Question

Business Growth Strategies at SM Holistic Living Academy Background...

Business Growth Strategies at SM Holistic Living Academy

Background

Preparing for the brightest of futures, SM Holistic Living Academy (SMHLA) is pioneering the field of education in holistic health and traditional and complementary therapies through its dedication and commitment to its students' needs. It offers a unique educational experience designed to enhance intellectual growth and promote projects that serve humanity.

Living up to its motto 'embracing the rhythm of Mother Nature', the academy brings students on a journey of discovery to allow their innate passion for natural therapies to shine. Many students who initially enrolled for the courses out of curiosity went on to discover that they have developed a passion for the field that they had chosen.

SMHLA, with its highly-trained tutors, facilitators and international panel of distinguished patrons and advisors, guides students to identify their inherent talent in the most creative and expressive way. The founder of SMHLA, who has vast experience, exposure and a unique passion for natural therapy, strongly believes that it is only through empowering people with education that you can bring out the best in them, all done in communion with the spirit of nature and the love for it.

SMHLA offers internationally recognized qualifications in the fields of holistic wellness, providing students with the skills for life to work in a global economy regardless of the learner's age. The scheduling of classes is also designed to cater for working individuals. The academy offers qualifications from highly recognized UK examining boards such as ITEC and VTCT, which are the world's leading awarding bodies specializing in the fields of complementary therapy, sports and fitness, and more.

The certificate and diploma courses offered by the academy include the following:

Certificate in Diet and Nutrition

Diploma in Aromatherapy

Diploma in Yoga Teaching

Certificate in Sports Massage Therapy

Diploma in Sports Massage Therapy

Diploma in Reflexology.

The academy also conducts other short courses and workshops related to health and wellness. With the increasing cost of healthcare services around the world and greater awareness of the side effects of chemical-based medication, many are turning to alternative medicines. Hence, these short courses do not only appeal to the public but also serve as continuous professional development courses that can further enrich the graduates and students. Some of the short courses and workshops that the academy offers are as follows:

Sports Massage

DIY with Essential Oils

Natural and Holistic Care for Pets

Herbal Remedies from Your Kitchen

Acupressure for Health.

Besides classroom education, the academy places a very strong importance on practical knowledge. This is to ensure that its students can apply the skills in real life situations such as in a hospital environment. Consequently, to further fortify the students' educational experience and practical knowledge in the healthcare sector, the academy is affiliated with hospitals and clinics to provide students with clinical training.

The academy's other activities also include conducting the annual SM Holistic Wellness Conference and promoting corporate social and humanitarian activities.

Annual International Conference and Exhibition for Holistic Wellness (ICEHW)

SMHLA, which aims to set a trend in the advancement of the field in natural therapies in Malaysia, organizes an annual International Conference and Exhibition for Holistic Wellness. The ICEHW is organized annually with an aim to educate the public, students and medical professionals on the importance of eco-friendly and healthy alternative practices that can contribute to one's overall wellness. The academy looks forward to promote the idea of integrative medicine to optimize the standard of health and wellness around the world. It also

aims to empower the public in recognizing its own role in healthcare so that individuals are steered towards becoming healthier and happier, and to be the best that they can be.

Corporate social responsibility/humanitarian activities

SMHLA's corporate social responsibilities and humanitarian activities are the pride of the academy. Besides conducting the necessary certificate/diploma skills and knowledge courses, SHMLA is also strongly involved in the following activities:

PawPrints Natural Rescue

This activity is initiated to rescue injured stray animals with natural and alternative methods of healing, and finding them loving homes.

Women's Life Force in Action

A women support circle called the 'Women's Life Force in Action' has been set up to provide support in various ways to grieving women who are afflicted by physical or emotional abuse, abandonment, etc.

Character building programme for kids

Children are the pillars of society. When children are taught the proper values, they will eventually grow up to be good leaders. Only with the leadership of people with good values will the world live in harmony and peace.

The SM character building programme for children was launched in order to help children cultivate good values and principles. They are also taught lessons on importance of self-empowerment, developing compassion for others and rational thinking. The values imparted to the children help them to blossom into thinkers who cultivate unconditional love for other beings.

The education that the children receive from this programme is unlike elsewhere for they are encouraged to develop their analytical mind and cultivate positive thought patterns. Good character is reinforced with creative teamwork and projects. Character building programme objectives:

To develop compassion for other beings so that they serve others from their hearts

To encourage self-awareness, confidence and mind mastery

To inculcate positive thought patterns that will instil self-empowerment and independent thinking

To instil discipline in every area of life

To guide children down the path of discipline, truth and righteousness.

Future development

SMHLA is a private academy wholly owned by its principal, Sandhya, a young dynamic entrepreneur who enjoys a high national media profile. She likes the excitement of the holistic wellness business and is determined to rapidly expand SMHLA-an ambition shared by her fellow partners. In 2018, on a turnover of RM800,000, SMHLA recorded a gross profit margin of 28% and an operating margin of 17%. It delivered a return on capital employed of 17.5 %. It currently has a zero gearing ratio.

Sandhya has an ambitious growth plan which she intends to achieve through a combination of internal growth, acquisition and, possibly, strategic alliances. She is keen to explore the possibility of opening a restaurant in the Klang Valley.The opening of healthy diet restaurant has been growing aspiration. Much of this drive for a healthy diet restaurant is fuelled by a desire to exploit SMHLA's unique competency in running the Certiicate in Diet and Nutrition course. A healthy diet restaurant will complement her academv's holistic wellness activities, particularly with the Diet and Nutrition Programme which is a hit with local school leavers. Currently, the student numbers are growing and SMHLA is finding it a challenge getting appropriate placement for students to complete their practical internship.

Sandhya has specifically identified vegetarian restaurants as potential targets because current trends suggest that a new consumer society is emerging for vegan and vegetarian food around the Klang Valley.Although SMHLA has no experience in running a restaurant business. Sandhya is keen to explore the food and beverage industry to cater to the unmet needs of consumers. However, for SMHLA to open a new restaurant will take considerable time and money. Hence, SMHLA is considering acquiring or partnering with an existing restaurant. With a view to expand, SMHLA has identified two restaurants as potential targets for acquisition or strategic partnership, Traditional Home-Style Restaurant (THSR) and Village Fusion.

Traditional Home-Style Restaurant (THSR)

THSR currently has two restaurants in the Klang Valley catering for the local Chinese and Indian vegetarian population. Besides catering for in-house customers, THSR also does catering services for functions and events. Its catering services cater for both small and large functions, with orders for 50 to 1,000 pax. While the restaurant has become a household name amongst vegetarians, it is becoming challenging for the owner, Ryden, to sustain the quality of the food. This is mainly because of the high turnover of the kitchen staff (chefs) at THSR. Consequently, the quality of the food has not been consistent, resulting in declining sales.

THSR has an effective front desk team who are courteous and provide efficient service. Nevertheless, the customer numbers have been falling in the past year. The average sales per day has fallen from RM2,000 to RM1,200. All in-house sales are on cash only basis. However, from his event catering services he collects a deposit and the balance is collected within five working days. Ryden is concerned and worried about future commitments and the financial challenges of continuing the restaurant business. He is, however, not ready to close down the restaurants. Ryden is keen to sell 50% ot his share interest in THSR.

Ryden has valued his current business at RM150,000. However, Sandhya feels that the business is overvalued. Moreover, she is unsure whether to acquire one of Ryden's restaurants or to consider a strategic alliance with THSR.

Village Fusion

Village Fusion is a relatively small semi-fine-dining restaurant located in the Klang Valley. The business is doing very well and on average the daily turnover is around RM3,000. This restaurant caters food to a number of offices located around the restaurant. However, this service only operates for 25 working days in a month. The payment for this services is collected from the companies at the end of each month. Hence, 20% of monthly sales is on credit.Nathan, the restaurant owner, is getting old and is looking for a partner who will be able to manage the daily operations of the restaurant. He is keen to go on semi-retirement and wants to sell 50% of his business shares to the right investor. He is very conservative and wants to maintain the natural healthy eating vegetarian concept. Nathan values his current business at RM200,000.

Nathan is an experienced accountant and therefore he has operated a very conservative policy in respect of the management of the restaurant's working capital and daily operational costs. He ensures that there is no wastage of food at the end of each working day. He assembles the information about the company's forecast end-of-year financial outcomes. These are provided in Appendix 2.

From the above case, answer the following questions:

a)Analyse the financial and non-financial position of both THSR and Village Fusion and comment on the performance of each of the restaurants.

(22 Marks)

b)Discuss FIVE (5) main aspects to consider in respect of the investment in either one of the restaurants.

(10 Marks)

c)Explain 'social responsibility' in the context used by SMHLA.Contrast how short-and long-term investors' interest perspectives may affect SMLA's attitude to corporate social responsibility.

(8 Marks)