Project Formulation and Business Planning Assignment 1: Unit Project – Part A Imran Imtiaz Butt 8/27/2017 MyTravelPartner.com An Ultimate Travel Experience for International Students TABLE OF CONTENTS: 1. Introduction......................................................................................................................... 3 2. Literature Review...................................................................................................................4 2.1 Project Formulation for Online Travel Agency.....................................................................4 2.2. Project Planning…………………………….....................................................................................7 2.3. Roles of Project Manager…………………………………............................................................... 7 2.4. Business Plan of MyTravelPartner.com.............................................................................. 8 2.5. Overview of a Travel Agency……………….............................................................................. 9 2.6. Business Model.................................................................................................................. 11 2.7. Business Model Designing Process..................................................................................... 11 2.8. Business Model Canvas………………...................................................................................... 13 2.9. SWOT Analysis of MyTravelPartner.com............................................................................ 14 2.10. Business Model Canvas for MyTravelPartner.com........................................................... 16 3. Conclusion………………………………………..................................................................................... 16 4. References………………………………………..................................................................................... 17 Introduction: Every start-up begins with an idea which comes into the mind of a person or a group of people to put forward a new or improved product. But the success or collapse of any business heavily depends upon the ability of the owner, resources, decision-making skills, initiatives and innovations. The element of innovation only performs its function if the decision-maker has an immense knowledge of market and its dynamics. This sense of innovation then design a business concept which includes information of value of goods, services, core business activities, target market and the means of distributing or providing goods and services into the market segment. In this report, considering all these points, we have put forward an idea to launch an Online Travel Agency which has an aim to target mostly international students in Australia, who are keen to spend their leisure time in travelling without facing any hurdles in arranging these trips. Countries like Australia, the educational sector works as a major revenue generating engine in the economy. Nearly 0.5 million students from almost 200 countries studied in Australia in 2015 (Department of Education and Training - Australia, 2016). The international students contribute not only through tuition fees but they indirectly contribute in the hospitality and tourism sector through expenditure on leisure activities. Nearly $19.7 billion were generated directly or indirectly through international students and additional $300 million generated as a newly-recognized revenue stream through family members and friends of the students by visiting them. This resulted in 8% revenue growth in the fiscal year of 2015/2016 compared to the previous year, making it as the most earning sector of Australia’s economy (Australian Bureau of Statistics, 2016). In short, it is the most lucrative business in Australia if pitched correctly and targeting potential customers. The graph shows the enrolments of international students from 1994 to 2016, which indicates that the sector is at the verge of booming and flourishing. Figure 1: International Students enrolments from 1994 to 2016 So the target market has the capability to provide successful business future. We have proposed a name for our newly created company which is “My Travel Partner”, the website of our company will be “mytravelpartner.com”. In this report, we will be fully examining the literature review related to project management and business model, which would be helpful in the planning process of the venture. Literature Review: After discussing the whole scenario, in order to flourish in the market, this travel agency business should follow the essence of project management before launching its product and services. This business has a wide target audience. These international students share 20% contribution in the hospitality and tourism industry all over the world (StudentMarketing, 2012). These students are embedded tourists; long duration of stay and keenness to explore the host country makes them more genuine traveler than other types (Fordham, 2006). Starting up this business in main stream requires immense homework and thorough research. Before taking such step, it is necessary to weight every component of the project through proper analysis and conceptualization. Project Formulation for Online Travel Agency: Before starting a business, one should know the fundamentals of project management. The project initiation requires massive brainstorming and discussions. The important factor in designing the project is known as project formulation. It is the concise, accurate statement of a project to define the limits or boundaries of work to be executed. The project formulation is described in a formal document that provides a unique identity of the project and specific meaning of the project work to avoid any overlaps, confusions or conflicts. It is the part of the Project Lifecycle, hence this stage is also known as conceptualization, initiation, pre-project or definition. Some of the points of the project formulation in its working boundary are as follows: Identifies, weights and examines numerous components of the project. Performs feasibility analysis. Analyzes the inputs and outputs. Classifies stakeholders and their contribution and involvement in the project. Highlights the expectations and benefits. Estimates the allocated resources. Performs risk analysis. Maintains and defines the project timeline. Figure 2: Typical diagram of Project Life Cycle After the identification of the project, the next step take place with more detailed and systematic analysis, this step is called project formulation but the stage is known as “Initiation stage”. This phase consists of all the necessary work to bring the project at the stage where a careful appraisal and evaluation can be undertaken to make sure that the project is practicable and attractive, and if found as per the expectations then implementation phase can be started. Many aspects come into consideration in the project formulation, such as Technical aspect, Social aspect, Market aspect, economic aspect, financial aspect, commercial aspect and managerial aspect (Gupta, 2017). Before forming online travel agency, project formulation elements should be taken into consideration. According to the business journal by NSBDC (Nevada Small Business Development Centre, 2004), below elements are extracted for project formulation in order to start a new business: Evaluation of benefits and demands: This element finds the possible benefits that can be achieved from investing in the identified business. The market size and nature are estimated so that a rough idea can be assumed either the product or service is saleable or not. According to our research, there is enough space for online travel agencies to flourish and make profit by targeting right people with right package or service in Australia. Analysis of technology used in project: This element examines the technological medium of the project. The proposed technology of the project is examined on the basis of the findings gathered from the evaluation of benefits and demands to make sure that the technology used in the project is updated and robust. The advent of internet brought bright chances for those businesses which rely upon the usage of internet. MyTravelPartner.com will provide a user-friendly, updated and informative platform in the form of website for international students so that they can book their trips on special discounts with real-time flight schedules, weather forecast, special events and cheap accommodation details of the destination. Environmental friendliness of the project: This element scrutinizes the likelihood of environmental damage through the project. As this project is totally based on online working, hence it creates almost negligible negative impact upon the environment. But MyTravelPartner.com clearly aim to promote the environment friendly messages and awareness programs onto the website so that the travelers can also be concerned with not to harm environment by any means during the trip. Sustainability of the project: This element analyzes the sustainability in terms of overhead expenses and operational costs. If the project is not sustainable then the implementation can be difficult decision for the entrepreneur or project team. Estimation of income and costs: The income and costs associated with the project and its operations can be evaluated in this stage of project formulation. The major costs in starting an online travel agency are associated with the marketing of the product or services in order to spread the word among potential customers. This includes social media marketing campaigns, brochures and vouchers distribution in all major universities of Australia, Deployment of IT systems, Utilities, Salaries, Registration fees for the travel agency under the license of Tourism Ministry of Australia and IATA (International Air Transport Association), and some miscellaneous expenses. The income directly comes in the form of commission on each direct sale of air ticket, train ticket, hotel booking and adventure trip packages, and indirect sales through franchising. Financing the initial investments: After analyzing the inputs and outputs of the cash flow, the financing from the investments and daily operations working capital should be considered carefully. Defining the organization structure: The organization structure must be defined by designing an adequate structure for managing operations and directing with drawing roles and responsibilities of the working people in the project. Without this element, even the most profitable business can become jeopardized. Recommendations: From the findings of above elements, the decision-makers will provide recommendations to further make improvements in the project formulation concepts. The risk factors are also highlighted in this stage. Preparation for budgets, investments and finance: After examining the feasibility and risk factors of the project, the final phase of project formulation is started which includes tack scheduling, arrangement of funds, supervision of implementation and other activities for the execution of the project. Project Planning: The project planning is a standardized methodology which is used to implement the objectives of the project step by step so that the execution of that project can be done smoothly. The checks and balances are drawn so that each step can be thoroughly examined before proceeding to next objective (Lewis, 2005). The project planning describes the scope and responsibilities in building up the project from scratch by scheduling the timeline, designing the plan for allocation of resources, estimating costs and budgeting and also analyzing the risk factors involved in the project (Harrison, 2004). Initiating an online travel agency requires intense planning and research work, the major hurdle in starting an online travel agency is the designing of the website or online blog which is the face of the business. The project planning should also include the method that what type of algorithm is required for the website which should produce relevant information to the visitors in a blink of an eye according to their desire. The website must contain the beautiful and exotic pictures with wonderful adventure stories of the destinations which the business is offering to its clients. The algorithm should also cater the records of those searches which the visitors are searching for, so that it will provide the trend of most searched results which will give an idea to the decision makers that which destination is most preferable to people. Project planning should also decide which type of content should be used as an inbound marketing in the web page. These are the fundamental points which should be accommodated by the project manager of Online Travel Agency before making the website public and available (Bernard, 2017). In present time, there are number of project management tools in the market with a wide variety of technical functions and complex algorithms that can process every step which leads to the successful implementation of project keeping in mind the time schedule, quality assurance, scope and cost. These tools efficiently establish the communication channels between the concerned persons in the project in order to sustain the quality, time and overall goals of the project. Some of the tools which work efficiently for any type of projects are CPM and PERT (Kendrick, 2009) Roles of Project Manager: Every project is unique and surrounded by factors of complexity, unknowns and uncertainty. In this scenario, the role of project manager is challenging and tough as compared with any other typical functional manager. The surrounding environment of a typical functional manager is organized and well defined which supports the functional manager with many perspectives. But the project manager deals with many challenges like providing leadership to the project team without any formal, documented authority as well as between the matrix structures where the orders come from vertical and horizontal directions from different higher levels of management (Cleland, 1995). Therefore, project managers are supposed to be driving a diverse workforce with small amount of direct control over them (Cleland & Ireland, 2002). Project manager is eventually responsible for executing, implementing, deploying and completing the project on time, within the allocated budget and in the compliance with all technical requirements. Figure 3: Project Management triangle with project constraints The responsibilities of the project managers vary from company to company, industry to industry and project to project. But the fundamental responsibilities of every project manager are quite similar which are behind the success of many projects if performed well. According to Stefanie (2001), the tasks and duties of project manager is to plan, approve, implement, monitor, control and execute the project. Some of the major points are as follows: Leadership spirit for the project team Preparation of relevant documents Schedules development Planning of day to day activities during project execution Defining the scope of work Analysis of risk factors Monitoring and reporting the progress Quality control assurance Realization of timely execution Business Plan of MyTravelPartner.com: In Australia, the competition is very tough within the tour arrangement services sector. The major portion of the market is captured by some gigantic businesses like Flight Centre and Helloworld (formerly Jetset Travel World) and the remaining portion is left for many other small to medium size companies contending to become market leaders. Approximately, there were around 4890 businesses counted at the end of fiscal year 2012/13 (Australian Bureau of Statistics, 2013). Due to the modernization, the traditional travel agencies with their bricks and mortar shopfronts facing a tremendous amount of decrease in their market share. With the widespread of internet all over the globe, the travel agencies have also started the evolution process in order to sustain their position in day by day changing market. This is the reason that these traditional travel agencies are moving to online business by offering both online services and shopfront services. They have become online and all the operations have now been handled via internet and online bookings. This change in tourism industry has created an eminent impact which somehow benefits the traveler to make fast decisions with multiple options (O’Connor & Frew, 2002). In this intense competition, the tourism and hospitality sector is much more searching to reach new market segment with more specific marketing techniques and product presentation. This segment refers to youth travelers and students, as this segment is much more attractive because of its growth, substantial size and influence on economies of the countries (Reisinger, 2002). Consequently, there is much potential and enough space to flourish by new entrants. Many travel agencies ignore the major portion of potential tourists like international students. MyTravelPartner.com aims to target this sector by offering them a very competitive and reasonable tour packages’ prices so that they can afford with their limited savings. Overview of a Travel Agency: A typical travel agency is considered as a private retailer company which sells the ready-made tour packages and provides services related to tourism and hospitality to the clients known as tourists on behalf of the supplier known as tour operators. The travel agency mostly earns its profit through commission fees that is a difference between the advertised price from the suppliers and discounted price given to a travel agent (Stephen, 2012) Online Travel Agencies (OTA) are companies who provide travel reservations primarily on the internet. These companies acquire blocks of airline and hotel inventory at discounted prices and make them available to consumers on the internet. Travel agents have many responsibilities and deal with many different tasks, including: Making reservations Route planning Charges and fares circulations Producing tickets Giving advices to tourists. For example, choosing the destination, airline Communicating with tourists in written or verbal Maintaining accurate records on reservations Acting as intermediaries when customer complains occur Business Model: In order to start any business, the entrepreneurs should also have basic idea of business models. Business model can be defined as the conceptualization of techniques in which companies generate profit in the form of logical structure comprising of various elements and connections that defines an organization (Osterwalder, 2004). A business model can also be described as the architecture for manufactured goods or any service which entails diverse business performers, their tasks and responsibilities as well as profitable outcome and resources required for returns (Timmer, 1998). Company’s business model portrays the overall vision and mission statements within the scope of its micro and macro environment factors which can help the decision makers to achieve their goals. A deep study and analysis of each component and their relationship with each other in business model can turn this as a very useful tool in order to take better decisions by the management. A business model canvas is a constructive tool which can capture major components related to the business as well as its macro and micro environment factors in the marketplace. Business Model Designing process: Business model design process is crucial yet helpful strategy to the decision makers that whether the business has potential to grow or not. Due to the technological advancement and widespread of internet, now business model designing is becoming an important part before starting up new business or redefining the business strategy, as the business model allows a detailed description and identification of the logic of absorption and realization of added value (Bucherer et. al, 2012). Any business model must be passed through four major stages before the implementation. These stages are defined in the flow chart. Figure 4: Flow chart of Business model generation Stage 1: Idea Generation: The foundation of any business model is idea generation which is the process of developing, producing and communicating the proposals that are theoretical, solid and conceivable. This process will further construct the ideas, bring innovation in the concept and bring this concept into reality (Chesbrough, 2006). It is the most challenging task for entrepreneurs to generate business model for new startups or to bring innovations in existing business model as a chief way of competitive advantage (Mitchell & Coles, 2003). This stage requires efficient teamwork for a proper incorporation of knowledge from various people having different way of thinking or various divisions within the organization to meet the intricacy of the mission. Thus, it facilitates joint efforts, allows exchange of knowledge and promotes creativity factor among the members (Fay et al., 2006). Stage 2: Feasibility analysis: Feasibility analysis is a process of determining the viability of the business model. This stage is based on estimations which include market assessment by assessing the market size and estimated number of potential customers, financial estimation by evaluating the financial feasibility of the business, sales estimations through market share and customer count, identification of variable and fixed costs of the business (Reilly, 1996). Feasibility analysis is the last stage for the conceptualization process and first stage for the planning process of business model which defines the practicality of business whether it would survive or not. This stage checkmarks some points which are necessary to be taken into consideration by the decision makers and entrepreneurs for the sustainability of their ventures, these points are (1) Business model viability, (2) Management model viability, (3) Economic viability, (4) Market feasibility (5) Operational feasibility, (6) Geological feasibility, (7) Resource availability, (8) Technological possibility (9) Legally practicable, (10) Realistic timeframe and (11) Cultural practicability. Stage 3: Prototyping: This stage is used to first check the product in every aspect before making it public to targeted customers; this includes creating, testing and improving the product at an initial level before allocating big amount of resources on implementing the project. It is the duty of project manager and team workers to evaluate, experiment, study, treat and adapt changes in the project before drawing the conclusions. This involves small sample of random people or relevant team members so they test the prototype and put forward their ideas in order to adjust the settings near to perfection level. The reason of the prototype consequently is facilitating the decision-maker to make a decision. Another plan could be for checking the healthiness and toughness of own business model in comparison with the other competitors. Beyond that, it is possible to recognize the principal logic of absorption and realization of added value and to obtain further improvements from that trial and error (Geschka, 1996). Stage 4: Decision Making: Decision making stage is the decisive moment which establishes the verdict either the business is suitable to be launched or should be terminated. Some of the main points that will arise in the decision making process are that as follows: The reviews from the sample people upon the prototype The forecast of sales either validate the value proposition or not. The SWOT analysis of the business The Porter’s five forces. After getting positive feedbacks from these points, the decision maker will then term the business model as healthy and move further to place the foundation of the business. If the feedback is partially positive and partially negative, then the decision maker should make certain changes in the business strategy and approach and fine tune the structure. If the feedbacks are all negative then decision maker should terminate the idea and move forward for any other concept (Haslam, 2007). Business Model Canvas: A Business Model Canvas is a representation of key elements present within the scope of the organization and their role in day to day business. These key elements are the nine building blocks of the canvas which includes key partners, key activities, key resources, value propositions, customer relationships, channels, customer segments, cost structure and revenue streams. These elements can be summarized into four major segments that can define the core of the business model canvas. These four segments are product, infrastructure management, customer interface and financial aspects (Osterwalder & Pigneur, 2005). Figure 5: Descriptive chart of business model canvas 2.8.1 Product: The first segment of the business model is the product which is to be offered to the customers by the company. The product portfolio is supposed to be different from other competitors on the basis of its unique value proposition, and also defines the benefits to the customers (Bagchi & Tulskie, 2000). This value proposition gives an idea to customer that what advantages he or she will get after buying company’s manufactured goods or acquiring services. 2.8.2. Customer Interface: The second segment is related to the customer interface which consists of target audience, customer relationship and distribution channels. The customer of the company is the person to whom the offering is relevant and useful. It is essential to utilize the proper market segmentation and target the specific group of people within the market who shares common attributes and behavior preferences (Gordijn & Akkermans, 2003). Second, Customer Relationship, which is highly important that portrays the reputation of the company. A good customer relationship can be built up by asking for recommendations, advices and resolving the complaints. Third, Distribution Channels, which defines the number of ways through which the customer can be reached. 2.8.3. Infrastructure management The third segment signifies the infrastructure management which is essential to distribute the value proposition in best possible way to the target audience. The key resources comprise all linked activities which insert information or physical part at each phase of the value chain. The finished result is the final product handed over to the customer which integrates all information attained through the value chain process (Afuah & Tucci, 2003). The second part of this segment is activities, which is the repeatable patterns of action for developing, producing and offering of goods and services. Third part is the partnership; the successful companies always create good partners in business to initiate co-brandings and joint ventures (Osterwalder, 2004). 2.8.4. Financial aspects: The last stage of the business model canvas covers the financial aspects such as revenue stream and cost structure of the company. Starting with the cost structure, this element contains the total expenses required in the manufacturing of good or implementing the mechanism to provide services of the business. It is calculated through the ratio of variable and fixed costs of the company (Christensen, 2013). On the other hand, the revenue stream is defined as the number of means of revenue flows through which a company generates its revenue. It may include pricing structures, subscription fees, commissions, direct sales and gross margin (Klein & Loebbecke, 2000). SWOT Analysis of MyTravelPartner.com: The SWOT analysis is the method to evaluate the company’s internal factors such as strengths and weakness, and external factors such as opportunities and threats. The SWOT analysis gives a rough view for any emerging entrepreneur that what are his unique selling products and what are his weak points in which he should make improvements. Strengths: Reasonable prices International student market (especially youth segment). Special Discounts for students. Highly advanced webpage. Aggressive social media marketing Custom tour package with provisions for special request services Chain of competitive hotel partners Day-to-day updates over reviews and ratings Weaknesses Indirect communication with the hotel could lead to misinformation regarding the room type, availability, hotel policy with children, animals, special equipment, storage, parking etc; Narrow targeted audience. Chance of misinformation New Brand Less market penetration due to newly formed business Small investment startup. Opportunities Mergence with other online travel agencies to make expansion of business Student visa laws amendments in favor of international student, so that more students can come to Australia. New launching of adventure parks and tourists spots Economic growth. Threats Change in the behavior of tourists by directly book hotels and arrange tour trip without the need of travel agency. Developing of hotel’s communication systems with its guests, like apps, Social Medias etc. Strict visa policy for international students. Economic downfall Business Model Canvas for MyTravelPartner.com: After reviewing the literature related to the business model canvas, we have come to generate an idea of business model canvas for our new Online Travel Agency. The inputs were thoroughly discussed and reviewed before putting into the canvas. This canvas is somehow describes the actual components of MyTravelPartner.com. Figure 6: Business model canvas for MyTravelPartner.com Conclusion: In this report, we have learned the in-depth literature of project formulation, project planning, roles of the project manager and business model generation. After reviewing all the literature above we have come to know the science behind the startup of any business. We have put forward an idea to initiate an online travel agency with the name of “MyTravelPartner.com” which aims to target the high potential market that is international students. The marketing of our travel agency can be possible by the distribution of pamphlets and brochures in top universities of Australia through our personal contacts and connections so that the students can become familiar with our brand. The next promotion scheme is through paid advertisement method in social media such as facebook and twitter by simply setting the target audience with the age from 19 to 32 years in the ad manager of facebook so that our ad will only be appeared on filtered targeted audience such as youth of Australia. The business model canvas of our company has clearly described the internal and external factors involved in the business. In next assignment, we will discuss the competitive analysis and PESTLE analysis of MyTravelPartner.com with business implementation procedure. References: Bagchi, S., & Tulskie, B. (2000, October). E-business models: integrating learning from strategy development experiences and empirical research. In 20th Annual International Conference of the Strategic Management Society (pp. 15-18). Bucherer, E., Eisert, U., & Gassmann, O. (2012). Towards Systematic Business Model Innovation: Lessons from Product Innovation Management. Creativity and Innovation Management, 21, 183-198. Bernard (2017): “How to start your own travel agency today” http://blog.invoiceberry.com/2017/06/start-travel-agency-today/ Chesbrough, H (2006). Open Business Models: How to Thrive in the New Innovation Landscape. Boston, MA: Harvard Business School Press. Chris Harrison (2015): “Are international students important to the Australian tourism?” http://www.thebyte.com.au/are-international-students-important-to-the-australian-tourism-industry/ Christensen, C. (2013). The innovator's dilemma: when new technologies cause great firms to fail. Harvard Business Review Press. Cleland, David, and Lewis R. Ireland, Project Management: Strategic Design and Integration, McGraw-Hill (2002). Cleland, David, “Leadership and the Project Management Body of Knowledge,” International Journal of Project Management, 13:2 (1995), pp. 83-88. Fay, D, C Borrill, Z Amir, R Haward and M West (2006). Getting the most out of multidisciplinary teams: A multi-sample study of team innovation in health care. Journal of Occupational and Organizational Psychology, 79(4), 553–567. Fordham, T. (2006): “Pedagogies of cultural change: The rotary international youth exchange program and narratives of travel and transformation”, Gordijn, J., & Akkermans, J. M. (2003). Value-based requirements engineering: exploring innovative e-commerce ideas. Requirements engineering, 8(2), 114-134. Geschka, H. (1996). Creativity Techniques in Germany. Creativity and Innovation Management, 5, 87-92. Gupta, Amresh (2017): “Project Appraisal and financing” (pp. 21-23) Harrison, F; "Advanced Project Management: A Structured Approach"; Gower Publishing; 2004 Haslam, Colin. (2007) Business analysis and decision making, Publications Office The External Programme University of London Stewart House 32 Russell Square London WC1B 5DN United Kingdom James P. Lewis; "Fundamentals of Project Management"; AMACOM; 2006; 160 pages Klein, S., & Loebbecke, C. (2000, June). The transformation of pricing models on the web: examples from the airline industry. In 13th International Bled Electronic Commerce Conference (pp. 19-21). Mitchell, D and C Coles (2003). The ultimate competitive advantage of continuing business model innovation. The Journal of Business Strategy, 24(5), 15–24. Osterwalder, A. (2004). The business model ontology: A proposition in a design science approach. Institut d’Informatique et Organisation. Lausanne, Switzerland, University of Lausanne, Ecole des Hautes Etudes Commerciales HEC, 173. Reisinger, Y. (2002). Does travel motivation influence destination perception in the youth travel market? Monash University: Reilly, 1996 Michael D., Ph.D. and Norman L. Millikin, Ph.D. College of Business, Montana State University-Bozeman: http://msuextension.org/publications/BusinessandCommunities/MT199510HR.pdf Stephen J. Page. 2003. Tourism Management: Managing for Change. A Butterworth-Heinemann Title.Protected Travel Services Blog. 2012. Tour Operator or Travel Agent? Accessed 10.01.2014 http://protectedtravelservices.wordpress.com/2012/12/06/tour-operator-or-travel-agent/ Stefanie vater (2011) “Project Planning as key to success in project management” Timmers, P. (1998). Business models for electronic markets. Electronic markets, 8(2), 3-8. Tom Kendrick; "Project Management Toolkit"; AMACOM; 2004; 256 pages 16