Investment Proposal Mobile Retail Outlet

Background

The following 4 investment proposals which are insightful for Company are assessed in this report: The definite outcome of each option offered was compared to the issues relating to strategic planning, financial requirements, and future development of the company. Working capital, incomes and expenditure forecasting for the proposals were reviewed to ascertain which seemed most capable of achieving sustainable high ROI (Oppitz, 2021).

Why? Addressing Key Business Challenges of Mobile Retail Outlet

The key challenges include:

• Customer Reach: Despite what it does today, there is little managerial freedom to go into other markets and capitalize on under tapped niches such as universities or home office users (Knox & van Oest, 2014).
• Sustainability: The increasing concern for green products and supplies calls for an implementation of measures to enhance the sustainability of Companys’ products.
• Customer Retention: Specifically, a relative absence of customer loyalty incentives remain untapped sources of additional revenues.

Closing these gaps through effective investment is not only beneficial for achieving business goals (Grewal et al., 2015) but also will create an understanding that continued investment is necessary for the company to maintain the relevance it has always had in the market.

What? Investment Options

Proposal 1:

Mobile Retail Outlet at the University of Hertfordshire

The Mobile Retail Outlet aims to provide food service at the university where student and other employees maybe devoid of convenient means of food acquisition. As pointed in the proposal, the investment plan needed at start up is £100,000 for the trailer, legal fees, recruitment, and promotion. At the end of the period, daily takings of £7,500 are expected with 200 operational days leading to an annual revenue of £1,500,000. Total overheads such as staff wages, rent and other expenses such as table and cutleries, etc will be £1,100,000 hence a net profit of £400,000 will be achievable per annum. Recall that the initial investment was £500,000 and the expected monthly earnings are of £33,333 Therefore the break-even point should take approximately 6 months of establishment.

Proposal 2:

Developing Baking Kits

Baking Kits is used to target a new customer base and reinforce brand equity, anchored on society’s trend towards home baking. The implementation of this proposal will cost £85,500 in the first instance to cover production of products, packaging and advertising campaigns. The anticipated annual revenue is £150,000 that translate to £15 per kit to 10,000 clients. On an average there is an estimated gross margin of £50% thus the annual turnover of course is £75,000. The end product is not only easily scalable as it may presents new recipes or seasonal changes which can add incremental revenues.

Proposal 3:

 Loyalty Card Promotion

T main goal of the Loyalty Card Promotion is to raise the level of customer loyalty and gain more sales by including a digital card for customers. The projected amount of £100, 000 will go to the creation of a simple to use application, promotion and administration expenses. The objective of the program is to raise overall sales by ten percent in a year and add £2 000 000 to annual profit. This system forecasts an annual profit of £300,000 and expects to get the ROI in the first year of its operations. The yardstick for success will be by the extent, which customers are willing to engage them on social media, which should rise to 25% and more frequent returns from customers. This proposal addresses the following customer loyalty challenges improvement while at the same time improving the organization’s long-term revenue stability.

Proposal 4:

Sustainable Sausage Roll

Creation of a low-carb sausage roll is a solution to the growing market need for environmentally sensitive products and aligns with Companys’ strategies. The RAF of £72,700 covers ingredients formulation, supplier sourcing, and initial product trials. The three months pilot period is set to produce £17,500 from 5,000 units. This could ensure the product realized annual sales of £210000, culminating from 60 000 sets at £ 3.50 each in each year. This proposal also aims in reducing the product’s carbon footprint by twenty-five percent which as again stresses Companys’ sustainability strategy. Adding this innovative product extends an already established brand value to incorporate more new products aligning it with the market trends of encouraging green consumption.

How? Ideas Generation and Idea Evaluation on Mobile Retail Outlet

The ideas for proposals were established using a market analysis study, engagement with key stakeholders, and by comparing past practices from competitors. Each idea was evaluated using the following framework (Rietzschel et al., 2010):

1. Strategic Fit: Similarity to Companys’ goals (for instance, profitability and sustainability).
2. Financial Metrics: Out of this the performance indicators which can be useful are the % ROI, pay back period, and profit margin (LICUANAN et al., 2007).
3. Market Demand: Identification of customer requirements and new trends.
4. Operational Feasibility: Assuming resources that are essential in translating the above ideas into tangible forms are available and that the timeline of carrying out the executory aspect of this course is manageable.

On these considerations, proposals were ranked and the option with the highest financial return and the most significant opportunity for development was the Mobile Retail Outlet (Paulus & Yang, 2000).

What? Evaluating Four Options

Based on profitability, Proposal 1: At the University of Hertfordshire, there is a uniqueness of Mobile Retail Outlet that makes it the best. It has the highest net annual profit £400,000, better ROI 400%, and the shortest payback period of 3 months. This recommendation is the most practical and effective financial investment and fits well into the operating structure of the company (McMahon et al., 2016).

Preferred Proposal: Mobile Retail Outlet

Implementation Plan of Mobile Retail Outlet

The Mobile Retail Outlet will follow a structured timeline for execution:

1. Licensing and Preparations (Jan–May 2024): Discuss the operational terms of the project with the university and complete the final trailer.
2. Testing and Recruitment (June–Aug 2024): Manage flight pilots to fly aircraft and obtain professional staff.
3. Launch (Sept 2024): To initiate full scale operations in the university, promotional campaigns should be targeted to the University’s community.

Cost Breakdown

• Capital Investment: £100,000.
• Operating Costs: £1,100,000 annually.
• Revenue: £1,500,000 per annum and an expected profit of £40000 of which the partners are to contribute £300000.

Projections

The initial business targets include reaching £7,500 of average daily sales which will help the business reach the breakeven point in six months and get an annualised return on investment of 400%.

Recommendations

The Mobile Retail Outlet is recommended as the preferred investment due to the following:

• High ROI: Generates £400,000 of profit per annum and has a low payback period.
• Market Potential: Serves an unmet need of students at the University of Hertfordshire.
• Scalability: Success in one campus leads to comparable chances in other campuses.
• Strategic Fit: Satisfies Companys’ objectives with regard to expansion and diversification of its markets.

The secondary products like Baking Kits and the Loyalty Card Promotion should therefore be launched once the Mobile Retail Outlet has proven to be profitable.

This approach guarantees that; Companys focuses on both the short term profit and long term opportunities for growth.

References

• Grewal, R. et al. (2015) ‘Business-to-business buying: Challenges and opportunities’, Customer Needs and Solutions, 2(3), pp. 193–208. doi:10.1007/s40547-015-0040-5.
• Knox, G. and van Oest, R. (2014) ‘Customer complaints and recovery effectiveness: A customer base approach’, Journal of Marketing, 78(5), pp. 42–57. doi:10.1509/jm.12.0317.
• LICUANAN, B.F., DAILEY, L.R. and MUMFORD, M.D. (2007) ‘Idea evaluation: Error in evaluating highly original ideas’, The Journal of Creative Behavior, 41(1), pp. 1–27. doi:10.1002/j.2162-6057.2007.tb01279.x.
• McMahon, K. et al. (2016) ‘Beyond idea generation: The power of groups in developing ideas’, Creativity Research Journal, 28(3), pp. 247–257. doi:10.1080/10400419.2016.1195637.
• Oppitz, M. (2021) ‘Investment recommendations and statistics’, EU Market Abuse Regulation [Preprint]. doi:10.4337/9781800882249.00030.
• Paulus, P.B. and Yang, H.-C. (2000) ‘IDEA generation in groups: A basis for creativity in organizations’, Organizational Behavior and Human Decision Processes, 82(1), pp. 76–87. doi:10.1006/obhd.2000.2888.
• Rietzschel, E.F., Nijstad, B.A. and Stroebe, W. (2010) ‘The selection of creative ideas after individual idea generation: Choosing between creativity and impact’, British Journal of Psychology, 101(1), pp. 47–68. doi:10.1348/000712609×414204.