Business Plan For Sophisticated Market: A New Retail Business

Discussion Process of the New Venture

The main purpose of this assessment is to develop a business plan for starting a new retail business which will be providing a variety of products and will operate as a supermarket. The name of the supermarket will be Sophisticated Market. The assessment will also be containing a marketing plan which will focus on how to promote the products which are offered by the business and also will be showing the financial plan of the business for starting the business (Scarborough 2016). The financial plan and the marketing plan as per the decision of the management will be shown in the next few paragraphs.

Discussion Process of the New Venture

The business plan which is to be developed is a retail business which will be providing a variety of products to the customers and the will be a supermarket form of business (Burns and Dewhurst 2016). The name of the supermarket as per the decision of the management will be Sophisticated Supermarket. The management of the business has decided to register the business as a company so that funds can be procured easily from the issue of shares in present case scenario and also will be helpful when the business further wants to expand in the market.

The reason due to which the founders of the business wants to set up a company form of business and not a partnership or sole proprietorship is because a company form of business enjoys legal existence and can easily draw required funds from the market with issue of shares or even take loans (Schaper et al. 2014). As per the plan of the management, the business will be opening a single shop and focus all the resources in that particular shop to effectively attract customers and also build up a brand name for the shop. The management of the business has decided to offer goods which are mostly used by households in day to day life such as utensils, tools, beverages, FMG products, grocery foods and vegetables. detergents and similar other products (Ross and Byrd 2015).

As per the plan which is developed by the management, the initial fund requirements and start-up costs will be meet with the issue of shares, loan from banks and contribution from the founders of the company. The management expects that the business will be able to procure loans and equity capital which will cover all the initial costs of the business.

Background and Industry Structure

Background and Industry Structure

The main reason for opening a supermarket is the recent success of such markets and popularity of the same among the consumers. Such markets provide a one destination stop for a variety of products and thus have the preference of the consumers. The only problem associated with such a business is threat of competition in the industry which is immense (Schneider and Spieth 2013). However, if a business can survive the extreme competition in the industry and establish itself constant revenue can be earned by the business. The industry is competitive in nature but the same is also at the same time growing as well.

The management of the supermarket will be comprised by the top-level management who will be responsible for the overall management of the business and the founders of Sophisticated market will be on the board of directors and the directors will responsible for all important decisions, policy framing of the business. After the directors comes the managers of the shop who will be handling marketing, sales and administration of the shop and business and also be responsible for implementing the decisions taken by the directors of the business (Burns 2016). Then comes the supervisors who will be looking after the services of the employees and also help the customers with advices.

The lower level of management comprises of cash counter clerks and sales personnel. The major role in sales maximization will be played by the supervisors and the sales personnel. The sales personnel of the business need to be trained as to how to treat the customers, educate them, advice the customers. The management of the Sophisticated market has decided to introduce a training schedule for the employee in order to develop a marketing sense and sales maximization capability among the employees of the business.

The value proposition of the business is to develop a business which will be able to meet the day to day requirements of the households in terms of grocery and other requirements of household sectors (Cao 2014). As per the plan of the management, the business model of the shop will be to offer a variety of quality foods at a cheap price. In order to improve the competitiveness of the business, the shop will be offering discounts, exclusive offers, combo offers to the customers.

In addition to this, the management of the company has also planned to incorporate a weekly sales day every week on which day, all products will be very cheap so that the business can get adequate demand and increase the overall sales revenue of the shop (Coombes and Nicholson 2013).  The management of the shop has also plans for customer gift options and special discounts on special occasions such as a festival. The management is of the opinion that the above policies might give the shop some competitive edge and help the business to survive the initial stages of the business.

Competency Matrix

Competency Matrix

Name of the Director	Project Management	Leadership	Financial Skills and Knowledge	Problem Solving Ability	Software Development and Innovative approach	Forecasting Ability
1.      James August	ü	ü		ü
2.      Will Jones	ü	ü	ü
3.      Alex Heard	ü			ü		ü
4.      Mitch Sheldon		ü		ü	ü	ü
5.      Bobby Baxter	ü	ü	ü	ü		ü
6.      Evan Hopkins		ü		ü	ü	ü

The names of the directors represent individual which can be selected for the post of director in the business which is to be established. The tick mark represents skills which can be either basic or critical in different areas of competencies. The competency matrix above reveals the important skills which are present in different individuals and how the same can contribute to the decision-making process of the board of directors of the business.

Objectives and Goals of the Business

The management of Sophisticated market plans to only provide products which are used by household consumers in day to day activities and therefore the target customer for the initial stages of the business will be the housewives and other retail business which require day to day household products. The business model of Sophisticated market is to provide the best quality services at the cheapest price so that the business is able to build itself a niche in the intense competitive environment of retail industry. The management will be offering foods and vegetables which will be fresh as the business is considering a tie up with the local farmers of the area and the contract with such farmers will enable the business to have cheap food products with any middlemen involved which will be reducing the costs of the products of the business.

The business model of the business as per the management is a sound one as the lower price charged will be able attract more customers to the business and slowly help the business to develop customer loyalty and brand image. The objectives of the business as per the management will be to create a niche in the market and survive the initial years while at the same time developing and attaining growth (Tang et al. 2014). Another objective of the business will be to diversify the products which are offered by the shop and move into products such as appliances and clothes and branded products in order to get a status of a proper super market. The goals of the business as set by the management are listed below in point form:

• To a build a brand name and image for the company in the market so as to attract as many customers as possible.
• To further growth in terms of market and products which are offered by the business so as to increase the overall sales revenue of the business and diversify the risks of the company.
• To improve the products and policies of the business and expand the businesses and capture new markets.

Market Research

The management of the company in order to establish a retail business, first needs to analyze the retail market which exists in the area. The management of the company also recognizes that it has to also know about the potentials competitors of the business which can affect the overall business of supermarket. In order to identify the competitors of the business, the business needs to apply competitive analysis and also apply strategic management tools so as to derive a competitive edge over the competitors (Piotrowicz and Cuthbertson 2014).

As per the plan of the management, the company will be adopting benching marking techniques so as to analyze the techniques and policies which are used by the competitors. With the help of this, the management of Sophisticated Supermarkets can develop a strategy to develop competitive edge to face the competitions of the business. In addition to this, the market research which will be undertaken by the management will be very useful to collect information about the taste and preference patterns of the consumers and also enable the management to take decisions about the targeted group of customers of the business and also which products should be more focused on by the sales personnel (Kim and Min 2015).

The location of the business as decided by the management will be near a locality of community of people so that the people living are able to access the products which are offered by the supermarket on a daily basis (Fernie and Sparks 2014). Moreover, the supermarket can create a monopolistic type of environment as most of the major supermarkets are situation in big cities and key areas. The management has decided to open the shop in an area where there is no supermarket close by or it is difficult to access supermarkets as the same are at far distance. As per the business environment scenario of a retail business is quite favorable as major supermarkets are able to earn significant amount of profits. The only concern for the management is the intense competition which exist in the retail market not just by the supermarkets but also by the small retail businesses.

Porter’s Five Forces Model

In order to research and analyze the market, the management will be applying Porter’s Five Force model for analyzing the conditions and the opportunities which the company will be having in a retail industry. The different segments which are covered in Porter’s Five Force Model are explained below:

1. Competition in the Industry: As per the market analysis, it is clear that the overall competition which exist in the industry is intense. The established players in the industry occupy maximum market shares (E. Dobbs 2014). Therefore, any policy which the management needs to develop policies considering the level of competition in the market.
2. Potential of new Entrants in Market: The retail business is a popular and diversified business and therefore many of the new businesses are fascinated with the industry. However, due to intense competition which exist in the market, the entry to the new market.
3. Bargaining Power of Suppliers: The policies and decisions of the management is also affected by the bargaining power of the suppliers. The management needs to consider from where the business will be receiving the products (Marshall 2013). As per the plan of the management, fruits and vegetables will be procured from local farmers. The management will also buy products from other retailers. The bargaining power of such suppliers affect the decisions and policies of the management. In such a industry the bargaining power of the supplier is high.
4. Bargaining power of the Consumers: The bargaining power of the consumers refers to the ability of the consumers to affect the prices of the products which are offered by the business. The prices of the products as per the plan of the management will be as cheap as possible so that the bargaining power of the consumers can be reduced. The bargaining power of the consumers in such retail industry is normally high.
5. Threats of Substitutes: In a retail business, the risk of substitute are always high as similar or identical products are also offered by other supermarkets and small retailers. The products are not differentiated and therefore the risks from substitutes are high in such a market.

SWOT Analysis

 The business can apply SWOT Analysis for identifying the potential strengths, weaknesses, opportunities and threats which can affect the supermarket. SWOT Analysis applied by the management helps the business to identify what will be the strengths, weaknesses, opportunities and threats (Suh 2014). This is also considered to be a part of marketing research and this will help the business not only with understanding the business characteristics of its competitors but also understands the strengths and opportunities of one’s own business.

1. Strengths: The potential strength of the business can be the products which are offered at cheap prices by the business and the initial specialization of the business in household products which will make the supermarket a one stop destination for such goods in the locality in which the shop is established (Bull et al. 2016). The business will also be specializing in one resources which is household products and therefore can make the same strength of the business.
2. Weakness: The weakness of the supermarket will be the inexperience and no customer awareness for the brand which will be developing overtime. The supermarket will not have any customer base and therefore, in initial stages the business will be facing problems relating to sales maximization
3. Opportunity: There is an opportunity of establish a business in a locality which suits the business and is able to attract maximum customers. The industry of retail business has been in a growth phase and therefore, there is ample opportunity for development and growth.
4. Threat: As per the expectation of the management, the threat which looms over the business is that of the competitors who are more than capable of driving a business into non-existence (Ji, Sun and Liu 2014).

Marketing Strategy

The marketing strategy of the business as developed by the management will be focusing on sales maximization in order to ensure that regular revenue flows into the business. The management thus plans to follow an aggressive sales strategy which will also imply that the management needs to invest significantly on the marketing and promotional activities for the business and its products (Varley 2014). The management has planned to arrange for a weekly sales offer on which date all the products which are offered by the supermarket will be excessively cheaper. This will be done on weekly basis so that the stock of goods which are with the supermarket gets cleared out easily and the business is also able to increase the sales of the business. This will also build a good image of the supermarket in the eyes of the public and they will prefer the supermarket for its products (González and Waley 2013).

The management also plans to promote the products of the business with the help of advertisements which will be done on both paper media and television media. The management is also opening an online website for promoting the business after a few months when the overall demand of the business has increased. The management also plans for an online order services which will be implemented with the expansion strategy in future if the business turns out to be successful. In order to further promote the sales of the business, the management has planned to provide delivery services to customers who live in close proximity of the shop so that the overall reach of the business for its customers can further increase.

Believable Marketing Plan

The marketing plan of the supermarket will be including an online sales plan which will be included after 6 months period for the business. The business will be including a provision for delivery services for household products which are offered by the business. These products will mostly include vegetables, fruits and any specific household’s goods as well as per the requirement of the business. The management anticipates that the setting up online sales business will be taking time approximately 3 to 4 months at a minimum. The delivery services can be established within weeks of setting up the business and therefore the business needs to purchase delivery trucks and recruit potential divers for the delivery service of the products of the business.

The business will be implementing the recruiting process for appointing potential delivery services person for the business. The management estimates that the business will be fully operational in a month period and the delivery services will be starting in a week’s time from the start of the business.

Financial Plan

Estimated Set-up Cost Budgets

The expenses of the business which is required to set up the supermarket is shown in the table above. The figures which are taken is on an assumption basis judging the current market scenario. The first major expenses which the management need to incur is the expenses related to the shop which can either be purchased, rented or taken on lease (Hilton and Platt 2013). In the table above, the management estimates that it will be taking a potential shop location for rent of £ 30.000 which is the rent for the year along with expenses which is related to renovations and maintenance. In addition to this, the management also anticipated that basic equipment such as computers, tools and other equipment will also be required in the day to day business operations.

The management will also be requiring office equipment as well so that the business runs smoothly.  The cost for such assets and equipment are also considered to be a part of the start up costs of the business. The above table clearly indicates that the major expenses of the business is undertaken in the setting up the sales and administration and marketing departments of the supermarket. The total cost which is anticipated by the management of supermarket is shown to be £ 3,50,000. The expenses which are anticipated in the above table is for the first year for starting the business of the supermarket. In addition to this, the inventory which reflect the variety or stock of products which are held by the business for the purpose of sale.

Sales Forecast and Estimated Returns

The above table shows the sales forecast of the business for the year along with the forecast of expected return for the business which is anticipated by the company (Ward 2013). The initial costs of the business are meet by the management with the help of a loan taken from bank and also from issue of equity shares and balance amount is contributed by the Founders of the business. The sales are shown in the above taken table taking four months period at a time and the sales is respectively shown for three periods which are £ 3,25,000, £ 4,50,000, £ 5,25,000 respectively

Source: (Created by Author)

 The total variable expenses which is estimated by the business is shown to be £ 10,48,750. The pre-taxed profit of the business which is shown is estimated to be around £ 5,65,750. The profit is appropriate and the management anticipates that the same can be reached due to the aggressive marketing strategy of the business. 

Source: (Created by Author)

Thus the plan of the management seems to be feasible and therefore, the management should implement the plan as soon as possible to get the business up and running.

Reference

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