Market research reports

Describe the organisation in terms of its key functions and the financial implications of its operations.

CHEF VENDING is a business that specializes in roosting chicken on machines and installed commercial food and beverage equipment imported from Spain. These include vending products line will include the unique Sandwich Express machine, a fresh orange juice machine and the multi-line dispenser. CHEF VENDING, LLC, is a privately-held an organization and establish an office as well as a small warehouse in a area of Ireland.

The Company

The mission of the company is to be a leader in a high quality food and sale of restaurant equipment to the market. It can be done be a close customer contact and excellent relationships, the company will meet the needs of the customers.

The investor of the organization has a full operational responsibility. The two of the co founder Mauricio Ordonez and Javier Palmera, have entrepreneurial and industry experience. Charles Mulligan handles the operational management, financial skills and marketing skills to the operation. The company will have two product lines, for the markets it serves. The vending products line will include the unique Sandwich Express machine, a fresh orange juice machine and the multi-line dispenser. The restaurant will use the equipment that includes espresso makers, toasters, and fresh juice squeezers. Products like Sandwich Express are innovative machine a function and other advantages that are rarely found in today's vending machines and this will provide the company a competitive advantage over other competitors. CHEF VENDING plans to aggressively enhance the existing line in the future. The company have a plan to include a larger model sandwich express chicken rooster and will be offer a huge and greater variety of chicken rooster sandwiches, and a more diverse product line, like pizza. Rest of the products are in exploratory phase. The company also establishing supplier relationships with a large sandwich manufacturers and nationally-branded juice, in order to customize the machines to their products. It would enable the company to supply machines to the companies and it will help them to band the machines with their product lines.

The Market

In the UK market where the product are sold through automatic vending machines had decreased by 4% in 2009. Total number of refreshing vending machines operating at Uk are estimated at 468,000 in 2009. The total numbers of cigarette machines are estimated to 69,000. During the yeah 2009 the total number of sale of refreshment vender products are estimated to 1.9% of total of the household expenditure that is spent of the food and non-alcoholic beverages.

The main sale sector of vending machine includes: cigarette and tobacco machines refreshment machine; and other vending machines. The refreshment machines sector includes sales of hot and cold drinks, snacks, confectionery, sandwiches and meals and is the largest segment of the market. 2009 was a difficult year for many automatic vending companies. The recession affected demand for services in important sectors for vending such as manufacturing, banks and financial institutions, all of which were affected by staff redundancies and company closures. There has also been a steady reduction in the numbers of refreshment vending machines installed in the UK since 2005, that has affected the potential for sales growth and the poor image which vending has among some consumer groups has further hampered the scope for market expansion. All of it indicates that a innovative fast moving company can introduce enhanced products to vending restaurant/machine product customers stand in order to gain market share in a very short period of time span. The company also going to market its machines to a three distinct market segments that includes: distributors juice manufactures and branded sandwich and end users. For the restaurant equipment business the company will pay more focus on equipment restaurants, and supply companies well as hotels.

Market Needs

Chef Vending is providing its customers with a wide selection of innovative vending machines and Restaurant equipment. Many of the products have first to market features not found on competitor's equipment. Chef seeks to fulfil the following benefits that are important to their customers.

  • Innovative features: There are lots of vending and restaurant equipment on the market, customers demand innovation as a competitive edge.
  • High-quality machines: Equipment is expensive and customers cannot deal well with down time when equipment needs to be repaired.
  • High-quality food products: Vending machines are not normally synonymous with high quality food products; Chef Vending is changing this perception.

2-Estimate sales revenues and costs incurred by the organisation according to board functional areas including: production, marketing, administration.

Financials

The company will address sales forecasts, Break-even Analysis, and how they link to the Marketing Strategy Expense Forecasts.

Break-even Analysis

It indicates that $321,908 will be needed in annual revenue to match total expenses.

Expense Forecast

Selling Expenses, Marketing expenses and administration expenses are enclose in the sheet 1.

A comparative balance sheet for the ROOSTERS CHIKEN is presented in below with the results of vertical analysis shown. The pair columns on the right is used to record each item as percentage of total assets for each year, the later year on the left and earlier year on the right. For instance on December 31,19Y3 ,the cash balance was $72,860 and total assets were $779,144.Thus the cash balance is found to be 9.4 percent of total assets in 19Y3.

Cash/ Total Assets= 9.4 percent

The same procedure is applied to each item in turn

We know that characteristic of the vertical process is that the percentages can be added and subtracted down the column to give 100 percent on the line for total assets and also on the line for total liabilities and stockholders equity. In making the commutations and rounding off percentages, it may be necessary as with vertical analysis of income statements to adjust one or more of figures to obtain an even 100 percent for each total.

Vertical analysis percentages of balance sheet are very useful when they are compared with the percentages of the same company for previous years and with those of others companies in the same industry. Changes in percentages may reveal situations that need investigations. For example the comparative balance sheet of CHEF VENDING shows that cash has decreased from 15.9 percent of total assets in 19Y2 to 9.4 percent of total assets in 19Y3.The accountant would be quick to realize that this decline may mean a future problem and would take to realize that this decline may mean a future problem and would take steps to find out exactly why the decrease occurred

Horizontal Analysis of Financial Statements

Lets examine how a horizontal analysis is made. Starting with the comparative statement of CHEF VENDING for 19Y3 and 19Y2, shown in figure below. We will subsequently examine the horizontal analysis of balance sheet.

Each figure in the 19Y3 statement is compared with the corresponding figure on the year 19Y2statement the amount of change is shown and the percentage of change is shown. For example look at the sales figure on the comparative in come statement

All the other figures on the comparative statements have been analysed in the same manner. If the amount for the second year is less than that for the base year, the percentage decrease is still calculated in the same manner. For example the comparative statements show that other Interest Expense decreased by $1,835 during 19Y3.

Interpretation of the Percentages of CHEF VENDING

The amounts of increase or decrease can be added or subtracted in the column from top to bottom and will give correct subtotals at each point. However the percentages of change cannot be added or subtracted from top to bottom. Each percentage relates only to the line on which it appears. If the amount of change is zero there is no percentage of change. A study of each item on the comparative income statement quickly reveals the changes that occurred between the two years. Some important changes in CHEF VENDING income statement from 2008 to 2009 are seen to include the following

  1. Gross sales and net sales were both up 9.1 percent
  2. Cost of goods sold increased 10.8 percent
  3. Gross profit on sales increased 6.5 percent
  4. Operating expenses increased 4.3 percent
  5. Net Income from operations increased 17.2 percent
  6. Income taxes were up by 23.0 percent
  7. Net Income after income taxes was 15.5 percent higher

Horizontal analysis is especially useful in calling attention to relationships that bear further investigation. For example although the increase in net sales for 19Y3 over 19Y2 was only 9.1 percent, the increase in cost of goods sold was 10.8 percent. An alert manager would call for pertinent facts to determine facts to determine the reasons for the disproportionate increase of goods sold. Management would be interested in learning in greater detail why general expenses showed an increase of 10.9 percent. This would calls for an analysis of each selling expense and each general expense

It should be kept in mind that percentages of increase or decrease can be misleading when small amounts are involved. For example, CHEF VENDING interest income decreased from $722 in 19Y2 to $355 in 19Y3, a decrease of 50.8 percent. However in terms of actual dollars ,the amount is immaterial. On the other hand, even a small percentage change for an item involving many dollars is important because of sizeable amount. No percentage change is computed when there is no amount for the base period , as happened with the gain on the sale of equipment that is reported for 19Y3 on CHEF VENDING comparative income statement. Actually some analysts prefer to omit items like this gain from their commutations even if data for the base period is available because changes are usually not meaningful for such items. Usually the process of interpretation is easier if some basis of comparison is available such as a company budget or industry average data. Significant or out-of-line, changes should be investigated in detail and the reasons evaluated

Horizontal and vertical analysis of Operating expenses

On the Income statement illustrated in operating expenses were shown as two sub totals-selling expenses and general Expenses. The details of selling and general expenses are included in supplemental schedules. An analysis of the comparative schedule of selling expenses for CHEF VENDING is shown in Figure below. Notice that the results of both horizontal and vertical analysis are given in the schedule. The vertical analysis percentages relate to net sales, as they would if the details of these expenses had been presented in comparative form to permit a detailed horizontal analysis. A comparative balance sheet showing the Mirabel Unpainted Furniture Corporations financial position on December 31,2009 and 2008 is illustrated in figure. The calculations involved are the same as those for the horizontal analysis of income statements. The amounts are compared line by line. For example the accountant computes the difference between the amounts for cash($10,018-$7286) and finds that there is a decrease of $2,732.The percentage of change is determined by dividing the amount of change by base-year(2008)amount:$27,327/100,187=27.3 percent. Every line is analysed in the same manner.

Expense Forecast

Marketing expenses will be budgeted so that they initially ramp up and then re-ramp up over the course of the year. It will be used as a tool to keep the organization on target and provide indicators when a modification or correction is needed.

Financial Objectives

  • Decrease customer acquisition costs by 1% a quarter.
  • Continue to decrease variable costs through efficiencies gained from experience.
  • Increase profit margins by 0.5% per quarter.

Describes how the suggested changes will be implemented within the business itself.

The purpose of Chef Vending's marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance:

  • Revenue: monthly and annual, based on planned compared to actual.
  • Expenses: monthly and annual, based on planned compared to actual.
  • Customer satisfaction, to generate repeat business and referral activity.

The above plan when implement the observation of market share, increase in sales revenue and decrease in cost of goods sold and increase in profit will be reflected.

Managerial Statistics. Statistics are of great value for any management. This can help management in various ways such as charts, tables, diagrams, and statements are must for a management. It provides the basic input for managerial decision making.

Special Reports. These reports served in case of need to explain certain situation or exception. These reports are called for when the ordinary reports prove inadequate for the management.

Break even Point. The break even charts reflect the relationship between sales and expenses.

Internal Audit. This device is helpful particularly in finance matters. However, the areas of internal audit may be expanded to cover policies, review of the delegated authority, management, quality, procedures depending on the management requirements.

Cost Accounting. The technique such as standard costing, marginal cost, cost control account, cost division analysis, variance analysis etc is a few of these devices provided by cost accounting.

Personal observation. Is such a control technique that can not be replaced by an other control method. No control is complete with out personal observation.

Strategies

The single objective is to position Chef as the leader in vending machines and restaurant food and beverage equipment in the southeast region. Chef will strive to aggressively increase its market penetration. The marketing strategy will seek to first create customer awareness regarding the offered products, then develop the customer base, and finally work toward building strong customer loyalty. The message communicated will be that Chef Vending offers the best vending and restaurant equipment. The first method of broadcasting the method is participation in trade shows, a valuable resource. The second method will be distributor open houses. The third method is the development and use of Chef's Internet website. The last method of communication that Chef Vending will be using advertisements in trade publications.

Marketing Research

During the initial stages of the marketing plan development, Chef held several focus groups with perspective customers. These focus groups were developed out of interactions/introductions made at the regional trade show. The goal of the focus groups was to solicit a significant amount of information from perspective customers. Chef was very careful with the facilitation of the focus groups, attempting to insure that the results were as valid as possible. The groups ranged in size from seven to nine people. The focus groups were video taped to allow Chef to review them more carefully at a later time. Overall, the focus groups provided Chef with a wealth of information that was instrumental in launching and growing the business.

Human resource

The most important managerial skills are technical, interpersonal, conceptual, diagnostic, communication, decision making and time management skills

The technical skills are necessary to accomplish and understand the specific activities carried out by the organization and skill will be develop among the managers to spend considerable will be spend on dealing communication with people, to do this important function satisfactory, managers require strong interpersonal skills.

Identify new areas in which the business could be expanded justifying suggestions

Growth rates in both the industries remain strong. Growth is fuelled due to the changes in the workplace are causing workers to utilize more of their meals away from home. These food sales are expected to increase by 53%. It is because more consumers eat away from home, In the market there is a increased demand higher quality products. Other competitors are selling a full line of packaged frozen meals in their machines. There is another impact that is affecting the industry that is called demographic trends. Young adults, who are grew up on fast food, have a economic force. Their perceptions on fast food, vending and technology will have a positive impact on the business. Never the less population growth rates and immigration trends, also have a economic impact on the industry. The growth in both of these areas will be in the southeast, where the company is poised to capitalize on these trends.

Identify new skills that must be attained by management in order to take advantage of new opportunities.

  • Participation in a growing market with a significant percentage of the target market still not aware of Chef and its products.
  • The food market, while somewhat affected by economic downturns is largely immune because food is a basic necessity.
  • A strong distributor network.

Predict how the organisation will be effected in the near future by recent changes in the business environment.

The company is new in the market and is introducing new products, the worker of the company should be more focus and they also have to work hard in order to create acceptance for the product in the market. The keys to success are:

  1. The company success depends on Quality support recognizing and service, recognizing.
  2. In order to create new customers and expanding market the company should introduce Innovative, quality products
  3. continuous disciplined and a Steady growth.
  4. the company customers and make them happy.

References:

  • http://www.bharatbook.com/Market-Research-Reports/Automatic-Vending-Market-Report.html

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