mario mouraz - business plan - oldcare gerontological services - eada 2010 - hmu1 final project
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BUSINESS PLANBUSINESS PLAN
OLDCARE GERONTOLOGICALOLDCARE GERONTOLOGICALSERVICESSERVICES
MRIO MOURAZ SANTOSMRIO MOURAZ SANTOS
INTERNATIONAL MASTER IN HOSPITALITY MANAGEMENT HMU1INTERNATIONAL MASTER IN HOSPITALITY MANAGEMENT HMU1
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EADA - JULY 2010EADA - JULY 2010
TABLE OF CONTENTSTABLE OF CONTENTS
Page
1. Objectives of the Business Plan 2
2. Executive Summary 3
3. Analysis of the idea and the business opportunity 5
4. Presentation of the company and development team 7
5. External Analysis 14
6. Internal Analysis 18
7. Research & Development & Innovation 27
8. Agreements, alliances and Outsourcing 30
9. Expansion Plan 31
10. Marketing Plan 34
11. Quality Management 50
12. Financial Plan 53
13. Conclusion 56
14. Bibliography 57
15. Acknowledgments 58
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11. OBJECTIVES OF THE BUSINESS PLAN. OBJECTIVES OF THE BUSINESS PLAN
This creation of this business plan is an attempt to put in practice the knowledge
I got during this year through the Master in Hospitality Management. For this
reason, I introduce different topics from diverse subjects as Quality, Expansion,
Human Resources, Finance, Strategic Management, Marketing, Operations, etc.
Besides that, and equally important, it was my intention to create a business
plan focus on the part of the Expansion and Marketing for an existing company
back in Portugal called OldCare, which I have been following even since it was a
project and then when they turn out into a real company.
One year later here it is that company trying to grow as a result of their past and
present success trying to find new ways of growing. Therefore, this business
plan is an attempt to give my contribution and to help OldCare in their further
grow and hopefully many years of success.
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2. EXECUTIVE SUMMARY2. EXECUTIVE SUMMARY
OldCare Gerontological Services is a company that provides gerontologicalservices for elder people with his headquarters in the city of Bragana, Portugal,
who operates in the northeast territory of Portugal.
OldCare is composed by a team of professionals specialized in aging, with
academic background in health technologies, where they studied and developed
an adequate and customized response to the needs of the elder population.
They provide all kinds of personalized gerontological services supported in
principles as promotion for the Health, Active Aging, Autonomy and Quality ofLife. They also sell geriatric furniture and equipments as technical aids for the
senior population. Furthermore, they give training and provide formation in
various topics in the area of health. Their work philosophy is based on keeping
the elder in their home environment.
OldCare came out from an academic project that was then presented in an
entrepreneurship programme, being one of the winners. Since then the project
started obtaining power and it became a reality in December 2008. Thecompany started operating in July 2009 and it completed already his successful
first year with revenues of more than 30.000.
In order to better assist the elders in their overall needs, they are all the time
developing strategic alliances with complementary companies. Besides, they are
linked to the academic environment so that they can take advantage of
scientific studies and research to develop new solutions that demonstrate
improvements in quality of life for this growing population in Portugal.
They believe that by differentiating their services, they can gain a competitive
advantage in such a competitive market and they have also been quite
successful in keeping their costs low, since their collaborators (all specialized in
aging and health) came from the universities at a low cost.
Right now, OldCare is looking for all types of partners (financial, consulting, etc)
to expand to the all North region of Portugal.
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This business plan was created to help this company in achieving that goal, by
formulating an expansion and marketing plan as I strongly believe OldCare can
grow further if some strategic changes and methodologies are implemented.
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3.3. ANALYSIS OF THE IDEA AND THE BUSINESS OPPORTUNITYANALYSIS OF THE IDEA AND THE BUSINESS OPPORTUNITY
It is a reality, that in about a decade, 30% of the Portuguese population will be
65 years older. We are assisting to an exponential increase in the number of old
and less active people as population in getting old and the average life
expectancy is increasing. One of the causes of this phenomenon is the health
conditions that are in general much better than some years ago. The big
problem comes because Portugal doesnt have proper socials structures and
there is a lack of professionals to care about this entire people that are getting
older.
People are becoming more aware of the importance of creatinghealth funds in
order to guarantee their quality of life after an entire life of work, after
retirement. Besides that, health consciousness is changing and there are each
time more people looking for quality services.
Related to these facts is the increasing awareness of the term Gerontology in
Portugal. Gerontology is the science that studies the process of aging in fourdifferent aspects: physiological, psychological, social and cultural. This concept
has been around in some European countries and United States for more than
30 years, but it just came to Portugal a couple of years ago.
A new trend that gerontological industry has to take into consideration is that
nowadays, elder people and their families are looking more and more for
someone who can take care of the elders in their homes, someone who can be
responsible for the elders in a personal level by doing their food, washing theirclothes, taking care of their personal hygiene, skin and hair care, helping them
dress, maintaining the house or doing small structural arrangements, etc. Pulling
out those elders from their homes and throwing them to Elderly Residences is a
reality that soon will be over because those residences are completely full and
queued. Besides, it is also important for Portuguese society to keep relations
inside the family and avoid the break between the elder and his family.
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4. PRESENTATION OF THE COMPANY AND DEVELOPMENT TEAM. PRESENTATION OF THE COMPANY AND DEVELOPMENT TEAM
OldCare Gerontological Services is a company that provides gerontological
services for the elder population, located in the center of Bragana and
operating in the Northeast territory of Portugal.
It is composed by a team of professionals, all specializing in aging, with
academic background in health technologies, where they studied and developed
an adequate and customized response to the needs of senior citizens.
What do they do?
They provide all kinds of personalized Gerontological Services supported in
principle as promotion for the Health, Active Aging, Autonomy and Quality of
Life. They offer a personal page for each client on their website, with information
updated on a daily basis for the family who are distant can be aware of day-to-
day of their loved one.
They also offer a set of complementary services as sale of technical aids
equipments and geriatric furniture for the senior population, consulting services
related to health care structures for the elderly population and training plans.
Location and Facilities
Their work philosophy is based on keeping the elder in their home environment.
For that reason they have an extensive logistical assistance to the household
extended to the Northeast region of Portugal. Their headquarters are located in
the city center of Bragana.
They have in their headquarters multipurpose room where they can either give
training, provide group sessions of psychic and physical intervention, geriatric
physiotherapy and rehabilitation or even leisure activities and entertainment.
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History of the company
The OldCare came out in 2007 as a result of an academic project. It was then
developed within the 5th Poliempreende Program to encourage
entrepreneurship in Bragana Polytechnic Institute (IPB).
The project was then presented to the competition and was one of the winners.
Since then, together with the Center for Entrepreneurship of IPB, it developed
structurally to become a reality in the District of Bragana.
OldCare is a pioneer in the use and development of the name gerontological
services.
They base themselves in the Study of the Aging to provide a customized
response tailored to the needs of senior population.
They develop strategic alliances in order to better assist the elders in their
overall needs and they are linked to the academic environment so that they can
take advantage of scientific studies and research to develop new solutions that
demonstrate improvements in quality of life for this growing population in
Portugal.
Mission
OldCare's mission is to promote the value of the senior person.
Avoid breaking the bonds of affection with the family and socio-cultural
environment by providing home services of reference, with quality and
personalization that meets the needs of this population;
Provide information to approach the familiars more distant;
Create partnerships with the society, so that service delivery is the most
customized and complete as possible, so that the person may also feel
involved and integrated socially;
Their shared values are Integrity, Quality, Excellent Customer Service,
Research and Innovation, Self-Esteem, Active Aging, Autonomy, Quality of
life and Social responsibility.
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Vision
Being the market leader for the region of Trs-os-Montes
Provide a service of quality;
Promote customer loyalty;
Working under a multidisciplinary perspective, Biological, Psychological
and Social person, where the health and welfare, are allied to the
autonomy and development in society;
Propose and develop innovative solutions for a Healthy and Active Agingin the family environment;
Create a cohesive team work and high motivation;
Promoting the expansion of services to the Northern of Portugal and to
close Spanish cities.
Objectives
Provide a service of excellence;
Achieving the full satisfaction of their customers;
Involve their employees in their philosophy and mission;
Create and develop new solutions that improve the quality of the services
provided;
Be innovative in the Gerontology context;
Use data collected in scientific studies that have proven their importance
in the improvement of our services.
Corporate Strategy
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Their strategy is characterized by the intention to keep expanding to other cities
within the north region of Portugal, maintaining the same philosophy and
identity with the first base of the company.
The opening of new bases with the same services and capacity will give themthe opportunity to keep focusing on their mission concerning the part of giving a
very personalized service to their customers.
Target market
Their target market is people sixty five years older with support needs on a
personal level but not in total dependence.
OldCare Philosophy
The philosophy of OldCare is to provide customers with an excellent service in
an extensive logistics operation, ensuring that the service provided by the
Company complies with the following objectives:
Be fast, flexible and open on the first visit to the customer;
To offer a service tailored to the needs of each client available 24 hours a
day;
Create intervention and care plans through scientific principles;
Ensure competitive prices;
Simplifying the logistics of the service, widening the area of action inorder to minimize operating costs;
Provide a working team with scientific, academic and technical knowledge
in health and aging.
OldCare believes that their greatest asset is its staff, being these ones essentials
to ensure the commitments with customers. For that reason, OldCare gives
particular importance not only to the recruitment and selection processes but as
well the procedures for training their employees.
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The ability, behaviour, engagement and performance of their employees are
crucial to the quality of service and the achievement of their Personal
Appreciation Plan, which is focus on improving competitiveness by improving
working methods, knowledge of the client and of their needs.
Services
Domiciliary Service Someone who takes care of the elder personal
hygiene, helps in dress, in the displacements, in skin care, hair, among
others. Meal preparation or choice from a menu. Treatment of clothing.
Sanitation and light housekeeping, and still providing small structural
arrangements.
Attendance - Hospital and pos-hospital stays, medical appointments,
displacements and more diverse.
Old-Sitting Having someone for a specific situation to monitoring.
Psychic and Physical Intervention - Stimulate the mind through
cognitive training, developing and using sets of exercises suitable for
each case. Stimulating the body through physical training and mobility.
These are two essential ingredients for a healthy active aging, and for an
exponential increase in the autonomy of the person.
Leisure Activities, Entertainment and Free-times - Occupy elders
free times constructively and objectively implies a detailed assessment of
the person. That requires a positive interaction in the discovery of tastes
and expressed or implied skills. Develop a life project whose aim is a
better integration into the community, and increased self-esteem and
self-realization.
Nursing A partnership with the Nursing Clinic Brigantina allow them to
provide nursing services as palliative care, among others specialties. Thus
they want to ensure always the best quality of their services, working with
experienced professionals who already have a broad background in the
market.
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Geriatric Physiotherapy and Rehabilitation - They provide
physiotherapy services in the customer's home, when under the
circumstances this is the most comfortable way to improve their welfare,
their recovery and their quality of life. The geriatric rehabilitation is a
crucial element in the recovery from falls, strokes, loss of mobility and
muscular dexterity, facts that can and should be countered with the
purpose of recovering the maximum possible the autonomy of the elder.
Telemedicine Service - Tele-assistance with choice of location via GPS.
All information is transmitted to a 24-hour-Call-Center connected to a
database where the patient medical history is recorded. Other medical
devices can be provided as well.
Elimination of Architectural Barriers Supplying options for both
private houses and public areas to remove architectural barriers, to
assure that people with mobility limitations can move freely and safety.
Sale and Rental of Geriatric Furniture - Adapted furniture, with the
possibility of repurchase the equipment after two years of use.
Bio-Healthy Geriatric Parks - Sale of equipment that promotes the
physical activity of low-effort, for indoors and outdoors.
Consultancy Service - Consultancy and advice for planning and
projection of structures related with responses aimed at serving the
senior community.
Training and Formation Certified technical training for the sector
related to aging for either formal or informal caregivers, employees,
directors of institutions or family members of the elders.
Presentation of the entrepreneur and development team
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The owner and CEO of the OldCare Gerontological Services is Master in Health
Services Management from the University of Trs-os-Montes and Alto Douro
(UTAD) and graduated in Gerontology at the School of Health Sciences,
Polytechnic Institute of Bragana (IPB).
The team is composed by a group of professionals specialized in aging, with
academic backgrounds in the area of Health Technologies, where they study and
develop everyday an appropriate and customized response to the needs of the
elder population.
Organizational Chart
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TECHNICALTECHNICALDIRECTIONDIRECTION
PHYSIOTERAPISTPHYSIOTERAPISTGERONTOLOGISTGERONTOLOGIST
SSAUXILIARSAUXILIARS
NURSING CLINICNURSING CLINIC
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55. EXTERNAL ANALYSIS. EXTERNAL ANALYSIS
The PESTEL Analysis is the first measurement tool used to analyze the macrofactors from the external environment that can influence a business. For that
reason it is important to do a detailed analysis by type of factors, including
political, economical, social, technological and more recent environmental and
legal.
Thus I found the following factors for Portugal:
Political factors:
Political stability in the country;
Lowest crime rate in Europe;
Tax system (increase of tax payment in 2010);
Less administrative bureaucracy.
Economical factors:
Economic recession less income of families and consequently morehaggling;
Less access to bank credit;
Increasing number of competitors in the market;
High level of unemployment (11%); Dirio de Notcias
Less support from entrepreneurship organizations;
Distrust of investors.
Social factors:
Portugal is a peaceful retirement destination;
High quality of life;
Big social tradition of wine producing;
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Very High Human Development Index (wealth, education, average lifeexpectancy);
Literacy - 94,9% of population; Wikipedia
Average life expectancy - 78.1 years; Demographic aging - 17.4% population were 65+ years old in 2009;
Life styles changes;
Increase of health consciousness;
Lack of a proper social support structures for elderly people;
Population growth stands at 0.305%;
84.5% of total population are Catholics;
Portugal have about 10,3 million habitants;
Bragana 148,808 habitants 1.4% of total population;
25% of the population is covered by health systems;
3,3 million habitants with internet access;
Most famous social magazines in Portugal Caras, Lux, VIP e Flash;
Family is the foundation of the social structure;
Portugueses are traditional and conservative;
Relationship-based culture;
Low tolerance for change and risk - difficult to implement innovationswithout previous track record or history;
% of elderly population in urban areas (44%) intermediate (23%) and ruralareas (33%).
Technological factors:
Lack of specialized professionals in the gerontological industry;
First gerontologists in the market came out 3 years ago;
Increasing awareness of green technologies;
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Environmental factors:
New regulations;
Legal factors:
Less bureaucracy in administrative processes - easier to createcompanies or to sign agreements;
Social Security supervises private institutions OldCare for example.
PORTERS 5 FORCES MODEL
In order to further analyze the competition in the market, it was used the
Porters Five Forces Model analysis.
Suppliers
OldCare has close relations with their suppliers and in general they can get
cheaper prices. Unfortunately, they still depend too much on suppliers to maketheir business profit as the biggest proportion of revenue comes from the sale of
geriatric equipment and technical aids.
Due to this stated reason, I can conclude that the bargaining power of suppliers
is high. However, expecting other partnerships and other suppliers contracts in
the near future, it may lead to a decrease of OldCare dependence on their prices
and their power.
Customers
The bargaining power of our customers is by far the most important factor for
the success of OldCares business. As customers have a diversity of places to
choose from, I can conclude that they have high bargaining power. Thus, it is
extremely important for OldCare to differentiate itself from the rest by offering
flexible services. That means OldCare never says NO to a client and customers
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will always try to negotiate the prices and conditions, even more in times of
crisis, as they are more price sensitive. The service always depends on what the
clients want. By time, we expect the customer bargaining power to decrease.
Substitutes
Within possible substitutes companies in the area I have considered all the
others Home Support Service Companies or Domiciliary Services and IPSSs.
There are many options here for the customer and the threat of substitute
products is consequently high. Even being a different concept, IPSSs are
increasing their number and express a big power. The power from substitute
services is definitively huge, at least until OldCares can make obvious theirdifferences to the market and in the mind of customers.
New players
Threat of new entrants is always high. First of all, OldCare is relatively new in the
market and has not obtained yet big recognition, which means that they still
arent making use of the differentiation to really obtain competitive advantageover their competitors.
Furthermore the capital investment to create a similar concept is relatively low,
depending of course on many factors as size, services or products, location,
team, etc. It is a quite easy industry to enter.
To conclude, I assume that since as this is the type of business with a constant
grow and with a huge potential to grow, a lot of players will continue getting in,
however new players are aware of the high competence that already exists.
The exit barrier for OldCare would be around 500 every month until 3 years, in
order to pay for the lost funds of the Government and to get rid from the
vehicles the company possess, plus the compensation salaries to their
employees.
Rivalry
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Although there is already a huge competitiveness among Gerontological
services providers due to the high number and the wide range available,
OldCare have a unique concept consequently there are no direct competitors.
66..INTERNAL ANALYSISINTERNAL ANALYSIS
COMPETITIVE ADVANTAGE MODEL OF PORTER
According to the Competitive Advantage Model of Porter, a competitive strategy
takes offensive action to create a defendable position in an industry in order to
cope successfully with competitive forces and generate a superior Return on
Investment.
OldCare consider as their main competitive advantage - differentiation.
Achieving of differentiation means that a company seeks to be unique in its
industry along some dimensions, that are widely appreciated by buyers. A
differentiator cannot ignore its cost position. In all areas, that do not affect itsdifferentiation, it should try to decrease cost; in the differentiation area, the
costs should at least be lower than the price premium it receives from the
buyers.
Areas of differentiation can be: service, distribution, sales, marketing, product,
know-how, performance, image, etc. For this moment OldCare concept is
unique in Bragana and Northeast region of Portugal and they differentiate
themselves by the service they offer and their know-how.
But because not every difference is significant, it must be established to meet
the following criteria:
Importance: offers added value to the client;
Highlight: is outstandingly offered;
Superiority: is superior to other ways of getting the same benefit;
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Exclusivity: cannot be easily copied by competitors;
Accessibility: The buyer must be able to pay for it;
Profitability: it must be profitable for the company.
Today theres a medium high competition level among such providers of
Gerontological services in Bragana and Northeast region of Portugal. OldCare
must make use of their main competitive advantage by offering such kind of
service that could be recognized as unique in its thematic.
SWOT ANALYSIS
Strengths:
Flexibility;
Diverse revenue streams;
Personal experience and know-how;
Increasing demand and sustainable answer;
Research&Development of new solutions;
Relation with suppliers and local authorities;
Partnerships with MOLAFLEX and HARTMANN;
Portfolio of products for sale;
Connection to the academic world;
Motivation and entrepreneur spirit of the team;
Low operational costs;
Weaknesses:
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No standard procedures;
Brand awareness;
Stuck capital in the sales of equipment;
High turnover of collaborators.
Opportunities:
Quality certification;
New alliances and partnerships;
Creation of new services;
Get new collaborators with complementary competencies;
Better communication and promotion;
Expansion for new markets;
Enlarge the profits margin.
Threats:
Increasing number of competitors;
Simple logistics and distributions plans.
BCG MATRIX (BOSTON CONSULTING GROUP)
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Fig. 1 - Market Growth-Market Share MatrixThe BCG matrix relates to marketing. It is a simple tool for analyzing companys
business portfolio in their product life cycle. This model allowed me to prioritizewhich products/services within the company product mix get more financial
support and attention.
The BCG model is based on classification of products into four categories, based
on combinations of market growth and market share, relative to the largest
competitor.
Each product has its product life cycle and each stage in product's life-cycle
represents a different profile of risk and return. In general, a company shouldmaintain a balanced portfolio of products. Having a balanced product portfolio
includes both high-growth products as well as low-growth products.
In OldCares case the set of services are all in the Question Marks phase, i.e.,
with high growth but low market share. Thats ok as the company is quite young
and the services are not yet well establish in the customers mind. OldCares
services have to be further discover by potential clients. The marketing strategy
settled on this marketing plan is to make market adopting OldCares services. Iwant this marketing plan to be able to increase the market share and
consequently increasing returns.
If the services dont increase their market share quickly they may turn into to
Dogs phase. Therefore, the best way to handle question marks services is to
either invest heavily in them to gain market share, to sell them, or to make a
partnership with a company that has their services on the Stars phase or a
Cash-Cow. A company in the Cash-Cow phase seems to be a good option to
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make a partnership with as they usually have a solid position in the market,
generating lots of cash-flows but they have a lack of innovation which can
translate in their failure and eventually became a Dog. For that reason OldCare
can take advantage of their innovative services and creative team by allying
their services with a Cash-Cow company by complementing each other, one
providing fresh knowledge and innovative solutions, the other providing
promotion channels, infrastructures and eventually capital.
GREINER GROWTH MODEL
Fig. 2 Different organization development phases
Greiner's Growth Model is used to analyze organization development.
It describes phases that organizations go through as they grow. Each growth
phase is made up of a period of relatively stable growth, followed by a "crisis"
when a major organizational change is needed if the company wants to continue
growing.
OldCare is in the creativity phase as they still are reacting to the feedback of
the market to settle their services. It is characteristic from this phase that a
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company constantly needs to add new employees. Management is focus on
make & sell, the organization structure is informal, entrepreneur actions take
place, no reports or written standards are produced, there is not a cost center
and communication inside the organization is frequent and straight.
This model is useful to predict and eventually prepare a company for what is
going to happen in the future if continue to grow is the choice. Because of this
reason I predict OldCares first and next crisis will be the leadership crisis. The
word "crisis" is nothing less than a "turning point. OldCare may prepare itself to
convert in a functional organization, where an accounting system is needed,
new IT systems, new people, manufacturing procedures, and the most
important, centralized direction where professional management is needed. The
founders may change their style and take on this role, but often someone new
will be brought in.
VALUE CHAIN ANALYSIS
The production of a good or service consists of a chain of activities, each one
with a different cost structure determined by different cost drivers. This added
value line of production can be called Value Chain.
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The value chain analysis not only helped me to think how does each activity
benefits the customer as it allowed me to settled OldCares main and secondary
services and activities and to define in which activity OldCare can pursue
competitive advantage. That allowed me to conclude that the biggest
competitive advantage of OldCare is differentiation. The activities considered to
give major differentiation to OldCare are Innovation & Development of new
services, which create new approaches and new solutions for a healthy and
autonomous aging of the population and the services of domiciliary service and
rehabilitation, which are only provided by specialists in health technologies with
training in aging.
It is very important in the current competitive business environment to identify
separate activities of the value chain. Identifying the appropriate activities is a
matter of judgment. It requires understanding the chain of processes involved in
the transformation of inputs into outputs and its delivery to the customer.
After this phase we should be prepared to define the contribution of each
activity to the total cost of a service by identifying the cost drivers and then
looking for cost-cutting opportunities.
Primary activities:
The group of services Domiciliary Service, Geriatric Rehabilitation,
Sales of geriatric Equipment and Physiotherapy represents the services
that produce more revenues for OldCare, even though domiciliary service
is the core business of the company.
Innovation and Development as differentiation is OldCare main
competitive advantage, they need to devote resources, which includes
time, people and money, to think and create new solutions to solve the
problems related to the aging.
Marketing and Sales - will be the promotion, advertising, distribution and
communication of OldCares image and brand.
Post-Service - developing and supporting customer service.
Support activities:
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Global Management and Human Resources- The daily basis management
of the company, the activities associated with recruiting, development
and training of employees, retention and compensation of employees and
managers, learning process, training supporting customer service and
excellence, maintaining OldCares philosophy.
For suppliers or inbound logistic I am referring to purchasing from
suppliers: geriatric equipment, technical aids and either food & beverage
for the domiciliary service. It also includes finding the best suppliers in
terms of quality and price or retaining the existing ones and finding the
best communication channels for OldCares promotion.
Firm Infrastructure includes planning management, legal, finance,accounting, public affairs, quality management, improving or renovating
infrastructure.
Formation or Training, Old-Sitting, Telemedicine, Consultancy are all the
other services provided by OldCare that are not core-services, i.e., where
the company invests more resources as time, money and people to
produce the service.
By Relations with Public Institutions I mean contacting with Town Halls,
3Age universities, organizations or even other Institutions whose activity
is related with the elderly to find potential partnerships, strategic
alliances or other type of agreements that could bring benefits to the
company.
VALUE CURVE MODEL
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Fig. 3 Value Proposition identification - Comparison with main competitors in the District of Bragana,Portugal (July 2010)
In an increasingly competitive environment, managers face the challenge of
finding ways to differentiate their services. As markets progress over time, theysplit into multiple segments and it can be difficult to determine which factors are
of most importance to customers.
The Value Curve Model uses a diagram to compare services on a range of
factors by rating them on a scale from low to high. These can be features,
benefits or ways in which a product is distributed or consumed. The combination
of these various factors defines the service. In the end of an analysis to the
Value Curve Model we must be able to find out which is the value proposition ofthe company.
Thus, I discovered that the value proposition of OldCares global services is
Quality, Flexibility, Customization and innovation. Right after, what is necessary
to do, is to put ourselves the questions: Will customers want this? Can we afford
this?; and then identify possible gaps in our value proposition and then make
changes in our service that considerably change our value preposition to
continually better adapt to what customers need and want.
Due to the fact that OldCare is a quite young company, the brand awareness
that have in the market is still unsatisfactory. It is expected changes in this level
as OldCare is going to expand to new markets and as a result, more publicity
and promotion will be made and consequently the brand awareness is expected
to increase. Other factor that OldCare needs to review is the capacity or number
of clients they can work with. For now, the number is small when compared with
other possibilities of domiciliary service or other substitute services. Once again,this point is expected to increase during the expansion, but in general the
number of clients they can handle is slightly inferior to competitors and this
situation could be rethought or it may cause future problems.
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77. R&D&I. R&D&I
As it was explained before differentiation is the main competitive advantage of
OldCare. For that reason they consider that by investing time and resources in
Research & Development they can find innovative solutions related with healthy
aging, which can bring added value to the existing services by complementing
them.
A brand new solution being developed by OldCare is the OldCare TeleSupport
Service.
The purpose of this innovative solution is to provide an excellent service to elder
citizens by making the domiciliary service more simple and accessible to the
needs of each family, through competitive prices. Basically, through a phone call
to the head offices in Bragana, or directly to the health technicians of each
operational area, they will take to the clients home a qualified professional to
carry out an assessment visit to evaluate and design the best plan of care and
assistance that complements the geriatric necessities of the customer.
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88. AGREEMENTS, ALLIANCES AND OUTSOURCING. AGREEMENTS, ALLIANCES AND OUTSOURCING
OldCare has some partnerships and strategic alliances with other companiesthat in on the whole make the value proposition of OldCare more interesting.
They have a strategic alliance with a Nursing Clinic who provides between
others palliative services to the clients of OldCare. They are a team of
professionals with competencies in this field that OldCare opted to Outsource as
it is not their main competencies.
Besides that, OldCare establish some partnerships of commissions with certain
companies, in which OldCare either receives commission for the sell, cheaper
prices or OldCare can use their logos to promote both companies together. As
they are all companies with relative brand awareness it makes OldCare name
more visible to the market in general. The referred companies and its average %
of profit to OldCare is described in the following image:
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Fig. 4 Agreements and Partnerships of OldCare.
99. EXPANSION PLAN. EXPANSION PLAN
OldCare aims to create a shaft support in the entire area in the North territory of
Portugal which would include main cities as Guarda, Porto, Aveiro, Vila Real and
Braga plus the current one which is Bragana.
Each of these five cities would be someone responsible, that for the case could
correspond to the existing professionals of OldCare, which would produce the
work of technical director of one operational center and be the commercial of
OldCare in that same area.
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Those people would have the task of representing OldCare brand, promoting and
communicating the company to potential target customers, such as nursing
homes, pharmacies, Parish Councils, Municipal Councils and Community in
general, and be responsible for the creation of a Client Database on its
operational area, and its surrounding areas.
Each new operational center director would be as well responsible for doing
research on statistics, on existing companies and social responses for the
elderly, finding contacts and new agreements, in order to have a better image of
the needs of the population in each area, and then procedure to the settlement
of the most appropriate services to deliver on that area.
In collaboration with local authorities, it may be possible to organize free health
screening and formations for the community so as to promote the company, its
services and specially the domiciliary service.
Current Intervention Area
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Fig. 5 - Current Intervention rea district of Bragana
Right now the intervention area where OldCare is operating includes Bragana,Miranda do Douro, Mogadouro, Torre de Moncorvo, Mirandela, Vinhais, Macedo
de Cavaleiros and Vila Flor.
Expansion Plan Proposal
Fig. 6 - Plan of Expansion Operational areas of Vila Real, Porto, Aveiro and
Guarda.
The expansion plan suggests four new Operational Areas which includes all the
bigger cities from the North territory of Portugal which in turn represents the
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biggest focus of elder population and for that reason should be the place to
invest. The expansion plan would have the following dimension:
OC2 Vila Pouca de Aguiar, Chaves, Amarante, Marco de Canaveses andLamego;
OC3-Porto, Matosinhos, Maia, Santo Tirso, Guimares, Braga, Barcelos,Esposende, Vila do Conde, Viana do Castelo e Pvoa de Varzim;
OC4- Moimenta da Beira, Viseu, Mangualde, Celorico, Trancoso and Guarda;
OC5- Aveiro, lhavo, gueda, Albergaria-a-velha, Estarreja, Oliveira de Azemis,Ovar and Santa Maria da Feira.
Development Team Proposal
OC1 BRAGANA (Mrcio Vara Health Services Manager andGerontologist);
BRAGANA (Joo Matos Expert in Clinical Analysis and PublicHealth);
OC2 VILA REAL (Diogo Tristo Gerontologist);
OC3 PVOA DE VARZIM (Patrcia Correia Nurse);
OC4 GUARDA (Ludovina Marques Gerontologist).
OC5 AVEIRO (Someone exterior to the company that would have to be
hired) I believe it wouldnt be difficult to find someone to became
responsible for the OC5 as Aveiro is another city in Portugal where
Gerontologists are being trained, as well as Bragana.
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Implementation Typologies for the Operational Centres (OCs)
WHAT OBJECTIVES WHO HOW
DOMICILIARY
SERVICE
Communicate andprovide thedomiciliary service inOCs without creationof a fix office, just visitand evaluation in theclients home;
Finding collaborators.
65+years
Free healthscreenings for thecommunity;
Communication inlocal media;
Appointing evaluationdomiciliary visitsaccording to the
headquartersavailability.
TECHNICALAIDS
&
GERIATRICEQUIP.
Create a clientdatabase;
Find at least twopotencial clients everymonth.
ElderlyResidences,IPPSs orprivatesonsumers.
Face contact;
Catalogs;
Web tools.
TRAINING
Create a client
database;
Sell at least one formonth;
Elderly care
institutions,families,
community
Presentation of
training plans;
Local media, socialmedia.
BIO-HEALTHYGERIATRICPARKS
Sell one park in eachtwo months;
Partnershipspublic-private
betweenmunicipalities
and IPSSs
Face contact and bycatalog;
NURSINGSERVICES
(Exclusive inOC3)
Communicate thenursing service for thedomiciliary servicethrough their own 24hphone line;
Community
Health Screenings;
Agreements;
CommunicationChannels;
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Success keys for expansion:
Careful recruitment of employees with compatible values in order to
create a excellent operational team; Good management work in innovating job tasks and organizational
structure;
Motivate employees by letting them cooperate in company decisions;
Stimulate the sense of common objectives;
Create a fair and pleasant work environment;
Promote effective communication inside the company;
Constant development of the professionals through internal formationsand training;
Clarify working processes, duties and responsibilities;
Know when to delegate;
Create motivating objectives;
Offer competitive salaries or compensate with other benefits;
Create incentive packages to employees;
Be updated on new practices, new solutions, new competitors and newpotential clients.
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Service, Sale and Rental of Geriatric Furniture, Bio-Healthy Geriatric Parks,
Consultancy Service, Training and Formation.
It is possible for the customer to request an evaluation visit from an OldCare
Gerontogist where both will design the best plan of care and assistance thatcomplements the necessities of the customer.
The image customers have of OldCare is of an innovative company, trustful and
with very accessible prices.
OldCare positions itself as a flexible provider of quality and customized
gerontological services. They always try to say yes to everyone but never say
no to nobody.
9.3.2. - Pricing policy: price formation, sales conditions
The price charged for the domiciliary service is slightly below the average of the
district of Bragana.
Although there is a price list of the services, the prices of follow-up plans and
their consequent actions are almost all the times negotiated between the client
and the company as the nature of treatments and services provides are very
personalized and depends on the distance to the head offices.
The price of sale of geriatric equipment is fixed but the rental conditions can be
negotiated according to the time of use(less or more than 1 year) and type of
equipments.
9.3.3. Promotion and communication policy: market coverage,
promotion channels, image put across, total financial volume
The awareness of company is done by word-of-mouth and the promotion of the
name OldCare is being done in some regional newspapers. They distribute
flyers in institutions of the area such as hospitals, associations, medical centres,
etc.
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They have their own internet website and they are still present in the social
media tool facebook.
Besides that, the name OldCare can be suggested due to the fact of some SAs
made with companies of the area.
The company expects to launch soon a promotional campaign in a free
publishing journal that is present in the north region of Portugal, namely the in
the districts of Bragana, Vila Real, Guarda e Braga.
They are preparing a bimonthly newsletter that is going to be sent by email to
the database of the company which should be updated all the time with the
clients folder of each collaborator.
They are also thinking in creating health screenings for the population together
with local authorities with the objective of promoting themselves in a
personalized way next to their target clients and at the same time by promoting
the social responsibility of the company.
Although OldCare has been investing from 5% to 10% of their sales to invest in
publicity, it is my opinion that so far the effort being made to promote OldCares
brand and services outside is very limited and thats why theres not that manymarket coverage and consequently the image put across could have been even
more powerful.
9.4. EXTERNAL ANALYSIS
9.4.1 Market Analysis
9.4.1.1. Size and development
The size of the potential market is very big and optimistic. According to the fact
that OldCare offers a wide range of services, there is a possibility of attracting
different customers and not just one narrow type of client.
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In addition to that it is possible to create and develop new strategic alliances
with other companies which can provide us complementary services and bring
even more different customers.
9.4.1.2. Seasonality
This type of business isnt influenced by a high degree of seasonality. The nature
of the business is resulting in relatively fix structure of sales and costs through
all the year.
9.4.1.3. Decision making process
The customers are making their decision to choose OldCares services
depending on the flexibility of the services and their prices.
9.4.1.4. Trends
In the next decade about 30% of the Portuguese population will be 65+ years.
As the people are getting older and fewer children are born we are assisting to a
demographic aging of the population. Consequently the average life expectancy
(ALE) is increasing.
People are becoming more aware of the importance of creating retirement and
health funds in order to guarantee their quality of life after an entire life of work,
after retirement. Health consciousness is changing.
Definitively Portugal needs to adapt their social structures to respond to this
increasing number of elders. Right now there are a lot of elders waiting for
getting in elderly residences where in general the conditions are miserable, and
theres a lack of trained people and specialists to take care of this segment of
the population.
A new trend that gerontological industry has to take into consideration is the
fact that old people and their families nowadays are looking more and more for
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someone who can take care of the elders in their homes, someone who can be
responsible for the elders in a personal level by doing their food, washing their
clothes, taking care of their personal hygiene, skin and hair care, helping them
dress, maintaining the house or doing small structural arrangements, etc.
Pulling out elder people from their homes and throw them to Elderly Residences
is a reality that soon will be over because those residences are completely full
and queued. Besides, it is also important for Portuguese society to keep
relations inside the family and avoid the break between the elder and his family.
From OldCares point of view, this new trend can become a competitive
advantage since they offer a customized Domiciliary Service and a set of other
complementary services provided by a team of professionals all specialized inhealth and/or with training in gerontology.
9.4.1.5. Segmentation and target market
The process of segmenting the market has been done based on the market
characteristics, on the objectives and values of OldCare and also on the trends
in the marketplace.
Accordingly, OldCare segmented their market by:
Geography
Age
Disposable income
Life cycle
Type of client
After deciding the variables that they are going to use so as to segment their
market, they decided to focus on the markets that best match the value
proposition of OldCare. They are going to target different groups according to
the service provided. As a result, OldCare ended up with the following:
Habitants of Bragana, surroundings and Northeast region of Portugal.
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People of medium disposable income?
People 60+ years old.
People with support needs on a personal level but not in total
dependence.
People on retirement.
Loyal and moderate customers.
Local institutions (elderly residences, local governments, third-age
universities, etc)
9.4.2. Analysis of the competition
As a result of the past couple years of increasing competition in gerontological
industry the only way to differentiate a company and to occupy their own place
in the market is to think in innovations in order to obtain a competitive
advantage. Finding out a specific niche has become a necessity that would
guaranty the success.
9.4.2.1 Competitive structure. Main competitors and their
characteristics.
According to my research the competitors that OldCare faces in the market in
Bragana and Northeast region of Portugal are the following:
HOME INSTEADHOME INSTEAD
Operating since 1994, the Home Instead Senior Care network has been devoted
to providing the highest-quality senior home care. Home Instead is currently
working under 800 franchise offices throughout the world in countries as United
States, Canada, Ireland, United Kingdom, Portugal, Switzerland, Japan, Taiwan,
Australia, New Zealand, Germany, South Korea, Finland and Austria. They have
hundreds of partners to whom they send their clients when they need any aging-
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related medical needs that goes beyond their home care capabilities.The Home
Instead Senior Care network's mission is a passion to be the world's trusted
source of companionship and home care for seniors.
Despite Home Instead recognition worldwide is unquestionable their franchise inBragana has not been seen as a good senior care services provider.
QUALITY SADQUALITY SAD
Same concept of OldCare of In-home support service. It was opened half a year
ago in Bragana as a result of a similar project to OldCares. It begun operating
under the direction of an Gerontologist and it has been growing slow. Dont havethe same brand power and alliances as OldCare and as a result it has been a
market follower. Quality SAD has been more worried in copying OldCare services
than in investing in their own innovations.
VARIOUS (GROUP OF SEVERAL IPSSS)VARIOUS (GROUP OF SEVERAL IPSSS)
A group of particular and non-profit institutions that have an extensive presencein Bragana and Northeast region of Portugal. Their target market is broader as
they provide services in diverse fields, such as health, education and solving
problems of the population. Their services include support for children and
youth, family and community and protection of the elders in their aging and
disease. They are regulated by the social security. Although their activity is quite
different from OldCares, as there are a big awareness of their services in the
market and due to their broader presence and cheap prices, they steal a lot of
potential clients from OldCare. It is a reality that people still look for cheap
prices instead of quality.
9.4.2.2. Competitive forces: entry and exit barriers, pressure from
substitute products, negotiating power of suppliers and customers
See the Five Forces Model of Porter in the point number 5. EXTERNAL ANALYSIS.5. EXTERNAL ANALYSIS.
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9.4.3. Consumer analysis
geography
age
disposable income
Services chosen
life cycle
type of client
9.4.4. Habits and stages of the purchase
decision process
The main habit is people coming to OldCare because they heard something from
friends and familiars or were recommended by other institutions. It is also
necessary to take in consideration people that will show up in order to get to
know the place and the services and then will consume. There are as well aconsiderable percentage of people that just saw the name OldCare at some
place and they go there to pick information later on, because a familiar or a
friend needs.
9.4.5. External Business Environment (PEST Analysis)
See as well topic number 5. EXTERNAL ANALYSIS PESTEL ANALYSIS5. EXTERNAL ANALYSIS PESTEL ANALYSIS
9.5. Marketing objectives
9.5.1. Determination of the market opportunity
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Mrcio Vara has indentified a new market opportunity where the concept of
quality and flexibility can be linked and not being provided by the competitors,
at least not in the same way that OldCare does it.
Exhibit 7 Service Market Positioning Map
The map above shows how much different OldCare is from their main
competitors and from the ordinary concept of domiciliary aid service according
to Quality and Flexibility.
Moreover, OldCare has everything different, which means that the offer they
have is the same as any other domiciliary aid service with a wider and
innovative range of services.
The importance of this graph is to see the market opportunity and how different
OldCare is, that is what makes them being a new and unique concept.
9.5.2. Objectives
In order to achieve the overall objectives for this project and measure the
effectiveness of the communication the following objectives were established:
Qualitative objectives
To create awareness to OldCare, as it is important to let everyone knows
what is this company purpose and inform about their services;
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Create buzz around OldCares name by using creative approaches;
To create a clear and exclusive image, with the use of selective
communication channels in line with the overall objectives of the project.
Quantitative objectives
In order to set realistic goals for the next semesters it is necessary to
forecast by using the experience of the owner.
To double the revenue of the 1 semester 2010 in the next year.
9.6. Critical Success Factors
There are some factors that are critical for the success of this business plan.
Those factors are the following:
Taking advantage of the different services of the company so as to attract
different customers and not be dependent just from one type of client;
Ensure that all decisions make long-term economic sense;
Adapt desirable features for the every kind of target customer;
Effectively communicate the values and objectives to the employees;
Maintain a clear mission and vision;
Continue with a low cost structure;
Keep expanding and enlarge relations by signing new partnerships and
strategic alliances.
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Through the new strategy we will try to increase the revenue of OldCare in three
ways. First by expanding the services so as to develop their market, secondly by
developing the existing services provided so as enhance sales and satisfy its
customers' desires and finally by delineating a marketing strategy
complementary with the expansion so that it attracts more customers and
increase the brand awareness in the new operational centers.
9.7 Marketing Mix
Following, it is presented the analysis of the new marketing mix suggested.
9.7.1. Definition of the product concept
OldCare is an innovative concept of Domiciliary Service. This new concept is
mainly a multi-purpose Home Support Service that mixes a wide range of offers
for a full-size variety of needs of the elder population. Each service is intending
to match each different type of need. For more details about the services see
the point
9.7.2 New ideas
VIP Card
Treatment Packages
Screenings to the population in the OldCares Space or organized by
OldCare
Patronize (support) Sport Events,
Organize Elderly excursions
Organize Elderly Meetings (dance, theatre, music, sports Grandparents
and grandchildrens race)
Alliances or Parnerships with STAR companies to put OldCares logo on
their space(Health image, Sport Centers, SPAs, Travel Agencies)
To conclude, all those ideas were thought to, more than creating direct demand,
the biggest objective is to create brand awareness, and consequently increase
revenue in a long-term period.
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Some additional details that could make a difference
Birthday Postals for the existing clients;
Install a Bio-Healthy Park in the OldCares space (so that it can be seen
from the exterior, agreement with the company provider)
9.7.3. Branding
Improve Website create a forum and improvement of the general aspect of the
website. Firstly it would create a clearer picture in the mind of potential
customers about what exactly OldCare stands for. Moreover, the new website
could be constantly adapted with all different kinds of events being organized by
OldCare or events where OldCare is going to be present. As a result, people that
already know OldCare could be all the time informed about all those news.
Newsletter (monthly)
OldCare T-shirts distribution to the existing clients - Way to increase
awareness of the brand and bring more families to their facilities.
9.7.4. Price
The pricing strategy was decided taking into consideration the costs of thecompany, the value the customer attaches to the service and of course, OldCare
objectives.
One of OldCares objectives is to increase the revenue and to get higher margins
than the ones reached in the first year of operations. After considering the prices
of the general set of services of OldCare, it was decided that any change of the
prices would not have desirable results. During the expansion, by implementing
a penetrate price positioning, they could not be able to make good margins and
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by setting higher prices than the ones they have, they would have the risk of
creating the feeling of bad value for money to any potential customer. For that
reason, we considered to be appropriate maintaining the prices they already
practice in the first operational center, as the difference in the power or
purchasing does not diverge much from one operational center to another.
9.7.5. Promotion
The overall goal of OldCares promotional program is to create more public
awareness through various promotional tools that will result in increased
demand.
Of course, in order to have a successful promotion, it has to be analyzed which
segment is going to be addressed with the lunch of each new idea.
All promotional tools that are here suggested will target current customers and
potential ones as well.
Advertisement in free news papers and local magazines (For each new
operational area);
Promotion through Sports Academies, Health clinics, SPAs, Travel
Agencies
Constantly updating the website with anything that will be organized
(Health Screenings, Sport Leisure Races, Live Shows of music, theatre and
dance)
Special offers (Discounts, Packages, VIP card)
Word of mouth communication through Social Media
Social Media
Based on nowadays critical role of social media, we decided to emphasize on
this promotional tool. Obviously it is not intended to target the elders directly as
they are not the main users of Internet but to target their families, which are the
one that in the end take the decision to find a Home Support Service.
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The idea is that OldCare could establish a Facebook, and Twitter page with links
to the website and shortened versions of its posts. Customers will be
encouraged to become fans of those social media and then to share information
with their friends.
In addition, any special event organized by OldCare would be posted on the
pages above so every potential customer would be informed.
Special offers (Discounts, Packages, VIP card)
Discount 2x1 During one incredible month experience for target elder
couples;
Services Package Domiciliary Service + Technical Aids Equipments =
free TCare device;
9.7.6. Place
OldCares services can not only be distributed in OldCares headquarters as theycan be provided in the clients home, public spaces or private institutions,
depending how the client wants. Besides, the client can do his reservation
through phone service.
9.7.7 People
The employees of OldCare should represent the desired culture of the business.Interaction between employees and customers is an essential element of
OldCares image. Thus, employees should be reinforced to make this clear to
every customer and creating and transmitting a peaceful energy for them. Of
course, training the employees to adopt this kind of serving style would not be
difficult due to the small number of employees.
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The existing management style is exactly the one that comes from the culture of
OldCare and that can help in the employees' training procedure as it is a
dynamic, innovative and caring management.
Customer's service has to be done in a familiar way so as to make the guestacquiring the feeling of a comfy place.
6.7.8 Physical environment
The elements that would complete the OldCares value proposition are the
following:
Lightening facilities in OldCare should be enlightened to transmit calm;
Comfort facilities in OldCare should offer comfort for customers
6.8. Implementation
Time may be specified on a relative scale rather than specific calendar dates. It
should be created three different areas for implementation that includes
Promotion, Activities and New Ideas. The main objective of this schedule is to
guide OldCare in the process of implementing, by knowing exactly when they
should start preparing and allocating the necessary resources to put them in
practice.
7. Budget
The total amount of investment necessary, although not figure it out exactly,
seems very reasonable since the benefits it would bring, would amortize the
investment in a short-time period and in addition to that, I believe they would
give OldCare more reliability, sustainability and a stronger position to face future
years since the project OldCare was thought to be a long investment by his
owner Mrcio Vara.
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7. Control
Critical success factors
OldCare should take advantage of the different services of the company so as to
attract different customers and not depend so a lot in just one type, adapt
desirable features for every kind of target customer and communicate
effectively the values and objectives to their employees. Besides, it is my
opinion that OldCare should keep their core service the domiciliary service and
not, for example, the sale of geriatric equipment. If that happen, they would
probably lose market to other companies, as there are a lot of them specialized
in this type of selling and OldCares mains competencies and values are related
with health and caring about people. For that reason I suggest OldCare to
continue invest in their growth focusing on the domiciliary service and use the
other services like Sales, to complement their full service.
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11. QUALITY MANAGEMENT
When a customer pays for product he wants guarantees that a company is
capable of meeting his quality requirements, now and in the future. For that
reason, a commitment to quality is a winning attitude, to the extent that quality
is the key factor in a long and successful relationship between organization and
the customers.
Thus, the certification of Quality Management System of a company is the
recognition by an external and independent entity of whether the companymeets in an effective way the client exigencies and the legal and regulatory
requirements.
Objectives of the implementation of a Quality System
Among others the objectives to be achieved when implementing a QualitySystem are:
Penetration into new markets, or safeguarding of the existing ones;
Increase confidence, internally and externally in the working methods;
Reorganization of the company;
Increase motivation of employees;
Prestige;
Greater control of non quality costs and its reduce; Increased customer satisfaction;
Worldwide recognition;
Becoming part of the list of leading companies in the world market.
The main objective of ISO 9001 is customer satisfaction, as can be seen in the
following diagram:
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Fig. 8 Main phases of the Process of Quality Certification by the standard ISO 9001
How does the implementation works: Planning - setting objectives and methodologies in order to achieve
customer satisfaction;
Do - Implement the previous methodologies;
Check - Monitoring and measuring the processes / products and then
reporting the results;
Act Put in practice measures to improve the process / product.
Moreover, on practice the implementation of a Quality Management System
goes through three stages:
Document what you do;
Do what is documented;
Record what was done.
The practical application of this standard is of great importance for the success
of a business and the evolution of a company and the services they provide.
This certification of quality it is an opportunity for OldCare to differentiate even
more from their competitors and to obtain more recognition and awareness in
the market. I believe that by implementing the ISO 9001 standard certification
OldCare could definitively ensure their further success in the marketplace and
establish a more powerful identity in the customers mind.
The only opposition to this certification is the fact that is not accessible to all the
companies with prices around 16.000.
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25% average
increase Expansion
Investements
(marketing)
30% Interest rate
Nodividens
12% increase in
equipm. Sales;
26% increase in
services provided
1212. FINANCIAL PLAN. FINANCIAL PLAN
Below you can find financial ratios and financial statements such as income
statement and balance sheet of the company OldCare for the first semester of
2010 as well as forecasts for the second semester of 2010 and year 2011.
INCOME STATEMENT
DEC2009
1Sem2010
2Sem2010 2011
Forecast Forecast
Net Operating Revenues 13825,00101613,75
135265,05 260861,04
-Sale of equipment 6525,00 47958,75 52874,52 106285,37
-Service delivery 7300,00 53655,00 82390,53 154575,66Cost ofgoodssold 1694,18 12881,58 18034,22 43282,12
Gross Margin12130,82 88732,17
117230,83 217578,91
Operating Expenses 5082,53 38644,75 67589,92 127481,60
Operating Profits 7048,29 50087,41 49640,92 90097,31
Non-Operating Expenses 3388,35 25763,17 27051,33 60736,67
EBIT 3659,94 24324,24 22589,59 29360,64
Net Income2.561,96
17.026,97
15.812,71
20.552,45
NET MARGIN (%) 19% 17% 12% 8%
Retention Ratio (%)100% 100% 100% 100%
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Acquisition of a van,
new office,equipment;
ASSET TURNOVER 0,20 1,12 1,23 2,01ROA (Return onAssets) 0,05 0,27 0,21 0,23
LEVERAGE 7,1 3,4 2,6 2,0ROE (Return onEquity) 26% 63% 37% 32%
BALANCE SHEET
ASSETS
Clients c/c 2098,00 4405,80 4626,09 5320,00
Cash and equivalents 510,00 3213,00 3373,65 5313,50
Property and equipment 51072,90 66039,63 81006,36 101006,36
Bank deposits 13448,62 16138,34 19366,01 16138,34
Inventory 380,00 1140,00 1197,00 1995,00
State and other publicentities 3263,88 9791,64 9791,64 4895,82
TOTAL ASSETS70773,40 90936,77
109569,11 129773,21
LIABILITIES + EQUITY
Clients c/c 27500,00 28875,00 30318,75 28651,22
Accrued expenses 960,00 979,20 979,20 1403,60
State and other public
entities 323,34 970,02 970,02 1449,60Non current liabilities 31990,06 33085,58 34461,46 34876,66
TOTAL LIABILITIES 60773,40 63909,80 66729,43 66381,08
EQUITY 10000,00 27026,97 42839,68 63392,13
The figures above show a good financial performance of OldCare.
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In the first semester of 2010 OldCares revenues surpassed the barrier of
100.000 with a good margin of profits and the forecasts for the second half of
2010 are quite good as well.
The net margin is also quite optimistic and the reason to be declining is becauseOldCare have been making investments in the first half of 2010 and more are
expected to the second half of 2010 and next year of 2011 as the expansion
plan requires more cost and investments.
Analysing figures in detail:
The Retention Ratio indicates the percentage of a company's earnings that are
not paid out in dividends. OldCare credited all their earnings to retained
earnings in 2009 and they will do the same in the second half of 2010 in order to
have sufficient funds to invest in the expansion by natural growth, i.e. without
more credit help.
Obviously, the expansion of the business so far could just be possible with bank
credit help thats why the Leverage Ratio until December 2009 is so high in the
figures above. Since the beginning of 2010 this ratio has been decreasing
because the capacity of OldCare to finance their assets with their own capital is
increasing. The challenge of financial leverage is to strike a prudent balance
between the benefits and cost of debt financing, even if it increases our ROE
when is maximized.
The Return on Equity Ratio (ROE) shows an excellent picture of the company for
the potential investors, as the return of the investment has been very stable and
rather high for a new company.
The Asset Turnover Ratio indicates OldCare efficiency management to generate
sales through investments in their assets. For the future, this ratio predicts a
very high performance.
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Financial Strategy
To accomplish the goal of expanding to all the North Region of Portugal by
creating four new Operational Centres, external capital will be required.
Consequently, OldCare is either interested in finding new financial investors or
finding business partners. Although OldCare has good capital funds for natural
growth, it is not sufficient if in the end they choose to create as well, four new
offices in each operational centre. By deciding to do that, it will involve higher
investments in buildings, licensees, eventually more vans, more equipments,more fixed costs, more advertisement, and so on.
Other possibility that has been questioned is the possibility of creating a
franchising network, as they have been receiving some proposals to do that.
From our point of view this last option is not the most appropriate right now
because creating a franchising requires standard operations and a clear cost
structure and OldCare hasnt been able so far to accomplish these requirements.
Furthermore, the franchisee would have to fit with the same values andobjectives of OldCare, which could be a little bit difficult in, for example, when
wiring specialists of gerontology and health or with training in aging, as right
now there are not that many professionals in this field in Portugal. As OldCare is
quite young company, they still need to define which costs arent producing
revenues, which activities are more profitable as the most important experience-
based source of cost reduction is learning, and this learning process implies
repetition in order to decrease the time wasted in providing a service. The time
taken by a service to be provided is the bottle neck of OldCare, as theprofessionals just can go to the next client when they are done with the first
one. Just after doing this analysis of the operation of each task it can be possible
to reorganize processes and become more efficient and then settle standards,
which is practically impossible due to the fact that OldCare provides a very
customized service and all depends on what the customer wants.
Nevertheless, this could be a great possibility for a near future, as favourable
conditions will soon came out.
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The investment necessary to install a new office in a new operational centre is
around 20.000, which includes a new office all refurbished, a van to provide
domiciliary service, licensees, and basic equipment. Other possibility is to opt for
an open space office. This option would keep away the heavy costs of
refurbishment and licensees.
1313. CONCLUSION. CONCLUSION
Aging is an important stage in the life of an individual and requires special
needs. Therefore, in line to get those needs met, I present you this new conceptof providing services in order to be able to fill the deficiency most frequently
experienced by elder people.
With the project present on these pages, I strongly believe I transmit that this
innovative concept of home assistance service is a feasible alternative and could
even become the ideal response in meeting the needs of the elderly.
At the same time, I provide a business plan where I analyzed and reviewed all
the important points of the company and finally outlined an expansion plan and
related marketing strategy, which will be undoubtly an important and inevitable
part of the growing process of this company.
I want this marketing plan to be able to increase the market share and
consequently increasing returns, and sincerely hope that in some way I will be
able to help OldCare in the achievement of their overall goals and I wish them all
the success in this new stage of their life.
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BIBLIOGRAPHYBIBLIOGRAPHY
LARRY, E. Greiner Evolution and Revolution as Organizations Grow HBR vol. 50 (4) 1972. Rep May, 1998.
HIGGINS, Robert C. Analysis for Financial Management, McGraw-HILLINTERNATIONAL EDITION 2009.
Websites consulted:
www.kwintessential.co.uk/resources/global-etiquette/portugal.html -Countries Business Etiquettes - consulted in 05/07/2010
http://stats.oecd.org/ - Country statistical profiles 2008 and 2009 -
consulted in 05/07/2010
http://www.ipq.pt/custompage.aspx?modid=1576&pagid=3352 (ISO
9001) Quality Certification - consulted in 27/07/2010
http://homeinstead.com.pt/ - consulted in 11/07/2010
www.drcarlosrocha.com/ - consulted in 11/07/2010
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http://www.kwintessential.co.uk/resources/global-etiquette/portugal.htmlhttp://stats.oecd.org/http://www.ipq.pt/custompage.aspx?modid=1576&pagid=3352http://www.kwintessential.co.uk/resources/global-etiquette/portugal.htmlhttp://stats.oecd.org/http://www.ipq.pt/custompage.aspx?modid=1576&pagid=3352 -
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www.cebrigantina.com/ - consulted in 11/07/2010
http://www.ine.pt; - National Statistical Institute of Portugal Consulted in
12/07/2010
www.turestaurantefranquicia.com - consulted in 27/07/2010
http://www.homenurses.com.au/ - consulted in 28/07/2010
http://www.inhomesupportservices.com/ - consulted in 28/07/2010
www.quickMBA.com - consulted in 06/07/2010
www.maxipedia.com - consulted in 27/07/2010
www.socialgest.com - consulted in 26/07/2010
http://www.aeportugal.pt/inicio.asp?
Pagina=/Areas/Qualidade/ISO90012000&Menu=MenuQualidade -
consulted in 27/07/2010
http://pt.shvoong.com/exact-sciences/engineering/493912-certifica
%C3%A7%C3%A3o-da-qualidade-pela-iso/ - Quality Certification -
consulted in 27/07/2010
ACKNOWLEDGMENTSACKNOWLEDGMENTS
First of all I want to thank the owner of OldCare, Mrcio Vara, for all the time and
patience he had to provide me with all the information about the company, for
the long hours missed answering the bunch of questionnaires, and for the
sympathy and care.
I want to thank to all the people that contribute in some way for this project, by
supporting me, for the tips, for guiding me, for providing information, for doingresearch, for whatever.
Finally, thank you EADA for guiding me in this new phase of my life, for all that I
lived and learnt, thank you for the amazing teachers and remarkable Master,
thank you for the opportunities of networking, the workshops and seminars, all
http://www.turestaurantefranquicia.com/http://www.homenurses.com.au/http://www.inhomesupportservices.com/http://www.turestaurantefranquicia.com/http://www.homenurses.com.au/http://www.inhomesupportservices.com/