Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez

Cite this

The chosen company is a local clothing firm that has been in operation for the last ten years. For purposes of this assignment, the corporation will be referred to as Designer Stylez. The business deals with both clothes and shoes and targets both men and women. Recently, the enterprise’s owners decided to venture into e-commerce in an attempt to compete better with other institutions in the same industry. Ideally, the company has minimal experience in the digital economy but also hired a consultant to help them manage their digital platforms. It is critical to note that the firm had already created a consumer base for its physical shop. Their database had grown due to effective client engagement and quality products. They aim to achieve the same effect on their online shops as well.

On-Time Delivery!
Get your customized and 100% plagiarism-free paper done in as little as 3 hours
Let’s start
322 specialists online

It is arguable that the business has a competitive advantage over other businesses because its brick-and-mortar approach is still considered one of the best ways to deal with consumers. Debatably, it is the perfection of this approach to sales that has allowed the establishment to gain as many clients as it has so far. It is important to note that many scholars argue that the future of business and retail is online (Oyku, 2018). This school of thought has led to an increase in the number of companies that are turning their attention to e-commerce. However, as Mishra (2017) notes, the brick and mortar experience of sales and business is still crucial in a majority of the countries in the world. The term refers to the physical store, and many purely online shops have been encouraged to have some form of the physical shop as well. A significant number of the stores that sell both clothes and shoes in the area are purely online-based, making the brick-and-mortar approach employed by Designer Stylez a competitive advantage.

Several analytical frameworks can be used to discuss the opportunities for growth that the company can employ. First, it is important to note that Designer Stylez has various chances for improving its bottom line. The specific prospects will be discussed in this business plan as part of the assessment of the business. SWOT and PESTLE analysis will be used to assess the firm’s internal and external elements. Additionally, Ansoff’s growth matrix will be employed to discuss further the relevant competitive edge that the corporation currently enjoys. Debatably, a competitive edge is not only brought on by the resources that a corporation has, such as the physical store but also the resource should be challenging to replicate. Indeed, any competitor can easily rent out space and put up his or her store in order to also take advantage of the benefits of the brick and mortar methodology. Therefore, despite the fact that Designer Stylez is currently considered a strong brand, the management has to customize its approach so that it cannot be easily copied. Questionably, the most critical concern for the company today is how they can best capture the market with the resources they have in a manner that is not common among competitors, and that can be difficult to recreate. The answer to this question lies within the consumer journey concept, which will also be discussed in the next few sections of the business plan.

Strategic Objectives

  1. Ensure that Design Stylez enhances its consumer database by implementing successful e-commerce methodologies.
  2. Guarantee the adoption of omnichannel success for the growth of Design Stylez.

SWOT Analysis

Strengths

The company has several strengths that can be highlighted. The first is that they have the right staff for the job. The firm has sales executives, cashiers, and has recently included digital marketing consultants. Each of these staff members is highly qualified and has received extra training on handling the brand. It is vital to note that the company has ensured that all its employees understand the importance of having happy clients. Therefore, all their processes are designed with the end-user (the customer) in mind. This can be seen as a second strength as it has allowed the business to both attract and retain its consumers. A strong understanding of their client journeys is a competitive advantage as many firms struggle to acknowledge the same. Additionally, it is highly unlikely for businesses to design the same client journeys even if they have the same target audience.

Weaknesses

The late entry into the digital space can be seen as a weakness. Indeed, as Goldfarb, Greenstein, and Tucker (2015) explain the digital economy has become a key part of business growth in the last couple of years. There are several opportunities that have come up due to this digital space. For instance, people are able to engage with potential clients from different countries without any extra costs. Secondly, the digital platform further enhances the consumer journey as it makes it easier for the clients to reach out and interact with their favorite brands from wherever they are, and at whatever time. The fact that Designer Stylez has joined the platform late is a weakness as they have less experience in that specific space. It is crucial that the team get the right person to help boost their digital presence in order to enjoy the benefits of e-commerce.

Opportunities

The mentioned weakness can be perceived as an opportunity for the company. Pedro and Cagica (2017) explain that the seamless combination of both brick and mortar and digital space is the future of business and retail. The statement means that a mixed and successfully linked online and physical presence is an opportunity that companies have to take advantage of in order to get the desired competitive edge. Since Designer Stylez already has a great approach for their physical store, they have an opportunity to effectively link this up with their online platforms. This is often referred to as the omnichannel. Arguably, the concept of omnichannel presents a competitive edge, as it not only affects consumer journeys but also differentiation. This is not primarily guaranteed through different products and services but through ensuring brand equity and the reputation of the firm. It is essential to note that the status of the enterprise can be used as its competitive edge. Proper application of the omnichannel concept will ensure that the firm’s image is positive among the public, as it will be known for both quality and reliable consumer engagement.

Threats

Like many retail businesses that are trying to improve their bottom line today, Designer Stylez is also facing several threats to its position in the market. The first threat is competition, which has mainly been on the digital front. Ozuem, Patten, and Azemi (2019) reveal that the nature of the internet and e-commerce has allowed more people to start businesses online. Due to the fact that clothes and shoes are fast-moving products, there are numerous digital shops that offer the same goods as Designer Stylez.

Yes, we can!
Our experts can deliver a custom Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez paper for only $13.00 $11/page
Learn More
322 specialists online

PESTLE Analysis

Political

The company is affected by political agendas that relate to policy formulation. Since the firm is seeking to use omnichannel to enhance its competitive edge, and political policies that affect the digital economy will also affect the corporation’s profitability. It is crucial to note that this can either be positive or negative as it depends entirely on the policy implemented at that time. The same applies to the physical shop that the business currently runs. Any new policies signed by the political leaders that affect issues such as taxation, rent, and even salaries will affect the enterprise’s bottom line.

Economic

The stature of the economy will affect the business as many people often purchase shoes and clothes as part of their luxury spending. Therefore, when the target market’s source of income is greatly affected, they will not be able to make orders. In turn, the company will record fewer profits. Currently. the firm is affected by the slow economy due to the global pandemic. The physical shop was further affected as the management had to close due to the extended lockdowns. The experience makes the growth of the business’s online presence more important.

Social

The social element of the PESTLE analysis ties closely to the economic angle. It refers mainly to the status of the individual purchasers which will either be affected by a communal event (pandemic) or an isolated event (personal). As stated, many people perceive the constant purchase of both shoes and clothes as a luxury. Thus, for the company to continue recording profits, its target audience must have disposable funds in order to make the purchases. In the event that they do not, or part of this group is not able to make orders, then the bottom line will be negatively affected.

Technological

The impact of technology on the business has already started to be felt. As explained previously, digital space is currently one of the key elements of the economy of any country. Global trade has been enhanced significantly due to e-commerce. It is vital to point out that the digital space refers to both the websites and social media platforms. Indeed, numerous companies have their own websites where people can purchase their products. However, smaller companies have also enhanced their businesses by selling through social media platforms such as Facebook, Instagram, and Twitter.

Legal

Any legal action that is filed in relation to business operations will affect Designer Stylez. The issue of taxation is both political and legal. Whereas changes to the taxation policy are political, the adherence to the same is legal. The senior management of the firm has to know all their legal obligations to ensure that they do not lose their competitive edge. Additionally, anticipating some of these changes will also help lower costs that might have otherwise been needed to revert the implications of legal changes. Towards this end, this will further enhance the company’s competitive edge.

Environmental

There is a crucial need for all corporations to take care of the environment through both their core business activities and their day-to-day actions. Using the suggested omnichannel will further develop the firm’s competitive edge as it will ensure they lower their carbon footprint. Additionally, the amount of space needed will be reduced as a significant number of the enterprise’s target audience will access their favorite brand online.

Ansoff’s Growth Matrix

The Ansoff growth matrix offers executives the opportunity to analyze their growth opportunities. Rao and Klein (2015) explain that the matrix provides four elements that have to be considered, namely, market development, diversification, market penetration, and product development. These elements are then further divided into new and existing market segments. Each of these elements has some risks that are tied to them. This section will look into the different segments and also apply them to Design Stylez.

Cut 15% OFF your first order
We’ll deliver a custom Management paper tailored to your requirements with a good discount
Use discount
322 specialists online

The first growth strategy is market penetration, which refers to the proper absorption of a brand in its current markets. Therefore, this type of growth would ensure that Design Stylez attracted and retained more of the clients who visit its physical store. The most important part of this strategy is to increase the market share of the company. Arguably, this will significantly increase the profitability of the firm. As stated earlier, the physical store is Design Stylez’s biggest asset as many consumers still prefer to visit a physical shop even when they have the option of shopping online. It would make sense for the business to apply this strategy to capture more of the market as many of its competitors are focusing on their online platforms. One risk of this strategy is that the market is steadily moving towards e-commerce.

The second growth strategy in Ansoff’s growth matrix is market development. Furrer (2016) explains that this concept relates to the idea that a firm will grow if it penetrates new markets. Ideally, these markets are geographical and physical, such as countries. Design Stylez is yet to reach out to new markets as it has focused on the small community it is located in at the moment. The suggestion for the corporation to incorporate digital marketing will open it up to these new markets. Additionally, the fact that the company did not have an online presence also ensures that entry into the digital economy is a form of entering a new market. A vital risk of penetration into new markets is an insurable risk, where the failure recorded in the new market will also affect the main store.

Thirdly, product development is a crucial growth strategy. Rao and Klein (2015) argue that many companies rely on the development of new products or new versions of their old products to capture more consumers. This strategy requires significant funding to ensure that the new product that is developed is profitable. First, the firm has to do significant market research to understand what its consumers need. The market research will then inform the new product that will be developed, how it will be marketed, and which channels will be used to do the same. Currently, the corporation does not have any plans to develop any new products as it deals with ready-made clothes and shoes. Therefore, the business cannot use this strategy to grow, thereby not facing the financial risk that comes with the strategy.

The last growth strategy in the matrix is diversification, which refers to branching out in terms of both new products and new markets. Furrer (2016) argues that this is the riskiest of the Ansoff matrix’s four strategies. This is due to the fact that the company will be carrying the risks associated with both market penetration and market development. Again, Design Stylez does not intend to diversify at the moment; therefore, it will not use this specific growth plan.

Financial Growth

Design Stylez can be considered a small business, and one of the potential sources of funding for the firm is bank loans. Various banks offer low-interest loans to small businesses and start-ups. The enterprise should consider this option if there are currently no other bank loans that the owner is servicing. It is critical that the management balance the assets and debts of the firm to ensure growth. Gallino and Moreno (2019) argue that companies that take too many loans end up having negative value and, in turn, cannot also attract viable investors. If the business has its debt under control, installment loans offer the best way to ensure growth while still paying off debt in a sustainable manner. One of the justifications that can be used as to why Design Stylez should consider loans is the fact that proper debt management allows for the growth of a business in terms of relationships with its financial partners.

A second viable source of income that can be availed for Design Stylez is crowdfunding and peer lending. As the name suggests, this option allows the owner of the business to fundraise for the company. It is often considered a better option as it does not rely on credit scores. Additionally, the funds raised do not have to be returned to the owners, like in loans. There are numerous ways businesses have raised funds for their activities and for purposes of scaling up their operations. Currently, a good number of companies use digital platforms to raise the required funds. Interestingly, there are numerous online money transfer services such as PayPal that have made this process that much easier. Arguably, Design Stylez is justified to use this approach as it does not tie the institution down in regard to interest payable.

Indeed, Design Stylez has to consider investment options in an attempt to both grow their capital and their client database. Fraser (2019) reveals that collaborations are the best way for small companies to secure investment. This can be a collaboration with peers or even with larger institutions. As stated, the enterprise deals with ready-made clothes and shoes. The management can seek collaboration with some of the brands that they display in their shop. Such collaborations will both boost the reputation of the firm as people will associate it with the identified brands. In turn, it will be easier for the management to attract investors when they want to expand.

Get a custom-written paper
For only $13.00 $11/page you can get a custom-written academic paper according to your instructions
Let us help you
322 specialists online

Secondly, the corporation can enter into a joint venture with another firm that offers complementary goods and services. For instance, they can encourage a joint venture that includes a renowned company that sells handbags. Together, they can provide styling options by creatively combining clothes, shoes, and handbags.

Appraisal

It is expected that the firm will successfully achieve the stated strategic objectives through the proper implementation of the frameworks and strategies identified. It is critical to note that the business can still fail to improve its bottom line despite this. Therefore, there is a need to develop two exit strategies for the firm. The first is in the event the corporation is successful and attracts investors while the second is in the case the firm is not as successful as desired.

The first exit strategy is liquidation, which is the selling of all assets and settling debts. Any money that remains from liquidation goes to the owner of the company. Zenger (2016) explains that many small companies rely on liquidation as an exit strategy. This is mainly due to the fact that it is straightforward and does not require any consensus from employees. However, it is often essential to pay any pending employee salaries after the liquidation of the firm. One of the drawbacks of this exit plan is that if the business is in a lot of debt, all the money received from liquidation will go into debt. It offers a low return on investment for the owner of the corporation. Additionally, the assets’ price will also be lower than they would ideally go for because they are considered distressed items. It is often encouraged that one rethink ways of making the business profitable before liquidating. If a viable solution is decided, it will be more profitable for the owner to sell the business to someone else.

A second strategy that can be considered is giving the business to a family member or friend to manage. This is often the case if poor management has been recorded in a business that would otherwise be profitable. One advantage of this is that the business’s legal owner does not have to change as the critical element is to encourage a managerial shift. Often, one funds that the owner of the company is the holder of the original idea, but does not have the right skills to lead a team or even manage the business. This will lead to significant losses, and a simple change in managers will ensure the business runs smoothly and records profits. A limitation of this strategy is that it can cause family wars due to the complexity of choosing the right person for the business. Additionally, no change will be recorded f the wrong person is selected to head the firm. It is not a guarantee that a family member will be a better manager. The owner of the corporation has to ensure that the selected individual also has proven managerial skills.

Additionally, the business owner can sell the entire firm to his or her managers or employees. This is especially the case if the selected employee is a technical person that understands the business better. It is common to find people starting businesses but hiring technical managers to run the same day-to-day activities. Equally common is to find such firm owners taking full charge of decision-making even though they are not qualified for the same. In such scenarios, it is advisable to sell the business to the technical staff so that they have full decision-making control. One advantage of this plan is that it ensures the business is inherited by a person who is keen on providing the services offered and growing the brand. Additionally, since the staff has been working for the company, he or she understands the needs of the other employees and the clients as well. On the other hand, one disadvantage of the approach is that the employees might also not be qualified to run the business fully. Indeed, just because they are technical does not mean that they are business savvy. Additionally, the staff might not be interested in purchasing the corporation.

The business can also be sold in the open market as an exit strategy. This is one of the most common exit strategies for small businesses that have been successfully run for years. An example can be used to explain further. A woman has been running a small hotel for the last 30n years and has decided to retire and use the money to travel all over America. The best option for this woman would be to sell the hotel in the open market, where interested parties give her offers, and she decides on the best one. The buyer can then keen the same name of the hotel, but clients can be informed that management has changed. On the other hand, the woman can take the money and travel as she desired. One advantage of this approach is that it offers the owner the best price for the business. The return on investment in this exit plan is significantly high, as the price will include all assets and the corporation’s reputation. One drawback of the plan is that it can take a long time to get the right buyer. It is important to note that the term “right buyer” here refers to both a person who can afford the desired price of the business and has an interest in the sector.

Lastly, the corporation can be sold to another firm as a potential exit plan. The acquisition of one company by another is often linked with various factors. First, many larger companies will acquire companies that are one, making a profit or, secondly, have the potential to make a profit in the future. Therefore, the affected businesses have to show how they are maintaining their bottom line and how they plan on improving it in an attempt to lure investors. Arguably, companies can also be acquired when they are part of debt repayment. This approach is often considered for companies that also have employees in an attempt to retain the staff of the store. Unlike mergers, acquisitions often retain the staff as they are perceived to understand the brand better. However, they are absorbed into the larger organization and have to shift their business culture where applicable. One advantage of this is that it helps employees retain their jobs. A second benefit is that it can be significantly profitable for the owner as it ensures return on investment. However, one limitation of this is that it can lead to the folding of the business if a competitor acquired it. This will not only lead to eventual job loss, but it will also erase the brand from the market altogether.

It is important to note that each of the strategies offers its advantages and disadvantages. However, the need for exit is what often determines the type of plan selected. People who are tired of managing their businesses can sell with a peaceful conscious while those who are letting go due to debt will not enjoy the same options. In the first instance, the sale will ideally also be highly profitable, while in the second, it will most likely be a loss as the asset is in distress.

Recommendation

Design Styles will have to develop two primary exit strategies as part of the business plan. The first recommended plan is to sell the business to managers/staff. One of the reasons this is a viable strategy for the firm is that it is currently a small enterprise. Additionally, the owner can still keep a sizeable percentage of the company’s shares to get benefits. The corporation also has employees who will ensure that they still have their jobs even after the transition. This approach avoids the problems associated with a complete change of leadership both in regards to staff and clients. Indeed, some clients change brands only because the brand changed ownership. It can be assumed that the managers are also well known by the clients, hence, ensuring a smooth transition.

On the same note, the approach ensures that the successes and efforts suggested in the business plan are implemented as the staff is a crucial part of business plan implementation. The business plan is developed by the senior management and the staff that interact with the clients daily. It can be argued that when the manager acquires the business, the same level of commitment to the brand will also be assured. An arrangement can be reached on how the business will transition. The manager can pay upfront or in installments based on the agreement. Additionally, the owner can hold onto the firm’s leadership until the manager completes his or her payments. Overall, this approach offers a seamless, easy, and straightforward way for the owners of Design Stylez to exit the enterprise eventually.

A second recommendation is for the exit when the company is not doing as well as expected. This means that the firm is not recording as many profits as the owner anticipated, even after the implementation of the business plan. The most viable option for Design Stylez is to encourage an acquisition by a larger enterprise. Numerous stores offer the same services as Design Stylez. The fact that the firm has a reliable store and a steady consumer base will attract some investors to the business. The owner of the business must start the process early as it can be time-consuming. It is common to find that a business owner starts looking for a business to acquire his or her firm at a time when it is profitable, but by the time they get the interested party, the business is no longer profitable. This is why such an exit plan has to be adopted early so that strategies are put in place to ensure the firm is ready when such a necessity arises. Arguably, having both exit plans is important as it allows for proper planning. Indeed, it is difficult to think of the possibilities of one’s business failing. However, in business, it is always better to have a plan as it prepares one for either win or loses.

Reference

Fraser, C. (2019) Business statistics for competitive advantage with excel 2019 and JMP. Charlottesville: Springer.

Furrer, O. (2016) Corporate level strategy: theory and applications. New York: Routledge.

Gallino, S. and Moreno, A. (eds.) (2019) Operations in an Omnichannel World. New York, NY: Springer.

Goldfarb, A, Greenstein, M. S. and Tucker, E. C. (eds.) (2015) Economic Analysis of the Digital Economy. London, UK: University of Chicago Press.

Mishra, S. C. (2017) Creating and sustaining competitive advantage: management logics, business models and entrepreneur rent. New York: Springer.

Oyku, N. I. (2018) Creating business value and competitive advantage with social entrepreneurship. Istanbul: IGI Global.

Ozuem, W., Patten, E and Azemi, Y. (eds.) (2019) Harnessing Omni-Channel Marketing Strategies for Fashion and Luxury Brands. Boca Raton, FL: Universal Publishers.

Pedro, I. and Cagica, L. C. (2017) User innovation and the entrepreneurship phenomenon in the digital economy. Istanbul: IGI Global.

Rao, P. M. and Klein, A. J. (2015) Strategies for high-tech firms: marketing, economic, and legal issues. New York: Routledge.

Zenger, T. (2016) Beyond competitive advantage: how to solve the puzzle of sustaining growth while creating value. Boston: Harvard Business Review.

Cite this paper

Select style

Reference

BusinessEssay. (2021, December 31). Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez. Retrieved from https://business-essay.com/investing-in-the-future-and-developing-an-exit-plan-basis-of-competitive-advantage-for-designer-stylez/

Reference

BusinessEssay. (2021, December 31). Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez. https://business-essay.com/investing-in-the-future-and-developing-an-exit-plan-basis-of-competitive-advantage-for-designer-stylez/

Work Cited

"Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez." BusinessEssay, 31 Dec. 2021, business-essay.com/investing-in-the-future-and-developing-an-exit-plan-basis-of-competitive-advantage-for-designer-stylez/.

References

BusinessEssay. (2021) 'Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez'. 31 December.

References

BusinessEssay. 2021. "Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez." December 31, 2021. https://business-essay.com/investing-in-the-future-and-developing-an-exit-plan-basis-of-competitive-advantage-for-designer-stylez/.

1. BusinessEssay. "Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez." December 31, 2021. https://business-essay.com/investing-in-the-future-and-developing-an-exit-plan-basis-of-competitive-advantage-for-designer-stylez/.


Bibliography


BusinessEssay. "Investing in the Future and Developing an Exit Plan: Basis of Competitive Advantage for Designer Stylez." December 31, 2021. https://business-essay.com/investing-in-the-future-and-developing-an-exit-plan-basis-of-competitive-advantage-for-designer-stylez/.