Business Plan Financial Projections

This assignment presents a comprehensive business plan with detailed financial projections spanning three years. It includes projected income statements, balance sheets, and cash flow statements. The document also outlines the company's strategy, market analysis, and operational plans. Key expense categories such as cost of goods sold, administrative expenses, selling and distribution expenses are analyzed. Finally, it details the dividend payout policy based on a 25% ratio.

THESIS
(The feasibility of a continental breakfast
service in Ghana by the year 2017)
1

TABLE OF CONTENTS
CHAPTER 1....................................................................................................................................5
1.0 Introduction................................................................................................................................5
CHAPTER 2....................................................................................................................................6
2.0 Business Concept.......................................................................................................................6
2.1 General business description.................................................................................................6
2.2 Products and services.............................................................................................................7
2.3 Vision and Mission..............................................................................................................10
2.4 Goals and objectives............................................................................................................10
2.5 Target market.......................................................................................................................10
2.6 Value added.........................................................................................................................10
2.7 Specific features...................................................................................................................11
2.8 Who is involved?.................................................................................................................11
2.9 The window of opportunity.................................................................................................12
2.10 Legalities............................................................................................................................13
CHAPTER 3 .................................................................................................................................14
3.0 FEASIBILITY RESEARCH .................................................................................................14
3.1 Product feasibility................................................................................................................15
3.2 Industry feasibility...............................................................................................................16
3.2.1 Porter's five force..............................................................................................................16
3.3 Market feasibility.................................................................................................................17
3.3.1 Size of potential customers...............................................................................................17
3.3.2 Target customers/ key customers......................................................................................17
3.4 Organizational feasibility.....................................................................................................18
3.4.1 Required qualification and skills......................................................................................18
3.5 Financial feasibility..............................................................................................................18
3.5.1 Start up capital..................................................................................................................18
3.5.2 Operating cost...................................................................................................................19
3.5.4 Profit and loss...................................................................................................................20
3.5.5 Statement of financial position.........................................................................................20
3.5.6 Statement of cash flow......................................................................................................21
CHAPTER- 4 ................................................................................................................................23
2

4.0 BUSINESS MODEL...............................................................................................................23
4.1 Introduction to business model............................................................................................23
4.2 Strategic analysis of business idea.......................................................................................24
4.3 PESTLE analysis.................................................................................................................25
4.4 SWOT analysis ...................................................................................................................26
4.5 M's model analysis...............................................................................................................27
4.6 Selection of possible strategies ...........................................................................................28
4.6.1 Porters generic..................................................................................................................28
4.6.2 Blue ocean strategy...........................................................................................................29
4.7 Development of appropriate business model.......................................................................30
4.7.1 Business canvas model.....................................................................................................30
CHAPTER -5 ................................................................................................................................33
5.0 business plan ...........................................................................................................................33
5.1 Industry analysis..................................................................................................................33
5.2 Ansoff Matrix......................................................................................................................33
5.3 Market analysis ...................................................................................................................34
5.4 Key customers......................................................................................................................35
5.5 Marketing plan ....................................................................................................................36
5.5.1 Marketing strategy............................................................................................................36
5.5.2 Marketing methods...........................................................................................................36
5.5.3 Marketing communication................................................................................................37
5.5.4 Distribution system...........................................................................................................38
5.5.5 Life cycle changes in the use of marketing mix ..............................................................39
5.5.6 Marketing segmentation...................................................................................................41
5.6 Organizational plan .............................................................................................................42
5.6.1 Ownership structure..........................................................................................................42
5.6.2 Management team background ........................................................................................42
5.6.3 Human resource management...........................................................................................43
5.7 Operation plan .....................................................................................................................44
5.7.1 Location............................................................................................................................44
5.7.2 Flow of orders for goods and services..............................................................................44
5.7.3 Technology utilization......................................................................................................45
5.8 Risk assessment...................................................................................................................45
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5.8.1 BCG matrix.......................................................................................................................45
5.8.2 Exit strategy......................................................................................................................46
5.9 Time table for operations.....................................................................................................46
5.10 Financial plan ....................................................................................................................48
5.10.1 Financial need of the company.......................................................................................48
5.10.2 Major suppositions or assumptions.................................................................................48
REFERENCES..............................................................................................................................49
APPENDICES...............................................................................................................................51
4

CHAPTER 1
1.0 INTRODUCTION
Urban migration has brought immense implications on business activities in the cities of
many countries. As of 2010, urban dwellers constitute 64% of the total population in Ghana.
Workers in all fields thus have to wake up very early to avoid being late to work as a result of
intense traffic. This daily routine has made it more difficult for most workers who have busy
schedules to have breakfast before starting the day’s work. This has created avenues for private
breakfast services to provide breakfast services for workers at various food stands in the city.
Workers, however, still form queues to get their breakfast at the various standpoints as a result of
increasing demands leading most of them to forfeit breakfast for fear of reporting late at work.
For this reason, MAG Breakfast intends to meet this rising demand by providing “at your
doorstep” delivery services comprising breakfast ranging from cereal, grain and porridge.
For the purpose of completing the proposal successfully the conditions of the market as
well as industry is being analyzed in an effective manner. Further detail expenses in relation to
the start up is being outlined. The present plan is comprised of detailed market, organizational,
operational and financial plan. At last implementation of timetable would also be developed. The
proposal is secondary research as such the feasibility study carried out is on the basis of
information gained from primary investigation of other authors. An internal and external
secondary sources from reports, the market and industry data bases, government statistics and
other information sources are collected, compared as well analyzed in order to make
determination of the feasibility of MAG Food and Delivery Services Limited.
Relevant model that includes PESTLE analysis, porters five force, SWOT analysis,
business canvas model and the product and industry life cycle model are being implemented in
the present proposal so as to make sure that positive results are obtained by organization. Te
proposed business aims at starting operations in 2017. It is being assumed that by the end of first
year the business would make profitability which will assist it in sustaining operations for the
coming years. Thus it will not fail. Each part of the present proposal aims at assisting the
business to be executed and survive in long run course of time.
5

CHAPTER 2
2.0 BUSINESS CONCEPT
2.1 General business description
MAG food and delivery services Ltd. is a start-up company which focuses mainly on
providing high quality but affordable breakfast services in urban areas in Ghana. MAG food and
delivery services Ltd. is sole-proprietorship business. The company is owned by Maame
Gyamfua Obeng-Agyemang and intends to provide breakfast delivery services to workers of
various fields; Corporate bodies, Schools, Construction and manufacturing firms etc. The firm is
small business that is aiming to satisfy the requirement of huge customer base in an effective
manner. The firm intends to provide quality and affordable breakfast services to the customers.
At present the firm desires to introduce new range of breakfasts products for the customers. The
new business is concerned towards enhancing the market share through the means of introducing
new range of products. The organization is dedicated towards offering new products as well as
services to the areas where there is need. MAG food and delivery services Ltd. has came into
existence to offer breakfasts services at economical prices. The organization is wishing to make
suitable relationship with customers, suppliers as well as personnel that can provide value to the
interests and objectives of each party. The organization aims at offering greater satisfaction level
to the customers that will facilitate in increasing awareness of the organization within the market.
Along with this such will enhance the base of customers for the organization to a significant
level. The present concept of the business is being devised in order to serve the recent growing
requirements of the market with greater effectiveness (Anderson and Khedair, 2009). The main
aim is to provide the customers with affordable prices and greater breakfast products at a specific
location. Thus quality with convenience is provided to the customers.
Urban Areas in the Greater Accra region constitute the initial target market for Mag Ltd.
These areas are highly concentrated with corporations of different charters. The demand for
quality but affordable breakfast keeps rising with few service providers such as Koko King
meeting this demand. Alternative means of getting breakfast are the “road side” vendors,
however their quality and hygienic standards remain questionable.
6

2.2 Products and services
The breakfast products of MAG Food and Delivery Services Limited include the following:
 Tom brown
 Wheat porridge
 Rice porridge
 Millet porridge
 Oat meal
 Green tea
 Fruit meal
7

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The services that will be offered by the organization is comprised of home delivery so
that convenience can be offered to the customers. Along with this organization takes into account
health of customer at priority while serving the clients (Birkinshaw, Hamel and Mol, 2008).
2.3 Vision and Mission
The vision and mission of Mag Food and Delivery services Ltd has been enumerated in
the manner as under:
Mission
To provide timely quality and affordable breakfast daily to workers of various fields.
Vision
To be the number one breakfast service provider in Ghana.
2.4 Goals and objectives
The goals and objectives of MAG Food and Delivery services Ltd is enumerated in the
manner as under:
 To offer high quality and affordable breakfast delivery services
 To provide Convenient and timely delivery of breakfast.
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2.5 Target market
In the present business that is MAG Food and Delivery services Ltd the target market
includes the middle-income city dwellers in the Accra and Tema townships.
2.6 Value added
MAG Ltd. intends to distinguish our products by providing a complete set of breakfast
including appetizers and desserts in a well packaged disposable container. Due to the large scope
of the market, the company shall setup a place in each district where the breakfast will be
prepared. Most road side vendors would be employed and trained to prepare the breakfast under
strict hygienic conditions. For effective time delivery, the company shall employ the services of
dispatch riders to avoid intense traffic situations in Greater Accra. The market scope will then be
extended to other regions in phases in subsequent years.
The aim of MAG Food and Delivery services Ltd is towards minimizing the cost but
make production of quality products as well as services (Boldrin and Levine, 2008). Offering
greater number of services to customers including home delivery on time would provide greater
convenience to the customers. The offerings in the menu are fast, healthy and easy to be
prepared.
2.7 Specific features
MAG Food and Delivery services Ltd would show creativity within its product.
 The organization would offering complete breakfast including appetizers and desserts in
a well packaged disposable container.
 It has major feature that relates with high quality and affordable breakfast delivery
services
 Convenient and timely delivery of breakfast
 Preparation of breakfast would be done under strict hygienic conditions (Chen, Yao and
Kotha, 2009)
 Offers breakfast delivery services to workers of various fields; Corporate bodies,
Schools, Construction and manufacturing firms etc.
2.8 Who is involved?
The competition facing MAG Food and Delivery Services Limited is vast. This includes
every eating establishment in the Accra and Tema townships. The major competitor is Koko
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King Ltd, who also operate similar line of business. Also, some restaurants in Accra and Tema
such as KFC, Azeemera, Food Sta and many other "mom and pop" style organizations serve as
secondary competitors because they provide some element of breakfast food. However, these
companies do not have the breakfast food as their main service, but rather as an ancillary
business segment.
Furthermore, there is a large number of substitute suppliers from grocery stores that offer
pre-packaged meals. Drawing any sort of general conclusions from these vast array of secondary
competitors is difficult, but it can be said that every conceivable product or service idea, and just
about every taste is encompassed within this group.
Also, many of the road-side breakfast sellers, due to lack of funds, are not able to carry
out profitable marketing strategies. MAG Food and Delivery Services Limited intends to
leverage its locational advantage to create higher profits that will in turn fuel marketing efforts.
The company aims to promote its local flavour and cuisine and draw in those individuals who
see fast food as unhealthy and of low quality (Cooper, 2009). Therefore the promoter of MAG
Food and Delivery Services Limited believes that there is significant opportunity to gain local
market share.
To overcome the existing competition, MAG Food and Delivery Services Limited had
chosen business locations in Accra and Tema that are critical to success since proximity to the
target market (middle class workforce) provide convenience and satisfaction.
Parking for the end-of-workday traffic stopping to pick up takeout dishes. Also, our
pricing strategy is not very sensitive because products are priced a bit lower than the market
price. Though low price is not essential, because many target customers may mistrust low prices,
the prices are not too high to deter the middle-income class. Also, through the provision of
quality and healthy food, given price a moderate price level, the company will have growth
through repeat business (Doganova and Eyquem-Renault, 2009). Also, our focus is an advantage.
By focusing on established businesses as customers, and on organic source of food item from
suppliers, the company will draw customers from the existing major competitor.
2.9 The window of opportunity
There are wide range of opportunities which are present for MAG Food and Delivery
Services Limited. This is major factor that has compelled the owner to enter within the particular
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sector. It is important for the owner of the firm to make examination if the opportunities for new
business which prevails in the market. This is suitable in order to attain success by the firm to a
significant level. It is significant to consider the opportunities as it enhances the growth prospects
for the new firm in an effective way (Drucker, 2014). The opportunity for the present firm is
comprised of increasing demand for breakfast services and its delivery. With this the people are
able to manage their time for other work in an effective manner.
In the modern era there is huge increase within the working schedules of the people. Such
reflects that they have become very busy and are not able to devote time towards making
breakfast. Thus this has resulted in creating need for the services that acts as an aid in offering
high quality breakfast and affordable prices. This would make the life of the individuals much
easier. In addition to this it has potential to achieve success in the long run course of time. In
addition to this there is huge increase in the number of individuals who requires food that is
cooked under hygienic conditions (Edwards, Delbridge and Munday, 2005). This has greater
scope in future course of time as people have become health conscious and require meal that is
much healthy. With this greater awareness has been developed among the people regarding
easting nutritional breakfast. With the emergence of MAG Food and Delivery Services Limited
the people would be able to satisfy their needs with effectiveness. The firm has opportunity to
setup a place in every district wherein the breakfast will be prepared and served to the people.
This has major role in increasing the demand for the organization and such effects the
profitability of the business in long run course of time (Evans, 2015).
2.10 Legalities
The firm can carry out its operations without undertaking all the legal process. The firm
would thus investigate regarding the legal needs and get familiar with them in order to avoid any
issues. Organization license, patents, copy right, safety of equipments among others would be
taken into consideration.
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CHAPTER 3
3.0 FEASIBILITY RESEARCH
For the purpose of gaining clear and broad knowledge regarding the business MAG Food
and Delivery Services Limited carries out feasibility study. This would assist in making
determination of whether the business is sustainable and viable. The end outcomes of the
feasibility study would make MAG Food and Delivery Services Limited gain insight about the
market niche, customers, competition, expectations, market share, cost of goods, labour and
equipments among others. Thus business carried out feasibility study with the assistance of
secondary data by means of articles, government, website and journals. The feasibility research
plan for MAG Food and Delivery Services Limited is carried out from the aspect of product/
service, industry, market, organizational as well as financial. For the purpose of making sure that
business plan would work out in reality it is significant to test the feasibility of business idea. In
case when individual talk regarding the business plan with other person, then they feel that
business can be opened easily but in real terms it is difficult to open similar business as there is
presence several constraints in the way (Foskett and Paskins, 2011). Thus it becomes necessary
for entrepreneur to determine the feasibility of the business plan. For the purpose of checking
feasibility of business plan detail investigation will be done. In this primary and secondary data
would be gathered from several information sources. Beside this projections regarding business
income and expenses would be done by entrepreneur. In this relation projected statement of
income, balance sheet as well as statement of cash flow would be developed within the report.
With this profitability of the projected venture would be measured. In this manner feasibility of
the project would be measured. Business model is regarded as one of the essential thing which is
required to be taken into account so as to measure viability of business idea. Business model is
referred to as the manner in which the goods would be produced at manufacturing plant and sales
is made to the end customer. For the purpose of ensuring that business idea of MAG Food and
Delivery Services Limited business model would be developed. In this regard extensive
investigation would be done on business model which are being adopted by small size firms
within this industry (Garayoa, Vitas, Díez-Leturia and García-Jalón, 2011). Therefore based
upon the evaluation and findings out of advantages and disadvantages of business model adopted
13

by firm sellers business model for proposed venture would be determined and based upon this
business idea feasibility would be tested. In this manner feasibility of the business plan would be
measured.
3.1 Product feasibility
The MAG Food and Delivery Services Limited has core competencies that is related
with efficient team of managers. In addition to this it has low employee and management
turnover. The employees emphasis on providing quality services to the customers. MAG Food
and Delivery Services Limited will strive to be accurate and honest with the customers in terms
of maintaining the quality of breakfast products that are being offered to the customers. In
addition to this honesty will be ensured by the means of using right ingredients in preparing food
so that health and safety of customers can be taken care. The deliverance of services would be in
accordance with promise made by the employees (Hiduke and Ryan, 2013). This would assist in
developing strong association with customers which is based on trust and integrity. The
organization will make utilization of greater technology in order to maintain full range of
inventory. The organization will assist the customer in meeting their expectations to a significant
level. Along with this the firm would consider the feedbacks of the customers in account
regarding the taste of food, quality etc. MAG Food and Delivery Services Limited is engaged in
selling breakfast food items which includes the following:
 Tom brown
 Wheat porridge
 Rice porridge
 Millet porridge
 Oat meal
 Green tea
 Fruit meal
The organization will include the food items that are healthy for individual as this assist
in fulling the demand of the customers in an appropriate way.
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3.2 Industry feasibility
3.2.1 Porter's five force
Porter's five forces is being introduced by Micheal porter in the year 1980. The aim of the
particular model is towards explaining state of the industry in competitive strategic environment.
The five force and other strategic model are being utilized with the aim to take decisions
regarding future of the business. The five force includes elements such as buyer power, supplier
power, barriers to entry, threat of substitute as well as rivalry between the existing players within
the industry.
Threat to entry
The power of the business can be weaken by the means of facility of competitors to get
into the market. In the proposed business opening of new restaurant is not difficult. Thus more
number of competitors can enter the market (Jones and Penaluna, 2013). Further this sector
requires less amount of investment that can assist the firms in making an entry in the particular
sector.
Bargaining power of customers
In this relation it is considered that how easy it is for the buyers to drive the prices down.
Here the bargaining power of customers is high in terms that there are several competitors who
are offering the similar kind of product. Thus it is important the new business needs to examine
the needs and expectations of the customers in an effective manner.
Bargaining power of suppliers
It is significant to make analysis on how easy is for the suppliers to enhance the prices
which is dependent on the uniqueness in their services or product. Further it depends on the
number of suppliers in the market and the cost of switching to another supplier. In case there are
few suppliers and less choices are there then suppliers possess high bargaining power. For the
present case of restaurant bargaining power of suppliers is high as there are number of suppliers
of products that are being offered.
Threat of substitutes
This is being influenced by the ability of the customers to gain insight to similar product
that is being sold by other firms with a better deals. In the proposed business plan the threat from
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substitute is greater as there is presence of greater number of competitors of the business that are
making sales of the similar kind of products.
Competitive rivalry
The number of capability of competitors is regarded as the main driver. Here in the
present case there is presence of several competitors of the firm and they are equally attractive.
Thus there is little power with the business as the customers can switch over to the another
restaurant at any point of time.
3.3 Market feasibility
3.3.1 Size of potential customers
In the present era restaurant sector is growing to a larger extent. It is considered as the
market that never dies. Thus it is considered as the demanding industry in which customers are
willing to purchase products as they are part of human lives. The Greater Accra region is
considered as the most populous region in Ghana. Along the population of Accra, the national
capital of Ghana and the regional capital, stood at 2.27 millions as at 2012. The industrial city of
Ghana, Tema is the eleventh most populous town in Ghana, with a population size of 165,000.
Our market size is estimated at 0.5 percent of Accra’s population and 1 percent of the population
of Tema. This makes up 13,000 customers of the company, with anticipated increases as it gain
grounds. In the present era there is presence of wide range of customers who wants healthy food
that can be offered in sound atmosphere. There is presence of greater number of customers who
demands for easting healthy breakfast. It is significant to access the needs to the target market
and offer them food which is expected by them. It is significant that target market analysis is
done so that customers views regarding the new business can be analysed in advance.
3.3.2 Target customers/ key customers
Urban Arears in the Greater Accra region constitute the initial target market for Mag Ltd.
These areas are highly concentrated with corporations of different charters. The demand for
quality but affordable breakfast keeps rising with few service providers such as Koko King
meeting this demand. Alternative means of getting breakfast are the “road side” vendors,
however their quality and hygienic standards remain questionable.
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3.4 Organizational feasibility
3.4.1 Required qualification and skills
The MAG Food and Delivery Services Limited demands for some types of qualifications
as well as skills from its personnel. This aspect is significant for the firm as it can assist in
making determination of the failure as well as success of the organization (Jones, 2014). On
general basis the qualifications that are needed by the firm in making selection is experience,
skilled and personnel who possess willingness to be committed to the business mission, vision,
values as well as its goals and objectives. The number of staff required by MAG Food and
Delivery Services Limited includes the following:
Twenty-four (24) employees will be engaged, comprising the promoter, plus four counter
clerks, six kitchen staff, ten sales persons, and three delivery personnel. Currently the business
lacks a dedicated marketing manager and an accountant. The company will soon advertise these
positions for filling. The counter clerks has responsibility to manage the customers, Kitchen staff
needs to make tasty dishes that are desirable by the customers. In addition to this delivery
personnel would have the responsibility to make timely delivery without making any kind of
delays. The sales person who be involved in creating awareness among the customers regarding
the services the are being delivered by the restaurant.
3.5 Financial feasibility
Financial feasibility is regarded as the one that reflects how much money would come
and leave, for what the money will be used, the amount of cash available as well as the
forecasted financial position or the level of the business (Khan and Shaikh, 2011). Financial
feasibility offers long term and short run foundation for the business budget control and its assist
in preventing financial drawbacks for the proposed new business. Financial feasibility is
regarded as another most significant aspect of the start up business such as MAG Food and
Delivery Services Limited. This feasibility would assist in gaining knowledge regarding the start
up cost, source of finance, sales forecast, profit and loss, financial position as well as cash floe
statement.
3.5.1 Start up capital
The initial expenses of the company will be GH₵100,000. This include cost of setting up
the place of business, acquisition of equipment and working capital.
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3.5.2 Operating cost
Operating cost is regarded as the expenses that relates with the operations of the firm.
This is comprised of administrative expenses, selling expenses that are borne by the business.
Forecasted general and administrative expenses
Year 1 Year 2 Year 3
Salary - sales personnel
20,34
0
21,35
7
22,7
81
Salary - errand personnel
6,78
0
7,11
9
7,5
94
Depreciation of building
6
00
60
0
7,6
00
Depreciation of furniture and fittings
4,95
0
4,95
0
4,9
50
Electricity expenses
20,40
0
21,42
0
22,8
48
Water expenses
18,00
0
18,90
0
20,1
60
Staff meal
12,00
0
12,60
0
13,4
40
Salary - functional managers - -
67,1
22
Stationery and other materials
1,86
0
1,95
3
2,0
83
-------------- --------------- ---------------
Total
84,93
0
88,89
9
168,57
8
Forecasted selling and distribution expenses
Year 1 Year 2 Year 3
18

Advertising expenses
11,0
40
11,5
92
12,3
65
Depreciation of motor vehicles -
11,2
50
98,7
50
Transport and carriage expenses
11,5
20
12,0
96
12,9
02
Packaging expenses
15,8
40
16,6
32
17,7
41
Communication expenses
19,8
00
20,7
90
22,1
76
------------- ------------ ------------
Total
58,2
00
72,3
60
163,93
4
======= ======= ========
3.5.4 Profit and loss
Note Year 1 Year 2 Year 3
Revenue 5 505,600 557,419 670,350
Cost of sales 6 151,192 158,752 169,335
-------------- -------------- --------------
354,408 398,667 501,015
Administrative expenses 7 84,930 88,899 168,578
Selling expenses 8 58,200 72,360 163,934
-------------- -------------- --------------
Operating profit 211,278 237,408 168,503
Corporate tax 4 52,820 59,352 42,126
-------------- -------------- --------------
Net income 158,459 178,056 126,378
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3.5.5 Statement of financial position
Note Year 1 Year 2 Year 3
Non-current assets
Property, plant and
equipment 2 49,200 77,400
666,10
0
------------- ------------- -------------
Current assets
Cash and cash equivalents 489,636 931,528
659,53
5
------------- ------------- -------------
Total assets 538,836 1,008,928 1,325,635
========= ========= =========
Equity
Stated capital 3 107,750 107,750
107,75
0
Retained earnings 131,504 265,046
359,82
9
------------- ------------- -------------
239,254 372,796
467,57
9
------------- ------------- -------------
Non-current assets
Deferred tax 4 182,716 405,176
578,64
5
------------- ------------- -------------
Current assets
Current tax liability 4 52,820 59,352
42,12
6
20

------------- ------------- -------------
Total equity and liabilities 474,790 837,324 1,088,350
3.5.6 Statement of cash flow
Note Year 1 Year 2 Year 3
CASH FLOWS FROM
OPERATING
ACTIVITIES
Profit before taxes 211,278 237,408 168,503
Depreciation 5,550 16,800 111,300
--------------- --------------- ---------------
216,828 254,208 279,803
Taxes paid - 52,820 59,352
--------------- --------------- ---------------
Net Cash Flows from
Operating Activities 519,250 531,406 459,601
--------------- --------------- ---------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of PPE 45,000 700,000
--------------- --------------- ---------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from share issue 10,000 - -
Dividends paid 9 39,615 44,514 31,594
--------------- --------------- ---------------
Net Cash Flows used in
Financing Activities 29,615 44,514 31,594
--------------- --------------- ---------------
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Net increase/ (decrease) in
Cash and cash equivalents 489,636 441,892 271,993
Cash and cash equivalents
at beginning - 489,636 931,528
--------------- --------------- ---------------
Cash and cash equivalents
at end 489,636 931,528 659,535
========
===
========
===
========
===
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CHAPTER- 4
4.0 BUSINESS MODEL
4.1 Introduction to business model
In order to succeed in the competitive market it is necessary for new business to have
effective strategies. Further, business model is regarded as future for sustainable advantage and it
highlights the key operations which are being carried out by organization. Moreover, without
effective model it is not at all possible for MAG food to operate as expected and it leads to
decline in overall level of performance in the market. Apart from this, the entire business model
is answer to all the questions such as who are the customers, along with their requirement and
how value will be delivered to target market as per their real expectations. Appropriate
development of business model delivers long term benefits to the business in terms of higher
customer satisfaction etc (Kitching, Smallbone and Athayde, 2009). Company has developed
very small business model as operations will be carried out on very small basis and due to this
reason it is necessary to work on the basis of model being developed.
Business model of MAG food highlights the key activities being carried out by business.
Further, it is a kind of backbone to new firm where range of operations can be carried out
efficiently and in turn it brings favorable results for company in every possible manner. Main
revenue stream of the organization is sale of its services and as the venture is newly established
then it is required for firm to focus more on promotion so that large number of customers can
know about the services which will be offered to target market (Liu and Lin, 2009). In short,
promotional activities can support enterprise in gaining competitive advantage and along with
this additional benefit can be obtained easily. MAG food has set proper direction for delivering
services to the target market. Apart from this, strategies will be modified time to time and due to
this reason business model requires modification. Without effective model no business can
survive in the market and it can sometime lead to unfavorable results. The model associated with
business supports in saving cost and in turn favorable results are obtained by company.
Apart from this, business will mainly focus on utilizing its main strengths so that
profitability level along with market share can be enhanced easily. At present restaurant will
operate on very smaller basis but in case if customers are providing positive response then
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expansion of services is possible in near future. This will also provide base in grabbing growth
opportunities being present in the environment. Further, for development of business model
business has employed various strategies tools such as SWOT, PESTLE, porter generic strategy
etc. This will allow business in attracting large number of customers towards its services and in
turn favorable outcomes can be accomplished easily (Marthinsen, Sundt, Kaysen and Kirkevaag,
2012). Therefore, with the help of this it can be stated that business model being developed is
fruitful for the business and with the help of this it is possible to set direction with the motive to
carry out overall operations. Apart from this, it can assist in expansion also in near future.
4.2 Strategic analysis of business idea
For conducting business operations in effective manner it is necessary to carry out
strategic analysis. Further, SWOT analysis as a model is considered to be most effective through
which it is possible for MAG food to identify its major strengths and weaknesses present
internally. Apart from this, opportunities and threats present in the internal environment can be
known easily. Moreover, through this tool it is possible for company to identify the key area
where its performance is lacking behind and overall improvement is needed for betterment of
business (McKeever, 2012). Main focus of MAG food will be on enhancing business
performance in the market and this is only possible when proper tools for analysis purpose is
being undertaken. Apart from this, porter five forces as one of the most is also effective which
can assist in analyzing external environment of the business. It supports in identifying the real
factors which can influence business performance of MAG food.
At initial level organization is required to focus on development of its core competencies
so that customers may find valid reason to purchase products of company. Other effective
models are also present which can be undertaken by business for development of its market
image and this in turn can surely bring favorable results for company in every possible manner.
Strategic analysis provides proper direction to the business entity where it becomes easy to
satisfy actual need of the target market (Mount, 2012). The entire business idea is associated
with opening up of restaurant to deliver breakfast services in urban areas of Ghana. Therefore,
this idea requires strategic analysis with the motive to know its feasibility. Apart from this, in
case if this analysis is not considered then business may have to face large number of issues
which may sometime lead to decline in level of performance in the market. It is recommended to
24

business owner to carry out strategic analysis on continuous basis for determining the range of
growth opportunities present in the market and same can be grabbed for obtaining favorable
results. Firstly it is necessary for business to build its overall strength as this will allow to deal
with threats being present in the external surroundings. Strategic analysis develops internal
strength and provides direction to company in which all the activities can be carried out
efficiently. Therefore, with the help of this it can be stated that strategic analysis of business idea
is must for new venture.
4.3 PESTLE analysis
With the motive to analyze external environment of business it is necessary to carry out
PESTLE analysis so as to know the range of factors influencing business operations. This tool
considers most crucial factor such as political, economical, social, technological, legal and
environmental. PESTLE analysis of MAG food has been shown below:
Political: This factor is associated with legal laws and regulations which business has to comply
with necessarily for carrying out operations in the market. Further, the market where business
will operate is highly regulated where different regulations are present that needs to be followed
while conducting business operations (Parks, Olson and Bokor,2015). Apart from this,
employment laws have to be followed where it is necessary for organization to deliver favorable
environment to employees. Service quality regulations have to be followed where organization is
required to maintain proper quality in the service which is being offered to target market.
Sometime political laws may act as barrier and due to this reason they are required to be
followed necessarily.
Economical: Economy of Ghana is improving at faster pace where overall growth has been
witnessed as compared with past. Further, considering the overall economic condition of Ghana
it is fruitful for MAG food to carry out operations in the market. Due to GDP growth customers
are ready to spend on restaurant services and this will be highly beneficial for business in the
market. Apart from this, inflation rate is also low due to which purchasing power of consumers is
high.
Social: This factor is associated with changing need and requirement of target market on the
basis of which services need to be delivered to customers. Further, it is necessary for MAG food
25

to understand the social factors so that overall expectations of target market can be met in proper
manner.
Technological: The market where MAG food will operate is highly advanced and due to this
reason it is required for business to use advanced tools. Further, for delivering fast food items
advanced techniques can be used so that quality related issues can be tackled easily. No doubt
high cost has to be incurred in adopting new technology but overall results will be favorable for
company through its adoption.
Legal: This factor is linked with laws which new restaurant is required to follow. Generally
MAG food has to comply with legal law associated with payment of duties and taxes. Further,
other type of regulations are also required to be followed such as employment etc.
Environmental: Overall operations carried out by businesses are adversely affecting surrounding
and due to this reason government has introduced guidelines for protecting environment.
Therefore, MAG food is also required to take corrective actions for saving environment where
recycling technique can be employed for environmental protection. Through this adverse impact
on surrounding can be tackled easily by business enterprise.
So, these are some of the key factors which affects business productivity and in turn it is
required for business to take corrective actions so that performance may not be influenced due to
presence of various factors.
4.4 SWOT analysis
The influences from the internal and external environment have present favourable and
adverse effect on the organisation and activities. Since the company seeks to produce best for
quality, and yet affordable and dependable source of breakfast, it is necessary to anayze its
strengths and weaknesses, opportunities and threats (SWOT) in attaining its overall objectives.
The SWOT analysis is displayed in the table below.
Analysis of Strengths, Weaknesses, Opportunities and Threats (SWOT)
Positive Factors Negative Factors
26

Internal
Functioning governance systems
Skilled and efficient team of managers
High inventory turnover rate
Numerous sources of revenue due to
diversification large customer base
Locational advantage in Accra and
Tema
Low employee and management
turnover
Availability of demanded recipes
Use of renewable energy in preparing
food
Inadequate finance for implementation
Loyalty of some customers to existing
restaurants
External A growing market demand for
breakfast food
Lack of numerous competitors in the
location of operation
Existence of association of large
supplier base
Heavy traffic build up in the morning
of weekdays
An ever-growing income of Ghanaian
middle-income earners
Fluctuations in the exchange rate
Difficulty in accessing bank loans, and
high cost of borrowing
Frequent power outages
High utility tariffs
High frequency of motor accidents on
highways
4.5 M's model analysis
M’s model is based on 5 factors and it has been witnessed that business who has obtained
5 M’s is able to successfully operate in the market. In case of MAG food also it is necessary for
business to identify five key elements such as money, manpower, methods, materials and
machinery. Further, they need to be used in proper manner so that market performance of the
business can be enhanced efficiently.
27

Money: This factor is associated with financial feasibility of MAG food in the market where
owner has invested personal savings in the business. Apart from this, bank loan has also been
taken with the motive to successfully carry out business operations in the market. Further, it is
necessary for company to indulge into practices of proper financial planning so that finance as a
resource can be utilized efficiently. In short, money power of MAG food is quite strong where
all the major expenses of enterprise can be recovered easily through proper planning.
Manpower: It is regarded as one of the most crucial factor where for conducting overall
business operations it is necessary to have skilled workforce within the company. Further, MAG
food has to appoint right waiters and staff members so that they can serve customers in better
manner. Employing efficient workforce can surely allow MAG food in gaining competitive
advantage where large number of customers can be satisfied efficiently by business.
Methods: All the services will be delivered to customers through appropriate process. MAG food
will design proper processes (Pichler, Ziegler, Aldrian and Allerberger, 2014). The range of
method starts only when customer places order and main motive of company is to provide best
breakfast to the customers which can be above their expectation level.
Materials: All the range of materials that will be employed for delivering breakfast service will
be of high quality. Further, MAG food will purchase materials from different suppliers operating
in the market. Apart from this, good quality material will allow in enhancing satisfaction level of
target market and will enhance profitability level of business also.
Machine: As MAG food will not carry out overall operations on wider basis and due to this
reason no such advanced tools will be employed by business. Apart from this, some machines
will be used for preparing food item and this will lead to better customer satisfaction.
Therefore, in this way all the five M’s are quite significant for business and their proper
utilization can be beneficial for business.
4.6 Selection of possible strategies
4.6.1 Porters generic
Porter generic takes into consideration most effective strategies with the help of which
business performance can be enhanced easily. Further, such strategies which are beneficial for
MAG food has been discussed below:
28

Cost leadership: This strategy is adopted by business when firm stands on top in the market in
terms of cost. Further, there is an opportunity for MAG food to become leader in the market on
the basis of cost. Low prices can be set in starting which are adequate enough to recover the
major costs. Through this strategy desired goals of enterprise can be accomplished easily.
Moreover, this will act as major source of customer attraction and business performance can be
enhanced easily. On the basis of cost business can become leader in the market and in near future
there is an opportunity to dominate the entire sector.
Differentiation: As MAG food is carrying out operations in the market where competition level
is quite high and due to this reason differentiation strategy is required to be adopted. MAG food
will differentiate its products on the basis of quality where breakfast items will be of high
quality. Through this business will be able to satisfy requirement of its target market in efficient
manner.
Focus: In order to succeed in the market it is necessary for MAG food to focus on one selected
group. Company will focus on each and every type of individual as breakfast items are consumed
by every consumer. By focusing on the actual need of target market it is possible for business to
gain competitive edge where long term benefits can be obtained easily along with the
opportunities present in the market (Pompe and Korthals, 2010). This will be favorable for
company in every possible manner and can allow in expanding business operations in near
future.
Therefore, all these strategies will be undertaken by business for its smooth functioning
in the market.
4.6.2 Blue ocean strategy
This type of strategy is associated with level of competition prevailing in the market.
Further, blue ocean is all about operating business in the market where level of competition is
quite less. The concept of value innovation provides a base in eliminating large number of factor
where the industry competes and enhancing level of market share by creating value which has
not been delivered by industry. This strategy strongly relies on four key questions which have
been discussed below and it is necessary for MAG food to answer all these questions for its
smooth functioning. Such questions are:
29

Raise: This question is associated with what factor should be raised well above the industry
standard. So, quality is one of the main factor which MAG food is required to raise as before
consuming any sort of item consumers ensure that quality of the service is up to the market or
above than that. By focusing on this question it is possible for new business to gain expected
results and it can allow in gaining competitive advantage.
Eliminate: MAG food will eliminate all the loopholes which are being present in its internal
processes. Further, this can support in reducing the overall time required in carrying out
operations and in turn large number of customers can be served in short period of time.
Reduce: MAG food is required to reduce cost of delivering service. Further, main expenses are
purchasing raw material, wages to employees etc. Therefore, control on all these areas is needed
so that profit margin can be enhanced.
Create: MAG food will offer high quality service to the target market and along with this their
feedback will also be taken so that it will support in product development. Breakfast range will
be unique and prices will be low for customer attraction purpose.
4.7 Development of appropriate business model
4.7.1 Business canvas model
Key partner
 Providers
of food,
raw
material,
vegetables
etc.
Key activities
 Delivering
different
type of
breakfast
items to
customers
as per their
need
 Assessing
demand for
food items
in the
market
Value
proposition
 High
quality
food
items
that
can
provid
e
remark
able
experi
ence to
custo
mers
 A new
type of
experi
Relationships
 Social
networkin
g site
such as
Facebook,
twitter
 Text
messagin
g and
emails
Clients
 Wealt
hy
clients
30

ence
that
starts
when
custo
mers
consu
me
food
items
of
MAG
food
Key Resources
 Financial
 Physical
 Manpower
Channels
 Restauran
t
 Media
Cost Centers
 Main cost involve: Food, wages along
with other form of assets purchased
Revenue Streams
 Selling of breakfast items
Above shown is the business canvas model of MAG food. Further, it highlights the key
activities which need to be carried out by organization for its smooth functioning. Key partner is
one of the main stream where supplier of raw material, food and vegetable will provide
assistance to new business. MAG food will offer breakfast and for the same food materials are
required for preparing of consumable item. Model of firm highlights the key activities where the
major one involves offering different type of breakfast item to target market on the basis of their
actual need. Business is required to identify the real demand for type of breakfast items in the
market. This will be main activities of new business which will be carried out in proper manner
so that organizational performance may not be influenced due to this. Apart from this value
proposition is also present where business will develop its value with the help of quality as a tool
31

and in turn high quality product will be delivered to customers in the market. For building
relationship with target market social media along with other form of sources will be employed
by business for providing better support to customers. Moreover, the main resources required for
conducting affairs of MAG food involves physical, human and technological. The main revenue
stream in case of new business will be selling breakfast items to customers. This will support in
recovering the major costs and can be advantageous for organization in every possible manner.
Apart from this, the main areas where cost will be allocated involve purchase of raw material,
wages to employees etc. Therefore, in this way business canvas model provides idea in relation
with major operations of the business and the way in which they will be carried out.
32

CHAPTER -5
5.0 BUSINESS PLAN
5.1 Industry analysis
The restaurant industry is highly fragmented and competitive. Each company within this
field has low capital costs and low margins, which create this high intensity of competition.
Suppliers do not have a great deal of power in setting and negotiating the prices of their
products and services to the existing restaurants. This is due to the fact that the suppliers who
absorb the greatest amounts goods in the restaurant industry are small food distribution
companies scattered all across the country. These companies are not so consolidated, very
limited number of substitute customers. Therefore, these companies cannot be able to set
whatever price they wish to. Furthermore, labour is relatively cheap in the industry, and can
foster greater productivity and profitability.
To sustain the market, diverse strategies with regarded to product orientation and
customer orientation will be undertaken towards meeting the need of the growing market. On
product basis, total quality management (TQM) approaches will be adopted to ensure that each
pack of a product meets a high level of quality desired by the customers. Also, diverse recipes
will be used in developing the products, so as to give the customer a lot of varieties to choose
from. Towards, customer orientation, much more customer focus strategies will be adopted
towards meeting their needs to a level that will satisfy them.
5.2 Ansoff Matrix
The particular model is being developed by H Igor Ansoff that assist the organization in
deciding its market as well as products and services growth through focus on whether they are
new or existing. The particular model would assist MAG Food and Delivery Services Limited in
making analysis of the growth of its products as well as service existence.
Market penetration
As the breakfast products of MAG Food and Delivery Services Limited are already in
presence thus proposed business can make adoption of market penetration strategy in order to
attract the customers. This can be done by the means making use of promotional strategies like
discount, sales, buy one get one free strategies as well as combo packs.
33

Product development
Such strategy is being adopted by the MAG Food and Delivery Services Limited in order
to make development of its product. This would be carried out by making the products more
appealing and more quality by the means of creating healthy and safe food product with the
features that customers have never viewed before. With the new dishes added in the menu the
customer would feel delighted as they get variety of offerings within the breakfast. Along with
this good quality of ingredients can assist in development of dish which the customer desires for.
Market development
The company would expand its segmentation in the new market as well. Moreover the
new start up business is making efforts in improving the price strategy and also making the
plating more attractive that would be included in the new market development (Powell, Jacob
and Chapman, 2011). The proposed business MAG Food and Delivery Services Limited would
get sound reputation and therefore it is able to set new branches in other regions as well as
countries by the means of franchise strategy. The market development strategy has effectiveness
for the business in terms that it would act as an aid in creating sound image of the company
across the globe.
Diversification
The company can diversify in related sector. This can be relating to starting up with
selling the dinner and lunch dishes as well. Such would serve to the healthy needs of the
customers. The company can also diversify in unrelated activities that can entertainment or
cosmetic etc. in order build its sound image in the market. This will draw image of the company
as the one that sells products in reasonable prices. These are the most suitable means for
diversification that new business can adopt.
5.3 Market analysis
The wider market for the company’s produce include all city-dwellers, especially those in
Accra and Tema. Our target market are the middle-income city dwellers in the Accra and Tema
townships. The Greater Accra region is the most populous region in Ghana. The population of
Accra alone, the national capital of Ghana and the regional capital, stood at 2.27 millions as at
2012. Tema, the industrial city of Ghana, is the eleventh most populous town in Ghana, with a
population size of 165,000. Our market size is estimated at 0.5 percent of Accra’s population and
34

1 percent of the population of Tema. This makes up 13,000 customers of the company, with
anticipated increases as it gain grounds. These days, customers desire fast but healthy food that
will appeal to their aesthetic tastes and is provided in a comfortable atmosphere. Furthermore,
some customers also need a facility that can provide them with delicious, convenient take-away
meals when there is no opportunity to cook at home before leaving for work. All of this needs to
be delivered to the customer with great level of satisfaction, and at a good margin.
5.4 Key customers
The analysis of the market and key customers is the key to success for the every business.
In the present era there is presence of greater number of individual who possess the demand of
hygienic as well as healthy food so that they are able to maintain healthy living. Urban Areas in
the Greater Accra region constitute the initial target market for Mag Ltd. Such kind of areas are
highly concentrated with organizations of several charters. The demand for quality as well as
economical breakfast is increasing with few service providers such as Koko King meeting this
demand. Alternative means of getting breakfast are the “road side” vendors, however their
quality and hygienic standards remain questionable. With the analysis of the customer's demand
in the present market it has become feasible for the business start up such venture that has greater
demand in the market. The aim of the firm is to reach customers that will assist in accomplishing
the mission, vision, goals as well as objectives of the organization to a greater extent. It is
significant for the company to target the key customers as they are biggest source of income for
the new business.
There is greater importance among the firm towards making analysis of its target market
as such would assist the new business in surviving in the market for long run course of time. As
the new business is targeting middle-income city dwellers in the Accra and Tema townships thus
it focus would be on selling products at economical prices and in accordance with the needs as
well as expectation of the market. There is huge significance of the proposed business in terms
that it helps in offering hygienic and quality food to the customers. It is significant for the
company to analyse the breakfast requirement of the customers in terms of the one who are
having busy schedule and are not able to prepare breakfast. For them home delivery services in
offices and corporations would be made so as to offer them greater convenience and comfort.
This would assist in increasing their satisfaction level to a significant level. The customers have
35

power to determine the success and failure of any business. Thus their requirement has to be
accounted so that business can sustain in the market. Moreover the target market needs to be
such that it possess sufficient requirement of the proposed business plan to start up.
5.5 Marketing plan
5.5.1 Marketing strategy
For the established business market, the company will focus on specific companies with
their breakfast needs. For individuals, who consist of workers and road users, the company will
leverage on word-of-mouth recommendations, probably depending on business customers.
The business has the potential of providing large volume of sales to the company during
the peak hours of 7 a.m. to 10 a.m., both through street sales and delivery orders to workers and
established businesses. Satisfaction of this groups will provide a vital long-term revenue stream.
For the established business market, the company plans to do specific target marketing through
flyers, business discounts, billboards, and creating a record of fast delivery.
For the individual groups seeking breakfast, or take-home meals, it is necessary for the
company to build an effective word-of-mouth marketing strategy. The company will do this
slowly, realizing that much of this will grow from the satisfaction derived by customers of the
market. The company will also plan and undertake a number of joint marketing efforts with and
advertiser by producing and distributing of a referral book to be given to various individuals.
This in turn would help to drive our word-of-mouth marketing efforts.
5.5.2 Marketing methods
Marketing being the most important consideration of each and every enterprise is hereby
required to acquire an equivalent postulation with tactical application of its affiliated methods. It
is basically an interactive tool for making continual communication with the potent client's and
users. It is hereby in association with the new business proposal of MAG Food and Delivery
Services Limited where it has established a restaurant with breakfast services for the consumers.
Therefore, on outlining the eminent methods of marketing, it has been ascertained that these
procedures consist of some pivotal steps of marketing. It is where pricing of products, promotion
via advertisement, distribution of goods and services by together performing some other relative
measures of public relation are the major associative elements of marketing.
36

With an analogous reference to it, the recent business proposal is hereby referred to focus
upon the pricing of its offerings. It is to fundamentally correlate with its economic nature of
business where they are hereby offering reasonable products to their consumers. However, the
market standards will definitely make some major influence on the pricing standard of MAG
Food and Delivery Services Limited. It is thence important for the designated company to make
a primary understanding of pricing where it is depicts to be a foremost cogitation of the firms in
order to determine the price structure of their goods and services.
It tends to reflect a dual consideration of the establishment where a considerable set up of
price directly impacts upon the buying decision of the users. In addition to this, it together
impacts upon the economic stipulation of the venture by significantly determining their levels of
earning. In such case, MAG Food and Delivery Services Limited will hereby tend to implicate
some impeccable strategies of pricing in order to fix the cost structure of their offered goods and
services. In context to which, their exists total three distinct sorts of pricing strategies that are
named as penetration, cost based and psychological method of pricing. MAG Food and Delivery
Services Limited is hereby referring to the penetration strategy of pricing in order to set up a
lower cost structure of their goods and services. It is considered to be a beneficial tact for the
designated cooperation where they have depicted to be the new entrants of the marketplace. This
strategy is thus referred to be a leafing assistance to such organisations who begin with a lower
pace by ultimately reaching to a succeeding level of success.
5.5.3 Marketing communication
This section is yet another major consideration of the start up businesses where they are
hereby required to adopt some substantial means for interacting with the customers in a
respectable manner. It has another leading sense of broadcasting the users about their active
presence in the market where they are also required to communicate them about their offered
products and services. For which, there exists some prominent tools of communication for
making a precise interaction with the potential number of consumers in the marketplace. This
involves some laid down procedures of direct marketing, advertisement, sales promotion and
conducting public relation measures, etc. The recent business plan of MAG Food and Delivery
Services Limited is enormously focused at two leading methods of market communication that
has depicted some fine measures of advertisement and direct selling.
37

Advertisement is however an extended procedure that further includes varied other
affiliation of promoting the product via television, newspapers, magazines, hoardings, etc.
However, the recent trend is largely emphasizing upon some newer methods of social media
equipments that tends to attract large number of users. Advertisement is referred to be an
assertive tool that aids the establishments to set realistic goals of achievement. It is basically in
order to outline those measures that they actually want to reveal their customers. This is for
instance to state about a realistic goal of MAG Food and Delivery Services Limited where they
are tending to serve healthy food to their consumers.
With context to which, they can hereby use this peculiar cogitation in their advertisement
strategies to fetch a liable interest of more number of users towards their offerings. It is however
referred to be a cost effective strategy that will require sufficient amount of funding with an
orderly arrangement of their investing budget. This will also tend to determine a particular period
of time in which they will be launching their strategy into the practical world. It is mainly due to
a requisite amount of time that will be taken up to formulate efficient advertising strategies with
liable investment of funds. Direct marketing is termed as another major consideration of MAG
Food and Delivery Services Limited where it is one of most fastidious approach of marketing the
products and services.
It however requires a targeted set of customers with a direct format of interacting with
them. Such spontaneous measure will hereby require the designated firm to appoint distinct team
of sales and marketing individuals who can directly communicate with the consumers. In
addition to this, such type of format will also necessitate the entity to build some technical
constituents to transact in an effortless way via mail and telephonic calls, etc. Printed set of
catalogues to obtain a direct response from the customers is also depicted to be a relative
measure of such marketing tact. Segmenting the market in smaller division is yet another
additive measure to precisely target the clients. This will substantially benefit the newly
associated food joint with such impelling modes of promotion that will attract more number of
customers to buy their offered products and services.
5.5.4 Distribution system
The system of distribution is referred to as sequential flow of the process, systems as well
as activities that have been devised as well as linked for facilitating as well as monitoring the
38

movement of goods and services from the sources to the consumer. Distribution process is
regarded as the method of the firm that assist in movement of of the product and services from
where it has been produced to customers or market or to the point of sales. In marketing of goods
the distribution is being done by two kinds of channels. This includes direct distribution channel
and another is indirect channel of distribution. The organization would operate two kitchens, one
in Accra, and the other at Tema. These kitchens will serve as the site for producing the breakfast
items for the consuming populace. The organization would makes sales by the means direct
selling strategy. Thus it would make direct delivery to the customers with no intermediaries. The
MAG Food and Delivery Services Limited would open outlet at different locations and also
offers delivery services at customer's homes and offices in order to fulfill their needs. This would
offer them greater deal of satisfaction that result in increasing the sales as well as profitability of
the new business. The company will have its own warehouse and it will make sales directly to
the market. The firm will take feedback from the customers so that it can bring improvement in
its delivery services to a greater extent. Along with this other strategies would be executed after
certain years of operations when the firm would attain stability.
In the present era there is major role played with respect to channel of distribution as it
assist in offering convenience to the customers. It is significant that distribution channel is in
accordance with the requirement of the target market. As direct selling is being done thus this
would minimize the cost for the customers. The distribution to the customer will be done through
home delivery. This requires the customers to place an order with the restaurant. This can be by
the means of internet or phone. This has advantage in terms that customers are able to receive
quick delivery without wastage of time. It is significant as through this customers can attain
quality product at their places only. Thus in order to take breakfast they are not required to hold
at roadside vendors that are offering unhygienic food.
5.5.5 Life cycle changes in the use of marketing mix
Product
The breakfast products of Mag Food and Delivery Services Limited include the
following:
 Tom brown
 Wheat porridge
39

 Rice porridge
 Millet porridge
 Oat meal
 Green tea Fruit meal
Place
The place of business is targeted at all district capitals in Ghana. However, the first three
years of business will take place in the Accra and Tema Metropolitan Assemblies, which are all
in the Greater Accra region of Ghana. The success in these two zones will warrant further
expansion to all districts capitals in Ghana. These two locations are chosen for the start up
because they have the largest number of the workforce of Ghana, most of whom fall into the
middle class.
People
The target customers are urban and peri-urban dwellers, who broadly fall into the middle
class category of the workforce, and mostly busy
Promotion
The product will reach its target market through direct selling on busy road networks in
the cities of Accra and Tema.
Physical evidence
The company will operate two kitchens, one in Accra, and the other at Tema. These
kitchens will serve as the site for producing the breakfast items for the consuming populace.
Process
The process for producing the breakfast products involve cooking recipe. The cooking
process will be transferred to two loyal employees through training, so as to keep the trade secret
the company uses in producing its breakfast items.
Price
The Company plans to use the market demand approach in setting out the price for the
product. Through observing the market prices, the company will set a price that is a bit lower
than that of the major competitors, so as to beat the competition towards becoming a market
leader
40

5.5.6 Marketing segmentation
Our market segment consists of established business, workers and other road pliers.
Segments of the market
The segment market is expected to grow as follows:
Segmentation of the market
Growth
rate Year 1 Year 2 Year 3
Established
businesses 0.0% 600 600
6
00
Workers 1.5% 6,600 6,699
6,79
9
Road users 2.0% 22,800 23,256
23,72
1
------------- ------------- -------------
Total 30,000 30,555
31,12
1
========= ========= =========
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5.6 Organizational plan
5.6.1 Ownership structure
This is a medium-sized company with our employee categories including counter clerks,
kitchen help, sales person and busboys. Twenty-four (24) employees will be engaged,
comprising the promoter, plus four counter clerks, six kitchen staff, ten sales persons, and three
delivery personnel. Currently the business lacks a dedicated marketing manager and an
accountant. The company will soon advertise these positions for filling. The organizational
structure is displayed below:
5.6.2 Management team background
The Chief Executive Officer (CEO) will be responsible for the overall functioning of the
operations of the company. He or she need to have experience in food processing or culinary.
The Human Resource (HR) manager shall oversee all affairs that deals with the need of
employees of the company, and will ensure that the well-being of all employees is maintained.
Among other duties, he/she will be responsible for recruitment and retirement of employees,
determination of wage and salary schemes, employee bonuses and fringe benefits.
42

The financial manager will be responsible for overseeing all monetary transactions and
financial decisions of the company. He/she shall be responsible for the overall accounting needs
of the company, including payroll accounting, costing, management accounting and reporting.
He/she shall be answerable to the CEO and have an accounts clerk and internal auditor reporting
to him/her
The marketing manager shall undertake duties aimed at selling the products of the
company. Such measure include advertising, sale products, customer relationship management
and introduction of after-sales services.
The production manager shall be responsible for the overall operation of the kitchen.
He/she shall be responsible for allocating materials and labour to the various units of the kitchen,
and in designing recipes for preparing the breakfast meals.
The purchasing manager shall be responsible for buying all supplies and materials needed
for the effective functioning of the company.
5.6.3 Human resource management
The concept of human resource management is function in firm that is being devised to
maximize the performance of personnel in service of an employer's strategic objective.
Employees are the asset of the business. Without their performance the organization is not able
to attain its target in an effective manner. Human resource management is referred to as the
management of the work relating issues, policies of employment as well as relationship among
the employees as well as business in and out of the work place through usage of suitable policies.
MAG Food and Delivery Services Limited feels that by means of putting suitable practices of
HR in place the company is able to increase the success of the business as it is significant to view
the well being as well as welfare of the personnel. The organization would make implementation
of the policies that would assist in personal development of the employees. Further this would
assist in motivating them and keeping them committed in relation to the mission, vision, goals as
well as objectives of the business to a greater extent. In addition to this health benefits and
reward benefits would assist in maintaining healthy work life for the personnel to a significant
level. MAG Food and Delivery Services Limited would be engaged in providing several
benefits, motivation and training to the personnel so that they can delivery standard quality of
breakfast to the customers without minimal wastage of time. It is significant to keep a track on
43

the satisfaction level among the personnel as in case there is more employee turnover then this
can result in affecting the organizational performance. Thus it becomes important for the
business to increase the morale of the personnel by offering them salary benefits as well as
rewards for better performance. This acts as an aid in making employees satisfied and inspires
them to perform with fullest zeal and enthusiasm. The role of human resource management can
be greatly viewed towards providing quality services to the customers. In addition to this they
possess suitable role in providing greater convenience to the customers as they are self motivated
when they are offered things as per their expectations. MAG Food and Delivery Services
Limited has organizational structure that presents the manner in which the personnel needs to
treated at several layers of the firm. The lower level employees requires greater motivation and
they are the real person who are involved in execution of the plan. Thus such needs to be taken
care off when providing benefits to the employees.
5.7 Operation plan
5.7.1 Location
In the first three years of operations, MAG Food and Delivery Services Limited will rent
premises that would be located in Accra and Tema townships. This is considered as the perfect
location for the organization as it is the centre of all the firm and thus it is surrounded by the
office areas and corporates, retail shops as well as other. Further it is easy for all the forms of
businesses to gain advantage from the breakfast available at economical prices. The location has
major role and it assist in determining whether the business has potential to attract large mass or
not.
5.7.2 Flow of orders for goods and services
For the purpose of maximizing the productivity MAG Food and Delivery Services
Limited is required to have suitable flow of order. The customer places an order at the reception.
Further the order needs to be communicated to the kitchen staff so that they are able to make
preparation of food as per the specific requirement of the customers. Following this the address
the amount that has to be collected for the good is informed to the delivery person so that
individual can provide accurate food item at the correct address and in right amount. Later the
delivery person delivers the parcel, collects the amount and give it the the owner. This process
will be followed in case the order has been placed through means of telephone or internet.
44

However in case the customer reach the outlet then at first order is taken by waiter and then order
needs to be communicated to the kitchen staff so that preparation of food can be done. Later it is
being served to the customers. At the end bill is generated and it is offered to the customers. The
production manager has responsibility that while the preparation of food is done he has to keep
an eye on the work of kitchen staff. This is in terms that whether they are preparing the food
within standard quality or not.
5.7.3 Technology utilization
MAG food will employ different type of new tools with the motive to deliver effective services
to the target market. As business is totally newly established then in such case it is not possible
to employ tools which are costly as it can lead to situation of inadequacy of funds within the
firm. Further, technology employed will be linked with preparation of breakfast items that can be
of high quality and can assist in enhancing customer satisfaction level also. Moreover, time to
time business will be updated regarding new technology in the market so that level of customer
satisfaction can be well maintained through this.
5.8 Risk assessment
5.8.1 BCG matrix
This model is considered to be most effective as through this business can easily plan its
portfolio. It focuses on market share along with growth of business which is segregated into four
main categories and it involves stars, question mark, cash cows and dogs. All the main stages
present in BCG matrix have been discussed below:
Stars: It is regarded as one of the most effective stage where market share along with growth of
business is considered to be high. Further, in order to reach into this stage MAG food is required
to allocate larger funds and has to focus on proper service delivery. Through this it is possible to
grab opportunities being present in the business environment.
Cash cows: In this stage market growth rate of business is low and market share is high. In case
if MAG food obtains more income than business will consume then it states that assets of
business are larger than market growth and due to this reason small investment is required in
other crucial activities.
Question mark: It represents high market growth rate and low market share. Further, when
market growth is high then it is advantageous for MAG food to obtain larger cash. Therefore,
45

overall investment opportunities will increase and new business can easily explore different
markets.
Dogs: It is the last stage where low growth along with market share is being present. As MAG
food is newly established in the market and due to this basic reason it is necessary for business to
avoid reaching into this stage. Further, in case if low market share along with growth is being
present then business is required to shut down its operations which is having adverse impact on
company.
Therefore, these are some of the key stage in BCG matrix which needs to be considered by new
business for its overall growth in the market.
5.8.2 Exit strategy
MAG food is not facing any type of issue in the market that can lead to failure of
business. No doubt large numbers of challenges are present such as competition, legal barriers
etc due to which exit strategy has to be employed by company. But in case of MAG food this is
not all applicable when it is not required for business to adopt any sort of exit strategy. Apart
from this, main focus of business is on service development where range of breakfast items will
be offered to target market as per their expectations and this will be beneficial for entire business
in the market. The exit strategy which can be adopted by MAG food in worst condition is selling
off business to other party in case if all the operations are not carried out successfully. Further, it
is necessary that strategies of business to sustain in the market must be effective as this will
provide kind of support to carry out overall operations. Moreover, organization has set proper
direction so that there is no need to adopt any kind of exit strategy. Due to this basic reason any
type of exit strategy has not been employed by MAG food.
5.9 Time table for operations
MAG aims to enhance its service range and business wants to operate efficiently in the
market. Therefore, it is necessary to develop effective time table which highlights the range of
critical activities along with the actual time required in conducting them. Below shown is the
Gantt chart which shows major activities along with the time of 12 weeks.
Key Activities
1st
Wee
k
2nd &
3rd
Week
4th
Wee
k
5th
Wee
k
6th
Wee
k
7th
Week
8th &
9th
Week
10th
Wee
k
11th
Wee
k
12th
Wee
k
46

Registration of
business
Purchasing all
the equipments
required
Appointing chefs
Deciding
breakfast items to
be served
Finalizing the
main items
Searching for
suppliers
Framing policies
of the firm
Searching for
physical outlet
and starting
operations
Developing
marketing
activities
Promotion
through phamlets
and social media
Obtaining
feedback from
target market
Bringing
modification in
the service range
Above shown is the time table which will be followed by MAG food at the time of
rendering service to the target market. Further, it is necessary for company to follow all the
activities in proper sequence so that business performance can be enhanced through this. Apart
from this, main focus will be on development of skills of chefs so that they can easily offer
unique type of breakfast items to the target market. Moreover, effective marketing strategies are
being required so that majority of the customers may know about service range of MAG food
and this in turn can act as development tool for business in the market. No doubt in starting to
gain customer response is quite difficult but it will be possible through various types of
47

marketing strategies. The time table framed can surely allow business in gaining competitive
edge and its long term objectives can be accomplished easily. Therefore, in this the time table of
business can be surely fruitful and can be beneficial for long term also.
5.10 Financial plan
5.10.1 Financial need of the company
Described below are the financial need of the company.
Table 1: Financial need of the company
Item Amount (GH₵)
Office building 30,000
Furniture and fitting 24,750
Working capital 45,250
------------
100,000
5.10.2 Major suppositions or assumptions
 The financial plan outlines the outlook of the company’s performance and position for
the first five years of operations in the agricultural businesses.
 For the purpose of the projected financial statements, a 12-month year period is used.
Therefore, the details were projected on monthly basis, which were then summarized into
annual figures.
 All amounts are expressed in Ghana Cedis (GH₵), unless otherwise stated. Various
amounts stated in foreign currencies, were converted at the prevailing exchange rate
 Corporate taxes in Ghana currently stand at 25 percent of profit before tax.
48

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50

APPENDICES
Notes to the financial plan
2. The amount for property, plant and equipment (PPE) represents the capital expenditure to
incur in acquiring and installing the office furniture and equipment, and other tangible non-
current assets. PPE at various rates depending on the estimated economic lifespan of the assets
on straight line basis. It is expected that purchase and installation of plants and other tangible
non-current assets will be carried out within the first of operation. The PPE schedule shown
below.
Table 4: Schedule of property, plants and equipment
Cost Year 1 Year 2 Year 3
Office building 30,000 30,000 380,000
Furniture and fitting 24,750 24,750 24,750
Motor vehicles - 45,000 395,000
------------ ------------ ------------
54,750 99,750 799,750
========= ========= =========
Depreciation Year 1 Year 2 Year 3
Office building 600 600 7,600
Furniture and fitting 4,950 4,950 4,950
Motor vehicles - 11,250 98,750
------------ ------------ ------------
5,550 16,800 111,300
========= ========= =========
Net book value Year 1 Year 2 Year 3
Office building 29,400 28,800 371,200
Furniture and fitting 19,800 14,850 9,900
Motor vehicles - 33,750 285,000
------------ ------------ ------------
49,200 77,400 666,100
51

========= ========= =========
3. The company is authorized with 100,000 ordinary share of no par value. The company has
issued 1,000 of these shares for a consideration of GH₵97,750.
4. Deferred taxes result for the difference of taxes resulting from capital allowance. The standard
tax rate of 25% was applied for to determine the current tax liability. Taxes are paid in the next
financial year after they have been assessed by the tax authorities.
5. Revenue indicates the amount generated from delivery of service to customers. The details are
shown below:
Table 5: Forecasted yearly sales quantity (in packs)
Number of packs of products Year 1 Year 2 Year 3
Tom brown 50,000 54,000 61,000
Wheat porridge 35,000 40,000 52,000
Rice porridge 50,000 56,000 70,000
Millet porridge 10,000 11,500 11,800
Oat meal 35,000 38,000 45,000
Green tea 10,000 12,000 18,000
Fruit meal 53,000 55,000 60,000
Table 6: forecast of selling prices (in GH₵)
Price per pack Year 1 Year 2 Year 3
Tom brown 1.7 1.7 1.7
Wheat porridge 1.8 1.8 1.8
Rice porridge 1.7 1.7 1.7
Millet porridge 2.0 2.0 2.1
Oat meal 2.5 2.5 2.6
Green tea 2.2 2.2 2.3
Fruit meal 2.7 2.7 2.8
Table 7: Forecast of sales revenue (in GH₵)
52

Revenue from sales Year 1 Year 2 Year 3
Tom brown 85,000 92,718 106,293
Wheat porridge 63,000 72,720 95,940
Rice porridge 85,000 96,152 121,975
Millet porridge 20,000 23,230 24,190
Oat meal 87,500 95,950 115,313
Green tea 22,000 26,664 40,590
Fruit meal 143,100 149,985 166,050
---------------- ---------------- ----------------
Total revenue 505,600 557,419 670,350
========== ========== ==========
6. Cost of sales basically constitutes all cost incurred in generating revenue for the given year,
and incidental expenses required to get products delivered. A detailed forecast of cost of sales is
below.
Table 8: Forecasted cost of sales
Cost of sales Year 1 Year 2 Year 3
Salary - kitchen staff
16,2
72 17,086
1
8,225
Cost of materials
114,12
0 119,826
127
,814
Carriage costs
20,8
00 21,840
2
3,296
------------ ------------- -------------
Total
151,19
2 158,752
169
,335
======= ========= ========
7. General and administrative expenses are all amounts to be incurred in ensuring day-to-day
running of the business. It generally constitutes wages and salaries of administrative (or office)
53