MN5002

Entrepreneurship, Innovation and Leadership

Individual Assignment

Module Tutor: Dr. Dakshata Rana

Date: 4th May 2016

NIRAKAR BOGATI
ID no. 14046828
 NIRAKAR BOGATI
NEAPALI KHANA FOOD SERVICE
Tripureshore, Kathmandu

Date Prepared: 3rd May 2016

ACKNOWLEDGEMENT

I would like to express my deepest appreciation to all those who helped, supported and
encouraged me to successfully complete this report. I give a special gratitude to my module
tutor, Dr Dakshata Rana, who provided a lot of guidance, suggestions, and encouragements and
helped me to coordinate in writing this report.

Furthermore I would also like to thank my family and friends without whom it would not be
possible to complete this report. Last but not least, many thanks go to the BBA tutors of
ISLINGTON COLLEGE, who have invested their full effort in guiding us in various business
related modules.
TABLE OF CONTENTS
ABSTACT.......................................................................................................................................4
EXECUTIVE SUMMARY...........................................................................................................5
GENERAL COMPANY DESCRIPTION....................................................................................6
PRODUCTS...................................................................................................................................7
PRICING........................................................................................................................................8
MAIN SERVICE............................................................................................................................9
MARKET ANALYSIS AND PLANNING.................................................................................11
TARGETED CUSTOMERS.......................................................................................................12
PROMOTIONAL TOOLS..........................................................................................................13
STRATEGIC ANALYSIS...........................................................................................................14
PARTNERSHIP AGREEMENT................................................................................................15
FUTURE PLAN...........................................................................................................................16
SWOT ANALYSIS.......................................................................................................................17
SURVEY QUESTION.................................................................................................................18
FINANCIAL PLAN.....................................................................................................................20
BREAK EVEN ANALYSIS........................................................................................................28
REFERENCES............................................................................................................................29
ABSTACT
The report is a depth analysis and examining of the feasibility and profitability of the chosen
service, lunchbox food delivery service, in the current state of Nepalese market. It further
analyses the issues related to the food market and provides proper solutions and marketing
strategies to solve them. The information is gathered from local food retailers and from the
websites of major food delivering companies of Nepal.
EXECUTIVE SUMMARY

Nepali Khana Food Service cooks and delivers home-made quality food packed in lunchbox to
its customer’s doorsteps. It is a both product and service oriented business. The company is
established by 2 partners with equal share of initial capital. The major product sold is packed
food set and the services provided are food delivery of food set and food delivery form
customer’s home to their offices.

This business plan shows the establishment and promotion strategies of Nepali Khana Food
Service. Primary research of Nepalese consumers through survey is the main supportive research
of this plan.
GENERAL COMPANY DESCRIPTION
This section summarises the aims and objectives, operating strategies and organizational
system of the company.

Mission Statement
The mission statement of Nepali Khana Food Service is “every individual customer should be
happy with the food and service provided along with the pricing”.

Vision
The vision of Nepali Khana Food Service is to provide every individual consumer with the
quality food in their preferred time and location at a very reasonable pricing. It does this by
doing through checking of the quality of the food, maintaining cleanliness while cooking and
using shortest route while delivering the food.

Nepali Khana Foods Service utilizes the food resources efficiently by keeping the food waste
level to minimum. The main challenge related to promotion is while getting initial customers and
making them realise about the company. Also, the company uses eco-friendly and biodegradable
packaging.

Company Goals and Objectives

Goals:
 To cook and serve food by maintaining home-made quality and taste.
 To have branches in 5 major towns and cities of Nepal.
 To aware consumers about the importance of healthy food and balanced diet.
 To expand market coverage to international level cover neighbouring SAARC countries.

Objectives:
 Make a sales of $5000 (NRs.500,000) in the first year.
 Increase the market-share by 3-4% every year.
 To have 25 full time employees by next 4 years.
 To have good relation with the customer and the locality of company.

Business Philosophy
Balanced diet, Hygienic, and Affordable is our motto of Nepali Khana Food Service.

 Balanced diet, because balanced diet is the best way to remain healthy. The food set
prepared by Nepali Khana Food Service includes all type of nutrients providing food
items.
 Hygienic, because healthy and clean food is the main property that consumers seeks
while purchasing food.
 Affordable, because every interested consumer should be able to get access to the food
and service provided.
PRODUCTS

Main Products.
The main food products cooked and sold by the company are:
 Veg-Food Set
 Non-veg Food Set
 Snacks Set
 Beverages

The foods menu was prepared as per the following survey result:

As per the survey result, it was identified that people preferred lunch food to be delivered.
During the lunch time, consumers will be away from their home and thus required food to be
delivered at their doorsteps. The food is delivered via motorcycle and traffic is comparatively
high during this time, so it is a challenge to make delivery within the time.
PRICING
For pricing, psychological pricing strategy has been used. The pricing is set as follows:

Vet-set Box - NRs.249

Non-veg-set Box - NRs. 299

Snacks Set - NRs. 149

Competitive advantage

Nepali Khana Food Service is has advantage as a food producer and delivery service provider.
Since Nepal is an agricultural country, raw food materials are available in abundance here.
Similarly, all of the competitor companies in Nepal is either focusing solely upon food producing
or upon food delivery. There is no major producer do does both. Similarly, the availability of
labour is also easy and equally affordable in the Nepalese market.

Product Variation:
The food cooked by the company is distinctive than the other food suppliers. The company
considers individual customer’s food and taste preference and cooks them accordingly. While
registering as a regular customer their food preference is asked and food is cooked in a special
way for them. Also, for any order that gets delayed by 60 minutes, the food is provided for free.
MAIN SERVICE
Delivery service system is implemented relying upon the survey result of following question.

The main service provided and served by the company are:

 Free food delivery (when ordered from the company)
 Paid food delivery from consumer’s home to their office

Food delivery from consumer’s home to their office is the first time that any Nepalese company
is serving in the market. The Dabbawalas of Indian market that provided similar service got
immense success in Indian market. Since the market structure and functioning style of Nepalese
market and Indian market is similar, this service has huge potentiality.
Delivery Resources
For delivery 4 staffs are employed as human resources and 4 motorcycles are purchased for
delivery in 4 locations at a time.

Insurance
Since the company is a newly established start-up, insurance for the building premises is not
done as well as due to lack of huge initial capital. However, the insurance of delivery vehicles
have been done in order to reduce loss during any uncertainty. The insurance cost for each
motorcycle is NRs.1,117 approximately till date[Sid16].

Legal Considerations
The registration cost for food business in Nepal is NRs.43,000[Lic16].
MARKET ANALYSIS AND PLANNING.
Nepalese Food Industry Description
Due to the increasing number of population and working citizens in the country, there is need of
high supply of resources and food is the major requirement. With increasing working couples
and individual workers access to home-cooked food is very difficult. Most of such people eat in
nearby restaurants by paying higher price; this is shown in the survey result below. Similarly, as
the number of farmers is 430,000 in Nepal, getting raw materials is cheap and easy[USA16].
TARGETED CUSTOMERS
To understand and select the major customers, following survey was done.

The main targeted customers of Nepali Khana Food Service are the working consumers who go
to offices in the area of Kathmandu and Lalitpur. Since they prefer lunch set box and are able to
pay for a set, foods sets are prepared considering them.

The targeted customers include both the middle-level as well as the high-level of consumers.
Similarly, students are secondary target. Snacks-set and beverages are included in the product list
considering them.
PROMOTIONAL TOOLS
The main promotional tools that Nepali Khana Food Service focuses upon are online promotions,
sales and sponsoring.

 Online Promotions.
For online promotions, the company has its own Facebook page and an official website.
The online promotion focuses upon the final customers. Similarly, the pricing and recipes
of product is provided in the website. Television advertisement is not done due to high
cost air-time.

 Sales Promotion
To increase and boost the sales company has decided to provide discount to its regular
customers of 5% in the total cost. Similarly, various gifts will be sent to regular
customers during festival seasons.

 Sponsorship
Company will be taking active participation while organising various trade shows and
food festivals.

PLACEMENT
For the first 2 years the company will be operating in Kathmandu through Tripureshore branch
and Lalitpur through Jawalakhel branch.

POTENTIAL COMPETITORS AND RIVALS

The potential competitors and rivals of Nepali Khana Food Service are:

 Foodmandu

 TiffinBox.
STRATEGIC ANALYSIS

Nepali Khana Food Service analysed the competitive market via Five Forces Analysis. The
analysis is done below.

1. Threat of new entrants to the market

The threat of new entrants is extreme. Due to availability of sufficient capital any investor
can easily start the new business. When they get the idea they can invest their money and
start competitive business. Since, patent or any other restrictions cannot be exercised
there is no barrier for entry. Also, due to easy availability of resources they can operate
the business.

2. Bargaining Power of Suppliers

Due to large number of suppliers, they do not have power. If one supplier raises their
price, one can easily shift to another. The price in the market is set by market forces of
demand and supply. Suppliers cannot influence them.

3. Bargaining Power of Customers

The customers hold relatively high bargaining power. Due to availability of other
restaurants and hotels. The price is set comparatively low because of this factor.

4. Threat of Substitute Products

There aren’t any company which provides both the food product and delivery service.
Due to this the threat of substitute product is not so strong. But due to high threat of new
entrants to the market, substitute service can come in long term period.

5. Degree of Competitive Rivalry

At present the competitive rivalry is comparatively low. Due to two major rivals, the
pressure is not so high.
PARTNERSHIP AGREEMENT

Nepali Khana Food Service will be started as a partnership company with the initial capital for
$10,000 (NRs.1,000,000) per each partner. Initially company has two partners. The partnership
agreement and initially invested capital is shown below:

The partnership agreement is set as per the Partnership Act 1890, which are as follows:
- Initial capital should be equal for all partners
- Interest return is not got by the partners on their capital investment
- Partners won’t get any salary
- On drawings partners are not charged any interest

Partners Invested Amount $ (cash)

Partner 1 10,000
Partner 2 10,000
TOTAL 20,000

Total of the total invested amount i.e. $20,000.

FUTURE PLAN
The future plan of Nepali Khana Food Service is as follows:

 Expanding market coverage by opening branch in Pokhara, Biratnagar and Nepalgunj.

 Adding more food items in the food menu.
 Getting mobile application for online food ordering system.
SWOT ANALYSIS

Strengths
 Cheap suppliers
 Cheap production due to economies of scale
 Large number of suppliers
 Online Presence
 Cheap Pricing
 Highly maintained cleanliness
 Different products
 Home delivery system

Weaknesses
 Lack of TV advertisements
 Lack of insurance
 Lack of more outlets
 Human error
 Lack of heavy coverage promotions

Opportunities
 Increasing number of working population
 Cover more market coverage in future
 Maintain strong relation with marketing medias

Threats
 Low barrier for entry
 Political InstabilityWS
 Uncertain market state
 Food market is a perfect competitive market
SURVEY QUESTION
The survey questions are as follows. This was done to understand the market and views of
customers.
FINANCIAL PLAN
For all the purchases and sales made, payment is done through cash basis. A financial plan for
next 12 months has been made for Nepali Khana Food Service. The budgeted accounts include:

 Sales Budget

 Production Budget

 Direct Material Usage Budget

 Direct Material Purchase Budget

 Direct Labour Budget

 Expenditure Budget

 Cost of Sales

 Profit and Loss Account

 Balance Sheet
Sales Budget
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec
Sales unit 400 450 500 550 600 650 700 750 800 850 900 950
Selling 10 10 10 10 10 10 10 10 10 10 10 10
Price ($)
Sales ($) 400 4500 5000 5500 6000 6500 7000 7500 8000 8500 9000 9500
0
Total ($) 81,000

Production Budget
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec
Sales unit 400 450 500 550 600 650 700 750 800 850 900 950
Add: C. 5 5 5 5 5 5 5 5 5 5 5 5
Stock
Required 405 455 505 555 605 655 705 755 805 855 905 955
Less: O. 0 5 5 5 5 5 5 5 5 5 5 5
Stock
Productio 405 450 500 550 600 650 700 750 800 850 900 950
n

Direct Material Usage Budget

Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
Productio 400 450 500 550 600 650 700 750 800 850 900 950 400
n
LPG Gas 4 4 5 5 5 5 6 6 6 6 6 6 64
Oil 4 4 5 5 5 5 6 6 6 6 6 6 64
Food 40 45 50 55 60 65 70 75 80 85 90 95 810
Items
Spices 4 4 5 5 6 6 7 7 8 8 9 9 78
Direct Material Purchase Budget
LPG Gas
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
Budgeted 400 450 500 550 600 650 700 750 800 850 900 950
Add: 0 0 0 0 5 0 0 0 0 0 0 0
C.Stock
Required 4 4 5 5 5 5 6 6 6 6 6 6
Less: O. 0 0 0 0 0 0 0 0 0 0 0 0
Stock
Required 4 4 5 5 5 5 6 6 6 6 6 6
Purchase
Total Cost 40 40 50 50 50 50 60 60 60 60 60 60 640

Oil
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
Budgeted 400 450 500 550 600 650 700 750 800 850 900 950
Add: 0 0 0 0 5 0 0 0 0 0 0 0
C.Stock
Required 4 4 5 5 5 5 6 6 6 6 6 6
Less: O. 0 0 0 0 0 0 0 0 0 0 0 0
Stock
Required 4 4 5 5 5 5 6 6 6 6 6 6
Purchase
Total Cost 40 40 50 50 50 50 60 60 60 60 60 60 640

Food Items
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
Budgeted 400 450 500 550 600 650 700 750 800 850 900 950
Add: 0 0 0 0 5 0 0 0 0 0 0 0
C.Stock
Required 40 45 50 55 6 65 70 75 80 85 90 95
Less: O. 0 0 0 0 0 0 0 0 0 0 0 0
Stock
Required 40 45 50 55 6 65 70 75 80 85 90 95
Purchase
Total Cost 400 450 500 550 600 650 700 750 800 850 900 950 8400

Spices
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
Budgeted 400 480 560 640 640 720 720 800 800 880 880 880
Add: 0 0 0 0 5 0 0 0 0 0 0 0
C.Stock
Required 4 4 5 5 5 5 6 6 6 6 6 6
Less: O. 0 0 0 0 0 0 0 0 0 0 0 0
Stock
Required 4 4 5 5 5 5 6 6 6 6 6 6
Purchase
Total Cost 40 40 50 50 50 50 60 60 60 60 60 60 640
 Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
Total 520 600 710` 790 790 870 900 980 980 1060 1060 1060 10320
Purchase
Direct Labor Budget
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
Budgeted 400 480 560 640 640 720 720 800 800 880 880 880
Labor/Uni 1 1 1 1 1 1 1 1 1 1 1 1
t
Required 400 480 560 640 640 720 720 800 800 880 880 880
Payment 800 960 1120 1280 1280 1440 1440 1600 1600 1760 1760 1760 1552
0

Expenditure Budget
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
Purchases 520 600 710 790 790 870 900 980 980 1060 1060 1060 10320
Wages 800 960 1120 1280 1280 1440 1440 1600 1600 1760 1760 1760 15520
Production 405 450 500 550 600 650 700 750 800 850 900 950 7405
Total Exp 172 2040 2390 8710 2710 3030 3060 3380 3380 3700 3700 3700 20277
5
Cost of Sales
AMOUNT
Particulars Per Unit (£) (£)
Opening inventories of raw materials
Material Purchase cost 10320
Less: Closing Inventories of raw materials 1000
9320
Cost of material used 9320
Labor Cost 15520
Production Cost 7405
Total Production Cost 23925
Total Cost of Sales 39445
Income Statement
Particulars AMOUNT (£) AMOUNT (£)
Sales 81000
Less: Cost of sales (33245)
Gross profit 47755
Less: other expenses
Rent 2400
Utilities 2000
Managerial Salary 9000
Advertising 1000
Depreciation 600 15000
Net profit 32755
Balance Sheet
Particulars Cost Depn. NBV
Non-Current Assets
Utilities 10600 600 10000
10000
Current Assets
Inventories 22755
Cash 20000 42755

Less: Current Liabilities

Trade Creditors 0 52755
52755

Financed By
Capital 20000
Net Profit 32755 52755
BREAK EVEN ANALYSIS

Fixed Costs = 2400 + 2000 + 9000 + 1000 + 600

= $ 15,000

Sales Revenue per unit = 81000 / 8100

= $10

Variable Cost per unit = 15520 / 8150

= $1.9

Breakeven point = Fixed Costs / (sales revenue per unit – variable cost per unit)
= 15000 / (10-1.9)
= 1852 units
REFERENCES
LicensePortal, 2016. LicensePortal. [Online]
Available at: http://licenseportal.gov.np/index.php/browse_license/license_details/215
[Accessed 3 May 2016].
Siddhartha Insurance, 2016. Siddhartha Insurance. [Online]
Available at: http://www.siddharthainsurance.com/?
option=com_services&task=details&ProductsId=6
[Accessed 2 May 2016].
USAID, 2016. USAID. [Online]
Available at: https://www.usaid.gov/nepal/agriculture-and-food-security
[Accessed 29 April 2016].