star project paper

BUSINESS PLAN OF STAR GROUP 2013

1. Introduction

Star group is educational service center which is projected to commence in 2013 in,

Somalia for the purpose of preparing high school graduates to equip necessary pre-

university courses/ skills to succeed in their system education locally and internationally

as well. The main goal of the business is to provide excellent educational service

delivered by well qualified lectures and trainers who have a great deal of experience in

their fields; it will represent a unique and distinctive educational service. Upon

completion of this program, students will be able to successfully complete their studies in

prestigious universities around the world without having any difficulties regarding the

academic, environment and the culture.

Vision

To become a leading center that produces highly competent students.

Mission

To promote knowledge, skills and capabilities of students through a variety of programs

and global networking.

Objectives:

1. To prepare students to be qualified for prestigious universities.

2. To provide quality and balanced curriculum recognized by well known

universities.

3. To prepare students for international academic placement tests.

4. To create network around the world universities.

5. To provide students and business individuals advice and consultancy.

Programs offered:

Star Group will offer local and overseas programs that include Sciences, Information

technology, and Business studies. The duration of the program will be one year that

consists of three semesters. Each semester is four months, include semester break and

1 DREAMING TODAY WILL BE TRUE TOMORROW


exams. Students who successfully completed this program will be able to study well-

ranked universities in the country as well as international universities around the world.

Currently, some Somali students are pursuing their higher education in abroad such as:

Sudan, Egypt, Pakistan, India, Bangladesh, Malaysia, China, Turkey, Ukraine, and

Russia; so that our curriculum will be based on the requirements of those universities as

well as the cultural diversity of those countries.

The details of the programs are as follows:

Sciences Arts

Math English

Physics Business & Math

Chemistry Accounting

Biology Economics

IT and web designing Arabic Language

English IT and web designing

Cross-cultural Cross-cultural

Requirements:

1. Secondary school certificate recognized by the ministry of education, and the

senate of the institution

2. Student must at least pass seven subjects from the over-all subjects in the

secondary school.

3. Recommendation letter from the school should be provided upon the application.

4. Four recent photographs (passport size).

5. The student must pass Arabic and English Placement Test.

6. Students must pay $20 for processing the application.



Situation analysisStar Group is a start up institution that provides educational service; its customers will

come primarily from secondary school students and those who have equivalent

qualifications. Initially, star group will not face much direct competition, so its biggest

challenge will be to convince potential customers to enroll our institution. In order to be

successful in this much needed new service, we need to consider factors that will affect

the whole industry of education. These factors include: external and internal

environment.

External environment factorsPolitical and legal factors: Like all other institutions, is subject to the rules and

regulations set by the ministry of education. The political and legal environment in the

country supports the educational sector. This will enable us to get approval and license to

operate from the government conveniently.

Social and cultural: is very important element in external environment that affects the

educational system. In the city and the surrounded areas, there is an increase in

population size and urban people are becoming more aware, their life styles are changing.

All these changes will most likely to have positive impact on star group service.

Technological factors: have significant influence in the education industry. Technology

is dynamic. It is changing rapidly; Star group have to adopt technological changes in the

environment to be competitive. There are so many devices that are more efficient to

deliver star group service, these include: visual aids, projects, computes labs and digital

library. Even though, the current internet service providers in the country do not provide

sufficient speed that can be used to develop online data base, it will only have minor

effects to our service.

Economic factor: The overall state of the economy will have large impact on star group

performance. Since our school is private, and that the government don’t allocate funds for

us, we have to generate our revenue internally (i.e potential customers), our target is



middle and high income people, this means we have to consider the price we set for our

services, the fees structure will depend on the income of the family, and overall the

economy betterment.

Competitive environment

Threat of New Entrants: If Star group is successful; it will entice others to enter the

market. The entrance of this market is very high because, there are no regulations that can

prevent the new entrants to enter in this industry, and it is also very easy to set up such

this program as it does not need more capital. The only barriers are the economies of

scale, and the network that we are already developed with our partners.

Threat of Competition and Substitutes: star group is pioneer for this service, one of the

first to market. Therefore, there will not be any direct competitors. But there is a threat

for substitute, some of the institutes are providing similar courses, but their main

objective is to support secondary school students to understand more of the subjects, in

other words, they act like private tutorials. Express Institute, Kasmo, Al-Abadir and

Ramadan are providing science, Arabic and English languages separately. However, our

service is concentrated, integrated in all subjects and a bit more advanced. We will also

help students to choose their university programs, and instilling them cross cultural

values on the selected region in order to avoid cultural shock.

Bargaining Power of Buyers and Suppliers: Since our service is unique and innovative

that was not served in the market, and there is great demand for this program. Tens of

thousands of students finish their secondary school every year; most of them are ready to

pursue their education locally and overseas universities. So, bargaining power of

customers will be low. Similarly, bargaining power of suppliers are also low, the

materials such as text books, stationeries, visual aids, supplies are readily available.

Lecturers are more than willing to contribute their knowledge to the society. Many

graduates are coming from different overseas countries. Therefore, this makes the

bargaining power of suppliers to be lower.



Internal Environment

To be relatively new to the market is little bit tough to adopt and run the new business

successfully. Star groups ’s success depends on its ability to convince customers to adopt

this new program. Star group will hire qualified and dedicated managers who will always

try their best to minimize costs, this cost reduction will be long-term rather than short –

term, in other words, the managers will include cost saving as part of strategic planning.

At the same time, managers will create innovation and quality culture to make the

institution more profitable. The major financial resource of our institution comes from

partners and interested parties, such as shareholders, investors, and community leaders

and all the relative parties of the society who have real interest to do this business.

Star group values keeping its service current and ensuring that the institution is in a

position to take advantage of any oncoming new technologies. This will ensure that the

institution to be current and update. Star group has operation capabilities that can serve

major city location in the capital city of Mogadishu, following success in this market; star

group will be able to expand the whole country.

Human resource will be the most valuable asset in the institution; the employees will

receive competitive salary, healthy benefits, and stock option as part of their

compensation.

SWOT analysis

StrengthOur service is unique and quite new, and much more different from the competition, no

other institutions have offered this fully integrated program in the country before. We

will have the first mover advantage. Most of our lecturers are well talented educated and

trained abroad.



Weaknesses

The service is new, and the people don’t know much about it, so, there is a possibility to

fail in the market. There is a lack of more experience in this industry, as well as

inadequate capital investment for the institution.

Opportunities

The demand of this service is quite high because so many secondary schools are

producing thousands of students who are eager to further their education up to university

level before they go to higher education institution, they need bridging and foundation

programs that cater their needs.

Threats

Possibility of new entrants is very high because there are no significant barriers to this

market. Existing universities may see this opportunity and enter the market, as they have

economic scales and recognized brands.

Market Research

Placing the roots of the new business in places is a very challenging and this requires

researching and gathering suitable information. The Star group collected secondary data

for the existing service provided by the schools and institutions that allowed it to

investigate whether similar service is being offered to the students or not and the intensity

of the rivalry in the market. Besides, the primary data has been gathered from final

semester of secondary students to show their wildlings and feeling of this newly invented

program, first year of university students both local and overseas were asked the

obstacles they met in their first semester as well as the parents who are really the

backbone for the decision regarding educational learning process. The research was done

through personal and group interviews and then information was analyzed through

qualitative analysis. The result indicated that students have encountered so many

obstacles and hinders which sometime leaded to withdraw students from the universities



or being drop outs. Thus, the research recommends that there is interest and high demand

for these services to established in the city where everybody can come and grasp this

opportunity and be successful students in his journey of studies.

Marketing goals and objectivesThe star group goal is to be the best bridging program provider in the country and serve

with quality. The main objectives are to enroll 175 students for the first year. Since the

school has one intake in every year, the second and third year enroll 264 and 300 students

respectively. Attaining the high level of student satisfaction is also our major concern as

well as attracting new students in every intake.

Marketing Strategies

Segmentation

The market for star group service can be easily divided between secondary school

leavers, and those who have equivalent qualification. Secondary school leavers can be

further divided into those who want to go into local universities and those who want to

pursue their education abroad. Similarly, the students who don’t get the opportunity to

get further education promptly who are in need to fill the gap, and the refresh their mind,

these are the students who have been outside of the academic field for quite some time

and want to come back. There is another important segment, which is the business

segment; who would like to travel abroad.

Target Marketing

Star group evaluated all those segments mentioned above, to determine its focus for

initial investment.

The first segment, secondary school leavers who are planning to go to local universities

will need solid foundation programs to succeed and perform well in the tertiary

education. The second segment, are those students who want to further their education



overseas. This is our main focus; it is the segment that makes us unique and a niche

market. These students want more than foundation programs, they want the culture of the

region they are going, and a proper placement, as well as consultation regarding the

programs they want to pursue. Star Group will also target for those who want to come

back to education field, and refresh their memory. The last segment which is the business

segment, Star group will provide them cross-cultural diversity, and consultancy services.

Positioning

Star group will position itself as integrated, concentrated, and instilling cultural values in

the mind of the students, this is different from any other service provided by existing

educational systems. This is known as differentiation strategy, which works best in the

current situation of the country. Star group will also offer quality education, interactive

class-rooms aided by the best facilities in town. Star group will bring international

examination, such as IELTS and TOEFEL to prepare students for international standard

examinations.

Marketing Mix Strategies

Product

Star group is offering pre-university courses and foundational programs. The offering

will include science subjects, such physics and chemistry, and arts such English and

Arabic Languages. One of the most important services star group will provide are

cultural education, preparing students for international examinations, and giving them

strength based tests to discover their natural talents, this will help students to choose their

field of specialization.

The institution is expected to provide services that meet the highest standards of quality,

inclusiveness, and integrated. Our staff will need to have good knowledge of the services

we are providing, and good delivering skills of the lectures. In order to achieve this, the

management will attract the best and experienced workforce available in the town,



especially those educated and trained in abroad and those who will be able to meet the

standards and expectations.

Price

The pricing decision for star group is made more difficult due to the newness of its

service offering and lack of strong competitors in the market. Initially, penetration pricing

can be effective to gain student trail, expose students to the excellent service quality, and

build customer loyalty for the brand. Once we develop a loyal customer base, some

incremental changes can be taken away from them without major disruption in the

customer base. The general formula for pricing will be traditionally based, covering the

costs with 30% profit margin, which is definitely subject to change depending on market

forces.

Promotion

Promotion process is tightly related to introducing new business. Our promotion strategy

will start with advertising the venture on local TV stations, and then will take next stage

of advertising in local newspapers and by mailing to target customers.

Soft copy brochures are good options. We will send our target market brochures through

e mail which are inexpensive and efficient. This will be done in order to make our target

market aware of our business and our offers.

During the opening ceremony, we will provide discount for the first 50 students who

enrolled our institution. And give them strength based test for free. So that our potential

customers can get idea that what kind of service we are offering.

These are kind of promotional strategies that we will do at the beginning. We might even

consider doing aggressive promotional strategy before we lunch venture. Our goal is to

make our target customers aware of our services and later we hope that we will gain their

loyalty based on good quality services. So the second stage of the promotional strategy

will be based on word of mouth, which will be assembled among our students and

parents.



However, second stage doesn’t mean that we will stop promoting our venture through

means we mentioned above, in contrast we will continue but with lighter intensity. This

intensity can increase from time to time, depending on new offers of our business.

Place

The location of the institution will be attractive; it will be in the city center, more

specifically Bakaro Market which is very close to major bus stations. This is to make the

institution more accessible to our customers.

Financial projection of our marketing plan

Every institution needs resources to start its services or business. The major resources are

coming from the partners of the institutions. That is four of us. Each of the partners will

contribute equal amount of $11,000. The expenses we projected for the first year will be

$51,920. $44,000 will be paid by the partners, and the rest of $7,920 will be borrowed

from the family members (see appendix A). The entire profit will be divided among the

partners, but in case of initial loss, the partners who provided capital will bear the

consequences of loss.

Projected operating expenses for the first three years

In order to start the institution, there will be initial cost that we will incur; these costs will

include advertising, salary of the staffs, rent of the building, and stationery expenses (see

appendix B).

The following table will illustrate operating expenses in the first three years:

Items/descriptions First Year ($)

Second Year ($)

Third Year ($)

Total ($)

Salary of the lecturers $24,000 $33,600 $43,200 $100,800

Admin salaries $4,800 $4,800 $7,200 16,800

Rent 5,400 5,400 5,400 16,200

Books and stationeries 2,700 1,500 1,600 5,800

Advertisement 1,920 1,550 1,350 4,820Miscellaneous expenses 1,200 1,260 1,350 3,810



Grand total $40,020 $48,110 $60,100 $148,230

Projected revenue from the service for the first three years

In contrast of the expense, there is revenue; our main source of the revenue will be the

fees that we charge for our services, such as teaching and training (see appendix C). Not

only we provide training for students but also for business individuals regarding cross-

cultural diversity. For instance, for those who want to go abroad for business purpose, as

well as providing consultancy to help students discover their strength. Another source of

revenue will be agency that will facilitate students to get applications from selected

universities. We will act like marketers for some major universities; star group will earn

commission from the universities for the service they render.

The following table will illustrate the revenue of Star group for its start up.

Services First Year

($)

Second Year

($)

Third Year

($)

Total

Application fees $3,500 $5,240 $6000 $14,740

Semester fees $63,000 $95,040 $108,000 266,040

Consultancy and career service $2,900 $4,350 $4,350 11,600

Agency commission $950 $1,900 $3,500 6,350

Cultural training services $1,200 $2,400 $3,170 6,770

Grand Total $71,550 $108,930 $125,020 $305,500

First year profits

The projected expenses and revenue for the first year of operation, we will expect to earn a

normal profit. The details are as follows.

Revenues (fees) 66,500

Other revenues (consult) 5,050



Total Revenues 71.550

Total Expenses (40,020)

Net income 31,530

Action PlanAction Dec Jan Feb Who

Approval from Ministry of Higher Education Director, NAJMA

Beginning Campaign of Advertisement through media(Local TVs, Local FM Radio, Local Magazines)

Chief Operating Officer IDIL

Job Announcements, Recruiting Lectures and Administrative Employees.

Chief Operating Officer, FATIMA

Publication brochures, Distribution Chief Operating Officer, NAJMA

Visiting higher education institution Director of Public and External Relations,

Registration Students/ Trainees Academic Director,

ZEINABS

Commencement day Chief Operating Officer, Najma

Marketing controls and contingency planStar group will continually evaluate its marketing efforts to ensure its performance is on track

against stated first year objectives. Star group will monitor its first marketing objective which was

to enroll 175 students for the first semester in year one. If the market mach our plan, we will

increase enrollment by 50% each in second and third years. If they are not met, the market will

have to be surveyed to determine awareness level, and to increase the recruiting by increasing the



frequency of the advertisement. And also the customer satisfaction will be monitored by ongoing

customer satisfaction measurement.

If star group, s target market does not respond to the service as planned, it would likely to be

easier to change the market to fit the service rather than changing the service to fit the market. For

example, our core business providing bridging programs for students who finished secondary

school, if star group don’t get sufficient response from this market, it will focus more it is second

segment which was the business segment, star group will provide them consultant and training

services.

Appendices Appendix A: Initial investment

Description Cost

Office equipment & Machines

$ 2,500

Projectors $ 2000

Class furniture $2,640

Computer labs $4,800

Total $ 11,900

Appendix B: Projected expenses

First year expenses

Items/descriptions Sem 1($) Sem 2 ($) Sem 3 ($) Total ($)

Salary of the lecturers $8000 $8000 $8000 $24,000

Admin salaries 1600 1600 1600 $4,800

Rent 1800 1800 1800 5,400

Books and stationeries 900 900 900 2,700

Advertisement 960 640 320 1,920



Miscellaneous expenses 400 400 400 1,200

Grand total $13340 $13340 $13340 $40,020

Second year expenses



Admin salaries 1600 1600 1600 $4,800

Rent 1800 1800 1800 5,400


Advertisement 750 500 300 1,550Miscellaneous expenses 420 420 420 1,260

Grand total $16,270 $16,020 $15,820 $48,110

Third year expenses



Admin salaries 2400 2400 2400 $7,200

Rent 1800 1800 1800 5,400


Advertisement 650 400 300 1,350Miscellaneous expenses 450 450 450 1,350

Grand total $20,300 $19,950 $19,850 $60,100

Expense calculations for first year.

Description Cost

Salaries of lecturers 5*($400)=2000/month4**($2000)=$8000/sem

Administrative 2*($200)=$400/month4($400)=$1,600/sem

Rent $450/month



4($450)=$1800/sem

Original books $ 900

Media advertisement $ 250 for Local TVs$ 150 for Internet$160 for Local newspapers

Brochures $80

Miscellaneous $ 400 /sem

Total amount $ 40,020

*No of lecturers or administrative employee.

**No of months in the semester.

Appendix C: Revenues

First year revenue

Services Sem 1 ($) Sem 2 ($) Sem 3 ($) Total

Application fees $3500 $0 $0 $3,500

Semester fees 21000 21000 21000 $63,000

Consultancy and career service 800 950 1,150 $2,900

Agency commission 0 450 500 $950

Cultural training services 300 400 500 $1,200

Grand Total $25600 $22800 23150 $71,550

Second year revenue


Application fees $5,240 $0 $0 $5,240

Semester fees 31,680 31,680 31,680 $95,040

Consultancy and career service 1,350 1,400 1,600 $4,350

Agency commission 750 550 600 $1,900



Cultural training services 700 750 950 $2,400

Grand Total $39,720 $34,380 $ 34,830 $108,930

Second year revenue


Application fees $6000 $0 $0 $6000

Semester fees 36,000 36,000 36,000 $108,000

Consultancy and career service 1,350 1,400 1,600 $4,350

Agency commission 1000 1200 1300 $3,500

Cultural training services 920 1,050 1,200 $3,170

Grand Total $45,270 $39,650 $ 40,100 $125,020

Revenues calculation for the first semester

Description Cost

Registration fees 175 students ($ 20)= $3,500 once year

Semester fees 4 month ($30/month)= $120/sem/student

Revenues 175 students ($120)= $ 21,000

Consultancy service+ $2900

Commissions from the universities++

$950

Training for cultural diversity+++

$1200

+ Consultancy services are charged per service, and the projected revenue from the service is so small which is about 2900, this is because of the lack of the expertise in this area, star group will expect to do 3 services for the whole year, each service will vary depending on the service.

++commission from the universities: the institution will connect specific universities, and will give brief of our service, then star group will make connection between the students and the



universities, from there star group will get their commission, for the first semester we expect zero, as this service is new also.

+++training for cross-cultural- this is course is for those students and business individuals who want to go overseas. Star group will provide students as well as business individuals orientation programs about the culture of the country they want to go, the cultural training is based on region, for example Asian region, most Asian countries have similar culture. The projected revenue for the first year will be $1200.


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