新加坡国立大学案例大赛商业计划书范例2(Business Plan.doc

A Business Plan ByManoj Karia mkaria.mba2006ivey.ca, 519-434-3742Smita Yadavsyadav.mba2006ivey.ca, 519-474-7648Saurav Singhalssinghal.mba2006ivey.ca, 519-857-3532Ashwat Yennaguddeayennagudde.mba2006ivey.ca, 519-433-7463of the Richard Ivey School of BusinessIndex Topic Pages· Executive Summary 2-7· Comprehensive Business Plan 7-26 § Canada Investment Climate 7§ Canada as a TCM Market Macroeconomic Analysis 7§ The Canadian NHP Industry 8§ Canada as a TCM Market For a New Entrant 8§ Chinese Herbal Products Competitive Environment 9§ Entry Strategy 9§ Value Proposition & Positioning 10§ Marketing Strategy 10§ Market Segmentation & Target Segment Identification 11§ Marketing Plan 13§ Organizational Plan & Management Structure 17§ Operational Strategy 20§ Financial Analysis 24§ Business Risks 26EXECUTIVE SUMMARYRECOMMENDATIONWe recommend that DragonCare Ltd expand its footprint to Canada through a fully owned subsidiary by the name of “DragonCare Canada Ltd”.Awareness of alternative health medicine is increasing rapidly in Canada. The Canadian Natural Health Products (NHP) industry (Market Size: $2620 million) Trade Facilitation Office Canada Pharmaceuticals and Natural Health Products Market Research 2003. Canada Business Service Centre www.cbsc.org, of which the herbal medicines have a 40% share (Market Size: $1048 million), is growing at 20% annually Same as above. TFOC www.tfoc.ca. The Traditional Chinese Medicine (TCM) segment in particular is highly fragmented with no major brand in the marketplace. Market share of none of the current players exceeds 5%. In this respect, the market condition in Canada is similar to what exists in DragonCares current markets and provides DragonCare a good opportunity to create a niche for itself by building a brand on the strength of its scientific research capabilities and experience of operating in such markets.ROLL OUT STRATEGYDragonCare Canada should employ a phased approach in introducing its products, its geographic expansion in Canada and introduction of its full value proposition to the Canadian customers.DragonCare should enter Canada with two patented womens healthcare products preferably for nutritional benefits & immunity development which have the highest demand in Canada NDMAC. www.ndmac.ca. Exhibit5. The strategy is to develop these products as DragonCares “Flagship” products in Canada. Introduction of other products will be after the “DragonCare Brand” is established. Further, DragonCare should initially limit itself to British Columbia and Alberta since these are the biggest markets for TCM products (51% of people in BC & Alberta use NHPs & TCM) NDMAC. www.ndmac.ca Exhibit 4. BC also has a high Chinese immigrant population (380,000 Chinese immigrants i.e. 31% of Chinese immigrants in Canada are in Vancouver, BC) Statistics Canada. www.statcan.ca. Exhibit 15., thereby providing an attractive easy-to-tap market for DragonCare. After 3 years of operations in Canada, DragonCare should introduce services in the form of TCM clinics, thereby completing its value proposition.Dragoncare, with its limited resources should focus on growing primarily in the Canadian market. However, if a few years down the road, DragonCare decides to enter the US market, it should consider setting up a manufacturing unit in Canada to take advantage of the North American Free Trade Agreement and use Canada as a manufacturing base for North America. However, we do not recommend setting up a manufacturing unit in Canada to target the Canadian market because of higher risk associated with high initial investment and also because the production costs are lower in Malaysia and Singapore. OPERATING MODELDragonCare Canada should source products from its manufacturing facilities in Singapore and Malaysia, and use Canadian pharma-products distributors to reach the pharma-retailers and ultimately the end users. MARKET SIZE ANALYSIS & MARKETING PLANProductDragonCare should enter the Canadian market with only the TCM product line since DragonCare can differentiate itself best on the basis of its research and scientific capabilities (which are more applicable to this line of patentable products) and because there are more opportunities for market penetration in this segment due to less competition. DragonCare should introduce two patented womens healthcare products for nutritional benefits & immunity development (55% of consumers use NHPs for this reason) NDMAC. www.ndmac.ca Exhibit 5. The primary reason for this recommendation is that women form the biggest TCM market segment NDMAC www.ndmac.ca Exhibit 3. (Womens Herbal Medicine Market Size: $ 535 million. Growth Rate: 20%).This limited introduction approach will allow DragonCare to strategically allocate its limited resources in building the brand effectively. Exhibit 13 & 14 show market size calculations and projected growths.PriceWe suggest that DragonCare adopt a premium pricing strategy (inline with its brand image) and price its products at $32-$35/bottle (Retail price in Canadian $).Competitors products are in the price range of $21-$35/bottle Competitor Websites , www.nl-,. PromotionDragonCare will use a multi-pronged approach for establishing its brand. It will have a budget of $2.5 million for promotions in 2006.Advertising in health books and buzz marketing techniques will be the main promotion vehicles. (Market research indicates health books (18%) and family/friend referrals (36%) as being top influencers in buying decision for NHPs) NDMAC. www.ndmac.ca. Exhibit 8. Advertising: Using health magazines for women, cable TV, radio, newspaper, bill boards, and internet. The focus of the advertisements will be product benefits, DragonCares research labs and Singapore - a clean & progressive city. This approach will help build consumer confidence on the quality of health products imported to Canada.Sales Promotions: Includes free samples, discount coupons, bundling products into value packs, and bundling DragonCare goods (key chains, coffee mugs etc).In-Store Promotions: Includes Trade Discounts and special In-Store campaigns. Public Relationships: Includes participation in Trade Shows, sponsorship of social causes targeted at women.Direct Mail Campaigns: These campaigns will be used for selectively reaching potential long term customers. Blogs: DragonCare will also initiate/participate in discussions on herbal products in blog sites like where its customers can share their experiences on the efficacy of DragonCares products. This channel, we believe, will prove to be effective for buzz marketing. Distribution There are three main distribution channels for Dragon care in Canada: health food stores, pharmacies and TCM practitioners. DragonCare will reach the health food stores and pharmacies through strategic alliances with two pharma-product distributors (one each in BC and Alberta). Online sales are not recommended based on ROI calculations. FINANCIAL ANALYSIS(Note: All figures are in 000s SGD)5- Year Return on Initial Investment: 14.43% (Refer Exhibit 33 for details)Net Present Value of Project: 5.2 Million SGD (Refer Exhibits 32 & 33)Initial Investment Required: $2.1 million in 2005-06.Profitable in 2007. 7% of DragonCare Ltds net profits in 2010 will be from Canadian operations. 14% of DragonCare Ltds sales in 2010 will be from Canadian operations.Positive cash flows from operations in 2007.Breakeven Sales Volume: $ 5.3 million/year in 2006 (Refer Exhibit 44 for details) Breakeven Market Share: 4.2% (Refer Exhibit 44 for details) Interest Coverage Ratio: Healthy (> 4 ) Refer Exhibit 40 for other ratios.Refer Exhibits 28 to 44 for projected financial statements (Canadian operations and Consolidated), ratios, cash flows, sensitivities and assumptions.Source of Funds: DragonCare Ltd should secure long term loans from its current bank in Singapore to fund capacity expansion in its Singapore/Malaysian facilities and its own excess cash for funding initial working capital requirements. In later years the Canadian division can source working capital requirements from Canadian banks.Risks: a) High working capital requirements in future years to meet growth. Mitigation steps Supply chain efficiency improvement. b) Foreign exchange risks. Risk level Medium. Mitigation Steps Hedging.Organization Plan & Management Structure DragonCare Canadas Mission Statement:“Caring for Humanity by providing the traditional route to a healthy life.” Organization Structure:Inline with the structure of DragonCares other subsidiaries, GM Canada will report to VP-Sales & Retail. Since Marketing will be DragonCare Canadas focus, the Marketing Manager will report directly to GM Canada. A R&D Coordinator will act as a link between Canadian Government and Dragoncare Ltds R&D headquarters for matters regarding certification, product safety etc. COMPREHENSIVE BUSINESS PLANCANADA Investment ClimateCanada is a dynamic and competitive economy that has liberal and favorable policies for establishing new businesses. Canadas strong economic fundamentals and relative cost advantages over other developed nations provide a first rate business environment. Canada led the G-7 countries in terms of GDP growth (3.1%) in 2000-2003 KPMG Competitive Alternatives G7 2004 Edition. Invest in Canada. www.investincanada.gc.ca and is expected to remain a top performer in 2004-2006 (2.8%). Canadian locations compare well internationally in terms of statutory corporate income tax rates. Firms in Canada have growing income tax rate advantages over US firms. Elimination of capital tax is expected to increase the tax advantage over US from the current 2.3% to 3.4% by 2008 KPMG Competitive Alternatives G7 2004 Edition. Invest in Canada. www.investincanada.gc.ca.Exhibit 1 summarizes few of the advantages of Canada as an investment destination. Canada leads the G7 Countries in terms of quality of life (highest index value = 9.2), business environment, labor costs (lowest index value = 80) and cost of living (lowest index value = 60).CANADA AS A TCM MARKET Macro Economic AnalysisThe Political climate in Canada is well suited for investment. The bilateral discussions on the Canadian Singapore Free Trade Agreement are ongoing since 2001. The approval of CSFTA will lead to the elimination of all tariff and non-tariff measures between Canada and Singapore and more efficient trade and customs procedures. The Canadian economy is on an upswing with low unemployment rates, low interest rates, strong dollar value, low inflation and high disposable incomes resulting in positive consumer behavior. Increasing health consciousness and growing awareness of alternate healthcare products especially TCM presents tremendous growth opportunities for Chinese herbal product companies. Further, the presence of a large Chinese immigrant population also adds to the attractiveness of Canada as a TCM market. High computer literacy has led to wide spread usage of internet making this an attractive advertising channel. Hence, from a macro economic perspective, Canada is a very attractive market for TCM products.Refer Exhibit 2 for the Political, Economic, Social and Technological (PEST) Analysis. THE NATURAL HEALTH PRODUCTS (NHP) INDUSTRY IN CANADACanadians are becoming increasingly willing to shoulder responsibility for their own health. With this trend has come a new awareness of health products, therapies and remedies derived from ancient sources of knowledge such as the Traditional Chinese Medicines (TCM) have found increasing appeal in the contemporary Canadian Society Health Canada. http:/www.hc-sc.gc.ca. The Canadian NHP industry is a SG$ 2620 million industry growing at 20% annually. The biggest markets for NHPs within Canada are the Western Canadian provinces of British Columbia and Alberta. Women are the largest users of Natural Health Products (49% of Canadian Women use NHPs) and a significant percentage of Canadians spend over SG$ 39 monthly on these products. 55% of NHP consumers use these products to develop immunity and for nutritional benefits.Refer Exhibits 3 to 8 on the Canadian Natural Health Products Market.CANADA AS A TCM MARKET FOR A NEW ENTRANTThe TCM industry (Herbal Medicine Market Size: $ 1048 million) in Canada is highly fragmented with several small players vying for customer attention. The absence of dominant players and major brands (no player has more than 5% market share) in such a rapidly growing market and low barriers to entry, make Canada an attractive market for DragonCare Ltd. Despite the threat of increased competition from new entrants, the Canadian TCM market provides DragonCare an attractive growth avenue which it can tap effectively by acting promptly and establishing a strong brand early on the basis of its quality, scientifically developed products and aggressive marketing.Exhibit 9 summarizes the attractiveness of the Canadian TCM market from the perspective of a new entrant.CHINESE HERBAL PRODUCTS MARKET - COMPETITIVE ENVIRONMENTWhile the absence of a major brand in the market is to DragonCares advantage, it is worth taking note that there are a large number of small players currently in the market. Most of these are small companies/distributors (Sales < $1 million) that sell relatively unprocessed products like ginseng roots, Chinese herbs (Example: Sumbu City Chinese Herbs) etc. The bigger players are into selling more value added products