Business Opportunity Analysis of Clickpix - Essay Example

Business opportunity analysis of Clickpix Introduction Photography is less saturated industry in Canada. The industry has witnessed both peaks and down turns in the recent decade. However, post recession it has been noticed that most entrepreneurs in the western nations prefer to develop businesses which are not conventional and provide avenues for creativity and uniqueness. Technological progression of the digital and DSLR (digital single lens reflex) cameras have provided newer avenues for developing business in this arena. Moreover, the photography industry in Canada has been witnessing growth in the post recession period (Marland, 2012). A major advantage of the photography business is the low barriers to entry. Additionally, the capital investments are also low as compared to other conventional business sectors. The manpower requirements are also little. Major investments in such a business category are primarily incurred in respect of technology such as procurement of highly efficient cameras (Bowman, 2012). The current paper analyses the feasibility of the new business venture ‘Clickpix’. Clickpix would be a professional photography studio, which expertises in still photography. The company would provide photography services for special occasions such as weddings, birthdays, anniversaries, corporate parties, baby shower and so on. It would also provide non occasional casual photography services. Apart from providing the photographs through albums and mails, the company would also provide services such as engraving and imprinting photographs upon different materials such as tiles, clothes, showpiece items, key rings, wall clocks, coffee mugs. Photo framing services in different and unique forms would also be provided. The company would facilitate its clients with customized photography and photo presentation services. Clickpix aims to specialize in portrait photography. The business would be to set up at a prime location in the city of Ottawa. Ottawa consists of the most educated population of Canada and is considered to be the nation’s cultural hub. The standard of living in the nation is seen to be high leading to elevated income earning potency. Due to the existence of such high standards of living, residents of the city are used to luxurious living. Such factors are likely to create more opportunities for the growth of Clickpix as the spending power of the target population especially on luxury products and services is considerably high (Pomfret, 2013). Opportunity analysis Every business plan requires careful opportunity analysis so that suitable techniques can be developed for business growth and sustenance. Opportunity analysis involves studying the prospective market for a product or services so that detailed forecasting regarding the businesses profits can be constructed. The current paper analyses the business growth opportunities available for Clickpix, a new photography business venture to be set up in Canada. The analysis would be done incorporating essentially examination of the market and industry, technical feasibility, scenario versions and scalability of the venture. Opportunity analysis facilitates understanding the different positive and negative impacts upon a business and accordingly takes decisions regarding their implementation. A business venture requires huge investments and therefore must not be undertaken only after careful environment and feasibility analysis so as to avoid losses due to risks. Self-analysis An entrepreneur himself must have the physical and mental preparation for beginning a new business venture. The confidence and expertise possessed by the entrepreneur contributes immensely towards the success of the business. Clickpix would be begun as a joint venture, consisting of three entrepreneurs. The owners of the business have adequate knowledge regarding the profession of photography and have served in the same field for a considerable period (Beaumont, Whitaker and Pedersen, 2013). They are well prepared to meet the physical, intellectual and emotional demands of beginning a new venture. The entrepreneurs of Clickpix have spent much time and effort in analysing the feasibility and planning for starting the venture. The communication and understanding existing between the entrepreneurs is also strong. This is an essential factor as strong partnership at the top level is considered to be the motivating factor. The entrepreneurs of Clickpix have possessed adequate business acumen apart from the knowledge associated with photography and are confident that they are capable of meeting all required responsibilities of making the venture a successful one (Chesbrough, 2013). Venture description Clickpix will meet the professional photography needs of target population and facilitate capturing important moments of their life. The company aims to present captured moments in the best manner possible and as per the needs of the consumers. Most individuals use the professional photography services for rare occasions such as weddings, birthdays or corporate parties. Since this is specialized services involving creativity, the company would ensure that they offer the best services by hiring the best professionals (Willard, 2012). The company studio will consist of floor space of 800 square feet in one of the premier locations of Ottawa city. The shop floor would be acquired on lease for the first year, post which the company aims to purchase the location. The studio will present customers with sample photographs and videos. There would be separate area for office and assembling of final products. A separate storage department will also be present where the shop would preserve frames, albums and materials upon which photo engravings are done. Cameras and photography equipments will be stored separately. Clickpix would ensure its clients with the best photographs and videos. High resolution digital formats are used for capturing the pictures using modern and high quality camera equipments. Clickpix aims to specialize in portrait photography. This would include both individual and group. The company offers a variety of options to its consumers in respect of how they want their pictures to look like. Background editing and through other technical adjustments, Clickpix tries to facilitate customers to preserve their memories in the most beautiful manner. One of the special services offered by Clickpix is their imprinting and engraving facilities which makes it possible to present photos on different materials and base items such as cloth, tiles, coffee mugs and show piece items. In most cases it is seen that such imprinting services are not offered by most photography studios. This creates a unique selling point for Clickpix, where consumers are provided with all sorts of photography options. The company aims to sell their services at normal existing market rates. This is likely to attract customers from all income levels. The photography options would range from low cost to high end services through quality alterations (Mullins, 2012). Market research The photography industry of Canada is worth approximately $699 million. The industry has been seen to grow at an average rate of 0.8%. It employs approximately 17000 employees. Prior to the year 2010, the industry had been adequately been impacted by the economic depression. Growth was rapidly slowed down (Reese and Staff, 2014). Due to lack of disposable income, consumers were seen to shift away from spending upon luxury items. This trend is perceived to become altered in the forthcoming times as the economic conditions improve and consumers spend more upon such services. Ottawa in general comprises of high income earners and hence it is generally observed that irrespective of the economic conditions, consumers continue to spend highly upon luxury items. The average spending of people upon photography related services has continued to grow in the last decade. The population of Canada are seen to enjoy different family and social occasions. They are less hesitant to spend upon photography and enjoy spending money on preserving memories in creative ways (Hermes and Lensink, 2013). Industrial analysis: porters five force Threat of new entrants- The threat of new entrants in the photography sector is adequately high. The industry offers a number of opportunities to small and medium scale entrepreneurs who can offer photography incurring lesser capital. The low capital investments in this industry as compared to other industrial segments are the primary reason behind frequent entry of new firms (Koellinger and Roy Thurik, 2012). Rivalry from competitors- Lifetouch and Pnp would be the strongest rivals for Clickpix. However, Clickpix’s range of services and a customized approach towards the business is expected to facilitate overcoming the issues from competition (Parker and van Praag, 2012). Bargaining power of suppliers- Suppliers for Clickpix would be the providers of technology and different albums, photo frames and base materials used for imprinting. The bargaining power of suppliers is expected to remain high since Clickpix is a new firm in the industry and it is expected that it would take time for the company to develop superiority over suppliers (Davidsson and Gordon, 2012). Bargaining power of buyers- Clickpix would offer its services to consumers at competitive fixed rates. Hence bargaining power is expected to remain low. The prices charged by Clickpix initially would be marginally lower than competitors. This is basically to be able to penetrate into the market and attract more consumers. Once the firm establishes itself well, prices would be raised (Heger and Rohrbeck, 2012). Threat of substitutes- Due to the easy availability of professional and high quality camera in the market, individuals can themselves take photographs without having to approach professionals. A major threat is the availability of camera in phones which are equally capable of clicking superior quality pictures. Such aspects reduce the need for approaching professional photographers. Hence the threat of substitutes is mostly high in this sector (Tang, Kacmar and Busenitz, 2012). Technical feasibility study Technological growth in the photography sector has been seen to be quite rapid in the last decade. This has facilitated providing high quality services to consumers and to also develop uniqueness in the manner in which memories are captured and preserved. However, constant technical advancement in the photography industry would require Clickpix to upgrade themselves from time to time and thereby remain competitive. Clickpix would be required to spend heavily upon technology, so as to not only take high definition pictures but also to present them in the most creative and appealing manner. Hence, capital investments in respect of procuring technology are expected to remain quite high (Davenport and Beck, 2013). Clickpix’s effective team of professional photographers and their dedicated efforts towards providing the best quality services is expected to bring in high profits, which would facilitate bearing the costs of technology. Being an important destination in the globalized economy, Canada provides easy access to technology which is supportive for the growth of Clickpix’s business growth. It also becomes essential that the company develops an internal management system that is flexible towards adopting new types of technology (Bayus, 2013). Financial feasibility study Clickpix aims to achieve a considerable level of profit from the first year of operations itself. As a result, the company would be able to achieve a significant level of profits within the third year of operations. The company plans to expand their activities and acquire more equipments and sales levels by the end of the third year of operations (Bucherer, Eisert and Gassmann, 2012). The projected gross profit, earnings before interest and taxes and net profit figures for the first three years have been shown in the following figures. The sources of capital for the company are: Paid in capital 11500 11500 11500 Retained earnings -38000 -12500 25000 Earnings 26000 55300 85000 Total capital -500 54300 121500 The paid in capital requirement of the company would be entirely financed by the entrepreneurs themselves. Long term debts of $97000, $68000, $54200 would act as additional sources of fund. The business is largely self-financed by the entrepreneurs to reduce the risks arising out of interest fluctuations and commitment towards banks and other financial institutions. Since the venture is seen to yield adequate profits, it is considered to be financially feasible (Li and Zahra, 2012). View on the scalability In order to understand whether the project is feasible, the entrepreneurs of Clickpix have decided to run a scalability test, by conducting a survey in the market of Ottawa is respect of such a business venture. Also a small proxy Clickpix studio would be set up at different locations and seen whether customer walk-ins are sufficient and accordingly a suitable destination for beginning the business would be selected (Dahlqvist and Wiklund, 2012). Conclusion Clickpix is considered to be a highly feasible business venture and is expected to reap adequate profits. The photography sector in Canada is in general seen to do well and there exists a positive environment for Clickpix to develop its business. Since the general income standard of Canada is relatively high, the company is expected to attract a number of consumers as their spending upon luxury and general items are quite elevated. Moreover, Clickpix offers services beyond just photography such as engraving and imprinting services. This is expected to create a unique and strategic business position for Clickpix and sustain the competition from other photography businesses. 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