Sport Clips
Sport Clips
Short Term Strategy and Action
As the CEO, I would seek to increase the sport clips’ market share by attracting new customer into the organization. This will be achieved through investment in promotional activities such as; advertising; publicity; sales promotion and others. This will enable us to boost or revenues thus enhancing the profitability of the company.
Long Term Strategy and Actions
In the long term, the company should focus on retaining existing customers. As the business moves along the product life cycle, it may become more expensive to attract new customers. Thus, the best strategy is find ways of establishing loyalty among the customers acquired during the short term strategy. This can be realized through offering superior customer service, developing a strong brand and developing customer rewards programs.
Sports Clip Competitive Advantage
Sources competitive advantage include; cost leadership; focus and differentiation strategy. Sport clips appear to rely on differentiation strategy in order to create a competitive edge. Differentiation strategy entails distinguishing products from those of competing firm in order to enhance the perception of value among customers. One way in which sport clips has managed to differentiate its product is through branding. The importance of brand for this business is demonstrates by the move to adopt a franchise business model. Franchise business model is whereby a company gets the right to use the established brand of another company in exchange for a loyalty fee. Sport clip has also used customer services to differentiate its product. The company provides superior and differentiated services thus creating a unique customer experience. The company’s differentiators include; VSPC004000.mp3, Burger.mov and Sportclips. Mp3. A 20% operating margin indicates that the company depends on margin rather than volume to earn an income. This, therefore, rules out cost leadership strategy.
Five Forces
Rivalry
Sport Clips is operating with a highly saturated industry. The company faces still rivalry from large franchises. Traditional competitors include; Great Clips, Hair Cuttery and Military Bases. The company also faces still competition from small scale salons.
Substitutes
Salon offers essential services with relatively inelastic demand. Therefore, the threat of substitutes is minimal.
Buyer Power
Buyer power is limited since Sport Clips’ customers are fragmented and least organized. This limits their ability to influence the prices of the organization. However, the clients also highly informed about the existence of competing products, and this gives them some degree of power.
Supplier Power
Most suppliers are small and least organized thus making them less powerful against the organization. This has limited their ability to influence the prices of supply. The only powerful supply is the company that supplies the salon with power.
New Entrants
The threat of new entrant is real. This is because salons have minimal entry and exit barriers. The business require relatively low capital to start, minimal regulatory requirement, low technical skills and has minimal operation cost. This makes it easier for new players to enter and leave the industry.
SWOT Analysis
Strengths
One of areas of strength for Sport Clip is having a powerful brand. The Sport Clip brand has managed to achieve brand recognition in areas in which the salon operates. This has given the organization a strong selling tool for the organization.
Strong financial performance is also another area of strength for the Sport Clip. The company financial statement indicates that the company has been recording positive cash flow in previous accounting period. Positive financial performance enhances the business’ liquidity and solvency status thus increasing accessibility to sources of finances. It also enhances the organization operations.
Weaknesses
Lack of succession plan is one of Sport Clip areas of weakness. The company has no plan for development of employees. This has affected to performance of the organization. The organization is also suffering from high employee attrition rates. The employees are also stealing the organization proprietary information, which is affecting the firm’s business.Presence of unprofitable stores is also an area of weakness in Sports Clip. The organization has a number of non performing stores. This implies that the company has to divert fund from other stores in order to support the financial activities of these non performing stores. This is having an adverse impact on the company’s financial position.
Opportunities
There is an opportunity for Sport Clips to expand its operation by acquiring new stores. This will boost the company’s revenues and increase the company’s control of the market. Sports Clip also has a chance to diversify into other industries. This will help the company to minimize vulnerability to industry specific risks.
Threats
Government regulation is one of the significant threats that the company is encountering. The government’s tax and labor regulation are influencing the expenditures of the business and thus affecting the operation of the business.
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