Buy custom Planning a New Business Venture essay
Task 1: Research and Report
The Type of Business Organization
Millennium Travel and Hospitality Ltd pride itself in the fact that we will be the market leader in the provision of guest services, including accommodation, laundry and consultations at discount services throughout the Adelaide city.
The Sources of Finance
Millennium Travel and Hospitality Ltd will raise finance through a number of methods. Financing of the business is a huge risk that Millennium Travel and Hospitality Ltd need to handle well (Hillson, 2009). Therefore, both internal and external sources will be considered. Internal sources will include retained earnings and borrowing from friends and relatives. External sources include loans from commercial banks.
Like many other startup businesses, Millennium Travel and Hospitality Ltd will consider various legal aspects. First, I will need to obtain a trading license to legally allow Millennium Travel and Hospitality Ltd provides guest services. The company also needs to register the “Millennium Travel and Hospitality Ltd” name with the Registrar of Companies.
Australia has several labor and employment laws aimed at protecting the employees and employers against lawsuits (Ntumy, 1993). Millennium Travel and Hospitality Ltd will, therefore, abide by all Australian labor and employment laws.
Australian employers are required to keep records of all employees, in order to determine the tax returns (Ntumy, 1993). The company shall follow the Tax laws (Cameron, 1983). Keeping good records will also enable the company to monitor its progress, prepare financial statements and keep track of deductible expenses (Lynn, 2007).
Although various facets of the Australian economy have fallen as a result of the global financial crisis, the travel and hospitality industry has continued to consistently grow (Woodside & Martin, 2007). The consistent growth in this industry guarantees investors that there is potential money to be made (Lambin, 2007). The exact market that we intend to penetrate is Adelaide city. Adelaide city is one of the most explored parts of South Australia. The city is considered as one of the most liveable cities across Australia because of its various environmental sites. Among the fascinating outlooks in Adelaide City include beaches, Barossa and Coonawarra valleys, Adelaide Hills among others (National Geographic, 2011). The city is also densely populated, and this provides a ready market for travel and hospitality business. The proximity to Kangaroo Island also makes Adelaide be home to thousands of visitors from various countries across the globe (Shackley, 2012).
We shall carry out a market analysis in order to gain an insight on the attractiveness and the dynamics of the tourism industry. An analysis of the market allows marketers to identify the key success factors, including threats, opportunities, and trends and to create strategic questions that can guide information gathering and analysis (Dibb & Simkin, 1996). Thus, we will be able to predict how the Australian travel and hospitality market is going to develop both in short-run and long-run by conducting a market analysis (Hitt, Ireland & Hoskisson, 2010).
Task 2: Business Planning
a) Vision Statement
To be the market leader in the provision of excellent guest services in Australia and beyond.
b) Mission Statement
The company aims at becoming the market leader in the Australian travel and hospitality industry by providing visitors with panoramic experience that relieves the hustle and bustle of the harsh life through adoption of state of the art technologies, and taking into consideration economic and environmentally sound practices.
-To achieve a competitive edge in the travel and hospitality market through the adoption of internet technology.
-To maximize revenues, to enhance customer loyalty and retention in the face of global competition.
-To be the market leader in the travel and accommodation industry, and to liaise with key stakeholders in the travel and hospitality industry in an effort to enhance tourism in the area.
In the recent past, the tourism sector in Australia has recorded a considerable growth despite the deteriorated financial conditions. According to Boone & Kurtz (2011) visitation to Australia is expected to increase by 4 per cent between 2013 and 2020. The buoyant in the Australian tourism industry has been made possible by the existence of a government sector that is efficient, a competitive business sector, and a labor market that is flexible (Lang, 2005). The government has set forth policies that ensure the tourist industry is vibrant. The tourism industry has also played a prominent role in the creation of jobs, regional development, and export earnings (Enz, 2009. Tourism contributes significantly to the Gross Domestic Product of Australia. In the services sector, tourism has been the biggest export earner. The increase in visitation to Australia has, in turn, led to an increase in the number of tourism businesses (Pearce, 2005). Key indicators show that the travel and hospitality industry employed over 500, 000 workers in 2011 and paid about 70 billion in wages to the diverse workforce. In Australia, restaurants are found in major towns, in uptowns, near airports and at resorts. In the face of globalization, hoteliers across Australia have embarked on franchising their hotel businesses with a view of appealing their customers (Palmer, 2012). Also, most hoteliers across Australia have overwhelmingly institutionalized the culture of innovation to meet customer’s needs. For instance, most reservations are made over the internet. In addition, hoteliers are advertising their business online and this allows guests to review the services offered before booking (Murthy, 2009).
a) Gaps in the market
Despite its success, the travel and hospitality industry has faced several challenges that are hindering the realization of its full potential (Daniels et, al., 2004). One of the greatest challenges facing the travel and hospitality industry in Australia is the harsh climatic conditions. Climate change influences both the behavior and demand (Lee, 2005). Some of the main issues that can affect tourism in Australia, include the rise in sea level, biodiversity, changes in rainfall, and changes in the fire ecology. Also, there have been massive displacements, land ownership issues, pollution, habitat annihilation among other issues in recent years and this has caused conflicts in the land. Snow, rise in sea-level and other climatic conditions normally influence visitors’ perceptions, motivations and destination choices (Mentzer, 2001). For instance, most consumers are forced to visit a destination or see an attraction before it is lost as a result of climate change (Dahlen, Lange & Smith, 2010).
b) Target Market
The target market for Millennium Travel and Hospitality Ltd shall be divided into local and international. The local market shall consist of the residents of Adelaide City. The local market will further be divided into young and family groups. The demographics of Adelaide City provide a firm base of why it is a promising market for our company. According to the Australian Bureau of Statistics (ABS), there are 1,277,174 residents in Adelaide City. In order to target the international market and boost export earnings, the company shall target various regional market blocks such as Africa, Asia, Europe and the US.
c) External Factors and Market Conditions
Australia has a conducive political environment which in turn plays a greater role of encouraging investors such Millennium Travel and Hospitality Ltd (Dewar, 2009).
Australia is a signatory of various international laws and treaties that affect business operations in Mexico, including the NAFTA, UN, WTO, World Bank, IMF and ILO, all which plays a significant role in business operations (Coupey, 2005). Nonetheless, the legal framework guiding the process of business registration and operation is flexible; thus, promoting international investment (Dibb & Simkin, 1996).
Australia has recorded remarkable economic growth in the last two decades (Francis, 2010). This tremendous growth can be attributed to the sound economic decisions (Hansen & Christensen, 2003). With such a strong economic background, Australia is undoubtedly an incredibly promising investment region that is most likely to create value for money for an investment (Gronroos, 1989).
e) Business Products to Meet the Needs of the Target Market
The company will offer differentiated travel products and services. This will be achieved through innovation of numerous products and services to suit the different consumer segments and to market them through the most effective approaches (Kao, 2010). Initially, the company will focus on inexpensive products and services with desirable qualities. This will be attractive to Australian travellers, who are likely to form the first bunch of clients (McDonald, Burton & Dowling, 2002). With time, premium products and services will be included in order to suit clients seeking for quality (Ferguson, Brohaugh, 2010).
The financial reports for Millennium Travel and Hospitality Ltd start from January 1st each year and end on December 31st.
ASSETS 2015 2016 2017
Cash and equivalent 8,500 10,200 12,240
Accounts Receivable 1,500 1,575 1,654
Inventory 9,000 12,600 17,640
Prepaid Expense 1,500 1,500 1,500
Total Current Assets 20,500 24,375 31,534
Equipment 3,000 3,600 4320
Accumulated depreciation (300) (900) (1,400)
Net property and equipment 2,700 2,700 2,920
TOTAL ASSETS 23,200 27,075 34,354
LIABILITIES AND OWNERS’ EQUITY
Accounts payable 750 788 827
Salary and Wages Payable 1,500 1,575 1,654
Payroll Tax Payable 115 120 127
Sale Tax Payable 550 578 606
Total Current Liabilities 2,915 3,060 3,214
Owners’ investment 20,285 20,285 20,285
Retained earnings 0 3,729 10,955
Total Owners’ Equity 20,285 24,015 31,240
TOTAL LIAB & OWNERS’ EQUITY 23,200 27,075 34,454
Millennium Travel and Hospitality Ltd INCOME STATEMENT
2015 2016 2017
Sales Revenue 160,000 224,000 291,200
Cost of Sales 96,000 134,400 174,720
Gross Margin 64,000 89,600 116480
Gross Margin % 40% 40% 40%
Advertising 11,000 11,000 11,000
Depreciation 300 600 500
Insurance 1,500 1,575 1,654
Interest Expense 200 210 221
License Fee 500 500 500
Office supplies 600 630 662
Payroll Taxes 1,836 2,570 3,342
Rent 18,000 18,540 19,096
Salaries and wages 24,000 33,600 43,680
Telephone 1,200 1,260 1,260
Store setup 1,000 500 500
Lodge setup 3,000 1,200 1,260
Total Expenses 63,136 72,185 83,711
Net Profit 864 17,415 32,769
If the business targets are not met, we shall consider international acquisition (Gitman & McDaniel, 2008). Despite the various risks associated with acquisitions, research has shown that a company can rip various benefits from such transaction if carefully evaluated and implemented (Aaker &Mills, 2005).
Task 3: Pitch
Millennium Travel and Hospitality Ltd has been subjected to the most rigorous analysis. For this reason, it can be concluded that the business is viable under all realistic scenarios. The above plan demonstrates that Millennium Travel and Hospitality Ltd is a solid new business based on real and exciting opportunities.