Suleyman Demirel University

Suleyman Demirel University

Faculty of Economics

Department of Economics

BUSINESS PLAN

for

"Arsenal" Bookshop

Prepared by: Assem Nurbayeva

Dayana Tumenbayeva

Aidos Kuanyshbek

Ayan Akhym

Subject: Management

Almaty, 2014

Executive Summary

The "Arsenal" the only bookshop that will operate in Kaskelen town that provides a great amount of books of various genres to anyone's taste and preference. It is small business with Limited Liability Partnership form of ownership owned by four members. (Assem Nurbayeva, Aidos Kuanyshbek, Dayana Tumenbayeva and Ayan Akhym)

The bookshop will provide some distinctive features that will be useful and convenient for our customers. Pleasant atmosphere, high quality books that will give people access to great volume of information (social, educational, entertaining, etc.), convenient location will satisfy customers and each of them will find something that will suitable for him.

The "Arsenal" will be located in the center of Kaskelen town. There are some villages nearby Kaskelen, so the number of potential customers is higher. Moreover, the bookshop will be very helpful for the citizens of Kaskelen and related to it regions, and for students and teachers of Suleyman Demirel University that is located there, as there will be no use to go to Almaty with the purpose of finding a desirable book. We made little survey from which we find out what genres people prefer more, where usually they take them and how often they buy books.

We have no direct competitors in our area, however there are several strong ones in Almaty. All of them provide wide range assortment and high quality books at reasonable prices. We will use two types of advertisement and on-line selling. It is billboards and posters. Today the advertising is expensive, but we will not need so much advertisement after 3 months, the posters will be enough as we will be known for our customers.

To start up our business we require 807000 KZT. We as the owner of the business will held the investment by ourselves with the help of our parents.

I. Business Description.

Name of the business.

The bookshop's name is "Arsenal". The meaning of this word is a large collection of the things you can use to achieve a particular purpose. In our case, we consider books as the arsenal of knowledge, experience whole humanity and opportunity to plunge into the mysteries of the past. We provide the wide range of different goods.

Nature of the business.

We are going to sell the books that are offered in 8 languages (Kazakh, Russian, English, Turkish, Arabic, French, Italian and Chinese) and of various genres (books for preschool and school study, fiction, biographies and memoirs, comics & graphic novels, fairytales, history, politics, culture, encyclopedias, horror, mystery, science fiction, classics, myths and legends, drama, fantasy). We can offer the books that will satisfy anyone's needs and tastes.

Unique or distinctive features of the business.

a) Our bookshop is supposed to be successful as there is no any others in Kaskelen. Moreover, there are some villages nearby Kaskelen that also need interesting and qualitative books.

b) Audio books are likely to be a help for people who has problems with eyesight. So we are going to include them in our assortment.

c) Some discount cards are given to loyal and permanent customers.

d) Books in different languages such as English, Turkish, Chinese and others are provided for our customers.

e) If there is no needed book at our bookshop, customers can order it on-line at our web-site: arsenalbook.kz

Mission Statement.

Our bookshop's mission is to find a part of soul of every person with the help of books from different parts of the world that can be suitable to anyone's taste and to present them knowledge and widen the boundaries of unfamiliar world of our readers.

Vision Statement.

Within 10 years to become the most successful and the biggest bookshop in the country. To be the place where people can find a book that they like and stay alone with their fantasy.

Assumed location and its advantages.

Our bookshop will be located at the Autostation. There are several advantages. Firstly, there is a crossing of the main streets in Kaskelen where a lot of people not only from Kaskelen itself but also from nearby villages come or change the buses, so here we have a big number of potential customers. Secondly, a great number of other shops and services like cafes, beauty salons, construction materials shop, etc. are at Autostation, thus, our bookshop can be noticed by people coming here. Thirdly, students from Suleyman Demirel Uniersity and citizens do not have to go to Almaty spending hours on the way to buy necessary books because bookshop "Arsenal" is comparatively close to them.

We are going to rent a boutique at "Damu" mall for our bookshop. Our adress is 153 Abylaykhan street, Kaskelen town, Kazakhstan. There are 28 sq. meters area and monthly cost of rent is 84000 KZT (3000 KZT/sq. metres). So the yearly expenses on rent will be 1008000 KZT.

II. Industry profile and Overview.

Industry Analysis

Bookshop industry has completely changed with the time passed. Traditional bookstores' mission was only to sell books, they were simple in design and layout. Today small-scale bookshops (even those owned by the large chains) have been closed because of increasing availability of electronic books in the Internet. Though, people are very fond of reading consider the bookshop industry will not be displaced with electronic books. According to the investigations of specialists in book industry previously the majority of people buy only one book in two months in Kazakhstan (reference: http://yvision.kz/). Our book industry is closely related to Russian one. Books in Russian language considerably prevail the native one. For about 10-15 years ago the bookshops were little shops that were at the first floors of apartments. However, the book industry today is more developed in Kazakhstan. The main participants of book industry are publishers, libraries and also bookselling organizations. The major part of this industry is concentrated in Almaty (77%) and Astana (13%) towns. Overall there are 360 publishers, such as Aruna, Alamatykitap, Atamura, Zheti Zhargy, Mektep, etc. They publish schoolbooks, fiction, children literature. Some of them have their own competitive bookshops (Atamura, Almatykitap). Moreover, some the bookshops of Almaty like "ЭкономикС", "Эврика" have their shops more than in one town. However, there are no bookshops in Kaskelen, and we are going to fill this gap. Speaking of book industry, it should be mentioned that there are 4135 libraries the readers of that are 25.14% of population of RK. There is a slight sales increase in the books of native publishers. The study books are mostly bought.[1]

III. Business Strategy.

Competitive Strategy

What about Porter’s competitive strategy, we will use Focus strategy. It implies that a company selects one or more market segments, identifies customer special needs, wants and interests, and designs a new good or service to meet these needs, wants and interests. Here we focus on a specific regional market – Kaskelen. Firstly, it much easier for a new entrepreneurship to concentrate on a small area. Secondly, here Arsenal will be the only bookshop, so we have a great opportunity for further development.

Competitor analysis

Concerning the competitors, there are no direct competitors operating in the same area. However, we have several strong indirect competitors. Each of them provides great amount of books in different genres, their location is convenient for the citizens of Almaty, and there is good design, quite and friendly atmosphere. So our main competitors are "Gulyanda" and "Книжный город" bookshops in Almaty city.

Firstly, "Gulyanda" is a well-known bookshop operating in Almaty. It offers wide assortment not only of books in different genres and for different ages, but also stationery products and toys. It has 3 affiliates in different places of Almaty. Besides, it also has a good on-line store where customers can order books that are in assortment with delivery at home.

The second is "Книжный город" bookstore that is also located in Almaty along with it, it operates in Astana town. Its assortment is of high value and it has big client base exactly in shop as well as on-line one. It provides some discount cards for their customers.

Comparative table

Bookshop	"Arsenal" (OurCompany)	"Gulyanda"	"Книжный город" ("Book city")
Price	From 135 to 8100	From 420 to 7000	From 300 to 5000
Service	Self - service (but also there is consultants)	Self - service (but also there is consultants)	Self - service (but also there is consultants)
Location	Kaskelen Abylaykhan st. 153	Almaty Tole bi st.111 Shevchenko st. 112 Koktem district. 17	Almaty Rozibakiyev st. 283
Advertising campaign	Billboards, posters, web - site	Web - site	Web - site
Interiors	There is a spacey boutique in the "Damu" mall at the first floor. The books on the shelves are grouped by the genres. Different colors (blue, orange, green, yellow, violet) are used in decoration in order to create bright and cheerful atmosphere. There is also cashier and table for seller.	There are three floors in the shop. There is a great amount of books, that are divided into sections according to the genres. The green and yellow colors are the most preferable. The cashier is on each floor near the exit.[2]	There is one floor, but the shop is long itself. It is divided into several section on the base of genres of books (classic, modern fiction, children, specialized books, etc). The main color is red, the bookshelves are made from dark wood. The shop has two automatically opening doors, near to one of them the cashier is.[3]

SWOT Analysis of future company

Strengths:

Ø "Arsenal" sells a wide variety of fiction, non-fiction and general interest books in Kazakh, Russian, English, Turkish, Arabic, French, Italian and Chinese languages, as well as school textbooks and audio books.

Ø Excellent advertising campaign.

Ø Excellent web-site.

Ø Customers can order a book if we do not have it right now.

Ø Affordable prices.

Ø Good location (a lot of potential customers can observe it).

Ø Customers will not have to go to the town to find needed book anymore.

Weaknesses:

Ø We do not have especial building for our bookshop as our competitors have, we will operate in a boutique in "Damu" mall.

Ø There is no any affiliates due to we are a new business.

Opportunities:

Ø "Arsenal" is the only bookshop in Kaskelen, so we do not have any direct competitors.

Ø Good opportunity for expanding and creating additional special offers.

Ø Great potential market (citizens of Kaskelen and villages, students and teachers from SDU).

Threats:

Ø From year to year more people, especially the youth, prefer electronic books.

Because we do not have direct competitors, Arsenal is supposed to be a monopolist in the market. It is our greatest advantage. Even our strong indirect competitors ("Gulyanda", "Knijnyi Gorod") will not be so attractive to our potential customers. Our wide assortment can provide people with all necessary books.

IV. Marketing Segment.

Target market

The "Arsenal" bookshop will target customers who are needed books starting from preschool study to any preferences of other people and the primary age is about from 5 to over 63. So our potential customers are students of SDU and citizens of Kaskelen and related to it regions. The population of Karasay region is 289788 people, 78919 of them are children till the age of 15, 187132 are men at the age of 16-62 and women at the age of 16-57, and the rest are elder people. Also we have approximately 3000 students from SDU and 1000 citizens of nearby villages.[4] (Graph 1

Graph 1

We have made a survey to gather information about book industry. We asked 30 people questions about types of books they prefer most of all. According to it we found out that the most preferable genre of books is Fantasy. The science fiction is at the lowest position. Approximately the same result is at Traditional Literature, Realistic Fiction and Informational types of books. Other types are at point 2. After this research we make a decision what types of books to provide for our customers.

Graph 3

Besides, we also asked where people usually take the books, if they purchase, borrow or give no preference to each of them. There are 3 groups of people: 1) those who read printed books, 2) who read e-books and 3) who listen to audiobooks. The result for 1 and 2 groups is that they mostly purchase rather than borrow books, the 3 group has the opposite result. 43% of people gave no preference answer.

Graph 4

It is also important to know the frequency of purchasing. We identified that almost the half of asked people never buys books and the one third purchases sometimes. The minor part is occupied by those who buy them seldom and often.

Pricing

The price of books will be set by adding a mark - up to cost of books of our publishers. The mark - up of our bookshop will be 35%, so we can find the price of our books.[5] (Table 1)

Table 1

Type of book	Cost of product (KZT)	Price with mark - up (KZT)
Preschool study (kaz-rus)	100 - 540	135 - 729
Encyclopedias for children (kaz-rus)	1250 - 3150	1685 - 4250
"Famous people of the East" (kaz-rus)	490 - 595	660 - 805
"Fairytales of kazakh nation" (kaz-rus)
"Fairytales of the world" (kaz-rus)	350 - 525	475 - 710
Comics & Graphic Novels (eng)	1500 - 4600	2025 - 6210
Biography & Memoir (eng)	1500 - 5520	2025 - 7452
Bestsellers (rus - eng)	1500 - 6000	2025 - 8100
Fiction (rus)	650 - 4200	880 - 5670
History, Politics, Culture (rus)	300 - 5600	405 - 7560
Horror	950 - 2350	1280 - 3170
Classics	700 - 4500	945 - 6075
Fantasy	1700 - 3500	2295 - 4725
Science fiction	1750 - 5800	2360 - 7830
Books on other languages	500 - 5800	675 - 7830
Audiobooks	640 - 5380	864 - 7263

Advertising

Concerning the advertising, we consider the billboards, some posters and web - site will be the most effective way of attracting customers for the first time. There is all information about our bookshop available for customers at our web-site - arsenalbook.kz. and where they can order any preferable book. So our expenses for the advertising of our bookshop for the first time will be 132000 KZT. (3*(40000 KZT for 3*6 sq. m. billboard) + 12000 KZT (600 KZT for * 20 posters of A1,A2 format). The monthly price for advertising on the 3*6 sq. m. billboard is 400000, we are going to rent 3 billboards (at autostation, in Altyn Aul, near university and near
"Aport" mall). Concerning the posters, we will order 20 posters, that we will distribute in Kaskelen, the price for ordering 20 posters of A1,A2 format is 600 KZT. So the sum of monthly price for them will be 120000 + 12000 = 132000 KZT.[6]

V. Management Segment.

Form of ownership

There is Limited Liability Partnership form in our company which is owned by four members whose liability is limited, we will share managerial duties as well as profit and losses. The majority of organizations in Kazakhstan prefer this form of ownership. LLP has advantages as well as disadvantages.

Advantages of LLP in Kazakhstan:

Ø Any company debts or obligations are not personally held by each partner.

Ø This partnership is flexible within business ownership. Contribution to the business is decided by each partner. Duties and responsibilities are divided either equally or depends on experience of individual.

Ø The quantity of owners is not limited.

Ø The limited liability partnership like another ones are not taxed and losses/profits flow into owners' tax returns.

Disadvantages of LLP in Kazakhstan:

Ø One of the big cons is that unlike other partnerships, LLP is not accepted as legal business structure in every state.

Ø The death or withdraw of a partner leads to the end of partnership.

Ø Partners do not have to consult with each other while making some decisions over the business, if only it is not drawn up in the partnership agreement.

Names of owners and their qualifications

1. Assem Nurbayeva - Director

Graduate: SDU Faculty of Economics, specialty - economics

Personality: Hard-working, responsible, strong

2. Aidos Kuanyshbek - Research and Development manager

Graduate: SDU Faculty of Economics, specialty - economics

Personality: Persuasive, communicative, creative

3. Dayana Tumenbayeva - Sales Manager

Graduate: SDU Faculty of Economics, specialty - economics

Personality: Organized, responsible, hard - working

4. Ayan Akhym - Accountant

Graduate: SDU Faculty of Economics, specialty - economics

Personality: Calm, responsible, good at accounting

Organization Chart

Our Bookshop will be organized according to Functional Departmentalization. This structure is the most suitable one for our Bookshop as we are supposed to be a small organization. It is known that functional departmentalization implies that employees are grouped together into departments based on common skills and work activities. Here we have director, research and development manager, sales manager and also accountant. The director will work with suppliers and watch and analyze the competitors. The work with target customers and market is relied on the research and development manager, moreover he also arranges the advertizing campaign. Sales manager and accountant are mostly involved in office work. The salaries will depend on accountant and sales manager's job will be controlling the selling process.

VI. Start-up segment.

Needed facilities and equipment.

To start our business, first of all, we need an office, which we have found. It is a room of area 28 sq. meters located in the Abylaikhan st. 153 in the Damu Shop. Also we must buy the facilities as follows:

· Bookshelves and cashier table (250000KZT)

· Computer and monitor (70000KZT)

· Printer (15000KZT)

· Table and chairs (15000KZT)

· Signboard (32000KZT)

· Cashier register (21000 KZT)

· Some office staff such as pens, pencils, paper, etc. (3000KZT)

· Cleaning staff (5000KZT)

· Decoration, i.e. artificial flowers (5000KZT)

Suppliers.

Our suppliers are:

· publishers Aruna, Alamtykitap, Atamura (Kazakhstan), online ordering from Eksmo, Rosmen, Ardis (Russia), McMillan (Great Britain)[7]

· table and chairs can be bought from private owners[8]

· kupe.kz (WoodLife): bookshelves, office armchair[9]

· Avtoritet company: cash register[10]

· Alser Computers: computer, printer[11]

· RanAi Company: signboard[12]

All other staff like cleaning equipment, office supplies and decoration can be bought on any shop or bazaar.

Salary expenses.

As long as Arsenal is a new bookshop, it is not big, we can decrease number of emloyees to the minimum. We four are enough. Due to we are owner and have the same part in the business, the salary is equal for each of us.

Employees	Monthly salary (KZT)	Yearly salary (KZT)
Director
Sales manager
R&D manager
Accountant

Estimating of start-up costs.

For all necessary facilities we need 416000 KZT. Initial advertising will cost 132000 KZT. Salary expenses are 280000 KZT. Totally, we need 828000 KZT to start our business.

Loan proposal.

We are four co-owners of the Arsenal bookshop, and each of us can give by $2500. Overall, it is $10000 or 1810000 KZT (dollar exchange rate is 181)[13]. A part of money as needed as start-up cost, and the rest we can use for unexpectable expenses.

VII. Financial segment.

Sales forecast.

Sezon	Type and number of books sold per month	Cost per month	Monthly income (KZT)	Total monthly income (KZT)	Yearly income (KZT)
January-Febrary	Schoolbooks
Encyclopedias
Novels of all genres
Books on foreign languages
Audiobooks
March-April	Schoolbooks
Encyclopedias
Novels of all genres
Books on foreign languages
Audiobooks
May-July	Schoolbooks
Encyclopedias
Novels of all genres
Books on foreign languages
Audiobooks
August-October	Schoolbooks
Encyclopedias
Novels of all genres
Books on foreign languages
Audiobooks
November-December	Schoolbooks
Encyclopedias
Novels of all genres
Books in foreign languages
Audiobooks

Saying “Novels of all genres” we mean fiction, tales, bestsellers; schoolbooks are books for preschool study, pupils, students; encyclopedias are general encyclopedias and books about history, politics and culture as well.

Projected (proforma) income statement.

Yearly income: 23512600 KZT

Cost of books per year: 1203850 KZT

Salary expenses: 3360000 KZT

Taxes: 4496920 KZT

Advertising expenses: 504000 KZT

Rent: 1008000 KZT

Utility: electricity 20000 KZT

Net income: 2085180 KZT

[1] http://www.bizlife.kz/article/show/id/28, http://expertonline.kz/a11570/

[2] http://www.gulyanda.kz

[3] http://www.bookcity.kz

[4] Statistical Agency of RK http://stat.gov.kz/

[5] http://www.akpress.org/books.html, http://www.almatykitap.kz

[6] http://alyansgroup.kz/info/1/

http://almaty.satu.kz/Izgotovlenie-plakatov

[7] http://www.aruna.kz/

http://almatykitap.kz/

http://atamura.kz/

http://www.rosman.ru/

http://eksmo.ru/

http://www.ardisbook.ru/

http://xn--80apmglwl.xn--p1ai/%D0%B2/%D0%90%D0%BB%D0%BC%D0%B0%D1%82%D1%8B/Macmillan- i9429940000788524?v=d493gr39555I74H3gd67uvtx43010J2Hdc7d459B0A8BB79999gg89GC361I1484GH85

[8] http://alma-ata.alm.olx.kz/dom-i-sad/mebel/mebel-dlya-gostinoy/stoly-stulya/

[9] http://kupe.kz/

[10] http://almaty.pulscen.kz/products/kassovy_apparat_9985565

[11] http://www.alser.kz/

[12] http://almaty.satu.kz/p2645026-vyveska-magazinov.html

[13] http://kazfin.info/exchange/usd/

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