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Rhymed – A Young Enterprise Company

Business Plan
December 2009

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Contents
Section 1

1. The Company and its Management.................................................................page 5 - 15

1.1 The Formation of the Company………………………………………………………………… page 5 1.2 Mission Statement …………………………………………………………………………………… page 6 1.3 Vision Statement ……………………………………………………………………………………… page 6 1.4 Short Term Objectives ……………………………………………………………………………… page 6 1.5 Long Term Objectives …………………………………………………………………………… page 6 -7 1.6 Company Name ……………………………………………………………………………………….. page 7 1.7 The Logo ………………………………………………………………………………………………..… page 7 1.8 Company Motto …………………………………………………………………………………..….. page 8 1.9 Company Structure ……………………………………………………………………………..page 8 - 15 1.9.1 Organisation Chart ……………………………………………………………………page 8 1.9.2 Company Members …………………………………………………………… page 9 -15 1.10 Legal Structure ……………………………………………………………………………………… page 15 1.11 Company Resources ……………………………………………………………………………… page 15

Section 2

2. Product and Operations ………………………………………………………………………………page 16 - 20

2.1 Product Overview…………………………………………………………………………..….page 16 - 19 2.1.1 Taqbiliet Maltin – Ghal kbar u z-zghar…………………………………page 16 - 17 2.1.2 Target Market …………………………………………………………………………. page 18 2.1.3 Product Sample …………………………………………………………….…………. page 18 2.1.4 Copyright …………………………………………………….…………………………….page 19 2.2 Business Location …………………………………………………………………………………… page 19 2.3 Production Methods……………………………………………………………………………….. page 19

-32.4 Stocks …………………………………………………………………………………………………….. page 20 2.5 Quality and I.T systems …………………………………………………………………………… page 20

Section 3

3. Marketing ………………………………………………………………………………………………… page 21 - 40

3.1 Introduction …………………………………………………………………………………………… page 21 3.2 The Significance of the External Environment …………………………………. page 21 - 22 3.3 Market Research …………………………………………………………..………………… page 22 - 36 3.3.1 Statistics of Adult’s questions ………………………..……………….. page 23 – 30 3.3.2 Statistics of Children’s questions ………………………………………..page 31 - 32 3.3.3 Business Opportunity ……………………………………………………….. page 33 - 36 3.3.3.1 Product Analysis …………………………………………………. page 33 -34 3.3.3.2 Marketing Projections ……………………………………….. page 35 - 36 3.3.3.2.1 Estimated Sales ………………………………………….. page 35 3.3.3.2.2 Market Share ……………………………………………… page 35 3.3.3.2.3 Market Growth …………………………………………… page 36 3.3.4 Conclusion on Market Research ………………………………………………. page 36 3.4 Marketing Mix ………………………………………………………………………………... page 37 – 38 3.4.1 Product ………………………………………………………....................... page 36 – 37 3.4.2 Price ………………………………………………………………………………………… page 37 3.4.3 Promotion ……………………………………………………………………………….. page 37 3.4.4 Place ………………………………………………………………………………………… page 38 3.5 Target Market ………………………………………………………………………………………... page 39 3.6 Ways of Marketing ………………………………………………………………………………… page 39 3.7 Distribution ……………………………………………………………………………………………. page 40

-4Section 4

4. Finance Plan ………………………………………………………………………………………………. page 41 - 45

4.1 Basis of Preparation ……………………………………………………………………………….. page 41 4.2 Capital ……………………………………………………………………………………………………. page 41 4.3 Credit Facilities …………………………………………………………………………………….... page 41 4.4 Budgeted Cashflow for the period ending 31 January 2010 ……………………. page 42 4.4.1 Budgeted Cashflow for the period ending 30 June 2010 ………….. page 42 4.4.2 Cash Flow Notes ………………………………………………………………………. page 43 4.5 Quantities ………………………………………………………………………………………………. page 43 4.6 Payments to suppliers ……………………………………………………………………………. page 43 4.7 Budgeted Income Statement for the period ending 30 June 2010…………….page 44 4.7.1 Income Statement Notes …………………………………………………………. page 44 4.8 Budgeted Statement of financial position as at 30 June 2010 …………………. page 44 4.9 Breakeven Analysis ………………………………………………………………………………… page 45 4.10 Other Important Work ………………………………………………………………………… page 45

Section 5

5. Corporate Social Responsibility ……………………………………………………………….... page 46 - 47

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1. The Company and its Management
Rhymed recognises and believes in the importance of keeping in touch with ones Language and Culture, especially in this modern day where these tend to take a back seat. It is therefore our mission to promote the Maltese Language and Culture to our Nation in order to foster a love and appreciation for the Maltese heritage. At Rhymed our goal is to revive the Maltese spirit and traditions by preserving traditional rhymes handed down through the ages and introducing original nursery rhymes. These rhymes offer a learning experience to the Maltese children, which aims to educate and teach them to appreciate their Language, as well as rekindling happy memories of the older generations. We strive to create the best product possible in order to strengthen our language and satisfy the needs of the consumer, whilst ensuring that the environment is always protected and considered during every phase of the company.

The most important element for Rhymed is the promotion of our heritage with particular focus on the Maltese Language. However as a company we also highly maintain the importance of protecting the environment, and thus we strive to create a product which respects the safeguard of the environment.

1.1 The Formation of the Company

Rhymed consists of fifteen determined, talented and able students from St. Edward’s College, brought together by their will to experience entrepreneurship through Young Enterprise. The company was unanimously created once the students learned about Young Enterprise and the unique skills, experiences and opportunities offered to the achievers. Young Enterprise’s motto “Learning by doing” was the driving force behind the company from the very start, and led to the formation of a successful team willing to set aside differences, dedicate time and work together to pursue and ensure the utmost perfection in all aspects of a business.

-61.2 Mission Statement

Rhymed is a Young Enterprise company dedicated to the Maltese Language and Culture whose mission is to strengthen Maltese by providing traditional and original Maltese Nursery Rhymes which reflect our heritage that is slowly fading away.

1.3 Vision Statement

Rhymed will devote its human resources and innovations to produce top quality Nursery Rhyme books for Maltese people of all ages, doing our utmost to constitute a better global society while preserving our heritage, and maintaining the safeguard of the environment during every phase of the competition.

1.4 Short Term Objectives:  To provide a high quality Maltese nursery rhyme book which strengthens the Maltese language and preserves our heritage.  To make profits which will allow us to pay our shareholders and encourage the company to reach its short term objectives  To boost sales further, to be able to produce more of our product at cheaper costs giving us a higher profit margin.  To export our product to the Maltese Communities living abroad as they have a limited exposure to Maltese language and a smaller selection of Maltese books.  To introduce our books to Nurseries and Kindergartens around Malta and Gozo.  To have an official book launch.

1.5 Long term objectives:  Coloring book – Rhymed is looking to incorporate a colouring section in the book, which still contains the Nursery Rhymes, however the illustrations are such that the child can colour them in. This objective has to be further analysed as the main aim of

-7the book is to encourage the Maltese language for the younger generation and the inclusion of the coloring book might change the whole scope of the book and deviate from the language, which goes against our mission. This is a possibility which we will take into consideration after stabilizing and assessing what costumers are willing to have.  CD - At the start of our brainstorming we decided to include a CD with our product, which would have all of the nursery rhymes sung on it. However after further research we realised that it might be too expensive to produce the CD, and thus decided not to include it as yet. However, we hope to include it when we get enough funds, and if costumers are willing to purchase our product at a slightly higher price.

1.6 Company Name

The company’s name Rhymed was unanimously chosen during one of the early company meetings. A name is very significant to the identity of a company and thus we chose Rhymed not only because is it reflects our product, since we are creating a Maltese Nursery Rhyme book, however because it also refers to the close bond between all the members of the team.

1.7 Logo

Our company Logo consists of 2 human figures reading a book, together with the company name, Rhymed, adjacent to the symbol. The Logo also includes the words: A Young Enterprise Company, below the company name. The larger figure represents an adult whilst the smaller one represents a child. The book refers to our product. Both figures are reading the book, and this represents our wider market which is not only the child, but also older generations which are interested in Maltese culture. The Logo represents the unique bonding experience which our product offers parent and child and it also reflects the passing on of our special heritage from one generation to the next. The company name is in blue – our company colour.

-81.8 Company Motto

The company motto is: Rhymed – Uniting through Language Our motto was purposely selected because it has a strong link to the aim of our company. At Rhymed our goal is to strengthen our Language, and thus we hope to unite people through their heritage, and encourage them to love and appreciate their culture. Language is one of the most significant cultural aspects, and is thus why the team has decided to focus on enhancing the Maltese language.

1.9 Company Structure

Rhymed consists of 15 talented students brought together by one common characteristic: determination. All 15 company members have worked together to create the best possible product, whilst at the same time taking advantage of the unique learning experience Young Enterprise offers. At Rhymed we have a board of 9 Directors, each one responsible for one or more different departments, who collaborate with one another in order to ensure ultimate success. The Board of Directors includes the following:  Managing Director  Company Secretary  Human Resources Director  Finance Director  Marketing Director  Sales Director  Public Relations Director  Design Director  IT Director  Operations Director  Quality Director

-91.9.1 Organisation Chart

1.9.2 Company Members

The roles of each company director were democratically chosen by voting. Each member was entitled to one vote per department. The company was presented with the departments required, and whoever was interested in being director of a particular department gave a short presentation to explain why he/she would be the best candidate for the job. The first 3 roles chosen were the Managing Director, the Company Secretary and the Finance Director. Once all the Directors were established, the remaining members were appointed as deputies, according to the demands of the departments.

Managing Director – Keith Mayl:

As Managing Director, Keith is responsible for leading the company. He is in charge of creating the agendas for the all important company meetings, as well as setting deadlines and ensuring that they are met. As Managing Director Keith must recognize the key issues and guide the functional Directors towards a common direction. Keith is responsible for representing the company at any external functions, communicating with the Young Enterprise office, and other outside companies and organisations. Keith is very suitable for the job as he has a keen sense of direction and is capable of delegating work to the Directors. He is also able to find alternative solutions to any problems the company faces,

- 10 and is most importantly diplomatic with respect to running the company, demonstrating strength and fairness when faced with difficulty.

Company Secretary – Kelsie Coates:

As the Company Secretary, Kelsie is responsible for the administration of the company. Her work starts immediately from the formation of the company as she is in charge of recording the company minutes; a crucial part of the business. She is responsible for setting up the meeting, informing everyone about the date, place, time and agenda of the company meeting. After each meeting Kelsie is to consult the MD in order to finalise the official minutes of every meeting. It is her role to make sure that all of the necessary company documents such as the Memo and Articles of Association are filled in correctly and to keep all company records in order. Kelsie will also play an important role when preparing the annual report at the end of our business period. Being very organized, dedicated and able to grasp, Kelsie is the perfect member for the job.

HR Director – Andrew Cachia:

As the Human Resources Director, Andrew is responsible for motivating all of the company members. He is required to gather all of the details of the company members such as DOB, contact numbers, skills and role in the company. One of the functions which falls under his responsibility is organising role training for the company members with respect to their departments. Andrew is to organise meetings with the Directors in order to ensure that no problems have accumulated and he must also keep the Board of Directors updated with the company’s progress. It is up to Andrew to make sure that proper communication is established between our company’s departments. Being very friendly and approachable Andrew offers a strong link between the company members, focusing on getting the maximum out of each department whilst always being diplomatic and unbiased.

- 11 Finance Director – Peter Hili:

As Finance Director, Peter Hili is responsible for all the transactions of our business. His role in the company is very important as without money the company cannot operate. Peter’s work will heavily influence the decisions made by the Board. He is the sole person in charge of monitoring all of our funds whilst ensuring that the company is making money. Any financial transactions must get his approval. He is responsible for getting the necessary mandate in order to open the company’s HSBC account. It is Peter’s duty to collect the share money and set the company policies for payments. Peter, in collaboration with the Marketing Department, is responsible for pricing our product based on the quotes gathered by the Operations Department. His job is to create budget statements, deposit money, and ensure that all transactions are regularly updated. It is up to the Finance Director to prepare monthly financial statements/ management accounts and inform the Board if any problems arise. At the end of the competition Peter has to prepare for liquidating the company. He must draw up Profit and Loss accounts and prepare an audited Financial Account. Once liquidated, Peter will then pay the YE Corporate Tax and be sure that all creditors and debtors are respected. Peter is good with numbers and willing to take on this difficult role in the company. He is able to collaborate with others and produce work which is accurate and organised. Trustworthy and able to simplify complex work, Peter is the best person in the company to take on this role.

Marketing Director - Christian Cluett:

As Marketing Director, Chris holds one of the most important roles in the company. Good marketing is the key to success and thus our company has a large, dedicated Marketing Department. One of the most important roles that Chris is responsible for is the Market Research. In order for the research to be conducted, Chris is in charge of creating a questionnaire (in Maltese and English), designed to obtain as much information as possible from the public, with respect to our product. It is also Chris’ role to understand and advise the Board on who the company’s competitors, suppliers and potential customers are. The Marketing Director is also in charge of determining the feasibility of the product ideas and

- 12 the 7P’s. It is up to Chris to carry out a SWOT and PEST Analysis to establish any external and internal factors which may affect the company and our product. Once this is complete Chris must then create a Marketing Strategy and establish a Sales Forecasting; 2 very important aspects affecting the success of our company. Through out the competition it is up to the Marketing Director to review the strategy to make sure that the company is on target, and to report any progress to the Board. Chris is to work closely with other departments to ensure that customer needs and wants are met through our product. He must also collaborate with the Sales Department and improve the marketing strategy accordingly. Chris is a hardworking, innovative thinker with a creative flair and good management skills. Able to motivate the team and focus to coordinate team skills, Chris is a good Marketing Director. Being an A’ level Business and Management student, Chris has a good marketing background which will definitely help Rhymed succeed.

Sales manager – Matthew Farrugia:

As the director of this department Matthew is responsible for Sales which is closely linked to the Marketing Department. He is responsible for the distribution of the book making sure that it is readily available to our customers using the appropriate means. He is to collaborate with the Marketing Department to identify potential customers in order to further attract them. Matthew is to coordinate with the Finance Department to ensure that the sales target identified in the budget is reached. The sales team is the front liner when it comes to direct contact with the customers, and thus it is Matthew’s responsibility to make sure that the department succeeds in attracting customers. Matthew is also in charge of assisting the Marketing Director in preparing the Marketing Strategy. He must also prepare a Sales Plan and Forecast which appeals to the Board. Matthew is responsible for setting up an efficient after Sales service, and plan proper sales recording which is easy to monitor. The Sales Director is to work with the Finance Director to ensure that payments received are accurate. He must also visit any potential customers and verify that all incoming and outgoing stocks are properly recorded. Matthew is a good communicator and understands the product well enough in order to show customers how our product can help. Being an A’ level Business and Management student Matthew has a good business background. Owning a large family

- 13 business Matthew has several contacts which the company could use to their advantage, making him the ideal Sales Director.

PR Director – Andrew Cachia

As the Director of Public Relations, Andrew is responsible for promoting the company and making our work known to the public. He does this by taking photos of the company meetings and organising events such as our fundraiser which raised a total of €255 in aid of l-Istrina. Andrew, together with the Managing Director, is in charge of the company’s CSR; an extremely important aspect of our company. He is responsible for publishing the company’s work and events in the media by writing articles in Newspapers, and posting information onto popular sites such as Facebook.

Design manager – Yasmin Cachia:

As the design manager Yasmin Cachia is responsible for creating the book. She is in charge of designing the layout of our product being sure to satisfy the needs of the customer as established by the Market Research. She is responsible for sampling the paper from our publisher and ensuring that the best quality printing is achieved. Through her contacts Yasmin has hired a graphics designer from outside the team who has accepted our offer to create illustrations for the book. Knowing that the design of the book is very crucial to the success of our company, Yasmin is to coordinate her work with the Managing Director to be sure that the highest standards are maintained. Yasmin is responsible for finalising the prototype as well as the choosing the shape, size and colour scheme of the book. Yasmin must also work with the Sales department in order to develop book options which could increase sales, and establish the all important competitive edge. Yasmin is an extremely enthusiastic, capable and hard working member of the team. Having a creative flair, a very clear idea of what our aim is, and an ability to pin point exactly what needs to be included in our book, Yasmin is the perfect candidate for Design Manager.

- 14 I.T Director – Erik Saliba:

As the I.T Director it is Erik’s job to integrate our business with the computer world. He is responsible for preparing the company’s I.T needs such as a website, a Facebook page, and a Facebook group for members only. Erik played an important role in designing the company logo offering unique ideas. Erik is to liaise with the Marketing and Sales departments in order to promote our book via the Internet. Having a very good knowledge of computers and the Internet Erik is fully aware of the IT opportunities which are available to the company.

Operations Director

As the Operations Director Kyle is responsible for converting the company’s raw materials and resources into a product that will satisfy the customers needs accordingly. Therefore he is in charge of coordinating the production to ensure that the product is provided at the optimum amount, price and time. Kyle is to collaborate with our Design Director, Yasmin, in order to create the prototype, whilst ensuring that all costs are calculated for the design, development and production of the prototype. It is also his job to make sure that our product abides by the YE Rules and Regulations, and to consult the Quality Director to ensure that the quality check is conducted during every phase of production. He is also responsible for identifying the prospective companies to manufacture the product we offer and thus he must gather various quotes from different companies. Once taking advantage of the Economies of Scale Kyle is to liaise with the Finance and Marketing Departments in order to appropriately reprice the product. It is up to the Operations Director to purchase stock based on accurate information, as well as updating the stock sheet. At the end of the company he will have to take stock, and clear all stock for liquidation. Kyle has a good understanding of operation procedures, and is able to manage people well. Organised and logical he makes a good Operations Director.

- 15 Quality Director – Keith Mayl

The Quality Director, Keith, is responsible of making sure that everything which the company does abides by YE Rules and Regulations, in order to maintain the highest product and company quality possible. His job is to set up a filling system for the entire company, as well as quality control when it comes to production, labelling and packing. Keith is to ensure that all company records are up to date, and regularly reviewed. Being extremely organised, critical and tidy Keith does a good job as Quality Director.

1.10 Legal Structure

Rhymed is a Young Enterprise Company established in October 2009, which has successfully completed all registration requirements with Junior Achievement Young Enterprise Malta, and is thus a recognised Young Enterprise Company for the programme year 2009-2010. Rhymed functions as a private company which abides by the JA-YE Rules and Regulations of 2009-2010. Capital was obtained by the selling of shares to family and friends adding up to a total of €1000. The administration of the company is entrusted to the Board of Directors, which were democratically elected by the company members.

1.11 Company Resources

Having reached the maximum number of share capital as prescribed by Young Enterprise, Rhymed is confident that it has enough funding to start up the company. The company’s main resources however are the 15 members of the company, together with our Graphic’s Designer John Cascun, Business Advisor Malcolm Lowell, Link teacher Abigail Felice, Logo Designer Michele Agius, and Antonia Gauci and Bernardine Deleonardo who provided the vast majority of the nursery rhymes. The company also made good use of the Internet and I.T software such as Photoshop.

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2. Product and Operations
2.1 Product Overview

One of the first things Rhymed established was its product. After 2 company meetings all of the members mutually agreed that the product should be a Maltese Nursery Rhyme book, a product initially suggested by the Managing Director. Rhymed chose Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar as its product because the company strongly believes in the importance of promoting the Maltese Language. We feel that there is a need for more books which encourage our Language and Culture, 2 very important aspects of our heritage that Rhymed actively supports, and thus we came up with our idea.

2.1.1 Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar

Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar consists of 55 nursery rhymes, 50 of which are traditional Maltese rhymes handed down through the ages. Interestingly what we found whilst compiling our selection of rhymes was the different variations of the same rhyme. The traditional rhymes were handed down orally and this probably accounts for our discovery of variations. The vast majority of traditional rhymes were provided by Antonia Gauci, the Design Director’s Grandmother. All of the traditional rhymes are very popular and known by several Maltese people. The other 5 nursery rhymes are originals which were

written by Bernadine Deleonardo. The 55 rhymes were sorted thematically into 7 different themes. These are:  Loghob tat-tfal  L-Imhabba  Kant tat-tfal  Il-Festi  Il-Bahar  In-Natura  Iz-Zoghzija

- 17 Once the poems were sectioned, the Design, Operations, Quality and Managing Directors discussed how illustrations were going to be linked to the various themes. The short rhymes will be linked by one picture, whilst the longer rhymes have their own page. All of the illustrations are being done by our Graphics Designer John Cascun together with the direction of the Design and Managing Directors. John Cascun is 17 years old and is a relatively unknown designer who is currently studying at MCAST. The team discovered John through our Design Director. Apart from the brilliant work he is capable of producing, Rhymed chose John to pay tribute to the undiscovered local talent, giving him a chance to display his work in our product. Currently we are considering between 24-28 pages of nursery rhymes and their respective illustrations. The book will also include a front cover, a page for acknowledgements, an introductory page, a contents page, a glossary at the back with the harder words explained, and a back cover and blurb.

2.1.2 Target Market

Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar as the title suggests, is not only aimed at children, however also to anyone who is genuinely interested in the Maltese Language and Culture. The nursery rhymes offer a wonderful learning experience for young children aged between 3 and 8, whilst also appealing to older generations. Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar, as the sample in section 2.1.4 shows, was not designed to be a baby book. On the contrary, Rhymed aims to attract more people by creating a nursery rhyme book with a more classic look. All of the illustrations depict typical Maltese scenes, including traditional Maltese style, clothes and surroundings. Apart from the illustrations, the themes represent different aspects of Maltese life, from traditional Maltese games, to love and adolescence. Although the characters in the book are predominantly children, the book is not exclusively for kids.

- 18 2.1.3 Product Sample

- 19 2.1.4 Copyright

Since Rhymed is creating a book it made sure to consider any copyright issues related to our product. Through research Rhymed has discovered that the traditional Maltese nursery rhymes do not belong to anyone, or any organisation, and thus we do not require any copyright to include them in Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar. Regarding the 5 original rhymes which Bernadine Deleonardo wrote, she granted Rhymed full permission to include them in Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar.

2.2 Business Location

Rhymed’s Head office is situated at St. Edwards’s College. Rhymed has chosen this location since it is the most convenient venue for meetings since the company members are there everyday. Above all Rhymed opted for St. Edward’s College in order to save rental costs and use the funds to further improve the quality of the book. Having said that, the production house is not at St. Edward’s College but at the Design Director’s premises were all the necessary software needed to produce the book is available.

2.3 Production Methods

All the production methods and steps taken by Rhymed, where specifically chosen in order to save as much time and money as possible, whilst ensuring maximum efficiency.

        

Step 1: The nursery rhymes for the book are selected. Step 2: The Graphics Designer is hired. Step 3: The illustrations are created. Step 4: The prototype is finalised. Step 5: The prototype is critically examined and approved by the Board. Step 6: The product is approved by Young Enterprise. Step 7: The best quote is selected. Step 8: The final book is sent to the publisher for mass printing. Step 9: The book is printed and the cover is attached.

- 20 2.4 Stocks Rhymed will make use of a database whereby the amounts of books in stock will be recorded and any outgoing books will be entered into the database. When the stock decreases to a certain limit the database will automatically inform the user of the shortage and re-order more books to be printed from the printing press. Books will be printed based on the information from the Market Research and in accordance to pre-orders received. However Rhymed will be taking a slight risk by printing in bulk in order to cut costs. A customer database will be created whereby any new customers will be added to the database and if any improvements in the product occur, they will be the first to be notified.

2.5 Quality and I.T Systems

Quality is the most significant factor for Rhymed. Customer satisfaction is of utmost importance, and thus Rhymed makes sure that its product is of the highest standard. This is achieved by sampling the paper used and setting clear guidelines regarding dimensions, paper thickness, ink and layout for the publisher. The Design and Quality Directors are responsible for ensuring that high standards are maintained through out the entire printing process, and will closely review every book. Any damaged products will not be accepted, and most importantly not sold to our customers. Rhymed is committed to its clients and will set up an after sales service for its customers in case of any damages or complaints. However Rhymed is very aware of protecting the environment and thus any waste material will be recycled. Rhymed is currently trying to determine whether recycled paper is to be used; one which will benefit the environment, yet maintain our very high standard. Rhymed does not wish to use recycled paper which tends to be low quality, simply to tick a CSR box. Thus the Design Director is working hard to find the highest quality recycled paper available. The main I.T system in use is Photoshop. The graphics designer uses this programme in order to edit his illustrations which he draws using a graphics tablet. Apart from this Rhymed makes good use of the internet in order to send emails, and have clear communication between the company members, the Young Enterprise Office and potential clients. Rhymed has a Facebook group which members use to communicate outside school. It is also used to post any relevant information regarding the company such as agendas, minutes, reminders, company events and important Young Enterprise documents.

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3. Marketing
3.1 Introduction

Marketing plays a vital role in any sort of business, whereby one can attain considerable success should the marketing role be handled in an organised, professional and driven fashion. Marketing is needed in order to determine one’s target market as well as finding new, innovative ways of gaining more customers, which could be done by creating a strong corporate image – one of the objectives that Rhymed decided upon targeting. Rhymed is determined to be flexible in accordance to customer wants and needs. Our flexibilty in altering the product for existing and potential customers, will put our company ahead of any sort of competion and thus will frurther strengthen the corporate image that is truly precious to us.

3.2 The significance of the External Environment

The importance one gives towards the external environment is a factor that will make or break the prosperity of a company, and ours is no different. Rhymed made it a point to give full importance towards the external environment in order to be alert and ready to counteract any possible threats as well as seizing opportunites that may arise. Through the identification of the various changing situations in this particular environment, Rhymed was able to be both flexible and efficient in the way it responds towards these changes. Resulting in the company being one step ahead of various other competitors and thus, gaining a greater market share from them. A PEST analysis was the most useful way to access the future impact of the external environment on Rhymed. A PEST analysis considers four aspects of the external environment – Political, Economic, Sociological, and Technological factors. PEST is a management tool that will analyse the external environment in a successful and fruitful manner. From this, we managed to strengthen our aims and objectives for the upcoming year, as well as move on towards our next step in completing the stages prior to the actual production of our product. An example of some of the factors that could have both hindered as well as increased our success are:

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Political factors

Economic factors

- a new law on competition being introduced - change in laws related to employment and tax payments - government elections resulting in a change in power Sociological factors

- a rising exchange rate or interest rate

- rising tendancy for prices to increase (inflation) - the rate of economic growth (slower or faster) Technological factors

- rise in people becoming more environmentally aware - demographic changes regarding the rates of both birth and death - change in trends such as the increase in ecommerce

- new machinery that makes printing more efficient, but at a higher cost - new composite materials needed for book to be formed - rise in ways one ought to advertise the company’s product

3.3 Market Research

The significance of the Market Reasearch is evident; one is able to attain an overview of how the external stakeholders and society feel about our product. Through this Market Research, Rhymed’s aim was not only to see how society would react towards this product filled with much potential, but to further dig into any innovative suggestions made by certain personnel. Thus enabling Rhymed to flex its flexibility once more and work towards satisfying all those interested in purchasing our product. A market research was conducted around the areas of St.Julian’s, Sliema and Valletta, whereby a total of 91 people; 65 adults and 26 children, were asked to answer the questions in our questionnaire. The various graphical designs presented below illustrate how these people reacted towards a book that will further strenghten the reputation of the Maltese Language.

- 23 3.3.1 Statistics of Adult’s Questions

Question 1: From one to five, with five being the highest, how important do you think it is to have a book of Maltese Nursery Rhymes?

30 25 20 15 10 5 0 1 2 3 4 5
X-axis represents rate of importance Y-axis represents number of votes

Question 2: Do you believe it is necessary for our children to begin reaading Maltese from a young age?

Yes No

One can clearly see how strongly the Maltese feel about their children adopting a habit of reading Maltese from a young age.

- 24 Question 3: Would you be interested in buying one of our nursery rhyme books for your child?

15

Yes No

50

There is a clear interest present in our product as one can see from the overwhelming rate of people who chose ‘Yes’ when answering this question.

Question 4: If yes, how much would you be willing to pay?

30 25 20 15 10 5 0 €7 - €8 €9 - €10 €11 - €12

X-axis represents estimated price Y-axis represents number of people who voted for each estimated price

- 25 Question 5: Would you be willing to pay more for the book if it includes the CD?

18

Yes No

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This pie chart illustrates that people would like it if the book incorporated a CD with the rhymes sung on it. However the company believes that it is not financially feasible at this stage.

Question 6: Would you buy the book for your own personal use?

17 Yes No

48

The pie chart here shows us that a relatviely large percentage of the adults asked would consider buying our prodcut for their own personal use.

- 26 Question 7: If you were to buy one of our books, would you prefer it to be: A. A typical book which includes both new and traditional Maltese nursery rhymed with colourful pictures on each side? B. A nursery rhyme book in the form of a colouring book where all pages are suitable for the child to colour in? C. A book which includes both coloured pictures, and pages with pictures for the child to colour in?

22 30 A B C

13

This pie chart illustrates a very close call between choices ‘A’ and ‘C’ and thus, showing that a book based solely on manual colouring by the owner of the book was not very popular.

Question 8: If you chose ‘C’ in the last question, what do you think the percentage of colouring pages should there be?

A. One large colouring pagr in the middle only B. 25% C. 50% D. 75%

- 27 -

D

3

C

15

B

7

A

5

0

2

4

6

8

10

12

14

16

This clustered bar chart shows us that the general choice was that of having 50% of the pages suitbale for colouring. Despite this, the company was unsure whether to follow the external environment’s significant decision as we feel incorporating a colouring book may change the scope of the the product.

Question 9: Do you remember any Maltese Nursery Rhymes from your childhood?

25 Yes No 40

This chart illustrates that many adults nowadays have forgotten, or possibly have never even heard of any sort of nursery rhymes in their very own mother tounge - Maltese

- 28 Question 10: If yes, which?

There were various answers from the 25 people which remembred any nursery rhymes. The most commonly mentioned ones were:

i. ii. iii. iv.

‘Dawra Durella’ ‘Banni Bannozzi’ ‘Pizzi Pizzi Kanna’ ‘Ara Gejja l-Mewt Ghalik’

Aside from these popular ones, others such as; ‘Denfil’, ‘Zunzana’, ‘Ongi Ongi Onggella’, ‘Bum bum il-bieb’, and ‘Paci Kulacci’ were also mentioned.

Question 11: Do these Nursery Rhymes bring about happy memories?

1

Yes No

24

From this chart, taken by those who still have those rhymes close to their heart, it is evident to note that the Maltese do feel very fondly about their past, and nursery rhymes formed a significant part in this happiness.

- 29 Question 12: Do you think your decision to buy this book is going to be influenced by something in particular?

26 Yes No 39

This chart shows us that these adults do not, in general, believe that the company needs to attain any sort of competitve edge in order to sell – another dubious factor that was noted on Rhymed’s part.

- 30 Question 13: If yes, by what? Once again a diverse and numerous amount of answers cropped up when this question was asked. However, through much deliberation the company created a type of ‘Force Field Analysis’ based solely on the driving forces. Each of the suggestions was ranked from strong, moderate to weak, according to its importance.

Strong
-Use of correct, sophisticated language in Maltese - Instills a higher level of respect towards the Maltese folklore and traditions

Moderate
- Translation and brief Explanation of difficult Maltese words in Enlgish - Easy-to-use and is adapted to the children’s imagination and level of intelligence

Weak
- A just and fair price for this product - Children learn through the singing rather than the reading. We believe that the incorporation of both could be vital, however we must give more importance towards the act of reading

- Innovation, especially in the artwork

Question 14: Would you choose to buy our product over another one similiar to it, if you knew it were made out of environment-friendly paper?

1 16 Yes No No Difference 48

This pie chart further streghtens the analysis we did with regards to PEST since, through this chart, we can note that people are becoming more aware when it comes to the importance of the environment.

- 31 3.3.2 Statistics of Children’s Questions

Question 1: How old are you?

Throughout the 26 children, a varied amount of ages were noted.

14 12 10 8 6 4 2 0 2--4 years old 5-8 years 9-21 years old old

Question 2: Boy or Girl?

10 Boy Girl 16

This chart illustrates the majority of the childern who answerd the questions were girls.

- 32 Question 3: Do you enjoy listening to stories and nursery rhymes in Maltese?

7

Yes No

19

This pie chart shows us that most children expressed an avid interest in our Maltese nursery rhyme book.

- 33 3.3.3 Business Opportunity

3.3.3.1 Product Analysis

Through our product analysis our organisation was able to understand better how to market the book’s unique features. By comparing positive and negative points about the product, we were also able to delete unnecessary features, thereby saving money with the aid of the Development team.

Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar, is a revolutionary product on local and foreign Maltese markets. It enables readers to appreciate their literary heritage, reflect on their childhood, and mostly importantly foster a warmer approach to the Maltese language for children. As a patriotic firm, it is our wish to instil more recognition for the Maltese Language and thus we sincerely hope that our product will aid the current situation.

WHAT:

Rhymed’s sales team puts much emphasis into subdividing its efforts to make our product not only desirable and economical, but also highly sellable. Our product, after having eliminated other potential products, was chosen to be a Maltese Nursery Rhyme book, based on the Maltese Culture and folklore. Various excellent points made it clear to our team, as well as the people, that Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar, is an ideal opportunity for Rhymed to capitalise on a market gap; unfilled prior to our intervention.

HOW:

Market research has shown our Sales Department that the best channels through which Rhymed could sell its product are via:  Direct Communication with clients who wish to place large orders.  Using questionnaires to advertise in afore mentioned target areas  Word of mouth communication

- 34 TO WHOM:  Children – for those who require a better grounding in local culture, those who need to strengthen their command over the Maltese Language and those who wish to own an enjoyable, animated reading book.  Older Generations – Many are those amongst the population who lack a proper understanding of the Maltese Language and Culture. Our product also appeals to those who would like to rekindle happy memories of their childhood or are genuinely interested in cultural products.  Kindergartens and Nurseries - Taqbiliet Maltin – Ghall-Kbar u Ghaz-Zghar is aimed to be used in classrooms to teach children to love and appreciate their language. We believe that our product offers an innovative approach for introducing Maltese in a fun, child friendly manner. Apart from the creative illustrations and colours, our book includes a glossary at the back with the harder words explained, thus increasing its child friendly approach. Together with explanations on how to play the games in our Loghob tat-tfal section.

- 35 3.3.3.2 Marketing Projections

3.3.3.2.1 Estimated Sales

The company conducted another Market Research in order to compile a list of customers who will definitely by our product. The research established 200 buyers. All necessary details were recorded, and once the book is printed, these customers will be the first to get a copy.

By using the figures obtained from the Finance department, based on our response of a minimum of 200 units, our sales team was able to calculate the following:

Sales

Share Capital

Production

Share Capital was €1000. From this we made payments to our supplier, the printing house, who in turn provided us with 200 units. This is the material required to begin sales. Based on the fact that we have a minimum of 200 buyers, and a market over that number, one can safely assume that sales will surpass breakeven point of 153 (see section 4.9), and reach 200 units.

3.3.3.2.2 Market Share Carlton O’Neal stated that the Market Share is the percentage of the total available market that is being serviced by a company. It can be expressed as a company through the following: Sales revenue from the market Total Sales revenue available in that Market

- 36 Based on our products uniqueness, and our high sales estimate, we understand our product to have a relatively high and strong market share, ranging between 45% and 65% of the market for Maltese nursery rhyme books.

3.3.3.2.3 Market Growth

Assuming that our product does sell as estimated, we can hope to see an increase in awareness of the importance of Maltese nursery rhymes. Thus we expect to note a larger potential market. This would a mean loss in Market share, although providing an opportunity for Rhymed to grow.

3.3.4 Conclusion on Market Research

As a strong and united company we ceratinly have no doubts regarding our product and its potential. From the results of this survey its clear that adults, as well as children are fully supporting us in our quest to make something new that will further strenghten and broaden the awareness of our language. Along with its educational, innovative, flexibilty and enjoyable parts that all sum up into one interesting and enchanting book, we are in no position to back down from this chance to create something truly special. The majority of people interviewed noted that they do not have the proper background to rest on their laurels and stated that they have a poor knowledge of Maltese nursery rhymes. Thus our book will offer adults the potential to restart and begin a new experience with a book that will be full nursery rhymes that are suitable for them too to read and enjoy. It is our objective for the readers, both young and older, to attain a certain degree of knowledge, be it new and exciting or a continuation and widening of knowledge. We hope that our customers will be fully pleased with the diligence and creativity expressed in our organisation, through our accessible nursery rhyme book.

- 37 3.4 Marekting Mix

3.4.1 Product After the research, the Marketing Department then collaborated together in order to organise and determine the product’s most interesting and innovitive features that, we believe would help us attain the all important competitive edge - vital in order to increase ones sales and obtain a greater market share:  Solely based upon the Maltese Culture – vital part since we are giving the Maltese language a higher level of respect which it demands  Education – children and adults can learn through this book since it can further strenghthen and widen ones Maltese vocabulary and diction, as well as improve ones knowledge of the Maltese Culture.  Fun - Our nursery rhymes are enjoyable as they are not only educational, but are built upon catchy, humerous sentences, creting a vibrant feel when read out loud.  Our Flexibilty – we believe this is our ultimate edge since we are capable of customising our product for large customers in whichever way they want. Thus creating versions of the book which are uniquely theirs and entitled to no one else.

3.4.2 Price

In collaboration with the Finance Department several factors where taken into consideration before arriving at the price. The team analysed all the costs and then established a profit margin (see section 4.10). It should make a difference whether we are selling to a retail shop or directly to customers. Therefore for bulk buying retails we established a discounted price of €9 and suggested that they in turn sell these books at €10 while if selling to individual customers we will be selling at a rate of €10. The retail price includes the cost of the books that will be given for free for CSR purposes (see section 5). The price will differ if costumers want alterations of the product.

- 38 3.4.3 Promotion  Our main promotion is by word of mouth, and promotion from the Sales Department as we have limited funds.  Members from Sales Department are attending meetings with potential buyers to see if they would like any customization done. For example adding their business logo on the front cover. This will be our competitive edge.  We will also have a website which will act as a promotion  We have a group on Facebook which allows people to become aware of our product.  Advertising tools. This consists of a short description and logo of our company which will appear on the right side of the screen on facebook.

3.4.4 Place

Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are transferred from the manufacturer/ service provider to the user or consumer.  We shall be using a direct way channelling for our product since, we believe, it is best to give the product straight to the hands of the customers. This could allow Rhymed to get feedback on the book from the customers should they be willing to further aid us throughout the production.  The channel intermediary Rhymed will most likely follow is the retailer one, since we believe that a strong relationship with the customer is vital.  Through word-of-mouth by the customer, we could further increase our sales as we would be considered as a ‘professional, friendly and flexible company’

Despite this, we know that we must have a strong brand so that the customers would choose our product over the rest. Through our flexibility and will to alter our product in respect to what the customer demands, we believe we shall succeed.

- 39 3.5 The Target Market

A target market is the segment of a certain market in which our product will be marketed. Due to the product’s broad accessiblity, Rhymed believes that the target market is the Maltese population in general. This is because the book does not impose particular ages and certainly no specifications on gender or sociological grouping. It can be used within kindergartens and primary schools to promote Maltese reading and Maltese Culture. It can then be used later on in studies when doing projects on various past traditions that are uniquely Maltese – and our nursery rhymes certainly fall under this category. It certainly defines the old Maltese culture, especially with the artwork that reflects the traditional Maltese look, thus it could be easily used as a souvenir. Our rhymes appeal to the older generations by sparking happy childhood memories.

3.6 Ways of Marketing

Rhymed’s marketing is directed towards both the internal and external market. Our product is the culmination of culture and history that is truly Maltese. We believe it is a necessary material to own in order to attain more knowledge with regards to our heritage.

With the use of internal marketing, the company’s employees are continaully trying to broaden customer awareness throughout the island so that our book will reach and fulfull its potential. We are determined to supply the Maltese locals, as well as those outside the island by giving them solely what they want in the book.

Externally, the company is focusing mainly on promoting the product through various advertisements subjected under the media, such as Internet, Flyers, Newspaper and Magazine articles. Through this we hope to encourage more buyers that will not only make us more efficient in suceeding, but help enrich the Maltese culture further.

- 40 3.7 Distribution Line

Rhymed will make use of 2 distribution lines. The below diagrams represent the company’s distribution lines.

(A)

(B)

Supplier

Supplier

Rhymed

Rhymed
Reseller

Book Shops

Customer

Kindergartens Stationeries

Customer

- 41 -

4. Finance Plan
4.1 Basis of preparation

It is Ryhmed’s intention to prepare financial statements in accordance with the Accountancy Profession (General Accounting Principles for Smaller Entities) Regulations, 2009 and the Schedule accompanying and forming an integral part of those regulations (“GAPSE”).

4.2 Capital

The authorised, issued and fully paid share capital of the company consisted of 1000 ordinary shares of € 1 each. All shares carry equal voting rights.

4.3 Credit Facilities

Our only source of finance was the issue of ordinary shares. We would like to keep it as such without putting ourselves into unnecessary debts. That is why we managed to agree on some credit terms with our suppliers, basically our main supplier which is the printer. We agreed to pay the printer in five equal instalments. That would put us in a better working capital cycle position where we will be receiving money from our customers before we pay our suppliers. That would in turn leave us with a better cashflow position to invest further in marketing and product enhancement.

- 42 4.4 Budgeted Cashflow for the period ending 31 January 2010

Book quantities

200 €

500 €

1000 €

Cashflow from operating activities Cash received from customers Payments to suppliers 1,000 (425) 575 1,000 (650) 350 1,000 (1,100) (100)

Cashflow from financing activities Issues of ordinary shares 1,000 1,000 1,000

Net cash inflow

1,575

1,350

900

4.4.1 Budgeted Cashflow for the period ending 30 June 2010

Book quantities

200 €

500 €

1000 €

Cashflow from operating activities Cash received from customers Payments to suppliers Cashflow from financing activities Issues of ordinary shares 1,000 1,000 1,000 2,000 (1,525) 4,700 (2,650) 9,250 (5,000)

Net cash inflow

1,475

3,050

5,250

- 43 4.4.2 Cashflow Notes

We thought it would be ideal to examine our cashflow position at several points in time during our business period. That is the main reason why we produced two separate cashflows. In January we are hoping that our sales department will be up and running and therefore we wanted to examine our financial situation at a time where customers would be demanding our products. We intend to do a monthly budgeted cashflow to continuously monitor our financial needs and therefore prepare ourselves for any contingencies.

4.5 Quantities

Since the company is not yet sure about the printing quantities we produced a three column cashflow with all three possibilities. We are awaiting a reply from a local bookstore and some local stationers who are willing to buy in bulk. Should these pre order the books, we will go ahead and print 500 or 1000 copies. However should we get a negative reply, we will be printing 200 copies selling them to individual customers. Also please note the change in income where we took into consideration bulk discounts to retailers. In accordance to our marketing research we are expecting to sell a maximum of 250 copies to individual customers while the rest at a reduced price of € 9 per copy. This means that in the 200 and 500 scenario we are planning to sell 200 books at €10 and the rest at € 9 whereas in the other option we are estimating that should our sales department keep up the good work we would sell 250 copies to individual customer at € 10 per copy and the rest at €9 per copy.

4.6 Payments to suppliers

Payments to suppliers include both part payments to printer and money allocated to other departments such as administrative expenses and marketing expense.

- 44 4.7 Budgeted Income Statement for the period ending 30 June 2010

Book quantities

200 € 2,000 1,125 875 400 475

500 € 4,700 2,250 2,450 400 2,050

1000 € 9,250 4,500 4,750 500 4,250

Turnover Cost of Sales Gross Profit Administrative expenses Net Profit

4.7.1 Income Statement notes

Ryhmed’s finance department looked at several alternatives when it came to profit forecast. Once again we took into consideration various possibilities and selling quantities.

4.8 Budgeted Statement of financial position as at 30 June 2010

Book quantities

200 €

500 €

1000 €

Current Assets Bank 1,475 3,050 5,250

Equity and Liabilities Share Capital Retained Earnings Total equity and liabilities 1,000 475 1,475 1,000 2,050 3,050 1,000 4,250 5,250

- 45 4.9 Breakeven Analysis This analysis is very relevant especially to new businesses like Rhymed. With this analysis we intend to achieve the minimum number of books that have to be sold for the business to break even; that is just to cover the costs and no more. Any products sold over and above this quantity would leave us with a profit.

Book quantities Estimated Selling price Estimated expenses Books to be sold to breakeven

200 € 10 1,525 153

500 € 9.4 2,650 282

1000 € 9.25 5,000 541

4.10 Other important workings:

These particular percentages would give us an indication of the percentage profit we are estimating to make with various quantities being printed.

Gross Profit Margin: 200 € 500 € 1000 €

Selling Price Direct cost per book Profit per book Margin Net Profit Margin:

10 5.63 4.37 43.7 % 49%

9.40 4.50 4.90 47.5%

9.25 4.50 4.75

200 €

500 €

1000 €

Selling Price Cost per book Profit per book Margin

10 7.63 2.37 23.7%

9.40 5.30 4.10 41 %

9.25 5.00 4.25 42.5 %

- 46 -

5. Corporate Social Responsibility
Corporate Social Responsibility is an essential part of every business whereby companies ensure that they adhere to their ethical standards. Businesses are committed to their CSR value by being responsible for the impact of their activities on the environment, employees, communities, consumers, stakeholders, and all members of the public. Furthermore, business should promote the public interest by actively encouraging community development and growth. Companies should voluntarily eliminate practices that harm the public sphere, regardless of the legality. Essentially, CSR is the deliberate choice to include public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, and Profit.

Rhymed is strongly dedicated to the importance of incorporating CSR into the company as much as possible. One of the main reasons behind our product choice is this very reason. The promotion of the Maltese heritage, with particular focus on the Maltese Language, is itself a CRS issue. Thus one can say that our product revolves entirely around CSR. For the company members, our product is not simply a collection of random Maltese nursery rhymes. On the contrary, we were sure to create a book which incorporates various aspects of Maltese life, culture and tradition. The 7 themes all display focus on a specific part of that which is truly Maltese, ranging from sweet games and songs, to our Festi and the Sea. Therefore our product, Taqbiliet Maltin – Ghall-Kbar u Ghaz-zghar, is a main part of our CSR.

However knowing how important CSR is, Rhymed wishes to take it a step further. As previously explained in section 2.5, the company is currently on a mission to try and use recycled paper in the product. However due to our high quality standards, we are still unsure whether this will be possible, since most recycled paper is of a lower quality. However should we succeed in finding recycled paper which satisfies our demands, Rhymed will most definitely opt for it. We are very aware of the importance of saving the environment, and thus Rhymed makes it a point to recycle all unwanted or extra company documents. We try to minimise the amount of printing by using soft copies of the work as much as possible, and thus we save on paper and costs. Apart from this Rhymed also prints

- 47 a limited number of any necessary documents, and instead opts to share them between the departments. For instance the Managing Director only printed 7 copies of the Take-off feedback form and thus 1 copy represented 2 people. Therefore the company works to save as much paper as possible. In order to make up for the paper we use, Rhymed is going to plant 3 trees in the St. Edward’s College gardens.

Although the environment is a big issue when it comes to CSR, Rhymed does not wish to stop here; we want to take CSR outside the product and company. In order to this Rhymed has created a list of events which it would like to organise in order to give back to the community. One of these was the L-Istrina Fundraiser which took place on Wednesday the 23rd of December. The company organised a football tournament and hot dog stand, at St. Edward’s College. All proceeds (€255) were donated to L-Istrina which raises money for the Malta Community Chest Fund. One event which the company is definitely going to do is visit the children’s cancer ward at Mater Dei Hospital, and spend an animated afternoon with the children. We would like to bring some joy into their lives by reading our book, and organising some games for them. This will most certainly by one of the most rewarding CSR events for the company which we are all keen to take part in. Rhymed will also like to organise another fundraiser for Puttinu Cares. We are planning to have a car wash and donate all of the proceeds to this organisation. Rhymed is also looking into donating some of our books, once the product is printed.