Doyle Company Analysis: Case Study

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Statement Problem

Doyle wanted to open and run his own business instead of being employed. He thus purchased a building which was a former school for $5000. Even though Doyle was an entrepreneur, he didn’t know what kind of business to operate in this building since he had three choices either starting a children’s entertainment facility, Bed and breakfast of an apartment complex. A children’s entertainment facility was a favorable choice for him because the building did not require any structural changes. He also had experience with the children which motivated him to start this kind of business. Doyle wants a business which is continuous throughout the year and not a seasonal one. He wanted to involve the parents thus making it a somewhat family business. The other problem is that the school is located in a rural area where there were no shops, grocery stores and even bus services. With these shortfalls, Doyle needs to analyze his market and come up with strategies for being successful in his business.

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The entertainment facility for the children is a promising business since less capital will be required to operate it as compared to the other two choices of bed and breakfast, and apartment complex. Analysis of the business needs to be done in order for Doyle to match the opportunities with the strings of the business and at the same time overcome the threats and weaknesses of the business so as to succeed.

Case analysis

Doyle should analyze his business environment in order to match the opportunities with strengths and at the same time try to over come the threats and weaknesses of the business. SWOT analysis should be carried out in order to match the business capabilities and strengths (Botten 123)

Strengths

Strengths of a businesses help in matching the capabilities and resources in order to have a competitive edge. The children’s entertainment facility business will have a cost advantage because the building does not require any structural changes. It has a gym room, a kitchen and two class rooms which are enough rooms to be used as an entertainment facility for the children. The other cost advantage that the business has is that Doyle has experience in dealing with children because he was a youth coordinator and has also taught confirmation and religious classes. This is an advantage because he does not require any training or to employ a trained teacher to deal with children.

Weaknesses

Weaknesses of any business act as obstacles to achieve a competitive edge in the market. The rural area as a location of the building is not favorable because there are no bus services; neither does that place has a shopping center or a grocery. This will prevent children from coming to the entertainment facility due to lack of transportation means. The businesses do not also have a brand name and has not gained good reputation to the customer; thus presenting an obstacle to its success.

Opportunities

These are the advantages that the business enjoys from the external environment which help it to grow and make profits. The children’s entertainment business has an opportunity for growth because presently, the customers’ needs are not fulfilled by the current businesses in a similar business. According to the marketing research that Doyle conducted, it was established that most parents carry with them their children for entertainment, and for this reason if Doyle opens up the children’s entertainment facility, then most parents would be willing to take their children there.

Threats

Threats are the problems from the external environment that may hinder the business growth and jeopardize its profitability or have a competitive advantage in the market. One of the threats experienced by children’s entertainment facility businesses is that Doyle, apart from targeting the locals, has also targeted the tourists and due to this the business is seasonal. The business does well when the tourists visit the country and it is at off peak when there are low numbers of tourists in the country. Some parents also would prefer to go with their children to an entertainment facility which will accommodate both the parents and their children, which cannot go down well with the Doyle.

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Alternatives

One of the strategies available for the children’s entertainment facility business is market modification strategy. This strategy is aimed at looking for opportunities to attract new buyers. It involves selling products and services to new markets or new segments and also increasing the usage of the product or services among the existing customers. A business can even decide to open new markets outside the country in order to reach many customers. Investment of the company to promotion strategy is very necessary for this strategy to be successful because awareness needs to be created to those new markets (Harline, 117).

Advantages

  1. Product modification results to increment of sales for the company which leads to the business making sustainable profits.
  2. The business gains a competitive advantage over its competitors because the company is able to increase its market share compared to that of the competitors
  3. The business gains a good reputation from the customers due to its ability to reach more buyers.

Disadvantages

  1. Market modification is a very expensive exercise because a business is required to open new branches to meet the needs of all the customers, new distribution channels should be established and also promotion should be done to make the customers aware of the product.
  2. Opening of branches in another country is some times hard due to the trade barriers that may have been put in place.
  3. The business will face challenges in penetrating a market which has other players because customers may be very loyal to the competitor’s products or services thus the business may end up making losses.

The other alternative that the business can use is product modification strategy. In this strategy the company aims at increasing the products sales by changing the attributes of the product or its design. This can be in terms of quality improvements which entail improving the products durability, reliability or taste in order to increase the functional performance of the product. It could also be in terms of feature improvement which is achieved through adding new attributes to the original product in order to increase its convenience, safety of versatility. Style improvement is also an aspect of product modification and it involves improving the products aesthetic appeal.

Advantages

  1. Product modification increases the functional performance of the product thus attracting new customers to buy the product or making the existing buyers buy the modified product.
  2. Product modification gives the company an edge in the market because the differentiated product will be preferred by the customers more that the standard products of the competitors.
  3. Sales of the company and profits increase since more buyers are attracted to buy the modified product.

Disadvantages

  1. A business requires to invest a lot of money because changing the design of a product or adding new attributes to it is very costly
  2. A businesses must first carry out marketing research or employ somebody to do it in order to know the needs of the customers.
  3. Sometimes the modified product may not perform well in the market even after its launch which is a loss to the company.

Pricing strategy is also another alternative that the business can use in order to grow and have a competitive edge in the market. Pricing strategy involves the company setting a price which customers will perceive value for the products or services offered and at the same time the price should cover the business’s cost and earn some profits to it. A business can use competitive pricing strategy where the competitors’ price is used as a bench mark to price the products. Cost plus mark up strategy can be used where the company looks at its cost structure and decides how much profit it wants to make and then determining the selling price of the product. A business can use a loss leader where by charging its products at a price similar to its cost of production or a price below the production cost in order to attract more customers (Botten 123). Close out can also be used as a pricing strategy where the products are sold at discount to prevent storing of the products. The aim of this pricing method is to reduce losses.

Advantages

  1. When the company adopts the competitive pricing strategy, it’s able to compete fairly since the price can be slightly lower or above the competitor’s price.
  2. Loss leader pricing will attract more customers to buy the product because the price will be very low compared to that of the competitors.
  3. Close out pricing will help the company to sell its excess inventory rather than incur the cost of storing.

Disadvantages

  1. If the company is to adopt the competitive pricing strategy it requires a lot of information from the competitor and thus research has to be done which is an extra cost to the company.
  2. When a company adopts the cost mark up strategy, it may sell the products at very high price beyond the customers’ expectations.
  3. When a company adopts the close out or loss leader methods of pricing it will result to making losses in spite of the large volume of sales it may makes.

Recommendations

The children’s entertainment facility should be improved in order for it to grow and earn profit. In order to increase the market share, Doyle should modify his market. He should open more branches in the country in order to target more children and also reach the customers who cannot access the facility due to its location in the rural area where transportation is poor. Since he concentrates on one segment which is the children, he should also target the parents by coming up with entertainment facility for the adults. This will help him increase the market share for his services because according to his research, parents went for entertainments with their children thus the former needs to be entertained too. By modifying his market, he will be in a position to sell his services throughout the year even when the tourists are not visiting the country.

Doyle is supposed to improve his services so that he can attract more customers. He should include entertainment facilities to suite all kinds of children as well as adults. This will help him to develop a competitive edge over his competitors due to the high quality services he will be offering. Since the building is located in a rural area where there is no bus services, Doyle should offer transportation services. This will give him an edge and attract more customers for sustainable growth and expansion.

Doyle should use a competitive pricing strategy in order for him to compete fairly with other firms in the similar business and at the same time earn profits. By offering good services and charging competitive price, the business will have a competitive advantage over competitors because customers will gain value for the money they pay.

Implementation

Implementation means executing the strategies formulated to achieve the company’s goals within the time stipulated. Doyle should allocate enough financial resources and also the right human resource to put the marketing modification strategy, product strategy and pricing strategy to action. He should also come up with control measures like the budget to help in proper use of the resources without wastage. Evaluation measures should also be put in place in order to compare the real performance of the strategy with the expected results and thus correct the short falls in case of any.

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References

Botten, Neil. Business Strategy. Chicago. Elsevier, 2005.

Hartline, Michael. Marketing Strategy. New York. Cengage Learning, 2008.

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