Beep Beep will be a new local start-up company in the private ride hailing industry in Singapore. Instead of venturing out to different countries, Beep Beep will be focusing on its efforts firstly on homeground here in Singapore.
Beep Beep is not just a transportation service provider, the true service that we are providing for our clients is a new seamless user-friendly, cost-effective and efficient way to allow you to power through your day on time, without needing to worry about how to get where you need to be.
Through the Beep Beep smartphone application, you are able to get a ride at anytime, anywhere. Set your schedule for the day the night before, and your ride will be ready for you once it is time for you to get going! Instead of outsourcing different aspects of our business, we will be the main head in-charge of every department – from application development, to customer service, to logistics management such as car rental and maintenance and also finance, to ensure that our riders have the best at every step of the way
Beep Beep was set up in 2018 by a group of friends who were having a cup of tea together and started ranting about the recent news about grab taking over uber and comfort taxi. Despite being taken over they still have dissatisfaction towards grab service thus this group of 6 friends decide to set up Beep Beep to better improvise transport service in southeast asia especially in their home town Singapore.
There are many various definitions of stakeholders – with perhaps the most widely cited one being “any group or individual who is affected by or can affect the achievement of an organisation’s objectives” (Haddaway et al., 2017).
A stakeholder is someone who will either be affected by the company’s success or failure, or one who will determine whether the company succeeds or fails. Also, stakeholders can be internal or external to the business. A stake is a vital interest in the business or its activities. It can include ownership and property interests, legal interests and obligations, and moral rights.
A legal obligation may be the duty to pay wages or to honor contracts. A moral right may include the right of a consumer not to be intentionally harmed by business activities. Stakeholders can: 1) Affect a business 2) Be affected by a business 3) Be both affected by a business and affect a business.
The stakeholder analysis is important and crucial as it can make or break a company. With the stakeholder analysis, a company will be able to better identify each individual’s expectations and interests in the business along with their needs. (Project Management, 2018) The purpose of conducting a Stakeholder Analysis allows us to identify opportunities, risk or potential, emerging or existing challenges.Stakeholder analysis can also be used to avoid inflaming conflicts, ensure that the marginalization of certain groups is not reinforced, and fairly represent diverse interests (Prell, Hubacek and Reed, 2009).
In the case of Beep Beep, most of the roles above in the table are considered to be stakeholders to the company. Shareholders will be those that are investing their money to Beep Beep, government may involve ministries such as the Land Transport Authority. Employees are those that will be working in the Beep Beep offices handling customer service or accounting roles for examples. Drivers will be on the field serving passengers, who are also stakeholders. What the press has to say about Beep Beep will also affect the company. How the community views the company and creditors such as car rental subsidiaries are also affected by the actions of Beep Beep.
We will name a few of the more dominant and important stakeholder roles.
Shareholders will expect to be aware of the company’s financial standing and also if they will be able to get back a profit on their investments. On the other hand, they have the financial capability to allow the company to grow.
Creditors in this case can be seen as car rental subsidiaries which will provide the vehicles for Beep Beep’s drivers to carry out our services. They will want to have peace of mind to know that the cars that they have will be out and rented by people, and not just sitting in the garage depreciating. On the other hand, they have the “supplies” to keep the company up and running.
Employees and drivers are those working for Beep Beep, both in the office and on the field serving the passengers. These group of stakeholders of course want to have the peace of mind that they are in a good company that will take care of their wellbeing. They are the ones that lead the company to acquiring profit and income.
Passengers are also stakeholders as they want to get the best quality of service and worth for their money from Beep Beep. They are willing to spend their money on our services, keeping Beep Beep sustainable in the long run.
For stakeholders like shareholders that have a high level of power and interest, they should be managed closely. For passengers that have a high level of power but low level of interest, they should be kept satisfied. Creditors have a low level of power and high interest level, they should be kept informed. Employees and drivers have a low level of interest and power, so they should be monitored.
With so many stakeholders in a company, prioritization is extremely important to make sure that resources are made use of to the best ability.
Vision and Mission
Beep Beep’s long-term objective is to revolutionize not just the private hire car industry, but the way people travel on roads. We want to make car hailing easy, fuss-free, straightforward and transparent for all consumers around the world.
Our mission is to ensure not just riders, but also that our drivers are getting real value out of our passion – one kilometer at a time.
In the future, we envision ourselves to be the benchmark for all private hire car companies. For our competitors to work equally hard in serving our consumers with what they find to be the most important – timeliness, quality customer service, efficiency and effectiveness.
PESTEL analysis is used to evaluate the external environment such that potential risk and issues are considered (Nitank, 2016).
In recent years, the demand for private hire car services has increased tremendously and the alliance witness between these services and taxi firms raises many concerns about the possibility of market dominance (Lim, 2018). The government is now studying on creating a greater range of regulatory levels on providing private hire car services to ensure that the market grow towards the intention of drivers, commuters and the government. It is possible that new licensing may be imposed to ensure that the market remain contestable and no single player will dominate the market.
Economist predicts that the local economy will grow 3.2 percent this year, which remains unchanged from the last survey taken in March (Chia, 2018). Given that the local economy is unlikely to experience huge changes, the purchasing power of Singaporeans should not differ too much. However, the GST hike that is likely to kick in in year 2021 to 2025 (Kwang, 2018), may have repercussion to private hire car services business.
Social-cultural
In this digital-age, 7 in 10 Singaporeans uses social media on mobile (Tan, 2017). It is safe to say that an estimated amount of 4 million Singaporeans possess smartphones that has the ability to use mobile application such as Facebook and Whatsapp. It is also expected that phone-calling will evolve into using related-applications that utilises the internet. This allows changes interactions between people and enables faster exchange of ideas. Hence, most Singaporeans have the means to get private hire car services through mobile applications.
Technological
Singtel and Ericsson will launch a 5G pilot network in the fourth quarter to support drones and self-driving car tests (straitstimes, 2018). The fifth generation technology brings greater consumer connection with higher reliability and lower latency. In addition, many telecommunications companies in Singapore offer mobile plans that provide large amount of data with lower pricing to attract more smartphone users. This in turn enable smartphone users to use smartphone applications more freely.
Scenario Planning
Recent reports have shown that there are several new competitor companies joining the private hire car hailing industry in Singapore – Go-Jek, TADA, SIX, Urge and Ryde. Of course, with Grab still holding the largest market share here. (The Straits Times, 2018)
In terms of the private hire car hailing industry, Beep Beep should keep up with what the competitors are doing in the market to keep their loyal application users or consumers. These include things such as loyalty point memberships, fuss-free payment methods and of course, exceptional customer service. With this strategy, the approach may lead to loyalty, trust and attract more users.
For tourists in Singapore, payment mode becomes an issue. Some tourists have their preferred local payment methods such as AliPay from China. Some ride-hailing companies already have this available on their applications. Grab also has their own built-in payment system known as GrabPay. More and more consumers are increasingly adapting and making use of these payment gateways as they are convenient. (EDB Singapore, 2017) Beep Beep can ensure to put in place an attractive loyalty points system and also to provide as many different popular payment methods as possible to attract new users.
VRIO Analysis
VRIO (Valuable, Rare, Inimitable and Organisational) model is used to assess the resources and the sustainability of the competitive advantages possessed by the organization (Chu, 2015)
|
No. |
Competitive Advantages |
Are the Resources |
|
1 |
Valuable? |
Yes |
|
2 |
Rare? |
Yes |
|
3 |
Costly to Imitate? |
No |
|
4 |
Organisation Support? |
Yes |
Table 9.1 indicates the VRIO analysis of Beep Beep
Valuable – Yes
The traditional taxi firms such as Comfortdelgro, dispatch their drivers to look for customers while on the road. Passengers will have to hail any available taxi while standing beside the road. The outdated method of hailing a taxi can be time consuming and frustrating for both passengers and drivers. Similarly, the built-in booking system these taxi have are slow and difficult to work with. The Beep Beep app offers great convenience to both passengers and drivers. Other than having a smooth interface and is easy to manage for all generation, the app provides a GPS navigation function for drivers to determine the best and fastest driving routes. Being connected while driving, it is able to feed information on roads that are temporary close or are experience traffic jams. Hence, the organisation can offer cheaper rides for commuting as the cost and time to travel will be lower. In addition, drivers have the flexibility of working and resting.
Rare – Yes
Beep Beep is considered rare with its new strategy called the “Driver-Passenger Package”, this strategy allowing our customer to appoint a driver that they are comfortable and satisfied with to be their permanent driver, however mutual agreement with the driver must be consented. A contract of one month, three month or a year package with standardised terms and condition will be rolled by Beep Beep to provides our drivers and customers the comfort and efficiency in their everyday routine of life. Beep Beep also provides bus, van booking services anytime and anywhere in advance for the benefit of tourism organisation. On the other hand, Beep Beep also aims to fare our rides at 10% lower which is fairly lower than market rates and our largest competitor Grab.
Costly to Imitate – No
Here in Singapore, we can see that taxi hailing apps such as Beep Beep is an easily imitable business. Nothing is preventing competition from presenting the same service and product to the public. This can be seen as there were several similar businesses that existed in Singapore such as Uber, Grab and Ryde. The problem however, is whether such businesses are able to survive in the tight and competitive market in Singapore.
Organization Support – Yes
Beep Beep is organized to capture value from this capability. The IT department has the skills to collect and maintain the data, while HR and team leaders are trained on how to use the data to hire, promote, manage, and improve performance of Beep Drivers.
Hence, the competitive implication for Beep Beep are temporary competitive advantage.
The Competition and Consumer Commission of Singapore has mentioned that they will remove all restriction on Grab if any new player is able to attain 30 percent of the market in a single month (Cheok, 2018). New players are unable to compete with Grab as passengers are less likely to switch due to Grab’s market position. Hence, many deemed that the bar are set too high and Beep Beep configuration of resources are likely to be underutilized at the initial phase.
Beep Beep will be a new local start-up company in the private ride hailing industry in Singapore. Instead of venturing out to different countries, Beep Beep will be focusing on its efforts firstly on homeground here in Singapore.
Beep Beep is not just a transportation service provider, the true service that we are providing for our clients is a new seamless user-friendly, cost-effective and efficient way to allow you to power through your day on time, without needing to worry about how to get where you need to be.
Through the Beep Beep smartphone application, you are able to get a ride at anytime, anywhere. Set your schedule for the day the night before, and your ride will be ready for you once it is time for you to get going! Instead of outsourcing different aspects of our business, we will be the main head in-charge of every department – from application development, to customer service, to logistics management such as car rental and maintenance and also finance, to ensure that our riders have the best at every step of the way.
Beep Beep’s core competencies focuses on the fact that it is an all-in-one platform. Today, you have to use a private hire car service to get a ride home, a food delivery application to get your dinner delivered to your home and then subsequently a courier company to send to your home whatever you need to be collected. However, with Beep Beep, we make the journey simpler for you – leave the office after work and get into a car with your dinner and parcels ready to make it back to your home with you.
Detailed Explanation of the value creation activities of the firm
Generating value that the customer wants should be one of the main goals for any corporation. It can influence a customer a lot, such as affecting their loyalty. The concept of value consists of the value creation process, and then the outcomes of this value. The value creation process is how the corporation is going to create this value, and the outcome being how the customers see this value – whether or not it is value adding for them. (3) Consumer behavior is important in this case, understanding consumer behaviour and what they want is crucial to the value creation process. (4)
When it comes to the industry of transport in Singapore, what consumers want it all – convenience, comfort and affordability. Alongside this consumer behaviour, we have come up with a value creation process. This is to provide convenience in our application development, where our consumers get to book all the services they need, from transport, to food, or even delivery. They will also be able to be in the comfort of their own Beep Beep cars, instead of packed public transportation. The services will also be in an affordable price range. The value outcome will hopefully be that the consumers see us as a service that will be useful in their day-to-day life and continue using our services for long-term brand loyalty.
Value creation is crucial when it comes to the success or failure of any company that is operating on a business-to-consumer model. (1) It also involves the factor of sustainability and helps a firm to maximize their profits or revenue. (2)
For Beep Beep, the value that we create for our consumers is the factor of convenience. We are an all-in-one platform that serves the business-to-consumer market. In the ever fast-paced environment in Singapore, convenience is of utmost importance to many people which can assist in the long-term sustainability of Beep Beep.
The Porter’s 5 forces can be used to better understand the current situation of the industry market – industry rivalry, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and also barriers to entry. (Mars, 2014)
When it comes to industry rivalry, the largest competitor to Beep Beep would be Grab. Grab is definitely still the king here in Singapore, as they still hold majority of the market share. (Salim, 2018)
The threat of substitutes for Beep Beep is relatively small. The only similar substitute would be Taxi services like Comfortdelgro or Premier. There is definitely also the alternative of public transportation services like the bus or MRT trains, or even bike-sharing services like OFO. However these substitutes are quite different and are unlikely to be considered by a consumer looking for something similar.
The bargaining power of consumers of Beep Beep will be on the higher side. Since Beep Beep is a new company penetrating into the private hire car hailing service industry in Singapore, we will first need to offer attractive discounts and offers before we can get consumers to switch over to our services.
As for barriers to entry, Singapore is slowly changing up the regulations for ride hailing services industry in Singapore since March 2018 when Uber left the market. Entering the market, Beep Beep may find more hindrances as to the legal aspects. (Cheng, 2018) Some examples include making it necessary now for all private hire car drivers to have a Provisional Driving Vocational License.
The private hire car industry is an industry of services. The service life cycle includes – service strategy, service design, service transition, service operation and continual service improvement. (5) The service strategy considers the organisational strategy of the corporation such as effective management. The service design’s goal is to show how the firm can use their resources to create value for consumers. The service transition is mainly on how to implement any changes if needed. The service operation focuses on exactly how the service will be delivered to the customers. Continual service improvement is maintenance of IT and support to users. (6)
For Beep Beep, the service strategy is an all-in-one platform where we handle everything from providing the vehicles for our drivers, to the back-end customer support and all other functions. The service design is using our all-in-one app to create convenience for consumers. The service transition will involve needing to improve the application to provide any new services in the future – apart from just delivery and transport services. We will have in place a reliable IT team to handle such problems. The service operation will run mainly on the entire application built. Continual service improvement to meet customers needs will be done through our helplines and also constant application update to make it more user-friendly and keep up to trends of the consumers needs.ndustry Life cycle of transportation services
Industry life cycle with the 5 forces
The largest player in the private hire transport service industry in Singapore is Grab. Grab’s monopoly in Singapore was, however, short-lived even after Uber exited the market. New players such as Ryde, Jugnoo, Filo, MVL, and even possibly Go Jek have quickly pounced upon the opportunity to be a part of the industry. (Lim, 2018). There has been instances that drivers could wait up to 30 minutes to get customers. This means that power of buyers increases as the capacity exceeds demand.
The KSF competitor ranking by David Aaker ranks a corporation against its industry competitors based on key success factors. There should be less than 10 different key success factors. (7)
Although Beep Beep’s key success factors ranking is higher than Go-Jek and Ryde, it is still lower than Grab. However, it does have an edge in the factor of variety.
As of now, the estimated global taxi market net worth is $108 billion, which is 3 times the size of the private ride-hailing market (Huston, 2017). Recent years have shown that there is a decreasing trend in the value of the taxi market as the ride-hailing market increase exponentially. It is speculated that in 2030, the number of ride-hailing trips will reach 97 million globally, triple the amount as of now. Despite the expected market growth, our organisation may not grow as expected due to limited market share. Currently, Beep Beep is positioned second in the market shares of ride-hailing. However, the difference between our market shares and Grab’s ones is considerably huge.
In order for Beep Beep to position itself closer towards the ‘star’ of the BCG matrix huge investment will be needed (Hanlon, 2018). Capital will be required to purchase more vehicles to meet the demands of the growing market and increase in marketing will be required to capture more target audience. However, if Beep Beep is only able to keep up with the pace of the market growth, the market positioning will not improve. Hence, more capital is needed to fund the development programmes and manufacturing operations, such that we are position closely to Grab. If the business is deemed to be a ‘dog’ eventually, divestment of assets to other competitors will cut down the loss.
|
Strengths – Large fleet of vehicles – Cashless paying system – Flexible working hours for drivers – Operation cost reduce due to reliance on driver-customer interaction – High valuation – Provides multiple services that brings conveniences |
Weakness – Driver might be unmotivated – Cost of operating the vehicles are high – Interaction between Beep Beep and customers is limited – Concern over the privacy issues – Business model can be unpredictable – Low research and development capability |
|
Opportunities – Use of electric cars cuts down usage of fuel and reduce operation cost – Favourable support from government – Emphasizes on environmental sustainability influences decision |
Threats – Resistance towards change – Competitive price pressure – Substitutes readily available – New legal regulation may be unfavourable to the organisation |
Table 17.1.: SWOT analysis of Beep Beep
The organisation seeks to be unique in the service industry where one or more attributes of consumers are perceived important. Beep Beep position itself such that it is able to meet the demand of a broad target by having a premium price. Hence, the generic strategy of Beep Beep is the differentiation method. This means that the services provided must be different and more attractive than the competitors (Tanwar, 2013). This could be achieved through the enhancement of features, functionality, durability and the perceived branding. Effective marketing and innovation are two essential in differentiation strategy. Marketing is required to inform the target audience on the service offerings and the differences with competitors. A good research and development team is required for new innovation such that services provided will always be unique and stay on top of the market. However, it is important that risk such as commondisation of the services may exist.
In the near future, it is highly possible that the organisation may decide to expand in the business through the development strategy. As mentioned previously, one of the key competitive advantage of Beep Beep is bringing convenience to consumers. Hence, we could include new service offerings that will enhances and improve consumers’ lifestyle. Under the Ansoff Matrix, product development is a strategy that sells new and existing services into the same market. The new services provided may even replace existing services which will increase organisation growth and boost market shares (Hussain, 2013). By understanding the underlying needs of customers, it provides opportunities for the organisation to develop new services for existing customers. Having local guides that drives can be an example of the services that Beep Beep could incorporate into the service offerings. This line of service is targeted towards tourist visiting Singapore, in which they will have cultural lessons from the driver and will be brought around Singapore to visit heritage sites. In addition, Beep Beep could collaborate with organisation such as Klook to leverage on their expertise.
A value proposition
An organizational structure usually tells about the method which an organization utilizes to set the communication lines, organizational policies, authority as well as responsibilities. It also determines the nature of the process, through which leadership is dispersed throughout the company and the way in which info flows. Generally, organizations adapt either hierarchical or a flat structure. The above structure of this organization is hierarchical in nature (Hoch & Kozlowski, 2014). A hierarchical organization is a structure where each entity of the organization, except the superior one, is assistants to a particular other entity of the organization. Additionally, associates of such hierarchical organizational structures mainly converse with their direct supervisors and with their immediate juniors (Clauset, Moore, & Newman, 2008).
Moreover, a hierarchical organization trails the outline of a pyramid structure. It means that every employee of the company, excluding one, customarily the CEO, is subservient to some other employee within that organization. Layout of this kind of structure consists of various individuals those descend towards the base of staff level workforces, those who lays at the bottommost of the pyramid structure (Jones, 2013).
Now coming to this particular case, the given hierarchical organizational structure is having three layers of entities. One layer is at the uppermost level, second one is lying in the middle of the extremes and the last one is lying at the bottom of the hierarchy. CEO which as an acronym of chief executive officer, named as CLARICE is the supervisor of all employees in the organization. He is that exceptional entity which is not supervised from anyone and who is the most responsible person in this organization. After CLARICE, CFO (chief financial officer) named as XINFA is the supervisor of four departments of the firm comprising HR department, finance department, operations department and marketing department. There will be so many employees in these four departments but they all will be working under a single entity that is Head of the department (referred as HOD). In this way, we can say that all HR department employees will be reporting to TECKSING, who is the head of HR. Similarly, this can be said for all other department employees including finance, operations and marketing.
There are many advantages of adopting a Hierarchical Organizational Structure; some of them are as follows:
All employees are capable to recognize well-defined levels of leadership within an organization;
Employees working in the hierarchical structures are able to fine their field and become the experts of any specific function (Jones, 2013).
In this structure employees are more loyal to their own departments as they look out for the best for their specific department.
The promotion opportunities for the employees are a source of motivation for performing well (Meehan, 2018).
On the other hand, there are some flaws in this organizational structure, as follows:
Complexity of communicating across distinct departments comparative to the flat structures.
Increased organizational costs because of salaries of multiple layers of hierarchical management.
Competition may transform into conflicts among all departments of the hierarchy (Robbins, 1983).
Moreover, whenever there is any conflict in between the entities and their immediate supervisors then they can go to the higher authorities than their supervisors. Besides, a condition is implied to all of the employees of the organization having hierarchical structure is that they all need to follow the hierarchy which is shown in the above figure (Clauset, Moore, & Newman, 2008).
An analysis of the firm’s HRM strategy
HRM strategy needs to be designed as per the need of the organisation. The human resource development has to be effective so that company may face challenges related to the staffing, recruiting and other human resource functions (Koprax, Mayrhofer & Güttel, 2014). Beep Beep has a hierarchical organisational structure hence they need to have a strong HRM unit so as to recruit people as per the requirement as well as measure the challenges that they have facing in the HRM management (Latkovikj, Popovska, & Popovski, 2016).
The management team comprises of people from different sectors. This will help them in managing the business in an appropriate manner (Saha, 2013). Since the decision making will be the responsibility of these people hence the selection of the candidate must be as per their qualification (Kesting, Mueller, Jørgensen & Ulhøi, 2011). Highly qualified people that are having experience of working in the industry will be recruited in this management team. Their qualification can be illustrated below.
|
Post |
Name |
Qualification |
Reason for Selection |
|
HR manager |
Rio |
Maters in HRM |
He has an experience of working in the same field for 4 years. |
|
Finance |
Samuel |
Master in finance and accounting |
He has an experience of working at this job profile for 6 years |
|
Operations |
John |
PHD in operations |
He is having an experience of working as a operational manager for 5 years |
|
Marketing |
Kuang |
Phd in marketing |
He is justified for this position as he has an experience of working at this profile for 4 years. |
They can find people from both local and international arena. It is recommended that at the initial stage company needs to find people that are from Singapore only. This is necessary for working as per the cultural orientation of the country (Julien, 2018). This will also help the company in working as per the value that company has made for itself. They can easily find people on the job portals or through other kinds of internet mediums by posting job profile on it. This is extremely beneficial in the case of recruiting international contenders (Alasadi & Al Sabbagh, 2015). They can also call for an interview that aims to recruit more local people.
Appropriate staffing can be done by distributing the day into three shifts and one day off on any of day. In case of holiday some additional staffs have to be kept into the pool. Illness can be another reason for absentees hence these additional staffs could help them (Garavan, Watson, Carbery & O’Brien, 2016). The span of control can be made powerful by keeping 20 employees under one manager. The salary packages is in three levels and the salaries keep on increasing every year according to the performance of the employees as well as the base structure also increases. The base structure for this year has been given below
In terms of training Beep Beep will hire staffs of both the types i.e. the staffs that are already trained as well as the staffs that are to be trained. This is because this company has an excellent training department that aims to give training of all the types that is required at any job post. The training will be given in the fields such as technical, behavioural and culture that is followed by the company (DuBois & Dubois, 2012). Apart from this training will be given at regular intervals so as to improve the standard of the employees and to fulfil the changing requirements of the firm. This training will be also given to the employees when they are promoted to new levels.
It is estimated that recruitment cost will be around $20 dollar per candidate. This is less as the firm will use more of internet mediums for recruitment. In order to protect employee turnover, company will promote staffs as per their capabilities. They are also given rewards as per their performance. For this a performance management system will be used (Long, Ajagbe & Kowang, 2014).
They have made employment legislation as per the legislations that are prevalent in the country. Apart from this the norms and rules as per the values and the culture that is present in the organisation.
Operational plan is the process which includes the planning of strategic objectives and goals of the business in order to meet the overall expectations of the business. It describes about the condition for success, milestones, key performance indicators etc of the business to which are put together to meet the common objectives and the strategically performance of the business (Madura, 2011). In the business plan, in order to prepare the operational plan, all the details have been measured related to start the business and run the business smoothly. It has been studied that CAPEX, OPEX and the budgetary responsibility are the main parts which must be planned in order to run the business smoothly. Below is the description about the capital expenditure of the business:
|
CAPITAL Expenditure/ ONE TIME COSTS |
– |
|
Owned Building |
$ 100,000 |
|
Construction & equipments |
$ 50,000 |
|
Contents |
$ 45,000 |
|
Vehicles |
$ 80,000 |
|
DEPRECIATION |
$ 48,000 |
|
RAW MATERIALS |
$ 50,000 |
|
OTHERS |
$ 10,000 |
|
Total capital costs |
$ 383,000 |
It represents about the total cost which is basically the funds for the company and it is used by the company to acquire, maintain, and upgrade the physical assets of the business (Chandra, 2011). The above table reprints that in order to start the business and manage the physical assets of the business; $ 383000 is required in the business which must be funded by the business through the bank loan, financial institutions, equity or debt.
Further, the operational expenditure of the business has been studied. OPEX and CAPEX are two different categories of cost of an organization. Operating cost mainly represents the total cost which is required in the business to run the business operations of the company on daily basis (Hilton & Platt, 2013). The operational expenses of the business have been studied and a list has been prepared in order to identify that how much fund would be required in the business to maintain the activities of the business. Below is the OPEX table:
|
START-UP COSTS/ONGOING COSTS |
|
|
Admin Costs |
$ 15,000.00 |
|
Salaries |
$ 5,000.00 |
|
Rent |
$ 12,000.00 |
|
Fees |
$ 6,000.00 |
|
Insurance |
$ 5,000.00 |
|
Misc. |
$ 5,500.00 |
|
Total start-up costs |
$ 33,500.00 |
Further, the budgetary responsibilities of the business has been studied and it has been recognized that preparing the budget is one of the common tool in each of the business in order to forecast the future performance of the business so that the corrective and collective decision could be made on time (Porcelli & Delgado, 2009). The budgetary responsibilities lie in the business in order:
to promote, communicate an coordinate the performance of the employees
To provide a base to appraise the performance
To forecast the future performance of the business
To improve the allocation of scarce resources
To motivate the employees by participating in budget preparation etc. (DemaMoreno, 2009)
These few are the points due to which it is important for the business to maintain and prepare the better budgetary plans in the business.
References
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