Category: Corporate Strategy

Executive summary

Fragrance Villa is a start up firm planned to be located in Dubai Airport Freezone, Al Quds St., UAE. The company is to be owned by a sole owner, Mukesh Adan, who will be in charge of the managerial functions of the company. The firm intends to position itself competitively in the perfume retail industry by opening a shop in the specified location and later diversify into other places within and outside the city. The shop will stock various perfume products from high-end to low-end to take care of the overwhelmingly big perfume and cosmetics industry in UAE.

Introduction

Dubai has in the past decade become a hotspot for business, especially due to its centralized nature and booming economy. The Middle East as a whole is a steadily growing perfume market that currently is valued at more than $ 2 billion and is expected to grow steadily in the near future thus making it a very attractive business destination for both foreign and local business companies. According to the Beauty World Middle East (2011), “Cosmetics and fragrance firms are attracted to Dubai because of the tax-free zone and 100% ownership subsidies given by the Dubai Airport Free Zone”. This has attracted the large number of investors who have set up their headquarters and business centers in Dubai airport tax free zones.

Mission

The main mission of Fragrance Villa is to make it one of the most respected and reliable retailers of perfume products within the U.A.E, especially Dubai city. Since many visitors visit Dubai annually and the local demand for perfumes is also high, Fragrance Villa intends to dissect and study the needs of the market and sell products that will become household brands.

Objectives

1. The founder of Fragrance Villa intends to start making profits by the end of the second year.
2. The founder of Fragrance Villa expects to launch the company by the third quarter of 2011.
3. Fragrance Villa intends to be among the top ten perfume retailers and wholesalers by the end of its third year of operations.

Keys to success

1. The entrepreneur is known to be a quite skilled and stubborn individual who doesn’t give up on his/her ambitions.
2. Manpower.

The Company

Fragrance Villa intends to open up the shop before the end of the year 2011, as a sole proprietorship with the entire business belonging to one individual, Mukesh Adam. Mukesh will run the firm with the assistance of the employees, family and friends. Mukesh considers himself as a highly talented and a passionate individual with the ability to steer the business into a greater future by competing in the current market within Dubai. He is also a professional business consultant so it is expected that his expertise will come in handy into the business operations.

The company’s main business format is to target the entire market that consist of a wide range of demographics and market perfumes to them and later grow its business gradually by increasing the number of outlet stores in Dubai and eventually in the entire Middle East region. The company intends to grow into a respected retailer and wholesaler of well established brands of perfumes that will use innovative marketing techniques to compete in the market with other competitors. It is the intention of the owner to venture in the future and start developing hid own brands of perfume as soon as he fully understands how the giants of this industry operate.

Start up Summary

Legal terms

Opening a free zone company that is owned 100% by one individual is easy in Dubai since there are no legal restrictions in terms of number of members of a company and an individual only needs a commercial license. To get along well with the legalities of business here, the firm will hire a legal consultancy company which will in the first year of operation be consulted constantly on legal and tax issues (Report Linker np). The consultancy will also assist the owner obtain personal legal requirements necessary.

Start up Requirements

Products

Statistics by the Generation Data bank suggest that residents in Dubai start using perfumes as early as they turn into teenage hood (Business Standard np). It is apparent that every individual (both genders) within the population usually desire to look and smell good thus the demand for perfumes is high. Perfumes can be grouped into many categories and one such category can be either male or female type of perfumes. Although many perfumes are becoming more and more unisex many consumers still feel comfortable wearing perfumes that are considered to be sexually appropriate and unique.

Most of the time, men are turned away by perfumes which are strong in smell unlike women and thus this is why Fragrance Villa intends to stock male, female and unisex perfumes within its outlets. The intentions of Fragrance Villa is to cater to the needs of various subgroups of customers who exist within the Dubai market and this is hence the reason that the company will also stock both high end and low end segments of the perfume market by selling premium brands and also stocking low-end brands (Casson 58). The main reason for doing this is to ensure that the company has a mass market that will allow the company enjoys large numbers of customer traffic at all times. Despite selling perfumes which target various people, the shop also intends to deal with the sale of perfumes meant for use in homes (for example, toilets, sitting rooms), cars and perfumes used in aroma therapy.

Fragrance Villa plans to be unique by operating as a leading house that provides all types of perfumes under one room, this way shoppers can shop for all ranges of perfumes from one single shop (Carsrud & Malin 122-124).

Market Analysis

Dubai is one of U.A.E’s busiest cities with a lot of aircraft traffic, thus increasing the market for luxury products, such as perfume-related products, to the locals and also to international consumers who include world businessmen and tourists on vacation. Data from the Euro monitor suggest that the Middle East market for perfumes is rapidly growing, currently growing at over 10.3% annually as compared to the global growth of 4.6% making the region a quite attractive market. Dubai alone in the last five years has experienced a growth of over 12% up from 2008 and the industry reports suggest that the industry is likely to continue growing even beyond by the year 2014 (Report Linker np).

Euro monitor reports indicate that perfumes meant for women enjoy a larger market share of over 65 percent as compared to that of the male counterparts. The Dubai perfume market makes most of its sales to the many saloons, which are located in Dubai, spa’s and even higher sales transactions occur especially when pilgrims visit the Middle East city of Mecca. If Euro monitors estimates is anything to go by then by the year 2014 the cosmetic industry within Russia would have grown to 519.5 million (AED), meaning that business men who invest in perfumes should expect more profits (Premium Beauty News,2011).

Although there are a number of competitors within this industry such as “Chanel, Clarins Group, Estee Lauder West Asia, P&G Cosmopolitan Cosmetics, Perfumes Loewe West Asia, Guerlain West Asia, Revlon West Asia, Parfums Givenchy West Asia, Parfums Christian Dior SA, and Elizabeth Arden West Asia” which are well established companies that have been in both the manufacturing and retailing market internationally (Premium Beauty News np). Despite having many well reputable companies in the Dubai market there are many independent manufacturers and retailers who manufacture and sell perfume in Dubai.

Strategy

Fragrance Villa will use multiple marketing strategies that will allow the shop increase the customer traffic in its store. The shop will put in place a mass marketing strategy for its lower end customers so that it can appeal to a larger segment of the demographic chart of Dubai (Case 34). Marketing is all about selling goods and services to consumers with an aim of satisfying them. Successful commercial organizations more often than not aim to satisfy their consumers and maximize the revenue streams got from selling their products., and thus with this knowledge in mind Fragrance Villa intends to target and reach out to its customers in Dubai. Under the mass marketing strategy the company intends to use a perfect marketing mix that will both at the same time reach out to consumers and save any incremental costs that the company is more likely to face while marketing the products. According to Kotler (65), companies are more likely to enjoy economies of scale when they use a mass marketing approach because differentiating products usually comes at an extra cost. Companies which do not adopt a differentiation approach may at the end of the day adopt a mass market strategy end up pursuing a market penetration strategy which is basically a pricing strategy that aims to sell affordable low priced products to the market this will thus appeal to a given share of prospective consumers in Dubai (Beauty world Middle East. np).

Since Fragrance Villa plans to offer a wide range of products which are not limited to either low-end or high-end products, the shop’s higher end premium product range will use a segmentation and targeting marketing approach where the marketing mix will be manipulated to appeal to consumers who want something extra (Kourdi 116). When companies follow a differentiation strategy they are most likely to adopt a skimming/milking price strategy which involves charging high rates for a product in order to recover extensive funds that may have been involved in the process of sourcing the products from the producers. Marketing Research techniques can be used by Fragrance Villa continuously and the subsequently obtained Information can be used in decision making and policy selection as the market evolves in order to ensure that value is sold to consumers. This means that the company will be forced to use more vigorous promotional strategies that will place and position all higher end products under their wing as superbly unique and high class. With a good marketing mix then the company can thus appeal to high end clientele. Currently, the owners are considering partitioning their stores into two different areas that will be packaged and decorated uniquely clearly bringing out a subliminal message of the difference between the high-end and low-end markets of their products throughout their stores this way the current market can know what to expect while entering their stores (Porter 56).

Implementation and Control

The marketing department will constantly evaluate its performance levels, analysis being made in comparison with forecasted revenues and achievement of set forth objectives. Use of milestones will be of most importance to ensure that the company’s mission and vision is on the right track. Short term goals and targets will be used against a planned timetable and used to control the strategic implementation process.

The most conclusive control measures that will be used by Fragrance Villa will include performance indicators. Such as sales volumes and revenue measure performance. If the data obtained surpassed set targets that the company will not need to adjust their strategies but if their targets are not met then strategy will be changed (Kotler 89).

Management of the Company

Since Mukesh will solely be in-charge of managerial functions, he is expected to dedicated more attention to the venture, particularly during the beginning years of the venture as at that time the business will be a bit shaky and fragile. Most of the decisions will be made by the owner, however on certain occasions he will need a sounding board, for instance market experts or employees, in making some decisions. Once the business gains ground and stabilize, because of the increased workload Mukesh can change his role into a more supervisory role whereby if he or she decides to expand he can supervise the work of his employees on a regular interval.

Since it’s a start-up business, the owner will use flat organizational structure as it will allow him use a hands-on approach meaning him will have more control over his organization. If the entrepreneur has more control then he can thereby influence the overall strategic direction the company is expected to follow (Porter 57). The owner when not available due to unavoidable circumstances, he will appoint the most trusted and hard working employee and give him or her authority to take his role until his return.

Financial forecast

Financial statement

Assumptions

1. The business will experience a steady learning curve for the first 3 years.
2. Only 40% of all costs are fixed costs while the rest are variable costs.
3. The business will realize significant growth in revenues is subsequent years.
4. Amount estimates are in American Dollars ($).

Table 1: List of total expenses (2010-2013)

The expenses are expected to be rise gradually in the first three years due to inflation and also expansion of the business. Assuming that the business will make sales of 20,000 perfume items which retail at an average of $ 4 in the first year $5 and$6 the sales of 2011-13(80,000, 100,000,120,000) and thus the projected profit or losses will be:

The above shop trend suggests a business growth of 125% in the first year and a growth of 84% in 2013.

Works Cited

Beauty world Middle East. ‘UAE Market for color cosmetics to be Worth AED 519.5 million in 2014.’ Beauty world Middle East. 2011. Web.

Business Standard. ‘Booming Cosmetics Sector of U.A.E.’ businessstandard.com. 2008. Web.

Carsrud, Allan & Malin, Brannback. Entrepreneurship, (Illustrated edition), Melbourne: Greenwood Publishing Group 2007.

Case, James. Competition: The Birth of a New Science. New York, NY: Farrar, Straus and Giroux, 2008. Print.

Casson, Michael. The entrepreneur: an economic theory, (Illustrated edition), Manhattan: Rowman & Littlefield, 1982. Print.

Kotler, Philip & Keller, Kinen. Marketing Management (13^th edition). New York: Prentice Hall, 2006. Print.

Kotler, Philip. Marketing Insights from A to Z: 80 concepts every manager needs to know, New Jersey: John Wiley & Sons Inc, 2003. Print.

Kotler, Philip. Principles of marketing, 2^nd edn. New York: Prentice Hall, 1990. Print.

Kourdi, Joseph. Business Strategy: A Guide to Effective Decision Making, 2 edn. New York: Economist books, 2009. Print.

Porter, Michael. The Competitive advantage of nations, illustrated edn, Northampton, MA: Free Press, 1990. Print.

Premium Beauty News. ‘Color cosmetics to drive growth of the UAE beauty market.’ Premium Beauty News. 2011. Web.

Report Linker. ‘Make up Marketing in U.A.E.’ Report Linker. 2011. Web.

Executive Summary

This paper is a business strategy analysis of Royal Caribbean Cruise Company, which is the second largest cruise company in the world. Its business success mostly hinges on an elaborate market segmentation strategy that generates revenues by selling different types of products to different types of clients. The same broad business strategy has seen the company offer multiple cruise packages to suit the needs of different types of clients.

Based on this strategy, this paper proposes that the company needs to focus on building its business around emerging markets because this is where most of the potential for market growth exists. Furthermore, based on a review of Royal Caribbean’s external market (PEST analysis) and internal market (SWOT) analysis, we find that focusing on the social media strategy should be the first strategic choice of the company because it aligns with its growth trajectory and capabilities. Particularly, this paper draws our attention to Asia, where the greatest potential for growth exists and demonstrates that focusing on this market would require the effective execution of a robust social media-marketing plan.

Introduction

The Royal Caribbean Cruise Company is arguably one of the leading cruise companies in the world. Founded in 1968, the shipping company has six brands, which provide contemporary and premium cruise packages to different groups of customers (Cederholm 2015). This paper evaluates the company’s business level generic strategies, directions of strategic development, and strategic factors affecting the execution of its business plan. The goal of this assessment is to provide solutions for enhancing the company’s strategic focus.

Business Level Generic Strategies

Royal Cruise Company’s passenger market mix includes three main components – a broad passenger market mix, an elaborate internationalisation strategy, and a robust technological strategy.

Passenger Market Mix

Royal Cruise Company’s strategy mostly focuses on increasing brand awareness to different groups of customers (Fabbi 2013). This strategy also includes capitalising on the portability and flexibility of its ships to exploit different market opportunities in different parts of the world. The aim of this strategy is to exploit new market opportunities, while at the same time catering to the needs of the local market (Mancini 2010). It also aligns with the company’s quest to expand its passenger market mix.

Internationalisation Strategy

As part of its generic business strategy, the Royal Caribbean Company has six different types of ships to cater to different customer segments (Cederholm 2015). Most of them are in different locations around the world to provide prompt services to its varied customer groups. Traditionally, the company has mostly focused its marketing strategy in the United States, but as of 2008, the number of ticket sales outside the states has steadily grown from 40% to 46% (Cederholm 2015).

Royal Cruise Ship’s international marketing strategy has seen it establish offices in different countries around the world, including some of the world’s top tourist destinations, such as Mexico, Spain, Australia, Brazil and Italy (among others) (Turner 2005). The company’s quest to be more responsive to local market needs has informed this strategy.

Technology

The use of modern technology to deliver quality services and to improve customer experience has been a key component of Royal Cruise’s strategy (Cederholm 2015). The company has also incorporated some of the latest technologies in its ships by creating VIP areas for celebrities (Celebrity iLounge) where guests use their technological gadgets without disturbance. The technological strategy also aligns with its international strategy because the company has redesigned some of its websites for international markets to respond to the customer needs of different market segments (Cederholm 2015).

Directions of Strategic Development

Based on the above findings, Royal Cruise Company should focus on exploiting the market potential of unexplored markets, expand its relationship with tour operators, and embrace social media to increase its market share. The justification of these recommendations appears below

Focus on Underexplored Markets

Royal Caribbean should focus on increasing its market penetration strategy to unexplored markets, such as Asia (Chon 2013). So far, the company’s strategy has only focused on Europe, America, and Australia. It needs to expand its market scope and include emerging markets, in Japan, China, and other Asian countries, where there is a growing middle class (Papathanassis 2016).

How would it do so?

Royal Caribbean should explore unexplored markets in Asia by increasing brand awareness in the region. It could effectively do so by adopting effective marketing strategies centred on digital marketing.

Expand its relationship with Tour operators

Royal Caribbean should liaise with travel agents and develop a good relationship with them to increase its market scope. This strategy would be a departure from its traditional model of relying on a direct consumer outreach strategy that allows it to prospect for new customers without the input of third parties. The company needs to adopt the new strategy because tour operators are the veins of the tourism industry and they outline the customer distribution network in the industry (Beaver 2005).

How would it do so?

Royal Caribbean should expand its network of tour operators by including them as partners and not as third parties. Therefore, for every business they get, the operators would get a commission for their work (Campbell, Stonehouse & Houston 2000).

Embrace Social Media

Royal Cruise targets young partygoers and families who have a liking for adventure and fun. In this regard, the company has a broad range of clients who allow it to diversify its revenue pool, as it could get money from anyone who wishes to take a cruise. The company should enhance this strategy and embrace a strong social media-marketing plan to increase its market share (Evans 2012).

How would it do so?

Instead of focusing on a general marketing strategy, Royal Caribbean needs to gather information about its clients through social media (mostly Facebook and Twitter) and develop a target market that would better respond to its products (Vogel, Papathanassis & Wolber 2012).

Strategic Factors Affecting the Company and their Influence on the Suitability of the Strategic Options

PEST Analysis

Political

Royal Caribbean is under pressure to reduce its carbon footprint from environmental authorities around the world. This is why different countries and environmental authorities are formulating new laws to regulate the environmental impact of the company and its rivals (Hoskisson, Hitt & Ireland 2008).

Economics

The global economic environment has affected different players in the tourism industry through fluctuations in demand and price adjustments. The Royal Caribbean Cruise Company is no exception. Since the 2007/2008 global economic crisis, the company has had re-evaluate its business strategies to meet changing customer preferences and to adapt to the current economic environment.

As part of the strategy to adapt to these external market dynamics, the company has improved the attractiveness of its products and included more variety to its dining packages and entertainment options (Fabbi 2013). The goal of doing so has been to reduce the cost of travel, especially air travel, thereby providing a more fun and affordable way of travelling.

Socio-Cultural

The unpredictable nature of security has created increased concerns regarding the safety of passengers aboard cruise ships. For example, piracy and terrorism have been at the top of the list of the major concerns that would create reluctance for customers to take long cruises (Vogel, Papathanassis & Wolber 2012, p. 237). In response to such concerns, the company has taken extra measures to increase passenger safety. However, some people are not fully convinced to book the services, despite the new measures taken (Mancini 2004; Weidner 2010).

Technology

Most cruise companies have installed some of the latest technological services, such as WiFi, on their vessels (Mancini 2004). The ships are also equipped with wireless telephones for communication. However, their fees are often high. There are also interactive televisions across different areas of the vessel, providing the customers with entertainment whenever they need it. Although some of these technologies are old, cruise ship companies are part of the “green revolution,” as they are now using energy efficient engines and constructing eco-friendly structures (Mancini 2010).

The Royal Cruise Ship Company is particularly paying a close attention to this fact because, in 2008, authorities fined it for contaminating the sea by discharging oil and falsifying reports about this action (Cederholm 2015).

SWOT Analysis

The table below shows a summary of Royal Cruise’s SWOT analysis

Financial Performance

Since 2011, the Royal Cruise Company has posted a positive financial performance that emanates from the recovery of the tourism sector after the 2007/2008 global financial crisis. For example, an assessment of the company’s profitability reveals that its gross income increased from $1.73 billion to $5.52 billion (Market Watch 2016). Its earnings before interest and tax also followed the same pattern because it increased from $1.47 billion in 2011 to $2.36 billion in 2015 (Market Watch 2016). The table below shows the company’s revenue growth over the past decade:

The year 2015 was the second year that the company remained on track to accomplish its goal of doubling its adjusted earnings per share. The company’s management is optimistic that this trend will continue up to 2017. Indeed, according to its 2015 financial report, it is on track to achieve double-digit return on invested capital by 2017 (RCL 2016, p. 45). Relative to this assertion, the company reported, “the year 2015 was another record year for our company, as adjusted earnings grew by more than 40% year-over-year for the second consecutive year” (RCL 2016, p. 45).

Part of the company’s financial success has stemmed from its continued quest to decrease its expenditure. The low cost of crude oil prices in 2015 and 2016 has helped to further cement this advantage (RCL 2016). Appendix 1 and a comprehensive review of the company’s 2015 annual report (cited in RCL 2016) emphasize the company’s positive financial performance.

Preferable Approach

Based on a review of Royal Caribbean’s external market (PEST analysis) and internal market (SWOT) analysis, we find that focusing on the social media strategy should be the first strategic choice of the company because it aligns with its growth and capabilities.

Key Issues for Implementing the Social Media Strategy

The financial performance analysis section has proved that the company is on track to post more numbers that are positive in the future. The adoption of social media marketing would be a step towards meeting this goal. Furthermore, it would elevate the company’s brand name in promising markets, such as Asia that have not traditionally been accustomed to cruises, as a luxury holiday product (Zarrella 2009).

To do so, the company needs to advertise on Facebook and Twitter, which are the main social media marketing platforms in the world. In these platforms, it should develop online videos with an option of “sharing” where customers speak about their experience cruising and where viewers could see the kinds of activities they would engage in when travelling to different destinations. The company also needs to engage in online conversations about its brand.

Conclusion

Going forward, the Royal Caribbean Cruise Company needs to focus on building its business around emerging markets because this is where most of the potential for market growth exists. Particularly, this paper draws our attention to Asia, where the greatest market potential exists. However, doing so would require the effective execution of a robust social media-marketing plan.

References

Beaver, A 2005, A Dictionary of Travel and Tourism Terminology, CABI, Massachusetts.

Campbell, D, Stonehouse, G & Houston, B 2000, Business Strategy: An Introduction, Butterworth-Heinemann, London.

Cederholm, T 2015, Overview: Royal Caribbean Cruises, the 2nd largest cruise operator. Web.

Chon, K 2013, Tourism in Southeast Asia: A New Direction, Routledge, London.

Evans, D 2012, Social Media Marketing: An Hour a Day, John Wiley & Sons, London.

Fabbi, M 2013, Royal Caribbean Cruise Line (RCCL) – A Brand Portfolio Analysis, GRIN Verlag, New York.

Hoskisson, R, Hitt, M & Ireland, M 2008, Business Strategy: Theory and Cases, Cengage Learning, London.

Mancini, M 2004, Cruising: A Guide to the Cruise Line Industry, Cengage Learning, London.

Mancini, M 2010, The CLIA Guide to the Cruise Industry, Cengage Learning, London.

Market Watch 2016, Royal Caribbean Cruises Ltd. Web.

Papathanassis, A 2016, Cruise Business Development: Safety, Product Design and Human Capital, Springer, New York.

RCL 2016, Annual Report 2015. Web.

Turner, T 2005, Vault Guide to the Top Hospitality & Tourism Industry Employers, Vault Inc., New York.

Vogel, M, Papathanassis, A & Wolber, B 2012, The Business and Management of Ocean Cruises, CABI, New York.

Weidner, S 2010, Risk Management for Small and Medium Sized Incoming Tour Operators, GRIN Verlag, New York.

Zarrella, D 2009, The Social Media Marketing Book, O’Reilly Media, Inc., New York.

Appendix

Nail salons are small businesses that can be observed in many towns and large cities. La Belle Nail Salon is one of small salons that mainly specialize in providing such services as manicure, pedicure, nail art, nail enhancement, and nail extension. The target audience of La Belle Nail Salon is females aged between 18 and 50. In order to stay competitive within the actively developing industry of nail and hand care services, nail salons should focus on improving their strategies in order to attract more clients and increase the customer loyalty. The strong competition is more obvious in large cities, where the number of nail salons is great and the provided services are various in their kind and quality. The aim of this paper is to create a working business strategy for a competitor to La Belle Nail Salon in the market and to propose a business plan for a new nail salon.

Strategy for a Business Concept

The process of selecting a strategy for a new business is one of the most challenging tasks for an entrepreneur because it is necessary to choose a strategy that can be effective to create the competitive advantage for the business. Thus, an entrepreneur usually chooses among differentiation, low cost, and focused strategies oriented to developing and accentuating different aspects of the business to contribute to the competitive advantage (Blackburn, Hart, & Wainwright, 2013, p. 9; Scarborough & Zimmerer, 2012, p. 57). For starting such a small business as a nail salon, it is relevant to choose the differentiation strategy based on the concept of service (Scarborough & Zimmerer, 2012, p. 58). Differentiation according to the factor of service means that the new nail salon has the mission to provide superior and high-quality customer services while responding to the customers’ needs, interests, and expectations. According to the differentiation strategy, it is expected that the nail salon will be organized and designed as a sitting-room in a mansion where clients can not only improve the state of their nails but also discuss latest news, drink a cup of tea, eat a cake, listen to music, and look through magazines. In spite of the fact that many of these activities are typical for salons providing different types of services for women, the new nail salon will emphasize the unique atmosphere of the fashionable spa-salon designed as the saloon of the 19^th century that is located in the centre of a city. The focus on the customer will be reflected not only in the quality of the provided nail services but also in the attention from waitresses and assistants. Furthermore, the rules of the nail salon can be associated with the rules of the fashionable club or saloon of the 19^th century.

The discussed differentiation strategy based on the aspect of the reliable various services can be referred to as an effective business strategy that can be used in the competitive market of spa and cosmetics salons. The focus on the customer service is selected because of the lack of financial resources to propose customers the innovative approaches in the sphere of nail art, extension, and enhancement. The competition in the industry is high, and it is possible to choose the opposite path and provide clients with the services that are associated with the certain atmosphere and leisure activities that can be discussed as trendy (Cronin-Gilmore, 2012, p. 97). In this case, an entrepreneur uses the available financial and material resources to create the specific atmosphere, there is no need to focus on innovation, and the uniqueness of the customer service can be achieved through providing exclusive experience while using only the basic equipment and known technologies.

Rationale for Purchasing Business

In spite of the fact that the new business can become an efficient competitor to La Belle Nail Salon, it is more relevant to purchase the existing business and use the selected strategy in order to improve the tactical approach currently followed in the salon. The reason is that the strategy followed in La Belle Nail Salon is based on the idea of high quality, but it does not contribute to increasing the business’ competitive advantage. However, instead of the direct competition, it is more profitable to purchase the existing business because its location is known for the public, the clients are permanent, and the reputation associated with the provision of high-quality services works to attract more customers (Scarborough & Zimmerer, 2012, p. 128). Furthermore, it is possible to use the previously developed relationships with suppliers in the industry and avoid the staff recruitment procedures while inviting the employees who worked for the former owner of the business (Ensign, 2008, p. 26). It is possible to state that the staff of La Belle Nail Salon is competent, and it is important for the entrepreneur to address the needs and interests of the staff while following the human resource strategies that were used by the former owner. The process of changing the human resource management approaches should be slow and based on the ideas of the customer service and job commitment.

From this point, the total costs of purchasing La Belle Nail Salon are expected to be lower than the costs associated with opening a new business. Thus, the process of opening a new nail salon can be time-consuming and costly because of the necessity of starting the business from the zero point (Scarborough & Zimmerer, 2012, p. 128). Several stages of the business development process can be avoided with references to purchasing La Belle Nail Salon. As a result, a new entrepreneur will avoid risks associated with the start-up stage and save significant financial and material resources, while developing relations with the existing staff, suppliers, and customers.

The Appropriate Form of Ownership

It is possible to state that the sole proprietorship is the most appropriate form of ownership to start the small business, without focusing on the business as the new one or as the purchased one. An entrepreneur can see many advantages in operating such a small business as the nail salon as an individual. In this case, fewer resources are necessary to develop the business and organize it from the legal perspective. Furthermore, a nail salon is a typical small business, and it is relevant to refer to the sole proprietorship while focusing on the analysis of potential profits (Scarborough & Zimmerer, 2012, p. 70). The sole proprietorship is also selected because partnerships and corporations are not efficient for businesses that are only at the starting point of their development. In order to save resources, it is reasonable to choose the sole proprietorship associated with appropriate fees and costs.

A Business Plan for the Business

A business plan for the new nail salon should include the following sections: Executive Summary, Mission and Vision Statements, Business History and Goals, Industry Profile, Business Services, Business Strategy, Marketing Strategy, Analysis of Competition, Management and Organization, and Financial Statement.

Executive Summary

Luxury Nail Bar is a fashionable nail salon located in the central part of Boston, Massachusetts. The nail salon specializes in making different types of manicure and pedicure as well as other nail and hand care services. In addition, the nail salon is organized as a spa club and saloon for permanent female clients.

Mission and Vision Statements

Luxury Nail Bar’s mission is to provide the exclusive nail services for the female population while addressing their needs in the aesthetic satisfaction.

Luxury Nail Bar’s vision is to foster beauty and care in the sphere of nail art and services.

Business History and Goals

Luxury Nail Bar was established in 2015 as a small nail salon providing high-quality services to female customers in Boston, Massachusetts.

The goal of the business is to develop the profitable entrepreneurship in the sphere of beauty and care with the potential for the further expansion in five years.

Industry Profile

There are more than 205,000 nail salons in the United States with references to the data on 2010-2012 (Statistics on Nail Salons in the USA, 2013). The number of salons tends to increase because of the high demand for the provided services. Many nail salons use different innovative technologies in order to increase the quality of the provided services and propose new kinds of services.

Business Services

1. Manicure.
2. Pedicure.
3. Nail art.
4. Nail enhancement.
5. Nail extension.
6. Hand care services.

Business Strategy

Differentiation based on the idea of the customer service. The focus is on provision of the high-quality services in the customer-focused environment. Much attention is paid not only to the provision of the nail services but also to organizing the client’s leisure and waiting time.

Marketing Strategy

The main focus is on distribution of flyers providing the information about Luxury Nail Bar and discounts.

Analysis of Competition

The market is highly competitive. The risk of new entrants is high because of the comparably low costs associated with starting a business.

Management and Organization

The sole proprietorship, two management positions, 15 employees.

Financial Statement

The business will start basing on a loan. A repayment schedule is expected to be developed for 24 months.

Conclusion

The decision on starting or developing a small business depends on the analysis of the industry’s environment, on the discussion of the market trends, and on the analysis of the competitors’ advantages and disadvantages. The success of the business depends on the effectiveness of a selected strategy. Having analyzed an industry in which such small businesses as nail salons operate, it is possible to state that the differentiation strategy is the most effective choice for starting a business in the highly competitive environment. The sole proprietorship and the path of purchasing a business are chosen for Luxury Nail Bar in order to compete within the market while referring to the minimal starting capital. An outline of the business plan reflects the main points need to be addressed in the document.

References

Blackburn, R., Hart, M., & Wainwright, T. (2013). Small business performance: Business, strategy and owner-manager characteristics. Journal of Small Business and Enterprise Development, 20(1), 8-27.

Cronin-Gilmore, J. (2012). Exploring marketing strategies in small businesses. Journal of Marketing Development and Competitiveness, 6(1), 96-104.

Ensign, P. (2008). Small business strategy as a dynamic process: Concepts, controversies, and implications. Journal of Business & Entrepreneurship, 20(2), 25-43.

Scarborough, N. M., & Zimmerer, T. W. (2012). Effective small business management: An entrepreneurial approach. Upper Saddle River, NJ: Prentice Hall/ Pearson.

Statistics on Nail Salons in the USA. (2013). Web.

What Is the Importance of Strategy in Business? Essay Introduction

Corporations are founded by people as a means of achieving their goals as well as their visions of what the business ought to be. Thereafter, objectives and policies are set and put into practice. Combined, goals, visions and plans constitute strategies set forth to be achieved in the long or short term.

Strategic management process is based on the formulation, implementation and evaluation of an entire business organization (David, 2006). Strategy in business terms refers to the direction and scope which an organization has over a long-term period and which helps it in achieving the best using the available resources within a highly competitive environment (Lippmann & Rumelt, 2003). Strategies should be designed in such a way that the business meets the market needs as well as stakeholder satisfaction.

Different organizations develop and execute their strategies in unique ways motivated by the need to gain advantage over other businesses within the same environment. Applying mediocre strategy as well as the analysis of the industry environment by firms are definite preferences over ad-hoc or superb strategies and their evaluations. The essay seeks to provide an analysis of the application of strategy by different business organizations.

What Are the Strategies to Make a Business Successful?

The use of strategy can be found at different levels of any business organization which ranges from the business in general to particular individuals operating the business. Three levels where strategy operates have been identified (Lippmann & Rumelt, 2003). Corporate strategy seeks to meet the needs of all the stakeholders through the operations of the organization.

This level is central to the success of the business since it involves the great influence of investors. Corporate strategy serves to provide guidance in the decision-making process in the entire business. Most, if not all businesses have their corporate strategy clearly spelt out in the “mission statement” from which all other strategies emanate (Stalk & Evans, 2002).

The second is business unit strategy which is designed to guide how a given business survives the tough competition presented by similar operators within the same market environment (David, 2006). This strategy inspires important decisions ranging from the choice of appropriate products, customer satisfaction, overcoming competition, to the exploitation and creation of new business opportunities.

The last strategy employed in strategic management is the operational strategy which guides decisions on how the organization is structured in order to ensure that the business is operating at its maximum potential (Lippmann & Rumelt, 2003). The importance of this strategy is that it facilitates the implementation of the other two strategies mentioned earlier.

Operational strategy is concerned with decisions touching on the effective use of available resources, the various processes within the business, and human resource or labor. These three types of strategy are very beneficial to a business organization when it comes to making important decisions.

Many companies and organizations have realized the importance of formulating sound strategies. Strategies help organizations take key actions that facilitate the achievement of milestones and results which would not be easy to attain without strategy formulation (Stalk & Evans, 2002).

Strategic planning acts as a guide for all the stakeholders in the organization since it sets out clear vision of what the business seeks to achieve both in the short and long-term. Many theories have been used in the business sector to guide operations. For instance, the entrepreneurial decision process model describing opportunity recognition by organization managers has been very resourceful (Pech & Cameron, 2006).

Strategy formulation helps organizations to anticipate future business trends and to prepare adequately for the foreseeable market competition and opportunities. Guided by sound strategies, organizations will be able to invest their capital funds wisely and hence get maximum returns on investments (Stalk & Evans, 2002). It is evident, therefore, that an organization without strategy will not be able to withstand the challenge from its competitors causing a decline in their share of the market as well as in their sales.

Factors of an Effective Business Strategy

A sound strategy can be formulated by considering some key elements. The organization has to define the nature of the business that is to be pursued, state a clear mission of the business, set strategic goals and the expected performance, formulate a business strategy, implement the set strategy and finally evaluate the effectiveness of the strategy from time to time and making necessary improvements (Faulkner & Cliff, 2005).

Business Definition

Any business organization has to understand the type of customers being targeted and then defined from their perspective (Abell, 1980). Customers are the central pillars of all businesses since they are the source of revenue and hence determine how far the business would withstand the test of time (Rumelt, 1993).

The first step in designing a sound strategy is to put in place measures that will ensure a strong customer base. Developing products and enhancing their quality through efficient means of production may help some organizations to achieve success. However, maintaining a chain of committed customers is crucial in attaining prosperity since pricing may not be a major determinant of the number of customers (Porter, 2003).

Mission Statement

An organization’s mission statement should contain the strategic mission which states clearly how the business will be in future. This step involves the formulation of strategic mission which guides the organization in making important decisions. The mission statement should contain the elements that define the organization as a whole (Porter, 2003).

Strategic Objectives

This is the third step that facilitates the design of a successful strategy by outlining a clear position in the market environment that an organization desires to take. It involves the formulation of specific performance rates that will help in achieving the set objectives (Faulkner & Cliff, 2005).

Some examples of strategic objectives include the placing of goods and services in a highly competitive market environment and the general structural organization of a business (Abell, 1980). Moreover, organizations should be keen on increasing profitability without hurting their customer base, value of return on investments made, promoting innovativeness, and diversification of the businesses and their products (Porter, 2003).

Competitive Strategy

Developing a workable strategy involves the formulation of ways of guiding one business unit or a specific product. The major objective of this strategy is to attain a competitive edge in the market environment even in the presence of similar products or services (Faulkner & Cliff, 2005). The business should well aware of its strengths and weaknesses and capitalize on the strengths it has relative to the competitors.

According to Porter’s strategy theory, understanding the size of the market as well its growth rate is crucial in setting business strategies (Rumelt, 1993). Other factors to consider include the profitability of the business, the uniqueness of the products or services, the challenges to the business that may hinder performance, and to ensure that the organization is operating at maximum capacity (Abell, 1980).

Competitive analysis is a study of companies competing with your companies’ products or services for a market share (Dobni, 2010). It is way of scanning the environment in order to acquire information about trends, events, and relationships that may affect the organization (Choo, 1999).

Both profitable and non-profit organizations can benefit from this study. It aims at achieving a better understanding of competitors’ performance and how to maintain your advantage over them. It is a strong factor contributing to strategy planning. It also aims at expanding the employees’ knowledge of the company by providing content and functionality information. It is likely that this process will benefit current as well as future projects.

Exploring competing firms will give you a chance to what is working well for them and what is commonly being offered which would eventually lead you to learn from their mistakes, not to reinvent what they’ve got and find a better way to implement from where they’ve left(Faulkner & Cliff, 2005).

Implementation of Strategies

Many business have failed to perform in the market not because they lack effective strategies but due to lack of or poor implementation strategies. An organization has to put in place meaningful tactics for implementing the strategies that have been formulated (Faulkner & Cliff, 2005). This element is crucial in that it informs the process of evaluating the strategies as well as the design of new ones.

Monitoring and Evaluation

Once the strategies have been implemented, it is advisable to monitor the progress and effectiveness of these strategies. This step is crucial and equally important since it ensures that necessary adjustments are made to the general running of the organization. Continued assessment of the progress ensures that the organization remains true to its mission statement and hence a successful future.

Application of Strategy

Having discussed what strategy is and the various components, it is also important to understand that different organizations have different ways of applying the strategies they formulate. Others would opt for mediocre strategies while some will seek to use specific or ad-hoc strategies with an aim of achieving the set goals.

It may not be of any significance to have great strategies which are poorly executed, instead, it would be more meaningful to an organization if it had mediocre strategies which are superbly implemented (Moreton, 2004). To illustrate, we will take a look at the Australian Telecommunication firm, Optus.

This corporation included the continuous need for innovation as part of its management strategy so that it remains ahead of its competitors. Its goals are incorporated into a strategy to be handled by its strategic personnel. These people would be responsible for analyzing and developing future profits and performance strategies.

What distinguishes Optus as a firm is that it has implemented strategies focused on specific goals, one of which is to achieving positive customer feedback. The focus was also on improving the management of its operations and on opting for growth opportunities in its sector while maintaining profits (Optus Annual Report, 2009).

Carrying out strategic analysis of the competing environment and emerging business opportunities are among other objectives that strategists work on.

They also work on emerging technologies and come up with other possible strategies to improve and achieve Optus’ sustainability. Thus by implementing correct strategies and expanding its share market, Optus was able to achieve a gradual growth reaching a net profit of $583 billion in 2009 and revenues of up to $8.321 billion.

Hence when one applies an efficient mediocre strategy and examines its implementation, then he would be choosing a really good strategy. Optus for instance has initialized and implemented strategies to achieve objectives and this has proved beneficial to the firm (Optus, 2009).

Many factors, according to the report, support the firm’s objectives. This include enhancing growth opportunities by driving operational performance (2009).It is my belief that a mediocre strategy is successful in terms of evaluation as you can review its objectives and make any alterations when necessary. Based on outcome evaluation, a strategy has to be a mediocre one rather than an ad-hoc one because it has proven its superiority.

For short-term deals, it would be better to look at a mediocre strategy beyond the obvious facts. Strategy evaluation is better conducted following successes or failures (Moreton, 2004).Selecting appropriate strategy and assessing how the business will perform accordingly and whether a given strategy will render higher profits or advantages are key missions for business managers as they contemplate strategies.

Rumelt (1993) thinks that a good strategy evaluation is more successful for short- term businesses rather than long- term ones; though mediocre strategies do not provide guarantees as to the success of the strategy. He also mentions four criteria to be kept in mind when applying the mediocre strategy which he believes would render the company profitable:

1. Remaining constant as an internal assessment tool
2. Applying consonance as external assessment tool
3. Using feasibility as an internal assessment tool
4. Making use of advantages as an external assessment tool

To select the proper strategy and assessment tool one faces a number of challenges and tough questions such as: Are the objectives really suitable for the firm? Are the plans suitable? Would the outcomes be achievable within the time limit?

It is important for managers to contemplate these questions to recognize the suitability and efficiency of the devised strategy. If the answers to the questions are positive then this means that the strategy is workable. But if it is negative, then alterations to the plan must be made in order to meet the objectives of the corporation (David, 2006).

Choosing either one of the strategies has proven to be tricky because of the unique nature of each of the strategies and the need to evaluate each.

Firms’ managers need to be aware of evaluation strategies (Moreton, 2004).For instance, it is a good idea for a firm to take into account the fact that strategies work differently in different situations. So, where a strategy fails and has negative impacts on a firm, it might be quite successful in another. Hence, efficient strategy relies on choosing the one that best caters for the firm’s circumstances and needs.

Conclusion: The Importance of Business Strategy

The essay has broadly discussed and analyzed the concept of strategy as used in business management. Strategy has been defined as the direction and scope which an organization has over a long-term period and which helps it in achieving the best using the available resources within a highly competitive environment without hurting its customer base.

The various levels in which strategy operates have been identified and they include corporate, business unit, and operational strategies. Six components of a successful strategy have also been explained.

The essay has further elaborated on the application of a given type of strategy, whether it is a mediocre or ad hoc strategy. It can be concluded that formulation of a successful strategy by an organization or company demands more than just having it in paper, instead superb implementation and evaluation determines the overall success of the strategy.

References

Abell, D. F.1980. Defining the business: The starting point of strategic planning. Englewood Cliffs, Prentice Hall

Choo, C. W. 1999. The art of scanning the environment. American Society for Information Science. Bulletin of the American Society, 25 (3), 21-24

David, M. 2006. Strategic management: diversification and profitability. McGraw-Hill Plc.

Dobni, C.B. 2010. “Achieving synergy between strategy and innovation: The key to value creation”. International Journal of Business Science and Applied Management, 5 (1).

Faulkner, D. & Cliff, B. 2005. The components of strategy. Hertfordshire, UK: Prentice Hall.

Lippmann, S. A. & Rumelt, R. P. 2003. “A Negotiable Perspective on Gaining Resource Advantage.” Strategic Management Journal, 24 (11): 1064-1070

Moreton, P. 2004. Strategy theories and corporate management: classification and implications. Washington University Press.

Optus Annual Report, 2009. Strategy Implementation: Financial and Market Analysis. APC Environmental Management

Pech, R. J. & Cameron, A. 2006. An entrepreneurial decision process model describing opportunity recognition. European Journal of Innovation Management, 9 (1), 61-78

Porter, M. 2003. Business strategy. New York, Free Press

Rumelt, R. P. 1993. Competitive strategic management: understanding strategic theory of the Organization. Englewood Cliffs, NJ, Prentice-Hall

Stalk G., A. & Evans, E.2002. “Competition and Capabilities: The New Approaches of Corporate Strategy.” Harvard Business Journal [Peer Reviewed]. 26-69