Ronkes Business Development - Case Study Example

1. In your own view, critically reflect on the extent to which planning is a basic component of running a successful business by paying particular attention to Ronke’s business development. Planning is considered to be the starting point of establishing a business as well as managing it. In other words, before you can do anything, you need to determine in advance what you want to achieve and this will make it possible for you to visualise the result as well as objectives of the business. Thus, planning can be defined as “the process in which objectives are decided upon, and the plans on how to reach the objectives are formulated or put together,” (Bates et al 2005). Planning is very important because it gives people in the organisation an idea of direction in which the business is going. It can be noted that Ronke put everything in place and tried to set out the plans for the operations of her business. After studying optometry, Ronke realised that she could venture into optical business. Soon she started an optician’s shop on an American Airbase. She then expanded into another site and also bought an Eckle & deVilleneuve franchise. After a few years she was running 5 small opticians, including the franchise. Having realised the potential of the business and after carefully studying the needs of the affluent people who lived in the Cambridge area, she then went on to carefully plan a business that was going to target the affluent people but this was going to be a long term process. Planning is primarily concerned with looking ahead and focusing on how to obtain a set of goals in business. The objectives and goals of her future business were laid down and that marked the beginning of quite a long journey that saw here having more than 4 500 customers in the data base in the end. Indeed, it was not a one night off event to register such a huge number of loyal customers who would keep on coming back for services but it was a result of careful planning. Though she invested heavily in setting up her enterprise, it was after due consideration of what was likely to appeal to consumers from an upmarket area. She planned that her business ought to resemble any other upmarket business by way of being made up of glossy and expensive material that would distinguish it from any other business though in the same industry. Targeting first class buyers who are often prepared to pay premium prices for the services offered is no easy feat but it requires proper planning where the objectives are clearly laid down as well as the means of achieving them. In a business setup, planning is very important as it improves the communication and the relationships between everyone involved in the business as everyone knows what is expected of them (Bates et al 2006). Basically, planning makes life easier as well as running of business since there would be a clear direction to follow which would be very clear to every one involved in the day to day running of business. Without plans, managers would find it difficult to organise people and resources. Plans give the managers a picture of what they need to organise and how to go about achieving the organisational goals. As can be noted in the case study, Ronke laid the ground work by drawing a workable plan which would be achieved in the space of about seven years before starting to reap the benefits of the goals she was anticipating to get. Indeed, it can be noted that though she invested heavily in her business venture, the course of action had a direction and was not conducted on a random basis the reason why she managed to achieve her goals. Planning often encourages co-operation between sections of the organisation inorder to ensure that different departments run efficiently towards the attainment of the organisational goals. In this case, there were also marketing communication plans that were put in place as a way of attempting to attract as many customers as possible. Ronke had direct mailing system in place as well as the use of news weeks to attract as many potential customers as possible. All this was planned inorder to fulfil her visions she had for her business.It was always Ronke’s long term intention to create a workable, profitable business, the reason why her plan was targeted for year seven as she knew that it was certainly going to take quite a long time to reach her goals as they required quite a substantial amount of capital and other logistics. In view of the above assessment, it can be noted that planning plays a very important component of successful business since it is the foundation upon which organisational goals and objectives are set. It is also regarded as the backbone which gives directions to the ways that would be followed by the business enterprise in an endeavour to accomplish the set objectives and goals. To a greater extent, it can be noted that Ronke took her time in laying the ground work upon which the framework of operation would be set. 2. Critically evaluate the factors that influenced the growth of Ronke’s business enterprise. Which strategies do find more effective especially during the contemporary period? A close analysis of development of business at Image Eyewear Ltd reveals that there are various factors such as consumer behaviour, niche strategy through market segmentation as well as customised services which have greatly influenced the growth of business. The above mentioned concepts would be discussed in detail below. Basically, consumer behaviour in most cases is influenced by various factors and this study seeks to explore some of them and the most appropriate in influencing the behaviour of consumers towards the chosen brand of glasses offered at Image Eyewear Ltd headed by Ronke. There are various factors that influence consumer behaviour for this product. In attempting to outline these factors, it is imperative to highlight the meaning of consumer behaviour for easier understanding. Cant et al (2006:2) define customer behaviour as “the study of individuals, groups, or organisations and the processes they use to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs and desires.” Basically, all aspects of the individual which determine his or her buying behaviour such as perception, needs, motives and attitudes are either directly or indirectly influenced by the individual’s ability to learn (Lancaster G &Reynolds P 1999). This is a process where an individual acquires the buying and consumption knowledge about a particular product which will ultimately affect his or her behaviour towards that product. For instance Ronke had long observed the behaviour of buyers such as the perception that many people were embarrassed to choose glasses in the large exposed space of the shop, and were prone to becoming hostile when asked if they needed help. She had also realised that many customers would prefer to have the same old type of glasses regardless of the fact that they did not fit them hence the need to embark on a drive to offer glasses which satisfy all the other needs and interests of the customers apart from correcting the eyesight problem only. Apparently, the consumers’ attitude towards this brand changed after they had realised that there was more to the value of their glasses following Ronke’s initiative of customised glasses that would also fulfil other tasks. In this regard, it can be noted that consumer behaviour was directly influenced by their attitude following the perceived satisfaction they would obtain from the new range of glasses specially designed to fit different faces. It can be noted that Ronke’s customer base grew from grassroots levels to large numbers as a result of the perceived benefits from customised glasses. Her afluent customers were recommending Ronke’s attentive service, and beautiful collections. Thus, she claims that she never had a customer experience buyer’s remorse, even though most glasses would be retailing at over 250 pounds which is quite exorbitant. It can also be seen that consumer behaviour in this case was greatly influenced by their attitude. McCarthy & Perreault (1990) define an attitude as “a learned predisposition to behave in a consistently favourable or unfavourable way towards market related objects or situations.” Therefore, it can be noted that from this definition the major characteristics of attitude are; attitudes are learned and attitudes tend to be consistent. In the case of Image Eyewear Ltd, it can be noted that the behaviour of the consumers with regards to their attitude towards the brand is a learned process. Consumers form relevant attitude to buying behaviour as a result of direct experience with the product. Having realised that they can get their glasses in a place where they also got excellent customer service, the consumers switched their attention to Ronke’s new offering. Given such a scenario, it can be noted that attitude is a learned process in direct response to what the customers have experienced or consumed from the media in form of advertisements. Ronke also used a niche marketing strategy. Basically, niche marketing has its roots based in market segmentation which is defined as, “the process of dividing a total market into market segments of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix,” Strydom et al (2004:61). Niche marketing therefore, is used to concentrate on sub groups within the market segments. Thus, “a niche is a small group of the market segment which can be narrowly defined as and identified by dividing a segment into subsegments,” Strydom et al (2004:62). More often than not, the benefits of implementing the niche strategy involve the fact that marketers of organisations that use the strategy are particularly aware of the of the needs of their target market so well that even their customers would be willing to pay premium prices for the services offered since they would be unique in a certain way and full of satisfactory benefits to the consumers targeted. Services offered to a niche market are specifically tailored in such a way that they would be characterised by certain unique features that would have been especially tailored in such a way that they would satisfy the needs of the unique needs of the consumers that are often overlooked by other competitors which is the case in the above case study. It can be seen that in some instances other organisations are primarily concerned with providing what they often view as the basic services or needs which often undermine other small but equally important features of a product or service. One other advantage of niche marketing is that there are likely chances of creating loyal customers in the long run as they would be accustomed to specific features that characterise their product or service which would not be found on other similar products in the market like what Ronke successfully did. Niche marketing often involves in depth knowledge about all the specific needs of the consumers though they may be regarded as minor in some instances. Whilst market segmentation at large is primarily concerned with identifying the needs of the segment at large, niche marketing looks specifically at the needs of the sub segments which is why it is advantageous and beneficial to be implemented by any given organisation. The organisation would also able to offer customised services with all the special features that would be attractive to many customers which would mean growth of the organisation’s customer base. 3. Critically analyse the Strengths and Weaknesses influencing Ronke’s business. Why do you think it is important to have such knowledge in doing business? The identification of the internal strengths and weaknesses is part of a SWOT analysis. A SWOT analysis stands for strengths, weaknesses, opportunities and threats. The ‘SW’ looks at the internal factors that affect business while the ‘OT’ looks at external factors and in most cases businesses strive to capitalise on strengths and opportunities for potential growth while they also try to minimise the weaknesses and threats which are detrimental to any business development (Smith P. 1999). This section would be limited to the discussion of internal factors namely strengths and weaknesses and attempt to establish how they can affect the operations of business. The major strength of Ronke is that she has the knowledge and expertise to identify the needs of the targeted consumers. Having realised that the area she operated in was made of affluent people, Ronke decided to fulfil some of the needs which were overlooked by other competitors in the same field. By virtue of being able to identify a void in the market that was not satisfied by other major service provider, she was in a better position to enjoy competitive advantage over other rival competitors which is a major strength that made her business to attract more customers gradually including those returning. A business is not necessarily about exchanging services for money but should as well try to fulfil some of the needs that are not given due consideration since this would in turn help to build loyal customers and even attract new customers. This is one major strength which Ronke is endowed with which led to the success of her business. Another major strength she has is that she is able to provide customised as well as excellent service to the customers. A satisfied customer is a loyal customer in the long run hence a source of strength in establishing a business enterprise that is attractive especially to the affluent class. Consumers are usually not at liberty to part with their hard earned cash especially in upmarket businesses when they would not get a satisfactory service in the end hence the need to offer excellent service which would ensure that they even attract more customers. Consumers who are primarily concerned with paying premium prices are different from ordinary consumers hence the need to offer satisfactory service which is one of Ronke’s strengths. Another internal strength is that everything is first class and up to standard. The premises are elegant and everything is made of high quality and the glasses offered are also of excellent quality. However, one major weakness facing Ronke is that she has a tendency of over investing in expensive things in a short period without realising profits within that short term period. Likewise, disasters can happen unexpectedly while the capital invested had not yet started to generate any revenue. It should always be taken into consideration that debts incurred in investing in a business should correspond with expected outcomes of revenue generated depending on the predictions of the lucrativeness of business. It seems Ronke was a bit over excited to buy off all other small businesses to concentrate on what she wanted Image Eyewear Ltd to be. It should always be noted that such kind of business is long term in nature hence capital should be spread over a gradual period rather than at one goal as this would be risky should there be any unfortunate incident which would be disastrous. In short, it can be said that Ronke was re-active whereby she waited for the problems to arise before dealing with them which in itself is a weakness. There is need to be pro-active whereby an entrepreneur can anticipate problems and to prevent them from happening at all if possible so as to avert probable disaster. Another weakness can be attributed to recommendations through her personal network. Though she had found a new design studio and a much more supportive working relationship, which encouraged her, this in the long run could be dangerous as the personal advisors can in ‘turn’ still her secrets of doing business without her notice which could be challenging. In some instances, it may be difficult to trust social networks as they may also lack the expertise of doing business. 4. “Ronke is an opportunist who triumphs on luck but lacks basic understanding of business.” Evaluate this statement with regards to the way Ronke runs her business. To a greater extent, it can be argued that the above assertion is an over statement with regards to Ronke’s business operations. Contrary to the above statement, it can be noted that Ronke’s empire did not suddenly grow overnight but it was a business entity which passed through long, carefully planned stages though the unfortunate incident happened at the end which resulted in her being rendered redundant. In most cases, a business entity which sails through to reach such dizzy heights is not a result of an accident but proper planning where substantial effort is put. This section would attempt to discuss some of the considerations that may be helpful in investigating as well as ascertaining the notion that Ronke has the fundamental knowledge of running a business regardless of the unfortunate incident that resulted in her giving up her business. According to information obtained from the case study, Ronke studied image advice and consultancy in her spare time, gathering resources from myriad sources including promotions from designer frame makers. It can also be noted that she also attended many expensive sales and marketing courses, to help her with a business plan. From such glaring evidence that Ronke indeed went through various stages in an attempt to build a plan for her business, it would be over excitement for anybody to claim that she is an opportunist who had been thriving on luck. By virtue of studying image advice and consultancy, it showed that Ronke has the basic knowledge and understanding of the kind of business she wants to do. In most cases, the success of any business lies in the entrepreneur having the basic understanding of what she or he would be intending to achieve by setting up that business. Having excelled in sciences, she started an optician’s shop on an American Airbase. She then expanded into another site and also bought an Eckle & deVilleneuve franchise. After a few years she was running 5 small opticians, including the franchise, and in total employing and managing 16 people. Indeed, through her efforts, this made a dramatic change in her lifestyle. Well, all this effort bears testimony that Ronke had a vision somehow for what she wanted to achieve as far as her business was concerned. Indeed, most of the things in Cambridge area were exclusively expensive and the targeted consumers were mainly comprised of the affluent people and Ronke had a vision for what she wanted Image Eyewear Ltd to look like. She wanted to have exclusive business enterprise that would attract especially the affluent class and she began to embark on stoking expensive wares for her shops as well as making first class renovations in the shops as well. This seemed ideal for the image and customers she had in mind. It was always Ronke’s long term intention to create a workable, profitable business and franchise this system. In her plan this was targeted for year seven. The success of any business plan over such a long period of time cannot be said to be a result of sheer luck or accident but careful planning with the major aim of attracting first class customers by offering excellent service. However, Ronke had little knowledge about risk that can be involved in any business, whether carefully planned or run on an informal basis. It should always be projected that the amount of debt should not reasonably shoot beyond the expected revenue to be generated by any business in a specific time frame. Things like property rates going up without due notice should always be expected in business and should not be a cause for panic whereby somebody would sacrifice the hard gained effort in building especially a business like Ronke’s which was just beginning to realise profits after a long time in existence. Selling out business at the stage where Ronke had reached is not a very wise decision as it would be advisable to keep going where there are likely chances of generating revenue. The aspect of risk should always be anticipated of which Ronke had little knowledge about it. 5. Discuss how the knowledge of mergers and acquisitions is important in ensuring the survival of business. It has been noted in the given case study that after four years, Image Eyewear Ltd was approached by BrightEye, a family business with 3 shops whose owners were looking for growth through acquisitions. Ronke refused to sell to them at first as she felt she was about to turn the corner with profits. Her debt was slowly becoming more manageable and she could not imagine giving away her hard work to some body to just reap the profits. Indeed, it is imperative to have knowledge about mergers as well as acquisitions as ignorance may benefit other people to reap from what they did not sow like what happened with Ronke’s business. A clear and concise understanding of the two terms would be very significant in this particular case. According to Jackson & Schuler (2000), in a merger, the two firms supposedly are on equal footing after the deal is closed, while in an acquisition, it is clear that one firm will take control of the other’s resources. There are various reasons why firms embark on mergers and acquisitions such as the need to increase their market share, increase their geographic reach as well as responding to new deregulation. In most cases, one major objective of a merger or acquisition is to gain skills and talents of people employed by another company. Therefore, it would be imperative for both parties involved having a sound understanding of the concept of mergers and acquisitions and no one company should yield more power over another since this would imply easy takeover of another company’s assets and resources. A good deal should be in actual fact beneficial to both parties involved which is one major draw back that affected Ronke in the end though she had tirelessly managed to build a strong database of loyal customers. Having realised the propensity of Ronke’s business to succeed, BrightEye cunningly eyed to buy out Image Eyewear out of business thereby grabbing all its customers as well as it resources. At first they tried to directly buy her out through an acquisition since they were a family business that was actually seeking growth and expansion. If Ronke had accepted at first, it would mean that Bright Eye would acquire all the assets owned by Ronke as well as the customers and she would in turn just get a substantial amount that was only enough to cover her debts but not enough compared to the profits which she was beginning to reap. Ronke was again approached for the second time after the offer but this time it was to rent her equipment and a space in her shop to service BrightEye’s customers. It can be noted that for a very long time, these people had a hidden agenda and they wanted to be as close as possible to Ronke so that she would not be suspicious of anything while they worked their logistics for take over of her hard earned business entity which she had built from scratch. While this brought in a much needed, although modest, cash injection for Image Eyewear Ronke was still not aware of their agenda. More critically, a stronger relationship was formed between the two companies as they traded in the same premises, and Ronke got to know the individuals involved a little better. When Cambridge Municipality announced a 60 % increase in rent, this was supposedly a final blow to Ronke who thought that it was wise to have an exit since her lease was also coming to an end. Little did she know that BrightEyes still wanted to buy her out, as her valuable customer database now had over 4500 names on it which she had successfully built on her own over the years. This was more than they had at the three BrightEyes shops put together. As can be noted from this scenario, it is very important to have knowledge about mergers and acquisitions in order to avoid the ignorance of easily giving away a thriving business you could have built over a long period of time. References Bates et al (2006), Business Management; Fresh Perspectives, Prentice Hall, S.A. Cant M.C. (2000), Marketing Management, 4th Edition Juta and Co Ltd, SA. Jackson, S.E. & Schuler R.S. (2000), Managing Human Resources: A Partnership Perspective, South Western College Publishing USA Kleynhans R. et al (2006), Human Resource Management: Fresh Perspectives, Pearson, S.A. Kotler P. (1999), Kotler on Marketing: How to create, win and dominate Markets, Free Press, London. Lancaster G. & Reynolds P. (1999), Introduction to Marketing: A step by step Guide to all the tools of Marketing, Kogan Page Kotler, P. (1998). Marketing Management: Analysis, Planning, Implementation and control. Prentice Hall, New Jersey. McCarthy J.E & Perreault W.D (1990), Basic Marketing, International student Edition, 10th Edition, Irwin, Boston McCarthy J.E & Perreault W. D. (1996), Basic Marketing: A Global Managerial Approach, 12th Edition, Irwin McGraw-Hill, USA. Smith P.R. (1999), Great Answers to Tough Marketing Questions, Kogan Page, UK. Read More