Investment and Analysis For the Budget Required For Coffee Shop

Question: Discuss about the Investment and Analysis For the Budget Required For Setting Up the Coffee Shop in New Zealand. Answer: Introduction This report reflects the details and investment appraisal strategies to evaluate the amount of expenditure, investment and analysis for the budget required for setting up the coffee shop in New Zealand. It is further observed that if entrepreneur wants to set up a coffee shop in New Zealand then it will require investment approximately NZ$ 4,50,000. Investment project and aspects of investment projects With the increasing ramification of economic changes and increasing growth of coffee business in New Zealand, it is evaluated that if a businessman wants to set up a new coffee business in New Zealand then he has to make arrangement of finance. However, estimation of approximately NZ$ 4, 50,000 investment is required for setting up new coffee business. In setting up new coffee business in New Zealand, it will cost around NZ$ 4, 50,000 amount. It is observed that company has to raise capital from internal and external sources such as own funding, issues of shares and debenture in market and using retained earnings (Gotze, Northcott Schuster, 2016). Capital and revenue expenditure requirement Details Cost (NZ$) Infrastructure 1,00,000 Sales team hired= Employees salary= 1K* 13 employees=13K Human resources investment= 7K Managers salary= 5k*2 =10K 50,000 Value chain expense 1,50,000 Investment plan 50,000 Legal department expenses 25,000 Tender filling cost 1,00,000 Licensing cost 50,000 Hired space 25,000 Project cost escalation 25,000 Total required cost 5,50,000 (Alkaraan, 2017). This details shows that in order to set up new coffee shop business in New Zealand businessmen will have to bear cost around NZ$ 5, 50,000. Investment details related to raw material It is evaluated that innovative steps in this new coffee business could take the entrepreneur on big level. It is considered that if entrepreneur who have set up business in New Zealand, has to make investment to buy best quality of raw material such as high quality sugar, coffee beans, and lengthy process to beat the coffee and using different flavor to change the taste of coffee. However, people in New Zealand are more inclined towards buying high quality of coffee irrespective of the price charged for the same. Therefore, management department of new coffee business in New Zealand should focus on buying best raw material in value chain activities (Dyson, Berry, 2014). Cash for operation In order to establish new coffee business in New Zealand, entrepreneur would be in need of arranging NZ$ 5, 50,000. However, the main risk involved in arrangement of cash for this business is related to overburden of cost of capital. If entrepreneur failed to have return on capital employed more than its cost of capital then it will result into loss to the value of capital invested in business (Dyson, Berry, 2014). Profitability of investment After evaluating the coffee business market in New Zealand, it is evaluated that Coffee business has high growth in New Zealand market. It is considered that teenage people, couples and office going persons are more inclined towards drinking coffee. In addition to this, the cost of one coffee will take only 30% of the selling prices which would be (NZ $ 4*30%= NZ $ 1.2). This reflects that company could have profit of 70% from its coffee selling business which will help businessman to create value on his investment (Parsons Wilkinson, 2015). Risk and opportunity apparent from the investment project Risk It is considered that due to high growth in the coffee market in New Zealand, there are several new comers who are entering into coffee business with innovative ideas and creative business functioning. It is evaluated that if businessman fails to deliver new coffee business as per the demand and need of clients then other rivals will grab all the potential clients from the market (Gotze, Northcott Schuster, 2016). Opportunity Coffee business and demand of coffee products are increasing very drastically in New Zealand. Ideally, couples, Teenagers and other office going persons are more inclined towards drinking coffee. Moreover, the coffee products costing will be 30% of the sells price which will reflect high profit earning amount for the company. In addition to this, fixed cost and other abnormal losses are also very low in coffee business. Conclusion It is evaluated that innovative steps in this new coffee business could take the entrepreneur on big level. If proper level of risk and opportunity is measured in determined approach then entrepreneur could easily grab the potential opportunity and available investment options. References Alkaraan, F. (2017). Strategic Investment Appraisal: Multidisciplinary Perspectives. InAdvances in Mergers and Acquisitions(pp. 67-82). Emerald Publishing Limited. Dyson, R. G., Berry, R. H. (2014). Capital investmen Research: Frontiers of Operational Research and Applied Systems Analysis, 59. Gotze, U., Northcott, D., Schuster, P. (2016).INVESTMENT APPRAISAL. SPRINGER-VERLAG BERLIN AN. Gotze, U., Northcott, D., Schuster, P. (2016).INVESTMENT APPRAISAL. SPRINGER-VERLAG BERLIN AN. Parsons, A., Wilkinson, M. H. (2015). Retailing in New Zealand: Where Are We and Where To Next?. InEuropean Retail Research(pp. 141-160). Springer Fachmedien Wiesbaden