eco tourism - final

08 Fall

U n i v e r s i d a d e C a t ó l i c a P o r t u g u e s a

F a c u l d a d e d e C i ê n c i a s E c o n ó m i c a s e E m p r e s a r i a i s

Entrepreneurship & Business Planning

Professor:

Mário Valente

Students:

Ana Filipa Alves | 152109086

Joana Pereira | 152109077

Miguel Pita | 152109304

Rose Azevedo | 152109100

Vanco Krmov | 152110137

Jan 11

Business Plan

EcoTourism in

Angola

Acknowledgements

Our report has been made possible not only due to the work of our group, but also due to a

group of people that helped us in various ways. We would like to thank them for all their

efforts and support.

First and foremost to Professor Mário Valente, who oversaw the entire project and guided us

in our efforts.

Gonçalo Costa, who was instrumental in the elaboration of the firm’s Logo. João Pedro Modas

and João Gonçalo Santos, who provided us with information regarding interest rates and bank

insurance rates. Tiago Lopes Alves, who helped us with some information and insight about

Angola.

To João Verne Oliveira, not only for his insightful information regarding the country, but also

for his legal support regarding commercial company law and tax law in Angola; and João

Duque Martinho for providing us with Angolan tax legislation information.

And finally we would like to thank to all those who answered the surveys, for being an

information source of crucial importance.

Table of Contents

Executive Summary …………………………………………….……………………………………………………………… 1

Business Description…………………………………….…………………………………………………………………….. 2

History and Founders ………………………………………………………………………………….… 2

Company Name ..………………………………………………………………………………………..… 2

Slogan…………………………………………………………………………………….………….…….……..2

Logo …………………………………………………………………………………………………………….….2

Mission ……………………………………………………………………………………………………………3

Vision .………………………………………………………………………………………………………….…3

Values …………………………………………………………………………………………………………….3

Goals ..…………………………………………………………………………………………………………….3

Business Environment ………………………………………………………………………………………………………… 3

Industry Domain …………………………………………………………………………………………… 3

Market Domain ……………………………………………………………………………………………. 6

Market Projections ………………………………………………………………………………………. 7

Market Trends ……………………………………………………………………………………………… 8

Industry Key Success Factors ……………………………………………..………………………. 10

Market Specifics ……………………………………………………….……………………………….…………………….. 11

Market Needs ………………………………………..…………………………………………………… 11

Market Segmentation …………………………………………………………………………………. 11

Market Segment Trends ……………………………………………………………………………… 13

Market Segment Potential ………………………………………………………………………….. 13

Competitors …………………………………………………………………………..……….………..… 14

Technological Challenges/Opportunities ……………………………………………………. 14

Angolan Market SWOT Analysis ………………………………………………………………….. 16

PEST Analysis ……………………………………………………………………………………….……... 17

Purchase and Provision Policies …………………………………………………………………… 19

Competitive Strategy …………………………………………………………………………………………………..…… 20

General Strategy & Value Proposition ………………………………………………………… 20

Core Competences ……………………………………………………………………………………… 20

Competitive Advantage ………………………………………………………………………………. 21

Value Chain ………………………………………………………………………………………….……... 21

Marketing & Sales Strategy ………………………………………………………………………………………………. 22

Product …………………..………………………….……………………………………..……………….. 22

Price ………………………………………………………………………………….………………………... 26

Place …………………………………………………………………………………………………………… 28

Promotion …………………………………………………………………………………………………… 28

Processes/Routines ……………………………………………………………………………………………………….… 29

Knowledge Systems ……………………………………………………………………………………. 29

Legal Structure …………………………………………………………………………………………………………………. 30

Human Resources Management …………………………………………………………………………………....... 31

Implementation Plan ……………………………………………………………………………………………………….. 33

Schedule ……………………………………………………………………………………………………… 33

Tasks …………………………………………………………………………………………………………… 34

People in Charge …………………………………………………………………………………………. 34

Break-Even Point ……………………………………………………………………………………………………………… 35

Initial Investment ………………………………………………………………………………………… 35

Variable Costs ……………………………………………………………………………………………… 35

Fixed Costs ………………………………………………………………………………………………….. 36

Break-Even Point Calculations ……………………………………………………………………… 37

Financial Analysis ……………………………………………………………………………………………………………… 38

Costs of Packages ………………………………………………………………………………………… 38

Assumptions ……………………………………………………………………………………………….. 39

Operational Costs ………………………………………………………………………………………… 39

Sales ……………………………………………………………………………………………………………. 40

Capex ………………………………………………………………………………………………………….. 40

Depreciations ………………………………………………………………………………………………. 41

Working Capital and Cash Flow Statement ………………………………………………….. 41

Sensitivity Analysis ………………………………………………………………………………………. 42

Financing …………………………………………………………………………………………………….. 42

Ratios ………………………………………………………………………………………………………….. 44

Solvency ………………………………………………………………………………… 44

Liquidity ………………………………………………………………………………… 44

Profitability …………………………………………………………………………… 45

Funds Management …………………………………………………………….. 46

Business Model Canvas ……..…………………………………………………………………………………………….. 46

Key Partnerships .………………………………………………………………………………………… 46

Cost Structure ………………………………………………………………………………………….….. 47

Key Activities …………………………………………………………………………………………………48

Key Resources ……………………………………………………………………………………………… 48

Value Propositions ………………………………………………………………………………………. 49

Customer Relationships ………………………………………………………………………………. 50

Channels ……………………………………………………………………………………………………… 50

Revenue Streams ………………………………………………………………………………………… 51

Customer Segments ……………………………………………………………………………………. 52

References …………………………………………………………………………………………………………………….....53

Appendix

Entrepreneurship & Business Planning EcoTourism in Angola

1

Executive Summary

The following project is based in the creation of an ecotourism company in Angola, which

targets expatriates, tourists and companies and other institutions. Ecotourism concept is that

of responsible travel to natural areas, conserving the environment and improving the well-

being of local people. While being specifically directed towards the adventure tourism market

our project involves visiting and exploring the natural resources of the country.

Our product offer includes a “Weekend Package”, a “24h Package” and a “Beach Activities

Package”. Within each package a customer can choose different itineraries and/or activities.

These packages provide customers with activities of diverse lengths and scopes, from which

they can choose according to their preferences and time availability.

The company has been named Hayo Angola and will enter an industry where it has only one

direct competitor (in Angola), but still other players operating in the surrounding countries or

offering tours that briefly pass through Angola can also be considered. Even though, given that

our company is targeting a new segment of consumers, it will be creating a new market.

The company will be placed in the Mussulo beach, where we will operate our “Beach Activities

Package”. This place was chosen because it is the most appropriate for the beach activities

provided and one of the most visited beaches by tourists and expatriates.

We will focus on the differentiation of our service, mainly through the exploitation of our

unique concept. In that respect, the marketing mix as well as the operational plan will be

crucial for us to implement our service in the best way possible.

Our business is exposed to seasonality and therefore it is expected that it will be most

successful on the hot months, due to people’s preference to travel and go to the beach when

the weather is best.

To promote Hayo Angola we will divulge our unique services through both general ads (main

journals and magazines bought by expatriates), direct ads (flyers and brochures) on the town

centre and other key places in the suburbs, and targeted ads (company’s website, Facebook

and by e-mail).

Our product prices range from €50+VAT to €500+VAT. These prices are all-inclusive - no

additional charges, already includes hotel, food and other services. The price charged takes

into account the willingness to pay of our customers, as well as our fixed and variable costs.

With these prices and with all of our costs for the first three years we will reach a Break-Even-

Point at 11.041 customers, an objective we expect to accomplish between the first and second

year of activity (month 13).

To sum up, we are hoping to create a new leisure concept which goes directly to a present

need of the foreign population, aiming to serve people who are working or travelling far from

their home countries and offer them a superior service with quality leisure time, which

includes adventure, culture and the exploration of natural resources.


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Business Description

Our project is to develop an EcoTourism company in Angola. Being specifically directed

towards the adventure tourism market our project involves visiting and exploring the natural

resources of the country, namely the Kalandula Falls, Miradouro da Lua, Dondo & Kwanza

Rivers and Kissama Foundation Natural Park, among others.

History and Founders

Our business is most of all a friendship alliance, built on the foundations of goodwill and fun.

The idea was simple but it built on us very quickly and here we are today presenting our most

cherished inspiration. We come from very different backgrounds: Joana, Miguel and Vanco

come from Business Administration, Rose and Filipa come from Psychology. We all undertook

the same path of taking a Master of Science in Business Administration at Universidade

Católica Portuguesa, which is what united us in the first place. Some of us are even from

different countries, Vanco comes from Macedonia and Rose from Brazil. That is what we are all

about, mixing and matching to make a great team and therefore an amazing business!

Company name

Hayo Angola

When defining our company’s name we wanted it to be short, easy to memorize and

“brandable”. We came up with the word Hayo, which has a little bit of history behind it. In

Angola there is only one official language, Portuguese, but there are many dialects. Umbundu

is the most used one, and it is the first language of 26% of the population. “Hayo” is a word

that we found in the Umbundo dialect, and in English it means “here it is”.

Slogan

Because life is too short

Logo


3

Mission

Helping people make the best of their leisure time

Vision

“To be the first choice when it comes to Angolan adventure”

Values

Respect – for our team, our customers, our community and natural beauties;

Integrity – we act with honesty without ever compromising the truth;

Passion – we always put our mind and heart on what we do;

Fun – the amusement of our clients will only be accomplished if our team gets fun with

everything it does.

Goals

Establishing goals is vital to a company because it enables to measure its success.

The main targets we have established in order to successfully achieve both our mission and

vision are:

To achieve €4.000.000 in sales within 4 years

To achieve the Break-Even Point in the second year of activity

Achieve a growth of 15% in sales after three years of activity

To be the #1 ecotourism company in Angola in 2 years

To open our own store in the centre of Luanda in three years, where we can establish

a more physical presence in order to increase brand awareness

Business Environment

Industry Domain

Macro-level

At this level we will analyze the EcoTourism Industry attractiveness in Angola, using Porter’s

Five Forces:

• Threat of entry – Since Angola showed a 24% increase in tourist arrivals in the year of 2009

(WTO), and has an economic growth rate of about 10%, everyone is trying to get into this

market. On the other hand, there are some barriers to enter into this market. The main ones


4

are created by the government, such as the difficulty to obtain a visa and the need to have at

least one Angolan as owner of the company (meaning companies need to be 50% Angolan

owned). Further more, the access to the distribution channels might also be a challenge.

Regarding product differentiation, it is not very easy to try to create differentiation in this

industry, but there is the advantage of being in an industry that is not very developed yet,

which is also good in terms of the retaliation expected from the incumbents, because since

they are only a few it is expected to be low.

Having that in mind, we conclude that the threat of entry is medium/high.

• Buyer power – The number of international tourist arrivals in Angola last year was 366.000

(according to WTO), a number that is increasing at a rate of more than 20%. Besides that, we

have also to consider the local population with high income and give special attention to the

tourists that visit Angola for service reasons, which represented 63% in 2003, according to

“Ministério da Hotelaria e Turismo de Angola”. This means that the number of customers is

high and thus, it represents an attractive industry.

Moreover, in Angola the demand is generally superior to the supply offer, and in the tourism

industry, since we are mainly targeting customers with high income, their price sensitivity is

not very high. There are also a high number of foreign specialized workers in Angola with

medium/high incomes and little knowledge about the country and some weekend time to

spend travelling along Angola.

As a result, we conclude that buyer power is medium/low.

• Supplier power – It is hard to find data about suppliers in this industry, but we believe that

the trends must be similar to the ones in other industries in this country. The number of

suppliers must not be very big, as well as their size. In this case, their power is medium/high.

However, in Angola it is common that we cannot find the suppliers for what we need, and

importation is a regular practice. Angola has a lack of organized suppliers and import/export

companies, therefore we have to take this in mind and create ways to get our needs satisfied

one way or the other, specially by exploring gaps in the Angolan law that may allow us to buy

certain items abroad.

• Threat of substitutes – Since tourism can be included in the leisure/entertainment industry,

some possible substitutes include other leisure activities such as reading or going to the

cinema. However, these activities are quite different and have different performances, so we


5

conclude that the threat of substitutes is low. Although Angola has fine weather and beautiful

landscapes most of the people working there have no time to explore the full length of the

country, since it is very big and the only available time are weekends, so that might be a

barrier for primary acceptance of “packages” that are longer than a weekend, furthermore

local activities in Luanda and other main cities will prove a serious threat if developed

properly. But besides people working in Angola we will also provide packages for tourists in

order to serve the travelling market also, minimizing the threat of substitutes that is

medium/low.

• Competitive rivalry – In terms of direct competition, there is no more than one company,

however, according to Ministério da Hotelaria e Turismo de Angola, in 2003 there were 160

travels agencies, and it is possible that they can offer the same services. Besides, as referred

before, the rate of market growth is quite favourable, and customers do not have switching

costs in changing from one company to the other and we also believe that customer loyalty is

not a problem since brand knowledge does not seem to be very developed.

Thus, we conclude that the level of competitive rivalry is medium.

Ultimately, the level of industry attractiveness is medium/high.

Micro-level

In terms of competitive advantage, since there are no proprietary elements such as patents or

trade secrets to protect us from competition, we will rely on our business model. The most we

can aspire to do is to create a recognized brand like “Club Med” but that will only be viable

after some years of success. Our goal is to target people from other countries that are

currently working in Angola (the expats), some local people (the ones with high income, that

belong to social elites), tourists and also to try to make deals with some foreign companies

that are entering in Angola, in order to give the opportunity to their collaborators to know

each other and also the natural beauty of Angola. In this way, we hope to have a good market

penetration, at the beginning it will obviously be small but with the increasing tourism we

hope to grow in the order of somewhat 4% per year. Growth margins are usually small in the

tourism business, yet we hope to grow above average since Angola is a ever growing economy

nowadays, attracting more and more workers and visitors.

Revenues in the industry are normally medium to high depending on the type of tourism, but

normally in the Adventure Tourism there are higher revenues since it is a more expensive kind


6

of tourism, for that we hope to generate generous cash-flows from the start that will help

develop our company in the coming years. One problem is related with the big amount of

invested capital we will have to put upfront, to buy all the equipment necessary, eventually

open our own stores and to market the product, and also to pay salaries and suppliers in the

early months of activity, we will probably need to ask for a loan from the bank. Customer

acquisition will be made mainly by marketing in a first phase and word-of-mouth in the latter

stage, since we hope to create a “the experience is everything” kind of feeling to our

adventure trips. Retention costs will be low as they are in the general part of the industry since

it will be made mainly by enjoyment of the trip (experience), there is little room for costumer

service in the adventure tourism sector.

Finally the company’s cost structure will have the following look: high fixed costs, if we want to

have deals with travel agencies and a lot of marketing, they will also be high because of fixed

employee salaries and maintenance fees of our materials. There will be a medium level of

variable costs regarding expenditures with the trips we will provide, also with insurance that

will have to be made to travellers and materials. There will also be a high volatility in variable

costs due to seasonality of the business, there are some “high tide” months and other

“calmer” months, this is also a situation we will have to work to change in order to take

advantage of Angola’s year round good weather.

Market Domain

Macro-Level

Regarding a new business analysis, we decided to have a closer look at the market domain;

nowadays tourism is a strong and solid industry with around 880 million people travelling in

2009 leading to a revenue of around €3923,8 billion, so globally tourism is a very big market,

so market size is a clear advantage we can explore when launching our product. When it

comes to Angola this represents a growing number in the year of 2003, with a peak of 106.625

travellers leading to a revenue of around €13.128.186. Specialists are keen in the thought that

this number will continue growing in the coming years. Although we can see in “appendix 1”

that sales volume index in tourism related activities have been decreasing, the situation in

Angola is the opposite and is actually increasing, making it an interesting market. Due to 9/11

there was a decline in tourism worldwide, recovery was underway when this financial crisis

came along, but now the trend in the world is for a slow recovery whereas in Angola the trend

is that tourism will grow faster and stronger than ever.


7

Micro-Level

Regarding target segment benefits and attractiveness we can see that nowadays ecotourism

represents 26% of the world’s total tourism being responsible for revenues of at least €68

billion revenues and growing, along with a growing number of 228,8 million travellers. The

concept of ecotourism is based in an ecologically and environmentally correct way of doing

tourism, with a positive impact on both local natural and economic resources. Although it is a

relatively new trend it has been growing constantly despite the late difficulties encountered by

the tourism sector. Ecotourism is also regarded by the United Nations Organization as an

important step forward towards natural preservation and is strongly supported by this

organization under the “Letter of Quebec” where an official environmental program was sign

by member countries. Governments are making an effort to help the birth of new companies

that will work in this business, meaning it might make it easier for us to get governmental

subsidies in order to progress in our project. Studies presented since 2007 have proven that

countries like Canada, Brazil and Portugal have been benefiting from this new trend and it is

our goal to get Angola into the leading pack with the development of our project.

Market Projections

In 2009 the UN World Tourism Organization (UNWTO) statistics shows that 880 million tourists

travelled worldwide representing a 4% drop in relation to the previous year. Regarding the

forecasts for 2010, a recovery of the tourism market is expected to be ranging from a 3% to 4%

enhancement in terms of global number of tourists. This movement generated worldwide the

sum of €4246,4 billion in 2008, €3923,8 billion in 2009 representing a -4.7% real growth and

the projections for 2010 point out to a 0.5% real growth, meaning a €4153,4 billion revenue for

the tourism industry. Relatively to the ecotourism market, specifically the adventure tourism

market, a 2009 market report delivered by The George Washington University School of

Business, The adventure Travel Trade Association and Xola Consulting states that this segment

is sizable at 26% of the total travelling population meaning 228.8 million tourists with a total

market value of €64,215 billion and is growing at 20% annually according to the World Travel &

Tourism Council.

The African continent accounts for 5% of the total travelling population, i.e., 44 million tourists

in 2009 (personal and business travels, according to the UNWTO). The latest Angolan tourism

market statistics publicly available stand for 2008, reporting 294.000 foreigners’ entries in the

country that according to the Angolan Tourism Ministry (Minhotour) that represents a 60%

increase in tourism movement in comparison to 2007. Angola tourism market for 2008 is €866


8

million and the UNWTO Travel & Tourist Demand real growth index forecasts an average 4.7%

yearly growth till 2020. There are no specific statistics for the ecotourism market in Angola but

one can expect that its growth will be (at least) quite similar to the whole industry in that

country, since the tourism offer is very incipient even at this moment in time. The 2009 market

report (delivered by The George Washington University School of Business et al.) shows the

average spending on an adventure trip is €452 per person and that in the marketing surveys

that were conducted intent for “definitely will do an adventure trip again” relatively to the

proportion of adventure travellers population is 5%. The report also gives a market

penetration rate of 20% specifically for the adventure travel industry.

Transferring all this data to our project we estimate that the number of people travelling to

Angola in 2011 will be superior to 340.00 (assuming a growth rate of 5% - 294.000x1,05^3).

Presuming that from these 340.000 tourists only 26% is related to adventure tourism, we will

get a number around 88.500. Finally, our aim is to be able to capture 10% of these clients,

which means serving around 9.000 customers on the first year, expecting an average 5% yearly

growth on our demand on the second year (subject to the forecasted increase in tourist flow

for Angola trending in 60% the last 4 years).

The pricing for our services will range from €50 to €500 (plus VAT) depending on the scope,

time and resources spent on each activity. Based on our estimate for the evolution of number

of possible clients and on an average price of €212 per activity per person we can foresee a

yearly revenue projection of approximately €2.000.000 on the first year.

Market Trends

There are several trends influencing the ecotourism market nowadays. As a first trend we

consider the increase in the area of land covered by natural parks and protected areas. By

1996 there were about 30.361 natural parks worldwide, representing 8,84% of the total land

area of the planet.

Related with the first trend considered, we have a strong consumer demand – despite the

economic downturn felt all over the world, the number of people looking for this type of

tourism did not decrease. This piece of evidence may be related with the fact that ecotourists

are a different type of travelers, more independent and better educated, for whom travel is

considered very important. In fact this type of tourism is growing three times faster than mass

tourism.

Furthermore, this strong demand has led ecotourism to grow into new areas such as gateway

communities, agritourism and green architecture.


9

Due to the growing corporate social responsibility within the tourism industry we observe

another trend - travelers’ philanthropy. Presently, both travelers and travel companies are

giving financial resources, time and talent to local communities with the main aim of helping

and empowering them. This help is given in format of jobs, skills and improvements in areas

such as health care and education.

Special programs are being created, in which individual businesses and travelers are

encouraged to support social service and conservation projects in the local communities where

the travel experiences take place. The main reason behind this is related with the fact that

tourists visiting the developing world want to help the communities they visit but financial

contributions do not always have a positive impact.

These programs represent a way of connecting donors, travelers and travel companies, by

telling what each community needs, both in terms of donations as well as community projects

that people can get involved in. The benefits for local communities are obvious and travelers

say that their holidays are enriched when they are able to contribute to community projects in

the places they visit.

To finish, we will consider certification. The graphic below shows the trend of certification in

different tourism sectors. Accommodations like hotels and resorts are until now the most

concerned with getting this type of accreditations (about 68% of them ask for it). In order to

enable hotels to get certifications several factors are taken into account, like the biological and

physical surroundings, hotel facilities, customer feedback and direct benefits to community.

But other initiatives must also be considered. The Blue flag campaign is a successful example. It

is a voluntary eco-label that has awarded more than 3.000 beaches and marinas in more than

40 countries across Europe, South Africa, Morocco, Brazil, Canada, Tunisia, New Zealand and

the Caribbean. In order to select the beaches/marinas that are awarded several criteria are

considered: water quality, safety, and environmental education and information.


10

This trend of getting accreditations in the ecotourism industry can be explained by the

expectation of high standards and the increasing awareness regarding service quality by

consumers. Nowadays, the expectation of products that are both safe and environmentally

responsible are quite high.

Industry Key Success Factors

In the ecotourism industry the key success factors include location, fun and activities provided,

as well as education.

Location plays a major role, given that if the market considers a location as not having the

essential characteristics for developing ecotourism activities people will simply not go there

and the company will go bankrupt. Some of these essential characteristics are related with the

beauty of the existent natural resources, which may include natural parks, wild beaches and

waterfalls. Without the right location it is simply impossible to develop an ecotourism

business.

Besides, the experience itself is also important. People who are willing to pay high prices to

enroll in ecotourism activities do it with the main goal of enjoying themselves, to get in contact

with nature and relax from the stressful routine that they are subject to during the week while

they are absorbed by their work. This makes fun an essential ingredient of the equation.

Furthermore, the activities provided are also critical. According to David Bruce Weaver, the

author of The Encyclopedia of Ecotourism, “When consumers buy nature-based tourism

products, they are buying a range of personal benefits.”

in “The Encyclopedia of Ecotourism”; Weaver,D.B.; 1st edition; CABI Publishing; pag.572

This means that tourists are now buying products that match their lifestyles and preferences,

and the taste for adventure and nature itself is becoming more and more important. The

activities that companies in this business offer must first of all differentiate themselves from

other amusement activities, and then also from mass tourism. Variables like authenticity and

quality in primitive locations are being sought by consumers, and ecotourism is able to fulfill

this desire.

Last, we need to consider education. On one hand, we need to consider education in a way

that the cultural norms and values of the local populations visited must be respected; on the

other hand, besides the desire for adventure and enjoyment when tourists engage in these

activities, they do it also with the aim of learning something, either about ancient cultures or

simply about natural resources, places and their history. We can say that consumers are

exchanging mass tourism for experiences that are more individualistic and enriching.


11

Market Specifics

Market Needs

Because there is only one small operator in the market, the needs of consumers are not

entirely fulfilled. This leaves a gap for our company to explore. The advantage our company

will take on the market, is based on the numerous expatriates that are nowadays working in

Angola, this growing number goes hand-in-hand with the growing number of tourists entering

Angola each year. Although there are some packages for travelers in other countries around

Angola, the adventure tourism segment is very undervalued in the Angolan landscape. The

main needs we intend to satisfy are the needs of fun and adventure while exploring the

natural beauties of the Angolan country. Nowadays, the most successful marketing strategies

for creating product demand require the use of customer feedback to assess just how well a

product actually impacts market needs. By developing a survey, we were able to clearly see a

market need we had already identified. This enables us to pursue this need in a more

confident way, relying on the fact that since there is still a lot more demand than supply in this

market we are more confident in the success of our product. Successful products are often

those that develop a solution to real customer problems, therefore fulfilling market needs.

Market Segmentation

Market segmentation means dividing a market into distinct groups of buyers with different

needs, characteristics or behaviors, who might require separate products or marketing mixes.

In order to do this, one needs to identify bases for segmenting the market, this means one

needs to find and divide large heterogeneous markets into smaller segments. In this case, this

division was based on the information we were able to gather from the surveys that were

made, and which show us that there are two main groups of potential customers for our

company: tourists and expatriates. Alongside the survey results we will also target companies

and other institutions, and we estimate that this type of clients will account for 40% of our

total sales.

The two different groups, pointed in the survey, have different characteristics that allow us to

understand their different needs. We can say that we will have more of a niche, since a niche is

a more narrowly defined group and offers smaller companies, like ourselves, an opportunity to

compete by focusing or limiting resources on serving these niches, which may be unimportant

for large competitors. This makes sense if we look at the adventure tourism segment,

meaning, the company has developed products that, according to our surveys, will be able to


12

satisfy both the people working in Angola and want to spend quality time in the weekend, and

also satisfy a tourist that wants to explore a more radical Angola, but does not want to spend

that much time on it.

Our packages allow for a good coverage of the market, and that is why we expect that our

total market penetration will be around 10% of the market, giving us an interesting starting

point for the business. Based on the three segments we’ve identified we can see that:

Expatriates: Foreign people currently working in Angola, although they come from different

backgrounds. The largest community is Portuguese workers; this is a good thing for us, in

terms of language barriers. This segment is characterized by a good intention to buy (according

to the survey); also they have a medium/high income, allowing them to pay the fees practiced

by the company. This group is also characterized by having available weekends and is eager to

explore a country they do not know.

According to the data available, in 2003 63% of people traveling to Angola did it for service

motives and 17% for business motives.

Tourists: Foreign people currently visiting Angola, although there are no records of the

nationalities of the foreign people visiting Angola (the only available information shows that in

2003 58% of tourists came from Europe, 29% from Africa and 14% from the American

continent) most flights to Angola come from Portugal. Since Portugal has a historical linkage

with Angola, there are many tourists coming from this European country. The tourist segment

is characterized by having more time to spend exploring the country, but they also have

different reasons to go in a holiday trip to Angola, and normally would like to spend more time

on the beach and maybe exploring other interesting features of the country. They also have a

good willingness to pay, according to the survey.

Companies: Companies that operate in Angola and may want to provide their clients,

customers or employees with some leisure time, and for that purpose our company is ready to

receive them. We expect companies to represent a significant 40% of total sales, and in order

to stimulate companies into purchasing our services we will offer corporate entities to pay

within a 30 days term. Angola is attracting more and more foreign companies and this will

help leverage our activities, and therefore, all of our products are tailored for working people

and executives. Companies, although not present in the survey, are believed to be more price

sensitive, but with a good willingness to pay.

Market Segment Trends


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We were able to see that the main segments we have identified have a growing trend. Tourism

is increasing in Angola, meaning that the number of people that enter the country to visit it is

increasing. The hotels and whole tourism infrastructure are still raw but are being developed

rapidly. Tourists are also spending more time in Angola, despite of the global crisis, and when

in holidays people tend to continue spending more, which is a positive thing for us. Since

Angola showed a 24% increase in tourist arrivals in the year of 2009 (WTO), and has an

economic growth rate of about 10%, everyone is trying to get into this market, and we will

probably benefit from entering in such an early stage. The number of international tourist

arrivals in Angola last year was 366.000 (according to WTO), a number that is increasing at a

rate of more than 20%.

Regarding the expatriates segment we can see that the number of foreign workers in Angola is

also increasing, yet, the majority of this workers spend 1 to 5 years in Angola and then leave, in

the mean time they are in a foreign country which they do not know and with little to do in the

weekends - our company can take a good advantage from this. So we should give special

attention to the tourists that visit Angola for service reasons, which represented 63% in 2003

(representing an increase of 10% compared with the previous year), according to “Ministério

da Hotelaria e Turismo de Angola”. This means that the number of customers is high and thus,

it represents an attractive industry.

Regarding the companies segment, there are several multinational companies operating at this

moment in Angola and the trend shows that it is expected to increase. Consulting companies

like PricewaterhouseCoopers and Deloitte, oil companies like BP and ExxonMobil or even Coca-

Cola are just a few examples.

Market Segment Potential

This market is very attractive, we consider ourselves to be in the tourism industry, operating in

the adventure tourism segment. Relatively to the ecotourism market, specifically the

adventure tourism market, a 2009 market report delivered by The George Washington

University School of Business, The adventure Travel Trade Association and Xola Consulting

states that this segment is sizable at 26% of the total travelling population meaning 228,8

million tourists with a total market value of €68 billion and is growing annually at 20%

according to the World Travel & Tourism Council. So the adventure tourism segment is a

growing one, and it is a very interesting one to be in, especially in Angola where it is very

underdeveloped and there is money to be made from this type of activity.


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Competitors

Currently the only player in the market is EcoTur Angola, operating from Luanda. This company

organizes field trips that can take up to 10 days. Their concept, though, is different from ours.

They are mainly focused in being a tour guide, not always offering physical activities.

Furthermore, they offer other services such as airport transfers, check in, accommodation,

translation and interpretation services as well as meeting and conference hosting services.

In a broader scope, competition can also come from across borders. Other African countries

are famous for their wild life and safaris, like South Africa and Kenya. These countries, along

with Angola’s neighbour - Namibia, are probably its most direct competitors. In these countries

there is already a significant and well organized offer in this sector:

Kenya – Ontdek, Gecko’s Adventures, GSE EcoTours.

South Africa – Stormsriver Adventures, Induna Adventures.

Namibia – Namibia Executive Tours & Fishing Safaris (based in Namibia but offer some holidays

in Angola).

In addition there are already some companies in this industry that offer adventure ecotourism

in several different countries, even though its concept is different in the sense that their offer

is for full/longer trips. Of those operating in Africa, in all the three countries above mentioned,

these are the top 3 that stand out and, according to National Geographic ratings, have a

reputation for being the best:

- Wildland Adventures

- GAP Adventures

- Wilderness Travel

Curiously the Wilderness Travel is the only one that seems to include Angola in their

destinations, but only on their way in and out of other countries.

Technological Challenges/Opportunities

Technology is not the most important issue regarding the tourism industry. In fact we are more

concerned with fluctuations in the travelling habits, than with any technological changes that

can happen in this business, since it is relatively low demanding in terms of technological

insight or dependence. The main issues regarding technology are our key resources.


15

Our key resources will be essentially physical and human.

The physical ones include physical assets, such as our facilities and the materials needed to

provide our customers the desired activities (our vehicles, jet skis, longboards, and so on).

In order to create value for our customers we have to assure that all the materials we use are

the best in the market. Quality is a big issue here, since in this type of activities there are many

security concerns.

Human resources refer to our staff. The main technology we will use regarding this is the

Internet; due to the role the company needs to have in the customer relationship. As the

service we provide to our customers is not supposed to be “consumed” on a daily basis (like

coffee for example), we do not expect to create a very close relationship with them, we do not

expect them to visit us everyday, especially because some of them are only in vacation and

may never come back to Angola. Nevertheless, even if they are only tourists, while they are in

vacation they may decide to do more than one tour with us, if they are satisfied they may

recommend us to their friends and may even get in touch with us if they ever decide to visit

Angola once again. Consequently, we intend to keep in touch with our customers, sending

them e-mails and newsletters with special offers and new tours. The same happens with the

expatriates that are currently working in Angola. They may recommend us to their co-workers,

or even to their friends and family that might go there to visit them. Another important issue

is to ask them for feedback at the end of each tour, as well as for suggestions.

The main relationship that we intend to create is one of personal assistance. The relationship

we build with our customers is based on human interaction – if our customers want to

communicate with us, they can do it directly with a member of our sales force at our store, by

phone or by e-mail.


16

Angolan Market SWOT Analysis

Our business strengths in the Angolan market come from our service quality and novelty

associated with a structural need for all kinds of services to assist the upper class and

expatriates that live there. Our ease to make business due to historical and language

connections is another asset that plays in our favor. On the other hand, the very incipient

infrastructures in Angola make management efforts very difficult, therefore all of our

management staff must work full-time in loco (Angola) to secure the flow and quality of our

services and the correct provision of materials.

Opportunities in Angola are immense since this is a country that has gone through a massive

destruction due to civil war and reconstruction efforts are happening all over the territory.

After the financial crisis, the Angolan GDP growth is coming back to its two digit normal and

Strengths

1. Internal market knowledge due to historical background

2. Ease of communication due to shared language

3. Service high quality and novelty

4. Targeted market as a niche that is in need of recreative activities offer

Weaknesses

1. Need of on the spot management due to the high infrastructure barriers

2. High number of imported goods to grant the regular operations

3. Apparent easiness of communication and market knowledge can lead to a fatal hyper-confidence

Opportunities

1. Since 2002 Angola lives in peace, going through a democratic build up as a nation

2. GDP grows on a two digit rate on the last years

3. High effort of reconstruction since the ending of civil war

4. All economic sectors are now being rebuilt from scratch

5. High need of all types of services and

technologies

Threats

1. Most of the economic growth is based on oil revenue streams

2. Possible setback in terms of political stability

3. High economic growth levels are a call out to competitors

4. High competition from China and Brazil on

the reconstruction efforts


17

the non-oil sectors are now growing by 25,6% per year according to Deloitte Angola. Threats

are also present in Angola, mostly because its economic growth is too tightly related with the

oil sector and also due to the potential return of political instability in the future and its

current corruption reality.

PEST Analysis

The tourism, and particularly the ecotourism, industry is evolving. Thus, if we want to

understand better Hayo Angola’s expected situation, we have to consider what environmental

influences have been particularly important in the past, and after we must identify if these

changes will, or will not, be significant in the future.

Political/Legal: A country’s political stability is very important for investment purposes and also

for the sustainability of a firm. José Eduardo dos Santos has been president since 1992 and

next elections will only take place on September 2012. So at least until then government

stability should endure. As a matter of fact, if the current president happens to be a candidate

for the next elections his probability of winning is quite high, but if anything should happen to

him and he leaves the political scene the risk of political instability rises. However, despite this

apparent stability, Angola is still recovering from nearly 27 years of war and its level of

government corruption is very high.

Angola’s legal rules and regulations are based on old and outdated Portuguese regulations and

customary law with small changes to adapt to the country’s specificities and needs. However

there has been a significant effort to modernize the country’s regulations, namely in what

concerns oil industry, diamond sector and services. But still there are many occurrences which

are not predicted or regulated by Angolan law, namely regarding the tourism sector.

Even though currently there is the “Angola’s National Agency for Private Investment”,

commonly known as ANIP, which determines and carries out government policies, mandatory

for foreign investment, designed to support economic growth and stability. Furthermore, there

is the Private Investment Law that establishes a company as a separate legal entity with

directors and commissioners for its representation.

Finally, one must account for the fact that all companies’, to be constituted, must have an

Angolan partner. Plus, it is also quite hard for a foreigner to get a loan from an Angolan bank.

Economical: Angola is one of the fastest growing economies worldwide. Due to its policies and

exploitation of national resources their GDP has been rapidly and consistently increasing in the


18

last few years. However, GDP growth in 2009 was flat due to significantly lower oil prices

owing to the global financial crisis - crude oil accounted for roughly 85% of GDP, 95% of

exports, and 85% of government revenues in 2009.

Some important economic figures regarding Angola are the following:

2008 2009 2010 (estimated)

GDP Real Growth

Rate

13,3% 0,7% 5,9%

Inflation Rate 12,5% 13,7% 13,3%

Despite still being very high, Angola’s inflation rate has been decreasing (21,3% in 2006).

Although there are not reliable sources on Angola’s unemployment rate, this is estimated to

be quite high (around 27% in 2008/2009).

Finally, one should consider that taking money (profits) out of the country is currently very

difficult as an authorization from the Angolan National Bank is always required. There is also

the need to account for money exchange rates (Kwanza is Angola’s currency), given that its

volatility might mean incurring in extra costs.

Social: Recent estimates point for a population of 18 million people in 2010, with an annual

population growth rate of 2,8% according to United Nations’ 2005-2010 list.

In the past few years, due to Angola’s economic boom, there has been a trend towards

immigration, mainly from highly educated individuals. Portuguese make up the largest non-

Angolan population, according to Direcção-Geral dos Assuntos Consulares e Comunidades

Portuguesas (DGACCP) in 2009 the Portuguese community was the fastest growing in Angola

with 10.925 new members. DGACCP estimates that in 2005 and 2006 the number of

Portuguese residents was respectively 45.000 and 60.000 including individuals with double-

nationality.

With this rising number of high income expatriates, there has been a growing interest and

demand for tourism and other related activities that enrich individual’s leisure time.

Technological: Angola still needs to improve and develop hugely in technology and

infrastructures. However, the ecotourism sector in particular does not require high

investments in R&D. As a matter of fact, this sector only tries to take advantage of the existing


19

technological resources in order to improve the customers’ experiences while making them

safer.

Purchase and Provision Policies

Our company will make a big investment, in order to start off the business, therefore the

biggest investment will be around €455.965,00 in fixed assets like Jeep’s and other material for

our tours, that we need to have to start our company’s operations.

This will leave the company with less investment to due in the following years, where we will

only slightly increase our tangible assets.

In terms of circulation assets, meaning, the money the company will need to have available

every month, we have established a minimum level of money that the company’s bank

account will need to have, and this level is around €40.000. This is justified by the fact that 40%

of our customers will be other companies and organizations that will have special paying

conditions – they can pay us in a period up to 30 days. This minimum cash allows the company

to establish its necessities in working capital around a single value, in order for it to be able to

“forecast” what it is going to spend every month.

The company has a policy of paying all its suppliers in a maximum of 30 days, and is available

to give its corporate clients a 30 days paying period. We made the decision of allowing this 30

days period for collecting payments and paying liabilities in order to reduce the company’s

working capital needs that were getting very big due to the extended paying periods.

The company will therefore need working capital investment to cover monthly expenses with

fixed and variable costs encountered during our daily activity.

The investment in working capital in the 1st year will be of -€265.682,99,86 and the peak of

cash needed will be around €25.653,19 and will occur in the month of January. For the second

year we will need a -€521.867,55 investment in working capital and the peak of cash needed

will ascend to a €30.327,34 value, in the month of June.

Finally in the third year, the investment in working capital will be around -408.797,30, with a

top need of cash occurring in the month of July, topping a total of €31.130,13.

These negative values in terms of investment in working capital can be explained by the fact

that at the end of each year we will have an excess of working capital – at the beginning of the

year we need more money to be able to buy all the necessary materials and, in the middle of

the year (around the months of June/July) we will also need money in order to face the

fluctuations of demand, which tends to be smaller in these months. However, and also

because of the existence of the minimum cash, we will have too much money at the end of


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each year in working capital and we decided that it will be used to pay dividends – this way we

take money out from the working capital and that explains why the investment in WC is

negative.

Competitive Strategy

General Strategy & Value Proposition

Hayo Angola’s strategy is based on differentiation. We aim to be the top of mind company

when it comes to adventure tourism in Angola not only for the expatriates but also for tourists

in general. We aim to achieve this differentiation goal by providing a top quality service when

compared to the international competition in Africa, providing our customers with the best

trips, routes and activities. Our partners will be screened for best practices in terms of

hospitality in the industry - we do all to serve our customers with nothing else but the best.

The value of our business lies in providing an exclusive service to our customers, this way

enabling the growth of our clientele database and expanding our business with a growth of

10% in sales in 3 years and achieving a revenue stream of around €1.170.000 on year three.

Core Competences

A firm’s core competences should meet three distinctive requirements, which are a significant

value creation for the clients, difficulty of imitation by competitors and access to new markets.

Therefore the following core competences were identified for Hayo Angola:

Client-oriented - Our firm is totally focused on maintaining its customers satisfied, and

for that we give particular importance to their feedback. More than just providing

them with a series of different products we are open to clients’ suggestions and in that

sense we also offer customized products.

High quality service – We provide our clients with premium products and set for

ourselves only the highest standards, not only regarding the products/services offered

but also the kind of interaction/relationship established between our customers and

our staff.

Company’s culture – Our open culture allows our employees to give suggestions for

improvement. The company also develops sessions to keep the team informed, where

it expresses and explains concerns and also tries to find new objectives and setting

directions that are also considered valuable by the employees.


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Innovation – We focus in providing our customers with innovative products having

into consideration the country/market in which we reside. For the first time Angola

has someone who provides beach activities to those who enjoy the ocean and

spending the day on the beach. We intend to keep innovating in the products we offer,

particularly in the “24h Package” and in the “Weekend Package” providing our

customers with new places to visit and new sports to enjoy.

Competitive Advantage

Even though we are not the first mover in the market, we are the first targeting a specific

segment, that of expatriate workers. As so we might consider a first mover advantage in this

specific segment.

Furthermore, we benefit from speaking Portuguese, which is an important characteristic that

sets us apart and somehow protects us from other new and already global competitors

(language barrier).

Hayo Angola’s differentiation is relatively high and the company does not benefit from a low-

cost leadership, therefore its competitive advantage is that of pure differentiation.

Low-Cost Leadership

Low High

Differentiation

High

Pure differentiation

Differentiation with

low-cost leadership

Low No advantage Pure low-cost

differentiation

Value Chain

a.

Hayo’s value chain is

focused on “Operations”


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as the primary activity in which it differentiates itself from competition. Our core competency

is to provide a great experience to our clients even in the toughest conditions, as it is the case

of doing adventure ecotourism in Angola. The “Inbound Logistics” and “Operations” are

minimal, since we are a service provider and not a manufacturer, in terms of “Outbound

Logistics” our main focus goes to our website and our shop in Luanda as these will be the

touchpoints with customers. The company’s partners will carry out “Marketing and Sales”,

once we are all trained on our Master’s Course in terms of marketing communication and sales

strategy. Regarding the support activities we shall focus on “Procurement”, especially

concerning the contracts that we will do with our partnerships, i.e., hotels and restaurants; as

well as on “Human Resources”, given that “Services” is our main core competence we need to

select and train people to stand for the task ahead.

Marketing & Sales Strategy

Product

The company’s product offer is based on the “Shopping Goods” Marketing classification, once

our target customer will use factors such as price, quality, style, and suitability as a base of

comparison in order to make a final decision between our services and those from the

competitors’. Our services are inserted in the Travel and Leisure category, more specifically the

adventure ecotourism industry.

Based on the data retrieved from the consumers’ survey we concluded that 88% of

respondents showed a high interest in the consumption of products related with our

adventure ecotourism concept in Angola. A further description of our offer, in packages,

continued showing us a great consumer acceptance with a very high-intended consumption on

the “Weekend Package” (78%) and a high-intended consumption on the “24h Package” (58%)

and the “Beach Activities Package” (58%). In terms of competition analysis we indeed found

out that other companies exist offering some similar services but on the other hand supply is

very incipient and designed on a very Ad Hoc fashion meaning that there is no 100% functional

company in the Angolan market at this moment and business is made on a provincial fashion.

This way we came to the conclusion that the most adequate offer (i.e., the one that would

offer the most aggregated benefits for our customers and at the same time will make our

product unique when compared to the competition) for our company is a three-folded

portfolio constituted by:


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•“Weekend Package” with three different itineraries: “Cachoeiras do Binga - Hot springs /

thermals at Tocota - River Cubal Canyon - Porto Amboim”, “Dondo – Calulo – Cabuta” and

“N’dalatando – Pungo Andongo - Malange – Kalandula”. Activities will rely on

landscape/viewpoint gazing, hiking, waterfalls and beach visits with free time, historical

monuments and new architecture projects tours. The company provides accommodation,

transportation and meals (Consumer Survey shows that the preferred options, with 35% were:

“various activities, various places and short time spent on each activity” and “few activities,

various places, more time spent on each activity”).

The three options consist of:

Luanda - N’dalatando – Pungo Andongo - Malange – Kalandula - Luanda

The main attractions of this trip are visiting the rock formation called “Pungo Adongo” (Black

Rocks) on day one and the Kalandula Falls on day two.

Our trip will start at 6 a.m. from Luanda going straight to the N’Dalando city that is the capital

of Kwanza Norte province, there we will refuel and take our breakfast, afterwards heading to

the fascinating “Pungo Adongo” rock formation. There we will have a picnic lunch and do some

trekking climbing to see from the top the country side (Capanda Dam) and also the famous

Rainha Ginga rock. Than we will head to Malange town, where we will have dinner and spend

the night at one of our partner hotels. On day two, after having breakfast at the hotel we set

off to the majestic Kalandula Falls. When arriving there we will have the opportunity to hike in

order to see the falls from above and below, when getting to the bottom of the falls we will

have a picnic lunch. Before heading back to Luanda we will still have time to visit the great

Kalandula church.

Service includes – transport in fully equipped air conditioned 4x4 vehicles (satellite phones, 1st

aid kits, etc.) with English/Portuguese speaking guides, drinks and snacks in car, activities,

accommodation on the first day and all meals as indicated, park fees and tolls where indicated.

Luanda - Cachoeiras do Binga - Hot springs / thermals at Tocota - River Cubal Canyon - Porto

Amboim – Luanda

We will depart form Luanda at 6 a.m. crossing the Kwanza River Bridge and enter into Kwanza

Sul province. Arriving at the waterfalls “Cachoeira do Binga” we will have a picnic brunch and

hike to see the beautiful surroundings. Afterwards we will go towards Gabela to the hot

springs of Tocota to relax by taking a dip on those marvelous waters and later head to the city


24

of Sumbe where we will have dinner and spend the night at one of our partner hotels by the

seaside. On day two, after having breakfast at the hotel we will carry on further to Cubal River

Canyon and then to Porto Amboim where we will have lunch on the beachfront. After that we

will finish our trip by going back to Luanda.




Luanda - Dondo – Calulo – Cabuta – Luanda

We will departure from Luanda at 6 a.m. heading north to Dondo, stopping at Rio Kwanza to

visit the Cambambe Dam Waterfall and than going ahead to Calulo where we will have a picnic

lunch and visit the town’s fort and old chapel. Afterwards we will head to Cabuta Farm that is

an old coffee farm, where we will have our dinner and spend the night. On day two, after

having breakfast we will hike the farm to see the old coffee state and processing area. After

touring the farm we will leave and go to “Serra da Magia” that holds various springs that will

later form major rivers inside Angola. We will trek the mountain stopping to have a picnic

lunch and later head back to Luanda.




•“24h Package”, which will take place on the surroundings of the major cities and will include

two destinations: “Massangano Village” and “Kissama Natural Park”. This package has a more

exploratory nature and will be focused on cultural and wildlife activities. The company will

provide transportation and meals (Consumer Survey shows that the preferred option is a

“various activities, less places and more time spent on each activity”, with 53%).

The two options consist of:

Luanda - Massangano – Luanda

This one-day trip is focused on the historical landmarks that show an important part of

Angola´s history. The town of Massangano was founded in 1582 by one of the great navigators

of that time, Paulo Dias de Novais, and today it is one of the few places where historical

buildings where preserved from the civil war.


25

Massangano holds preserved the old administration building, a beautiful fortress and the

church of “Our Lady Victoria”. It is also a place of wild beauty where two of the most

spectacular rivers, Kwanza and Lucala, meet each other creating an amazing scenario for those

who explore Massangano town.

The trip will start early in the morning (6 a.m.) and we should be arriving back in Luanda by the

end of the day. We should arrive at Massangano by midday, where we will have a picnic

brunch and than explore the ruins around town. By 4 p.m. we will have a snack and than hike

to where rivers Kwanza and Lucala cross with one anther and have a snack while appreciating

the view. At 5 p.m. we will start our journey back to Luanda.

Service includes: transport in fully equipped air conditioned 4x4 vehicles (satellite phone, twin

spares, 1st aid kits, etc.) with English/Portuguese speaking guides, drinks and snacks in car,

activities, picnic lunch with drinks, park fees and tolls where indicated.

Luanda – Miradouro de Lua – Kissama Park – Luanda

Kissama Park is now being repopulated with all the native animals that almost disappeared

during the civil war. The main purpose of this trip is to undertake a photographic safari at the

heart of Kissama Park and see the amazing “Miradouro da Lua”, in English Lunar viewpoint,

where the earth seems to mimic the surface of the moon!

Our trip will start at 6 a.m. from Luanda and we will head to “Miradouro da Lua” making a 30

minute stop and than go to Kissama Park by crossing over the Kwanza River Bridge. Arriving at

the main camp (Kawa Camp) we will have a reinvigorating brunch at the Camp Bar to

afterwards finally start a 3-hour game drive. There is the possibility to see Elephants, Giraffes,

Zebras, Ostriches, various Antelopes and many birds. When the game drive is finished we will

head back to Luanda arriving there by the beginning of the night.

Service includes: transport in fully equipped air conditioned 4x4 vehicles (satellite phone, twin

spares, 1st aid kits, etc.) with English/Portuguese speaking guides, drinks and snacks in car,

activities, picnic lunch with drinks, park fees and tolls where indicated.

•“Beach Activities Package” will be offered in Luanda’s most attended beach, Mussulo.

Longboards, gaivotas and jet skies will be the activities available.

Our Consumer Survey shows that the preferred option is a “one activity all day”, with 35%

followed by “various activities, short time spent on each activity, for 2 hours” and “few

activities, longer duration of each activity, for 2 hours”, with 24% each). Based on that we will


26

offer our customers the opportunity to enjoy themselves with these three packages – jet ski

(for half an hour), longboard (for one hour) or gaivotas (for one hour).

In this way our customers can spend an entire day at the beach experiencing all these different

activities that will give them the possibility of visiting and exploring the wild beauties of Angola

(in the case of tourists) or, if we consider the case of people currently working in Angola, they

can benefit from a wide offer of leisure activities at the beaches where they usually go on the

weekend whenever they have a break from work - always with the best quality service and the

most selected clientele.

Price

Since we will be offering different products to our customers - three packages that include

different activities and have different time durations - we will also have different prices for

each of them.

In order to evaluate our potential customers’ willingness to pay and price sensitivity, we

conducted a market survey. Regarding our “weekend package”, results show that 59% of

respondents would perceive it as a low quality product if it was priced at €400 and 29% would

perceive it as expensive at €700. Regarding our “24h package”, results show that 59% would

perceive it as low quality at €100 and that 35% would perceive it as expensive at €300. Finally,

regarding our “beach activities package”, results show that 59% would perceive it as low

quality at €20 and that 53% would perceive it as expensive at €80. Besides this, we will also

have into account other factors, such as: our desired market positioning, our company’s goals,

our competitors and the nature of demand.

Since our main target will be foreign people that are currently working in Angola, with high

incomes, our products cannot be perceived as low quality. On the other hand, since we are

entering the market and have yet no brand awareness in it, if our price is perceived as too

high, we face the risk of having a low market penetration rate.

Taking into consideration competition, since we expect to have a little number of direct

competitors (according to the interview with the industry player we will only have one direct

competitor – EcoTur Angola), we expect other firms to be sensitive to each others’ pricing and

marketing strategies, which means that if we want to sell our products at a price that is inferior

to theirs, they will also lower theirs for sure and it will be very easy to start a price war.

According to our market research, our main competitor charges an average price of €200 for a

one-day trip (all inclusive) and an average price of €430 for a two-day trip (all inclusive).

However, these prices will only be used as a starting point since our product offers are a little


27

different. Their activities include mainly visits to Angola’s natural attractions (trips that have

the duration of 1 to 10 days), and they do not provide daily leisure/sports activities on the

beach.

Regarding the nature of demand, Angola is a country that is facing a huge market growth and

that is not yet very developed in terms of ecotourism. There is still a lot to be done and it is our

conviction that the actual demand is superior to the supply. Besides, when a product is

perceived as unique or as having high quality, consumers are less price sensitive, meaning that

an increase in price will have no major impact on the level of demand.

Regarding the “Beach Activities Package”, as it has already been referred, according to our

market survey 59% of respondents would perceive it as a low quality product if it was priced at

€20 and 53% would perceive it as expensive at €80. However, defining a single average price

for this package is a little bit harder since different activities have very different costs and

require different investments in terms of materials, which obviously will have an impact on

price). In this way, each activity will have its own price, but our customers can obviously

choose to do more than one activity in the same day and, if they decide to do the three

activities a special price may be arranged.

As a conclusion, our positioning strategy will be to charge a considerably high price to our

customers, at the same time that we provide them high quality services. This way, and based

on all the information we were able to gather until now, our packages will have the following

prices:

Package Tours Price

Weekend Package Luanda – Kalandula

Falls

€500 + VAT

Cachoeiras do Binga €500 + VAT

Dondo – Calulo -

Cabuta

€500 + VAT

Package Tours Price

24h Package Kissama Park €200 + VAT

Massangano €200 + VAT


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Package SubPackages Price

Beach Package Jet Ski (1/2 hour) €100 + VAT

Longboards (1 hour) €50 + VAT

Gaivota (1 hour) €50 + VAT

Place

Our company’s office will be placed on Mussulo beach, since that is where we will be operating

our “Beach Activities Package”, hence where our beach concession will be and where we will

keep our materials and equipment. Mussulo is an island in the surroundings of Luanda.

Initially our products/services would be available for clients in only two places, in order to

better manage costs. Customers will be able to purchase our products directly in our own

facilities on the beach (Mussulo), or instead through the Internet on our website

(www.hayoangola.com).

Since in the first year we will only have one store, which is located on the beach, this could

become an impediment because many customers might not be able to go there whenever

needed and to make the reservations in advance. By enabling the purchase of

products/services online, anyone can easily access our website and purchase our products

with no constraints whatsoever, apart from the need of a computer and an internet

connection. Our distribution channels (internet and own store) will allow us to reach our target

market. We have to ensure that we use the right channel to reach the desired target. Since our

revenues will only come from our customers, we need to provide them with all that was

promised. If we overpromise, our customers will be unsatisfied with us; they will not come

back, and will badmouth our company. Hence, developing a good relationship with them is

vital in our business.

Promotion

Since in the beginning we will be running our campaigns on a restricted budget we will be

much focused and also expect, and partly rely on, the existence of “word of mouth” effect. As

so the advertisement will be made through general ads, direct ads and targeted ads.

Regarding the general ads, we will promote our products on the main journals and magazines

most frequently bought by expatriates. An example of a journal that could be used for this

purpose is “Sol”, a Portuguese journal also distributed in Angola. Advertising would not be

made through magazines specialized on tourism since our main target segments do not usually

http://www.hayoangola.com/


29

buy them (although we expect to have some tourists that visit Angola on vacation as our

clients we will not focus on them, at least in this initial phase).

Concerning the direct ads, promotion would be made through flyers and brochures. Flyers

would be spread through the town centre (Luanda) and other key places including the suburbs.

Brochures would be made available in hotels, our beach facilities and also distributed in

companies’ offices in order to reach potential customers more efficiently (high income

Angolans and expatriates).

Finally, our targeted ads include online advertising - not only on the company’s website

(www.hayoangola.com) but also by e-mail to those who provide their e-mail and show interest

in receiving updates and information on our products and services, and on Facebook.

Processes/Routines

Knowledge Systems

As stated before, our website will be one of the main touch points that we will have with our

clients. There our clients will be able to contact us, leave comments/suggestions, find

information about our company and the services offered. This way we think that it is crucial to

have a well designed and easy to navigate website, as well as a built-in system for packages’

reservations. The web design and maintenance is going to be outsourced and the payments

are going to be by deposit only, so we can avoid extra credit card fees. The webhost will be a

common and simple one, once there is not a huge amount of data to be transferred and

transacted within the website.

http://www.hayoangola.com/


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Legal Structure

From among the various types of companies provided for in the Companies Code – Law 1/04

of 13 February – the most significant are the limited liability companies - Limitada and S.A.

From these two different structures the foreign investor option for one or another depends on

various factors, including the degree of simplicity of structure and operating, the amount of

capital to be invested and confidentiality issues regarding the ownership of the share capital.

Based on this, our decision is for Hayo Angola to be a Limited Liability Corporation (“Sociedade

por Quotas”), therefore being characterized by the following features:

a) Number of members – This type of company must be incorporated with at least two

directors, since there is no provision in Angolan law for single member companies. In our case

the company will have five directors, its five founders, one of which also has Angolan

citizenship (relevant given that by law at least 51% of the company must be owned by an

Angolan citizen – this depends on the sectors but given that the tourism sector is not specified

by law, one should be prudent and do it by principal, avoiding any future complications).

b) Members’ liability – The members are not liable to the creditors of the company, only to the

company itself. Each member is only liable for the payment of their own contributions.

c) Registered capital – The formation of a local company by foreign investors is qualified as

“private investment operation” under the Angolan private investment legislation. As such,

there is a minimum statutory investment required for companies with foreign partners of USD

100.000 and 50% of the initial capital contributions may be deferred for a maximum of three

years, provided that the legal minimum has been paid up in full (in cash, cash equivalents or in

kind). The capital is divided in “quotas”, which may or may not be of the same amount, and

these quotas are always nominative meaning that the names of those who hold them must be

stated in the company statutes and in the company’s commercial registry certificate, as well as

in any subsequent agreement or resolution regarding transfers or capital increases.

d) Transferring the quotas - Quotas can only be transferred by a written agreement, which is

then registered with the relevant commercial registry. The transfer of quotas will have no

effect on the company until it gives its consent, with the exception of transfers between

members, spouses, ascendants or descendants. There will be preference rights for the other

members.

e) Company bodies - It must appoint one or more directors or managers who need not to be

members, but which in this case will be the founders. These must perform what is necessary

for or expedient to the pursuit of the company object, respecting the resolutions of the


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members. Their duties will continue until terminated by removal or resignation, although the

deed of incorporation may stipulate a certain term of office. No supervisory board is necessary

for this type of company.

f) Resolutions – The following acts of the company require a company resolution: (i) the

amortization of quotas, the acquisition, disposition and charging of company quotas, consent

for the division or transfer of quotas, (ii) the dismissal of members, (iii) the dismissal of

managers and supervisory board members (if any), (iv) the approval of the annual report and

accounts, distribution of profits and apportionment of losses and (v) amendments to the

statutes. As a rule, resolutions are passed at the General Meeting by a simple majority of the

votes cast by the attending members, unless otherwise stipulated by law or by the company

statutes.

Given that the partner with Angolan citizenship will own 51% for the company, we will also

have a Corporate Governance agreement (“acordo parassocial”). This will define the

asymmetric distribution of dividends or capital gains, options, and so on, which will be defined

as equal to the five founders (all working full-time on the project). Moreover, it will also be

stipulated in the company’s Corporate Governance Agreement that the five partners have

equal voting rights.

Human Resources Management

Our employees are essential to our business not only because they are our ambassadors

before our current customers and potential ones, but also because they have to guarantee

that they enjoy themselves during the activities, and that everything goes as planned. Initially

we will use our social network as a means for direct recruitment. We will also try to depend on

this type of recruitment in the long-term, but if proves to be insufficient for our needs at that

time we will turn to indirect recruitment, namely employment agencies or temporary work

firms.

Basically the staff is composed by the tour guides and the drivers. All our staff is qualified.

Despite having different backgrounds in terms of studies, all of them know Angola very well

and are able to escort our customers, showing them the best of Angola without compromising

their security. Moreover, our employees will also divide and perform other tasks that are

needed to keep the company running, such as the cleaning service.


32

For the first year of activity we will hire 9 drivers, 14 tour guides and 1 beach employee that

will be responsible for receiving our clients at the beach and supervise the activities that take

place there.

The five founders of Hayo Angola will work at the company during the first years as drivers and

will also be responsible for running the company as well as taking care of strategy and

marketing issues. In this initial phase they will not receive any monthly salary.

The number of employees is expected to increase steadily in the next years, reflecting the

increase in demand for Hayo Angola’s services.

In the tables below there is a summary of our company’s employees and their salaries for each

of the first three years of activity:


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Implementation Plan

Schedule

We will work every day of the year, for the purpose of this exercise, we did not consider the

existence of vacations or weekends because since we are in the tourism industry, periods of

vacations and weekends are the ones where our demand will be higher. Once again, since in

our line of activity there are some months with low demand, and in those months not all the

staff will be needed, it is possible for them to rest during that off-season period. In Portugal

this situation could cause us some problems, yet we hope to find a more flexible labor law in

Angola.

In order to fully fulfill our demand we will have to work 10 hours a day (which is a little bit

more then the normal 8 hours in Portugal), but we will be flexible with our staff, depending on

the number of tours scheduled for each day. Every activity will start at 8a.m. and we will close

the day around 19p.m. with a one-hour lunch break. Off course the beach activities will also

work in that schedule, but we will be able to serve more than one set of clients per day.

Drivers, Tour Guides and ourselves will have to work hard and follow this schedule, at least,

during this first three years of activity. We are planning to get another loan in the fourth year


34

in order to increase the scale of our activity is we reach the third year with the positive results

we expect in the spreadsheet.

Tasks

We already defined our work force; drivers that will be responsible for driving the jeeps in the

tour we provide will compose the staff. So will tour guides, that are responsible for “leading”

the expedition and give information to tourists, along with providing support when it comes to

hotels and food needs of the tour. The beach employee will be assigned to work every day in

the beach stand we have and will control the beach activities with the help of one of us, the

other four of us will have to help out as drivers, since all of us hold driving licenses this should

not be a problem. All workers are required to handout a written report about the number of

tourists in the day’s tour, and about all incidents with costumers or vehicles, along with a

questionnaire to be answered by costumers about their satisfaction with the service and

suggestions for improvement.

People in Charge

Besides driving, we will have to be responsible for all other areas of the company, this is why

we have an office and have purchased computers and working material. So each one of use

will have different tasks besides driving. Summarizing:

Joana Figueiredo Pereira – Operational director, Joana will be in charge of the tours/activities,

being the one that more often stays in the office in order to be available to solve any problem

the workers find during the everyday activities. Joana that is a very skilled manager and has an

incomparable team spirit is the best of the five of use to have this lead role; she will also be

responsible for the assignment of drivers and tour guides for each route. Joana will hold

12,25% of the capital of the firm.

Miguel Vieira Pita – CFO and CSO, Miguel will have a more back office role, being responsible

for making sure that everything is financially under way. He will be the strategic leader of the

company deciding with the help of his fellow shareholders the best way to go in the future of

the company. Being a skillful manager we will be responsible for planning the future strategies

of the company. Miguel will also be responsible for the accounting part of the company,

having to compute every thing everything that goes in and out of the company. Miguel will

have 12,25% of the capital of the firm.

Filipa Vasconcelos Alves – Public Relations, Filipa will be responsible for the marketing

department, thinking of new ways to sell and promote our product, being an experience


35

psychologist may help in analyzing peoples reactions to our tours and services and finding out

how we should develop future products and how we should promote them. Filipa will hold

51% of the capital of the firm, due to having double citizenship (Portuguese/Angolan) .

Rose Marie Azevedo – Supply Chain Manager, Rose will be responsible for the negotiation of

the fixed assets we buy in order to go ahead with our business. She will also be responsible for

the deals with hotels, food, electricity and other suppliers and will be responsible for putting

everything in order, so that we can do a proper job everyday of our activity. Rose will hold

12,25% of the capital of the firm.

Vanco Krmov – Human Resources Manager, Vanco will be responsible for the personnel,

having to deal any problem that they might have, we rely on his capabilities to maintain

everything peaceful between the company and its employees, Vanco will also be responsible

for choosing the employee of the month and pointing out workers for promotion. Vanco will

hold 12,25% of the capital of the firm.

Break-Even Point

Initial Investment

The initial investment is considerable due to the necessity of having all the equipment for the

activities we provide to our customers, including new jeeps, jet skis, gaivotas, PWC, longboards

and also the money necessary to register our company’s name and logo. In the end, the initial

investment will top a total of €483.933,19.

Variable Costs

Our cost of goods (services) sold is related with the price of the inputs we will need to buy to

be able to offer our packages to our clients. They include costs such as fuel, insurance,

maintenance, hotel and food.

In order to know how much money we would spend in fuel with each tour we made some

calculations based on the number of km of each tour, based on the average consumption rate

of fuel of a jeep and based on the cost of fuel in Angola.

The costs related with insurance, hotel and food were based on values given to us by

companies that have at the present moment offices in Angola. Regarding maintenance, we

assumed a fixed value that represents 10% of price.


36

With the sum of all this costs we were able to determine the cost of each package (service) we

sell.

Thus the final costs of our packages will be the following in the 1st three years:

Fixed Costs

Staff: The employees will be paid in a monthly basis. The total number of workers will be 24 in

the first year: 9 drivers, 14 tour guides and 1 employee for the beach, while in the second year

it will be 26: 10 drivers, 15 tour guides and 1 employee for the beach. Finally, in the third year

our staff will increase to 28, with 11 drivers and 16 tour guides and 1 employee for the beach.

Security and Rent: Our company will need security to guarantee that its office and the

materials needed for the packages it offers are not robbed. This activity will be outsourced.

Regarding the rent, it refers to the space occupied by our office/store and it will be paid on a

monthly basis.


37

External Supplies and Services: Our ESS will include expenses such as water, electricity and

telecom. Concerning these expenses, it was hard for us to estimate how much our company

would need to spend since these costs that are not related with our core activity. To overcome

this difficulty, we based our estimates in costs occurred by other companies that are present in

Angola.

Depreciations: Our calculations will be annual and done with straight-line depreciation. We

used the rates presented on the “Decreto Regulamentar 25 of 2009”. Some reinvestments will

have to be made on a yearly basis; however the amount of the annual depreciation will not

grow too much from year to year.

It is also important to refer that we did not consider any inflation rate in the depreciation

calculations.

Promotion: Our Company will have a very busy schedule, in order to serve all our demand we

will work everyday. Yet it will be hard for us to be recognized in the first years of activity; we

will rely on the word of mouth effect certainly, but our promotion will be very aggressive - we

are considering to distribute 5.000 flyers per year, spending a total of €5.000.

In total we will spend a value of €52.955,00 per year in promotion, including the website

creation and its maintenance, as well as the adds in the newspaper “Sol”.

Break-Even Point Calculations

To calculate the final margin we first had to calculate the weight of each package in the final

sales. Based in the questionnaires we made we were able to estimate the percentage of sales

of each package, that allowed us to calculate a weighted average price of €352,50 and a

weighted average variable cost of €232,20 to finally reach our margin of €120,30.

Our fixed costs amount to €1.274.140,85 (at the end of three years).


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Through the BEP formula we need 10.592 customers to cover our fixed costs of the first three

years of activity – this objective is accomplished between the first and the second year of

activity (month 13).

In annual terms we need 3.322 clients, which seems not to be a problem since we expect to

achieve 8.849 in the first year and, in monthly terms we need 277 customers. This monthly

value will not be achieved every single month because our demand tends to fluctuate and

suffers from the effect of seasonality – this means that in some months our demand will be

much higher than this value while in others it will be significantly lower.

Financial Analysis

Cost of Packages

Hayo Angola is only able to generate money from selling the packages of activities it provides

to its clients, so the related costs of these packages are crucial to its financial health and thus

are very important to analyze carefully.

So, we had to take into account all the costs that we will need to hold in order to make those

packages possible, as shown in the tables presented in the BEP chapter of this report.

First and foremost, it is necessary to define clearly each of the packages since each one will

have different costs - for example, not every package includes fuel as a cost.

In order to calculate the costs associated with each package we had to take into consideration

what each of them includes in terms of activities and also in terms of accommodation for

example – hotel expenses only exist in the weekend packages.

The final costs of our packages in the first year are the following:


39

Note: These variable costs have already been explained in the BEP chapter

Assumptions

In order to do the financial plan it was necessary to make some assumptions such as:

o The inflation rate was established at 2% for the first year and it is expected to maintain

stable through the following years.

o VAT rates vary from 6% to 21%. The first rate is related with the food that we buy to

offer our clients during the tours, while the second rate is related to our sales and

related to the investments on Capex and to the supplies and other services.

o Income tax of 35%.

o The Social Security rate paid at the end of each month by the company is 10% (7% +

3%).

o The Personal Insurance is 2%.

o Interest rate for current debt is 8%.

o Dividend Payout will start to be applicable on the first year. This rate will be 25%, 53%

and finally 67% in the third year because we will not have much reinvestment so we

will not need to retain much of the earnings.

Operational Costs

o The total personal costs are calculated through de number of employees and the

months worked by them (already explained) totalizing the costs down described.

o Electricity, water and telecom costs were calculated based on information we manage

to gather from other companies that are based in Luanda.

o The rent paid for the place we will need to have to set our office/store is calculated

based on its dimension, and also on the standard cost of that dimension in the Luanda

region.


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Sales

The Sales are estimated based on the market projections, already explained - we estimate that

the number of people travelling to Angola in 2011 will be superior to 340.00 (assuming a

growth rate of 5% - 240.00x1,05^3); presuming that from these 340.000 tourists only 26% is

related to adventure tourism, we will get a number around 88.500 and, finally, our aim is to be

able to capture 10% of these clients, which means serving around 9.000 customers on the first

year. Then they will be normally distributed along the years, with slight fluctuations on a

monthly basis due to seasonality.

In order to get a monthly value for our sales projection we simply multiplied our expected

demand by the price of each package and its corresponding expected rate of utilization.

In the table below it is possible to analyze the evolution of our sales in annual terms:

Capex

The Capital Expenditure is what we will need to start our business. We will need a “container”

to store all our equipment (that will be located on the beach, next to our office), various

equipments for the different activities we provide, like Jeeps, Jet Skis, “Gaivotas”, and PWC

(Personal Water Craft). Besides we also have to consider all the furniture and equipment of

our office – computers, desks, telephones, etc.

And finally it is also necessary to include clothing for our employees as well as the money

necessary to invest in working capital.

The following table describes the total costs in each segment:


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This total value is what we will face as the investment needed to start our business – we

assume that all these expenses are made in year 0, allowing us to start our activity in the first

day of year 1 (1/1/2011). As this amount is quite big we will need to finance ourselves with a

loan. The details of this financing will be explained further.

Depreciations

Since we will have a considerable amount of tangible assets, we

will have to deal with a significant number of different

depreciation rates, as shown in the table aside:

Working Capital and Cash Flow Statement

For us to do the Working Capital investment statement we first had to determine how we

were going to manage the cash flows that derive from our activity. We do not hold any

inventory since we are a “services” company, and we do not sell any kind of products. Our

day’s account payables will be mainly 30 days (these suppliers refer to our variable costs) as

our suppliers allow such payment methods, which will lower our necessity of working capital

investment. In this way, we will pay most of our suppliers (60%) in 30 days and the rest of

them we will pay at the moment of the purchase.

Regarding our receivables, individual clients will pay us immediately, at the day of the tours,

and the corporate clients in a 30 days period, as explained above in this report.

Concerning VAT, our payment will be made at the end of each month and, finally, as it has

already been referred, we stipulated that our minimum cash would be €40.000 in order to

establish our necessities in working capital around a single value.

In the first year our investment in Working Capital will be around -€265.682,99, in the second

year it will be -€251.867,55 and, in the third one, -€408.797,30. Once again, these negative

values come from the fact that at the end of each year Hayo Angola will have too much money

in working capital, partially explained by the existence of the minimum cash.


42

Since the seasonality to which our type of business is exposed to, there will be months where

our business volume will drop significantly. For this reason there will be months where our

outflows are superior to our inflows and consequently we will have to compensate with an

increase in money expenditures – for example, at the beginning of each year we will need

more money to buy new equipment and, it will also happen in months where our demand is

lower (around the months of June/July).

So, at the end of each year our company has decided to use that excess of money in working

capital to pay out dividends.

Sensitivity Analysis

The sensitivity analysis measures the impact that a variation on some crucial elements has on

the adjusted NPV of the project. Here we will face variations of -20%, -10%, +10%, +20%, on

the prices of our packages and on the cost of fuel. Regarding the variations on demand, we

considered 3 possible scenarios: in the normal one we assumed that we would be able to

capture 10% of the expected number of people entering in Angola related with adventure

tourism (88.488,86) – these numbers have already been explained in our report in the section

Market Projections. Regarding the worst and the best scenario, we assumed that we would be

able to capture 2% and 20%, respectively.

Through this analysis we can see that the changes in price and in quantity are the ones that

will provide a higher impact in the Net Present Value.

Nevertheless it is important to refer that no single change in these scenarios, except a -20%

variation in demand, will have as a consequence a negative adjusted NPV.

Financing

The way that we will finance our business is extremely important to the financial analysis. This

will result in the debt that we will face in the first year of activity.

The total amount on Fixed Assets and consequently the amount that would be necessary to

initial invest in our project will be €483.933,19.


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Since we will have 7% of capital invested, we will need to finance ourselves through a loan that

represents around 93% of the initial investment, which means 450.000,00 €.

The loan contracted with an investment bank will mature in 3 years and we will support an

interest rate of 8%


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Ratios

Solvency

Another important thing we most refer in our report are the solvency ratios, since determining

if a company is technically solvent is very important because otherwise it means that it cannot

comply with its financial obligations. If this should happen the company can no longer exist.

As we can see in the table above, Hayo is in very good health when it comes to solvency. The

debt only represents 60% of our total assets in year 1 and less than 50% in year 2. But most

importantly in year 3, the debt will represent 37,69%, which means that the total assets are

enough to cover all of the financial obligations. These values are superior to our financial debt

mainly because of our debt to suppliers, since we pay some of them in a 30 days period.

Regarding financial debt, it only represents 23,22% of our assets in year 1 and it decreases

until year 3, where its value is zero because we have already made all debt repayment by then.

This means that our financial debt never represents a big percentage of our assets.

The cost of debt fluctuates, because we start repaying debt right in the first year of activity,

but it will never be superior to 5%. The cost of debt will be 4,49% in year 1, which is the highest

value, since it is the year where we have the most debt and less profits. In the second year the

cost of debt will be 2,68%, and in the third year it will continue decreasing, hitting a low of

1,02%. Summarizing, it is fair to say that overall our cash flows are high enough to pay the cost

of debt.

Regarding the interest coverage, it is utilized to determine how easily a company can pay the

interests of its outstanding debt. In our case this ratio is always higher or at least equal to

1.000%, which means that our ability to meet our interest expenses is not questionable.

Liquidity


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The current ratio is used to test a company’s liquidity by determining the proportion of current

assets available to cover its current liabilities. In our case, our current short-term assets are far

superior to our current short-term liabilities. Usually having this much excess cash is not

normal or optimal for a company but our company is expecting an increase in demand and, in

order to fulfil it, it will buy more assets that can be financed with these internally generated

cash flows, instead of having to go to a bank and ask for a loan.

Although our projections only rise until the third year of exploration, it is fair to say that the

investment in personnel and tangible assets will continue to grow in order to keep up with the

growth rate of demand, as we can see supported in the justification of the material utilized in

the excel file.

Our quick ratio is equal to the current ratio since we do not hold any inventory - our current

assets are mostly excess cash.

Regarding the cash ratio, it is generally used to determine when a company is able to repay its

short-term debt. Our strong cash ratio means that our company’s total cash is enough to pay

our current liabilities just after the 2nd year of activity and, in the previous ones, it never

represents less than 80%, which is very good.

We must add the fact that we receive immediately from 60% of our clients, which is also a key

aspect to achieve good liquidity ratios.

Profitability:

Operating return on sales is a ratio that helps to know how much profit a company is

producing per dollar of sales. In our case this ratio decreases a little bit on year 2, but that can

be explained by the fact that we increase our costs due to the need of more workers, more

material and also because of inflation. This means we actually managed to reach the Break-

Even Point between the first and the second year, from month 12 to month 13 of activity.


46

Nevertheless in year 1 and in year 2 our ratios are good, and in year 3 our net return on sales is

8.61%, which is a sign that our operations are running very well. In other words we manage to

have an almost 9% profit margin in our business.

As we have seen before our operating return is at a very acceptable level and so is our

sales/assets ratio. Having this ratio high is important because it means that we are taking

advantage of the assets that we have at our disposal to reach a good operating income; that is

to achieve a high number of sales. Consequently we have an excellent ROA in the year 1 and

on. This means we are being very efficient and benefiting from the assets at our disposal. The

“ROA – Cost of Debt” ratio is positive and around 40% every year, once again a sign of the

ability to pay the debt completely with our internal cash flows. All together this makes our ROE

very positive in every year, yet decreasing to 44% in year 3. ROE measures a company’s

profitability by finding out how much profit a company generates with the money

shareholders have invested.

Funds Management

Our average collection period is 13 days since 60% of our customers pay us at the day of the

trips and the other 40% (companies) pay us in a 30 days term.

The average account payable period is 18 days since we pay most of our suppliers 30 days after

purchasing the merchandise/service; meaning tangible assets are paid upfront, whereas

activity related costs suppliers are paid 40% upfront and 60% in a 30 days period, leading to

the values in the table above.

Business Model Canvas

Key Partnerships

At the beginning of our business, one of our key partners will have to be the national parks

where the tours are headed. We expect to get free access or special prices to the parks by

creating protocols with the government in order to establish the business.

Travel agencies will also be key partners when it comes to publicize our products and

packages, so we will need to take them into great account and create stable and cooperative

relationships with them.


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We will have a medium number of suppliers but none of them will be especially important for

us since we will not be buying a lot of materials or products in the first 3 years of activities -

our fleet of vehicles will be composed of 14 jeeps (year 1) that will be used during the trips and

besides that we will only buy the materials necessary for the beach activities – jet skis (2),

gaivotas (4), longboards (4) and PWC (1).

A lot of our resources will be provided by suppliers, not directly from partners, yet, one of the

main partners will be the national parks and they provide the most important resources of the

company that are the beautiful landscapes of Angola.

We do not rely a lot on outsourcing, but we do it, mainly when it comes to security and to the

creation and maintenance of our website. These are key issues to the company and partners

have a very important role to play in the well functioning of our company.

Cost Structure

Analyzing our company we can see that the costs inherent to the business model are

separated in costs related with the core activity of the company and costs related to the

supporting activities of the company.

In order to simplify the cost structure we have decided to index and fix most of the costs, since

the company’s activities are subject to fluctuations due to seasonality it would be reasonable

not to do so, yet, we have decided to do things in this way in order to minimize problems

related to wages and insurances that the company has to deal with in a yearly basis.

As we look at our cost structure, we can understand that the company is very value driven.

Since our prices are fixed based on the priceless experience we provide, we do not intend to

be the lowest cost operator in the market, instead we intend to provide the best quality

service available in the ecotourism segment.

Looking in more detail to our cost structure, we can see that we will have a lot of expenses in

the first year due to the purchase of equipment needed to start the operation of the company.

Furthermore we can see that the main costs of the company are variable costs related to the

trips and activities we provide (for example the costs related with gas and maintenance of the

materials/equipments, mainly the vehicles and the jet ski’s).

So, which key resources are most expensive? Labor is the most expensive resource since we

are very dependent on the hiring of local tour guides, given that at least at the beginning we

have limited knowledge about the country. The other great expenditure we will face is related

with the purchasing of the operating equipment, because we are a recently created operator


48

and therefore very unlikely to benefit from large scale discounts from retailers since we will

not have a large fleet of vehicles.

Furthermore, we can ask which key activities are most expensive. Advertising and security are

the most costly activities of the firm. Since all the operations we have are very well planned,

we managed to reduce costs in order to increase margins.

Therefore the most expensive activities are activities where we have to deal with outsourcing

and with problems of scale, given that being a recently created operator the company will not

be able to negotiate prices with suppliers, which may prove to be key in leveraging its

important activities (an example being that the company will not benefit from discounts when

it comes to regular advertising).

Key Activities

In order to keep our business running, the most important activities we must perform are

related to problem solving and networks.

Problem solving is key to our business because there is a need for constantly finding new ways

of creating value for our customers. We have to create new packages and new activities, study

our customers and their needs and desires in order to fulfill them, create a link with them and

try not to disappoint them.

Networks on the other hand are key because our website will be essential as a vehicle for

promotion and as a sales channel. We will advertise our services there, our customers will be

able to make reservations there, as well as contact us through it.

For all these reasons, we must guarantee that it is working properly and continuously develop

it.

Key Resources

Our key resources will be essentially physical and human.

The physical ones include physical assets, such as our facilities and the material needed to

provide our customers the desired activities (our vehicles, jet skis, longboards, etc).

In order to create value for our customers we have to assure that all the material we use is the

best one in the market. Quality is a big issue here since in this kind of activities there are a lot

of security concerns.

Human resources refer to our staff. They are essential to our business not only because they

are our ambassadors before our current customers and potential ones, but also because they


49

have to guarantee that they enjoy themselves during the activities, and that everything goes as

planned.

All our staff is qualified. Despite having different backgrounds in terms of studies, all of them

know Angola very well and are able to escort our customers, showing them the best of Angola

without compromising their security.

Our distribution channels (internet and own-store) will allow us to reach our target market.

We have to ensure that we use the right channel to reach the desired target. Since our

revenues will only come from our customers, we need to provide them with all that was

promised to them. If we overpromise, our customers will be unsatisfied with us, they will not

come back, and will badmouth our company. Hence, developing a good relationship with them

is vital in our business.

Value Propositions

The main values we try to proportionate to our customers are related with their desire of

exploring a country that has an infinite number of wild beauties, and their passion for

adventure. This way we are providing them accessibility – we are making a service available to

customers that did not have access to them previously, because they simply did not exist. We

offer them the opportunity of choosing among our predefined packs (3 options in the

“weekend package”, 2 options in the “24h package” and 3 options in the “beach activities

package”), but we also allow them to customize their tours under some conditions (such as:

minimum number of participants – 7; booking two months in advance).

Besides providing them accessibility, we believe we also provide them status - Angola is not a

cheap country, and participating in activities like the ones we provide is not cheap either, and

not everyone can afford to do it. Travelling creates status, and nowadays it is not only by

staying in luxury hotels, ecotourism and tourism of adventure are new trends and are

considered very “hot”.

Although our offer is not especially innovative because there is already one company providing

this kind of services, we create value to our customers because we differentiate our offer from

competition. Besides the usual tours, we offer our customers the possibility of doing sport

activities at the beach, something that does not exist and that they really appreciate.

Customization is also present. We try to adapt our services to our customers. Weekend

packages are most likely to be bought by our segment of expatriate workers, since during the

week they do not have much free time. On the other hand, tourists are more likely to choose a

24h package during the week since they are less time constrained.


50

Customer Relationships

Since we are entering the market, our main goal is customer acquisition.

As the service we provide to our customers is not supposed to be “consumed” on a daily basis

(like coffee for example), we do not expect to create a very close relationship with them, we

do not expect them to visit us everyday, especially because some of them are only in vacation

and may never go back to Angola. Nevertheless, even if they are only tourists, while they are in

vacation they may decide to do more than one tour with us, if they are satisfied they may

recommend us to their friends and may even get in touch with us if they ever decide to visit

Angola once again. Consequently, we intend to keep in touch with our customers, sending

them e-mails and newsletters with special offers and new tours. The same happens with the

expatriates that are currently working in Angola. They may recommend us to their co-workers,

or even to their friends and family that might go there to visit them. Regarding companies, if

they are satisfied with our services the probability of getting in touch with us again is higher

and, besides that, it may lead their employees to contact us in order to do some trips or beach

activities on their own during the weekends. Another important issue is to ask all our clients

for feedback at the end of each tour, as well as for suggestions.

The main relationship that we intend to create is one of personal assistance. The relationship

we build with our customers is based on human interaction – if our customers want to

communicate with us, they can do it directly with a member of our sales force at our store, by

phone or by e-mail.

Channels

According to our market survey, our customers prefer to be reached through the Internet and

through magazines and newspapers in terms of promotion. In terms of points of purchase,

they prefer to buy our services on the Internet and on our own stores.

Since we are new in the market, we are still trying to create some awareness about our

company and our services, and as so we believe the best way to do it is through our own

website (direct channel), and also by putting adds in some journals/magazines. For instance,

journals like “Sol” that are distributed in Angola. Flyers and brochures will be spread through

the town centre (Luanda), and will also be available in hotels, travel agencies in Angola, in our

beach facilities and will also be distributed in some companies’ offices. We are also counting

on the “word of mouth” effect.


51

After knowing about our company, our potential customers are able to find information about

us by searching on the Web. We have a website where they can find our mission, vision,

objectives and value proposition.

In case they are interested, they will be able to book tours through the Internet (all they have

to do is to access our website), or at our own store in Angola, located on the beach, where

they can contact our sales force and ask for information and do reservations. This is a way of

saving some money at the beginning, but if everything goes as planned, we have plans to open

new stores in different locations in Angola within a few years.

In terms of payments, our clients will have to pay for our services at the day of the tour in our

beach facility.

The meeting point for the tours has to be scheduled too. It can be either near our facility at the

beach or near the hotel where our customers are staying).

At the end of each tour/activity we will ask our customers for feedback and/or suggestions,

being always available to answer any questions they may have. This can also be done in our

website – customers will have access to some of our staff’s e-mail.

Revenue Streams

Our business model involves mainly transaction revenues that result from one-time customer

payments. At least at the beginning, our revenues will only come from our customers; from

the money they pay us for the service we provide them – an usage fee. The price of our

services is fixed (each package has a price – list price) and depends largely on the costs

associated with each activity and/or tour.

In order to evaluate our customer’s willingness to pay, we did an online survey that showed

that: regarding our weekend package, 59% of respondents would perceive it as low quality if it

was priced at €400 and 29% would perceive it as expensive at €700; regarding our 24h

package, 59% would perceive it as low quality at €100 and 35% would perceive it as expensive

at €300; finally, regarding our beach activities package, 59% would perceive it as low quality at

€20 and 53% would perceive it as expensive at €80.

Our final prices are: Weekend Package – €500 + VAT

24h Package – €200 + VAT

Beach Package – €100 + VAT (jet ski) or €50 + VAT (longboards and

gaivota), depending on the activities chosen.


52

If our customers choose to customize their tour, price would be under request, since it depends

on the costs associated with the tour.

Payments must be done at the day of the trips and can be done either in cash or with credit

cards.

The only exception is the case of companies, which will be able to pay us in a 30 days term.

Customer Segments

In our business, customers are segmented.

Our services will be directed to three main segments: expatriate workers in Angola, companies

and tourists. All of them have slightly different needs and can sometimes be reached in

different ways.

The first one is composed of people that have a high level of education, medium/high income

level, and a considerable number of them are Portuguese. The idea is to fulfill a market gap,

since many of these people claim that they do not have anything to do during the weekend in

Angola apart from going to the beach (where again there is not much to do). The number of

people in this segment has been rising, given that Angola is a very attractive country with a lot

of resources, many international companies are opening offices there, or simply sending some

employees there to visit clients.

The second, companies, is composed by companies operating in Angola that want to provide

their employees or clients with some leisure time. We expect them to represent 40% of our

clients and, although they were not included in our survey, we expect them to be more price

sensitive then our individual customers. Nevertheless, we anticipate that their willingness to

pay is quite good.

The third segment is composed of tourists that go to Angola during their vacations. This

segment is important because the first one will be interested in our packages mainly during

weekends. This second segment will allow us to have clients during the whole week, since they

do not have to work from Monday to Friday like the previous ones. Since Angola is a very

expensive country, people who go there on vacation are people who have a high purchasing

power.

One thing that all our potential customers must have in common is the passion for travelling,

as well as the interest in getting to know Angola better and the enthusiasm for adventure and

nature.


53

References

http://www.state.gov/r/pa/ei/bgn/6619.htm

http://www.gfmag.com/gdp-data-country-reports/331-angola-gdp-country-

report.html

http://www.can-angola2010.com/Destinos/SobreAngola/index.htm?Language=en_EN

http://www.un.org/esa/population/publications/wpp2006/WPP2006_Highlights_rev.pdf

http://www.plmj.com/xms/files/Guias_Investimento/Guia_de_InvesAngola_Final.pdf

http://adventure.nationalgeographic.com/2009/02/adventure-ratings-list-text

http://books.google.com/books?id=HhfHmSojJ8QC&pg=PA572&lpg=PA572&dq=key+success+factors+in+ecotourism&source=bl&ots=AjZPkGcmQO&sig=QvKxt88PTF-fWFxyZUCPBy6RcR8&hl=pt-PT&ei=s9H2TIzxFqaI4gap9NT4Bg&sa=X&oi=book_result&ct=result&resnum=4&ved=0CCUQ6AEwAzgU#v=onepage&q=key%20success%20factors%20in%20ecotourism&f=false

http://131.175.172.10/carta/Analisi/trend%20internazionali%20nel%20turismo%20nei

%20parchi.pdf

ftp://ftp.puce.edu.ec/Facultades/CienciasHumanas/Ecoturismo/ArticulosTurismo/Art

%EDculos%20cient%EDficos/Ecoturismo%20y%20la%20Conservacion%20biodiversidad

/The%20Concept%20of%20Ecotourism-Evolution%20and%20Trends.pdf

http://www.travelersphilanthropy.org/community-projects/community-projects.shtml

http://greennow.net/okoturisme/Martha_Honey_foredrag_10_%20mai%2006.pdf

http://www.blueflag.org/

http://www.inti.gob.ar/cadenasdevalor/ecotour.pdf

http://www.eco-tur.com/

http://www.unwto.org/facts/eng/vision.htm

http://www.unwto.org/facts/eng/pdf/highlights/UNWTO_Highlights10_en_LR.pdf

http://www.unwto.org/facts/eng/pdf/indicators/new/ITR05_africa_euro.pdf

http://www.unwto.org/facts/eng/pdf/indicators/new/ITR05_africa_US$.pdf

http://www.unwto.org/facts/eng/pdf/indicators/ITA_africa.pdf

http://www.state.gov/r/pa/ei/bgn/6619.htm

http://www.gfmag.com/gdp-data-country-reports/331-angola-gdp-country-report.html

http://www.gfmag.com/gdp-data-country-reports/331-angola-gdp-country-report.html

http://www.can-angola2010.com/Destinos/SobreAngola/index.htm?Language=en_EN



http://www.plmj.com/xms/files/Guias_Investimento/Guia_de_InvesAngola_Final.pdf







http://131.175.172.10/carta/Analisi/trend%20internazionali%20nel%20turismo%20nei%20parchi.pdf

http://131.175.172.10/carta/Analisi/trend%20internazionali%20nel%20turismo%20nei%20parchi.pdf

ftp://ftp.puce.edu.ec/Facultades/CienciasHumanas/Ecoturismo/ArticulosTurismo/Art%EDculos%20cient%EDficos/Ecoturismo%20y%20la%20Conservacion%20biodiversidad/The%20Concept%20of%20Ecotourism-Evolution%20and%20Trends.pdf



http://www.travelersphilanthropy.org/community-projects/community-projects.shtml

http://greennow.net/okoturisme/Martha_Honey_foredrag_10_%20mai%2006.pdf

http://www.blueflag.org/

http://www.inti.gob.ar/cadenasdevalor/ecotour.pdf

http://www.eco-tur.com/

http://www.unwto.org/facts/eng/vision.htm

http://www.unwto.org/facts/eng/pdf/highlights/UNWTO_Highlights10_en_LR.pdf

http://www.unwto.org/facts/eng/pdf/indicators/new/ITR05_africa_euro.pdf

http://www.unwto.org/facts/eng/pdf/indicators/new/ITR05_africa_US$.pdf

http://www.unwto.org/facts/eng/pdf/indicators/ITA_africa.pdf


54

http://www.dti.gov.za/econdb/raportt/angolaOverview.html

http://www.embaixadadeangola.org/cultura/turismo/turismo.html

http://www.botschaftangola.de/ueber_angola/reiseinformationen/tourism_angola.pd

f

http://embangola.artedesign-net.pt/content.php?id=turismo

http://www.xolaconsulting.com/industry-research.php

http://www.adventureindex.travel/reports.htm

http://www.ecotourism.org

http://www.unwto.org/videogallery/index.php?ruta=barometer_e

http://www.wttc.org/eng/Tourism_Research/Economic_Research/Country_Reports/An

gola/

http://www.portalangop.co.ao/motix/pt_pt/noticias/turismo/index.html

http://www.portalangop.co.ao/motix/pt_pt/noticias/turismo/2009/8/39/Dia-Mundial-

Turismo-assinala-hoje,b715c8b7-702b-414b-9b28-9ba98a01aa6e.html

http://www.dti.gov.za/econdb/raportt/angolaOverview.html

http://www.embaixadadeangola.org/cultura/turismo/turismo.html

http://www.botschaftangola.de/ueber_angola/reiseinformationen/tourism_angola.pdf

http://www.botschaftangola.de/ueber_angola/reiseinformationen/tourism_angola.pdf

Appendix

Appendix 1

Sales volume index in tourism related activities

World

Ranking Country Continent

International

Tourist arrivals

in 2009

(In millions)

International

Tourist arrivals

in 2008

(In millions)

International

Tourist arrivals

in 2007

(In millions)

1 France Europe 74,2 79,2 80,9

2 United States North America 54,9 57,9 56,0

3 Spain Europe 52,2 57,2 58,7

4 China Asia 50,9 53,0 54,7

5 Italy Europe 43,2 42,7 43,7

6 United Kingdom Europe 28,0 30,1 30,9

7 Turkey Europe 25,5 25,0 22,2

8 Deutschland Europe 24,2 24,9 24,4

9 Malaysia Asia 23,6 22,1 21,0

10 Mexico Central America 21,5 22,6 21,4

http://pt.wikipedia.org/wiki/Estados_Unidos

http://pt.wikipedia.org/wiki/Espanha

http://pt.wikipedia.org/wiki/Rep%C3%BAblica_Popular_da_China

http://pt.wikipedia.org/wiki/Reino_Unido

http://pt.wikipedia.org/wiki/Turquia

http://pt.wikipedia.org/wiki/Alemanha

http://pt.wikipedia.org/wiki/Mal%C3%A1sia

http://pt.wikipedia.org/wiki/M%C3%A9xico

Appendix 2

Interview with industry player:

Partner of EcoTur Angola

Main points:

Market

They have no figures on the market size and subsequentely on their own market share;

In his own round numbers, 70% of tourists are in Angola for business reasons, 20-25%

visiting family or friends, and only 5-10% are genuine tourists (around 100.000

tourists);

The threat of new entrants seems to be the only and most important threat, especially

now that the government seems to be more interested in this sector and about to

invest in it, starting to support firms in the tourism industry.

EcoTur Angola

Created 4 years ago, has a total of 4 employees and anual revenues are around

US$200.000;

Focused on corporate clients (team building exercises), but has agreements with

various hotels;

Most clients are foreigners currently living in Angola;

Number of clients has been increasing steadily, due to an investment in marketing, for

example on the internet (were not able to provide information on the number of

clients);

Their activities include mainly visits to Angola’s natural attractions, they do not offer

many sports activities, hence there is not a great need for equipment – what they

need they get mostly inside Angola, they do not usually import;

The biggest difficulty is the cost of coming to Angola (most expensive city in the world,

airplane costs, difficult to get a visa;

Currently there is no government support, however they are begining to invest in the

tourism sector having already held a meeting with one of EcoTur Angola’s partner.

Future support is expected to become a reality;

Legally there are no competitors, there is no other organized firm in the sector of

ecotourism, or even in general tourism (tour guides, etc). There are only one or two

people doing it alone and not on a regular basis.

Appendix 3

Online Survey

eco tourism - final

Documents

market trends

market domain

new market

market specifics

market projections

market needs

market segmentation

key activities