Business Plan On [Broadway Dairy]

Business Plan Projects Submitted to Faculty of Management and Administrative Sciences in Partial Fulfillment of Requirements for the Subject of Entrepreneurship

Submitted By:
Ms Scholar: Muhammad.Jahanzaib Ms Scholar: Muhammad. Shahid Ms Scholar: Luqman Ahmed Ms Scholar: Abu Sufyan MBA 3rd (3.5Year) Session (2011-2015) (11022720-028) (11022720-008) (11022720-019) (11022720-035)

UNIVERSITY OF GUJRAT
Date of Submission 04/02/2013

Name of Program Coordinator: Mr. Waqas Manzoor Dar Signature of Program Coordinator: ____________________

Dedication
I dedicate to our dear Parents whose prayers are always with us Friends, University Of Gujrat and my respectable Mr. Waqas Manzoor Dar whose guidance Is always with us

You know??? You want it

Page 2

Acknowledgement
All praise to Allah, the most merciful, kind and beneficent, and the source of all knowledge, wisdom within and beyond our comprehension. He is the only God, who can help us in every field of life. All respect and possible tributes goes to our Holy Prophet Mohammad (SAW), who is forever guidance and knowledge for all human beings on this earth.We are very thankful to the most merciful and Almighty Allah who gives us the strength that we fulfill our task. We are very thankful to our parents who give us a chance to learn better for bright future. We are very thankful to ourteacher who is polished our personality and gives personal and professional skill. We are really very thankful to Mr. waqas Manzoor Dar for her cooperative attitude during the completion of our project work. He helped and supported us during completing project. We are really very thankful to one of our friend Mr. Furqan Hameed for his cooperative attitude during the completion of our project work. He helped and supported us during gathering and analyzing information.

You know??? You want it

Page 3

Executive summary
Opportunity and problem analysis Today it is a major problem for the people that they want to consume quality dairy products but they dont get these products with purity. Secondly several sweets, bakes and restaurant operators are using milk as raw material and then convert it into cream, ghee and condensed milk, we will provide them these products in better quality and low cost. Business plan: We will collect milk from producers at low cost and then refine it in different products like cream, butter, ghee and condensed milk. We will provide these products to industrial consumers for further production of products. Business form: We are four partners in this business everyone will take active part in the management and will bring equal capital. Profits and losses of the organization will be distributed equally. Marketing: We have selected Gujranwala as target market, we have adopted several marketing strategy to capture the customers from this market. We have made competitors and industrial analysis of this market. Financial plan Total investment 3000000/Mr. Jahanzaib750000/Mr. Luqman750000/Mr. Shahid750000/Mr. Abu Sufyan 750000/We have divided this investment in different initial requirements like purchase of fixed assets, legal charges, cash in hand etc. You know??? You want it
Page 4

Table of Contents
Contents
Dedication.................................................................................................................................................... 2 Acknowledgement ...................................................................................................................................... 3 Executive summary.................................................................................................................................... 4 Table of Contents ....................................................................................................................................... 5 Business plan................................................................................................................................................. 9 Vision .............................................................................................................................................. 10 Mission ........................................................................................................................................... 10 Objectives ...................................................................................................................................... 10 SWOT ANALYSIS ............................................................................................................................ 10 PEST ANALYSIS ............................................................................................................................. 11 Porter 5 force modal ........................................................................................................................ 12 Business modal ................................................................................................................................ 13 Business location ......................................................................................................................... 13 Form of organization .................................................................................................................... 13 Intellectual Property ..................................................................................................................... 14 Organizational structure .................................................................................................................. 15 Organizational hierarchy chart ................................................................................................... 15 Office boy....................................................................................................................................... 16 Two cream refiner ........................................................................................................................ 16 Butter refiner ................................................................................................................................. 16 Powder milk refiner ...................................................................................................................... 17 Condensed milk refiner ............................................................................................................... 17 Products Packer ........................................................................................................................... 17 Working hours of labor: ............................................................................................................... 17 Production unit .............................................................................................................................. 17

You know??? You want it

Page 5

Salaries .......................................................................................................................................... 17 Compensation:.............................................................................................................................. 18 Salary payment: ............................................................................................................................ 18 Leaves:........................................................................................................................................... 18

Marketing plan ............................................................................................................................................ 19 Industry analysis ............................................................................................................................... 19 Competitors analysis....................................................................................................................... 19 Market research ................................................................................................................................ 20 Potential customers ..................................................................................................................... 20 Questionnaires Results ................................................................................................................... 21 Individual customer results ......................................................................................................... 21 Industrial customer results .......................................................................................................... 30 Market objectives ............................................................................................................................. 39 Positioning strategies....................................................................................................................... 39 Segmentation ................................................................................................................................ 39 Geographical segmentation .................................................................................................... 40 Demographical segmentation................................................................................................. 40 Behavioral segmentation......................................................................................................... 40 Competitors edge ........................................................................................................................ 41 Marketing mix ................................................................................................................................ 41 Product ....................................................................................................................................... 42 Price ........................................................................................................................................... 42 Place........................................................................................................................................... 42 Promotion .................................................................................................................................. 43

Operational plan ......................................................................................................................................... 46 Collection and storage of milk ........................................................................................................ 46 Cream refining .................................................................................................................................. 46 Cream packing .............................................................................................................................. 47 Butter .................................................................................................................................................. 47 Butter packing ............................................................................................................................... 47 Page 6

You know??? You want it

Ghee ................................................................................................................................................... 47 Condensed department ................................................................................................................... 47 PRODUCTION LAYOUT................................................................................................................. 48

Financial Plan .............................................................................................................................................. 49 Objectives: ......................................................................................................................................... 49 Capital Arrangement ........................................................................................................................ 50 Use of funds: ..................................................................................................................................... 50 Startup cost: .......................................................................................................................................... 50 Projected Financial statements .............................................................................................................. 51 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Projected Income Statement ...................................................................................................... 51 Projected Cash flow Statement .................................................................................................. 52 Projected Balance Sheet............................................................................................................. 53 Working Notes .............................................................................................................................. 54 Sale Prediction .......................................................................................................................... 54 Sale Forecasting....................................................................................................................... 54 Quantity of raw material .......................................................................................................... 54 Cost of Good Manufactured.................................................................................................... 55 Manufacturing overhead ......................................................................................................... 55 Fuel charges ............................................................................................................................. 55 Factory Depreciation ................................................................................................................ 56 Administrative Expenses ......................................................................................................... 56 Plant and machinery ................................................................................................................ 57 Equipments ........................................................................................................................... 57 Furniture and Fixture............................................................................................................ 57 Rent cost ................................................................................................................................ 58 Preliminary expenses .......................................................................................................... 58 Marketing Cost ...................................................................................................................... 58 Legal Expenses .................................................................................................................... 59 Overall depreciation ............................................................................................................. 59

Financial Analysis of Business ............................................................................................................... 60

You know??? You want it

Page 7

Internal rate of return ................................................................................................................... 60 Payback Period............................................................................................................................. 60 Net present value ......................................................................................................................... 61 Profitability Index .......................................................................................................................... 61

You know??? You want it

Page 8

Business plan
This business idea is come up after assessing the environment of different cities of Pakistan by four people who were friends in a university and they decided to start a profitable business with the name of Broadway Dairy in Gujranwala region. We will provide the products cream, condensed milk, powder milk, butter and ghee after refining the milk. For this purpose they decided to go for a partnership in which all will contribute equal amount of capital to start up the business and will also provide some services to run the business successfully. Problem From consumer point of view it is major problem today people wants to consume milk and different types of dairy products in pure quality but often they find such things of low quality and at high price. Suppliers are providing such consumer products at their own rates. From producer point of viewin winter production of milk increases but its consumption decreases, in such situation mostly milk is converted in powder milk and utilize in summer for consumption and adulteration. Opportunity We can collect milk from different villages directly and supply it to consumers at low price with purity. In winter extra production of milk can be used to refine it in different dairy products like cream, butter, ghee, condensed milk and powder milk. These types of products can be utilized for production of different sweets and bakes products. There are many businesses that operating to produce different types of consumer products in which dairy products are used as raw material, usually they purchase milk and refine it into cream, condensed milk and ghee for further use in production. We shall provide them these products in ultimate form as they require cream, condensed milk and ghee. We will collect milk directly from producer (milkmen) at low cost and convert it into cream, condensed milk, powder milk and ghee and deliver it to these businesses. You know??? You want it
Page 9

 Vision
To become the first priority of the consumers while selecting purity in Pakistan and abroad.

Mission
Our aim is to provide pure quality dairy consumer products at low cost so that the people can enjoy good health and taste.

Objectives
To provide quality dairy products

To minimize the cost To utilize extra production of milk in winter season To build and maintain a strong relationship with customers To increase the sales 10 to 20 % quarterly To expand the business portfolio

SWOT ANALYSIS
Strength
Milk and milk product being a necessity, they would always be demand. Direct link with the farmer ( supplier). Low cost due to production in bulk.
Trusted for its quality and hygiene.

Weaknesses
Milk and milk product being perishable have lower shelf life.
We cant store the extra milk product due to shortage of finance.

Opportunities
We can expand our business in other cities. Competitors are providing dairy products at higher price because they are not consumed milk properly. You know??? You want it
Page 10

 Threats
Lower entry barriers for competitors. Advance payment (pashgi) in rural area.
Climate change.

PEST ANALYSIS
Political
No legal restrictions to start business Dairy products exempt from tax Govt. makes policy to enhance milk production Unstable political environment

Economical
More suitable as low wages rate limit High disposable income of selected area

Social
Wellness is a core focus Consumer are increasingly becoming more and more diet conscious Enhance people living standard People are well educated so they are more serious about quality of goods

Technology
High costly machinery are used to refine milk Available the modern communication technology in a country Transportation system is well organized

You know??? You want it

Page 11

 Porter 5 force modal

Threat of new entry
Low barrier to entry Not too expensive to enter the market Absolute cost advantage

Bargaining power of customer

Low switching cost Pure quality Homogeneous product Very large order

Bargaining power of supplier

Too much number of supplier Similar product No substitute

Threat of substitute
High relative price Substitute of product not available

Industry rivalry
Low customer loyalty Low switching cost Many competitors

You know??? You want it

Page 12

 Business modal
First of all we have analyzed the need of consumers that they have a problem of quality for consumption of dairy products. Secondly the opportunity analysis of industrial consumers of dairy products, these consumers purchase the milk from suppliers at high cost and then convert this milk into different products and these products are used for further production of sweets, bakes and restaurant products. After analyzing the need and opportunity in the market

resources are gathered, supplies are used and finished products are supplied to our consumers and at the end feed from them is required in terms of quality and price of the products.

Need and opportunity analysis

Resources and supplies

Production process

Outlet/ Feedback Supplies

Business location
We are going to start our business in such area where the raw material will be available easily and at the cheap rates. Here we can collect raw material from producers directly and suppliers also. This is the rural area of Gujranwala, village KotSheraQilamiansingh Road, Gujranwala. In this region there is abundance of milk production.

Form of organization
We are four partners in this business. Everyone will contribute equal amount of capital and actively participate in the business activities. Profits and losses of the organization will be divided equally among the members.

You know??? You want it

Page 13

 Intellectual Property
Trademark (Applied For): The application for the registration of the below shownTrademark will be submitted to preserve the intellectual property rights of Broadway Dairy.This trade mark after the registration will become the exclusive identity mark of allBroadway Dairy products. The application will be filed to the Registrar of Trademarks (Trademark Registry Karachi) under the Trademark Ordinance, 2001 and the TrademarkRules: 2004

You know??? You want it

Page 14

 Organizational structure
Organizational hierarchy chart

CEO & OPERATIONAL MANAGER

ABU SUFYAN

MARKETING MANAGER M.SHAHID

FINANACE MANAGER LUQMAN AHMAD

QUALITY INSPECTOR M.JAHANZAIB

Office boy

Butter refiner

Cream refiner

Powder refiner

Condensed refiner

Packing

Storing

Abu sufyan, Muhammad Shahid, Luqman Ahmad and Muhammad Jahanzaib are good friends and they are studying in the university. We have not noticed that the people want to consume dairy products and due to low quality and high price they are not consuming the dairy products. Dairy products which they are consuming affect the health and for that purpose they have to go to doctor. With the questionnaire and personal observation we observe that people want to consume dairy product, due to low quality and not suitable for health do not prefer to consume dairy products. So to provide the quality and healthy dairy products we decided to operate a business which will provide the quality dairy products which have no effect on the health of people.

You know??? You want it

Page 15

Human resource plan

Labor is necessary to work done of any type so we will hire the labor for this purpose. We are the four partners who are doing the major task of the business. But these four partners are not enough to complete the task so we hired more 11 employees for this purpose. These employees are hired on the basis of their skills and knowledge which are checked in the interview. The interview of those employees is taken by Abu Sufyan who is the operational manager of the business. Interview is the best way to select the right person on the right job. Following 11 employees are hired by interview:

Office boy
A person is requiring in outlet which we are organized in Gujranwala city. All order is placed in outlet by customer that is fulfilled in the production department. He must be punctual and having an attractive personality. He must have good communication skills, effective and convincing personality and ability to greet customer with a smiling face.

Two cream refiner

Two labors are require for the process of converting milk into cream. This is the regular work and hiring person must be having the quality of hardworking. He will have some experience of doing such type of work.

Butter refiner
One labor will hire for the conversion of cream into butter. This is not to hard task. This task will complete on the machine and for the running of machine one person will require for handling the machine. Only experience person will be hire for this job.

You know??? You want it

Page 16

 Powder milk refiner

Two labors will be require for the conversion of remaining 90% milk after getting 10% cream into powder milk. This process will complete by hand as there is no special machine for that purpose. These persons only require some years experience for that job.

Condensed milk refiner

Three labors will be hire for the conversion of 90% milk into condensed milk by adding some ingredients into the milk. This job requires physical efforts as it is hard task to convert milk into condensed milk, this process in very slowly.

Products Packer
Two labors will be requiring for the packaging the butter, cream and condensed milk. This process requires only the packaging material.

Working hours of labor: Production unit

Working hours for different labor will be different, according to their working conditions. The labors which will work on the production unit the time for their working will be from 9 AM to 6 PM.

Salaries
Employee salary office boy Cream refiner Butter refiner Powder milk refiner Condensed milk converter Packaging staff Total No of employee 1 2 1 2 3 2 salary/Month 8,000 9,000 8,000 9,000 8,000 7,000 salary/Annum 96,000 216,000 96,000 216,000 288,000 168,000 1080000

You know??? You want it

Page 17

 Compensation:
Workers and employees would be benefited in cash and would be given yearly increments on theBasis of growth rate that is 10% according to financial plan.

Salary payment:
Salaries are paid to employee in the form of cash. Amount of salary are paid to the employee at the end of month. Advance salaries are not paid to employee due to getting high performance from employee.

Leaves:
Labor is allowed to have a leave in a month during their working month. Employee must announce or informed to the operational manager about their leave because manager arrange the work of that person.

You know??? You want it

Page 18

Marketing plan
Industry analysis
People are using dairy products as necessities of life. There is so much potential in this industry, there are many local and international, branded and non-branded producers in this industry. Branded producers those are providing quality products to some extent but they are focusing only elite class, non-branded and local producer are providing these products but they are not delivering purity. In that region where we are going to start our business there many producers and suppliers of milk normally producer(milkman) produce the milk and suppliers purchase it from them at low cost and supply it to ultimate consumers at high cost after mixing water in it. People want to purchase purity not the milk we will deliver them

Competitors analysis
Dairy products are become the needs of people know a days. Many suppliers are providing these products most of them are local and without brand name. Branded suppliers are also exist in the market but people dont want to consume their products due to high prices, not according to taste and use of chemicals to save the dairy products for long period of time. Here we have made a survey about the prices of the dairy products and we will compare it with consumer expectations and our prices that would be charged by us.

You know??? You want it

Page 19

Brand name Haleeb Nestle Blue band Without brand

Liquid milk Powder Rs. / 1kg milk Rs. / 500g 85 90 250/290

Cream Rs. / 1kg 320 340

Condensed Butter milk Rs. / 1kg Rs. / 1kg

Ghee Rs. / 1kg

600 80 200 260 360 600 800

Market research
No doubt, availability of quality milk and its related products is a problem that is being faced by every city of the Pakistan but the Gujranwala and Lahore are also facing this problem in spite of that these cities are the biggest milk producer in the Pakistan and also consuming it in larger quantity. I know the Gujranwala market, its consumers, its suppliers and its producers as well. I share this thing with my partners and search a very high potential for our business in the Gujranwala market. We will operate our business in Gujranwala and InshaAllah we will expand it in other cities in coming few years.

Potential customers
There are many suppliers in this era, but people still want to consume quality products. For knowing the feedback of the consumers about existing products and their quality and what kind of change they want regarding the consumption of existing products. For this purpose we have developed two type of questionnaires; individuals questionnaire for household consumers and industrial questionnaire for industrial consumers. The results of these questionnaires and its analysis are given below:

You know??? You want it

Page 20

 Questionnaires Results
Individual customer results
What is economic status of you?
Frequency Valid Upper Middle Lower Poor Total 19 34 16 6 75 Percent 25.3 45.3 21.3 8.0 100.0 Valid Percent 25.3 45.3 21.3 8.0 100.0 Cumulative Percent 25.3 70.7 92.0 100.0

Interpretation
The result of this question show that 45.33% middle and 25.33% upper economic status people prefer to use our products. That is favorable for our business.

You know??? You want it

Page 21

 For which purpose you use dairy product?

Frequency Percent Valid Percent Cumulative Percent Valid Health Necessity Need Want Total 17 30 18 10 75 22.7 40.0 24.0 13.3 100.0 22.7 40.0 24.0 13.3 100.0 22.7 62.7 86.7 100.0

Interpretation
Almost 40% people are use dairy products for necessities and 24% use for need that is showing regular customer of our business that is more positive point for business.

You know??? You want it

Page 22

 Do you satisfy with the quality of those existing products?

Frequency Valid extremely satisfy Satisfy Dissatisfy extremely dissatisfy Total 75 100.0 100.0 3 14 45 13 Percent 4.0 18.7 60.0 17.3 Valid Percent 4.0 18.7 60.0 17.3 Cumulative Percent 4.0 22.7 82.7 100.0

Interpretation
The result of this question show that 60% people are dissatisfies the quality of existing products. That is opportunity for our business to capture the market.

You know??? You want it

Page 23

 What change would you like in the existing products?

Frequency Valid quality change price change performance change Packing Total 2 75 47 22 4

Percent 62.7 29.3 5.3 2.7 100.0

Valid Percent 62.7 29.3 5.3 2.7 100.0

Cumulative Percent 62.7 92.0 97.3 100.0

Interpretation
The result of this question show the 62.67% people want to change the quality of dairy products that is positive point for business give a best quality to people and charge healthy prices.

You know??? You want it

Page 24

 Do the price relate with existing products quality?

Frequency Valid Agree strongly agree Disagree strongly disagree Total 14 6 38 17 75 Percent 18.7 8.0 50.7 22.7 100.0 Valid Percent 18.7 8.0 50.7 22.7 100.0 Cumulative Percent 18.7 26.7 77.3 100.0

Interpretation
The result this question showing 50.67% customer are disagree the existing price to relate the quality of products.

You know??? You want it

Page 25

 Are these easily available in market?

Frequency Valid Agree strongly agree Disagree strongly disagree Total 75 100.0 100.0 10 2 47 16 Percent 13.3 2.7 62.7 21.3 Valid Percent 13.3 2.7 62.7 21.3 Cumulative Percent 13.3 16.0 78.7 100.0

Interpretation
The result show this question the 62.67% people disagree dairy products are not easily available in a market. That is opportunity for business to provide easily in market.

You know??? You want it

Page 26

 Are those goods are available to you in proper packing?

Frequency Valid Agree strongly agree Disagree strongly disagree Total 75 8 5 45 17

Percent 10.7 6.7 60.0 22.7 100.0

Valid Percent 10.7 6.7 60.0 22.7 100.0

Cumulative Percent 10.7 17.3 77.3 100.0

Interpretation
The result showing 60% people are disagreed those goods is not available in proper form.

You know??? You want it

Page 27

 What price you will be willing to pay in order to get desire quality?
Frequency Percent Valid Percent Cumulative Percent Valid Low Equal High Total 9 45 21 75 12.0 60.0 28.0 100.0 12.0 60.0 28.0 100.0 12.0 72.0 100.0

Interpretation
The result shows 60% people willing to pay equal price to get desire quality.

You know??? You want it

Page 28

 Would you like that these products are delivering to you at home?

Frequency Valid Agree strongly agree Disagree strongly disagree Total 20 34 14 7 75

Percent 26.7 45.3 18.7 9.3 100.0

Valid Percent 26.7 45.3 18.7 9.3 100.0

Cumulative Percent 26.7 72.0 90.7 100.0

Interpretation
The result showing that 45.33% people are agreeing to like that these products are delivered to at home,

You know??? You want it

Page 29

 Industrial customer results

Which business you are operating?
Frequency Valid Sweets Bakes ice cream Restaurant Total 10 5 4 6 25 Percent 40.0 20.0 16.0 24.0 100.0 Valid Percent 40.0 20.0 16.0 24.0 100.0 Cumulative Percent 40.0 60.0 76.0 100.0

Interpretation
The result showing this question 40% customer are operating sweet related business and 24% customer operate restaurants. That are benefit for business, we are produce these products that are mostly use in sweet and restaurant business.

You know??? You want it

Page 30

 How do you manage the material related the dairy products.

Frequency Valid self-production from suppliers Total 4 21 25 Percent 16.0 84.0 100.0 Valid Percent 16.0 84.0 100.0 Cumulative Percent 16.0 100.0

Interpretation
The result shows this question 84% customer arrangement of raw material from supplier they are benefit for our business.

You know??? You want it

Page 31

 Which products you frequently utilize as raw material?

Frequency Valid Milk Cream butter and ghee condensed milk more than one Total 4 1 6 1 13 25 Percent 16.0 4.0 24.0 4.0 52.0 100.0 Valid Percent 16.0 4.0 24.0 4.0 52.0 100.0 Cumulative Percent 16.0 20.0 44.0 48.0 100.0

Interpretation
The result show this question 52% customer are use more than one products (milk, butte, ghee and milk) as raw material products at a time that is opportunity we produce many

You know??? You want it

Page 32

 In which routine you order for the raw material?

Frequency Valid daily basis two time in a week four time in a week Total 25 9 10 6

Percent 40.0 24.0 36.0 100.0

Valid Percent 40.0 24.0 36.0 100.0

Cumulative Percent 40.0 64.0 100.0

Interpretation
The result showing this question 40% customer purchase on daily basis, these customers are most important for our business. Because our production of products on daily basis.

You know??? You want it

Page 33

 Do you satisfy with thee exiting quality of raw material?

Frequency Valid strongly satisfy Satisfy strongly dissatisfy Dissatisfy Total 7 25 4 6 8

Percent 16.0 24.0 32.0 28.0 100.0

Valid Percent 16.0 24.0 32.0 28.0 100.0

Cumulative Percent 16.0 40.0 72.0 100.0

Interpretation
The result shows this question 32% customer is strongly dissatisfy the quality of exiting quality of the raw material. This is our opportunity to provide the best quality products and capture the whole market.

You know??? You want it

Page 34

 Do the raw material is providing you in proper packing?

Frequency Valid strongly satisfy Satisfy strongly dissatisfy Dissatisfy Total 5 25 20.0 100.0 20.0 100.0 100.0 1 10 9 Percent 4.0 40.0 36.0 Valid Percent 4.0 40.0 36.0 Cumulative Percent 4.0 44.0 80.0

Interpretation
The result shows this question 40% customer is satisfy the packing of existing products. On the other hand 36% customers are dissatisfying the packing of existing products.

You know??? You want it

Page 35

 Do you satisfy with existing price of raw material?

Frequency Valid strongly satisfy Satisfy strongly dissatisfy Dissatisfy Total 12 25 48.0 100.0 48.0 100.0 100.0 1 6 6 Percent 4.0 24.0 24.0 Valid Percent 4.0 24.0 24.0 Cumulative Percent 4.0 28.0 52.0

Interpretation
The result shows this question 48% customer is dissatisfy with existing price of raw material, our opportunity to provide fewer prices against market and capture whole market.

You know??? You want it

Page 36

 Which kind of change you want from the raw material?

Frequency Valid Price Quality both same as existing Total 25 100.0 100.0 4 11 10 Percent 16.0 44.0 40.0 Valid Percent 16.0 44.0 40.0 Cumulative Percent 16.0 60.0 100.0

Interpretation
The result shows this question 44% customer are change the quality of raw material.

You know??? You want it

Page 37

 How much you are willing to pay for desired quality?

Frequency Percent Valid Percent Cumulative Percent Valid Low High same as existing Total 5 11 9 25 20.0 44.0 36.0 100.0 20.0 44.0 36.0 100.0 20.0 64.0 100.0

Interpretation
The result shows this question 44% customer is willing to pay high price against best quality of raw material. That is benefit for our business to earn healthy profit.After knowing the feedback of the consumers about existing products, we have adopted the following marketing strategies to capture the market. You know??? You want it
Page 38

 Market objectives
While targeting the Gujranwala market we have defined the following objectives: Delivering purity to our consumers Making direct relations with the customers Retain the customers loyalty Market strategies To attain our market objectives we have to set out the following market strategies: To delivering purity to our consumers To making direct relations with the customers To retain the customers loyalty

Positioning strategies
For survival among the competitors, gaining the customers priority and creating values for customers we have to adopt the following strategies:

Segmentation
Before going to any market we have to make segmentation of our market because no one have the same taste, consumption pattern and every market have different potential related to a product. Our purpose is not only to focus the ultimate consumers but we will provide raw material to industrial customers those are operating the business of sweets, bakes, ice cream or hoteling. For this purpose Broadway Dairy have segmented our market into different segments, that are: Geographical segmentation: Country Pakistan City Gujranwala

You know??? You want it

Page 39

 Demographical segmentation: Upper class Middle class Lower class Behavioral segmentation: Household consumers Industrial consumers

Geographical segmentation
No doubt, availability of quality milk and its related products is a problem that is being faced by every city of the Pakistan but the Gujranwala and Lahore are also facing this problem in spite of that these cities are the biggest milk producer in the Pakistan and also consuming it in larger quantity. I know the Gujranwala market, its consumers, its suppliers and its producers as well. I share this thing with my partners and geographically selected a very high potential market for our business.

Demographical segmentation
Individuals have different taste, requirements, consumption patterns and monthly incomes. According to these characteristics we have divided our market into three classes and Broadway will target its consumers according to their status.

Behavioral segmentation
Broadways main customers are industrial consumers; according to the purpose of consumption we have segmented our consumers in to following to classes:

You know??? You want it

Page 40

 Household consumers
Ultimate consumers are our household customers who utilize the dairy products for ultimate consumption.

Industrial consumers
Industrial consumers are our main customers; they utilize the dairy products for production different consumer products. Sweets, bakes, ice cream and hoteling are the business that has been selected as customers. In the Gujranwala region many businesses are operating that are providing different consumer products in which dairy products are used as raw material, these business operators feel that they should be provided condensed milk, cream and ghee with low cost, they usually purchase milk and convert it into cream and condensed milk but they do this in small quantity so their cost is high they require that they should be provided with these products in ultimate form at low cost and with high quality. It is the basic opportunity for us.

Competitors edge
No doubt several suppliers are providing these products but mostly in this area are providing at small scale and with interference of middle man that collect the milk from supplier and then supply it after mixing water in it. Whereas we will produce these products at large scale and eliminate those middle men, we will provide these products at low cost and extreme quality.

Marketing mix
After selecting the target market we have to applied some tactical and controllable tools to produce the response in the selected market, these are called marketing mix. There are four P, s of marketing mix that would be focused for attracting the potential costumers.

You know??? You want it

Page 41

Product
Products that we are going to deliver our customers are cream, condensed milk,

powder milk, butter and ghee. We will provide these products in absolute quality, proper packing and at low cost.

Branding
Products will be provided to our customers with separate brand names like

crepito for cream, Desi for ghee and butter, and puritatum for condensed milk.

Packing
All products will be available in proper packing, small packs of 1 kg and 500g for

households and big packs for industrial consumers will be provided to our customers.

Price
Prices of the products are set out after inspecting the behavior of the consumers

about existing products with relation to their quality.

Penetration pricing
Penetration pricing strategy will be adopted for capturing the market, because

customers are willing to pay same or low price for quality consumption.

Place
Production process is conducted in rural area where raw material is easily

available. Whereas the outlet for contact with customers will be open in urban areas where we will supply to housed hold consumers and industrial consumers. Factory sight:
Village KotShera QilaMian Singh road Gujranwala

You know??? You want it

Page 42

Marketing outlet:
Tanveer center Nowshehra road Gujranwala

Promotion
For promotion of our business and for the awareness of people about our

organization and making the strong relations with the customers we have taken the following steps:

Promotional objectives
o To aware the customers about the our products o To making strong and loyal relation with customers o To attracting the more customers for increasing sales

Opening ceremony
We will arrange an opening ceremony in which we will invite our potential industrial consumers and introduce them with our business and suggest them to try this strategy, purchase raw material from us, and reduce the cost of their products.

Print advertising
Through print media advertising we have attempted the following steps to promote our business:

You know??? You want it

Page 43

 Visiting card
The customers that will visit our organization we will provide them our visiting card for direct marketing we have printed out the visiting cards for the customers.

Newspaper
For door to door advertisement through print media we will advertise weekly on every Sunday in daily express newspaper Gujranwala.

Pamphlets
For promotion of business and introducing of a business we have printed out pamphlets through which customer will get acknowledgement about our products and key purposes.

You know??? You want it

Page 44

 Broad costing
For advertising through electronic media we have taken the following steps:

o Cable ads
Cable ads will be broadcast on Gujranwala TV that will promote our business around the city.

o Facebook ID:
We have created a page with name of Broadway dairy at Facebook for gaining the peoples perception and suggestions about our organization.

You know??? You want it

Page 45

Operational plan
Operations of the organization are divided in to different departments because we have to refine the milk into different products like cream, condensed milk, powder milk, butter and ghee. We shall purchase milk from different producers at different locations and store it in one tank. The whole operations of the organization are divided into following departments.

Collection and storage of milk

First step of business operations is collection of milk from different producers from different villages of the region. For this purpose a vehicle will be used, that will go at the doors of the producers and collect milk, a person will be appointed with the driver that will check the quality and quantity of milk. After collecting the milk tanker will be bring to factory. Here for the storage of milk at cold place, chiller of 1000 liters is purchased the whole milk will be stored in this chiller and supply to other departments as they required.

Cream refining
After collection of milk the next step is to refine it in to cream for this two refining cream machines will be used. After refining the milk into cream, milk will be divided into two i.e. cream and refined milk. Both these products will be used into further four dimensions. Cream into butter or will be packed as final product. Refined milk will be used four production of condensed milk or powder milk. Lets discuss these four dimensions in to detail:

You know??? You want it

Page 46

Cream packing
After refining the milk in to two parts, cream will be sent to packing department,

after packing it will be stored as final product in cooling system, from where it will be dispatched to consumers.

Butter
Total cream will not be packed but some part of the cream will be converted in to butter. For this purpose cream will be sent to butter department a laborer will convert it in to butter. After completion of butter process, butter will also be sent into two dimensions. Either it will be sent to packing department or further convert into ghee. Here I would like to explain these two dimensions:

Butter packing
After completion of butter process, butter will be sent to packing department.

Where it will pack and after that it will be sent to store.

Ghee
Here the further operation will be applied on butter and it will convert it into ghee,

mostly people like to consume ghee rather than butter so we will convert it into ghee. Here the cream process ended and ghee will be sent to packing department and after finally it will be stored.

Condensed department
After refining the milk into cream the remaining refined milk will be sent to condensed Department, The after process that converted into cream.

You know??? You want it

Page 47

PRODUCTION LAYOUT
RAW MATERAIL STORAGE

MILK REFINING PROCESS

CREAM

REMAINING MILK

CONVERT INTO GHEE

CONDENSED MILK

POWDER MILK

PACKING

STORE

You know??? You want it

Page 48

Financial Plan
Financial Plan ensure that there are adequate funds available to acquire the resources needed to help the organization achieve its objectives; ensure costs are controlled; ensure adequate cash flow; establish and control profitability levels. The two core functions of the Finance Department are to provide strategic financial support for business and operational planning and to provide day-to-day financial services to the investor, its departments. Meet external and internal financial reporting requirements.

Objectives:
To maintain an inflation growth in earning per year at a rate of 13.92%. To obtain a return on equity of at least 25%. To meet annual projected profit. To maintain a strong cash flow by meeting projected cash flow balances.

We start the dairy business with Three Million rupees on the basis of partnership and we divide profit equal proportion. Loss also bears by equal proportion all partners.

sources of funds:
Loan or debt portion does not prevail in it. The detail of the fund and its contribution are shown in the tables.

Detail Equity Total

Amount PKR 3000000.00 PKR 3000000.00

Percentage 100% 100%

You know??? You want it

Page 49

 Capital Arrangement
The details of the contribution of the equity and ratio of the profit distribution are shown in the table as follows:

Detail of Equity
Name of Partners Mr. Abu Sufyan Mr. Luqman Ahmed Mr. Muhammad Shahid Mr. Muhammad Jahanzaib Amount Contributed 750,000.00 750,000.00 750,000.00 750,000.00 Percentage share 25% 25% 25% 25%

It has been decided with consensus that there would be 40% retained earning first year, 30% second year and 20% third year will the part of equity and remaining profit distribution in partners every year.

Use of funds:
The funds those are contributed will be used in such ways such as the startup cost.

Startup cost:
Description Vehicle Motor Bike (2*107000) Plant & Machinery cost Furniture & fixture Equipment Security of Building Legal Expenses Marketing Expenses Gas Installation Total Capital Cost Cash in hand/ required cash Total project cost You know??? You want it Total Cost Quantity 500000 214000 880000 64000 88450 84000 10000 71600 145000 2057050 942950 3000000
Page 50

Projected Financial statements

Projected Income Statement

Broadway Dairy Projected Income Statement For The Year Ended, 2013, 2014, 2015
Description Sales Less: CGS Gross Profit Less: Operating Expenses Administrative Expenses Selling Expenses (Packing) Operating Profit Net Profit Retain Earning Profit Distribution Abu Sufyan 25% Luqman Ahmed 25% M. Shahid 25% M. Jahanzaib 25% Notes 1&2 4 2013 24876000 (20955345) 3920655 2014 28607400 (23050879) 5556521 2015 32898510 (25355966) 7542544

(205300) (180000) 3535355 3535355 1060607 2474748 618687 618687 618687 618687

(225830) (198000) 5132691 5132691 1539807 3592884 898221 898221 898221 898221

(248413) (217800) 7076`331 7076331 2122899 4953432 1238358 1238358 1238358 1238358

You know??? You want it

Page 51

 Projected Cash flow Statement Broadway Dairy Projected Cash flow statement For the year ended 2013, 2014, 2015
Description Cash flow from operating activities Net Profit Add: Depreciation Cash flow from operating activities Cash flow from investing Activity Less: Purchases of Asset Less: preliminary Expenses Cash flow from investing Activity Cash flow from Financing Activity Add: Capital Less: Dividend Total cash flow during year Add: opening Balance Total Cash Balance Notes 2013 3535355 178645 3714000 (1746450) (310600) 1656950 2014 5132691 178645 5311336 -----------2015 7076331 178645 7254976 ------------

16

13

3000000 --------(2474748) (3592884) (4953432) 2182202 1718452 2301544 --------2182202 3900654 2182202 3900654 6202198

You know??? You want it

Page 52

 Projected Balance Sheet

Broadway Dairy Balance Sheet As on 31 Dec 2013, 2014,215

Description Fixed Assets Plant& Machinery Vehicle furniture Equipment UPS Deferred cost Preliminary Building Security Office Building Factory Building Current Assets Cash in hand Cash at Bank Total Asset Notes 9 Opening 880000 714000 64000 68450 20000 226600 2013 792000 642600 57600 61605 14000 226600 2014 704000 571200 51200 54760 8000 226600 2015 616000 499800 44800 47915 2000 226600

11 10

13

48000 36000 942950

48000 36000 1182202 1000000 4060607 3000000 1060607 4060607

48000 36000 900654 3000000 5600414 3000000 2600414 5600414

48000 36000 1202198 5000000 7723313 3000000 4723313 7723313

Liabilities
Owner equity Retain Earning Total Liabilities 3000000

You know??? You want it

Page 53

 Working Notes 1. Sale Prediction

Description Cream Ghee Condensed milk Powder Milk Per unit price/Kg 260 500 260 400 Per day sale(kg) 60 13 150 20 Per month sale(kg) 1800 390 4500 600 Annual sale(kg) 21600 4680 54000 7200

2. Sale Forecasting
Description Cream Ghee condensed Powder Milk Total sale Per unit price(Kg) 260 500 260 400 Unit sale in a year 21600 4680 54000 7200 Total sale (Annual) 5616000 2340000 14040000 2880000 24876000

3. Quantity of raw material

Description Milk Ghee dalda Per Liter Price 62 170 Daily purchases 800 15 Monthly 24000 450 Annually 288000 5400

You know??? You want it

Page 54

4. Cost of Good Manufactured

Description Milk Labour Cost MOH cost Total cost of good manufactured Cost of goods sold Notes Total Cost 3 17856000 984000 5 2115345 20955345 20955345

5. Manufacturing overhead
Description Electricity bills Gas bills Dalda Ghee Fuel charges (Generator ) Fuel charges (vehicle) Fuel charges (bikes) Depreciation Factory Rent Total Cost MOH Notes Total Cost 60000 144000 918000 6 108000 6 540000 6 108000 7 165345 12 72000 2115345

6. Fuel charges
Description Vehicle Bikes Generator Total fuel cost Daily fuel cost 1500 300 300 Monthly fuel cost 45000 9000 9000 Annually fuel cost 540000 108000 108000 756000

You know??? You want it

Page 55

7. Factory Depreciation
Description Vehicle Chiller Cream refiner Butter refiner Condensed milk plan Powder milk plant Cooling store Generator Furniture Equipment Total Depreciation cost Percent 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Total Depreciation 71400 25000 7000 6500 7500 120000 20000 10000 4000 1945 165345

8. Administrative Expenses
Description Office rent (8000*12) Depreciation: Office equipment (49000*10%) UPS (20000*30%) Office furniture (24000*10%) Office boy salary (8000*12) Total Administrative Cost Total cost 96000 4900 6000 2400 96000 205300

You know??? You want it

Page 56

9. Plant and machinery

Description Per unit cost NO. Tot Total of Cost units 1 250000 2 70000 1 65000 1 120000 3 75000 1 200000 1 100000 880000

Chiller Cream refiner Butter refiner Powder refiner Condensed milk plant Cooling store Generator Total Cost

250000 35000 65000 120000 25000 200000 100000

10.

Equipments
Per unit cost 25000 12000 10000 2000 2600 550 20000 NO. of units 1 1 -----1 6 7 1 Tot Total Cost 25000 12000 10000 2000 15600 3850 20000 88450

description Air conditioner computer Celling( office) Celling Fan office Pedestal Fan Factory lighting UPS( office) Total Cost

11.

Furniture and Fixture

Total cost 15000 3500 5500 40000 64000

Description Sufa set Moving chair Table and chairs Furniture (Factory) Total cost

You know??? You want it

Page 57

12.

Rent cost
Per month 8000 6000 Months 6 6 Total cost 48000 36000 84000

Description Security ( office Place) Security ( factory Place) Total Cost

13.

Preliminary expenses
Notes Total Cost 15 10000 14 71600 145000 226600 84000 310600

Description Legal Expenses Marketing Expenses Gas installation Total Cost Building Security Total cost

14.

Marketing Cost
Per unit cost 3 2 6400 18000 140 NO. of units 2000 500 4 ------150 Guest Tot Total Cost 6000 1000 25600 18000 21000 71600

Description Pamphlets Visiting card Newspaper Ad Cable Ad ( Local Channel) Opening Ceremony Total Cost

You know??? You want it

Page 58

15.

Legal Expenses
Total Cost 4000 6000 10000

Description Partnership Registration Legal Advisor Total Cost

16.

Overall depreciation
Percent 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 30% Total Depreciation 71400 25000 7000 6500 7500 120000 20000 10000 6400 6845 6000 178645

Description Vehicle Chiller Cream refiner Butter refiner Condensed milk plan Powder milk plant Cooling store generator Furniture Equipment UPS Total Depreciation cost

You know??? You want it

Page 59

Financial Analysis of Business

Internal rate of return
IRR = lower rate + diff b/v 2 rate (NPV at lower rate/sum of both NPV) IRR = 45 + 5 (3077247/5977742) IRR = 47.57 Working PV = FV/ (1+i)n Years Discounted @ 45% 1.45 2.1025 3.048 Present value of cash flows 1504966 817337 754944 3077247 Discounted @ 50% 1.50 2.25 3.375 Present value of cash flows 1454801 763756 681938 2900495

2013 2014 2015 Total

Payback Period
Year 2013 2014 2015 Cash flow 2182202 1718452 2301544 Cumulative cash flow 2182202 (c) 3900654 6202198

(d)

a= A is number of year in which last cumulative cash flow is less than our cash outflow. b= Initial investment = 3000000 c= Cumulative cash flow against a = 2182202 d= next cash flow of c1718452 Payback Period = a +b - c / d
Page 60

You know??? You want it

=1+3000000+2182202/1718452 =1+0.4758 Payback Period = 1.4758

Net present value

NPV = Present value of future cash flow-Initial Investment NPV = 4789981-3000000 NPV = 1789981 Working Present value of future cash flow PVFC= present cash flow/ (1+ I )n

2013 = 2182202/ (1.14) =1914212 2014 = 1718452/ (1.14)2 = 1322293 2015 = 2301544/ (1.14)3 =1553476 Total present value of future cash flow = 4789981

Profitability Index
PV = P.V of Future Cash Flow/ Initial Investment PV= 4789981/3000000 PV= 1.5966

You know??? You want it

Page 61