Longines Watches - Business Opportunities - Case Study Example

The of the venture will be Timelines since this business is associated with the watches. Location: The venture will be located at the following address: Time Lines 204, 3r Avenue 10025, New York Phone: (212) 325 - 9235 Fax:(212) 325 - 7134 Description of business: It is proposed to start an excusive dealership of the world famous luxury brand of the company Longines in the city of New York. Longines is an internationally famous Swiss brand that has been in the business of manufacturing quality watches since the year 1832. The company is also well known as time-keepers in many international sporting events across the world. The dealership will be situated in the address given above and will be having an area of 2000 sq feet. The interiors will be according to the specifications given by the company and will be similar to other dealers across the world. The store will be temperature controlled with pleasant and well trained staff including a doorman. The venture will be in the form of a sole proprietorship. Overview of market: Longines watches are classified as a luxury brand and hence our clientele will definitely be up-market. It is estimated that 85% of the clientele will fall into this category. Ten percent of the rest will consist of customers who would like to use the occasion to give an expensive, but occasional gift to a spouse or relative. The balance of five percent is expected from corporate houses that are in the practice of giving expensive gifts to preferred clients and well-wishers. Strategic actions: Advertising in the media will be the main strategy to be followed. Distribution of leaflets in up-market areas of the city will also be done. Another proposed method is using e-mailing lists. Other marketing efforts will include appointment of marketing representatives. The company does its own advertising also there is high visibility at sporting events by being time-keepers to events. Managerial and technical experience: Since this is a dealership, there would not be much need for technical staff. It is proposed to have two technicians for servicing of watches. The store will have a trained general manager and a marketing manager. The marketing manager will be a person with a business degree. Three sales representatives will be appointed to assist the marketing manager. Ten sales persons will be appointed to serve customers. They will be given proper training in technicalities and etiquette. Luxury watch brand market: The luxury branded watch market in the United Sates is dominated only by a few well known international companies. They include apart from Longines, Accutron, Bulova, Citizen, Colibri, ESQ, Movado, Pulsar and Seiko. All these brands, especially Citizen, Longines and Seiko are well known and need no introduction to the market. Growth Rate: It is estimated that the venture will have a growth rate of 10% per year. Outlook: Growing affluence and the need for exclusivity among customers are advantages in this type of industry. The outlook is that the venture will be able to maintain a growth rate of 10% for the next five years. Mission statement: To be the most preferred luxury watch outlet in the city of New York Uniqueness: The dealership of one of the most respected and oldest watch brands in the world. Being an exclusive outlet will allow us to give a better pricing to our customers when compared to sub-dealers of the same brand. Key factors: Quality and name of the brand, high quality customer service and after sales service. Market analysis: Our customers come from up-market backgrounds, occasional purchase by the middle income group, organizations who use our products as gifts. There is no special off season or lean season for this segment and business is expected to be steady throughout the year. It is expected that sales will be higher during festive seasons like Christmas and New Year. It is estimated that there will at least 500,000 potential customers in the city. Distributed among our competitors, we estimate that we have 75,000 potential customers. Pricing strategy is based on prices offered by the manufacturer. We propose to sell our products at a discount of 10 to 15% below our competitors. External factors like inflation, rate of employment etc will affect us, but only to a small extent. Since watches are consumer durables, a repeat purchase may happen once every five years or more. Customers have preferences regarding brands and will influence buying behavior. Competitor Analysis: Even though Longines watches are sold in many outlets through sub-agents, there are only four other authorized retail outlets in New York area of the city. They are American Wemepe Corp Fifth Avenue, Bassano Ltd in Third Avenue, Chalano and De Picciotto, both in 5th Avenue. Core competencies: A well trained staff which includes customer service staff, marketing staff and technicians for service. In addition, a general manager and a marketing manager will also add to our value. The most important factor will be the dealership of the Longines Brand. Business Plan Term Project: Running a small business requires a great deal of dedication , commitment and ability to face and overcome challenges of all hues- it also demands entrepreneurial skills in as diverse areas as marketing, trading, finance management, dealing well with people, etc. However the basic objective of business is to provide returns for the owner's investments over a period of time. The study concerns the establishment and running of trading firm dealing exclusively in "LONGINES" watches. It is a sole proprietorship trading unit and is intended to create a niche market for this branded item in downtown New York. There are certain aspects about sole proprietorship in terms of accountability that it is privately owned and therefore, answerably only to the owners and the internal revenue (IR) department of the state of New York. Moreover, it is also seen that the concern may take around 3-4 years to break even and subsequently earn profits in a highly competitive field. It is first intended to be established as a brick-and-mortar shop which could subsequently make forays into internet business. There are several aspects of the business that needs immediate attention: 1. Financial planning and management. 2. Approaching banks for financial assistance for setting up business. 3. Preparation of SWOT analysis for knowing areas of strengths and weaknesses. 4. Budgeting and financial forecasting for future years. 5. Human resources management and personnel management. 6. Other areas which may be of concern for start up trading companies. It is to be kept in mind that this is a trading firm. Therefore, most of the funds would be used up for trading - ordering merchandize in bulk from Swatch Company locations, clearing and forwarding, duties and having it set up in the retail outlet. Besides the firm would also take up the repairing and servicing of "LONGINES" watches both for own clientele and general public This would serve to augment revenues for future expansion and growth. The total investments initially would be to the tune of $ 5 million towards acquisition and set up costs. There would also be an initial outlay of around $10million towards stocks of watches, spare parts and accessories, including equipment. BUDGET: Expenditures For the month $ For the year $ Nature Set up costs including Advertising and promotional 500,000 Initial expenses Non recurring in the short term Rentals and lease costs 5,000 60,000 Recurring Salaries and wages 25,000 300,000 Recurring Stock purchases 50,000 60,000 Recurring Sundries for insurance, utilities, improvements, maintenance 3,000 36,000 Recurring Other recurring overheads 2,500 30,000 Semi variable Total budgetary allocations 585,500 486,000 As per the above provisional estimated budgetary fiscal, an initial amount of $ 585,000 is required to commence trading operations. Subsequently, at least $ 496,000 would be needed every year to sustain the business. The reason why this is needed is to operationalise the business and commence business. It would be needed at the earliest in order to commence business. Since it is a watch trading business, it is expected that revenue could be generated from Day 1 of operations. The daily target of sale is estimated at $ 15,000 every day, and is expected to cross $ 25,000 after six months of operations. PROJECTED BALANCE SHEET (millions): Liabilities Amt ($) Assets Amt ($) Capital Loan liabilities Creditors (expenses) Other liabilities Dues towards stock of watches Profits to sole proprietors 15 5 7 8 7 3.5 45.5 Stocks Equipments Debtors Other assets Furniture and fixtures Goodwill 9 7 9 6.5 8 6 45.5 Profitability and income statements: Particulars Amount ($) Expected incomes ( $ 15,000 per day X 30 ) Expected Expenditures ( refer Budget) Net profits /losses Month Year 450,000 585,500 (-) 35,500 5,40,000 4,86,000 (+) 54,000 SWOT Analysis: Strengths Weaknesses Opportunities Threats No public accountability Complete risks - losses would have to be completely borne by owner High growth prospects Highly competitive business whether it could sustain future competition and how Centralized decision making Firm dissolves upon death or disability of owner Rapid expansion Servicing high costs of trading No restrictions on profit making or earnings Unlimited liability Watch trade is booming industry Targets for criminals and arsonists No external controls Restrictions on public borrowings Technical expertise would be important Need to develop good rapport with watch mfrs Watch trade in high demand business sector Since this is in service industry, competition is strong Location in heart of city - tourist area Capital intensive and sales depending upon popular trends High profitability and growth potential Reputation oriented business High rate of profitability Market acceptance of brand may be lowered in future Read More