Business Plan Huang Medical Clinic
Towards this end, it will pursue the generic strategy of differentiation, supported by a premium pricing strategy and extensive promotion (advertising, personal selling, publicity, and sales promotion). Its market will be segmented using demographic variables, and it will target three segments the male, female, and joint couple segments. Some of the formidable competitors the clinic will have to contend with include The London Women s Clinic, TCM Healthcare, and the Zhai Clinic.
A capital outlay of 21,500 will be required to get this venture off the ground. Of this amount, Ms Huang already has a sphygnanometer, electrical acupuncture machines and mobile and answer phones (estimated to be worth 4000) plus 2,500 in cash. Therefore, she will need to borrow the balance, amounting to 15,000. The clinic is projected to break even in May, and end the year with a positive cash flow of 61,000 and an annual profit of 16,500, way above the targeted 15,000.
OPERATIONS and MANAGEMENT
Huang Clinic is an upstart business which is scheduled to begin its operations on March 1st 2010. It will offer specialist traditional Chinese medicine fertility treatment.
It has been registered as a sole proprietorship and will be run and operated by Ms Huang who is the business sole owner. Its mission statement is to be recognized as the finest purveyor of fertility treatment for both men and women, and in the process bring smiles to the faces of millions who can neither conceive nor deliver babies. This will be achieved through the delivery of quality Chinese-based fertility treatments delivered using ultra-modern equipment such as IVF, and distinguished by exceptional levels of patient care. The delivery of the treatments will conform to the highest ethical standards possible.
Huang Medical Clinic expects to break even within eight months. Its goals include
To achieve a market share of at least 2 of the TCM fertility treatments market in the UK within one year.
To achieve profits of at least 15,000 pounds within one year, and profitability growth rates of 5 annually thereafter.
To become one of the most highly recognised brands in the UK fertility treatment market, and the brand of choice in as far as Chinese-based fertility treatments re concerned.
To achieve sales of at least 100,000 pounds within one year of operation.
To achieve a success rate of 60 for all women patients and 90 for all male patients.
The clinic will offer a whole range of diagnostic and treatment programs for fertility problems. In this regard, its product line will comprise of
acupuncture fertility treatment
herbal medicine fertility treatment
These will be targeted at women suffering from difficulties in conception and from recurrent miscarriages, as well as men suffering from low sperm count and low sperm motility.
For the clinic to be successful, various facilities, equipment, and staff will have to be present. Facilities and equipment that will be required include sphygnanometers, electrical acupuncture machines, IVF, IUI, a sperm bank, facilities for freezing embryos oocytes sperms, as well as facilities for carrying out amniocentesis, ICSI (intra-cytoplasmic sperm injection), laser assisted hatching, sperm retrieval, and sperm embryo donation.
Its USP will consist of
Quality healthcare ultra-modern equipment such as latest IVF machines well qualified personnel (Ms Huang has top qualifications in TCM, strong capabilities in gynaecology and fertility and rich experience garnered from her part time job) and use of high quality natural-based herbs which have little or no chemical derivatives and no side effects.
Superior levels of patient care and customer service - achieved through courteous and patient-centred front office personnel, a welcoming frontage, and considerate treatment. Personnel required will include gynaecologists, endocrinologists, surgeons, anaesthesia team, dieticians, and assistant staff. However, given the huge costs involved in hiring all these staff, Ms Huang will perform all these duties by herself (given her expertise in all the areas) and instead hire a receptionist who will help her receive clients and schedule appointments with her.
To achieve the stated objectives, various control measures will be put in place. To achieve the desired sales target of one million pounds within the first year, the annual target will be broken down into monthly targets, which shall be compared against actual performance. Deviation of the actual performance from the targets set will automatically lead to corrective measures.
Similarly, careful procedures for all herbal formulations including the source and quality of the herbs used will be established, to which all treatments will be monitored to establish whether they conform to these procedures. Any deviation will be corrected before the delivery of the treatment. To ensure that only high quality herbs are used, only reputable and approved Chinese-based suppliers will be used. All such procedures will conform to the quality standards set by the Human Fertilization and Embryology Authority (HFEA).
MARKETING
Market and Competitors
The infertility market globally, in Europe, and in the UK is large and growing. It is estimated that in Europe, one in seven people has fertility problems and that the figure will double by 2015 (Roberts, 2005a). While obesity used to be mainly a joint male-female problem with both respectively accounting for 40 of cases, Roberts (2005b) writes that it is becoming more of a mans problem now.
According to MedIndia (2005), one in every six people in the UK has fertility problems. CIA (2010) places the current population of the UK at 61,113,205. This means that approximately 10,185,534 people have fertility problems. As such the potential market is made up of 10, 185, 534 people. Taking the average projected growth of 7 for Europe, by 2015, the market should have grown to 10, 898,521 people.
To be more successful in the market, Huang Medical Clinic will segment this market. Market segmentation may be done along various bases, including pyschographically, geographically, demographically, behaviourally, and on the basis of benefits sought (Mercer, 1999). Huang Medical Clinic will segment its market demographically. Demographic segmentation involves breaking down the entire heterogeneous market into smaller more homogeneous segments on the basis of the characteristics of population such as age, gender, generation, and so on.
On the basis of gender, two distinct segments can be identified the male and female segments. For the female segment, infertility results from a variety of causes including ovulation disorders, pelvic inflammatory disease (PID), endometriosis, polycystic ovarian syndrome, hormone imbalance, congenital anomalies affecting the reproductive structures, or environmental and occupational exposure to chemicals or radiation. For the male segment, infertility is manifested through sexual dysfunction (the inability to achieve or sustain an erection, premature ejaculation, or retarded ejaculation) or inadequate semen. Male infertility may arise due to various reasons including smoking, exercise, stress, and alcohol or substance abuse. Another segment comprising of couples can also be identified. This is where the infertility problem is neither distinctly male nor female, but their physiology is incompatible leading to fertility problems (Norris, 2001, p.3).
According to Roberts (2005b), 40 of all infertility problems (that is, 4,074,214 cases) are reported by men, 40 by females (4,074,214 cases), while the remaining 20 (2,037,107) are for joint problems. On this basis, the market can be segmented as depicted in the graph below
Huang Medical Clinic will target all the three segments. There are several competitors which Huang Medical Clinic will face, and who are likely to react to its entry in the market. These include The London Womens Clinic, TCM Healthcare, and the Zhai Clinic.
The Londons Women Hospital is located on Harley Street and has been ranked among the three best licensed centres for women aged over 35. It offers IVF and fertility treatments to couples with fertility problems. With a track record spanning twenty years, it has a verified success rate of 55.7 (London Women Clinic, 2010).
TCM HealthCare also has a medical facility in Central London and specializes in traditional Chinese fertility medicine. It was started in 2000, and is run by a Chinese professor of Chinese medicine, Prof Li. This clinic incorporates an acupuncture facility clinic, a herbal medicine fertility clinic, a Chinese medicine fertility clinic, and a male fertility clinic. It has the latest western medical equipment, and has a success rate of 45 (for females) and 80 (for men) (TCM Fertility Clinic, 2010). The Zhai Fertility Clinic is located in London and has been in operation for more than fifteen years. It boasts of a success rate of 70 for women (Zhai Clinic, 2010). These competitors are likely to react to the entry of Huang Medical Clinic into the market through a variety of responses
they may lower their prices in order to attract customers away from the clinic
they may improve the quality of their service or customer care in order to stay ahead of the competition
They may engage in extensive promotional campaigns in order to counter the buzz the entry of the Huang Medical Clinic may cause.
Competitive Business Strategy.
Business strategy is usually viewed as being formulated at three levels the corporate level, the business level, and the functional level. At the corporate level, three types of strategies have been identified including the growth, retrenchment, and maintenance strategies (Robbins and Coulter, 2008). In view of the goals of the clinic presented in previous sections (profit, sales and market share growth), the clinic will at the corporate level pursue a growth strategy.
At the business level, Porter (2008) has identified three generic strategies which include the generic strategies of differentiation, overall cost leadership, and niche focus strategies. As previously outlined, the clinic will base its unique selling proposition on superior quality and exceptional levels of customer service. In this regard, the clinic will pursue the generic strategy of differentiation at the business level. Functional level strategies will flow from these, and are described by the clinics marketing mix (the set of four variables including the product, price, place, and promotion). These are discussed s under
Price given that the firm offers products that are superior in quality and which are supplemented by exceptional levels of customer service, the clinics products are in a position to command a premium price and towards that end the clinic will deploy the premium pricing strategy. Its prices will be 20 higher than the prevailing prices of the market. The cost plus pricing strategy will be used, where the total costs of producing the service will be ascertained and the desired margin loaded.
Promotion the clinic will be promoted using all the five elements of the promotional mix. These include personal selling (where sales personnel will be retained to market the clinic), advertising (through radio, television, the internet, print media, and outdoor forms), sales promotion, direct marketing, and publicity public relations.
Place the clinic will be located in a suburban part of London, in a high traffic location that is also close to shops and other amenities such as good transport links.
The clinic estimates that in line with its goals as stated, it will be able to secure a 10 market share within one year. Like every other business, the clinic is likely to be affected by a host of political legal, economic, social-cultural, and technological factors extant in its external environment (Porter, 2008). These include
Social-cultural factors, where there is an increase in lifestyle and sexually transmitted diseases (likely to cause blockages in the fallopian tube leading to problems in conception and delivery) e.g. obesity and Chlamydia. Obesity makes the women fail to ovulate as required (Roberts, 2005a). Inflexible working hours and financial and career aspirations mean many women are putting off having a family until they are in their late 30s and early 40s. Women aged 35 and over generally have very low fertility rates (Roberts, 2005a, p.1).
Legislation, where many Scandinavian countries, faced with the risk of an unsustainable population due to too few children being born are introducing policies to encourage women to have children earlier. UK may follow the example of France which has introduced tax relief and gives greater support to women who want to take career breaks to start a family (Roberts, 2005a, p.1).
The ongoing economic recession may also reduce the ability of many people to seek and pay for fertility treatments. Increased technological sophistication has brought about newer technologies such as IVF and ICSI which have been used to successfully treat fertility problems.
Forecasts and financial data
Assumptions
It is assumed that in line with expert forecasts, the number of people with fertility problems will grow by 7 between 2005 and 2015. The initial capital outlay is estimated to be worth 21,500. Of this amount, Ms Huang already has a sphygnanometer, electrical acupuncture machines and mobile and answer phones (estimated to be worth 4000) plus 2,500 in cash. Therefore, she will need to borrow the balance, amounting to 15,000. Although some furniture is provided with the rented premises, these will not suffice and she will still have to buy additional furniture.
Start-up costs
Details Cost AmountIVF2000IUI2000sperm bank1500facilities for freezing embryos oocytes sperms1500facilities for carrying out amniocentesis1500ICSI (intra-cytoplasmic sperm injection) equipment 2000laser assisted hatching facilities 1500sperm retrieval equipment 1500Personnel hiring costs 500Raw material costs (herbs and other formulations)500Rent for premises 1000Initial marketing costs 500Furniture and fittings 1000TOTAL 17,000
Balance sheet Profit and Loss statement for the first year of trading
Balance Sheet
The clinics balance sheet for the first year is depicted as shown below
Current AssetsAmount (in pounds)Cash in hand 2,500Inventory 500Fixed assetsSphygnanometers1000Electrical Acupuncture Machines2000IVF machines2000IUI machines2000Sperm Bank1500Facilities For Freezing Embryos Oocytes Sperms1500Facilities For Carrying Out Amniocentesis1500ICSI (intra-cytoplasmic sperm injection) equipment 2000Laser Assisted Hatching Facilities 1500Sperm Retrieval Equipment 1500Furniture and fittings1000Mobile phone and answer phone 1000TOTAL ASSETS21,500Current Liabilities --Long Term LiabilitiesCreditors15,000Capital 6,500TOTAL 21,500
The following is the clinics profit and loss statement for the first year
Details AmountSales 100,000Opening stock 500Add Purchases60,00060,500Less closing stock 1000Cost of goods sold (COGS) 59,500Gross profit (sales less COGS) 40,500Less Expenses- rent 12,000- personnel 6,000- utilities 6,000 24,000Net Profit (loss) 16,500
From the table analysis, the clinic will break even in May, and end the year with a positive cash flow of 61,000.
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