1. ForeRunner Integrity | Quality | Consistency Anne, Yuan YiCarlos, Lam Chunwa Charlotte, Zhou ZitaoDaisy, Wu Ximin Ginger, Zhang JianfangJacky, Chen Yacheng May, Chen YumeiYoyo, Io San Wa Business Plan

2. Market Assessment Business OverviewBusiness Overview PEST AnalysisPEST Analysis 5Fs Analysis5Fs Analysis Market Planning STP AnalysisSTP Analysis Marketing ProgramsMarketing Programs Revenue Forecast Industry SalesIndustry Sales ForeRunner’ s RevenueForeRunner’ s Revenue Investment Appraisal Cash FlowCash Flow EvaluationEvaluation Sensitivity AnalysisSensitivity Analysis ForeRunner Integrity | Quality | Consistency Presentation Agenda

3. Applied Business Project – Module V Company Introduction Presented By Anne ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Revenue Forecast Market Assessment

4. Company name: ForeRunner Company Logo: Company Introduction ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Revenue Forecast Market Assessment

5. Incentive service company Target at the incentive tourism industry Provide well-designed package to help company fulfill their goal of enhancing corporate commitment Business Blueprint ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Revenue Forecast Market Assessment

6. Provide customized and delightful path for customers Provide value-added strategies for business partners Provide growth opportunity for employees Foster innovation, creativity and teamwork Mission Statement ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Revenue Forecast Market Assessment

7. MICE Meetings Incentives ConventionsExhibitions Type of employee reward Cultivate employee commitment Business Concept ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Revenue Forecast Market Assessment

8. ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Market potential Forecasting Market Assessment Macau Market Overview

9. Start-up Strategy Corporate with business partners Future Development Strategy Corporate with business partners Direct marketing Business Model ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Revenue Forecast Market Assessment

10. Applied Business Project – Module V PEST Analysis Presented By Ginger

11. PEST Analysis  Political Factor ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Market potential Forecasting Market Assessment Supportive Entities Macau Fair & Trade Association Macau Convention & Exhibition Association (MCEA) Macau Trade and Investment Bureau (IPIM) Macau Government Tourist Office (MGTO) Government Program and Funding Industry Partner Program (IPP) Strategic MICE Market Stimulation Program (For Incentive Tourism) Aid Schemes for Small and Medium Enterprise (SME) Investment Incentive Plan (IIP)

12. PEST Analysis  Economic Factor ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Market potential Forecasting Market Assessment Average of 12.68% annually from 2001 to 2007 Decrease in 2008 and 2009 Rebound to 26.4% in 2010 Gross Domestic Product (GDP) A continuous increase of inflation rate since August 2010 Inflation Rate Currently unemployment rate in Macau is 2.6% Unemployment Rate 86% of visitor arrivals come from Mainland China and Hong Kong Customer Base Analysis MOP is indirectly pegging to the U.S dollar and kept depreciating against CNY last year Exchange Rate

13. PEST Analysis  Social Factor ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Market potential Forecasting Market Assessment Population Distribution People aged below 40 accounts for 67% of the total population Overview of Tourists Attracted more than 25 million tourists come to Macau annually Lifestyle Macau is a leisure city with a slow life tempo Religions Many religious activities even become parts of Macau’s regular festivals

14. PEST Analysis  Technology Factor ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Market potential Forecasting Market Assessment Government Support Application of Technology The light rail project and HK-Zhuhai- Macau Bridge are under construction The artificial reclamation made the built of the airport come true Three over sea bridges connecting Macau and Taipa Build Macau science center in2005 Set Science and Technology Development Fund in2004

15. Applied Business Project – Module V Five Force Analysis Presented By Charlotte ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Market potential Forecasting Market Assessment

16. Porter’s Five Force Analysis ForeRunner Integrity | Quality | Consistency Market Planning Investment Appraisal Revenue Forecast Market Assessment Threat of Entry Capital Requirement Economies of Scale Government Policies Retaliation from Existing Competitors Threats of Substitutes Availability of Substitutes Switching Cost Buyer’s Propensity to Substitutes Bargaining Power of Buyers Customized Service High Service Quality Demand Switching Costs Bargaining Power of Suppliers Lodging providers Venue providers Restaurants and similar establishments Rivalry among Existing Competitors Potential Competitors in Macau Outsider Competitors Barriers to Entry and Exit Differentiation in the Industry

17. Five Force Analysis – Threat of entry ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Capital Requirement Initial Capital Requirement: Macau Tourism Industry Net Set-up Capital Requirement: set-up cost much lower than that of retailer Economies of Scale Little fixed cost incurred, not practical to pursue economies of scale Existing companies does not have advantages Government Policies Government has allocated tremendous resources Retaliation from Existing Competitors Professional Liability Insurance guarantee MOP 700,000 Bank guarantee MOP 500,000 Min. Set up Cost Mop 1,500,000 Mop2.7 million 152 incentive travels held last year Industry Partner Program

18. Five Force Analysis – Threat of Substitutes ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Availability of Substitutes Macau Convention & Exhibition Association (MCEA) statistics: 11 travel agencies collaborate with the association main substitutes of ForeRunner’s business Switching Cost Contracts for incentive services granted on project basis default risk is small Buyer’s Propensity to Substitutes Client companies are quality sensitive rather than price sensitive, tailored program distinguishes itself buyers’ propensity to substitutes is low

19. Five Force Analysis – Bargaining Power of Buyers ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Customized Service To help customers increase employee loyalty, incentive services companies destined to differentiate from each other through customized services High Service Quality Demand Customers are quality oriented Switching Costs Appeared switching costs to the buyers are extremely low Switching cost increases in two scenarios: 1. Buyers establish deep relationship with current incentive service providers 2. Switching from specialized incentive service providers to traditional travel agencies potential low service quality

20. Five Force Analysis – Bargaining Power of Suppliers ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Lodging providers 91 lodging establishments with unsaturated occupancy rate (DSEC, 2009) Venue providers Hotel establishments: dominate market share abundant hotel establishments ensure the supply of incentive meeting venues Non-hotel establishments Restaurants and similar establishments Ample restaurants and similar establishment

21. Five Force Analysis – Rivalry among Existing Competitors ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Potential Competitors in Macau Number of establishments of conference & exhibition organizing services and increasing rate of those establishments are not large (DSEC,2009) Outsider Competitors Delta region has matured market and intelligent incentive planners Other considerations Low barriers to Exit: we are service company High differentiation in the industry: customized service Rivalry in the Industry Out-of-town Competitors Macau Competitors Conference & Exhibition Organizing Services Travel Agencies

22. Five Force Analysis – Conclusion ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Summary 1 Threat of entryRelative low 2 Threats of substitutesRelative low 3 Bargaining power of BuyersRelative low 4 Bargaining power of SuppliersModerate 5 Rivalry among existing competitorsModerate

23. ForeRunner Integrity | Quality | Consistency Market Assessment Investment Appraisal Market potential Forecasting Market Planning Applied Business Project – Module V Market Planning Presented By Daisy & May

24. ForeRunner Integrity | Quality | Consistency Consumer Analysis Competitor Analysis Marketing Strategies Marketing Programs Market Planning  Segmentation Segment at clustered customers—groups of customers having same preference Behavioral segmentation: local residents, business visitors, gamblers, and travelers Segmentations are changed with different geographic and demographic needs Customer Preference Diffused each customer has a different preference Clustered groups of customers have the same preferences Homogeneous all the customers have the same preference

25. ForeRunner Integrity | Quality | Consistency Consumer Analysis Competitor Analysis Marketing Strategies Marketing Programs Market Planning  Targeting Expand from Greater China to Global market gradually Core Business in Asia Pacific region Medium and large size companies Tailor-made packages  Different market segments with degree

26. ForeRunner Integrity | Quality | Consistency Consumer Analysis Competitor Analysis Marketing Strategies Marketing Programs Market Planning  Positioning Differentiated service is the key to success in specific industry Tailor-made product packages High value-added benefit to customers Make service delivery distinctive Improve employees’ morale, mutual trust and etc Benefit positioning is adoptedBest to cultivate a sustainable CA

27. ForeRunner Integrity | Quality | Consistency Consumer Analysis Competitor Analysis Marketing Strategies Marketing Programs Market Planning  Product Program Base on different demands Different items and pricing Incentive Relaxing Entertainment Customized

28. Pricing Program Client companies care about quality more than price Adopt the cost-based pricing strategy ForeRunner Integrity | Quality | Consistency Market Assessment Investment Appraisal Market potential Forecasting Market Planning

29. ForeRunner Integrity | Quality | Consistency Market Assessment Investment Appraisal Market potential Forecasting Market Planning Distribution Program Business Partner Channel Other MICE companies, local government, hospitality industry Good for a new company to obtain market awareness May lose control to some extent Internet Channel Provide details, provide quicker service Make service arrangements instant Direct Sales Establish its own customer database Collect information through business partner and internet channels

30. ForeRunner Integrity | Quality | Consistency Market Assessment Investment Appraisal Market potential Forecasting Market Planning Promotion Program Medium and large size companies Potential business partners Target Audience Obtaining recognition of potential partners Adopt marketing mix strategy by itself Promotion Process

31. ForeRunner Integrity | Quality | Consistency Market Assessment Investment Appraisal Market potential Forecasting Market Planning Promotion Program Printed Flayers Forthright, eye- catching, and informative Different sets for both group of target audience Promotional Pamphlet Provide detail information about ForeRunner Distributing Channel Directly distribute to target audience by hiring distributor Cooperating with business partners

32. ForeRunner Integrity | Quality | Consistency Market Assessment Investment Appraisal Market potential Forecasting Market Planning Promotion Program

33. ForeRunner Integrity | Quality | Consistency Consumer Analysis Competitor Analysis Marketing Strategies Marketing Programs Marketing Budget

34. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting Applied Business Project – Module V Revenue Forecast Presented By Carlos

35. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast Assumption Market Timeline Customer average consumption is proportional to the inflation index

36. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast MICE Industry Sales MICE Industry Revenue Forecast = No. of Travelers × Market Penetration Rate × Average Consumption Number of Travelers as Proxy Market Cycle Theory Adjusted by inflation index The initial MPR= MICE participants in 2011/ number of tourists MPR growth rate = 10% from 2008 to 2012, 30% from 2013 to 2017, 5% after 2018 Average Consumption = Inflation index * 10

37. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast Inflation Forecast Model Validation ModelMSEMAPEMPE Naïve0.22600.00380.0014 Simple Average91.67490.07470.0371 Moving Average0.56760.00620.0027 Double Moving Average 0.17600.0034 -0.0013 Time Series65.60930.0789-0.0178 Multiple Regression1.74450.0114 -0.0002 Double Moving Average

38. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast Travelers Forecast Model Validation ModelsMSEMAPEMPE Naïve27389.100.1008-0.0003 Simple Average477033.600.31550.2967 Moving Average22764.690.08800.0214 Double Moving Average38486.890.1161-0.0078 Time Series58231.430.1298-0.0209 Multiple Regression102720.700.1878-0.0622 Exponential Smoothing9035.310.05550.0048 Exponential Smoothing

39. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast MICE Industry Sales

40. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast ForeRunner’s Revenue Forecast ForeRunner Revenue Forecast (Marco Approach) Based on MICE Industry Revenue Market Share Forecast Factors - Customer Loyalty (Cl) - Customer Penetration (Cp) - Customer Selection (Cs) - Price Selection (Ps)

41. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast Formula

42. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast Market Share Forecast StageIntroductionGrowthMaturity Customer Penetration 36.4%54%72.675% Customer Loyalty40%35%45%. Customer Selection60%75%80% Price Selection85%90%100% Forecasted Market Share7.43%12.75%26.16%

43. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Investment Appraisal Market Potential Forecasting ForeRunner Revenue Forecast ForeRunner Revenue Forecast （ in thousands) Year Incentive Travel Sales 10%, constant Incentive Travel Sales 10% - 20% Incentive Travel Sales 10% - 30% 2012 4,925.715,219.985,514.25 2013 6,034.727,057.498,080.25 2014 16,348.1620,889.0125,429.70 2015 22,818.1331,622.4840,426.99 2016 31,806.3247,517.1263,227.92 2017 49,231.3578,871.02108,510.86 2018 63,136.96107,849.13152,561.29 2019 99,889.25181,403.38262,917.50 2020 108,342.00208,465.95308,589.90 2021 117,398.36238,582.34359,766.33 Forerunner’s revenue =Industry sales* Forerunner’s market share

44. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Applied Business Project – Module V Investment Appraisal Presented By Jacky

45. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment AppraisalAssumptions Four Key Assumptions We do not sell on credit 1 We assume the continued trend of MICE industry in Macau We assume a capital structure with 30% debt We assume annual sales without adjustment of seasonality 2 3 4

46. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Key Indicators Discounted Cash Flow Method Net Present Value of all cash flows Return on Investment ROI = (Gain from investment – Cost of investment)/Cost of Investment Payback Period Method Payback period = Cost of investment/ Annual cash flow

47. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Initial Investment ItemsCosts a. Down payment of office cost (4,250,000*30%) $1,275,000 b. License registration fees --Fees for issuing license (including 10% stamp duty)$25,000 --Fees for inspection of facilities500 --Fees for publishing license extract in the Official Bulletin of the Macau Special Administrative Region (Overpayment refundable; supplemental) 1,000 --Miscellaneous (photocopy and other document prepared fees) Sub-total 1,000 27,500 c. Office equipment --Notebook Computer ( 7000@10,5 years life) --Photocopier ($5000@4, 5 years life) --Telephone($500@15, 5 years life) --Others Sub-total 70,000 20,000 7,500 4,500 102,000 d. Shuttle Bus 335,000 e. Official website 18,500 Total $1,758,000

48. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Forecasted Cash Flow  Data Source - Five Public Companies in Travel Industry in China and Hong Kong ( 中旅，實德環球，南華集團，專業旅運，星辰集團 ) - Wing Hang Bank Website : http://www.whbmac.com/chi/mortgage/mortgage_link.html http://www.whbmac.com/chi/mortgage/mortgage_link.html - DSEC, Consumer Price Index Report - World Bank report released in 2011

49. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Forecasted Cash Flow YearMortgageSalaryCommission (30%) DepreciationPromotionOther Expense Total Expense 2012 0.241.900.670.140.120.083.14 2013 0.242.020.820.140.130.083.44 2014 0.244.112.740.14 0.097.45 2015 0.244.393.820.140.150.098.82 2016 0.244.685.910.140.160.1011.23 2017 0.245.007.580.150.170.1113.25 2018 0.245.348.270.150.180.1114.30 2019 0.245.7116.970.150.190.1223.38 2020 0.246.0918.400.150.210.1325.23 2021 0.246.5119.940.150.220.1427.20  Illustration Exclude Mortgage, Commission, Depreciation Assume others increase with stable Inflation rate 6.8%

50. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Forecasted Cash Flow Year10%10% - 20%20% - 30% 2012 -0.91-0.79-0.66 2013 -0.70-0.270.16 2014 1.684.948.20 2015 3.909.7215.54 2016 8.4719.4430.41 2017 12.0228.5745.12 2018 13.2734.0854.88 2019 33.1875.87118.57 2020 36.1288.56141.00 2021 39.27102.75166.22  Illustration Calculation of EBIT = Revenue - Expenses

51. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Forecasted Cash Flow  Illustration Calculation of Interest Expense Interest expense = Total debts * loan rate (5.25%) YearTotal LiabilityForecasted SalesDebt-to-Sales Ratio 20120.82.2335.8% Level10%10% - 20%20%-30% YearSalesDebtsInterestSalesDebtsInterestSalesDebtsInterest 2012 2.23 0.800.04 2.36 0.840.04 2.48 0.890.05 2013 2.74 0.980.05 3.17 1.130.06 3.60 1.290.07 2014 9.13 3.270.17 12.39 4.440.23 15.65 5.600.29 2015 12.73 4.560.24 18.54 6.640.35 24.36 8.720.46 2016 19.70 7.050.37 30.67 10.980.58 41.65 14.910.78 2017 25.27 9.050.47 41.82 14.970.79 58.37 20.901.10 2018 27.57 9.870.52 48.38 17.320.91 69.18 24.771.30 2019 56.56 20.251.06 99.25 35.541.87 141.95 50.822.67 2020 61.35 21.971.15 113.79 40.742.14 166.23 59.523.12 2021 66.47 23.801.25 129.95 46.532.44 193.42 69.253.64

52. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Forecasted Cash Flow Annual taxable profits (in Mop)Rate Income up to $200,000Exempted Portion exceeding $200,000: $200,001 to $300,0009% Above $300,00012%  Illustration Calculation of Tax Expense Tax expense = Profit before tax * Complementary Income Tax rate Level10%10%-20%20%-30% YearPBTTax Exp.NIPBTTax Exp.NIPBTTax Exp.NI 2012 -0.95-0.11-0.84-0.83-0.10-0.73-0.71-0.09-0.62 2013 -0.75-0.09-0.66-0.33-0.04-0.290.090.010.08 2014 1.510.181.334.710.564.147.910.956.96 2015 3.660.443.239.371.128.2515.081.8113.27 2016 8.100.977.1318.872.2616.6029.633.5626.08 2017 11.541.3810.1627.783.3324.4544.025.2838.74 2018 12.751.5311.2233.173.9829.1953.586.4347.15 2019 32.123.8528.2674.018.8865.13115.9013.91101.99 2020 34.974.2030.7786.4210.3776.05137.8816.55121.33 2021 38.024.5633.46100.3012.0488.27162.5819.51143.07

53. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Forecasted Cash Flow  Illustration Forecasted Cash Flow = Forecasted sales – Total expense YearCash Flow 10%Cash Flow 10%-20%Cash Flow 20%-30% 2012-0.70-0.59-0.48 2013-0.52-0.150.22 20141.474.287.10 20153.368.3913.41 20167.2716.7426.21 201710.4824.7739.06 201811.3729.3447.31 201928.4265.28102.14 202030.9276.21121.49 202133.6188.42143.22

54. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment AppraisalEvaluation Investment Horizon: 10 years Incorporate three stages of industry life cycle Board members want to reap profits at the maturity stage Terminal Value included: better valuation of company 10%10%-20%10%-30% Payback Period 3.452.582.28 Net Present Value (in Million) 36.6994.60 Return on Investment (%) 7.0617.6928.33 Internal Rate of Return90%144%188% This is a figure you will NEVER forget!

55. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Sensitivity Analysis  Return on Investment (ROI) as a proxy for NPV Gains from investment Costs of investment  Two factors *Level of uncertainties are bigger for the two factors  How do we fluctuate the factors Changing range: 15% for Market Share & Cost of Service Interval: 1% Market Share Changes to ROI Cost of Service Changes to ROI

56. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Market Share Sensitivity Analysis ForeRunner’s Market share: 7.43%  41.43% 10% Scenario Introduction: -0.75  4.27 Growth: 3.76  16.72 Maturity: 17.54  37.38 10%-20% Scenario Introduction: -0.29  2.89 Growth:9.4  30.24 Maturity: 43.51  70.57 20%-30% Scenario Introduction: 1.88  3.34 Growth: 15.04  43.76 Maturity: 69.47  109.05 ROI increases positively with Market Share

57. ForeRunner Integrity | Quality | Consistency Market Assessment Market Planning Market potential Forecasting Investment Appraisal Cost of Services Sensitivity Analysis Percentage change of cost10%10%-20%20%-30% 50.40%8.0114.1220.23 51.40%7.8413.8319.82 52.40%7.6813.5519.41 53.40%7.5213.2619.00 54.40%7.3612.9818.59 55.40%7.2012.6918.19 56.40%7.0412.4117.78 57.40%6.8812.1217.37 58.40%6.7111.8416.96 59.40%6.5511.5516.56 60.40%6.3911.2716.15 61.40%6.2310.9915.74 62.40%6.0710.7015.33 63.40%5.9110.4214.92 64.40%5.7510.1314.52 65.40%5.589.8514.11 - As cost of service increases in different scenario ROI will decrease - However, the cost can be controlled as long as ForeRunner uses the appropriate way to manage the operations