OPEN UNIVERSITY MALAYSIA

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1 OPEN UNIVERSITY MALAYSIA Student ID : CGSSO Student Name : ABDIHAKIM OMAR HALANE Course Code : BMET5103 Course Name : ENTERPRENEURESHIP Program : MBA Semester : FOUR Assignment : BUSINESS PLAN Facilitator : PROF:ALI YASIN SHIEKH ALI Date due : 10 Sep 2015 Submission Date : 10 Sep 2015

2 Table of Contents Page 1) Executive Summary 2) Company Description Products and services Long Term goals Milestones S.W.O.T. Analysis 3) Market Analysis Market trends Competitor analysis 4) Marketing/Sales Strategy Marketing strategy Pricing Advertising and Promotion 5) Staffing and Operations Operations Staffing 6) Financial Projections Profit and Loss Accounts Cash flow Projections Balance sheet

3 1.0 Executive Summary Somalia lacks a real poultry production businesses and most consumers use imported Chicken meat. Most of the time the sellers face immense challenges to get fresh products, some walking more than four Kilometers to access the market for eggs or meat. Having no other competitors or little competitors in this industry, Shabelle Poultry production (SPP) will be placed as a Monopoly market; it will therefore strive to offer its consumers best quality at competitive prices for the poultry products to keep at the top of the market. The Company will be Capital intensive as it will use more capital per unit of output rather than use of more labor per unit of output. Somalia, economic infrastructure has not been functional due to years of conflict and communities struggle to meet their market supply and demand for many commodities. Many consumers import goods to fill these needs gap. SPP has undertaken a market survey and realized the need for fresh chicken eggs and Meat. The immediate target consumers will be general population, restaurants, hotels, schools, local shops and individual consumers. Somalia market has demand for locally processed daily products that are cheaper and affordable. SPP understands the risk of poultry farming and will put in place measures to address potential risks in this venture. Having trained human resource and ready market SPP is assured of high cash inflows in the first year of investment and expects the business to payback in the second year of investment. 2.0 Company Description According to Abdullahi(2015) Shabelle Poultry productions LTD established in 2013, it will be one of the leading business companies in Somalia. It is a professionally private managed company that is committed to providing quality products and services with strong emphasis on ethics, quality and professional works, on schedule and cost control. Since its inception, SPP is endowed with the latest technological equipment in the poultry production industry. Having undertaken a market research SPP has identified a gap in poultry fresh products including: Eggs and Meat and is ready to fill this gap. SPP is now engaging in manufacturing companies

4 including dairy fresh products and livestock and farming in Somalia targeting the general population. Vision To be the leading company in producing nutritious meat and eggs, generate employment and create wealth for stockholders Mission To meet the market need of supply and demand by providing competitive products and to build a mechanized poultry that is efficient and rewarding to Somalia population. Quality statement Shabelle Poultry productions ltd is committed to ensure that the quality of services meet the international and local standards in providing poultry products and related services.in order to insure quality standards biosecurity measure will be put in place to prevent disease outbreak. Every vehicle coming into the facility will also pass through a bath and get sprayed. All quality control standards will be adhered to strictly so as to produce a world class standard. Animals and materials will be kept away from the poultry areas. On the other hand, biosecurity training will be mandatory given to the employees and every other attendant (Abdullahi,2015) Milestones: So far the company has been able to implement many projects including bee keeping, hospitality and hotels. Today, poultry business is in to move another Somalia milestone, lack of production of fresh poultry meat and eggs, SPP is committed to realizing this market demand through implementing this project and there are ready ground set for the project to kick, SPP having already invested in 50 hectares of land for this and other projects in future. There are existing challenges in Somalia because for many years Somalia has been unstable politically, but still business thrive in the same context though not at the expected rate, but this is changing now with many investors flocking in Somalia. SPP will work with local experts who understand the contexts and will be able to drive the project to success.

5 SPP is seeking financing to implement the poultry business to fill in for this market demand by Somalia consumers. Since SPP is also in other business, this business has a base as some of the existing assets will be share with the poultry as well. After receiving the finances SPP has the ability to maintain the factory to profitability level. Long term strategies: In the long term, SPP expects to solve the challenges of shortage of Poultry products in Somalia, which will also reduce over reliance of imported food products. In this way the consumers will be able to access cheaper products at their door steps. Also SPP will ensure communities are empowered to provide quality raw materials to our site encourage them to increase our cooperation and will be provided with training once every year (Abdullahi, 2015) Products & services The company produces the following poultry products for the local consumption; Poultry which are large domestic fowl (e.g. hens, ducks, geese, turkey) reared for meat or egg. This proposal envisages the establishment of a farm for the rearing of poultry with raising capacity of 200,000 heads of poultry per annum. Poultry meat and eggs have become the most important sources of protein in the human diet by using it directly or after passing through food processing industries. The major inputs and auxiliary raw materials required are day old chickens, commercial formula feed, and high quality vaccines which have to be imported (Abdullahi, 2015) Day old chicken is bought for rearing in the envisaged plant by feeding well balanced feed in disease controlled and hygienic shed for about six month and then marketed at this stage. The major consumers of the product of the envisaged plant will be hotels, restaurants, supermarkets, various institutions with food catering services, and households (Abdullahi,2015) SWOT ANALYSIS FOR SHABELLE POULTRY PRODUCTS Internal Strength STRENGTHS Small competitors in South and Central Somalia Weaknesses WEAKNESSES Somalia lacks experts and

6 External Available local employees There is ready market for the poultry Products. OPPORTUNITIES SPP has a chance for a growing market demand There are local experts who has the ability to train employees There are no strict government rules and measures that restrict the business operation. therefore training will be needed There are no modern equipment and therefore they will be imported There is weak research and development department THREATS General Insecurity in Somalia Shortage of the eggs and meat in the market Government regulations may be forced in future times 3.0 MARKET ANALYSIS Poultry products such as egg and poultry meat are the central diets of Somali s. Moreover, eggs as they are easy to prepare and digest, have good test and nutrient are becoming the favored breakfast items in urban areas like Mogadishu. Accordingly, due to the traditional consumption habit and as the awareness of the population on the nutritional and other advantages of poultry products increases the market for the products is also expected to expand. Most of the chickens and egg that are supplied to the City s market come from other rural areas (Abdullahi,2015) The demand for poultry meat is mainly influenced by population growth and income rise. Accordingly, the rapidly increasing population of the city will augment the demand for poultry products such as egg and poultry meat. With increasing income or purchasing power, people demand more diversified food products like poultry products (Abdullahi, 2015)

7 Therefore, the level of poultry products consumption has a strong association with the growth of income. One of the indicators that measure the economic performance of a country and the well being of the population is GDP. The positive performance of the Somalia s economy is expected to continue in the future. As a result, the market for poultry products may also be expected to increase as economic expansion lead to a raise in the income level of the population (Abdullahi, 2015) The envisaged farm, as a new entrant into the market, has to penetrate the market and create awareness and product loyalty first. Therefore, the objective of the pricing policy should be to gain a foot hold in the market, get a sizable market share and attempt to sustain a reasonable profitability, which at the initial stage, could only be achieved through charging of lower prices that could influence users of the product (Abdullahi, 2015) Accordingly, by taking the price of live chicken in to consideration $ 20 per kg of poultry meat or 40 per head is proposed for the envisaged plant. The product can be sold directly to bulk buyers. For individual buyers existing outlets such as super markets and specialized food items department stores can be used. Competitor analysis According to Abdullahi(2015) Although an indirect competition exists, small poultry Companies do compete for the same corporation business sectors. These competitors include as follow. Direct Competition There are several poultry companies, which provide the same products and services, the availability of these companies in the countries have direct influence in our activities. These direct competitors are those who import poultry meat and eggs from far abroad. And they are faced by enormous challenges including losing money when the products go bad due to lack of preservatives. The other competitors are those who import the product from neighboring companies to sell in the restaurants, hotels and institutions. SPP will have an advantage over the importers as they will be able to sell at competitive prices as they process the product locally.

8 The market share of the imported poultry products is minimal and also it is not affordable to the general population who are the higher consumers. 4.0 MARKETING STRATEGY We have set the following marketing strategies to enhance our competitiveness; The company aims to provide modern processing unit in order to produce wide range of poultry products To satisfy local demand for chicken meat and Eggs The company focuses on sales and enhances the production of poultry meat in the industry We aim to provide hygiene and safe working environment To work with a specialist in the industry for quality assurance To heavily invest in facilities and equipment for poultry production Committed to maintaining good communication with its shareholders Setting strategic sales plan to enhance our strategic positioning Pricing and Promotion Strategy In social marketing, price refers to the mental, social, and financial costs so as to consumers exchange for product profit. The goal of the pricing strategy is to identify the costs or barriers to the recommended our business practices only when it has not rained and recommend ways to respond to those barriers and create the practices more acceptable (Abdullahi,2015) The promotional strategy includes guidelines for designing effective, attention-getting messages, selecting appropriate information channels, and identifying promotional activities to promote change including: advertising, public relations, policy changes, public information, special events, and community-based activities to bring about the desired changes (Abdullahi, 2015)

9 Advertisements: Shabelle poultry production will use a multi-pronged advertising campaign to generate visibility. SPP advertises through radios, websites, and boards. Sales Promotion: The company Company uses many types of sales promotions such as discounts to our customers, free shipping to some customers who buy a great amount of our products and services, also SPP uses promotional products such as calendars at the beginning of the new year. SPP enhances sales promotion programs at the end of the year Public relations: The Company has a public relation policy which is applied by using several tools such as speeches to the public by using media such as radios and televisions. Also SPP uses written materials such as brochures. Public relation tools used by the company also includes valuable thing which is contributing money and time to public service activities. Direct marketing: SPP company uses many forms of direct marketing techniques, and the most direct marketing technique used by the company is telephone marketing. As we are the company we write full information including telephone numbers of our customers in our customer list book, then when we desire to make direct marketing we call our customers. Website: Shabelle poultry production is planning to establish a new website that will serve SPP customers as soon as possible. The development of the website will include a current catalog of their offerings. This will be the most up-to-date source of service information and availability.

10 5.0 OPERATIONS Farm Capacity The proposed annual capacity of the poultry farm by considering the market study and minimum economies of scale is rearing 2,000 heads. The production capacity is determined based on 300 days per year operation of the farm. The farm will operate at 70% and 85% of its rated capacity in the first and second year. Full production capacity will be achieved in the third year and then after. The principal farm inputs required are chicken for breeding, poultry feed, and medicines (Abdullahi, 2015) Chickens and poultry feed required by the plant can be acquired locally. The annual requirement for farm inputs and the corresponding cost at 100% capacity utilization. The major utilities required are: water for feeding chickens and general purpose, electric power for lighting and heating. The table below gives the utilities and their quantity; (Abdullahi, 2015) Production Process Chicken production is typically carried out at so-called complexes. Each complex contains a feed mill, a hatchery, a processing plant, and chicken farms where the chicks are raised, usually in a mi ( km) radius from the processing plant. But the envisaged farm starts from the day old chicken from the hatchery and grows them for about six month and sells them (Abdullahi, 2015) The chicks live in large houses which hold as many as 20,000 birds. These grow-out houses are kept at about 85 F (29.4 C) through heating and ventilation controls. The birds are not caged, and typically they are provided with approximately 0.8 sq ft per bird.

11 The floor of the house is covered with a dry bedding material such as wood chips, rice hulls, or peanut shells. The birds are fed a diet of chicken feed, which is typically 70% corn, 20% soy, and 10% other ingredients such as vitamins and minerals (Abdullahi, 2015) When the chickens are old enough for slaughter, they are collected and shipped to the processing plant. Sick chickens are treated with antibiotics or other medications. These chickens then go through a withdrawal period before slaughter, to make sure no medication residue remains in their meat. The chickens are usually watered through nipple drinkers, so that they don't spill and wet their bedding (Abdullahi, 2015) A significant waste produced in chicken farming is the feces of the birds. Because the flocks are so large, with 100,000 chickens per batch typical for a broiler growing-out farm, the amount of faces is enormous. So these feces has to be collected and used for fertilizer or bio gas generation for own energy source. By doing so, the environmental effect will be controlled (Abdullahi,2015) The poultry rearing technology is simple and does not require any special training. The supervisors, laborers and veterinary doctor needs a one week orientation in one of the poultry rearing farms operating in the country. The cost of such training is estimated at $ 5,000. In order to meet the training needs, it is proposed that training is offered in three broad categories: Technical training- specific to the project such as poultry management and monitoring strategies of poultry projects. Develop a training strategy that

12 identifies and prioritizes training needs; Prepare monthly work-plans and budgets for training based on the projects objectives. Management skills training related to general Poultry management such as financial tracking, communications, feasibility planning and accounting. Professional development formal or non formal training that facilitates poultry keeping expertise. Conduct a training needs assessment. Staffing The Company will recruit locally for quality produce; international technology will be borrowed and transferred to the locals through training that will be conducted in Mogadishu Somalia. After this training the workers will be equipped with the skills to safeguard, care, and cure the chickens and even market the product to the market. Sustained efforts will be made to hire local people in non-technical jobs as a way of involving the Somalia community in the poultry (Abdullahi, 2015) 6.0 FINANCIAL PROJECTIONS PROJECTED PROFIT AND LOSS Sales First year Production cost & Expenses Net profit or net loss $ ,000 4,540 Second year 376, , ,310 Third year 485, ,430 26,5025

13 First year Second year Third year Cash inflow 204, , ,455 Cash outflow 224, , ,400 Net Cash flow (20,500) 22,000 63,055 Projected balance sheet First year Assets Liability & Capital Net worth 77,500 77, Second year 102,50 102,500 50,000 Third year 115,00 115,000 49,014 Risk related factors Our businesses involve a high degree of risk. We will consider carefully the risks and uncertainties described below and the other information included in this plan. The risks and uncertainties we believe are most important for us to consider, we will know that they are not the only risks or uncertainties facing the business or which may adversely affect the business. The equipment upgrade, refurbishment and construction projects are subject to risks and uncertainties, including delays, cost overruns, and security issues

14 which could have an adverse impact on our results of operations and cash flows Abdullahi(2015) 1.8 Some of the major challenges the business will face incude 1. Shortages of equipment or skilled labor; 2. Unforeseen hygiene problems; 3. Unanticipated change orders; 4. Work stoppages by different authority groups 5. Adverse weather conditions; 6. Unforeseen increases in the cost of equipment, labor or raw materials, 7. Financial or other difficulties with current customers 8. Lack of ability to obtain the required permits or approvals,

15 REFFERENCE Abbdullahi, M. (2015, Augst 10). Managing Director. (Interview)

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