Table of Contents
Smart Objectives of the Business. 6
Business Start-up Influence. 8
Market Segmentation and Marketing Mix. 15
Characteristics of Target Market Segments. 15
Justification of the Target Market Segment Viability. 16
Organization Structure and Human Resources. 19
Executive Summary
The business of interest is a Fashion Line Boutique. The boutique will deal in the design and sale of Muslim dresses. The boutique will also sell ornaments for the Muslim women. The designs of the clothes will come from the designers in the boutique, which will feature the normal sizes of women and the plus sizes. Additional services in the boutique will include personalized shopping where the shoppers will get personal assistance in shopping. The attires will reflect the religious inclination of the women indecency and modesty without the violation of the religious beliefs.
The boutique will be taking orders from the customers and design them according to the specifications. The boutique will be open for both the locals and the tourists in the region without any discrimination. More products will resemble those from the western culture such as trousers and dresses. The location of the boutique will be in Dubai on the Dubai Mall. The mall is big and the number of customers in the mall is very high on a daily basis. The location of the mall in the center of the city make the location accessible to many people.
With the prime location, it will be easier for both the locals and the tourists to locate the boutique and the exceptional services will ensure the boutique stands out among the others. The rooms in the mall are big and the size of the business dictates the need for a big room. The traffic in the mall is extremely high providing a high potential for making profits from the business. The population of the city was over two million in the year 2013. Tourists storm the city in high numbers due to the temperatures in the city and the architectural buildings that are tourist attraction sites.
The strategic positioning of the boutique aims at tapping the potential held by the people visiting the mall.The capital required to set up the shop is $150,000. The two major divisions for the capital will be the assets and the expenses. The expenses will cover a third of the capital, which will go towards renting the location, furnishing the location to fit the required status and payment of the employees who will be working in the boutique.
To familiarize the potential customers with the boutique, part of the expenses will go towards advertising the boutique in the media to ensure popularity. The assets will go towards the acquisition of the designers and the employment of the personal assistants to help with the shopping. To reduce the costs, the business will seek the services of the relatives who will offer their services at a cheaper cost.
The capital will come from the savings and loans procured from the relatives. The methods of funds acquisition reduce the chances of undergoing high interest rates with the local financial institutions. With time, the boutique stands a chance of offering services to people from all over the world who are in the city. The opportunity of investing with the boutique is still open. The opportunities are open to anyone with the need to be part of the biggest boutique in the city and be part of the team. Investing in the boutique offers a chance to profit from the business.
The location of the business and the products and services offered to the customers holds a huge potential for the business growing big. In a period of two years, the business aims at investing in other boutiques within and without the city. The people investing in the boutique will get to analyze the progress in the boutique through the availability of all the records in the boutique. The shipping rates for the shareholders will be lower than the other part of the population, as some of the privileges of being part of the investment. The investment is an opportunity for financial freedom and growth in the business.
Business Description
The Business Idea
The idea in the business is to appreciate religious beliefs of the women in the country and offer a fashion line that gives the Muslim women’s diverse fashion options. Most of the women would like to have attires that offer a wide range of fashion choices that do not violate their religious beliefs. Many people require guidance in shopping while at the same time; many of the plus size women do not get clothes that fit them. The boutique will provide the answer to all the challenges under the same roof. The boutique aims at closing the gap in fashion for the Muslim women by providing designers who will make customized designs for the customers. The designs will offer the Muslim women with a wider variety compared to the limited ones in the country.
The attires represent the religious culture in the United Arab Emirates. The products will keep the women smart while holding up their religious beliefs. Both the locals and the tourists who are Muslims will find the boutique useful because of the wide range of products in the boutiques. If a customer does not find a suitable product, the custom tailors in the building will produce a product that fits the specifics given by the customer making it easier to meet the demands of every customer. The wide range of products will ensure all the customers get something to buy from the boutique (Jefferys, 2011, p. 266). Just as the name of the boutique, Fashion Line Boutique will offer unique products at unique prices that meet the financial capacity of every customer.
Unique Selling Point
Fashion Line Boutique selling point addresses the measures in the business that differentiates the business from others that offer similar services. At Fashion Line Boutique, the customer comes fast. The boutique will provide a wide variety of goods with diverse fashion needs. Many of the boutiques in the country provide goods with a few alternatives limiting the choices of the Muslim women. To beat the competition, the boutique invests in the production of goods according to the specifications of the customer and unique designs (Trentmann, 2012, p. 274).
The goods will acknowledge the religious culture of the women in the region and offer choices that acknowledge the religion. The prices of the goods will be reasonable. The different prices ensure the catering of the whole population without discrimination on the financial abilities. The prices will depend on the design of the product and the costs of production.
The boutique will accept currencies from all over the world to accommodate the tourists. Many boutiques only accept American dollars and Arab Emirates Dirham. The acceptance of the currencies will ensure all tourists spend freely without the inconvenience of having to change the currency.
Mission Statement
To fill the fashion gap in the fashion industry in relation to Muslim women dressing
Smart Objectives of the Business
The business looks forward to establishing a huge market base in the region and on the global market. SMART objectives refer to the objectives that are attainable in the business. In Fashion Line Boutique, the first Specific goal is increasing the market share of the business. The goal focuses on increasing the number of people buying and ordering the goods in the country and the GCC region at large. With the investment of different shareholders, an increase in the market share would see a rise in the value of the business and growth of the clientele.
Secondly, the measurable objective of the company revolves around raising the profit margins of the investment. In the first year of operation, the business aims at raising the value of the shares by four percent. Such a growth would ensure the business makes the profit, and the value of the shares increase making the business competitive.
Looking at the market the potential, the business is capable of achieving the target and the investment placed in place stands high chances of meeting the objectives. The capital required to set up the business will provide the necessary resources to see the business grow (Baschab & Piot, 2007, p. 494). The investment can advertise the company and provide the customers with the goods in demand to realize the growth.
In a period of one year, the growth will see a return of the investment and further investment in the business. In the first one year, the company targets the growth of the market share by a value of 4%. The target is because of the extensive measures of advertising the business to the customers and the agreements signed with the designers. The designers will concentrate on the creation of unique designs and ensuring the value of the production meets the intended levels.
Legal Business Ownership
The ownership of the business will be in the form of partnership. The people involved in the investment will form the partners of the business. Making of decisions involving the business will call for the attention of the partners who will sign any major changes in the business. At the end of every financial year, the partners will meet and discuss the previous year, come up with a way forward and enforce of adopting new strategies. The partnership will be the general partnership where all the partners have a legal binding to the company.
Business Location
The location of the business will be in the Dubai Mall. The mall has a high number of visitors on a daily basis. The visitors are from the local population and the tourists. The reason behind the high traffic is the high number of stores in the building that sell clothes and other accessories to the people. The mall is in the city, easing the process of accessing the boutique..
The location will ensure a high number of tourists and locals into the boutique to sample and buy the goods. Visiting the island get the chance to see the business and sample the products. With the target customers being the tourists in the region and local Muslim women, the position is strategic to the business (Ryan & Hiduke, 2013, p. 158). Many customers will be able to access the business with ease, making the business enjoy the highest sales from the customers.
Business Start-up Influence
The reason behind the establishment of the business was the untapped potential for the Muslim women’s clothes. Most of the boutiques are small and offer a limited range of products. Despite the high number of the boutiques, the demand remains high and the variety remains low. Provision of a higher level of fashion will tap the potential that looks to get unique products.
The establishment of the business aimed at meeting the demands of the customers and making a profit from the business. The business also appreciates the Islamic religious affiliation for the women. Dubai is a very rich city and people from all over the world live in the city for tourism reasons or work related reasons. The business will provide better fashion designs from the designers and the directives of the clients.
External Analysis
In business, the success of the investment depends on the internal and external factors of the company. The internal factors are those in the control of the business while the external factors are those controlled by the environment of the business. A consideration of the factors presents the business with better chances of growing in profitability and market share. The external factors for Fashion Line Boutique will consider the political, economic, social and technology in the region.
Political
The political stability of the region is unwavering. The region is under the leadership of Sheikh Hasher bin Maktoum Al Maktoum (Walker, 2010, p. 372). Due to the political stability, the region provides many opportunities to grow both economically and socially. Tourists tour areas with political stability in huge numbers due to the peaceful nature of the place and the stable environment.
With the business targeting tourists and the Muslim women, the political stability will ensure the number of customers increases on the daily basis providing higher chances of making profits. In addition to that, the government of the city does not charge high taxes to the businesses in the region. In some countries, the tax policies are extreme making the survival of the business quite challenging. The taxes in the city are friendly, thus encouraging the establishment of businesses.
Economic
The economy in the city is quite high. The region is rich in petroleum products making the region sustain a high economic level. The unemployment rate in the city is extremely low to the extent of people coming from other parts of the world to secure employment in the region. The increase in the sources of finances realizes a high economic growth. The sources of financing are the mining of oil in the region and the tourism activities in the region.
The high economic growth and the financial stability of the people present the business with a population with the ability to spend on the boutique. The high number of tourists will also provide the business with customers buy the goods. The pricing of the boutique will ensure the prices are within the affordability of many of the potential customers. The currency of the country is competitive compared to the currencies of other countries. The competitive nature of the currency will ease the importation of the goods into the country.
Social
Social factors refer to the cultural practices in the region. The target population for the business is the women and tourists. Tourists have the tendency to buy goods that reflect the culture of the region they visit. The designs of the products will reflect the religious inclination of the women in the country. The designs will reflect on the needs of the women, despite the varying ages and nationality. The population of the country, thus presents a large opportunity for the business.
The population is composed of the younger population who will appreciate such products because of the fashion in the designs. The social setting of the region is rich enough to make the business expect good results. The recruitment of the employees in the business will ensure a composition of people with professionalism in fashion to meet the objective of the business. Such social factors will play an important part in enhancing the demand for the goods in the market and increasing the flow of goods in the business.
Technology
The level of technology in the city is recommendable. The technology will play to the advantage of the business. In the expenses of the business, there is the creation of a website with the information on the company, which will ease the location of the business of the customers and enable online shopping. Technology will also help the business in identifying the trends on the products thus making it easier to stock the business. Technology eases the process of communication concerning efficiency and low costs.
The business will invest in the transaction using credit cards. The reason behind the decision is the preference for cashless transactions in many parts of the world. Due to the security associated with the carriage of money, many people prefer transactions without money. Technology in the country is high and with good measures in place, the technology will ease the process of running the business and advertisement (Pousttchi & Wiedemann, 2010, p. 62).
Competition
The city has many boutiques. The city has a high number of boutiques. The malls sell general products, making the goods sold to be similar. To beat the competition, the boutique will provide unique goods to the customers making the boutique stand out. Some of the boutiques that might offer competition include Abaya stores which are smaller and do not provide customized goods. To avoid the products in the boutique resembling those from other stores, the designers will sign a contract that prevents them from selling the design sold to the customers to other boutiques.
Furthermore, other boutiques do not offer guidance to the customers in conducting their shopping. Such additional services will attract more customers and enable the boutique to be on top of the competition. The boutique will also secure legal terms to prevent other designers from stealing the designs and flooding the market thus diluting the brand. In addition to the unique designs, the boutique will stock clothes like the abayas, jalabiyas, shawls, scarves, and dresses among others.
SWOT Analysis
SWOT analysis considers the strengths of the business, the weakness, opportunities, and the threats (Moynihan & Titley, 2001, p. 327). The analysis ensures the maximization of the strengths and opportunities while minimizing the threats and weaknesses of the business. One of the strengths of the business will be the location. The high local population and tourists in the city presents the business with a high chance of making high sales. A region with a high number of people with financial stability offers a higher population with the ability to buy goods from the boutique.
However, if the financial ability of the people were low, then the business would struggle to raise the number of customers required for a considerable profitability. The products sold add on to the strength of the business. Fashion Line Boutique in the city center will be accessible to many people presenting a high chance of profitability. The uniqueness of the clothes and the jewels will attract more customers not to mention the personalized help in shopping and the tailors. The unique setting in the business will reduce competition.
The weakness of the boutique comes in through the products manufactured. The goods only fit a single gender, which is the female gender. The women in the city have the opportunity to come into the business and get customized products that go along with their needs. However, the boutique does not meet the need of the male population. A big percentage of the population is male and the lack of any product for the male leaves a high potential untapped.
The business has a weakness in the aspect of gender bias. Secondly, the high population in the mall might lock out the people who hate crowded places. The location might be challenging for such (Fried, 2015, p. 271). However, with time, the business will lead to further investments with goods for the male population. The purpose of the SWOT analysis is to put measures in place that reduce the negative attributes of the business and increase the positive ones. By increasing the number of branches in the city, the male population will enjoy similar services as the female group.
The opportunities for the business revolve around the cultural setting in the region. The culture of the people dictates that the women wear modest clothes. The women in the region do not wear exposing clothes such as those in other parts of the world. Other people visiting the region as tourists have their different practices for the Muslim women. The boutique will maximize on the opportunity by designing clothes that offer a wide variety of options for the Muslim women.
The culture of the people is an opportunity to make business growth. In addition, the high population offers high potential to the business for growth. The boutique will be working together with the government to take part in the cultural events to advertise the business. The opportunities in the region concentrate on the high population and the limited fashion options for the Muslim women.
The threats to the business originate in the availability of funds. Currently, the business requires a high amount of funds with a presumed budget of $150,000. The amount is very high, and the business is not in a position to operate without the funds. The plan is to acquire small loans from the relatives and the rest of the savings.
There are many plans in place to salvage the situation by ensuring the relatives work in the business to cut the operational cost. The location is too expensive. The malls in the city have expensive stores that require high monetary value to maintain. The high monetary expenses in the business require a high supply of cash to keep the business operational (Schertler, 2003, p. 82). Taking loans to sustain the business will place the business at high economic strain, and if the business operations stall, the business might fail. The financial threat can only end with a considerable number of investors who are willing to invest in the business and avoid taking loans.
Risk Response Plan
A risk response plan puts to use the SWOT analysis and uses it to ensure the stability of the business. The business will research on the fashion needs of the Muslim women in the city to provide goods that meet the needs. The boutique will invest more in new designers to increase the supply of new designs. The more the designs, the easier it will be to match to the expectations of the customers.
The designs will also provide the young Muslim ladies with unique designs that fit their needs. With many designs and the prime location, the business will get many clients and get more profits. The population in the city is Islamic. Thus, the potential in the population will provide a ready market. The population has people of varying sizes, the designers will cater for the sizes, and the personal assistants help with the shopping.
To avoid burdening the business with financial debts, the business will concentrate on the use of investors to keep the business running (Enright & Petty, 2013, p. 83). Using the investors’ money will cover the business from experiencing financial burdens incurred by taking loans to set up the business. The presence of investors will create the legal ownership of the company to be in partnership ensuring the members contribute towards the survival of the company.
The business will increase stability through elimination of the financial debt that might affect the running of the business. To increase the opportunities, the business will look forward to growing the clientele through increasing the number of designs to fit the taste of all women without interfering with the religion. The reason behind the risk plan is to minimize the chances of making the business fail and improving on the attributes that keep the business growing. The plans will reduce the financial issues and increase the survival chances of the business.
Market Segmentation and Marketing Mix
Characteristics of Target Market Segments
There are two major markets that the firm (Fashionline Boutique) will concentrate. The markets are the consumer market and the retail market. The business location receives a lot of visitors all year round. Most of the visitors are young tourists who aim to have fun and do shopping. Dubai has had a good reputation for shopping enthusiasts in the world. Therefore, the boutique will target customers from the age of 1 year to the age of 60 years. Target market analysis has shown that the majority visitors of the area are people who range from 20 years to 60 years.
These people visit with their children, and the research has shown that when they visit, shopping is their priority. Dubai is one of the famous cities that attract massive shopping enthusiasts, according to the research by (McKenzie-Mohr, 2013, p. 37). Therefore, it’s likely that the boutique will make substantial financial progress if it targeted the consumers of all ages. Since the boutique will concentrate more on Islamic fashion for women, it will strive to accommodate children, normal size women, as well as plus size women. Visitors who will visit Dubai will find variety of Hijab, and Hijab at a very friendly prices..
The other target market segment is the retail segment. Many of the resellers are from other small towns in the country as well as from other countries. Many countries in the African continent have identified Dubai as the center of retail shopping. According to the (McKenzie-Mohr, 2013, p. 37), Dubai rates the highest regarding the most visited places about the shopping in the world.
Therefore, targeting the retailers will render the business profitable. According to the studies the retailers who visit the country normally account for 40% of total individuals who visit Dubai. The business will also be boosted by the fact that the business premise will be located at the Dubai Mall. The unique shopping experience of the place will give the firm a boost since many of the shoppers will want to visit the area (McKenzie-Mohr, 2013, p. 37).
Justification of the Target Market Segment Viability
Thorough research was done before the two target markets were identified. The research on the specific target group that the boutique will target entailed various interview sessions with the suppliers, the competitors, and the potential customers. Secondary research was also used in the process of getting the ideal locality for the boutique business. Various magazines and books were analyzed, and the results showed that most of the shoppers who visit or are in Dubai usually pass by the Dubai Mall.
That gave the business a lot of potential regarding reaching the target market (McKenzie-Mohr, 2013, p. 37). The primary research entailed interviewing various stakeholders in the boutique business. The stakeholders are the suppliers, competitors, and the potential customers in the industry. The interview with the suppliers and the competitors in the industry generated useful information. The information generated helped in the formulation of the market price of the commodities, the probable returns in the business, an idea of the starting capital, and the techniques of surviving in the industry for long.
The interview with the consumers gave the business idea some life. The reason being, most of the customers responded by justifying that they love shopping every time they visit Dubai. They consider Dubai as a place where business people sell unique and quality commodities that are much cheaper than in their countries or any other town in the UAE. The local consumers also responded by stating that they do shopping every month. The information gotten from the research justified that the boutique business is the best business idea that could be started in Dubai.
Marketing Mix
The firm plans to position its products in a unique manner just as its name suggests. Product positioning is one of the important factors to consider among the other 4Ps in marketing (Mullin, Hardy, & Sutton, 2014, p. 97). The company will concentrate on Islamic Fashion for women, though the boutique will strive to add some casual wear clothing which adhere to the Islamic faith since the majority of people in Dubai are Muslims and the country is governed in accordance with Sharia Laws.
Most of the probable competitors in the industry deal with modern clothes, designer jewelry, and footwear (Mullin, Hardy, & Sutton, 2014, p. 97). However, there is a growing demand for fashionable, unique Islamic clothing in the country. Therefore, the firm will position itself as a unique manner, concentrating pure Islamic Fashion for women and other Islamic fashion wear with western inspiration.
The pricing strategy is one of the important factors in any firm. It is the only one of the 4Ps in marketing that contribute to the revenue of the company (Mullin, Hardy, & Sutton, 2014, p. 97). A good pricing strategy contributes to the attainment of the company objectives. Therefore, the firm will utilize several pricing strategies. Since the firm deals with one of a kind products, the firm will utilize the value pricing strategy.
The value pricing strategy will take into account the fixed and variable costs, competition, the firm objective, and the target group. When all of the factors are considered the firm will then set the optimal price. However, the firm will offer the unique option in every product. The client has an option of negotiating for the price. That will empower the company and also attract the widest variety of customers. When the price is favorable, the profitability of the firm will increase (Hartley, & Claycomb, 2013, p. 76).
Another important factor to consider in the marketing mix is the distribution strategy. The firm will be located in a mega store in Dubai where all its product will be displayed. The consumers will have the power to check whether the product suits them and an expert opinion on the products.
The company will also set up an online platform where any person who is not in the country or some distance away can review its product and do the purchasing using the online platform. Wholesalers will also find the distribution mechanism of the firm to be very conducive and reliable. The distribution strategy of the firm will enable the firm to be competitive in the industry and set itself apart from the rest of other boutiques in Dubai.
Customer satisfaction is one of the best promotional strategies. When the customer is satisfied, he or she will spread the good word to his or her friends. Therefore, the firm will strive to make the customer experience with our products and services the best they can get in the industry (Mullin, Hardy, & Sutton, 2014, p. 97). The handling of our customers will prove key to our future success. Therefore, the firm will; strive to provide quality products to our customers at a reasonable but profitable price.
Additionally, the firm will do online promotion as well as media promotions. The company products will be marketed in several media platforms and extensively in every social media. However, the company will rely hugely on the customers who visit the firm to do the huge marketing process. A customer recommendation is always good since the recommended person will already have the confidence of the products before purchasing (Mullin, Hardy, & Sutton, 2014, p. 97).
Organization Structure and Human Resources
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The business owner has a rich business background and thus brings vast experience in the business. The owner has accounting, marketing, and financial education background and, therefore, can analyze the accounting information effectively and also assess the performance and the position of the company.
The background of the managing director who is the owner is an added advantage to the business since the management will be able to analyze the market trend and market performance (Mullin, Hardy, & Sutton, 2014, p. 97). That will give the management the market knowledge that will in turn empower them to make rational and effective decisions. The good rational decision will give the company an upper hand in performing better in the industry and attain its goals.
Job Description
The job description is an important factor in any business. Therefore, the company will prioritize the job description in all departments of the company (Hartley, & Claycomb, 2013, p. 76). The job description highlights the tackles and duties that each of the personnel in the firm is expected to accomplish. The managing director has the most important job description. The managing director is the owner and, therefore, sets the mission and vision of the company. The managing director will play an integral part in making and formulating effective decisions that the firm is expected to abide and follow (Mullin, Hardy, & Sutton, 2014, p. 97).
The managing director will approve any expenditure that is brought to the managing director’s office, review the employee performance, analyze the company performance, and use each factor to make the decision that will affect the company positively (Jobber, & Ellis-Chadwick, 2012, p. 81). The managing director will also play an important problem-solving role.
In the case of any dispute that may affect the company, the managing director will be able to look for an appropriate solution to solve the issue (Hollensen, 2015, p. 107). Therefore, most of the decisions that are concerned with the welfare of the whole company will be made by the managing director.
The marketing manager will have an important role to play. The marketing manager will be in charge of all marketing decisions. The marketing manager will use all available platforms to showcase the company products (Jobber, & Ellis-Chadwick, 2012, p. 81). He or she will be tasked with the duty to look for prospective clients and also strive portray the image of the company positively. The manager will seek to enter into business contracts with many retailers and some clients.
He or she will be in charge of the company performance (Hartley, & Claycomb, 2013, p. 76). The role of the marketing manager is very critical of his or her decision will affect the outcome of the company. The company without an appropriate marketing strategy will perform dismally since marketing brings customers to the company. Therefore, the performance of the company will entirely depend on the marketing strategy decision of the marketing manager.
Operating manager will be in charge of all operations that concerns the merchandise in the firm (Jobber, & Ellis-Chadwick, 2012, p. 81). The operation manager will make decisions regarding the storage, display and other activities that are concerned with the daily operation of the business premise. The operation manager will also be in charge with the operating employees. Operating employees are the employees who have no educational skill, but can perform duties as instructed.
Therefore, the operation manager will be in charge and should take responsibility for the employee’s action (Hollensen, 2015, p. 107). The main roles that the operation manager will conduct include the hiring of the operating employees, check whether they report to work, assess their effectiveness to the company, and discipline the employees. The operation manager will be in charge of the daily running and operation of the company.
The accounting manager will have a critical role to play in the company. He or she will perform accounting duties as well as financial duties. He or she will conduct annual auditing on the company, track the financial performance of the company, maintain the books of account, and analyze the performance of the company by the use of financial statements. The accounting manager will always report to the managing director since his or her role is critical. The accounting manager will always give the company financial advice such as what the company should do to be profitable (Hollensen, 2015, p. 107).
Compensation Plan
The Fashionline Boutique will compensate its staff and management well basing on the critical level and their functions (Jobber, & Ellis-Chadwick, 2012, p. 81). The managing director is the major decision maker and, therefore, will receive a higher compensation. The accounting manager and the marketing manager, will receive an equal pay, whereas the operation manager will receive a slightly increased pay. The reason for the increased pay for the operations manager is that he or she plays extended roles than the other two managers (Jobber, & Ellis-Chadwick, 2012, p. 81).
The marketing manager will have to show his or her worth within the first year of operation. After he or she proves that he or she can attract the substantial clientele, then the top management will increase his or her pay on a commission basis. That will serve as a motivation token to the marketing manager and thus he or she will work extra hard to achieve the boutique’s target. The firm will have ten individuals working full time. He individuals are the managing director, three managers, and six employees. The compensation structure for each individual working at the firm is illustrated in the table below:
| Compensated Party | The Amount of Compensation $ |
| Managing Director | 5000 |
| Accounting Manager | 1000 |
| Operation Manager | 1500 |
| Marketing Manager | 1000 |
| Operation employees | 500 |
| Total 9000 | |
Financial Planning
Business Costs
The firm will require a good start in business and, therefore, will require $150,000. The firm looks to expand the business by 4% per year. Therefore, the company seeks to have strong sales in the first year of operation and probably break even in the next year. Sales for the first year is estimated to be $85,000.
The estimate of the sales is based on the purchasing power of visitors and people in the area as well as the process of capturing new customers each month (Hillier, Grinblatt, & Titman, 2011, p. 99). The company is situated in a strategic place where shoppers frequent. Therefore, it is quite possible to hit the estimated figures in the first year without much struggle. Though the company expects to do much better to improve on the estimated sales by either 2% or 3%.
The company expects to break even in the second year and begin to make substantial profits in the third year. The administration, overhead, and other fixed cost are estimated to cost the company an estimate of $90,000. The variable cost will cost the company an estimate of $60,000. Most of the variable cost will involve importation costs of the raw materials, the processing of the raw materials, and all other cost that are not stable are due to change anytime (Peetz, & Buehler, 2013, p. 1097).
Sales Forecast
The company will concentrate on making and selling of Islamic Fashion clothes. The company will focus on importing traditional designs from all over the world. The company will be involved in purchasing of raw material and making the products. The products that the company will be involved in making include women’s clothes, children’s clothes, and all Islamic clothing that will accommodate women with large bodies. Most of the clothing will have various designs from all over the world (Gitman, Joehnk, & Billingsley, 2013, p. 205). The major reason the company has specialized in the Islamic clothes from all over the world is that Dubai is a metropolitan city where there are people from all over the world (Peetz, & Buehler, 2013, p. 1097).
Dubai usually receives people from all continents and therefore, many people will be able to relate to the products that the company will produce. The price for each product will depend on the nature of the product. However, all will average $10 per unit. In a month, the company expects to sell 700 units that will translate to $7000 sales each month in the first year. The detail financial analysis for the first two years is shown on the income statement below which shows that the company can earn some returns over time:
| Year 1 $
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Year 2 $ | |
| Revenue
|
85,000 | 120,000 |
| Cost of sales
|
84,000 | 86,520 |
| Gross profit
|
169,000 | 206,520 |
| Advertising & Promotion
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9,000 | 10,000 |
| Compensation & Benefits
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138,000 | 138,000 |
| Insurance
|
900 | 900 |
| Security
|
800 | 800 |
| Web site
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1000 | 1,000 |
| Licenses & Fees
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500 | 500 |
| Miscellaneous
|
2,000 | 4,000 |
| Total Operating Expenses
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152,200 | 155,200 |
| EBTA
|
16,800 | 51,320 |
| Income Taxes
|
17,000 | 17,000 |
| Net Income
|
-200 | 34,320 |
Sources of Funding
The firm as stated will require 150,000 as the starting capital. The firm will strive to seek funds from other sources. The firm will source funds from both the equity finance and the debt financing. The equity finance will entail 40% of the total funds needed for the start-up capital. The debt financing will entail 60% of the total start-up capital.
The equity finance will entail the personal savings, funding from friends and relatives, venture capital, and the government grants. The debt financing will entail loans from the banks, bonds, and the funds from the commercial finance companies (Hong, & Hanna, 2014, p. 189). The sources of funding for the company are summarized in a table below:
| Sources of Funds
|
Funds $ |
| Equity Finance
|
|
| Personal savings
|
1,000 |
| Friends and relatives
|
10,000 |
| Venture capital
|
40,000 |
| Government grants
|
9,000 |
| Total
|
60,000 |
| Debt Finance
|
|
| Loans from the banks
|
60,000 |
| Bonds
|
10,000 |
| Commercial finance companies
|
20,000 |
| Total
|
90,000 |
| Overall total funds
|
150,000 |
The average cost of funds is 10% per annum. The cost of fund is significantly average, which means the company can make profits if it propels the sales target. The company needs to elevate the sale process so that it can manage to repay the cost of capital on time. Therefore, the marketing manager has a significant role to play in a bid to help the company to meet the cost of funds (Hong, & Hanna, 2014, p. 189).
There are several marketing strategies that the company should apply. One of the strategies is utilizing the online marketing strategy. The online marketing strategy is one of the fastest and most efficient methods of making sales in the current world. The reason being the many people utilize websites in their daily activity. Therefore, it is quite easier for the company to reach many people.
The most significant online marketing strategy is using the social media. Many people have resulted in using the social media such as Facebook, Twitter and most recently Instagram. Therefore, the company may strategies on the manner in which the company will make effective sales by posting the company products online. The other strategy that the company can use in a bid to increase the sales is using the promotional and advertising techniques.
The promotional techniques are putting the sales messages in the print media as well as electronic media. Though this means is expensive, the company may strategies to minimize the utilization of the platform. Doing one advertisement in a week is economical. The other most effective marketing tool that the company will utilize is doing promotional activities. Such activities include doing extra activities such as giving the customers some after sale services.
The more the company will make more sales the more the company will be able to afford the cost of funds. The company has shown to increase profitability over time. The first year the company will strive to cater for operational cost. The company will start to make the profit in the second year. The company also plans to increase the personnel as the sales continue to grow. As the sales continue to grow, the company has an ambition of opening up branches in other places in the country. The branches will diversify to accommodate other fashion. The Fashionline boutique will be one of a kind in Dubai.
Conclusion
There are no many firms who have specialized in Islamic clothing in the country. That gives the company more scope to cover since it will be facing fewer competitors. The other administrative technique that the company can apply is the use of employee performance. The company should strive to motivate its employees so that they can perform much better.
The more the employees perform better, the more the returns for the company. Any of the employees who prove to be a liability for the company should be relieved from their duty. That will make the company increase its performance and, therefore, will attain its goals much faster. The company will also focus on the quality of the products. The product quality will give the good company reputation and thus more customers.
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Appendix
Appendix I
Various combinations of Abayas
Appendix II
A model with Jalabiyas
Appendix III
Various Islamic Fashion Clothings, some with western touch