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Determining Which Kind of Business Should Be Opened on a Plot of Land

Extracts from this document...

Introduction

Business Studies Coursework Introduction -Aim The aim is to chose a vacant site and carry out research to find out what is the most suitable type of business that should be opened and why. I will carry out primary and secondary data, present them in a variety of ways (which suits each one) and perform a swot analysis to draw a conclusion. I have chosen the old C&A building on Oxford Street as my vacant site. -The Area: Oxford Street Oxford street is the most famous shopping area in Britain and is known internationally. It is a popular tourist attraction. It stretches from Marble Arch to Tottenham Court Road for one mile. In this report I will focus on the area surrounding my site. There are 3 tube stations and 1 bus stop. Many well-known department stores, national and international chains stores are located here. Examples are M&S, Debenhams, Selfridges, HMV and Gap. This are (W1) has an average property price of 322,783 pounds, which is high. This suggests that revenue may be important to what ever shop opens here. It would need to be high to cover the costs. -The Site: Old C&A Building, 501-519 Oxford Street, Marble Arch, W1A The building is a large flat of 5 floors, there is about 150m2 , meaning there is 750 m2 of floor space. This means the shop does not have to specialize in a certain market. It could sell a range of goods and services. The ground floor has two sides of glass, which is an advantage for promotion; people may be attracted to what is inside. The previous use of the building was a clothing retailer, it was an international chain store, but has made losses of 250m pounds in the last five years, and so closed. -Methodology 1. Primary Data * Questionnaire The aim of the questionnaire is to find out the profile of consumers who visit the area (Oxford Street). ...read more.

Middle

a comparison shop. Although not everyone passing the shop and visit and purchase goods, a high pedestrian flow means more people are likely to purchase. Therefore a shop similar to those close by would benefit from high pedestrian flow. -Frequency of Visit The majority of respondents (63 people) visit Oxford Street 0.5-1 times a month. There were 2 respondents who worked in the area and so visit more than 4 times a month. The low frequency is because of the large sphere of influence produced resulted from its market type-up market retailing. Consumers will not travel a great range frequently for shopping (main purpose); it is tiring and may become boring. Also because most product sold here are high priced, people are not prepared to spend a large amount of money frequently. Low frequency means the shop will need to rely on a large population to survive, this is provided by the large SoI and high pedestrian flow. Therefore a shop providing up market goods would be suitable. -Amount of Money Spent by Respondents per visit Most people spend 50-100 pounds per visit, with 10-50 being the second most frequent. People spending only 10 pounds may be just passing by and purchased food. There were respondents who spent 100-300 pounds, these may be tourists, which are prepared to spend a large amount of money, especially if they are on holiday. This is because Oxford Street is an up-market area, the goods and services it provides are high priced. This may be because there are many international franchises/branches, e.g. Nike, Gap, Next...etc. These shop provide branded comparison goods, which are high priced. The ability to spend money of respondent who visit the area is high. This means opening a shop providing high priced goods has a good chance of surviving, people are prepared to spend. However, because of high threshold population, a low-order shop may survive because the number of goods sold will be high (people buy low-order goods frequently causing a higher percentage of people buying [compared to comparison shops]). ...read more.

Conclusion

* External economies of scale. Promotion costs would be low, it can rely on shops nearby to attract consumers to the area. * May be able to offer its own credit cards, which attract consumers. -Disadvantages * By selling a range of goods, this means each type will not be bought at large quantities. This mean the shop will not have a discount. This means less profit than focusing on one segment. * By targeting all market segments, the shop will not be able to serve market niches, as specialized shops may do. * Would be able to include chain stores or branded products to attract even more people. * Competition from out-of-town shopping centers. Many people are attracted to these shops because they are easily accessible and goods are often cheaper than high streets. * The shop will need to react quickly to changes in the market (e.g. fashion), and this may be difficult for big shops. Recommendation From the analysis and arguments, I found that a shop located at this site would require the following: * High threshold population. * Target at as much market segment/niches as possible. * Benefit from economies of scale. * High price/up-market goods that appeal to consumers. also need to be easily transportable. Large floor space. * Popular with the public. * Interesting place to shop: a variety of goods. Therefore, I've decided that a department store would be most suitable. It will meet these requirements. Solutions to Problems (refer to disadvantages of department store) * In the first few months, the shop should concentrate on promotion. It needs to establish itself in the market to gain some customers (and market share). This may be done through advertising throughout the area's SoI. It should also have lower prices than its competitors. After this, it would have enough customers so that goods are sold quickly, enabling the shop to be confident to purchase in larger quantities and benefit from discount. The cost of avertising will be spread across a large number of units sold. * * * * * ...read more.

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