Asian Institute of Technology
International Executive MBA Program
Vung Tau 3
**************************
Innovation and Techno Entrepreneurship
Group Assignment
CARNARD FOIE GRAS COMPANY LIM ITED
BUSINESS PLAN
Student Name: Mr. Tran Xuan Thien
Mr. Doan Huu Hai
Mr. Vu Xuan Lai
Mr. Dang Ngoc Anh
Instructor: Dr. Yuosre Badir
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Table of Contents 1. Introduction ............................................................................................................................. 5
2. The Company .......................................................................................................................... 6
3. The Product and Production .................................................................................................... 7
3.1. Farming the Duck ............................................................................................................. 7
3.2. Forced feeding process ..................................................................................................... 8
3.3. Primary product – Foie Gras ............................................................................................ 8
3.3.1. Preparing the fresh foie gras ..................................................................................... 8
3.3.2. Cooking process ........................................................................................................ 9
3.4. Secondary products ........................................................................................................ 10
3.4.1. Fresh duck breast .................................................................................................... 10
3.4.2. Duck confit.............................................................................................................. 10
3.5. Product quality and hygiene control............................................................................... 10
3.5.1. Product quality control ............................................................................................ 10
3.5.2. Hygiene control ....................................................................................................... 10
3.5.3. Production Capacity ................................................................................................ 11
4. Market Analysis ..................................................................................................................... 11
4.1. Targeted Customers........................................................................................................ 11
4.2. Market growth forecast .................................................................................................. 11
4.3. Competitors .................................................................................................................... 12
5. Marketing Strategies .............................................................................................................. 12
5.1. Product Strategy ............................................................................................................. 12
5.2. Pricing Strategy .............................................................................................................. 12
5.3. Advertisement and Promotion Strategies ....................................................................... 13
5.4. Distribution Strategy ...................................................................................................... 13
6. Management Team ................................................................................................................ 13
7. Capital and Sources ............................................................................................................... 14
8. Forecast Profitability ............................................................................................................. 14
9. Reference: .............................................................................................................................. 16
APPENDIX 1 – FINANCIAL FIGURES..................................................................................... 17
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EXECUTIVE SUMMARY
Nowadays, along with developing of Vietnam economi and life standard level, the demand of
gourmet is also increased. Revered as one of the most exquisite foods in the world, foie gras is
synonymous with great taste and unabashed elegance. So the foie gras are quite popular on the
menu in big hotel an luxury restaurant. Foie gras is the fattened liver of a duck or goose which is
made through the intentional force-feeding of a duck or goose to fatten and enlarge the liver.
The foie gras currently sale in Vietnam are imported either from French or other European
countries such as Romania or Bungari. Foie gras has never been produced by Vietnam, although
it has good nature condition such as low labor cost, abundance of food for duch feeding such
corn, and especially foreseeing of the increasing demand on foie gras in Vietnam market. In
attempt to meet with the demand and supplying to the market with the foie gras quality same as
those imported from overseas however with lower price, Carnard Foie Gras Company Limited
shall be established.
Carnard Foie Gras’s farm and factory shall be built on the block of plan with total area about one
hecta in which includes the out-door and indoor farm, slaughtering areas, cooking and packing
areas, twenty meter square cool room, offices and dormitory for workers.
Carnard Foie Gras has two main line of products. Their flagship product is foie gras, renowned
for its freshness, delicacy texture, quality ingredients and lower price than imported product. The
secondary product categories are other duck products such as fresh duck meat and pre-cooked
duck meat such as duck confit and rendered duck fat. The products shall be produced in closed
cicle from breeding the duck, farming, slaughtering, cooking, packing and delivery to customers.
Customer of Carnard Foie Gras are high class restaurants and luxury food stores or delicatessen
in the four largest cities of Vietnam i.e. Ho Chi Minh, Ba Ria Vung Tau, Ha Noi and Da Nang.
For later stage of development, customers can be expanded to other cities and also exported.
Together with the increment of income, number of Vietnamese middle class and high rate of
income spending on restaurant, it would be reasonable to expect the market growth rate of foie
gras to be around 30%-35% per year until 2016. The product prices are set at the lower prices
than those imported from oversea in order to penetrate the market and attacting customer to use
the products.
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With the estimated market demand and growth, the profit are expect to achieve in the second
year of operation.
Carnard Foie Gras shall be established with an investment of US $600,000 from equally shared
four investors who are very passion and having approriate skills to establish as well as running
the business.
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1. Introduction
Foie gras, which means “fat liver” in English, is the fattened liver of a duck or goose. The
delicacy is made through the controversial process called “gavage,” or the intentional force-
feeding of a duck or goose to fatten and enlarge the liver. This fattened liver is made to a pâté
with rich flavour and the silky smooth texture.
The traditional of force-feeding of duck or goose is very old, probably originating from the
incent Egypt. The gavage was spread throughout the Mediterranean, and adopted by the Greeks
and then the Romans of whom made foie gras into a delicacy in its own right. As Rome
expanded territorially, its gastronomic influence also expanded, turning foie gras into a food
enjoyed by gourmets. After the fall of Rome, it was the Jewish who kept and brought with them
the tradition of foie gras alive wherever Jews moved across Europe during the Middle Ages. The
foie gras became more popular when the king of French, Louis XIV, a gourmand, enjoyed haute
cuisine, but his tastes began to trickle down to the aspirations of the French middle class. After
the French Revolution, the bourgeois became the new consumers of cuisine, and they began to
frequent a new establishment known as the restaurant (Guemene and Guy, 2004). And though it
has enjoyed a long history, foie gras is still produced using the traditional methods passed down
by generations.
Globally, France produces about 20,000 tons of foie gras each year. Bulgaria is the world’s
second with 2,200 metric tons in 2009 and Hungary comes third with1,800 tons of goose foie
gras. Although the economic crisis the demand and production of foie gras is still expecting to
increase from 5%-10% in the next few years.
In Asia, especially in China where with the high economic growth and increasing number of
middle class who have more and more money, and they are looking for quality, and are willing
to pay for it. China’s total annual foie gras production of about 1,000 tons is still far off that is
demanded (Anakin, 2010).
Nowadays, along with developing of Vietnam economic, life standard level is increase. The
demand of gourmet is also increased and so the foie gras are quite popular on the menu in big
hotel an luxury restaurant. Although there is no previous study about demand of foie gras in
Vietnam, however, similar to China, we foresee a good indication of the opportunities for foie
gras business through the fast growing of Vietnamese's middle class which is now about 7
million households and the spending on average of 7% of the annual income on restaurant
(which is one of the highest rates in the worlds) (Hoang Yen, 2008). The demand of the foie gras
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is also represented at the increasing of number in luxury restaurants and hotels/resort and
entertainment complex in Viet Nam.
2. The Company
Carnard Foie Gras Company Limited is a startup company which farms the duck from which the
foie gras and other related duck product are produced. The facility is planned to be unique in that
all the stages of production, from breeding, farming, slaughtering, pre-cooking to packaging,
exist in one location. This design is to ensure the freshness and controlling of product hygiene.
The duck growing in Canard Foie Gras is the Moulard Duck which is believed to give the most
productive fatten liver.
Company plant is located in Ba Ria Vung Tau province which is about100 km from Ho Chi
Minh City and being the province of many luxury hotel and entertainment complex such as the
Ho Tram Strip Resort Complex with US 4.2 billions investment and the Good Choice Resort and
Convention Complex with US 1.4 billions investment. Company farm and factory shall be built
on the block of plan with total area about one hecta in which includes the out-door and indoor
farm, slaughtering areas, cooking and packing areas, twenty meter square cool room, offices and
dormitory for workers.
Company Vision:
To provide competitive prices and finest foie gras and related duck meat products to Vietnam
high class hospitality industry.
Company Mission:
Carnard Foie Gras is committed to the highest standards of animal welfare, and utilizes humane
techniques in the raising and feeding of ducks. Ducks are never individually caged and are
allowed to roam free range.
Objective of the Company:
Carnard Foie Gras's has several objectives that we will achieve within the first three years of
operation.
- Roll out the first product sale launch on October 2012
- Establish supplying strategic relationships with 10-15 high class hotels and restuarants in
Ho Chi Minh, Vung Tau, Da Nang and Ha Noi in the first year.
- Achieve sale revenue of US 200,000 for the first year operation, increase to US 300,000
for the next year and at minimum 20% for the third years.
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- Start to have profit from the second year.
Key success factors for Carnard Foie Gras
- Providing the best product quality duck products with lower prices than imported
products which is thank to the lower labor cost and duck feeding food. Our goal is to
produce the same high-quality foie gras, whether in Canada, France, Hungary, United
State or Vietnam.
- Carnard Foie Gras is the only one foie gras producer in Vietnam who can provide the
fresh, timely and making to order foie gras and duck related products.
- Establishing and maintaining working relationships and contractual agreements with high
class restaurant and retailer
- Effectively communicating potential customers, our position as a differentiated provider
of the highest quality specialty duck products
3. The Product and Production
Currently, Carnard Foie Gras's has two main line of products. Their flagship product is foie gras,
renowned for its freshness, delicacy texture, quality ingredients and lower price than imported
product. The secondary product categories are other duck products such as fresh duck meat and
pre-cooked duck meat such as duck confit and rendered duck fat.
3.1. Farming the Duck
The duck chosen for foie gras production is a hybrid between the muscovy duck and the
Pekin duck. There is an important sexual dimorphism in muscovy ducks, the adult male
weighs between 4.5 and 5 kg while the adult female weighs between 2.2 and 3 kg. The
Muscovy duck were too nervous and at the end of the force feeding period, their fatty liver
had a tendency to lose fat by melting. For all these reasons Muscovy ducks are crossed with
Pekin duck. A male muscovy duck is crossed with a female Pekin duck of and the product is
a sterile hybrid, the so-called mulard duck.
After hatching, the mulard ducks shall be grew in door for about 4 weeks, in order to
minimize the death rate, infected diseases and to increase the immune system of the duck.
After 4 weeks, the ducks are then allowed to go outside for four weeks. At this stage, the
duck are fed by mixture of bran, vitamin and minerals
The duck is then grown rapid muscle growth which generally lasts about four weeks, the bird
receives a large quantity of food. This results in esophagus dilation and progressively leads to
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the half fatted. Prior to force feeding, the ducks shall be trained to dilate the esophagus, for
example by grass ingestion. Such preparation makes it possible for the bird to receive a large
quantity of food in the forced feed process. The feeding mixture of this stage shall be
controlled with the components as followings: corn 20%, rice 50%, soya cake 22%, mineral
and vitamin supplement 8%.
Two week prior to the slaughtering, the ducks are went to the forced feed stage where they
shall be fed two meals per day with very high carbohydrate and fat mixtures which includes
corn 60%, rice 10%, soya cake 25%, mineral and vitamin supplement 5%. Corn is selected as
the main ingredient in the force-feeding diet because it is a low cost ingredient and also
because of its high starch content, starch being one the best substrates to stimulate neo-
lipogenesis in the duck livers.
3.2. Forced feeding process
The food is fed into the duck by a tube inserted to the esophagus. The food delivered to the
tube a hydraulic dispenser which can be pre-programmed to amount of foods and speed.
Another advantage of this dispenser is the opportunity to incorporate a certain amount of
uncooked whole corn grain into the mixture.
Regarding to the rearing conditions the ducks are placed in individual cages during the
cramming period. The main advantages being that there is no risk of confusing the ducks and
that they always remain in the right position. These practical changes together contributed to
enhancing productivity, with up to 400 ducks being force-fed by one person per hour.
3.3. Primary product – Foie Gras
3.3.1. Preparing the fresh foie gras
The fattened liver should be removed from the duck quickly after its death while the
duck is still warm. The fattened liver is examined closely in order to remove all tiny
veins that run through the two lobes of the livers. The veins shall affect on the taste and
smoothness of the foie gras as they are quite chewy. The foie gras is then soaked in milk
and honey with the ratio thirty to one which make the foie gras swell as well as flavoring
it. The foie gras shall be seasoned at precise ratios to one (01) kilogram of foie gras as
followings:
- Salt 18g per kg
- Fesh ground pepper 5g – 7g per kg
- Sugar: 15-20g per kg
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- Fresh grouned nutmeg: 5g – 7g per kg
The foie gras is then marinated for at least one day under refrigeration to ensure the
freshness and product hygiene. After marinating, the foie gras shall be cooked in the
terrine or vacuum bag depending on the quality of the foie gras. The high quality foie
gras shall be cooked in vacuum bag to retain the whole liver lobes, while the less quality
shall be cooked in terrine.
3.3.2. Cooking process
The half cooked foie gras (in French Mi-cuit Foie Gas) is applied to two foie gras
products, each of which is cooked to a different internal temperature. The mi-cuit foie
gras is cooked in a terrine in a water bath, or steamed in a vacuum bag, is taken to an
internal temperature of 46-50 Celsius degree and then removed from the heat source. It
is pale pink in color and melting in texture and is generally agreed to have the best
flavor. This cooking process shall retain the freshness and full texture of the foie gras
and shall be the highest quality and most expensive foie gras in Cardnard Foie Gas’s
products. However, this product shall also have shorter product life i.e. maximum two
month if keeping at temperature below 4 Celsius degree. This product is more suitable
for high turn-over restaurant and hotel.
For longer product life, the foie gras has to be cooked in the following ways:
- to an internal temperature of 70 Celsius degree and held at that temperature for 92
minutes or
- to an internal temperature of 80 Celsius degree and held for 16 minutes
This cooking process shall allow the product life to 6 months and must be stored under
refrigeration. It tastes pretty good but does not have the finesse of the less cooked
products.
The full cooked foie gras (in French En conserve foie gras) is the foie gras has been
cooked in an internal temperature of 105 Celsius degree and completely sterilized. It is
shelf-stable and can be stored anywhere for 1-2 years. It shall have beige color and has a
denser, and stronger flavor than half cooked foie gras.
When the foie gras is cooked, it must be cool and drain the excess water, then refrigerate
for at least 24 hours before it can be delivered to customer.
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3.4. Secondary products
3.4.1. Fresh duck breast
Duck breast is de-boned, remove the excess fat and air-seal packed for fresh products.
3.4.2. Duck confit
Duck confit is the duck breast or duck leg which is salted and marinated, then slow
cooked in duck fat. Duck leg shall be marinated for at least 24hrs with the mixture of
thyme, bayleaf, junipers, pepper and 50g coarse salt per kilogram of duck leg. The
marinating process must be stored in the refrigeration to ensure the hygiene of the
products. After 24hrs, the marinating mixture is brushed off the duck which is then slow
cooked in duck fat for about 4 hours until the duck meat is tendered.
The cooked duck confit is removed from the pot and cool in the refrigerator and covered
by duck fat for reservation. This reservation can keep the duck confit for at least two
months until they are packed in the air sealed bag and delivered to customer which is
expected to last for another two month under refrigeration conditions.
3.5. Product quality and hygiene control
3.5.1. Product quality control
The quality of the foie gras is classified based on the size, color and texture of the liver.
The highest quality foie gras shall have the size about 700-800g, well lobed, smooth and
round and putty coloured. The foie gras shall be the category 1 product or called foie
gras d’oie entire in French. The category 2 products are those liver with less than 100g
smaller in size or oversized but still have the smooth and putty coloured. The category 1
and category 2 products shall be cooked in the vacuum bag for whole foie gras.
The other kind of foie gras shall be the category 3 which shall be reconstituted and
cooked in the terrine which shall sale as foie gras terrine.
3.5.2. Hygiene control
Carnard products naturely are always in high risk of for food poisioning, therefore
hygiene control is vitally important as same as the product quality. Temperature of the
cooking process and storage shall be strictly controlled. Products are delivered to be
packed in air sealed bag and insulated box with ice bag inside. The slaughetering
process also separated from the cooking to prevent the cross contamination.
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Sample of each production batch shall be retained for hygenie check and testing
purposes. Carnard Foie Gras also works closely with the local Bureau of Veternary for
regular health check and vaccination of the ducks.
3.5.3. Production Capacity
The initial investment for the farm shall be able to grow simutaneously production
capacity of the first three years shall be around 4 tons of foie gras and 6 tons of confit
per years. However, in planning for future development, the land of the farm and
production facilities can be able to expand and produce up to 10 tons of foie gras per
year.
4. Market Analysis
4.1. Targeted Customers
Carnard Foie Gras's has targeted two main local customer groups to sell the products to. The
first group is high class restaurants such as Au Manior De Khai, An Nam and luxury hotel
/resort in the large cities such as Ho Chi Minh, Ha Noi, Da Nang and Ba Ria-Vung Tau such
as the New World hotel, Park Hyatt hotel, Caravell hotel, Sofitel Plaza hotel, Sedona hotel,
Equatorial hotel, Sheraton hotel, the six star resort Six Sense in Con Dao and the potential Ho
Tram Strip. These restaurant and hotel shall purchase our product to serve their customers
who are willing to pay for high price. This segment is expecting to grow at double in the first
two years and there currently are 50 potential customers. The second group is the luxury food
stores or delicatessen will be then sell directly to the end consumer. This segment has a lower
growth rate with 5 potential distributors.
Carnard Foie Gras is also looking forward to the last customer segment which is exporting to
oversea reseller, however this shall be the long term plan. As mentioned before, Carnard Foie
Gras’s originally targeted firstly to the Vietnam customers. The market has indicated that
their products have broader appeal and Carnard Foie Gras's has recognized this and acted
accordingly.
4.2. Market growth forecast
Business Monitoring International forecasted the pre-cooked and canned food market of
Vietnam shall have significant growth in the next few years, in particular in the year 2014
this market shall increase with approximate of 24.2% in quantity and 48.7% in revenue
(Vietrade, 2010). The double increment in revenue comparing with the growth in quantity
can be a good indication that Vietnamese’s are willing to pay more on the luxury and high
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price food products. Together with the increment of income, number of Vietnamese middle
class and high rate of income spending on restaurant as mentioned above, it would be
reasonable to expect the market growth rate of foie gras to be around 30%-35% per year until
2016. This forecast growth rate is also further supported by the increasing number of high
class hotel and resorts projected invested to Vietnam or going to operate in the next few
years.
4.3. Competitors
While there are many competitors from oversea who can export their product to Vietnam,
there are none direct and local competitor at Carnard Foie Gras's foie gras and pre-cooked
duck meat. This is quite advantageous for Carnard Foie Gras's, providing them with
additional breathing room to establish itself as the premier brand of luxury food.
The competition threat from the new entrant shall also be low because of the barriers of
know-how, technical aspects on farming the duck and cooking the foie gras, well established
strategic customer of Carnard Foie Gras.
5. Marketing Strategies
5.1. Product Strategy
The products are positioned at the high end restaurant or hotel or delicatessens in terms of
both quality and price. The products shall be categorized depending on the quality, sizes and
texture, however, there shall not differentiate between those customer segments.
5.2. Pricing Strategy
Given that Carnard Foie Gras needs to penetrates the local market, gaining competitors'
customers and attracting non-users of our product or convincing current customer to switch
using more of our product as local provider. Therefore, the Carnard Foie Gras products shall
follow the penetrating market pricing which the prices are set at the lower prices than those
imported from oversea. The products prices shall be as followings:
No Products Description Unit Unit Prices
(USD)
1 Foie Gras
1.1. Category 1 (premium quality) Per kg 80.00
1.2. Category 2 (high quality) Per kg 72.00
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1.3 Category 3 (terrine foie gras) Per kg 65.00
2 Duck confit Per kg 20.00
3 Fresh duck breast Per kg 7.00
The prices of the foie gras and confit are set at the level 10% lower than those imported. The
above prices shall be adjusted subjected to the significant fluctuation of the input raw
materials and inflation each year.
5.3. Advertisement and Promotion Strategies
Given that Carnard Foie Gras products are mainly sold to other businesses, therefore we shall
establish the sale office and sale team in Ho Chi Minh City. This sale team shall directly
market our products to the targeted hotel, restaurant and delicatessen. Free samples shall be
provided to the head chef for trail.
We also cooperate with Au Manior De Khai restaurant to organize the foie gras weeks in
order to promote and increasing the awareness of restaurant goer. This event shall be
advertised on selected magazine such as on-flight magazines, the entrepreneur weekly
magazine and picture of foie gras or confit duck dishes shall be displayed outside of the
restaurant.
For the long-range goal, Carnard Foie Gras aims to gain enough visibility to leverage the
product into other distribution sites within Vietnam, then to move on to other countries in
Asia.
5.4. Distribution Strategy
The products shall be packed in the air tight sealed plastic bag and delivered to customer in
the insulated spongy box with ice bags. This is to ensure the products quality and hygiene.
The products shall be delivered to customer in Ha Noi and Da Nang by airfreight, while for
customer in Ho Chi Minh and Vung Tau by car or motorbike.
6. Management Team
Carnard Foie Gras's management team includes experienced person from diversified background
such as marketing, chef graduated from French culinary school and experienced in Australia,
engineering and veterinary will ensure sustainable growth for Carnard Foie Gras. Carnard Foie
Gras's management team included of three highly motivated individuals who experiences and
qualification are briefed as following.
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Mr. A is the Director of the Company. He has a MBA degree and graduated from University of
Finance and Economic, Vietnam for his bachelor. He is very experience in managing business,
especially for start-up company. Good inter-personal skill and influencing on the people are also
his other strength
Mr. B is the Production Manager of the Company. He hold a bachelor in biotechnology and
diploma in culinary from Le Cordon Blue-French. He had many year working experiences in
high class restaurant in Sydney, Australia and under supervised by one of the most well known
master chef in Australia. He shall also be the person in charge for the cooking, product quality
and hygiene control.
Mr. C is Sale and Administration Manager. He graduated from University of Finance and
Economic, Vietnam and majored in Marketing. Previously, he was the sale manager for a FMCG
company in Ho Chi Minh City. He is native in inter-personal relationship skilled and has good
connection with the hotel restaurant owner in Ho Chi Minh City and Ba Ria Vung Tau.
Mr. D is Maintenance and Site Manager. His background is in engineering and construction. He
has more than ten years experiences in international companies for design, structuring and
facilities maintenance.
7. Capital and Sources
Carnard Foie Gras shall be started with a total investment of USD 600,000 which is equally
funded 4 founders. This fund shall be used for land rental, factor, farm building, equipments,
ducks, food for feeding the ducks of the first years, labors. For the first three years, Carnard Foie
Gras does not intend to have any long terms borrows or increasing of capitals.
However, Carnard Foie Gas also plans to seek for fund from Venture Capital in the next stage
which is for further development and expansion of the business. This plan shall be depended on
the forecast and performance of the first three years.
8. Forecast Profitability
Carnard Foie Gras will plan to launch the product in October 2012 to take the advantage of
special events of the year such as Christmas, New Year in which foie gras is the traditional food
for Westerners. It is expected that Canard Foie Gras will not gain profit in the first year. Loss
mostly arrives from fixed monthly expenses such as labor, rent, and insurance. However, there is
still reason for company to continue i.e. sales is increasing and the optimizing of the cost.
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Carnard Foie Gras's forecasts profitability in net profit in second years. The financials within the
plan further reinforce the exciting nature of this business.
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9. Reference:
1. Anakin, 2010, China goes gourmet with foie gras, Luxyo, viewed on 27th July 2011, access
at http://www.luxuo.com/gastronomy/china-foie-gras-euralis.html
2. Guemene D. and Guy G., 2004, The past, present and future of forcefeeding and “foie gras”
production, World’s Poultry Science Journal, Vol. 60, June 2004, pg 211-222
3. Hoang Yen, 2008, Xem cách chi tiêu của người dân các nước và Việt Nam, Vnmedia,
viewed on 27th July 2011, accessed at
http://www.vnmedia.vn/newsdetail.asp?NewsId=140072&CatId=26
http://www.vnmedia.vn/newsdetail.asp?NewsId=140072&CatId=26
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APPENDIX 1 – FINANCIAL FIGURES
1. Start up Funding
Start-up Funding Start-up Expenses to Fund $14,800 Start-up Assets to Fund $499,000 Total Funding Required $513,800 Assets Non-cash Assets from Start-up $489,000 Cash Requirements from Start-up $10,000 Additional Cash Raised $86,200 Cash Balance on Starting Date $96,200 Total Assets $585,200 Capital Planned Investment Investor 1 $150,000 Investor 2 $150,000 Investor 3 $150,000 Investor 4 $150,000 Total Planned Investment $600,000 Loss at Start-up (Start-up Expenses) ($14,800) Total Capital $585,200 Total Capital and Liabilities $585,200 Total Funding $600,000
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2. Sale Forecast
Sales Forecast FY 2013 FY 2014 FY 2015 Unit Sales Foie Gras 1,760 2,100 2,500 Confit 2,940 3,500 4,200 Fresh Duck Meat 3,530 4,200 5,100 Total Unit Sales 8,230 9,800 11,800 Unit Prices FY 2013 FY 2014 FY 2015 Foie Gras $70.00 $88.00 $102.00 Confit $20.00 $22.00 $25.00 Fresh Duck Meat $7.00 $8.00 $10.00 Sales Foie Gras $123,200 $184,800 $255,000 Confit $58,800 $77,000 $105,000 Fresh Duck Meat $24,710 $33,600 $51,000 Total Sales $206,710 $295,400 $411,000 Direct Unit Costs FY 2013 FY 2014 FY 2015 Foie Gras $17.50 $22.00 $25.50 Confit $5.00 $5.50 $6.25 Fresh Duck Meat $1.05 $1.20 $1.50 Direct Cost of Sales Foie Gras $30,800 $46,200 $63,750 Confit $14,700 $19,250 $26,250 Fresh Duck Meat $3,707 $5,040 $7,650 Subtotal Direct Cost of Sales $49,207 $70,490 $97,650
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Foie Gras
Confit
Fresh Duck Meat
Figure 1-First Year Monthly Sale Plan
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3. Projected Profit and Loss
Pro Forma Profit and Loss FY 2013 FY 2014 FY 2015 Sales $206,710 $295,400 $411,000 Direct Costs of Goods $49,207 $70,490 $97,650 Production Payroll $22,800 $25,100 $26,900 Other Costs of Goods $21,000 $25,000 $30,000 ------------ ------------ ------------ Cost of Goods Sold $93,007 $120,590 $154,550 Gross Margin $113,704 $174,810 $256,450 Operating Expenses Sales and Marketing Expenses Sales and Marketing Payroll $16,404 $28,400 $28,400 Advertising/Promotion $12,000 $12,000 $17,000 Other Sales and Marketing Expenses $6,000 $6,000 $13,000 ------------ ------------ ------------ Total Sales and Marketing Expenses $34,404 $46,400 $58,400 General and Administrative Expenses General and Administrative Payroll $13,200 $14,600 $16,600 Marketing/Promotion $3,500 $6,000 $3,000 Depreciation $53,200 $53,200 $53,200 Sell and Representative Office $4,800 $4,800 $4,800 Telephone and Stationary $1,240 $1,300 $1,300 Electric and water $14,900 $20,000 $25,000 Other General and Administrative Expenses
$13,200 $14,000 $20,000
------------ ------------ ------------ Total General and Administrative Expenses
$104,040 $113,900 $123,900
------------ ------------ ------------ Total Operating Expenses $138,444 $160,300 $182,300 Profit Before Interest and Taxes ($24,741) $14,510 $74,150 Interest Expense $733 $0 $0 Taxes $0 $3,627 $18,537 Net Profit ($25,474) $10,882 $55,612
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4. Cash Flow
Pro Forma Cash Flow FY 2013 FY 2014 FY 2015 Cash Received Cash from Operations Cash Sales $155,033 $221,550 $308,250 Cash from Receivables $47,545 $72,077 $100,439 Subtotal Cash from Operations $202,578 $293,627 $408,689 Additional Cash Received Sales Tax, VAT, HST/GST Received $20,671 $29,540 $41,100 Subtotal Cash Received $223,249 $323,167 $449,789 Expenditures FY 2013 FY 2014 FY 2015 Expenditures from Operations Cash Spending $52,404 $68,100 $71,900 Bill Payments $127,180 $152,616 $183,279 Subtotal Spent on Operations $179,584 $220,716 $255,179 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $11,200 $15,000 $20,000 Principal Repayment of Current Borrowing
$5,000 $0 $0
Purchase Other Current Assets $4,000 $5,000 $7,000 Dividends $0 $0 $40,000 Subtotal Cash Spent $199,784 $250,716 $322,179 Net Cash Flow $23,465 $72,415 $127,610
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5. Balance sheet
Pro Forma Balance Sheet
FY 2013 FY 2014 FY 2015
Assets
Current Assets Cash $132,665 204665 324665
Accounts Receivable $4,133 $5,906 $8,217
Inventory $8,754 $12,540 $17,371
Other Current Assets $54,000 $59,000 $66,000
Total Current Assets $199,551 282111 $416,253
Long-term Assets Long-term Assets $427,000 $427,000 $427,000
Accumulated Depreciation $53,200 $106,400 $159,600
Total Long-term Assets $373,800 $320,600 $267,400
Total Assets $573,351 $602,711 $683,653
Liabilities and Capital FY 2013 FY 2014 FY 2015
Current Liabilities
Accounts Payable $4,153 $5,240 $6,300
Current Borrowing $0 0 0
Other Current Liabilities $9,471 $24,011 $45,111
Subtotal Current Liabilities $13,624 $29,251 $51,411
Total Liabilities $13,624 $32,103 $51,4111
Paid-in Capital $600,000 $600,000 $600,000
Retained Earnings ($14,800) ($40,274) ($23,370)
Earnings ($25,474) $10,882 55,612
Total Capital $559,726 $570,608 $632,242
Total Liabilities and Capital $573,351 $602,711 $683,653
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6. Break-even Analysis
Break-even Analysis Monthly Units Break-even 603 Monthly Revenue Break-even $15,141 Assumptions: Average Per-Unit Revenue $25.12 Average Per-Unit Variable Cost $5.98 Estimated Monthly Fixed Cost $11,537
($15,000)
($10,000)
($5,000)
$0
$5,000
$10,000
0 200 400 600 800 1000
Monthly break-even pointBreak-even point = where line intersects with 0