Siberian Academy of Public Administration

SAPA

Business Plan

Venetian Lion

Prepared by
Alexandra Afanasyeva

Novosibirsk
2002
 Table of Contents

Executive Summery.........................................................................................................................3
Resume.............................................................................................................................................5
Background and Description of the Business..................................................................................6
Organization of the Business...........................................................................................................8
Situation Analysis..........................................................................................................................11
Problems and Opportunities...........................................................................................................13
Objectives......................................................................................................................................14
Marketing Strategy and Tactics.....................................................................................................15
Budget ...........................................................................................................................................17

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 Executive Summery

This business plan proposes the idea of selling Italian souvenirs and Venetian
glass in Novosibirsk. Our merchandise will include the following: Venetian
glass such as glassware, souvenirs, frames for photos, statuettes, clocks,
etc.; souvenirs such as trinkets, reproductions of Italian artwork, cards and
Venetian masks.

These kinds of goods are new for the Novosibirsk market. People are usually
very interested in everything new and the shop will be very popular.
Certainly, our city is full of different kinds of souvenirs from the various
countries of the world. However, Italy does not have a great deal of
representation here. All we can find here is Italian clothes, Italian shoes and
Italian furniture. But all this merchandise is so called "material things". They
are practical, but do not have anything to do with the immaterial side of
people. For Russians Italy is a wonderful, magical and magnificent place. And
they want some piece of its beauty. The goods that we are going to sell will
be very beautiful and, according to studies Russians, are especially fond of
beautiful things.

We will buy goods directly from Italian suppliers. Hence, the cost of the
goods will not be very high due to not using a middle man. We plan to
negotiate a long term contract with our suppliers to avoid any risks. Also it is
possible that our suppliers will provide us some discounts thus we will be
their steady customers. This will give us an opportunity to make some of our
merchandise not very expensive, so it will be affordable to many.

After one year of work we are going to have 5% of this market. After 3 years
we will have 20%of the market. After 6 years we will be the leader in the
market and our market share will be 40%. Besides we plan to open one more
shop on the left bank of the river Ob. The best location will be somewhere on
Marx Square and along Marx Prospect. We are going to open this shop 3
years after the opening of the main shop in the center of the city.

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The total necessary capital investment is 2,370,000 roubles. According to our
forecast we will breakeven after 1.5 years of work. After that we will work on
opening a new shop on the left bank of the river Ob. This will not need extra
investments because we will use our operating profit.

If the business is a success we plan to run a marketing survey in other

Siberian cities and towns to find out if it will be successful to open branches
around Siberia.

4
 Resume

ALEXANDRA AFANASYEVA
Mail address: 23/1 – 47, Sibiryakov-Gvardeytsev St.
Novosibirsk 630048 Russia
Phone number: (3832) 540020
E-mail address: todestorheit@ngs.ru

STATEMENT OF PURPOSE
Seeking employment as a financial manager in a respected company in
Novosibirsk.
EDUCATION
Siberian Academy of Public Administration (SAPA).
• Major: Financial Management. 1998 - present.
• Secondary major: Interpreter of English in professional communication
sphere.
• I have a 4.6 grade point average.
• Member of the English Club.
Secondary school #41
• Took second price in city school Olympiad on English.
• Graduated with honors.
WORK EXPERIENCE
February 2002 - present – training in the Novosibirsk Municipal Bank.
October 2001 – November 2001 - pager company Topaz-Almaz as an
operator.
• Duties involved: receiving and sending messages, answering
questions, giving information.
SKILLS
• High level of English.
• Computer skills (MS Office 2000, CorelDRAW 10, Dreamweaver 4,
Internet).

REFERENCES
Available upon request.

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 Background and Description of the Business

Some time ago a friend of mine returned from Italy. She started torturing me
telling about all the beautiful things she had seen there. Buildings,
cathedrals, towers, bridges, statues, Venetian gondolas, glass, masks and
many other things. I thought how much I would love to see all this. And then
I realized that here, in Siberia, we cannot find anything like this. It would be
good to bring a little piece of Italy to our city. And the idea of selling Italian
goods came to me.

What Italian goods will we sell here? To solve this problem we should decide
on some certain economic characteristics of the product. Obviously, we want
our ware to be in brisk demand. Then it should be eye-catching, unique and
special. The prices should vary so many people can afford our goods. Having
thought over all these details I have decided that the best type of goods to
be sold here would be Italian souvenirs and that type of thing. Thus our
merchandise will be the following: Venetian glass such as glassware,
souvenirs, frames for photos, statuettes, clocks, etc.; souvenirs such as
trinkets, reproductions of Italian artwork, cards and Venetian masks.

We will buy goods directly from Italian suppliers. Hence, the cost of the
goods will not be very high due to not using a middle man. We plan to
negotiate a long term contract with our suppliers to avoid any risks. Also it is
possible that our suppliers will provide us some discounts thus we will be
their steady customers. This will give us an opportunity to make some of our
merchandise not very expensive, so it will be affordable to many.

There are reasons why this kind of business will be successful in Novosibirsk:
 These kinds of goods are new in the Novosibirsk market. People are
usually very interested in everything new and the shop will be very
popular.
 The goods that we are going to sell will be very beautiful and according
to studies Russians are especially fond of beautiful things.

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 A certain part of our products will not be expensive, so they will be
affordable to many.
 Italian products in general are of high quality. This also concerns
souvenirs and Venetian glass. Real Italian things are way better than
Russian made but which pretend to be Italian.

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 Organization of the Business

The shop will work from 10 am till 8 pm every day, without tea breaks.
Hence, the working day will be 10 hours long. Thus it is favorable to have
people working in 2 shifts, one shift – from 10 am till 1 pm, second shift –
from 1 pm till 8 pm.

The organization of the company will be as follows (see chart 1).

Director

Managers Guard Accountant

Sales people Cashiers

Stock people

Cleaner

Chart 1. The Organization of the Business.

The head of the company is the director. The rest of the staff will be
managers (2 people), guard (2 people), an accountant, sales people (4
people), stock people (2 people) and cashiers (2 people). Guard, sales people
and stock people will work in 2 shifts. This means that at one time in the
shop there will be a manager, a cashier, 2 sales people and a guard. The
accountant will come in the morning and be busy with accounts. It is
unnecessary for him to be in the shop all day.

Now there are a more detailed description of the staff and their
responsibilities.

DIRECTOR

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 • General management and decision making.
• Financial management (investment, loans).
• Organization of supply, contract conclusion.

MANAGERS
• Administrative activities.
• Organization of the supply goods from the stock.
• Daily decision making.
• Transporting goods from the stock to the shop.
• Controlling the work of the subordinates.
• Working day after another the whole shift.

SALES PEOPLE
• Serve customers.
• One working day a week off.

STOCK PEOPLE
• Store keeping.
• Monitoring of the safety of the goods.
• Loading and reloading goods.
• Saturday and Sunday are days off.

ACCOUNTANT
• Accounting.
• Monitoring goods transporting to the shop and filling in all necessary
documents.
• Monitoring how cash is transported to the bank.
• Paying wages, taxes, accounts payable.
• Saturday and Sunday are days off.

CASHIER
• Taking care of cash, responsible for its safety.

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 • Responsible for the cash transporting to the bank.
• One day a week off.

CLEANER
• Cleaning floor, windows, shelves, etc.
• Arrives every morning before opening of the shop.
• Sunday is a day off.

GUARD
• Working regime is set up by the company which provides us with the
guard. We pay for the service. The only condition will be that the guard
will be the same; no changes in staff are allowed.

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 Situation Analysis

Market
Certainly, our city is full of different kinds of souvenirs from the various
countries of the world. However, Italy does not have a great deal of
representation here. All we can find here is Italian clothes, Italian shoes and
Italian furniture. But all this merchandise is so called "material things". They
are practical, but do not have anything to do with the immaterial state of
people. For Russians Italy is a wonderful, magic and magnificent place. And
they need some piece of its beauty.
Competitors
In general, there are two kinds of competitors. First kind – those who sells the
same product (in our case, Venetian glass). Here, in the city, we have no
competitors of this type. Nobody in the city sells the same kind of goods as
this shop. Yes, they do sell different kinds of glass and souvenirs but nobody
deals with this type. Second type of competitors – ones that sell souvenirs
and this type of thing. There is still a great deal of souvenirs are being sold in
the city. But what do they sell here? If we take the souvenir market (see
graph 1), we can see that about 80% of it is clay ceramics, 5% - metal-made
things, 5% - different kinds of glass and 10% - wooden-made things. All these
do not have much value from an artistic point of view. Mostly it is "rough" art
that is not sublime. Sometimes there is a need for more refinement and we
cannot find much of it in our market. Thus there is the need for Venetian
glass with its refinement, daintiness and beauty.

5%
10%
5%

80%

c la y c era mics gla ss

wooden-ma de things meta l-ma de things

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 Diagram 1. The souvenir market.

Clients
Of course, our products will not be very cheap. Venetian glass itself is quite
expensive (though it depends on the size of a thing and on work done on it).
But prices are going to vary, from relatively cheap to extremely expensive,
for many people can afford these products. Hence, our target market will be
the middle and upper classes. For our merchandise to be available to more
people, the shop will be situated downtown. Somewhere on Krasniy Prospect,
Sovetskaya St., Vokzalnaya Magistral or Lenin St. would be the optimal
location. Probably the best place would be on Krasniy Prospect in the area
between Lenin Square and Krasniy Prospect metro stations.

Selling season
Obviously, the shop will have a consumption peak period on the eve of
holidays such as Saint Valentine's Day, Woman's Day, Christmas Day, the
New Year's Day, etc. I think we will not sell much in the summer time,
because many people travel abroad or are on vacation out of the city. And
also there are not many holidays during the summer time. During this time
we will allocate additional advertisement on TV, in magazines, organize
lotteries and drawings.

12
 Problems and Opportunities

• There are a lot of different little shops and departments where

souvenirs and glass are sold. People may have no wish to go downtown
in order to visit our shop, but go to some local shop and buy something
cheaper. "Why should I go downtown to visit some new shop (and I
don't even know if there's something interesting there) if I can buy
good stuff not so far from my home?" they think. There is only way out
– broad advertising campaign. We must make people think they can
find everything they want in our shop. They should think our goods are
the best.
• During the consumption peak period it is possible that a client will
want to buy something (a ware he/she saw in the booklet or on the
site), but this particular type of thing might be out of stock. Thus we
will have to get extra supplies of goods before the holidays.
• This problem is a special one that concerns the features of our goods.
Glass and some other goods we are going to sell are very fragile. They
can be broken or scratched during transportation or being in the
warehouse. Thus we will have to insure our goods. Also we will use
special packages and boxes, which will prevent glass from damage.
People who will transport goods will assume the risk of damage and
will pay for any breakage.
• There are no suppliers of this kind of goods in Russia. Hence, we will
have to look for Italian suppliers. While we find them, this will give as
the opportunity not to set high prices because the historical cost of the
goods will not be very high – we will not have any mediators. If we
negotiate a long term contract with our suppliers, we will be provided
with a discount. Thus we will have the opportunity to reduce prices if it
will be necessary.

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 Objectives

To repeat, today situation in the souvenir market is as follows:

5%
10%
5%

80%

c la y c era mics gla ss

wooden-ma de things meta l-ma de things

Diagram 2. The souvenir market.

After one year of work we are going to have 5% of this market. After 3 years
we will have 20%of the market. After 6 years we will be the leader in the
market and our market share will be 40%.

8%
9%
3% 40%

40%

Venetian Lion c lay c eramic s

metal-made things w ooden-made things
glass

Diagram 3. The souvenir market.

Also another goal of ours will be to open one more shop on the left bank of
the river Ob. The best location will be somewhere on the Marx square and
along the Marx prospect. We are going to open this shop 3 years after the
opening of the main shop in the center of the city.

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 Marketing Strategy and Tactics

According to the budget we are going to spend 500 000 roubles on

marketing. This will include several items:
• The most important item in our advertising campaign will be the
following. There are quite a few shops and boutiques in our city, which
sell Italian goods, such as clothes, perfumes, furniture, household
articles and other accessories. My idea is to publish one united booklet
relating to all Italian goods, which are sold in our city. Thus if a person
buys, for example, Italian furniture, he/she can also look for some other
Italian goods to match with what he/she has already bought. The
booklet is going to be colored, printed on high-quality paper. It will
have separate sections dedicated to various Italian goods. Copies of
this united advertising booklet will be in all shops represented in it. A
copy will be a bonus with every purchase. Also it will be given for free
to anyone who wishes. Hence our shop will be advertised in every
place where Italian goods are sold.
• As a continuation of the idea of the booklet, we are going to make a
web-site. In it customers will find the same information as in the
booklet. The site will provide an additional service: the opportunity to
order and/or buy goods online.
• During the first five months after our shop is open we are going to
work out a special broad marketing campaign. This will include:
 intensive advertising on TV and radio;
 discounts for those who buy goods of more than 700 roubles wroth;
 monthly lotteries and drawings for our customers. Everybody who
buys anything gets a lottery-ticket and then at the end of the month
the lottery will take place. Prices will not be very expensive, rather
of little value. Drawing of more expensive prices will take place
every month also;
 special discounts on weekends;
 special prices for the first 10 customers;
 after 5 months of work a 7-day vacation to Italy will be drawn
among all customers.

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Other major advertising campaign will be as follows.
• Advertisement on TV programs. On the city local TV there are several
programs that make report about various shops, boutiques in our city
and goods they can offer. Among them are fancy, luxurious and
fashionable furniture, clothes, commodities and household goods. The
names of these programs are "Dorogoye Udovolstvie" ("Expensive
Pleasure"), "Udachnaya Pokupka" ("Successful purchase") and some
others. With their service we can make a very good detailed report
about our shop. And this will have a good effect on many people,
especially well-to-do women, watch such programs.
• Advertisement in local newspapers. As in the case with TV programs,
we will advertise or even publish a whole article in special advertising
newspapers, which are free and delivered to apartments. One of them
is "Kupecheskaya" ("For Merchants"), the informational-advertising
newspaper. It is delivered to the apartments of well-to-do people in the
city center.
• Several billboards will be located downtown and along main city
streets and prospects.

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 Budget
The budget of the business will be as follows.
Table 1. Budget, roubles.

ASSETS DEBIT

Item Sum Item Sum

Capital Investments 2 370 000 Rent 100 000

Equipment 200 000

Decorating expenses 250 000

Building 50 000

Cost of goods 1 000 000

Salaries 70 000

Cost of transportation 50 000

Advertising 500 000

Administrative expenses 50 000

Overhead expenses 50 000

Combustive-lubricating 50 000
materials
Total 2 370 000 Total 2 370 000

Thus the total necessary capital investment is 2,370,000 roubles. According

to our forecast we will breakeven after 1.5 years of work. After that we will
work on opening another shop on the left bank of the Ob. It will not require
extra investments thus we will use our operating profit.

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