Business Development Proposal

BREADON RT FURNITURE MANUFACTURER PLAN

Writer: Abby Tran

Submitted in fulfilment of the requirements of the Masters’ degree to the University of Gloucestershire, for the degree of Master in Business Administration (MBA)

Supervisor: ....

2012

Contents EXECUTIVE SUMMARY 4 Description of products 4 Business strategy 4 Competition 4 Risk analysis 5 Company Ownership 5 Start-up Summary 6 Chapter 1: Introduction 7 1.1. Rationale of Business 7 1.2. Business Opportunity Definition 7 1.3. Scenario Selected 8 1.4. Business objectives 9 Chapter 2: The Business Concept 10 2.1. Brief Discussion of the Business Idea: 10 2.2. Business Objectives 10 2.3. Mission 11 2.4. Keys to Success 11 2.5. Product Description 11 Chapter 3: Feasibility 14 3.1. Primary and secondary market research 14 3.1.1. The UK market 14 3.1.2. The UK Domestic Production 16 3.1.3. Third Party Importing Activities: 17 3.2. Feasibility 17 3.2.1. Products Positioning 17 3.2.2. Industry/Market: 18 3.2.3. Organizational 19 3.2.3. Financial Feasibility 19 3.3. Resource requirement evaluation 21 Chapter 4: Strategic Analysis and Business Model 23 4.1 Strategic Analysis of the business idea 23 4.2 SWOT analysis 24 4.3 Sources of competitive advantage and sustainability 26 4.4 Selection of strategies for success 26 4.5 Development of appropriate Business Model 27 Chapter 5: Business Plan 29 5.1. Overall assessment of the Business Development Proposal 29 5.2. Business Plan 29 5.2.1. Marketing Strategy 29 (1) Beds 29 (2) Wardrobes 29 (3) Chairs 29 (4) Tables 29 (5) Doors 30 (6) Other Art Nouveau product applications 30 5.2.2. Pricing Strategy 30 5.2.3. Promotion Activity 31 5.2.4. Store Location 32 5.3. Discussion of critical success/failure factors 33 5.3.1. Political Risks 33 5.3.2 Legal Risks 33 5.3.3 Cultural Risks 35 5.3.4 Financial Risks 36 5.3.5 Competitive Risks 36 5.4. Schedule for First Year Operation 37 5.4.1 Quarter 1 – 2012 37 5.4.2 Quarter 2 – 2012 37 5.4.3 Quarter 3 – 2012 38 5.4.4 Quarter 4 – 2012 38 5.5 Feedback and Control 38 References 40 Bibliography: 41

EXECUTIVE SUMMARY
Description of products
“Breadon RT” Company offers its customers in the UK various products which are designed and developed under a tailor made solution regarding to existing standard. By applying the standard to the products, our clients are provided with the following mentioned products: wardrobes, chairs, sleeping beds, tables, doors, and other applications including ladder, sculptures, and other decoration. Every single product is tailored made regarding to client requirements and to strict specifications link to manufacturing site in Spain through the distributing partner in the UK. All products made by Breadon RT Company are not regular furniture products; all of the products are unique pieces of art; thus the best descriptions for our products would be uniqueness and individuality.
Business strategy
Stepping in the UK market will be conducted by applying the local partners. A comprehensively market analysis will be done to be able to search the practical sales targets. A careful strategy for promotion and sales activities will be planned. First year plan is to achieve 300.000 GBP sales revenues; sales target for the second year stands at 330.000 GBP. After a period of setting up the operations in the UK in future, an additional analysis will be conducted to search chances for export to their countries in the European. Moreover, our company also sets up Unique Selling Point as the unique furniture of Art Nouveau from the Spain Company with effective methods to conduct the project.
Competition
Noticeably, the UK market for furniture import maintains a significantly supportive condition for foreign imports since only 25% of all furniture products are produced locally, and the remainders (75%) are imported from foreign countries. According to a statistic report in 2011, the UK top 10 furniture import market are China, United Stated, France, Germany, Taiwan, Vietnam, Thailand, and Italy. There is weak evidence that an intensive competition is raised to Art Nouveau products since this is a narrow niche segment of the furniture products. Nonetheless, other international appearance shows potentials in sales in the UK.
Risk analysis
Hence, the UK market has no obvious and strong political risks which could influence negatively on our company to run the business the market since Spain is a member of the European Union and the UK is a country belong to the Europe which have a close relationship in term of economy with any countries in the region. Hence, the main indicators could be applied to improve the measurement the ease or difficulty in the business running including starting a business, registering property, hiring and firing workers, obtaining credit, enforcing contracts, producing investors, closing business. Regarding to the World Bank research conducted in 2011, the UK is a considerable low legal risk country in the region. In additional, financial risks are the major risks for our business including currency rate change since the price indications is shown in GDP currency due to the economic specific in the UK. This condition leads a potential risk for reduce the revenues change in consolidated financial report and a huge change in foreign exchange rate may bring a threat to our business. Another risk is derived from the competitive risks which are the situation where local companies may follow our business to compete with our brand in the UK market.
Company Ownership
The Breadon RT Company is a Limited Liability Company. All shares are belonging to Bobby Nguyen and Abby Tran. Our company implements intensive proportion of shares to find capital investment. Our plan developing shares comprises 100 members which are from business, friends, family, and other external investors. A value of single share stands at £4,250. Abby Tran and Bobby Nguyen remains 59% of total shares to retain strong accrue power to deliver our management decision.
Start-up Summary
The start-up expense of Breadon RT business is valued at 103.000 GBP. The main amount of this fund which is 100.000 GBP is adopted to establish initial facility, pay for any financial demanded deposits, and capital for the first 6 months operating. Other amount which is 3.000 GBP is employed for start-up inventory and other need costs.

Chapter 1: Introduction 1.1. Rationale of Business
“Breadon RT” business is a steam of some workshops gathered in one company. “Breadon RT” Ltd provides unique components of furniture and equipments of an interior. The capacities of “Breadon RT” is to make furniture and sculptures, ladders, bas-reliefs, decorative pieces and other panels of high quality value including stationery, doors, gifts, and bars. The business focuses on premium piece of the furniture market. Out company does not apply the furniture to all products, instead every product is unique (for particular customer with a special design), all products are handmade by workers. Resulted from the aims of further business enlarging and strengthening globally, “Breadon RT” employs a management with intending to approach operations in the European. The UK was selected due to of highly developed and successfully free market country, with stable political environment, free corruption environment, high income and GDP, as well as stable economy system. 1.2. Business Opportunity Definition “Breadon RT” business is a steam of some workshops gathered in one company. “Breadon RT” Ltd provides unique components of furniture and equipments of an interior. The capacities of “Breadon RT” is to make furniture and sculptures, ladders, bas-reliefs, decorative pieces and other panels of high quality value including stationery, doors, gifts, and bars. The business focuses on premium piece of the furniture market. Out company does not apply the furniture to all products, instead every product is unique (for particular customer with a special design), all products are handmade by workers.
Our company only implements high quality raw materials including various kinds of wood, specially cast metal materials, golden or silver finishing and colored glass. This company offers high quality personally tailored design and high manufacturing quality. Moreover, the quality of Art Nouveau provides a quality of refinement to any products design, thus increase the reputation for works of “Breadon RT” business. Hence, this is a competitive advantage for our products attracting customers since the products could increase their value overtime. 1.3. Scenario Selected
Our business set up the manufacturers mainly in Barcelona’s industrial zone. Our company exports our products mainly to the European countries market including the UK, France, Italy, and Portugal. In additional, we also set up occasional contracts with importers from Asia and USA.
Due to the aims of our business is to expand operations internationally; “Breadon RT” employs a management with intending to approach operations in the European. The UK was selected due to of highly developed and successfully free market country, with stable political environment, free corruption environment, high income and GDP, as well as stable economy system
Our company is aiming to achieve the wealthy individuals and business operations in decoration projects (hostels, restaurants, and offices) in the UK. All contracts are derived from order basis due to our company will run business in the narrow niche segment in the UK market; our company does not aim to provider our products to all inhabitants in the UK.
Breadon RT is targeting to achieve 3-4 decoration contracts which their value are 30.000 to 90.000 GDP in the first year operating as well as obtaining a active strategy of selling single products of Art Nouveau. The current market and business environment in the UK for the furniture new entrants is continuously growing but increasing competition. Meanwhile, our company with the initial cost budge would not cover too much finance of marketing, instead, our management decides to enter the more reasonable and most appropriate business segment is the niche piece of Art Nouveau including pictures wooden copies. Since the UK market currently is dominated by the other expensive and quality products from other importers from European countries, our company would develop a locally oriented and plan a comprehensively competitive pricing strategy and put effort on concentrating on unique design and high quality products. Accordingly, our management may develop a strategy of export to other markets such as Asian countries, the US and also conduct business manufacturing facilities in this region. 1.4. Business objectives * To step in the UK market within 4 months after a first move to develop relationship with local distributor. * To offer products with superior quality and unique design in regarding to our business’s internal standard. * To offer free niche of Art Nouveau in every product and to be able to maintain the strongly competitive advantages over the potential rivalry. * To gain success in deliberative marketing strategy to put awareness in the UK customers according to our product and brand * To set up and maintain a strong distribution channel in the UK market. * To secure the financial performance target in the first 5 years.

Chapter 2: The Business Concept
2.1. Brief Discussion of the Business Idea: “Breadon RT” Company is new business establishing in the first quarter 2012 with fresh experience as an Art Nouveau furniture provider. However, our company has been found by a experienced management board who are former managers of Wood RE Ltd Company operating in Vietnam market for such 10 years of the same business. Hence, the management team can ensure the capacity to master the business segment. Our company turnover in year 2018 will be forecasted standing at around 50% of products in the UK and 50% of our products will be exported to other European countries. The production capability can be raised by 30% what could result in revenues improvement up to 300.000 GBP for the first year and increase by 10% annually. If taking the consideration of higher price in export, out company will make effort to supply to the UK market with products for maximum value. 2.2. Business Objectives
In order to identify our business’s object in the UK market, it is important to propose firstly to definition of the mission of the company: “To run a unique business and deliver a high quality and unique components of Art from high quality materials”.
From the determined mission, our management board tends to step the UK market with our range of products which aims to achieve following objectives. * To step in the UK market within 4 months after established the first move in the market with local partner of distribution and store. * To offer furniture products of high premium and superior quality and unique design according to our company’s internal standard. * To gain success in deliberative marketing strategy to put awareness in the UK customers according to our product and brand * To set up and maintain a strong distribution channel in the UK market. * To secure the financial performance target in the first 5 years. 2.3. Mission
Three missions are integral part of future success, as follows: * Product: Offer customers the highest quality and best satisfaction with efficient serving time. * Economy: Run business with a profitable level by deploying suitable financial decisions. * Community: Bring supports to local with more vacancies for local community. 2.4. Keys to Success
There are four main keys which are reasons for our success in conducting this business, as follows: * Sound Locations: Manufacturers and efficient location of local partners. * High quality products: Unique design and high quality products. * Strong Brand: mass media, technical magazines, and promotion program. 2.5. Product Description
Our company management conducted a analysis in term of current situation of Art Nouveau as well as other European furniture competitors in the UK and indicates that there were only several competitors which has end-price 0f 60% higher than what can be proposed by our strategy and has a delivery time three time longer than our proposal
It leads to a situation where our company furniture and other offers can be highly competitive in the UK market since our company can deliver a lower level of price, faster delivery, better personal approach and broader range of ready-made offers.
For the complex strategy, the furniture products will be packaged and ready delivering to the UK by Containers. In this regards, the cargo is a significantly element to secure products and reduce possible risk of products damage. The period of delivering from Spain to the UK ports to the city center where our stores located will be the responsibility of our partner and customers (in the case they do not want to cover the delivery and other fees). Our business offers customers ability to collect products for the partner premises if these partners are willing to handle the assembling step to get the products ready for use. If any partners will get the role for products assembling, all these products will be finished by such partners for additional fee. Our company specialist would take some responsibilities to supervise the assembling process with some fee in order to secure the quality and performance the complex and complicated assembling steps. Our business will adopt the DHL and TNT service to deliver the single and separate components of Art Nouveau style products to the partner store or directly to customers.
All products are carefully and designedly packaged before they are transported and delivered to partners’ store and customers. Coming together with the products, the instructions are also included with English language for assembling instructions. Hence, almost customers are able to follow the instruction and finish the assembling process. Moreover, the instruction in term how to use furniture with care to ensure the longer term of exploitation will be also included.
Our business offers no specific after-sale services in the UK furniture market because of the nature of products. In fact, high-end furniture products cannot be replaced and repaid after a full deliver; in only some cases, our company can offer a replace broken which derived from the quality of the material.

Chapter 3: Feasibility
3.1. Primary and secondary market research
3.1.1. The UK market
The UK furniture market is a small part of the global furniture business market. The total revenues in 2011 are evaluated at 190 GBP, with the annual growing importing rate at 12% from 2006 to 2011 among the top 25 countries.
Table 6: Percentile points for income of individuals before tax Percentile point | Income (04-05) | Income (07-08) | Bottom 1% | £4,980 | £5,600 | 5% | £6,070 | £6,870 | 10% | £7,260 | £8,240 | 25% | £10,300 | £11,800 | Median (50%) | £16,400 | £18,500 | 75% | £26,100 | £29,500 | Top 10% (90 %) | £39,000 | £44,900 | Top 5% (95 %) | £52,400 | £61,500 | Top 1% (99 %) | £117,000 | £149,000 |

Source: http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom
Table 7: Income distribution across age bands (year 2004 – 2005) Age Band | Median Income | Mean Income | Median Income (Men) | Mean Income (Men) | Median Income (Women) | Mean Income (Women) | Under 20 years | £ 8,130 | £ 9,570 | £ 8,490 | £ 9,810 | £ 7,990 | £ 9,250 | 20 – 24 years | £ 11,800 | £ 13,200 | £ 12,400 | £ 13,800 | £ 11,200 | £ 12,300 | 25 – 29 years | £ 17,000 | £ 19,300 | £ 17,800 | £ 20,600 | £ 15,900 | £ 17,800 | 30 – 34 years | £ 19,500 | £ 23,900 | £ 21,600 | £ 26,700 | £ 16,400 | £ 20,100 | 35 – 39 years | £ 20,100 | £ 26,800 | £ 23,600 | £ 31,700 | £ 15,500 | £ 20,100 | 40 – 44 years | £ 20,200 | £ 28,100 | £ 24,600 | £ 34,600 | £ 14,900 | £ 19,800 | 45 – 49 years | £ 20,300 | £ 28,600 | £ 24,800 | £ 35,400 | £ 15,200 | £ 20,100 | 50 – 54 years | £ 19,300 | £ 27,000 | £ 23,500 | £ 33,400 | £ 15,100 | £ 19,200 | 55 – 59 years | £ 17,200 | £ 24,500 | £ 20,900 | £ 29,900 | £ 13,100 | £ 17,200 | 60 – 64 years | £ 13,600 | £ 20,000 | £ 16,500 | £ 24,300 | £ 10,700 | £ 14,200 | 65 – 69 years | £ 12,600 | £ 17,900 | £ 13,600 | £ 19,500 | £ 11,100 | £ 14,800 | 70 – 74 years | £ 13,300 | £ 18,100 | £ 15,600 | £ 21,100 | £ 10,700 | £ 14,300 | Over 75 years | £ 12,400 | £ 16,700 | £ 15,300 | £ 19,900 | £ 10,400 | £ 14,100 |
Source: http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom
Table 8: Income distribution by household

Source: http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom
Regarding to statistical data GDP per capital in 2006 in the UK was 27.800 GBP per person, which is a high level of income. This indicates a good indication to our business. Hence, the GDP data shows that the average UK market for furniture is considerable supportive for foreign importers such as our company. Moreover, only 20% of total furniture sold is produced by local manufacturers and the remainders 80% is from import activities from other nations including Germany, France, Australia, and Asian countries. This is also an important factor for our business’s assumption which is the UK market is a potential market to conduct business with the Art Nouveau type of furniture.
From the table, it can be concluded that our business is not typical type of furniture business which is imported to the UK. However, with around 80 million population and high level of income, the UK market is a potential market for a furniture business. Moreover, the UK market contains following characters: * The UK market is a competitive globally. * The market is a strong globalize nation. * The best business environment is the European market. * The third most profitable market in the European market. * Strong legal environment with least corruption the European market. * High quality and high income market. * The good offshore location for global company.
With such information, the UK market is a potential market for selling such premium products with a highly acceptable price level. Hence, our business is appropriate place for conducting business. 3.1.2. The UK Domestic Production
The furniture industry consist of around more than 230 companies and 70% of these companies set up subsidiary manufacturing branches in the regional countries around UK including Scotland, Iceland, Wales, Spain, and Portugal. Moreover, there are about 700 furniture wholesalers and nearly 1000 retailers running business in the UK market. However, our market research shows that there are only a few Art Nouveau companies in the UK market. Although together with the business development and then it leads to new entrants to the segment which becomes potential competitors for our business in future.
3.1.3. Third Party Importing Activities:
There are two kinds of importing activities from a third nation. Regarding to export and import activities trend data in 2011, the imports activities is shown in region as follows, * Asia: 650 GBP million. * Europe: 200 GBP million. * America: 80 GBP million. * Oceania: 16 GBP million. * Africa 7 GBP million.
The total trading activities in 2011 was the total import which equals to 1.113 GBP million and the total export value stands at around 200 GBP million.
To sum up, our company currently faces the directly and potential competitors from Italy, Germany, and France. Several companies from these countries have operated business in the UK market and several others would be considered as potential competitors.
3.2. Feasibility
3.2.1. Products Positioning
The most noticeable issue to our management in term of developing products in the UK market is set up product and company image awareness and developing the competitive advantage of our business in a competitive link with existing and new possible competitors. Another problem which needs to be solved is the country of product origin. Spain is quite well-known country, but it is not famous with the products like Art Nouveau style furniture. Hence, in order to make our products well-known, our management needs to put more effort on European products origin and Spanish furniture industry’s history including advertisement and advertisement materials).
3.2.2. Industry/Market:
Our company targets to be a small exporter in the UK; our position strategy is to provide products with careful designed and high quality to small niche customers as the main target. This group may be appropriate target since they are able to recognize the value of Art Nouveau furniture products
Our company’s products are not regular and popular products; instead the description of our products is the term of Art Nouveau furniture niche which is an expression of furniture decorating for private house, hotels, and commercial companies. The Art Nouveau type of furniture and relative products are not the typical range of products, but rather similar to a luxury car brand such as Mercedes, Bentley, and Aston Martin. Our brand is developed as a unique with single product and handmade with high quality regarding to customers’ requirements; our products represent our customers’ wealth and famous and needs to be differentiated from others by the impressive focus on continuity or stability.
Handmade products produced from Spain will be secured with more superior quality than the similar products in the UK market. Meanwhile, the pricing strategy set up a high level of price according to our quality which wise to customers that high quality and high price make our products different with others. Moreover, also our products are made only regarding to our customers’ orders; this is a typical character of our business which being no available stock for delivery. The marketing and promotion program shows an adequately samples of our Art Nouveau furniture using the show rooms given by our local partners in the UK market.

3.2.3. Organizational
“Breadon RT” Company is new business establishing in the first quarter 2012 with fresh experience as a Art Nouveau furniture provider. However, our company has been found by a experienced management board who are former managers of Wood RE Ltd. Company operating in Vietnam market for such 10 years of the same business. Hence, the management team can ensure the capacity to master the business segment. Our company turnover in year 2018 will be forecasted standing at around 50% of products in the UK and 50% of our products will be exported to other European countries.
3.2.3. Financial Feasibility
Financial Requirement:
Breadon RT aims to create an internal restriction and is targeting to provide in the UK a various range of products. We set up price in the UK 15% higher than other markets, which are presented in the following table.
Table 2: Product Group Price for Customer Product Group | Price for Individuals | Price for Company | Transportation Costs | Production Costs | Large Project complete furniture and decoration for one large room | 100,000 | 75,000 | 4,000 | 30,000 | Small Project – complete furniture and decoration for one small room | 50,000 | 35,000 | 4,000 | 17,000 | Gift (wooden copy of world-famous picture) | 4,000 | 2,500 | 300 | 1,300 |

Profitability and Financial Appraisal
Table 3: Expected profit for the first year Year | 2012 | 2013 | 2014 | 2015 | 2016 | Revenues | 300,000 | 330,000 | 363,000 | 416,000 | 457,000 | Cost of Sales | 362,000 | 284,000 | 305,500 | 337,000 | 362,500 | Components Costs | 150,000 | 165,000 | 181,500 | 208,000 | 228,500 | Start Up Costs | 103,000 | 0 | 0 | 0 | 0 | Lease Costs | 44,000 | 44,000 | 44,000 | 44,000 | 44,000 | Wages & Salary Costs | 40,000 | 45,000 | 45,000 | 45,000 | 45,000 | General Expenses | 25,000 | 30,000 | 35,000 | 40,000 | 45,000 | Net Income | (62,000) | 46,000 | 57,500 | 79,000 | 94,500 | Interest Expenses | 7,000 | 10,000 | 10,000 | 10,000 | 10,000 | Taxes | 0 | 11,500 | 14,375 | 19,750 | 23,625 | Net Income After Tax | (69,000) | 23,500 | 33,125 | 29,671 | 60,875 | Retain Earnings | 0 | 13,500 | 18,125 | 9,671 | 35,875 | Dividend | 0 | 10,000 | 15,000 | 20,000 | 25,000 |

Our management team shows the estimated costs, sales, and profits for first year operation in quarter period. Moreover, we also provide analysis of a 5-year budget from the 2012-2016 periods. The forecast income statement is prepared for our business operations in the UK market.
Regarding to income statement, our business will make profit on the second year of operations, creating an amount of net income after taxes and interest is 23.500 GBP. The dividend payment is pre-determined at 10.000 GBP which means the retaining earnings are 13.500 GBP. This is a noticeable result. Except for the losses in the first year operation, the result from the table presents a positive result for next four year running.
Breakeven Analysis
Based on the evaluated sales figure in the foreseen income statement, in the 5-year period of business running, our company expects a cumulative profitability standing at around 150.000 GBP. Hence, it can be shown that our company can reach a high level of profit margin which is approximately 10%. This level of profitability can be achieved due to a stable and relative low production costs and manageable sales costs in the 5-year period.
3.3. Resource requirement evaluation
The following cost will be included to be considered when exporting to the UK market: * Customer duties: Our market research shows that there is no relative information in term of customer duties to furniture products. * Good and Service Tax: 15% rate which is added to CIF price including also freight and insurance costs. This cost is paid by our partners in the period of importing our products to the UK.
Potential market capacity is mainly evaluated derived from our company’s capacity to produce the products and ability to make contracts in the UK. However, we plan our sales volumes in the following table.
Table 4: Sales Volumes Strategy Product group | 2011 | 2012 | 2013 | 2014 | 2015 | Large Project – complete furniture and decoration for one large room | 0 | 75,000 | 150,000 | 225,000 | 225,000 | Small Project – complete furniture and decoration for one small room | 70,000 | 105,000 | 140,000 | 140,000 | 140,000 | Gift (wooden copy of world-famous picture) | 10,000 | 15,000 | 25,000 | 40,000 | 40,000 | Total | 80,000 | 195,000 | 315,000 | 405,000 | 405,000 |

Our management aims to achieve two small projects and have 4 orders of gifts set in the first year of our operation in the UK. In the year 2, our business is aim to complete 3 small contracts and 1 large contract and 6 other gift sets. Meanwhile, in the year 3 of our operation, we targets to obtain 405 000 GDP in sales and retain the sale volumes the same in the year 2015 of our business running.
Table 5: Cost for business operation Year | 2012 | 2013 | 2014 | 2015 | 2016 | Cost of Sales | 362,000 | 284,000 | 305,500 | 337,000 | 362,500 | Components Costs | 150,000 | 165,000 | 181,500 | 208,000 | 228,500 | Start Up Costs | 103,000 | 0 | 0 | 0 | 0 | Lease Costs | 44,000 | 44,000 | 44,000 | 44,000 | 44,000 | Wages & Salary Costs | 40,000 | 45,000 | 45,000 | 45,000 | 45,000 |

Our company cost of sales in the first year comprises marketing and promotion costs, costs of new website development, costs of sample products production, costs of communication, costs of advertisement material development, and cost travelling and other relative costs.

Chapter 4: Strategic Analysis and Business Model
4.1 Strategic Analysis of the business idea
The key reason behind to run business operation of Breadon RT business in the UK market in a short-term consideration is characters of the UK market (potential to expand business in other European countries and high volume of customers) and high income. Hence, our company can apply our experience and reference the UK market to expand our business to other countries in the Euro region. All business in the UK market will be conducted with a just-in-time concept in regarding to customers’ orders. Hence, we will not set up any storehouse in the UK market, even in a longer term plan, we will not plan to establish any production facilities in the UK due to it costs a lot to set up storehouse in the UK market. Our company will maintain production centralized due to the requirement of control superior quality and business depending on the quality master.
The aim of entering in the UK market in 4 months is considered as a aggressive business strategy because of the fact that a free market niche could be entered by any other competitors. With the period, our company aim to set up a relationship with local distributor. These partners have responsibilities to perform a fully market research, to conduct registration on our brand and trademark of our products, to star promotion operation and to process initial customer order, as well as to establish contracts with local store and wholesalers.
Our company is not only intending to put effort on dominating the market share, but also obtain the manufacturing capacity and advertising resource to secure a fast development.
Moreover, our company also put effort on develop our brand to get customers’ awareness by servicing the first customers on a premium quality with a reasonable pricing policy to improve our revenues in future.
Another responsibility of local co-operator of our company is to perform a regular market surveys to supervise the market demands and report any issues and take a quick response and reasonable decisions to secure a punctually orders to provide best-selling services to customers. Moreover, the partners also have responsibilities to conduct positioning and active promotion of our company products to secure awareness and customer’s notices.
Additional main responsibility is to keep in line the regular contracts and search for long-term business chance with other local retailers and other in the UK market to set up a effective distribution channels. Regarding to our previous assessment, our aimed retail stores are premium furniture retailers and designers.
Lastly, our business operation will be evaluated by our financial performance which will be showed in following sections.
4.2 SWOT analysis
In order to have a better preparation for our business startup, SWOT analysis for our company will be conducted concentrating on strengths, weaknesses, opportunities, and threats deriving from the business environment in term of Art Nouveau premium furniture business in the UK.
The main strength of Breadon RT Company is the management team which has a strong experience in the manufacturing the furniture Art Nouveau, they are former workers of other famous brand company in the region. This is an important factor with our management since it leads to many other programs are operated and managed with care and effective plan, take sale plan for example. We would set up a distinctive production style and provide accrue enough references to find the UK co-operation partner. The market research shows that export the identical range of products since the range is on a production line right now; thus, it leads to a the conclusion that there is no demand to adjust products prospects to the UK local market. Hence, our company will hire the existing production facilities in Spain and will not alter any production and design process. The plan will follow our business to eliminate high investment and minimize cost and increase the profitability. Additional positive outcome is the relatively low level of production costs and low level of salary for workforce in relation with other competitors in the market. The use of the business related strengths and the relatively following productions is referred as the key competitive advantages approaching the new business in the UK in the high quality and unique furniture niche.
Nonetheless, any previous prospects for the company may be taken less effective due to a lack of knowledge in term of personnel deficit which may not be solved in a short-term time in the UK furniture market. Our company’s management has lack of understandings in term of cultural differences such as the local entrepreneurship habits and the long-term trends in market furniture industry. Moreover, the shortages of English speaking specialists also affect negatively on our business that are referred as a weakness. Moreover, since our business is mainly production in furniture, out company may find difficulty in allocating financial budget for marketing strategies. All available financial resources are usually invested in production and raw material; so, there is shortage cash spending on marketing.
Our business, as any other new entrants, faces challenging market capacity of about 3 million wealthy customers in the market. The UK could be a test for our bigger step in the European countries with around 1 billion people. In the market, there is a free niche for Art Nouveau premium furniture, and this is a reasonable factor push our company to enter to the UK market. Our company’s strategy is to promote and sell our product through the co-operation with local partner and on-demand order procedure will decrease the cost to stepping in the UK market.
The key threat for our business is the strong competition from long established and experienced European manufacturers, which can compete over our company with more well-known brand and image, and strong market plan in term of available marketing budget. Possible cost demand to retain our profession in the Spain and to step over the UK requirements can decrease our company’s competitive advantage of low price in a relative link with other producers from other countries. Moreover, our business is also threatened by the inability to improve the production output considerably since shortage of financial and personnel resource to develop additional facility which can lead to erosion in satisfying possible orders as well as the trusty decline in customer’s mind in comparison with other producers.
4.3 Sources of competitive advantage and sustainability
By applying the standard to the products, our clients are provided with the following mentioned products: wardrobes, chairs, sleeping beds, tables, doors, and other applications including ladder, sculptures, and other decoration. Every single product is tailored made regarding to client requirements and to strict specifications link to manufacturing site in Spain through the distributing partner in the UK. All products made by Breadon RT Company are not regular furniture products; all of the products are unique pieces of art; thus the best descriptions for our products would be uniqueness and individuality.
4.4 Selection of strategies for success
Our company adopts Unique Selling Point for business selling activities as unique furniture of our products from other competitors with individual consultants for single project. Our company does not put concentration on low pricing strategy due to the reason that the cheap price products may be referred as low quality products. Nonetheless, our price level is set at lower rate than our competitors in the UK market in order to achieve customers’ low price interest and obtain additional advantage.
4.5 Development of appropriate Business Model
Stepping into the UK market will be conducted by the applying the local partners and assigned Spain Manager by taking following steps: (1) Preparation step: a. Conduct a market research and evaluation, finish financial strategy, and assign our administration manager from Spain to take responsibilities for general management and further expansion in the UK and other European countries. b. Search and set up co-operation with local partners to sign a partnership contract as well as set up a pricing policy and operation strategy for next three years. c. Develop marketing strategy and promotion activities, set up web-site and introduce our products sample and promotion materials to the UK market, as well as to hire and train our partner’s staffs. (2) Marketing and Promotion Activities: a. Set up and develop distribution channels, conducts advertisement, make agreement with market players. b. Make a deal with partners to set up the promotion activities and create awareness of our products to customers. (3) Sales Activities: a. Conduct a market exploration with the first step focusing on small furniture products in the first year. This step is important to deliver our brand and image to customers. b. The expensive projects or large furniture products will have been started from the second year. Our sales revenues for first year operation is planned standing at 80 000 GBP while the target for second year is 195 000 GBP. (4) Additional Development a. Plan to develop and expand our business further to other European countries. b. Investigate ability to set up a manufacturer in the UK in future.
Our management conducts investigation our products’ competitive advantages in comparison with similar products in the UK market as follows:
(1) Superior quality products which are 100% handmade. Our products, thus, maintain our unique characters since they are not easily to be copied.
(2) Low cost of products leading to a competitive pricing strategy in relation with other competitors in the market.
(3) Beautiful and unique design for every single product and wide range of products which can meet a huge demand of Art Nouveau customers.
(4) Our products are not new in the UK market, but there are only a few competitors in the high-end product niche, thus there is minor competition in the UK market.
(5) Since effective production and distribution channels, our company has ability to make delivery single pieces of furniture and deal with small projects which may be not interest for other competitors.

Chapter 5: Business Plan
5.1. Overall assessment of the Business Development Proposal
5.2. Business Plan
5.2.1. Marketing Strategy
Our company set up a plan to provide customers in the UK some kinds of product which are tailor made and developed with special solution used for individual customers regarding to current standards of Art Nouveau
(1) Beds
Our business offers customers Art Novena style beds. Our main targets for this type of products are luxury hotels and privately wealth people who are interested in being different in bedroom furniture.
(2) Wardrobes
Similarity to the beds products, wardrobes is used by hotels and private house to be a decoration in a special style according to customer needs.
(3) Chairs
Our designed chairs in Art Nouveau style are a combination between the table found in larger customer range and decorating bedrooms with other furniture such as wardrobe and bed products. The combination with tables can provide a special feeling, an old time aspect in hotels, restaurants, and private places. Hence, this specific product will be used by many customers since the chairs in a Art Nouveau style is a special piece of art.
(4) Tables
Our business offers two types of designed tables including dinner table and office table. Both of them are manufactured with tailor made and special quality to show a differentiated feeling of unique design which is referred as a added value aspect of our product. Moreover, this work is not found in any other product since its purpose is to serve the business man group and wealthy group of people. The tables in Art Nouveau style present a uniqueness and especially informative piece of the owners.
(5) Doors
Due to a belief that the first impression presents a lot of information about one person, a door is the first impression of a house which is important furniture to anyone house, especially for wealthy people. Hence, a door in Art Nouveau style can give an importantly accent impression to any house which is necessary to a rich person.
(6) Other Art Nouveau product applications
However, our business of Art Nouveau products provides customers tailor made solution in term of every product. That means our business can offer clients the additional applications in combination with previous products as the additional components such as a bed side table and book shelves.
5.2.2. Pricing Strategy
Our product pricing strategy represent out product market position and quality which offer to our customers. Our products are completed with only a few similar types of products, imported from some other countries including France, Germany and Italy. Hence, we offer products with more acceptable price which is set up at lower level than our competitors.
Accordingly, with every single product we will set a different price level which base on the hours and labor we invest in products making and the requirement material need. After evaluating customer’s requirement, our company’s specialist in the local partner or in our main company will conduct cost estimation for the ordered products. The estimation includes our commission for local partner of distribution and representative; duty and tax costs, material and production cost and our level of profit requirement gained from the products. The price is shown in Pound due to our products are delivered to the UK market.
As our estimation, a fully function for a office cabinet which our decorative furniture in Art Nouveau style would cost our customers from 50.000 GBP to 100.000 GBP. The set of furniture products includes chairs, table, bookshelf, and coffee table. Our company assigns our partner a duty to search the customers with commission for each customer. Moreover, our partner also in charge of promoting our products in the UK market and conduct legal and technical assistance for customer requirement to achieve success in the product implementation our product design.
The level of commission giving to our partner for any customer introduced is set up at 30% and in some case if the project has a big value and long-term business relationship, the commission can be set at higher level. The other 30% of the total value of a project will be retained as our business profit gross margin. Meanwhile, the insurance costs and freight cost are expected from 500 – 6000 GBP. Moreover, the last price of our products will be announced to our local partner during the period of negotiation with our customers.
5.2.3. Promotion Activity
Our promotion strategy is managed by using several following methods:
(1) First way to dealing with our local partner to work directly with designers and architects as well as run marketing and promotion campaign in regarding to our competitive advantage from our products including tailor made products, high quality, handmade work, and tailor solution and a high price strategy with a competitive price plan in comparison with our competitors.
(2) Our company can adopt internet website to connect to the UK customers. Our management would run the internet promotion project which employ positive feedback from our existing customers to attract newly potential clients’ attention. The English-English language is applied on our website due to language nature of the UK market.
(3) Our company may implement show rooms in several key regions in the UK market. These show rooms with Art Nouveau furniture samples can be used to give to our local partner direction of a promotional target in a sale place or in trade fair. The cost for operating a show room is evaluated at 40 000 GBP per year. (4) Our company also implement printed catalogues showing our company’s products and service image in which the quality and unique design is stressed and given to our local partner disposal.
(5) Our company also applies advertising in local mass media such as architectural magazines, niche magazine, and local magazine. This method is used as an additional way to improve our image in the products promotional period in order to help our partner sale activities.
5.2.4. Store Location
Our main business activities will be conducted at our local partner store where our available catalogues and sample are appealed to potential customers. Because of our nature business, our main sales activities are set up directly to our customers including following activities: showing samples, catalogues, negotiations with customers, prepare contracts, payment task. Besides, our company and our local partner will take part in some local events such as trade event and exhibitions; these activities are used to spread our company brand to customers’ awareness and attract attention of customers.
Our customer’s orders can be conducted through internet or phone call by our Spanish employee who can speak English in both important steps: order evaluation and negotiation. In some special events, our manager and specialists can take business trip to the UK market with our huge potential customers. For the special event, the travelling cost will be cover by our customers.
5.3. Discussion of critical success/failure factors
5.3.1. Political Risks
The UK has regularly democratic elections and the UK government has an active role in economic activities. Hence, it is noticeable that the Spain is a member of the European Union, and the UK has a special deal with the Union as a country of the European region. Hence, business from Spain is protected by the Union which currently is the major economic partner of the UK economy. The main trading partners of the UK include European Union, the US, Japan, South Korea. Moreover, the UK is a market with free political risk. Hence, the political risk has a very minor effect on our company’s operation in the UK market.
5.3.2 Legal Risks
Legal risk is a significant indicator for a business operating in the UK. Legal policies and regulation may create both opportunities and potential threats to our business. Hence, it is important to evaluate the state regulation and legal policies in the UK market. The main indicators can be implemented to assist our estimation of the difficulty and the ease of operating our business from following steps: establishing a first step of our business: firing and hiring staffs and workers, property registration, and the following steps: credit collection, investor protection, contract enforcement, and business closing. According to World Bank (2012)
The main difficulty faced by a business which operates in the UK is shown by following estimation: * Procedures required setting up a business. * Time and cost association. * Start-up capital requirement.
Moreover, a new business also expects to follow 7 steps to approach a business in the UK after 8-14 days on average. A cost covering the establishing steps equals to 1.5% of total UK income per capita. Moreover, in the UK legal system there is no requirement for a new business to get the business registration number. This figure is much lower than regional average cost of registration.
There are three ways to evaluate the difficulties of a business entering a new step in the UK market: * How to search new worker. * How strict a regulation is on the working hours. * How difficult to fire a staff.
The conditions for the three ways which should be applied in our business are as follows: * Availability of part-time and full time contracts. * Working time requirement for a particular position. * Minimum wage regulation and agreement. * Minimum conditions of working environment.
Meanwhile, the ease of a business operating in the UK market is evaluated by following indicators: * Number of procedures required to transfer a property. * Time and cost as a proportion of the property value.
In the UK, it takes a normally 12 days to register a property which is much shorter than regional average in the European countries.
Another issue in term of legal practice is the credit information which is used to evaluate the scope, access and quality of credit information. The index present in information available in term of credit in the market. According to the report, the UK score is standing at around 4.5 which is positive indicator for our business.
The difficulty and ease of set up a commercial contract in the UK is also important indicator for our business. It can be evaluated by the number of procedures conducted from the plaintiff files and actual payment is delivered; the time and cost requirement which is shown in debt value. In the UK, the cost of contract enforcement is around 10 while the regional average standing at 23.
Another legal issue related to cost and time need of bankruptcies resolve. The costs comprise the fee of insolvency paid for lawyers, accounts, and practitioners and court cost. The rate of recovery estimates efficiency of bankruptcy procedures and foreclose procedures. Currently, the rate of recovery in the UK market is around 86 which is much higher than the average rate in the region which is 35.
5.3.3 Cultural Risks
Cultural risks are not very significant in doing business in Singapore. For many years Singapore has been under the colonial rule of British Empire and it has had certain impact on perception and openness of local people to different ideas and products. From more than 4 million people currently living in Singapore 77% are Chinese; 14% Malay and 8% Indian. English is widespread. Companies' current economy is very much based on international co-operation with other close and far away located nations. Under these conditions, it is possible to assume, that no hard time is expected due to cultural problems.
Nevertheless, it can be pointed out, that Art Nouveau is style of furniture without clear local connection and may arise some problems of this kind. However Art Nouveau furniture is not really a mass market product and is targeting small niche market.
5.3.4 Financial Risks
Financial risk comprises currency rate exchange risk since our business operating in two countries which are the UK and Spain that means our price is given in UK while the manufacturer is located in Euro country – Spain nation. Our local partner will show price the local currency which is pound. Hence, this is a huge potential risk for our business since some gains or losses may be changed over time, especially in the due period where our company makes financial reports. Moreover, our company also faces the risk due to the separate project with every client through our co-operation with the local partners, the tailor made solution is offered to customers with separate price. In additional, since our work is handmade and tailor made and there is no available stock, then, it could take a period to finish our orders. Hence, there may have a big difference in foreign exchange rate at original period of negotiation and the exchange rate at the delivery period. It may have negative effect on our level of income. Hence, it is important to take steps to bear the financial risk. Additionally, our business may also face the foreign exchange rate from the debtors. Therefore, in order to reduce this type of risk, our company will choose our local partner carefully with well-experience and strong credit rating to avoid any potential risk from the end client side.
5.3.5 Competitive Risks
The competitive risks are resulted from the local companies which may following our method of doing business. Moreover, the competitors could be either foreign or local companies, which may produce the Art Nouveau style furniture. Moreover, our furniture distributor partners are also considered as potential competitors since they provide individual approach and unique project of distribution and they could follows our method of conducting business. Nonetheless, our local partner may be less competitive with our business in term of price offering to customers.
Moreover, the competitive threat may also come from other international companies which have been operating in the unique design and current competitors in the market. They are the most worried to our business since our company are a newcomer and may have less experience in the UK market and weak financial capital strengths and brand/image awareness.
5.4. Schedule for First Year Operation
Our schedule of operating business in the UK market
5.4.1 Quarter 1 – 2012
(1) Searching suitable distribution and local partner for our company’s products in the UK market.
(2) Setting up sales budget for next two years, conduct the profit and loss target for our company.
(3) Make agreement and contracts with local partner.
5.4.2 Quarter 2 – 2012
(1) Evaluate the result obtained from quarter 1.
(2) Make the advertising campaign for local distribution.
(3) Make our website to show information of our products and company. (4) Joint the sales exhibitions and participations in local trade events.
(5) Make public relation by report our company’s information on advertisement to target audience magazines.
5.4.3 Quarter 3 – 2012
(1) First orders are delivered to customers.
(2) Make evaluation on the second quarter of operation.
(3) Make new agreement of new distributors.
(4) Conduct sales activities for new client orders.
5.4.4 Quarter 4 – 2012
(1) Make evaluation of the result in previous quarter and make correction in according to our income and expenditure budget ability.
(2) Conduct an analysis of what we have done to find the best option for next operations.
(3) Make sales work for new client orders.
(4) Make financial plan for next year running.
5.5 Feedback and Control
Our company will have to make control our fulfillment of business objective in order to set up how successful our company business in the UK market. Operation controls may take the sales result into account to control fulfillment of our annual sale figure. Another indicator is the number of clients served monthly. Moreover, our evaluation will be conducted regarding to expected market share, the data will be achieved from local furniture sales organization.
Financial controls are done to have a careful attention on the gross margin revenue and profitability level with each customer. The following aspect of a financial report will be important for our program of monthly business monitoring: net income, operating costs, and cash flows. Our management also takes control on fixed cost including overhead costs and sales costs which comprise representative’s costs and marketing and promotion activities costs. Our company will take control on administrative controls weekly on the result report; the result will be delivered to our company through internet and email.

References
1. http://www.austrade.gov.au/australia/layout/0,,0_S2-1_home-2_-3_-4_-5_-6_-7_,00.html
2. http://www.viewswire.com/index.asp
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20. http://en.wikipedia.org/wiki

Bibliography:
Forecast Income Statement of the 5-year period Business Running. Year | 2012 | 2013 | 2014 | 2015 | 2016 | Revenues | 300,000 | 330,000 | 363,000 | 416,000 | 457,000 | Cost of Sales | 362,000 | 284,000 | 305,500 | 337,000 | 362,500 | Components Costs | 150,000 | 165,000 | 181,500 | 208,000 | 228,500 | Start Up Costs | 103,000 | 0 | 0 | 0 | 0 | Lease Costs | 44,000 | 44,000 | 44,000 | 44,000 | 44,000 | Wages & Salary Costs | 40,000 | 45,000 | 45,000 | 45,000 | 45,000 | General Expenses | 25,000 | 30,000 | 35,000 | 40,000 | 45,000 | Net Income | (62,000) | 46,000 | 57,500 | 79,000 | 94,500 | Interest Expenses | 7,000 | 10,000 | 10,000 | 10,000 | 10,000 | Taxes | 0 | 11,500 | 14,375 | 19,750 | 23,625 | Net Income After Tax | (69,000) | 23,500 | 33,125 | 29,671 | 60,875 | Retain Earnings | 0 | 13,500 | 18,125 | 9,671 | 35,875 | Dividend | 0 | 10,000 | 15,000 | 20,000 | 25,000 |