw materials to the point we collect accounts receivable is 32 days. As a manufacturing company, “2 in 1 Oral Solution Co. Ltd.” requires considerable facilities to assist in operations, which include manufacturing equipment, computers, printer, photocopy and fax machines, telephone system, furniture, and other fixtures and fittings. In order to secure a strong market position, our company intends to adopt sound manufacturing policies which stress the importance of reliable supplier selection, standard manufacturing process and strong quality management efforts.

As far as the organization structure is concerned, our company has six departments: Human Resource, Finance, Research & Development, Production, Marketing and IT. The key personnel include 1 general manager at the salary of 10,000,000VND/month, Mr. Vu Nhat Tan and 4 managers at the salary of 8,000,000VND/month/person: Ms. Nguyen Thi Tu Anh – Manager of Human Resource Department and Production Department, Ms. Le Thi Bach Duong – Manager of Finance Department, Ms. Tran Yen Mi – Manager of Marketing Department, and Mr. Huynh Ba Minh Duc – Manager of R&D Department and IT Department. The total number of employees at the initial stage is expected to be 66 people.

Our business is exposed to two critical risks, which are the strong competition and the mistaken customers’ demand. To overcome these risks, our business must always ensure the commitment of “bringing the added value” and continuous innovation. In addition, proper planning and market research should receive careful attention.

Looking at the financial aspects, “2 in 1 Oral Solution Co. Ltd.” is quite profitable, attaining net profit of 2,625,468,480 VND in the first year of operation, 2,982,081,060 in the second year and 4,299,010,866 in the third year. Given the initial investment of 4,500,000,000 VND, our company offers investors Return On Investment (ROI) figure of 58.34% after the first year of operation. After three years, the ROI figure is 220%, which is highly lucrative for investors.

“2 in 1 Oral Solution Co. Ltd.” will be incorporated in February 2007. The five founders of the company receive 1000 shares in exchange for their intellectual contributions and the other 4500 shares (82% percent ownership) will be issued to outside investors at 1,000,000VND/share. Dividends will be paid on a quarterly basis, and will be equal to 25 percent of projected after-tax profits.

TABLE OF CONTENTS

THE INDUSTRY, THE COMPANY AND ITS PRODUCT

1. THE INDUSTRY:

2. OPPORTUNITY RATIONALE:

3. THE COMPANY:

4. THE PRODUCT:

4.1 Detailed product description:

4.2 Product types:

4.3 Additional service:

5. COMPETITIVE ADVANTAGES:

6. ENTRY AND GROWTH STRATEGY:

MARKET RESEARCH AND ANALYSIS

1. CUSTOMERS:

2. MARKET SIZE:

3. MARKET TRENDS:

4. MARKET GROWTH:

5. ESTIMATED MARKET SHARE AND SALES:

6. COMPETITION:

7. ONGOING MARKET EVALUATION:

THE ECONOMICS OF BUSINESS

1. GROSS AND OPERATING MARGINS:

1.1 Gross profit margins:

1.2 Operating profit margins:

2. PROFIT POTENTIAL AND DURABILITY:

3. MONTHS TO BREAK EVEN AND REACH POSITIVE CASHFLOWS:

MARKETING PLAN

1. OVERALL MARKETING STRATEGY:

2. PRICING:

3. SALES TACTICS:

4. SERVICE AND WARRANTY POLICIES:

5. ADVERTISING AND PROMOTION:

6. DISTRIBUTION:

DESIGN AND DEVELOPMENT PLAN

1. DEVELOPMENT STATUS AND TASKS:

2. PRODUCT IMPROVEMENT AND NEW PRODUCTS:

3. PROPRIETY ISSUES:

MANUFACTURING AND OPERATIONS PLAN

1. HOURS OF OPERATION:

2. OPERATING CYCLE:

3. GEOGRAPHICAL LOCATION:

3.1 Site selection:

3.2 Location analysis:

3.3 Reasons for site selection:

4. FACILITIES AND IMPROVEMENT:

5. MANUFACTURING POLICIES:

MANAGEMENT TEAM

1. ORGANIZATIONAL CHART:

2. KEY MANAGEMENT PERSONNEL:

3. MANAGEMENT COMPENSATION AND OWNERSHIP:

4. SUPPORTING PROFESSIONAL STAFF:

CRITICAL RISK, PROBLEM

OVERALL SCHEDULE

FINANCIAL PLAN

1. FIRST YEAR’S PROFORMA INCOME STATEMENT: _

2. THREE YEARS’ PROFORMA INCOME STATEMENT:

3. FIRST YEAR’S PROFORMA CASH FLOW STATEMENT:

4. INITIAL CAPITAL INVESTMENT:

5. COST STRUCTURE (FIXED-VARIABLE) ANALYSIS:

6. VARIABLE COST ANALYSIS:

7. BREAK-EVEN ANALYSIS:

PROPOSED COMPANY OFFERING

REFERENCES

THE INDUSTRY:

“2 in 1 toothbrush” belongs to the Vietnam oral hygiene industry, which has undergone highly satisfying growth in the past few years. Especially in 2005, this industry had sales boost by 10% in current value terms to attain approximately 2.5 trillion VND and continued to be the leading contributor to the total sales of cosmetics and toiletries in Vietnam with a 36% value share. This phenomenal growth of the oral hygiene industry in Vietnam is mainly attributable to the increasingly high level of consumption of toothpaste and toothbrushes among Vietnamese citizens, which can be most satisfactorily explained by the developing national economy.

Vietnam economy has achieved increasing GDPs (Gross Domestic Product) over the past few years, which is an obvious indication of a rapidly growing economy. Upon Vietnam accession WTO in November 2006, these figures are predicted to keep increasing more and more dramatically in the future:

Exhibit 1: Vietnam’s Real GDP from 2000-2006 (base price of 1994)

(Source: Constructed based on data from Vietnam General Statistics Office 2006,)

This growth in economy has led to improved quality of life for most Vietnamese citizens. As a visible result from successful economic development, disposable income in Vietnam has been increasing over time. It is reported that Vietnamese disposable income reached 421,416 billion VND in 2005, posting a year-on-year growth rate of 10% on average and increasing 52% under the review period of 2000-2005. Due to higher income and better living standard, rural Vietnamese people have become increasingly educated and, thus, more and more cognizant of the significance of oral hygiene, which contributes to the exponential growth in demand for oral hygiene products in the rural areas. Urban Vietnamese people, on the other hand, have long considered oral hygiene an indispensable part of everyday life and, thus, their demand for hygiene products is enormous. With the constant amelioration in their quality of life, urban consumers are becoming more and more demanding, opting for hygiene products that can provide them with the most added values in terms of quality, convenience, comfort, price, etc.

It is worth noticing that the growth in the consumption of traditional oral hygiene products is mainly driven by the increasing demand in the rural areas due to rural consumers’ higher awareness of oral hygiene and improved disposable incomes. In urban regions such as Ho Chi Minh City, Ha Noi, etc., demand for traditional oral hygiene products has become quite saturated. Therefore, growth of oral hygiene in these areas can only be achieved through manufacturers’ efforts devoted to the development of new oral hygiene products that can add more values to increasingly demanding urban consumers.

The oral hygiene industry can be regarded as having an oligopoly structure. Despite the considerable number of industrial participants, sales of oral hygiene products are concentrated among only three major players – Unilever Vietnam, Colgate-Palmolive Vietnam and Oral-B Vietnam, which combined accounted for nearly 65% of sales value in 2005. These key players are multinational companies who wield enormous market power thanks to their huge capital investment, strong distribution network, large-scale marketing efforts, high product diversity, wide market coverage, etc. and, most importantly, sustained customer preference and loyalty. Moreover, due to their massive market position, the bargaining power of customers and suppliers for these major corporations are quite low as compared to other existing oral hygiene companies and, obviously, new entrants, which further enhances their competitive advantage. As a consequence, barriers to entry for new firms posed by these “industrial giants” are quite considerable.

Oral hygiene covers a wide range of products: toothpaste, toothbrushes, mouthwashes/ dental rinses, denture care, mouth fresheners, dental floss, tooth whiteners, etc. As far as the toothbrush product alone is concerned, sales has been growing steadily over the past years:

Exhibit 2: Sales of toothbrush from 2000 to 2005

(Source: Constructed based on data from Oral Hygiene Report by International Euromonitor (RMIT Library))

Sales for toothbrushes have boosted along with the overall growth of the oral hygiene industry. The total market size in 2005 is estimated at 609 billion VND. Manual toothbrushes are still the dominant product category in the Vietnamese market as the price charged for power toothbrushes is quite exorbitant for Vietnamese consumers in general. Furthermore, there has already been a wide variety of manual toothbrushes that are capable of catering for diverse consumers’ needs, which renders it unnecessary for Vietnamese consumers to consider power toothbrushes. In this market for manual toothbrushes, Oral-B has, up till now, secured the first place, followed closely by Unilever Vietnam and Colgate-Palmolive Vietnam. Such success of Oral-B is attributable to its widest range of products, from high to low quality, which can cater for virtually all needs in the Vietnamese consumer market.

Generally speaking, the oral hygiene industry in general and its manual toothbrush sub-sector in particular have achieved rapid development in recent years, which is indeed very promising for industrial players. Moreover, the heightened demand for new breakthroughs within the industry among urban consumers reveal promising opportunities for new entrants who wish to utilize product differentiation as an effective tool to compete with existing industrial “Goliaths”.

OPPORTUNITY RATIONALE:

There are some reasons why distinct opportunity exists for our “2 in 1” toothbrush.

Increasing need for convenience:

The dramatic development of Vietnam economy as well as the faster process towards international integration has led to Vietnamese people getting busier and busier both in their work and personal life. To most Vietnamese people residing in Ho Chi Minh City, the commercial centre of Vietnam, being busy has indeed become quite indicative of their characteristics. On account of that, people are developing increasing need for convenience, which can enable them to better cope with the frantic pace of modern life. With a considerable improvement in living standard, Vietnamese people, especially those in Ho Chi Minh City, are becoming more willing to pay for products that can add significant convenience to their everyday life. This trend definitely reveals great development opportunities for our “2 in 1” convenient toothbrush.

Increasing awareness of life quality, health and personal care:

With the development of Vietnam economy and the resulting amelioration of living standard, people are caring more about their life quality, especially their health and well-being. They want to be healthy, look fit and possess an attractive appearance. Consequently, there is a distinct tendency to increase consumption of cosmetics products, healthcare products and, obviously oral hygiene products, which have become an indispensable part of Vietnamese people’s everyday life. As illustrated earlier, sales of oral hygiene products in general and toothbrushes in particular have experienced steady growth over the past few years and are still growing satisfactorily.

Existence of market gap:

After a careful analysis of significant players in the oral hygiene industry (such as Oral-B, Unilever, Colgate-Palmolive, etc.), we are convinced of the existence of two market segments that are inadequately served by existing oral hygiene companies: the local traveler segment and the office worker segment, who possess strongest need for convenience products. No competitors in the industry have though of introducing new products that can cater for this urgent need of these segments. Our integrated “2 in 1” oral hygiene solution is highly capable of satisfying this increasing need, which reveals promising prospects of market receptiveness to our product.

Strong market growth:

Increased number of local travelers

Due to higher living standard, demand for leisure in general, and taking holidays in particular, has increased gradually among Vietnamese. In 2000, only 13% of the Vietnamese population took holidays; however, this number increased to 21% in 2005. This means the number of travelers taking domestic and outbound tours are on the increase. When traveling, bringing along oral hygiene products is a must, especially in traveling regions where toothpastes and toothbrushes are not provided for travelers. Even if these products are provided, there is no guarantee their quality is good enough for use by health-conscious travelers. This further brightens the future prospects of our “2 in 1” toothbrushes.

Increased number of full-time office workers

Vietnamese people are becoming better educated and, thus, many are opting for jobs pertaining to office work. This segment is estimated to grow steadily at a rate of 15% per annum. Most full-time office workers have to stay at their workplace more than 8 hours/day, having lunch and taking nap at their office as well. Thus, for hygiene purposes, they have to bring their toothbrushes and toothpastes along to work and do dental hygiene during lunch break. Our convenient “2 in 1” toothbrush can save them from having to bring along a separate toothbrush and toothpaste, thus providing them with greater convenience and comfort to do oral hygiene at work.

THE COMPANY:

The opportunity for penetrating the oral hygiene industry with the unprecedented “2 in 1” toothbrush product category was proposed and acknowledged in late November 2006. All preparations for the business such as investor appeal and presentation, bank relations establishment, business registration, site selection, equipment purchase, initial marketing campaigns, etc. will require at least 5 months; therefore, it is probable that our company will commence operations in early July 2007 under the name of “2 IN 1 ORAL SOLUTION CO. LTD.” The chosen location will possibly be in the Viet-Sing Industrial Park, Binh Duong Province. Intrinsically a start-up manufacturing company, we will rely on the retail networks (shops, department stores, supermarkets, etc.) to sell our products to end-users. Moreover, we also sell directly to purchasers who order in large quantities such as corporations, tourist agencies, etc.

THE PRODUCT:

Detailed product description:

Brushing teeth normally requires two things: toothbrush and toothpaste. These two products are currently sold and purchased separately. In order to provide greater convenience for end-users, especially travelers and office workers, we have come up with the idea of the “2 in 1” toothbrush, which is the combination of both the toothbrush and toothpaste into only one product.
Components: An integrated “2 in 1 toothbrush” has three parts:

The toothbrush contains a plastic head filled with nylon-based bristles. The head is designed specifically to penetrate deep into the hard-to-brush areas. The hardness of the bristles is kept at a medium level (not too hard, not too soft) in order ensure effective removal of plaque between teeth and, at the same time, avoid hurting the gum. The quality of the bristles depends on the type of product (elaborated later). Unlike the handle of normal toothbrushes which are usually quite flat, the plastic handle of our toothbrush is designed in cylindrical shape and has gears at the end to enable the toothpaste tube to be twisted into the handle. The whole toothbrush part is estimated to be 14 centimeters long and the cylindrical handle has the diameter of 2 centimeters.
The toothpaste tube is made of rubber and utilized to hold the toothpaste. The rubber material is very elastic, thus enabling the end-user to squeeze toothpaste out without deforming the tube, which may make the toothbrush look ugly. The toothpaste tube also contains a plastic opening (just like the opening in other normal toothpaste tube) that enables toothpaste to come out. The plastic opening also has gears so that it can be twisted into the toothbrush handle. The tube has a diameter of 2 centimeter (the same as the diameter of the handle); its length depends on the type of product (elaborated later)
The cap: This toothbrush cap is made of transparent plastic. The cap covers the toothbrush head to protect and keep it clean and sanitary. Also, it can effectively keep the wet toothbrush away from the rest of the luggage when end-users are on a traveling tour. This plastic cap is shaped in cylindrical form, its length being 6 centimeters and diameter being 2 centimeters.

Usage: Whenever our customers want to brush their teeth, they just need to follow very simple steps:

Remove the cap
Twist the toothpaste tube off the handle
Squeeze toothpaste out of the tube onto the bristles
Brush their teeth
Once finished, twist the tube back into the handle and put the cap back on the toothbrush head

Graphical illustrations:

Exhibit 3: Three components of “2 in 1” toothbrush

(Drawn based on our own ideas about “2 in 1” toothbrush)

Exhibit 4: A complete “2 in 1” toothbrush

(Drawn based on our own ideas about “2 in 1” toothbrush)

Product types:

Our company offers two types of “2 in 1” toothbrushes:

Normal “2 in 1” toothbrush, which has

Medium-quality bristles which last less than 2 weeks
Toothpaste rubber tube of 4 centimeters in length and 2 centimeters in diameter which holds enough toothbrush for less than 2 weeks’ use

➔ This product is designed especially for those who need our product for a relatively short period of time. For example, travelers going on a 01-week tour would probably go for this product for ...

This is a preview of the whole essay

(Drawn based on our own ideas about “2 in 1” toothbrush)

Product types:

Our company offers two types of “2 in 1” toothbrushes:

Normal “2 in 1” toothbrush, which has

Medium-quality bristles which last less than 2 weeks
Toothpaste rubber tube of 4 centimeters in length and 2 centimeters in diameter which holds enough toothbrush for less than 2 weeks’ use

➔ This product is designed especially for those who need our product for a relatively short period of time. For example, travelers going on a 01-week tour would probably go for this product for better convenience during the short trip. The price of this product type is 10,000 VND each, which is quite cheap in comparison to the second type.

Super “2 in 1” toothbrush, which has

High-quality bristles which last approximately a month
Toothpaste rubber tube of 9 centimeters in length and 2 centimeters in diameter which holds enough toothbrush for a month’s use

➔ This product is designed especially for those who use our product for a longer period of time, e.g. office workers who bring them along to their workplace everyday. The price of this product type is 20,000 VND each.

Additional service:

Our company will also offer customers free Dental Consultation Service. A particular phone number will be fixed so that customers can call this number for advice with regards to dental issues. Moreover, on our company’s website, there will be a “Question Box” where customers can drop their inquiries regarding oral hygiene and related issues; these questions will then be transferred to us. We will cooperate with a renowned specialist from Vietnam Dental Association to help us implement this additional service.

COMPETITIVE ADVANTAGES:

Convenience: This is the most obvious competitive advantage of our “2 in 1” toothbrush. The product has been designed with customers’ need for convenience in mind and the completed “2 in 1” toothbrush would be so convenient and lightweight that it can easily slip into a purse or a briefcase for frequent on-the-spot use by diverse customers. No competitors of ours have been able to provide such value so far. Therefore, this helps us secure a competitive edge over them as a new entrant.
Quality: Our emphasis on sound manufacturing policies (selection of raw material suppliers, administration of manufacturing processes, human resources development, etc.) contributes considerably to the high product quality we offer to customers. All quality management efforts are strictly under the administration of Vietnam Dental Association.

ENTRY AND GROWTH STRATEGY:

Although we have many strong competitors in the oral hygiene industry, most of them have so far paid little attention to satisfying the need for convenience of the traveler market segment as well as the office worker market segment. Even industrial giants such as Oral-B, Unilever, etc have not focused decent effort on developing toothbrushes that can provide these market segments with greater convenience of carry and use. This, undoubtedly, reveals an opportunity gap that our innovative “2 in 1” toothbrushes can perfectly fill in. The clever integration of the toothbrush and toothpaste into 1 single product demonstrates added value of convenience, which gives us a distinct competitive advantage of entry into the market.
We have defined two target markets for our products: local travelers in the 15-49 age brackets; and “front office workers” and company executives. Upon entry into the market, we will invest heavily in advertising and launch extensive promotion campaigns aimed towards these two market segments to enhance awareness and draw a certain number of customers away from existing competitors. For example, our “2 in 1” toothbrushes will be advertised on advertising sections of such famous newspapers as Tuoi Tre; on popular magazines such as Sai Gon Tiep Thi, Tiep Thi & Gia Dinh, etc.; and even on television. We will also contact several tourist agencies to endorse our products to travelers. Direct marketing will possibly be executed at various companies in Ho Chi Minh City to appeal to office workers. We will also set up a website to promote our company and products.
As a new entrant, we will initially establish relationships with a few retailers (e.g. supermarkets, department stores, convenience shops, etc.) to sell our “2 in 1” toothbrush to our target market. Phone ordering service and delivery service are available only to bulk buyers.
After achieving certain popularity and reputation in the oral hygiene market, hopefully within the next 2 years, we will further expand our distribution networks, establishing relationships with more department stores, supermarkets, shops, etc. in Ho Chi Minh City to carry our products. As part of our growth strategy, we will also add diversification to our product lines, introducing more product variations and types which are better tailored to suit the needs of more customers. Furthermore, we may also open 2 branches in District 1 and District 3 to further promote our image, facilitate our growth and enhance the convenience of interaction between our company and customers. Finally, it is also our ambition to further widen our initial target markets (local travelers + office workers) and expand the reach of our products beyond Ho Chi Minh City market.

CUSTOMERS:

We intend to target our unique “2 in 1” toothbrushes at three market segments:

Local travelers:

By “local travelers” here, we mean those Vietnamese who would like to take domestic trips around Vietnam or outbound trips to other countries. In the early stages of establishment, our market will be restricted to Ho Chi Minh City only.
Before embarking on either outbound or domestic trips, travelers would have to spend time “shopping around” for a considerable number of personal items such as toothbrushes, toothpastes, soaps, handkerchiefs, towels, shampoo, foodstuff, etc. to use during the trips. Evidently, they would have to carry along lots of miscellaneous items for the trips; therefore, product functionality and convenience are what travelers need. By integrating both the toothbrush and toothpaste into one single “2 in 1 toothbrush”, we aim at lightening travelers’ luggage and, thus, satisfy better their need for functionality and convenience.
We segment local travelers (domestic and outbound) in Vietnam according to age groups, which are listed in order of dominance according to 2005 figures: 25-34 (32.1% of total travelers); 35-49 (24.7%); 15-24 (18.9%); 50-64 (11%); 0-14 (6.8%) and over 65 (6.5%).

Exhibit 5: Local travelers by age segmentation (2005 figures)

(Source: Constructed based on data from Travel and Tourism Report (RMIT library) and General Statistics Office)

We intend to target our “2 in 1 toothbrush” at Ho Chi Minh City travelers, which takes up about 25% of all local travelers in Vietnam. Our main attention will be focused on HCMC travelers from 15 to 49 years old in terms of product design, marketing and promotion campaigns, value-added services, etc. because these age groups constitute the largest proportion (75.7%) of local travelers and, thus, can most considerably influence our sales revenues and profit.

Office workers:

By “office workers” here, we mean those clerical, professional or administrative individuals who work inside at fixed location.

(Source: )

A large proportion of these office workers have to work full-time, which means it is compulsory for them to show up at their offices 8 hours/ day to work both in the morning and in the afternoon. For convenience, most full-time office workers will choose to stay at their offices instead of going home during lunch break to eat lunch, practice some personal hygiene and take a nap before commencing work in the afternoon. It is, therefore, obvious that these office workers also have a need for a convenient toothbrush that they can bring to work and brush their teeth during lunch break. Our unique “2 in 1 toothbrushes” can save them from having to bring along a separate toothbrush and toothpaste for oral hygiene, thus entitling them to great convenience.
Full-time office workers in Vietnam normally fall into the 23 to 60 age bracket. There are normally two kinds of office workers: “Back office workers” (who constitute about 30% of all office workers) do not generally engage in face-to-face interaction with visitors or customers; while “front office workers” (who constitute about 60%) are those who deal directly with customers and visitors in person. Company executives (about 10%) can also be classified as “office workers”

(Source: )

Figure 6: Office workers in Vietnam

(Source: Estimated and constructed based on available data from Vietnam Demographic Report (RMIT library)

Our target market would be office workers in Ho Chi Minh City, which constitutes about 40% of the total employed population within the 23-60 age bracket in Ho Chi Minh City. More specifically, we will direct our efforts towards “front office workers” and company executives due to the following reasons:

“Front office workers” must frequently engage in face-to-face interaction with customers; therefore, good oral hygiene (white, clean teeth; fragrant breath; etc.) plays an important role in making a good impression on customers.
Company executives have to deal directly with big clients, strategic partners, governmental representatives, etc. on a regular basis and, hence their need for good oral hygiene

➔ These two segments have the most need for our “2 in 1” toothbrushes. Also, they take up a large proportion of office working population. (70%)

MARKET SIZE:

Since we have identified 2 different target markets, we will attempt to estimate the market size for both target markets of ours based on 2005 figures (2006 figures are not readily available)

Local travelers:

In 2005, Vietnamese population was approximately 83,119,900 people (Source: Vietnam General Statistics Office). According to the Travel and Tourism Industry Report by Euromonitor International, in 2005, total national local travelers took up around 20.5% of total population, thus amounting to 17,039,580 people. At a rough estimate, the population of local travelers in Ho Chi Minh City constituted about 25% of this total figure, thus giving us about 4,259,895 people. Local travelers in the 15-49 age bracket (our target market) held a proportion of 75.7%, which is roughly 3,224,740 people.

Thus, in terms of local travelers, our target market size in 2005 could be estimated at 3,224,740 people.

Office workers:

In 2005, Ho Chi Minh City population aged between 23 and 60 years old was approximately 3,427,688 people (Source: 1080 Information Service). According to the investigation done by the Ministry of Social Labor, Invalids, the unemployment rate of Ho Chi Minh City in 2005 was 5.9% (Source: ) . Therefore, the number of employed people within the 23 to 60 years old in Ho Chi Minh City can be estimated at roughly 3,225,454 people. At a rough estimate, office workers accounted for 50% of this figure, thus amounting to 1,612,727 people. Of this figure, “front office workers” and company executives would account for roughly 70%, which gives us a target market of nearly 1,128,909 people.

Thus, in terms of office workers, our target market size in 2005 could be estimated at 1,128,909 people.

Total market size:

In short, our total target market size can be estimated at 4,353,649 people (=3,224,740 + 1,128,909), which is quite considerable. In the future, we will certainly expand this target market of ours beyond Ho Chi Minh City; thus, this figure is certain to increase in the future.

MARKET TRENDS:

Local travelers:

Due to the continuous economic development of Vietnam, especially after accession to WTO, disposable income as well as living standards of Vietnamese people, especially those in Ho Chi Minh City – Vietnam’s commercial center, will continue to improve as time goes by. As a result, demand for leisure & recreation in general and domestic & outbound traveling in particular is also expected to boost in the foreseeable future. Recent statistics have revealed that traveling, especially during summer and Tet holidays, has become increasingly popular amongst the Vietnamese people, particularly urban ones. For many of them, taking a tour whether domestically or in other countries is no longer something of a luxury but is actually starting to catch on favorably. According to Travel and Tourism Report by Euromonitor International (RMIT Library), the proportion of Vietnamese people taking domestic and outbound tours for holiday has grown by approximately 61.54% over the period from 2000 to 2005 and urban travelers are said to outweigh rural ones. This trend is predicted to continue. It is also forecasted by Euromonitor International that by 2010, more than 2 million Vietnamese people will go on traveling tours, three times higher than in 2005. Also, people in big cities, especially Ho Chi Minh City, will devote an increasing proportion of their income towards traveling. With the overall increase in their purchasing power, these travelers are increasingly opting for innovative products that can provide them with uttermost convenience while on the trip, especially oral hygiene products which are an obvious necessity. Therefore, it is logical to forecast that demand for our toothbrush will catch the increasing trend. Estimated sales of “2 in 1” toothbrush for the first year are predicted to reach 1,393,088 units, which are expected to increase to 3,060,613 units by the end of 2010 for this particular segment.

Office workers:

Due to the improvement of the national economy as well as the international integration efforts made by Vietnamese government, more and more companies, both domestic and foreign, are being established in Vietnam, creating more and more job opportunities for Vietnamese people and diminishing the unemployment rate. In the case of Ho Chi Minh City - Vietnam’s commercial centre, this trend couldn’t be more obvious. Moreover, the population in Ho Chi Minh City is becoming better educated, and an increasing proportion is proceeding to higher educational degree, hence the boost in the number of people working as office workers in the city. At a rough estimate, the number of office workers constitutes about 50% of HCMC’s employed population and is forecasted to enjoy growth of 15-20% per annum till 2010. As elaborated earlier, this office worker segment, especially “front office workers” and company executives, also demonstrates a need for our “2 in 1” toothbrush. Judging by existing trends, it is expected that demand for our innovative and convenient toothbrush within this market segment will increase significantly in the future. Sale projections for the first year would reach 149,298 units and increase to 257,988 units by 2010 for this particular segment.

Future influential factors: In the long run, the development prospect of our “2 in 1” toothbrush depends on these possible future factors:

Major changes in the oral hygiene industry: new dental-related technological developments, new dental concepts and methodologies, moves of major competitors, etc.
Changes in consumer’s tastes, preferences, buying behaviors and spending patterns, especially for dental care products
Changes in Vietnam’s economy and people’s disposable income
Changes in the tourism industry (which directly affects the traveler segment)
Changes in the educational situation and career orientation (which directly affects the office worker segment)

MARKET GROWTH:

Local travelers:

According to the Travel and Tourism Report obtained from Euromonitor International, there has been satisfactory growth in the number of Vietnamese travelers taking outbound and domestic trips during the past few years:

The number of local travelers going on outbound tours increased from only 286,300 people in 2002 to 586,200 people in 2005, experiencing increasing growth rates of 5%, 30% and 50% over the three periods of 2002-2003, 2003-2004, and 2004-2005, respectively.
The number of domestic trips taken by local travelers also increased considerably from only 14,442,800 trips in 2002 to 28,710,000 trips in 2005, experiencing increasing growth rates of 10.4%, 24.1% and 45% over the three periods of 2002-2003, 2003-2004, and 2004-2005, respectively.

Exhibit 7: Growth of the local traveler market (2002-2005)

(Source: Constructed based on figures from the Travel and Tourism Report by Euromonitor International (RMIT Library))

=> As illustrated in the chart, the local traveler market has been growing satisfactorily over the past few years, which is quite conducive to the demand for our “2 in 1” toothbrushes. As the biggest economic and leisure city of Vietnam, Ho Chi Minh City can be assumed to experience somewhat similar growth rates in the number of local travelers as those of the whole nation. It is forecasted that the figures above will continue to increase in the future period with the average growth rate of 20 - 30% per annum, which will also be the growth rate of our target market in Ho Chi Minh City.

Office workers:

According to 1080 Information Unit (Ho Chi Minh City Posts and Telecommunications), there has been increasing growth in the number of employed people in Ho Chi Minh City. The city’s employed population increased from 2.3 million people in 2002 to more than 3.2 million people in 2005, experiencing gradually increasing growth rates of 5.4%, 7.6%, and 10.2% in the periods of 2002-2003, 2003-2004 and 2004-2005, respectively. As mentioned earlier, the population of office workers in Ho Chi Minh City can be estimated to constitute 50% of the city’s employed population. Also, our target market, i.e. “front office workers” and company executives, takes up approximately 70% of the office worker population. Assuming that these proportions vary negligibly during the considered time periods, it can be inferred that our target market also underwent increasing growth rates (from 5.4% to 10.2% per annum) during the 2002-2005 periods.

Exhibit 8: Growth of the office worker market (2002-2005)

(Source: Constructed based on figures from 1080 Information Unit, Ho Chi Minh City Posts and Telecommunications)

=> Taking the existing trend into consideration, it is sensible to estimate that the office worker market as well as our target market will continue to experience steady growth in the future at the average growth rate of approximately 15 – 20% per annum.

ESTIMATED MARKET SHARE AND SALES:

Estimated sales earned from targeted local travelers:

Most of our competitors, even the biggest competitors such as Oral-B Vietnam, Unilever Vietnam, have not paid sufficient attention to the need for greater convenience of the traveler market segment. Thus, there is strong likelihood that local travelers will be readily receptive to our “2 in 1” toothbrush right after it is launched into the market because this unique product category of ours is highly capable of satisfying travelers’ need for convenience.
At a rough estimate, 30% of all local travelers in our target market will switch from competitors’ normal products to our “2 in 1” toothbrushes right in 2007, our first year of operation. Assuming that our target market growth rate is 20% per year from 2005 to 2007 (3,224,740 travelers ➔ 4,643,626 travelers), we will possibly earn estimated sales of 1,393,088 units one year after our commencement.
Selling price per toothbrush for local travelers is 10,000 VND (please refer to the pricing section below). Hence, sales revenue from our targeted local travelers will probably amount to 13,930,880,000 VND.

Estimated sales earned from targeted office workers:

When it comes to using oral hygiene products, office workers also demonstrate a need for greater convenience. However, this need among office workers is not as urgent as that of local travelers. Therefore, we expect that market receptiveness among office workers towards our “2 in 1 toothbrushes” would not be as strong as that among local travelers. Moreover, while many of our competitors currently ignore the traveler market segment, they have focused quite considerable marketing and promotional efforts on this office worker market segment to boost their sales revenues. This poses certain difficulties for our company to draw customers away from current competitors.
Probably only 10% of all office workers in our target market will purchase our “2 in 1” toothbrushes right in 2007, our first year of operation. Assuming that our target market growth rate is 15% per year from 2005 to 2007 (1,128,909 people ➔ 1,492,982 people), we will possibly earn estimated sales of 149,298 units one year after our commencement.
Selling price per toothbrush for office workers is 20,000 VND (please refer to the pricing section below). Hence, sales revenue from our targeted local travelers will probably amount to 2,985,960,000 VND.

Exhibit 11: Estimated sales earned from targeted office workers in the first year of operation (Calculated using MS Excel)

Sales growth is forecasted to grow 20% per year after the first year due to gradually increasing market receptiveness and the continued growth of our target market:

Note: Here, we are assuming constant unit price at 20,000 VND/toothbrush for office workers.

Figure 12: Forecasted sales earned from targeted office workers 2007-2010 (Calculated using MS Excel)

Total forecast sales value of “2 in 1” toothbrushes:

Figure 13: Total forecast sales value of “2 in 1” (Calculated using MS Excel)

Estimated market share:

Our forecast market share is estimated by determining the percentage of the forecast sales value of toothbrushes in the industry that is taken up by the forecast sales value of our “2 in 1” toothbrushes during the first three years of operation. (Forecast sales quantity is not available for the purpose of calculation). As illustrated, our market share after the first year of operation may be approximately 2.32% of the entire toothbrush market in terms of sales value earned. This market share is expected to increase to 3.3% in the third year.

Exhibit 14: Estimated market share of “2 in 1” (Calculated based on forecast figures from the Oral Hygiene Industry Report by Euromonitor International (RMIT Library))

COMPETITION:

Although there are many toothbrush manufacturers in the oral hygiene industry, market power is concentrated into a few hands, specifically in three major players – Oral-B, Unilever Vietnam, and Colgate-Palmolive Vietnam. These three companies together already accounts for a total of 64% of the market share for manual toothbrushes in Vietnam in 2005. All of these companies emphasize heavily on their marketing efforts to boost sales.

Exhibit 15: Major competitors

(Source: Oral hygiene Report from Euromonitor International (RMIT Library), The three companies’ websites)

Besides our three most powerful competitors, we can also encounter rivalry from other industrial players who manufacture toothbrush and other oral hygiene products. Displayed below are key competitors of our company and their relative market share over the years.

Despite the high level of concentration in the oral hygiene industry as well as the threats imposed by existing strong players, we believe that our “2 in 1” toothbrush is able to compete in this industry due to its unrivalled added value: CONVENIENCE. Moreover, we tailor our efforts specifically for local travelers and office workers, the two promisingly growing segments that our competitors, even strongest ones, seem not pay careful attention to. Our innovative edge, clear market focus in combination with heavy advertising and promotion right at the first stage will help us secure a firm position amongst competitors in this industry.

ONGOING MARKET EVALUATION:

Continuous market evaluation plays a significant role in the long-term growth of our product and our company. Therefore, we will conduct frequent market research to be aware of customers’ demand and opinions regarding our products. Besides, analysis on sales figures is also a crucial part of long-term development since based on these figures, management can evaluate the appropriateness of the price we charge and the effectiveness of our marketing campaigns. The analysis will also help management in formulating long-term decisions such as the introduction of new products and which areas to introduce the new products first.
Obviously, strategic moves of competitors are also important factors to take into consideration. Through various sources of business intelligence about competitors such as competitors’ websites, newspapers, magazines, press releases, documentaries, etc., we will regularly monitor our competitors and update our knowledge of their products, services, advertising and promotion campaigns, pricing policies, new technologies utilized, etc. From this, we can constantly make predictions about competitors’ future moves and devise proper proactive or reactive plans to defend our sales and market position. It is apparent that we will keep a close eye on the three market leaders and formulate strategies to react to their moves (e.g. introduction of new products, etc.)
In the future, we also plan to expand our operation by introducing our products to markets other than Ho Chi Minh City. Information regarding these markets such as market size, customers’ demand and preferences and sales forecast therefore is also very important to ensure the smooth growth of our business.

GROSS AND OPERATING MARGINS:

Gross profit margins:

As “a fast consumer product” and also, a highly innovative one, the gross profit margin of “2 in 1 toothbrush” is relatively high, 63.92%. The cost of goods sold takes up around 35% of the selling price.

Production Cost estimates:

Exhibit 17: Product cost estimation

Operating profit margins:

Although the gross margin is high, the operating margin is lower due to high expenses. It is also fluctuated because the customers’ demands vary in different months during the year, which leads to the fluctuation in net sales. During the first year of operation, our operating margin is lowest in the first month of operation (July) at -3.48% due to considerably high expenses, especially advertising/promotion expenses because we invest heavily in marketing in this first month. The operating margin is highest in month five (November) at 30.97% due to market receptiveness as a result of our strong marketing efforts. The average operating margin in the first year of operation is 17.78%.

Exhibit 18: Gross and operating margins

PROFIT POTENTIAL AND DURABILITY:

After deducting income tax (10% of operating income), the net profit margin is projected to vary from its lowest value of -3.48% in the first month of operation (July) to its highest value of 27.87% in the fifth month (November). On average, the net profit margin in the first year will be 16%.

Exhibit 19: Net profit margin

As mentioned earlier, during the first two month of operations, we expect that expenses would be staggeringly high, especially advertising/promotion expense. Therefore, it is logical for our net profit margin to be negative in these two months after our commencement. However, from the third month onwards, as we have already created a favorable image in the market with our strong marketing campaigns, sales starts to speed up and the profit potential of our product, according to the chart, proves highly promising. Furthermore, for most of the time in the first year, our net profit margin stays at the level above 15% of sales, which shows great profit durability. (This will be further demonstrated in the financial plan).

The average net profit margin in the first year of operation is 16%, which is forecasted to decrease slightly to 14.17% primary because of increasing costs of operation and our stronger marketing effort. However, in the 3rd year, operating profit is expected to soar back to 15.92% as a cumulative result of all our sales and marketing effort. From that point, the figure is likely to keep on increasing in future operating periods.

MONTHS TO BREAK EVEN AND REACH POSITIVE CASHFLOWS:

With total estimated fixed cost in the first year of 5,202,896,000 VND and a weighted average unit contribution margin of 5,594 VND for our sales mix which contains 90% Normal toothbrush and 10% Super toothbrush (1,393,088 Normal: 149,298 Super), the estimated break even point in units is calculated to be 840,106 for Normal toothbrush and 90,035 for Super toothbrush, which corresponds to the break even points in VND of 8,401,063,712 VND and 1,800,693,151 VND for the two products, respectively. As a result, our company will break even in about 7 months and 11 days, which falls into the middle of the eighth month after the commencement of our operations (February).

Due to the high expenses incurred in every month, it takes a while for our company to generate positive cash flow. We predict that our cash flow from operations will be positive from the tenth month after operation (April) at 4,393,167 VND and continue to increase dramatically over the next operating periods (demonstrated later in the financial plan).

OVERALL MARKETING STRATEGY:

Our company decides on an overall marketing strategy that can appeal to our target markets’ increasing need for greater convenience and comfort. We will do our utmost to position our “2 in 1” toothbrush as an innovative “2 in 1” oral hygiene solution that can deliver convenience, quality, and functionality at a justifiably reasonable price.

With a view to erecting this positive image in customers’ mind as well as secure a strong market position, our company will employ five major approaches:

Firstly, we will make extensive use of distribute flyers, brochures, leaflets, etc. to create awareness of our existence.
The second approach we adopt is launching strong advertising campaigns on various means of media such as newspaper, magazines, television, hotel and travel guides, yellow pages, etc.
The third approach we choose is organizing special advertising and promotional events to attract customers’ attention and entitle customers to contact with our real product, not just the graphical illustration on advertising channels.
In addition, online advertising is also highly beneficial in this technology-dominant era. E-media and our website can also contribute to our marketing efforts.
Finally, we will cooperate with key travel agencies and companies in executing our advertising/ promotion strategies.

PRICING:

As elaborated earlier in the Product section, our company offers two product types to satisfy the demand of customers: Normal “2 in 1” toothbrush and Super “2 in 1” toothbrush (Normal is aimed at those who have shorter need of our products, e.g. travelers going on short tour of around 1-2 weeks; Super is for those who have longer need of our products, e.g. office workers who brush their teeth everyday during lunch break at their workplace)

The price contains about 185.71% mark-up on the unit cost of each kind of product, which is 3,500 VND for Normal toothbrush and 7,000 VND for Super toothbrush. This helps us earn a gross margin of 65% on each product of the two product types. Although the price of our products is higher than the industry average by approximately 20%, our pricing policy is justifiable by the innovativeness and the high added value of our product: the integration of toothbrush and toothpaste for the sake of end-users’ convenience.

Discounts: an important part of our sales policy

Quantity Discount: As we sell our “2 in 1” toothbrushes only to retailers (supermarkets, department stores, convenience stores, shops) and bulk purchasers (corporations, tourist agencies, etc.) , we will offer quantity discount as follows:

Cash discount: For those retailers and bulk buyers who pay cash immediately when ordering products or right after receiving the products, they will receive a cash discount of 1%-3% per total amount.

SALES TACTICS:

At the very first stage of our operation, we will utilize personal contacts and social relationships to establish strategic partnership with a handful of key retailers (e.g. supermarkets such as Metro, Coopmart, Maximart, etc.; department stores; convenience shops and others) to purchase and resell our products to the end-user market. We will select these key retailers based on a number of criteria such as:

Scale of operation (as large as possible),
Popularity among end-users (as well-known and well-frequented by customers as possible),
Prestige (as well-established in the retailing industry as possible),
Strategic locations (located in “profitable areas”, e.g. in populated shopping precincts, areas near traveling and tourism agencies, etc.),
And others

After a certain period when our product has been considerably used in the end-user market and other retailers have recognized the profitability of carrying our products, then we will sell our “2 in 1” toothbrush to many more markets, supermarkets, convenience stores and other retailers to enhance our ability to reach more and more end-users. At the same time, we will focus on applying attractive quantity and cash discounts to stimulate as many retailers and bulk buyers to purchase from us as possible.
Throughout our operation, we will also collaborate closely with key retailers on launching sales promotion campaigns and grand discounts during certain periods to attract end-users into buying more of our products, thus resulting in benefits for both our company and the retailers.
To enhance awareness among end-users, we will invest heavily in advertising right from the start. We will introduce our products through TV documentaries, newspapers, magazines, press releases, leaflets, posters, trade shows, promotional events at supermarkets and company’s website so that more and more travelers and office workers will take notice of “2 in 1 toothbrush” and realize the convenience and necessity of our innovative products.

SERVICE AND WARRANTY POLICIES:

It is quite difficult to establish a warranty policy for our product, especially when we are a manufacturer located in Binh Duong Province and will not have enough financial capability to establish a representative office in Ho Chi Minh City to directly resolve customers’ complaints in the first stage of operation. As stated earlier, during the first stage, we will establish relationships with key retailers to carry our products for resell. Therefore, we will also negotiate with them for cooperation to implement the warranty policy that is done mainly through our retailers. If a customer purchases a “2 in 1” toothbrush from a particular retailer and later finds out that the product has serious defects (e.g. damaged bristles, spoiled toothpaste, broken handles, etc.), he/she will return to that retailer and make their complaints based on true evidence. The retailer will then evaluate the defective toothbrush and replace it with a completely new one for the customer if the old product is assessed to be truly unusable. The retailer must keep all faulty toothbrushes returned by end-users until the next time they purchase from us. Then, our company will obtain back the defective products and compensate the retailer with new ones in the form of discount on total purchase. For example, during the month of July, Ban Co department store collects back 20 faulty products returned by end-users. When this department store purchases 100 more toothbrushes from us at the beginning of August, we will obtain back the 20 defective products, charge department store A the price of only 80 toothbrushes (out of the total 100) in addition to the quantity discount discussed earlier. With this retailer-based warranty policy of ours, both end-users and retailers will be satisfied. Although this may seem somewhat disadvantageous for us, we believe that compensation for defective toothbrushes for any particular period will not be high as we are confident that defective rate of our innovative product will be maximum 1% due to the following reasons:

Carefully selected and reputable suppliers of raw materials
Standard manufacturing process which is continually assessed, maintained and upgraded
Strong quality management efforts

All these factors will be discussed in more detail in the manufacturing policy section.

ADVERTISING AND PROMOTION:

Obviously, our advertising and promotion strategies have to be in accordance with our product positioning and market targeting strategies. As elaborated earlier, our “2 in 1” toothbrush is mainly targeted at local travelers and office workers. Therefore, we will focus the advertising and promotion strategy efforts on these customer segments. For travelers, the majority of traveling tours are normally concentrated in the summer holidays, from June to August and in months around Tet holidays (January and February); therefore, we will boost advertising on these times of year. For office workers, demand is quite constant all year round except around Tet holidays when demand is down significantly and we should organize promotional events to appeal to them during this period. Our advertising and promotion efforts will be implemented using the four approaches we mentioned earlier:

Advertising through flyers, leaflets, brochures, posters, etc. in key areas:

Our company will make extensive use of flyers, leaflets, brochures, posters. Etc. because these advertising means are relatively cheap and can also help enhance customer awareness to a significant level. We intend to hire “seasonal workers”, especially high school and university students, to distribute these flyers, leaflets, brochures, etc. in key areas where there is high concentration of our target customers. Such areas can be those in close vicinity of travel agencies, hotels, shopping centers where local travelers usually frequent. Areas near big companies can also be ideal locations for handing out flyers and leaflets to office workers who go to work or return home from work. And of course, street corners where traffic lights stand are ideal place for spreading flyers. Finally, big posters displaying our innovative product will also be put up at high-profile and eye-catching places.

Advertising through media means:

We will invest heavily in various means of media as the advertising channel for our product:

Print newspapers and magazines: our company will evaluate a number of local newspapers and magazines based on a number of criteria such as popularity, number of subscribers, level of relevance to our target market, and, of course, advertising fees to decide on the most appropriate ones to put up our ads. It is our intention to select Cam Nang Mua Sam, and Tiep Thi & Gia Dinh magazines to advertise our product as many Vietnamese people refer to these magazines before making purchasing decisions. Du Lich TPHCM will also be selected as this magazine is regularly frequented by HCMC local travelers. We will also put up an advertisement on the advertising pages of Tuoi Tre Newspaper, the most popular newspaper in Ho Chi Minh City.
TV Enterprise Self-introduction Program: Putting up advertisement on television costs through HTV7 and HTV9 channels cost a staggering amount of money for just a very short time, not to mention the filming costs of these advertisements. However, these TV channels have offered us more economical ways of appearing on this most popular means of media: the TV Enterprise Self-Introduction Program, which normally lasts 3 to 6 minutes per broadcast and costs much less than a 1-minute advertisement. Thus, we will investment in this program on both HTV7 and HTV9 channels.
HCMC Hotel and Travel Guide: An important target market of ours is local travelers, who normally purchase hotel and travel guides for essential traveling information. Therefore, our presence in this guidebook can also draw prospective customers’ attention.

Miscellaneous: We will also put brief information about us and our contact details on Vietnam Yellow Pages.

E-advertising:

In this virtually internet-based era when people get almost hooked on the net, it would be foolish not to utilize e-advertising to endorse one’s new products or services. We will put up advertisements on the website of Tuoi Tre Newspaper (Tuoi Tre Online – ), which attracts the most number of visitors. Saigon Tiep Thi Online () is also a popular website that can influence our target customers’ purchasing decisions, hence our decision to select it. Of course, we will build up our own company’s website where customers can gain access to more information regarding our “2 in 1” toothbrush.

Organizing advertising and promotional events:

Another advertising/promotion approach we choose is organizing special advertising and promotional events to attract customers’ attention such as:

Trade shows/exhibitions/fairs: We will keep ourselves informed of grand trade shows, exhibition, or fairs that will be organized in Ho Chi Minh City and register for our product to be displayed at these occasions. These events are particularly popular and successful during times of significant national holidays, especially Tet holidays.
Supermarket events: We will also cooperate with such supermarkets as Coopmart, Maximart, Big C, Ha Noi, etc. to organize product exhibition shows and special promotional activities (prize contests, discounts, etc.) for supermarket-goers, which also entail our target market.

Advertising/promotion through cooperation:

We will also consider cooperating with significant travel agencies such as Saigon Tourist, Viettravel, Fiditourist, etc. to help endorse our product. It is our intention to give them a certain number of “2 in 1” toothbrushes to be used as free samples; so during a traveling tour, they will distribute these free samples for the travelers, our target market, to use. This can help create awareness of our product. We can also negotiate with these travel agencies to put our brochures and leaflets at their place so that whenever a customer comes in to register for a tour, they will take notice of our new product. Similarly, it is possible for us to deal with key companies in Ho Chi Minh City to circulate our product brochures around the organization for greater awareness.

ADVERTISING/PROMOTION BUDGET FOR THE FIRST YEAR:

DISTRIBUTION:

Since our company is located in Viet-Sing Industrial Park in Binh Duong Province, we will have to rely on our distribution channels to introduce our “2 in 1” toothbrush to customers in Ho Chi Minh City. As stated earlier, at first, we will establish relationships with some key retailers to help our product penetrate the end-user market. Big supermarkets such as Metro, Coopmart, Maximart and Big C are very important to our distribution efforts at the early stages. So do big department stores and shops in busy shopping precincts of District 1 and District 3. Therefore, we will utilize our own transportation facilities (company vans and trucks) to transport our products to these key retailers, who will purchase and resell our products to end-users. After our reputation has been established in our target market, then we will plan on the expansion of our distribution networks to more retailers.

DEVELOPMENT STATUS AND TASKS:

Convenience, Quality and Functionality at Reasonable price present key characteristics of our “2-in-1 toothbrush”. Therefore, our task is to ensure that the product development will satisfy all of those requirements. So far, the basic design for “2-in-1 toothbrush” has been finalized. Next, we need to deal and sign contract with the chosen suppliers (which will be discussed further in “Manufacturing and Operations plan” section) with agreements on the quality and price of raw materials. Then, the prototype will be developed and tested. After this stage, “2 in 1 toothbrush” is ready to be launched into the market and find its new owners.

PRODUCT IMPROVEMENT AND NEW PRODUCTS:

Each year, our company will spend a considerable proportion of the annual budget for Research and Development in order to enhance the value of our products. For instance, the design of the toothbrush will be frequently checked and improved so that it can function suitably with customers’ requirements. In addition, our products will be embedded with the newest oral protection technology and the quality of the toothpaste will be strictly supervised to ensure the high quality of “2-in-1 toothbrush”.

After successfully launching NORMAL and SUPER toothbrush that target to local travelers and officers, we plan to expand the market to other customer groups such as hotels and schools. Therefore, new products will be introduced to fit those customer groups. Firstly, to target the school sector, which composes a major part of primary school children, our company will offer “KID 2-in-1 toothbrush” to satisfy the demands of those children (and also their parents). In addition, the designs of toothbrush for children will vary in colors and images, which also widen this product line.

Secondly, to target the hotels sector, our company will offer “ECONOMIC 2-in-1 toothbrush”. This is a type of low-price toothbrush, of which the quality and the toothpaste only last for a short period (3-5 usages).

In the further future, we will offer a wider range of toothbrushes which vary in sizes, designs, usage length and prices to satisfy the increasing demands of the market for this convenient product.

PROPRIETY ISSUES:

Our company seeks to copyright the product design and the company name, logo, the brand name of the toothbrush. They are the most important intellectual asset of our company, which help the company enhance our competitive advantages over our competitors. Therefore, we need to protect those assets by patenting them.

HOURS OF OPERATION:

The factory workers will work five days a week (from Monday to Friday). They need to work extra time when there is extremely increasing demand on our products (that exceeds the normal production capacity of the factory). In this case, the overtime premium is calculated depending on how many extra hours workers work.

In the first period of operations, the employees of other departments such as Marketing and HR may have to work on Saturday morning in addition to five weekdays to handle large amount of work.

Both office and factory workers take days off in Vietnamese’s official holidays such as Tet (Lunar New Year) and National Day. Each person in the company has 2 weeks off in one year (with announcement on advance). However, the company has the right to reject any request for vacation if needed to prevent personnel shortage during holiday season and summer.

The company’s policy is to comply with Vietnamese’s law of labor. We also try to create a great working environment for our workers and staff to exploit their competency and ability.

OPERATING CYCLE:

The operating cycle is, by definition, the time period between the outlays of cash for materials purchased from suppliers and the cash receipts from subsequent sales of the product. As previously mentioned, we will sell our “2 in 1” toothbrushes to individual customers through retailers (e.g. department stores, shops, supermarkets, etc.) and also sell directly to bulk buyers (i.e. institutions or corporations that would like to purchase directly from us). In both cases, the operating cycle will be somewhat similar.
As we purchase in large quantities from our suppliers, we will negotiate and sign contract with them to be given a credit term of approximately 30 days. Supplies will be delivered to our company approximately twice a month to help us cope with customers’ demand. If possible, we will also sign contract for just-in-time delivery.
Since we sell our “2 in 1” products to retailers and bulk buyers in large quantity, we will also give them a credit term of 30 days for them to settle their purchasing costs. However, we also encourage our customers to pay earlier to be entitled to cash discounts of 1%-3% on total amount (which has been discussed in the pricing section).
We will need one day to manufacture products ready for selling and distribution during the next day.

Figure 20: “2 in 1” toothbrush: Cash conversion

GEOGRAPHICAL LOCATION:

Site selection:

Our company will be situated within the Vietnam – Singapore Industrial Park (VSIP). We will sign a 50-year lease for 1,000 square meters at the total land rental fee of approximately 608,000,000 VND (incurred one time only for 50 years of land rental).

Location analysis:

Located in Binh Hoa Commune, Thuan An District, Binh Duong Province, this industrial park was established in accordance with the Investment Licenses 1498/GP of the Ministry of Planning and Investment. Since its official launch in January 1996, VSIP has proven to be an attractive destination for large multinational companies such as Diethelm, Kimberly Clark, Konica, Nitto Denko, etc. to establish manufacturing bases, serving both the domestic as well as the export markets. Occupying 500 hectares, it is a fully integrated industrial park with a comprehensive range of infrastructure including power, water, sewage treatment and telecommunications, which is ideal for us to establish our company here.

Exhibit 21: VSIP Location Map

(Source: SembCorp Park Management, )

Reasons for site selection:

Reasonable renting cost: Land rental in VSIP is 38 USD/m2/50 years, which excludes cost of factory building, utilities, sewage processing, telecommunications, etc. The renting cost is incurred one time only at the commencement of the business. With an operating area of 1,000 m2, we will pay about 608,000,000 VND (38,000 USD) to be allowed to use the land for 50 years.
Favorable location: VSIP has the strategic location in Binh Duong province, a competitive operating environment which is just 17km (about 45-minute ride) north of Ho Chi Minh City, Vietnam’s main commercial centre and, also, our target market. The close proximity to Ho Chi Minh City provides easy access to the city’s developed infrastructure, professional services and social amenities. This favorable location of VSIP can help our company much in our distribution efforts, ensuring timely deliveries of our products to various retailers and bulk buyers in Ho Chi Minh City.
Easy access to infrastructure and utilities: VSIP provides manufacturers with quality infrastructure, utilities in a safe and conducive operating environment:

Electricity: The industrial park has an on-site power plant, which, along with the national grid, forms a dual-feed source that generates a seamless supply of reliable electricity of 85MW, expandable to 120MW.
Water supply: VSIP has its own water treatment plant that treats and inspects water to meet the standards of the World Health Organization. This plant has a daily capacity of 22,000 cubic meters, rendering it highly capable of satisfying water requirements of all factories within the industrial park.
Sewage treatment: VSIP exercises stringent scrutiny over effluent discharge. Before being discharged, sewage water must undergo special treatment at an on-site treatment plant established in compliance with the local authority’s environmental standards.
Telecommunications: VSIP provides manufacturers with a total capacity of 1,200 lines for IDD, fax, local and dedicated leased lines, with fiber optic capacity.

➔ This easy access to quality infrastructure and utilities is likely to smooth our business operations and help us attain optimum effectiveness and efficiency.

Easy access to abundant labor supplies and labor-training facilities: VSIP is located very close to a number of abundantly populated areas, i.e. Ho Chi Minh City, Bien Hoa City, Lai Thieu Town, An Thach Town, and Di An Town, all of which can serve as major labor supplies for our company. It will be possible for us to source qualified and highly educated “white-collar” employees from big cities as Ho Chi Minh and Bien Hoa as well as seek low-priced and skilled “blue-collar” workers from such towns as Lai Thieu, An Thach and Di An. Thus, labor source is ensured for our company. Furthermore, the Vietnam-Singapore Technical Training Centre, established within the industrial park by experienced personnel from Singapore’s Institute of Technical Education (ITE), can assist our company in human resources development efforts: training employees, raising their technical standards and imparting specialized skills to them.
Ample availability of social amenities: Essential services are available within VSIP to cater for the needs of the working population. Canteens, banks, logistics companies and recreational facilities are easily accessible by companies’ employers and employees. A post office can be found right outside VSIP compound. These factors play a key role in enriching the spiritual life of our workers, which can help enhance their productivity in work life.
High level of security and safety assurance: Security and precautionary measures are tightened at VSIP with guard posts erected throughout the industrial park and surveillance officers going on frequent patrol. The officers also ensure that the roads are free of obstruction and that traffic is orderly so as to allow smooth two-way movement of containers. This high level of security diminishes the risk of theft and vandalism, thus ensuring safety for our operations. Also, the role of patrolling officers in road management can assist us considerably in product distribution.

(Source:

)

FACILITIES AND IMPROVEMENT:

As stated earlier, our company will sign a 50-year lease to rent an area of 1,000 square meters in Viet-Sing Industrial Park (Binh Duong Province) to commence our business. We intend to sign the leasing contract and finish off with all other land renting procedures around the end of week 2 – February 2007 so that we can start building up our company at the start of week 3 and purchasing manufacturing and office-related equipment around week 4. Factory building, equipment purchasing and installation will have to be finished by July 2007, when we official commence operation.

Our company will be divided into two main areas: the manufacturing plant and the company’s office space. Details about each area are elaborated as follows:

The manufacturing plant which constitutes 4/5 of the company’s area (approximately 800 m2) is where the production department carries out the manufacturing of our innovative “2 in 1” toothbrushes. The following facilities will be installed in this plant:

Manufacturing equipment, specifically injection molding machine; automatic bristle filling machine, bristle trimming machine, toothpaste filling machine, and other production facilities
01 computer for general monitoring by the factory supervisor
01 telephone for communication with other departments and with external parties such as suppliers
Some pieces of furniture (table, chairs, etc.)
Other facilities, fixtures and fittings to assist either directly or indirectly in production processes

The office space which takes up 1/5 of the company’s area (approximately 200 m2 ) is where other organizational departments reside (i.e. Human Resources, Finance, IT, Marketing, Research and Development). Facilities in this area may include:

19 computers allocated to the General Manager (1) and the 5 non-manufacturing departments (number depending on the specific nature and need of each department). Computers are undoubtedly effective tools for information management within our company. They contain internal databases about customers, distributors, suppliers, financial figures, etc. that are of strategic importance to our organization. Computers can also help organizational departments, especially marketing department to carry out market research and environmental scanning for significant market trends that may affect our company. And of course, the use of computer technology will save us from having to deal with huge bundles of paperwork.
A telephone system and 01 fax machine to facilitate communication between departments and with outsiders
01 printer and 01 photocopier to assist in document replication
Furniture such as tables, chairs, sofas, etc.
Office stationery such as pens, pencils, rulers, erasers, etc.
Other facilities, fixtures and fittings (lights, fans, air-conditioners, etc.)
In addition, we will also invest in building a company website as the “intangible” asset of our company

Exhibit 22: Plan for facilities and improvement

MANUFACTURING POLICIES:

As a toothbrush manufacturer, our company has certain manufacturing policies to ensure the quality of our products.

Renowned and reliable suppliers of raw material:

Suppliers play an important role in our manufacturing policies, as our production is affected much by the quality of input provided by them. Therefore, it is imperative that our company establish sound criteria to evaluate different prospective suppliers and select the ones that are most compatible with our policies. Some standard criteria can be

Reliability and prestige (most important),
Reasonable price,
Availability of good discounts,
Reasonable credit terms,
Virtually zero defect supplies,
Speed of delivery,
Availability of emergency or just-in-time supplies,
Availability of warranty options,
Etc.

In order to manufacture our “2 in 1” toothbrushes, we would need three basic types of inputs: plastic (to make the toothbrush handle), rubber (to make the toothpaste container) and toothpaste (a necessary ingredient to make our product truly “2 in 1”). Based on some of the above criteria, we have initially selected three best suppliers for our company. They are:

Duy Tan Plastic Company: one of the most popular suppliers of plastic in Ho Chi Minh City, turning out a wide variety of plastic, including industrial plastic that is necessary for our manufacturing process.
Dau Tieng Rubber Company: a giant rubber plantation in Binh Duong Province, exploiting more than 45,000 ton of natural rubber per annum. The operation scale as well as the favorable location of this company renders it a suitable rubber supplier for “2 in 1 Oral Solution”.
Daso-Dacco Company: which is a renowned supplier of diverse cosmetics and hygiene products, including toothpaste, in the oral hygiene industry, constituting 4% market share (ranking 5th among companies that have significant market share)

(Source: ; ; )

Standard manufacturing process:

At our company, we run a comprehensive, standard manufacturing process for our “2 in 1” toothbrushes, which supposedly comprises of the following stages:

Stage 1: Molding the handles: In this initial stage, plastic is mixed and shaped into pellets (small hard balls). The pellets are then transferred to an injection molding machine, which then heats the plastic until it is melted. A rotating screw or plunger forces the liquid plastic into the handle molds, which form the entire toothbrush handle including the small holes (called cores) into which the bristles are subsequently inserted. The end of the handle has specially designed gears so that the toothpaste tube can be twisted into or off the handle easily. The molds are securely clamped, and high pressure is applied to the molds during the time the plastic cools. Once the molds have undergone sufficient cooling time, clamps are removed and small pins push the handles out of the molds.
Stage 2: Molding the soft, elastic rubber toothpaste container: Liquid rubber is poured into the moulds designed for the container. Pressure is also applied; however, the amount of pressure is considerably less than in the first stage as we want soft container which enables customers to squeeze toothpaste out. When the container has cooled down, we will put in a metal opening through which toothpaste can squeeze out. In this metal opening, we will make some gears so that the rubber container can be twisted into the cylindrical handle.
Stage 3: Filling in the bristles: After the complete handle has been formed, bristles (nylon that has been cut into small strings) are positioned into the cores (small holes) of the handle by the automatic filling machine. These bristles are then stapled firmly into the core with the aid of tiny metal staples.
Stage 4: Trimming the bristles: Bristles positioned onto the toothbrush sometimes vary in lengths and shapes. In order to make them standard, the toothbrush is passed through a trimming machine which cuts them into the correct length and shape to suit the expected design.
Stage 5: Filling toothpaste into the container: The whole perfect toothbrush with its container must be completed before toothpaste can be added to make it truly “2 in 1”. Toothpaste is poured into a large toothpaste filling machine, which can enable us to fill in the similar amount of toothpaste for each and every toothbrush.
Stage 6: Packaging: Finally, our “2 in 1” toothbrushes are packaged into plastic containers just like those of normal toothbrushes. Labels are then attached to the package, supplying customers with essential information about the product, for e.g. the bristle hardness, toothpaste ingredients, usage instructions and recommendations. Of course, our company name, brand and logo also appear on the label. Packaged toothbrushes are then bundled together into shipping boxes, ready for transportation to our retailers and customers.

(Source: )

Exhibit 23: “2 in 1” Operation Flows

Emphasis on quality management and control:

Quality management and control forms an indispensable part of our business. Enumerated below are some quality management efforts that our company will put in place:

Select reliable raw material suppliers and sign long-term contract with them to ensure good quality right from the input
Establish and promulgate quality policies within the organization, especially the production department
Constantly monitor, supervise and update manufacturing process to ensure product quality is in compliance with regulations set by Vietnam Dental Association
Consult dental specialists either from the Vietnam Dental Association or other professional dental organizations in Vietnam to improve production process
Carry out periodical “machine check-up” to evaluate the conditions of machines used in the manufacturing process; execute maintenance or upgrade if necessary
Organize training activities for production workers and supervisors, with instructors hired from the Vietnam-Singapore Technical Training Centre, to ameliorate their skills and professionalism which can affect product quality
Ensure the highest level of hygiene possible for the company, especially the manufacturing space
Keep informed of technological advancements that can enable our company to improve production process, product quality as well as hygienic conditions
Carry out constant market research and R&D efforts to add into existing products other features which can enhance quality offered to customers
Select reliable retailers who are part of the quality delivery to customers

MANAGEMENT TEAM

ORGANIZATIONAL CHART:

As a new and small company, “2 in 1 Solution” follows the traditional functional structure because it provides efficiency for the manufacturing process. In addition, by applying this structure, the management board can take control of the operations of different departments easily.

There are currently six departments in the company such as Marketing, Human resources, Finance, Research and Development, Production and IT, among which Production is the core department. Besides accomplishing specific tasks of each department, all departments should communicate and cooperate intensively with one another. For instance, Production department and Research and Development department need to exchange information for the invention of appropriate new products.

Exhibit 24: Organization Chart

KEY MANAGEMENT PERSONNEL:

Mr. Vu Nhat Tan – General Manager
Ms. Nguyen Thi Tu Anh – Manager of Human Resource Department and Supervisor of Production Department
Ms. Le Thi Bach Duong – Manager of Finance Department
Mr. Huynh Ba Minh Duc – Manager of Research and Development Department and IT Department
Ms. Tran Yen Mi – Manager of Marketing Department

Four of the key management personnel major in commerce with deep understanding of the commercial world and business know-how. The remaining personnel of the management team (Mr. Huynh Ba Minh Duc) major in design with deep understanding of the design codes and standards. He is also familiar with out-of-the-box thinking which is crucial for innovations and new product design process. Moreover, the key management personnel have strengths in communications in English, problem solving skills in business, managing subordinates, conflict solving and teamwork skills.

Mr. Vu Nhat Tan – General Manager: Mr. Vu Nhat Tan is one of the most outstanding students in commerce program in RMIT University. He is well known in Ho Chi Minh City for his excellent academic transcripts. As a promising entrepreneur, Mr. Vu Nhat Tan has demonstrated leadership skills in various projects in the university. He is truly a versatile person with extensive knowledge in many fields. Besides, he also has some real-life work experience in conflict solving, time management and teamwork. Therefore, Mr. Vu Nhat Tan is the most suitable candidate for the position of General Manager.

Ms. Nguyen Thi Tu Anh – Manager of Human Resource Department and Supervisor of Production Department: Ms. Nguyen Thi Tu Anh possesses profound work experiences in many companies such as 2! Magazine, Mai Linh Corporation and Yeah 1. She is currently a project collaborator of Cyber Media – an advertising company. She has extensive knowledge in communication, psychology and emotional intelligence. That is why she is chosen to take the role of the Manager of Human Resource Department.

Moreover, the “2 in 1” toothbrush is originally her idea as she recognizes the need for a convenient toothbrush for travelers and office workers instead of the clumsy traditional toothpaste and toothbrush combination. Therefore, she wished to supervise the initial production process to control the quality of the toothbrush.

Ms. Le Thi Bach Duong – Manager of Finance Department: Ms. Le Thi Bach Duong is an excellent accountant and financial analyst, so she is most suitable for this position. She has thorough understanding of financial and management accounting. She is familiar with the Vietnamese Report Standard and plans to receive intensive training in order to acquire international recognized accounting certificates.

Mr. Huynh Ba Minh Duc – Manager of Research and Development Department and IT Department: Mr. Huynh Ba Minh Duc is the youngest personnel in the management team. He has intensive knowledge in the field of design and information technology. Besides, he is also very creative and he often emphasizes on the importance of out-of-the-box thinking. His working principle is “I think, therefore I am”. He is already working on plans to innovate and improve on the quality and strengths of the “2 in 1” toothbrush.

Ms. Tran Yen Mi – Manager of Marketing Department: Ms. Tran Yen Mi has been working as the marketing manager of RMIT Business Club. She is familiar with the nature of the marketing work and the sub-functions within the marketing department such as advertising, sales, promotions and public relations. As stated before, during the first six months of operations, the company will emphasize on advertising campaigns to promote the convenience of the “2 in 1” toothbrush and generate demand for it. Therefore, marketing department’s jobs will be heavier during this period.

Detailed job specifications:

MANAGEMENT COMPENSATION AND OWNERSHIP:

The general manager’s monthly salary is 10,000,000VND, while the four other managers will receive the basic salary of 8,000,000VND per month. At the end of a financial year, they will receive their year-end bonus, based on the percentage of their ownership to the business.

SUPPORTING PROFESSIONAL STAFF:

Our company has two supporting professional specialists that play important roles in consulting the management team to successfully operate this promising but risky business:

Mr. Peter, Tran Viet Hoang – General Consultant:

Education: Graduated from Pepperdine University, Malibu, CA, USA with a Bachelor degree and a Master degree in Business with emphasis on Financial Planning and Marketing Research. He also taught at Pepperdine University in Quantitative Analysis Course.

Professional: Has been teaching at RMIT International University Vietnam since February 2004. He also worked as Market Research and Financial Planning Consultant for various companies, from small businesses to large corporations, such as Vons Groceries Company, Vons Credit Union, Household Merchandising Inc., Smart and Final Iris Corp... Owned and operated a variety of successful Retail Business Enterprises.

Email:

Office location: room 1.3.04, RMIT International University, Nguyen Van Linh Boulevard, District 7, Ho Chi Minh City, Vietnam

Ms. Lilibeth Jandug-Montera – Financial consultant:

Profile: She is currently a Management Accounting lecturer of RMIT University. She also has many working experiences in the field of Finance and Accounting. Therefore, she is a suitable consultant who can provide valuable financial advices for our management team.

Email:

Office location: room 1.3.4, RMIT International University, Nguyen Van Linh Boulevard, District 7, Ho Chi Minh City, Vietnam

CRITICAL RISK, PROBLEM

Although the product “2 in 1” toothbrush has a very bright future to grow strong, there are still two potential risks and problem that the management team has to be aware of and get ready to overcome. These two threats are:

Strong competition:

Evaluation: Our “2 in 1” toothbrush is definitely a brand newcomer; therefore, the more potential the market and industry is - the more competitive threats from other giants we might get. As it has been mentioned above, the oral hygiene industry in Vietnam has an oligopoly structure with three giant players: Unilever Vietnam, Colgate-Palmolive Vietnam and Oral-B Vietnam, accounted for nearly 65% of sales value in 2005. It is not difficult to these giants, if they really want, to take the idea and produce the same kind of product to compete with us. In addition, if our product really wins, other competitors absolutely will not miss the chance to jump into the market, with the product that even has better design and function.

Contingency: To overcome this risk, our business must always ensure the commitment of “bringing the added value” to the customers and enhance customer loyalty. Besides, continuous innovation is another contingency that helps the business to have a strong and stable position in the market.

Mistaken customers’ demand:

Evaluation: This could be another serious problem to our business. As stated before, we identify that travelers and officers have strong demand for this product because of the convenience of the “2 in 1” toothbrush. However, if unfortunately, we wrongly identify the target customers and mistaken customers’ demand, the company will suffer a big loss because it has taken a vast amount of money to invest in “2 in 1 toothbrush” production assembly lines.

Contingency: To overcome this problem, the first and most important things that we need to do are proper planning and market researches. We must have a strong and deep understand about our customers’ demands and characteristics, as well as the characteristics of the market.

OVERALL SCHEDULE

FINANCIAL PLAN

FIRST YEAR’S PROFORMA INCOME STATEMENT: (Unit: VND)

THREE YEARS’ PROFORMA INCOME STATEMENT:

FIRST YEAR’S PROFORMA CASH FLOW STATEMENT:

INITIAL CAPITAL INVESTMENT:

COST STRUCTURE (FIXED-VARIABLE) ANALYSIS:

VARIABLE COST ANALYSIS:

BREAK-EVEN ANALYSIS:

PROPOSED COMPANY OFFERING

The company will be incorporated in February 2007. The five founders receive 1000 shares in exchange for their intellectual contributions.

The other 4,500 shares will be issued for outside investors. Each share corresponds to 1,000,000VND. Any future stock issues will be offered to current shareholders first.

Offering and Dividends: All shareholders will receive common stock in proportion to the percentage of share ownership. After the business earns a profit, dividends will be paid on a quarterly basis, and will be equal to 25 percent of projected after-tax profits.

PROPOSED OFFERING:

REFERENCES

- Timmons, J. & Spinelli, S. 2005, “Chapter 1 – The Entrepreneurial Revolution”, in New Venture Creation – Entrepreneurship for the 21st Century, McGraw-Hill/Irwin, a business unit of The McGraw-Hill companies Inc., New York, U.S.A., pp.23-45.

- Timmons, J. & Spinelli, S. 2005, “Chapter 12 – The Business Plan”, in New Venture Creation – Entrepreneurship for the 21st Century, McGraw-Hill/Irwin, a business unit of The McGraw-Hill companies Inc., New York, U.S.A., pp.403-420.

- Vietnam General Statistics Office 2006, “Gross domestic product at constant 1994 prices by economic sector”, viewed January 3rd 2007, <>

- Vietnam General Statistics Office 2006, “Population and population density in 2005 by province”, viewed January 3rd 2007, <>

- RMIT library, Euromonitor International, “Travel and Tourism Report”, viewed January 3rd 2007

- Search Promise, Glossary, viewed January 3rd 2007, <>

- Tuoi Tre online, “Decreasing unemployment rate in HCM city”, viewed January 4th 2007,

- 1080 Information Unit, Ho Chi Minh City Posts and Telecommunications

- RMIT library, Euromonitor International, “Oral Hygiene Report”, viewed January 5rd 2007

- Unilever website, viewed January 5th 2007, <>

- Colgate website, viewed January 5th 2007, <>

- OralB website, viewed January 5th 2007, <>

- Trade press (Vietnam Economic Times, Saigon Marketing), Trade interviews, Euromonitor International estimates

- Ad Solution Advertising Co., Ltd. Official Website, “Media Rates – Cam Nang Mua Sam”, viewed January 6th 2007, <>

- Ad Solution Advertsing Co., Ltd. Official Website, “Media Rates – Du Lich HCMC”, viewed January 6th 2007, <>

- Taiwan Turnkey project information 2006, “Wan Hsin toothbrush manufacturing plan”, viewed January 9th 2007, <>

- Binh Duong Province website, “Vietnam-Singapore Industrial Park”, viewed January 7th 2007, <>

- SembCorp Park Management, « Vietnam-Singapore Industrial Park”, viewed January 7th 2007,

- Duy Tan company website, viewed January 9th 2007, <>

- Vietnam Agriculture News, “Dau Tieng rubber company exploiting more than 45,000 ton of natural rubber per annum”, viewed January 9th 2007, <>

- Daso-group website, viewed January 7th 2007, <>

- How products are made, “Toothbrush”, viewed January 9th 2007, <>

- RMIT online, Blackboard Learning System, Staff Information, <>)

Marking:

Executive summary: You offered an excellent business proposition. You provide a brief financial summary, as well as who the customers are, how they will be reached, the strength of the team and relevant industry background. The benefits for the potential investor, profit and ROI were mentioned.

Market Size: You meticulously showed the total current market size and the slice you intend to have in Years 1 to 3, by segment, region and country, in units, dollars and profitability. Potential growth of the total market for the product over the coming years was described. Factors impacting on market growth, industry trends, and previous trends were discussed. Mentioned shifts in past and future growth trends. Estimated market share, sales provided.

Market Research: Listed primary or secondary data used to show market size and potential. Further details provided in the appendices.

Concept: Described generally the concept of the business. What industry are you in, who will be its principle customers. Gave the date of when the venture is planned to be launched.

Product/Service: Described the products/service in some detail and the involvement of the company’s principals in that development. Application of the product/service and any primary and/or secondary applications were discussed. Emphasized unique features and how these will add significant value. Defined the current stage of development of the product and how much time and money it will take to refine development and commercialize the product. Summarized how quickly the business is intended to grow over the ensuing 5 years. Showed how entry and growth strategy will be achieved and other competitive advantages you may have.

Customers: Customers classified into homogeneous groups; age, interests, cultural backgrounds, etc. Indicated how easily the customer is reached. Who makes the buying decision. How long does it take for the customer to make a decision to buy? What are the criteria for decision making: price, quality, performance, availability, convenience, design, service, warranties contracts?

Marketing plan: You discuss the overall marketing strategy: Pricing strategy and policy, and compare pricing with competitors. The payback time to the customer is included. Discussed gross margins, and indicate whether this margin covers other expenses of the business. Mention is made of what tolerance there is for occasional sales. Sales tactics: Describe methods used. Service/Warranty: described and explained how this is important from the customer’s perspective. Advertising / Promotion strategy: E.g. Trade shows, direct mail, fliers.

Distribution: described methods and channels of distribution. Note any potential problems.

Operating cycle: Described lag times or cycles in the business. Geographical location – discussed advantages/disadvantages of different sites. Described special requirements / tools / equipment needed. Strategy and plans for the production of the product and any sub-contracting requirements is discussed. Explained rationale for make or buy decisions. Regulatory and legal issues that may impact on the business should be discussed: licenses, planning issues, employment laws, etc.

Financial plan: Clear, concise, accurate, convincing financial data and supporting statements. Income statements, profit and loss statement, and balance sheets, for first 3 years were well prepared. A break-even chart is included. Cost control reports and who’s responsible for various elements. Description the duties for each position, and who will fill these roles is included. Other investors and/or advisors listed, and where not immediately known, a note that this is what the business plan is seeking to fill. Other shareholders rights and restrictions are identified.

Overall Schedule comprises a table or Gantt chart. Marketing activities are spread over a period of time, not a once-off event. The schedule is consistent with Manufacturing and Operations Plan, plus Marketing Plan.

Risks included: Technical, financial, competitor and market related risks, production capacity and capability, HR – key person issues, timing (too early or too late can kill an opportunity), OH&S, including things such as security, crowd control, food poisoning, etc. Managing Brand and Reputation

Outline contingencies to reduce risk.

Structure, referencing: Contents page clearly guides the reader to each section of the plan. Fun and easy to read report. Referencing to appendices is made where appropriate. Reference material listed in the appendix, for market research

Mark: You receive a 90 marks or equivalent to HD.

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