Business Plan For Nature Pura Organic Food Store In Thailand

MKTM033 The Entrepreneurship Report

Business details

Producing organic food has become one of the national agenda of Thailand and development of organic knowledge, innovation as well as promoting the commercially viable organic produce by high-level committee. The present report discusses about the business plan of organic food store to be opened in Thailand. Name of shop will be “Nature pura organic food store” that will be located in Watthana, Bangkok, Thailand. Organic food will have the advantage, as the market place will be a comfortable place to shop in the community. The closest competing natural food store to Rediance Wholefoods co Ltd that is twenty-minute drive. The mission of food store is to enable health conscious customers to explore, discover and embrace a healthy life style and organic food store is there to support in the journey (Baker and de Zeeuw 2015). The goal of food store is to help people live healthier life style by providing the quality foods at the competitive prices.

Nature pura organic plans to become a fast growing organic food store in Bangkok, Thailand. Main aim of establishing the business is to fulfill the growing demand of organic products along with satisfying the needs of health sentient customers. Some of the products offered by the store would involve locally grown and organic produce, preservatives and chemical free groceries along with eco household products. The products offered by nature and pura store would be healthy alternatives to all the products available at traditional grocery stores (Thongplew et al. 2014). Objectives of business is to provide the foods without added preservatives, added colors, additives and flavor and provide customers with organically grown vegetables and fruits. It also intends to support organic farm for keeping water and earth in its purest form. Supporting organic culture will help the business in rewarding all the farmers who have made significant contribution for eliminating the requirement of harmful chemicals.

Rapidly growing market is a factor that is attractive to the investors compared to struggling against the competitors in stationary market. An analysis of industry of Nature pura intention of entering is essential for gaining recognition for whether the market size is appropriate for business. Analysis of market opportunity revolves around the value system and creation of value chain in organization. Thaliana has been experiencing soaring demand for organic food market due to going health concern and increasing awareness and rising adulteration of foods and welfare of animals. In the coming year, growing funding from government will fuel the organic food market in Thailand. Sectors of organic farming is growing in Thailand (McKenzie 2015). Government and private initiatives is encouraging the sector of organic sector.

Industry and market analysis

The total market size for organic packaged beverages and food in Thailand in 2015 stood at US $ 12.9 million and this value make the organic food market 41^st largest market in the market. Per capita spending on organic beverages and food packaging stood at US $ 0.2 and this was ranked 43^rd in the world. There is a moderate year on year growth of organic packaged beverages and foods close to 8% in 2015. However, this particular percentage is considered slower than other pacific region in Asia. A moderate forecast growth of sales of organic beverages and good would be experienced from 2015-2020 at the rate of 7.3% (Blackburn et al 2013).

In the coming years, sales of organic food packaged and beverage foods will continue to grow, however the rate of growth is slow in recent years. Some of the organic products that is projected to grow at higher rates is green tea, organic breakfast cereals and dried baby food and this presents an opportunity for companies to break into the organic food of Thai market. Landscape of organic beverage is relatively more competitive with some of Thai based companies of Coffee Beanery Co ltd and Green net Coop with market share of 21.7% and 32.6% respectively. Capital Rice Company Ltd having a market share of 64.8% dominates the organic food landscape (Barton 2016).

Highest sales volume was recorded in organic rice that is far among the organic food categories in recent years. Among average beverage categories, organic coffee and tea topped the list in terms of sales volume. Strong growth in sales of beverages and organic packaged food was driven by Thai consumers and thereby increasing the growing demand and health consciousness from high-income consumers. Organic packaged beverage and food are premium prices and high-income consumers generally purchase them (Lu and Gursoy 2017). Thai consumers are increasingly becoming health consciousness and are willing to spend on wellness and health products and this has resulted in driving sales in recent years.

One of the strong incentive of producers is premium pricing and the willingness of consumers to pay anywhere between 15% to 30% more for organic products. The challenging price volatility for crops is the chemical free agriculture. However, the organic farming industry remains a tiny niche industry in Thailand (Butler 2015). With the growth in international market and the Thai government wants to pick up the modest growth in the production of organic growth.

Demographic and economic data

Consumers in Thailand are increasingly concerned about the issues related to nutrition al value of health and food. The implication of healthy food is increasing for the safe consumption of food involving organic produce. Environmentally friendly products are becoming popular among consumers and they are becoming aware of their health and environment. Consumers are still limited in some specific groups resulting from lack of understanding and knowledge about organic products. They have little confidence in the organic products and thereby having little information about organic products and this is inflecting the purchasing decision and buying behavior of organic products. The producers and manufacturers to plan the distribution and production of organic foods use such information. This will help in meeting the demands of customers directly leading to the development of organic food industry in the country. Factors that are responsible for increasing the purchasing demand of organic products involve reduction in price of organic products, sales channel extension and having a system of organic certification and having rigorous inspections that conveys a sense of trust to consumers (Kurnia et al. 2015).

Lack of information about organic products is the main obstacle for purchasing the organic products. Price of organic products is another factor as organic products tends to be more expensive that conventional products. Findings from present study shows that if the current price of products is reduced then the willingness of the organic products by consumers will be 20% to 50%. The clearly positioning of the organic products will be done by reducing the number of safe food labels. Standards that are more restrictive will be indicated by it. One of the most important issues of consumers is health aspects of organic products (Shannon 2014). Producers and retailers will be able to address the health aspects by considering that production of organic products have been done entirely without synthetic pesticides and therefore, they are less probable to contain residues. Consumers are more likely to purchase the products that are certified by accredited agencies.

There are two values of Thai consumers in purchasing organic products and one values is the expected healthy and safety benefits. Another is the perceived higher nutritional value of organic foods. Some of the marketing channels from where the consumers buy the organic foods are green shops; moderns trade outlets and buying directly from producers. Modern trade outlets are recognized as marketing channel for nationwide consumers. Due to variety of products and convenience, supermarkets are most frequently by purchasing organic products. The new organic food shop in Bangkok should provide consumers with comprehensive information that would provide them with better understanding and help in building positive attitude towards organic products (Hofer 2016). This will influence the decisions of consumers toward purchasing organic products at more frequent basis.

Market trends

The marketing initiatives of “Nature pura organic food store “is the development of their own logo as it helps in improving the communication about the company and products. Marketers should know the basic habit and culture of the target market as it would help in providing the information about main channel and deciding on where to sell the organic products. This will have the impact on delivery and purchase of organic products of consumers. For gaining an understanding of the habits of consumers and knowledge of consumers, shop would rely on base marketing strategy (Thøgersen 2017). The new and trendy issues on organic products are published by interest of mass media. Store is targeting household with earning in excess of $ 60000 in Bangkok, Thailand.

Pricing strategy of marketers is intended to both consumers and farmers. Pricing by the new shop is done in an open way and based on principle of fair trade. Margin can be used by such organization for their operational expenses such as running cost of office and salaries. It will also help in generating special funds for future expansion market and extended activities. In order to encourage farmers to convert to organic agriculture, different premium prices are applied for the products (Schaper et al. 2014). Another strategy would be to offer lower margin on lower priced products. Sales strategy of Nature and Pura store is simple and key to providing satisfaction to consumers is a community friendly store that has knowledgeable people for helping the customers and is easy to navigate.

The marketing strategy used by retailers is extremely significant and premium charged needs to be justified. They should look for opportunities for explaining the benefits to consumers for supporting organic farmers with their purchases. Consumers having ethical and environmental concerns should be responded and explanation of buying organic products should be made by the business.

The marketing strategy will be needed to make use of the concept on what and how it should be said. Marketers of organic food believe to use advertising campaign for reaching the targeted customers. Organization would be able to sharpen their marketing strategies by recognizing the average food consumer’s qualities and providing them knowledge about potential health, lifestyle benefits of offered organic foods and about environment. Organization can rely in digital marketing strategy for running the business of organic food store. Relying on promotional videos will help the marketers in the current market scenario. Nature and pura shop will introduce a promotional high definition video and share such videos on video sharing sites and other social media channels for increasing the popularity of brand (Thongplew et al. 2014). Another best option for instant marketing is Facebook ad campaigns. Business will have various benefits of digital marketing as it enables real time customer service and generating high conversion rates for stores.

Customer and value proposition

Operations plan are regarded as the strategic management for successful running of the business. Some of the strategic decision in the area of operations of organic good shop is the quality management for ensuring the quality of organic foods supplied.  Store will have proper labeling of the products. Another concern in this area is capacity utilization, process efficiency and cost effectiveness. For sourcing the products, “Nature pura organic food store” would rely on decentralized approach and corporate standards will be applied in all the areas of business. Location strategy of business will be maximized by using the app and websites for reaching the target market. Shop will be utilizing and optimizing the human resources and business materials (Ritthaisong et al. 2014). The strategy would be to exhibit an ambience of convenience in stores along with quality. Business will rely on maximization of space and efficiency emphasizing in its supply facilities. It will have decentralized stocking that will help in maximization of flexibility of inventories for satisfying the varying demands of market.  

“Nature pura organic food store”will be wholly owned and operated by Frank Ryan and Alexander Burns. Frank Ryan was the founding member of some natural grocery that was established in year 1990. He has 25 years of experience All the accounting and official functions will be will be performed all such activities involve by Mr. Frank. Will involve calculating the cost of project such as interior design, rent of building, supplier of organic food, music legal, water bill and electricity bill. Overtime, owners have plan for to hire part time delivery drivers as well as the bookkeepers. Alexander and frank will actively manage store. Management team of the store will involve both Frank and Alexander Burns along with few staff members. There would be two produce staffs and two cashiers. They both will actively participate in managing the business during busy months and will have an active participation by speaking to local civic groups by drafting the weekly newsletter. In order to assist with the tax reporting, store would rely on tax ccountant.

Marketers will be requiring several resources for running organic food business. It should comprise of all-important elements for developing the organic product line. The scale of production will determine resources required and additional resources will be required for production. Business would require physical and financial resources for running the business. There would be usage of handbook containing information on tax requirement, requirement of poster display and other information in successfully running the business.

Some amount of capital investment will be required by “Nature pura organic food store”to start the business. The startup cost of business will be 1,046,000 THB. Business will be requiring loan of amount 1,000,000 THB for the time period of 10 years at an interest rate of 5.62% per year. The plan of addition al member of staffs will be implemented when there is increased demand of organic foods. As the finance will become complex with growth in business, additional accountants will be required. After few years of operations, business will be registering for value added services and will be requiring expertise of accountant. Both the owners in equal percentage will finance remaining 46000 THB. The major costs can be broken down in the following:

Rent the building- 70,000 THB/ month

Decoration shop- 700,000 THB

Interior design- 100,000 THB

Cashier and Staff Worker (4 persons) (15,000 THB/person)- 60,000 THB/ month

Organic food supplier (Ingredients)-90,000 THB/ month

Music Legal- 8,000 THB/ month

Electricity bill- 15,000 THB/ month

Water bill- 3,000 THB/ month

The total working days of the new organic shop will be 325 days and per day sales is estimated to be at 15000 THB. The annual sales has been estimated to be at 4875000 THB. The gross profit for the first year of operations has been estimated at 1,889,053.90 THB. Corporate tax paid by Nature and Pura organic food store is estimated to be at 472,263.47 THB and the net profit value stood at 1,416,790.50 THB.

The financial projections of the business will comprise of anticipated cash flow statement, balance sheet and income statement for the first year of operations.

Cash Flow from Operating Activities:
Cash Sales	4875000
Cashier & Staff Worker	-720000
Organic Food Supplier	-1080000
Water & Electric Bill	-216000
Music Legal	-96000
Rental Building	-840000
Repair & Maintenance the Shop	-20000
Corporate Tax	-472263.5
Cash Inflow/(Outflow) from Operating Activities	1430736.5
Cash Flow from Investing Activities:
Interior Design	-100000
Decoration Shop	-700000
Cash Inflow/(Outflow) from Investing Activities	-800000
Cash Flow from Financing Activities:
Loan from Bank	1000000
Owner’s Contribution	46000
Loan Repayment	-130946
Cash Inflow/(Outflow) from Financing Activities	915054
Net Cash Increase/(Decrease) for the period	1545790.5
Add: Opening Cash Balance	0
Closing Cash Balance	1545790.5

Forecasted Balance sheet:

Current Assets:
Cash at Bank	1545790.53
Inventory	106088.47
Total Current Assets	1651879.00
Non-Current Assets:
Interior Design	100000.00
Decoration Shop	700000.00
Total Non-Current Assets	800000.00
TOTAL ASSETS	2451879.00
Current Liabilities:
Total Current Liabilities	0.00
Non-Current Liabilities:
Loan from Bank	989088.00
Total Non-Current Liabilities	989088.00
TOTAL LIABILITIES	989088.00
Equity:
Equity Capital	46000.00
Retained Earnings	1416791.00
Total Equity	1462791.00
TOTAL EQUITY & LIABILITY	2451879.00

Every business is associated with some sort of risks and risk are related to borrowing capital. Business of organic farming is inherently risky and this can affect the welfare of an individual. There are additional risk of price and production. Organic foods store is relied on natural process of ecosystem and marketers of such business management of understanding of the cultural practices. There are production risks associated with the business and there is risk related with contamination of their organic supplied foods. If the demand of organic foods from customer end does not increase, then there is a risk for new business entering in the market and price of premium is associated with the large scale of organic producers. However, such risks can be reduced by employing organic production techniques. Risk management of organic food business is of interest to government. There are also risk related to inputs.

The identification of needs of risk management should be done when developing new product that is sensitive to the attitude and needs of consumers. New business should develop the rich understanding of the critical issues risk associated with such business. There has been a rapid expansion of organic food business along with experiencing pain when they are growing. Some of the strategic options involve managing the risks by diversifying their marketing plan. Marketing of foods should be done by employing more than one channel. 

Conclusion:

After conducting the primary research, it has been investigated that opening of the organic food store would be viable as Thailand has been experiencing rapid growth of organic foods. Business will help in meeting the growing needs of health consciousness consumers who are willing to make investment in quality organic foods. From the financial projections made above, the shop will be experiencing growth of net profit from its operations. Therefore, it can be said that development of such business will help in meeting the needs of consumers along with the objective of establishing the business and its objectives.

From the above graph, it is depicted that researcher has collected data from 50 participants. Out of 50 participants, 54% are female and 46% are males.

Researcher has collected data from 50 participants of different age groups. The pie chart above shows that 46% of respondents are in the age group of 25 to 34 years. 24% of respondents are in the age group of 18 to 24 years. 12% of respondents lying in two different age group that is between the age group 35 to 44 years and 45 to 54 years. Only 6% of respondents are more than 55 years.

Data collected from 50 participants’ shows majority of participants have bought some organic food. Graph above shows that 12.2% respondents have never purchased some organic food while 87.8% of respondents have purchased some organic food. Therefore, it can be concluded from above data that more people are inclined towards buying organic food despite of higher price. This is so because more people are becoming health consciousness.

On asking 50 participants about how frequently they purchase organic food, it was found that 30% of respondents purchased organic food twice in a month, followed by 22% of respondents purchasing organic food once in a week. 16% of respondents has three different pattern for buying organic food. One group comprising of 16% buy organic food once in a month, other group either do not buy or buy only once in a month. Remaining 16% purchase organic food more than once in week. This depicts that people are consuming organic food more or less frequently and majority of participants purchase organic food twice in a month.

On asking the participants about their spending on organic food, it is ascertained from above analysis that 22% respondents spend comparatively higher income on purchasing organic food compared to rest participants. 24% of respondents spend $ 71- $ 90 on organic food purchase. Another 22% respondents spend $ 51- $ 70 on purchasing organic food. Spending $ 91- $ 120 on purchasing organic food comprise another group of 22%. Remaining participants spend less than $ 50 for purchasing organic food that comprise of 12% of respondents. From the above analysis, it can be said that few respondents spend few amounts on purchasing organic food.

Data collected represents the reason behind buying organic foods by respondents. The above data shows that 46% of respondents buy organic food because they are becoming increasingly conscious about the quality of foods. The main reason for purchasing organic food is their quality. 20% of respondents were concerned about protecting the environment and 12% of respondents purchase organic products for ethical reasons. 10% of respondents purchase organic products because they like the taste and remaining respondents purchase organic products because of their price. Therefore, quality is the main attribute of organic foods that makes people inclined toward purchasing organic food. 

From the analysis of data, it is found that majority of participants are of view that organic goods are available nearby their home and price and quality are the major issues. It is ascertained that price is the main reason and higher price of organic food is the main concern of consumers. Therefore, price of organic food should be lowered for gaining more customers.  

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