Financial Aspects Human Resource Aspects Essay

Question:

Discuss About The Financial Aspects Human Resource Aspects?

Answer:

Introduction:

The aim of the paper is to study a business plan and model of an Australian new business venture. The new business venture would be a firm making an organic soap for men and women and would be called ‘Australian Organic Soaps Limited’. The soap products would be available in two variants. The men’s variant would be called ‘Eastern Brown’ while the variant for women would be called ‘Snow Petrel’. The ‘Eastern Brown’ would be available in fragrances like musk, woody and sandal. The package would have picture of an eastern brown snake which would reflect that using the soap would make men confident and aggressive like the snake. The ‘Snow Petrel’ would be meant for female customers and would be available in variants like rose and milk. The package would have picture of a petrel flying over the ocean signifying ambition and confidence in women. Both the variants would have organic ingredients like Australian eucalyptus, aloevera and Indian sandal making them safe and beneficial for the skin.

  • The first section of the paper deals with the customer segments of these two soaps by Australian Organic Soaps Limited followed by value proposition of the two products.
  • The third section deals with customer relationship of the company followed by channels of business. This section has again been divided into two subdiviosns, the supplier chains and the distribution chains.
  • The next sections study key activities, key resources, key partners and revenue structure of the new business.
  • This is followed by cost structure, minimum viable product and feasibility analysis for the new business venture.

Business Model Canvas:

Key partners

Financial institutions

Microcredit institutions, retailers, marketing agencies and suppliers

Key Activities

Acquisition of raw materials like aloevera, organic oils, cocoa butter and sandalwood oil.

Value proposition

Creamy lather, moisture and freshness

Soap

Quality

Customer relationship

Assistance to customers with regards to product features, quality and points of sale.

Communication through social networking sites

Customer segments

Urban high income and stylish Men and women

Key resources

Material resources

Plant and machinery

Human resources,

Packing materials.

Channels

Suppliers

Distributors

Local farmers

Wholesalers

Revenue streams

Sale of soaps less the costs

Cost structure

Raw materials

Fixed costs

Initial capital investment in fixed assets

Variable costs like employee salary

Licensing costs.

Distribution costs

Marketing and advertisement costs

Figure 1. Figure showing business model canvas

(Source: Author)

Customer segments:

The ‘Eastern Brown’ and ‘Snow Petrel’ would target the middle and upper class customer segments. The target customer segments would consist of modern and contemporary men and women of Australia who like to take care of their skin with organic soap. The soaps would segment the customer bases geographically, financially, psychographically and behaviourally(Hamka et al. 2014).

The two soaps would segment the market geographically. The company would make the first soaps available in the cities and then make them available in the rural areas. Australian Organic Soaps Limited would target the customer segments who lead lifestyle, which allows use of premium skincare products (Dzobo et al. 2014).

Value Proposition:

The value pro

Financial Aspects Human Resource Aspects

position of Australian Organic Soap Limited would be offering premium quality soap to the contemporary men and women of Australia. The company would aim at offering high quality soaps at premium prices. This high price would guarantee high quality to the customers who are ready to spend a lot of money to get high quality skin care products. The rich lather and superior quality ingredients would leave the skin of the users nourished and soft. The fragrances would elevate the level of confidence of the users, which would boost their confidence level (Covin et al. 2015). These benefits to the skin and increase in the level of confidence would add value to the purchase the consumers. The value proposition for the customers of the two soaps would be luxurious bathing experiences, which would make them feel energised.

Customer Relationship:

Australian Organic Soap Limited would maintain healthy and long lasting relationship with its customers by offering high quality premium organic soaps to them. The company would make the products available to the customers at the grocery shops and retail chains in the main cities of Australia and then gradually make them available in the rural stores. The customers would be able to give their feedback about the products on the customer care number. The company would also maintain a continuous flow of communication with the customers using its official website and social networking media like Facebook(Hollensen 2015).

Channels:

Australian Organic Soap Limited would have two channels supporting its operations, the supply channels and the distribution network or channel. The supply chain would supply the company with raw materials and the distribution channels would ensure availability of the soap products in the market(Christopher 2016).

The supply channels:

The supply chains would consist of suppliers who provide Australian Organic Soap Limited with raw materials for the soaps. The main raw materials of the soaps would be natural ingredients like eucalyptus oil, Indian sandal wood oil and milk. The company would emphasis on acquiring these raw materials from sustainable sources like local farmers. This way it would be successful in contributing to economic development of the local farmers by buying raw materials from them. It would also have the soap packages made from recycled paper in local paper mills. This way the company would be able to encourage sustainable making of packaging among the other Australian soap companies (Monczka et al. 2015).

The distribution channel:

Australian Organic Soap Limited will use an extensive network distribution network to distribute its products in the market. The company would make use of wholesalers and retailers who would make the soaps available in the market to the middle and upper class customers. The company would hire logistics services to transport the products to the retailers and the wholesalers. As a result, the wholesalers and retailers would be able to stock and sell ‘The Eastern Brown’ and ‘Snow Petrel’ to the customers. This large-scale availability would help these two products gain competitive advantage in the market. Moreover, the two soaps would be available in the high-end skin care outlets in the cities to attract the attention of the rich shoppers(Cui and Mallucci 2016).

Key Activities:

The key activities of Australian Organic Soap Limited would consist of a wide range of activities ranging from acquisition of raw materials to the sale of products to the final customers. The first activity of the Australian Organic Soap Limited starts with the marketing receiving orders from the market. The production department makes a budget of the raw materials to be acquired with approval from the accounts department. The production department then acquires the raw materials from the producers like suppliers of eucalyptus oil and sandal wood oil. The production department than produces the soaps and forwards them to the quality department for quality testing. The soaps which qualify the quality testing of the quality department are packaged by the packaging department. These packaged bars of soap are priced and shipped to the retailers and wholesalers. The accounts department records revenue generated from selling of soaps. The waste products generated by the production of the soaps are then recycled to form manure and other materials(Jeston and Nelis 2014).

Key Resources:

The key resources used to make ‘The Eastern Brown’ and ‘Snow Petrel’ are organic raw materials like eucalyptus oil, Indian sandal wood oil, rose oil and extracts flowers like rose. The other key resources use in manufacture of soap consists of fragrances and preservatives used to maintain the quality of the soap products while they are on transit. The ancillary resources consist of packages, which are used packaging the soaps. The human resources and the machinery also form part of the key resources in manufacturing the soap products(Goetsch and Davis 2014).

Key partners:

The key partners of Australian Organic Soap Limited would be the stakeholders, which play significant role in manufacturing of its soap products. The company would consider the management body and employees as key business partners. The management would form business strategies and policies on which the company would function. The middle level directors would communicate these strategies to their subordinates who actually execute the plans. This makes the employees and the management key partners who adopt and execute business strategies, which leads to smooth operations of the company(Wheelen and Hunger 2017).

Australian Organic Soap Limited would consider the customers key partners because they are the ones who create demands for the products. The customers consume the products and generate revenue for the company. This important role of revenue generation played by the consumers make them significant business partners(Macdonald, Kleinaltenkamp and Wilson 2016).

The next line of business partners consist of suppliers and distributors. the suppliers supply the company with organic raw materials at economic rates which help the company to maintain a low cost of production. This also allows it to produce more product units and earn higher margin of profits by selling. This discussion shows that suppliers play a very significant role in making materials available to Australian Organic Soap at economic prices so that the company can gain leadership in the market(Popa, Soto-Acosta and Loukis 2016). The distributors ensure that the finished products of Australian Organic Soap reach the final consumers. The distributors would help the soap making company offer its products to the middle and upper class customers readily and give the company competitive advantage in the market. Thus, suppliers and distributors are key business partners because they help the company to make products available to the final consumers(Karray 2013).

Revenue structure:

The revenue structure of Australian Organic Soap consists of revenue collected from repeat business from the outlets where the soap products are sold. The main expenditures would include the material cost, production cost, administrative cost and the marketing cost. These expenditures would be deducted from the sales to calculate the profit amount. The taxes are deducted from the net profit to calculate profit after taxes. The company revenue structure would be weak and consist of several expenditures in the initial phase and less number of outlets. The revenue earned from selling the soap is expected to rise as the soaps gain bigger consumer base in the market owing to continuous marketing efforts by the marketing department. As the company succeeds in establishing more economical supply and distribution network, it would able increase its production and earn higher profits by selling the two soaps(DaSilva and Trkman 2014).

Cost structure:

The cost structure of the Australian Organic Soap Limited would consist of two types of cost, fixed cost and the variable costs. The fixed cost would include taxes, factory rent and tariffs. The business would also require capital investments in acquisition of land and building, vehicles, plant and machinery and office buildings to start the initial production. The variable costs include salary of employees, maintenance cost of machinery and stationary expenses. The semivariable costs include telephone expenses and electricity expenses(Fageda, Suau-Sanchez and Mason 2015).

Cost categories

Examples

Fixed costs

Taxes, Rents

Variable costs

Amount spend to acquire materials, salary of employees, stationary, marketing expenses, lighting costs

Semi variable costs

Telephone expenses, electricity expenses

Figure 2. Figure showing types of costs

(Source: Author)

Minimum viable product of Soap Company:

The minimum viable product of Australian Organic Soap Limited would be organic soaps capable of offering clean and fresh feel to their users. The soaps would be made from organic materials like eucalyptus and aloe vera and be available in two initial variants. One variant called ‘Eastern Brown’ would target the male customers and be available in musky fragrance. The second variant would target the female customer under the name ‘Snow Petrel’ and would be available in rose fragrances. The company would introduce the soap products in these two variants as the minimum viable product on entering the Australian market. It would then expand its product line into other beauty products as it strengthens its market position(Schroder 2015).

Feasibility analysis:

Market feasibility:

The market feasibility of the two soaps by Australian Organic Soap is positive. The beauty industry in Australia has experienced tremendous growth in the last thirty years and the demand for beauty products are rising. Both men and women of Australia are showing increase in interest in beauty products. The bloggers keep the consumers informed about the latest trends in the fashion market. Australian beauty market has presence of multinational brands from all over the world. This analysis shows that it is market feasibility of the two soaps by Australian Organic Soap is positive and the company can go ahead with the manufacturing and marketing of the soaps(Huffington Post Australia. 2017). The soap industry is experiencing steady growth with presence of big brands like Dove, Palmolive and Imperial Lather. This presence of big brands owned by Unilever, Colgate and Palmolive and Cussons respectively. This presence of multinational brands acts as barrier to entry of new companies like Australian Organic Soap Limited from entering the market. The government regulations like, sustainability requires the companies invest huge amount of funds towards acquisition of sustainable technology, which is very expensive. The multinational companies like Unilever and PZ Cussons are financially strong and invest in acquiring of sustainable technology. However, new ventures like Australian Organic Soap Limited cannot invest huge amount of money towards achievement of sustainability. Thus, the government laws like, mandatory achievement of sustainability proves to be barrier to entry of new companies in the beauty market of Australia (Schroder 2015).

The rise of per capita income in Australia has resulted in more disposable income in the hands of the Australians. This would allow them to spend more money towards buying of luxurious goods like premium soaps. This would allow Australia Organic Soap Company to serve more customers and earn higher revenue. The soap products should add value to the customers’ expenditure through their superior quality, rich creamy lather and fragrances. They should make the users feel refreshed and confident (Hollensen 2015). These attributes would allow the soap company to create higher value to the customers and earn higher revenue. This proves that the market feasibility of the soap business venture is positive.

Technical feasibility:

The new business of making soap by Australian Organic Soap Limited is positive. The country is advanced in technology and has suppliers of machinery to make soap. The suppliers in the country provide organic raw materials like vegetable oil and fragrances like rose. The market of the company has logistics companies who make the finished products(soap here) available to the consumers. Moreover, there are companies in the market which make recycling machinery. This shows that the soap manufacturer can attain sustainability by acquiring raw materials from the sustainable suppliers and use the services of the recycling companies. This analysis shows that the soap manufacturing business in Australia is technically feasible (Andersen et al. 2015). The figure below shows the process of soap manufacturing and distribution operations, which Australian Organic Soap Company can follow to manufacture its soap products.

An analysis of the production process:

An analysis of the steps shows that the company can obtain raw materials like sandalwood oil and aloevera from the suppliers from all over the world. The production plants would manufacture the soap using advanced technology. The next step would be distribution of the finished products using logistics channels. The retail stores in the main cities would also cat as crucial distribution points.

Forms of business:

Australian Organic Soap Company would follow two modes of operations in producing and marketing soaps. The company within Australia would use self-production model and market its products under its own label. This model would allow the company to create its own strong image in the market. The company can enter into joint venture with established soap companies and enter new markets. This would enable it to use the knowledge and expertise of other companies and carry out open innovation. Australian Organic Soap Company after establishing its brand in the new market can end the joint venture and resume marketing its products under its own label.

Human feasibility:

The new soap manufacturing business of Australian Organic Soap Limited is feasible. Australia has skilled human resource, which is capable of making business strategies and executing them. This analysis shows that the new business venture can be executed in the Australian market efficiently. The ownership structure should in the initial stage be sole proprietorship but then shift towards public limited format to acquire more capital by selling shares. The business structure should be flat which would allow dynamic decision-making actions. The HR department should train the employees and motivate them to work harder. This would in turn allow them to achieve higher standards of performances which would ultimately lead to the growth of the business.

Financial feasibility:

The soap manufacturing venture in the Australian market is financially feasible. There are financial institutions in Australia which provide capital help to small scale entrepreneurial ventures like Australian Organic Soap Limited. The big corporate houses also assist small companies as a part of their corporate social responsibilities. There are several NGOs which train the people to start entrepreneurial ventures. This analysis shows that the soap business is financially feasible because the company in its initial stage can obtain financial help from these financial institutions and NGOs. It can also approach microfinance groups for financial assistance(Vezzoli et al. 2015).

Conclusion:

It can be concluded in a nut shell that the new soap business would target customers who like to take care of themselves. The new business would aim to create value for the customers and create a healthy relationship with them. The suppliers and distributors would play significant role in the operations of the company. The new venture is technically, financially and manually feasible. The company should aim towards creating of customer satisfaction to grow and sustain in the future.

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