The Resurgence of Tourism Business in Croatia

Introduction

Background

Croatia is an exciting tourist destination in Europe. In the past, Lonely Planet has named the country among the top tourist destinations in the world (IBP, Inc., 2015). National Geographic Adventure Magazine has given the same ranking for the country in its 2006 report of the best holiday destinations in Europe (George, 2013). Statistics from 2014 reveal that the country receives more than 14 million tourists annually (Eurostat, 2015).

The tourist numbers have been increasing steadily after the end of the 2007/2008 global financial crisis (The Croatia Tourism Cluster, 2013). The Croatian government expects to double the number of tourists in 2020 and increase the revenue generated from the sector to more than $18 billion annually (IBP, Inc., 2015). Authorities in the country’s tourism sector have registered eight regions as protected national parks where tourists would like to visit (George, 2013).

Istria, Kvarner & Highlands, Dalmatia, Šibenik, Dubrovnik, Central Croatia, Slavonia, and Zagreb are the main tourist regions in Croatia. Croatia also has seven world heritage sites that tourists come to visit. They include Stari Grad Plain, Cathedral of Saint James, the historic city of Trogir, Episcopal Complex of the Euphrasian Basilica, Old City of Dubrovnik, Historical Complex of Split, and Plitvice Lakes National Park.

Most of the activities that go on in these regions revolve around enjoying outdoor activities. For example, many tourists who visit such regions like to participate in diving activities, hiking, biking, and similar ventures (The Croatia Tourism Cluster, 2013). However, beach activities are the most commonly preferred recreational ventures for foreign tourists. Companies, which own yachts and operate along the country’s coastline, provide such services.

Comprehensively, the resurgence of tourism business in Croatia has led many experts and observers to argue that the country is experiencing a renewal of the sector as a vibrant economic hub of the Eastern European nation (The Croatia Tourism Cluster, 2013; Eurostat, 2015; IBP, Inc., 2015).

Selection of a Scenario

According to The Staff of Entrepreneur Media, Inc. (2015), many business development plans have emerged from different scenarios that include a new company start-up (by an entrepreneur), establishment of a new company (as an existing company owner), establishment of a new company in an employment organisation, and the establishment of a non-profit organisation. This business plan is for the establishment of a new company, with the business promoter as the entrepreneur. The motivation for choosing this type of business start-up is to apply the promoter’s knowledge on entrepreneurship and business market analysis to a real business.

The Business Opportunity

Rationale behind the Business Idea

As mentioned in this report, Croatia has recently been posting positive results in its tourism performance. The country has many tourism products that people from different parts of the world come to enjoy (The Croatia Tourism Cluster, 2013). However, for several reasons, the industry’s stakeholders have not fully exploited the country’s tourism potential (George, 2013). The proposed business owner, having come from Croatia, has extensive knowledge of the country and its tourism potential. Furthermore, he has existing links with business contacts in Croatia who could provide attractive tourist products and services to foreign tourists.

Therefore, besides exposing tourists to conventional tourism products, such as cruises and national park visits, which have always characterised the Croatian tourism experience, the business owner could expose new tourists to other activities in the countryside, which will appear in later sections of this report. Having an operational base in London, the business owner could also exploit the growing number of people who want to visit Croatia from Britain (Elton, 2016).

Target Market, Customer and Accessibility

The target market for Blue Lagoon will come from Britain as an attractive source of tourists. The target customers would be British nationals and foreign tourists who wish to travel to Croatia. The market is accessible.

Business Model

The business model would be a tour package deal for the customers. Stated differently, the customers would pay for a holiday package that includes transport, accommodation, meals and various outdoor activities that they would do when in Croatia (Cobb, 2011).

Structure of the Work

Collectively, this paper has five chapters. As seen above, the first chapter introduces the business idea, and sets the framework for its conception. The second chapter highlights the business opportunity and concept. Key sections of this chapter explain the company’s mission, vision and proposed services/products. The third chapter evaluates the feasibility of the business plan, considering the context of implementation and the prevalent industry dynamics. The fourth chapter analyses the strategies chosen for the execution of the business idea. It also contains information about the development of the business model. The last chapter provides an overview of the business plan by highlighting important information about it, such as the marketing plan, operational plan, and financial plan.

The Business Concept

The purpose of this chapter is to explain the business idea in detail.

Business Opportunity

The business opportunity that justifies the establishment of Blue Lagoon emerged from a market research, which happened by analysing the Croatian tourism market and the tourism potential of Britain, as an outbound tourism market. The market in the gap emerged from undertaking a market segmentation strategy through a review of secondary research information.

Business Concept

Business Idea

There is potential for a viable business for Blue Lagoon if British nationals and foreign tourists gain access to these markets (Lickorish, 2012; Eurostat, 2015). The promoter provides an opportunity for achieving this goal by developing holiday packages that would exploit this potential. This is the business idea.

Mission

Blue Lagoon would be a service-centred travel agency that offers unique and competitive tourism products that appeal to British nationals and foreign tourists.

Vision Statement

Blue Lagoon would become the leading British tour travel company that organises for holiday trips to Croatia.

Services

Blue Lagoon would offer three main products – Spirited Croatia, Real Food Adventure, and Jewels of Croatia. They appear below

• Spirited Croatia: The Spirited Croatia package would mostly be for the young and energetic people who enjoy outdoor activities, such as trekking, biking, and kayaking. This package would be available for young and middle-aged customers because Croatia is home to some of the world’s most amazing national parks, waterfalls, and mountains, which could host these activities (The Croatia Tourism Cluster, 2013; Eurostat, 2015; IBP, Inc., 2015). This package would include a seven-day stay at a villa, transport to the location, meals, and sightseeing.
• Real Food Adventure: The Real Food Adventure package would mostly appeal to an older audience. The package involves farm visits to rural parts of Makarska where the promoter comes from. Here customers would partake in different activities that include cherry picking, wine tasting, and potato digging. The visitors would also sample the local dishes served in the Croatian countryside. The Real Food Adventure package would include a seven-day stay at a villa, transport to the location, and meals.
• Jewels of Croatia: This holiday package is best suited for the younger customers because it involves exposing visitors to some of Croatia’s most exciting “jewels.” This package would mostly involve organising for cultural interactions between the visitors and residents of Croatia. In detail, the customers would visit historical city centres, such as Zadar and Split, which have a rich cultural background. The trip would include a seven-day stay at a villa, transport, and meals.

Positioning

Different companies have unique positioning strategies that hinge on different product attributes including pricing, demographics, distribution, and affinity (among others) (Possel, 2013; Sengupta, 2005). Blue Lagoon’s positioning strategy would hinge on affinity as a key product positioning strategy. Stated differently, the business owner would position the company’s products to appeal to people who have a strong spirit of adventure, and, at the same time, appreciate quality service.

Scale and Growth Anticipation

The anticipated sales growth for Blue lagoon hinges on the financial projections of the business revenue that appear in chapter three. However, a snapshot of the same appears in the graph below

According to the graph above, the business owner of Blue Lagoon expects that the company’s sales would rise by 15% each year (figures are in British pounds).

Business Model

The business model would be a packaged tour model. In other words, Blue Lagoon would offer holiday packages to its customers. As mentioned above, the holiday packages would include accommodation, travel and meals. Therefore, customers would be required to make a one-off payment and enjoy the trip.

Chapter 3: Feasibility

Market Research Methodology

Defining the Research problem

Problem Formulation

The tourism industry is a traditional economic sector that has thrived in different eras of human history (Tourism Alliance, 2016). In Croatia, and most parts of Eastern Europe, it remains a vibrant economic sector and a significant foreign exchange earner (The Croatia Tourism Cluster, 2013). However, the full potential of this sector, in Croatia, remains untapped because most people are not aware of the amazing tourist attractions the country has to offer.

Part of this problem rests in the failure of existing tour companies and travel agencies to highlight some of the country’s “hidden gems” because they mostly focus on providing traditional tourism products, such as hiking, biking, ship cruises, deep-sea diving and similar products (Visit Croatia Tour Operators, 2013; The Croatia Tourism Cluster 2013). Therefore, the hope of fully exploiting Croatia’s tourism potential rests in setting up enterprises that could holistically display and exploit what the country has to offer. This background outlines the basis for the formulation of this business proposal.

Aim of the Current Market Research

To identify a business opportunity in the Croatian tourism industry

Design of the Market Research

According to IBP USA (2012), there are different methods researchers could use to undertake business research. The main techniques include descriptive methods, exploratory methods, qualitative techniques, quantitative techniques, and casual research techniques (IBP USA, 2012).

Each technique suits unique research circumstances, or market conditions. For purposes of writing this proposal, the exploratory technique is the most appropriate technique to use because this research is exploratory in nature, in the sense that it identifies a gap in the market that the proposed business would fill using this proposed business plan as an execution tool.

For further analysis, the market segmentation method would be applicable in this paper to find out the specific target market that would use the services offered by the proposed business. Therefore, the exploratory research design would help to identify unsaturated areas in the Croatian market where other tour companies have not fully exploited. The identification of these areas would provide the impetus for the introduction of Blue Lagoon, as a viable business, to fill the market gap.

For purposes of finding the most accurate information about the market segmentation strategy, the proposed research would consider useful market informatics, such as the demographic profile of the target market, the geographic segmentation of the target market, behavioural segmentation of the target market, price segmentation of the target market, and the psychographic segmentation of the same. For purposes of understanding the potential for market segmentation, the business owner would consider the effects of important details surrounding the market entry strategy, such as the presence of oligopolies, monopolies, competition, rivalry, licensing laws, and similar factors.

Information types and sources required

For purposes of preparing this report, the business promoter would use secondary data sources, like books, journals, and government reports.

Proposed Methods of Data Analysis

For purposes of data analysis, we will use descriptive presentation techniques, such as graphs, tables, and flow charts, to explain different segments of the business proposal and its associated data.

Formulation of Findings

After completing the above market research, there would be a clear picture of the best marketing strategy to use when introducing Blue Lagoon to the British tourist market. Similarly, there would be a clear understanding of the kinds of services the business would offer and the best resource requirements for developing an effective marketing strategy (The Staff of Entrepreneur Media, Inc., 2015). These solutions would be tested for financial, organisational, and resource availability in the sections that follow

Market Research and Product Service

Feasibility

Before setting up Blue Lagoon, the business owner would carry out a market feasibility test to make sure the business plan works. The aim of undertaking the market feasibility study is to have a neutral point of view regarding the possibility of the business plan working, or not (The Staff of Entrepreneur Media, Inc., 2015). This section of the paper uses information from an analysis of the UK tourism industry, as a source market, and Croatia as a tourist destination market to find out the market opportunity that Blue Lagoon would exploit.

During the global recession that lasted from 2008 to 2012, the Croatian tourism industry suffered decreased tourism numbers because of a low demand for tourism products (IBP USA, 2012). However, throughout the years, there has been a slow and steady rise in the demand for the country’s tourism products (Visit Croatia Tour Operators, 2013; The Croatia Tourism Cluster 2013). In fact, as of 2012, Croatia’s tourism industry accounted for more than 30% of the total employment in the country (Usa International Business Publications, 2015).

The hotel, catering, and restaurant sectors accounted for the highest numbers, in terms of employment growth, because they were responsible for three out of four employment opportunities in the tourism sector (Usa International Business Publications, 2015). The Croatia Tourism Cluster (2013) affirms the country’s recovery story by saying “Tourism industries in Croatia recorded a total turnover in 2011 of EUR 4.2 billion, corresponding to 5.4 % of the total turnover of the non-financial business economy in Croatia” (p. 2). Relative to other European Union (EU) countries, Croatia’s recovery path is only slightly below 5.8% of the total turnover of the non-financial business in the EU (Eurostat, 2015).

The above findings reveal that the Croatian tourism industry is on an upward trajectory and doing better than most countries in the EU. The proposed establishment of the Blue Lagoon tour company aims to capitalise on this trend. Statistics from Tourism Alliance (2016) also reveal that the value of outbound tourism supports the possibility that Blue Lagoon would capitalise on the potential for increased tourism between the UK and Croatia. According to the diagram below, many British tourists spend the highest amount of money on accommodation services, food, beverages, and railway transport services (Tourism Alliance, 2016). Conversely, they spend the least amount of money on exhibition, conferences and sports-related activities (Tourism Alliance, 2016).

The table above also shows that the main services Blue Lagoon would offer (accommodation, food, and transport) rank high in the list of products that British tourists spend their money on. Based on this analysis alone, coupled with the thriving nature of the Croatian tourism industry, undoubtedly, the potential for Blue Lagoon to tap into the positive economic indices characterising the tourism exchange between Britain and Croatia exists. Indeed, the above statistics reveal that the businesses plan to establish a tour and travel business to tap into the tourism potential between Britain and Croatia is feasible.

Market Segmentation

According to Kotler (cited in Fifield, 2008) “Market Segmentation is the sub-dividing of customers into homogenous sub-set of customers where any sub-set may conceivably be selected as market target to be reached with distinct Marketing Mix” (p. 193). In this proposed market segmentation plan, the targeted clients would be British and foreign tourists. This choice of target market stems from the fact that Blue Lagoon would be London-based and a high traffic of British tourists visit Croatia annually (Bhatia, 2012).

The primary target market would mainly consist of three groups of travellers – family vacationers, soft moderates, and general enthusiasts. General enthusiasts are the main clients because they often travel with a partner and usually have a medium to high income (Wedel and Kamakura, 2012). Similarly, they are likely to participate in challenging outdoor activities that characterise most of Blue Lagoon’s proposed holiday packages. Family vacationers would be the second most desirable target market.

Similar to the first group of holidaymakers, this group of clients often travels with their kids and possibly spend a couple of days in one holiday destination (Wedel and Kamakura, 2012). However, the first group of clients would be more appealing than this group of tourists because they are more adventurous than the family-oriented travellers are (Fifield, 2008).

The target market would also include “soft moderates” who mostly comprise of middle-aged people with medium, or low, income. They are also adventurous people, but prefer low-risk activities. Nonetheless, they would fit in the profile of the targeted market. Therefore, holistically, this market segmentation strategy identifies three groups of customers – family vacationers, soft moderates, and general enthusiasts. The table below summarises their key characteristics

Table 1: Market Segmentation for Blue Lagoon

(Source: Created by Author)

As part of the business marketing strategy, the promoter would give out flyers to potential clients in London. More importantly, since the promoter works at a restaurant in London, he would hand out flyers to different customers who patronize the establishment. This strategy would be the primary market entry plan because it is cheap and aligns with the promoter’s daily routine. Therefore, the business owner could participate in the normal day-to-day activities of his work and promote the new business at the same time.

An auxiliary marketing strategy would involve linking with Expedia to increase the marketing scope. Expedia is one of the world’s most recognisable travel brands (Tourism Alliance, 2016). It provides different services to its clients, including hotel bookings, car rental services, and similar offers (Tourism Alliance, 2016). By linking Blue Lagoon with this travel agency, the company could gain access to a wider pool of clients. Similarly, it could benefit from the “spill over effect” of many clients who would possibly outstretch Expedia’s company infrastructure during high tourism seasons. Alternatively, the company’s long-term plan involves creating a website for the company as another avenue for Blue Lagoon to increase customer traffic to the business.

Identification of Product/Service

Gap in the Market

The proposed tour company will organise and arrange trips for British and foreign tourists willing to travel to Croatia. The destination (Croatia) is deliberately selected for this study because, being a citizen of the country, the promoter understands it well. Blue Lagoon would offer different types of services to its clients. At the core of its service model would be the ability to provide its clients with an excellent holiday experience by organising adventurous trips to different and exotic locations in the Eastern European nation.

Market in the Gap

After analysing the opportunities that emerged in the market segmentation plan, the business owner found that the market opportunities for reaching the target market were present. Particularly, on completion of the exploratory research, the emerging demand for Croatian tourist products stood out (Eurostat, 2015). For example, the increased tourist numbers of British tourists to Croatia emerged as an opportunity that Blue Lagoon could exploit. Furthermore, the growth in different metrics of Croatia’s tourism industry shows that the country is ready to receive more tourists from different parts of the world (Eurostat, 2015). These factors, when combined, paint a picture of a market opportunity for setting up a tour company that would meet the increased demand of British tourists to Croatia and satisfy Croatia’s appetite to receive more tourists

Description of Product/Service

Blue Lagoon’s holiday adventures would involve sightseeing and bird watching, just to mention a few. Visitors would stay at different villas, depending on their demographic profile, off the coast of Dalmatia. The picture below shows this location

Blue Lagoon would also offer trips and excursions to some of the most adventurous locations in Croatia, such as Mount Biokovo. The same adventures would expand to suit different needs and preferences of different groups of customers to include visits to other tourist destinations in Croatia, such as Lake Imotski and Pritivice lakes.

Visitors would also take ferries to some remote islands, such as Hvar and Brac, and sample the topography of the region, or the different cuisines offered at these locations. They could also engage in different outdoor activities, such as deep-sea diving, bird watching, and play different “beach games,” such as volleyball and the likes. However, the kinds of services that the company would offer to its clients would depend on the types of customers who have paid for the trips.

For example, instead of staying at the coastal villas, older clients could get accommodation in quieter places in the countryside. In these locations, they could also engage in less physically demanding activities, such as wine tasting, potato digging, and cherry picking (just to mention a few). Younger customers could participate in fun music festivals, such as the Ultra music festival and beach parties at Zrce beach. Nonetheless, the main travel destination would be Makarska where tourists would first visit and get to learn about Croatia before they move to other places. Makarska is the promoter’s hometown.

Industry/Market Analysis

For purposes of undertaking this industry analysis, the porter’s five-force analytical tool, which focuses on investigating the bargaining power of customers, threat of substitute products, supplier bargaining power, threat of substitute products, and the threat of new entrants, will be the main analytical framework for the external market analysis. This analysis appears below

• Threat of Substitute Products: The threat of substitute products emerges from the fact that tourists could choose to visit other destinations besides Croatia. However, according to the diagram below, the Croatian tourist market could record more than 62 million guest nights per year (Eurostat, 2015). Compared to other EU countries, the vibrancy of Croatia’s tourism sector is relatively higher because Croatia has an index of 14.1, while EU states have an (average) index of 5.0 (Eurostat, 2015). The only EU countries that have a higher vibrancy index than Croatia are Malta (18.8), Cyprus (16.9), and Montenegro (14.7) (Eurostat, 2015). Compared to the same countries, many foreign tourists prefer to stay in Croatia, as opposed to other European Union countries (The Croatia Tourism Cluster, 2013). In fact, foreign tourists account for 92% of all night bookings in Croatia’s tourism industry (The Croatia Tourism Cluster, 2013). Other EU member states report an average figure of 44% for all non-resident bookings (The Croatia Tourism Cluster, 2013). Indeed, as reported in this paper, most of these guests come from the EU member states (the number of non-EU guests who come to Croatia for a holiday is 11%) (Eurostat, 2015). There is a lot of potential for attracting tourists from Britain because the top five sources of tourists from Croatia are Germany, Slovenia, Austria, Czech Republic, and Italy, in that order (Ferguson-Kosinski and Price, 2012). Because Croatia outperforms most of its EU rivals, who offer similar tourist products, it is safe to say the threat of substitute products is low.
• Customer Bargaining Power: In the context of this paper, the customer bargaining power emerges from an understanding of the holiday options available for British and foreign tourists whenever they want to travel for a holiday. Their bargaining power emerges, in this regard, because if they choose to go to other destinations besides Croatia, Blue Lagoon would have a low demand for tourism products from this market (Doganis, 2002). Furthermore, if they have many destination choices, Blue Lagoon could have to offer low prices for its holiday packages because it would be aggressively competing for the same customers with other tourism markets (Richardson, 2016). Nonetheless, Europe remains among the top tourist destination for British customers (Barrow, 2013). In fact, according to Barrow (2013), 80% of British tourists prefer to visit tourism destinations in Europe. This fact supports the feasibility study highlighted in this report because it shows that there is a high traffic of British tourists willing to travel to European destinations. However, the most popular holiday destinations for British tourists remain the traditional European destinations, such as France and Spain (Barrow, 2013). Other top tourist destinations for British nationals are the Irish Republic, Italy, Germany, Greece, Netherlands, Portugal and Belgium, in that order (Barrow, 2013). According to the Usa International Business Publications (2015), there is a high growth in the number of British visitors travelling to Croatia. Relative to this assertion, TSA (2016) says “Croatia is among most wanted tourist destinations to visit this summer for British tourists. Research done by British travel agencies reveals that Croatia has placed itself side by side with big tourist destinations British travellers want to visit this summer” (p. 1). Figures reported by Kaynak (2013) reveal that Croatia received more than 241,000 British tourists between January and August of 2013. This figure is a 23% increase in tourist numbers from the same destination, compared to the same period the previous year (Kaynak, 2013). Some tour operators have recorded more than a 200% rise in bookings within the last few years (Usa International Business Publications, 2015). Prestige Holidays is one of them (TSA, 2016). The most common destination, in Croatia, preferred by British tourists is Dubrovnik. However, with the abundance of options that these tourists have, safely we could say the customer bargaining power is high. The high number of competitors in the Croatian tourism industry, and the elastic demand of hotel clients emphasise this fact.
• Supplier Bargaining Power: The supplier bargaining power in the Croatian tourism industry is low because of strong union activity that favours employers, as opposed to employees. For example, the Association of Employers in Croatian Hospitality (2016) is among the most vibrant unions in the industry and it mostly caters to the needs of employers. Through such union activity, employers get economies of scale in business and benefit from favourable law changes that increase the ease of doing business (Association of Employers in Croatian Hospitality, 2016). Comparatively, employees often have a weaker bargaining power because there is an abundance of workers who are willing to work in hotels and other tourist facilities without much hesitation. The high number of available workers makes it easy for employers to reduce their operational costs by paying lower wages. Indeed, there are adequate workers to work in their firms. Furthermore, many tourism colleges and universities in Croatia churn out qualified graduates who could work in different tourism firms (Association of Employers in Croatian Hospitality, 2016).
• Competitive Rivalry: Despite the potential that Croatia has in terms of the diversity of its tourism products, the country still has an underdeveloped tourism industry (Demes, 2015). The scarcity of hotels in many tourist destinations underscores this fact (Demes, 2015). Furthermore, some of those available are substandard (Kaynak, 2013). The entertainment and catering industries are also sub-standard and generally look like they are in the infant stages of development. The slow development of the hotel industry is mostly because of the slow transition of economic ideals from a socialist framework to a liberal framework (Demes, 2015). This issue has not only affected the tourism sector because other facets of the economy have suffered the same problem. Similarly, relative to other developed tourist destinations, Croatia does not have an even spread of high-end to low-end hotels (Demes, 2015). This situation leaves some segments of the market unattended and underdeveloped. The degree of product and service differentiation is also high because tourists could easily distinguish the level of service they could get between different hotels. Based on these findings, the competitive rivalry among different hotels is low.
• Threats of New Entrants: Based on the nature of the Croatian economy, which is increasingly diversifying and adopting liberal economic policies, the threat of new entrants in the market is high (Kaynak, 2013). This threat is particularly high in coastal areas of the country where new hotels come up every year (Kaynak, 2013). New investments are also flowing into the sector through the introduction of new types of tourism products (The Croatia Tourism Cluster, 2013). Although the cost of setting up new hotels is high, there is a relatively low cost of participating in other sectors of the tourism market, such as starting transport companies, catering services, or even setting up a tourist agency (The Croatia Tourism Cluster, 2013). The low inhibitive costs have seen an increase in the number of players in the Croatian tourism industry (Demes, 2015). The same is true for Britain, which will be the home of Blue Lagoon. Although there are some established tourism agencies in the country, there are few, or no, inhibitions to prevent other people from participating in the business (Kaynak, 2013). In this regard, there is a high threat of new entrants. The table below summarizes the strengths of the five forces characterising the Croatian tourism industry

Table 3: Porter’s Five Force Analysis of Blue Lagoon

(Source: Created by Author)

Organisational Feasibility

The purpose of undertaking this organisational feasibility plan is to find out whether the proposed business could be organised via management expertise and organisational competence. It also strives to establish the motivation of the business owner to make sure the business plan is executable. The business owner conceived the idea of starting Blue Lagoon because he has a strong interest and passion for the tourism and hospitality industry.

Having had some experience in this sector, working as a service agent, the promoter knows how the business works and hails from a country that has immense tourism potential (Croatia). Makarska, which is the hometown of the promoter, is also a relatively unexplored tourism market where many of Blue Lagoon’s customers would visit. Considering these insights, the checklist for organisational feasibility is as follows

Table 4: Organisational Feasibility Plan for Blue Lagoon

(Source: Created by Author)

Financial Feasibility

Estimation of Market Share and Sales build up

From the market research done in section 3.2, this report demonstrated that Croatia receives more than 240,000 British tourists yearly (Eurostat, 2015). During the first year of operation, it is projected that Blue Lagoon would have a 2% market share of this population. The business promoter also projects that the company would have 5% of the market share of British tourists who want to visit Croatia for a holiday. This estimation comes from the understanding that there would be deliberate efforts to market the company through different types of media and establish connections with other industry players to get business. The returns for these efforts should materialise in the second year of operation. The company’s sales numbers and market share should also increase as a result (The Staff of Entrepreneur Media, Inc., 2015). The sales projections for the proposed business are as follows

Sales Forecasts

The table below shows the sales estimation for the first five years of operation

Table 5: Sales Estimation for Blue Lagoon

(Source: Created by Author)

Based on the above table, the business owner estimates that the sales would increase substantially within the first two years of operation and thereafter increase exponentially for each year of operation.

Project Funding

It would cost around £25,000 to start the proposed business. This cost would cover the fixed costs and the capital requirements of the business. The source of funding would be contributions from family, friends, well-wishers and personal savings. According to appendix 3, there would be no depreciation to erode the capital base.

Cash flow Projections

The projected cash flow for the business is as follows

A detailed analysis of the cash flow projections appears in appendix 2

Profit and Loss Projections

In the first year of Blue Lagoon’s operations, the business owner would conduct a marketing trial to see if the business can reach a target of £158,400. To attain this target, the promoter would charge £550 per tourist. The monthly target for tourist numbers would be 24 people (this number would also include group travels). Nonetheless, it is important to note that this target mostly applies to the first year of operation. After the first year, the business owner projects that the sales numbers would rise by 15% annually. The profit and loss statement shown below gives more details regarding the business’s financial flows.

Indeed, as mentioned above, the company’s profits should rise exponentially from the second year of operation, after people have known about the company and the returns for the company’s marketing efforts suffice. The total expenses for the same period under analysis are could fluctuate within a narrow margin of between £27,500 and £33,000. Using these figures, the ROEI index should rise from a low of -4% to 69% within the same period under analysis. The profit and loss statement shown in appendix one highlights these projections.

For the first year of operation, the business owner intends to work from his apartment. The equipments he plans to lease include computers and printers. The capital cost for the business would be low because of the leasing strategy, as it is cheaper to lease equipments than to buy them. The wages included in the profit and loss statement would mostly include the salary that the business owner would get from the business. Therefore, the aim of adopting a lean business strategy is to reduce the risks and costs of running the business, at least in the first year of operation.

Break-even Analysis

The purpose of undertaking this break-even analysis is to find out when Blue Lagoon would make enough money to cover all its expenses, and start to make a profit (Usa International Business Publications, 2015; Demes, 2015). To do so, it is important to understand the start-up costs of the business, the business expenses, and how much money it would cost to run the business. To come up with the break-even analysis, the business owner used the following formula

Break-even sales value = Average fixed cost/%contribution

The graph below shows the outcome of the application of this formula in the business proposal for Blue Lagoon

According to the diagram above, the breakeven point would suffice when sales hit £300,000. This figure is inclusive of the effect of fixed cost and company contributions to the business plan.

Risk Evaluation

As part of the risk management plan of the proposed business, this paper has already shown that, the business owner would lease some of the company’s assets for short-term business operations. The purpose of doing so is to reduce the financial risk of the business. The risk management plan would also include insuring the customers when they travel to Croatia. This insurance plan would mostly protect them from bad health and injury.

Resource Sufficiency

The purpose of this section of the proposal is to determine what resources are available, or not, for the owners to start the business (The Staff of Entrepreneur Media, Inc., 2015). Key factors under review would be the availability of financial resources, technical knowledge of undertaking the business, availability of human capital, the availability of physical space to run the business, and organisational characteristics that would support the business plan (The Staff of Entrepreneur Media, Inc., 2015). Details surrounding the resource efficiency plan are as follows

Availability of Financial Resources

As highlighted in this report, the capital for financing the business would come from a combination of personal savings, and contributions from friends, well-wishers, and family.

Technical Knowledge of Undertaking the Business

Computers and stationery would be the main items leased. Since the promoter is the only employee during the first year of business, there would be no need to hire workers and increase the company’s initial operating costs. Furthermore, in terms of technical expertise, the equipments leased would be easy to use and, therefore, not require technical knowledge.

Availability of Human Capital

The promoter would be available to manage all operational processes of Blue Lagoon.

Availability of Physical Space to Undertake the Business

The business would be physically located in London. The area of operation would be in the owner’s apartment

Organisational Characteristics That Would Support the Business Plan

The business owner would make efforts to support the new business by forging partnerships with existing businesses, and become part of existing business networks because looking for business in the tourism and hospitality sectors involve plugging into profitable networks with stakeholders who are already in the industry (Tourism Alliance, 2016). The owner would also make efforts to establish connections with suppliers and customers, directly. He would also seek public liability insurance to cover the customers from injury.

Business Model

Internal Analysis

Resource-Based Theory for developing Competitive Advantage

The resource-based view is essential to developing a firm’s competitive advantage because it views a company’s internal resources as key to its overall competitive performance (Kirsch, 2007). According to the diagram below, the resource-based view assumes that a business depends on its tangible and intangible resources to remain competitive (Kirsch, 2007).

The tangible resources could be a firm’s profitability, superior accommodation, luxurious transportation and such resources (Jurevicius, 2013). Intangible resources could simply mean a firm’s resources and capabilities. These resources must either be heterogeneous, immobile or have VRIO attributes to become VRIO resources (Jurevicius, 2013). These resources help to create the competitive advantage that companies need to outperform their rivals. The diagram below explains different tenets of the resource-based view.

The main tangible asset for Blue Lagoon would be its gross profit numbers. According to appendix one, the company’s projected gross profit would be £32,000, £36,800, £42,320, £48,668, and £55,968 for the first five years of operation. It is difficult to undertake a comprehensive comparative analysis of the competitors’ gross profits because most tour and travel companies in Britain are private companies (Harris, 2015).

Therefore, they are not required to publish their financial statements. However, some of the giant tour companies in Britain, such as Thomas Cook make more than 470 million in profits annually (Hay, 2016). Nonetheless, Greitemeyer (2002) says tangible assets do not generally offer a strong competitive advantage even for established businesses because a company that has enough money could buy the same tangible assets, as a rival owns.

Using this analogy, the main sources of competitive advantage for Blue Lagoon would come from its intangible assets. Quality customer service, brand reputation, and intellectual property are a few of the intangible assets that Blue Lagoon could leverage for better market positioning. Some of these intangible assets are difficult to replicate, as the business owner would develop them over a long time (Nothnagel, 2008).

Furthermore, some of them are intertwined and interdependent. For example, the business’s reputation would be subject to excellent customer service because poor customer service would ultimately dent the business’s image (Jurevicius, 2013). Relative to this reasoning, the business owner intends to trademark the company’s name to, possibly, trade it in future. Based on the focus on excellent customer service, the company’s name should be a source of competitive advantage for the business.

The main assumptions of the resource-based view are that these resources are often heterogeneous and immobile (Salonen, 2010). However, these assumptions alone cannot guarantee the potential of internal competencies to create a competitive advantage. This is why experts formulated the VRIO framework to investigate the sustainability of these competitive advantages in a business.

This framework was developed by Barney (1991) as he tried to explain that the sustainability of organisational resources often emerges when the resources are valuable, rare, difficult to imitate, and difficult to substitute. Stated differently, the resources that meet these attributes are the only ones that meet the criteria for sustaining competitive advantages (Wernerfelt, 2011). Later years of research have fine-tuned this area of analysis by investigating whether organisations are equipped to benefit from these competitive advantages through proper organisation (Jurevicius, 2013).

Based on the resource competencies that Blue Lagoon has, the best way to improve the firm’s resource capabilities is by adopting the lean intervention strategy. Often, many companies make the mistake of increasing a firm’s resources whenever their resources are not yielding as much productivity as they would like (Grant, 1991). However, experts warn against this approach because adding more resources to a system that is already running at full capacity is a bad idea (Barney, 2001; Grant, 1991). Blue Lagoon could hit the same point one time in its business cycle. This is why it is important to understand how the promoter would improve its resource capabilities.

As mentioned above, lean intervention would be the best way to increase the firm’s resource capability because the technique focuses on an organisation’s processes and highlights how the same processes work towards fulfilling organisational demand (Hay, 2016). A lean intervention would uncover different things about the business, including its purpose (why the organisation exists), measurement (how the organisation is performing viz-a-viz its purpose), and method (how the promoter intends to achieve the purpose of the business) (Hay, 2016).

Another strategy to improve Blue Lagoon’s competitive advantage revolves around digital marketing optimisation. It involves being smart about where the company is advertising its products in the digital market space. Although details about this plan would be clearer after executing the “clicks strategy,” the business owner would consider placing online ads in places where there is a high potential for a deep customer engagement and customer loyalty (Hay, 2016). The aim of doing so is to promote the organic growth of the business through repurchases and referrals. Since Blue Lagoon’s competencies mostly revolve around fulfilling the demand requirements of its clients, it is important to understand the value of transactional demand for the business and the value that lean intervention could add to the business.

Value demand emerges when a business receives inquiries from customers that could potentially lead to new sales (Hay, 2016). This type of demand differs from failure demand, which often emerges when customers inquire about a purchase they had already made (Hay, 2016). Lean intervention helps to improve value demand by freeing up an organisation’s internal processes, or resources, that go to failure demand and instead redirects them towards improving value demand (Hay, 2016). This strategy would increase the organisation’s capability to manage its processes, without necessarily increasing the resources needed to achieve the organisation’s goals (Barney, 2001; Grant, 1991).

Sources of Business Competitive Advantage and Sustainability

To analyse the strengths and weaknesses of Blue Lagoon, it is vital to undertake a SWOT review of the company to understand its internal environment. In other words, the SWOT analysis tool would help the business owner to identify the sources of business competitive advantage. It is a practical framework for identifying the strengths and opportunities of Blue Lagoon. The company’s SWOT analysis appears below

SWOT Analysis

Table 6: SWOT Analysis of Blue Lagoon

(Source: Created by Author)

The table below shows how Blue Lagoon’s competencies appear in the VRIO framework of analysis

Table 7: Blue Lagoon’s competencies in the VRIO framework

(Source: Created by Author)

Concepts in Strategy, which could be used

Different researchers use different strategic tools to develop business strategies. Some of the most common ones include Ansoff matrix, BCG growth matrix, balanced scorecard technique, and Porter’s generic strategies (among others) (Kuhn and Johnson, 2013). For purposes of this business plan, the business owner used the balanced scorecard technique because it resonates with the nature of the business and the context of its operations. Researchers have used this strategic planning technique in different quarters of the society, including government, industries and non-profit organisations, successfully (Niven, 2010).

Companies that have done so successfully have used the strategic management tool to align different business processes to their strategic goals and vision (Makhijani and Creelman, 2011). This strategic management tool argues that managers should look at their business processes from four perspectives – the learning and growth perspective, the business process perspective, the customer perspective, and the financial perspective (Makhijani and Creelman, 2011; Niven, 2010).

The customer perspective emphasises the importance of satisfying customer needs. This customer-focused perspective recognises that customers could easily seek the services of other service providers if they are unhappy with one business owner (Kuhn and Johnson, 2013). Using this line of reasoning, the customer-focused perspective looks at customer dissatisfaction as an indicator of future company decline. The financial perspective looks at organisational performance in the context of how its operational activities should improve its financial position (Kuhn and Johnson, 2013). Many people consider this view the traditional perspective of strategic management (Makhijani and Creelman, 2011; Niven, 2010). However, this approach changed because the extreme focus on finances was unbalanced as it could not measure all aspects of organisational success (Niven, 2010).

The business process perspective of the balanced scorecard technique underscores the need to examine business operations to achieve organisational success (Makhijani and Creelman, 2011). The focus on this perspective highlights the need for managers to understand how well their businesses are running and how their internal organisational processes work towards meeting organisational goals (Niven, 2010). Therefore, the business process perspective is best implemented by those who understand an organisational process well and not outsiders.

Lastly, the learning and growth perspective of the balanced scorecard technique refers to the need for organisational self-improvement through the framework of cultural growth and employee training (Makhijani and Creelman, 2011). In line with this framework of reasoning, Kuhn and Johnson (2013) say that in the current tech-dependent economy, the need for workers to adopt continuous learning, as one of its mantra in employee development is vital.

Proponents of the balanced scorecard technique argue that learning should be more than training because the completion of a training course does not necessarily mean that learning and growth should stop (Makhijani and Creelman, 2011; Niven, 2010). Collectively, the four perspectives of the balanced scorecard technique underscore some of the main strategic approaches businesses could use to improve their performance. However, the customer perspective emerges, as the best strategic approach for developing Blue Lagoon’s strategies because the proposed company is a service-oriented enterprise and customer satisfaction is at the heart of its success.

The Customer Perspective

The first step of implementing the customer perspective approach on Blue Lagoon’s strategic blueprint involves understanding the company’s key performance indicators (KPIs). Blue Lagoon would have five key performance indicators as follows

KPIs

• Customer retention: Customer retention refers to the degree to which customers are likely to stick with a company and do more business with it. Businesses that succeed in this regard often bring back customers and have a steady stream of clients who would repetitively choose to do business with the company, as opposed to moving to its competitors. Having high customer retention numbers would be a positive outcome for Blue Lagoon (Wedel and Kamakura, 2012).
• Conversion Rate: The conversion rate refers to the likelihood that a potential customer would do business with a company. A high quality customer service would increase the conversion rate of a business. Conversely, a low quality customer service would exert a downward pressure on the conversion rate (Wedel and Kamakura, 2012). Based on this analysis, Blue Lagoon would strive to have a high conversion rate by implementing effective marketing strategies and collaborating with the established businesses in the sector.
• Resolved Issues: Many service-oriented businesses often register customer complaints. While the number of customer complaints could be an abstract indicator of the quality of customer service, the number of issues a company resolves are a better indicator of how well it is addressing its customer needs (Kuhn and Johnson, 2013). Therefore, having a high number of resolved issues is a good indicator of excellent customer service, while having a low number of resolved issues is an indicator of poor customer service. Having a high number of issues resolved would be a primary objective of Blue Lagoon.
• Complaint Escalation Rate: The complaint escalation rate is a reliable indicator of customer service and is an inverse understanding of the rate of resolved issues because the failure to resolve customer issues leads to an escalation of complaints (Kuhn and Johnson, 2013). Therefore, the two indicators intertwine. Wedel and Kamakura (2012) say that most companies, which receive a huge number of complaints and do not realise a growth in customer numbers, should be worried about their customer service standards. In line with this reasoning, experts encourage companies to investigate their customer escalation rates and customer growth percentages (Kuhn and Johnson, 2013). Blue lagoon will strive to have low complaint escalation rates.
• Cash flow: A business’s cash flow is a good performance indicator for different aspects of its operational attributes. At the same time, customer service is an important attribute for most businesses, such that it could mean the success or failure of a business. This is why Stillwagon (2015) says,

“If your service is bad, it could drive customers away, decrease referrals, and cause potential customers not to complete purchases. But if it is good, customers are likely to come back, tell their friends, and have a big impact on your company’s overall profits” (p. 14).

A business’s service quality is likely to reflect in its cash flow numbers. Therefore, cash flow will be an important indicator for Blue lagoon’s business success because low cash flow numbers would mean that the business is not offering good customer service, while high cash flow numbers would probably mean that the business is doing well (Kuhn and Johnson, 2013). Since the company aims to provide quality customer service, the business owner expects to have a strong cash flow.

Development of Appropriate Business Model

Blue Lagoon would use a packaged tour model for the business. In this model, the promoter would advertise the company’s products to potential customers as a holiday package, which includes transportation and accommodation options. As part of the package, customers would also participate in different activities and outings for the holiday. In detail, the tourism package would allow customers to enjoy the unspoiled coastline of beautiful beaches and islands that dot Croatia’s oceanfront and indulge in exquisite cuisines that are synonymous with the country (Demes, 2015).

As part of the outing package, visitors would also visit historic towns and castles that are characteristic of Croatia’s heritage (Demes, 2015). Therefore, the packaged tour model would allow customers to enjoy a variety of activities when they choose to travel with Blue Lagoon. By choosing to purchase one tourism product, customers would enjoy different activities for one price (Shimomura and Kimita, 2012).

9 Building Blocks of the Business Model

This section of the report highlights key parts of the overall business plan that collectively create the vision of the business model. These key parts appear below

• Value Proposition: The value proposition of a business plan refers to the areas where a business creates value for its customers (Demes, 2015). Blue Lagoon’s value proposition would be excellent customer service. The company strives to be a leader in this regard because the industry analysis in chapter three revealed that, although there may be different travel agencies that operate in the same market as Blue lagoon, their customer service standards are poor (Singh, 2009). Therefore, Blue Lagoon intends to fill this research gap through its value proposition.
• Customer Segments: According to McDonald (2012), customer segments are often either single-sided or multi-sided. Blue Lagoon’s customer segments would be multisided because the company acts as an agent for two parties – tourists willing to visit Croatia and Croatian service providers willing to serve foreign tourists.
• Channels: The business channel used by Blue Lagoon would adopt a bricks and clicks framework. A bricks and clicks business model often works when companies have an online and offline presence. The business promoter chose this business model because Blue Lagoon is a service-centred business and a bricks and clicks strategy would increase different ways of serving and engaging its clients (Shimomura and Kimita, 2012). The bricks and clicks strategy will work in a complementary fashion because the promoter expects the online strategy to complement the back office work. For example, when approaching potential customers through face-to-face interactions, the promoter would encourage them to learn more about the company by visiting the company’s website. This way, the clients would learn more information about the company than what the promoter tells them through the face-to-face interactions. As highlighted in this paper, part of the bricks and clicks strategy involves having a virtual presence. In other words, Blue Lagoon would have an e-commerce website where customers could engage with the company in real-time. This site will handle customer complaints and replicate the same services that customers could receive if they went (physically) to the business. Therefore, bookings, ticket purchases, and product plans would appear on the website. The online strategy would also be a marketing platform for the company because in the website, customers would have a chance of looking at the kinds of destinations they would be going to, the kinds of events they would be attending and the kinds of places they would be staying in. Nonetheless, the promoter would establish the online presence as a medium time goal because most of the company’s resources, within the first year, would go towards establishing a strong physical presence of the business. Indeed, the bricks strategy would involve having a physical location where the promoter could undertake most of the business’s operations. As mentioned in this report, the physical location would be the promoter’s apartment. The business owner would undertake most logistical operations of the business from this location.
• Customer Relationships: the customer relationship strategy involves “discovering and validating the right market for your idea, building the right product features that solve customers’ needs, testing the correct model and tactics for acquiring and converting customers, and deploying the right organization and resources to scale the business” (Shimomura and Kimita, 2012, p. 54). As part of the customer relationship plan, part of the initial cost of investment would go to market testing. Feedback would be included in developing the finer details of the business plan and its results would be included in the execution plan.
• Key Activities: There would be three main activities in the business plan. The first one would be setting up a physical location to operate the business. This plan includes buying equipment, like computers, chairs, tables, and stationery (business cards and flyers) for the business. The second activity in the business plan involves arranging for meetings with managers of Expedia to establish a working partnership with the enterprise. As mentioned in this paper, the motive for doing so is to establish a market for Blue Lagoon’s holiday packages. By doing so, the promoter would increase the options of meeting new clients (to add to the direct marketing strategy of handing out flyers to prospective customers). The last activity in the business plan involves establishing an online presence for the company. Here, the promoter would develop a website that markets the company and accepts online bookings and payments. This activity is part of the brick and click strategy that complements the overall business plan.
• Key resources: Some of the key resources in the business model include the financial resources to buy computers, stationery and to undertake market testing. The promoter would also provide the human resources needed to start the business during the first few months of operation.
• Key Partnership: The business partnership with Expedia would emerge as a key resource in Blue Lagoon’s business plan because it would play an important role in creating a customer pool for the business. The promoter would also forge partnerships with service providers in Croatia who would offer accommodation, catering, and transport services for the customers. This activity would meet the “demand aspect” of the business plan.
• Revenue Streams: The main revenue stream for Blue Lagoon would come from the sales made through the tour package model. Indeed, a high number of holiday packages sold to customers through this business plan would amount to higher revenues for the company.
• Cost Structure: As mentioned in this paper, customers of Blue lagoon would pay £550 to buy a holiday package. This cost would be inclusive of transportation, accommodation, and activity costs. Since the promoter intends to run the business from his apartment, there would be no fixed costs for the first year of operation.

Business Plan Review

Overall Assessment of the Business Plan

Product and Service Ideas

Although the Croatian tourism industry is relatively underdeveloped, as is the case in many Eastern European countries, many service providers have focused on providing traditional tourism products, thereby shunning the need for creativity and the importance of providing new visitors with an experience that they would typically lack if they visited other destinations (The Croatia Tourism Cluster, 2013).

Existing London-based tour companies have also made the same mistake of offering similar products by adopting a mass-market business strategy where they do not particularly focus on one market because they try to offer different tourism products to different types of customers, at the same time (Eurostat, 2015). A review of chapter three findings reveals that this is the reason why their service standards have deteriorated because some of their sales agents are unable to understand, or describe, the kinds of services they offer to their customers well enough for potential customers to understand (ACS Distance Education, 2011).

Blue Lagoon offers a different approach to the same business model because it uniquely focuses on Croatia and offers unique holiday packages that are rarely in the market. Since the promoter hails from the country of destination, the company would also give its clients a personalised approach to their holiday because the promoter knows the different locations and attractions in Croatia, which the visitors may like to see. Blue Lagoon would strive to expand the scope of tourism products offered to British customers by offering uniquely designed tourism products.

Legal Issues

According to Hall (2016), setting up a business in the UK could be a legal nightmare for most new business owners. However, with the right advice, and through a proper understanding of the legal responsibilities that a business owner has to fulfil, registering a business should not be a problem. There are five main issues to consider when setting up Blue Lagoon. The first one is the legal structure of the business

• Legal Structure: According to Hall (2016), a business’s legal structure has a long-term implication on the type of activities it could engage in and the kinds of operations it should participate in. The three main types of legal structures that most businesses could engage in include the sole trader framework, partnership framework, and a limited company framework (Shimomura and Kimita, 2012). The business owner of Blue lagoon would register the company as a sole trader type of business. According to the IBP, Inc. (2015), a sole trader type of business is the easiest to register, but has the highest level of personal risk for any type of business category.
• Licensing: According to Hall (2016), the UK law may require businesses to apply for a licence, depending on the type of industry they choose to engage in and the nature of business they wish to do. The establishment of travel companies in the UK requires licences (Shimomura and Kimita, 2012). Therefore, Blue Lagoon would have an operating licence and an insurance cover for its business risks. This provision would be included in the business insurance policy.
• Health and Safety: Blue Lagoon would assume the health and safety risks for its clients. In this regard, it would have a duty of care to all its customers whenever they are abroad. The business’s work practice would incorporate these attributes.
• Business Insurance: Blue Lagoon would be assuming responsibility for its customers when they are on holiday. Since public liability claims could be expensive to cover, Blue Lagoon would have a business insurance policy that would ordinarily be included in the business insurance policy. This policy would be useful in saving money during the crucial first stages of setting up the business.
• Value Added Tax (VAT) Registration: As a business owner, the promoter would have several tax obligations to the taxman. VAT payment is one of them because the business owner would file at least one annual tax return.

Financial requirements

As mentioned in this report, the capital financing for Blue Lagoon would come from personal savings and contributions from friends and family. According to the Staff of Entrepreneur Media, Inc. (2015), this is the most common form of equity investment in the world. In fact, statistics from Canada reveal that business owners finance 76% of small businesses, in British Columbia, from personal savings (The Staff of Entrepreneur Media, Inc., 2015).

Since Blue Lagoon adopts the same financing model, the main assumption is that the business owner assumes most of the risks of the business. However, at the same time, the same financing model implies that he is responsible for the business’s success (The Staff of Entrepreneur Media, Inc., 2015).

Risk Issues

Starting a new business often comes with multiple risks. However, the nature of such risks often depends on the type of business venture (The Staff of Entrepreneur Media, Inc., 2015). Five types of risks could potentially affect the operations of Blue Lagoon. They include product risk, market risk, and financial risk (Entrepreneur Press, 2013). Their details are as follows

• Product Risk: A Product risk, in the context of the Blue Lagoon business plan, refers to the possibility that the customers would not fully understand the kinds of holiday products that the company would be selling to them. This is a significant risk for the company because it would affect its financial performance (Shimomura and Kimita, 2012). Indeed, if customers do not understand the company’s products, it would be difficult for them to part with their money. Therefore, it is important that they understand the kinds of holiday packages Blue lagoon would be offering them. As mentioned in this report, Blue lagoon would be selling three holiday packages that include Spirited Croatia, Real food Adventure, and Jewels of Croatia. All these products have different activities to suit different audiences. The contents of the different holiday product are intentionally different because researchers have said that one strategy of overcoming product risk is making sure they appeal to a wide audience or a big enough market (The Croatia Tourism Cluster, 2013; Eurostat, 2015; IBP, Inc., 2015). Since the promoter has undertaken an effective market research of the British tourism market, he clearly understands how the products fit within the needs of different market segments.
• Market Risk: In the context of this business plan, market risks often occur when the targeted market fails not resonate well with the kind of services Blue Lagoon would offer (Shimomura and Kimita, 2012). To overcome this risk, the promoter has spent a lot of time investigating where the potential market would alternatively go to get the same services as Blue Lagoon offers if they do not want to do business with his company. He has also understood the proper marketing channels that would appeal to the target markets and whether they could promote the business, or not. By evaluating the impact of these market dynamics, the promoter effectively minimises market risk (The Staff of Entrepreneur Media, Inc., 2015).
• Financial Risk: Financial risks often occur when a business owner fails to gather enough capital to finance a business (The Staff of Entrepreneur Media, Inc., 2015). In the context of this business plan, the main financial risk for Blue Lagoon would be the failure of friends and family members to support the business by refusing to contribute to the capital investment.

This is a risky outcome for the business owner because he intends to get enough capital to finance the business through contributions from family members and friends. To minimise financial risk, the promoter would have to subdivide the business plan into different milestones and investigate the financial requirements needed for meeting each milestone (Entrepreneur Press, 2013). By articulating these requirements and understanding the business growth plan, the targeted friends and family would feel confident enough to write up a cheque for financing the business.

Marketing matters

The marketing issues in the Blue Lagoon business plan relate to the process of making sure that the company’s business products appeal to the needs of the target market (Shimomura and Kimita, 2012). As mentioned in the above chapters, the promoter would use a direct selling technique during the first few months of operation to popularise the business. This strategy involves printing flyers and handing them out to potential clients at the promoter’s place of work. Later, he would use an online platform to attract customer traffic to the business. Generally, this business plan would represent a bricks and click model discussed in earlier sections of this report.

Organisational Feasibility

The strength of organisational feasibility needed to undertake the proposed business plan comes from a review of the company’s SWOT analysis. It revealed that Blue Lagoon’s main strengths were the low-cost of operations and the potential to create profitable business partnerships. These two attributes are at the core of the organisational feasibility plan because from a position of low operational costs, Blue Lagoon could minimise its resource expenditures and invest the same in expanding its market (The Staff of Entrepreneur Media, Inc., 2015).

The profitable business partnerships Blue Lagoon intends to build with its partners, such as Expedia, emerge as an important hub for the business’s growth, as the company would gain access to a wider pool of clients and possibly learn valuable knowledge about the tourism, and the hospitality industry at large (The Staff of Entrepreneur Media, Inc., 2015).

Overall Resource Sufficiency

The design of this business plan alludes to the fact that Blue Lagoon would need minimum resources to start. In fact, most of the resources the company would need are intangible. For example, the conviction of the business owner to look for business through direct selling eliminates the need for incorporating physical resources in the marketing plan of the business (aside from the cost of printing flyers), thereby maintaining the resource requirements at a minimum. Furthermore, the availability of the promoter to work as a sole employee reduces the need for depending on many people to execute different aspects of the business plan. Comprehensively, securing the capital investment of the business would largely cover most parts of the overall business plan.

Proposed Plan of Action

The main tasks that underlie Blue Lagoon’s overall business plan appear as follows

Table 8: Main tasks that underlie Blue Lagoon’s overall business plan

(Source: Created by Author)

Gantt chart

Table 9: Blue Lagoon’s Gantt chart

(Source: Created by Author)

Discussion of Critical Success Factors

According to the Staff of Entrepreneur Media, Inc. (2015), critical success factors refer to specific goals that a business has to achieve to be successful. Therefore, these critical success factors should be vital to the organisation’s success, benefit the company as a whole, be synonymous with a high-level goal, and have a direct link with the organisation’s goals. Blue Lagoon’s critical success factors appear below

• Increase of market share through the acquisition of new customers
• Promote service-orientation as a key part of business success
• Achieve high standards of order fulfilment by improving in-line processes

The above-mentioned critical success factors are products of key assumptions made by the business owner. They include the following

• The success of the business would mainly depend on increased customer satisfaction
• Excellent customer service would be the main competitive feature to distinguish Blue Lagoon from its rivals
• The business would mainly be service-oriented

Reflection Questions

Question 1: Research Methods and Processes

A Reader of your Major project

In the third chapter of the business proposal, I mentioned that there are different methods researchers could use to undertake a business research. The main techniques included descriptive methods, exploratory methods, qualitative techniques, quantitative techniques, and casual research techniques. Each technique suits unique research circumstances, or market conditions. For purposes of writing the business proposal, the exploratory technique was the most appropriate technique to use because the underlying research was exploratory in nature, in the sense that it identified a gap in the market, which Blue Lagoon would fill using this business plan as an execution tool.

I chose the exploratory research technique because it helped me to discover ideas and insights about the proposal. Indeed, when I started the project, I only had a few points of references to guide my proposal. Therefore, I had to find out what works, and what does not work, for the business proposal. Furthermore, I needed to conduct a market feasibility test to determine whether my business proposal was feasible, or not. This process required the implementation of the exploratory research design.

Another motivation for using the exploratory research design was its open-ended nature. Concisely, I could use many other research methodologies for the paper, but I chose to use the exploratory research technique because it was not fixated on using one framework of review to guide the formulation of the business plan. For example, I used the exploratory research technique to define the target market because I wanted the facts to guide the selection of the target market and not vice versa, where the target market defines the facts.

Therefore, for purposes of finding the most accurate information about the potential customers, I used useful market informatics, such as the demographic profile of the target market, the geographic segmentation of the target market, behavioural segmentation of the target market, price segmentation of the target market, and the psychographic segmentation of the same to define the target market. For purposes of understanding the potential for market segmentation, I considered the effects of important details surrounding the market entry strategy, such as the presence of oligopolies, monopolies, competition, rivalry, licensing laws, and similar factors to outline my potential customers and rivals.

The market segmentation method was applicable to the paper because it identified the specific target market that would use the services offered by the proposed business. The exploratory research design also helped in the identification of the market gap by identifying unsaturated areas in the Croatian market where other tour companies have not fully exploited. The identification of these areas of business provided the impetus for the introduction of Blue Lagoon, as a viable business, to fill the market gap. These techniques helped me to get a comprehensive understanding of the research context and set the framework for the completion of the other sections of the business proposal.

My Future Employer

My choice of research methods highlighted my interest in having an open-ended approach to addressing the research problems. I believe this approach is an asset to any employer because employees should not have closed-minded approaches to solving organisational problems, especially when they occupy decision-making positions. My skill in this regard manifested through the justifications for using the exploratory research technique, which advocates for an open-ended nature of gathering facts and information.

Question 2: Literature and Sources

Most Important Literature Sources

I used secondary research data as the main source of information for the business proposal. The preferred sources were books and journals.

Why are these Sources Important and Fundamental to your Work?

For purposes of writing the business plan, I chose to use secondary research findings to formulate the business proposal because I wanted the business to be as practical as possible. Using primary research information to do the same would have consumed a lot of time and, based on the international nature of the business plan, would have been impractical to do, considering the minimum resources available to finish the business plan.

Therefore, secondary research sources emerged as the best research materials to use for the study. The sources were important and fundamental to my work because it helped in the clarification of the research question and the definition of the business problem. I believe that this type of research source is important in the clarification of research information because it defines the research focus and provides valuable information that may be used in future research.

The justification for the use of the secondary research sources emerged from the above advantages because I needed a reliable source of information that would provide me with a holistic analysis of research information needed for the business proposal. Furthermore, different aspects of the proposal required research of a wide scope, which I could not practically do using primary research.

For example, when conducting the industry analysis, the secondary research sources that I used in the paper were useful in providing the comprehensive scope of information concerning the Croatian and British tourism industries. Furthermore, using the secondary research sources, I discovered different facts underlying the development of the business plan. Some of these discoveries were common knowledge for me, as a person who has worked in the tourism and hospitality industry, but the secondary research sources helped to affirm some of them.

The use of secondary research information also gave me a deeper insight regarding the market trends and consumer behaviours of British tourists, which were pivotal to my conception of Blue Lagoon’s operations and the potential it had to attract new customers. For example, tourism experts revealed that many people who use specialist tourist travel agents would use the same agents again. The researchers also revealed that many more of the same customers would use direct tour operators, or general travel agents, when booking a holiday trip abroad (Bhatia, 2012; Entrepreneur Press., 2013).

Comprehensively, the secondary research helped me to identify the growing uptake of tourism products in Croatia, and the business opportunities that emerged from improving the quality of service delivery in the market. In this regard, I understood that, by developing holiday packages to Croatian destinations where most British customers have not visited, or would not visit if they chose to use other tour companies, Blue Lagoon would be the “go to place” for tourists who have a wild spirit of adventure.

Question 3: Your Knowledge

Key Areas of Knowledge I have Gained from Undertaking the Research

The key areas of knowledge I have gained from undertaking the research include conducting internal and external market analysis, developing workable marketing strategies, developing effective business models and understanding the legal considerations for starting new businesses in the UK.

Why are these areas Important to you?

The above-mentioned knowledge areas are important to me because they outline key considerations for starting a business. For example, I identified the packaged tour model as the best business model for Blue Lagoon by understanding the process of developing effective business models. Within this business model, the goal of Blue Lagoon was to provide its clients with a high quality tourism experience that would make them appreciate the beauty of Croatia’s natural and cultural assets.

The packaged tour model also gave me an opportunity to expand the scope of tourism products offered by Blue Lagoon in Croatia by including “rare” tourism activities like cherry picking, wine making, and fun festivals for different types of target markets. This way, the company would not only provide an unforgettable experience to its clients, but also provide a sustainable source of livelihood for Croatians who would be working as tour drivers, caterers and such like jobs.

By developing the business plan, I also learned new information about the legal ramifications of starting a new business in the UK. This area of analysis was important to my conception of the legal aspects of new business development because it helped me to understand my responsibility as a business owner and the legal responsibilities required of different types of business entities. This experience was particularly informative to me because I often thought the legal responsibilities of new business owners were complex and intimidating. However, after learning the legal obligations of starting Blue Lagoon, I have finally understood that registering a business should not be a problem for anyone.

Concerning the process of undertaking the internal and external market analyses of Blue Lagoon, I also had an opportunity to apply different analytical tools in an area of industry that I was familiar with – tourism and hospitality. The SWOT analysis tool was useful in undertaking the internal environment and analysis, while the Porter’s five-force analysis tool was useful in undertaking the external market analysis. I have always used these tools theoretically, but applying them in a real business setting gave me a new experience of doing so because I found the process to be realer for me and, frankly, more interesting. I had the same experience when developing the marketing strategies for the new business because I have worked in the tourism and hospitality sector for many years now and it was interesting to apply strategic analysis tools in an area that I was familiar with.

Question 4: Your Learning

What are the most important Aspects of Learning that you have gained from:

Undertaking the MBA Program

The most important aspects of learning that I have gained from undertaking the MBA program include how to use reasoning skills in business development and how to apply communication skills for my professional development. Concerning the latter, I have learned useful information, such as the importance of using professional language when developing business plans and strategies, when formulating, or developing, reliable research work.

Through my interactions with my professor, I have also learned the importance of participating effectively in discussions and comprehended the importance of positive engagements with other members of the academic space, who would contribute to the exchange of ideas. I have also improved my reasoning skills by undertaking this project because I used different models and theories to develop unique aspects of the business proposal. The business model formulation highlights the development of my reasoning skills, which I learnt from the entire process.

Following through Your Research

Following through the research, I developed a good grasp of enquiry skills and information processing skills, which were essential in my overt understanding of how to develop a workable business plan. My enquiry skills emerged throughout the period of developing the business plan because I often asked relevant questions about different aspects of the proposal and the possibility that they would all fit in one cohesive business blue print. Using this important aspect of learning, I identified problems and plans of actions that formed part of the business plan. The use of information processing skills also helped me to use the information I received from the secondary research sources effectively.

Applying what you have learnt in your Major Project

When writing the business proposal, I came to understand that writing the plan involves some level of creativity. This was especially true when developing the holiday products because I had to develop unique tour and travel packages that the customers would not easily interpret as an imitation of what other travel companies have to offer. Therefore, the process of developing the business proposal was not to apply existing business concepts only; instead, it demanded some creativity from the business owner.

Question 5: Critical Thinking and your Ideas

When evaluating research information about the business plan, I came to learn that the UK tourism and hospitality industry is a cutthroat sector, fuelled by the high number of players in the industry. For example, from the analysis, I discovered that Blue Lagoon would be fighting for customers with hundreds of other companies that offer similar services. This was just an abstract statement showing the high level of competition that characterised both the Croatian and British tourism industries. For example, I found that the Association of Croatian travel agency had more than 220 members who offered the same logistical services as Blue lagoon intends to do.

Most of the companies were private enterprises, or privatised recently, because of the ongoing trend to liberalise Croatia’s business environment. Most of these companies undertook ground operations by organising tours, excursions and cruises for different types of clients. However, I realised that this category of travel agencies was not the primary competition for Blue Lagoon, although they could fight for some of the company’s clients. This is why I did not include their effects in the paper. Instead, the primary competitors for Blue Lagoon were UK-based tour companies that offered logistical travel services to British clients who wanted to visit Croatia.

Concisely, I found that many tour companies in Britain offered logistics services to tourists travelling to different destinations around the world. While the services offered by these companies varied, their levels of service quality differed across the spectrum. A handful of these travel companies are in the UK. The major ones included Croatian Villas, Completely Croatia, Transun, Balkan escape, Footsteps in Croatia, Cookery Workshops, in Makarska, G Adventures, and Affair Travel (Visit Croatia Tour Operators, 2013). The major travel agencies highlighted in this paper showed the high level of competition that characterised the tourism industry because these companies have an established client base and have many years of experience in the industry.

Despite the discovery of the high level of competition in the sector, I found a market gap in the varied levels of services offered by these companies. In other words, I found that the competitive business strategy for Blue Lagoon would be in attracting and retaining customers who value quality services.

Furthermore, with the quest to collaborate with some of the most experienced travel agencies in the country, such as Expedia, Blue Lagoon could provide the most updated and relevant travel information and logistical services to its clients. By focusing primarily on the Croatian market, and being a Croatian, I believe I have sufficient knowledge of the market, which I could use to develop a workable business plan. Therefore, this strategy aligns with the marketing strategy of positioning Blue Lagoon to as a company that provides quality services.

Question 6: Barriers Met

What were the main Barriers your were faced with when:

Undertaking your Research

When undertaking the research, I encountered several challenging issues that revolved around exploiting the existing opportunities that Blue Lagoon had to offer. For example, when undertaking the research, I found out that the current lack of leaders in the Croatian tourism industry poses an opportunity for Blue Lagoon to create a name for itself as the most preferred travel company for British and foreign tourists who wish to visit Croatia. However, the methodology for doing so, or meeting this goal was unclear. Nonetheless, this difficulty did not negate the fact that Blue Lagoon had an opportunity to develop a dominant presence in both the British and Croatian tourism markets, from a demand and supply perspective.

In the same process, I also found out that there were new opportunities available to expand Blue Lagoon’s primary market beyond Croatia. These opportunities also included expanding the scope of tourism packages the company could offer. Lastly, the company could also cash in on the trend towards incorporating work, wellness and nature in modern holiday packages.

This opportunity inspired the development of the holiday packages, as we saw through the inclusion of work-related activities, such as farming, in some of the company’s holiday packages. Although I developed unique holiday packages, I was not sure about how well these packages exploited the existing opportunities available for Blue Lagoon. Furthermore, the changing economic and political space of Europe, following the “Brexit” vote made it difficult to predict (correctly) the feasibility of the proposed strategies.

Completing your Major project

When finalising the major project, my main barrier to completion was procrastination and the differing views between my professor and I. However, procrastination was the most dominant issue here because when writing the fifth chapter of the report, I believed there was no hurry in finishing the project because I had completed the main parts of the business plan.

This problem slowed me down in the last phase of project completion. Lastly, as mentioned above, I had differing views from my professor regarding the direction the proposal would follow. Although we reached a consensus regarding most issues, I had to change different aspects of the proposal to align with a common view of the business plan.

Question 7: Your Professional Development

Risk management is the most important management skill I came to learn from undertaking the business plan. In chapter five of the proposal, I identified three main types of risks that included product risk, market risk, and financial risk.

A Product risk, in the context of the Blue Lagoon business plan, refers to the possibility that the customers would not fully understand the kinds of holiday products that the company would be selling to them. This was a significant risk for the company because it would affect its financial performance. Market risks often occur when the targeted market fails not resonate well with the kind of services Blue Lagoon would offer. I had different strategies for managing each risk.

For example, I managed the product risk through effective market research. It helped me to understand how the products fit within the needs of different market segments. To overcome market risks, I spent a lot of time investigating where potential customers would alternatively go to get the same services as Blue Lagoon offers, if they did not do business with the company. I also understood the proper marketing channels that would appeal to the target markets and whether they could promote the business, or not. By evaluating the impact of these market dynamics, I had the basis for managing the market risk.

To manage financial risk, I understood that the main risk for Blue Lagoon would be the failure of friends and family members to support the business by refusing give money as capital investments for the business. This would be a risky outcome for me as the business owner because I intend to get enough capital to finance the business through contributions from family members and friends.

To minimise financial risk, I had to subdivide the business plan into different milestones and investigate the financial requirements needed for meeting each milestone. By articulating these requirements and understanding the business growth plan, I believe my friends and family members would feel confident enough to write up a cheque for financing the business. Comprehensively, I believe risk management was the most important management skill I came to learn from the business plan development because risk is the main cause of uncertainty in the implementation of the business plan.

Question 8: Objectives

The main objective of the proposed business plan was to identify a business opportunity in the Croatian tourism industry. I believe I achieved this objective, fully. For example, I demonstrated that the Croatian tourism industry has experienced a renewed growth after the end of the 2007/2008 global financial crisis. I also explained that Europe is going to maintain its position as a preferred tourist destination for different types of holidaymakers in the western world.

To determine the business opportunity that exists in the Croatian tourism industry, I also found that in Croatia and most parts of Eastern Europe tourism remains a vibrant economic sector and a significant foreign exchange earner.

However, the full potential of this sector, in Croatia, remains untapped because most people are not aware of the amazing tourist attractions the country has to offer. Part of this problem rests in the failure of existing tour companies and travel agencies to highlight some of the country’s best tourist attractions because they mostly focus on providing traditional tourism products, such as hiking, biking, ship cruises, deep-sea diving and similar products.

Throughout the analysis, I also found that I am in a prime position of understanding the demand and supply aspects of the business. My research also revealed that Britain is a significant tourism destination for different visitors who come from different parts of the world. In fact, according to the Tourism Alliance, 2016), “the UK is the eighth largest international tourism destination ranked by visitor numbers. The first seven destinations are France, USA, Spain, China, Italy, Turkey, and Germany” (p. 1). Based on this fact, I could strategically position Blue Lagoon to exploit the inflow of tourists to Britain.

This strategy would involve attracting foreign tourists to the business by including a visit to Croatia as part of their holiday package. Indeed, most of these visitors also visit other destinations when they visit Britain. In the context of the proposed business plan, I would position myself as a specialist tourist travel agent in London who sells different holiday packages to British and foreign tourists.

Comprehensively, I found that the hope of fully exploiting Croatia’s tourism potential rests in setting up an enterprise that could holistically display and exploit what the country has to offer. This background outlined the basis for the formulation of the business proposal, but more importantly, it demonstrated how far I achieved my objective for the business plan, which was to identify a business opportunity in the Croatian tourism industry.

Question 9: Findings and Outcomes

The findings of the business proposal show that Blue lagoon has a relatively strong opportunity of exploiting the tourism potential that exists in the Croatian and British tourism markets. The strategic fit of the business idea stems from the SWOT analysis of the business’s internal environment, which highlights the strategic positioning of the business owner as a well-versed citizen of Croatia who understands the country well and knows the different kinds of attractions it offers to foreign nationals. The market feasibility of the business plan is justified by the fact that the business would adopt lean operational strategies, based on the understanding that the business owner would be the only employee of the company.

Three important assumptions underlined the business plan. The first assumption was that the success of the business would depend on increased customer satisfaction. The second assumption stemmed from the understanding that excellent customer service was the main competitive feature to distinguish Blue Lagoon from its rivals.

The last assumption was that the business would mainly be service-oriented. Overall, I planned to implement the business plan over a course of 19 weeks with the main milestones being the completion of a market survey and feasibility plan, arrangement of funds, product and service development, infrastructure development, sales and marketing, and the establishment of an online marketing platform.

The findings I derived from this project are useful to my academic pursuit, as a master’s student, because they gave me an opportunity to evaluate my competency in merging theory with practice. Here, I could evaluate how well I performed in this regard through a review of my business proposal with my instructor. The completed business proposal would also be useful to other students because they would have another example of how to develop an effective business plan. More importantly, it would be useful to students who want to start a business in the tourism or hospitality space because most of the contents of the business proposal relate to this field.

The outcomes of this project are also useful to my future employer because they would have a platform for evaluating my skills in project management. Indeed, through my work, they would have a better understanding of my organisational and project development skills. For example, in the last chapter of the business proposal, I developed a Gantt chart to show how I would achieve different milestones in the project and when I would do so. In the same chapter, I outline different project milestones that include product and service development, infrastructure development, sales and marketing, establishment of online presence, market survey and feasibility, and funds arrangement. Since I believe I did a good job on the business proposal, I am inclined to believe that they would find my skills useful to the organisation.

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