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Introduction
The Great Wall of China is among the most instantly recognizable historical monuments in China. Feng et al. (2017) suggest that the Great Wall carries a new significance and value. They propose preserving the Great Wall heritage site that combines cultural and historical qualities with a forward-thinking modern perspective. According to Feng et al. (2017), the Great Wall preserves all fundamental, religious, cultural, and historical knowledge contributing to its exceptional universal worth. As Yang et al. (2017) enumerate, some of the positive social impacts that accrue due to the various economic activities taking place on the Great Wall include friendly and helpful behavior in neighborhoods. However, Zhuang et al. (2019) suggest that higher crime behavior with visible and community-unfriendly policing behaviors have erupted due to business activities taking place at the Great Wall. The financial and economic sustainable development in cultural heritage could be achieved by harmonizing the various economic and financial elements (Blundo et al., 2018).
Business Proposal
The main business idea is to preserve the Great Wall heritage site that combines cultural and historical qualities with a forward-thinking modern perspective. The business is expected to start operating on July 15th. 2021 and is projected to last for ten years. That is to mean that it will run through to July 15th. 2031. The purpose of this proposal is to generally preserve the Great Wall as a cultural heritage through tourism activities and sales of other merchandise. Heritage, as Nilson and Thorell (2018) stress, is used in a variety of contexts and becomes significant as a vehicle for political, cultural, and entrepreneurial reasons, as well as academic and emancipatory objectives. The benefits that will accrue as a result of preserving the cultural heritage can be divided into economic, social, and environmental advantages.
Economic benefits include incomes earned from tourist activities, employment creation, and a general increase in a country’s Gross Domestic Income associated with a rise in its citizens’ living standards (Maeer et al., 2016). Additionally, Forster (2020) suggests that globally, cultural heritage serves economic growth and place-making activities. Lastly, the heritage sites create countless long-term jobs at home that don’t demand particular talents or a college degree. Heritage preservation projects frequently result in social advantages due to community engagement and increased understanding of the community’s heritage. Other sites were not considered because the Great Wall of China is a hallmark of ancient Chinese culture and one of the oldest and most impressive artificial structures visible from space (Dramaretska, 2019). Therefore, it is the most suitable site to carry out the proposed business idea. The possible direct competition comes from another Chinese ancient historical site, the Forbidden City (Imperial Palace).
To reduce competition and beating the Forbidden City, the following approaches, as suggested by Parowicz (2019), will be used. First, they will be providing international guidebooks for tourists as a promotion methodology. Another inexpensive strategy to market the heritage site would be to supply information to travel publications, newspapers, radio, and the internet. Lastly, direct contact with tour companies effectively piques their enthusiasm for a location (Hosseini, 2021, p.100). To beat indirect competitors that include the theme parks, then, through the social channels that the customers use, we will communicate information about our services and products and take a look at all competing companies’ economies and trends. Winter (2016, p.8) estimates that in the coming decade, one particular effort, China’s One Belt, One Road, will elevate this cultural strategy to a whole new level. Winter (2016) enumerates key objectives embedded within a broader framework of connectedness and partnership, facility interconnectivity, policy coordination, unhindered trade, and people-to-people linkages. All these objectives are aimed at promoting tourism within the nation. The challenges likely to be faced are major management of risk and insufficient initial capital. In dealing with the above challenge, they will source funds from potential investors who will be willing to save on the project and their personal contribution of capital.
Revenue Generation Model
The type of services provided will be from the tour and ticket sales from the historical site. The services they will be offering attributed to the increasing size and velocity of tourism services, resulting in the emergence of a genuine tourism sector (Sofronov, 2018). The data from table 1 below were obtained from Liang and Ma (2018) since, without public administration of the tourism purchasing market, the outcome of the match is that vendors would choose to auction substandard goods.
Table 1: Revenue Generation Model
From the table above, it implies that the site will be generating a revenue of $1238500 × 12months = $14,862,000.Furthermore, they propose that the site be sustainable, and the estimation will be employed for ten years. It, therefore, implies the site as generating a revenue $14,862,000 × 10 years = $148,620,000 of after upgrading.
Relevant Cost Analysis
Architectural and cultural buildings play a vital role in maintaining the country’s heritage, and hence it is considered a national treasure in every country that owns it. These facilities may be susceptible to shape, color, and material alterations due to weather, natural disasters, and human activities (Abed et al., 2017). Preserving such treasure is critical to all entities which deal with this subject. Furthermore, Wright and Eppink (2016) enumerate that heritage sites are increasingly recognized as capital assets, which can aid conservation decision-making. It is critical to demonstrate the tangible benefits to justify the implications and conservation costs associated with a heritage site listing (Jones et al., 2017). However, Jones et al. 92017) enumerate that before contemporary research on value was developed, valuation studies were quite rare and those that did exist primarily used stated preference methodologies like the Contingent Valuation (CV) and Choice Model (CM).
Economic activity’s rising complexity and diversity necessitate an increasingly effective utilization of financial resources (Stoenoiu, 2018). Cost management solutions are critical in this setting because they enable costs to be aligned with corporate goals (Stoenoiu, 2018). Because the behavior of production costs varies according to economic activity, managers are frequently forced to make estimations based on historical or current data provided by financial or management accounting, financial reports, or dashboards. The executive action is progressively dependent on the financial activity’s quality and timeliness of the data and how it is analyzed and translated into clear, relevant, and full data. The relevant costs of the various items of the proposal were valued as follows: loan repayment of $48,700 and upgrading $15,000,000. Furthermore, staff wages were valued at $2,500, fixed cost of maintenance $150,000, variable cost of maintenance $9,500, merchandise (bottle $3, t-shirt $20, short $15 and photos $10) and utility cost $15,000.
Table 2: Total Fixed Cost
Table 3: Total Variable Cost
Thus, the total cost is the summation of the whole variable costs and fixed costs. Therefore, the total cost will be $20,137,000 + $125,315,000 = $145,452,000.
Financial decision
The generated revenue of the proposed business idea is $148,620,000, whereas the total costs expected as a result of running the business are expected to be $145,452,000. Therefore, the generated revenue is in a position to cover all the total costs of the proposed business idea.
Profits (Income)
The profits earned during the 10 years period, that is, from July 2021 to July 2031 is computed by $148,620,000 – $145,452,000 = $3,168,000. The monthly profits would be $3,168,000/10 = $316,800. High markups, growing business profits, and decreased business dynamism are all current empirical concerns in macroeconomics (Savagar, 2018). After ten years, our projection is likely to be inaccurate; therefore, forecasts and estimates are recalculated following exceptional circumstances.
Monthly and Yearly Cash Flows
Table 4: Monthly and Yearly Cash Flows
The annual cash flow of $1,000,000 was necessary since the economic transactions will involve the acquisition of the cash essential to realize investment opportunities: loans from associates, bank credits, personal funds, or non-reimbursable assets (Răscolean and Rakos, 2018).
Present Net Value to Evaluate the Project
The net present value of a transaction is described as the variation between the proceeds and expenses at a certain rate of discount. It is equivalent mathematically as follows as Dwidayati (2020) suggests: Due to the site’s location in China, they chose a discount rate of interest of 0.035, which corresponds to the Chinese People’s Bank interest charged on reserves. The calculations for the NPV are summarized in table 5.
Table 5: Discounted Cash Flows and NPV
According to the projections in Table 5, the cash flows will be constant as a result of the strategic alliances the heritage site will enter into. It results in a positive NPV of $385,543.2894, which is more than zero, therefore a worthwhile investment.
Discounted Payback Period
The discounted payback period is the time frame during which initially discounted investments will be repaid using discounted returns (Loginovskiy, 2016). The calculations for the discounted payback period will be as follows $909090.9091 + $826446.281 + $751314.8009 = $2,486,851.1709. The balance that I will need to earn in year four will be $3,168,000 – $2,486,851.1709 = $681148.8291.
Conclusion
Our business model and monetary strategy will be offered to the cultural heritage since our mission is to disseminate the cultural and historical elements of the heritage worldwide while also pursuing a noble social purpose. Of course, communicating the heritage site’s significance to the international community needs a significant upfront outlay. This original cost contributes to upgrading and enhancing the cultural site to achieve the goals of the business proposal. Consequently, they must bear in mind the importance of self-sufficiency for the heritage site. Therefore, they have a solid financial strategy due to that to enable the site to earn money in the surplus from its initial outlay. It will be a source of revenue and spending statement which produces a consistent flow of cash over ten years. Additionally, they must be pragmatic after ten years, as important emerging issues will have altered and changed, rendering our financial Strategy obsolete. The business proposal also sought to meet the Standard Goals of Development (SDGs) in ensuring that sustainability in Cultural heritage is attained.
References List
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Dramaretska, K. (2019). Development of tourism in China in view of cultural heritage. Web.
Dwidayati, N. (2020) ‘The use of financial mathematics to evaluate the feasibility of a water conservation project.’ In Journal of Physics: Conference Series, 1567(4), pp.042-068.
Feng, J., Li, Y. and Wu, P. (2017) ‘Conflicting images of the Great Wall in cultural heritage tourism.’ Critical Arts, 31(6), pp.109-127.
Foster, G. (2020) ‘Circular economy strategies for adaptive reuse of cultural heritage buildings to reduce environmental impacts.’ Resources, Conservation and Recycling, 152, p.104-507.
Hosseini, K., Stefaniec, A. and Hosseini, S.P. (2021) ‘World Heritage Sites in developing countries: Assessing impacts and handling complexities toward sustainable tourism.’ Journal of Destination Marketing & Management, 20, p.100-616.
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Wright, W.C., and Eppink, F.V. (2016) ‘Drivers of heritage value: A meta-analysis of monetary valuation studies of cultural heritage.’ Ecological Economics, 130, pp.277-284.
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Zhuang, X., Yao, Y. and Li, J.J. (2019) ‘Sociocultural impacts of tourism on residents of world cultural heritage sites in China.’ Sustainability, 11(3), p.840.
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