Business Plan on 'Luggage with Fingerprint Lock'

The luggage industry of Australia is quite large. A new business idea of luggage with fingerprint lock will be launched by the Australian Luggage Company as an innovative product in the market.

Running head: ENTREPRENEURSHIP
Business plan on 'Luggage with fingerprint lock'
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Executive summary
The luggage industry of Australia is quite large. A new business idea of luggage with fingerprint
lock will be launched by the Australian Luggage Company as an innovative product in the
market. This report highlights the features of the market, industry size, operations and
technology, human resource and finances of the company for the new business ideas. The startup
cost, and profit and loss statement for the next three years is also estimated in this report. It is
seen that in the Australian luggage market the new business idea will be beneficial for the
company in the long run.

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Table of Contents
1. Introduction..................................................................................................................................3
2. Business model canvas................................................................................................................4
3. Market..........................................................................................................................................5
3.1 Market size and capacity.......................................................................................................6
3.2 Industry growth, competitiveness and barriers to entry.........................................................6
3.3 Industry trend.........................................................................................................................7
3.4 Market segmentation.............................................................................................................7
3.5 Target customers....................................................................................................................7
3.6 Place of distribution...............................................................................................................8
3.7 Business location and potential customers............................................................................8
4. Operations and technology..........................................................................................................8
4.1 Development of technology...................................................................................................8
4.2 Changes in technology affecting the market.........................................................................8
4.3 Option for producing the product..........................................................................................9
4.4 Sales and distribution.............................................................................................................9
4.5 Required resources.................................................................................................................9
4.6 Laws and regulation...............................................................................................................9
4.7 Moral/ethical issues.............................................................................................................10
5. Human resources.......................................................................................................................10

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5.1 Technical and management experience required.................................................................10
5.2 Owners and their roles.........................................................................................................11
5.3 Ownership structure.............................................................................................................11
5.4 Manpower requirements......................................................................................................11
5.5 Growth strategy...................................................................................................................12
6. Finance.......................................................................................................................................13
6.1 Projected revenues...............................................................................................................13
6.2 Start up cost for the new product diversification department..............................................14
6.3 Profit and loss statements for the next 3 years....................................................................16
6.4 Possible source of financing................................................................................................17
7. Conclusion.................................................................................................................................18
References......................................................................................................................................19

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1. Introduction
Innovative business model refers to the type of innovative product or service that not only
would benefit the customers and but also the companies through market popularity and profits.
Innovative business ideas are launched in the market to attract a new target market and give them
more value than the existing products (Saebi and Foss 2015). Luggage with fingerprint lock is a
new business idea that will be discussed in this report. As the technology is getting advanced,
and biometric technology is being extensively used in many of the products and services, hence,
luggage bags or trolleys have installed security system through locks and number locks, the
installation of fingerprint technology would be a new idea, which would make the luggage bags
more secure. Fingerprint technology is a new safety and security measures, which is being used
widely in products, such as, smartphones, which has increased the security of the phone and the
information stored in it as fingerprint is unique and hence, it reduces the risk of data hacking.
Similarly, the luggage bags or trolley are mostly made secured through lock and key on the
zipper or through number locks. There are some disadvantages of these measures, such as, the
key can be lost and the owner can be stuck with the lock, and for number locks, if the owner
forgets the number combination, the luggage cannot be opened unless the lock is broken. Hence,
fingerprint lock is not only easier and convenient, but also more secure. Hence, it is forecasted
that the new business idea can capture a large market share, especially the travelers with its
innovative technology and feature.
2. Business model canvas
Key Partners Key Activities Value
Propositions
Customer Customer
Segments

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One of the luggage
manufacturing
companies, The
Australian Luggage
Company
(ausluggage.com.au
2019).
The suppliers of
raw materials and
fingerprint
technology
Making luggage
with fingerprint
locking
technology and
keeping the
design
attractive
Increase in the
convenience of
security of the
luggage and
trolley bags by
implementing a
new-age
locking
technology, that
is, fingerprint
locking, which
will make the
products more
secure and also
increases value
by reducing the
risk of losing
keys or
forgetting the
number lock
password for
the bags.
Relationships
The Australian
luggage
industry is an
AUD 320
million
industry
(Ibisworld.com
.au, 2019) and
hence, the
Australian
Luggage
Company has
an established
market for its
high quality
product. Thus,
it is easier to
reach out to the
existing
customers of
the company
and the
potential
customers
through
promotional
techniques
(Baker 2016).
 Urban and
semi-
urban
population
 Travelers
 Back-
packers
 Office
goers
 Fashion
bags users
Key Resources
Fingerprint
technology,
luggage manu-
facturing
materials,
human
resources,
Channels
 Retail
outlets of
the
Australian
Luggage
Company
 Franchise

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especially the
product
designing and
marketing
teams
stores
 Factory
outlets
 Online e-
commerce
sites
Cost Structure
 Fixed costs
 Variable costs of manufacturing
 Cost of technology
 Cost of marketing
Revenue Streams
 Direct sales through outlets
 Sales through e-commerce
Table 1: Business model canvas
(Created by author)
3. Market
Market for any product, service or business refers to the total volume of the customers
and potential customers, that is, industry size and growth rate (Baker 2016). Hence, Market
represents the section of the particular customers who would avail the product or service. In case
of the new innovative idea, if the product or service is launched independently, then it has to
capture the market from scratch. Hence, if the idea is incorporated as a product or service
diversification of an existing company, it is easier to capture and address the existing and target
market. Thus, the Australian Luggage Company is launching the new innovative product, that is,
luggage with fingerprint lock, which will be targeted to the existing as well as potential
customers who prefer to use devices with smart technologies.

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3.1 Market size and capacity
The luggage industry of Australia is worth of AUD 320 million as on 2018
(Ibisworld.com.au 2019). Numerous local and international companies operate in this industry,
through manufacturing and imports. However, the industry is growing due to increase in the
number of domestic and international travelers, including backpackers and fashion accessories
users, as well as users who prefer smart technology in their regular life.
3.2 Industry growth, competitiveness and barriers to entry
According to IBIS World (2019), from 2014-2019, the industry experienced an annual
growth rate of 3.8% and there are around 161 businesses operating currently with a workforce of
around 1621. While the revenue from online sales is around AUD $97 million, with an annual
growth rate of 9.4% from 2014-2019. Around 181 businesses operate in the online sales platform
(Ibisworld.com.au 2019). Thus, competition in the luggage manufacturing industry across the
country is intense. However, the barriers to entry for a new product is low as it is an innovative
idea, to be launched under an established luggage and bag manufacturing company, hence, there
will be no initial barriers to entry.
3.3 Industry trend
Intense competition from numerous luggage companies has been pushing the price of the
products downwards, especially the spread of online sales has been pushing the price further
down, implying the popularity of convenience and smart technology.
3.4 Market segmentation
Segmentation criteria Segmentation category
Demographic  Age: 20 and above

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 Income: monthly income with 15000 AUD and above
 Urban and semi-urban population
Behavioral  Brand loyal
 Prefers durable luggage products
 Look for value for money
Geographic  People all across the country
Psychographic  Luxury and backpacker travelers
 Business travelers
 Fashion accessories users
 People who prefer devices and products with smart technology
Table 2: Market segmentation
3.5 Target customers
The travelers, including, leisure and business, fashion bags users, people who prefers
convenience through smart technologies, especially people belonging to the age group of 20 to
35 who are more accustomed with smart devices are the target customers.
3.6 Place of distribution
Various retail outlets of the Australian Luggage Company, franchise stores, departmental
stores and online e-commerce sites will be used to supply the product to the customers.
International brands, such as, Samsonite, American Tourister etc. and various local
luggage manufacturers are the major competitors. However, none of these companies have

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launched any unique product yet, hence, the competition for the luggage with fingerprint lock is
much lower as there is no similar product in the market.
3.7 Business location and potential customers
The store locations and headquarter for the Australian Luggage Companies will be used
for business for the new product and it is expected that among the existing customers of the
brand, the young generation will be the first to buy the products.
4. Operations and technology
4.1 Development of technology
The fingerprint technology will be developed and implemented in the new models of
various types of luggage through contract to the designers and technology developer.
4.2 Changes in technology affecting the market
The changes in the security features for all types of products are a driving factor for
implementing the new lock technology in the luggage. The growing preference for smart
technology in all types of products, such as, smart devices has been a pushing force for
developing the innovative fingerprint locking technology for luggage.
4.3 Option for producing the product
The in-house manufacturing department of the Australian Luggage Company will make
the luggage and the fingerprint sensor will be collected through contracting and that will be
incorporated into the products through technical collaboration with the contractor.

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4.4 Sales and distribution
For sales and distribution, the existing in-house channels will be used as it is a new
product lunched by the Australian Luggage Company and hence, using the existing channels
would reduce the supply and distribution network costs for the company. Moreover, the
customers will also be able connect easily with the brand name if the direct retail outlets,
franchise stores, factory outlets and departmental stores are used for sales along with online
purchase options as increases visibility of the products (De Mooij 2018).
4.5 Required resources
Luggage manufacturing skills and raw materials are available to the company along with
suppliers, facilities and equipment. However, the skill for developing the smart fingerprint sensor
technology is not available and hence, the manufacturing of the technology will be contracted to
a technology developing firm.
4.6 Laws and regulation
As stated by Picciotto (2017), any business must be aligned with the local and state
business regulations to ensure a lawful, ethical and transparent business which will benefit the
economy through profits, employment and customer service. Similarly, even for a new product
launch, the Australian Luggage Company must abide by the local and central laws and
regulations designed for the industry. The products must provide value for money, the price
should be competitive even it is meant for profit making business, the new technology should not
be harmful for the environment, that is, it should be sustainable. Furthermore, as fingerprint lock
is a new technology in the luggage manufacturing industry, its copyright must be established and
the intellectual property should be protected. Hence, patent should be designed to protect the

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intellectual property of designing new luggage with fingerprint sensor technology. This will help
the company to have a competitive advantage in the market by protecting the new design.
4.7 Moral/ethical issues
The business idea is an innovative one and there is no perfect substitute in the market. It
is a part of product diversification strategy of the Australian Luggage Company to capture a
larger share in the market and hence, there is no complicated moral or ethical issue for the
innovative product development and launch. However, the product should be sustainable and
must have less impact on the environment, which is addressed by the development and
implementation of the smart technology, that is, fingerprint sensor, that increases value for
customers without increasing carbon footprint.
5. Human resources
5.1 Technical and management experience required
The Australian Luggage Company has been operating as one of the leading luggage and
bag manufacturers since 1996. All of its departments have the technical and managerial
experience to manufacture the products and distribute those efficiently to reach out to the target
customers. However, the company does not have the expertise to develop the smart technology,
that is, fingerprint sensor as a lock for various types of bags. Hence, the development of the
technology will be outsourced and until the in-house department is established and skilled
developers are hired, the manufacturing of this technology will be given to a technology
developing firm. Thus, the company needs to develop a separate in-house department and hire
and train technology developers for developing and implementing the technology in its new
luggage.

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5.2 Owners and their roles
The owners of the Australian Luggage Company are entrepreneurs. Entrepreneurs are
risk takers and they develop and launch new business ideas into the market. In this regard,
entrepreneurs promote innovation and creativity to retain existing customers and attract new
potential customers (Howard, Zwicky and Phillips 2018). In this case, the fingerprint lock sensor
to enhance the security of the bags is an innovative and creative idea, which new in the industry
and hence, involves risk, such as, technology failure, inconvenience to the travelers who are not
used to the smart technology etc.
5.3 Ownership structure
The Australian Luggage Company is a family owned business and hence, it is a sole
proprietorship.
5.4 Manpower requirements
The company will establish a separate department for handling the production,
distribution and sales of the new products. Separate promotional campaigns will be created for
the new products. As it is a diversified product in the portfolio of the company, a separate human
resource team will be employed to look over the business operations of the new products. Thus,
in the 1st year, 5 people will be recruited for the promotions and sales, in the 2nd year, 5 people
will be hired to conduct the market research to find out the sales growth and the factors affecting
the sales. In the 3rd year, 10 people will be hired to look over all the operations, such as,
manufacturing, finance and accounts, technology development, marketing, product distribution,
supply and sales.

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Recruitment and selection process will be implemented to hire employees with right
experience for the role and placing them in the right position. The job roles will be defined and
accordingly, employees will be selected to fit the right position.
The compensation of the employees will be decided as per the industry standard. The
factors like, shift hours, productivity, knowledge, experience etc. will be considered while
deciding the remuneration of the employees.
To motivate the employees, the benefits of the new products will be described as how
they can contribute effectively in capturing a larger market share. Moreover, rewards and
recognition will be introduced to motivate the employees.
On an on-going basis, the employees will be trained for market research and designing
promotional campaigns for the new product. As the fingerprint sensor will be collected from a
contracting company, trainings will be given on implementation of the product on the new
models of the luggage.
5.5 Growth strategy
The company will be adopting product diversification strategy to enter the market with
the new innovative product. Along with that, to capture a larger market share, low cost focus
strategy will also be adopted. As per the Porter’s generic strategies, product diversification helps
the company to address a broad market and low cost focus helps to gain competitive advantage
(Bell, Dyck and Neubert 2017). These two strategies will be implemented to grow the business
in the long term.
Quality check is the first responsibility of the company after product manufacturing. The
quality check team will ensure that the security measure is enhanced after the application of the

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new technology and also will check if the sensor is working efficiently before supplying the
products to the market.
The organizational structure will not change with the growth as product diversification is
a business strategy that can be adopted by any organizational structure.
There will be various designations for the employees that will be given as promotions
over the years based on their performances. They can move to the higher positions such as,
technical lead, head supervisors of any department and managers etc. (Vande Griek, Clauson and
Eby 2018). Thus, there is scope for career development for the employees.
6. Finance
6.1 Projected revenues
The conventional luggage and the accessories of the company are usually priced from
AUD 9.95 to AUD 249 (loveluggage.com.au 2019), which is quite reasonable. As the luggage
with fingerprint lock is a new innovative and creative product in the market, and the company
will be using low cost focus strategy, for the first few models, the price will be kept within 150-
200 dollar. Initially, 3 different sizes of the same model, that is, soft luggage with 4 wheels will
be launched.
capacity
production cost per
unit (AUD)
sales price per
unit (AUD)
rate of
return
(AUD)
year 1 60% 130 175 45
year 2 70% 125 160 35

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year 3 80% 135 165 30
year 4 90% 135 150 15
year 5 100% 120 170 50
6.2 Start up cost for the new product diversification department
Start-up Costing for [Australian Luggage Company, Luggage with fingerprint
sensor] - [2019]
START-UP COSTS Cost ($) EQUIPMENT/
CAPITAL COSTS Cost ($)
Registrations Business purchase price 1250
Business name
Australia
n
Luggage
Company
Franchise fees
2000
Licenses 100 Start-up capital 1500
Permits 25 Plant & equipment 500
Domain names 120 Vehicles 400
Trademarks/designs/patents 300 Computer equipment 800
Vehicle registration 315 Computer software 2000
Membership fees 108 Phones 1800
Accountant fees 500 Fax machine 2000
Solicitor fees 50 Security system 5000
Rental lease cost (Rent
advance/deposit) 150 Office equipment 4000
Utility connections & bonds
(Electricity, gas, water) 180 Furniture 550
Phone connection 400 Shop fit out 450
Internet connection 800

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Computer software 2000
Training 850
Wages 400
Stock/raw materials 650
Insurance 1500
Building & contents 1700
Vehicle 800
Public liability 1000
Professional indemnity 500
Product liability 450
Workers compensation 400
Business assets 775
Business revenue 250
Printing 125
Stationery & office supplies 200
Marketing & advertising 500
Total start-up costs Total equipment/capital
costs $
Assumptions:
All figures are GST exclusive.
6.3 Profit and loss statements for the next 3 years
PROFIT & LOSS
Month
1 Month n Year 1 Year 2 Year 3

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Sales 150 145 200 360 400
less cost of goods sold 70 30 50 50 50
More…
Gross profit/net sales $80 $105 $150 $310 $350
Expenses
Accountant fees 80 90 110 115 120
Advertising &
marketing 50 50 70 90
98
Bank fees & charges 60 50 20 120 100
Bank interest 8 10 7 9 10
Credit card fees 11 9 8 5 10
Utilities (electricity,
gas, water) 70 45 60 110
120
Telephone [phone]
Lease/loan payments 30 50 50 8 50
Rent & rates 29 48 41 50 50
Motor vehicle
expenses 40 50 42 38
50
Repairs &
maintenance 21 23 29 21
58
Stationery & printing 27 23 24 28 21
Insurance 80 90 100 120 140
Superannuation 56 69 85 47 35
Income tax 74 45 69 47 78
Wages (including
PAYG) 88 78 56 45
85
More…
Total expenses
$
445 $487 $523 $589 $547
NET PROFIT (Net $600 $599 $710 $669 $703

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Income)
Assumptions:
All figures are GST
inclusive.
6.4 Possible source of financing
The company, that is, Australian Luggage Company is already an established company, it
has its capital funding to sponsor the new venture. However, for reducing the risk of money loss,
the stakeholders will invest in this new business idea. Since, it started off as a family owned
business, the major funding will come from the family capital source.
As seen from the estimate profit and loss forecast, it is seen that the company will benefit
from the new business and in the long term, the return on investment will be enjoyed by the
company.
7. Conclusion
Thus, lastly, it can be said that the business idea of luggage with fingerprint sensor is a
completely new and innovative idea on the luggage security and the Australian Luggage
Company will be launching this new luggage as a first company in the Australian market. Hence,
it will have a chance of having earning profit in the long term. As the new idea is adding value to
the convenience of the customers, it is expected that eventually the popularity of the product will
increase among the young generation and the company will get benefited from this business.

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References
Baker, M.J., 2016. What is marketing?. In The Marketing Book(pp. 25-42). Routledge.
Bell, G.G., Dyck, B. and Neubert, M.J., 2017. Ethical Leadership, Virtue Theory, And Generic
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De Mooij, M., 2018. Global marketing and advertising: Understanding cultural paradoxes.
SAGE Publications Limited.
Howard, H., Zwicky, D. and Phillips, M., 2018. Academic libraries support cross-disciplinary
innovation and entrepreneurship.
Ibisworld.com.au, 2019. Luggage Stores – Australia Industry Research Reports | IBISWorld.
[online] Ibisworld.com.au. Available at:
https://www.ibisworld.com.au/industry-trends/specialised-market-research-reports/consumer-
goods-services/luggage-stores.html [Accessed 22 May 2019].
loveluggage.com.au, 2019. Australian Luggage Co Orbit Hardsided Expander Lightweight
Luggage - Rose Pink. [online] Love Luggage. Available at:
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Picciotto, S., 2017. Rights, responsibilities and regulation of international business.
In Globalization and International Investment (pp. 177-198). Routledge.

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