Native Organics: A Business Plan

This article discusses a hypothetical mobile food business, ‘Native Organics’. Being a mobile business, ‘Native Organics’ initiative will not operate from a permanent structure or stay in one particular place. However, on the contrary, the ‘Native Organics’ will keep moving to new locations. The purpose behind choosing a mobile business is to ensure that the customer base is expanded by spreading to the new and untapped areas, which will eventually increase the profits. The Native Organics will revolve around prominent and well-known universities and offices established around Muscat, for instance, Majan University College, Al Zahra College for Women, Arab Open University Oman, Sultan Qaboos University, Al Buraimi University etc. The ‘Native Organics’ will specialize in providing healthy breakfast and lunch options to working individuals and students of different locations of Muscat. Some healthy food and beverage items would include fruit and vegetable salads, seafood, egg patties, toasts, pancakes, oatmeal, filling smoothies, juices, and dark chocolates etc.

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Mission

The mission of the ‘Native Organics’ business is to ensure that the students and working individuals of Muscat have a healthier lifestyle.

Vision

We imagine a world where every single one of our customers is healthy and happy by providing them with gluten-free and healthy snacks on-the-go.

Business Goals

1. To provide healthy and organic food items to the customers while ensuring minimum to zero pollution due to waste.

2. Ensure the effective distribution of food to guarantee zero wastage of food.

3. To give employment opportunities to people coming from low-income families and students who want to work part-time.

4. To control the growing obesity issue in the Muscat region and then ultimately expand this goal.

5. To ensure that customers are served within 4 minutes of placing their orders.

6. To become the market leader in the healthy food business in Muscat and then eventually worldwide.

Market Segmentation

The prospective buyers of the ‘Native Organics’ are aggregated into following customer segments.

Demographic Segmentation

  • Age: The age group that ‘Native Organics’ will target is between years 18-40. This is because college and university students range between years 18-26. While, on the other hand, the working individuals that are out and about for their jobs everyday range between 18-40. Therefore, by setting the age bracket between years 18-40, both the types of customers will be targeted.
  • Socio-economic group: The food items would be reasonably priced. Therefore, students who are short on money because of limited pocket money and working people who have limited wages will be able to afford it.

Behavioural Segmentation

Both students and working individuals working across various industrial sectors and organizations who have a busy lifestyle and prefer on-the-go eating will be targeted by the ‘Native Organics’.

Market and Industry Analysis

The food industry of Oman has been observed to grow fiercely over the years. During the COVID-19 pandemic, customers have engaged in the bulk stocking of food items by increasing their essential spending (Sydney and MJ, 2020). Being one of the most important and profitable industries of the country, Oman has increased initiatives to ensure food security. Weather in Oman is not conductive and favourable for year-round cultivation of fruit and vegetables (WeatherSpark, 2020). However, increasing vegetable and fruit production in Oman is improving the economic diversification efforts by the Omani government. Increased production of these crops results in the generation of both income and employment (Salmi, Nadaf, Mbaga, Janke and Busaidi, 2020). Food security has been the heart of Oman’s food industry. The food industry of Oman emphasizes on decreased dependence on imports by ensuring self-sufficiency of the food production in Oman. OFIC is a state-owned enterprise associated with partnering up with investors, government bodies and private operating agencies. This enterprise ensures food security in Oman and manages the food security both domestically and internationally. As a result, a combination of both food security and an emphasis on increased food production has kept the demand and supply of food items in Oman attractive.

The overweight and obesity problem has seen to be prevalent in Oman and has observed to be predominantly increasing amongst men. Hence, increasing metabolic and cardiovascular complications have been seen amongst the Omani population. The people in southern part of Oman are found to be 70% more obese than the northern region. In addition, urban areas were also observed to be 21.1% obese, while a lesser percentage, i.e. 13.1%, was identified in the rural areas (Lawati and Jousilahti, 2004). As a result, the ‘Native Organics’ is focused on urban areas. With increasing awareness and education, the demand for non-alcoholic and organic food products has risen in not just Oman but worldwide. Moreover, high disposable income in Oman has presented an opportunity for all health-conscious customers as the demand for premium organic food products has enhanced. As a result, organic agriculture has increased in Oman over the year, as shown in the figure below.

Figure 1: Land area used for organic agriculture in Oman from 2014 to 2018 (Statista, 2020)

Porter’s Five Forces Analysis

This tool will be used to analyse five major competitive forces that shape the food industry of Oman. In addition, the strength and weakness of the food industry of Oman will also be evaluated by using this model. This tool will help Native Organics in adjusting its marketing, operational and financial strategies in accordance with the competitive environment.

Threat of new entrants

The threat of new entrants is high in the food market as the food industry of Oman is extremely profitable and ever-growing. Moreover, small-sized startups like Native Organics do not require much financial resources to set up as well. In addition to that, existing bakeries and restaurants offering conventional and processed food might introduce new product lines focusing on organic food items due to growing demand of organic food amidst increasing obesity and heart stroke issues (Wellner and Lokotta, 2020).

Threat of substitutes

The threat of substitutes is low as of present as not many options are available that can replace organic and healthy food.

Bargaining power of buyers

The bargaining power of buyers is high as the number of food businesses offering healthy food items is expanding with each growing day. Moreover, customers can also buy organic food, e.g. vegetables, fruit, corn etc. directly from private households in bulk.

Bargaining power of suppliers

The bargaining power of suppliers will be moderate in Oman. This is because the agricultural lands of Oman are not ideal for year-round cultivation of many food items, and Oman imports many food items as well (Brown, Fee and Thomas, 2009).

Competitive rivalry

The competitive rivalry is high when it comes to the organic food industry of Oman. This is because the Ministry of Commerce and Industry (MOCI) has eased the provision of licences to many startup food ventures (Das Nair, 2018).

Figure 2: Porter’s Five Forces Analysis of Organic Food Industry

Customer and Value Proposition

The unique selling proposition of Native Organics which sets it apart from other food businesses is that it specializes in providing healthy and organic food options to its customers. In addition, the startup has perfected the art of exceptional customer service as it offers food on-the-go to all its customers within 4 minutes of placing their order. Finally, the Native Organics offers the best and most reasonable food prices in its area. All in all, the Native Organics caters to the busy, health-conscious and price-sensitive students and working professionally in Oman.

Marketing Strategy

The 4 Ps will be used to summarize the four basic pillars of the marketing strategy, which are referred to as the product, price, place and promotion (Ettenson, Conrado and Knowles, 2013).

Product

All the food items offered by the Native Organics to its customers will be organic and produced by using healthy ingredients. The Native Organics will provide healthy breakfast and lunch options. The healthy food and beverage items involved in the Native Organics food menu include fruit and vegetable salads, seafood, egg patties, toasts, pancakes, oatmeal, filling smoothies, juices, and dark chocolates.

Price

The Native Organics will utilize the value-based pricing strategy. The strategy will allow the organic food business to set up prices of food items based on the perceived value of the product (Varelas and Georgopulous, 2017). Value-based pricing will be favourable for the Native Organics as it is customer-focused pricing and means that prices are set up based on how worthy customers consider the offered product to be. As most of the food vendors around Oman have set up prices between 0.5 to 4 OMR, The Native Organics will set up prices higher than this range mainly because their food items are considered to be healthier options than processed and conventional food items in customer’s eyes. The price range of Native Organics food items would be 0.6-5 OMR.

Place

The ‘Native Organics’ is a mobile business and will keep moving to new locations. The purpose behind choosing a mobile business is to ensure that the customer base is expanded by spreading to the new and untapped locations which will eventually increase the profits. The Native Organics will revolve around big and well-known universities and offices established around Muscat, for instance, Majan University College, Al Zahra College for Women, Arab Open University Oman, Sultan Qaboos University, Al Buraimi University etc.

Promotion

The Native Organics will use social media and influencer marketing. The food venture will have a presence on social media channels like Facebook and Instagram. Moreover, the Native Organics will also ask the influencers within the universities and campuses to advertise the food business. Native food bloggers will be asked to test and promote Native Organic’s food products. The digital marketing will allow the Native Organics to reach the broader set of customers measurably and cost-effectively. In addition to that, the marketing brochures will also be distributed amongst the customers. Finally, discounts and promotions will also be offered on specific occasions to the customers.

Marketing Objectives

Following are the marketing objectives of the Native Organics:

  • Ensure a steady and positive growth of 10% in terms of sales each month
  • Achieve a rate of customer retention by 45% within six months of operations.
  • Enhance the frequency of customer visits with each month
  • Build positive, long-term and beneficial relationships with at least two famous food bloggers and influencers each month for social media marketing

Product Launch Strategy

A carefully formulated launch strategy is crucial as it will allow the ‘Native Organics’ to properly launch the market offering of the organic food venture by internal and external testing, positioning and goal setting. It will help the company in the brand’s growth and user adoption (Satimanon and Weatherspoon, 2019). Initially, the ‘Native Organics’ will only focus its business operations in Muscat. However, once the venture reaches a break-even point there, it will expand towards nearby cities of Muscat such as Nizwa and Salalah.

Before the launching, brochures and pamphlets will be distributed in universities, colleges and offices. Social media marketing will also be thoroughly used before, during and after the launch event. Food bloggers and influencers from around Muscat will be called for food testing and then post reviews of the food on their social media accounts. In addition, a discount of 60% will also be offered at the launch day to increase the volume of customers.

Management Plan

A proper management plan of the Native Organics will be established so that clearly defined roles and responsibilities and accomplished project tasks are explained. Initially, the Native Organics will begin with placing two trucks; one will be in the university and the other around a corporate organization. Later, with increased revenues and user adoption, the business will expand by placing two more trucks in busy areas of the city.

In order to carry out the business operations of Native Organics, two chefs, one barista, two supervisors, and one manager will be hired. The manager will oversee all the management, financial and operational responsibilities associated with the Native Organics. Supervisors will be recruited from low-income families or students who want to do part-time jobs for daily expenses.

Operational Plan

A detailed operational plan will allow the Native Organics to get a clear picture of how the employees will contribute towards the achievement of everyday tasks. The operational plan will pinpoint the day to day responsibilities required by the Native Organics to cover (Towbin, Perry, Moskovitz & OConnor, 2018). Before the business operations start in the day, the supervisors will ensure the adequate availability of food raw materials by purchasing fresh food raw materials such as milk, corn, vegetables, meat, dairy and fruit will be purchased by the supervisors and cleaned. As the customers come, the waiters will provide them with a pamphlet mentioning all the food products along with their prices. Chefs will ensure that the vegetables and fruits are thoroughly cleaned and cut while eliminating waste and providing food within 4 minutes of placing the order will be two of the most crucial duties of the chefs. The waiters will be responsible for taking the orders, serving the food and taking the valuable feedback from the customers that would be delivered to other employees for improving the quality and taste of the food items. The manager will oversee the entire operations and maintain proper financial records. Managers will also ensure that the product and service standards are met in the most efficient way possible.

Required Resources

Required resources for this venture would include an under-counter refrigerator, ventilation, fryers, utensils, washing station, microwave, napkins, raw vegetables and fruits, spices and condiments, sanitary gloves, storage containers, aprons and food prep clothes, brooms and trash bins, sprays.

Critical risks faced by the business

A commercial business faces numerous critical risks when it ends up making insufficient profits due to many uncertainties. These uncertainties can be risks associated with compliance, financial, competition, economic, reputational, operational and many more (Adams, Nayak and Koukpaki, 2018).

Competitive risks

Native Organics not just faces intense competition from multiple movable food trucks but also cafes, bakeries, restaurants and university and colleges canteens. By issuing licensing to the movable food trucks, the Ministry of Commerce and Industry in Oman has made an increase in the number of such food ventures (Press Reader, 2019). Some amongst the many of the competitors of Native Organics are Gourmet Taste Sweets LLC, Organic India, Pairidaeza Organic Farm etc.

Economic risks

Economic risks are the risks that are majorly associated with the macroeconomic circumstances. Exchange rates, inflation, inflation rates, new government regulations are all the economic factors that can severely affect the Native Organics. For instance, one such government regulation of Oman issued by the Ministry regarding the movable food trucks business is strict Omanization (Al-Lamki, 2005). This regulation paid an adverse effect on those food trucks who had violated it by hiring expatriates. Municipality carried out raids on such food trucks who had leased out or handled their operations to expatriate and ensured their shut down (Mansour, 2019).

Operational risks

Operational risks are referred to as the business risks caused due to failed or inadequate policies, procedures and systems. Criminal activity, fraud, systems errors or employees’ errors can all lead to disruptions in the daily business operations of Native Organics (Li, Zhu, Lee, Wu, Feng and Shi, 2015). Fires during cooking, insufficient cash flow, improper food storage, improper reputation management or poor branding of the business, foodborne illnesses of the customers, insufficient and improper marketing, workplace safety, fuel mismanagement in case of movable business are all the operational issues that Native Organics might have to deal with.

The best risk assurance method to counter the above-mentioned threats is ‘prevention’. Native Organics can prevent all these risks through a continuous background check, regular equipment maintenance, safety checks and maintenance of the physical premises.

Financial Requirement

The initial investment required by the Native Organics would be 25,000 OMR. Out of 25,000 OMR, 4500 OMR will be the investment that would cover the purchase costs of trucks and the transportation costs of these trucks from China to Oman. Other financial expenses would involve the purchase and procurement of utensils, stove, glassware, electronics, marketing and promotional expenditure, employee payroll, setting equipment and food raw materials. In addition, the venture would strive to ensure that the net value of the food venture is increased by ten folds within two years of operations by increasing the customer base. Finally, a goal to grow 60% of the gross margin will ensure the growth and expansion of the Native Organics in other cities and geographical locations of Oman.

Balance Sheet

assets omr omr
non-current assets:
tangible assets 4500
intangible assets 3900
current assets:
advances 18,000
account receivables 9,000
stocks 18,000
cash and bank balance 7,575
60,975
equity and liablities:
equity 30,000
NON-CURRENT liablities: 15,000
current liabilities:
trade payables 8,250
short term loans 5,250
other payables 1,500
60,000

Cash Flow Forecast

Month

(2021)

Package sold Tickets issued Commission earned (OMR) Fixed costs

(OMR)

Variable costs

(OMR)

Balance

(OMR)

January 15 30 5,250 (7,800) (4,500) (7,050)
February 24 48 6,135 (7,800) (5,250) (6,915)
March 33 57 6,892 (7,800) (4,800) (5,707)
April 45 75 7,845 (7,800) (6,000) (7,455)
May 30 37.5 6,382 (7,800) (3,750) (5,167)
June 25 54 6,900 (7,800) (4,500) (5,400)
July 37.5 81 8,760 (9,750) (5,325) (5,550)
August 97.5 150 17,737 (9,750) (7,537) 450
September 112.5 201 22,897 (9,750) (8,280) 4,867
October 82.5 120 20,220 (9,750) (6,877) 2,190
November 46.5 88.5 13,050 (7,800) (2,850) 2,535
December 30 67.5 6,750 (7,800) (1,200) (2,250)

Critical Success Factors

Critical success factors are also referred to as the ‘Key Result Areas’. These are the areas that are crucial for a business to be successful. The five major critical success areas that any business should concentrate on include, human resource, marketing, finance, operations and management (Disterheft et al., 2015).

The critical success factors for the Native Organics include flawless execution of strategies, positive customer feedback, empowered employees, realistic financial formula, quality and delicious food, excellent customer service, proper customer data and efficient target marketing.

Some other key milestones for Native Organics’ success are:

  1. Establish a successful business model
  2. Attain customer loyalty by achieving a 50% retention rate
  3. Increase 10% sales each month

Conclusion

The article is based on the marketing plan of a food venture named as ‘Native Organics’. This is a movable business on trucks and will initially be operating within Muscat. Later, the expansion would occur in other cities of Oman as well. The company specializes in selling organic and healthy food items to its customers studying in colleges and universities and working in the corporate sector. The marketing plan of Native Organics discusses the industry analysis using Porter’s analysis, marketing segmentation, marketing strategy using 4 Ps, product launch strategy, operational plan, management plan, financial plan, critical risks and success factors.

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