Garments &amp Textile - Business Plan - Academic Assignment - Top Grade Papers

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United Retail House Company
GRBSOL Ltd.;Authors Name
Business Plan
Table of Contents
EXECUTIVE SUMMARY .................................................................................................................................. 2 THE OPPORTUNITY........................................................................................................................................ 4
Company: .................................................................................................................................................. 6 SWOT Analysis: ......................................................................................................................................... 6 Services of United House Retail Company: ............................................................................................... 8 Strategy: .................................................................................................................................................... 8 MARKETING STRATEGY ................................................................................................................................. 9 Product:..................................................................................................................................................... 9 Pricing: .................................................................................................................................................... 10
Placement: .............................................................................................................................................. 11 Customers: .............................................................................................................................................. 12 Company: ................................................................................................................................................ 12 Competition: ........................................................................................................................................... 12 Collaborators:.......................................................................................................................................... 13
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Context:................................................................................................................................................... 14
OPERATING PLAN ........................................................................................................................................ 15 FINANCIALS ................................................................................................................................................. 16 Ratio Analysis: ......................................................................................................................................... 19
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Promotion: .............................................................................................................................................. 11
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THE COMPANY AND ITS SERVICES AND STRATEGY ...................................................................................... 6
EXECUTIVE SUMMARY
Time and convenience are the factors highly valued by the people belonging to the higher and upper middle income class because they have a lot of money to spend but pretty less time to
his/her needs is what United Retail House Company aims to eliminate. So United Retail House
Company would be providing its customers the opportunity to fulfill all their major needs at one place, thus saving them the hassle of going to various places.
United Retail House Company is a Saudi based partnership, having an objective of providing convenient services to the elite and upper middle income class of Saudi Arabia and unique selling proposition of one stop shop. Besides its tailored yet standardized services, higher profit
differentiate United Retail House Company in a longer run.
The services that Sympathy will provide to its customers are as follow: New European brands the fashion market Candy shops specialized stores
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Entertainments Franchising
Italian village; outlet village specialized shopping centers Restaurants & Coffee shops food & drinks
As timely services and convenience are the factors highly valued, so these services would be priced based on the perceived value these people would be applying. These services would be placed with direct placement program like direct sales force etc. Promotion would consist mainly of one-to-one promotion program, Advertisement on TV (local cable channels) and direct mail as it would help United Retail House Company in reaching its intended audience. The operations of the company will be regulated from an office situated in the capital, Riyadh. The founding members will look various operations of United Retail House Company.
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margin, reasonable prices and timely and efficient services are some of the factors that will
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waste. The hassle that one bears because he/she has to go to more than one places to fulfill
Companys pro-forma statements show accounting profit in first five years which assures that this plan is favorable.
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THE OPPORTUNITY
People belonging to the highest rung of the income level have a lot of money to spend but very little time to waste. These people consider time to be money, i.e. they would be willing to spend
want to buy convenience.
It was decades ago when lives were simpler; economic activity wasnt much complex;
international trade was limited. But with the passage of time, the pace of globalization increased
economic changes. Human lives got busier people had less time and more business to take care of. Saudis are no exception to this rule. The lives of Saudi residents are pretty busy and time is of the essence for them.
People saw the opportunity back in the days to design custom services for those who have money so that in return for premium prices, they can get whatever they want conveniently. This fact presents us with an opportunity to fulfill all the major needs of Saudis at one place. If all the needs of Saudis can be fulfilled at one place, it will save their time as they wouldnt have to go to various places to buy various items. In addition to it, it would also save them the hassle of
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needs will bring convenience to them. the profitability of the store operations.
going from one place to another. In simple words, a place where Saudis can fulfill all their major
Poverty of Time: The desire for personal fulfillment, the daily job commute, and the tendency of some people to have second jobs contribute to many consumers feeling time-pressured. Market analysts expect direct marketers to do well based on the poverty-of-time life-style. Component Lifestyles: In the past, shoppers were typecast, based on demographics and lifestyles. Now, it is recognized that shopping is less predictable and more individualistic. It is more situation-based. Providing one-stop solution to the customers by having all the needed products at one retail outlet supports the situation-based shopping. People go for shopping for one thing but when they see many others being placed in front of the, they make instant decisions based on the situation which increases the average spend per customer, thus adding to
United Retail House Company will provide the Saudis with the opportunity to fulfill all their needs at one place. In other words, United Retail House Company would be a one-stop shop. The products and services that United Retail House Company would offer include:
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and economic activity became more complex. Human lives were also affected by these socio-
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some money if that act of theirs can save them from doing additional work. In a nutshell, they
New European brands the fashion market Candy shops specialized stores Italian village; outlet village specialized shopping centers Restaurants & Coffee shops food & drinks Entertainments Franchising
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THE COMPANY AND ITS SERVICES AND STRATEGY

Company:
the objective of fulfilling all major needs of the elite class of Saudi Arab. The partners (founding members) are relatives aiming to capitalize the opportunity available in the Saudi market. The company analysis is performed below using SWOT Analysis:
The components of SWOT Analysis are the following: Strength:
The USP of our company is that it will meet and exceed the demands of quality products at affordable prices by the Saudi Arabian customers. Our company will serve Kingdoms ladies, gentleman and children at the same place. Thus we can say that United Retail House Company is not attempting to serve individual customers only; rather it is aiming to serve families as well. Individuals as well as families would be able to fulfill their
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overburdened. Reasonable Prices Effectiveness and Efficiency
demands at United Retail House Company at affordable prices compared to competitors.
The major difference between us and existing players, our USP, would be that we will offer our products and services at affordable prices so that our customers pockets are not
Services Tailored yet Standardized The services provided by United Retail House Company are perfectly tailored to the needs of the target audience, but at the same time the services are completely standardized. Customers will be able to buy branded items under one shed.
Even though we are doing value-based pricing and are targeting the, but still our prices are quite reasonable compared to our competition and given the quality, magnitude and
the wide range of the services provided by the company.
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Unique Selling Proposition (One Stop Shop)
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SWOT Analysis:
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United Retail House Company is a Saudi-based partnership. It was founded in June 2010 with
Given the nature of the services and the environment in which these services are to be provided, efficiency and effectiveness are the key elements for the companys success. Customers would come to United Retail House Company to shop conveniently. If we are not able to serve their needs effectively and efficiently, it would result in hassle for them and it exactly what we are trying to avoid. Therefore effectiveness and efficiency would be our key priority and strength. This would be done by proper planning and implementation for the store operations. Higher Profit Margin
As our target audience belongs to the upper class and we are doing value-based pricing, so we would be able to earn a high profit margin from our services. A Complete Package Offered
Retailing Company. Thus we would like to state that we would offer a complete shopping package to our customers. Weaknesses:
Inexperienced Management Team
Our biggest weakness lies in the fact that we are a bunch of relatives without any real
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Threats:
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Opportunity: Growing Market Potential of this market.
experience of running such a business.
This is an untapped market with a huge potential for growth, so we can really establish ourselves in this market and thus in the longer run can benefit from the expected growth
New Entrants resulting into Increased Competition Due to extremely low barriers to entry and the expected high growth of the market size, we expect a large number of new entrants within two to four years of the starting of our
business. But we intend to cement our place and establish a name for our company by then, plus we believe in being innovative in whatever service we provide. So this will enable us to stay ahead of our potential competitors at all times.
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All the major needs of Saudi Arabian customers would be fulfilled at United House
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Services of United House Retail Company:

The services that United House Retail Company will provide to its customers are as follow: New European brands the fashion market Italian village; outlet village specialized shopping centers Restaurants & Coffee shops food & drinks Entertainments Franchising Candy shops specialized stores
Strategy:
United House Retail Companys strategy will be to target the elite class of Saudi Arabia i.e.
convenience i.e. the quality of our services and convenience to avail of our services will give us an advantage. Thus, United House Retail Companys competitive advantage will be Quality, Convenience and Affordability.
In addition to it, we will charge our customers according to the value we create for them. The pricing approach will be value-based which will result in higher-profit margins. The details of
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pricing will be discussed in the marketing plan.
Focusers carve out a market niche and compete by providing a product or service customers can get in no other th way --- Human Resource Management by Gary Dessler, 10 edition, Page number 81.
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United House Retail Company will be the focusers1. We will be competing on quality and
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MARKETING STRATEGY
Product:
New European brands the fashion market o BiBA o TOMMY HILFIGER o Jacques Britt o Jean Paul GAULTIER o Camel Active o Strellson o Karl Lagerfeld
o New Zealand Auckland Heritage Fine Clothing
o Arqueonautas Worldwide S.A.
Candy shops specialized stores
Italian village; outlet village specialized shopping centers Restaurants & Coffee shops food & drinks Entertainments Franchising
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services.
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United Retail House Company will fulfill various needs of customers. It will provide customers with the ability to shop and dine at the same place. Initially United Retail House Company will succeed in the Ladies and Gentlemens fashion segments and then it will step into other selected areas. It has been said earlier that United Retail House Company will provide the individuals as well as families with the opportunity to fulfill all their major needs at one place. The candy shops are aimed at kids and parents wouldnt have to go anyplace else to buy their kids candies. Similarly, people can also drop by entertainment and franchising facilities to avail of the offered
The need for this service has emerged due to several reasons. Firstly, a change in the thinking of people (who fall in middle and higher income class) has been observed. People are less averse to new and strange ideas; the success of Sheesha is an example of this phenomenon. Secondly,
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The products of United Retail House Company are:
the lives of people have become very busy and they are always running out of time. People are looking for convenient solutions to their problems. Thirdly, the structure of family has undergone a transition i.e. nuclear families2 are pervasive as opposed to extended families3(traditional joint family system). Thus, immediate family members are not available to take the responsibility4and one stop shop in such a situation would really facilitate people. And
lastly, the need to bargain with different individuals is eliminated which also results in less fuss.
Pricing:
Class A & B; these people are willing to pay for quality service. Thus, the pricing will be Value-based. United Retail House Company will charge its customers according to the value it is creating for them.
The factor that motivated us in doing value based pricing was the fact that people belonging to these areas have enough money but not much time to waste. Moreover people belonging to elite class do not want any hassle; rather they are constantly looking for convenience. The law of diminishing marginal utility dictates that when people get enough of something, its marginal utility declines for people. This law applies to money as well. The value of money is less for
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those who have it and they spend it to buy convenience. Catering these facts United Retail House Company is committed to provide convenient services at one stop shop. In a nutshell, people would highly value these services which would give us an opportunity to market these people with prices according to the perceived-value that these people would put on those. Moreover in the future run, we would be minimizing the difference between potential and perceived value of these services with the help of certain awareness programs and one to one marketing.
A husband and wife and one or more children constitute a nuclear family---Consumer Behavior by Leon G. th Schiffman and Leslie Lazar Kanuk, 9 edition, Page number 347. The nuclear family, together with at least one grandparent living within the household, is called an extended th family--- Consumer Behavior by Leon G. Schiffman and Leslie Lazar Kanuk, 9 edition, Page number 348. Perhaps its better to say that the association among family members has weakened over the years as the trend of nuclear family continues to grow and people have become busier as compared to their forefathers.
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The target market of United Retail House Company is the people who fall in Socio-Economic
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Promotion:
United Retail House Company will use a combination of various promotion strategies. One of them will be One on One (O-O-O) promotion strategy. In O-O-O strategy we will distribute
pamphlets will be the one where our target market dwells such as ABC, XYZ, PQR, etc. This
strategy will help us in reaching our target market with the advantage of timely advertisement.
The hassle and opportunity cost of shopping at different places will be fresh in minds of people; thus, creating awareness in minds of people at that time will have a lasting effect.
The other promotion strategy will be to air commercials on televisions. We will study the viewership of various programs on different TV channels and select the time slot accordingly so that we are able to reach the right target market at the right time depending on the time slots. Another promotion strategy will be the use of reference. Its based on common sense. Suppose a customer comes to shop at United Retail House Company and is satisfied with his/her experienced of shopping. He/she will then discuss it with people in his/her entourage and they are likely to give United Retail House Company a chance. So the key here would be to serve our customers excellently so that they recommend us to others.
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Placement:
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The use of mail will also be done to promote our company. We will mail our potential customers brochures regarding our services and how to reach us. The brochures will be details in all aspect i.e. the services that we will be offering, how we can be of help to them, how can the fuss can be avoided and time can be saved, etc. Catalogues can also be mailed to the potential customers to
inform them about the store offerings. There can also be memberships for the shoppers at the store who will be more motivated because of special promotional campaigns designed for the members such as discounts, lucky draws, etc.
The placement of our services will be direct; there will be no intermediary between our customer and us. The customers will contact us directly.
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pamphlets to people shopping at various places. The areas selected for the distribution of
Customers:
Our customers are people of Saudi Arab, who fall in the SEC A&B, who have money to spend but not time to waste. These people are identified as dwelling in the posh areas of Saudi Arab;
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Besides, our customers will be educated. Hence, they will have a thorough understanding of not only the process but also the reasons behind our presence. Thus, the acceptability of our services will be greater because of the understanding of our customers and their wants to buy convenience. The customers will also be socially active and busy in their lives; therefore, they will be short of time and may not have enough time to spend on shopping at various places. This
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Alshaya
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Company:
with all their major needs at one place.
will also result in increased probability of someone availing of our services.
As aforesaid, the company is a Saudi-based partnership providing the elite class of Saudi Arab
Competition:
Currently our competitors include: Fawaz Al Hokair Savola Group
Fawaz Al Hokair is in business for over 20 years and its businesses include the following: Arabian Centers Fashion Retail
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the names of the areas are as under:
Food & Entertainment Real Estate
Savola Group is in business since 1979 and its businesses include the following: Savola Plastic Retail Sector Investment Sector Real Estate Sector
Alshaya was founded in 1890 and its businesses include the following: Fashion & Accessories Footwear
Health & Beauty Food Optics
Pharmacy
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Office Supplies Home Furnishing competitors enter later on.
Sports Fashion
But there are no impediments to entry in particular. Thus, we expect a lot of people entering into the market by imitating the services that we are offering. We will build our name and trust in the minds of people and these will in-turn help us in competing against the new entrants. By providing superior service and quality products through our store, we will establish a long-term relationship with the customers which will in turn enhance the brand equity for our store. We will also be focusing on building customer loyalty to minimize customer switching when
Collaborators:
The collaborators in this case will actually be the suppliers for different products, and other businesses renting store space for setting up their services such as restaurants or other outlets. A
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strong and healthy partnership will be maintained with these collaborators by continuous monitoring of the settlements done with them.
Context:
hesitation by the customers. It will require some change in the shopping habits of the customers but will also be offering them convenience at the same time which will be the basic attractive
feature for the store. Hence, the factor of reluctance is likely to be major contextual factor. We
time and assuring that the company is providing quality products at affordable prices. Considering the economic variables and the change in customer demographics, the poverty of time constraint will be very much fulfilled by strong emphasis on the convenience factor. Thus the economic, social and demographic variables will prove favorable for the store operations.
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intend to overcome this factor of reluctance by building trust and confidence with the passage of
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The concept of one-stop convenience store will be new to the Saudis which might result in some
The vision of United Retail House Company is:
Offer a better price value relationship than other providers in each line each and every time
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people is valued in turn.
and offer our customers with a more exiting shopping experience. Based on the above vision, the following mission statement has been defined: To establish a business in Saudi Arabia that can meet and exceed the dynamic needs and changes of current and future times of the region. In order to achieve the above mission, the following guiding principles will be kept in mind: The company will succeed through valuing its human capital in the service equation so that each and everyones contribution whether customer, stakeholders or our
To serve customers properly as one would wish to be served, and so create a relaxed, facilitative environment; to treat all fairly.
To respect uphold and affirm the values and ideals of the Kingdom of Saudi Arabia.
To reward our stakeholders fairly.

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OPERATING PLAN
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To improve our offer to customers continuously in a commitment to excellence in all that we do.
No business can survive if it is not financially feasible. It does not matter how creative or novel
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100% in Year 3
the idea is, if the business fails to earn financial returns, it cannot survive. The financial statement of MF Trading shows that it is earning profits from the first year. The Profit & Loss account is based on the following assumptions: MF Trading will operate at 40% potential in Year 1, followed by 65% in Year 2 and
Cost of goods sold is estimated to be 40% of sales The growth rate in first year5 would be 15% followed by 20% henceforth The inflation rate for stock is assumed to be 5% p.a. The inflation rate for rent is assumed to be 10% p.a.
The wages of staff would increase at an inflation rate of 10% p.a. The management expenses, administrative expenses, retail design expenses and marketing expenses all increase at an inflation rate of 10% p.a.
It refers to fourth year, first year after MF Trading has achieved 100% operating capacity.
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FINANCIALS
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The upfront investment year 1 is spread across 5 years 20% p.a.
In addition to the above assumptions, cost figures are given below:
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Retail Staff General Management Expenses Administrative Expenses Finance Expenses Operating Expenses Office Rent Retail Design
Cost Item
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The above monthly figures are multiplied by 12 to reach to annual costs.

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Monthly Cost (in 000) 160 100 50 50 50 20 15
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The sales for the first year are 20,000,000 which is equal to 40% operating capacity; it implies that (20,000,000/0.4) = 50,000,000 is 100% capacity which MF Trading will achieve in year 3; year 2s sales equal 32,500,000 (50,000,000*0.65)
The upfront investment equals key money paid in year one and shop fitting costs = 12,000 + 2,000 = 14,000
Year
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2011 40% 2012 65% In '000 In '000 32,500.00 13,000.00 19,500.00 20,000.00 8,000.00 12,000.00 1,920.00 240.00 1,200.00 600.00 600.00 600.00 180.00 2,500.00 4,000.00 2,112.00 264.00 1,320.00 660.00 660.00 660.00 198.00 2,750.00 0.00
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2013 2014 100% In '000 60,375.00 24,150.00 36,225.00 2015 100% In '000 76,072.50 30,429.00 45,643.50 Operating Capacity 100%
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Sales Cost Gross Profit SGA Expenses Wages Rent Expense Management Administrative Expenses Accounting Operating Expenses Retail Design Marketing Expenses Rental
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In '000 50,000.00 20,000.00 30,000.00 2,323.20 290.40 1,452.00 726.00 726.00 726.00 217.80 3,025.00 0.00 2,555.52 319.44 1,597.20 798.60 798.60 798.60 239.58 3,327.50 0.00 2,811.07 351.38 1,756.92 878.46 878.46 878.46 263.54 3,660.25 0.00
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The rental expense is a onetime expense
Portion of upfront cost Total SGA Expenses Net Profit
2,800.00 14,640.00 -2,640.00
2,800.00 11,424.00 8,076.00
2,800.00 12,286.40 17,713.60
2,800.00 13,235.04 22,989.96
2,800.00 14,278.54 31,364.96
Below is a trend line showing movement of Net Profit graphically:
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Ratio Analysis:
Below are some ratios showing profitability of MF Trading:
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2011 Gross Profit Margin Net Profit Margin ROE 60.00% -13.20% -7.44%
2012 60.00% 24.85% 22.75%
2013 60.00% 35.43% 49.90%
2014 60.00% 38.08% 64.76%
2015 60.00% 41.23% 88.35%
Average 60.00% 25.28% 43.66%
constant at 40%. The net profit margin is increasing over the years and a five year average is 25.28%, which is fairly high. The ROE6 (return on equity) is also increasing over the years and a five year average is 43.66%, which is also fairly high.
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ROE is calculated using an investment of 35,500,000.
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The gross profit margin is constant at 60% because cost of goods sold is assumed to be
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THE COMPANY AND ITS SERVICES AND STRATEGY ...................................................................................... 6

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differentiate United Retail House Company in a longer run.

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want to buy convenience.

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THE COMPANY AND ITS SERVICES AND STRATEGY

The components of SWOT Analysis are the following: Strength:

demands at United Retail House Company at affordable prices compared to competitors.

the wide range of the services provided by the company.

Unique Selling Proposition (One Stop Shop)

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Inexperienced Management Team

experience of running such a business.

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Services of United House Retail Company:

pricing will be discussed in the marketing plan.

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o New Zealand Auckland Heritage Fine Clothing

o Arqueonautas Worldwide S.A.

Candy shops specialized stores

The products of United Retail House Company are:

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ABC DEF GHI JKL LMN OPQ

will also result in increased probability of someone availing of our services.

Currently our competitors include: Fawaz Al Hokair Savola Group

the names of the areas are as under:

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Food & Entertainment Real Estate

Health & Beauty Food Optics

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The vision of United Retail House Company is:

To reward our stakeholders fairly.

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The upfront investment year 1 is spread across 5 years 20% p.a.

In addition to the above assumptions, cost figures are given below:

The above monthly figures are multiplied by 12 to reach to annual costs.

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The rental expense is a onetime expense

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Portion of upfront cost Total SGA Expenses Net Profit

2,800.00 14,640.00 -2,640.00

2,800.00 11,424.00 8,076.00

2,800.00 12,286.40 17,713.60

2,800.00 13,235.04 22,989.96

2,800.00 14,278.54 31,364.96

Below is a trend line showing movement of Net Profit graphically:

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2012 60.00% 24.85% 22.75%

2013 60.00% 35.43% 49.90%

2014 60.00% 38.08% 64.76%

2015 60.00% 41.23% 88.35%

Average 60.00% 25.28% 43.66%

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