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The Executive Summary
The Sultanate of Oman has become the center of projects and successful global businesses, especially in Muscat area. The tea selling project is a marketable project. The shop would sell different varieties of tea, especially the Karak tea. The residents here comprise of different nationalities. They like taking tea for various reasons.
Tea comes from countries such as China and India at affordable prices. The Arabs and the Asians are the groups of people that have the strong passion for tea. The business would choose a locality that is open for all tea lovers. Despite the different customs and traditions, the habit of taking tea is in everyone. The business would choose strategic marketing tools and develop a three-year strategic growth plan.
The Vision and Mission Statement
The vision of the business is to become a leader in quality product and service and provide a competitive advantage to the best and most respected companies in the service industry. The aspiration is to create a leading company in a competitive market.
The Karak Shop would become the foremost tea shop in the area. The shop would serve the perfect product at the very affordable price. The shop would also be a meeting venue for different artistes.
The mission is to provide and deliver the best and the finest tea products, especially Karak and maintain the highest level of quality in all that the business does to gain the confidence of the customers, employees, and partners. It would lead to a major contribution to the development of the product, prosperity and growth in the tea industry.
The Company Goals and Objectives
The company goals and objectives include the running of a successful tea shop in Muscat. The company would employ 2-3 employees within the first year of operation. The business seeks to achieve sales of at least $150,000 during the first year. If the company is to achieve and maintain a gross profit margin of 55% on average, the company would need to minimize operation costs and find a reliable supplier.
The Values and Principles
The company would create a culture of respect and a sense of belonging amongst the staff members and the customers. There would be a need for respect for everyone. The business would invest in research and development. It would enable the business to find new ways of growth and advancement from a small firm to a much larger business with branches in the town and throughout the country. There would need to create a great working environment for the workers. Everyone would need to focus on diversity in the business and provide outstanding service to the customers from all walks of life.
The customer satisfaction is an ongoing activity that would enable the customer care staff to take the customer comments and concerns seriously. The ideas would help the management to gauge the companys image in the eyes of the customer, whether positive or negative. It would enable the management to find the best suitable way to satisfy the customers needs. The management should work towards ensuring the customers develop a long lasting interest in the service and products. The staff should also love their work.
The project would promote the multiplicity of flavors of tea. It would offer various kinds of hot drinks. The other important aspect would be to honor the traditional heritage of the OMAN. There would be the need to provide the best service at all times and be quick on delivery. The social media would be essential for marketing the product and placing the orders. Apart from normal customer visits, the customers can reach the shop for orders and bookings through the phone calls or texts, the social media and the website. The customers can also place delivery orders at their offices or reliable places.
Strategic Location
Karak had to choose a strategic location so that it can attract the customers easily. The place had to be within the reach of customers. It had to be in the city where customers find it easy to access at their comfort. The town center is good because customers are far from their homes and, therefore, would find it easier to access a nearby joint. The market research also showed that the population is high. For the services and products to cover a large area, the business would open more branches in different regions.
Business and Industry Profile
Once the customers enter the shop, the staff would ensure that they leave with a smile. They would also fill a form that enables them to gauge the services and products. The question and answer customer satisfaction form would also require them to give details of the places in town where they frequently visit. When a new branch opens in such localities, the customer would gladly refer other friends.
The business would increase services in certain seasons of the year. The winter season, for instance is a time when there is increased demand for hot drinks. There would be the need for special promotional activities and launches. A good marketing campaign in the winter would increase the awareness and sales. During the summer, the company can concentrate on the cold drinks while serving the hot drinks in considerable amounts.
Industry Analysis
The diversity of the services would include the preparation of Karak tea with some light meals such as the Omani bread with cheese or bread with honey. The staff would add Omani flavors like the cardamom and saffron to improve the taste. The delicacy in these meals would be an added advantage.
Business Strategy
Karak Shop is a new tea shop in Muscat, Oman that would provide quality flavored tea to customers around Muscat and other parts of Oman. It is a Limited Liability Company under the management of the Store Manager. He is suitable as a manager of Karak Shop because he has wide experience in the management position at successful coffee shops in other parts of the United Arab Emirates. Karak Shop has a high potential for growth considering that its management personnel has good knowledge about tea. Also, the companys management team has undergone extensive training in health benefits of tea. It makes the team ideal and reliable for the sales and marketing strategies.
Tea has become a very important commodity not only in the United Arab Emirates but also in the entire world (Hazarika 285). Given the fact that tea trade happens on the direct sales basis, resellers of tea add some value at every stage of the trade (Nakamura 67). According to the current market analysis, the highest ranking tea consumers, as well as largest tea producers in the world are India and China. Dubai is now among some of the fast growing areas globally, which makes it an ideal market for tea.
A recent market analysis on the production and sale of tea in UAE shows that there is a significant increase in the demand for tea within UAE and its neighborhood (Nakamura 67). For example, in 2008, Dubai tea imports were 148.6 million kilograms, which recorded an increase of about 4.0 million kg about imports in 2007. In 2009, UAE registered the highest number of sales in both coffee and tea, which amounted to about 10.435 tons.
On the high demand for tea witnessed in the past years, it is expected that the tea industry would grow tremendously in the following years. Over the past ten years, the sales of tea have registered a percentage increase of over 100%. Trends in UAEs tea market nowadays show a positive growth rate of about six billion kilograms by 2016.
The high demand for tea has contributed largely to the success of the tea industry in general. Such a high demand can be attributable to the growth in individual awareness of the health benefits of the tea. For this reason, Karak Shop will capitalize on its managements experience to explore different avenues to satisfy the demand for tea in UAE.
According to tea market trends, the tea industry would grow tremendously in the future as many people discover the significance of tea in their body. Thus, Karak Shop would establish new markets for tea in the future to cater for the growing demand for tea.
During the start-up stage, the business would require a lot of energy, money, effort, and ample time to ensure that there is good management of a stable customer base. Secondly, at the growth stage the shop would depend on the limited resources of the company to carry out daily activities. There are prospects that the business would attain maturity after three years. At that time, there would be a reliable source of income to maximize the revenue. There would be a need for intensive marketing to sustain the already acquired market and add other new clients.
Karak Shop Company desires to be a market leader in the future, providing flavored tea to customers all over Muscat and other parts of Oman. As such, the company targets a market share of 10% within the first year and hopes to attain more than 50% within its second year of operation.
Karak Shop should apply some competitive strategies including focus, differentiation and cost leadership. Karak Shop would focus its efforts on the provision of flavored tea, which would enable the company to design market segment. Also, the company would have enough capital to set the lowest prices for its tea, as a strategy to hedge out its competitors.
The SWOT analysis is the acronym for Strength, Weakness, Opportunities and Threats. The strength includes the location that would attract very many customers because there are different nationalities in Al Satwa.and the entire region. One weakness is that there is only one branch. And that would impact heavily on the business. The opportunity is that specialty tea shops are now sprouting everywhere and are as popular nowadays as coffee shops. They may provide competition to the shop, but the market is available, and management would ensure that the shop retains its customers. The threat is that there are many restaurants providing Karak tea around the shop.
Company Products and Services
Karak Shop would focus on the sale of flavored tea. The availability of several tea flavors complements the companys experience. The primary goal is to become the main stopover for customers in need of all types of tea flavors, as well as new experiences.
The business would use the ministrys guidelines to prepare the tea under the best temperature condition and time. It would ensure that there is the consideration for all flavors. There would also be the loose, iced, as well as hot tea. The customers needs and tastes would be the preference and priority of the company. Different types of tea have different benefits to the users (Pastore and Fratellone 531). The provision of flavored tea would ensure that the different flavors cater to the customers needs. As such, the primary goal of Karaks flavored tea is focused on ensuring the provision of great therapeutic virtues to all users, with a guarantee of no health problems to all users.
The business would also invest in diversification. The main focus remains to be tea. But to ensure that the business holds on to its market, there would be the need for variation in the products offering. Some customers have company meetings, and not all of them take tea. The varieties would encourage the target market. Coffee would be an added advantage.
There are plans to include gift baskets designed for all occasions. Besides, the company plans to introduce chocolates and a variety of pastries. It would be a business for all social groups.
The process of making tea is simple. But it depends on whether it is black tea or white tea. The Karak tea, for instance, contains milk, the tea leaves, and sugar. The Indians make the best Karak tea in the area. It was popular among Asian people before it became common among all the other people, especially the Emirati youth. They always stop in front of any Karak shop and place their order. They raise one finger to order one cup of Karak and two fingers for two cups and so on. Its like they have their sign language and it does not matter the location of the shop. Every Karak shop owner knows what one or two fingers mean besides other signs. For example, when someone moves the forefinger and the thumb together it means I need more sugar . The pleasure is not only in the taste but also in sharing it with friends. Karak tea has become popular in the workplaces, home and globally.
It is the reason for opening another tea shop in the mall to operate professionally. Many people enjoy drinking tea as an alternative to coffee, whether for health reasons or to get a quick caffeine fix. Tea leaves grow in gardens and plantations all over the world, with each location having its individual flavor nuances. The resulting variety in tea leaves and taste characteristics allows for a lot of creativity for a tea business. The main suppliers of the tea are the locally available wholesalers, who are selling it at an affordable price. The recurrent expenditures would include the salaries, rent, utilities, and garbage collections.
The Marketing Strategy
Effective marketing is very important for any company (Smith and Culkin 263). For this reason, Karak Shop would target the youth and the aged between 16 and 60 years within Muscat. In 2015 Omans population was 4.155 million (Drysdale 144a). It includes 1.28 million people leaving in Muscat. Out of the 1.28 million people leaving in Muscat, 22% are youth and thus, form the target market for the flavored tea.
Over the past years, there has been a high demand for flavored tea in UAE. It led to an increase in the number of tea shops specializing in the sale of flavored tea. By the end of the third year, the business would start looking for export links, because trends show that there is a lot of demand for flavored tea outside UAE. The exports would mainly include dry tea leaves.
Karak Shop faces competition threats from several other tea shops such as the Chado Tea Lounge, which prides in more knowledgeable staff and detailed tea menus. However, at Karak Shop the menus are simple. The staff normally consults the customers to find out if they have knowledge of the many varieties of flavors. Apart from just getting what they want, the staff would let the customer taste two of the other varieties that the customer does not know.
The business recently conducted a market research to find out the state of the market for flavored tea, as well as the level of competition. Most people are turning to flavored tea (Balsaraf and Chole 46). It has the implication of increased demand and establishment of numerous tea shops. For this reason, the market for flavored tea might be saturated in the future which can have adverse effects on the business (Hazarika 286).
The main focus would be on maintaining the existing customers and attracting new ones through elaborate distribution channels. The firm would encourage referrals to ensure that it remains competitive in the market. There is also an established and reliable supplier to provide the company with new products at all times.
The Ownership and Management Team
The shop would have two shareholders who would each have 50% stake in the business. They would be responsible for making and shaping the vision of the shop. The project management is essential for developing and expanding the services to the customers. The team would ensure that they provide leadership in monitoring the challenges and providing the competitive advantages towards the growth of the project. The staff would comprise of experienced people who would provide distinct service to the customers.
The Store Manager would be responsible for ensuring that the store runs efficiently and becomes profitable. He or she would maintain the overall quality and day-to-day operations of the establishment. Another responsibility would be problem-solving and handling the day to day operations. The Manager must have three years experience and qualified in Hotel Management with a degree in the field. He has must have worked in successful coffee shops in the United Arab Emirates.
The supervisor would update the manager on the day to day running of the shop. He or she would be responsible for managing the cooks, the chef, the cleaners, and the waiters. He or she would communicate and coordinate all the activities of the shop between the staff and the Manager. He or she must have management experience and learn from a recognized college. The Cashier would count the daily incomes, dispatch expense money as budgeted. He or she would report to the manager about the incomes and expenses. He or she must be an accountant by profession.
The Chef would be responsible for planning the set menu items and any specialties as well as provide the recipes. The Chef would be responsible for placing food orders and necessary kitchen tool orders. The chef would also address any complaints that affect the kitchen staff and resolve those issues. He or she would be an experienced and seasoned chef.
The waiters would serve the tea and other accompaniment. They would ensure that the tables, seats, and the serving environment are clean. They would also dress modestly. The waiters would be professionally trained and undergo job evaluation. The Garson would be responsible for welcoming the arriving customers. He or she would also provide information about their services to the customers. He or she must be a person with high public relations experience.
The business would base the staff package on the business activities. The company would have an agreed minimum package and then provide other incentives as the income increases. The medical insurance, the house allowance, and the bonuses are some of the benefits the company would consider as the business advances.
Location and Layout
Geographically, the choice of the Alqurm region was advantageous because there are different nationalities that live in this region. There are Arabs, Asians, and hundreds of other nationalities. The residents have different traditions and languages because of their nationalities and tribes. But they share the habit of having a cup of Karak tea. It is an Indian name for this type of flavor which is common for breakfast, afternoon, and evening meetings.
There is no specific focus. People of all ages and races have special tastes for specific flavors. But the youths are the most typical clients. The psychological aspect is that customers are looking for an excellent product with affordable price. Quality is also essential.
Planning should focus on the design of the cafeteria. A special interface design cafe should attract customers and reflect the kind of service the business offers. It must be a suitable place for the customers to drink tea. The distinctive design demonstrates the outstanding services it provides to its customers. There are many designs that can suit the Karak café. For instance, the exotic designs and decorations would be the first option. The colors would include some shed of green to make the customers understand that the product comes from the natural plants. The decorations and design would integrate the Omani heritage and some bit of foreign ideologies.
Competitor Analysis
There are many competitors such as Tea Corner Cafe, Fareej Tea Cafe, Tea Cafe Al Msafer, Coffee Al Makan, and Starbucks Coffee Shop. They are strong competitors since they had been in existence for many years. But Karak shop has a strong brand name that it is building. They are well-known. They also have more than one branch. They normally display very competitive promotions for their services. However, there are weaknesses in their service delivery. They delay in providing the service, and their range of cuisine is not yet up to date. There is the lack of adequate space for meals or drinks in the shop and delays in opening the cafes. The early morning customers miss their breakfast.
There could be increased competitors in future who would affect the business in a big way. The commercial Starbucks coffee shop and Almakan café could pose as future threats. They may open large branches, especially in large centers and malls. Some of them may decide to copy the Karak, business model. But to counter such moves, the Karak shop would advance its proposals to open in the large business malls as early as one year into the business.
The Financial Forecasts
To fund the business, there is $100,000 from each shareholder. It would go into the registration purposes, installation of important equipments, buying stock, and the furniture. It would take the company at least a year to break even. Since the owners would have provided the capital, there would be no need for a taking a loan. The management would consider the bank loan during the time for expansion.
Income statement for the Month ending October, 31, 2013
Revenue:
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Sales 60,000
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Interest 1000
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Service revenue 2,500
Total revenue 63,500
Expenses:
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Salaries expense 3000
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Rent expense 2,500
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Advertising expense 1000
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Utilities expense 1,500
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Total expenses 8000
Net income 55,500
Balance sheet for the Month ending October, 31, 2013
Current asset:
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Cash 3,000
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Account receivable 2,500
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Prepaid insurance 3,500
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Suppliers 1,000
Total current asset 10,000
Property, plant and equipment:
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Equipment 6,000
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Less accumulated
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Depreciation equipment (1,000)
Total property, plant and equipment 5,000
Total asset 15,000
Current liability:
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Notes payable 2,000
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Account payable 3,000
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Interest payable 800
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Wages 800
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Rent 3,000
Total current liability 9,600
Long term liability:
-
Long term notes payable 400
Total liability 10,000
Owner equity:
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Capital 5,000
Total liability and owner equity 15,000
Cash flow statement for the Month ending October, 31, 2013
Net income 55,500
Cash flow from operating activities:
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Depreciation expense 3,000
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Increase in account receivable (2,500)
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Increase in inventory (18,000)
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Increase in account payable 8,000
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Decrease in notes payable short term. (15,000)
Net cash flow provided by operating expense 31,000
Cash flow from investing activities:
-
Equipment Purchase (5,000)
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Land 10,000
Net cash flow from investing activities 5,000
Cash flow from financial activities:
-
Dividend payment (10,000)
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Net increase in cash 26,000
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Cash at the beginning years 3,000
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Cash at the end of the month 29,000.
Works Cited
Balsaraf, Swati and Revant Chole. Tea: Its Potential Health Implications and Other Benefits. International Journal of Nutrition, Pharmacology, Neurological Diseases. 5.2 (2015): 46. Ijnpnd. Web.
Drysdale, Alasdair. Population Dynamics and Birth Spacing In Oman. International Journal of Middle East Studies. 42.01 (2010): 144a. Ijmes. Web.
Hazarika, Kakali. Changing Market Scenario for Indian Tea. International Journal of Trade, Economics and Finance. (2011): 285-287. Ijtef. Web.
Nakamura, Yoshiyuki. The Past and Future of Studies on Tea. Genes and Environment. 32.4 (2010): 67-74. Genesenvironment. Web.
Pastore, Robert L and Patrick Fratellone. Potential Health Benefits of Tea: A Narrative Review. EXPLORE: The Journal of Science and Healing. 2.6 (2006): 531-539. Explorejournal. Web.
Smith, David and Nigel Culkin. Making Sense of Information: A New Role for the Marketing Researcher. Marketing Intelligence and Planning. 19.4 (2001): 263-271. Emeraldinsight. Web.
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