The establishment of a business organisation follows a procedure depending upon the scale of business, the nature of business and also the industry in which the business will operate. Before starting a venture it is important for the people associated with the venture to come up with a plan for the business (Aziri and Nedelea 2013). This is a business plan and there are a number of functions of this document: it helps in understanding the prospect of the business; it develops an understanding regarding the resources will be required to carry out the initial stages, it will also guide in determining the mandatory procedure that is required to start the business etc. For a business unit to successfully operate and generate profit the initial steps of incorporation, employing the right people at the right time ensuring the resource and capabilities are essential. This report is a business plan for a venture which is in the travel and tourism industry (Botha and Robertson 2014). The idea is to develop a travel agency that is based on the e-commerce platform; the idea is initiated based on the rising importance of technology in the lives of the people. One of the major drives to open the business in the e-commerce domain is to stay connected with the customers need and requirements. The company is an offshore organisation which will be set up in New Zealand due to the trade facilities in the country as well as the infrastructure that will be required to set up the business. The budget that is set for the venture is £150,000 (BP). The company will focus on promoting and encouraging the tourism of New Zealand along with the culture of the country.
The idea is to set up an off shore organisation in New Zealand in the Travel and tourism industry. The business will be based on the e-commerce model and will be available in various platforms. The people who will be initiating the venture are James Kelly and Marcus Russo. The duo is friends from college and has a vision to promote the culture of New Zealand on a global platform. It will be an online travel agency which will help and guide the customers to manage their vacation in New Zealand. There will be packages which the customers can choose form or they can also customize their own plan with the help of the options that will be available. The micro focus of the agency will be on cultural tourism, where the people, lifestyle, history, cuisine, language etc will be given importance (Köhler and Garcia Durand 2007). The website and the mobile application will have a layout which will attract the customers who are interested in exploring the culture of the country. There will be hotels and resorts listed in the platform from where the customers can easily book their stay. There will also be several packages that will be listed in the website, the customers can choose the package and enjoy their vacation in New Zealand and the entire vacation will be planned by the company (Cross 2015). Depending on the choice of place and the budget the customers can choose the packages. New Zealand is blessed with gorgeous exotic locations and a rich culture thus the venture is a feasible idea. The name that has been suggested for the organisation is “Kiwi Travels”. Technology is the key to the venture and the tourism industry over the years have gained immensely form the advancement of technology and acceptance of technology by common people. The website will offer the customers with user friendly customization and features. Usually tourists who are travelling form a different country do not have idea regarding the hotels and transportation; in that case they approach a travel agent who acts as a mediator in planning the vacation. The company will serve the visitors in the similar way in a much lower price. The packages that will be offered will be divided in sections and subsections: budget, luxury, adventure. But all these aspects will be associated with the association of the Maori culture.
Apart from these services there will be a list of articles that will help the visitors to know more about the country and the places to visit along with the things to do while visiting the country. One of the purposes of the company is to promote the culture of the country therefore there will be articles regarding the various shades of the beautiful culture that is prevalent in the country (Cross 2015).
The office will be situated in Auckland, which is one of the trade centers of the country and is also a tourist destination. Though Wellington is the capital of the country, Auckland is chosen as the base of operation in terms of infrastructure availability and feasibility of the people.
New Zealand is a country that has a developed economy and the government of the country also encourages trade and business. Tourism is one of the major modes of income for the country. This makes both the industry as well as the country of operation a lucrative opportunity for the company to invest upon. The company will encourage and focus upon the culture of the New Zealand. The management of the company also has experience in the tourism industry thus the venture will be guided by experienced people. The tourism industry has a significant contribution towards the economy of the country; in 2017 both domestic and international tourism amounted to $35.9 Billion (Tourismnewzealand.com 2018). The tourism industry in New Zealand is flourishing the government of the country has been spending significant amount in the industry as there is opportunity in the process total tourism expenditure was $34.7 billion in 2016 (Tourismnewzealand.com 2018).
The values and principles that drive the organisation are to spread knowledge regarding the culture of New Zealand with the help of tourism. Every package will have a culture oriented aspect which will help the visitors to connect with the local people and understand, appreciate the culture of the country.
To promote and encourage New Zealand tourism in the international platform
As a new venture the company will have to invest the finance as well as human resource starting from what is available in the start. The internal capabilities of the company are based on the expertise of the owners and their passion for travel and information technology (Bah and Fang 2015). The owners of the company are also committed to promote the rich culture of New Zealand. The financial investment that the company is going to make is £150,000 (BP). And this money has been partially brought in by the owners and is taken as a loan. The internal environmental factors that will impact that business operation are the human resources, financial resource, infrastructure, contacts etc. With the help of The McKinsey 7-S Framework, the internal resources and capability of the company can be analyzed. Here 7 aspects of the internal business environment are stated in terms of its presence and impact of its existence.
Hard elements
Strategy: the strategy that the company has taken to maintain an edge over the other players in the market is to position the company in a way that it highlights and promotes the culture of the country. Cultural tourism is a rising and popular aspect in the industry.
Structure: As a new venture the structure of the company is fairly simple there are just two people in the company as they recruit more people while developing the website or collect data the company will follow a hierarchal system, owners of the company being the highest level of report. There will initially be two teams business development and information technology and each will be led by one of the two entrepreneurs.
System: The operations in the initial stage will be building the contacts and collecting data from the business development department. On the other hand the IT department will lead the development and creation of the website.
Soft elements
Shared values: the core value of the company is to provide the customers with a good time, ensure there is a healthy and enjoyable work environment. The owners believe one should do what they like doing for a profession since they love Travelling and in the course learn about the culture of various places they have come up with the idea of this venture (Singh 2013).
Style: The leadership style that will be adopted by the owners in the process of the business is transformational, the owners believe that as the organisation is driven by technology they have to keep improving updating and adopting to the changes in the technology as well as focus on the needs and requirements of the customers in order to achieve success in the objectives.
Staff: The human resources that will be employee have to be either skilled in terms of management or have information technology knowledge. This is the initial requirement for the employees; the owners have brought with them four other members who are experts in these fields.
Skill: based on e-commerce platform the requirement of the business is IT skills as well as administrative skills, in order to ensure that the platform is operating (Cross 2015).
Figure: 7s model of McKinsey
Source: (Ravanfar 2015)
Experience and knowledge: The people who are associated with the company are mostly the owners; there are two people who are in the venture. One of them is from New Zealand and is passionate about the place and its culture and has knowledge about the country, James is a person who understands the land and its culture and he is passionate about travel and is a master in business management. He contributes his management skills and understanding of the culture towards planning and organisation of the business. On the other hand Mark is a person who has Information technology background, he has been associated with a big IT firm for more than 10 years, with his previous experience and skill the website which is one of the major infrastructures of the business model will be developed. They are also the people responsible for hiring more human resource (Chaffey et al. 2013).
Financial support: The owners of the company have the financial capability of £150,000 (BP), which enables the company to build the website and organize a few people to develop the data base for the website.
Service: as an online travel agency the company will come up with unique and lucrative holiday packages for the people who are interested in exploring the cultural exclusiveness of New Zealand. The packages will be divided in a way that it will cater to a wide array of people depending on the income demographic as well as psychographic segmentation. The company will allow the people to pay with the help of several options and in order to do that they have to seek support and develop the website accordingly (Chang et al. 2015).
The concept: The concept of cultural tourism is relatively new and unique in the industry; the people of the organisation are passionate about the vision and the concept. This is a major strength as this will allow the people to create objectives which are realistic and achievable.
Lack of experience in terms of running a business, this is one of the major drawbacks of company, both the owners are not from a business background, study management and dealing with business practically is two different things and therefore the company has a disadvantage over other competitors in the market.
There is also lack of infrastructure in the company as an off shore organisation the owners have to start the business and build the infrastructure from scratch. Each and every step associated with incorporation will be a challenge for this reason.
Lack of suppliers and contacts in the industry is another weakness; the skill and knowledge of the people are not enough for the development of the plan that the entrepreneurs have in mind in terms of the service and the reach of the business. it will take time to build the data for the institution.
A major part of such a business in this industry is dependent on the customer service department and the company must invest in their resources and infrastructure to develop this segment. But that is being neglected in order to create more and more packages and offers.
The elements in the external environment of any business organisation impact the success and failure of the company to a significant extent. The management of the new venture must consider factors like the competition in the industry, political and social scenario of New Zealand, the condition of the economy as well as the status of the technology and infrastructure will impact the business and decisions in the process (Bah and Fang 2015). The management of the company will take decisions based on these factors. For example, if a package is being formulated the composition of it should be based on these factors making so that it is more attractive to the target market (Bah and Fang 2015).
The PEST analysis will help in determining the impact of the factors discussed above. On the other hand porter’s five force analysis will help in understanding the competition in the industry.
Political: The government of New Zealand encourages trade and commerce in the country. The government also has good foreign relations with other country to encourage foreign investment. The government of the country also has policies and infrastructure to support the venture as there is increase in the internet usage by the common public in the past decade. The tourism strategy both aligns and coordinates government efforts supporting the sector to boost the economic contribution of tourism across the country and plan for the future (Ho 2014).
Economy: As a developed country the country is a land of opportunities for investors. There is also a growing trend in the economic development of the country; therefore the investment decision in the country is profitable for the business. One of the objectives of the business is to earn profit and therefore the status of the economy in the country of investment is important (Gupta 2013). The entrepreneurs of the venture will bring in 150000 (BP) in expectation to get their investment back in two years and at the end of the third year the venture is expected to make profit. The largest export industry of New Zealand is the Tourism as it is the greatest way of earning foreign exchange. 7.5 percent of the workforce of the country is directly employed in this industry (Gupta 2013).
Social: The Company is targeting the international as well as domestic tourists for the service. The country lifestyle of any country is dependent on the economic condition of the country and as New Zealand is a developed country the people lead a high standard of living. There is acceptance of cultural diversity and upgrade of technology in the daily lives of the people. The culture of the country is important for the company as one of the objectives of the business is to promote the rich heritage of the country in the international platform (Gupta 2013).
Technology: The technology adaptability of the country is also high as the people accept the changes in technology, as the company is based on technology this aspect of the analysis is important (Ho 2014). The payment choice and decision that the customer is going to make will be based on technology therefore the acceptance is essential and is also prevalent among the people. The availability of the skill and technology in terms of developing the website and the mobile application in the future is available in the country (Ho 2014).
With the help of porter’s five forces analysis the company can determine the competition in the market. Understanding the competitors is an important step in deciding the policies and the packages. This helps the company in initiating competitive advantage over the other in the market (Teeratansirikool et al. 2013). With globalization and increased communication with the international market, it is imperative to have a policy in the operation that will give the company advantage over the other organisations in the industry. Michael Porter in introduced this framework in 1979 (Cheng 2013). It will not only help the company identify the competition in the current situation it helps the company to forecast the competition and trends in the future (Fiore et al. 2013).
Threat of new entries: The tourism and hospitality industry in the New Zealand has significant contribution towards the development of the economy of the country. A company looks out for opportunities in such industries where there is scope of return on investment, thus making the industry attractive for new entrants. There are a number of services that a new company can come up with in the tourism department; the model that this new venture is following is effective and efficient in terms of reaching out to the target market. Hence it can be concluded that the threat from new entrants are high. The feasibility of this new venture is the best example of the threat in the future.
Competition in the industry: There are a number of players in the tourism industry of New Zealand; some of the direct competitors of the venture are Zicasso.com, acrossnz.com, experiencenz.com etc. the government also provides packages and guidance to the tourist in planning their vacation in the country making it one of the most significant competitors. The intensity of competition makes the market attractive for the investors. It also reassures the investors that there is scope of growth and development in the future. Therefore the threat from competition is high.
Bargaining power of the buyers: as discussed above there is intense competition in the market which increases the option of the buyers or the customers, this deceases the switching cost of the buyers. This aspect increases the bargaining power of the buyers. The management has to be constantly in sync with the needs and requirements of the customers in order to be attractive and interesting.
Bargaining power of the suppliers: The suppliers of the company have a number of contacts who operate in the same business model, the suppliers are the hotels, resorts and transportation companies etc. it can be said that their bargaining power is high as there are other organisation where they can list their companies with higher profit margins.
Threat of substitute: Physical travel agents are the major threat in case of substitute. The people who do not want to relay on internet based company to manage their travel plans and want to make plans for themselves are also a substitute to the service the venture will provide the target market.
With the help of the internal and external business environment the management of the new venture will decide upon the strategic decisions that will lead the organisation towards achieving the objectives. There are a number of opportunities that the company has to achieve an edge over the competitors (Fiore et al. 2013). The first opportunity that the service has is the focus on culture tourism. Starting from the layout and color selection of the website and the mobile application the venture will promote the Maori culture and the heritage. The packages that will be developed will be focused around this as well, the society and the culture of the country is an opportunity for the company to create an exclusive brand image. The name and the logo of the organization will also be created on these lines (Fiore et al. 2013).
The external business environment is also favorable for the venture hence it can be said that the company has an opportunity to incorporate the business with the help of the policies and encouragement from the government. The increased use of technology among the target market is a big opportunity for the business. The decision of the owners to incorporate a business model based on internet is because of this scope. Buying and selling of goods and services has gained immense popularity in the international as well as New Zealand domestic market therefore the owners of this new venture wanted to explore this opportunity. As one of them is form Information Technology background he has skill and knowledge regarding the technical aspect of the project.
It is important to have long term objectives for any business organisation because it gives the management a direction to operate. It ensures that the company remains true to its values and principles. For a new company it is important to have long-term goals as it will help in the growth and development by guiding the management in formulating strategies to achieve the objectives. The focus of a new venture is upon objectives which can be achieved in a short term as the company has to be ready to incorporate, but these short term objectives are also guided by the long term ones.
As discussed above the tourism industry in the domestic and global platform is crowded, there are many established travel agents who offer packages and help the people to plan their vacation in New Zealand and the government is also one of the competitors in this segment. The company has come up with a strategy that can be analyzed with the help of Porter’s generic strategy framework. Following figure demonstrates the framework.
Figure: Porter’s generic strategy framework
Source: (Kim 2004)
Porter has explained three ways in which any company can gain competitive advantage over the other organisations in the industry. Cost leadership or low cost, differentiation and focus.
Cost leadership: For a company that is new and has restricted financial resource it is not possible to incorporate this strategy in the business. Companies who have incurred profit for a considerable period of time and have gathered loyal customers use this to increase the reach of the business (Tanwar 2013).
Differentiation: This is the process by which a company can make the products and services engaging and more lucrative than other competitors. The company has the ability to innovate and develop the products in this strategy, research, back up with reputation and high quality and effective sales and marketing are some of the prerequisites of this strategy (Kim 2004).
Focus: The entrepreneurs of the new venture can adopt the focus strategy as the focus of the venture is upon the cultural aspect of the country. This will help the company to target the niche market that they are trying to create in terms of cultural tourism. The management will firstly try to understand the dynamics of this niche market and determine the unique requirements of the customers based on this the company will develop packages to suit the needs of the customers. Therefore it can be said that the strategy that the company will undertake is differentiation focus. The company will serve the customers with an experience of Maori culture by providing opportunity to stay and experience from within the areas (Tanwar 2013).
On the other hand the grand strategy that the company will incorporate in the business is sustainable growth, as a new venture the company has to grow and develop in order to meet other objectives of the business. This strategy is focused on how the industry and the elements in the industry operate. The management of the company should keep up with the dynamics of the needs and requirements of the niche target market to engage more customers (Fiore et al. 2013).
The management has to prepare the resources and capabilities in order to incorporate the business in the least possible time. Short-terms objectives cumulatively help the company in achieving the long-term objectives. The owners have to make decisions to ensure there is a stable (Jones and Penaluna 2013)
The company wills employee a number of functional tactics in order to achieve the objectives of the business. As it is a new company the operations of the business has to be planned from Day one. The ventures start with the two owners, who are responsible for bringing in four other people in the organisation. (Kew and Stredwick 2017)
Renting the office in Auckland, it has been mentioned above that the base of operation will be in Auckland and therefore the owners need to rent the place.
The next tactics is to divide the operations in two segments operations and process. As discussed above the operations will do the research and will also act as business development department to gather clients. Only after getting the clients to list themselves and work with the company the packages can be formulated. Therefore research is the most important part of the business and it will take at least four months to create a preliminary data base. On the other hand the process department can also be the IT department will be responsible for developing the website (Lueg et al. 2014).
Creating content to educate the people, one of the major parts of building a website apart from the technicality of it is to create the content that will be displayed in the website. The aim of the company is to promote the culture of the country as well therefore this step is important; the content has to be informative and must also engage and interest the people in visiting and experiencing the Maori culture. This tactic will also help the company to communicate with the customers (Kew and Stredwick 2017).
Another functional tactics that the company should incorporate is the focus on marketing with the help of marketing mix; this should only be commenced after the data that is required. The management has to decide upon the product or service in this case and build the packages so that it can please the market and also engage them. The management of the company has to decide the price, place and promotional strategies for the same (Armstrong et al. 2014).
As the company will operate in the digital space the management should employee time to create social media presence and use some of the content of the website to promote the website. This step should be taken after the website is launched, in fact the pages should be created and promoted at the same time (Jones and Penaluna 2013).
Some of the policies that will empower the objectives of the business are as follows:
The first policy that the company should undertake is encouragement and innovation in the process of business, as the company will cater to a niche market, they should work hard in offering the customers with service options that will improve quality of the travel, help them experience the culture as closely and as realistically as possible (Werani et al. 2016).
The culture of the company is based on the values which drive the organisation that is passion for travel and love for the culture. Based on this the company will follow an inclusive policy in employing the human resource where the skill and talent of an individual will be the prime aspect of selection.
There will be a policy of providing the customer a complete guidance of the tour that they are choosing to opt. The customers will be given an opportunity to speak with a representative before availing a package; this representative will explain the procedure and the package to the customers (Werani et al. 2016).
The people who are working for the company will have working hours depending upon the legal boundaries of the country. There will be an informal environment where there people will be encouraged to innovate and work in their own space.
Another policy of the company will be to contribute towards the development of the Maori community, as the company will work closely with the community the owners understand their responsibility they have towards the same ((Lueg et al. 2014).
It is not only important for the company to ensure that the process of implementation of the strategies are effective, there should also be a constant monitoring of the process as well. In order to do that the management has to determine several milestones that can act as a marker of achievement. The objectives of the business and the time period that has been mentioned should be maintained in order to achieve success.
As mentioned above the policy of the company is to encourage the people to innovate and make changes in the process as well as operation. The objective of the company is to cater to the needs and requirements of the customers and in order to do that there must be provisions for continuous requirement. As an e-commerce website the international market is also the target market for the company (Lueg et al. 2014).
Conclusion
It can be concluded form the above discussion that Kiwi Travels will be an organisation that will cater to a niche market. The company has the goal to promote the Maori culture among the international market as well as cater to the needs and requirements of the target market accordingly. In order to stay true to this goal, differentiation focus strategy will be used to ensure competitive advantage over the other players in the market. In New Zealand the government and the society encourages tourism industry and it has proven to be one of the significant contributors towards the economy. Hence it can be said that the new venture is feasible.
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