BUSINESS PLAN OF SENSORIAL MUSEUM

Rita Reis Sousa

Project submitted as a partial requirement for the degree of Master in

Finance

Supervisor:
Pedro Manuel de Sousa Leite Inácio, Assistant Professor
ISCTE Business School, Department of Finance

September 2019
 BUSINESS PLAN OF SENSORIAL MUSEUM
Rita Reis Sousa

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Business Plano of Sensorial Museum
 Business Plano of Sensorial Museum

Abstract
This thesis consists on the creation of a sensorial museum – IMMERSIVUS –, located
in the city of Lisbon through the rehabilitation of an existing industrial pavilion at Beato
Creative Hub. The museum’s goal is to provide an innovative video-mapping service featuring
immersive exhibits using technologic components.
Over the last years, the tourism sector has been growing in importance in the Portuguese
economy, with a significant increase in tourist arrivals in Portugal. The dynamics of Tourism
in Portugal has allowed more revenue and job creation. Tourist demand (consumption by
foreigners and residents) rose to €26,700 million in 2017, which represents a 14.50% growth
over the previous year (INE). These forecasts are favourable to the implementation of this
business plan.
To understand the attractiveness of the market, the business plan begins by presenting
an analysis of the mediate environment and the market, focusing on the cultural entertainment
industry and the current competition in Lisbon. Subsequently an internal analysis is presented
to define the museum’s target audience as well as the strategy to follow. To finish, the
resources and investments necessary for the implementation and operation of the museum are
identified and quantified, followed by an economic and financial analysis that evaluates the
viability of the project.
Based on the study carried out in this business plan and the financial-economic analysis
of the project for the period of 10 years, it is concluded that there is feasibility for the progress
of the presented project.

Key-words: Business Plan, Technology, Tourism, Video-Mapping

JEL Classification System:

• L83 – Recreation and Tourism
• M10 – General Business Administration

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Resumo
A presente tese consiste na criação de um museu sensorial – IMMERSIVUS –,
localizado na cidade de Lisboa através da reabilitação de um pavilhão existente na Hub Criativo
do Beato. O objetivo do museu é oferecer um serviço inovador de vídeo-mapping,
apresentando exibições imersivas com recurso a componentes tecnológicas.
Nos últimos anos, o sector do turismo tem vindo a registar uma crescente importância
na economia, verificando-se um aumento significativo de entradas de turistas em Portugal. A
dinâmica do turismo em Portugal tem permitido mais receitas e a criação de postos de trabalho.
A procura turística (consumo por parte de estrangeiros e residentes) subiu para os €26,700
milhões em 2017, o que representa um crescimento de 14.50% face ao ano anterior (INE).
Estas previsões mostram-se favoráveis à implementação deste negócio.
Para perceber a atratividade do mercado, no plano de negócios começa-se por
apresentar uma análise do meio envolvente e do mercado, focando-se no setor turístico de
entretenimento cultural e na atual concorrência de Lisboa. Posteriormente é apresentada uma
análise interna para se definir o público alvo do museu assim como a estratégia a seguir. Para
terminar, são identificados e quantificados os recursos e os investimentos necessários à
implementação e operacionalização do museu, seguidos por uma análise económico-financeira
que avalia a viabilidade do projeto.
Tendo por base o estudo realizado neste plano de negócios e a análise económico do
projeto para o período de 10 anos, conclui-se que existe viabilidade para o avanço do projeto
apresentado.

Palavras-chave: Plano de Negócios, Tecnologia, Turismo, Video-mapping

Sistema de Classificação JEL:

• L83 – Recreation and Tourism
• M10 – General Business Administration

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Acknowledgements
First, I must thank my supervisor, Professor Pedro Leite Inácio from ISCTE Business
School, for the support he gave me and all the suggestions, which greatly contributed to the
realization of this Master Thesis.
Secondly, I should acknowledge all my professors that taught me important issues over
my Master and Bachelor degree in order to make me a better professional in the future.
I would like to thank the atelier OCUBO’s team for providing crucial information for
the realization of this Business Plan. Especially to the OCUBO’s CEO, Carole Purnelle, who
closely accompanied the elaboration of this project.
Thank you also to my family and friends for all the support, encouragement and
motivation. Thank you for always take care of me.
A final acknowledgement to all those not mentioned here, but who contributed in a
direct or indirect way to the conclusion of this thesis.

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Index
1. Executive Summary ....................................................................................................... 11

2. Introductory Chapter .................................................................................................... 12

2.1. Description of the Innovative Project .............................................................................. 12
2.2. Sensorial Museum’s Technical Sheet .............................................................................. 13

3. Literature Review .......................................................................................................... 14

3.1. Concept of Tourism ........................................................................................................... 14
3.2. Tourism Trends ................................................................................................................. 14
3.2.1. Worldwide Perspective ............................................................................................... 14
3.2.2. European Perspective.................................................................................................. 15
3.2.3. Portugal Perspective ................................................................................................... 15
3.2.4. Lisbon Perspective ...................................................................................................... 16
3.3. Case Studies – Sensorial Museums .................................................................................. 16
3.3.1. France ......................................................................................................................... 16
3.3.2. Japan ........................................................................................................................... 17
3.3.3. USA ............................................................................................................................ 17

4. Reference Framework and Methodology .................................................................... 18

5. Mediate Environmental Analysis ................................................................................. 19

5.1. External Analysis – PESTLE Analysis ............................................................................ 19
5.1.1. Political-legal Analysis ............................................................................................... 19
5.1.2. Economic Analysis ..................................................................................................... 23
5.1.3. Socio-Cultural Analysis .............................................................................................. 25
5.1.4. Technological Analysis .............................................................................................. 26
5.1.5. Environmental Analysis.............................................................................................. 27

6. Market Analysis ............................................................................................................. 29

6.1. General Framework .......................................................................................................... 29
6.2. Market Dimension ............................................................................................................. 29

7. Competition Analysis ..................................................................................................... 32

7.1. Direct Competition ............................................................................................................ 33
7.1.1. Lisbon Story Centre – Memories of the City.............................................................. 33

8. Immediate Environmental Analysis ............................................................................. 34

8.1. Porter’s Five Forces Analysis ........................................................................................... 34
8.1.1. Bargaining Power of the Buyers ................................................................................. 34

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8.1.2. Bargaining Power of the Suppliers ............................................................................. 34

8.1.3. Rivalry Among Existing Firms ................................................................................... 35
8.1.4. Threat of New Competition ........................................................................................ 36
8.1.5. Threat of Substitutes ................................................................................................... 36

9. Internal Analysis ............................................................................................................ 38

9.1. SWOT Analysis .................................................................................................................. 38

10. Development of Strategy ........................................................................................... 40

10.1. Mission, Vision and Values ............................................................................................... 40
10.2. Competitive Advantages ................................................................................................... 40
10.3. Segmentation, Targeting and Value Offer ...................................................................... 41

11. Marketing Policies – Marketing Mix ....................................................................... 43

11.1. Product ............................................................................................................................... 43
11.2. Price .................................................................................................................................... 44
11.3. Place .................................................................................................................................... 45
11.4. Promotion ........................................................................................................................... 45

12. Location ...................................................................................................................... 47

12.1. Macro Location .................................................................................................................. 47
12.2. Micro Location .................................................................................................................. 47

13. Organization ............................................................................................................... 49

14. Project Planning and Implementation ..................................................................... 51

15. Economic and Financial Valuation .......................................................................... 52

15.1. Introduction ....................................................................................................................... 52
15.1.1. Time Horizon of Analysis .......................................................................................... 52
15.1.2. Inflation Rate .............................................................................................................. 52
15.1.3. Corporate Rates – IRC ................................................................................................ 52
15.1.4. Legal Reserves ............................................................................................................ 52
15.1.5. Other Reserves ............................................................................................................ 52
15.1.6. Dividends .................................................................................................................... 53
15.1.7. VAT Rates .................................................................................................................. 53
15.1.8. Depreciations .............................................................................................................. 53
15.1.9. IRS Retention Rate ..................................................................................................... 53
15.2. Capital Structure ............................................................................................................... 53
15.2.1. Capital Structure Policy .............................................................................................. 53
15.3. Investment .......................................................................................................................... 54
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15.3.1. Real Estate Investment ............................................................................................... 54

15.3.2. Equipment and Other Investments.............................................................................. 55
15.3.3. Investment Summary Table ........................................................................................ 56
15.3.4. Investment in WC ....................................................................................................... 57
15.4. Sensorial Museum Exploitation ....................................................................................... 58
15.4.1. Sales Forecast ............................................................................................................. 58
15.4.2. Operational Costs........................................................................................................ 58
15.5. Cash Flow Table ................................................................................................................ 59
15.6. Financial Plan .................................................................................................................... 60
15.7. Income Statement .............................................................................................................. 61
15.8. Balance Sheet ..................................................................................................................... 62
15.9. Evaluation of the Project .................................................................................................. 63
15.9.1. Discount Rate.............................................................................................................. 63
15.9.2. Evaluation Indicators (Equity Return Rate) ............................................................... 63
15.9.3. Weighted Average Cost of Capital – WACC ............................................................. 64
15.9.4. Evaluation Indicators (WACC) .................................................................................. 65
15.10. Key Performance Indicators ........................................................................................ 65
15.10.1. Economic Indicators ............................................................................................... 65
15.10.2. Economic-Financial Indicators............................................................................... 65
15.10.3. Financial Indicators ................................................................................................ 65
15.10.4. Liquidity Indicators ................................................................................................ 65
15.11. Sensitivity Analysis ....................................................................................................... 66

16. Conclusion and Critical Analysis ............................................................................. 68

17. References ................................................................................................................... 70

18. Annexes ....................................................................................................................... 73

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Index of Tables
Table 1 - IMMERSIVU's Technical Sheet .............................................................................. 13
Table 2 - Target ........................................................................................................................ 42
Table 3 – IMMERSIVUS’s Entrance Price ............................................................................. 44
Table 4 – Promotional Actions of IMMERSIVUS .................................................................. 46
Table 5 – Capital Structure ...................................................................................................... 54
Table 6 – Investment Summary Table (values in €) ................................................................ 56
Table 7 – Investment in WC (values in €) ............................................................................... 57
Table 8 – Sales Forecast (values in €) ..................................................................................... 58
Table 9 – Cash Flow Table (values in €) ................................................................................. 59
Table 10 – Financial Plan (values in €) ................................................................................... 60
Table 11 – Income Statement (values in €) ............................................................................. 61
Table 12 – Balance Sheet (values in €) .................................................................................... 62
Table 13 - CAPM ..................................................................................................................... 63
Table 14 – Evaluation Indicators for the Investment Project (Equity Return Rate) ................ 63
Table 15 - WACC .................................................................................................................... 64
Table 16 – Price Growth Sensitivity Analysis ......................................................................... 66
Table 17- Visitors Number Growth Sensitivity Analysis ....................................................... 66
Table 18 – Sensitivity Analysis (values in €) .......................................................................... 67

Index of Figures
Figure 1 - Systemic SWOT Matrix .......................................................................................... 39
Figure 2 - Organizational Chart of IMMERSIVUS ................................................................. 49
Figure 3 - Project Planning of IMMERSIVUS ........................................................................ 51

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List of Acronyms
APT – Automatic Payment Terminal
ASAE – Autoridade de Segurança Alimentar e Económica
AT – Autoridade Tributária
BdP – Banco de Portugal
BRL – Brazilian Real
CAE – Classificação Portuguesa das Atividades Económicas
CAPM – Capital Asset Pricing Model
CML – Câmara Municipal de Lisboa
ECB – European Central Bank
EGEAC – Empresa de Gestão de Equipamentos e Animação Cultural
EU – European Union
GDP – Gross Domestic Product
IMF – International Monetary Fund
IMI – Imposto Municipal sobre Imóveis
INE – Instituto Nacional de Estatística
IRC – Imposto sobre Rendimento de Coletivos
IRR – Internal Rate of Return
IRS – Imposto sobre Rendimento de Singulares
JESSICA – Joint European Support for Sustainable Investment in City Areas
MICE – Meetings, Incentives, Conferences and Events
NPV – Net Present Value
PENT – Plano Estratégico Nacional do Turismo
PPP – Purchasing Power Parity
QREN – Quadro de Referência Estratégico Nacional
RNAAT – Registo Nacional de Agentes de Animação Turística
ROA – Return on Assets
ROE – Return on Equity
ROI – Return on Investment
SWOT – Strengths, Weaknesses, Opportunities and Threats
UNWTO – World Tourism Organization
USA – United States of America
USD – American Dollar
VAT – Value Added Tax
WC – Working Capital
WTTC – World Travel & Tourism Council

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1. Executive Summary
This master thesis consists in the evaluation of an investment project for the creation of
a sensorial museum – IMMERSIVUS – located in Lisbon city centre, at Beato Creative Hub.
The motivation for the development of this theme arises from the interest in studying the
tourism sector in Portugal, especially in the city of Lisbon, to understand the reasons that
fostered the exponential growth of this industry over last years. The WTTC data show that the
tourism has had an estimated direct impact of €14.30 million on the Portuguese economy in
2018 and is projected to reach 15 million euros this year.
The purpose of the museum is to enhance the culture and history of Lisbon through an
immersive show, with the objective to reach not only the touristic audience but also the locals.
The museum’s exhibitions consist on staging different scenes, previously filmed, 3D and 2D
animations and sounds. Video-mapping will be projected onto walls, floors and ceilings to
create a 360º experience that invites the audience to roam freely throughout the museum’s
facilities.
The project foresees the rehabilitation of an old industrial pavilion in the city, turning
it into a sensory museum with an exhibition hall. The use of the premises will be contracted
with its owner and will correspond to the attribution of a part of the museum’s billing.
The entrance price of the museum ranges between €7.00 and €15.00, according to the type of
ticket purchased. These values are presented in detail in pricing policy.
The initial investment amount is €2,000,000.00, of which €800,000.00 will be financed
by equity and the remainder through a bank financing (€1,200,000.00). The project has a
duration of 10 years, being the first year of implementation 2020.
The indicators considered in the economic and financial analysis prove the viability of
this project. This project achieves: a NPV of €473,588.18 (discounted @ WACC = 6.94%),
meaning that it is possible to recover the investment made, remunerate the capital invested and
still generate a surplus; an IRR is 9.37% which is higher than the WACC 6.94%; and a Pay
Back Period of 8 years, which is lower than the lifetime of the project (10 years).
Based on the information presented above, it is possible to state that this is a project
economically viable and with a potential of investment.

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2. Introductory Chapter

2.1. Description of the Innovative Project

The cultural dynamism of Lisbon as well as its diversity of experiences, make it an

increasingly demanded city, either for business or leisure tourists. It is being considered one of
the most preferred destinations to make a city-break.
Lisbon has been recording a sustainable tourism growth over the last years (recording
an aggregate increase of 10% in the number of visitors and 8.30% in the amount spent by each
tourist since 2009), being predicted a slowdown of this growth in the coming years (Turismo
de Portugal).
These forecasts lead to the creation of tourism-related businesses, especially hotels,
local lodgings and tourist animators. In this context, this project consists in the development of
a business plan of a sensorial museum, following a coherent structure that encompasses several
stages, ending with an evaluation and investment analysis and decision.
The concept of the sensorial museum is a unique immersive experience in Lisbon
through video-mapping and other technological features. It turns real space into virtual ones
using optical illusory images and movement of 3D objects, walls, water and floors. Real actors
and dancers are introduced into our virtual worlds to interact with the project surfaces. Our
visitors will get in touch with Portuguese culture, especially the traditions from the city of
Lisbon. The content of the exhibitions during the museum’s launch will be closely linked to
the history of the city of Lisbon, highlighting its most important historical events.

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2.2. Sensorial Museum’s Technical Sheet

Company IMMERSIVUS
Immersive Sensorial Experience using Video Mapping
Concept
and Other Technological Features
Economic Activity CAE 9329 – Outras Atividades de Diversão e Recreativas
Legal Form Limited Partnership
Company’s Social Capital €800,000
Average Entrance Price €11.00
Geographical Location Beato Creative Hub, Lisbon, Portugal
Number of Employees Seven
Duration of Business
10 months
Implementation
Equity: €800,000
Capital Structure
Liabilities: €1,200,000
NPV @ WACC=6.94%: €473,588.18
Economic and Financial
IRR: 9.37%
Indicators
IR: 8 Years
Project Life 10 Years
Table 1 - IMMERSIVU's Technical Sheet

Source: Author

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3. Literature Review
The goal of this part of the project is to gather data for the development of the business
plan of the sensorial museum. It allows to understand the concept of tourism, its principal forms
and recognize the existent offers of immersive experiences in the world.

3.1. Concept of Tourism

Tourism is a key driver of development in many countries worldwide, because it is one

of the largest industries in the world (Annex 1). In real terms (i.e. considering exchange rate
fluctuations and inflation), the international receipts from tourism worldwide during 2018
totalized an amount of €1,700 thousand million (UNWTO, 2019: 2) (see Annex 2).
To define the concept of tourism it should be considered the various groups that
participate in and are affected by this sector. Their perspectives are vital to the development of
a comprehensive definition of tourism. The UNWTO enounces the most widely tourism
concept, which was approved by the United Nations Statistical Commission, in 1993.
According to the UNWTO (UNWO, 2018: 1), tourism is “a social, cultural and economic
phenomenon which entails the movement of people to countries or places outside their usual
environment for personal or business/professional purposes”. The term usual environment is
intended to exclude trips within the area of usual residence, frequent and regular trips between
the domicile and the workplace and other community trips of a routine character. In the Annex
3 can be found the classification of tourism by UNWTO.

3.2. Tourism Trends

For a better understanding of the trends of the touristic sector, we divide the analysis in
four levels. First we analyse the tourism at worldwide level to understand the main tendencies
through the world. Next, we focus our research on the EU level and to complete our analysis
we study the tourism in Portugal with special attention to the city of Lisbon.
3.2.1. Worldwide Perspective

Tourism is a global force for economic growth and development, driving the creation
of more and better jobs and serving as catalyst for innovation and entrepreneurship. Modern
tourism is closely linked to development and encompasses a growing number of new
destinations. Strong demand from conventional and emerging markets fuelled growth in the
global receipt, which follows the positive trend recorded in international tourist arrivals.

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During 2018, destinations worldwide recorded a total of 1,400 million international tourist
arrivals (UNWTO, 2019: 2). In most recent publications, UNWTO predicts a robust growth in
international tourist arrivals of between 4% and 5% in 2020.
As stated by UNWTO in the Long Term Forecast Report of Tourism Towards 2030
(Annex 4), international tourist arrivals worldwide are going to grow 3.30% every year
between 2010 and 2030 to attain 1,800 million by 2030 (UNWTO, 2017).
3.2.2. European Perspective

In the EU, as in the whole world, the tourism plays an important role in the economy
mainly because its creates employment. It contributes 5% to the EU GDP and accounts for
5.20% of the total labour force (European Parliament).
Over last years, Europe has reinforced its position as the world’s number one
destination. In 2018, the number of international tourist arrivals reached 1,400 million
worldwide, 710 million of which were in Europe (which represents a 51% share of the tourism
market) (UNWTO, 2019: 10). A long-term study forecasts a future modest growth in European
tourism to an estimated 595 million tourists until 2030 (UNWTO, 2017).
The core objective of the EU policy is to maintain Europe’s standing as a leading tourist
destination while maximizing the industry’s contribution to growth and employment
(European Commission). The quality of touristic offer needs to be continuously improved to
achieve this goal.
3.2.3. Portugal Perspective

In Portugal, tourism sector has grown well above the sector worldwide. Per BdP, the
competitiveness of tourism is independent of prices and can be explained by a relative increase
in the perception of Portugal as a safe destination and an improvement in the quality of services
offered (BdP, 2019).
In 2018, the number of foreign tourists visiting Portugal reached a record of 12.76
million people. Tourism has been increasing steadily since 2010, with hundreds of new hotels
and thousands of refurbished apartments for tourists opening across Portugal (INE, 2018).
Although this growth is remarkable, BdP believes that there is still room for growth. However,
BdP highlights that is essential to focus on different factors from price competitiveness, namely
in an increase in the quality and added value of the services offered that contribute to the loyalty
of visitors and to an increase in average revenue per tourist (BdP, 2019).

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3.2.4. Lisbon Perspective

Travel and tourism plays an important role in Lisbon’s economy too. Lisbon had an
average touristic growth of 10.60% between 2009 and 2017. During 2017, 4.94 million
international travellers stayed overnight in Lisbon, which translates in total expenditures of
1,780 million euros (WTTC, 2018). Lisbon’s tourism sector contributed 5.30% for the city’s
GDP in the year of 2016, which is higher than in almost all the other European cities (WTTC,
2018). In terms of jobs and unemployment, more than 100,000 people are engaged in tourism
related jobs; this constitutes a noteworthy 7% of the city’s workforce.
Lisbon’s economic futures relies in large part on tourism and the forecasts for touristic
activity look promising with national GDP set to grow by 4.70% per year on average over the
next decade, reaching a total of €5,300 million by 2026 (WTTC, 2018).

3.3. Case Studies – Sensorial Museums

Tourists are demanding for unique experiences; they want something that is once in a
lifetime experience. To achieve these expectations, innovative concepts of tourism offers are
emerging. When combining with new technologies, this offers can attract even more visitors.
An example of this is the video-mapping experiences that have been created for cultural as well
as for commercial purposes (Annex 5). Video-mapping is a technique for video projection that
can be used to bring buildings and objects to life, create immersive environments and to provide
exciting interactive experiences. This technique always involves a combination of an extremely
high degree of creative skill and intricate technical planning.
3.3.1. France

Culturespaces is a private actor for global management of monuments and museums,

the creation of art centres and immersive digital exhibitions. It has developed a unique and
innovative concept for the site: AMIEXâ (Art & Music Immersive Experience). This concept
is currently being used on two spaces in France, at Les Carrières de Lumières in Baux-de-
Provence and the Atelier de Lumières located in Paris.
[Link]. Les Carrières de Lumières

In 2011, the City Council of the City of Baux-de-Provence entrusted to Culturespaces

the management of the visits, the cultural animation and the promotion of Les Carrières de
Lumières. It is located on a quarry within the rock of the Hell Valley, which has 7,000 square
meters of projection area with ceilings up to 18 meters high. The visitors walk around the

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quarry totally immersed, as they are surrounded by imagery and sound. Since its opening in
March 2012, it presented exhibitions related to works of art of artists known worldwide such
as Van Gogh, Monet, Michelangelo and Leonardo da Vinci. In the Annex 6 is presented the
detailed history of Les Carrières de Lumières.
[Link]. Atelier des Lumières

Given the success of the Les Carrières de Lumières, the Culturespaces decided to create
the Atelier de Lumières on an unoccupied foundry in Paris with the same concept. It opened in
April 2018 and since then it has been a success, already presented exhibitions from Gustav
Klimt, Hundertwasser and Van Gogh.
3.3.2. Japan

[Link]. teamLab Borderless

The digital art collective teamLab (an interdisciplinary group of artists, scientists and
more) has presented multiple exhibitions in Japan and other locations over last years. However,
it was only in 2018 that teamLab opened a permanent installation in Japan the teamLab
Borderless. As the name suggest, some of the exhibits are not confined to their respective rooms
as they transition from one to another seamlessly. It has an exhibition of 10,000 square meters
space; where they use technology to create an experience that stimulate all the human senses.
In total, there are 50 exhibits spread across the vast space. All the exhibits are interactive: the
visitors are encouraged to touch, follow, disrupt or add to them. None of these video/digital
artworks are played on loop, either. They are all original, organic movements that are
dependent on the audience participation.
3.3.3. USA

[Link]. ARTECHOUSE

ARTECHOUSE is a three-level digital art immersion with over 1,000 square meters
exhibition, located in Washington and open since June 2017. It displays large-scale
installations produced by artists who are merging arts and technology to connect audiences of
all ages to the arts and stimulate interest in the limitless possibilities of technology, science and
creativity. In ARTECHOUSE, art has no limits and many of its experiences are interactive and
immersive, inviting visitors to become a part of the art. This innovative project welcomed over
400,000 visitors since its opening and has captivated a global audience making headlines in
numerous international media outlets as the premier contemporary art space.

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4. Reference Framework and Methodology

The methodology of this project would be content analysis technique, especially on a
qualitative and quantitative analysis of online content. The business plan will present the
following structure:
• Mediate Environmental Analysis – it identifies the external constraints that could
have an impact on the organization, analysing the political, economic, social and
technological context of Portugal through PESTAL model.
• Market Analysis – it includes the analysis of the offer and demand side of the
touristic industry in Portugal.
• Competition Analysis – it identifies and characterizes the direct and indirect
competitors of the sensorial museum.
• Immediate Environmental Analysis – it analyses the tourism industry context in
Portugal, with a special emphasis in Lisbon, through Porter’s five forces model.
• Internal Analysis – development of a systematic SWOT analysis based on the
environment analysis and considering the strategic position of the museum.
• Segmentation, Target and Positioning – it defines the specific characteristics of
the targeted customers of the museum and the positioning in the local market,
considering the expectation of customers and the existent competition.
• Marketing Policy – it defines the marketing plan which includes the key variables
product, price, promotion and distribution to be applied by the museum.
• Organization – it defines the organizational structure that suits the characteristics
of the museum, including the human resources needs for the organization.
• Implementation – definition of the execution program for the project.
• Technical Features – it identifies several key elements to be considered in the
development of the exposition unit: size, location, technology and equipment.
• Economic and Financial Evaluation – it evaluates the proposed business plan
using the appropriate methodologies and valuation criteria.
• Decision – a final decision will be taken based on the viability of the project.

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5. Mediate Environmental Analysis

5.1. External Analysis – PESTLE Analysis

The mediate environmental analysis is crucial to identify and analyse the external
constraints that have direct impact on the business’ environment. It is important to notice that
any market player does not have control on these constraints and any fluctuation on one of
them will have an impact on the others. To analyse all constraints, we use the PESTLE Analysis
that categorizes the analysis in the following factors: Political-Legal, Economic, Socio-
Cultural, Technological and Environmental.
5.1.1. Political-legal Analysis

The analysis of the political environment provides the political framework that has
impact in the Portuguese tourism industry, which in turn influences the museum’s business
plan and the way it will be projected.
• Tourism Policy

The growing importance of the tourism industry over last years led to the need to create
guiding principles to regulate the tourism in Portugal. The PENT was firstly approved in 2007
by the Resolução do Conselho de Ministros 53/2007 of April 4th and gained legal importance
in 2009, through the Decreto-Lei 191/2009 of August 17th. It was a stable reference framework
of tourism activity and it defined the tools and strategies for its execution during the period
between 2006 and 2015. To achieve more accurately its objectives, this plan was revised and
adapted, over the years, according to environment changes (Turismo de Portugal, 2007). The
final balance of PENT in 2017 was positive and proves that it was worthwhile to have a strategy
for the tourism industry. It resulted on the implementation of eleven projects across five
strategic areas: territory, destinations and products, brand and markets, resources qualification,
distribution and sales and innovation and knowledge.
When the PENT expired in 2015, it was replaced by a new plan named Turismo 2020
to help turn tourism the main economic activity in Portugal. The main objective of this plan
was for Portugal to become the European destination with the greater touristic growth
supported by a competitive and diverse touristic offer (Turismo de Portugal, 2015a).
In 2017, Estratégia Turismo 2027 replaced Turismo 2020 to work as a reference for
tourism in Portugal in the decade 2017-2027 (Turismo de Portugal, 2017). This strategy,

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approved by the Resolução do Conselho de Ministros 134/2017, focus on assets that ensure at
the sustainability and competitiveness of the Portugal, aiming to:
o Ensure stability in the major priorities for national tourism until 2027;
o Promote the integration of sectorial policies;
o Generate a continuous articulation between the various agents of tourism;
o Give strategic direction to investment options.
Several public incentive systems for tourism activities were created such as QREN
(2014-2020) and JESSICA, currently in progress. It is also important to mention the program
Portugal 2020, established between Portugal and the European Commission, that provides
funds to finance projects that have impact on the economic, social and territorial progress of
Portugal.
Moreover, Portugal has a national touristic authority, Turismo de Portugal, which is
responsible for the support, value creation, promotion and sustainable growth of the touristic
activity, aiming to contribute to the economic and social development of the country.
Additionally, there are other entities that contribute to similar purpose like the Regional
Tourism entities, the Regional Agencies of Tourism Promotion, the Regional Directorates of
Tourism in Madeira and Azores and the Tourism Teams Abroad (Turismo de Portugal).
It is also important to take into account the legislation for Tourism Animation Agents
that was regulated by Decreto-Lei n.º 108/2009 of May 15th, modified by Decreto-Lei n.º
95/2013 of July 19th and by Decreto-Lei n.º 186/2015 of May 3rd. In order to develop activities
of tourist animation, with commercial character, it is necessary to be registered in the National
Registry of Agents of Tourism Animation (RNAAT). RNAAT is part of the National Tourism
Registry (RNT) and is an electronic platform that gathers and makes available information
about tourism companies operating in Portugal (Turismo de Portugal). Tourism companies
must have a complaints book. The competent authority for the handling of complaints is the
Food and Economic Security Authority (ASAE).
Regarding compulsory insurance coverage, it is regulated by Decreto-Lei n.º 108/2009 of 5th
May, which establishes the conditions for access and exercise of business activity of tourism
animation. In addition, in terms of legislation the Decreto-Lei n.º 186/2015 of September 3rd
is the more recent wording of the legal regime that establishes the conditions for access and
exercise of the activity of tourist animation companies and maritime tourism operators
(Turismo de Portugal).

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• Portuguese Tax

The tax system in Portugal is under control of Direção Geral dos Impostos, which is
responsible for a number of general taxes that must be paid by residents and in some case by
non-residents. The main taxes are:
o Personal Income Tax (IRS) – it is applied to all types of income earned by
individuals resident in Portugal. According the Portuguese Personal Income Tax
Code (CIRS), the tax rates are progressive ranging from 14.50% up to 48% (AT,
2019).
o Corporate Tax (IRC) – it is levied on the income of companies operating in Portugal
being regulated by the Corporate Tax Code (CIRC). The standard corporate income
rate is 21% to which may be added the a municipal tax (Derrama Municipal) up to
1.50% levied on taxable profits depending on the municipality of the activities, as
well as a state additional tax (Derrama Estadual) between 3.00% and 9.00% on
taxable profits (AT, 2019).
o Value Added Tax – VAT (IVA) – is added to the price of products, services, imports
and commercial transactions. It is charged to every buyer, independently of being
resident or non-resident. There are three levels of VAT for Continental Portugal,
Madeira and Azores due for different goods and services, namely: general VAT
(23% in Continental Portugal; 22% in Madeira and 18% in Azores), Intermediate
VAT (13% in Continental Portugal; 12% in Madeira and 9% in Azores) and reduced
VAT (6% in Continental Portugal; 5% in Madeira and 4% in Azores) that are
available in the Value Added Tax Code (CIVA) (AT, 2019).
o Local Property Taxes (IMI) – is a tax that is levied on the net worth of buildings
(rustic, urban or mixed) located in Portugal. It is a municipal tax, whose amount is
between 0.30% and 0.80% (per year) of the estimated value of the property, as we
can verify in the Local Property Tax Code (CIMI) (AT, 2019).
These tax codes can be found on the website of the Tax Authority and Customs (AT).
• Social Security in Portugal

There is a mandatory social security charge over the salary of each employee that must
be paid, both by the employer and by the employee. The amounts of social security
contributions in Portugal vary according to the type of work performed. Employees pay
monthly 11% of their salaries to the General Social Security regime and the companies have
to pay 23.75% for each employee (Segurança Social).
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• Public Programs for Supporting the Arts

Over the last years, the Ministry of Culture has been developing different programs
designed to support the creation, production and broadcasting of different programs of art, as
well as the management and promotion of cultural infrastructures. This public investment
assumes many forms, according to the activities being undertaken and their objectives:
o Direct Support: the main objective is to invest in organizations dedicated to the
creation and/or organization of activities in the Portuguese territory.
o Indirect Support: Partnerships are developed between the Ministry of Culture and
local administrations or between local administrations and organizations dedicated
to creating and/or organizing activities. These former entities to become eligible for
receiving such investment must develop and present together a project proposal to
the Ministry of Culture.
o Internationalization of the Arts: public investment is conceded to support artistic
projects being developed outside Portugal by organizations dedicated to creating
and/or organizing activities, as well as informal groups or single persons whose
fiscal residence and main country of activity continues to be in Portugal.
• Increasing Support of Culture Made by Local Administrations

Over last years, Portuguese cities have been constantly investing in culture as a strategy
for regional, local and urban development. The cultural resources are used for promoting
regional identity, leverage competitiveness and attracting visitors and new residents. The
Lisbon City Council allocates financial support to initiatives and investments in the field of
culture of municipal interest. As a rule, the amount of support may cover up to 60% of the total
cost of the initiative or investment (CML, 2018).
It is important to mention the work carried out by EGEAC in the management of some
of Lisbon’s most emblematic cultural spaces and the realization of cultural moments of
reference of the city. For more than 20 years this municipal body has been promoting,
preserving and revitalizing the cultural activity of Lisbon. As a privileged interventionist in the
Portuguese’s capital, EGEAC ensures multidisciplinary, comprehensive, inclusive and
democratic programming, seeking to be an active and receptive agent, acting both in the
cultural sphere and in the most popular.

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5.1.2. Economic Analysis

The economic analysis allows to gather information about the opportunities and threats
driven by the economic sectors, as well to understand the actual status of the purchasing power
of the population. We consider in our analysis the following indicators: GDP and GDP per
capita, Gross National Disposable Income per Capita (PPP), Inflation Rate, Exchange Rate,
Interest Rate and Unemployment Rate. As the majority of the tourism facilities are used by
foreigners, it is necessary to take into account the economic context of the main countries where
they come from (INE, 2018). According to the available data, the more relevant nationalities
of the inbound tourists are: France, Spain, Brazil, Germany and USA (WTTC, 2018).
• GDP and GDP per Capita

GDP is the most commonly used measure of economic activity and serves as a good
indicator to track the economic health of a country. Conceptually, it is defined as the total
market value of all final goods and services produced within a country for a year. It includes
private and public consumption, private and public investment and export less imports.
Deriving from a straightforward division of total GDP by the population we obtain GDP per
capita. GDP per capita is an important indicator of economic performance and a useful unit to
make cross-country of average living standards and economic wellbeing.
The Portuguese GDP growth rate has been negative since 2009, which was the first
year of four years of economic contraction within five years. The recovery period following
2012 was characterized by a continued increase in the share of exports in GDP, a trend that
extended to all components, especially tourism which recorded the highest accumulated
growth. Growing since 2014, the Portuguese’s GDP grew significantly in 2017 when it
recorded the highest growth since 2009 (Annex 7).
According to BdP, the Portuguese economy is expected to continue a growth trajectory
of activity, albeit in a deceleration over the 2018-2021 horizon, in line with projections for the
same period established for the euro area accounted by the ECB (BdP, 2019). European
Commission predicts a growth of 1.80% of GDP in 2019, 1.70% to 2020 and 1.60% in 2021
(European Commission).
In terms of GDP per capita, Portugal experienced a similar evolution than the previous
indicator, increasing since 2012 (Annex 8).
Regarding the European principal countries where tourists are from, there was also a
decrease in the GDP growth rate until 2009, with most of the countries recovering in the
following years. In 2018, the real GDP growth rate was +1.72% in France, +2.58% in Spain
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and +1.43% in Germany. Apart from France, the Eurostat forecasts that the growth rate of this
economic indicator is decreasing over the next few years. However, in France this growth will
remain constant. Relative to GDP per capita, the European countries studied presented an
evolution like the one observed in Portugal recovering since 2015 (Annex 7).In Brazil, the
GDP practically increased over the years until 2014, since then this indicator has declined and
only start to recovery in 2017. In 2018, the real GP growth rate was +1.12% (Annex 7). The
US GDP growth rate registered a declining trend for several years to reach the lowest one by
2009 when the economic crisis started. By 2010, the US GDP growth rate start the recovery
and by 2018 it was +2.86% (Annex 7).
• Gross National Disposable Income per Capita (PPP)

Gross national disposable income is the sum of the gross disposable incomes of the
institutional sectors. The gross national disposable income per capita represents the income
that a person has available to use in consumption or in savings in a determined country,
assuming the incomes are distributed equitably (Eurostat). Regarding the studied countries,
USA, Germany and France presented the highest PPP values: $62,517, $52,896 and $45,601,
respectively, in 2018. On the other hand, Spain, Portugal and Brazil presented the smallest PPP
values: $40,371, $30,487 and $16,111 (Annex 9).
• Inflation

Since 2014, the prices in Portugal have exhibited a small annual increase. The inflation
rate (average annual change in the consumer price index) was +1.37% in 2017, up from
previous years (+0.76% in 2016 and +0.81% in 2015) (INE, 2018). Banco de Portugal predicts
a moderate increase in the inflation rates for the following years, more specifically it will grow
1.40% in 2019 and 1.50% in 2020 (BdP, 2019). Considering the countries under analysis, only
Brazil registered a decline in the inflation rate, while the remainder presented a growth in the
inflation rate until 2016. The inflation rates of that countries are 1.85% in France, 1.68% in
Spain, 3.66% in Brazil, 1.73% in Germany and 2.44% in USA. The forecasts of the inflation
rate for all countries analysed are that it will be declining in the following years (Annex 10).
• Exchange Rate

In spite of majority of countries of this study using Euro (EUR) as their currency it is
necessary to analyse the evolution of the exchange rate of the EUR against BRL and USD,
because the importance of Brazil and USA in the tourist flows. When it comes to the evolution
of these exchange rates, there were observed some oscillations mainly due the economical

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conjuncture, with the EUR to devaluating against USD since 2015, making Portugal a more
appealing and inexpensive destination for the visitors that came from the countries of that
region (Annex 11). On the contrary, despite the oscillations, the EUR value has increased
against the GBP and the BRL along the years under study (Annex 12).
• Interest Rate

Relative to the reference interest rates by the ECB, they decreased since 2008, being
settled near to zero the fixes for main refinancing operations in 2018 and for deposit facilities
by the Governing Council (ECB) (Annex 13).
• Unemployment Rate

In Portugal, the unemployment rate increased continuously between 2008 and 2013,
reaching the highest rate of 17.50% due to the financial crisis of 2008 and later to the
intervention in Portugal of the IMF, EU and ECB to implement an aid financial program with
hard measures causing a severe economic recession. In 2014, the unemployment rate start
decreasing to achieve 6.50% in 2018 (INE). After a very dynamic growth in 2018, employment
should resume an evolution more in line with its historical relation with the activity (BdP,
2019), which will allow the continuation of a downward trajectory of the unemployment rate,
although more than in recent years (Annex 14).
5.1.3. Socio-Cultural Analysis

The analysis of the sociocultural environment identifies the values, customs and
tradition of Portuguese society during a period of time. These indicators influence the market,
impacting on the performance of the museum.
• Evolution of the Population

In terms of evolution of the population, Portugal presented positive growth rates for
several years until 2010. Since then this rate has been negative and was gradually decreasing
until 2018. In 2018, Portugal had 10,283.80 inhabitants, corresponding to a decrease of 0.16%
when compared to the previous year. This decline can mainly be due to the decrease in crude
birth rate as well by the migratory balance (Annex 15, 16 and 17). Regarding to the other
studied countries, Spain presented positive growth rates of population until 2012, presenting
negative rates since then. By contrast, in Germany the growth rate was negative until 2013 and
positive since then. France, Brazil and USA have presented an almost constant growth over the
years (Annex 15).

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• Distribution of the Population

Population ageing is even pointed out as one of the greatest demographic trends of the
21st century. Portugal, as in almost European countries, has suffered significant changes in
terms of age distribution over the last decades (Annex 19). The relative weight of the older
population will keep growing because of the increased longevity (Annex 18), as well as the
decreased fertility. Finally, when it comes to the regarding studied countries they also present
a similar aging trend, with the exception of Brazil (Annex 19).
• Lifestyle Evolution

The lifestyles have seen some changes that consequently influence the tourism activity.
These changes foster the motivation to travel and even to enjoy free-time which impacts the
tourist demand. One of the main reasons for travel, even depending on the cultural, economic
and social background, is increasingly the satisfaction of a specific pleasure or experience.
Moreover, we can highlight the following lifestyle changes with impact on tourism:
o Trend to enjoy free-time to travel and to combine business travels with leisure,
increasing the practise of tourism activities;
o Increased levels of education, training and information, that helps to extend new
horizons, increases the interest in certain types of activities and new territories as
well as impacts on new needs;
o Improving accessibility, contributing gradually for faster, cheaper and more
convenient movements, increasing the number of short trips and potentiating the
concepts of city break and internal tourism.
5.1.4. Technological Analysis

The technology heavily influences almost all science fields, being the variable that
changes more quickly and may change the structure and the business model of the organization.
In fact, technological factors can give competitive advantages to the company, as well as,
reduction of operational costs, improvement and innovation of the offered products or services,
benefiting costumers and the environment.
• Growing Importance of Internet as Channel of Communication, Information and

Commercialization

The internet is the primary driver of the global economy and our primary mode of
communication. Across industries and beyond borders, the reach of the internet develops and

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builds businesses and personal connections. Mobile devices have helped with the proliferation
of the access. When the internet became a viable marketing communications channel, it
levelled the playing field for smaller businesses to compete in a much larger market.
Nowadays, we can reach our ideal customer in a bigger geography and in more ways for a
much smaller cost.
• Progressive Democratization of Access to Culture Based on Access to Online Content

Businesses need to interact with their customers to show them that there are real people
behind their product/service that care about the people buying it. There is no other platform
that offers the same level of customer engagement than online content. Nowadays, companies
can build communities, interact with their customers in real-time, answer questions and
complaints and post regular updates. Companies can reach out to their customers in several
different ways. They can appeal to customers through blog posts, infographics, videos and
games through networks such as Facebook, Pinterest, Instagram and other platforms across the
web. For those who are using social media, it is important to monitor trends and look at
analytics reports closely to determine whether the strategy is working.
• Widespread Use of Social Media

Social media includes many channels of communication which are the most powerful
and the best way to increase the conversation about the business. Social media is part of
everyone’s daily routine and nearly 90% of businesses are using social media actively to
promote their products/services. Social media is one of the most efficient forms of marketing
nowadays and most businesses must have a presence across some of the major networks to be
perceived as a legitimate company. Continuous communication with the customers is necessary
and we’ll have to make sure that we are aware of all the positive and negative feedbacks about
our brand.
5.1.5. Environmental Analysis

The environmental analysis is related not only to environmental issues as there are
others external factors that may influence the nature of the industry, like the management style
and environmental regulations.
• Increase of Norms of Environmental Regulation

According to the report Turismo 2020, climate changes have impacted the tourism
activities. In Portugal, the tourism flows are changing, increasing the demand for the low
season. In this sense, people are increasingly concerned with environmental issues, so they start
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to adopt fuels and energy environmentally friendly and search for natural and biological
products. As the environmental framework has an increased importance in the customer
purchase decision, the tourism industry needs to adapt its practises and management strategies
to the environmental issues (Turismo de Portugal, 2015b). Simultaneously, over last years the
governments and international organizations have defined environmental regulatory standards
and certification and the national tourism authorities have increased the monitoring of the
environmental practises of tourism companies.

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6. Market Analysis
This business plan consists in the creation of a sensorial museum, so it is crucial to
consider the context in which it is going to be developed and analyse the entertainment market
in Lisbon. We start to make a general framework of the touristic sector in Lisbon and after we
describe the evolution of the demand and the supply that is available to the market segment we
want to achieve.

6.1. General Framework

The tourism in Lisbon has achieved historical results, with impact on the creation of
new businesses related to the sector over the last years. The cultural heritage of Lisbon, besides
being rich, is diversified and in constantly change. Nowadays, the main difficulty of Lisbon’s
visitors is the process of choosing the touristic activities given the wide range of entertainment
experiences offered. The offer of Lisbon has diversified and evolved in such a way that is
currently prepared to receive all kinds of tourists. It stands out from the other cities for its offer
of excellence in all segments with emphasis on good accessibility, quality accommodation,
mild climate throughout the year and safety (Turismo de Portugal).

6.2. Market Dimension

6.2.1. Demand

To qualify the demand, it is important to analyse the motivations and the behaviours of
the visitors of Lisbon, focusing in the present but also in the future. In this sense, we used the
Motivational Survey of Lisbon of 2017 (Observatório do Turismo de Lisboa).
The vast majority of the visitors travelled to Lisbon with a leisure purpose (75.60%),
followed by professional reasons (21.00%). In terms of foreigner guests, 89.30% of them
visited Lisbon for the former reason and 9.90% for the second one. While, 58.20% of the
national guests visit Lisbon for professional reasons and 30.00% came to Lisbon in leisure
(Annex 20).
City and short breaks are the main reason for visiting Lisbon, with 67.90% of the total,
followed by private business (10.80%) and MICE (9.30%) (Annex 20). Overall, the average
stay in Lisbon is around four nights, which depends on the motivation of the visit (in the leisure
segment is 4 nights and for business segment it is 3 nights) (Annex 20).
Most Lisbon’s visitors organize their travel by themselves (70.20%), due to the greater
percentage of visitors with leisure motivations. Only business visitors (18.90%) have their trips
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arranged by their employer (Annex 20). The use of Internet is essential for Lisbon’s visitors,
67.80% of them used it to reserve accommodation and 55.90% to book transport. There is a
greater use of the Internet by leisure visitors compared to other motivations (Annex 20).
The most chosen means of transportation to reach Lisbon is air travel (Annex 20).
Analysing the airport movements, Lisbon airport recorded the highest passenger traffic
compared to the other airports in Portugal. In 2018, it recorded a total of 27.42 million
passengers, which represents an increase of 7.30% comparing to the previous year (Annex 21).
Being that 52.50% of the passengers had as origin/destination the airport of Lisbon (Turismo
de Portugal). Cruise tourism is gaining increasing importance in Lisbon, which is again at the
top compared to the remaining ports in Portugal, reaching a total of 522,501 passengers in 2016
(INE, 2018: 23) (Annex 22).
Relatively to the demand for hotels and similar establishments, Lisbon is the second
Portuguese region, only after Algarve that received more guests during 2017. It totalized
16,695 thousand overnight stays during 2017, which almost 80% were from external market,
principally from France, Spain, Brazil and USA (INE, 2018: 64). The room occupation rate in
the Metropolitan Area of Lisbon is the highest in Portugal, achieving 71.20% in 2017 (Turismo
de Portugal). This indicator shows that Lisbon is a seasonable destine, with the room
occupation rate being higher between June and September than in the other months due to the
holiday season.
During 2017, the visitors of Lisbon spent daily €133.65 (minus 5.60% than in the
previous year), which, by applying the average stay correspond to an average individual cost
in Lisbon of € 651.94 (minus 4.70%). The average daily spending is higher for business tourists
(€197.33 – growth of 22.00% over 2016) than the leisure spending (€108.27 – reduction of
21.20% comparing to 2016). The business segment also had an average cost of overtime,
€726.77 comparing €568.63 in leisure (Annex 20).
The increasing flow of tourists in Lisbon over last years has positively impacted the
number of people visiting museums and other cultural establishments. In this analysis, we
considered the revenues of the entities managing cultural equipment (such as EGEAC and other
private entities) weighted by the number of visitors. In terms of cultural facilities, Lisbon is the
Portuguese region that concentrates more cultural equipment.
The Strategic Plan of Lisbon Tourism sets out a new ambition for 2019, Lisbon
achieves 20 million of overnight stays and earnings of €800 million with improved satisfaction
(Turismo de Lisboa, 2015: 67). The announcement of the opening of the new Lisbon’s airport

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in Montijo, during 2022, reinforces these statistics. For the first year of operation, the new
airport will receive seven million passengers, but it could quickly reach fifteen million.
6.2.2. Supply

Due to its history, Lisbon city has naturally gathered several artistic collections,
historical pieces and other artefacts that make it worth visiting in its several museums. After
an irregular behaviour until 2015, the Tourism Animation sector consolidated its dynamism,
presenting an average annual growth rate approximately 35.50% in the period between 2015
and 2017, achieving a total of 6.167 agents in Lisbon. This growth has mainly contributed to a
significant increase of the number of entities registered in the Registry of Tourism Animation
Agents (RNAAT), between 2015 and 2017, an additional 1,973 entities were recorded in the
RNAAT only in the Lisbon Region (Deloitte, 2019).
The supply reflects the number of museums and other cultural establishments which
are available in the Metropolitan Area of Lisbon, totalizing 85 cultural entertainment
establishments, in 2017(Annex 23). Of the total of these cultural facilities, 43 are museums
(CML, 2012: 22).
It is important to note that the evolution has been positive over last years, with an
average net increase of almost two new establishments every year since 2000. The museums
in Lisbon welcomed around 4.52 million visitors during 2017 (Annex 24), which more than
half were foreign tourists (CML, 2012: 22).

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7. Competition Analysis
To carry out the Competition Analysis, we defined the differentiation criteria in the
cultural tourism sector and, then, we analyse and compared its importance for the industry. The
factors that most impact the choice of a cultural experience by visitors of Lisbon are:
• Location: the good accessibility of the cultural establishment is a decisive factor in
consumer choice, given the proximity to public transport networks as well as other
means of transport enables more people to visit.
• Interaction with Customers: is crucial, primarily over the Internet, because people
can access a lot of information about the cultural establishment before visiting it and
thus choose the experience they will have based on the entitlement information and
customer’s feedbacks. This interaction is beneficial if it is maintained during the visit
to the chosen experience.
• Quality of Innovative Features: the bet on differentiation should be based on the
quality of the cultural experience offered to build customer loyalty relation and thus
reach new people due to word-of-mouth.
The establishments that resemble the proposed sensorial museum are those that can be
classified as touristic entertainment services that value the interaction with its visitors located
in Lisbon. In this market segment, it is important to ensure an easy and convenient access to
several areas of interest in the city centre of Lisbon.
Now, it is important to identify the competitors and group them into two groups, the
first level will be direct competition (i.e., those with the same characteristics as the sensorial
museum) and the remaining market players will be part of the second level.
As the concept of this sensorial museum is quite innovative, it becomes difficult to find
its direct competition because there is no cultural establishment in Lisbon with the same
characteristics. However, and to complete our analysis, we identify as direct competition the
“Lisbon Story Centre – Memories of the City”, a museum which tells the story of Lisbon
through models and multimedia displays. In this way, the secondary competitors encompass
the remaining tourist attractions in Lisbon.
In the Annex 25, we can find the classification of the touristic-cultural establishments
of Lisbon by the two levels of competition.

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7.1. Direct Competition

7.1.1. Lisbon Story Centre – Memories of the City

Despite some artistic and technical differences, the concept of the “Lisbon Story
Centre” is the one that most resembles the one intended for the projected sensorial museum.
Both aim to offer a very interactive and educational cultural experience. Therefore, we decided
to select the “Lisbon Story Centre” as the direct competitor of the sensorial museum.
At “Lisbon Story Centre”, the visitor will travel back in time as if walking through a
picture book brought to life. Through the use of scenography, multimedia and sensory
experiences, dramatic reports of the main events of the city of Lisbon are presented, exploring
myths and realities of this millenary city. In a playful and interactive way, while respecting the
historical truth that a city with the past of Lisbon deserves, the Centre offers the visitors
approximately one hour of a journey in time and space. One of the high points of this cultural
establishment is the 1755 Earthquake of Lisbon presented in a theatre of immersive experience.
On the ground floor, “Lisbon Story Centre” is based on the five main areas that make
up the exhibition. Each story focuses on different aspects of Lisbon's history, structured in a
chronological sequence in which visitors are on an engaging tour. The sixth area is counted on
the first floor, where is the virtual model of the city of Lisbon, and where it explores the
architecture of the city and provides the most detailed discovery of its history, encouraging its
discovery today. In addition, a temporary exhibition area with themes alluding to the areas
covered can also be visited.

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8. Immediate Environmental Analysis

8.1. Porter’s Five Forces Analysis

The Porter’s Five Forces Analysis is a framework that studies the attractiveness of an
industry, determining the intensity of its competition and the level of profitability through the
joint of five forces: bargaining power of the buyers, bargaining power of the suppliers,
competition rivalry, threat of new competition and thereat of substitutes (Porter, 2008).
8.1.1. Bargaining Power of the Buyers

The attractiveness of an industry can be influenced by customers, as their requirements

and needs may affect the conditions under which the products/services are acquired. Thus, the
profitability will be lower the higher the bargaining power of the clients (Porter, 2008).
The sensorial museum has two main types of clients, which can be classified as educational
group (schools, universities and other educational institutions) and individual customers
(which encompasses the local audience and the tourists).
The educational group normally represent a major source of revenue for museums. So,
it is important to adapt our services so that the expectations of this group are fully satisfied.
Therefore, we can verify that this group has great negotiating power. Regarding the individual
customers, they can choose an entertainment experience over another, since there are many
alternatives in this industry and it is easier to compare quality and prices of the offered services
of a cultural establishment before visiting them, through the ease access to information and
customers’ opinions on the internet.
As the entertainment services are very differentiated, the quality of the services offered and
the reviews of the visitors has been more relevant in the customer purchasing decision. The
demand is higher than the supply, so the influence of the customers on the industry is low and
we can conclude that the bargaining power of the customers on this industry is lower.
8.1.2. Bargaining Power of the Suppliers

The suppliers also may affect the competitive environment of an industry, influencing
the terms under the products/services are sold. Strong suppliers can pressure buyers by raising
prices, lowering product quality and reducing product availability. Thus, higher supplier power
the higher impact and influence on the business and on its policies (Porter, 2008).
The suppliers of technological equipment play a central role in this project, since the
whole concept of this museum is technology-based. The technologic equipment needed to open

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and maintain the museum is available in the market, existing many competitive suppliers which
decreases their bargaining power. Relatively to the products/services associated to the
exploration of the museum (outsourcing services) the offer is wide. Normally, these
products/services have little differences and are offered by different companies, so its suppliers
have low influence on this industry. The suppliers of energy and water until few years ago have
a high bargaining power, since they hold the monopoly of these relevant facilities. However,
these suppliers have begun to lose some of their bargaining power as new companies providing
identical goods are emerging. To complete our analysis relatively to the suppliers, it is
important to analyse the financing of the project. Although scarce, this resource holds great
importance in all investment projects. After the crisis of 2008, the banks restricted their policy,
which makes it difficult to access to foreign capital. Since then we have been in a period of
economic prosperity and as result the banks are grating more credit. So, investors and lenders
have a high power in this industry.
Therefore, the suppliers in this industry have a lower bargaining power, increasing the
attractiveness of the industry.
8.1.3. Rivalry Among Existing Firms

The rivalry refers to the degree to which firms respond to competitive moves of the
other firms in the industry. It analyses the competitive intensity in the industry allowing a better
understanding on how significant the competitors are and how they operate in this market
(Porter, 2008). The industry rivalry is affected by the structural factors as concentration,
diversity, product differentiation, excess capacity and exit barriers.
In terms of dimension, the cultural entertainment industry in Lisbon is fragmented,
since there are many cultural establishments with small market shares which dispute the
profitability of the sector. So, we can say that this industry does not present a concentration of
supply.
Lisbon present a rich touristic offer, with cultural experiences for the most diverse
interests of its visitors. In fact, the cultural establishments are in constant innovation and
improvement of their services to differentiate their offer from the others. Each cultural
establishment provides the basic services to entertain the visitor, adding some unique features
in its services to achieve customer’s expectations. Despite being a fragmented industry,
services offered are highly diversified which contributes to an increased rivalry among existing
businesses.

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A company creates excess capacity when it is producing at a lower than projected

production scale, it creates excess capacity. The tourism market in Lisbon does not have excess
capacity, by the contrary, the demand for entertainment products and services is much higher
than the existing supply.
It is important to analyse the existence of exit barriers, since the higher they are more
intense will be the rivalry among competitors. The companies in this industry held durable
assets, however its residual value is very low. As a consequence, the rivalry among industry
competitors diminishes.
Therefore, the rivalry among competitors is high which decreases the attractiveness of
the business.
8.1.4. Threat of New Competition

The threat of new entrants influences significantly the ability of current companies to
generate a profit. When new competitors enter in the market offering the same
products/services, a company’s competitive position will be at risk. The threat of new entrants
depends on the barriers to entry, which refers to the existence of high costs or obstacles that
can deter new competitors from entering the industry (Porter, 2008).
The most significant entrance barrier into the cultural entertainment industry in Lisbon
is the high initial investment cost. It is essential to find a good location in Lisbon at an
affordable price, without forgetting the capital investment in the requalification and the
operationalization of the museum. The Portuguese Government offers diverse public incentive
programs that have been created to invigorate the tourism sector, supporting and financing new
ideas and projects.
Therefore, the threat of new competition is high, which means that is difficult for a new
player to enter the cultural entertainment industry in Lisbon.
8.1.5. Threat of Substitutes

The threat of substitute may affect the profitability of an industry because consumers
can choose to purchase the substitute instead of the industry’s product. The availability of close
substitute products can make an industry more competitive and decrease profit potential for the
firms in the industry (Porter, 2008).
There are many substitutes to be considered in Lisbon as an alternative of choosing a
cultural entertainment experience, like historical museums and monuments. However, the
cultural experiences are increasingly in the top of the preferences of visitors. Despite this
variety, the threat of substitutes has no major impact on the projected museum activity as it
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offers an innovative video-mapping service and the visitors of Lisbon are looking for unique
experiences during their trips. So, we can conclude that the threat of substitutes is low, which
increases the attractiveness of this industry.

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9. Internal Analysis

9.1. SWOT Analysis

The SWOT analysis is an important tool for strategic planning that consists of
collecting important data that characterizes the internal environment (strengths and
weaknesses) as well as the external environment (opportunities and threats) of the company.
This analysis is the basis of management and strategic planning in a company, since it is
essential for successful planning the future strategies for any business.

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Strengths Weaknesses
Systemic SWOT Matrix Innovative Immersive Use of Latest Lack of Notoriety
Central Location Central Location
Experience Technology and Awareness
Incentives for New The incentives of public institutions for creating innovative cultural
Touristic establishments are important to support this project technology based, -
Investments which has a constant need of investment.
Increasing
Promotion of The partnerships with Local Administration of Lisbon are a good source
Opportunities

Culture Made by for promoting the museum, giving credibility to our activity and reaching
-
Local a wider audience. Simultaneously, it is possible to develop technical
Administration of support partnerships that aim at the maintenance of the museum.
Lisbon
The customers are seeking for unique
Importance of the experiences, being the technology based
High Growth of
proximity to the city centre museum is the perfect advantage to capture
Touristic Sector in - -
and its touristic and their visit. Another innovative component of
Lisbon
business points of interest. this project is that customers can interact
with our exhibits through their smartphones.
Difficulty in
Finding a Space in It has a lot of impact on any business, as it is crucial to find a central
-
Lisbon at location for the lowest possible investment.
Competitive Price
High number of The competitors known the industry and the behaviours of the competition If the museum uses
Threats

Clients are more

competitors and the measures to take to combat the entrance of new competitors. outdated
informed which
technology, as
makes the lack of
The easy access to information makes the process of choosing of customers are more
notoriety to have a
More informed customers more conscious, so the museum needs to implement a closer informed they will
huge impact in their
customers communication policy, principally on the Internet, to announce our opt for other
choice of cultural
exclusive exhibitions and its unique technological features. experiences that the
experience.
competition offers.
Figure 1 - Systemic SWOT Matrix

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10. Development of Strategy

10.1. Mission, Vision and Values

Outlining a company’s mission, vision and values is critical for a business creation,
organization and development. In this way, it becomes possible to strategically plan, guide
human resources and create ties with clients.
• Mission: Ensure the excellence of the museum’s creative content, maximizing the
immersive experience of our customers.
• Vision: Be the market leader of cultural entertainment experiences in Lisbon, being
a reference of the immersive ones.
• Values:
o Quality: Offer a good service with the adequate creative and technological
resources.
o Respect: Respect the environment of the museum, treating co-workers and
visitors accurately and having a sustainable behaviour to the society.
o Loyalty: Create a mutual trust relationship with museum’s visitors and
shareholders.

10.2. Competitive Advantages

The competitive advantages are the result of the museum’s ability to neutralize or
diminish the action of competition in the market segment in which it operates through
differentiation. The museum has the following competitive advantages:
• Creative and Innovative Service: the museum stands out from the competition
for the innovative video mapping service it offers to its customers. The video-
mapping combined with other technical components can create a completely
immersive environment.
• Quality: is closely linked to the advantage mentioned above, as we aim to offer
an innovative quality service to our visitors. The quality is mainly based on the
human resources selected to be part of the creative team that will be responsible
for the production and execution of our exhibitions.

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• Employee Motivation: it is also a great advantage for the museum as the staff is
motivated to achieve the museum’s objectives. This has a major impact on
business productivity as well as creating a good working environment.

10.3. Segmentation, Targeting and Value Offer

10.3.1. Segmentation

The public of a company is always heterogeneous. In this way, segmentation is one of

the most efficient tools for companies to reach their target audience. It consists in the process
of dividing the market of potential customers into different groups and segments based on
certain characteristics. With this purpose, we select the following factors to segment the
consumer market:
- Demographic Criteria: Age.
- Geographic Criteria: Nationally.
- Social Criteria: Educational status.
- Behavioural Criteria: Motivation and other decision factors.
All these criteria are easily measurable, so it has great operational value. In this sense,
we defined two distinct market segments:
• Youth and Educational Group (Schools, Universities and Other Educational

Institutions)

The Youth and Educational Group is composed by the young people living in Lisbon,
most of whom are studying in elementary, high school or university. Nowadays, the school
groups are responsible for a large part of the visits of the museums in Lisbon, so they should
play a prominent role in the definition of our strategy.
• Individual Customers

To detail the museum’s performance in the segment of Individual Customers, we

decided to make a division in our analysis between local customers and recreational tourists.
The local customers are those who live in Lisbon, while the recreational tourists are all the
people who are visiting the city of Lisbon.
o Local Customers
The local customers are the visitors of the projected sensorial museum who live in
Lisbon or in its Metropolitan Area with more than 25 years. According to Lisbon City Council,
about 10% of the population residing in Lisbon is foreigner (CML, 2018). In terms of
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qualifications, the majority of the population of Lisbon has the university degree. The local
audience visits the museum mainly for leisure reasons, looking for unique entertainment
experiences in their city of residence.
o Recreational Tourists
The recreational tourists are all the visitors of Lisbon, whether they are nationals or
foreigners. As the tourism facilities in Lisbon are mostly used by foreigners, it is essential to
know the context of the countries where they came from. The visitors of Lisbon are mainly in
the age group between 26 and 55 years. In aggregate terms, about 70% of visitors of Lisbon
have high education qualifications. The majority of the tourists visit Lisbon for leisure reasons.
In the Annex 20, we can find more information about the tourists that visit Lisbon, according
to a satisfaction and motivational survey made by Turismo de Portugal in 2018.
10.3.2. Target

Based on the segmentation analysis, the sensorial museum will focus on two different
targets, which are the Youth and Educational Group and the Individual Customers. Both targets
are characterized in the following table:
Youth and Individual Customers
Target
Educational Group Local Audience Recreational Tourists
Demographic Criteria
Age 8-25 25-70 25-55
Geographic Criteria
Nationality Mainly Nationals Mainly Nationals Mainly Foreigners
Social Criteria
Academic Level Mainly Students University Degree University Degree
Behavioural Criteria
Motivation Educational Purpose Recreational Purpose
Mainly School Alone or Alone or
Visit Companions
Groups Family/Friends Family/Friends
Table 2 - Target

10.3.3. Positioning

The positioning involves defining how the target audience perceives the museum’s
image and its offered services. Its strategy is based on differentiation, since it focuses on
offering an innovative entertainment touristic service in Lisbon. The museum will focus on
highlighting the quality of the services its offers, betting on a unique immersive experience of
video-mapping and other technological features.

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11. Marketing Policies – Marketing Mix

11.1. Product

11.1.1. Offered Services

The highlight of the sensorial museum is the technological innovation of its exhibitions,
a characteristic that is increasingly valued by tourists today. The museum will be equipped
with the latest technology, which will transform our facilities in a virtual environment to appeal
to the senses of our visitors. It offers an immersive experience through video mapping and
other technological features.
The main purpose of the museum’s exhibitions is to introduce Portugal to everyone
who visit us. Our exhibitions will have content about the Portuguese history and traditions,
with special emphasis on the city of Lisbon. At the museum’s launch, there will be an
exhibition that presents the history of Lisbon until today in a very creative and appealing way
due to the technologies used. In parallel, another exhibition will be present with more detail
the city of Lisbon nowadays. It will present the points of interest in the city, giving to our
visitors a global view of Lisbon. The infinity. The content will consist of an anchor 15 minutes
piece based on the history of Lisbon, a curation to present Lisbon today to fill out another 15
minutes and an mirror room. The mirror room runs parallel to the exhibitions; however its
content is different as it is interactive with the visitors and designed in a glass-lined room.
It is important to note that the exhibitions can change whenever the museum has created
new creative content to display. The customer satisfaction surveys will help us tailor the
content of our exhibitions according to their feedbacks and preferences.
In the future, partnerships could be made with other existing sensorial museums around
the world which enables the change of creative content. Thus, we will be able to present our
exhibitions about Portugal abroad and receive in Lisbon exhibitions from international artists
with diverse contents.
11.1.2. Brand, Colour Scheme and Logo

The brand should be well defined, so that the museum’s services can be easily identified
and differentiated from its competitors. The sensorial museum will be identified as
IMMERSIVUS which is associated with an immersive entertainment experience.
The definition of a colour scheme for the museum is a key feature. The chosen colour
will be orange, normally associated with creativity and enthusiasm. This colour is used to

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stimulate the human senses, which helps the process of assimilating new ideas namely the
assimilation of the innovative contents presented in the sensorial museum.
In the Annex 26, we present the logo of the sensorial museum. It consists in its name
IMMERSIVUS written with a stylized letter in the orange colour.

11.2. Price

The definition of the entrance price of the museum is a critical phase for its success.
The price should be defined taking into account the costs of the museum, the target that is
aimed to achieve and the price the clients are willing to buy.
As the museum moves to a niche market, prices will be defined per the skimming
strategy. The skimming strategy is to enter the market with a high price, in which only the most
avid consumers are willing to buy. Given that the sensorial museum is an innovative product
in the market, this strategy seems to be better suited to recover the investment quickly by
maximizing profits while demand increases. Subsequently and in case of new competitors, the
product loses its innovative character and the price will eventually fall.
Price must meet both the needs of consumers and the needs of the provider. With the
objective to stimulate the activity of the museum, special prices will be made for young people,
the elderly and even for group visitors (educational and tourism). More specifically, with four
categories of tickets:
• “Bilhete Inteiro” for people over 12 years;
• “Bilhete Reduzido” for the residents in the Lisbon district, students, children
between the ages of 6 and 12 and seniors over 65 years;
• “Bilhete Promo” for groups of visitors above 30 pax and partnerships with
companies and tour operators as tourist agencies and companies like Odisseias and
Sapo;
• “Bilhete Escola” for school groups.
The entrance prices of the sensorial museum are summarized in the Table 3:
Entrance Tickets Price
“Bilhete Inteiro” €15.00
“Bilhete Reduzido” €12.00
“Bilhete Promo” €10.00
“Bilhete Escola” €7.00
Table 3 – IMMERSIVUS’s Entrance Price

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11.3. Place

The placement of the sensorial museum represents its booking system and its steady
flow of visitors, for this central location is essential to facilitate make it as easy as possible for
the customers to choose it. In order to make the museum available for the customer, we choose
to use the following marketing channels:
• Direct and Short Distribution Channel

The museum sells directly to the customers through its own website or direct contact
(as face-to-face, phone or via e-mail). This way, the museum can control the final price (that
should be lower than the one available in the remaining distribution channels). Furthermore,
the museum can avoid the payment of commissions, as well as its dependency on the touristic
operators and travel agencies.
• Indirect and Long Distribution Channel

The distribution of the museum is also carried out through intermediaries, such as
touristic operators. The touristic operators assemble touristic packages that usually include the
entrances in entertainment touristic attractions and sell them to travel agencies. Therefore, they
hire touristic attractions for a certain number of entrances and receive quantity discount, while
travel agencies receive a commission from tour operators.

11.4. Promotion

The promotion aims to communicate the museum to its target audience, creating a
customer relationship, while it begins to gain some notoriety in the market. At the start of
activity, the museum will invest in significant and necessary means of communication. Given
the market’s response and not going into unnecessary costs, the communication strategy is
adapting to potential future needs.
The museum will focus on the strategy of communication in the media, mainly through
the Internet since it as an easy, fast and inexpensive way that is increasingly used nowadays to
book cultural entertainment experiences.
Additionally, direct and relational marketing actions will be used in which the museum
communicates directly with the client through personalized e-mails or newsletters, presenting
new features of our exhibitions according to the clients’ preferences. In this way, we can
improve our services through the feedback of our customers.

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Our clients share memories of their entertainment and holidays experiences with
family, friends and colleagues. Word of mouth increases awareness about the museum with
potential consumers.
The promotional actions of the museum are as follows:
Promotional
Strategy Main Goals Benefits
Actions
• Provide institutional
information about the
• Promote the museum; museum;
Own Website
• Online ticket sales. • Control prices,
booking and payment
process.
• Promote the museum
• Free advertising;
online;
Travel Websites • Spread of word-of-
• Know the perceptions of
mouth.
Online the visitors.
Channel • Easy and quick to
• Promote the museum; communicate;
Social Media • Launch special campaigns • Direct and bilateral
for visitors. contact with clients
and employees.
• Present and promote the
museum;
• Allows to knowledge
• Conduct personalized
E-mail Marketing customer’s needs and
campaigns;
satisfaction.
• Conduct surveys to
visitors.
• Gain visibility in the
Advertising in
market;
Industry • Promote the museum.
• Spread of word-of-
Press Magazines
mouth.
Articles in Online • Present and promote the • Spread of word-of-
Newspapers museum. mouth.
Communication • Gain visibility in the
• Promote the museum;
and Technical market;
Partnerships • Technical support in the
Support • Direct and bilateral
sector.
Partnerships contact with partners.
Table 4 – Promotional Actions of IMMERSIVUS

Source: Author

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12. Location
To ensure the success of the projected museum, it is crucial to choose a good location
in terms of centrality and convenience. So, the location appears as one of the most important
components of this project. For this analysis it will be used the ELECTRE Method, which
allows to compare and relate several criteria of the alternative places. Considering the factors
selected, the ELECTRE Method determine the location of the most sustainable way for the
investment, considering the weight given to the importance of each factor.

12.1. Macro Location

In a first phase, the Macro Location is defined, which consists in the choice of the city
where the museum will be located. The cities of Lisbon and Oporto were selected for the
analysis, since they are the two Portuguese cities that receive more visitors (national and
international). Additionally, given the technical specificities of the museum, we will analyse
the location hypothesis in Alentejo since this region has the necessary infrastructure for this
project.
The factors considered as critical in the macro location of the museum are:
• Accessibility: the museum should have a central location with good accessibility in
order to ensure the best experience for our visitors.
• Availability of Labour: the technical specificities of the museum require qualified
human resources that dominate the highly technological equipment necessary for the
development of our activity.
• Flow of Visitors: the location of the museum should have a considerable flow of
visitors to maintain the activity at the box office. Rather, it should be a location
where seasonality does not have much impact on visitor flow.
So, through the use of the ELECTRE Method, we can observe that Lisbon is the most
interesting city for the opening and development of the sensorial museum, setting the best
values according to the established criteria (Annex 27).

12.2. Micro Location

The definition of the location should take into account the needs and preferences of the
targeted market segment and therefore the flowing factors should be considered:
• Means of Transportation: the abundance and diversity of means of transportation
allow the customers to have greater access to the museum. Thus, is essential that the
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museum is in the city centre, allowing customers to have access to the entire
available infrastructure of public transportation.
• Cultural Dynamism: the proximity to points of interest and other commercial
establishments, like cafes and restaurants, influences the attractiveness of the
museum’s location as it has impact on consumer’s decision. The cultural dynamism
in the selected Lisbon area should encourage people to visit our exhibitions.
• Building Cost: the business strategy is aimed at cost containment, in order to enable
the practice of more competitive prices. In this sense, it is vital to minimize the initial
investment being the building a high factor to be taken into account. At the same
time, it is important to consider the characteristics of the building given the technical
specificities of the project.
Using the ELECTRE method, we can conclude that the location in the Beato is the best
alternative in relation to the others. In addition, it is an area with strong growth of cultural
establishments recently which potentiates the success of the projected museum (Annex 28).
The chosen building is located at Beato Creative Hub and has a gross floor
approximately of 16,000 square meters. The ceiling height of the entire facilities is about 20
meters, so it is important to make a good organization of the museum area. It has an approved
project which will allow the requalification of the museum’s facilities.
The museum facilities are a former industrial warehouse with excellent areas for
immersive projection activities. For a better optimization of the exhibition area, it was decided
to keep the original ceiling height of 20 meters in this room. The exhibition room occupies an
area of approximately 10,400 square meters.
The remaining museum’s area was split into two floors, namely the ground floor and
the first floor. The access to the museum is made through the ground floor, where the customers
can buy the entrance tickets and enter the exhibition room.
On this floor, there is also a warehouse for the audio-visual and other technologic
equipment. On the first floor are the museum office which are divided into four rooms: the
boardroom, the finance department room, the creative department room and the meeting room
that can be used for other purposes. On this floor, there is also a platform where our visitors
can watch the exhibition from another perspective.
Finally, the layout of the museum can be seen in the Annex 29, where we can observe
the outline and description of the different spaces of the sensorial museum.

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13. Organization

13.1. Legal Form

The sensorial museum will be a Limited Partnership (in Portuguese: Sociedade por
Quotas). It is formed by two partners with limited liability. The share capital of the museum is
€800,000.00, divided into two equal stakes of the two partners.

13.2. Organizational Culture

The museum embraces a culture of people, which means that we value the work of our
staff and team integration as well as the growth of each of our talents. The worker is placed
first, having space to give ideas and points of view that will be consider. In our company,
factors such as career planning and talent retention are very well worked out by managers, who
seek the formation of leaders who can continue with their legacy, ensuring the growth of people
along with the growth of the company.

13.3. Organizational Structure

The museum adopts a functional organizational structure characterized by the

horizontal division of departments with specific competences to achieve certain objectives.
This structure aims at the decentralization of power, where each department is responsible for
its performance, having enough autonomy to plan its actions that must respect the strategic
plan defined by the direction.

Direction

Sales and
Creative/Technical Administrative
Marketing
Department Department
Department

Technical Support Ticket Sales

Marketing and
Maintenance
E-commerce

Figure 2 - Organizational Chart of IMMERSIVUS

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• Direction: the top organ that coordinates the whole activity of the museum. The
direction is responsible for defining the strategy and objectives of the company (in
direct contact with the other departments). It is responsible for all financial aspects.
It is also responsible for all administrative aspects of the company, as well as for all
contracts established between the company and external entities. All other
departments depend on and report directly to the direction, who is responsible for
managing any conflicts that may arise in the company.
• Creative/Technical Department: the organ composed of technicians together with
the creative team is responsible for the creation and implementation of the
exhibitions in the museum. It develops all the creative content of the museum, as
well as the most technical features at a creative and technological level.
• Sales and Marketing Department: the organ responsible for the communication
of the museum, which function as the link between the company and the customers.
It is responsible for building a relationship of trust with the client, developing
marketing and sales strategies to keep the customers loyalty.
• Administrative Department: the body responsible for all the aspects related to the
management of the museum. It is responsible for the financial and tax matters of
the company, as well as the relations with suppliers.

More information about Organization can be consulted on the Annex 30.

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14. Project Planning and Implementation

According to the project planning present in the Gantt Diagram in Figure 3, it is
expected the beginning of the activity of the museum to start on May of 2020. For more
information about the planning and implementation activities and tasks check the Annex 31.

Figure 3 - Project Planning of IMMERSIVUS

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15. Economic and Financial Valuation

To analyse the investment project, it is essential to prepare some information about the
investment and the museum exploitation, supported by some auxiliary maps. Additionally, we
can analyse another maps such as Cash Flow Map, Financial Plan, Income Statement, Balance
Sheet, which are crucial to obtain the necessary data to evaluate the project and to make a
decision.

15.1. Introduction

15.1.1. Time Horizon of Analysis

The projected investment project of the sensorial museum will be analysed on the time
horizon of ten years. According to the Project Planning and Implementation analysis, the
proposed museum will start its activity in May 2020 (more information on Chapter 14).
15.1.2. Inflation Rate

For the business plan, it was considered an inflation rate of 1.40%, which is the
predicted rate for 2019 by BdP (BdP, 2019).
15.1.3. Corporate Rates – IRC

According to the Portuguese Corporate Tax Code (CIRC), the standard corporate
income rate is 21%, to which may be added a municipal tax (Derrama Municipal) up to 1.50%
levied on taxable profits, as well as a state additional tax (Derrama Estadual) of 2.50% on
taxable profits, exceeding €1,500,000. Thus, it was defined a corporate tax rate of 22.50% or
25%, related to the taxable profits. The tax losses may be carried forward for a period currently
set in 5 years and limited to 70% of the taxable profits.
15.1.4. Legal Reserves

According to the articles 218º and 294º-296º of Código das Sociedades Comerciais, a
Limited Partnership is required to constitute a minimum legal reserve of € 2,500.00. The
museum will set up this reserve when it reaches its first positive net income.
15.1.5. Other Reserves

In 2024, once the Legal Reserve is formed, Other Reserves will be constituted in the
annual amount of €12,500.00.

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15.1.6. Dividends

The earnings obtained by the museum can be reinvested or distributed for the
shareholders as dividends. The museum’s dividend policy intends to distribute a significant
margin 5% of the museum’s earnings.
15.1.7. VAT Rates

There are different VAT rates (6%, 13% and 23%) in Portugal, that are added to the
price of a purchase of a product or service (Annex 32).
15.1.8. Depreciations

Regarding the depreciations of the fixed assets, it will be considered the straight line
method, by applying the maximum specific rates set out in the Decreto Regulamentar N.
25/2009, of 14th of September (actualized by the Decreto Regulamentar N. 4/2015, of 22nd of
April), and being reinvestments according to the same life cycle. Moreover, and according to
the same Decreto, the depreciations are only considered after the beginning of the activity of
the museum (Annex 33).
When reaching the lifetime of the project, it is assumed the liquidation of the company,
being considered the residual value of the assets. However, due to the difficulty in determining
the market value of the assets, after this large period of time it will be assumed that the residual
value would be equal to the net book value (acquisition cost less accumulated depreciations).
15.1.9. IRS Retention Rate

For the IRS retention of the employee remunerations, including Christmas and holiday
subsidies, it was considered the Table 1 of the Tabelas de Retenção na Fonte para o Continente
– 2019, assuming that all workers are not married and do not have dependents (Annex 34).

15.2. Capital Structure

15.2.1. Capital Structure Policy

According to the Modigliani-Miller theorem, when corporate tax exists, the higher the
debt, the greater the value of the company, since it increases the present value of tax benefits
of debt interests. Thus, the value of the company increases linearly with the debt, being the
optimal capital structure the one that is only financed by debt capital. However, this theorem
assumes perfect capital markets and, therefore, it does not take in account the risks and cost

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(financial distress and bankruptcy costs) associated to the excessive use of debt. In addition,
potential lenders will avoid a project presenting a high leverage.
Considering the necessary capital for the investment of the project, it will be distributed
according to the following table (Table 5):
Capital Structure Total Amount % of Total
Share Capital €800,000 40%
Financing €1,200,000 60%
Necessary Capital for the Investment €2,000,000 100%
Table 5 – Capital Structure

Regarding the capital, it will be delivered in a single instalment of €800,000 during

2019, in order to finance the fixed assets.
Although the museum’s activity represents a large investment, it shows the ability to
generate cash flows and, therefore, can take advantage of financing. Thus, the medium and
long term solution used by the museum to fund its activity is bank credit. The bank credit, like
capital, will be mainly used to finance the fixed assets.

15.3. Investment

15.3.1. Real Estate Investment

[Link]. Land and Building

The museum will establish a partnership with the Creative Hub of Beato to “rent” the
facilities for this project. This partnership will be based on the attribution of Sales a part of the
billing to the Creative Hub.
By contractual link, the Beato Creative Hub, legitimate owner of the Beato building,
located at Avenida Infante Dom Henrique, gives the museum the use of its facilities. In return
for this transfer, the museum will pay a fixed amount for each ticket sold monthly to the Beato
Creative Hub in the following terms:
• €1.25 for each “Bilhete Inteiro”, in the amount of €15.00;
• €1.00 for each “Bilhete Reduzido”, in the amount of €12.00;
• €0.75 for each “Bilhete Promo”, in the amount of €10.00;
• €0.50 for each “Bilhete Escola”, in the amount of €7.00.
• For commercial reasons and in order to improve the commercial success of the
initiative, the museum will be able to change the price of tickets at any time, after
re-examination and agreement of the Beato Creative Hub accordingly.

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Regardless of the number of tickets sold, and only from May 2020 inclusive, the
museum will always pay a minimum monthly fee of € 5,000.00 plus VAT at the legal rate in
force. The Annex 35 presents detailed information on the annual fees paid to the Beato Creative
Hub.
For control of the number of tickets sold and calculation of the variable price
component, if and when due, the museum must provide, at the first monthly, the ticket
management software reports (duly certified and accredited) per se used for this purpose.
The payments from the museum to the Beato Creative Hub, due only from May 2020
until the date of closure to the public in 2029, must be made on a monthly basis until the 10th
of each month (if this coincides with a weekend or holiday, on the next working day) against
invoicing by the latter.
Any amendment by the museum, whether in relation to the assigned premises or the
value of the transfer, shall only be possible if it has been previously agreed writing by the first
contractor.
[Link]. Requalification Costs

Given that the space provided to implement the museum requires works of
requalification and renovation, it was contracted with Beato Creative Hub that these charges
would be the responsibility of the museum and that they would be taken into account when
defining the museum’s rent. To calculate the requalification costs, it was considered the
museum’s dimension (16,000 square meters) and an average cost of construction per square
meter (€ 10.00). So, the estimated total amount of requalification works is € 160,000.00.
[Link]. License, Charter and Writing

As this is a real estate rental agreement, no IMT or IMI charges are incurred. However,
it was considered a value of 1% of the rent paid for other expenses of the Land and Building
Investment.
15.3.2. Equipment and Other Investments

The projected investment in equipment can be found in the Annex 37.

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15.3.3. Investment Summary Table

Investment Summary Table 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Tangible Fixed Assets
Real Estate Investment
Land and Building 20,808 28,652 36,532 44,715 54,731 61,408 68,900 77,306 82,794 88,673
Requalification Costs 160,000 - - - - - - - - -
Interior Design 14,000 - - - - - - - - -
License, Charter and Writing 208 287 365 447 547 614 689 773 828 887
Equipments
Furniture 10,250 - - - - - - - - -
Machinery and Appliances 787 - - - - 844 - - - -
Computers 20,341 - - 21,207 - - 22,110 - - 23,052
Projectors 379,342 - - - - 406,650 - - - -
Servers 20,000 - - - - 20,000 - - - -
Audio Systems 10,160 - - - - 10,891 - - - -
Extras (Cables and Other Equipment) 28,052 - - 29,247 - - 30,493 - - 31,792
Total Tangible Asset Investment 663,947 28,939 36,897 95,616 55,278 500,406 122,192 78,079 83,622 144,403
Intangible Fixed Assets
Computer Software
MadMapper – Annual License 2,075 2,104 2,134 2,163 2,194 2,224 2,256 2,287 2,319 2,352
Industrial Property
Institutional Website 16,386 - - 17,084 - - 17,812 - - 18,557
Financial Charges
ATP Commissions 1,409 1,941 2,474 3,029 3,707 4,159 4,667 5,236 5,608 6,006
Total Intangible Asset Investment 19,871 4,045 4,608 22,276 5,901 6,384 24,734 7,523 7,927 26,914
Table 6 – Investment Summary Table (values in €)

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15.3.4. Investment in WC

Investment in WC 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Exploitation Needs 131,617 6,251 2,934 12,109 - 74,433 2,493 - - -
State
VAT 131,617 6,251 2,934 12,109 - 74,433 2,493 - - -
Exploitation Resources 20,473 21,983 22,358 22,738 93,947 82,160 101,563 137,779 154,454 157,933
Facilities
- Electricity 941 1,412 1,432 1,452 1,472 1,493 1,514 1,535 1,556 1,578
- Water 147 220 223 226 229 233 236 239 242 246
Outsourcing Services
- Accounting 1,231 1,846 1,872 1,898 1,925 1,952 1,979 2,007 2,035 2,063
- Cleaning 1,210 1,227 1,244 1,262 1,279 1,297 1,315 1,334 1,352 1,371
- Communication 73 74 75 76 78 79 80 81 82 83
- Information Technology 167 169 171 174 176 179 181 184 186 189
- Insurance 1,990 2,018 2,046 2,075 2,104 2,133 2,163 2,193 2,224 2,255
- Litigation and Notary 150 - - - - - - - - -
- Maintenance 42 58 73 90 110 123 138 155 166 178
- Marketing Promotion 3,333 3,380 3,427 3,475 3,524 3,573 3,623 3,674 3,725 3,778
- Office Material 167 169 171 174 176 179 181 184 186 189
- Representation Expenses 656 665 674 684 694 703 713 723 733 743
- Safety 5,333 5,408 5,484 5,560 5,638 5,717 5,797 5,878 5,961 6,044
- Other Expenses - 209 288 367 449 549 616 691 776 831
State
- VAT - - - - 4,822 - - 14,221 16,392 5,048
- IRC - - - - 65,997 58,625 77,649 99,251 113,354 127,800
- Social Security (Employer) 2,304 2,369 2,402 2,435 2,470 2,504 2,539 2,575 2,611 2,647
- Social Security (Personnel) 1,067 1,097 1,112 1,128 1,144 1,160 1,176 1,193 1,209 1,226
- IRS 1,662 1,662 1,662 1,662 1,662 1,662 1,662 1,662 1,662 1,662
WC 111,144 (15,732) (19,424) (10,629) (93,947) (7,727) (99,071) (137,779) (154,454) (157,933)
Investment in WC 111,144 (126,876) (3,692) 8,795 (83,319) 86,220 (91,344) (38,709) (16,675) (3,478)
Table 7 – Investment in WC (values in €)

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15.4. Sensorial Museum Exploitation

15.4.1. Sales Forecast

Sales by Type of Entrance Ticket

Year “Bilhete “Bilhete “Bilhete “Bilhete Total
Inteiro” Reduzido” Promo” Escola”
2020 169,992 72,530 6,714 1,316 250,553
2021 234,080 99,874 9,246 1,812 345,011
2022 298,452 127,339 11,788 2,310 439,890
2023 365,305 155,863 14,429 2,828 538,425
2024 447,133 190,777 17,661 3,462 659,032
2025 501,683 214,051 19,815 3,884 739,434
2026 562,888 240,166 22,233 4,358 829,645
2027 631,561 269,466 24,945 4,889 930,862
2028 676,402 288,598 26,716 5,236 996,953
2029 724,426 309,089 28,613 5,608 1,067,736
Table 8 – Sales Forecast (values in €)

15.4.2. Operational Costs

The analysis of the operating costs was made into three levels, namely the cost of
facilities and outsourcing services, payroll and other operational expenses.
More details about operational costs are presented in the Annexes 37, 38 and 39.

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15.5. Cash Flow Table

Cash Flow Table 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Financial Resources
Operational Cash Flow (14,663) 62,426 132,843 206,265 296,651 356,740 423,591 498,737 546,384 597,994
Divesture in WC - 126,876 3,692 - 83,319 - 91,344 38,709 16,675 3,478
Residual Value WC - - - - - - - - - (157,933)
CAPEX Residual Value - - - - - - - - - 48,933
Financial Needs
Investment in CAPEX 683,817 32,984 41,505 117,892 61,179 506,790 146,926 85,602 91,549 171,317
Investment in WC 111,144 - - 8,795 - 86,220 - - - -
Cash Flow (809,625) 156,319 95,030 79,578 318,791 (236,271) 368,009 451,844 471,509 321,156
Accumulated Cash Flow (809,625) (653,306) (558,276) (478,698) (159,908) (396,179) (28,170) 423,674 895,183 1,216,339
Cash Flow Discounted (751,425) 136,690 77,621 60,655 226,442 (156,120) 225,634 256,110 245,655 152,327
Accumulated Cash Flow (751,425) (614,735) (537,114) (476,459) (250,017) (406,137) (180,503) 75,607 321,261 473,588
Table 9 – Cash Flow Table (values in €)

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15.6. Financial Plan

Financial Plan 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Origin Funds 800,000 1,147,701 172,888 139,396 228,967 427,412 419,111 595,309 638,420 677,110 729,417
EBITDA - (52,299) 45,896 135,592 228,862 343,995 418,994 503,884 599,603 660,290 725,754
Share Capital 800,000 - - - - - - - - - -
Financing 1,200,000
Divesture in
- - 126,876 3,692 - 83,319 - 91,344 38,709 16,675 3,478
WC
Financial
- - 115 112 105 98 117 82 109 145 185
Incomes
Application
- 794,962 201,298 210,411 299,562 236,726 772,619 330,007 272,627 281,149 352,581
Funds
Investment in
- 111,144 - - 8,795 - 86,220 - - - 157,933
WC
Investment in
- 683,817 32,984 41,505 117,892 61,179 506,790 146,926 85,602 91,549 171,317
CAPEX
Payment of
- - - - 3,969 6,641 10,702 14,175 18,118 20,693 23,329
Dividends
Reimbursement
- - 134,157 138,847 143,070 147,422 151,906 156,526 161,287 166,193 -
of Loans
Financial
- - 34,157 30,059 25,836 21,484 17,000 12,380 7,619 2,713 -
Expenses
Treasury
800,000 352,740 (28,410) (71,015) (70,594) 190,686 (353,507) 265,302 365,793 395,961 376,837
Balance
Accumulated
Treasury 800,000 1,152,740 1,124,329 1,053,314 982,720 1,173,406 819,899 1,085,201 1,450,994 1,846,955 2,223,792
Balance
Applications 800,000 1,152,624 1,124,217 1,053,209 982,622 1,173,289 819,817 1,085,092 1,450,849 1,846,771 2,223,570
Table 10 – Financial Plan (values in €)

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15.7. Income Statement

Income Statement 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Revenues 250,553 345,011 439,890 538,425 659,032 739,434 829,645 930,862 996,953 1,067,736
Operational Costs
Cost of Facilities (92,638) (101,128) (103,088) (105,074) (107,120) (109,256) (111,222) (113,268) (115,355) (117,292)
Cost of Outsourcing
(206,961) (194,235) (196,954) (199,711) (202,507) (205,342) (208,217) (211,132) (214,088) (217,085)
Services
Other Operational
(3,253) (3,753) (4,256) (4,777) (5,410) (5,841) (6,322) (6,859) (7,220) (7,605)
Expenses
EBITDA (52,299) 45,896 135,592 228,862 343,995 418,994 503,884 599,603 660,290 725,754
Depreciations (122,751) (122,780) (122,809) (123,759) (123,789) (129,439) (130,429) (130,460) (130,492) (131,520)
EBIT (175,049) (76,884) 12,783 105,104 220,206 289,555 373,455 469,143 529,798 594,234
Interest Income - 115 112 105 98 117 82 109 145 185
Interest Expenses - (34,157) (30,059) (25,836) (21,484) (17,000) (12,380) (7,619) (2,713) -
Earnings Before Taxes (175,049) (110,925) (17,164) 79,373 198,821 272,673 361,158 461,632 527,230 594,419
Income Tax - - - - (65,997) (58,625) (77,649) (99,251) (113,354) (127,800)
Net Earnings (175,049) (110,925) (17,164) 79,373 132,824 214,048 283,509 362,381 413,875 466,619

Tax Losses
Auxiliary Calculations
Initial Income Taxable (175,049) (110,925) (17,164) - - - - - - -
Accumulated Deductible
(175,049) (285,975) (303,139) - - - - - - -
Tax Losses (70%)
Deductible Tax Losses (122,535) (77,648) (12,015) - - - - - - -
Used Tax Losses - - - 79,373 132,824 - - - - -
Final Income Taxable - - - - 65,997 58,625 77,649 99,251 113,354 127,800
Table 11 – Income Statement (values in €)

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15.8. Balance Sheet

Balance Sheet 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Assets 800,000 1,845,423 1,601,851 1,446,215 1,385,398 1,445,368 1,497,521 1,642,231 1,873,922 2,129,495 2,430,828
Non-Current Assets
Tangible Assets - 548,733 462,459 384,142 363,858 303,236 682,122 682,078 637,921 599,308 620,728
Intangible
- 12,334 8,812 5,824 20,243 18,255 16,719 33,261 32,560 32,230 50,607
Assets
Current Assets
Income Taxes - 131,617 6,251 2,934 12,109 - 74,433 2,493 - - -
Cash 800,000 1,152,740 1,124,329 1,053,314 989,188 1,123,878 724,246 924,399 1,203,441 1,497,957 1,759,494
Assets 800,000 1,845,423 1,601,851 1,446,215 1,385,398 1,445,368 1,497,521 1,642,231 1,873,922 2,129,495 2430,828
Equity 800,000 624,951 514,025 496,861 578,735 714,917 930,763 1,212,596 1,569,359 1,975,040 2,430,828
Share Capital 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000
Legal Reserves - - - - 2,500 2,500 2,500 2,500 2,500 2,500 2,500
Other Reserves - - - - - 12,500 25,000 37,500 50,000 62,500 75,000
Retained
- - (175,049) (285,975) (303,139) (232,907) (110,785) 89,087 354,477 696,165 1,086,709
Earnings
Net Earnings - (175,049) (110,925) (17,164) 79,373 132,824 214,048 283,509 362,381 413,875 466,619
Liabilities - 1,220,473 1,087,825 949,354 806,663 730,451 566,758 429,635 304,563 154,454 -
Non-Current Liabilities
Loans - 1,200,000 1,065,843 926,996 783,925 636,503 484,598 328,071 166,784 - -
Current Liabilities
Suppliers - 15,440 16,855 17,181 17,512 17,853 18,209 18,537 18,878 19,226 -
Income Taxes - 5,033 5,128 5,177 5,226 76,094 63,951 83,026 118,901 135,229 -
Equity and
800,000 1,845,423 1,601,851 1,446,215 1,385,398 1,445,368 1,497,521 1,642,231 1,873,922 2,129,495 2,430,828
Liabilities
Table 12 – Balance Sheet (values in €)

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15.9. Evaluation of the Project

15.9.1. Discount Rate

In order to analyse the economic viability of the investment project is necessary to

discount all the cash flows to the same moment, applying a constant discount rate in all years.
The discount rate applied in the evaluation of the project was obtained through the CAPM,
which aggregates the time of money and the risk for the investors. The risk premium of the
project in terms of its economic risk is given by its unlevered beta, since it is considered that
the investment in entirely financed by equity.
The unlevered beta considered for the project was the beta of the average equity of the
Entertainment industry, since it is a new project, being considered a beta of 0.96 (Damodaran;
[Link]).
For the risk-free rate it was assumed the coupon of the Portuguese Government Bond
with a maturity of 30 years and emitted on March 2019, which corresponds to 2.59%. On the
other hand, it was considered the total equity risk premium of Portugal in January of 2019
which is 7.96%.
To conclude, the discount rate for the project is 7.75%:
CAPM Symbol Ru=bU[E(Rm)-Rf] (1)
Unlevered Beta bU 0.96
Risk-Free Rate Rf 2.59%
Market Equity Risk Premium [E(Rm)] 7.96%
Market Risk Premium [E(Rm)-Rf] 5.37%
Discount Rate Ru 7.75%
Table 13 - CAPM

15.9.2. Evaluation Indicators (Equity Return Rate)

The business project was evaluated for a period of 10 years, according to the following
criteria:
Indicators (Ru=7.75%) Value
NPV @ Ru=7.75% €447,110.47
IRR 8.90%
PP 8 Years
Table 14 – Evaluation Indicators for the Investment Project (Equity Return Rate)

This investment project presents a positive NPV, showing that it allows the recovery of
the investment. Thus, based on this indicator the decision is to accept the project.

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The IRR of the project is higher than the considered discount rate (8.90% versus
7.75%), being the project economically viable. The payback period of the project is 8 years.
Despite that, it is important that the NPV was calculated assuming that the project is
completely financed by equity (Ru=7.75%), being relevant to analyse the effects of debt on the
value of the investment project, since the project will be financed in 40% by equity and 60%
through debt. To do this, it will be used the WACC, that consists on incorporating the effects
of the financing decision by adjusting the discount rate.
15.9.3. Weighted Average Cost of Capital – WACC

In order to compute the WACC, firstly, it is necessary to find the return on equity rate,
taking into account the leverage risk of the project. The rate was obtained through the CAPM,
aggregating the time value of money and the risk for the investors. The risk premium of the
project in terms of its economic risk is given by its levered beta, since the investment is not
entirely financed by equity. Thus, in order to calculate the levered beta was used the following
expression, assuming there is no risk associated to the debt:
)
!" = !$ 1 + 1 − ( (2)
*

Regarding to the Return on Debt (Rd) of the financing it was estimate an interest rate
of 3% for the bank financing.
1 1
WACC Symbol +,-- = ./ ∗ + .4 ∗ (6 − 7) ∗ (3)
123 123
Debt D €2,000,000.00
Equity E €800,00.00
Debt + Equity D+E €2,000,00.00
Corporate Tax T 21.50%
Unlevered Beta bU 0.96
Levered Beta bL 2.01
Risk-Free Rate Rf 2.59%
Market Equity Risk Premium [E(Rm)] 7.96%
Market Risk Premium [E(Rm)-Rf] 5.37%
Return on Equity Re 13.82%
Return on Debt Rd 3.00%
WACC 6.94%
Table 15 - WACC

To conclude, the WACC is 6.94%, being lower than the return on equity when the
project is entirely financed by equity (Ru=7.75%).

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15.9.4. Evaluation Indicators (WACC)

Analysing the business using the WACC, it will be achieved a NPV of €473,588.18,
which is higher than the achieved before, i.e. taking into account the entirely financing through
equity (the discount rate is the return on equity (Ru)). This way, it can be conclude that the
investment project is viable, being positive the impact of financing through debt.

15.10. Key Performance Indicators

The museum’s performance indicators are important to evaluate the success of the
company during a period of time. These indicators are divided according to the following
categories: economic, financial and liquidity indicators (Annex 40).
15.10.1. Economic Indicators

The Profit Margin is negative in the first three years of exploitation, because the sales
are not enough to meet all the expenses of the museum. However, it can be observed that the
Profit Museum is increasing over time, as the sales revenue are positively impacting the profit.
15.10.2. Economic-Financial Indicators

The ROI is negative in the first three years of exploitation, increasing over the years to
reach the 23.33% in the last year of evaluation. The ROA and the ROE also present negative
values in the first years of museum’s exploitation, increasing over the years, presenting 69.51%
e 58.33% in the last year of the analysis.
15.10.3. Financial Indicators

The Equity Ratio shows the proportion of the company’s assets that are funded by
equity stakes. Thus, the greater its value, greater is the financial strength of the museum. This
ratio increases until 2024, showing the financial robustness of the project during that period.
Until then, this ratio decreases until the end of the period analysis.
The Debt-to-Equity Ratio is used to evaluate a company’s financial leverage. Regarding
this ratio, we can note that it decreases over the analysis period due to the reductions of the
museum’s financial obligations.
15.10.4. Liquidity Indicators

The Current Ratio measures the company’s ability to pay short-term obligations or
those due within one year. The ratio is higher than 100% in all the years of the analysis period,

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which proves that the museum has the capacity to pay its current liabilities with its current
assets.

15.11. Sensitivity Analysis

To assess the economic and financial viability of the project it is important to analyse
the sensitivity of the project to changes in the most relevant variables. The chosen variables
were the museum entrance price and the number of museum’s visitors, since both indicators
have a considerable impact on the results of any museum and are variables highly influenced
by the external environment.
Regarding the entrance price of the museum the table below presents the associated
sensitivity analysis from changes in the prices:
Price Growth NPV @ WACC=6.94% IRR PP
-5.00% €(293,895.99 - -
-3.00% €(11,967.64) - -
-2.00% €141,079.29 3.14% 10 Years
-1.50% €220,816.66 4.77% 9 Years
- €473,588.18 9.37% 8 Years
+1.50% €747,999.51 13.64% 6 Years
Table 16 – Price Growth Sensitivity Analysis

The table below present the NPV, IRR and PP, using WACC as discount rate, for
reduced number of museum’s visitors:
Visitors Number Growth NPV @ WACC=6.94% IRR PP
-20.00% €(115,062.11) - -
-17.50% €(41,480.82) - -
-15.00% €32,100.47 0.66% 10 Years
-10.00% €179,263.04 3.65% 9 Years
- €473,588.18 9.37% 8 Years
+10.00% €766,997.89 14.77% 6 Years
Table 17- Visitors Number Growth Sensitivity Analysis

Finally, the next table presents a combination of both variables:

NPV @ Visitors Number Growth
WACC=6.94% -20.00% -16.00% -15.00% -10.00% - +10.00%
-4.50% (674,973) (585,240) (562,805) (450,638) (293,896) (1,965)
Price Growth

-3.00% (503,507) (405,199) (380,622) (257,737) (11,968) 233,802

-2.00% (381,069) (276,640) (250,532) (119,995) 141,079 401,897
-1.50% (317,279) (209,660) (182,755) (48,231) 220,816 489,445
- (115,062) (41,481) 32,100 179,263 473,588 766,997

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+1.50% 104,467 233,173 265,350 426,233 747,999 1,068,347

Table 18 – Sensitivity Analysis (values in €)

The most optimistic scenario has an increase of 1.50% on entrance prices and an
increase of 10.00% of the annual number of museum’s visitors, presenting a NPV of €
1,068,347. By the contrary, the worst scenario has a negative NPV of € 674,973, in which there
are a decrease of 4.50% in the entrance price and a decrease of 20.00% in the number of
museum’s visitors.

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16. Conclusion and Critical Analysis

The tourism industry has a great importance for the Portuguese economy because of its
capacity for wealth-generation as well as for job creation. The most dynamic sectors were those
linked to travel agencies, tour operators, guides, hotels and similar accommodation
establishments. Increasingly stimulated by consumers’ habits and lifestyles, tourism has
presented different modalities as well as new tourist products have become increasingly
recognized.
The presented investment project consists in the creation of a centrally located sensorial
museum in the city of Lisbon, at Beato Creative Hub, that offers a unique video-mapping
immersive experience, aiming to present the history and culture of the city of Lisbon.
The project competitive edge and core competencies are based on its strategic location,
remarkable video-mapping immersive exhibitions, superior customer service and
environmental responsibility.
The museum focus on a differentiation strategy that aims to highlight the innovative
qualities of the video-mapping exhibitions. The investment in high technology to create a 360º
immersive experience to the museum’s visitors is the strong point of the museum.
Regarding the target client group, the museum focus on educational group and on
individual customers, which encompasses the local audience and the recreational tourists. The
reason is that they are open minded towards such a project and are more aware of the
experiences they would like to do.
To ensure the success of the presented business, it is important to be a pioneer and to
start it as soon as possible and to promote the creation of business relationships with potential
customers and suppliers.
Several components were used to understand if the sensorial museum is feasible or not.
First, the competition analysis is essential to perceive if there is audience for this concept.
Through this analysis, the main player in the market were identified and it can be concluded
that Lisbon Story Centre is the one that can be compared to the sensorial museum. However,
these unit cannot be put on the same level as IMMERSIVUS since the concepts differ from
each other.
Secondly, a SWOT analysis helped to understand the feasibility. This tool assisted to
understand that the sensorial museum can be implemented since the strengths and opportunities
outweigh the weaknesses and threats. It is crucial to understand the company’s weaknesses as
well as the threats, of which the latter ones cannot be influenced by the company in order to

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understand the associated risks of the implementation. However, the lookout can be seen rather
positive, therefore the concept of the sensorial museum should be taken into action.
Through the financial and economic analysis, it can be concluded that the project is
economically viable, presenting a positive NPV, which means that all the investment is
recovered, the shareholders are remunerated at a rate of 13.82% and it generates a surplus of
€473,588.18. Furthermore, the project presents a IRR of 9.37%, being the investment recovered
in 8 years.
The analysis of the performance indicators is also favourable, ensuring the success of
the museum and supporting the decision of investing in the project.
It should be noted that during the investment project several assumptions were made in
order to proceed with its realization. The one that will have most influence is the number of
visitors of the museum. Thus, to bring reality as close as possible, the number of visitors of
video-mapping events occurred in Portugal were taken into account.
Besides that, the motivations and behaviours of the tourists are constantly changing,
influencing positively or negatively the tourism demand and the competitor decision. Thus, it
has a huge impact on the future profitability and viability of the project. Through the sensitivity
analysis, it could be observed that some changes in the most relevant variables (price and
number of visitors) impact on the economic and financial viability of the present investment
project. Therefore, it is crucial to analyse the surrounding environment and understand how
this business plan can be adjusted if any relevant change happens, in order to continue its
sustainability.

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 Business Plano of Sensorial Museum

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