Mis Bonus Assingment

8/8/2019 Mis Bonus Assingment

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According to N.G.CARR et al, they examined the evolution of information

technology in business and show that it follows a pattern strikingly similar to that

of earlier technologies like railroads and electric power. For a brief period, as they

are being built into the infrastructure of commerce, these "infrastructural

technologies," as they call them, open opportunities for forward-looking companies

to gain strong competitive advantages. But as their availability increases and their

cost decreases - as they become ubiquitous - they become commodity inputs. From

a strategic standpoint, they become invisible; they no longer matter. The staff of

HBR voted "IT Doesn't Matter" the best article to appear in the magazine during

2003. A sequel to this article, titled The End of Corporate Computing, appears in

the Spring 2005 issue of the MIT Sloan Management Review. This article,appearing in the Spring 2005 issue of the MIT Sloan Management Review, is

something of a sequel to the 2003 Harvard Business Review article IT Doesn't

Matter. Whereas the earlier piece examined the demand side of business

computing (how companies use IT), "The End of Corporate Computing" examines

the supply side (how the technology industry will be organized to supply IT to

companies). In particular, it shows how the wastefulness of the current, fragmented

model of IT supply is unsustainable. As with the factory-owned generators that

dominated electricity production a century ago, today's private IT plants will be

supplanted by large-scale, centralized utilities. The transition to the new supply

model promises to bring challenges and opportunities to the users of IT while

upending the status quo of the computer industry.

The title of the article has a dual meaning. Computing utilities will bring to an end

the traditional model of "corporate computing" in which computing is carried out

within individual corporations - just as electric utilities made "corporate electricity


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generation" obsolete. And utility computing will represent "the end" toward which

business computing in general is heading. It's IT's destination.

How are business schools thinking about developing leaders for the emerging

digital economy? To answer this question, they interviewed 45 business school

deans about whether knowledge about IT in business should be a part of core MBA

education, and if so, how this knowledge should be delivered. A majority of deans

recognize the importance of IT in business and the need for its presence in a

forward looking core business curriculum that is training managers for an

increasingly global and information rich future. There are three themes around

which such a presence is described by them: understanding how the transformative

and wealth generating potential of IT changes business and society, understanding

how to make successful IT investment decisions, and facilitating innovation and

creativity in the use of increasingly available data for decision making. However, a

significant fraction of these deans struggle with the delivery of IT content in their

core curriculum, and there is a clear divergence between the extent to which

business school leadership considers IT in business important, and its realized

presence in core MBA education.

Barriers to Entry. How easy is it for new firms to start competing in a market? Higher barriers are

better.

y Buyer (Customer) Power. Similar to switching costs, what keeps customers locked in or

causes them to jump ship if prices were to increase? Lower power is better.

y Supplier Power. How well can a company control the costs of its goods and services?

Lower power is better.

y Threat ofSubstitutes. A company may be the best widget maker, but what if widgets will

soon become obsolete? Also, are there cheaper or better alternatives?


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y Degree of Rivalry. Including the four factors above, just how competitive is a company's

industry? Are companies beating one another bloody over every last dollar? How often are

moats trying to be breached and profits being stolen away?

y The five forces concept is perhaps best explained through example. (Porter's work is

nothing short of excellent, but it is a heavy read.) Let's briefly examine the household

consumer-products industry by considering rival firms Clorox CLX, Kimberly-Clark KMB,Colgate-Palmolive CL, and Procter & Gamble PG in terms of Porter's five forces:

y Buyer Power. Consumer-products companies face weak buyer power because customers

are fragmented and have little influence on price or product. But if we consider the buyers

of consumer products to be retailers rather than individuals, then these firms face very

strong buyer power. Retailers like Wal-Mart WMT and Target TGT are able to negotiate for

pricing with companies like Clorox because they purchase and sell so much of Clorox's

products. Verdict: Strong buyer power from retailers.

y Supplier Power. More than likely, consumer-products companies face some amount of

supplier power simply because of the costs they incur when switching suppliers. On the

other hand, suppliers that do a large amount of business with these companies--supplyingKimberly-Clark with raw materials for its diapers, for instance--also are somewhat

beholden to their customers, like Kimberly-Clark. Nevertheless, bargaining power for both

the firms and their suppliers is probably limited. Verdict: Limited supplier power.

y Threat of New Entrants. Given the amount of capital investment needed to enter certain

segments in household consumer products, such as manufacturing deodorants, we suspect

the threat of new entrants is fairly low in the industry. In some segments within the

household consumer-products industry, this may not be the case since a small

manufacturer could develop a superior product, such as a detergent, and compete with

Procter & Gamble. The test is whether the small manufacturer can get its products on the

shelves of the same retailers as its much larger rivals. Verdict: Low threat of new entrants.y Threat ofSubstitutes. Within the consumer-products industry, brands succeed in helping

to build a competitive advantage, but even the pricing power of brands can be eroded

with substitutes such as store-branded private-label offerings. In fact, some of these same

store-brand private-label products are manufactured by the large consumer-products

firms. The firms believe that if they can manufacture and package a lower-price

alternative themselves, they would rather accept the marginal revenue from their lower-

priced items than risk completely losing the sale to a private-label competitor. Verdict:

High threat of substitutes.

y Degree of Rivalry. Consumers in this category enjoy a multitude of choices for everything

from cleaning products to bath washes. While many consumers prefer certain brands,switching costs in this industry are quite low. It does not cost anything for a consumer to

buy one brand of shampoo instead of another. This, along with a variety of other factors,

including the forces we've already examined, makes the industry quite competitive.

Verdict: High degree of rivalry.

y Examining an industry through the framework of Porter's five forces helps illustrate the

different dynamics at work. It's not always clear-cut, either, so one wouldn't expect all of

the firms in this industry to fall into one big bucket labeled wide moat or narrow moat.


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Instead, there are firms with distinct, long-term advantages and wide moats, like Procter

& Gamble and Colgate, while others have advantages that we think may be less

sustainable, such as Clorox and Kimberly-Clark.

y Next: Getting Back to Moats >>

y How to write a Good Porter's Generic Strategies Analysis?

Firms can choose from one of the three generic strategies to compete in the marketplace, regardless of the

context of industry (Porter, 1980). Note that companies that are successful at making use of the cost

leadership strategy are often positioned to capitalize on a value proposition which emerges from their low

cost emphasis, like the classic success story of Tesco , in the UK. These companies typically focus their

efforts on value-oriented customers in the market. Tesco , Value products are focused on providing value-

oriented customers with products that are indeed value-for-money, relative to competitive offerings.

Interestingly, an emphasis on cost leadership in this sense can act as a form of differentiation. Successful

implementation of a cost leadership strategy would benefit from process engineering skills, products

designed for ease of manufacture, access to inexpensive capital, tight cost control and incentives based

largely on quantitative targets (www.wikipedia.org). McDonalds, restaurants, for example, achieve low costs

through standardised products, and centralised buying of supplies etc. Despite the benefits that the cost

leadership strategy entails, there is limited empirical evidence that supports successful implementation of

cost leadership strategies.

y Contrary to the cost leadership strategy, there is empirical evidence to support the differentiation strategy

(Pearson, 1999). Hall (1980) investigated sixty-four American companies and the findings of the study

revealed that companies following a differentiation strategy had superior performance compared to those

companies that were not following the same. It is important for analysts to note that there is more than one

way in which a company can make use of differentiation. Differentiation can be achieved through a

differentiated product, superior quality, and customer service etc. A key question to ask is whether the

customers of the company perceive the point of difference as one that is worth a price premium.

y The focal point for the company pursuing a differentiation strategy should be the customer, and not per se

the competitors. Note that for a differentiation strategy to be successful, the point of differentiation

perceived by customers as valuable should coincide with the distinctive competence of the company

(Pearson, 1999). For example, Orange succeeded by providing the most basic requirements for mobile

phone communication, better than the competition, and in that the company created a differentiation in the

minds of the consumers. Orange provided the customers with mobile phone communication requirements

like better network coverage, network reliability, and charging customers for only what they use, instead of

features like free phone calls, which even have a higher cost for provider (Barwise et al, 2004). Therefore, a

customer-focused differentiation strategy when implemented with a clear vision benefits the company in


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many ways including price premium, brand loyalty and sometimes even reduced costs, like the case

of Orange. In order to effectively maintain a differentiation strategy, the firm should have strong skills in

R&D, product engineering, change management, marketing, advertising, and HRM.

Continuous innovation plays a vital role in case of differentiation, as is exemplified by companies like IBM,

also referred to as the IT bluehood of the corporate world. IBM was awarded more US patents in 2003 than

any other company, for the eleventh year running, which qualifies IBM as one of the most innovative and

successful companies in its industry.

y Notably, a number of small and medium sized companies have found that the niche strategy is the most

useful strategic area to explore for them (Lynch, 2003). While most companies employ cost leadership

strategy, differentiation, or a mix of these two strategies, there are relatively fewer companies that adopt a

niche strategy. Perhaps one of the most important elements to consider in case of a niche strategy is

whether the size of the market is appropriate from the revenue potential aspect, and if the company has the

capability to provide the specialised products that the consumers in the niche market need and want.

y According to Parnell (2006), the stuck in the middle phenomenon received considerable support in the

1980s (Dess et al, 1984; Hawes et al 1984) but was later challenged by numerous scholars (Buzzell and

Gale, 1987; Proff, 2000). It has been noted that a shortcoming of the low-cost-differentiation dichotomy, is

that the two strategies are not opposites in entirety, and are neither always mutually exclusive (Parnell,

1997). Notably, most successful firms exhibit one or more forms of differentiation, along with forms that are

directly associated with cost leadership and even the focus orientation. This is one of the trickiest areas in

the analysis of generic strategies that the reality can be different and more subtle than the stark contrasts

that are highlighted by Porter (1980). It is important to conduct the analysis with an open mind, and to

explore the relative advantages, disadvantages, and risks that the various strategies may offer to a

company vis--vis the competition and overall business environment.

y Information Technology and the advent of the Internet have caused major changes in the business

environment and have accelerated the speed of change. Kim et al (2004) have argued that Porter's generic

strategies of differentiation and cost leadership will be applicable to e-business firms in a broad sense,

while the focus/niche strategy will not be as viable for e-business firms, compared to their traditional

counterparts. They suggest that an integration of cost leadership and differentiation strategies would be the

most promising in the e-business context, but individually differentiation will show superior performance

compared to cost leadership. As more and more companies are transforming their bricks-and-mortar

existences to brick-and-click, it is vital for analysts to understand the role that generic strategies are playing

in the digital era.


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Retail Clothing Business Plan

1.0 EXECUTIVE SUMMARY

1.1 COMPANY

Booming Boutique is a start-up retail establishment that will sell fashionable clothing to women of the

Baby Boom generation. Booming Boutique will be located in downtown Pleatsville, Florida, which is a

popular retirement and tourist destination. While our initial goal is to open one boutique, expansion

plans include potentially franchising our retail store and/or building a well-recognized brand name. In

turn, we would hope to penetrate a sizable portion of the online retail market.

1.2 PRODUCTS & SERVICES

The fashion and retail industry tends to be overly youth focused. However, by closely followinggenerational fashion trends as well as our own customers' purchasing preferences, we will tailor our

inventory to meet the specific needs of our clientele. We will solely focus on the our styles, colors and

fits to flatter the lady Baby Boomer/ Meeting the needs of her figure will be our specialty.

1.3 MARKET ANALYSIS

The total sales reported in the U.S. retail industry in 2007 (including food service and automotive)

exceeded $4 trillion. There are roughly 75 million Baby Boomers, half of which are women. InPleatsville, the current population is just fewer than 40,000. 54 percent of the total population is

women who have a median age of 48. The median income is $48,600. We will initially seek customers

locally, but will increase our reach as we build our brand and secure our image.

1.4 STRATEGY & IMPLEMENTATION

Booming Boutique recognizes the importance of marketing. And to that end, we plan to promote our

retail business with an ambitious, targeted marketing campaign, which will include a grand opening

event, local media coverage, print advertising and a direct-mail campaign. Our goal is to keep our

marketing budget to no more than 5% of our gross annual sales, and we will partner with local

organizations such as the Chamber of Commerce and Downtown Merchants Association as often as

possible.

1.5 MANAGEMENT


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Robin Mathews and Joanna Jensen are co-owners and will co-manage Booming Boutique. Mathews has

worked ten years in the retail industry, including four years as the manager of an antique furniture

shop. She earned a BA degree in finance from Britannica College in Tampa, Florida.

Jensens experience lies in the fashion industry. Shes worked with designers, wholesalers and retailers

for roughly 20 years. Jensen holds a BA in fashion merchandising from Colliers Fashion Institute in

Miami, Florida.

1.6 FINANCIAL PLAN

Our company will earn revenue from our customers' purchases of our products. Booming Boutiques

first-year income statement illustrates a profit margin of at least fifty-two percent, with a net income

of $44,075 per month - after taxes. Finally, we have determined our break-even point will equal no less

than $15,500 in total monthly sales. We project our annual profits to reach $380,000 by year three.

Our company will generate revenue from the retail sale of clothing and other merchandise. First year

sales are projected at $285,000, and we expect sales to surpass $525,000 by the end of year three. We

will achieve month-to-month profitability within the first year.

1.7 SOURCES & USE OF FUNDS

Booming Boutique requires $282,000 to launch successfully. Weve already raised $62,000 through

personal investments and a small community grant.

We are currently seeking additional funding from outside angel investors and business loans. Start-up

funds will be used for renovations, inventory and operating expenses such as rent, utilities and payroll.

Further, our initial investment will also be used to purchase retail equipment and inventory software -

all of which will produce future benefits for the company.

2.0 COMPANY

2.1 COMPANY & INDUSTRY

Booming Boutique will be located in downtown Pleatsville, Florida. Our company is a retail

establishment selling fashionable women's clothing to up-and-coming Baby Boomer retirees. Our

business operates within the retail industry and is classified under NAICS code 448120 women's

clothing stores.

2.2 LEGAL ENTITY & OWNERSHIP


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Booming Boutique is a multi-member Limited Liability Corporation formally organized in Florida. Robin

Mathews and Joanna Jensen are the company's principle owners. We hold equal shares of ownership in

the company.

2.3 COMPANY HISTORY TO DATE

The Company is a new business aimed at providing women of the Baby Boom generation stylish clothing

options to buy and wear. As the company's founders and as Baby Boomers ourselves, we found that

Floridas current boomer-wear market is missing the mark. In fact, most clothing shops for the 55+ set

are still selling clothes that our grandmothers would have worn. As our local population ages and more

Baby Boomers reach retirement-age and migrate to Florida, we recognize the need for a shop that

caters to the up-beat, fashion-forward Baby Boomer generation.

2.4 FACILITIES

Presently, Booming Boutique does not have a bricks-and-mortar location. However, we have identified

an ideal spot in the downtown district of Pleatsville. The gorgeous area includes numerous restaurants,

an art gallery, coffee shop, candy store and a picturesque park in the town square. We have signed a

three-year lease for a 1,700 square foot building at $13 per square foot. Comparable properties are

renting for $12-18 SF/Year.

Working with the property owner and the City of Pleatsville Downtown Redevelopment Committee, we

have secured a $1,000 grant to beautify the faade of the building to include painting, signage and a

new awning. Only slight internal renovations will be required - such as the installation of dressing

rooms and decorative items.

When considering the addition of wall mounts for merchandise, multi-level clothing displays as well as

creative floor planning, this facility is large enough to support future growth. Additionally, we will be

able to conduct all aspects of our business from this location. This includes deliveries and shipments,

inventory management and administrative duties such as finance, buying and marketing.

2.5 KEY ASSETS

Our key assets are our co-owners, Robin Mathews and Joanna Jensen, who bring tremendousexperience and relationships to this business.

Once Booming Boutique is launched, our primary asset will be our brand, which will convey style,

quality and a great shopping experience. In the long term, it is this brand that will separate Booming

Boutique from other retailers both locally and nationally.


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3.0 PRODUCTS OR SERVICES

3.1DESCRIPTION

Booming Boutique will sell a combination of widely recognized name brands as well as clothing lines

from select fashion designers. We will closely follow generational fashion trends as well as our owncustomers' purchasing preferences. Moreover, we will tailor our inventory to meet the needs of our

boomer clientele. Solely focusing on the styles, colors and fits to flatter the female Baby Boomer's

figure will be our specialty. While apparel, such as business clothing, casual wear, jeans and formal

wear will be our main staple, we will also offer some accessories such as belts, scarves, and hats.

Profits will be earned via the sale of our merchandise. Our pricing structure will remain flexible, as we

will implement suggested retail pricing on common brands as well as the standard practice of

keystoning prices. Additionally, we will utilize a value-based pricing structure, which measures the

value of our products to our customers such as easy access, quality, customer service and styles

flattering to our target consumer. End of season sales, holiday and overstock sales, multi-buy savings

and promotional coupons will be implemented at strategic intervals.

3.2 FEATURES & BENEFITS

One key feature that separates Booming Boutique from all other local boutiques and chain department

stores in the area is our commitment to providing women of the Baby Boom generation stylish, quality

clothing options. Because our primary concern will be ensuring our consumers are happy with the fit

and style of their purchase, we will provide products tailored to all shapes and sizes of women. In

addition, we will make every effort to have petite and plus size versions of our merchandise in stock. If

they are not in stock, ordering them will be easy, cheap and efficient.

Further, Booming Boutique will not just be a store that sells clothes. Our clientele will benefit from an

experienced, knowledgeable sales staff. Out of the gate, our goal is to implement a superior customer

service system. Beyond our friendly reception and an inviting atmosphere, Booming Boutique will also

offer customers fashion information and advice. Our trained personnel will provide counsel that women

simply cannot find at other clothing stores. The service will be likened to a beautician who offers

advice on what hair styles best complement his/her clients face. Our hip and qualified fashion-

industry expertise will ensure our customers walk away with the perfect outfit.

3.3 COMPETITION

In Pleatsville, there are no direct competitors offering our unique services or targeting Baby Boomers

specifically. In the Downtown District, the shops most closely competing with Booming Boutique are as

follows:


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y EcoWise Boutique, which targets a younger demographic and specializes in natural fiber clothing.

They also carry local art and jewelry.

y Caddy Corner Kids, which targets parents shopping for children, specializes in children's clothing,

accessories and toys.

y Kati Kouture, which targets younger women, specializes in offering industrial chic clothing with"classic lines and a punk gothic edge."

y Marjorie Joe's Fashion & Gifts targets older women within our target demographic, but specializes in

the more homemade, old-fashioned style clothing.

y Petal Place Boutique targets women within our target demographic as well, but they specialize in an

affordable, folksy style of clothing with handmade shawls and embroidered shirt sets.

y Second Time Around targets women and may overlap our target demographic slightly. However, they

specialize in consignment clothing.

There is one super-store within a 60-mile radius of Pleatsville. The store is similar to Wal-Mart in that it

sells lesser quality items at lower price. But there are two chain department stores. They sell men's,

women's and children's clothing along with home accents, electronics and appliances. While familiarity

is comforting, industry research indicates increasing frustration with the inferior quality, sub par

customer service and vastness of super-stores. Not to mention, the inept sales staff and lack of

selection often found at department stores.

3.4 COMPETITIVE ADVANTAGE/BARRIERSTO ENTRY

To date, our primary competitive advantage is the absence of any store like ours in the Pleatsville

area. In addition, company co-owner, Joanna Jensen, has worked in the fashion industry for more than20 years. Her experience includes working with apparel retailers, clothing wholesalers, garment

manufacturers, and fashion designers. She understands the fashion industry and knows how to spot the

latest trends.

While there is no guarantee a competitor will locate within our area, we have no doubt in our fashion

sense, outstanding customer service and quality products. In turn we will quickly establish Booming

Boutique as the place for lady Baby Boomers to shop.

Also, we would be the only niche fashion retail-store for hip, older women. While other stores offer

some style equivalents, they are not focused solely on the baby boomer generation. We are, and

therefore, have a distinct competitive advantage in our niche.

Our supplier relationships and exclusive product offerings will prevent future competitors from

entering the market as a competitor. Also, it takes time to build a retail store, and by the time a


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competitor attempts to compete with us directly, we will have already established a strong customer

base.

3.5 DEVELOPMENT

As our company grows and our boutique earns a positive reputation, several opportunities will open to

us. And we are considering some options already. Should we choose to remain a small local boutique,

we will develop and grow our company by increasing existing clothing lines and expanding our selection

to include additional products such as swim wear, lingerie, or sportswear. Within five years, we will

assess the potential for franchising our stores in select locations.

Additionally, as we build our business, we plan to simultaneously develop an online Booming Boutique.

The power and ease of an online storefront is obvious to us, and we plan to develop one quickly and

efficiently. We also see the potential for regional and/or national expansion at some point.

4.0 MARKET ANALYSIS

4.1TARGET CUSTOMER

Booming Boutique is a business-to-consumer retail company. Female Baby Boomers are our clear target

customers. However, we do realize that we will likely attract some younger women with our peripheral

products (handbags, scarves, etc.). Moreover, we expect a portion of our products to catch on with the

younger generations. Its important that we do not offer products that are exclusive to the older

audience.

Having said that, there are currently about 75 million Baby Boomers living in the United States. A

boomer is better described as the generation born between the years 1946 and 1964. About half of this

population is women.

While those born in the 1940's are still slightly more conservative, those born during the 1950's and 60's

were trailblazers and trendsetters. Specifically, these will be the women we target vigorously with our

marketing and offerings. These women range in age from their mid 40's to late 50s. They value

uniqueness, convenience, service and quality. As they retire, price does become a factor in decision-

making. At the same time, they were always a generation of the buy now and pay later philosophy.

4.2 MARKETSIZE

Pleatsville accommodates a robust retail market. While car dealerships, grocers and home

improvement retailers account for a sizable portion of the retail market, the main local shopping

district is downtown. With tree-lined streets and quaint shops and restaurants, the downtown retail


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district is the social and shopping hub of the community. The current population of Pleatsville is just

fewer than 40,000. 54 percent are women who have a median age of 48. Their median income is above

the national average at $48,600. Moreover, according to National News, Pleatsville is one of the 2008

Top 6 Towns to Retire for Baby Boomers. Many of these retirees are looking to retire on the water in a

cozy, yet thriving community.

In addition to local consumers, we will also benefit from tourist traffic. Pleatsville is located a mere 30

miles from the sandy white beaches of St. Petersburg and Clearwater. Its also within close proximity

to many Tampa and Orlando area attractions. Our town boasts a healthy and recession-proof tourism

industry. In addition, Pleatsville hosts several annual craft and golf events, which bring several

thousand of our target consumers into the area each year.

4.3 TRENDS

The retail fashion industry is a solid business with ever-changing styles and ever-present consumer

demand. While supercenters and megastores ruled the past two decades, more and more consumers

are looking for change. Theyre searching for a more serene and customer-friendly shopping

experience. This is true especially for those nearing retirement age. In reality, as the Baby Boomers

numbers decrease, there will be fewer older Generation X-ers to sell to. However, this market

decrease will not occur for at least twenty years. Even then, clothing will always be in high demand.

The fashion industry in America has been thriving since the advent of moving pictures.

4.4 SWOT ANALYSIS

Strengths

y Experience and understanding of the fashion industry

y Unique shopping experience with exceptional customer service

y Great downtown location

y Large and growing consumer base

Weaknesses

y

Untested market in Pleatsvilley While market is large, it is a niche market (Baby Boomers)

Opportunities

y Outstanding shopping experience will lead to repeat business

y Growing online Booming Boutique


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y Establish a Booming Boutique clothing line

Threats

y Cost and effectiveness of marketing to women Baby Boomers

y New retail shops that may or may not open in the future

5.0 STRATEGY & IMPLEMENTATION

5.1 PHILOSOPHY

Our company's core business strategy is to combine exceptional and knowledgeable customer service

with quality stylish merchandise. And n turn, well provide an enjoyable shopping experience for our

customers. Booming Boutique's mission is to offer women of the Baby Boom generation a wide selection

of fashionable, figure-flattering clothing. Our aim is to establish our company as a pioneer in this

youth-obsessed industry and build a boutique brand name that will be synonymous with the fashion

industry revolution.

5.2 PRODUCTDEVELOPMENT

We are currently working with several apparel wholesalers, garment manufacturers and two freelance

fashion designers to assemble our inventory. We are also working with city economic-development

officials to secure all required permits and occupational licensees. Once financing is secured, we will

move ahead with the faade renovation, which will be paid for via the PDRC, as well as purchasing

inventory, retail displays, and office supplies. Prior to the grand opening of Booming Boutique, we will

schedule an event with the Chamber of Commerce and commence with pre-publicity flyers, advertisingand additional marketing activities.

5.3 INTERNETSTRATEGY

As the Internet has become a staple of American life and retail merchandising, Booming Boutique will

have a viable Web site. We have secured the domain name BoomingBoutique.com and will begin site

development as funds become available. Further, we plan to hire an established Web designer that will

accept modest pay in exchange for future profit-sharing. Foremost, we intend to showcase our brand,

our clothing and provide customers with the ability to purchase items online. As the site progresses, we

will include features such as fashion advice, designer interviews, newsletters, and Internet-only

specials. Eventually, we hope to establish and nurture an online social community where women can

gather and discuss topics of the day, network and share clothing secrets.

5.4 MARKETING STRATEGY


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We both have strong marketing backgrounds and recognize the significance of effective marketing. We

expect our strategy to draw consumers into Booming Boutique from the very beginning. Moreover we

will hire a local PR firm to help us develop and implement a strategic marketing plan and guide our

publicity efforts in a cost-effective manner. Our marketing message, logo and slogans will revolve

around the idea of the Baby Boom generation as revolutionaries and trend setters. Boomer women arein their prime and at their best, meaning these women deserve to be recognized as a force within the

fashion industry.

Our goal is to keep our marketing budget to no more than 5% of our gross annual sales. We will partner

with local organizations such as the Chamber of Commerce and Downtown Merchants Association as

often as possible. We already have connections in all the necessary places. These strategic partnerships

will allow us to piggyback on publicity for local events, as long as they are within our targeted

demographic. Booming Boutique's initial marketing efforts will remain local as we establish a presence

in our community. These will rely heavily on local print and broadcast media coverage, traditional

advertising, signage, a direct mail marketing campaign and networking. A significant portion of our

advertising budget will be allocated to print and broadcast media.

Of course, we will build anticipation and excitement about the new boutique prior to its grand

opening. Working in conjunction with the Chamber of Commerce, we are already talking about a grand

opening soiree. This will include hors d'ouvres donated by the bistro across the street and a silent

auction of a local artist's painting collection. The collection is currently on display in the Downtown Art

League Gallery.

We will also hold a drawing for a $100 shopping spree and fashion consultation. Entry collection willstart at the grand opening and continue throughout the week. Names and contact information will be

utilized for follow up marketing initiatives. The Chamber of Commerce and the Downtown Merchants

Association will promote the event in local newspapers and radio advertising. Comprehensive

advertising and semi-annual direct mail marketing campaigns will follow the grand opening. Low cost

publicity activities will also be taken advantage of such as posting sale flyers on community bulletin

boards and online.

Finally, marketing opportunities will be continually utilized as we expand our business and our

consumer numbers grow.

5.5 SALESSTRATEGY

Booming Boutique plans to generate sales via strategic marketing efforts. These concentrated efforts

will be targeting new and returning customers as well as single-visit tourist consumers. We will also

implement a referral program rewarding customers who refer new customers with discount coupons.

Following our grand opening, we will conduct a direct-mail campaign to targeted consumers that we


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have signed up through our in-store mailing program. The direct mailers will be comprised of 5,000

full-color postcard mailers. Each will include at 10% coupon. We will offer promotional discounts and

seasonal and clearance sales throughout the year.

Booming Boutique will accept cash and payment via major credit and debit cards. Cash layaway plans

will also be permitted. Returns and exchanges must take place within 30 days of purchase and receipts

are mandatory.

Our sales staff will include both co-owners and 2-3 part-times sales associates. Combined, Jensen and

Mathews have nearly 30 years experience in the fashion and retail industries. Comprehensive training

will be provided to each sales associate to include selling merchandise as well as how to provide

fashion advice to customers. Our sales team will earn an hourly rate, plus a generous percentage of

commission from each sale.

5.6 STRATEGIC ALLIANCES

Booming Boutique plans to join the Pleatsville Chamber of Commerce as well as the Pleatsville

Downtown Merchants Association. These organizations are dedicated to promoting local businesses

within our community and sponsor several events downtown each year. As a member of these

organizations, Booming Boutique will gain exposure, make business contacts, and will benefit from

Chamber and Association advertising, Web site promotions and events.

5.7 OPERATIONS

As a retail establishment, Booming Boutique will conduct business seven days a week from 10 a.m. to 6

p.m. Monday through Thursday, from 10 a.m. to 8 p.m. Friday and Saturday, and 12 p.m. to 6 p.m. on

Sunday. During the holiday seasons and during special events, store hours will be extended. At this

point, the retail store will take require approximately 2/3 of the building's available space. The

remainder will be utilized for stock and administrative purposes. In addition to the two full-time co-

owners, three part-time employees will be hired to serve customers.

Our company will secure merchandise from local manufacturers with showrooms in Orlando and Miami.

Well also have access to the Florida Apparel Market, which is the largest wholesale merchandise

warehouse in the state. Purchasing from FAM, buyers receive product displays and promotionalmaterials with purchase. Additionally, we will work closely with our regional sales representative. We

will also attend relevant pre-season fashion trade shows.

To control costs, track inventory and manage stock levels, an inventory control system will be set in

place. This will include the standard bar code with its related equipment and software. Staff will


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conduct annual inventory audits and hire outside auditors when necessary. All accounting and finances

will be maintained using Peachtree software.

5.8 GOALS

The following is a list of business goals and milestones we wish to accomplish our first year of

operations.

y Complete renovating, stocking, hiring and initial marketing.

y Host a successful grand-opening event.

y Penetrate and raise awareness in 60 percent our targeted consumer market.

y Achieve a profit margin of 50 percent.

y Build a solid customer base and mailing list.

y Generate repeat and referral sales.

y Become a profitable business with expansion potential.

y Establish a solid reputation as quality retail establishment.

Our first major milestones will be securing funds and setting up our business. This is our major focus

right now. In five years, we hope to have established our retail business within the community and

within our industry. Furthermore, as co-owners, we would like to see the growth of our store with an

increase in product lines, further penetration of the national market with online sales and, under the

right set of circumstances, the opening of franchise Booming Boutiques in strategic locations.

5.9 EXITSTRATEGY

The co-owners intend to launch and grow Booming Boutique for many years into the future. In the

event that our investors require repayment of their initial investments, plus a large return on their

investments, we will seek a partner to buyout the investors shares. Another alternative is a

management buyout, which will be agreed upon in advance.

In the long term, we will position Booming Boutique as a profitable business that will be an appealing

acquisition for any number of retail chains.

6.0 MANAGEMENT

6.1 ORGANIZATIONAL STRUCTURE

As a small business, we will have a small staff. Both co-owners will assume leadership roles within the

company and will be responsible for daily operations, overseeing marketing efforts, buying


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merchandise and managing inventory and all other administrative duties. A small sales staff will assist

co-owners with securing sales, assisting customers and general maintenance of stock on the floor.

6.2 LEADERSHIP

Robin Mathews and Joanna Jensen are co-owners and will co-manage Booming Boutique. However,

daily responsibilities will differ.

Robin Mathews will manage the day-to-day operations including supervising staff, maintaining inventory

and bookkeeping. Mathews worked ten years in the retail industry including four years as a manager of

an antique furniture shop. Mathews earned a BA degree in finance from Britannica College in Tampa,

Florida.

Joanna Jensen will oversee the merchandise buying for the store as well as maintain a keen awareness

of trends within the industry. She will also work with our public relations firm to ensure superiormarketing plans are in place and implemented. Jensen worked in the fashion industry in various

capacities working with designers, wholesalers and retailers for 20 years. She earned a BA in fashion

merchandising from Colliers Fashion Institute in Miami, Florida.

6.3 STAFF MEMBERS

Booming Boutique will employ a sales staff of 3 part-time employees. These positions are yet to be

filled. However, we feel the labor pool is such that finding qualified employees will not be an issue.

Our sales associates will be paid an hourly wage, plus commission. Bonuses will be provided with each

year of service following an annual review to encourage employee retention.

7.0 FINANCIAL PLAN

7.1 REQUIREMENTS

Booming Boutique will need $282,000 to get our business off the ground. We are currently seeking

funding from outside investors and business loans.

At this time we have raised $50,000 in equity capital and an additional $12,000 for a specific-use grant.

Both co-owners, Robin Mathews and Joanna Jensen, have invested $25,000 each into Booming

Boutique. We are seeking investors for an additional $170,000 in equity investment and $50,000 in

loans.

7.2 USE OF FUNDS


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Funds will be used to pay for renovations, including the outside faade (to be paid for via PDRC grant),

construction of fitting rooms, sales counter, painting, carpeting, lighting, decor and display fixtures.

We will also purchase inventory, a cash register, computer equipment and an inventory management

system. The remainder of the start-up funds will be utilized to cover operating expenses, such as rent,

utilities, marketing costs and wages.

7.3 INCOME STATEMENT PROJECTIONS

Based on our marketing plans, location, store size and product offerings, we expect to collect annual

sales of $285,000 in year one, $375,000 in year two and $525,000 in year three.

Our average cost of goods sold will be 40%, which leaves us with a gross margin of 60%. Our minimum

monthly fixed costs are $15,500 per month, so we will need to generate sales of $25,833 per month to

break even. We will become profitable on a monthly basis before the end of our first year.

In our third year, we will earn net income of $105,000. The accompanying income statement

demonstrates our company's profitability.

7.4 CASH FLOW PROJECTIONS

Our business will collect immediate payment from customers, so our cash flow statement will be

substantially similar to our income statement. Our cash flow statement clearly demonstrates our ability

to cover all bills.

7.5 BALANCE SHEET

Booming Boutique will launch with $220,000 in equity capital and $50,000 in loans. Credit amounts and

supplier terms for inventory will appear in our balance sheet as short-term liabilities. Jewelry

consignments from vendors will not be documented in our balance sheet and will be expensed as these

items are sold. Details are shown in our enclosed balance sheet.

7.6 ASSUMPTIONS

Our projections are based on the assumption that the economy, consumer spending habits andpopulation growth in Pleatsville will continue for the foreseeable future.

We must also assume that our present and future suppliers will continue to sell inventory to us at

prices that allow us to maintain our present margins. It is also important that we are able to hire

reliable employees at reasonable wages.


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Strategic Planning for Information Systems

One major aspect ofstrategic planning is planning for information systems. Proper planning relies

on the appropriate integration of a companys business objectives and its plan for information

systems (Thompson & King, 1997). The information system is utilized to assist an organization in

reaching elements stated in its strategic plan. Having good information systems and operating data

is an important part of executing astrategy successfully (Thompson, Gamble, & Strickland, 2006).

A critical step in strategic planning for information systems is the proper definition of the problem

being solved. Porters value chain model can assist with defining and analyzing areas that are likely

to have a strategic impact on competitiveness (Porter, 1996). Once this definition is determined, a

properly designed Information Systems can adequately execute a successful strategy that meets

the planned business objectives. According to OBrien (2005), the strategic role of information

systems is to use information technology to develop products, services, or capabilities that give an

organization a significant advantage over i ts competitors.

Wal-mart uses information systems to link customer behavior to distribution and production

and supply chains; thus allowing continuous replenishment of inventory which reduces sales

revenue for overhead. This is accomplished by obtaining an efficient customer response

system to maintain the lowest possible operational costs and the lowest product prices.

EBay made it much easier and safer to pay sellers by purchasing Pay Pal. This method of

using information systems enabled EBay to gain an advantage by using a form of service

differentiation.

Hilton Hotels uses information systems to store detailed information about regular guests, in

order to determine guest preferences and the likelihood of that guest being a future customer

(Laudon & Laudon, 2006).

Aligning Information Systems Planning with the BusinessPlan

The alignment of information systems planning with the business plan tends to be a

critical issue for organizations. The degree of alignment can determine the

successes and/or failures of the actual information system. Information systems

planning, also known as ISP, is described as being the process of establishing

objectives for an organizations computing needs and identifying applications the

organization should potentially implement (Thompson & King, 1997). ISP is

becoming more and more important as organizations attempt to balance information


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systems to become more efficient, improve or change business processes, and gain

a competitive advantage. The difficulty of actual gaining this alignment and

minimizing any gaps between the business plan and the ISP tends to lie in the

development and maintenance of a centralized ISP that is driven by the needs of

the entire organizational entity.

Information Systems as a Competitive Advantage

According to Thompson et al (2006), a competitive advantage in an organization is

defined as having the majority of buyers preferring the organizations products or

services over the competition when the bias is strong.

Todays information systems can help companies achieve a competitive advantage.

Information systems are created to solve problems, provide information, make

organizations more efficient or create a new business. It is imperative that acompanys information systems keep up or ahead of similar industries for their

business to maintain their competitive advantage.

In Management Information Systems by Effy Oz, the author discusses eight ways to

gain competitive advantage. Those eight methods include Reduce Costs, Raise

Barriers to Entrants, Establish High Switching Costs, Create New Products or

Services, Differentiate Products or Services, Enhance Products or Services,

Establish Alliances and Lock in Suppliers or Buyers. Below are examples of

companies that have gained a competitive advantage.

Examples of Organizations that use Information Systemsas a Competitive Advantage

Dell Computerhas created a build-to-order system that allows customers to build and

customize their computer online. They also have a process that allows them to ship the

custom computers rapidly. Dell has become a low cost producer from their information

systems (OBrien, 2005).

Amazon one-click purchasing (customers enter shipping and credit card information only

once for current and future purchases) gives them a competitive advantage over other

shopping sites. This technology was patented in 1999 and for a fee this technology is now

being used by other sites such as Barnes & Noble. (Course Technology, 2009)


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Progressive Group enhanced services by allowing insured customers the ability to file a

claim online, track the claims progress and offering a free service called Total Loss

Concierge Service. This Concierge Service uses their information system that contains

details about the insureds totaled car. As Progressives system is now connected with car

dealerships and financial institutions, they can offer aid in the purchase of a new vehicle for

their customers. (Course Technology, 2009)

Microsoft Office is an example of High Switching Costs. Free office software is available

from OpenOffice but most consumers do not want to learn new software so they will not use

another product. (Course Technology, 2009)

Apple iPhone was a new product that gave Apple a competitive advantage over other cell

phone manufactures. eBayand Facebookare also new products that have gained a

competitive advantage.

L'Oral name illustrates Differentiate Products or Services. Consumers buy L'Oral products

because they believe these products to be superior to the competition.

Amazon and Target have Established an Alliance. When you go to Targets web site you see

Powered by Amazon.com as Target utilizes Amazons information systems. Target pays an

annual fee plus a percentage of web site purchases to Amazon for information systems use.

Walmart is the largest retailer in the world so they are able to Lock in Suppliers. This is one

example of Wal-Marts competitive advantage.

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