Business Plan ADDED CONTENT NEEDED PER INSTRUCTOR

Wonderland

Brandi Glenn

Dr. Rebecca Snarski

MBA Capstone

October 30, 2016

Executive Summary

Starting a business usually requires a comprehensive plan for the same. Investors are required to establish comprehensive plans for their business ventures, especially in the current markets with increased complexities and dynamics. This report aims at providing a framework for starting a business in the bar and nightclub industry within the state of Maryland. The business will concentrate on providing alcoholic and non-alcoholic drinks and food, within the state. The state is among the most attractive sites for business, which may generate huge profits if managed effectively.

The report will provide details on analysis of the industry, to determine the trends and conditions that may affect the business. it focuses on a comprehensive market analysis to determine the most effective entry strategy into the market. Some trends that have been identified include increase in per capita income, consumer spending, and legislative changes, which have continued to affect the demand and supply of the products and services in the market. The plan analysis the various factors affecting the market, and provide a spectrum of marketing strategies to ensure business success.

Background and Purpose

As the world becomes increasingly integrated, numerous investments and threats continue to emerge. Investors are increasingly compelled to plan their investment projects more effectively, in order to exploit the opportunities while avoiding the increased threats in the same markets. A key instance is the numerous opportunities in the bar and night club industry. The industry offers an attractive business opportunity for investors, which may generate attractive returns if planned and implemented effectively. The state of Maryland is one of the highly connected states, which enhances its interaction with the outside world. The state receives numerous visitors from across the globe, which has led to tremendous growth in its bar and nightclub industry.

However, entering the industry may be challenging, especially without an effective for the same. According to a report released by the Maryland’s Department of Commerce, starting a business in the industry may be highly challenging. Entrepreneurs are therefore required to adopt highly effective planning strategies, in order to effectively enter the markets. As the cost of living continues to rise, individuals are increasingly seeking to earn more income. Additionally, the increased rate of unemployment has been a major challenge to economic development, not only in America but also across different regions of the globe. It is thus vital for innovative and creative individuals to implement their ideas, in order to create jobs for the unemployed (Paley, 2014). 

The opportunity emerged from the incredible income earned by the firms operating in the industry. The combined income for U.S night clubs and bars totals to approximately $25 billion. The industry includes approximately 45,000 firms. However, the dominant firms’ accounts for approximately 5% of the market share. Although the market demand for alcohol and entertainment continues to grow, the firms may not meet the demand of the consumers. The projected sales in restaurants located in Maryland are approximately $11.4 billion. The State accounts for a significant percentage of the total sales across the American region. The industry is therefore highly attractive to investors willing to invest in highly profitable markets (Maryland, 2015). 

The purpose of this documentation is to provide a business proposal for the investment in the Maryland’s bar and nightclub industry, which will lead to establishment of a successful business. The business will not only provide employment to the surrounding communities but also address the market needs of the consumers. It aims to provide an effective framework establishing an effective business in the industry. The proposal will address the numerous issues involved in starting the business in Maryland, as well as exploit the various opportunities in the market.

History

The pioneers of the Wonderland Bar and Nightclub Company include Brandi and Michelle Glenn. The partners have partnered in starting the business, owing to their common interests. The company is registered under the United States’ Company Law, in 2014. The registered office of the company is situated at Baltimore, which is the largest city in the State. The address of the company is 750911, Fourth Street, Baltimore. It is registered for the purpose of distributing and selling alcoholic drinks, beverages, food, entertainment, and nightclub services. The company aims at providing unique and high quality bar and nightclub services and products to its target consumers. Its vision is to become the world class bar and nightclub company.

The pioneers of the company have experiences and interests in the industry, owing to a spectrum of factors. Both of the pioneers are professionals in retail management, hotel and restaurant field. They have diverse skills and knowledge in the field, which has led to their interest in starting the business. The pioneers started the company with capital worth $40,000, contributed equally by both of the owners. The company is registered as Limited Liability Company.

Business Overview

The business intends to provide alcoholic and non-alcoholic beverages, dishes, accommodation, entertainment, conferences, and partying services and products. It will focus on providing high quality products, in order to strategically position itself in the market. It will source its products from credible sources, while it will internally produce those without sophisticated production processes and procedures. The company aims to outsource some of the tertiary operations, in order to fully emphasize its efforts on the core operations. Its products and services will be labelled with its name-Wonderland. Service deliver will be controlled to maintain a high quality service delivery to the customers, in order to gain competitiveness.

The products will be designed to address the market needs of the diverse consumers. The design and development of products and services will aim at addressing the differences in income, tastes, and preferences among consumers. The products will be packaged in different sizes, in order to accommodate all the groups of consumers. The club will offer self-contained accommodation, single-room, conference meals, wholesale, and retail prices for the different market segments. It will provide single-night accommodation, as well as month-term accommodation (Bangs, 2008). The month-term accommodation will be charged at a discount, in order to encourage lump sum and cash sales.

Business Objectives

The primary objective of the business is to achieve a significant market share (at least 20%) of the market, by providing unique and high quality product and services within five years. The company will achieve the objective through establishment of a strategic position in the market, which will distinguish it from rival firms in the industry. The company will also implement a variety of marketing strategies, in order to achieve competitive advantage over competitors. Other objectives of the business are as follows;

1. To achieve a 20% market growth every year for the first five years from the start of the business operations.

2. Expand its bar and nightclub establishments in over 10 major cities in the state of Maryland within five years.

3. Increase the company’s workforce by 20% within the first 1 year of operations.

4. Achieve at least $1 million sales in the first year.

5. Increase the range of products and services by 20% by the end of the first year.

Market Analysis

The bar and nightclub industry in Maryland has numerous opportunities asA. The business will prosper through effective planning and implementation, which will take into account both opportunities as well as the threats within the market. A key instance is the projected increase of growth in sales revenue of the industry in the coming future. The various trends in the today’s society pose both threats as well as opportunities for business firms in the industry. Additionally, the increased income to the people will increase consumer spending on the luxurious products and services such as alcoholic drinks and entertainment. However, the demand of the industry is highly affected by economic recession such as the previous Great Recession in 2008 (Stutely, 2012). 

The industry has modestly performed over the past 5 years, as their consumers’ overall spending and confidence continue to rise steadily. The consumption patterns of the products and services have also changed over the five years’ period. The seasoned operators of bars and nightclubs have been forced to adapt new menus that effectively address the changed tastes and preferences. However, business owners in the industry will continue to celebrate the consequences of the increased consumer spending and household income.

As a service industry, the firms and operators in the industry are dispersed largely on the basis of income distribution and population. The alcohol tax was recently increased in 2010 by 568 percent, which raised the tax expense to $10.03 per gallon of alcohol. However, the industry is the largest employer in the state, providing jobs to over 500,000 jobs to the Americans. The industry revenues have started to grow significantly in the recent past, from the sluggish growth in 2007 to 2012. The industry revenues grew by 3.5% in 2011, while in 2012 it grew by 3.2%. The industry is driven by the state of the economy. The demand of the products and services in the industry is highly affected by entertainment needs and personal income of the population.

The number of bar and nightclub establishments in the U.S totals to 70,000, while only less than 3,000 are located in Maryland. The majority of the establishments are primarily focused on retail sale of the alcoholic drinks. Maryland has been one of the least states in drinking of alcohol drinks, with the leading States including California, Texas, and New York. The industry does not have dominant company, owing to the strict liquor laws that make it hard for firms to form large chains. The industry is largely labor intensive. The profitability of an individual firm in the industry largely depends on the ability to develop a loyal clientele and drive traffic. It involves numerous small-sized firms, which are mostly owned by families (W.A, 2013). The firms usually purchase their alcoholic drinks from licensed liquor distributors by the local government.

The various barriers to entry and business in the industry is expected to be removed. The department of liquor control is expected to determine an effective strategy to maximize the opportunities and revenue collection for the counties and the State governments. The owners of the business firms in the industry as well as their employees are expected to reap higher income and increase their spending in the state. Consequently, the industry is expected to grow significantly in the coming future. The industry is expected to bear the largest growth among other industries.

The industry statistics makes the market an attractive investment opportunity for any investor. The average wage of the employee in the industry is estimated to be $20,600. The total sales of drinks and food industry in United States amounted to $745.61 billion in 2015. The industry has grown tremendously from $42.8 billion in 1970. The industry is projected to experience a significant growth across 2016 to over $780 billion. Beer production across U.S totals to $219.52 billion in 2015, which also represents a significant growth. The increased production is due to the increased demand for the same, owing to various factors such as increased per capita income, consumer spending, and favorable regulations. The wine retail value amounted to $55.8 billion, while distilled spirits totaled $24.1 billion nationwide. The industry has experienced numerous technological advancements, as producers, retailers, and distributors of alcoholic drinks continue to seek for more efficient production methods and techniques.

The industry is expected to experience a significant growth in the coming years, owing to establishment of more favorable regulations and tax laws. The prices of bear are expected to reduce as the producers generate more profits. Majority of bar and nightclub establishments combine alcoholic and non-alcoholic drinks, as well as food items. Although the industry has stiff competition, it is highly challenging to enter the markets. The strict legal requirements and high tax rates make the business unattractive. However, the business firms in the industry are advantaged by the increased barriers to entry of new competitors, which would stiffen the competition. The industry entry is relatively easier in terms of little capital requirements.

Competition

The business will face competition from both local and international firms. The market faces competition from other surrounding states, including cities such as New York. Although the demand for the products and services in the industry continue to increase, stiffer competition is probable in the coming future. The already existing firms will be the major competitors to the business. The most immediate competitors to the business will include Grand Central Nightclub, City Café, The Brewer’s Art, and Club Hippo, in Baltimore. The market has numerous bars and nightclub establishments, which requires the business to adapt highly effective strategies to achieve business success.

The market is segmented into various types of bar and nightclubs, including neighborhood bars, beer bar, specialty bars, and clubs. The neighborhood bars involve the American version of an English pub. The bars are the most common across different parts of the regions. For the purpose of this report, club and neighborhood bars will be considered. Clubs involves varying numbers of personalities. The firms in this category usually provide a wide variety of products and services, including food items, alcoholic and non-alcoholic drinks, entertainments, and various games (Maryland, 2009). The clubs are mostly located in major cities such as Baltimore, with large populations. The clubs make average annual sales of approximately $700,132.

The major bases of competition include efficiency, prices, target markets, and uniqueness. Most products and services in the industry involve luxuries. The demand is significantly affected by the economic situations. The market has various segments, including tourists/business travelers, students, children, and adults. The firms in the markets have designed their products and services in a manner that they address the diverse customers’ needs more effectively. Many of the firms in the market have focused on addressing the needs of different market segments, through customization of their products and services.

Firms have sought to reduce their operational costs, in order to reduce their prices. As a luxury, the pricing of products and services in the market is estimated to significantly affect a business. The various mechanisms applied by various market leaders such as Club Hippo and City Café include use of self service, automatic dispensers, and cheaper sources of power. Although the market does not have a dominant firm, the pricing of one firm may affect the operations of the other. However, quality and variety is a key determinant of competitiveness in the market (Meacham, 2009). 

The market has smaller number of bar and nightclub establishments, compared to other states such as California and Illinois. The strict regulative frameworks by the state and county governments make it hard for new firms to enter the market. The business is also expected to face stiff competition from rival firms from across other States such as Washington DC. It has numerous recreational, sports, nightlife, and entertainment resources, which makes it receive numerous visitors every year. Individual states have aimed at gaining competitiveness over others, in order to enhance their economic development. The business will compete with rival firms in the industry, from across the region.

The competing firms have focused achieving unique services, while the products are largely similar. The firms are mostly retailers, owing to the strict regulations in the industry. The 50 largest companies across U.S account for only 55 of the total sales. The major market segment with the highest competition is beer market, followed by distilled spirits, food and non-alcoholic drinks, and wines. The majority of the firms have focused on offering varying products and services, in order to enhance their profitability. The business will also face competition from large multinational corporations such as Mc Donald’s, which has focused on retail business. The businesses have established retail shops and online selling platforms, which has facilitated their access to consumers in different parts.

The firms in the industry are increasingly compelled to enhance their strategic management, in order to survive in the highly competitive markets. A key highlight is the increased concern for healthier lifestyles among people. The providers of the products and services in the hotel and restaurants industry are compelled to address the changing tastes and preferences, in order to remain relevant in the markets. Mc Donald’s is planning on a spectrum of strategic moves, which are aimed at achieving and sustaining its competitiveness in the markets. The firm is planning on trimming its menu, review its cooking methods, and discard some of its ingredients (Stenson, 2014). 

The businesses in the market usually face competition from firms such as restaurants, casinos, consumer homes, and hotels. A firm can achieve business success by offering a wide variety of foods and drinks, as well as offering high quality services. It can also achieve competitiveness by operating for long hours, which will increase sales revenue. Majority of the firms have focused on beer, which is the largest source of revenue for the firms in the industry. Although the market entry is challenging due to strict legal requirements, the business requires fewer resources to start. Majority of the firms operating in the market are single operation firms. The firms have adapted up-to date technologies such as automated point-of-sale systems, to enhance their efficiency.

Sales Forecasts

The sales of the business will be affected by a spectrum of factors, including target customers, ethnicity, geography, and income levels. The consumer spending on alcoholic drinks will be affected significantly by the household income levels. The expected increase in household income levels will enhance sales of the businesses in the industry. The targeted customers will also affect the sales of an individual firm in the market. The household population below 35 years is the largest consumers of alcoholic drinks. Ethnicity also affects demand for alcoholic drinks and other products offered by nightclub and bars in the region. Non-Hispanic whites spending on beer is approximately 16 percent higher, compared to national average of household expenditure. The market accounts for approximately 88 percent of the total market. The other ethnic groups have a lower spending than the average of the market (Stenson, 2014). 

The geographical location of a bar or a nightclub will also determine the sales revenue forecasts. Baltimore is the largest consumer of alcoholic drinks in the state, owing to its strategic location, large population, and numerous recreational resources. The household income levels for the population in the location are average, compared to other parts of the state with below average. The projected sales of the business have taken into account a spectrum of factors, in order to establish a realistic and objective plan for the business.

Figure 1:1: Sales forecasts for the year 2016

Marketing Strategy

Product Differentiation

Product differentiation refers to the strategy of distinguishing a firm’s products, from the rival products, to enhance its attractiveness within a particular target market. This will make the products of a firm to be different from others, reducing the competitive forces against the products. A firm would achieve competitive advantage over the rivals, through an effective implementation of product differentiation strategy.

Product differentiation would also consider the durability of its products, comfort, and safety, among other features, determined through market research to gain market intelligence. The strategy would also make the products easily accessible to the consumers. The outward features of its products will also be designed uniquely, fitting the targeted market. This will enable the firm to win over its key rivals such as City Café (Maryland, 2009). The accommodation facilities will be differentiated by their luxurious and high quality furnishing, which will enhance customer comfort and satisfaction. The food items will be differentiated from the rivals in the industry, by focusing on healthy food ingredients. The strategy will more strategically position the firm in the market over its rivals.

Low Pricing Strategy

The firm will seek to provide affordable prices for its products and services, in order to capture a significant market share in the region. It will aim at adopting advanced technologies in its production processes, in order to reduce its operational costs, which will enable it reduce its prices. The industry involves luxurious products and services, whose demand is highly affected by economic conditions. Low operational costs will enable the firm to enjoy a high profit margin, which will result to an increased margin of safety for its revenue (Jain, 2000). 

A company within the market would effectively compete with rivals, through low cost strategy, which will enable setting of products prices lower than the rival products’ prices. The Maryland bar and nightclub market is considered by many investors in the industry, due to its low cost of production, large population, and numerous resources, which result to competitive advantages. The low cost market leader will possess an added advantage over the rivals, since it will be possible to set prices low, without comprising the quality of products delivered (Streicker, 2000).

Market Focus Strategy

There are a variety of market focus strategies that may effectively be applied in the market, to gain competitive advantages over rivals. The strategies include single-segment, product specialization, selective specialization, market specialization, and full-market coverage. Each strategy has its distinct values, and may fit different situations. It would gain advantage in the market through selective specialization strategy, aiming at differentiating its marketing mixes, to fit different market needs. Consequently, it will effectively address he particular needs of the markets, thus counteracting the key rival’s competitiveness. The firm will segment its market on the basis of demographic factors such as income levels, age, and ethnicity. This will enable the firm to more effectively address the unique needs of each market segment.

Target Consumers

The business will target a spectrum of target markets within the Maryland. The consumers will be categorized on the basis of income levels, geographic locations, age groups. The category of tourists and visitors will be the largest target market segment, especially in the city of Baltimore. The city receives numerous tourists every year, which makes it an attractive market for entertainment and accommodation products and services. The business will offer diverse products and services at different prices, to cater for both high and low income earners in the state. Majority of the population is average income earners, which the business intends to target. The major focus will be on the population between the age of 18 years and 35 years, which forms the majority and accounts for the largest consumption of alcoholic drinks (Howard, 2016).

The business will focus on major cities in the state, in order to enjoy huge market size, owing to their high population. The various big cities include Baltimore with a population of 620,961, Columbia-99,615, Germanton-86,395, and Silver Spring-71,452. The cities receive numerous visitors due to their numerous natural sites and recreational facilities. The markets will be further divided in terms of income level, age, and other demographics, in order to effectively address the unique market needs. The large market will be subdivided into students, adults, tourists, children, and business consumers. Children will include persons under the majority age, while adults will include parents and elderly persons.

Products and Costs

The business will involve a spectrum of products and services, including alcoholic drinks, non-alcoholic drinks, food items, and accommodation. The products and services will be designed and offered differently, in order uniquely position the business in the market. The prices of the products will be set to reflect the differences in among the consumers, to ensure their affordability.

Vendors

The various products to be offered by the business will be acquired from authorized vendors as required by the law of the land. The alcoholic drinks including beer, distilled spirits, and wine will be acquired from licensed liquor distributors by the local government. The firm will enter into long-term relationships with the distributors, in order to facilitate smooth flow of supplies. The non-alcoholic drinks will be acquired from distributors of the products authorized by the manufacturers of the same and under the local government regulations. The non-alcoholic drinks will be sourced from reputable manufacturers including Coca Cola and Pepsi (Hayeslip, 2000).

The food items including green grocers, cereals, and fruits will be acquired from local dealers, through contractual engagements. The contracts for supply of the items will stipulate the quality and price of the items, in order to enhance their effectiveness. The vendors will be selected through a competitive bidding process, which will ensure maximum quality at the minimum most prices.

Quality Assurance Measures

The business seeks to regulate the relationship between an employer and employees. The process of creating and staffing the position of Quality Assurance Manager must consider any potential legal issues and establish effective mechanisms to address the same. Some strategies that may ensure effective process include training involved persons, maintaining records of the process, clear policies and procedures, and seeking legal expert’s guidance. The mechanisms, tools, policies, and procedures for performing employment practices should be reviewed regularly to ensure compliance with the law. 

The firm will ensure proper documentation of the whole process, and maintain the records for a considerable period of time. The strategy will enable the firm to track its production processes, in order to identify problems. It will also be possible to identify opportunities for improvement, in order to enhance quality of its products and services. A firm may involve control strategy, where effort is directed in ensuring that the planned actions happened as they were planned. This should involve monitoring the products at the different phases, through feed-forward, feedback, and concurrent controls for monitoring. The balanced scorecard approach ensures an effective control of quality, through performance evaluation. Lean manufacturing approach also involves quality control, through TQM-Toyota Quality Management, which ensures that the defects that may reduce quality of products and processes are identified and addressed (Maryland, 2009). 

The firm will also implement an intensive information system, which will facilitate customer feedback. Customers usually have excellent ideas that can help the firm to improve on its services, identify problems, and solve them. The system will facilitate interactions between the firm and its customers. It will also provide opportunity for processing, analysis, manipulation, storage, and data retrieval. The system will be an important move to enhance quality of decisions made by the management of the business. The company will also ensure continuous review of its production processes, in order to identify areas that require improvement.

Contingency Plan

The business faces two major threats in its operations, fire explosion, and bomb threat. The contingency plan provided below will prepare the firm for the potential adverse event in case they happen.

BOMB THREAT/FIRE EXPLOSION CONTIGENCY PLAN

In case of an event that Wonderland Bar and Nightclub company premises experiences bomb or fire explosion, the procedures outlined below should be followed to set kick start evacuation and alleviate panic.

During Usual Business Hours

1. Immediately raise emergency alarms to alert others and the security officers.

2. Immediately alert the relevant authorities and call 911 to notify of the situation.

3. Immediately call relevant authorities in other department in order for them to initiate evacuation procedures for their staffs and customers.

4. Everybody to gather at the evacuation center and wait for further directions, in case the center is not affected. In case it is also affected, everybody should evacuate the firm’s premises and seek for safe location.

During non-working Hours

1. Immediately call this number: 911, to inform police department for help.

2. Search for colleagues and customers stuck in the affected area to offer assistance on escape.

3. Notify other departmental authorities for evacuation procedures.

4. Everybody to evacuate to the emergency center and wait for further directions, if the center does not have actual or potential risk. In case the center is affected, everybody should escape to the safest location.

CONTIGENCY PLAN FOR ROBERRY

In case the firm encounters an event of robbery, either aimed at it, its customers, or the surrounding homesteads, the following procedure should be followed by any staff or customer who notices the event;

1. Press the nearest security alert button, located at every collider across every department.

2. Call 911 to inform the police for further assistance.

3. Inform organizational authorities for further steps on how to resolve the situation.

Financial Data

Current Financial Position

The company has a total capital of $1,500,000, which is contributed by the shareholders of the company. The company has a total accounts payable of $50,200, which is expected to pay by the end of next month. The total accounts receivable is $60, 400, which is expected to be paid back within 3 months. The total company worth is $900,000, which includes both tangible and intangible assets. The company projects to have a total worth of $8 million by 2019, following its comprehensive analysis and forecasts of growth.

Figure 2:1: Financial projections

Organizational Structure and Management

Key Personnel

The business will involve various categories of human resources, including bartenders, cooks, waiters/waitress, salesmen/women, security guards, and managerial personnel. The human resources will be categorized on the basis of their management level, including operational, middle-management, top management, and executives. The operational employees will include bartenders, cooks, and security guards, who will directly report to their respective supervisors. The operational employees will undertake various activities involved in the production process of the firm, including cooking, washing, sales and marketing, and procurement. Accountants will also be among the most vital employees in the organization, who will ensure effective recording and reporting of financial and non-financial events (Hayeslip, 2000).

The management personnel in different levels of authority within the structure will significantly affect the business success. The firm will be headed by the chief executive officer, who will report to the board of directors. The managerial personnel will be responsible for making major decisions affecting the business, including setting targets, direction, vision, and mission to others. The total workforce requirement for the firm is 700 bartenders, 200 cooks, 120 security guards, 80 cleaners, 50 supervisors, 10 managers, and 10 top managers. The total labor cost for the firm will be approximately $350,000.

Professional Advisers

The business will require a spectrum of professionals, in order to enhance its efficiency and effectiveness. It will more importantly require auditing professionals, in order to ensure quality and control. The firm will contract an external auditing firm. External auditing will aim at quality control and assurance, in order to ensure success. A reputable firm will be considered for the function. The business will also require organizational consultants and coaches, to design and implement effective organizational design and structure for its business. Industrial and organizational psychological professionals will undertake planning and design of the business structure, as well as interventions for organizational effectiveness (Maryland, 2009).  Additionally, the business will require professional advisors in the legal, tax, marketing, tourism, and engineering fields, in order to provide professional advice to enhance decision making.

Ownership

Business Structure

Transnational model refers to a form of an organization with horizontal structural design, with multiple subsidiaries’ managers, to who collaboratively contribute to the overall corporate strategy. Each part of the organization is effectively coordinated with others, to integrate both domestic and international components of the business, in order to create one organization. The model is based on the concept of interdependence, where individual operations are networked to effectively achieve multidimensional goals of the whole organization.

On the other hand, a learning organization focuses on continuous improvement and increase in organizational capacity, by engaging everyone in identification and problem solving. The organization is founded on the principle of equality and openness, encouraging adaptability and engagement. There are little hierarchical differences, enabling such organizations to utilize different opinions from many, to exploit opportunities and solve problems. Learning organization’s model enables an organization to develop, in order to adapt to industry trends (Stenson, 2014). 

Transnational model would better fit the company’s business, leading to effective management of their cross-border business operations. The organization will utilize its human resources, through building cross-subsidiary teams, enabling operational effectiveness in all its establishments. The teams would enable reduction in the costs of labor, as well as enable sharing of ideas.

The flexibility involved in the model will enable the organization to better address the changing market needs. The model is particularly effective in the wake of globalization, where the world has turned into a global market. It would be easier for a global organization to address different geographical markets, through specialization of subsidiary operations. The model will enable the organization to create a highly committed workforce, through a strong culture, values, and leadership, rather than trying to control people through formal structures. However, the model may have some challenges, in trying to incorporate a common culture and values, in all different parts across the world. Different communities have varying values, beliefs, and practices, making it hard for a huge global firm to integrate all the varying social-cultural facets into a common culture. Obliviously, organizational members from different socio-cultural backgrounds will approach the common culture and values differently, which may affect teamwork.

Current Capitalization

The current capitalization of the business is $1,200,000 contributed among the two shareholders of the company and borrowing. The borrowed capital is $120,000, which is 10% of the total capital invested in the business. The current leverage between borrowed capital and equity capital is very attractive. The firm will be able to meet its short-term liabilities more effectively. The returns on investment for the investors in this industry currently stand at 5.8% of their invested capital. Although majority of the firms in the market are operating at a profit, the average dividends per share is $1.05. The majority of firms are family businesses, which fund their businesses through borrowing from financial institutions. Few firms have been listed in stock exchange, which gives them access to the funds from the public (Maryland, 2009). 

Exit Strategy

There are various strategies that the business establishes in case of achievement of business purpose or business failure. The business may choose among a spectrum of alternatives that would enable it exit the market, including outsourcing, joint venture, selling out, or liquidation, among others. The company will choose to liquidate in case of extreme worst conditions, which may not be resolved through any other alternative strategy. Prior to liquidation, selling the company to a friendly buyer may be the best option. It will enable you establish a good relationship with the buyer, which may enhance the firm’s negotiation skills. The company may also opt license its business to a third party, where it will earn regular profits.

Royalty/licensing Arrangements

The business will consider a spectrum of require legal procedures, to be complied with, in handling particular issues. An effective manager must therefore be aware of the procedures to follow, in relation to the laws of the land of a given state, so that the decision made will not have a negative impact on the operations of the business, or affect operation of another company, which may lead to conflict of interest, and thus unhealthy competition, or even legal liabilities. This will prevent the organization from undergoing through the lengthy and costly legal processes of resolving issues, as well as restore relationships, which will in turn favor the business.

In case a conflict arises within the operations of two distinct businesses, and it’s clear that unfair competition will arise, and will affect one of the operations negatively, then the manager must follow the laid down procedures to safeguard the operations of their company. An effective manager should therefore work to restore relationships, both internally as well as externally, in order to create a suitable environment for a smooth running of business operations. The entrepreneur must determine whether the invention is patentable, for it to be licensed. The potential manufacturers would not be willing to enter into license agreements for inventions that are not patentable. The inventor will be selling rights to the patent, but rather not to the invention. The invention must therefore be patented under the property law, in order to license (Hatton, 2010). 

The Law provides guidelines for determination of patent rights. Some inventions may not be patented, in accordance with the property rights. The process may consume time and resources, which may be a burden to the inventor. The companies that the inventor is seeking to license to may be having similar ideas. Additionally, the inventor may opt to license ‘pending patent’ which may later fail. A professional search for patents would be advisable in order to determine whether the invention is patentable, which would add to the costs. The breach of the compliance standards may result to recalls, which may be frustrating to both licensee and the licensor. The licensor will be required to establish quality control protocol to regulate the engagement of the license agreement.

Business Risks

The business faces a variety of business risks, which must be addressed effectively in order to ensure success. Both the external and internal environments of the firm provide both threats as well as opportunities to the business of the firm. The external environment is categorized into political, social-cultural, economic, natural, and technological factors. The internal environment is categorized into the various into factors that lead to strengths or weaknesses to the firm.

The firm faces the major risks in its external environments. The risks include political instability. The political trends in the United States may change, which may affect regulations of the liquor market in the state. The stability of legislation and politics of the land will significantly affect the business of the firm, including taxes, licensing, tariffs, and customs. The various regulative mechanisms will affect the success of the business of the firm. Technological advancements will also affect the business of the firm. The technologies that the business will adopt in its production processes may turn obsolete due to further advancements in technology by rivals in the industry. The company may spend massive resources in innovation, which may then turn obsolete due to the rapid technological advancements (Hatton, 2010). 

The current world is highly affected by the increased crime and terrorist attacks across the globe. The increased radicalization of youths is leading to increased crime in major cities not only in Maryland but also across different regions of the world. In case of such an event, the company may incur huge losses in property and revenue. Crime discourages economic development in any nation. Investors will not invest in a place that has high rate of crime.

Conclusion

The firm will achieve business success by investing in the Maryland bar and nightclub markets. The market provides numerous opportunities as well as threats. The firm will achieve business success through effective business planning on how to exploit the available opportunities as well as address the potential risks in the market. Maryland is one of the most attractive market for bar and nightclub business, which will enable the company to generate huge profits. The company will enjoy the competitive advantage inherent in the market over the rivals in other states in the American region.

References

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