Strategy, Aims & Objectives
Objectives have to be created according to the SMART acronym. Specific: The business has the objective to increase its sales by November since that is when the Term 1 starts for universities. Measurable: From the start of the business (July) increase the sales by three times till November Achievable: The objective of the business (to increase sales till November) is achievable, since it is the time period when the Term 1 starts for both universities, and it would be essential for them to buy stationery.
Realistic: The resources the company owns would allow the company to actually reach their objective of increasing it’s sales. Time-specific: As said before, the business has the objective to increase its sales by three times from the period of starting the business (July) till November. The business strategy of E & A Stationery shop is to sell cheap stationary, which would be available to any student from the Lancaster University and University of Cumbria.
However, at the same time the E & A stationary must keep their quality under control, and poor quality products are not appreciated by most of the students.
Organizational structure and HR
No workers would be employed just yet, since the business will just start-up and will not have big amounts of profit to afford employing others. The two partners will be running the business by themselves. The partners would mostly be motivated to work by the profit, since it’s the driving reason of opening up the business, so motivation is not an issue to consider yet. As a famous American businessman Robert Kiyosaki said: “Passion is the begging of success.” and we are passionate and optimistic on the start of our business.
Financial plan and legal structure
Partnership, since it is easier two set up in case of two people opening up the business, rather than an ltd. ltd may require extra costs and a corporate tax, while partnership is easy to set up (no any complicated paperwork), and doesn’t require a payment of corporate tax (only income tax of 20%) However, partnership might be worse off than the private limited business, since in that case the business and the owners are the same legal identity, and they are the guarantors of any risks, i.e. they would have to pay any banks loans back from their own capital if the business makes a loss or goes bankrupt. Financial Plan is an investment of personal funds, 8000 GBP from each of the partners.
Cash flow forecast can be seen below. All figures are in GBP.
Based on the cash flow forecast, we can see that there is constant pattern of positive closing balance starting from November. The business closes its October month with a negative closing balance due to a high cost of advertising, however the sales increase constantly, as the retail outlet gets more customers, and by the end of June the business is estimated to have a 2016 GBP closing balance. Furthermore, the annual rent of the business is divided into the 12 month time period, as it is more preferable for the business to pay it that way. However, the cash flow forecast has a few drawbacks.
Firstly, it is not very reliable, since the numbers are just estimates, even though some of them have been found from real places (e.g. utility bills). The forecast ignores all the qualitative factors. Stock of 2000 GBP will be bought every month, except from the first two months, when the business will purchase raw materials of 3500 GBP in July as it has just started up and will need stock, since it will be working under JIC, which will also be used in August with further purchase of raw materials of 500 GBP.
Strengths: * Located on King Street (city centre) in Lancaster, which is a student city, i.e. there is a large population of students * Cheaper prices than in other stationery shops in Lancaster, which is beneficial for the students * Vouchers given to the students, which will encourage further sales * Facebook page will keep the potential customers informed about the promotions upcoming * The two points above may increase loyalty for the customers, which can lead to an increase in sales for a further period of time| Weaknesses: * Already existing competition in Lancaster. * There is no customer base established, therefore some money should be spent on the advertising of the shop| Opportunity: * If the shop’s sales increase and it has a good reputation, an opportunity to open an on-campus retail outlet may be considered| Threats: * The existing competitors may have an already existing customers base, where the customers may be loyal to the business and still buy their products instead|
* The suppliers of the business will be manufacturers of stationery products in China. The reason to choose this supplier is because the products available in China are at cheaper prices, which will give E & A Stationery shop the opportunity to sell their products at cheaper prices. * The products will be bought in bulk from the suppliers, which will give the business the opportunity to gain an advantage over the economies of scale, and yet again sell the products at cheap prices * The only problem that can occur with the suppliers is the delivery times, however if the time is managed efficiently, there will be no problems.
Target Market: Students of Lancaster University and University of Cumbria, as well as students from primary/secondary/high schools. Products: Pens, pencils, pencil cases and accessories, notepads, post-cards, diaries and calendars, files and folders, home and office decors. Pricing: Pricing strategy of this retail outlet will be a market based pricing strategy. Promotional pricing is the best suited for opening up a business of this kind, since this pricing strategy supports an opening of a new store. This strategy will help E & A Stationery retail shop to gain market share and increase sales (it will help the achieve the objective of increasing the sales by three times till November) with low prices. Low prices would also be beneficial for the university students, since in that case all of them will be able to afford the products of the E & A Stationery shop.
Secondly, the business is considering using the psychological pricing strategy, since it is very common for retailers to set the key price levels in order to make the prices appear lower than it is. Promotion: Above the line promotion will be done by the business, in terms of advertising, which will be informative (giving information to the potential customers). The advertising costs are included in the cash flow forecasts. It will help the business to spread the word about its existence in Lancaster city, which will hopefully lead to higher sales. Below the line promotion will also be done. It will be in the form of giving the students, vouchers and coupons, e.g. getting a voucher of 5 pounds in case of buying products of more than 30 pounds at the same time. Furthermore, the business is planning to create a Facebook page, which will definitely help them to increase its reputation. Students will be invited from both of the universities will be invited to the Facebook page.
- Fisher Wrathall [online] Available at http://www.fisherwrathall.co.uk/images/uploads/commercial/doc_brochure/13kingstreetpdf.pdf [08 November 2012]
- Energy Price Comparison Service powered by UK Power [online] Available at http://referrer.ukpower.co.uk/home_energy/compare/dual/4QG4JW2P [08 November 2012]
- 1 January 2012. Lancaster Online 2012 Advertising Options [online] Available at http://lancasteronline.com/pages/lnp/ratecards/retail.pdf [08 November 2012]
Cite this essay
Analysis of E&A Stationery Shop Company. (2017, Jan 14). Retrieved from https://studymoose.com/analysis-of-ea-stationery-shop-company-essay