Business Proposal: Formula1 Milk Products
Executive Summary
Formula1 Milk Products is a company that produces infant milk powder formula made in United
States, and sells it to China through our online store. Baby milk powder is highly demanded in
China because there are news regarding the unsafe and artificial milk powder. These artificial
milk powder contain a substance called Melamine, a substance harmful to infants. Our goal with
starting this company is to produce a safe and nutritious formula and send it to China, so babies
do not have to suffer through circumstances outside of their control. We want our products to be
affordable, but worth their quality. We also want to make the consumers’ experience buying our
product to be easy and stress-free. Therefore, the idea of selling it to China will be effective
because it is high in demand.
Business Description
Formula1 Products is a producer of a healthy baby formula and sells high-grade baby milk
powder to China. According to BBC news, there were several infants died of kidney damage and
kidney stones after consuming milk in China that contains Melamine (“China Dairy…”).
Melamine is a type of chemical substance that is high in nitrogen and is sometimes added in food
product to increase the protein content by manufacturers illegally. Worried parents will try their
best to buy imported milk from overseas such as US, UK and Australia. This is because the milk
from these countries go through high grading standards. For example, every agricultural products
are graded and will need to satisfy requirements by the USDA. USDA quality standards are
based on measurable attributes that describe the safety and utility of the product. Our product
brand name will be Formula 1 Milk Powder. Formula 1 Milk powder is organic, high in protein
and vitamin, and can increase babies’ immune system towards bacteria. It is also rich in DHA for
brain development and Lutein to support eye health. Chinese parents tend to trust imported milk
more because of the high grading standards. Our Formula 1 milk powders are available for
different ages. There are as follows, Birth-12 months, 12-24 months and 4-10 years. Each
product comes in two sizes which are 16 ounces and 32 ounces. The customer can order them
online from our website. After placing an order, we will pack it and ship it over to China to their
doorstep. We will also provide free shipping and return if it is not satisfying. Moreover, we will
be selling them in Trader Joe’s and Whole Food in the United States.
Marketing Strategies
This business mainly focuses on the parents as they will be the one who decide on the milk
powder brand for their babies. The parents will look for milk powder online from overseas. We
will be aiming on middle class and above customers because we will definitely charge a higher
price compared to local milk powder. The customers will spread the word and promote our
product by introducing to their family, friends, neighbors and others. Word spreading in Asia is
one of the best way to promote the product as it is a culture that if the product is good, everyone
will want to try it. We will email them with a review form to fill up online after they use the
product. The reviews will be shown on the website so that other customers get a chance to read it
before purchasing it. Other than that, we will come up with a live forum for the customer if they
have any questions. The live forum will be available in English and Mandarin for the
convenience of Chinese customers.
Competitive Analysis
Chinese parents will try their best to get better milk powder for their children from overseas such
as Hong Kong, Unites States, Germany, United Kingdom and many more. According to New
York Times, “Rushing shelves at a supermarket in Germany, Chinese shoppers stuffed a half-
dozen large cans into bags” (Wong 1). Chinese tourists will try to buy as much as they do fit into
their luggage. Some of the tourists buy them for their own use whereas some buy them to resell it
in China. The resale value of the baby milk powder could be twice the price they bought
overseas. Allowing them to buy it online and get it shipped over to China is a better way for
them to buy baby milk powder.
Design and Development Plan
Some Chinese would even try to smuggle baby milk powder as there are limitation to the amount
can be purchased in overseas. For example, “Big retail chains like Boots and Sainsbury’s in
Britain now limit individuals to two cans of infant formula per purchase, and customs officials in
Hong Kong are enforcing a two-can, or four-pound, restriction on travelers taking it out of the
territory — with violators facing fines of up to $6,500 and two years in prison” (Wong 1).
Therefore, it is shown that baby milk powder from overseas are highly demanded in China which
result into good business by selling legally online. Our company reduces the need for smuggling
because, we ship directly to homes and apartments. Moreover, if the business online is doing
well, we could franchise our product to Walmart in China in order for them to have access right
away. It will be more convenient for Chinese customer to buy them first hand instead of buying
them online. Baby formula sells better when sold in a hypermarket like Walmart (Ken Research).
A long term goal is to purchase a warehouse in China so that we can ship our products more
efficiently at the international level.
Operations and management plan
We will deliver our product by shipping it over to China by courier service for the time being.
Our company will need to hire employees for the packaging and sending them to the post office.
A lot of production is dependent on an assembly line of machines. The primary machines we
need for production are a wet mixing plant, an evaporator, a spray dryer, and a CIP plant for
cleaning equipment (Sørensen). Our company will need to have an employee responsible for
supervising the assembly process. In addition, our company will provide a couple of English and
Mandarin forum moderators on the website if the customers have any questions and enquiries.
Financial Factors
Our company will need to sign up for the courier service that we will use for shipping. The
shipping fees will be included in our company’s expenses. Since our company is a
manufacturing company, we need to buy raw materials to be manufactured into our final
products, baby powder and nutrition shake mix. Since we already have a tested formula, we can
use our retained earnings to fund research, development, and testing for new products. The
website and store have already been premade because we already have a web designer as
potential staff for our company. We will sell the milk powder for a higher price than local milk
powder because we uses organic nutrients, and shipping price is included into the original price.
The demand is great in China for a quality milk product, so newborn children can live and thrive
without issues with the food they eat. The Chinese customers are willing to pay for expensive
milk powder from overseas for the sake of their babies’ health.
Work Cited
Ken Research. “China Baby Food and Infant Formula Market Research Outlook to 2016.” Rep.
AM Mindpower Solutions, May 2012. Web. 05 May 2015.
“China Dairy Products Found Tainted with Melamine - BBC News.” BBC News. BBC, 9 July
2010. Web. 10 May 2015.
Sørensen, Ib H., and Erik Jørgensen. “Production of Powdered Baby Food.”Niroinc.com. GEA
Process Engineering, Apr. 1992. Web. 06 May 2015.
Wong, Edward. “Chinese Search for Infant Formula Goes Global.” The New York Times. The
New York Times, 25 July 2013. Web. 12 Apr. 2015.