Conducting feasibility is an important part of a business plan as it helps in discovering possible factors that could influence the success of the business. This allows the business opportunity for proper planning. Additionally, feasibility study enables a business to analyze its performance and market penetration which in the end, may offer an insight into the success chances and its performance. There are many models that could be used in conducting the feasibility study. Among the common models include PESTLE model and Porter's Five Forces model. The model plays a significant role in evaluating a companys position in its industry and in determining its attractiveness and competitive intensity in a market (Scarborough & Cornwall, 2015). The forces include competitive challenge, an intimidation and entry of new enterprises, a threat of alternatives, negotiation power of consumers, and bargaining power of providers. Similarly, conducting a product or service feasibility ensures the business provides the customers with the most appealing products (Schmidt, 2014). However, it is important to do a financial feasibility to identify the most efficient ways to fund the business. The firm under analysis seeks to operate in the food and beverage industry as an importer and distributor of fresh and healthy foods and beverages in California (Schmidt, 2014).
Importance of a feasibility study to a business start-up
Profit realization is one of the major goals that any business entity often desires to achieve. When starting new business premises, business organizations are often faced with the uncertainty of realizing the desired financial gains or possible loss. In regard to this, feasibility study plays a critical role in allowing the business owner to gauge the financial potential of the business. In a number of instances, feasibility analysis is used in developing projected financial capability of the business that is a critical aspect of business planning. In a number of cases, business without proper feasibility will realize poor planning that could give way to financial distress hence business failure. Secondly, a business operates in a dynamic environment that comprises many facets that influence performance of the organization (Schmidt, 2014). Among these factors include, legal environment, technological environment, social environment, competitive environment, besides other domains that varies from one organization to the other. With regard to conducting feasibility, the business should be able to ascertain the sustainability of the business premise with regard to the possible environments that will affect the operations of the business. This provides a platform for recommendations that can be adopted to improve the sustainability of the organization within the recognized spheres (Schmidt, 2014).
The reasons for conducting a feasibility study
Apart from offering the information about the sustainability of the business, adopting feasibility study allows the business to monitor the trends within the industry as a whole hence ability to adopt effective operational measures. With regard to the food and beverage company, the feasibility study will make it possible for identification of various factors that could influence the business as argued by Scarborough, M., & Cornwall, R. (2015)
Porter's five forces model
The Porter's five forces model puts forth five factors (fig 1 below) that determines the competitive advantage that a company will realize within its environment of operation. According to Porter, any company is faced with certain threats that emanate from the operation of other competing firms and policies adopted within the market place. Among the key aspects central in the Porter's five models include, threat of new firms entering the industry, threat of substitutes, bargaining power of both customers and suppliers and possible rivalry within the industry (Schmidt, 2014).
Threat of new entry
Our company that focuses on distribution, importation of food and beverage products within the state of California will operate in full knowledge of the possible threat of new firms entering the industry. The relatively high population of the California state puts the firm with a possible increased market for the food products to be distributed. In addition, this market has the advantage that members of the state are aware of the production of beverages and distribution, hence the possible increased demand for the products (Schmidt, 2014). Owing to the easy entry into the markets, the organization has the possibility of being affected by the possible entry of new firms. This could result into a reduced market share hence a reduction in the expected profit volumes. In order to reduce this threat, the organization is looking forward to offer quality products that meet the specific needs of different market segments. In addition, reliable distribution is another measure that the company looks forward to integrate in order to create customers loyalty (Stuckler, McKee, Ebrahim&Basu, 2012).
Threat of substitutes
The presence of many firms in the market, California, providing substitute products places a great threat to the company. So as to counter this, the company looks forward to develop a strong brand that will help in promoting loyalty among the customers. Further, the company plans to employ intense promotion strategies so as to inform potential customers within the state about the existence of the products distributed (Scarborough & Cornwall, 2015)
Bargaining power of the suppliers
Suppliers will take a critical position in the operation of the food and beverage company. As a result of this, the management of the company will endeavor offer enticing terms to suppliers with the intention of improving their ties with the company. Terms such as prompt payments for deliveries offered will help to develop loyalty among the suppliers (Stuckler, McKee, Ebrahim&Basu, 2012).
Bargaining power of the buyers
The population of California compromises buyers of different social and age groups that the company will tailor in the distribution of the products. Apart from the actual purchases, the company intends to use customers in reaching out to other possible consumers. Free after-sale services will be central in the organization strive to create strong ties with the customers. In addition, adopting prices, promotion and even packaging that meets the perception of every market segment will be instrumental in promoting loyalty among the customers (Stuckler, McKee, Ebrahim&Basu, 2012).
The California food and beverage industry is composed of a number of firms that are in constant competition. Promoting healthy competition through partnering in certain service delivery measures with other companies within the same industry will help in reducing possible rivalry with other companies (Jacobson & Brownell, 2000).
Description of the Company under analysis
Food and Beverage Industry
Food and beverage industry is one of the major components of tourism and hospitality. In California it is one of the major foreign exchange earners in the sense that it leads to high increase in tourism income. Food and beverage are also the greatest employer in the tourism and hospitality industry. Employees performance is of significance as far as quality and delivery of food and beverage industry is concerned. The employees performance in this case directly translates to service rendered. How effectively the food and beverage service of employees is managed will definitely ensure service delivery and productivity.
Import and distribute fresh, healthy, and organic foods and beverages in California
The food and beverage industry in California dealing in distribution of fresh, healthy and organic foods will be concentrating on achieving the following four main objectives:
i. Quality food and beverages comprising fresh, healthy and organic foods
ii. Promotion of proper hygiene and healthy environment.
iii. Easy to use and well-designed facilities
The main method that will be used for distribution of fresh and organic foods and beverages in California will be centralized distribution of food production.
The fresh foods and beverages that the company will be distributing include;
Vegetables: Roots, leaf, brassicas, fruit, bulb, squash, and pods
Fruits: Berries, Citrus, tropical,
Fish: freshwater, including; trout, ecl, carp, salmon and Seawater including; Mullet, Mackerel, Snapper, Cod
Poultry and game: Chicken, goose and turkey, woodcock, Quail and Partridge, Hare and Rabbit
In distribution of fresh foods and beverages in California, a lot of logistics will be involved. Logistics entails the administration of the flow of products from place of origin to the target to meet consumer needs at the right time, place at a low operational cost
There will be a few challenges that our company will be experiencing which include but not limited to increased globalization, tighter standards for compliance and security
Advantages of the centralized distribution method are:
Promotion of high standards of hygiene in handling of fresh foods and beverages.
Production in large amounts makes the prices relatively affordable for the final consumers.
i. There is possibility of slow delivery in the supply of the products.
ii. Pass control to another company
Fresh foods, transportation, especially meat depend on cold chain since once slaughtered unfrozen meat has limited storage life. Meat animals will be collected alive and transported to slaughterhouses. The carcasses will be frozen and transported by refrigerated railcars to consumption markets. There they will be butchered, packed and sold mainly in major supermarkets in temperature controlled locations.
Industry and market feasibility
From the analysis of the food and beverage market in California, engaging in the industry operation is highly feasible with adoption of sustainable strategies. The fact that there are few firms that import and distribute organic food products makes the market sustainable and with possible high profit margins. In addition, the fact that the State has fewer resources for agricultural activities allows for high demand for food and beverage products. Legally, the production and distribution of food related products in the state California is boosted by friendly policies such tax cuts and other policies that make the industry favorable for operating entities (Jacobson & Brownell, 2000).
Product or service feasibility
This entails a series of measures that will make it possible for the products and services being rendered in the market to meet the specifications of different market segments. Besides, product feasibility will ensure at maintaining sustainability of the product in the market (Schmidt, 2014).
Proper storage facilities
Food and beverage products are very perishable hence the company will venture into measures that help in promoting the provision of fresh products. Every distribution point within the state will be provided with refrigerators for storage. Cooling systems will also be installed in the distribution trucks in order to preserve the freshness of all the products distributed (Nestle, 2013).
High health standards will be provided for the products through quality packaging. Clear guidelines on the usage and the ingredients of the food products will also be highlighted in the packages. This will help in providing confidence among the final consumers, hence improving the levels of loyalty.
The prices for all the products will be properly designed after intense market research. The prices to be set should meet the budget lines of the target market segment besides being able to ensure a profit margin...
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