Report On Innovation By An Entrepreneur In Retail Industry

Historical Background and Environmental Conditions

An Entrepreneur who has had measurable success with at least one venture. 
The situation involved could be a new business venture, a new product or a new process but it should represent a significantly new direction for the entrepreneur and/or the organisation. 
Write a short report about what happened and how it confirms or disconfirms the principles in your textbook, emphasising: 

• The historical background and environmental conditions that led to its emergence, 

• A description of the approach, attitudes and behaviour towards the innovation 

• The strategies that were employed and which ones contributed most to the innovation’s success. 
Important Instructions 


Innovation is adopted by the entrepreneurs in order to bring changes into their business operations so that market cap can be increased. The innovation helps the entrepreneur to explore business opportunity in order to benefit the business and earn long term profitability (Barney, 2009). Therefore, the current study will be presenting a report which will be discussing the innovation made by the entrepreneur to gain better consumer base. For this report Spar Company has been chosen which took a decision to start the own brand packaged for organic food in the retail store in order to increase their profit level (Spar-international.com, 2015).

The retail industry in UK is developing at an increasing pace and Spar Plc also operates in UK so that they can gain benefit from the retail industry of UK. The continuous rise in competition, many retail industries are adopting different kinds of strategies and innovation in their business approach so that they can cater the large customers (Barringer, 2010). The Spar Plc is facing stiff competition from different companies such as Morrison, Sainsbury and Waitrose. As a result, company is not able to win over their competitors in terms of market share. Moreover, the retail industry of Spar Plc is planning to adopt some innovative technique that can help in increasing the market share and gain better income from their retain chain (Clarke, 2010). From the data of April 2014, it can be found that customers in UK spend more than £27 billion for purchasing retail products.

Retail Chain	Market Share (%) Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper
Somerfield	1.02
Ice Land	1.5
LIDL	2
SPAR	5
ALDI	5.09
Waitrose	6.36
Marks and Spencer	7.05
Morrison	12
Sainsbury	13
ASDA	13
TESCO	24

It can be observed from the above table that market share of Spar Plc is very low which instigated the company to add new organic grocery section. Apart from that, as per London Chamber of Commerce report, around 41.3% of the consumers in UK are health freak and search for the products that are organic in nature. On the other hand, the market for organic packed grocery product has increased over the past years and this move has been adopted by other retail chain companies (Reddish, 2011). Therefore, it made the Spar Plc to concentrate on the organic product so that they can engage large customer base and generate better income. As per the recent studies, the retail chain like Tesco was able to increase their sales by 10% from organic products and Sainsbury by 4.5%. Therefore, it can be understood if Spar Plc engage them in organic grocery, they can also be able to increase their sales and sustainable market share (Pakroo, 2012). The growing complexity of health and rise of many health issues problem, customers prefer to buy the product that positively impact their health. Therefore, the demand for the organic packaged product have risen which made the company to add new section so that they can survive in the market and provide quality products to their customers all around (Morris et al. 2011).

Approach, Attitudes and Behavior towards Innovation

The growing need of health sustainability has forced the company, Spar Plc to implement new innovation that is organic packaged food product that can last for an average time. The research and development team of the company has found from their research that making innovation in the package can increase their sales. For instance, the Tesco Organic Barn Flakes package last for approx one and half months but if company launches their own organic package then it can store Barn Flakes for almost 2 months (Wilson and McDonald, 2011). Therefore, it can help the company to compete with their major competitors. On the other hand, launching own organic package brand can help in increasing the brand value and equity that can ensure better sales and profit (Smith, 2011). As per the research, the company’s own package brand can be effective in safeguarding the food from external threats.

External Environment Situations	Protective Packaging Functions
Mechanical Shock, compressive loads and vibration	Compressive strength, vibration and shock absorption
Light	Transmission (high or low as needed)
Biological Factors	Resistance
Water	Absorption and Resistance (high water vapor obstruction)
Temperature	Thermal Conductivity (low or high as needed)
Gases (O, N, CO2)	Low permeability (high gas barricade)

The company has decided to start their own packaged brand so that ecologically friendly product can be provided to the customers in more protective nature. The organic package of the Spar Plc Company can be easily recycle and on the other hand, company has decided to employ packaging materials in tertiary and secondary packs as they comprises high ratio of recycled materials. The management decided to concentrate build organic package so that they can be known as responsible corporate house towards the society and natural environment (Schoenecker and Cooper, 2010). On the other hand, company can be able to win over other organic food package brands such as Earth bound farm or Exotic Farm. The package brand of Spar Plc is strong and durable enough to safeguard the goods with a rational safety margin. For example, the Spar package can protect peas for 25 days whereas Earth bound package can only protect the peas for 20 days (Spar-international.com, 2015).

The management of the company is positive in their behavior to support launching company’s own organic package brand. The company decided that the proposed innovation has to be carried in expected manner and has to be different from other packaged brand available in the market. The company engaged all the senior level managers to put their view point towards launching their organic package brand (Augenti, 2010). As a result, the managers supported the move of the company as it can help in building image of the company in global scenario and more number of customers can become aware about the brand. The growing brand war for attracting customers has made company to change their behavior and approach to launch their own brand. Customers, today wants to store the product for longer time and in order to meet such specific requirement of customers, the company can focus on organic package that can help in drawing consumers (Barrow, 2011). Thus, it can improve the market share and assist in expansion.

Marketing: The Spar Plc has taken decision to promote the organic package brand in order to make the consumer aware about their strategic step. On the other hand, initially, the marketer of the company studies the need of organic packaging and the company that are providing organic packaging service. This helped in knowing the competitors and the impact of their brand on customers (Rhyne, 2009). Moreover, company adopted follow-up marketing programs that can help in increasing the customers by providing them fresh and quality packaged product.

Strategy and Implementation

Promotion: In order to promote their brand package, the company decided to show a benefit of their brand package on screen in their retail store so that customers can make distinction between Spar Plc brand and other brands (Ware et al. 2012). On the other hand, the company chose social media to advertise their innovation step so that it can reach out to large number of consumers.

Sales and Pricing: The Company in order to increase the customer base and sales decided not to charge high price on packaging in comparison to other competitors. This can help in enhancing the package brand image for packaging organic food (Pakroo, 2012). The decision of not charging extra more above the product price came beneficial for the company as it helped in improving the sales percentage.

Competitive edge: The decision to start own brand package was taken to gain competitive advantage. Through their brand package, the Spar Plc can be able to maintain the quality of the organic product for long duration as against their competitors. Moreover, company can turn out to be threat for the other company (Smith, 2011). On the other hand, if price charged for the package is less then it will increase the customer traffic.

Sales Strategy: In order to satisfy the need of the customers, the company approached to develop own brand of package for storing and packaging the organic product (Wilson and McDonald, 2011). The company delivered the benefit of their package to consumers so that consumers can shift to their organic food products.

Sales Forecast: If the company completely focuses on their brand package then company can be able to increase their sales that can benefit the company to have a long term effect.

Month	Sales (£ approx)
1	25000
2	27000
3	30500
4	33000
5	36500
6	40000
7	41000
8	43500
9	45000
10	47500
11	48500
12	50000

Year	Sales (£ approx)
1	467500
2	518500
3	586000
4	645000
5	696300

Website marketing strategy: This strategy was developed by the company in order to inform the customers about the recent move of the company. The website will provide information about the organic food product that is packaged by the company itself. On the other hand, the customers can be able to know the how long the organic food can be stored in the company’s package. Moreover, the consumers can know the number of items that has label of the company. Therefore, this would help in increasing the customer engagement and improving the brand awareness of the company. Apart from that, in order to design specific website, the company hired web design company’ so that necessary adjustment can be made regarding the brand package in more efficient and attractable manner.

In order to manage different activities of the company, the top level manager of company decided to segment managers of different segments so that work can be carried in successful way. The company formed different team for handling the new process approach of the company. One of the team members was made responsible for handling daily operations and staffing. On the other hand, one was allocated the job of bookkeeper and administrator whose role is to keep track of payment of taxes, payroll and bookkeeping. On the other hand, for tracking the growth of brand package, company hired one person so that the company can know whether people are interested towards it or not.

Personnel Plan
	Year 1	Year 2	Year 3	Year 4	Year 5
Owners or Managers	£ 49000	£ 49000	£ 53000	£ 56000	£ 56000
Clerks	£ 24500	£ 24500	£ 24500	£ 26300	£ 26300
Accounting or Books	£ 2800	£ 3700	£ 5000	£ 6200	£ 7100
Product Packaging	£ 6800	£ 8200	£ 10200	£ 11600	£ 13400
Total People	5	7	7	9	9
	£ 83100	£ 785400	£ 92700	£ 100100	£ 102800

The company expected that in the initial phase of introduction of own brand package; the company may suffer loss as customer may not be aware of their brand package. After some period of time customer can become aware that can lead to increase in sales and profit of the company will also increase. On the other hand, in order to finance their proposal, company can generate cash from banks as a loan for financing their activities. This would help in meeting the need of the company and receiving enough package material for the packaging purpose. Therefore, if the brand package goes successful then the company may able to increase their market cap and customer can prefer buying product that has been packaged by Spar Plc. This would increase the customer mobility and company can generate income that can cover their cost.

Break Even Analysis: The Spar Plc has consider the break-even point on the basis of monthly revenue which comprises rent, cost of goods sold, payroll, operating costs, etc.

BREAK EVEN ANALYSIS
Monthly Revenue Break-even point	£ 33692
Average Variable Cost	60%
Determined Monthly Fixed Cost	£ 13477

Forecasted Profit and Loss

Month	Profit or Loss (£)
1	(3100)
2	(1600)
3	990
4	1800
5	2600
6	2850
7	3000
8	3250
9	3400
10	3625
11	3800
12	4300

 

Projected Cash Flow

Month	Net Cash Flow (£)	Cash Balance (£)
1	18000	27000
2	21000	26000
3	20000	28000
4	18000	27000
5	16500	30000
6	15500	32500
7	13000	35000
8	11500	36500
9	13000	35000
10	13500	34000
11	12000	36000
12	10000	39000

 

Projected Balance Sheet

PARTICULARS	Year 1	Year 2	Year 3	Year 4	Year 5
Current Assets	£ 65970	£ 92563	£ 108500	£ 153000	£ 195500
Long Term Assets	£ 82565	£ 106322	£ 186510	£ 215960	£ 326520
Current Liabilities	£ 19545	£ 31215	£ 33514	£ 35110	£31000
Long Term Liabilities	£ 87725	£ 73662	£ 68520	£ 63250	£ 58950

 

It can be observed from the above tables that company, Spar Plc can gain large benefit from their own brand of packaging in five years. Moreover, the company can be able to increase their sales that can be helpful in increasing the customer attention and generating new customers. On the other hand, the company can give tough competition to other brand package company. Therefore, it can be effective for winning the customer and market share.

Conclusion

From the whole study, it can be concluded that company can be able to provide better and quality service to the customers in terms of packaging. The launch of new brand package by the company itself can largely benefit the company in context to sales and income and generating better customer base. On the other hand, the rising need of sustainable packaging has made the Spar Plc to develop new packaging that can keep the organic food for long time and fresh.

References

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Barrow, C. (2011) Practical Financial Management: A Guide to Business planning and budgeting, 8th ed. London: Kogan Page Limited 

Clarke, G. (2010) Business Start Up and Future Planning, Bringhton: Emerald Publishing

Morris, M., Schindehutte, M. and Allen, J. (2011) The entrepreneur’s business model: Toward a unified perspective. Journal of Business Research, 58: 726-735.

Pakroo, P. H. (2012) The Small Business Start-Up Kit: A Step-By-Step Legal Guide, 2^nd ed. Oxford: Blackwell Publishing.

Reddish, A. T. (2011) Business Plan for GitFit Training Fitness Services, California State Polytechnic University

Rhyne, L. C. (2009) “The relationship of strategic planning to financial performance,” Strategic Management Journal, 4, 319-337

Schoenecker, T. S. and Cooper, A. C. (2010) The role of ï¬Ârms resources and organizational attributes in determining entry timing: A cross industry study, Strategic Management Journal, 19, 1127–1143.

Smith, T. (2011) Pricing Strategy: Setting Price Levels, Managing Price Discounts & establishing price structures, 5^th ed. Liverpool: Harper Press

Spar-international.com, (2015). SPAR International – International Expansion. [online] Available at: https://www.spar-international.com/aboutsparinternational/new-country-development [Accessed 16 Jan. 2015].

Ware, C., Bamford, C. and Bruton, G. (2012) Business Management for the Personal Fitness Trainer, 3^rd ed. New York: Free Press

Wilson, H. and McDonald, M. (2011) Marketing Plans: How to Prepare Them, How to Use Them. 5^th ed. London: Chapman and Hall.