BUSINESS REPORT 11
1
Business Plan
Name of Class (Course)
Professor (Tutor)
Name of the School (University)
The City and State (Location)
Date
Introduction
The basis of the report is to expand the financial services reach of the company the subject area of performing its business. The company has identified a weakness in its operations spanning the scope of its operations and the necessity of opening retail centers where there are local markets. It has also been due to an increase in uptake of its services from outside countries, and the company has decided to venture into this field starting with the Chinese market to establish a retail chain in the country. The problem is to address the issue of retail centers locally and internationally to address the issue of inadequacy in retail centers and reduce the business to business approach to further tap into the market.
Executive summary
The company is a multinational business which offers financial services business. The formation of the company was in the United Kingdom in the late 80s, and it specializes in the production of insurance services, trade finance, and services that include; consultative services for companies involved in trading of global commodities. The business does not have retail customers it mainly operates from business to business in that consulting business is done by the parent company, and it does not have an established retail network where businesses that are not able to access its parent location can come to seek services. The goal of the company is to address this problem by exploring ways in which it can set up retail centers especially in China, where there are producers, buyers, and sellers of commodities.
Products, Markets, channels and international business
Business is for various reasons such as production, distribution, and provision of many goods and services depending on the kind of business that has been created (Means 2017). A company cannot operate if it has no target market for the goods and services it intends to produce. The international business possesses even higher risk because various countries have different policies of allowing companies operate in their countries and some of the regulations and procedures might be hurtful to the performance of the company in terms of revenue and operational costs (Strange 2017).
Products
The company operates multi-nationally and majorly deals with the provision of financial services to companies in its areas of business. Some of the financial services the company provides are; investment advice, brokerage, insurance, consulting and mortgage. Some of the markets that the company has secured are Chinese market where some of the consumers of the company’s services have requested the company to provide its services for their local firms in China.
Marketing strategy and channels
Creating a marketing strategy such as bringing new customers, getting existing customers to purchase more, establishing the brand, increasing market share and improving customer loyalty (Verhoef 2016) will be some of the marketing strategies that the company will use when opening a retail center in China and case there is consideration to open another branch in another country.. The channel of distributing the services of the business will be through the establishment of retail centers to popularize the company and also explore that alternative to see if the market will improve given the stagnation at the time (Betancourt 2016). The projection is that the employment of these strategies will help the business grow and realize projected income.
International business
International business comes with its challenges, and most of the companies prefer to operate out of their parent countries due to the strict and hazardous nature operating in a new country. There might be policies that will force the company to source labor from the host country or make sure that they establish projects for social responsibility. Getting permits to operate is also an issue that needs attention due to its sensitivity, and it’s an upfront issue because if it lacks, the intended venture will not see conceptualization. It also comes with varying customer preferences (Hamel 2017).
Operational impact
Opening more retail centers will increase the expenditure of the company, and there will be cannibalization of funds from the already established centers because the money that will be used to set up the new centers will come from the established center (Jackson 2018). It will also mean an increase in the corporate social responsibility and even embracing the fact that each country will pose different amounts of the operating business and that might be a challenge to the industry. The operational increase will also mean that the revenue of the transactions will reduce significantly before the companies pick up as a result of increased spending in that fiscal year. The result might only translate to success after a given period. It is crucial for board members to consider these factors and the returns after the initiation of the project and the impacts are just what to expect in the starting of the new retail center in a foreign country.
Operating strategy
Every business aims at reducing the costs of doing business to translate to an increase in revenue. In light of the looming increase in operational cost, it is necessary that an elaborate operational strategy to reduce the cost of operation is adopted. Some of the strategies that will ensure minimization of spending are; layout design and strategy formation, choosing an ideal location, human resources and the overall design of the services, process and capacity design and quality management (Bai 2016). The business realized some downside after the closure of some stores in the United States but had not remitted their dues. The operational strategy suggested above will ensure the resolution of such issues for the business.
Operational management
There will be a need for the company to come up with business practices that will create the highest level of efficiency (Annarelli 2016). It will involve the conversion of materials and labor into the goods in an efficient manner to avoid inconveniences such as delays to ensure that the company maximizes on profits. The proper management of operations is to be overseen by the CEO in collaboration with the relevant departments to ensure accountability and enhance the success of the business in the new venture.
Financial impacts
The information gathered after much research is that China is a long- term, global-scale market. The estimate the new business will turn over £150 million per annum with net profits at £48 million, and profits, after tax, are £31 million (Annarelli 2016). The capital requirement for the expansion is in the region of £60 million. These are the projected financial impacts the new venture will have on the business and as seen above the projections are positive, and it is a venture worth taking a risk considering the profits after tax.
Financial strategy
The management of the financial resources of the company is very critical to success and accountability in the company. The new venture will come with new economic challenges, and there will need to ensure that accounts balance and responsibility enhanced. Some of the business strategies that will be adopted are the determination of a baseline budget, comparison of benefits and salaries and using social media wisely. As amplified by the Myers finance theory, finances are one of the backbones of business success (Ragozzino 2016). This financial strategy I have proposed will help the company manage its finances without having to make losses from the new venture.
Organizational impacts
Change comes with various challenges, and the company will be no exception. Operating in another country will pose a challenging in sourcing human resource because depending on the country, there are requirements for the supply of labor (Lee 2016). Taking workforce from the parent country will also translate to an increase in wage bill because they will need to be a salary increase for the employees to cover things such as housing, work permits and other expenses they would not have incurred were they working from their own countries. The retail business will have an impact on the structure of the organization, and I propose that other people be hired to manage the business venture in China and will answer directly to the CEO for transparency and accountability.
Organizational strategy
Some of the plans include the implementation of the five wheel model that entails; shared, hidden, false, learning and realized that would encompass all the aspects of the company (Aten 2016). I will also do a proper hierarchy description in which the managerial will supersede the professional logic, although they will have to work in tandem for a suitable outcome.
Limitations
The analysis was around the United Kingdom, and the establishment was that some companies that had affiliate businesses in China wanted the company to work with their respective companies in the country. The assumption is that the reception of the company services in China will be above average because of the upper hand recommendations from some of the Chinese companies and London based companies that were ready to work with the company. The limitation of the report is the scope of implementation because the aim is to expand the business globally, but the focus is only in China starting mainly with the companies that had agreed to conduct business with our company.
Conclusion
The finding which indicates the percentage in revenue that the company will get if it decides to invest in the Chinese market shows that it is a wise move to invest their given there has been a stagnation in business for some time. The findings also justify why China will be an ideal destination to open the market because of the projected returns (Sheng 2016). The strategies if implemented will see the venture be profitable, as shown by the market analysis.
Recommendations
The business has been stagnant in recent times for the company because most of the clients of the company are U.K. based and account for 85% of the company’s turn over (Sheng 2016). And as the CEO, In light of the business stagnation, the right channel is to open the centers in China to boost the company’s profits. As observed, the company does not have a retailer service, and it is something that is in demand, and it is essential to review the business to the business module to embrace the retail idea as it adds revenue for the company. Globalization of the business starting with China will also help boost revenues and extend the grip on the market globally. The company should also diversify its investment portfolio.
References
Annarelli, A. and Nonino, F., 2016. Strategic and operational management of organizational resilience: Current state of research and future directions. Omega, 62, pp.1-18. Available at: https://www.infoentrepreneurs.org/en/guides/prepare-a-business-plan-for-growth/
Aten, K. and Thomas, G.F., 2016. Crowdsourcing strategizing: communication technology affordances and the communicative constitution of organizational strategy. International Journal of Business Communication, 53(2), pp.148-180. Available at: https://coschedule.com/marketing-strategy/marketing-channels/
Bai, L., Li, F., Cui, H., Jiang, T., Sun, H. and Zhu, J., 2016. Interval optimization based operating strategy for gas-electricity integrated energy systems considering demand response and wind uncertainty. Applied Energy, 167, pp.270-279. Available at: https://www.vendhq.com/blog/retail-expansion-ideas/
Betancourt, R.R., Chocarro, R., Cortiñas, M., Elorz, M. and Mugica, J.M., 2016. Channel choice in the 21st century: The hidden role of distribution services. Journal of Interactive Marketing, 33, pp.1-12. Available at: https://www.sciencedirect.com/journal/journal-of -interactive-marketing/vol/33/suppl/C
Hamel, G. and Prahalad, C.K., 2017. Do you really have a global strategy?. In International Business (pp. 285-294). Routledge. Available at: https://www.business-to -you.com/international-business-strategy/
Jackson, A.A., 2018. Semi-detached London: suburban development, life, and transport, 1900 -39. Routledge. Available at: https://journals.sagepub.com/doi/abs/10.1080/00420987420080661
Lee, J.C., Shiue, Y.C. and Chen, C.Y., 2016. Examining the impacts of organizational culture and top management support of knowledge sharing on the success of software process improvement. Computers in Human Behavior, 54, pp.462-474.Available at: https://www.sciencedirect.com/science/article/abs/pii/S0956522113000973
Means, G., 2017. The modern corporation and private property. Routledge. Available at: https://www.jstor.org/stable/2548753
Ragozzino, R., Reuer, J.J. and Trigeorgis, L., 2016. Real options in strategy and finance: Current gaps and future linkages. Academy of Management Perspectives, 30(4), pp.428-440. Available at: https://www.humentum.org/free-resources/guide/developing-financing -strategy
Sheng, L. and Zhao, W., 2016. Strategic destination management in the face of foreign competition: the case of Macao SAR. Journal of Travel & Tourism Marketing, 33(2), pp.263-278. Available at: https://smallbusiness.chron.com/issues-arise-doing-business -globally-56877.html
Strange, R. and Zucchella, A., 2017. Industry 4.0, global value chains and international business. Multinational Business Review, 25(3), pp.174-184. Available at: https://www.emeraldinsight.com/toc/mbr/25/3
Verhoef, P.C., Kooge, E. and Walk, N., 2016. Creating value with big data analytics: Making smarter marketing decisions. Routledge. Available at: https://www.amazon.com/Creating-Value-Big-Data-Analytics/dp/1138837970