Business Plan Outline for TFSU/TCC Students May-June 2011 5/09/2011

CEO

I. Executive Summary (It will be written after the other sections of the business plan have

been completed).

II. History/Background

a. Business Description

b. Uniqueness of Business (Need for Business)

c. Objectives

i. Vision

ii. Mission

d. Funds Required

i. Use of Funds

e. Principals of Business

MARKETING

III. Market

a. Industry Analysis

b. Market Trends and Growth

c. Target Audience

i. Primary

ii. Secondary

d. Primary Competitors

e. Market Research

i. Industry

ii. Consumer

iii. Trade

f. Marketing Goals

i. Share of market goals

Business Plan Outline for TFSU/TCC Students May-June 2011 5/09/2011

ii. Other marketing goals

iii. Marketing plan

g. Product Development

h. Promotion Mix

i. Promotion Objectives and Goals

ii. Strategy

1. Communication Objectives and Goals

2. Trial and Repeat Strategy

3. Promotion Tools

a. Advertising

b. Media Selection

c. Sales Promotion

i. Consumer

ii. Trade

d. Personal Selling

e. Public Relations

f. Buzz Marketing

g. Internet Marketing

4. Other Marketing Considerations

i. Summary Strategy for Expansion into Foreign Markets: U.S.

i. Product

ii. Pricing

iii. Distribution

iv. Promotion

v. Personal Selling

vi. Financing

vii. Problems & Opportunities

Business Plan Outline for TFSU/TCC Students May-June 2011 5/09/2011 HR

IV. Management and Organization

a. Board of Directors and Advisory Team

b. Management team

c. Key employees

d. Recruitment and Training

e. Compensation and Evaluation

V. Operations Management

a. Production or Service Detailed Plan

b. Layout and Facilities Management

c. Schedule and Evaluation Techniques

VI. Financing the Operation

a. Income or Pro Forma (Five Years)

b. Cash Flow Projection

c. Operating Capital Requirements

i. Detailed Description of Funds and Allocation

ii. Sources of Funds

d. Investor Opportunity

i. Description

ii. Exit Strategy

iii. Summary of Benefits to Investors

CEO

VII. Problems and Opportunities

a. Possible Problems

b. Opportunities

VIII. Appendix

a. Sample Creative Execution

 

第二篇：Business_Plan (Pegasus)

Pegasus Travel.com: *Fasten Your Seatbelts!

A Business Plan Analysis and Simulation

* Boston College Professors Michael Peters and Gregory Stoller adapted this business plan and prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

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Pegasus Travel.com

1975 Beacon Street

Brookline, MA 02446

P.O. Box 1234, U.S.A.

(617) Pegasus

Co-owners:

Kimberly Peters

J. H. Welch

Christa Bentley

Yoriko Nomo

Sandrine Bouchet

Description of Business:

This Company will cater to the need of people age 55 and over who want the flexibility in

traveling by groups or individually. Services will include a web site where customers can create their own customized vacation package or choose from the pre-set travel packages of the week and chat with people who are also interested in traveling with them. Customers will also be able to locate travel buddies if they have an idea of a destination, but do not have a large enough group for traveling.

Financing:

Initial financing required is $2,105,185, and will be received from venture capitalists and bank loans that will be paid off over 12 years. The invested money from venture capitalists and bank loans will allow Pegasus Travel, Inc. (“Pegasus”) to cover office space, office equipment and supplies, advertising, technology development, salaries and wages and utilities.

This report is confidential and is the property of the co-owners listed above. It is intended only for use by the person to whom it is transmitted and any reproduction or divulgence of any of its contents without the prior written consent of the Company is prohibited.

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Pegasus Travel.com (“Pegasus” or “the Company”) is a niche online operator specializing in customized and package tours for the age group of 55 and over (referred to as seniors). It is based on the belief that, as an increasing number of seniors become users of the Internet, combined with an interest in traveling, they will provide a lucrative market for Pegasus. The Company provides the option for

flexibility in its tours, allowing the consumer to decide on length of stay, budget, destination and so forth. Apart from the customized tours, tour packages will also be sold. Through its web site, seniors are able to gain insight into tours they might be interested in as well as chat with other similarly oriented people. The comprehensive web site provides links to relevant sites, free e-mail addresses and a sense of community. Pegasus will align itself with a well-known travel agency, Carlson Wagonlit Travel. Its reputable name will give Pegasus’ customers assurance and trust. The Company can also take advantage of Carlson’s expertise and operations in many parts of the world.

Pegasus believes that now is the right time to be entering the travel industry. Currently, travel is the largest sector of e-commerce, accounting for 32% of total sales. Half of these revenues are generated from online travel agencies such as the proposed Company. The online travel industry is expected to explode, from $8 billion this year to about $20 billion in 2002, and predictions of about $29 billion in 2004.

Apart from the industry itself, the target market of seniors is growing significantly. The addition of baby boomers in five years means that seniors will continue to be the fastest growing demographic group. In 2004, about 27% of all seniors will have access to the Internet. Currently, research indicates that seniors spend 8.3 hours a week online, more time than the average college student. Furthermore, seniors have more disposable income, and time on their hands, due to the lack of financial or employment commitments. Seniors spend most of their recreational budget on traveling and want to explore new opportunities that have escaped them in the past.

Pegasus plans to attract and retain customers through its advertising and services. Banner ads will be placed on the top-ten senior and baby boomers web sites in order to generate traffic and create brand awareness. Print ads in leisure and senior magazines will supplement online advertising. A direct mail campaign including promotions, discounts and upcoming tours is also planned, for seniors who have become members of the web site community.

In order to start-up the business, the Company foresees that it will require $2.1 million in venture capital. The high start-up costs are attributable to the aggressive marketing the Company will undertake. The main shareholders of the group will not be drawing any salary, but salary expense will come from the customer service representatives hired. Since the Company will act as an outsource agent to Carlson and 646

receive a commission in return, the Company expects to break even in four years. As more expertise is gained from Carlson and the Company’s operations expand, the need for outsourcing will be minimized. Future prospects for the Company are very attractive. With the growth of the market and industry, Pegasus plans to gradually expand into the next largest market with the most potential – Europe, and will continue to offer the same quality service to these new customers. Pegasus will also continue to please its customers by offering special event packages, such as birthdays and golden anniversaries. Furthermore, the Company will begin providing tours for the disabled, believing that there are very few players in the market which target this particular segment.

The diverse service that Pegasus offers will attract a niche market. The growth of the online travel industry, coupled with the potential of the target market, highly increases the Company’s chances of success. By focusing on quality, service and value, the Company will be able to attract and retain its

customer base. The Company believes that it will succeed in this market segment, and grow substantially as more experience and expertise is gained.

The travel and tourism industry is a leader in E-commerce. According to Forrester Research, travel and tourism will account for 32 percent of all business-to-consumer on-line sales in 2003. On-line sales of travel surged over 200 percent in the last year alone, increasing from $3.1 billion to $8 billion in 2001. The travel and tourism industry is expected to generate almost three times as much revenue as originally predicted, surging to $20 billion in 2002.

By 2004, Forrester Research predicts this segment will become the largest business-to-consumer product, in terms of dollar volume, accounting for 12 percent of the overall travel market. In addition, total travel spending is forecast to grow 4.2 percent annually, increasing from $502 billion in 1998 to

$630 billion in 2003. Domestic travel spending is forecast to grow 5 percent to reach $518 billion in 2003. Spending by international visitors is expected to reach $119 billion in 2004, growing 5.5 percent annually between 1999 and 2004.

The primary transportation sectors in the travel and tourism industry are airlines, rental cars, railways, and cruise lines. The Federal Aviation Administration forecasts that in response to customer demand, U.S. Airlines will continue to increase capacity 4.5 percent per year through 2011. Amtrak’s business plan projects that revenues will grow to $2.5 billion in 2003. Chief among the railway revenue generators will be the Acela high-speed service between Boston, New York, and Washington D.C, which is projected to add $180 million in revenues when it is fully operational in 2001 or 2002.

According to the Cruise Lines International Association (CLIA), cruise lines have committed

over $10 billion to building and launching more than 35 new ships, including the world’s largest

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passenger vessel ever, by the end of 2003. CLIA expects that nearly 7 million travelers will take a cruise vacation in the year 2002.

Moreover, with healthy growth projected for international travel and consistent growth

expectations for domestic travel, total spending for travel and tourism in the United States will grow at least 5 percent annually, reaching a record $630 billion in 2003.

Growth will start slowly, but expected recoveries in Europe and Asia will spur the United States into also record-breaking international visitation levels in 2004, when arrivals will reach nearly 55 million visitors. Receipts are projected to surpass $119 billion. Over the next 4 years, arrivals from each world region are projected to increase proportionately. By 2004, Mexico and Canada alone will account for just over 47 percent of total in-bound visitors.

A significant trend that Pegasus seeks to exploit is the anticipated growth of the European market on the Internet. In general, Europeans spend more on travel than other world regions, generating $10.4 billion in sales revenue this year, and predicted to increase to $23.4 billion in 2004. Furthermore, online travel is becoming increasingly popular with European travelers as the demand for online travel related services increased by 300% in 2000, with 6.4% of all trips initiated through the Internet. The Company plans to take advantage of this trend by expanding into European markets in the foreseeable future. According to recent analysis reports published by the NUA, future revenues in the e-commerce travel industry are expected to increase substantially. Pegasus can expect to take advantage of the

opportunities provided by this growing segment. Phocus Wright, a company which incorporates airfare, accommodation, packaged tours and related travel and tourism services, reported that this year agencies generated 54% of E-commerce dollars spent for the travel services industry. The size of the overall

market assures that the Company can expect to make a good return on its investment. A report by Jupiter Communications states that the online travel industry in 2000 yielded $3.2 billion in sales. Expectations are for sales to reach $29 billion in 2004 and surge to $63 billion by 2007. If Pegasus can successfully reach even .01% of this market, the Company could expect to have $2.9 million worth of sales in 2004.

The Travel and Leisure Industry can be broken down into three major segments: price, age and purpose for travel. Pegasus believes that an in-depth knowledge of these market sectors will help the Company to focus its marketing efforts.

Price is one of the more important factors in determining market segmentation, as it influences a consumer’s travel choices. Customers have come to demand what they pay for. If a customer opts for an expensive tour, he/she will expect better hotels, superior customer service etc. However, a budget traveler 648

will choose the lowest possible price and forgo the extra frills. It is important to note that the majority of customers look for value, which is a key component of Pegasus’ mission.

A second factor which influences market segmentation is the age of the customer. The age range of the travel industry is large, ranging from college students to retirees, and different marketing strategies will attract a variety of patrons. For example, a tour agency targeting college students might advertise low priced tours at locations such as Cancun and Jamaica for spring break. On the other hand, business oriented agencies might reach their customers by the quality of accommodation and services provided. Lastly, the market can be segmented by the purpose for travel. The two main sub-categories are leisure and business. Travel Agencies which target the leisure segment would incorporate tourist attractions and sightseeing activities in their tours. Furthermore, their aim is to allow the customer to enjoy their holiday and transportation with the business traveler in mind.

Pegasus targets the senior population (55 years old and over). The Company believes that this is an important segment, as seniors tend to have more money and time, and travel more for leisure purposes. Furthermore, the number of seniors using the Internet is expected to increase substantially in the near future. According to a report from eMarketer, 27% of seniors are expected to be on the Internet by 2004. The actual number of seniors however will be exploding, as the baby boomers move into this range (US Census bureau reports that the over 55 population will increase by 6 million by 2006).

Forrester reports that the UK seniors (one of the first international markets the Company will

target) will number in the range of 3.2 million. According to Media Metrix, older users are the fastest growing demographic group in the US Internet market. Other reports indicate seniors spend 8.3 hours per week online, even more than the average college student. The combination of the explosive dollar amount spent on online travel, the number of seniors expected to take to the Net, and the fact (from Media Metrix) that older Internet users have and use the most credit cards, presents Pegasus with major opportunities for growth and high returns.

Travel is one of the most profitable industries worldwide, playing a major part in the American lifestyle, as well as the national economy. In 1998, global tourist receipts reached $447.7 billion, making it an attractive industry, with ample room for many players to fight for “a piece of the pie.”

The Company’s competitors in the travel and leisure industry can be broken down into the three main sectors: traditional travel agencies, online travel agencies, and airlines (Examples are listed in

Exhibit 1). Traditional travel agencies provide full service, and are typically known as “brick and mortar” organizations. Online travel agencies are companies which provide their services on the Internet, offering 649

pricing and tour booking options. Lastly, airline companies sell their tickets directly to the consumer, with both online and traditional booking services available. Each of these sectors has various strengths and weaknesses (illustrated in Exhibit 2) and are at different stages of their respective growth cycle. Traditional travel agencies are companies which provide travel information and tour bookings to their customers mostly through the phone, and face-to-face meetings. While traditional travel agencies do not offer “24 x 7 access,” they are making up for this disadvantage by providing the “personal touch” that the Internet does not provide. Moreover, while a consumer has to research online for the best possible deal, the traditional travel agent will do everything for the patron. The forecast for traditional travel agencies is bleak, as most analysts are predicting that the growth in online travel services will cause a decline in the need for traditional agencies. However, partnering with online businesses will allow brick and mortar travel agencies to remain viable. The Financial Times reported that 62% of every dollar spent by the U.S. web shoppers is going to brick and mortar retailers that have online operations. Furthermore, another study conducted by NPD Online Research revealed that 56% of on-line travelers reported having completed reservations with a traditional agent after visiting a travel-related site. This could be due to the fact that consumers tend to seek out the advice of a “live” person who will be able to offer them the reassurance and expertise that they seek. Although many industry analysts predict sales growth to

decrease due to the advent of Internet travel resources, the traditional travel agency has had a compound average growth rate of 6% over the past few years.

Online Travel is a rapidly growing segment of the travel and leisure industry. These agencies provide travel planning on the Internet, enabling the consumer to compare costs and services at an easier, quicker pace. Furthermore, most people use the Internet as the essential tool for acquiring travel

information. Lastly, online agencies offer the consumer the convenience of 24-hour access and flexibility. They provide fast, interactive, and global services. Online travel can be broken down further into three categories: full-service, name-your-price, and umbrella agents. Full service agents provide the service of a traditional travel agent on the Internet. Name-your-price agents allow customers to quote a price they are willing to pay, and will try to locate a seller who matches that price. Lastly, umbrella agents play the part of the middleman, allowing a user to customize his/her preferences, and then matching those preferences to a suitable travel agent. Analysts predict that online travel services will grow from $6 billion in revenue to $29 billion by 2004 and $63 billion by 2007. Some factors that contribute to the significant rise in the online travel industry include: the growing number of people buying online, the rise in individual

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spending on the Internet, and the growing number of American travelers (as a result of the strong US economy).

More and more airline companies are adopting a combination of traditional, and online travel agent services. Airlines sell their tickets directly to the consumer, bypassing service fees that the agencies charge. While the customer might not have as much flexibility in choosing among different fares, airlines reward customers for their loyalty through perks such as frequent flyer programs.

However, passengers still have little or no loyalty to a particular airline, citing price as the

primary factor affecting their purchase decision. Airlines are concerned with organizations such as Priceline and Travelocity, who are luring away many customers, and have retaliated by forming an alliance named Hotwire.com. Hotwire sells discounted airfares for “distressed seats,” seats that are still empty at the last minute. By doing this, airlines hope that they can recoup their losses and concurrently break into the online travel industry.

Pegasus differentiates itself from its competition through convenience, service, target market selection, and personalization. The Company plans to incorporate a “click and mortar” approach,

combining the convenience and flexibility of the Internet with the “human touch” of a 24-hour customer service agent. The Company believes that solid customer responsiveness is crucial, as its target market demands a high level of service, quality and value for money spent. Another factor that makes the

Company unique is the specific market segment that Pegasus is focusing on. Most travel agencies focus on a broad range of segments. A third competitive advantage that the Company offers is the ability to choose and personalize a tour according to the customer’s preferences. Through the combination of these factors, the Company believes it can successfully carve out a niche market, and operate profitably. Pegasus is an online travel agency that caters to the needs of people aged 55 and above who are looking for flexibility and personalized travel experiences. Pegasus will provide an online web site in which customers can search and browse. There will also be a chat room that will list the pre-set travel-of-the-week package from Pegasus. However, the package will also be adaptable to a customer’s needs, in terms of time, destination and entertainment. Once a customer logs in with his or her username and password, a customer will be able to chat with others to collect information prior to booking.

The web site will also offer a discussion board where customers can post a request to find travel buddies, for travel ideas which are different from the pre-set package. Other customers who are interested 651

in a travel plan may only contact other parties through the permission of the patron who initiated the original itinerary.

Because Pegasus’ target customers are baby boomers and seniors, the office will be located on 1675 Beacon Street. Pegasus decided to lease the space to incur a reasonable rent expense. The place has adequate space for computers, printers and also contains a guest room where customers can share their opinions personally with a travel agent. The location of this office is perfect for the business because it is in the heart of Washington Square in Brookline, where most of the successful baby boomers and seniors live.

The business will require employees with at least a bachelor’s degree or equivalent. Personnel would also be required to have some experience with the travel and tourist industry, in order to

understand what customers might want, and how to satisfy their needs. In addition, Pegasus may need web developers and web designers for maintaining the Internet site. The equipment that will be needed for this business are computers, printers, database servers and application servers, and they will be purchased, in order to avoid overpriced equipment leases.

The entrepreneurs of the business are well educated people with different backgrounds and experiences. Kim Peters has worked in a variety of organizations, ranging from small entrepreneurial firms (Mann & Co.) to large corporations (The American Red Cross). She has experience in customer service and promotions.

Christa Bentley is currently earning her Bachelor’s degree in Finance and Marketing at Boston College. Through her coursework and academic experience, she has acquired knowledge on the various aspects of finance. Furthermore, her employment in the largest bank in Singapore helped her develop her analytical skills.

Jack H. Welch is highly qualified as a public relations and information technology manager,

Yoriko Nomo’s resume includes working for nine months in Carlson Wagonlit as a travel agent. Her experience of serving customers, arranging trips, making reservations, and issuing tickets over the computer will allow the Company to begin its operations efficiently. She has also worked for three months as a registration representative at SkyPerfect TV in Japan, where she assisted customers with registration over the phone, and supported them with the appliances’ technical problems.

Sandrene Bouchet is currently “on exchange” at Boston College from a business school in France. Her work experience included a stint at Cora Supermarket where she was in charge of sales analysis in the food department. She was also responsible for submitting a new map of this department to increase sales figures. having worked in the John Hancock Agency in Boston as a Management Information System Intern.

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When the customer has logged on to the Company’s web site (see Exhibit 3), he/she will be able to browse through the special promotions, as well as have the option to research and create their own tour package. Options include choosing their price, location, special dietary requirements, and locations they would specifically like to visit. Once all these factors are in place, the user will be asked to fill out a form which requires general information. At this time, they are entitled to receive the Company’s newsletter, as well as promotions-of-the-month. They will also receive their own e-mail account when they have chosen a username and password. The price estimate will be mailed to their account, or a representative will call them (depending on their preferences), at which point they can decide whether or not to accept the tour package.

After accepting the package, Pegasus will make the necessary arrangements. The firm will use reservation systems such as Sabre and Apollo for making air and hotel reservations. These companies offer various fares which are regularly updated and published on the computer. Reservation agencies are not affiliated with hotels and airlines, and merely provide options, allowing travel agents to choose the best fit for the passenger. Once a selection has been made, a confirmed ticket will be printed out and issued. Pegasus will pay the reservation agencies weekly for the tickets sold. Pegasus receives a

commission from the reservation agency for every ticket booked and paid for. The commission will then be distributed among the sales representatives.

After the tour package is finalized, the customer will be notified by a response of his/her choice. An e-mail message will appear with an itinerary of the trip. If the customer is unfamiliar or uncomfortable with email, a customer service representative will call and explain the travel details. A letter will also be sent confirming their order. Changes can be made to the tour during this period. When the customer is happy with their travel plans, the money will be transferred and the tour will be finalized. At this time, the terms and conditions of each tour will be agreed upon via the web site. The agreement will be legally binding and commit the customer to the price of the trip.

A small welcome packet will be sent to reinforce the customer’s choice of the Company, and the great value they will be receiving. Emergency contact numbers will be provided for cities visited. Through agreements with tour providers in Europe, Asia, Australia, Africa, and South America,

customers will have access to any additional assistance needed. They will also be given detailed maps to cities and country destinations booked for travel, recommendations on sites to visit, and transportation options. Vouchers will be given for discount restaurant visits and popular locales. A small history of the countries will be included, as well as information on local customs and laws. A small foreign language card containing useful phrases will even be provided for customers to carry during this trip.

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Feedback will be a very important issue for improving service. For a limited time, customers will have the opportunity to receive a discount on future travel by providing post-trip analysis on the web site using a simple questionnaire. A feedback chat room will allow customers to hear from others during the decision process both on where to go, and where to stay.

Goals and Objectives

Based on Company research, online travel and tourism will become the largest business-to-

consumer product, and account for 12 percent of the overall travel market by 2004, with sales surging to about $29 billion.

Based on this predicted online market the short-term goal of the Company will be to reach $1 million in gross sales in the eighth month, and approximately $1.8 million by the end of the first year. The effectiveness of word of mouth promotion will be key to the early success of Pegasus. Care packages and customer service should enhance the customer’s attitude and motivate them to talk positively about the Company to others.

Of the $29 billion that consumers are expected to spend in online travel and tourism, Pegasus’s goal will be to achieve about .01% of that number for its market share. This translates to a goal of $2.9 million domestic gross sales revenue in 2004. Pegasus predicts to have losses in the first three years of its operation, but with later entry into the European market, will achieve profits of approximately $700,000 in year five. The Company will also plan to exploit the anticipated growth of the European market by capturing another .01% of market share, thus reaching $10 million in total gross sales revenue by year five.

Pegasus will focus on the most lucrative segment of the population, which are the baby boomers (55 years old and over) and the senior population. The Company believes this particular segment has more money and time on their hands due to their retirement, and tends to travel more often for leisure purposes than other segments. Seniors and baby boomers amount to 55 million people. Pegasus expects to have market penetration of .02% or 11,000 customers after three years of operation, and will increase steadily at a growth rate of 5% each year.

As mentioned earlier in the marketing strategy and promotion program section, Pegasus will partner with info-mediary services such as e-How and Yahoo in its first year of operation. With the help of these partnerships, the Company plans to have a distribution network covering approximately 45% of the market. The Company also seeks to create an awareness level index of 65% by the third year of its operation.

One of the biggest features of the web site will be the chat room, which will allow customers to interact with other travelers. On scheduled nights, Pegasus will invite anyone interested in a selected city 654

to come together to share experiences, and answer any questions about traveling to the area. Customers wanting to travel together can also organize tours. The Company will also have a posting board for

customers who are looking for others with whom to travel. This will help older citizens and handicapped persons find compatible travel companions.

Pegasus’ site will be launched in a predicted time frame of one and half years, after it has

received the sufficient amount of funds needed. The Company will outsource its web site development, and operation, to a more experienced and professional web company. The customers will be able to set the maximum amount of money that they wish to spend on any trip, and Pegasus will try to accommodate that specified budget.

Pegasus will also receive a sales commission of 8.5% on every transaction that is made by each of its agents. The sales promotion budget may be higher than other existing services, but Pegasus believes this amount is necessary to motivate agents to satisfy the customer’s needs. The Company will advertise its site heavily in the first three years of its operation, which contributes to the losses during this time. Plans include click-on banners, television advertising, local and national newspaper buys, and travel magazines. The anticipated media campaign will cost Pegasus about $1 million in the first year. The Company will be promoting itself aggressively in the initial stages of operation, as brand awareness is important in establishing a solid reputation, especially in the target market. It will be easier in the long run to promote the Company’s name without having to extensively utilize mass media, and expend significant dollars on an advertising program.

Strengths and Weaknesses

The firm’s offering of both online and “face-to-face” customer service is an important strength, as it enables the Company to attract more customers, and to increase market share among baby boomers and retirees. Pegasus’ 24-hour service is also important in achieving a competitive advantage. Targeting a specific market is another strength for the Company, enabling it to offer those services that would attract more baby boomers and retirees. In addition, an alliance with travel agencies in Europe will be beneficial to its operations. Furthermore, having employees who are knowledgeable about the travel business, as well as information technology, will be advantageous to the Company. Its web site can be easily arranged and improved by the knowledge of IT in accordance with customers’ needs. Since employees are capable of speaking more than one language, Pegasus may service foreigners who desire to speak Japanese, Cantonese, Indonesian, and French.

One of the main weaknesses of the Company is its lack of a partnership with an airline. It can only offer the best fares that are published on line. Those published fares might change as the departure time approaches. Therefore, it is likely for the firm to demand immediate payments to customers before the airfare increases. Secondly, since the firm anticipates operating only one retail location initially,

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customers who prefer “face-to-face” service might have to visit the office directly. This can be inconvenient for customers who live far away from the Brookline, MA area.

Opportunities and Threats

As the market that Pegasus competes in grows significantly, the Company can take advantage of the large market potential. After establishing a customer base, opportunities for further expansion will be considered. Currently, the Company is focusing on the domestic market, having a strategic alliance with other travel agencies around the world. However, with the growth of international markets, especially Europe, Pegasus will gradually expand into those locations as well. As the Company grows, the need for alliances will diminish. Lastly, Pegasus will broaden its services to include event packages such as anniversaries, wedding vow renewal opportunities, and birthday packages to meet the demands of the market.

Pegasus also faces threats that might hinder the Company’s growth. The travel industry relies heavily on the health of the economy. If the economy is performing poorly, people are less inclined to travel. The travel industry is also susceptible to the political and economic status of other countries. The amount of tourists will significantly decline if a country is undergoing political strife, or has bad relations with the United States.

The growth and profits in the industry makes it lucrative for other players to enter the market.

While the Company does target a niche market, competitors might find the same market big enough to enter themselves. However, Pegasus will have established a significant market share by that time which would create barriers to entry for a new player.

Service Development Strategy

The service that Pegasus provides is highly customized. The customer has the flexibility to tailor his/her travel arrangements through a convenient web site. Because the service targets seniors and baby boomers, the firm will try to meet all of their specific needs, such as providing a 24-hour customer service support as well as a package containing emergency contacts and guidebooks. An emergency sheet that can fold into a wallet or purse will provide contact numbers for everything from the loss of a passport to a dispute with a hotel. The distribution of guidebooks will help the consumer get the most out of their vacation. The goal of Pegasus is to provide value-added services, which cater to a specific target market with a definite set of needs. The Company’s web site will provide the chance to customize the traveler’s vacation and allow as much flexibility as the customer desires.

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Customer Service

Pegasus will provide a unique Emergency Customer Service hotline number. This service will allow customers to contact a Pegasus agent, should there be any questions which arise or problems

encountered during their trip. This emergency hotline number will require Pegasus to hire employees who are specifically trained to cater to customer needs in an emergency situation.

The hotline will also allow Pegasus to hear about the concerns of its customer base, whether it be for their upcoming trips or from their past excursions. These concerns will be documented and discussed during a regular meeting so that management can evaluate and improve its overall service quality.

Pricing

The Company will price the tour package competitively without compromising quality. However, due to seasonal fluctuations in prices, certain times of the year will be more expensive than others. The price of the package will take these price fluctuations into account, as is standard industry practice. Pegasus will therefore find the best possible pricing combinations and include a 25% markup on the

entire package. This is an acceptable and reasonable markup for this industry, and once again in line with industry standards. For example, a trip to Rome might cost $10,000 and Pegasus will then charge $12,500 to the customer. With the combination of discounts that lower the $12,500 price point, and the

Company’s follow-up services (care package and tour book), a high price-value relationship will be attained.

Distribution

The channel of distribution for the Company begins when it receives the airline tickets, car rental, and hotel bookings from a fare listing service such as ARC and TATA. The confirmation is immediate, and the ticket can be printed out from the computer terminal. After the relevant documents have been obtained, Pegasus will compile the package for the customer. The package, which includes a guidebook, contact numbers in the foreign country, as well as the ticket, hotel booking confirmation etc. will be mailed to the customer, who is at the end of the distribution channel.

Pegasus will have many alliances with foreign tour operators: In Europe, the main partner will be Horizon Travel in Athens Greece. Others include Voyages Lorraine in France, Gatehouse Travel in the U.K., Imagine Tours in Belgium, and European Travel Inc. Over time, other alliances will be sought out and established.

Promotion

Pegasus will market to customers online through advertisements on specific sites. In the first phase, the web sites most used by seniors will be targeted. This includes senior.com and aarp.com. The 657

Company will need to build trust amongst seniors since security and the safety of information are two of their primary concerns. Associating with trustworthy web sites will also enhance the Company’s credibility.

Television will also be utilized. The Travel Channel will provide a great outlet to reach the target market. Shows of interest to seniors such as “Great Rail Adventures” and “Hidden Treasures” will further increase the Company’s brand awareness. This will be the most expensive advertising mediums, so the number of Pegasus “spots” will be limited, and further advertising will be based on past effectiveness. The Company will spend $40,000 in the first month advertising on the Travel Channel. $10,000 will go into the travel section of the New York Times and USA Today, and $2,000 towards banner ads on senior.com. Every winter Pegasus will focus its advertising strategy on television, and concentrate on print ads in the summer. At least 20% of the budget (see financial pages) will go into newspaper The Company will also use “give away” promotions to increase awareness. Other possible strategies would be a free vacation to the parents of a college graduate. This will allow the Company to reach a large number of target customers (at a large university) and possibly receive free publicity. The Company will also offer discounts for credit toward a future trip.

Pegasus will be established as an S-Corporation. The principal shareholders will each assume an After considering the pros and cons of each form of ownership, the Company agreed that the S-equal stake in the business. Corp would be the most beneficial structure. A significant advantage of the S-Corporation is the ability to avoid double taxation.

The second benefit from being an S-Corporation is that the shareholders retain the limited liability protection of a C-Corporation. Shareholders are only liable for the amount of their investment.

Management Team Background

Kimberly Peters – President

Kim Peters was born in Amherst, Massachusetts and graduated near the top of her class at Amherst High School. She is currently earning a general management degree in marketing and human resources. Kim represented his high school at the Massachusetts Free Enterprise Week, winning the “Best Return on New Assets” award. She went on to represent her country at the Bosphprus International Student Congress on entrepreneurship, and walked away as the CEO of the winning Company. She has worked in many different organizations ranging from small entrepreneurial firms (Mann & Co.) to large corporations (The American Red Cross). She has experience in customer service and promotions.

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As president of the Company, Kim will be responsible for strategic development, hiring, firing, major asset acquisition, and capital expenditure decisions. Her day-to-day activities will involve

establishing corporate partnerships, training and supervising employees, and dealing with major customer service problems. Kim will run monthly meetings with the Board and the vice presidents. She will also be in charge of handling any disagreements among the workforce.

Christa Bentley – Finance and Accounting Manager

Christa was born in Sydney, Australia and is currently earning her Bachelor’s degree in Finance and Marketing at Boston College. Through her coursework and academic experience, she has acquired knowledge on the various aspects of finance. Furthermore, her employment in the largest bank in Singapore assisted in the development of her analytical skills.

Duties

Christa will be responsible for finance, accounting, payroll, billing, taxes, check signing, and any other matters related to sales and revenue budgets. She will also be in charge of the financial statements and be responsible in choosing an appropriate accounting firm.

Jack H. Welch – Public Relations/Information Technology Manager

J.H. Welch is highly qualified as a public relations and information technology manager, having worked in the John Hancock Agency in Boston as a Management Information System intern. Currently he works in the Student Help and Support Center at Boston College as a User Assistant. Through his work experience, he has acquired the necessary interpersonal skills needed in the public relations field. Duties

Jack’s responsibility as a public relations manager include overseeing the customer service aspect of the Company. He will be in charge of handling customer complaints and the hiring of customer service representatives in the future. Furthermore, he will develop the customer service toll-free hotline that will be introduced. His role as IT manager requires him to develop, maintain ,and update the web site of Pegasus, and to ensure the smooth running of web operations.

Yoriko Nomo – Marketing and Sales Manager

Yoriko Nomo will assume the role of Marketing and Sales Manager. Her resume includes working for nine months in Carlson Wagonlit as a travel agent. Her experience of serving customers, arranging trips, making reservations, and issuing tickets over the computer will enable the firm to efficiently start its operations. Furthermore, she has three months of experience as a registration

representative at SkyPerfect TV in Japan, where she assisted customers with registration over the phone and supported them with the appliances’ technical problems.

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Duties

Yoriko will be responsible for creating promotional activities, monitoring sales, and performing the necessary market research to determine how best to improve the Company’s awareness. She will also be responsible for the design and distribution of all promotional and advertising materials.

Sandrene Bouchet – Administrative Manager

Sadrene Bouchet is currently on exchange at Boston College from a business school in France. Her courses include Introduction to Marketing, Statistics, International Marketing and Entrepreneurship. Her work experience includes a stint at Cora Supermarket where she was in charge of sales analysis in the food department. She also submitted a new map of the department to increase sales figures.

Duties

Sandrene will oversee the daily operations of the business. Her responsibilities include the hiring and firing of employees as well as training and supervision. She will also handle all purchases needed for the office, and be responsible for the opening and closing the office daily.

Organizational Chart

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Board of Advisors

Apart from the management team, Pegasus will have a Board of Advisors consisting of qualified individuals who will provide their expertise to the Company in return for compensation of $300 per

meeting, and an equity stake when the Company goes public. The Board of Advisors’ function is to serve in an advisory capacity for the various functions and activities of the Company. The Board of Advisors includes:

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● Mr. Henry Chuang – Manager of Carlson Wagonlit Travel Agency in Boston. His experience of managing a tour agency as well as Pegasus’ alliance with Carlson will be beneficial. Professor Maria Sannella – Professor in the marketing department of Boston College. Her expertise in the field of knowledge is much needed by the Company. Professor Mary Cronin – E-commerce professor at Boston College. Pegasus can use her advice to create and update its web site. Courtney Wark – a professional E-commerce consultant who has been working with IBM in

South Carolina for three years. Her experience from working with other E-commerce companies will benefit Pegasus tremendously in the development of its web site.

The potential success of Pegasus could be affected by any unexpected changes in the economy. The government could decide to regulate Internet companies or on-line travel, due to concerns Efforts will be made to monitor changes in the industry and economy, and adjust offerings accordingly. over security. If fraud gets out of control, or if airline security gets compromised (terrorists using Internet sites to book fake passengers to hijack planes), new regulations could increase costs, or force serious changes in Company operations.

Trouble in popular vacation sports, such as the conflict in Israel, will affect travel choices and The devaluation of the dollar could also be a significant problem. If customers cannot get much in possible revenues. The Company must make sure to offer better deals to different areas not in conflict. return for their money, they will not be able to travel abroad. This can be overcome by offering more

domestic travel, and to countries where the dollar is still strong. It is important to continue to diversify the product line and client base (get many branches throughout the world) to keep risk minimized.

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PEGASUS TRAVEL.COM

PRO FORMA INCOME STATEMENT

THREE-YEAR SUMMARY

The initial investment of $2,105,185 will be acquired through venture capitalists and bank loans,

which will be paid off over 12 years. Given the low capital intensive nature of the business, the

Company’s start-up costs and working capital are less than other e-commerce ventures. The Company is willing to offer a reasonable portion of equity to attract investors.

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PEGASUS TRAVEL.COM

PRO FORMA INCOME STATEMENT FIRST YEAR BY MONTH ($000s)

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PEGASUS TRAVEL.COM

PRO FORMA CASHFLOW FIRST YEAR BY MONTH ($000s)

Pegasus forecasts its first year sales to be 5% of Travelocity’s revenue in 2000, with projected

increases of 30% per year. The Company budgets 20% of sales for advertising, in order to attract travelers and increase market share. Advertising and technology development expenses will decrease in years #2 and #3, in line with a goal to become profitable by the end of year #5.

The Company assumes that most sales will occur in September and December, as seniors are

most flexible with their travel plans and the best fares are offered by the airlines during these months. Because December is a high travel period, the Company has increased its anticipated salary and

commission expense proportionately. Remaining operating expenses such as office, rent, utilities and insurance are assumed to remain flat throughout the year. Reservation computers and ticket printer expenses are included in office supplies.

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EXHIBIT 1

Major Players in Competitive sectors

Traditional Travel Agencies

*Note: most of these travel agencies have already incorporated the “click and mortar” approach.

● Carlson Wagonlit Travel

● American Express

● World Travel

Online Travel Agencies

Full Service

● Travelocity.com

● Expedia.com

● Amadeus.com

● ByeByeNOW.com

Name-your-price

● Priceline.com

● Cheaptickets.com

Umbrella Agents

● EGulliver.com

● iwant.com

● respond.com

Airline Companies

● US Airways

● United Airways

● American Airlines

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EXHIBIT 2

Competitive Sectors’ Strengths and Weaknesses

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EXHIBIT 3

Pegasus Web Site

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