O'ran Business Plan Proposal 2012

Business Plan Proposal 2012

O`RAN As Bare As You Get

Together, We Grow.

WRITTEN AND DESIGNED BY Hui Shan, NG Clara, PUAR Nicole, KOO

Paper, print and finishing: Green Prints Singapore Singapore www.greenprints.sg Text is set in HTF Whitney and HTF Mercury.

© 2012 O’ran Pte Ltd Design Management Business Plan Proposal 21 March 2012

This book was Self Published ISBN: 978-2-8399-0580-0

PHOTOGRAPHY BY Various amazing indie photographers

Three Faces of O’ran These are the three faces of O’ran; they are passionate individuals with different, relevant expertise and industrial knowledge for the running of O’ran.

Hui Shan, Ng Managing Director Deputy General Manager, Finance

Clara, Puar General Manager, Sales and Marketing

Nicole, Koo General Manager, Administration and Operation

Hui Shan is responsible for the overall business, operations and performance of O’ran. Hui Shan is a Full Member of the Singapore Institute of directors and she holds a Bachelor of Accountancy Degree from Nanyang Business School of Nanyang Technological University (NTU), Singapore.

Clara oversees the sales and marketing function of O’ran and manages the retail support. She is social media focused, visual communication trained and holds a Bachelor of Business Administration Degree from the Royal Melbourne Institute of Technology (RMIT) University, Australia.

Nicole is responsible for the administrative function, product innovation, manufacturing and quality control. She holds a Bachelor of Chemistry Degree from Hong Kong University of Science and Technology. She also holds the Chartered Chemist status from The Royal Australian Chemical Institute Incorporated (MraCI CChem).

In addition, Hui Shan is also responsible for the financial management, IT and logistics management of O’ran. She is a fellow member of both The Institute of Certified Public Accountants of Singapore (ICPAS) and The Association of Chartered Certified Accountants (ACCA).

Reporting to the Managing Director, Clara is also responsible for driving the strategy to grow O’ran’s brand and market share.

In discharging her duties, she performs the following functions: proposes pricing decisions and marketing strategies and manages channel selections and relations.

In addition, Nicole is also responsible for hiring and assigning employees in a particular store or to assist her.

Nicole also makes regular trips to parts of Asia to liaise with the local representatives, and producers where needs arise.

Table of Contents

Marketing Management

The Proposal is divided into eight sections: 1 Executive Summary with a business model attached, 2 Industry and Business, 3 Strategic Planning, 4 Marketing Management, 5 Marketing Strategies (4Ps), 6 Operation and Labour Management, 7 Financial Management, and 8 Contingency and Exit Planning. 9 The last section offers a Future Outlook on O’ran’s operational development and brand expansion.

Strategic Planning

Executive Summary

Industry and Business

Marketing Strategies (4Ps)

Operation and Labour Management

Future Outlook Contingency and Exit Planning

Financial Management

1 Executive Summary 12

26

Corporate Profile

40 Brand D.N.A.

27

Planning Assumptions

41

Business Model

2 Industry and Business

3 Strategic Planning

Promotion (IMC)

Target Markets

81

Place (Distribution)

42

Primary Market Research

50

DIrect Competitors

6 Operation and Labour Management 84

Operation Management

90

Supplier Relationship Management

92

Labour Needs

94

Insurance Needs

96

Labour Cost Estimates

112 Contingency Plans

97

Labour Policy

115 Exit Strategies

98

Organisational Work Culture

9 Future Outlook

16

Industry

30

Vision

53

Indirect Competitors

18

Business Overview

31

Mission

54

Porter’s Five Forces

20

Ethos

33

Objectives

56

SWOT

22

Location and Facilities

34

Unique Value Proposition

58

PESTLE

Organisational Chart

4 Marketing Management

5 Marketing Strategies (4Ps)

38

68

Product

69

Pricing Strategy

24

Brand Logo

7 Financial Management

70

104 Start-Up Capital Needs 105 Balance Sheet 106 Profit and Loss 107 Breakeven Analysis 109 Financial Ratio Analysis

8 Contingency and Exit Planning

122 Business Model

Appendices

Executive

Summary

10

Executive Summary

We are not interested to be the next The Body Shop no LUSH; we will be an exemplary handmade cosmetics group which achieves industry leadership levels of revenue and profit in Asia and beyond, through innovation, authenticity and continual improvement, without compromising the well-being of people, animals and the planet by being committed to ethical and sustainable acts. We are O’ran, and that is our mission.

We write this Business Plan Proposal (“Proposal”) to tell you why you should invest in our business. Specifically, we solicit S$245,000 worth of capital injection, which makes up 49% of O’ran’s share capital. The Proposal discusses, with a focus on its first five operational years, O’ran’s business proposition (refer to “Strategic Planning”), key financial projections (refer to “Financial Management”) and critical success factors (discussed throughout the Proposal) and finishes with an outlook on the long term growth of O’ran.

The cosmetics industry is a highly competitive, but lucrative marketplace in which O’ran serves a specialised segment with products that include face masks, soap bars, hand and body lotions. We focus our efforts on audience who are quality- and eco-conscious; they desire to feel exclusive and pampered, and are even more delighted by ethical shopping. By pioneering an ethical handmade business in Singapore,

O’ran gains the first mover advantage and is committed to continual improvement so that any competition will always be a step behind us.

To reach our audience where, when and how they wish to be contacted, we focus our marketing efforts on less traditional avenues such as viral marketing (e.g. interactive on-line tools). While they are effective, they also offer significant costs savings. Traditional mass media advertising such as magazine are secondary in our Integrated Marketing Communications plan (refer to “Marketing Strategies (4Ps)”.

O’ran is not a conventional company; we do not intend to become one.

We live, breathe and work by O’ran’s Seven Ethos (refer to “Business Overview”) and focus on innovation and smart business practices.

O’ran is organised around the ability to attract and leverage the talent of exceptional people as non-renewable resources. We are adamant about building a non-conventional work culture which embraces individuality, recognition and work-life balance (refer to “Organisational Work Culture”). We believe that happy workers are productive, so even as we grow, we pledge to retain a small-company ambience within the company (e.g. through a flat structure).

What makes O’ran different from the rest who makes bath and body products? We make them better, if not the best; O’ran produces and

30.0

0 -10.0

-30.0 -40.0

Hui Shan, Ng Managing Director, O’ran Pte Ltd

-32.1

32.6 20.5

Year 5

10.0

22.9

27.5

Year 4

20.0

-20.0

Yours faithfully,

11

40.0

Year 3

O’ran is expected to break even by Year Four and begins to earn a positive net profit (after interest and tax) by Year Three. As a good point to start, we expect the costs of starting up to be under S$600,000, of which we would like to invite yourself to match S$245,000.

Before we leave you to peruse the rest of the Proposal, we summarise O’ran’s business model in a diagram on the next page.

Return on Investment %

Year 2

The bottom line inevitably, is fundamental in a valued investment decision like yours.

Through careful deliberation (refer to “Financial Management”), the Proposal draws references to the financial performance of O’ran, as singleshop retailer of bath and body products, and presents key financial ratios to help you with your decision, which includes the Return on Investment (ROI) on the right.

“Know how you are going to get out before you get in.” The Proposal incorporates relevant contingency plans and exit strategies as an assurance and readiness in times of big calamity, or opportunity (refer to “Contingency Plans” and “Exit Strategies”).

Year 1

sells products based on Asian formulations using fresh ingredients that are procured in a sustainable way. Our virgin product range is bound to excite you, and our audience Maruthuva Malai (Malai for short), which also means “the abode of medicinal herbs” (refer to “Marketing Strategies (4Ps)”).

We are definitely not the best persons to hand make them so we invite great, but marginalised, farmers and producers to lend us a quality hand, and at the same time, earn a better living from us (refer to “Business Overview” and “Operation Management”).

The unconventional business model can trace to more decent opportunities for sustainable growth to satisfy your protracted investment horizon.

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O’ran’s Business Model January 2013 to December 2017

CUSTOMER RELATIONSHIPS

KEY ACTIVITIES t 1SPEVDU GPSNVMBUJPOT t 4VQQMJFST USBJOJOH t 43. t 6ODPOWFOUJPOBM NBSLFUJOH

KEY PARTNERS t -PDBMJTFE QSPEVDFST t 8)0 t 4JOHBQPSF &OWJSPO NFOU $PVODJM t -PHJTUJDT DPNQBOZ t 8'50 "TJB t 4JOHBQPSF $PNQBDU

KEY RESOURCES t 0OF TUPSF GSPOU t #MPH XFC WJTJCJMJUZ t "VUIFOUJD GPSNVMB UJPOT t )BQQZ QSPEVDUJWF XPSLFST

COST STRUCTURE t 1SFNJVN QSJDJOH t %JGGFSFOUJBUJPO

VALUE PROPOSITION

t 0SBO DPN t -PZBMUZ QSPHSBNNF t .JMFTUPOF FWFOUT t &YDMVTJWF QSPEVDU MBVODIFT t 8PSLTIPQT DPOUFTUT

t )BOENBEF QSPEVDUT t *OHSFEJFOUT SFDPNNFOEFE GPS NFEJDJOBM WBMVFT t 3JHPVSPVT FUIJDBM BHFOEB

CUSTOMER SEGMENTS # $ 4BMFT t 2VBMJUZ FDP DPOTDJPVT VTFST t 6ODPOWFOUJPOBM NPEJTI VTFST t (JGU TIPQQFST

CHANNELS t 7JSBM NBSLFUJOH t 8PSE PG NPVUI t 0SBO DPN t 0UIFS*.$ UPPMT

REVENUE STREAM t #BUI CPEZ QSPEVDUT t 8PSLTIPQT TFNJOBST t .FNCFSTIJQ GFFT

13

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Indust Busi

ry and iness

16

Industry Overview Key Insights to the Cosmetics and Toiletries (C&T) Industry and Corporate Social Responsibility (CSR) Landscape in Singapore

Cosmetics and Toiletries Industry With a gross domestic product (GDP) of S$59,8131 per capita as at fiscal year 2011, Singapore’s total population of 5.18 million1 has very significant spendings on cosmetics and toiletries (C&T). According to industry estimates, the Singapore C&T retail sector is worth approximately S$742.8 million in 2007, which rose by 3.8% in 2008 / 20092.

Supermarkets as well as apparel, medical goods, toiletries, furniture, food and beverage and department stores have registered increased year-onyear sales between 1.8% and 8.8% as of August 20113.

The C&T business in Singapore is fairly resilient to economic cycles and continues to thrive in affluent Singapore. Going forward, C&T sector is expected to steadily increase despite economy downturn and instability.

Industry sources say that approximately five new brands enter the market each year but this however, does not necessarily translate to a significant growth in the consumer base4. To stay relevant, products have to constantly evolve and improve upon to satisfy the needs and wants of the discerning consumer.

Growth in Singapore’s C&T market is expected to see more competition among the top premium brands and an increase in the number of companies serving specialised niche markets. One growth segment is the

organics sector. While not going head-on against the larger companies, the niche players will serve to expand the market by providing either unique or complementary products to consumers.

With a keen pulse on market trends and Singapore’s sophisticated consumer, importers seem positive about the market recovery and many are bringing in beauty products and treatments with a strong focus or exceptional brand values.

Corporate Social Responsibility In an era of mass consumption, social responsibility puts forward a big challenge for producers and consumers to seriously think about.

The underpaid workers at the far end of the line, the rapidly degrading environment, the fading cultural identity and traditions, the discriminated women, the exploited and overworked children, and the families and communities searching for means to survive.

Social responsibility is fundamentally a response to the failure of conventional trade to deliver sustainable livelihoods and development opportunities to people in the poorest countries of the world; this is evidenced by the two billion of our fellow citizens who, despite working extremely hard, survive on less than $2 per day5.

The awareness and implementation of CSR in Singapore has been increasing over the past six years since the formation of the Singapore Compact. Poverty and hardship limit people’s choices while market forces tend to further marginalize and exclude them. This makes them them vulnerable to exploitation, whether as farmers and artisans in familyproduction units or as hired workers within larger businesses. CSR challenges businesses to contribute in eliminating these social inequalities and environmental injustice.

17

To date, 240 organisations have joined Singapore Compact and are implementing CSR practices. These organisations include large corporations, small-medium enterprises, co-operatives, unions, federations and NGOs. In addition, 70 companies have signed up as signatories to the United Nations Global Compact (UNGC) network in Singapore6.

Statistics (22 February 2012). Statistics Singapore, www.singstat.gov.sg, 2007.

1

South East Asia – strength in diversity (13 December 2010). Costmetics Business, www. cosmeticsbusiness.com, 2012.

2

Setting up a Retail Outlet in Singapore.

GuideMeSingapore.com, 2008 - 2012.

3

Cosmetics and Toiletries in Singapore (22 February 2010). GlobalTrade.net, 2012.

4

Fair Trade (2012). World Fair Trade Organization ASIA, fto-asia.com/fairtrade, 2012.

5

Corporate Social Responsibility in Singapore: Awareness and Implementation (2 October 2009). Green Business Times, www. greenbusinesstimes.com, 2008 - 2011.

6

18

Business Overview

O’ran is a private limited cosmetics company incorporated in Singapore.

We produce and sell a variety of handmade bath and body products, through a retail and on-line shop which are slated to commence operation on 1 January 2013.

O’ran identifies, trains and outsources our product manufacturing process, beginning 1 September 2012, to marginalised producers from disadvantaged communities in Asia (e.g. India, Cambodia, Myanmar) to improve their livelihood as part of our effort to perpetuate social equalities. In addition to extending equal development opportunities and socially acceptable remuneration (cost plus mark up), O’ran is also against animal testing and performs tests solely with volunteers instead.

O’ran is a registered member of Singapore Compact1 and intends to register our products for Singapore Green Labelling Scheme Certification which was enacted on 29 February 20122.

O’ran’s business is summarised in the diagram on the facing page.

The Singapore Compact for Corporate Social Responsibility (CSR) is a national society committed to bringing the CSR movement forward.

(About Us, Singapore Compact, www.csrsingapore.org, 2012.)

1

The Singapore Green Labelling Scheme (SGLS) was launched in May 1992 to endorse consumer products and services that have less undesirable effects on our environment. This is administered by the Singapore Environment Council. The SGLS is also recognised as a member of the international Global Ecolabelling Network (GEN), allowing certification by mutual recognition of SGLS endorsed products by other members of the network. Under the products category, SEC has certified more than thousand industrial and consumer products with the Green Label as a seal of endorsement on its environmentally-friendly claims to fight against the abuse of green-washing. This has proved to be advantageous for Green Label certified products that have become more marketable and readily accepted by consumers or business associates when making a purchase. The cosmetics category is recently enacted on 29 February 2012 after it was opened for public review on 15 November, 2011. (Singapore Environment Council, www.greenlabel.sg, 2012.)

2

19

Bath and body products made from fresh, natural ingredients and with no packaging

Marginalised communities as source of suppliers

Member of Singapore Compact; Green Labelling Scheme Certification

Diagram: O’ran’s business model as at 1 January 2013

20

Ethos O’ran prescribes seven ethos that we follow in our day-to-day work and monitor them to ensure our values are upheld:

Ethos one: Transparency and accountability O’ran is transparent in its management and commercial relations. It is accountable to all its stakeholders (e.g. customers and employees) and respects the sensitivity and confidentiality of commercial information supplied. O’ran finds appropriate, participatory ways to involve customers, employees, members and suppliers in its decision-making processes. It ensures that relevant information is provided to all its trading partners. The communication channels are good and open at all levels of the supply chain. Also refer to “Organisational Structure” and “Organisation Work Culture”.

Ethos two: Creating opportunities for economically disadvantaged producers Poverty reduction through trade forms a key part of O’ran’s aims. We support marginalised small producers, whether these are independent family businesses, or grouped in associations or co-operatives. We seek to enable them to move from income insecurity and poverty to economic self-sufficiency and ownership.

Ethos three: Payment of a fair price O’ran and its suppliers mutually agree on payments (cost plus mark

up) for goods through dialogue and participation. Where local fair trade pricing structures exist, these are used as a minimum. Fair pay means provision of socially acceptable remuneration (in the local context) considered by producers themselves to be fair and which takes into account the principle of equal pay for equal work by women and men.

Ethos four: Ensuring no child labour and forced labour O’ran adheres to the United Nations (UN) Convention on the Rights of the Child, and local law on the employment of children. We ensure that there is no forced labor in its workforce and / or members or homeworkers. To our best ability, we also ensure that no forced labor is used in production by producer groups and that the producer groups comply with the UN Convention on the Rights of the Child, and Singapore law on the employment of children. We require any involvement of children in the production to always be disclosed and monitored and not adversely affect the children’s well-being, security, educational requirements and need for play.

Ethos five: Commitment to non discrimination, gender equity and freedom of association O’ran does not discriminate in hiring, remuneration, access to training, promotion, termination or retirement based on race, caste, national

origin, religion, disability, gender, sexual orientation, union membership, political affiliation, HIV/Aids status or age. O’ran provides opportunities for women and men to develop their skills and actively promotes applications from women for supplier or representative vacancies. Also, we take into account the special health and safety needs of pregnant women and breast-feeding mothers. We also work closely with the local representatives (and producers) to ensure that women are always paid for their contribution to the production process, and when women do the same work as men they are paid at the same rates as men.

Ethos six: Promoting fair trade O’ran raises awareness of the aim of fair trade and of the need for greater justice in world trade through fair trade. We provide our customers with information about the firm, the products we markets, and the producers, producer organisations or members that make or procure the products. Honest advertising and marketing techniques are always used.

Refer to “Marketing Strategies (4Ps)”.

Ethos seven: Respect for the environment O’ran aspires to maximise the use of raw materials from sustainably managed sources, buying locally (in the context of our producers) when possible. We seek to minimise the impact of our waste stream on the environment and encourage our producers

to minimise their environmental impacts, by sustainably procuring natural ingredient wherever possible. We also seek to use recycled or easily biodegradable materials for packing to the extent possible, and our goods are dispatched by sea wherever possible.

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22

Location and Facilities

Standing at 550 sq ft (51.1 sq m) of retail and office space, ACB flagship store in Singapore is located at Orchard Ion, 2 Orchard Turn #B3-54 Singapore 238801. Customers can also make use of our e-commerce website (oran.com) for on-line shopping in Singapore and regions beyond.

To complete O’ran’s ethics virtues, the shopping space will be lit mainly by energy efficient light-emitting diode (LED) lighting, while the fittings in the store are built using recycled off-cut teak from discarded wooden pallets typically found in factories, and used for carrying crates.

Orchard Ion1 ION Orchard (Chinese: 乌节弯), formerly known as the Orchard Turn Development or Orchard Turn Site, is a shopping mall by Orchard Turn Developments Pte Ltd , a joint venture between CapitaLand and Sun Hung Kai Properties, and started operating on 21 July 2009. With a lettable area of almost 660,000 sq ft, Orchard Ion is home to 335 retail and food outlets, with 60% of the retail space being leased to flagships, new-to-market and new concept stores.

Currently, O’ran’s office also shares the same address and generally performs corporate functions such as strategic planning, tax, marketing, financial, human resource and procurement. Trainers (usually Operation Masters) are out posted to selected parts of Asia for an average of three to five months to source, train and supervise local producers whom we engage to carry out our production.

We attach our floor plan on the facing page.

1 ION Orchard and The Orchard Residences (19 February 2012). Wikipedia, the free encyclopedia, en.wikipedia.org, 2012.

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WAREHOUSE

OFFICE

SHELF

SHELF

POS TERMINAL SHELF

SHELF

DISPLAY TABLE

SHELF

SHELF SHELF

SHELF

Store

FLOOR PLAN

Office Warehouse

POS

Point-of-sale

Diagram: O’ran’s retail shop floor plan

24

Organisational Structure The organisational chart on the facing page excludes part time or contract labour who may be providing support to the Sales and Marketing, Operation and Administration divisions whenever necessary.

For O’ran is a small firm which seeks to leverage on principled individuals with varied expertise and knowledge relevant to its business operations, O’ran adopts an organisational structure with few levels of intervening management between staff and managers. A broad-based management team helps to ensure the firm has knowledgeable directors or managers (i.e. General Managers for Operation, and Sales and Marketing) to handle various types of business situations. The organisational model also enhances productivity by fostering employee involvement through a decentralised decision-making process. By elevating the level of responsibility of baseline employees and eliminating layers of middle management, comments and feedback reach all personnel involved in decisions more quickly. Expected response to customer feedback becomes more rapid.

When O’ran reaches a critical size (20 employees and more), the decentralised decision making process will continue to apply but within individual business units.

25 Managing Director Deputy General Manager, Finance )VJ 4IBO /H

Secretary Accounts Executive 1BVMJOF )FOH

General Manager, Administration & Operations

General Manager, Sales & Marketinig

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Operation Master 1

$MBSB 1VBS

Operation Master 2

Retail Sales Associate 1

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Retail Sales Lead 2

Retail Sales Lead 1

Retail Sales Associate 2

Retail Sales Associate 3

Retail Sales Associate 4

26

Corporate Profile O’ran Pte Ltd

Director

Share Registrars

Hui Shan, Ng Managing Director

Danny, Heng CPA

Boardroom Corporate & Advisory Services Pte Ltd 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Tel: (65) 6536 5355 Fax: (65) 6536 1360

Company Legal Name

Audit Exemption

O’ran Pte Ltd

O’ran Pte Ltd is currently eligible for audit exmption under Section 205C the Companies Act1.

Company Secretary

Date of Incorporation 3 January 2012

Principal Banker The Hongkong and Shanghai Banking Corporation Limited

Registered Office 2 Orchard Turn #B3-54 Singapore 238801 Tel: (65) 6509 8941 Fax: (65) 6509 8276 Refer to Appendix A for information on Exempt Private Companies and Audit Exemption.

1

Key Assumptions

27

In crafting the Proposal, we made the following key assumptions for the five-year period beginning date of business commencement, i.e.

January, 2013 to December, 2017:

1.

Inflation rate is projected at 3.0%1.

2.

Local demographics and political landscape (e.g. government policies, business requirements), and competitive landscape for cosmetics and toiletries segment remain unchanged.

3.

The cost of borrowing (unsecured business loan interest rate) is 5.75%2.

4. Revenue growth rate is approximately 15% based on similar industry models.

5.

No major changes to Asian politics, particularly in parts of Asia where our producers are located.

6. The one-off SME cash grant of S$5,000 or 5% of total revenue for the basis year3, whichever is lower, will continue to be available for Year of Assessment 2014 (basis year 2013).

The Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said inflation will likely remain elevated for the next few months of 2012, averaging between 2.5% to 3.5%. (Venus Hew (2012). Inflation will stay elevated in near-term, warn MAS and MTI. TODAYonline, www.todayonline.com, 26 January.)

1

2 Based on the Micro Loan Programme by SPRING Singapore, for a tenure period of four years and below.3 SME Cash Grant for Year of Assessment 2012. IRAS, www.iras.gov.sg, 17 February 2012.

Strategic

Planning

30

O’ran_Vision

O’ran will be an exemplary handmade cosmetics group known for fresh, natural and authentic formulations.

31

O’ran_Mission

O’ran will fulfil its vision by achieving industry leadership levels of revenue and profit in Asia and beyond, through innovation, authenticity and continual improvement, without compromising the well-being of people, animals and the planet by being committed to ethical and sustainable acts.

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O’ran_Mission (continued) •

To hand make the finest cosmetics of distinguishable localised flavours that heal, sooth and cleanse our customers who are quality-minded and socially- and eco-conscious

•

To act responsibly towards people, animals and the planet, and uphold the principles of fair trading

•

To create value for and make a difference to our customers, employees and shareholders

Objectives The objectives for O’ran are as follows:

Sales • •

Achieve sales goal of $500,000 during first year of operation Generate constant sales increase of 15% subsequent to the third year of operation

Customer base • •

Accumulate 3,000 successful membership applications by the end of first year of operation Subsequent to the first year of operation, attain a constant increase of 20% membership base

Financial performance • •

Generate positive net profit before tax (NPBT) by third year of operation Maintain return on investment (ROI) of 25% to 30% during an average year of operation, subsequent to second year of operation

Target awareness •

Increase consumer awareness - achieve constant 30% to 35% growth in in-store, phone and mail inquiries made regarding our product or service after first year of operation

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O’ran_Unique Value Proposition

We maintain rigourous ethical agenda in offering superior cleansing products, which are handmade from fresh, natural ingredients that are recommended by World Health Organsisation (WHO) for their medicinal values.

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Mark Manag

keting gement

38

Brand Name, Logo and Tagline O’ran is an inventive word, which means Oriental and 然 (ran) or “natural” in Chinese. and it bears a similar pronunciation to the word “Orient”.

然, “ran”

Sans serif, “Lowvetica”

Sans serif, “Century Gothic”

In crafting our brand logo, we keep our choice of images and colours neutral to avoid any that may have negative connotations or significance in certain parts of Asia.

A key symbol of our logo is a circle, which is generally of positive significance across Asia. A circle suggests wholesomeness, responsibility and reliability, which complement our brand values and personality (refer to “Brand DNA”).

It can also represent the world, reiterating our mission to achieve industry leadership levels of revenue and profit in Asia and beyond. As the letter “O” in “Oriental”, it encapsulates our passion for distinguished formulations of rich Asian heritage, also an association by the use of small seal script in 然 (ran). An unfinished brush stroke embellish one side of the circle suggests O’ran’s commitment to continual improvement and innovation. 然 (ran), which means natural, lies to the left of the circle to suggest the heart and soul of O’ran business - O’ran takes pride in producing cosmetics from fresh and natural ingredients procured from parts of Asia.

The logo is dressed in a neutral earth colour, which is associated with desirable attributes such as raw, bare and again, natural. A sans serif typeface is used for “O`ran” for a touch of modernity to contrast with the traditional appearance of 然 (ran).

Our tagline, ‘’As Bare As You Get’’ is a simile to associate our offerings with one’s bare skin.

Bare means unconcealed, naked, and having no addition. O’ran seek to enrich one’s cleansing experience with our products which are fresh, natural and without packaging, and ultimately an essential part of quality well-being.

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BRAND PERSONALITY

BRAND POSITIONING

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BRAND VALUES

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BRAND ESSENCE )BOENBEF CBUI BOE CPEZ QSPEVDUT VTJOH GSFTI OBUVSBM JOHSFEJFOUT QSPDVSFE GSPN SJDI "TJBO MBOET XIJDI TFFL UP TPPUIF BOE DMFBOTF PVS DPOTVNFST

BRAND BENEFITS 0VS QSPEVDUT IFBM DMFBOTF BOE TPPUIF BOE BSF CFZPOE DPOTVNFS QBDLBHFE HPPET UIFZ BSF NFBOT CZ XIJDI FUIJDBM CVZJOH NBLFT TFOTF

BRAND IDENTITY "T POF PG UIF MPDBM QJPOFFST XIP BEWPDBUFT GBJS USBEJOH XF FTUBCMJTI PVSTFMWFT BT BO FYFNQMBSZ IBOENBEF DPTNFUJDT CVTJOFTT PG SJDI "TJBO IFSJUBHF

0VS DPNQBOZ WBMVFT BSF BCCSFWJBUFE BT 4 1 " XIJDI HPWFSOT UIF IPMJTUJD BQQSPBDI 0 SBO UBLFT UP NBOBHF JUT SFMBUJPOTIJQT XJUI JUT DVTUPNFST JUT QFPQMF BOE UIF FOWJSPONFOU Social Responsibility 8F FOEFBWPVS UP NFBOJOHGVMMZ DPOUSJCVUF UP MPDBM BOE JOUFSOBUJPOBM DPNNVOJUJFT JO XIJDI XF USBEF CZ BEPQUJOH B SJHPVSPVT DPEF PG DPOEVDU XIJDI FOTVSFT DBSF IPOFTUZ BOE GBJSOFTT 0VS SFTQFDU GPS UIF FOWJSPONFOU FNQPXFST VT UP DPVSBHFPVTMZ FOTVSF PVS CVTJOFTT JT FDPMPHJDBMMZ TVTUBJOBCMF NFFUJOH UIF OFFET PG UIF QSFTFOU XJUIPVU DPNQSPNJTJOH UIF GVUVSF People-oriented 8F SFDPHOJTF UIBU PVS QFPQMF BSF WBMVBCMF OPO SFOFXBCMF SFTPVSDFT TP XF NBLF NFBOJOHGVM FGGPSU UP SFUBJO UIFN CZ QSPWJEJOH UIFN XJUI B DPOEVDJWF FOWJSPONFOU UP XPSL BOE QMBZ JO 1MFBTF SFGFS UP i0SHBOJTBUJPOBM 8PSL $VMUVSFw GPS BEEJUJPOBM JOGPSNBUJPO PO IPX XF QSPWJEF B HSFBU FOWJSPONFOU GPS PVS QFPQMF Authenticity and Innovation 8F UBLF BO JOOPWBUJWF BQQSPBDI JO QSPEVDU EFWFMPQNFOU CSBOEJOH BOE NBOBHFNFOU 8F FYQFDU UP DPOUJOVF UP DSFBUF IJHIFS DPOTVNFS EFNBOE UISPVHI BVUIFOUJD QSPEVDU GPSNVMBUJPOT PG FYPUJDJTN GPMMPXJOH UIF QSJODJQMFT PG QIZUPUIFSBQZ1 IBOEJOH EPXO DVMUVSF BOE MPDBM LOPX IPX

BRAND EXPERIENCE 8F JOEVMHF PVS DVTUPNFST XJUI QSPEVDUT NBEF GSPN GSFTI IFSCT BOE GSVJUT XJUI NFEJDJOBM PS IFBMJOH DBQBCJMJUJFT BOE BO BEEJDUJWF JO TUPSF FYQFSJFODF XIJMF FOTVSJOH UIBU FBDI QSPEVDU SFBDIFT UIFN JO B TVTUBJOBCMF XBZ

BRAND ATTRIBUTES 'JOF OBUVSBM JOHSFEJFOUT RVBMJUZ QSPEVDUT BOE SFTQFDU GPS UIF XFMM CFJOH PG QFPQMF BOJNBMT BOE UIF QMBOFU BSF IBMMNBSLT XF MJWF CZ

Phytotherapy is a form of medical treatment which relies on the use of plants, either whole or in the form of prepared extracts and essences. (What Is Phytotherapy?, wiseGEEK, www.wisegeek.com, 2003 - 2012.)

1

GEOGRAPHIC

LOCAL AND ASIA East Asia including China, Hong Kong,

BEHAVIOURAL

PSYCHOGRAPHIC

DEMOGRAPHIC

AGE 25 to 35 (Generation X) GENDER Females and males

South East Asia including Myanmar,

Cambodia, Vietnam, Malaysia, Philippines,

Indonesia; South Asia including India

OCCUPATION Professionals; Managers; Executives; Business women

EDUCATION LEVEL Tertiary and above

SOCIAL CLASS Middle class and above

41 MARITAL STATUS Single: Married

GENDER Females and males

ETHNICITY Chinese; Malays; Indians

INCOME S$2,800 gross and above; At least 20% disposable PERSONALITY Socio- and eco-conscious; Empathetic; Humanitarian VALUES Empathy; Commitment to making a difference to community; Ethics; Righteousness; Aesthetics; Well-being

USAGE RATE Daily

AGE 36 to 50

VALUES Exclusivity; Lavishness; Quality; Sensuality

PRIMARY AUDIENCE

INTEREST Asian formulations; Exoticism; Well-being;

LOYALTY High

Social sustainability (human rights, labour rights and corporate governance)

SECONDARY AUDIENCE

PERSONALITY Unconventional; Modish

LOYALTY Low (occasional festive or events)

42

Primary Market Research To gain insights to our prospective market’s needs and preferences, we conducted two types of primary research:

PRIMARY RESEARCH TOOL

Questionnaire / Survey1 RVFTUJPOT DPNQSJTJOH DPNQVMTPSZ BOE PQUJPOBM RVFTUJPOT

Interview PQFO FOEFE RVFTUJPOT

PLATFORM

t 8FC CBTFE TVSWFZ TPMVUJPO J F 4VSWFZ.POLFZ DPN

t &MFDUSPOJD EJTUSJCVUJPO J F & NBJMT 'BDFCPPL BOE 5XJUUFS

t *O QFSTPO

t 5FMFQIPOF JOUFSWJFX

NUMBER OF RESPONDENTS

1

43

1

Refer to Appendix B1 for a sample of the Questionnaire.

2

Refer to Appendix B2 for a sample of the e-survey.

Refer to Appendix B3 for some samples of completed Questionnaires.

3

Refer to Appendix B4 for a sample of the Interview questions.

4

44

Primary Market Research Questionnaire / Survey

Introduction

Key Findings and Learning Points

The results1 were derived from complete, valid responses submitted between 26 January 2012 and 25 March 2012 by almost 220 respondents (on-line and off-line). Because of guaranteed anonymity, no specific information is available about these respondents. However, based on our visitor logs and results of some poll questions, all respondents are Singapore-based, and we identify the majority would have had the following key attributes:

The Survey found that O’ran’s prospective customers have the following noteworthy preferences or needs, which O’ran will deliberate in carving our “Marketing Strategies (4Ps)” below:

• • • •

Has purchased a similar product (e.g. The Body Shop, Skinfood and Kiehl’s) Likely to fall within the age bracket of O’ran’s target group (i.e. 25 to 35) Is a female Unemployed (e.g. students) or is a professional (e.g. in accounting, engineering)

1

Refer to Appendix B5 for charted results of the questionnaire.

45

KEY FINDINGS

/BUVSBM JOHSFEJFOUT QSPEVDU FGGFDUJWFOFTT BOE TPDJBM SFTQPOTJCJMJUZ BSF NPTU XFMM MJLFE BUUSJCVUFT PG 0 SBO T BOE DPNQFUJUPST PGGFSJOHT

-BDL PG BTTVSBODF BOE QSPWFO FGGFDUJWFOFTT PG 0 SBO T QSPEVDUT

4 UP 4 QFSDFJWFE GBJS QSJDF SBOHF GPS 0 SBO T QSPEVDUT

1PTJUJWF QFSDFQUJPO BOE JOUFSFTU BCPVU 0 SBO T QSPEVDUT

4QFOE NPTU OVNCFS PG IPVST PO UIF *OUFSOFU BOE PS UIFJS TNBSUQIPOFT DPNQBSFE UP UIF UFMFWJTJPO SBEJP BOE OFXTQBQFST

QUESTIONS

BOE

7

BOE

LEARNING POINTS

0 SBO XJMM DPOUJOVF UP GPDVT PO VTJOH OBUVSBM JOHSFEJFOUT XIJDI DBO DMFBOTF TPPUIF BOE IFBM BOE SFUBJO JUT FUIJDBM BOE TPDJBM WBMVFT

0 SBO JOUFOET UP SFHJTUFS PVS QSPEVDUT GPS 4JOHBQPSF (SFFO -BCFMMJOH 4DIFNF $FSUJGJDBUJPO 5IF OBUVSBM JOHSFEJFOUT VTFE BSF SFDPNNFOEFE UP UIF FYUFOU QPTTJCMF CZ 8)0 GPS UIFJS NFEJDJOBM WBMVFT

0 SBO T QSPEVDUT DBO CF QSJDFE BU B QSFNJVN TP MPOH BT XF BSF BCMF UP DPOWJODF PVS DVTUPNFST UIBU UIFZ BSF PG RVBMJUZ BOE FGGFDUJWF

"UUFTU UP 0 SBO T TUSBUFHZ

t 0O MJOF BOE JOUFSBDUJWF BEWFSUJTJOH XJMM CF B GPDVT JO 0 SBO T *.$ DBNQBJHO t .BTT NFEJB BEWFSUJTJOH XJMM CF TFDPOEBSZ UPPMT

46

Primary Market Research Interview

Introduction A telephone interview was conducted on 4 February 2012 with a respondent working in an established medium-sized company in a similar industry as O’ran, whose responses1 were noted accordingly.

Because of guaranteed anonymity, no specific information is available (censored) about the respondent (e.g. company he or she is working for, size of the company, his or her name and designation). However, he or she is Singapore-based and plays a managerial role in the company.

Key Findings and Learning Points The Interview found that a company in a similar as O’ran has the following strategies, which O’ran will deliberate in carving our “Operation Management” and “Future Outlook” below:

1

Refer to Appendix B6 for records of the Interview.

47

STRATEGIC PLANNING

ORGANISATION

KEY RESPONSES

.BSLFUJOH TUSBUFHZ DPOTUBOUMZ FWPMWJOH EVF UP NBSLFU DPOEJUJPOT CVU CFMJFWFT JO EJGGFSFOUJBUJPO BT B GVOEBNFOUBM

0O MJOF XFCTJUF GPS EJSFDU QVSDIBTFT i1JDL VQ ZPVSTFMG BOE TBWF w DBNQBJHO UP FODPVSBHF TFMG DPMMFDUJPO JO TUPSF

'VUVSF QMBOT UP JOUSPEVDF DVTUPNFS EBUBCBTF XIJDI TUPSFT QFSTPOBM QSFGFSFODFT

#PUUPN MJOF JT UIF LFZ DPSQPSBUF TPDJBM SFTQPOTJCJMJUZ $43 JT POMZ PG TFDPOEBSZ DPODFSO BOE OPU DSJUJDBM

'MBU IJFSBSDIZ GPS GBTUFS SFTQPOTFT UP NBSLFU DIBOHFT

QUESTIONS

LEARNING POINTS

"UUFTUT UP PVS QSJDF BOE QSPEVDU EJGGFSFOUJBUJPO TUSBUFHZ UP TUBZ PO UPQ PO UIF DPNQFUJUJPO

0O MJOF XFCTJUF BOE SFUBJM TIPQ XJMM DPNNFODF UPHFUIFS UP DBQUVSF MBSHFS DVTUPNFS CBTF

4PQIJTUJDBUFE TFMG IFMQ DVTUPNFS SFMBUJPOTIJQ NBOBHFNFOU $3.

TZTUFNT DBO CF JNQMFNFOUFE JO GVUVSF UP DBUFS UP VOJRVF QSFGFSFODFT PG PVS DVTUPNFST

0 SBO XJMM SJEF PO UIF $43 BOE iHSFFOw XBWF GSPN UIF TUBSU PG CVTJOFTT UP TUSFOHUIFO PVS CSBOEJOH FGGPSUT

$PNQMFNFOUBSZ UP B GMBU TUSVDUVSF 0 SBO OVSUVSFT B IBQQZ BOE QSPEVDUJWF XPSL DVMUVSF XJUIJO UIF PSHBOJTBUJPO UP FOIBODF JOOPWBUJPO BOE QFSGPSNBODF

48

PRODUCTS

5ISFF NBJO QSPEVDU DBUFHPSJFT UP JUFNT QFS QSPEVDU DBUFHPSZ BU BOZ POF UJNF

641 VODPNQSPNJTFE RVBMJUZ QSPEVDUT XIJDI BSF TPME BT BO JOUFHSBM QBSU PG IFBMUIZ MJGFTUZMF EPFT OPU FOHBHF JO QSJDF XBST

BOE

0 SBO JOUSPEVDFT BU MFBTU POF OFX QSPEVDU SBOHF FWFSZ RVBSUFS UP SFKVWFOBUF UIF QSPEVDU MJOF T EFQUI

5P FOTVSF RVBMJUZ 0 SBO FYFSDJTFT RVBMJUZ DPOUSPM BOE TVQQMJFS QFSGPSNBODF FWBMVBUJPO UISPVHI B TVQQMJFS SFMBUJPOTIJQ NBOBHFNFOU 43.

F TZTUFN

Competitive Analysis We look at two levels of competition: from the direct competitors and the indirect competitors.

49

50

DIRECT COMPETITORS

BRAND YEARS IN BUSINESS

Unknown

Unknown

NATURE OF BUSINESS

Produces and sells skin care and spa products which contain 100% natural and safe ingredients

Produces and sells organic handmade soaps which contain healing ingredients

STRENGTHS

t Cost effectiveness - savings passed on to consumers in the form of lower prices (as low as S$4.50) by cutting down on showy marketing campaigns, expensive and impractical packaging t Preserves two pillars and beliefs in safe products and natural ingredients

t First mover advantage t Niche proposition - a collective undertaking that benefit local community for generations to come t Product specialisation - produces soaps from fruit, vegetables and Chinese herbs; strong localised flavours and exoticism

WEAKNESSES

Lowly-budgeted, and likely ineffective, promotions and marketing strategies.

Small scale production (11 local employees) so unable to cater to increasing demands

LEARNING POINTS

t Attractive packaging is possible through recycled and post-consumer recycled materials t Carefully planned and executed advertising campaigns which are effective are possible at reasonable cost (refer to “Promotion” in “Marketing Strategies (4Ps)”)

Strategic labour management (engaging disadvantaged labour from less developed areas in Asia) can boost productivity

51

DIRECT COMPETITORS

36

18

A global manufacturer and retailer of naturally inspired, ethically produced beauty and cosmetics products

Produces and sells handmade cosmetics made from fruits, vegetables, essential oils and synthetic ingredients

Exceptional ethical standards and green actions appreciated by wide women audience

t 7FSZ FUIJDBM DVMU CSBOE XJUI TUSPOH CFMJFGT t 'MBU NBOBHFNFOU TUSVDUVSF EJSFDUPST BDUJWFMZ JOWPMWFE in operations of firm right from new product development to training the employees t 4VQFSJPS DVTUPNFS TFSWJDF VODPOWFOUJPOBM NBSLFUJOH conversational online approach

Safe and timid advertising over the last decade, which results in decreasing market share and brand value

Absence of a regular marketing department; relied more on unconventional products, wacky product names, in-store advertising, word-of-mouth advocacy, and public relations

Strategic IMC planning which keeps up with up-to-date technology and new media trends (refer to “Promotion� in “Marketing Strategies (4Ps)�)

To strike a good balance between traditional and unconventional marketing strategies in order to stay competitive in the ethical cosmetics market (refer to “Promotion� in “Marketing Strategies (4Ps)�)

52

DIRECT COMPETITORS

155

36

An America cosmetics brand retailer that specialises in making premium skin, hair, and body care products

An international retailer of body, face, and home products based in Manosque, France

t Generous marketing budget; e.g. liberal sampling policy representing 80% of total marketing budget t Localised strategy - Works to understand each new location and develop a unique approach for that market

t Socially responsible company - standing by the values: authenticity, respect, sensoriality and continual improvement driving concrete actions t Unique proposition - strong connection with the company's roots in native Provence

t Liberal sampling policy t Expensive for what you get (e.g. Blue Herbal products are terrible for acne)

Susceptible to natural threats or lost traditions - sources the majority of its production from local producers who rely on traditional production methods

t Careful budgeting to avoid fruitless investment in activities like excessive sampling (refer to “Financial Management”) t Quality control has to be exercised to ensure non-damaging products (refer to “Supplier Relationship Management” for system implementation)

t Pre-empt threats or risks and have in place appropriate measures to minimise contingency losses in sourcing production from local producers (refer to “Insurance Needs” and “Contingency Plans”); or t Regularly review and innovate formulations to reduce dependence on any single Asian supplier source (refer to “Future Outlook”)

53

INDIRECT COMPETITORS

126

95

An American multinational pharmaceutical, medical devices and consumer packaged goods manufacturer

French brand which offers beauty and personal care products that incorporate latest scientific advances

t Product diversification Pharmaceutical portfolio, Medical Devices & Diagnostics and Consumer Health divisions serve to reduce dependence upon any one area t (MPCBM TBMFT GPSDF BUUSBDUT +7 QPTTJCJMJUJFT

t Diverse, flexible in global market (ad campaigns) t Each brand to benefit from formulae specifically adapted to needs of men and women worldwide, within each market or distribution circuit t Developed activities in the field of cosmetics, dermatological and pharmaceutical fields to put more concentration in their particular activities

Divisional organisational structure resulting in high overhead costs (e.g. own finance and human resource departments for each unit)

Decentralised organisational structure counterproductive and accountability issues

t Product diversification allows a wider range of choice when pursuing opportunities with the greatest growth prospects (refer to “Outlook on Future Development”) t Lowers cost with integration of different functions across different divisions

Strategic IMC planning which keeps up with up-to-date technology and new media trends (refer to “Promotions” in “Marketing Strategies (4Ps)”)

54

Porter’s Five Forces Based on Porter’s Five Forces analysis, the handmade cosmetics market segment is characterised by moderate to high threat of new entrants, high threat of substitute products, low to moderate intensity of competitive rivalry, moderate bargaining power of buyers and low bargaining power of suppliers. It is relatively viable and sustainable an industry to enter, subject to the strategy adopted to compete, capture and retain customers.

FORCES FROM HORIZONTAL COMPETITION 1.

HIGH THREAT OF SUBSTITUTE PRODUCTS

MODERATE TO HIGH THREAT OF NEW ENTRANTS

Barriers to entrance and exit: It does not require sophisticated plants and equipment, massive infrastructure nor obligatory patents or rights to start a handmade cosmetics business, resulting in great ease of penetration into the industry. In the same manner, the exit barriers are low as non-performing firms can exit easily in the absence of massive capital outlays. Low barriers of entry and exit make the segment attractive for new businesses.

LOW TO MODERATE RIVALRY INTENSITY LOW BARGAINING POWER OF SUPPLIERS

Threat of new entrants is moderate to high Profitable markets that yield high returns will attract new entrants and therefore driving down profitability for all firms in the industry.

Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will tend towards zero (perfect competition).

MODERATE BARGAINING POWER OF BUYERS

Government regulations: Potential firms may be deterred by strict regulations administered by Health Sciences Authority in Singapore on the cosmetics market to eliminate products which may cause health risks.

Economies of scale: Given the nature of handmade cosmetic business, small economies of scale are involved so it may not be very attractive to

potential entrants.

Low initial investments and fixed costs: To build a handmade cosmetic business requires only the relevant expertise and moderate capital investments, this enhances the attractiveness of the segment.

Buyer loyalty or switching costs: A customer can switch from a cosmetic product of one brand (e.g. Our Natural Factory) to another (e.g. LUSH) with ease, offering inviting opportunities to potential firms.

2.

Threat of substitute products is high A close substitute product (but outside the realm of handmade cosmetics product boundaries) constrains the ability of the firm to raise prices.

Number of substitute products available: Product substitutes are readily available to satisfy the functions of handmade cosmetics (e.g. Procter & Gamble) to increase the propensity of customers to switch to alternatives.

Ease of substitution: It takes negligible effort to use a new alternative product to meet the same need.

handmade cosmetics segment can facilitate desirable retention of niche audience.

3.

Intensity of competitive rivalry is low to moderate The intensity of competitive rivalry is the major determinant of the competitiveness of the handmade cosmetics industry.

The degree of competition: There is a small (but increasing) number of small firms in the handmade cosmetics segment so the competitiveness is fairly neutral. The landscape is also characterised by the absence of a single dominating firm.

almost zero probability of backward integration by the buyers to produce handmade cosmetics for themselves.

Buyer switching costs: A buyer is free to switch from a product of one brand (e.g. Our Natural Factory) to another brand (e.g. LUSH) and is constantly on shopping for favourable prices and products.

5.

Bargaining power of suppliers is low

Concentration of suppliers: While there are many sellers in the segment, suppliers’ power is low for there are also many localised producers all over Asia.

Buyer switching costs: As a customer is free to switch from a product of one brand (e.g.

Our Natural Factory) to another brand (e.g.

LUSH), the result is a low switching cost which increases the rivalry in the cosmetic industry.

Threat of forward integration: There is almost zero probability of forward integration by the suppliers to market and retail handmade cosmetics.

Degree of differentiation: In response to fragmentation of the segment, existing firms adopt product differentiation strategy to reduce rivalry.

Sellers switching costs: Moderate costs will have to be incurred in sourcing and training new localised producers outside Singapore upon switching.

FORCES FROM VERTICAL INTEGRATION 4. Bargaining power of buyers is moderate

Buyer switching costs: With insignificant sunk costs, a buyer can easily switch from one brand to another.

Concentration of buyers: While there are many sellers in the segment, buyers’ power is low for there are also many buyers of cosmetics.

Perceived level of product differentiation: High level of product differentiation in the

Threat of backward integration: There is

55

56

SWOT Strengths, weaknesses, opportunities and threats

S

O

Opportunities are leveraged upon in “Future Outlook”.

POSITIVE

Weaknesses are addressed in “Future Outlook”.

T

t Environmental management system yet to be certified by official standards HREATS (e.g. ISO14000 certification3) t Suppliers are not required to adhere to ecological standards t Business model easily replicated by potential competition (low barrier of entry) t Lack of control and little/no regulations over animal experimentation/testing in Singapore and Asia t Intense rivalry within the industry - consumers more inclined towards established brands (e.g. The Body Shop) for they have stronger brand equity and are associated with quality Threats are addressed in “Contingency Plans”.

NEGATIVE

EXTERNAL

t Increasing consumer knowledge and wealth, with heightened awareness of PPORTUNITIES and demand for natural, eco/sociofriendly products means potential brand expansion and extension (brand leverage) t Potentially viable expansions, in Asia especially, given the nature of localised formulations; powered by favourable changes in regulations in Asia (e.g. ASEAN Harmonised Cosmetics Regulatory Scheme2) t B2B sales opportunities t Improved SRM, CRM systems within organisation t Global volunteering to break into international market through positive publicity

W

t New venture; personnel without prior industrial experience EAKNESSES t Sales volume restricted by small scale production by hands; product line expansion restricted by ethos (non-animal tested products, ingredients sustainably procured) t Highly dependent on local producers from other parts of Asia (critical primary activity, operations, in the value chain) t Absence of business-to-business (B2B) sales network; and therefore lack of sophisticated customer relationship management system

INTERNAL

t Niche marketing / Product specialisation – appeal to customers TRENGTHS who are quality- and socially-conscious, through unique values we stand for t Fresh, natural ingredients recommended by WHO1 for medicinal values t Streamlined structure to enhance productivity via decentralised decision making process t Localised training ensures quality t Supplier relationship management (SRM) e-system which enables real-time sharing of information t Holistic approach to work culture for happy and productive workers t Comprehensive insurance and contingency plans to minimise loss should threats or risks materialise

57

WHO is the directing and coordinating authority for health within the United Nations system. It is responsible for providing leadership on global health matters, shaping the health research agenda, setting norms and standards, articulating evidence-based policy options, providing technical support to countries and monitoring and assessing health trends. (About Us, World health Organisation, http://www.who.int, 2012.)

1

The ASEAN Harmonized Cosmetic Regulatory Scheme is the agreed one standard scheme for regulating cosmetic products among ASEAN countries. It aims to remove technical barriers by harmonizing regulatory and technical requirements under ASEAN Cosmetics Directive and to govern the product safety. The participated 10 member countries to the scheme included Brunei Darussalam, Cambodia, Indonesia, Malaysia, Myanmar, Lao PDR, Philippines, Singapore, Thailand and Vietnam. This agreement is effective on 1 January, 2008.

(New ASEAN Harmonized Cosmetic Regulatory Scheme will be effective (17 September, 2007). SGS Hong Kong Limited, www.hk.sgs.com, 1997 to 2011).

2

Refer to Appendix C for information on ISO14000 certification.

3

O’RAN PTE LTD

58

P

PESTLE

E

At the start-up stage, O’ran is intending to focus solely on the Singapore market currently. Thus the PESTLE (political, economic, social, technological, legal and environmental) analysis will be in Singapore context.

E

P O’RAN

E

Singapore is a politically stable country with a freely convertible stable currency. such there is limited risk in setting-up PTE As LTD businesses in Singapore.

Singapore is also renowned for its extremely low corruption levels within the government and it system. Creating O’RAN PTE LTD a pro-business environment with favourable tax laws and funding offers for business ventures has consistently ranked Singapore as one of the best places to do business in the world1. It is also ranked as one of the most competitive nations2 and has several initiatives supportive of business start-ups.

There are also various government O’RAN PTE LTDschemes and assistance3 Small Medium Enterprises (SMEs) can tap on to increase productivity. They include, but are not limited to, Customer-Centric Initiative, Workplace Health Promotion Grant and Work-Life Works! Fund, which in their totality, could mean a handsome savings in startup expenses.

S

However, it may be noteworthy that with the rise in nation-wide literacy, coupled with the quick emergence of social media, the governing power

O’RAN PTE LTD

is now often questioned. Such distrust may be detrimental to economic growth and the country’s image beyond borders.

2012 Budget Statement4

L

S

The Deputy Prime Minister and Minister for Finance delivered his 2012 Budget Statement on 17 February 2012 and communicated a good number of initiatives by the Government which seek to help companies offset higher business costs. Specifically, he has announced a one-off on-taxable SME cash grant for Year of Assessment (YA) 2012, which may continue to next YAs. There is also the Productivity and Innovation Credit (PIC) Scheme which will be applicable in respect of O’ran’s costs of training employees to upgrade their skills and capabilities and research and development processes and tax deduction for expenditure incurred on renovation and refurbishment during qualifying period.

T

E

Economic O’RAN PTE LTD

Singapore adopts the free market system so that our industries can respond quickly to market signals

and adjust their strategies accordingly. It enjoys a per capita Gross Domestic Product (GDP) higher than that of most developed countries. Based on Diagram 1 below, the GDP in Singapore expanded 3.6 percent in the fourth quarter of 2011 over the same quarter, previous year5. Amidst subdued global economic conditions, Singapore economic growth for 2012 is expected to be between 1% to 3%.

A slow GDP growth suggests that O’ran has a lot to do to keep ahead of its competition as demand for body products may remain stagnant, if not diminish.

As far as possible, the government does not intervene in the economic decisions of firms, unless overriding social or political concerns prevail. This facilitates the ease of setting up businesses in Singapore and enables, with rare

exceptions, entrepreneurs to advance in any sector.

Apart from having the most competitive corporate tax regimes6 among the developed nations around the globe, Singapore has also endorsed a wide network of tax treaties with neighboring economies. Therefore it is only natural that Singapore with its pro business policies, world class infrastructure and competitive tax rates is an attractive businesses and investments hub viable for future expansions.

Despite the economic erosion of the Eurozone ending 2011, the Singapore Dollar sees strong growth and appreciated 2.24 percent against the US Dollar in December 20117 (see Diagram 2 below). During the12 months ending

February 2012, the Singapore Dollar exchange rate appreciated 1.46 percent against the US Dollar. This favourable growth can translate into a lower cost of sales for O’ran in the form of cheaper imports.

Singapore’s retail sales weathered the economic slowdown and grew 10.9% on-year in June 2011. Specifically, compared to June 2010, retailers of recreational goods,

1 Refer to Appendices D1 and D2 for regulatory flowchart in setting up a retail outlet and “Singapore Incorporation Handbook” by Janus Corporate Solutions dated 18 January 2012 respectively.

2 Refer to Appendix D3 for information on Singapore’s rankings.

According to SPRING Singapore, it dispensed some S$98 million to support 3,900 SMEs with 3,800 upgrading projects in 2011. When fully realised, these projects are expected to create 15,000 new jobs and contribute some S$4.4 billion in new business activity over the next 3 years. (SPRING, EDCs Supported 112,400 SMEs In 2011 (31 January 2012). EnterpriseOne, www. enterpriseone.gov.sg, 2012.)

3

Refer to Appendix D4 for relevant extracts of 2012 Budget Statement published by PricewaterhouseCoopers (PwC), Singapore.

4

5 Singapore GDP Annual Growth Rate. Trading Economics, www.tradingeconomics.com, 2012.

Refer to Appendix D5 for Singapore corporate tax rate, tax exemption scheme and other Singapore corporate tax information.

6

Diagram 1

7 USDSGD - Singapore Dollar Exchange rate. Trading Economics, www.tradingeconomics.com, 2012.

59

60

Diagram 2 department stores and medical goods and toiletries increased between 1.4% and 6.7%8.

The domestic retail market is sophisticated with various market segments, from those with high disposable incomes who seek premium and high-quality products, to mass-market consumers who are more price-sensitive. O’ran can take good position to target the niche segment which desires quality bath and body products handmade, and with a social agenda.

O’ran will probably not run the risk of higher wage demands from employees which will in turn raise recruitment costs since inflation is expected to be fairly low, from 2.5% to 3.5% in the early months of 2012.

There is a minimum interest rate of 5.75% levied on unsecured business loan tenure of four years and below extended by Spring

Singapore to SMEs. In order to grow a viable business, O’ran will ensure that its rate of return is enough to compensate.

O’RAN PTE LTD

S

Standard ISO 26000:2010 – Guidance on Social Responsibility, was launched on 15 March 2011 by SPRING Singapore9 at a seminar to introduce the new standard to the business community. As the world moves towards an age of radical transparency, organisations and stakeholders become increasingly aware of the need for socially and environmentally responsible behaviour. ISO 26000 is thus a timely and relevant guide for us to follow in order to understand what we need to do to operate in Singapore a socially responsible way.

A socially responsible corporate could in turn be an attractive employer in the labour market, increasing the availability and willingness of individuals to want to work with O’ran.

On the consumer level, research by Organic Monitor confirms that demand for natural and organic cosmetics is surging in Asia, including Singapore. Sustainability and eco-friendly are tipped to remain buzzwords in 2012. In fact, an emphasis on respecting the animals and planet will be supported by both ‘austerity chic’ and an environmentally friendly approach to beauty.

Social The awareness and implementation of Corporate Social Responsibility (CSR) in Singapore has been increasing over the past six years since the formation of the Singapore Compact, a national society promoting CSR in Singapore in 2005. The latest International

June Retail Sales Up 10.9% On-Year. EnterpriseOne, www.enterpriseone.gov.sg, 16 August 2011.

8

Introducing ISO 26000 – Guidance on Social Responsibility (16 March 2011). Green Business Times, www.greenbusinesstimes.com, 2008 - 2011.

9

According to Netpop, a research company, Chinese consumers rely heavily on social media in the decision making process. In addition to off-line sales, O’ran will focus on attaining good word-of-mouth reputations and see these reflected in sales figures.

With increasing life expectancy and low fertility rates, the proportion of residents aged 65 and above has continued to rise in Singapore. The proportion of residents aged 65 and above increased from 7.2% in 2000 to 9.3% in 201110 (see Diagram 3 below). A rising proportion of the aged within the population could translate into higher demand for natural products that heal and soothe and enhance well-being.

Technological

success as a business hub and a technology savvy country which uses technology to build efficiency. It is interesting to note that 77%11 of the population has access to broadband network and the country is O’RAN PTE LTD often described as a ‘plug and play’ nation.

Singapore (and Sweden) continue to top the rankings of The Global Information Technology Report 2010-2011 published by World Economic Forum.

T

Technology is instrumental in Singapore’s

O’ran can ride on the technological surge to reduce business costs, improve work and product quality and fuel innovation, thereby reaping bigger returns in the long run. Some of the initiatives or developments are elaborated in the sections below.

In early September 2010, internet service providers in Singapore rolled out the Next Generation Nationwide Broadband Network (Next Gen NBN) service plans12, which are supported by Singapore’s nation-wide ultrahigh speed fibre network. It offers pervasive, competitively priced broadband speeds of up to 1 Gbps at comparable prices to ADSL and cable connection. Deployed 75% nationwide as of August 2011, Next Gen NBN is on track to achieve its target of 95 per cent coverage by mid-2012.

The idea of having a “personal cloud” for storage was pervasive in 201113. The line has become blurred in terms of personal and business use of such technologies. People can

Population in Brief 2011 (September 2011). Statistics Singapore, www.singstat.gov.sg, 2007.

10

Internet Usage in Asia (March 2011). Internet World Stats, www.internetworldstats.com, 2001 - 2012.

11

Internet in Singapore (20 February 2012). Wikipedia, the free encyclopedia, en.wikipedia.org, 2012.

12

Diagram 3: Resident population by age groups (years), as of June (%)

13 10 Tech Trends Defining the Future of Small Business (27 January 2012). Yahoo! Singapore Finance, sg.finance. yahoo.com, 2012.

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now share critical files with their co-workers, collaborate on those files and have access to them from any device they happen to have with them.

From plug-ins to location-based marketing initiatives to the move to higher bandwidth, there’s change afoot in the world of social media. Social media has significantly changed the way people communicate. It is no longer a choice, but a necessity for businesses to incorporate social media in their Integrated Marketing Communication strategy to effectively market their products. It also makes honest business sense to do so, now that even 0.5 billion of the Chinese population of over 1.3 billion people are connected to the World Wide Web14.

Legal Singapore law, which O’RAN PTE LTD has its roots in English law, has now evolved into a distinctive jurisprudence.

Developments in Singapore law reflect an acute awareness of the need to recognise and accommodate current international business and commercial practices.

L

There are clear cut rules and regulations

pertaining to commerce, manpower and other business-related areas. There are clear-cut laws regarding working hours, minimum wages, industrial production and taxation, making it an attractive place to operate a business.

The result is an effective and efficient legal system which makes enforcing legal rights and obligations by local businesses inexpensive and straightforward, and ultimately reducing business transaction costs.

Cosmetics Regulatory Environment15 It is relatively easy to set up and manage a cosmetics retail business in Singapore; there is no need to apply for any product, manufacturer and import licences, according to the ASEAN Cosmetics Directive. Where there is a need to execute any administrative procedure before one set up a cosmetics retail store in Singapore, it is made convenient and simple. One example is the requirement to notify the Health Sciences Authority (HSA) before placing the product in the market via the HSA’s PRISM site.

Employment16 The absence of labour unrest in Singapore creates a conducive business environment for investors. Many employment regulations have set the tone and mood of calmness in this area making it a great pull-factor.

Singapore’s Free Trade Agreements (FTAs)17 Singapore has entered into various Free Trade

Agreements (FTAs) with its trading partners, bringing about some changes to the country’s legal environment.

Many of these changes will be of interest to people wanting to do business with or invest in Singapore. Singapore-based companies will enjoy exclusive benefits in the following areas: Trade in Goods, Trade in Services, Investment Protection and Facilitation, Government Procurement and Intellectual Property Rights (IPR) Protection.

Environment In Singapore, laws have been passed to ensure that corporations do not damage the environment or compromise the health of their workers and the public in the course of their activities. Above all, however, the environmental legal landscape in Singapore is not well-defined and has little practical values on local businesses. International frameworks, such as International Organisation for Standardisation (ISO), may therefore be useful to guide an eco- or socio-responsible business like O’ran.

14

Refer to Appendix D6 for connectivity figures for Asia.

Refer to Appendix D7 for information on the requirement by HSA. 15

Refer to Appendix D8 for information on employment regulations in Singapore.

16

17

Refer to Appendix D9 for information on FTAs.

E O’RAN PTE LTD

Environmental Two major environmental factors are the weather and climate change. Owing to its geographic location and maritime exposure, Singapore experiences tropical rainforest climate, with no true distinct seasons.

Its climate is characterised by uniform temperature and pressure, high humidity and abundant rainfall. The absence of major climate changes provides a low-risk harbour for businesses to thrive without the need for heavy insurances against and remedies for natural disasters like earthquakes and volcanos.

The worldwide climate crises is a good opportunity to anticipate the need for contingency measures to guard against potential environmental risks beyond Singapore, especially in Asia, where our producers are located.

The growing desire to protect the environment has an escalating impact, particularly in recent years, on many industries such as the travel and transportation industries (for example,

more taxes being placed on air travel and the success of hybrid cars), The general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities, which is to the advantage of O’ran.

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Mark Strate

keting egies

66

Marketing Strategies (4Ps) We summarise O’ran’s marketing mix (product, pricing, promotion (IMC) and place) in relation to the early stages of a typical product life cycle (i.e. first five years) below.

SALES

INTRODUCTION

GROWTH

MATURITY

DECLINE

SALES

INTRODUCTION

GROWTH

MATURITY

DECLINE

TIME

YEAR

1

2 to 3

4 to 5

YEARS IN PROFITS BUSINESS

Loss

Average 19% growth

Average 16% growth

MARKETING OBJECTIVES YEAR

Create product awareness 1 and trial

YEARS IN PROFITS BUSINESS

Loss

MARKETING OBJECTIVES

Create product awareness and trial

TIME Maximise market share 2 to 3 4 to 5 Average 19% growth

Average 16% growth

Maximise market share

STRATEGIES

67

PRODUCT STRENGTHS

Basic bath and body products

Expands product line’s depth (variety)

PRICING

Premium pricing (S$8 to S$50)

Premium pricing (S$8 to S$50)

IMC

t Website, blog t Social Media t Webisodes, podcasts t Mobile application t Direct mailers t Train platform screen doors t External an din-store shelf signs t Samples t Coupons t Loyalty programmes t Brand story t Team bonding activities

STRENGTHS

PRICING

t Flagship store t On-line store

t Website, blog t Social Media t Webisodes, podcasts t Mobile application t Direct mailers t Train platform screen doors t External an din-store shelf signs t Samples t Coupons t Loyalty programmes t Brand story t Team bonding activities t Magazines t Milestone events

t Website, blog t Social Media t Webisodes, podcasts t Mobile application t Direct mailers t Train platform screen doors t External an din-store shelf signs t Samples t Coupons t Loyalty programmes t Brand story t Team bonding activities t Magazines t Milestone events t Seminars t Contests t Sponsorships

t Flagship store t On-line store

68

4Ps - Product O’ran’s unique selling point is powered by product differentiation strategy.

O’ran produces and sells a variety of bath and body products handmade from original Asian formulations of exoticism, including face masks, soap bars, hand and body lotions and hair treatments. We use fresh, natural ingredients ethically and sustainably procured from parts of Asia, essential oils, and synthetic ingredients in all products produced.

The natural ingredients include herbs, spices, flowers, woods and fruits which are recommended by World Health Organisation (WHO) for their medicinal values.

Every quarter, O’ran introduces one new product range to rejuvenate the product line’s depth. Amongst a commendable variety, an introductory star range of products is Maruthuva Malai (“Malai” for short), which also means “the abode of medicinal herbs” and is a hill (also known as Marunthuvazh Malai) in the Kanyakumari District of Tamil Nadu state, India. The Malai range incorporates a chili powder indigenous to the hill as the base. The creamy foam skincare lineup is soft and gentle on the skin. Key ingredients include mineral-abundant mountain spring water, and moisture-rich Himalayan honey which we source from Kanyakumari.

The hot processing method allows for fresh foaming products, and the

Himalayan organic essential oils will effect a refreshing aroma.

In order to stay in touch with our fresh standard, O’ran store does not sell products older than four months and most products have a total shelf life of approximately 14 months.

At O’ran, most products are sold by weight in-store because we believe that each individual has his or her own unique needs and preferences.

They come in no, if not little, packaging at all; about 70% of our products are bare or naked, including shampoo bars, massage bars, body butters and solid facial cleansers. When we cannot eliminate packaging completely, O’ran looks for the simplest packaging to do the job and use post-consumer recycled, recyclable, biodegradable or fair trade materials whenever possible. Finally, we dispatch our goods by sea to the extent possible.

O’ran intends to register our products for Singapore Green Labelling Scheme Certification1.

1 Refer to Appendix E for for a copy of Singapore Green Labelling Scheme Certification Guide (extracts).

4Ps - Pricing Strategy

69

O’ran serves the niche market segments, and focuses more on selling and delivering extra value to our customers, less on what the competition does or does not do.

To grow favorable perceptions of our products in the market (refer to “Brand Positioning” in “Brand DNA”), we adopt a premium pricing strategy. A high price is an indication of good quality, which we take pride in delivering through the handmade process.

The survey outcomes are supportive of the premium pricing strategy the price sensitivity of our target groups appears fairly low as 41.7% of our respondents feel that being cheap is not an important feature of our offerings.

A high price is also a sign of self-worth and authenticates a buyer’s success and status (as a member of an exclusive group for example).

It also acts as an avenue for one to support our cause in helping disadvantaged communities improve their livelihood.

PRICE RANGE (S$)

SOAP BARS

8 - 10 per 50g

FACE MASKS

15 - 25 per 100ml

HAND/FEET LOTION

10 - 15 per 50ml

BODY LOTION

20 - 30 per 100ml

HAIR TREATMENTS

20 - 50 per 100g

A sample of our product price listing is as follows:

LIP BALM

8 - 10 per 10ml

BODY DEODORANT

8 - 10 per 20g

4Ps - Promotion Based on the hierarchy of marketing communications effects (below), we devise O’ran’s consumer-centric Integrated Marketing Communications (IMC) plan.

AWARENESS

ATTITUDES

UNAWARENESS

EXPECTATIONS

TRIAL ATTITUDE REINFORCEMENT

BELIEF REINFORCEMENT BELIEFS

B LO RAN YA D LT Y

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O’ran’s IMC plan seeks to meet the following objectives as a new start-up: 1.

Facilitate successful introduction of new O’ran brand (“unawareness”) 2. Create O’ran’s brand “awareness” 3. Enhance O’ran’s brand image by creating “expectations” and encouraging “trial” 4. Increase sales subsequent to “trial” Our IMC plan leverages on increasing connectivity1 to contact customers and prospects using touch points that reach them where, when and how they wish to be contacted. Traditional mass media advertising strategies are no longer always the most effective or cost-efficient avenues for such.

Therefore, our IMC plan focuses on mobile and on-line advertising; magazines and other print media are only secondary. On-line advertising is also borderless and can reach consumers outside Singapore, drawing them to our retail store when they visit Orchard Ion as a tourist destination. It is also a good platform for future expansion beyond Singapore borders.

DIRECT RESPONSE AND INTERACTIVE ADVERTISING

Great Singapore Sales from May to July) which include coupons, free memberships and invitations to the official opening of our flagship store. Given a small budget for marketing the new brand, O’ran also uses bi-monthly electronic direct mailers to create brand buzz.

We recruit buyers of O’ran’s products whom we invite to pass along a creative commercial message for O’ran, which includes a link to oran.com to at least 15 other people.

Interactive Advertising Company’s website Oran.com will represent a venue for generating and transacting exchanges between ourselves and our customers. it is the centerpeice of O’ran’s online advertising efforts, with other advertising formats (see below) which serve to drive traffic to oran.com. The website will focus on easy navigation and sophisticated minimalistic design. It provides a reasonable amount of useful information, e.g. O’ran’s brand story, ethos, product offerings, production process, and a highly-secured shopping platform for online purchase.

Webisodes

Direct mail Literature An aggressive direct mail literature initiative will be rolled out to as part of our viral marketing efforts both on- and off-line.

Residents of defined zones will receive off-line direct mailers (especially during the annual

Webisodes are video advertisements that run as a series of episodes on Web sites which may offer free hosting (e.g. YouTube, Vimeo, our Facebook Page and Bliptv.com). The first set of O’ran’s webisodes come in three episodes, each a minute to two in length, for

introducing the brand to the bath and body products market. They are embeddable to get the word out to such as the blogosphere and are slated to run one after another over eightweek intervals. Subsequently, they will still be available on the Web for viewing.

Blogs, podcasts and social networks They are the most explosive outbreaks in the information world, since the Internet itself.

Oranblog.com is a platform for communicating directly with prospective or existing customers, who in turn can become active communicators through their own posted comments. Podcasts are one contribution of oranblog.com and the first series is called “The O’ran Way” which provides useful information on valuable herbs and spices. To learn more about our consumers and their needs and habits, we also create two social networking accounts on Facebook and Twitter that enable consumers to learn from one another and to share their experiences.

Smartphone application To complete our interactive advertising campaign on-line, we commission an application developer to come up with a basic application for O’ran which will gradually operate on a more sophisticated platform to incorporate a wider range of functions. The

1

Refer to Appendix D6 for connectivity figures for Asia.

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72

basic application automatically feeds users with notifications of latest product range, promotions, news and campaigns for causes.

It also includes a comprehensive list of ingredients that we use in our products, detailing their sources, characteristics, benefits and medicinal values. It also serves as a member’s portal so that customers within our loyalty network will be able to access their benefits, rebates, points etc on the go.

EVENT MARKETING AND SPONSORSHIPS

producers as our suppliers. Subsequently, we will tie up with relevant organisations, such as Singapore Compact, Society for the Prevention of Cruelty to Animals (SPCA), Agri-Food & Veterinary Authority of Singapore (AVA), CARE Network to campaign for social causes, create awareness and solicit donations. One notable plan will be to contribute, as a sponsor, as a partner to World Wide Fund for Nature (WWF) or as a carnival vendor of the annual Earth Hour Singapore in April each year.

TRADITIONAL MASS MEDIA ADVERTISING

Seminars and Contests Hosting To encourage participation from customers, their friends and family, we host occasional workshops and seminars (e.g. motivational seminars, informative talks, beauty roundtable challenges) in conjunction with such as social campaigns, milestone events and new product launches. Some workshops and seminars also form a fringe source of revenue for O’ran.

Sponsorship of Causes In an effort to advocate social responsibility and fair trading, we undertake sponsorship of causes in smaller scales as a start-up to build the desired brand image and values. One of the first initiatives involves sending our operations team to conduct free skill development workshops and trainings to identified parts of Asia where we potentially engage local

Magazines We place advertisements in magazines whose objectives and values are parallel to O’ran’s.

They may include Reader’s Digest, LiveWell and Healthy Times. We typically advertise in magazines in February, May and December issues which are published in conjunction with celebrations such as Valentine’s Day, Mother’s Day and Christmas Day. PLACE ADVERTISING Posters and Transit Ads To launch the O’ran brand with a bang, we will place transit advertisements in January 2013 to promote the brand at public areas such as train platforms and station lobbies to leverage on heavy human traffic. The next campaign

will be in December to target the year-end season crowd. Each time, they will occupy the advertisement space for an average of four weeks.

STORE SIGNAGE AND POINT-OF-PURCHASE ADVERTISING External and In-Store Shelf Signs Creative and relevant signs are strategically located in- and external store at Orchard Ion to enhance and complete the O’ran in-store experience. In addition to highlighting the latest product launches and features so that our customers feel good about not missing out any, they also provide our customers with a seamless shopping process by telling them what a product is made of and when it is made and no longer good for use. We also adopt point-of-purchase advertising for popular products among our customers and employees, membership and latest event.

CONSUMER-ORIENTED PROMOTIONS Samples and Coupons Free samples and coupons are particularly effective devices for getting consumers to try the new brand, O’ran. This encourages trial purchases by influencing consumers to switch from brands that they currently are purchasing to O’ran’s products. In-store sampling also enhances store experience.

Loyalty Programme O’ran offers a unique lifetime membership for a nominal fee that rewards our loyal customers with discounts, free gifts and perks and privileges. For a one-time membership fee of S$10, one will also receive the following benefits: • •

• •

•

•

10% off all purchases, subject to prevailing terms and conditions Birthday month special – a chance to win a specially formulated soap based on personal preference of ingredients or flavours Dedicated on-line portal and individual account Redemption of one free product up to value of $30, subject to spendings at O’ran Invitations to exclusive events (e.g. product launches, workshops) and special rates for friends or family members Fresh news and updates (e.g. promotions)

Price-off packs O’ran sells most of our products by weight (like a grocery store) but there are always prepacked products for the economical shoppers.

We can afford to offer them at a slightly lower price because the buying process is a quicker and effortless one.

PUBLIC RELATIONS AND PUBLICITY

To create awareness and audience participation, we organise milestone events which may be a charity run or an in-store party (e.g. O’ran’s birthday). On a regular basis, we endeavour to show appreciation to employees or partners (suppliers) who work hard to make our business possible by highlighting outstanding employee, supplie or product of the quarter in-store, on- and off-line. A story appeals to one on an emotional level; O’ran has a brand story (e.g. generation of the brand), like many other distinguishable brands and on a regular basis, we solicit contributions from employees or customers which we drip-feed to local press. We value our stakeholders and engage them through team-bonding activities or simple meals inside or outside working hours.

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74

Diagram: IMC Plan - Year 1

JAN INTERACTIVE ADVERTISING

Company Website Blog (oranblog.com) Facebook, Twitter Webisodes O’ran Mobile Application

DIRECT RESPONSE

Direct Mailers EDMs

PLACE ADVERTISING

STORE SIGNAGE AND POINT-OF-PURCHASE ADVERTISING CONSUMER-ORIENTED PROMOTIONS

Train Platform Screen Doors (Orchard Station) External and In-Store Shelf Signs

Samples and Coupons Loyalty Program Price-Off Packs

PUBLIC RELATIONS AND PUBLICITY

Best Employee / Producer / Product Recognition Brand Story Team Bonding Activities

FEB

MAR

APR

MAY

75 JUN

JUL

AUG

SEP

OCT

NOV

DEC

76

Diagram: IMC Plan - Years 2 and 3

JAN INTERACTIVE ADVERTISING

Company Website Blog (oranblog.com) Facebook, Twitter Webisodes, Podcasts O’ran Mobile Application

DIRECT RESPONSE

Direct Mailers EDMs

PLACE ADVERTISING

Train Platform Screen Doors (Orchard Station)

TRADITIONAL MASS MEDIA ADVERTISING

Magazines

STORE SIGNAGE AND POINT-OF-PURCHASE ADVERTISING

External and In-Store Shelf Signs

CONSUMER-ORIENTED PROMOTIONS PUBLIC RELATIONS AND PUBLICITY

Refer to Year 1

Best Employee / Producer / Product Recognition Brand Story Team Bonding Activities Milestone Events

FEB

MAR

APR

MAY

77 JUN

JUL

AUG

SEP

OCT

NOV

DEC

78

Diagram: IMC Plan - Years 4 and 5

JAN INTERACTIVE ADVERTISING DIRECT RESPONSE

Refer to Years 2 and 3

Direct Mailers EDMs

PLACE ADVERTISING

EVENT MARKETING AND SPONSORSHIPS

Train Platform Screen Doors (Orchard Station)

Seminars Contests Sponsorships

TRADITIONAL MASS MEDIA ADVERTISING

Magazines

STORE SIGNAGE AND POINT-OF-PURCHASE ADVERTISING

External and In-Store Shelf Signs

CONSUMER-ORIENTED PROMOTIONS PUBLIC RELATIONS AND PUBLICITY

Refer to Year 1

Best Employee / Producer / Product Recognition Brand Story Team Bonding Activities Milestone Events Article Contributions

FEB

MAR

APR

MAY

79 JUN

JUL

AUG

SEP

OCT

NOV

DEC

80

Diagram: IMC Budget (Estimates)1 Based on our Media Plan, we project O’ran’s marketing budget for the first five years of operation.

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

3,550

2,550

2,550

2,550

2,550

DIRECT RESPONSE (E.G. MAILERS)

30,000

10,000

10,000

10,000

10,000

PLACE ADVERTISING (E.G. TRAINS)

110,400

55,200

55,200

55,200

55,200

EVENT MARKETING, SPONSORSHIPS

0

0

0

3,800

3,800

MASS MEDIA (E.G. MAGAZINES)

0

6,000

6,000

6,000

6,000

EXTERNAL/IN-STORE SIGNAGES

2,000

2,000

2,000

2,000

2,000

OTHERS (E.G. PUBLIC RELATIONS)

830

2,890

2,890

3,070

3,070

TOTAL ANNUAL MARKETING EXPENSES

146,780

78,640

82,620

82,620

INTERACTIVE (E.G. BLOG, APP)

With the exception of Year 1, O’ran allocates about 4% to 5% of our projected annual sales revenue to the marketing budget for the

78,640

corresponding year. The high marketing budget for Year 1 is necessary to introduce the O’ran brand and create awareness in the market.

Refer to Appendix F for a breakdown of the marketing budget (estimates).

1

4Ps - Place

81

O’ran will sell its products to customers directly over the counter at its flagship retail store at Orchard Ion (which is also home to various flagship stores) to retain absolute control over how, to whom and at what price our products are sold as part of our effort to effectively build a distinguishable brand identity and equity. Also, we are able to reduce costs which would otherwise be incurred as intermediary costs (e.g. mark up or commission) if we were to sell our products via other distribution channels. At the same time, we recognise there is a shift in buyers’ behaviour to online shopping so we also make our products available for purchase over the Internet via our official website, which will subsequently be dispatched locally or internationally via snail mail or sea respectively.

O’ran does not, however, preclude the possibilities exclusive distribution (refer to “Future Outlook”).

Operation Manag

n & Labour gement

Operation Management In an average business cycle, O’ran assumes the following operational procedures: PRODUCTS RETURN SUPPLIERS (PRODUCERS) TRAINING AND SUPERVISION

PRODUCTION SCHEDULING

QUALITY CONTROL (PRODUCTION)

WAREHOUSING AND STORAGE

ORAN.COM O’RAN (RETAIL)

INVENTORY UPDATE

PACKAGING AND DELIVERY

CONSUMER IS BOSS

STORE MANAGEMENT

SALES SUPPORT MANAGEMENT

AF T SU ERPP SA OR LE T S

84

END-CONSUMERS

1 Training and Supervision

in Singapore.

As mentioned in “Labour Needs”, our Operation Master(s) (OM) and/or support staff will spend between three to five months to train and supervise our suppliers, assisted by a local representative whom we engage.

During the out station, expenses incurred will be reimbursed and monthly allowances will be disbursed to the OM and/or support staff in their monthly pay checks.

4 Warehousing and Storage

2 Production Scheduling We will negotiate with our suppliers, through their local representatives, and mutually commit to an agreed production schedule, which is logged into our supplier relationship management (SRM) system (refer to “SRM”).

Subsequent to the initial production of a new product range (launched every quarter), each batch production is scheduled to complete before the end of every two months, to meet our inventory demand without compromising product freshness. Correspondingly, payment (cost plus markup) is made to the suppliers within thirty days upon receipt of goods.

3 Quality Control (Production) The production process will be closely controlled and monitored by the OM and/ or support staff during their out station. Any deviation from prescribed standards will be promptly rectified by the Operation team to minimise product defects before they reach us

Immediately upon receipt of new stocks from third party logistics service provider, they will be checked, by our retail support, for quality, unusual appearance, texture and smell to ensure freshness. The spoilt ones will be discarded and/or returned accordingly.

The operation function will feedback to the suppliers to negotiate refunds (supported by the finance function) or makeup orders within two weeks upon receipt, and ensure that subsequent batches will comply with prescribed standards. The remaining ones will then sorted, repackaged and kept in a cool, dry place in the warehouse for storage up to three months before sales by our retail support.

simplest packaging sufficient for the job and use post-consumer recycled, recyclable and biodegradable materials whenever possible.

We also encourage and incentivise (e.g. rebates) our customers to bring their own bags to pack their purchases.

On-line If any customer orders our products on oran. com, we pack our products in accordance with our eco-guidelines before they are dispatched immediately. Our retail support coordinates Oran’s commissioned logistics service provider to do so via sea or land mail for international and or local purchases respectively. It usually takes no more than ten working days for the courier to reach its destination, in the case of international shipping.

5 Inventory Update

7 Sales Support Management

The SRM system will be updated accordingly, by our retail support, when new stocks arrive to reflect the latest inventory level. Where the new stocks are from a new product range, the Sales and Marketing team will also update catalogues, website and inform our customers by e-mail.

The Sales Associates (SAs) will work on shifts according to planned work schedules to assist the Sales Lead (SL), who works longer hours.

Typically each SA will be scheduled for a six to eight-hour work slot to cater to traffic flow. Part timers are also contracted to provide support to the SL during peak periods (e.g. festive, Great Singapore Sales). They are paid their salaries on 27th of each month, or on an earlier work day, where 27th falls on a Sunday or public holiday through electronic banking.

6 Packaging and Delivery In-store (retail) The products are weighed and sold bare (no packaging) for each sale. When we cannot eliminate packaging completely, we go for the

8 Store Management Our retail support is a key driver to the

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86

addictive in-store experience that O’ran offers to our customers. Our shop is managed, by the retail support, according to standards and guidelines; products are placed neatly and correctly, well-labelled and superior quality service is upheld. Products older than four months are discarded and not sold. Products sold, if found defective, are non-refundable but exchangeable within seven days from date of purchase on a valid receipt.

9 Consumer Is Boss Everyone in O’ran - from the Managing Director down - would spend time shopping with consumers, or working alongside consumers. Each would describe invaluable insights he or she personally obtained by spending time in the market. This is in addition to regularly administered quantitative surveys to assess the quality of our product and packaging. Observations can drive inspirations for product innovation at O’ran. The people of O’ran, despite busy schedule, spend time in the market so that we can know the customer better than they know themselves.

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88

We illustrate a standard annual operational cycle, from training the suppliers to storage and inventory update, in the table which follows:

FUNCTION Ops TRAINING AND SUPERVISION BATCH PRODUCTION (NEW PRODUCT) BATCH PRODUCTION PAYMENT TO SUPPLIERS WAREHOUSING AND STORAGE PRODUCTS REFUND/RETURN INVENTORY UPDATE

S&M

WEEK Fin

1-15

16

17

18

19

20

21

22

23

24

25

26

27

28

Legend

89

Ops Operations S&M Sales & Marketing Fin Finance

WEEK 29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

90

Supplier Relationship Management (SRM) We build a dependable, agile and transparent supply network supported by TXT e-solutions which is equipped with advanced SRM capabilities.

Measure Performances • •

Establish KPIs Track suppliers’ performance overtime STORE

SUPPLIERS

SRM LOGISTICS COMPANY

Execute and Collaborate • •

Automate generation of production orders Issue delivery notes and transport orders

The suppliers group is a key driver to the successful operations of O’ran, which is currently in the business-to-consumer (B2C) retail industry. We build a dependable, agile and transparent supply network supported

by TXT e-solutions which is equipped with advanced SRM capabilities. Real-time information sharing is made available through the web access. This streamlines and makes more effective the processes between O’ran and its suppliers by means of ongoing cost reduction and continual improvement in execution and collaboration and performance evaluation. Although it involves investing some money in developing the SRM system, it is expected to drive extensive procurement benefits and O’ran’s return on investment in the long run.1 Execute and Collaborate With the e-solutions, O’ran manages all aspects of SRM in one single web environment - procurement and order management down to event and performance management.

To enhance the efficiency of processes associated with acquiring goods and services and managing inventory, our SRM system automates the generation of production orders to the corresponding local representative every two months, or when the inventory level falls below a prescribed volume (e.g. three months’ worth of stocks). Upon filling the orders, the representative sends a notification to O’ran,

which is then logged into the SRM system and subsequently triggers the issuance of delivery notes and transport orders to our logistics service providers. At the same time, payments to the suppliers (and representatives) are also processed by the Finance division.

Measure Performances At the same time, our SRM system complements O’ran’s strategy, structure and systems to position for sustainable growth.

We set clear goals and objectives and also put execution measures in place to evaluate suppliers’ performance against plan by generating performance reports on a regular basis. Based on review of the performance reports by supplier-facing staff and the Operation General Manager, O’ran can better manage the expectations of our suppliers, enhance quality of supplier relationships and, therefore the production process. Product innovation is also encouraged through incentives (e.g. intrinsic - interest in mastering a specific skill, recognition; and extrinsic repeated orders and collaborations and better compensation).

The SRM system also meets the following objectives: • •

Security of supply and leverage through negotiation of better deals from suppliers Compliance with contracts and regulations

Such mutual commitment and control over the process enable us to raise our productivity per supplier.

The above SRM system reduces risks of and facilitates fast responsiveness to possible disruptions to the supply chain through event management. In subsequent years, it will be enhanced through supplier self-help system to further streamline the supply processes.

A Supplier Relationship Management performance study indicates that SRM is driving extensive procurement benefits for both Top Performers and Peer organizations. Top Performers report annual SRM benefits of 3.05% on their spend. Over 25% of reported Top Performer benefits come in the form of growth (Innovation and new business generation/revenue uplift).

Peer organizations, typically not as far along in their SRM programs, report capturing SRM benefits at an annual rate of 1.78%, less than half that of Top Performers.

(Supplier Relationship Management -- Performance Study Findings (15 December 2011). Spend Matters, www.spendmatters.com, 2004 - 2012).

1

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Labour Needs Besides the key personnel elaborated in the section above, O’ran also expects to meet the following staffing needs as at January 2013:

OPERATION MASTER

Number One

Responsibilities

Remuneration

As an Operation Master (OM), he or she provides meaningful support to the Operation General Manager (OGM) in researching and developing new formulations for our bath and body products, therefore enabling the introduction of at least one new product range every quarter. During the process, he or she will be required to travel to other parts of Asia (e.g.

India, Cambodia, Myanmar) to liaise with local producers or farmers (through their local representatives). Upon approval of new formulations, the OM takes an average of three to five months to train and supervise the local producers in the production process. He or she is also expected to manage the relations with and expectations of the representatives and producers.

S$2,000 per month (excluding outpost benefits and variable bonuses)

The OM executes instructions directly from and reports to the OGM. As part of our effort in continual improvement, he or she is tasked to review current product offerings regularly in order to meet the changing needs of our customers. He or she may also be required to train contract operation support in the above areas as well.

RETAIL SALES LEAD

Responsibilities As a Retail Sales Lead (RSL) of O’ran, he or she serves as an extension of the Sales and Marketing General Manager (SMGM) in terms of monitoring and supervision of general activities. He or she carry out tasks and implements orders directly from the SMGM. He or she also evaluates Sales Associates’ performances, makes regular reports to be reviewed and submitted to the SMGM. An RSL also interacts with customers at the frontline. Specifically, he or she frequently acts as beauty experts or consultants for customers, providing tips and passing on knowledge of products and their techniques. He or she may also be tasked to train retail sales associates

in these areas as well.

Number One Remuneration S$1,550 per month (excluding sales commission and variable bonuses)

In addition to assisting customers and generating sales, the job scope of an RSA comprises carrying out sales checks, receiving cash, cheques, debit and credit card payments, bagging purchases and giving receipts. He or she may be required to open and close cash registers and may be held responsible for the contents of the register.

Number

RETAIL SALES ASSOCIATE

Responsibilities A Retail Sales Associate (RSA) is a company employee assigned to minor administrative tasks in the store. He or she is an assistant to an RSL, tasked to open or close the store, or help in maintaining security of the merchandise.

An RSA is responsible for generating sales by providing outstanding customer service.

Greeting the customer, attending to his needs and building a loyal customer base are some of the duties of an RSA. The RSA is expected to be aware of any promotional offers and encourage the customer to avail discounts on the products promoted by the store. The RSA is also expected to be aware of the merchandise available in the shop and ensure its availability and in-store display. It is expected of the RSA to assist the customer by providing tips on the kind of products that would be most suitable.

One Remuneration •

Full time basis - S$1,200 per month (excluding sales commission and variable bonuses)

•

Part time basis - S$6.50 per hour (no variable bonuses)

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Insurance Needs Business risks are inevitable but with a sound risk management protocol, O’ran can avoid them, if not minimise losses in times of troubles. We highlight two key potential general risks which we insure against.

TYPES OF INSURANCE

General Liability

Work Injury Compensation Insurance SFRVJSFNFOU CZ .0. VOEFS UIF 8PSL *OKVSZ $PNQFOTBUJPO "DU 8*$"

INSURED PERSON(S)

$PNQBOZ

t 4FDSFUBSZ "DDPVOUT &YFDVUJWF t 0QFSBUJPO .BTUFS t 4BMFT -FBE t 4BMFT "TTPDJBUF P/s: Mandatory for non-manual employees earning $1,600 or less a month under WICA

POTENTIAL RISK

-FHBM IBTTMFT EVF UP BDDJEFOU JOKVSJFT BOE DMBJNT PG OFHMJHFODF

-FHBM MJBCJMJUZ UPXBSET PVS FNQMPZFFT JG UIFZ TVGGFS EFBUI PS JOKVSJFT CZ BDDJEFOU BSJTJOH PVU PG BOE JO UIF DPVSTF PG FNQMPZNFOU VOEFS UIF 8*$"

LEVEL OF RISK

.PEFSBUF UP IJHI

-PX

SUM INSURED / COMPENSATION BENEFITS1

6Q UP 4

t .FEJDBM MFBWF XBHFT PG VQ UP EBZT t .FEJDBM FYQFOTFT VQ UP 4 QFS BDDJEFOU QFS FNQMPZFF t -VNQ TVN DPNQFOTBUJPO GPS QFSNBOFOU JODBQBDJUZ PS EFBUI VQ UP 4

ANNUAL PREMIUM

4

6Q UP 4 2

95

Refer to Appendix G1 for information on compensation benefits under WICA (extract).

1

2 Refer to Appendix G2 for five-year cost estimates in respect of work injury compensation insurance.

96

Labour Cost Estimates We summarise O’ran’s labour costs estimates1 in the table that follows. In perusing the information, note that the Managing Director and General Managers (Hui Shan, Clara and Nicole) are also shareholders of O’ran Pte Ltd. They receive non-taxable dividends as compensation (instead of salaries) for the responsibilities they discharge in the operations of O’ran.

HEADCOUNT ANNUAL LABOUR COST (S$)

1

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

10

12

Refer to Appendix H1 for detailed calculation in respect of O’ran’s labour cost estimates.

Labour Policy

97

O’ran Pte Ltd has formulated our Labour Policy in accordance to our Ethos and based on our commitment made in the Employer’s Pledge on Fair Employment Practices1. We are committed to uphold human rights of employees, and to treat them with dignity and respect as understood by the international community.

Therefore, we are committed to establish and comply with the Labour Policy, as follow: •

To exercise freely chosen employment and prohibit the use of forced, bonded or indentured labour

•

To prohibit the use of child labour in any processes in our company

•

To abide to the lawful working hours, holidays/leaves, wages and benefits accorded to our employees

•

To prohibit inhumane treatment, including any sexual harassment, sexual abuse, corporal punishment, mental or physical coercion or verbal abuse of employees

•

To practice non discrimination measures in recruiting, selecting, promoting and training of employees. At such, all employees recruited, selected, promoted and been trained are based on merit of performance, such as skills, experience and ability. It is regardless of race, colour, age, gender, sexual orientation, ethnicity, disability, pregnancy, religion, political affiliation, union membership or marital status

•

To respect the rights of employees to associate freely, join/ or not join unions, seek representation in accordance with local laws.

We will provide employees with opportunities and free access to communicate openly with management regarding working conditions without fear of reprisal, intimidation or harassment.

•

To practice continuous improvement in our management of labour issues

In addition to the above, we will act in accordance to any other regulating laws, common sense, ethical principles and moral principles, with sincerity and good faith, to make the right decision.

Refer to Appendix H2 for a sample of the Employer’s Pledge on Fair Employment Practices.

1

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O’ran Work Culture At O’ran we take pride in striving to be the best at what we do. There is, however, always room for fun, because we believe happy workers are productive.

SELF-ACTUALISATION

ESTEEM LOVE/BELONGING

SAFETY PHYSIOLOGICAL

.PSBMJUZ DSFBUJWJUZ TQPOUBOFJUZ QSPCMFN TPMWJOH MBDL PG QSFKVEJDF BDDFQUBODF PG GBDUT 4FMG FTUFFN DPOGJEFODF BDIJFWFNFOU SFTQFDU PG PUIFST SFTQFDU CZ PUIFST GSJFOETIJQ GBNJMZ TFYVBM JOUJNBDZ

TFDVSJUZ PG CPEZ FNQMPZNFOU SFTPVSDFT NPSBMJUZ UIF GBNJMZ IFBMUI QSPQFSUZ CSFBUIJOH GPPE XBUFS TFY TMFFQ IPNFPTUBTJT FYDSFUJPO

Diagram: Maslow’s Hierarchy of Needs

Working for O’ran is both demanding and challenging. We are energetic and resultorientated people who pursue our goals. But there is also room for fun and we encourage our employees to find a balance between work, the social aspects of their jobs and their professional development. At O’ran, we also give all our employees great responsibility and a reason to be proud of our company and our products.

In developing our work atmosphere and culture, we draw significant reference to the implications of Maslow’s hierarchy of needs which facilitate the evaluation of the different needs, values, drives and priorities of our workforce.

SAFETY

Welfare and Training Programmes O’ran shares and cares about its employees’ concerns over their health, children’s education and post-retirement life and helps them prepare for their future in order to enhance employee satisfaction and provide better working environments. In addition to the basic legal welfare programs such as Work Injury Compensation Insurance, we also provide medical subsidies and gym membership. In addition, O’ran provides a comprehensive “Learning and Education” programme for skills enhancement and personal development.

LOVE / BELONGING Adopting a Flexible Time Programme O’ran adopts a “Flexible Time” test program to maximise the creativity of its employees. This test is the expression of our determination to nurture a creativity-oriented corporate culture.

Under the program, employees are empowered to flexibly manage their office hours as long as they work a total of ten hours each day. If this test proves successful, we will continue this shift away from traditional time managementbased corporate culture.

Work-Life Balance Because social norms have changed, an increasing number of female workers are participating in economic activities and retaining high potential employees has become the key to successful business operations.

Happiness has become the overarching value of employees’ quality life, giving rise to greater social interest in balancing work and life. Therefore, O’ran also supports and encourages the employees to balance their work and life. In case anyone works overtime, their supervisor and the employee are notified to insure they comply with the legal overtime work requirements. For the creativity of the employees, O’ran also provides vacations for self-management and other vacation programs including family theme tour packages.

ESTEEM Creating and Nurturing Charitable Culture to Grow its Vision O’ran aspires to be an exemplary persona for its employees and other stakeholders and encourages charitable undertakings by executing various initiatives. In one notable scheme, O’ran’s employees are awarded paid time-off to do charity work of their choice.

Encouraging Suggestions for Work Process Improvement O’ran implements various programs to support employees’ suggestions so that ideas can bear fruit. We offer incentives for new product formulations (successful or not), provide a knowledge management system to share expertise and knowledge amongst employees, and support community activities.

We also offer incentives for idea suggestions to encourage our employees to proactively participate in knowledge sharing within O’ran.

SELF-ACTUALISATION

A Fun Place to Work and Play Drop the dress code Dress codes are just silly. We only require our employees to dress decent when interfacing

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with clients and consider every other working hour a casual dress time.

Encourage sidecar projects O’ran encourages the product development division to spend part of their work day on sidecar projects, fun and creative projects with no guidelines or restrictions. Such creativity is inevitably going to spill over into billable product formulations, which we can research on, develop, produce and sell.

Laugh together Laughter is good therapy. We make it a point to take some time to make others laugh by passing around some funny videos, watch a comedy at lunch or play a devious prank on an unsuspecting co-worker. Just make sure the source of the laughter is uplifting and not singling anyone out to add plenty of camaraderie to our collaboration.

It’s the small things that count The people working hard to churn out good work simply want to be appreciated. O’ran keeps the office fridge stocked with drinks, snacks and easy-to-make meals and install a nice counter top coffee maker. We also subscribe to StarHub Cable TV for the conference room television and give our employees a small budget to decorate their workspace. Office amenities are seen as a communal resource to be replenished as often as needed at O’ran.

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Finan Manag

ncial gement

104

Start-up Capital Needs O’ran requires start-up capital of S$600,000 (S$551,3091 rounded off ) to comfortably match the projected costs in respect of the first six months of operation, i.e. 1 January 2013 to 30 June 2013.

The four key expenses are charted below:

45.1% Salaries and bonus

9.9%

12.3%

19.0%

Starting inventory

Advertising (first year)

13.6%

Rent

1

Refer to Appendix J1 for a breakdown of the start-up capital.

Balance Sheet (Estimates)1

105

As at 31 December SGD‘000

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

433

413

393

507

719

36

18

45

18

45

469

431

438

525

764

TOTAL LIABILITIES

45

45

59

50

91

TOTAL LONG TERM LIABILITIES

75

50

25

0

0

TOTAL SHAREHOLDERS’ EQUITY

349

336

354

475

674

TOTAL LIABILITIES AND EQUITY

469

431

438

525

764

TOTAL CURRENT ASSETS TOTAL FIXED ASSETS TOTAL ASSETS

1

Refer to Appendix J2 for a detailed balance sheet (estimates).

106

Profit and Loss (Estimates)1 SGD‘000

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

600

749

841

1,078

1,306

(210)

(231)

(254)

(280)

(307)

390

518

587

798

999

55

50

50

50

50

OPERATING EXPENSES

(596)

(580)

(616)

(702)

(809)

NET PROFIT BEFORE TAX

(151)

(13)

21

146

240

0

0

(4)

(25)

(41)

(151)

(13)

17

121

199

REVENUE COST OF GOODS SOLD GROSS PROFIT OTHER INCOME(S)

TAX EXPENSE NET PROFIT AFTER TAX

1

Refer to Appendix J3 for a detailed profit and loss (estimates).

Graphical representations of sales revenue and net profit before tax trends are appended:

107 Net Profit Before Tax SGD’000 300

Sales Revenue SGD’000

240

250 1,400

1,306

1,200

-150 -200

-151

Break-even To break even, we need to achieve minimum revenue of S$866,400 1 (S$72,200 x 12 months) in a single year of normal operations, and this will take place in Year 4 (FY 2016).

1

Refer to Appendix J4 for a break-even analysis.

Year 5

Year 5

Year 4

-100

21

Year 4

-13

Year 3

0

Year 3

0

50 -50

Year 2

200

Year 1

400

600

841

Year 2

600

749

100

Year 1

800

146

150

1,078

1,000

200

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Financial Ratios Return on Investment (ROI)1

ROI (%)

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

-32.1

22.9

27.5

20.5

32.6

Return on Investment % 40.0 30.0

-20.0 -30.0 -40.0

-32.1

20.5

Year 5

Yearbook of Statistics Singapore, 2011 (2011). Statistics Singapore, www.singstat.gov. sg, 2007.

3

-10.0

32.6

Year 4

Assuming that cost of investment equals to equity (no debt injection) so ROI equals ROE.

0

Year 3

Refer to Appendix J5 for a detailed ROI analysis.

2

10.0

22.9

Year 2

1

20.0

Year 1

In comparison to Government bonds and stock market, new businesses are considered highly risky so a good ROI would be between 20% to 30%. O’ran is expected to quickly turn around from a negative ROI to a reasonable ROI of 22.9% in Year 2. ROI drops slightly in Year 4 due to business expansion plans, if carried out under suitable business conditions. Overall, the retail business is an efficient one which generates healthy returns for its investors. It generates an average ROI ratio of 25.9% from Years 2 to 5, which is higher than the return on equity2 generated by the wholesale and retail trade industry of 24.4%3 from 2005 to 2008.

27.5

Gross Margin (GM)4

Gross Margin %

109

72.0

GM (%)

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

63.2

67.6

68.2

68.7

71.3

71.3

71.0 70.0 69.0 68.0

67.6

66.0

Year 5

Year 4

63.2

Year 3

63.0

Year 2

65.0 64.0

Operating Expense Ratio %

Operating Expense Ratio (OER)5

90.0 YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

90.0

70.0

66.6

59.9

58.1

90.0

80.0

70.0 66.6

70.0 OER (%)

68.7

67.0

Year 1

O’ran retains more than S$0.60 (up to S$0.71) from each dollar of revenue generated, to service its selling, general and administrative expenses, interest expenses and distributions to shareholders. Based on industry estimates, this is a healthy ratio for a retail firm.

68.2

60.0

59.4 58.3

50.0 40.0 30.0

Refer to Appendix J6 for a detailed GM analysis.

5

Refer to Appendix J7 for a detailed OER analysis.

Year 5

4

Year 4

0

Year 3

10.0

Year 2

20.0

Year 1

O’ran is fairly financially efficient beginning Year 3; the high OER in Year 1 is within expectation as it is inevitable to incur significantly higher operating costs in the early years of business (e.g. advertising) and generate slower sales than subsequently.

Continge Exit Pla

ency and anning

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Contingency Plans The business environment is extremely volatile for every business, despite a fairly stable local landscape. At O’ran, we recognise the need to be prepared so that we will be ready to handle minor and major business hurdles effectively an efficiently. The contingency plan will be reviewed semiannually and exercised on an annual basis (e.g. walk-through, mock disaster).

STRATEGIC

promotion strategy or growing our product mix and depth.

Persons of concern: Operation and Sales and Marketing divisions

Change in market trends and/or demographics such that handmade and/or natural bath and body products are not desirable Corrective procedure: To cater to consumers’ drastic change in needs and desires, we can substitute our offerings (without change the business model significantly) by outsourcing our production orders to third party manufacturer for consumer-packaged body products which may appear to be much more desirable. In the transit, the current handmade natural products can be sold off on huge discounts and foreign suppliers notified (through their local representative) and compensated according to contractual terms, if required.

Persons of concern: Operation division Business model replicated by direct competitor(s) Corrective procedure: We regularly review and evolve our business model or be ready to activate future plans in much advance when the need arises. As one of the first movers in the handmade bath and body products in Singapore, we can take position to stay ahead of the competition by improvising production process, enhancing marketing/

FINANCIAL

Escalated interest rate on current loan(s) There are a few options which O’ran can undertake separately or collectively and they are: Source for alternative loan service providers who offer lower interest rates or longer tenure period; or Decrease loan principle by making advance repayments through improved cash flow short term, which can be achieved with tighter credit period for corporate customers (if any) and more lax credit period extended by our suppliers.

Persons of concern: Deputy General Manager for Finance division Withdrawal of investor(s) The only option may be to source for new investors. Otherwise, we may

need to activate one of the exit strategies (refer to “Exit Strategies� in the section below).

Persons of concern: Finance division and Managing Director REGULATORY

advance to make up for any significant drop in supplies. This ensures a stable inventory in our warehouse to meet demands on an average sales day. Under exceptional requests by us (in contrast with under during normal operations), the suppliers will be compensated accordingly to ensure a fair and reasonable transaction.

Persons of concern: Operation division

Prohibition of sales of imported bath and body products (e.g. due to health risks) Surge in barriers to or absolute prohibition of the current sales will spell the need to engage a new local supplier of similar products for about a year. This is while we reassess, within three months, the viability of setting up a local production plant which manufactures our own products and ensures it is functional after another nine months if the plan is given the green light. If required by contractual terms, we will compensate our current suppliers.

Persons of concern: Operation division SUPPLIES AND LABOUR

Loss of suppliers / goods Each time we do not depend only on a single supplier for effective inventory management purposes. In the event of such a loss, we will negotiate, through their local representatives, for other suppliers to either increase production or deliver the same production in

Loss of key personnel (e.g. Social Media Manager) Our IMC plan is very much focused on interactive advertising via the World Wide Web, so the Marketing Manager, who is also playing the role of a Social Media Manager, is key to the success of our IMC plan. Arising from the importance, we assign and train a backup person for the Social Media Manager.

Should the Manager be taken down ill, by accident or by death or quit, the backup person can follow a guideline which outlines how social media followers/fans are to be handled in her absence, or during transition.

Persons of concern: Marketing division INFRASTRUCTURE

In the event of natural disasters (e.g. fire, flood or water damage) Fire If fire or smoke is present in the facility, the

first person who realises evaluate the situation, determine the severity (major or minor fire) and take the appropriate actions; extinguish minor fires with hand-held fire extinguishers located in the premise. Otherwise, call 995 as soon as possible if the situation warrants it.

Investigate the cause and work out insurance claims with the building management.

Persons of concern: Finance division Flood or water damage The first person who realises Immediately notify all other personnel in the premise and be prepared to cease operation accordingly. Water detected below the raised floor may have different causes: If water is slowly dripping from an air conditioning unit and not endangering equipment, contact repair personnel immediately; If water is of a major quantity and flooding beneath the floor (water main break), immediately implement power-down procedures. While power-down procedures are in progress, evacuate the area and follow management’s instructions.

Investigate the cause and work out insurance claims with the building management.

Persons of concern: Finance division

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In the event of a network or utilities services provider outage An Operation staff notifies the service provider of the outage while his or her colleagues attempt to determine its cause and timeframe for its recovery. If the outage will be greater than one hour, route all calls and e-mails via alternate services and perform cash-only transactions. If it is a major outage and all carriers are down and downtime will be greater than 12 hours, we will attempt to deploy satellite phones and mobile internet, if available.

Persons of concern: Operation division

In certain cases (e.g. inability to secure new investors in the event current investors withdraw), we should prepare to exit (refer to “Exit Strategies� below).

Exit Strategies

115

Every company needs an exit strategy so that the owners can go into retirement or when a business is cash-strapped for example. A good exit strategy, well matched to the characteristics of the business and market, will i. improve the probabilities of success; ii. shorten the time to exit, and iii. often significantly increase the ultimate exit valuation.

We propose three viable exit strategies for O’ran, when the situation warrants one (e.g. to cash out equity). We will not be talking about ceasing the trade absolutely for it is always the least attractive option (other than in exceptional circumstances), and normally a last resort where other options are exhausted.

SALE TO STRATEGIC BUYER

This is one of the most attractive, and common, exit strategy. Typically the buyer sees additional opportunities in our business and is willing to pay for it in the form of an acquisition premium. The additional opportunities come in the form of cost reduction or the cross selling of products into both customer bases. The strategic buyer is willing to pay more because he or she sees more opportunity through synergy. A successful sale that realises the full value of our retail business will be to a buyer who can increase the business’s value through their ownership.

Some of that increased value will flow to our investors in the sale through cash or shares in the buyer’s company, depending on the deal.

When it should be considered: O’ran identifies prospect(s) who have purchased similar businesses to success in the past; a fairly straightforward exit is desired.

MERGER

This may be the ticket to and a great way to plan an exit (e.g. in an IPO where we need to generate enormous revenue or market value). A merger significantly increases O’ran’s business value - at that point, the same shares in the merged company will be worth much more than they could have been with O’ran as an individual business. However it may not be an ideal exit strategy itself as it is often expected that owners and management to be invested in the business’ future. Alternatively, the owners of O’ran do not relinquish all involvement and stay on in advisory roles.

When it should be considered: O’ran meets the perfect acquiring company, but it doesn’t have the cash to buy your business outright; the owners of O’ran do not require an immediate out (unless the merger calls for the head of the other involved company to stay on).

INITIAL PUBLIC OFFERING (IPO)

IPO may be the least attractive exit strategy amongst the three given the

116

growth profile of O’ran in the next few years, unless backed by venture capital or it could really be the next The Body Shop. In addition, IPO will take at least a year of preparation and cost anywhere from several hundred thousand to several million dollars, depending on the exchange and the size of the offering. Despite the drawbacks, should the market conditions be right, the original investors in O’ran can make fortunes because the new stock is worth much more than their original investments; greater rewards comes with greater risks.

When it should be considered: O’ran is profitable and has a market value of $25 million to $50 million or is generating revenue of $30 million to $50 million.

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Future O

Outlook

120

Development Plans (Post-Five Years) Parallel to our vision of becoming a handmade cosmetics group which achieves industry leadership levels of revenue and profit in Asia, we take calculated steps in expanding our business operations first locally and then beyond. O’ran makes consistent effort to create new touch points and build images consistent to the brand promise in a consumer’s mind.

Brand Line Expansion Stores Expansion

Backward Integration B2B Sales

Brand Extension Market Penetration

#VJME CSBOE BXBSFOFTT 'PDVT PO TQFDJBMJTFE GVODUJPOT TVDI BT 3 % GPS HSFBUFS TDBMF CSBOE MJOF FYQBOTJPO J F QSPEVDU WBSJFUZ

/FX TUPSFT PQFOJOH JO $#%

4FDVSF MPDBM NBOVGBDUVSJOH GBDJMJUZ *ODSFBTF NBSLFU TIBSF CZ FYQMPSJOH # # TFHNFOU &YUFOTJWF $3. TZTUFN SFBEZ GPS VTF

BOE POXBSET #SBODI JOUP PUIFS QSPGJUBCMF JOEVTUSJFT BOE JOUFSOBUJPOBM NBSLFUT CFZPOE "TJB 4FU VQ BO 0 SBO "TJB 'VOET JO BJE PG NBSHJOBMJTFE DPNNVOJUJFT

YEAR 1 (FY2013)

YEAR 7 (FY2019)

YEAR 10 (FY2022)

Years 1 to 6: Brand line expansion Stores Expansion O’ran is very much focused on a single touch point - the retail shop, for the first five years in operation to create awareness, build identify and establish values, with increased manpower in years four and five in view of heightened brand awareness and therefore sales traffic.

Beginning year five, O’ran will see an increase in specialised functions, either by dissecting the current functions or introducing new ones to catalyse product line expansion in bigger scale through in-house research and development and subsequent opening of two or more stores in the vicinity within town (e.g.

Central Business District) in Year Six. In the meantime, O’ran will continue to grow its pool of management talents (local and/or overseas) to strategically draft O’ran’s future roadmap.

to sales from companies, organisations and other formal groups (B2B sales). O’ran also intends to expand its sales network to include selective distributors who match our goals and requirements (e.g. capable of carrying full product line and provide the required service).

Independent bath and body products carries such as Summerloft at Holland Village and identified spa places are under our deliberation.

This would mean greater revenue, greater business opportunities and greater market share.

To maximise value derived from this new revenue stream (e.g. retain corporate customers), we will roll out an extensive customer relationship management (CRM) system, which is similar to our SRM system to enable real-time information sharing, cost reduction and enhanced relationships.

Years 7 to 9: Backward integration Year 10 and onwards: Brand extension Business-to-business Market penetration (B2B) sales Now backed by a local manufacturing function O’ran will also begin planning and gathering and a seasoned management team, O’ran resources to either engage a local manufacturer branches into various profitable and relevant or set up a manufacturing plant on our own in industries in phases to offer products and Singapore which will be responsible for 20% services whose attributes are aligned to the to 30% of O’ran’s supply demands, therefore values of O’ran (refer to “Strategic Planning”). reducing the risk of absolute dependency on Some considerations are O’ran lifestyle foreign suppliers. The facility is slated to be products (think Osim), O’ran travel agency ready by end of Year Seven or early Year Eight. which offers tour groups for social causes and O’ran’s furniture and stationery.

With an enlarged production capacity and an experienced workforce, we can also cater With brand extension, there will be various

opportunities to hit markets beyond Singapore and Asia (e.g. India, China, Indonesia), where we would already have established presence through building good working relationships with our local suppliers. As a tribute to them for the long term support, O’ran will set up O’ran Asia Funds in aid of marginalised farmers and workmen in less developed areas of Asia to improve their livelihood and living quality (e.g. medical assistance, education etc).

In view of our expansion plans, we summarise O’ran’s future business model in a diagram on the next page.

121

122

O’ran’s Business Model January 2018 to 31 December 2021

CUSTOMER RELATIONSHIPS

KEY ACTIVITIES

KEY PARTNERS t -PDBMJTFE QSPEVDFST t &YDMVTJWF EJTUSJCVUPST t 8)0 t 4JOHBQPSF &OWJSPO NFOU $PVODJM t -PHJTUJDT DPNQBOZ t 8'50 "TJB t 4JOHBQPSF $PNQBDU

t 1SPEVDU GPSNVMBUJPOT t 4VQQMJFST USBJOJOH t 43. $3. t 6ODPOWFOUJPOBM NBSLFUJOH t 1SPEVDU EJTUSJCVUJPO

KEY RESOURCES t 0OF TUPSF GSPOU t #MPH XFC WJTJCJMJUZ t .BOVGBDUVSJOH QMBOU JG OPU NBOVGBDUVSFS

t "VUIFOUJD GPSNVMB UJPOT t )BQQZ QSPEVDUJWF XPSLFST

COST STRUCTURE t 1SFNJVN QSJDJOH t %JGGFSFOUJBUJPO

VALUE PROPOSITION t )BOENBEF QSPEVDUT t *OHSFEJFOUT SFDPNNFOEFE GPS NFEJDJOBM WBMVFT t 3JHPVSPVT FUIJDBM BHFOEB

t 0SBO DPN t -PZBMUZ QSPHSBNNF t .JMFTUPOF FWFOUT t &YDMVTJWF QSPEVDU MBVODIFT t 8PSLTIPQT DPOUFTUT

CHANNELS t 7JSBM NBSLFUJOH t 8PSE PG NPVUI t 0SBO DPN t 0UIFS*.$ UPPMT t 4FMFDUJWF EJTUSJCVUJP

REVENUE STREAM t #BUI CPEZ QSPEVDUT t 8PSLTIPQT TFNJOBST t .FNCFSTIJQ GFFT

CUSTOMER SEGMENTS # $ 4BMFT t 2VBMJUZ FDP DPOTDJPVT VTFST t 6ODPOWFOUJPOBM NPEJTI VTFST t (JGU TIPQQFST #VTJOFTT UP CVTJOFTT # #

t #PEZ QSPEVDUT SFUBJMFST t %JTUSJCVUPST t )PTQJUBMJUZ DPNQBOJFT F H IPUFMJFST

t )FBMUIDBSF PSHBOJTBUJPOT F H IPTQJUBMT

123

This page is intentionally left blank.

Appen

ndices

Appendix A

126 Home

Company

Making Changes

Annual Return of a Local Company

Exempt Private Companies

Exempt Private Companies What is an Exempt Private Company (EPC)?

An Exempt Private Company (EPC) is a private company which has at most 20 shareholders. No corporation holds (directly or indirectly) any beneficial interest in the EPC's shares. It can also be a company the Minister has gazetted as an EPC (see section 4(1) of the Companies Act).

Is an EPC required to file Annual Return?

An EPC is required to file Annual Return via BizFile. If the EPC is insolvent (i.e. unable to meet its debts when they fall due), it has to lodge the financial accounts with the Registrar. However, if the EPC is solvent (i.e. able to meet its debts when they fall due), it has to complete an online declaration of solvency instead.

Exempt Private Companies need not attach the EPC certificate or the Statement by EPC exempting them from audit requirements (currently in PDF format). The appropriate online declarations will appear in the new Annual Return if the correct company type has been selected earlier.

Professional firms filing on behalf of companies may continue to require the hardcopy certificates from directors as evidence of compliance, and keep these for record purposes, even though ACRA has done away with lodgment of these certificates as an attachment in the new Annual Return.

What is an audit exemption?

Companies that are exempted from audit requirements are not required to have their accounts audited. Instead, they will prepare unaudited accounts for purposes of AGMs and filing with ACRA. If the company chooses to have the accounts audited, it will submit the audited accounts together with the auditor’s report.

What types of companies are exempted from audit?

The following companies are exempted from audit:

Appendix A EPC with revenue not more than S$5 million for the financial year starting on or after 1 June 2004; or EPC with revenue not more than S$2.5 million for the financial year starting on or after 15 May 2003 but before 1 June 2004; or Any company, including an EPC, that is dormant for the financial year starting on or after 15 May 2003

Can ACRA require the accounts to be audited?

The Registrar may require the company to submit audited accounts and the auditor’s report, to the Authority, if: he believes that there has been a breach of section 199 (relating to accounting records and system of control) and section 201 (relating to the accounts and director’s reports) of the Companies Act; or it is otherwise in the public interest to do so.

If an EPC company has already filed an Annual Return with ACRA, does it still need to file any documents with IRAS? Notwithstanding the filing of Annual Return with ACRA, an EPC company must also file its Income Tax Return (Form C), accounts and tax computation with IRAS annually. You may wish to find out more details on the filing requirements of IRAS.

http://www.acra.gov.sg/Company/Making_Changes/Annual_Return_of_Local_Company/Exempt+Private+Companies.htm

127

Appendix B1

128

Marketing Research Survey Project Name:

Design Management

Product/Category:

Cosmetics - bath and body products

Department:

Marketing and Communications

Project Coordinator:

Ng Hui Shan

Date:

January 26, 2012

Prepared by: Document Owner(s)

Project/Organization Role

Clara Puar

Team member

Ng Hui Shan Nicole Koo

Confidential App B1 - Primary Research - Survey.pages Last printed 31/01/2012 10:28:00 PM

Coordinator

Team member

Appendix B1 Marketing Research Survey

129

Product Description: For the purposes of our School project, we are a handmade cosmetics company which produces and sells quality bath and body products that heal, sooth and cleanse our customers. Our product offerings include, and are not limited to, face masks, soaps, hand and body lotions and hair treatments. We train and engage disadvantaged labour in the less developed areas in Asia who makes our products from fresh natural ingredient that are ethically and sustainably procured from all over Asia. Our business hinges on the principles of fair trading and protects and acts responsibly towards people, animals and the planet.

Your feedback is highly appreciated. The entire survey will not take you more than 7 minutes.

Customer Questions: ID 1

Question What is your overall perception of the product described above?

2

What do you like most about this product?

3

What do you like least about this product?

4

How important are these features as being a part of this product?

• • • •

Cheap Eco-friendly / For Social Cause Well-packaged Effectiveness

5

If this product were available, would you be interested in buying it?

Please select your level of interest.

6

What would be your main reason for buying this product?

7

What do you think is a fair price range for this product?

Confidential

Page 2

Selection 1. Poor 2. Average 3. Good 4. Excellent

Response/Comments

1– 2– 3– 4–

Not Important Neutral Important Very Important

1– 2– 3– 4–

Not Interested Indifferent Somewhat Interested Very Interested

1– 2– 3– 1–

S$5 to S$10 S$10 to S$15 S$15 to S$20 S$20 to S$25

19/3/12

Appendix B1

130

Marketing Research Survey ID 8

Question How would you rate the value of this product?

9

Would you be likely to select this product over other offerings from other brands?

Selection 1 – Poor Value 2 – Average Value 3 – Good Value 4 – Excellent Value Yes No

Response/Comments

Under Response/Comments, please explain why or why not.

10

Have you purchased a similar product? If yes, proceed to questions Yes 11 to 12. Otherwise, please proceed to question 13.

No

11

What other brands of similar product have you used? (Check all that 1 – The Body Shop applies.)

2 – LUSH 3 – Origins 4 – Skinfood 5 – Kiehl’s 6 – Our Natural Factory 7 – Others What was your main reason for buying the product?

12 13

14

What would be your most important factors in choosing this product? 1 – Value

(Please select three.)

2 – Effectiveness 3 – Name Recognition 4 – High Quality 5 – Eco-friendly / For Social Cause 6 – Price 7 – Don’t Know How many hours do you spend on 1 - television/radio, 2 newspapers and 3 - internet/smartphones respectively on an average per day?

15

What is your gender?

16

What is your age range?

Confidential

1– 2– 1– 2– 3– 4– 5–

Page 3

Female Male Below 20 20-29 30-39 40-49 Over 50

19/3/12

Appendix B1 Marketing Research Survey ID 17

Question What is your annual income range?

18

What is your profession?

Confidential

131

Selection 1 – Below 20K 2 – 20K–29K 3 – 30K–39K 4 – 40K–49K 5 – Over 50K 1 – Professional (e.g. accounting, IT, engineering) 2 – Admin / HR 3 – Managerial 4 – Sales / Marketing 5 – Services 6 – Other Professions 7 – Unemployed

Page 4

19/3/12

Response/Comments

Appendix B2

132

SAMPLE OF THE E-SURVEY

Appendix B2

133

Appendix B2

134

Appendix B2

135

Appendix B2

136

Appendix B3 Sample 1

137 Marketing Research Survey Project Name:

Design Management!!!!

Product/Category:

Cosmetics - bath and body products!!!!

!

Department:

Marketing and Communications!!!!

Project Coordinator:

Ng Hui Shan!!!!

Date:

January 26, 2012!!!!

!

Document Owner(s) !Ng Hui Shan !!!

Project/Organization Role !Coordinator !!!

!Clara Puar !!!

!Team member !!!

!Nicole Koo !!!

!Team member !!!

Product Description: For the purposes of the School project, we are a handmade cosmetics company which produces and sells quality bath and body products that heal, sooth and cleanse our customers.

Our product offerings include, and are not limited to, face masks, soaps, hand and body lotions and hair treatments. We train and engage disadvantaged labour in the less developed areas in Asia who makes our products from fresh natural ingredient that are ethically and sustainably procured from all over Asia. Our business hinges on the principles of fair trading and protects and acts responsibly towards people, animals and the planet.! !

Your feedback is highly appreciated. The entire survey will not take you more than 7 minutes.

Customer Questions:

2 3

What do you like most about this product?

What do you like least about this product?

Confidential primary research - survery.pages Last printed 31/01/2012 10:28:00 PM

Selection 1. Poor 2. Average 3. Good 4. Excellent

! !

Prepared by:

ID Question 1 What is your overall perception of the product described above?

!

Response/Comments ! !!!

! !!! ! !!!

Appendix B3 Sample 1 138

Marketing Research Survey

ID Question Selection 4 Select how you feel about 1 – Not a Value the product described above. 2 – Average Value 3 – Good Value 4 – Excellent Value 5 How important are these 1 – Not Important features as being a part of 2 – Neutral this product?

3 – Important 4 – Very Important • Cheap • Eco-friendly / for social cause • Well-packaged • Effectiveness 6 Please rate the importance 1 – Least Important of each feature from 1 to 4: 2 – Neutral 3 – Important • Cheap • Eco-friendly / for social 4 – Most Important cause • Well-packaged • Effectiveness 7 If this product were available, 1 – Not Interested would you be interested in 2 – Indifferent buying it? Please select your 3 – Somewhat level of interest.

Interested 4 – Very Interested 8 What would be your main reason for buying this product?

9 What do you think is a fair 1 – S$5 to S$10 price range for this product? 2 – S$10 to S$15 3 – S$15 to S$20 1 – S$20 to S$25 10 How would you rate the 1 – Poor Value value of this product?

2 – Average Value 3 – Good Value 4 – Excellent Value 11 Would you be likely to select Yes this product over other No offerings from other brands?

Under Response/ Comments, please explain why or why not.

12 Have you purchased a similar product? If yes, proceed to questions 13 to 18. Otherwise, please proceed to question 17.

13 What other brands of similar product have you used?

(Check all that applies.)

14 What is it that you like about the product? Please enter as many items as you wish.

Confidential

Yes No

1– 2– 3– 4– 5– 6–

Response/Comments ! !!!

! !!!

1.

2.

3.

4.

!!!! !!!! !!!! !!!!

! ! ! !

! !!!

! !!! ! !!!

! !!!

! !!!

! !!!

The Body Shop LUSH Origins Skinfood Kiehl’s Our Natural Factory

Page 2

31/1/12

Appendix B3 Sample 1

Marketing Research Survey

ID Question 15 What do you like least about the product?

16 What was your main reason for buying the product?

17 What would be your most important factors in choosing this product? (Please select three.)

Selection

Response/Comments

1– 2– 3– 4– 5–

! !!!

Value Effectiveness Name Recognition High Quality Eco-friendly / for social cause 6 – Price 7 – Don’t Know

18 How many hours do you spend on 1 - television/radio, 2 - newspapers and 3 internet respectively on the average per day?

19 What is your gender?

1– 2– 20 What is your age range?

1– 2– 3– 4– 5– 21 What is your annual income 1 – range?

2– 3– 4– 5– 22 What is your profession?

1– 2– 3– 4– 5– 6– 7–

Confidential

female male Below 20 20-29 30-39 40-49 Over 50 Below 20K 20K–29K 30K–39K 40K–49K Over 50K Professional (e.g. accounting, IT, engineering) Admin / HR Managerial Sales / Marketing Services Other professions Unemployed

Page 3

139

! !!!

! !!!

31/1/12

Appendix B3 Sample 2

140

Appendix B3 Sample 2 141

Appendix B3 Sample 2 142

Appendix B4

143

Marketing Research Interview Project Name:

Design Management

Product/Category:

Cosmetics - bath and body products

Department:

Marketing and Communications

Project Coordinator:

Ng Hui Shan

Date:!

January 26, 2012

I want to thank you for taking the time to complete this questionnaire. My name is Hui Shan and I am from First Media Design School. I would like to share in your experiences operating or working with a cosmetics business in Singapore. Specifically, as one of the components of our school project, we are assessing the effectiveness of strategy and organisation management in order to capture valuable industrial information that can provide good resources for our project.

The questionnaire should take less than 30 minutes.

All responses will be kept confidential. This means that your interview responses will only be shared with project team members and we will ensure that any information we include in our report does not identify you as the respondent. Please note that you do not have to share anything you do not want to.

Please let me know if you require any clarifications on imhuishan@gmail.com or +65 9630 7028.

Thank you for your kind assistance.

Appendix B4

144

INDUSTRY PLAYERS Strategic planning 1.

Who is the majority of the company’s customers (e.g. age, gender, income)? Please list.

2.

What is the company’s dominant marketing strategy (e.g. product differentiation, cost leadership or market segmentation) Please explain.

3.

2.1.

Has the marketing strategy worked well? Please elaborate.

2.2.

What would you do differently next time? Please explain why.

How critical is acting responsibly towards the community (e.g. people, environment) to the business, including its customers? Please elaborate.

3.1.

If it is critical, what procedures (e.g. procurement, labour management, product packaging) are carried out differently to ensure the stance? Please elaborate.

Products 4.

How big is the product range? Please elaborate.

5.

Name one unique selling point of those products.

6.

How does this unique selling point compete with other similar products in the market? Please explain.

Organisation 7.

What type of hierarchy (e.g. traditional, flat) does the company operate on? Please elaborate.

7.1.

How has the business benefitted from such hierarchy? Please explain.

7.2.

What problems, if any, have arose as a result of such hierarchy? Please explain.

Appendix B4 8.

What is the company’s online strategy (e.g. traditional or personal) Please explain.

8.1.

Has the strategy worked well? Please elaborate.

8.2.

What would you do differently next time? Please explain why.

145

Appendix B5

146

Q1

“Q1 What is your overall perception of the product described above?

60.0%

Poor

24.4% 15.6%

“Q4 How important are these features as being a part of this product?â€? •

Q4 Cheap

Average Good

Cheap /PU *NQPSUBOU Neutral

Excellent

*NQPSUBOU

41.7%

37.5%

20.8%

7FSZ *NQPSUBOU

“Q2 What do you like most about this product?�

Q2

•

Q4 Eco-friendly / For Social t /BUVSBM JOHSFEJFOUT BSF VTFE Cause t 4PDJBMMZ SFTQPOTJCMF F H FOHBHJOH

Eco-friendly / For Social Cause /PU *NQPSUBOU

TOP THREE RESPONSES

Neutral *NQPSUBOU

42.3%

30.8% 15.4% 11.5%

7FSZ *NQPSUBOU

EJTBEWBOUBHFE MBCPVS

t 3FTQFDU GPS UIF FOWJSPONFOU

“Q3 What do you like least about this product?�

Q3 TOP THREE RESPONSES

•

Q4 Wellpackaged

Well-packaged /PU *NQPSUBOU Neutral *NQPSUBOU 7FSZ *NQPSUBOU

t None t -BDL PG QSPWFO QSPEVDU FGGFDUJWFOFTT t "QQFBST DPTUMZ

Questions labelled * are optional.

34.5%

31.0%

24.1% 10.3%

4 fectiveness

5

Appendix B5 •

Effectiveness /PU *NQPSUBOU Neutral

“Q6 What would be your main reason for buying this product?”

78.6%Q6 14.3%

*NQPSUBOU

TOP THREE RESPONSES

7.1%

7FSZ *NQPSUBOU

t 1SPEVDU FGGFDUJWFOFTT t /BUVSBM JOHSFEJFOUT VTFE t 'PS TPDJBM DBVTFT

“Q5 If this product were available, would you be interested in buying it?” /PU *OUFSFTUFE *OEJGGFSFOU 4PNFXIBU *OUFSFTUFE 7FSZ *OUFSFTUFE

Q7

73.3% 17.8% 8.9%

“Q7 What do you think is a fair price range for this product?”

4 UP 4 4 UP 4 4 UP 4 4 UP 4

46.7%

26.7% 15.6% 11.1%

147

Appendix B5

Q8

148

“Q8 How would you rate the value of this product?�

1PPS 7BMVF "WFSBHF 7BMVF (PPE 7BMVF &YDFMMFOU 7BMVF

46.7%

“Q10 Have you purchased a similar product? If yes, proceed to questions 11 to 12. Otherwise, please proceed to question 13.�

Q10

42.2%

11.1%

“Q9 Would you be likely to select this product over other offerings from other brands?�

Q9

:FT

71.9%

No

28.1%

“Q11* What other brands of similar product have you used? (Check all that applies.)�

:FT No

73.3% Q1126.7%

5IF #PEZ 4IPQ 0SJHJOT 4LJOGPPE ,JFIM T 0UIFST F H 0VS /BUVSBM 'BDUPSZ -64)

43.3% 16.4% 14.9% 10.4% 15.0%

Appendix B5 “Q12* What was your main reason for buying15.6% the product?�

Q12

13

TOP THREE RESPONSES

Q14 t 1SPEVDU FGGFDUJWFOFTT t /BUVSBM JOHSFEJFOUT VTFE t /JDF TNFMMJOH

“Q14 How many hours do you spend on 1 - television/radio, 2 newspapers and 3 - internet/smartphones respectively on an average per day?�

5FMFWJTJPO 3BEJP /FXTQBQFST *OUFSOFU 4NBSUQIPOF

61.7%

24.3% 14.1%

“Q13 What would be your most important factors in choosing this product? (Please select three.)� “Q15 What is your gender?�

Q15

Value &GGFDUJWFOFTT /BNF 3FDPHOJUJPO

30.5%

)JHI 2VBMJUZ &DP GSJFOEMZ 'PS 4PDJBM $BVTF 1SJDF

'FNBMF Male

17.8% 16.1% 16.1% 16.1% 3.4%

84.4% 15.6%

149

Appendix B5

150

Q16

“Q18 What is your profession?�

“Q16 What is your age range?�

Q18

#FMPX

78.1%

"ENJO )3

12.5%

6.3%

0WFS

3.1%

“Q17 What is your annual income range?�

Q17

#FMPX , , UP , , UP , , UP , 0WFS ,

43.8% 18.8%

1SPGFTTJPOBM

18.8% 12.5% 6.3%

4BMFT .BSLFUJOH 4FSWJDFT 0UIFS 1SPGFTTJPOT 6OFNQMPZFE

31.3%

25.0%

18.8% 12.5% 9.4% 3.1%

Appendix B6

151 Marketing Research Interview Project Name:

Design Management

Product/Category:

Cosmetics - bath and body products

Department:

Marketing and Communications

Project Coordinator:

Ng Hui Shan

Date:!

January 26, 2012

I want to thank you for taking the time to complete this questionnaire. My name is Hui Shan and I am from First Media Design School. I would like to share in your experiences operating or working with a cosmetics business in Singapore. Specifically, as one of the components of our school project, we are assessing the effectiveness of strategy and organisation management in order to capture valuable industrial information that can provide good resources for our project.

The questionnaire should take less than 30 minutes.

All responses will be kept confidential. This means that your interview responses will only be shared with project team members and we will ensure that any information we include in our report does not identify you as the respondent. Please note that you do not have to share anything you do not want to.

Please let me know if you require any clarifications on imhuishan@gmail.com or +65 9630 7028.

Thank you for your kind assistance.

Appendix B6

152

INDUSTRY PLAYERS Strategic planning 1.

Who is the majority of the company’s customers (e.g. age, gender, income)? Please list.

Respondent: Our company’s primary customers are in the range of 27 to 50, mostly females (approx 75%) and are considered middle to top income earners.

2.

What is the company’s dominant marketing strategy (e.g. product differentiation, cost leadership or market segmentation) Please explain.

Respondent: Our company believe in differentiation. In today’s world, many people are selling almost homogeneous products. Coupled with the extremely cheap imports from China, it will not be sustainable for our company to go on a price war (i.e. differentiation through price). We held pride in our belief in quality product and with that association, we price our goods accordingly.

3.

4.

2.1.

Has the marketing strategy worked well? Please elaborate.

Respondent: Our marketing strategy is constantly evolving and hence I am unable to give you a clear answer on this. However, statistic has shown that the effectiveness of our marketing campaign is largely reliant on the state of economy in this country. In the event where there is a negative outlook on the economy, no amount/level of marketing/advertising can help to boost sales.

2.2.

What would you do differently next time? Please explain why.

Respondent: We adjust our marketing strategy depending on market. There is no clear answer to this question.

What is the company’s online strategy (e.g. traditional or personal) Please explain.

Respondent: We have a online website that allow the customers to buy directly from us. Our payment options include paypal and credit card which are the most commonly used payment methods for netizens. In addition, we also give consumers the option to have it delivered to their place (for purchases above S$x) or self collect at our outlets which is convenient to them. This arrangement helps to bring crowd to our stall where our staffs can introduce new product range to them.

3.1.

Has the strategy worked well? Please elaborate.

Respondent: So far so good. We have seen a 10% increase in the customer presence at all our outlets, especially during the period where we introduce a “Pick up yourself and save!” campaign, which we offer a 10% discount for customers who are going down to the outlets to pick up their purchases.

However, further analysis will be required to determine if the increase in customers’ presence translate to more sales.

3.2.

What would you do differently next time? Please explain why.

Respondent: Going forward, we will want to try to introduce a data-base where we allow customers to store their personal preference on the range of product that is commonly used. This will reduce the customers’ time on remembering the products that is good for them. We will also allow them to key in their comments/feedback on each individual item. This will help us track and understand our customer and know which product range is in trend and which is not.

How critical is acting responsibly towards the community (e.g. people, environment) to the business, including its customers? Please elaborate.

Respondent: As a normal business, our investors are more concern about bottom line. Whether or not we should act responsibly to the community etc is of secondary concern. Of course we see the potential in riding the recent trend of being “green” as part of the marketing campaign but we will still analyse and evaluate every investment decision and our supply chain to understand the financial impact on our company prior to supporting / implementing “green” options.

4.1.

If it is critical, what procedures (e.g. procurement, labour management, product packaging) are carried out differently to ensure the stance? Please elaborate.

Respondent: Irrelevant as we do not see it as critical.

Appendix B6 Products 5.

How big is the product range? Please elaborate.

Respondent: Our product range comprises of 3 main categories, namely hygiene product, healthcare product and aroma product. Each product category should have around 50 to 100 items at any one time. We regularly phases out the product range when they are obsolete and unpopular.

6.

Name one unique selling point of those products.

Respondent: They are all quality products and selling under our image is seen as part of their integral healthy lifestyle. We sell beyond products. We sell “healthy body” to our consumers.

7.

How does this unique selling point compete with other similar products in the market? Please explain.

Respondent: This question ties back to our USP. We do not engage in price war with those low quality sellers of mass produced China goods. We pride ourselves as believers in good health and quality product. Our consumers can be assured that the goods that are purchased from us are of top quality and no compromises will be made in the quality and usage of ingredients. We have a stringent selection process when choosing the right ingredients to make our products.

Organisation 8.

What type of hierarchy (e.g. traditional, flat) does the company operate on? Please elaborate.

Respondent: Our company operates on a flat hierarchy. Our CEO, (censored), has 3 Assistant VP helping (the CEO) to run operations in the 3 countries (i.e. SG, Msia and Indo); Each AVP is supported by a outlet manager which in turn runs the staff 8.1.

How has the business benefitted from such hierarchy? Please explain.

Respondent: A flat structure allows us to respond faster to market changes which is very crucial in our industry. Keeping ahead of the trend allow us to keep our heads above the water.

8.2.

What problems, if any, have arose as a result of such hierarchy? Please explain.

Respondent: A flat structure of course will give rise to more responsibility down at the managerial level. They have to keep a tight reins on the happenings in each country/outlet as (the CEO) will personally hold them responsible for any happenings that they are not aware/not well taken care of.

153

Appendix C

154

ENVIRONMENT INFORMATION / GREEN BUSINESS / INFORMATION ON ISO14000

NEWSROOM

Press/Speech Releases Calendar of Events Tenders PSI READING WEATHER REPORT

ISO 14000 in Singapore Standardisation Programme in Singapore International Environmental Management System Standards Help for Small Businesses to implement ISO 14001 Where to purchase Singapore Standards (SS) on EMS ISO 14001:2004 Transition Period ISO 14001 Certification in Singapore Training Providers of ISO 14001 Useful links to ISO 14000 resources Success Stories of ISO 14001 certified companies

Standardisation Programme in Singapore

SPRING Singapore coordinates the national standardisation programme in Singapore. The Environmental Management Technical Committtee (EMTC) has been formed under the Management System Stardards Committee to look into standardisation and guidance in the field of environmental management. The purpose is to help organisations improve their environmental management practices and performance. Information on the national standardisation programme is available at http://www.standards.org.sg

Appendix C

International Environmental Management System Standards

The International Organisation for Standardisation (ISO) published the first edition of the ISO 14001 standard on Environmental Management System (EMS) in 1996. ISO 14001 standard enables organisations to control and minimise their environmental impact of its activities, products and services. Organisations which have implemented an EMS that conforms to ISO 14001 standard can get an independent certification body to audit and verify that they meet the requirements specifed in the standard.

ISO also published the ISO 14004 standard that complement the ISO 14001 standard by providing guidelines and clarifications on the EMS. SPRING Singapore (then known as PSB) adopted both the 1996 edition of ISO 14001 and ISO 14004 as Singapore Standards.

ISO had on 15 Nov 2004, issued a press release to announce the publication of the revised, improved version of the ISO 14001 and 14004 standards. SPRING Singapore had on 10 Dec 2004 adopted and published the revised ISO 14001 and 14004 standards as Singapore Standards.

Help for Small Business To Implement ISO 14001

Small and medium-sized enterprises (SME's) may mistakenly perceived of International Standards as being only for big business and government. In fact, SME's too can benefit from the state-of-the-art technology and management practices disseminated by International Standards which also open the door to export markets and participation in global supply chains.

ISO has opened a new section on its website to help SME's achieve the benefits of implementing environmental management systems based on its ISO 14001:2004 standards.

This website contains articles on sharing how an SME can take the first steps and the practical considerations in implementing an environmental management system.

Where to purchase Singapore Standard (SS) on EMS The relevant SS ISO standards pertaining to EMS are:

1. SS ISO 14001:2004, Environmental Management SystemsRequirements with guidance for use 2. SS ISO 14004:2004, Environmental Management Systems General guidelines on principles, systems and supporting techniques 3. SS ISO 19011:2002, Guidelines for quality and/or environmental management systems auditing SPRING Singapore has from 28 August 2006 appointed SNP Corporation Ltd to manage the sale of the Singapore Standards and Technical References, as well as international and overseas standards that SPRING Singapore can sell in Singapore.

These standards can be purchased from SNP Corporation at:

155

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1 Kim Seng Promenade #18-01 Great World City East Tower Singapore 237994 Customer Service Hotline: (65) 6826 9691 Fax: (65) 6820 3341 Email: singaporestandardseshop@snpcorp.com Contact Person: Mr Rahman Daud, (65) 6826 9629, email: rahmandaud@snpcorp.com Singapore Standards eShop: http://www.singaporestandardseshop.sg

ISO 14001:2004 Transition Period

ISO has announced that a 18-month period for organisations implementing an EMS certified as conforming to the orginal 1996 version of the ISO 14001 standard to make the transition to ISO 14001:2004. The transition period extends from 15 May 2005. Beyond that date, only ISO 14001:2004 certificates will be issued by certification bodies accredited by members of the International Accreditation Forum (IAF). Details of the ISO 14001:2004 transition plan are in the ISO press release.

Training Providers of ISO 14001

The following organisations conduct training activities related to ISO 14000 standards regularly (the list is not exhaustive).

Organisation & Address

Telephone & Fax No

Regional Institute of Environmental Technology 3 Science Park Drive #04-08 PSB Annex (Science Park) Singapore 118223 http://www.riet.org

Tel 6778 4679/6777 2685

Novo Environmental Technology Services Pte Ltd 3 Science Park Drive #04-21 PSB Annex Singapore 118223 http://www.novoets.com

Tel 6777 9985

SGS International Certification Services Singapore Pte Ltd 26 Ayer Rajah Crescent #03-07 Singapore 139944

Tel 6775 9815

Fax 6773 2800

Fax 6777 3017

Fax 6774 4538

Appendix C http://www.training.sg.sgs.com NOVO Envirotech Pte Ltd 10 Science Park Road #03-01 The Alpha Singapore 117684 http://www.novoenvirotech.com AJA Registrars Ltd 37 Beach Road #16-07 The KeyPoint Singapore 199597 http://www.aja-singapore.com

157 Tel 6774 7298 Fax 6774 7298

Tel 6294 0308 Fax 6294 5797

Useful links to ISO 14000 resources ISO Online Official home page of the International Organisation for Standardisation.

ISO/TC 207 Official home page of the International Organisation for Standardisation's (ISO) Technical Committee 207 on Environmental Management -- the committee responsible for developing the ISO 14000 series of standards and guidance documents.

ISO 14000 Info Center Sponsored by the Environmental Industry Web Site, offers ISO 14000 overviews, links to ISO 14000 discussion lists, and other resources.

Voluntary Environmental Management Systems/ISO 14001 An initiative by the USEPA and the Global Environment & Technology Foundation to assist small and medium-size to government organisations to implement an environmental management system at a local facility or organisation.

Success Story of ISO 14001 certified companies Case Study 1

PS Seiko Pte Ltd 9 Kallang Way 3 S(349106) Tel: (65)6296 8189 Fax: (65)6481 0136 Website: www.psseiko.org PS Seiko manufactures and distributes industrial fasterners & assembly components. The main clientele are electronics, information technology and telecommunication industries. PS Seiko aims to be a world class solution provider for their customers' assembly needs as well as an

Appendix C

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innovator in revolutionising the supply of fasterners to the industries.

EMS Vision & Committment The company operates under environmental friendly condition to reduce pollutions. It aims to have: - 100% compliance with all applicable legislative requirements - Zero fines from relevant governing authorities Environmental Policy Environmental Aspects are identified from operations. Annual goals and objectives are then determined. A defined structure is used to ensure proper implementation of programs to achieve the goals set. Some of the goals include: - Lower electricity usage - Reduce paper usage - Comply with waste disposal requirements and disposition of non-conforming products Achievements By being ISO 14001 certified, PS Seiko has proven committment to good environmental management. Substantial savings were observed significantly on the month that ISO 14001 environmental management system was implemented. The energy and paper recycling program are so successful.

There has also been greater environmental awareness since the implementation of the Restriction of Hazardous Substance Program. Employees are now more equipped with knowledge to minimise usage of hazardous chemicals during the manufacturing process.

Home | Feedback | Send this Link | Bookmark this page | Useful Links | Sitemap Copyright Š 2002 National Environment Agency. All rights reserved. Privacy Policy.

NEA Call Centre Hotline: 1800-CALL NEA (1800-2255 632) / Fax: 62352611 / Enquiry Email: Contact_NEA@nea.gov.sg Dial-a-weather Hotline: 65427788 / Weather Fax-on-demand: 65427789 Members of the media can reach us at media@nea.gov.sg

Appendix D1

Print C

159

Home » Resources » Licences and Permits » Regulatory Flowchart: Setting Up A Retail Outlet

Regulatory Flowchart: Setting Up A Retail Outlet Thinking of setting up a retail outlet? Use this regulatory flowchart as your guide.

It sets out the minimum steps you need to take in order to comply with regulations when setting up a retail outlet.

Please note that this checklist does not cover non-regulatory matters such as accounting, budgeting and product pricing.

Preparation Register Your Business

Premises Secure Your Premises Ensure Your Premises Comply With Regulations Ensure Renovations/Works Comply With Regulations

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160

Licences & Permits Apply For The Licences/Permits You Need

Manpower Ensure All Foreign Workers You Hire Have Valid Work Permits/Work Passes

Last updated on 16 Sep 2011 Š 2012. All rights reserved. Government of Singapore Terms of Use | Privacy Statement | Rate Our Website

EnterpriseOne is a multi-agency initiative managed by

Appendix D2

161

Singapore Incorporation Janus Corporate Solutions (+65) 6222-7445

January 18, 2012

At a glance  Singapore rated as world’s easiest place to do business  One-day company

Overview

incorporation  100% foreign

This guide provides an overview and key facts about incorporating a private limited liability company in Singapore.

shareholding (individual or corporate)  Min. paid-up capital $1 only  No authorized capital required  Audit exemption for exempt private companies  Tax exemptions and low corporate tax rates  Relocation visa available for professional staff

Singapore is consistently rated as one of the easiest places to do business in the world. It is highly evaluated by business professionals for its growth opportunities, ease of setting up and running a business, productive workforce, simple tax system, business friendly policies, and stable political and economic climate.

Factors such as one-day company incorporation,

100% foreign shareholding, low corporate taxes, and progressive immigration policies have made Singapore a preferred destination for business setup and expansion.

Part of the success or failure of a business also depends on the choice of business structure. In this regard, the most flexible, advanced and common form of incorporation in Singapore is a limited liability company.

A limited liability company has its own legal identity, separate from its shareholders and directors.

The liabilities of the owners are limited to the assets in the company and their personal assets are protected.

A notable feature of a limited liability company is its continued existence irrespective of the status of its shareholders or directors.

As an incorporated business entity, it projects a credible image to stakeholders, potential employees and business partners. Moreover, a limited liability company makes it easy to raise capital and enjoys easier transfer of ownership.

Company Incorporation: Key Facts Contents Overview

1

Company Incorporation

2

Ongoing Compliance

4

Corporate Taxation

5

Foreign Staff Relocation

5

Other Useful Facts

5

About Janus

6

Minimum Statutory Requirements for Incorporation:  A local registered address.  At least one local resident director.  A minimum of one and maximum of 50 shareholders.  A local resident and qualified company secretary.  A minimum paid up capital of S$1.00.  An approved company name.

Foreign Ownership:  100% foreign shareholding allowed.  Shareholders can be individuals or corporate

bodies.

Timeline:  Company Name Approval: 1 hour assuming no objection.  Company Incorporation: 1 day once documents ready for filing.  Bank Account: 2-14 days upon submission of account opening docs.

Corporate Taxation:  Full Tax Exemption: 0% tax rate for first S$100K subject to conditions.  Partial Tax Exemption: 8.5% tax rate for profits up to S$300K for all companies.  Flat 17% tax rate for profits above S$300K.

 No dividend tax.  No capital gains tax.

Annual Filing Requirements:  Annual Return filing with Company Registrar.  Annual Income Tax Return filing with Tax Department.

Relocation Visa:  No quota limitations for professional employment visa called Employment Pass (EP).  Company owners, directors, staff eligible for EP.  Good education is a key requirement for EP.  Business owners who lack good education can apply for Entrepreneur Pass.

Appendix D2 2

SINGAPORE INCORPORATION REPORT

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Company Incorporation

“Company registration procedure in Singapore is fully computerized and can be completed in 1-2 days in most cases.”

In order to incorporate a private limited liability company in Singapore, the following requirements apply:  Approved Company Name: The company name must be approved prior to incorporation.  Directors: At least one local resident director (Singapore citizen, Singapore permanent resident, or Singapore work pass holder) must be appointed. Any number of additional local or foreign directors can be

appointed. Directors must be natural persons.  Shareholders: A minimum of one local or foreign shareholder is required. There can be a maximum of 50 shareholders. A director and shareholder can be the same or different person. A shareholder can be an individual or corporate body.  Company Secretary: A local resident and qualified company secretary is required.

Company secretary must

be a natural person and not a corporate body. A sole director/shareholder cannot act as the company secretary.  Paid-up Capital: Minimum paid-up capital of S$1.00 is required. No authorized capital required. Paid-up capital can be increased anytime later after injecting the necessary funds.  Registered Address: The company must have a local registered address. A PO Box is not allowed.

Incorporation Documents Required The Singapore Company Registrar will require the following information for company incorporation:  Company name.  Brief description of business activities proposed for the business.  Shareholders’ particulars such as name, address, verification of identity, citizenship.  Directors’ particulars.  Registered address particulars.  Company Secretary particulars.  Memorandum and Articles of Association (MAA).

Identification Documents:

For non-resident individuals:  Copy of passport.  Overseas residential address proof.

For resident individuals:  Copy of Singapore identity card.  Copy of passport if not Singapore citizen.

For corporate shareholders:

showing up-to-date particulars of the entity.

All incorporation documents must be in English. Officially endorsed translated versions must be provided for nonEnglish documents.

Note: Our compliance department may request additional documents as appropriate.

 Certificate of Registration.  Memorandum & Articles of Association (MAA).  Company profile extract from Company Registrar

Incorporation Procedure and Timeline Company registration in Singapore is fully computerized and involves two distinct steps: Company Name Approval and Company Incorporation.

Name Approval: The name approval is secured by filing an online application with the Company Registrar.

Generally, the name approval (or rejection)

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notification will be known within one hour.

Company Incorporation: On name approval, incorporation documents must be filed with the Company Registrar. If all documents are in order, the Company Registrar will send an official email notification (including the company registration number)

confirming the incorporation of the company, within few hours of documents submission. The email notification is treated as the official certificate of incorporation in Singapore.

The overall incorporation process will take a little longer due to the need to prepare and sign incorporation documents.

Appendix D2 SINGAPORE INCORPORATION REPORT

3

163 Bank Account Opening Singapore has emerged as the leading financial center in the Asia Pacific region.

Singapore companies have a broad choice of world-class local and foreign banks for opening an account. Banks in Singapore offer a widearray of attractive features such as multi-currency accounts, internet banking, credit cards, trade financing, freedom to move funds across countries and more.

Some of the most popular banks include:  HSBC  Standard Chartered  OCBC  UOB  DBS Documents Required: Although the exact requirements may vary from bank to bank, typically the

following documents will be required:  Completed account opening application.  Copy of the certificate of incorporation in Singapore  Copy of MAA.  Copy of passport.  Copy of residential address proof.  Personal bank reference letter.

Other Facts:  A company can designate any person as the bank signatory. It does not have to be a company director.  Most of the banks require physical presence at the time of opening the account; however they are willing to make an exception on a case-bycase basis.

 Bank may request additional information as part of their Know-YourClient policies on a caseby-case basis.  The account opening process may take anywhere from 2-15 days depending on the amount of due-diligence undertaken by the bank.  All banks have minimum balance requirements that vary from S$500 to S$50,000. If the balance falls below the minimum balance, banks levy a monthly charge ranging from S$15-S$50.  Almost all banks offer internet banking facilities.  Credit card facilities are not automatic but are subject to approval on a case-by-case basis.

“Singapore is a free economy with no exchange controls or restrictions on repatriation of funds.”

Registration for GST, Licenses and Permits Goods and Services Tax: The Goods and Services Tax (GST) - also known as Value Added Tax (VAT) in other countries - is an indirect consumption tax levied on the supply of goods and services in Singapore and the import of goods into Singapore.

GST Exemption: A company is required to register for GST only if its annual turnover exceeds S$1 million. A GST registered entity must collect GST on its supply of goods and services from consumers on behalf of the Tax Department and then in-turn pass the collected amount to the Tax Department.

GST Rates: The current GST rate in Singapore is 7%. No GST is charged on export of goods

and services. Companies that are involved only in the export of goods and provision of international services are exempt from GST registration. GST registration process takes about 2-5 days.

Business Licenses and Permits: Certain types of business activities require a business license in Singapore.

Fortunately majority of the business activities don’t require any business licenses in Singapore. The business license(s) must be obtained from the relevant government agencies after company incorporation but before commencing business operations.

Timeline: In general, it may take between 1-8 weeks to get a

business license or permit depending on the type.

Activities Requiring License: The following are some of the examples of business activities that require business licenses:  Professionals such as lawyers and doctors need to obtain occupational licenses to practice.  Private schools, travel agencies, employment agencies, F&B establishments, event management companies, fund management companies, financial advisory companies, import/export companies need to obtain relevant license.

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Appendix D2 4

SINGAPORE INCORPORATION REPORT

164

Ongoing Compliance

“Dormant companies and qualifying small exempt private companies are

Appointment of Auditors: A company must appoint an auditor within 3 months from its date of incorporation, unless it is exempted from the audit requirement.

Audit of Financial Accounts: Non-exempt companies must audit their accounts on an annual basis.

Accounting Records: A company must maintain accounting records for 5 years after the completion of

exempted from auditing their accounts.”

the transactions or operations to which they relate.

Notification of Changes: Any change that occurs in the company or to its officers must be informed to the Company Registrar.

Company Registration Number Disclosure: Every company must publish its registration number on all business letters, statements of account, invoices, official notices and publications

Financial Accounts: Annual financial statements must be prepared in accordance with the Financial Reporting Standards (FRS).

Annual General Meeting (AGM): Every company must hold an AGM once every calendar year. The first AGM must be held within 18 months of the company’s date of incorporation.

Accounting and Corporate Regulatory Authority (ACRA) Frequency of Filing: Every company must file an Annual Return (AR) with Singapore’s Accounting and Corporate Regulatory Authority (or ACRA) within one month of its Annual General Meeting (AGM).

Particulars of the company officers, registered address, and auditors (if applicable) must be included in the Annual Return.

Requirements: Unless exempted, the company must attach their

audited or unaudited (per the requirement for their firm) accounts along with the annual return.

Firms Exempt from Attaching Accounts: The following companies are exempted from attaching accounts:  Dormant companies (i.e. a Singapore company with no accounting transactions during a financial year).  Small Exempt Private Companies (i.e.

companies with less than 20 shareholders and whose all shareholders are individuals) with an annual turnover of less than S$5 million.

Tax Return Filing with Inland Revenue Authority of Singapore Frequency of Filing: The Singapore income tax system is annual in its structure and organization.

The statutory tax year in which income tax is calculated and charged is known as the Year of Assessment.

Singapore adopts the preceding year basis for taxation. In other words, the profits of the accounting year ending in the preceding year will form the basis for assessment for the current Year of Assessment. Filings are to be made annually.

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Timeline: The statutory deadline for filing corporate income tax return is November 30 of Year of Assessment. As an example, if the accounting period of your company is April 1, 2010 – March 31, 2011, the income tax return filing deadline for the company will be November 30, 2012. However, companies are required to declare the revenue amount and Estimated Chargeable Income (ECI) by filing an ECI form with IRAS within 3

months of the company’s financial year-end.

Firms Exempt from Audit Requirement: The following companies are not required to have their accounts audited:  No corporate shareholding; and  Number of shareholders less than 20; and  Annual turn-over less than S$5 million.

Appendix D2 SINGAPORE INCORPORATION REPORT

5

165

Corporate Taxation This section provides only basic highlights of corporate taxation in Singapore. For additional information, see our guide titled Singapore Tax Report , which provides a detailed overview of Singapore’s tax system and policies.

Single-Tier Tax System: Tax paid by a company on its chargeable income is the final tax and all dividends paid by a company to its shareholders are exempt from further taxation.

Tax Jurisdiction: Territorial basis of taxation.

Tax is imposed on the income a) accrued in or derived from Singapore; and b) received in Singapore from outside Singapore, subject to certain exemptions.

Corporate Tax Rate: Flat corporate tax rate of 17%.

Tax Exemptions: Resident Singapore companies are eligible for following tax incentives:  Full tax exemption for newly incorporated companies on their first S$100K profits for each of the first 3 years. To

qualify, the company must have at least 10% individual shareholding.  All companies qualify for partial tax exemption in which their first S$300K annual taxable income is taxed only at 8.5%.

Company Residency: A company is considered to be a resident company if the control and management of the business is exercised from within Singapore. Nonresident companies are not eligible for the above tax incentives.

Capital Gains Tax: None

facilitates the relocation of

Relocation of Executives and Staff The following two types of relocation visas are available: Employment Pass (EP):  Both company owners and their professional staff are eligible to apply for EP.  There is no quota system for EP, and each application is reviewed based on its own merits.  Good education and

professional experience are key to succesful application.  Minimum salary of S$3,000 per month.

Entrepreneur Pass (EntrePass):  Only company owners can apply.  Designed for company owners who lack good education and therefore

“Singapore's open immigration policy

foreign entrepreneurs and

unable to qualify for Employment Pass.  The applicant must have at least 30% shareholding in the company.  The company must have a minimum paid-up capital of S$50,000.  Must have a good business plan.  The business must create employment for locals.

skilled professionals.”

Other Useful Facts About Singapore Company Registrar: Accounting and Corporate Regulatory Authority of Singapore (ACRA).

Sources of Company Law: Companies Act of Singapore.

Membership in International Trade Organizations: Singapore is a member of WTO, ASEAN, British Commonwealth, and APEC. International Ranking on Business related Indices:  Ranked #1 on the ‘World’s Easiest Place to

Do Business’;; World Bank’s Doing Business Report, 2012.  Ranked #2 in ‘2011-2012 Global Competitiveness Index’, World Economic Forum.  Ranked #1 as the ‘Most Open Economy for Trade’;; World Economic Forum’s Global Enabling Trade Report, 2010.  Ranked #1 as ‘Most Entrepreneurial Economy in Asia’;; Global Entrepreneurship and Development Index 2011.

 Ranked #2 as ‘World’s Second Freest Economy’;; Heritage Foundation’s 2012 Index of Economic Freedom.  Ranked #1 in ‘2010 Corruption Perceptions Index’;; Transparency International.  Ranked #2 as ‘World’s Second Most Network Ready Country’, Global Information Technology Report 2010-2011.

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Appendix D2 6

166

SINGAPORE INCORPORATION REPORT

Janus Corporate Solutions Pte Ltd 16 Raffles Quay #33-03 Hong Leong Building Singapore 048581 Phone (+65) 6222-7445 Fax (+65) 6222-7421 Email info@guidemesingapore.com Website www.guidemesingapore.com

About Janus Janus provides a complete range of company incorporation, accounting, tax, immigration and related compliance services for entrepreneurs, startups and established companies who want to enter the Singapore market. Janus is based in Singapore and we believe that this country offers an ideal

venue for firms and individuals who operate in the global economy. Singapore has world-class infrastructure, well-developed capital markets, highly educated work force, liberal immigration policies, stable political institutions, business-friendly economic policies and a very attractive tax regime. Given

these characteristics, there is increasing demand for worldclass professional services to help organizations establish a presence in Singapore. Janus is at the forefront of offering such services at affordable fees through its experienced team.

Singapore companies;  Accounting and tax advisory services;  Tax preparation and filing for companies and individuals;  Application for work passes for expatriates;

 Application for Singapore Permanent Residence under various schemes;  Application for business licenses; and  Other related corporate services.

Our Services Our core services include:  Incorporation of local companies, subsidiaries of foreign corporations and registration of branches of foreign organizations;  Ongoing statutory administration of

This report is designed to provide introductory information to clients and does not constitute professional advice. It is of a general nature only and is not intended to be comprehensive. Readers are therefore advised that before acting on any information obtained from this document, they should discuss their particular situation with a professional tax adviser. While care has been taken to prepare this report accurately, Janus accepts no liability for any errors or for any loss, however occasioned, to any person by reliance on this report.

We’re on the Web! www.guidemesingapore.com

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Appendix D3 SINGAPORE’S RANKINGS Ranking Category

Singapore’s Ranking

Source

World’s easiest place to do business

1

Doing Business 2012 Report, World Bank

Most competitive country in the world

2

The Global Competitiveness Report 2011-2012, World Economic Forum

World’s (Asia’s) least corruption in its economy

7 (1)

IMD World Competitiveness Yearbook 2011

Most transparent country in Asia

1

IMD World Competitiveness Report 2011

Best business environment in Asia Pacific and worldwide

1

Economist Intelligence Unit, Country Forecasts, December 2010

World’s Freest Economy

2

The Heritage Foundation, Index of Economic Freedom , 2010

World’s (Asia’s) most competitive country

3 (1)

The Global Competitiveness Yearbook 2009-2010, World Economic Forum

167

Appendix D4

168

Corporate tax changes The corporate income tax rate remains at 17%, which was largely expected.

For Year of Assessment (YA) 2011, companies were given the higher of a one-off 20% corporate income tax rebate (capped at $10,000) or a small and medium enterprise (SME) cash grant of 5% of the company’s revenue (capped at $5,000).

The cash grant has been extended to YA 2012, with the amount remaining at 5% of the company’s revenue, and subject to a cap of $5,000. The company must have made Central Provident Fund (CPF) contributions for at least one employee ZKR ZRXOG KDYH WR EH D 6LQJDSRUHDQ RU SHUPDQHQW UHVLGHQW LQ WKH Ä&#x;QDQFLDO year ended 2011.

Sadly, the 20% corporate tax rebate has not been similarly extended, although the grant may be set off against tax payable.

Productivity and Innovation Credit The Budget should be lauded for improving the Productivity and Innovation Credit (PIC) scheme in four key areas: Ĺ? Ĺ? Ĺ? Ĺ?

&DVK SD\RXW RSWLRQ 7UDLQLQJ 5HVHDUFK DQG GHYHORSPHQW 5 ' DQG ,QYHVWPHQWV LQ DXWRPDWLRQ HTXLSPHQW

Cash payout option

With the Singapore economy showing signs of slowing down, cash is king, particularly for businesses that are making losses. The cash conversion or payout option, while not giving the same bang for its buck as taking advantage of the PIC itself against taxable income, nevertheless gives access to cash when cash may be in short supply. Three enhancements were proposed for the cash payout in the Budget announcement, namely (a) an increase in the cash payout rate from 30% to 60% from YA 2013, (b) an extension of the option to YA 2015 (previously it was meant to stop after YA 2013) and (c) increased frequency (quarterly instead of yearly) of claims. ,W ZRXOG EH GLIÄ&#x;FXOW WR DUJXH WKDW WKH Ä&#x;UVW RI WKH FKDQJHV LV QRW DQ LPSURYHPHQW With this change, the difference in absolute amounts between the PIC and the cash payout becomes smaller and is likely to make the cash option more appealing for a cash-strapped business.

Using a simple example, if we assume $100,000 of qualifying PIC expenditure had been incurred by a normal taxpayer, the corresponding cash payout would be $60,000 compared with $68,000 of tax savings ($100,000 x 400% x 17%).

Depending on the tax attributes of the taxpayer, the tax savings (albeit 13.3% higher than the cash payout in nominal monetary terms) may typically take more time to be realised and therefore opting to get the cash of $60,000 on hand would be a much more pragmatic outcome. Arithmetically the increase in the cash payout rate to 60% means that any corporate taxpayer who has a tax rate of 15% or below will never lose out in monetary terms by opting for the cash payout over the 400% tax deduction/allowance ($100,000 x 400% x 15% = $60,000 tax savings). Hence for incentivised or exempt corporate taxpayers, the choice becomes emphatically clearer.

4

Budget Commentary 2012

2Q E RQH GLIÄ&#x;FXOW\ LV WKDW H[SHQGLWXUH DFURVV VRPH \HDUV RI DVVHVVPHQW cannot be combined for this purpose, as allowing a combination would clearly LQFUHDVH Ä H[LELOLW\ IRU WD[SD\HUV ZLWK UHJDUG WR WKHLU VSHQGLQJ SDWWHUQ 7KH increased frequency of claims suggested in (c) may of course sound helpful for any cash-strapped business but a general downside of the broader PIC scheme starts to creep back in: increased compliance burden and tracking requirements for the taxpayer.

Training Two changes were announced in the area of training in relation to the PIC: Ĺ? ,Q KRXVH WUDLQLQJ FRXUVHV DQG Ĺ? 7UDLQLQJ RI DJHQWV In-house training courses Qualifying in-house training expenditure incurred of up to $10,000 per year no ORQJHU QHHGV WR EH FHUWLÄ&#x;HG IRU 3,& SXUSRVHV DV ZDV WKH FDVH EHIRUH By partially relaxing the earlier requirement for all in-house training H[SHQGLWXUH WR EH FHUWLÄ&#x;HG WKH WD[SD\HUĹ‚V SRVLWLRQ PD\ LPSURYH VRPHZKDW However, tracking the amount of in-house training expenditure (whether FHUWLÄ&#x;HG RU QRW IRU 3,& SXUSRVHV LV DOUHDG\ UDWKHU FRPSOH[ )RU H[DPSOH it contemplates apportionment of salary paid to in-house trainers between their time spent conducting training and their time spent on other employee functions (which are not related to training).

Training of agents It was announced that expenditure incurred by a principal on the training of its agents may qualify for PIC subject to certain conditions. The conditions include: Ĺ? ([LVWHQFH RI D UHJXODU ZRUNLQJ FRQWUDFWXDO UHODWLRQVKLS EHWZHHQ WKH SULQFLSDO DQG WKH DJHQW Ĺ? 5HTXLUHPHQW IRU WKH SULQFLSDO WR EHDU WKH WUDLQLQJ H[SHQVHV DQG QRW FKDUJH RU UHFRYHU WKH WUDLQLQJ H[SHQVHV IURP WKH DJHQW Ĺ? 5HTXLUHPHQW IRU WKH WUDLQLQJ H[SHQVHV QRW WR EH FODLPHG E\ WKH DJHQW DV H[SHQVHV RI KLV KHU WUDGH RU DV FRXUVH IHHV UHOLHI DQG Ĺ? 5HTXLUHPHQW IRU VKDULQJ RI ULVNV DQG UHZDUGV RI WKH DJHQW Conceptually this is an interesting pronouncement. An example of where this could apply is where an agent needs to obtain additional knowledge of the SULQFLSDOĹ‚V SURGXFWV VHUYLFHV WKURXJK WUDLQLQJ LQ RUGHU WR IXOÄ&#x;O WKH DJHQF\ GXWLHV XQGHU WKHLU FRQWUDFWXDO UHODWLRQVKLS :KLOH WKLV LV Ä&#x;QH DQG WKHUH PD\ EH instances where a principal may be more than happy to facilitate and bear the cost of training the agent, we have two lingering questions at this stage: Ĺ? :KHWKHU WKH DJHQW QHFHVVDULO\ KDV WR EH DQ LQGLYLGXDO DV RSSRVHG WR VD\ D FRPSDQ\ DQG Ĺ? :KHWKHU WKH UHTXLUHPHQW IRU VKDULQJ RI ULVNV DQG UHZDUGV LV VXSHUÄ XRXV 7R WKH Ä&#x;UVW TXHVWLRQ LW FDQ EH LQIHUUHG IURP WKH JHQGHU UHIHUHQFH LQ WKH VWDWHG WKLUG FRQGLWLRQ DQG WKH H[DPSOHV RI DJHQWV LQVXUDQFH DJHQWV Ä&#x;QDQFLDO DGYLVHUV and real estate agents) listed, that the agent must be an individual. There is however no compelling reason from a theoretical standpoint why such an agent cannot be a corporate body (e.g. even an individual may choose to operate his business through an incorporated vehicle). A contract manufacturer may for example have a need for his principal to train his staff in the operation of the principal’s machinery.

5

Appendix D4 On the second question, the respective contractual risks and rewards accrue to both the principal and the agent in most forms of principal-agency relationship and are “shared� although the proportion may differ depending on the contractually agreed remuneration scheme. In the situation where the agent is remunerated on a cost-plus basis for most of its activities, it may well be the case that fairly limited risk/reward is borne by it, but would such an arrangement still qualify?

Software development Prior to the Budget, expenditure incurred for the development of internal-use software GLG QRW TXDOLI\ DV 5 ' H[SHQGLWXUH DQG VRIWZDUH ZDV SUHVXPHG WR EH IRU LQWHUQDO use unless it was developed to be commercially sold, leased, licensed or otherwise marketed, for separately stated consideration, to third parties. This was referred to as the “multiple sales� requirement.

,W ZRXOG EH LQWHUHVWLQJ WR JHW IXUWKHU FODULÄ&#x;FDWLRQ RQ WKH DERYH DQG LW LV DOVR KRSHG WKDW WKLV pronouncement applies to training across all industries as opposed to those more focused RQ WKH Ä&#x;QDQFLDO VHFWRU DV WKH H[DPSOHV RI DJHQWV VHHP WR VXJJHVW

In the Budget, it was announced that the “multiple salesâ€? requirement will now be UHPRYHG WR IDFLOLWDWH 5 ' LQ VRIWZDUH GHYHORSPHQW QRW LQWHQGHG IRU VDOH +RZHYHU WKH WKUHVKROG RI ĹƒQRYHOW\Ĺ„ RU ĹƒWHFKQLFDO ULVNĹ„ VKRXOG VWLOO EH PHW WR TXDOLI\ DV 5 ' *HQHUDOO\ LI WKH VRIWZDUH LV LQQRYDWLYH DQG GLIIHUV LQ D VLJQLÄ&#x;FDQW DQG LQYHQWLYH ZD\ IURP SULRU YHUVLRQV RU LI WKH VRIWZDUH GHYHORSPHQW LQYROYHV VLJQLÄ&#x;FDQW HFRQRPLF ULVN WR WKH WD[SD\HU GXH WR VXEVWDQWLDO XQFHUWDLQW\ DULVLQJ IURP WHFKQLFDO ULVN WKH 5 ' H[SHQVH VKRXOG TXDOLI\ +RZHYHU VRIWZDUH 5 ' ZLOO VWLOO QRW EH FRQVLGHUHG 5 ' LI WKH software is developed to be used for internal business administration, which is in line with the approach in several developed countries around the world.

R&D R&D cost-sharing agreements As economies around the world struggle to recover, many governments are taking steps WR PDNH WKHLU 5 ' UHJLPHV PRUH DWWUDFWLYH WR PXOWLQDWLRQDO EXVLQHVVHV DQG 6LQJDSRUH LV QR H[FHSWLRQ 7KH 5 ' WD[ UHJLPH KDV EHHQ VLJQLÄ&#x;FDQWO\ HQKDQFHG DW WKH IURQW HQG RI WKH innovation cycle in this Budget.

Prior to the Budget, companies had to seek the Economic Development Board’s (EDB’s) DSSURYDO WR FODLP ZULWLQJ GRZQ DOORZDQFHV RQ H[SHQGLWXUH LQFXUUHG RQ 5 ' FRVW VKDULQJ DJUHHPHQWV ,Q DGGLWLRQ WKHVH H[SHQVHV GLG QRW TXDOLI\ IRU WKH 3,& EHQHÄ&#x;WV 7KLV FUHDWHG DQ DQRPDO\ DV SULRU DSSURYDO ZDV QRW UHTXLUHG WR FODLP D WD[ GHGXFWLRQ IRU RWKHU 5 ' expenses incurred under sections 14D and 14DA(1) of the Income Tax Act and the PIC EHQHÄ&#x;WV DSSOLHG WR RWKHU 5 ' H[SHQVHV :LWK WKH DQQRXQFHPHQW H[SHQGLWXUH LQFXUUHG RQ 5 ' FRVW VKDULQJ DJUHHPHQWV ZLOO QRZ TXDOLI\ DV H[SHQGLWXUH RQ 5 ' 7KLV HIIHFWLYHO\ PHDQV WKDW FRPSDQLHV WKDW FROODERUDWH RQ 5 ' SURMHFWV FDQ QRZ FODLP Ĺ? (QKDQFHG GHGXFWLRQ RI VXEMHFW WR DQ H[SHQGLWXUH FDS RI XQGHU WKH 3,& IRU TXDOLI\LQJ H[SHQGLWXUH L H VWDII FRVWV DQG FRQVXPDEOHV RQ 5 ' DFWLYLWLHV FDUULHG RXW LQ 6LQJDSRUH RU RYHUVHDV LI WKH 5 ' GRQH RYHUVHDV UHODWHV WR WKH FRPSDQ\Ĺ‚V 6LQJDSRUH WUDGH RU EXVLQHVV

Ĺ? GHGXFWLRQ RQ WKH EDODQFH RI TXDOLI\LQJ H[SHQGLWXUH H[FHHGLQJ WKH FDS RI IRU 5 ' SHUIRUPHG LQ 6LQJDSRUH DQG Ĺ? GHGXFWLRQ RQ WKH EDODQFH RI DOO RWKHU 5 ' H[SHQVHV LQFOXGLQJ H[SHQVHV IRU 5 ' done overseas (which is related to the company’s Singapore trade or business).

7KH 0LQLVWHU FODULÄ&#x;HG WKDW WKH 5 ' FRVW VKDULQJ H[SHQGLWXUH FODLPHG ZLOO FRXQW WRZDUGV WKH H[SHQGLWXUH FDS IRU WKH 5 ' DFWLYLW\ DQG WKH TXDOLI\LQJ H[SHQGLWXUH XQGHU 5 ' cost-sharing agreements will be deemed to be 60% of the shared costs, similar to RXWVRXUFHG 5 ' ZKHUH D EUHDNGRZQ RI WKH H[SHQGLWXUH LWHPV LV QRW DYDLODEOH WR WKH WD[SD\HU :H EHOLHYH WKDW LI 5 ' XQGHU D FRVW VKDULQJ DJUHHPHQW LV SHUIRUPHG E\ D Singapore taxpayer, the shared costs incurred by the taxpayer, to the extent that they relate to qualifying expenditure, should be 100% deductible.

7KH 0LQLVWHU DOVR FODULÄ&#x;HG WKDW WUDQVLWLRQDO UXOHV ZLOO EH SURYLGHG IRU H[LVWLQJ FODLPDQWV under approved cost-sharing agreements.

7KLV DQQRXQFHPHQW ZLOO EH ZHOFRPHG E\ PDQ\ LQGXVWU\ SOD\HUV DV 5 ' HIIRUWV DUH becoming increasingly costly and international alliances to pool resources and share risks to GHYHORS DGYDQFHG WHFKQRORJLHV RQ D FRVW VKDULQJ EDVLV LQVWHDG RI DEVRUELQJ KHIW\ 5 ' ELOOV individually, has become a viable option for many industry players.

6

Budget Commentary 2012

2QH TXHVWLRQ WKDW FRPHV WR PLQG ZRXOG EH ZKHWKHU D EX\ LQ SD\PHQW WR DQ H[LVWLQJ 5 ' cost-sharing agreement would qualify for deduction under sections 14D and 14DA(1).

Our view is that it should not, as generally a buy-in payment compensates the transferor for costs/risks undertaken in developing or acquiring pre-existing intellectual property (IP) DQG LV VWULFWO\ QRW DQ 5 ' H[SHQVH RQ ,3 GHYHORSPHQW :H DOVR EHOLHYH WKDW WKH FODZ EDFN provisions applicable to approved cost-sharing agreements in the event of sale, assignment or disposal of any IP developed or equipment acquired under the agreement, should no longer be applicable.

169

7KLV DQQRXQFHPHQW ZLOO EH ZHOFRPHG E\ PDQ\ LQGXVWULHV LQFOXGLQJ WKH Ä&#x;QDQFLDO industry as the development of electronic platforms and service offerings is critical WR FRPSHWLWLYHQHVV LQ WKH Ä&#x;QDQFLDO VHFWRU DQG VKRXOG EH UHFRJQLVHG DV D YDOLG DUHD IRU 5 ' ([DPSOHV RI VRIWZDUH GHYHORSPHQW WKDW VKRXOG TXDOLI\ ZRXOG LQFOXGH WKH GHYHORSPHQW RI IDVW DQG HIÄ&#x;FLHQW H EDQNLQJ DQG H Ä&#x;QDQFH DSSOLFDWLRQV IRU LQWHUQHW service delivery and the development of unique algorithms (and supporting software and systems) to take advantage of opportunities for arbitrage in global markets.

Investments in automation equipment

Currently, the cash conversion option is only available on a per-item basis, subject to the expenditure conversion cap of $100,000 for all six qualifying activities for each year of assessment. Businesses must convert the full amount of expenditure incurred on an item of qualifying equipment into cash, subject to the expenditure conversion cap for each year of assessment.

As expenditure incurred on the qualifying equipment cannot be partially converted into cash, the option is not available to any qualifying equipment acquired on hire purchase with a repayment schedule straddling two or more basis periods, L H Ä&#x;QDQFLDO \HDUV However, to support cash-constrained small and growing businesses in innovating and improving productivity, it was announced in the Budget that with effect from YA 2012, qualifying automation equipment acquired on hire purchase with a UHSD\PHQW VFKHGXOH VWUDGGOLQJ WZR RU PRUH Ä&#x;QDQFLDO \HDUV ZLOO EH HOLJLEOH IRU WKH FDVK conversion option. All other existing terms and conditions of the scheme apply. This is good news, especially for SMEs.

Gains on disposal of equity investments 7KH 6LQJDSRUH WD[ OHJLVODWLRQ LPSRVHV WD[ RQO\ RQ LWHPV RI LQFRPH *DLQV RU SURÄ&#x;WV WKDW are on capital account are not taxed. Because of the stark difference between a taxable item of income (taxable at rates of up to 17% for companies and 20% for individuals) and a non-taxable item that is on capital account, the distinction between what is DQG ZKDW LV QRW FDSLWDO KDV EHHQ D VLJQLÄ&#x;FDQW ERQH RI FRQWHQWLRQ EHWZHHQ WKH ,QODQG Revenue Authority of Singapore (IRAS) and taxpayers, for many years.

In response to lobbying, this year’s Budget introduced guidelines to determine when a company will not be taxed on gains from the disposal of equity investments. This VKRXOG JLYH LQWHUQDWLRQDO EXVLQHVVHV PRUH FRQÄ&#x;GHQFH LQ XVLQJ 6LQJDSRUH DV D KROGLQJ company or headquarters location than before, when Singapore could not really be recommended because of this uncertainty.

7

Appendix D4

170

2QH RI WKH SULPDU\ GLIÄ&#x;FXOWLHV ZLWK WKH VFKHPH HYHQ LQ LWV HQKDQFHG IRUP LV WKDW the acquiring entities have to already be carrying on a taxable activity in Singapore.

7KLV UHVWULFWLRQ FHUWDLQO\ OLPLWV WKH DSSHDO RI WKH VWUXFWXUH 0RUH Ä H[LELOLW\ VKRXOG EH introduced to enable the allowances available to an otherwise empty acquisition company to be group-relieved within the target group.

7KH DERYH FKDQJHV ZLOO WDNH HIIHFW IRU TXDOLI\LQJ 0 $ FRPSOHWHG IURP )HEUXDU\ to 31 March 2015. All other existing terms and conditions of the scheme continue to apply.

The IRAS and the EDB will release further details of the changes by 30 June 2012.

It is hoped that these measures will help meet the objective set by the Economic Strategies Committee to have 1,000 Singapore companies with a turnover of over $100 million each by 2020 (i.e. 530 in 2007 to 1,000 in 2020). While we would have preferred the Government to introduce outright measures such as giving interest expense deductions, we will add these to next year’s wish list.

5HQRYDWLRQ DQG UHIXUELVKPHQW WD[ GHGXFWLRQ VFKHPH ,Q WKH %XGJHW WKH UHQRYDWLRQ DQG UHIXUELVKPHQW 5 5 WD[ GHGXFWLRQ VFKHPH ZDV LQWURGXFHG WR DOORZ D VSHFLDO DOORZDQFH IRU H[SHQGLWXUH LQFXUUHG RQ Ä&#x;[WXUHV Ä&#x;WWLQJV DQG installations for renovations undertaken by companies. However, the special allowance was subject to a cap of $150,000 for every three-year period and was applicable for expenditure incurred up to 15 February 2013. The IRAS issued a circular on 18 June 2008 to explain the tax treatment and provided a list of qualifying expenditure which would be eligible for the special allowance.

To further enhance this scheme, the sunset deadline of 15 February 2013 has been abolished to make it a permanent feature of the tax regime and the expenditure cap has been doubled to $300,000 for each three-year period. It is proposed that all other terms and conditions of the scheme will continue to apply.

While the scheme is enhanced to help businesses renew and refresh their premises regularly, the following points are worth noting: Ĺ? :LWK D FDS RI IRU D SHULRG RI WKUHH \HDUV WKH VFKHPH FRQWLQXHV WR UHPDLQ DWWUDFWLYH PDLQO\ IRU 60(V DV LW GRHV QRW SURYLGH VLJQLÄ&#x;FDQW EHQHÄ&#x;W WR ELJ HQWHUSULVHV ZKLFK PD\ LQFXU VLJQLÄ&#x;FDQW 5 5 FRVWV Ĺ? 7KH WD[ GHGXFWLRQ FRQWLQXHV WR EH DYDLODEOH WR WKH WD[SD\HU RQ D VWUDLJKW OLQH EDVLV RYHU D SHULRG RI WKUHH \HDUV +HQFH D WD[SD\HU GRHV QRW JHW WKH IXOO WD[ EHQHÄ&#x;W LQ WKH \HDU LQ which he incurs the expenditure. Ĺ? 5 5 FRVWV UHODWLQJ WR VWUXFWXUDO FKDQJHV DQG FHUWDLQ RWKHU FRVWV H J GHVLJQHU fees, etc) continue to be non-qualifying expenditure. Considering the cap on the H[SHQGLWXUH LW ZRXOG KDYH EHHQ PRUH HIIHFWLYH WR VD\ WKDW DOO 5 5 UHODWHG H[SHQGLWXUH should be eligible for tax deduction.

The changes will take effect from YA 2013, and further details will be released by 30 June 2012.

Capital allowance claims for low value assets Currently, companies can claim capital allowances over one year on assets which cost no more than $1,000. This is subject to a cap of $30,000 on the aggregate claim.

The cap on the costs has now been increased to $5,000 for each asset. This should certainly help taxpayers as the cost ceiling of $1,000 was becoming inappropriate with increasing costs, and not many assets could qualify for the one-year claim. The changes should result in reduced administrative effort in identifying and tracking the fate of low value items. The changes will take effect from YA 2013, and further details will be released by 30 June 2012.

11

Appendix D5 Print Close

For companies

171

For companies > Guide for new companies >

Tax Rates and Tax Exemption Schemes Both resident and non-resident companies are taxed at a same flat rate on their chargeable income. The tax rates and tax exemption / rebate for the respective Years of Assessment (YAs) are as follows: Year of Assessment

Tax rate

From 2010

17%

Tax exemption / rebate Partial tax exemption and tax exemption scheme for new start-up companies Companies will continue to enjoy the partial tax exemption scheme and tax exemption scheme for new start-up companies as provided in YA 2008 and YA 2009.

In addition, with effect from YA 2010, the tax exemption scheme for new start-up companies will be extended to include companies limited by guarantee, subject to the same conditions.

SME Cash Grant and Corporate Income Tax (CIT) Rebate For YA 2012, companies will be granted a one-off 5% SME Cash Grant.

For YA 2011, companies will be granted a 20% CIT Rebate or 5% SME Cash Grant, whichever is the higher amount.

2008 and 2009

18%

Partial tax exemption for companies Exempt income: First $ 10,000

@ 75%

=$

Next $290,000

@ 50%

= $145,000

Total $300,000

7,500

$152,500

Appendix D5

172

Tax exemption scheme for new start-up companies Exempt income: First $100,000

@ 100%

= $100,000

Next $200,000

@ 50%

= $100,000

Total $300,000*

$200,000

A company that does not qualify for a tax exemption for new start-up companies will be given partial tax exemption. *Normal chargeable income (excluding Singapore franked dividends)

Find out more on Tax rates and tax exemption schemes.

Related Items Related pages Tax rates and tax exemption scheme

Appendix D6 CONNECTIVITY FIGURES FOR ASIA, AS AT 31 MARCH 2011 Source: internetworldstats.com/asia

173

Appendix D6

174

(to be continued on the next page)

Appendix D6

175

Links to Asia - 35 Countries and Regions 3,879,740,877 estimated population for Asia in 2011 1,016,799,076 Internet users and 26.2% penetration rate as of 31 December, 2011 183,963,780 Facebook users on 31 December, 2011, 4.7% penetration rate

Appendix D7

176

REQUIREMENTS BY HEALTH SCIENCES AUTHORITY (HSA), SINGAPORE (Source: www.guidemesingapore.com)

Appendix D8 EMPLOYMENT IN SINGAPORE (Source: singapore.smetoolkit.org)

177

Appendix D9

178

SINGAPORE’S FREE TRADE AGREEMENTS (FTAS) (Source: singapore.smetoolkit.org)

Appendix D9

179

Appendix E

180

SINGAPORE GREEN LABELLING SCHEME CERTIFICATION GUIDE [Category: Cosmetics]

[The Green Label Category for cosmetics establishes grading criteria on environmental and health parameters for the above-mentioned product. The standard includes product specific environmental and health prerequisites, as well as criteria related to recyclability and disposal.]

Appendix E

181 The Singapore Green Labelling Scheme (SGLS) was launched in May 1992 by the Ministry of the Environment. It was handed over to the Singapore Environment Council (SEC) on 5 June 1999 and is currently fully owned by the SEC. The Green Label aims to help the public identify environment-friendly products that meet certain eco-standards specified by the scheme and seeks to encourage the level of eco-consumerism in Singapore as well as to identify the growing demand for greener products in the market. The scheme hopes to create a backlash effect, encouraging manufacturers to design and manufacture with the environment in mind.

Green Label offers certification of a range of products in conformance with its standards. For additional information on the SGLS or any of the SEC’s programmes, contact:

Singapore Green Labelling Scheme 1E Cluny Road, #02-01 Singapore 259601 +65 6337 6062 greenlabel@sec.org.sg www.sec.org.sg

Appendix E

182

I.

SCOPE

This category establishes criteria for all cosmetic products including skin care products, hair care

III.

GREEN LABEL CERTIFICATION CHECKLIST

products, decorative cosmetics, perfumes and hygiene products.

II.

A.

DEFINITIONS Bioaccumulative Energy Management Programme Carcinogen

A programme to ensure energy efficiency and effectiveness, including policies, practice, planning activities, responsibilities and resources in order to achieve the targets and objectives of energy saving.

A carcinogen is any substance, radionuclide, or radiation that is an agent directly involved in causing cancer

Mutagen

A mutagen is a physical or chemical agent that changes the genetic material, usually DNA, of an organism and thus increases the frequency of mutations above the natural background level

Reproductive toxin

A reproductive toxin is a substance or agent that can cause adverse effects on the reproductive system

Label

Refers to the Singapore Green Label

Material Safety Data Sheet

A document that indicates the physical and chemical properties of a substance or product informing the reader of its intended use and safety precautions to be undertaken when using it

Volatile Organic Compound (VOC)

Any organic compound which participates in atmospheric photochemical reactions and has an initial boiling point lower than or equal to 280°C measured at standard conditions of temperature and pressure

INCI

International Nomenclature of Cosmetic Ingredients

CAS

Chemical Abstracts Service

CMR

Substances that are carcinogenic, mutagenic or repro-toxic

Page | 4

CRITERIA

SUPPORTING DOCUMENTS

a) Environmental and Occupational Safety, Health and 

ISO 14001, ISO 18000 and ISO

Quality management guidelines

9001 (or equivalent) management



The tendency for a substance to be accumulated in an organism due to a difference in the rate of intake and loss of the substance from the organism.

Health and Environment Criteria



The company is required to have ISO (or equivalent)

certifications, or

environmental, occupational safety and health, and 

Environmental management

quality management systems in place

guidelines and a declaration that the

Emissions to the air and water during the production

company is in the process of

process shall be controlled within the environment

obtaining the relevant certifications within 2 years

regulation limits set by the NEA in the Code of Practice on Pollution Control (2000). 



Documentation on the manufacturing process

Overseas manufacturing units shall comply with the relevant local legislation.

The applicant must provide details of the manufacturing process b) Hazardous and Prohibited Substances



The following chemical substances must not be added during manufacture: 

Carcinogens



Mutagens



Reproductive toxins



Borates



Per Borates



Boric Acid



Triclosan



Parabens (4-Hydroxybenzoic acid and its salts and esters)



Potential endocrine disruptors

A statement to this effect signed by the CEO of the applicant company;



Relevant quality control and/or production documents;



List and quantity of product material composition



Third party laboratory testing reports

Page | 5

Appendix E  

Nitrilotriacetate (NTA, cas no. 139-13-9) must not be

e) Colorants

added to the product.



Lawsone (cas no. 83-72-7) must not be present in hair dyes.





Butyl hydroxy toluene (BHT, cas no. 128-37-0), ethylene diamine tetraacetate and its salts (EDTA, e.g.



cas no. 64-02-8 and 60-00-4)* and nitrilotriacetate



* Exception for soap: Ethylene diamine tetraacetate and its salts (EDTA, e.g. cas no. 64-02-8 and 60-00-4) < 0.05% of the product Toothpaste must not contain sodium lauryl sulphate



(SLS) NOTE: Flavorings, coloring agents and preservatives



used in lip products, toothpaste and oral hygiene products must be approved for use in foodstuffs according to 88/388/EC (EU, 1988) c) Nomenclature 

Documentation stating formulation.



the EU Cosmetic

Hair dyes must fulfil all colorant requirements in this 

Specification of Cl-number (Colour

category.

Index number).

Aroma, colorants and preservatives used in these



Declaration that the fragrance must

The fragrance must be used in accordance with the

be used in accordance with the

IFRA guidelines. IFRA’s (International Fragrance

IFRA guidelines.

Association)

Declaration that the fragrance mix

guidelines

can

be

found

on 

www.ifraorg.org/guidelines

does

Fragrances must not be added to products that are

classified as carcinogenic (Carc),

intended for use on infants/babies.

mutagenic

Fragrance substances classified in the Fragrance table

reproduction (Rep), allergenic with

may be present in the product in quantities not

R42

exceeding 0.01% (100 ppm) in rinse-off products and

disruptive tendencies. 

not

contain (Mut),

and/or

R43

Appendix A: Table 1.

name, trade name, INCI name, CAS-number, quantity

ingredient

if the total amount of substances classified fragrance 

Third

in the product including and excluding water, as well as

Directive 2001/58/EEC.

table do not exceed 5% of the fragrance mix.

reports

with 

party

laboratory

testing

Musk ketone (cas-no. 81-14-1) and musk xylene (cas-

g) Preservatives

Refer to Appendix A: Table 1

Enzymes must be a dust-free granulate or liquid

endocrine

no. 81-15-2) must not be added to the product.

substances must be specified in the formulation.

d) Enzymes

or





Declaration

from

the

enzyme

producer or information on safety data sheet.

Preservatives must not release substances that can be classified CMR, endocrine disruptive effects.

Page | 6



Preservatives must be approved in the Directive

Relevant documentation as well as signed declaration of compliance

76/768/EEC (Cosmetic Directive) Annex VI 

to

not contain any of the substances in

may be part of the fragrance mix in amounts below 1%

accordance

damaging

Declaration that the fragrance does

Product safety datasheets for each in

substances

Fragrances substances classified with Fragrance table

Full formulation specifying the ingredients’ chemical 

ingredient consists of several substances, data on all



Directive 76/768/EEC Annex IV.

0.001% (10 ppm) in leave-on products.



the function performed by the ingredient. If an



approved in

Directive 76/768/EEC Annex IV.

f) Fragrances

product.



Declaration that colorants must be

products must be approved for use in foodstuffs.

(NTA, cas no. 139-13-9) must not be added to the





Colorants must be approved in the EU Cosmetic

with this requirement 

Third party laboratory testing reports;

Page | 7

183

Appendix E

184

h) Biodegradability

lowest LC50/EC50/IC50 > 10.0 mg/l.

assigned by approval for foodstuffs)

Polymers must contain less than 100 ppm monomers

or alternatively logKow value

(A to F) in OECD guidelines for

measured on newly produced polymer dispersion if the

(logarithmic octanol/water partition

Organic solvents must be readily degradable.

testing of chemicals (ISBN 92-64-

monomers are classified CMR, endocrine disruptive or

coefficient) or BCF value



Emollients must be readily degradable.

1222144) or equivalent test

sensibilising R42 and/or R43.



Emulsifiers must be readily degradable

methods.



Specification of degradability tested

All cleaning/washing active surfactants must be readily

with the aid of test methods No. 301

degradable aerobically and anaerobically. 









Documentation of bio availability

aid of ISO 11734, ECOTOC No. 28

may take the form of a specification

(June 1988) or equivalent test

of molar weight or the results of a

methods. The requirement is a

test report. The molar weight for

minimum of 60% degradability

substances not regarded as bio

under anaerobic conditions.

available must be greater than 700 g/mol,

Specification of degradability tested with the aid of test methods No. 301



(A to F) in OECD guidelines for

Specification of the lowest LC50/EC50/IC50 value

testing of chemicals (ISBN 92-64-



Specification of logKow value or BCF value

Specification of anaerobic degradability that is tested with the



(bioconcentration factor). 



Specification of degradability tested

1222144) or equivalent test

with the aid of test methods No. 301

methods.

(A to F) in OECD guidelines for

Specification of degradability tested

testing of chemicals (ISBN 92-64-

with the aid of test methods No. 301

1222144) or equivalent test

(A to F) in OECD guidelines for

methods.

testing of chemicals (ISBN 92-64-



Declaration from the polymer

1222144) or equivalent test

manufacturer containing

methods.

specifications and/or the test result

i) The company shall furnish proof to show that substances 

Third party laboratory testing

of analyses.

in the cosmetics are within the stipulated threshold

reports;

j) Packaging

Material safety data sheets where



concentration: 

Preservatives must have a logKow < 3.0 or BCF < 100.



Antioxidants and complexing agents must have a

 

required

plastic based on other types of chlorinated materials

Specification of E-number (number

must not be used.

Page | 8



Plastic packaging (including labels) containing PVC or

Declaration from the packaging manufacturer documenting absence of bleaching with gaseous chlorine



Declaration from the packaging Page | 9

Appendix E  

Metal packaging must not be used. Small parts of metal

manufacturer documenting the

e.g. part of a hand pump or sealing foil can be used.

proportion of recycled material

Dual or multi packaging must not be used for packaging of individual products unless the extra



Third party laboratory testing reports



Recycled Content: Cardboard packaging must consist

ISO 18001 and ISO 9001 Environmental Management System Certification or equivalent, issued by an

a) Purchasing and receiving

with gaseous chlorine.

List of INCI list: Refer to Appendix B ( Table 2)

185

CRITERIA

In lieu of the conditions below, all applying organisations must provide a copy of their valid ISO 14001,

Singapore Green Labelling Scheme.

Packaging paper or cardboard must not be bleached



Quality Control / Assurance

accredited certification body, for the facility(s) that produce the product(s) seeking endorsement under the

packaging consists of paper, cardboard or pasteboard. 

B.



New sources of materials or parts are evaluated to comply with specifications or purchasing documents.



The manufacturer shall have a documented method to ensure that sources of materials or parts continue to comply with specifications.

of at least 80% recycled materials

b) Manufacturing 

Documentation that describes production methods and materials used shall be provided.



Records shall be maintained to show that products are made in accordance with documented methods and materials.

c) Final product testing  

All products shall be identified by lot or batch number.

All products shall be inspected, tested, or otherwise evaluated to ensure proper performance. The measuring, inspection, and test equipment (equipment used in the evaluation of products submitted for certification only) are ensured calibrated.



The method of evaluation shall be documented.

d) QA/QC Manual 

Page | 10

The manufacturer is to provide a copy (or relevant sections) of their quality assurance/control manual.

Page | 11

Appendix F IMC Budget

186

Note

Unit Price (S$)

Year 1

Year 2 and Year 3

Year 4 and Year 5

Frequency

IMC Expense (S$)

Frequency

IMC Expense (S$)

Frequency

IMC Expense (S$)

Interactive Advertising Company website

1

50

Year-round

50

Year-round

50

Year-round

50

1

50

Year-round

50

Year-round

50

Year-round

50

Facebook

0

Year-round

50

Year-round

50

Year-round

50

Twitter

0

Year-round

0

Year-round

0

Year-round

0

Podcasts

0

0

0

Year-round

0

Year-round

0

800 per a minuteepisode

3 episodes

2,400

3 episodes

2,400

3 episodes

2,400

1,000

Year-round

1,000

Year-round

0

Year-round

0

Blog (oranblog.com)

Webisodes Oâ&#x20AC;&#x2122;ran mobile application

2

3,550

2,550

2,550

Direct Response Off-line (i.e. direct mailers) On-line (i.e. e-mailers)

0.50 per piece

10,000 pieces per month; 6 months

0

8 months

30,000 10,000 pieces per month; 2 months 0

6 months

30,000

10,000 10,000 pieces per month; 2 months 0

6 months

10,000

10,000 0 10,000

Place Advertising Train platform screen doors (Orchard Station)

13,800 per week; minimum 4 weeks

8 weeks

110,400

4 weeks

110,400

55,200

4 weeks

55,200

55,200 55,200

Event Marketing and Sponsorships Seminars Contests Sponsorships

3

0

0

0

0

0

2

0

200 per contest

0

0

0

0

4

800

3,000 per sponsorship

0

0

0

0

1

3,000

0

0

3,800

Traditional Mass Media Advertising Magazines

2,000 per fullcoloured page

0

0 0

3

6,000 6,000

3

6,000 6,000

Appendix F IMC Budget Note

Unit Price (S$)

Year 1

Year 2 and Year 3

187

Year 4 and Year 5

Frequency

IMC Expense (S$)

Frequency

IMC Expense (S$)

Frequency

IMC Expense (S$)

Year-round

2,000

Year-round

2,000

Year-round

2,000

Store Signage and Point-ofPurchase Advertising External and in-store shelf signs

2,000

2,000

2,000

2,000

Trade- and ConsumerOriented Promotions Samples and coupons

0.10 per sachet

3,500 sachets

350

3,500 sachets

350

3,500 sachets

350

Loyalty program

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Price-off packs

n/a

n/a

n/a

n/a

n/a

n/a

350

350

n/a 350

Marketing-Oriented Public Relations and Publicity Milestone events (e.g. Oâ&#x20AC;&#x2122;ranâ&#x20AC;&#x2122;s birthday) Best producer / product recognition

2,000 per event

0

n/a

n/a

0 n/a

1 n/a

2,000 n/a

1 n/a

2,000 n/a

Brand story

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Article contributions

n/a

n/a

n/a

n/a

n/a

n/a

n/a

30 per headcount per activity

2

480

2

540

2

720

Team bonding activities

Total annual marketing expenses (S$)

480

2,540

2,720

146,780

78,640

82,620

Notes 1. Our S&Marketing General Manager, Clara, is trained in web design. She will assist with developing our on-line advertising tools. O'ran will incur S$50 per year as domain name registration fee.

2. To develop a mobile application costs S$1,000.

3. Seminars are conducted in-store so there is significant cost-savings.

Appendix G1

188

Compensation Benefits 19) What are the compensation benefits under the Work Injury Compensation Act? Under the Work Injury Compensation Act, an injured employee is entitled to claim the following compensation benefits: Medical leave wages. These include (a) full pay up to 14 days for outpatient medical leave; and (b) full pay up to 60 days for hospitalization leave. Beyond these two periods, 2/3 salary is payable up to a maximum period of one year following the date of accident; Medical expenses. These include the medical treatment received by an employee in relation to his injury by accident arising out of and in the course of employment. It shall be the lower of the following amounts: (a) the cost of medical treatment received by the employee, up to one year from the date of the accident; or (b) $25,000 per accident per employee (for accidents that happen before 1 June 2012) or $30,000 per accident per employee (for accidents that happened on and after 1 June 2012); and Lump sum compensation for permanent incapacity (PI) or death, if any. The compensation amount payable is subjected to the following limits:

Limits

Current Limit (accidents happened before 1 Jun 2012)

Adjusted Limit (accidents happened on and after 1 Jun 2012)

Minimum

$47,000

$57,000

Maximum

$140,000

$170,000

Death

Appendix G1 Minimum Total Permanent Incapacity* Maximum

$60,000 x % loss of earning capacity

$73,000 x % loss of earning capacity

$180,000 x % loss of earning capacity

$218,000 x % loss of earning capacity

* - This excludes the additional 25% compensation that is paid to workers with total permanent incapacity to offset the cost of care for the injured worker.

Employers remain liable to pay the above compensation, including medical leave wages, to the employees even if their employment or work passes have been terminated.

20) Under the Work Injury Compensation Act, is the employer liable for costs of medical treatment received overseas?

Under the Work Injury Compensation Act, the employer is liable for the costs of medical treatment received overseas if the accident happened when the employee was working overseas and immediate medical treatment was needed.

Insurance Requirement 21) Is it mandatory for employers to buy insurance for all employees eligible for compensation under the Work Injury Compensation Act (WICA)? Who are required to be insured under the WICA? Employers are required under WICA to maintain work injury compensation insurance for (i) all employees doing manual work and (ii) non-manual employees earning $1,600 or less a month. Failure to do so is an offence punishable by a maximum fine of $10,000 and/or imprisonment of up to 12 months.

It is not mandatory for employers to maintain insurance for non-manual employees earning more than $1,600 a month. Nonetheless, employers will be required to pay compensation in the event of a valid claim, even if they do not buy insurance. As such, employers can decide

189

Appendix G2 Work Injury Compensation Insurance Cost (Estimates)

190

Position Operations Master

Headcount

Total Labour Cost (S$)

Year 1

Year 2

Year 3

Year 4

Year 5

1

1

1

2

2

Year 1

Year 2

Year 3

Year 4

Year 5

24,000 26,400 29,040 63,888 70,277

Premium Rate (/S$100) 0.30

Total Insurance Cost (S$) Year 1

Year 2

Year 3

72

79.2

87.12

Retail Sales Lead

1

1

1

1

2

18,600 20,460 22,506 24,757 54,465

0.20

37.2

40.92

Retail Sales Associate

2

3

3

3

4

28,800 47,520

52,272 57,499 84,332

0.20

57.6

95.04

Secretary / Accounts Executive

1

1

1

1

1

19,800

21,780 23,958 26,354 28,989

0.20

39.6

43.56

5

6

6

7

9

Annual Insurance Cost (S$)

45.012

Year 4

Year 5

191.664 210.8304 49.5132

108.929

104.544 114.9984 168.6643 47.916

52.7076 57.97836

206.4 258.72 284.59 408.88

546.4

Appendix H1 Labour Cost (Estimates)

191

Staff costs are inclusive of CPF and based on gross annual increment of 10% (before adjustment for inflation of 3%) Position

Headcount

Note

Year 1 Year 2 Year 3 Year 4 Year 5 1

Monthly Cost Per Headcount (S$)

Total Labour Cost (S$)

Year 1

Year 2

Year 3

Year 4

Year 5

Year 1

Year 2

Year 3

Year 4

Year 5

0

0

0

0

0

0

0

0

0

0

Managing Director

1

1

1

1

1

General Manager

2

2

2

2

2

1

0

0

0

0

0

0

0

0

0

0

Operations Master

1

1

1

2

2

2

2,000

2,200

2,420

2,662

2,928.2

24,000

26,400

29,040

63,888

70,276.8

Retail Sales Lead

1

1

1

1

2

2

1,550

1,705

1,875.5

18,600

20,460

22,506

24,756.6 54,464.52

Retail Sales Associate

2

3

3

3

4

2

1,200

1,320

1,452

1,597.2

1,756.92

28,800

47,520

52,272

57,499.2

84,332.16

Secretary / Accounts Executive

1

1

1

1

1

2

1,650

1,815

1,996.5

2,196.15

2,415.765

19,800

21,780

23,958

26,353.8

28,989.18

8

9

9

10

12

Note 3

Annual Labour Cost (S$)

2,063.05 2,269.355

91,200

116,160 127,776 172,498 238,063

Notes 1. Managing Director and General Managers (Hui Shan, Clara and Nicole) receive non-taxable dividends as compensation for the responsibilities they discharge in the management of Oâ&#x20AC;&#x2122;ran.

2. It is envisaged that through training and skills upgrading, their salary should increase by 10% annually; with an adjustment for projected inflation of 3%, their effective income increment is 7%.

3. Oâ&#x20AC;&#x2122;ran maintains 10 or less employees from Year 1 to Year 4 to qualify for Micro Loan Programme (tenure of four years and below) by SPRING Singapore.

Appendix H2

192 Employers’ Pledge of Fair Employment Practices Our shared vision is for Singapore to be one of the best places in the world to work; a place where every worker is given an equal opportunity for employment, rewarded according to his or her merit, treated fairly and with respect, and given the opportunity to optimise his or her unique talents; a place where businesses are able to attract, develop and retain valued employees, and create a harmonious and inclusive work environment, where employees are highly motivated and contribute to their fullest to their organisations and the economy.

With a view to achieving this vision, the Tripartite partners:- the Singapore Business Federation/ Singapore National Employers Federation, the National Trades Union Congress and the Ministry of Manpower, have unanimously endorsed the 5 key principles of fair employment practices for implementation:

Sample

•

Recruit and select employees on the basis of merit, such as skills, experience and ability, regardless of age, race, gender, religion or family status.

•

Treat employees fairly and with respect and implement progressive human resource management systems.

•

Provide employees with equal opportunities for training and development based on their strengths and needs, to help them achieve their full potential.

•

Reward employees fairly based on their ability, performance, contribution and experience.

•

Abide by labour laws and adopt Tripartite Guidelines which promote fair employment practices.

My company, ____________________________________[Name of Company], shares the above 5 key principles of fair employment practices and is committed to adopting these principles in the management of our human resources. We believe that the effective implementation of fair employment practices would bring about a harmonious and progressive work environment within our organisation, thereby contributing towards making Singapore a great place to work.

Signed for and on behalf of (Company’s Name)

With the support of (Union’s Name) and the employees of (Company’s Name)

_______________________

_______________________

Name and Designation of Signatory (CEO or equivalent)

Name and Designation of Signatory (Union SG or equivalent)

______________________ Name and Designation of Signatory (HR Director or equivalent)

PARTICIPATION FORM - Attn: SNEF Member Relations (MR) Dept

Contact No: 6827 6955 Fax: 6733 1644 Please tick; My company will be endorsing the pledge.

Company: ____________________________ Contact Person: _______________________ Tel: _________________ Fax: _________________ Email: __________________________ Submission Date: ____________________________ Employment size: ________________ 1) Name of CEO (Mr/Ms): _______________________________________ 2) Name of HR Personnel (Mr/Ms): ________________________________

For Official Use:

Appendix J1 Estimating Start-up Capital

193

Note 1 Monthly Expenses Cash Needed to Start

Total Source of Estimate

Monthly costs

Subtotal

Salaries and bonus

9,120

54,720

9.9%

Directorâ&#x20AC;&#x2122;s fees

833

5,000

0.9%

Rent

12,500

75,000

13.6% CapitaLand

Advertising

6,583

39,500

7.2% Media companies

Utilities, transport and logistics

1,667

10,000

1.8% Various service providers

Office supplies

667

4,000

0.7%

Telecommunications

83

500

Travel expense

4,167

25,000

0.1% Telecommunications company

Insurance

184

1,103

Central Provident Funds

1,216

7,296

1.3% CPF Board

Interest expense

479

2,875

0.5% EnterpriseOne

Repairs and maintenance

833

5,000

0.9%

Taxation and other professional fees

250

1,500

0.3% Professional firms

Miscellaneous supplies

1,250

4.5% 0.2% Insurance company

7,500

1.4%

$238,994

43.4%

Appendix J1 Estimating Start-up Capital 194

One-time costs Fixtures and equipment

21,000

3.8% Contractor

Decorating and other renovation costs

6,000

1.1% Contractor

Installation charges (telecommunication and IT infrastructure)

11,000

2.0%

Starting inventory

105,000

19.0%

Advertising (first year)

68,000

Legal and other professional fees

500

Licenses and permits

315

Cash (Note 2)

100,000

18.1%

Other

500

0.1%

$312,315

56.6%

$551,309

100%

Subtotal

Total estimated start-up capital

12.3% Oâ&#x20AC;&#x2122;ranâ&#x20AC;&#x2122;s Media Plan 0.1% Professional firms 0.1% ACRA

Notes 1. Based on projection of costs to be incurred for first six months of operations subsequent to business commencement.

2. For contingency and emergency purposes (e.g. obligatory premature repayment of S$100K Micro Loan, rent deposits, potential litigation).

Appendix J2

195

Balance Sheet (as at 31 December) SGDâ&#x20AC;&#x2DC;000

Assets

Year 1

Year 2

Year 3

Year 4

Year 5 45

Current Assets Cash

20

25

20

20

Accounts Receivable (Trade)

23

10

25

42

29

Inventory

290

278

247

344

545

Other Current Assets (Fixed Deposits)

100

100

100

100

100

Total Current Assets

433

413

392

506

719

Furnitures and Fittings (Net)

19

13

23

13

23

Office Equipments (Net)

6

0

9

0

9

Fixed Assets

Computers and Peripherals (Net) Total Net Fixed Assets

Total Assets

11

5

13

5

13

36

18

45

18

45

469

431

437

524

764

Appendix J2

196

Liabilities and Shareholders’ Equity

Year 1

Year 2

Year 3

Year 4

Year 5

Current Liabilities Accounts Payable (Trade)

10

10

15

15

25

Current Portion of Long Term Notes

25

25

25

0

0

Income Tax Payable

0

0

4

15

41

Deferred Tax Liability

5

5

5

5

5

Accruals Total Liabilities

5

5

10

15

20

45

45

59

50

91

Long Term Liabilities 75

50

25

0

0

75

50

25

0

0

Share Capital

500

500

500

500

500

Current Year Profit / (Loss)

(151)

(13)

17

121

199

Long Term Debt Total Long Term Liabilities Shareholders’ Equity

Retained Earnings Total Shareholders’ Equity

Total Liabilities and Equity

0

(151)

(164)

(147)

(26)

349

336

353

474

673

469

431

437

524

764

Appendix J3 Profit and Loss (Estimates) Note

Year 1

Year 2

Year 3

Year 4

Year 5

570

713

798

894

1,073

Revenue Sales revenue (products) Workshops and seminars

-

-

-

132

172

Membership fees

30

36

43

52

62

600

749

841

1,078

1,306

(210)

(231)

(254)

(280)

(307)

390

518

587

798

999

50

50

50

50

50

5

0

0

0

0

55

50

50

50

50

(83)

Cost of goods sold

2

Gross profit Other income

1

Grants

Operating expenses Advertising

3

(79)

(79)

(79)

(83)

Advertising (first year)

4

(68)

-

-

-

-

(15)

(19)

(20)

(28)

(38) (50)

Central Provident Funds

(50)

(50)

(50)

(50)

Director’s fees

Depreciation

(10)

(10)

(10)

(10)

(10)

Employees’ bonus

(18)

(23)

(26)

(34)

(48) (238)

5

Employees’ salary

6

(91)

(116)

(128)

(172)

Interest expense

7

(6)

(6)

(6)

(6)

-

Insurance

(2)

(2)

(2)

(2)

(3)

Miscelleneous supplies

(15)

(15)

(16)

(16)

(17)

Office supplies

(8)

(8)

(8)

(9)

(9)

Rent

(150)

(165)

(182)

(200)

(220)

Repairs and maintenance

(10)

(10)

(11)

(11)

(11) (3)

Taxation and other professional fees

(3)

(3)

(3)

(3)

Telecommunications

(1)

(1)

(1)

(1)

(1)

Travel expense

(50)

(52)

(53)

(55)

(56)

Utilities, transport and logistics

8

(20)

(21)

(21)

(22)

(23)

(596)

(580)

(616)

(702)

(809)

197

Appendix J3 Profit and Loss (Estimates) 198 Net profit before tax Income tax expense

Net profit after tax

9

(151)

(13)

21

146

240

0

0

(4)

(25)

(41)

(151)

(13)

17

121

199

Notes 1. Based on projection of costs to be incurred for first six months of operations subsequent to business commencement.

2. For contingency and emergency purposes (e.g. obligatory premature repayment of S$100K Micro Loan, rent deposits, potential litigation).

Appendix J4 Breakeven Analysis Cost Description

Fixed Costs ($/month)

Variable Costs (%)

Variable Costs Cost of goods

31.6

Fixed Costs Salaries (includes CPF and bonus)

16,802

Repairs and maintenance

885

Advertising

6,667

Taxation and other professional fees

132

Rent

15,263

Utilities, transport and logistics

1,770

Insurance

195

Directorâ&#x20AC;&#x2122;s fees

833

Interest expense

267

Miscellaneous supplies

1,327

Travel expense

4,424

Telecommunications

88

Office supplies

708

Total Fixed Expenses Total Variable Expenses

Break-even Revenue Level (S$)

49,362 31.6

72,200

To break even, we need to achieve minimum revenue of S$866,400 (S$72,200 x 12 months) in a single year of normal operations, and this will take place in Year 4 (FY 2016).

199

Appendix J5 Return on Investment (ROI)

200

Discount Rate:

10.0%

Benefits, Costs and Value (in Thousands) Year Discount Factor

1

2

3

4

5

0.91

0.83

0.75

0.68

0.62

Increased Revenue

$570

$713

$798

$894

$1,073

Annual Benefits

$570

$713

$798

$894

$1,073

Present Value (Benefits)

$518

$589

$600

$611

$666

Benefits

Costs One-Time Costs

$312

$0

$10

$40

$0

Recurring Costs

$528

$580

$616

$702

$809

Annual Costs

$840

$580

$626

$742

$809

Present Value (Costs)

$764

$479

$470

$507

$502 $264

Note 1

Net Value Annual Net Value

-$270

$133

$172

$152

Cumulative Net Value

-$270

-$137

$35

$187

$451

Net Present Value

-$245

$110

$129

$104

$164

-32.1%

22.9%

27.5%

20.5%

32.6%

Annual ROI

Notes 1. CapitaLand requires its tenants to renovate their stores after every two to three years of occupancy (i.e. Year 3); Oâ&#x20AC;&#x2122;ran is expected to incur S$10k in doing so. In addition, Oâ&#x20AC;&#x2122;ran is expected to incur S$40k in respect of its business expansion in Year 4 (e.g. enhancement of infrastructure, e.g. SRM system, recruitment exercises, new limited-edition offerings).

Appendix J6 Gross Margin (GM)

201

Sales and Cost of Goods Sold (in Thousands) Year Product Sales Revenue (Gross)

1

2

3

4

5

$570

$713

$798

$894

$1,073

($210)

($231)

($254)

($280)

($307)

Gross Profit

$360

$482

$544

$614

$766

Gross Margin (%)

63.2

67.6

68.2

68.7

71.3

Less: Cost of Goods Sold

Appendix J7 Operating Expense Ratio (OER)

202

Operating Expenses and Receipts (in Thousands) Year

1

2

3

4

5

Operating Expenses

$600 $540

$749 $524

$841 $560

$1,078 $646

$1,306 $759

Operating Expense Ratio (%)

90.0

70.0

66.6

59.9

58.1

Operating Receipts

Contact Information

203

Oranâ&#x20AC;&#x2122;s Business Plan Proposal is a collective effort of Oranâ&#x20AC;&#x2122;s three shareholders: Hui Shan, NG (Ms), Clara, PUAR (Ms) and Nicole, KOO (Ms). Should you require clarifications on the following section(s), feel free to get in touch with the corresponding person(s) at the contact points furnished.

S/N

Section

Contact Person(s)

E-mail

DID

0

Executive Summary

Hui Shan

huishan@oran.com.sg

+65 9630 1231

1

Business and Industry

Hui Shan

huishan@oran.com.sg

+65 9630 1231

Clara

clara.puar@oran.com.sg

+65 9630 1232

2

Corporate Information

Hui Shan

huishan@oran.com.sg

+65 9630 1231

3

Strategic Planning

Hui Shan

huishan@oran.com.sg

+65 9630 1231

Clara

clara.puar@oran.com.sg

+65 9630 1232

Nicole

nicole.koo@oran.com.sg

+65 9630 1233

Hui Shan

huishan@oran.com.sg

+65 9630 1231

Clara

clara.puar@oran.com.sg

+65 9630 1232

Nicole

nicole.koo@oran.com.sg

+65 9630 1233

Clara

clara.puar@oran.com.sg

+65 9630 1232

Nicole

nicole.koo@oran.com.sg

+65 9630 1233

Nicole

nicole.koo@oran.com.sg

+65 9630 1233

Hui Shan

huishan@oran.com.sg

+65 9630 1231

4

5

Marketing Management

Marketing Strategies (4Ps)

6

Operation and Labour Management

7

All others

O`RAN As Bare As You Get