Business Development Plan

BUSINESS DEVELOPMENT
PROPOSAL
Tea Di Lusso

Student Name | Bao Quan Nguyen
Student ID | B0103HOHO0813

Business Development Proposal

TEA HOUSE IN VIETNAM:
TEA DI LUSSO

Bao Quan Nguyen
B0103HOHO0813

Submitted in fulfilment of the requirement of the Masters degree to
University of Gloucestershire, for the degree of Master in Business
Administration (MBA)

Supervisor: Dr K V Shenai

April 2014

DECLARATION

This Business Development Proposal is a product of my own work and is not the
result of anything done in collaboration.

Student signature

I agree that this Business Development Proposal may be available for reference
and photocopying, at the discretion of the University.

Student signature
Bao Quan Nguyen

Contents
Executive Summary ....................................................................................... 1
Chapter 1: Introduction ................................................................................ 3
1.1 Rationale for the business .................................................................. 3
1.2 Scenario chosen ................................................................................. 4
Chapter 2: The Business Concept ................................................................. 5
2.1 Mission............................................................................................... 5
2.2 Vision ................................................................................................. 5
2.3 Products/Services ............................................................................... 6
2.4 Scale and growth anticipation ............................................................ 6
Chapter 3: Feasibility .................................................................................... 7
3.1 Market Research Methodology .......................................................... 7
3.2 Feasibility......................................................................................... 24
3.3 Resource Requirement Evaluation................................................... 43
Chapter 4: Business Model .......................................................................... 44
4.1 Strategic Analysis of the Business Idea ........................................... 44
4.2 Sources of competitive advantage and sustainability ...................... 50
4.3 Development of appropriate Business Model .................................. 52
Chapter 5: Business Plan ............................................................................. 56
5.1 Business Plan Overview .................................................................. 56
5.2 Proposed Plan of Action .................................................................. 59
5.3 Discussion of critical success/failure factors ................................... 63
Appendices .................................................................................................... 65
References ..................................................................................................... 70

Figure Lists
Figure 1. The prevailing image of a pavement tea and coffee shop in Vietnam .. 3
Figure 2. Area of tea plantation in Vietnam ...................................................... 24
Figure 3. Porters Five Forces Model of Competition (David, 2012) ............... 28
Figure 4. Highlands Coffee Vietnam Menu ....................................................... 29
Figure 5. Porters Value Chain ......................................................................... 44
Figure 6. Competitors positioning map ............................................................. 50
Figure 7. The Business Model Canvas of Tea Di Lusso .................................... 52
Figure 8. Gantt Chart of Tea Di Lusso .............................................................. 62

Graph Lists
Graph 1. The genders of respondents .................................................................. 9
Graph 2. Respondents age groups ...................................................................... 9
Graph 3. The occupation status and the reasons for choosing drinks store ...... 11
Graph 4. Types of service that respondents want to be served .......................... 12
Graph 5. The relationship between occupation status and spending ability ..... 18
Graph 6. Vietnam Tea Production (FAO, 2014) ............................................... 25
Graph 7. Vietnam tea harvested area (hectares) (FAO, 2014) ......................... 32
Graph 8. Break-even chart ................................................................................. 42

Table Lists
Table 1. The occupation status of the respondents ............................................ 10
Table 2. The coded table of reasons categories ................................................. 11
Table 3. The answers regarding to the going out reasons of the respondents .. 12
Table 4. Age groups and number of respones .................................................... 13
Table 5. The coded flavours that can be added into the drinks ......................... 14
Table 6. The observed frequencies between age and flavours ........................... 14
Table 7. The expected frequencies between age and flavours ........................... 15

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Table 8. Results of the Chi-square test............................................................... 15
Table 9. The observed frequencies between occupation status and money
spending for drinks in customers ....................................................................... 16
Table 10. The expected frequencies between occupation status and money
spending for drinks in customers ....................................................................... 17
Table 11. Result of the Chi-square test .............................................................. 17
Table 12. The degree enjoyment with the level number ..................................... 19
Table 13. Coded age groups .............................................................................. 19
Table 14. Regression Statistics table ................................................................. 20
Table 15. ANOVA Table ..................................................................................... 20
Table 16. Confidence Interval Estimate ............................................................. 21
Table 17. The observed frequencies between occupation status and ................ 22
Table 18. The expected frequencies between occupation status and ................. 23
Table 19. Result of Chi-square test .................................................................... 23
Table 20. Vietnam consumer foodservice sales values ...................................... 26
Table 21. Vietnam foodservice value in US$ ..................................................... 26
Table 22. The market share by brand of vietnam caf/bars ............................... 28
Table 23. The mean and standard deviation of enjoyment degree regarding to the
drinks .................................................................................................................. 31
Table 24. The start-up requirements of the business ......................................... 40
Table 26. Cash flows table ................................................................................. 41
Table 27. The cumulative cash flows for calculating payback period ............... 41
Table 28. Profitability table and ROEI .............................................................. 42
Table 29. The start-up funding table .................................................................. 58
Table 25. Forecast of sales values and cost of sales ......................................... 59

1

Executive Summary
Tea Di Lusso is a new tea house which is operated in English afternoon
style in Ho Chi Minh City, Vietnam. Tea Di Lusso is a brand name of Tea Di
Lusso Ltd a new venture formed through the partnership of the investors and
has the vision to provide a professional and elegant tea house for Vietnamese
people to have chance in enjoying the traditional green and black tea together
with English pastry. This proposal provides an evaluation toward the
establishment of the venture.
The initial investment of the business is US$ 50,000 which is sufficient
for start-up finance. The founding team includes of professional people who had
adequate experiences and knowledge in catering service, cash flow management
and business administration.
A range of primary and secondary data research is conducted. 100 people
answered the survey which is related to the analysis of market requirement. 66%
and 23% of the respondents have the age ranges from 25-34 and 18-24
respectively. These age ranges are also the target for Tea Di Lusso. The primary
research shows that there exists the relationship between the occupation status
and service adjustment. Hence, the main service style of Tea Di Lusso would be
self-service: when the customers come, they will make the order at the service
desk and wait for their drinks to be served. This service style would help Tea Di
Lusso to decrease the price range in order to attract more customers.
An analysis of secondary data research shows that the demands for tea
products of Vietnamese people have the trend to increase in the future: a forecast
tea sales from US$ 1.43 billion in 2015 to US$ 2.01 billion in 2018. Moreover,
the Porters Five Forces analysis show that the low barrier to entry for new
entrant in this industry as well as the low bargaining power of supplier due to the
increase of tea plantation makes the business founders believe the venture can
survive.

2

However, in the other hand, this industry is dynamic and full of fierce
competition from high reputation competitors. Therefore, the competitive
advantages of Tea Di Lusso are also identified, they include of the competitive
price range in comparison with the competitors which provide the same service
and products, the first English afternoon tea style tea house in Ho Chi Minh City,
staffs are trained with high standard operation procedures from experienced
directors.
The value chain of Tea Di Lusso is built based on the strong coordination
with suppliers through the implementation of MRP (material requirement
planning) system in order to ensure the effective inventory management.
Moreover, Tea Di Lusso also tends to build up the strong relationship with
customers through applying the relationship marketing DLusso loyalty card
program.
The business model of Tea Di Lusso is also built within this proposal.
The business model is based on Ostawalders business model canvas with nine
aspects of customer segments, value propositions, channels, customer
relationships, revenue stream, key resources, key activities, key partnership, and
cost structure.
The critical factors concerning to the failure and success of the business
are also mentioned. The risks assessment shows that multiple factors from
market/industry as well as social and economic can have effect toward the
company especially the high inflation rate and the forecasted increase in
unemployment rate can have impact toward the spending behaviour of
Vietnamese people.

3

Chapter 1: Introduction
1.1 Rationale for the business
The business concept that is presented throughout this proposal is about
a tea house based in Ho Chi Minh, Vietnam. This tea house is created regarding
to the passionate with the dining style of English afternoon tea of its founders.
The founders are friends from university, together they have shared the same
common and interest toward the tea enjoyment. Therefore, they would like to
introduce with Vietnamese people a whole new way to have tea with gourmet
pastry. The name of tea house Tea Di Lusso is the combination of the two
words Tea in English and Di Lusso in Italian which means Deluxe. As its
name state, the business founders wish to bring a deluxe and cozy tea house
which targets to the trendy and funky young people who would like to have a
nice place for working, gossiping and socializing. For long, Vietnamese people
get used with the tea and coffee shop that are mostly placed on the outdoor
pavement and people sitting together around small tables and chairs, reading
newspaper, enjoying the condense Vietnamese tea or filtered coffee.

Figure 1. The prevailing image of a pavement tea and coffee shop in Vietnam
(36 Pho Phuong, 2010)

4

However, with the lucrative development of globalization and the
internalization of the world business, people in Vietnam nowadays have chance
to approach with the new style in enjoying the beverage. Regarding to Business
Monitor (2014), Vietnam has the massive youth population and an increase in
domestic income has lead to the higher demanding in quality of food and
beverage. Moreover, the appearance of franchised coffee and tea popular chain
stores such as Gloria Jeans of Australia, The Coffee Bean & Tea Leaf of
America or Angel-in-us from Korea and even Starbucks has also created a new
habit for the Vietnamese people in acknowledging a more Westernised and
modern style in savoring hot drinks. Therefore, more and more voguish coffee
and tea chains has been founded by Vietnamese entrepreneurs. The appearance
of Trung Nguyen Coffee, Phuc Long Tea or Highlands Coffee chains has created
a dynamic competitive environment. With Tea Di Lussos owners, this is quite
an obvious opportunity and exciting challenge to step into this industry.
1.2 Scenario chosen
The chosen scenario is a brand new start-up business. A Western tea
house which is located in Ho Chi Minh City, Vietnam. This tea house will bring
up the style of English afternoon tea for the potential segmented customers.

5

Chapter 2: The Business Concept
Tea Di Lusso - as the name say about the company, the business founders
want to bring a cross-cultural of classical Eastern tea taste with the traditional
sweet Western cake combining the excellent and elegant customers service. The
business founders will help to re-shape and re-think the mind of enjoying
beverage of Vietnamese people. Tea Di Lusso opens its first store on District 1,
Ho Chi Minh City, Vietnam. The company would provide the Vietnamese
traditional green and black tea (including of hot and ice) and various types of
English pastries and cakes: scone, lemon drizzle, opera cake. The tea can be
added with fruity syrup and flavors regarding to the interest of the customers. A
company will be established with the name - Tea Di Lusso Ltd. The company
is operated under partnership model with the initial share capital was mainly from
investors who are friends in real life. Tea Di Lusso is the brand for the product
of tea house.
2.1 Mission
Tea for long has been the traits of Eastern culture, it is the first step in
each of conversation, a valuable herb for the health and a fancy drink. Tea Di
Lusso is here to rehabilitate a classical and elegant way of enjoying Tea, to bring
the people together with the real communication and humanity value, in the
world which is invaded by electronic equipment.
2.2 Vision
Tea Di Lusso has the vision to become a great tea house brand for people
to come socializing and enjoying fine brewed tea and pastries. In order to achieve
that vision, Tea Di Lusso will need to:
1. Training great staffs
2. Delivering great service
3. Offering great products

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2.3 Products/Services
Tea Di Lusso will specialize in the most quality and premium of green
and black tea with gourmet English pastries and cakes.
Green and Black Tea: regarding to the habit, the customers can have the
hot tea to enjoy or if they want, tea house can serve the ice tea with original taste
or add the syrup regarding to customers favorites.
Pastries: Some selection of high quality English pastries and cakes are
served for customers to enjoy with various types of tea, the cakes include of:
scone, lemon drizzle, black forest cake, opera cake.
2.4 Scale and growth anticipation:
Tea Di Lusso will be based in District 1, Ho Chi Minh City, Vietnam.
Regarding to the group research, Ho Chi Minh City is the largest city in Vietnam
with the population of approximately 7,521,138 in 2011. The experts predict that
the population can be over 13.9 millions people in 2025. Ho Chi Minh City is
also the economic center of Vietnam and take account of a large proportion of
the economy of Vietnam, beside Hanoi (it takes about 20.2% of Vietnam GDP,
27.9% of industrial output and 34.9% of the FDI projects). According to National
Statistic Department, in 2012, GDP per capital of Ho Chi Minh City reached of
nearly $3,600 in comparison with national average of $1,540. District 1 is one of
the CBD (Central Business District) in Ho Chi Minh City. This District has
diverse food and beverage offerings with multinational restaurants, bars and
clubs from India, Brazil to Italia. Moreover, a lot of historic sightseeing also place
in District 1. Therefore, this district attracts a lot of multinational tourists.
Therefore, with such external condition, we make an anticipation toward the
growth of Tea Di Lusso as below:
Obtain a minimum of 3,000 customers/month in the first year.
Increase the loyalty of customer of 6% per quarter.
Achieve the target of sale revenue of $182,594 in the end of year 3.

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Chapter 3: Feasibility
3.1 Market Research Methodology
The present research aims to resolve the two main objectives. Firstly, the
business owners want to acknowledge about the customers behaviours as well
as the interests, the range of taste and the way they want to be served within the
teahouse. The market of hot drinks and beverage chain store is quite dynamic and
full of tough competitors; therefore, a market research would help the founders
can have the idea to build up the strategic capability including of unique resources
and core competences which are the basis for competitive advantages.
Secondly, the market research also helps the owners in building up the
appropriate business concept as well as business model and service style that can
adapt with the high customers demandings. The globalisation, emergence of
Internet, the increase of the international tertiary students originated from
Vietnam have created a broad access in the aspect of Western hot drinks habit in
this country and moreover, the increase of income per capita has created a chance
for Vietnamese people to have chance in enjoying fancy drinks from foreign
coffee and tea chain stores. For this reason, Tea Di Lussos founders have a lot
of questions to think: what are the habits of Vietnamese people, especially young
adults and students, when going out for tea or coffee? What are the main purposes
of these people when they come to a tea house? What is the service type that
these customers want to be served?

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Sample
The survey was conducted mainly online with the participants were from
18 to 55. They would be more likely to be proactive in their life. The 18-years
old and above participants means they should have been at least attending the
university or college and in Vietnam, in this age, the people would have more
freedom to hang out with friends than in the high school or secondary school.
Moreover, they would have the part-time jobs when they are still university
students, or they would have been full employed. This means these people have
more monthly income than the high school students and below.
Collecting Data and Sampling
Simple random sampling was conducted mainly in this survey. The
simple random sampling is probability sampling procedure that ensures that each
case in the population has an equivalent opportunity of being involved in the
sample (Saunders, et al., 2009). All of these respondents were invited randomly
on the Internet through survey online system. The name and other detailed
information of respondents were remained unknown so as to guarantee the
unbiased factors in this survey (Benson, et al., 2011). The research objectives
were discussed and the survey participation was voluntary. At first, the survey
was conducted with 10 questions regarding to the various aspects of customers,
26 responses were received. However, after reviewing, there is a need to add 02
more questions regarding to the demanding and spending habit of customers. A
total of 12 self-completed questions was distributed again (Appendice 1). The
business owners received 100 more responses. After receiving all of the
responses, a classification of questions was conducted. The answers were then
categorized and coded by numerical variables on the Microsoft Excel sheets for
further data evaluation.
Total of surveys 126
Surveys that meet the requirement 100

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3.1.1 Descriptive Statistic
3.1.1.1 Gender

Graph 1. The genders of respondents
A total of 100 (n=100) responses were received, 47 responses were Male
a proportion of 47% while this was 53% in female.
3.1.1.2 Age

Graph 2. Respondents age groups
47%
53%
Respondents' gender
Male
Female
23%
66%
9%
2%
Respondents' Age
18-24
25-34
35-44
45-54

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The age groups were categorized into 06 groups of 18 24, 25 34, 35
44, 45 54, 55 64, and Above 65 and the responses were 23%, 66%, 9% and
2% respectively. There were no any response from the groups of 55 64 and
Above 65 years old. The most responses were received from the group of 25
34 years old with the rate of 66%.
3.1.1.3 Occupation status & reasons for choosing a tea house
The occupation status was also classified into six groups with the
respondents details are:
Table 1. The occupation status of the respondents
Occupation Status Number of response
Full Time Employed 61
Part Time Employed 11
Self Employed 10
Unemployment 2
Student 16
Other 0
Total 100

The reasons for the participants to choose a coffee or tea house were also
categorized into five aspects. These five aspects were also coded (7a 7f) for the
further statistical analysis:

11

Table 2. The coded table of reasons categories
Categories Code
Enjoying delicious food and drinks 7a
Location and view 7b
Place for business discussion 7c
Place for gossiping with my friends and family 7d
Place for studying and reading books 7e
Strong Wi-Fi connection 7f

Graph 3. The occupation status and the reasons for choosing drinks store
The answer details of the respondents are:

0
10
20
30
40
50
60
70
80
90
100
Enjoying
delicious food
and drinks
Location and
view
Place for
business
discussion
Place for
gossiping with
my friends
and family
Place for
studying and
reading books
Strong wifi
connection
Full Time Employed Part Time Employed Self Employed Unemployment Student

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Table 3. The answers regarding to the going out reasons of the respondents
Coded Reasons
Occupation status 7a 7b 7c 7d 7e 7f
Full Time Employed 49 45 36 42 25 53
Part Time Employed 8 7 2 8 8 10
Self Employed 9 8 7 9 4 9
Unemployment 2 2 0 1 0 2
Student 12 10 0 15 15 15
Other 0 0 0 0 0 0
Total 80 72 45 75 52 89

Regarding to the table and the graph, the reason that participants would
like to choose a coffee or tea house is that the store can provide Strong Wi-Fi
connection. This is a very common choice with 89 responses. Enjoying delicious
food and drinks and Place for gossiping with my friends and family were 80 and
75 responses respectively while the least reason was Place for business
discussion (45 responses) since this reason was distributed mainly in Full Time
Employed and Self Employed respondents.
3.1.1.4 Type of service

Graph 4. Types of service that respondents want to be served
55%
31%
14%
Service styles
Im coming into the tea shop;
a staff welcomes me, smiles
and takes my orders.
I want to order directly at the
service desk and wait to take
my drinks.
I will order directly at the
service desk, take a number,
and the staff will bring my
drinks to my table afterward.

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The Question 8 in the questionnaire would help the business owners in
identifying the ways that the potential customers want to be served within the tea
or coffee store. 55% of the participants said that they want to have a complete
service with the answer of Im coming into the tea shop; a staff welcomes me,
smiles and takes my orders. 31% of the respondents answered that they want to
order directly at the service desk and will wait to take their drinks by themselves.
The remaining 14% of the consumers wanted to order at the service desk, take a
number and then the staffs brought the drinks to their table.
3.1.2 Inferential Statistic
3.1.2.1 Age and different drink flavours
The business owners conducted a multivariate Chi-square test to
distinguish whether the different age groups would have the different taste to put
in the tea. The variables of respondents age were classified into six groups with
the number of respondents as below:
Table 4. Age groups and number of response
Age Number of Responses
18-24 23
25-34 66
35-44 9
45-54 2
55-64 0
Over 65 0
Total 100

The other variables so-called the drink flavours include 10 types that the
business owners intend to add into the service. These variables would be coded
to be easily data input on the master data file:

14

Table 5. The coded flavours that can be added into the drinks
Flavours Code Flavours Code
A taste of smoke 6a Hazelnut 6f
Apple 6b Jasmine 6g
Bitten 6c Lemongrass 6h
Citrus 6d Orange 6j
Ginger 6e Peppermint 6k

Null hypothesis H0: = 0 (No relationship exists between the age
distinction and the favourite flavours)
Alternative hypothesis H1: 0 (Relationship exists between the age
distinction and the favourite flavours)
Significance level: = 0.05
Table 6. The observed frequencies between age and flavours
The flavours adding into the drinks
Age 6a 6b 6c 6d 6e 6f 6g 6h 6j 6k Total
18-24 6 12 8 7 8 7 11 11 12 5 87
25-34 27 28 27 27 32 32 31 25 32 29 290
35-44 1 5 6 6 5 2 5 4 5 6 45
45-54 1 0 1 1 2 2 1 1 1 1 11
Total 35 45 42 41 47 43 48 41 50 41 433

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Table 7. The expected frequencies between age and flavours
The flavours adding into the drinks
Age 6a 6b 6c 6d 6e 6f 6g 6h 6j 6k Total
18-24 7.0 9.0 8.4 8.2 9.4 8.6 9.6 8.2 10.0 8.2 87
25-34 23.4 30.1 28.1 27.5 31.5 28.8 32.1 27.5 33.5 27.5 290
35-44 3.6 4.7 4.4 4.3 4.9 4.5 5.0 4.3 5.2 4.3 45
45-54 0.9 1.1 1.1 1.0 1.2 1.1 1.2 1.0 1.3 1.0 11
Total 35 45 42 41 47 43 48 41 50 41 433

Data
Level of Significance 0.05
Number of Rows 6
Number of Columns 10
Degrees of Freedom 45

Table 8. Results of the Chi-square test
Results
Critical Value 61.65623338
Chi-Square Test Statistic 14.07092131
-Value 0.9999973

Regarding to the Table above, the Chi-square test statistic is 14.07 and it
is less than the critical value of 61.66. Moreover, the -Value is 0.99 which is
greater than the significance level = 0.05. The null hypothesis, therefore, is not
rejected. This means the reason for respondents want to add the flavours into their
drinks is totally based on their habits or favourites, not concerning to whichever
their age. The independence between the age and beverage flavours is at 95%
level of confidence. There is the risk of occurring the Type 2 error a 5% of the
alternative hypothesis would be wrongly rejected.

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3.1.2.2 Occupation status and the spending ability for drinks
This Chi-square test will help business owners to gain the awareness
about the price range regarding to spectacular targets of customers. Therefore,
the business owners can build up a food and beverage menu regarding to the
relationship between the occupation status of the customers.
Regarding to the drink spending, in the survey, there were also four
groups of price ranges for the respondents to answer which were laid in Question
12: What is the maximum amount of money that you would like to pay for the
beverage?. The price ranges are $1 - $2; $3 - $4; $5 - $6; and Above $6.
Null hypothesis H0: = 0 (No relationship exists between the occupation
status and amount of money that customers would want to spend for drinks)
Alternative hypothesis H1: 0 (Relationship exists between the
occupation status and amount of money that customers would want to spend)
Table 9. The observed frequencies between occupation status and money
spending for drinks in customers
Spending amounts for drinks
Occupation status $1-$2 $3-$4 $5-$6 Above $6 Total
Full Time Employed 12 29 14 6 61
Part Time Employed 6 3 2 0 11
Self Employed 4 5 0 1 10
Unemployment 2 0 0 0 2
Student 12 2 1 1 16
Total 36 39 17 8 100

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Table 10. The expected frequencies between occupation status and money
spending for drinks in customers
Spending amounts for drinks
Occupation status $1-$2 $3-$4 $5-$6 Above $6 Total
Full Time Employed 21.96 23.79 10.37 4.88 61
Part Time Employed 3.96 4.29 1.87 0.88 11
Self Employed 3.6 3.9 1.7 0.8 10
Unemployment 0.72 0.78 0.34 0.16 2
Student 5.76 6.24 2.72 1.28 16
Total 36 39 17 8 100

Data
Number of Rows 5
Number of Columns 4

Table 11. Result of the Chi-square test
Results
-Value 0.01086

The Chi-square test statistic is 25.96 which is greater than the critical
value of 21.02. The -Value is 0.01086 and less than the significance level =
0.05. The null hypothesis is rejected. The amount of money spending is not
independent from occupation status. The relationship between the occupation
status and money spending in beverage is at 95% level of confidence. There is
the risk of occurring the Type 1 error a 5% of the null hypothesis would be
wrongly rejected.

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Graph 5. The relationship between occupation status and spending ability
The graph above helps to illustrate the relationship between the
occupation status and the money spending. The Full Time Employment
customers would like to spend more money than the other aspects. 82% of
respondents who can spend from $5 - $6 comes from this occupation status. The
Unemployment ones which contain 2 respondents and all of them would like
to spend no more than $2 for the drink.

33%
17%
11%
6%
33%
74%
8%
13%
5%
82%
12%
6%
75%
13%
13%
0% 20% 40% 60% 80% 100%
Full Time Employed (n=61)
Part Time Employed (n=11)
Self Employed (n=10)
Unemployment (n=2)
Student (n=16)
$1-$2 $3-$4 $5-$6 Above $6

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3.1.2.3 The relationship between age and teas level of interest
The business owners conducted a simple linear regression in order to gain
awareness whether there is any dependent factors between the age and the
specific beverage products from tea including of Green Tea and Black Tea. The
level of enjoyment were categorized in four degrees:
Table 12. The degree enjoyment with the level number
Level Number Degree of enjoyment
0 Definitely not
2.5 I don't like
5 I would give a try
7.5 I love it
10 Fantastic

The age of the respondents were also coded and categorized in order to
easily analyse the data on the Excel Sheets:
Table 13. Coded age groups
Age Code
18-24 1
25-34 2
35-44 3
45-54 4
55-64 5
Over 65 6

The average of the enjoyment in both types of tea was calculated. The
independent variable was the respondents age and the dependent variable was
interest level.

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Table 14. Regression Statistics table
Multiple R 0.0218
R Square (Coefficient of determination) 0.0005
Adjusted R Square -0.0097
Standard Error of the Estimate 1.5732
Sample Size 100

Table 15. ANOVA Table
ANOVA
df SS MS F Significance F
Regression 1 0.1158 0.1158 0.0468 0.8292
Residual 98 242.5561 2.4751

Total 99 242.6719

Coefficients Standard
Error
t Stat P-value Lower
95%
Upper
95%
Intercept 7.8590 0.5038 15.5982 2.6491E-28 6.8591 8.8588
Q2
(slope)
0.0545 0.2519 0.2163 0.8292 -0.4454 0.5544

Regarding to the Regression Statistics Table and ANOVA Table, the
intercept value is 7.86 and the slope is 0.0545. The slope value nearly reaches to
0, the linear relationship between the interest level toward the tea products and
the age of the respondents is imperceptible. R Square (coefficient of
determination) is 0.0005 which is approximate 0. This value means the age may
not help to explain any dependent factors related to the tea interest level.

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Table 16. Confidence Interval Estimate
Average Age Value 2
Confidence Level 95%
Intermediate Calculations
Sample Size 100
t Value 1.984467
Age Bar, Sample Mean of Age 1.9
Sum of Squared Differences from Age Bar 39
Standard Error of the Estimate 1.573233
h Statistic 0.010256
Predicted Interest Level 7.967949
For Average Interest Level
Interval Half Width 0.3162
Confidence Interval Lower Limit 7.6518
Confidence Interval Upper Limit 8.284129
For Individual Response of Interest Level
Interval Half Width 3.1380
Prediction Interval Lower Limit 4.8299
Prediction Interval Upper Limit 11.10595

The Confidence Interval Estimate table shows that with the average age
value of 2 the age range of 25 34 years old the result is 95% confidence
that the respondents interest level of enjoying black and green tea is between
7.65 and 8.28.

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3.1.2.4 The occupation status and the adjustment in service
Realizing the possibility in adjusting the service style in order to adapt
with more customers demanding, a Chi-square test was conducted in order to
identify the relationship between the occupation status and the adjustment in the
service style. A question (Question 11) was carried out for the respondents to
answer whether they wanted a full-served style service and agreed an increase in
the charged price applying in the menu or they would like a self-served style
service and the menu would be decreased in price, otherwise.
Null hypothesis H0: = 0 (No relationship exists between the occupation
status and service adjustment)
Alternative hypothesis H1: 0 (relationship exists between the
occupation status and service adjustment)
Table 17. The observed frequencies between occupation status and
service adjustment
Adding Service
Occupation Status Full-served,
increase price
Self-served,
decrease price
Total
Full Time Employed 43 18 61
Part Time Employed 8 3 11
Self Employed 6 4 10
Unemployment 0 2 2
Student 3 13 16
Total 60 40 100

23

Table 18. The expected frequencies between occupation status and
service adjustment
Occupation Status Full-served,
increase price
Self-served,
decrease price
Total
Full Time Employed 36.6 24.4 61
Part Time Employed 6.6 4.4 11
Self Employed 6 4 10
Unemployment 1.2 0.8 2
Student 9.6 6.4 16
Total 60 40 100

Data
Number of Rows 5
Number of Columns 2

Table 19. Result of Chi-square test
Results
-Value 0.001300214

The Chi-square test statistic is 17.88 which is greater than the critical
value of 9.49. The -Value is 0.0013 and less than the significance level = 0.05.
The null hypothesis is rejected. The relationship between the occupation status
and service adjustment exists at 95% level of confidence. There is the risk of
occurring the Type 1 error a 5% of the null hypothesis would be wrongly
rejected.

24

3.2 Feasibility
3.2.1 Product
Drinking tea for long has been a tradition of Vietnamese people.
Moreover, Vietnam is considered as one of the world largest tea plantation on the
world with the proportion of 3% (Majumdera, et al., 2010). Regarding to Center
for Community Empowerment (2007), tea in Vietnam is a high volume
commodity and is planted in 34 out of 64 provinces all over the country.

Figure 2. Area of tea plantation in Vietnam
(Center for Community Empowerment, 2007)
The area of the tea plantation has still developed. Regarding to FAO
(Food and Agriculture Organization of the United Nations). The tea production
of Vietnam has increased from 164,000 tonnes in 2007 to 216,900 tonnes in 2012.

25

Graph 6. Vietnam Tea Production (FAO, 2014)
The tea sales of Vietnam also increases from US$ 905.78 million in 2011
to US$ 1.12 billion in 2013 (Business Monitor, 2014). According to the forecast
table of hot drinks value sales from Business Monitor, a comparative forecast
was conducted between the coffee sales per capita and tea sales per capita in
Vietnam. Although the consumption of coffee in Vietnam increased 65%
between 2008 and 2011 (Bloomberg, 2013); the tea sales per capita in 2013 was
US$ 12.27 in comparison with US$ 11.88 in coffee sales per capita (Business
Monitor, 2014). This means the development of tea sales in Vietnam is still
keeping a potential position and has room to grow in the future. Moreover, the
statistical analysis of the primary research data regarding to the relationship
between the age and tea interest level shows that 95% confidence that the
respondents with the age from 25 34 would have tea interest level laid between
7.65 and 8.28. This lays in the range of I love it interest degree (see Appendice
1). Furthermore, a forecast tea sales from US$ 1.43 billion in 2015 to US$ 2.01
billion in 2018 has created a promising market environment.

164,000
173,500
185,700
198,466
206,600
216,900
0
50,000
100,000
150,000
200,000
250,000
2007 2008 2009 2010 2011 2012
Vi etnam Tea Producti on (Tonnes)

26

Additionally, the growth of the coffee and tea shops in Vietnam has
created a new trend in enjoying the coffee. There is forecast potential value of
US$ 3.05 billion regarding to the coffee and tea bars as well as US$ 34.5 million
in takeaway service in 2015 (Canada International Market Bureau, 2012). The
penetration of Starbucks in opening the first outlet in Vietnam in 2013 was an
evidence for the attractiveness of this market (Bloomberg, 2013). Top of the
chained consumer foodservice brands by number of units in Vietnam were Trung
Nguyen Coffee (1020 outlets) and Highlands Coffee (93 outlets) 2 coffee and
tea chains store (Canada International Market Bureau, 2012).
Table 20. Vietnam consumer foodservice sales values
(Canada International Market Bureau, 2012)

Table 21. Vietnam foodservice value in US$

27

The reasons for the strong potential development of coffee and tea house
in Vietnam were came from two main factors. Firstly, the Vietnam has a lucrative
youth population in urbanised areas. Younger people has the opportunity to
access and update with the worlds trend and is the main leading factor for the
significant influence of new style (Dinh & Hilmarsson, 2013). Moreover, young
consumers are also very receptive to the new ideas as well as product innovation
(Business Monitor, 2014). The young Vietnamese people, in addition, are also
willing to spend higher money for food or beverage that has better quality
(Truong, et al., 2012).
Secondly, Vietnam has a high diversified range of coffee and tea houses
that can adapt to all types and demographics of customers (Canada International
Market Bureau, 2012). The diversified coffee and tea products and services have
created the trend and drinking habits among Vietnamese people. The coffee and
tea houses also play an important role to provide appropriate venues that people
can have for various jobs. They can take advantage of the shops for discussion
business, studying or gossiping.
3.2.2 Market / Industry Feasibility
Porters Five Forces model would be used in order to analyse the industry
environment. Regarding to Wheelan & Hunger (2012), an industry is a group of
organisations or firms that produces or provides similar products or services.
Porter (2004) state that the firm is concerned with the intensity of competition in
the industry and the intensity level is regulated by basic competitive forces
including of:
1. Rivalry among competing firms
2. Potential entry of new competitors
3. Suppliers bargaining power
4. Buyers bargaining power
5. Potential development of substitute products

28

Figure 3. Porters Five Forces Model of Competition (David, 2012)
Rivalry among competing firms
This can be considered as the most powerful one among the five
competitive forces and the strategies of one firm can be successful only in
contemplation of providing competitive advantage over the competitors
strategies (David, 2012). The industry of coffee and tea house in Vietnam
witnesses the dominating market share of Trung Nguyen Coffee with the
proportion of 56.6% in 2010. Such high market share of Trung Nguyen Coffee
was come from the different strategy in comparison with the other coffee and tea
shop brands. Regarding to Dang Le Nguyen Vu founder and owner of Trung
Nguyen, the company has pursued the strategy that providing the real and
traditional filtered Vietnamese coffee and tea instead of Westenised ones
(Bloomberg, 2013) and he said that his coffee is for the real coffee gourmand.
Table 22. The market share by brand of Vietnam caf/bars

29

However, regarding to the table above, although Trung Nguyen Coffee
still had the largest market share in 2010 (56.6%), this figure gradually decreased
from 2007. In the other hand, Highlands Coffee doubled its market share from
3% in 2007 to 6% in 2010. The fact was Highlands Coffee has provided a wide
range of international coffee and tea blends beside the traditional Vietnamese
coffee and tea.

Figure 4. Highlands Coffee Vietnam Menu (Foody.vn, 2013)
The other competitors of Trung Nguyen such as Hoa Huong Duong a
Vietnamese brand of bubble tea and Gloria Jeans also showed the increase in
market share. This means the opportunity for the competing firms to gain more
market share in this industry is significant. Moreover, the report from Business
Monitor (2014) stated that the 2014 coffee value sales growth and tea value sales
growth in Vietnam would be 13.0% and 11.3% respectively. Therefore, it would
be a great chance for the business owners of Tea Di Lusso plan the strategy
carefully in order to create the competitive advantage and gain the market share
in this industry.

30

Potential entry of new competitors
The owners of Tea Di Lusso can identify the high opportunity in joining
this industry this means the other entrepreneurs can identify as well. The
possibility for the potential and better new entrants is obvious. According to this
industry, there are some possible barriers to prevent new entrants (Wheelan &
Hunger, 2012):
Product differentiation: Trung Nguyen Coffee and Highlands Coffee can
invest in high level of advertising, promotion or customers loyalty programs in
order to create the barriers to entry for new firms. However, the differentiation
of products within this industry is not significant enough to prevent potential
competitors. The coffee and tea can be bought through a variety of wholesalers
or suppliers. Therefore, it is easy for a new venture to penetrate into this market
regarding to the products provided. Actually, regarding to Ward & Huong (2014),
the increase of Vietnam domestic coffee and tea consumption in last years has
lead to the increase in new store brands both local and international appear.
Switching costs: no significant switching costs appear. As stated above,
Vietnamese young people are easy to perceive new trends or new brands as long
as the quality of that brand can adapt their demanding. Therefore, any new
venture can have equal chance to join this industry.
Government policy: Vietnam government has pushed and created policy
to motivate the start-up business such as the investment of US$ 400,000 to build
up the Silicon Valley Project in Vietnam (Do, 2013). Therefore, with the easy
access of start-up funding resources, no significant entry barrier for any new
entrepreneur wants to take part in.
With such above factors, the potential of new entrants has high
possibility. Therefore, the owners of Tea Di Lusso must carefully plan the
business development proposal, create the strong brand-name, take good care of
customers to gain the loyalty and build up good distribution channels.

31

Potential entry of substitute products or services
Substitutes products or services can offer a similar benefit to an industrys
products or services, but by a different process and they can decrease the
customers requirements regarding to particular category of products or services
as the customers switch to the alternative (Johnson, et al., 2007). In order to
identify the potential entry of the substitute products, the owners of Tea Di Lusso
created a question in the survey in order to collect the primary data about the
substitutes (see Question 5 in Appendice 1). There are four other alternatives
beside the main products of green tea and black tea. They are coffee, chocolate,
soft drinks and juice. The degree of enjoyment were classified into five categories
as mentioned before (see Table 12). The result is:
Table 23. The mean and standard deviation of enjoyment degree regarding to
the drinks
Green
Tea
Black
Tea
Coffee Chocolate Soft
drinks
Juice
Mean 7.975 7.95 7.675 7.975 4.425 6.95
Standard Deviation 2.43 2.17 2.76 2.86 3.86 3.34

The average values of coffee (7.675) and chocolate (7.975) are nearly
equal with the green tea (7.975) and black tea (7.95). This means these two
products have the high possibility of being substitutes. Actually, in another way,
since the coffee is also quite popular in Vietnam, tea also can play as a substitute
role. For the soft drinks, although there was forecast of 10.5% in the aspect of
sales growth in 2014 (Business Monitor, 2014), Vietnamese young people are
not fond of this product since they tend to live healthier (Su, et al., 2013) and
want to spend money for higher quality food products (Truong, et al., 2012).

32

Suppliers bargaining power
Suppliers have the power to create an impact on the industry by raising
the price or reduce the quality of purchased goods or services (Wheelan &
Hunger, 2012). Regarding to FAO (2014), the harvested area of Vietnam tea in
2012 increased to 115,963 hectares (ha) and this figure gradually increased
through years from 107,400 ha in 2007. This means the tea plantation is
continuously developed. Hence, the product range is not unique enough for the
suppliers to gain the power.

Graph 7. Vietnam tea harvested area (hectares) (FAO, 2014)
Moreover, regarding to Dang & Lantican (2011), there is no formal
organisation or association in the aspect of tea sellers and buyers as well as tea
auction center. The only way to conduct a sale contract or transaction is based on
the negotiation between the buyers and suppliers. These types of sales deals may
prevent the suppliers from catching up with the market information (Dang &
Lantican, 2011). Therefore, the fact is although the amount of exporting tea in
Vietnam increased gradually; however, the exporting price decreased (MARD,
2009). The power of tea suppliers in Vietnam is not strong.

107,400
108,800
111,400
113,200
114,399
115,963
102,000
104,000
106,000
108,000
110,000
112,000
114,000
116,000
118,000
2007 2008 2009 2010 2011 2012
Vietnam tea harvested area (hectares)

33

Customers bargaining power
There is only one boss. The customer. And he can fire everybody in the
company from the chairman on down, simply by spending his money somewhere
else Sam Walton (1918 1992). The customers can affect the industry by
forcing the prices down and bargaining for higher quality of products or services
and put the competitors in the situation to against each other (Wheelan & Hunger,
2012). Moreover, the market that Tea Di Lusso takes part in has a high
competition level with the appearance of similar service providers such as Trung
Nguyen Coffee, Highlands Coffee, Gloria Jeans, and so on. However, in the
other hand, Vietnamese young people are very receptive with the new brands that
offer quality products (Ward & Huong, 2014); hence, the opportunity for new
ventures to attract loyalty customers is still obvious.
3.2.3 PESTEL Analysis
Regarding to Johnson et al. (2007), PESTEL framework contains six
types of environmental influences that cause great impact toward the success or
failure of corporate strategy: political, economic, social, technological,
environmental and legal factors. As a result, an analysis toward PESTEL would
be necessary in order to help business owners gain the awareness toward Vietnam
external environmental factors.
Political
Vietnam is ruled by one party Communist Party of Vietnam. Regarding
to Business Monitor International (2014), change or fluctuation in policy
direction is not expected within five years. Therefore, in short-term, Vietnam can
provide a stable political environment. The government has a strong project
pipeline regarding to the infrastructure and transportation improvement; a lot of
foreign investors have recognised the potential of Vietnams infrastructure
development.

34

Additionally, the enhancement relationship between Vietnam and United
States has also improved the business climate in Vietnam (Srebrnik, 2014). For
instance, EDES (Executive Decision Export Services) from United States has
signed with an organisation in Vietnam a memorandum of understanding (MoU)
for a construction project valued US$ 3.6 billion in Vietnam (Business Monitor
International, 2014). This can helps the organisation in taking advantage of
logistic perspective.
However, Vietnam has high government bureaucracy system (Vietnam
Briefing, 2010) which creates a lot of regulations and can cause challenges for
business operation. Vietnam also has high rate of corruption and was ranked
116/177 on 2013 Corruption Perceptions Index (Transparency International,
2013). High corruption can cause unfair competitive business environment and
resources allocation (Wheelan & Hunger, 2012).
Vietnam has also encountered with the increasingly wary attitude from
China for East Sea issue and the HD-981 oil rig. This can slow down Vietnams
growth rate as well as consumers spending in 2014 (Nguyen, 2014).
Economic
Vietnam has become one of the Asia fastest growing economies, the
average annual GDP growth was 7.1% from 2000 to 2012 (Business Monitor
International, 2014). This leads to the fall in poverty rate and higher citizenry
living standards. Vietnam is also considered as a country providing cheap but
young and literate labour force (Lai & Vinh, 2013). Thus, the economic
environment in Vietnam is attractive prospect for start-up business.
However, high inflationary rate as well as the weak currency status leads
to the heavy slump regarding to the consumer price index (CPI). In April 2014,
a decrease of 0.44% in CPI and it was the most serious decrease in the last five
years of Vietnam.

35

Social
25% of Vietnam population has age 15 24 years old; hence, this means
Vietnam has massive youth population and these people will be the backbone of
socio-economics success (Long & Hong, 2007). Vietnam is also positioned of
8/25 top origins of international student (Institute of International Education,
2013). Therefore, young Vietnamese people nowadays are more receptive with
the new business ideas and well-adaptive with the modernisation as well as trend
update. However, Trading Economics (2014) has forecasted an increase in
unemployment rate of Vietnam in the next five years from 2.1% in 2015 to 3.16%
in 2020. The unemployment can lead to a lot of social issues especially the
decrease in demanding of higher living standard and life quality. High rate of
urbanisation has also lead to the serious issues of trafficking and transportation
(General Statistics Office of Vietnam, 2014).
Technology
The appearance and development of social network especially
Facebook in Vietnam has created a new platform for business promotion. 12
million Vietnamese are Facebook users (Do, 2013). Facebook would be a very
potential business communication channel since it is easy for customers to share
with their friends by suggesting directly the link of the tea house and the business
owners can receive the feedback as well as comment immediately.
Moreover, the rapid Internet development in Vietnam has created
opportunity for new start-up ventures to search for suppliers or equipment and
technological experts for supporting.

36

Environment
An ecological problem for Vietnam is that the traffic from mountainside
of Lam Dong province where the suppliers located to the city is quite
challenging. The road is full of fog and dangerous to travel. Most of drivers need
to wait until morning in order to have safe journeys.
Ho Chi Minh City locates in Southern Vietnam; therefore, the weather is
totally different with Northern Vietnam. Only two seasons exists: dry and rain
each occurs six months. Dry season can help to boost revenue since the weather
is extremely hot and dry, people are easy to be thirst and requires cool place to
quench. However, in the rain season, due to the weak drainage system in the city,
the road is heavily flooded and therefore, people have trend to be home as soon
as possible instead of wandering around in caf or tea shops.
Legal
The rapid growth of Vietnam economy recent years has lead this country
into the status of continuous adjustment of judiciary system. A lot of laws and
regulations have been created in order to help the ventures both domestic and
foreign be more easy to access the resources. However, due to the centralised
power of Communist Party of Vietnam, the regulations have been made with a
lot of benefits regarding to public sectors.

37

3.2.4 Organisational Feasibility
Founders and Management Team
Through the planning and analysis of the market and industry entry, the
business founders are convinced that this project would be possible. Tea Di Lusso
will be owned by a team of multi industry experienced partners who are willing
to spend the investment and have the ambition in being entrepreneurs, owning
a private business. The management team will spend their own cash and achieve
the shares regarding to the invested amount. A total required capital would be
US$ 50,000:
Andy Tran - Chief Executive Officer. Graduated in Auckland
University with Bachelor of Finance, and achieved CFA Level 2,
Andy Tran is now the Director of Securities Department of Maritime
Bank in Vietnam. He has quite big experience in Finance and New
Venture Management. He would contribute 29% of the company's
budgeted capital investment, which is US$ 14,500.
Quan Nguyen - Director of Sales and Marketing. He used to be
Convention & Event Sales Manager of InterContinental Hanoi
Westlake Hotel, graduated from RMIT University with Bachelor of
Commerce. He has experience in catering and service industry. He
would own 20% of the company, which is US$ 10,000.
Huy Do - Director of Operation. He at the moment is the Credit
Manager of Asia Commercial Bank in Vietnam. He owns 12%, which
is US$ 6,000.
Nam Phan - Director of Finance & Business Support. Nam is
currently the Securities Manager of Vietnam Direct, a leading
securities company in Vietnam with a fund management of more than
$800 million. He contributed 20%, which is $10,000.

38

Michael Phan - Director of Research and Development. He has 03
years working in Chemical Industry, he will be responsible in creating
new blend of tea. He owns 19%, which is $9,500.
Management Prowess
Although the members in the founders team are friends in life; however,
once any of them shows the wish to join and establish the team, an interview
section of Management Prowess must be conducted by the CEO and include
seven fields:
1. Being responsible and proactive with the assigned tasks: the members
are required to be responsible with the allocated jobs and proactive in
resolving the problems may occur during the period of start-up.
2. Being passionate in operating the new start-up business: the members
are notified about the difficulty in starting a new business with limited
resources and full of works need to be done. Just only with a passion,
the members can overcome the difficult challenges.
3. Being interest in the business idea: the members must be interest with
the business idea so they can spend time in studying or researching
the potential market, doing market research properly and having
knowledge in appropriate business operation.
4. Have the knowledge about industry or relevant matters: the members
should have the knowledge regarding to the Food and Beverage
industry or knowledge that is relevant to business operation.
5. The business networks: the members are recommended to expand
their professional business networks and relationship.
6. Cash flow management: since the members would be responsible for
the department head position; therefore, they must have ability to
control the cash flow in order to ensure the healthy financial status of
the organisation.

39

7. Education background: the members are recommended to achieve the
basic education background of college degree or above.
Resources Sufficiency
The business founders also identify a range of non-financial resources
that are required for the business start-up:
1. Availability of location for the business: A commercial real estate for
lease with the total area of 100m
2
District 1, Ho Chi Minh City with
the rate of US$ 20/m
2
. The business founders will have to spend US$
2,400/month and total first year spent would be US$ 28,800. The real
estate has two floors. The first floor would be used for the store and
the second floor is for the office and warehouse.
2. Government support for the business: Vietnam government has been
adjusting for the simplicity process of opening business. The expense
for getting business license would be US$ 105.
3. The availability of the labor pool: The business owners only need a
basic range of labors to work in the business. The human resources
are kept simple and can be easily recruited without any challenge.
4. Equipment for starting the business: no complicated or high-
technology equipment is required. The business founders just need
the basic equipment to run the business and there is no any difficult
to achieve.
5. Key supplier requirement: a tea supplier is based on Lam Dong
Province a very famous tea plantation region of Vietnam. The
distance is about 242.7 km from Ho Chi Minh City and 4-hours
driving. This ensures the inventory supplement within 24-hours.
Moreover, as stated above, the suppliers bargaining power is not
strong enough to create an impact on business ventures. Therefore,
the business founders believe that they can deal a good contract with
supplier.

40

3.2.5 Financial Feasibility
The table below is the calculated required start-up of the business:
Table 24. The start-up requirements of the business
Start-up Requirements

Start-up Expenses
Business License $105
Store and office rental $28,800
Photocopy and Printers lease $300
Furniture for lease $4,200
IT Support and Website $300
Promotion and advertising banners and flyers $150
Tea cups, dishes, glasses, and tea pots $950
Other $590
Total Start-up Expenses $35,395

Start-up Assets
Cash Required $3,000
Start-up Inventory $4,000
Other Current Assets $300
Long-term Assets $6,950
- POS order system $1,800
- PCs $,400
- Tea Racks $700
- Hot water machine $1,000
- Dishwasher $1,100
- Refrigerator $950
Total Assets $14,250
Total Requirements $49,645

41

The start-up requirement would be very important in order to ensure the
business can be operated properly in the very first step. The total required start-
up is US$ 49,645. The planned investment from the founders is US$ 50,000. The
start-up, therefore, can be within the control.
Cash-flows table and Payback Period
The start-up capital for this business is $50,000 which is appropriate in
covering most of start-up funding requirements. The calculated payback period
would be 1 year and 322 days. In Year 3, the Net Cash flow for Period has a
sudden slump at $4,754 since in this time, the venture must pay the corporate tax
at 25%.
Table 25. Cash flows table
Cash Flow Summary Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Net Cash flow For Period $11,205 $32,784 $18,942 $4,754 $11,846 $48,073
Opening Cash Balance 0 $11,205 $43,989 $62,931 $67,686 $79,532
Closing Cash Balance $11,205 $43,989 $62,931 $67,686 $79,532 $127,605

Table 26. The cumulative cash flows for calculating payback period
Year Cash Flows Cumulative Cash Inflows
0 ($50,000) ($50,000)
1 $11,205 ($38,795)
2 $43,989
3 $62,931
4 $67,686
5 $79,532

= 1 +
38,795
43,989
365 = 1 322

42

Break-even analysis

Graph 8. Break-even chart
The Break-even would occur in the end of Year 2 when gaining a total
revenue of $187,431.
Profitability
Table 27. Profitability table and ROEI
Sales Year 1 Year 2 Year 3 Year 4 Year 5
Total Sales $150,904 $165,994 $182,594 $200,853 $220,939
Cost of Sales $37,550 $41,305 $45,436 $49,979 $54,977
Gross Profit $113,354 $124,689 $137,158 $150,874 $165,962
Total expenses /
overhead
$87,755 $86,439 $91,869 $97,909 $104,607
Profit after tax $19,199 $22,288 $33,967 $39,724 $46,016
ROEI 38% 45% 68% 79% 92%

The ROEI in Year 1 is expected at 38%, this means the initial capital is
appropriate to fund the project, the expenses are distributed properly and there is
no cash trap occurs regarding to start-up requirement. The expected ROEI in Year
5 would be 92%.
-100000
-50000
0
50000
100000
150000
200000
0 50000 100000 150000 200000 250000 300000
Contribution Fixed Cost Profit

43

3.3 Resource Requirement Evaluation
Human resource: as stating in the part of Resources Sufficiency, the
requirement for human resource pool is basic. Huy Do Director of Operation
will be responsible for the interview and recruit the staffs with details as below:
1. 01 Store Supervisor with salary of US$ 400/month.
2. 04 bartenders are required (different shifts 02 persons/shift):
responsible for making the drink - US$ 250/person/month.
3. 04 waiters or waitress (different shifts 02 persons/shift): US$
190/person/month. The waiter and waitress would be responsible for
stewarding and cashier job as well.
4. 01 accountant to take care of financial process: US$ 350/month.
The number of staffs may be changed regarding to the efficiency in
business operation. The IT support and website would be outsourced since the
management team does not have particular skills in web-design and the
outsourcers can help to ultilise the users interface.
Financial resource: the start-up finance will be funded by the partners
initial investment (a total of US$ 50,000). All partners agreed that the dividends
would be paid in the end of Year 2. The start-up financial status is calculated
carefully in order to ensure there would be no any deficiency regarding to capital
in the very first year of operation.

44

Chapter 4: Business Model
4.1 Strategic Analysis of the Business Idea
4.1.1 Value Chain
The value chain helps to identify the activities within and around an
organisation which take part in the process of creating products or services
(Johnson, et al., 2007). Regarding to Wheelan (2012), Porter suggested that a
corporate value chain includes of primary activities and secondary activities. The
firms need to analyse the value chain activities since there is no reliable or ready
source for them (Bygrave & Zacharakis, 2011).

Figure 5. Porters Value Chain (Wheelan & Hunger, 2012)
4.1.1.1 Primary activities
Regarding to Wheelan (2012), the primary activities start with the
inbound logistics concerning to the receiving, storing and distributing inputs to
the products or services such as raw materials, transportation and so on. Then, it
will go through the process of operation and move on to the outbound logistics,
marketing and sales and service, at last.

45

Inbound logistics
Since the seasons in Ho Chi Minh City and the transportation issues may
arise; therefore, the company would need a steady and stable tea supplier which
can help to deliver the materials just in time and ensure the long term agreement
regarding to the materials price. The business founders chose a supplier so-
called Ladotea based in Lam Dong Province, Vietnam. This supplier has 278
hectares of tea plantation and also has a modern factory to process the raw tea
(Ladotea, 2014).
For the pastry and bakery section, Duc Phat Bakery is chosen as the main
supplier for the cake that tea house wants to provide. Duc Phat Bakery has the
history of nearly 20-years in producing the high quality of cake and pie in Ho Chi
Minh City (Duc Phat Bakery, 2014). Moreover, the distance from this supplier
to the tea house is only 12 kilometres. Therefore, it would be perfect for products
delivery. This supplier also provides the fruity syrups for tea.
Both suppliers can provide the delivery service; therefore, no need for a
third party transportation firm to be engaged. Quan Nguyen will be responsible
for negotiating with the suppliers contracts.
Operation
Since Duc Phat Bakery is within Ho Chi Minh City and can help Tea Di
Lusso in implementing the inventory right away; therefore, only tea supplier
Ladotea would need to be careful considered in the aspect of transportation and
delivery. Firstly, the store supervisor has to make a schedule regarding to
inventory management. The amount of materials would be based on the sales
forecast from top management level. Nam Phan Director of Finance and
Business Support will be responsible for double-check the inventory order from
store supervisor. Then, Michael Phan Director of Research and Development
will be responsible for the quality management of the materials. The inventory
delivery order will be conducted on monthly basis.

46

Outbound Logistics
After the quality management of the materials is through, they will be
placed in store of the tea house. The green tea and black tea must be preserved in
dry place, no direct contact to the sunlight. Syrups, cake and other pastry products
will be preserved in tea houses refrigerator.
Marketing and Sales
The products will be sold directly in the tea house and the customers make
the order directly at the service desk. The business owners will also take
advantage of advertising tools on online social network Facebook and flyers.
Service
The service of Tea Di Lusso will be self-service style which means the
customers when coming to the tea house, they will make the order at the service
desk. The staffs will record the order and customers will wait to have their drinks
be delivered. However, the risk that customers will need to wait while the tea
house is crowded may be high. Regarding to the primary data research, there
exists the relationship between the occupation status and service adjustment.
Hence, the business owners decided to change from the serve-on-table in the
beginning with the self-service style and decrease in price in order to attract more
customers.
4.1.1.2 Secondary activities
Firm Infrastructure
The firm needs to have adequate infrastructure in order to keep track with
the inventory as well as sales situation so that the top management can make the
forecast budget properly. The staffs will be equipped with the POS order system
so that they can follow up with particular customers order and follow it properly.
The POS system also helps the directors to keep track with the items sales
situation such as price, quantity, types of items and so on so that they can help
planning for the upcoming periods.

47

Human Resource Management
This activity involves the tasks of recruitment, selection and training for
employees. Regarding to Hellriegel & Slocum (2011), the reason for the proper
recruitment is that the chosen employees will support in maintaining and
delivering the culture and organisational behaviour. Three steps are applied for
analysing the human resources requirements (Daft, 2010):
1. Job analysis: in this very first step, the directors of Tea Di Lusso will
analyse the activities regarding to specific job as well as the workload.
Then, the directors will identify the range of knowledge that would
be required for that job.
2. Job description: a description that outlines the specific tasks,
particular duties for the employees.
3. Job specification: the required skills or abilities for the job.
After the jobs detail is prepared, directors will carry out the selection
process in order to find out the appropriate employees. The application forms
will be used in order to collect the candidates information and interviews will be
conducted later in order to find out more about the potential employees as well
as explaining the necessary information about the company. Huy Do will
coordinate with Quan Nguyen to be responsible for preparing the standard
operation procedures as well as training program in order to ensure the service
quality.
Technology Development
There is no any complicated technological aspects for Tea Di Lusso.
Michael Phan will be responsible for receiving the feedback from customers for
potential flavours as well as types of pastry that they want to add into the menu.

48

Procurement
MRP (material requirement planning) system will be implemented. This
system will be connected with the POS order system. The main function of this
one is supporting the supervisor in getting the necessary materials when needed
(Rushton, et al., 2010). Since tea and cake are easily corrupted items; therefore,
careful material planning is a must in order to avoid waste.
4.1.2 SWOT Framework
SWOT is the acronym of Strengths, Weaknesses, Opportunities and
Threats which are the organisations strategic factors. The SWOT analysis
contains of both internal factors firms strengths and weaknesses as well as
the evaluation of external factors threats and opportunities.
Strengths
First tea house with the style of English afternoon tea in Ho Chi Minh
City. Tea Di Lusso creates the chance for young Vietnamese people
to enjoy the tea in a different way in comparison with other tea house
and coffee bar.
Location is in business central district which can attract the office
staffs, trendy young people and international tourists.
Staffs are trained by director who have sufficient experience in hotel
and catering services. Therefore, customers can be impressed with the
professional attitudes as well as skills in the first time they come into
the tea house.
The tea house will be designed in the English brasserie style;
therefore, it can bring a new and strange feeling for customers since
they are so familiar with the usual urban caf store.
The price is competitive in comparison with other competitors which
provide the same level of service.

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Weaknesses
Business founders lack the experience of operating tea house.
Lack of funds for strong advertising programs in the beginning.
New comer in the market, therefore, lack of reputation in comparison
with the other competitors such as Phuc Long Tea, Highlands Coffee,
Coffee Bean and Tea Leaf.
The reputation of new entrant cannot attract high quality human
resources.
Opportunities
The increase in health consciousness of Vietnamese people lead them
to choose the drinks which contain less caffeine. Moreover,
Vietnamese peoples demanding regarding to food and beverage
service also increases, they would like to spend more money to choose
the high quality shop and receive the high quality service from staffs.
Vietnamese young people are receptive with new business idea,
especially with the international food and beverage style.
The continuous development of tea plantation from various suppliers
can empower Tea Di Lusso the bargaining advantages in dealing with
the materials.
Threats
Beside the matter that labour force is more literate and can earn more
income, the unemployment rate of Vietnam has trend to increase in
upcoming years. Therefore, the requirement for high-end and trendy
tea and coffee shop can be affected.
The low barriers to entry can lead to the appearance of potential better
new competitors with unique styles and services.

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4.2 Sources of competitive advantage and sustainability
Competitive strategy considers the basis on which a business might
achieve competitive advantage in its market (Johnson, et al., 2007). The
competitive advantage can be provided through strategic capabilities. The
strategic capabilities include of unique resources and core competences.
Regarding to Johnson, et al. (2007), the unique resources are those resources that
critically reinforce competitive advantage; hence, the other competitors cannot
easily duplicate or obtain. The core competences, in the other hand, are the
entrepreneurs abilities to organise and take advantage of the resources through
the organisations processes in order to accomplish competitive advantage in
ways that others cannot imitate or obtain.
Porter (1980) proposed three strategies that can support the organisations
in achieving the competitive advantages: overall cost leadership,
differentiation and focus. In order to identify which strategy can be used, a
competitors positioning map must be used to identify the range of price and
perception of service and products that competitors provide to customers.

Figure 6. Competitors positioning map

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Tea Di Lusso would provide the same service and price range with Trung
Nguyen Coffee, Highlands Coffee, and especially Phuc Long Tea and Coffee
House the direct competitor. However, some sources of the competitive
advantages that Tea Di Lusso can acquire:
1. The price range of Tea Di Lusso would be much more competitive
than direct competitors: the tea house will pursue Differentiation
strategy but the customers are not charged with premium price. The
English afternoon tea style in Vietnam is still unique in comparison
with other urban coffee and tea store like Starbucks or Highlands
Coffee.
2. The staffs are trained with five-stars standards from Quan Nguyen.
The standard operation procedures will provide the staffs with
knowledge of serving customers, dealing with difficult and
challenging situation in daily work routine. The training procedures
in some coffee and tea houses are underlooked some directors
consider that waiter or waitress does not need specific skills in serving
clients in appropriate ways.
3. The product range of Tea Di Lusso can cause a tremendous awareness
toward customers. Tea Di Lusso wants the customers remember as a
place for enjoying gourmet tea and pastry; therefore, the tea house
does not provide any other beverage products such as chocolate or
coffee. Tea is the only drink being focused in Tea Di Lusso.
4. The implementation of sale as well as logistic system (POS, MRP)
and conducting good long-term relationship with suppliers can create
significant competitive advantages for Tea Di Lusso.

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4.3 Development of appropriate Business Model
The business model describes the rationale of how an organisation
creates, delivers and captures value (Ostawalder & Pigneur, 2010). The business
model can be described through nine categories: customer segments, value
propositions, channels, customer relationships, revenue stream, key resources,
key activities, key partnership, and cost structure.

Figure 7. The Business Model Canvas of Tea Di Lusso

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Customer Segments
Tea Di Lusso focuses on three segments: students, high-end adults and
tourists. The students although they cannot earn the income yet. However, they
are still supported and funded by parents and when they hang out, they usually
go by group. Tea Di Lusso will provide a nice place for them to gossip with
friends, free Wi-Fi and comfortable tables and chairs that can support them in
studying together.
The high-end adults are mostly full-time employed and have personal
income. Therefore, they want to spend money for the quality food and beverage.
Moreover, they are fond of European style of dining. They usually take the family
and friends together for dining.
The tourists demand an elegant and trendy place to enjoy Ho Chi Minh
City.
Value Propositions
Design: the English brasserie interior and outdoor designs can bring the
customers a new feeling and interest instead of conventional tea and coffee shop.
Price: the competitive price with higher service standards ensure the
customers can be well taken care when coming to Tea Di Lusso.
Performance: Tea Di Lusso offer customers the high quality tea products.
The focus in tea can ensure Tea Di Lusso to be able to offer customers with better
standard regarding to tea in comparison with other competitors.
Channels
Direct channel: The customers can choose to enjoy the tea and pastry
within the tea house or take away. Tea Di Lusso suggests customers to enjoy in
tea house so that they can enjoy the atmosphere as well as experience high service
standards.

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Customer relationships
Personal Assistance: The relationship marketing must be implemented in
order to achieve the objective of gaining loyalty customers. Regarding to Buttle
(2008) in a book by Lancaster & Massingham (2011), the relationship marketing
is identified by a sincere concern with the aim to adapt or go beyond customers
demandings and to provide excellent services or products in a basis of trust and
commitment to the relationship. In order to maintain a good relationship with
customer, the way of adding financial benefits would be applied (Lancaster &
Massingham, 2011):
In the first three days of the tea house opening period, a discount of
40% for all of items in the menu will be conducted. This will help to
gain the customers awareness about the new tea house and encourage
them to come and enjoy the products.
A loyalty card program DLusso Card will be carried out. The
card-holders can have a deduction of 10% for any bills up to $60. The
card-holders can upgrade their cards to the Gold DLusso Card once
they spend more than $500 in the tea house. The customers
information when they register the loyalty card program will be saved
for usage in the future. For instance, Tea Di Lusso would prepare a
small present for customers birthday celebration when they come to
the tea house. Moreover, the customers information will be used to
identify and acknowledge their favourite food or drinks.
Revenue Stream
Asset sale: The main revenue is generated through the clients
consumption of tea houses products including of tea and pastry.

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Key resources
Human resources: the employees are trained in the aspect of standard
operation procedures of five-stars catering service. The staffs are recruited and
selected carefully through well-analyzed job description.
Financial: Tea Di Lusso is funded totally by the founders. Therefore, no
cost of capital occurs.
Key activities
The key activity of Tea Di Lusso is production. Tea Di Lusso makes and
delivers the food and drinks regarding to customers choice in substantial
quantity and high quality.
Key partnership
Buyer-supplier relationships to assure reliable supplies: Ladotea and
Duc Phat Bakery help Tea Di Lusso in optimizing the usage of the resources
through the MRP (Material Requirement Planning) system. Hence, both supplier
and buyer can achieve Optimization and economy of scale.
Cost structure
Value-driven: Tea Di Lusso has the ambition to create the value of
delivering the right way in enjoying tea for customers. Since the consumption of
the customers would relate mainly to the revenue stream, the variable cost
characteristic dominates in this cost structure.

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Chapter 5: Business Plan
5.1 Business Plan Overview
With a passion in enjoying tea tasting, Tea Di Lusso is set up in District
1, Ho Chi Minh City with the core business of providing the rehabilitation of
elegant and fancy enjoying of tea with the mixture of traditional green and black
tea and the sweet English cakes. Tea Di Lusso would try it best to bring the
excellent service of the fine dining and gourmet tea in Vietnam. The company is
established in the basis of partnership among the investors. The company is
named Tea Di Lusso Ltd and its core product is the tea house so-called Tea Di
Lusso.
Tea Di Lusso aims to three segments of customers: students, high-end
adults, and tourists. The customers will have the opportunity to enjoy not only
the excellent tea drinks but also the wide range of English pastry. The interior as
well as outdoor design in the style of brasserie shops in Britain would bring a
new feeling and enjoyment for customers. Tea Di Lusso aims to bring the highest
value and service standard with the good relationship marketing to maintain the
customers loyalty.
5.1.1 Objectives
The objectives of Tea Di Lusso can be categorized into three aspects:
employees, suppliers, customers.
Employees: the employees will be recruited and selected carefully
through the direct interview sections with the business founders. The
company always prioritizes the development of employees who later
can deliver high standard services for customers.
Suppliers: the company understands that in order to have quality
products, the reliable relationship with major suppliers is very
important. The company aims to implement appropriate logistic
system to ensure the material handling would meet no problem.

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Customers: all employees and board of directors must remember that
customer is the biggest boss in every business. Tea Di Lusso always
put on top the objective to deliver highest standard service for
customers.
5.1.2 Mission
Tea Di Lusso is here to rehabilitate a classical and elegant way of
enjoying Tea, to bring the people together with the real communication and
humanity value, in the world which is invaded by electronic equipment.
5.1.3 Financial start-up plan
The total initial fund of US$ 50,000 is invested by the business founders.
This initial fund will be used to cover the preliminary expenses include of the
store and office rental at US$ 2,400/month and the company has to pay in
advance for 01 year. Moreover, the company also has to cover the expenses that
are used to purchase the long-term assets such as the equipment for order (POS
order system), the refrigerator, tea racks, dishwashers, computers and so on. The
furniture and other interior furniture can be leased in order to help decreasing the
initial costs. The required funding is $49,645. The start-up finance from
investors, therefore, can help the company not falling into the lack of cash in the
first year of operation and to ensure the smooth business transaction as well as
high standard service to customers. The break-even is calculated at Year 2 and
the payback period would be 1 year and 322 days.

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Table 28. The start-up funding table
Start-up Funding
Total Funding Required $49,645

Assets
Non-cash Assets from Start-up $11,250
Cash Requirements from Start-up $3,000
Additional Cash Raised $355
Cash Balance on Starting Date $3,355
Total Assets $14,605

Liabilities and Capital
Liabilities
Current Liabilities -
Long-term Liabilities -
Total Liabilities -
Capital
Planned Investment $50,000
Additional Investment Requirement $0
Total Planned Investment $50,000
Start-up Expenses ($35,395)
Total Capital $14,605
Total Capital and Liabilities $14,605
Total Funding $50,000

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5.1.4 Sale forecast
A sale forecast was conducted based on the estimated value of
consumption. The most consuming product would be the green tea with the total
sales after Year 5 is forecasted at $233,209. Scone would follow in the pastry
section with the total sale after Year 5 is approximate $140,833. The Total Gross
Profit is predicted at $692,037.
Table 29. Forecast of sales values and cost of sales
Sales Year 1 Year 2 Year 3 Year 4 Year 5 Total
Green Tea $38,199 $42,019 $46,221 $50,843 $55,927 $233,209
Black Tea $33,534 $36,887 $40,576 $44,634 $49,097 $204,728
Scone $23,068 $25,375 $27,912 $30,704 $33,774 $140,833
Lemon Drizzle $17,898 $19,688 $21,657 $23,822 $26,204 $109,269
Black Forest Cake $18,392 $20,231 $22,254 $24,480 $26,928 $112,285
Opera Cake $19,813 $21,794 $23,974 $26,371 $29,008 $120,960
Total Sales $150,904 $165,994 $182,594 $200,853 $220,939 $921,284
Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5 Total
Green Tea $7,162 $7,878 $8,666 $9,533 $10,486 $43,725
Black Tea $6,687 $7,356 $8,091 $8,900 $9,790 $40,824
Scone $3,970 $4,367 $4,804 $5,284 $5,812 $24,237
Lemon Drizzle $4,774 $5,251 $5,777 $6,354 $6,990 $29,146
Black Forest Cake $4,774 $5,251 $5,777 $6,354 $6,990 $29,146
Opera Cake $4,604 $5,064 $5,571 $6,128 $6,741 $28,108
Syrup $3,181 $3,499 $3,849 $4,234 $4,657 $19,420
Other ingredients $2,398 $2,638 $2,902 $3,192 $3,511 $14,641
Cost of Sales $37,550 $41,305 $45,436 $49,979 $54,977 $229,247
Gross Profit $113,354 $124,689 $137,158 $150,874 $165,962 $692,037

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5.1.5 Market Analysis Summary
Vietnam has show the booming in the tea & coffee market; an increase of
65% in tea & coffee consumption for the last 4 years (from 2008 to
2011). Moreover, the consumption trend is also very potential in the future when
Vietnam has increase the rank from 7th (2008) to 5th (2011) among the countries
which have the most tea planted area and still in the top of the tea exporters of
the world. Moreover, the tea export is also forecasted to have an increase in
turnover from $220 millions in 2012 to $440 millions in 2015 (FAO, 2014).
The trend of enjoying tea & coffee of Vietnamese people has gradually
changed from the small tea & coffee shop with simple furniture and unquality
ingredient to the well-known tea & coffee brands all over the world like Gloria
Jeans, Coffee Bean, Highland & even Starbuck. Beside the fashion and the trend,
people now realize that those brands are affordable luxury. They are willing to
spend more to enjoy the high-end stores like that.
Market Size and Market Segmentation
Ho Chi Minh City has about 7,521,138 people; meanwhile, 185,715 of
people living around District 1. In the other hand, there are about 500,612 people
living in District 2, 3 and 5 which are within a 6 km radius of District 1.
Moreover, Ho Chi Minh City has one of the highest shares of population in adult
age 15-60 among the 120 largest cities in the world. The tourists to Ho Chi Minh
City also increase of 12% in 2012. The segmented customers are:
Students: the students, the teenagers or the youngsters who still not have
work to earn money yet but have the money from the parents.
High-end adults: the young people and maybe middle-aged persons who
usually come with friends or family. These customers will be the main
target because they go to work, earn money and they can spend in higher
price food & beverage.
Tourists: they want to have an elegant place to enjoy Ho Chi Minh City.

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5.2 Proposed Plan of Action
Firstly, a quick meeting among business founders will be held in a coffee
shop in Ho Chi Minh City to discuss about the business matters. The business
founders will make up the decision with the total initial investment of US$ 50,000
and an memorandum of partnership agreement will be carried out.
A business development plan will be prepared with the detailed analysis
toward the fields of:
1. Business objectives
2. Business concepts
3. Market opportunity
4. Feasibility analysis
5. Required resources including of finance and non-finance
6. Firms strategic factors
7. Business model
The business development plan then will be through and the team will go
finding proper real estate that can be used for the companys headquarter. A real
estate with total area of 100m
2
laid in District 1, Ho Chi Minh City with the rate
of US$ 20/m
2
. The total spend per month for the real estate would be US$ 2,400
and total first year spending would be US$ 28,800. The real estate has two floors.
The first floors will be used for tea house. The second floor will be splitted into
two functions: warehouse and office. Office will be equipped with computers,
stationery, shelves, and so on.
After having the real estate, the directors will make the purchase of the
necessary systems as well as equipment for the tea house such as POS system,
refrigerator, tea pots and so on.
Contacting various suppliers then will be made in order to identify
potential suppliers as well as catch up with the market price for the materials.

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The recruitment and selection of employees will be conducted later. After
official employees are chosen, the directors will carry out the training sections to
support employees get along with the equipment and companys process.
After the employees are ready with the business operation. The tea house
will be officially opened and welcome very first customers. The loyalty cards
program will be conducted after the opening one week.
In order to have an obvious overview toward the Tea Di Lussos project
plan, a Gantt chart will be used for all members of the company can catch up with
the working process.

Figure 8. Gantt Chart of Tea Di Lusso

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5.3 Discussion of critical success/failure factors
Critical factors for success:
The good initial investment amount that ensure the smooth operation for
Tea Di Lusso in the first year of operation. No lack or deficiency of cash occurs,
business activities can be functioned appropriately and the customers service
standard can be guaranteed.
The differentiation in providing the customers with tea-focused products
as well as high standard service from well-trained staffs are also the main critical
key success factors.
The industry does not have challenging barrier to entry for such a new
start-up and the bargaining power of both suppliers and suppliers are high.
The competitive price in comparison with the other competitors which
provide the same products and services. The unique furniture and interior design
in the style of English afternoon tea house would bring to customers new feelings.
The tea house is located in the central business district which can attract
and target the segmented customers to the best.
The company applies a good system of logistic to ensure the inventory
implementation is guaranteed.
Key performance indicators:
The total sale revenue and sale per item.
The profit after tax of the venture
The cost for expanding business
The cost for wasteful corrupted items in warehouse.
Customers satisfaction
The loyalty proportion of customers.

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Critical factors for failures
In order to perceive critical factors that can cause failures to the venture,
the business owners have to analyse the risks that can cause tremendous impact
toward the operation. For Tea Di Lusso, the risk can be:
Risks from Market / Industry:
Since this industry does not have tough barriers to entry, there is high
possibility of new entrants. The new entrants can possess the unique technology
or service style that can create the new trends toward the young people. In another
hand, there is also the risk that the new competitors would make the copy of the
business model and find the way to do better in a particular aspect.
The fierce competition from the existing competitors with the high
reputation such as Trung Nguyen, Highlands Coffee, Coffee Bean and Tea Leaf
can cause difficulty to Tea Di Lusso especially when they build up the steady
brand name within Ho Chi Minh City.
Risks from customers change of trend
Vietnamese young people are receptive with new business idea or trend;
therefore, they are easy to change the requirement or demanding when new
products appear. Then, young people will create a new trend regarding to those
products. Therefore, Tea Di Lusso must always catch up with the continuous
requirements update from customers to ensure that the company does not miss
any chance that can create the trend within them.
Risks from social and economic status
Vietnam has the high rate of inflation and the unemployment rate has the
increase trend in the future. This can cause a decrease in consumption and
spending of Vietnamese people. People in order to save money will tend to
choose the service that can adapt their minimum requirement with minimum
price instead.

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Appendices
Appendice 1. Questionnaire
1. Are you male or female?
Male Female
2. What is your age that fit with your information?
18-24 25-34 35-44
45-54 55-64 Over 65
3. What is your current work status?
Full Time Employment Self Employed
Part Time Employment Unemployed
Student Other (please specify)
4. What is your current monthly household income?
$100-399 $400-699 $700-999
$1000-1299 $1300-1599 Over $1600
5. Which degree of favourite does you feel toward the below types of drinks?
Definitely not! I dont like I would give a try I love it Fantastic!
Green Tea
Black Tea
Coffee
Chocolate
Soft drinks
Juice

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6. What flavour would you like to taste in the drinks? (you can choose more than
one option)
A taste of smoke Apple
Bitten Citrus
Ginger Hazelnut
Jasmine Lemongrass
Orange Peppermint
7. Which matters that attract you to a tea house? (you can choose more than one
option)
a) Enjoying delicious food and drinks
b) Location and view
c) Place for business discussion
d) Place for gossiping with my friends and family
e) Place for studying and reading books
f) Strong Wi-Fi connection
Other (please specify)
8. Which service style below will fit you?
a) Im coming into the tea shop; a staff welcomes me, smiles and
takes my orders.

b) Im coming into the tea shop; I want to order directly at the service
desk and wait to take my drinks.

c) Im coming into the tea shop; I will order directly at the service
desk, take a number, and the staff will bring my drinks to my table
afterward.

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9. Which type of music would fit you in a tea house?
a) Chill-out/Lounge
b) Instrumental & Classical
c) Country
d) Hip-hop/R&B
e) Jazz
f) Pop & Ballad
g) Rock
Other (please specify)
10. Do you like ordering pastry and cakes to enjoy with tea?
Yes No
11. Which service adjustment would you like to recommend?
Full-served, increase price
Self-served, decrease price
12. What is the maximum expenses you want to spend for a cup of tea?
$1 - $2 $3 - $4
$5 - $6 Over $6

Thank you for your time!

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Thank you for considering participation in this survey.
We are very glad and exciting to announce that we are planning a project to open
a tea house in Vietnam. We would like to find out more about you to have a clear
understanding what range of products and services that a tea house can provide.
The survey will ask about your thoughts and interest toward specific perspectives
that a tea house should be.
There are no right or wrong answers.
The questionnaire will take approximately 20 minutes to complete.
We are currently recruiting men and women aged 18 years and over. All
responses and any identifiable information provided will be held confidentially
and retained for up to three months from the date this survey is completed. After
three months all identifiable information will have been completely anonymised.
All data will be stored on computers that are password protected.
Participation in this study is entirely voluntary. If you choose to participate you
are free to withdraw from the study at any time. The project has received ethical
approval from the School of Business and Law, accredited by University of
Gloucestershire.
If you have any questions about this project then please contact the principle
investigators Bao Quan Nguyen at email:
B0103HOHO0813@student.sbllondon.co.uk
Thank you very much for helping us with this project on participation in
research.

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Appendice 2. Profit and Loss Statement
Year 1 2 3 4 5
Revenue $150,904 $165,994 $182,594 $200,853 $220,939
Cost of sales $37,550 $41,305 $45,436 $49,979 $54,977
Gross profit $113,354 $124,689 $137,158 $150,874 $165,962

Expenses/overheads
Premises (rent, rates) $28,800 $28,800 $28,800 $28,800 $28,800
Wages and salaries $29,570 $32,527 $35,780 $39,358 $43,293
General expenses $18,000 $19,800 $21,780 $23,958 $26,354
Interest $- $- $- $- $-
Lease payments $- $4,200 $4,620 $5,082 $5,590
Depreciation $1,390 $1,112 $890 $712 $569
Other expenses $9,995
Total expenses overheads $87,755 $86,439 $91,869 $97,909 $104,607
Profit before tax $25,599 $38,250 $45,289 $52,965 $61,355
Tax @25% $6,400 $15,962 $11,322 $13,241 $15,339
Profit after tax $19,199 $22,288 $33,967 $39,724 $46,016
Dividends $20,000 $25,000 $30,000 $35,000
Transfer to reserves $25,599 $2,288 $8,967 $9,724 $11,016

70

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