d e f i n i n g p o t e n t i a l s

D E F I N I N G P O T E N T I A L S O F O P E N I N G A

M A T C H A G R E E N T E A H O U S E

T H E S I S

P R E P A R E D B Y

S A M I E R J A N M A H O M E D

0 8 7 0 9 9 2

F I N A N C E & A C C O U N T I N G

R O T T E R D A M B U S I N E S S S C H O O L

J U L Y 3 , 2 0 1 3

Thesis Rotterdam Business School 2013

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C O N T E N T S Executive summary ..................................................................................................... 5

1.0 Introduction .......................................................................................................... 6

2.0 Theoretical framework .......................................................................................... 8

2.1 Company profile ...........................................................................................................8 Legal form .............................................................................................................................................. 8 Company structure ................................................................................................................................ 9 Company operations............................................................................................................................ 10

2.2 Strategic analysis/plan ................................................................................................ 10 Strategy formulation ............................................................................................................................ 11 Strategic plan ....................................................................................................................................... 12

2.3 Marketing plan ........................................................................................................... 13 Marketing mix ...................................................................................................................................... 14

2.4 Financial plan ............................................................................................................. 15

2.5 Summary .................................................................................................................... 16

2.6 Answer to theoretical research questions .................................................................... 17

3.0 Methodology ...................................................................................................... 18

3.1 Research method ........................................................................................................ 18

3.2 Data collection method ............................................................................................... 18

3.3 Data analysis procedure .............................................................................................. 18

3.4 reliability and validaty ................................................................................................ 19

4.0 Findings/Empirical framework ............................................................................. 19

4.1 Company profile .................................................................................................. 20 Mission, vision, & objectives................................................................................................................ 20 Legal form ............................................................................................................................................ 21 Operations ........................................................................................................................................... 21 Company structure .............................................................................................................................. 22

4.2 Environmental analysis ....................................................................................... 23

4.2.1 PESTEL analysis ........................................................................................................ 23 Political factors .................................................................................................................................... 24 Economic factors ................................................................................................................................. 24 Social/demographic factors ................................................................................................................. 26 Technological factors ........................................................................................................................... 28 Environmental factors ......................................................................................................................... 28 Legal factors ......................................................................................................................................... 29

4.2.2 Industry analysis ...................................................................................................... 29 The threat of new entrants .................................................................................................................. 30 The threat of substitute products and services ................................................................................... 30 The bargaining power of customers/buyers ........................................................................................ 30 The bargaining power of suppliers ...................................................................................................... 30

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The intensity of competitive rivalry ..................................................................................................... 30 Industry life cycle ................................................................................................................................. 30

4.2.3 Market analysis ....................................................................................................... 31 The tea and coffee market in the Netherlands .................................................................................... 31

4.3 Competitive environment .................................................................................... 40

4.3.1Competitor analysis .................................................................................................. 40 Sarah Lee & Coffee Company .............................................................................................................. 40 Starbucks ............................................................................................................................................. 41 Kaldi ..................................................................................................................................................... 42

4.4 Research on viability ........................................................................................... 42

4.4.1 Strategic factor analysis summary ............................................................................ 42 Internal factor analysis summary (IFAS) .............................................................................................. 43 External factor analysis summary (EFAS) ............................................................................................. 44 Strategic factor analysis summary (SFAS) ............................................................................................ 45 SFAS conclusion ................................................................................................................................... 46

4.4.2 Strategic plan ........................................................................................................... 47 Market positioning .............................................................................................................................. 47 Competitive advantage ........................................................................................................................ 47 Brand strategy ..................................................................................................................................... 48 Porter’s generic strategies ................................................................................................................... 48

4.4.3 Marketing plan ........................................................................................................ 49 Segmentation ....................................................................................................................................... 49 Marketing mix ...................................................................................................................................... 49 ............................................................................................................................................................. 52

4.4.4 Financial plan........................................................................................................... 55 Statement of financial needs ............................................................................................................... 55 Sources of Funding .............................................................................................................................. 56 Sales projections .................................................................................................................................. 56 Income statement ................................................................................................................................ 57 Cash budget ......................................................................................................................................... 57 Balance sheet ....................................................................................................................................... 58

4.5 Summary .................................................................................................................... 58

4.6 Answer to empirical research questions ...................................................................... 60

5.0 Discussion ........................................................................................................... 62

6.0 Conclusion & recommendation ............................................................................ 63

Bibliography ............................................................................................................. 65

Appendix .................................................................................................................. 67

Financial appendices ........................................................................................................ 67

Research proposal ............................................................................................................ 76


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L I S T O F I L LU S T R AT I O N S

Figure 1: Three levels of a product ________________________________________________________ 14 Figure 2: Organizational structure of one restaurant __________________________________________ 22 Figure 3: Organizational structure of multiple restaurants _____________________________________ 23 Figure 4: Macroeconomic indicators Netherlands ____________________________________________ 24 Figure 5: General social data of the Netherlands _____________________________________________ 26 Figure 6: Age structure Netherlands 2013 __________________________________________________ 27 Figure 7: Netherlands population density ___________________________________________________ 27 Figure 8: Consumption of beverages in 2012 ________________________________________________ 32 Figure 9: European coffee consumption per capita in 2010 _____________________________________ 33 Figure 10: Historical tea consumption in the Netherlands ______________________________________ 34 Figure 11: Market share types of tea in 2012 ________________________________________________ 35 Figure 12: Historical coffee consumption in the Netherlands ___________________________________ 36 Figure 13: Types of coffee purchased in 2012 ________________________________________________ 37 Figure 14: Coffee corners in the Netherlands according to BHC _________________________________ 39 Figure 15: Porters Generic Strategies ______________________________________________________ 48 Figure 16: Roasted green tea beverages ____________________________________________________ 50 Figure 19: Red bean beverages ___________________________________________________________ 50 Figure 17: Green tea beverages ___________________________________________________________ 50 Figure 18: Coffee & juice beverages _______________________________________________________ 50 Figure 20: Ice cream sweets _____________________________________________________________ 51 Figure 21: Parfaits sweets _______________________________________________________________ 51 Figure 22: Crepes ______________________________________________________________________ 51 Figure 23: Pricing Strategies Matrix _______________________________________________________ 52 Figure 24: Nieuwe Haagse Passage _______________________________________________________ 53 Figure 25: Map Den Haag _______________________________________________________________ 54

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EXECUTIVE SUMMARY

My name is Samier Janmahomed, and as part of my graduation, I am writing a master thesis. I have always been interested in business and finance. During high school, I decided to pursue my career into business, and proceeded to study International Business and Management Studies (IBMS), at The Hague University. From this course I learned all aspects of international business ranging from marketing to human resources, logistics, finance, and accounting. In the third year a decision had to be made to specialize in either marketing or finance. I chose finance, and after graduating, continued to pursue my master’s degree in finance and accounting. This is where I am now. For the future, my goal is to start my own company, as I want to be independent and making my own decisions. I also want my thesis to be useful to me, something which I could use in the future. As an aspiring entrepreneur, I am constantly looking for opportunities to start a business. When I visited Singapore, I came across a nice tea bar, selling food and beverages made with green tea. As I enjoyed the experience, I noticed that this type of tea/coffee bar is still absent in the Netherlands. This made me seriously consider the possibility to open a green tea/coffee bar in this country, which is the topic of my thesis. The objective of this thesis is “To make recommendations of the potential of a green tea startup, by making an analysis of the current internal and external environment, using strategic- analysis and planning, and financial planning theories.” The focus here is the viability of opening this company in the Netherlands. To do this, I will analyze the company’s internal and external environment. The internal analysis is related to the company itself, whereas the external analysis is about the country, industry, and competitors. Taking note of the objective of this thesis, the central research question of this thesis is: “What is the viability of opening a successful green tea bar company in the Netherlands in 2014?”


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Anna’s green tea

1 .0 INTRODUCTION

The company I would like to establish is called “Anna’s green tea”, or (AGT). AGT is a modern Japanese style tea bar, which offers food and beverages based on Matcha green tea.

Matcha is a fine powder green tea that originates from Japan. The tea has been used for hundreds of years in Japanese tea ceremonies, but now has become more popular and used for drinking as tea or as an ingredient for all types of foods.

Coffee and tea is deeply rooted into Dutch culture and history. Centuries ago, Dutch merchants brought coffee and tea with them from exotic regions. Through the years, coffee and tea have become an important part in the daily lives of the Dutch people. As society is changing, so is the demand for certain types of products and services. Dutch society is becoming more Americanized, and slowly becoming a “to-go” country. Changes in society bring new opportunities, which are currently happening in the coffee and tea branch. Starbucks-like formulas are opening up everywhere, and gaining much popularity. In Asia however, there is much more of a tea culture.

Looking at the tea market, green tea is slowly gaining popularity among tea consumers. Consumers are starting to realize the health benefits of this type of tea, and as many people are looking to adopt a healthy lifestyle, Anna’s green tea wants to capitalize on this by mainly providing beverages with green tea as its main ingredient. Using green tea and Japanese culture as its competitive advantage, AGT wants to know if there is potential for such a formula in the Netherlands.

The structure of this thesis is as following:

2.0 Theoretical framework: Is the theoretical part of this research. It includes literature and theories needed to answer the theoretical research questions. The sub chapters of the theoretical framework include:

2.1: Company profile: Provides theories on a company’s legal form, the organizational structure, and operations.

2.2: Strategic analysis/plan: Provides theories on how to analyze the business and its environment, and how to develop a strategy.

2.3: Marketing plan: Contains marketing theories needed to create a successful marketing strategy.

2.4: Financial plan: Provides theories on the financial statements that are needed in this financial plan. Includes the statement of financial needs, and the pro forma statements.

3.0 Methodology: Includes all the elements of the research process. These elements are:

3.1: Research method: Here I explain the method of research I will use for this thesis and the reasoning why I chose that specific research method.

3.2: Data collection method: Explains which method(s) of data collection will be used in this thesis.

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3.3: Data analysis procedure: Explains which data analysis method will be used in this thesis.

3.4: Reliability and validity: Describes the reliability and validity of the information gathered.

4.0 Findings/Empirical framework: Includes all the findings of the research carried out which is based on the framework derived from the theory. In this case, the findings are grouped in three main elements: The company profile, the competitive environment, and the research on viability.

4.1: Company profile: Basic information about the company’s legal form, the organizational structure, and operations.

4.2: Environmental analysis: External analysis which includes the PEST analysis, industry analysis, and market analysis.

4.3: Competitive environment: Includes a competitor analysis of the company’s three main competitors.

4.4: Research on viability: Consists of the strategic factor analysis summary, strategic plan, marketing plan, and a financial plan, to look at the viability of the company.

5.0 Discussion: Includes a discussion of the findings related to the actual problem.

6.0 Conclusions/Recommendations: Based on the outcome of all previous sections, a conclusion will be made. Finally recommendations will be given about the viability of this company startup.

The research questions of this thesis are as following:

Central research question

What is the viability of opening a successful green tea bar company in the Netherlands in 2014?

Theoretical research questions

1. What are the various external factors of strategic management that affect a company? 2. What strategic management methods are needed to determine a company’s internal strengths and weaknesses? 3. What are the essential elements of a company profile? 4. What financial planning tools are needed to assess the financial viability of a company?

Empirical research questions

1. What is the company’s current organizational structure? 2. What are the latest and historical consumption trends of the tea and coffee industry? 3. What factors caused the success of the tea/coffee bar branch in the Netherlands? 4. How is the current Dutch economic and political situation? 5. Who are AGT’s biggest competitors, and what are their strengths and weaknesses currently? 6. What is AGT’s competitive advantage, and what strategy will it implement in the future? 7. What is AGT’s financial projection of the coming of 2014-2016? 8. Based on the company’s internal-, and external analysis, and its chosen strategy, what recommendations can be made about the company’s future?


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2.0 THEORETICAL FRAMEWOR K

The theoretical framework discusses the theory needed to answer the research questions. The framework consists out of four parts. These parts are the essential elements needed for this research.

Chapter 2.1 Company profile discusses theories about basic information of the company itself. These are the different types of legal forms, theories about the importance and creating of an organizational structure, and finally theory about company operations. After the company profile, the strategic analysis/plan will be discussed in chapter 2.2. This chapter is about the analysis of the external environment and the formulation of a suitable strategy based on the analysis. After that, the marketing plan will be discussed in chapter 2.3. This chapter is comprised of the necessary tools and theories needed to create a marketing plan. Finally in chapter 2.4 the financial plan will be discussed. This chapter shows the essential elements of a financial plan.

Each of these elements will be discussed using relevant literature, which will then come back in the empirical framework of this thesis.

2.1 COMPANY PROFILE

The company profile contains fundamental information regarding the organization. This includes legal form, company structure, and operations.

LEGAL FORM

“In preparing to conduct business activities in the Netherlands, a company is presented with several choices of how to go about it as well as the legal requirements to be complied with. From a legal and tax point of view, the first priority is deciding on which legal form to use to “house” the proposed Dutch-based activities.”1

The legal framework in the Netherlands is quite open and liberal compared to other countries in the European Union, which makes it easier for foreigners to conduct business. There are no special requirements or restrictions, which makes business here attractive.

The basic legal forms in the Netherlands are:

Sole proprietorship: A sole trader is a one-man owned company. The one person who owns the company is personally liable for business obligations.

Partnership: A partnership is a co-owned company by two or more partners. These partners are then liable for business obligations.

General Partnership (VOF): A VOF is a business which is operated by more than one person. This is done suing partnership agreements, which determine each partner’s contribution in the company, liability, and entitlement. All partners are jointly, but also personally liable for business obligations.

Limited Partnership (CV): A CV is a limited partnership which is operated by more than one person, but with this legal form, there are certain types of partners. There are active and silent partners. The silent partner is usually the person who backs the sole proprietor financially. Therefore, the silent

1 Ibpus (2012). Netherlands Business Law Handbook: Strategic Information and Laws. United States: International Business Publications. p 154.

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partner is only liable for the investment he or she made in the company. The active partner is then allowed to make decisions based on day to day activities. With this kind of partnership, the active partner is personally liable for business obligations. Furthermore there are some differences in tax. The active partner is considered a sole proprietorship and thus has to pay income tax on its share of profits, which is not the case for the silent partner.

Private Limited Liability Company (BV): A BV is a private limited liability company, which is considered a legal entity on itself, meaning that the owners are not personally liable for business obligations, which limits the owners’ risk. The paid in capital required to start a BV in the Netherlands is €18000. It is important to know that shareholders are only liable for their own cash invested in the company. When a shareholder owns more than five percent of shares, he or she becomes a substantial interest and thus has becomes liable for taxes on capital gains or dividends paid.

Public Limited Liability Corporation (NV): An NV is a corporation and owned by shareholders whereby shares are publicly traded on the stock market. An NV can only be created when it has at least €45000 paid in capital.

Besides these legal forms, there are several other legal forms such as a Foundation (Stichting), an Association (Vereniging), Cooperation (Cooperatie), and a Freelancer (ZZP). These legal forms are not really applicable for this thesis, so will not be explained thoroughly.

COMPANY STRUCTURE

The company structure, better known as organizational structure of a company “defines the scope of acceptable behavior within an organization, its lines of authority and accountability, and to some extent the organization’s relationship with its external environment”2. On a deeper level, organizational structure describes responsibilities and tasks of jobs. These can vary depending on the size of a company. An organizational structure of a large corporation is much more complex compared to that of a small business. Yet it is also important for small businesses to implement an efficient organizational structure because this will help making the business to reach its maximum potential in terms of productivity, efficiency, flexibility, and motivation. One must recognize that this might be a difficult task if the company is not operating yet. Often, the structure is created when a business already has been established.

As this thesis is about a small business, the following factors should be taken into consideration when creating an organizational structure.

“Relative strengths and weaknesses of various organizational forms.

Legal advantages and disadvantages of organizational structure options.

Advantages and drawbacks of departmentalization options.

Likely growth patterns of the company.

Reporting relationships that are currently in place. 2 Inc.com. (2013). Organizational Structure. Available: http://www.inc.com/encyclopedia/organizational-structure.html. Last accessed 25th June 2013.


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Reporting and authority relationships that you hope will be implemented in the future.

Optimum ratios of supervisors/managers to subordinates.

Suitable level of autonomy/empowerment to be granted to employees at various levels of the organization.

Structures that will produce greatest worker satisfaction.

Structures that will produce optimum operational efficiency.”3

COMPANY OPERATIONS

Company operations are what a company does to create value. To be more specific, what a company does with its assets to create value. These assets owned by the company can be both tangible and/or intangible assets.

Virender, S. states: “business operations encompass three fundamental management imperatives that collectively aim to maximize the value harvested from business assets, also known as "sweating the assets".

These are:

1: Generate recurring income

2: Increase the value of the business assets

3: secure the income and value of the business

Note that these three imperatives are mutually dependent on each other.”4

2.2 STRATEGIC ANALYSIS/PLAN

Strategic analysis and planning is part of strategic management, which can be identified as “the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

The term strategic management is used synonymously with strategic planning.

The purpose of strategic management is to exploit and create new and different opportunities for tomorrow while long-range planning tries to optimize for tomorrow the trends of today.”5

What are the benefits of strategic management? The main benefit of strategic management is to help organizations to formulate better strategies. This is done by using a systematic approach to strategic decisions. It is very important that everything is communicated well, because through

3 Hillstrom, K (2002). Encyclopedia of Small Business. United States: Gale group 4 Poonia, S (2010). Production and Operations Management. Delhi: Gennext Publication. p32. 5 David, R (2012). Strategic Management Notes. 12th ed. South Carolina: Prentice Hall. p14 - 15.

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communication, you are able to achieve the commitment to change and implement a strategy, which will have great benefit to the company.

There are three stages of strategic management. These are: Strategy formulation, strategy implementation, and lastly, strategy evaluation.

Strategy formulation: Includes basic goal setting information. What is the company’s vision and mission? What are the company’s (long term) objectives? It is also about identifying the company’s strength, weaknesses, opportunities, and threats. Based on this information, a strategy, or multiple strategies are created, while looking not only internally, but also at the external environment. Eventually one strategy has to be chosen to implement.

Strategy implementation: In order for a strategy to be implemented successfully, it is required that the firms short term objectives are aligned in such a way that the formulated strategy can be executed. Besides short-term objectives, other important elements are the company’s policies. If a company has policies that are not in line with the formulated strategy, it will be impossible for the company to implement the strategy successfully. Also, it is important that the company adopts a company culture that promotes goals and objectives needed to implement its formulated strategy. Motivated employees are also important for this, because usually people are against change. If company employees are open for change, implementation of a (new) strategy will go much smoother. Besides the elements just mentioned, there are many other elements such as, the correct way of allocating resources, the right marketing strategy, the right organizational structure, and the utilization of information systems.

Strategy evaluation: Strategy evaluation is the last stage, whereby measurements are conducted to see how the company is performing. This is done by reviewing the internal and external factors of the formulated strategy. When measurements have been conducted and evaluated, corrective action should be taken.

It is important to realize that because for this thesis, the company is a startup, it will not be possible to implement, and evaluate the business. Therefore only the strategy will be formulated.

STRATEGY FORMULATION

Vision, mission, and objective statements

(David, R. 2012), describes the vision, mission, and objective as following:

1. “Vision statements answer the question: “What do we want to become?”

2. Mission statements are “enduring statements of purpose that distinguish one business from other similar firms. A mission statement identifies the scope of a firm’s operations in product and market terms.” It addresses the basic question that faces all strategists: “What is our business?” It should include the values and priorities of an organization.

3. Objectives can be identified as specific results that an organization seeks to achieve in pursuing its basic mission. Objectives are long term, which means more than one year. They state direction, aid in evaluation, create synergy, reveal priorities, focus coordination, and provide a basis for effective planning, organizing, motivating and


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controlling activities. Lastly, objectives should be challenging, measurable, consistent, reasonable, and clear.”6

Strategic analysis

Part of the strategy formulation entails to analyze the internal and external environment. To be more specific: The internal strengths and weaknesses of the company, and the external opportunities and threats.

Internal strengths and weaknesses: These are the controllable elements of a company that are either performed positively or negatively. The identification of a company’s strengths and weaknesses are a necessity and can be determined by comparing its performance with the industry, or by comparing it to itself. When comparing to itself performance is measured by comparing by the goals the company has set for itself combined with what is important to the company (weights). External opportunities and threats: external opportunities and threats are the external factors that could affect the company in either a negative or positive way. These factors are: Political, economic, social, technological, environmental, legal, and cultural factors. In contrast to the internal strengths and weaknesses, this is not controllable by the company. Therefore, strategic management is about creating a suitable strategy that reaps advantage of the external opportunities while at the same time reduces the threats the company may face. There are several tools to determine a company’s internal strengths and weaknesses and its external opportunities and threats. First of all, the Dutch market will be analyzed. After that, the PESTEL analysis will be conducted to analyze the external environment. I will also analyze the industry using Porter’s five forces, to determine the industry’s profitability and attractiveness. Also, the strategic factor analysis summary model will be used to analyze the internal and external environment using weights and ratings to see where the company stands. A competitor analysis will be made as well, to see how the competition stands in the Netherlands. To do this, I will select three of the main competitors, and use the SWOT analysis, and Porter’s generic strategies.

STRATEGIC PLAN

After this, the strategic plan can be formulated. The strategic plan is composed of a comprehensive business strategy where I focus merely on the business. This can only be done when all the necessary information is collected. Key terms in the strategic plan are: Market positioning, competitive advantage and the company’s brand strategy Market positioning: Market positioning is described as “how you want your customers to perceive your product or service in relation to their perception of your competitors and what marketing strategies you should adopt to reach this perceptual goal. In other words, what message about your product or service is your company trying to put across? And how will you do that? A market position will happen whether or not you are proactive, reactive or passive about the on-going process of developing and sustaining a market position. However, you can positively influence these perceptions by developing and implementing deliberate market positioning strategies.

6 David, R (2012). Strategic Management Notes. 12th ed. South Carolina: Prentice Hall. p17 - 18.

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When developing a market position you need to select the most persuasive, meaningful and unique points of difference that will allow you to compete for the largest number of potential customers. Developing a positioning strategy depends largely on how competitors position themselves. Some companies develop a 'me too' strategy and position themselves close to their competitors so prospects can make a direct comparison when they purchase. Other companies develop marketing strategies which position them well away from their competitors. Offering a benefit which is superior depends on the marketing mix strategy the company adopts. Your pricing strategy must reflect the benefit offered and your promotion strategy must clearly communicate this benefit.” 7 In short, it is all about what you as a company wants customers to think about the company. Competitive advantage: A competitive advantage can be defined as something the company does exceptionally well, that sets itself apart from its competitors. A company cannot survive in the long-term if it does not have a sustainable competitive advantage. To sustain a competitive advantage, a company has to be able to change and adapt quickly to changes in the external environment. Brand strategy: Why is building a brand strategy so important? It is all about creating a perception. When a company has a strong brand, it has certain values it portrays to the outside world. People will then identify themselves with these values, which creates brand loyalty. Thus brands are able to influence customers. A good definition about what brand strategy is about: “In building brand value “perception is more important than reality” (Duncan and Moriarty. 1998), and as brands only exist in the minds of customers then the management of brands is all about the management of perceptions. The power of a brand to influence perceptions can transform the experience of using the product. In a double-blind trial, patients taking a branded analgesic perceived it to be more effective in treating pain than a chemically identical unbranded analgesic (Branthwaite and Cooper, 1981). In order to manage brands strategically we need to understand how perceptions are organized, how they influence behavior and how a brand can compete in the battle of “mindspace” (Corstjens and Corstjens, 1995).”8

2.3 MARKETING PLAN

Marketing is an essential element to the success of any type of business. Marketing is the tool by which companies are able to create value for its customers. This is done by catering to the needs of the customer. So companies must differentiate themselves by the customer benefit their products or services provide. As companies have created value for their customers, they now want to capitalize on this. To remain successful, companies must find u sustainable way of keeping its practice of creating value for their customers and capitalizing on the value created. A marketing strategy is exactly this. Finding sustainable ways to create value and capitalize on this in the long-run.

In order to create a successful marketing strategy, it is essential that the target market is identified. Everything revolves around the customer. This process is known as segmentation. Markets can be segmented in several ways. These are demography, geography and lifestyle.

7 Boldhorizon. (2013). Market Positioning. Available: http://www.boldhorizon.co.nz/market-positioning.php. Last accessed 26th June 2013. 8 Elliot, R (2007). Strategic Brand Management. New York: Oxford University Press. p4.


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When the target customer is identified, it is then possible for the company to figure out their needs. And based on that, the marketing strategy can be formulated.

There are several tools that can help to create a marketing plan/strategy. This thesis will make use of the marketing mix to create a marketing strategy.

MARKETING MIX

There are many topics related to marketing. Think about pricing, branding, distribution channels, advertising, and packaging to name a few. This can all be categorized into the four p’s. These are product, price, place, and promotion.

Product: The product of a company is the good that satisfies customer needs. This can be a physical (core) product, but also a service, depending on the type of company. However the product is more than that, as can be seen in the figure below

Figure 1: Three levels of a product

To explain the figure above, let’s use a car as an example.

The core product is the car itself and the transportation benefit. The actual product is the style of the car, the quality level, features of the car, and branding. The Augmented product is about the intangible benefits. Think about after sales service and warranty.

Price: The price is what a customer is paying for the company’s products (or services). Pricing is essential for a company’s success as it needs to cover its cost, and of course the price determines what profit the company will make. However it is much more than that. The price determines the demand of the product. Depending on what product you offer, and the price elasticity of that product. Price elasticity means, how much demand will change to a change in price. Price elasticity for medicine is very low, but for food it’s higher, as there are many substitute products. Finally, the last important element in pricing is the perceived value the customer has. Pricing is the most important factor that influences the value of products and the company itself. There are various pricing strategies that one can adopt in order to create a certain image, but also capture more market share.

Augmented product

Actual product

Core product

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Place: The place of a product is firstly, about the location of the business. The location has to be chosen strategically, depending on what type of business you have. For a restaurant business, you want to find a place where your target group can easily access your restaurant. Besides physical location, it is also about distribution channels (if you sell products). For this there are many distribution strategies that can be used.

Promotion: Promotion is all about the communication between the company and its target group. Think about advertising, events, packaging etc. Silk, A. author of “What is marketing?”9 describes a useful tool to create an effective promotion strategy using the six M’s model.

1. “Market: To whom is the communication to be addressed?

2. Mission: What is the objective of the communication?

3. Message: What are the specific points to be communicated?

4. Media: Which vehicles will be used to convey the message?

5. Money: How much will be spent in the effort?

6. Measurement: How will the impact be assessed after the campaign?”

Silk also describes the usefulness of advertising in media. First of all it is very effective when you want to create awareness of a new product. The reason for this is that it is easy to reach many potential customers using media. It is also useful to describe features of a product. When looking at advertisements on television, you see plenty commercials where features are mentioned. Furthermore, advertising in media is effective to distinguish the product from competitors. Why is your product better? Why should you buy our product? Lastly, one of the most important reasons is that it is very useful to improve the company’s brand image. Companies that are perceived as a “premium” brand often use models and give the impressions of “success” in their advertisements.

2.4 FINANCIAL PLAN

The last part of the business plan is the financial plan. The financial plan is everything of the business plan translated into quantities. Everything stated in the strategic and marketing plan is used in the financial plan, and therefore this can only be done once the strategic and marketing plan has been finished.

Financial statements are used portray finances that occurred in the past, present, and future. Because this is a startup company, I am not able to showcase past performance.

The statements that will be used in the financial plan are the following as described by Linda Pinson, author of “Anatomy of a Business Plan”10:

Statement of financial needs: This statement shows how much funding is needed to start the company. It also shows how the money needed will be spent.

9 Silk, A (2006). What is Marketing. United States: Harvard Business School Publishing Corporation. 10 Linda, P (2008). Anatomy of a Business Plan. 7th ed. Tustin: Out of Your Mind... and Into the Market place. p83.


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Pro forma Statements: The pro forma statements include a cash budget statement, a three year income statement, and a balance sheet.

1. Cash budget: “The cash budget is a financial document that projects what your business plan means in terms of dollars. A cash flow statement is the same as a budget. It is a pro forma (or projected) statement used for internal planning and estimates how much money will flow into and out of a business during a designated period of time, usually the coming tax year. Your profit at the end of the year will depend on the proper balance between cash inflow and outflow.” 11

2. Income statement: A pro forma income statement shows the projections of the coming year(s). This is done by using the total revenue and expenses of the first year as a base, and depending on the economic outlook, future projections will be made.

3. Balance sheet: The pro forma balance sheet shows the projections of the company’s assets, liabilities, and equity at the end of the first fiscal year. It is a snapshot of a company at a certain point in time.

2.5 SUMMARY

The theoretical framework outlines the body of this thesis, which the empirical framework will be built on. In order to measure a company’s viability, information about the internal and external environment of the company is required.

The basic legal forms are examined. A sole proprietorship is a business operation owned and managed by an individual. Establishing this form of business is simple, but one must be aware that the owner is personally liable for business obligations. Partnerships are operated by more than one person. There are different types of partnerships where owners can be fully or partially liable for business obligations. Then there limited liability companies where the company is a private entity on its own, and therefore owners are not fully liable for business obligations.

Company structures and operations are examined. The company structure of a company defines the lines of authority within a company. It describes responsibilities and the tasks of jobs. Organizational structures vary based on the type of business and the size of the company. A suitable organizational structure is of utmost importance in order for the company to reach its maximum potential when it comes to productivity, efficiency, flexibility, and motivation. Company operations are in essence what it does to create value. Three imperatives that achieve this goal are the generation of recurring income, the increase of value of business assets, and securing the income and value of the business.

Strategic analysis and planning tools are presented. Strategic analysis and planning are part of strategic management with the goal to help companies to formulate better strategies by using a systematic approach to strategic decisions. The three stages of strategic management are the strategy formulation, implementation, and finally evaluation. When the strategic analysis has been completed, the strategic plan can be formulated. This consists out of a detailed company strategy focusing on the businesses itself. Essential elements in the strategic plan are market positioning, the competitive advantage of the company, and finally the company’s brand strategy.

Marketing planning tools are presented. Marketing is an essential element to the success of any type of business. It is a tool by which companies are able to create value for its customers. In order to

11 Pinson, L (2008). Anatomy of a Business Plan. 7th ed. Tustin: Out of Your Mind... and Into the Market place. p84.

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create a successful marketing strategy, it is essential that the target market is identified. After that, it is possible to create a suitable marketing strategy. The most widely used tool for this is the marketing mix. Marketing consists of many topics such as pricing, branding, distribution channels, and advertising to name a few. This can all be categorized into the four p’s or marketing mix. These categories are product, price, place, and promotion.

Financial planning statements are introduced. The financial plan is everything of the business plan translated into quantities. When making financial projections, certain statements need to be used. The statement of financial needs shows how much funding is needed to start a company. The cash budget is a detailed plan of future cash flows and is composed of four elements: cash receipts, cash disbursements, net change in cash for the period, and the ending cash balance. The income statement is an overview of revenue(s), expenses, and profit. Finally the balance sheet is an overview of the company at a certain point in time which shows the value of the company.

2.6 ANSWER TO THEORETICAL RESEARCH QUESTIONS

This section of the thesis will briefly answer the theoretical research questions. The answers are summarized answers of the information found in the theoretical framework.

1. What are the various external factors of strategic management that affect a company? Various external factors that affect Anna’s green tea are political, economic, social, technological, environmental, legal, and cultural factors. These factors are outside determinants and cannot be controlled by the company. Therefore, strategic management is about creating a suitable strategy that reaps advantage of the external opportunities while at the same time reduces the threats the company may face. 2. What strategic management methods are needed to determine a company’s internal strengths and weaknesses? Strategic management methods needed to determine Anna’s green tea’s internal strengths and weaknesses include the SWOT analysis. This tool is the most basic form of listing strengths weaknesses opportunities, and threats. As it is too basic to use for this instance, we are using the Strategic Factor Analysis. It is a much more professional way of analyzing the company’s strengths weaknesses opportunities, and threats by using weights and focusing on an internal analysis, external analysis, and finally a combined summary. 3. What are the essential elements of a company profile? The essential elements of a company profile are firstly the company form. There are many forms each with their own advantages and disadvantages. Based on the company form you can build on other things related to the company. Secondly it is essential to know the company operations. Only if you know what the company does to make money, can you make analyses about certain things. Finally it is essential to know the organizational (company) structure of the company, as it gives a clear view of how the company is built. 4. What financial planning tools are needed to assess the financial viability of a company? The financial planning tools needed to assess the financial viability of a company are the statement of financial needs, the cash budget, the income statement, and lastly the balance sheet. The statement of financial needs is meant to give an overview of the amount of money needed to establish the company and make it operational. The cash budget is an overview of the timing of incoming and


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outgoing cash. This is important because you might not have enough cash at certain periods of time and might not be able to meet the required financial obligations. The income statement shows the profit/loss of the company by subtracting all expenses from the earned revenue. Lastly the balance sheet shows the value of the company at a certain point in time. These statements combined give a clear picture of the financial viability of a company.

3.0 METHODOLOGY

Research methodology is a way to systematically solve the research problem. It is necessary for a researcher to know not only the research methods/techniques, but also the methodology, the logic behind the techniques. It basically provides the methods of the research process, giving the reader a better picture of this thesis, and the reasoning behind the methodology choices. This chapter consists out of four parts: 3.1: Research method, which is about the research method(s) I will use for this thesis. 3.2 Data collection method shows what methods I will use to collect the data. There are various ways to collect data, and based on the research method, the right data collection method needs to be used. Then chapter 3.3 Data analysis procedure is about how the acquired data will be analyzed. This is especially important for primary data. Finally chapter 3.4 discusses the reliability and validity of the data and sources that are being used in this thesis. It is of utmost important that sources are reliable, because it can make or break a research.

3.1 RESEARCH METHOD

First of all, the decision has to be made on whether to use qualitative or quantitative data. For my project I will use mixed research. This means that I will use both qualitative and quantitative data in my research. As my thesis is based on both exploratory and explanatory research objectives, the mixed research is the best option. I will have to use quantitative data when analyzing the tea and coffee market of the Netherlands. However my thesis is also about finding trends and new developments in this industry, which is qualitative. I would say that 70% of the thesis is qualitative, while 30% is quantitative.

3.2 DATA COLLECTION METHOD

The primary method used for data collection is secondary research. I will use credible sources that have done their research to complement my research with. I understand that the data needs to be reliable, suitable, and adequate. Because I need to research the market it is hard to use primary data, because it takes a lot of time, and other companies might be far more specialized in certain fields, and thus using their information might be more credible to use. The secondary data is derived using desk research. Most of the information will be from the internet. Besides secondary research, I will also use interviews for data collection. I have found a recent interview by another investigator of the tea and coffee branch, which I might use as it is beneficial for my research.

3.3 DATA ANALYSIS PROCEDURE

There are special methods for the analysis of data, however in my case, this is not really needed. Because I’m using mostly qualitative data, I don’t need to analyze specific data from questionnaires or other data collection methods. The only quantitative data used is historical data about the consumption of tea and coffee. As for the financial part of the research, it is based on projections. So again, this is not relevant for me.

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3.4 RELIABILITY AND VALIDATY

It is always a question if the collected data is actually reliable and valid. To make sure that it is, I am using recognized sources for my secondary data collection. Data about the industry, demographics, and other figures about the Netherlands, is found from CBS, Centraal Bureau Statistiek. This is a 100% credible source as it’s from the Dutch government. Other data about the tea and coffee branch are from credible consulting companies.

To make sure that the data is valid, I check the date of the data collected and information found. If data is older than 2010, I will not use it. As I need to analyze the company’s current internal and external environment, I will make sure that all the data I collect is recent.

4.0 FINDINGS/EMPIRICAL FRAMEWORK

This chapter is the empirical framework of this thesis. It consists out of four sub chapters that are listed in such a way to make sense and to provide better understanding. These chapters are:

4.1: Company profile: This is the basic company information, which is needed to continue with the external analysis. This includes:

Mission, vision & objectives: The mission, vision and objectives of the company are the essence of the company. It answers the question of why the company is established and what the company would like to achieve.

Legal form: Shows the type of legal form of the company, and the advantages versus the disadvantages of the legal form chosen.

Company structure: Shows an overview of the organizational structure of Anna’s green tea.

Company operations: Describes what main activities the company is engaging in.

4.2: Environmental analysis: This chapter analyzes the external environment of the company which consists of the PESTEL analysis, industry analysis, and a market analysis. It is about the outside forces that affect the company.

PESTEL analysis: A business framework which helps understanding the Macro-Environment of the company. It helps to analyze the environment of the Netherlands.

Industry analysis: Analysis of the tea/coffee (bar) industry by using the Porter’s Five Forces framework to assess the industry’s competitiveness and attractiveness.

Market analysis: Analysis of the tea and coffee market in the Netherlands. It also includes an extensive analysis of the tea and coffee bar branch.

4.3: Competitive environment: The competitive environment is an analysis of the company’s main competitors. It provides information about these companies and lists strengths and weaknesses, which helps to formulate a strategy.

Competitor analysis: Analysis about Anna’s green tea main competitors in the Netherlands.


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4.4: Research on viability: With the information of the previous chapters, this chapter is about the strategy formulation. Here, the best strategy is formulated, and research is done about the viability of the company. It consists of the SFAS analysis, strategic plan, marketing plan, and a financial plan.

SFAS: Evaluation tool to evaluate the company. It identifies the company’s strengths weaknesses, opportunities, and threats. The strengths and weaknesses are the internal factors, while the opportunities and threats are external factors. By giving ratings, one can determine the position the company is in.

Strategic plan: Formulation of the company’s strategy. This is done by using market positioning, competitive advantage, and brand strategy theories.

Marketing plan: Presents the company’s marketing strategy by using segmentation to define the company’s target group, and the (marketing mix) four P’s: Product, Price, Place, promotion.

Financial plan: The quantitative part of the research on viability. Consists of the statement of financial needs, cash budget, income statement, and a balance sheet.

4.1 COMPANY PROFILE

This is the first part of the empirical framework. The company profile provides information about the company itself. Basic company information is needed to paint a picture of the company and its operations. This chapter starts with the mission, vision, and objectives of the company, continues with the legal form, then the company operations will be described, and finally the organizational structure of the company will be given. This chapter refers back to chapter 2.1 of the theoretical framework.

MISSION, VISION, & OBJECTIVES

Mission

To make and serve the best Japanese green tea beverages and food, in modern Japanese-style stores.

Vision

To enhance people’s lives with Japanese tea culture in a modern way

Objectives

To create a modern place for people to gather and socialize inspired by Japanese culture

To allow people to enjoy Japanese green tea beverages and food everywhere

To provide the best Japanese style dining experience

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LEGAL FORM

The company’s legal entity is a private limited liability company, or in Dutch: Besloten Vennootschap, (B.V). The main reason why I choose for the private limited company is that it has the most limited liability for the owners, as a BV is a legal entity in itself. This used to mean a capital investment of 18000 euros is required, but has recently been changed. There is no capital investment needed anymore.

Advantages of a private limited liability company include:

Fast establishment of the company

No private liability, which gives investors more incentive to invest in the company.

A private limited company is a legal entity, which means it operates on its own.

It is easy to protect private equity

Profit is only charged with tax up to 25 percent

Only one shareholder and director is needed

Minimum share capital is a mere one eurocent

A private limited company reflects a reliable image

(Partial) sale of the company is easily established

Of course every advantage also has its disadvantages. These include:

Starting capital of eighteen thousand euros is required. (This is not necessary anymore)

Startup-costs and formalities are higher compared to other entities

To sell shares a notary is required

There is no starters- and entrepreneurs deduction

Higher accounting costs than a sole proprietorship or a partnership

Looking at the advantages vs. disadvantages, I believe the private limited liability company is the best option with the biggest reason that liability is limited.

OPERATIONS

The company’s main operation is quite simple. It’s a new “tea-coffee bar” startup that sells beverages and food based on (Matcha) green tea. Therefore the company’s main operation is running (a) restaurant(s). In the future, the company might increase operations by licensing, so that the company can grow through franchising. So operations include:

1. Operation of restaurant(s)


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The restaurant(s) sell food and beverages based on (Matcha) green tea. Beverages include Regular green tea lattes, roasted green tea lattes, red bean lattes, coffee, and juices. Food includes parfaits, ice cream, and crepes.

2. Licensing

In the future, the company will license its brand. However this can only be done when the brand is popular enough and has a large amount of brand loyalty. The company will then receive income from royalties.

3. Franchising

Franchising is also something for the future. If the company’s restaurant(s) become successful, it might want to look to expand, and franchising is a good method to do this, whereby the company’s business model is sold to the franchisee.

As the company is a startup, we will focus on the operation of restaurants for now, as this is the first step in order to continue with franchising and licensing.

COMPANY STRUCTURE

The structure of the company can be portrayed in many ways. First the structure of one restaurant will be shown. However when the company expands and opens multiple restaurants, the organizational structure will be changed, which will be shown as well.

Organizational structure of one restaurant

Figure 2: Organizational structure of one restaurant

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Organizational structure of multiple restaurants

Figure 3: Organizational structure of multiple restaurants

4.2 ENVIRONMENTAL ANALY SIS

The second part of the empirical framework is about the environmental or external analysis of the company. It starts very broad, with the PESTEL analysis, and then the analysis will be narrowed down to the industry analysis. The industry analysis is done using Porter’s five forces. Finally the analysis will be narrowed down even further, by analyzing the market. Altogether this will provide the necessary information about the external environment of the company. The environmental analysis and the tools used in this part of the thesis refer back to chapter 2.2 of the theoretical framework.

4.2.1 PESTEL ANALYSIS

The PESTEL analysis is a framework used to analyze the Macro-Environment of the place where the company is operating in, in this case the Netherlands. The importance of analyzing the Macro-Environment is that it will help understanding the external environment, which will help the company making better decisions regarding factors such as government stability, tax policies, entry mode regulations, credit accessibility and many more external factors.


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POLITICAL FACTORS

The current government in the Netherlands with Prime Minister Mark Rutte, is a pro-European government. The Netherlands at the moment is rated AAA, which is not the case for many other EU countries anymore. The current government has adopted a policy of strict fiscal discipline, whereby with many budget cuts. Because of the economic crisis, the Netherlands is at risk to lose the AAA rating.

Over the next few years, sixteen billion euros of budget cuts will take place, together with structural reforms. One of these reforms is a reduction in tax breaks on home loans.

Polls at the moment show much discontent about the current government, mainly due to the economic situation. People complain about high unemployment, the ongoing economic crisis and weak economy, and the possibility of pension cuts.

What to expect:

The government will remain committed to the disciplined fiscal policies in budget cuts to overcome the economic crisis. The government will aim to bring the budget deficit down to 2.6% of the GDP. The suggested budget cuts will be implemented, and finally if the economic situation stays bad, and if public discontent keeps rising, strikes can be expected.12

ECONOMIC FACTORS

Let’s first have a look at the major macro-economic indicators. The figure below shows these indicators of the Netherlands. Looking at these indicators, the economic situation in 2012 is bad. The biggest reason for this is the economic crisis. As Germany and other countries are starting to show signs of recovery, the Dutch economic situation remains bad.

2010 2011 2012

GDP growth (%) 1.63 0.99 -0.96

Inflation (yearly average) (%) 1.28 2.35 2.45

Budget balance (% GDP) -5.6 -5.1 -4.5

Current account balance (% GDP) 7.9 10.1 10

Public debt (% GDP) 63.1 65.5 71.2

Figure 4: Macroeconomic indicators Netherlands

Source: World Bank

12 Reuters. (2012). Political risks to watch in the Netherlands. Available: http://www.reuters.com/article/2012/12/03/dutch-risks-idUSL5E8LUH7Y20121203. Last accessed 26th July 2013.

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Coface, a credit insurance company has made an analysis about the country risk of the Netherlands that I will state below.

“Strengths:

Port operations (Rotterdam, leading European port)

Diversified exports (refined oil, natural gas, automotive, electrical equipment, IT equipment)

External accounts in surplus

Unemployment relatively low by international standards

Public debt under control

Weaknesses:

Very open economy, dependent on European economic conditions

Banking sector shaken by the crisis

Substantial household debt

Ageing population, threatening the solvency of pension funds

Risk assessment:

Severely weakened domestic demand: Hit by fiscal austerity, a slowdown in world trade and depressed private consumption, the country did not escape the recession in 2012. The economic gloom is expected to continue in 2013. Internal demand will remain depressed due to the weakness of real household income, rising unemployment, the worsening property market, continued fiscal consolidation and under-utilization of production capacity. Moreover, sales abroad will remain constrained due to weakening demand from the euro zone. The contribution of foreign trade to growth is, however, expected to remain slightly positive because of slower import growth.

Highly exposed to the external environment: Although the economic fundamentals remain sound (external accounts in surplus, public debt still contained), the country was considerably shaken by the financial crisis in 2008-2009, given its financial and commercial openness. Burdened by the cost of the American mortgage crisis, several banks had to be rescued by the government. As regards trade, the country has a satisfactory level of competitiveness and has gained market share in Europe. It remains, however, very sensitive to the international economic situation, given the economy’s high degree of openness.

Households over-indebted, banks and businesses bruised by the worsening of the economic situation: Property prices continued to fall and many property owners are seeing the value of their assets fall below that of their mortgages. This is particularly damaging in the Netherlands, where household debt has reached record levels (128% of GDP at the end of September 2012) due to the mortgage debt boom, itself favored by tax deductions. The banking sector is facing a fall in its profits and a surge in non-performing loans because of the housing market deterioration and the recession. Finally, businesses, whose financial situation was rather sound in the past, are also seeing their profits sink. Bankruptcies grew by


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21% in 2012, with construction and trade leading the way. At the same time, payment incidents recorded by Coface substantially increased.”13

Looking at the risk assessment by Coface, the economic situation in the Netherlands is alarmingly bad. First of all domestic demand has weakened severely. Prime Minister Rutte keeps saying to spend money; however people are saving at the time of crisis. Fiscal policies are very strict, and unemployment has not been this high since a very long time. Purchasing power of the Dutch people is decreasing as well. As the Netherlands is a very open economy and dependent on the external environment, it will only start to improve economically when other countries in the EU will too. I do have to mention that the data by Coface is based on 2012, and that now in 2013 bankruptcy started to decline again and prices of houses are starting to go up a little, so there is still a little bit of hope.

All in all, under these circumstances comparing the economic situation to other EU countries, the Netherlands does not have to complain. It still has the AAA credit rating, and the government has everything under control.

SOCIAL/DEMOGRAPHIC FACTORS

General Social Data of the Netherlands

Population 16.7 million

Population growth rate 0.452%

Median age 41.5 years

Life expectancy at birth Total: 80.91 Male: 78.84 Female: 83.08

Nationality Dutch

Urban population 83% of total population

Languages Dutch, Frisian

Major cities Amsterdam, Rotterdam & Den Haag

Figure 5: General social data of the Netherlands14

The small country of the Netherlands, with 16.7 million inhabitants, is the fourth most densely populated country across the globe. Dutch society is very much structured and most things are planned in detail. From work life to private life, everything needs to be planned to the smallest detail, as changes are not welcomed. The society in general is very open and tolerant. The Dutch religion is based on Calvinism, however most people do not attend church anymore. Even so, Calvinism still has big influence on Dutch beliefs and values. Dutch people are known to be “greedy”, however it’s just that they do not like to waste things. There are no real extremes in Dutch society. In general they don’t have extreme luxurious lifestyles. Dutch people frequently go on vacations abroad, which they do to relax and forget work for a while. The Dutch society is egalitarian. Status is obtained through study and work and every person is equal.15

Demographics:

13 Coface. (2013). Netherlands Synethesis. Available: http://www.coface.com/Economic-Studies-and-Country-Risks/Netherlands. Last accessed 23rd July 2013. 14 Index Mundi. (2012). Netherlands Demographics Profile 2013. Available: http://www.indexmundi.com/netherlands/demographics_profile.html. Last accessed 28th July 2013. 15 Breukel, E. (2012). Dutch society and working culture. Available: http://www.expatica.com/nl/essentials_moving_to/country_facts/The-Netherlands-at-a-glance.html. Last accessed 24th July 2013.

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Figure 6: Age structure Netherlands 2013

Source: CBS Looking at the age structure of the Netherlands society is getting older. Elderly people have different needs, and as this company’s target group is mainly young people, it is important to be aware of that. Continuing on, our operations will be in three provinces, which are Zuid-Holland, Noord-Holland, and Utrecht. These three provinces combined have a population of 7.5 million people. Also the population density in these provinces is quite high (as can be seen from the figure below), which makes these places an excellent location for the new business venture.

Figure 7: Netherlands population density


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TECHNOLOGICAL FACTORS

Innovation in the Netherlands is part of the Dutch economy and people. The Dutch government is constantly looking to strengthen its power of innovation for the welfare of future generations to come. The Industrial sectors, together with the government have plenty of innovation programs. Some of the innovation programs are: 1: Chemistry/Polymers, 2: Food & Nutrition Delta, 3: High Tech Automotive Systems Innovation Program, 4: Life Sciences and Health, 5: Logistics and Supply Chain, 6: Maritime Innovation Program, 7: High Tech Systems (Point-One Innovation Program), and 8: Service Innovation & ICT.

The Netherlands is a great business hub with its attractive location, and great infrastructure to access the whole of Europe. The country has a perfect energy infrastructure, fresh water transportation and gas infrastructure, and telecommunication network. So, business in the Netherlands is excellent.

Looking at the Dutch tea and coffee industry, it continues to innovate especially when it comes to the sustainability of tea and coffee. The Dutch tea and coffee industry takes pride in providing coffee and tea that is environmental friendly and sustainable. In fact 40% of all coffee in Dutch supermarkets are sustainable and the goal is to change this to 75% by 2015.

The Dutch tea sector plays an active role in the sustainability of its products, trade relations, and production processes. This is evident as the availability of sustainable tea in the Dutch market is growing. Besides this, the so called “The Sustainable Trade Initiative (IDH) Tea Program, has been created by the KNVKT. In this project, The Dutch and British tea industry work together with many organizations to help provide training and certify farmers of tea plantations in Africa and Asia. The common goal is to provide 22% of the worldwide tea export sustainably in 2013.16

When it comes to the coffee industry, innovations in the production process of coffee are something plays an important role. The industry continually tries to optimize its production processes, with the goal to lessen harm on the environment and to make the production process much more energy efficient. The industry aims to decrease energy consumption by 20% in 2020 compared to 2005.17

ENVIRONMENTAL FACTORS

In order to do business in the Netherlands, one must comply with certain environmental rules and regulations. These rules and regulations are based on the Environmental Management Act. The Environmental Management Act provides legislation about the environment. It states certain requirements on environmental quality, licensing, general rules, and enforcement. It also provides information about rules on levies, contributions, and compensation.18

The Dutch government is very much involved in environmental management. Some important topics related to the environment are:

16 KNVKT. (2013). Oorsprong. Available: http://www.knvkt.nl/werkvelden/duurzaamheid/duurzame-ontwikkeling-in-de-theeketen/oorsprong. Last accessed July 24th 20132. 17 KNVKT. (2013). Productie. Available: http://www.knvkt.nl/werkvelden/duurzaamheid/duurzame-ontwikkeling-in-de-koffieketen/productie. Last accessed July 24th 2013. 18 Europa. (2009). nvironmental rules - Netherlands. Available: http://europa.eu/youreurope/business/doing-business-responsibly/keeping-to-environmental-rules/netherlands/index_en.htm. Last accessed 24th July 2013.

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Spatial planning: Local Dutch districts have created plans on how to shape their province and districts. There is a Spatial Planning Act, which regulates these plans.

Waste management: The Dutch government wants to minimize waste as much as possible. To do this the government promotes recycling.

Chemicals: Businesses should comply with the EU REACH laws and regulation when working with chemicals. REACH is a European act that tries to protect people and the environment from dangerous chemicals.

Noise: There are certain regulations when it comes to noise to stop noise as much as possible. The rules and regulations about noise can be found in the Dutch Noise Act.

LEGAL FACTORS

Laws and regulations

As this company is in the food business, there are strict rules and regulations because it can potentially harm the health of people. The General Food Law forms the basis of food law and food safety in Europe. This acts sets out requirements for the entire food chain from farm to consumer. There is a wide range of national and European rules in the food industry. Also, legislation is constantly subject to change due to new scientific or technological knowledge.

In recent years, more legislation comes from European level and implemented on a national level. In the Netherlands, legislation is found in the Warenwet (Commodities Act). The Commodities Act states that a product cannot harm the health and safety of consumers.

Regulation through the European Union is great, because it promoted the free movement of goods as all EU countries have to comply with these rules and regulations.

Enforcement

The Dutch Food and Commodities Authority, part of the Ministry of Economic Affairs, is a government body that oversees food safety and compliance of rules and regulations. It operates within the entire production chain, from raw material to finished product. Recently, they implemented a new enforcement tool, called horizontal supervision. This enforcement strategy is based on voluntary compliance of laws and regulations by companies, institutions, and consumers. In this context, agreements are made with businesses so that these companies are left with more responsibility.

The Dutch Food and Commodities Authority is committed to safe and healthy food and pays much attention to the laws and regulations that are important for the tea and coffee industry. This requires knowledge and understanding of legislation and food safety by the company themselves.

4.2.2 INDUSTRY ANALYSIS

Now that we have analyzed the Macro-Environment of the Netherlands, it is time to focus on the Micro-Environment. To analyze the Micro-Environment, the Porter's Five Forces framework will be used. It is a method to assess the industry's competitiveness and attractiveness. The company I want


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to establish is primarily focused on tea; however the competitors focus primarily on coffee. Furthermore, the drinks that AGT offers are very similar to coffee, and therefore it is necessary to analyze both the tea and coffee industry. This will become clear in the market analysis. Therefore the industry is “the tea & coffee industry”.

THE THREAT OF NEW ENTRANTS

“Coffee- and tea bars” is the branch of this new starting company. To open a restaurant or a tea/coffee bar is relatively cheap and everyone could open such stores, which makes the threats of new entrants high. Opening a company in this industry does not require specialized skills or expensive technology and machines, which makes it easy for new companies to enter this market. Also, the products the company will offer can easily be imitated by other companies. The food industry has always been very competitive, which is also the case in this branch. There are a few market leaders, but besides that there are plenty of good running small tea and coffee shops.

THE THREAT OF SUBSTITUTE PRODUCTS AND SERVICES

The threat of substitute products and services is high. The products offered by this company are mainly beverages (and food) based on green tea. There are unlimited similar types of drinks and food such as energy drink, juices, teas and coffee that can be found in any other café, pub, restaurant, snack bar, and fast food chain. Even though this company also provides coffee, the main substitute product is coffee too. As the main product is based around green tea, coffee is seen as the substitute and as mentioned, coffee can be found anywhere. Furthermore people can make their own drinks at home as they have their own machines to make tea or coffee. Therefore it is really important for us to create something special with our drinks, so that people remember it, and to create a powerful brand image.

THE BARGAINING POWER OF CUSTOMERS/BUYERS

The bargaining power of customers is very high. Because of the unlimited choices and supply of beverages and stores people can go to, customers call the shots. As mentioned earlier in the interview, the tea and coffee industry is based around what the customer wants. Consumers are very knowledgeable about what they want, and expect good quality.

THE BARGAINING POWER OF SUPPLIERS

As most of the products in the company’s assortment are made with green tea, we are somewhat dependent on suppliers. However the supply of green tea is large, and can be found anywhere. If prices of green tea from suppliers in the Netherlands are high, we could just buy them internationally. Therefore the bargaining power of suppliers is low.

THE INTENSITY OF COMPETITIVE RIVALRY

The intensity of competitive rivalry is quite high. The three biggest players in the coffee bar branch are DE Koffie & Coffee Company, Starbucks, and Kaldi. The first coffee bar was opened by the coffee company in 1996. Sarah Lee, the owner of DE Koffie, recently took over the coffee company, which makes the market leader with 30% market share and 60 stores. Kaldi opened their first store in 2000, and own 38 stores. Finally Starbucks opened in 2007 with currently 19 stores. These companies are all well established and rivalry will be very high among these companies.

INDUSTRY LIFE CYCLE

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The product Life Cycle is used to analyze which marketing strategy is best used on a specific product. Each product that is introduced on the market undergoes four different stages that are described in the product life cycle. The speed at which each product goes through these phases depends on the type of product and the demand, ranging from weeks, to many decades. Food products such as bread have stayed on the maturity phase for centuries, whereas other products never get beyond the introduction phase.

The four product life cycle phases:

Market Introduction phase: Introduction of a new product, usually high entry-costs due to research and development needed to introduce the product. Low sales-volume due to lack of demand

Growth phase: Sales volume increases immensely. During this phase, there will be more competition and competitors will start introducing their own version of the product. Most profit comes from this phase of the cycle.

Maturity phase: As most consumers purchased the product competition becomes fiercer. During this phase, sales-volume is peaking and competitors try everything to get the last consumers to purchase their product.

Saturation and Decline phase: In the fourth and the last stage, sales-volumes are declining as there will rarely be any new purchases. Most competitors start withdrawing due to the continuing decline of profits.

The industry life cycle of the tea/coffee bar branch is currently between the introduction and growth stage in the Netherlands. Bars, café’s, and other shops have been in the Netherlands for a long time, however the coffee/tea bar like Starbucks is relatively new in this country. The first tea/coffee bar has been here in 1996, and since then, the amount of these types of stores has been growing, and is expected to grow even more in the near future. The Dutch society is still transitioning to in becoming an on-the go society like the United States, and when that happens, there will still be growth in this market.

4.2.3 MARKET ANALYSIS

THE TEA AND COFFEE MARKET IN THE NETHERLANDS

The new business revolves mainly around the sales of beverages, in particular tea and coffee beverages. Therefore, I am looking into the trends and developments of the tea and coffee market in the Netherlands, because this market fits our business best.

Coffee and tea are deeply rooted into Dutch culture and history. Centuries ago, Dutch merchants brought coffee and tea with them from exotic regions. Through the years, coffee and tea have been very beloved beverages in the Netherlands, and have an important place in the daily lives of Dutch people.


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In 2012, the average Dutch consumer drank 150 liters of coffee and 90 liters of tea. Those are amply 3 cups of coffee and 2 cups of tea per capita per day. Coffee and tea are (together with water) the most consumed beverages in the Netherlands (See the figure below).19

Figure 8: Consumption of beverages in 2012

With 27% of the daily liquid consumption per day, coffee is the most consumed beverage in the Netherlands. Tea and coffee combines counts for almost half of all consumed liquids per day, which is very significant. After the Scandinavians, Swiss, and Austrians, the Dutch consume the most coffee in the world as can be seen in the figure below. Note that Italy is not in the chart because figures of 2010 are not known. In 2009 this was 5.8 kilograms per capita, which is less compared to the Netherlands.

19 KNVT. (2013). Trends en ontwikkelingen in koffie- en theeconsumptie . Available: http://www.knvkt.nl/media-center/nieuws/item/258-trends-en-ontwikkelingen-in-nederlandse-koffie-en-theeconsumptie. Last accessed 16th July 2013.

Juice (8%)

Milk (7%)

Coffee (27%)

Tea (15%)

Soda (10%)

Water (21%)

Alcohol (10%)

Consumption of beverages in 2012

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Figure 9: European coffee consumption per capita in 201020

(Information about the Dutch coffee and tea market has been derived from De Koningklijke Nederlandse Vereniging voor Koffie en Thee (KNVT), which is the spokesman for tea and coffee companies in the Netherlands. With 55 member companies, it represents 98% of the coffee- and tea branch. The following information about tea and coffee market comes from this source.)

Tea market

Tea is one of the most consumed beverages in the Netherlands, as mentioned before. This part of the market analysis will zoom into the tea market in the Netherlands to get a better picture of the consumption of tea.

First of all, tea consumption in the Netherlands comprises of 15% of all beverages in 2012. Per capita, this is 2 cups per day, 90 liters of tea per year, and 722 grams of tea consumed on a yearly basis.21

Let us look into the historical data of tea consumption in the Netherlands.

20 European Coffee Federation. (2012). European Coffee Report 2010/11. Available: http://kaffeinfo.dk/wp-content/uploads/2012/04/European-Coffee-Report-2010-11.pdf. Last accessed 23rd Junly 2013. 21 KNVT. (2013). Thee - Consumptie in Beeld 2012 . Available: http://www.knvkt.nl/media-center/nieuws/item/257. Last accessed July 16th 2013.

0

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European coffeeconsumption per capita in 2010


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Figure 10: Historical tea consumption in the Netherlands

From 2005 to 2012, tea consumption has been between 12 and 13 million kilograms. IN 2005 and 2006, consumption has been 13.1 million kilograms, which then fluctuated in the years of 2007 through 2010. What we see now is that the tea consumption in the last two years has been stabilized to 12.1 million kilograms. Even though the last two years have been the lowest amount of consumption, tea still accounts for 15% of total beverage consumption.

In the coming future, I expect that tea consumption will be more or less the same as in 2011 and 12, as it seems consumption has been stabilized. I don’t expect a sudden increase or decrease of consumption. Having checked historical tea prices as a commodity per kilo, changes in tea prices do not affect Dutch tea consumption, as changes in prices have not been very significant.

It is important to realize that the above figure is based on the consumption of Camellia sinensis tea. As this company is based on green tea, it might be interesting to see what types of tea are being consumed. Traditionally, black tea has always been the most popular and most consumed type of tea, however this is changing. Since the last few years, green tea is gradually becoming more and more popular, and consumers are seeing the benefits of consuming green tea. The figure below shows the market share of different types of tea.

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2005 2006 2007 2008 2009 2010 2011 2012

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Historical tea consumption in the Netherlands

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Figure 11: Market share types of tea in 2012

As expected, black tea is the most popular type of tea with a market share of 54%. Across the globe, black tea is the most popular type of tea, and this is the case in the Netherlands as well. After that, variation tea takes second place with 18%. Variation tea includes tea with different types of tastes. It usually is black tea with fruit variations, and is meant for people who like variety. Then there are herbal blends. These types of tea are blends with carefully selected spices, herbs, fruits and other natural ingredients. Finally we have green tea with the least market share, namely 11%. This might look bad for us however that is not the case. Green tea has only gained popularity since the last few years, and market share is growing every year. In fact, the market share of black tea has been decreasing in contrast to green tea and herbals blends, which showed increases in market share. Between 2004 and 2010, the market share of black tea has dropped from 66% to 54%, and in 1999 this was 77%. The market share of green tea has actually increased. From 2004 to 2010 the market share of green tea has increased from 3% to 8%. In 1999 this was just 0.3%. I believe that in the coming few years the market share of green tea will continue to increase because of the health benefits of this type of tea, and the market share of black tea will continue to drop.

Nowadays, many people are trying to live a healthy lifestyle and use green tea instead of coffee or other types of tea, because it is proven that green tea is great for oral health, bone health, weight loss, cancer, and reduction of heart attacks. Research published by Harvard actually shows that people who drink one cup of green tea on a daily basis, have 44% lower risk of heart attack.22

22 Harvard Health Publications. (2004). Benefit of drinking green tea: The proof is in -- drinking tea is healthy, says Harvard Women’s Health Watch. Available: http://www.health.harvard.edu/press_releases/benefit_of_drinking_green_tea. Last accessed 18th June 2013.

Green tea 11%

Variation tea 18%

Herbal blends 17%

Black tea 54%

Market share types of tea in 2012


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Coffee market

Coffee is the most consumed liquid in the Netherlands, with 27% of all consumed beverages per day. As mentioned before, coffee is engrained into the Dutch culture, and this will stay the same. Let us dive into the market and see what we can find about coffee consumption in the Netherlands.

First off, some interesting facts based on coffee consumption in 2012. On average, Dutch people drink 3.2 cups of coffee per day, which is quite a lot. Translated into liters of coffee, this is around 148 liters of coffee per year. On a yearly basis, the average Dutch consumer uses 7.1 kilograms of coffee per year.

Let us have a look into the historical consumption of coffee in the Netherlands.

Figure 12: Historical coffee consumption in the Netherlands

Looking at the figure above, we see an upward trend of coffee consumption since 2005 until 2010 from 110 million kilograms to 120 million kilograms. In the last two years it has stabilized to 119 million kilograms, which was also the case in the tea market. In the future I expect the coffee consumption to stay the same, however I do expect that there will be changed in the types of coffee consumed.

Before I go into detail about future expectations of types of coffee consumed, let’s first look into the market share of types of coffee consumed. With types of coffee I do not mean the types of coffee beans, but the type of coffee as in filter coffee, coffee beans, coffee pads/capsules, or instant coffee. The figure below shows how much of these different types of coffee have been purchased in 2012.

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2005 2006 2007 2008 2009 2010 2011 2012

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Historical coffee consumption in the Netherlands

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Figure 13: Types of coffee purchased in 2012

Looking at the chart above, filter coffee is being consumed the most. The reason for this is that filter coffee is the most basic form of coffee, which is simply brewed. After that, there are the coffee pads/capsules. This has been gaining more popularity since the last few years because of the coffee quality, but also convenience. People have these machines and you only have to use a small pad or capsule with all kinds of tastes, which people seem to like. The last two least purchased types of coffee are coffee beans and instant coffee. Instant coffee is not being consumes as much because the taste is very watery and as Dutch people love good coffee, they will not settle for instant coffee. Coffee beans are used by companies for the most part. Think about restaurants and tea-coffee bars. They use expensive machines to provide the best coffee. Individuals who do use coffee beans are real coffee lovers and choose quality over convenience.

Of all coffee consumed, 71% of coffee is being enjoyed at home, and 29% drink their coffee outside. Another point worth mentioning is that Dutch people find it important that their coffee is produced in a social responsible way, and are willing to pay extra money for coffee that has been produced in a socially responsible way. Furthermore there are many certificates for this, Max Havelaar being the most widely accepted certificate. In fact, 40% of the coffee in the Netherlands is certified, which means that it meets all the requirements of the Max Havelaar (or other) certificates. Compared to 8% worldwide, this is a very good thing. In the ten biggest supermarket chains in the Netherlands 33% of the sold coffee is sustainable. The KNVKT’s intention is to increase this amount to 75% by 2015, which would make the Netherlands the leader when it comes to the sales of sustainable coffee.

As mentioned before, for the past few years, consumption figures show that the coffee consumption in the Netherlands is stabilized. However there are some remarkable trends that are worth mentioning. Within the coffee consumption, it is apparent that since the last few years there has been an increase in the sales of coffee beans compared to ground coffee. Also there are changes in preferences of preparation methods of coffee. As people want good quality coffee, and is convenient in preparation, figures show that the popularity of single serve preparation methods with coffee pads and capsules is rapidly increasing. According to figures of the KNVT from 2000 – 2010, the market

Filter coffee 55%

Coffee beans 8%

Coffee pads/capsule

30%

Instant coffee 7%

Types of coffee sold in 2012


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share of single serve packaging has increased from 0% to 35%. This is mainly due to the arrival of the Senseo, which opened the market of single serve packaging. According to the MarketResponse coffee monitor 2009, 63% of the Dutch population (in 2009) owns a Senseo or a similar coffee pad or capsule machine. So in the future I expect the market share of single serve packaging to continue to increase.

The tea- and coffeebar branch

Now that I showed the tea and coffee market of The Netherlands in general, I would like to look into something more close to the startup business I would like to start. The company is a tea and coffee bar which is based on green tea. It can be compared to Starbucks. This part of the market analysis will look into the tea and coffee bars in the Netherlands.

Tea and coffee bars are relatively new in the Netherlands, and concrete figures about these bars are not easy to find. According to the Catering industrial board, there were around 1430 “coffee corners” in 2011. The term coffee corner includes tea bars, coffee bars, but also coffee shops that sell soft drugs.23 Compared to 2009, Van Spronsen & Partners consultancy, noted a decrease in coffee corners of 1.5%.

According to Intraval, a bureau for social-scientific research and consultancy, the Netherlands counted approximately 670 soft drugs selling coffee shops, which means that at this moment, the Netherlands has around 760 tea and coffee bars.

It can be unclear what exactly a tea- coffee bar entails. As I mentioned before, this company is a tea- coffee bar similar to that of Starbucks. However there are also specialized coffee and tea stores that fall into this branch.

The following figure shows the amount of coffee corners in the Netherlands in 2009 and 2011, by Province. Note that these figures also include the soft drugs selling coffee shops.

Coffee corners in the Netherlands according to BHC

2009 2011

Groningen 51 52

Friesland 60 60

Drenthe 31 27

Overijssel 75 80

Flevoland 19 21

Gelderland 135 135

23 Hendriks, C. (2013). De Koffie- en theebar in beeld. Available: http://www.spronsen.com/downloads/de_koffie-_en_theebar_in_beeld_2012.pdf. Last accessed 25th July 2013.

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Utrecht 75 81

Noord-Holland 416 412

Zuid-Holland 370 348

Zeeland 31 32

Noord-Brabant 115 116

Limburg 65 68

Total 1443 1432

Figure 14: Coffee corners in the Netherlands according to BHC

We see that the Randstad (Noord- and Zuid-Holland) have the most coffee corners. This is also where this company will start operating in. Most big cities are in the Randstad, and there are many people on-the-go, thus tea and coffee bars will have most potential in these areas.

Interviews

Van Spronsen & Partners conducted interviews with two men who know everything about the coffee branch and the coffee corners which I would like to show one interview as it shares valuable information about new developments in the coffee industry and the tea/coffee bar branch.

Interview Jeroen Veldkamp – CoffeeLab

Jeroen Veldkamp is the owner of CoffeeLab, an independent coffee platform that inspired, shares knowledge, presents and motivates. Jeroen has plenty of experience in the coffee branch, working for Douwe Egberts, the market leader of coffee in the Netherlands, and has two titels, namely Dutch barista champion, and director of Specialty Coffee Association of Europe.

Q: How did you see changes in the coffee market in recent years?

A: “The most important change is the role of the consumer. The consumer is getting more aware of the quality of coffee and chooses products more consciously. In the past consumers used to follow the suppliers in new developments, but the roles are now reversed.”

Q: What does this mean for the Market?

A: “Within this industry, there are chances that the consumer is more knowledgeable than the shop owners. There are better home opportunities in coffee making and ways coffee is offered, plus the quality has improved quite a lot in recent years. Compared to the coffee industry, the Dutch consumer is faster in terms of new developments and knowledge about coffee.”

Q: Are we going to drink more coffee outdoors?

A: “Yes that is what I expect. The possibilities of drinking coffee outdoors will increase. We obviously have a real coffee culture in which we make time for coffee, and take a moment to rest. However we are Americanizing and adopting an on-the-go culture. People are getting busies and we


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are looking for speed. In short, we are becoming a to-go culture. Consumers are becoming more demanding and are not satisfied with the coffee offered at work, so they go outdoors for their own coffee.”

Q: What are your expectations of the coming five years?

A: “I expect a bright future. If everyone keeps doing what they’re doing, there will be a place for everyone. As I mentioned before, consumers will continue to determine new developments. Suppliers will have to listen to the consumers. Consumers will no longer be tricked, and would like to pay for quality. So quality will improve even more. The number of coffee bars will continue to increase in the future, making it hard for (grand) cafes. To stay a player in the market, this group will have to realize the importance of good coffee, and will go into the direction of a coffee bar.”

Conclusion:

To summarize, consumers have become more knowledgeable about coffee (and tea). They know what they want and they expect good quality products too. Therefore quality will continue to increase to meet the needs of these consumers. As the Dutch culture is becoming Americanized, it will adopt the on-the-go culture, meaning that they will start going outdoors for coffee (and tea), and expect speed and quality. Coffee/Tea bars will start to show up more and if everything goes the way it is going now, everyone will have a place in this branch.

This interview shows good signs that a tea/coffee bar will be loved by Dutch consumers.

4.3 COMPETITIVE ENVIRONM ENT

The competitive environment is the third part of the empirical framework which is all about the company’s competitors. It is important to know the competitive environment because the company’s strategy will be based on the competitors as well. If all competitors use a certain type of strategy, it might not be wise to use the same strategy as them. The competitive environment relates back to the strategic analysis part in chapter 2.2 of the theoretical framework.

4.3.1COMPETITOR ANALYSIS

In this part of the thesis will show an analysis of three main competitors of our company in the tea/coffee bar branch. In the “tea and coffee market” part of the thesis I already introduced the competitors already, but now I will analyze these companies on a deeper level.

The three biggest coffee/tea bars in the Netherlands are:

SARAH LEE & COFFEE COMPANY

In December 2011 it was announced that Sarah Lee (Mother Company of Douwe Egberts) took over the Coffee Company that has over 30 coffee bars already. Because of this, Sarah Lee (With its Douwe Egberts Koffie Cafes) became the biggest coffee/tea chain in the Netherlands with approximately 60 stores which gives them a market share of 30% in this branch. The stores are primarily located in large cities, and in new locations such as campuses, and hospitals. Jointly, these stores receive around 7 million customers annually. The acquisition shows Sarah Lee to have confidence in the outdoors coffee/tea market in the Netherlands. The initial establishment of Coffee Company happened in 1996 in Amsterdam, and before the sale to Sarah Lee, the Coffee Company was the largest coffee chain of the country.

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Strengths

First-mover advantage: The Coffee Company was the first to start this type of coffee/tea store in the Netherlands

Great image: Together with DE cafes, the company has created a great image. Especially DE cafes, because Douwe Egberts is the most popular coffee brand in the country

Relatively cheap: Compared to Starbucks, the coffee they offer is much cheaper.

Own coffee roasting plant: Coffee Company has its own coffee roasting plant in Kenya

Weaknesses

No unique selling point: The company has no USP that makes it stand out from other companies in the Netherlands

Bad atmosphere and service: In contrast to Starbucks, the atmosphere in coffee companies is bad. According to reviews online, people complain about the bad atmosphere in the store and the service leaves much to be wished for.

STARBUCKS

After the first opening of Starbucks in the Netherlands in 2007, the American company now has 19 stores in the Randstad, where for them are found at Schiphol Airport in Amsterdam. The other stores can be found in other large cities, mainly in stations.

Strengths

Biggest coffee chain in the world: Starbucks has most stores in the world and operates in many countries.

Best brand image: Starbucks has created a very power brand image that is recognized worldwide making people very loyal to the brand

Starbucks experience: Starbucks promotes the company as experiencing the “Starbucks experience”

Strong financial situation: Starbucks has a strong financial situation, making it easy to expand in the Netherlands.

Weaknesses

High prices: The prices of Starbucks drinks are really high. Even though many people are willing to buy their coffee at premium prices, there are also people who find this a deal breaker, and choose to drink their coffee elsewhere.

Difficulty penetrating Dutch market: Even though Starbucks has 19 stores already, it seems like they are quite hesitant penetrating the Dutch market compared to other countries like


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the UK, where they have more than 600 stores. The reason for this can be the authentic Dutch coffee culture, where people prefer to drink their coffee in traditional coffee shops.

KALDI

Kaldi has about 38 stores across 30 cities in the Netherlands. The first branch was opened in 2000. Kaldi’s focus is much more on the sales of coffee and tea, crockery and equipment, but also provides seating. Furthermore there also is “Kaldi Mobile” where coffee is sold from a Piaggio scooter that has been transformed into an espresso bar.

Strengths

Diversification: Kaldi is much more different than Starbucks and the Coffee Company. The store is much more focused on the sales of coffee and tea, and

they also sell coffee making machines. When entering a Kaldi store, it looks more like a store than a café.

Kaldi Mobile: Kaldi provides catering services using a mobile espresso bar.

Online sales: Kaldi sells their own range of coffee and tea products that can be bought online. Furthermore they are the official dealer of Philips Saeco and ECM Manufacture espresso machines.

Weaknesses

Coffee/Tea specialist: Kaldi looks more like a specialist store with an opportunity to drink coffee. The company’s main goal is the sale of its product, and the store is made in such a way that whilst drinking your tea or coffee, you are tempted to buy its products

Bad atmosphere: Kaldi looks like (and is) a store selling products, which really isn’t enjoyable for people looking to drink coffee outdoors.

4.4 RESEARCH ON VIABILIT Y

The last part of the empirical framework is the research on viability. This part is all about strategy formulation and looking at the viability of this startup company. First there is the Strategic Factor Analysis Summary, which shows the strengths, weaknesses, opportunities, and threats of the company in a very detailed manner. After that the strategy formulation can be found. Then there is the marketing plan, and finally the financial plan to look at the financial viability of the company.

4.4.1 STRATEGIC FACTOR ANALYSIS SUMMARY

After having analyzed both the Macro- and Micro-Environment, it is time to focus on the business itself. The tool that I will use for this is the Strategic Factor Analysis. It is a method used to analyze,

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and evaluate a company by identifying its internal and external factors, while each factor will be given weights and ratings. This analysis is comprised of three parts, the Internal Factor Analysis Summary (IFAS), which shows the company's internal strengths and weaknesses, the External Factor Analysis Summary (EFAS), which shows the company's external opportunities and threats, and finally a combined Strategic Factor Analysis Summary (SFAS), which shows a combined overview of both the internal and external factors. The SFAS relates back to chapter 2.2 Strategic analysis/plan of the theoretical framework.

INTERNAL FACTOR ANALYSIS SUMMARY (IFAS)

The IFAS is the first part of the total analysis, which looks at the internal factors of the company, the strengths and weaknesses. Each factor is given a weight from 0 (not important), to 1 (most important). Combined, all factors should have a weight of 1 (100%). After the weights have been set ratings must be given. The ratings reflect how good or bad the company scores, 1 being low, and 5 being high. Then the weights will be multiplied with the ratings given, which will then result into the weighted score. The higher the total rating, the better the company stands. So a rating of one would mean that the company is in a very poor position, whereas a rating of five means the company's position is very well. In this case, the rating is about the company's internal position; however the same method applies to the EFAS, and SFAS. All weights and ratings are based on my own impression of each factors’ importance, and the effect it has on the company.

Internal Factors Analysis Summary Table

Internal Factors Weight Rating Weighted Score Comments

STRENGTHS

Unique Matcha green tea concept

0.20 4 0.80 This company is the only tea/coffee bar that offers green tea food and beverages in the Netherlands

Outstanding service and unique atmosphere

0.15 5 0.75 The company will focus on exceptional service, and creating a unique modern Japanese style atmosphere that isn’t found anywhere else.

Strong management 0.15 3 0.45 The company owner has a lot of experience in the fast food and restaurant business to help reach the company’s full potential

WEAKNESS

Limited funds available 0.15 2 0.30 The company has limited funds and needs to rely on outside investors or loans

Relatively high prices 0.10 3 0.30 Products offered by this company will be offered for premium prices


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which may put people off

Low reach of customers 0.15 3 0.45 Because we start with one store, we have limited reach to customers compared to our competitors

Advertisement Dependent

0.05 3 0.15 To gain fast recognition, the company needs to advertise a lot, so that people know of our existence.

Too focused 0.05 3 0.15 As our products are mainly based on Matcha green tea, it might be too focused.

TOTAL 1 3.35

EXTERNAL FACTOR ANALYSIS SUMMARY (EFAS)

The EFAS focuses on the external factors of the company, the opportunities and threats. When it comes to the weights, ratings, and weighted score, the same method applies which has been used in the IFAS.

External Factors Analysis Summary Table

External Factors Weight Rating Weighted Score

Comments

Opportunities

Huge coffee/tea market in the Netherlands

0.15 5 0.75 Most Dutch people drink coffee and tea.

Health conscious society

0.15 5 0.75 Nowadays society is getting more health conscious and consume healthy food

Internationally minded society

0.05 3 0.15 Dutch people aren’t afraid to try new foods and drinks.

Expansion of operations 0.10 1 0.10 As the society is transitioning to an on-the-go culture, there is still room for expansion and growth

Diversification of product offering

0.05 2 0.10 More types of beverages and food could help attract more customers

Threats

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Substitute goods 0.20 2 0.40 There are many alternatives customers could go to

Competitive Established Market

0.20 3 0.60 The market for tea/coffee bars already exists and is long established before our startup.

State of the economy 0.05 3 0.15 The current state of the economy is weak which can negatively affect our business

Increased prices of dairy products

0.05 1 0.05 As most of the drinks is based on milk, increased prices could affect the company’s cost

TOTAL 1.00 3.05

STRATEGIC FACTOR ANALYSIS SUMMARY (SFAS)

The SFAS is a summary which includes both the internal and external factors which have been analyzed before in the IFAS and EFAS. A selection of the most important internal and external factors will be chosen to come up with a final rating for the company as a whole. The SFAS gives a great overview of the position of the company looking at its strengths, weaknesses, opportunities, and threats. The difference between the IFAS/EFAS and the SFAS is that "Duration" is added. The Duration shows the time each factor holds.

Strategic Factors Analysis Summary Table

Duration

Strategic Factors Weight Rating Weighted Score

Sh

ort

Med

iu m

Lo

ng

Comments

(Strength)

Unique Matcha green tea concept

0.10 4 0.40

X

This company is the only tea/coffee bar that offers green tea food and beverages in the Netherlands

(Strength)

Outstanding service and unique atmosphere

0.15 5 0.75

X

The company will focus on exceptional service, and creating a unique modern Japanese style atmosphere.

(Weakness)

Limited funds available

0.10 2 0.20

X

The company has limited funds and needs to rely on outside investors or loans

(Weakness)

Relatively high prices

0.10 3 0.30

X

Products offered by this company will be offered for premium prices which may put


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people off

(Opportunity)

Huge coffee/tea market in the Netherlands

0.15 5 0.75

X

Most Dutch people drink coffee and tea.

(Opportunity)

Health conscious society

0.10 4 0.40

X

Nowadays society is getting more health conscious and consume healthy food

(Threat)

Competitive Established Market

0.15 2 0.30

X

The market for tea/coffee bars already exists and is long established before our startup.

(Threat)

Substitute goods

0.15 2 0.30

X

There are many alternatives customers could go to

TOTAL 1.00 3.40

SFAS CONCLUSION

Looking at the Strategic Factor Analysis Summary, the main strength of our business venture is our unique concept. Instead of starting a regular coffee/tea bar, we diversify by opening a business that is based on green tea. This is the company’s competitive advantage and will stay this way until other companies imitate our concept. The second strength is the outstanding service and atmosphere the company will offer. In Japan, politeness is very important and customers are seen as gods. This will be reflected in our company as well. In combination with the beautiful Japanese style atmosphere, the company will be able to attract and keep customers.

However there are also weaknesses. First of all, we have limited funds to our disposal. This limits us in what we can, and cannot do. The company will need to apply for a loan, which begs the question if we even get the loan at the first place. Secondly, the products we will offer are at relatively high prices. We want to portray our business as a premium store, but this may scare people away. To fight this we will have promotional events, and discount coupons to let people familiarize with our company and products we offer.

There are also some opportunities. The Dutch coffee and tea market is huge. This means that there is a lot of potential to grow. We realize that there are many competitors, however if done correctly, we have opportunities to grow and capture market share. The second opportunity is the fact that people are becoming health conscious. Matcha Green tea has a lot of great benefits to the health of people, and marketing our products correctly, this could potentially attract more customers.

There are many dangers threatening the business too, one ranked high among them is the fact there is already a competitive market established. Starbucks, Coffee Company, and other coffee bar chains

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have been in the Dutch market for a long time, and captured most of the market share. This makes it difficult for us to penetrate the market unless we really offer something different that’s not already there. Lastly, we have to realize that there are many substitutes in this branch. There are unlimited cafes and other stores that sell beverages, so in order to survive in this market, we need to keep customers by our unique green tea based food and beverages, combined with outstanding service. A rating of 3.40 is reasonable, and the future of this business can be profitable.

4.4.2 STRATEGIC PLAN

Now that the internal- and external analysis has been finished, we can now proceed to the formulation of the strategic plan. We know everything about the industry, competitors, and the company itself. Using all of this information gathered so far, we can make the best decision on choosing the most appropriate strategy. To do this, I will start with the market positioning, and then continuing on with the competitive advantage theory and finally the brand strategy. The strategic plan relates back to chapter 2.2 of the theoretical framework, under the strategic formulation part of the chapter.

MARKET POSITIONING

Market positioning is about the positioning of the company in the market. "The market" is very broad, so in order to be successful as a company, it should know how it wants to position itself. It answers the question of how the company wants to be perceived by their target group. It is very important to carry out a certain image which shows the company's uniqueness, in order to distinct itself from the competitors, and of course to leave the right impression in the minds of the segments which are being targeted.

Core impressions of the company: Status Symbol / Hip / Healthy

Secondary impressions: Quality / Taste / Innovative

Other impressions : Packaging / Safety

COMPETITIVE ADVANTAGE

Before choosing the right strategy, it is important to identify the company’s competitive advantage. A competitive advantage is needed if we want to stay ahead of our competitors.

In order for Anna's green tea to be successful it needs to be sustainable not only in the short- but also in the long run. To ensure sustainability, the company needs a certain advantage, something it does better compared to its competitors. This is called the "competitive advantage". Michael Porter describes in his theory, that competitive advantage can be achieved by three factors: Competitive advantage by lower prices for the same product (cost leadership), competitive advantage through a better or more attractive product (differentiation), or competitive advantage by focusing on a certain niche market (focus). Only with one of these advantages will the company be able to stay successful in the long-run. The competitive advantage of our company is the Differentiation Advantage. Using Matcha green tea as our basis, in combination with Japanese style and culture, we are setting the company apart from our competition, and this will certainly be noticed.


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BRAND STRATEGY

As the company wants to portray a certain image with certain qualities and attributes, an important tool to use is the company's brand strategy. Each brand portrays certain values, and it is up to the company to make sure these values are in line with the company's goal(s). This is done by researching, defining, and building the brand. In order to reflect the values mentioned above the company will represent this using certain elements

Logo: The Company’s signature logo represents something modern and Japanese. Anna in comes from the Japanese name Hana, which means flower, but to make it more accessible to the Dutch people, it became Anna. The flower is based on Kiku-no-hana (Chrysanthemum) which was used as an emblem by the Japanese royal family. So it is kind of a status symbol.

Physical location: The physical location of the company must radiate “hip” and high quality. To do this, the atmosphere must look trendy of furniture must be of high quality.

Packaging: Drinks that are sold must have good looking packaging. People taking away drinks send a message to outside people, and that message must be trendy, hip, healthy, and high status.

Website: A good looking website will help radiating the image we want for our customers and the outside world.

PORTER’S GENERIC STRATEGIES

Porter describes 4 common strategies that are used by companies to achieve their competitive advantage. Now that we know our market positioning, competitive advantage, and brand strategy, we can choose the best generic strategy.

Figure 15: Porters Generic Strategies

I believe the best strategy is Differentiation. There are many coffee/tea bars out there, mainly focusing on coffee. We do something else. Most of our products offered are made with Matcha green tea, which is totally different than our competitors. By differentiating, I believe this company can be successful.

Cost leadership Differentiation

Cost focus Differentiation focus

Generic strategies

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4.4.3 MARKETING PLAN

This part of the thesis is about the marketing plan of the startup company. The marketing plan consists of segmentation, to identify our (potential) customers, and the marketing mix. The marketing mix consists out of four main elements used to create a marketing strategy. The marketing plan relates back to chapter 2.3 of the theoretical framework explaining theories about segmentation and the marketing mix.

SEGMENTATION

The tea and coffee market in the Netherlands is huge. There are many types of consumers with different needs and wants. Some care about price only, while others care about quality, and are willing to pay premium prices. People have different tastes too. Then there are different ranges of age as well, and to cater to all these people in the coffee and tea market is impossible. Therefore it is important to divide this market into groups that our company decides it wants to attract.

First off, I use geographic segmentation. The company will operate primarily in 3 provinces: Zuid-Holland, Noord-Holland, and Utrecht. I mentioned this before. In these three provinces alone the number of inhabitants is more than 7.5 million. Furthermore, the target group of the company is internationally minded people, modern people, students, and “hip people”, to name a few. And these people are mostly found in urban areas. This brings us to the next point.

As we first segmented by geographic location, we now use psychographic segmentation. The basis of this type of segmentation is the lifestyle of individuals. Think about the individual’s attitude, interest, values etc. The people we target are:

Students: We want to position ourselves as a place where students can hang out, study, and meet with their friends.

“Hip modern people”: As we are portraying our company as premium, we like to make the company a status symbol. These people are likely to have professional careers and care about status. We like to portray our company as a “ cool” place to be

Internationally minded people: Because, our company is based on Japanese tea culture, we like to attract people who like to try new and exotic things. These people are usually to be found in urban areas.

Health conscious people: Because green tea has many benefits to the health of people, we want to promote this, in order to attract health conscious people.

Lastly, we also segment the market by age group. The main target groups are young adults, and adults. Young adults can be classified between the ages of 17 to 25, and adults from the ages of 26 to 45.

MARKETING MIX

The marketing mix is the most important tool to create a marketing plan and consists of the four P’s: Product, Price, Place, and Promotion. Using these elements, I will be able to create a marketing plan that fits our generic strategy, and will help to create the right image we want to achieve.


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Product

Matcha green tea Matcha is Japanese green tea grounded into powder. It is made from the leaves of the tea plant Camellia sinensis. What makes Matcha so special is the origin and production of this green tea. The different ways in which green tea leafs are treated, determine the tea quality.

More than 800 years ago, Matcha was manufactured by Buddhist monks as a meditation drink. Nowadays Matcha is the finest and rarest teas in Japan. The tea can be used in any type of food or beverage to create a green tea taste, which is what this company does.

Products Beverages:

Figure 18: Green tea beverages Figure 17: Roasted green tea beverages

Figure 16: Red bean beverages Figure 19: Coffee & juice beverages

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Sweets

Crepes

Figure 22: Crepes

Figure 21: Parfaits sweets Figure 20: Ice cream sweets


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Economy Penetration

Skimming Premium

Price

Premium Pricing Strategy

When determining the price of a company's product(s), the first thing that comes in mind are the expenses. Looking at the expenses, the company sets a profit margin it wants to achieve and based on that, the price is determined. However there comes much more into play when it comes to pricing strategies. As mentioned before, Anna's green tea wants to portray an image of high status. To do this, a high prices need to be set for its products because products that are high in price are often linked with high quality and vice versa. Therefore, the best pricing strategy for Anna's green tea to pursue would be the "Premium Pricing Strategy"

Thomas Nagle describes the price/quality effect in his book about consumer psychology. It refers to the price-quality relationship as the perceptions consumers have about products that are relatively high in price are an indication of good quality. So, the effect of this is that consumers will be less sensitive to the price of the product. Figure 23: Pricing Strategies Matrix shows the pricing strategies

Place

The place of the business is very important as this is the place where the target customers need to be attracted. Based on the previous analysis of segmentation, we can now list places where the type of people we look for, most likely are situated.

Lo

w

Hig

h

Low High

Pri

ce

Quality

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Some of the possible locations are:

Amsterdam, De Dam. As Amsterdam is the capital of the country, there are many people especially tourists that potentially could visit our store.

Rotterdam, Koopgoot. The Koopgoot is a place with many shops in the city center. Many of our potential customers can be found.

Den Haag, Grote Markt. There are many people who go shopping in de Grote Markt. Besides that, the place is renovating, and from 2014 it will look very nice.

Out of these three options, Den Haag is chosen. The reason for this is that the main competitors are not found in this area. In Den Haag, Starbucks only has one store in the Central Station. Besides that I have found a perfect location that fits our company image, and will attract the customers we want.

Nieuwe Haagse Passage The city center of Den Haag is being renewed, which gives us the opportunity to capitalize on a new project that is being built at the moment. The project is called: Nieuwe Haagse Passage. The building connects three important streets, attracting many customers. The building itself looks incredibly nice and modern, built by the architect Tschumi. The building will have many international retailers, hotels, and catering facilities.

Figure 24: Nieuwe Haagse Passage


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As can be seen, the building looks very modern, and is in the heart of the city, which is very accessible. Looking at the map, below, the Nieuwe Haagse Passage, together with 3 other areas form a unique mix of atmosphere, greatness, and international allure that is part of the urban transformation. Right below the building, there is public transportation available as well.

Figure 25: Map Den Haag

Promotion

The last part of the four p's is promotion. Promotion consists of all activities that are meant to communicate with the market in order to increase sales. Promotion can be carried out in numerous ways. Think for instance about radio, television, magazines, trade shows, direct mail, but also very important if not the most important, the internet and mobile internet specifically.

Our main form of promotion will be using (mobile) internet. Some of the activities we will do to promote the business are:

Creating an attractive website: The most important part of promotion is a good website in my eyes. A website can be seen as an extension of a store, and therefore it should be attractive to carry out the message we want to portray.

Making use of social media: Nowadays, social media is used very much, and the company should make use of this. A twitter and Facebook page will be very helpful, as special promotions and information can be reached to the target audience very quickly and easily.

Creating a mobile application: As most people use smartphones or tablets, the company will create an application, with coupons and other special promotions. This way people will be more willing to visit our store.

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Handing out flyers: Handing out flyers is always a good thing to reach people. It is easy to hand out flyers to people walking nearby the store, and it is inexpensive.

These promotional methods combined will be enough to promote the business.

4.4.4 FINANCIAL PLAN

The last part of the empirical framework is the financial plan. This section is the quantitative part of everything I have stated before, and is an integral part of this thesis, and needed to know the validity of opening this company. The financial plan consists out of the summary of financial needs, which is a list of the minimum financial requirements to open this business. Then the pro forma statements will be created. These are the cash flow statement, income statement, and the balance sheet. Finally a break-even analysis will be made to look at when costs equal revenue. This chapter relates back to chapter 2.4 of the theoretical framework, where the theory about the financial plan is explained.

STATEMENT OF FINANCIAL NEEDS

The statement of financial needs is a list of all the investments needed to start the company. It gives a clear view of what is needed. This is the first step of the financial plan, because using this will be the guideline to start making projections later on. The figure below shows the statement of financial needs of Anna’s green tea.

Current Assets

Prepaid rent 4,000

Rent deposit 8,000

Stock food and drinks 4,700

VAT prefinancing 31,208

Total € 47,908

Fixed Assets

Renovation 41,322

Inventory 24,793

Machines 33,058

Car 23,150

Computer / cash register system 1,799

Total € 124,122

Working Capital

Cash 250

Bank 1,500

Total € 1,750

Start-up Costs

Personell uniforms 474

Accessories 1,580

Permits 744

Insurance 63

Accountant 1,488

Promotion 2,479

Tablewear, glass 4,446

Bank charges 42

Total € 11,316

Total Investment € 185,096

Statement of Financial Needs


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Assumptions: The above figures are the assumed total investments needed to open the store. Also, all machines and the car are purchased. Often companies lease machines and vehicles, but I decided to buy it. Furthermore, in preparing the statement, I excluded VAT amounts.

As can be seen from the statement above, €185096 will be needed to start the company and make it operational. Most of the costs are the fixed costs, where the initial renovation and machines are high in costs. Secondly, current assets are quite a big amount due to VAT pre financing. Lastly, startup costs are much the lowest expense, of course initial tableware is needed which costs a lot. For more detailed information about each expense, please refer to the appendix.

SOURCES OF FUNDING

Assumptions: €80000 will be paid by the owner. The remaining amount needed for the initial investment is financed by a commercial loan with a loan rate of 8 percent to be repaid in 60 months.

Nearly 57 percent of the company’s initial investment is financed by a commercial loan. Monthly payments which include interest plus the amount that needs to be repaid, amounts to circa €2131. More information about the sources of funding and the amortization schedule can be found in the appendix.

SALES PROJECTIONS

Assumptions: 160 customers are expected on a daily basis. Furthermore the store will be open 7 days a week. I assume Beverages will be sold the most with parfaits having the second most sales. I expect Anna’s green tea, to attract 160 customers per day. The reason for this is the very attractive position of the store, where many people will be walking by. People will be able to takeaway drinks quickly and therefore it is possible to attract the amount of customers stated. I expect sales to

Amount Totals Months Loan Rate Monthly Payments

Owner's Equity 43.22% 80,000

Commercial Loan 56.78% 105,096 60 8.00% 2,130.97

Total 100.00% € 185,096 60 8.00% € 2,130.97

Sources of Funding

Products Percentage Price/unit Cost/unit

Beverages 55% 4.50 0.62 Per day 160

Parfaits 25% 6.00 1.30 Per week 1120

Crepes 10% 4.50 0.90 Per month 4800

Ice cream 10% 4.75 1.05 Per year 58400

2014 2015 2016 2017 2018

% change 0% 15% 15% 15% 15%

Sales € 286,160 € 329,084 € 378,447 € 435,214 € 500,496

COGS € 50,282 € 57,825 € 66,498 € 76,473 € 87,944

Gross Profit € 235,878 € 271,259 € 311,948 € 358,740 € 412,551

Sales ProjectionsTotal customers

Total

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increase each year due to the popularity of the company and the brand. Therefore, in 2018 expected sales volume will exceed €500000. A more detailed sales projection can be found in the appendix

INCOME STATEMENT

Assumptions: All shares belong to me, the owner and no dividends will be paid out in these years. The remaining amount of money will go to the retained earnings.

Looking at the income statement, the company will make a net loss of €2362. The main reason for this is that the company is new, and needs more customers in order to make a profit. I don’t want to increase prices, because too high prices will chase away customers. In the second year, and the years thereafter, net profit is gradually expected to increase.

CASH BUDGET

Assumptions: First two months will have the least sales due to the unpopularity. Furthermore I assume seasonality does not play a role because AGT offers both hot and cold food and beverages.

2014 2015 2016

Total Sales 286,160 329,084 378,447

Total Cost of Sales 50,282 57,825 66,498

Gross Profit 235,878 271,259 311,948

Total Operating Expenses 229,125 231,883 234,917

Earnings Before Interest and Taxes 6,753 39,376 77,031

Interest Expense 7,764 6,286 4,685

Earnings Before Taxes -1,012 33,090 72,345

Taxes 1,351 7,875 15,406

Net Profit -2,362 25,215 56,939

Anna's Green Tea

Projected Income Statement - Yearly

Month: Pre-Start 1 2 3 4 5 6 7 8 9 10 11 12 Totals

Receipts

Total Receipts 185.1 15.0 18.0 25.0 25.0 30.0 20.0 20.0 30.0 30.0 22.0 22.0 29.1 471.3

Payments

Total Payments 183.3 19.8 22.7 24.2 23.5 22.7 24.2 23.5 22.7 24.2 23.5 22.7 26.0 463.0

Cashflow Surplus/Deficit (-) 1.8 -4.8 -4.7 0.8 1.5 7.3 -4.2 -3.5 7.3 5.8 -1.5 -0.7 3.2 8.3

Opening Cash Balance 1.8 3.5 -1.3 -6.0 -5.2 -3.7 3.6 -0.6 -4.1 3.2 9.0 7.5 6.8

Closing Cash Balance 3.5 -1.3 -6.0 -5.2 -3.7 3.6 -0.6 -4.1 3.2 9.0 7.5 6.8 10.0

Anna's Green Tea

Cash Budget - Monthly (In Thousands)


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The cash budget shows the monthly cash flows of the company for the first year. What we see is that during the first six months, closing cash balances are negative. This is changing in the last six months. The negative cash balances aren’t significantly high, and see no problems to pay monthly bills. A more detailed cash budget can be found in the appendix.

BALANCE SHEET

Assumptions: No new machines will be bought in the beginning five years. Furthermore is depreciation excluded from the balance sheet because it is a non-cash item and therefore does not represent Anna’s green tea’s actual earnings potential.

As can be seen total fixed assets stays the same due to no new purchases of any fixed assets. Total liabilities decrease on a yearly basis because each year, the commercial loan to be repaid becomes lower. A more detailed balance sheet can be found in the appendix.

4.5 SUMMARY

The empirical framework of this thesis uses the body of the theoretical framework and presents the findings. These findings will be summarized to give a quick view of what the empirical framework is all about.

Anna’s green tea’s mission is to serve the best Japanese green tea beverages and food, in modern Japanese-style stores. With its vision to enhance people’s lives with Japanese tea culture in a modern way, it looks to create a modern place for people to gather and enjoy green tea beverages. The company entity is a private limited partnership, the main reason for this choice being that this type of legal form has the most limited liability for its owners. Anna’s green tea’s main operation(s) include selling food and beverages based on Matcha green tea, thus running a bar/café is the company’s

Beginning 2014 2015 2016

Assets

Current Assets

Total Current Assets 51,995 31,825 40,117

Fixed Assets

Total Fixed Assets 133,101 133,101 133,101

Total Assets 185,096 164,926 173,218

Liabilities and Owner's Equity

Liabilities

Total Liabilities 105,096 87,289 68,003

Owner's Equity

Total Owner's Equity 80,000 77,638 105,215

Total Liabilities and Owner's Equity 185,096 164,926 173,218

Pro Forma Balance SheetAnna's Green Tea

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primary operation. If the company will be successful it might look into other sources of income such as licensing and franchising. The organizational structure of the company consists of four hierarchies. At the top of the company we have the restaurant manager, then the assistant manager, shift supervisor, and finally the barista. When more stores will be opened, the structure will slightly change, as a district manager, regional manager, and a director will be included.

The political situation in the Netherlands at the moment is strict. With its policy of strict fiscal discipline, the government is looking to save much money in the coming years, which is the result of the bad economic situation in the country. The Netherlands has yet to show signs of economic prosperity, as it still doesn’t know how to climb out of the recession. Looking at the social/demographic factors, the country with its 16.7 million inhabitants is the fourth most densely populated country across the globe. The overall trend of the Dutch age structure is the rapid aging of the society. The country is technologically advanced, and as its part of the European Union, there are strict regulations when it comes to food.

The tea/coffee bar industry is quite open. It is relatively cheap and easy to start a tea/coffee bar which makes the threat of new entrants high. Besides that, there are many substitute products as the branch is the food industry. Customers have high bargaining power as there are unlimited choices for them to go to. Suppliers have little bargaining power as we are dependent on green tea, but this is very minimal because there are plenty of suppliers. Finally, competitive rivalry intensity is high. On the whole, Anna’s green tea will face tough competition, and is very much dependent on what the customers want.

The Dutch tea and coffee industry look promising. Coffee and tea are one of the most consumed beverages and when zooming into the consumption of tea, the amount of green tea consumed has been gradually increasing since the last decade. The Dutch society is becoming more Americanized, meaning people are constantly on the-go which brings new opportunities, especially in the coffee/tea bar branch. If this will be the case in the next coming years, everyone will have a place in this branch.

Anna’s green tea has three main competitors. These are Sarah Lee & Coffee Company, Starbucks, and Kaldi. Coffee company was the first coffee bar chain in the Netherlands, but later merged with Sarah Lee. They have approximately 60 stores in the Netherlands, giving them 30 percent market share. Starbucks on the other hand opened its first store in 2007, mainly at stations. Starbucks has a very strong brand giving them a huge advantage in this industry. Finally there is Kaldi. Kaldi tries to diversify itself by focusing not only on the sales of coffee and tea, but much more than that. Their stores look more like a shop than a café. It is a coffee/tea specialist store.

Looking at the company itself, the main strength of Anna’s green tea is its unique concept. Furthermore, is the company looking to stand out by providing outstanding service. In contrast, the weaknesses of this company are the limited funds it has at its disposal. Companies like Starbucks have much more funds which will make it hard for this company to compete. Secondly, the prices offered for these products are relatively high, bearing the question if people are willing to these prices for our products. As mentioned earlier, the Dutch coffee and tea market is huge, so there are still plenty of opportunities.

The company’s overall strategy is to create a brand image that portrays the company as a status symbol, hip, and healthy. This will be achieved by outstanding quality, taste, and innovation. The competitive advantage of Anna’s green tea lies in its differentiation advantage. Using Matcha green tea as the basis, in combination with Japanese style and culture, the company tried to set itself apart from the competition. The main target group(s) are students, hip and modern people, internationally minded people, and health conscious people. We feel that these people are most likely to try new things and will be intrigued by this new concept. Located at The Hague’s central hub, it will attract


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many customers. Anna’s green tea must promote itself as well. This is best done by using social media.

Finally looking at the financial statements of the company, it is still a question if the company can be successful. The company is expected to make a loss during the first year, which will change into profits the years thereafter. However, for this to stay a success, many customers are required to buy from the store on a daily basis, and due to the huge amount of costs this is troubling.

Looking at the viability of the company, there aren’t any big red flags telling us to disqualify this company. There are many challenges, but there are still opportunities out there. This will be further discussed in chapter 5.

4.6 ANSWER TO EMPIRICAL RESEARCH QUESTIONS

This part of the thesis will look to answer the empirical research questions provided earlier.

1. What is the company’s current organizational structure? The organizational structure of the company consists of four hierarchies. At the top of the company we have the restaurant manager, then the assistant manager, shift supervisor, and finally the barista. When more stores will be opened, the structure will slightly change, as a district manager, regional manager, and a director will be included. This is only if there are many stores. The regional manager is in charge of overseeing stores and making sure they all perform well. The director makes sure the company on a whole is heading into the right direction. 2. What are the latest and historical consumption trends of the tea and coffee industry? First of all, on average in 2012 the average Dutch consumers drank 150 liters of coffee and 90 liters of tea. Those are amply 3 cups of coffee and 2 cups of tea per capita per day. Coffee and tea are (together with water) the most consumed beverages in the Netherlands. With 27% of the daily liquid consumption per day, coffee is the most consumed beverage in the Netherlands The tea market from 2005 to 2012, consumption has been between 12 and 13 million kilograms. In 2005 and 2006, consumption has been 13.1 million kilograms, which then fluctuated in the years of 2007 through 2010. What we see now is that the tea consumption in the last two years has been stabilized to 12.1 million kilograms. Looking at the coffee market we see an upward trend of coffee consumption since 2005 until 2010 from 110 million kilograms to 120 million kilograms. In the last two years it has stabilized to 119 million kilograms, which was also the case in the tea market. 3. What factors caused the success of the tea/coffee bar branch in the Netherlands? There are multiple factors that caused the success of the tea/coffee bar branch in the Netherlands. First of all, coffee is the most consumed liquid in the Netherlands and the Dutch culture is a real coffee culture. People drink coffee in the morning and also at work. This means there is a big market for coffee in this country. This in combination with the transformation of Dutch society causes the success of this branch. Dutch society is becoming more Americanized and on the-go, which creates the demand of such tea/coffee bars. 4. How is the current Dutch economic and political situation?

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The political situation in the Netherlands at the moment is strict. With its policy of strict fiscal discipline, the government is looking to save much money in the coming years, which is the result of the bad economic situation in the country. The Netherlands has yet to show signs of economic prosperity, as it still doesn’t know how to climb out of the recession. 5. Who are AGT’s biggest competitors, and what are their strengths and weaknesses currently? The biggest competitors of Anna’s green tea are Sarah Lee/Coffee Company, Starbucks, and Kaldi. Sarah Lee/Coffee Company’s biggest strength is its first mover advantage. It was the first company that opened such a store in the Netherlands giving them a first mover advantage. The company’s weakness is the fact that they do not have a unique selling point. It does not stand out from other companies and besides that the service is bad too. Starbucks’s greatest strength is its amazing brand image. Because of this powerful brand image the company is able to make their customers extremely loyal to their brand. The company’s biggest weakness is the high prices. Because of this, many people avoid Starbucks and prefer to go somewhere else to drink their coffee. Kaldi’s strength lies in its diversification strategy. It is more of a coffee and tea specialist store with the opportunity to drink coffee. Its weakness is the same as the strength. Because the store is a specialist store, the atmosphere is not what you expect of a coffee/tea bar. 6. What is AGT’s competitive advantage, and what strategy will it implement in the future? The company’s overall strategy is to create a brand image that portrays the company as a status symbol, hip, and healthy. This will be achieved by outstanding quality, taste, and innovation. The competitive advantage of Anna’s green tea lies in its differentiation advantage. Using Matcha green tea as the basis, in combination with Japanese style and culture, the company tried to set itself apart from the competition. 7. What is AGT’s financial projection of the coming of 2014-2016?

2014 2015 2016

Total Sales 286,160 329,084 378,447

Total Cost of Sales 50,282 57,825 66,498

Gross Profit 235,878 271,259 311,948

Total Operating Expenses 229,125 231,883 234,917

Earnings Before Interest and Taxes 6,753 39,376 77,031

Interest Expense 7,764 6,286 4,685

Earnings Before Taxes -1,012 33,090 72,345

Taxes 1,351 7,875 15,406

Net Profit -2,362 25,215 56,939

Anna's Green Tea



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The figure above shows a simplified income statement. As can be seen, it is projected that the company will start off with a loss in the first year, but this is expected to change in the years thereafter. By using a yearly growth rate of 15 percent, the company is expected to make a net profit in 2015 that will continue to increase on a yearly basis. 8. Based on the company’s internal-, and external analysis, and its chosen strategy, what recommendations can be made about the company’s future? After having analyzed the company’s internal and external environment in combination with its chosen strategy, there are two things the company must do. Firstly, Anna’s green tea has to look into its cost structure. Total operating expenses are too high and needs to be trimmed. This can be done by finding a different location that is cheaper. Furthermore the company should try starting off smaller, with less employees because with the current economic situation and the fact that Matcha is quite unknown in the Netherlands it is still a question whether the projected amount of customers will come to the store. Secondly, it is very important that Anna’s green tea starts an effective advertising campaign. As mentioned, Matcha is still unknown in this country, so first let people know what it is and let them try it. Let people talk about it. When the general public starts to know more about Matcha and this store, then the future will look promising for this company. A more detailed recommendation is found in chapter 6.0

5.0 DISCUSSION

This chapter of the thesis relates the findings back to the problem definition by outlining the implications of the findings to the problem definition. It discusses how the findings can be used to answer the main research question(s).

Looking back at the problem statement, I stated my desire to start a green tea/coffee bar company. The focus of this thesis was to look at the viability of opening such a store in the Netherlands. This should be done by looking at the internal- and external environment. Internal analysis is related to the company itself, whereas the external analysis is about the country, industry, and competitors.

Based on this the problem statement was:

“To what extend can a green tea bar startup be successful, and how viable is the idea of green tea products?”

Based on the findings, I can say that a green tea company can be successful, to a certain degree. First of all, Dutch culture is a coffee culture. Even though tea is in the top three of most consumed beverages, coffee will always be the most consumed.

Secondly, Matcha green tea is a niche product. Green tea is not consumed as much as black tea, and even though consumption is gradually increasing every year, it is still a small amount. One could argue that there is not enough demand for this to be successful.

These are the pitfalls of opening a green tea store. Having listed the pitfalls, there is still some potential. I believe that opening such a store can be successful to a limited degree, as it will not be possible to make these types of store mainstream like Starbucks for example, but there will always be people interested in Matcha green tea and its products.

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We know that green tea is being consumed more every year. We also know that there is demand for healthy drinks in the Netherlands. The challenge lies in making people aware of Matcha green tea and its health benefits. Matcha is very new at the moment, and people might be hesitant to try Matcha.

If Anna’s green tea is successful in conveying what it’s all about, making people interested in the new thing, I believe the company will be successful.

6.0 CONCLUSION & REC OMMENDATION

Throughout this thesis, theories and findings about the internal and external environment of Anna’s green tea has been described, analyzed, and held against actual facts and trends regarding the coffee and tea (bar) branch in the Netherlands.

Primarily, it has been established that the Dutch tea and coffee market is promising. Findings showed that the Dutch tea and coffee consumption is very large. Furthermore society is expected to change in favor of the tea and coffee bars where consumers are much more on the-go creating demand of these types of stores.

It has also been established that the market is saturated. There are many competitors offering tea and coffee, and substitutes can be found everywhere. Furthermore there are established competitors who have already been able to capture most of the market and as threats of new entrants is high, companies could easily copy Anna’s green tea’s concept.

The internal analysis shows the many challenges this company would face. The biggest challenge is the financial situation of the company. Offering high priced products for something that is unknown to the Dutch market, in combination with the ongoing economic recession is a big hurdle the company must try to jump.

For these reasons this thesis will conclude that the viability of opening a green tea/coffee bar in the Netherlands is limited. Anna’s green tea startup can be successful but as mentioned in the previous chapter 5.0, there are some limitations that one needs to be aware of.

1. The Dutch market has many opportunities when it comes to tea. Traditional black tea consumption is declining, while green tea consumption is increasing.

2. Demand of green tea products might be too little. As mentioned in the financial part of the thesis, every day 160 people are expected to come to the store. If this does not happen, the company will be in financial trouble.

3. Dutch culture is becoming more Americanized and on the-go. However, this is still a slow process and the Dutch market might not be ready for something new like this at this moment

This does not mean that Anna’s green tea will fail, in fact I still believe the company can be successful, if some changes will be made, and if the company will focus on a couple of things. I recommend Anna’s green tea to:

1. Start smaller and in a different location. The location in the center of the city is very expensive, and is usually meant for successful companies. As this company is a startup, it is


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unlikely that it will attract 160 customers on a daily basis, and because of that the company might be in financial trouble. Therefore, a different and cheaper location should be chosen and start with two employees instead of five which will result in a significant decrease of costs. No longer will that many customers be needed for the company to survive. Also, instead of buying machines, it might be better to lease machines. This will help to reduce costs as well.

2. Start an extensive but cheap advertising campaign. Most people have no clue about Matcha green tea and might be hesitant to try something new. Therefore it is very important to inform people about the product, familiarize them with the taste, and educate them about the numerous health benefits of the product. Providing samples outdoors might be a good idea for that.

If Anna’s green tea will be able to convey the message about Matcha green tea, while changing location and reducing costs, I believe the company will have potential and can be a successful company in the Netherlands.

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BIBLIOGRAPHY

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Elliot, R (2007). Strategic Brand Management. New York: Oxford University Press. p4. Energiecentrum. (2013). Energiescan. Available: http://www.energiecentrum.nl/energiescan-mkb/scan/. Last accessed 24th August 2013. Europa. (2009). nvironmental rules - Netherlands. Available: http://europa.eu/youreurope/business/doing-business-responsibly/keeping-to-environmental-rules/netherlands/index_en.htm. Last accessed 24th July 2013. European Coffee Federation. (2012). European Coffee Report 2010/11. Available: http://kaffeinfo.dk/wp-content/uploads/2012/04/European-Coffee-Report-2010-11.pdf. Last accessed 23rd July 2013. Harvard Health Publications. (2004). Benefit of drinking green tea: The proof is in -- drinking tea is healthy, says Harvard Women’s Health Watch. Available: http://www.health.harvard.edu/press_releases/benefit_of_drinking_green_tea. Last accessed 18th June 2013. Hendriks, C. (2013). De Koffie- en theebar in beeld. Available: http://www.spronsen.com/downloads/de_koffie-_en_theebar_in_beeld_2012.pdf. Last accessed 25th July 2013. Hillstrom, K (2002). Encyclopedia of Small Business. United States: Gale group

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Inc.com. (2013). Organizational Structure. Available: http://www.inc.com/encyclopedia/organizational-structure.html. Last accessed 25th June 2013. Index Mundi. (2012). Netherlands Demographics Profile 2013. Available: http://www.indexmundi.com/netherlands/demographics_profile.html. Last accessed 28th July 2013. ING. (2013). Pinautomaat. Available: http://www.ing.nl/zakelijk/betalen/geld-ontvangen/pin-pakket-compleet/pinautomaat/?furl=0000_GOOG-ING___PIN_Pakket___Product-PIN___Product___PIN_automaat-2pautomaat&ppc=true&s_kwcid=TC|21706|pinautoma. Last accessed 24th August 2013. ING. (2013). Zakelijke Rekening. Available: http://www.ing.nl/zakelijk/betalen/zakelijke-rekening-openen/zakelijke-rekening/#tab=kosten. Last accessed 24th August 2013. Investopedia. (2012). Capital Investment Decisions - Pro Forma Financial Statements . Available: http://www.investopedia.com/walkthrough/corporate-finance/4/capital-investment-decisions/pro-forma.aspx. Last accessed 23rd August 2013. KNVKT. (2013). Oorsprong. Available: http://www.knvkt.nl/werkvelden/duurzaamheid/duurzame-ontwikkeling-in-de-theeketen/oorsprong. Last accessed July 24th 20132. KNVKT. (2013). Productie. Available: http://www.knvkt.nl/werkvelden/duurzaamheid/duurzame-ontwikkeling-in-de-koffieketen/productie. Last accessed July 24th 2013. KNVT. (2013). Thee - Consumptie in Beeld 2012 . Available: http://www.knvkt.nl/media-center/nieuws/item/257. Last accessed July 16th 2013. KNVT. (2013). Trends en ontwikkelingen in koffie- en theeconsumptie . Available: http://www.knvkt.nl/media-center/nieuws/item/258-trends-en-ontwikkelingen-in-nederlandse-koffie-en-theeconsumptie. Last accessed 16th July 2013. Koningklijke Horeca Nederland. (2013). Horeca Nederland Plus Pakket. Available: https://www.khn.nl/web/guest/content-template/-/asset_publisher/qJ4e/content/ledenvoordeel-horeca-nederland-pakket-ziggo-upc. Last accessed 25th August 2013. Pinson, L (2008). Anatomy of a Business Plan. 7th ed. Tustin: Out of Your Mind... and Into the Market place. p84. Poonia, S (2010). Production and Operations Management. Delhi: Gennext Publication. p32. Rendement. (2012). Tarief loonheffing start in 2013 bij 37 procent. Available: http://www.rendement.nl/thema/prinsjesdag/id8424-tarief-loonheffing-start-in-2013-bij-37-procent.html. Last accessed 24th August 2013. Reuters. (2012). Political risks to watch in the Netherlands. Available: http://www.reuters.com/article/2012/12/03/dutch-risks-idUSL5E8LUH7Y20121203. Last accessed 26th July 2013. Vass, T. (2013). Corporate Retained Earnings: Your Company’s Emergency Savings Account . Available: http://carolinanewswire.com/news/News.cgi?database=columns.db&command=viewone&id=472. Last accessed 23rd August 2013.

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APPENDIX

FINANCIAL APPENDICES

Explanation statement of financial needs

Prepaid rent

The amount of prepaid rent is €4000 excl. VAT. Per year the total rent amounts to €4000 * 12 = €48000. The monthly rent incl. VAT amounts €4000 + 21% = €4840. (VAT = €840)

Rent deposit

The rent will be prepaid for two months in advance, so 2 * €4000 = €8000. This is excl. VAT. The rent deposit incl. VAT is €8000 + 21% = €9680. (VAT = €1680).

Current Assets

Prepaid rent 4,000

Rent deposit 8,000

Stock food and drinks 4,700

VAT prefinancing 31,208

Total € 47,908

Fixed Assets

Renovation 41,322

Inventory 24,793

Machines 33,058

Car 23,150

Computer / cash register system 1,799

Total € 124,122

Working Capital

Cash 250

Bank 1,500

Total € 1,750

Start-up Costs

Personell uniforms 474

Accessories 1,580

Permits 744

Insurance 63

Accountant 1,488

Promotion 2,479

Tablewear, glass 4,446

Bank charges 42

Total € 11,316

Total Investment € 185,096

Statement of Financial Needs


68

Stock food & drinks

Because the company is just opening, we need extra stock of food and drinks needed. Therefore we expect total food and drinks costs to be €5000 incl. VAT. This is mostly the green tea, roasted green tea, and red bean powder. Besides that we also need ice cream and milk, but buy those on a weekly basis due to the shelf life. Green tea powder is €185 / kilo. Hojicha (roasted green tea) powder is €150 / kilo, and red bean powder is €85 / kilo.

VAT prefinancing

All VAT amounts are summed up.

Rent €840

Rent deposit €1680

Renovation €8678

Inventory €5207

Machines €6942

Car €4862

Cash register system €378

Stock food & drinks €300

Uniforms €100

Accessories €420

Permits €34

Accountant €312

Table ware & glasses €934

Promotion €521

Total VAT €31208

Renovation

To make the store ready to run, things need to be changed. Think about the placement of toilets, cables, etc. I expect the costs of this renovation will be €50000 incl. VAT. Exclusive VAT this will be €50000 / 121% (*100%) = €41322. (VAT = €8678). The amount is based on expected elements of renovation that must be done, plus the extra man-hours to complete the renovation. Furthermore, this renovation will have a useful life of ten years, which means that per year €41322 / 10 = €4132 will be depreciated.

Inventory

Inventories are the tables, chairs, closets and lamps. The inventory costs are €30000 incl. VAT. Exclusive VAT this will be €30000 / 121% (*100%) = €24793. (VAT = €5207). Also inventory needs to be depreciated. The useful life is 7 years, which means every year €24793 / 7 = €3542 needs to be depreciated.

Machines

Categorized under machines are: Vitrine, refrigerator, freezer, oven, stove, dishwasher, workbenches, tools, and a coffee machine. The total machine costs are €40000 incl. VAT. Exclusive VAT this is €40000 / 121% (*100%) = €33058. (VAT = €6942). Also machines needs to be depreciated. The useful life of these machines are 5 years, therefore yearly depreciation is €33058 / 5 = €6612.

69

Car

The Mercedes Benz Vito 110 CDI costs €28012 incl. VAT. Exclusive VAT the car costs €28012 / 121% (*100%) = €23150. (VAT = €4862). The car will have a scrap value of 20% of the total amount, so €23150 / 100 (*20%) = €4630. The car has a useful life of 5 years, so the yearly depreciation is €23150 - €4630 = €18520 / 5 = €3704

Computer / cash register

The cash register system costs €2177 inclusive VAT. Exclusive VAT the amount is €2177 / 121% (*100%) = €1799. (VAT = €378). The cash register system has a useful life of 5 years, so each year the depreciable amount is €1799 / 5 = €360

Personnel uniforms Uniforms are €574 incl. VAT. Exclusive VAT the amount is €574 / 121% (*100) = €474. (VAT = €100). Uniforms are provided for 5 employees costing €57.40 (incl. VAT) per uniform. Each employee gets 2 uniforms.

Accessories

Total costs of accessories are €2000 incl. VAT. Exclusive VAT this is €2000 / 121% (*100%) = €1580. (VAT = €420).

Permits

In order to open this company we need a permit costing €279 incl. VAT. Exclusive VAT this is €279 / 121% (*100%) = €245. (VAT = €34).

Insurance

When opening a store, one needs certain types of insurance such as fire, theft, etc. This insurance costs €63 a month, and must be prepaid.

Accountant

If the owner of the company keeps track of its administration on its own, an accountant costs €1800 inclusive VAT. Exclusive VAT this amount is €1800 / 121% (*100%) = €1488. (VAT = €312).

Table ware and glasses

In total, table ware and glasses cost €5380 inclusive VAT. Exclusive VAT this is €5380 / 121% (*100%) = €4446. (VAT = €934).

Promotion

Promotion costs are €3000 inclusive VAT. This includes a website, and flyers. Exclusive VAT the amount is €3000 / 121% (*100%) = €2479. (VAT = €521).

Bank charges


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Per month, bank charges of €3.50 must be paid for the bank account of this company

To fund this company, I will use own funding, in combination with a loan. As can be seen from the statement of financial needs, €185096 is needed to set up the company. €80000 will be paid from my own pockets, which are savings of the past 20 years. The remaining €185096 will be funded by obtaining a loan from the bank. The loan rate is 8 percent, and the full amount will be paid back in 60 months (five years). Each month €2130.97 must be paid which includes principal payment and interest expense. For more information about the commercial loan, you can find the amortization schedule which shows the payment of the loan in much more detail.

The salaries of each employee are based on a fix amount of €1500 per month. There are five employees so on a yearly basis each employee is paid €18000 and in total €90000. Of course on top of that, taxes and benefits should be paid for as well. These taxes and benefits consist of the social security tax, employee insurance (ZVW), and other employee benefit programs such as “vakantiegeld”. So in total on a yearly basis for all five employees €130833 needs to be paid.

Amount Totals Months Loan Rate Monthly Payments

Owner's Equity 43.22% 80,000

Commercial Loan 56.78% 105,096 60 8.00% 2,130.97

Total 100.00% € 185,096 60 8.00% € 2,130.97

Sources of Funding

Salaries and Related Expenses # Assumptions Wage Base Quarterly 2014 2015 2016 2017 2018

Percent Change 0.00% 0.00% 0.00% 0.00% 0.00%

Salaries and Wages

Salaries 5 1,500€ 4,500€ 18,000€ 18,000€ 18,000€ 18,000€ 18,000€

Wages

Total Salaries and Wages 5 22,500€ 90,000€ 90,000€ 90,000€ 90,000€ 90,000€

Payroll Taxes and Benefits

Social Security (Tax) 36.90% 1,500€ 8,303€ 33,210€ 33,210€ 33,210€ 33,210€ 33,210€

Employee Insurance (ZVW) 0.47% 106€ 423 423 423 423 423

Other Employee Benefit Programs 8.00% 1,800€ 7,200€ 7,200€ 7,200€ 7,200€ 7,200€

Total Payroll Taxes and Benefits 10,208€ 40,833€ 40,833€ 40,833€ 40,833€ 40,833€

Total Salaries and Related Expenses 32,708€ 130,833€ 130,833€ 130,833€ 130,833€ 130,833€

Salaries

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I expect Anna’s green tea, to attract 160 customers per day. The reason for this is the very attractive position of the store, where many people will be walking by. People will be able to takeaway drinks quickly and therefore it is possible to attract the amount of customers stated. I expect beverages to be most popular, so 55% of sales will be beverages. Then the second best in sales are the parfaits, and finally ice cream and crepes. After the first year, sales are expected to grow 15% annually.

Products Percentage Price/unit Cost/unit

Beverages 55% 4.50 0.62 Per day 160

Parfaits 25% 6.00 1.30 Per week 1120

Crepes 10% 4.50 0.90 Per month 4800

Ice cream 10% 4.75 1.05 Per year 58400

2014 2015 2016 2017 2018

% change 0% 15% 15% 15% 15%

Sales

Beverages 144,540 166,221 191,154 219,827 252,801

Parfaits 87,600 100,740 115,851 133,229 153,213

Crepes 26,280 30,222 34,755 39,969 45,964

Ice cream 27,740 31,901 36,686 42,189 48,517

Total € 286,160 € 329,084 € 378,447 € 435,214 € 500,496

COGS

Beverages 19,914 22,902 26,337 30,287 34,830

Parfaits 18,980 21,827 25,101 28,866 33,196

Crepes 5,256 6,044 6,951 7,994 9,193

Ice cream 6,132 7,052 8,110 9,326 10,725

Total € 50,282 € 57,825 € 66,498 € 76,473 € 87,944

Gross Profit

Beverages 124,626 143,319 164,817 189,540 217,971

Parfaits 68,620 78,913 90,750 104,362 120,017

Crepes 21,024 24,178 27,804 31,975 36,771

Ice cream 21,608 24,849 28,577 32,863 37,793

Total € 235,878 € 271,259 € 311,948 € 358,740 € 412,551

Sales ProjectionsTotal customers


72

Year O

ne (2014)January

FebruaryM

archA

prilM

ayJune

JulyA

ugustSeptem

berO

ctoberN

ovember

Decem

berT

otals

Interest€ 700.64

€ 691.10€ 681.51

€ 671.84€ 662.11

€ 652.32€ 642.46

€ 632.54€ 622.55

€ 612.50€ 602.37

€ 592.18€ 7,764.14

Principal€ 1,430.33

€ 1,439.86€ 1,449.46

€ 1,459.13€ 1,468.85

€ 1,478.65€ 1,488.50

€ 1,498.43€ 1,508.42

€ 1,518.47€ 1,528.60

€ 1,538.79€ 17,807.48

Loan B

alance€ 103,665.67

€ 102,225.81€ 100,776.35

€ 99,317.22€ 97,848.37

€ 96,369.72€ 94,881.22

€ 93,382.79€ 91,874.38

€ 90,355.90€ 88,827.31

€ 87,288.52€ 1,146,813.26

Year Tw

o (2015)

Interest€ 581.92

€ 571.60€ 561.20

€ 550.74€ 540.20

€ 529.60€ 518.92

€ 508.17€ 497.35

€ 486.46€ 475.50

€ 464.46€ 6,286.13


€ 1,559.37€ 1,569.77

€ 1,580.23€ 1,590.77

€ 1,601.37€ 1,612.05

€ 1,622.80€ 1,633.61

€ 1,644.50€ 1,655.47

€ 1,666.50€ 19,285.49

Loan B

alance€ 85,739.48

€ 84,180.11€ 82,610.34

€ 81,030.11€ 79,439.34

€ 77,837.97€ 76,225.92

€ 74,603.12€ 72,969.51

€ 71,325.01€ 69,669.54

€ 68,003.03€ 923,633.48

Year Three (2016)

Interest€ 453.35

€ 442.17€ 430.91

€ 419.58€ 408.17

€ 396.68€ 385.12

€ 373.48€ 361.77

€ 349.97€ 338.10

€ 326.14€ 4,685.44


€ 1,688.80€ 1,700.06

€ 1,711.39€ 1,722.80

€ 1,734.29€ 1,745.85

€ 1,757.49€ 1,769.20

€ 1,781.00€ 1,792.87

€ 1,804.82€ 20,886.17

Loan B

alance€ 66,325.42

€ 64,636.62€ 62,936.56

€ 61,225.17€ 59,502.37

€ 57,768.09€ 56,022.24

€ 54,264.75€ 52,495.55

€ 50,714.55€ 48,921.68

€ 47,116.86€ 681,929.88

Year Four (2017)

Interest€ 314.11

€ 302.00€ 289.81

€ 277.53€ 265.18

€ 252.74€ 240.22

€ 227.61€ 214.92

€ 202.15€ 189.29

€ 176.35€ 2,951.90


€ 1,828.97€ 1,841.16

€ 1,853.44€ 1,865.79

€ 1,878.23€ 1,890.75

€ 1,903.36€ 1,916.05

€ 1,928.82€ 1,941.68

€ 1,954.62€ 22,619.72

Loan B

alance€ 45,300.00

€ 43,471.04€ 41,629.87

€ 39,776.44€ 37,910.65

€ 36,032.42€ 34,141.67

€ 32,238.31€ 30,322.26

€ 28,393.44€ 26,451.77

€ 24,497.14€ 420,165.01

Year Five (2018)

Interest€ 163.31

€ 150.20€ 136.99

€ 123.70€ 110.32

€ 96.85€ 83.28

€ 69.63€ 55.89

€ 42.06€ 28.13

€ 14.11€ 1,074.47


€ 1,980.77€ 1,993.98

€ 2,007.27€ 2,020.65

€ 2,034.12€ 2,047.68

€ 2,061.33€ 2,075.08

€ 2,088.91€ 2,102.84

€ 2,116.86€ 24,497.14

Loan B

alance€ 22,529.49

€ 20,548.72€ 18,554.74

€ 16,547.47€ 14,526.82

€ 12,492.70€ 10,445.01

€ 8,383.68€ 6,308.60

€ 4,219.69€ 2,116.86

(€ 0.00)€ 136,673.78

Am

ortization Schedule

Amortization Schedule

73

The income statement speaks for itself. Numbers are taken from the other statements such as the sales projections, salaries, and expenses from the cash budget. This compiled is the income statement.

2014 2015 2016 2017 2018

Sales

Beverages 144,540 166,221 191,154 219,827 252,801

Parfaits 87,600 100,740 115,851 133,229 153,213

Crepes 26,280 30,222 34,755 39,969 45,964

Ice cream 27,740 31,901 36,686 42,189 48,517

Total Sales 286,160 329,084 378,447 435,214 500,496

Cost of Sales

Beverages 19,914 22,902 26,337 30,287 34,830

Parfaits 18,980 21,827 25,101 28,866 33,196

Crepes 5,256 6,044 6,951 7,994 9,193

Ice cream 6,132 7,052 8,110 9,326 10,725

Total Cost of Sales 50,282 57,825 66,498 76,473 87,944

Gross Profit 235,878 271,259 311,948 358,740 412,551

Operating Expenses

Payroll 90000 90000 90000 90000 90000

Rent 48,000 48,000 48,000 48,000 48,000

Advertising 500 550 605 666 732

Depreciation 18,350 18,350 18,350 18,350 18,350

Accounting 1,488 1,488 1,488 1,488 1,488

Business Licenses & Permits 245 245 245 245 245

Pin Machine 516 516 516 516 516

Bank Fees 42 42 42 42 42

Music & Entertainment 499 499 499 499 499

Repairs & Maintenance 6,000 6,600 7,260 7,986 8,785

Utility 6,180 6,798 7,478 8,226 9,048

Communication 720 720 720 720 720

Insurance 693 693 693 693 693

Payroll Taxes & Employee Benefits 40,833 40,833 40,833 40,833 40,833

Trash Removal 156 156 156 156 156

Table ware/Uniforms/Cleaning Supplies/Decor 5,000 5,500 6,050 6,655 7,321

Office Supplies 500 550 605 666 732

Facility 3,000 3,300 3,630 3,993 4,392

Transportation 6,403 7,043 7,748 8,522 9,375

Total Operating Expenses 229,125 231,883 234,917 238,255 241,926

Earnings Before Interest and Taxes 6,753 39,376 77,031 120,485 170,625

Interest Expense 7,764 6,286 4,685 2,952 1,074

Earnings Before Taxes -1,012 33,090 72,345 117,533 169,551

Taxes 1,351 7,875 15,406 24,097 34,125

Net Profit -2,362 25,215 56,939 93,436 135,426

Anna's Green Tea



74

Month: Pre-Start 1 2 3 4 5 6 7 8 9 10 11 12 Totals

Receipts

Cash sales 15000 18000 25000 25000 30000 20000 20015 30000 30000 22000 22015 29130 286160

Collections from credit sales 0.00

New equity inflow 80,000 80,000

Loans received 105,096 105,096

Other 0

Total Receipts 185,096 15,000 18,000 25,000 25,000 30,000 20,000 20,015 30,000 30,000 22,000 22,015 29,130 471,256

Payments

Cash purchases 4,700 300 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 5,282 50,282

Payments to creditors 0.00

Salaries and wages 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 90,000.00

Employee benefits 635 635 635 635 635 635 635 635 635 635 635 635 7,623

Payroll taxes 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 33,210

Rent 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 52,000

Rent Deposit 8,000 8,000

Utiltities 1,545 1,545 1,545 1,545 6,180

Repairs and maintenance 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Renovations 41322 41,322

Music and entertainment 499 499

Insurance 63 63 63 63 63 63 63 63 63 63 63 63 756

Travel 959 254 254 959 254 254 959 254 254 959 254 789 6,403

Telephone 60 60 60 60 60 60 60 60 60 60 60 60 720

Office supplies 42 42 42 42 42 42 42 42 42 42 42 42 500

Advertising 2,479 125 125 125 125 2,979

Professional fees 1,488 1,488

Permits 245 245

Bank charges 42 42

Pin machine 43 43 43 43 43 43 43 43 43 43 43 43 516

Trash removal 13 13 13 13 13 13 13 13 13 13 13 13 156

Facility 250 250 250 250 250 250 250 250 250 250 250 250 3,000

Interest expense 701 691 682 672 662 652 642 633 623 612 602 592 7,764

Loan repayments 1,430 1,440 1,449 1,459 1,469 1,479 1,489 1,498 1,508 1,518 1,529 1,539 17,807

Tax payments 31,208 31,208

Capital purchases 82,800 82,800

Table ware/Uniforms/Accessories 6,500 417 417 417 417 417 417 417 417 417 417 417 417 11,500

Total Payments 183,346 19,805 22,675 24,220 23,505 22,675 24,220 23,505 22,675 24,220 23,505 22,675 25,974 463,001

Cashflow Surplus/Deficit (-) 1,750 (4,805) (4,675) 780 1,495 7,325 (4,220) (3,490) 7,325 5,780 (1,505) (660) 3,156 8,255

Opening Cash Balance 1,750 3,500 (1,305) (5,980) (5,200) (3,705) 3,620 (600) (4,090) 3,235 9,014 7,509 6,849

Closing Cash Balance 3,500 (1,305) (5,980) (5,200) (3,705) 3,620 (600) (4,090) 3,235 9,014 7,509 6,849 10,005

Anna's Green Tea

Cash Budget - Monthly

This cash budget shows how much money comes in and out of the company. This is very important especially when the company needs a fair amount of working capital. Especially the first few months the closing cash balances of AGT are negative. During the last five months this becomes positive.

75

The first year of a company is always very unstable, but as sales is expected to increase during the second year, closing cash balances will also increase.

The balance sheet uses other statements previously made to show the value of a company at a certain point in time. Fixed assets are expected to stay the same due to no new purchases during the first couple of years. Total liabilities are gradually decreasing because of the steady payments of the commercial loan. As the company is expected to make a net profit during from 2016, the value of the company also starts to change in a positive way.

Beginning 2014 2015 2016

Assets

Current Assets

Cash 1,750 10,005 20,093

Stock 4,700 7,483 5,687

Prepaid expenses 45,545 14,337 14,337

Total Current Assets 51,995 31,825 40,117

Fixed Assets

Inventory 31,293 31,293 31,293

Machines 33,058 33,058 33,058

Car 23,150 23,150 23,150

Computer equipment 1,799 1,799 1,799

Renovations 41,322 41,322 41,322

Website 2,479 2,479 2,479

Total Fixed Assets 133,101 133,101 133,101

Total Assets 185,096 164,926 173,218

Liabilities and Owner's Equity

Liabilities

Accounts Payable

Loan payable 105,096 87,289 68,003

Total Liabilities 105,096 87,289 68,003

Owner's Equity

Paid-in Capital 80,000 80,000 80,000

Retained Earnings 0 (2,362) 25,215

Total Owner's Equity 80,000 77,638 105,215

Total Liabilities and Owner's Equity 185,096 164,926 173,218

Pro Forma Balance SheetAnna's Green Tea


76

RESEARCH PROPOSAL

INTRODUCTION

Coffee and tea is deeply rooter into Dutch culture and history. Centuries ago, Dutch merchants brought coffee and tea with them from exotic regions. Through the years, coffee and tea have become an important part in the daily lives of the Dutch people. As society is changing, so is the demand for certain types of products and services. Dutch society is becoming more Americanized, and slowly becoming a “to-go” country. Changes in society bring new opportunities, which are currently happening in the coffee and tea branch. Starbucks-like formulas are opening up everywhere, and gaining much popularity. In Asia however, there is much more of a tea culture. It would be interesting to see if instead of a typical coffee bar, an Asian style tea/coffee (with emphasis on tea) bar could be successful in the Netherlands. That is the topic of this thesis proposal.

The structure of this proposal is as following:

1. Context

2. Research objective

3. Problem statement

4. Research questions

5. Research framework

6. Literature review

7. Methodology

8. Timeline

9. Bibliography

In deciding the structure of this proposal, my aim was to order the chapters in a chronological order, so that everything is aligned properly and makes sense.

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1 . CONTEXT

As an aspiring entrepreneur, I am constantly looking for opportunities to start a business. When I visited Singapore, I came across a nice tea bar, selling food and beverages made with green tea. As I enjoyed the experience, I noticed that this type of tea/coffee bar is still absent in the Netherlands. This made me seriously consider the possibility to open a tea/coffee bar in this country. The company I would like to establish is called “Anna’s green tea”, or (AGT). AGT is a modern Japanese style tea bar, which offers food and beverages based on Matcha green tea.

The Dutch tea and coffee market is incredibly large, as these beverages account for 42% of the daily liquid consumption per capita in the Netherlands. There are continuous new developments happening in this market.1 The latest developments in this market are the coffee/tea bars. Unlike traditional cafes, these bars are marketed to the modern adults of today’s society. Since 1996, a few of these chains have been established. These chains all focus on mainly coffee, which is their core product.

Looking at the tea market, green tea is slowly gaining popularity among tea consumers. Consumers are starting to realize the health benefits of this type of tea, and as many people are looking to adopt a healthy lifestyle, Anna’s green tea wants to capitalize on this by mainly providing beverages with green tea as its main ingredient. Using green tea and Japanese culture as its competitive advantage, AGT wants to know if there is potential for such a formula in the Netherlands.

This paper focuses on the research and analysis of the company’s internal and external environment, and existing effective strategic management and planning theories to provide the best strategy for this company, and recommendations about the potential for this startup company.

2. RESEARCH OBJECTIV E

The research objective of this research project is: “To make recommendations of the potential of a green tea bar startup, by making an analysis of the current internal and external environment, using strategic- analysis and planning, and financial planning theories.”

3. PROBLEM STATEMENT

In chapter 1 I discussed the desire to start a green tea/coffee bar company. The focus here is the viability of starting this company in the Netherlands. To do this, one must analyze the company’s internal and external environment. Internal analysis is related to the company itself, whereas the external analysis is about the country, industry, and competitors.

1 KNVT. (2013). Trends en ontwikkelingen in koffie- en theeconsumptie . Available: http://www.knvkt.nl/media-center/nieuws/item/258-trends-en-ontwikkelingen-in-nederlandse-koffie-en-theeconsumptie. Last accessed 16th July 2013.


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This is the field of strategic management, strategic planning, and also financial planning. Keeping this in mind, the problem statement of this project is:

To what extend can a green tea bar startup be successful, and how viable is the idea of green tea products?

4. RESEARCH QUESTION S

4.1 CENTRAL RESEARCH QUESTION

What is the viability of opening a successful green tea bar company in the Netherlands in 2014?

4.2 THEORETICAL RESEARCH QUESTIONS

1. What are the various external factors of strategic management that affect a company? 2. What strategic management methods are needed to determine a company’s internal strengths and weaknesses? 3. What are the essential elements of a company profile? 4. What financial planning tools are needed to assess the financial viability of a company?

4.3 EMPIRICAL RESEARCH QUESTIONS

1. What is the company’s current organizational structure? 2. What are the latest and historical consumption trends of the tea and coffee industry? 3. What factors caused the success of the tea/coffee bar branch in the Netherlands? 4. How is the current Dutch economic and political situation? 5. Who are AGT’s biggest competitors, and what are their strengths and weaknesses currently? 6. What is AGT’s competitive advantage, and what strategy will it implement in the future? 7. What is AGT’s financial projection of the coming of 2014-2016? 8. Based on the company’s internal-, and external analysis, and its chosen strategy, what recommendations can be made about the company’s future?

5. RESEARCH FRAMEWORK

Figure 1: Research framework viability green tea bar

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The research framework can be formulated as follows: (a) an analysis of a company’s internal and external environment (b) used to determine the position of AGT (c). An evaluation the position of AGT results in (d), which is used to make final recommendations (e).

6. LITERATURE REVIEW

6.1 EXTERNAL FACTORS OF STRATEGIC MANAGEMENT

PESTEL ANALYSIS

The PESTEL analysis refers to political, economic, social, technological, environmental, and legal factors. PESTEL analysis can be used to help detect trends in the external environment that will ultimately find their way into the competitive environment (Henry, 2008). It is a technique that facilitates a wide scan of the context and actual or potential factors that would affect objectives if left unmanaged (Webster, 2010).

SWOT ANALYSIS

A SWOT analysis is a technique for focusing an individual’s or a group’s attention on strengths, weaknesses, opportunities, or threats. It is useful particularly because strengths and weaknesses (which are actual facts now) can be the cause of potential future risks – both opportunities and/or threats. As a result SWOT analysis is useful not only for identifying context, but also for identifying risks (Webster, 2010). Opportunities and threats relate to aspects within the external environment. These should also be evaluated against the strengths and weaknesses identified, e.g. opportunities can only be capitalized upon if there are sufficient and appropriate resources to meet the challenges posed (Coles, 2009).

PORTERS FIVE FORCES FRAMEWORK

The five forces framework is undertaken from the perspective of an incumbent organization, i.e. an organization already operating in the industry. The analysis is best used at the level of an organization’s strategic business unit (SBU). Although each organization in an industry is unique, the forces within the industry which affect its performance, and hence its profitability, will be common to all organizations in the industry (Henry, 2008). Porter argues that the stronger each of these forces is, the more limited is the ability of established companies to raise prices and earn greater profits. Within Porter’s framework, a strong competitive force can be regarded as a threat because it depresses profits (Hill, 2010).

6.2 STRATEGIC MANAGEMENT METHODS TO DETERMINE INTERNAL STRENGTHS AND

WEAKNESSES

RESOURCE BASED VIEW

The resource based view emphasizes the internal capabilities of the organization in formulating strategy to achieve a sustainable competitive advantage in its markets and industries (Henry, 2008). The central idea of the resource based view, also called inside-out approach is that a different endowment of idiosyncratic resources within firms leads to a strategic heterogeneity which displays differences in the success of the firms due to sustainable competitive advantages (Blumberg, 2008).


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COMPETENCIES

Whilst the existence of resources is important, resources per se do not confer any benefit on an organization. It is the efficient configuration of resources that provides an organization with competencies. A competence is the attributes that firms require in order to be able to compete in the market place (Henry, 2008). In general a competence may be defined as a combination of human beings who are organized and function in/under a certain culture using hard technology to do certain tasks to produce the products/services of the firm (Drejer, 1996)

COMPETITIVE ADVANTAGE

Competitive advantage starts with the premise that a competitive strength can arise from many sources and shows how all advantage can be connected to specific activities and the way that activities relate to each other, to supplier activities, and to customer activities (Porter, 1985). Competitive advantage is what separates you from the rest of the herd. It’s what keeps your business alive. IN short it’s the reason you are in business (Smith, 2006)

6.3 ESSENTIAL ELEMENTS OF THE COMPANY PROFILE

ORGANIZATIONAL EFFECTIVENESS

In strategic management and organizational theory, organizational effectiveness denotes the broadest domain of business performance; Organizational effectiveness not only captures firm performance, but also “the plethora of internal performance outcomes normally associated with more efficient or effective operations and other external measures that are broader than those simply associated with economic valuation (Kortmann, 2011).

CORPORATE STRUCTURE

An organization structure is a framework that establishes the relationship between job positions as well as establishes the channel of communication (Andrews, 2007). Chain operations have elaborate structures. Large restaurants require more people to operate it. The amount of specializations also increases and therefore, requires elaborate structure. Small restaurant operations properties may not have such elaborate structures. The owner/Manager would have direct control of operations (Andrews, 2007).

6.3 FINANCIAL PLANNING TOOLS

STATEMENT OF FINANCIAL NEEDS

When applying for a loan, lenders and investors will analyze the requirements of your business. Distinguished you these are working capital, growth capital, and equity capital. Working capital needs to be repaid through cash (liquidity) during the business’s next full operating cycle (Pinson, 2008). Keeping this in mind one must know how much is needed to accomplish their goals.

PRO FORMA STATEMENTS

Pro forma statements show your projections for the future profitability of your business (Pinson, 2008). All financial plans must contain the cash flow statement, three-year income projection, and a break even analysis (Pinson, 2008).

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7 . METHODOLOGY

Research methodology is a way to systematically solve the research problem. It is necessary for a researcher to know not only the research methods/techniques, but also the methodology, the logic behind the techniques.

7.1 RESEARCH METHOD

First of all, the decision has to be made on whether to sue qualitative or quantitative data. For my project I will use mixed research. This means that I will use both qualitative and quantitative data in my research. As my thesis is based on both exploratory and explanatory research objectives, the mixed research is the best option. I will have to use quantitative data when analyzing the tea and coffee market of the Netherlands. However my thesis is also about finding trends and new developments in this industry, which is qualitative. I would say that 70% of the thesis is qualitative, while 30% is quantitative.

7.2 DATA COLLECTION METHOD

The primary method used for data collection is secondary research. I will use credible sources that have done their research to complement my research with. I understand that the data needs to be reliable, suitable, and adequate. Because I need to research the market it is hard to use primary data, because it takes a lot of time, and other companies might be far more specialized in certain fields, and thus using their information might be more credible to use. The secondary data is derived using desk research. Most of the information will be from the internet. Besides secondary research, I will also use interviews for data collection. I have found a recent interview by another investigator of the tea and coffee branch, which I might use as it is beneficial for my research.

7.3 DATA ANALYSIS PROCEDURE

There are special methods for the analysis of data, however in my case, this is not really needed. Because I’m using mostly qualitative data, I don’t need to analyze specific data from questionnaires or other data collection methods. The only quantitative data used is historical data about the consumption of tea and coffee. As for the financial part of the research, it is based on projections. So again, this is not relevant for me.

7.4 RELIABILITY AND VALIDATY

It is always a question if the collected data is actually reliable and valid. To make sure that it is, I am using recognized sources for my secondary data collection. Data about the industry, demographics, and other figures about the Netherlands, is found from CBS, Centraal Bureau Statistiek. This is a 100% credible source as it’s from the Dutch government. Other data about the tea and coffee branch are from credible consulting companies.

To make sure that the data is valid, I check the date of the data collected and information found. If data is older than 2010, I will not use it. As I need to analyze the company’s current internal and external environment, I will make sure that all the data I collect is recent.


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TIMELINE

Week Activity

25 Thesis proposal

26 Introduction of thesis

27 Theoretical framework

28-31 Findings

32 Final draft

BIBLIOGRAPHY

Andrews (2007). Food & beverage Management. Delhi: MC-Graw Hill. p22

Linda, P (2008). Anatomy of a Business Plan. 7th ed. California: Out of Your Mind... and Into the Market place. p77

Henry, A (2008). Understanding Strategic Management. New York: Oxford University Press. p117-126

Coles, L (2008). Public Health Skills: A Practical Guide for nurses and public health practitioners. Victoria: Blackwell Publishing. p143

Kortmann, S (2011). The Relationship between Organizational Structure and Organizational Ambidexterity. Munster: Springer Gabler. p12-17

Porter, M (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press. p26

Lumberg, C (2008). Competences and Innovation. Norderstedt: Books on Demand. p3.

Drejer, A (2002). Strategic Management and Core Competencies: Theory and Application. United States: Greenwood Publishing Group. p66

Hill, C (2010). Strategic Management - Theory: An Integrated Approach. United States: Cengage Learning. p43.

Kothari, C.R. (2004). Research Methodology Methods & Techniques. 2nd ed. Delhi: New Age International.

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