I.
Executive Summary
Jamba Juice is a leading high-end smoothie and health food eating establishment that strives to provide healthy and natural food products. Jamba Juice’s mission is to be recognized as a fun and healthy alternative for people on-the-go, creating a unique dining experience for each customer. Our friendly and inviting employees welcome customers with warm smiles and positive attitudes while focusing on satisfying the needs of the guests that walk through the door. All Jamba J amba Juice products are made fresh daily from high-quality, natural ingredients. All of the current Jamba Juice restaurants are located in the United States; however, after conducting and evaluating extensive research, Jamba Juice is primed for success at an international level. We plan to take the first step in this endeavor by opening a Jamba Juice overseas in Shanghai, China, located specifically in one of the city’s largest malls, the Super B rand Mall. Based on our research, we have determined that the Chinese culture, mindset, and market will be accepting of this “American” brand. brand . Shanghai’s current demographic and economic trends make Shanghai the perfect place to locate a Jamba Juice. China’s economy is second in size only to the United States and is rapidly expanding due to technological advances and the country’s staggering population. population. Shanghai remains China’s most densely populated city with a population of 13,831,900 people, meaning that our brand and logo will be exposed to a large audience. Our Jamba Juice’s primary target market is the health conscious upper -middle -middle to upper class 16-28 year old demographic. We are mainly targeting targeting that fact that most of these people are very accepting of “American” brands and trends, such as healthy eating. We plan to have an International Operations Representative (IOR) interview and hire the most qualified employees for the positions positions of cook, cashier, general manager, and shift leader. This international Jamba Juice team will be responsible for the day-to-day business in the store. This Jamba Juice will offer wide wide varieties of smoothies, coffee, tea, oatmeal, salads, and sandwiches. sandwiches. Our goal is to provide our customers with fresh, high-quality ingredients that we will will have transported, by truck, through the Cheuk Tak Transportation Company. The planned date for our international Jamba Juice to open it’ it’s doors is June 1, 2011. This will help insure the maximum level of foot traffic as summer in Shanghai is the busiest time for economic activity. We plan to work with the Puyi Advertising Company to develop many man y methods of advertising directly through the Internet, television, and throughout throughout Line Two of the Shanghai Metro. We also have an indirect plan of advertising through the sale of apparel ap parel and positive word-of-mouth. We have included our estimated first year income statement and balance sheet in order to solidify our expected success in terms of a $61,100 net profit, and also to demonstrate our sound financial planning. With the information provided, we plan to further your knowledge k nowledge of Jamba Juice’s potential in the international market of Shanghai, China. We are extremely optimistic optimistic about this endeavor and feel that the opportunities that the success that it will bring will be o nly the first stepping stone towards more international expansion of Jamba Juice.
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II.
Introduction
Jamba Juice is a leading smoothie and health food establishment that focuses on providing healthy h ealthy options made from natural ingredients. ingredients. Our mission is to to offer consumers great-tasting great-tasting and better-foryou products. With over 700 locations across the United States, Jamba Juice is recognized as a fun and healthy alternative for people on-the-go. Jamba Juice is not just an average smoothie shop – shop – it it also offers a variety of nutritious wraps, wraps, sandwiches, and salads. Customers can indulge in a guilt-free snack, and Jamba Juice offers consumers the option to add a Boost to to personalize their drink, giving giving them an energized energized feeling. There is certainly something for everyone.
In 1990 Jamba Juice was founded by Kirk Perron in San Luis Obispo, California, and was originally named Juice Club. Perron decided to begin to expand his lone smoothie store by franchising in 1994. In 1995 Perron wanted to distinguish his smoothie store from the competition. He wanted his store to be known to offer a hipper, festive, and better quality product. He chose the word word "jamba" which means "to celebrate" in Swahili. Now the Jamba Juice Juice headquarters is located in San Francisco, California. “We want to grow Jamba into that lifestyle brand that really stands for great-tasting, great-tasting, better-foryou nourishment, nourishment, and we have a lot of opportunity to grow the products and things that can help people lead healthier lifestyles through our offerings. I feel we’re just we’re just getting started.” Kirk Perron, Founder, Jamba Juice, July 2000
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Based on our research, we have determined that there is no better location to establish a Jamba Juice franchise than the People’s Republic of China Ch ina (here after referred to as “China”). “China”). Chinese culture is becoming increasingly accepting of foreign markets, specifically those found to be “hip” or “trendy” in the United States. It is widely known that “As Shanghai goes, so goes the rest of China.” Shanghai, the most heavily populated city in the world, has a population of 18,552,309 and is rapidly growing, which makes locating our franchise within the city extremely important. Shanghai sets the precedent for popular culture in China C hina but still encompasses traditional Chinese culture.
When looking for an appropriate location, we searched the city for the area with with consumers who would be most accepting of our progressive brand. brand. The Super Brand Mall is located across the Huangpujiang River from Shanghai’s largest tourist attraction, The Bund. This will provide a large large variety of customers for our first Jamba Juice location. Super Brand Mall is recognized as the epicenter of shopping, dining, and entertainment in Shanghai with an emphasis on foreign brands. Our proposed location is the perfect foundation to expand Jamba Juice throughout China and make our brand internationally known.
We plan on opening the international Jamba Juice branch on June 1,2011. 1, 2011. Opening at the beginning of summer will give the new store the maximum amount of traffic since summer is the season that Shanghai has the most tourists. Summer is also the hottest time of year; year; therefore more people will be looking for a refreshing smoothie to cool down do wn from the heat.
China has been a member of the the World Trade Organization (WTO) since 2001. The WTO is the only global international organization dealing with the rules of trade between nations. The WTO 3
agreements are negotiated and signed by the bulk of the world’s trading trading nations and ratified by their parliaments. Their goal is to assist the producers of goods and services and to help exporters and importers conduct their business. China’s participation in the organization is one of the main reasons the Chinese people have become accepting of unique foreign brands such as Jamba Juice. One existing trade barrier is China’s Foreign Trade Law. This law states that trading rights are to be automatically available through a registration process process for all domestic and foreign entities and individuals. China now allows any domestic or foreign enterprise or individual to trade steel, natural rubber, wools, acrylic, and plywood. In September of 2008, China announced that it had delegated authority for foreign retail outlet approvals to the government. This is a very positive move in streamlining and facilitating approvals for for foreign retail outlets, which will greatly ease the introduction of our store in Shanghai. III.
Analysis of the International Business Situation A.
Economic, political, and legal analysis of the trading country 1.
Describe the country’s economic system
Chinese leaders call their style of governing “market socialism.” The Chinese economy is unique in a couple of ways. It is one of only five Communist nations in the world, and it is the only one which has a relatively large GDP. China has managed this by combining a market-driven economy with supposedly socialistic ideals. As of right now, the Chinese government is not exactly focused focused on improving the lives of its people, but the government claims that by helping a small portion of the population initially, it will eventually improve the lives of all people. This policy has allowed the Chinese government to be by far the most successful of any one-party style of government. The Chinese economy of today has come a long way from being 100% publicly owned and self sufficient.
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2. Describe economic information that is important to Jamba Juice
According to the New York Times, China recently passed Japan in becoming the world’s second largest economy, second only to the United States. However, it is the by far the fastestgrowing economy, contributing 30% of the world’s growth in 2009. China relies heavily on its its exports to the U.S. In order order to sustain their profits from this trade they buy U.S. treasuries. This keeps the value of the yuan low relative to the U.S. dollar; therefore, their goods are cheaper for the U.S. to buy. Although this policy is key to the growth of the Chinese economy, it doesn’t benefit the Chinese Ch inese middle class consumer. The low yuan means that the purchasing power, standard of living and wages of consumers in China are low.
The Chinese people have grown tired of their low standard of living, and their government has begun to respond. They have started to show signs of allowing the yuan to appreciate which would significantly increase the purchasing purchasing power and the general wealth of the Chinese consumer. This increase in the disposable income of the people will create a stronger desire and ability to shop at the Super Brand Mall. Besides the increase in foot traffic, customers will will also be more willing to stop in to our Jamba Juice and grab a snack. With a little extra money to spend, we believe shoppers won’t just spend their money on lunch but will also want to purchase a smoothie to go with it. 3.
Describe the trading country’s co untry’s governmental structure and stability
The current Government of China is the Chinese Communist Party which has 78 million members accounting for 16% of the country’s population. Officially, the highest body within the government is the National Party Congress which only meets once every five years. Most of the decisions are made by the nine member Politburo (Political Bureau) Standing Committee. These decision makers are the most
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powerful men in China. It is somewhat unclear what their exact decision-making process is, but it is believed that the Standing Committee comes to a group consensus when implementing policies. Our Jamba Juice will most likely never be a concern of either of these committees’; committees’; however, it is important for our franchise to be aware of o f the complexity of the Chinese governmental structure.
Many economists believe China is currently growing at an unstable rate. China’s GDP growth is by far the largest of the world powers and is only rivaled by newly developing Middle Eastern and African nations. Such great growth is hard to maintain for a country with a generally weak infrastructure infrastructure and a population of 1.3 billion people. Despite these seemingly daunting facts, Chinese leaders have the situation under control. China has some of the top top economic minds in the world andtogether and together they’ve realized what they must do to not only accomplish their goal of providing decent lives for all Chinese, but also to stabilize their rapidly-growing economy. With the current worldwide economic struggles, China is beginning to realize it can no longer rely strictly on foreign demand to drive its colossal economy. China has recognized that the domestic demand for their products needs to increase in order to stabilize the economy. For this demand to increase, increase, a rise in the disposable disposable income of the people must occur. One way the Chinese plan to accomplish this is by allowing allowing the yuan to appreciate in the future.
Besides the threat of diminishing foreign demand, China also faces the danger of rapid inflation. China’s current rate of inflation is 5.1% which is not terribly dangerous, but b ut if the rate grows higher it could result in serious serious problems for the country. The two major factors contributing to the threat of inflation are the increase in both the demand and supply of loanable funds and the excessive printing of money to keep the value of the yuan low. Over the last few few months China’s central bank raised raised the required reserve ratio from from 1.5% to 18.5% and it may be set to 20% within the next six months. These
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numbers are compared to a U.S. reserve ratio of 10% which has not changed since December of 2006. These major increases in the reserve requirement will decrease the dangerous amount of liquidity that the large banks of China are lending at. The expectations of China to eventually slow down the printing of its currency will also greatly curb the the dangers of inflation. According to Qu Hongbin, the co-head of Asian economics research at HSBC, “There’s no need to panic, as Beijing has more than enough effective policy options to combat inflation.”
Commodity prices, especially food, have gone up due to recent increases in consumer demand and the government’s attempts to curb inflation. This increase in the price of food could potentially pose some problems for the the pricing of the products at our Jamba Juice location. However, these increases will not be problematic for us as they will be short lived. China imposed these controls on food in order to keep the prices under control. According to a top economic planning agency in China, the National Development and Reform Commission, Commission, “The country's commodity futures prices had declined d eclined since the government stepped up measur es es to battle inflation.” China is also self sufficient in most food production and carries a large trade surplus. Together, this makes the country well prepared to deal with the danger of rising world commodity prices. 4.
Describe laws and/or governmental agencies that affect your business
China recently set in place a new law regarding food. The Food Safety Law (FSL) was brought into effect in June 2009. According to the United States Department of Agriculture (USDA) Foreign Agriculture Service, this law is a great improvement over the old complex legal measures that China used to have in place. The FSL is very important because because it requires businesses in the food industry to limit their use of pesticides and food additives according to Chapter 6 Article 37.
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In 1978 China implemented the “Opening “Open ing to the Outside World” policies, and since then the Chinese gross domestic product (GDP) has grown over 9% annually. These policies make it much easier for a foreign brand, such as Jamba Juice, to open and prosper in China.
While our Jamba Juice will be privately owned and operated, it will be important to keep in mind that some of China’s businesses are run by the state, and many are at least somewhat influenced by a controlling hand. Although this fact may not be critical, it is worth worth noting, simply because other businesses and consumers have a different political mindset than what people from the United States are used to. B.
Trade and cultural analysis 1.
Geographic and demographic information
China is located in Southeast Asia along the coastline of the Pacific Ocean. It is the the fourth largest country measuring 9.6 million square kilometers with 18,000 kilometers of coastline. China is bordered by fourteen other countries as well. China contains countless plateaus, plains, basins, foothills and mountains, and has the longest river in Asia, the Yangtze. Shanghai, specifically, is located on the east end of the Yangtze River Delta. It is bordered by the estuary of the Yangtze River to the north, the Jiangsu and Zhejiang Provinces on the west, Hangzhou Bay is to the south, and on the east by the East China Sea. The city of Shanghai is composed of a sprawling 6000 square kilometers. kilometers. Shanghai experiences all four seasons, summer being the peak time for tourism.
The indirect competition that our Jamba Juice will have in the Super Brand Mall is Starbucks and McDonald’ McDonald’s. Starbucks is known for for their coffee and espresso drinks. While Jamba Juice offers coffee to customers, it is not the company’s main product. Unlike Jamba Juice, McDonald’ McDonald’s is known for their fast but fatty food. Even though McDonald’ McDonald’s has just recently launched a new n ew campaign which offers 8
McCafe items such as cappuccinos, frappes, and smoothies, Jamba Juice focuses more on the health h ealth food aspect of their offered products, especially especiall y the wide variety of smoothies. Therefore Jamba Juice will have a more competitive edge when it comes to customers who are looking for a healthy and refreshing alternative. alternative. With proper advertising and the opening of a new “American” store, Jamba Jamba Juice is sure to attract attract customers who are interested interested in new and upcoming health trends. trends. Since Jamba Juice is widely known for their healthy food and drink options, it will have an advantage over Starbucks and McDonald’ McDonald’s because like most people, the Chinese are very health conscious and will want to choose healthy dining as a first option. 2.
Market segment analysis target market
China has the largest population if all countries in the world at 1,330,141,295 people as of Chinese Population Population Breakdown Age
Per Percent entage
0- 14
19.80%
15-64
72.10%
65 +
8.10%
November 2010. Shanghai is the largest city in China with a population of 18,552,309 as of December 2010. The average age in Shanghai is 32. The vast majority of the Chinese population is young adult to middle-aged. This fits perfectly with our target age group which ranges from seventeen to mid-forties.
Our primary target market is ages 16-28, and our ou r secondary market is 29-45. This target market also includes the people in that age demographic that are uppermiddle to upper class. Our Jamba Juice will also use the fact the young-adults of our target group are very interested in healthy-living trends. They are also also prone to to purchase “American” foods and fashions.
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The purchasing power is currently highest in China’s metropolises. The average yearly income in Shanghai is ¥63,000 while Beijing has the second highest with ¥58,000. This means that Shanghai contains a larger number of consumers that will be willing to purchase Jamba Juice Products. Based on China’s desire to begin focusing on improving the th e lives of its entire populous, entire populous, this number of consumers will only continue to grow.
The members of our primary target market are known for wanting to be “hip” and “trendy”. A Jamba Juice opening in Shanghai would serve as a new “hangout” in the Super Brand Mall that serves exactly what these people want. Low calorie, healthy beverages and meal choices are just what these people are looking for, and that’s just what we serve. 3.
Analysis of the potential location
“Site selection is a priority for the company. To create the best choice for somebody, somebody, you have to start with the most convenient, easiest location for people to access, and then follow it up with the best experience in the store.” Kirk Perron, Founder, Jamba Juice, May 1998
The potential location for opening a Jamba Juice would be in the food court of the Super Brand Mall located in Shanghai. This mall is the most influential business business and financial center in the the city and is known for its international style and urban shopping center. The mall consists of thirteen thirteen floors and
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offers an area of 250,000 square feet. The Super Brand Mall has an average weekday weekday traffic of 180,000 persons and weekend traffic as high as 300,000 consumers. In 2005 Super Brand Mall was given the “Famous Chinese Business Brand” award, the highly prestigious “Mall China Gold Mall Award” in 2006, and was the only recipient of the “China Best Shopping Center Progress Award.” The mall is home to more than seventy international restaurants and an extensive range of entertainment and education venues.
We plan to locate specifically on the fifth floor of the Super Brand Mall. The fifth floor is filled mainly with places to dine and is set up like an an upscale “American” food court. By locating on the fifth fifth floor we will expose the the business to our hungry and thirsty thirsty target market. This also makes Jamba Juice easily recognizable as eating establishment. The fifth floor is the ex act center of the mall as there are ten total floors. This creates easy access by stair, escalator, or elevator, from from any of the nine other floors.
Jamba Juice promises consumers daily freshness in all all products. As a result of the 2008 food crisis and the hard-hitting recession in bordering countries, China has begun to increase their agricultural production of fresh fruits and vegetables to lead towards self-sufficiency. self-sufficiency. Therefore instead of going through all the complex legalities and safety of importing fruit and vegetables into the country, our store will buy them fresh, as needed, from local organic farmers in the surrounding area.
China requires that both the franchiser and the franchisee be legal entities when opening openin g a franchise such as Jamba Juice. There must be signed agreements between between franchisers and franchisees that include quality and standards requirements, arrangements for franchise fees, and lia bility agreements in case of disputes. The franchiser must also also be able provide guidance, training and technical support as a mature business to the franchisee. Jamba Juice fits these guidelines as there already over 700 stores currently
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open and thriving in the United States as Jamba Juice is one of the Top 50 Franchises according to Franchise Business Review. IV.
Planned Operation of the Proposed Business A.
Proposed organization
The opening of Jamba Juice in Shanghai will be the first first international Jamba Juice location. location. For this reason, Jamba Juice Shanghai will be owned by the parent company whose headquarters is located in San Francisco, California. The Jamba Juice franchise has been looking to expand into international locations, and the opening of Jamba Juice Shanghai will be the first first of many to come. An International Operations Representative will travel to Shanghai to complete the hiring process, conduct interviews, and specifically select employees with the greatest knowledge k nowledge and skills necessary for each Jamba Juice team position. This representative will will finalize employee choices and inform and train the selected employees in each of their specific areas, most mo st important of which is the General Manager Mana ger position.
Jamba Juice takes great pride in having friendly, outgoing employees who are eager to assist customers and are passionate about the Jamba Juice brand. Jamba Juice focuses on creating a unique and memorable dining experience for for each of the customers that walk through our doors. There are four positions necessary for the smooth operation of each individual individual Jamba Juice location. These include the General Manager, shift leader, cook, and cashier. A fully trained and certified certified Management Em ployee must train each of these regular employees to the company’s satisfaction satisfaction prior to the opening of the Jamba Juice Store, as stated in the Jamba Juice Franchise Disclosure Document, or FDD. Six employees will be working in hourly shifts as determined by the shift leader -- three part-time cooks, two full-time cashiers, cashiers, doubling as shift leaders, leaders, and one general manager. The general manager and a shift leader (cashier) will be present at all times along with up to two cooks.
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General Managers are responsible for the overall operation of the restaurant including contacting and interacting with the suppliers suppliers that have been selected. These employees must be effective team leaders and assist in the training, development, and discipline of fellow team members. They manage the business of the individual restaurant while offering outstanding customer service, communit y involvement, and operational excellence. General Managers must have a minimum of five years of supervisory experience within a food company, and college degrees are preferred. Jamba Juice shall ensure that the operation of the Jamba Juice store is under the direct control of a general manager at all times. The ideal General Manager will be a local citizen of Shanghai with extensive knowledge of the culture and language.
As a shift leader, responsibilities include opening and closing the restaurant, hiring and training new employees, and creating the schedule for operating operating hours, including individual employee shifts. shifts. As with all other Jamba Juice team member positions, shift leaders must maintain positive relationships with customers, and a college degree is preferred.
Employees with the title of cook are responsible for the processing and creating of orders for customers. Cooks must also be able to to recommend appropriate products in order to meet an individual customer’s needs and enhance a customer’s dining customer’s dining experience through sampling. They must have knowledge in cleaning and operating operating food equipment such as blenders and other other tools. Stocking supplies is another common task for these employees. Cooks Coo ks must work in a timely manner and consistently serve all Jamba Juice products to specifications while following health, safety, and sanitation guidelines for all products. Knowledge of operating the cash register is also required in in the event that the working cashier is is unavailable. This position is one of the most important in any any Jamba
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Juice store as they are responsible for creating the meals that will satisfy customers’ taste buds and k eep them coming back. Cooks should have at least one year of experience in the food chain chain industry.
Cashiers must handle all the cash transactions according to the Jamba Juice cash-handling policies, greet customers with a smile, and maintain eye contact while interacting with various customers. Communication with customers must be clear and accurate to create a positive experience. Cashiers Ca shiers must work well in a team environment and be able to work calmly under stressful conditions. B.
Proposed product/service 1.
Details of the products/services to be provided
Jamba Juice offers a wide variety of smoothies, drinks, salads, and sandwiches. There are endless smoothie options. Some customer favorites favorites include: Banana Berry Strawberries Wild Peach Pleasure Mango-a-go-go Pomegranate Paradise In the Chinese culture, peaches, symbolizing longevity, and bananas, which symbolize education and brilliance in work or school, are very popular fruits. Jamba Juice recognizes these benefits and provides products with these fruits.
Customers also have the option of adding a Boost to their smoothie. These Boosts do everything from giving customers a little extra energy to providing them with their daily vitamins. Soy Protein Boost Daily Vitamin Boost Energy Boost Antioxidant Power Boost
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If smoothies aren’t the customer’s c ustomer’s cup cup of tea, then he or she may try one of our Fruit Tea Infusions, or choose from one of our Mighty Leaf Teas -- organic whole-leaf black, green, or herbal tea. Popular tea options include: Passion Fruit Tea Infusion Pomegranate Tea Infusion Organic Earl Grey Organic Spiced Chai Organic Green Dragon Jamba Juice also offers customers healthy meal options including: Ideal Meals: yogurt parfaits with granola and fruit toppings Steel Cut Oatmeal: organic oatmeal with with choice of toppings Wraps, Salads, and Sandwiches: grab-and-go items free of artificial flavors and preservatives California Flatbreads: delicious toppings on a flatbread crust Baked Goods: all-natural, including pretzels, cookies, and scones With the introduction of these meal options, customers who would normally purchase a smoothie or drink and then go elsewhere for food will now have the convenience of purchasing a complete meal in one stop. Although these food items come with American names and American tastes, the ingredients are all natural and organic and will be easily accepted by the Chinese population.
In “Food Safety First,” Rhondi Shigemura, the Director of Research and Development at Jamba Juice, says, “You can minimize risks by b y choosing a supplier who is serious about food safety.” Hamilton Testa-Avila, Testa-Avila, Jamba Juice’s Quality Assurance Manager Manager agrees, stating, “We have an in-depth in-depth checklist for evaluating suppliers.” Jamba Juice requires fresh fruits, juices, dairy products, vitamins, and protein ingredients to produce their their smoothies. Jamba Juice relies heavily on their suppliers, especially those of their fruit.
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Our goal is to provide our customers with fresh, high-quality ingredients. ingredients. We plan to do this by using suppliers in the provinces surrounding Shanghai including the Jiangsu, Shanxi, Zhejiang, Shandong, Guangdong, and Hebei provinces. Chengde Co-Intel Export Products Co., Ltd., located 1480km away from Shanghai in the Hebei province, will provide us u s with a wide variety of fruits such as apples, pears, peaches, strawberries, oranges, pineapples, bananas, and melons. Shenzhen Dingada Trade Co. Ltd. in the Guangdong province will be our main mango supplier, as mango is an important fruit in the production of our products. There are dairy farms located in Henan Jiaozuo City and Xiaodian Taiyuan in the Shanxi province, respectively located just over 1000km and 1360km away from Shanghai that can provide us with all of our dairy products. 2. How the goods will be transported to/from the home country
Jamba Juice relies heavily heavily on their suppliers, especially those of their fruit fruit and dairy. Their goal is to consistently provide high quality products. In order to do this, Jamba Juice will have their fruits fruits and dairy shipped in refrigerated truck to the Super Brand Mall location from various farms in the provinces surrounding Shanghai. Transporting the goods by trucks is is the most practical option for Jamba Juice. Since there are no large scale farms located within 1000km of Shanghai, air travel would be extremely expensive and is therefore unrealistic. unrealistic. There are no major train routes that would deliver the goods goods in as timely a manner and as directly d irectly as a trucking system.
We will use the Cheuk Tak Transportation Company which will deliver our products directly to Jamba Juice. Cheuk Tak agrees that trucking is the most realistic way of travel, saying on their website, “The untold truth today is that in China the highway network is far better than many in the West would West would expect. Transit time is amazingly short vis-a-vis vis-a-vis the large area of the nation.” Cheuk Tak’s network of road delivery deliver y covers the entire country of China, China, and they boast a 98% success rate in delivering goods to destinations destinations across the country. The distances that our products products need to 16
travel, all less than 1500 kilometers, would allow Cheuk Tak to deliver our products within 48 hours. The benefits that this would pose are immense, especially esp ecially since we want our products to spend as little time in transit as possible. By reducing the time that our goods spend in trucks, we can ensure that we have the freshest ingredients possible. Costs involved with using the Cheuk Tak trucking system are relatively low, especially when compared to to the costs of transport by air. Not only are the costs costs significantly less expensive, but the time associated with a trucking system is not much more than using air transportation. Using the Cheuk Tak trucking system system will only take a few few hours longer than transporting goods by air. C.
Proposed Strategies 1.
Proposed pricing policies
At all Jamba Juice locations, locations, prices for menu items are the same across across the board. Smoothies and juices come in three different sizes: Sixteen (16 fl oz), Original (22 fl oz), and Power (30 (30 fl oz). A Sixteen costs $3.75USD, Original costs $4.50USD, and a Power costs $5.30USD. Our Jamba Juice will will accept payment in the form of the yuan (China’s currency). Therefore we will price a Sixteen at ¥23.06CNY, an Original at ¥29.65CNY, and a Power at ¥34.92CNY. (These prices are all subjective to the current value of the Chinese yuan compared to the United States dollar.)
Compared to the competition, Starbucks and McDonald’s, Jamba Juice’s prices are relatively higher than than McDonald’s and McDonald’s and only slightly more expensive ex pensive than Starbucks, which is why we will be using a competitive pricing policy. A medium smoothie at McDonald’s costs around $2.50USD which is less than at Jamba Juice. We do not foresee foresee this as a problem because of the difference in quality between a Jamba Juice smoothie and a McDonald’s smoothie. For health conscious, calorie counting Chinese in our target market, the difference in nutritional value between a Wild Berry smoothie at McDonalds and a Berry Fulfilling smoothie at Jamba Juice is staggering. staggering. A small Wild Berry smoothie contains 378 17
calories and four grams of fat, whereas the Sixteen Six teen Berry Fulfilling smoothie only contains 150 calories and has zero grams of fat. fat. The calories in a Starbucks Venti Venti Strawberries and Crème Frappucino are a horrifying 770 with 19 grams of fat, compared compa red to a Jamba Juice Power Po wer Strawberry Whirl with 380 calories and zero grams of fat. fat. As our target market is highly aware of their well-being, they are much more likely to purchase a drink with fewer calories and fat fat even at a higher cost. The impressive nutritional value of Jamba Juice’s menu along with the more elegant atmosphere will attract consumers in our target market to come to our location and purchase our products. 2.
Proposed promotional program
As the Jamba Juice name will not yet be widely known in the Shanghai area, we have created a marketing strategy to promote promote awareness of the Jamba Juice name and logo logo to attract customers. In 1995 China passed the Advertising Law Law of the People's Republic of China. This law states that advertising in China must:
not contain false and deceiving information not impair the mental and physical health of the minors and the disabled not display the national flag, emblem, or anthem not use the words "state-level," "the highest-level," or "the best" not harm social interests or hinder social stability not hurt the social public order not contain any pornographic, superstitious, horrible, violent or ugly information not harm the environment or natural resources not discriminate against national origin, race, religious affiliation, or gender include statements of commodity performance, origin, use, quality, producer and manufacturer, valid term, promise, service's items, manner, quality, and p rice must be clear and explicit Our Jamba Juice can easily comply compl y with these laws as none of our advertising ad vertising will defy any of these standards. 18
Part of our promotional mix mix will include advertising within the Shanghai Metro. We will advertise specifically on Line Two, most heavily at the Dongchang Road Station. The Dongchang Road Station is less than a ten minute walk to the Super Brand Mall and is the closet stop. It is a main source of transportation for our potential customers. Line Two of the Shanghai Metro runs from East Xujing to the Pudong International Airport (See Appendix pg. 27). Therefore advertising on Line Two will will help make the Jamba Juice name and logo recognizable and will create an impetus for customers in our target market to try out this this new brand. (See Appendix pg. 29 for a sample advertisement advertisement for the Shanghai Metro.) Prices for advertising are prone to differ at each metro station. station. To help with organizing, organizing, negotiating, and implementing our advertisements, we have come to the consensus that hiring an advertising agency is the most effective way to do so. The Puyi Advertising Co., Ltd. Ltd. located in Shanghai is an agency that is well suited to our needs.
Another portion of our promotional mix is to advertise on a larger scale through television advertisements. According to StartUp Overseas, just just short of 100% of households in China have a television. The Chinese government says that the y have 1.2 billion viewers. This is a huge number of people to whom we could expose the Jamba Juice name and logo. Specifically, we will run an advertisement on the local Shanghai channels to reach our target audience. The costs of running a television advertisement will vary based on time of o f day, how often, and how long the time-slot is during which we run the commercial. We will work with with the Puyi Advertising Co., Ltd. Ltd. to develop an appropriate and cost-effective commercial that fits with with China’s Advertising Laws to attract our attract our target audience.
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Jamba Juice not only sells delicious food and drinks, but they also sell apparel (See Appendix pg. 28). By selling apparel such as tee shirts, hooded sweatshirts, sweatshirts, and sweatpants bearing the Jamba Juice name and swirl logo, we will will be gaining free publicity. In fact, as customers purchase the clothing, Jamba Juice is profiting fiscally as well as profiting from the additional ben efits of other potential customers seeing the name and logo.
Traditionally in China, advertising doesn’t exude the same influence on the Chinese consumer psyche as it does a normal person in the States. The Chinese rely more on endorsement from friends, and personal research and reading. Therefore our biggest tool will be the asset of word-of-mouth.
In addition to the high-end high-end advertising that we’ll be putting in place p lace with Puyi Advertising Advertising Company, we plan on announcing the opening of Jamba Juice on the Super Brand Mall website, www.superbrandmall.com,, under the Events Calendar tab during the month of May since the planned www.superbrandmall.com grand opening date is June 1, 2011. There we will have pictures of the inside of the store, store, our products, as well as a printable printable coupon (See Appendix pg. 28) as a part of our sales promotion. A customer with a coupon will get a size Sixteen smoothie for only $1.00 or ¥6.59. This coupon will be good for the week of the store’s gr and and opening. This low price for smoothies on the week of the store’s grand opening will draw in a large amount of customers.
The last portion of our promotional mix will be personal selling. selling. Our well-qualified employees will be in charge of offering additional products for customers to purchase at checkout such as clothing, water bottles, upgrading in product size, or adding a boost. Our employees must also have positive attitudes towards Jamba Juice products as well as the business in general.
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V.
Planned Financing A.
Projected income statements for the first year’s operation
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B.
Projected balance sheet for the end of the first year
C.
Description of the planned growth of the proposed business
After our first first year of operation we plan on accumulating $61,100 in net profit. We estimated our sales profits in China based on our expectations exp ectations of the market and by researching the revenues of Jamba Juice’s in similar settings. We used Jamba Juice’s FDD (Franchise Disclosure Document) to gather financial information for the year year 2009, which we could use to aid us in our estimates. Our approximate total expenses came out to $292,900 (see Income Statement for detailed breakdown). breakdown). Putting the FDD
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to further use we were able to calculate approximate figures for a first year balance sheet, which effectively shows our expected assests and liabilities. Many of the numbers in these tables are a re based on averages of Jamba Juice stores in America, however, there are some differences differences in figures because of our unique location. For example labor costs would be much lower in China as Jamba Juice’s in the U.S. pay most of their employees minimum wage. In China there are a large amount of young people that would be eager to work for us at their minimum wage. Therefore, we will pay our cooks cooks and cashiers the minimum wage of ¥37, shift leader/cashier ¥40 and our sales manager ¥43. Based on our estimate of the store being open for 4,200 hours in a year and an average of 3.3 employees working at one time, our labor costs will come to $83,000 which is substantially less than the $115,000 it would have cost in the U.S. Based on the our first year’s projected net profit we are setting a goal of achieving $350,000 net profit in our first five years of operation. Sales will increase over time as our Jamba Juice establishes itself within the Super Brand Mall.
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VI.
Bibliography
“About Us”. Super Brand Mall. Nov. 2010. 19 Dec. 2010. > Amadeo, Kimberly. “China Economy”. About.com. 16 Feb. 2010. 17 Dec. 2010. od/worldeconomy/p/China_Economy.htm > Amadeo, Kimberly. “Is China Threatening to Sell U.S. Treasuries?” About.com. Treasuries?” About.com. 16 Mar. 2009. 17 Dec. 2010. treasuries.htm > Arias, Martha. “How does China Regulate Advertising?” Mar. 29 2010. Internet Business Law Services. Jan. 11 2011. > “Average Salary in China”. Q2Hoo.16 Jul. 2010. 19 Dec. 2010. > Barres, Barres, Mark. “China Franchise Law”. eHow. 18 Sep. 2010. 19 Dec. 2010. >
Begang, Wu. “Final Food Safety Implementation Law Measures”. Gain Report. 14 Aug. 2009. USDA Foreign Agriculture Service. 19 Dec. 2010. > Bradsher, Keith. “Beijing’s Focus on Food Prices Ignores Ignores Broader Inflation Risk”. Risk”. New York Times. 17 Nov. 2010. 4 Jan 2011 http://www.nytimes.com/2010/11/18/world/asia/18china.html> >
Bruner, Kristi. “Jamba Juice External Analysis”. BUSA. 25 Feb. 2009. 19 Dec. 2010. > “China Demographics Profile 2010”. Index Mundi. 3 Nov. 2010. CIA World Factbook. 11 Dec. 2010. >
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“China Geography”. China Travel Guide. Apr. 2010. 12 Dec. 2010. > “East & Southeast ”. The World Factbook. 24 Jan. Jan. 2011. CIA. 30 Dec. 2010. > “Economy of the People’s Republic of China”. Wikipedia. 18 Dec. 2010. 19 Dec. 2010. > “Food Safety First”. SYSCO. June 2009. 19 Dec. 2010 > “Food Safety Law Related Measures” USDA. 14 Aug. Aug. 2009. Foreign Agricultural Services. 19 Dec. 2010. > “Jamba Juice”. Coriolis Research. Dec. 2001. 19 Dec. 2010. Lukens, Jeff. “Could China’s Instability Threaten America?” Right Side News. 6 Dec. 2010. New Media Alliance. 19 Dec. 2010. instability-threaten-america.html >
“Made-in-C “Made-in-China.com”. hina.com”. Dec. 2010. Focus Technology Co., Ltd. 31 Dec. 2010. >
Mones, Nicole. The Last Chinese Chef. Boston: Houghton H oughton Mifflin Harcourt, 2007
“Portable Power”. Enterprise Resilience Management Blog. 15 Feb. 2010. 14 Dec. 2010. versus-selfsufficiency.html>
“Politburo Standing Committee”. Jan. 2009. University of Florida. 3 Jan. 2011. >
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VII.
Appendix Map of the Super Brand Mall, Entrances, & Surrounding Area
Photo Credit: http://www.superbrandmall.com/info/traffic_en.asp?tag=1
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Shanghai Metro Map
Photo credit: http://www.exploremetro.com/static/pdf/en/shanghai.pdf
Satellite Map of Shanghai
Road Map of Shanghai
http://www.google.com/images?q=shanghai+maps&oe=utf-8&rls=org.mozilla:en-US:official&client
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Jamba Juice T-Shirts for Sale
Photo Credit: http://www.shirtcrazy.com/jamba-juice-tshirt.htm
Grand Opening Coupon
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Sample Advertisement for Line Two of the Shanghai Metro
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