Introduction
The electronic money and electronic ticketing industry has become ingrained with the emergence of globalization and the demand of a fast paced lifestyle that the modern individual possesses. The discussions of the paper offer a new innovation for the Malaysian market. This paper deals with McDonalds, a number one food chain that will introduce a new line of e-card or electronic ticketing that allows food lovers and consumers buy their favorite burgers and other products of McDonalds. The new e-card especially made for McDonalds will be known as “McDonald’s e-Card”.
The introduction of a new line of e-card or electronic ticketing allows for alternatives among the food chain lovers and consumers in Malaysia. As it stands, it appears that McDonalds with their “McDonalds’ e-Card” shall have to work doubly hard on its marketing strategy in order to effectively introduce and ingrain the company name in the popular culture of the company. The new service of McDonalds will be the “McDonalds’ e-cards” that deals in ease of payment not only for McDonalds establishments but also to the use of the public transportation, shopping market, other food establishments and convenient stores of Malaysia. The company will compete to other electronic money businesses like VISA, smart cards and master cards. Billboard, website, e-commerce and TV advertising are the essentials of marketing of “McDonalds’ e-cards”.
Basically, through the help of excellent management team, staff and key personnel, the business could go far as compared to other leading smart cards or e-cards in Malaysia. With their expressive start-up capital and promising business goal, McDonalds could possibly become successful as other electronic money market business.
The Business Products and Services
The main service/product is “McDonald’s e-cards” that deals in ease of payment to the use of the public transportation, shopping market, food establishments and convenient stores of Malaysia. The target market would be individuals and families. Actually, McDonalds will offer now a wide range of payment services not only for their food products but also to transportation, shopping markets, gasoline stations, etc. Basically, the product is an e-card which is easy to use, safe and with high quality. With regards to its price, it is to be offered fair and reasonable. And it should have numerous outlets to be located at transportation stations, food establishments, supermarkets, gasoline stations and shopping malls. Moreover, there would be a 24-hr customer help available through phone and internet. McDonalds actually plans to develop innovation, respect, and good relationships to the community.
Company Mission: “Maximize the company’s resources to satisfy customers and provide ease of payment in different business establishment in Malaysia”
Marketing Plan
When it comes to the buying preferences of consumers in online money market, a major new business study reveals that what keeps the consumer buying a particular brand has less to do with pricing and manufacturing or merchandising than with how well the company treats its customers (Kara, 1998). Tendency of the consumers is to buy or purchase goods and services which are cost-wise and valuable. Consumers are more likely to know all the information of the products before they would buy it (Leong, 1993). Thus, the decision process as one of the elements of consumer behavior is influenced by the information available to the consumer and the way in which the consumer processes that information. With this regard, marketing efforts of McDonalds is essential to make consumers be aware of the products or services that the company is selling.
For more than four decades, advertising and marketing researchers have been intrigued by the symbolic properties of products (Umiker-Sebeok, 1987). During that period, it has become increasingly clear that the consumption of any product is richly embroidered by the symbolism of the practices, rituals, and texts surrounding it and, further, that the connotation and meanings associated with products/services are crucial to understanding their exchange value in the marketplace and the way the consumer behaves and perceived the products and services (Hirschman, Scott & Wells, 1998).
In the emergence of the new market and the lack of such a company owning that particular niche in Malaysia, this presents itself as an opportunity for business to establish a specific type of electronic money business that will serve wide range of payment services in different establishment. For this paper, it is proposed to introduce a new McDonalds’ e-Card that is possible to use in other type of business establishments. This will give the public a new alternative within the electronic ticketing and e-money services in Malaysia. Aside from that, ease of payment in not only in public transportation but also to different establishment like food, super markets, movies, grocery stores. This card is unique compared to other e-cards because its universal use.
- Customer Profiles
Primarily, the context of the market segmentation for this company will be the Psychographics. Psychographics includes social class, lifestyle, and personality variables that determines the customer profile (Chiagouris & Kahle, 1997). The profile of customer would be those that use the public transportation, shopping market, food establishments and convenient stores of Malaysia. The customers would be individuals and families. Actually, McDonalds will offer now a wide range of payment services not only for transportation but also to other establishments such food chains, shopping markets, gasoline stations, etc. Basically, the product is an e-card which is easy to use, safe and with high quality.
- Competitive Advantage
As part of the competitive advantage of McDonalds, they will offer a wide range of payment services not only for food products but also to transportation, other establishments such food chains, shopping markets, gasoline stations, etc. The product McDonalds e-Card will be easy to use, safe and with high quality.
· Advertising and Promotional Activities
Designing attractive brochure is very important. The first step we contact with customers is introducing our brochure to them which include all information about the new McDonalds e-card product/service and all of our available products. The brochure has to print in high quality paper which will represent the whole company’s image. In McDonalds’ e-card product/service brochure, information about the company and its mission will be printed in the main page. Moreover, several papers which contain information about each product. Furthermore, the website will be involving all the information about McDonalds e-card product/service. Customers can submit question to us and receive the answer in the fastest time. The McDonalds e-card product/service will also initiate billboard and Television advertising.
· Pricing Method
With regards to its price, it is to be offered fair and reasonable. The company will only charge 1% of the amount of money that the customer loaded to their McDonalds e-card product/service. And it is expected to have numerous outlets to be located at transportation stations, food establishments, supermarkets, gasoline stations and shopping malls. Moreover, there would be a 24-hr customer help available through phone and internet. The company actually plans to develop innovation, respect, and good relationships to the community.
· Distribution Method
The distribution of Cards will be through different outlets that can be found in different supermarkets, transportation terminals, convenient stores and other business establishments.
Financial Plan
In this part of the paper, it will detail the information regarding the current financial status and projected revenues of McDonald’s e-card product/service.
Current Financial Status
Currently, McDonald’s e-card product/service has the capability to operate in the current market. The current financial status of the company is appropriate to sustain their business operation. Thus, no other financials is needed. See Statement of Assets and Liabilities on Appendix B. From the statement of assets and liabilities, McDonalds has total assets of $1,111,096 which enough to sustain the $62,296 liabilities. With respect to the expected cash flow and current assets and liabilities McDonald’s e-card product/service projected the possible earnings in 3-year time.
Projected
YEAR 1
YEAR 2
YEAR 3
Total Revenue
$ 5,736,000
$ 21,107,000
$ 34,242,000
Projected Financials
With respect to the business plan, financial capabilities and business operation, the projected statement of operations was shown in Appendix C. In this part of the financial report, the breakdowns of operations including the expenses, the projected revenues and development costs by McDonalds in 3 years of operation are computed in detail. As shown in Appendix C, the total cost of cards to be sold in 3 years time is $12,049,000. In addition, it is also computed that the total cost for site development in 3 years time will $319,000. And since McDonalds will be dealing to automated transactions, computers are essential. With this regard, it is projected that in 3 years time, McDonalds will be spending $69, 000 for both computer hardware and software.
Projected Balance Sheet
In 3-year period of operation, the projected balance sheet of McDonald’s e-card product/service is presented in Appendix D. Based on this presentation, the lists of current assets such as cash, accounts receivable, and inventory are shown. Aside from these liabilities such as accounts payable and income tax payable will be also shown. And from the presentation, it indicates that within 3 years of operation. McDonald’s e-card product/service can still sustains its liabilities since the projected total assets would be $31,149,000.
Projected Statement of Cash Flow
In 3-year period of operation, the projected statement of cash flow of McDonald’s e-card product/service is presented in Appendix E. Actually, this statement reflects to the money coming in and out to the company. The statement illustrates how changes in balance sheet and income accounts affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. And from this presentation it shows that the total cash-operating activities after 3 years of operation would be $7,986,583. This value excludes the projected cash flow from financial activities. However, the computed cash at the end of the year after 3 years of operation is $26,739,000.
References
Chiagouris, L & Kahle, L (1997). Values, Lifestyles and Psychographics, Lawrence Erlbaum Associates: Mahwah, New Jersey.
Hirschman, E., Scott, L. & Wells, W. (1998). A model of product discourse: linking Consumer practice to cultural texts. Journal of Advertising, Vol. 27. p 1
Kara, C. (1998). New report finds how companies treat consumers is a major driver Of Brand loyalty and impacts future sales.25th annual meeting of the Society of Consumer Affairs Professionals in Business (SOCAP). pp 12-26
Leong, S.M. (1993). Consumer decision making for common, repeat-purchase Products: a dual replication, J. Consumer Psychology 2(2): 193-208
Lindenmann, W (1999). Measuring relationships is key to Successful public relations. Public Relations Quarterly, 43, (4) 18+.
Umiker-Sebeok, Jean, ed. (1987), Marketing and Semiotics, New York: Mouton de Gruyter. pp 18-20
Appendices
Appendix A. Gap Analysis
Business plans and strategies would be incomplete without paying much consideration to the customers. Customers will and should always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer acceptance is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today's ever increasing competitive environment (Lindenmann, 1999).
Businesses are developing and changing with regards to the needs of the people. The advent of new technologies and growth of e-cards, electronic money and e-payment are becoming necessities in the current era. The emergence of Electronic Money market and electronic ticketing in Malaysia are only of the innovations needed in the current era. And currently, smart cards, VISA, Master Cards and other credit cards show expressive contribution to various establishments in Malaysia. In this industry, there are major brand names that lead the market. As mentioned earlier, companies like smart cards, VISA, Master Cards and other credit cards are those that dominate the electronic money industry in Malaysia. These companies have successfully integrated their name in the everyday lives of the modern Malaysia. The use of their services would come naturally to these people as they are already a part of the daily routines of the public. Basically, this proposed business endeavor will deal in Electronic Money market and electronic ticketing not only for McDonalds establishments but also in linked establishments and transportations in Malaysia.
To complete this analysis, Ansoff Matrix was also done to identify the causes of service quality shortfalls in each or all of the dimensions. Customers build an expectation of the service to be received depending on four factors: word of mouth communications (obtained from friends and acquaintances); personal needs; past experience; and, communications put out by the service company. The Ansoff Growth matrix provides a more detail explanation of future growth anticipation in particular highlighting the areas the business which to grow into and areas that the business does not.
Existing Products
Product Development
Existing Markets
Market Penetration-Winning competitor’s customers by targeting the general public.
Product Development-Offering greater choice to customers, such as McDonalds e-card in line with customer demands and market research on buying behaviors.
New Markets
Market Development- Growth via location diversification and promotion of existing products via opening new outlets on various locations in Malaysia
Diversification- Currently not envisaged by the business as this area moves away from core competencies of the business.
Summary of Projections and Accounting
Note I. Basis of Accounting
The assumptions and projections in the Statements of Operations, Balance Sheets and Statements of Cash Flows reflect management’s research for McDonalds e-card product/service. Therefore, these financial projections for the three years stated are projecting the Company obtain sufficient capital to support the revenue levels. This is a new business endeavor in which management cannot guarantee that all projections will be achieved. The levels of accuracy might differ even if capital and revenue projects are at obtainable levels.
This business plan has been prepared for the assistance of potential investors and does not contain any offering of securities in McDonalds e-card product/service.
Note II. Accounting
The financial projections are based on the accrual method of accounting. Management has inserted a contingency of 1.5% to allow for non-collectible revenue.
Appendix B
Statement of Assets and Liabilities
MCDONALDS
STATEMENT OF ASSETS
INCOME TAX BASIS
AS OF
March 28, 2011
ASSETS
Current Assets
Cash
$ 845,306
Total Current Assets
$ 845,306
Property and Equipment
Furniture and Fixtures
4,140
Machinery and Equipment
10,156
14,296
Less: Accumulated Depreciation
1,229
Net Property and Equipment
13,067
Other Assets
Investments
251,000
Prepaid Taxes
1,117
Intangible Assets – Net
606
Total Other Assets
252,723
Total Assets
$1,111,096
MCDONALDS
STATEMENT OF LIABILITY
INCOME TAX BASIS
AS OF
MARCH 28, 2011
LIABILITIES
Current Liabilities
Payroll Taxes Payable
$ 5,451
Sales Tax Payable
14,770
Total Current Liabilities
$ 20,221
Long-Term Liabilities
Excess of Fair Value Over Cost of Asset
43,154
Less: Accumulated Amortization
(1,079)
Total Long-Term Liabilities
42,075
Total Liabilities
62,296
Appendix C
Projected Statement of Operations
PROJECTED STATEMENTS OF OPERATIONS
3 YEARS OF OPERATION
YEAR 1
YEAR 2
YEAR 3
REVENUE
Total Revenue
$ 5,736,000
$ 21,107,000
$ 34,242,000
COST OF CARDS SOLD
E Commerce
$ 2,582,000
$ 8,032,000
$ 12,049,000
Total Cost of CARDS Sold
$ 2,582,000
$ 8,032,000
$ 12,049,000
DEVELOPMENT COSTS
Financial
$ 38,000
$ 24,000
$ 27,000
Investment Challenge
11,000
2,000
3,000
Index
126,000
4,000
4,000
New Development
0
30,000
30,000
Auctions
76,000
22,000
22,000
Leisure
34,000
19,000
19,000
Sports
31,000
19,000
19,000
Entertainment
29,000
19,000
19,000
AV Web Productions
166,000
32,000
32,000
Travel
46,000
27,000
27,000
Shopping
63,000
30,000
30,000
Licenses
63,000
83,000
87,000
Total Site Development
$ 683,000
$ 311,000
$ 319,000
COMPUTER EXPENSES
Computer Hardware
$ 26,000
$ 30,000
$ 33,000
Computer Software
30,000
33,000
36,000
AV Server & prod
175,000
68,000
74,000
Total Computer Expenses
$ 231,000
$ 131,000
$ 143,000
GENERAL & ADMINISTRATIVE EXPENSES
Salaries & Wages
$ 1,520,000
$ 1,824,000
$ 2,189,000
Payroll Taxes
152,000
182,000
219,000
Employee Benefits
132,000
157,000
190,000
Insurance
14,000
17,000
20,000
Professional Fees
80,000
88,000
97,000
Occupancy & Rent
59,000
59,000
59,000
Office Supplies
14,000
15,000
16,000
Repairs & Maintenance
4,000
5,000
6,000
Telephone
29,000
32,000
36,000
Postal
20,000
40,000
60,000
Travel
12,000
18,000
24,000
Entertainment
5,000
12,000
18,000
Amortization& Depreciation
6,000
8,000
10,000
Non Collectable
82,000
317,000
513,000
Miscellaneous
3,000
6,000
10,000
Total General & Administrative Expenses
$ 2,132,000
$ 2,780,000
$ 3,467,000
MARKETING & SELLING EXPENSES
Media Package
$ 20,000
$ 25,000
$ 30,000
Public Relations
75,000
85,000
95,000
Online Advertising
775,000
852,000
937,000
Radio, TV
575,000
632,000
695,000
Non Traditional Advertising
180,000
198,000
218,000
Trade Shows
45,000
49,000
54,000
Online Media Commissions
55,000
61,000
67,000
Other Marketing & Selling
5,000
8,000
11,000
Total Marketing & Selling Expenses
$ 1,730,000
$ 1,910,000
$ 2,107,000
Net Income (Loss) Before Taxes
$ (1,622,000)
$ 7,829,000
$ 16,039,000
Net Income (Loss) After Taxes
$ (1,623,000)
$ 5,222,000
$ 9,323,000
Appendix D
Projected Balance Sheet
PROJECTED BALANCE SHEET
3 YEARS OF OPERATION
YEAR 1
YEAR 2
YEAR 3
ASSETS
Cash
$ 14,185,000
$ 18,753,000
$ 26,739,000
Accounts Receivable
$ 478,000
$ 1,759,000
$ 2,853,000
Assets
$ 25,000
$ 40,000
$ 60,000
Deferred Costs
$ 613,000
$ 1,097,000
$ 1,507,000
Accum. Depreciation
$ (6,000)
$ (8,000)
$ (10,000)
Accum. Amortization
Total Assets
$ 15,295,000
$ 21,641,000
$ 31,149,000
LIABILITIES
Accounts Payable
$ 613,000
$ 1,097,000
$ 1,507,083
Income Tax Payable
$ (1,623,000)
$ 2,607,000
$ 6,716,000
Total Liabilities
$ 613,000
$ 3,704,000
$ 8,223,083
SHAREHOLDERS EQUITY
Common Stock
$ 16,405,000
$ 16,405,000
$ 16,405,000
Total Liabilities & Shareholders' Equity
$ 14,682,000
$ 17,937,000
$ 22,926,000
Appendix E
Projected Statement of Cash flow
PROJECTED STATEMENTS OF CASH FLOW
3 YEARS OF OPERATION
YEAR 1
YEAR 2
YEAR 3
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss)
$ (1,623,000)
$ 5,222,000
$ 9,323,000
Amortization & Depreciation
$ 6,000
$ 8,000
$ 10,000
Accounts Receivable
$ (478,000)
$ (1,759,000)
$ (2,853,500)
Accounts Payable
$ 613,000
$ 1,097,000
$ 1,507,083
TOTAL CASH-OPERATING ACTIVITIES
$ (1,482,000)
$ 4,568,000
$ 7,986,583
CASHFLOW FOR FINANCING ACTIVITIES
Proceeds of Private Placement Rule 506
$ 4,500,000
$ -
$ -
Underwriting
$ 10,000,000
$ -
$ -
Total Cash from Financing
$ 14,500,000
$ -
$ -
Cash at Start of Year
$ 1,167,000
$ 14,185,000
$ 18,753,000
Cash at End of Year
$ 14,185,000
$ 18,753,000
$ 26,739,000
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