Introduction
There is a general understanding among several authors and business minds that for one to be an entrepreneur one has to have the capacity to notice business opportunities or create one before others do. This rests in the ability to notice a need in the market and developing a way(s) to meet this need. De Bono in his book on lateral thinking as quoted by Alasaaty (2007) says that adopting parallel thinking in satisfying a particular need in the market counts as a direct route to success as this may lead to establishments and development of different ventures serving the same purpose in different ways. Hisrich and Peters (2008) argue that entrepreneurship and entrepreneurs are principally linked by opportunities. Cromie (2000) reminds us that opportunities in a market are presented by both internal forces present in the entrepreneur himself (internal environment) and the market as an external environment. Mcmullen and Shepherd (2006) assert that before an entrepreneur brings into reality his business venture, he must conduct a feasibility study of his venture in what is called strategic planning for the business that will closely resemble a business plan. This paper therefore is a feasibility study cum business plan for new tours and travel business venture in the leisure tour and travel industry that is a response to a business opportunity created by the failing tour and travel market and the general global economic deterioration.
Business conceptualization
Plying the travel and tourism industry is seemingly a risky business in such a time when the world is facing challenging economic conditions that are threatening consumer spending in leisure travel and recreation. Fortunately, many players are bowing out due to low business thus creating more opportunities for risk takers in this business. Unfortunately, the market size for conventional tour and leisure travel consumers seems to be reducing but Minash notices an opportunity in these developments. By venturing into this industry, Monash Safaris will be introducing a relatively new concept in leisure travel and recreation; economy leisure. Our business will target middle to low-income earners who are willing to take up holidays and travel but are hindered by the high costs of luxury goods.
Statistics indicate that many people are denied leisure and recreation by prohibitive costs. As a new company in the market, our mission will be to reclaim the market from big travel agencies and cement the idea of economic leisure in the market. Our growth as a company will be pegged on increasing cost of living thereby driving households and individuals to be harder on their cash and seek bargains and offers than before. We will thus introduce travel packages for families into chosen destinations around the world. To assist in achieving our objective of maintaining low costs, our travel destinations will be chosen according to global rating on the cost of living in those areas. Countries such as Kenya in Africa have been classified as premium due to high costs. Such will be avoided in order to maintain our costs of operations as low as possible. By focusing on this direction our business will be targeting just around 20% of existing travel and leisure consumers in the US. By positioning our business as the poor man’s alternative, we will be targeting an untapped market segment that has a high potential for growth than others that are in their optimum capacity and seemingly declining.
By developing this market, Monash will be facing little competition in this market segment as it has been noted going by the budgets of many existing players, cutting their costs to compete with us is not possible in the short term. Continuous improvement in our services will lead to the growth of the market and our ability to keep our operations costs always will give us a much-needed sustainable competitive advantage. Based on this concept, I will be able to develop a business plan for Monash Safaris that also addresses the feasibility of this venture.
Product description
Monash Safaris will be offering a unique product in the market as budget/economy leisure and recreation in the US market mainly for domestic and outbound travelers. Our product will mainly be for group offers that will target church members and schools that operate on a tight budget as compared to employees of big corporations usually on team building activities sponsored by their employers. As a low-cost product, our company will also target other low-budget groups that may need our services. To expand and initiate growth for the company, Minash will create demand for its product through aggressive marketing and product positioning in the market.
Industry overview
Leisure travel among US residents took a nosedive in 2008. Many travelers were reported to have canceled their leisure travel plans until the economic situation improved to allow spending. According to an Ipos study conducted in 2008, 10% of leisure travelers canceled their trips. Again 37% of leisure travelers say they expect to travel less often in 2009 while the rest say they will travel the same as in 2008. However, there have been contrary reports to these findings showing that leisure travel will remain relatively stable with the economic hardship only affecting business travel. Economic sense according to Mcmullen and Shepherd (2006) indicates that leisure travel will be affected most the same as other luxury goods where an increase in competition from competing for basic goods leads to a fall in demand for luxury goods and services. Thus, we can deduce that stability in demand for leisure travel is pegged on the expected recovery of the economy in 2009 and the new future.
Contrarily, other market predictions show a stable market for 2009 and beyond. This peg on increased population and general demand for leisure travel. Leisure travel volume remained stable for 2008 (-0.2%) while in 2009 there is a further slight decline of -1.3%.
Strengths and weaknesses internal environment
These are indicative of the internal environment of the Monash safaris as a budget leisure travel and recreation company. They give a forecast of the strong points or advantages of the venture as compared to the weak points or disadvantages.
Strengths
- Monash has a concise business strategy that has a well-developed concept that will prevail in the market. This concept precisely defines the product and the role of the company in the market to give it a strategic direction.
- Brand positioning in the market and product message are realistic of the prevailing economic conditions in the market that affect our target market.
- Monash Safaris has clearly identified its target market and has thus designed its products to meet the needs of that particular market. As a result, Monash safaris will fully enjoy the benefits associated with product specialization.
- Has a well-developed pricing scheme as the preferred market entry strategy. This will give the company a competitive advantage over rival companies in the market.
Weaknesses
- Has a weak brand name as the company is new in the market.
- Low-cost products in the market are associated with low quality.
- Has a relatively inexperienced workforce.
- Has a weak budget and poor financial resources.
- Have no existing customers thus the company does not enjoy brand experience among customers as a brand enhancer.
- Has a poorly developed marketing strategy that is not adequately catered for financially.
- Our product is new in the market.
Opportunities and threats
The leisure travel and recreation industry is wide and has many players in it and an array of stakeholders who have a direct or indirect influence on how Monash Safaris will conduct business. The environment created by these factors presents challenges/threats of creates opportunities for growth and development of business for Monash Safaris.
Opportunities
- Increased demand for leisure travel and recreation among the low o middle-income earners as a result of proper marketing.
- Existing high costs in the market allows Minash ample room to market their services as a low cost alternative.
- Growing awareness and demand for low cost products and services.
- Current economic hardships are expanding markets for low cost products and services as consumers seek more pocket-friendly alternatives.
Threats
- Lack of compliance with strict fair competition laws threatens our product in the market.
- High-level competition from existing players in the market
- High chances of price reduction by existing players to meet consumer needs in terms of bargains
- Variation in the number of willing consumers of our product as is common of the market.
Marketing strategy
As a new company in the market, our future in the industry lays in the company’s ability to strategically market its products and services in the market. Minash Safaris will make use of marketing communication tools such as advertising (print, electronic, internet, newspapers and brochures), promotions, exhibitions and special offers and discounts to increase or brand awareness in the market. An integrated approach will be adopted in order to pass a uniform message to our target audience on the cost efficiency of our products and services as compared to competing ones without compromising quality for costs.
The company will target to increase brand awareness levels among the middle to low income earners already in the market and those have conventionally shied away from leisure travel and recreation and woo them into the market. Our low cost ideology should convince our target market that they can afford through us what they have always wished to have but had been barred by high costs. Existing consumers pressured by high inflation and high costs of living but still willing to enjoy leisure travel and recreation should perceive our product as more pocket friendly and the company as more mindful of our customers by providing them with an affordable substitute to existing products offered by competitors.
Distribution and sales
As an international travel agent, our company will have to enter into strategic alliances with travel companies and some of low cost tourist destinations such as Malaysia, Singapore and Thailand. Minash Safaris will enter into agreements with hotels and lodges in these areas to offer group services at a lower cost. This will be in line with our company policy of maintaining low costs throughout our operations in order to reflect the benefits to our customers in terms f lower costs.
Our company will have branches in major towns in the US starting with low profile towns that have relatively low conventional leisure travel and recreation consumers. Our low cost offering will lure this people into our market segment thereby increasing our market share and hence growth and profits for our company.
Operations plan
Our company will have an integrated organizational structure that will strategically emphasize our idea of lowering costs. As such, the company will have branches in various locations that will number 10 in the first few months of operations pending establishment of others. One of the branches will also act as our head office responsible for harmonising all the activities of various branches. Our headquarters offices will be responsible for making international negotiations and arranging for package offers with destination players in the market such as hotels and lodges. The head quarter will be headed by a general manager answerable to the overall head of the company, managing director. Branches will be led by branch managers who in turn will be answerable to the general manager at the headquarters.
Development plan
Expanding our market share will in the short run lead to company growth. As such, Minash plans to increase its presence in other locations and tap into undeveloped market. However, this direction will be determined by the progress made in undeveloped markets as compared to developed markets where perfect competition exists. In our case, development will be realised in terms of increasing the number of branches in either market segment. In addition to this, development will be interpreted in form of the company’s ability to offer a wider variety of destinations the same way as premium operators.
Exit strategy
The same way our company has taken time to enter the market; the same careful arrangement must be done when exiting the market. Exiting the market will be only done if our business strategy fails in the market and our product does not meet the needs of the market adequately. If such a decision were to be arrived, the company will close down its underperforming branches and retain the fair performing ones. The procedure will continue until the company can no longer hold more transactions due to operations costs. As such, the company will only exit the market if there are no chances of market growth in case of a period of not less than two years is marked with losses or breakeven operations.
Financial estimates
Conclusion
The feasibility of Minash Safaris indicates that this business idea has a lot of potential in performing well in the leisure travel and recreation industry if all the arrangements and strategies laid out for the company are well implemented. The company feasibility study qualifies this venture for establishment as the strengths and possibilities of the company succeeding and taking root are higher than the weaknesses and the chances of failure as the market present an excellent opportunity for the firm.
References
Alasaaty, Falih, (2007) “Entrepreneurs: Strategic Thinkers In Search Of Opportunities” Journal of business and economic research, vol 127, No 14.
Cromie, Stanley (2000). Assessing Entrepreneurial Inclinations: Some Approaches and Empirical Evidence. European Journal of Work and Organizational Psychology, (90) 1, 7-30.
Hisrich Roberts and Peters, Michael, (2008) Entrepreneurship 7th ed. New York: McGraw Hill
Mcmullen, Jeffery S. and Shepherd, Dean A. (2006). Entrepreneurial Action and the Role of Uncertainty in the Theory of Entrepreneurship. Academy of Management Review, (31) 1, 132-152.