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Business Plan for Tea Shop in Barrie, Canada

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Added on  2021/04/17

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AI Summary
The provided document is a comprehensive business plan for a tea shop in Barrie, Canada. It includes an executive summary, company description, market analysis, product line, pricing strategy, marketing mix, operational plan, management team, financial statements, and references. The business plan focuses on the quality of products and services, emphasizing raw material and preliminary expenses in the first month. It also addresses the importance of environmental and pest analysis for strategic planning and highlights the benefits of tea over its substitutes.

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Running head: BUSINESS PLAN
Small Business Management: Business Plan
Name of the Student
Name of the University
Author’s note

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1BUSINESS PLAN
Executive summary
The purpose of this assignment is to develop a business for a tea café in Canada. The café is
located in a popular tourist place of Barrie city. The idea of the place is to offer the customers a
quaint and claim place to sit and enjoy the view as well as sip a good quality cup of tea. The café
will sell bakery items that compliment the tea as well as sell loose tea which is of far better
quality that what is available in the grocery stores commercially. The café will target the middle-
class localities as the primary consumer and the tourist of the city as the secondary customer.
The café not only wishes to provide people with good quality product or service they also aim to
educate people regarding the pros of tea consumption and how it is better than many other hot
beverages. With the help of the below stated promotional tools the company wishes to
communicate with the customers, build a valuable relation and establish the entity. It is a sole
proprietorship business and the owner is responsible and liable for all the operations and duties
of the business.
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Contents
Part one............................................................................................................................................3
1.1 The Product............................................................................................................................3
1.2 Target market.........................................................................................................................6
1.4 Location.................................................................................................................................8
1.5 Market potential...................................................................................................................10
1.6 The competition...................................................................................................................11
Part 2..............................................................................................................................................12
2.1 Pricing..................................................................................................................................12
2.2 Promotion Strategy..............................................................................................................14
2.3 Organisation.........................................................................................................................18
2.3 Organisation.........................................................................................................................18
2.4 Operations............................................................................................................................20
2.5 Financial Plans.....................................................................................................................23
Reference List:...............................................................................................................................26
Appendices................................................................................................................................30
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Part one
1.1 The Product
Drinking tea is known is often associated with sophistication and class, we intend to
bring the best flavors of the world to the customers so that they can experience the beauty of
brewing tea and clamming the senses (Summerfield, 2015). The café is going to be a warm hide
out for people who are looking for quaint, clam place to enjoy tea and time with friends and
loved ones. The idea of this kind of a “teahouse" experience is taken from the tea shops situated
in various hill stations of India. The customers will be open to experimenting with exotic tea
flavors from around the world as well as complement that with an assortment of various kinds of
bakery items form biscuits to pies etc (Alstete, 2014). The customers can also buy loose teas, tea
accessories like different types of kettles and cups from a collection of items from around the
world. There will also be premium chocolates, and gift baskets, along with souvenirs and gifts
for our tourist customers. Customers can also buy loose tea form our online website. The café
will apply to be a member of the Tea association of Canada (Summerfield, 2015).
The vision statement
The organisation seeks to be fist choice of the tourists as well as localities when it comes to
enjoying quality time with friends and loved ones.
The mission statement
To serve best quality tea from around the world and to offer a nostalgic good time to the
customers

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Goals of the company
To popularize the tea culture
To introduce a new kind of café in the locality
To educate people regarding the benefits of tea
It is a café and the customers can either choose to sit and enjoy a cup of tea and other
complimentary items from the bakery or they can take away their cup of tea in a to-go style
sipper they can also take away bakery items. The customers can buy loose tea form our variety of
tea section. The shop will also have tea accessories which are not easily available like tea cozies,
bone china tea sets etc.
Tea will be available from various parts of the world like: India, Nepal, Sri Lanka, China,
Japan, Morocco, Turkey at the beginning and slowly other flavors will be introduced. There are a
number of subdivisions of the kind s of tea that will be made available to the customers from
these countries. For example: there will be Assam, Darjeeling as well as tea from the Nilgiri
region of India. The café will have tea experts who will explain the benefits and tastes of each
tea so that it is easy for the customers to decide (Tea.ca, 2018). Apart from that there will freshly
baked items to compliment the tea and the customers can also take away the order.
From the perspective of the customers the café will be a place to talk and have a good
time with friends; people who love drinking tea will love the tea assortment that we have to
offer. It will also be a good place for the tourists to visit and spend time among the gorgeous
location of the quaint café. The company will focus on the quality of the product and the service,
the hostess and the waiters of the café will be provided with training regarding various kinds of
teas and their benefits this will ensure a value relation in between the company and the
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customers. The customers will also get an opportunity to learn about various health prospects of
tea consumption and they will also be able to purchase tea from around the world. The customers
of the organisation will be also lured by the cozy environment of the café as the ambience of the
café will smell of tea and bakery items,.
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1.2 Target market
The café will encourage young people to understand the benefits of the tea and use the
café as a place for afternoon meetings and discussions. People who have an idea about tea
drinking and are accustomed with the culture will enjoy their time in this café. People who are
tired of buying commercially packed tea from department stores and tea bags will get their
favorite tea in the café. The café also targets the tourist; the population of tourists is also
significant in the location of the café.
Demographics:
The age group of the target market is in between 18-55 this is a wide target group as the
organisation does not want to promote tea drinking as the practice adopted by only older
people, the company wants to educate the young population regarding the benefits of tea.
The café will provide the neighboring upper-middle-class community with a place to
socialize and meet people.
Most of the people are localities and the ones who come to visit the place.
Well-educated, aware, politically and socially conscious, responsible and aspirant citizens
Psychographics:
The café will target people who enjoy and appreciate a good cup of tea and good
company.
Secondary customers

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Tourists are the secondary customers of the café that are being targeted as potential buyers.
Tourists who are looking for a place to sit and rest along with a cup of tea and snacks can not
only enjoy the view of the area, but also enjoy the claim environment.
1.3 Distribution
The organization is a café cum tea store where the customers can come and sit and enjoy
the quaint and peaceful ambience of the café. There will be around twenty table arrangements
five on the ground floor and fifteen in the first floor with. The café will have strength to
accommodate maximum 50 guests at one time. In the ground floor there will be a counter of
display of the complimentary items which the customers can purchase along with the billing
counter. There will be an array of display of the various kinds of tea preparations that will be
available in the café, the person at the billing counter will help the customer to make their choice
in case they are unaware of what to order (Armstrong, 2014).
There will also be takeaway facility for the customers where they can choose to take their
cup of tea and sip it along the way back home or to the office.
The café will also have a tea library where people can go and choose to take loose tea. The
specialists will help the customers pick out the best kind of tea as per their choice of taste and
will also help them with the brewing instructions as different tea has a different brewing
procedure.
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After a few years of establishment and enough popularity among the locals as well as the
tourists the company will develop e-commerce facility as well. This will help the customers to
order loose packaged tea online.
These distribution channels are decided based on the target market portfolio that has been stated
above, as the primary customers are the localities and the idea of the organisation is a café.
Hence the distribution of the product or service channel is justified.
1.4 Location
Barrie City is one of the quaint yet popular tourist sites in Ontario of Canada. This is a
famous tourist spot in the country and people usually come here to enjoy ski and snow.
Therefore it will be perfect to serve the target market as mentioned above (Tourismbarrie.com,
2018). Tourists from various parts of the world come to visit the beautiful city; it is popular for
the skiing destination and natural beauty.
Location criterions are as follows:
The café should be located beside or near a famous tourist spot but not away from the
town. This will help in catering both the primary as well as the secondary customers. For
a small business it is essential to ensure that the target market can see the establishment
and the existence of the place.
The place should be easily accessible by the employees and the owner of the café as the
opening times are from morning 8 am. This will help the café to attract people who are
going to office, as they can quickly grab a cup of tea and few bakery items on their way
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The location should also be on a main road so that people are aware of the existence of
the café without even promoting the place. As a small set up promotional aspects are
restricted hence location of the café will play an important role.
The location should not be near any other café or restaurant as that would take away from
the secondary tourists who might visit the place to rest after travelling or shopping a lot
As mentioned above the café will have two floors where the ground floor will have some
seating arrangements with the billing counter and the bakery display and another side will have
the tea library where the customers can choose their choice of loose tea and also learn how to
brew them from the experts of the team. The owner will be available in the café and will look
after the management. The first floor will have 15 tables where arrangement of 40 people will be
made. Whereas there will be place for five table and 10 people accommodation on the ground
floor. Refer to the picture in Appendix 1.

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1.5 Market potential
Tea is the second-most consumed beverage in the world, and sales are consistently
increasing. Drinking tea as a beverage is gaining popularity in Canada as well. According to a
market research firm, tea is the most popular drink after water in the world (Tea.ca, 2018).
Canadians are not only developing a taste for tea they are also experimenting with various kinds
of teas, one of the major reason for this increase demand for tea in Canada is immigration from
countries with strong tea-drinking cultures like India, China, the Middle East and Russia etc.
Another major aspect that is recognized to be increasing the popularity of the beverage is the
health benefits associated with tea; people are becoming more and more health conscious and
want healthy alternatives of every food aspect. The sales of tea reached $1.3-billion in Canada in
2015 – a 23 per cent increase from the previous years (Siddiqi, 2017). There are two tea markets
in the tea industry of Canada one is the packaged loose tea and tea bags that are found in
supermarkets and grocery stores etc. Another slew of players in the market are, the online e-
commerce market like the Davids Tea, There are also distributor like in cafes and tea houses etc.
Therefore it can be concluded that there is enough scope for the company as the tea industry is in
the growth stage (Siddiqi, 2017).
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1.6 The competition
There are a number of cafés in the Barrie, but there are very few direct competitors of the
café in the region. There are just two cafes in the region that specialize in selling tea. This is a
great advantage for the company as it will not only make it unique but will also help in building
a new culture in the town. These two cafes are: Hamley's Tea & Coffee Co and Campbell's
British Food & Tea Room (Bah and Fang, L, 2015).
Other cafés that sell coffee and other hot beverages are indirect competitors of the
company as they are substitute for tea. For example: Alchemy café, Riverwest Bistro,
Cheekcakos bakeshop are the three important indirect competitors. The strength of these cafes
are that they have been here for a long time and people are more used to coffee than tea in this
region, but another important opportunity and weakness of the substitutes are the fact the tea is
gaining popularity and people like to enjoy change.
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Part 2
2.1 Pricing
The company is a humble and quaint place among the popular tourist attraction of Barrie
City the prices of the items and the service are structured according to the target market that has
been described above and also according to the prices of the competitors that are prevalent in the
local market. Therefore, it can be said that the pricing strategy that will be undertaken by the
company is competitive in nature it will be priced so that it can attract the secondary tourist
customers as well. The company not only serves people a place to sit and enjoy tea the café will
also consist of a place where they can choose to buy the choice of loose tea. The company will
have an assortment of tea from over the world and will also have complimentary fresh bakery
items for sale.
Products and services Price / Price
Range
Tea (serving 3) (any type) $5
Tea (serving 5) (any type) $7
Cost of loose tea 50 gm $898 - $1098
Bakery items $2-$8
Take away extra 50 c.
The price list that has been stated above is arrived with the help of a small market
research that has been undertaken by the company with the target market was taken as the
population and a sample size of 50 people were randomly selected to conduct the survey. They

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were asked to fill a questionnaire which was analyzed, not only that the research also consists of
an observation process where the competitors that has been stated in the previous paragraph has
been visited and their prices has been taken into consideration while formulating the price list.
The stakeholder who is given precedence while taking such decisions are the consumers, the idea
is to provide the people a place to have visitors of the café a clam and quaint ambience where
they can indulge in discussions and have a good time with the friends or family. Therefore the
prices are kept within the reach of the target market. The company will be charging a minimum
amount for the packing that will be required for take away.
Month Anticipated sales
January $6,000
February $7,500
March $8,000
April $9,200
May $10,000
June $12,300
July $15,500
August $19,900
September $22,000
October $25,000
November $26,000
December $30,500
Total sales $191,900
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The list that is provided is based on the calendar year which will be considered for this
plan. For the first month it has been anticipated to be $6,000 based on daily sale for the month
which consists of 26 working days. Therefore approximately $230 per day sales will help in
achieving this amount. Furthermore, on an average the café caters to around 60 people this
amount is achievable for the café owing to the location and the demand among the target market.
2.2 Promotion Strategy
Any business organisation communicates with the customers and other stakeholders of
the company with the help of promotional tools. As a small startup company the focus of the
organisation is on the quality of the products and services that are provided in the organisation.
The company will therefore not spend a fortune on promoting the café, as the owner believes that
the quality of the products and services will help in reaching its objectives.
The objectives of promotion strategy are:
To establish the entity of the café
To communicate with the customers
To build a valuable customer relation
The company will use two medium in the promotional strategy Advertising and digital
media. Firstly in order to establish the presence of the company the company will indulge in
advertising is a platform that is both traditional and contemporary, and it has been observed that
the target market both primary and secondary are impacted with this platform hence local
newspaper will run the story of the launch of the café. This will not be an advertisement rather it
will be an advertorial where a journalist of the newspaper will write a promotional piece about
the café and the vision of the company along with the owners vision and how it is different from
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the other cafes around. The write up will also include a section of information regarding the
various kinds of tea that will be sold in the organisation this will have health benefits as well as
brewing process explained in the article juxtaposing the harm that coffee consumption may have
on the health. Starting from the day before the opening till the end of that week pamphlets will
be distributed among the local area as well as in the nearby tourist place. This will also help the
company spread the news of its launch. This pamphlet will be designed by the entrepreneur as he
has the expertise and the budget that has been allocated in the table is the dedicated to the
printing charges of the pamphlet. People usually read newspaper and hence the print advertorial
will be a good idea for the company on the other hand the people will also get to know about the
goodness of tea.
To communicate with the customers and also to save money the company will
extensively use internet and social media platforms like Facebook, Instagram and twitter (Mata
& Quesada, 2014). In each of the platforms the company will use creative methods and pictorial
articles to garner the attention of the target market.
Feedback is another way to directly communicate with the customers, in digital space the
company can even personally chat with the customers and also use other methods such as
Facebook like and Instagram comment to communicate.
In order to establish a valuable relation with the customers the digital marketing strategy
will be use mixed with sales promotion. The company will publish discount codes and offers
with the help of the social media platforms to gain the attention and popularity of the people. The
owner will be handling these website pages and will also provide inputs in making the portal
attractive (Khan, 2014). The main aim is also to create a platform for gaining instant feedbacks

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and reviews from the customers, this review will help the company gain popularity among the
other cafes in the region. The company is also focused in developing a valuable relation with the
primary target market therefore these platforms will be used to improve and develop the products
and services of the café. These portals will also be used as a place to provide knowledge
regarding the various kinds of tea. There is a focus on spreading more awareness and knowledge
as there is a constant rise of people who are looking for alternative healthy beverage options and
tea is certainly healthier than many other hot beverages (Khan, 2014).
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The budget that has been allocated to the promotional strategy of the café is sated below:
Medium of Promotion Amount Allocated
Advertising
Print advertising (local news paper) $500
Pamphlets (printing charge) $40
Distribution of the pamphlets $20
Digital media promotion
Listing in Zomato $0
Facebook page $0
Instagram page $0
Twitter handle $0
Total budget $560
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2.3 Organisation
The nature of business that is undertaken by the organisation is Sole proprietorship. It is
the nature of business structure where there is one owner of the organisation; the owner is
responsible for all the liabilities of the business and is also the sole beneficiary of the revenues of
the business. The owner of the company wanted to keep the process of business simple and
hence he did not take help from anyone in the process of starting up the business. Tax benefit is
one of the most important advantages that are enjoyed by this structure and because this is a
small organisation this form is best suited.
Checklist of items
1. Choose a name of the company
2. Check accessibility of the anticipated names of the enterprise
3. Registration of the business name that has been selected
4. Get a Business Number
5. Incorporation federally
6. Application for HST number that was previously known as the GST number
7. As the café will have employees application of payroll number is the next step as well as
WSIB Account
8. The owner already have the land where the café is going to be situated
9. Construction of the place should be over by the time of inauguration
10. Employees have to be hired
All these above stated factors can be achieved with the help of this link:
https://www.bdccanada1.com/bdc_order/index.php?

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website=index&page=commerce&op=options&packageId=64&a_aid=3785&a_bid=a0dd5df
4&chan=code3
Red Tape is the rigidity in the authoritative conformity in Canada there is hardly any
practice of red tape as the government policies and practices of the country is liberal in terms of
trade practices, as the registration and approval of the business enterprise is very easy and hassle
free.
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2.4 Operations
As a sole proprietorship organisation, the will have all the operations as well as liabilities
on the owner of the company. The following organisation chart will explain the situation of the
structure of the organisation (Ho, 2014).
Figure: Organisation Chart
Source: Author’s creation
The above chart clearly sates the major role the owner of the organisation has to play
when it is a sole proprietorship. The operations of the company which are baking, making tea,
serving the people, assisting the customers with their choice of tea etc will be done with the help
BusinessOwnershipMarketingandSale(owner)Operation(employeesandowner)Accountsorfinance(owner)
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of employees. The owner of the company wishes to maintain a cordial and friendly relation with
the employees there will be a hierarchy which will be maintained in the company as the
decisions will be taken by the owner, the Human resource will be divided in two sections one is
front of the house ad other is back of the house (Fiore et al., 2013). Two employees in the back
of house will be employed and two members in the front of the house at the initial stage of the
café (Kew & Stredwick, 2017).
Key responsibilities
Owner: The owner of the business is responsible for the marketing and promotion of the
company, looking after the proceeds of the business, as well as looks after all the associated
operations o the business as well. The owner will also provide assistance to the people who are
looking to buy loose tea. The owner has the full liability of the business is responsible for any
kind of risks and challenges associated with the business at any point of time. The success of the
business depends on the owner and his vision.
Front of the house employees: They are the servers or the waiters, they will serve the order to the
table and will also provide them with the bill and collect the cash from them while they are done
these employees are also responsible for cleaning and maintaining the café.
Back of the house employees: these are the two cooks of the café who will look after the order
and ensure that the order is served in time. One of the employees is the cook who will bake the
items and is also skilled to brew any kind of tea perfectly and the other employee will assist the
cook and will help him in the work and maintaining the kitchen, these two employees will be
also responsible for cleaning the kitchen. Another responsibility of these people is to keep the

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owner informed about the usage on the raw materials of the kitchen on a daily basis. (Botha &
Robertson, 2014).
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2.5 Financial Plans
The initial capital investment that is brought in by the owner is Income statement of the
company is as follows:
Particulars Year 1 Year 2 Year 3
Inflation Rate 2.50% 2.50%
Sales Growth Rate 7% 7%
Sales Volume 400000 428000 457960
Selling Price Per Unit $5 $5 $5
Total Sales Revenue $2,000,000 $2,193,500 $2,405,721
Cost of Good Sold per unit:
Raw Material Consumed ($1) ($1) ($1)
Direct Labor Cost $0 $0
Total Cost of Goods Sold p.u. ($1) ($1) ($1)
Total Cost of Goods Sold ($400,000) ($438,700) ($481,144)
GROSS PROFIT $1,600,000 $1,754,800 $1,924,577
Variable Manufacturing Overhead p.u ($650) ($666) ($683)
Insurance ($12,000) ($12,300) ($12,608)
Rates & Taxes ($6,500) ($6,663) ($6,829)
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Salary of Office Staffs
Cleaning Charges ($500) ($513) ($525)
Electricity for Office ($15,000) ($15,375) ($15,759)
Telephone & Internet
Total General Administrative Expenses ($34,000) ($34,850) ($35,721)
Net Profit before Tax $1,566,000 $1,719,950 $1,888,856
Net Profit after Tax $1,566,000 $1,719,950 $1,888,856
Gross Profit Margin 80.00% 80.00% 80.00%
Net Profit Margin 78.30% 78.41% 78.52%
Above is the income statement of the first year have been provided, which initiates that the
company will earn a net profit of $1,566,000 at the end of first year of establishment.
As sole entrepreneur the owner will bring the capital of the business.
Following is the cash flow statement for the first month:
Particulars Year 1 Year 2 Year 3
Cash Flow from Operating Activities:
Cash Sales $2,000,000 $2,193,500 $2,405,721
Cash Purchase ($400,000) ($438,700) ($481,144)
Insurance ($12,000) ($12,300) ($12,608)
Rates & Taxes ($6,500) ($6,663) ($6,829)
Cleaning Charges ($500) ($513) ($525)
Electricity for Office ($13,750) ($15,344) ($15,727)

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Cash Inflow/(Outflow) from
Operating Activities $1,567,250 $1,719,981 $1,888,888
Cash Flow from Investing Activities:
Preliminary Expenses ($245,000)
Cash Inflow/(Outflow) from
Investing Activities ($245,000) $0 $0
Cash Flow from Financing Activities:
Dividend Payment ($548,100) ($601,983) ($661,099)
Cash Inflow/(Outflow) from
Financing Activities ($548,100) ($601,983) ($661,099)
Net Cash Increase/(Decrease) for the
period $774,150 $1,117,999 $1,227,788
Add: Opening Cash Balance $0 $774,150 $1,892,149
Closing Cash Balance $774,150 $1,892,149 $3,119,937
Summary of the financial plan:
There are several expanses that a new company that is going to incorporate has to go
through. The organisation will concentrate on the quality of the products and services and hence
the company will focus on the raw material and preliminary expenses in the first month.
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Tea.ca. (2018). About Us. tea.ca. Retrieved 2 March 2018, from http://www.tea.ca/about-us/
Tourismbarrie.com. (2018). Barrie, Canada. Tourismbarrie.com. Retrieved 5 March 2018, from
http://www.tourismbarrie.com/

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Appendices
Appendix 1
Figure: location Idea
Source: (Tourismbarrie.com, 2018)

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Appendix 2:
Figure: Benefits of tea with respect to its substitute
Source: (Tea.ca, 2018)
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