Running head: BUSINESS PLAN: ETHICS AND SOCIAL RESPONSIBILITY PLAN 1
BUSINESS PLAN: ETHICS AND SOCIAL RESPONSIBILITY PLAN
Business Name: Fruitfit Company
The name of the company has been inspired by the core objectives that the business has to the customers. Fruitfit is a company that operates the business of distributing herbal drink, vegetable juice and fruit juice for health in box and bottle packaging. The product makes from herbs, fresh fruits, and vegetables from natural 100%, which does not contain any concentrated to dilute. As the company is committed to providing healthy drinks which will serve as an alternative to commercialized high sugar beverages on the market. The company will provide non-alcoholic beverages based on fruits, herbs, and vegetables. Fruits will, however, make up the largest part of the business raw materials. The company focuses on domestic raw materials to support Thai farmers through a standardized production process and advanced technology. The factory is located at Samut Prakarn, Thailand. The use of quality fruits to make healthy drinks has therefore inspired the name Fruitfit as the business name
Fruitfit Company is committed to providing healthy and achieve the highest level of satisfaction from our customers and build customer confidence in our products. At Fruitfit, we believe that what you put in your body matters a lot.
This mission statement is based on the mandate that the company has to its customers. Through the providing healthy beverages, the company will ensure that its customer’s health matters concerns are taken care of. The responsibilities of the business are inspired by the recognition of living a healthy life by controlling what we consume.
The global non-alcoholic beverage industry is estimated to be USD 967 billion. This is according to 2016 estimates done by market research studies. The industry is also expected to grow at an estimated rate of 5.7% through 2017-2025. This makes it a desirable business to venture into. In Thailand, the non-alcoholic beverage industry can be divided into the sectors of carbonated drinks, bottled water, fruit and vegetable drinks, performance drinks, energy drinks, and smoothies. The company will primarily operate in the fruit and vegetable drinks. This is especially a good time for the business as changes in the market have indicated that customers are shifting from carbonated drinks to healthy drinks (Helms & Nixon, 2010). As a result, the categories of drinks which offer health benefits to the customers are experiencing constant growth rates over time.
In the order to properly position the company effectively in the market, the company will adopt a value-based positioning strategy. The company is committed to providing healthy drinks to customers. This comes at a time when the global market is becoming more conscious of the importance of healthy living. Fruitfit Company aims to provide healthy drinks which have been produced using quality raw materials. The company sources are raw materials from the local farmers whereby they are able to get the highest quality fruits and vegetables.
As the company will be operating in an industry which has stiff competition, it will be necessary to ensure that the products of the company are brought as close to the customers as possible. As a result, the company will adopt a well-networked distribution channel which will ensure coverage of a wide geographical area. The company will have a central point of distribution where finished goods will be stored as they await shipping to retail points or direct to customers. This central point will be determined by convenience of supply to all involved outlets. The company will be distributing its products to retailers in various parts of the country. The company will employ geographical segmentation strategy in targeting potential customers. Supply will be made to those convenience stores; grocery stores or other outlets which are located in areas which have a high concentration of our customers.
Risks are part of operations of the business. A good risk management plan is crucial for the continued survival of a business. As a result, the company has to be aware of the risks that it faces in order to come up with an effective risk management plan. The following are three risks which are faced by Fruifit Company and the strategies which will be applied to mitigate the risk.
· Financial risk; as the company operates in the fast moving consumer goods sector, the company supplies will mainly be done on credit to the retailers. This brings the risk that some of the retailers may pay late on their dues or even default. This implies that the company may be faced with liquidity issues. As a result, the company will carefully evaluate the clients on which to offer credit to.
· Compliance risk: as a provider of drinks, the company will be expected to meet certain standards in the business, failure to which may imply serious consequences to the business. The business will, therefore, be required to maintain the highest standards of quality and comply with all the relevant authority through the quality control department.
· Competitive risk: the business will also face the risk that competition in the market may prevent it from achieving set goals. In order to mitigate this risk, the nosiness will adopt an aggressive advertising strategy to ensure wide coverage of the market.
Company’s Target Market
Recently, the fruit and vegetable’s beverage market in Thailand was valued at 14 billion baht. The segment of premium fruit is worth 5,000 million, quite stable. Based on overall economic and purchasing power, to generate sales growth, it is necessary to launch new products, combined with market activity, and communication must be continuous. The company has found that the fruit juice market is likely from the segment with low calories and less sugar. Despite, the size of the market is not very large just only 77 million but has high growth potential. This year is expected to grow 51%, and in the next 3-5 years, the market is expected to reach 500 million.
The target market for Fruitfit Company that is located in the city of Samut Prakan, Thailand, consists of both the youths and the aged population. The age bracket of the targeted population is between 24 to 60 years of age who want to be healthy. The fruits and vegetable beverages target the age group that is cautious of their health regarding harmful chemicals in soft drinks. The herbs contained in the beverages of Fruitfit Company are also regarded for medicinal purposes. The product of the company does not target any specific demographic groups in terms of education, income, or ethnic group. However, the 24-60 age groups are the primary target of the company since the youths and the adults are the majority of the city while the herbal content of the beverages targets the aged population. As per the age structure of Thailand, the 25-54 age group accounts for 46.32% of the total population of the nation (The World Factbook., n.d). The company is located in the central part of the city, which has an average population of 388,920 individuals. The targeted individuals in the city are people who consider natural products that are free of chemicals. Their taste is in line with the mission of the company, which is aimed at providing the fruit and vegetable beverages that are natural and free of harmful chemicals.
Company’s Market Competition
The beverages which made with fruit and vegetable have been rising steadily throughout the world. It is mixed with fruit and vegetable juice to reduce the amount of sugar in the drink and increase the health value. The mixed fruit juice with vegetable juice is up to three times more competitive in the market in 2015 compared to 2017.
Over the past three years, 100% fruit and vegetable juice have gained more market share, compared to products made from concentrated juice or products are flavored and color. This is a result of a 25% increase in the number of fruit and vegetable juices produced from natural raw materials, up from 25% in 2015 to 30% in the year 2015 – 2017. More than 60% of consumers around the world are interested in products that prove they have specific health benefits. Many manufacturers turn to produce 100% fruit and vegetable juice, vitamins and other healthcare features, such as strengthening the immune system. Digestive system, heart health, bone, and brain, plus the benefits of skin, beauty. The number of these products in the market is up to two-thirds of all new products.
The marketing strategy that is deployed by Fruitfit Company to obtain the competitive advantage is through differentiation (Sherlekar, Prasad & Victor, 2010). It is achieved through the production of the organic beverage rather than the commercial ones. Considering that stable companies that manufacture non-alcoholic beverages are a vital threat in competing for the market, the organization decided to venture into the manufacture of the fruits and vegetable beverages and integrated with herbs. The approach is appropriate to attain the competitive advantage since there is global awareness regarding harmful chemicals that exist in the commercial drinks. Citizens are moving away from the commercial drinks since their chemical content is posing a harmful risk to their health. The global awareness of such risks has given Fruitfit Company the competitive advantage since people prefer taking their products. In addition, Fruitfit Company has numerous outlets within the city and across the nation that deliver the beverage close to the clients which will ease access by the buyers.
The organization also chose fruits and vegetables as ingredients in its beverage since they are readily available from the farmers and are less expensive. Competition is the major challenge in the non-alcoholic beverage industry, which prompts each company producing such beverages to obtain differentiated approaches to obtain the competitive advantage. Therefore, Fruitfit Company took the approach of producing the organic beverages as a differentiation factor. The global awareness regarding the harmful effects of the chemicals present in the commercial beverages has enabled the organization to compete favorably in the industry with a stable organization in the industry. In essence, differentiation through the production of the organic beverages from fruits and vegetables has offered the organization a competitive advantage in the beverage industry.
Clarification of the Company’s Message
The main focus of Fruitful Company is to provide healthy beverages to the clients and enhance customer satisfaction. The five F’s that will clarify the message of the company are the focus, follow-through, feedback, flexibility, and fun (Rudman, 2012). The primary focus of Fruitfit is to provide healthy beverages that will enhance customer satisfaction. This is achieved by producing refreshing beverages that are made from fruits and vegetable, which are nutritious and free from harmful chemicals. Regarding follow-through, the organization ensures that the appropriate procedures in the production of the beverages are followed and all the standards are adhered to effectively. The organization is highly flexible regarding the market trends. Such flexibility is attained through feedback obtained from the clients and experts. Information that requires flexibility includes market prices, change in policies, and change in customer’s taste. Regarding fun, the strategies deployed by Fruitfit Company do not only enhance the strategic development of the company but also inspire both the employees and the clients. In essence, the company’s message of Fruitfit Company is clarified through the five F’s as it has been illustrated.
Fruitfit Company decide to use various vehicles to reach the potential customers such as to deploy the media as its marketing vehicle. The media sources to be used in the marketing process include social media, television channels, and magazines (Sherlekar, Prasad & Victor, 2010). For example, Facebook or Instagram because it can be posting amazing images, videos and useful information about our drinks. This will increase awareness about the brand and consequently increase the sales. Media sources also considering that Fruitfit has its groceries and joints close to the clients, it does not require moving around with the products to showcase them to the clients. The customers only need the direction of the groceries and the ingredients used in the preparation of the beverages. Such information can be achieved effectively through the media. The company is able to reach a vast population over a short period of time through media advertisement. Besides, the choice of varied means of media advertisement enables the organization to reach different types of clients who are unable to access one of the media sources used.
The other marketing vehicle will be coming up with promotions and advertise them to the public. Fruitfit will set prizes for lucky winners who will purchase our product with winning numbers written in the lower part of the box or lid of the Fruitfit product. For example, if the customer gets the first winning prize they might get a package tour to Japan for 4 days, or getting the money prize for $3000. This will encourage many people to buy the Fruitfit’s drink with the hope of winning prizes.
Business Plan: Ethics and Social Responsibility Plan
Commitment to being a Good Corporate Citizen
Businesses have an obligation to act in a manner that will maximize benefits and minimize harm, even as they pursue their financial objectives. Fruitfit will act as a good corporate citizen by aligning its financial objectives with those of major stakeholder. This way, the business will be encompassing stakeholder theory, which requires businesses to consider the interests of all stakeholders when setting strategies and going about their operations (Crane, 2016). Fruitfit will ensure that its activities are aligned with the community’s interests. The business will take a proactive approach in ensuring its alignment with community interests by ensuring that its goals and objectives reflect the community’s values. By considering community interests at the strategy-setting stage, the business will ensure that its activities are always mirror community interests.
Part of being a good corporate citizen is ensuring that business activities have a positive impact on the surrounding community (Andriof & McIntosh, 2017). The business will play a role in being a good corporate citizen by employing people from the local community, which will subsequently improve their financial and economic statuses. Fruitfit will employ professionals from the local community by enforcing equal opportunity employment practices that provide each individual with a fair chance of getting employed. All employees will be treated fairly as the business will implement a multicultural and inclusive workplace. It will also provide training for support job positions so that people from the local community can qualify for the job positions. In addition, the business will source raw materials locally, a factor that will boost economic activity in the region as farmers will get a ready supply for their produce. The business is not structured as a social venture as its aim is to maximize value to investors. Nonetheless, it will still play a substantial role in the community by improving the society’s welfare through ensuring that they get access to healthy beverages.
How Business Activities will Impact the Environment
Inevitably, Fruitfit’s activities will impact the environment in various stages of the supply chain. First, raw materials will need to be transported from suppliers to the manufacturing facility, which will lead to the release of carbon emissions to the environment. Secondly, the beverage manufacturing process results in the release of fumes (Kregiel, 2015). Also, the environment may be negatively impacted due the disposal of the packaging materials used by customers. Plastic bottles will be used for packaging the beverages, which will create environmental concerns associated with their disposal. The production of the beverages will also consume a lot of water, which may lead to the depletion of the natural resources.
It would be impossible to implement all the organizational activities without causing firm to the environment or surrounding communities. However, the negative impact of a business can be lessened by implementing measures that will reduce the environment’s and the community’s exposure to harm (Kregiel, 2015). With regards to lowering the negative environmental impact associated with transportation, the business will be located in an area that is near retailers and distributors so as to prevent the finished products from being transported over long distances. Also, the business can plan its inventory in such a manner that supplies are bundled together in large volumes so as to prevent unnecessary trips from suppliers. In matters concerning environmental damage due to fumes emitted during the manufacturing process, the manufacturing process can be designed in a way that will reduce environmental damage. Also, the consumption of water will be minimized by implementing effective water recycling methods. In future, Fruitfit may consider utilizing alternative packaging materials and doing away with plastic packaging. However, non-plastic packaging is expensive, and they will substantially alter both the cost of doing business as well as the product price. For now, the company can include recycling instructions on product packaging to inform customers to dump the bottles in recycling bins.
Health Issues Related to the Product
Fruitfit is developing a healthy product that will be comprised of natural fruits and vegetables. Consumers should expect to benefit from better health after their consumption. The products will not have any sugar or artificial colorings or preservatives. This way, they will appeal to the health-conscious consumer market that is drawn towards healthy foods. The elimination of sugar as an additive helps to lower the risk of diabetes, obesity, and high blood pressure. The elimination of chemicals helps to reduce the risk of cancer as artificial colorings and flavors usually contain carcinogens (Ramesh & Muthuraman, 2018).
The organization will have strict scrutiny over the production process to ensure that all beverages are free from chemical contaminants. Also, Fruitfit will employ the highest food standards to prevent contaminations. In addition, it will adhere to any legal or regulatory food and quality standards that are enforced by the Thailand government. To ensure conformity with current laws and standards, the management will employ a quality control expert who will head the safety and quality department. In order to mitigate against instances where the beverages provide by the company are harmful to people’s health, the packaging will include all the components that have been used in their manufacture. This way, consumers can make informed choices on whether or not to purchase the beverages. Some customers may be allergic to the fruits and vegetables used in the manufacture of the beverages. In addition, consumers need to be informed about the nutritional content of the foods, especially if they need to be aware of their calorie intake.
Fruitfit’s Plan to Target Appropriate Business Segments
Fruitfit’s target market has been identified as ranging between the ages of 24 and 70. The determination of the age group was based on the assumption that they are capable of making sound decisions regarding food and beverage selection. Andrews and Shimp (2017) recommend that the target market can be aimed at by employing advertising measures that will appeal to them. Similarly, Fruitfit’s target market will be reached through the social media, online websites, and flyers and brochures that will be handed to people in social gatherings. The advertising medium has to be frequented by the target market. For instance, in order to ensure that only people aged between 24 and 70 are targeted by social media campaigns, the company will purchase consumer lists from marketing firms that only includes the aforementioned age bracket. Marketing firms sell contact information to interested buyers such as firms, where customer demographics are specified. Also, the content will be created in a way that will appeal to customers within the age bracket.
Marketing to children is unethical as they are easily influenced. Children may not have the decision-making capacity needed to differentiate between armful and beneficial products (Kelly, Vandevijvere, Freeman, & Jenkin, 2015). For this reason, the marketing and public relations campaigns will only be created to attract the mature market. Although the beverages produced by Fruitfit are not harmful to their health, the organization needs to be cognizant of the ethics involved in targeting such a market. Another method that will be used to attract individuals within the target age bracket is product packaging. The product will use designs and shapes that appeal to a more mature market. Thus, it will only draw in customers from the intended target market.
Operation, Technology, and Management Plan
Key aspects of operations
The facility will be located in Samut Prakan, Thailand, a location that has been selected due to its close proximity to consumers. Processing of the beverages will require equipment such as process skis, transfer panels, hot water sets, utility stations, and holding tubes. According to Rahim and Raman (2015), the beverage production process involves treating water, which goes through a filtration process and afterwards a deoxygenating process. After the water has been treated, the next step involves the creation of syrup by mixing concentrate and sugar in a reservoir tank. The syrup then undergoes a clarification and infiltration process. The purified water and syrup are mixed in a filler tank, and carbon dioxide is injected into the blend, after which the beverage is bottled and moved into a conveyor belt prior to packaging. Packaging is then done in different sizes, and the products are stored in the warehouse ready for shipping. Automation plays a large role in ensuring product consistency, quality, and cost.
Cost and time efficiencies
The business will incur operational costs involving payment of wages, purchase of equipment, leasing of land and buildings, legal costs the purchase of raw materials and supplies, as well as marketing and administrative expenses. The entire production process will necessitate a variety of skills involving mechanical operators, programmers, marketing professionals, administrative, and support staff. The Fruitfit Company will need a manufacturing facility, a warehouse, and an administrative block. The raw materials will be source from local farmers. Fruitfit will have contracts with farmers to provide a constant supply of raw materials. Also, a key aspect of the operation will involve transportation as the products will need to be distributed to grocery stores, convenience stores, and other partners involved in the distribution of the products to final customers. Time efficiencies may be gained by the utilization of automation to ensure the maintenance of quality (Hitomi, 2017). The facilities will be bought instead of being rented or leased, which will increase short-term costs but will provide long-term cost advantages. The business will continue adding new products to its portfolio based on market demands. Research and development will play a major role in new product development. Research will be conducted through the social media and through gaining access to readily available industry insights.
Fruitfit will achieve competitive advantage by providing customers with better value in terms of product quality, price, and availability. Functional level competitive advantage will be achieved by pursuing cost-effectiveness through pursuing efficiency in the production process and implementing a culture of continuous learning that will spur innovation. As stated by Hill, Jones, and Schilling (2015), functional-level strategies provide a business with competitive advantage by making the firm superior. On the other hand, business-level strategies provide it with competitive advantage by enhancing the value provided to customers. Thus, Fruitfit will pursue business-level strategies through focusing on the needs of the target customer segment and ensuring that its products are affordable, timely, and of high quality. The operational process of the business will be designed in such a manner that will cut costs so that customers can pay reduced prices for the final product and access them easily.
Problems Addressed and Overcome
One of the challenges that could potentially compromise the success of Fruitfit is lack of capital. According to Scarborough (2016), a majority of startup companies fail due to lack of capital for day-to-day operations. Nonetheless, funds will be sourced from financial institutions and an angel investor. Another potential problem that could hamper the success of the company is lack of continuous supply of fruits and other supplies. However, the company will engage in long-term contracts with farmers that will ensure timely supply of materials and raw products.
The company will utilize a just-in time inventory that will minimize costs and ensure that only the needed amount of materials are within the facilities. The implementation of the just-in-time inventory strategy entails the implementation of technology to oversee the process from ordering materials, receiving them, and distributing final products to distributors and retailers (Lai & Cheng, 2016). The technology will be situated on-premise. Fruitfit will need to back up its data in the cloud so that it can be readily accessed even when the company’s servers are down. The business will also need enterprise resource planning (ERP) for quality analysis, production analysis, dashboard analytics for sales and inventory, and resource planning and management.
The types of hardware that will be needed by the business include computers, hard drives that store software, and memory chips.
Telecommunication needs involve internet access to facilitate communication with internal organizational members and external parties. The business will also require telephone services that will also facilitate communication. Retailers can use the services to make product enquiries while the business may use it to communicate with suppliers. Fruitfit will activate its website that will provide pertinent communication to interested parties and provide a medium through they can contact the business. Also, email will be used as a communication method both within and outside the organization.
Fruitfit will utilize both in-house an outsourced personnel. In-house personnel will include technicians, operators, administrative, and support staff. However, marketing and customer care staff will be outsourced. The benefit of outsourcing is that it ensures that the organization gets the best expertise at a fraction of the cost (Gunasekaran, Irani, Choy, Filippi, & Papadopoulos, 2015). It would be expensive to hire, train, and develop individuals working in marketing and customer service departments. Therefore, it is preferable to outsource the two functions as they are not critical and can be performed by third parties.
Management and Organization
Key management and employees
The management will be comprised of the chairman, who will also occupy the CEO position. Five managers will report to the CEO, each manager representing productions and operations, planning and performance management, marketing, finance, and technology. The managers will head over CEOs and other staff in each department.
Board members and advisors
The business will be comprised of four board of governors who will be represented by the CEO, the angel investor, and two other board members who have expertise in the beverage manufacturing industry.
Management structure and style
Each of the managers will report directly to the CEO. The managers will be responsible for overseeing the day-to-day operations of the business and for reporting to the CEO in case of emerging issues or critical decisions. The CEO will have the authority to make pertinent decisions that affect each department. Below is a diagram showing the management hierarchy.
Flow-chart showing Fruitfit’s management hierarchy
The management hierarchy has been structure in a manner that shows level of authority and their corresponding functions. According to Carley and Prietula (2014), new organizations benefit from a hierarchical organization structure as the members may not have gained expertise in their roles, and they need distinct roles and responsibilities so that the organization can function seamlessly. Similarly, Fruitfit has adopted a hierarchical management structure to enhance efficiency.