broadway dairy project muhammad jahanzaib 11022720-028

8/13/2019 Broadway Dairy Project Muhammad Jahanzaib 11022720-028

1/61

Business Plan

On

[Broadway Dairy]

Business Plan Projects Submitted to Faculty of Management and Administrative

Sciences in Partial Fulfillment of Requirements for the Subject of

Entrepreneurship

Submitted By:

Ms Scholar: Muhammad.Jahanzaib (11022720-028)

Ms Scholar: Muhammad. Shahid (11022720-008)

Ms Scholar: Luqman Ahmed (11022720-019)

Ms Scholar: Abu Sufyan (11022720-035)

MBA 3rd(3.5Year)

Session (2011-2015)

UNIVERSITY OF GUJRAT

Date of Submission 04/02/2013

Name of Program Coordinator: Mr. Waqas Manzoor Dar

Signature of Program Coordinator: ____________________


2/61

You know??? You want it Page 2

DedicationI dedicate to our dear Parents whose prayers are always with us

Friends, University Of Gujrat and my respectable

Mr. Waqas Manzoor Dar whose guidance

Is always with us


3/61


Acknowledgement

All praise to Allah, the most merciful, kind and beneficent, and the source of all

knowledge, wisdom within and beyond our comprehension. He is the only God, who can

help us in every field of life. All respect and possible tributes goes to our Holy Prophet

Mohammad (SAW), who is forever guidance and knowledge for all human beings on

this earth.We are very thankful to the most merciful and Almighty Allah who gives us the

strength that we fulfill our task. We are very thankful to our parents who give us a

chance to learn better for bright future. We are very thankful to ourteacher who is

polished our personality and gives personal and professional skill. We are really very

thankful toMr. waqas Manzoor Dar for her cooperative attitude during the completion

of our project work. He helped and supported us during completing project.

We are really very thankful to one of our friend Mr. Furqan Hameedfor his cooperative

attitude during the completion of our project work. He helped and supported us during

gathering and analyzing information.


4/61


Executive summary

Opportunity and problem analysis

Today it is a major problem for the people that they want to consume quality dairy

products but they dont get these products with purity. Secondly several sweets, bakes

and restaurant operators are using milk as raw material and then convert it into cream,

ghee and condensed milk, we will provide them these products in better quality and low

cost.

Business plan: We will collect milk from producers at low cost and then refine it in

different products like cream, butter, ghee and condensed milk. We will provide these

products to industrial consumers for further production of products.

Business form: We are four partners in this business everyone will take active part in

the management and will bring equal capital. Profits and losses of the organization will

be distributed equally.

Marketing: We have selected Gujranwala as target market, we have adopted several

marketing strategy to capture the customers from this market. We have made

competitors and industrial analysis of this market.

Financial plan

Total investment 3000000/-

Mr. Jahanzaib750000/-

Mr. Luqman750000/-

Mr. Shahid750000/-

Mr. Abu Sufyan 750000/-

We have divided this investment in different initial requirements like purchase of fixed

assets, legal charges, cash in hand etc.


5/61


Table of Contents

Contents

Dedication .................................................................................................................................................... 2

Acknowledgement ...................................................................................................................................... 3

Executive summary .................................................................................................................................... 4

Table of Contents ....................................................................................................................................... 5

Business plan ................................................................................................................................................. 9

Vision .............................................................................................................................................. 10

Mission ........................................................................................................................................... 10

Objectives ...................................................................................................................................... 10

SWOT ANALYSIS ............................................................................................................................ 10

PEST ANALYSIS ............................................................................................................................. 11

Porter 5 force modal ........................................................................................................................ 12

Business modal ................................................................................................................................ 13

Business location ......................................................................................................................... 13

Form of organization .................................................................................................................... 13

Intellectual Property ..................................................................................................................... 14

Organizational structure .................................................................................................................. 15

Organizational hierarchy chart ................................................................................................... 15

Office boy....................................................................................................................................... 16

Two cream refiner ........................................................................................................................ 16

Butter refiner ................................................................................................................................. 16

Powder milk refiner ...................................................................................................................... 17

Condensed milk refiner ............................................................................................................... 17

Products Packer ........................................................................................................................... 17

Working hours of labor: ............................................................................................................... 17

Production unit .............................................................................................................................. 17


6/61


Salaries .......................................................................................................................................... 17

Compensation: .............................................................................................................................. 18

Salary payment: ............................................................................................................................ 18

Leaves:........................................................................................................................................... 18

Marketing plan ............................................................................................................................................ 19

Industry analysis ............................................................................................................................... 19

Competitors analysis ....................................................................................................................... 19

Market research ................................................................................................................................ 20

Potential customers ..................................................................................................................... 20

Questionnaires Results ................................................................................................................... 21

Individual customer results ......................................................................................................... 21

Industrial customer results .......................................................................................................... 30

Market objectives ............................................................................................................................. 39

Positioning strategies ....................................................................................................................... 39

Segmentation ................................................................................................................................ 39

Geographical segmentation .................................................................................................... 40

Demographical segmentation................................................................................................. 40

Behavioral segmentation......................................................................................................... 40

Competitors edge ........................................................................................................................ 41

Marketing mix ................................................................................................................................ 41

Product ....................................................................................................................................... 42

Price ........................................................................................................................................... 42

Place........................................................................................................................................... 42

Promotion .................................................................................................................................. 43

Operational plan ......................................................................................................................................... 46

Collection and storage of milk ........................................................................................................ 46

Cream refining .................................................................................................................................. 46

Cream packing .............................................................................................................................. 47

Butter .................................................................................................................................................. 47

Butter packing ............................................................................................................................... 47


7/61


Ghee ................................................................................................................................................... 47

Condensed department ................................................................................................................... 47

PRODUCTION LAYOUT ................................................................................................................. 48

Financial Plan .............................................................................................................................................. 49

Objectives: ......................................................................................................................................... 49

Capital Arrangement ........................................................................................................................ 50

Use of funds: ..................................................................................................................................... 50

Startup cost: .......................................................................................................................................... 50

Projected Financial statements .............................................................................................................. 51

Projected Income Statement ...................................................................................................... 51

Projected Cash flow Statement.................................................................................................. 52

Projected Balance Sheet ............................................................................................................. 53

Working Notes .............................................................................................................................. 54

1. Sale Prediction .......................................................................................................................... 54

2. Sale Forecasting ....................................................................................................................... 54

3. Quantity of raw material .......................................................................................................... 54

4. Cost of Good Manufactured.................................................................................................... 55

5. Manufacturing overhead ......................................................................................................... 55

6. Fuel charges ............................................................................................................................. 55

7. Factory Depreciation ................................................................................................................ 56

8. Administrative Expenses ......................................................................................................... 56

9. Plant and machinery ................................................................................................................ 57

10. Equipments ........................................................................................................................... 57

11. Furniture and Fixture............................................................................................................ 57

12. Rent cost ................................................................................................................................ 58

13. Preliminary expenses .......................................................................................................... 58

14. Marketing Cost ...................................................................................................................... 58

15. Legal Expenses .................................................................................................................... 59

16. Overall depreciation ............................................................................................................. 59

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


8/61


Internal rate of return ................................................................................................................... 60

Payback Period ............................................................................................................................. 60

Net present value ......................................................................................................................... 61

Profitability Index .......................................................................................................................... 61


9/61


Business plan

This business idea is come up after assessing the environment of different cities

of Pakistan by four people who were friends in a university and they decided to start a

profitable business with the name of Broadway Dairy in Gujranwala region. We will

provide the products cream, condensed milk, powder milk, butter and ghee after refining

the milk.

For this purpose they decided to go for a partnership in which all will contribute equal

amount of capital to start up the business and will also provide some services to run the

business successfully.

Problem

From consumer point of viewit is major problem today people wants to

consume milk and different types of dairy products in pure quality but often they find

such things of low quality and at high price. Suppliers are providing such consumer

products at their own rates.

From producer point of viewin winter production of milk increases but its

consumption decreases, in such situation mostly milk is converted in powder milk andutilize in summer for consumption and adulteration.

Opportunity

We can collect milk from different villages directly and supply it to consumers at

low price with purity. In winter extra production of milk can be used to refine it in

different dairy products like cream, butter, ghee, condensed milk and powder milk.

These types of products can be utilized for production of different sweets and bakes

products.

There are many businesses that operating to produce different types of consumerproducts in which dairy products are used as raw material, usually they purchase milk

and refine it into cream, condensed milk and ghee for further use in production. We

shall provide them these products in ultimate form as they require cream, condensed

milk and ghee. We will collect milk directly from producer (milkmen) at low cost and

convert it into cream, condensed milk, powder milk and ghee and deliver it to these

businesses.


10/61


Vision

To become the first priority of the consumers while selecting purity in Pakistan

and abroad.

Mission

Our aim is to provide pure quality dairy consumer products at low cost so that the

people can enjoy good health and taste.

Objectives To provide quality dairy products

To minimize the cost

To utilize extra production of milk in winter season

To build and maintain a strong relationship with customers

To increase the sales 10 to 20 % quarterly

To expand the business portfolio

SWOT ANALYSIS

Strength

Milk and milk product being a necessity, they would always be demand.

Direct link with the farmer ( supplier).

Low cost due to production in bulk.

Trusted for its quality and hygiene.

Weaknesses

Milk and milk product being perishable have lower shelf life.

We cant store the extra milk product due to shortage of finance .

Opportunities

We can expand our business in other cities.

Competitors are providing dairy products at higher price because they are not

consumed milk properly.


11/61


Threats

Lower entry barriers for competitors.

Advance payment (pashgi) in rural area.

Climate change.

PEST ANALYSIS

Political

No legal restrictions to start business

Dairy products exempt from tax

Govt. makes policy to enhance milk production

Unstable political environment

Economical

More suitable as low wages rate limit

High disposable income of selected area

Social

Wellness is a core focus

Consumer are increasingly becoming more and more diet conscious

Enhance people living standard

People are well educated so they are more serious about quality of goods

Technology

High costly machinery are used to refine milk

Available the modern communication technology in a country

Transportation system is well organized


12/61


Porter 5 force modal

Threat of new entry

Low barrier to entry

Not too expensive to enter the market

Absolute cost advantage

Bargaining power of customer

Low switching cost

Pure quality

Homogeneous product

Very large order

Bargaining power of supplier

Too much number of supplier

Similar product

No substitute

Threat of substitute

High relative price

Substitute of product not available

Industry rivalry

Low customer loyalty

Low switching cost

Many competitors


13/61


Business modal

First of all we have analyzed the need of consumers that they have a problem of quality

for consumption of dairy products. Secondly the opportunity analysis of industrial consumers of

dairy products, these consumers purchase the milk from suppliers at high cost and then convert

this milk into different products and these products are used for further production of sweets,

bakes and restaurant products. After analyzing the need and opportunity in the market

resources are gathered, supplies are used and finished products are supplied to our consumers

and at the end feed from them is required in terms of quality and price of the products.

Business location

We are going to start our business in such area where the raw material will be

available easily and at the cheap rates. Here we can collect raw material from

producers directly and suppliers also. This is the rural area of Gujranwala, village

KotSheraQilamiansingh Road, Gujranwala. In this region there is abundance of milk

production.

Form of organization

We are four partners in this business. Everyone will contribute equal amount of

capital and actively participate in the business activities. Profits and losses of the

organization will be divided equally among the members.

Need and

opportunity

analysis

Resources

and

supplies

Production

process

Outlet/

Supplies

Feedback


14/61


Intellectual Property

Trademark (Applied For):

The application for the registration of the below shownTrademark will be

submitted to preserve the intellectual property rights of Broadway Dairy.This trade

mark after the registration will become the exclusive identity mark of allBroadway Dairy

products. The application will be filed to the Registrar of Trademarks (Trademark

Registry Karachi) under the Trademark Ordinance, 2001 and the TrademarkRules:

2004


15/61


Organizational structure

Organizational hierarchy chart

Abu sufyan, Muhammad Shahid, Luqman Ahmad and Muhammad Jahanzaib are

good friends and they are studying in the university. We have not noticed that the

people want to consume dairy products and due to low quality and high price they are

not consuming the dairy products. Dairy products which they are consuming affect the

health and for that purpose they have to go to doctor. With the questionnaire and

personal observation we observe that people want to consume dairy product, due to low

quality and not suitable for health do not prefer to consume dairy products. So to

provide the quality and healthy dairy products we decided to operate a business which

will provide the quality dairy products which have no effect on the health of people.

CEO & OPERATIONAL MANAGER

ABU SUFYAN

MARKETING MANAGER

M.SHAHID

FINANACE MANAGER

LUQMAN AHMAD

QUALITY INSPECTOR

M.JAHANZAIB

Office boy

Butter

refiner

Cream

refiner

Powder

refiner

Condensed

refiner

Packing Storing


16/61


Human resource planLabor is necessary to work done of any type so we will hire the labor for this

purpose. We are the four partners who are doing the major task of the business. But

these four partners are not enough to complete the task so we hired more 11

employees for this purpose. These employees are hired on the basis of their skills and

knowledge which are checked in the interview. The interview of those employees is

taken by Abu Sufyan who is the operational manager of the business. Interview is the

best way to select the right person on the right job.

Following 11 employees are hired by interview:

Office boy

A person is requiring in outlet which we are organized in Gujranwala city. All

order is placed in outlet by customer that is fulfilled in the production department. He

must be punctual and having an attractive personality. He must have good

communication skills, effective and convincing personality and ability to greet customer

with a smiling face.

Two cream refiner

Two labors are require for the process of converting milk into cream. This is the

regular work and hiring person must be having the quality of hardworking. He will have

some experience of doing such type of work.

Butter refiner

One labor will hire for the conversion of cream into butter. This is not to hardtask. This task will complete on the machine and for the running of machine one person

will require for handling the machine. Only experience person will be hire for this job.


17/61


Powder milk refiner

Two labors will be require for the conversion of remaining 90% milk after getting

10% cream into powder milk. This process will complete by hand as there is no special

machine for that purpose. These persons only require some years experience for that

job.

Condensed milk refiner

Three labors will be hire for the conversion of 90% milk into condensed milk by

adding some ingredients into the milk. This job requires physical efforts as it is hard task

to convert milk into condensed milk, this process in very slowly.

Products Packer

Two labors will be requiring for the packaging the butter, cream and condensed

milk. This process requires only the packaging material.

Working hours of labor:

Production unit

Working hours for different labor will be different, according to their working

conditions. The labors which will work on the production unit the time for their working

will be from 9 AM to 6 PM.

Salaries

Employee salary No of employee salary/Month salary/Annum

office boy 1 8,000 96,000

Cream refiner 2 9,000 216,000Butter refiner 1 8,000 96,000

Powder milk refiner 2 9,000 216,000

Condensed milk converter 3 8,000 288,000

Packaging staff 2 7,000 168,000

Total 1080000


18/61


Compensation:

Workers and employees would be benefited in cash and would be given yearly

increments on theBasis of growth rate that is 10% according to financial plan.

Salary payment:

Salaries are paid to employee in the form of cash. Amount of salary are paid to

the employee at the end of month. Advance salaries are not paid to employee due to

getting high performance from employee.

Leaves:

Labor is allowed to have a leave in a month during their working month.

Employee must announce or informed to the operational manager about their leave

because manager arrange the work of that person.


19/61


Marketing plan

Industry analysis

People are using dairy products as necessities of life. There is so much potential

in this industry, there are many local and international, branded and non-branded

producers in this industry. Branded producers those are providing quality products to

some extent but they are focusing only elite class, non-branded and local producer are

providing these products but they are not delivering purity. In that region where we are

going to start our business there many producers and suppliers of milk normally

producer(milkman) produce the milk and suppliers purchase it from them at low cost

and supply it to ultimate consumers at high cost after mixing water in it. People want to

purchase purity not the milk we will deliver them

Competitors analysis

Dairy products are become the needs of people know a days. Many suppliers are

providing these products most of them are local and without brand name. Branded

suppliers are also exist in the market but people dont want to consume their productsdue to high prices, not according to taste and use of chemicals to save the dairy

products for long period of time.

Here we have made a survey about the prices of the dairy products and we will

compare it with consumer expectations and our prices that would be charged by us.


20/61


Brand

name

Liquid milk

Rs. / 1kg

Powder

milkRs. / 500g

Cream

Rs. / 1kg

Condensed

milkRs. / 1kg

Butter

Rs. / 1kg

Ghee

Rs. / 1kg

Haleeb 85 320

Nestle 90 250/290 340

Blueband

600

Withoutbrand

80 200 260 360 600 800

Market research

No doubt, availability of quality milk and its related products is a problem that is

being faced by every city of the Pakistan but the Gujranwala and Lahore are also facing

this problem in spite of that these cities are the biggest milk producer in the Pakistan

and also consuming it in larger quantity. I know the Gujranwala market, its consumers,

its suppliers and its producers as well. I share this thing with my partners and search a

very high potential for our business in the Gujranwala market. We will operate our

business in Gujranwala and InshaAllahwe will expand it in other cities in coming fewyears.

Potential customersThere are many suppliers in this era, but people still want to consume quality products.

For knowing the feedback of the consumers about existing products and their quality

and what kind of change they want regarding the consumption of existing products. For

this purpose we have developed two type of questionnaires; individuals questionnaire

for household consumers and industrial questionnaire for industrial consumers. Theresults of these questionnaires and its analysis are given below:


21/61


Questionnaires Results

Individual customer results

What is economic status of you?

Frequency Percent Valid Percent Cumulative

Percent

Valid Upper 19 25.3 25.3 25.3

Middle 34 45.3 45.3 70.7

Lower 16 21.3 21.3 92.0

Poor 6 8.0 8.0 100.0

Total 75 100.0 100.0

Interpretation

The result of this question show that 45.33% middle and 25.33% upper economic

status people prefer to use our products. That is favorable for our business.


22/61


For which purpose you use dairy product?

Interpretation

Almost 40% people are use dairy products for necessities and 24% use for need

that is showing regular customer of our business that is more positive point for

business.

Frequency Percent Valid Percent CumulativePercent

Valid Health 17 22.7 22.7 22.7

Necessity 30 40.0 40.0 62.7

Need 18 24.0 24.0 86.7

Want 10 13.3 13.3 100.0

Total 75 100.0 100.0


23/61


Do you satisfy with the quality of those existing products?

Frequency Percent Valid

Percent

Cumulative

Percent

Valid extremely satisfy 3 4.0 4.0 4.0

Satisfy 14 18.7 18.7 22.7

Dissatisfy 45 60.0 60.0 82.7

extremely

dissatisfy

13 17.3 17.3 100.0

Total 75 100.0 100.0

Interpretation

The result of this question show that 60% people are dissatisfies the quality of

existing products. That is opportunity for our business to capture the market.


24/61


What change would you like in the existing products?

Interpretation

The result of this question show the 62.67% people want to change the quality of

dairy products that is positive point for business give a best quality to people and charge

healthy prices.


Percent

Cumulative

Percent

Valid quality change 47 62.7 62.7 62.7

price change 22 29.3 29.3 92.0

performance

change

4 5.3 5.3 97.3

Packing 2 2.7 2.7 100.0

Total 75 100.0 100.0


25/61


Do the price relate with existing products quality?


Percent

Cumulative

Percent

Valid Agree 14 18.7 18.7 18.7

strongly agree 6 8.0 8.0 26.7

Disagree 38 50.7 50.7 77.3

strongly disagree 17 22.7 22.7 100.0

Total 75 100.0 100.0

Interpretation

The result this question showing 50.67% customer are disagree the existing price

to relate the quality of products.


26/61


Are these easily available in market?


Percent

Cumulative

Percent

Valid Agree 10 13.3 13.3 13.3


Disagree 47 62.7 62.7 78.7

strongly

disagree

16 21.3 21.3 100.0

Total 75 100.0 100.0

Interpretation

The result show this question the 62.67% people disagree dairy products are not

easily available in a market. That is opportunity for business to provide easily in market.


27/61


Are those goods are available to you in proper packing?

Interpretation

The result showing 60% people are disagreed those goods is not available in

proper form.


Percent

Cumulative

Percent

Valid Agree 8 10.7 10.7 10.7


Disagree 45 60.0 60.0 77.3

strongly

disagree

17 22.7 22.7 100.0

Total 75 100.0 100.0


28/61


What price you will be willing to pay in order to get desire quality?


Percent

Valid Low 9 12.0 12.0 12.0

Equal 45 60.0 60.0 72.0

High 21 28.0 28.0 100.0

Total 75 100.0 100.0

Interpretation

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


29/61


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


Percent

Cumulative

Percent

Valid Agree 20 26.7 26.7 26.7


Disagree 14 18.7 18.7 90.7

strongly disagree 7 9.3 9.3 100.0

Total 75 100.0 100.0

Interpretation

The result showing that 45.33% people are agreeing to like that these products are

delivered to at home,


30/61


Industrial customer results

Which business you are operating?


Percent

Valid Sweets 10 40.0 40.0 40.0

Bakes 5 20.0 20.0 60.0

ice cream 4 16.0 16.0 76.0

Restaurant 6 24.0 24.0 100.0

Total 25 100.0 100.0

Interpretation

The result showing this question 40% customer are operating sweet related

business and 24% customer operate restaurants. That are benefit for business, we are

produce these products that are mostly use in sweet and restaurant business.


31/61


How do you manage the material related the dairy products.


Percent

Valid self-production 4 16.0 16.0 16.0

from suppliers 21 84.0 84.0 100.0

Total 25 100.0 100.0

Interpretation

The result shows this question 84% customer arrangement of raw material from supplier

they are benefit for our business.


32/61


Which products you frequently utilize as raw material?


Percent

Cumulative

Percent

Valid Milk 4 16.0 16.0 16.0

Cream 1 4.0 4.0 20.0

butter and ghee 6 24.0 24.0 44.0

condensed milk 1 4.0 4.0 48.0

more than one 13 52.0 52.0 100.0

Total 25 100.0 100.0

Interpretation

The result show this question 52% customer are use more than one products

(milk, butte, ghee and milk) as raw material that is opportunity we produce many

products at a time


33/61


In which routine you order for the raw material?


Percent

Cumulative

Percent

Valid daily basis 10 40.0 40.0 40.0

two time in a

week

6 24.0 24.0 64.0

four time in a

week

9 36.0 36.0 100.0

Total 25 100.0 100.0

Interpretation

The result showing this question 40% customer purchase on daily basis, these

customers are most important for our business. Because our production of products on

daily basis.


34/61


Do you satisfy with thee exiting quality of raw material?


Percent

Cumulative

Percent

Valid strongly satisfy 4 16.0 16.0 16.0

Satisfy 6 24.0 24.0 40.0

strongly

dissatisfy

8 32.0 32.0 72.0

Dissatisfy 7 28.0 28.0 100.0

Total 25 100.0 100.0

Interpretation

The result shows this question 32% customer is strongly dissatisfy the quality of

exiting quality of the raw material. This is our opportunity to provide the best quality

products and capture the whole market.


35/61


Do the raw material is providing you in proper packing?


Percent

Cumulative

Percent


Satisfy 10 40.0 40.0 44.0

strongly

dissatisfy

9 36.0 36.0 80.0

Dissatisfy 5 20.0 20.0 100.0

Total 25 100.0 100.0

Interpretation

The result shows this question 40% customer is satisfy the packing of existing

products. On the other hand 36% customers are dissatisfying the packing of existing

products.


36/61


Do you satisfy with existing price of raw material?


Percent

Cumulative

Percent


Satisfy 6 24.0 24.0 28.0

strongly

dissatisfy

6 24.0 24.0 52.0

Dissatisfy 12 48.0 48.0 100.0

Total 25 100.0 100.0

Interpretation

The result shows this question 48% customer is dissatisfy with existing price of

raw material, our opportunity to provide fewer prices against market and capture whole

market.


37/61


Which kind of change you want from the raw material?


Percent

Cumulative

Percent

Valid Price 4 16.0 16.0 16.0

Quality 11 44.0 44.0 60.0

both same as

existing

10 40.0 40.0 100.0

Total 25 100.0 100.0

Interpretation

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

material.


38/61


How much you are willing to pay for desired quality?


Percent

Valid Low 5 20.0 20.0 20.0

High 11 44.0 44.0 64.0

same as existing 9 36.0 36.0 100.0

Total 25 100.0 100.0

Interpretation

The result shows this question 44% customer is willing to pay high price against

best quality of raw material. That is benefit for our business to earn healthy profit.After

knowing the feedback of the consumers about existing products, we have adopted the

following marketing strategies to capture the market.


39/61


Market objectives

While targeting the Gujranwala market we have defined the following objectives:

Delivering purity to our consumers

Making direct relations with the customers

Retain the customers loyalty

Market strategies

To attain our market objectives we have to set out the following market strategies:

To delivering purity to our consumers

To making direct relations with the customers

To retain the customers loyalty

Positioning strategies

For survival among the competitors, gaining the customers priority and creating

values for customers we have to adopt the following strategies:

Segmentation

Before going to any market we have to make segmentation of our market because

no one have the same taste, consumption pattern and every market have different

potential related to a product. Our purpose is not only to focus the ultimate consumers

but we will provide raw material to industrial customers those are operating the business

of sweets, bakes, ice cream or hoteling. For this purpose Broadway Dairy have

segmented our market into different segments, that are:

Geographical segmentation:

Country Pakistan

City Gujranwala


40/61


Demographical segmentation:

Upper class

Middle class

Lower class

Behavioral segmentation:

Household consumers

Industrial consumers

Geographical segmentation

No doubt, availability of quality milk and its related products is a problem that is

being faced by every city of the Pakistan but the Gujranwala and Lahore are also facing

this problem in spite of that these cities are the biggest milk producer in the Pakistan

and also consuming it in larger quantity. I know the Gujranwala market, its consumers,

its suppliers and its producers as well. I share this thing with my partners and

geographically selected a very high potential market for our business.

Demographical segmentation

Individuals have different taste, requirements, consumption patterns and monthly

incomes. According to these characteristics we have divided our market into three

classes and Broadway will target its consumers according to their status.

Behavioral segmentation

Broadways main customers are industrial consumers; according to the purpose

of consumption we have segmented our consumers in to following to classes:


41/61


Household consumers

Ultimate consumers are our household customers who utilize the dairy products

for ultimate consumption.

Industrial consumers

Industrial consumers are our main customers; they utilize the dairy products for

production different consumer products. Sweets, bakes, ice cream and hoteling are the

business that has been selected as customers. In the Gujranwala region many

businesses are operating that are providing different consumer products in which dairy

products are used as raw material, these business operators feel that they should be

provided condensed milk, cream and ghee with low cost, they usually purchase milk

and convert it into cream and condensed milk but they do this in small quantity so their

cost is high they require that they should be provided with these products in ultimate

form at low cost and with high quality. It is the basic opportunity for us .

Competitors edge

No doubt several suppliers are providing these products but mostly in this area

are providing at small scale and with interference of middle man that collect the milkfrom supplier and then supply it after mixing water in it. Whereas we will produce these

products at large scale and eliminate those middle men, we will provide these products

at low cost and extreme quality.

Marketing mix

After selecting the target market we have to applied some tactical and controllable tools

to produce the response in the selected market, these are called marketing mix. There are four

P, s of marketing mix that would be focused for attracting the potential costumers.


42/61


Product

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

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

packing and at low cost.

Branding

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

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

Packing

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

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

Price

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

about existing products with relation to their quality.

Penetration pricing

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

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

Place

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

available. Whereas the outlet for contact with customers will be open in urban areas

where we will supply to housed hold consumers and industrial consumers.

Factory sight:

Village KotShera

QilaMian Singh road

Gujranwala


43/61


Marketing outlet:

Tanveer center

Nowshehra road

Gujranwala

Promotion

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

organization and making the strong relations with the customers we have taken the

following steps:

Promotional objectives

o To aware the customers about the our products

o To making strong and loyal relation with customers

o To attracting the more customers for increasing sales

Opening ceremony

We will arrange an opening ceremony in which we will invite our potential industrial

consumers and introduce them with our business and suggest them to try this strategy,

purchase raw material from us, and reduce the cost of their products.

Print advertising

Through print media advertising we have attempted the following steps to

promote our business:


44/61


Visiting card

The customers that will visit our organization we will provide them our visiting

card for direct marketing we have printed out the visiting cards for the customers.

Newspaper

For door to door advertisement through print media we will advertise weekly on

every Sunday in daily express newspaper Gujranwala.

Pamphlets

For promotion of business and introducing of a business we have printed out

pamphlets through which customer will get acknowledgement about our products and

key purposes.


45/61


Broad costing

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

o Cable ads

Cable ads will be broadcast on Gujranwala TV that will promote our business

around the city.

o Facebook ID:

We have created a page with name of Broadway dairy at Facebook for gaining

the peoplesperception and suggestions about our organization.


46/61


Operational plan

Operations of the organization are divided in to different departments because

we have to refine the milk into different products like cream, condensed milk, powder

milk, butter and ghee. We shall purchase milk from different producers at different

locations and store it in one tank. The whole operations of the organization are divided

into following departments.

Collection and storage of milk

First step of business operations is collection of milk from different producersfrom different villages of the region. For this purpose a vehicle will be used, that will go

at the doors of the producers and collect milk, a person will be appointed with the driver

that will check the quality and quantity of milk. After collecting the milk tanker will be

bring to factory. Here for the storage of milk at cold place, chiller of 1000 liters is

purchased the whole milk will be stored in this chiller and supply to other departments

as they required.

Cream refining

After collection of milk the next step is to refine it in to cream for this two refining

cream machines will be used. After refining the milk into cream, milk will be divided into

two i.e. cream and refined milk. Both these products will be used into further four

dimensions. Cream into butter or will be packed as final product. Refined milk will be

used four production of condensed milk or powder milk.

Lets discuss these four dimensions in to detail:


47/61


Cream packing

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

after packing it will be stored as final product in cooling system, from where it will be

dispatched to consumers.

Butter

Total cream will not be packed but some part of the cream will be converted in to

butter. For this purpose cream will be sent to butter department a laborer will convert it

in to butter. After completion of butter process, butter will also be sent into two

dimensions. Either it will be sent to packing department or further convert into ghee.

Here I would like to explain these two dimensions:

Butter packing

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

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

Ghee

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

mostly people like to consume ghee rather than butter so we will convert it into ghee.

Here the cream process ended and ghee will be sent to packing department and after

finally it will be stored.

Condensed department

After refining the milk into cream the remaining refined milk will be sent to condensed

Department, The after process that converted into cream.


48/61


PRODUCTION LAYOUT

RAW MATERAIL

STORAGE

MILK REFINING

PROCESS

CREAM REMAINING MILK

CONVERT INTO CONDENSED MILK POWDER MILK

PACKING

STORE


49/61


Financial Plan

Financial Plan ensure that there are adequate funds available to acquire the resources

needed to help the organization achieve its objectives; ensure costs are controlled;

ensure adequate cash flow; establish and control profitability levels. The two core

functions of the Finance Department are to provide strategic financial support for

business and operational planning and to provide day-to-day financial services to the

investor, its departments. Meet external and internal financial reporting requirements.

Objectives:

To maintain an inflation growth in earning per year at a rate of 13.92%.

To obtain a return on equity of at least 25%.

To meet annual projected profit.

To maintain a strong cash flow by meeting projected cash flow balances.

We start the dairy business with Three Million rupees on the basis of partnership and

we divide profit equal proportion. Loss also bears by equal proportion all partners.

sources of funds:

Loan or debt portion does not prevail in it. The detail of the fund and its

contribution are shown in the tables.

Detail Amount Percentage

Equity PKR 3000000.00 100%Total PKR 3000000.00 100%


50/61


Capital Arrangement

The details of the contribution of the equity and ratio of the profit distribution are shown

in the table as follows:

Detail of Equity

Name of Partners Amount Contributed Percentage share

Mr. Abu Sufyan 750,000.00 25%

Mr. Luqman Ahmed 750,000.00 25%

Mr. Muhammad Shahid 750,000.00 25%

Mr. Muhammad Jahanzaib 750,000.00 25%

It has been decided with consensus that there would be 40% retained earning

first year, 30% second year and 20% third year will the part of equity and remaining

profit distribution in partners every year.

Use of funds:

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

Startup cost:

Description Total Cost Quantity

Vehicle 500000

Motor Bike (2*107000) 214000

Plant & Machinery cost 880000

Furniture & fixture 64000

Equipment 88450Security of Building 84000

Legal Expenses 10000

Marketing Expenses 71600

Gas Installation 145000

Total Capital Cost 2057050

Cash in hand/ required cash 942950

Total project cost 3000000


51/61


Projected Financial statements

Projected Income Statement

Broadway DairyProjected Income Statement

For The Year Ended, 2013, 2014, 2015

Description Notes 2013 2014 2015

Sales 1&2 24876000 28607400 32898510Less: CGS 4 (20955345) (23050879) (25355966)

Gross Profit 3920655 5556521 7542544

Less: OperatingExpenses

AdministrativeExpenses

8 (205300) (225830) (248413)

Selling Expenses(Packing)

(180000) (198000) (217800)

Operating Profit 3535355 5132691 7076`331

Net Profit 3535355 5132691 7076331

Retain Earning 1060607 1539807 2122899

Profit Distribution 2474748 3592884 4953432

Abu Sufyan25%

618687 898221 1238358

Luqman Ahmed25%

618687 898221 1238358

M. Shahid 25% 618687 898221 1238358

M. Jahanzaib25%

618687 898221 1238358


52/61


Projected Cash flow Statement

Broadway DairyProjected Cash flow statement

For the year ended 2013, 2014, 2015

Description Notes 2013 2014 2015

Cash flow from operating activities

Net Profit 3535355 5132691 7076331

Add: Depreciation 16 178645 178645 178645

Cash flow from operating activities 3714000 5311336 7254976

Cash flow from investing Activity

Less: Purchases of Asset (1746450) ----- -----Less: preliminary Expenses 13 (310600) ----- -----

Cash flow from investing Activity 1656950 ---- ----

Cash flow from Financing Activity

Add: Capital 3000000 ---- ------

Less: Dividend (2474748) (3592884) (4953432)

Total cash flow during year 2182202 1718452 2301544

Add: opening Balance --------- 2182202 3900654

Total Cash Balance 2182202 3900654 6202198


53/61


Projected Balance Sheet

Broadway DairyBalance Sheet

As on 31 Dec 2013, 2014,215

Description Notes Opening 2013 2014 2015

Fixed Assets

Plant&Machinery

9 880000 792000 704000 616000

Vehicle 714000 642600 571200 499800furniture 11 64000 57600 51200 44800

Equipment 10 68450 61605 54760 47915

UPS 20000 14000 8000 2000

Deferred cost

Preliminary 13 226600 226600 226600 226600

BuildingSecurity

Office Building 48000 48000 48000 48000

Factory Building 36000 36000 36000 36000

Current Assets

Cash in hand 942950 1182202 900654 1202198

Cash at Bank 1000000 3000000 5000000

Total Asset 4060607 5600414 7723313

LiabilitiesOwner equity 3000000 3000000 3000000 3000000

Retain Earning 1060607 2600414 4723313

Total Liabilities 4060607 5600414 7723313


54/61


Working Notes

1. Sale Prediction

Description Per unitprice/Kg

Per daysale(kg)

Per monthsale(kg)

Annualsale(kg)

Cream 260 60 1800 21600

Ghee 500 13 390 4680

Condensedmilk

260 150 4500 54000

Powder Milk 400 20 600 7200

2. Sale Forecasting

Description Per unit price(Kg) Unit sale in a year Total sale (Annual)

Cream 260 21600 5616000

Ghee 500 4680 2340000

condensed 260 54000 14040000

Powder Milk 400 7200 2880000

Total sale 24876000

3. Quantity of raw material

Description Per Liter Price Dailypurchases

Monthly Annually

Milk 62 800 24000 288000

Ghee dalda 170 15 450 5400


55/61


4. Cost of Good Manufactured

Description Notes Total CostMilk 3 17856000

Labour Cost 984000

MOH cost 5 2115345

Total cost of goodmanufactured

20955345

Cost of goods sold 20955345

5. Manufacturing overhead

Description Notes Total Cost

Electricity bills 60000

Gas bills 144000

Dalda Ghee 918000

Fuel charges (Generator ) 6 108000

Fuel charges (vehicle) 6 540000

Fuel charges (bikes) 6 108000

Depreciation 7 165345

Factory Rent 12 72000Total Cost MOH 2115345

6. Fuel charges

Description Daily fuel cost Monthly fuel cost Annually fuel cost

Vehicle 1500 45000 540000

Bikes 300 9000 108000

Generator 300 9000 108000

Total fuel cost 756000


56/61


7. Factory Depreciation

Description Percent Total DepreciationVehicle 10% 71400

Chiller 10% 25000

Cream refiner 10% 7000

Butter refiner 10% 6500

Condensed milk plan 10% 7500

Powder milk plant 10% 120000

Cooling store 10% 20000

Generator 10% 10000

Furniture 10% 4000

Equipment 10% 1945Total Depreciation cost 165345

8. Administrative Expenses

Description Total cost

Office rent (8000*12) 96000

Depreciation:Office equipment (49000*10%)

UPS (20000*30%)Office furniture (24000*10%)

4900

60002400

Office boy salary (8000*12) 96000

Total Administrative Cost 205300


57/61


9. Plant and machinery

Description Per unit cost NO.ofunits

Tot TotalCost

Chiller 250000 1 250000

Cream refiner 35000 2 70000

Butter refiner 65000 1 65000

Powder refiner 120000 1 120000

Condensed milk plant 25000 3 75000

Cooling store 200000 1 200000

Generator 100000 1 100000

Total Cost 880000

10. Equipments

description Per unit cost NO. of units Tot Total Cost

Air conditioner 25000 1 25000

computer 12000 1 12000

Celling( office) 10000 ------ 10000

Celling Fan office 2000 1 2000

Pedestal Fan

Factory

2600 6 15600

lighting 550 7 3850

UPS( office) 20000 1 20000

Total Cost 88450

11. Furniture and Fixture

Description Total cost

Sufa set 15000Moving chair 3500

Table and chairs 5500

Furniture (Factory) 40000

Total cost 64000


58/61


12. Rent cost

Description Per month Months Total cost

Security ( officePlace)

8000 6 48000

Security ( factoryPlace)

6000 6 36000

Total Cost 84000

13. Preliminary expenses

Description Notes Total Cost

Legal Expenses 15 10000

Marketing Expenses 14 71600

Gas installation 145000

Total Cost 226600

Building Security 84000

Total cost 310600

14. Marketing Cost

Description Per unit cost NO. of units Tot Total Cost

Pamphlets 3 2000 6000

Visiting card 2 500 1000

Newspaper Ad 6400 4 25600

Cable Ad( Local Channel)

18000 ------- 18000

OpeningCeremony

140 150 Guest 21000

Total Cost 71600


59/61


15. Legal Expenses

Description Total CostPartnership Registration 4000

Legal Advisor 6000

Total Cost 10000

16. Overall depreciation

Description Percent Total Depreciation

Vehicle 10% 71400Chiller 10% 25000

Cream refiner 10% 7000

Butter refiner 10% 6500

Condensed milk plan 10% 7500

Powder milk plant 10% 120000

Cooling store 10% 20000

generator 10% 10000

Furniture 10% 6400

Equipment 10% 6845

UPS 30% 6000

Total Depreciation cost 178645


60/61


Financial Analysis of Business

Internal rate of return

IRR = lower rate + diff b/v 2 rate (NPV at lower rate/sum of both NPV)

IRR = 45 + 5 (3077247/5977742)

IRR = 47.57

Working

PV = FV/ (1+i)n

Years Discounted @

45%

Present value of

cash flows

Discounted

@ 50%

Present

value ofcash flows

2013 1.45 1504966 1.50 1454801

2014 2.1025 817337 2.25 763756

2015 3.048 754944 3.375 681938

Total 3077247 2900495

Payback Period

Year Cash flow Cumulative cash flow

2013 2182202 2182202 (c)

2014 1718452 (d) 3900654

2015 2301544 6202198

a= A is number of year in which last cumulative cash flow is less than our cash outflow.

b= Initial investment = 3000000

c= Cumulative cash flow against a = 2182202

d= next cash flow of c1718452

Payback Period = a +b - c/ d


61/61

=1+3000000+2182202/1718452

=1+0.4758

Payback Period = 1.4758

Net present value

NPV = Present value of future cash flow-Initial Investment

NPV = 4789981-3000000

NPV = 1789981

Working

Present value of future cash flow

PVFC= present cash flow/ (1+ I )n

2013 = 2182202/ (1.14) =1914212

2014 = 1718452/ (1.14)2 = 1322293

2015 = 2301544/ (1.14)3 =1553476

Total present value of future cash flow = 4789981

Profitability Index

PV = P.V of Future Cash Flow/ Initial Investment

PV= 4789981/3000000

broadway dairy project muhammad jahanzaib 11022720-028

Documents