Business Plan: YummY - Der gesunde Fast Food Store

International Financing and Controlling

Fulda, 15th of July 2006
Term paper for the University of Applied Sciences in Fulda

Author and student number: 

Robert Tönnis

Study course: International Management (MBA)
Course: International Finance and Controlling
Time period: 27th of July – 17th of July 2006
Language: American English

Executive summary

• Meaning of the company Yummy

Yummy produces and sells power drinks that can replace a whole meal. Cursorily, a smoothie is a fruit drink with some extras, but after a closer view the customer gets all the minerals and vitamins he/she needs for a powerful day.

There already exist a few competitors in Switzerland but they focus on people who like to have a fresh drink in the hot summer and they do not use any extras for special occasions. Yummy will make the difference and gives the company a USP because Yummy focuses on other target groups: There are the business people who are always in stressful situations without much time and quick healthy meals. There are sports-aware people who do not have the chance to get a quick meal rich in vitamins and minerals away from their own kitchen. In addition, there are health-conscious people in general who will love the product.

• Background

Within the last years, the expenses of private consumers for whole food products, for healthiness and for food consumption has continuously grown. More than ever, consumers look for quick and especially healthy solutions regarding to a balanced diet and the time aspect in the Swiss society today. In addition to that consumers are more worried about their well-being and therefore, Yummy has a great chance with its products.

• Problem

In Switzerland, only very few competitors for smoothies exist. They offer a similar kind of this product for a wide range of potential customers. In contrast, Yummy tries to develop a new niche market which also means that the group of potential customers is comparatively small. But especially this will guarantee the success if Yummy gets a kind of monopoly and later it will steadily be the cutting edge.

• Expectations

First, Yummy will start its business in Switzerland just in one city in the most auspicious districts. After a successful introduction, it is planed to build up a nation-wide operating chain. To avoid too high investments the company will introduce a franchise system like McDonald′s. The parent company will help to create the right image for the new market.

• Financing

The expected turnover for the first year is amounted to 544,200 Swiss Franc. In the third year, the company realizes a positive net profit (3,088.26 Swiss Franc). Yummy will be present on the German and the Swiss market in big cities.

Table of contents

Executive summary 2
Executive summary 2
Table of contents 3

1. Introduction 5

2. The purpose of the company and its management style 6

3. Host country regulations and investments 7
3.1 Country risks 7
3.1.1 Political risk 7
3.1.2 Economical risks 8
3.1.3 Growth prospects 9
3.2 Rules applying to investment from outside 9
3.3 Other legal issues 10
3.3.1 Dispute resolution 10
3.3.2 Labor laws 10
3.4 Tax considerations 11
3.4.1 Taxable base 11
3.4.2 Withholding taxes 11
3.4.3 Tax rates for Yummy in Zurich 12
3.5 Foreign exchange 12
3.5.1 Foreign exchange risks and controls 13
3.5.2 Transfer pricing and remittance issues 13
3.5.3 Current and projected rates (USD to CHF) 14
3.6 Overseas private investment corporation (OPIC) 14
3.6.1 Subsidies 15
3.6.2 Export 15
3.6.3 Free trade zones 15
3.7 Foreign direct investment (FDI) 16
3.7.1 Turnkey project 17
3.7.2 Factors influencing foreign direct investment 17
3.7.2.1 Supply factors 17
3.7.2.2 Demand factors 18
3.7.2.3 Political factors 20

4. Marketing plan 21
4.1 Wots-Up-Analysis 21
4.2 Market potential 24
4.2.1 Public infrastructure 24
4.2.2 Population, GDP, per capita GDP, wealth distribution 24
4.2.3 Developments in consumer spending 25
4.2.4 Description of the industry (six external variables) 26
4.4 Competition 27
4.4.1 Porter′s five forces 27
4.4.2 Levels of competition 28
4.5 Target group 28
4.6 Marketing mix 29
4.6.1 Product 29
4.6.2 Price 29
4.6.3 Promotion 30
4.6.4 Place 31
4.7 Marketing goals 31
4.7.1 Level of the field of business 31
4.7.2 Level of the company 32
4.7.3 Level of the operation 32
4.8 Strategies 32
4.9 Sales plan 33

5. Financial plan 35
5.1 International capital budgeting 35
5.1.1 Net present value 35
5.1.2 Payback period - Bailout payback 35
5.2 Internal/external sources of investment capital 35
5.3 View of costs 36
5.4 Cost price calculation 36
5.5 Balance 38
5.6 Exploitation estimate 39
5.7 Liquidity estimate in Swiss Franc 40
5.8 Liquidity estimate in Euro 40

6. Conclusion 41

Books 42
Publications 42
Electronic sources 42

8. Appendix 46
Appendix A: Switzerland′s world competitiveness for infrastructure, 2004 46
Appendix B: Age structure Switzerland 47
Appendix C: Switzerland´s international position in GDP per capita, 2005 48
Appendix D: BIP 49
Appendix E: Lorenz curve of income for Switzerland, 2001 50
Appendix F: Gini indices for Switzerland, 2001 51
Appendix G: International comparison of Gini indices, 2004 51
Appendix H: Consumer spending over time 52
Appendix I: Expenses for health 52
Appendix J: Expenses for organic food 53
Appendix K: Possible locations for Yummy stores in Zurich 54
Appendix L: Location near the central station 55
Appendix M: Locations near working places and gyms 55

1. Introduction

Nowadays, people all over Europe are influenced by food scandals about BSE, pesticides in vegetables, and pork. People are set thinking especially by consuming meat because of hormone treatment and antibiotics. Furthermore, topics such as obesity, too much sugar, and cancer causing substances that are caused by preparing meals are often discussed. Because of this, there is a trend towards a healthier and more conscious nutrition. In addition, people do not have much time for meals and look for "fast" food with vitamins and minerals as a result. But actually, there is no special offer that meets the customers′ expectations except salad. Therefore, the company Yummy tries to fulfill this need by offering smoothies (fruit drinks) that replace a whole meal.

People who think about nutrition are usually women and educated people like business people. That is why Yummy concentrates on certain target groups.

A smoothie is an American product and concept. Because of the Americanization and other well-known examples such as McDonald′s, Starbucks, and Dunkin Donuts you can see that American business ideas have been introduced successfully out of America. Especially the franchise system has proved its worth for this kind of business as the company Yummy has already recognized in Germany.

The listed characteristics above apply especially to Switzerland and therefore, Switzerland has become the target country. This assignment describes a business plan for entering the Swiss market. The following section of the assignment is about the purpose of the company and its management style. Then, the host country regulations are examined. The fourth section describes a marketing plan and the fifth section contains a financial plan. Finally, a conclusion discusses the feasibility of the project.

2. The purpose of the company and its management style

The purpose of Yummy in Switzerland is to open up a new niche market. Therefore, Yummy starts its business by opening three stores in Zurich. The primary goals are gaining customers and establishing the products and the brand on the market successfully. On the long-run, Yummy wants to build up a nation-wide operation chain with a franchise system in Switzerland.

To determine the management style for the company, the author uses Geert Hofstede′s five cultural dimensions: power distance, individualism versus collectivism, masculinity versus femininity, and uncertainty avoidance. For Switzerland, masculinity is the highest ranking dimension at a value of 70. This means that there is a higher separation between the values of Swiss men and women. The men are more competitive and assertive in comparison to the women. Individualism is the second highest dimension at a value of 65 and implies that the Swiss are independent and take care of themselves. At a value of 58, uncertainty avoidance is the third highest dimension. This dimension indicates that the Swiss population is not afraid of unusual situations and does not need strict rules and regulations. The lowest dimension is power distance at 34 which reflects that the power of the society is distributed relatively equal.¹

As a result of Hofstede′s examination, Yummy in Switzerland should have low hierarchies and the manager positions are preferably occupied by men. Each employee knows his/her area of responsibility, so there is no need for strict rules (cooperative management style).

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1 View Web site: <http://www.geert-hofstede.com/hofstede_switzerland.shtml>