Business plan Essay
This business plan concerns the operation of Webster bookstore trading company that will offers books. This business is intended to take advantage of the enormous growth opportunities in the UK which was valued at ? 200 billion as of 2009. To effectively penetrate the market, the company intends to operate a lean, but nimble management structure to handle the key operational areas of marketing, technical/website administration, and inventory management and delivery scheduling. Furthermore, the organization will employ the best people with ample experience and competence in the books retail sector.
From a marketing perspective, the proposed venture will position itself as a high-end, yet value laden books retail firm offering top-of-the line, yet competitively priced products in order to cut a large slice of the market. The company will differentiate itself from other retailers through it’s customize client service feature and competitively priced, yet high value products. Consequently, the company will advertise and promote itself aggressively not only through Internet marketing activities, but also through print advertisements and tie-ups with social networking websites.
For its print ads, the business will advertise in the major magazines. From an operational standpoint, the business relies on a well maintained website and speedy delivery of services.
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For its income streams, the venture will rely on online sales from credit card purchases and various online payment systems such as PayPal, XOOM, etc. During its first year of operations, the bookstore venture is projected to generate net income amounting to US? 230,251. Consequently, the venture will yield total cash on hand worth US? 214,086, which forms the bulk of its total assets, during the first year of operations. Subsequently, the venture will amass total assets worth US? 240,885 and total capital of US? 240,385. Introduction
Given the rising demand in books in the U. K. and the increasing use of the Internet to purchase books, establishing and operating a business can be a lucrative venture. Establishing this kind of business is also attractive considering that the venture can be established with only a minimal investment. A capital of approximately ? 40,000 is sufficient to start a small-scale business. Organizational Structure The proposed books business will initially be established as a sole proprietorship with the proponent as the overall general manager.
Eventually, as the business evolves and expands, the proprietor will incorporate the business so that greater operational control and stability will be achieved. A corporate structure is also advantageous in that the business owner will not incur all the liabilities associated in running the venture. The other, minority incorporators or shareholders will come from immediate family members so that the proponent will be assured that only trusted people will have access to trade secrets. Consequently, the proponent intends to operate a lean, but nimble organizational structure composed of the following key personnel:
? General Manager – the proponent will be in-charge of the overall management and leadership of the business. The other key tasks of the general manager would be on product development, developing and implementing overall marketing, operations, and finance strategies. The general manager will also assume the critical tasks of product development, merchandizing, and financial control; ? Marketing Manager – will assist the general manager implement marketing strategies for the venture (i. e. advertising, promotions, gimmicks, entertainment.
etc. ). ? Operations manager – in charge of inventory management and scheduling of product deliveries and shipments. The company’s organizational structure is illustrated as Figure 1 below: Figure 1: Proposed Organizational Structure Corporate Mission and Objectives The online venture aims to become the best online provider of top-quality, innovative, and value-laden products to the market. Consequently, the business subscribes to the following objectives: ? Provide lucrative financial returns to business owners;
? Provide the best products to online shoppers; ? Provide the best working environment for personnel; ? Establish strong, mutually beneficial, and sustainable business relationships with merchandise suppliers Marketing Plan Due to the fierce competition in the ecommerce industry, Webstore has been investing heavily in marketing of its products. According to the accounts record of 1999-2000, marketing expenses represented 42% of the total operational costs which is relatively high compared to goodwill(25%), technology(20%), and administrative (8%).
This was an increase compared to the previous year and thus a loss to the firm. This is because the net profit is calculated by deducting the total operational costs from the gross profit. The firm is expected to make more losses since the marketing expenses are on the rise. The introduction of new markets also contributed to the expected losses of 427 million dollars in 2000. Webstore sent many products to its customers without charging them in the last few months of 2000 as a marketing strategy (Bangs, 2002). This also reduced the company’s profits.
The firm is investing heavily in marketing in order to survive the great rivalry in the e-commerce industry which has been brought about by the large number of firms entering the industry. Although the industry is growing, the pace is not adequate enough to sustain the number of firms in the industry. Webstore must therefore struggle to maintain its share of the market in the industry. The large number of firms is increasing the power of the buyers in the industry. Although this situation does not lead to monopsony due to influence of supplier power, the prices of goods are affected to some extent.
This reduces the revenues of the firm leading to lowered profits (DePamphilis, 2009). Finance In terms of assets, Webstore is strong in current assets which represent 66% of the total asset. The total assets of the firm reached a total of US$ 2,461 million in June 2000. The inventories represent 7% of total assets although there have been variations in the inventories with the results being positive in many years. Webstoreis always in an expansion process opening new Web Sites in France and Japan and adding new items in its products.
The firm has a policy of acquiring smaller Internet firms as a strategy to increase its fixed assets. Beginning in 1998, the firm acquired four internet companies while another six were added in 1999. It also controls a minimum of 20% and a maximum of 50% of the total shares in Dot-Com firms. Amazon did not have any long-term debt by the end of 2000 although the liability structure has been fluctuating substantially since 1996. It made a significant move by completing a Euro-bond worth 690 million of Euros which is due in 2010 (DePamphilis, 2009).
Administration (Human Resources) Webstoreis run by a large number of professional staff led by the board of directors which is headed by the president and founder of the company, Jeff Bezos. The president is assisted by various Vice Presidents in different departments of the company (Brandenburg, 2009). SWOT Analysis Webstore was one of the leading firms, It has a strong name and enjoys a wide popularity throughout the globe. Its strong brand name assists it in reaching a wide range of clients which is vital for the marketing of its products.
In order to maintain its share of the market, the firm must capitalize on its strengths while utilizing all the opportunities available for its expansion. It must consider its threats and apply the appropriate strategies to hinder their influence in the firm’s operations. The firm should also adopt the necessary mechanisms to suppress the effects of its weaknesses on its operations (Miyuki, 2009). a. Strengths Some of the strengths that webstore has include: • Global leading firm • Large scale operation • Firm financial status • Wide popularity
• Product assortment Global leading firm Webstore is the leading firm in the online retailing of books. Since it was ranked top of its main competitors in 2000 due to its enormous growth, the firm is able to maintain its share of the market and survive the fierce competition in the online trading of commodities. Firm financial status Webstore enjoyed a firm financial status to support all its operations. The firm was placed in a position to implement any change or any strategy which was deemed reasonable to enhance its growth.
Due to its strong financial basis, the firm was able to acquire small internet firms and open new Web Sites in Japan and France as new avenues for its expansion (Miyuki, 2009). Wide popularity Since the firm was the first online retailer at the time of its establishment, it has enjoyed loyalty from its customers. The company has been able to retain customers and still penetrate new markets due to its popularity. This has enabled it to remain above the competitors in the industry (Miyuki, 2009). Product assortment Webstore trades in a variety of products thus giving its clients a range of products to choose from.
By trading in a wide variety of products, Webstore ensures that it wins customers’ confidence in the company which is necessary for the growth of the firm. Weaknesses • Decreased cash in its activities • Lack of establishment in many countries Webstore profits dropped in 2000 due to increase in operational expenses. This was contributed by the high spending in marketing of its products. The huge acquisitions of several small Internet firms also led to a decrease in the firm’s cash for its operation though they were significant fixed asset acquisitions.
The firm had only opened new Web Site in only two countries besides UK in 2000. This was big blow to the expansion of the firm since customers willing to purchase goods from the firm could not do so due to delays in delivery of the commodities (Miyuki, 2009). b. Opportunities • Acquisitions • Growth in the IT industry The company acquired several small Internet firms in an effort to expand its operations. These enabled the firm to enlarge its scale of operations which was necessary for the growth of the firm Threats • Major competitors
Webstore found it difficult to compete with other online retailers such as eBay since both of them are trading in similar products. This situation was difficult since lowering of prices would imply a reduction in revenue and thus a loss to the company (Porter, 2009) 1. Products and services Webstore traded in a wide variety of products by the year 2000. By the end of 1998, the firm was trading in commodities such as books, Music and DVD. Electronics, toys, home appliances, video games and software were added to the list in 1999. Some of the services that were introduced in 1999 included auctions, zShops and sothebys. a