Introduction to Business Marketing/Finance/Accounting

Question: Describe about the Introduction to Business for Marketing/Finance/Accounting. Answer: Introduction The business sector in New Zealand is largely dominated by 460,000 small and medium sized enterprises (SMEs) that currently employs a massive 30% of the entire workforce, i.e., over 900,000 people (New Zealand Government, 2014). Out of the entire population of enterprises in New Zealand, 97% are presently small businesses consisting of around 20 or fewer employees (See Appendix 1). The aim of this essay is to analyse the business overview, and the marketing/finance/accounting aspect of OOB Organic that operates out of Auckland, New Zealand. Business Overview OOB is a producer of fresh and frozen varieties of organic Strawberries and Blueberries (Omaha Organic Berries, 2016). Industry Overview The organic foods sector in New Zealand has been growing at 25% for three consecutive years irrespective of the global recession(Cooper, et al., 2012) and was valued at $480 million in 2009 (See Appendix 2). OOB Organic is a market leader in its domain of organic fresh fruit and vegetable producers in New Zealand, which consists of over 1,700 certified and licensed organic operations. Marketing Marketing Mix Analysis Product. The products offered by OOB are Asurequality Organic Certified, premium organic fruits which are grown without any form of chemical treatment and related desserts, which are manufactured in a way so as to retain the goodness of the fruits (Omaha Organic Berries, 2016). These include fresh and frozen varieties of organic Strawberries and Blueberries, as well as authentic and delicious, sorbets, ice creams (Se Appendix 3). The organisation has been in existence for a decade and is currently on the lookout for opportunities to expand since it is in the growth stage of its product lifecycle(Twose, 2013). The products are positioned as a premium brand for genuine and certified organic berries and guilt-free desserts that are made with real fruits, without the use of harmful chemicals(Auton Auton, 2013). The products of OOB Organic are branded as by focusing on its key attribute of trustworthiness, that is differentiated based on its sustainability and simplicity, i.e., its ingredients are just fruit, cream and sugar. Thus, its unique packaging is similarly done using only three colours, which signifies its limited ingredients (Martin, 2013). Pricing. The pricing strategy alternatives available to OOB Organic are: Penetration pricing strategy where low prices are used to increase sales, Skimming pricing strategy where high prices are used to increase margins and Competitive pricing strategy where prices are set comparative to industry rivals. The correct pricing strategy for the organisation is competitive pricing strategy of setting prices in the range of $9.99/500 gm for frozen berries, $6.99/470 ml and $3.99/120 ml for ice creams, $11.99/6 unit pack for sorbet ice blocks and $11.99/450 gm for organic smoothies; which will help to reduce price sensitivity, ensure that the prices are market competitive and encourage more consumers to make purchases. Promotion. The promotional methods available to OOB Organic in this context are (Auton Auton, 2013): Trade promotion through trade shows, such as the Food Show in New Zealand, Consumer promotion through product tastings in supermarkets, Public relation through participation in the Restaurant Month Event in Auckland, and Advertising outsourced to Special Group for rebranding OOB Organic from berry growers to a premium brand of organic food producers and distributors (See Appendix 4). The most suitable promotional strategy for OOB Organic is a combination of online promotions through a social media campaign which will attract millennial consumers and increase the interest of tech-savvy consumers, as well as consumer promotions in supermarkets which will increase desire and elicit action through purchase. 2.1.4 Place. The successful distribution of OOB Organic products is aimed at supermarket and hypermarket retailers such as Countdown and New Worlds in New Zealand. The domestic distribution channel can also include popular organic and speciality food stores such as Nosh and Farro in order to reach out to health-conscious consumers (Auton Auton, 2013). In addition to this, exporting half of the overall turnover of frozen berries, i.e. around 500 tonnes, the brand can be targeted at Australian consumers. By making it available in at least 1600 of the top retail outlets of Woolworths stores and Coles stores (NZ Farmer, 2014), the company will be able to reach out to a much larger consumer base spread across the entire country. Consumer/Market Analysis The competitive market for premium quality organic foods can be segmented Geographically, based on the location of the consumer, which will enable the frozen organic mixed berries and ice creams can also be exported to emerging markets (Atherton, 2015) to benefit from the growing aggregate demand for organic foodstuff in these countries and capture a larger market share (See Appendix 5). Demographically, based on the age of the consumer, which will enable the company to serve younger consumers at its ice-cream and smoothie bars such as the one near Matakana Cinemas (Matakana Village, 2016). Behaviourally, based on heavy users of organic foods, who are increasingly aware of the harmful effects of chemical contamination of food (See Appendix 6). Psychographically, based on preference for healthy foods, in an effort to lead a healthy lifestyle (See Appendix 7). Benefit segmentation, based on the need for healthier snacks by consumers, who are particular about taste and health benefits (See Appendix 8). The target consumers are thus urban millennials, who have a sweet-tooth, like consuming organic fruits and are looking for healthier snacks and guilt-free indulgences in dessert items. Finance and Accounting Capital Structure of the Business Small and medium-sized companies often face capital gaps while de-leveraging their capital structures and making important financial transitions. There is a constant need to strengthen the capital structures and to reduce the dependency on borrowing by focusing on alternative mechanisms that enable such enterprises to increase their debt (OECD, 2015). Equity Financing. The options available to OOB Organic for equity financing are: There are 9 programs for business loans and 63 programs for a business grant available for small and medium business entrepreneurs located in Auckland, which can be availed for financial aid, expert advice, and mentorship (NZ Funding Grants, 2016). Funding can be sourced from angel investors who are always on the lookout for investment opportunities that will fetch them high returns on investment(OECD, 2015). The Entrepreneurs' Challenge programme arranged by the University of Auckland Business School, provides $1 million from venture capitalists in equity growth funding to the winner(Twose, 2013). The best alternative for OOB Organic for equity financing is to seek out government equity funding since it is an award-winning Auckland based businesses. This enables it to receive government funding in the range of $500 - $25,000,000 to help finance their small and medium business needs since there is no guarantee that venture capitalists will choose OOB Organic as a suitable business venture Long-Term Financing. The options available to OOB Organic for long-term financing are: Bank lending from Kiwi bank, Westpac NZ, GE Capital, Biz Finance, ANZ Bank and ASB Bank are a credible source for fulfilling the long-term investment and cash flow needs of start-ups in New Zealand(OECD, 2015). Crowdfunding through Snowball Effect, Pledge Me, Equities, and Lift-off can be used to finance particular projects of the enterprise, through peer-to-peer lending (OECD, 2015). Equity crowdfunding is the suitable option for long-term financing since OOB Organic is a new and growing entrepreneurial venture that might not get capital from traditional sources due to the absence of high collaterals and a strong credit history. Short Term Finance The options available to OOB Organic for short-term financing are: Invoice Finance through Pacific Invoice Finance, Invoice Funders and Fifo Capital can be utilised to oversee transient income by releasing money from the receipt receivables record, and reinvesting money back the business to create a more prominent return out of capital that would have generally been tied up on the accounting report(OECD, 2015). Merchant Finance through SFO Capital and New Zealand Merchant Finance Group Limited is for enterprises with multiple low-value point-of-sale transactions, where the funding is done based on card sales value, where repayment is made through revenue collection from the provider of the card(OECD, 2015). The most appropriate option for short-term financing at OOB Organics is invoice financing since it consolidates the gap between the point of sales and receipt of payment, is a flexible short-term financing solution for a small/medium enterprise and can be received irrespective of the existing financial status of a profit/loss making organisation. References Atherton, J. (2015, June 21). Oob wins in organic food sales surge. Retrieved from Stuff.co.nz: https://www.stuff.co.nz/business/69550482/oob-wins-in-organic-food-sales-surge Auton, S., Auton, R. (2013, May 24). Small Business: Shannon Auton - OOB Organic. (G. South, Interviewer) Cooper, M., Manhire, J., Dan, C., Reider, R., Morris, M., Rosin, C. (2012). New Zealand Organic Market Report. New Zealand: Organics Aotearoa. Martin, J. (2013, January 29). Special Group takes OOB to the masses. Retrieved from Idelog.co.nz: https://idealog.co.nz/design/2013/01/cream-crop-oob-takes-it-masses Matakana Village. (2016). OOB Ice Cream Cafe. Retrieved from Visit Matakana: https://www.visitmatakana.co.nz/food-wine/oob New Zealand Government. (2014). The Small Business Sector Report. New Zealand: New Zealand Government. NZ Farmer. (2014, August 28). Organic berry firm snares new market. Retrieved from Stuff.co.nz: https://www.stuff.co.nz/business/farming/cropping/10423230/Organic-berry-firm-snares-new-market NZ Funding Grants. (2016). Auckland Government Funding Programmes. Retrieved from NZFundinggrants.org: https://www.nzfundinggrants.org/region/auckland-government-funding-programs OECD. (2015). New Approaches to SME and Entrepreneurship Financing: Broadening the Range of Instruments. Istanbul: OECD. Omaha Organic Berries. (2016). About Us. Retrieved from Omaha Organic Berries: https://www.oob.co.nz/about-us Twose, H. (2013, September 13). Berry growers branch out. Retrieved from NZ Herald News: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3objectid=11123913