May 5, 2003
Table of Contents
1. Executive Summary......................
2. Personal details.......................
5. Industry and Market Analysis..................
6. Marketing Plan.......................
7. General Company Description.................
8. Production and Operations Management.............
9. Products and services....................
11. Annotated Bibliography...................
“Blue Bubble” will be a small self-service laundry. Our goal will be to create a cozy atmosphere among the staff and customers. We will provide cookies and hot drinks to make the place more pleasant.
“Blue Bubble” will be a partnership owned by five equal owners who will share all the responsibilities, profits and losses.
We decided to open a seelf-service laundry because washing is a daily routine that not many people enjoy.
There are eight cleaning and washing companies in Lithuania. However, there are only two self-service laundries; therefore, we have only two competitors.
We will not only be a self-service laundry. A customer who will not have enough time to wait until his laundry is done will be able to leave his clothes and take them after a couple of hours. We will also provide ironing services.
Our services will be orrientated to those who do not have a washing machine. Our target market will be students.
I have already worked as an employee in a company called “Remulda”; I was responsible for marketing and customer service at a junior management le
Details of business
Partnerships: Advantages & disadvantages
There are 2 main advantages to forming a partnership. First, a partnership allows two or more people to work together and bring different skills and resources to the business. Second, a partnership is fairly easy to establish. The actual registration of a partnership is not expensive or complicated. However, it is a good idea to decide how the partnership will be run and put it into a partnership agreement.
There are 5 main disadvantages to forming a partnership. First, because the partnership is not considered to be separate from its owners, the partners are personally responsible for liabilities off the partnership. If the business fails, the partners will be personally responsible to pay all of the debts and obligations of the partnership. Second, because each partner is an agent for the business and for the other partners, each partner is personally responsible for the actions of the other partners. If one of the partners makes a bad business decision, or acts negligently which results in the partnership owing a debt, all of the other partners are personally responsible to
Third, because a partnership is based on the individual partners, and it is not a separate legal entity, if one of the partners dies, the partnership ends. This means that the remaining partners have to re-establish the partnership.
Fourth, because a partnership is not a separate legal entity, it is difficult to buy or sell a partnership interest. Buying or selling a partnership interest will involve rewriting the partnership agreement and determining exactly how the partnership will change.
Fifth, although the resolution of disagreements amongst partners is generally covered under a partnership agreement or case law, it usually is very difficult. There is no Act that exists which sets out rules for settling partnership disputes. If the disagreements are not resolved by the partners themselves, they will usually have to turn to outside help which can be time consuming and costly.
Our company is organized in a way in which the groupings of jobs are under the authority of one main manager (president) who plans, coordinates, and controls the business. He is the representative for our company. The organization is by function. That means it is based on marketing, finance, production sales, and operation functions. There are four other managers wh
Main manager (President)
Marketing Finance Production Operation Manager Manager Manager Manager
Our company has a flat structure with wide span of control, with few managerial levels and a short chain of command.
· We haven’t got staff authority. In this case we will have line authority. All the managers have right to make decisions or solutions.
· We have informal organization in which the use of informal channels of communication is widely adapted.
· It is a decentralized company because decision-making authority and freedom will be given to the lower level managers.
The shares of the company are divided equally for each of the managers (owner). The company will have no board of directors. The company has only one president in the organizational structure.
Management of our company:
There will be four key managers that will be responsible for finance, operation, production, and marketing.
The sales and marketing manager’s responsibilities involve supervision, marketing, profitability and sales, reporting and purchasing.
Finance manager responsibilities:
· Provide analytical support on projects
· Assist with the preparation, coordination and analysis of management reports
· Communicate financial requirements and risks associated with projects
· Ensure the timeliness, completeness, accuracy and reliability of financial information
· Understand the risk an
Operations Manager general responsibilities:
· Responsible for the overall management, implementation and operations of a gas turbine airfoil coating process
· Responsible to meet the Customer_s contractual requirements. All work will be conducted under a strict quality process system.
Production Manager general responsibilities:
Responsible for the overall production planning and implementation of gas turbine airfoil coatings. Responsible to meet the Customer_s contractual requirements. All work will be conducted under a strict quality process system.
Uniqueness is in that fact that we will be business majors. We are young, active, responsible, devoted to work, creative, and communicative.
1. We will have job description – lists of the tasks and responsibilities for the employees. This will help new employees tot get to know the job better. The employees also will have to have some specific qualifications in different fields of job.
The workweek will be altered in which we will have to work from the standard eight-hour-a-day, five-days-a-week.
2. Recruitment and selection will be not very broad. The employees will be our friends or other acquainted people. The selection process will have an application form and selection interview. But it will not be very complicated.
3. Training and development is bases on-the-job training. We will have on-the-job training to the staff to get to know the place, in which he works, to get acquainted to the specifications of it and to be directly related to the job. The workers must have qualities such as: 1. Hard working; 2. Thorough; 3. Flexible & affable; 4. Communicable.
4. The employee compensations will be wages because the work is based on the specific number of hours worked.
5. Fringe benefits & employee services will not be included because our company is not so large to pay such money to the employees. The good working conditions are guarantied to every worker of the company.
6. We will give leave-taking separations to the employees. There will be included:
No promotions are included because the job is divided to several workers who do their specific job. And no changes will be made in it. The transfers will be made in which the workers change their specific job between each other.
BASIC FUNANCIAL ASSUPMTIONS
We will invest 40000 Lt into our business. Our company will not take any loans. We will only invest savings of all the owners.
•Two salespeople 450 Lt x 2 = 900
•Accountant (once a month) 50Lt
Total salaries: 950Lt
We will rent facilities in Sauletekis. Leasing will cost us 1100Lt per month.
• Washing machines will use 228 kWh of electricity first month. This will cost 228kWh x 0.29 Lt = 66 Lt
• Lamps, computer and iron will use 137kWh of electricity first month. The cost will be 137kWh x 0.29 =40 Lt
Total electricity cost (first month): 106 Lt
Every month electricity cost will increase depending on our sales.
• Washing machines will use 12.9m3 of water first month. That will cost 12.9m3x4.43Lt=57Lt
• Water for other usage (toilet, hand washing, etc.) will cost approximately 4m3x4.43=18Lt
Total water cost: 75Lt (will increase depending on sales)
There are approximately six heating month in Lithuania. Usually these months are October, November, December, January, February and March. Heating costs vary every month depending on the temperature outside. The average cost of heating per month will be 65Lt.
Total heating cost per year: 389Lt
• Cost of a telephone: 50 Lt
Total cost of utilities approximately per month: 296Lt
• Cash-register tape: 2 Lt
• Other items: 3 Lt
Total cost of office supplies: 5Lt per month
ü We will spend 1000Lt on advertising in newspapers and flyers the first month. An advertisement campaign in “Panele” and on the universities campus and dorms will be started immediately.
Our company will pay these taxes:
• Profit tax – 24% of net profit before taxes
• Social Security tax (VAAT) – 30% of total salaries of employees
• Road tax – 24Lt per three months.
THE PRICE PF EQUIPTMENT, NEEDED TO START AND RUN OUR BUSINESS
Washing machines 7,800 Lt
Office computer 2,000 Lt
Telephone apparatus 150 Lt
Office table 340 Lt
Office chair 30 Lt
Couch 1,750 Lt
Coffee table 200 Lt
Iron + ironing board 180 Lt
House-hold goods 500Lt
Aquarium 400 Lt
Total cost of all equipment 15350lt
THE PROCESS OF BUSINESS
ü “Blue Bubble” will start on 1st September 2003 with 2 full-time employees, equipment worth 15350 and wwwwLt of cash.
ü An advertisement campaign in “Panele” and on the universities campus and dorms will be started immediately.
The First Year of Activity
ü The number of orders will increase; however, at the end of the year we will have a loss of XXX
The Second Year of Activity
ü The costs of utilities will increase;
ü The cost of rent will remain the same;
ü The costs of advertisement will decrease by XXX
ü We will end with a loss of XXX LT
The Third Year of Activity
ü The costs of utilities will increase;
ü The rent coat will remain the same;
ü The revenues will increase;
ü We will end with a profit of XXX
Industry and Market Analysis
Our service belongs to service industry that provides qualified household services. The industry that we intend to enter consists of companies that color, clean, and wash clothes, furniture, carpets, carpet coverings, fur and leather. According to “Lietuvos įmonių katalogas” there are 72 companies that provide cleaning and washing services in Lithuania. The most important players among these companies are 4-5. There are only nine self-service laundries in Lithuania.
All this particular moment the major problems in the industry that we are about to enter are the discounts on washing machines, which enable more people to acquire washing machines of their own and habits of potential customers. People are not used to using laundry service in the daily life.
As you might see in the Table 1.1 the prices of electricity in Lithuania rose in last years. If prices of electricity and water Table 1.2 remain the same industry that we are about to enter will not face any major changes. However, if the price of electricity will be raised due to “Ignalina Nuclear Power Station” shutting, variable costs of washing service will be changed.
Table 1.1 “The Change of Electricity Costs in Lithuania”
1994 1995 1996 1997 1998 1999 2000 2001 2002
0,12 ct 0,16 ct 0,22 ct 0,20 ct 0,22 ct 0,22 ct 0,274 ct 0,274 ct 0,29 ct
Table 1.2 “The change of water cost in Lithuania”
1998 1999 2000 2001 2002
Hot water 7,65 Lt 8,38Lt 9,78 Lt 8,20 Lt 13,24 Lt
Cold water 2,34 Lt 2,34 Lt 3,61 Lt 3,61 Lt 3,61 Lt
Our marketplace will be limited to a city, as we will open our company in Vilnius. There are some laundry companies in Vilnius as well. The most important player is “Palūstrė”. A number of present laundry companies from 1993 until now have branched out from it. However, “Palūstrė” serves companies and other state organizations and do not specialize in washing small amounts of clothes. Namely this service is provided by some proprietorships that are about the same size.
Potential customers in our market are mainly students and pensioners. These are the people who cannot afford high prices for washing.
-Geographic. Our customers are from particular neighborhood that is the closets to our company.
-Psychographics. The customers who want to save their time and energy.
-Volume. Our customers will be heavy users, as they will use our service continuously.
The motives for purchasing our service are to avoid wasting time and energy on our daily routines. There is no self-service laundry in this area of the city. Therefore, the consumers won’t have to go to the other district of Vilnius.
Here are eight potential competitors in Vilnius. Most of them not only wash, but also do the dry cleaning. Companies, which provide such services, are “Joglė“, “Pedantė“, “Mr Harry“, “Švara”, “Tebūnie švara”, “Palūstrė”, “Koperfilas”, “Albaresa”, “Balima“, and “Vikdagis”.
Joint Lithuanian Italian enterprise UAB INTERIPA was established in Lithuania in 1993. In 1996 the enterprise expanded its activities by opening its branch in Vilnius – cleaning center JOGLĖ. Joglė provides such servises: dry clothes cleaning, cleaning of leather and fur, clothes washing, intermediation in acquiring, rent, urgent dry cleaning. They are using flexible discount system. After 10 visits customers receive 10% discount, after 20 visits they receive “Discount card” that entitles customers to 20% discount. They also apply 50% discount for child clothes (for children under 12 years old).
It is the most famous cleaning company, which provides dry cleaning, washing and ironing services. It was set up in 1997. There are 6 employees who are the ironers, washers and a technologist. The working hours are 8:00-20:00
They offer a lot of services, discounts and actions. There is a discount of 30 % if today is your birthday. If you bring your school uniform for the service you need to pay only 15 Lt. Students are also not forgotten because they have 15 % discount. Also regular consumers get discounts, they get points for cleaning and each point is a different quantity of discount.
The company provides delivering the laundry home for the people who want to save their time.
“Tebūnie švara “
Is a company that provides dry cleaning and washing services. It is located in Vilniaus g. 9, telephone number (+370 2) 31 20 78. It has working hours 8:00-20:00. The company opened in 1996. There are six employees.
The company offers transportation of the laundry for free. That is a great advantage among other companies. 1 kg of laundry costs 2,80 Lt. For more than 10 kg they give a discount of 10 %. The same discount is given to regular customers. Unfortunately, self-service is not provided. The prices of dry cleaning vary from 3 to 109 Lt. You can find all the information and costs in their flyer.
Penetration pricing will be a operation of “Blue Bubble” that would help us to compete. We’ll suggest our service at a low price in the hope of achieving large sales volume. This penetration pricing has two big advantages:
1. First, the low initial price may induce consumers to switch “Blue Bubble”, the brand of our company.
2. The second advantage of penetration pricing is that it may discourage competitors from entering the market. Their costs would tend to be higher, so they’d need to sell more at the same price to break even.
From the very outset our company will use leader pricing because this type of pricing will increase sales volume and profit of “Blue Bubble”. Leader pricing, pricing below the normal markup or even below cost, would more easily to attrack customers.
Our plan how to improve quality:
· Quality control – we’ll create quality standarts and measure our service against those standarts.
· TQM – toltal quality management will involve all employees to improve quality. All together will serve, purchase, account and so on. It will let us to achieve greaer efficiency and satisfy clients.
· Benchmarking – we’ll compare our service with services of the best and strongest firms in the market. This way will help us to improve quality and maybe avoid some mistakes that did other companies.
· Control of State – there are firms of state , which are authorized to control our place of work, hygiene, taxes, security of works and so on.
· Desire of the public – the book , in which our clients will write all wishes and mistakes we are doing.
We wish “Blue Bubble” has the best on-time performance. The client for us must be the most important point. Our time-table will depend on desires and needs of our customers. At first, we must see when is the biggest stream of people and at what time our service is the most demanded by customers.
Supposted schedule: Monday-Friday 11.00 – 19.00
Saturday 9.00 – 18.00
Relationships with the suppliers
Good relationships between the vendors, suppliers, and partners will make our organization run more effective. It will help us reduce delivery time to our company, raise quality criteria and to establish best price for the customers.
We will try to find such vendor, which is the nearest to our organization location. This will save much of delivery time.
Our organization will make effort in business and try to keep good relationships with the vendors. It would be a great opportunity to us become highly involved with vendors and maybe they’ll become a part of our business.
We are a little company and we need to accept the suppliers’ requirements about the services they provide us.
Products and Services Description
In this very dynamic every day life, where people are always in a hurry, working or studying, there is no time left for such minor things as the cleaning of house or even washing the laundry. That is why we decided that a company, which provides good quality washing services, is able to be successful in this rapidly developing world.
Our company “Blue Bubble” will provide a variety of services related with washing. The citizens will be able to come and wash their laundry by themselves that is by paying money to the staff and doing their services on their own. Our service is orientated on self-washing, but if somebody doesn’t have time to wait until the washing is done than we are here to help. The customers can leave their laundry to the staff member and pick up after several hours. Naturally this service is a little bit more expensive.
Our services are orientated firstly of all to the ones, who do not have washing machines at home, and to those who wish to save their time and energy.
The advantage of our company will be the employees. They must be young, sociable, willing to help and flexible in all sorts of unexpected situations. In Vilnius there are several companies, which provide laundry services and they offer a big competition to us.
In Vilnius there are nine companies, which provide laundry services. To such a big city it is not enough. However, the statistics show the decrease of people in the city and that leads to smaller market and bigger competition. But we are being optimistic because we will have discounts for constant customers and different shares. For example if you bring more than 10 kg laundry, you can iron without any charge etc.
We hope that we are going to enter the market easily by providing good quality and also washing at affordable price for all of the people.
The major Problems that we can face are these:
· Our company belongs to service industry. If the provider increases the costs, we also will be forced to raise our costs of washing. That will become a problem to attract customers.
· Another problem is the costs of washing machines. If the prices go down, the consumers will buy more washing machines than before and they loose the need of using laundry.
Washing can be fun!!!Always give 100% to laundry:12% Monday23% Tuesday40% Wednesday20% Thursday 5% Friday
· Statistical Yearbook of Lithuania. Vilnius: Methodical Publishing Center, 2000.
· Yellow Pages. Telephone Book. Vilnius district 2003.
· www.imones.lt, laundries in Lithuania
· www.vilnius.lt, map of Vilnius
· “Lietuvos rytas”. Advertising Department. I found out the costs of advertisements in this newspaper.
· Laundries: “Joglė”, “Vikdagis“, “Tebūnie švara”-telephone interviews. I found out the costs of services and exact services those companies provide.