Shades of Blue: Strategic Plan - Term Paper Example

Inserts His/her Inserts Inserts Grade (07, 07, Shades of Blue Strategic Plan Executive Summary Shades of Blue believes there is an opportunity to use technology to make it simple for people to easily purchase beautiful varieties of flowers, with delivery on days they determine in advance, for their loved ones. The company aims to debut the citys first floral art gallery in Atlanta. Shades of Blue will differ from traditional florists by enlightening personal relationships through the use of technology and marketing that makes purchasing flowers easy and delivering quality customer service. Ideally the company plans to open its gallery in April in Castleberry Hill, one of the most famous places in Atlanta. The company expects less first year total revenue with the opportunity to increase revenue of second year exponentially because of Valentines Day sales (excluded in the first year due to April opening). The area will have nearly 1400 residents at the time of opening the Castleberry Hill. Studies indicate that a population of 9,000 is necessary to support a traditional retail florist and therefore it is important to point out that Shades of Blue will not be a usual retail florist. In the first three years of Shades of Blue’s development, the company will not depend on retail traffic, but will instead use advanced technology and smart marketing programs to target repeat buyers in more than 1,500 targeted businesses in Atlanta office buildings. Company Background The company’s business is to provide flower delivery services to customers who want to gift their loved ones with fresh flowers. Shades of Blue will target men who are more accustomed to spending money on loved ones. Location and Facilities Shades of Blue is scheduled to open in April. The total space for the shop will be approximately 800 sq. feet. The shop will be located alongside the main street with one-fourth of the space would be allocated for retail use, and remaining space would be used for workspace and storage. At this time, there are no other planned florists in the Castleberry Hill that can act as a competitor. Free parking is available for the shoppers who visit the shop. However, majority of Shades of Blue’s revenue will be generated from routinely delivered floral arrangements outside of the Castleberry Hill area. Shades of Blue will be open for six days (Monday – Saturday), and will remain close on Sunday and on other public holidays. Hours of operation will be 10:30 a.m. - 6:00 p.m. Monday - Friday, and from noon - 5:00 p.m. on Saturday. Hours might get extended during the holidays. Owner Roger Jam, who has nearly 15 years of experience in corporate marketing and has trained as a florist, will run the business (manage operations, inventories, marketing and sales). Vision Statement Customer satisfaction is achieved by providing flower delivery services and spreading happiness and freshness. The vision statement of the company informs the customers about the business of the company and how the company plans to make this world a better place. Flowers are usually associated with happiness and freshness and therefore these words are used in the vision statement. The details of the services of the company are also not discussed in the vision statement. It clearly focuses on an ideal world where everyone is fresh and happy. The vision statement tells that the company will make the world a better place by spreading happiness and freshness. Mission Statement The mission of Shades of Blue is to provide various beautiful flowers to the customers and use advanced technology to ensure excellent and one of a kind service. Shades of Blue will use advanced technology to identify and serve customers within a five-mile distance from Castleberry Hill. The mission statement clearly identifies the core competency of the business that is use of advanced technology. The company will use smart marketing strategies to secure a loyal clientele of executive class customers and businessmen. The company will offer flower delivery services in a modified fashion. Therefore, I recommend this mission statement as since it will help us to achieve our vision of providing quality service to the customers and make this world a better place for them. SWOT Analysis Strength Analysiss Shades of Blue has some strengths that makes it different and unique from its competitors. First, customers are free to select and customize the products by using graphic program that is available on the official site of the company and can add different options like size, color or any flowers that they want in basket, bouquet or vase. It is totally up to the customers to decide the design and style of the flowers they want to purchase. Being aware of the fact about busy routine of customers, Shades of Blue offers home delivery option for the orders that are placed. This makes it easier for customers to enjoy products at their requested place and do not have to bother to travel to the shop. Moreover, these delivery charges are free of cost. Customers just need to make a call to the shop or simply place an online order through our website and enjoy our products. In order to make sure that correct order has been placed to the customer, we also have SMS sending service to confirm that the product has been delivered appropriately. And in case of any confusion, customers need not to call and only send SMS to our administrator and immediate reaction will be taken. Weakness Analysis Shades of Blue has two primary weaknesses that makes it a bit difficult to compete with other flower shops at the initial level. Firstly, many people believe that paying for flowers is luxurious and it is a waste of money. According to them, there are much better things than flowers that can be given as a gift or make them feel fresh. Secondly, Shades of Blue is a new company. We are not popular and therefore it will take fair amount of time to gain experience and get recognized in the market. With the presence of other flower shops all over, it is quite obvious that company will face some problems to earn a reputable name in the market. But this issue is not too big to be highlighted. Once the company survives 6 months in the market, it will definitely earn a reputed name because of the outstanding services we tend to provide our customers. Opportunity Analysis There are many people who appreciate innovative style of decoration. They love to see flowers in the surroundings. It is essential that we target such group of customers that would be fruitful for our shop both by means of sales and experience. The customers are able to customize products and design flowers in whatever way they want. This will create an opportunity to increase sales and customer counts of consumers who are looking to design the products by themselves. Advertising in various Media channels can also help us to develop a strong name in the market within a short period of time. We will take support from the media as much as we can because people do get attracted towards things that are shown on the television. This will definitely give us an opportunity to increase the number of customers in the future. Demographic change is an important external factor that can influence the business of the company. Technology is getting inroads in the lives of people and they are more comfortable in using technology. Also young people are getting used to sending gifts. The blend of these two things can positively influence the company. These demographic changes can affect the business of the company. Another external factor is the growth of US service industry. The industry is growing rapidly and this offers immense opportunity for the company. Government regulations are also expected to boost this industry therefore this factor also offers good opportunity for the company. Threat Analysis Since Shades of Blue is a new company in the market, there is a threat of having low customer counts because there are many famous competitors already available in the market. It will be hard to attract customers at the initial level. It is likely that the customers will go to recognized shops. Therefore it would be significant to come up with something extra ordinary that attract customers to our shop and hence increase customer counts. An important external factor here will be threat of substitute products. There are a lot of competitors in the market and there is risk that the business model of the company can easily be copied. Other companies can also come up with technology based flower delivery services therefore this is a threat for the business. Weak barrier to entry is also an external factor that can threaten the company. The flower delivery service is not a capital intensive industry therefore anyone can enter the industry. This serves as a threat to the company. Long-Term Objectives To avoid initial threats of the company it is important that we generate handsome total revenue of $90,000 a year b year 5. This would allow us to invest more in our business. Furthermore, it will help us to utilize cash that is generated from sales to improve the quality of the products and services rather than using our capital and ending up with no profit. This long term objective is also important to counter the external threats for the company as discussed above. Shades of Blue will look forward to build pricing strategies based on the assumption of at least 10% profit by year 5. With this profit the company will be able to give incentives to the employees in terms of bonuses so that they work harder and get more motivated towards their work. These incentives will also boost up their confidence and this would eventually be fruitful for the company. The profits will also help the company to avail the opportunity of catering to a growing clientele. Sales of the company should increase by 70% in the next 5 years. To earn a reputed name in the market, it is important that our sales increase constantly. The employees and the management team will work very hard to achieve this target because it is the only way by which we could survive in the market with so many competitors all over. Increase in sales constantly will allow the company to survive in the long run. Strategic Analysis and Choice There are three tools that can be used to identify Shades of Blue’s strategic alternatives. They are as follow: The SWOT Analysis Diagram Grand Strategy Selection Matrix Model of Grand Strategy Clusters . SWOT Analysis diagram A SWOT Analysis diagram is a comparison between the internal and external factors to identify the position in one of four quadrants. Shades of Blue is above the horizontal axis, since there are not many flower shops in the market the threats of low customer count and bankruptcy is unlikely. The horizontal axis shows internal weaknesses and strengths. Shades of Blue’s strengths of proximity to customers outweigh weaknesses, therefore indicating that it is to the right of the vertical axis (Fulbright, 1). Hence, the position of Shades of Blue is cell 1 which suggests that it implements an aggressive and growth-oriented strategy. Grand Strategy Selection Matrix The results of the SWOT analysis are used by Grand Strategy Selection Matrix to determine its selections as output. Because of Shades of Blue’s existing strengths, there is no point in looking for external growth opportunities rather than concentrating on internal resources. Shades of Blue will also focus on increasing those strengths, since they outweigh its weaknesses as mentioned in the previous section. Therefore, the best grand strategy lies in third quadrant. The options of grand strategy in this quadrant are concentrated growth, development of product and innovation. Model of Grand Strategy Clusters Last tool for selecting the grand strategy is Model of Grand Strategy Clusters. The flower industry is experiencing rapid market growth in Shades of Blue with low market share among 10 other local shops. This shows that it is in a weak competitive position. Therefore, according to the model the best grand strategy for Shades of Blue lies in the second quadrant. The strategic options in this quadrant are: concentrated growth, liquidation and divestiture. Selection of Grand Strategy By evaluating the results of the above three selection tools, I believe that Shades of Blue employ the grand strategy of concentrated growth. This is because the SWOT Analysis diagram supports an aggressive strategy. Selections available in the Grand Strategy Selection Matrix were concentrated growth, development of product, and innovation. Since Shades of Blue has extensive strengths in a growing market, a growth strategy should be selected. Product development would add too much financial risk. Similarly, innovation is also not encouraged (Prince, 1). The Model of Grand Strategy Clusters supports this grand strategy because the other choices such as liquidation would be premature at this level. In a rapidly growing market, a relatively weak business can also find profitable results. Therefore concentrated growth strategy is best. The growth strategies lead to enhanced performance and maximize core capabilities which are more important determinant of competitive market success as compared to environmental forces that the firm experience. A growth strategy causes lower risk as compared to other strategies which is the most important factor for this business. The success of a concentration strategy is based on the firm’s use of superior insights into its product and target customer to obtain competitive advantage. By building on its strengths of a modernized and proximity to large numbers of customers, Shades of Blue will certainly achieve a competitive advantage. Following a concentrated growth strategy will accomplish the long-term objectives as well. Achieving the target $1 million revenue in year five will require an aggressive growth strategy. Shades of Blue will need to build business swiftly and maintain a large customer count. Moreover, achieving an annual customer check count of 35,000 by year five is also supported by a growth strategy (Powers, 221). A growth strategy helps avoid the threats of bankruptcy and low customer counts because as revenue grows the shop will have more resources which can be utilized for advertising and the development of more various products. Lastly, achieving these long-term objectives with the help of concentrated growth strategy; Shades of Blue will be able to achieve its mission in a shorter period of time. Short term objectives To make buying and searching of products easy for customers, Shades of Blue will develop a user-friendly website so that the customers could search for desired items and purchase it easily. It is important that customers do not find it difficult to purchase items from our shop. This short term objective is in line with the long term objective of achieving revenues of $90,000 by year 5. A user friendly website will help the company achieve this number. The second short term objective will be to market the name and services of the industry. It is really to inform potential customers about the business and only then sales targets can be achieved. This particular short term objective is in line with the long term objective of achieving increase in sales by year 5. The third short term objective is to provide special training programs for employees so that they perform so as to make them learn many skills. The aim is to make them good at all jobs so that a lower number of employees can perform all jobs in the company. This will help the company reduce costs. This objective will help the company achieve long term objective of making 10 percent profit. Tactics To achieve long term objectives and meet the goals, Shades of Blue will implement some tactics that are as follows: We will make an easy and automatic process for customers to buy flowers for their loved ones so that they find it enjoyable. Difficult buying processes may change the customer’s mind and go for something else other than flowers. This tactic should be implemented from the very first day because it will encourage people to take flowers home more regularly and not just for special occasions. This will aid the strategy of concentrated growth for the company. The company will try to change the flower buying responsibility from women to men. This is because men are usually soul earner of the family. It is easier for them to buy things as compared to women. To make their loved ones happy, they will not think much to spend some money on flowers and enjoy their lives happily. Implementation of these tactics would avoid threats of low customer counts and increase revenue which would make it easier for the company to meet long term objectives quickly. Financial Projections and Analysis Labor and rent cover over 35% of the expenses (Stefanino, 10-15). These two aspects are something which cannot be neglected no matter what. Without labor and rent of the shop it is impossible to run a business. Therefore in order to cover these expenses it is important to cut or lower down other expenses such as utility bills. Cutting down other expenses will allow us to generate more revenue and help to achieve company’s long and short term objectives. Marketing is one of the most important areas as far as a business is concerned. Therefore it will cover 7% of sales every month. This is because it is important for us to earn a reputed name in the market as quickly as possible so that the initial threats could be avoided. And marketing is the only way by which we could achieve this goal. However, company expansion will be considered if sales projections are met as projected. Projected Initial Expenses Dues and Subscriptions Delivery Labor Marketing Expense Floral Designer License for Business Communication Expense Shop Equipment Shop Maintenance Shop Furniture Marketing Plan Duties on Equipment $500 $1,000 $2,000 $3,000 $32 $150 $7,000 $4,000 $2,000 $3,000 $50 Total Expenses $22,732 Start-up Assets Cash Required Other Current Assets Long-term Assets $10,000 $0 $225,000 Total Assets $235,000 Critical Success Factors All of the aforementioned strategies are essential for Shades of Blue, but the most critical factor for success is the creation of unique products so that possible threats of low customer counts could be avoided. In order to attract customers it is important that we focus on designing innovative, high quality fresh floral arrangements using a variety of design styles and containers (Kondo, 110). Coming up with something different and interesting products will surely maximize the opportunities of increasing customers count and generate more revenue. Therefore, if Shades of Blue want to avoid all possible threats, it is important that they focus on this critical element. Works Cited Pages Fulbright, J. Starting a Florist Shop Business. PowerHomeBiz. 2008. Web . Kondo, M. Success of MNCs in India: The investment size factor. Nihongo Bashi Pvt Ltd, 2006. Print Prince, T. Florists Invest in Designing and Delivery to Thwart Market Competition. Flower News. Prince & Prince Inc. 2004. Web . Powers, R. Note on SWOT Analysis.2009. Print Stefanino, O. Six Ways to Reach Your Target Audience. E-Zine, 2007. Web. < http://ezinearticles.com/?Six-Ways-to-Reach-Your-Target-Audience&id=762826> Read More