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Subject: ENTREPRENEURSHIP
Table of content
Figure 1 …………………………………………………………………….1
Figure 2 ..............................................................................................6
Figure 3 ...............................................................................................9
Figure 4 .............................................................................................19
Figure 5 .............................................................................................23
Figure 6 .............................................................................................26
Figure 7 .............................................................................................28
Figure 8 .............................................................................................28
Figure 9 .............................................................................................31
Figure 10 ...........................................................................................41
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Figure 14 ………………………………………………………………….54
Figure 15 ………………………………………………………………….69
Table 1 ……………………………………………………………………...6
Table 2 …………………………………………………………………….24
Table 3 …………………………………………………………………….36
Table 4 …………………………………………………………………….47
Table 5 …………………………………………………………………….48
Table 6 …………………………………………………………………….58
Table 7 …………………………………………………………………….59
Diamonds Group vi
Entrepreneurship A`I’A – New Venture
Table 8 …………………………………………………………………….60
Table 9 …………………………………………………………………….75
Table 10……………………………………………………………………76
BUSINESS PLAN
Diamonds Group i
Entrepreneurship A`I’A – New Venture
Hanoi, Vietnam.
Diamonds Group ii
Entrepreneurship A`I’A – New Venture
DISCLAIMER
This report forms part of the author’s assessment for a course undertaken at La Trobe
University. The report is for educational purposes only, and is neither for professional nor
consultancy purposes, in any way.
The authors do not give any warranties in relation to the accuracy, completeness and reliability
of the information in the report.
The information in this report may include inadvertent and occasional errors and is provided
“as is”. Professional advice should be sought before acting on the basis of any such
information. No responsibility will be taken for any loss incurred as a result of any reliance or
use of any statement/material in the report.
The contents of this report are copyright. Copyright remains with the authors. No part may be
reproduced or copied in any form or by any means without the prior permission of the
copyright holders.
Executive Summary
Athens Fitness Club provides professional health care and body workout services, which is
supposed to start operating in January of 2011.
The business outlined in this plan is an “all-sport” club that will offer a variety ofdifferent
exercise techniques in order to please its clients. We feel this market is very profitable because
it reaches over 33.8 million people across the United States and brings in over $12.2 billion
annually. Club memberships in the United States have increased every year since 1987 and a
strong market makes a strong business. We are a solid investment because start-up sports gyms
on average take in 1,000 new members per year. This will allow our business to break even in
less than five years.
Our club, “Athens Fitness” will offer its members quality services and benefits that no other
club can offer. We want to take investments and use them wisely in order to create a sports
facility that pleases customers. In sports clubs, the top five most profitable programs/services
are personal training, massage therapy, food/beverages, an aquatics program, and a tennis
program. Our gym will provide all of these services and thus increase our productivity. We
will build a large complex that will include a pool, personal training facilities, steambath and
sauna rooms, and many other features to attract clientele. Through our knowledge of the Tri-
Valley area and our willingness to take risks we will be able to build a single center into a
profitable facility. Livermore, where our facility will be built has a large “20 to 64 year old”
population. This means not only that our clientele pools is large but that these people are
experienced and have attained the socioeconomic status that will be needed in order to attain
and maintain our service.
In conclusion, our profitable new gym will be a coordinated effort among three aspiring
entrepreneurs to create “the ultimate in sports fitness”.
The business provides integrated products and services relating to the theme ‘aesthetics of
ancient Hanoi’. There are three areas in A` I’ A respective to restaurant area (A`),
entertainment area (I’), and self-cooking area (A). With such differentiated products, the
business simultaneously provides an atmosphere of family, and tranquility added with
inspiring one. The business is legally considered as a partnership business with the primary
contribution of five individuals; and located on 10/431 Au Co Street, Tay Ho district, Hanoi,
Vietnam.
Like other business operating in hospitality industry, ATHENS FITNESS CLUB, in fact, is
influenced by the characteristics of this ‘non- smoke’ sector. It is believed that the industry is
profitable in the growth stage of life cycle. Moreover, its market size is large enough for new
players. However, the rule of economics stated that the more benefit the industry is, the more
players and potential ones want to join. As a consequence, there are some main competitors
that ATHENS FITNESS CLUB has to compete against, namely Brother Café, Quan Ngon,
Diamonds Group iv
Entrepreneurship A`I’A – New Venture
Quan Sen. However; the business also owns several strengths that can consolidate its position
in the market. With some weaknesses like experience, and some threats, ATHENS FITNESS
CLUB try to consolidate the strengths, and take advantage of the opportunities to be the leader
in the market.
The strategy, that ATHENS FITNESS CLUB follows, is ‘differentiation’ because it owns
three important competitive advantages. These are named as unique model, architecture and
design, and professional service. Those all makes ATHENS FITNESS CLUB very much
different and distinctive from other competitors.
At the start up stage, ATHENS FITNESS CLUB uses penetration in marketing strategy.
Moreover, defining itself as a ‘high- end products’, it targets at upper-middle, upper class of
the society, businessman and international visitors. For the first year of operation, the
marketing plan is elaborated with marketing mix strategy, action plan. The budget for
marketing expenses reaches to 15,000,000 VND.
As a new venture, ATHENS FITNESS CLUB management team understands that careful
operation plan is very important to the success of the business. Therefore, the value chain of
the business is clearly defined. Moreover, under the operation management system, all the
preparation for start up, physical layout and administering the operation is careful devised.
One very important part of operation is human resource management of ATHENS FITNESS
CLUB, Indeed, ATHENS FITNESS CLUB follow flat structure. Basing on the core human
resource policy described as 4Fs (Fun, Freedom, Flexibility, Fortune), the business manages
the work of staffing, developing and controlling the quality of employees. Moreover,
ATHENS FITNESS CLUB is vigilant with risk management because of business nature.
As a start-up business, the company, furthermore, proves its profitability, efficiency, and
feasibility in financial plan projection in five years. The following is ATHENS FITNESS
CLUB’s sale forecast.
Diamonds Group v
15,000,000,000
Entrepreneurship A`I’A – New Venture
Diamonds Group vi
Entrepreneurship A`I’A – New Venture
1. Introduction
Vietnam idolizes and raises upon the social pedestal those with beauty as well as superior
physical ability. We pay millions of dollars to those who can hit a ball, throw it through a
hoop, or run quickly. It is this societal perception and individual goal that our company will
rely upon in order to gain clientele. We envision an “atmosphere implied by such
entrepreneurs as Ray Kroc (McDonald’s) in which hard work and fun become a single entity
and personal goals become reality”. Imagine a place in which track, weight, lifting, swimming,
and sauna personal training all exist, aimed towards the ultimate goals of extreme personal
fitness. We offer our customers not just equipment to use or facilities in which to practice on,
but an image, a lifestyle, and a standard of living. This is what “True Fitness” will provide to
each of its members. We will combine the use of various sports in order to appeal to all those
who desire to develop useful skills and personal health. Personal training directed specifically
to individuals will help every member with his or her goals and longer club hours will ensure
that each customer will have access to our facilities during time that is convenient for them.
Our motto, “Our goals are to reach your goals” will be the aspiration of all our employees and
will reassure customer satisfaction. Our mission is not just to create a sports club but also to
educate and assist people to become healthier, more competitive, better looking, and
passionate about their lives’
Along with the development of economy, the attention of people to their health is getting more
and more increased. The fitness service is a typical part of the health care industry which has
grown rapidly in the last 10 years. According to a survey in year 2009, it was mentioned that
there are 8,369 health clubs in Vietnam that house a total of 3.2 million members, 48% are
male and 52% female. Health clubs that are involved in commercial business have a total
membership of almost 1.5 million and 1.2 million members belonging to not for profit health
clubs. It is undoubtedly that the fitness service will be continuously booming in the near
future.
Diamonds Group 1
Entrepreneurship A`I’A – New Venture
16%
COMMERCIAL
46%
NOT PROFIT
OTHERS
38%
Fitness club market in Vietnam is getting more and more demanding with the passage of time.
Following are the common demands that have arise in recent past.
Customization: People who already have membership or those who are willing to have one, are
interested in subscribing to a customized health care plan according to their requirements or as
per the recommendation of medical expert.
Ease of Service: People are looking for exercises that are easy to adopt and are performed by
expert trainers.
Effectiveness of Exercise: Members are very demanding over results of the exercises which
they are performing. An expert trainer can be helpful in setting a proper exercise plan for the
members so they can work out accordingly.
There are many factors that cause the increase of market demand. Two of these factors are
overweight and obesity increase and living standard increase in the last decade of Vietnam.
In recent years, there is an increase of overweight and obesity in the world as well as in
Vietnam. According to a survey by the Institute of Nutrition in 2009, there is a seriously
increasing of overweight and obesity in Vietnam, particularly in the proportion of adults (from
25-64 years old) accounted for 16.8% of the population. The increase of overweight and
obesity will cause a variety of chronic diseases which seriously affect the health of the
community such as diabetes, heart disease, hypertension, and respiratory, etc.
Diamonds Group 2
Entrepreneurship A`I’A – New Venture
The survey also showed that the overweight and obesity increase fastest from the age of 45
years old. The overweight people and obsesses in cities are 3 times higher than the people
living in countryside.
As the result, there are more and more people are aware of health care and wish to improve
their health by doing exercise or taking training programs at fitness centers.
Another factor is increase of living standard of Vietnamese in recent years. People are now
paying less attention on tangible values but on other intangible ones. Higher living standard
enable people to focus more on their health related issues such as spending time in health care
clubs and gyms.
Although medical research has pointed out several benefits of body fitness and workout, still
almost 95% population in Vietnamese is yet to attend health clubs.
Health care industry in general and fitness service in particular in Vietnam is still in the
growing stage, although it has been more than two decades of active operations. Currently,
total membership has reached 3.2 million and covered is only 4.2% of total population
throughout Vietnam, which is huge potential for growth in years to come.
Diamonds Group 3
Entrepreneurship A`I’A – New Venture
Health club business is not affected by different seasons and keeps running smoothly
throughout the year.
Total market size in Miami, Florida is almost 1.28 million members. Total population in
Miami including Miami-Dade County is 2.82 million9. That’s makes almost 45.3%10
attendance of members in health clubs. See the chart below to understand percentage of
estimated members.
Health care industry in Vietnam has grown at a very healthy rate in the last decade. As of
2010, fitness club market reached 176 billion VND. It has doubled in size at almost 12.56%
that was 78 billion VND in year 2005. It was a 0.6 million members market in the year 2005
which has grown to reach 1.5 million members in 2010. With such high speed of development,
the fitness service will be continuously booming in the near future.
Diamonds Group 4
Entrepreneurship A`I’A – New Venture
No business is about to grow permanently if it fails to understand the trends of the market
where it is operating. For Athens Fitness Club, it is an essential task to continuously keep an
eye on the changes of health care and fitness industry so that it can proactively coping with the
changes.
Body work out and exercise has become a daily life routine of many Vietnamese in the last
decade. People can own personal fitness and health care training equipments to do exercise at
home or go to fitness clubs to follow training programs. Hence, it will create a huge
opportunities for a business of Athens Fitness Club.
In a big city like Hanoi, life seems to be bustle and unstoppable. People are busier with their
works in the office, hence no time for doing exercise at home. Staying for a long time in front
of computers make people easy to get stress and damage their health. Moreover, not many
people can buy fitness equipments as many and qualified as in fitness clubs. They find that
coming to fitness clubs is not only for doing exercise but also for enjoying sport activities with
other people. Instead of going out to have drink with their friends after working hours, they
join fitness clubs to take a variety of training programs. As a result, fitness memberships in
office environment are increased day by day. This trend also is supportive the business of
Athens Fitness Club.
Diamonds Group 5
Entrepreneurship A`I’A – New Venture
Fitness club industry has a lot of potential in the future for both existing and new investors.
Market is expected to reach over 10 million members by the year 2015. Market volume, which
is 176 billion VND as of 2010, is expected to reach 318 billion VND by the year 2015.
Fitness club industry offers a huge lot of opportunities for existing and potential investors.
Marketing is growing for many reasons, some of them are following:
Diamonds Group 6
Entrepreneurship A`I’A – New Venture
5% children
High rate of diabetes are suffering from high blood pressure and heart disease
2.3 Competition
Sun Tzu has a very famous saying “know thy enemy as thyself, and you will win every battle”
(Sun Tzu Art of War). It means that together with thorough understanding about Athens
Fitness Club’ s internal environment, it is important for the organization to recognize and
define the strengths and weaknesses of its competitors. Basing on these definitions, Athens
Fitness Club can formulate suitable plans and strategies to compete effectively with them.
Thus, this part is created with the purpose of analyzing Athens Fitness Club main competitors.
2.3.1 Actilife:
- Certified trainers
Actilife has a rather convenient location but it is really small area in comparison with other
clubs. The area of all services, including one gym room, one function room for aerobics and
dance sport, lockers and toilet, is totally about 400m2 only. Its target customers are medium
and high income people. Actilife charges a lower price, about 12 USD for one time of gym and
5 USD for one time of aerobics. The trainers are professional and certified. Some trainers of
aerobics come from Russia, and the others are experienced and national certified trainers.
Diamonds Group 7
Entrepreneurship A`I’A – New Venture
However, the gym of Actilife is too small and its equipments are not new and qualified. The
facilities are really poor, some is broken or out of working. The changing room and lockers are
really small and old. Furthermore, the space is relatively small, which limits its capacity and
makes customer feel uncomfortable. In general, this fitness is suitable for the middle class
customers than the upper.
Location: 5th floor, Vuon Xuan building, 71 Nguyen Chi Thanh Street,
- Too crowed
Located at the Nguyen Chi Thanh Street, Nshape Fitness’s position is relatively convenient
which is in the center of a large area. Its target customers are in the middle and upper class.
Nshape Fitness is one of the best equipped gyms in Hanoi. Nshape Fitness has competitive
advantage of its strong brand name. The gym equipments of Nshape Fitness are from the
famous gym brand in the world - Life Fitness, USA. It has recently been expanded and now
has two classrooms, a free weight area, and a cardio area with treadmills, bicycle, and elliptical
machines, one locker room and one sauna. The other strength of Nshape is the personal touch
that is given to each member. The staff remembers the name of customers and well interacts
with them. The trainers are quite good and professional. Most of them are the national and
international certified trainers. One fitness trainer is a national champion bodybuilder, the
other is the national coach for kickboxing and a coach for weightlifting. The manager
introduced belly dance to Vietnam and is known internationally. Yoga teacher was flown in
from India specifically.
However, gyp equipments of NShape Fitness are not enough for the users, and some is not
qualified. There are not a lot of free weights. There is only one bench for doing bench press
and one inclined bench. There is no free squat rack (only an assisted one) and no military press
station. The inclined chair can be adjusted but it’s not fully extended to a 90-degree angle so
Diamonds Group 8
Entrepreneurship A`I’A – New Venture
the users feel pain when they do dumbbell shoulder press. The lack of free weight equipment
in general means that if somebody is using the bench press the others will have to wait until
he/she is done before they can start using it. This is really bothered customers when they work
out at their take turn to use an equipment.
NShape Fitness charges a quite high price for their service compared with others fitness clubs.
Even if comparing it to the gyms in 5-star hotels, there are cheaper options especially
considering the $330 joining fee. This is one thing that Athens Fitness Club can compete
against.
- Not so crowed
- No certified trainers.
The location of Star Fitness Hanoi is in the Garden Shopping Mall of the Manor, really far
from the center. The main target customers of Star Fitness Hanoi are high income people. Star
Fitness just opened some months ago so equipments and facilities are absolutely very new.
Fitness Equipments are well built and reliable products, LifeFitness, Cybex and Ivanko, the
best overall brands available for a commercial fitness environment. Star Fitness Hanoi has one
18 meters outdoor Swimming Pool, one luxury sauna, one steam bath, one Jacuzzi, and one
Cold Plunge Bath. It is not crowded as it just opened. The space and atmosphere is also good.
However, it's expensive compared with same range as the other fitness centers in Hanoi. The
swimming pool is a little bit small though and only few classes are running. The staffs are
friendly but there is no certified trainer. This is one weakness of Star Fitness Hanoi that they
need to consider for their development in future.
Diamonds Group 9
Entrepreneurship A`I’A – New Venture
2. Industry characteristics
To have a better understanding of healthcare industry in which Athens Fitness Club operates
its business, the industry characteristics are created for some aspects. The analysis shows
attractiveness level of this kind of business; the trends within the industry; and the key success
factors which AIA needs to look at and do well in order to ensure the success of the business.
Also, the analysis identifies the external factors that impact strongly on the business through
PEST analysis.
By analyzing Porter’s five forces model, this part will evaluate the attractiveness of hospitality
industry.
Rivalry determinants
For years, hospitality has become an important part of service industry, especially tourism
industry as it provided customers with comfortable accommodation, and food and beverage.
As a part of this component, food and beverage businesses are characterized with high growth
rate and large number of competitors. Brand identity is also important because it helps the
business to gain the market share and magnetize customers to come. In addition, the business
has weak product differentiation and low switching costs which leads to high competition. In
general, the rivalry determinants of the business are relatively high relatively high because of
high bargaining power of buyers and suppliers, and there are a lot of substitute services.
Diamonds Group 10
Entrepreneurship A`I’A – New Venture
Bargaining Power
Bargaining Power
of Suppliers INDUSTRY
of Buyers
COMPETITORS
SUPPLIERS BUYERS
Intensity of rivalry
DETERMINANTS OF DETERMINANTS OF
SUPPLIER POWER Threat of BUYER POWER
Substitutes
High number of different
Large number of buyers
suppliers
Buyer switching costs are low
Switching costs of suppliers
Many substitute products
are low
SUBSTITUTES
Diamonds Group 11
Entrepreneurship A`I’A – New Venture
At present, hospitality is a fast growing and lucrative industry. The enormous benefits from
this industry have caught the attention of many new entrants who still have to face with the
difficulty of brand identity as a main obstacle. Without a well-known brand name, it is actually
difficult for them to compete for a strong hold in the market. However, it is said that the entry
barriers of food and beverage business are moderately low in general as new competitors can
possibly launch a small family-own restaurant with a small amount of capital.
There are many kind of suppliers for a restaurant business like A`I’A. They can be the food
and beverage suppliers, flower suppliers, and many other suppliers who supply the restaurant
with stationary, toilet sanitary, kitchen tools, etc…These suppliers all affect to the business of
A`I’A, but at different levels.
The most powerful supplier of A`I’A business is the food and beverage suppliers. They
influence directly on the operation of the business because they provide the restaurant with
materials and ingredients to make the dishes. On the other hand, A`I’A is also impacted by
other suppliers but not as strong as food and beverage suppliers. Hence, the bargaining power
of these suppliers is moderate. In general, overall bargaining power of suppliers is relatively
high.
There are several types of buyers for A`I’A, such as the business people, tourists, and families.
These are also the types that influence on the business the most. The bargaining power of
buyers is high because of low switching costs and there are different substitute products that
customers can buy.
Threats of substitutes
A`I’A itself has already defined the threats of substitutes. The substitutes can be the small
family-own restaurants or fast-food restaurants with reasonable price. But the biggest threat of
substitute of A`I’A is considered as specialty restaurants, where people can try the same dishes
as of A`I’A but with lower price. In short, threats of substitutes in food and beverage business
are high because it is easy for customers to access to different types of substitutes.
Conclusion: Despite of some disadvantages such as high bargaining power of buyers and
suppliers, or increasing threats from substitutes, it is said that the hospitality industry in
general and the food and beverage business in particular are still very attractive because of
their high growth rate, and its supreme and enormous revenues.
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Entrepreneurship A`I’A – New Venture
Customer-oriented service
Unlike other industries, the main characteristic of service industry is intangibility. It means
that customers can not see, taste, feel, hear or smell the service before they purchase it.
Therefore, the experience that customers have in their mind after using the service will directly
affect on the future of the business as someone who purchase the service may go away empty-
handed but they do not go away empty-headed. They have memories that can be shared with
others. Therefore, it is a must for any hospitality business who want to be successful to put
customer-oriented service above the company’s profit. It is easy to understand because, once
customers are satisfied with the services, they will pay a fair price for the product. A fair price
includes a profit for the firm.
Product reliability
For an industry like hospitality, where the main purpose is to serve and satisfying customer,
staff plays an enormously important role as they are ones who directly communicate with
customer. In other words, staff is the “bridge” to connect the buyer and supplier of the product
together. Having a skillful and courtesy staff will increase the positive image of the business
and make customers feel satisfied. Once they are satisfied, customers will keep coming back
time to time.
Convenience of space/location
Location is also one of the key success factors of hospitality industry. Convenient location will
help to attract the eye and attention of customers. As well, a well-located place encourages
customer to come and therefore, can motivate their purchases of the product. Hence, each
business needs to find a suitable place where it can do business well.
Political factors have considerable influence on the business in both positive and negative
direction. Good political conditions to the business includes: the emergent development of
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Entrepreneurship A`I’A – New Venture
private sector; stable law system in Hanoi; encouragement of tourism development and
traditional culture preservation. Furthermore, the Labor law that provides 2 days off system
causing the increase in demand for going out for the meal. All of these advantages raise more
opportunities for the operation of the business. However, there are still some inconvenient
conditions for the growth of the business such as low transparency, high inspection hours,
mixed waiting periods and low dynamism.
Economic factors which comprise increase in wages and salaries, increase in demand for
goods and services, increase in living standard and increase purchasing power are looked as
most important component affecting the food and drinking industry. Firstly, it has direct
impact on buying power of consumers. Generally, the customer with high income will tend to
consume a larger number of products than those with lower income. That is also the same with
the business of drinking and food. Regarding how many times the customers going out to have
meal, the high-income customers always spends more time in restaurants because they are too
busy to prepare for themselves and it is possible that their job providing them more chance to
go to restaurants
Social factors also affect much on the business. Firstly, there is an increase in the trend of
seeking traditional culture and values as people started to be fed up with the various issues
caused by modern life and want to come back with traditional values. Furthermore, modern
life makes people busier, more and more people have less time, resources, and ability to cook
for themselves, which leads to the trend of having dinner out in big cities. In addition, people
are now not only want to satisfy their physical needs but also want to have delicious and
traditional dishes. All these things are the positive sign for the development of restaurant
business. On the other hand, there is a new tendency for fast-food restaurant, which may limit
the development of traditional restaurant business.
Currently, information technology has developed very quickly and penetrated to most
industries in the economy. In the service and entertainment industry, the introduction and the
popularity of online game has attracted millions of game players all around the world. As a
result, the young will no longer find interesting with traditional games, they will change their
habits to play modern games such as MU or empires…. That will be the strongest threats to
the preservation of traditional games and its business as well. Moreover, the development of e-
commerce will also have influence on this industry. Specifically, the online buying has
emerging relatively fast. So, instead of going out for the meal, the customers can call for room
service in order to have convenient meal
2. Business concept
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Entrepreneurship A`I’A – New Venture
Athens Fitness Club is a private own entity that has been newly established by a young but
dedicated founder. The differences that the Athens Fitness Club provides to customers are
high-quality training programs which are instructed by international certified trainers. There is
no doubt that the best fitness services and training programs are available in Athens Fitness
Club so as for the customers to improve their health and enjoy sport activities.
ming
Fitnes im
s Sw Pool
Diamond
Fitness Club
Sau
na
Athens Fitness Club will provide health related services such as Fitness (Gym, Aerobics,
Yoga, Dance Sport), Swimming Pool, Sauna, etc. Each service offers a different way to
improve health and body of customers.
Our fitness service offers participants a number of classes in a variety of fitness programs. The
fitness classes that are included Butts & Guts, Body Sculpting, Aerobics, Cardio Core, Flex &
15
Entrepreneurship A`I’A – New Venture
Stretch, Power Up, and Zumba, etc. The memberships shall be free to use swimming pool and
sauna.
Cardio kick boxing: This is a great cardiovascular and muscle-strengthening class which is
using techniques of professional kick-boxers. The participants will use speed bags, heavy bags,
wave masters, jump ropes, and focus mitts. This is a great weight loss and toning class.
Flex & stretch: This hour-long class incorporates the best of Pilates, body conditioning, and
basic stretching. The first 30 minutes will be resistance training using free weights, bands, and
tubes. In the second 30 minutes, participants will complete a full body stretch to increase
flexibility and muscle elasticity. Stretching is essential in preventing exercise induced injuries
of muscles and tendons. A broad range of fitness participants will enjoy this class because it is
moderately paced and safe, yet effective.
Power-up: This class will be taken in the early morning to provide participants the energy for
the whole day long. The members will get a cardio work-out in this fun class full of
calisthenics, drills, and team activities.
Mixed martial arts: Mixed martial arts is an intense and evolving sport that includes jiu-jitsu,
judo, karate, boxing, kickboxing, wrestling and other strategic and tactical practices. The
competitors are among the best-trained and conditioned athletes in the world.
Get fit with pilates: This class will incorporate pilates mat work utilizing a mini ball and flex
bands. Participants will also make use of the stability ball, which will further target core while
improving posture and balance. The class will focus on improving overall muscular endurance,
with an emphasis on strengthening abdominals, and lower body (glutes and thighs).
Body sculpting: This class is a strength training workout that combines flexibility and
cardiovascular conditioning. Body Sculpting is highly recommended to those enrolled in a
weight loss program because it helps retain lean muscle tissue while boosting the metabolism.
Any fitness level can enroll. Strong, toned muscles increase metabolism and burn calories far
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Entrepreneurship A`I’A – New Venture
more than aerobic dance sessions, walking or stair climbing. Body Sculpting also helps to
prevent osteoporosis.
Curves: Curves specializes in a 30-minute total body work-out especially designed for women,
proven to strengthen and tone muscles while improving cardiovascular health.
Aerobics: This class offers a great cardio-vascular work-out. Most classes consist of low
impact aerobics, weights, dyna-bands, and floor work. Classes may vary by level of intensity
and choreography.
Strengthen, stretch & tone with the stability ball: The stability ball is one of the most versatile
piece of equipment used today in fitness settings. It has long standing success and
effectiveness in developing balance and core strength. The unique thing about the stability ball
is that it utilizes the neuromuscular system in a way that no other piece of equipment can. This
class will integrate fundamental core strengthening with dynamic stretching and toning. The
participants will experience a total body conditioning workout like never before.
Pilates and strength training: This program is designed to help the participants create the
fabulously fit, long, lean, and strong body. Pilates is a great compliment to weight training,
producing strength without bulk and combining sculpting, balance and flexibility exercises to
get the best of each discipline in less time. We begin the workout with a warm-up and weight
training. In the second portion, we work with the ball and on the mat with core-strengthening
moves taken from traditional pilates, and end with a tension releasing cool down. Throughout
the class we focus on correct breathing and proper alignment, helping the participants develop
body awareness and control.
Yoga: Yoga quiets the mind and energizes and aligns the body with a flowing series of
postures that stretch and strengthen. Breathing and stretching are combined to challenge and
relax the body. Yoga is an ancient practice that greatly reduces the stress of modern life.
Hatha yoga: This is the most commonly practiced tradition of yoga. Hatha yoga is an entire
philosophy of being with the goal of achieving peace, harmony and union of breath, body and
17
Entrepreneurship A`I’A – New Venture
mind, creating the union of mind, body and spirit. It is an ancient, time tested practice of well
being and calm abiding. This class will incorporate four basic yoga principles: centering and
relaxation to calm the mind; yoga postures to stretch, strengthen and tone the body; breathing
techniques to increase lung capacity, strengthen internal organs and deepen one’s ability to
relax; and meditation practice as a means to reduce stress and achieve spiritual self-
enlightenment. Please bring a mat and wear loose, comfortable clothing. This class is
appropriate for beginners to advanced practitioners as each person works at his or her own
pace.
Gentle yoga: A focus on mild to moderate stretching and muscle strengthening are the key to
this class. Learn to reduce stress and relax through exercise that will release tension from the
mind as well as the body. This class is very useful for those who recuperate from an illness or
surgery, or suffer injuries such as chronic back pain. This is an excellent class for beginners.
Kundalini yoga: is the oldest known yoga practice. It has been practiced for over 7,000 years.
The word Kundalini refers to the bodies primal energy which is housed in the spine. Through
the practice of Kundalini yoga, one can unlock and tap into the bodies energy, raising it from
the base of the spine to the top of the skull. This awakens the nucleus projection of every cell
in the body. In this type of yoga, the experience is most important, not the form.
Advanced beginner yoga: A yoga class for those who have some experience with yoga and
wish to pursue it further or those interested in a more challenging class. This is a traditional
yoga class and will include breathing practices, physical postures and movements as well as
relaxation techniques.
Vinyasa flow yoga: The word vinyasa means breath synchronized movement. This vinyasa
flow class is a progressive series of postures linked to the inhalation and exhalation of breath.
Movement through the asanas purifies the physical body, while mastery of the breath, through
concentration, quiets the mind. The class will begin with centering and quieting of the mind-
body, move through a powerful flow of sequenced asanas, and end with a meditation.
Belly dance:
To add some Indian spice to workout, Belly Dance, a fusion of Indian and Western dance
forms, offers an aerobic warm-up followed by dynamic and energetic choreography. Belly
18
Entrepreneurship A`I’A – New Venture
dancing is one of the hottest dances around the world. It’s ideal for novices who are looking
for a light-hearted workout.
Zumba / Cardio dance: Zumba fuses hypnotic musical rhythms and tantalizing moves to
create a dynamic workout system designed to be fun and easy to do. This class will be an
absolute blast in one exhilarating hour of calorie-burning, heart-racing, muscle pumping,
body-energizing movements meant to engage and captivate for life. Zumba has spread like
wild-fire, and has positioned itself as the single most influential movement in the industry of
fitness.
Figure 1:Mission:
Core policy
Toof Athens
give Fitness Clubthe best fitness in Hanoi that can be
our customers
found in variety of high quality service and professional training
The illustration indicatesWe
programs. theprovide
core policy
theseofwith
Athens Fitness Club,
a dedication to thewhich is created by the
highest
founders. It can be seen from the diagram that
satisfaction the mission, vision and the value of Athens
of customers.
Fitness Club deciding factors that lead the operation of the business regarding business
imperatives, the development of the organization and human resource, and the improvement of
serviceVision
quality. For a healthier life
:
2.2.1 Mission
Value: Professional training programs by international certified
Athens Fitness Club is continuallyinstructors
pursuing to become the best provider of fitness in
Hanoi. In fact, our primary focus is to provide a professional health care service to our
customers, which can be found in a variety of training programs as well as high quality
Businessallimperatives
equipments and facilities. Especially, training programs will be instructed by international
certified trainers. In addition, keeping in mind that the satisfaction of the customers is golden
rule, the Athens Fitness Clubofisorganization
Development confident to&deliver
humanthe service with a sense of warmth,
resource
friendliness, and professional performance.
Improvement of service quality
2.2.2 Vision
In ten years, Athens Fitness Club will be the best choice for health care and fitness
service in Hanoi. Athens Fitness Club is believed to have great potential to develop.
Especially, the trend of healthcare is increasing, and being supported by not only the
government, but also people of concern; hence, in ten years Athens Fitness Club has an intent
ambition to become the first choice when people think of workout service in Hanoi,
19
Entrepreneurship A`I’A – New Venture
The delivery policy of Athens Fitness Club is based on the mission and vision, or in other
words, all the devising strategy of the business is imperative to the strategic vision of Athens
Fitness Club. It determines the development of the organization, and the policy for staffing the
human resource. As a result, it also influence to the strategy of improving the service quality.
In brief, all the strategic outcomes of the business have to obey the core policy of Athens
Fitness Club, in both short term and long term.
3. Company ownership
Athens Fitness Club is a partnership business, in which three members are the main investors.
The initial investment of the business is equity investment. The three key members decide the
strategy of the business and have equal importance in decision making and contributing to the
success.
Athens Fitness Club operates the land area of 1000m2 at Lac Long Quan Street, Tay Ho
district Hanoi, Vietnam, in which 800 m2 is for building and the remaining the for external
decoration to express the aesthetics of antique Hanoi and the beauty of nature. The area of
building includes the three sections A, I and A, administrative office, kitchen, and restroom.
The surrounding land is exaggerated by tree, plan, picture, calligraphy, pottery, and china. All
the operating area of ATHENS FITNESS CLUB pursues the goal to visualize ancient Hanoi in
the most elegant and peaceful way.
The ATHENS FITNESS CLUB site is chosen for the following criteria which meet the
demand of people truly concern on the elegant value of Hanoi
Tranquil atmosphere
Easy to access by public and target market (near big hotel for business and international
tourists such as Thang Loi, Sheraton)
The maximum occupancy of ATHENS FITNESS CLUB is about 150 seats. All the decoration
and facility is one of the top qualities. With all that qualification, ATHENS FITNESS CLUB
is believed to be a unique and promising business offering such a high quality of product that
no business in Hanoi can compete.
20
Entrepreneurship A`I’A – New Venture
One of the very important responsibilities Athens Fitness Club of marketing is to define the
right market and the groups of customers that business may serve best. It is essential because
Athens Fitness Club recognizes that it cannot appeal to all buyers as they are too numerous,
widely scattered and varied in their needs and buying practices. In order to find out its groups
of customers, Athens Fitness Club has applied strictly the steps in segmentation, targeting and
positioning.
Figure 1:
There is no single way to segment a market. Each firm has to try different segmentation
variables, alone and in combination. Understanding this, Athens Fitness Club decided to use
multiple segmentation to segment its target customers. Using this method, Athens Fitness Club
chose three variables, including age, demographic and psychographic. Each of these variables
helped Athens Fitness Club effectively in the process of segmentation.
For demographic variable, Athens Fitness Club uses two units to segment. They are income
and age. Income segmentation is commonly believed to be one of the primary variables
affecting pricing strategy. Price is not solely determined by income, but there is often a close
correlation. Athens Fitness Club tends to target on high income people as they are suitable
with the pricing strategy of the restaurant. Besides, Athens Fitness Club business also
21
Entrepreneurship A`I’A – New Venture
concentrates on age variable. For this unit, Athens Fitness Club separated its target customers
into two groups. The first group at the age of 35-60 years old demographic will be the primary
target market. This group already shows interest in the sports field and also has attained the
necessary socioeconomic status allowing them to purchase our service. The other group is at
the age of 20-34 years old. Although this age group does not have the buying power of the
“35-60 year olds”, they are still a very powerful purchasing group as the population at this
group is much higher than others accounting 30% of total population of Vietnam.
Furthermore, Athens Fitness Club used psychographic variable together with these above ones.
In term of this variable, Athens Fitness Club divided its customers according to their social
class. Especially, Athens Fitness Club drives its attention on the upper-middle class and upper
class, ones who can use the products and services of Athens Fitness Club significantly.
Following is the summary of what is discussed above.
- 35 – 60 years old
Psychographic
- Upper class
2. Target market
Target market of Athens Fitness Club is the residents in the West of Hanoi, including Tu Liem
District and a part of Cau Giay District. In this area, there are many new buildings such as
Ciputra Hanoi International City, Vuon Dao Apartments and Villas, West Westlake City,
where will attract many people to come for residence.
22
Entrepreneurship A`I’A – New Venture
Currently, the west area is the fastest developing area of Hanoi. Hence, the population in this
area is increased day by day. According to 2009 report of Hanoi, total population of Tu Liem
is 395,000 people, and the estimated population growth rate is 1.2% yearly.
Cost
High
Low High
Value
Low
As it can be seen from the figure, Athens Fitness Club positions itself at the high-end market,
high cost but high value. It is fit with the groups of target customers of the company, which are
the high income people who actually love and appreciate the truly values of Hanoi traditional
culture. Also, the price of Athens Fitness Club is fairly high, which is afforded only by the
company’s target customers. With the professional service and certified staffs, it is an
advantage for Athens Fitness Club to pursuit its target position. It is definite that Athens
Fitness Club will tries hard to maintain and expand its high-end position in the market.
There are not many competitors in this area currently. The main competitor in this target
market is Ciputra Fitness Club which is only served for the residents of Ciputra Hanoi
International City.
Strength
23
Entrepreneurship A`I’A – New Venture
Ciputra Fitness Club is a complex sport area with Fitness, Swimming Pool, Tennis court,
Basket ball court, Sauna, Jacuzzi, etc. The gym equipments of Ciputra Fitness are new and
high quality of Life Fitness, the famous gym brand in the world. The facilities are luxury and
comfortable.
Weakness
The services of Ciputra Fitness Club are not as good as its equipments and facilities. The staffs
are not professional and qualified (no certified trainer). There is lack of services for women,
who do not want to work out body heavily, such as aerobics, yoga, dance sports. The other
weakness of Ciputra Fitness Club is that its memberships are the residents living inside
Ciputra Hanoi International City only. The customers living outside are not allowed to use
these services. This is one factor that Athens Fitness Club enables to compete against.
2. Competitive advantage:
After elaborating the competitor analysis, Athens Fitness Club realizes that it owns some
distinctive advantages over other competitors. Actually, these advantages determine the
competitive position of the business in the fitness club industry. More importantly, they are
paramount factors to selection the strategy for the business. These competitive advantages are
location, and professional service and lower cost.
2.2 Location
Athens Fitness Club is located in the west and near the suburb of Hanoi where it has
advantages over the competitors. Firstly, Athens Fitness Club is near Westlake, a peaceful and
beautiful place where customers can enjoy interesting and comfortable feeling in the time of
being served here. This is one of important factor to create a good atmosphere. Also, it is very
convenient for customers to reach Athens Fitness Club because transportation from and to here
is very good and accessible and large parking lot. This location, moreover, is surrounded by
many new buildings so it can attract more and more new customers. Moreover, the renting fee
is not as high as other area near the centre, hence reducing the expense.
One prominent feature of Athens Fitness Club is professional service. This can be expressed in
three aspects, named proficient staffs, and managing the intangibility, the atmosphere indeed.
Professional and qualified staffs and trainers guarantees to deliver professional service to all
customer segmentations. As mention above, with international certified trainers, Athens
Fitness Club gives commitment and dedication towards our health care services with lower
cost in comparison to other same rank fitness clubs. Therefore, this difference of Athens
Fitness Club is created during staffing, training, and job development part.
24
Entrepreneurship A`I’A – New Venture
Athens Fitness Club charge lower cost not only to attract the customers at the beginning of
business, but to compete with the competitors as our pricing strategy in the long term. Athens
Fitness Club commits to provide the best services with lower cost than other fitness clubs
which are in the same rank.
II – Business strategy
1. SWOT analysis
1.1. Strengths
Warmly & family atmosphere – AIA tries to give customers a warmly and family atmosphere
where customers feel like they are home and are cared by their family members.
Unique business model – creating a model with three different areas works separately. Each
area functions a particular task (A` area: served customers with variety of Hanoi cuisines; I’
25
Entrepreneurship A`I’A – New Venture
area: provided customers with ancient values of Hanoi; A area: helped customers to make their
own dishes).
Dedicated & customer-oriented staff – having a creative, dynamic, young, and enthusiastic
staff, who actually love culture and want to share their passionate to others. They all have
customer-oriented thinking, in other words, they put the satisfaction of customers on the top.
Organization culture: “family culture” - crafting an open, honest, respectful and trust
environment where people are “all in a family”. Everyone gets to know each other personally
and makes them feel they are dealing on a one-to-one basis with individuals they could trust.
Means of payments – AIA has a good system of means of payments. Customers come to AIA
can pay their bills by credit card, foreign currency (USD), cheque, or in cash.
Food security – AIA are proud of its quality and hygiene standard of food from the beginning
step to the last step of delivering a finished dish to customers. AIA assures that the foods are
totally delicious and healthful for the users.
Acceptances of public – cultural values are things that need to be preserved and get a lot of
concerns from the society. By generating a business that mainly introduces and protects the
ancient values and traditions of Hanoi, AIA has got significant supports from the society and
local residents.
Specialization – unlike dozens of restaurants that sell assorted kinds of dishes in both Western
and Orient style, AIA has specialized in just Hanoi cuisines and antique values. As the result,
it can have deep understandings as well as professional style in making the cuisines.
Good location and design – lying in Au Co street, AIA has an absolutely beautiful location
with a lot of advantages, including the pure surrounding, large area, and thousands of potential
customers. Moreover, AIA has designed its own unique structure which is totally different
from other competitors.
Quality of service – AIA ensures that it will provide customers with international high
standard of food and services. Any demand or requirement of guests is orders for our business
and it will be served as good as possible.
1.2. Weaknesses
Lack of experience – AIA is planned and operated by five students still lack of experience
in managing the business.
High price of food & service – with the average price of 250,000 VND/person, AIA thinks that
the price is still at a high level and not all the people can afford to come there regularly. As the
result, the market that AIA wants to serve is limited.
26
Entrepreneurship A`I’A – New Venture
Lack of variety – because AIA specializes in Hanoi cuisines, it is hard for the business to
create more choices in the menu for customers.
High cost of capital – as AIA has to rent a large square of land and construct its own building,
AIA has to suffer a high cost of capital.
Lack of brand name – AIA is still at its start-up stage, so it can not build a strong brand name
for its own image because not many of customers know about its appearance. Also, it has the
pressure of famous brand names that already existed in the hospitality industry.
1.3. Opportunities
Increase in the interest of Hanoi culture – The growth of the economy makes people to have
more income for social activities. When they are no longer care about the physical condition,
they have more demand for relaxation. As the result, they tend to look back to traditions and
cultural values- things belong to the ancient times. That is obviously an opportunity for AIA to
have more potential customers.
Increase in the number of tourists, especially those love cultures – Together with the increase
in international tourism industry, the number of tourists visiting Vietnam also enlarge. The
thing is many of them come here because of culture-loved and they really want to experience
the new faces of Vietnamese traditional culture. This trend, therefore, will help AIA to have an
additional source for serving.
Change in working time and family size – Instead of working 6 days per week, people only
have five days at work, so they have more free time to engage in social and entertainment
activities. Moreover, the family size is smaller and smaller, with less children than in the past.
The change in working time and family size will motivate people to join in social activities,
hence, creating more opportunities for AIA.
1.4. Threats
Increase in tax for luxury goods will make AIA to suffer more expense and reduce its profit.
Law and regulation restrictions – The appearance of business law may restrict the favorable
condition for AIA having bad influence on the business.
Imitation of competitors – Competitors can easily copy the idea or the design of AIA AIA
may lose its uniqueness and competitive advantage.
The ups and downs of other factors - If SARS or Bird flu re-happens, there will be a sharp
decrease in the number of tourists. This could make AIA lose a number of consumers.
Seasonality has a strong influence on the business. The problem of seasonality can be the
decrease of guests in off-season, which causes the issue of reducing the number of employees
27
Entrepreneurship A`I’A – New Venture
and makes them become jobless. Also, it is the off-season that makes AIA spends more than
earns profit losses.
2. Target market
Target market of Athens Fitness Club is the residents in the West of Hanoi, including Tu Liem
District and a part of Cau Giay District. In this area, there are many new buildings such as
Ciputra Hanoi International City, Vuon Dao Apartments and Villas, West Westlake City,
where will attract many people to come for residence.
Currently, the west area is the fastest developing area of Hanoi. Hence, the population in this
area is increased day by day. According to 2009 report of Hanoi, total population of Tu Liem
is 395,000 people, and the estimated population growth rate is 1.2% yearly.
There are not many competitors in this area currently. The main competitor in this target
market is Ciputra Fitness Club which is only served for the residents of Ciputra Hanoi
International City.
Strength
Ciputra Fitness Club is a complex sport area with Fitness, Swimming Pool, Tennis court,
Basket ball court, Sauna, Jacuzzi, etc. The gym equipments of Ciputra Fitness are new and
high quality of Life Fitness, the famous gym brand in the world. The facilities are luxury and
comfortable.
Weakness
The services of Ciputra Fitness Club are not as good as its equipments and facilities. The staffs
are not professional and qualified (no certified trainer). There is lack of services for women,
who do not want to work out body heavily, such as aerobics, yoga, dance sports. The other
weakness of Ciputra Fitness Club is that its memberships are the residents living inside
Ciputra Hanoi International City only. The customers living outside are not allowed to use
these services. This is one factor that Athens Fitness Club enables to compete against.
28
Entrepreneurship A`I’A – New Venture
2. Competitive advantage:
After elaborating the competitor analysis, Athens Fitness Club realizes that it owns some
distinctive advantages over other competitors. Actually, these advantages determine the
competitive position of the business in the fitness club industry. More importantly, they are
paramount factors to selection the strategy for the business. These competitive advantages are
location, and professional service and lower cost.
2.2 Location
Athens Fitness Club is located in the west and near the suburb of Hanoi where it has
advantages over the competitors. Firstly, Athens Fitness Club is near Westlake, a peaceful and
beautiful place where customers can enjoy interesting and comfortable feeling in the time of
being served here. This is one of important factor to create a good atmosphere. Also, it is very
convenient for customers to reach Athens Fitness Club because transportation from and to here
is very good and accessible and large parking lot. This location, moreover, is surrounded by
many new buildings so it can attract more and more new customers. Moreover, the renting fee
is not as high as other area near the centre, hence reducing the expense.
One prominent feature of Athens Fitness Club is professional service. This can be expressed in
three aspects, named proficient staffs, and managing the intangibility, the atmosphere indeed.
Professional and qualified staffs and trainers guarantees to deliver professional service to all
customer segmentations. As mention above, with international certified trainers, Athens
Fitness Club gives commitment and dedication towards our health care services with lower
cost in comparison to other same rank fitness clubs. Therefore, this difference of Athens
Fitness Club is created during staffing, training, and job development part.
Athens Fitness Club charge lower cost not only to attract the customers at the beginning of
business, but to compete with the competitors as our pricing strategy in the long term. Athens
Fitness Club commits to provide the best services with lower cost than other fitness clubs
which are in the same rank.
3. Strategy selection
It is undoubtedly to say that strategy is one of the most important factors leading a company to
success. In other words, every company needs to have a suitable strategy to reach its strategic
goals in the short run, its vision in the long run. ATHENS FITNESS CLUB business also
follows that rule. As a usual step in strategic selection, after elaborating environment analysis,
29
Entrepreneurship A`I’A – New Venture
and SWOT analysis, we can easily found out what the competitive advantages of the business
are. As a consequence, deciding which strategy to follow. ATHENS FITNESS CLUB finally
chooses “differentiation” strategy as it official one in the way of reaching its strategic goals.
There are some important reasons that lead to the ‘differentiation strategy’. Firstly, the
distinctive differences of the three competitive advantages of ATHENS FITNESS CLUB
indicate the higher position in the hospitality industry. These also can be found only in
ATHENS FITNESS CLUB, not for other hospitality entity. Moreover, ATHENS FITNESS
CLUB targeted at a niche market which is high income, business and international tourists, and
they all want to have something different from normal life and restaurants. All in all,
differentiation is the best choice for strategy of ATHENS FITNESS CLUB.
1. Marketing strategy
Beyond evaluating current businesses, any company should consider in the future. Companies
need growth if they are to compete more effectively, satisfy their stakeholders and attract top
talent. Like any other company, AIA also pays much concern on the future business, thinking
of how to gain more market share with its current products in its current markets. In other
words, AIA decides to follow penetration strategy for its growth and development. With the
chosen strategy, marketing has the main responsibility for achieving profitable growth for AIA
as it must identify, evaluate and select market opportunities to suit with penetration strategy.
To make more sales to current customers without changing its products, AIA tries to improve
in promotion as it spends a big amount of budget for advertising in newspapers, magazines,
television, etc… and these programs tends to be strongly maintained and developed. In
addition, AIA also concerns on providing customers with better and better services as well as
creating more choices in term of menu selections so that customers feel comfortable and
pleasure when coming to AIA. Furthermore, AIA focuses on changing its decoration and
design to encourage customers stop by more often and keep them back from time to time for
those who have a chance to visit AIA.
One of the very important responsibilities of marketing is to define the right market and the
groups of customers that AIA business may serve best. It is essential because AIA recognizes
that it cannot appeal to all buyers as they are too numerous, widely scattered and varied in their
needs and buying practices. In order to find out its groups of customers, AIA has applied
strictly the steps in segmentation, targeting and positioning.
30
Entrepreneurship A`I’A – New Venture
Figure 1:
There is no single way to segment a market. Each firm has to try different segmentation
variables, alone and in combination. Understanding this, AIA decided to use multiple
segmentation to segment its target customers. Using this method, AIA chose three variables,
including geographic, demographic and psychographic. Each of these variables helped AIA
effectively in the process of segmentation.
Firstly, for geographic variable, AIA’s customers were divided base on regions. It means that
AIA separated its target customers into international tourists and domestic ones. It is said that,
this division assists the business much because international and domestic customers differ in
their culture and behavior. That is why dividing target customers base on regions will help
AIA managers and staff to effectively deal with them.
Secondly, for demographic variable, AIA used three units to segment. They are income, family
life-cycle and occupation. Income segmentation is commonly believed to be one of the
primary variables affecting pricing strategy. Price is not solely determined by income, but
there is often a close correlation. AIA tends to target on high income people as they are
suitable with the pricing strategy of the restaurant. Besides, AIA business also concentrates on
family life-cycle variable. For this unit, AIA focuses on married couples with children and
married couples with no children under 18. Furthermore, AIA also concerns on the occupation
of customers as it targets on business people the most. It is said that demographic factors are
the most popular bases for segmenting customer groups because it is easier to measure than
other types of variables. Even when market segments are first defined using other bases,
demographic must be known to assess the size of the target market and to reach it efficiently.
That is also the reason why AIA concentrates on this variable the most in determining its target
customers.
Finally, AIA used psychographic variable together with these above ones. In term of this
variable, AIA divided its customers according to their social class. Especially, AIA drives its
attention on the upper-middle class and upper class, ones who can use the products and
services of AIA significantly. Following is the summary of what is discussed above.
- Domestic customers
31
Entrepreneurship A`I’A – New Venture
Demographic
Psychographic
- Upper class
From the analysis of segmentation, AIA has come to the last decision of its target customers,
including business people, upper-middle and upper families (especially, AIA also targets on
the children of families who learn at foreign schools in Hanoi), and international tourists.
However, these groups of customers have to have a common characteristic, which is the love
of traditional culture of Hanoi. For each type of customers, AIA analyses carefully and deeply
about their needs and wants in order to serve them effectively.
First of all, business people are considered as the main customers of AIA restaurant. AIA
realizes the two things that affect business people most, consist of the atmosphere and
acculturation. It is said that business people always need a formal atmosphere for business
meetings or negotiation. Even when they are on a party, it is a must that the party need a
formal atmosphere with professional services as these conditions may sometimes help the
business works to be successful. Furthermore, business people, particularly foreign
businessmen and business women, need to be acculturation. What is known as acculturation is
the process through which “a person not only understands a foreign culture but also modifies
and adapts his or her own behavior to make it compatible with that culture”. Therefore, it is
very important to a manager or a business person to understand about the culture of their
employees or of the partners who they do business with so that they can get better results from
the business. Both of the above requirements will be highly satisfied at AIA, where the
professional services are provided together with the truest values of ancient culture of Hanoi.
Another group of customer that AIA takes into consideration is upper-middle and upper
families. For this group, AIA pays much attention in satisfying their needs of self-
actualization, a warmly family atmosphere and interesting cultural knowledge and experiences.
Nowadays, there is a fact that a large number of people become rich and having more than
32
Entrepreneurship A`I’A – New Venture
they expected. For these people, eating is not to satisfy their physical need but to be an art.
They want to show others that they belong to elite society, knowing much about traditional
eating culture of Hanoi, loving and preserving these precious values. In other words, these
people are at self-actualization level, trying to fulfill their desire and hobby.
In addition, the modern life makes people busier and almost forgets the atmosphere of a
family. For various families, a meal with full of family members is somewhat impossible. That
is the reason why they need a warmly family atmosphere to build up the happy times of the
family and create unforgettable memories. Also, a place like AIA will give customers new and
deep knowledge about the faces of ancient culture, and help them to have more interesting
experiences.
Moreover, AIA also targets families by targeting kids. In fact, because of bustle life, a lot of
parents now find it difficult to have time to take care of their children and they often feel guilty
about this. If they could make a dining experience that the children would enjoy, the family
would have fun together. Aware of this idea, AIA has built A area to help the children to have
new entertainment activities, cultural learning and more importantly, children can have the
feeling of self-esteem. They can feel self-esteem because they can receive applauses and
compliments from their parents and others. As the result, children will feel happy and proud of
what they have tried to show their parents, an effective way to encourage the ability of
children.
The fourth, also the final group of AIA’s customers are international tourists. This is very
common as there are millions of tourists come to Vietnam each year. A lot of these visitors
come for culture-loved desire and want to be satisfied with the high quality of products and
services; friendly and warmly atmosphere; as well as new cultural experiences. As the main
aim is to provide customers with the truest traditional culture of ancient Hanoi in variety of
marvelous dishes and elegant activities, along with professional service style, AIA believes
that it can successfully reach this group of customers.
Cost
High
Low High
33
Entrepreneurship A`I’A – New Venture
(e.g. business people, upper families and foreign tourists). With the unique model and the
professional style in serving and operation, it is an advantage for AIA to pursuit its target
position. It is definite that AIA will tries hard to maintain and expand its high-end position in
the market.
3. Objectives
Like any other part of the business, there are also objectives for marketing department to
achieve. AIA has set up some fundamental goals for marketing as follow:
Introduce Hanoi traditional culture to customers and build famous brand name for the venture
These objectives are very essential because they will be the target for marketing to obtain. In
other words, these objectives guide the activities of marketing and determine the success of
marketing strategy.
4. Marketing mix
The purpose of marketing mix strategy is to support for the objectives above and create
marketing activities to achieve these objectives. Firstly, it is necessary to investigate on the
components of this strategy as below:
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Entrepreneurship A`I’A – New Venture
The figure shows that there are four main components of a marketing mix strategy, including
product, pricing, place (distribution) and promotion strategy. These strategies support each
other, and together build up the major part of a marketing strategy.
The first component of marketing mix that needs to be mentioned is product strategy, which
includes three main levels: core products, actual products and augmented products. For AIA,
these three levels are illustrated in the following model.
Augmented
Warranty
products
Design
Actual
Credit
products
Brand
name
Core
Quality products
level
It can be seen from the figure that, the most basic level is the core products, which answers for
the question: “what is the buyer really buying?”. The core product that AIA restaurant
provides customers is the truest Hanoi traditional culture and values. It means that what
customers really buy is the cultural values, the knowledge of ancient Hanoi as well as new
experiences when they are eating out. This core product is offered through the three different
parts of AIA, which are called A`, I’ and A areas. In A` area, tourists and customers will have
a chance to enjoy the various dishes of Hanoi delicious cuisines. And these dishes are surely
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Entrepreneurship A`I’A – New Venture
cooked in the most traditional style so that customers will be provided with the best quality
and received more than expected values.
Leaving A` area, customers can enter I’ area to take pleasure in different atmosphere. Cover
the whole area is the pure, peaceful and tranquil surrounding, which can make people calm
down and relax. AIA tries its best to re-create the actual atmosphere that once was existed in
ancient Hanoi through its elegant values. In this area, tourists and guests can immerse in
elegant pleasures such as calligraphy, tea ceremony , appraising flowers and pictures, or
relaxing in the rhythm of traditional folk songs (e.g. ca tru, hat quan ho). Or else, they can
loosen up through the gentle and marvelous melodies of traditional instruments. Certainly,
beside these values, customers can also try the various kinds of drinks, both traditional and
foreign ones.
Alternatively, A area brings the customers with exciting and dynamic atmosphere. In this area,
customers who want to make dishes themselves can be absolutely pleased. AIA creates this
area because it believed that not all people now, especially the young, know how to cook even
though they are willing to learn. As the result, A area becomes an ideal place where they have
chances to practice their cooking.
Another level of product strategy is actual products, which used to be “extra products offered
to add value to the core products and help to differentiate it from the competition”. The actual
products of AIA consist of quality level, brand name and its design.
First of all, AIA really focuses on its design characteristics to generate the difference in
compare with its competitors. To put things in consideration, AIA composes a theme for its
design, which is “ancient Hanoi and family atmosphere”. According to this theme, the
decoration of the restaurant is implemented. At the start, the paint color of the restaurant is
beige color. This is a light color and it already matches with the lighting system, mostly in the
mixture of red and yellow neons to create the feeling of antique atmosphere of Hanoi.
Together with those colors are the wonderful rhythms of traditional instruments (e.g. sao, dan
bau, trong, etc…) and the beautiful voices of singles singing traditional folksongs. The space is
decorated with furniture mainly made of bamboo and rattan, things have significant traditional
values and meanings for any Vietnamese. The decoration process is adorned with tiny and
unique ornaments such as pictures and photos of Hanoi in the old days, hand-made items,
ceramic items, etc.
Furthermore, it is necessary to look at the quality level of AIA. The thing is that AIA ensures
to give customers with international standard of service quality and high-quality products
because AIA has positioned itself at the high-end market. To do this, AIA usually concerns on
the quality of every dish from the first to the last step making a specialty. In addition, it still
pays attention on supplying high standard quality of the service offered, especially on training
and managing its staff. All of 60 employees have to wear uniform, which is the traditional
long-dress in light brown color. They also have professional skills in serving guests and are
able to satisfy every requirement of customers.
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Entrepreneurship A`I’A – New Venture
The last component of actual product to be mentioned is branding. Although AIA is still at the
start-up stage; and it is very difficult for the restaurant to build a strong brand name among its
various famous competitors, it still tries hard to generate its own image in the mind of
customers. By choosing the name AIA, the restaurant wants to remind guests of the da diet
rhythm of Vietnamese folksongs. From that, it encourages the customers to memorize the
ancient times and create the feeling of loving the old days. AIA also attempts to build its own
image as the ideal place “where true Hanoi traditional values were preserved” and every time
customers think of the ancient Hanoi, they think of AIA.
The augmented products are an important concept because hospitality and travel services
require customer co-production of the service. The augmented products of AIA include credit,
warranty and the post-purchase service. By discussing credit, AIA wants to offer customers
with extras when they use the restaurant’s services. Credit includes the two main programs,
one is the tick point program for loyal customers and the other is the lucky number draw
program for every customers. What’s more, as it is mentioned before, AIA concentrates much
on guaranteeing its quality of products and services so that customers feel completely pleasant
and comfortable when coming to the restaurant. Particularly, AIA focuses intentionally on the
post-purchase service through feedback system, thank you letters and photograph sending
program. Any feedback of customer will be highly appreciated as it is these useful comments
that make the firm do better business and have better result.
Price is the only marketing mix element that produces revenue. All others represent cost. A
pricing mistake can lead to a business failure, even when all other elements of the business are
sound. That the reason why managers of AIA should understand this strategy clearly.
Simply defined, price is the amount of money charged for a good or service. When considering
the price, it is a must for AIA managers to consider three main factors, including cost,
customer and competition. Also, in a marketing mix strategy, the price would be coordinated
with product design, distribution and promotion decisions to form a consistent and effective
marketing program.
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Entrepreneurship A`I’A – New Venture
Costs set the floor for the price AIA can charge for its products and they take two forms, fixed
and variable. The fixed costs that AIA has to bear can be bills each month for renting land,
interest, utility, employee salaries, etc. On the other hand, AIA also needs to consider variable
costs which vary directly with the level of production, such as food items, beverages, etc. It is
said that these costs are relatively high, which result in the high price of the dishes.
Another factor that has direct influence on the price of AIA is its customers. As it is
determined previously, the target customers of AIA are high income people, for example,
business people, international tourists and upper families. With these customers, it is possible
for AIA to charge high price to cover the high cost that the restaurant has to suffer and make
profit for the business.
Competitor’s prices and their possible reactions to AIA’s price also affect pricing decision. In
compare with some main competitors such as Quan Ngon, Brother’s Café and Quan Sen, the
price of AIA is fairly competitive but customers will have more activities than that of
competitors. That is why AIA needs to observe the moves of its competitors to make sure that
it can positively react with the changes and new conditions.
After evaluating these factors carefully, as well as researching cautiously the conditions of
market analysis, AIA decided to follow value-base pricing, strongly beaten on the guests’
perception of value, not the seller’s cost. Moreover, as AIA positions itself at the high-end
market, it chooses prestige pricing, entering the market with high price to support this position.
It is said that this pricing strategy can be reached because the main characteristic of AIA
business is the values that customers will actually receive when using the product. In addition,
the market that AIA targeted is the high-end market with its high income customers who do
not care much about the money but the value that they receive - a perfect condition for setting
high price.
By giving the idea of distribution strategy, AIA wants to concentrate on the location of the
restaurant as “for businesses whose customers come to them, the business must be
conveniently located”. Understand deeply this concept, AIA chose to locate its business at
10/431 Au Co street, Tay Ho district, Hanoi – Vietnam. The business was constructed in a
1500 meters square. AIA chose this place because of several reasons.
Firstly, the location is easy to access to customers. AIA lies near big and famous hotels, such
as Thang Loi Hotel, Sofitel Hotel, and Sheraton Hotel. These hotels will provide a large
number of customers for AIA, especially for international tourists and business people. It is a
really good advantage for AIA.
Secondly, lying in this area, AIA finds suitable atmosphere for the business to happen. The
location is not really far from the city centre, but it seems to almost escape from the pollution
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Entrepreneurship A`I’A – New Venture
environment of the city. The location helps the business to own relatively pure air and peaceful
surroundings, which is the basis needed for illustrating the atmosphere of ancient times.
Thirdly, this location provides AIA with good infra-structure. The road system here is really
good and convenient for transportation. Also, there is a fine sewage system, therefore,
customers do not need to worry on flooded situations. Furthermore, the electricity and water
systems are good enough for AIA to do business here.
Lastly, the location has an advantage of parking area. With 3000 meters square, AIA makes
sure that customers do not need to worry about parking lot as there is a large one to satisfy all
the means of transport. This will help encourage customers to visit AIA more often.
The last element of marketing mix strategy is promotion strategy, a very important factor
together with product strategy. There are three main activities that AIA thinks of in promotion
strategy, consisting of advertising, sales promotion and public relations (PR).
Although it has some short comings of impersonal and carries only a one-way communication,
it is impossible to deny the role of advertising in a promotion strategy. Every company needs
to advertise, simply because it is a way to introduce effectively the products or services of the
firm to its customers. It is particularly fundamental for a new firm to advertise in order to get
the attention of potential and future customers. For AIA, advertising is a vital tool to introduce
the business to society. It is also a tactic that AIA invests heavily on in the first three years.
AIA normally uses four types of advertisements, including flyers and brochures, television,
newspapers and magazines, and online marketing. By advertising on television, AIA intends to
advertise on “Bep Viet” program – an attractive gastronomy series. Promoting in this program
will be a good chance for AIA to introduce the core competences and advantages of the
business over its competitors. In addition, AIA mostly focuses on newspapers and magazines,
a big source of advertisement. The business launches its advertisement frequently in some
popular newspapers and magazines, such as Vietnam News, Vietnam Economic Times,
Vietnam Investment Review, Heritage, Discovery, and Vietnam Pathfinder. It advertises on
these newspapers and magazines because its target customers mainly are business people and
international tourists, and these are the popular ones for them. What is more, AIA prints a vast
number of flyers and brochures to deliver to potential customers and business partners in
chosen places. Or else, it already promotes in internet and websites to attract more sources of
customers.
Besides, AIA organizes special programs on special occasions as its sales promotion activity –
short term incentives to encourage the purchase or sales of a products and services. There are
two main incentive programs in AIA, named as “Tick Point” and “Lucky draw” programs. For
the first plan, AIA largely uses to attract loyal customers as customer who has the bill over
500,000 VND/time will receive 1 point. Every 10 points will be used to change for a free meal
at the restaurant. On the other hand, AIA also shows cares of other guests by its “Lucky draw”
schedule. Weekly, AIA numbered its customers and chooses a lucky number from those ones.
Customer who is in the chosen number will be given a small gift, free photographs, an
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Entrepreneurship A`I’A – New Venture
additional order or a free dish from the restaurant. AIA hopes that both of programs will help
to boost purchases from its customers rapidly.
Another promotion activity of AIA is PR. Under this policy, AIA expects to build long-term
relationships with foreign schools, travel agencies and tour operators, who will be the suppliers
of customers for AIA. To achieve this target, AIA begins by having appointments with these
potential suppliers and introducing about the business on these meetings. Furthermore, AIA
joins in special events of hospitality industry, for instance, tourism festivals and gastronomy
fair as another way of PR. The purpose of this activity is to primarily build the image and
attract the concern of future customers and investors.
It is said that promotion strategy is very important for AIA as it is the way that AIA has to
follow so as to introduce its existence. Promotion is also a must to support for penetration
strategy of AIA in the near future. That is why AIA concentrates much on this strategy.
5. Action plan
With the detailed marketing mix strategy above, AIA has assigned different tasks monthly in
the action plan for the first year of its operation. This action plan mainly concentrates on
promotion activity, which is very crucial for the restaurant.
Issue and distribute brochures and flyers to travel agencies, tours operators and high-end villa
areas, who can be the target customers and suppliers of visitors for the restaurant.
Use network marketing, base mostly on individual relationships to advertise for AIA
Meet and introduce the restaurant to decision makers in offices, companies and organizations
Continue to distribute brochures and flyers in both old and new areas.
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Entrepreneurship A`I’A – New Venture
Join in PR activities in schools, offices and companies to interact with them and build long-
term relationships.
Take part in special events (gastronomy fair, tourism festival…) to introduce the business with
customers and attract future partners in order to build brand image and gain further
investments.
Prepare to build the restaurant’s website so that customers can easily search the information
and booking online. It is also a step to introduce deeper and clearer about the restaurant and its
business activities.
6. Marketing budget
Television ads 40
Newspapers and magazines 100
Printed promotional materials 18
Web marketing 10
Public relations 50
Promotional events 15
Other expenses 9
Total expenses 242
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Entrepreneurship A`I’A – New Venture
15,000,000,000
V – Operational plan
This part of business plan covers the whole activities of daily operation in AIA business, its
location, equipment, people, surrounding environment, and processes, and
10,000,000,000
1. Physical business structure 9,331,20
8,640,000,000
The physical business structure gives information about business location, physical layout and
the interior equipments of the restaurant.
1.1. Location
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Entrepreneurship A`I’A – New Venture
AIA business is planed to locate at the address of 10/431 Au Co Street; Tay Ho district with its
total area of 1500 m2. This location brings the business both advantages and disadvantages:
People now have the trend for relaxing far from the centre to take and enjoy the new
atmosphere. In addition, it makes close and easy to access some famous hotel such as Sheraton
hotel and Thang Loi hotel from AIA. Moreover, the near West Lake and Tay Ho Palace with a
beautiful view and comfortable atmosphere can encourage a lot of customers coming AIA
restaurant. Besides, the good infrastructure including road system, water system and electricity
all support much to the doing business in this area.
Business also suffers from some disadvantages due to the location of the business. It is far
from the city's centre about 10 km2, so it discourages a number of customers having limited
time. In addition, AIA business is located in an area where have potential about tourism and
economy so it is relatively difficult to rent land for a long time and its renting fee is very
expensive. It costs about 65,000 VND/m2 per month. This thing can lead to the risk increasing
and the profit reducing.
The occupation cost for this physical location accounts for 97.5 VND million per month.
1.2. Layout
AIA business plans to rent the land for long term and develops the physical structure that
follows the business’s own idea.
Looking from the top of the restaurant, AIA forms a building with three areas pointing to
three directions. The centre area is designed for the receptionist and cashier stall. Main areas of
the AIA business are buildings offering food, beverage and entertainment activities. The first
building with the capacity of 50 to 70 seats is equipped with decorative multicolored lanterns,
rattan tables and chairs, ornaments. The second building is designed with 35 seats and one bar.
This floor also has a small stage to serve the art performance activities. The space between
buildings is decorated with bamboo trees, ornament trees, mini lakes. The kitchen area is built
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Entrepreneurship A`I’A – New Venture
at the back of customer serving area to make a fast delivery of delicious and fresh foods.
However, there is a distance between two areas to avoid the influence of the kitchen area to the
experience of customers. The area of “doing by yourself” is designed far from the area of
customer serving due to the possible noise and smell of this area.
1.3. Equipment
Fixtures and fitting: room and specialized areas are built by business itself with the effective
waiter and electricity system. The interior design has the feature of the ancient Hanoi style.
Office equipment includes computers, telephone and fax machines, air conditioners, table and
chairs, light system and other stationery materials are equipped to make the efficient operation
and management works.
Producing equipments with have a lot of things such as gas cooker, fridge, grinder, oven
systems, kitchen cupboards, bowls, dishes, sticks, light system, saucepan, pan, skillet, fire
alarm… These all equipment
Decoration equipments of customer serving area : bamboo tables and chairs, ornaments,
flowers, statues, bamboo- plaited curtains, ancient Hanoi pictures, Bat Trang ceramic, pictures
of parallel sentences. They all support to the business characteristics.
The start- up cost for opening the AIA business comes from multiple sources as follows:
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Entrepreneurship A`I’A – New Venture
Deposit
Soft cost: legal requirements, consultation fees for design, procedure and accounting for the
opening business
Working capital reserve: the capital enough to cope with the operation loss during the first
year after opening.
The estimation of total start- up investment for AIA business accounts for about 9,172,200,000
VND.
2. Production procedure
Opening time
AIA business serves customers from 7.00 am to 11.00 pm every day and the weekend is not
exception. Full-time staffs works with two shifts per day: the first shift is from 8:00 am to 6.00
pm and the second shift is from 2.00 pm to 11.00 pm. Besides, working hours for part-time
staff are divided into two main shifts including the first shift is from 9:00 am to 4:00 pm and
second shift is from 6 pm to 11.00 pm. Serving staff will come earlier at 7.00 am to prepare
everything for the serving operation.
Break time
Employees of AIA business rotate to take a 45 minutes break at the time from 12.00 to 13.30
in the day shift.
The food material receiving and checking from suppliers are carried out at 5.00 am every one
to two days. This job belongs to the duty of the employees in the kitchen area
Revenue totaling:
The daily revenue collecting and totaling has to be completed at the end of every day by the
accountant and cashier.
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Entrepreneurship A`I’A – New Venture
Production procedure
The following product value chain of AIA business shows how the food and beverage
products are moved ‘from raw material stage, through manufacturing and distribution, and
ultimately to the end user of customers on a daily basis. AIA builds the product value chain
with a focus on enhancing product quality and reducing costs. The process applies fully steps
in the normal process with procurement, manufacturing and distribution
Menu
Ordering Receiving
planning
Storage
Control
Delivery Production
system
The product delivery procedure begins at the menu items based on the customer demands. The
customer demand and the availability of the materials in the store will make the purchasing
decision. After receiving the order, employees categorize and store them in the good condition
of refrigerators. These materials will be processing to make them clean and to be ready for the
cooking. The cooking process is followed the customer’ order and complied with the product
quality requirements. However, the production process is supervised and controlled by the
head of department. After that, the products are delivered to the customers for using. The tasks
of purchasing, receiving, storage, production and quality control belong to the responsibilities
of kitchen department.
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Entrepreneurship A`I’A – New Venture
Custome
Service
r Order
delivery
welcome receiving
Complain
t follow-
up
The service delivery procedure starts at the entrance of the restaurant with the warmly
welcome to customers. After that, employees have duty for arranging the comfortable and
good seats for the customers. Asking for the orders is implemented immediately along with the
collecting special customer requirements. During the service delivery, the employees always
keep smiling and helpful attitudes towards customer to maintain customer satisfaction. The
waiters/ waitress and the cashiers together give an accurate and fast bill delivery and payment.
Customers can receive the extra service depends on the policies and marketing plan of the AIA
business. Complaint follow- up is an important element to improve the service quality and
build the customer loyalty as well.
Another following model of value chain for AIA business shows more clearly more about
multiple tasks in three part of serving process including logistics, service delivery and the after
service:
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Entrepreneurship A`I’A – New Venture
AIA business attaches special importance to both working flow and the quality of the
operation. Especially, for customer benefits, AIA concerns about food and beverage quality,
and the service quality. Some main activities of AIA for this plan are defined as follows:
- Minimizing the risk at each step in the food production by supervising closely the process.
Offering the quality control program with keeping records and data about the trend of
customer’ changing tastes. The business also makes the regular inspections about the customer
requirement and liking.
Inspecting and controlling all incoming ingredients used to make foods and beverages.
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Entrepreneurship A`I’A – New Venture
Building good and honest business relationships with many suppliers. In addition, AIA also
makes the quality agreement with them for purchasing to get the high quality supplies and
materials.
Making the tracking system to identify lots number of food and beverage materials that may
have been recalled.
Identifying the customer expectation with the focus on customer discussions and interviews.
From these discussions, business can realize what about the serving ways or styles that the
customers want (for example: the ways of ordering, payment…)
Developing the quality training program by creating a “service culture” in the AIA business.
Employees of business meet your restaurant dining guests' wants and expectations deliciously
and safely every single day.
3.1. Inventory
- Kind of inventory: raw materials and supplies of foods and beverages including a larger of
meats, poultry, fish, shellfish, fruits, vegetables, salads, dairy foods, wheat flour, teas and
wines
- Rate of inventory turnover: the inventory will be supplied every 1 to 2 days that depends on
the consuming power of customers. The fresh and raw materials will be purchased every day
to ensure the quality. The purchasing of dry materials, cereals, flour, spice… will be made
with large volume to serve for long time. This way can reduce the transportation costs for the
AIA business.
- Seasonal buildups: on weekend or public national days, the inventory volume is increased to
meet the raising customer demand.
- Time for ordering: the inventory is ordered at the end of the day after totaling the selling
power and the remaining.
- Inventory quality control: the inventory is placed in dry, frozen or refrigerated storage. In
addition, a tracking system will made to check the freshness of the inventory.
3.2. Suppliers
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Entrepreneurship A`I’A – New Venture
AIA business makes contractual arrangements with some major supplies of key inputs:
Food suppliers: Long Bien market, Dong Xuan market vegetable and fruit from some villages
of outskirts of Hanoi, Metro supermarket,
Beverage supplier: Metro supermarket, wine distributions in Xuan Dieu Street, Thai Ha street
and Hang Buom Street.
Other suppliers (stationary, toilet sanitary, kitchen tools) are from Metro supermarket.
- Responding to the risks of critical element shortages: AIA will set the relationship and
transact with more than one supplier for critical items to avoid the market changes and
unexpected shortage.
- Credit and delivery policies: business tries to build prestige relationship with suppliers to get
the credit policies for the purchasing in the long term.
4. Legal environment
AIA business operation follows the legal and regulation system of Vietnam such as labor law
and business law
Licenses and permits: Government Act for establishing a company requires a business license
with registration fee of10 million VND and the initial capital requirement of 200 VND million
to be accepted as an independent entity.
Special regulations covering restaurant industry: liquor licensing for alcohol, food quality
insurance.
Building code requirements: Hanoi construction regulation for building the restaurant
Insurance coverage: property insurance for the restaurant, employee’s compensation insurance
(accident, health, life…)
Trademarks, copyrights and patents: business decided to use the pending name of “AIA”
5. Operation expense
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Entrepreneurship A`I’A – New Venture
Apart from the marketing cost and the labor cost, AIA business also incurs some monthly
operational expense in term of:
Utilities (electricity, water, gas and telephone…): 300 VND mil per year
1. Business structure
The business structure of AIA applies the flat model with three levels. This kind of structure
offers the decentralization that supports the human resource philosophy of the business and fits
with the service industry characteristics. The general manager holds the position at the highest
level in the structure and has duty of controlling the whole activities of the business. For the
lower level of office manager, assistant manager, cook and accountant, they all take leading
responsibility of different functional departments. The assistant manager supervises the
activities of serving food, beverage and entertainment to customers. The office manager covers
all the administrative works of the business. The only chef manages the kitchen department for
making the food for customer and controls the activities of “doing by yourself” area.. The
accountant does all finance related activities of the business. Waiters and waitress work
directly under the control of the assigned assistant managers. Cooks, kitchen helpers and
dishwashers work in the kitchen area and follow the instructions of the chef. The cashier helps
accountant to do all financial activities. Other employee such as security guard and cleaner
will work under the control of the office manager.
2. Key employees
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Entrepreneurship A`I’A – New Venture
Part time
Cashier 4 Full time
Kitchen helper and dishwasher 8 Full time
Cleaner 3 Full time
Security guard 4 Full time
Total employees (first year) 60
AIA business will employs mostly full-time employees. The exception is the position of
waiters and waitress which covers the largest number. These positions use both full time and
part time jobs. Allowing them to work as part-timers creates the flexibility so that the business
can respond to the changes in the market more rapidly.
Because a new business suffers from the instability situation so we have a plan of employee
increase to provide the employee sufficiency with different period and save costs. This plan is
divided into three periods of the first three months, next six months and the late period of the
year. The above total number of 60 employees is the targeted number after one year and even
for the next few years of operating when the business comes to the stability. However, we may
need only about 45 percent from this number for the beginning of starting up the business. As
revenue allows, business will add personnel at every position to handle the increased volume.
Figures from following table shows the plan of needed employee number for each period of
time.
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Entrepreneurship A`I’A – New Venture
Each following position cover the information about job title, position in the company (the
person whom employees will report to), location of the job, and the main job duties.
General Manager:
Assistant manager:
Having direct responsibility with the operation of the specialized areas and keep the manager
fully informed of all problems
Office manager:
Schedule working hours and assign duties for the whole employees on a daily basis
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Entrepreneurship A`I’A – New Venture
Chef:
Organizing the work flow in the kitchen & supervise kitchen activities
Monitor compliance with health and fire regulations regarding food preparation.
Conducting inventory & determine food materials availability for future demands
Cook:
Ensuring the providing of fresh and clean foods for the customers
Accountant:
Totaling and balancing the costs and revenues, lost and benefit of the business.
Cashier
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Entrepreneurship A`I’A – New Venture
Bartender
Defining the material demand for beverage and control the beverage inventory
Cleaner
Cleaning & tidying up all facilities & areas of restaurant before the working opening
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Entrepreneurship A`I’A – New Venture
Security guard
Supervising and ensuring the security situation for the customers and employee
General Manager:
Assistant manager
University graduation
Office manager:
University graduation
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Entrepreneurship A`I’A – New Venture
Skills in defining labor need and special needs to maintain adequate labor level
Chef:
Cook:
Experience in cooking
Accountant
Cashier
College degree
Bartender
General education
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Entrepreneurship A`I’A – New Venture
Knowledge of specialization
Cleaner
Security guard
Quick reaction
HR
Business
philosophy
regulation
Staff
Reward, hiring
Discipline
Lay- off
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Labor law
Entrepreneurship A`I’A – New Venture
The human resource management of AIA business covers multiple human resource areas in
terms of hiring; base compensation; reward, discipline and layoff; employee development and
business regulation. These areas are built around the core business human resource philosophy.
In addition, the labor law is also applied to make an effective human resource plan for the
business development in the high competitive market.
Freedo
Fun
m
4Fs
Flexibil Fortun
ity e
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Entrepreneurship A`I’A – New Venture
The human resource philosophy of AIA business follows the “4Fs” philosophy with features
of fun, freedom, fortune and flexibility. This philosophy supports much to the business’
differentiation strategy.
Fun: the first feature is funny working environment existing in the working place of
employees. Employees will love their job to work with much motivation for the achieving the
objectives and creating positive influence to coworkers. This requires that business have to
offer enjoyable works for all employees.
Freedom: this feature reflects the relationship between employees and employers. The
subordinates can express their own ideas and opinions to the higher ranks without fear.
Employees are also empowered to reach the job solutions.
Fortune: “fortune feature” talks about the value of employee themselves. This means that the
employees are considered as a valuable asset of the business. Whether the business develops
steadfastly or not depend on the employee’s performance
Flexibility: this factor mentions the environment exiting among employees and customers.
This mentions about the employee’s ability of dealing with customers. Employees may express
creative solution for serving the customers.
3.2.1 Recruitment:
AIA business relies on some effective recruitment sources such as advertisement, referrals
from personal relations, job fair and college recruiting for attracting the best potential
applicants:
- Advertisements are inserted in local presses and websites such as Labor newspaper, Hanoi
Moi newspaper, Kiemviec.com and Vietnamwork.com.
- Referrals from personal relations are very effective sources for many new businesses in
general and AIA restaurant in particular. Moreover, this source is extremely important that
enables to find some key high positions such as manager, chef and accountant.
- The business will also take part in some job fairs in university and exhibitions with no fees.
- College recruiting is potential for part-time job to work during peak hours of evening and
weekend. The recruiting will be focused on tourism specialized schools and universities.
Especially, this recruitment source offers a relatively cheap cost, dynamic and enthusiastic
working.
3.2.2 Selection
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Different positions require different selection tools that are suitable to the nature of the job.
Thus, AIA business uses multiple selection tools for selecting the best applicants
The application form is designed to comply with all applicable state laws prohibiting
discrimination in employment on race, age, sex, religion, and other protected classification.
(Appendix: “application form”)
From these tools, the selectors can look into the qualification; past employment records in
other businesses and organizations; experiences and preferences that fit the business
characteristics. Application form is easy to compare the skills and experiences of different
applicants. Especially, application form is important to recruit some key positions such as
manager, assistant manager, and accountant.
- Interview: After studying the application forms and CV, a shortlist of good candidates will
be drawn to make the next step of selection process with interview. This is particularly
effective for positions dealing directly with customers. In order to select the best candidates,
the interviewers will use multiple questions during the interview:
Situational questions are especially important such as dealing with customer complaints and
feedbacks.
Marginal questions about liking of doing service, traditional culture and food
The selection stage will be carried out every two or four weeks after collecting a sufficient
number of applicants.
Training is necessary for an employee first joins a new business and starts a new role. The
training or employee orientation of AIA business has two major tasks including providing
necessary information and the working probation.
- Information providing: to make the employee orientation to new business, AIA firstly
provides some important information about the whole business:
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After providing the necessary information for the new employees, a period of time for work
practice will be offered to test the actual suitability of the employees with the business
development. The new employees have opportunities to observe and practice the job.
For the first year, the hiring duration is divided into two periods with the first six months and
the next six months
- During the first 6 months, the hiring is maintained for all positions in our business due to the
employee instability of a new business.
- After the first 6 months: the hospitality industry suffers from the high labor turnover rate
especially some position like cook, waiter & waitress, security guard. Thus, the hiring for these
positions will be maintained at least for the first year to get the labor sufficiency for the
business operation.
Costs of holding interview for selection: telephone, email, rooms and facilities preparation,
interviewer.
The total cost for hiring employees is estimated at about 12 VND million for the first year.
Different jobs require different levels of skills, effort, responsibility and working condition.
AIA business uses some compensable factors to asses the value of different jobs:
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Skills: the requirement of high knowledge, experience & initiation in defined jobs like chef
and manager.
Responsibility: ensuring good operation process, food and service quality or security situation
Working conditions:
Working with heat, noise, risk of injury such as position of cook, security guard, cleaner…
3.3.1. Payroll
From the assessment the job value based on above criteria, the initial payroll for all positions
of business is set as follows:
The fixed pay structure will be increased every one year depending on the seniority,
performance of employee and business in general. The exception can be made for some
positions if they do the job extremely well. The business looks to have a 15% and a 20%
increase next year. However, the pay raise plan can be delayed if the business faces the
difficulties in development. The below table indicates the plan of pay increase for different
position.
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1.2 1.3
Kitchen helper&
Dish-washer 1.2 1.5
security guard 1.2 1.5
Cleaner 1.4 1.8
However, AIA business is a new one in the hospitality industry so it faces with the high
employee turnover rate. Thus, the cost estimation of this plan for each year (beginning from
the second year) accounts only for about 7% from the total pay roll.
In the first year, the pay level will be remained at the point of beginning but the number of
employee fluctuates. The below table indicates the total employee’s payment for the first year.
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All decision making for purposes of reward, discipline and layoff will be based on the
performance appraisals with several common indicators as follows:
Work accomplishment
Personal skills
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In order to encourage the effort of individual employee as well as the coordination between
them for the common goals, AIA business applies both individual and department based plan
for the rewarding.
Department rewarding
- Different departments will receive a monthly reward if they operate well without any
problems and achieve the set objectives. The reward can be based on the production of the
departments.
Individual rewarding
- For those at management level like general manager and leaders of functional areas, they will
take the profit sharing program for the monthly bonus. This means that they management can
receive amount of percentage in the business revenue if they accomplish their responsibilities.
- The monthly bonus of subordinates applies the” rating system” that based on employee’s
evaluation system. The bonus level is based on a combination of a percentage of salary and
how far the employee has achieved their objectives over the month. However, the rating
system is only divided into 3 levels (top, middle & lowest) and all employees may be at the
highest level if they all do the job well. This few levels will help to avoid the high competition
and decisiveness between employees and encourage the effort of them as well.
- In addition, other special rewarding can be offered if there are very good customer feedbacks
customer survey results from customers.
A cost estimation of both rewarding plan is account for 9 VND million per month that covers
about 5 % of the total payroll.
The employee discipline decision bases on some criteria such as being late to work, be absent
without permission (or unexplained and unconvincing reasons), neglecting the work, acting
rude to customers.
The employees breaking these business regulations will get a verbal warning or a wage
deduction. The deduction is about from 5% to 10 % from the fixed pay based on different
levels of mistakes.
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Absence has been popular cause in making decision for lay-off of many organizations in recent
years. Although employees are allowed to be absent if they have the legitimate reasons such as
sickness, doctor seeing and medical treatment. However, any organization has encountered the
poor attendance without legitimate reasons. Thus, the employers need to monitor and
investigate the causes of absence. For a private business as AIA, this issue is an importance
points in management to avoid the labor shortage. Therefore, AIA plans to set up the right
polices and procedures to control absence:
Consider the systemic absenteeism, for example with those who regularly call in sick on a
Saturday or Sunday.
Set targets for absence levels. Beside one day- off per week belonging to policies, the
employees will take large wage deduction if have more than 4 days off per months.
Require the written document along with the manager’s agreement and signature for the asking
absence.
Require the medical report for the absence for some reasons.
The decision making for employee lay- off is based on some key factors:
The decision for lay-off will be informed for the employee before 30 days
Employee development is closely linked to the growth of business and they themselves play a
vital role in the success of the business .This is especially necessary to make the employee
development. The Most common root causes for the bad employee’s performance are “does
not know” (training) or “does not care” (motivation).
Performance = Ability x
Motivation
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From this principle, the AIA business shows the importance of providing the motivation and
periodic training program for the employees.
The business holds the training to equip them with the skills to handle changes in your
business and improve the skills and knowledge for further success. Training schedule is
divided into two parts includes meeting once per week in every department and overall
training once per six months
Training schedule
Raise the feedbacks and opinions from customers about the product and service quality
Explore the cause of performance problems and then show the best solutions for them
Give new strategy & goals of the whole business for the incoming period.
Improve functional skills of employees to meet the new trend in the market.
Presentation option: in- house training with room instructions & role- plays
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One of the simplest and least costly methods of motivating employees is to show them
recognition for a job well done. Small gestures that recognize their positive accomplishments
can often go a long way. It increases the employee’s sense of self-esteem and he or she feels
better about his or her job
Business will make the high recognition of employee's important roles to the business’s
success.
The more satisfied the employee is with his or her job, the better he or she will perform. The
work itself of our business provides opportunities of contacting and dealing with different
kinds of customers. Thus, it can create an environment in which employees feels involved and
enjoys working.
Clear and specific objectives of business are provided to encourage the effort of the
employees.
Good appraisal systems that can be recognize the actual contribution of employees.
Employees' work-life balance can increase productivity and lower absenteeism( one day off
per week, working shift selection)
Business policies and benefits include the business’s own benefits and the legally required
benefits. The business shows concerns for the birthday celebration, public national day
celebration, employee’s personal matter sharing. Benefit providing is funded from both the
business & employee contribution (employees will build a business club and each person
contributes for the activities). The total cost that business spends on this area is about 50 VND
million per year.
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Relationship with managers that allows the employee to give their own personal opinions
without fear.
Always be on time
Implementing the right timeliness for working time and break time
Comply with all policies and requirements for the product quality and workplace safety.
Be honesty
AIA business develops with the differentiation strategy so the part-time employees play a very
importance role to support such a strategy. Thus, the managers pay much attention to the
policies applied for the managing the part- timers to get the benefits from them
Encourage initiative
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Business also applies the reward, discipline and lay off with the part time employees.
However, the policies can be different from those of full time employees.
They are empowered to express their own ideas and reach solutions
Business members keep in touch with part- timers on a regular basis. The part- time employees
can be asked questions about their projects — what’s going well, what’s not, and whether or
not they need help.
Part- time employees also get the opportunities to improve the skills and knowledge to make
further job success. They so will have training courses along with the full- timers.
Be inclusive
Part time employees have right to be notified about the memos as well as to attend all meeting,
holiday parties and entertainment activities of the business.
The importance of part time employees is recognized as the full- time employee of the
business.
Part time employees have no weekly day off and holiday. Moreover, the exception is made if
they show reasonable reasons (family works, illness, wedding…)
Part time employees have to obey all the common business policies such as working time,
uniform, service quality, infrastructure preservation…as applied to the full- time workers.
4. Labor law:
During the process of planning the human resource, business also apply the labor law to
defend the effective business development and motivate employees.
The new employee will take the job practice for 2 months and receive the pay account for 70
% of official pay
Every full time employee completing the job trying and working after 3 months will sign the
labor contract with the business ( Clause 28, Vietnamese Labor Law) (Appendix : “labor
contract”)
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The monthly payment for employee is above the legal minimum level and the pay- day falls on
at the end every month
The daily working time includes 2 shifts per day. Each shift has 8 hours with break time
included:
Each employee has 1 working day off per week that all does not fall on weekend. In addition,
the employee will rotate the day off to maintain the normal daily working of the business
For annual public holidays except for Tet holidays, the employees have to remain the normal
working with extra pay but they will have a substitution for other days
The policies for the time off plan of AIA business are based on both legal requirements and
policies of business itself that can be offered:
Employees having family works such as wedding, family emergencies (funeral) will get 5 days
to 7 days off with full pay
For short- term illness or disability, the employees has full pay for 3 days (clause 142,
Vietnamese Labor Law)
Woman with pregnancy is offered 4 months off with full pay. This policy is only applied for
employees signing the labor contract with the company
For serious health problem, 3 months off with 50% of wage will be applied
Social insurance:
The business will buy the social insurance for every full time employee after three months of
signing the working contract. (Clause 141, Vietnamese Labor Law). The business will spend
about 15 % of the total payroll for this policy. However, this cost only estimates about 194.4
VND million per year because of the existing of the employee turnover rate.
Employee’s compensation
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Employees sustaining job related injuries will receive the compensation policy of the business.
Medical care, income continuation and rehabilitation expenses will be provided by business
for compensating the employee. Because ATHENS FITNESS CLUB business offers a good
management of working safety so the cost for this kind of compensation accounts only about
20 VND million per year.
5. Ownership
Ownership of AIA business belongs to five members of the group. Every member will share
the equal benefits as well as the risks of the business development. Owners will coordinate and
negotiate with manager to set the new vision and mission for the business. All members are
equal in raising their own opinions for the business development.
The restaurant and foodservice industry now face with unexpected operation risks that
influence its profits in the short run, and potential growth in the long run. In fact, the key to
running a good restaurant is the risk control. In addition, a successful restaurant business must
be willing to invest resources and take risks as well. AIA business, like any other business
venture, involves certain operational risks. The risks may be the potential to cause illness,
injury or death for the employees and customers; property damage or degradation for the
business itself. Recognizing the benefits from taking the risks, AIA business shows much
concern for the offering the operational risk management system including six steps as
follows:
1. Identify 2. Assess
hazards the risks
6. 3. Analyze
Supervise risk control
and review measures
4. Make
5. Implement
risk controls
control
decisions
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This system aims at identifying the potential risks to defend and adjust the business operation
in the appropriate conditions. For AIA business, the multiple risks are defined as seasonality,
food safety and security. Hence, it is necessary to follow this system when solving each of the
risk.
1. Seasonality
In tourism industry, seasonal factor can create serious problems for businesses during off-
seasons due to the sharp decrease in the demand of customers. The potential sources of AIA
customer come from tourist, businessman, both domestic and international market. Thus, the
tourist season, occasion of event and meeting holding occasions in Vietnam and Hanoi in
particular will influence to the AIA customers volume. It means that the restaurants will attract
many customers in the high-seasons because of great number of tourists coming to Hanoi and
Vietnam in general. This leads to the increase of purchasing power and revenue for the
business. In fact, Hanoi attracts more tourists in summer and occasion of public national
holiday. In contrast, the tourist number is lower in spring, autumn and winter, and these
seasons are considered as off-seasons of AIA. However, the AIA business suffers not only
from the customer volume but also the seasonality and availability of foods and beverages.
Some kinds of fruit and vegetable are only available in some certain period of time of the year
that can affect to the offered product items.
AIA business plans to address these problems with some solutions to remain profits and
minimize the loss. Like other hospitality sectors, AIA will try to earn large profits in the high-
season to subsidize for the situation in the low seasons. In the high seasons, AIA business will
concentrate every effort and resource to meet the high customer demand. Another way is the
human resource management policy by creating a flexible workforce. AIA will use a number
of part-time workers in the labor structure. Especially, the part- timers will be offered to
important working shifts that attract too many customers. From this policy, AIA can reduce
the labor need in the low season or difficult business situation. Therefore, business does not
have to pay salary without breaking the legal issues. For the food material seasonality, AIA
business has plan to use the appropriate material substitution or offer the diverse menu items,
from these ways, AIA business particularly economize amount of money to spend on other
things.
2. Food safety
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The food safety concerns of people now require all food production procedures of restaurant to
make the decision about risk assessment and management. AIA business specializes in field of
food and beverage so any problems relating to the food quality can affect seriously to the
prestige and the existing of the business in the long term. Thus, AIA business plans to meet
regulatory requirements for food safety for the operation.
AIA business sets an effective quality control system of assuring the good sanitation. Every
department and employee in the business approves and takes this control system for the
operation direction. Specifically, AIA goes some following ways that help the business always
offer safety foods for customers. These are:
Inspecting all incoming ingredients, compressed gas, packaging, labels, and making the
product returns for those with signs of counterfeiting.
Food and beverage materials are preserved in dry, frozen or refrigerated storage before using
for the cooking.
All cooks will be trained carefully to cook foods to appropriate temperatures to ensure the taste
and quality of the foods.
The delivery process keeps cold foods cold and hot foods hot prior to serving the customers.
Cleaners, waiters, kitchen helpers or dishwashers scrub, clean and sanitize the counter, floors,
equipments and facilities routinely. In addition, they also dispose the garbage properly and
keep dumpsite areas clean
ATHENS FITNESS CLUB business will control to make sure that all employees follow rules
of sanitation and proper food handling.
By carrying-out these ways, AIA directly benefits to the wealth of the business. Besides,
customers also show the confidences that contribute to the image and prestige of the business.
3. Workplace Safety
Another potential risk that AIA must control is workplace safety, because these problems
create additional financial burdens for the restaurant. Hidden costs include lost production, the
cost of hiring and retraining new employees, repair or replacement of damaged equipment, and
reduced efficiency due to poor morale. So AIA will periodically have a workplace safety audit
to reduce and prevent potentially serious, expensive, and time-consuming problems.
In fact, there are a great number of workers' compensation claims that are accepted for work-
related injuries and illnesses. Medical care and wage replacement for these injured workers
costs a large amount of money of the business.
Employees in the hospitality industry like AIA suffer from major risks that are caused by labor
equipment, electricity, heat (gas). For hospitality industry as AIA, the most common causes of
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injury arising from the work environment and labor instruments such as slips, trips and falls,
and heat stress. Kitchen staffs use many items such as slicers, mincers, knives or mixers which
have the potential to cause injury. However, more serious risk during operation in AIA
business is burn caused from the heat. The heat can occur when the employees cook the food,
take food from ovens and making the beverages using hot equipment or steam. Electrical
equipment is widely used in AIA operation equipment so this risk is also addressed. Because
of frequent use and cleaning, its electrical safety may be compromised, exposing workers to
the risk of shock, burns, or fatal injury. Electrical accidents are usually caused by using faulty
equipment, working with damaged leads or unsafe work practices
In order to develop and enforce workplace safety and health rules, AIA will design training
program for both employees and employers, especially kitchen staffs. The program will cover
the following programs: injury and illness, emergency actions, fire extinguisher use,
housekeeping, eye protection, and etc. By giving employers and employees necessary
knowledge, AIA can avoid unexpected problems for both employees and customers.
Apart from the threats of injuries in the workplace, AIA business also copes with some
security problems that can affect the profit, prestige and image of the business. The problems
here include thefts and frauds caused by both customers and employees. AIA addresses these
problems by giving an effective security system for the business operation. The employees can
make the theft or fraud with the customers and even coworkers. In term of
employees’ problems, AIA sets an strict discipline and lay-off policies to make the positive
perception among employees about these. Especially, AIA business will build equipments for
protecting properties of customers, employees and business such as personal bags, wallets and
business money safe. In order to control problems caused by customers, the security guards are
trained to discover any problems or doubtful signs from the customer flows. in addition , the
employees will be provided regularly about security situation and popular tricks in the market.
Identify all above operational risks and make the effective risk control procedures will help the
AIA business runs smoothly and operates successfully.
Apart from three main above risks, the restaurant business has to cope with other kind of risks
such as crop damage or epidemic diseases. These kinds of natural disasters can cause the
material shortage for the business operation, high material price or bring the worrying
psychology for the customers. Although for AIA, these disasters belong to the external factors
but they will reduce the customer volume and the business benefit as well. Therefore, AIA
plans to offer flexible directions to readily face with these unexpected situations such as
diverse menu items. In addition, AIA will give the marketing plan to push the consuming
power for other items along with build the customer trust.
Besides, there are many other risks that can impact on the success of AIA such as: restaurant
density, firm size and managerial characteristics which are considered as internal factors. AIA
business is a relatively large business in Hanoi so, it is important for AIA to have the requisite
skills to run business operation, and AIA are ready at any time to alter plans in response to
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changes in external factors, as marketing and advertising or paying attention to community and
customer relations.
1. Terms
Sale: Includes all the revenue that ATHENS FITNESS CLUB can obtain through its operating
activities such as selling food, and services, drinking.
Cost of good sold: includes entertainment and music, material, repair and maintenance,
renting fee, depreciation, utilities and 90% of the sum of labor cost, insurance and employee
benefit.
Selling expense: comprises marketing expense such as advertising, public relation, and other
activities related that help to enlarge the revenue.
General and administrative expense: include the expense for operating including paying for
business fee for arrogate of the district, added by 10% of the sum of labor cost, insurance and
employee benefit for managers.
2. Important assumptions
Actually, there are some assumptions needed when building the financial plan for ATHENS
FITNESS CLUB. The following is external assumptions:
The economy that ATHENS FITNESS CLUB operating is strong enough so that during 5 first
years, there is no sudden economic factor affecting it.
There is no sudden change in the trends of traditional culture orientation so that the tastes of
customers stay the same.
All the economic factor changes in the year 4 because of slide inflation of the business
There this almost no changes of the country’s policy that affect considerably on the business
success and operation
The following the other assumption relating to the ATHENS FITNESS CLUB business:
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The business operates within 10 years and divided into 2 periods, first five years and the
remaining.
Short term loan interest is 9% per year and pay back to the bank at the end of that year.
There are five key financial statements of ATHENS FITNESS CLUB. They are the projected
figures, balance sheet, income statement, cash flow statement, and finally pro forma cash flow
statement.
Projected figures: is a financial projection that estimates the key figures that need to define in
the first five years of ATHENS FITNESS CLUB. Those numbers are essential to create
balance sheet, income statement, cash flow statement and cash flow projection.
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Balance sheet: state out the status of ATHENS FITNESS CLUB in terms of asset, liabilities
and equity
Income statement: state the loss and profit of ATHENS FITNESS CLUB
Cash flow statement: describes the actual cash on hand of the company at the end of each
year
Pro forma cash flow statement: is essential for start-up business in estimate the cash inflow
and outflow of the business. It is, moreover, important to estimate the feasibility of the start-
up.
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(VND)
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4. Business Financial Ratio
It can be seen that from the gross profit margin that ATHENS FITNESS CLUB is profitable
business with the gross profit occupying 34.32% of sale. The company gains such large profit
for the first three years. In year 3, it reaches nearly 40%. However, there is a decline in year 4
due to some factors. Firstly, renting fee is increased by 300,000,000 VND. Secondly, it is
supposed that the company has to compete with more competitors, and then the sale goes
down that year. However, there is an improvement in year 5, the business continues to gain
nearly 30% gross profit of net sale. This increase is a good signal that the management team
tries to innovate the product and can compete with rivals better.
According to the return on assets table, it can be seen that in the first year of operation
ATHENS FITNESS CLUB spent 100 VND can gain 15.17 VND. This is a good signal of
profitability. However, in the year 4, the company suffers a decrease due to the increase of
variety of expense and slow growth rate of sale, hence sharp decline on the net Income.
It can be seen from the table that the accounts payable turnover of ATHENS FITNESS
CLUB increases gradually, and reaches peak at the year 5. It is a good signal for the business
in terms of efficiency ratio. Because the rise in this ratio indicates that ATHENS FITNESS
CLUB can keep the money of creditors longer, as longer the business establishes, the more
credit that creditors have toward ATHENS FITNESS CLUB.
5. Feasibility
There are three methods to estimate the feasibility of the project ATHENS FITNESS CLUB.
And all the figures used is in the pro forma cash flow statement. The following table is the
net cash flow of ATHENS FITNESS CLUB in five years. The year 0 indicate the time when
the business spend expenses and buy asset for start-up, thus the value is less than zero.
However, in the next four year, the value is larger than 0 because the cash of inflow is larger
than the cash of outflow.
Using NPV formula in Excel, and with the discount rate is 12%, ATHENS FITNESS CLUB
business is estimated to have NPV is 1,792,889,807 VND. This value is much larger than 0,
hence ATHENS FITNESS CLUB business actually worth investing.
Moreover, in the previous section, it can be seen that with the discount rate 12%, NPV of the
project is 11,792,889,807 VND. With the same method of calculation, guessing the discount
rate is 20%, NPV of the project will be -72,193,663.08 VND.
Hence, ATHENS FITNESS CLUB should be invested because of the ability to generate
profit and feasibility.