Strategic Management Project - Coursework Example

BSM 201 Semester: FALL Lecturer: Dr. Mohamed Gamal Project Strategic Management Project Students Name: 1. The Business The business involves producing and selling hand-made beaded jewellery. The jewels to be produced include; necklaces, bracelets, rings, and ankle bracelets. The jewellery will be made from various types of beads such as Swarovski stones, precious stones, and glass. The business will develop its products with consideration of the consumers’ opinions to ensure high quality. The customers will be allowed to choose the beads of their choice online, and then the ornament will be handcrafted and delivered to the customer in time. This business will operate online, and will, therefore, allow the customers to place their orders at any time, and from any place. Despite the stiff competition in the ornaments’ production, this business will establish its niche by offering highly customized products at an affordable price. The business will ensure high quality and durable products are produced and delivered in time to its customers. The business will mainly target young women and men in colleges who are interested in enhancing their looks without compromising on their slim budget. Most of these young people are looking for unique jewellery that suits their styles. The market for hand-made jewellery is wide and is growing rapidly in colleges. Our business is likely to derive a lot of demand from this expansive market. The business will be a partnership, run by two proprietors. The partners will be responsible for collecting data from the customers, designing the ornaments, assembling them, packaging them, and delivering them to the customers. The start-up cost is minimal thus will be contributed equally by the partners. Advertisement of the products will mainly be done using social media, such as twitter and Facebook. The business will opt for the social media because it relatively inexpensive and it is possible to target the possible buyers more directly. The use of online marketing does not require physical stores and a lot of inventory to start the business. The little capital the partners will contribute will be used mainly for buying beads. Mission Statement The mission of the business is to develop unique and creative piece of jewellery that promote our clients’ cultures from beads. We want to be the preferred jeweller for the people that want to stand out. Objectives To promote art and culture through ornaments and jewellery; To develop unique and creative ornaments for stylish individuals; To open a jewellery business whose main interest is to exceed client expectations: To create an online store that promotes art, creativity, and culture through jewellery, and To initiate a profitable and sustainable jewellery business 2. Environmental Analysis Market Research There are a number of businesses that make and sell jewellery both online and in physical stores since there is a high demand for beauty products among young people in the market. Although there are a large number of businesses dealing with handmade ornaments, this business has developed a unique plan of reaching out to those people who cannot afford expensive jewellery. Most of jewellery products are priced above $50 in most retail shops, but our business will sell most products at between $5 and $30. These prices will enable our customers to afford our products and to purchase frequently, and in bulk. Products The business will specialize in the production of jewellery such as rings, necklaces, bracelets, and ankle bracelets. The products will be made on demand according to the preferences of our customers. They will be made using beads from glass, seeds, wood, metal, plastic, pearl, marbles, Swarovski crystals, and precious stones. The beads will be bought from suppliers that can ensure high quality materials. Customers The customers will be allowed to choose the material they prefer for their jewellery. All the materials used will be of high quality to ensure durability. All the jewellery products will be crafted by hand according to the preferences of the customers. The customers will be required to fill a form online entailing their preferences on materials, colours, and sizes. Our target customers are college-going students with a limited source of income. Most of our products will be designed for people within 15-40 years. The business expects most of the customers to be women wishing to stand out through our unique design of jewellery. The need to separate themselves from other ladies is likely to push them towards our unique and customized designs. Most of these people are internet-savvy, and are using more than one social media to interact with friends. Most young people like shop online, nowadays. The business will operate 24hours a day to allow our customers to place orders on the products of their choice at any time convenient to them. The business will also sell its products through online stores such as Ebay. The potential for physical stores in the future will be investigated by setting up some stores in prominent shopping malls. Competition There are many businesses that make and sell hand-crafted jewellery in physical stores as well as online. These stores are well established and offer a stiff competition to our business. Online shops such as artfire.com, etsy.com and overstock.com are among some of the well-established competitors in selling jewellery products. Despite not operating in a similar manner, the physical stores offer a significant competition since they serve the same market. However, our business is looking towards offering the same products at slightly lower prices. Despite the high level of competition, the large market for the jewellery will allow our business to obtain a share. Niche The business will mainly focus on young enthusiastic women, mainly in college, willing to try out new and creative jewellery designs. This market has often been neglected by jewellery makers. A SWOT Analysis Developing a good SWOT analysis helps the business to formulate a plan that capitalizes on its strengths; minimizes the weaknesses; exploits the opportunities; and mitigate the threats (Brooksbank, 1999, p. 80). Strengths: The strengths presented are those aspects that the partners believe will give their business a competitive advantage over their competitors. Some of the aspects of the business considered to be its strength include: The business will produce unique products that are tailored to the needs of the clients. The production of unique designs will help the business establish its brand in the market and gain royal customers. The business does not require large capital investment to start. The proprietors will hence need to contribute a small amount of money. This will considerably reduce the risk of the investment. The business enjoys a rich marketing niche among college students. Social media will be used to target the young people who are likely to be the main market for the jewellery business. The business will undertake extensive research to come up with most marketable designs The proprietors of this business will offer their business managerial skills in making decisions for the business. The business has well established sources of raw materials for the production of the beaded jewellery. The business will look to establish good relations with the suppliers to ensure good quality materials and timely delivery of beads Weaknesses: The weaknesses presented are those aspects that the partners believe will hamper the success of the business if they are not dealt with. Some aspects of the business considered to be its weaknesses include: The jewellery business is seasonal. People often buy jewellery during holidays such as Christmas. The business is likely to suffer low turnover during low seasons, and this may impact on the success of the business. Lack of funds may be a challenge to the business. Although the business does not require a huge investment on stocks, some clients may request for expensive beads that the business may not afford during the early stages. Marketing may pose a challenge to the business. Reliance on the proprietors’ friends on social media for marketing may limit the reach of the marketing. Excessive workload during peak seasons is a challenge for the business. The business has only two employees who must craft all the ornaments by hands. During the peak seasons, the workload may be excessive forcing the business to outsource or risk late deliveries. Outsourcing may pose challenges on quality of the final product. Working from home and selling products online may pose a challenge to the business. Some potential customers may not trust online transactions on expensive jewellery Opportunities The opportunities presented are aspects outside the business that the partners believe, when exploited, will enhance the success of the business. Some of the aspects outside the business considered to be it opportunities include: The high number of young people in college offers a wide market that can be exploited for the success of this business. The large network, established by the proprietors, over the social media can offer a good market for the business. Internet and presence of online stores offer the business an opportunity to market itself far and wide. The economic trends may see consumers shift from expensive jewellery to more affordable hand-made bead jewellery. Threats The threats presented are those aspects outside the business that the partners believe, if not mitigated, can result in failure of the business. Some of the aspects outside the business considered to be threats include: Some beads may be expensive or rare to find. Lack of some beads may lead to failure to meet the preferences of our clients. The suppliers may fail to meet the quality demanded by our clients. The business has no control on emergence of new competitors. The low capital involved in starting this business will encourage emergence of new competitors close to our business Theft of intellectual property. There is a threat that our designs may be copied by our competitors 3. Marketing Strategy Strategy The business strategy is to develop high quality jewellery products that are marketable to young people, especially college girls. The products will be marketed through the internet and social media where many young people frequent. The business will also look to establish physical stores at strategic places, such as close to colleges, and in large shopping malls. The jewellery products will be developed using a wide variety of materials including: glass, seeds, wood, metal, plastic, pearl, marbles, Swarovski crystals, and precious stones. This will make the jewellery affordable to a wide class of people in our market niche. All the products will be developed using materials of highest quality to enhance the appearance and durability of the final product. Each product will be developed on demand according to the preferences of the client. The company will also allow the customers to place their orders round the clock through an interactive website. This will ensure convenience to the shoppers who have limited free time to do their shopping. Strategy Formulation It is not possible to consider all the strategies that would improve this business because there are countless numbers of strategies out there. The strategy choice was made based on the vision and the objectives of the business. The internal and external conditions of the business were also given a consideration when selecting the strategy. The functional level strategies for departments such as purchasing, MIS, R&D, marketing, finance, and accounting were considered in the selection of the business overall strategy. Alternative strategies were discussed and evaluated in a number of meetings between the partners. The strategy formulation was based on a 3-step framework. That is; input stage, matching stage, and the decision stage. In the input stage, a summary of the information required for the development of the strategy was made using Competitive Profile Matrix (CPM), IFE matrix, and EFE matrix. In the second stage, a SWOT matrix was used to generate the best strategy. According to David (2007), other possible techniques include; Grand Strategy Matrix, the Internal-External (IE) Matrix, the Boston Consulting Group (BCG) Matrix, and the Strategic Position and Action Evaluation (SPACE) Matrix. During the decision stage or the third stage, the Quantitative Strategic Planning Matrix (QSPM) was used to come up with the final strategy. Figure 1: The Strategy Formulation Framework, Source:David (2007) The Input Stage The information was collected using Competitive Profile Matrix (CPM), IFE matrix, and EFE matrix. External Factor Evaluation (EFE) Matrix KEY EXTERNAL FACTORS WEIGHT RATING SCORE Opportunities Untapped college market 0.1 3 0.15 Large network of friends 0.25 3 0.75 Internet use in the market 0.25 4 1 Shift from expensive jewellery to affordable ones 0.1 2 0.2 Threats     Rare and expensive beads 0.05 1 0.05 Poor quality by suppliers 0.05 2 0.1 New competitors 0.1 1 0.1 Intellectual property theft 0.1 2 0.2 TOTAL 1 2.55 The business obtained a rating of 2.55 out of 4.0 according to the external factor evaluation matrix. This indicates that the business is above average in exploiting the opportunities and mitigating possible threats. Internal Factor Evaluation (IFE) Matrix KEY INTERNAL FACTORS WEIGHT RATING SCORE Strengths unique products 0.2 4 0.8 Small capital required 0.05 3 0.15 a rich marketing niche 0.15 3 0.45 extensive research 0.1 3 0.3 business managerial skills 0.1 4 0.4 established sources of raw materials 0.1 3 0.3 Weaknesses       The jewellery business is seasonal 0.1 2 0.2 Lack of funds 0.05 3 0.15 Reliant on the proprietors’ friends on social media 0.05 2 0.1 Excessive workload during peak seasons 0.05 3 0.15 customers may not trust online transactions 0.05 2 0.1 TOTAL 1 3.1 The total score for the business is 3.10 out of 4 on the internal factor evaluation (IFE) matrix. This indicates that the strategy developed is meant to maximize on the business strengths and minimize the weaknesses. A Competitive Profile Matrix This competitive profile matrix evaluates how competitive our business will be when compared to other established online jewellery selling businesses artfire.com etsy.com Our business CRITICAL SUCCESS FACTORS WEIGHT RATING SCORE RATING SCORE RATING SCORE Market share 0.05 1 0.05 4 0.20 3 0.15 Advertising 0.20 1 0.20 4 0.80 3 0.60 Global expansion 0.20 4 0.80 2 0.40 2 0.40 Product quality 0.10 4 0.40 4 0.40 3 0.30 Customer loyalty 0.10 4 0.40 4 0.40 2 0.20 Price competitiveness 0.10 3 0.30 3 0.30 4 0.40 Financial position 0.15 4 0.60 3 0.45 3 0.45 Management 0.10 4 0.40 3 0.30 3 0.30 TOTAL 1.00 3.15 3.25 2.80 A score of 2.80 on the CPM indicates that our business is weaker when compared to other online jewellery business, such as etsy.com and artfire.com. Matching Stage The matching stage helped the entrepreneurs to try and match the internal strengths and weaknesses with the external opportunities and threats. The partners decided to use the SWOT matrix to match the external and the internal critical success factors of the business. Using the SWOT matrix, the partners developed four strategies, including; 1. SO: Strength-Opportunities 2. WO: Weaknesses-Opportunities 3. ST: Strengths-Threats 4. WT: Weaknesses-Threats Internal External Desirable Strengths Opportunities undesirable Weaknesses Threats Figure 2: SWOT The Strength-Opportunities (SO) strategies were employed to determine how the business would use its strengths to take advantage of the emerging opportunities in the market. It was found that some strengths, such as the strong managerial skills of the owners, could be harnessed to exploit opportunities arising from expanding internet use in the market. It will be the aim of this business to continue to invest its strengths towards taking advantage of the emerging trends and technology. Weaknesses-Opportunities (WO) strategies will be employed to determine how the business’ internal weaknesses can be improved in order to take advantage of the emerging opportunities. There are those opportunities that are emerging, but the business may lack the required facilities, skills or experience to take advantage. There is an opportunity to use friends on social media to market the jewellery products, but the number of those friends is limited in providing a sufficient market. The partners will hence look into a strategy of expanding the network through marketing and sharing of files in prominent internet groups. Strength-Threats (ST) strategies will be used to evaluate how the business’ internal strengths can be used to mitigate the external threats posed to the business. Threats, such as intellectual property theft, can be mitigated through the managerial skills of the owners. The owners will use their expertise to ensure that their designs are protected from being copied by their competitors. Weaknesses-Threats (WT) strategies will be used to defend the business against major downturns. The strategies are meant to help the business reduce internal weakness in order to avoid external threats. Strategies such as accumulation of rare beads materials, during the low seasons, will be used to mitigate threats of lack of such materials in the peak seasons. Strength-Opportunities Strategies Weaknesses-Opportunities Strategies The business will use its unique products to exploit the untapped online market The business will use its owners’ managerial skills to exploit the large network of friends on the internet to obtain customers the limited number of friends on social networks will be used to generate a bigger network through incentives Strengths-Threats Strategies Weaknesses-Threats Strategies the business will build good relations with its establish sources of raw material to ensure that the suppliers maintain a steady supply of the rare beads the business will use the managerial skills of the owners to ensure products are copyrighted to avoid intellectual property theft the business will use the low seasons to collect enough reserve of the rare beads Figure 3: The SWOT Matrix Strategies The Decision Stage The decisions on the right strategies to be employed will be made by the partners upon analysis of the business strengths, weaknesses, opportunities and threats. The matching technique using SWOT matrix will help the partners identify all possible alternatives. The two competing strategies include; adopting an online market and a physical store. The final decision was arrived at using the Quantitative Strategic Planning Matrix (QSPM). The weighting was drawn from the EFE and IFE matrix as done by David, David, and David (2009). The two alternative strategies were drawn from the SWOT matrix. ONLINE STORE PHYSICAL STORE WEIGHT Attractiveness Score (AS) Total Attractiveness Scores (TAS) Attractiveness Score (AS) Total Attractiveness Scores (TAS) Opportunities Untapped college market 0.1 4 0.4 2 0.2 Large network of friends 0.25 4 1 1 0.25 Internet use in the market 0.25 4 1 Shift from expensive jewellery to affordable ones 0.1 1 0.1 3 0.3 Threats Rare and expensive beads 0.05 Poor quality by suppliers 0.05 New competitors 0.1 3 0.3 1 0.1 Intellectual property theft 0.1 Strengths unique products 0.2 Small capital required 0.05 4 0.2 1 0.05 a rich marketing niche 0.15 3 0.45 2 0.30 extensive research 0.1 business managerial skills 0.1 established sources of raw materials 0.1 Weaknesses   The jewellery business is seasonal 0.1 Lack of funds 0.05 3 0.15 1 0.05 Reliant on the proprietors’ friends on social media 0.05 4 0.2 Excessive workload during peak seasons 0.05 customers may not trust online transactions 0.05 1 0.05 4 0.20 TOTAL 3.85 1.45 Figure 4: The Quantitative Strategic Planning Matrix (QSPM) From the above evaluation, it can be noted that the online store scored 3.85, while the physical one score 1.45. Therefore, online store was adopted as the overall business strategy Functional Level Strategies Marketing Strategies The business will open a 24-hour interactive website that can allow customers to place their orders. The website will display samples that will allow the customers to adjust their sizes, colour and materials, and view their selections in 3D before placing their orders. Promotion: The business will not do a lot of advertising, but will rely on the networks established through the social media to spread the word about the products. The business will instead look at building brand loyalty by offering their customers high quality products at a competitive price. Pricing The business will price their products at between $5 and $30. Discounts will be given on mass purchases. The prices will be computed automatically upon a customer’s selection of the material, size, and colour of their jewellery. The pricing will still allow the business a small margin that can allow it to remain competitive and sustainable. Place/Location The business will be done online. This will allow a wide reach and 24 hours operations. Operation Strategies The business will be run by two directors, who are the owners and the employees of the business. They will be responsible for making the jewellery products, packaging them, and delivering them to their clients. The designs will be done upon orders thus eliminating inventory costs. Management Strategies The business will be operated by two directors/partners. The partners have qualifications in management of business, and enjoy crafting bead jewellery. They both have a wide experience in making bead jewellery by hand. This experience will allow them to produce high quality jewellery that will attract a lot of customers. Financial Strategies The business requires little capital to start-up. The partners will contribute a total of $ 500 (each $250), which will help in buying beads and developing a website. Advertising will be done using social media, which is relatively inexpensive. 4. Strategy Implementation and Evaluation The development of Quantitative Strategic Planning Matrix (QSPM) helped on the selection of online selling as the main strategy for the business. The use of QSPM gave the business partners an objective rather than a subjective basis of developing a strategy (David, David, & David, 2009). The strategy will be evaluated by setting up small physical stores near colleges and malls to compare the effectiveness of the online store to the physical ones. 5. Summary This business will be a partnership between the two owners on the cover page. The business is about making bead jewellery using assorted materials such as glass, seeds, wood, and precious metal and selling them online through a network of friends. The business will develop high quality products that are priced competitively in order to attract consumer loyalty. References Brooksbank, R. (1999). The Theory and Practice of Marketing Planning in a Smaller Business. Marketing Intelligence & Planning Marketing Intelligence, 17(2), 78-91. David, F. (2007). Strategic Management: Cases and Concepts. New Jersey: Pearson Education. David, M. E., David, F. R., & David, F. R. (2009). The Quantitative Strategic Planning Matrix (QSPM) applied to a retail computer store. The Coastal Business Journal, 8(1), 42-52. Read More