Ninja Van Report Final - Group assignment PDF

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BUS344 INTERNATIONAL MANAGEMENTMAJOR PROJECT PROPOSALLECTURER: DR JURGEN RUDOLPHGROUP MEMBERS NAME:APRIL HOON BOON TENG (33378201)LEE YI HUAI (33413826)ONG KWEE CHEN, ANGELIA (33483324)CHRISTINA TJAHYADI (33499746)YAP JIA KERR, ASHLEY (33574575)TOTAL WORD COUNT: 11,REFERENCE STYLE: APA 6TH EDITIONUR...

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BUS344 INTERNATIONAL MANAGEMENT MAJOR PROJECT PROPOSAL LECTURER: DR JURGEN RUDOLPH

GROUP MEMBERS NAME: APRIL HOON BOON TENG (33378201) LEE YI HUAI (33413826) ONG KWEE CHEN, ANGELIA (33483324) CHRISTINA TJAHYADI (33499746) YAP JIA KERR, ASHLEY (33574575)

TOTAL WORD COUNT: 11,1565 REFERENCE STYLE: APA 6TH EDITION URKUND SCORE: 1%

TABLE OF CONTENTS: 1.

Executive Summary.......................................................................................... 5

2.

The e-commerce and logistics industry ............................................................ 6 2.1 Logistics for the e-commerce industry in Singapore ......................................... 7

3. Ninja Van’s Company Introduction ......................................................................... 8 3.1 Mission and Vision ............................................................................................ 9 3.2 Company Profile ............................................................................................... 9 3.3 Shareholder structure ..................................................................................... 10 4. Ninja Van’s services in India ................................................................................ 10 4.1 Ninja Van’s entry in India ................................................................................ 11 4.2. Porter’s Five Forces Analysis ........................................................................ 12 Threat of New Entrants – Medium to High ............................................................ 12 Bargaining Power of Buyers – Medium................................................................. 13 Bargaining Power of Suppliers – Low ................................................................... 13 Threat of Substitutes – Low .................................................................................. 14 Industry Rivalry – High.......................................................................................... 15 4.3 Customer Profile and Demand Analysis ......................................................... 15 Geographic Segmentation .................................................................................... 15 Demographic Segmentation ................................................................................. 16 Psychographic Segmentation ............................................................................... 16 Behavioural Segmentation.................................................................................... 18 5. Environmental Factors ......................................................................................... 19 5.1 PESTEL Analysis............................................................................................ 19 Political ................................................................................................................. 19 Economic .............................................................................................................. 21 Social-Cultural ...................................................................................................... 22 Technological ....................................................................................................... 23

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Environmental ....................................................................................................... 23 Legal ..................................................................................................................... 24 5.2 SWOT Analysis............................................................................................... 25 Strengths .............................................................................................................. 25 Weaknesses ......................................................................................................... 25 Opportunities ........................................................................................................ 26 5.3 Hofstede’s Cultural Dimension........................................................................ 27 5.4 Government Constraints and Incentives ......................................................... 29 6. Business Strategy ................................................................................................ 30 6.1. Product/ Service Positioning .......................................................................... 30 6.2 Pricing Strategy .............................................................................................. 33 6.3. Distribution and logistics ................................................................................ 34 6.5 Advertising and promotion .............................................................................. 48 6.8 Future plan ..................................................................................................... 54 7. Ninja Van’s financial planning .............................................................................. 55 7.1. Benefit-Cost Analysis..................................................................................... 55 Projected Profit and Loss Statement Forecast for Ninja Van from Year 2020 to Year 2022 ............................................................................................................. 55 Projected Profit and Loss Statement Forecast for Ninja Van from the Year 2020 to the Year 2022 ....................................................................................................... 57 Projected Expenses Forecast for Ninja van Pte Ltd from the Year 2020 to the Year 2022...................................................................................................................... 57 Projected Expenses Forecast for Ninja Van Pte Ltd in the Year 2020 .................. 58 Projected Expenses Forecast for Ninja Van Pte Ltd in the Year 2021 .................. 59 Projected Expenses Forecast for Ninja Van Pte Ltd in the Year 2022 .................. 60 Cash Flow Forecast for Ninja Van for the Year 2020 to the Year 2022 ................ 61 Forecasted Three Years Performance Summary ................................................. 62 8. Management Consideration ................................................................................. 63 Page 3 of 65

8.1 Personnel/sales force factors ......................................................................... 63 8.2 Business advisers ........................................................................................... 64 8.3 Contingency plans .......................................................................................... 64 9. Conclusion & Recommendation ........................................................................... 65 10. References ......................................................................................................... 66

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1. Executive Summary Ninja Van is one of Singapor e’s fastest growing last-mile e-commerce logistics company. With the support of Grab, a mobility technology company in Singapore, it is set to scale up strategically within the region. With the e-commerce industry booming, this business plan aims to look into the probability of Ninja Van venturing into India by exploring all the business aspects of a joint venture.

India has one of the highest growth rates and the fastest economies in the world. With its technology capabilities and strategic planning, the report will dissect the advantages, and disadvantages Ninja Van will face upon entering this new market. PESTLE and SWOT analysis will be used to deep dive into the macro-environment factors for both Ninja Van and the host country, as well as the potential encounter of opportunities. This report will provide further insights as to the ideal way to enter a challenging market- India, by using the 7Ps of the service marketing mix as a business strategy. With the immense growth in the service industry, customers are not only focused on the outcome but also obsessed with customer experience. This plan will be tailored to suit the India market from advertising and marketing to its pricing strategy.

To conclude the report, contingency plans will be put in place in the event of operational failure or unforeseen circumstances such as the occurrence of a natural disaster. The report will also cover suggestions for management consideration and business advisors. Based on the three years forecasted profit and loss statement, the first year inevitably reflects a net loss given penetration of new markets and minimum branding awareness. Fortunately, the result for the following two years is projected to look positive at a gradual pace. With the right strategy, local expertise and patience, Ninja Van’s entry into India can be successful.

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2. The e-commerce and logistics industry Technology is proliferating over the years, driving the e-commerce industry to significant growth over the world. The global sales of e-commerce grew by 18% from 2017 to 2018. Consumers spent $2.86 trillion on the internet in the year 2018. The internet has changed how people shop and enable consumers to shop in the diverse market across the globe (Young, 2019). The evolution of the e-commerce industry has changed the logistics and transportation management system. Hence, the role of last mile delivery is increasingly important as it facilitates the issue of limited vehicle capacit y, while e-commerce customers have high expectations for the arrival timing of their items from order till delivery (Burnson, 2019). The global logistics market is expected to grow from $8.1 trillion in 2015 to $15.5 trillion by 2023. The e-commerce market place such as Amazon, Taobao and others are driving forces for the expansion in the logistics industry (Henry, 2019).

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2.1 Logistics for the e-commerce industry in Singapore The logistics industry is a critical enabler to Singapore’s economy. Singapore has the strategic location of the heart of Asia, and its logistics professionalism has helped to attract the world’s top 25 third-party logistics company to establish their headquarters in Singapore (Zhang, 2018). Singapore has the quickest time in export and import, and imported goods to Singapore take merely 30 hours to clear the border compliance process (TAN, 2018). Besides, Singapore has the highest demand for online purchasing in Southeast Asia. Singapore is ranked the top country within Southeast Asia, where most consumers shop online after working hours (Mato, 2018). Therefore, the growth of e-commerce is a positive indication for the logistics industry in Southeast Asia.

Figure 1 (Singapore eCommerce Insights | 4.11 Million Online Shoppers By 2021. (2019). Retrieved from https://www.eshopworld.com/blog/singapore-ecommerce-insights/)

Porter’s Five Forces framework on the e-commerce delivery service in Singapore indicates that the threat of new entrants in Singapore is low. Other courier service providers can easily copy the last-mile delivery business model. However, the threat of substitution is perceived high. Customers are in a position to choose other service providers such as Speedpost, TA-Q-BIN and many more to enjoy similar delivery services based on brand loyalty, pricing or convenience. Figure 2 reflects the list of competitors in the industry. We also observed that the bargaining power of supplier is relatively low. The certificate of entitlement (COE) in Singapore has caused the price of Singapore’s vehicles to be

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high. Hence, vehicle dealerships make minimal profits. The buyer's bargaining power is high as it has a greater number of options available with competitive pricing.

(Figure 2. Retrieved from: https://blog.moneysmart.sg/budgeting/delivery-courier-service-singapore/)

3. Ninja Van’s Company Introduction Ninja Van (NV), a privately held company, is the fastest growing last-mile e-commerce logistics company with millions of packages delivered every month. NV's services have already expanded to several countries in Southeast Asia, which includes Malaysia, Philippines, Indonesia, Thailand, and Vietnam in just six years. The company has 2,000 full- time staff and 10,000 full- time drivers across the region (Jagdish 2018). Technology plays a crucial part in NV. NV provides businesses needs with an innovative technology-based solution to logistics optimisation (Tay, 2015). The employment of technology in NV's operation allowed real-time updates on deliveries across every aspect of the company that is a push- infrastructure empowered besides deep integration with partners and application of webhook architecture API which enables the company and customers on receiving the latest updates.

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3.1 Mission and Vision NV has a simple yet impactful mission statement. It aims to connect Southeast Asia to a world of possibilities with one delightful delivery at a time. CEO Chang Wen also has a vision of a ninja being available to any customers in Southeast Asia and to cater their needs in logistics. NV is driven to do delivery which provides to businesses of all sizes and believes in divine product creation to serve customers better. NV focuses on removing the hassle out of the parcel for customers and is dedicated to ensuring simple logistics as well as a seamless affair for its business partners and consumers (ninjavan.com). 3.2 Company Profile The startup of NV begins when Marcella, a company founded by Lai Chang Wen which specialised in making custom menswear (Ong, 2018), was faced with a problem of unreliable courier services where the products are either delayed, lost or damaged during the delivery process. Chang Wen, Shaun Chong, and Tan Boxian, who are school mates, realised that there was a potential in the logistics market of the ecommerce industry (Salim, 2018) and founded NV in 2014. The trio is NV's CEO, CTO, and COO, respectively. Timeline of Ninja Van

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3.3 Shareholder structure

(Figure 3: Ninja Van’s major shareholders (Lee, 2018). Retrieved from: https://www.techinasia.com/singapore-logistics-firm-ninja-van-concludes-series-funding)

The latest funding of at least US$87 million from DPD Group, an international parcel delivery company based in France which now holds a 32% stake in NV could help to improve NV's services (Lee, 2018), given that NV is still considerably new and young in the industry. NV’s CEO and COO ownership in NV are relatively low, only 6% each. Holding the same stake as the founders are Aureos and YJ Capital. Monk Hill Ventures’ funding in 2015 also gave them a 17% ownership in NV. Samurai Ventures and B Capital hold 16% and 7% respectively in NV.

4. Ninja Van’s services in India

(Figure 4: Services provided by Ninja Van. Source: Ninja Van. Retrieved from: www.ninjavan.com)

NV’s services are catered to customers of every budget. Customers can collect, return, and send parcels at any Ninja Points or Ninja Boxes located at various locations. Partnerships with retail stores, restaurants, shop lots and buildings in India will bring convenience for customers of India who prefers to collect, return, and send parcels personally.

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With the Ninja Pack service, customers can fit their deliveries in a pack and enjoy a flat- rate delivery. Cash-on-delivery option is available everywhere, which benefit customers who yet to have access to online payments. Customers are also able to know the progression of the delivery with a seamless real-time tracking function. Unsuccessful deliveries will be re-attempted with no extra charges. As an experienced last-mile delivery player in the logistics industry, NV delivers globally to S.E.A. and is the only logistics company which provides reliable cash on delivery payment option. 4.1 Ninja Van’s entry in India An equity joint venture (JV) with a local transportation company in India is NV’s ideal mode of entry where NV and a local transportation company creates an independent legal entity according to an agreement both parties make.

NV can limit their exposure by sharing the liabilities with the local transportation company. Risks are also better managed. Having a local partner will allow NV to focus on its back- end operations and technology services while the transportation partner who already has established contacts, distribution, marketing set up, vehicles, drivers and employees will help smoothen the entire delivery process. Also, royalty payments which were required back then have now been removed. It is necessary for the sale of shares in an Indian company be taxed in India, but profits can be repatriated as long as domestic and federal taxes are met. Singapore is included in the double tax avoidance agreements (DTAAs) with India which disclose the provision of benefits in regards to capital gains tax and withholding taxes on interest payments. NV can protect intellectual property (IP), a separate law involving complex legalities navigation and numerous documents submission by registration and detailing provisions in the JV agreement (Dezan, et al., 2018).

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NV must adequately assess the following criteria before signing a joint venture contract to avoid conflicts: ●

Applicable law

●

Management committee

●

Transfer of shares

●

Shareholding pattern

●

Frequency

of

●

Change of control

●

Dividend policy

Restriction or prohibition

●

Non-compete

on assignment ●

Break of deadlock

Composition

●

General meeting and its

●

Employment of funds in

board

meeting and its venue

●

●

●

Confidentiality Jurisdiction

the

board of directors venue

parameters

●

of

cash or kind for

resolution of a dispute

●

Indemnity

●

Termination criteria and notice

Source: Dezan Shira & Associates 2018

4.2. Porter’s Five Forces Analysis

By analysing the competitive industry and market in India using Michael Porter’s five forces, NV’S strategies to enter India can be identified and adjusted accordingly. NV must distinguish its position by analysing its strengths and weaknesses as there will be an impact on long-term profitability. Threat of New Entrants – Medium to High

The rising and onset of the e-commerce industry, with the entrance of Flipkart, Snapdeal and Amazon which out-sourced logistics services to deliver goods purchased by customers has helped companies in India to set their foothold in the logistics industry (Agarwal, 2017). In November 2017, the government of India had allowed e-commerce start-ups to sell goods in the global markets at a competitive price upon granting the infrastructure status to the logistics companies. The grant has increased the competition among the conventionally ran companies and new companies that are more advanced in technology (Abihshek, 2019).

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Figure 5: Logistics start-ups in India

Source: Agarwal, Meha. 2017. “Startup Watchlist: 7 Indian Logistics Startups To Watch Out For In 2018”. Inc42. Retrieved from: https://inc42.com/features/watchlist-indian-logistics-startups/

Bargaining Power of Buyers – Medium There are sufficient logistics companies in the market which offer a competitive rate and similar logistics services. It is challenging to create loyalty customers often look for the best service at the lowest price available. Merchants who supply business to NV may stop outsourcing for lo...