Assignment 4: Supply Chain Management and Financial Plan

Feasibility Study

Industry and Market Feasibility

Coffee is one of the most popular products in the restaurant chain industry, and a number of multinational food chains specialize in coffee as their main product. This restaurant chains however mostly rely on an already established market and do not focus to a great extent on online orders and deliveries. Popular coffee shops such as Starbucks and Blue Bottle focus mainly on attracting customers to their premises, and although they have an e-commerce selling platform they do not make deliveries to most parts of the local area. This means there is an unexploited segment of the market in the area that can be a market niche for the new business. Additionally, an analysis of the locations of existing coffee shops indicates that there are several areas that do not have access to a coffee shop, despite having a significantly high number of residents. This means the new proposed shop has a ready market and will most likely be able to make profits in its first year of operation. Additionally, the coffee industry is growing, as more people are taking up coffee as their preferred beverage of choice (Charlebois, 2017). This means the market for the business is likely to grow in the near future.

Product and Service Feasibility

The organization intends to focus on the quality of both its products as well as the accompanying service as a way of attracting and retaining consumers. The product that will be offered by the organization will, therefore, meet the needs of the different types of coffee customers in the area. A key group of coffee consumers includes people that caffeine which is found in coffee is refreshing and provides energy. In addition, caffeine is addictive and therefore there is a segment of the market that will take coffee regularly due to the fact that it’s a habit. The coffee shop will, therefore, be able to meet the needs of both habitual coffee consumers as well as occasional consumers.

Due to the fact the café will be located close to the target market, this reduces the time it will take for consumers that consume coffee habitually due to caffeine addiction to be able to buy the product. Since the café will also be providing an online store that can be used to order for coffee on short notice, this will also be an attractive option for habitual drinkers as they don’t have to spend time looking for a café. The products that will be offered by the café is therefore highly desirable while the service is convenient for customers.

Finance Feasibility

The startup capital for the business will be directly contributed by the owners. Key investments in assets will include rents expenses for the café, large scale coffee machines, coffee beans, and utensils. This will be financed directly from the startup capital and is estimated to cost less than $2,000.

In order to ensure the business is successful in its early stages, the business will adopt a penetration pricing policy. This will involve charging a comparably lower price when the business commences operations after which adjustments can be made when it acquires a sizeable share of the local market. Currently, Starbucks, which is the main source of competition in the area, charges a price of $1.85 for its freshly brewed coffee. In order to compete effectively with this, the organization will charge an estimated $1.5 for the tall version of its freshly brewed coffee.

Key expenses that will be incurred by the business include wages and salaries for kitchen staff, who will be responsible for the processing of the coffee beans speedily and the preparation of the coffee. For only sales, delivery personnel will also be hired who will be on standby for online orders. Total salary estimates are

Proforma Income Statement

Entrepreneurship Readiness

The business idea is feasible and will result in sufficiently high profits. As the main entrepreneur for the business, I believe have the necessary skills and understanding of the commitment required by the new business and best practices that will ensure it is successful. In addition, there is support from co-entrepreneurs who are willing to dedicate their time and skill towards the management of the business. I believe I have the necessary leadership skills that will enable me to effectively run the business and motivate employees to do their best in their daily duties. Careful consideration has also been put into selecting an ideal location for the business as well as the design of an effective operational strategy that will enable the business to succeed in the highly competitive retail industry. This includes planning for investments that will be made from the startup capital as well as the daily and monthly expenses that will be incurred by the organization.

References Charlebois, S. (2017). How the coffee industry is about to get roasted by climate change. Retrieved from The Conversation: https://theconversation.com/how-the-coffee-industry-is-about-to-get-roasted-by-climate-change-85054