COST AND BENEFIT ANALYSIS: Beauty Store Project

Understanding that beauty is an endless need and cosmetics the way for women to reach true beauty, the company decided to choose Japanese SK-II products to replicate in Vietnam – which i

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TABLE OF CONTENTS

I Introduction

1 Company background ………. 2

2 History and current situation ……… 2

3 Future orientation ……… 4

II Market Analysis 1 Vietnam cosmetic market ……… 5

2 SK-II market in Vietnam ……… 6

III Business Strategy 1 SWOT analysis ……… 6

2 Orientations ……… 7

IV Assess Project's Impact on the Surrounding Area ……….10

V Project Benefit and Cost Analysis 1 Total fixed investment ……… 10

2 Working capital ……… 14

3 Ba Dinh showroom construction capital ……… 14

4 Funds for project implementation ……… 14

5 Capital resources ……… 15

VI Analyze Financial Performance 1 Depreciation of fixed assets ……… 16

2 Assumptions of revenue ……… 17

3 Cost Assumption ……… 18

4 Economic indicators of the project ……….…… .21

5 Project cash flow statement ……… 22

VII Conclusion ……… 24

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I INTRODUCTION

1 Company background

 Company’s name: Beauty Store Company

 Cooperation company: SK-II Company

 Headquartered: Japan

 Founded: 2016

 Legal representative in Japan: Hirokazu Kore-Eda – Director

 Legal representative in Vietnam: Mrs Phung Thi Hao – Director

 Type of business: Skin care

2 History and current situation

2.1 History

Beauty Store was established on April 21, 2016 with the main purpose of bringing beauty and youthful life to Vietnamese women Understanding that beauty is an endless need and cosmetics the way for women to reach true beauty, the company decided to choose Japanese SK-II products to replicate in Vietnam – which is famous with ingredients of natural origin The company has nearly 5 years operation and experience

as an online shop selling hand-carried Japanese goods, currently orienting and expanding genuine showroom stores affiliated with SK-II Japan

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Serum SK-II RNA

Radical New Age

Serum SK-II Genoptics Aura

Serum SK-II Facial Treatment Repair C

Serum SK-II LXP Ultimate Perfecting

SK-II R.N.A Power

Radical New Age

SK-II Cellumination Deep Surge EX

SK-II R.N.A Power Eye Cream Radical New Age

SK-II LXP Ultimate Perfecting Cream

SK-II Facial

Treatment Essence

SK-II Facial Treatment Clear Lotion

SK-II Atmosphere Airy Light SPF50+/PA++++

Facial Treatment Cleansing Oil

For body

Foundation Powder SK-II Clear Beauty Artisan Brush Foundation Moist

SK-II Color Clear Beauty Powder Foundation

of the country and a city with a dynamic and developed economy

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II MARKET ANALYSIS

1 Vietnam cosmetic market

Before 1997, the Vietnamese cosmetic market had not received much attention because women's income was still low and their budget for cosmetics was too meager The skin care and makeup products on the market at that time were mainly smuggled goods from China (cheap brands) and domestic goods, a few foreign ones However, currently, the Vietnamese cosmetic market is very potential according to the forecast of Nielsen Vietnam (the world's leading market research firm)

The cosmetic market in Vietnam is divided into 4 main levels:

 Level 1: The noble line (lady): Currently on the market is very rare, not widely sold in commercial centers, supermarkets but only in spas and beauty salons Although the sales are small, the sales of the lady line are very high because the price is at least 18-20 million VND/skin care set (including 3 bottles of skin care, rose water and facial cleanser), not to mention using other products Some lady brands are Wigleys, Clinique, Estee Lauder, Lancome…

 Level 2: High-class cosmetics: To be at this level, manufacturing enterprises must be located in places with certified cosmetic scientific research institutes There are only 4 countries in the world that have this institute: France, Japan, and Switzerland Some high-class brands on the market are Shiseido, Carita, L'Oreal, Kanebo, Clarins, Pupa

 Level 3: Brand name cosmetics: This line is currently occupying a large amount

in Vietnam Some typical grand name brands are DeBon, Amore, Maybeline, Nevia…

 Level 4: Ordinary goods such as Pond, Hezaline, Essance, Rohto and Vietnamese brands such as Lan Hao (Thorakao), Lana, Kao (Biore), Saigon cosmetics With a market of 90 million people, people's income People's population is constantly improving, especially women (accounting for more than

½ of the population) are increasingly participating in social activities, accessing knowledge, science, fine arts, art so the demand for cosmetics constantly increasing, from perfume, lipstick, makeup powder to lotion - hair care, so Vietnam is a huge market for domestic and foreign cosmetic manufacturing and trading enterprises

SK-II products belong to level 2: high-class cosmetics with diverse price models

Market trend

Nowadays, natural beauty cosmetics are receiving the attention of girls, this is also a new trend in the cosmetic industry After a period of neglecting available natural ingredients, we have paid more attention to the valuable and healthy effects of skin care products and cosmetics of natural origin And almost in the field of cosmetic chemistry alone, now all products derived from nature are gradually regaining their position with higher development

The advantages of natural cosmetics:

- Completely natural: Extracted from flowers, fruits, plants, minerals

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- Safe use: Natural cosmetics are strictly tested and verified by dermatologists, cosmetics are not chemically processed, do not contain synthetic and artificial ingredients

- High compatibility with all skin types: Compatibility with many skin types and high skin safety index, for each skin type you can easily find the right cosmetics

- Wide range of leather products

- Affordable: Except for cosmetics extracted from rare materials, natural cosmetics are not expensive, suitable for all subjects

- Not tested on animals: It is a plus point of natural cosmetics in terms of environmental protection and human life

- No side effects: The natural ingredients used in these products are guaranteed not to cause any side effects; They don't clog pores, don't dry out or make skin oily, don't irritate so you can use them whenever you want

SK-II in Japan is famous for its natural product line, which has good effect and no side effects

2 SK-II market in Vietnam

Currently SK-II cosmetics have a certain number of customers in Vietnam, but the products of this brand line have not been officially available in the market and still depend mainly on portable, floating and wholesale goods directly from the wholesale system with the title "Japanese domestic cosmetics" Currently, there is a unit to buy wholesale directly from Japan, avoid taxes in Hanoi, also set up a showroom, but there

is no official cooperation with our distributor in Japan SK-II Faced with great demand and customer preference for SK-II product lines, SK-II Company will conduct exclusive distribution and development of this brand in Hanoi

III BUSINESS STRATEGY

1 SWOT Analysis

Strengths Weaknesses

 Good products with power results:

SK-II produces quality premium skin care

products which are largely successful as

seen from their market share in the

fragmented markets

 Having a strong brand image and being

highly recognisable

 Loyalty customers:

Majority of the SK-II current users adore

the products and are very loyal to the brand

 Niche market:

By capturing only the top of the pyramid, SK-II is will not be able to maximise its market share as there will be many consumers unable to afford their products

 Narrow range of product:

Khách hàng không tìm được sản phẩm họ muốn mua của hãng SK-II, làm mất khách hàng

 Absence of retail flagship store:

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 Being a child brand under Procter and

Gamble also ensures strong marketing

support and other benefits associated

with the parent company such as

perceived quality and assurance since

Procter and Gamble is big and famous

international fast-moving consumer

goods (FMCG) company

 High recognization

Unlike some of its competitors, SK-II does not own a flagship store By operating solely via departmental stores and specialty stores like Sasa and Sephora, their brand exposure

is also much lesser Competition in departmental stores and specialty stores are also tougher as more brands are available for comparison

Opportunities Threats

 Men industry:

SK-II can hop on the bandwagon and

launch a new product line targeting men

Skin-care products targeting men are

becoming more widespread in the recent

years and this represents a new market

segment that is yet to be saturated

 Lauching make-up series:

SK-II has also recently launched a new

product line offering make-up, which

contains their trademark Pitera, known for

their skin care properties Expanding into a

currently unprovided market serves as an

opportunity for SK-II to better serve its

existing consumers and reach out to gain an

even wider market share

 Collaboration:

SK-II has also rolled out their exclusive

boutique spa in collaboration with

exclusive spa company, Senze Salus

Future collaborations with other companies

have signified a huge opportunity for SK-II

to further strengthen their brand

 Imitation:

The threat of imitation is constantly present

as consumers who are not well informed about the brand may purchase counterfeit goods online or via a third party This could lead to unintended negative word-of-mouth from consumers, whom preceive themselves using the original products

 Other strong competitors:

The beauty industry is also highly competitive as there are countless brands readily available for consumers to choose from These products do range from mass production to premium and exclusive selections To gain new market share from consumers, whom are already loyal to their preferred brands will be challenge to all companies across the industry

2 Orientations

2.1 Location

Choosing a business location is a very important strategy and greatly affects the success

of a business plan Having a good business location is already 40% successful but choosing a place to do business in a large city with 30 districts like Hanoi is a difficult problem The orientation of building a chain of our cosmetics stores with famous Japanese brand SK-II for the middle and high class, targeting young people or active women Stores need to be located in places which have high dense populations, many

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students and many office workers From the above criteria, we used GIS data for analysis Below is a map of population density distribution of 30 districts in Hanoi We see that when we come further into the city center, the more the population density increases; districts such as Dong Da, Hai Ba Trung, Ba Dinh and Hoan Kiem are all located in urban areas with a density of 25,000-35,000 people/km2 with the most population living in the city

Further analyzing spatially, we conduct data analysis of socio-economic points such as schools, hospitals, and companies to analyze and select suitable locations Through the map, we see that the districts of Ba Dinh, Cau Giay, Hai Ba Trung are the places where the majority of employees and offices are concentrated in the city and are near shopping centers, supermarkets, and commercial centers

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For showrooms in Cau Giay and Hai Ba Trung, SK-II has chosen a suitable rental location, which is home to many other high-end product lines, to be specifically our address for new showrooms are:

 Cau Giay: Discovery Complex: third (3rd) floor: 42m2 with price 20,000,000/month

 Hai Ba Trung: Vincom Trade Center Ba Trieu: second (2nd) floor: 36 m2 with price 18,000,000/month

As for Ba Dinh district, our company decided to buy land and proceed to build a suitable showroom by ourselves

Address: No 4, Van Cao, Lieu Giai, Ba Dinh

The land price is 3.8 billion for 41m2

2.2 Human resources

Each store is estimated to have 6 full-time employees including the store manager, salesman, security guard and 5 part-time collaborators Employees will be equipped with knowledge about cosmetics through training classes organized by company in association with teachers at the parent company in Japan

- Employees are required to have the following qualifications:

 Knowing how to display, manage and remember the items and uses of the SK-II cosmetic line

 Knowledgeable about beauty care, have knowledge and have used many different cosmetic lines

 Having good communication skills, cheerful spirit and enthusiasm when consulting and selling

 Having beautiful skin, few defects and hving passion with beauty

- Marketing strategy:

 Advertise on online newspapers: hire PR articles on major websites with beauty care categories such as vn.express, dantri.com.vn, kenh14, ngoisao.net, soha.vn, tiin vn, zing.vn, 24.com.vn…

 Advertise on beauty forums, share knowledge and have good review for SK-II products

 Setting up an official website and announcing information from the co-operarion company: the exclusive distributor SK-II in Hanoi for the purpose of creating trust, introducing products, consulting products and sharing ideas as well as ordering direct goods

 SEO keywords "cosmetic", "SK-II", "reduce dark spots, treat acne"

 Advertising on social networking sites: Facebook, Instagram, Tiktok in cooperation with KOLs to promote product uses

- Discount promotion:

 Issue deals and vouchers on famous website:

http://nhommua.com, http://hotdeal.vn, http://muachung.vn, http://cungmua.vn, http://www.123mua.vn, http http://www.cucre.vn, http://51deal.vn, http://khuyenmaivang.vn, http://vinadeal.vn/, http://www.diadiemvang.net/

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 Discounts on holidays and anniversaries

- Type of advertisements:

 Outdoor advertising: Pano, poster, LED light

 Advertise on means of transport (bus)

 Invite famous people to participate in the company's product promotion program

to add value and trust about the product

 Other types of advertising

+ Advertising through business directory publications (golden pages, business information )

+ Advertising through product introduction programs in public places: discounts, groupon giveaways at community events (student day, International Children's Day, International Women's Day )

+ Advertising through packaging (bags, delivery bags)

 Encourage customers to buy products, promote faster and more purchases

 Compare with other products for customers to see that the quality of service and after-sales is better than other competitors in the market

 Convince customers to believe in SK-II's product qualities

 Remind consumers of product availability and benefits In the initial stage of bringing the product to the Vietnamese market, in order for customers to know about the products distributed by the company, the company should let customers try the product through small packages of free products The company should also carry out programs for the community to bring its brand to everyone and create a beautiful image of the company in the public mind such as campaigns to support poor children, campaigns to protect environment

IV ASSESS THE PROJECT'S IMPACT ON THE

SURROUNDING AREA

1 For showrooms in Cau Giay and Hai Ba Trung District

The company applies the form of renting kiots at large department shopping center, so electricity and water are relatively quite stable, we just need to fix and connect them to

a suitable location

However, this repairation also takes time for about 1 week and causes noise effects by drilling machine and freight transportation Realizing that the commercial shopping centers start to open to welcome guests from about 9:30 am and close at 10 pm;

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therefore, construction workers can start from 6 am and finish work until 9 am, which will not affect shoppers as well as the shops around

2 For showroom in Ba Dinh District

The entire store needs to be built from the beginning, so it may have some impact on the residential area as well as the surrounding shops These impacts only take place during construction and have no impact on the environment after completion

It is expected that the showroom will take about 4 months to build, starting from November, 2021 and finishing at March, 2022 Below, there are steps that need to built our new showrooms:

+ Preparing the ground, gathering materials before construction: 1 week

+ Making the foundation, pressing piles, reinforcing the foundation: about 20 days to 1 month

+ Construction of rough parts (building of walls, beams, floors, columns, roof ): about 2 - 2.5 months depending on weather conditions (the humid weather will

be detrimental and prolong the time)

+ Completion time (ceiling, flooring, wall cladding, door installation, stairs, wall painting, sanitary equipment installation, electrical equipment): 1 month or 45 days

+ Time to install furniture and decoration: 2 weeks

In 4 months of construction, the showroom has the following effects:

 Noise

Table content – Maximum permissible limits on noise

(according to sound level equivalent), dBA

No Area From 6 a.m to 21 p.m From 21p.m to 6a.m

According to the table above:

+ Special areas: are areas within the fence of medical facilities, libraries, kindergartens, schools, churches, communal houses, pagodas and other areas with special regulations

+ Common areas: Including: apartment buildings, separate or adjacent houses, hotels, motels, administrative offices

Our showroom construction area is located in the normal area, through surveying and investigating the living rhythm of the surrounding residents, our company decided to proceed with the construction of the project from 7 am to 11 am as well as from 2pm to 5pm This is the time when most people have left their houses and gone to work and school, hence the noise can be minimized

 Dust

The pouring of soil, sand and construction materials during this period causes the vehicles to operate continuously; the amount of work for leveling the ground as well as

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building items, installing equipment such as foundations If deployed in the dry season, the dust pollution for the whole area is the highest The dust concentration can exceed many times the allowable standard but will decrease when the construction is completed The dust components are mainly soil, rock, sand, cement dust, smoke dust during the construction phase, dust concentration may increase and exceed the allowable standards; however, the above source does not spread far, only affecting workers on the construction and people passing across and around the construction area

 Solid waste

This waste is mainly the packaging of cement materials, rubble, stones, stones used to pour concrete slabs It can also be the waste of excess material, excavated soil, scattered materials, waste, packaging, wooden crates This amount is not much, but they are substances that are difficult to decompose and can be utilized and collected during the construction process depending on the type Solid waste in daily life of workers is relatively diverse such as biodegradable organic matter, besides, there are also packages, nylon, plastic bottles, canned goods, etc

Because the construction area is quite small and only one floor is built immediately in the aim of selling SK-II products, these wastes can be collected and sorted without much impact on the environment

 Economic and social impact

SK-II products belong to the cosmetic segment suitable for people with middle-high income, in addition, this is the first genuine store to cooperate directly with SK-II company in Japan The construction of shops is on the main road, where there is a dense population and an enough amount of shops having the same price range, this will push

up the general land price here and attract more shops to rent or build in this place Thereby, our showroom is contributed to creating the increasing the economic value of the region

V Project benefit and cost analysis

1 Total fixed investment for the stores

To calculate the business efficiency for a chain of stores, the most necessary is to calculate the investment efficiency of a store

Total investment for interior decoration and business services of the store is: 346,600,000 VND This cost includes:

+ Expenses for interior decoration: in accordance with regulations and general style in terms of images, colors and product layout

+ Equipment cost for the store

+ Deposit rental for 2 showrooms in Cau Giay and Hai Ba Trung

+ Advertising costs

+ Service cost of the shopping center

+ Provision fees (calculated by 10% of the investment value of furniture and equipment)