Entrepreneurship and Business Development: Herbal Cosmetics

This report discusses the feasibility of starting a new business of herbal cosmetics. It includes industry, market, organizational, and financial analysis. The report also covers the value chain and business canvas model in relation to the new business. The target market, competitive analysis, and advantages are also discussed.

ENTREPRENEURSHIP AND
BUSINESS DEVELOPMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
New business concept .................................................................................................................1
Assessment of industry, market, organisational and financial feasibility....................................1
Key components...........................................................................................................................5
Competitive analysis and its advantages......................................................................................7
Marketing-mix for Herbal cosmetics...........................................................................................8
STP analysis of Herbal cosmetics................................................................................................9
Qualitative and quantitative models...........................................................................................10
REFERENCE.................................................................................................................................12

INTRODUCTION
Business development and entrepreneurship concentrates on venture development. It is
very important to build such environment which is suitable for new venture. Advanced
technology is bringing unlimited opportunities for new company. Entrepreneurial mindset and
creativity is required to bring new ideas and make new markets which provides advantage to the
community and business. Basically business development is the idea or initiative which makes
business deficient and effective or in simple language it makes business better. Business
development bring more profit and revenue in the business. This report will discuss new
business idea, further it will conduct industry, organisation, market and financial analysis. It will
evaluate value chain and business canvas model in relation with new business. It will also
discuss quantitative and qualitative models to manage potential risks.
MAIN BODY
New business concept
New business which is taken in this study is 'Herbal cosmetics'. It includes skin and hair
care products. Skin care range includes cleansing, toner, moisturiser etc. and hair care involves
oil, serum, shampoo, conditioner etc. The reason for selecting this business idea because it is
high in demand. As companies are manufacturing chemical based cosmetics and that is
adversely affecting skin of people. Target market of herbal cosmetics are women of age group
between 16-45 years. Women of this age group uses cosmetics on daily basis so that is why they
require something herbal which do not damage their skin. Using chemical based products are not
good for the skin so that is why the demand of herbal cosmetics is increasing among consumers.
The products of herbal cosmetics will solve problem related to dandruff, hair fall, wrinkles,
acne, sun burn etc. It is better to launch that new product which are demanded by consumers. By
conducting research it is found that the demand for herbal cosmetics are high in the market. This
product will be sold throughout UK. Consumers can buy cosmetics by visiting stores or through
online. This business will involve owner and his team of workforces.
Assessment of industry, market, organisational and financial feasibility.
Industry feasibility:
1

It will be helpful for the company in checking attractiveness and importance of their
products and services. This will be explained through Porter's five forces.
Porter's five forces
Threat of new entry- it is low because initial capital which is required is huge. Although there is
no barrier for new firm but to set this business is complex. It is observed that growth
opportunities for herbal cosmetics are huge.
Supplier bargaining power- it is low because in this industry business will get many suppliers
which supply various range of raw materials (Björk, 2017).
Rivalry- it is high because there are lot of firms which are planning to enter in this industry
because there is lot of scope in this particular industry.
Buyer bargaining power- it is low because consumer does not have multiple options for herbal
cosmetics as there are very few companies which provide such products and then also those
companies are having less product range.
Threat of substitution- this is high because if customers can find herbal products to be expensive
then they can shift towards chemical based products which they were earlier using. As there will
be low switching cost for the consumers.
Market feasibility:
It is the study which involves market prediction, market profiling, market impact,
demographic studies etc. it will be explained through pestle and swot analysis.
PESTLE analysis:
Political factors- this factor have major impact on the business. Government can impose laws in
direct or indirect manner on the business. Herbal cosmetics have to follow consumer protection
stands which is laid by the government (Shadman and et.al., 2021).
Economic factors- these factor includes demand,market trends, currency fluctuations etc. beauty
sector helps in the economic growth of the country. Inflation rate can also affect the profitability
of herbal cosmetics.
Social factors- this factor includes lifestyle, attitude, beliefs etc. products of herbal cosmetics are
cruelty free so that will help them in increasing their market share. Herbal products can be used
by male member of the society also.
2

Technological factors- technology will help company in increasing their sales as they can
connect with the audience through digital platforms and can increase their revenue via online
sales.
Legal factors- there are various rules and regulations or laws which can bind company. Example
employment laws, tax laws etc. it is mandatory for herbal cosmetics company to pay minimum
wage to the employees which is fixed by the government.
Environmental factors- herbal cosmetics have to operate their business by considering all
environment related factors. They should have proper recycling and waste management system
so that environment will not get polluted in any manner.
SWOT analysis:
Strength- its biggest strength is it is chemical free cosmetics and also herbal cosmetics are
cruelty free. The company will able to attract more customers by doing publicity in the name of
herbal products.
Weakness- to start this business require high cost because it is having high cost structure.
Getting natural resources so that herbal cosmetics can be made is difficult. Distribution channel
is another challenge for the company.
Opportunities- new technologies are the biggest opportunity for herbal cosmetics. Company can
use advanced technology to make their production process fast and effective. International trade
barriers are loosened by various government. So this gives another opportunity for company to
get global sales.
Threats- there are many competitors which are their in the market. If substitute products are
available in the market with low price then if will definitely attract more customers. In cosmetic
industry often government brings new regulations for companies which are operating under this
sector.
Organisational feasibility:
It is the study which tells that how the information system is helping in fulfilling
objective of the company. It helps management in the decision-making process (Vardopoulos
and et.al., 2021).
Organisational culture plays vital role in influencing business activities and their employees.
Culture refers to the environment in which business activities takes place. Herbal cosmetic
company follows task culture. They assign group to their employees on the basis of their skills
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and knowledge. Employees of same skills and knowledge are placed in one group. Herbal
cosmetic will focus on providing flexible culture to their employees because if employee will
feel better then only goals of the company will get achieved.
Along with culture, leadership also plays vital role. Herbal cosmetic company will follow
democratic leadership style. This style is followed by majority of cosmetics companies and it is
also said that this leadership style helps in motivating employees. Leaders under this style
includes their employees in the decision making process. Workers are allowed to share their
views and opinions. By doing this employees also feel valuable and they work more hard so the
objectives of the organisation can be achieved (Ojasalo and Ojasalo, 2018). When company asks
views of their employees then there are chances that they will get innovative and creative ideas
from their young employees. It can be said that leadership style plays vital role in influencing
people of the organisation. So company has to select it carefully. There are various leadership
style and company chooses it according to their organisational culture and pattern.
Financial feasibility:
Particulars
Janu
ary
Febr
uary
Marc
h April May June July
Augu
st
Septe
mber
Octo
ber
Nove
mber
Dece
mber
Cash inflows
Opening cash
inflow 6000 8400
1260
8
1692
4.24
2134
8.888
2588
2.035
488
3052
3.692
7148
8
3527
3.783
7469
824
4013
2.141
2868
39
4509
8.501
2520
895
5017
2.497
1022
255
5535
3.653
9023
68
Sales revenue
1200
0
1224
0
1248
4.8
1273
4
1298
9
1324
9
1351
3.949
0311
68
1378
4.228
0117
914
1406
0
1434
1
1462
8
1492
0
Other income 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
Total cash 2100 2364 2809 3265 3733 4213 4703 5205 5719 6243 6780 7327
4

inflows 0 0 2.8 8.736
8.073
92
1.005
1264
7.641
7460
48
8.011
7587
738
2.053
8588
662
9.612
0755
572
0.430
1421
626
4.145
6031
038
Cash outflows
Material 3500 1836
1872.
72
1910.
1744
1948.
3778
88
1987.
3454
4576
2027.
0923
5467
52
2067.
6342
0176
87
2108.
9868
8580
41
2151.
1666
2352
02
2194.
1899
5599
06
2238.
0737
5511
04
Labour 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200
Other expenses 2400 2496 2596 2700 2808 2920
3036.
7656
4439
04 3158 3285 3416 3553 3695
Administration
expenses 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500
Total cash
outflows
1260
0
1103
2
1116
8.56
1130
9.848
1145
6.038
432
1160
7.312
4115
2
1176
3.857
9990
656
1192
5.870
4719
347
1209
3.552
6067
767
1226
7.114
9733
317
1244
6.776
2397
946
1263
2.763
4902
666
Cash deficit /
surplus or
closing cash
balance 8400
1260
8
1692
4
2134
9
2588
2
3052
4
3527
3.783
7469
824
4013
2
4509
9
5017
2
5535
4
6064
1
Key components
Value chain model-
Primary activity consists:
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Inbound logistics: there are many suppliers in the market from which herbal cosmetic can
purchase raw material (Porter's Value Chain., 2020). In order to get good quality of products at
less price company have to bargain with their suppliers.
Operations: herbal cosmetics is having machines which convert its raw materials in finished
goods.
Outbound logistics: in order to deliver products to customers herbal cosmetics uses store and its
website. With the help of store company is generating offline sales and website is helping in
generating online sales (Grabs and Ponte, 2019).
Marketing and sales: in order to attract customers company will provide special discount.
Service: they will provide after sale services. It is most important thing if business wanted to
retain their customers. If company will satisfy their customers then they will visit again.
Secondary activities:
Procurement: they will purchase fine quality of raw material. This department is vital because
they purchase raw material from which finished goods are made.
Human resource: company provides rewards and recognition to their employees so that they get
motivated and that will increase their productivity.
Technology: always adopt advanced technology for company's betterment. Technology helps
company in getting competitive advantage also. As with the help of new technology company
can able to manufacture same quantity is less time (Liverpool-Tasie and et.al., 2020).
Infrastructure: herbal cosmetic will create strong management system which can handle complex
problems.
Business model canvas-
Key partners
 supply
company
 fashion
magazines
 social
media
platforms
Key activities
 fulfilling
customer's
demand
 manufactu
ring goods
Value
propositions
 company
will
provide
good
quality
products
Customer
relationships
 providing
face to
face
service at
stores
 social
Customer
segments
 urban
women of
age group
16-45
years.
6

which can
satisfy
customer's
needs
media
Key resources
 beauty
experts
 Dermat
 R&D
Channels
 store sales
 online
sales
Cost structure
 the cost of this business will
be approx 500000.
Revenue streams
 it will be profit margin on the product.
Competitive analysis and its advantages
Basis Herbal Cosmetics Bloomtown Neel's Yard
Product The product will offer by
Herbal (organic) Cosmetics
are Hair serum, make-up kit,
foundation, skin care, Tea
Tree Mask fragrances and
others.
It provide all type of
products such as
Home & gifts, Face,
Candles, Body & bath
oil, Make-up brushes
(Steffen and et.al.,
2020).
Product offered by Neel's
Yard are Foundation,
anti-ageing cream, Make-
up tools, sunscream,
shampoo, face serum
Target
customer
Company target all age
group between 16-45
women.
Bloomtown's targeted
customers are 20-40
age group people.
Targeted men and women
both 20-45 age group.
USP The quality of products are
highest as compared to
others.
The price of products
are high.
Attract customer by send
them gifts.
Marketing Herbal cosmetics promote They use offline Marketing strategy
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strategy their products by social
media websites like
Instagram, Facebook and
whatsapp.
advertisement strategy
in terms of roadside
hoardings and posters
at airports
(Moongvicha, 2017).
followed by Neel Yards
are offline as well as
online.
Distribution
Channels
The channels will be U.K.,
Aldi, Walmart, Germany
and U.S.
Distribution channels
of Bloomtown are
U.S., China, SPAR
etc.
It only distribute product
in stores of U.K.
Market size Herbal cosmetics will
generate $7 million revenue
per year.
Revenue generated by
Bloomtown is $ 4
million per year.
$5 million revenue
generated by Neel yards.
Pricing
Strategy
Price skimming strategy will
follow by company.
Price penetration
strategy followed by
Bloomtown.
Neel yard also use price
penetration strategy for
their products.
Marketing-mix for Herbal cosmetics
Product- Herbal cosmetics will introduce wide range of products including make-up,
body & bath, fragrances etc. The major products are organic hair and face serum, foundation,
eye-shadow, skin care such as sunscreen, tea-tree face mask and sheet (Nugroho and Irena,
2017). All the products are 100% natural and there is no side effect of any product.
Place- Organization will be in UK and also provide all the products online in different
country like US, Germany. Herbal cosmetics will also available at Walmart, Aldi showroom.
There will be 30 stores in UK and nearby countries. At online stores product will available at
Nyka and Purplle, there are huge crowds of customers at these stores because it delivers product
at home.
Price- Herbal cosmetics will follow price skimming strategy to provide high quality
products to customers. This strategy enhances the customer base and improve the brand image
of the products in positive manner (Agustini, Athanasius and Retnawati, 2019). Organization
8

will enjoy economies scale and continuously work with their suppliers to organize supply chain
efficiently to reduces prices.
Promotion- Company will majorly follow social media marketing strategy to promote
their products. This also advertise by newspaper because it is start-up in UK and needs to
promote widely. It will use offers in festive season like Christmas and new year that helps to
build customer base for Herbal cosmetics. Also, sell their products online where Facebook,
Twitter can be used because more than 80% of the people uses these sites to remain updated.
Social media helps customer to share their experiences and reviews over the products.
People- Herbal cosmetics will focus on all people related to firm such as employees,
manager, accountant, etc. All these people play important role to assist the customer and in the
success of the organization. Firm will invest time and huge amount for training and development
of employees. The reward scheme will also start for employees to motivate them and appreciate
their work.
Physical evidence- Organisation will focus on well-designed interior of stores and other
tangible representation such as furniture where products showed, fantastic brochures and
business card to attract customer (Lin and et.al., 2018). Herbal cosmetics will also focus on
attractive packaging of products, that builds good image of branding for customers.
Process- Process of delivering Herbal cosmetics product to the customer that increases
the efficiency and effectiveness of the product. Here, customers do not have to wait because
there will be booking facility available for customers to book their chance that helps to minimize
customer’s time. They also provide online payment methods via debit & credit cards and paytm.
STP analysis of Herbal cosmetics
It refers to three steps of model which examines the products and services as well as way
of communication and their benefits to specific customer.
Segmentation- This is a process that used to segment the market into different bases
such as demographic, geographic, behavioural and psycho-graphic (Jan and Victor, 2019).
Herbal cosmetics will segment their market on the basis of demographic areas.
 Age- On the basis of age it would be segment the customers whose age is fall under the
category of 16-45 years.
 Gender- Company will focus on female only.
 Income- Average income people will target by organization.
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 Profession- Target customers would be students, working professionals, models, etc.
 Class- Firm will focus on mainly lower and middle class of people.
Targeting- The strategy which will be followed by the cited firm will be differentiated
marketing strategy which will help to focus on large group of market through effective means.
This type of strategy will also help the firm to stand out in the market (STP analysis, 2021). For
the startup companies this strategy is best suited because it assists to enter the market with very
average level of investment. Company will sell their products all over the world with surprising
variations and developed for UK market.
Positioning- This refers to position of the product in the market in relation to other
competition. The firm will gradually position in market through providing organic or herbal
cosmetics to customers that will help to introduce new kind of product that are difficult to find in
the global marketplace (Dost and et.al., 2019). It will also use various types of advertising and
sales promotion techniques so that it can establish a good image in the market that creates a
unique positioning in a market. Customers would appreciate the product because it is fully
organic and no side effect that also aid to grab attention of many customers.
Qualitative and quantitative models
Risk register model
risks likelihood impact Risk description Mitigation action
Financial risk medium high It is the risk
which increase
debt load of the
company (Axon,
2019).
This risk can be
mitigated by
maintaining
proper financial
reports.
Reputation risk high high This risk is
related to brand
value of
company.
Business can
mitigate this risk
through corporate
social
responsibility.
Operation risk medium medium It can occur due This risk can be
10

to natural
calamities like
flood or
earthquake.
Employee can
also arise this risk
and due to which
company can loss
money.
mitigate by
constructing good
infrastructure.
Compliance risk low medium This risks are
related to laws or
rules or
regulations.
It can be mitigate
by appointing
expert who can
guide company in
regards of rules
and regulations.
There are various risks from which bushiness are exposed to. In order to manage risk it s
important that business should take measures for risk prevention. Herbal cosmetics can be done
by taking insurance. Insurance will cover financial aspect of the risk. Training and development
of employees can also help in risk prevention (Register, 2017). If employee will learn how to
handle machinery or equipment properly then chances of risk will also decreased. Company can
also form risk management committee in which members of the committee will help employee
to take action so that risk can be mitigate.
CONCLUSION
Through this report it can be concluded that the new business idea is Herbal cosmetics.
It will target female member of the society whose age is between 16-45 age. The reason for
selecting this business idea because consumers wanted to get rid of chemical based cosmetics
and want something natural. This report has also discussed industry, organisation, market and
financial analysis. It has also discussed various other models also like value chain, business
canvas, qualitative and quantitative models.
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REFERENCE
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online
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Porter's Value Chain., 2020. [Online]. Available through:
<https://www.mindtools.com/pages/article/newSTR_66.htm>
STP analysis. 2021. [Online]. Available through: <https://www.smartinsights.com/digital-
marketing-strategy/customer-segmentation-targeting/segmentation-targeting-and-
positioning/>.
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