Question: I have to do 5c of credit analysis (collateral,conditions and capital). I need to reject this business proposal as a banker's point of view. Please
I have to do 5c of credit analysis (collateral,conditions and capital).
I need to reject this business proposal as a banker's point of view.
Please also put the conclusion.
Thanks in advance.
1.0 EXECUTIVE SUMMARY
Danial Maju Enterprise is a small medium corporation company that located at Jitra, Kedah. This company is established on Jun 2014 and commenced on July 2014. Within the last three years there has been significant increases in demand for these bahulu products. This can be explained to a large degree by the fact that popularity of bahulu has earned itself a place in Malaysian's heart as it evolved to suit the modern Malaysian lifestyle and taste preferences. Danial Maju Enterprise has its own objectives which is to make traditional cake that can be commercialize but stays to be all time favorite for all communities. This business capital is amounted to RM 300, 000.00 which half is contributed by FAMA fund and half is from owner's capital.
Mission
Danial Maju Enterprise aims to be a cornerstone in the community creating an environment where customers feel comfortable and become instant regulars. We are concerned for Malaysian need of good and delicious snacks. We will always seek fair and responsible profit, enough to keep the company financially healthy for the long term.
The Products
Expertise in selling traditional food which is Bahulu, our company offers a wide range of exciting Bahulu products which is Bahulu Cermai, Bahulu Kemboja, Crme Bahulu and Cup bahulu with crme & topping.
Target Market
Our company decides to build a strong market position in Kedah. The target market consists of the population in Changlun, Kubang Pasu and Alor Setar area. Besides, there are two main competitors that sells bahulu in Alor Setar which consists of Bahulu Warisan Enterprise and Mak Kiah Bahulu Enterprise. Type of bahulu that those companies offer to the customer are traditional main bahulu which is Bahulu Cermai. Thus this will give advantages for our company as we offering varieties flavor of bahulu that will definitely attracts more communities. Our company aims to offer the product at a competitive price to meet the demand of the customer in market area residents, students, and individual.
1.1 Background of the Business
CONTENT LIST
1) Business address
Bahulu Danial Maju Enterprise
Lot B5, Guar Napai,
06000 Jitra, Kedah.
2) Telephone Number
04-33925544
3) Form of business
Sole proprietorship
4) Date of Business commencement
1st July 2014
5) Name of bank
Bank Rakyat
6) Bank account number
13-456-01-556634-1
7) Equity contribution
RM 150 000
1.2 Purpose for a Business Plan
-This business plan is prepared by Bahulu Danial Maju Enterprise for the purpose of:
-This business is prepared as to convince Bank Rakyat in obtaining working capital loan for RM 200 000.
-This business plan is also prepared as a guide line for managing proposed business for a day operation as to operate the business smoothly.
-This business plan is prepared by Bahulu Danial Maju Enterprise to make sure the entrepreneur views and proposed business venture in good manner.
2.0 COMPANY SUMMARY
Danial Maju Enterprisealready operating its business in Jitra and plans to expand a new branch that will be located in Alor Setar. This downtown district is a very popular destination for weekenders and tourists. It is also a prime location for all the employees of the surrounding downtown businesses. Hence, this will be a good opportunity for Danial Maju Enterprise to expand its business.
2.1 Company Ownership
Currently Danial Maju Enterprise is a sole proprietorshipowned by Muhammad Danial Bin Hambali. Eventually, as the company becomes established and well known, Danial Maju Enterprise will apply to be incorporated.
2.2 Product Concept
As our main selling point is bahulu, thus we have done some innovation to these bahulu in order to make it look different and attractive than other ordinary bahulu. We also modernize the bahulu so that in the future it can be accepted globally. The types of bahulu that we offer to the customers are. Bahulu Cermai, Bahulu Kemboja, Crme Bahulu (strawberry, vanilla and chocolate) and Cup bahulu with crme & topping. Bahulu Cermai is the main product which will be distributed to the retailers. While for Crme Bahulu, Cup bahulu with crme & topping and Bahulu Kemboja are the types of products that their offer to the customers for ordering purposes. With these varieties of products, our company hope that we are able to compete with other competitors and able to gain more customers. Besides that, we also ensure that our bahulu is delightful so that customers will satisfy with the taste and quality.
3.0 PROBLEM & SOLUTION
3.1 Problem
The SMEs in Malaysia is one of the backbones of the Malaysian economy. Since the Federal Agriculture Marketing Authority (FAMA) has predicted that the potential market for local food products in Malaysia will increase based on the volume in domestic distributions. Thus, resulting in higher demand for local traditional snack food is part and parcel of the export business. As the SMEs are characterized by their limitations in capital ability, especially in terms of resources such as in the human and financial aspects, it is quite common to find many SMEs struggling to survive in a competitive market. Lack of financing became an obstacle to SMEs growth in transitional economies due to poorly developed capital markets and where credit was accorded according to historical working practice.
3.2 Business Improvement
The bahulu has been identified by FAMA as one of the top ten traditional snack food sold in the Northern states of Malaysia. In our opinion Danial Maju Enterprise have potential to become high growth SMEs. Since Danial Maju Enterprise have potential to expand their business and also high demand for bahulu, we would like to apply for a bank financing to open a new branch in Alor Setar. Alor Setar is the state capital of Kedah and has a high population growth, thus providing a huge market for a comprehensive range of businesses in Malaysia. Alor Setar is also a tourist attraction.With a branch in Alor Setar, our target market is people who live in there and also tourists.
3.3 Marketing Strategies
Product
As stated before in the product concept, this company offer several products to the customers which are Bahulu Cermai, Bahulu Kemboja, Crme Bahulu and Cup bahulu with crme & topping. With the motto quality, delicious and relation, they are not only focusing on the taste of the bahulu, but also care about the quality of their bahulu. In order to attract customers to buy the product, this company have design the bahulu with different design according to the types of order. Besides that, they packing the product with clear colorful plastic for those products that will be distribute to the retailers shops. The purpose is to allow customers to see the product clearly. While for ordering packages, the packing are in colorful box and ribbon so that it will look more special, simple yet beautiful.
Price
Basically, this company use cost based pricing to put price on the product. For different types of bahulu, they put different price for it. This is because the amount of material used for different types of bahulu is different from one another. Besides that, they also consider the quality and the preparation steps of the bahulu before putting the price. Below are the price for 1 unit of bahulu and the selling prices of our products.
1. Bahulu Cermai
Price per unit : RM 0.30
Selling prices : RM 0.30 x 50 = RM 15.00
2. Bahulu Kemboja
Price per unit : RM 1.50
3. Crme Bahulu
Price per unit : RM 0.40
Selling prices : RM 0.40 x 10 = RM 4.00
4. Cup bahulu with crme & topping
Price per unit : RM 1.20
Promotion
Like many other businesses, they also use few types of promotion tools in order to accomplish the sales promotion objectives. This company use advertising in magazines to promote their bahulu. They also choose to advertise the bahulu in magazine like Rasa because this magazine has its own readers who are interested to know about new foods. Besides that, they also have an own website. The purpose of this website is not only to promote the bahulu, but also to get feedback or any new ideas from the customers in order to improve the bahulu. Moreover, this website is also use to introduce new kind of bahulu to the customers. This website will make the customers closer to our product because it is easy to access and customers will easily get information about our bahulu.
Other than that, they also do sales promotion like giving bahulu sampling and discounts. This company supply their bahulu sampling to the retailers at C-Mart Changlun, Jitra Mall and Aman Central because at shopping mall people usually are interested in testing food and they tend to buy the food if it tastes delicious. For discounts, they only give discounts for order bahulu. For example, if a customer buys cup bahulu with Crme & Topping for more than 1000 units, then 10% discounts will be given out of the total price.
Lastly, the sales team also do personal selling by communicate face to face with the customers and explain to them the types of bahulu that their offer. Not only that , they also give pamphlet and name card to the customers so that easy for them to contact with them for detail information about their bahulu.
Place
The factory and office are located at Jitra which is near to the town and city like Changlun, Kubang Pasu and Alor Setar. Therefore, it will make them easier to promote the product to more wide market including the town people. Besides that, this location is strategic because it is near to the raw material and labor source which is the village people.
Even though Danial Maju Enterprise would like to open a new branch,this company also realizes that distribution strategies are important as it is one of the factors that will contribute to whether the product can be sold effectively or not. To distribute the product, they use two types of distribution strategies which are:
1)Manufacturer retailer consumer
2)Manufacturer consumer
For distribution that use retailers, they choose four places to sell their bahulu which are Changlun (C-Mart Changlun), Jitra (Jitra Mall and Tesco Jitra) and Alor Setar (Aman Central). For all the retailers, this company agrees to pay them some commission every month. They use retailers to help them to distribute the bahulu in certain places. By using this way, this company could save some cost from renting a shop to sell the bahulu at every place that we want. For direct distribution to the customers, they use this kind of distribution when receive orders from customers. This company will deliver the orders to the customers and no transportation cost is charge for area around Changlun, Kubang Pasu and Alor Setar. But if the delivery is outside from these areas, transportation cost will be charged.
3.4 Competitors
Based on our research, we knew that every competitor has their own strengths and weaknesses. So, we have engraved more in order to move a step ahead in order to compete with both new entrants to our market and current competitors. Therefore, we will create marketing strategies that take advantages of our competitors' weaknesses, and improve our own business performance and is important in order to manage our business successfully. Below are the lists of our current potential competitors:
Bahulu Warisan Enterprise
Strength
1.Opened for 24 hours
2.Stable financial background
3.Comfortable cafe
4.Had open 6 years ago until now
Weakness
1.Very unreasonable price
2.Do not have up to date equipment
3.Do not have special treatment
4.Do not have variation of flavor
Mak Kiah Bahulu Enterprise
Strength
1.Opened everyday
2. Have polite workers
3.Have cheaper price
4.Had open 2 years ago until now
Weakness
1.The shop is not well manageable
2.Less quality of product
3.Not strategic location
4.Lack of quality and services
3.5 Target Market
Since the factory is located in Jitra and the new branch at Alor Setar, target market would be the customers in Changlun, Kubang Pasu and Alor Setar. Most people are already familiar with bahulu as one of Malay traditional cakes which are served during Hari Raya and are enjoyed by many. The demand for bahulu during these occasional events normally will increase. Therefore this company bahulu and cup bahulu can also be enjoyed by all age groups. It means that, in term of demographic segmentation, their focusing on customers from all age groups who live in Changlun, Kubang Pasu and Alor Setar area. Since they also accept customized orders for certain occasions such as birthdays and weddings, they give a bit more focus on those in the age group of 1 - 35 years old as they are at the age where they like to have birthday celebrations with their group of friends and families as well as getting married. Besides that, they also segment our market into separate psychographic profiles. Since the bahulu and cup bahulu are modernized version of the traditional bahulu, they seek to first capture the interest of those who are adventurous and love to try out new things besides being food enthusiasts. This company hope that through them, it could reach out to other more conservative customers by recommending our delicious and unique bahulu and cup bahulu to others.
4.0 EXECUTION PLAN
Danial Maju Enterprise was built with a small business starting with received a reservation types of bahulu from time to time the bookings received was out of listed amount. Our focus on this project is want to grow the business and expand the market by offering high quality products at an affordable and reasonable price to the whole community. This is driven by the increasing demand for bookings day especially school holiday and Eid day. At that time the order received exceeded the specified quota causing the company to suffer shortage of space and staff in providing the reservation. In addition, our location was located in Changlun, Jitra and Alor Setar makes it easy for customers to come and get sample for our products. Our aim to expand our market around the area with new branch that will coming soon.
We will produce specialty menu is Bahulu Durian which makes its popular menu. The texture of the product is very soft and easy to set up. The company also offers a variety of other flavour for them to try something new. Native flavors are also one of the most popular seasonal flavors and are often reserved for festive occasions. We also provide delivery shipping service with bulk bookings to customers' homes. This is because we want to provide the best service in terms of product quality at affordable prices. Same with other business that face will competitors we will make sure our service, price, quality and product are will be the best choice among customers. Our Product price are as follow.
1. Bahulu Cermai
Price per unit : RM 0.30
Selling prices : RM 0.30 x 50 = RM 15.00
2. Bahulu Kemboja
Price per unit : RM 1.50
3. Crme Bahulu
Price per unit : RM 0.40
Selling prices : RM 0.40 x 10 = RM 4.00
4. Cup bahulu with crme & topping
Price per unit : RM 1.20
In addition, the marketing method we have created is through Facebook, Instagram and some social media platform. We also put a pamphlet in every store that take our product to be marketed together with other local products which in the same time we also promote the Malay traditional food. Our target customer is open to all age group. We do not limit our target customer because the product we produce are foods that are free from any allergic ingredients.
Besides that, we also provide packs that are easy to carry and extremely conducive and are able to maintain the quality of food within a set time. This is because our customers also come from another state such as Johor, Kuala Lumpur and others.
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