BF091 Understanding Business Planning And Budgeting: Industry, Porter’s Five Force Model, Customer And Competitor Analysis

Industry Analysis

1. Industry Trends

The major industries in Singapore needs to be identified in terms of tourism, biomedical sciences, logistics, banking and finance. In addition to this, some of the other focus on the industry needs to be also depicted for the focus on the chemicals and construction. It is worth mentioning that under the construction industry the entrepreneurs have put an augmented focus on the casino resorts, shopping malls, residential projects, sports hub and business parks.  Some of the emerging industries in the country are evident in terms of the focus on thee casinos, health care, education, info communication and media (Gnvconsultancy.com 2018).  

Th physical activity trends in the country shows that there has been major focus on the being active among the individuals in the age group of 13-15 years and 16-24 years. There has been 38% participant consumption and 62% of workforce contribution. The Singaporeans and obesity data have further shown that there is an increasing awareness among the individuals for fitness consciousness from 1998 to 2010 (Ministry of Culture 2018).

2. Sports Industry

The most popular trends in the sports industry in Singapore is depicted in terms of Swimming, football, cycling, cricket, Basketball, Rugby and badminton. The sports industry focus is also evident in terms of the adventure sports. This includes adequate provision in terms of the wake boarding, rock climbing and cable skiing. The focus on the indoor sports is also depicted in terms of the activities such as tennis, table tennis, badminton and gymnastics. The emphasis on the various types of the outdoor sports activities needs to be depicted in terms of the focus on the different types of the sports activities which are based on the football, volleyball and cricket. The activities pertaining to the water sports are seen in terms of the construction of unique features pertaining to the recreation centres (Briefing 2014).

In top list of sports of Singapore Basketball, Bodybuilding and Sailing are considered to be most evident in compare to the availability of the other sports activities. It is worth mentioning some of the various type other sports under this list with the inclusion of Badminton, netball and table tennis (Agarwal et al. 2017).

Supplier Power – Low

The availability of the similar websites where the clients will be able to find Athletes and Coaches needs to be depicted in terms of Sport Singapore. This is a government hosted website where the individuals have a number of choices to search for their desired coaching service. Some of the payers in the market needs to be identified in terms of the websites such as the Active SG. There are also customised service providers for providing services associated to sports coach. Such a website has been identified with sport4kids. This website has focused only on the coaching advisory for the kids. Moreover singaporeathletics.org is also seen to be based on providing a similar service across Singapore. There the supplier power is depicted to be low with the existence of large number of players dealing with a similar trade (Zomer et al. 2016).

3. Porter’s Five Force Model

Buyer Power -Moderate

The buyers also seek for being active in terms enthusiasm in fitness and a large proportion of such individuals are depicted to be in terms of age group 13-15 years and 16-24 years. It has been also seen that the overall contribution of the workforce of the employees are seen in terms of the 62% workforce contribution. The buyer power in the industry needs to be focused in terms of more demand for differentiated sports service such as jogging, swimming, badminton and tennis. Hence, they are not in a good position to bargain for less price for the specialised service (Agarwal et al. 2016).

Barriers to entry- Low

The main barrier to entry in the sports industry needs to be inferred with the uncertainty in the future and the big trend to capture onions of the clients. The challenges as per the gameday experience is also seen to be leading challenge as availability of the sponsors who will be willing to make a significant contribution towards the sports activities.

Threat of substitutes- Moderate

The service provided by the company in website is depicted to be online in nature. However, there may be several types of the offline modes in building such a community of the fitness professionals. This needs to be identified with the several types of the initiatives taken by the local fitness trainers who has a network of the clients visiting a gymnasium (Lim 2017). In addition to the fitness professionals may be also available on the social media to build the network of clients seeking for advice in a particular discipline of sports.  Therefore, there is a moderate pressure from the other sources of the information sharing platforms (both online and offline).

Rivalry among the competitors -High

The high amount of rivalry among the existing companies needs to be identified in terms of the Sport Singapore, Active SG, sport4kids. and singaporeathletics.org. However, due to the increasing number of more players in the industry associated to the such service, the rivalry among the competitors is depicted to be high in nature. In addition to this, the main rival of the company needs to be also determined with https://lessonsgowhere.com.sg. This website is responsible for offering of number of services ranging from choosing appropriate sports and the area selected (Wai 2015).

The customers of the company will vary between casual fitness enthusiasts and individuals seeking for sports as their full-time profession. The customer analysis related to the industry is seen in terms of the all age groups as there will be experts available to provide a differentiated service. The customers are also seen with such individuals who are seeking for expert advice on their diet and regulatory eating regime. This is mostly applicable to those customers are working professionals and has a limited time to contribute towards fitness.

1. Direct Competitors

Customer Analysis

The direct competitors of the company need to be represented in terms of the inline websites providing such a service. These are seen with websites such as Sport Singapore, Active SG, sport4kids. and singaporeathletics.org. The director competitor of the company need to be identified with https://lessonsgowhere.com.sg.

2. Indirect Competitors

The indirect competitors of the company need to be identified with the availability of the offline modes in building such a community of the fitness professionals. This may include fitness trainers who has a network of their own for the clients visiting a gym. In addition to the fitness professionals may be also available on the social media to build the network of clients seeking for advice in a particular discipline of sports. This is also depicted as an indirect competition to the business (Halevy et al. 2016).

3. Competitive objective analysis

The main objective of the competitive analysis needs to be focused with the providing of the different types of the service offered by the company in terms of seeking out for the other initiatives taken by the competitors. This analysis phase into to be translated in to the innovation strategy which will able to bring in new insights for the clients for focusing on a greater focus in defining the USPs. Some of the main form of the innovation pertaining to the nature of the business which will be considered with the several types of the focus as per the discount strategy, advertising strategy, product pricing strategy. The important nature of the other focus for the study needs to be identified in terms of the initiatives pertaining to the future options business mergers (Petrovi?, Milovanovi? and Desbordes 2015).

1. Start-up description

The start-up analysis of the company has been identified with the selection of the appropriate location for building the headquarter. The main location for the selection of the office premise is depicted in the Junction off Jalan Boon Lay area. This area is seen to be focusing more on the existence of the IT parks which will be conducive for the business in taking support of IT solutions if needed in the future.  The company needs to further consider the initial registration fees of S$315 as the ACRA registration fees. The total registration time in the website will vary between 14 days to 2 months (Acra.gov.sg. 2018). The Singapore Government is seen to provide subsidies to the new start-ups. This needs to be directly considered with the various types of the effort given by the Singapore government which are related to the provide various range of the services associated to programs such as EntrePass, T-UP and SME Talent Programme (STP) which are aimed at the start-ups. The subsidy under the STP provided by the Singapore Government is seen to be ranging upto 70% as per the secondment cost pertaining to the research.

Competitor Analysis

The company will further rely on the SG Loan services which is considered as a load backed up by the Singapore Government. This loan will be conducive for the company as the initial business will start by less than 10 employees. Therefore, the company will be able to draw more amount subsidy from the Singapore Government (Rikvin 2016).

2. Service description

The main service provide by the company needs to be depicted in terms of providing appropriate service related to a convenient platform for the fitness enthusiast who are seeking for a professional advice in major sports disciplines in Singapore. The company aims to provide easy options for the clients to contact with the personal fitness/sports coach at the best price along with ensured results. Some of the important objective of the service needs of the company is identified with maintaining a database for the best fitness coach related to jogging, swimming, badminton and tennis. The service will also suggest the best referral program for a coach who will provide the desired fitness plan by the clients. The important source of revenue for the company will be also based on the 15% commission from the sports coach for the first two years, which will increase to 20% in the later years.

1. Market Segmentation

The market segmentation for the companies are listed with the following services:

• Casual sports advisory services- Focused on the individuals who are seeking for basic sports advice in the discipline of jogging and swimming.
• Professional sports advisory services- Focused on the individuals who are seeking for advanced advice in the discipline of jogging and swimming.
• Premium sports advisory services- Focused on the individuals who are seeking to participate in the championship in the discipline of jogging and swimming.
• Dietary advisory services: Focused on the working professionals who are seeking for an advice on how to maintain balanced and healthy food habits.

Market Needs

The market needs are considered as per individuals seeking for fulfilling various types of the sports advisory services. The market needs are seen in terms of the all age groups. The requirement of the services is also evident among the individuals who are seeking for expert advice on their diet and regulatory eating regime. This is mostly applicable to those customers, working professionals and regular people who wants to be fit (Lee et al. 2017).

Market trends

The important trend in the market needs to be depicted as per the most popular trends in the sports industry in Singapore with Swimming, football, cycling, cricket, Basketball, Rugby and badminton. The sports industry focus is also evident in terms of the adventure sports. This includes adequate provision in terms of the wake boarding, rock climbing and cable skiing. The focus on the indoor sports is also depicted in terms of the activities such as tennis, table tennis, badminton and gymnastics. The emphasis on the various types of the outdoor sports activities needs to be depicted in terms of the focus on the different types of the sports activities which are based on the football, volleyball and cricket.

Market growth

The projected growth of the company needs to be taken into account with increasing awareness of the calorie intake. In addition to this, the development in the new sports infrastructure led by Sports Facilities Master Plan (SFMP) is identified as the key to the emergence of such an online business to facilitate advisory activities.

1. Personnel Plan

The personal plan has been formulated with  the inclusion of the initial service providers. The names of the coaches along with their work experience are shown below as follows:

Name	Educational Qualification	Experience	Fees
Dr. Saiful Nizam	MBBS, Diploma in Occupational General Physician	17 Years	$ 22
Dr. Moti Hassaram Vaswani	MBBS, MCFP (Family Med), FCFP, General Physician	48 Years	$ 50

Table 1: Personnel Plan

(Source: As created by the author)

1. Place of operation and location

The place and operation of the facility needs to be considered as per the depicted in the Junction off Jalan Boon Lay area. As the location has several companies for IT related services it will be conducive for the business in taking support of IT solutions.

The important consideration for the financial aspects has been duly considered with the present interest on loan at 3.7% which will be taken from the HSBC Personal Loan. In addition to this, the business in Singapore needs to consider a Corporate Tax rate of 17% (Cen et al. 2017). The outlining of the important financial aspects is enumerated below as follows:

Start-up Requirements
	Start-up Expenses
		Particulars	Amount ($)
	Fixed Costs
		Premises (RENT & RATES)	$35,000
		Salaries	$125,000
		Interest on loan @ 3.7%	$2,960
		Accountant Fees	$180,000
		Rewards and incentives	$35,000
		Commission paid to merchants	$15,000
		Sales and Marketing	$25,000
		Total Fixed Costs	417960
	Variable Expenses
		Communication and cellular service expenses	$12,000
		Promotion Expenses	$8,000
		Adding new features to the Website	$35,000
		Logo Designs	$5,200
		Market survey	$7,500
		Website Maintenance	$3,200
		Lease payments	$42,000
		Total Variable Costs	$112,900
		Total Costs	$530,860
	Average Monthly Costs
		Premises (RENT & RATES)	$2,917
		Lease payments	$3,500
		Interest on loan @ 3.7%	$247
		Communication and cellular service expenses	$1,000
		Promotion Expenses	$667
		Salaries	$10,417
		Total Average Monthly Costs	$18,747
		x Number of Months:	12
		Total Monthly Costs	$224,960
	Total Startup Expenses		$755,820
	Start-up Assets
	Owner Funding
		Owners Fund	$100,000
		Total Owner Funding	$100,000
	Loans
		Bank Loan	$80,000
		Other
		Total Loans	$80,000
		Total Startup Funds	$180,000
	Assets
		Land & Building	$800,000
		Softwares	$80,000
		Computer	$35,000
		Total Fixed Assets	$915,000
	Total Start-up Assets		$1,095,000

Table 2: Important Assumptions for Start-up Requirement

(Source: As created by the author)

(1) SALES FORECAST
Year	0	1	2	3	4	5
Projected Sales		574,000	607,840	682,558	762,982	875,510
(b) COST OF E-Commerce Website		12,000	12,480	13,042	13,694	14,515

Table 3: Annual Sales Forecast of Sports Coach Website for five years

(Source: As created by the author)

Breakeven Analysis
Breakeven Sales Value =	Average fixed cost/% contribution
Average fixed cost	35000
Contribution %	50%
Year	Revenue	Contribution	Fixed Cost	Profit
1	574000	287000	35000	252000
2	607840	303920	35000	268920
3	682558	341279	35000	306279
4	762982.39	381491.2	35000	346491
5	875510.2105	437755.11	35000	402755

Table 4: Breakeven analysis of Sports Coach Website

(Source: As created by the author)

(4) PROFIT AND LOSS FORECAST
	Preop
Year	0	1	2	3	4	5
Revenue	0	574,000	607,840	682,558	762,982	875,510
Cost of sales	0	12,000	12,480	13,042	13,694	14,515
Gross profit	0	562,000	595,360	669,516	749,289	860,995
Gross Margin		545,697	520,470	547,016	576,806	614,106
Expenses/overheads
Premises (rent, rates)		35,000	35,000	35,000	35,000	35,000
Salaries		125,000	127,500	132,600	139,230	146,192
Logo Designs		5,200	3,200	1,300	0	0
Accountant Fees		180,000	184,500	189,113	193,840	198,686
Rewards and incentives		35,000	35,700	36,414	37,142	37,885
Software Renewals		15,000	17,500	20,000	22,500	25,000
Sales and Marketing		25,000	28,000	31,360	35,123	39,338
Communication and cellular service expenses		12,000	12,360	12,731	13,113	13,506
Promotion Expenses		8,000	8,160	8,323	8,490	8,659
Adding new features to the Website		35,000	35,875	36,772	37,691	38,633
Website Maintenance		3,200	2,300	2,600	2,850	3,150
Market Survey		7,500	8,400	9,408	10,537	11,801
Lease Payments		42,000	40,000	43,000	30,000	20,000
Total expenses/overheads		527,900	490,095	506,212	524,979	546,050
Profit before tax		34,100	105,265	163,304	224,309	314,945
Tax @ 17%		5,797	17,895	27,762	38,133	53,541
Profit after tax		28,303	87,370	135,542	186,177	261,404
Transfer to reserves		34,100	105,265	163,304	224,309	314,945
ROC		5%	87%	132%	175%	239%

Table 5: Profit and Loss Forecast for Sports Coach Website

(Source: As created by the author)

X-Axis Label	Sales	Gross Margin	Net Profit
Year 1	$921,000	$694,327	$226,673
Year 2	$975,540	$676,205	$299,335
Year 3	$1,096,111	$714,740	$381,371
Year 4	$1,225,865	$757,788	$468,078
Year 5	$1,407,442	$812,964	$594,478

Table 6: Sales , Gross Margin and Net Profit for 5 Years

(Source: As created by the author)

(2) CASHFLOW FORECAST
	Preop
Year	0	1	2	3	4	5
CASH INFLOWS
Cash from Sales		574,000	607,840	682,558	762,982	875,510
Directors loans		80,000	80,000	80,000	80,000	80,000
Capital Employed	600,000	100,000	103,000	106,090	109,273	112,551
Other cash inflows
TOTAL CASH INFLOW	600,000	754,000	790,840	868,648	952,255	1,068,061
CASH OUTFLOWS
Payments for materials		12,000	12,480	13,042	13,694	14,515
operating expenses (         )	0
Premises (rent, rates)	0	35,000	35,000	35,000	35,000	35,000
Salaries	0	125,000	127,500	132,600	139,230	146,192
Logo Designs	0	5,200	3,200	1,300	0	0
Interest and bank charges payable	0	2,960	2,960	2,960	2,960	2,960
Lease payments	0	42,000	40,000	43,000	30,000	5000
Corporation Tax		5,797	17,895	27,762	38,133	53,541
Market survey costs	0	7,500	8,400	9,408	10,537	11,801
Other preliminary expenses	0	3,200	2,300	2,600	2,850	3,150
capital expenditure
Computers	0	35,000	35,000	35,000	35,000	50,000
financing repayments
Loan repayments			20,000	20,000	20,000	20,000
TOTAL CASH OUTFLOWS	0	273,657	304,735	322,671	327,403	342,159
Cash flow summary
NET CASHFLOW FOR PERIOD	600,000	480,343	486,105	545,977	624,852	725,902
OPENING CASH BALANCE	0	600,000	1,080,343	1,566,448	2,112,425	2,737,277
CLOSING CASH BALANCE	600,000	1,080,343	1,566,448	2,112,425	2,737,277	3,463,179
(3) DEPRECIATION SCHEDULE
Year	0	1	2	3	4	5
Fixed Assets
Land & Building	800000	720,000	640,000	560,000	480,000	400,000
Softwares	80000	0	-64,000	-115,200	-156,160	-188,928
Computers	35000	28,000	22,400	17,920	14,336	11,469
Total book values (i.e. net fixed assets)	0	748,000	598,400	462,720	338,176	222,541
Annual Depreciation
Land & Building -10% straight line		80,000	80,000	80,000	80,000	80,000
Softwares- NA		80,000	64,000	51,200	40,960	32,768
Computers-20% reducing balance		7,000	5,600	4,480	3,584	2,867
Total annual depreciation		167,000	149,600	135,680	124,544	115,635

Table 7: Cash flow forecast for 5 Years

(Source: As created by the author)

Assets	FY-1	FY-2	FY-3	FY-4	FY-5
Current Assets
Cash	$71,081	$35,746	$14,781	$1,900	$1,700
Accounts receivable	$574,000	$607,840	$682,558	$762,982	$875,510
Total current assets	$645,081	$643,586	$697,339	$764,882	$877,210
Fixed (Long-Term) Assets
Softwares	$80,000	$80,000	$80,000	$120,000	$120,000
Land & Buildings	$800,000	$832,000	$869,440	$912,912	$963,122
Computer	$35,000	$35,000	$35,000	$35,000	$50,000
(Less accumulated depreciation)	$167,000	$149,600	$135,680	$124,544	$115,635
Intangible assets	$50,700
Total fixed assets	$798,700	$797,400	$848,760	$943,368	$1,017,487
Total Assets	$1,443,781	$1,440,986	$1,546,099	$1,708,250	$1,894,697
Liabilities and Owner’s Equity
Current Liabilities
Accounts payable	$24,000	$25,000	$27,000	$25,000	$27,000
Accrued Rent	$35,000	$35,000	$35,000	$35,000	$35,000
Bank Charges Payable	$3,000	$3,000	$3,000	$3,000	$3,000
Short-term loans	$10,000	$10,000	$10,000	$10,000	$10,000
Income taxes payable	$5,797	$17,895	$27,762	$38,133	$53,541
Accrued salaries	$125,000	$127,500	$132,600	$139,230	$146,192
Logo Designs	$5,200	$3,200	$1,300	$0	$0
Lease Payment	$42,000	$40,000	$43,000	$30,000	$20,000
Current portion of long-term debt	$2,960	$2,960	$2,960	$2,960	$2,960
Total current liabilities	$252,957	$264,555	$282,622	$283,323	$297,692
Long-Term Liabilities
Long-term debt	$80,000	$0	$0	$0	$0
Less: Loan Repayment		$20,000	$20,000	$20,000	$20,000
Deferred income tax	$1,110,824	$1,196,431	$1,283,477	$1,444,928	$1,617,005
Total long-term liabilities	$1,190,824	$1,176,431	$1,263,477	$1,424,928	$1,597,005
Total Liabilities	$1,443,781	$1,440,986	$1,546,099	$1,708,251	$1,894,697
Owner’s Equity
Owner’s investment	$100,000	$103,000	$106,090	$109,273	$112,551
Net Profits	$28,303	$87,370	$135,542	$186,177	$261,404
Reserve and Surplus	$34,100	$105,265	$163,304	$224,309	$314,945
Total owner’s equity	$162,403	$295,635	$404,936	$519,759	$688,900
Total Liabilities and Owner’s Equity	$1,606,184	$1,736,621	$1,951,035	$2,228,009	$2,583,597

Table 8: Projected balance sheet for 5 Years

(Source: As created by the author)

Capital Budgeting of Sports Coach Website
Cost of Capital	17%
	Year
	Now	1	2	3	4	5
Cost of E-Commerce Website	-12000
Annual Profit/Loss		28,303	87,370	135542	186177	261404
Total Cash Flows	-12000	28,303	87,370	135,542	186,177	261,404
Discounting Factor	0	0.85	0.73	0.62	0.53	0.46
Present Value of Cashflows	-12000	24191	63825	84628	99353	119229
Cumulative Cash Flow		24191	88016	172644	271997	391227
Net Present Value	379226.8
Payback Period	-12000	16303	103673	239215.0	-53038	314442
IRR	362%
Payback Period	Cost of investment/annual net cash flow
Payback Period	1	Year
Profitability Index	PV of future cash flows/Initial Investment
Profitability Index	22.67

 Table 9: Capital Budgeting of Sports Coach Website

(Source: As created by the author)

Common Financial Ratios
Debt Ratio (Total Liabilities / Total Assets)	1.00	1.00
Current Ratio (Current Assets / Current Liabilities)	2.55	2.43
Working Capital (Current Assets – Current Liabilities)	392,124	379,031
Assets-to-Equity Ratio (Total Assets / Owner’s Equity)	8.89	4.87

Table 10: Common Financial Ratios of Sports Coach Website for five years

(Source: As created by the author)

The company will have dedicated teams who will be having the expertise on website designing and search engine optimisation. They will be having the significant scope of contributing to the overall operational efficiency and making better network. The operational plan has been segregated with the fixed cost and the variable costs. The inclusion of the fixed costs is depicted in terms of Premises (Rent & Rates), Salaries, Interest on loan, Accountant Fees, Rewards and incentives, Commission paid to merchants, Sales and Marketing (Abeysinghe and Gu 2016).

References

Abeysinghe, T. and Gu, J., 2016. Estimating fundamental and affordable housing price trends: a study based on Singapore. Applied Economics, 48(49), pp.4783-4798.

Acra.gov.sg. 2018. Registering a Limited Liability Partnership (LLP) : Chapters – ACRA. [online] Available at: https://www.acra.gov.sg/components/wireframes/howToGuidesChapters.aspx?pageid=1063 [Accessed 8 Sep. 2018].

Agarwal, S., Choi, H., He, J. And Sing, T.F., 2017. Ethnic social network in public housing market in Singapore.(2017). Research Collection Lee Kong Chian School Of Business.

Agarwal, S., Qian, W., Reeb, D.M. and Sing, T.F., 2016. Playing the boys game: golf buddies and board diversity. American Economic Review, 106(5), pp.272-76.

Briefing, A. (2014). Asia’s Sports Industry: Singapore’s Next Major Growth Market? – Asia Business News. [online] Asia Business News. Available at: https://www.asiabriefing.com/news/2014/09/asias-sports-industry-singapores-next-major-growth-market/ [Accessed 31 Aug. 2018].

Cen, L., Maydew, E.L., Zhang, L. and Zuo, L., 2017. Customer–supplier relationships and corporate tax avoidance. Journal of Financial Economics, 123(2), pp.377-394.

Gnvconsultancy.com. (2018). Major Industries in Singapore | Industrial Parks in Singapore | One stop Solution to all your business needs. [online] Available at: https://www.gnvconsultancy.com/incorporation/major_indusries.html [Accessed 31 Aug. 2018].

Lee, K.M., Guo, S., Manning, V., Thane, K. and Wong, K.E., 2017. Are the demographic and clinical features of pathological gamblers seeking treatment in Singapore changing?.

Lim, S., 2017. Marketization and corporation of early childhood care and education in Singapore. In Contemporary Issues and Challenge in Early Childhood Education in the Asia-Pacific Region (pp. 17-32). Springer, Singapore.

Ministry of Culture, C. (2018). MCCY – Sports Facilities Master Plan. [online] Mccy.gov.sg. Available at: https://www.mccy.gov.sg/Topics/Sports/Articles/Sports_Facilities_Master_Plan.aspx [Accessed 31 Aug. 2018].

Petrovi?, L.T., Milovanovi?, D. and Desbordes, M., 2015. Emerging technologies and sports events: innovative information and communication solutions. Sport, Business and Management: An International Journal, 5(2), pp.175-190.

Rikvin. 2016. 16 Singapore Start-Up Grants and Schemes | Rikvin. [online] Available at: https://www.rikvin.com/blog/16-singapore-start-up-grants-and-schemes/ [Accessed 8 Sep. 2018].

Wai, L.L.M., 2015. Views on Sports Sponsorship in Singapore. In Emerging Trends and Innovation in Sports Marketing and Management in Asia (pp. 22-43). IGI Global.

Zomer, C., Nobre, A., Reindl, T. and Rüther, R., 2016. Shading analysis for rooftop BIPV embedded in a high-density environment: A case study in Singapore. Energy and Buildings, 121, pp.159-164.