Strategic Analysis for Quick Stop & Go Convenience Store - Report Example

Strategic Analysis and Presentation of Business Proposal for Qwick Stop & Go Convenience Store Project Due Date Company Background and History Qwick Stop & Go convenience store was opened 20 years ago in a small strip-mall in an undeveloped neighborhood. The area of the store was 1400 square feet of space for selling fountain drinks, coffee, sodas, milk, beer, wine coolers, juices, water, groceries, snack items, sundries, automotive items, and frozen foods. Recently the store was offered to the store manager for sale and the purchase of Qwick Stop & Go included renovations that would increase the space by 750 square feet and include a deli service and fresh produce. The completion of the renovations is expected to increase the current revenue by at least 2% every month over the next year for a total of a 24% increase (Hasan, 2012). Negotiations have also been instigated for the inclusion of gasoline sales at this location. In order to install underground gasoline tanks, gas pumps, and a canopy over the fueling area, half of the current parking lot area would need to be fenced off for construction. While this might interfere with business, the profits earned from this venture could potentially exceed the losses endured during the installation of the necessary equipment. Negotiations between a national oil company and Qwick Stop & Go have discussed who would be responsible for the installation of the underground gasoline tanks, gas pumps, and the canopy. Figure 1: Store Layout and Projected Gasoline Mission, Vision, and Guiding Values Organizations write mission statements to specify the values that will govern day-to-day operations, customer service, and promotion and purpose of the business. Most corporations keep the statement simple for easy reading, understanding, and repetition of values (Radtke, 1998). Teaching employees how to incorporate the expected values in daily actions, while employed, requires training and examples that continually enforce the desired outcome. The mission statement for this business is as follows: Qwick Stop & Go convenience store exists to provide customers with a convenient shopping experience with a selection of quality products, exceptional service, and a clean and friendly neighborhood environment. We are committed to our customers and we will be responsive to their needs and viewpoints as we stock our shelves and interact with the individuals throughout our community (Hasan, 2012). Customers are the backbone of the convenience store industry and without their continued patronage Qwick Stop & Go would not exist. Excellent customer service becomes essential to maintaining current customers and earning the business of new clients. Offering the products that the customers need at a fair price also builds customer loyalty (Thompson, Peteraf, Gamble, & Strickland III, 2011). External Environment Five external environmental factors will potentially affect Qwick Stop and Go convenience store’s success. The five factors are social, economical, political, technological, and ecological. Each one of these factors can work independently or collectively to support the business. The new owner needs to observe how each factor interacts with the business and take the necessary steps to ensure that each factor is used as a strength or opportunity (Thompson et al. 2011). The social factor relates to the interaction of the customers and the buying patterns they display. Customers who patronize the Qwick Stop & Go have commented that the benefits of gasoline sales would be worth the initial cost to install the equipment. The owner has discussed this idea with many of the regular customers who frequent the convenience store and decided that looking into the possibility of installing gas pumps on the premises may be a strategic move that would benefit all stakeholders. Many families live within a close proximity of the Qwick Stop & Go convenience store and most of them have more than one car per household. Middle class residential housing provides a good economic support for the store and more apartments, condominiums, town homes, and single-family homes are scheduled to be built within the next five years (Hasan, 2012). Economical factors that interact with Qwick Stop & Go convenience store include the number of jobs that are affiliated with this business. The number of people who work as employees in the convenience store or deli service are a small portion. The vendors and farmers who supply the store and deli with produce and products for sale are another part of the economical picture. The oil company who will supply the gasoline, once the arrangements have been completed, will be included. Truckers who deliver the gasoline or products also make up the economical factor that will interact with the business. How each one of these individuals are treated when they interact with the new owner and employees will impact the business’s success (Thompson et al., 2011). The political factor of Qwick Stop & Go focuses mainly on the interaction of the new owner with the city council members who will ultimately vote to allow gasoline sales to be included at this location. The new owner will need to file the proper papers to request the item to be put on the council’s agenda for discussion. The council members may have questions regarding the location and may want to visit the business to get an idea of the layout of the store and the benefits that may be attached to the gasoline sales. Council members may patronize the store and even ask for political donations for re-election at a later date. All of these possibilities will have an impact on the success of the business (Thompson et al., 2011). Technological advancements have allowed the owner of Qwick Stop & Go to bargain competitively with the distributors and vendors to offer comparable pricing with surrounding competitors. The latest technology was installed during the renovation to connect the deli service with the convenience store to better track sales and inventory. Adding the gas pumps to the existing technology would be relatively simple as the owner has the foresight to install the necessary wiring during the renovations of the store for a minimal fee, in the event that future gas sales were considered. Because of this maneuver, the only costs to the Qwick Stop & Go convenience store would be a connection fee to hook up the pumps to the existing wiring. The contract between the national oil company and Qwick Stop & Go offers one cent back to the store on every gallon of gas sold and the remaining proceeds would go to reimburse the oil company for the installation of the tanks, pumps, and canopy. The suggestion of having the oil company accept the costs for the equipment was a strategic move on the owner of Qwick Stop & Go to achieve the desired gas sales, while not increasing the company’s overhead. The new owner of Qwick Stop & Go will need to ensure the ecological factors are carefully considered continually for the duration of the ownership of the business. Gasoline tanks that are buried in the ground will have to be sealed from leaks and monitored regularly to ensure no leaking occurs. Water, gas, and sewage lines need to be monitored and maintained to ensure that the lines are always in good working order, or properly fixed if a pipe is broken or develops a leak. With a park, a Zoo, and residents close to the location of the store, it becomes imperative that contaminants are not allowed to leak into the environment. Industry Environment The Five Competitive Forces that Porter (2008) discussed for business can affect any business and any part of the model, because of the intertwining relationship of each part. The five forces are the buying power of the organization, the selling power of the supplier, the substitution of products and services, the threat of new businesses, and the competition that already exists. While each one of these factors work independently, they also work collectively to determine the success or failure of the organization (Porter, 2008). The buying power of the Qwick Stop & Go is not as strong as national chain stores that have multiple locations across the country. A single-store operation does not have the need for an extensive inventory to make the buying power stronger. The selling power of the vendors and distributors may fluctuate, depending on the ability each has to provide the goods and services needed by the Qwick Stop & Go convenience store. Large distributors with name brand items are more powerful, but local vendors selling local produce have less power as they compete with other local vendors for the same space in the store. Competition for Qwick Stop & Go convenience store currently extends to five other businesses in the industry with close proximity. The unavailability of undeveloped land within the five-mile radius limits the intrusion of new businesses to the area. The possibility that a petition to re-zone an area from residential to commercial is always a threat by new businesses, but not currently a concern for Qwick Stop & Go. Any attempts to re-zone an area require notification to all stakeholders within a specified proximity of the area before the zone change can take effect (Kansas, 2012). The threat of name brand products being substituted for generic items is always a threat as companies try to promote new products. The prices for promotional items often encourages a store owner with limited buying power to purchase more product for less money and observe how the customers like the product. Depending on the response of the customers, a store owner may continue to carry a new product past the introductory offer. Operating Task Environment Most of the customers who patronize Qwick Stop & Go convenience store purchase drinks and snacks, according to a local survey that was performed by the prospective owner prior to the purchase of the business. The drinks range from coffee in the morning to soda and juice in the afternoon, and alcoholic beverages in the evening. The snacks are also divided by time zones. The doughnuts and energy bars were usually purchased with coffee in the morning. Chips, crackers, cookies, and other snacks were purchased in the afternoon and evening with soda and beer. The afternoon sales were mostly made by students buying candy and other snacks on their way home from school. The dairy sales usually increased in the early evening around dinnertime. Knowing customer habits help the employees offer better service and available products when the customers are in need (Thompson et al., 2011). Opening of the deli service and fresh produce is expected to capture market shares from rival companies. The idea of considering gasoline sales would also capture market shares from other competitors that also sell gasoline. Asking customers what their needs are and then creatively finding ways to satisfy those needs allow the customers to feel like their desires are being heard and provided. Loyal customers are built through providing a service that is needed and wanted and offering excellent customer service at the same time (Thompson et al., 2011). Entering into an alliance with other merchants is a strategic decision that should increase profits of Qwick Stop & Go. Alliances with local vendors that will provide the fresh produce, Western Union and Money Gram for money transfers, Redbox for DVD movie rentals, and Shell Oil Company will increase the products offered at Qwick Stop & Go. These alliances will allow Qwick Stop & Go to offer more variety in products and services without increasing the overhead (Thompson et al., 2011). Internal Analysis Strengths that are recognized by Qwick Stop & Go convenience store are the proposed increase in housing developments over the next five years that will introduce more customers into the area. The fact that this convenience store is the first within a five-mile radius to incorporate two businesses into one location gives Qwick Stop & Go the leading advantage over other convenience stores that are considered competition. The ability to contract with local vendors to provide fresh produce is another strength that will be used to increase profits. The deli service being installed to provide a sandwich, soup, and salad service to customers is also being considered a strength because no other store offers this service inhouse. Weaknesses are opportunities for strengths that need more attention to detail to alter the outcome. Any business that is starting deals with the unknown of how much money can be made, what services and products are essential to maintain business, and how to improve profits. Keeping a vigilant watch on what sells and customer requests can eliminate some of the guess work. Other business owners may see the set-up at Qwick Stop & Go and want to copy the idea, which could potentially infringe upon the market niche. Not knowing exact completion dates of the housing developments can be turned around to a strength as workers from the construction sites visit the store and friendships are created. Wanting to explore the idea of selling gasoline and not knowing if all the people that decide on the development will be in favor of the idea can be a weakness. The owner can attend city council meetings and learn the process required to get a development accepted by council members and may even find new customers interested in the products and services offered. The opportunities that Qwick Stop & Go can capitalize on are the promotion of the deli service and fresh produce, excellent customer service, and trying to provide customers with the needs and wants to maintain customer loyalty. Some of the customers have been patronizing the store from the opening day. Interacting with the construction crew to learn updates on completion of the housing development projects can give Qwick Stop & Go the advantage of promoting the store to new arrivals in the area. Consideration has been given to customers who would like to see gasoline sales at this location. Checking into the details that would enable Qwick Stop & Go convenience store to sell gasoline provides ample opportunity to increase profits and customer loyalty. The threats or risks of another convenience store creating a similar set-up to hone in on the market niche could potentially draw customers away. New businesses moving into the area can threaten current and future profits. Unexpected delays on construction of housing developments could threaten or delay increased profits. Improvements to the location to sell gasoline offer its own set of threats and risks. The owner of Qwick Stop & Go convenience store needs to take an active role in the promotion of the store to turn each threat into an opportunity (Thompson et al., 2011). Strategic Direction The size of Qwick Stop & Go convenience store and the number of employees limit the opportunity for leadership development. Training the staff to accept and promote the values and beliefs through each action remains the responsibility of the new owner. Some practices will be replaced to ensure safety of the employees and discourage criminal activity by using skills and resources to accomplish these changes. The alliances between new vendors will allow for Qwick Stop & Go to offer more products and services without increasing the overhead of the business (Thompson et al., 2011). Implementation and Management A balanced scorecard for Qwick Stop & Go convenience store will allow the owner to consider “financial, customer, internal processes, and learning & growth” as interconnected perspectives within the organization (Marr, 2012). Six benefits were noted for companies that used the Balanced Scorecard. These benefits consisted of 1) better strategic planning, 2) improved communication, 3) better management information, 4) performance ratings, 5) strategic alignment, 6) organizational alignment according to Marr (2012). Table 1: Balanced Scorecard Areas Department Area Finance Return on Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly) Internal Business Processes Number of activities per function Duplicate activities across functions Process alignment Process bottlenecks Process automation Learning & Growth Correct level of expertise Employee turnover Job satisfaction Training/Learning opportunities Customer Delivery performance to customer Quality performance for customer Customer satisfaction rate Customer percentage of market Customer retention rate Table 2: Balanced Scorecard Layout Objectives Measures Projected Actual Variance Initiatives Financial Customer Process Learning By addressing each section of the Balanced Scorecard from each perspective, the owner of Qwick Stop & Go convenience store can project current and future areas that need attention to detail. Each area offers insight from another perspective that may not have been considered prior to the use of this template. The completion of the scorecard then allows the owner of Qwick Stop & Go to evaluate areas of concern and gain a better understanding of how each perspective is related to the others (Marr, 2012). Building incentive into the pay scale for employees may be a way that the owner of Qwick Stop & Go can ensure the loyalty of the individuals who work for the store. Incentives and rewards are a way to give something back to those individuals who have maintained the values and beliefs and promoted the business during their employment (Thompson et al., 2011). Employees need to be recognized for a job well done and that recognition, done in public, brings greater satisfaction to the individual than any other expression of gratitude. When incentives are in place, employees try to strive for excellence in hopes of being the chosen benefactor. Summary Evaluation In summary, the Qwick Stop & Go convenience store has outlined a strategic direction that once all parts are implemented, profits should increase and customer and employee loyalty should persist. Following through on the gasoline sales and capturing more of the market niche can help in the continued success of this location. Incorporating an employee incentive and reward plan can continue to benefit all stakeholders involved. In order for the company to do more to ensure the success, the owner and employees need to listen to the requests of the customers and try to find creative ways to implement those ideas that can be accomplished easily without increasing the overhead of the company or cause undue stress on any stakeholder. References Hasan, M. (2012). Taking over and expanding an existing business as a new owner: A business plan proposal. Previous assignment Kansas (2012). Rezoning application procedures and instructions. Retrieved from http://www.topeka.org/pdfs/ApplicationProcedureRe-zoningorPUD.pdf Marr, B. (2012). What is a balanced scorecard? Advanced Performance Institute. Retrieved from http://www.ap-institute.com/Balanced%20Scorecard.html Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review. Retrieved from http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1 QuickMBA (2010). Balanced Scorecard. QuickMBA.com: Accounting. Retrieved from http://www.quickmba.com/accounting/mgmt/balanced-scorecard/ Radtke, J. M. (1998). How to write a mission statement. The Grantsmanship Center, Inc. Retrieved from http://www.tgci.com/magazine/How%20to%20Write%20a%20Mission%20Statement.pdf Thompson, A., Peteraf, M., Gamble, J., & Strickland III, A. J. (2011), Crafting & executing strategy: The quest for competitive advantage: Concepts and cases. (18 ed.). New York, NY: McGraw-Hill Read More