BusinessPlan Part II: A competitive analysis and strategic assessment
Businessplan part II: competitiveanalysis and strategic assessment
Allentrepreneurial ventures face competition. Even if you stand alone inthe city, you face competition from other enterprises where customersprefer to spend their money instead of with you. With the increase intechnological advancement and use of the internet to locate where tobuy goods and services, businesses are not only competingdomestically but also globally. Potential competitors can bedescribed as companies that deal with substitute products ororganization that deal in similar products which make your ownredundant.
Theproposed venture (Cookies Café) is aimed at providing snacks,leisure, and recreational facilities and in that case, we expect toface competition from fancy bakeries, restaurants, and other fastfood franchises. Some of these companies command a large market shareand will pose a significant barrier to entry for our business. Someof the conditions that would place these competitors at a superiorbusiness position would be economies of scale and having sole controlover raw materials and supply channels. Economies of scale enablegreat entrepreneurial ventures to enjoy substantial discounts whichplace them in a better position to undercut their prices which scareaway new entrants into the market. These existing companies also havesole control over the primary raw materials or have made long-termcontracts with the manufacturers which restrain new businesses fromaccessing them. Other factors that would hinder Cookies Café fromgaining a competitive advantage would be presence loyal customers whoare hard to change, inadequate start-up capital which would boost ourability to compete, inadequate technology and inadequately trainedemployees among other factors (Porter, 1998). Nonetheless, we aredetermined to use whatever available strategies and marketingtechniques to place our business in a better position within theindustry and compete favorably.
The primarytarget for our products will be the young generation who have a hugecraving for fast food. This implies that to lure new them to ourcompany we need to be located strategically and exposed to theprimary market. Positioning our branches to areas near learninginstitutions, playing grounds and regions where the majority of theyouths and children crowd would give us an opportunity to attract newcustomers. We are also determined to use aggressive marketingcampaigns to make potential customers aware of our presence.Advertising will be done over and over via the media, posters, andbillboards to ensure that we reach a large geographical area.However, advertising does not necessarily convince people to buy fromus. In that case, we shall employ the use of free samples and gifts.Everybody likes free services and gifts. This strategy will lurecustomers to our business. Cookies Café will offer a free month ofservices which will enable the market taste our products and servicesand distinguish them with those of our competitors. We shall alsodevise a method through which we can offer after sales services. Thismore likely to be used to retain our customers even after the freemonth of services are over. “Romancing our customers” will beanother strategy we shall use to steal customers from ourcompetitors. This will involve sweet- talking customers out of thebusinesses they regularly deal with by letting them know our concernfor them and how it would pain us if they were disappointed by thosethey engaged in business with (Porter, 1998).
The CookiesCafé will also employ the use of marketing techniques to attract newcustomers. Such tactics include attraction tactics. Here our primarystrategy will be differentiating our products to make them unique anddistinguishable from those of our competitors. Our principal form ofdifferentiation will be unique packaging with attractive colors.Products that stand out in any market have a tendency of attracting agood number of customers. Another tactic would be developing newchannels of sale where the primary channels are flooded. Lastly, wewill be able to network through attending trade fairs and exhibitionsand being involved in local business associations and events. Closerinvolvement in the local society upholds the business’ image. Itwill also give us the opportunity to interact with the customers andunderstand their needs which will enable us to shape our products inagreement with the demand (Porter, 1998).
Therelative position of any business venture within its industry is anessential determinant of its performance. Strategic positioning willfocus on making our company competitive in the future whileconsidering the dynamic business environment in the food industry. Itwill also aim at ensuring continuity and survival of our organizationthrough differentiating our products from those of the competitors’. Various factors will be considered while determining the position ofour organization within the food industry. They include changesbrought about by technological advancement, strengths and interestsof our organizations, market trends and developments and competitiveopportunities among others. The Cookies Café has several strategicpositioning openings which post incredible opportunities bothinternally and externally. They include competitive positioning,demographic-related positioning, value positioning and qualitypositioning among others.
Competitivepositioning will focus on placing the Cookies Café on a leadershipposition within the industry to enable us to gain a competitiveadvantage. This kind of strategic positioning will be used todemonstrate how superior our products and services are compared tothose of our competitors. It will also be a major counterstrategy inaltering the image our opponents wish to portray and put ourorganization in that top position. A leadership position will providean opportunity to expand, increase niches for new products andservices and also ensure global optimization and relocation ofcritical functions. As we grow and move global, we shall takeadvantage of all chances to diversify our operations to maintain ourcompetitive response. Several internal opportunities will alsodevelop. For instance, the ability to provide our employees withcareer training for their professional development and opportunitiesto enhance networks and communication facilities within our companyamong others (Hooley & Saunders, 1993).
The CookiesCafé will use several demographic factors such as age and sex of thetarget population to position ourselves within the market. We shallproduce a new type of fries to the market such as cookies made frombanana, sandwiches, and some new blend sauces to appeal to certainages and genders within our market. This kind of positioning willprovide our company with an opportunity to command a larger marketshare and increased sales. It will also provide opportunities todevelop new technologies which aid in designing products that bestserves the consumer needs (Hooley & Saunders, 1993).
Ourentrepreneurial venture will employ value positioning strategies tosell our products and services at a price lower than the industryaverage. This approach is geared towards appealing to consumers whoare sensitive to price changes. It will place our company at asuperior position within the industry which will enable us gainstakeholders confidence and ensure excellence in investor relations.At this post, our company will also be able to convert all othermarket opportunities to a sustainable organizational growth (Hooley &Saunders, 1993).
Qualitypositioning strategies will focus on ensuring that the Cookies Caféstand out in the quality of products and services offered on themarket. This implies that we shall be distinguished for our highestquality products possible. Quality products will form the corecomponent of our competence within the food industry. We will bedefined as quality leaders. Quality positioning will also ensureoperation agility. This implies that our business will have thecapability to deliver efficiently within the fast changing market. Itwill also provide us with an opportunity to charge prices above theindustry averages and still retain our customers hence aggravatedprofit margins. With increased profits, our company will have achance to motivate employees through increased salaries and acquirebetter expertise and new technologies which are good for our businessoperations (Hooley & Saunders, 1993).
Just likeany other business within the food industry, our Cookies Café isexpected to face some risks which may originate from the internal orexternal sources. Nonetheless, we have been prepared to face theserisks and have devised some strategies to mitigate them. The risks weexpect to face include operational risks, financial risks,reputational risks, political shocks, market risks and risksassociated with technological advancement among others.
Operationalrisks result from sudden failure of an organization’s dailyoperations. It could emerge from technical problems such as serveroverload, equipment breakdown or failure of employees. Operationalrisks could also stem from outside events beyond our control such asnational calamities, power failures or even problems with ourwebsites hosts (Foster, 2007).
Financialrisks result from unexpected financial loss. It could be as a resultof theft, sabotage or delayed payments from our major clients.Sovereign debts could also make us vulnerable to financial risk andin particular a lot of short term liabilities whose due datesconverge around one point (Foster, 2007).
No matterwhat type of an industry an organization operates in, reputation iseverything. It upholds the image of the company and serves as anattraction for potential customers. In cases where our reputation isdamaged, we might face a loss of revenues as our clients will becomewary of engaging in business with us. We may also suffer from thedeparture of our key employees who are hard to find an excellentreplacement. Reputational risk is like a silent epidemic that killsany business slowly. It may result from the misconduct of employeesor managers. It could also source from our competitors who takedamaging our reputation as a competition strategy (Foster, 2007).
Politicalshocks are known to have enormous negative impacts on enterprises’performance. Political stability brings peace within the businessenvironment and promotes confidence in investing in new capital oreven new markets. Social unrest causes mayhem and disruption whichmay results in damages that an organization may not survive.
Marketrisks also known as systemic risks arises from the fluctuation ofreturns caused by macroeconomic factors such as price instability,changes in demand and supply and inflation among others. The best wayto hedge against this risk is by diversifying our operations.
The worldis dynamic and every day new technological advancements are made. Insome cases our strategies may become ineffective as a result oftechnological changes or entry of powerful competitors. However, theCookies Café will heavily invest in research and development toensure our technologies do not go obsolete, and we always remainabreast in matters concerning use of new technologies (Foster, 2007)
There arevarious strategies that the Cookies Café will employ in mitigatingthe above-stated risks. They include diversification, risk buffering,risk transference, risk avoidance and installing a data- gatheringsystem with the ability to quantify risks and send an alarm beforethe risks become an actual menace (Foster, 2007).
There is abroad range of sources of funding for any startup business. Some ofthem include loans from financial and non-financial institutions,donor funding, and support from family and friends. Businessincubators can also be regarded as sources of capital for anenterprise. These are business “accelerators” who offer capitalsupport to new ventures. Personal investments and partnerships arealso sources of capital for a new entrepreneurial venture. TheCookies Café will operate as a partnership. This implies that thebest source of funding for our venture will be personal contributionsfrom the key stakeholders. However, in cases of crises we shallobtain loans from financial institution to cushion against anychallenges.
Using theBusiness Plan Financial package, we analyzed the projections on theoperating costs and the benefits expected over the next five years.Business ratios have also been calculated and the breakeven pointsdetermined. From the balance sheet, the total net worth of theCookies Café was found to be $190,295 for the first quarter and$369,200 for the second quarter and so on. If the adopted strategiesare followed strictly, the Cookies Café will grow and expand rapidlywithin the first five years of business.
From theprojected results, it is clear that unless unforeseen circumstancesattack the proposed entrepreneurial venture, it is a very profitableopportunity. We will ensure that our management and employees remainfocused to achieve the laid down goals and make the Cookies Café goglobal.
Foster,T. (2007). Managementaccounting risk and control strategy.Oxford: Elsevier.
Hooley,G. & Saunders, J. (1993). Competitivepositioning.New York: Prentice Hall.
Porter,M. (1998).Competitive Strategy.New York: Free Press