Business plan for a chocolate factory in Latvia

Table of Contents

0 Abstract

1 Introduction

2 Business plan
2.1 Products
2.2 Organization
2.3 Supply network
2.4 Marketing strategy
2.5 Schedule

3 Feasibility study
3.1 Market and conditions
3.1.1 Economical analysis
3.1.2 Market analysis
3.2 Financial rationale

4 Conclusions

5 Bibliography

Index of Tables

Table 1: Product range

Table 2: Implementation schedule

Table 3: Figures ofexpected growth (in Euro Mill.)

Illustration Index

Illustration 1: Sourcing flexibility rationale (Source: Gosling et al. (2010, 18))

Illustration 2: Euromonitor Indicators of Business Environment Scores (Source: Euromonitor (2017))

List of Abbreviations

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0 Abstract

This paper represents a business plan and feasibility study for a chocolate factory outside Riga/Latvia. In its first section the paper depicts product line, organizational principles, supply chain strategies, and marketing strategy. In its second section it bases the enterprise on analysis of market and business environment in Latvia. It can be shown that the project falls in line with both economical developments and national and EU policies favoring foreign investment.

1 Introduction

The paper assumes a fictional but realistic mother firm in the UK to expand to the national market of Latvia in this way. The business plan comprises a description of products, a marketing strategy, a depiction of organization, basic corporate strategies and envisaged supply network, and a schedule for implementation. The feasibility study provides market and conditions analysis and financial rationale.

2 Business plan

2.1 Products

Laria chocolates are an invitation, a voyage into passion, addiction, and the art of connoisseurship. Yet, they are normal, affordable, totally middle class, they rank from chocolate bar to confectionery, appeal to an age variety of 4 to 99, and fit occasions ranging from running off to work to anniversaries. The product range comprises seven options (see Tab. 1) starting with small and medium sized chocolate bars, continuing with bars of chocolate weighing 100 and 300g, and concluding with four sizes of confectionery boxes; the cheapest of which is remarkable small. Its unusual weight of 200g is in line with our marketing strategy (see 3).

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Table 1: Product range

All Laria chocolates have a distinct flavor while flavor variations still can be found in the confectionery boxes.

The corporate strategy draws from Porter's (2004, 3) definitions of competitive advantage, value and value creation. Fischer states,

"[competitive advantage grows fundamentally out of the value a firm is able to create for its buyers that exceeds the firm's cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation."

Against the background of our analysis of a consumption boom (see 3.1), our product line emphasizes on differentiation. It adds unnecessary affordable pleasures to consumers tired of remembering the hard times and the need to save money.

2.2 Organization

The management comprises one chief executive officer (CEO) and a board of directors each overseeing one of the areas technical management and production (TP), product management (PM), supply network management (SNM), sales & marketing (S&M), human resources management (HRM), public relations (PR), and accounting and administration (AAD). The board of directors on the whole is responsible for the implementation of corporate identity and corporate strategies. The board of directors is partly British and partly Latvian. Thus, corporate strategies may be embodied within the setting of local cultural characteristics more naturally (see also 3.1.2).

In the UK Laria has successfully launched a middle to top range priced product line three years ago. At their core, corporate strategies embrace an innovative reputation management, viewing stakeholder's loyalty as their core asset for value creation. Interests of stakeholder groups - comprising customers, own employees, shareholders, and hybrid stakeholders - shall be considered important and relevant each in their specific characteristics (cf. Helm 2007). For example, S&M thus is obliged to permanently evaluate and improve customer relationships (cf. Elfroth et al. 2006).

The corporate tax planning employs a tax avoidance strategy - as valued by capital markets - prioritizing high net-of-tax earnings and thus strategically focusing on a low level of long-term effective tax rates. Additionally, variation of tax rates is kept at a minimum (Jacob & Schütt 2013).

HRM is responsible for constantly evaluating and raising the company's human capital, and thus for laying foundation to productivity and customers satisfaction. Hence, employees satisfaction is taken seriously as factor of corporate value increase (Casalegno & Pellicelli 2008). In respect to the production plant in Latvia, the company's HRM policies associate with social responsibility on a broader scale as the provision of employment is of much relevance to the region (see 3.1)

2.3 Supply network

Supply network management focuses on supply chain flexibility (SCF). The term network instead of chain already indicates a radical understanding of flexibility. As for ourselves, flexibility primarily refers to sourcing flexibility, and applies to business relationships with vendors, marketing companies, and retailers, in order to give SNM the opportunity to constantly minimize costs. The underlying rationale is that chocolates are not a highly innovative product, and thus their production does not need, for instance, elaborated cooperation among product developers of various suppliers. Thus, we rely on sourcing flexibility, rather then vendor flexibility (III. 1).

Sourcing flexibility refers to our freedom of reconfiguration of the supply chain, vendor flexibility refers to capacities of flexibility of business partners. Thus, we are not particular with our business partners. We do not contract under framework agreements, but rely on a pool of approved suppliers who fulfill minimum criteria (cf. Gosling et al. 2010; see III. 1).

Similar measures of flexibility will neither be applied with HRM (see 2.2), nor with logistics. Instead, in logistics we aim on a tailor-made solution provided by suppliers with high flexibility capacity.

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Illustration 1: Sourcing flexibility rationale (Source: Gosling eta/. (2010,18))

2.4 Marketing strategy

Our marketing strategy targets the middle class, normal people. As for ourselves, chocolates are luxurious normality, common luxuries easily affordable even if they are exquisite. The 200g small size confectionery box symbolizes accessibility to a world of normality. The middle classes are those who have made it, who are part of society. Thus, the comfort and nourishment of chocolates associate with security and success.

In principle, our PR and marketing strategies employ Image Transportation Theory (ITT) coined by Green and Brock. The authors maintain that public narratives are best received, if recipients can view themselves positively in them. Further, ITT claims that in our media dominated world images - as in the image of firms for instance - and narratives are strongly intertwined (cf. Polichak & Gerrig 2002, 75-6; Gerrig 1993, 10-1; Green & Brock 2000, 701-721; Green & Brock 2002, 315-341). Subsequently, by producing and selling chocolates we need to tell stories our customers would rather identify with, our chocolates themselves are to become narratives much like movies the middle class wants to play a role in. Laria's image ought to be pictures before the inner eye.

Market analysis (see 3.1.2) reveals the importance of presenting our products as Latvian products. Indeed, they are manufactured for the Latvian market within the country. Our marketing strategy though implicates more than ecological concerns. Marketing concepts will need to take in consideration that Laria chocolates are produced by Latvians, enjoyed by Latvians, they thematize being Latvian in the new times.

2.5 Schedule

Tab. 2 shows an overall time-line, consisting of three phases, preparation phase, development phase, and production kick-off.

Preparation phase mostly concerns AAD and PR. According to Euromonitor's business environment analysis (see 3.1.1), it may take up to 5 months to sort out legal requirements.

All areas of management are involved with the development phase at some point. Development phase includes the construction of the manufacturing plant and the establishment of B2B-relationships.

As a major future employer in the region, the company will take PR responsibilities seriously from the start, throughout the development process, and especially during the first months of production.

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