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Business Expansion Plan of Phaeton Tours

University: REGENT COLLEGE LONDON

  • Unit No: 2
  • Level: Undergraduate/College
  • Pages: 18 / Words 4513
  • Paper Type: Assignment
  • Course Code: BSBMKG609
  • Downloads: 26
Question :

This assessment will demonstrate certain questions which will cover - 

  1. What is customer value proposition managed in Phaeton Tours?
  2. Elaborate the plan business model in context to Phaeton Tours.
  3. Annelyse the financial plan and the financing.
Answer :

INTRODUCTION

Entrepreneurship development refers to the process of developing the skills and knowledge of an entrepreneurs through facilitating several training and classroom programmes. The main motive of this term is to increase in the number of entrepreneurs who develop a unique business idea. For the purpose of attaining the market success, it is very essential for a business entity to ensure that they are capable to introduce a new and creative products as well as services in the marketplace. This report is based on the new business idea which is based on the online travel agency as it will be introduced by the Phaeton Tours. It will be launching in 2020 in Romania, United Kingdom. Under this report discuss about the several elements that includes introduction of new product, customer value proposition canvas, lean business model canvas as well as contribution of C level specialist contribution. In addition, the financial and financing plan with the specific reason of making investment in lean entrepreneurial opportunities also studied in detail under this assignment.

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MAIN BODY

Introduction

New business idea of online travel; agency is being defined by the CEO or the founder of Phaeton Tours. It is a new agency that is based in Romania and it offers a planning resources and booking capabilities by using an online platform in order to shape personalised offers for travelers. The company will be focus on their motto which is related to “having stories to tell, not stuff to show” that means the life of a person is filling with experiences not the things (Leonidou, 2018). Phaeton Tours choose Romania for destination as they want to fulfil the market demand or needs which is related to the new and undiscovered destination as well as it is not only about Dracula, nature and ancient ruins. The services of company will be physically possible from A to Z at a cheaper rate also and along with these facilities a company serve many packages from medical to nightlife packages. The objectives of a company for upcoming three years that are prepared by the CEO of the company which as follows:

  • Attract a large number of tourism so that maximum profits could be generated.
  • To launch a successful business in the market as well as generate huge sales.
  • Raise profit by 3% every year for next three years so that more money could be arranged to perform operational activities and function in future.  

Selling determines the cost of tour packages in order to facilitates standard services to its customers or tourism. Selling price for tour and travel package as well as price per candidate are calculated as follow:

Particulars

Prices for 5 days (in £)

Prices for one night (in £)

Accommodation cost

12000

3000

Conveyance cost

7000

1700

Visitor attraction charges

2500

700

Charges of tour guide

1200

300

Food charges (Including breakfast, lunch, dinner)

15000

4000

Total cost

37700

9700

ADD: Profit margin

12441

3201

Sales price

50141

12901

           

The above price estimation table shows the different packages which is for individuals and classified as per the one night and for 5 days charges of a single person. As it clearly shows that the total prices of selling tour and travel packages should be 50141 for 5 days and 12901 for one night including food package. Whereas excluding the food package determine the prices of one night and 5 days are respective 30191 and 7581 only. From which tourist can make their own judgement after considering all elements and select operators as per the requirement and price factor of a company.      

From the above estimation of sales price a company can calculate profit and loss of next three years that are as follows:

Particulars

First year

Second year

Third year

Packages sold

200

300

400

Sales for one night

2580200

3870300

5160400

Less: cost ( 4500 per Package )

900000

1350000

1800000

Profit:

1680200

3780300

3360400

Profit margin: Profit / sales * 100

1680200 / 2580200 *100

3780300 / 3870300 * 100

3360400 / 5160400 * 100

 

65.11%

65.11%

65.11%

           

Form the above estimated data it has been evaluated that a company will estimated to sell 200 packages in first year which gives 1680200 pounds profits and second year a company sell 300 packages and earn profits 1350000 as well as in the next or third year a company estimated to sell 400 packages that will give profit of 1800000. The profit margin for all the three years is equal because sales increment for the same period is equal. Therefore the percentage of profit margin for the organisation is 65.11%.

Customer value proposition canvas

Value proposition canvas:

This is defined as a tool that is used by the many companies for analysing and evaluating the link between key aspects services and the demands of consumers. Through which a company can ensure that the quality of products and services are best meet the target customers expectations and requirements (Mitra, 2019). Several elements are includes in customer value proposition canvas model all these are considered below within the context of  Phaeton Tours company:

Products:

It includes mainly three kinds of components such as Health tourism, countryside and nightlife tourism as well as online travel platform which deals in three categories such as services or products, gain creator and pain relievers. In health tourism, there will be several products and services such as salt therapy, thermal spa, dental practices and physio-kinetic therapy that customers can enjoy and like it for a long time in future. These services can consider as a gain creator which results in stress, pain relieve, save time and money, natural and health procedures etc. Whereas, the pain relievers will includes trusted service providers, modern technology, cheaper services as well as better health better life experience to their customers. Secondly in the countryside and nightlife tourism sector, a company decides to serve many packages which includes city escapes, nightlife or countryside services that will also facilitates the same kind of gain creators and pain relievers but one new thing will be added in this kind of package which is modern environment pain reliever (Li, 2018). Lastly, online travel platform sector provides advertising and online platform accessibility products and services which creates some new kind of gain such as new customers, discoverability as well as platform to provide services. It pain relievers plan includes trusted platform and access to new customers experience.

Customers (Travelers and service providers):

The key components of customers includes gain, pain and customer jobs which is divided in three kind of sectors. In Health tourism, customers will be targeted of 22-65 years or over and the products and services of this will give gainful results such as trusted agency, cheep services, full information, promotion as well as trusted health care providers by the Phaeton Tours while tourism travel at Romania destination. Where the major fear or painful results will be shown in market suspicions, joint pains, stress, as well as inefficient processes. In this, customers will work for identify medical services, choose environment, when and relax while they are searching for a tour and travel packages. In the countryside and nightlife packages customers will be targeted of 18-65 years or above that can gain the trusted accommodation along with the full information and trusted agencies. In this, mainly painful thing will be related to the lack of information as well as lack of all in offers and customer job will be related to the several factors such as service identification, chose how many days, when, entertainment etc. In the online travel platform, a company Phaeton Tours will target service providers as on the basis of their gain, pain and job roles. In the customer job will includes subscribes, clear and full information as well as provide operations hours and the gain factor will be includes trust, profit, new customer, discoverable and sales (Aizpurietis, 2018). Along with its fear or painful factors involves market suspicious, lack of information as well as no advertised elements that will creates negative impacts on the company's growth and success.

Lean business model canvas

Business canvas model:

This is considered as a strategic management tool that is basically in used by the companies for keeping brief information towards the business concept. This contains many informations regarding the different items are related to the business execution. In this model, mainly 9 elements are discussed such as key partners, activities, resources, value proposition, customer relationship, channels, customer segment, cost structure as well as revenue systems (Business canvas model, 2019). As a new online travel agency will be introduced in the marketplace by Phaeton Tours that situated in Romania, UK. The business canvas model is essential for the management of a company through which the company's stakeholders like service providers, travelers etc. will be able to evaluate the key components related to the business. These element are considered as follows:

  • Key partners: For executing the operational activities of a business entity it is significant for the company like Phaeton Tours to make a better relationships with their key partners. The key partners of the company includes accommodation and service providers, bloggers, UK outbound holiday seeker as well as flight agencies. Through which a company will be successfully execute the operational activities.
  • Key activities: It is considered as a set of operational activities that a company Phaeton Tours will be considered while launching a online travel agency in the market. The management of a company have to pay attention on the key activities such as service development, marketing and customer acquisition etc. that helps in achieving the goals and successfully operates in the market.
  • Value proposition: Every products and services that are sold by the companies in order to meet the customers expectations are considered as valuable elements. In the context of Phaeton Tours the value proposition elements will be trusted platform and service providers, time and money saving, new experience for travelers and for service providers gain trust, high profit and sales, discoverable and new customers that will help the business to attract a large base of customers as well as establish business in a successful manner. 
  • Customer relationship: For the sustainability and survivability in the market it is required for all businesses to develop and maintaining better relationships with customers. For Phaeton Tours can create relationships with customers through the help of social media, customer support, travel blogs, review and rating system etc. to develop a good image in the marketplace (Tolvanen, 2018).
  • Customer segment: This is targeted by the companies for selling their products and services to earn profit. In the context of Phaeton Tours two types of people will be targeted such as young people on the basis of music, pubs, dance etc. factors and all categories that are interested in healthcare services and countryside experience. 
  • Key resources: To perform the operational activities of a business organisation it is necessary to arrange required resources. For Phaeton Tours resources will be required like technological platform, mobile app and website developers which will be able to perform the business operations effectively and efficiently. 
  • Channels: The value proposition factor can be developed through the help of providing right kind of services to the required people or tourism. For Phaeton Tours several channels will be used for promoting more and attract large number of customers which includes websites, mobile app, flayers, news paper, word of mouth etc. 
  • Cost structure: This includes the estimation of all kind of cost that occurs during executing business activities as the company Phaeton Tours will take place for launching their online travel agency idea are technological set up cost, operating cost and employees salary (Butler and Szromek, 2019).
  • Revenue stream: This is considered while carry out business operations in order to generate revenue so that funds could be acquired to execute operations. For Phaeton Tours online transaction, website advertisement as well as mobile app advertisement will be considered as a revenue stream.

Key partners

  • UK outbound holiday seekers.
  • Accommodation providers.
  • Service providers.
  • Flight agencies.
  • Bloggers. 

Key activities

  • Service development.
  • Marketing activities.
  • Customer acquisition.

Value proposition

For travelers:

  • Trusted platform.
  • Trusted service providers.
  • Time and money saving.
  • New experience.

For service providers:

  • Promote professional.
  • Profit.
  • New customers.
  • Discoverable.
  • Increased profit and sales.
  • Gain trust.

Customer relationships

  • Social media.
  • Customer support.
  • Review and rating system.
  • Travel blogs.
  • Support systems.

Customer segment

Young people:

  • Music.
  • Dance.
  • Pubs.
  • Interested in festivals.

All categories:

  • Interested in healthcare services.
  • Countryside experience.

Key resources

  • Technological platform.
  • Mobile app.
  • Web developer.

Channels

  • Websites.
  • Mobile app.
  • News paper.
  • Flayers.
  • Word of mouth.

Cost structure

  • Technological set up cost.
  • Operating cost.
  • Permanent workforce salary.
  • Promotional cost.

Revenue stream

  • Online transaction.
  • Website advertisement.
  • Mobile app advertisement.

 

The C level specialist contribution

The CEO of a business entity is developed an innovative idea of online travel agency that will be facilitate in the market by Phaeton Tours company. There is a great chances of success because it facilitates many unique services and focused on different target markets along with the attractive packages. It deals with the healthcare tourism, countryside and nightlife as well as online travel platform products and services which will help in satisfying the different customers needs such as young age as well as all categories (Millán Lara, 2019). As it will focus on having stories to tell, not stuff to show for which it will choose several technologies to better serve their travelers as well as attract many customers by using channels. The estimated cost of per package for one night is 4500 per package and the company decides the selling price is 12901 pounds. The profit margin of a company from this service is 8401 that will kept by the Phaeton Tours.

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New innovative idea regarding online travel agency will gives several benefits for travelers as well as service providers. Travelers will get benefits of trusted platform, trusted service providers, time and money saving, new experience etc. whereas, in the context of service providers it will advantages in promote professional, new customers, gain trust, discoverable as well as increased in profit and sales. All these things will be considered by the company's CEO after analysing the entire market conditions as well as pay attention towards the innovation that are taking place in the market (Slávik, 2019). For developing an innovative concept several steps can be considered by the company which are as follows:

  • Conducting market research: Firstly the founder has conducted market research for determining the growth opportunities in order to establish a new business. The CEO of Phaeton Tours company has analysed the market trends and situations as well as latest technologies in the market that will capturing the interest and attention of customers.  
  • Formulating different business ideas: After evaluating the technologies many business ideas are created by the CEO of Phaeton Tours in order to launch a new concept in the market. Different ideas are formed for keeping several options and alternatives for choosing a best one.
  • Ideas screening: In this stage, CEO of  Phaeton Tours has analysed and examined the all ideas and options so that best one could be selected for establishing an innovative business (Choi, Hickerson and Kerstetter, 2018).
  • Selecting one unique idea: At this level, CEO has selected the idea of introducing online travel agency in the market which is more suitable in available options.
  • Implementing the best one and perform accordingly: After selecting the best one concept CEO implemented it and perform the activities accordingly so that business could be launched in the market successfully.
  • Launching idea into market: It is the last stage that is followed by the CEO of Phaeton Tours in which decisions can be taken to launch innovative idea in the market regarding the online travel agency will be formulated so that an organisation can attain desired success and growth.

Financial and financing plan

Form the Appendix 2 it has been analysed that company will have to bear many cost for the survivability in a market these are related to the technological set up cost, permanent employees salary as well as operating cost (Reichstein and Härting, 2018). Revenue streams of the company could be generated by Phaeton Tours online transaction, website advertisement and mobile app advertisement. Estimated total cost for first year will be 1900000 and sales will be 2580200 for the same year and profit will be 1680200. The contribution per unit for the first year is 11901. If an organisation sale packages in the first year then cost could be recovered by it and possibility of loss will be decreased. Cash flow statement showing that total income for first year will be 2580200 and closing sales will be 680200. Along with this, there are several sources of finance that could be used by the CEO of Phaeton Tours for launching online travel agency in the market which includes personal loans, owner's capital and so on. There are many usage of funds that will be acquired by a business organisation from the different sources such as online transaction, website advertisement and mobile app advertisement etc.

Summary

The opportunity of introducing online travel agency is attractive and investors should also invest in it because tourism is a growing industry. As this is a unique concept that will attract a large number of customer base towards the services and attain market growth and success. Investing in the lean business opportunity of Phaeton Tours because it is a unique idea that covers the need of health, countryside as well as nightlife tourism. The main reason behind the making investment in this opportunity is that it will be able to take competitive advantage in the market because the idea can be turned in services.

CONCLUSION

            It has been concluded from the above report that entrepreneurship development is a process of introducing an innovative ideas as well as established into the market successfully. Several models, concepts and frameworks are needed to be formulated by a business entity such as business canvas model, value proposition model etc. Also, developing a business with proper financing and financial plan is needed that contains several elements like cost structure, BEP, cash flow analysis, sources and usage of funds as well as revenue stream.\

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REFERENCES

Books & Journals

Aizpurietis, J., 2018. Creating and Testing a Business Model for Online Travel Package Comparison Website.

Butler, R. W. and Szromek, A. R., 2019. Incorporating the Value Proposition for Society with Business Models of Health Tourism Enterprises. Sustainability. 11(23). p.6711.

Choi, Y., Hickerson, B. and Kerstetter, D., 2018. Understanding the sources of online travel information. Journal of Travel Research. 57(1). pp.116-128.

Leonidou, E. and et. al., 2018. An integrative framework of stakeholder engagement for innovation management and entrepreneurship development. Journal of Business Research.

Li, Y., 2018, January. Research on the Business Model Innovation in Online Tourism Services: A Case Study of Ctrip. In Proceedings of the 2018 2nd International Conference on Management Engineering, Software Engineering and Service Sciences (pp. 1-5). ACM.

Millán Lara, S. and et. al., 2019. Flamenco Tourism from the Viewpoint of Its Protagonists: A Sustainable Vision Using Lean Startup Methodology. Sustainability. 11(21). p.6047.

Tolvanen, S., 2018. Planning and facilitating strategy process for an online travel agency.

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