Minute Maid Fresh Fruit will be considered as the visualization of young entrepreneur. The business will be making contribution in the society by assisting the youth to enhance their health with the help of healthier launches. The business will be making use of the fruits produced locally by the graduates and would import the fresh grown fruits to make a constructive use of the business process. Offering smooth juice to the customers will help Minute Maid Fresh Fruit to gaining a fair amount of share in the Leicester market. The business would be utilizing the fresh fruit in manufacturing juice and would be increasing its operations by distributing its products in the local stores.
The products of Minute Maid Fresh Fruit will be made from the local fruits which will not be containing any preservatives or artificial additives. The product will be free from sugar content as the fruits would be having natural sugar (Abrams 2017). Fruits that are available during the specific season would be collected and would be processed in fresh fruits.
The major products of Minute Maid Fresh Fruit would include
Figure 1: Figure reflecting fruit and fruit juices
(Source: As Created by Author)
Apart from the production of fruit juice there are other products that will be manufactured will be having the content of sugars;
The company will be categorizing the products under the heads of Relax Fit for its young customers that prefer working out. Simultaneously the other category of fruit drinks will include the Sporty Fit which will be dedicated towards the sports team and clubs that participates in sports. This will enable the business to attract customers from every quarter.
Tropical Smoothies and Banana Beaters are some of the major competitor that operate in the Leicester market of East Midlands of England (Scholes 2015). Market research have provided that both the competitors have better reputation of providing quality products. Both Tropical Smoothies and Banana Beaters is located in the East Midlands of England busy market. Both the company are characterised as the purchase and go form of outlets.
Minute Maid Fresh Fruit faces direct competition in the market from the local producers that compete to offer customer with pulpy drinks (Rubin 2016). The business faces major competition from Tropical Smoothies since it is located close to Minute Maid Fresh Fruit location. The direct competition can be viewed relatively medium as there are no other fruit juice producers that offer customers with fresh fruit juice and no content of sugar.
The other competitor Banana Beaters is known for their traditional juices with Tropical Smoothies operating in the market for several years and no real sign of growing its business soon. Fortunately, other fruit juice manufacturer located in the far East Midlands faces financial shortages and this may assist the proposed business in stimulating demand for fresh fruit juices.
The market research suggest that the industry of fruit juice has experienced rise in 2016 and recorded a growth of 7% in the off-trade values sales with 6% rise in off-trade sales. The expansion of fruit juice industry is primarily because of the rise in premium trend especially packed bottle of pulpy fruit and vegetable juice, sugar content preservative drinks and carbonated content juice (Cassidy 2016). New market entrant of carbonated fruit juice brands without the preservatives are some of the popular launches and drinks having Asian speciality are on declining trend.
The per unit price of reconstituted fruit juice bottles costs around £4.50 per litre while the price per unit of peel fresh nectars brands of fruit juice costs around £4.30 per litre. Presumably recent market trends suggest a demand for health drinks with majority of the consumers have expressed their preference of sharing goodness with their family. Over their forecasted time period the consumers would look for wide range of healthy fruit drinks that are free from sugar and preservatives.
With more than 1.5 million population of Leicester the target market for Minute Maid Fresh Fruit is visibly large. Nevertheless, the business will be targeting customers from all age group but a special focus will be placed on younger and health conscious customers. The target market will mainly comprise of creating an appeal for its products among the youth generations that are engaged in sports and value their health (Morecroft 2015). The target market opportunity is based on prioritizing and personalizing the packaging for achieving the objective of better standard of living.
The breakeven of the sales was computed at £1,00,591 over the one year forecasted period. Because of the margin of contribution ratio, the prices of the products are determined based on the bulk purchasing of the products. The projected quantity to be sold is determined based on the market survey of how often the consumers purchase the juice item. The market survey reveals that 10% of the customers purchase an additional item with their smoothies (Wheelen et al. 2017). The sales computation is based on the assumption that 11 % of the sales are generated from the purchase of fruit and vegetable juices from the first year were as 14 % of the sales revenue are generated from the super food drinks in the initial year of operation.
Moreover, the strategy employed is low cost option that is envisioned to diversify the company overall revenues and simultaneously offering customers with the necessary nutrients (Slack 2015). The average cost per batch is anticipated to be around £94.50. As a result of this, the contribution margin stands 78.5%. This strategy is regarded as one of the incredibly easy method of implementing and boosting sales. The revenue and cost strategy would help in strengthening the financial stability of the firm.
To increase the seasonal sales, the proposed business needs products that can be sold throughout the year particularly during the winter months. The fruit and vegetables shakes can be considered as the ideal solution that is budget friendly and it is favourite among the French culture. This strategy would help in diversifying the revenue of product offerings and offers greater diversification in financial security (Kotler 2015). A commercial graded machinery is capable producing 70 bottles in one batch and would cost merely around £94.75. All the information relating to expenditure was obtained from the online stores and each bottle of juice would cost around £1.25 to manufacture with pre-tax profit £2.30. This strategy can be extremely considered to be low cost but would help in bolstering the sales and revenue for the firm.
The macro-economic factors that dictate the supply or price and the consumer demand for the packaged juices play an important role in the organic market. Though the UK supermarket chains have reported a rise of 22% the supplies in general are unable to keep pace with the demand. Even though the individual juices on certain occasions have gone past the demand however a surplus in supply is generally short lived (Keller and Kotler 2016). Unlike the conventional juices the organic fruit juice market in UK have reported a strong growth, underpinned by insufficient supply. Most of the juice type is witnessing a shortage in certified production. This has resulted the new entrants to make a solid investment opportunity.
The freshly squeezed varieties of orange, grapefruit, lemonade and orange in the UK regions have grown strongly and more specifically the market is demanding more fresh juices. The market has number of large hospitality industries along with educated health conscious customers that shop for wellbeing (Armstrong et al. 2015). Manufacturing companies in the UK have the demand for fruit juices and concentrates with guaranteed product quality.
The procedure of supply chain management is the significant process in running the key operations for all business. The business will be following the five step supply chain procedure for running its key operations.
Step 1: Planning: The supply chain managers will be identifying the list of vital components such as location of plant, size and warehousing and IT solutions selection (Chernev 2018). The business will be planning the matrices such as transportation cost modelling and warehousing efficiency.
Step 2: Source: At this stage of supply chain management the emphasis would be placed on ascertaining the reliable source of suppliers for raw materials so that procedure is not jeopardised.
Step 3: Execution: At this stage the company will be designing and implementing the perceivable shape to the plans for manufacturing the products that are ready for testing, packaging and delivery (Weinstein and Pohlman 2015). At this stage the results will be quantified and maximum potential efficiency will be attained.
Step 4: Delivery: The supply chain at this stage will be reaching the delivering the products and service at the right quantity at the right market place. The company will be equipped with modern tools to keep track on the inventory and warehousing along with invoice and payments received.
Step 5: Return: Return will form the final step in the process of supply chain. It would not only consist of reviewing and returning the products because of quality but would also manage the inventory.
Figure 2: Figure representing Supply Chain Procedure
(Source: As Created by Author)
Concerning the credit facilities, the business will take the credit facilities of paying its suppliers of raw materials for a period of two months. The main purpose of obtaining the pre shipment facilities is to provide the exporter with the facilities of procuring raw materials carrying out the manufacturing procedure and to offer a secure warehouse for goods and raw materials (Rothaermel 2015).
The cash flow assumption is based on the budgeted amount of inflow and outflow of cash. The cash flow will be containing the business associated expenditure that owners will be incurring each year (Hill, Jones and Schilling 2014). The cash flow for the first year is related low as the owners will be looking forward to expand the business. The cash flow is potentially aimed at producing the personal income of 150% greater than the presently listed expenditure however the surplus amount of cash flow will be used in expanding the need of bank loan. The cash flow will be reviewing the net inflow and outflow of cash for the first year.
The one year projected revenues stands approximately £100,591. The breakdown for units sold for each of the product categories are provided and justify the sharp increase in the units sold over the period of 12 months. The cost of goods sold maintains the persistent relation with the sales. The expenses though for the first year is high but these expenses are offset in profits because of the overall larger amount of goods sold (Barney 2014). The income tax expenditure stands £3223 with net income before tax standing £12,891. The EBIT are anticipated to increase from year to year. The appendix offers the detailed yearly summary of the financial measures.
Minute Maid Fresh Fruit will remain open for 12 months during period of first year of operations with total amount of fixed cost standing £42,700. The average contribution margin is assumed to be around 78% of sales and 4,543 units must be sold each year to attain breakeven. This is equivalent to 378 units to be sold each month. As evident from the current information the breakeven point will be easily attainable (Wheelen et al. 2017). The numbers obtained from the calculations explain the huge potential of profitability for the proposed business.
Conclusion:
On a conclusive note, given the Minute Maid Fresh Fruit is a small start-up business it is difficult to perform analysis against the large fruit juice companies. The profit line appears to be in accordance with industry average. The company projected profit margin in first year of operation is 10% which is in line with the industry average. The business strategies have maintained a minimum borrowed money to afford the company to generate sufficient amount of sales to breakeven. The business is profitable on small scale and all sales projections were based on breakeven point and units.
Reference List:
Abrams, R.M., 2017. Entrepreneurship: A Real-World Approach. Planning Shop.
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.
Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.
Cassidy, A., 2016. A practical guide to information systems strategic planning. CRC press.
Chernev, A., 2018. Strategic marketing management. Cerebellum Press.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Keller, K.L. and Kotler, P., 2016. Marketing management. Pearson.
Kotler, P., 2015. Framework for marketing management. Pearson Education India.
Morecroft, J.D., 2015. Strategic modelling and business dynamics: a feedback systems approach. John Wiley & Sons.
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Scholes, M.S., 2015. Taxes and business strategy. Prentice Hall.
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Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.
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