Business Plan for Online Shop - Coursework Example

Running head: BUSINESS PLAN Business plan for online shop ‘In Heart’ [Supervisor’s Business plan for online shop ‘In Heart’ SECTION 1- Strategic Analysis of the business macro environment: PESTEL Framework and Analysis: The work of a PESTEL framework is to provide the top management with the tools to identify various macro-environmental factors that can have an effect on the business strategies and to monitor which environmental factors can influence the growth of the company and increase organizational performance in the near future (Porter 1985). Step 1 Macro variables relevant to online business environment: Following are the list of macro variables that may be of relevance in handling the business strategies. Entrance regulation The enlargement of the European Union nations. Inflation Ageing population Shifts in social trends Technological advancement Attitude towards environment. License of a website Step 2 Implications and Impact: PESTEL Analysis Political Factor The entry regulations in creating an online business are limited which results in saving money for the organization. The enlargement of the European Union nations helps in the development of the business to expand in the member countries. An online shop can easily trade with these countries because there are limited international trade regulations and it can have a positive impact on the growth of an online business (Porter 1985). Economic Factor Inflation affects the online business because buying the product online includes various costs associated with the product, which includes shipment cost and possibility of theft in online payments. The decrease in the buying power will have a negative effect in purchasing the product online because people would be reluctant to pay online due to the increased prices (Aaker and McLoughlin 2010). Social Factor The ageing population is increasing in the United Kingdom and due to which the organizations are producing the products that caters the market for old people. This indicates the social change from organization point of view (Aaker and McLoughlin 2010). Technological Factor Coming up with new products all the time gives a competitive edge and it leads in the innovation, which results in the growth of the company. Every product contributes an impact towards the environment. If the product of an online shop creates a good impact then it will be appreciated by the customers (Porter 1985). Legal Factor: ‘In heart’ online shop should approach towards the license of a website in a legal manner. Forming an online shop in today’s world can be achieved for a few costs unlike the franchises that need million dollars for a startup investment (Porter 1985). Step 3: Scenario Analysis In the future it is expected that many of the businesses would be transformed online because of the heavy investment associated with the opening of franchises. The concept of ‘In Heart’ online shop would target a market of millions of audience and attract the people toward its product in the span of five years if factors favor the online businesses (McLaughlin 2010). Strategy Creation: The ‘In heart’ online shop should me more focused towards differentiating its designer product from its competitors because the online shops will tend to increase in number and the products would lack in differentiation (Fox 2010). The other strategy is to maintain their website in a unique way and to make it user friendly that it helps in encouraging repeat purchases. The strategy should be based on ‘just in time’ deliveries which will ensure the shipping of best quality products. Successful e-business plans focuses on competitive pricing and up to date web technologies to increase sales. ‘In heart’ online shop should follow these approaches in order to expand its growth in future. SECTION 2- Strategic analysis of internal environment: Value Chain Approach: Porter (1985) has described the value chain by distinguishing primary activities and support activities. Primary activities are related to the creation and delivery of the product or service. In inbound logistics, the ‘In heart’ online shop should develop a good relationship with its suppliers and the designers who would design the clothes. This includes the transportation of raw materials to the apparel factories tailored by the designer (Porter 1985). In the second phase of operations, the raw material is converted in to a finished product and through outbound logistics the product would be carried to the distribution centers. Then the advertisements would promote the brand along with the designers. The customer service call centers would then take the orders from the customers (Bischoff 2011). In defining the support activities, procurement of material plays important role in developing an online shop. Implementing a program would ensure the compatibility of the materials from the suppliers. Technology development would ensure the advanced supply chain management to remain competitive in the market. The infrastructure of online shop should adhere to their corporate values and focus on informal and flexible business structure. Hiring should be based on equal employment opportunity (Porter 1985). Evaluation of functional areas: The manufacturing department will be outsourced in the online shop. The suppliers would be given the tailored samples made by the ‘In heart’ shop designers in order to manufacture. The service center would receive the orders through telephone calls and emails. The software engineering department would update the website for latest designs and products. Performance analysis: ‘In heart’ online shop would be meeting the customer’s satisfaction in order to achieve high performance and desire for repeat purchase. Approach would be based on individual performance rather than the departmental performance. In maintaining high growth of the company we will ensure the employee’s motivations should be kept high (Rossett 2009). SECTION 3 - EVALUATION of the strategic fit: Environmental Impact: ‘In heart’ online shop would have no affect on the environment in terms of pollution, but it certainly will cause an impact socially in the lives of the people. ‘In heart’ online should would influence their lives in a positive manner. Strategic Capability Profile: An interview would be conducted from different managers and staff members to distinguish their characteristics which will reflect their knowledge, attitudes, values and skills in the workplace. This will analyze their capability and their performance level (Silver 2009). SWOT/TOWS Matrix: Key Internal Factors Weight Rating Weighted Score Strengths 1. Wide reach of the business 0.20 4 0.80 2. Lower cost maintenance 0.20 4 0.80 3. Purchase price is lesser than offline shop 0.20 4 0.80 4. Building relationship with customer is easy 0.10 4 0.40 5. Distribution cost is low 0.05 4 0.20 Weaknesses 1. No franchise to accept returns 0.10 2 0.20 2. Less recognition of brand 0.10 2 0.20 3. Difficult in responding to the demand 0.05 2 0.10 TOTAL 1.00 3.60 OPPORTUNITIES WEIGHT RATING WEIGHTED AVERAGE 1. Higher traffic will enable repeat purchase 0.20 2 0.40 2. Increased use of shopping through internet 0.20 3 0.60 THREATS 1. Established retail business can compete because of low cost. 0.20 2 0.40 2. Buyer are reluctant to buy over internet 0.20 2 0.20 3. Larger firms can cut prices to gain online market share 0.20 3 0.60 TOTAL 1.00 2.20 Conclusion and Evaluation: ‘In heart’ online shop has greater opportunities to start as an online shop because there are limited restrictions for the businesses that are opening online and there are few external environmental that could affect the performance of the company. Although there are possibilities of threat from the existing online shops which are operating since years which might cause a hurdle, but the overall results suggests that the chances are favorable. References Aaker, D. & McLaughlin, D., 2010. Strategic Market Management: Global Perspectives. London: John Wiley and Sons. Bischoff, A., 2011. Porters Value Chain and the REA Analysis as an Accounting Information System. New York: GRIN Verlag. Fox, V., 2010. Marketing in the Age of Google: Your Online Strategy Is Your Business Strategy. New Jersey: John Wiley and Sons. Porter, M., 1985. Competitive Advantage: Creating and Sustaining Superior Performance : with a new introduction. New York: Simon and Schuster. Rossett, A., 2009. First Things Fast: A Handbook for Performance Analysis. San Francisco: John Wiley and Sons. Silver, D., 2009. The Social Network Business Plan: 18 Strategies That Will Create Great Wealth. New Jersey: John Wiley and Sons. Read More