Discuss about a new start-up company in any economy initially suffers from high business risks and also from the lack of proper investment?
Entrepreneurship is more vital, creative and dynamic sector than any other sector of the economy. However, during the past thirty years in most of the countries in this word, it has been observed that the creation of most of the new ventures by the start-up entrepreneurs has been failed. Entrepreneurship consists the process of planning, organizing, operating and risk bearing of a business venture. Starting a business by a new entrepreneur is not easy. The startup process of an entrepreneur requires the blend of courage, self-confidence and skills; on which the success and failure of an enterprise depend on (Anderson, 2012). In this whole world, there are many types of entrepreneurial business and the start-up processes of these different kinds of entrepreneurial business are different. To fill a dozen of business plans, any start-up entrepreneurs will have to bear enough risks. There are no start-up ideas that can expect a risk-free plan. There are innumerable barriers for the new ventures set up by the existing companies. Hence, for the success of new ventures set up there is a need for a blend of old and new organizational traits and a subtle mix of characteristics through the balancing acts. The companies have to keep those forces in equilibrium; otherwise the emerging business will flounder (Aras and Crowther, 2012). There are different risks related to start-up of a new entrepreneur such as:-
The investors of private companies always prefer to invest in the old, big and reputed companies than the new one to avoid the market risk.
Even the friends and relatives of the start-up entrepreneurs, don’t want to invest in these new ventures.
Investors always like to invest in the successful ventures than the start-up ventures.
Sometimes the start-up entrepreneurs have no idea about the goal of starting a new business or company (Barrow, Barrow and Brown, 2012).
Hence, the start-up entrepreneurs have to deal with deal with different kinds of issues while staring a new business.
Among the many start-up strategies, most of the times the entrepreneurs prefer to go for the Hungry start-up strategy which means creating new ventures with unlimited vision but limited resource. To get a start-up off the ground, a new company requires long hours and low pay. According to the Brew Dog’s story, there are six hungry start-up strategy choices that can be followed by any new entrepreneurs:-
Set goals: – First of all a new entrepreneur should set his goal before starting a new venture. That is the entrepreneur should first decide that what to produce, how to produce and for whom to produce.
Pick markets: – Secondly, the entrepreneurs should try to pick the market by developing different types of business strategies and through expanding their business beyond their located area (Venture Capital for Africa, 2012).
Raise capital: – To continue and expand the business, the entrepreneur should try to raise the capital by taking loans from the banks or selling share or debenture of their company to the public.
Build team: – To maintain a good working environment, after start-up a new venture, the entrepreneurs should build a team of efficient employees or workers.
Gain share: – The new entrepreneurs always try to gain the market share by adopting different types of marketing strategies or techniques.
Adapt to change: – The new entrepreneur should adopt some changes to compete with the other successful entrepreneurs in the world market.
To start-up a new venture, an entrepreneur should follow these six strategies and should also look for the big companies in which to train by following the hungry start-up strategy of big companies as the start-up training guides (Blogsdelagente.com, 2015).
As the new entrepreneurs are new in the market, they always try to follow the strategy or business guidelines as followed by the big successful entrepreneurs. This follow-up process by the new entrepreneurs is always treated as taking the training from the big entrepreneurs, and the business guidelines of the big entrepreneurs are also treated as the training guidelines (Bradford, Erickson and McDonald, 2012). To turn themselves into good start-up training grounds by adopting the capabilities that spur start-up success, the big companies has adopted the three strategies, such as:-
Exploit and explore:-
The big or the Aspiring entrepreneurs always try to provide training to a new organization such as American Express and IBM under Gerstner, Landmark Communication under Batten, etc. This refers to the Bushman’s work on the ambidextrous organization (Scarborough, 2012).
Design capability:-
Klebahn and the P&G design expert Claudia Kotchka have developed this idea in which the big company’s CEO choose to make an internal design-thinking capability that is a process that starts by observing the performing activities of the customers and it ends with the new products that are produced to meet their needs that depend on the iterative prototyping. From most of the people in the company, this capability will initially encounter the great resistance. The core business units are not able to meet their financial targets and as a result, more eager for new ideas that can put out the fire threatening to incinerate the careers of the new ventures. Hence, they will open the learning design thinking. If this design thinking can produce a turnaround by putting out the fire, then the other part of the organization will be driven by goal to find the path to apply the design thinking to their own organization or business (Bryson and Daniels, 2015).
Culture of Frugal Experimentation:-
This is the idea of Cook. According to Cook, innovation can become part of the everyone’s job with the use of right internal mechanisms and methodologies. There is a creation of idea of collaboration portal that allows the employees to suggest their new ideas and after receiving the feedbacks from others at intuiting, they should revise the ideas and get staffing and in this case there will be no intervention from the managers. Moreover, a design –thinking methodology is adopted by the Intuit, based on testing the new hypothesis after receiving the feedbacks on the inexpensive prototypes. From this feedback the big entrepreneurs to take the decisions that whether they will invest in new ideas or not (Burrow and Bosiljevac, 2012).
Three cases of the big companies to train the start up CEOS for expanding their new business:-
To judge the effective of the process where to start-up a new venture an entrepreneur is looking for the big companies in which to train by following the hungry start-up strategy of big companies as the start-up training guides, three cases of three companies can be considered where the big companies provide the training to start-up companies (DzÌÂwigoÅ‚, 2015).
Case-1: – The creation of Frugal Experimentation by Cook:-
According to Cook, the big companies should create a culture of the frugal experimentation which includes the innovation of new business strategies and to create a good working environment for the employees which helps to attract the new employees as well as the new ventures. There are several stories where the intuits have succeeded in inventing new business by creating a new innovative working environment to encourage the employees or the entrepreneurs to with the new business hypothesis or ideas and they usually test them by getting feedback from the customers (Hampton, 2001). In this case the following three things are beneficial for the start-up venture such as:-
The big company provides full liberalization to the trainee entrepreneurs to freely [use their inventive power.
It helps to create a culture of experimentations among the beginner entrepreneurs.
The new entrepreneurs can easily take the decision that whether they should pursue or cancel the innovation projects after analyzing the consumers’ feedback about the new intervention strategy (Runge, 2009).
Cook has suggested eight steps to generate the culture of innovation. These are as follows:-
Leaders’ vision: – The CEO’s of new start-up companies should have a new and innovative vision, that they cannot back to the old way and will always thinking about the new way.
Strategy by experiment: – The big companies encourage their trainee CEO’s to conduct the data base experiments by collecting data on the customers’ behavior (Robbins, 2004).
Leap-of-faith assumptions: – The trainee CEOs can make two or three hypothetical assumptions and can test them with customers in a very short period with a very low cost.
Numeric hypothesis: – The CEOs should estimate the number of new employees who will order the new products.
Experimental run: – Then an experiment should be run by the new employees to judge whether the numerical estimation is right or wrong.
Analysis of variances: – The CEOs should analyze the gap between the hypothesis and the actual result to take the new innovative strategy to reduce the gap (Wallis, 2012).
Surprise celebration: – There may be some surprised market signals that cannot be initially detected by the start-up companies. The CEO’s are trained to recognize these market surprises (Harvard Business Review, 2006).
Decision-making: – Finally a decision should be made by the executives, whether they want to pursue the idea or will go for the new ideas.
Case-2: – Kotchka’s Design Capability: How Procter and Gamble design the guru spurs growth:-
The CEO of Procter and Gamble (P&G, which is a big company) trained Kotchka before 2009 about the designing of new packaging system. According to P&G, it is the new, improved and attractive packaging system which attracts the new customers easily. P&G was mostly influenced by the effective designing strategy of the companies of Japan, especially the cosmetic companies. For example, attractive packaging design of L’Oreal Praise has helped to improve its sales (Hiebing, Cooper and Wehrenberg, 2012).
Case: 3:- AT&T manages the ambidextrous organization:-
Using the Tuchman’s term the leadership of Glenn Lurie of an AT&T Explore division helped this telecommunication giant to win a lucrative deal with the Apple’s iPhone. The trustworthiness, the wireless and innovative business strategy and speedy business decision making etc., are the main reason behind this exclusive relationship between Apple and AT&T (Hult, Pride and Ferrell, 2012).
Despite of successful imposition of the above mentioned three processes in case of different trainings in different companies, all these three strategies are not free from limitations. That is while providing the training to the new entrepreneurs, the big entrepreneurs sometimes faces different types of problems (Khachidze, 2012).
Problem related to the creation of Frugal Experimentation by Cook:-
Cook, in his frugal experimentation case study has suggested that the training of new entrepreneurs to start-up a new business should be facilitated by the big companies and they should be trained in such [a manner that ‘they can go for the new innovative ideas. However, practically there are many reputed big companies in this world, which are not succeeded to invent new successful innovative business strategies which causing a slowdown its business growth. As a result they cannot invent the new industries. Particularly in case of consumer technology companies such as Microsoft, Hewlett Packard, 3M, Toyota, and P&G etc. also face a common threat in case of product and process innovation. Moreover, this strategy depends on some hypothesis which cannot be true in reality. There is a gap between this hypothetical strategy and the reality (Kotler and Keller, 2012).
Problems related to the Kotchka’s Design Capability:-
The Kotchka’s Design Capability also suffers from some challenges in adopting the designing thinking, such as:-
Complacency: – Due to heavy success the big companies are very resistance to try the new things and hence cannot encourage the innovation process.
Risk aversion: – The big companies will always go for the validity and reliability process of the business strategy to avoid the risk and will not go for the new strategies which are not reliable (Reimer, Pohlmann and Schneider, 2012).
Functional silos:- In case of working with the cross functional groups such as finance, marketing and manufacturing, there arise a problem regarding the conflict in decision-making process of the business as each group looks at the problem from their own functional perspectives (Kyriazoglou, 2012).
Problem related to the AT&T management:-
This strategy includes the threat of breaking the trustworthiness and the leakage of information of one company to another one. Especially in case of Apple iPhone there was a high possibility of information leakage in the dealing process which may be harmful for the big companies. Moreover to compete with the competitors it needs fast and flexible business strategies.
Bearing the risks:-
Despite of these three strategies, the start-up ventures also suffers from the product risk, market risk, financial risk and the competitive risk.
Product Risk:-
Product risk is a risk associated with the uncertainty of creation of the product. Specially, in case of biotech firms, the producers are not sure about producing the drug which they are expecting to produce. Hence, the start-up companies related with this kind of sectors bear a huge product risk (Lind, 2012).
Market risk: – Sometimes the market develops differently as expected by the entrepreneurs. That is it may take a long time to develop and the cash runs out when the company is waiting for the customers (Raconteur, 2015).
People risk:-
The start-up companies may have some particular experts except whom; they cannot continue their production or operate their business.
Financial risk:-
Since the new entrepreneurs have very small idea about the financial management, they bear a huge risk due to their bad money management policy. Especially the new entrepreneurs in the financial sector suffer from bad lending policies which can sink them (Mariotti and Glackin, 2012).
Competitive risk: – Many new web-based companies started with the new products and they face a high competition in the market for existence of large companies in this field. The risk is more when they start with the small amount of capital and there is no way to lock its customers (Pride, Hughes and Kapoor, 2012).
Two cultures problem:-
There also exist some risks associated with the difference in culture between the big successful ventures and the start-up ventures. This is known as the two-culture problem.
The existing ventures are account for their bulk of their revenues. This includes a finely tuned organizational system support for the current customers and the technologies. They operate under a predictable business environment and the executive goals to hold the stability, efficiency and in the incremental growth process (McGovern and Polk, 2006).
On the other hand, the start-up ventures or the new ventures are different in their culture as some of them are born on the basis of the peripherals division of companies’ establishment. As a result their operation and the financial model become same as the existing business. Hence, no innovation can take place in this case. These companies may only be developed only if the executives try to develop new strategies and business applications. To achieve the success in future they need to adopt the new organizational environment as there is high level of uncertainty associated with the start-up ventures (McKeever, 2012).
These kinds of distinctive features between these two types of entrepreneurs also represent three challenges in this case.
Firstly, the start-up business suffers from the lack of hard data and also from the undependable financial forecast. There are some common large errors.
Secondly, the new business requires the innovation process and the innovation process requires the mavericks. Most of the mavericks cannot distinguish between the bad and the good ideas. Hence, there arises a dilemma problem (Nyjournalofbooks.com, 2015).
Thirdly, though the start-up entrepreneurs looking for big companies for training, there is a poor fit between the new business and the old system. Despite the effort of new start-up ventures to innovate the new business strategy, the old big firms still concentrate on the old strategies, especially in case of budget and human resource management (Potter, 2012).
Hence, from the above analysis it can be said that a new start-up company in any economy initially suffers from high business risks and also from the lack of proper investment. Hence, collaboration is needed among the start-up ventures and the big existing ventures, since it is thought that the new start-up ventures have more marketing or business experience than the new one. Hence, it will be possible for the new one to adopt the appropriate and flexible marketing strategies by adopting the training from the new one or following the marketing or the business strategy of the old and big one. There are also some observed cases where adopting the training by the new ventures from the old ventures have provided a fruitful result in the business economy and also for the future growing up process of the new ventures. These types of strategies modified the system in such a manner that there should be less bias in the new business strategy.
Besides, some other strategies should be followed by the start-up ventures, such as:-
Be open to the partnership: – The start-up ventures should openly or freely exchange the market strategy with the big ventures which is initially acted as a partner with this new venture. There should be a good relationship and trust worthiness among them.
Understanding the environment: – Before starting up a new business the start-up venture should well understand the environment of that economic market i.e. the lifestyle and the geography of the customer, the requirements of the customers and the barriers to the market entry from the product. This gives a competitive edge to the new ventures to compete with the existing ones.
Target the large ‘unappealing market: – By unappealing the market means targeting the market which has been neglected previously by other companies providing the same goods and services. This will help the new start-up venture to establish its business easily in that market as in that case it will face less competition than other region. This introduction of new products and new business strategies now can easily attract the new customers which is beneficial for the firm.
The most essential thing, on which the start-up entrepreneurs should concentrate to adopt the hungry strategy, is the goal of the new venture. However, it is known to them that there are huge problem related to the training procedure of the new entrepreneurs under the big entrepreneurs, they still continue to follow the big companies for the future benefits i.e. to achieve their goal in future. Hence, rather than concentrating on the short-term goals, the start-up entrepreneurs should concentrate on the long-term goals which will help to attract the talented people and the new customers and also the new investors with huge capital which will lead to a sustainable long-term goal in future.
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The “BeautiGlow” is a company that is situated in London, United Kingdom. This company is a cosmetics and body-care product manufacturing company. Two popular brands of this company are “Attitude” for its cosmetic products and “Pride” for its body care range. This company has started its journey from the year 1960. Since then, it has been successfully serving all the U.K people. It has begun its journey by selling only body care products. This company has done intensive research and development before launching a new product range in the market. The main aim of the company behind this research is to offer its customer a high quality product. From the year 1990, this company has started to produce cosmetics products also. Today, this company becomes one of the most popular cosmetic and body care brands of the United Kingdom (Abrams, 2003). From 2006, this company started to expand their business beyond the geographical boundaries of United Kingdom. At present, this company is operating in India, China, Singapore and Malaysia. The name of the person who has been with the company from its beginning is Mrs. Ema Watson. Before starting this business, he was in another body care manufacturing company as an assistant manager. She had ten years experience in this industry which she had successfully utilized to set up her own business (Abrams and Vallone, 2008). The main intention of her life is to offer a wide variety of products without compromising the product quality as she believes that the brand value of a company depend mainly on the quality of the product that it provides to the consumer. Ema Watson had started this business with the capital amount of 500 pounds in her residence. Gradually she expanded this company and now about 3000 people are working in this company. The annual turnover of this company is 100000 pound. The head quarter of this company is located in the Central London. This company has almost 30 outlets all over the United Kingdom and four sub-branch in other countries. The mission of the company is to launch a new perfume brand “Essence” suitable for both men and women. This company aims to fulfil all the requirements of both men and women for their daily purpose and also for any occasional purpose. Every individual especially woman dreams that they will be look smart and beautiful and elegant all the time. The “BeutiGlow” helps these ladies with their skin care, body care, cosmetics range (Bates and Basch, 2003). The new addition to these ranges is a variety of perfume that is going to launch on the market within a very short time. This company offers its range of product to the consumer through both offline and online. The consumer can buy products either from the retail stores or from the company website. This company offers free home delivery and cash on delivery option to the customers if they buy from the company website. This company also runs a customer service centre to help the customers to select appropriate products for their skin and body. All the products are produced in the own manufacturing units using different herbal products. All the herbal products are grown in company’s firm. All the products and also all the raw material are produced under continuous observation to ensure the overall quality. This company is run through the sole entrepreneurship, and it is ISO certified company (Brown, 2004).
The “BeautiGlow” is a body care, cosmetics product manufacturing company, and now it prepares to produce a range of perfume. Therefore, it can be said confidently that the potential customer of this company will be mainly women between the ages of 16 to 75. The female citizen of the United Kingdom is very popular for their stylish look as well as glowing, clear skin. The United Kingdom is a very developed country. Most of the urban ladies of U.K are working woman. They do not concern that much about the pricing of the products rather they are very much concerned about the quality of the product. They are very much concerned about their body, skin and how they look. They prefer to spend some time in personal care. A recent trend that emerges in the young generation people is to maintain their youthful looks as much as possible (Brush et al., 2004). Also, this female segment of the entire population likes to use appropriate perfumes when they go outside of the home. This female section is the targeted audience of this company as they always like to use high quality branded body and skin care products, cosmetics and perfume(Fisher and Shelly, 2002). Since this company is already popular for its existing brands, therefore the new perfume brand ”essence” is expected to win the people’s preferences within a very short period. The preference and the skin types of an individual depend on the region or the society in which the individuals live. Therefore the preference and the skin nature vary country wise. . In the beginning, this company produced only for the U.K people. The rationale behind this is that the lady owner of this company did not have that amount of money to produce products that will meet the preferences of different people (Fullen, 2005). However, after the year 2006, this company started to produce cosmetics and body care products not only for the U.K people but also for the citizens of many Asian countries. Now this company will start to produce perfumes for the people of different countries and different age group. Now this company becomes a multinational company literally whose headquarter, and all the manufacturing units are in London and some sub-branch in other Asian countries. The demand for the skin care and body care remain high all the time. Therefore, in the United Kingdom many companies are producing these types’ products and try to acquire a strong market position in the U.K market (Fullen, 2005). Hence, this company often has to face many challenges from its competitor. The main competitors of this company in the U.K market are- philosophy skin care, Clarins, Shiseido, Kiko Milano, L’occitane en Provence, Lush, Babor. These companies are also producing high quality cosmetics products and body care products. Among these companies Babor is well known for its anti-aging cream and Lush is a popular brand of cosmetics product. L’occitane is well known for its luxurious fragrances. However, these companies except philosophy skin care only have an expensive product range that may not be affordable all the class. On the other hand, the “beautiGlow” manufactures both moderate and expensive product range so that all income class can afford their product. This is the main reason for its popularity (Hirsch, 2005). This company will produce its perfume range for all the people. Therefore, it is expected that this company will be able to acquire high profit and also the popularity from their new ranges (Kapterev, 2011).
The below table is used to show the cost and price of different skin and body care products offered by the “BeautiGlow” company (Kingaard, 2007).
SKINCARE PRODUCTS:
|
PRODUCT NAME |
COST(£)(0.25oz) |
PRICE(£)(0.25oz) |
|
FAIR & BRIGHT CREAM |
36 |
40 |
|
FAIR & BRIGHT LOTION |
38 |
40 |
|
FAIR & BRIGHT GEL |
23 |
25 |
|
TOUCH N GLOW |
40 |
45 |
|
FAIRNESS PACK |
70 |
80 |
|
REMOVE TAN GEL |
67 |
75 |
|
SKIN WHITENING GEL |
60 |
65 |
|
SKIN WHITENING LOTION |
100 |
120 |
|
FRESH LOOK FEASHWASH |
30 |
35 |
|
SKIN ERASER |
20 |
25 |
|
SKIN ERASER LIQUID |
20 |
25 |
|
FACECLEAN LOTION |
50 |
60 |
|
ROSE TONNER |
20 |
22 |
|
ALOEVERA TONNER |
20 |
22 |
|
ORANGE TONNER |
20 |
22 |
|
CLEAR & CLEAN |
40 |
45 |
|
CLEAR OFF |
30 |
35 |
|
CLEAR GEL |
50 |
60 |
|
DARK CIRCLE REMONING CREAM |
60 |
65 |
|
SUN PROTECTION SOLUTION |
100 |
120 |
|
SUN PROTECTION GEL |
100 |
120 |
|
STOP AGE LOTION |
200 |
250 |
|
BB CREAM |
500 |
550 |
BODY CARE PRODUCTS:
|
PRODUCT NAME |
COST(£)(8 OZ) |
PRICE(£)(8OZ) |
|
BODY MOISTURISERS |
500 |
550 |
|
BODY CLEANSERS |
330 |
350 |
|
BODY SPA |
300 |
350 |
|
HANDS AND FEET |
120 |
130 |
|
FULL BODY SCRUBBER |
120 |
125 |
|
BODY MILK |
450 |
500 |
|
SHOWER GEL |
150 |
200 |
|
BODY MASSAGE OIL |
100 |
150 |
COSMETICS PRODUCTS:
|
PRODUCT NAME |
COST(£) |
PRICE(£) |
|
EYE MASKARA |
15 |
20 |
|
KHOL LINER |
2.00 |
5.00 |
|
DARK MASCARA |
5.00 |
7.00 |
|
EYE PENCIL |
4.00 |
6.00 |
|
GEL EYE LINER |
5.00 |
9.00 |
|
EYE SHADOE PALETTE |
20 |
25 |
|
ORGANIC LIP BALM |
10 |
12 |
|
LIPSTICK |
15 |
20 |
|
LIPGEL |
15 |
25 |
|
NAILCOLOR |
7.00 |
10.00 |
|
MAKEUP FOUNDATION |
50 |
65 |
|
MAKE UP CREAME |
70 |
80 |
ESTIMATED FUTURE SALE AMOUNT:
The retail market for personal care and cosmetics product is in pink in all over the world. It is likely to grow in the next financial budget by 16%. Therefore, it is expected that the “BeautiGlow” will earn enough profit in the next few years (Linsenman and Kingaard, 2011). The average sale of other companies producing almost the same product range is £2.5 billion per year. Almost every company has experienced an increase in sales of 5 percent over last few years. According to the report published by the beauty product industry of the United Kingdom, the consumers of the United Kingdom spend about 8.9 billion pounds each year on the purchase of personal care products and this amount is increasing continuously. This “Beautiglow” company also will launch its new product essence”. Therefore, it can be expected that this product launch will help the company to increase its total sale amount by some significant amount. According to the market research conducted by the “BeautiGlow” company prior to the launch of new product range, it is forecasted that the annual sale of this country will increase to 3.5 million. Moreover, the demand for the cosmetics products and the other product is also increasing in the Asian countries because of its high quality but the affordable price. This increasing demand also expected to raise the sale amount of this company in the Asian countries (Longenecker, 2008).
The marketing plan of this company to make the people aware of the brand of this company is discussed below:
1) To maintain the strong market position, this company decides to devote a significant amount on the research and development process so that the company will launch a new product after a certain time interval continuously (McKeever, 2012).
2) The company will hire an efficient, talented market research team so that the team will able to understand the change of preference of the customers of this company and also the requirement of the potential customer of this company. This continuous evaluation will help the company to produce products according to the customers’ requirement more accurately (Press, 2012).
3) The company will check the quality of its product more consciously as any disparity in the promised quality will hamper the brand value of the company.
4) The company will use popular persons in their advertisement and the product launch campaign programme (Reuvid, 2009).
5) The company will publish attractive advertisement with positive feedback from some popular artist about its brand in the local newspaper, magazine and local TV channel. This will help the company to reach to more number of customers.
6) The company will open more outlets in the populated area (Rogoff, 2004).
The”BeautiGlow” company offers a wide variety of body care and cosmetics products to its customer and intends to launch its perfume section “Essence” within a short time period. The operation of this company includes Herbal Cultivation, research and development of product, manufacture, quality checking process, packaging and distribution to the retail shops. Another service that should be included in the business operation of this company is customer service centre. The operation department of this company currently employs approximately 1000 people in its head office and other sub-branch, firms, manufacturing units and the exclusive retail centre of this company. This team of worker put a great effort to operate the entire process successfully (Sahlman, 2008). The manufacturing units and the warehouse of this company are so located that the research and development team and also the marketing team of this company can easily connected with each other. Moreover, this company also has almost 50 logistic centres in the United Kingdom and the Asian countries in which it is operating. All the employees of this company are especially skilled so that they can the best effort for the betterment of this company. The products offered by this company are a wide range of skin care product, body care product, cosmetics products, and essential oils. The new addition to this list is a range of perfumes. The variety of skin care and body care of this company helps the customer to nourish, rejuvenate, repair the damaged skin and also help them to keep their youthful looking. Beauty and skin care are the opposite sides of the same coin. A good skin helps an individual to be more confident. Moreover, the cosmetics and the fragrances which the company plans to provide within a couple of time helps and individual to refresh, remove all the work stress and mental stress. The cosmetic products become the part of daily life of a woman. It gives the woman an elegant, beautiful and decent look. Along with these products, this company offers various kinds of services to its customers. The skin type and the colour complexion of an individual vary from other. Sometimes consumers become very confused about which product will be suitable best for their skin. Moreover, sometimes the consumers face some skin problem, and they do not know that how they will resolve the problem. The company has some customer service centre around the United Kingdom and also in the Asia countries where a team of experts check the actual condition of the individual and advice the product range accordingly. This company also provides solution online. The company has free home delivery service and cash on delivery service also. People working in this organization are highly skilled. Since this company is a skin care, cosmetics and perfume manufacturing company, therefore the entire production process needs especially skilled worker. Each section of this company needs workers with different skill as the work process of one segment is totally different from the other section. All the employees in this company are dynamic, flexible and can able to handle challenges (Sloan and Sloan, 2005).
Income:
The following table depicts the income of the company from different sources in the financial year 2014-15.
|
Retail Sales |
£ 80,000 billion |
|
Wholesale |
£ 40,000 billion |
|
Catalogue and Internet sales |
£ 20,000 billion |
|
Total |
£1,40,000 billion |
According to the above table, this company has got the highest income from the retail sales. The wholesale amount of this company is 40,000 billion pound that is moderate. However, the company could not gain much through the online sale of their product. Therefore, it can be suggested that the company should emphasize on how they can increase their online selling as modern generation prefers to buy products through online than visiting a retail shop (Small Business – Chron.com, 2015).
Expense:
Therefore, it can be said the total expenditure is less than the income of the company. Therefore, the company has gained in the last financial year.
|
Herbal Cultivation cost |
£4000 billion |
|
Manufacturing Cost |
£ 20,000 billion |
|
Storage cost |
£ 5000 billion |
|
Quality Checking cost |
£10,000 billion |
|
Advertisement Cost |
£6000 billion |
|
Employee cost |
£ 40,000 billion |
|
Transportation cost |
£ 12000 billion |
|
Rental cost |
£3000 billion |
|
Total Cost |
£110000 billion |
FINANCIAL FORECAST
|
|
TOTAL SALES |
GROWTH |
MARKET SHARE |
|
SKIN CARE |
£ 30,000 |
3.50% |
30.00% |
|
COSMETICS |
£ 70,000 |
2.80% |
40.00% |
|
BODY CARE |
£ 40,000 |
1.40% |
30.00% |
|
TOTAL |
£1,40,000 |
4.00% |
100.00% |
The above table shows the data of the body care and cosmetics product manufacturing company”BeautiGrow” for the year 2014-2015. According to the data last year this company can sell its skin care product range worth of 30,000 billion pound and successfully acquire 30% market share of the total Skincare market in the U.S economy and also in the Asian market. The company sold 70,000 billion pound cosmetics product and 40,000 billion pound body care products last year. The market share of the company in these two product range is 40% and 30% respectively. It can be said from the above data that this company has experienced approximately 3.50% growth in skin care products, 2.80% growth in cosmetics products and 1.40% growth in the body care range (Timacheff and Rand, 2001). The overall market growth of this company in the last year was 4.40%. Therefore, it can be said that the company is in good financial condition, and the brand value of this company in the U.S market and the Asia market is increasing continuously. According to the survey conducted by this company, there is a good market for perfume also in the U.K. Therefore the company is likely to earn good profits by launching its all new perfume range in the U.S market as the company is already popular for its other high quality brand (Strauss, 2011).
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