MaxShim Florists is a firm that operates in the form of a partnership type of business structure. The firm is established within the US floral industry. The business was established in 1999 and has expanded to other regions in the US. Its headquarters are located in California, US. The firm’s major operations involve supplying fresh-cut flowers within the domestic market. It also procures various floral designing components from the manufactures and supplies them to the floral designers. Some of these products include ribbons, baskets, vases, floral foam, stands, and flames. The firm has employed 200 employees who are involved in various activities of the firm.
Over the past nine years, the firm’s average annual profit has been $120,000.The firm also owns a farm where it grows different varieties of flowers. To ensure that there is a steady supply of flowers, the management of the firm also sources flowers from small-scale farmers. In 2008, the firm’s profit was $150,000 which represents a 15% increase over the previous financial year.
The business’ primary mission is to operate in an ethical manner and offer products that will result in customer satisfaction in terms of product quality. In the operation of the firm, the customers are considered the most important element of the business. This means that the management of the firm is concerned with establishing a customer relationship based on the principles of mutual benefit and respect. To ensure that the customers are satisfied, the firm is committed to ensuring that its operations are conducted effectively. The firm is also committed to ensuring that it meets the dynamic needs of the customers through product innovation.
The management of the firm has realised that there is a high probability of the firm increasing its profit potential. To tap the industry potential, the management has formulated a strategy that is aimed at expanding its line of operation by venturing into floral designing. This involves the art of creating a balanced and pleasing composition using flowers and other plant materials. Floral designing has been in existence for a long period of time. However, floral designing has witnessed a rampant growth over the past decade. By venturing into floral designing, the firm will be able to attain a high competitive advantage within the industry and also improve on its profit margin. This is due to the fact that it floral designing will not only be based on fresh cut flowers but they will also include artificial designing. The artificial designs will be produced from cloth materials. Use of cloth materials will give the firm a competitive edge since the firm’s products will have a long shelf life. In addition, it will be more cost effective to obtain the cloth materials. This means that the cost benefits will trickle down to the consumers in terms of reduced product prices.
Currently, consumers are becoming more sensitive to decorations. This has resulted into emergence of various designs. By venturing into floral designing; the firm will be involved in producing various floral designs such as boutonniere, bouquet, garland, nosegay, wreath, corsage, and ikebana. Boutonnière consists of a collection of 1 or 2 small flowers with an accent similar to that of a fern. On the other hand, bouquet involves a collection of flowers that are creatively arranged. Ikebana as a floral design mainly emphasises on harmony, form and balance. It also includes other parts of the flowers such as the stem and leaves (Tricia, 2009).
The management of the firm will ensure that it designs its flower products effectively by incorporating the concept of visual arts. Colour is an important element in visual arts. Flowers of different colour will be combined in a way that will result into harmony. These designs will enable the firm to satisfy the diverse consumer’s demands in relation to decorations.
The US floral industry is well established and consists of approximately 60,000 small floral businesses. These include the growers, distributors, retailers, wholesalers, and importers. The demand of flowers by consumers is determined by their discretionary spending. On the other hand, the profitability of businesses in the floral industry depends on their effectiveness in marketing. In addition, these firms focus on pricing, customer service and convenience of location for them to be competitive. The floral industry is labour intensive (‘Industry profile excerpt, 2009).
There has been a steady growth in the US floral industry for the past eight years. This is illustrated in the table below which shows the annual retail flower sales in US.
|Year||Sales in all retail outlets |
Amount in billions $
It is estimated that the annual flower sales for a firm amounts to $320,000. In US, California State is the largest producers of flowers. It accounts for 77% of all the flowers supplied in the US market. The industry also obtains fresh flower supplies through importation. South America is one of the largest sources of fresh flowers that are supplied within the US market. 70% of the US domestic flowers come from South America (‘Industry profile excerpt, 2009, ¶ 5). Foreign imports form the largest percentage of flowers sold within the US market.
Firms SWOT analysis
- Strong financial base. The firm has adequate financial resources in the form of retained earnings. This will enable it to conduct floral designing effectively.
- Superior knowledge of floral business. The firm has been in existence in the floral industry for eight years and is thus well versed with floral business concepts.
- The firm has a well established distributional channel within the domestic market. The firm will use these channels to ensure that their new product penetrates the entire domestic market.
- The firm has established a good public image by supplying quality products to its customers.
- The firm has a well established customer oriented culture which has enabled it to develop a high customer loyalty.
- The firm is an expert in growing high quality flowers in its farm.
- There are gaps that exist in the firm’s human capital. The firm does not have all the necessary expertise necessary for it to conduct floral designing effectively for it to become the market leader.
- Financial constrains. The firm will be involved in constant research to develop designs that meet the consumers demand. This will result into increase in firm’s expenditure.
- High probability of the firm increasing its profit level due to increased demand for floral designs by consumers. Consumers are increasingly incorporating artificial floral designs as a form of decoration.
- Increased chances of product innovation. The firm can attain a high competitive advantage by adding value to its products through innovation.
- High probability of the firm expanding its market size. The firm can expand the scale of its operation by venturing into the foreign market through various avenues such as foreign direct investment or exporting.
- The firm can incorporate the current technology in growing flowers in its farm. This will enable the firm to produce flowers of different variety and of high quality.
- Increase in the volume of flowers imported into the US market increases the operational efficiency of the business through out the year. This is due to the fact that there will be sustainable supply of flowers within the industry.
- High competition from leading firms in the domestic market. These firms include Alexander Flowers, Rowers Plus and Blossoms Fresh Flowers Market.
- Changes in tastes and preferences in relation to floral designs.
- Decline in consumers’ purchasing power as a result of the current economic recession. Currently, consumers are emphasising on purchasing necessity products such as food.
- Low consumer demand in US compared to other countries. US citizens have not yet formed an effective culture of flower consumption compared to other countries such as England and Holland. Only 28% of US citizens consume followers constantly compared to 63% and 76% in England and Holland respectively (Michael, n.d, p. 4).
- The lucrative nature of the industry is resulting into an increase in the number of firms entering the industry. The effect is that there is an increase in the degree of rivalry culminating into a reduction in the level of profit.
- The current changes in climatic conditions would affect the growth of flowers by the small scale farmers.
- Domestic flower producers are facing increased cost of production due to increase in cost of energy, labour and land. This would have the impact of increasing the price of the flowers (‘The world of cut flowers: industry trend’, 2000).
In venturing into floral designing, the management of the firm conducted a market research to determine the market potential. The firm’s target market includes individual and institutional customers. The individual customer purchase flowers either for themselves or as gifts. The floral market is segmented using gender as a demographic variable. In US, the flower market is composed of 79% of consumers being women while 21% are men (‘Consumer trends on buying flowers’, 2009). In addition, women are the largest consumers of fresh flowers with a consumption rate of 65% compared to that of men which is 35%.
In designing the floral products, the management of the firm has considered individual flower consumption during various occasions. The calendar consumption of flowers during occasions such as weddings and get-well is 14% compared to non-calendars occasions consumption which is 86%. The management of the firm intends to make increased revenue by making high sales during occasions such as Christmas, Valentines Day, Easter, Mothers Day and Thanksgiving Day and other social gatherings. This shows that there is a high potential of the firm making profit by selling flowers throughout the year (Katie, n.d, p.42).
By targeting the individual consumers, the management of the firm identified that there is a trend that is emerging amongst the consumers to use flower to commemorate various special occasions. In addition, this customer category use flowers to pass on special messages for example ‘I love you’ and ‘Get well.’ In addition, flowers are used to create an atmosphere of festivity (Jenny, 2009).
There is also an increase in demand by institutional consumers. Various organisations are using flowers to beautify their offices. In addition, these consumers are increasingly using flowers to beautify their occasions such as annual general meetings, and launching of products. This shows that there is a high probability of the firm succeeding in the new venture.
Competitor and substitutes
The firm faces intense competition in the domestic market from other competitors such as Alexander Flowers, Rowers Plus and Blossoms Fresh Flower Market. These firms have effectively established outlets in various geographical regions within the domestic market. This is enhanced by the fact that these firms have been in existence within the market for a considerable duration. For instance, Alexander Flowers and Blossoms Fresh Flower Market have been in existence for ten years. This gives these firms a high competitive advantage in that their products are accessible by a large number of consumers (‘Retail florists’, 2005).
In addition, these firms have well established floral designs that are widely recognised. For instance, Blossom Fresh Flower Market is well known for its originality and high quality products. This has enabled these firms to attain a high competitive edge by developing brand loyalty and hence the customer loyalty. Increased customer loyalty results into an increase in the level of revenue for these firms which enable them to conduct their designing process effectively. The financial strength of these firms enables them to conduct effective product promotion and market research. Through market research, these firms are able to incorporate the consumer demands in their products thus enhancing customer satisfaction.
These firms supply diverse competing floral product to both individual and institutional consumers such as bouquets, corsages and buttonholes. They also supply flowers for various occasions such as weddings, Christmas, and funerals.
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