Retail investment involves the purchase of small securities by an individual rather than an organization. Retail investors trade in small amounts of products which enables it to be more advantageous in profit making. Retail investing, in general, occurs through four distinct channels. First, the individual investor is the owner and the one who buys and sell products. The retail brokers act towards the direction of the individuals. Managed accounts are the third channel; the managers make the decision to purchase or buy and sell resources to investors (Ibrahim & Goodwin, 1986). The fourth channel is the investment clubs who pool their money to start retail investment. Considering the following highlighted reasons I chose the retail business venture.
Reasons for Choosing the Retail Business
Retail investment and management have four R's which are; the return on revenues (ROR). Return on revenues is the first and essential aspect of retail investment. It is the cornerstone of any retail operation, it gives and tells how much amount of money or the net income is being made from the top line revenues. The return on revenues is important because the gross margin return on investment determines the entire gross margin profit on the total amount of the inventory (Sorescu, et al. 2011). Return on revenues has two basic building blocks which include balance sheet and the cash flow statement.
Return on total assets is the second and further an important thing to consider in retail investment. It is also the four-wall cash contribution; it tells the amount of profit generated per single store. Investment determines the aspect that shows the speed at which each store can return the invested capital which was required to open it. The third R is the return on the total assets. Such scenario shows the total operating profits the company makes from the invested assets. In the retail industry, the total operating profits usually vary depending on the business. Return on capital employed is the fourth R, and it tells how efficiently the retailers managed and use their capital. Capital from retail is calculated by the earnings before the interests and the taxes divided by the capital employed which is represented by the total assets less the liabilities which still current. The strongest and major retailers usually get the notch that every store in the retail store should be profitable. Such factors occur because the stores can recover the investment capital with ease. The simplicity of retail business in store administration and retail also gives it a positive indicator why the business will work basing on the chart in Appendix B below. The profits that are realized from the sales of the products rise significantly within months of operation. The sales forecast for a retail business should be consistent concerning profits realized every month to enable it to survive in the retail industry.
In appendix B, the simplicity of retail business in store administration and retail also gives it a positive indicator why the business will work basing on the chart in Appendix B below. The profits that are realized from the sales of the products rise significantly within months of operation. The sales forecast for a retail business should be consistent in terms of profits realized every month to enable it to survive in the retail industry.
Venturing into retail business is an idea of business and opportunity that meets the needs of the targeted clients. The reason why this retail venturing would work is that of the many reasons which favor and promotes customer relations. Provision of customer friendly prices and services directly serve as a good indicator to attract more and retain the old customers. The positioning of the retail market and its all-around products which enable the customers to get everything at one shop stop is also an added advantage. High-quality employees who are dedicated to working also serve a reason why this business idea and opportunity would work. The strengths both internally and externally outweigh the weakness which shows how successful retail business venture would work.
The opportunities in the market industry provide an insight whether this business plan would be successful or not. Such factor is based on the market audit and the SWOT analysis in understanding the strategic approach in venturing into retail business.
Wal-Mart Retail Business Company
Wal-Mart is an American multinational retail corporation which can be used as case study for anyone who wants to venture into and build a successful retail business. The Wal-Mart retail business operates a chain of hypermarkets, many discount department stores, and grocery stores. It was founded in 1962 July by two entrepreneurs Samuel Moore and James Lawrence Walton, who were incorporated in 1969 October (Mujtaba & Maxwell, 2007). The Wal-Mart retail Company uses the name Wal-Mart in the United States and Canada only but uses other names in other parts of the world. Its headquarters are found in Bentonville Arkansas in the US.
The leadership of the Wal-Mart Company has been consistently having its founders as the sole people who are running the whole company. The management of the firm has experienced and qualified advisors who provide and guide administrators on making decisions which would otherwise have a positive impact on the forward movement of the Wal-Mart retail Company. Situation analysis of the current management system shows that it involves executive management consisting of the inclusive company supervisory officer. The overall company executive officer oversees all the other company executives who manage the various Wal-Mart Company (Kumar, Eidem, & Perdomo, 2012). Under the overall company executive officer, there are the several company executive officers who head the various Wal-Mart companies in various regions of the world. Other leadership positions include the presidents, vice presidents and the various heads of different sections.
Wal-Mart has about 11,718 retail stores worldwide, with approximately 2.3 million employees around the globe. Although the company was founded by two entrepreneurs, 49% of the net worth is owned by other investors. Wal-Mart Company has about US$ 17.3 billion operating income. It has been on the operation for around 50 years.
Wal-Mart Company offers a wide range product to its customers. Ranging from electronics, craft supplies, home and furniture equipment, clothing, footwear, jewelry, toys, health and beauty, party supplies and pet supplies which are important satisfying the retail company customers. The targeted customers are mainly persons around the Wal-Mart Company, but much has been done to enable network marketing which targets the customers around the globe. The online marketing involves the business networking that enables people to get the exact information about the Wal-Mart company products and services and their prices (Mujtaba & Maxwell, 2007). Online marketing is accomplished by global e-commerce which supports the industry in marketing strategy. Target customers include the kids, the youths, and those who are old. The number and the vast range of products offered benefits all those who might want to shop with them.
Nature of the Demand for the Products
The consistent maintenance of quality products has so far seen the demand for the products of the Wal-Mart Company rise to higher levels. The analogy and what seems to be one of the company's goal and vision in providing a way in which the customers and their members can save money and live a better life is an important aspect of increasing the level of demand (Kumar, Eidem, & Perdomo, 2012). Despite the high level of competition offered by the rivals providing the same product to the consumers, Wal-Mart has got many advantages which should be emulated by any entrepreneur who wants to venture into retail business.
Competitive analysis is very critical in the starting and venturing into retail business that is essential in the retail business marketing plan. Analyzing competition provides and establishes the effective use of the product or service to be so unique that it ends up attracting the entire market. Wal-Mart Company receives competition both directly and indirectly from companies offering the same kind of products to the customers. The main competitors are JCPenney, Kohl, and Macy's companies. The stores offer retail goods similar to those offered by the Wal-Mart Company (Mujtaba & Maxwell, 2007). The disadvantage of competitive companies is that they are mainly established in the U. S while the Wal-Mart Company is found around the globe. Such factors enables the firms obtain an upper hand in competing for the consumers who are used to the Wal-Mart products and habituate globally. The enterprise focuses on customers that are willing to purchase on quality commodities, such situation enables other companies that offer a single type of product to encounter stiff competition from Wal-Mart that sells variety of goods. The marketing objectives of the competitors are:
- To increase the market share
- To enhance the customer loyalty
- To use various the various tools both directly and indirectly to enable expansion of the business around the globe.
Considering this marketing strategy that is used by the competitors, the Wal-Mart Company has a justifiable and modified plan to enable it to have its product have the better taste of the customers (Ibrahim & Goodwin, 1986). The best method was to serve the customers to their homes instead of them necessarily coming to the retail stores.
Opportunities and Issue Analysis
Wal-Mart Company has significant number of advantages which makes it have an impact in the retail market across the globe.
- Large buying power
Wal-Mart Company depicts the capacity to negotiate with manufacturers directly, and this aspect enables the retail business company to acquire products at low prices. The retail business is able to get more discounts by buying a large number of products from the manufactures and this would pose for another advantage that will benefit the company it marinating its customers. The low price and quality products are usually obtained from the world's largest producing company's example are in China.
- Low cost of products
Because of the low cost of acquiring the products directly from the manufactures, the Wal-Mart retail company can evade the rise in the price of the products because of the middlemen. Relatively low prices attract more customers hence reducing the cost that helps the firm save more (Mujtaba & Maxwell, 2007). Low prices while offering high-quality products are important in the retail business especially for the startup in acquiring and maintaining the customers.
The longtime presence in the retail market for about 50 years has seen Wal-Mart company control around the retail industry immensely. It has given it an upper hand in out doing the competitors who pose a threat to the wellbeing of Wal-Mart Company. Despite this aspect of the experience, the startup can make a fortune in the retail by offering low price goods although it can be disadvantageous it will have an impact in developing the retail business.
- International presence
Wal-Mart Company has been international present since in 1992. The factor contributes to the success of the firm through the joint venture with various companies like Cifra which is a Mexican retail company. Therefore, the company has expanded to all nations around the globe thereby precipitating to efficient growth and become the largest retail business considering the amount of revenue gained (Kumar, Eidem, &a...
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