Opening a Flower Shop in the Coventry City of the United Kingdom - Essay Example

Business Decision Making Table of Contents Introduction 5 1 Purpose of the Report 6 2 Introduction to Coventry 6 2. Sources Collection 8 2 Plan for the Collection of Primary and Secondary Data 8 Questionnaire 8 Observation 8 2.2 Survey Methodology and Sampling Frame Used 9 2.3 Design of a Questionnaire for a Given Business Problem 9 Chapter 3: Analysis 11 3.1. External Market Analysis (PESTEL) of the UK 11 Political Factors 11 Economic Factors 11 Social Factors 13 Technological Factors 14 Legal Factors 14 Environmental Factors 14 3. 2. Analysing Data Effectively 15 3.2.1. Summarizing and Analysing Data using representative values and quartiles and percentiles. 15 3.2.2. Analysing Data Using Measure of Dispersion 23 3.2.3. Quartiles, Percentiles and Correlation Coefficient in the Business Context 23 3.2.4. Plotted Scatter Diagram for variables of Prosperity and Frequency 24 3.2.5. Mean, Median & Mode 26 4.1 Critical Path Analysis 27 4.2 Sources of Budget 27 4.3. Start-up Cost 29 4.4. Income Statement 29 4.5 Break Even Analysis 31 Conclusion and Recommendation 34 Reflection 34 References 36 Questionnaire: Prospect of Flower Shop 37 Appendix 2 44 Appendix 3: Data Survey 47 Findings from Descriptive Statistics 48 1. Introduction Florist business is one of the most profitable businesses because of high demand for flower by the people. In addition, the availability of flower shops in a locality is also much less in comparison to other shops. For opening a flower shop in the Coventry city of United Kingdom, it is very essential to understand the demand for flower in the area. There are also other factors that are to be considered includes social, political and environmental factors. These factors are identified to have an impact on the operations of the flower business. Competitors and other external factors such as availability of suppliers are also necessary to be considered that would help an entrepreneur in successfully establishing a flower shop in the city (Fairfax Media, 2015). Sufficient workforce should be available in the particular area that would help in conducting the business in an effective manner. Moreover, there are factors that include effective promotional activities and good customer support are recognized to be vital for attracting the customers towards the flower shop, which will be beneficial in creating customer loyalty, which in turn will assist towards long term sustainability of the flower shop. There are various flower shops in the UK operating successfully and an increased demand has been observed in the market segments of Coventry city. In this respect, the growing demand for flowers in the country is providing a great scope for the entrepreneurs to establish flower shops in order to suffice the demand of the people (Warwickshire Observatory, 2015). 1.1 Purpose of the Report Feasibility report is generally used for evaluating the probability of the success of a particular project or business that is being planned to be launched in the future. It is therefore, the result of detailed analysis of a proposed project, business or idea for determining whether establishing such venture would be successful or not. A feasibility report also examines the readiness of an organization for ensuring that internal capabilities are capable enough to commence a new project or business. In case, if an organization or an individual is not capable of carrying out the new business planning, a contingency plan is being provided in the feasibility report that would help to overcome the adverse situation. Contextually, in this study, the feasibility report would help the flower shop owner to obtain a detailed outlook about the environment and the rate of success if the flower shop is established in Coventry city, UK. The report would be serving as an important business investment decision for which various aspects would be considered that would include the recent market trends in the area, estimated sales revenue, challenges that the business may face along with the solution. Based on the aforementioned aspects, the success of the proposed business would be ascertained and thus, decisions will be made regarding establishing the flower business. 1.2 Introduction to Coventry Coventry is one of the most ancient cities of the UK. It is the second largest city of West Midlands and thirteenth largest city in the UK. It is a small city with an average population of over 300,000 as per the census of 2011. The number of business establishments and organizations are growing gradually that is contributing to the development of the UK. The city is being governed by the UK government and effective measures are being taken by the government to promote business in the city that would contribute to the economic growth of the country. The entrepreneurs are provided with enormous scope and attractive tax structures that would influence them in establishing their business in the city with better effectiveness (Coventry and Warwickshire Chamber of Commerce, 2015). 2. Sources Collection 2.1 Plan for the Collection of Primary and Secondary Data Data collection is generally segregated in two categories that include primary data collection method and secondary data collection method. In this research, both primary and secondary data collection method will be used in order to acquire better reliable and accurate data that are required for the research study (Institute for Work & Health, 2009). The primary data to be used in this research will be collected from Questionnaires and Observations. Questionnaire Questionnaires are considered as one of the most effective methods for collecting primary data, because of the fact that accurate and reliable data can be directly collected from the respondents who are being surveyed (LTDI, 1999). For this research study, 30 questionnaires will be prepared, each containing 10 questions of both open ended and close ended questions in order to gather adequate information required for the research. The survey will be conducted in the market area where large number of respondents will be present. Observation Observation is also a major way of collecting primary data that is generally conducted by observing various actions and behaviour of the customers. It is the most cost effective and easiest way of collecting primary data. The observation method will serve effective for the research study that will help in identifying the behaviour and characters of the potential customers for the flower business in Coventry. Various secondary sources of information have also been used in the research. Secondary data has been acquired from various online sources and other journals, magazines and reports that help in gathering most relevant and accurate information regarding the research study. It has been ensured that data and information are being retrieved from authentic sources and government reports in order to maintain the relevancy of the report. 2.2 Survey Methodology and Sampling Frame Used Probability sampling method has been used in this research study in order to make the analysis effective and understand the probability of the success of establishing the flower shop business in Coventry. Similarly, random sampling has been used as the technique of probability sampling in order to save time and other available resources. Moreover, the percentage of potential customers can easily be understood with the help of this technique. The questionnaires and observation methods along with the probability sampling techniques will help in understanding consumer behaviour and attitudes that will help in determining potential customers (SAGE Publications, 2015). 2.3 Design of a Questionnaire for a Given Business Problem Questionnaires that will be designed for the survey will be distributed among the people living in the Coventry area, where the flower shop is being proposed to be established. This will help in understanding the potential consumers for the flower shop, their choices and preferences along with the demand for specific flowers. The questionnaire will consist of two parts, i.e. Part A and Part B. Part A will include 5 questions that will be targeted towards the demography of the customers. The second part will be the main body of the questionnaire that will include 10 questions. The questions will be directed towards the habits and behaviour of the respondents regarding purchasing flowers. Moreover, their choices and preferences along with the demand for specific flowers will also be asked in the questionnaire. This will help the flower shop owner to implement effective strategies that will help in the successful establishment of the flower business in the Coventry area. Chapter 3: Analysis 3.1. External Market Analysis (PESTEL) of the UK Political Factors The external environment of the UK comprises a number of factors that defines the strengths and weaknesses underlying the nation’s political scenario. The political environment of the UK is stable, owing to a number of strengths such as presence of a strong governance setup apart from the existence of effective governance. Furthermore, the political environment of the UK is identified to be stable, as it is backed by a dominant position in terms of global politics. UK’s position in the global political environment is quite strong however; it faces continuous challenges pertaining to tension underlying the ineffectiveness of ruling union resulting to decline in the popularity of the national government. The government of the UK has constantly focused towards developing sustainable relationships with developing nations such as India resulting to increased economic opportunities in the future. However, UK’s economy faces constant challenges and potential threats from emerging issues such as terrorism, the recent being the infamous “Charlie Hebdo Attack” (MarketLine, 2013). Economic Factors Since, the UK is a highly developed economy hence, economic stability of the nation is quite positive. Moreover, the economy is boosted by the presence of a favourable investment atmosphere that further provides an excellent platform for conducting business operations. The economy is also being supported by its ability to exploit the future economic prospects of a substantial reduction in the corporate taxes, apart from strengthening the financial mechanism. The presence of such benefits and future prospects pertaining to the development of the UK are beneficial, but it faces the challenge of high debts and budget deficits, which play a key role in reducing the overall ability to attract potential businesses and shareholders investing in the nation. In addition, the economy faces constant challenges of a stagnant growth and high indebtedness, apart from the increasing vulnerability of the banking sector. The diagram below provides an illustration of the vulnerability of the banking sector in near future, which can hamper the economy (MarketLine, 2013). (Source: MarketLine, 2013) The next diagram provides an illustration of increasing debt and its effect over the UK’s economy. (Source: MarketLine, 2013) Social Factors Social environment of the UK is competitive enough, with a majority of the UK people enjoying high living standards. Furthermore, social mechanism of the UK is supported by the existence of a strong educational framework and healthcare services for the people of the UK. Furthermore, social factors such as ability of the nation towards effective management of migrants in the UK and encouraging support towards low as well as middle-income customers support the development of the nation. However, the UK faces the challenge of relatively high level of dependency ratio compared to the developed nations, rising inequality and ageing population (MarketLine, 2013). Technological Factors Technological factors such as high level of scientific expertise and efficient intellectual property rights play a key role in supporting UK’s technological environment. Moreover, high scope of entry for foreign nations and outsourcing of Research & Development (R&D) plays a key role in highlighting the development of UK’s technological market. However, negative factors such as lack of sufficient skill personnel and decline in the number of patent applications, highlight the drawbacks of technological environment of the UK (MarketLine, 2013). Legal Factors Legal environment of the UK is highly stable and supported by the presence of business freedom and enforcement of legislative laws. Furthermore, a number of measures such as reducing tax evasion have been taken by the government towards ensuring the development of a legal landscape in the UK. However, the UK faces constant challenges due to lack of incentives, tax evasions and inability to attract Foreign Direct Investments (MarketLine, 2013). Environmental Factors Environmental factors surrounding the UK are supported by the presence of a strong global influence and ability to implement the proposed policies. However, increasing level of air pollution and inability to balance economic growth with environmental protection plays a key role in degrading the environmental effectiveness of the nation (MarketLine, 2013). 3. 2. Analysing Data Effectively 3.2.1. Summarizing and Analysing Data using representative values and quartiles and percentiles. Representative values are applied to show all the values added in a single dimension or basic set and can be used for reporting or decision-making. Q.2. It can be interpreted from the Fig.1 shown below that five people out of the total 100 belong to the age group of 15-19 years, apart from seven people belonging to the age group of 20-24 years. Moreover, it can be interpreted from the diagram that seven people belong to the age group of 25-29 years, with five people falling in the age group of 30-34 years. Additionally, the survey found six people more than 35 years of age. (Fig. 1 Age of respondents) Q.3. It can be interpreted from the descriptive analysis that mean, median, mode and minimum people’s economic situation in Coventry is an average, as nine customers out of the total 30 customers, have an average income (refer to Appendix). This makes the flower shop feasible to be established in Coventry, since the people in Coventry are having a stable economic situation and some are affluent people. Q.4.The findings from the data collection further suggested that the nine people from 30 customers live in a household comprising two customers. Furthermore, six and five people are living in the household group of 5 to 6 members and as singles respectively. This shows that the flower shop can have huge prospects in Coventry, as the existing customers can bring in new people along with them. This ensures that the flower shop can increase in efficiency in future. The scenario can be better understood with the help of Fig.2 (Fig.2 Household size of respondents) Q.5. In addition, the data indicates that 22 respondents out of the total 30 people are visiting flower shops in the past six months. This reveals the actuality of the fact that most of the customers are interested in purchasing flowers from flower shops. Q.6. It can be analysed from the diagram that out of 30 customers, a majority of the customers did not visited the flower shops, since they did not preferred to purchase flowers from the shop. Q.7. Findings from descriptive analysis revealed that around 10 of the customers visited flower shops, 2 or less than 2 times in a month. Furthermore, 11 of the responders visited flower shops, 3 to 4 times in a month. Fig.3 shown below represents the frequency of flower shops’ visits by the customers. (Fig.3 Frequency of visits by respondents) Q.8. Findings from the descriptive statistics revealed that most of the customers were concerned with purchasing flowers during limited edition products and during special offers or gift coupons. Q.9. Findings suggested that the new flower shop must target specific customers and focus towards attractive designing of the shop. Furthermore, the findings revealed that the new flower shop could provide best quality flowers to attract customers and maintain sustainable relationships. Fig.4 below provided an analysis of the steps. (Fig. 4 Steps to be implemented by respondents) Q.10. Furthermore, 28 customers out of 30 suggested that the flower shop could have a long-term sustainability in future. Fig. 5 below provides an overview of the scenario. (Fig.5 Sustainability in Future) 3.2.2. Analysing Data Using Measure of Dispersion The analysis clearly indicated that the survey is self-explicated rating or free from bias, as the standard deviation of the data is around or less than 1, which means that the number of data being spread is closely related or low. Furthermore, the data are very consistent, as their range is very small. As for the result of skewness, the data follow a normal distribution where the mean = the median = the mode. Normal distribution is created by random chances. Sample variance also depicted that the population in Coventry is distributed perfectly without any high discrepancy. From the measure of dispersion, it can be also observed that there is little possibility that the flower shop will fail in Coventry. 3.2.3. Quartiles, Percentiles and Correlation Coefficient in the Business Context Quartile statistics have a high impact in relation to analytical powers and is one of the most important methods of benchmarking. Such statistics are widely used in manufacturing sector, even more than their use in service sector. However, businesses are acquiring summary with the help of quartiles and statistics with the aim of improving the business processes. A percentile can be considered as any of the 99 values, which play a key role in distributing sorted information into several or more than 100 parts. Correlation coefficient is a statistical tool that measures the extent to which changes in one variable has an impact on the other. In case variables are closely related, the values fluctuate positively and vice-versa. The below diagram provides an overview of the positive correlation underlying the question 3 and question 7. Findings suggested that the value of correlation is 0.657274187, which shows the existence of a positive relationship between the variables of prosperity and frequency. 3.2.4. Plotted Scatter Diagram for variables of Prosperity and Frequency Scatter chart for variable of prosperity (Fig. 6 Scatter chart for variable of Prosperity) Scatter chart for variable of frequency (Fig. 7 Scatter chart for variable of Frequency) 3.2.5. Mean, Median & Mode Findings from the descriptive statistics (refer to Appendix 3) revealed that in case of gender, the value of Mean is 1.466666667, where, the median, mode and range equals to one. Furthermore, in case of age, the value of mean, median and mode is three, and the range is 4. Additionally, the mean value for ‘Prosperity’ factor is 3.333333333, range being 4 and median and mode being 3 and 3, respectively. In case of ‘Household Size’ variable, the value of Mean is 3.133333333, median being 3, whereas, mode and range stand at 2 and 5, respectively. For visiting variable, the value of mean is 1.266666667, with median, mode and range having a similar value of 1. In case of frequency, the value of Mean is 2.433333333, median and mode being 2 each, and value of range is 4. The variable of step, includes mean having a value of 2.166666667, whereas, the value of median and mode is 2, apart from the range having a value of 4.In case of sustainability variable, the value of mean stands at 1.066666667, whereas, it stands for 1 each in case of median, mode and range. Please refer to Page 15 or 42 for findings from calculations of mean, median and mode for all the 10 questions. 4. Project Plan 4.1 Critical Path Analysis From the above analysis and survey, it can be stated that the flower shop will be successful if they open their shop in Coventry. People living in the area seem to support the business and majority of them would be the customers of the shop. Therefore, it is necessary for the business owner to implement effective plan accordingly and open its shop in Coventry. It is estimated that that for launching the store, a time frame of about five weeks based upon the legal structure and other government regulations has been estimated. Planning should also be made for providing an effective customer service and recruiting efficient employees that will help in establishing friendly customer relations (CIMT, 2015). 4.2 Sources of Budget The sources of finance for the new flower shop business will be provided itself by the owner of the business. The start-up budget for the business has been revealed with the help of following table: Promotion £1,200 Legal £500 Stationery £1,000 Insurance £1,200 Utility £800 Professional fees £8,000 Wages £12,000 Furniture £25,000 Market Research £800 Land property £150,000 Stock of products £20,000 Total start-up expenses £220,500 ASSETS Non-cash assets from start-up £45,000 Cash requires from start-up £200,000 Additional cash raised £50,000 Cash balance on staring date £200,000 Total Assets £495,000 LIABILITIES Borrowings from Bank £25,000 Long term liabilities £35,000 Investment by the owner £715,500 Total planned investment 5,000,000 Loss at start-up £220,500 Total funding £715,500 4.3. Start-up Cost Start-up Expenses to fund £220,500 Start-up Assets to fund £495,000 Total Funding £715,500 4.4. Income Statement Income Statement [Name]       [Time Period]   Financial Statements in U.S. Dollars   Revenue       Gross Sales 10000     Less: Sales Returns and Allowances     Net Sales 10000     Cost of Goods Sold       Beginning Inventory 20,000     Add: Purchases     Freight-in     Direct Labour     Indirect Expenses     Inventory Available 20000     Less: Ending Inventory     Cost of Goods Sold 20000       Gross Profit (Loss) (10000)     Expenses       Advertising 1,200     Amortization 500     Bad Debts     Bank Charges     Charitable Contributions     Commissions     Contract Labour     Depreciation     Dues and Subscriptions     Employee Benefit Programs     Insurance 1,200     Interest     Legal and Professional Fees 8,000     Licenses and Fees     Miscellaneous     Office Expense 800     Payroll Taxes     Postage 1,000     Rent     Repairs and Maintenance     Supplies     Telephone     Travel     Utilities 800     Vehicle Expenses     Wages 12,000     Total Expenses 25,500 25500       Net Operating Income (35500)     Other Income     Gain (Loss) on Sale of Assets     Interest Income     Total Other Income 0       Net Income (Loss) (35500)               4.5 Break Even Analysis From the estimation made on the basis cost, it has been ascertained that break even sales level for the flower shop in Coventry is US$ 25,500. Break even analysis has been provided hereunder. Cost Description Fixed Costs ($) Variable Costs (%) Variable Costs       Cost of Goods Sold     0.0% Inventory $ 20,000   4.0% Raw Materials     0.0% Direct Labour (Includes Payroll Taxes)     0.0%         Fixed Costs       Salaries (includes payroll taxes) $ 12,000     Supplies $ -     Repairs & maintenance $ -     Advertising $ 1,200     Car, delivery and travel $ -     Accounting and legal $ 500     Rent $ -     Telephone $ -     Utilities $ 800     Insurance $ 1,200     Taxes (Real estate, etc.) $ -     Interest $ -     Depreciation $ -     Professional fees $ 8,000     Market research $ 800     Stationary $ 1,000     Principal portion of debt payment $ -     Owners draw $ -             Total Fixed Costs $ 25,500 Total Variable Costs     4% Breakeven Sales level = 25500 Conclusion and Recommendation From the above discussion, it can be concluded that it is feasible for the flower shop to open in the Coventry area of UK that will attract majority of the people of the locality to visit the shop. An internal and external analysis being conducted in the research revealed positive response from the respondents and other surveyed people that would lead to the successful establishment of the flower shop in the area. It is recommended for the flower shop owner to establish an effective business strategy that will help in attracting more customers through sufficing the demands of the customers and providing flowers according to their choices. Moreover, effective promotional measures are also recommended to be taken by the flower shop owner to reach a wider section of the people. Reflection This reflective journal is completely prepared by me that generally reflect the business plan for the flower shop to be established in the Coventry city of UK. The key reason for preparing this project is to reflect my personal opinion and experience in executing the business plan for the flower shop. I have gathered relevant knowledge and experience at the time of carrying out the entire project that will help me to become a successful entrepreneur in future or become an efficient professional consultant in business planning. The questionnaire survey and observation method along with the use of various statistical tools for conducting the research helped me to gain more experience that will assist in developing my professional competency level. References CIMT, 2015. Critical Path Analysis. Journal, pp. 189-202. Commonwealth of Learning, 2015. Starting Your Own Business. VUSSC, pp. 1-197. Coventry and Warwickshire Chamber of Commerce, 2015. Quarterly Economic Survey. The Voice of Business. [Online] Available at: http://www.cw-chamber.co.uk/standardTemplate.aspx/Quarterly%20Economic%20Survey [Accessed May 09, 2015]. Fairfax Media, 2015. Things to Consider Before Starting a Business. My Small Business. [Online] Available at: http://www.smh.com.au/small-business/resources/things-to-consider-before-starting-a-business-20130208-2e4n8.html [Accessed May 09, 2015]. Institute for Work & Health, 2009. What Researchers Mean By Primary and Secondary Data. Article. [Online] Available at: http://www.iwh.on.ca/wrmb/primary-data-and-secondary-data [Accessed May 09, 2015]. LTDI, 1999. Some Advantages of Questionnaires. Questionnaires: Advantages and Disadvantages. [Online] Available at: http://www.icbl.hw.ac.uk/ltdi/cookbook/info_questionnaires/ [Accessed May 09, 2015]. MarketLine, 2013. United Kingdom In-depth PESTLE insights. Country Profile Series, pp. 1-67. SAGE Publications, 2015. Choosing the Type of Probability Sampling. Sampling Essentials, pp. 125-174. Warwickshire Observatory, 2015. Coventry & Warwickshire Economic Assessment. Article, pp. 1-50. Appendices 1 Questionnaire: Prospect of Flower Shop Please respond the following questions by crossing (x) in the appropriate block or writing your answer down in the space given. Section A – Background Information This section comprises personal and biopic information about the participants. Although the questions have been kept sensitive in nature however, they would provide a platform for comparing the views of respondents. The responses shared will be kept secretive and anonymous. Thank you for the cooperation. 1. Gender 2. Age 3. How would you think of your economic situation? 4. The number of people, including you who reside at least three months of the year in your house, (size of your household). Section B In this part of the questionnaire, your habits and preference, if any, are being examined concerning prospect of Flower Shop in Coventry, U.K. 5. Have you been visiting any flower shop from the past six months? Please respond to question 8 only, if you answer no to question 7. In case you answer yes, please skip question 8 and keep on from question 9. 6. Please rank each of the following reasons for not visiting flower shop in the last six months in order of importance. Apply a rank of 1 to the most significant reason for visiting flower shop in the last six months, a rank of 2 to the second most significant reason, etc. Allocate the least important reason for not visiting flower shop in the last 6 months as a rank of 6. Use each of the numbers 1 to 6 only once Thank you for your co-operation in completing this questionnaire 7. In a typical month, how many times do you visit flower shops? 8. How often do you shop on each of the following occasions? 9. What do you think the steps new flower shop must take towards ensuring satisfaction of customers and increasing sales? 10. Do you think flower shop can have a long-term sustainability in future? Appendix 2 Data Coding Question Number Code Description 1 1 and 2 1=Male 2=Female 2 1,2,3,4,5 1=15-19 years old 2=20-24 years old 3=25-29 years old 4=30-34 years old 5=35+ years old 3 1,2,3,4,5 1= Poor 2= Below Average 3= Average 4= Above Average 5= Affluent 4 1,2,3,4,5,6 1=Live alone 2=2 3=3 4=4 5/6=5 More than 6= 6 5 1,2 1=Yes 2=No 6 1,2,3,4,5,6 1= I do not like to buy flowers from flower shops 2= I am not satisfied with services offered by Flower Shop 3= Products at Flower Shop are expensive 4= I do not visit Flower shops because my friends or relatives do not 5= I do not have time to visit Flower Shops 6= I prefer flower stalls rather than visiting flower shops 7 1,2,3,4,5 1=2 time or less 2=3-4 times 3=5-6 times 4=7-8 times 5=9 times or more 8 1,2,3,4 1=Never 2=Rarely 3=Often 4=Always 9 1,2,3,4,5 1=Provide best quality flowers 2=Target specific customers and attractive designing of shop 3=Provide flowers at affordable costs 4=Ensure quality customer service 5= Others 10 1,2 1= Yes 2=No Appendix 3: Data Survey Findings from Descriptive Statistics Read More