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Masters in Business Administration

Middlesex University Business School

Academic Year: 2013 2014

SHOAIB KHAN

M00435609

Business Plan to Start

Adventure Sports Company in Kashmir, India

Supervisor: Dr. Simon Speller

Submission: 17th Jan 2014

Word Count: 13,268

Project Submitted in Part Fulfillment of the Degree of Masters in Business

Administration

MBA4800

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DECLARATION OF ORIGINALITY

I hereby declare that this project is entirely my own work and that any additional sources of information

have been duly cited.

I hereby declare that any internet sources, published or unpublished works from I have quoted or drawn

references have been referred fully in the text and in the contents list. I understand that failure to do

this will result in a failure of this project due to plagiarism.

I understand I man be called for a viva and if so must attend. I acknowledge that it is my responsibility to

check whether I am required to attend and that I will be available during the viva period.

Signed:

Shoaib Khan

Date: 17th January 2014

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ACKNOWLEDGEMENT

This project would not have been possible without the kind support and help of many individuals and

organizations. I would like to extend my sincere thanks to all of them.

I am highly indebted to Dr. Simon Speller for his guidance and for being a wonderful coordinator and

also for providing necessary information regarding the project and also for his support in completing the

project. I really appreciate his dedication towards the course and his help for completing the course.

I would like to express my gratitude towards my parents, friends and faculty and staff of Middlesex

University, London for their kind co-operation and encouragement which helped me in completion of

this project.

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Table of Contents 1. EXECUTIVE SUMMARY .................................................................................................................... 7

2. BUSINESS BACKGROUND ................................................................................................................ 8

2.1. Introduction: ........................................................................................................................... 8

2.2. Kashmir An Economic Overview: .......................................................................................... 8

2.3. Infrastructure Development in Kashmir: ............................................................................... 11

2.4. Tourism Growth in Kashmir: .................................................................................................. 11

2.5. Adventure Sports Current Trends and Status: .................................................................... 14

2.5.1. Motivational Factors and Attraction for Tourists to Participate in Adventure Sports: ....... 16

2.6. Political Instability and Militancy as a Risk Factor: ................................................................ 16

3. METHODOLOGY AND DATA COLLECTION ...................................................................................... 17

3.1. Introduction: ......................................................................................................................... 17

3.2. Research Design: ................................................................................................................... 17

3.3. Research Tool: ....................................................................................................................... 17

3.3.1. Secondary Research: .......................................................................................................... 17

3.3.2. Primary Research: .............................................................................................................. 18

3.3.2.1. Questionnaire Method: ................................................................................................. 18

3.3.2.1.1. Sampling for Questionnaire: .......................................................................................... 18

3.3.2.2. Face to Face Interview Method:..................................................................................... 18

3.3.2.2.1. Sampling for Face to Face Interviews: ............................................................................ 19

3.3.2.3. Pilot Test: ....................................................................................................................... 19

3.4. Data Analysis: ........................................................................................................................ 19

3.5. Issue of Reliability and Validity:............................................................................................. 19

4. MARKET AND BUSINESS ANALYSIS AND APPRAISAL ..................................................................... 20

4.1. Business Background: ............................................................................................................ 20

4.2. Market Appraisal: .................................................................................................................. 21

4.3. Management Record: ............................................................................................................ 21

4.4. Business Model: .................................................................................................................... 21

4.4.1. Product: ............................................................................................................................. 21

4.4.2. Price:.................................................................................................................................. 22

4.4.3. Place: ................................................................................................................................. 22

4.4.4. Promotion: ........................................................................................................................ 23

4.4.5. Physical Evidence: .............................................................................................................. 24

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4.4.6. People: .............................................................................................................................. 24

4.4.7. Process: ............................................................................................................................. 24

4.5. Sales Strategy: ....................................................................................................................... 24

4.6. Operational Details: .............................................................................................................. 25

4.7. Financial Details: ................................................................................................................... 28

4.8. Risk Management Strategy:................................................................................................... 29

4.8.1. Resource Risk:.................................................................................................................... 29

4.8.2. Poor response to Service Offerings: ................................................................................... 29

4.8.3. Service Quality: .................................................................................................................. 29

4.8.4. Militant Attacks ................................................................................................................. 29

4.8.5. Economic Volatility: ........................................................................................................... 29

4.8.6. Causalities: ........................................................................................................................ 30

4.9. Performance Management and Measurement: .................................................................... 30

4.10. Prospects: .......................................................................................................................... 31

4.10.1. Sales Forecast: ................................................................................................................... 31

4.10.2. Profit & Loss Forecast: ....................................................................................................... 32

4.10.3. Balance Sheet Forecast: ..................................................................................................... 33

4.10.4. Cash flow Forecast: ............................................................................................................ 34

4.10.5. Break-even Analysis:.......................................................................................................... 34

5. FINDINGS AND CONCLUSION ........................................................................................................ 35

5.1. Introduction: ......................................................................................................................... 35

5.2. Primary Data Analysis:........................................................................................................... 35

5.2.1. Demographic Analysis: ...................................................................................................... 35

5.2.2. Travelling Behavior: ........................................................................................................... 36

5.2.3. Travel Package Buying Behavior: ....................................................................................... 36

5.2.4. Preferred Leisure Activities: ............................................................................................... 36

5.2.5. Preference to visit Kashmir region ..................................................................................... 36

5.2.6. Perception and Attitude towards Adventure Sports: ......................................................... 37

5.2.7. Pricing Expectations:.......................................................................................................... 37

5.2.8. Preferred Mode of Buying the Adventure Sports Package: ................................................ 38

5.2.9. Expectations from Adventure Sports Services: .................................................................. 38

5.2.10. Motivation to Participate in Adventure Sports: ................................................................. 39

5.3. Macro Environment Analysis: ................................................................................................ 39

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5.3.1. PESTEL Analysis: ................................................................................................................ 39

5.3.2. Porters Five Forces: .......................................................................................................... 42

5.4. Key Findings: ......................................................................................................................... 44

5.5. Conclusion: ............................................................................................................................ 45

6. ACTION PLAN ................................................................................................................................ 46

6.1. Specific: ................................................................................................................................. 46

6.2. Measurable: .......................................................................................................................... 47

6.3. Attainable: ............................................................................................................................. 47

6.4. Realistic: ................................................................................................................................ 48

6.5. Timeframe: ............................................................................................................................ 49

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1. EXECUTIVE SUMMARY

The new business concept is to open an adventure sports company in Kashmir region. Kashmir is one of

the most attractive and intensive tourists place in India. Tourism is the major source of income for

Kashmir and there is lot of opportunities for the new adventure sports business in the city. Kashmir is

located at Northwestern region of Indian subcontinent. Until 19th century Kashmir was geographically

donated as valley between the Pir Panjal mountain region and great Himalayas. Presently it is donated

as large area covering the Indian administrated state of Jammu and Kashmir. Target customers for the

business would be tourists of age 14 to 35 years who visit Kashmir for leisure purpose and local

residents. There is a good potential exist for the business in the region. The services offered to the

customers include rock climbing, bungee jumping, free fall, and rafting, kayaking,

mountaineering, paragliding as key adventure sports. The Kashmir region has major tourist inflow

during the winter season. As per the statistics published by the directorate of J&K, 80% of the hotels and

house boats were occupied in month of January 2013. The Kashmir tourism department is expecting the

overall growth of 2 million inflow of tourists in summer 2014.During the past couple of decades, the

international tourists arrival has been grown up from 435 million to approximately 1 billion with an

annual average growth rate of 5.4%.It has been observed that there is a good growth expected by the

Tourism Ministry of India. It has been predicted that the number of tourists would increase by 15%

every year which is currently standing at 432,890, referred to table 2.3. The projected number of

tourists in 2014 and 2015 is 14734445 and 15829895 respectively and this would be the potential

customers for the new business.

In order to check the business feasibility and viability, primary and secondary research has been

conducted. In primary research questionnaire and interviews are conducted among general consumers

to understand their views and attitude towards adventure sports. Based on the analysis and key findings

obtained, it can be concluded that there is a good opportunity exist for the new business in Kashmir

region. The business need to focus on various aspects of marketing and sales to overcome from

competitive challenges at the initial stage of the business. Excitement, thrill, fun, mood change, stress

buster, enjoyment and relax would be the key motivational factors for tourists to participate in

adventure sports.

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Initially the business will be opened up as a sole proprietorship which would be 100% funded by owners

capital. Minimum capital investment required to start the business is estimated as INR 5 million. The

total sales revenue for the first year is expected to be INR 7.4 million and would reach up-to INR 9

million for the third year. The forecasted profit in the first year of the business is expected to be

approximately INR 1,423,604 and would reach up-to 2,254,113 in the third year. The business is

expecting to reach the break even in 1.8 years.

Potential risks identified for the business includes resource risk, poor response to service offerings,

service quality, militant attacks, economic volatility and causalities.

2. BUSINESS BACKGROUND

2.1. Introduction:

The new business concept is to open adventure sports in Kashmir, as one of the most attractive and

intensive tourists place in India. Tourism is the major source of income for Kashmir and there are lot of

opportunities for the new adventure sports business in the city. Tourism impacted the city at three

different levels namely economic impact, social impact, and environmental impact(Economist.com,

2012). There are various destinations which are the attractive places for adventure sports to tourists.

The tourism industry has significant role in the development of Kashmir and near-by

regions(jktourism.org, n.d.). This literature therefore provides the facts to support the feasibility of the

new business to be opened in Kashmir and background information to develop the business plan for the

new business.

2.2. Kashmir An Economic Overview:

Kashmir is located at Northwestern region of Indian subcontinent. Until 19th century Kashmir was

geographically donated as valley between the Pir Panjal mountain region and great

Himalayas(jktourism.org, n.d.). Presently it is donated as large area covering the Indian administrated

state of Jammu and Kashmir. The current population of the region is approximately 4 million out of

which 95% population belongs to Muslim religion and 4% population belongs to Hindu religion(BBC,

2013). In ancient times, the region was known to the world due to the export of Cashmere Wool to

other region and parts of the world(University, 2012). The economy of the region was badly damaged by

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the earthquake in 2005 which resulted over 70,000 deaths(BBC, 2013). There has been considerable

growth in the GDP of the region as presented in figure 2.1.

Figure 2.1 - Kashmir GDP, Source: (Knoema, 2012)

The following table 2.1 shows the GDP of Kashmir region for last 12 years and annualized growth.

Table 2.1 GDP of Kashmir

Source: (Knoema, 2012)

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The population growth in the region is also significant as presented in figure 2.2 and table 2.2.

Figure 2.2 Kashmir Population, Source: (Knoema(b), 2012)

Table 2.2 Kashmir Population

Source: (Knoema(b), 2012)

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Depending on the different socio-economic indicators the state ranked at 8th place. Per capita income of

the region is INR 24,414 however this figure is quite low as compared to the national figure of INR 33,

283(Knoema(b), 2012). The most attractive aspects for the new businesses in the region are local

government policies and incentives such as 100% excise exemption for 10 years, 100% income tax free

for 5 years, subsidizing the capital investment with the maximum limit of 3 million rupees, land

availability for the period of 90 years on lease basis, a host of incentives for capital goods, loan,

branding, working capital and transportation and finally the insurance premium reimbursement to the

extent of 100% on the capital investment for a period of 10 years to the new business units(BBC, 2013).

2.3. Infrastructure Development in Kashmir:

For every business, it is important to have the infrastructure development in the region as it ensures

people have access to roads, transportation, electricity, safe drinking water, proper sanitation, and

health and communication facilities. The state government in Kashmir has come up with several

initiatives to develop the infrastructure in the state(Sharma, 2011). Approximately 8 Billion rupees are

announced by the state government to invest into road development and transportation in Kashmir

being a prime mode of transportation. The state of Jammu and Kashmir has been granted with huge

hydro-electric energy and if the state exploit it with full of potential then it could be a great thrust to the

economy. The local government has taken initiatives in past few years to use such potential and support

the local businesses. This is extremely important for the region to provide electricity support to the

business in the sense of their development and catalyst to boost their growth(Sharma, 2011).

2.4. Tourism Growth in Kashmir:

Tourism is one of the major revenue generation industry for the region. Kashmir is known as paradise of

the earth due to its amazing scenic spots which are most favorite and attractive to tourists and pleasant

weather. Another attraction for tourists to visit Kashmir includes the existence of monasteries, temples,

caves, and shrines(Gadoo, 2012). There has been a great potential for the tourism sector to grow in the

region. It has the good potential for forward and backward linkages in terms of both employment and

income which can contribute significantly towards the economic growth of region as well as country. It

is a well-known fact that valley of Kashmir has been one of the most travelers destination from time

immemorial (Jain, 2012). The western people called it as Asias Switzerland. There are certain factors

which are driving the overall satisfaction among tourists in Kashmir and finally ensure the good potential

and opportunity for growth of new business.

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The behavior of employees reinforces tourists confidence

Experienced and competent tour and hotel escorts

Employees are credible and courteous with tourists

Willingness to help tourists and advice on how to use free time.

Cultivation of friendly relationship with tourists

Understanding specific tourists needs.

Destinations are visually aesthetically attractive

Unspoiled nature

Appealing accommodation facilities

Overall cleanliness of the destination

Availability of information documents and notes

Physical appearance of tour and hotel escorts (tidiness etc.).

Modern and technologically relevant vehicles

Personal safety and security

High-quality meals

No sudden increase in tour cost

Performing the service/s at the promised time

Insisting on error-free service

Performing the service/s right the first time

Provision of adequate information about the service delivered.

Meeting the tour schedule

Sincere interest in problem-solving of tourists

Tourists are being served quickly by the appropriate personnel.

Sponsors act on participants suggestions

Provision of information on local events/entertainment

The indicator for tourism growth in the Kashmir region is info of tourist during the past 60 ears. The

hotels based in Pahalgam had more than 40% occupancy during the winter season of 2012. The

following table 2.3 shows the inflow of travelers in Kashmir valley since last 60 years.

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Table 2.3 Travelers Inflow in Kashmir Valley

Number of Tourists Coming in Kashmir Valley (in '000)

Year Indian Non-Indian Total

1951 9.33 1.25 10.58

1955 48.19 2.83 51.02

1960 63.37 11.19 74.56

1965 35.7 7.43 43.13

1969 129.75 19.95 149.7

1974 148.32 19.3 167.62

1978 443.34 59.32 502.66

1980 548.49 46.03 594.52

1985 465.6 38.02 503.62

1995 0.32 8.2 8.52

1996 0.37 9.59 9.96

1997 7.02 9.11 16.13

1998 99.64 10.25 109.89

1999 199.9 15.99 215.89

2000 104.34 7.58 111.92

2001 66.73 5.86 72.59

2000 104.34 7.58 111.92

2001 66.73 5.86 72.59

2002 24.67 2.69 27.36

2003 182.21 8.96 191.17

2004 358.1 18.63 376.73

2005 585.7 19.68 605.38

2012 412.88 20.01 432.89

Source: (Jain, 2012)

The Kashmir region has major tourist inflow during the winter season. As per the statistics published by

the directorate of J&K, 80% of the hotels and house boats were occupied in month of January 2013. The

Kashmir tourism department is expecting the overall growth of 2 million inflow of tourists in summer

2014(Jain, 2012). All the hotels, houseboats and guest houses are 100% booked for the same period.

The local government is encouraging the guest houses to get registered and large numbers of guest

houses are registering themselves for the same. Tourism department is providing basic facilities to guest

houses and houseboats so that they can deliver good service to the tourists. The department has also

authorized the hotel owners and guest houses to assemble tents in the open areas without

compromising the environment. In the down town area also the hotels are fully booked. This ensures

the promising business for the new adventure sports entity. The following table 2.4 shows the

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percentage of different business segments operating in tourism sector. The new business will use this

information in its sales and marketing approach to attract the tourists by coordinating these business

segments.

Table 2.4 - Different Business Segments Operating in Tourism Sector in Kashmir

Different Business Segments in Tourism Sector Percentage Break-up

Handicraft shopkeepers 9.09%

Hoteliers 18.18%

Houseboat owners 18.18%

Restaurant owners 9.09%

Shikara owners 9.09%

Tour operators 9.09%

Travel agents 9.09%

JKTDC 9.09%

J&K Tourism Department 9.09%

Source: (Jain, 2012)

Another key focus area for the new business growth is rural tourism as it is recognized as important

instrument for growth of rural economy. Within the Kashmir valley, the scope and need of rural tourism

diverging the growth of the economy as well as rural people. People from rural areas in Kashmir are

engaged in the multiple livelihood activities in which agriculture is one of the most important activity.

The art work in Kashmir is famous across the world. This is also the attraction for tourists to view and

buy such arts. It is always worth for visitors to visit these places to understand the process, people

engaged in creating these arts and their socio-economic conditions. Rural tourism around the villages

satisfy the curiosity of the tourists for both the domestic and foreign places. This would be an added

advantage of the new adventure sport business (BBC, 2013). Considering the above factors from tourism

sector in Kashmir, it can be concluded that there is a good potential for the new adventure sport

business since if the tourists inflow will grow in the region the obviously it gives the opportunity for the

new business attract them and finally leads the growth to the business.

2.5. Adventure Sports Current Trends and Status:

The adventure sport in Kashmir is backed by 30 years old heritage however it did not flourish in the

region due to the lack of resources and available facility since past few years. Skiing, water skiing,

kayaking, mountain biking are the most popular adventure sports in the region (koausa.org, n.d.). The

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participation in these sports is considered to be very expensive due to the high cost involvement of

trained professionals and expensive gears & equipment. The adventure sport is more appealing to

teenagers and youth. Also most of the companies take their employees on regular tour for these sports

to encourage them and increase their confidence to work as a team in difficult situations. If the right

prices are offered then the local residents can also participate in such sport and phenomenally boost the

industry growth in the region. During the past couple of decades (1990-2012), the international tourists

arrival has been grown up from 435 million to approximately 1 billion with an annual average growth

rate of 5.4% (Chauhan, 2012). The following table 2.5 shows the growth projects for tourists coming in

Kashmir region.

Table 2.5 Tourists Projection

Year Projected Number of Tourists

2014 14734445

2015 15829895

2016 17009148

2017 18278954

2018 19646661

2019 21120269

2020 22708506

Source: (Jain, 2012)

The international receipts also registered record growth from USD 262 billion to USD 900 billion. Looking

at such trends for international and domestic tourism, there is a good potential of growth for adventure

sports in the region. The state government has also proposed the investment project in Kashmir region

to develop the better infrastructure as one of the initiatives to support the adventure sport in the

region, please refer to annexure 1. Adventure sports also provide adrenaline rush feeling in the human

body which gives amazing experience while participating. Adrenaline is a natural hormone in the body

which is produced and secreted throughout the body whenever an individual undergoes any traumatic

experience (Fitday.com, n.d.). There are certain motivational factors which encourage the tourists to

participate in the adventure sports. The following section 2.5.1 describes the same.

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2.5.1. Motivational Factors and Attraction for Tourists to Participate in Adventure Sports:

There have been several researches conducted in the past to study the sports behavior however very

few are focused towards the motivational aspect to participate in sports. These researches have

demonstrated that the motivation for a given sport i.e. the perceived benefit is not only the physical

health of an individual but number of other aspects such as mood management, enjoyment, fun, weight

control, stress, appearance and excitement(Ottevanger, 2007). There are certain differences between

the perceived benefits of an individual which are helpful to explain the differences in sport participation.

Some factors such as age and gender influence the perception of benefits or motivation to participate in

adventure sports. The researches in the past concluded that there are eight factors which motivates an

individual to participate in the adventure sports namely excitement, thrill, fun, mood change, stress

buster, enjoyment and relax(Fitday.com, n.d.). Few essential reasons for participating in the adventure

sports are improving skills, learning new skills, having fun, be physically fit and be challenged.

Researchers have cited three common threads in their research to analyze the motivation. The first,

several factors yielded the common but consistent factors such as team aspects, competition, fun,

fitness competence and affiliation. Second, children and adolescent are more inclined towards the

adventure sports participation, finally third, there were minimal age, gender and experience to sport

activity (Ottevanger, 2007).

2.6. Political Instability and Militancy as a Risk Factor:

Kashmir has been experiencing high political instability since its partition between Pakistan and India

after independence. It has been caused due to the conflict and high tension between these two nations.

India occupied Kashmir follow the same constituency as followed by rest of India and the government is

elected by the democracy (BBC, 2013). However continuous attack from the Pakistani Militants has

made the situation highly stressed in the Kashmir region and India is forced to appoint regular military

across the border and inside the region which disturbs the local residents and tourists. This could be a

potential threat for the new business (Gadoo, 2012).

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3. METHODOLOGY AND DATA COLLECTION

3.1. Introduction:

This chapter describes the methodology to check the market feasibility and validity of the proposed

business plan and approach of data collection. It provides the important information of type of data

collected, different topics covered and process of collecting the relevant information useful to check the

feasibility of the business concept.

3.2. Research Design:

Quantitative research design has been used in this research since this is useful where a lot of

quantitative information required and statistical inference is needed to analyze the results and draw the

conclusion (Saunders, et al., 2007). The new business concept is to open adventure sport business in

Kashmir region, it requires lot of quantitative information to validate the assumption of starting the new

adventure sport business in the region. Hence the quantitative research design has been used in this

research.

3.3. Research Tool:

There is lots of information available in the published format however some of the information such as

view of individuals, potential customers and tourists is essential to understand the scope of adventure

sports, competitive offerings, need and perception. With this view, researcher has used both the

primary and secondary research methods for data collection.

3.3.1. Secondary Research:

The secondary data has been collected using a combination of authentic websites such as Kashmir

Government, news articles, web articles, government publications and India census website. It helped

the researcher to gain the background information about the economic environment of Kashmir,

adventure sports scope and opportunities, risks and potential threat and literature around the research

topic. The key advantage of using secondary data is ease of access, valid information, easy availability,

cost effective and quick to analyze.

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3.3.2. Primary Research:

In order to validate the hypothesis about the new business concept, it is essential to understand the

opinion of tourists who are the potential customers of the business about their needs and perception

towards adventure sports. Hence primary data has been collected to validate the hypothesis.

Researcher has used both face to face interviews and questionnaire surveys to collect the primary data.

3.3.2.1. Questionnaire Method:

Questionnaire method has been used to identify the tourists opinion about adventure sports, consumer

trends, and their perception towards participating in adventure sports, attitude, behavior, likes and

dislikes. The questionnaire has been administered among general consumers who would like to visit

Kashmir for leisure. Questionnaire has been created in survey monkey and distributed by social media.

A close ended questionnaire has been designed as presented in Appendix 2. Some of the key benefits of

using questionnaire method are systematic data collection, large sample can be covered in a short time,

quick and easy.

3.3.2.1.1. Sampling for Questionnaire:

For this research, the target universe is general population of age more than 18 years who belongs to

middle class income group (household income more than INR 25,000) and lives in semi-urban and urban

cities in India. Considering the universe random sampling methodology has been used to select the

samples as it allow equal chance to each person to get selected in a sample. Since the sampling is

random and individual consumers were selected, there are no biasness in the questionnaire response

(Saunders, et al., 2007). The researcher has collected opinion of about 200 respondents.

3.3.2.2. Face to Face Interview Method:

Face to face interviews have been conducted to get detailed insights of consumers about the adventure

sports, their thinking pattern, and change in behavior, preferences and their expectations. Some of the

benefits of using face to face interviews includes in-depth information, acquire first knowledge about

the business, probing techniques can be used to address specific topic, re-design or change in the

interview guide depending on the target respondent. Face to face interviews have been conducted in

Delhi-NCR region in a quiet restaurant. Respondents were called in a small restaurant and interview

questions were asked over light snacks and hot drink. It allows the researcher get hold off the

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respondent for a longer period of time and discussed the desired topics during the interview in a relaxed

and peaceful environment.

3.3.2.2.1. Sampling for Face to Face Interviews:

Researcher has used snowball sampling to find out the target respondents for face to face interviews. In

snowball sampling researcher has identified one respondent who wishes to visit Kashmir region for

leisure in next six months and willing to participate in adventure sports. Respondent has further asked

the respondent to share the references of like-minded people in his circle and developed the database

in the similar way. Researcher has completed 15 face to face interviews.

3.3.2.3. Pilot Test:

In order to effectively execute the questionnaire surveys and face to face interviews, researcher had

pre-tested the script of both the questionnaires and interviews before fully executing it. For

questionnaire, researcher has conducted a small pilot of 15 surveys and for face to face interviews

researcher has conducted small pilot of 2 interviews among its friends. Based on the pilot it was found

that the flow of questions and language was a bit incorrect which was rectified then and there.

3.4. Data Analysis:

Data which has been collected through questionnaire surveys, analyzed using excel by preparing the

graph and generating the consensus out of the results. It was appropriate since the data was

quantitative in nature. Interviews have been analyzed by preparing the transcripts from interview notes

and presented in the form of discussion in the analysis.

3.5. Issue of Reliability and Validity:

The researcher has been conducted to check the feasibility and validity to set-up and open a new

adventure sports in Kashmir region. Looking at the criticality of the research problem, it is extremely

essential for the researcher to use the authenticated and reliable data sources to collect the

information. Researcher has used only authentic data sources such as government websites, published

news articles, web articles from renowned websites as key source of information. All information

sourced has been referenced properly in the Harvard referencing style as per the guidelines of the

university in order to maintain the validity of the data (Churchill, 2009). Further researcher has used

Chronbachs Alpha to test the validity of the questionnaire using the SPSS software with the sample size

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of 15 as standard practice. According to (Churchill, 2009), if the Chronbachs Alpha score is more than

0.6 then the questionnaire is reliable and acceptable. In the current questionnaire, the Chronbach Alpha

score was 0.78 which shows that questionnaire is reliable and not bias.

4. MARKET AND BUSINESS ANALYSIS AND APPRAISAL

4.1. Business Background:

The new business concept is to open a new adventure sports company in Kashmir region offering a

range of adventure sports. The new business will be opened up as a private limited company with two

directors which would initially be 100% funded by owners capital and later would use bank loan for

further expansion. Profits therefore generated from the business will be distributed among the director

of the company. The business will hire trained professionals who will assist tourists to take part and

perform adventure sports. The new business will be opened at the center location in Kashmir region.

The timing for the office hours will be 9 AM to 6 PM. A short website will also be opened to spread out

the online presence for the business. Target customers for the business would be tourists of age 14 to

35 years who visit Kashmir for leisure purpose and local residents.

The new business will follow the necessary requirements to obtain the license to offer adventure

sports company. In order to ensure the safety during the sports participation of tourists, the new

business will adhere to guidelines laid down by tourists department and obtain the certificate for

professional service from the local government. Some of the legal requirements laid down by the

Ministry of Tourism and Government of India to set-up adventure sports business includes the following:

Minimum paid-up capital INR 300,000

Minimum office space 100 square feet

Minimum four qualified staff with at least one employee should have the diploma/degree in

tourism and travel from recognized university

Owner of the firm should be one of the qualified staff

Owning the adventure sports equipment

Adhering to the safety guidelines laid down by the ministry

Source: (Government of India, 2012)

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4.2. Market Appraisal:

It has been observed that there is a good growth expected by the Tourism Ministry of India. It has been

predicted that the number of tourists would increase by 15% every year (referring to table 2.5) which is

currently standing at 432,890, referred to table 2.3. It signifies that the market would appraise the new

business by 10% if it able to attract 50% of the tourists from the projected growth. Further the Ministry

of Tourism in Kashmir region has taken several initiatives such as security, better facilities, hotels

development in the region and other activities to attract more and more tourists to ensure the tourism

development and growth in the region.

4.3. Management Record:

Researcher and its partner would be the owner of the business as both have quite a good experience in

adventure sports. Currently the researcher is pursuing Masters of Business Administration from

Middlesex University UK which would enable the researcher to understand the various business and

management concepts such as marketing, finance, human resource etc. It would help the researcher to

develop and execute the successful business strategy. Before pursuing the MBA course, researcher has

worked as tourist guide in its home country to gain professional experience in the field. In total research

has one year of experience in tourism business and would be solely responsible for managing the

operations. On the other hand, the other partner has vast experience in tourism and worked as

freelance tourist guide and very good knowledge about the trekking route, enthusiastic, adventurous

and treks very often.

4.4. Business Model:

The new business would be opened up as a private company in Kashmir region. All the initial capital

requirement will be funded by its owner and he would be responsible for the overall management and

operations of the business. In future the business will expand through franchise model in other parts of

the country. Further to explain the business model, researcher has described all the 7Ps of marketing for

the new business

4.4.1. Product:

Being into the adventure sports, the business will sell its service instead of any physical product. The

services offered to the customers include rock climbing, bungee jumping, free fall, and rafting,

kayaking, mountaineering, paragliding as key adventure sports. It will attract people who are

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enthusiastic towards these sports, people who want to try these sports as recreation and

business corporates for weekend getaway for their employees.

4.4.2. Price:

Since the business is new and it would need good efforts to attract the customers and remain

competitive in the marketplace. Therefore the new business would offer both customized and standard

packages to customers. The bare minimum price for a particular activity would be ranging from INR 500

to INR 1000 depending on the sports selected. Various promotional offers will be run as described in

the promotion section to attract the customers and pass on the cost benefits depending on which

promotional offer they choose.

4.4.3. Place:

The key competitive advantage for the business would be its online presence in terms of place. A

comprehensive and attractive website will be created to promote the business and create the

awareness. However, the new business will set-up the physical office at central location at Sonmarg. The

business will increase its virtual presence than the physical presence. As a part of strategy, the business

will tie up with hoteliers, shikara owners, houseboat owners and travel & tourism companies to

promote its services among the target customers. These would be the best place to create awareness

and attract the customers. In addition to this website will be the key means of communication where

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the tourists/potential customers can visit and know about the sports activities, related prices, packages,

discounts, promotional offers and many more.

Rock climbing INR 600 per person

Bungee jumping INR 900 per person

Free fall INR 700 per person

Rafting INR 500 per person

Kayaking INR 750 per person

Mountaineering INR 1000 per person

Paragliding INR 1000 per person

Skiing INR 1000 per person

4.4.4. Promotion:

The services will be sold independently and in collaboration of various other tourist service providers

such as hotels, houseboats, shikara, tour & travel agencies in Kashmir. There will be several promotional

offers to be run to attract more and more tourists. Customers will get exclusive discounts if they will

select the independent package. Some offers are highlighted below:

Independent Packages:

1. Selecting any one sport INR 500 INR 1000 depending on sport selected

2. Selecting more than 2 sports Discount 10% on total price

3. Selecting all sports Discount 15% on total price + 1 complementary gift

Collaborative Packages:

1. Selecting any one sport INR 700 INR 1300 depending on sport selected

2. Selecting more than 2 sports Discount 8% on total price

3. Selecting all sports Discount 12% on total price + 1 complementary gift

There will be additional discount of 5% will be offered if more than two person in a group participates in

the sport activity.

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Promotional activities will be marketed through social networking sites, YouTube videos, and search

engine optimization, pamphlets to be placed on reception of hotels, shikara owners, boathouses and

billboards around the Kashmir region.

4.4.5. Physical Evidence:

The physical evidence for the business would be the videos to be published on the company websites,

hotel websites and websites of tour & travel operators. It will give the idea to the target customer to

aware of how the adventure sport activities are executed, and give them a feeling of fun and

excitement. Also the business will collaborate with travel guides to bring the tourists on sight as part of

their sightseeing so that they can see the live activities and if required, sample demos can be arranged

on request.

4.4.6. People:

As per the guidelines and regulations of Ministry of Tourism, only experienced professionals will be

hired for the sports activities and will assist the tourists and supervise them during the adventure sports

activities. Profile of key staff will be published on the website so that it gives the confidence to the

customers that the company has experienced staff and they are safe & secure during the activity.

4.4.7. Process:

In order to book the packages, few options will be offered to the customers. They can book the package

online directly from the company website or bundle the package with other tourists services online

from the facility provided by hotels, tour & travel companies like makemytrip.com, yourtravel.com,

yatra.com etc. Once the package is booked, email confirmation along with the activity timing, reading

manual and other information will be sent to the customers on their desired email id. Based on the

timing schedule they can avail the package and participate in the sports activity on given date and time.

A demo process will be mentioned on the company website itself so that the customers are fully aware

and there should not be any lack of communication.

4.5. Sales Strategy:

There will be multiples channels to be used to sell out the services to the target customers. First and the

foremost channel of selling would be the direct selling through online. The new business will promote

the offerings though social networking sites to create the awareness and attract the customer to visit

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the website. The business will provide an option to select the preferred and suitable package online and

make the online payment. Online chat option and 24 hours toll-free helpline service will also be

available to the customers for any query. Another mode of selling would be through collaboration with

hotels, shikara owners, boathouse owners and tour & travel companies to promote its adventure sports

service in their service package. The new business will pay appropriate commission to these partners for

each successful sale. The new business will also tie-up with the local taxi operators to get the contact

information of tourists and sell the services.

It has been observed that the key competition for the new business is limited in the region. Some of the

major competitors are Snow Leopard, Wonder Lust and Adventure Sports. None of these companies

have published proper information on website and their fee is too high for adventure sport activities.

The new business will utilize this information to make the website more comprehensive and provide as

much detail as possible to give the comfort to the customers. There will be the following unique selling

points to be used to promote and sell the services:

Highly competitive price offerings

Loyalty points to customers for repeat purchase

Reference discount

Qualified, skilled, trained and experienced staff highlighting the safety features

Snacks and light breakfast availability

Pick and drop facility at no extra cost

Gift coupons

Group discounts

Low price accommodation on request

Discounting on online purchase

4.6. Operational Details:

In order to operate the business, there will be the following functional skills required:

Human Resource

Administration Support

Trainers

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Information Technology

Driving

Finance

The new business will hire the following staff to run the business operations.

Table 4.1 Human Resource Description

Job Title Number of

Staff Salary per Month

(In INR) Job Responsibilities

Admin Manager 1 15,000

Receive the bookings Preparing weekly MIS

Documentation

Attending customer calls/enquiries

Trainer 5 25,000

Explain the activities to the customers

Guidance, instructions and supervise the customers

Ensure the security and safety Equipment testing

IT Executive 1 20,000

Managing the website update and maintenance

IT Maintenance and support

Search Engine Optimization Online content management

Driver 1 8,000 Pick and drop for customers and other transportation

The sales and finance function will be managed by the owner itself. The business will hire the above staff

from experienced human resource consultancy. It will ensure to find out the desired skills in time and

cost efficient manner and right set of people will be hired for relevant job. In addition to this some of

the job portals will also be used for hiring such as Naukri.com, timesjobs.com, monster.com etc. A

robust screening and interview process will be conducted for hiring which will include the written test

followed by couple of rounds of detailed interviews.

On the job training will be provided to each employee to make sure they comply with their job

responsibilities and carry forward the organizational value to achieve higher level of customer

satisfaction. The following table shows the daily pro forma roaster of each employee.

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Table 4.2 Pro-Forma Roaster

Staff Description Start Time End Time

Owner 8:30 AM 9:00 PM

Admin Manager 9:00 AM 6:00 PM

Trainer 9:30 AM 7:00 PM

IT Executive 9:30 AM 7:00 PM

Driver 8:00 AM 8:30 PM

Owner will be the sole decision maker of the business and all the employees will report to the owner

directly. The following figure shows the organization chart of the business.

Figure 4.1 - Organizational Chart

In terms of equipment for adventure sport, it has been observed that business would need at least INR

10 million of investment. Therefore in the initial years of operations, the business will hire the

equipment on rent.

A comprehensive website will be designed to ensure the online presence. In addition to the company

pages will be crated on social networking sites such as Facebook, LinkedIn, Twitter and regularly update

them to create the awareness among potential customers.

Trainer 2 Trainer 3 Admin Manager Trainer 1

IT Manager

Owner

Driver

Trainer 4 Trainer 3

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4.7. Financial Details:

The business will be 100% funded by the owners capital. If required, a small loan will be availed from

the bank though it would not be needed at the initial stage of the business. The total start-up budget for

the business is INR 5 million. The following table shows break-up of start-up capital requirement for

setting up the business.

Table 4.3 Start-up Expenses Break-up

Start-up in INR

Start-up Expenses

Salaries 2,016,000

Marketing and Advertising Expenses (20% of Budget) 1000000

Stationery etc. 50,000

Rent 240,000

Equipment 1200000

Internet Web page 10,000

Other Miscellaneous Expenses 100,000

Total Start-up Expenses 4,616,000

Start-up Assets

Cash Required 400,000

Total Requirements 5,016,000

Salaries are calculated as below:

Table 4.4 Salaries Description

Job Title Number of Staff Salary per Month (In INR) Total Yearly Salaries

Admin Manager 1 15,000 15,000 x 12 = 180,000

Trainer 5 25,000 25,000 x 5 x 12 = 1,500,000

IT Executive 1 20,000 20,000 x 12 = 240,000

Driver 1 8,000 8,000 x 12 = 96,000

Total 2,016,000

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4.8. Risk Management Strategy:

For any start-up business, it is essential to develop risk management strategy to deal with the potential

risks which could have likely impact on the business operations. Considering this view, the current

section outlines the potential risk and suitable risk management strategy for the new business.

4.8.1. Resource Risk:

There is always a possibility that the potential risks such as trainers can left the organization. It will be a

significant risk for the business since they are the people who will deliver the service to the customers.

In order to reduce this risk, the new business will keep the back-up plan ready by developing good

relations with the human resource consultancy so that immediate replacement can be available as and

when required.

4.8.2. Poor response to Service Offerings:

The new business will offer range of adventure sports activity. It might be a possibility that response to

the service offering is poor. In order to keep the excitement and feel the customer happy, locations of

the sport activities will be rotating and new locations will be explored.

4.8.3. Service Quality:

The business will maintain high service standards by certifying its process and services. Some of the

certificated to be obtained to ensure better service quality includes ISO 9001, ISO 20252 and ISO 27001.

4.8.4. Militant Attacks

Kashmir is a highly tense area due to the continuous terrorism attack and military actions. It has

significant impact on the economic development of the region over past 50 years. Local businesses and

residents are much affected from such activities. In order to reduce the potential loss from such

activities, the business will start the operations in other parts of India such as South India, East India etc.

Further the business will take insurance to cover the losses.

4.8.5. Economic Volatility:

It is difficult to predict the economic volatility in the near future. There could be a possibility that

economy encompasses through some downturn and in such case it will impact the consumer spending.

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In order to mitigate this risk, business will use discounting and promotional strategies to encourage the

customers to spend within their budget.

4.8.6. Causalities:

There is always a risk of causalities and life danger during the adventure sports activities specifically

while doing skiing, freefall and mountaineering. In order to mitigate the risk, the rescue operations will

be prepared before start of each sport activity on the spot. Also the casualty insurance will be taken to

recover the losses, if any.

The potential risks and associated strategies underlined in the previous section will be prepared in

advance by analyzing the business environment on regular basis and identify the areas impacted by such

risks. Based on the findings, relevant action will be taken to protect the business from such unseen

event.

A contingency plan will be prepared to successfully implement the activities of business plan. All the

activities will be taken care of by the owner itself. In order to track and monitor the business

performance, weekly sales report will be generated and accordingly undertake the action. Monthly

meetings will be conducted with the hoteliers, Shikara owners, houseboat owners and travel & tour

companies across the region to ensure regular inflow of tourists towards the participation in sports

activities and generating sales.

4.9. Performance Management and Measurement:

In order to track the business performance, the following key performance will be monitored and

tracked.

Customers Foot Fall: Owner will maintain excel based tracker which will be updated every

week. It will help the business to analyze the trends, number of repeat purchase and new

customers coming in.

In order to ensure the business profitability, owner will keep the track on expenses and revenue

on monthly basis and identify the reasons for increase or decrease of the profitability and

accordingly appropriate actions will be taken.

Marketing expenses will be monitored and tracker on monthly basis and analyze its impact on

the revenue growth

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Customer satisfaction is extremely important for the business to ensure customer loyalty and

generating new business through reference. Hence the business will design a short

questionnaire and ask the customers to fill it after completing the sport activity.

4.10. Prospects:

4.10.1. Sales Forecast:

The following table 4.5 shows the sales forecast for the period of three years.

Table 4.5 Sales Projection

Sports Activities Expected Units Sold Total Expected Sales (In INR)

Price per Person Year 1 Year 2 Year 3 Year 1 Year 2 Year 3

Rock climbing 600 750 825 908 450,000 495,000 544,500

Bungee jumping 900 600 660 726 540,000 594,000 653,400

Free fall 700 1,200 1,320 1,452 840,000 924,000 1,016,400

Rafting 500 2,500 2,750 3,025 1,250,000 1,375,000 1,512,500

Kayaking 750 2,200 2,420 2,662 1,650,000 1,815,000 1,996,500

Mountaineering 1,000 750 825 908 750,000 825,000 907,500

Paragliding 1,000 1,000 1,100 1,210 1,000,000 1,100,000 1,210,000

Skiing 1,000 1,000 1,100 1,210 1,000,000 1,100,000 1,210,000

Total 10,000 11,000 12,100 7,480,000 8,228,000 9,050,800

It has been expected that the new business will generate total revenue of INR 7.4 million in the first

year, INR 8.2 million for the second year and INR 9 million for the third year. It shows good growth for

the business in the coming years.

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4.10.2. Profit & Loss Forecast:

The following table 4.6 shows the profit and loss forecast for the three years.

Table 4.6 Profit & Loss Projection

Profit & Loss Account Year 1 Year 2 Year 3

Sales 7,480,000 8,228,000 9,050,800

Cost of Goods Sold 748,000 822,800 905,080

Gross Margin 6,732,000 7,405,200 8,145,720

Operating Expenses

Marketing & Sales Expenses

Sales &Marketing Expenses 850,000 935,000 1,028,500

Web Promotion 150,000 165,000 181,500

Total Marketing & Sales Expenses 1,000,000 1,100,000 1,210,000

General and Administrative Expenses

Utilities 7,480 8,228 9,051

General and Causality Insurance 74,800 82,280 90,508

Rent 240,000 240,000 240,000

Equipment 1,200,000 1,200,000 1,200,000

Salaries 2,016,000 2,016,000 2,016,000

Stationery etc. 50,000 50,000 50,000

Internet Web page 10,000 10,000 10,000

Other Miscellaneous Expenses 100,000 100,000 100,000

Total General and Administrative Expenses 3,698,280 3,706,508 3,715,559

Total operating Expenses 4,698,280 4,806,508 4,925,559

Profit Before Interest & Tax 2,033,720 2,598,692 3,220,161

Taxes Incurred 610,116 779,608 966,048

Net Profit 1,423,604 1,819,084 2,254,113

The forecasted profit and loss statement shows that the business would be able to generate profit in the

first year of the business with approximately INR 1,423,604, 1,819,084 for the second year and

2,254,113 for the third year.

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4.10.3. Balance Sheet Forecast:

The following table 4.7 shows the forecasted balance sheet for the business for next three years.

Table 4.7 Balance Sheet Forecast

Balance Sheet Year 1 Year 2 Year 3

Assets

Current Assets

Cash 5,984,000 6,582,400 7,240,640

Inventory 119,680 131,648 144,813

Total Current Assets 6,103,680 6,714,048 7,385,453

Long-term Assets

Long-term Assets 374,000 411,400 452,540

Accumulated Depreciation 11,220 12,342 13,576

Total Long-term Assets 385,220 423,742 466,116

Total Assets 6,488,900 7,137,790 7,851,569

Liabilities and Capital

Current Liabilities 648,890 713,779 785,157

Accounts Payable 973,335 1,070,669 1,177,735

Current Borrowing 324,445 356,890 392,578

Subtotal Current Liabilities 1,946,670 2,141,337 2,355,471

Long-term Liabilities

Total Liabilities

Paid-in Capital 2,733,406 2,753,627 2,775,869

Earnings 1,423,604 1,819,084 2,254,113

Total Capital 4,157,010 4,572,711 5,029,982

Total Liabilities and Capital 6,103,680 6,714,048 7,385,453

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4.10.4. Cash flow Forecast:

The following table 4.8 shows the forecasted cash flow statement for the business for next three years.

Table 4.8 Cash Flow Forecast

Cash Flow Statement Year 1 Year 2 Year 3

Cash Received

Cash from Operations

Cash Sales 5,984,000 6,582,400 7,240,640

Sub Total Cash From Operations 5,984,000 6,582,400 7,240,640

Additional Cash Received

New Current Borrowings 1,496,000 1,645,600 1,810,160

New Long Term Liabilities 0 0 0

Sub Total Cash Received 1,496,000 1,645,600 1,810,160

Expenses

Cash Spending 359,040 394,944 434,438

Bill Payments 119,680 131,648 144,813

Subtotal spent on operations 478,720 526,592 579,251

Additional Cash Spent

Sales Tax VAT Paid Out 935,000 1,028,500 1,131,350

Principal Repayment of Current Borrowing 149,600 164,560 181,016

Sub Total Cash Spent 1,084,600 1,193,060 1,312,366

Net Cash Flow 411,400 452,540 497,794

Cash Balance 411,400 452,540 497,794

4.10.5. Break-even Analysis:

The following break-even analysis has been conducted to understand when the business would be able

generate profits.

Break-even = (Contribution margin * 100)/fixed cost

Where, contribution margin = sales variable cost

Break Even

Total Sales = 7,480,000

Variable Cost = 1,232,280

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Contribution of Margin = 6,247,720

Fixed Cost = 3,456,000

Break-even = 1.80

Based on the calculation, it has been observed the break-even point is 1.8 which mean the business

would be able to earn income after meeting all expenses and cover the cost in 1year and 8 months

time.

5. FINDINGS AND CONCLUSION

5.1. Introduction:

This section presents the analysis of the data which was collected through primary research using

questionnaire and interview methods in aggregate manner. Based on the analysis, findings are

presented and finally the conclusion is drawn.

5.2. Primary Data Analysis:

Primary research has been conducted among general consumers using both the questionnaire method

and in-depth interviews to understand their views, attitude and behavior towards the adventure sports.

Consumers have shown good interest to participate into adventure sports activity and they are highly

excited to do such activities during their leisure trip in Kashmir region. The detailed analysis is presented

in the following sub sections.

5.2.1. Demographic Analysis:

Researcher has received approximately 200 completed responses through questionnaire and 15

completed responses through in-depth interviews. Only middle to upper income class people were

targeted as these are the potential customers for the new business. 45% of the respondents belongs to

age group 18-23 years, 40% of the respondents belongs to age group 24-28 years and remaining 15% of

the respondents belongs to age group 29-35 years. 65% of the respondents were male and 35% of the

respondents were female. 50% of the respondents have household income INR 25,000 to INR 40,000,

30% have household income INR 41,000 to INR 65,000 and remaining 20% of the respondents have

household income more than INR 65,000.

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5.2.2. Travelling Behavior:

Respondents were probed to understand their travelling behavior of consumers. It has been observed

that 50% of the people travel at-least once in six months for leisure purpose, 35% of the people travel at

least once in a year and remaining 15% of the people travel at-least one in three months. Interview

results also revealed that they usually prefer to go hill stations and destinations where they can enjoy

nature spots. 85% of the respondents preferred to go out to visit hill stations and nature scenic views.

On the other hand only 15% people preferred to visit places other than hill stations. Since Kashmir is a

rich place to visit scenic nature, it would be a best location for the business.

5.2.3. Travel Package Buying Behavior:

Respondents were asked to understand their buying behavior for tour packages. It was observed that

about 17% of the people buy the travel package through tour and travel agent and 83% of the people

buy the travel packages online. It signifies that online is the most favorable and preferred mode to buy

the travel packages. Respondents were further asked what they expect while buying the travel

packages. 60% of the respondents replied that they want to include everything starting from pick and

drop facility till sight-seeing. It means that respondents wanted to include pick & drop, hotel stay, food

service, sight seen and tour guidance. On the other hand, 45% respondents replied that they want

adventure, spa and other leisure activities in the package. Remaining 15% of the respondents replied

that they only want hotel stay and food service in the package and rest they want to customize on the

spot. It signifies that majority of people like to include sports activities to be included in the package

which shows that there is a good potential for adventure sports.

5.2.4. Preferred Leisure Activities:

Respondents were asked to share their preference towards different leisure activities. 38% of the

respondents replied that they prefer to do adventure sports, 40% respondents replied that they prefer

to do recreational activities and remaining 22% of the respondents replied that they would like to do

sight seen, spa and relax during their travel. There is a decent proportion of people who would like to

participate in adventure sports. It means a good potential for growth exist for the new business.

5.2.5. Preference to visit Kashmir region

Respondents were asked to share their preferences towards place they would like to visit in the near

future. 10% of the responses were received for Kerala, 20% of the responses were received for Goa, 15%

of the responses received for South India, 5% of the responses were received for Western part of India

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and remaining 50% of the responses were received for Northern region of India which mainly includes

Kashmir, Leh and Laddakh. It signifies that there is a tremendous opportunity exist for the new business

and hence the business will develop robust sales strategy to acquire such customer segment.

5.2.6. Perception and Attitude towards Adventure Sports:

Respondents were asked to provide responses around what they perceive and to understand their

attitude around adventure sports. 98% of the respondents replied that they would like participate in the

adventure sports while only 2% of the respondents replied they dont know as of now and will take the

decision only when they will be travelling.

Also respondents were asked which adventure sport they want to participate. 15% respondents replied

for Bungee Jumping, 20% replied for water sports, 10% replied for sky diving, 25% replied for

paragliding, 5% replied for rock climbing, 10% replied for free fall and rafting and remaining 15%

replied for kayaking and mountaineering. It shows that the consumers have positive attitude

towards the adventure sports and they would like to enjoy most exciting sports during their travel.

Respondents were probed further to understand their experienced from adventure sport if they

participated in the past. It has been observed that respondents have high motivation and excitement.

They replied that adventure sport is one of the ways to get out of stress and it was amazing experience

in the past from adventure sport activities. 55% of the respondents replied that they had a very good

experience in the past and would like to repeat that experience again, 30% of the respondents relied

that they never participated in adventure sports however they have viewed other trying this and

remaining 15% of the respondents replied that they had a moderate experience in the past. It shows the

majority of respondents have already experienced the adventure sports in the past and they would like

to try this again in the future and hence proves that there is a good opportunities available for the new

business in the market.

5.2.7. Pricing Expectations:

In order to develop the robust pricing strategy, respondents were asked to share their views about

pricing and how much they are willing to pay for different adventure sports. About half of the

respondents replied that they are willing to pay INR 600 to INR 1000, 20% replied that they expect the

pricing should be in the range of INR 400 to INR 1000, 5% replied that the pricing they expect should be

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INR 250 to INR 700 and remaining 25% replied that the pricing should be more than INR 1500 depending

on the different sports. It signifies that consumers have a well mind set to pay good amount for

participating in the adventure sports. Based on such observation, the minimum price is kept at INR 500

as referred to section 4.15.2.

Further respondents were probed around whether they would attract to avail the service directly or to

be included in the package. About 90% of the respondents replied that they would like to pursue this

service in their package itself and remaining 10% replied that they want to buy this directly from the

provider and should be independent from their travel package.

5.2.8. Preferred Mode of Buying the Adventure Sports Package:

Researcher would like to determine the optimal channel of selling the services and asked the

respondents about which mode the want to prefer to buy adventure sports services. 45% of the

respondents replied that they want to include this service in their travel package specifically booked it

online. 20% of the respondents replied that they would like to buy it directly from the provider. 25% of

the respondents replied that they want to buy it through travel agencies and hotel reference. Remaining

10% of the respondents replied that they do not have any preference and can buy it from any channel.

5.2.9. Expectations from Adventure Sports Services:

In order to design and deliver best services to the customers, researcher asked from respondents to

provide their views on what they expect from the adventure sports services. It has been observed that

respondents are more concern with the safety features while participating in the adventure sport. 40%

of the respondents replied that the expect safety to be in place as the foremost expectations from the

service. In addition to this respondents mentioned that equipment, accessories and trainers should be

the best so that they are comfortable and get full enjoy while playing the adventure sports. On the other

hand, 20% of the respondents replied that they want excellent spots for the adventure sports and

guiding material as the key expectations from such services. Considering the expectations of

respondents, the business will mainly hire experienced and certified trainers. The business will follow

the safety guidelines laid down by the Ministry of Tourism and obtain the service quality certificates

from ISO to ensure high end and standardized services are delivered to the customers.

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5.2.10. Motivation to Participate in Adventure Sports:

It was essential to understand what it motivates the tourists to participate in adventure sports so that

the business can take care of such motivational factors while delivering services to the customers. 32%

of the respondents replied that physical health is the biggest motivational factors for them. 17%

respondents replied that excitement and fun is the motivation for them. 29% replied that they want to

reduce stress and it is the best way to do it. Remaining 22% of the respondents replied that adventure,

enjoyment and entertainment are the motivational factors to play adventure sports. The new business

will focus on such motivational factors so that customer should have utmost experience and develop the

loyalty and satisfaction.

5.3. Macro Environment Analysis:

There are certain macro environmental factors which would have likely impact on the new business.

Researcher has used PESTEL framework and Porters five forces to see which all factors can affect the

business and likely strategy to minimize their impact.

5.3.1. PESTEL Analysis:

Political Factors:

Government policies

Safety guidelines are more stringent

Political risk

Corruption

Taxation policies

Employment act

Pressure groups and lobbying

Government restriction to some spots

Economic Factors:

Cost of living

Interest rates

Inflation rate

Seasonal factors

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Service tax policies

INR foreign exchange fluctuation

Social Factors:

Lifestyle trends

Change in demographics

Rise in disposable income

Changing travel needs of consumers

Buying behavior

Price sensitivity

Online purchase behavior

Influence of social media

Peer group influence

Cultural shifts, beliefs and values

Oil prices (Petroleum)

Militant attacks

Technological Factors:

Internet penetration

E-commerce development

Online travel portals growth

Mobile internet trends

Environmental Factors:

Environmental regulations

Carbon effect

Energy conservation

Legal Factors:

Ethical business

Fair business practices

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Health and safety issues

Travel and tourism regulations

Investor relations

It has been observed that political, economic and environmental factors would have large impact on the

business. Within the political factors taxation, government policies and safety guidelines have greater

impact on the business(Chowdhary, 2011). Travel and tourism in Kashmir region is highly sensitive due

to the militant attacks and regular military actions. It might be possible that government could change

its regulatory policies to safeguard the tourists and citizen from such risk factors. The local and state

government policies towards the taxation system is highly instable in the country(Navlakha, 2009). If the

taxation policies are revised then it will directly impact the business profitability. In addition to this, if

the government changes the safety regulations, then there is a possibility that the business need some

major investment to comply with such regulations.

The economic factors which could have greater impact on the business includes inflation rate, interest

rates and rupee versus dollar fluctuation. Over the period of one year, there has been significant change

in the inflation rate. Last year in the same month of January, the inflation rate was 7.74% which have

been fluctuated month by month and currently at 7.52%(Trading Economics, 2013). The fluctuation can

be seen from the following bar graph. Inflation rate can impact the consumer spending power.

Figure 5.1 India Inflation Rate, Source: (Trading Economics, 2013)

Interest rate fluctuation can also impact the long term profitability of the business. As far as the future

expansion plan for the new business is concerned, the capital funding need will be fulfilled through bank

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loan. Interest rate on bank loans are continuously increasing. It might impact the debt cost if the

business would expand using bank loans.

Government is very strict for every business to comply with the environmental regulations. In order to

protect the nature as well, strict regulations are imposed by the government and some of the spots are

restricted or penalties are levied to potential harm the nature (Srivastava , n.d.).

5.3.2. Porters Five Forces:

Industry Rivalry:

There is a good competition in adventure sports business in Kashmir region.

Some of the major players include Royal Saffari, Kashmir Tours, Shahnama

Tours, Gaffar Kashmir, Kousa and Travel Kashmir(Economist.com, 2012). Apart

from this, there are many local operators who provide adventure sports services

in the region. Hence the industry rivalry power is high in the industry. However

the new business will use robust marketing and sales strategies to quickly grab

the market share and become a leading provide in the adventure sport business.

Buyers Power:

There are several choice available in the market at the doorstep and consumer

can conveniently chose either of them. The services are not high involvement

purchase and therefore immediate decisions can be made. In addition to this

the cost of purchasing the service is not very high(Research Matic, 2012). There

are many options available in the market place to choose from Therefore the

buyers power in the industry is very high.

Suppliers Power:

Suppliers for adventure sports business are only those who provide the

equipment. There are limited number of suppliers in the industry and the

business in planning to hire those equipment on rent. These equipment cannot

be simply used in any other way. Therefore the suppliers power is relatively

weak(Infobanc, n.d.).

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Threat from New Entrant:

As described in section 4.1 that setting up the new business would need paid

capital only INR 300,000. This is a not very large amount however there are the

some other operational challenges i.e. resource availability, cost of equipment,

experience and high competition. Therefore threat from new entrant is

moderate.

Threat from Substitute:

There are several options available for the consumers to have fun, excitement

and adventure apart from adventure sports. Some of the options are in-door

gaming, recreational activities, clubs, sight seen etc. in addition to this there is

also international travel packages available at highly competitive price which

simply gives better choice for consumers to visit and have fun. Therefore threat

from substitute is very high.

5.3.3. SWOT Analysis:

Strengths:

Wide range of service offerings for adventure sports

Collaborative sales approach to sell services (partnering with Hoteliers, Shikara owners,

Boathouse owners and Tour and Travel agencies)

Experienced, skilled and trained staff

Pre-experience in adventure sports

Strong hold on safety and compliance regulations

Weakness:

New entrant

Limited resources

Limited capital investment

Equipment are rented

Opportunities:

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Increasing disposable income

Changing social lifestyle trends and demographics

Attitude towards travel

Growing number of tourists in Kashmir region

Business diversification into other tour & travel services

Threats:

Highly fragmented market

Intense competition

Militant attacks

Medical causalities

Resource bargaining

Based on the SWOT analysis, it has been observed that the business has enough strength to get hold of

the market and grow with opportunities exist in the market place. A strong marketing and sales

approach can help the business to overcome of its weaknesses. The key competitive advantage for the

business is that both the partners have good experience in travel business and they can quickly grow the

business and establish it as a competitive market player. Further the collaborative approach would help

the business to attract more and more customers which ensure the regular flow of business. Another

benefit to the new business is its experienced staff. It will help the business to provide great comfort

and high level of satisfaction among its target customers and deliver the best to increase the customer

loyalty and get repeat business. Also the satisfied customers would help the business to get new

customers through word-of-mouth marketing.

5.4. Key Findings:

There are the following findings obtained from the analysis.

Travelling to hill stations are the preferred destinations for the consumers. Being a rich place for

scenic nature and hill stations, Kashmir is the best location for the business

Consumers want to include adventure sports activities to be included in the package which

shows that there is a good potential for adventure sports.

Adventure sports and recreational activities are the preferred things to do while travelling

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Kashmir, Leh and Laddakh are the preferred places to visit

Majority of people would like participate in the adventure sports

Bungee Jumping, water sports, sky diving, kayaking and mountaineering are the main adventure

sports

Adventure sport is one of the ways to get out of stress and consumers would like to try this

again in the future.

Consumers are willing to pay good amount of money for adventure sports

Online portals are the preferred mode of buying adventure sports package and should be

included in their travel package.

Safety, best equipment, accessories, experienced trainers and guiding material are the key

expectations from adventure sports service.

Adventure, enjoyment and entertainment are the motivational factors to play adventure sports

Political, economic and environmental factors would have large impact on the business.

Industry rivalry, buyers power and threat from substitute is higher while threat from new

entrant and suppliers power is low in the industry

5.5. Conclusion:

Based on the analysis and key findings obtained, it can be concluded that there is a good opportunity

exist for the new business in Kashmir region. The business need to focus on various aspects of marketing

and sales to overcome from competitive challenges at the initial stage of the business. It would also

require for the business to have collaborative and robust partnership approach with other providers for

travel and tourism services such as hoteliers, Shikara owners, boathouse owners, travel agents and tour

& travel agencies. It will help the business to attract customers and get reference of new customers.

Being a preferred and attractive place for scenic nature, Kashmir would be the optimal location for the

business. There is a robust pricing strategy to