The concept of shisha bar is not at all new. Thus, this study deals with the concept of shisha/lounge bar in Gold Coast within the duration of eight months. Widespread smoking of molasses tobacco with the help of the water pipes has become highly popular in Melbourne as well as in Sydney’s ethnic communities in “hookah” or “shisha” bars. The process through which molasses tobacco is smoked includes placing tobacco in a pipe and heating it with charcoal. This, in turn, is smoked and inhaled by a mouthpiece by the individuals. Molasses does not contain only tobacco, chemicals, glycerin, or honey in it (SBS News, 2017). Thus, the objective of this study is to illustrate the details of the essentials, which are required to consider so that Arabian Night can attain success with respect to its business in Australia.
Arabian Nights is owned as well as established by a team of husband and wife Iyad and Ashiha Alsibi respectively, who have formulated the concept for the lounge after working in varied liquor lounges overseas. The business is developed as an S Corporation to facilitate additional investors of about 100 people to join in their business to an extent. Presently, Iyad currently owns 51% of stock and Ashiha owns 49% of the company. However, 40% of shares will be provided to the investors if they are interested to invest in the business and the couple will get 60% of the stock. According to Taulli (2017), in a S-Corp, the shareholders have the responsibility of providing the required investment by the company, which helps in raising the capital. Moreover, the S-Corp itself is not at all forced to face taxes and contradictorily, the shareholders earning profits are supposed to pay taxes (Taulli 2017).
Management of Arabian Nights will be executed through partnership as well as facilities of an S-corporation. In this context, partnership management signifies proper fostering of an atmosphere, where there are continuous collaboration and the emergence of a breakthrough as well as collective thinking and is not at all an easy task. However, this is the challenge, which has been sought by the partners in the organization. In the partnership management, both the partners must have distinct roles, responsibilities, and tasks (PEP Facility, 2019). The strategy to create an effective partnership while the company operates can be attained by understanding the fact that communication is the primary element, which is required for maintaining proper balance with the partner. Furthermore, the utilisation of self-disclosure skills to suffice the needs that partnership requires is compulsory. It must also be acknowledged that personal trust is important among the partners. At the time of partnership, it is important to establish specific agreements that can be beneficial to both of them (Dent, 2006).
On the other hand, an S Corporation focuses on opting for pass income, deductions, credits, and losses through to their shareholders for the purpose of paying federal tax. Shareholders of the S Corporation perform the task of reporting the flow-through the losses and income on their personal tax returns and are further evaluated on the basis of their individual income tax rate. The corporation must suffice some basic requirements, which encompasses the fact that the corporation must be domestic must not have more than 100 shareholders, as it can make the company non-eligible to be regarded as S-Corporation. This includes domestic international Sales Corporation, insurance companies, and financial institutions. An S Corporation is supposed to pay taxes if it anticipates owing taxes on specific passive incomes or built-in-gains. It is mandatory for corporations to use electronic funds transfer so as to make all kinds of federal tax deposits (James Keep & Company, 2013).
The term “market segmentation” is identified as one of the most vital elements that is involved in the field of modern marketing. It is also referred as the definite process, which intends to segregate the market into varied segments or groups based on the psychological, geographic, demographic, and behavioural factors (Larsen, 2010). Moreover, Wood (2014) asserted the conditions, which are to be present in the market segment must be precisely identifiable, durable, measurable, varied types of responses, and appropriate for the company’s resources. In addition market segmentation has to be accessed through promotion channels and communication (Wood 2014). Based on these factors of market segmentation, Arabian Nights Shisha Lounge has identified the following market segmentation for attracting potential customers:
The lounge aims to seek for individuals, who are either immigrants or residents of the Middle-East. According to World Health Organization (n.d.), it can be stated that this is owing to the reason that the people of the Middle Eastern countries prefer both drinking and smoking to a large extent. Moreover, Shisha is largely used for smoking tobacco in the Middle-Eastern countries, which directly illustrates the demand for smoking in the area (World Health Organization, n.d.). In addition, both residents along with the immigrants of the Middle-Eastern nations value the bond that the Arabian Nights Shisha Lounge presents, as there is a presence of both traditional and cultural elements at the lounge.
Arabian Nights Shisha Lounge focuses on the college goers, who find visiting bars and parties to be monotony and seek for different experiences. Arabian Nights understands the requirements of the college goers and that is why the environment present in the lounge illustrates exotic ambience, centres on group dynamics, and colourful atmosphere. The reason for considering the college-going students as one of the dimensions of market segmentation is stated by Witkiewitz, et.al. (2014) who asserted that both smoking and drinking take place altogether and this increases the business of shisha lounges in Australia.
Another group of customers that the Arabian Nights is targeting is the young professionals. This population comprises individuals ranging between the age of 22-35 years, who have become tired of the bar culture and react in a way that emphasises search for a new place. In this context, the place has to provide all their desired essentials and not a bar culture. They are the ones, who search for places where they can meet with their friends, have conversation, and share their experiences. All of these are presented in the Arabian Nights. Harrison & McKee (2008) have correspondingly stated that heavy episode of drinking and smoking is highly observed among the young professionals, which is one of the most crucial reasons for the business to focus on this particular population, as it can help the Arabian Nights Shisha lounge to attain success in the long run (Harrison & McKee, 2008).
According to Salmin & Morris (2018), in Australia, smoking shisha has become more popular. In addition, it has further been observed that the rate of shisha consumption is growing across varied regions. It is the practice where people gather all together to smoke and drink, which is common in the Middle-Eastern cultures. Even the cultural tradition that exists in the Middle East identifies that every other coffee shop or lounge bar has to have shisha in it. In this context, Shisha is also considered to be a draw card that attracts tourists into Australia and can help the business to be successful within the respective nation (Salmin & Morris, 2018). In spite of the demand for Shisha, there are laws that need to be abided by the Arabian Nights as smoking shisha in restaurants, cafes and bars are almost on the way to be closed (Cowan, 2016).
The shisha industry is mostly surrounded by the Victorian tobacco Control laws that implies to the sale, advertising and utilization of shisha tobacco. The things that are banned for the law involves the following points:
These particular alterations have also made it difficult for the business as it has aligned with Commonwealth tobacco plain packaging laws that demand shisha to be packaged in plain packaging with health warning images (State of Victoria 2017).
Siddiqi (2018) has stated that smoking shisha is highly accepted among the young people and is also quite addictive. This has led to the benefits that are attained by the shisha industry with openings of more shisha lounges. Providence of flavoured shisha has become the most popular among the young people and they are attracted to its allure. All of these are the essentials that can render benefits to the Arabian Nights in a wider context (Siddiqi, 2018).
At present, business is fast-paced and signifies competitive nature, so it is better to remain aware of the competitors in the existing market. In addition, acknowledging competitors’ offering is important for proper growth and business development. This, in turn, can also help in providing benefits to the present organisation. There are several ways through which competitor analysis can be done. In this context, it focuses on analysing the competitors along with their links of social media and website address. Furthermore, proper assessment of their services/products, inclusions, and price points is also necessary. Competitors’ professionalism and quality of their online presence need to be figured out and most importantly, their strengths and weaknesses are to be evaluated by Arabian Nights. Once the competitor analysis is completed, the company or the corporation can understand the competitor’s activities in the market. After this, the company can further focus on sorting out the competitors based on the nature of corporation type (Gough, O 2017).
There are reasons as to why competitor analysis needs to be executed. Executing a competitor analysis is important, as it can help in providing a corporation the edge on the basis of the competitors’ strengths and weaknesses. Contextually, this can help Arabian Nights to formulate a future planning and marketing strategy. Furthermore, proper analysis of the competitors is important, as it establishes training opportunity among the employees. The need to develop and diversify any service or product can be compared to the competitors’ marketing strategy, which in turn, will provide an insight as to understand the timing for executing such actions (Gough, O 2017).
There are posed risks and challenges associated with the venturing of the shisha lounges. The reasons are varied and reasonable. In accordance to the report presented by the World Health Organization (WHO), the smoke volume that is being inhaled during an hour-long session of shisha smoking is equivalent to consuming 100 to 200 cigarettes. Furthermore, the estimated findings also state that on an average, a smoker is inhaling half a litre of smoke from a cigarette, while on the other hand, a shisha smoker is considered to inhale anything ales than a litre of smoke to sixth of a litre (Qureshi, 2011). Another hurdle or risk that is posed towards the lounge bar is the Tobacco Amendment Act 2016, which has been implemented from August 1, 2017. This Act bans any kind of smoking in outdoor dining areas at the time when food is being served. This Amendment Act regulates both for shisha tobacco and e-cigarettes (Victoria’s Tobacco Laws, n.d.).
Furthermore, smoking is strictly banned in footpath dining, food fairs, community, and street festivals as well as cafes. Shisha tobacco is strictly banned in all the areas where smoking is prohibited. Retailers are not permitted to sell shisha tobacco under the age of 18, advertise it at the point of sale, or sell it for free (Victoria’s Tobacco Laws, n.d.). These are the hurdles, which can stand as a danger in the path of shisha lounge i.e. Arabian Nights in attaining success. The way to overcome this hurdle is to follow the rules and regulations, which have been implemented by the Act so that the population does not incur any harm from smoking shisha.
References
Cowan, G 2016, New laws means shisha days in Victoria are numbered, News Pty Ltd, viewed 16 January 2019, <https://www.heraldsun.com.au/leader/south-east/new-laws-means-shisha-days-in-victoria-are-numbered/news-story/3b2619792b85f25744117e0e56463d27>.
Dent, S.M. 2006, ‘Partnership relationship management’, Partnership Continuum, Inc, pp. 2-10.James Keep & Company 2013, ‘S corporations’, Tax Materials, Inc, pp. 1-2.
Gough, O 2017, Performing a competitor analysis – how and why, Bonhill Group Plc, viewed 30 January 2019, <https://smallbusiness.co.uk/performing-competitor-analysis-2539930/>.
Harrison, E.L.R. & McKee, S.A 2008, ‘Young adult non-daily smokers: Patterns of alcohol and cigarette use’ Addict Behav. vol. 33, no. 5, pp. 668-674.
Larsen, N 2010, ‘Market Segmentation’, Aarhus School of Business, pp. 3-27.
PEP Facility 2019, Partnership management. Governance and Resourcing, viewed 29 January 2019, <https://www.effectivepartnering.org/factor/governance-resourcing/partnership-management/>.
Qureshi, H 2011, Smoking shisha: How bad is it for you? Guardian News and Media Limited, viewed 30 January 2019, <https://www.theguardian.com/society/2011/aug/22/shisha-smoking-how-bad-is-it>.
Salmin, D & Morris, M 2018, One regional town’s shisha bar triggers public health debate, ABC, viewed 16 January 2019, < https://www.abc.net.au/news/2018-05-31/shisha-smoking-bar-approved-in-bunbury/9813464>.
SBS News 2017, SBS World News Radio: There are fears a tobacco black market is hurting Australia’s shisha bars and potentially funding criminal groups overseas, Concerns over Growing Shisha Tobacco Black Market, viewed 29 January 2019, <https://www.sbs.com.au/news/concerns-over-growing-shisha-tobacco-black-market>.
Siddiqi, K 2018, Shisha addiction may be stronger than cigarette addiction, The Conversation Media Group Ltd, <https://theconversation.com/shisha-addiction-may-be-stronger-than-cigarette-addiction-102058>.
State of Victoria 2017, Shisha tobacco reforms factsheet for businesses, Health and Human Services, viewed 16 January 2019.
Taulli, T 2017, Understanding the S Corp, Forbes Media LLC, viewed 16 January 2019, <https://www.forbes.com/sites/bensin/2019/01/14/xiaomi-mi-mix-3-review/#79c165e45a7a>.
Victoria’s Tobacco Laws No Date, ‘Summary’, BetterHealth Channel, pp. 1-3.
Witkiewitz, K et.al., 2014, ‘Concurrent drinking and smoking among college students: An event-level analysis’ Psychol Addict Behav., vol. 26, no. 3, pp. 649-654.
Wood, S 2014, A step-by-step guide to market segmentation, Marketing.com.au, viewed 16 January 2019, < https://marketing.com.au/a-step-by-step-guide-to-market-segmentation/>.
World Health Organization, No Date, ‘Addiction to nicotine’, Gender, women and the Tobacco Epidemic, pp. 137-148.
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