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BusinessManagementCapstone2.docxRunning head: BUSINESS MANAGEMENT 1
BUSINESS MANAGEMENT 17
Business Management Capstone
Name
Course
Tutor
Date
Business Management Capstone
MetaShoe Company
Executive Summary
MetaShoe Company is a shoe manufacturing company to be established in San Antonio, Texas. The company will set up a production unit in San Antonio, where all its production will take place. There are several reasons that informed the location of the business in San Antonio. The most critical factor that made it easy to select the city is the relatively lower average hourly wage in the area. The mission of the company is to produce high quality footwear (sneakers) to meet the needs, tastes and preferences of its customers at affordable costs using locally available resources. One of the goals of the business is to use locally available resources to provide products that meet the needs of the clients. In the production of the sneakers, the company will make sure the products are obtained locally. The second goal of the business is to enhance the economic development of the country by enhancing the creation of job opportunities to locals. There are three key issues that the company sees to be critical for its success. The first is the establishment of suitable relationship with all the stakeholders. The second key is environmental protection. The company sees the development of sustainable environmental conditions as being critical to its development. Finally, the company sees the establishment of enabling organizational culture as being critical for its success.
Company Summary
Industry History
The shoe manufacturing industry is a fairly old industry in the world. In the United States, the history of the industry may be traced to the coming of the British colonial masters when the show manufacturers came to provide shoes and boots to the colonizers. The tradesmen acquired leather from the nearby tanneries. In these early periods, there were no established companies since the cobblers who manufactured the shoes operated from their homes. At the end of the colonial era, massive developments had taken place in the shoe manufacturing sector. In Eastern Massachusetts, an industry was already developing. The Revolutionary War played a critical role in the development of this sector since there was a huge demand for boots to be used by soldiers in the war (Davies & Frink, 2014). The shoe manufacturers were compelled to import materials from Europe since the local market could not deliver enough leather.
Since that period, there have been massive changes in the shoemaking sector. Today, the shoe manufacturing sector in the United States is highly developed. There are about 230 footwear manufacturing companies in the United States. However, the industry is highly concentrated, with only 50 companies accounting for over 95% of the revenues in the Industry Dun & Broadstreet. (n.d). One challenge that the United States footwear sector faces is the high costs of manufacturing, which compels many companies to manufacture the products abroad and import the products into the country.
Legal Form of Ownership
The business is a Limited Liability Company (LLC). One of the characteristics of a limited liability company is that it a separate legal entity from its owners. The organization can sue and be sued in its name. One of the main reasons for the selection of this form of ownership is that it provides an opportunity for the establishment of flexible leadership (Mancuso, 2019). The owners are able to hire managers to run the business for them and, as a result, make sure there is professional and competent leadership being offered to the business. However, the owners maintain the right to make critical decisions concerning the management of the business.
Many business organizations have failed to achieve their goals, not because the environment has been hostile or unsupportive, but because of poor management. One critical issue that many business organizations encounter is the failure of business owners to provide objective and competent leadership to the organization. When businesses are run by their owners, there is a level of emotional attachment to the business that is capable of preventing objectivity in decision-making (Nissim, 2013). Thus, the utilization of the Limited Liability Company approach to the ownership of the business will make sure that the organization has not only proper management but also making sure that the owners do not lose control of the business.
Location and Facilities
The business organization is located in San Antonio, Texas. There are several reasons that informed the location of the business in San Antonio. One of the reasons for this decision is that San Antonio is a city that has a robust economic development. The city is highly developed in terms of infrastructure, and this will make it possible to easily transport the products of the business to other parts of the country. However, one of the most critical factors that made it easy to select the city is the relatively lower average hourly wage in the area. While the national hourly wage rate is $25.72, the rate in San Antonio is $22.70 (U.S Bureau of Labor Statistics, 2019). The low wage rates in San Antonio will enable the company to reduce the costs of its production without compromising the quality of the products.
The company will set up a production unit in San Antonio, where all its production will take place. The company intends to acquire a piece of land in the region where the production unit will be established. There was a thought of leasing a facility to use for production, but after carrying out a comparative analysis, it became evident that the route of purchasing a piece of land and setting up the production unit on it would be the ideal route to take.
Management Structure
Fig. 1.0: MetaShoe Company Managing Structure
The figure above shows the management structure of MetaShoe Company. The organization is headed by a managing director who is in charge of making sure that the daily running of the organization is smooth so that the organization. The managing director is the bearer of the vision of the organization, and the individual is tasked with the responsibility of making sure that all the employees of the organization work towards the realization of a common goal. Below the managing director are departments that are headed by managers. The departments include finance, marketing, production, human resource, and legal services.
The finance manager's primary responsibility is to make sure the organization maintains the desired level of financial health. The holder of the office is tasked with making sure the company has policies that will make sure it maintains sound financial standards. Additionally, the finance manager is tasked with handling all the financial resources of the organization. The primary responsibility of the marketing manager is to help the organization to expand its market base and market the products. The marketing manager will make sure that the company creates a loyal customer base in the market by making them understand how the product will add value to them.
The human resources department will handle all the issues related to employees from recruitment, training, remuneration, appraisal, and promotions. The human resource manager is tasked with developing human resource policies that will make sure the organization has all the employees that are suitable for its circumstances and culture. On the other side, the production department will make sure the organization makes products that will be competitive in the market. The production manager will be tasked with the responsibility of making sure that the company also obtains the raw materials that it requires to carry out its responsibilities. Finally, the legal office will assist the company in all legal issues. The department will help the organization in decision-making to make sure all the decisions are within the legal requirements at the local, state, and federal levels.
Products and Services
The main product of the company is sneakers. The company will manufacture sneakers that it will sell to its clients within the United States and other markets.
Market Analysis
1. Market Analysis
The company’s target market is young people who are between 15 and 45 years. Sneakers are shoes that are used primarily in athletics and in training. Most of the people who are actively engaged in athletic activities and those who are involved in active exercises are between the age of 15 and 45 years. Thus, the company will target young people with this product.
In the beginning, the company's target market is the American population. While the United States has a lot of companies that are producing sneakers, it is also evident that the market is still not yet saturated. It is possible that a firm can still enter this market and compete favorably with other players as long as it can produce sneakers that are of the highest quality levels. However, as the company increases its customer base in the United States, it will expand into international markets where the demand for the products is still high, but the supply is limited.
Industry Analysis
In the 2019-2020 financial year, the total revenue attributable to the footwear in the United States stood at $ 86 billion. Data suggests that it is expected that the sector would grow at a rate of 4% annually (Statista, 2020). In recent years, this industry has been experiencing significant growth patterns. The image below shows the growth of the revenues from the footwear sector in the United States;
Fig. 2.0: Growth of American footwear market between 2012 and 2025
From the data above, it is notable that the American footwear industry has been experiencing tremendous growth in revenue. Between 2012 and 2020, it was only between 2019 and 2020 that there was a dip in revenue. The dip in revenue could be attributable to the impacts of the novel coronavirus pandemic (COVID-19) that has had tremendous impacts on the global economy. The sneakers market segment of the industry appears to be one of the areas that have been experiencing tremendous growth levels in the country. Perhaps this change may be attributable to the change in lifestyle where many people are experiencing the need to get involved in physical exercises. Additionally, the growth of the sporting sector has led to an increase in the demand for sneakers. Looking into the future, there is no doubt that the sneakers market is going to be vibrant and is likely to be a significant source of revenue for the manufacturers of footwear.
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S (Strengths) 1. No history of a bad reputation 2. Has resources to build operations 3.Acces to highly skilled workers
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W (Weaknesses) 1. The company is new, and many people are not aware of it 2.High cost of production 3. The company is concentrated in the limited American market |
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O (Opportunities) 1. The footwear market is expanding 2. New technologies allow for improved production efficiency 3. Footwear is emerging as fashionable products |
T (Threats) 1. Stiff competition 2. Breakdown of supply chain system 3. Changes in labor practices may adversely affect its operations |
Strengths
One of the primary strengths of the company is that it is new, and as such, it does not have any baggage associated with its past, which may have an impact on its image. Since it is starting from scratch, the company may get the benefit of the doubt from consumers and give it a platform for growth. Secondly, the organization has access to resources that may be helpful in helping it realize its goals. Finally, the organization has access to highly skilled workers, and this gives it an opportunity to produce quality products that suit the needs of the market.
Weakness
The primary weakness of the company is that it new, and as such, it has no reputation that it can use as the foundation of its development. In many cases, companies use their reputation as the foundation of their marketing, interaction with clients, and the realization of their goals. The second weakness is that the company is concentrated in the United States, and the impact of this is that it limits its growth and development. In the event where something adverse happens in the country, the company’s operations will be affected damagingly. Finally, the high costs of production in this industry may have adverse effects on the company.
Opportunities
The immediate opportunity for the company is the expansion of the footwear industry. As the industry gets bigger, the demand increases, and the company has a chance of making use of this to advance its goals. Secondly, footwear is rapidly being recognized as a form of fashion, and that means its market is likely to improve. Finally, the company has an opportunity to use emerging technologies to boost its activities.
Threats
The most immediate threat that the company faces is competition from established firms. Firms such as Nike, Under Armor, and others have been in operation in the United States for a long time, and that gives them an advantage over new firms. Secondly, since the company does not control the supply chain, any changes in the supply chain system may adversely affect its operations. Finally, it is possible that labor policies and laws may change, and this may have tremendous effects on their activities.
The four Ps of marketing as they relate to the company’s products and services
The 4Ps are essential in the effective marketing of products and services. These elements of marketing include price, place, product, and promotion. The following is an analysis of the use of the 4Ps in marking the product;
1. Product: the product will fulfill an unmet demand in the market. The company will prove that this product will give them an experience that they have never experienced.
1. Price; the company will use low prices to tap into the middle and low-income segments in the market.
1. Place; the product is produced for the market, and its market will be focused on the American market
1. Promotion; promotion will be done mainly via advertising on social media platforms. The reason for using this approach is because most of the youthful persons who are the primary targets of this product have a significant presence in social media.
The company will produce sneakers in three categories for both children and adults. The products will be priced according to the materials used and the designs. The following is a price list for the products;
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PRICE LIST ($) |
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LEATHER |
TEXTILE |
RUBBER |
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Adults |
50 |
45 |
40 |
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Children |
45 |
40 |
37 |
Promotional Strategy: Develop a promotional strategy, including specific tasks, target dates, and responsible parties.
The promotion for this product will take place through sponsored adverts on social media. Social media platforms such as Facebook and YouTube are very popular among young Americans who are also the targets of the promotion. The following is an outline of the promotional strategy that will be used to market the product in the market.
Sales Forecast: Develop a monthly sales forecast for the first year of operations, including a discussion of expected market conditions.
Fig. 3.0: Projected Unit Sales for the first 12 months
Over the first few months, the unit sales for the products are likely to below. The primary reason for this is because many consumers will not be aware of the product. However, with time, as the company enhances its marketing, it is expected that the unit sales will also experience a significant rise. The sale of the outfits for children is expected to remain fairly low throughout the year, although the sales volume is expected to keep rising gradually over the period.
Implementation Strategy
Overall Strategy
The company will first set up the production plant at the site that had been identified in San Antonio, Texas. After setting up the plant, the owners will hire a human resources consulting firm to help recruit the management team of the organization. The firm will hire the managing director and the other line managers. The human resource manager will then oversee the establishment of the human resource department and hire, train, and prepare the employee for the production and delivery of the products to the market.
In the beginning, the company will manufacture and launch only a limited number of sneakers. This approach will allow the company to listen to the reaction of the consumers to the products. The feedback from the market will be used to guide the next course of a production. The main goal of this implementation strategy is to make sure that the company does not realize when it is too late that it has made productions that are not in line with the demands of the market.
Monitoring Plan
There are only two approaches that the company will use in carrying out monitoring and evaluation. Firstly, the company will use customer feedback. Customer feedback is essential in determining whether or not consumers are satisfied with the products of the company. Customer feedback will be obtained from the social media platforms where marketing for the products took place. Additionally, feedback will be obtained from messages and communication to the company through the publicly available communication channels that the company has put in place. Secondly, the company will monitor the sales trend and make a determination of whether or not the product is making the desired impact.
Financial Statements and Projections
Forecasted Profit and Loss Statement
Forecasted Balance Sheet
Financial Report
Financial Projections
The financial projections suggest that the firm is likely to start its activity with profitability. It is projected that within the first 12 months, the company will make significant sales while its costs will remain fairly low, and this will allow it to be profitable. As it gets into the year, the company's sales volumes will also increase, and this will help it to improve its profitability.
Financial Position
The company will be profitable at the end of the financial year. During the year, the company will post impressive growth in its sales, and it will keep the costs of its operations very low to enable it to maintain profitability growth.
Estimated Capital/Investment Needs
Initially, the company will require long term assets worth $ 2,450,000. These will include buildings, land, and machinery. Besides, the company will require cash to inject into its stock as well as cash to run the operations. These will need $ 1 million. These are the initial investment needs of the company. It is unlikely that additional resources will be pumped into the company in the future. The company will use its profits to expand.
References
Davies, A. R., & Frink, B. D. (2014). The origins of the ideal worker: The separation of work and home in the United States from the market revolution to 1950. Work and Occupations, 41(1), 18-39.
Dun & Broadstreet. (n.d). Footwear Manufacturing Industry Profile. Retrieved from http://www.firstresearch.com/Industry-Research/Footwear-Manufacturing.html#:~:text=The%20US%20footwear%20manufacturing%20industry,sales%20of%20about%20%241.8%20billion.&text=Demand%20is%20driven%20by%20fashion,demographics%2C%20and%20consumer%20disposable%20income.
Mancuso, A. (2019). Form Your Own Limited Liability Company: Create an LLC in Any State. No.
Nissim, B. H. (2013). Mutually Beneficial Relationship: How the Low-Profit Limited Liability Company can Build a Brand and Grow America's Wind Energy Infrastructure. Notre Dame JL Ethics & Pub. Pol'y, 27, 247.
Statista. (, 2020). Footwear: United States. Retrieved from https://www.statista.com/outlook/11000000/109/footwear/united-states
U.S Bureau of Labor Statistics (2019). Occupational Employment and Wages in San Antonio–New Braunfels, May 2019. Retrieved from https://www.bls.gov/regions/southwest/news-release/occupationalemploymentandwages_sanantonio.htm
Market Research
The primary purpose is to have a deep understanding of the market
Will be carried out by the Research and development unit
Developing content
Develop content that will be used to reach out to the target markets on the social media platforms
Will take one week
Monitor responses
Place the content on social media platforms (Facebook and YouTube)
Monitor the response of consumers
Will be done in two weeks
Wll be done by the marketing department
Respond to the clients where necessary
Will be done by the marketing department
Managing Director
Marketing Manager
Sales Department
Human Resource Manager
Head of employee training and development
Production Manager
Finance Manager
Research and Dev. Officer
Legal Officer
JANFEBMARAPRMAYJUNEJULYAUGSEPTOCTNOVDEC
ADULTS65006800700075007500750080001000011000120001400015000
CHILDREN300035003500350038004000420042004500480050005500
Monthly Profit and Loss Month 1Month 2Month 3Month 4Month 5Month 6Month 7 Month 8Month 9Month 10Month 11Month 12
REVENUE (Sales):430,500432000435000440000445000447000450000455000460000462000465000
425500.00
OPERATING EXPENSES:250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 240,000
Total Operating Expenses:250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00
Profit before Interest 175500.00180500.00182000.00185000.00190000.00195000.00197000.00200000.00205000.00210000.00212000.00225000.00
Interest Expense30000.0030000.0030000.0030000.0030000.0030000.0030000.0030000.0030000.0030000.0030000.0030000.00
Net Profit (Loss) - Monthly145500.00150500.00152000.00155000.00160000.00165000.00167000.00170000.00175000.00180000.00182000.00185000.00
Net Profit (Loss) for year145500.00150500.00152000.00155000.00160000.00165000.00167000.00170000.00175000.00180000.00182000.00185000.00
Cash
Cash at Bank
Inventoy
Owner's Equity3,450,000.00$
590,000.00$
Total Liabilities and
Owner's Equity
Owner's Investment (optional)500,000.00$
Retained Earnings90,000.00$
2,500,000.00$
Total Liabilities 2,860,000.00$
Long-Term Liabilities (e.g. Loan Payable, etc.):
Bank Loan2,500,000.00$
Accounts payable360,000.00$
360,000.00$
LIABILITIES:
Current Liabilties (e.g. Accounts Payable, Wages Payable, etc.):
2,450,000.00$
Total Assets3,450,000.00$
500,000.00$
Long-Term Assets (e.g. Furniture, Equipment, Vehicle, Building, etc.):
1,200,000.00$
Land
300,000.00$
Current Assets (e.g. Cash, Accounts Receivable, Inventory, etc):
Buildings
250,000.00$
Projected Balance Sheet
ASSETS:
Machinery
450,000.00$
1,000,000.00$
750,000.00$
