centercenterCommunity Engagement ProjectBusiness Management 4 2018Natasha Booysen2142453149/18/20189500095000Community Engagement ProjectBusiness Management 4 2018Natasha Booysen2142453149/18/2018Contents TOC o “1-3” u Introduction PAGEREF _Toc525744089 h 2Statement of strategic intent PAGEREF _Toc525744090 h 3?Vision PAGEREF _Toc525744091 h 3?Mission PAGEREF _Toc525744092 h 3?Goals PAGEREF _Toc525744093 h 3?Objectives PAGEREF _Toc525744094 h 3?Core Values PAGEREF _Toc525744095 h 4Environmental Scanning PAGEREF _Toc525744096 h 4External environment analysis: PAGEREF _Toc525744097 h 4Competitive analysis PAGEREF _Toc525744098 h 5Quick Environment Scanning Technique PAGEREF _Toc525744099 h 7Internal Environmental Analysis PAGEREF _Toc525744100 h 8Internal Factor Evaluation (IFE Matrix ) PAGEREF _Toc525744101 h 8Forecasting PAGEREF _Toc525744102 h 9Judgement Forecasting PAGEREF _Toc525744103 h 9Corporate Strategies PAGEREF _Toc525744104 h 10Intensive Strategy PAGEREF _Toc525744105 h 10Market penetration PAGEREF _Toc525744106 h 10Product Development PAGEREF _Toc525744107 h 10Cooperation strategy: PAGEREF _Toc525744108 h 11Generic Strategy PAGEREF _Toc525744109 h 11Implementation PAGEREF _Toc525744110 h 11Resource Allocation PAGEREF _Toc525744111 h 12Strategic Evaluation and Control PAGEREF _Toc525744112 h 12Appendices PAGEREF _Toc525744113 h 14References PAGEREF _Toc525744114 h 16IntroductionMany might argue that developing a small business is a “tricky” task which comes with many responsibilities, with that being so we look into the potential strategic development of a local small business owner and how the growth of the business could be developed. The task at hand is to select a small business in the residing area. As I am personally interested in fashion retailing, I’ve decided to choose a local tailoring and dressmaking business called “Eric’s Tailors” which is located at NY6 Gugulethu, a local township which is a 19 minute drive outside of Cape Town’s CBD.
This business was established in the beginning of 2016 whereby the owner first started doing small alterations and tailoring from his home. He then later decided to acquire a suitable space as his client base was growing. The owner was unable to acquire a space in the local mall nearby, which is Gugulethu Mall, so he settled for hiring a small container which was big enough for his clients to walk in and for other potential clients to see his business. The owner Eric mainly does all the work on his own, but he has one assistant that helps him with major orders. His basic duties consist of decision making, managing the capital, purchasing from suppliers, handling any complaints from customers, etc.
According to the feedback received from his loyal customers; he is well-known for good vibes, excellent pricing and good customer service, not to mention excellent lead time on orders made. The contribution made to the business will be to advise and guide the owner, who is a sole trader, to register the business with the Companies and Intellectual Property Commission (CIPC) as a profit company, from there onwards the business should also apply for a business tax number at SARS(South African Revenue Service), this shift for the business will help the business be more established and also allow the business to grow. Another contribution that will be provided is helping the owner create a Facebook, twitter and Instagram account as the owner is not as technologically involved. After a reasonable number of followers are collected on these social media platforms, we will continue to help the owner create a website and flyer designs for the business to increase advertising. A huge number of people are not familiar with Eric’s Tailor as it is not as big as the other two tailoring businesses in the area and most of his advertising solely relies on “word of mouth”. Not to mention the other businesses in the area have been in business for longer. Some people are aware of the business however they are not as interested mainly because it’s so small and they are not familiar with his work. The store is a bit messy with material lying around which does not create an inviting environment and t some people they feel it portrays the work the owner can provide.
As much as there are a few of wrongs that need to be fixed there is potential growth for the business as the work being done in this store is excellent and for a good price too.The following task will map out various ways in which the business can possibly grow and by doing so hopefully the positive contribution will make a difference to the future outcomes of the store. This assignment will state how I can positively contribute to this business in a more outlined manner, whereby the advantages and disadvantages will be highlighted and how the business can overcome negative obstacles.Statement of strategic intentVisionTo deliver the best quality tailoring and alterations at low prices and with less lead time.MissionWe strive to create a welcoming and tranquil environment for our customers where they can receive excellent customer service. GoalsTo increase profits and decrease expenses.
To increase customer awareness within the community.To have more than one supplier for material.To increase advertising by social media and flyers.Having a cleanlier store.ObjectivesTo increase profits by 20% in the next 6 months To have more than 500 followers on Instagram and Facebook in a period of 12months To acquire or expand the working space of the business by the end of the year.To acquire possible investors to expand the business when the business has reached a 40% increase of profitsCore Values We always put the customers’ needs and desires firstThe customer is always right.
We contribute positively to our community and environment We deliver excellent workmanship We have a compelling desire to improve We strive to have a direct, open, and honest communication between customer and owner Environmental ScanningExternal environment analysisThe business condition is unique. Many components in the environment go through changes after some time. Innovative changes are continuous, tastes and the inclinations of individuals change.The competitive situation is bond to constant changes such as statistic factors, disposition of buyer’s changes, government strategies and directions are likewise to adapt to the changing condition. According to Dr.
S Gomes “All these factors indicate that a business policy should be dynamic enough to be successfully adaptable to the changing environment. Therefore, the success of a business today, depends on its ability to foresee the environmental changes and to modify its strategies approximately with internal and external environmental changes.” The approach and techniques that will be used in this task will be the Competitive Analysis and Quick Environmental Scanning Technique. It is very important to analyse and evaluate your competitor’s strategies and tactics to make sure you are either on the same level, below or above your competitor, by creating a competitive advantage. Eric’s Tailor will be compared with the competitor “Thunga Tailors”, to analyse their advantages and disadvantages and how Eric’s Tailor can use Thunga Tailors cons to their advantage. The QUEST analysis will focus on the issues that could affect Eric’s Tailor in the future, the implementation plan and current trends to ensure the growth of the business.Competitive analysis The following analysis below clearly states out the business’s strengths and weaknesses against one another:Competitive Analysis of Eric’s Tailors and Thunga Tailors Eric’s Tailor Thunga Tailors (Competitor)Direct CompetitorsCompany’s Profile Highlights Founded in 2016.dressmaking, and alterations/tailoring store Founded 2013.
dressmaking, and alterations/tailoring storeKey Competitive Advantage Longer Trading hours. Ability to recreate designs customer desire,Seamless work,Quality products and affordable prices. Excellent lead time Bigger fan page.
Popular. Good location. Wide variety of products. Modern store design.Target Market Market Information Men and woman who seek tailoring, mainly woman as there is a high demand for traditional clothing, Youth as they tend to want to remake styles of clothing that they see on social media (See appendix A) Woman who seek traditional clothing, mainly woman from the community Xhosa, Zulu etc.Marketing Strategy A more detailed poster in the area and outside of the store whereby customers can see what the store has to offer.
Advertising their latest clothing on social media such as Instagram and Facebook.Products & Services Product Information Clothing and other tailoring services Accessories such as head garments, beads and traditional related jewellery Pricing Ranges from R40 – +-R400 a piece, it mainly depends on what is being made and with what material Ranges from R200– +-R700,Strengths SWOT Information The owner has a good sense of modern design and traditional design; Good service, vibrant workers, open for more hours. Good client base, location is central, great access to consumers, fashionable traditional designs, always a clean and tidyWeaknesses Advertising, pricing techniques, there r are no set prices for certain products. Store neatness Do not open long hours, pricing Is quite expensive Opportunities To improve advertising, improve store layout, do research on what is currently trending, and provide a social media platform. Exploring an online store base or delivery service Threats Competition. Crime within the area can divert possible customers who come from other areas People will resort to purchasing at cheaper stores.
According to analyses it is clear Eric’s Tailor has a lot to improve on, to be on par with their competitor(s). When we look at the business’s weakness we see that there is a lack of advertising and a fixed pricing system. This allows the business to lose track of income however as we can see the weakness towards Thunga Tailors is they are not open for longer hours. This allows there to be a void for possible clientele who work past the closing time.
Despite all these weaknesses Eric’s Tailors strengthens out way its weakness however the weaknesses can be improved on.Quick Environment Scanning TechniqueIt is important to always do research on what is currently trending when you are an owner of a business, whether it is clothing, food, furniture or equipment. In this case the main focus of this store is dressmaking and alterations. The creating of clothes is what brings in the most money for the store whereas the alteration only brings in a very small percentage of the profits.There are always new trends when it comes to clothing, they change very rapidly. It is essential for the businesses to do research on what customers are now interested in and most importantly, what they want the most. The store can also give a platform to the customers to give feedback on the store, how they think it should improve and what the store should offer; this can be done by giving a short survey after purchasing or by allowing customers to provide comments in a comment box.
Not offering what most customers are interested in could negatively impact the business. The less you have of what is wanted; the fewer customers you have, the less money being made. This could also lead customers to purchasing at a different store. The aim is to always make high profits and keep a good relationship with clientele. This could simply be done by keeping the customers happy. Since this store is not big on advertising, they could use the cheapest platform, which is social media.
The store should utilize the free advertising which would be Facebook and Instagram. That page can be used to advertise their goods, inform the customers of any kind of discounts there will be at a particular time, to answer any questions that a customer could have regarding the store, in future any vacancies or if there is a major problem that the store is facing at that particular time that could lead to the store closing temporarily or permanently.Internal Environmental AnalysisInternal Factor Evaluation (IFE Matrix)Key Internal FactorsWeight Rating Weighted Scores/TotalStrengthsExcellent customer service 0.
09 3 0.27Wide range of goods 0.07 3 0.213.interactive employees 0.08 4 0.
324. Longer trading hours 0.10 3 0.3Excellent reviews from customers 0.09 4 0.36Customer loyalty 0.
10 4 0.4WeaknessesLack of competitive advantage 0.10 1 0.1location 0.
01 4 0.03congested Store 0.10 3 0.
3Bad quality products 0.09 1 0.09Inventory pricing 0.07 1 0.06TOTAL 0.89 31 2.53Overall the total score of 2.5 is an average score.
With the internal evaluation technique, it is clear there are focus areas the business needs to work on to be on par with their competitors and frankly Eric’s business is weak against its competitors however there is an excessive opportunity for growth and improvement for this business ForecastingAccording to Vanguard software forecasting is instrument utilized by numerous organizations to help in planning, arranging, and assessing future development. In the least difficult terms, determining is the endeavour to anticipate future results in view of past occasions and administration knowledge. It helps the owner take the correct measures to ensure growth. The following forecast will be used for Eric’s Tailors.Judgement Forecasting Sales Force Surveys: Surveys of the company’s internal sales can be useful sources of forecasting data. This survey will help show Eric’s Tailor how to create estimates for different products lines and how he can improve the current pricing strategy that is in place.Customer surveys: Eric’s Tailor should conduct a survey that includes questions whereby they could see which areas the business can improve on.
What range of styles they would like to see more and the quality of the material they desire and at which price. These surveys will also allow the opinions of potential customers to help determine where change can be made to improve the traffic of customers. Customer’s preferences, attitudes and demands change after some time, therefore, it is very important to keep track of that.Corporate Strategies The aim of the business in question is to improve profits, create a larger consumer base and to provide the best service, however, there are numerous problems being faced by the business. One of the major problems is that there is a lack of competitive advantage. The ideal strategy that can be used for this case is the growth strategy which is known as the “Expansion Strategy.” Intensive StrategyMarket penetrationEric’s Tailor needs to analyse what their competitors are doing to get a lot of customers buying and what competitive advantage they have, then apply similar tactics. This will then attract customers and attract non-users to buy the businesses’ products.
Eric’s Tailor needs to understand that you do not just sell without doing any research on the area and competitors; there is quite a lot that needs to be done/ considered before actually selling to people.Product DevelopmentEric’s Tailor has a limited selection of premade products to sell to the consumer. The business should consider offering more in relation to the products he is currently selling now. He should consider providing designs and ideas to customers who are unsure of what they want, to advise them according to their style. This not only allows him to work from the ideas that he already has but it also allows him to have a closer relationship with consumers The second strategy that I personally think Eric’s Tailor should use is the cooperation strategy Cooperation strategy:The business could consider going into business with a supplier or another tailoring business in the area. This might be hard to acquire a tailoring business that is willing to join however by doing so there is an increase in capital; more potential to lease a bigger location, there is a better outcome of ideas when working together.
Generic Strategy The most effective strategy to link both the above-mentioned techniques would be cost leadership strategy. As it was mentioned earlier, Eric’s Tailor is trying to gain a competitive advantage and reduce costs in the business. This strategy is ideal for this businessCost Leadership StrategyThis method is used to constantly enhance levels of proficiency and cost decrease. The business should attempt to convey merchandise or administrations with highlights that are satisfactory to clients at the least expense. The distribution and managing of cost related exercises are accomplished by gathering, examining, assessing, detailing cost data utilized for planning, evaluating, determining and observing. One of the benefits of utilizing this system is that the benefits will be appreciated without stressing over costs.
Nonetheless, in the same class as this technique sounds, there are disadvantages of using this procedure. One of them is the way that the need to minimize costs may lead cost pioneers to be late in identifying the key condition patterns. Minimizing costs wouldn’t be an issue as the significant costs for the store is the expense of material. Implementation It is important for Eric’s Tailor to act on a problem as soon as it has been picked up.
It becomes very difficult to solve multiple problems that the business is facing at that particular time. The owner should not overlook any kind of problem that the business is experiencing, whether it is minor or major. When Eric’s Tailor decides to use these strategies that have been chosen, before even considering using them, it is vital to do some planning and think of the consequences they would bring. The consequences should also be weighed with the advantages of applying that particular strategy.
It happens at times that the business still faces problems even after implementing each particular strategy and this is simply because businesses sometimes fail to assess the actual problem of the business and use the wrong strategy that sends the business astray. This can be avoided by getting experts to help state what the problems are and which strategies should be implemented for each specific problem. According to Despacho (2012) “As a first step in ensuring the successful implementation of the firm’s strategy, firm leaders must take early and aggressive action to institutionalize the strategy within the firm.”(Read appendix B for Strategic Structure) Resource AllocationAccording to Grimsley (2012) “Resource allocation begins at strategic planning when a company formulates its vision and goals for the future. The vision and strategic goals are accomplished through achievement of objectives.”It does not matter how many resources the store has, if they do not know how to use their resources, they will never be enough. Eric’s tailor wastes a tremendous amount of material which could have been recycled or put to better use. This not only will help the business become economically friendly but will also allow them save money in the long run.
Strategic Evaluation and Control Evaluation and control play a major role in the strategic management process to conclude how well or bad things are how well things are going at every phase of the process and to take whatever necessary action to improve performance. There are usually three types of control systems to put in place when monitoring a business progress. For Eric’s Tailors the “output control” and “behavioural control” will be applied. For output control the business’s performance results will be monitored, the focus is generally on the result of the strategy put into place and from there it can be determined as to what actions can be taken to make improvements where required.
Behavioural control focuses on how things will be done. The evaluation technique that will be used will be bench marking so that we can monitor the improvement of the business compared to our competitors and other tailoring businesses. We can monitor these by comparing the customer traffic of the businesses, our profits and budgets (where it is accessible) Appendices Appendix AAppendix BReferences Anon, What is Forecasting.
Vanguard Software. Available at: http://www.vanguardsw.com/business-forecasting-101/what-is-forecasting/Accessed September 5, 2018.
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ONLINE Available at: http://open.lib.umn.
edu/strategicmanagement/chapter/5-3-cost-leadership/. Accessed 11 September 2018.Appendix 1.1: Slideplayer. 2017. Building an Organisation Capable of Good Strategy ExecutionSlide.
ONLINE Available at: http://slideplayer.com/slide/4220700/. Accessed 11 September 2018.Core Values: IN Slideshare.
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Competitive Analysis: Entrepreneur. 2010. Competitive Analysis.
ONLINE Available at: https://www.entrepreneur.com/encyclopedia/competitive-analysis. Accessed 14 September 2018.Competitive Analysis: EPM. 2010. How to Write a Competitive Analysis. ONLINE Available at: http://www.
expertprogrammanagement.com/2017/01/competitive-analysis-template/. Accessed 14 September 2018.Cost Leadership Strategy: BusinessDictionary. 2015. What is cost leadership? ONLINE Available at: http://www.businessdictionary.com/definition/cost-object.
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S Gomes. 2015. Ch-4-Environ-scanning. ONLINE Available at: https://xisspm.files.wordpress.
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The Macro environmental Factors Affecting the Clothing Industry. ONLINE Available at: http://smallbusiness.chron.com/macroenvironmental-factors-affecting-clothing-industry-37254.html. Accessed 11 September 2018.Importance of Forecasting: Smriti Chand.
2016. The Importance of Forecasting in the Operations of Modern Management. ONLINE Available at: http://www.yourarticlelibrary.
com/management/the-importance-of-forecasting-in-the-operations-of-modern-management/3504/. Accessed 11 September 2018.Judgement Forecasting: Gerald Hanks. 2013. Judgment Based Methods for Sales Forecasting.
ONLINE Available at: http://smallbusiness.chron.com/judgment-based-methods-sales-forecasting-74204.html. Accessed 11 September 2018.
Referencing: Harvard Generator. 2009. Harvard Referencing Generator. ONLINE Available at: http://www.
harvardgenerator.com/references/website. Accessed 11 September 2018.Resource Allocation: Shawn Grimsley. 2011. Resource Allocation in Management: Methods, Process & Strategy.
ONLINE Available at: http://study.com/academy/lesson/resource-allocation-in-management-methods-process-strategy.html. Accessed 11 September 2018.Strategic Planning: Shawn Grimsley. 2011. Resource Allocation in Management: Methods, Process & Strategy.
ONLINE Available at: http://study.com/academy/lesson/resource-allocation-in-management-methods-process-strategy.html. Accessed 11 September 2018.
