Question

New Business Plan – A Case

Part-I
Mr. Ahamed discovered an idea to start a new business venture in Oman after completion of his Business Graduation from Yale University. He wishes to study the entire economy of Oman for implementing his project in time and with proper execution. He collected data and found the following information i.e., the major earning of Oman economy is from Exports such as Crude oil and refinery, Natural Gas, Fishing, Minerals, Metals, Cement, Agriculture and Textiles etc., and domestic businesses like Fishing, Agriculture, Tourism, Real estate, Restaurant and Meat selling. As per 2018 censes the total population including other nationalities of the country is 4,829,473 million, the GDP of $ 203.959 Billion with Growth rate of 1.8% and Per- capita income is $18,970. Further he also found the up-coming projects like Fishing, Blue City, Oman Rail, Oman Khazzan Gas Project, Mina Al Sultan Qaboos Waterfront, and Modern Restaurant. Based on the above information, Mr. Ahamed wants to select the good business sector in Oman. Mr. Ahamed wishes to invest 30,000/- OMR, to develop the business venture in Oman. Mr. Ahamed decided to study the market scenario, demand and supply analysis in Oman. Based on the market demand and supply he will continue to do the business. One thing he will understand based on the information only Mr. Ahamed will start the excellent business.
Assume as you Mr. Ahamed, how will give the answer for the below questions.

1. Business Mr. Ahamed has chosen to invest in belongs to which type of market structure and explains the salient features of market. (2+3=5 Marks)

2. Explain the demand and supply of his product in the market. Explain.(2+3=5 Marks)

3. How the business is suitable for the Law of Demand in relation to the product being supplied in market? Explain. (3+2 =5 Marks)

4. What are the various Cost involved in the Business? Explain with proper examples? Explain in details. (3+2=5 Marks)

5. Discuss the revenues part of his business, how he will fix the pricing. Explain.

6. Based on the product nature, briefly explain the elasticity of demand for the product. Explain.

Answer 1

Mr. Ahamed will choose modern restaurant as first prefernce according to the data given because:

it is a great domestic business , a source of major earning then in upcoming projects again there is demand for restaurant project and above this this venture is interlinked with tourism and also this is the kind of business with less failures as grabing food cannot be out dated nor can be replaced or banned.

1)this is a monopolistic competitive kind of business

this type of business runs due to

• product differntiaton
• non price competition like advertising, home delivery, extra offers etc
• have close substitue
• therefore elasticity is more than unity
• downward sloping curve but flattter in nature

2)The demand curve for an individual firm is downward sloping in monopolistic competition and supply depends upon the producer himself but willing to sell the output where MR=MC

3)the business is suitable for the Law of Demand in relation to the product being supplied in market because with limited change in price there is maximum change in quantity .

4)

• opportunity cost is basically the loss of opportunity to gone to avail the current one , so here the opportunity cost is zero because it is a refresh start but considering other option we can say that all the option of business given which bare not opted are the opportunity cost.the social cost what environment pay will be the garbage produced in bulk and noise pollution if have music corner ,etc.
• the social cost he chooses to invest in is he is going to serve the 1 poor family daily and also whatever the leftover cooked food left daily will be distributed among the needy.
• explixit cost : actual money expenditure of a firm on purchasing of goods or hiring factor servicies and goods for example: wages to labour , payment of raw material, etc
• implicit cost: these are the cost of self supplied factors of production which are generally not recorded in accounts. For example, rent of own land.
• money cost: money spent on hiring or purchasing of inputs for producing a given output of commodity.
• real cost: it is a subjective concept. it is the efforts and sacrfifice involved in suppling factors of production,

5)he is monopoly with his own taste, but still he can fix price with the cost incurred to him and checking the basic price rate of such product.

the revenue part of his business is that he can add any flavour and make out his own uniquness creating onopoly of such thing and also with it he can add tourism to attract more revenues.

6)product is although perishable but having close subsitutes and kind of confort to ohers therefore the demand for it is more than unit which means demand curve will be downward sloping but flatter in nature.

as there will more change in quantity but less im price.