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Would a tuckshop be a successful business proposition?

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Introduction

Would a tuck shop be a successful business? The business that I am assessing the advantages and disadvantages of in order to determine whether it would be a successful business venture is a tuck shop. The measures I am going to use to find whether it is successful is mainly profit, although another effective way within a school, is to find out how much of the potential market is being exploited, the amount of pupils being able and willing to visit the tuck shop. There are of course other ways in which the success of the business could be measured, such as ROCE, but this would be very poor for a tuck shop as a tuck shop doesn't have many big assets, so it would definitely be a poor measure of it's success, a business such as a courier would have a good measure of success from ROCE, due to lorries and depots. Profit margin is also something that cannot be used to great effect with a tuck shop, as you cannot mark up the prices of tuck shop goods very high at all, as there will be no demand for them if the price is too high. So the mark-up will be relatively low, but with high sales meaning more revenue and eventually more profit. ...read more.

Middle

So, the overall revenue, is divided by the amount of units and then multiplied by the wholesale price, added to the other products calculations, using the same method, which then finds an annual cost for the products. Other costs are detailed, such as rent and wages for members of staff. Then, the profit is calculated by subtracting the costs from the revenue. In comparison to competitors, the product range is of similar size and variety, with an advantage being that the tuck shop would be located within school grounds, whilst an ice-cream van would be outside of school grounds and therefore inaccessible for Year 7s and Year 8s, meaning that a lot more of the potential consumers in these years would be regular customers, as they cannot get the products which they may desire in any other way. The pricing structure, is also something that would be determined from the questionnaire, I asked what prices pupils would be willing to pay for products, and have based the prices around what the average price was. Also, I researched the prices in the ice cream van and have ensured that they either match or better these prices, depending on the product, this means that we will not lose as many customers to the ice cream van as we may have done had they undercut out pricing strategy. ...read more.

Conclusion

Market - A place or medium in which goods and services can be exchanged. ROCE- Return on capital employed. Net profit/capital employed. A way of showing how successful a business has been in making acquisitions of assets. Profit margin- Net profit as a percentage of the value of sales. Sales- The amount of money made from selling a good or service. Revenue- (see Sales) Assets- Everything owned by a business which can have a monetary value placed upon it. Mark-up- Percentage addition to the cost of a product as a basis for setting the price. Research- A process in which the potential success for something is found out. Costs- Money that needs to be paid out of the business, for a service or product from another business. Variable costs- Costs of production which rise with the level of output. Costs of making the actual product. Fixed costs- Costs of production which need to be paid out regardless of output. Stock- Amount of products that are then going to be sold on. Surveys- Questions given to a sample of a potential market. Consumers- Buyers within a market. Competition- Businesses with which you are competing in a market with. Wholesale price- Price at which goods are sold to retailers, who will then sell the goods on to the public. Product range- Range of goods or services a business provides. Pricing structure- The way in which a business decides to price its products. Initial outlay- The initial costs needed to set up a business. ...read more.

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