Produce a business plan for a new product. I have decided to produce a business plan on a new flavoured Aero chocolate bar.
Introduction.
For this assignment I have been asked to produce a business plan for a new product. I have decided to produce a business plan on a new flavoured Aero chocolate bar. In my business plan it will contain information on the following areas:
Market analysis and marketing planning.
Will I use primary/secondary research to find out whether there is a market for my product.
What factors will determine the demand for my product.
Who my main competitors are for my product.
How I will promote my new product.
How I will distribute my new product.
Who my target consumers are.
Demonstrate why they will be prepared to purchase my product to competitors products.
The choice of my product and its distinctive features of it.
The price of my new product.
Production and resource requirements.
What quantity of my goods will I provide.
What plant, machinery, and equipment will be required.
What quality levels will be required and how I will ensure this quality.
What the key stages will be in the production of my product and how I will time the production to meet customer needs.
What key resources I will need to build into my business plan. I will consider the following kinds: financial, physical, human and time.
Financial analysis and planning.
Sources of finance are the people and organisations that provide finance for an individual or an organisation. Methods of finance are the form in which the funds are provided. In this section of my business plan I will include:
The type of source of finance which I will draw into my product.
I will create a budget for my business and include estimates of start-up costs and working capital.
Set out a break-even chart for my business.
Set out a simple cash flow forecast for my business.
I will set out a projected profit and loss account and a start-up balance sheet for my business.
Evaluating my business plan.
It will outline the expected return on capital employed that my business will generate. I will justify why this return will be appropriate and give alternative ways of using that capital.
I will identify the effectiveness of my business plan in:
Identifying the target market.
Calculating the size of the total market.
Calculating the size of the market segment targeted.
Identifying the proportion of this market that can be won.
Identify the value of this market share.
Market analysis and marketing planning.
To find out whether there is a market for my product I am going to use primary research. Producing a questionnaire will collect the primary research. I will be finding out if there is a market for my new product by asking males/females under 20.
The research was carried out and my questionnaire consisted of 16 males and 11 females. In my questionnaire I asked questions on Nestle chocolates: what type they buy, when they buy them, how much they spend, what attracts them to Nestle chocolates, what they think of the packaging, what Aero chocolate they have brought already. I will now analyse my questionnaire results.
Only 1 person bought Black Magic, 2 people bought mini smarties, 3 people bought a Breakaway and Blue Ribbon, 4 people bought a Caramac and a Maveric, 5 people bought a Toffo, 6 people bought a Milky Bar and a Lion Bar, 13 people bought a Drifter, 13 people bought Toffee Crisp and Rolo, 17 people bought a Yorkie and finally 18 people bought Kit-Kat Chunky.
As you can see from these figures above a lot of males/females buy Kit-Kat chunky, Yorkie, Toffee Crisp and Rolo. This shows that four chocolates mentioned are popular. Only a few people buy Breakaway, Blue Ribbon and Black Magic.
A lot of the males/females buy Nestle chocolate everyday and once a week. Eleven people buy them everyday and once a week. Only a few buy Nestle chocolates once every two weeks. One person buys Nestle chocolates once every month or never buys them. No one buys chocolates every three months.
If you look at the figures a lot of males/females under 20 buy Nestle chocolates because they may enjoy eating chocolates and also a lot of them are more likely to buy Nestle chocolates.
Out of all the 26 people I have asked 18 people spend under £1, 7 people spend £2-£4 and 2 people spend £6-£8.
From the figures above a lot of males/females spend under £1 everyday and once a week. This proves that a lot of males/females under 20 are eating chocolates. Only 2 people spend £6-£8 and this shows that 2 people like eating chocolates a lot.
Many people buy chocolates for certain reasons, there are certain things which attracts people to buy Nestle chocolates. In my questionnaire it shows that 22 people get attracted to Nestle chocolates because of the taste. The reasons for this are because they taste nice, it's chocolately, and it's different from any other chocolates. Three people in my questionnaire said that price attracts them to buy Nestle chocolates. The reason for this is because the chocolates are cheap. Two people in my questionnaire said quality attracts them to buy Nestle chocolates because qualities of the chocolates are good. Only one person said that the smell attracts them to buy the chocolates because they like the smell.
The figures show that the taste attracts most people to Nestle chocolates. Few people have said the price and the quality attracts them and only one person said the smell attracts them to buy Nestle chocolates.
In any product packaging is important. People have different opinions about what they think about the packaging. Eleven people in my survey said the packaging of Nestle is good, 8 people said it could be better, 6 people said its not bad and only 5 people said the packaging is excellent.
By looking at the figures, a lot of people said the packaging of Nestle is good and only a few said its not bad and that it could be better.
The Aero chocolate flavours that are already out, 19 people have bought mint Aero, 13 people have bought milk chocolate Aero, 6 people have bought orange Aero, 3 people have bought tangy orange Aero and 3 people have not bought any of the Aero chocolates.
From reading the paragraph over the page, a lot of people have bought more mint Aero chocolate and this shows it is a popular flavour Aero chocolate. The next popular is milk chocolate. Tangy orange is the least popular flavour bought among males/females under 20. Only 3 people bought no Aero chocolates at all.
There are different places where chocolates are bought from. These could be supermarkets, corner shops, vending machines etc. In my survey a lot of males/females buy Nestle chocolates from the corner shops, 11 people buy from the supermarkets, 15 people buy from the vending machines and 3 people buy chocolates from other places.
My questionnaire results show that a lot of males/females buy chocolates from the corner shop. The next popular places are the supermarkets and the vending machines. Males/females are more likely to buy chocolates from the corner shop as they may live near them and when they or if their parents go shopping they are more likely to buy chocolates from the supermarket.
On the market already there are only 4 Aero flavour chocolates. In my survey I asked what other flavour chocolates they would buy if they were on the market. The figures are as follows: 13 people would buy strawberry flavour, 6 people would buy passion fruit flavour and only 2 people would buy blueberry flavour. There were other people who suggested other flavours, which were Blackberry, white/milk chocolate, coffee, banana, Coca-Cola and caramel flavour.
A lot of males/females under 20 would buy strawberry flavour Aero chocolate. Only a few would buy passion fruit flavour and only 2 would buy blueberry flavour. Strawberry is the most popular flavour whereas blueberry is the least popular.
Apart from Nestle there are other brands that people buy which are Rowntrees, Cadbury's, Mars and Thornton's. In my survey 25 males/females buy the Cadbury brands, 13 people buy the Mars brand, 7 people buy the Rowntrees brand and only 4 people buy the Thorntons brand.
My results show that a huge number of people buy the Cadbury's brand chocolates and the next popular is the Mars brand. The reason for this could be that the 2 brands may offer a lot of chocolates. Rowntrees and Thorntons are the least popular brands for males/females under 20.
Most people have different preferences on what brand of chocolates they buy and have reasons for them aswell. In my survey 10 people said they prefer Nestle chocolates, 12 people prefer other brands of chocolates and 5 people said they prefer both. Ten people prefer Nestle chocolates because they taste nice, they buy more of that brand, they are addicted to Nestle chocolates and also because they offer a variety of chocolates. Eleven people prefer other brand chocolates because they taste better, they are better quality and they have more range of choices.
Most of the males/females under 20 prefer other brand for various reasons, Nestle is the next brand most bought. Only 5 people bought both brands- they have no preference and they say both tastes nice as each other.
In my survey 17 people say Nestle chocolates are tasty because they taste nice, because its chocolate and because they are sweet. Fourteen people say Nestle chocolates are good value because the chocolates are value for money and reasonable in price. Eight people say Nestle chocolates are satisfying because they enjoy the chocolate. Five people say Nestle chocolates are well packaged, 2 people say the packaging is poor as they do not make it good as others.
A lot of people in my survey have said Nestle chocolates are tasty, good value and satisfying. A few have said Nestle chocolates are well packaged.
Lastly, all the males/females under 20 are going to carry on buying Nestle chocolates in the future.
Overall, the most common Nestle chocolates brought by under 20 males/females are Kit-Kat chunky, Yorkie, Toffee Crisp and Rolo. Most buy chocolates everyday and once a week, most people buy Nestle chocolates from the corner shop. Most people would buy strawberry flavour Aero chocolate if it was out on the market, the most other brand bought was Cadburys, most people would prefer other brand chocolates, most people think the Nestle chocolates are tasty and finally all the males/females under 20 will carry on buying Nestle chocolates in the future.
As you can see from the analysis there is a market for my new product. The market for my new product is for males/females under 20. The new product will be a strawberry flavour Aero chocolate bar.
How I will distribute my new product.
My product will be produced in a factory and wholesalers will buy in bulk from the manufacturers and this will be broken down into smaller quantities, which will be handled by retailers. The wholesalers will benefit the manufacturer in a number of ways. They will have established distribution networks and are likely to have strong links with retailers, by breaking the manufacturer's product down into smaller batches and taking care of distribution problems, they free the manufacturer to concentrate upon production.
The wholesalers will also help retailers, as they will provide a "local" service, often delivering the product. The retailers will deliver the product to different places e.g. large department stores, supermarkets, local shops {independent retailers}, and multiple shop organisations. My product will be distributed by transport {lorry} in order for it to be sold on the market.
Distribution is the physical process of getting goods from the manufacturers to consumers. It will involve the storage, transport and handling of goods. The objectives of distribution are to get the right quantity, in the right place, at the right ...
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The wholesalers will also help retailers, as they will provide a "local" service, often delivering the product. The retailers will deliver the product to different places e.g. large department stores, supermarkets, local shops {independent retailers}, and multiple shop organisations. My product will be distributed by transport {lorry} in order for it to be sold on the market.
Distribution is the physical process of getting goods from the manufacturers to consumers. It will involve the storage, transport and handling of goods. The objectives of distribution are to get the right quantity, in the right place, at the right time and in the right condition.
Manufacturer.
Chain of distribution of my product.
Manufacturer
Wholesalers
Retailers
Consumers
Who my target audience are and why they will be prepared to purchase my product than other competitors products.
The target audience for my product are males/females under 20. This is called concentrated marketing because my product only concentrates on m/f under 20. There are a lot more other age categories on the market but my product is specifically aimed at under 20 m/f.
My target audience will be prepared to buy my product than any other competitors products because the brand is well - known. The brand of my product is Nestle and Nestle products are sold all over the world. This company's products are of high quality and they are priced reasonably on the market. Also, my product will be a brand new flavour {strawberry} and my analysis states that they are prepared to buy the new flavoured product.
The consumers will be prepared to purchase my product as it will be sold at an reasonable price, they will like the chocolate and also because it's a new flavour on the market.
The choice of my product, the distinctive features of it and the price of my new product.
My product is a brand new strawberry flavour Aero chocolate bar. The reasons why I have decided to produce a new flavour Aero chocolate is because when I carried out my market research it indicated that the consumers would prefer a new flavour. This flavour was strawberry.
Features
Benefits
Physical size
Colour
Packaging
Appearance
Material
The product will come in a variety of sizes to suit the consumers needs.
The colour on the packaging will stand out because the name of the chocolate will be written in red with a white background.
The product will come in a foil {red colour} wrapped in paper and it will come in a plastic wrapper. On the packaging it will have the ingredients, the address of the manufacturer, the best before date, storage place, the weight etc.
The name of the chocolate "Strawberry Aero" will be written in bubble writing in a slanted way.
The material for the product will come in variety of forms. The product will be easy to open.
The pricing strategy for my product will be penetration pricing. This strategy is used to gain foothold in the market. This will involve me pricing the product at a low level so that retailers and consumers will be encouraged to purchase the product in large quantities. My product will first be priced at 27p and will gradually reach up to 35p.
The reason why I have decided to use penetration pricing is because the consumers will develop the habit of buying the product, so when the price of the product increase they will continue to buy the product. Also, the retailers and wholesalers will purchase large quantities of the product. This strategy will gain a significant slice of the market. As my product will be operating in a mass market the pricing strategy will suit the product.
SWOT analysis of product.
Swot analysis will examine the relationship between an organisation and its marketing environment. A SWOT analysis will focus on Strengths, Weaknesses, Opportunities and Threats on its product. It includes both an internal and an external element. The internal element will look at current strengths and weaknesses of the organisation. The external element will look at the opportunities and threats present in the environment in which it operates.
STRENGHS:
Modern production technology.
Brand loyalty to products and to the corporate identity.
Well motivated skilled workforce.
Effective promotion.
Flexibility in production methods.
Excellent distribution network.
Constant R&D leading to new ideas.
Good reputation.
Good management team.
Well established products.
WEAKNESSES:
Deals in a limited market.
Age of the life cycle of certain products.
Poor management information systems.
OPPORTUNITIES:
Development in technology.
Expansion into newer markets e.g sports drinks, low calorie drinks/chocolates.
Expansion into countries abroad.
Development of a global brand and global marketing.
Changing taste of consumers.
Could diverse into a number of product lines.
THREATS:
Growing competition from other chocolate firms e.g. Cadbury's, Mars.
Legislation on ingredients could force changes in production.
Development of foreign competitors.
Recession leading to poor demand in the economy.
Changing technology.
Economic factors- rise in interest rates.
Political factors- introduction of new legislation.
PEST analysis for my product.
E
S T
By carrying out a PEST analysis it will identify key factors external to the organisation that are in a state of flux and that are likely to have an influence on the organisation in the coming months and years. Business decisions are influenced by political, fiscal {taxation} and legal decisions.
Pest influences might include:
Government policies.
Changes in the availability of raw materials.
Changes in the tax structure.
Regulatory constraints, such as labelling, quality, safety.
Legislation.
Economic factors.
A wide range of economic factors may affect a business. Influences might include:
Inflation.
Unemployment.
Price volatility.
Consumption patterns.
Economic trends.
Taxation.
Interest rates.
Exchange rates.
Economic growth.
Social/cultural factors.
Demographic changes, such as population growth, movements and age distribution, will be important, as will changes in cultural values and social trends e.g. family size and social behaviour.
Factors might include:
Consumer life style.
Environmental issues.
Demographic issues.
Religion { culture }.
Technological factors.
In marketing the goods organisations must become aware of new materials as well as development in manufacturing and business processes. At the same time the nature of the products and their particular cost-effectiveness has to be looked at. Also, the performance of the product will be looked at as well as the competition.
Factors might include:
New technological processes.
New materials and substitutes for existing materials.
Better equipment.
Energy- saving techniques.
Consumer expectations.
Rate of change.
The factors that will determine the demand for my product.
Wherever there is a choice consumers will make decisions, and such decisions may be influenced by complex motives.
Economists refer to the group of factors that affect consumer behaviour as the economic determinants of consumer demand. The factors that determine the demand for my product are:
Disposable income.
Substitute products.
Population size/composition.
Government influences.
Taste, habits.
Price of the product..
Location.
Disposable income.
The real disposable incomes available to consumers to spend on the product. An increase in real income will generally increase the demand for the product.
Substitute products.
The relative price of substitute products whose purchases might be preferred or seen as better value for money.
Population size or composition.
For example, if birth rates increase, the population will increase, therefore more of the goods will need to be produced.
Government influences.
Government influences in areas such as credit regulations and safety requirements. These could influence demand for a host of commodities.
Taste and habits.
Consumers have different taste and habits. If consumers like the product they will continue to buy the product. They will be in the habit of buying that product all the time.
Price of the product.
All products have various prices depending on the quality of them. Products can be expensive or cheap. If the products are cheap consumers will purchase them, but if they are expensive they will not purchase them.
Location.
The products have to be sold in a location where the consumers will have access to. If shops, supermarkets are relatively close to them it is likely that consumers will go out and buy the product.
Who my main competitors are for my products.
Once an organisation has established whom it is selling to, it is important to identify the total size of the market as well as who their competitors are.
The main competitors of Nestle are Mars, Cadbury's, Rowntrees and Thorntons. Each of these competitors produce similar products that are sold on the market. These products are purchased by a variety of consumers. The sales of each firms are all very high. Market share enjoyed by each are: Nestle 19%, Cadbury's 19%, Mar's 18%, Rowntrees 15% and Thorntons 17%. All the products produced by each of the firms are at a very high standard. The company makes sure the products produced are of high quality and are suitable to be sold on the market. Each of the firms research and develop the products and diverse into new markets. The range of brands produced by each firm are: Nestle produces boxed sweets, ice cream, salads, coffee, milk skakes, yogurts etc, Mars produces various sizes of Mars bars and ice creams, Cadbury's produces various chocolates, Rowntrees produces various sweets on the sugar market and also produces ice creams and finally Thorntons produce a wide variety of chocolates on the market.
Most of the competitors are innovators, they produce new ideas, they use resources efficiently, the key objective of each of the firms is to have the leading market share on the market- to increase their market share and to dominate the market. Finally, each of the competitors have they own suppliers and outlets.
How I am going to promote my new product.
I am going to promote my new product in the following ways:
Advertising.
Direct mail.
Sales promotion.
Merchandising.
Personal selling.
Consumer promotions.
Advertising.
My new product will be advertised at the local cinema's during the intervals of the film. I think that by advertising the product at the cinema will make people aware of the product. My organisation {Nestle} will be able to capitalise on the target audience in cinema's nationally and in this way increase sales and awareness of the product.
Radio - cost £250 for 30 seconds.
My new product will be advertised on the local radio stations throughout the country. There has been an increase in the amount of radio listening by people. By having the product advertised on local radio stations, it will be able to target its audience. As many people listen to the radio a lot more people will know about the product. The product will be placed in advertisements on the station e.g. at the beginning or at the end of the local news, weather etc.
The reason why I have decided to advertise my product on the radio is because of the sound effects and the gimmicks are far more effective than on television, the production cost for radio advertisement are comparatively cheap, good discounts are available for both new and regular advertisers, the target audience for my product will be targeted.
Posters.
Posters will be used to advertise my product in a variety of places. These include large retail supermarkets, on transport sites {airports, bus sides, tubes and surface rail stations}, in café's, pubs, leisure centres.
Many people go out to the supermarkets to do the weekly shopping. The posters of my new product will be colourful, eye catching and it will have a short message which will be easy to remember. A lot of the public use the local transport available to them which they use. By placing posters at airports, bus sides, on surface rail stations will catch people's attention. It will hopefully get people to go out and buy my product.
The reason why I have used posters to advertise my product is because it will cover my target group, it will encourage impulse buying through location close to shops, it will be seen repeatedly and it will have a short, sharp message on the poster.
Television- £12,000 for 10 second {peaking viewing}.
My product will be advertised on television mainly on satellite and digital. As a lot of young adults watch t.v it will be a good source to target my market. By advertising my product on t.v it will attract attention and have a great impact. The advertisements of my product will demonstrate it in use, it will reach my audience and it will be reinforced by continuous advertisements.
Merchandising.
Merchandising will be the attempt to influence the consumer at the point of sale. My new product will be sold anywhere the consumer buys its product from. The product will be sold in local supermarkets across the country, leisure centres, vending machines at schools, department stores across the country, local shops and petrol stations. The aim of merchandising will be to encourage sales of the new product and it will speed up the rate of which stocks are turned over.
In order for merchandising to carry out effectively it will have the following features:
The product will have a good display that will attract attention, enhance certain aspects of the product and it will encourage the right "frame of mind" to make a purchase. It will have displays near the windows in stores.
The layout of the product: the product will be displayed where it will be viewed by the target audience {under 20}. The aim of it will be to encourage consumers to buy the product.
Appropriate lighting- lighting will be kept soft where browsing is encouraged and bright where they may be the need to suggest cleanness. The smell of the product will encourage the right atmosphere.
The reason why I have used merchandising for my product is because it will encourage sales and it will speed up the rate at which stocks are turned over. By having a good display for the product it will give the product a good image. Also merchandising will help persuade the consumer to prefer one brand to another.
Direct marketing.
My product will also be advertised by direct marketing. This will include leaflets and brochures sent in the post on the product e.g. 10p off the next purchase. The leaflets, brochures and coupons will be sent in the post for consumers all over Yorkshire. By having them sent them sent in the post it will reach my audience and they will be aware of the product.
The reason why I have decided to use direct marketing is because it is a greater accuracy in targeting consumers; it provides more opportunities for feedback from customers; messages can be customised to fit the needs of the segment and direct marketing is easier to asses since the outcomes are measured through specific criteria such as request for more information.
Personal selling.
My product will be advertised through personal selling. This will involve a sales representatives by "knocking on doors" and selling the product. Individual consumers will be given personal attention and it will deliver a "standard message" to the consumers. With personal selling the individual consumers need will be dealt with and the product shaped to meet these needs.
The reason why I have decided to use personal selling is because it will create awareness and interest in the product, the company will obtain orders and make deliveries, it will encourage product trials and test marketing and it will provide rapid and detailed feedback from the consumer to the producer via the sales representative.
Sales promotion.
My product will go through sales promotion. Sales promotion will encourage the consumers to make a purchase. It will be used to increase sales, to help with personal selling, respond to the actions of competitors and it will be an effective alternative to advertising.
The reason why I have decided to use sales promotion is because it will gain attention of my product, it will increase sales, it will encourage switching from competitors brands and new technology will allow coupons to be at point of sale to reward loyal shoppers or attack rival brands.
Consumer promotions.
Consumer promotions will create interest and tempt potential customers to make a purchase. Example's which will be used are:
Free gifts.
Special price offers.
Free samples.
Coupons.
Production and resource requirements.
What quality of my goods will I provide?
One of the most important decisions I will have to make is to identify the most appropriate scale of production for my product. As my products organisation is large, the production of my product will have to be organised efficiently. It will benefits from internal economies of scale. The numbers of internal economies which will affect my product are:
Technical economies.
As my product is from a large organisation it will use techniques and equipment for large production scale. It will have four machines each producing 1,000 units per week at the cost of £2. When the production increases it will be replaced by one machine which will produce 5,000 units per week at the lower unit of £1.75.
Labour and managerial economies.
For the production of my product it will need highly skilled workers and they will need to fully utilise their specialised skills. Also, division of labour will be carried out as it will avoid time-wasting coursed by the constant need to switch from one type of job to another.
Commercial economies.
This products organisation will be able to obtain considerable benefits in the commercial world. It will gain enormously by devoting more resources to market research and the development of the new product. Raw materials for my product will be purchased in bulk, so large discounts will be extended on credit periods which will be negotiated. The organisation will be able to organise their retail outlets, have financial stake in their suppliers and collect profit at the various stages of production. Overheads, such as rent and rates, will be spread over a large output. The product will be distributed to the wholesalers and they will give the products to the retailers who will distribute them to various organisations.
Financial economies.
As this product is from a large company it will need to secure investment, this will make it easier for it to raise finance.
Production planning and control.
Production planning and control will include finding the answers to questions such as:
How many products should the company produce.
How close is it to completion.
How will the company resource the production requirements.
Programming.
Programming will be concerned with timetabling all the resources used by the production department. Production managers will set dates for delivering of resources and part-finished products, and allocate production services accordingly.
Purchasing.
Purchasing will be another key function. Purchasing materials will be a key management for the product. The purchasing department will provide the organisation with a steady flow of materials and at the same time will ensure the continuity of supplies.
Forecasting.
Forecasting will be a key area used on making decisions about the quantity to be produced. The forecast will look into the future and use past information to make predictions.
The organisation will have useful internal sources of data {management accounts and budgetary information} will help prepare forecasts. The forecast will include costing and sales figures for the individual product, breakdowns of overheads, sales results, and performance data for operating units. Reports will be frequently prepared showing the potential of different projects.
Forecasting resource will be a key requirement in order to meet customer demands.
What plant, machinery and equipment will be required for my product.
There will be five P's of production used in my business plan. These are: product, plant, people, process and programme.
Product.
Product is essential to provide the right requirements, which clearly meet the consumer, needs and that can be provided for them at the right place, at the right time and for the most attractive price.
Plant.
To add value to the product it will need some form of plant/base. The location, size, design, safety and layout of the plant will be important. Consideration will be taken into account on how the material for the product will be delivered and how the finished product will be transported away. The layout of the plant will be easy to co-ordinate the various activities that will take place there. The plant/base will be equipped and properly maintained.
People.
The production process of my product will depend upon the people involved and the quality of people will depend upon how much is invested in them. The production team will be trained and developed, as this will be vital in order for the products to be at a high standard.
Process.
The process will be important. The process management will identify the key processes of the business activity. This will be possible to maximise customer satisfaction, which will lead to better financial performance. The process management will also give details on how the process works, it will identify who in the organisation is involved in these processes.
Programming.
This will be mainly concerned with timetabling the use of resources. To meet orders successfully they will be a plan and controlled activities. The plan will be successful, as it will involve purchasing, stock control and quality control.
The equipment/machinery required for my product.
Vacuum equipment- for dirt to be removed from the beans.
Winnowers- to remove the shell of the beans.
Roasting and sterilisation machine- for roasting the beans and sterilising them.
Grinding machine- to grind the beans.
Blending machine- to blend the flavours in the chocolate.
Refiner- removes the gritty texture on the chocolate.
Tanks- to store the liquid chocolate.
Roller- to scrape off small particles of chocolates.
Packaging machine- to wrap the chocolate up.
What quality levels will be required and how I will ensure this quality.
Quality levels of my product will be the most important factor in determining its success. Consumers will be prepared to pay for the best value and value will be added by creating those standards required by the consumers. I will ensure the quality level by carrying out the following aspects:
Quality control.
Quality assurance.
Total quality management.
Quality control.
This will be concerned with detecting and cutting out components or final products which will fall below set standards. This process will take place after the products have been produced. It may involve considerable waste as defect products are scrapped. Quality control will be carried out by control inspectors. Inspection and testing will be the most common methods of carrying out quality control.
Quality assurance.
Quality assurance will occur both during and after the event, and it will be concerned with trying to stop faults from happening in the first place. Quality assurance will be concerned with making sure products are produced to predetermined standards. Quality standards will be maintained by following steps in a quality assurance system.
Total quality management.
Total quality management will go beyond quality assurance. It will be concerned with creating a quality culture so that every employee will seek to delight customers.
In the total quality system, TQM will take place at every stage of the products operation and it will be the responsibility of all employees.
The number of benefits from Total Quality Management are:
It will enable the organisation to focus on the customer.
It will enable the organisation to focus on quality.
It will emphasise on continuous improvement.
Teamwork will be emphasised.
It will lead to motivation.
The system will build control mechanisms and accountability.
What the key stages will be in the production of my product and how I will time production to meet customer needs.
My product will be produced through batch production. The product will be continually processed through each machine before moving on to the next operation.
The production team.
Production managers will be responsible for production teams and planners. The production team will be in charge of manufacturing, and packaging or wrapping. The technical and scientific manager will be responsible for quality systems co-ordination, product and process development, and packaging development.
Many parts of the manufacturing process will be fully automated. Quality checks will be carried out at critical control points. Quality will be maintained because the key factors which control the process will be already understood.
All production employees will be given hygiene training and will have to pass the Institute of Environmental Health Certificate of Food Hygiene.
The production process of my product..
The production process of my product is divided into stages. These stages are:
Storage.
Cleaning and sorting.
Winnowing.
Roasting.
Grinding.
Blending.
Coca butter and cocoa power.
Mixing and kneading.
Refining.
Conching.
Temporary storage.
Tempering.
Storage.
When the cocoa beans arrive, they will undergo laboratory tests for quality control. They may be then stored in sacks in warehouses. There, the temperature and humidity will be carefully controlled and the beans will be protected from insects. The beans will also be stored in huge silos which are 12-35 metres high and can hold up to 1000 tonnes.
Cleaning and sorting.
Before the manufacturing process begins, all dirt from the beans will be removed. This will be done by sieving and brushing, with a vacuum equipment and electromagnets.
Winnowing.
The beans may be pre-heated by a special process. Heat will cause moisture in the beans to crack the shells. The shell will be removed by the winnowers, which will leave the centre of the beans, called the nib.
Roasting.
This process will develop the aroma{smell} of the nib. The nib will be roasted at 130 degrees and sterilised.
Grinding.
The nibs will then be grounded by using a combination of beaters and millstones. The frictional heat will cause the cocoa butter paste contained in the nib to melt, so a liquid will be formed. The grinding will also reduce the size of the particles in the nib, making the liquid paste smooth.
Blending.
Blending will mix the nibs according to the recipe. It will help create the chosen flavour and quality of the chocolate. Blending will influence the hardness of the chocolate, it will keep the quality consistent and ensure the customer gets value for money.
Cocoa butter and cocoa powder.
Some of the cocoa paste will be pressed to remove the cocoa butter. This is the butter that will give the chocolate a shiny/glossy appearance. The cocoa cakes left behind will be then crushed to a powder, and this will be cocoa.
Mixing and kneading.
Three types of chocolate can be produced by blending the ingredients: cocoa paste, cocoa butter, sugar and milk.
Plain chocolate can be made by mixing the cocoa paste with cocoa butter and sugar.
Milk chocolate - milk is added to this mixture, usually as a dry powder.
White chocolate will contain only cocoa butter, sugar and milk.
Refining.
To remove the gritty texture, the chocolate will be passed upwards through a series of steel rollers which will turn in opposite directions. This process is called refining and the steel rollers are contained in a machine are called a refiner.
Conching.
This process will remove unwanted flavours, it will coat the solid particles with fat and develop the desirable flavours. Conching may be carried out in long troughs in which a roller travels from one end to the other. They have a larger capacity and are more efficient than troughs. Conching will create wave and add air to the mixture, to ensure that the flavour will develop perfectly. Cocoa butter and an emulsifier are gradually added to keep chocolate liquid and make the recipe to the correct proportions. Aromas will be added towards the end of conching.
Temporary storage.
The liquid chocolate will need to be stored after it leaves conches. It will be kept in tanks at a constant temperature and is stirred regularly to prevent fats separating from solids. For longer periods, the chocolate may be stored as blocks.
Tempering.
This process will involve heating the chocolate to 45 0c and then the cooling it to 30 0c {for dark chocolate} or 29 0c {for milk chocolate}. Tempering will adjust the fat crystals into their correct form. This will ensure that the chocolate sets with an attractive, glossy surface and doesn't "bloom" {go white}.
Meeting customer needs.
For the organisation to be competitive, it will need to manage the production and operations efficiently. The organisation of my product will deliver a high - quality product at the right time at reasonable cost which will quickly eliminate less successful rivals.
To manage the production of my product it will go through 3 distinct phases. These are:
Planning the operations process.
Starting up the operations process.
Controlling or running the operation process.
Another key element of timing to meet the customer needs will be the notion of flexibility. This is concerned with responsiveness and how well the organisation is able to meet changing needs.
What key resources I will need to build into my business plan.
Organisational structure.
The organisation will need to operate in such a way to give it a competitive edge. It must respond quickly to dynamic change which means it will have to be loose and flexible arrangements that empower people to make appropriate decisions I diverse. Members of the organisations have to feel proud of belonging to it, frequently they do not, this is a severe limitation to competitiveness.
Maintain moral will imply both motivating people effectively and creating an organisational structure tailored to the needs of the business concerned.
People
People are the most important resource of the organisation. It will be necessary to ensure the commitment of individuals to the success of the organisation. Human resource management will seeking to develop individuals to the best of their potential.
Individual development will be best for the organisation and for the individual because it will encourage commitment. Individuals will also need to be encouraged to become decision makers in their own rights. This will help to create a thinking organisation.
Finance.
Finance will be one of the biggest block to the business expansion. It will need sufficient cash flow to meet day to day trading needs. The organisation will need to be careful not to borrow too much money. It will need to structure its financing carefully to meet its key objectives.
Finance control will be an important element of the business activity. It will be essential that the business controls the cost of labour, production and marketing carefully in order to retain a competitive edge.
Time.
It will be important to measure productivity trends over a period to see whether the organisation is becoming more or less efficient. If a company increases automation of its plant or successfully reorganises the production process, it will increase the productivity ratio.
Financial analysis and planning.
The types of sources of finance which I will draw into my product.
All organisations require resources. These may be tangible. Using any of the resources requires financial planning. The management and planing of financial arrangement are therefore inseparable from the management of every organisation and an integral part of strategy building.
Every modern organisation needs to draw upon sources of finance. It needs to have funds to carry out its activities.
Profit retention.
When my product makes profit, the most important source will be the profit ploughed back into the business. The profits will be subject to co-operation tax payable to Inland Revenue. A proportion of what is left over will be allocated to shareholders as dividends.
Venture capital.
Venture is another form capital for a business. They will provide finance in return for an equity shareholding in the company and an element of control.
Bank loan.
I will take out a bank loan for a fixed period and repay it in either instalments or in full at the end of the term.
Suppliers.
Suppliers will be the valuable source of finance for my company. They will give credit to its own customers, the firm may be able to negotiate credit terms with its suppliers.
A projected profit and loss account and a start up balance sheet for my business.
The profit and loss account is an extension of trading account. Once the business has calculated its gross profit it can then calculate how much profit or loss it has made by adding any extra income it has earned and subtracting its expenses and tax.
Profit is the driving force in most businesses. There are a few, if any, which attach no importance in making profit. Profit has a number of functions. The prospect of making profit motivates people to set up in business. Without profit there would be little incentive for individuals to commit their time and personal resources to business activity. Normal profit is the minimum reward an entrepreneur must receive in order to remain interest in the business. If the business does not earn this amount of profit the owner will pull out and pursue other opportunities.
Profit also helps resource allocation in market economies. Businesses that makes profits are able to purchase more raw materials and labour in order to expand production.
The amount of profit that a business makes is a measure of how well it is performing. Those firms that supply products which are efficiently produced and sold at prices which are attractive to consumers will tend to be more profitable. From accountants point of view, profit is the amount of money left over in a particular trading period when all business expenses have been met. Profit can then be :
Retained
Distributed to the owners of the company
Used to pay tax
Balance sheet.
A balance sheet is a financial position of a business at a particular point in time. The balance sheet contains information about the assets about a business, its liabilities and its capital.
Assets.
Assets are the valuable resources that a business owns. They are resources that can be used in production. Assets are divided into current assets and fixed assets. Currents are used up in production, such as stock of raw materials. Fixed assets, such as machinery, are used again and again over a period time.
Liabilities.
Liabilities are the debts of the business, i.e what it owes to other business, individuals institutions. Liabilities are a source of funds for a business. They might be short term, such as an overdraft, or long term, such as mortgage.
Capital.
Capital is the money introduced by the owner of the business. It is another source of funds and can be used to purchase assets. In all balance sheets the value of assets will equal the value of liabilities and capitals.
The balance sheet has a number of uses for a business.
In general, it provides a summary and valuation of all business assets, capital and liabilities.
The balance sheet can be used to analyse the asset structure of a business. It can show how the money raised by the business has been spent on different types of asset.
The balance sheet can also be used to analyse the capital structure of a business. A business can raise funds from many different sources, such as shareholders capital, retained profit and long term and short term sources.
Looking at the value of working capital can indicate whether a firm is able to its everyday expenses or is likely to have problems. The value of working capital is the difference between current assets and current liabilities.
A balance may provide a guide to a firms value. Generally, the value of the business is represented by the value of all assets less any money owed to the outside such as all suppliers.
A budget for my business and estimation of start up cost an working capital.
A budget will show the money needed for spending and how this might be financed. Budgets are based on the objectives of businesses.
Budgets will provide a means of controlling income and expenditure. They regulate the spending of money and draw attention to loses, waste and inefficiently. They act as a "review" for a business, allowing time for corrective action. Budget can emphasise and clarify the responsibilities of executives. They enable management's to delegate responsibility without losing control, because subordinates are expected to meet budget targets which are known in advance by senior management. Budgets help ensure that capital is usefully employed by checking that the capital employed is consistent with the planned level of activity. They help the co - ordinations of the business and improve communication between departments and finally budgets provide clear which understood by personnel lower down in the organisational structure.
A budget is a plan which is agreed in advance. It must be a plan and not a forecast. It will show the money for spending ad how this might be financed.
Information contained in a budget may include revenue, sales, expenses, profit, personnel, cash and capital expenditure.
A simple cash flow forecast for my product.
Cash is the most LIQUID of all business assets. A business's cash is the notes and coins it keeps on the premises and any money it has in the bank. Cash is important to a business because without it businesses would cease to exist.
It is important that a business continually monitors and controls its cash flow. It must ensure that it has enough cash for its immediate spending. However, it should avoid holding too much cash because cash is an unproductive asset. A business will have more effective control over its cash flow if it:
Keeps up to date business records.
Always plan ahead.
Operates an efficient credit control system which prevents slow or late payment..
Continuous cash flow into and out of a business organisation.
Break-even chart for my product.
The break-even point will be where the point at which sales levels are high enough not to make a loss, but not high enough to make a profit.
The concept of break-even is a development from the principles of marginal costing. Marginal costing is a commonly employed technique that uses costs to forecast profits from the production and sales level expected in periods. The great benefit of marginal costing over other costing methods is that it over comes the problem of allocating fixed costs- only variable costs are allocated.
Break-even analysis is a concept that is central to the process of marginal costing. Breaking even is the unique point at which an organisation makes neither profit nor loss. If sales go beyond the break-even point, profits are made, and if they are below the break-even point, losses are made.
To calculate the break-even point there are two stages:
Calculate the unit contribution {selling price less variable costs}.
Divide the fixed costs by the unit contribution:
Break-even point - Fixed costs.
Unit contribution.
Evaluating my business plan
The plan of my business is based on a good idea. This is to produce a new flavoured Aero chocolate bar {strawberry flavour}.
When carrying out my market research, it has indicated that the consumers will buy the new flavoured chocolate bar and my main target will be males/females under. The factors which will determine the demand for my product are: disposable income, substitute products, population size, government influences, taste/habits, price of my product and the location. My new product will be successful as it will be promoted in various ways: advertising { cinema's, radio, posters, t.v}, direct marketing, merchandising, personal selling and sales promotion. Also, my product will be distributed to various places around the country, therefore it will reach my target audience.
When producing my product the equipment/machinery used will be: vacuum equipment, winnowers, roasting and sterilisation machine, grinding machine, blending machine, refiner, tanks, a roller and a packaging machine. My product will go through the following to ensure quality: quality control, quality assurance and total quality management. In order for the product to be produced it will go through 12 production processes. These are storage, cleaning, winnowing, roasting, grinding, blending, cocoa butter and cocoa powder, mixing and kneading, refining, conching, temporary storage and tempering. The key resources I will need are people, finance, good organisational structure and time.
Return on capital employed , this figure usually taken as that at the start of the year, as this is the capital that generated the profit in the following year. Return on capital will be measured by using the following formula:
ROCHE= Profit before interest and tax.
Capital employed.
In the start of my business plan I have indicated that my target market is males/females under 20. The total size of my market will be 19%.
The breakdown of the confectionery market.
Muliple grocers
25%
Independent CTN.
5%
Symbol & independent grocers.
5%
Variety/department stores.
0%
Forecourt.
8%
Muliple CTNs
6%
Co-ops
4%
Off- liences.
0%
Others.
7%
Cadbury
28
Nestle
24
Mars
24
Terry Suchard
3
Others
21
Nestle
9
Cadbury
9
Mars
8
Tresbor Bassett
7
Wigley's
4
Terry's Suchard
Others
3
Trebor Bassett
22
Wigley's
4
Nestle
9
Mars
5
Terry's Suchard
2
Others
48
WHOLESALER
Retailer 1
Retailer 2
Retailer 3
Retailer 4
Retailer 5
Consumers.
The Oraganisation.
Political, legal and fiscal
Evironment.
Social and Cultural
Environment.
Economic environment.
Technological environment.
CASH
Used to acquire resources.
Goods and services sold for cash.
