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UNITED INTERNATIONAL UNIVERSITY

Entrepreneurship and business plan development (MGT 3229)

Assignment: BUSINESS PLAN DEVELOPMENT

Submitted To: Mohammad Tohidul Islam Miya

School of Business,

United International University

Submitted By: Md.Shahaid Jurain Alam

ID: 111 121 645

Date of submission: 03-01-2015

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Report On

Developing New Business Of

Mushroom Chips

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Letter of Transmittal

3rd January, 2015

Mohammad Tohidul Islam Miya Lecturer

School of Business

United International University

Subject: Letter of transmittal for term paper.

Sir,

With due honor, I wish to inform you that it was a matter of great pleasure as well as learning to prepare term paper on “Developing New Business of Mushroom Chips” under the course of Entrepreneurship and Business Plan Development .To prepare the paper, I collected and studied

materials in due time and analyzed these and eventually finalize the term paper.

Actually I have enjoyed more in preparing this term paper and develop new business. I have worked hard to prepare this report. So I would highly oblige if the content of the report have been acceptable to you.

Though I have put my best efforts yet it is very likely that the report may have some mistakes and omissions that are unintentional. So, I hope that the report will worthy of your consideration.

Truly yours,

………………………

Md. Shahaid Jurain Alam

ID: 111 121 645

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ACKNOWLEDGEMENT

At the very beginning I would like to express my deepest gratitude to Almighty Allah for giving

me the strength and the composure to finish the task within the schedule time. Then I am very

grateful to all the general people who have provided the opportunity to complete my report and

help to develop new business plan. They give us long patient hearing and sitting, practical

orientation and answering my numerous queries nicely. This supplied the most valuable working

experience and information for which they deserve appreciation.

My sincere gratitude goes to my honorable teacher Mohammad Tohidul Islam Miya, Instructor

of Entrepreneurship and new Business Plan Development, in United international University.

Without his support and encouragement this report and business plan would not possible such an

endeavor to enhance my practical knowledge about the real situation.

Thanks all from core of my heart.

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Executive Summary_______

This Report is prepared for developing new business of “Mushroom Chips”. Mushroom, this

name is not new to us. At first, mushrooms were grown wildly and lived on rotten tree stems in a

damp forest. But following the high demand of the mushroom, it is now being planted by farmers

and used for medicines as well and many kinds of food. The benefits of mushroom have been

discovered by Chinese people hundreds of years ago. But recently, a researcher from Minnesota

Medical School, America, found that mushroom contained in everyday's meal could help the

blood circulation inside your body. It also could protect the health of blood vessels. Mushrooms

are brimming with protein, vitamins B and minerals. They're low in calories and may have

antibacterial substances to help the body. Mushrooms are the good sources of nutrition and this is

our main ingredients. The main ingredients are- White Mushrooms, vegetable oil, white vinegar,

red chili powder, potato, sea slot. For the market segmentation, I have decided that at first my

main focus will be Dhaka. Because large number of people lives in Dhaka City, it is a very large

market and has many customers as well. Later on I will go for other divisions. Every people can

consume our chips, but my special focus is on Children's and teenagers because they like chips

very much. My major competitors’ are- sun chips, potato crackers, Mr. Twits, meridian chips,

cheese ball. Mushrooms are good sources of nutrition and this is my main ingredients.

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Table of Content

Name Page

Introduction 7

Business and Industry Profile 8-9

Business strategy 9-11

Company Products and Services 11-13

Marketing Strategy 13-15

Location and Layout 16

Competitors Analysis 16

Financial Analysis 17-23

Appendices

23

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INTRODUCTION

Origin of the Report

As I am doing Entrepreneurship and small business plan development and my course instructor

Mohammad Tohidul Islam Miya has instructed me to prepare a term paper on Developing New

Business Plan (Mushroom Chips).

Purpose

To get a clear concept how to make the new product plan

To acquire knowledge how to make mission, vision, marketing mix etc.

Limitations

I had to give lot of times to collect information about competitors, market situation because

enough information not available.

Time and budget constraints for this kind of research.

Lack of instrumental facilities to get proper information.

RESEARCH METHODOLOGY

Secondary:

Internet: www.google.com , www.wikipidia .com, Source: thedailystar.net, www.alibaba.com

Other: Collected information from marketing report, magazines, running newspaper.

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Business Plan :

I. Business and Industry Profile

A. Industry Analysis

1. Industry Background and Overview

Mushroom, this name is not new to us. At first, mushrooms were grown wildly and lived on

rotten tree stems in a damp forest. But following the high demand of the mushroom, it is now

being planted by farmers and used for medicines as will and many kinds of food. People now-a-

days have their own choices and preferences. They are not only seeking for the traditional type

of snacks. Tastes, flavor and nutrition matters to them. I am very much concern about product

quality and test. My product contains mushroom that is very good for health especially for

children. Now-a-days market is very competitive. There are so many company enters the market

with chips so my try to introduce innovative products and packaging needed to satisfy ever-

changing appetites and tastes. I maintain the highest standard of service to my retail customers

through my dedicated sales force.My company produces a new product which name is

mushroom chips.My every product is examined by Bangladesh standards and testing institution

(B.S.T.I).Always my product tries to keep their goodwill and quality also

2. Significant Trend

The policy makers has decide to offer different types of popular cartoon and super hero

characters stickers and tutus with per packet of Mushroom chips for Childs and purchase

intensive to the wholesale and retail for sell promotion. By organizing Charity concert, Open

concert, Sports tournament, Reality shows etc.; Mushroom chips industries would like to build a

good relation whit people in near future.

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3. Growth Rate

The price of the soil meet is affordable in all classes of the society from lower to middle and

from middle to higher classes. There for the growth of the market is going up. This is the one

reason the other on is the change the teats of chips.My will start an integrated print, radio and

media advertisement targeting consumers. This advertisement will show my products

differentiation from other competitor. Advertisements also show my products feature to the

ultimate customer. My Advertisement manager is responsible for those works.

4. Key Success Factors in the Industry

Mushrooms are good sources nutrition and this is my main ingredients.

B. Outlook for the future stage of growth

1. Start-up

In the very beginning, it is difficult to grab the market. As a startup business I focus on to

stay in the market and try innovating more crispy recipes.

2. Growth

In the growth stage, my concentration will cover the largest market share in Bangladesh.

I will turn my company growth oriented, not profit oriented.

3. Maturity

In maturity stage, I want to turn my company in cash cow.

I. Business Strategy

A. Desired image and position in Market

Children, teenagers, and young people, those who are my chips consumers, they often seek for

delicious taste with nutrition. “Shahed’s Mushroom Chips” contains mushroom that gives taste

with good nutrition because it has the highest level of Protein, Fat, Sugar, Cholesterol, Sodium,

Carbohydrate & so on. I have decided to build strong customer relationships by providing better

quality products and I hope this will help me to create a positive image in customers mind with

unique potentialities.

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B. SWOT Analysis

1. Strength

Without any touch of hand the product is made because of development of technological

skills.

There are another strength of the company is distribution channels. My distribution

channel is very strong; relation of the supplier and resellers is very strong.

The product quality is more high comparative to the other competitors, because my main

ingredients is Mushroom which is totally new flavor and taste and also work against for

the cancer.

Because of my good relationship with supplier, reseller and for the good transportation

facility my sale will be definitely increases. My value delivery network is in strong

position. I having good relationships with my suppliers for a longer period of time.

2. Opportunity

It’s an available product but of the new version of taste and quality create a new

change of the customer taste.

For the technological changes and advances it’s easier to give any information and

promotional activities to know the product popularity to the people.

If the government changes policies then it will be easy to access the product to the

market.

Availability of the raw materials is increasing day by day which is help to produce

more products.

3. Weakness

Although the company is new, it has not established a brand or images in the market

place this is the weakness for the product popularity.

Because of the new product and company importer skills are absence here that’s why I

can’t include any internal facilities.

For the first time the mushroom is exit in the market that’s why people can’t properly

reliable to the product quality.

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Financial problem is another weakness of the company like what will be the price Cost

and investment.

4. Threats

If government is increase the taxes and the political issues are not favor then it will be the

threats for the company.

The product may not be accepted to the people then it will be the great threats for the

company.

The product competitor rate is very high that’s why sometimes they are facing many

competing problem, which can be a threats of the company.

Company establishment rules and regulation is strict that’s why sometimes to take any

easy decisions are create complicated situations.

C. Competitive strategy

1. Focus

It is not possible for me to take cost leadership approach because the chip market is very

much competitive. So, I focus on mushroom chips that are very much healthy and people

like to take different taste.

II. Company Products and Services

A. Description

1. Product and service features

My product is mainly “Mushroom Chips”, This retains the nutrients and natural flavor giving

you a healthier and tastier snack choice. My product is made from the chosen high quality

mushroom to assure the benefit it contains for in body. Mushroom chips are a very healthy snack

prepared with combination of mushroom & potato.

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2. Customer benefits

The benefits of mushroom have been discovered by Chinese people hundreds of years

ago. But recently, a researcher from Minnesota Medical School, America, found that

mushroom contained in every day’s meal could help the blood circulation inside ymy

body.

It also could protect the health of blood vessels. Mushrooms are brimming with protein,

vitamins B and minerals. They're low in calories and may have antibacterial substances to

help the body.

Mushrooms are rich in disease-fighting photochemical, and eating them regularly has

been linked to a lower risk of breast cancer in studies of Chinese and Korean women.

Mushrooms also prevent prostate cancer cells from multiplying in mice—and might do

the same in men.

Mushrooms are an excellent source of potassium, a mineral that helps lower elevated

blood pressure and reduces the risk of stroke. One medium portabella mushroom has

even more potassium than a banana or a glass of orange juice. One serving of mushrooms

also provides about 20 to 40 percent of the daily value of copper, a mineral that has

cardio protective properties.

3. Uniqueness

The uniqueness of the product is it is made my mushroom and also here add some

flavors.

B. Description of production process

1. Ingredients

Mushrooms are the good snakes of nutrition and this is my main ingredients. The main

ingredients are-

White Mushrooms

Vegetable oil

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White vinegar

Red Chili Powder

Potato

Sea salt

2. Costs

3. key suppliers

Bangladesh Mushroom Development Company and local farmers are the key suppliers.

C. Future product or service offerings.

I will add new flavors in the chips.

Expand the business.

Provide home delivery services

III. Marketing Strategy

A. Target market

1. Complete geographic profile

I have decided that at first my main focus will be Dhaka. Because large number of people

lives in Dhaka City, it is a very large market and has many customers as will. Later on

my will go for other divisions.

Per unit cost

fixed cost 500000

variable cost 990000

total cost 1490000

Unit Production 130000

Per unit Cost 11.46154

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2. Complete demographic profile.

Age segmentation: 5-12, 12-18, 18-24, 24

Social segmentation: higher class and middle class of people.

B. Customer’s motivation to buy

User enjoys the food not only for health but as a teats enjoyment.

User also spends money on food for different enjoyment of unique teats.

C. Advertising and promotion

1. Media used

For the promotion of my products, my will use attractive print ads, leaflets in the

newspapers. Free sample of my product will also be provided to the students of school,

college, and universities as a promotional campaign. Later on my will think for TVC.

D. Pricing

My “Mushroom Chips” will be introduced at Tk.14 wholesale and Tk.15 estimated retail

price per unit of medium size and Tk.24 wholesale and Tk.25 retail price per unit of

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family size product. I expect to lower the price of packets within few months. Because of

the first time at market the company would like to give some discount to the retailers

which will make them some profit. The company is also giving some credit terms

facilities to the wholesaler and retailers.

1. Cost structure

a. Fixed and variable cost

2. Customer wise

Target customers are higher and middle class people.They ready to pay BDT 20 for good

and healthy chips.

3. Comparison against competitors price

Right now, all the competitors in the market charge average 15-20 taka per chips.

E. Distribution strategy

1. Channels of distribution used

Factory Warehouse Divisional Warehouse Salesman Retailer

Customer.

My factory situated at Tongi in Gazipur. After producing my products it will store in my

own warehouse Mirpur.

From this warehouse products are distributed 6 divisions by my own transport and then

storing these goods in divisional warehouse.

Then my trained salesman distributes my products in the market to the retailer.

Pricing

Per unit sales 15

Per unit variable cost 7.615385 Per unit contribution 7.384615

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IV. Location and Layout

A. Location

1. Demographic analysis of location versus target customer profile

As my new to the market, i want to make available my products for my Dhaka city

customers through several distribution channels. I will use different wholesalers, retail

stores and super shops like- Meena Bazar, Agora, Shopno and so on.

V. Competitor Analysis

A. Existing competitors

Who are they: There are companies have grabbed over 80 percent share of the country's

branded-chips market, driving others almost away from the scene. They have a strong

competition among themselves. As a result it is very tuff to build a strong competition in

market.

Mr. Twist

Potato Chips

Meridian chips

1. Strengths:

There are so popular.

People know them.

They satisfied the customer a lot.

Customers are highly satisfied.

2. Weaknesses:

Serve they customer common item.

Have no variation.

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VI. Financial Forecast

A. Financial Statement

Financial Plan Shahed's mushroom chips

Cost of project

Item Initial Final

Land(3000 square foot)(Advance)

50000

Microwave Mushroom Processing Machine

170000

Brush washing machine for mushroom.(semi

automatic,Local)

50000

mushroom dryer machine.(local)

70000

Stainless steel mushroom slicer machine(second hand,local)

100000

automatic electrical mushroom packing machine.

200000

Miscellaneous Assets

100000

Machine tools

30000

Computers(2)

70000

Lights and fans

15000

Fire system

5000

water supply system

10000

Generator

100000

Software

20000

Speed money PDB 20000

WASA 10000 Other sector 10000 Total speed money

40000

License and approval

20000

Tax identification

20000

Patent and trademark

25000

Total cost

1095000

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Fixed and variable cost

Descriptions

Fixed cost

Initial Final

Item

Employee salary

Guards(2 guards)(1 shift)(9.00am-5.00pm) 10000 Employees (12 employee)( shift)(9.00am-5.00pm) 120000 Total employee salary

130000

Contingency on machinery

25000

Machine operation cost

200000

Space rent

50000

Waste management

15000

Speed money

80000

Total fixed cost

500000

Variable cost

Item

Initial Final

Inventories

550000

Bills Electricity bills 20000

Gas bills 5000 Mobile phone bill 8000 Water bills 15000 Generator oil bill 20000 Total bills

68000

Software maintenance

5000

Transportation cost

20000

Operating cost Workshop cost 17000

Supply chain management 60000 Distribution channel 150000 Total operating cost

227000

Promotional cost

120000

Total variable cost

990000

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1.Income Statement

Shahed's

mushroom chips

Forecasted income statement

1st

year

2nd

year

3rd

year

Sales

1500000 1600000 1750000 Cost of goods sold

750000 800000 825000

Gross operating income

750000 800000 925000

Selling expense

150000 165000 180000 General & Admin. Expenses

85000 91000 95000

Depreciation

25000 25000 25000 Other expenses

32000 54000 60000

Earnings before interest and taxes 458000 465000 565000

Interest expense 5%

12500 12500 12500 Earnings before taxes

445500 452500 552500

Tax 35%

155925 158375 193375 Net Income

289575 294125 359125

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2. Balance Sheet

Shahed’s mushroom chips

Forecasted balance sheet

1st year 2nd year

3rd

year

Assets Cash in hand

250000 270000 260000

Account receivable

430000 560000 510000 Inventories

390000 410000 415500

Other current asset

222000 245000 240000 Total current asset

1292000 1485000 1425500

Property, Plant & Equipment

750000 775000 795000 Accumulated depreciation

45000 90000 135000

Other non-current asset

160000 185000 210000

Total asset

2247000 2535000 2565500

Liability & Shareholders' equity Account payable

220000 250000 255000

Short-term debt

60000 65000 75000 Other current liabilities

265000 295500 300000

Total current liabilities

545000 610500 630000

Long-term debt

1100000 1125000 1200000 Loan

250000 300000 320000

Deferred Income taxes

37500 40000 45000 Other non-current liabilities

64500 159500 20500

Total liabilities

1997000 2235000 2215500

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B. Breakeven analysis

Per unit cost Amount

Fixed cost 500000 Variable cost 990000 Total cost 1490000

Unit production 130000

Per unit cost 11.46154

Breakeven Analysis

Sale price per unit 15 Fixed operating cost per period 500000 Variable operating cost per unit 7.615385 Breakeven sales in unit 67708.337

Shahed’s Mushroom Chips

Cash Flow Statement

Cash Flows from Operating

Activities:

Operating Income (EBIT) $458,000

Depreciation Expense 50000

Increase in Accounts Receivable

−80000

Decrease in Prepaid Expenses

8,000

Decrease in Accounts Payable

−40000

Net Cash Flow from

Operating Activities 396000

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Cash Flows from Investing Activities:

Purchase of Equipment −100,000

Net Cash Flow from

Investing Activities 136,000

Cash Flows from Financing

Activities:

Net Cash Flow from

Financing Activities −290,000

Net Change in Cash

$115,806

Beginning Cash Balance

319,730

Ending Cash Balance

$435,536

VII. Loan or investment proposal

Shahed's Mushroom chips

Sources of Fund

Item Initial Final amount Bank loan

250000

Own fund

600000 Other contribution

Family contribution 200000 Friends contribution 45000 Total other contribution

245000

Total sources of fund

1095000

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Conclusion

Mushroom this is not new to us. At first mushroom were grown widely and lived on rotten tree

stems in a damp forest. But following the high demand of mushroom it is now being planted by

farmers and use for medicines as well and many kinds food. People now-a-days have their own

choices and preferences. They are not only seeking for the tradition type of snacks. Tastes, flavor

and nutrition matters to them.

Appendices:

http://www.recipesource.com/fgv/vegetables/mushrooms/00/rec0053.html http://www.malaysiabest.net/2006/03/06/snacks-mushroom-chips/ http://ihor5.freeyellow.com/mushchip.html

http://banglapedia.search.com.bd/HT/M_0416.htm http://www.mushroomlovers.com/Health.htm

www.google.com www.alibaba.com www.wikipedia