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Business Innovation And Entrepreneurship

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Question:

Discuss about the Business Innovation and Entrepreneurship.
 
 

Answer:

Introduction:

Pizzeria Street is a tasty family oriented pizza business that specializes in pizza, pasta and frozen yoghurt. Pizzeria Street is a quick pizza service restaurant that aims to offer its customers with superior quality customer service and distinctive quality of Italian pizza experience. The business will be located in Auckland and the owners of the business will be offering its customer with unique customers with delectable pizza, pasta, sandwiches, appetizers and desserts in an inviting environment conductive to extended or simple family place for meal out (Drucker, 2014). The owners of the business is sure that to make the business successful they aim to provide a superior dine in facilities for their families that looks for wholesome food paired with fun. The menu of the pizza store would additionally feature the favourite range of food such as pepperoni, cheese along with the special pizza which will provide the customers with experience like no other in the city.

The fundamental mission of the owners of business is to make Pizzeria Street a favourite destination for every forms of customer. The owners aim to make the business as the ultimate pizza destination in the city of Auckland. In compliance to the mission is the belief, which the successful business should be involved in all the areas of the community where they operate (Kirzner, 2015). The company mission is to be engaged with the supporting supportive community of its customers in myriad ways.

The mission of the company is to provide service environment and service delivery of pizza in each part of the city to either meet or exceed the experience of the customers. The mission of the company is to become the first choice pizza in the city and simultaneously a respected pizza stores as the measured by the customers, employees, shareholders and the community in which the store will be located (Kuratko, 2016).

The goal of the company is to establish a market presence that is necessary to attract the customers and go past the goals of sales. The owners goal is to make Pizzeria Store a favourite pizza place among the customers in the city of Auckland. To attain the healthy monthly sales inside the span of two months of opening the store by increasing the regular daily sales modestly all through the year to $3000 per day of gross sales following extended promotions and discounts.

The goal of the business is to attain a constant three-digit profit within the span of three years following the establishment of the store. The long-term goals of the owners is to ultimately expand the operations into the surrounding cities inside the span of three years (Schaper et al., 2014). Another long term goal of the company is to establish a long term market share of Pizzeria Store following five years of operations.

 

Legal structure of business:

The legal structure of the business will based on the partnership form with each member of the business will be contributing capital in respect of the ratio of capital contributed by him or her. The liability of the partners will have limited to the face value of the capital contributed by them (Storey, 2016). The partners will privately hold the company with majority of the shares being shared in equal ratio. The investors will be the co-owners to participate in the capital structure of the company at ratio of 50:50. The purpose of the legal structure of the business is to secure the financing for that amount. The funds that will be provided by the owners will be used to fund the potential interest in the company with important assumptions section of the plan.

The owners of the business hold a decade long experience in the hotel industry. The company will be having assistant managers that will be recruited based on the qualifications. The initial team of management is reliant on the founders. As the company is currently small in nature, it needs a simple organizational structure. Implementing a management team of the organization calls for the owners to make all the major management decision in addition of monitoring all the other business activities (Ebert et al., 2014). The organizational structure will comprise of the director of the store when the location of the store is set up.

The owners anticipate that the individual will deliver the best in the store management. This will help in creating a supervisory level amid the executive level and the store administration level. The present plan is to have the accounting and payroll functions, which will be completed by the in-house bookkeeping (Hammer, 2015). At the initial level the employees structure will comprise of the two cashiers, four chefs and two delivery boys per location with one of the each during the premises open hours. During the long run of the business as the business would expand their products category and retail outlets in the middle of the management to make sure that the focus of store work is maintained.

Market analysis:

Pizzeria Store discovers itself bordering amid the edge of the two different industries. Not only is the company competing against the other fast service restaurants in the city but also the pizza dynamo such as Domino’s and Pizza hut (Hollensen, 2015). The industry of pizza is considered as the massive industry and a difficult industry to stay ahead however the Pizzeria Store cash cow is the pizza therefore the company is anticipating to excel in this field. The local area of Auckland is a well-developed market that is growing low to middle class area with more than one million residents.

Around 200 business is close to the locations of the Pizzeria Store business. A large number of them are families based dining restaurant. The growth in this area is primarily due to the response of the new business and opportunities of employment in the city’s local bay industrial park (Goworek & McGoldrick, 2015). There are identical food service businesses in this area that have traditionally done well with this population and have proved their potential for a Take-out Pizza. With constant amount of growth in this industry, the opportunities of serving the local residents will increase.

The customers on the other hand vary largely in terms of the demographic characteristics and choice of lifestyle. This will make somewhat difficult to target certain types of individuals however, product differentiated marketing strategies will be adopted to attract the customers from both inside and outside of the city (Armstrong et al., 2015). Positive outcome of the economic reflectors and hopeful increase in the consumer’s disposable income give rise to the anticipations that pizza market will be slight but steady growth for the industry. The recent economic reflectors offer a positive economic growth and anticipations are that the number of restaurants could approximately 300 locations in Auckland and may turn out to be the good year for the industry.   

Competitor Analysis:

The proposed location of setting up the pizza store in the city of Auckland is occupied by the competitive restaurants, which would help in drawing the traffic of customers to the area. A large number of the food restaurants is comprising of predominantly in the casual theme including the fast food chain restaurants (Sheth & Sisodia, 2015). The competitor analysis of the Pizzeria Store is complex because of the fact that it is identical industry of Pizza hut, Domino’s and Papa John’s. This business comprises of the fast service pizza, concentrated restaurant such as Pizza, Papa and Domino’s.

The above stated three companies are the clear leaders in the pizza industry and being the seller of Pizza the company should rise to the occasion. It is noteworthy to denote that these competitors are not too easy to beat the pizza power however with differentiated product strategy the company can be more appealing than other eating pizza store available in the city. As the company is centrally located in the city of Auckland, which is the local bay area close to the industrial, bay Industrial centre (Keller & Kotler, 2016). This is regarded as one of the busiest area in the town with the closest pizza is approximately thirty minutes of drive there are is a great chance of the business to excel in the pizza industry.

Lower cost of operations and reasonable price of the product might result in profit of the company. Excellent service of pizza and on time delivery service would provide the business with competitive edge. The competition in the market is arena is considered to be fiercest in respect of the other metropolitan areas in the city. Auckland is the compact city and has lot to offer (Bresler & Lubbe, 2014). The retailers operating in this industry does not want to lose the opportunity since the competitors are offering substitute product within the identical product categories. This phenomenon has made the business of pizza easy to attract customers because of the high amount of people strolling around in the main areas of Auckland.

 

Strength and Weakness:

Pizzeria Street would be having a valuable strength of inventory, which would make the company successful. Another strength lies in the location of the company with excellent quality of Italian pizza, which is presently not available in the local Bay area (Jooste & Strydom, 2014). On the other hand, the experience of the management could be considered as the proven experience that will be successful in the management of the business. Another important factor that could be considered as the strength of the pizza street is the state of the art of the company along with the energy efficient preparation of pizza equipment and technology. The company is dedicated to the clear needs of the market and the business management clearly understand the needs of the customers that are familiar with the latest technology and the company can provide pizza service which would bring the two together.

Strengths is considered to be valuable for the business however it is necessary for the company to realize the weaknesses surrounding the business as well. A weakness for the business that could be its cost factors that are involved in keeping the state of the art of equipment and technology (Ebert et al., 2014). Additionally, the business is new in the town and faces the challenge of start-up. On the other hand, the company faces limited capacity of operations during the peak sales periods. 

Opportunities and threats:

Taking into the considerations the strength and being aware of the weaknesses, the company will be able to capitalize on the emerging opportunities. One of the opportunity of the business is the fastest growing population and the market of the local bay of Auckland. There is no other specialized pizza take-out and delivery restaurant within the span of 8 miles’ radius from the selected location of the store. Additionally, the area consists of the large number of middle to high-class population and more than five hundred business in the areas (Hammer, 2015). There is medium to low competition that is offered to the Pizzeria Street in the surrounding area. It is noteworthy to denote that consumer behaviour changes because of the economic downturn, respectively an increased preference to purchase affordable pizza rather than purchasing expensive meals.

Threats surrounding the Pizzeria are as follows;

  1. Slow recovery procedure of the economy from the present economic downturn
  2. Changes in the environment of business may lower the cost of the sales
  3. Higher taxes in the future
  4. The commercial property is leased and it is not owned by the company
  5. Tighter terms of credit, higher rate of interest and higher rate of inflation rate than anticipated

Pizzeria Street has wide range of product to offer and the company is trying to market itself as not only the seller of pizza but also the other products. At Pizzeria Street, the consumer will also be offered with food such as pasta, dessert, yoghurt and may pick many more from the great ambience (Goetsch & Davis, 2014). These comprises of the famous chicken grill salad, sausage and meatballs along with the several more speciality. 

Pizzeria Street will be offering promotions to promote its product. Additionally, the company would be providing promo codes that would be going around the internet where customers can easily redeem for their purchase (Keller & Kotler, 2016). Television is considered as the popular means of advertising and Pizzeria Street will be taking more advantage of it. As the rival companies such as domino’s and papa jeans constantly promote their product through television advertisement, Pizzeria Street will include special cuisine along with the unique customer service.

Pizzeria Street would be having its outlets located in the centre of the city with next pizza destination is around half an hour drive away or in other words, it is eight miles away from the intended business location. In order to expand, the company will be undertaking major investment in the long run to expand its franchise in the other parts of the city to promote its products and services (Jooste & Strydom, 2014). Consumers loves Italian cuisine and even though a consumer does not have fond for Italian food will find something on the menu that would attract them to the store.

Increasing costs makes it tough to plan for the pricing of the product for a new business. As people react negatively to the change in price in menus, franchises needs to be make smart decision. This is where Pizza Street needs to make differentiate. Reasonable, but taste intensive cuisine for the middle class family is what the company is required to understand. To reach the perfect pricing strategy six price variations across the numerous items listed in the menus were also tested. Therefore, the price appears to be reasonable and in line with the competitors.

 

Action plan:

The action plan is designed to meet the success of the pizza store. The below stated is the action plan for the business are as follows;

Menu development: The action plan development in this context is to address the chef for developing a creativity of the menu based on the theme of the restaurant. The action plan of developing menu is to appeal the targeted customers.

Cost and margins: This actions plan has been developed for chef to create the cost of each menu item and suggesting the retail price for the menu (Jeston & Nelis, 2014). The action plan comprises of the selection of the vendors with the lowest price and constant quality to meet consumer experience.

Quality and consistency: This action plan addresses the customers that comprises of maintaining quality and consistency of food.

Supervision of employees and kitchen staff: The action plan addresses the employees and staff for coordinating the business and store by implementing extensive supervision.

Compliance requirement:

The governments for Pizzeria Street will typically require the internal compliance. Since the company is a partnership forms of business they are formed and enforced by the internal business owners. Document templates and compliance kits such as stock certificates seals the internal compliance requirement for business (Goetsch & Davis, 2014). 

The four ways of promoting business compliance for Pizzeria Street are as follows:

  1. Audits and reviewing of business documents
  2. Risk analysis through management program
  3. Outlining of business continuity
  4. Password protection of computer related documents.
 

Start-up Fund:

Start-up Requirements

Start-up Expenses

 

 

Fixed Costs

Particulars

Amount

 

Premises (RENT & RATES)

3000.00

 

Wages

10000.00

 

Interest on loan 8%

2000.00

 

Accountant Fees

2500.00

 

Payroll Tax

2500.00

 

Gasoline and Oil

750.00

 

Utilities

3000.00

 

Sales and Marketing

725.00

 

Postage & Telephone

550.00

 

Repairs and Maintenance

250.00

 

Website Development Expenses

1500.00

 

General Expenses

950.00

 

Market survey

450.00

 

Preliminary  expenses

250.00

 

Lease payments

1750.00

 

Total Fixed Costs

30175.00

Average Monthly Costs

 
 

Rent

250.00

 

Lease payments

145.83

 

Interest on loan 8%

166.67

 

Postage & Telephone

45.83

 

Repairs and Maintenance

20.83

 

Gasoline and Oil

62.50

 

Salaries / Wages

833.33

 

Total Average Monthly Costs

1525.00

 

x Number of Months:

12.00

 

Total Monthly Costs

18300.00

Total Start-up Expenses

48475.00

Start-up Assets

 

 

Owner Funding

   
 

Owners Fund

75000.00

 

Total Owner Funding

75000.00

 

Total Start up Funds

75000.00

Assets

   
 

Computers

5000.00

 

Vehicles

7500.00

 

Equipment’s

4500.00

 

Furniture & Fixtures

7500.00

 

Total Fixed Assets

24500.00

Total Start-up Assets

 

99500.00

Promotional Budget:

INCOME

Budget

 

Sales

 
 

Sales - Qtr 1

          31,250

 

Sales - Qtr 2

          31,250

 

Sales - Qtr 3

          31,250

 

Sales - Qtr 4

          31,250

 

Other

 

 

Total Sales

       1,25,000

 

Cost of Goods

          45,000

 

Cost of Goods Sold

          45,000

 

Gross Profit

          80,000

 

Non-Operating Income

 
 

Interest Income

 Nil

 

Rental Income

 Nil

 

Total Non-Operating Income

                    -

Total INCOME

          80,000

EXPENSES

 

 

Operating Expenses

 
 

Premises (RENT & RATES)

3,000

 

Wages & Salaries

10,000

 

Accountant Fees

2,500

 

Payroll Tax

2,500

 

Administrative Expenditure

750

 

Utilities

3,000

 

Sales and Marketing Expenses

725

 

Postage & Telephone

550

 

Repairs and Maintenance

250

 

Website Development Expenses

1,500

 

General Expenses

950

 

Interest Expenses

2,000

 

Market survey

450

 

Preliminary  expenses

250

 

Insurance

500

 

Advertisement

1,250

 

Lease payments

1,750

 

Total Operating Expenses

          31,925

 

Non-Recurring Expenses

 
 

Computers

5,000

 

Vehicles

7,500

 

Equipment’s

4,500

 

Furniture & Fixtures

7,500

 

Total Non-Recurring Expenses

          24,500

Total EXPENSES

          56,425

 

Net Income Before Taxes

          23,575

 

Income Tax Expense

          13,350

NET INCOME

          10,225

Sales Forecast:

(1) SALES FORECAST

 

 

Year

0

Year- 1

Projected Sales

 

1,25,000

(b) Cost of goods

 

45,000

Sales

 

Sales - Qtr 1

          31,250

Sales - Qtr 2

          31,250

Sales - Qtr 3

          31,250

Sales - Qtr 4

          31,250

Other

 

Total Sales

       1,25,000

Figure 3: Figure illustrating Sales for each Quarter

(Source: As Created by Author)

 

Reference List:

Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction. Pearson Education.

Bresler, M., & Lubbe, I. (2014). Marketing management.

Deegan, C. (2013). Financial accounting theory. McGraw-Hill Education Australia.

Drucker, P. (2014). Innovation and entrepreneurship. Routledge.

Ebert, R. J., Griffin, R. W., Starke, F. A., & Dracopoulos, G. (2014). Business essentials. Pearson Education Canada.

Edwards, J. R. (2013). A History of Financial Accounting (RLE Accounting) (Vol. 29). Routledge.

Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Goworek, H., & McGoldrick, P. (2015). Retail marketing management: Principles and practice. Pearson Higher Ed.

Hammer, M. (2015). What is business process management?. In Handbook on Business Process Management 1 (pp. 3-16). Springer Berlin Heidelberg.

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Hoskin, R. E., Fizzell, M. R., & Cherry, D. C. (2014). Financial Accounting: a user perspective. Wiley Global Education.

Jeston, J., & Nelis, J. (2014). Business process management. Routledge.

Jooste, C., & Strydom, J. W. (2014). Marketing management.

Keller, K. L., & Kotler, P. (2016). Marketing management. Pearson.

Kirzner, I. M. (2015). Competition and entrepreneurship. University of Chicago press.

Kuratko, D. F. (2016). Entrepreneurship: Theory, process, and practice. Cengage Learning.

Schaper, M. T., Volery, T., Weber, P. C., & Gibson, B. (2014). Entrepreneurship and small business.

Sheth, J. N., & Sisodia, R. S. (2015). Does marketing need reform?: Fresh perspectives on the future. Routledge.

Storey, D. J. (Ed.). (2016). Entrepreneurship and new firm. Routledge.

Williams, J. (2014). Financial accounting. McGraw-Hill Higher Education.

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