Startup Funding For Nestle Baby Food in Myanmar

Question: Discuss about theStartup Funding For Nestle Baby Food in Myanmar. Answer: Introduction: The baby food market mainly comprises of four product largely dried infant food, infant milk formula, prepared infant food and other baby food supplement (Mesch et al. 2014). The Myanmar food market is less regulated as compared to other market. Moreover, the sizeable population has provided many opportunities pertaining to market penetration. This summary report evaluates the market conditions prevailing at the Myanmar market in order to compute estimated level of costs that the company procures. Discussion: The amount of the Initial findings has been allocated in the following manner: Initial Funds Amount (Burmese Kyat) Initial Expenses: Regulatory costs 23,779,800 Logistical framework 48,040,000 Production facilities maintenance 29,064,200 Distribution costs 30,385,300 Research Development Expenses 36,030,000 Office expenses 48,880,700 Raw materials procurements 300,250,000 Initial Promotional Expenses 84,070,000 600,500,000 Start-up Assets 850,000,000 Total Funds 1,450,500,000 Assets: Non-cash assets 3400000000 Cash Needs 3200000000 Additional cash obtained NIL Opening cash balance 4,600,000 Total Assets 6604600000 Liabilities and Capital: Present Borrowings NIL Long-term loans NIL Accounts payable NIL Non-current liabilities NIL Total liabilities NIL Capital: Owners 560000000 Investors NIL Additional Funds NIL Total planned investment 560000000 Loss incurred during start-up expenses 46000000 Total Capital 514000000 Total Capital and Liabilities 560000000 Table 1: Estimated startup funding for the launch (Source: As created by the Author) Estimated Returns from products offered by Nestle Products 1st year 2nd Year 3rd Year Dried Infant Food (30%) 16213500 17996985 20606548 Infant Milk Formula (20%) 10809000 11997990 13737699 Prepared Infant Food (25%) 13511250 14997488 17172123 Baby Food Supplement (25%) 13511250 14997488 17172123 Total returns 54045000 59989950 68688493 Table 2: Estimated Returns (Source: As created by the Author) The numerous estimated expanses requires for the startup funds have been derived after taking into account the food industry dynamics prevailing in Myanmar. The initial expense pertaining to the costs stands at 600,500,000 Kyat after taking into account the probable expenses relating to the manufacturing, production facilities, expected distribution and promotional costs (tractus-asia.com 2016). The return from different baby food items have been estimated at 9% of the initial expenses due to the fact that food market in Myanmar is showcasing profit margins of around 10%. Moreover, returns over the next two year have been estimated to be 11% and 14.5% on expenses based on estimated forecasts (Myanmar Medical Exhibition, Healthcare Conference. 2016). It has been suggested that initial funding should be sourced from the retained earnings pertaining to the other businesses of Nestle. Conclusion: The report shows the computation of initial funds required to launch Nestls baby food products in the Myanmar markets. The initial costs pertaining to regulatory expenses and raw material procurements are high followed by the logistical operations because of accessibility issues. The returns have been estimated after taking into account the industry forecasts. Moreover, the returns pertaining to different products have been apportioned according to the estimated contribution that each of the four-food item will provide. The chosen source of funding relating to the launch of the product line has been selected to be internal in nature as the retained earnings is recommended to be utilized in order to minimize the cost of capital. References and Bibliography: Foodandbeverage.biz. (2016). www.foodandbeverage.biz. [online] Available at: https://www.foodandbeverage.biz/myanmarburma.html [Accessed 12 Sep. 2016]. Allied Market Research. (2016). Baby Food Market By Product Type (Dried baby food, Milk formula, Prepared baby food) and Distribution Channel (Super markets, Hyper markets, Small grocery retailers, Health and Beauty retailers) - Global Opportunity Analysis and Industry Forecast, 2014 - 2020. [online] Available at: https://www.alliedmarketresearch.com/baby-food-market [Accessed 12 Sep. 2016]. Mesch, C.M., Stimming, M., Foterek, K., Hilbig, A., Alexy, U., Kersting, M. and Libuda, L., 2014. Food variety in commercial and homemade complementary meals for infants in Germany. Market survey and dietary practice.Appetite,76, pp.113-119. Dunn, E.C., 2015.Privatizing Poland: Baby food, big business, and the remaking of labor. Cornell University Press. Myanmar Medical Exhibition, Healthcare Conference. (2016). Myanmar Baby Food Supplements Health Drink Registration FDA Myanmar. [online] Available at: https://medical-healthcare.mitamyanmar.com/yangon/sector-industry/baby-foods-food-supplements-and-health-drinks-registration-with-fda-myanmar-yangon-distributors/ [Accessed 12 Sep. 2016]. tractus-asia.com (2016). [online] Available at: https://tractus-asia.com/wp-content/uploads/2015/05/Business-Development-Publications-CODB-Myanmar-2015-05-08.pdf [Accessed 14 Sep. 2016].