Southern Taiwan University of Technology (STUT)
International Business Administration (IMBA), 1 st Semester – 2 nd Year, 2011
Group 2:
•
M997Z234 Ricardo M. Dukha Jr.
• M997Z217 Do Nguyen Yen Nhi
•
M997Z247 Nguyen Tan Nhat Duy
•
M997Z229 Damar Pambudi
•
M997Z243 Faustino Hyacintha
As a Midterm Requirement for the Course Entrepreneurship &
Innovation, under the supervision of Professor Chen-Nan Chen

Executive Summary
The "Gift Shop" at Avant-Garde Building has long offered a wide range of novelties and stationary inside one of the most prestigious landmark buildings in
Jakarta, Indonesia.
The Gift Shop's customers were primarily employees of the Avant-Garde
Building's tenants. The new venture, "PT. Avant-Garde Shop" is taking over this space and redesigning it as the flagship store of the Avant-Garde Building, through a joint operation with PT. ABC Company Indonesia.
We will broaden our customer base by focusing not only on tenants, but also on neighbors of and visitors to the Avant-Garde Building. The grand opening is slated for December 9th. Our main priority at PT. ABC Company is to refurbish the existing outlet to become an official store associated with the lifestyle of the professionals who are the focus of our marketing program.
[NOTE: *PT is an abbreviation for Indonesian Perseroan Terbatas, meaning
Limited Company.]
This business plan lays out our strategy for re-positioning the "Gift Shop" from
"just-another-store" to the "Official Store of Avant-Garde." This plan will detail services to be provided by ABC Company in the joint operation, along with the implementation milestones for each step. ABC Company will provide several strategic recommendations on how to enhance the traffic and image of the retail facility through re-naming and image revamping, re-modeling of interior and merchandise resource planning.
The Market
There are approximately 100 offices inside Avant-Garde Building, and roughly
1,000 visitors daily to Avant-Garde Building. The Avant-Garde Shop has identified three distinct market segments: tenants, neighbors, and visitors.
There are roughly 1,500 Tenants, our primary target customers, who are whitecollar workers with large disposable incomes. The secondary target customers are the surrounding office community in the area, who often visit the Avant-
Garde Building during lunch hour to meet their colleagues or friends. Both of these groups have already proven their willingness to buy from retail stores within the Avant-Garde building, and out location, on the Mezzanine above the ground floor dining area, is ideal for catching their eye.
The last target customer of the Avant-Garde Shop is visiting guests, both tourists and residents of the Jakarta Metro region who have come to the Avant-Garde

Building for a taste of glamour, as the symbol of high-class, high-tech, fast and modern living in Indonesia's new economy.

The Strategy
PT. Avant-Garde Shop will leverage the existing image and brand-name of the
Avant-Garde Building into a formidable brand that reflects power, modernity, wealth, and global sophistication. We will enhance the existing retail space with a new design, and supplement retail sales with catalog and website orders. We must remember that we are not selling merchandise, we are selling a brand, and an image: the New Indonesia.
1.1
Objectives
The Avant-Garde Shop has two objectives for the organization. The objectives are lofty, yet achievable. By developing and tracking progress toward the goals, the organization will push everyone both from PT. Avant-Garde and PT. ABC
Company to perform their best.
1.
To re-position the current "Gift Store" as the Official Store of Avant-Garde, through re-modeling of the retail space and various marketing program to generate more revenue and contribute to the overall Avant-Garde Building equity.
2.
To achieve a modest net profit of Rp. 1,801,000 by year two and Rp. 6,807,000 by year three.
3.
To achieve revenue of Rp. 90,299,000 by year one, Rp. 95,717,000 by year two and Rp. 101,460,000 by year three.
1.2
Mission
The Avant-Garde Shop is a retail store specializing in the sale of novelty of various product mix. The store, however, will emphasize the sale of official merchandise of the Avant-Garde brand with a full assortment of apparel, accessories and stationary, as well as other lifestyle related novelties.
Our goal in ABC Company is to be the sole supplier to those official merchandise of Avant-Garde. We believe that to attain the Avant-Garde Shop positioning strategy, we will need to be consistent within the theme according to lifestyle association of the target customers.
1.3
Keys to Success
In order to succeed in the merchandising retail, the team of Avant-Garde Shop must consider all aspects of significant value to their customers:
• Carry an assortment of various mix to fit the more ample frames of their white collar target customer base, and also create an image where visiting guests can associate themselves with the merchandise offers.
• Provide customers with top notch personalized customer service in an

atmosphere of professionalism and hospitality.
• Advertise and promote in areas where our target customer base will learn about our store, through the implementation of point-of-sales (banners, leaflets, flyers), website and other method of marketing medium to attract visitors to visit the location.
• Continuously review our inventory and sales and adjust our inventory levels accordingly.

Company Summary
• "Gift Shop" at Avant-Garde Building is an established retail business that offers a wide range of novelty inside one of the most prestigious landmark buildings in Jakarta, Indonesia. Now operating with minimal overhead, and a limited staff, the new, revamped "Avant-Garde Shop" will serve a wider customer base that in the end will go hand-in-hand with the image of the Avant-Garde Building and Avant-Garde internationally.
• ABC Company has agreed to help "Avant-Garde Shop" in establishing its new identity so it can be utilized as a driver to attract customers to purchase the merchandise.
• The hours of operation will be Monday - Saturday 10 a.m. - 6 p.m. and Sunday 12 p.m. - 6 p.m. There will be extended special hours designated during special exhibition events. All merchandise will be purchased and supplied according to the company's mission and customer focus profile, according to the image associated with Avant-Garde or
Avant-Garde Building.
2.1 Company Ownership
• "Avant-Garde Shop" is part of the non-profit organization Avant-Garde.
Through this joint cooperation, "Avant-Garde Shop" will share its activities with ABC Company. The details of the profit sharing agreement will be further discussed with all interested parties.

Industry Attractiveness
In general, retail businesses with similar target markets tend to concentrate together in malls. As this strategy has generally worked well for retailers, such a trend is expected to continue, with new shopping centers coming into operation such a trend is expected to continue, with new shopping centers coming into operation.
For instance, Harco Mas Mangga Dua and Glodok Plaza are focusing on the computer and electronic markets. In contrast, smaller outlets from the development of ITC Kuningan are dedicated to fashion retail, whilst STC
Senayan is targeting retailer of youth fashion and sports merchandise, while
Plaza Senayan and Plaza Indonesia are serving high-end segments of the retail market.
Market Timeliness
People around Jakarta Metropolitan Area have gradually but firmly recognized
Avant-Garde as an historical, elegant and prestigious place to be; it is synonymous with modern Indonesia and its way toward excellence in the global economy. Avant-Garde Building is the "embassy" of commerce with representative offices of multi-national firms internationally. There is already a trend of putting the Avant-Garde image in every tenant's logo or corporate name. We may feature some of the finest tenants' logos, in conjunction with the
Avant-Garde logo, in our merchandise.
Due to its current rapid expansion, the retail property sector in Greater Jakarta is expected to become saturated, with new retail developments over the next three to four years as land for retail projects become increasingly scarce. In light of the situation, several major retailers, including Ramayana and Matahari, have confirmed plans for expansions to the area outside Java and Bali to take advantage of growth opportunities within a wider region.
Theme-based merchandise stores vary in terms of the scope of their merchandise:
- One (Few) Merchandise Categories: many of these offer only apparel, for establishments in the core of the entertainment district, such as Hard Rock
Cafe or Planet Hollywood, along with their brand-building-throughmerchandising strategy.
- Multiple Merchandise Categories: these are retail stores with a wide range of product categories, varying from electronics, to stationary, apparel, novelties, etc.; for example, Duty Free Shops at various airports, with broad product mixes, including both their own brands and those of other vendors.

Market Analysis
The Avant-Garde Shop has identified three distinct market segments: tenants, neighbors, and visitors.
There are approximately 100 offices inside Avant-Garde Building, and roughly
1,000 visitors daily to Avant-Garde Building. The primary target customer of the Avant-Garde Shop will be the tenants with large disposable income, around
1,500 people.
The secondary target customers are the surrounding office community in the area, who often visit the Avant-Garde Building during lunch hour to meet their colleagues or friends.
The last target customer of the Avant-Garde Shop is visiting guests. As the store's popularity increases, we expect to see an assortment of curiosity seekers, and local residents from the outside the Jakarta Metropolitan Area.
We are confident that we will capture the essence of the Avant-Garde brand appealingly, so when people visit Avant-Garde Building, they ought to purchase a memoir of visit through Avant-Garde theme merchandise offered.
Industry Attractiveness Assessment
1 Least attractive
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5 Most attractive
Item 1 2 3 4 5
Number of competitors
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Age of industry
Growth rate of industry
Average net income for firms in the industry
Degree of industry concentration
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Stage of industry life cycle 
Importance of industry’s products and/or services to customers
Extent to which business and environmental trends are moving in favor of the industry
Number of exciting new product and services emerging from the industry
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Long-term prospects 
Target Market Attractiveness
The Avant-Garde Shop has identified three distinct market segments: tenants, neighbors, and visitors.

T he primary target customer of the Avant-Garde Shop will be the tenants with large disposable income, around 1,500 people.

The secondary target customers are the surrounding office community in the area, who often visit the Avant-Garde Building during lunch hour to meet their colleagues or friends.

The last target customer of the Avant-Garde Shop is visiting guests. As the store's popularity increases, we expect to see an assortment of curiosity seekers, and local residents from the outside the Jakarta
Metropolitan Area.

1.1
Tenants
This category commonly includes Avant-Garde employees, who possess the strongest "sense of belonging", although this also includes all employees whose companies reside inside the Avant-Garde Building.
This will comprise the largest segment of our target market (53%); we will focus on tenants for several simple reasons:

The group will be the first to become aware that there is a new, revamped store.

They have the sense of belonging or attachment to the whole idea of working inside one the most prestigious buildings in Jakarta.

This group will also make the most "lifestyle" purchases, either buying for themselves or as a gift for a friend or relative.
1.2 Neighbors
The second potential segment (26%) is nearby workers within the "Golden
Triangle" radius, who are drawn to the Avant-Garde building by the handful of retail food establishments. Perhaps, they will not be aware of the store's existence until their second visit to Avant-Garde Building, but as they repeatedly spend lunch/break time here, they will become aware of the existence of the Avant-Garde Shop via sales literature (flyers, banners, etc.).

This group does not necessarily have an attachment to Avant-Garde, but may make impulse purchases, if the selection of merchandise fits their styles and needs.

This also means that the merchandise aimed at them does not have to be
Avant-Garde-themed, as it could be generic products such as trinkets or ethnic arts and crafts.
1.2
Guests/Visitors
This last segment (21%) has not yet been fully cultivated. This segment is as important as the other two, particularly in communicating the image of Avant-
Garde Building itself as a destination spot within the Jakarta Metropolitan Area.
They will maybe unaware of the store existence until several visit to Avant-
Garde Building, this we will implement advertising effort such as guided tour, distribute flyer at the entry door, or positioning of banner inside the high traffic area of Avant-Garde Building.


This group shops at Avant-Garde Building infrequently, but may be subject to impulse purchases once they are in the store.

They will likely purchase the Avant-Garde-themed merchandise as a memoir of their only or rare visits to the Avant-Garde Building.
Category Benefits Sought Product Segment
Purchase
Behavior
Avant-
Garde
Brand
Image
High Tenants Sense of belonging
Collectible
Lifestyle
Neighbors Memoir of visit
Value shopping
Guests Memoir of visit
Value Shopping
Avant-Gardethemed merchandise, specific niche merchandise
Planned shopping
Specific product look ups
Avant-Gardethemed merchandise
Indonesian arts
Impulse shopping
Random and crafts
Various product selection mix
Generic Avant-
Garde-themed merchandise
Books magazines
Traffic shoppers and Random shopping
Various product mix
Medium
Medium-
Low
Market Analysis

Potential
Customers
Tenants
Neighbors
Year 1 Year 2 Year 3 Year 4 Year 5
Growth CAGR
1% 1,590 1,606 1,622 1,638 1,654 0.99%
1% 780 788 796 804 812 1.01%
Guests or Visitors 1% 630 636 642 648 654 0.94%
Total 0.99% 3,000 3,030 3,060 3,090 3,120 0.99%
2. Target Market Segment Strategy
We want to differentiate clearly the Tenants from the other two segments
(Neighbors and Guests). The focus strategy for the category of Tenants is to establish the sense of "belonging" meaning that we need to create the Avant-
Garde Shop as if it is their own. For example, the customers should feel a sense of pride in owning an "Avant-Garde" coffee mug, and displaying it in their office or home. This will give us a large opportunity for multiple sales and allow us to gain further access into the community's numerous occasions, such as giving the themed merchandise for their friends and families as tokens.
While the Neighbors and Guests categories for the Avant-Garde Shop will be the next important ones, they mostly fall under the rubric of "accidental" shoppers or impulse shoppers. With the Tenants, purchases might be conducted after several visits to the store because of their close proximity and frequency of visiting the Avant-Garde Building. On the other hand, with Neighbors and particularly with Visiting Guests, the purchase decision will be decided instantly after viewing the selection of merchandise that is suitable to their own needs.
Web Plan
Avant-Garde Building has launched its first international website in January of
2004. The website can be viewed at [proprietary and confidential information removed]; while the Jakarta Stock Exchange also owns a domain. Both can be utilized to advertise the new Avant-Garde Shop, as well as linked to our own website that list all the merchandise and services we offer.
1. Development Requirements

Optional costs that the Avant-Garde Shop will expect to incur with development of its website include:
Development Costs
 Site Design - Rp. 22,000,000
 Hosting fee of Rp. 1,700,000 per year, including 60 e-mail addresses
Ongoing Costs


Search Engine Registration - $200 per year.
Site Design Changes - Changes in the site, such as photography costs
(estimated at Rp. 300,000 - Rp. 600,000 per shot), are considered to be part of Marketing and Advertising.

Management
The management of the Avant-Garde Shop is made of the interim management team from PT. ABC Company, who will monitor the growth of the retail store, as well as making improvements and business maneuvers, if necessary. The many administrative functions of the Avant-Garde Shop would become the primary focus of the other team member, PT. Avant-Garde.
1. Organizational Structure
The organization will be a relatively dynamic one, since the majority of personnel are involved in both planning and operation.
There are three functioning groups within the company: Shareholders, who make the final decisions, then the two teams from PT. ABC Company, acting as
Interim Management and Business Development Consultants, in as well as the
Corporate Communications Division of PT. Avant-Garde.
2. Personnel Plan
The personnel plan is included in the following table. It shows the Store Staff's salary as other functions are working inside both PT. Avant-Garde and PT. ABC
Company.
Personnel Plan
Store Staff
Year 1 Year 2 Year 3
$9,600 $11,000 $11,000
Marketing/Store Manager $12,000 $12,400 $12,400
Total People 2 2 2
Total Payroll $21,600 $23,400 $23,400

Financial Plan
Most of the store/office equipments of the old Avante Guard Store will still be used by the newly renovated store. Few repairs will be done, like repainting, for the orderliness inside the store.
The initial funding from investors (let’s just say they are ABC and XYZ
Company) will enable us to renovate the space and buy initial inventory. With heavy marketing and outreach to customers who work outside the Avant-garde
Building, we expect to pass the break-even point early in the second year of this plan. This is also considered due the anticipated impulse buying of the people within the area, which is the trend in Jakarta, Indonesia.
We will keep costs to a minimum: 2 full-time employees will run the shop, while advisors and directors from AMC Company will oversee operations under their existing duties at PT. ABC Company. We will begin paying dividends to these investors in the second year.
8.1 Start-up Funding
Approximately Rp. 166,597,000 will be needed from the shareholders for these purposes. Some of the funding is priority as it's crucially important to go on to the next step of development. The remainder of the start-up capital required, for the continuation of operations, will be provided by the end of the project.

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Cash Balance on Starting Date
Rp 72,000,000
94,597,000
Rp 166,597,000
Rp 25,282,000
69,315,000
69,315,000
94,597,000 Total Assets
Liabilities and Capital
Total Liabilities
Capital
Planned Investment
PT. XYZ (32%)
PT. ABC Indonesia (62%)
-
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Rp 63,307,000
103,290,000
Rp 166,597,000
( 72,000,000)
Total Capital
Total Capital and Liabilities
Rp 94,597,000
94,597,000
Total Funding Rp 166,597,000
8.2
Important Assumptions

We assume that we at least secured our purchase of merchandise in the first two years of operation.

All employees except Store Staff are working under Interim Management
Team.

The Avant-Garde Shop assumes a medium growth in the beginning, without major recession.

The Avant-Garde Shop assumes of course that there is no unforeseen significant increase of the retail space.

Projected Profit and Loss (figures are in Rp 1,000s)
Sales
Year 1 Year 2 Year 3
Rp 90,299 Rp 95,717 Rp 101,460
Direct Cost of Sales
Total Cost of Sales
25,282
RPp25,282
22,530
Rp 22,530
22,980
Rp 22,980
Gross Margin
Gross Margin %
Expenses
Payroll
Marketing/Promotion
Rent
Utilities
Other
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
65,017
72.00%
RPp21,600
4,515
28,800
12,000
2,400
Rp 69,315
(4,297)
(4,297)
73,187
76.46%
Rp 23,400
4,786
28,800
12,000
2,400
Rp 71,386
1,801
1,801
78,480
77.35%
Rp 23,400
5,073
28,800
12,000
2,400
Rp 71,673
6,807
6,807
Net Profit
Net Profit/Sales
(Rp 4,297) Rp 1,801 Rp 6,807
-4.76% 1.88% 6.71%
Projected Cash Flow (figures are in Rp 1,000s)
Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Year 1
-
Year 2
-
Year 3
-
Rp 90,299 Rp 95,717 Rp 101,460
90,299 95,717 101,460
Rp 90,299 Rp 95,717 Rp 101,460 Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Subtotal Cash Spent
Net Cash Flow
Year 1 Year 2 Year 3
Rp 21,600 Rp 23,400 Rp 23,400
59,711 66,981 71,309
81,311 90,381 94,709
Rp 81,311 Rp 93,381 Rp 97,709
8,988 2,336 3,751
Cash Balance Rp 78,303 Rp 80,639 Rp 84,390

Comparison of the Financial Performance of Proposed Venture to Similar
Firms Assessment Tool
Annual Sales Estimate of Proposed
Venture’s
Annual Sales—Year 1
We used the average 6% growth of sales per annum of Gifts, Novelty, Souvenirs Industry in Indonesia
Estimate of Year 1 Sales Rp 90,000+
Summary: This number shows a little above average of the usual sales of Avante
Guard, which is in anticipation of the expansion & better location of the store. Trend in Indonesia, especially in major cities shows that new stores attract more customers.
Estimate of Year 2 Sales Rp 95,000+
Summary: Using the 6% average growth sales, this figure will come out. This is however including the possible competition & uncollected sales.
Net Income Estimate of Proposed Venture’s
Net Income—Year 1
Due to capital investment from outside finance, the company is opt to payback the cash first.
Estimate of Year 1 Net Income (Rp 4,000)
Summary: As expected, the income for the 1 st year will be very low due to the huge amount of outside financing. Also, as a small business selling small items, the margin to attain large income is very steep.
Estimate of Year 2 Net Income Rp 1,800,000
Summary: This is when the store operation starts to pick-up after the first year of relaunching. However, the monthly net income will still average low since at the start of the year the outside investment still needed to be paid & it is only towards the end of 3 rd quarter wherein the company achieve the break-even point.