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Development of Kindergarten Business

1. Introduction

The investigation of the thesis proposal was set up in order to create a business plan with the help of clear and well-thought decisions based on the professional marketing research. The basic idea was open up a kindergarten with the specialty of focusing on the English teaching from the young ages and providing a children-focused environment where the children have higher chances to become more open-minded, creative, quicker learners and successful members of the society. The inquiry of the thesis was based on hypothesizes and the relationships of those issues among each other.

Small business owners start up a company without doing proper analyses, surveys and making a concrete plan.

Inevitably, they soon find that they are out of money and have no time or clear strategies how to market their business.The business plan is aimed at making preparation for setting up enterprise. It has a high importance that the business owners are well prepared, fully informed about the market environment, have a wide understanding of the industry and know they own firm’s goals with the assumption of their strengths, weaknesses, opportunities and threats as well that they are able to have the control of their company’s position on the market among the other participants. The main requirement of a business plan is that all used information has to be based on real facts. Foggy and muddy data lead us toward dreaming what does not give any secure base of the idea and no any proper strategy can be formulated and implemented, so instead of the successful operation we can play more a gambling. This cannot be an objective of any serious entrepreneur. There are several makeup for a structure of a plan but every firm has to focus on their specialties and highlight the differences that are unique in their business according to Pinson (2008, p.152). A well prepared, professional leadership philosophy is based on the feasibility of the business idea and provides extraordinary benefits to the company.

The study of the research is based on hypothesizes and their relationships. These propositions constitute the basis for this examine.

The first is about the financial background that families with income significantly above the average are interesting to find ambitious education and high standard circumstances for their children. The Hungarian Central Statistical Office published the average net monthly earnings of employees in the national economy of the year 2010 was 132,623 Ft. ( In the light of this information it can be assumed that families with one or two children where the parent’s monthly net income reaches the 200,000 Ft each want to consume this service. After understanding the benefits of the school this parents based on their wealth possibilities want to use the offered services.

The second states that mothers with higher education what means a bachelor diploma and above are willing to use the most of the services of the SK. These women understand the profit of the diploma and would like to give the youngest members of their family better opportunities, as the children-centered education from the very beginning of their life, what provides those children faster and easier carrying capacities. These abilities what the children can learn in the kindergarten will base the future learning habits and help to reach the knowledge needed to get a diploma much easier as the other children with traditional way of teaching system from their early young ages.

The third hypothesis says that mothers with the knowledge of minimum one foreign language want their offspring to start learning a foreign language already from their early young ages and the starting age should not be later then their three years of age. The importance of this statement based on the fact according to Kovács and Szamarasz (2006, p.106) that children especially in their early young ages are more affiliated in connection of the second language learning and the period until the fourteenth year are the most effective in that field.

As an assumption the basic idea what provided the construction of these hypothesizes was that families with income over the average are ready to separate a budget for taking this service.

The explanation of why the further research objectives were focused on mothers abilities and skills is that they are the members of the families usually who are at home with their children in the younger age and they are searching for nursery schools at the first level. The fathers will be involved only after the first selecting level what is done mostly by the mothers.

Aware of the information of the hypothesizes acceptation or even rejection the best possible business structure, target market, what means the most essential element of this market, can be chosen. Summarizing these specific information of choosing and researching these hypothesizes provides results what mean strong, real facts and serves as a basis of the business plan and implementing the strategies based on them, leads the school to reach a stabile and successful market present in the field of child education. This matter is important in the long-term planning of the company because by increasing the number of kindergartens and creating a possible franchise system in the future can substitute the state nursery schools.

To the examination of these theory issues are several possibilities available what will be listed detailed and discussed in the topic of methodology. The frame structure of the report shows the form of a business plan included the investigation of the speculation with the result of it what provides the statement of the decision making, so that this company can entry the market successfully and reach effective market presence position by its profitable operating in the future. After introducing the kindergarten idea as a whole and the background of the business, a market analyses will be followed by a competition analyses and by a funding strategy. The next part of the exploration focuses on the market research what provides the answers of the above mentioned theorizes. The hypothesis testing gives the results weather the stated theories can be excepted or rejected.

At the end process of the inquiry the consequence of the theory researches offer the construction availability of a successful marketing management with the help of a well-thought marketing strategy.

In the conclusion the experiences will be summarized and judged by the available evidences, furthermore recommendations designated.

2. Methodology

In this chapter several method possibilities will be introduced and presented. First of all the development of a business plan will be discussed. The basic line to follow declares the structure of the assessment. In case a company would like to enter the market all relevant issues has to be analyzed and clarified. The business idea in this particular project is about entering the kindergarten market.

2.1. Market analyses

The most important step is to understand the market itself, the field of that market segment with all their advantages and disadvantages. This clear overview leads to be more involved into it and with that precise review the whole transparency is available and then the main direction can be determined. Market analyses gives explanation about the nature of the business. The examination of the historical background, the development of the nursery schools and among them the private kindergarten provides the first base of the assessment. The detailed business issues serve as starting point.

2.2. Competition analyses

After understanding the business in what the kindergarten want to entry, a competition analyses follows. The market can be analyzed by internal and external factors as well. The micro environment is directly linked to the company; the macro environment has a direct impact on the firm’s life. There are several methods for the competition analyses what can be chosen for this assessment.

2.2.1. Porter’s five forces model

There is the potential method to use as Porter’s five forces model (Porter, 1986, p. 541). It is a framework for industry analysis and business strategy development formed by Michael E. Porter and considers the attractiveness of the market in the industry sector. According to him the opportunities and the threats as external factors should take into consideration at formulating the organization’s corporate strategy, furthermore by creating the competitive strategy, these issues should provide the basis and the clear understanding of them. He collected and defined the five issues what exist in every market. “As the world economy has been engulfed by strong international competition, Porter argued that strategy equates to how the firm competes against other firms in its business. Porter argued that strategy is not just a series of model at the corporate level of strategy. He noted that strategy includes analyzing potential entrants, suppliers, buyers, substitutes, and competitors” (Stahl, Grigsby, 1997, p. 145)

The five forces what influences the industry in Porter’s theory model are the following:

  1. Existing competitive rivalry between suppliers
  2. Threat of new market entrants
  3. Bargaining power of buyers
  4. Power of suppliers
  5. Threat of substitute products including technology change

Three of Porter’s five forces refer to competition from external sources. The remainder is internal threat. These forces are the parts of the micro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit.

2.2.2. PEST analyses

There is a framework of external factors available called PEST analysis. It covers the abbreviations as Political, Economic, Social, and Technological analysis used for macro-environmental factors. This method identifies the factors which influences most the company from outside. These factors play the major roles in the organization’s long-term life and influence the long-term decision making, what the companies has to take into consideration. Recently two extra aspects has changed the sequence of the model’s key terms by adding ethics and demographic factors to this strategic tool provided the new terms STEEPLE and STEEPLED. (Curtis, Cobham, 2008, p. 54) STEER analysis considers the regulatory reasons as well.

2.2.3. SWOT analyses

With the help of the SWOT analyses the company’s environment can be analyzed by the different directives. According to Ferrel and Hartline (2008, p. 119), creating a correct SWOT offers a mechanism for development of the marketing plan. In case the analysis is not reliable and accurate, the time we have spent on is going to be only a waste.

It shows the viability of a business on the market and introduces the main points of the company what it focuses on the most. It explains the important pillars of the firm and explores the disadvantages, so necessary tasks can be planned and done in the future to eliminate those problems. The SWOT is created for investors and banks as a part of a business plan that every participant has a clear overview about the business and the chances of return. Based on the fact that it shares information what provides perspectives, this analyses means a fusion of information from many areas. That information consists of four elements as strengths, weaknesses, opportunities and threats. The first two characteristics are internal and the lasts external factors of the corporation.

  • Strengths: advantageous factors of the business over the other participants of the industry.
  • Weaknesses: the firm’s disadvantages relative to the other competitors.
  • Opportunities: external chances what provide better possibilities in the market field for the company.
  • Threats: external issues what can afford difficulties for the business.

During a well-focused SWOT analyses it is essential to look after every kind of competitors to have the benefits of it. The potency of this analysis lies in its simplicity and no trained skills are crucial what earns money for the firm.

As a conclusion of the above mentioned analyses possibilities Porter’s five forces model will be utilized in this investigation based on the fact that it provides an extensive overview of the whole industry and a comprehensive solution for analyzing the competition situation on the market with the addition of introducing of identification of the direct, indirect competitors.

2.3. Funding

The survey was analyzing the market situation, furthermore the system and functioning of the kindergarten business was understood in narrow aspect. It is very important to have a broad overview of the financial possibilities to create a successful participant on the market what represents more efficiency and ensure the organization’s competent future by gaining significant profit.

This chapter will observe and look after the potentials started from the local level because the goal is to support and strengthen the school, furthermore to get it well-known, popular among the local clients and investors to lead it into a beneficial market situation. The funding will continue with introducing of state provided support options and at last but not at least with European level of promises.

A financial plan indicates a one year prediction what includes the summary of the costs started with the set-up cost, expenses of the equipments, and the payments of operating as the salaries. The other side of the forecast contains the sum of revenues and direct financial support of the investors, sponsors and the European Commission. All relevant aspects will be discussed in this section and a designated plan will be compiled for the company’s finances.

2.4. Market Research

There are several research methods available, but the plan needs to be focused on one or two methods that will yield the results we are seeking.

2.4.1. Quantitative & qualitative data

There are two ways to collect data for market research as quantitative and qualitative as for example deep interviews and questionnaires according to Chisnall. (2001, p.55)

Quantitative data collection is statistical and uses mathematical analysis to measure the research findings. It can inform of significant differences in comparative data, as well as provide more simple analyses such as averages and satisfaction scores. Therefore quantitative data collection requires an adequate sample. It is suitable for deeper problem approach, works with small samples.

Qualitative data collection, on the other hand, is used to identify key issues that a business may want to explore in-depth. Although qualitative methods such as focus group discussions don’t actually measure the findings statistically but can be used to uncover issues which can be quantified and then measured through quantitative analysis. Therefore qualitative data collection is often used as a basis to design quantitative research. The qualitative research method provides objective results and represented in big samples.

There are two generic classification of the information on which research designs depend as primary and secondary data.

2.4.2. Primary & secondary data

Primary data have to be collected for the first time by either one or a blend of observation, experimentation, questionnaires.

Secondary data are existing information that may be useful for the purposes of specific surveys. This may be available internally or externally and has a disadvantage of being not fully useful or perfectly characterized to our case. These data can be collected from the government statistics, public libraries or online, offline market research sources.

2.4.3. Primary data collection methods

Observation help to learn the behavior and this can lead for wider understanding of the participants of the market. Ethnography is observing customers using products in their natural environments. Mystery shopping is a form of participant observation. Experimentation is to compare the responses to several alternatives in the marketing mix and to evaluate this information as a guide to management in deciding the most effective method of marketing specific products.

Survey research methods are very flexible and can be used for gathering information about consumer knowledge, attitudes, preferences and opinions.

Methods of enquiry are the following:

  • Surveys can be completed via face-to-face questionnaires the personal interviewing, mail and telephone or online.
  • Interviews ask and probe respondents to gain detailed responses.
  • Focus groups are moderating a discussion with users. Useful for capturing key concerns and messages.
  • Product clinics and tests having users try products and give feedback

There are two main types of question according to Chisnall (2001, p. 138): the open-end questions and the closed questions. Open-ended questions result free responses and are mostly used in the early phase of the study, what affects a general overview of the researched subject. It has the disadvantageous that the answers have to be recorded verbatim by the interviewers, so special training needed to handle this type of questions. The closed questions give limited response. It includes the simple alternative (yes/no) and the multi-choice questions, which has the unfavorable characteristic that it always “don’t know” answers and it decreases the utility of the questionnaire.

2.4.4. Testing, data collecting, report, budget

After choosing the method will be used for our survey the data collection will follow. The material should be tested in order to be able to create a relevant and reliable market research report in the future. The pilot work is necessary at the questionnaire scheming in order to receive valid results. Repetition is a useful and efficient tool in order to control the accuracy of the earlier responses. The choosing of the most useful method and the testing can reduce the market research costs and this plays an important role in the research budget planning.

2.4.5. Survey result

In this chapter a report will cover the different subjects of the enquiry. Those information mean the base of the hypothesis testing of this appraisal, therefore all relevant data will be introduced and presented.

2.4.6. Findings and analyses

This division concentrates on the effects of the survey outcomes what will be discussed. The above mentioned hypothesizes will be tested and as end results, they will be accepted or rejected. Based on the facts a better and safer marketing strategy can be created and implemented into the marketing management process.

2.4.7. Hypothesis testing

The hypothesizes, what were laid down at the beginning of the inquiry will be analyzed by comparing them with the facts resulted by the market research, and declared to be false or true.

2.5. Marketing Management

The Marketing Management Process consists of analyzing market opportunities, researching and selecting target markets, developing marketing strategies, planning marketing tactics; implementing and controlling the marketing effort. After researching and analyzing the market environment, the strategic management part of the marketing management process will follow. The STP marketing will be used for further analyses with the support of the 8 P’s marketing mix technique what is mostly applied for non-profit organizations.

2.5.1. Marketing Strategy

The STP marketing is an important element in developing the marketing strategy and refers to the market segmentation strategy (Segmentation), target market selection (Targeting) and market positioning (Positioning).

The main goal of this strategy is defining the facts that on which market the business should operate and what kind of technical solutions should be implemented. Segmentation divides and separates the market into distinctive groups with a focus on those likely to deliver the best return. In his review Dr. Fojtik said (2011) “Targeting is the process of evaluating segments and focusing marketing efforts on a country, region or group of prospects and customers that has significant potential to respond. It highlights the sector that can be reached most effectively, efficiently and profitably.” Positioning helps to become part of the customer’s mind by placing the company and the created brand efficient.

2.5.2. The 8P-s marketing mix technique

The basic concept of the science of marketing is the 4P-s, or at some places 5 to 9P-s in a wider approach. According to Donovan and Henley (2010, p. 282) this method is very useful. “Perhaps one of the best known concepts in marketing is the ‘4Ps’, apparently first described by McCarthy (1960). The 4Ps have endured because they provide the four fundamentals of marketing planning and management.” This is widely known as the marketing mix and even though it is relatively an old concept compared to all the modern marketing tools, it is still a very useful, easily applicable and therefore a popular way to market one’s business. The name of the concept comes from the starting letter of its core components. The short form of the first one is Product, which is followed by Price, the next one is Place and the last one is Promotion in the basic part of the method. According to Crossley (2010) People relations, Partnerships, Policy changes and Paid marketing form the additional 4 social elements of the 8P-s. This scheme was constructed basically for non-profit organizations but due to the reason the kindergarten is looking for investors, sponsors as a non-profit organization, this procedure can be applied into it.

2.6. Conclusion and recommendation

At the end of the investigation a summary will follow with conclusion, recommendations but no new methods will be introduced in that section but judgment of the evidence will be presented.

3. Market analyses

As the first step the most important is to analyze the market. After understanding and having a wide overview of the business, the main direction can be determined.

3.1. The historical background

The historical background of the development the nursery schools will be inquired. The first kindergarten started in 1828 in Hungary by Teréz Brunszvik according to Mészáros (1968, p. 248). Big number of children visited this institution and mostly the offspring of families in poor financial and social environments. The first reason to collect them was to teach them the rules of etiquette manners, moral and social values besides the general knowledge as mathematic, reading with the help of object lesson tools. The music and singing played a huge role because children can learn easier playfully and to develop the habit of body maintenance is the best way to choose the versification combined with singing. Those schools were operated and financed by members of wealthy, reach families who felt social responsibilities. The kindergarten system was part and the first cornerstone of the public education structure. They operations were regulated by the public education act. To be able to place the kindergarten business on the market it is a central question how big is the market. This business is not well covered and because of the rising demand of interest about the new age nursery schools there are a lot of possibilities to create a structure even to establish a franchise system in the future based on the rising stage of dynamism.

3.2. Legal environment

1993rd Act LXXIX. law regulates the public education in Hungary. “The act extends to the regulation of pre-primary education, school education and teaching, the college of education and learning, as well as on the related administrative and service activities, regardless of the structure and maintenance of the institution.”


It declares all aspects of the procedure and operation detailed. Every child has to attend the kindergarten at least one year long before the primary school age and after they 3rd age, but have the opportunity to enjoy the service the entire time during this period. The operation of the state schools is financed by the government but the in practice the parents has to add direct or indirect support on a monthly level if they would like to secure the acceptable environment for their children.

3.3. What is the kindergarten business?

To be able to place the kindergarten business on the market it is a central question how big is the market. There are 44 kindergartens existing and operating in Pécs included all private nursery schools according to the Pécs city official portal. ( According to the regulation from 20 to 25 children can create a school group what means that the kindergarten have to operate closed to those number of occupancy what is a great disadvantage of the state nursery schools against the private schools and it leads the company into a better market situation because it wants to operate with less number of children. This new age nursery school business is not well covered and because of the rising demand of interest about them there are a lot of possibilities to create a successful business and even to establish a franchise system in the future, based on the rising stage of dynamism. The other main issue of the industry is that following the basic educational plan and habit, the institutions operating language is Hungarian and the level of foreign language teaching is very low and not focused. The importance of that topic will be explained in the subchapter of 3.4.2.

3.4. Sunshine Kindergarten

The presentation the main structure of the nursery school provides a base in understanding the concept as a whole of the Sunshine Kindergarten (SK).

The business idea this institution places of interest on foreign language and the importance of nature in the everyday life. The education system teaches the children every subject theoretical and does not pay attention of the well and easy practicability of the topic. In case learning would be part of our life from the early childhood, every issue could be cultivated easily and naturally as how to clean our teeth. The globalization plays a big role today and the world became very small. The education will be available in English and Hungarian languages. The well known English give an advantage for a better and easier prevailing around the Globe. The kindergarten will operate with small and closed group of children with max.15 people in one group educating by intellectual way (no TV) what focuses on environment and nature. The global warming and nature catastrophes warn us to change our life style and show children how important the natural world is and we need to take care of it. On the daily basis it will be two teachers permanently and the subsidiary personal on duty.

3.4.1. Vision & Mission Statement

The vision statement is that children are our future and they can really save the world. It is constructive to provide them the possibility for experiencing the basic steps of a healthy physical-psychical life what has more understanding on the importance that we are part of the nature and we have to learn how to live in symbiosis with it to achieve a happy and successful adulthood. The second part of the vision is that useful and efficient English language knowledge is feasible for everyone by implementing a correct tools and training ways.

Mission Statement

The vision can be realized by educate young children by a different way creating a strong basis to be open-minded, to live in symbiosis with the environment and be flexible. At this peer group do not exist yet developed habits, so it seems the easiest way to put into action this knowledge into people’s life without changing any personalities of them. With skilled kindergarten teachers and a well defined schooling program the vision is successful reachable.

3.4.2. Service

The main service offered from the SK is the child supervision and training by a different way as usual in the state nursery schools. The quality of the service is always lower there due to the less environmental conditions as old buildings and high number of children put into one group. It is understandable that overloaded nursery schools are not able with every willing of the teachers to concentrate very well to every child personally. Every state institution needs financial support from the parents anyway due to the bad circumstances, so families in better financial situation can offer their children higher quality education from the very beginning. What else makes different this institution is the relationship to the nature and to the English language.

Nowadays the environmental pollution plays a big role in our life. In case the inhabitants of the world do not change their mind considered pollution we all know the possible causes of this behavior. The basic idea is to school and show people already in their early childhood the importance of that fact. The best way to protect the environment is to create nature focused behavior to give the chance for adults to create more environmental friendly businesses in the future and think different simply. All offered food is ecological and organic, so all meals in the kindergarten should be prepared from fresh ingredients ordered from the organic food company. The physical training will be a part of the daily routine to get the children used to it.

The second issue what need to be taken into consideration was the globalization. Due to this fact distances disappear and cultures come more close to each other. The basic problem is the communication what can be solved by knowing the most useful language what is the English based on the research of George Weber.

“English is the most obvious example of a language on the way up. It has survived the fall of the British Empire without even slowing down, it has now gone beyond being the language of the world’s only remaining superpower (which in the long run would be a liability), becoming the first truly world-wide lingua franca. International English has become independent of any one English-speaking country, even the USA. From, a certain level upwards, in business, sport, politics, science and many other fields, knowledge of English has become not a matter of prestige but of necessity. Also: the level at which this occurs is moving ever downwards. In science and technology the grip of English is complete. With growing computer sophistication it is becoming easier to put even the most awkward languages and script on screen but that does not alter the big picture. The Chinese trader, scientist, manufacturer who wants to talk to his foreign contacts is not helped much by even the most carefully presented Chinese characters on his screen. He has to tell his non-Chinese customers – in English.” (

The figure shows the significant difference of the most used and important languages.

At this point we have to mention the weakness of the Hungarian school system. Subject and languages as well will be taught as an external data without any successful integration that knowledge into the student’s every day. Our belief is to teach a second language by a natural way from the early years can provide a big advantage by implementing that knowledge effectively in the practice in the everyday life. At this age group our expectations should not be high, the passive language skills will be developed and so a stabile basic for the future improvements.

The business idea is b

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