CHAPTER:- ONE
BUSINESS AND ORGANIZATIONAL
STRUCTURE
1.2 Introduction about Khaptad
Homestay
Khaptad
Homestay is located at the Channa Municipality 07 Gadarai Bajhang near to
the Khaptad National Park. Khaptad
national park located at for far-western district Center Point of the
Farwestern four District, I.e Bajhang, Bajura, Achhamand doti. Khaptad Home is
owned By Mr. Mahesh Baduwal. The main motive to start up the khaptad home stay is that to promote tourism
activities in the domestic as well as international, Markets. Khaptad is most
beautiful place, most of the tourist comes from national and international
level to take the entertainment hoarse riding and so on. The main motive to
start up the khaptad home stay is that generate local employment opportunities
as well as attracting domestic and international tourist by providing quality
of services.
According
to Nepal Tourism Board Report Around 10-15 Thousand peoples visited in year. To
take entertainment riding horse observing the forest animals and too see the
such beautiful place, If the tourist come their the tourist will feels that It
just like Heaven, The Khaptad Homestay will to facilities accommodation to
those tourist.
The
Khaptad home stay will help to flourish the tourist and earning foreign
currencies. If we promote about the Khaptad national parks through social media
and magazine newspaper, then tourist will be lucrative they will comes. If they
comes obviously there will be the socio-economic condition of the local
community will be enhancement.
1.3 Introduction About the Khaptad
National Parks
Khaptad
National Park is located at the
confluence of four hilly districts of western Nepal's Seti Zone, Bajhang,
Bajura Doti and Achham. Its area is 225 sq. Km. Is It was established in 2042
BS. This park is one of the best in the world. Khaptad Lake stands at a height
of 12,000 feet in the middle of the Khaptad region, which stretches from 2,400
to 3,700 meters above sea level. Also taken in Khaptad. This is the holy place
where Khaptad Baba performed penance 50 years ago Khaptad Doti, known as the
paradise of the far west, is the confluence of Achham Bajhang and Bajura. There
are 22 temples in and around Triveni temple in Triveni of Khaptad. Khaptad
Baba's Kuti Triveni River Khapar Daha Shiva Temple Sahasrillang Ganesh Temple
Nagdhunga Kedardhunga are very famous religious places. Among the various
cultural fairs that have been held in Khaptad for centuries, thousands of pilgrims
gather at Ganga Dussehra. The locals gather to bathe in the Triveni river and
watch the famous hoodke dance of the far west. The best time to visit Khaptad,
the most famous destination in the far west, is from June to July. There are
not only 25 plains, but there are 53 thumkas around it, which is called Doteli
Bajhangi in the local language.
1.4 Vision, Mission Objectives and
Goals
Vision
“Khaptad Homestay” will struggle to be
the premier Homestay in the local market place.. The main objective of this
Homestay is to provide fresh, nutritious, healthy & delicious Nepalese and
Continental food. This Homestay will be
highly focused on satisfying customer by earning or generating reasonable i.e.
affordable profit. We will have different tastes that are available in Nepal
i.e.Newari, Thakali, Tharu, along with Italian, South Indian, Chinese etc.
dishes .To make them enjoy and realize them that they are not wasting their
time and money, large display of the games or other will be shown in the
projector.“ It believes in its unique delivery of services as its policy is “Customer
is the King”.
Mission
The mission is
to exceed the guest’s expectations and satisfaction along with setting the new
standards of hospitality.
Objectives
Ø To provide fresh, nutritious, healthy
&delicious food to the people
Ø To expand its food service to wider
area of the city
Ø Proper utilization of available
resources
Ø To maximize profit along with greater
satisfaction
Ø To maintain business position and
sustain in the market and adapt technology systems to gain competitive
advantage and benefits.
Ø To promote tourism in national and
international level.
Ø Providing opportunities for local labor force with employments and training.
Ø Promoting the local culture
to national and international markets.
Goals
Ø To penetrate the market successfully.
Ø To make sure the operation makes
enough sales in the initial stage to cover its expenses.
Ø To provide consistent service and
quick delivery that the operation has to offer.
Ø To satisfy customer concerning their
health and taste.
1.5
Management Team
The founder and owner of Khaptad
Home Stay is Mr. Mahesh Badul. Mr. Badul is an MBA from School of Business
Pokhara university . Previously, he was engaged with various NGOs and INGOs. He
also possesses the commercial banking experience. During his engagement in NGO
and INGO, the desire to get involved in social entrepreneurship aroused in him.
The manager of the company is also an MBA graduate with 3 years of experience
in related business field. Similarly, the designer is fresh college graduate of
fashion designing. The accountant and factory supervisors are BBA graduate with
1 years of work experience
1.6 Company Ownership Status
The promoters of this Khaptad Homestay are Mr Mahesh Baduwal , MBA degree with CGPA of 3.68 from Pokhara University and Mr. Nav Raj Mishara having a BHM degree from Nepal Tourism and
Hotel Management College. He being a hotel management student will be able to
manage our Homestay effectively from
technical aspect. And I myself will be
able to manage entire business operation and procedure effectively. The
promoters will invest fifty percent of the total investment amount. Partnership
will be equal and profit will be shared accordingly. The debt to capital ratio
is 50:50. Half of the fund will be raised among the partners and half will be
taken as a loan.
1.7 Structure of
the organization
An
organizational structure consists of activities such as task allocation,
coordination and supervision, which are directed towards the achievement of
organizational goals and objectives. It can also be considered as the viewing
glass or perspective through which individuals see their organization and its
environment. Our organizational structure with organizing committee consists
of:
1.8 Labor Market and availability
of Staff (Direct and indirect staff)
We
have seen Nepalese restaurant lacks efficient manpower. Although there are
number people we are educated and well trained but they prefer to go abroad to
work there. There is more opportunity to earn and they can explore more. The main problem is they don’t see any growth
here and political instability has also affected their employment. It is
obvious that if we can provide favorable working environment then we can hire
potential employees.
Table
1.1: Required Manpower
|
Post |
Number |
Qualification |
|
Director |
1 |
MBA/MBS
|
|
Finance
Manager |
1 |
BBA/BBS
with Finance specialization |
|
Operation
Manager
|
1 |
BHM
with proper training and experience |
|
Marketing
Executive |
1 |
BBA/BBS
with marketing specialization |
|
Chef |
1 |
At
least certificate level with proper training |
|
Cook |
2 |
At
least certificate level with proper hotel training |
|
Cashier |
2 |
10+2
with at least 1 year experience |
|
Server/
Helper |
8 |
At
least SLC with proper training |
1.9 Role and responsibilities of key staffs
As being an owner and managing director
I have important role and responsibilities towards the company. All the workers
are full time worker and in case of over time they will be paid according to
the Labor Act (i.e.normal+1/2normal) and also shift system for some staff
convenience. All personnel involved in this restaurant are liable to their work
and mistakes they conduct. All Employees should be unified and stay in the
rules and regulation made by the restaurant. However their specific duties and
responsibilities are;
Managing Director
Ø For managing the employees and hiring
and firing of the employees.
Ø For managing business effectively and
efficiently.
Ø Optimum Utilization of Resources.
Ø Planning , Measurement and evaluation
Administrative/ Finance Manager
Ø 0To prepare financial report and
state on the daily basis.
Ø Proper utilization of Fund
Ø To generate fund to run business
Ø Perform administrative task
Ø To keep appropriate financial record
Operation Manager
Ø For dealing with customers and look
day to day operation in the restaurant i.e. good service delivery and quality
food.
Ø To keep sound relationship with
suppliers for long term relationship
Ø To satisfy customer with customized
product
Ø To maintain healthy environment in
the restaurant.
Marketing Executives
Ø To visit the markets do promotion of
the restaurant.
Ø To attract and retain loyal
customers.
Ø Pricing product effectively
Ø Promoting product and business
Ø To conduct marketing related activitie
Chef
Ø To supervise cook for the preparation
of food
Ø To guide cooking and prepare best
cuisines
Cook
Ø To receive order and prepare food as
per the order
Ø To work under chef and follow his/her
guideline
Cashier
Ø To bill customer and receive payment.
Ø To pay suppliers as per the contract
Server/Helper
Ø To take order and serve customer
Ø To help chef whenever requirement.
1.10 Human Resources Policy
Human resource has been
key element for the success of any organization. Each and every department has
equal responsibility but human resource is the key success factor for the
organization. The organization will success and achieve the goal and mission
only if the organization manage its human capital most effectively than other
competitors. In the Khaptad Home stay all the employees will stay being a
friend if any obstacles will come then the responsibility will be given to the
manager. Manager is concern with the hiring and firing of the organization. The
role of manager will be played by the director. The detail of Human resource is
given in the annex table.
Considering the size of the proposed
establishment it is assumed that the owner/director will look after management
function. The cashier will only be responsible for receiving payment and
handing over change. Every employee has their own duties and responsibilities
to be fulfilled.
1.11
Location
Location
off course is matter need to be considered. Homestay play vital role in many
small communities play an especially important role in many small communities.
The Khaptda Home stay is located at near the khaptad national park. The Khaptad
Home stay does not facilitate the foods only but it also shows the various
local cultural program such dancing singing Deuda Fag, and Vajan so on. Taking into consideration of these
various social, demographic and economic factors of people In Khaptad national
Park in , was selected for the project. It
is the center point for every tourist whether domestic and international to
stay in. The beautiful view of Khaptad National park and riding horses Looking
different Forest animals to do the meditation on the parks. Hence so many
reason homestay will be main attraction part for the national and international
tourist.
1.12
Procurement Management
Procurement practices are used in the
logistics and supply chain industry to support
operational needs of the company by focusing on how purchasing is done,
how the product is received from
suppliers, building relationships with vendors and managing the procurement process by identifying opportunities and
managing internal operations In today’s procurement environment, importance has
been placed on reducing costs during
purchasing which leads to the best costs and value to its customers. Our
Homestay mange the Procurement through by Developing SCM Software. From that
software we can order the essential raw material from our relevant supplier.
Our main supplier will be local farmer Gardaigai supplier and Distributor, they
will supply the our raw materials by delivering on the transportation.
CHAPTER:-TWO
PRODUCT AND SERVICE ANALYSIS
2.1
The Product
The
Khaptad Homestay will offer a menu of food, Local Dhido, mashko dhidho , green tea, organic coffee Kodo Wine Thakali
foods, banana juice and beverages with distinctive items and image. There will
be three ways to purchase these products; table service at the Homestay,
take-out from the Homestay and delivery to home or offices. We will customize
our product as per the customer need and wants. The product will focus on
targeting national and international guests. We will focus on healthy and
quality food.
2.2
Production Materials
The
main raw material for our Homestay will be easily available in local market.
The suppliers will be on contract basis the whole responsibility will be given
to the supplier’s through purchase department. We will make agreement to local
farmers and other suppliers for the proper supply of raw materials. We will
always have the stock of raw material in our store for 7 days.
2.2.1 Availability of
materials
Since
our products are mainly relying on raw materials from our own local suppliers,
it is sure that there will be proper availability of essential materials.
Others like beverages and bar items will be managed by contracting with the
respective suppliers.
2.3
Production Techniques
Food
production and assembly will take place in the kitchen of the restaurant. Fresh
vegetables, meat and dairy products will be used to make most of the dishes. The
head chef will exercise strict standards of sanitation, quality production and
presentation or packaging over the kitchen and service staff. As customer will
order the chef will prepare for them in minimum time period. Focusing on the
time factor we will provide delicious food to the customers.
2.4
Production Plan
As our business
is Khaptad Homestay the production/service process will not be complex. We will
rent a building with adequate space and beautiful surrounding. Following steps
will be conducted as a production process.
Ø Collection of the raw materials from
the local suppliers
Ø Inspect whether it is in proper
condition or not
Ø If raw materials are good then
process them and also store them
Ø Customers will arrived and servers
should welcome them with proper greet
Ø Find comfortable place for the
customers as per their choice and waiter waits for the call for the service
Ø Waiter enter order on monitor and
table no. and send that order to the monitor of chef
Ø As chef receives order he gives order
to other cooks and they starts to prepare the food
Ø As the food became ready waiter is
asked to serve that order to the predefined table no. as on order slip
Ø Then delicious food will be served to
customer as per their choice and order.
2.5 Equipment
2.5.1 Details of equipment
Customers
are becoming busy and selective these days, they prefer quality food with
prompt service. Since bargaining power of customers have been increasing every
day because of competition, our main focus will be customer satisfaction. In
order to fulfill this different modern equipment and machines will play vital
role. We will have every machines required in kitchen and other operation.
2.5.2 Purchase,
installation and operation of Equipments
The
Homestay is expected to entertain a minimum of 80 customers in a day during
season, which requires a good seating layout to avoid any confusion and
problems during rush hours. To run the restaurant we need to have dinning
furniture, machines and general fixtures. As per the estimation we would
require a total of Rs.3424500 furniture, machines and equipment. All the
details of installation are included on machine purchased. For details see
annex.
2.5.3 Capacity of
Equipment
Understanding
the customer’s needs and capability to satisfy these completely is a vital part
of the Homestay’s success. This is in turn dependent on the machinery and
equipment used to produce good quality fast food. Fast food machines are easily
available in the market wherein the owner has to choose between expensive
brands and cheaper ones depending on how much he can offer to give quality to
his customers. Our homestay would
require the total of Rs. 870000 machine/equipment for its daily operations. For
detail see annex in the description way.
2.5.4
Repair, Maintenance of Equipment
Different modern tools and machines will be
used perform daily operation. This includes taking orders, cooking, storing,
delivering and the like are performed by using such equipment. For the smooth
operation and to meet the daily requirement equipment should be in proper
condition. In order to do that timely repair and maintenance will be done.
Their respective most allocation has been done.
2.6 Homestay Location
and Layout
The
proposed business will be located at rental premises at Channa Municipality 10
Gadrai bajhang . The following table shows the layout of the proposed
restaurant.
|
S.N |
Particulars |
Size
(Sq. Ft.) |
Cost |
Total
Construction Cost |
|
1 |
Dining |
1260 |
1,350 |
1,701,000 |
|
2 |
Waiting |
80 |
1,350 |
108,000 |
|
3 |
Musical
Stage |
60 |
950 |
57,000 |
|
4 |
Kitchen
& Preparation |
500 |
1,350 |
675,000 |
|
5 |
Office |
40 |
1,050 |
42,000 |
|
6 |
Stores |
60 |
950 |
57,000 |
|
Total |
2000 |
2,640,000 |
||
Chapter: Three
Environmental Analysis
3.1 Macroeconomic Analysis
Macroeconomics
deals with the study of the economy as whole. The
macroeconomic factors affect the purchasing power of the people, higher
purchasing power leads towards the higher demand. Although recent blockades
causing crisis, the demand for the security service is still the same because
people always seek for the security & safety. Although it is consumer who
ultimately determine direction of economy.
Khaptad National park
is beautiful city with free market economy. Location, fertile land, favorable
climate and nature has not only attracted foreigners and visitors but also it
has influence many entrepreneurs to engage in business activities. Many people
want to spend their life in near to the khaptad national.
Homestay business has gain high profit
because numbers of tourist who comes to visit Nepal will probably choose
Khaptad National Park as one of their
destination. People are always curious about new taste and new experience so if
we can come up with the new way of providing service to our customers then
there is chance to get success.
3.2 Analysis of competitors
Competitions everywhere we cannot deny
it. Growing impact of Homestay has given rise to its value among customers. The
convenience and value offered by the Homestay industry makes day to day living
of customers easier. Since purchasing power of Nepalese people is rising each
day, they are happy to spend their money in good food and happy moments.
The
concept of such Khaptad Homestay professionally is very new in the current
market. We will going to merge traditional style with modern technology so it
going to be interesting and worthy. Our competitors will be restaurants who
provide Thakali and Local dishes but
there is hard to find such restaurant. There is only one typical Homestay in
lakeside but we will going to offer which they lack. Despite of that, we will
also offer other food items and bar items in our menu we will have few
competitors around. Some of active competitors are:
3.3 Suppliers
As I have already mentioned our main
suppliers will be local from Bajhang itself. In order to meet daily order and
to perform daily operation it will not be problem of shortage for the raw
materials. It will be no difficult to get proper delivery of raw materials.
Following suppliers will be our main suppliers for the raw materials in order
to required quantity to our firm:
Ø Saleways Mart, Chainpur
Ø Local Farmer
Ø Gaddarai Supplier
3.4 Analysis of Internal Factors
Elements
close to the company that impact the company’s ability to serve its customers.
Such internal factors have direct impact on the daily operation and
organizational strategy. These factors include:
Labor Union
Labor unions are often industry-specific
and tend to be more common in manufacturing, mining, construction,
transportation and the public sector. They are especially interested in
negotiating over wages, working conditions and others employees’ related
matter. We will have favorable relationship with labor union.
Employees
Many
colleges provide course on hotel management. So, it is easy to have skilled
employees by giving them proper facilities and incentives. They are the basis
for the success of the business so it is necessary to motivate them.
Organizational values and norms
Values are the
underlying principle that guides our behavior. Organizational values and norms
concerned about the culture that binds the behavior of the people within the
organization. Organizational culture shapes the overall effectiveness of
business organizations. Our business will be based on our beliefs, values &
understanding
3.5 SWOT Analysis
The following
analysis highlights the internal strengths and weaknesses of the
Khaptad homestay and the opportunities and threats facing Khaptad
homestay will constantly improve
performance based on consumer critics and responses
Strengths
Ø Excellent location, full of tourism
sites.
Ø High quality service with international standards but local pricing
Ø Environmentally friendly building
Ø Good
support from the local community
Ø Experienced staff member.
Ø Always open to feedback and recommendations
Ø Complete facilities for all ages and purposes
Ø Security and safety is highly maintained
Ø Local fresh quality ingredients for our homestay with local cuisine
Ø Low
competition in the area
Weakness
Ø New
brand name.
Ø Homestay concept and design is quite common in the market
Ø Advertising might not be strong enough for our early opening
Ø Pricing could be a problem early on
Ø Local people and tourist cultural is
difference.
Ø Lack of transportation facilities.
Ø Lack of Marketing strategies.
Opportunities
Ø A lot of potential in tourism industry
Ø The dramatic
number of tourist increase in the Nepal.
Ø There is a lot of space in nearby area, possible area
to be developed in the future
Ø The presidential election
Threats
Ø Possible new competitors in the area
Ø The area does not have a certain uniqueness
Ø Change in whether condition
3.5 Porters Five
forces Model with respect to the Homestay
Threat
of New Entrant
The homestay and hotels industry
is strongly influenced by travel and tourism trends. It is possible to enter the
industry in a relatively low-key way by opening a small, independent hotel or motel as a sole proprietor. However,
the industry is capital intensive, and for a large-scale entrance, upfront investment in buildings,
décor and furnishings, ICT infrastructure and staff is expensive. To sustain revenue growth in the premium market,
operating a chain of hotels is often an important strategy
as it reduces dependence on tourism in any particular location. Regulations in terms of real estate and buying abroad need to be taken
into consideration and can therefore
be restrictive in some countries. The purchase, leasing,
and management of property may involve legal and financial complexities, necessitating spending on professional services.
Overall, the likelihood of new entrants is moderate.
Threats
of Substitute
Porter indicated
that substitute products
can be existing or potential
products and services which are able to perform the
same function. Substitute products can reduce costs, and/or provide
better quality performance and better value which very often the result of technological innovation. The Homestay Industry in all
major cities is not threatened by substitute products except that in times of recession domestic travel might
replace international or overseas travel and certain destinations replace more expensive ones on cost grounds.
A hotel operator in anywhere can compete on a low cost basis in a niche
segment. It can also compete on the
basis of a modern, comfortable but not luxurious hotel situated in a popular and convenient location. There is no major threat of substitute products
specific to a homestay’s product
and service. A homestay
will
be subject to powerful buyers
only if its marketing strategy
concentrates on attracting tour groups, provided no oversupply for the hotel’s
target market develops. A homestay may not appear
to be particularly vulnerable to intense rivalry because of the fragmented
nature of the competition in its strategic group and the potential growth
rate of its target market.
Power
Buyer
Unlike its international counterparts, the Indian industry
was not affected by a decline
recently and so may emerge
from the global recession period
stronger. Within the homestay and hotels industry, where switching costs are rather negligible and competing on price alone
is no longer a key to success, brand recognition and innovation helps to attract
first-time customers and also
repeat business. Due to a high reliance
on sophisticated technology and systems
and the growing importance of mobile communication channels, some suppliers may exert strong
supplier power.
Supplier
Power
Suppliers in this
industry are defined as property owners, developers and real estate companies, interior
design and furnishing companies, architects, management and training service
providers, marketing companies, industry. Consultants, and information and computer technology (ICT) manufacturers. Real estate companies
are often much smaller companies
than hotel and motel operators
and rather than being globalized, they are usually local to the property they develop, which reduces
their financial muscle and ability
to negotiate favorable
contracts. Furthermore, Homestay can integrate backwards and operate their own real estate business.
The quality and availability of supplier services and equipment is essential to
the Homestay and motel industry. The industry is also labor intensive. Staff costs are significant as success in the
homestay industry is strongly
influenced by the quality of the service provided. Supplier power is assessed
as moderate overall.
Competitive
Rivalry
There are also a large number
of independent players
present in the industry
apart from the existing houses.
Larger number of players means increased competition. Many larger operators have
diversified to some extent and own additional
businesses, such as casinos, restaurants and shops. To attract and sustain
more business, operators
try to offer more and more complex
packages and value-added services, such as free breakfast and parking,
free third night, etc. A recent trend
among major hotel chains is lifestyle hotels which cater to the conscientious traveler's demands for eco-friendly practices, social responsibility, and affordable style.
Chapter: - Four
Marketing Plan
4.1
Market Analysis
Comparatively
growth on the international tourism has boomed the hotel industries in Nepal. Where the increasing trend on the internal
tourism has even developed the tourism industry in Nepal.
Segmentation, targeted
customer, positioning Analysis
Proper analysis of the market leads to the
successful business operation. As the marketing in today’s scenario has become one of the most important
aspect, organization should not negotiate the marketing of the
organization. For proper as well as effecting marketing, organization should carry out
the numerous analysis. Where STP is one of the.
Ø Segmentation
The segmentation of the market for the purposed
homestay are.
1. Business people from Kathmandu, Lalitpur and Pokhara
2. Local people of Gorkha and Dhading
3. Tourist visiting Khaptad
National park.
4. Upper medium class families
5. Internal tourism
6. Wildlife tourism
7. Honeymoon travelers
8. Family
9. Event visitors
10. Celebrities & VIPs
11. Students comes from various region
Ø Target market
the target market for the
Homestay will be those who can
afford the price of the hotel.
Especially those people
who can spend 1500 for domestic
tourist and Rs 2500 for international tourist per night in average.
They will be business people,
upper medium class
as well as higher class
families, international tourism,
honeymoon travelers, celebrities and VIPs.
Ø
Positioning
The homestay will also brand itself as one of the best place for the
reasonable price. The images of homestay will be set as
the place where people
can spend quality time. Will set as the hub for the busy personalities who get very less time to enjoy their life.
4.2
Analysis of the Competitors
There are some repudiated Hotel businesses in Khaptad national parks .
Some of them are doing this business
more than 10-15 years; some of them are international hotel business. But none
of them are providing Enclave Tourism
Service or tailor made Tourism or Customer Care services, while “Khaptad
Homestay” is providing them, but I am seeing my competitor’s as my luck, But my
competitors of Homestay can be;
Hotel Surmasarobar -10% Share On Market. Hotel Saipal -15% Share On
Market. Hotel AChaam-18% Share On Market. Richmond Hotel & Suites-20% Share On
Market. Hotel Bayata-15% Share On
Market.
4.3
Promotional Strategies
Promotional activities have an important role acquiring a strong market
position. We need to use and implement four of the marketing promotion
tools in order to achieve
maximum market share. Advertising on mass media will
be very helpful for the promotional purpose.
Ø Advertising:
Basically, we will focus on newspaper advertisements, TV commercials, social Medias
and Internet as well. Because reaching the potential customers is much easier
through these Medias. We are
expecting to create a better impact on teenagers and other individuals. We have also decided to put the
advertisement of “Khaptad Homestay” on neon signs and bill board
in some Khaptad National park.. Hopefully, we can reach 80% of our
customers through these efficient advertising.
Ø Personal selling: In case of a Hotel
business such as “Khaptad Homestay personal selling is considered not that effective. Thus, we will try to encourage
convenience store employees for selling
our product and at the same time we will ask them to talk about the feature of
our product while a customer is
interested to buy some packages from them. Regardless, this will help to boost our
sales.
Ø Promotional Tools: We have decided to
implement some promotional tools such as distributing some free samples on the street and reduce the price during the
trial period. This will help the customers to be familiar
with our product.
Ø
Public
Relations: We have some public relation activities in future such as
seminars, cultural functions and sporting
events to improve public relations.
Ø
Customer Service: We will
try to provide best service to our valuable customers. We will try to interact with our customers regarding the
quality of our product. Any suggestion, ideas, advice related with the product is always welcomed. If any of the
product is defected or there is any problem we will be happy
exchange the product.
4.4 Marketing Strategy
In order to attract profitable customer, marketing should
must be done.
And to do something there must
be the long term as well short term plan. Here are the possible marketing
strategy that will be adopted by Khaptad Homestay
Ø Online marketing; With the
development of communication and technology, online marketing is becoming
ultimate choice for the long term
marketing planning. Marketing through social media like Facebook, Instagram, twitter and other social networking sites are seen
more effective than any other marketing tools. Connecting or informing people through emails can also be the effective marketing
strategy.
Ø Advertisement: As advertisement is one of the
major part of advertisement, company will not miss the chances to acquire the customer through the
advertisement in different channel. Advertisement in television, radios
as well as internet will be performed
Ø .Word of mouth: Word of mouth is another
core factor that have high effect on marketing. Hence, collecting and recording feedback from our valuable
customer will be done eventually. The feedback will be video recorded and then shown on various channel of marketing to get positive
word of mouth.
Ø Positioning and Branding: The proper branding and positioning of the products
helps to know about the product in the market.
It shows the company’s position and the value in the market. Identifying
the direct competitors, targeting the
market, market definition, brand promise and reason to believe will help to
establish positive brand value.
Ø Public relation departments:-Public relation
for marketing and betterment of the company
is always important to any company.
Therefore the separate public relation department will be created which
will look after the public relation of the
company.
4.5
Pricing Policies
Pricing is one of the important activities
in an organization. Setting prices involves considering many factors, including
the cost of food, cost of labor, what the competition is doing and what your
target customers are willing to pay. Setting your menu prices is a pivotal
decision for your restaurant. Pricing is a task that needs to be periodically
revisited to respond to changes in the industry, fluctuating market prices and
the mood of customers.
The prices of the product are priced affordably to the target market. Today
customers are price conscious and more quality conscious. If we can give
quality food at affordable price then it’s obvious that we can win over them.
The standard pricing for services and products are determined by the Homestay
guidelines of Nepal.. But price can be charge on the basis of services
provided. And location is always important factor to determine the price. So in
the Khaptad National park. price is
obviously more than in other places.
4.6
Distribution Channel
Distribution channels, or models, refer to different vehicles
used to get your product in a customer's hands. Employing various marketing
strategies helps you build and maintain a solid reputation in the community.
This often involves creating and experimenting with different distribution
channels.
Ø Food Supplier
The
quality of your food has a major impact on whether customers will return to
your Homestay. In the restaurant industry,
distribution channels typically start with the food supplier. This is where you
purchase your products and other supplies. So we have chosen local supplier
which is beneficial for prompt and timely delivery.
Ø Advertisements
Advertising your Homestay is key to
create a good distribution channel for your business. Print, radio and
television advertisements help attract new customers to your business. So we
will apply that for our restaurant also. These individuals might see one of our
ads in the newspaper and decide to give your restaurant a visit. Serving
delicious, quality food prompts our customers to return, and there's a chance
that they'll return with friends or recommend your establishment to others. Internet Marketing In the digital
age, taking advantage of the Internet and social media increases awareness and
encourages visits to our Homestay. We will create a website for our Homestay
that features our menu, nutritional information and specials or promotions. We will also create a Facebook page for your Homestay and invite customers to "Like," or
subscribe, to your page.
4.7 Sales
Forecasting
The estimated sales forecasting of the
Khaptad homestay can be done by using the historical methods. In this method
the actual amount of the past years sales is taken based upon the past sales
and then 10% Sales volume is increases in the next years. The sales are
expected to increase by 10% every year while the cost of raw materials is
assumed to increase by 10%. The 10% annual increase in revenue is expected to
result from a part increase in product price. The prices used to calculate the
gross revenue earned are based on the billing rate at which the entrepreneur
will charge the customer. The prices are also inclusive of the General Tax.
Chapter:-Five
Financial Plan
5.1 Description of initial investment
The
source of finance for Khaptad Homestay will be myself as well as the loan from
the Citizens Bank International Limited . 40% of the fund will be invested by
me i.e.
2,539,800 and remaining 60% will be taken from
Citizens Bank @ of 12% i.e. 3,809,700. The total fund
is of Rs. 6349500.
The capital structure is on 60:40 debts to equity ratio. For details refer
annex-1.
5.2 Requirements of fixed assets
The given items
are the required fixed assets for the proposed restaurant.
Ø Land, Building & Civil Works
Since the area will be taken on
lease, all the cost that incur while constructing restaurant is shown as
construction cost. This includes building, furnishing, wall painting,
decorating, attaching fixtures and the like. Totally the cost of construction
is Rs 2,640,000. For
details refer annex-10.
Ø Machinery and Equipments
All required machines and
equipment’s cost is allocated as per that. The total machinery and equipment
cost is Rs 1,538,000.
For details refer annex-10
Ø Dining and Furniture
As the
restaurant requires well-furnished dining and other related furniture, cost has
been allocated as per that which is Rs 1,886,500. Refer
annex-10
5.3
Estimation of working capital
It is estimated that an additional
amount of approximately Rs. 285000 will be required as cash in hand to meet the
working capital requirements/contingency cash for the Initial stages. The
requirement is based on the current asset and current liabilities. The details
are shown in the table:
Table
5.1: Estimation of working capital
|
S.N. |
Particulars |
Amount |
|
1 |
Utilities |
54,000 |
|
2 |
Salaries |
191,000 |
|
3 |
Rent |
40,000 |
|
|
|
285,000 |
5.4 Capital Structure
The source of equity capital for Newari
Chulo Restro and Bar will be myself as well as the loan from the Sanima Bank.
40% of the fund will be invested by me i.e. 2,539,800 and
remaining 60% will be taken from Sanima Bank @ of 15% i.e.
3,809,700. The total fund is of Rs. 6349500.
The capital structure is on 60:40 debts to equity ratio. Refer annex-2 for
figure.
5.5 Loan Repayment schedule
It’s a complete table
of periodic blended loan payments, showing the amount of principal and the
amount of interest that comprise each payment so that the loan will be paid off
at the end of its term.. The last line of the schedule shows the borrower’s
total interest and principal payments for the entire loan term. The loan amortization schedule for
the proposed project is shown in the annex-12.
5.6 Estimation of Sales / Revenue
The sales are expected to increase by 10
% every year while the cost of raw materials is assumed to increase by 10%. The
10% annual increase in revenue is expected to result from a part increase in
product price. The prices used to calculate the gross revenue earned are based
on the billing rate at which the entrepreneur will charge the customer. The
prices are also inclusive of the General Sales Tax. The sales revenue of the
proposed business is Rs. 9000000/-, at first year of operation. For details
refer annex-13.
5.7 Estimation of Variable cost
Variable costs are the expenses that
incur during operation of the business. The variable cost of the purposed
business will be 40% of the sales revenue as shown in annex of sensitivity
analysis. Refer annex-14 for more information.
5.8 Estimation of Overhead Expenses
Overhead
expenses of proposed restaurant are given below, refer annex-15 for more
information.
5.8.1
Utilities requirement
The
most of the fast food machines require considerable gas during the preparation
process. The preheating procedure of the equipment before commencement of
preparation also consumes considerable gas. It is assumed that utilities
expenses will be increased by 10 % every year. The total utility requirement
for the year is of Rs. 648000. It consists of electricity, gas, telephone and
water.
5.8.2
Land Requirement
The land requirement is around 2,000 sq.
ft. in densely populated area where all utilities and facilities are properly
available. It is recommended that the fast food outlet be opened on the ground
floor of flats wherein the consumer traffic will be a maximum. The more the
shops are near the main road the better the sales potential it will have.
5.8.3
Rent Cost
The rent for the assumed premises will
be Rs.40000 per month. The rent would be payable on a monthly basis and is
expected to increase at the rate of 10% per annum for the projected period.
5.9 Estimation of Interest and other expenses
Interest
will be payable each month for the loan. This includes 15% interest on loan of
Rs.571455 for the first year and it will amortize each year respectively.
Similarly other expenses include tax expense which is 13% of total earning
which is Rs.103752 for the first year.
5.10 Projected
Income Statements
The
projected income statement gives the company’s financial position in a
description way. Income statement is such a tool which provides the detail
analysis of weather the organization is in profit or in loss. How much tax and
interest they have to pay we can clearly identify by the help of income
statement. Newari Chulo Restro and Bar’s profit is in increasing trend. In the
beginning the profit is assumed to be Rs.694343 and
it is increased up to Rs.2457110. For detail see
annex-3, there is detail figure of income statement.
5.11Projected Balance Sheet
Balance
sheet shows the detail analysis of the restaurant’s capital, equity,
liabilities and assets position. As per the estimation the total assets for the
first year is Rs.6349500and constantly
increased up toRs.13151843in the sixth year. The
same condition is for owner’s equity and liability. For detail see annex-4 at
the back of this report.
5.12 Projected Net Working Capital
The
net capital is estimated with the help of current assets and current
liabilities. The initial working capital is Rs. 285000.
For detail see annex-6 at the end of this report.
5.13 Projected Cash Flows
The
projected cash flow gives the summary of cash inflow and cash outflow from
operating activities, investing activities and financing activities. Operating
activities is composed of cash receipt from operation i.e. earnings after tax
including depreciation. Financing activities are composed of source of finance
i.e. bank loan and equity capital. Similarly investing activities composed of
cash disbursement from the investment which represents the total amount of cash
being disbursed for the purchase of assets in the startup period and repayment
of loan at later period. The net cash flow in the first year is Rs. 164300and it is
increased to Rs. 2815213at
the end of sixth year. See annex-5 for detail analysis.
5.14 Projected Break Even Point
The break-even point is
the level of sales at which revenue equals expenses and net income is zero. It
shows neither gain nor loss situation. This is given as below:
Net income = Sales
Revenue – Expenses = 0
Break-even
point for the year is Rs. 6942155and it decline in
second and third year and after that it increase to Rs.10113874at
the end of sixth year. See annex-8 for detail calculation.
5.15 Capital Budgeting
The
Process of acquiring the fixed asset or process of investment in capital
projects is known as capital budgeting. The process of capital budget includes
the identification of the investment opportunity, estimation of relevant cost
and benefits of the identified project, evaluation of the project, approval and
monitoring of the projects. The capital budgeting focus on the evaluation
techniques of the investment based on already estimated cost and benefits. In
this business plan we use capital budgeting techniques to know whether the
project is feasible or not. Refer annex-9 for further details regarding capital
budgeting. In Capital Budgeting we take help of following techniques:
5.15.1 Pay Back Period
The payback period is defined as the
expected number of years required to recover the original investments .It is
traditional but important method of screening the project.
PBP = min year + (amount still to
recover/ next year cash flow)
As
per the calculation the payback period is 4.33years. See
annex-9 for detail.
5.15.2 Net Present Value
This is widely used discounted cash flow
technique of capital budgeting. While evaluating the projects, benefits of the
project measured in terms of cash flow is discounted and sum up and then
initial cash outlay of the project is deducted and the remaining value is NPV.
It is the difference between present value of cash inflow and outflow. The equation
for the NPV is as follows:
NPV= Total Present Value – Net Cash
Outlay
The
projected NPV is Rs. 631777which is positive. So, we accept this project. See
annex-9 for the detail analysis.
5.15.3 Internal Rate of Return
The internal rate or return (IRR) defined
as the discount rate that equates the present value of a project’s expected
cash inflows to present value of project’s costs. PV (inflows) = PV (investment
costs) or IRR is the rate that forces the NPV to equal zero. As per the
calculation the IRR is 20% which is higher than cost of capital i.e. 17% so, we
accept the project. See annex-9 for the detail summary.
5.16 Major Financial Ratios
5.17 Return on Investment (Net Income / Investment)
The return on
investment (ROI) measures the return on the owner’s investment. It is
calculated as follows:
Return on Investment
(ROI) = Net Income/ Investment
The ROI for the first year is 9.41%,
12.71%
in second year, 15.50% in the third year,
17.70% in forth year, 19.33% in the fifth year.
See annex-7 for detail analysis.
5.17.1 Return on Equity ((Net Income / Equity)
The return on equity (ROE) measures the
return on the owner’s investment in the firm higher ration of return on equity
for owner. It is calculated as follows:
Return on Equity (ROE)
= Net Income/ Total Equity
The ROE for the first year is 21.47%,
23.49%
in second year, 23.72% in the third year, 2.08%
in forth year and 22.09% in the fifth year.
See annex-7 for detail analysis.
5.17.2
Current Ratio (Current Assets / Current Liabilities)
Current ratio is the ratio of Current
assets to current liabilities. The project has current ratio of 213.42 in first
year to 529.86 in fifth years. For detail refer annex-7.
5.17.3
Interest Coverage Ratio or Debt Service Ratio (
Interest/EBIT)
5.17.4
Debt Service
Ratio for the first year is 41.73% and 5.94% for the fifth year which is
gradually decreasing. Further details are shown on annex-7.
5.17.5
Debt to Total Capital Ratio ( Debt/Total Capital)
Since
we are planning to take sixty percent loan from the bank and forty percent
collect from the partners, the debt to total capital ratio for the first year
is 51.63% and for the fifth year is 9.36%. To calculate debt to total capital
ratio we divide debt by total capital of the organization. See annex-7 for
further information.
5.17.6
Net Profit Margin ( Net Profit / Sales)
It includes net profit margin and gross
profit margin. The net profit margin on sales is calculated by dividing net
income by sales, which gives the profit per rupee of sales:
Net Profit Margin = Net Income/ Sales
The
projected net profit margin is 7.71% in first year, 10.03%
in second year, 12.07%in third year, 13.88%
in fourth year, 15.50% in fifth year and
16.95% for sixth year. See annex-7 for detail.
5.17.7
Gross Profit Margin ( Gross Profit / Sales)
The
gross profit margin on sales is calculated by dividing gross profit by sales,
which gives the profit per rupee of sales:
Gross Profit Margin = Gross Income/
Sales
The
projected gross profit margin is 60% in all year. See annex-7 for detail.
5.17.8
Operating Profit Margin I( Operating Profit/Sales)
The operating profit margin for the
first year is 15.22%, for second year is 16.44%, for the third year is 17.44%,
for the fourth year is 18.26%, for the fifth year is 18.94% and for the sixth
year is 19.48%. Further calculation and details is shown on annex-7.
5.17.9
Debt to
Equity Ratio ( Debt/Equity Ratio)
It shows the
relationship between creditor’s fund and owner’s fund. Higher the ratio, higher
is dependence on external debt. It is derived by dividing total debt by owners’
equity. The calculation shows 150% debt to equity ratio for the first year and
respectively 30.35% for the fourth year. Refer annex-7 for details.
CHAPTER:-SIX
RISK MANAGEMENT AND ASSUMPTION
6.1
Analysis
of the Risk
Ø Political
The political system of Nepal is
instable. Political situation is one of the major risk we are going to face.
Political instability has let unfavorable circumstances like strikes, Banda and
oil and fuel crises. This will highly impact on the business operation as well
as customer.
Ø Economic
When oil prices and prices of goods
shoot up and there will be inflation in double digits, then people may not have
purchasing power to buy the things because “more money chases fewer goods in
case of inflation”. And consumption Power declines which will ultimately
hampers our business.
Ø Socio cultural risk
Social
is all about how consumers, households and communities behave and their belief.
There is still people who are unknown about Newari food and their taste. Newari
food is only famous among them, there is also case, that most Newars haven’t
taste their most of foods. Because of the fact that Nepalese youth is shifting
towards the western culture so we have to consider the improvements in our
products with the passage of time to meet the requirement of changing culture
and to protect our culture.
Ø Technological risk
Technological
advancement and innovations has lead modernization in the economy. Since
technology is changing everyday it has become necessary to adopt them so that
will enhance our competencies and productivity. It has become necessary to face
the competitors and sustain in competing market.
Ø Legal risk
Government
restriction and their compliances also sometime affect the business. It is
necessary to follow rules and regulation of government to do our business but
too much restriction and modification may be riskier for the business. So company must be updated with the latest legal
requirement & payment of the taxes & renew of business permit should
done annually. The government allows running restaurant for late hour up to 11
o’clock is beneficial.
Ø Global risk
Integration
of market of whole economy has lead global to become single village. As a
result number of multinationals, joint venture, franchising and alliances has
been increasing. This has lead entry of larger companies, global financial crisis, cultural difference,
increased terrorism as risks to the business.
6.2 Sensitivity
Analysis
Ø 10% decrease in Sales
If
sales decreased by 10%, the break even sales have increased consecutively for
the five years. For detail refer annex 16.
Ø 5% increase in Cost
If
cost increased by 5%, the break even sales have increased consecutively for the
six years. For detail refer annex 16.
Ø 10% decrease in Sales and 5% increase
in Cost
If
sales decreased by 10% and cost increased by 5%, the break even sales have
increased consecutively for the six years. For detail refer annex 16.
6.3 Underlying
Assumptions
The project cost estimates for the
proposal of Khaptad Homestay have been formulated on the basis of discussion
with relevant stakeholders and experts. The cost projections cover the cost of
land, building, inventory, equipment including office furniture etc. the
specific assumptions relating to individual cost components are given as under:
Ø Price of the product is determined on
the basis of survey in different restaurants around the city
Ø Sales will increase by 10% per year
Ø Cost of raw material, staff salaries,
utilities expenses, rent and office expenses will increase by 10% per year.
Ø Debt/Equity ratio is 60:40
Ø Depreciation is 10% annually
Ø Shop building and fixtures,
kitchenware and machinery, furniture are diminishes by 10% per year
Ø Raw food inventory-meat is of 3 days
Ø Raw food inventory-spices and sauce
is of 7 days
Ø Lease period is of 5 years
Ø Lease installment is done monthly
Ø Tax rate is 13%
Ø Operating Days is 350 days in a year
and 16 hours a day
Ø Pricing is done as per the policy of
Homestay guidelines of Nepal
6.4 Risk Management Strategies
No any types of Business organization
avoided from the risk. As the Homestay hotel industry may face the more risk than
that rest of the organization to mitigate the such risk following strategies
would be follow
A.
Financial Risk :-
Ø Economic and Financial Crisis Risk
Ø To
enhance technology and revenue management tool that will enable to monitor
and respond quickly
to the changing landscape
Ø Reduce investment in business
expansion
Ø To
preserve profit margin lines by driving revenue,
increasing market share
and managing costs and debt,
this is important to keep the business
healthy and preserve as many jobs as possible.
Ø Develop promotions and sales strategies to help hotel to drive incremental revenue
and capture greater
market share
Ø Cancel bonuses of all head of departments within the hotel that will help
to cover the debt
B. Strategic Risk :-
v Competition Risk
Ø Implement pricing strategy tool and offer competitive prices to customers
Ø Develop effective marketing plan to be successful in the competitive market
Ø To
understand strengths & weaknesses of the hotels in competitive set and classify the hotels unique features to sell the product and winning
the competition
Ø To offer discounted rates to customer to gain
business
Ø Provide high quality and standard service to customers and satisfy needs in order to be
competitive in market.
v Reputational Risk
Ø Develop good brand image in order to be competitive
in market Provide high quality
of service to guest
and satisfy needs for excellent reputation
Ø Manage guest complaints effectively so it
doesn’t affect the reputation
C. Operational Risk :-
v Technology Risk
Ø Improve technology and systems, and update or replace to advanced system on regular basis
Ø Provide training to all the
associates and its importance for business
v Increasing Cost Risk
Ø Implement tool to minimize cost and to increase revenue
Ø Review and control costs for smooth functioning of business and to meet profit margin line.
Ø To
reduce capital expenditure and other miscellaneous costs
v Associates (Employees) Risk
Ø Hire talented associates for business development
Ø Provide training to associates on regular intervals
to offer standardized service and satisfy customer
expectations
Ø To look after associates and in turn associates will look after customers and increase
business
v Hazard Risk
Ø Implement policies and procedures to minimize
harm to associates and visitors
and to control and mitigate
damage to property and equipment
Ø Procedures for evacuation and assembly point at hotel
Ø Implement Procedures to contain the operational, service and public image impacts of an adverse incident and to manage and communicate information regarding the incident.
D. Compliance Risk:
Ø Policies & procedures to ensure
health safety standards are maintain.
Ø Conduct Health & Safety audit to meet the compliance
CHAPTER:- SEVEN
RECOMMENDATION AND CONCLUSION
7.1
Summary and Conclusion
The
proposed business plan of Khaptad homestay. Its IRR is 20% which is more than
cost of capital and profit margin is in increasing trend. Return on Assets
indicates a good financial condition of the project. The return on equity is
good. The project has overall good financial condition and is able to challenge
the existing restaurants in the market with its strong financial ratios. The
project is feasible to operate and is profitable. This can be proved with the
following fact;
Ø NPV is Rs 631777
which is positive
Ø Payback period is 4.33 years which is less than its life
Ø IRR is 20% which is greater than cost of capital
Ø Profit margin is in increasing trend
All the above supporting facts of the
proposed project conclude that project can be operated and is profitable enough
for its survival. It indicates that this is a robust project that will be able
to meet its financial obligations even in those most unfavorable circumstances.
It is appreciated to invest i.e. financially viable to sustain more
efficiently. This project may also be helpful to uplift the economic status of
the region and also for the profit maximization. The financial analysis shows
that the project is an attractive for investment. Hence, it is not risky to do
such business so it is viable project.
7.2 Recommendation
Apart from the financial feasibility,
the project may have other scope that need to be met. Some of the
recommendations for the project are as follows:
Ø Must focus on the best quality and
customer satisfaction.
Ø Though Khaptad National park is centrally located it should expand its
operation in different areas and even outside also.
Ø As Customers taste and preference
changes frequently, it must analyze it and perform their service as per the
situation demands.
Ø Regular advertisement should be done
consistently to attract and retain loyal customers.
Ø Success of the business also depends
upon dedicated and committed employees so employee satisfaction must be created
by providing good salary with overtime payment, training and development
programs to enhance their skills and by providing other intrinsic and extrinsic
rewards.
Ø Government rules and regulation must
be strictly followed.
Ø Tax must be paid in regular basis and
legal charges must be paid as per the requirement.
Ø Should fulfill the responsibility
towards society and the public. This will help to raise goodwill of the
company.
7.3 Key to Success
Ø Dedication to
the finest quality ingredients and "make it happen no matter what"
customer service.
Ø Give back to the
community.
Ø We will ensure that our products
are fresh and made on the spot in order to reduce the waste of food.
Ø We will listen to our customers
to better understand their wants and needs.
Ø Proper location and facility layout of the Khaptad Home Stay.
Ø Organic foods with standard quality of goods and service provided to
the customer.
Reference
Herrera, T. (2011). Hospitality Industry Developing Tool for Greener Supply
Chain. Retrieved
Van Horne, J.C.,
&Wachowicz, J.M. (2009).Fundamental of Financial Management. New Delhi
Wolff, Haward K., and
Pant P.R (2005), “Social Science
Research
http://www.scrivens.ca/family-matters/a-risk-management-plan-vital-for-the- hospitality-industry
The Risk Management Universe:
A Guided Tour by David Hillson – Risk management best practices and future
development, understanding
risk, (Viewed Nov 2010)
Cooley, M., n.d. Shopify. [Online]
Available at: https://www.shopify.com/guides/businessplan/the-financial-plan
Hunian Hotel Melonjak 49%. http://m.bisnis.com/. Retrieved June 23, 2014, from.
hospitality industry in nepal, n.d. hospitality industry
in nepal. [Online]
Available at: http://hospitalityindustryinnepal.blogspot.com
Comments
Post a Comment