Buoy Oh Buoy Pty Ltd

Company Report

Company Report
BUOY OH BUOY PTY LTD

Parviz Ahmadi | Group 1 |

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Buoy Oh Buoy Pty Ltd

Company Report

1. Executive Summary
This business report examines Buoy Oh Buoys activities during the 2015 financial year. The
function of Buoy Oh Buoy as a caf business is to promote the beach lifestyle. After analysing the
progress of Buoy Oh Buoy, it is definite to say that the current management team has done an
extraordinary job in maintaining the profits and performance index at a stable position. With our
company members coalescing as a team and aiming for the same goal, the company has managed
to create a steady amount of revenue.
Our long term strategy is to use social, marketing, financial and locational advantages to
maximize our net profit and diversify our customer range.
The caf business is one of a fickle nature and customers are inclined to make business with cafs
that tend to set themselves out through a specific set of qualities.
Therefore, our company will aim to attain customer loyalty through the products made and
endorsed by our caf business and in turn increase the demand for the Buoy Oh Buoy service. The
implementation of a photography area will reinforce this as it can potentially bring in more clientele
due to the proclivity for customers to disseminate information on social media platforms.
One tactic that our business will use is to position our caf franchises within Sydney CBD so as to
gain more profit and revenue. The locational advantages of our caf business, being one of our
unique selling propositions will be used in tandem with our high quality product range to build
relationships and create loyalty with our customers. In doing so we increase customer demand for
our caf and resultantly obtain an increase in profit. Furthermore, we will use marketing techniques
to maximize the revenue of our caf service through business cards, the use of a video commercial
that will resonate with our demographic, the use of posters and social media to further promote our
caf business.
The distribution of costs and financial assets will play an important role in Buoy Oh Buoys longterm strategy as it will play an essential role in revenue for our service. Thus by fine tuning
statistical variables such as unit cost, selling prices, supply, demand and working capital Buoy
Oh Buoy will yield more profit and minimize expenses.
The expansion of the Buoy Oh Buoy Caf being another component of the strategy will be another
method of seeking profit. By reproducing the number of caf franchises within the business we
reproduce the number of profit yielding cafes leading to further gains in profit. Overall our
long term strategy aims to maximize our net profit and diversify our customer range.

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1.1.

Company Report

GOALS AND OBJECTIVES

Financial:

Our company strives financially to obtain as much profit as is possible

In doing so we also aim to minimise expenses and liabilities

Social:

Our social goals are to utilise social media such as Facebook, Instagram and twitter to
effectively promote our caf business to a wider community

We also aim to make the Buoy Oh Buoy Caf experience an inherent part of the Australian
culture

Personal:

Maximise earnings/revenue for the business Be the best at what we do bring the quality
experience of the beach lifestyle to the customer

Our business is consistently being optimized to adjust to the various financial and seasonal
fluctuations. This optimization is being executed through marketing and operation initiatives
that aim to endorse the products of Buoy Oh Buoy and the business itself.

1.2.

FINDINGS

After thorough analysis of the data provided, we have deduced that the number of units sold by our
company is slowly increasing. In tandem to this our business also seems to be accruing more gross
profit and has currently expanded to five cafes each of which are located within the Sydney CBD
and suburban beach areas to diversify customer range. Overall according to the product demand
forecast the amount of units sold by our company is on a positive linear increase, which bodes
extremely well for our companies financial future.

1.3.

CONCLUSION

From the data analysed, it can be concluded that the current position and sales of the company is
positive in many aspects, but there are still many areas of the company which we will need to
further improve on, including:
-

Consideration of further expanding a different variety of products into our range to appeal to
a larger demographic target.
Expanding the current marketing methods to cover and ensure that the coverage of our
company is received by a larger demographic.
Reconsidering the distribution of the costs of our advertising choices to ensure the best and
efficient way to use the companys budget along with the growing demand of our products.
Possibly, widening our franchise to other locations in the city and suburban areas in
consideration of the amount of demanding customers in specific places.

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Company Report

2. Company Summary

Our company's mission is to leave an impressionable and positive impact on our audience to
acquire their highest interest. Through effective communication and teamwork, we strive to
handle any situations presented to our group with cooperation and when needed, compromise.
Attention to detail within design and organization will be the group's basis for ensuring that the
company's mission is achieved

The beach lifestyle and all associated pleasures are one to be experienced to the maximum
degree

Concomitantly our group has formulated a caf business that aims to promote the beach
lifestyle to the younger demographic with an age range of 13 30 years old

The caf consists of two main components:

A photography area where customers are encouraged to bring out their wild side while
posing as beach personalities for the camera

A diverse range of food products that cater to customers of many palates

These elements, combined with the ambience of the Buoy Oh Buoy Caf experience coalesce to
form a beach experience that is one to remember. Our work environment is one that remains
impartial, enthusiastic and collaborative to the optimum degree in order to work efficiently and
deliver maximum results. During the first quarter of the financial year our caf business manifested
into two franchises located within the Sydney CBD.

2.1.

MISSION STATEMENT

Our company's mission is to leave an impressionable and positive impact on our audience to
acquire their highest interest. Through effective communication and teamwork, we strive to handle
any situations presented to our group with cooperation and when needed, compromise. Attention to
detail within design and organisation will be the group's basis for ensuring that the company's
mission is achieved.

2.2.

BRIEF HISTORY

Despite the lack of a good, succinct, easy to digest company name, Buoy Oh Buoy Pty Ltd continues
to remain at the forefront of the caf industry with many stores widespread across the nation. The
company has been running for two years now with the start-up occurring in 2013 for four quarters
and was then taken over to be refurbished by a team of IT managers, designers and accountants to
further improve the caf. Buoy Oh Buoy Pty Ltd has grown into a franchise-caf and now has a
chain of up to five cafes across multiple locations in Australia.

2.3.

LEGAL STRUCTURE

Our company operates at a relatively small scale, and is proprietary limited, which enables us to
trade from anywhere in Australia. It also means that our liability for shareholders is limited, which in
turn gives us an access to a wider capital and skills base.

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3. SWOT Analysis:
Throughout our cafe experience we have faced many strengths, weaknesses, opportunities and
threats which we have used as a basis for assessing our company's progress and where we should
be heading in terms of finance, marketing and operations. The strengths that our business has
includes:
Solutions:
As this was due to a lack of demand within our cafe we aim to increase demand in the future
and as a result generate more profit
This should increase our performance index and boost our efficiency in output
Strengths
Capacity for
innovation as
evidenced by our
trade display and the
products that are
endorsed within the
display

Weaknesses
Newly
established
business with
a small
customer base
and little
reputation

Communication skills
which maximizes the
efficiency of our group
when faced with a
substantial workload

Unlimited
liability

Locations of our cafe

franchises has
diversified our
customers, increased
demand and
generated more profit

Inflexible
shifts due to
limited
number of
employees

Opportunities
Use of social media to
expand our business

Innovation of
Photography
component;
customers can
attribute Buoy
Oh Buoy with
a photography
experience
Installation of WiFi can
be used to expand
customer base

Threats
Competitors - nine
other competitors
each selling in
proximity to each
other

Government policies
regarding trading

Seasonal Demand for

products e.g. Cold
shakes during the
summer and Hot
drinks during the
winter

Management and
structure of our
business i.e. the roles
that have been
distributed and the
chain of command of
the business increase
efficiency and output
of our business

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Company Report

Finance which has

enabled our business
to expand due to
minimal expenses and
substantial profit
generated

4. Operations Summary

Buoy Oh Buoy Pty Ltd is geared towards achieving the highest possible Performance Index within
the cafe simulation. The company was rewarded with high ranks for our well-formed financial
decisions, including coming first out of all ten teams during the second quarter.

Cafe 1

Cafe 2

Cafe 3

Cafe 4

Cafe 5

Medium

Medium

Small

Medium

Medium

Suburban

Suburban

City

City

Suburban

Medium

Medium

Medium

Medium

Medium

Sandwich Area

20%

20%

20%

20%

20%

Cold Drinks Area

30%

30%

30%

30%`

30%

Size

Location

Quality

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Company Report

Hot Drinks Area

20%

20%

20%

20%

20%

Snacks Area

20%

20%

20%

20%

20%

Cakes Area

10%

10%

10%

10%

10%

Staff Level

Low

Low

Low

Low

Low

Medium

Medium

Medium

Medium

Medium

Low

Low

Low

Low

Low

Cafe Maintenance

Outdoor Dining

4.1.

FIRST QUARTER

Buoy Oh Buoys performance index in the first quarter was calculated to be 4.94. This ranked us 4th
out of the 10 groups participating within the cafe simulation. This starting position gave our group
the opportunity and motivation to rise above other cafes within the next quarter.

Some significant factors we encountered included the different size cafes, employees wages,
number of employees and the amount of stock for sale. As compared to the takeover stages, the
quarterly submissions were far more complex, and took time to completely understand. This initially
impacted on our ability to provide our consumers with the amount and number of products they
demanded as well as our servicing needs.
Some strategies we employed included determining the normal startup costs and ventures for a
new business, and using this, we were able to manage finances in a fashion that would allow for
fast expansion whilst maintaining considerable profits. We allowed for the expansion of our cafes

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Company Report

and employee wages as part of our long term strategies to allow for a large profit in the second
quarter.
We encountered difficulties in understanding the new decision-sheet layout for the quarterly
submissions. A plethora of new variables were introduced that were previously unheard of, making
it difficult for our team to make the right decisions the first time around. Although we did rectify
these misunderstandings and complications by the 2nd quarter submission, this did have a
significant impact on our company, resulting in the lowest performance index out of all 4 quarters.

4.2.

SECOND QUARTER

Buoy Oh Buoys performance as determined by the performance index, in the second quarter, was
calculated to be 7.58. This ranked us 1st out of the 10 groups participating within the cafe
simulation.

Some highlights and successes we achieved within this quarter include coming first overall, gaining
a greater understanding of how the simulation marketplace functioned, upgrading our first cafe into
including an outdoor dining area, and beating all our competitors in the marketplace. We
overestimated our prices as compared to previous submissions, and, as a result, achieved a large
profit as suppliers were willing to sell the products for a lower recommended retail price (RRP). We
also made the decision to open up a second medium sized cafe in Maroubra, boosting our consumer
base.
Some significant factors were the costs of the products themselves and the maintenance costs of
both our cafes. This resulted in higher investment and maintenance costs. Due to these increasing
costs, we were cautious to control the overall spending of capital on this sector.
Some issues we encountered include the underestimation of the selling prices of suppliers, as well
as difficulty in ensuring that our cafes had enough of popular foods in stock.

4.3.

THIRD QUARTER

Buoy Oh Buoys performance as determined by the performance index, in the third quarter, was
calculated to be 5.98. This ranked us 4th out of the 10 groups participating within the cafe
simulation.

The expansion of our cafe stores played a significant role in determining our companys sucess this
quarter, with the introduction of a new store in the city. Other groups were also becoming
increasingly competitive, making it even harder for our company to make large profits.
Our company also made the decision to open up a smaller cafe branch located in Martin Place. This
strategy was employed due to the fact that there could have been an increase of the demand due
to the large population of our target market, and thus would have given us a higher profit for the
company. Targeting a city audience would also sell our brand to thousands of individuals daily due
to its location in a heavily populated and commercial environment. However, the decisions we had

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Company Report

made during this quarter had caused our group to drop in ranking, falling from first to fourth place.
This was due to our underestimation of the rapid rate of the growing demand for the products in our
range, especially since we now have a cafe opened in the city. Due to this we had sold out of
everything and did not have enough products to sell to our consumers. Therefore, although we had
earned a sufficient amount of profit, it was extremely low in comparison to our previous quarter and
thus causing our performance index to drop.

4.4.

FOURTH QUARTER

Buoy Oh Buoys performance as determined by the performance index, in the first quarter, was
determined to be 7.06. This ranked us 4th out of the 10 groups participating within the cafe
simulation. Although we did not improve in in terms of our ranking out of the ten cafes, it is still
commendable to have maintained our position in the top half of the list.

During quarter four, we had decided to open up two more cafes in order to compete intensely with
other cafes during the summer christmas holidays. We had decided to open one small cafe in the
city (at Barangaroo) and another medium sized cafe within the eastern suburbs. We had also
decided to further increase the units that were going to be sold for the customers dramatically after
we had realised that we had underestimated the demand of our products in the previous quarter.
This strategy was successful to the extent where our performance index had increased. The
wastage that had occurred from overestimating units, however, resulted in a deduction of our
profits.

4.5.

CONCLUSION

Overall, Buoy Oh Buoy was successful in developing a strong, powerful marketing strategy that
enabled our business to consistently achieve both desirable and respectable results in the
marketplace. Although there were several variables in which our company could have improved,
our final results were pleasing and satisfying to achieve for a startup business of our size.

5. Marketing Summary
Buoy Oh Buoy Caf is targeted towards people of ages 15-23, as we believe individuals of this
demographic are at a stage in their lives in which beach culture plays a large role. Individuals of this
demographic are at the peak of their physical fitness, and therefore are more likely than any other
age group to travel to the beach frequently.

5.1.

STRATEGIES

Throughout each of the four quarters, Buoy Oh Buoy decided to spend significantly more capital in
the marketing of our company. This included the layout of our caf, what our caf has to offer,
allowing customers to sample products and the use of social media. For example, the layout of our
stores allow customers to either order takeaway or choose to dine in and experience our tropical
atmosphere. We believe that the more options the consumer has, the more likely they are to dine
with us. These strategies have assisted in the boosting of our customer base, our sales and our net
profit.

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Company Report

5.1.1. Design and Features

Each Buoy Oh Buoy Caf has a photo booth for our customers to come in and take a picture. This
allows customers to have a lasting memory of themselves in the caf, with background scenery of a
beach. The mainstream trends of our demographic are highly geared toward the use of social media
such as Instagram, Facebook and Twitter. In order to exploit this trend, our caf is actively involved
in social media through the use of Facebook pages and Instagram hashtags. The hashtag
#BuoyOhBuoy, for example, is attached to each photo posted by both employees and customers.
This spreads a larger coverage of our caf to be exposed to more people in regards with our
targeting market.
There is also in store WiFi connection provided throughout the cafes which may increase the
chances of customers to enter the caf to enquire for the password and thus would allow them to
be exposed to our caf and would make them want to buy some of our products as well. The beach
themed music would improve consumers mood and vibes when they enter the caf and would allow
them to have a more enjoyable time when they are staying at the caf. There are also sample
products of small sizes for customers who may be hesitant in trying the actual products and
wasting their money, and thus would lure them (as the samples are free) to want to buy the
products in our caf.

5.2.

RESULTS AND HIGHLIGHTS

During the four quarters, it was extremely crucial for the marketing team to calculate the make/buy
cost of the products in our range as if we were to pay an extremely low amount, competitors may
take away our suppliers for ingredients and therefore we would not have the ingredients to make
our products, resulting in a loss. On the other hand, if we were willing to pay too much for the
make/buying cost then we would not have enough profit for our company. The results we had after
deciding on suitable prices for the make/buy cost of the products were that we had overestimated
the prices and therefore had earned more profit as the suppliers were willing to sell it for a lower
price.
In the second quarter where the company had reached its peak, we had ensured that there were
enough products for our consumers to sell
In the third quarter, the company had a large decrease in regards with the performance index as
the management team had underestimated the consumer demand for the products in our range. As
there was an extremely high demand for our products and a non-sufficient amount of units for each
of our products, the caf had sold out of products and did not end up making enough profit
compared to the other two quarters.

5.3.

FAILURES

One thing that all businesses have in common is the concessions or failures that occur throughout
the business. The ability to learn from these mistakes is an essential quality of a successful
business. The mistakes that we have faced have given us great insight into the variability of finance
and the market as well as the importance of collaboration and communication. A prime example of
this is seen through our performance index results that fluctuated greatly throughout Q2 to Q4. This
was due to excessive demand for our products. Consequently, as we didnt yield enough supply we
werent able to generate a maximal amount of profit.
Further there were some problems with the advertising and promotion of the business which was
immediately resolved with the implementation of a photography area which would be linked to
social media platforms such as Instagram, Facebook and Twitter. The distribution of costs also posed

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Company Report

a problem for the Marketing of our business as we put more money into the expansion of the
business. The fact that we didnt put as much of our capital into advertisings and promotions meant
that our performance index lowered. This problem was in fact resolved by the redistribution of
capital towards the Marketing sector.

6. Financial Summary
Shown below would be an analysis and summary along with statistics and data of the progress of
this business throughout the four quarters that the Buoy Oh Buoy Pty Ltd has been running for.

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Company Report

Demand Unit
37200; 10%
120300; 31%
69800; 18%

71200; 18%
89700; 23%
Sandwiches

Cold Drinks

Snacks

Cakes

Hot Drinks

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Buoy Oh Buoy Pty Ltd

6.1.

Company Report

FIRST QUARTER

For the first quarter after taking over this business, the company had ranked fourth against the
competitors within the industry, gaining a sufficient profit of $45 452 after tax. Our final closing
balance was $90 854 after tax. Some of the factors which could have hindered us from obtaining a
potentially higher profit would have been the deciding how many units of each item were to be
sold, along with the suitable selling and costing price. We had not analysed the demand forecast
thoroughly and did not account to the potential demand of our products as the caf is fairly new
and many consumers would come and try our products.

6.2.

SECOND QUARTER

Sudden rapid growth was seen in the second quarter as we had grown to the top of the industry,
earning a profit of $289 226 with a gross income of $544 308. The caf had also turned into a
franchise, as we opened another medium sized caf in the suburban area. We had also received a
boost of $275 000 profit by making the decision to focus on both eat-in and takeaway aspects to be
included in the caf. This was to ensure that our caf is not centred and relied solely on a small
number of products, but can cover a variety of our range and therefore can please a larger
demographic.

6.3.

THIRD QUARTER

Although we had reached our peak of coming first in the industry in the second quarter, we had
dropped back down to fourth place again in the third quarter. This may have been due to the lack of
demand units we had decided to sell for a total of three cafes (since we had opened up another
one) and had therefore made us drop in terms of our performance index. We had also been given a
penalty of $50000 for deciding to advertise on Radios, TV's and print media to have it appeal to
more people. The companys decision of doing that had been wrong as we did not have a specific
target market in mind when carrying out these advertisements, as well as the high costs of

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Company Report

advertising on TV and Radios had an impact on our expenses. After this quarter we had earned a
total of $155912 with a closing balance of (after tax) $535992. The company had also paid off the
money we had borrowed from the credit facility ($40000) and would now use money solely based
off our profits. For the last quarter of this business takeover, the company had decided to open up
another two cafes; one medium sized one in the city and one in the suburban areas.

6.4.

FOURTH QUARTER

The company had remained at fourth place once again although our performance index had
increased along with our profits and closing balance. In total we had earned a profit of $494361 and
a total closing balance of $1030353. Although we had earned a considerable amount of money, our
wastages on the products had increased to up to 20% for sandwiches and cold drinks and thus we
had wasted a lot of our expenses when it came to making the food. Another factor which could also
have had an impact on our performance would be the fact that we had opened two cafes in one
quarter. The rent, lease fees, fit out fees along with the insurance and cost for outdoor dining would
definitely have had an impact on our profit and amount of money earned.

6.5.

STRATEGIES

Our company employed a plethora of strategies in order to make our franchise as successful as it
could possibly be. Some of the strategies that were employed throughout the four quarters was
ensuring that the prices of the items were at a reasonable level. Ideally, the prices were to be
above the industry averages but low enough to make our products affordable and competitive in
the marketplace. We had also decided with the marketing team to increase our advertising and
promotion costs to widen the coverage of our cafe franchise, and to ensure the demand for
products will continue to increase as more customers would come and try our products. There was
also the decision to increase the employee, management and community bonus to ensure staff
members would not cause trouble for the cafes and may cause damage to our image and
potentially to our profits. Planning infrastructure that allows customers to both eat-in and take-away
from our stores was a business strategy that resulted in a large success for us. Allowing customers
to choose between both options expanded our customer base to include individuals who were onthe-go, boosting profits and our company name.

6.6.

CONCLUSION

Overall, the four quarters in this business takeover had been done consistently at a high level. Our
cafe franchise has never been in the bottom half of the industry and had been consistently staying
at fourth place after our peak. It may not be at the top, but it is definitely commendable to be able
to stay in the top half for all four quarters. After four quarters, the company has managed to open
up five cafes surrounding the city and suburban areas, where people can both choose to dine in or
takeaway if they are in a rush. After one year of managing this business we had earned a total of
$1030353 and it is definite that our profits and gross income will continue to increase at a steady
rate.

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7. Review of performance and process

7.1. FIRST QUARTER
Our performance during the first quarter was one that placed us 4th overall compared to our
competitors. Although this performance index is calculably higher than the performance index
average there were still many deficiencies in our business that prevented us from spreading our
wings and potentially reaching a higher performance index. We started off with a medium sized
caf with minimum staff. The level of maintenance of the caf was medium. Overall our
performance index decreased in value which means that that we could have generated a lot more
potential revenue. At this point we aimed to shift our strategy towards maximizing the amount of
profit we earn by

7.2. SECOND QUARTER

During the second quarter our performance increased substantially placing us 1 st overall compared
to our competitors in the same market. Furthermore our Revenue per cover, market share, assets,
and after tax profit also increased. These increases are attributable to the expansion of our
business into two caf franchises. This in turn creates two profitable chains instead of a profitable
whole.

7.3. THIRD QUARTER

During the third quarter our performance decreased placing us back at the 4 th rank compared to our
competitors. This is because our overall performance index, after tax profit, market share and
revenue per cover all decreased.

7.4. FOURTH QUARTER

During the fourth quarter our performance steadied keeping us at 4 th place overall compared to our
competitors. At this point we had opened up five caf franchises to optimize the gross profit that
our business would be earning. The locations of these cafs also ensured we obtain a diverse
customer range that could yield an increase in profit and revenue.

8. Corporate Responsibility
As a caf enterprise we believe that the customer lies at the heart of the business. Therefore,
attaining customer loyalty is the only way of creating and expanding a successful company. This
means producing goods and services of the highest quality and selling fresh, local produce for our
food menus. Furthermore, all our products and services are strictly Fairtrade. This means that
consumers can be reassured that all products that they have purchased with a Fairtrade mark have
been sourced in line with Fairtrade standards, an international system of standards for producers
and terms of trade for their goods that ensuring fair prices towards producers.
Furthermore, our company strictly adheres to the Australian Competition and Consumer Act 2010
which ensures that trading is fair for business and customers. This Act covers most aspects of the
workplace such as:

Product safety
Collective bargaining
Price monitoring

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Product labelling
Industry codes of practice
Regulation of industries such as:
o Telecommunications
o Gas
o Electricity
o Airports

9. Issues
There were many issues faced along the way that enhanced our understanding and capacity to
work within a business environment. Such problems that were faced included:

Issues with the trade display design

Hindrances in advertising and promotions
Distribution of funds
Fluctuation in our Performance Index

Firstly the issue with the trade design was due to the observation of our competitors. We believed
that there would be elements missing within our trade display but essentially we had
underestimated the aesthetic quality that the lights and backdrop contributed to the design of the
trade display. At this point we believed that the problem had been resolved.
Secondly there were a few technical issues with our advertising and promotions that reduced the
efficiency of operations conducted within our business. Through solving this problem we gained a
greater insight into the factors that influenced the efficiency of the business.
Thirdly, the distribution of funds on our decision sheet led to problems for our performance index.
This problem was also resolved through the redistribution of funds as our knowledge of finance and
the market deepened.
Finally one of the main issues that our company faced was the fluctuation of our performance index
that was caused by a lack of supply towards our customers. This indeed stinted the amount of profit
that our company generated. But as time progressed we seeing this problem were compelled to
increase the number of units sold, which resolved the problem.

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