Entrepreneurship and Business Development: Assessment of the Cosmetic Industry and Business Model Canvas

This report discusses entrepreneurship and business development with a focus on the assessment of the cosmetic industry and the business model canvas. It covers the key elements of the Porter's value chain, qualitative and quantitative models in risk assessment, and the feasibility of the business.

ENTREPRENEURSHIP
AND BUSINESS
DEVELOPMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Business Concept........................................................................................................................3
Assessment of the Cosmetic Industry.........................................................................................4
Key elements of the porter's value chain....................................................................................8
Business model canvas................................................................................................................9
Qualitative and quantitative module in the assessment of risk.................................................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Entrepreneurship is the concept in which an individual person initiates the creative innovative
idea and executes with the ability and desire to establish and succeed in a start-up business with
the motive to make profits. It plays a vital role in the economy as establishment of new business
will generates more employment opportunities which boost the overall growth and development
of the country. Entrepreneur identifies the needs and demands of people and takes as opportunity
to implement the business idea. This report will illustrate new business concept including various
key components, along with assessment of industry, market, organizational and financial
feasibility. Apart from this, the study will also highlight key components of value chain model
and business canvas model along with appropriateness of qualitative and quantitative models
which determines potential risks.
MAIN BODY
Business Concept
As being an entrepreneur, the new business requires an innovative idea which can be
implemented in the existing market by offering unique product and services to have a financial
profit. Nowadays people are becoming more concern about their skin and lifestyles. By
introducing an organic beauty products and services will help the people to overcome from
various skin related issues (Ratalewska, 2018). Organic personal skin care products are made up
of natural minerals, organic plant extracts like aloe Vera gel, fruit juices, tea, coffee, milk, honey
etc. With the inclusion of natural substances the product are able to share their unique features
into diversified market place. Organic products are highly in demand as they are less likely to
cause allergic reactions, inflammations or irritations. Hence, organic products are the best
suitable product for sensitive skin people and requires immense care.
The business of selling organic skin care products will highly target the consumers who
are more concern about their skin. Generally the women's of age 18 and more are preferable for
the adoption of organic beauty care products as the products are extremely free from any kind of
harmful chemicals. Thus, capable to replace other harmful substances or beauty products form

the market space. Since there are no harsh chemicals in the products, the products will leads to
less wastage and toxins going down the drain. Buying naturally and sustainably sourced products
can be much kinder to the environment. The organic products cover a diversified range of
properties and attributes. These products are certified and clinically tested in the bio labs to
check the reality and pureness. The consumers will be more assured of the organic products by
having a certified mark (Morozova, Popkova and Litvinova, 2019). Using natural, organic skin
care products such as coconut oil, honey, aloe Vera and Shea butter are known to soothe,
nourish, moisturise and promotes smooth skin. Although the results might be comparatively
slower, but efficient enough to provide better results in long term to their users
From the records it has been observed that the global natural skin care product's market
size is expected to grow at a compound annual growth rate of 5% in upcoming years (Leung, ,
W.H. and Ho, 2019). By newly establishing the business of organic skin care products will
contribute more on overall expansion and growth in cosmetic industry. The ideal location for the
business will be more preferable near to the public areas or where the movement of consumers
are more likely to be enhanced such as malls or market. Further the business can also expands its
services globally with the help of appropriate use of technology. By selecting and applying
suitable promotional strategies the company will lead to higher profits and able to increase the
overall productivity of the firm. The increasing awareness regarding the quality of beauty
products and services has rapidly boosted the cosmetics industries worldwide. Due to increase in
demand of the organic skin care products the market competition of similar products also
enhanced. Cosmetic industries are fast growing and are projected as a future growing sector in
the market which has overwhelming demand for both male and female globally.
Assessment of the Cosmetic Industry
Industry Analysis- This is a tool which helps to understand a company's position in the
market space in front of their other competitive firms that produces similar kind of products and
services. It helps the business to identify various opportunities and threats that are coming their
way and gives them a strong idea for the present and future scenario for their expansion in the
industry (Bruijl, 2018). This can be better understood with the help of Porter's 5 force model
which make up the competitive environment and thus enhance the profitability of the business.

 Competition in the industry (High)– The organic personal care and cosmetic products
market is highly competitive activity that consists of regional and international
competitors. There is stiff competition in the industry and high-level of entry barrier for
the new entrants because it requires more spendings in terms of research and
development. Hence, it requires adoption of more powerful marketing strategies in the
business to sustain in the competitive world.
 Threat of Substitute products (High) - The presence of many competitors makes the
threat of substitute high. There are various substitutes available in the market of organic
skin care products which creates cut-throat competition. If manufacturers sell their
products at higher prices, or the offered products are of low quality, then consumers are
able to purchase substitute goods from any other company who are dealing into similar
products.
 Potential of new entrants into the industry (Medium)- The threat of new entrants in the
cosmetic industry can be considered as low to medium because this requires potential
investment to start the business such as bulk purchasing of organic products. New
entrants are likely to enter into dynamic industry but also requires huge amount of capital
at very initial stage. Developing unique beauty products requires a lot of resources both
in terms of research and development and the actual manufacturing process.
 Power of Suppliers (Low)- The beauty industry has a low bargaining power of suppliers
due to the high number of market players and large supply of diverse products to the
market.
 Power of customers (High)- The cosmetic industry has a high bargaining power of
customers due to the increase in competition and availability of beauty products from a
variety of manufacturers. The customers want to purchase the best offerings available in
the market by paying minimum amount for the goods.
Market Analysis- market analysis is basically doing assessment of the market area which helps
to understand the target audience and the conditions of the market. Through this the company
has the potential to change the draw backs of products and services in order o make them
sustainable for longer period (Matovic, 2020). Market analysis will be described in context of

Herbal Beauty Product with the help of pestle analysis which helps to describe the concept on
broader perspective:
 Political Factor- In beauty and cosmetic industry the product safety is considered as
main concerns. Herbal Beauty Product will have to take care of regulations that have
been created by the government while doing import and export of the raw material. The
company need to provide complete details about the ingredients that have been utilized
by them while manufacturing the goods. Apart from this, Herbal Beauty Product also
have to fulfil necessary requirements of rules and regulations of different countries while
doing business with them.
 Economic Factors- The company have to consider the involvement of taxes and duties
that affects the purchasing power of consumers with regard to organic beauty and skin
care products. As nowadays, customers are becoming more price conscious due to which,
they change their needs rapidly. Hence, Herbal Beauty Product have to consider the
pricing strategies as well. The firm also provides employment to various people which
increases their GDP level of the country.
 Social Factor- Many customers are nowadays, are more persistent towards brand loyalty,
so new beauty companies are constantly fighting to get attention in such a saturated
market. The customers are strict to their previous brands and following the same brand
offerings with different products. Hence, Herbal Beauty Product needs to focus on
advertising their products more known to customers.
 Technological factor – Earlier the products need to shelf in the stores which are
expensive and extremely difficult to manage. But by using advanced technology Herbal
Beauty Product can easily make transactions with e-commerce platform which is quick
and better way to make purchase of organic goods (Melnic and Iliescu, 2017). The
company will set their products on digital platform like amazon, flip-kart etc to have
competitive position in the market.
 Legal factor- The Herbal Beauty Product needs to follow strict rules and guidelines of
the government and as stated by law to persuasive smooth flow of business activity. The
act monitors ingredients and their uses in manufacturing process if these aren't up-to the
mark than the product can be banned.

 Environmental Factor- The Herbal Beauty Product can operate CSR activities which
helps in upliftment of the society. Thus, industry needs to focus on more plantation of
trees and save the environment. The packaging of the product needs to be eco-friendly
rather than polluting to the environment.
Organisational and Financial Feasibility
Basis Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Cash
Inflow
s
Openi
ng
cash
inflow
9000 15800 18500 25700 38400 42800 45300 52900 65800 68420 75600 82800
Sales
reven
ue
11000 10500 25000 29500 32600 35600 36900 45200 51200 56280 62100 65300
Other
incom
e
2500 3000 4000 5400 6200 6800 7300 8400 9200 9800 8500 7300
Total
cash
inflow
s
22500 29300 47500 60600 77200 85200 52600 106500 126200 13450
0
146200 155400
Cash
outflo
ws
Mater
ial
2200 3500 4200 4850 5200 4600 5300 5860 6740 12950 16750 20800
Labou
r
2000 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200
Other
expen
1500 1850 1960 2140 2370 2540 2740 2650 2730 2940 3020 3980

ses
Admi
nistrat
ion
expen
ses
3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500
Total
cash
outflo
ws
9200 11050 11860 12690 13270 12840 13740 14210 15170 21590 25470 30480
Cash
deficit
13300 18250 35640 47330 63930 72360 38860 92290 111030 11291
0
120730 124920
Key elements of the porter's value chain
Porter's value chain is an important management tool which focuses on all those activities which
are needed to perform in order to create and deliver the products. (Hayashi, Ishimura and
Ohsawa, 2021). The activities have been parted in two parts for implementing the chain in herbal
product organization.
Primary activities- These activities has been considered as prior activities for the organization.
It has been performed in fives stages.
1. Inbound logistics- This involves maintaining a good relationship with the suppliers so,
the raw materials or resources which are needed to start the production process of herbal
products can be available on time.
2. Operational activities- It involves the process of transferring all the resources into the
final products. The natural herbs are converted into the final herbal product.
3. Outbound logistics- This refers to collecting all the finished goods and starts the process
of distribution.
4. Sales and marketing- This involves making consumer aware about the products and
influence them to make the purchase.

5. Services- After selling the products certain services has to be performed in terms of
home delivery for the convenience of the buyers.
Secondary activities- These activities acts as a support system for the primary activities and it
involves.
1. Procurement- This activity is done in order to arrange the inputs for the organization.
So, the outputs can be created.
2. Human resource management- This involves recruiting, selecting employees for the
firm and provide training to them.
3. Technology- It helps in the manufacturing of the products, using of technology results in
highly efficient products. There are large number of range in herbal products.
(FERNANDES, Reis and Serio, 2017). Therefore, a good technology is needed so the
production can be done on time.
4. Infrastructure- This activity is performed in order to link different departments of the
herbal organization and creates a good infrastructure.
Business model canvas
Business model canvas helps in visualizing the key areas. The chosen business is creating that
products which ensures the safety of consumers as it involves the herbal stock therefore, the
share in consumer market will be high. (Kucukaltan, Irani and Acar, 2020). A business model
canvas helps in routing and shaping all the ways and methods which helps in focusing on the key
elements of business and helps in approaching the customers. The model includes:
Key partners
The herbal
cosmetic products
has three key
partners and those
are the investors,
suppliers and
distributors.
The investors
who are
Key activities
Producing the
different kind of
cosmetic products
with the mixture
of natural herbs is
the key activity of
the firm. Apart
from this,
creating a high
Value
propositions
The organization
is performing the
value of
standardization
by providing high
quality of
cosmetic products
with the mixture
Customer
relationships
The firm is
putting a keen
focus on making
an efficient
relationship with
the customers by
ensuring them a
high quality of
Customer
segments
The initial focus of
the firm would be
focusing on
segmented market
and it includes
behavioural and
geographical
segments.

interested in
being part of
equity
shareholders will
prioritise by the
firm.
The suppliers
who provide
efficient amount
of natural raw
materials will be
considered as top
suppliers.
The distributors
who linked up
with direct and
Indirect channel
of distribution is
appointed by the
firm.
marketing
strategy for
selling the
products is also
one of the key
activity of the
firm.
of herbal
resources and this
ensuring the
safety along with
quality.
products along
with good
services.
(services like,
free home
delivery)
In terms of
behavioural
segment,
organization will
focus on that
customers who are
fond of natural
products.
In terms of
geographical
segment, in the
initial stage the
organization will
sell its products in
the UK and after
some time the
expansion at the
international level
will be planned.
Key resources
The key resources
for the
organization will
be the raw
materials which
are consists of
natural resources,
a good human
force and updated
technology so the
products can be
made on time.
Channels
The products will
be sold through
both the platform
of online and
offline market. A
website will be
created in order
to maintain
online
transactions and
various stores
will be opened in
order to maintain
offline
transactions.
Cost structure
The herbal cosmetic product
organization will focus on
maintaining the fixed and variable
cost at the initial stage. The firm will
bear the expenses related to
operational process and expenses
Revenue streams
The firm will generate its revenue by selling its products
in the market. The firm is following one time revenue
generation stream. Under this, the products has been sold
to the customers in the exchange of price.

occurs from the acquisition of natural
resources.
Qualitative and quantitative module in the assessment of risk
Qualitative assessment of risk helps in analysing the risk on the basis of knowledge and
experience of the assessor while quantitative assessment helps in analysing the risk on the basis
of pre- defined data and observations. (Arvidsson and et.al., 2019). The organization is new in
the market therefore understanding the risk and its mitigation is important. The qualitative and
quantitative module of risks which can affect the venture are:
Risk
description
Impact
description
Time period probability Mitigation
Financial risk
This risk
involves losing
of fund in the
organization.
The financial
risk has a high
impact on the
firm. This risk
will affect the
cash flow of
the venture.
Lose of fund
will work as a
barrier in the
process
production.
Finance is required
through- out the life of
business. Therefore,
this risk is considered
as a part of long
period.
The probability is
high.
The firm is
focusing on
creating a high
base for the
capital.
The venture is
approaching
different
sources such
as
shareholders,
debentures,
creditors and
bankers in
terms of
creating high
capital.
Competitive This risk will
impact the
The product of chosen
organization assuring
The probability is The venture
will mitigate

risk
This risk
occurs when
the
competition is
high.
organization in
terms of losing
customers as
there are
number of
firms who is
producing the
cosmetic
products.s
the quality along with
safety. (Rossebø and
et.al., 2017). On the
other hand the prices
are high. Therefore,
the time period is
fluctuated.
moderate. this risk by
adding
uniqueness in
the product
which will
make the
product better
than the
competitor
product.
The
uniqueness of
the product
will be that, it
is made up
from natural
herbs and
ensuring safety
to the skin.
Environmenta
l risk
This risk
involves
harming the
nature while
performing
business
activities.
This risk has a
high impact on
the firm as the
public is
concerned
about the
environment.
Harming the
nature leads to
loss of image
in the market.
This risk is concerned
with the business for
longer period.
(Mirhoseini and et.al.,
2021). The herbal
products require
natural resources
therefore, the risk is
with the business
throughout the life of
business.
The probability is very
high.
The company
is focusing on
creating green
house which
results in
decreasing
global
warming.
The firm
focusing on
sustainability

development.
Political risk
This involves
the
interference of
government in
the business.
The excessive
interference of
the
government
can reduce the
productivity of
the firm.
The government keeps
a keen focus on every
organization
throughout the time.
The probability is high The venture
will pay taxes
on time and
will follow all
the rules and
regulations of
the political
environment.
Reputation
risk
This risk refers
to loss in the
goodwill of the
organization.
The loss of
goodwill leads
to heavy loss
for the
organization.
Once the
goodwill is
loss, it is hard
to recreate it
and hard to
take customer
favour.
Affects for longer
period.
The probability is less The
organization
will perform
all the
business ethics
in order tom
maintain good
reputation.
Apart from
this, the
company will
organize
certain social
camps.
Operational
risk
This risk
comes within
the
organization.
This affects
the quality of
products and
results in less
efficient
products and
Depends on the time
of production cycle.
The probability is less
as the firm is using
high efficient method
for production.
The firm is
using the
highly
efficient
method for
production

This risk
occurs from
the less
efficient
process of
production
process.
this leads to
less profit
margin.
along with
updated
technology.
Compliance
risk
This risk
involves
putting
financial
penalties on
the firm for
failing to
perform under
internal and
external
legislatures.
This Affects
the image of
the
organization
which results
in loss of
public image.
Affects for longer
period.
The probability is less. The company
is performing
all its activities
according to
the legislative
rules.
Market risk
This risk
occurs due to
changing
factors in the
market.
This risk
affects each
and every
activity of the
organization,
as the firm
performing its
activities in
order to grab a
The time period is
generally low as the
state of market keeps
changing.
The probability is
moderate.
The
organization
has completely
analysed the
market and
focusing on
each and every
factor such as,
consumers

large market
share.
choice,
government
policy,
changing
business
environment.
CONCLUSION
From the above report it has been concluded that an entrepreneur has to study various elements
in order to start a business. For starting a business the complete understanding of the chosen
product and targeted market is needed. (Ali, Warren and Mathiassen, 2017). The business
development process is a complete concept which includes all the aspects of business and every
aspect is needed to understand deeply. The concept of industry, market, organization and
financial feasibility in the set up of new business has also been discussed. Apart from this, the
report has also cleared the value chain and business canvas model of the herbal cosmetic product
organization along with the qualitative & quantitative modals of risk assessment. The herbal
cosmetic product organization has performed all the concept in, an efficient manner in order to
grab a large market share.

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