Group work master of business management

Student Name: Yana Larina Student No: 4015718 Subject Code: Subject Name: Lecturer/Tutor: Assignment Title: Word Count: Due Date: I am aware of ICMS policy on plagiarism as stated in the ICMS Student Handbook This assignment does not breach those requirements, nor has it been previously submitted for assessment contributing to any other subject or course The ideas and Information that are not mine have been referenced accordingly Signed: Iana Larina   Table of contents Executive Summary…………………………………………………………… .2 Introduction………………………… …………………………………………………….……3 Findings…………………………………………………………………………….…………….4 Conclusion and recommendations…………………………………………………………….7 Reference list………………………………………………… ………………… ………… Page of 20 Executive summary Nowadays the food delivery market is growing significantly worldwide, especially during Covid-19 pandemic Unmanned drone delivery in Sydney can be considered as a unique and environmental- friendly way of delivering food and medicine Initially drones were created for military purposes, but these days utilization of drones has expanded on different range of services such as fire detection, logistics services, weather broadcast etc Drone-based delivery services have gained a great amount of attention in the foodservice industry because of the various benefits, such as quick food delivery, the reduced labor costs, and the decrease of traffic accidents during delivery (Kim & Hwang, 2020, p.2) The demand for home delivery is growing significantly during Covid 19 as pandemic has forced many retailers and restaurants to close The main purpose of this report is to draft a new venture business plan applying developing strategies, estimating the value of the business with identification of potential sources of funding This report analyzes and estimates the value of drone delivery business by proposing a financial plan with financial cost of the business and provides an action plan for the upcoming two years Page of 20 1.Introduction to the business The notion of drone delivery originated with an innovative idea from Amazon’s CEO Jeff Bezos and his idea couldn’t come at a better time because of the success of e-commerce leading to more transactions (Lawson, 2017, p.27) Drone delivery is an alternative to traditional delivery by cars, trucks, motorcycles which attracts attention from retailers (especially food) and is being promoted by successful firms worldwide Our venture business is a drone delivery business located in Sydney, Australia which is feasible, appropriate, and relevant to the customers and business In Sydney drones can deliver food and medicine to an agreed location, to fly directly to the customers, the design of the drones depends on the volume(amount of packages ) that need to be delivered (heavy delivery requires more efficient and powerful drone),speed of the drone, distance and area of delivery Drone delivery business provides an opportunity to improve food delivery service in Sydney by reducing cost of delivery, providing faster (drones are not affected by the road traffic) and contactless delivery, for business drone delivery could reduce transportation costs and moreover, drone delivery service is an environmental- friendly business within the market Sydney drone delivery service can’t be fully controlled by human, due to high cost of human labour, it requires the implementation of drone delivery software with connectivity to 5G networks to collect data in real time and keeping records of every delivery order, also, drones city fleet (Wing Delivery Drone, Heavy Delivery Drone) will be provided by build-in sensors and cameras for better performance The maximum order capacity should be no more that 3.5 k, drones are not allowed to operate in rain, windy weather conditions with bad visibility and at nights, that is why the main operation hours in Sydney determined for summer is am until 18.30 p.m and for winter is 6.a.m until 17.00 p.m In addition, delivery drones can be requested via a mobile application, the type of drone is depending on limits of order, capacity of the drone and designated area Besides, the first delivery drone will conduct a trial run in order to assess the potential obstacles for drone delivery service in Sydney The drones will be purchased separately Our mission is to bring food inspiration by innovation delivery model to every location Our vision is to be the best drone-delivery company in Sydney by providing contactless and convenient delivery of food and medicine The main motivation of venture business is financial gain as operating a drone delivery business will lead to financial success as the money you can earn is determined by how successful your venture business is In a while drone delivery business can add earnings through expansion across the country The strengths of the drone delivery business are experienced staff, innovative delivery system, low delivery costs, environmental-friendly business, lack of competitors, Page of 20 however, there are drawbacks such as limited financial resources, uncertainties of market acceptance, drone delivery business requires innovative technology (drones) which is quite expensive, dealing with licencing, technical issues related to implementation of venture business (drones require continual technical maintenance performed by highly qualified technicians which is costly to the business) The process of drone delivery relies on wireless communications which make them vulnerable to different types of attacks The results of attacks can have negative effects, such as commercial and non-commercial losses (Yaacoub & Salman, 2020, p.2) Overview of market conditions Nowadays Australia focuses on the use of drones for agricultural and civil purposes, so as it can be observed there are no potential competitors for drone delivery business in Sydney Porter's Five Forces is widely used to analyze the attractiveness and profitability of the business, understand dynamics of the market, market potential and competition Competition There is no competition in the drone delivery business in Sydney Our venture drone delivery business is expected to be strong and generate high profits Drone delivery is able to offer unique and innovative service in delivering food and medicine and has a greater power to charge higher prices Supplier power As drone delivery service is a unique and innovative service it will be hard to find and switch from one supplier to another Moreover, the price of a drone and its spare parts is high and requires special knowledge for continual technician maintenance The supplier has more power which can impact a company's profitability Power of customer Depends on the responsiveness of the customers Drone delivery service power will increase if it has many independent customers and it is easy to charge higher prices in order to increase profitability Threat of substitution The customers can switch to other types of delivery such as by car, courier, Uber, motorcycle which pose a threat to drone delivery business, also they can go to a restaurant or café This fact weakens the position of the drone delivery company in the market and threatens profitability Threat of new entry The cost of entry is high and requires special approvals by the civil aviation of Australia, licensing, insurance It is worth noting that drone delivery service positions can be affected by the ability of other firms to enter Sydney’s market regardless of strong barriers to entry Undoubtedly, some of the new entrants will copy existing services, others will implement innovative solutions in drone delivery service Page of 20 Sales and Marketing strategy: - Value proportion - Customers - Customer Relationship - Channels Operation strategy: The decision-making process and its impact on organizational operations require a particular strategy for attaining the determined goals This strategy is known as an operational strategy The idea of starting food and medicine delivery throughout Sydney required a proper operational strategy to attain success within the market Key activities, required resources, and major partners have to be explored and determined before implementing the idea Key activities The activities that can help in successfully implementing the idea in the food and beverage industry to start delivering their products through drones have to be explored The first activity is to develop the design and implementation road plan for the sustainable delivery service idea Then the designs have to be approved by managerial employees and the organizational management for further procedures According to Rahman et al (2018), the main activity of any operational strategy is to attain effective investments for the implementation of the idea After obtaining approval, the same designs have to be presented in front of the potential investors who will be willing to contribute their financial resources for implementing the idea within the food and beverage business Heavy delivery items require powerful drones which can be attained and used only with active financial investments After attaining the investments, marketing has to be done in order to start receiving food and medicine orders that can be delivered through the environment-friendly drones After the initiation of the drone delivery services by Sydney-based restaurants and pharmacies constant monitoring has to be done for identifying the market acceptance of the idea Key resources The main resources that are required for operational strategy include physical, human and financial resources (Zatta et al 2019) These three resources have been explored in the following, Physical Resources for the business are all the resources of its partner's physical resources These resources may include services equipment like computers, digital machines, food making machines, etc., cold storage, heavy-duty drones which are Page of 20 capable of carrying even heavy delivery items, medical supplies, and all these products are included in the physical resources Human Resources The people who are employed in the technical team for operating and maintaining the drones, the restaurant staff members, pharmacy staff members are the human resources who will be helping in the implementation process of the strategy Financial Resources The main resource that is required for the strategizing and implementation process of their idea to deliver items through environment-friendly drones required capital investments, purchasing drones, hiring skilled laborers, and other additional operations required effective instruments Therefore, all funds required for this purpose may be brought from the bank loans or by issuing shares to the public Also, we will apply for the government’s assistance for the same Key partners Drone Developers Our whole business is depending on drones Therefore, we required efficient drones that are capable of lifting weight and could be able to reach distant places For that purpose, we searched for the drone developers, and we chose the DJI Developers as our drone partner We believe that our partnership will provide efficient drones Insurance Company These drones have to be insured to attain any compensation in case of any accidents Reputed insurance companies provide insurance to electric gadgets that are used in the operation of any business (Tarr, Thompson & Tarr, 2019) App developers have to be contacted for developing a software application that will be receiving orders from the consumers Additionally, the application will provide a real-time location of the parcel to the consumers for real-time tracking (Alshamsi, Këpuska & Alshamsi, 2016) Business Partners Supermarkets, pharmacies, restaurants are a few of the key partners of this operational strategy Additionally, documents and parcels can be delivered to customers or offices as well for doing the business, not just B2C but B2B also (Hallikainen, Savimäki& Laukkanen, 2020) Therefore, it can be established that the operational strategy that can help in implementing the idea of drone delivery services can help to revolutionize the foodservice industry, pharmaceutical industry and can be used for delivering documents to various indices as well Physical, human, and financial resources can help in executing the key activities of the strategy to achieve the objectives of the operational strategy Page of 20 Financial Projection 5.1 Start-Up Cost 148 - 11 = 137 ok The total setup cost is $414,526, with the largest being the automated UAV flight plan software (including surveillance), mobile app development, and maintenance cost of the 50 drones the company sets to develop, totalling to $120,000 The second largest cost is the manufacture of the drones, which is $150,000, followed by $79,000 office rent in Leichhardt (Real Commercial, 2020) The company’s intended office is an open-plan warehouse and no fit-out, suiting the need of a startup company Operation relies on automated flight plan, which makes Youtube advertisement the only operational cost, with an estimated monthly $5,000 cost (Frankosky, 2020) With automated flight operations, the company doesn’t need a pilot license (RePL) but only one operation certification (ReOC), (CASA, personal communication, September 1, 2020) All costs related to drone patents will be paid to IP Australia Set-up details can be seen in Appendix 5.2 Profit and Loss Forecast 106 ok The company aims to reach the intended initial target sales with $26,032 monthly net profit from August 2021 onwards Starting from September 2021, the company will have positive net profit Within one year of operation, the company will reach net profit of $70,868.55, with the same 150 drones However, the company will only reach breakeven in February 2022 with 125,928 total trips made, if the $6 price per trip doesn’t change with an approximate maximum capacity of 10 working hours per day and with no additional drones purchased Profit and Loss details can be seen in Appendix and Break Even in Appendix and Appendix 5.3 Balance Sheet Forecast 26 ok Page of 20 Figure shows how big fixed asset costs are and that leads to the company’s long-term liability (Bank Loan), which will leave $200,000 net asset 5.4 Cash Flow Forecast 41 ok - Graph not yet Page of 20 Sales revenue is paid on cash and there is no account receivables Cash flow is negative until October 2021, gradually achieved from August when the initial target without replenishment rate is achieved Cash flow details can be seen in Appendix 5.5 Source of Financing 37 - = 34 ok Aside from Bank Loan, member’s contribution of $40,000 per members and CSIRO Kick-Start Grant of $150,000 from the government source the company’s funding (Business Department, 2020) R&D Tax Incentive will also cut cost Action plan Action plans follow the business and marketing strategy and financial projection, including sets of SMART goals and guidelines for the company’s journey Athuraliya (2020) claimed that action planning helps a business prepare for the obstacles ahead and acts as a lighthouse for business Also, an effective action plan can boost company productivity and efficiency Page of 20 6.1 Action plan for the set-up year The goal of the set-up year of drone delivery business is described as SMART as follows: Specific: To put all drones that the company owns into full capacity working Measurable: according to the Financial plan, with 100 drones, 13200 delivery trips are the maximum number the company can implement per month Attainable: following group research, this number of trips accounts for only roughly 1% of target market demand, so it is considered achievable Relevant: this goal is entirely relevant to the company's long-term goal of becoming a leader in the delivery segment and vision of creating a convenient and prosperous life for people Timely: the due date for the goal is as of the end of July 2020 The action plan for the set-up year of the drone delivery business is described as Table below: Action step Assign ed to Start date Due date Resources Desired outcome Legal procedure Yohana for setting up the business Sep, Type of Successfully 2020 - business, money registering business Dec, for legal fees 2020 Leasing setting warehouse Sep, Location, 2020 - capacity Dec, money 2020 deposit and Will up Page 10 of 20 Successfully renting and and setting up a for ready workplace Purchasing equipment apps Sachin & Sep, Specification 2020 - equipment, Dec, money 2020 of Successfully purchasing drones and related equipment Finding Will marketing partner Sep, Marketing Successfully finding 2020 - strategy and a reliable Dec, target market, partner 2020 money Applying for Yohana government grant Sep, Business plan, Successfully gaining 2020 - financial plan the grant Dec, 2020 6.2 Action plan for the following two years The second and third financial years may also require reevaluation It is the time that the company is expected to gain popularity and revenue is maximized thanks to the maximized drone capacity However, the company might not achieve a break-even point due to high expenses Also, the initial equity investors want to see a better return on invested capital Therefore, the company must consider purchasing more drones and expand operating radius, which helps it serve more customers and earn better revenue and profitability At this stage, costs for expansion are likely to significantly increase, requiring the business to either loan more from banks or be further funded by investors The number of employees, therefore, should increase due to the increasing workload The company should compromise short-term profits in order to achieve long-term success Limitations and Challenges 100 7.1 Technical Challenges 98-4 = 94 During Sydney’s rainy season in June to Mid-October (Weather and Climate, 2019), the business won’t be able to operate as much and it directly impacts revenue Developing a drone that can reduce the impact of rain and wind might be more costly Using DJI’s battery capacity as a reference to come up with approximate capacity of our own drone Page 11 of 20 of flying 20 minutes with hours charging time, operation isn’t very effective We aren’t sure of CASA’s further regulations that we aren’t told in our primary and secondary research, and this too might limit activities and add cost 7.2 Financial Challenges Reference List Athuraliya, A (2020) How to Write an Action Plan | Step-by-Step Guide with Templates Creately Blog Retrieved 22 September 2020, from https://creately.com/blog/diagrams/how-to-write-an-action-plan/ Kim, J J., & Hwang, J (2020) Merging the norm activation model and the theory of planned behavior in the context of drone food delivery services: Does the level of product knowledge really matter?. Journal of Hospitality and Tourism Management, 42, 1-11 Retrieved August 24, 2020 from https://reader.elsevier.com/reader/sd/pii/S144767701930258X?token=D82B5DAE699E3 164401024072044D27B604DE986D69CFDCDA319A686968289681B3C5B0597EAFD B28DA10E98DAFC0BB4 Lawson, A M (2017). Consumer Behaviors of Drone Delivery (Doctoral dissertation, Appalachian State University) Retrieved August 25, 2020 from https://libres.uncg.edu/ir/asu/f/Lawson,%20Anthony%20August%202017%20Thesis.pdf Yaacoub, J P., & Salman, O (2020) Security Analysis of Drones Systems: Attacks, Limitations, and Recommendations. Internet of Things, 100218 Retrieved August 27,2020 from https://reader.elsevier.com/reader/sd/pii/S2542660519302112?token=D637EF79DC5E9 217AF719E03DE7FFEEE32D278927B7C97A1A76FA17E1E131AC1AA2664A8DBFE5 17CECEE916EB61E3002 Business Department (March 24, 2020) Matched funding for start-ups and small businesses to access CSIRO support Retrieved September 23, 2020 from https://www.business.gov.au/Grants-and-Programs/CSIRO-KickStart Business Department (September 16, 2020) Offset your R&D costs to help innovate and grow your business Retrieved September 23, 2020 from https://www.business.gov.au/Grants-and-Programs/Research-and-Development-Tax-Inc entive Page 12 of 20 Frankosky, C (March 6, 2020) YouTube Advertising Costs Explained Retrieved September 23, 2020 from https://surfsideppc.com/youtube-advertising-costs/ Civil Aviation Safety Authority Drone delivery systems Retrieved September 23, 2020 from https://www.casa.gov.au/drones/industry-initiatives/drone-delivery-systems O’Neill (July 1, 2020) Average Electricity Costs per kWh Retrieved September 23, 2020 from https://www.canstarblue.com.au/electricity/electricity-costs-kwh/ IP Australia Innovation patent price calculator Retrieved September 23, 2020 from https://www.ipaustralia.gov.au/tools-resources/calculator/innovation-patent-price-calcula tor Real Commercial (September 9, 2020) Retrieved September 23, 2020 from https://www.realcommercial.com.au/for-lease/property-129-arthur-street-homebush-wes t-nsw-2140-503202102 Alshamsi, H., Këpuska, V., & Alshamsi, H (2016) Real time vehicle tracking using arduino mega International Journal of Science and Technology, 5(12), 624 Retrieved on 22 September 2020, from: https://www.academia.edu/download/50872432/Real_Time_Vehicle_Tracking_Using_Ar duino_Mega.pdf Hallikainen, H., Savimäki, E., & Laukkanen, T (2020) Fostering B2B sales with customer big data analytics Industrial Marketing Management, 86, 90-98 Retrieved on 26 September 2020, from: https://www.sciencedirect.com/science/article/pii/S0019850118304656 Tarr, J A., Thompson, M., & Tarr, A (2019) Regulation, risk and insurance of drones: An urgent global accountability imperative Journal of Business Law, 2019(8), 559-576 Retrieved on 23 September 2020, from: https://eprints.qut.edu.au/202743/ Zatta, F N., Tambosi Filho, E., Campos, F C D., & Freitas, R R (2019) Operational competencies and relational resources: a multiple case study RAUSP Management Journal, 54(3), 305-320 Retrieved on 28 September 2020, from: https://www.scielo.br/scielo.php?pid=S2531-04882019000300305&script=sci_arttext Page 13 of 20 Appendices Appendix - Set-up Cost Page 14 of 20 Appendix - Profit and Loss ok Page 15 of 20 Appendix - Break Even Analysis ok Appendix - Break Even Time ok Page 16 of 20 Appendix - Cash Flow ok Appendix - Analysis of Quantity of Drones Purchased ok  Appendix - Flight Schedule and Analysis of Total Hours of Flight per Day Page 17 of 20    Page 18 of 20  Appendix - Analysis of Drone Specifications    Page 19 of 20 ... main purpose of this report is to draft a new venture business plan applying developing strategies, estimating the value of the business with identification of potential sources of funding This... value of drone delivery business by proposing a financial plan with financial cost of the business and provides an action plan for the upcoming two years Page of 20 1.Introduction to the business. .. 14 of 20 Appendix - Profit and Loss ok Page 15 of 20 Appendix - Break Even Analysis ok Appendix - Break Even Time ok Page 16 of 20 Appendix - Cash Flow ok Appendix - Analysis of Quantity of Drones