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MUJI Macau     

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MUJI Macau     

INDEX

1.

Executive Summary 1.1. Company Mission 1.2. Keys to success 1.3. Objectives

2.

Company Summary 2.1 Company Ownership

3.

Product and Services

4.

Market Analysis Summary 4.1. Market Segmentation 4.2. Season Distribution

5. 6.

Competitors Analysis Strategies and Implementation 6.1. Competitive Edge

7.

Staff Organization

8.

Financial Analysis

9.

Conclusion

10.

References

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MUJI Macau     

1. Executive Summary

MUJI is owned by Royhin Keikaku Co., Ltd., who’s headquartered in Japan. It was established in 1989 and listed in Tokyo Stock exchange on 14/12/1998 (http://ryohin-keikaku.jp/) as in Retail Trade industry. MUJI has over 7000 products ranging from clothes, household articles and food. MUJI aimed to develop and promote low price and high value products to customers. There are about 379 stores in Japan and 153 stores in Asia, Europe and North American. The company has six different types of businesses, which includes MUJI product business, The Café and Meal MUJI, MUJI Campsite Operation, MUJI Flowers, MUJI House and IDEE. The operating revenue for fiscal year ending Feb 2011 amounted to 145,800 (million yen). Considering solely the Asia region, operating revenue amounted to 10,964 million yen, increased 27% YoY. Operating profit margin is increased by 1243 (Million yen), up by 67% compared to the previous fiscal year. The growth of the figures in Asia is mainly due to the fast expansion of MUJI China. The economy of Macau has grown rapidly since the liberalization of the Casino licenses. Comparing to the year 2010, GDP has grown from 2,262 (million MOP) to 2,921 (million MOP). Such strong growth is partly contributed by an increase in retail sales (up 41.7%) and tourist expenditure (up 20.0%).

Retail Perfomance 2007 to 2011 

Million MOP

Million MOP 50,000

7,000

45,000 6,000 40,000 5,000

35,000 30,000

4,000

25,000 3,000

20,000 15,000

2,000

10,000 1,000 5,000 0

0

2007

2008

2009

2010

2011

Total Retail

14,195

19,391

22,354

30,588

43,340

Department store

1,630

2,371

3,336

4,423

6,294

Supermarket

1,379

1,741

1,906

2,122

2,633

The above chart shows the retail performance between 2007 and 2011. There is a common urban legend that department store sells exactly the same product as in most supermarkets, just with higher prices and nobody actually shops there. The above chart dares to differ this legend. As we can see, the department store sales increases in line with the whole retail trend,

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MUJI Macau      while supermarkets is obviously slowing down. There is a huge demand in higher quality department store products, but the supply is obviously insufficient. There are just a handful of department stores in Macau. Middle price product is simply a desert area. With the slowing down of the world economy, GDP is still expected to grow 12% this year, and 13 % in 2013. GDP in China will slow down to 7.5%, which is a real good scenario comparing to Europe (-0.3% in Q4 2011) and US (0.7%). One of the most important income sources of MUJI Macau would be from mainland tourists. All around China, wages have a formidable double digit increase in 2011. Chinese had been well known for their strong buying power, and should not be omitted in any commercial decision. Generally, MUJI China has higher pricing then MUJI HK due to strong RMB and import taxes. Excluding the exchange rate, there is a difference of 10% in pricing. Among other reasons, like trust issues, mainlanders would sometimes go all the way to HK just to find MUJI products. This is strongly reflected by the recent opening of a new MUJI HK in Harbor City, which is not just well known for D&G but also being a Chinese tourist concentration area. MUJI Macau will start up as a home product department store offering kitchen products, home products and food. Aside from these in shop products, we will also develop catalogue sales on furniture, using the same business model as Ikea Macau, except for a difference, we offer after sales service and a “brick and mortar” existence. We will continue to expand our collection accordingly to the market needs. Growth plans for MUJI Macau include an expectation of a Payback Period of 3 years maximum. We do also expect a YoY sales growth of at least 20%, which is extremely conservative if we look at the 40% growth in department store sales in overall Macau, but still a very reasonable growth since we still have to account for inflation (3.9%) and increase in other costs. Projections will be adjusted accordingly as the business environment modifies. But for the meantime, we should keep it realistic.

1.1

Company Mission

The mission and vision of MUJI Macau is to provide customers with quality product at lowest cost. There will be no over packaging. We base our motto on simplicity. Customers will enjoy a shopping space where they will free to browse through our products. Our well trained team will always be keen and ready to provide clarification on any product issues raised by our customers. Employees will enjoy a fair and friendly environment which respects ideas and hard work.

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MUJI Macau     

1.2

Keys to success

In order to succeed, we must always keep the following in mind:  Attain high level of exposure through media, school seminars and advertising.  Provide trainings and information sessions to all employees regarding new promotion and new product. Attain higher homogeneity of customer service through constant incentive meeting and trainings.  Increase customer revisit rate through loyalty programs  Since simplicity is our motto, we depend highly on face to face referrals from our customers. Consistent customer service is extremely important. There should be a clear procedure and claims and complaints.

1.3    

Objectives

Have a Payback Period of 3 Years maximum Increase YoY sales by 20% Develop an effective catalogue sales presence. Achieve a market share of at least 5%, accounting for annual sales of 31M.

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MUJI Macau     

2. Company Summary Privately owned by the 6 of us, Muji Macau will contribute a convenient and comfortable shopping space. It will give customer a selection of affordable designer products. Located in the center of Macau, the company will enjoy big exposure to both locals and tourists. Muji Macau will cater to middle class and tourist sector. These two classes seek for price x quality, simplicity and something with a brand. Our product fits perfectly into what these sectors want. We also intend to get a piece of pie from the B&Q and Ikea catalogue market. Not only do we have a wide range of product, we also offer personalized service on our products. This channel will aid to expand and reach to a broader range of customers, thereby increasing sales to our in shop products. Store Location Store will be located in the center of Macau, in a 3-storey building. Tenants in surrounding area include international brands such as G-Raw, Nine West, etc. The concentration of our target customers seeking middle price range products is highest in this area. This is an area with substantial foot traffic. We will have high exposure rate just by being there. Shopping will be easy and convenient. Store Operations MUJI Macau will open from 11.00 am to 11.00 pm, 7 days a week and extended working hour during special holidays. We will staff one full time manager and one full time supervisor. On average, we will need 7 part time employees. From time to time, owners will be on site to observe the business, and help out the sales team in a junior role. In the spirit of team building this is extremely important to keep the turnover rate of our employee as low as possible.

2.1 Company Ownership

MUJI Macau is a Limited Liability Company with equal partnership between the 7 owners.

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MUJI Macau     

2.2 Start-up Summary

The following funding needs were considered for the start-up:

Start-up Start-up Expenses Leasing and Franchise Decoration Works Utilities Travel Expenses

Total 6 000 000.00

700 000.00

5 000.00

5 000.00 10 000.00

100 000.00

100 000.00

15 000.00

15 000.00

Stationary

5 000.00

5 000.00

10 000.00

10 000.00

6 845 000.00

6 040 000.00

5 000.00

5 000.00

Total Start-up Expenses

March

6 000 000.00

Licensing

Other

February

700 000.00

10 000.00

Advertising and Grand Opening Event

January

805 000.00

Start-up Assets Petty Cash Start-up Inventory

622 910.24

Sub-Total Start-Up Assets

627 910.24

622 910.24 622 910.24

5 000.00

Other Assets Computer and Cash Register

15 000.00

15 000.00

100 000.00

100 000.00

40 000.00

40 000.00

Sub-Total Other Assets

155 000.00

155 000.00

Total Assets

782 910.24

5 000.00

155 000.00

7 627 910.24

6 045 000.00

960 000.00

Furniture CCTV and Security System

Total

Table 1:

622 910.24 622 910.24

Start-Up

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MUJI Macau     

3. Product and Services MUJI Macau identifies a specific group of people that wants to enjoy quality products at reasonable pricing. We offer value oriented home and kitchen products, as well as a variety of good quality food product. In order to attract more foot traffic and to increase hit rate, we will offer local delivery service over $300 purchase. In order to facilitate the work of our staffs and to avoid complains, we should also give customers the option of delivery if purchase does not reach $300, by paying a $20 fee. This way, local customers will no longer need to choose between continue shopping elsewhere or buy from us. They can simply follow their impulses. The market for the products where we can be competitive is as follows: Products Apparel Accessories Shoes Bags Travel Electronics House Keeping Bathroom Kitchen Storage Food Furniture Home Fabrics Health & Beauty Fragrances Stationary Art and Craft Gift and Memory Special Offer Total Retail Sales

Table 2:

Product Distribution 8.00% 5.00% 0.00% 3.00% 3.00% 2.00% 4.00% 10.00% 12.00% 15.00% 3.00%

Sales Volume 49 600 000.00 31 000 000.00

6.00% 5.00% 12.00% 3.00% 5.00% 1.00% 1.00% 2.00%

37 200 000.00 31 000 000.00 74 400 000.00 18 600 000.00 31 000 000.00 6 200 000.00 6 200 000.00 12 400 000.00 620 000 000.00

18 600 000.00 18 600 000.00 12 400 000.00 24 800 000.00 62 000 000.00 74 400 000.00 93 000 000.00 18 600 000.00

Muji Macau market universe

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MUJI Macau     

4. Market Analysis Summary According to government statistics, the retail sector is booming. There is an overall 41% growth from 2010 to 2011. Department stores market grows at the same rate, and even exceed by 1%. Supermarkets in Macau sell products comparative to a department store, yet their growth rate is simply 24%. This indicates a shift of consumer choice from cheap products to medium price quality products. Department store is indeed a powerful force in Macau, but luckily for us, it is still underdeveloped. There are just 2 sizable department stores in Macau, only one of which sells bridge price product. In order to suit the working schedule of the middle class people, most of which don’t want to be packed in a shop during tourist rush hour, we will extend our working hour to 11.00pm. At the same time, we will focus on promoting our online and catalogue business, so that at any time of the day, impulse buying is possible. Convenience is of extreme importance for success.

Retail Perfomance 2007 to 2011 

Million MOP

Million MOP 50,000

7,000

45,000 6,000 40,000 5,000

35,000 30,000

4,000

25,000 3,000

20,000 15,000

2,000

10,000 1,000 5,000 0

2007

2008

2009

2010

2011

Total Retail

14,195

19,391

22,354

30,588

43,340

Department store

1,630

2,371

3,336

4,423

6,294

Supermarket

1,379

1,741

1,906

2,122

2,633

Table 3:

0

Retail Performance

4.1 Market Segmentation The median salary has grown steadily by 6% YoY since 2009. Our primary customers consist of people with high correlation between median or higher salary and reasonable amount of education. That amount to 20 to 25% of the population. Out of this group, we assume that around 51% is within our target age group (18-44), which means the market is providing us with

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MUJI Macau      an estimate of 62,725 potential customers. We can consider then a yearly market universe above MOP 62 000 000.00.

Population in Macau by Age

Another important source of income derives directly from the mainland Chinese tourist. The presence of this group has grown astonishingly by 13% in 2011, up to a whooping 28 M visitor. In January 2012 China has recorded a CPI increase of 4.5%. Analyst expects the salary to rise above this factor. Above that the price of RMB had increased 30% since 2009. Both contribute to a very important factor, ie. This group has a growing amount of dispensable money. So in a sense the pricing of MUJI Macau would be real attractive if one compares its price with mainland.

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MUJI Macau      Macau Tourist Spending

4.2 Season Distribution

The sales have not a linear distribution along the year. They change according to the season. The following sales season indexes were considered: Month January February March April May June July August September October November December

Table 4:

Season Indexes 1.5 2.0 0.8 1.0 1.0 1.0 1.0 1.0 1.0 1.2 1.0 1.5

Season distribution of sales

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MUJI Macau     

5.0 Competitors Analysis

New Yaohan 

  

New Yaohan Department Store is the biggest department store in Macau. Built and run by the Japanese business house Yaohan, this huge department store is the symbol of Macau's shopping arcade. Its new location is in the center of the city. New Yaohan mall includes toys, gifts, electronics, household goods, cosmetics, and other items in addition to clothing and accessories, as well as a restaurant at the top floor to resemble the department stores are laid out in Japan. The mall is open daily from 11am to 10:30pm and operates seven days a week. The store offers a choice among the brand names that include international as well as famed Asian design talents. A branded endless collection of cosmetic and perfume counters, ladies fashion boutiques, men's and children wear. New Yaohan attract thousands tourists visiting Macau every year.

Daiso        

Daiso stores are accounted for almost half a million in 24 countries all over the world. Daiso's products are direct imported from Japan 100% Japanese Style and Taste that are positioned as quality, variety and unique products. From dishes, foods, toiletries, and sundries to makeup, stationary goods, and tools, Daiso offers a wide variety of high quality products at the amazingly low price. Daiso always surprise its customers with new products and amazing designs their each visit. wide-ranging product lineup; Large network of store made possible to distribute and sell products at low prices Daiso creates store with new unique value guided by the mission – to help customers "find surprises and fun". Daiso is located in the central of Macao and Taipa and operates seven days a week.

IKEA – Catalog Sales     

IKEA is the world's largest furniture retailer that designs and sells ready – to – assemble furniture. IKEA Home furnishings, kitchens, appliances, sofas, beds, mattresses, food etc. It is a Swedish company known for its affordable, modern furniture with compact styles that is usually assembled by the purchaser at home. With nearly 300 stores worldwide, followed by the budget-hunting customers. IKEA catalog gives to its customers a wide range of ideas for a comfortable and affordable quality living.

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MUJI Macau      Royal Supermarket   

Royal is the largest supermarket chain in Macao. Royal Supermarket has 28 stores and 600 employees. It sells both Chinese merchandise and imported goods.

Competitors’ analyses are done in respect to following key parameters of 5 P's. Positioning – Product – Price – Promotion - People 5 Ps

MUJI

New Yaohan

Daiso

Royal

Present Position

493 stores worldwide

1 Locally

534 stores worldwide

28 stores Locally

Product

- High quality best materials;

- High quality;

- Wide variety;

- Famous Brands

- High quality

- Variety of imported and from China products.

- Natural and simple design;

- Quality range - Japanese signature products

- Natural colors and shapes. Price

"reasonably priced" brand

Medium -to- High prices

Cheap commodity

Affordable

Promotion

- Muji Voucher Codes,

- New Yaohan Cash Coupon Rebate.

- Discount voucher codes.

- Royal Jetso Card - one point for every $1 spent

- Discounts;

- Free delivery on all items.

- Discounts in most of the products

Chose by yourself

Non English speakers.

Creating stores with unique value.

Endless Jetsos, at Royal

- cash coupon rebate for every 100$

People

Slogan

-Discounts Promo Codes & Deals

- Annual sales up to 80%.

-Well in structured;

Professional staff

Knowledgeable

Well unstructured

- Ability to speak multi languages

Ready to help

MUJI's Philosophy of no Brand Quality Goods

To help customers Find Surprises and Fun.

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MUJI Macau     

5.2. Porter 5 Forces

Rivalry

- Strong Existing Competitors - Competitors weapon: - Brand Products - Affordable prices - sales specials, discounts, coupons, etc. - Store chains and location

Threat of New Entrants

- The threat of new entry is moderate - Intense competition - Time and Cost of entry - High capital requirements -

Threat of Substitutes

Customer Loyalty

- Moderate - to – High - Number of store provide similar products - Unaware of Brand identity lead consumers switch to substitutes

Bargaining Power of Suppliers

 Bargaining power of suppliers is low  Use suppliers authorized by your franchisor  Franchisor may have a great deal of bargaining power to keep your costs low

Bargaining Power of Buyers

- Buyers have high power - Low switching costs (many products available at competitor's locations) - Buyers are well informed about products availability in the market and price - Price sensitive.

In conclusion, the overall competitor environment is not ideal: 

Intense rivalry;

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MUJI Macau        

Low switching costs of Buyers Threat of new entry High capital costs

Muji does have advantages:        

Strong Brand recognition Worldwide leader Product packaging high quality uniqueness Already existent market share in Macao (Macau citizens visit Hong Kong for Muji products) Ability to update products in response to changing customer needs A good mission statement (…) Differentiation strategy of offering customers a convenient shopping experience. Muji won awards for best design in 2001.

SWOT Strengths

Weaknesses

MUJI Brand

New Market

Simple design

High investment cost

Low cost

High quality

Opportunities

Threats

Growing Segment Market

Growing rental prices

First into market

Intensive rivalry

Government support

Low switching Costs (buyers)

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MUJI Macau     

6.0 Strategies and Implementation MUJI Macau will enjoy leverage on its location, brand position and pricing to increase profit and sales. The following sections will review the various strategies that will be implemented.

6.1 Competitive Edge MUJI Macau targets itself as a unique retail environment through its immaculate service, product offering, competitive pricing and location. Services Recommendation from our customer is extremely important for MUJI to expand its customer base. That depends heavily on our happy and knowledgeable team members. MUJI Macau will promote a friendly and fair working environment. Ideas will be discussed with respect. Staff performance will be constantly reviewed and suggestion will be made. Product and procedure training will be provided and constantly refresh. Giving customers consistent information is extremely important. We don’t want them to get annoyed due to misinformation from our staff. Decoration ideas will be constantly posted around the shop to stimulate buying impulses. Local delivery service will be provided to provide a less hectic means of shopping. In a sense it will give customer a care-free shopping experience. (Meaning one less thing to think about when they buy). Products and pricing MUJI Macau will provide a wide range of home products and kitchen appliances. Around Macau, these are one of the many things that you can either get it cheap and no quality, or extremely expensive. We intend to locate ourselves as a bridge product, something you can get at fair price and good quality. Food will also represent a strong percentage of our sales. Food, of course, has a very low profit margin. We will maintain to have variety of them, but not to occupy too much space. However since food is relatively price assessable to everyone, it will help to attract teenage customers. Body care product has high profit margin, but at the same time the mark prices is relatively low compare to the other same quality product. They occupy little space. And the fact that their price range is around 50 – 200 MOP is extremely assessable and attractive to almost every one. Location As previously mentioned, MUJI Macau will be located at the center of Macau. “You can’t pass by without seeing us”.

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MUJI Macau     

6.2 Marketing strategy In addition to our product quality, variety and pricing, MUJI Macau will focus its marketing effort via various medias: a. Local Newspaper publication  If you are familiar with the MUJI product, you should realize that our product is simple and plain. In these couple of years, people have come up to a habit of reengineering these types of products. We will host a special weekly piece showing people how they can personalize our product b. Consumer awareness – creating guilty conscience  MUJI puts a lot of effort on minimizing waste. This effort should not go unnoticed. We will schedule school visit to teach student about recycling, waste and on our eco system. It is crucial for us to create future buyers.  Train our customer to believe in our story. Informative email will be given out concerning our featured product. Information regarding the above topics will also be mention and emphasize.  For our body care and cosmetic range, we need to strongly emphasize on how natural our product is. We do need to continuously send our aromatherapy information and side effects of additives and some types of preservatives. c. Employee awareness – Train our employee to believe in the story. d. Website marketing  Our business will be supported via search engine marketing and banner advertising. We will post featured product on our website and change them regularly to give visitor a fresh view every time they come to our website. Collect customer database through official Facebook page and our official website.

6.3 Sales strategy All front line people will have a comprehensive sales and workplace training. All members should work as teammates to promote a Zen work place. They are strongly encouraged to assist customers in a personal manner. Gather information and seek to increase sales by giving useful ideas and information. a. Loyalty program Loyalty program will be established to generate a higher percentage of returning customers. Unlike most company we will not be giving out discount, since MUJI concept is “We are already offering the lowest price”. We will instead create a loyalty program base on a rebate system. For every $100 dollars purchase, we will provide an equivalent 0.5% gift rebate or cash coupon rebate to our customer, depending on the total sum. But the amount has to look good. Rebates over $200 or above should be deliver through cash coupon, while the rest should be in the form of merchandise. All these should be delivered on different interval period. This rebate campaign will work like an annual sales campaign to attract more flow during the low season. b. Partnership with credit card company Page 17 of 25 


MUJI Macau      We will negotiate partnership with credit card Company, offering them special discounts when purchasing our coupon. c. Gift baskets and gift ideas It is very rare to offer gift baskets in our kind of retail business, but this is really something that gets into everybody’s nerves every now and then. The most common market offer is fruit baskets and food basket. But why can’t we share a piece of pie by offering home product baskets? We will constantly arrange packs of items with reasonable price, to suit all kinds of purposes. Baskets will contain food, cosmetics and other home and kitchen products.

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MUJI Macau     

7. Staff Organization MUJI Macau will operate 12 hours per days, 7 days a week. The normal operation requires 5 persons simultaneously on the shop. This means 21.900 hours per year. Working with an hours bank, 21 900 hours can be achieved shifting 11 persons. In order to keep the staff motivated, we create a career perspective with pre-defined objectives and incentives. Our staff will have the following categories: - 2 Managers - 3 Cashiers/Attendants - 3 1st Class Attendants - 3 2nd Class Attendants Their base salaries will be as follows: Category Manager Cashier/Attendant st 1 Class Attendant nd 2 Class Attendant

Table 5:

Base Salary (MOP) 15 000.00 10 000.00 9 500.00 8 500.00

Staff salaries

Additionally, 1.5% of the sales will be distributed as annual bonus up to 3 salaries and 0.5% will be distributed as commissions.

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MUJI Macau     

8. Financial Analysis A 50% margin on the products in the franchise business is typical. Besides the products cost, we considered the following variable costs: Cost Staff annual Incentive Fund Royalties Advertising Fund

Table 6:

Percentage of Sales 2.00% 4.50% 2.00%

Variable costs excluding products

Additionally, we considered the following operational costs (with a 7% yearly growth rate): Cost Monthly Rent Monthly Utilities Other Expenses (Monthly) Insurance (Monthly)

Table 7:

MOP 250 000.00 10 000.00 5 000.00 300.00

Operational costs

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MUJI Macau      During the first year, we can expect the following Cash Flow distribution (in MOP): January

February

March

April

May

June

July

August

September

October

November

December

Sales

1 601 769.18

2 135 692.24

854 276.90

1 067 846.12

1 067 846.12

1 067 846.12

1 067 846.12

1 067 846.12

1 067 846.12

1 281 415.34

1 067 846.12

1 601 769.18

Sub-Total Cash In

1 601 769.18

2 135 692.24

854 276.90

1 067 846.12

1 067 846.12

1 067 846.12

1 067 846.12

1 067 846.12

1 067 846.12

1 281 415.34

1 067 846.12

1 601 769.18

6 045 000.00

960 000.00

622 910.24

-

-

-

-

-

-

-

-

-

Direct Cost of Sales

937 034.97

1 249 379.96

499 751.98

624 689.98

624 689.98

624 689.98

624 689.98

624 689.98

624 689.98

749 627.98

624 689.98

937 034.97

Payroll

114 000.00

114 000.00

114 000.00

114 000.00

114 000.00

114 000.00

114 000.00

114 000.00

114 000.00

114 000.00

114 000.00

114 000.00

1 650.00

1 650.00

1 650.00

1 650.00

1 650.00

1 650.00

1 650.00

1 650.00

1 650.00

1 650.00

1 650.00

1 650.00

250 000.00

250 000.00

250 000.00

250 000.00

250 000.00

250 000.00

250 000.00

250 000.00

250 000.00

250 000.00

250 000.00

250 000.00

10 000.00

10 000.00

10 000.00

10 000.00

10 000.00

10 000.00

10 000.00

10 000.00

10 000.00

10 000.00

10 000.00

10 000.00

Cash In

Cash Out Start-Up

Social Fund Rent Utilities Insurance Other Sub-Total Cash Out

300.00

300.00

300.00

300.00

300.00

300.00

300.00

300.00

300.00

300.00

300.00

300.00

5 000.00

5 000.00

5 000.00

5 000.00

5 000.00

5 000.00

5 000.00

5 000.00

5 000.00

5 000.00

5 000.00

5 000.00

7 362 984.97

2 590 329.96

1 503 612.22

1 005 639.98

1 005 639.98

1 005 639.98

1 005 639.98

1 005 639.98

1 005 639.98

1 130 577.98

1 005 639.98

1 317 984.97

Cash Flow

- 5 761 215.79

- 454 637.72

- 649 335.32

62 206.14

62 206.14

62 206.14

62 206.14

62 206.14

62 206.14

150 837.37

62 206.14

283 784.21

Accumulated Cash Flow

- 5 761 215.79

- 6 215 853.51

- 6 865 188.84

- 6 802 982.70

- 6 740 776.56

- 6 678 570.42

- 6 616 364.28

- 6 554 158.14

- 6 491 952.00

- 6 341 114.63

- 6 278 908.49

- 5 995 124.28

Table 8:

Cash Flows during year 1

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MUJI Macau      During the first 5 years, we can expect the following Cash Flow distribution (in MOP):

Cash In Sales Sub-Total Cash In Cash Out Start Up Start Up Direct Costs Direct Cost of Sales Sub-Total Direct Costs Fixed Costs Payroll Social Fund Rent Utilities Insurance Other Sub-Total Fixed Costs Sub-Total Cash Out EBITDA Depreciation EBITA Taxes NET Results Accumulated Net Results

Table 9:

Year 1

Year 2

Year 3

Year 4

Year 5

14 949 845.68 14 949 845.68

17 939 814.81 17 939 814.81

21 527 777.78 21 527 777.78

25 833 333.33 25 833 333.33

31 000 000.00 31 000 000.00

8 745 659.72 8 745 659.72

10 494 791.67 10 494 791.67

12 593 750.00 12 593 750.00

15 112 500.00 15 112 500.00

18 135 000.00 18 135 000.00

1 368 000.00 19 800.00 3 000 000.00 120 000.00 3 600.00 60 000.00 4 571 400.00 13 317 059.72 - 5 995 124.28 1 525 582.05 - 7 520 706.33 - 5 995 124.28 - 5 995 124.28

1 463 760.00 19 800.00 3 210 000.00 128 400.00 3 852.00 64 200.00 4 890 012.00 15 384 803.67 2 555 011.15 1 525 582.05 1 029 429.10 123 531.49 2 431 479.66 - 3 563 644.62

1 566 223.20 19 800.00 3 434 700.00 137 388.00 3 852.00 68 694.00 5 230 657.20 17 824 407.20 3 703 370.58 1 525 582.05 2 177 788.53 261 334.62 3 442 035.95 - 121 608.67

1 675 858.82 19 800.00 3 675 129.00 147 005.16 3 852.00 73 502.58 5 595 147.56 20 707 647.56 5 125 685.77 1 525 582.05 3 600 103.72 432 012.45 4 693 673.32 4 572 064.65

1 793 168.94 19 800.00 3 932 388.03 157 295.52 3 852.00 78 647.76 5 985 152.25 24 120 152.25 6 879 847.75 1 525 582.05 5 354 265.70 642 511.88 6 237 335.86 10 809 400.52

7 627 910.24

Cash Flows for the first 5 years

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MUJI Macau     

9. Conclusions

Investment: From Table 8 we can find that the maximum Net Working Capital will occur in March and will be MOP 6 865 188.84. We consider that the MOP 7M will be the adequate investment for this project.

Break Even Analysis: From Table 9 we derive:

Year 1 14 949 845.68 8 745 659.72 4 571 400.00 0.74

Sales Variable Costa Fixed Costs Break Even

Table 10:

Year 2 17 939 814.81 10 494 791.67 4 890 012.00 0.66

Year 3 21 527 777.78 12 593 750.00 5 230 657.20 0.59

Year 4 25 833 333.33 15 112 500.00 5 595 147.56 0.52

Year 5 31 000 000.00 18 135 000.00 5 985 152.25 0.47

Break Even

Payback Period: From Table 9 we can see that our Payback Period is around 3 years

NPV: From Table 9 we can see that our NPV after 5 years is almost MOP 11M.

ROI: From Table 9 we can derive also that Muji Macau Return on Investment after 5 years will be above 10% per year

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MUJI Macau      SMART Analysis: •

S for Specific:

Our goals are clearly defined. •

M for Measurable:

All variables can be measured as well as the results. •

A for Achievable:

Our Financial Analysis shows that we can achieve our goals. •

R for Realistic:

All data is realistic. •

T for Time Framed:

Our objectives and our financial analysis have a well defined time frame

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MUJI Macau     

10.

References

http://www.dsec.gov.mo/default.aspx http://www.muji.com

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