To Start A New Business By Own Business Plan Inti Assignment

3081 words - 13 pages

EXECUTIVE SUMMARY
This report provides business evaluation of Chimaek4You which is a bistro that planned to open at Uptown Avenue Seremban 2 offering Korean fried chicken and beer. This popular combination is known as ?chimaek? where the word is an abbreviation of ?chicken? and ?maekju? (Korean word for beer). Chimaek4You aimed to become the next hip and happening gathering spot in Seremban area.
This business will be sole proprietorship owned and operate by Tania. To begin with this new business, Tania has a capital of RM100,000 and permitted to get RM100,000 loan. 8 people will be employed to run the business daily operation.
This report first describes Malaysia economy outlook and industry analysis. Financial management of Chimaek4You is then discussed on its business description, business form, SWOT analysis and financial assumptions. Risk analysis is carried out by using CAPM model. Cost of capital (WACC) is also determined. Subsequently, this report elaborates the findings from valuating the project?s NPV, IRR, payback period and profitability analysis. A proper analysis by combining all the above findings is then derived to determine whether this business idea should be accepted or rejected.
1.0 ECONOMIC AND INDUSTRY ANALYSIS
1.1 Malaysia Market Analysis
In 2016, Malaysia is classified as an upper middle income nation by the World Bank with continuous effort to eliminate poverty (Worldbank.org, 2017). Malaysia?s per capita income was US$9546 (world ranking 66/189 economies) and Purchasing Power Parity (PPP) per capita of US$ 27,234,080 (world ranking 48) according to International Monetary Fund World Economic Outlook Projection (Oct 2016) (Export.gov, 2017).
The Malaysian economy exceeded expectation in 20171Q as GDP grew 5.6% against 4.1% registered in 2016 first quarter, mainly driven by domestic demand, underpinned by strong growth in both private spending and investment. 1Q17 recorded GDP of RM280.1 billion at constant 2010 prices and RM 324.6 billion at current prices according to Department of Statistic Malaysia (Thestar.com.my, 2017a). On the expenditure side, private final consumption expenditure grew 6.6% (Q4 2016: 6.1%) contributed by the consumption on food & non-alcoholic beverages, communication, housing and utilities. Both exports and imports performed strongly this quarter. Exports increased 9.8% and imports rose to 12.9% (Q4 2016: 1.6%). Malaysia?s recent economic outlook is encouraging, reflecting a well-diversified economy (Thestar.com.my, 2017a).
In contrast of having a growth in GDP, Malaysia?s currency, the Ringgit has experienced depreciation over the past few years. In 2014, the average exchange rate for the Malaysian Ringgit against the US Dollar was US$1=RM3.30. In 2015, it was US$1=RM3.90 and average around RM4.12 in 2016. The exchange rate for the month of May 2017 hovered around RM4.30 to US$1. When a currency weakens, the prices of locally produced goods get cheaper relative to international prices. This boost...

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