BMGT 522 Strategic Management


 


Final Exam Paper


 


 


 


 


Strategic Business Plan


of


Energy Health Center


 


 


 


 


Student Names and Student ID:


 


 


 


 


 



 


Confidentiality Agreement


 


The undersigned reader acknowledges that the information provided by ____________________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of ____________________.


 


It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader may cause serious harm or damage to _______________________.


 


Upon request, this document is to be immediately returned to


_____________________.


 


 


_________________


Signature


 


___________________


Name (typed or printed)


 


___________________


Date


 


This is a business plan.  It does not imply an offering of securities.


                                                                                                                               



 


Table of Contents


 


1.          Executive Summary                                                                                                1


1.1         Introduction                                                                                                   2


1.2         Objectives                                                                                                     2


1.3         Mission (Motto)                                                                                             3


1.4         Keys to Success                                                                                            3


 


2          Company Summary


2.1         Ownership                                                                                                     4


2.2         The economics of the business                                                                    4-5


2.3         Company Locations and  Facilities                                                                  6


2.4         Product and Service description                                                                     6


2.4.1        Unique product feature                                                                       6


2.4.2        Distributing a service                                                                           7


 


3            Services                                                                                                                  


3.1      Introduction


3.2      Service Description                                                                                          


3.3      Competitive Comparison                                                                                 


3.4      Fulfillment                                                                                                        


 


4            Market Analysis Summary                                                                                       


4.1      Introduction


4.2      Market Segmentation                                                                                       


4.3       Service Business Analysis                                                                                


4.3.2        Business Participants                                                                            


4.3.3        Distributing a Service                                                                           


4.3.4        Main Competitors                                                                                


 


5            Strategy and Implementations Summary                                                                   


5.1      Introduction


5.2      Market Strategy                                                                                              


5.2.2        Positioning


5.2.3        Branding


5.2.4        Pricing Strategy                                                                                   


5.2.5        Promotion Strategy                                                                              


5.3      Sales Strategy                                                                                                  


5.3.2        Sales Forecast


5.3.3        Time-lime                                                                                            


 


6            Management Summary                                                                                            


6.1      Introduction


6.2      Organization Structure                                                                                     


6.3      Management Team


6.4      Operation and process                                                                                     


6.5      Management Team Gaps                                                                                 


6.6      Personnel Plan


6.7      New resources


6.7.1 Manpower requirement


6.7.2 Funding requirement


6.8   Important assumptions


6.9   Key financial indicators


                                                                                                                       


 


7            Financial Plan                                                                                                          


7.1      Important Assumptions                                                                                    


7.2      Key Financial Indicators                                                                                  


7.3      Break-even Analysis                                                                                        


7.4      Projected Profit and Loss                                                                                


7.5      Projected Cash Flow                                                                                       


7.6      Projected Balance Sheet                                                                                  


7.7      Business Ratios                                                                                                


 


8            Appendices                                                                                                             


 



 


1.     Executive Summary


 


Extensive global research and market trend analysis strongly points to a boom in spa health and wellness vacations.  In recent years, many Hong Kong people travel to Resort and Health Spa of Thailand, Bali and Japan to enjoy and relax.  They are seeking to look and feel better; to lose weight; to slow the effects of aging; to relieve pain or discomfort; to manage stress; or to partake in the use of natural supplements like vitamins and minerals to improve their health.  Today’s health and wellness programs respond to growing consumer demands for fitness level improvement; for health lifestyle education; for nutrition counseling; for healing; for holistic, naturopathic, alternative or eastern medicinal practices/therapies.


 


Plastic surgery gives people an appearance that they decide for.  It is an important issue in today’s demanding world.  Many consider that success comes with the appearance.  This is something that enhances confidence and personality.  It is very important to match between inner beauty and external beauty to gain profound sense of self-comfort and confidence.


 


Energy Health Resort offers both vacation services for clients to relax and undergo plastic surgery in a safe environment.  We will tailor them to the individual as much as possible.


 


To achieve our objectives, we are seeking 500,000 to invest in the project.  The money will be paid from the cash flow from the business, and will be collateralized by the assets of the resort, and backed by the character, experience, and personal guarantees of the owners.


 


In Hong Kong entrepreneurial spirit, the pressures associated with living in a stressful environment, such as a frenetic city pace, our daily life and pollution have lead to a boom in the spa and wellness industry over recent years.



 


Highlights



 


1.1   Introduction


 


Energy Health Resort is a full-service resort dedicated to consistently providing high customer satisfaction by rendering excellent service, quality products, and furnishing an enjoyable atmosphere at an acceptable price/value relationship.  We will also maintain a friendly, fair and creative work environment, which respects diversity, ideas, and hard work.


 


1.2   Objectives


 


l             To establish Energy Health Resort as the dominant resort in Hong Kong


l             Establish a rapport with other virtual enterprises by exceeding expectations and earning a reputation


l             Network and create partnerships to increase sales


l             Provide sales incentives to staff to meet goals of 10% per month


l             Net income more than 10% sales by the third year


 



 


1.3   Mission


 


To supply services and products that enhance out clients’ physical appearance and spiritual relaxation – at affordable prices.  Our clients will choose us because of their belief in our ability to meet or exceed their expectations of price, service, and expertise.


 


Our motto: The Art of a Healthy Time!


 


1.4   Keys to success


 


The keys to success in our business are:


 


Location:          providing an easily accessible location for customers.


Environment:     providing a private environment conducive to giving relaxing and professional service – plastic surgery procedures.


Convenience:    offering clients a wide range of services in one setting, and extended business hours. 


Reputation:       good reputation of the owner, doctor and other “beauticians” as providing superior personal service.


 


2.0   Company Summary


 


Energy Health Resort will, upon commencement of operations, sell a wide range of beauty services and products.  The resort is for health minded individuals who want to learn about cleansing fasts, vegetarian food, Yoga and Meditation, exercise and just feeling better, looking better and living longer.  In addition, we strive to provide our customers the latest in cosmetic surgery procedures and services in a safe, caring and comfortable environment.  Combine a professional approach to patient education with the personalized attention each customers.  We are committed to protecting the clients’ privacy.  What will set us apart form the competition is our commitment to providing all of these services in one convenient location.


 


We understand managing a business demands dedication, persistence, the ability to make decisions and the ability to manage both employees and finances.  We believe we have the management team to meet these demands.  The company founded by three owners, all of whom hold director positions.



 


2.1   Company Ownership


 


Energy Health Resort is a privately held company.  The three founders comprise all of the ownership.


 


Yeung Chor Hun – 500,000


Lai Yuen Fun – 400,000


Wong Mei Yee – 400,000


 


2.2   The economics of the business


 


The timing is right for starting this new venture.  Patiently searching for 4 months for the perfect location, one was finally found.  The demand from the owner’s clients, as well as the ambitions of the owners to one day start their own resort, and the procurement of highly professional and qualified staff to support the resort, has made this business one of great potential.


 


Established and emerging resort business need to constantly improve their business and management skills, keep up with new changing trends within the sector, and develop good business contacts and partnerships.  Access to resources are needed that can assist operators with market/industry research, product development and improving standards, professional training and education.    By innovation and enhancement, it will increase revenues and profit for resort operators; foster sustainable, high quality and wellness experience across the resort, increase the capability of these resort operators to be globally competitive.


 


Energy Health Resort will be profitable because every needs a vacation, in which they can escape the stress and problems of their everyday lives. It has tremendous capacity for future growth.  Future expansions may include develop another branch in China.


 



 


Start-up Summary


 


Start-up will require approximately 500,000 if capital, 1,300,000 of which will be provided by the founders and the families.  The remaining 500,000 will come as a loan. 


 


Approximately750,000 will be allocated to leasehold improvements and 500,000 to equipment.


 



 


Start-up


 


Requirements


 


Start-up Expenses


 


Legal


20,000


Stationery etc.


5,000


Brochures


8,000


Insurance


50,000


Rent


300,000


Expensed equipment


500,000


Utilities


60,000


Leasehold improvements


750,000


Other


7,000


Other


0


Total Start-up Expenses


1,700,000


 


Start-up Expenses Needed


 


Cash Balance on Starting Date


100,000


Other Current Assets


0


Total Current Assets


100,000


 


Long-term Assets


0


Total Assets


100,000


Total Requirements


1,800,000


 


Funding


 


Investment


 


Investor 1


400,000


Investor 2


400,000


Investor3


500,000


Other


0


Other


0


Total Investment


1,300,000


 


Current Liabilities


 


Accounts Payable


0


Current Borrowing


0


Other Current Liabilities


0


Current Liabilities


0


 


Long-team Liabilities


500,000


Total Liabilities


500,000


 


Loss at Start-up


(1,700,000)


Total Capital


(400,000)


Total Capital and Liabilities


100,000




 


2.3   Company Locations and Facilities


 


The Resort will be located at Sheung Sze Wan, around 30,560 square feet.  The location is strategically situated on the Sheung Sze Wan Road in Sai Kung near Clear Water Bay.  It is a high profile area, with easy access from all parts of city.1.


 


2.4   Product and Service description


 


Energy Health Resort caters the needs of our customers at many levels.  We offer relaxation though the use of luxurious spa, vacation activities and comfortable lodging.  The transformation after plastic surgery is can results in both a revamped body and refurbished sense of self-esteem and confidence.


 


Everyone feels the difference.


 


2.4.1  Unique product feature


 


In Hong Kong, there is rarely resort like ours.  We want to set itself apart from other resort that may offer only one or two types of services.  We offer our clients the convenience of these services in one location without the need to travel abroad.


 


Besides, our customer can do plastic surgery in a “Resort” instead of a hospital.  We provide the latest in cosmetic surgery procedures and services in a private, caring, and comfortable environment.  Plastic surgery is never an easy decision.  We’ll have a client consultant and coordinator who will help answer the questions.    has earned great respect publicly and he is the Resort’s resident.   Our critical difference lies within our nursing staff.  All are caring, sensitive individuals who also happen to be skilled in the most advanced applications of plastic surgery, and have extensive training and experiences.


 


There are a number of health resorts overseas, but they are mainly in the very high income parts. We wish to offer a middle ground for those clients who can’t quite afford those high-end luxury resorts.  They can do enjoy those services in Hong Kong!


 


Our business atmosphere will be a relaxing one where clients can kick back and be pampered. 


 


2.4.2  Distributing a service


 


At the Energy Health Resort, we now offer a wide range of holistic health practices. 


 


l                 Plastic surgery:  Nose refinement, facial enhancements, liposuction, ear refinement, abdominoplasty, lower boy lift, inner thigh lift, breast refinement.


l                 Chiropractice care/acupuncture


l                 Fasting and colon cleansing – 3 2/1 day and 7 day learning programs


l                 Classical Thai and herbal massage therapy


l                 Thai Herbal steam room


l                 Reflexology


l                 Meditation


l                 Classes in Yoga, Chi Gung, Reiki, Cooking and in classical Thai massage


l                 Information topics on health, fitness, nutrition, cooking, stress management and wellness classes.


l                 Full use of Resort facilities, including Indoor and Outdoor (Seasonal) pools, tennis court, walking trails, strength training and latest cardio equipment


l                 Spa and salon services and treatments


 


Whether the customer stay for just a few days or an entire week or more are welcome. It is a great spot to rebuild the body, mind and change habits.


 


3.          Services


                                                                                                                                       


3.1   Introduction


 


          Energy Health Resort will offer the needs of our target market at different approaches. The services that will be provided include those that may enable the clients to feel relaxed and comfortable. The services will also include the cosmetics surgery which will ensure satisfying results for the target market.


                                                                                                                               


 


3.2  Service Description


         


          As mentioned, the company will offer relaxing and satisfying services. The services includes plastic surgery, chiropractice care/acupuncture, fasting and colon cleansing, classical Thai and herbal massage therapy, Thai herbal steaming, reflexology and spa and solon services. The spa services include a soothing rose petal massage in the master bedroom, with a revitalizing body treatment by the pool. the company will provide all the important equipment from massage table, facial steamer, aromatherapy candles, CD player with soothing music and many more. The services for surgeries include nose refinement, liposuction, facial enhancements, ear refinement abdominoplasty, lower boy lift, inner thigh lift, and breast refinement.


 


                                                                                                                                 


3.3  Competitive Comparison


         


          Unlike other energy health center, this company offers quality products and services which suits the needs of their target market. All the things needed for a certain session will be provided by the company in a convenience and affordable cost. With the growing demands for a resort that will offer beauty services and products, the company can be considered to have an edge from the existing competitors. The latest cosmetics surgery will be provided by the resort ensuring that such service will be safe, caring and comfortable for all the clients. The combined professional approach to patient education and the personalized attention given to each customer will be the best asset of the company.


                                                                                                                               


3.4  Fulfillment


 


          Being a resort which offers new products and services from beauty treatments to cosmetics surgery, the company is assured for meeting its objectives and achieving its mission to be the number one supplier of services and products that will enhance the physical appearance of their clients and as well as spiritual relaxation at a very affordable prices. The company will also have the assurance that their clients will choose them among other competitors because of their belief in the ability of the company to meet their needs or even exceed their expectations in terms of price, service and professional expertise.


 


 



  • Market Analysis Summary



  •                                                                                                                                        


    4.1  Introduction


     


    This part of the market plan and strategic management approach will be the discussion of the market analysis conducted within the location. The discussion will include market segmentation, service business analysis, distributing service and main competitors.


     


    4.2  Market Segmentation                                                                                         


     


    Primarily, the context of the market segmentation for this company will be the Psychographics.  Psychographics includes social class, lifestyle, and personality variables (1997). The end result of using these variables is a psychological profile of each market segment. Issues also examined the customers’ loyalties, habits and self-concept. Social class describes the level of enthusiasm of the customers in terms of taking good care of their cars, what they consider important about their immediate surroundings, their opinions on various issues, and their interests. The market segment for this company includes those individual who are seeking for a relaxing, convenient and affordable resort. Further, the segment also includes clients who will avail the services for spa and body treatment and for those who will choose to have a cosmetic surgery on the resort.


     


    4.3  Service Business Analysis                                                                                   


     


    The company is offering quality products and services among its customers. Having been able to realize the needs of the customers for a convenient place to relax and for beautification purposes, the business can be considered as the most suitable place for these clients. The services offered uses state of the art facilities and technologically advanced equipment to provide the current needs of the target market. Moreover, the business is also offering quality products and services.


     


    4.3.1        Business Participants


     


    In this particular business, the participants include those professionals who have knowledge in surgical procedures who are related to the services offered by the resort; this will include doctors and nurses. In addition, fitness instructors will also be involved in the business. Further, the participants will also include those who are experienced in providing spa services and other body treatment. Human resources will also be included from utility personnel to customer representatives, and others. The company will have its CEO and board members from major shareholders.


     


                                                                                                                                 


    4.3.2        Distributing a Service                                                                                 


     


     


    To be known in the market place, the product and services will be distributed directly to its clients and consumers through its main branch located at Sheung Sze Wan and through the on-line marketing at the company’s website.  The company will also find a traveling agency that will promote the company. In addition, the clients may avail the full services offered by the company by going to the resort.


     


    4.3.3        Main Competitors


     


    The main competitors of the company are enterprises which provide similar products and services within or near Sheung Sze Wan in Hong Kong. In addition, the competitors will also include those resorts in international boundaries like in Japan, Thailand and Indonesia. Since the offered products and services are in demand in the world wide market, the competitors are not limited to the local companies with this kind of business but also for those companies in the international market.


     



  • Strategy and Implementations Summary                                                               



  • 5.1  Introduction


     


    The marketing concept has been defined as ‘the key to achieving organizational goals’ and the marketing concept rests on ‘market focus, customer orientation, coordinated marketing and profitability’. In a profit making business the firm obviously has to try and achieve this level of customer satisfaction as a way of staying ahead of the competition and making a profit. In doing so, a company must be able to identify an effective and efficient marketing strategy for the product and services.


     


    5.2  Market Strategy                                                                                                


     


    Traditionally, marketing has been utilized by the private sector in decisively increasing the capabilities of an organization. Marketing can be considered as one of the most important element underpinning successful business creation ( 1994). Perhaps because of its complex applications, marketing has been defined in a variety of ways (1988). The marketing concept was first promulgated in the late 1950’s (1990). The importance of marketing concept incorporates oft-repeated elements such as: customer orientation; integrated marketing efforts; and resultant profitability ( 1990).  Part of a marketing strategy is the utilization of the marketing mix. The marketing mix principles is controllable variable that is why it can be adjusted on a frequent basis to meet the changing needs of the target market and other dynamics of marketing environment (2004). In relation to marketing plan, marketing mix includes both short term and long term strategies makes for a more profitable marketing mix. Long term strategies build brand/company awareness and give sales revenue a permanent, gradual boost. Short term strategies create a temporary, immediate revenue boost by giving buyers an incentive to purchase. By implementing both long and short term strategies, you can attend to immediate sales goals while building your business reputation and goodwill ( 2004).


     


    5.2.1        Positioning


     


    There are many competitors who are already in the marketing arena that offers this kind of products and services. The products and services of the Energy Health offer a high quality and satisfying features that would be able to have a good reputation in the marketing arena.  One of which is their spa services and their body treatments.  They give the clients satisfying services which makes them become in demand in the market place. In order to position the products in the market place, the company will use advertising.  To be able to let the target market of the company know the products offered to the different market segments or groups the company will use television advertisement. In addition, testimonials of the customers who already avail the products will be included.


     


    5.2.2        Branding


     


    Brand represents the most powerful link between the offer and consumer. Familiarity, image and trust drive a brands reason to be and thus they are the building blocks of its capacity to generate value. It follows that to value a brand, you have to investigate not only within the company walls, but above all else the mind of the consumer, where the real value of the brand resides. For the Energy Health Resort, their brand will be the name of the company itself, i.e. Energy Health.


                                                                                                                               


    5.2.3        Pricing Strategy


     


    One of the advantages of the Energy Health resort is when it comes to its pricing technique.  In order to be known into the market place and as a new entrant, the company will provide its target market with an affordable cost while providing them with high quality products and convenient services. The company will be given the customers and clients a price that is lesser than its competitors so that the consumer will be encourage in patronizing all products and services offered by the. Although, the company will provide lower cost, the company will ensure that the cost tagged to all its products is enough to give profit to the whole company.


     


                                                                                                                                 


    5.2.4        Promotion Strategy


     


    To promote the company and its product, the company will use video advertisements, print advertisements and the concept of e-marketing. These promotion and communication strategy will tend to meet the consumers form different places everywhere, especially those target markets or the consumers in the working place. Moreover, since the trend in the market place today is the usage of e-marketing, the company will provide a website that any client can access


    The main objective of utilizing e-marketing strategy is to keep in touch to different internet users to be able to attract more clients and consumers. All in all, through the website, whether the user is a customer, employee, stockholders, vendors, retailers or end customers, the true strength of e-marketing is acceleration of the business portfolio.


                                                                                                                                 


    5.3  Sales Strategy


     


    In order to achieve such forecasted sales or revenues, the company used integrated marketing campaign as their strategy. In this quarterly plan, the company will attempt to use an effective advertising and promotional strategy for each quarter. The promotional strategy includes the use of television, radio, internet and print advertisement.


     


    5.3.1        Sales Forecast


     


     


    Quarterly Sales Forecast


     


    Sales Forecast


    Sales


    FY 2006


    FY 2007


    FY 2008


    Local Tourists


    103,710


    262,527


    327,424


    Foreign Tourists


    150,304


    380,474


    474,528


    Other Clients (Corporation)


    25,401


    64,300


    80,195


    Total Sales


    279,415


    707,301


    882,148


    Direct Cost of Sales


    FY 2004


    FY 2005


    FY 2006


    Individuals


    46,669


    118,137


    147,341


    Families


    67,637


    171,213


    213,538


    Take out


    11,431


    28,935


    36,088


    Subtotal Direct Cost of Sales


    125,737


    318,286


    396,966


                                                                                                                                 


    5.3.2        Time-lime


     


    The first two months will be used to get the Energy Health Resort up and running.  By month three things will get busier.  Sales will gradually increase with profitability being reached by the beginning of year two.


                                                                                                                                 


     



  • Management Summary                                                                                        



  • 6.1  Introduction


     


    This part of the paper will be the discussion of the management of the Energy Health Resort. The management is an important aspect of a company. Without this, the company may not function well and may not be able to achieve its organizational objective.


     


    6.2  Organization Structure                                                                                       


     


    Organizational structure is the specification of the jobs to be done within an organization and the ways in which those jobs relate to one another. Organization structure provides a framework for managers to divide responsibilities, hold employees accountable for their work, and effectively distribute authority to make decisions, and coordinate and control the organization’s work. Organization charts clarify the organization’s structure and show employees where they fit into an operation.


    At Energy Health they have a chain of command or unbroken line of authority that connects each level of management. This process makes two things clear such as who is responsible for each task and who has the authority to make official decisions.


     


    6.3  Management Team


     


    Energy health Resort board of Directors consists of the Chief Executive Officer and his/her direct reports from each product department along with a representative from each of the four business units in each product sector. The organization is relatively flat consisting of fewer levels.


     


    6.4  Operation and process


     


    At Energy Health Resort the top level of the organization is formed into two product segments, Products for hotel accommodation and Services for cosmetics and spa or body treatment. Within the two sectors the organization then flows into a functional organization with four business units in the areas of Quality Assurance, Marketing/Sales, Finance, and Human Resources. Such units of areas are the ones responsible for ensuring that the company is able to meet the demands of the customers and the company as well.


                                                                                                                                   


    6.5  Management Team Gaps                                                                                   


     


    In this company, there are two current gaps that exist within the management team. These include the chief financial officer and the market development team specialist. Both of these functions will be performed under consultation process in the first year of the operations of the company. The position of the CFO can later be filled on a full time basis and the other team will be handled by a more experience investment banking relationships.


     


     


     


    6.6  Personnel Plan


     


    The table below shows the Personnel Plan for Energy Health Resort. Herein, specific needs, timing, and compensation, are given for each position


     


    Personnel Plan


     


    2006


    2007


    2008


    CEO


    60,000


    60,000


    66,000


    Sales Mgr.


    60,000


    60,000


    66,000


    Sales Executive


    42,000


    45,000


    48,000


    Head Surgeons


    42,000


    45,000


    48,000


    Nurses and other Professionals


    10,500


    45,000


    48,000


    Account Service Exec.


    36,000


    38,000


    40,000


    Administrative Asst.


    30,000


    30,000


    32,000


    Administrative Asst.


    6,000


    24,000


    25,000


    VP Corp. Dev.


    18,000


    24,000


    30,000


    CFO


    12,000


    60,000


    66,000


    Branch Sales


    0


    200,000


    380,000


    Other


    0


    0


    0


    Other


    0


    0


    0


     


    6.7  New resources


    6.7.1 Manpower requirement


    The manpower requirements include those individual who are experienced in providing spa services. In addition, service crews, utility personnels will also be required. Healthcare providers or those who will work as an assistant for surgery must have knowledge in medical practices and must be a registered nurse.


     


    6.7.2 Funding requirement


    For funding, the company is in need of an investor who will be willing to invest in the company and who will trust and believe in the full potential of the Energy Health Resort. In addition, with the good reputation, the company may be able to gain more profit from its loyal customers which may enable the company to grow even more. Further, the company may also consider special funding which may come from different banks.


     


    6.8   Important assumptions


     


    The quantifiable element that would control and monitor the marketing plan will be the profit and the promotional performances. If the company would be able to promote the products strategically and exemplary then the consumer will be encouraged to purchase the products which in return provide good performance with regards to profit.  If these two will have a positive result then the company is assured that the marketing plan is under control and that the company will surely became successful.


     


    6.9   Key financial indicators


                                                                                                                           


    In Energy Health Resort, the most essential indicator is in line with its inventory turnover. In this kind of business turnover exceeds 50, with product being purchased and sold often within the week. For example, Food costs must be kept below 32%. Beverage costs must be kept below 21%. In addition, controls must be instituted and maintained within the resort. All in all, management’s background in corporate finance indicates understanding of the importance of these control systems.


     


    Reference


     



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