Business Strategies for Discount Pharmacy and Dollar Store - Example

Engineering Management Name: University affiliation Outline Brief description of each of the two business plans The three strongest components of each plan and justification Identification of the three weakest components of each plan and their justification Suggestions on how the business plans could have been improved List of challenges faced and how they were overcome A statement of lessons learnt about business planning. The competencies that were demonstrated and to what extent. Introduction A business plan can be defined a document describing comprehensively how a startup investment is likely to attain its goals. A business plan lays out written plans starting from the sales and marketing, fiscal and operational standpoint. From time to time, business plans are prepared for reputable businesses that would be moving in new directions (Eric et al., 1993) A business plan entails a depiction of the organizations or small enterprises, their service and/or product and how these organizations are meant to attain their goals. A business plan entails an inclusive budget, present-day and anticipated financing, market analysis as well as its marketing stratagem. In the context of the business planning, the business owners project returns and expenditures for a particular time interval and give a description of operational activities and expenses associated with the businesses (Eric et al., 1993). This document is an individual written report based on two business plans. The business plans were to be selected from three websites and were analyzed as well as evaluated. The three websites from which the two business plans were to be gotten from were ttp://www.businessplanarchive.org, http://www.bplans.com and http://www.businessplans.org. However, we used two business plans from the http://www.businessplans.org website. Then a description in regard to the two business plans was considered and thus included in this document. The two business plans that were selected are the Discount Pharmacy and the Dollar store company. We have made some comparisons between the business plans of the abovementioned companies. There are also various contrasts that have been unearthed between these business plans. The document has also identified and explained the strongest aspects of the business plans of these two organizations. We have identified and explained various weaknesses that exist in each of these business plans. Various improvements have been put forward that need to be implemented on these business plans. There are some challenges that we faced and explanations on how they were overcome. A statement of different lessons learnt regarding business plans is also included in this report. During the course of writing this report, we faced many challenges but we managed to overcome them since we developed some skills which have been included in the report. The main motive of coming up with business plans is to give the business proprietors more clear picture of the possible expenses and shortcomings to particular commercial decisions and helps them revise carefully before the implementation of these concepts takes place (Eric et al., 1993). The first business plan: Discount Pharmacy The Discount Pharmacy business plan starts by stating the major goals of the company. The company will be providing treatments to their clients at a very low price compared to their competitors. The company will be selling medications at a reduced price through a careful sustenance of efficiency in its normal operation and through the targeting of particular segments within the market - those clients who will be paying for their medication on their own. The business plan highlights the essence of their concentration on these segments since they give the company extra competencies – the company will be avoiding any potential disruption within the cash flow usually related to the insurance payments and the company has the ability of eliminating superfluous services for the sort of conversant, repeat client taking maintenance-type medications (Bplans, 2014a). The Discount Pharmacy Company will be operating from a single store that will be serving both mails order clients and those who will be visiting the pharmacy in person. The company will make it by hiring friendly and informed professionals, which, together with the company’s excellent prices, will drive the repeat investment that the company will be relying on. In the business plan, it is only expected that as the prices of prescription continue skyrocketing, The Discount Pharmacy will be appealing additionally to the client's sense of value and expediency (Bplans, 2014a). The advertisement of the Discount Pharmacy, chiefly through advertisement in magazines targeting the over-55 mass, will be aimed at those who are anxious at saving their finances on an expensive but important and regular expenditure (Bplans, 2014a). The Discount Pharmacy Company will have John Reeleaf as its leader. He has an MBA and is also experienced in the pharmaceutical sector. Expenses will be reduced, since the company will have only one pharmacist and fill the other departments with pharmaceutical technicians. They have expectations of reaching productivity by their second year and would be generating recommendable sales by the third year (Bplans, 2014a). The second business plan: Dollar store The proposal elaborates that Dollar Store is a start-up retailing store found in the region of Bend, Oregon and is providing some merchandise choices at bargain costs. The finances of the company are meant to be gotten from the personal investments of the individual owners Jim Spencer and Ted Brinkman. The owners are to give a donation of equity that would be settled by the end of a period of 36 months. The Dividends are meant to be paid quarterly on based on the outstanding equities (Bplans, 2014b). The Dollar Store is to be integrated as an LLC company. This integration will be shielding the owners of the company from matters of personal liabilities and double taxation. Any investor of the Dollar stores is to be handled as a shareholder and thus won’t have any liability for more than their individual invested money. Ted Brinkman, who is the majority owner, will be contributing from his individual savings towards this business realization. Following a serious marketing approach, The Dollar Store is expecting some experiences of continuous development as it continues becoming popular to the majority of the general public (Bplans, 2014b). Assuming that finances will be in place, The Dollar Store Company will have the ability of efficiently opening and maintaining operations within the period of the first year. The huge capital investment of the two owners will be providing the public with a special and inventive type of store that would be catering to the need of anyone on fixed income for instance, low income households, the old, and the large populace of students within the Bend region. The flourishing operations of the Dollar Store Company will be providing a client base that would be allowing it to become self-sufficient (Bplans, 2014b). The major strongest components of the two business plans Dollar store 1. Market Analysis The market analysis summary is explaining their expectations that there will be a continuous increase of sales since clients will be finding out that they have the privelege of purchasing various quality stuff at a bargain price. The analysis also points out that the business is intending to get into the retailing market at prices that would be encouraging quantity purchases, and their prices would therefore end up attracting more clients on fixed budgets (Bplans, 2014b). The market analysis also points out that the targeted market is the low income section of the Bend and Redmond residents. Therefore, the targeted consumers comprise of the working class people, the old, and students. This class of people is always keen on prices of commodities and are therefore looking for seeking for more affordable services. The market analysis is showing that by focusing on the low income market, they will be making a little profit per a commodity but since they are the major residents of the region, the numbers of consumers will be greater and thus more profit likely to be made (Bplans, 2014b). The segmentation of the target market in the business plan shows that bend is making up the largest market segment followed by the Redmond residents. This shows that the company will have a good criterion of marketing their products to these regions based on their segmentation of the market (Bplans, 2014b). 2. strategy and implementation The business plan explains that the Dollar Store will be using strategies of total market services. It is also evident that the company will be presenting a store that would be attractive for the client to be shopping from a variety of products to be choosing from (Bplans, 2014b). Since the company will be selling itself more than just merchandizing, it clear that the company will gradually grow in the targeted market. The company will be offering good customer care services to their clients. This will eventually help them handle issues that their clients might be facing (Bplans, 2014b). The company has two assumptions on their strategies: every individual who has an income limitation or on fixed income is a potential client and once they market in the two segments of the populace, the comany will expand in the overall market (Bplans, 2014b). 3. Management component Ted Brinkman and Jim Spencer, as stated in the business plan, have been working together in the managerial posts in a group of vast area retailing operations (names left out). It is after their experience that they decide to start the Dollar Store. For more than a duration of ten years, under their magement, this company has turned out to become the largest and most famous in that region. Their experience as managers has significantly boosted the progression of this company. The two owners of this organization decided to sell this business to a state organization and it is at that junture that both Jim and Ted opted to be split on their own. Both brought a huge retail marketing and finance know-how to the organization. The two managers, as shown indicated in the business plan, posses the know-how, experiences and contacts of making the business a success (Bplans, 2014b). Discount Pharmacy 1. Market analysis The target market of the Discount Pharmacy comprises of two groups, that is, local clients or walk-ins, and mails order clients.  The company is meant to hire two different approaches as a way of reaching its two broad market segments. The Mails order clients: The Company decides to aim at a special group of clients who will be ordering their medication using the mails as a way of saving their money. The targeted mails order clients are the old, especially those who are more than 50 years old. The proposal continues to argue that, usually, it is this group of elderly clients that consumes more drugs compared to the younger generation. The mails order clients will be purchasing maintenance drugs - prescriptions due to their unending sickness that would be requiring constant treatment. Therefore, by aiming at this group of clients, the Company is likely to make more sales from them since they will probably be purchasing a number of months of drugs at once. This would eventually sustain the company since majority of such clients are likely to become returning customers (Bplans, 2014a). Walk-in clients: the business plan is also entrepreneurial in the sense that the walk-in clients are also put into consideration. This group represents those clients who constantly look for the lowest price for any of their prescription. The document continues stating that this segment of clients has the tendency of purchasing drugs on monthly basis at their local pharmacies, usually at higher prices. Majority of this group are likely to make payments for their drugs out of pocket while others will be submitting claims to their insurance companies for reimbursements at later dates (Bplans, 2014a). The business plan puts forward the major anticipation of the company as the group of clients that will be ordering through the mails. These clients would be targeted via advertising campaigns using the magazines and newsletters. The business plan justifies this choice of advertisements by stating that a people who are older than 50 years are the major regular audience of the newspapers and newsletters. This group of people will constantly be looking for better vendors of their drugs in advance prior to their needs of these drugs. It is for this reason that the company will be making advertisements through the A.A.R.P monthly newsletters (Bplans, 2014a). The company will target the Walk-in clients via advertisements in the local newspaper, "The Oregonian."  Advertisements will, therefore, increase awareness of the Discount Pharmacy and their lower prices to the targeted clients. The business plan is also sensitive to the possibility of competition from the current competitors in the market. The competitors include: chain pharmacies, local pharmacies, mails order and online pharmacies and the Canadian pharmacies (Bplans, 2014a). 2. Management John reeleaf is experienced since he has been working in various drug manufacturers while Lilly has been working as a drugs representative. Their past experience places them at a better position since they are aware of the best drug manufacturers who can supply to them with high quality products at a more economical price (Bplans, 2014a). 3. The financial plan The business plan has incorporated a break-even analysis that is calculating the required monthly revenues so as to achieve the break-even point. The monthly revenues break-even of $48,808 will be required. However, there are two assumptions that are made in this scope: the mean percentage variable cost is expected to be 40 percent while the approximated monthly fixed cost is &29,285. The business plan is also more practical in the sense that it shows that the company will not be expecting any profit within the nine months despite their huge capital (Bplans, 2014a). The Weakest components of each business plan Discount Pharmacy There is lack of a comprehensive marketing strategy since the plan has identified at least four existing competitors in the target market. Since these competitors have been serving the region for a long time, the competition would be very stiff since these companies have been serving their clients for a long time and possibly at low prices and better services (Bplans, 2014a). Since this is a startup business, expenses should be keenly analyzed and adjustments made on them. The number of employees hired, though there is lots of optimism, raises concern. The number of pharmaceutical technicians can be reduced to one in month two then two at month six and three at the end of the year. The number of fulfillment agents can be reduced to one for month five, two at the end of the year and three once the business has survived the stiff competition (Bplans, 2014a). The number of clients that are anticipated within a span of three years is also raising concern. The numbers seem to be exaggerated since it is a start up business in a stiff competition. These numbers should possibly be sliced by half all through up to the end of year five. The stiff competition from the pre-existing companies is likely to reduce the number of clients for any startup company (Bplans, 2014). Dollar store There is a concern on the number of employees for this startup company. This poses the risk of over since there is over staffing which could consequently plunge this start up business into critical losses. The number of fulltime staff can be reduced to two while the part time worker is reduced to two too. This would cut down the expenses since this business is a startup company and should mainly incur expenses on marketing and not staffing. Once the business has grown, they can increase the numbers gradually, that is, from two to three then to four (Bplans, 2014b). The business plan has not stated the list of competitors in the target market. By listing these competitors, the company would develop suitable mechanisms to compete with these pre-existing companies. This list would help the company to research on the different methods used by these companies in marketing their products. Then the company would employ the most appropriate marketing strategies in addition to their inventive mechanisms. Also, failure to know the type of competitors they are likely to face in the market is detrimental and could make the company not thrive since it will compete for clients with the very popular competitors (Bplans, 2014b). The company is prospecting to make losses for the first two years. This, to some extent, makes the idea of this business become doomed. This company will be dealing with the cosmetics and other usually used goods and there is likelihood of getting a good number of customers even by the end of the first seven months (Bplans, 2014b). The possible improvements of the two business plans Discount Pharmacy There should be a comprehensive marketing strategy that would be put into place. These strategies should be based on those used by the pre-existing competitors. As a way of cutting down expenses, the number of pharmaceutical technicians can also be reduced to one in month two then two at month six and three at the end of the year. The number of fulfillment agents can be reduced to one for month five, two at the end of the year and three once the business has survived the stiff competition. Due to the existing stiff competition, the numbers of clients should possibly be sliced by half all through up to the end of year five (Bplans, 2014a). Dollar store Since this is a startup business, the number of fulltime and part time staff can be reduced by half. This would cut down the expenses since they should mainly incur expenses on marketing and not on staffing. There should be a list of competitors so that the company can research and devise suitable methods to compete with these existing competitors. The prospected losses within a period of two years can be reduced through the reduction of expenses on staffing and other miscellaneous expenses (Bplans, 2014b). The list of challenges Some of the resourceful websites required subscription. We managed this by researching the whole list of suggested websites as well as the other relevant websites. There was a challenge of making decision on which business plans to analyze. This was overcome after a careful comparison of a few samples and then decided to use the Dollars store and the Discount pharmacy business plans. Statement of lessons learnt about business planning Start up businesses should start with few workers that can be managed. One should have a list of the existing competitors and devise methods of competing with them. By reducing the non-basic expenses, the company has a likelihood of making profit within the first year of operation. There is essence of having comprehensive marketing strategies which are based on those used by the pre-existing competitors. The competition posed by the existing competitors should not be under-estimated since they have the same clients a startup company would be targeting. The number of customers, who would buy the products from a startup business within the first two years, should not be too high since there are many popular competitors offering the same or even better products than the startup companies. A business that is started by people who have relevant education and experience is likely to survive the existing stiff completion. The developed competencies Ability to communicate: While writing this report, I have developed the ability of gathering information from a variety of sources, compiling them and then reporting them in a manner that is clear and not confusing. Critical appraisal skills: While comparing the two business plans, I had to develop critical reasoning so that I could come up with strong and weak components of the two business plans. Ability to generate ideas: I learnt to come up with ideas, especially, in regard to the necessary amendments that need to be done on the two business plans. Reference list Bplans. (2014a). Pharmacy business plan. Retrieved from http://www.bplans.com/pharmacy_business_plan/executive_summary_fc.phpv Bplans. (2014b). Retail business store. Retrieved from http://www.bplans.com/retail_discount_store_business_plan/executive_summary_fc.php Eric, S., Brian, R., Jay, M. (1993). The Ernst & Young Business Plan Guide. New York: John Wiley and Sons Read More