SWOT Analysis
There are factors that will affect our business that will be beyond our control. Whether the factors are positive or negative us as providers cannot control the impact that it will have on us. A SWOT analysis analyses the impact of certain areas within the outside world. S equals strengths, W equals weaknesses, O equals opportunities, and T equals threats.
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Strengths of our company are the market is on our doorstep. Meaning that we don’t have to search for customers, offering stationery to students was thought of carefully and cleverly. Students will run out of stationery and obviously they will have to buy more. If they forget to purchase outside of the college and they are in desperate need of stationery then they would have to buy from Stationery on Tap.
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Weaknesses of our company are that we are not established in the world like WH Smith how the public perceive us is essential. Whether they buy from us is based on whether they see us as quality. We only sell for 15 minutes a day which limits the amount of customers we get. There is no fixed shop where we can sell from this disenables customers to know exactly where we are situated.
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Opportunities are we are established on the premises of St. Charles. This gives us the ability to construct brand name products, (eg) St. Charles Exam Kit consists of a clear pencil case, pen, ruler, rubber, pencil, and a sharpener. This can be sold during the exam period. It is beneficial to us as some students may have their minds on studying and they forget the essential elements that they need for tests.
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Threats are how the public look at us. Being that the company is run by students they may not see us as being serious. Customers may feel more comfortable buying from our competitors, since they are known for quality.
Competition Analysis
With all companies there are factors that will affect them. The most common factor would be competitors. These are companies that operate in the same field as you; they try to undermine your company by trying to take your customers. Even though Stationery on Tap is within the college there are still companies that have some influence on our target market. Our competitors are:
- WH Smith
- Woolworths
- Rymans
- Stationery Box
These companies are situated around the London area. Within the Ladbroke Grove vicinity there isn’t a Rymans, Stationery Box or a WH Smith so having Stationery on Tap in the college may benefit students. The four companies as individuals are very successful. Each has frequent customers and sometimes regular customers who are satisfied with the service that they provide. On the whole these businesses may be situated near each other (eg) WH Smith and Woolworths in Kilburn but even tough they both sell stationery each specialise in other areas. Woolworths sell Clothes, Sweets, Juice, Video games, CDs and DVDs. WH Smith sell books, Magazines, and Cards (eg) Birthday cards. They are still very successful and without a doubt they will do very well in the future. There are only two main competitors for Stationery on Tap these are: WH Smith and Woolworths. The market share for these is:
Within the business structure from which we belong there are many competitors. Those of which would most definitely sell the same products as us. Even though they sell our goods they may decide to sell other things as well. (eg) Woolworths sell clothes. For our competitors here are their prices for the products that we will be selling.
WH Smith are our leading competitor as they are very well known throughout the country. People believe that their products are good quality items that are worth the amount they pay for them. Both WH Smith and Woolworths sell items like Parker pens which are expensive so Stationery on Tap can’t provide these. A Parker pen on its own costs £5.99 whereas the set which includes additional nibs, and ink cartridges costs £11.99. The companies have the ability to sell these items as the public trust them. Stationery on Tap isn’t as well known as these companies which places them in a position which leaves them looking as if the products that are being sold are not good quality.
A marketing mix refers to those elements of firms marketing strategies which are designed to meet the needs of its customers. The areas of the marketing mix may be seen as the 4Ps this means Product, Price, Promotion, and Place.
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Product – the product must meet the needs of the customers. Careful consideration should be taken when analysing what the public want. As the majority of the college use stationery it seemed obvious to sell stationery. Stationery on Tap will provide teachers and students with quality stationery also the customers can request items that may not be sold, depending on how many people ask for the same thing we will order it in.
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Price – the type of people that we are aiming to are mostly students, therefore we need to aware of the financial elements of students aged 16-19. The company issued questionnaires to a portion of the college stating how much they would like to pay for items. We made sure we indicated to only state a price for items they would consider buying. Items that the public would consider buying and their prices are: Pencils at 10-20p, Pens at 10-20p, Floppy disks at 50p, Ruler at 20-30p, Plastic Wallets at 5-10p, highlighters at 75p, Maths Set at £1-£3, Ring Binders at £1, Tippex pens at £1, Colour pens at £1, File paper at £1, Rubbers at 10-20p, and Dividers at £1. These prices are what the public believed to be reasonable and the items will be sold at these prices.
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Promotion – for recognition of the company a number of promotional strategies must be done. Within the environment that we will be based, having promotions like TV adverts, or on the radio would be un-ethical. Since it is set up and run by the AVCE business classes then having a spokes person from the class for each tutor group to inform students of what we are doing could be one form of promotion. Using posters around the college would grab the attention of the students. The tanoy could be used at break time to inform students that Stationery on Tap is now in session and during the week to inform students about the business. Another promotional strategy could be to sell shares. This form of promotion is excellent as our shareholders can turn out to be potential customers.
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Place – the product will be sold in the Atrium, the assembly hall, or during tutor group. Sales will last for 15 minutes a day and will be run by different students each day. Break times are the most convenient time to sell the products as the Atrium would be crowded with students.
The product life cycle shows the stages that a product goes through, and the sales that can be expected at each stage. There are six stages that a product goes through these are:
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Development – the products is being designed, ideas are being developed and investigated. With Stationery on Tap the development stage was a discussion about opening the business and going through a number of names. Last year it was called Stationery 1st so we knew we needed something around them sides. There was no disagreement about what we will be selling but some thought we could sell other things for special occasions (eg) Christmas cards. The names we went through were “Ur #1 Stationery, Pencil case, Logon Stationery, and Stationery on Tap”. Stationery on Tap sounded appropriate so we stuck with it.
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Introduction – this stage is when the product is new on the market. Even with great promotion methods the sales will be slow, nut will soon pick up. According to the product the length of time would vary. As we are selling stationery to students hopefully sales will change for the better. Even if there are one or two people within the first couple of days word will spread and sales will grow.
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Growth – the product will become profitable when it is established and consumers are more aware of it. If Stationery on Tap was very profitable then competitors could make their own version. However our competitors are WH Smith, Woolworths, Rymans, and Stationery Box. They are already selling stationery at their normal prices. We have copied their idea and made Stationery on Tap. With previous versions of the company situated in the college we hope that we are more successful.
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Maturity – there would be a period when the product will level off. This will also happen to Stationery on Tap. The product has become established with a good market share. Unless Stationery on Tap come up with new products customers will have stopped buying, this may be because of them buying from competitors or they question the quality of our products. However its done sales will be quite slow.
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Saturation – as more firms enter the market it will become saturated. At this point and within Maturity Stationery on Tap could use Extension Strategies. These are ways that the company can try to get a longer product life cycle. Stationery on Tap can make up different things with the products. (eg) An exam kit contains a pencil case, pencil, rubber, pens, ruler, and sharpeners. This can be sold during exam times.
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Decline – sooner or later companies die out. If Stationery on Tap was to decline it may be because consumers stopped buying or we stopped supplying. I can’t predict the future of the product but I do hope and believe that with the determination and drive of the employees it will last long and everyone will benefit from it.
A diagram of the product life cycle of Stationery on Tap is shown:
The Boston matrix places products into four categories these are:
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Star products are those with a large share of high growth market
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Problem child might have future potential as they are in growth markets, but their sales are not particularly good
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Cash cow are those which are able to generate funds, possibly to support other products. They are mature products with a stable market share
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Dogs are products that may be in decline
Market Growth
High Low
High
Market
Share
Low
I believe that Stationery on Tap has the ability to grow into something big. Not expecting great things straight at the beginning or raising false hopes would keep the business flowing at a steady paste and those within the business would look forward to seeing where the business will end up.
Existing
Markets
New
Existing Products New
The Ansoff matrix is used for businesses aiming for growth. These are strategies used to penetrate the market, develop a product in an existing market or to diversify into another market.
Stationery on Tap would want to penetrate an existing market with an existing product (market penetration). We can use this through encouraging students to use certain products more frequently (eg) plastic wallets. Stationery on Tap can use diversification. Exploring other areas that are specific for students of St. Charles would save the business from future problems. Diversifying would spread risk but also could increase safety.
Even though our main priority is to sell stationery students enjoy celebrating occasions like Valentine’s Day and Christmas. Selling roses from Stationery on Tap could be an idea to consider even if it was ruled out. Penetrating the market is our top aim. Selling stationery to students is what we aim to do and specialise in.
External influences have effects on the business. The PEST analysis examines these and outlines what may happen to business since they may have no control over them. No business can control what happens to the outside world therefore they need to be prepared for the worst case scenario.
Political is concerned with how political developments, regionally, nationally and internationally might affect a business strategy. With Stationery on Tap we are not what the suppliers expected. Since we buy in bulk from them and sell at lower prices in order to make a profit.
Economic might involve a variety of economic factors and their effects on the business. Stationery on Tap’s economic factors are that VAT is paid on the items. Meaning that as we pay VAT when we bought the items from GLS and Consortium we add VAT on to the individual goods.
Social is about the public. How they see us as a business, whether or not they see us as ethical. The customers may think that what we are doing isn’t right. Other than that they may genuinely not be interested in buying stationery as they may not see it as good quality. Customers could feel more comfortable buying from WH Smith.
Technological factors has no effect on the business. Since they specialise in the more technology side of factors or influences they don’t have much of an impact on Stationery on Tap.
Following this business plan will hopefully provide the company with a good market share and high growth. Enabling it to expand to different areas within the student lifestyle. Thus giving shareholders more reason to keep investing so the company can keep providing and growing.
Production and Resource Requirements
Setting up the business
The class came up with the idea for the stationery shop because it was done before. The year above us did this but they wasn’t successful. We thought as it would be under new management we may have a better chance of making it a success. We came up with the name from analysing possible suggestions that was made by both classes. Through this we all decided that the name would be “Stationery on Tap”. We found our suppliers by looking at different catalogues. We looked at the products that we were going to buy and at what price we would have to buy it at. We appointed department managers which consisted of: (1) Managing Directors – Nike Akinde and Brian O’Halloran, (2) Purchasing Manager – Lorraine Charles, (3) Marketing Manager Jason Wall. These three areas would take charge of the running of the business. With the help of others in both classes each person that invested in the business would take turns in the selling of goods.
Stationery on Tap won’t actually be producing anything, but, we will most definitely be providing a service for the students. There would obviously be a few things that we would need (eg) actual stationery. We intend to stay in business until the ending of April 2003 so we would need a substantially large amount to get us started. Here are a few pictures of the type of items that we will be selling.
Carnival coloured polypropylene ring binders
Quality 2 ring mechanism costing £1 each
Pack of 10
180 leaf refill pad
6mm rule with margin
Pack of 10
Costing £1.50
Pack of 12, HB grade
Box of 144
Costing £0.10
High quality soft erasers which won’t damage
the surface of your paper
Box of 20 at £0.10 each
Metal sharpeners with single hole and grip zone
Can be used for lead or coloured pencils
Box of 20 at £0.25
Clear plastic ruler marked with cm and mm
Pack of 10 at £0.10
Assorted highlighters
Suitable for most papers
£0.75 each
40 small clear pencil cases with coloured zip
these are suitable for exam use
£1 per case
An example of an order form is shown:
- Blue pens 3 packs
- Black pens 3 packs
- Red pens 2 packs
- Green pens 2 packs
- File paper 5 packs
- Dividers 10 packs
- Disks 20 packs
- Disk holders 10 packs
This is not the actual order that we made but it is along these lines. We order this big so it will cost less and we won’t have to keep ordering large amounts for every re-order.
To successfully set up this business we would need specific elements that would bring it all together. These are:
Main goods
- Trolley to keep the goods on and to bring it to the atrium
- Cash box to keep the money and any receipts in
- A table to present the individual goods on
We haven’t got an actual shop were we are situated but being positioned in the college could count as a capital and our place of residence.
To ensure that we sell good quality products we intend to purchase from suppliers that have a good reputation. We will be buying branded goods like “Staedtler stick 430 pens, Bic Crystal coloured pens”. We will be avoiding cheap products as this may generate bad publicity for us. Also we analysed the products in the catalogues before we purchased them. Quality assurance for our customers would result in us making sure that they receive their goods in good condition and that if there is anything wrong with what they’ve purchased then we will refund their money, this would not affect their statutory rights. As I have stated in the business plan earlier, buying in bulk is a necessity that we need. The way we chose the name and any other feature was done through class discussions.
The financial requirements that are needed for our business are shareholders. They will be the initial founders of the business and they are what we need to be able to start up. Our capital goods are the trolley and cash box. Current goods are the items that we ordered this is considered to be our current assets if placed in a balance sheet. Selling time would consist of the basic 20 minutes that is our break time we may run into period 3 if sellers have a free period. There would be a maximum of three people to sell the goods each day.
There will be constraints that may arise which will make it harder for our business to stay successful. There are legal ramifications that we would need to make sure that we follow, these may be from the “Sales of Goods Act 1979” (eg) section 14 (2) fitness for purpose. If someone buys a pen of a ring binder they would expect it to work whether it’s to write with or to hold things in. We will try to be environmentally friendly by offering recycled goods like “recycled file paper”, and if we find ourselves in financial difficulty we can make another selling shares party or we could find other ways to generate sales.
Financial analysis and Planning
Stationery on Tap would be a Limited company. We will sell shares to those of the two AVCE classes (they would be considered family) and to others around the college (they would be considered friends). At the end of the procession we would issue shares to those that invested in the business. However in regards to those of the AVCE classes those that invested in the business but did not participate in the running of the business, will not receive the money they invested and they won’t get any dividends.
Before actually setting up the business we would like to hold a selling shares party. Shares will cost £1 each. This will allow those that want to purchase shares to freely buy however much they wanted. At the end we hope to make quite a bit to get us started. I would hope for a budget of around £200. If we can get this many people to invest in the business we should have enough to make our first order. Working capital is needed for change. In the beginning we would require a fairly large amount money. If we round it off we could start with £40 worth of mixed elements, after this the money can range from a few bags of 1ps to a few bags of £1 coins. This will not be done often as we will be getting change on a regular bases from sales.
Coming up are break-even charts which show where we would hope to break even. We will be selling “File Paper” at £1.50 and we would hope to break-even at 3-4 pads of paper which will reflect £5.35 on the cost/revenue. “Pens” would be sold at £0.20 and would break-even at 13 units and would be £2.60. “Ring Binders” are sold at £1 and we hope to break-even at 4 units making £4. “Tippex” would be sold at £1 and would break-even at 6 units making £6. “Disk Holders” are selling for £1 and we hope to break-even at 4-5 units. This would make us £4.50. These are just predictions of where we would like to break-even. From the basis of this analysis I hope that the company can deliver these results.
The cash flow forecasts are predictions of where we hope to see ourselves in the coming future. Granted that these were made in November 2002 we would not have an “opening balance” thus giving zero. With the hope that business will pick up the next few months my predictions are as follows: (Look on sheet). The projected Trading and Profit and Loss accounts are what I feel predictions should look like. The start up Trading, Profit and Loss, and Balance Sheet accounts are for here and now. You can see that we have made a loss of £17 but this does not affect our outcome of £192.
At this present moment we are in a good position financially. With “Net assets” of £192 we are able to purchase the amount of stock that we need to start up the business.
Lorraine Charles: Mr Graham