Running Head: To Build or Buy 1 To Build or Buy Marlon Tivis BUS402 Professor Ademola Asaya 25 July 2015 To Build or Buy The strategy for a business concept that will directly compete with the small business selected The small business that I chose, a snack shop, would be the right competitor for a coffee shop as they offer the same products. The two are somewhat related, in the sense that they would serve as complementary products or even close substitutes. Any client who would need services from the coffee shop would likely be interested in the services being offered by the snack shop as the level of satisfaction being offered by the coffee shop is close to that which will be offered by the snack shop. In this case the snack shop, just like the coffee shop will offer fast moving products such as cakes and pastries, and other fast moving junk food. My snack shop business, Qwik-Eats, will be started in close proximity to the coffee shop that usually serves the middle class, especially students and other citizens who are not that well up in terms of the income they earn. They depend on this coffee shop as it offers their products at a relative low and affordable price that is quite friendly to their pockets. This in turn attracts many clients, as the market tends to have more demand for products that have favorable prices. The business centre is ever crowded and this has made this location to be popular and its glory has spread all over, making the location a favorable site to start and develop the my shop. Qwik-Eats will be located a few meters from the coffee shop and this will be a strategy to win customers, especially those who depend on the coffee shop. The products in this shop will be fast moving items such as snack cakes, chips, candy bars and soft drinks that would be sold at a relatively low price. The steady flow of traffic to and from the coffee shop will hopefully attract more customers to my shop, which has favorable prices and a wide variety of products. More 2 To Build or Buy will be attracted as our products will have a variety of choices to make, especially the junk food which many youths tend to love and prefer, as it is fast to consume and more satisfying than coffee alone. The business will also try to avoid mistakes that have been made by the coffee shop, like trying to sell products at a higher price forgetting that most clients are not the working classes. That would prove to be costly because patrons would not likely buy my products at high prices meaning goods would just sit on the shelf and maybe become expired, resulting in lack of sales. To start with the business will offer a few products since it will not have gained clients and this will be a strategy to make sure that the products do not become wasted as a result of low sales as the business will not yet have become popular. To solve the problem of unpopularity, the Qwik-Eats will take measures such as advertising and product promotion through discounts. We will also involve ourselves in a strength, weakness, opportunity and threat (SWOT) analysis which is a strategy that will be applied so as to identify the strengths and weaknesses as well as threats and opportunities that we have in our operations in the competitive market. In this new business, which is a food and beverage firm, a SWOT analysis will be very helpful in identifying these factors that will influence the efficiency and effectiveness that would make my firm better that others in the same industry, mainly the coffee shop and other close competitors. The strengths that this business will have over the coffee shop is a captive customer base where it will maintain good relations with the clients so as to ensure that all their needs are well catered for and with this my business will have a large market share. Food safety will be well monitored to ensure that the health of clients is our first priority and will also ensure 3 To Build or Buy that we have a strong distribution partnership where all orders made by clients who cannot make it to the store, will be delivered on time. With this strategy in place Qwik-Eats is likely to become more popular and successful than others in the same industry. Determine if it would make more sense to open the new business you describe or to purchase the existing business There is a challenge that arises when it comes to business and marketing and this is the issue of whether to buy or start up the business on your own. In this case, the two types of strategies have their own advantages and disadvantages. The main disadvantage related to a start up business is that the business will take time before it gains the customers that it will take to launch, and at first it’s subject to losses as a result of lack of clients and low sales. Poor management is another issue as the business owners lack proper management skills due to inexperience, and stiff competition is likely to bring the business down. The advantages related to buying a business is that the business has a customer base that can be relied on since it’s already popular, therefore the returns expected from such a business are high, making it more effective than the start up business. Other advantages over the start up business is that the business is already established to the financial institutions making it easy for the owners to have a chance to acquire loans and the employees who were previously employed by the seller will work for new owner and he or she will not be under pressure regarding recruitment of new employees. The advantages related to the start up business in this case is that the business will be created according to the type of market that it will target and the type of industry it wants to be part of. A start up is more flexible because decisions can be made at the planning stage before 4 To Build or Buy creation and these decisions will be used to make the difference better than others. It would be expensive to buy a business depending on the capital available, therefore a start up business is the best option that will meet with the objectives of the entrepreneur. With Qwik-Eats being a start up, we will adjust properly to make it different or more superior than its competitors, which would be more expensive in the case of buying an already established business. We will offer other refreshments such as soft drinks and we will provide close substitutes to the coffee being offered in the neighboring shops giving consumers a variety of choices. Many people tend to have interests in shops that have a variety of products to offer so that they can purchase products according to their taste and preference. With the variety of products we have, the competition will be high and the returns will be high and the shop will win a greater share in the market. Other advantages of the startup business are that it will gain customers through good relations and catering for their needs as requested. The business will have a new management that is experienced and that has techniques will ensure the business has an advantage over the others making it different and unique. The opportunities that the new business has are that it has a chance to establish and implement a menu development team that will be able to meet all demands that the customers have and with this improve the quality of our services and the firm has the opportunity of improving the morale and performance of our staff towards offering quality services and better customer relations. The employees that could have been associated with an already existing business bought might be reluctant and lack the right characteristics concerning relationship with the clients. It 5 To Build or Buy would be the right decision to have new and properly trained employees that will create a good customer base through their methods of offering services and maintenance of good relations with the clients. The startup business would also be a better idea since it will be located at the location where the management feels that is the right site. In this case, the main objective of this business is to compete with an already existing business. The new business will also incur less start up cost as it will be created based on the capability of the owner and all costs will be put under a cost benefit analysis. A cost benefit analysis is mainly conducted so as to evaluate all possible benefits that can be yielded from that budget in case a certain project is implemented and the business in this case should be subject to the minimum cost possible. This will affect the budget being laid down in the personal project and it is in this stage that one should seek to know the budget and this will help to avoid any financial constraints that might be experienced leading to failures or shortcomings in a given budget. Discuss the most appropriate form of ownership for your new business Qwik-Eats should be in form of a partnership; in that it will be subject to many more advantages than if I was a sole proprietor. The major advantages related to a partnership are that it is easy to create capital from personal contributions, thereby making it easy to start the business without any deficits in the budget. The contributions made will make it possible for the us to acquire all the necessary tools and raw materials required in production of the fast moving food products and other forms of refreshments. It will also be used in other indirect costs such as advertisements, so that the business will not be subject to loans from financial institutions that are subject to high interest rates and would later be a burden to the business. 6 To Build or Buy Management in a partnership is much more effective than that of a sole proprietorship, since the parties involved have different skills concerning business management and ideas that would make the business superior over the others. Qwik-Eats would not be affected in case of sickness or reluctance of one owner, as in the case of a sole proprietor, and the business would be ran effectively when one manager is not available due to unavoidable circumstances. The business is likely to be faced by risks and in the unfortunate event that a risk takes place; the owners for effective management will equally share the risks. Outline a business plan for your business The main mission of Qwik-Eats is to bring a new service in the market which will act as a competitor to other ventures that have already made it. In this case, we will compete with the coffee shop. The products that are being introduced in the market has a lot of uncertainty on whether it will gain popularity and acquire a share of the market since similar or related products have dominance and have a great share of the market. Therefore, we will have affordable products that will be able to enter the market in a good way and attract more clients. We as management will also focus much on the competitor’s strategies that in one way or another will us to have an advantage over their business and come up with strategic measures against them. We will also focus on our market share and what products we offer that makes ours better than others. In starting the business, any cost incurred should be as low as possible and it should be put under a cost effectiveness analysis to ensure that it’s not leading to wasteful spending. Qwik-Eats will be well managed with clear guidelines to ensure good flow and also efficiency and effectiveness in operations. This will ensure that the employees are well treated 7 To Build or Buy and this will portray a good image of the business to the outside world. The marketing plan puts a lot of emphasis on business customers, their culture and buying behavior. It also outlines the market share targeted by the business, and the approach to compete in the market. Qwik-Eats will base more of its marketing on word of mouth and massive promotions. The business operational plan will deal with business operation, the price of tools and equipment to be used in the business activity. This will also include valid licenses as required by the government to ensure we are legally and successfully operating in the industry. Qwik-Eats will employ marketing strategy such as posters, billboards, leaflets and bumper stickers. This will enable the us to promote publicity to many people. Our growth strategy will be through discounting, where the business will discount prices for regular customers, also those who come with other customers will receive a discount. New customers will also receive a discount in form of subsidized prices and discounts on more products. 8 To Build or Buy 9 References Ferroni, L. (2014). Real snacks: Make your favorite childhood treats without all the junk. Seattle, WA: Sasquatch Books. Zoe, J., & OverDrive, Inc.,. (2015). Super healthy snacks and treats: More than 60 easy recipes for energizing, delicious snacks free from gluten, dairy, refined sugar and eggs. Ries, E. (2011). The lean startup: How today's entrepreneurs use continuous innovation to create radically successful businesses. New York: Crown Business. Nager, M., Nelsen, C., & Nouyrigat, F. (2012). Startup Weekend: How to take a company from concept to creation in 54 hours. Hoboken, NJ: Wiley.
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