Small business enterprise refers to
the businesses which operate at a small scale, have a limited number of
employees and are still in the phase of growth. L'Occitane en
Provence is one
such company. This company is located in the UK and is a retailer of the beauty
products. There are various products sold by this company and it is gaining
fame in the recent times. However, as it is a small scale company, there are
several problems in this firm including the absence of a proper organizational
structure. In this study, the various facts of this firm will be studied in
details. The performance of the business will be analyzed and proper
recommendations will be provided for the rectification of its weakness. The
business plans will be assessed and a new plan will be suggested for the
business. The changes required for the growth of the business will also be
discussed in details along with proper plans to manage these changes and
monitor their effects as well.
Figure 1: Logo of the company
(Source: L'OCCITANE en
Provence. 2017)
According to Eid and El-Gohary, (2013,
p.31),
in today’s fast-changing world, the success of small and medium (SMEs)
businesses has received its real force behind its emerging in the market. It is
entrenched in its strategic elasticity and the adaptation ability. SMEs have
few rooted systems and methods that consists suppleness in order to make fast
decisions or even slow the speed of implementing and experimenting. In SMEs
like L'Occitane en Provence, with accordance to value modernization, the
managers or the directors go with the same flow resulting in the best decision
making (L'OCCITANE en Provence., 2017). A person or two close to the customers,
towards the performance and business environment, gets noticed by the
governance leading to a speedy feedback.
As stated by Storey, (2016, p.21), in some
cases, at an initial point, small businesses require little start-up capital
which is a big advantage for the ones who does not have a large amount of money
to invest in his business. With ethics and expertise, a person having money can
start a lucrative business in a start-up position. SME businesses require a low
functional cost. As compared to big business, a huge percentage of revenue gets
transformed into profit for small businesses. SMEs owners like in L'Occitane en
Provence finds creative measures in order to reach to its customers by offering
various personalized approaches for interaction session with the clients
(L'OCCITANE en Provence., 2017). It is observed that customers being treated
like a family are more likely to come back to that business in near future.
Sometimes for the better development of the business, the owners who are
generally self-employed take the initiative to provide higher level of customer
service. As mentioned by Giaoutzi et al.
(2016, p.7), as small business is mostly owned by an individual or several
partners, decisions can be implemented quickly. Therefore, decisions can be
deliberated and implemented faster. Profits made belong mainly to the owner(s)
and they are going t o decide on how it can be used for business development
further.
According to Dedman, (2016, p.359), having limited fund in SMEs for
the purpose of advertising can be a huge weakness for that business. It can
sometimes be difficult to reach to the potential customers for establishing
successful base of patrons. Promising customers have fewer tendencies to do business
with small business firms which do not offer products or services of known
brands. One of the serious disadvantages faced by the SMEs is the misuse of
capital. They lack outstanding publicity and authority. It is seen that
advertisement and costs are usually high for SMEs, guerrilla marketing is used
instead to gain more attention from the customers in a less budget spend. When
the owner fails on loan repayments, the burden comes onto the shoulders of the
owner where similarly when profit is made the owner solely enjoys its benefits.
According
to Van Horenbeek and Pintelon, (2014, p.33) using
Five Forces Analysis, it assumes that in order to determine competitive power
in business situations five important forces are needed to discuss. These are:
Supplier Power: In this
stage, it is determined how affluently the suppliers drive up the costs. The
main competitors of L'Occitane en Provence are Yves Rocher and The Body Shop.
These companies claim their products are having natural ingredients which add
benefit in their goodwill. Compared to L’Occitane, the positioning of Yves
Rocher is more popular and supplier power is also high which the favorite
cosmetic brand of the French patrons is. Outside France, The Body Shop has
controlled over the market because it supports fair business and no supporter
of animal testing. LVMH and L’Oreal groups are the direct competitors which
offer premium products worldwide.
Buyer Power: L’Occitane
is selling all of its products worldwide with a cheaper rate as compared to its
customers who are positioned well in the market. In order to grab more
attention of the customers, it's providing various kinds of offers, store
shopping discounts, beauty club benefits and e-shopping discounts. Though its
competitors are well known internationally but its prices are too costly for
the middle-class people. L’Occitane is thus providing products for a monetary
group of people.
Competitive Rivalry: As stated
by Brennan, (2014, p.84), the
competitors Yves Rocher, The Body Shop, L’Oreal are internationally renowned
brands which are at top lists of choice of the customers. But L’Occitane is
providing the products made with natural ingredients to its potential customers
at a cheaper rate as compared to its customers. It is providing various deals
through e-shopping and beauty club benefits where the buyers can avail for
various discounts. So, in this situation, L’Occitane positioned itself quite
strategically even through various social media sites.
The threat of Substitution: The
products manufactured by L’Occitane cannot be available as substitutes because
they are exclusively touched by expert's guidance and the natural ingredients
are not available every here and there. It is always dermatological tested and
is prepared by unique measures from the risk of getting substitutes on the
market.
The threat of New Entry: L’Occitane
always maintains a strong protection to its key technologies and durable
barriers to entry to its marketing strategies for keeping its position
favorable. They keep on posting one offer or benefits on a monthly basis which
is very distinct from its competitors. This prevents the new startup businesses
to follow its strategies in implementing in their business.
Figure
1: Porter’s Five Forces Model
(Source: Metzger et al. 2015, p.276)
As
mentioned by Real et
al. (2014, p.186), in order to stand out in the business market, it
is essential to know about the competitor’s history, performance, strategies
they are using in a promotion, etc. Not having capital in order to make the
required changes, corporate culture, reputation, strategies need to planned to
start with projects that have a good payback for getting some money and help in
demonstrating business case with an initiative for sustainability. Apart from
this, it is quite necessary for a small business to analyze their own business
and also to be updated on the trends and future launching of new products. The
owners or the managers of the SMEs like L’Occitane or any other must be
proactive and be informed before things happen. In order to achieve this, they
should sign up to other industry’s newsletters or subscripts in order to be in
the loop of new happenings.
As opined
by Machmud and Sidharta, (2014, p.51), the
value scheme of a business should carry at least one factor different from the
competitors in order to be alert to face risks and develop the progress stage
better. L’Occitane brings up with beauty club benefits as it key factor for
attracting its potential customers. A company can be unique in the way it
markets itself. Companies which might run a profit in their stores might not
attract the online customers due to poor marketing and promote strategies
including poor design of the websites and lack in social media platform using.
In today’s competitive market it is essential to have business cards,
well-designed websites, and pamphlets. But apart from this, a business must
develop their online portals as well to make them stand out in the competition.
For this, the managers or owners utilize their time in creating an attractive
website and invest in content marketing as well as SEO services. Promoting SMEs
through creating corporate culture will help them to long run their business.
The most important way for L’Occitane to overcome the business is to develop a
strategic business and creative marketing plan.
According
to Hofer, (2016, p.145), in
order to maintain and strengthen the existing performance of a business,
L’Occitane states that it is important to pay attention to the current customer
base as this will establish the growth of a business and will distribute the
available funds needed in the present scenario. Increasing market share will
help to strengthen the small business and for that customers are need from the
competitors or the new customers to get attracted to. In order to win bigger
market share, the owners and the managers must have knowledge about their
existing customers and who can be the future target groups. It also includes
knowing about the competitor’s strengths and the reasons customers are buying
from others. For extending a business, it is necessary to know about the unique
selling point of the business.
As stated
by Saylors et al.
(2014, p.3), by taking opportunities to expand, many small
businesses grow even after of having risks due to limited information. Business
development through diversification can take several forms which include;
launching of new or related products and services to the existing patrons,
opening new markets for the current existing products and launching of new products
for new markets and clear idea about the development costs. For strengthening
the growth of a business, partnership and joint ventures with another are
beneficial because it will help in creating more decision making and solving
management issues. As commented by Prayson et al. (2014, p.15), for
strengthening the growth of a business, partnership and joint ventures with
another are beneficial because it will help in creating more decision making
and solving management issues. Successful business cooperation can be
beneficial by producing large resources, creative and talented skills, decrease
commercial risks, etc. Through a partnership, agreement with a non-competitive
and integral business, L’Occitane will be able to open new markets for improving
discounts to the present ones. Various resources are considered in the process
of business growth which includes; more staffs to work out the strategies,
training of the existing staffs, sufficient space to meet safety and health
regulations of the staff, more sophisticated system of customer service,
outsourcing, marketing and sales strategies for promotion of the business to
the potential customers.
According to Phillips
and Pittman, (2014, p.8), in order to expand the business to a larger community
following recommendations have been discussed:
Collaboration: Working together with other complementary business groups
will help in bringing the traits and experiences of every individual for
creating awareness of the brand with the target customers that is unique from
the others.
Franchise the business: Hard work is needed for managing
franchises. With the help of business model it is done which is able to work in
different locations for expanding the business.
Sell complementary products or services: As stated by Enqvist
et al. (2014, p.36), in order to expand the business,
it is needed to offer the existing customers who are regular buyers with some
complementary gifts that are of their use. This will lead to selling an
equivalent product or services through a third party, from where the commission
can be gained.
Enter new markets: It is needed for the owners of the
small business to sell in a new country to new customers for expanding its
existing business. For entering into a new market, it is essential to do a
proper research about it for understanding their needs and wants. Adding to
this, the managers or owners then need to develop the relevant products for
satisfying their new customers.
Exporting: As commented by Lonial and
Carter, (2015, p.94),
this method will offer small businesses to have big growth opportunities by
expanding its market. Exporting will gradually increase the profitability of
the business especially when there will be not related competitors in the
target market.
Online delivery: The owners of SMEs receives an
offer from the web a cost effective method of transformation which includes
options like; online product selling for increasing reach to patrons in other
areas. It also adds to take the existing product for online delivery which will
make it available 27*7 to the customers worldwide.
Distinct marketing opportunities: In order to promote the business
and its products and services to the target market, it is needed for the owner
of beauty products selling to write about any weekly beauty advice in the
column of the newspaper or can write blogs to various social media sites by
reviewing the products. This can be the unique method of marketing a business.
A business plan refers to a document
which contains the specifications and details of a business. According to Lall et al. (2016,
p.12) this document contains all necessary information regarding the business
including its background, goals and the plans prepared for reaching them. The
chosen company is a retailer of various beauty products and the products of
this company are sold to a large number of people. The main objective of this
company is to create a variety of beauty products for the women. Since the time
of launch of this business, it has been creating several products for women
which have been provided with a positive response. The company started as a soap factory and was
involved in the traditional soap making. It slowly and gradually increased its
range of products and witnessed a substantial growth. However, as this is a small
business, the structure of the business is not appropriate and the CEO of the
firm is personally involved in all activities of the business. The number of
skilled staff is not adequate which makes it difficult to manage the various
operations of the business. The company is largely involved in the production
of a larger variety of goods which requires a large number of employees for
managing these operations. The advertisement of the products is done with the
help of television and print media. The major targets of this business are the
women. However, due to the limited scope of advertisements, the information of
these products is not able to reach to a large number of people. The people who
do not watch television on a regular basis and the people who are not regular
readers are less informed about these products. The raw materials used in the
company are purchased with the use of the finance available to the company and
the profits earned by selling the products. The stakeholder involvement is very
low in this company which is a limitation to the resources. Moreover, this
company is involved in some social movements but the maximum people are unaware
of this due to the limited exposure. This business is growing but the rate of
growth is slow. There need to be some changes and amendments ion these plans
which will help in accelerating the growth of this form.
The business plan of this company
needs to undergo several amendments in order to enhance its overall performance
by rectifying several issues which are present within. First of all the company
needs to make changes in the business organization. Proper departments need to
be formed which will be handling the different activities. As stated by Pugh (2016, p.14) different activities should be
assigned to the respective departments in order to ensure smooth functioning of
the business. There needs to be the proper sequencing of all activities as
these activities are interdependent on each other and the issues in one
activity will ultimately hamper all dependent activities. As is has been
assessed, the products of this company target mostly the women, the company
needs to expand its target customers to men and children as well. This company
should manufacture some mild beauty products for children as well. In this way,
the children will also be added as the customers. The increase in the number of
customers ultimately enhances the revenue of the company. This revenue can be
used for further growth.
With the growth in the production,
the number of employees must be increased. The venture should recruit a further
number of skilled employees who will be able to carry out the various
activities associated with the business.
The advertisements of the products need to be done through the internet.
Morgan et
al. (2016, p.45) mentioned that the Internet is the most convenient and
cost effective way of approaching the people. With the rapid advancement of
technology, large numbers of people have become regular users of the internet.
Therefore, making advertisements on the internet will be able to attract a
large number of people at an instance by incurring a minimum amount of cost.
Proper marketing plans have to be developed so that the maximum people become
aware of the products and add to the customer base. This will also help in
increasing the stakeholder involvements. Moreover, the social movements joined
the company will also be exposed to the people and they will be able to make
their contributions towards the same.
In addition to this, the most important change
in the business orientation can be made by incorporating e-commerce into the
business. There are several stores of this company and the company should go on
to launch online stores for a rapid growth. Online shopping is very popular in
today's world and most of the people prefer this mode of shopping due to
several factors. Lewis et
al. (2016, p. 23) stated that online shopping is a convenient mode of
shopping for the people who do not have time for personal shopping due to their
busy schedule. This company can make use of this factor and get involved in
online business. This will add extra benefits for the business. Apart from
these, it is also important to monitor all activities so the progress can be
tracked and the changes can be made in accordance with the results.
In order to implement any plans into
as business, it is essential to have a proper action plan. An action plan
basically refers to a document which provides the sequence of steps to be taken
for achieving the desired goal (Wetzstein, 2016, p.52). It provides the details of the
time constraints as well the resource requirements. The action plan for
implementing the changes into the chosen firm is as follows:
Staff recruitment: The very first step will be recruiting
new employees into the company. This will be done by following the process of
external recruitments. Advertisements will be placed on the job portals and the
candidates possessing the adequate skills will be hired. Recruitments will be
done for various departments as a staff is required for each of the
departments.
Change of structure: After having recruited the adequate
number of employees with desired skills, they will be placed in different
departments as per their qualifications. The company structure will be changed
and departments will be formed in accordance with the activities of the firm.
Thereafter, a proper sequence will be followed for communications within the
organization and there will be specific reporting heads for all departments.
Training: Once the structure is changed and
departments are divided, the employees will be provided with a job specific
training. They will be clearly explained about the roles and responsibilities
of their job and will be encouraged to come up with new plans for enhancing the
overall productivity of the business.
Product planning: Proper planning will be done for
determining the new product to be launched. This will be done after having
carried out proper research on the expectations and the demand of the
customers. The product will be designed to attract a larger number of users by
making use of the data received in the research process.
Advertisement planning: After the training process, the
marketing department will be asked to create new advertising plans which will
be helpful in making the people aware of the products at a larger scale. These
plans should include the use of the internet for the advertisement purpose.
Hardware and software installation
for e-commerce: In order to incorporate e-commerce into a business, several
hardware and software implementations need to be done. These will be done as
per the requirements and the scope of the business. This will be done with the
help of service providers who are involved in these activities. This also
includes the installation of the transaction processing system for the
payments.
Monitoring process: It is essential to monitor all the
processes right from the time of their initiation so that any problems arising
in the process can be identified and rectified at an initial stage. In the
opinion of Cummings et
al. (2016, p.69) this helps in the reduction of wastage of time and
resources as well.
|
Event
|
Month 1
|
Month 2
|
Month 3
|
Month 4
|
Month 5
|
|
|
Change of structure
|
|
|
|
|
|
|
|
Training
|
|
|
|
|
|
|
|
Product planning
|
|
|
|
|
|
|
|
Advertisement planning
|
|
|
|
|
|
|
|
Hardware and software installation for e-commerce
|
|
|
|
|
|
|
|
Monitoring process
|
|
|
|
|
|
|
Table 1: Timeline chart for action plan
(Source: Created by self)
The implementation of the
above-mentioned plan will have a considerable impact on the business. The
change in the structure of the business will have a direct impact on the
business performance. The job will be divided among the departments and the
department heads will be responsible for the commencement and the completion of
those tasks. In this way, it will become easier to achieve the objectives and
the productivity will be increased as a whole. A proper structure also helps in
the proper flow of information within an organization. There will be proper
communication within the firm which will help in eliminating any loopholes
within the processes. Distributed responsibilities minimize the pressure on the
employees which in enhances their creativity.
Better advertisements will increase
the awareness of the products and number of people will be able to buy these
products. This will increase the revenue of the company. Moreover, with the
help of the internet, the feedback of the users can be collected which can be
used for making improvements in the products. This will help in increasing the
level of customer satisfaction leading to an increase in the number of
customers of the firm. Vera-Baquero et al. (2016,
p.800) state that E-commerce has several benefits which include attracting
numerous customers across all physical boundaries. As the internet is used for buying and
selling, the business can be available throughout the day. People can place
their orders anytime and anywhere as per their convenience. Moreover, e-commerce also helps in saving
the costs of operations. This saved cost can be used for other purposes towards
development. Online selling and purchasing establish a better connectivity with
the user which enables the business to develop a better understanding of the
customers. This helps in creating more customer specific products to provide
better services to the customers.
Changes are often unpleasant for
people. The employees working in an organization for a long time get used to
the existing systems and develop a level of comfort working with the system. In
such a situation, if a change is imposed all of a sudden, the employees are
often resistant to changes. Therefore it is necessary to have proper plans to
manage the changes so that these changes can be implemented smoothly. The plan
for managing the change consists of several tasks which are explained as
follows:
Expression of reasons: The reasons behind making the
changes must be expressed clearly so that the people associated with the can
are able to grasp the fact that this change is necessary for the betterment of
all.
Communication: It is essential to choose the
perfect way to communicate these changes. All the employees, as well as other
involved people, need to be aware of the changes to take place. They should be
assigned to their specific responsibilities and the tasks which they need to
carry out at the time of implementing the changes. This will prevent any kind
of disparities and issues which are likely to arise at the time of imposing any
changes.
Task division: There will be proper documentations
which will contain the details of the specific actions to be performed at the
time of incorporating the changes. The complete process will be divided into
smaller tasks and will be allocated to respective departments. There will also
be definitions for the sequence of the tasks to be followed.
Monitoring: All the changes taking place as
well as the responses to these changes will be monitored in order to find out
any resistive activities by the employees or any problems faced by them. In the
case of arousal of such a situation, meetings and discussions will be conducted
to identify the issues and their root causes. The action for the rectification
of these problems will be taken as soon as possible.
Monitoring is essential in order to
find out the effectiveness of the new processes implied. As suggested by Acheampong and Vimarlund (2016, p.49) the performance of an enterprise can
be evaluated by comparing the actual performance of the firm with the expected
performance. Effective monitoring helps in
bringing about improvements in the business on a larger scale. Any changes made
in an organization do have a significant impact on its performance. It is
essential to maintain a track record of the performance in order to evaluate
whether the impact is positive or negative. The performance of the company has
been monitored after having done the changes for the duration of six months.
The sale of the company was compared with the earlier sales and it was found
that there has been an enormous growth in the sales. The customer base of the
company has also increased to a great extent. With the help of the profits
earned, the company has planned to make further investments to achieve higher
profits. In addition to this, the
establishment of a proper structure into the organization has helped in
creating a healthy workplace for the employees. The employees are able to put
forward their problems and find solutions to them by working in collaboration
each other.
In this study is has been
established that a small scale business has its own strengths and weaknesses.
There are several opportunities available to small scale business which needs
to be grabbed for growth. The performance of a business can be measured with
the help of comparative measures. Comparing the present performance with the
earlier one or comparing the performances of two different people or
organizations help in understanding the issues in performance. In this report,
a small business enterprise named L'Occitane en Provence has been studied. The analysis of this business
has been done and changes have been proposed. Hence it can be concluded that
there are many small business enterprises which need to be provided with
adequate support for enabling it to grow.
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