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Contents
EXECUTIVE SUMMARY ................................................................................................. 2
I.
THEORY OF CHANGE .......................................................................................... 2
II.
VALUE PROPOSITION ......................................................................................... 2
III.
THE PROBLEM ...................................................................................................... 2
IV.
BUSINESS MODEL DESCRIPTION ..................................................................... 3
V.
SOCIAL IMPACT ................................................................................................... 5
VI.
MARKET ANALYSIS ............................................................................................. 6
1.
Macro-environment Analysis: ............................................................................................ 6
2.
SWOT Analysis: .................................................................................................................. 6
3.
Segmentation, Targeting and Positioning: ........................................................................ 7
4.
Competitors’ Analysis: ....................................................................................................... 8
VII.
MARKETING .......................................................................................................... 8
1.
Promotion Strategy - Cultural Ambassador Recruitment .............................................. 8
2.
Promotion Strategy - Marketing to tourists ..................................................................... 8
3.
Pricing Strategy ................................................................................................................... 9
VIII.
MANAGEMENT TEAM & STAFF RESOURCE REQUIREMENTS ................. 9
1.
Management Team ................................................................................................................ 9
2.
Management Structure .......................................................................................................... 9
IX.
IMPELEMNTATION PLAN ................................................................................ 10
X.
FINANCIAL ANALYSIS ...................................................................................... 11
XI.
CONCLUSION ....................................................................................................... 11
XII.
APPENDICES ........................................................................................................ 12
1.
Financial Statements ......................................................................................................... 12
2.
Staff Headcount Timetable ................................................................................................... 14
3.
Cooperating Agencies ....................................................................................................... 15
4.
OUR NAME “CATERPILLAR TRAVEL” ................................................................... 16
5.
RISK FACTORS ............................................................................................................... 16
6.
TOUR DETAILS ............................................................................................................... 17

EXECUTIVE SUMMARY
Seeing that underprivileged youngsters have their opportunities deprived and Hong Kong has its beauty undiscovered, Caterpillar Travel pioneers to brighten the future of our pillars and demonstrate
Hong Kong’s latent beauty on the global arena.
With a capital requirement of HKD 140,000, in five years’ time, we will be able to sharpen the competitiveness of over 1,070 underprivileged youngsters, allow about 15,000 foreign visitors to gain insights into the veiled facets of Hong Kong and generate cumulative net revenue of over HKD
1,500,000 for the Hong Kong economy.
Over 300,000 youngsters in Hong Kong live in destitute families with monthly income of HKD
6,325 or below. These youngsters struggle through the acquisition of basic necessities daily, let alone gain access to enriching extra-curricular activities.
We pledge to help underprivileged youngsters (aged 10-16) cultivate their language proficiency, interpersonal skills and confidence. To achieve this, we would provide them with a three-month intensive training and opportunities to be Cultural Ambassadors in the tours that we offer.
While fostering a more comprehensive learning environment that aims to brighten the future of our target youngsters, Caterpillar Travel also aspires to reveal Hong Kong’s hidden beauty in the cultural, social and historical facets.
Caterpillar Travel aspires to CATER for our future PILLARS, thereby sustain the long-term robustness and prosperity of Hong Kong!
I.
THEORY OF CHANGE
1.
If impoverished youngsters are given opportunities to boost their competitiveness through cultural exposure and language enhancement, thereby attain self-confidence and positive attitudes towards life, their potential as pillars of society can be actualized.
2.
If local tours focusing on overlooked cultural and social facets of Hong Kong are introduced,
more visitors can unveil the hidden yet enchanting side of Hong Kong.
II.
VALUE PROPOSITION
Caterpillar Travel is an ideal platform that satisfies the needs of underprivileged youngsters by leveraging on the demand for Hong Kong cultural tours. By offering cultural exposure and learning opportunities, we endeavor to compensate for the current gulf in access to developmental opportunities between wealthy and underprivileged youngsters, simultaneously promote Hong Kong’s local tourism and the society as a whole.
III.
THE PROBLEM
In face of cut-throat competition in Hong Kong, human capital is an increasingly indispensable asset. Conceivably then, education and employment opportunities are largely reserved for well-rounded high achievers with both academic excellence and exceptional records in extracurricular activities (ECA). Since Hong
Kong is the city with the starkest wealth disparity given a 2010 Gini coefficient of 0.533
1
, underprivileged adolescents from low-income families are often denied access to such a category of well-rounded high achievers.
According to the Society for Community Organization (SoCO), there are currently over 300,000 youngsters (25% of total children population) living below the poverty line in Hong Kong.
2
According to a research report by SoCO, well above 80% of them are bereft of any opportunities to participate in extracurricular
1 Gini Coefficients by Country. Human Development Report 2010, The Real Wealth of Nations: Pathways to Human Development. United Nations Development
Programme.
2 香港社區組織協會 兒童權利關注會 貧窮兒童生活質素研究報告 24th July, 2011

activities.
3
Given such deprivation of developmental opportunities among underprivileged youngsters, the report has revealed that they share features of lack of confidence and low self-esteem. During such formative years, this can be destructive on their personal development and act as impediments towards their climbing along the society’s ladder in hopes of casting off poverty.
Youngsters are our society’s future pillars of success. Hong Kong cannot afford to lose this invaluable pool of human talents which lack opportunities due only to an impoverished background. Thus, the current situation urgently demands rectification.
IV.
BUSINESS MODEL DESCRIPTION
1.
Cultural Ambassadors: Caterpillar Travel offers a comprehensive learning experience for youngsters, aged 10-16, from low-income backgrounds. By recruiting them as Cultural Ambassadors of our local tours and providing trainings to them, we aim to cultivate in them the necessary acumen for success in both their education and future careers through our structured PILLAR workshop.
The PILLAR Workshop
Our creative and interactive pre-trip PILLAR workshop seeks to enhance our Cultural Ambassadors’ competitiveness through providing intensive training on 6 essential skills in Presentation, Interpersonal,
Leadership, Language, Analytical and Research. It will be organized into and delivered through 6 sessions of 2hour workshops over 3 weeks. Cultural Ambassadors will be divided into groups of 4-5 and be guided through a project to study one specific cultural attraction that they will be responsible for introducing during our walking tours. The learning schedule is as follows:
Session 1 Research – Balance use of multiple sources (library resources, research reports, documentaries, newspapers and the Internet) to gather information and stories behind the assigned sites
Session 2 Analyze – Filter, analyze, organize and interpret information and materials acquired
Session 3 Present – Learn from demonstration videos and avoid common presentation mistakes
Session 4 Present – Prepare presentations in groups under instructors’ guidance
Session 5 Present – Improve on presentations with feedbacks from instructors
Session 6 Present – Rehearse presentations which will be videotaped and evaluated
During the entire workshop experience, Cultural Ambassadors will be given abundant opportunities to learn to collaborate and communicate with their peers and take turns to assume leadership role in various tasks and thus, their interpersonal and leadership skills could be sharpened.
Aside from being the provider of our comprehensive PILLAR workshop, Caterpillar Travel would also be the platform where Cultural Ambassadors can put six skills that they have acquired into practical use.
Through direct contact with foreign visitors, our ambassadors would also be exposed to plentiful opportunities to practice conversational English and have their language and communication skills enhanced.
Upon completion of the workshop and before our Cultural Ambassadors could represent Caterpillar
Travel , we would provide them with an assessment which tests their language proficiency and presentation skills
3 香港社區組織協會 兒童權利關注會 貧窮兒童研究系列十二 : 貧窮家庭開學開支困難調查報告 15th August, 2010

in order for us to ensure tour quality. In the event that certain ambassadors are proved to be below standard, (i.e. unable to communicate effectively or present confidently to our participants), we would provide them with additional training.
2. Participants: As advocated in the list of “Top 10 Cities for 2012” published by the renowned travel guide book publisher – Lonely Planet, Hong Kong ranks the 8 th
most recommended tourists’ destinations for aside from renowned exotic attractions, we have a highly distinctive political, social and cultural ecology. To leverage on that, Caterpillar Travel targets exchange students who wish to gain a deeper insight into these facets of Hong
Kong by offering 2-3 hours’ long walking tours at a competitive price. We have already established partnership arrangements with the Office of Academic Links (i.e. Exchange Programme Office) at the Chinese University of
Hong Kong, one of the local universities that admit the largest number (i.e. over 1300 in 2011) of foreign exchange students each year. Demand for our offerings could therefore be safely maintained, thereby ensuring the viability, profitability and sustainability of our business. During our initial phase of business, we plan to introduce 3 tours per week at the weekend on Friday, Saturday and Sunday respectively. Each tour could accommodate 20 participants. As demand for our offerings increases from universities and individuals, the number of tours organized per week could then be expanded.
Caterpillar Travel is an unprecedented concept of local tours. The unique tour content and route packages are our main value to the customers while the interactive elements that we incorporate into each tour are what differentiate us from other travel agencies in additional to our social impacts and niche target market.
The followings are the current top 5 tour themes during our start-up phase, the breadth and depth of tours will be expanded as our business goes on.
1 West Kowloon: The Evolution of Hong Kong Private Housing Ownership
Detailed introductions on housing development in Yau Ma Tei, Jordan and Austin districts
Experience the characteristic wet market, fruit market and jade market in
Yau Ma Tei
Illustrate the stark contrast in wealth distribution
2 Sham Shui Po: The Life of Grassroots
Characteristic retail specialization areas: Apliu Street, Toy Street, Bead
Street and Cloth Street
Take a closer look at the poverty-stricken living conditions in the neighborhood
3 Kwun Tong: The Decline of an Industrial Era
Introduction on Hong Kong’s evolution from an industrial economy to a cosmopolitan IFC
Recap of the work and lives of factory workers during the industrial era
4 Wanchai: The History of Colorful Houses
Enchanting stories behind the blue, yellow, green and orange houses
The once heated controversy on the reconstruction of Lee Tung Street
5 Pok Fu Lam Estate – Old village in Hong Kong
History behind this one of the oldest villages in Hong Kong
Visit to the historical site of one of the major pasturelands in Hong Kong

To comply with legal licensing requirements of the Hong Kong Tourism Board, instead of establishing our own physical enterprise, we will be establishing a strategic alliance with a local travel agency which will have agreed to let us leverage on their travel agency license, shoulder for us our major source of costs: insurance.
However, we are still in full control of Caterpillar Travel ’s planning, operations and management. In return, due to our unique positioning as university students and our extensive connections with local universities, the travel agency can gain access to a niche, profitable and if not for us, a highly inaccessible market interested in route packages that it does not currently offer. Thus, such additional revenue that they could capture without incurring any cannibalization or much marginal operating or administrative costs provide them with a robust financial incentives to establish the strategic alliance with us. The Office of Academic Links would pay us on behalf of the participants (i.e. exchange students at CUHK) of our tours. From the fees that we receive from CUHK, we will then pay the travel agency back the agreed proportion.
Walking tours offered by us could be divided into 2 main parts: licensed local tour guides will provide historical, cultural and social background introductions of the district along the tour, while whenever the tour reaches specific sites of visit, Cultural Ambassadors will be given chances to present on the distinctive stories of the sites by integrating into the presentations their own fresh and local perspectives as well as the skills that they have acquired through the workshops that we organize. To supplement our ambassadors’ verbal presentations, we would also provide relevant materials such as videos clips or materials for the attempted production of small handicrafts to enhance participants’ involvement and deepen their understanding about the life of local people.
We will also foster active cultural exchanges between participants and ambassadors by requesting participants to present an interesting piece of information about the lifestyles, local traditions and taboos of their home countries at the end of each tour. Caterpillar Travel aspires to offer tours that are memorable for participants as well as invaluable and enriching for our ambassadors.
V.
SOCIAL IMPACT
The programme requires from our ambassadors a commitment of 4 hours per week with duration of 3 months. Eligible youngsters can join for free and they will be rewarded with food stuff as incentives for achieving an attendance of 90% or above.
We would like to initiate our business by partnering with schools in some the most destitute neighborhoods, to recruit youngsters. Presently, we have already established partnership channels with schools such as the Fresh Fish Traders’ School, Kowloon Technical School and the HKSYC & IA Wong Tai Shan
Memorial College.
By recruiting youngsters from underprivileged backgrounds who are most in need of the enrichment from participation in extra-curricular activities and providing them with professional training in vital skills for their future success, Caterpillar Travel aspires to bridge the inequality to access to developmental opportunities between relatively well-off and disadvantaged youngsters. By being the unprecedented platform where youngsters can have their potential fully unleashed, we also aspire to unveil the hidden beauty of the commonly neglected facets of Hong Kong, thereby rectify the common misconception among the global community that Hong Kong is nothing more than a
Food and Shoppers’ Paradise as well as promote the prosperity of Hong Kong’s tourism.

VI.
MARKET ANALYSIS
1.
Macro-environment Analysis: a.
Behind the prosperous masquerade hides the perils of income disparity…
When Hong Kong’s GDP per capita climbs to the new height of $45,900
4
in 2010, there is a batch of families who live with a mere $3,000
5
each month. Under a recent UN Development report,
Hong Kong ranked No. 1 amongst the World’s most developed economies for income inequality. It has the starkest wealth disparity given a 2010 Gini coefficient of 0.5333
6
. Over 1 million people are living in poverty. It is a colossal number given that Hong Kong is a wealthy society as portrayed by the remarkable GDP per capita of $45,900. b.
Deprived learning opportunities remains the root cause of social inequality…
Income disparity in Hong Kong has been increasingly intervening to social stability. What we witness nowadays is an approximation of 300,000 children (under the age of 18) is living under the poverty line, which is 26.7% of the total of 1,100,000 children
7
. A survey from Society of
Community Organization (SoCO) points out that among 115 children from the low-income family interviewed, near 40% of them cannot complete their homework due to the lack of resources, and the monthly median amount to pay for the extracurricular activities is only $10. The Boys’ and Girls’
Clubs Association of Hong Kong interviewed another 849 low-income students and highlighted that their confidence level are comparatively low. 29.3% of them even think that they are a failure. How do we fight income disparity when our future pillars are endowed with a disadvantaged learning environment? c.
Flipping over the page, the latent beauty of Hong Kong yet to be unleashed…
With over 100 years of colonial history and a largely Chinese population, Hong Kong has its incense-filled temples, colonial buildings and glass-and-steel skyscrapers living side by side along with its ancient traditions and lively festivals. These cultural and historical heritages are often not known by overseas travellers. It is not fair to deprive Hong Kong from the title of “The Pearl of the
Orient” before allowing her to unleash her latent beauty.
2.
SWOT Analysis:
We analyze both our supply market of Cultural Ambassadors and our demand market of tourists under the framework of SWOT analysis. a.
Caterpillar Travel’s cultural ambassadors
Strengths:
1.
Comprehensive understanding of the learning need of poor children
2.
Well-designed learning plan for cultural ambassadors
3.
Free-of-charge
Opportunities:
1.
NGOs’ policy supportive of the social enterprise with funding
2.
Widening of wealth gap – A great demand is created with the excessive gap
Weaknesses:
1.
Lack of work experience
Threats:
1.
Competitors from other institutions – endowed with more resources, they are equipped with better facilities
4
CIA World Factbook – GDP per capita (PPP)
5 Hong Kong Economic Journal, Dec 08, 2010
6
Gini coefficient by Country, Human Development Report 2010, The Real Wealth of Nations: Pathways to Human Development. United Nations Development Programme.
7
Oriental Daily News, Nov 09, 2011

b.
Caterpillar Travel’s Local Tours
Strengths:
1.
Management team with experienced
backpackers –exchange and travel experience
2.
Thorough understanding of Hong
Kong’s historical and cultural background
3.
Interactive elements of tours – let tourist experience and visualize Hong
Kong’s culture
4.
Understand foreign travellers’ needs through our exchange experience
5.
Social value of the tours - contribute to the well-being of the underprivileged youngsters
Opportunities:
1.
Travellers’ interests – Hong Kong with latent beauty to be discovered
2.
Exchange students’ interests -
Government and Universities’ objective creates demand
Weaknesses:
1.
Lack of resources - our tours are mainly walking tours, therefore not as comprehensive. It would be hard for us to target individual travellers at the start.
But we tackle this issue by partnering with Student Exchange Offices and travel agencies at our initial launch.
Threats:
1.
Competitors’ imitation
3.
Segmentation, Targeting and Positioning:
Target Cultural Ambassadors
Age: below 10
High-income
Wanchai Tin Shui Wai
Age: 10-16
Low Income
Age: above 16
Shum Shui Po
On the supply side of the market, it is first segmented based on age. We target teenagers aged between 10 and 16 who are at their formative years and to prepare them for the upcoming public exams. Then, we segment the market by children’s family income. Caterpillar Travel targets at lowincome families as it is unfair for youngsters to be disadvantaged due to the lack of opportunities.
We hope to change the current situation and offer our services to youngsters from low-income family.
Lastly, the market is segmented based on districts. There are districts in Hong Kong that have particularly large proportion of low-income family
8
. We first target at Sham Shui Po as it is located in the city centre with convenient transportation. We plan to expand to other districts after five years of business running.
On our demand side, we segment our target customers into overseas travellers and local dwellers so as to tailor-planned our tours according to their cultural background.
Packaged tours
Target Caterpillar Travel Participants
Overseas travellers Local dwellers
Backpackers
Exchange students
Business
Visitors
Elderly
Working adults
Families Teenagers
Within overseas travellers, we further segment the market by the travellers’ visiting purpose.
Travellers who come to Hong Kong through joining packaged tours are more interested in visiting
8
18 區貧富懸殊擴大 灣仔最富 深水埗觀塘最窮 明報 2011 年 4 月 1 日

the renowned sighting-seeing spots. Business visitors are also less likely to be interested in our tours as their schedules are usually tight. Caterpillar Travel therefore targets backpackers, who are more likely to be interested in exploring the cultural and historical aspects of Hong Kong and exchange students, who come here for the sake of experiencing Hong Kong. In our initial launch stage, we will focus our efforts in promoting our tours to exchange students through partnering with Universities.
4.
Competitors’ Analysis:
Caterpillar Travel ’s business model is new, thus we have no competitor who is doing exactly the same thing. However, if we dissect our business model, we do have some competitors. a.
Cultural Ambassadors
Caterpillar Travel offers learning opportunities to underprivileged youngsters. For direct competitor in the supply side, we have community centres and NGOs at affordable prices. However, they usually have very limited admission quota and lack continuity due to resource limitation. We differentiate by having a highly sustainable learning process as supported by our robust revenue model. Also, our company enjoys a price advantage as our programme is free-of-charge to eligible youngsters. It is certain that Caterpillar Travel is in an advantageous position. b.
Local Tours
Caterpillar Travel emphasizes its interactive way to showcase Hong Kong’s cultural and historical beauty, which is something new to the market. We currently have only one direct competitor, Secret Tour Hong Kong, which aim at showing people the secret side by Hong Kong.
However, its tour is less frequent with only 10 tours last year. Caterpillar Travel differentiates itself by not only offering more tours to suit participants’ schedule but tying itself to unique themes.
For indirect competitors, there are a lot of local tours organized by different organizations.
Unlike these tours which bring travellers to common sight-seeing spots, Caterpillar Travel aims to refresh travellers with a deeper understanding of Hong Kong’s latent beauty. Also, Caterpillar Travel is competitively priced compared with these tours.
Our prime differentiation from both our direct and indirect competitors is our social value.
While refreshing yourself with a relaxing and insightful tour, you refresh the underprivileged youngsters’ lives with opportunities and hope.
VII.
MARKETING
1.
Promotion Strategy - Cultural Ambassador Recruitment
Caterpillar Travel plans to recruit underprivileged youngsters primarily by connecting with and promoting to clubs and societies in partner schools. We have contacted teachers in charge of extra-curricular activities in three schools, namely, Fresh Fish Traders’ School, Kowloon Technical School and the HKSYC &
IA Wong Tai Shan Memorial College and they have indicated interests in our service. We will be providing more details to them in due course to facilitate cooperation.
Caterpillar Travel would also target youngsters studying in non-partner schools by setting up temporary stall counters and distributing handbills in the most destitute districts. Our marketing campaign aims to achieve popularity among schools, students and parents in the designated districts.
2.
Promotion Strategy - Marketing to tourists
To promote the new tour concept of exploring the hidden side of Hong Kong, we will leverage on social media, like Facebook and Twitter, to approach tourists from all over the world. Individual tourists will be able to apply through email or telephone at our expansion stage. We will also leverage on the international coverage of
GROUPON to offer cheaper trail tour to first-time participants.

The demand from individual participants cannot be easily forecasted in the early stage. Therefore, to ensure a stable source of participants, Caterpillar Travel has established strong link with the Office of Academic Links at the CUHK. With around 1300 inbound exchange students per year, we would be able to conduct our initial launch mainly targeting at the group. We will work on cooperation with Student Exchange Offices in other
Hong Kong tertiary institutions to gain on-campus awareness, thereby broadening our reach to over 4000 foreign students. This can guarantee a sufficient and recurrent pool of accessible target customers, supporting the start-up phase of Caterpillar Travel .
3.
Pricing Strategy
Caterpillar Travel will start the operations by providing tours to CUHK exchange students through a packaged pricing based on number of participants recruited. The overall price for each participant would be around HKD100, including transportation connecting CUHK and the tour destination.
On the other hand, Caterpillar Travel ’s future pricing strategy for individual participants is to accept cash payment at the beginning of the tour. A standard price of HKD66 will be introduced in the hard launch. The number “6” has similar pronunciation as “look” in Cantonese and “wandering around” in Putonghua. It will be the first piece of fun facts of Chinese culture we bring to the participants. This pricing will also allow us to enjoy a significant price advantage over our competitors. We are also evaluating the possibility of a referral discount to increase the popularity of
Caterpillar Travel through word of mouth.
VIII.
MANAGEMENT TEAM & STAFF RESOURCE REQUIREMENTS
1.
Management Team
The five founding members are passionate students completing our bachelor degrees majoring in Global
Business Studies, Professional Accountancy and Integrated Business Administration at the Chinese University of Hong Kong, where three of us earned membership in the Beta Gamma Sigma business honor society and have participated in the University’s Exchange Programme.
Our management team consists of experienced backpackers and trip planners, what we treasure the most in our round-the-globe travelling experiences is the interaction with local people and the social inspirations from each unique city. Our views are echoed by our travel companions who come from diverse cultural backgrounds.
Therefore, with our experiences and expertise, we are confident to plan and organize the local tours with unique tour content. We blend in our passion to lighten up the underprivileged youngsters’ future to make it even more meaningful for both us and the tourists.
Throughout our study, we are trained to conduct all kind of research and presentation. After practicing our training skills in community services and attending courses to learn about interactive teaching style. We are wellequipped with the skills necessary to provide the training workshops to the underprivileged youngster.
2.
Management Structure
Caterpillar Travel will begin operations with an initial management team of five founding members. These founding members with comprise the management committee until future employees are added, and will be accountable for all decisions relating to the operation of the enterprise.
Caterpillar Travel will also have an Advisory Board consisting of business executives with a combination of significant entrepreneurial experience, experience in the tourist and education industry, and extensive contact with industry members, institutional investors and venture-backed companies. The purpose of the Advisory Board will be to provide unbiased advice and guidance to
Caterpillar Travel ’s management team, to continually evaluate the firm’s business plan, and to assist in early business development efforts on behalf of the firm.

Given the social element of Caterpillar Travel , a number of university students respond very positively to our business and has volunteered to help with our operations. To facilitate the initial operations, we have currently recruited 5 volunteers to help with the training workshops and managing the tours.
The initial founders and volunteers will perform all business functions during first stages of the firm’s implementation plan (Pre-launch), after the alliance with licensed travel agency is form before the second stage (Initial Launch), tour-related operations will be shared among the two parties.
Caterpillar Travel will retain the tour design and guiding portion, while leaving transportation and administration to our strategic partner, given their competitive advantage in such areas.
We aim to obtain the travel agent license from TAR and register for affiliate membership of
TIC at the end of year 3. Then we enter the expansion stage running our business independently without partnership with travel agencies. We will open up our tours to individual participants and start offering tours to all universities. There will be a significant increase in tour frequency and the number of Cultural Ambassadors recruited. Therefore, Caterpillar Travel will hire one additional staff for general administrative support.
The organizational design is a flat structure in order to encourage greater collaboration, transparency, and cross-functionality within the management team. One founding member, Eileen
Yue, will be the CEO while the rest will be directly responsible for different functional areas relating to core operations.
Key functions supporting the CEO are Tours and Operations (design and manage tour routes) ,
Business Development (developing channel and partnership relationships with schools and universities and establish and maintain business partnerships with travel agencies and other Tourist industry members), Marketing (responsible for market research and testing, marketing strategy implementation), People Development (responsible for training and development of Cultural
Ambassadors) and Finance Given core organizational competencies, Business Development and
Finance are the most closely accountable to the CEO.
IX.
IMPELEMNTATION PLAN
Caterpillar Travel will implement its initial operations in three phases:
0 6 12 18
Month#
24 Tasks
Stage 1 - Pre-launch
Establish Partnership with OAL, CUHK
Market Research
Complete Workshop Syllabus
Complete 5 Tour Route and Content
Establish Advisory Board
Establish Partnership with 1School
Establish Partnership with travel agency
Basic Corporate Functions
Tour Tryout
Prepare PromotionalMaterials
First Student Recruitment
Stage 2 - Initial Launch
Start offering tours to CUHK
Start running PILLAR Workshop
Establish cooperation with 3 other universities
Start offering tours to 3 other universities
Complete 10 Tour Routes
Open Office
Register for Affilitate Membership of TIC
Obtain Travel Agent License from TAR
250 tours held
375 cultural ambassadors graduated
Stage 3 - Expansion
Open up tours to individual participants
Start offering tours to all universities
Complete 15 Tour Routes
Expand to Tin Shui Wai District
450 tours held
30 36 42 48

X.
FINANCIAL ANALYSIS
Aside from bringing social impact, Caterpillar Travel also achieve as a viable business as seen from the Net Present Value Analysis (refer to Appendix). Like other private companies, we expect to suffer from loss in the first 2 years. Positive return will be recorded from the 3 rd
year onwards and an accumulated turnover of near HKD 2,000,000 over the 5 years is estimated. A positive NPV indicates that there is net discounted case inflow.
Though tour fee will be the only source of income, it is certain and substantial enough to support the business. An initial agreement has been reached with the OAL of CUHK that Caterpillar
Travel will be the sole subcontractor on providing local walking tour for exchange students while a tour fee of HKD 200 per head. Annually, there are around 5,000 exchange students in Hong Kong in which CUHK accounts for 1,300. The turnover will increase to more than HKD 200,000 when agreement with other universities is reached in the 2 nd
year.
Caterpillar will be in contract with a travel agency for the first 3 years at a compromised amount.
Once being licensed in the 4th year, Caterpillar can provide tour service on its own and the contract will be ceased. Turnover will see a rise of 40% when individual travellers are also included as our target at a fee of HKD66. Hong Kong welcomed 36 million tourists in 2011, an increase of 20% from prior year. We expect this growth will persist and individual travellers will account for more and more of the revenue.
Caterpillar Travel will be financed by equity by issuing 100,000 common stocks at par value i.e.
HKD1. A total of HKD 100,000 capital raised in the 1 st
year will be used for initial investment and maintaining liquidity in the beginning stage when there is net loss. Dividend will be given in Year 4 and 5 when there is positive return. The return is summarized as below.
Year 1 Year 2 Year 3
Turnover
Net Profit(After-tax)
76,000
(68,043)
0.0%
240,000
(8,640)
0.0%
400,000
53,440
13.4% Profit Margin
ROE
Dividend
-
-
-
-
61%
-
Year 4
494,472
89,656
18.1%
62%
50,000
Year 5
620,796
157,532
25.4%
68%
50,000
Obviously, Caterpillar Travel will turn into a viable business if it is provided with sufficient capital in the initial stage. Once it can set up, it should be able to exert social impact and bring return to investors continuously.
XI.
CONCLUSION
Caterpillar Travel aims to achieve two missions, both unveiling the often overlooked cultural, social and historical elements of Hong Kong to foreigners and opening developmental and learning opportunities to underprivileged youngsters. We encourage social contribution with our unique and interactive tours and we bring to visitors a fresh new experience of Hong Kong.
After 3 months of intensive training and extensive cultural exposure, we are confident that
Cultural Ambassadors will gain the confidence, language proficiency, interpersonal skills and cultural sensitivity necessary for success both academically and socially in the context of today’s globalized and dynamic environment. We CATER for our future PILLARS!

XII.
APPENDICES
1.
Financial Statements
NPV
Net Present Value Analysis of Caterpillars Travel in the first 5 years
Initial Investment
Machinery & equipment
Furniture & fixtures
Working capital
Cash Inflow
Fee Revenue
Cash Outflow
Contract fee
Souvenirs
Salary: Tour guide
Salary:Adminstrative Staff
Insurance
Office Rent
Transportation Subsidy
Incentive: Food Stuff
Advertising
Telephone and Internet Bill
Utility Bill
Incorporation fee
Miscellaneous
Office Supplies Expense
Dividend
Profit Tax at 16.5%
Total Cash Outflow
Net Cash Flow
Year 3 Year 4
(20,000)
(5,000)
(75,000)
76,000 240,000 400,000 494,472
75,000
620,796
60,000 160,000 240,000 - -
760
-
62,400
-
2,400
-
-
4,000
-
-
4,800
66,560 70,720 72,800
33,540
6,800
144,000 156,000
76,960
47,515
8,000
285
8,800
450
9,680 120,000 132,000
750 900 1,275
798
1,000
2,400
1,500
630
1,000
2,400
1,500
1,050
1,000
2,400
1,500
1,260
1,000
2,400
1,500
1,785
1,000
2,400
1,500
2,000
2,000
400
-
-
-
2,000
400
-
-
-
2,000
400
-
2,000
400
- 50,000
10,560 17,716
-
2,000
400
50,000
31,129
141,543 246,140 344,060 452,316 510,764
(100,000) (65,543) (6,140) 55,940 42,156
1,226
Discount Rate 5%
110,032
Projected Balance Sheet
Current Asset
Cash
Non-current Asset
Machinery & equipment
Furniture & fixtures
Total Asset
Current Liabilities
Stockholders' Equity
Capital Stock
Retained earnings/Deficit
Total Stockholders' Equity
Total Liabilities and
Stockholders' Equity
9,457
18,000
4,500
31,957
-
100,000
(68,043)
31,957
31,957
3,317
16,000
4,000
23,317
-
100,000
(76,683)
23,317
23,317
69,817
14,000
3,500
87,317
-
100,000
(12,683)
87,317
87,317
129,689
12,000
3,000
144,689
-
100,000
44,689
144,689
144,689
220,850
10,000
2,500
233,350
-
100,000
133,350
233,350
233,350

Turnover
Operating Expenses
Contract fee
Souvenirs
Salary: Tour guide
Salary:Adminstrative Staff
Insurance
Office Rent
Transportation Subsidy
Incentive: Food Stuff
Advertising
Telephone and Internet Bill
Office Supplies Expense
Utility Bill
Incorporation fee
Miscellaneous
Depreciation: Machine and
Equipment
Depreciation: Furniture
Total Operating Expense
Gross Profit/Loss
Non Operating Income
Non Operating Expense
EBIT
Profit tax at 16.5%
Net Profit
(Note)
1
2
5
6
3
4
8
9
7
Projected Income Statement
Year 1
76,000
Year 2
240,000
8,000
285
798
1,000
2,400
400
1,500
2,000
2,000
60,000
760
-
62,400
-
2,000
500
144,043
(68,043)
-
-
(68,043)
-
(68,043)
160,000
2,400
-
66,560
-
8,800
450
630
1,000
2,400
400
1,500
-
2,000
2,000
500
248,640
(8,640)
-
-
(8,640)
-
(8,640)
Year 3
400,000
240,000
4,000
-
70,720
-
9,680
750
1,050
1,000
2,400
400
1,500
-
2,000
2,000
500
336,000
64,000
-
-
64,000
10,560
53,440
Year 4
494,472
-
4,800
144,000
72,800
33,540
120,000
900
1,260
1,000
2,400
400
1,500
-
2,000
2,000
500
387,100
107,372
-
-
107,372
17,716
89,656
Year 5
620,796
-
6,800
156,000
76,960
47,515
132,000
1,275
1,785
1,000
2,400
400
1,500
-
2,000
2,000
500
432,135
188,661
-
-
188,661
31,129
157,532
Estimated number of tourists Year 1 Year 2 Year 3 Year 4 Year 5
Exchange students from CU
Exchange students from other universities
Participation rate
No. of students
Visitors to Hong Kong
Participation rate
No. of visitors joining
600
-
Total est. number of tourists who are interested in 420
1,300
2,000
1,300
2,000
1,300
2,000
1,300
2,000
600
70%
3,300
72%
3,300
74%
3,300
76%
3,300
78%
420 2,376 2,442 2,508 2,574
36,000,000 43,200,000 51,840,000 62,208,000 74,649,600
0%
-
0.001% 0.005% 0.006% 0.007%
- - 3,732 5,225
2,376 2,442 6,240 7,799
No. of Student Benefited per quarter
Total number of tours a year
Number of tours a quarter
No. students per trip required
Total number students required per quarter
Number of tours a student can join
Total student benefited per quarter
Total student benefited per year
Year 1 Year 2 Year 3 Year 4 Year 5
38 60 100 120 170
19
6
114
4
29
15
6
90
4
23
25
6
150
4
38
30
6
180
4
45
43
6
255
4
64
57 90 150 180 255

1. Turnover Yr1 Yr2 Yr3 Yr4 Yr5
2. Souvenirs Yr1 Yr2 Yr3 Yr4 Yr5
No. of tours per year
Fee charged to University per student
38
No. of tourists per trip 10
No. of tourists can be served 380
200
Fee charged to individuals
No. of university students
No. of individual travellers
Revenue from universities
Revenue from individuals
Total Turnover
60
20
1,200
200
100
20
2,000
200
120
20
2,400
200
170
20
3,400
220
No of tourists can be served
Cost per souvenirs
Total cost for souvenirs
380 1,200 2,000 2,400
2 2 2 2
760 2,400 4,000 4,800
3,400
2
6,800
- - - 66 66
3. Transportation Subsidy Yr1 Yr2 Yr3 Yr4 Yr5
380 1,200 2,000 2,508 2,574
- - (108) 826
76,000 240,000 400,000 501,600 566,280
Total no. of places for students per year
- - - (7,128) 54,516
Amount of subsidy per student
57
5
90 150 180
5 5 5
255
5
76,000 240,000 400,000 494,472 620,796 Total Subsidy 285 450 750 900 1,275
4. Salary of Adminstrative Staff
Yr1 Yr2 Yr3 Yr4 Yr5
No of Adminstrative Staff
No. of working hour a week
No. of working hour a year
Toal no. of working hour in a year
Hourly rate
4
10
520
4
10
4
10
4
10
520 520 520
4
10
520
2,080 2,080 2,080 2,080 2,080
30 32 34 35 37
Total Annual Salary for Admin Staff
62,400 66,560 70,720 72,800 76,960
5. Insurance
Total No. of persons
Insurance cost per person
Insurance cost
Yr1 Yr2 Yr3 Yr4 Yr5
- - -
2,580
13
3,655
13
33,540 47,515
6. Canned food Yr1 Yr2 Yr3 Yr4 Yr5 7. Depreciation: M&E Yr1 Yr2 Yr3 Yr4 Yr5
No of students per quarter
No. of canned food required
Cost per canned food
Total cost for canned food
29 23
No of Student per year 114 90
Est % of student fulfilling attendance requirement 1 1
No of students fulfilling the attendance requirement 80 63
38 45 64
Cost
150 180 255
1 1 1
105 126 179
St-line depreciation over 10 years
105 126 179 80 63
10 10 10 10 10
798 630 1,050 1,260 1,785
20,00
0
20,00
0
20,00
0
20,00
0
20,00
0
4,000 4,000 4,000 4,000 4,000
8. Depreciation: Furniture
Cost
Yr1
5,000
Yr2
5,000
Yr3
5,000
Yr4
5,000
Yr5
5,000
St-line depreciation over 10 years 1,000 1,000 1,000 1,000 1,000
Operating Activities
Net Profit (Loss)
Depreciation Expense
Net Cash used in Operating Activities
Investing Activities
Purchase of equipment
Purchase of Furniture & fixtures
Cash used by investing activities
Financing Activities
Grants and subsidy received
Net Cash Provided (Used)
Beginning cash
Ending cash
Projected Cash Flow Statement
31 DEC of Yr 1 31 DEC of Yr 2 31 DEC of Yr 3 31 DEC of Yr 4 31 DEC of Yr 5
(68,043)
2,500
(65,543)
(8,640)
2,500
(6,140)
64,000
2,500
66,500
107,372
2,500
109,872
188,661
2,500
191,161
(20,000)
(5,000)
(25,000)
100,000
9,457
-
9,457
-
-
-
-
(6,140)
9,457
3,317
-
-
-
-
66,500
3,317
69,817
-
-
-
-
109,872
69,817
129,689
-
-
-
-
191,161
129,689
220,850

2.
Staff Headcount Timetable
Pre-launch Initial Launch Expansion
CEO
Managing Directors
Volunteers
Office Manager
1
4
0
-
1
4
5
-
1
4
10
Full-time
3.
Cooperating Agencies a.
The Office of Academic Links, the Chinese University of Hong Kong
The Office of Academic Links (OAL) serves as the international relations arms for The Chinese University of
Hong Kong (CUHK). Within CUHK, it works with academic units to build partnership programmes to strengthen the
University's teaching and research. Outside CUHK, it promotes the University overseas and forges ties with universities, research institutes, government organizations and funding agencies abroad.
Some of the more specific activities the OAL engages include:
1.
Establishing student exchange programmes - these include university-wide programmes as well as programmes that are college, faculty, programme specific.
2.
Receiving international visitors and delegations.
3.
Coordinating high level CUHK outreach delegations.
4.
Coordinating and promoting scholarship and fellowship opportunities for research students and faculty members.
5.
Ensuring that new partnerships and programmes with institutions abroad meet with the
University protocol.
6.
Representing CUHK at a number of associations and engaging the CUHK community in the activities of those associations.
Assisting members of CUHK and overseas universities to identify common areas of interest in teaching and research and providing advice in realizing joint research, teaching and other academic activities. b.
Potential Travelling Agency - HYFCO Travel Agency Limited
HYFCO Travel Agency Limited, a member of the Hong Kong Ferry Group, was established in
1983 and has branches in Hong Kong Island, Kowloon, New Territories and Macau. Throughout the years, they have provided comprehensive travel service to their customers. With the aim to provide quality service, HYFCO Travel plans tours with rich itineraries and selects accommodation and transportation carefully. Experienced tour guides are also appointed to ensure customers satisfaction. c.
Potential Partner’s school
Our company has already approached several schools and they definitely show interest in joining our programme.
Fresh Fish Traders’ School is a co-educational government aided primary school in Yau Tsim &

Mong Kok District. It has a student population of 300 and all of these students come from poor families. A lot of students lag behind in their English education because most of them are immigrants from Mainland where English is not a focus of the curriculum.
Kowloon Technical School is a government secondary school located in Sham Shui Po. Its motto is Thorough.
HKSYC & IA Wong Tai Shan Memorial College is a government aided secondary school in
Sham Shui Po
4.
OUR NAME “CATERPILLAR TRAVEL”
Caterpillar: The wormlike larva of a butterfly or moth
Caterpillar: CATER for our future PILLARS
Metaphorical Meaning
Children are our society’s future pillars of success. As an advanced, competitive and affluent society, Hong Kong cannot afford to be denied access to this potentially invaluable pool of human capital which lack developmental opportunities due only to an impoverished background.
Caterpillar Travel is an ideal platform that could compensate for the current gulf in access to developmental opportunities between wealthy and underprivileged children, thereby promote the healthy and balanced development of both underprivileged children and the Hong Kong society as a whole.
In the midst of the hectic pace of life in Hong Kong, foreign visitors and local city dwellers alike seldom enjoy the leisure to ponder over the cultural, social and historical facets of Hong
Kong. Caterpillar Travel offers a revolutionized way to experience Hong Kong. Participants of our tours will be introduced to a series of guided tours at a relaxed pace which offer profound insights into the evolutionary path of Hong Kong from a negligible fishing village to a cosmopolitan international financial centre and its distinctive cultural and social phenomenon. So, why hesitate? Start today and tour slowly, like caterpillars!
5.
RISK FACTORS a.
Macroeconomic Impact
In the event of macroeconomic decline globally, capital investment by private equity firms and other institutional investors could slow significantly in such a scenario, fewer firms would be able to obtain financing and Caterpillar Travel would face larger business risk in the gathering of initial capital. We seek to mitigate this risk by starting-up from a small scale tour operator focusing on the niche market before excessive capital is required in expansion. b.
Lack of Customer Acceptance/ Market opportunity is not larger enough
The company could find that the tourists do not value the service, mainly the tour content presented by the Cultural Ambassadors, thus reducing the “market multiplier” effect that we depends on for future growth and expansion. In addition, the company may discover that either the market opportunity is not large enough to support aggressive expansion, or that the target individual participants do not have enough purchasing power to pay for the tour repeatedly.
Caterpillar Travel seeks to mitigate this risk by establishing tour revenue milestones in advance of launching the business, therefore providing objective measures as to if the business continuity. c.
Competitive Response

If Caterpillar Travel is successful with this business, large travel agencies could enter the market, providing the formidable challenge to the company in term of resources. We will seek to mitigate this risk by establishing strategic partners with significant players in the tourist industry in order to achieve first-mover advantage in terms of brand equity. The firm will also use it social enterprise nature as a competitive advantage to create barriers to entry to other competitors. d.
Recruitment of Cultural Ambassador - Stigmatization
Caterpillar Travel may find it difficult in terms of the accurate recruitment of designated cultural ambassador with their low-income family background. Over-emphasis might lead to undesired stigmatization effect to the Cultural Ambassador, thus affecting the recruitment process. Caterpillar
Travel will not set a concrete requirement on the family background of eligible students, but will run the recruitment in the designated districts to achieve the goal of reaching underprivileged youngsters
6.
TOUR DETAILS
1 West Kowloon: The Evolution of Hong Kong Private Housing Ownership
Introductions on housing development in Yau Ma Tei,
Jordan and Austin districts
Experience the characteristic wet market, fruit market and jade market in Yau Ma Tei:
Hong Kong has long been hailed as the Shoppers’ Paradise, but instead of the established shopping malls frequented by tourists, we are going to unveil the side that more closely conforms to the daily lives of local people by guiding our participants through the wet market, fruit market and jade market in the West Kowloon district.
2 Sham Shui Po: The Life of Grassroots
Retail specialization areas: Apliu Street, Toy Street, Bead Street and Cloth Street:
Take a closer look at the poverty-stricken living conditions in the neighborhood
Sham Shui Po is a highly fascinating district in that though no posh, extravagant shopping centres is present in that area, it could be regarded as the paradise of local shoppers! The district is scattered with markets and store clusters specialized in selling one single product such as computer and electronic products, toys and comic products, beads, cloth, etc., which is a unique economic and social phenomenon in Hong Kong and could be an eye-opening experience for our participants.
Interactive elements that may be inculcated into our walking tours in Sham Shui Po include allowing our participants to attempt producing a small, delicate and beautiful handicraft using extremely simple materials: a thin string and some coloured beads.
3 Kwun Tong: The Decline of an Industrial Era
Witness Hong Kong’s evolution from an industrial economy to a cosmopolitan IFC
Recap of factory workers’ lives during the industrial era