Feasibility Study

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1.1 Introduction

The aim of this investigation is to explore the feasibility of setting up a stationery shop in my local area. Therefore this will be my primary objective. This study will help me in determining if my business idea is worth pursuing, considering basic market research.

A suitable location has been selected in the town of Southall, Middlesex. I have chosen this area because it is linked to many main roads which has huge amount of traffic each day which I feel will benefit my business. It also has many bus stops in the vicinity and has a train station within walking distance, I believe this will contribute greatly to my business and generate a healthy custom. The shop would also be situated close to many schools which means that the majority of my customers are likely to be students who usually buy stationery to aid them in their everyday studies. Therefore I aim to target these students which would differentiate me from the local competition such as Woolworth’s who seem to have a reputation in the local area for selling stationery. However they do not seem to specialise in selling stationery but is part of a range of products which they offer.

My main reason for choosing to set up this business is because as a young person living in Southall I find that there is a lack of decent stores for students in this area to buy reasonably priced stationery especially for people aged 9 to 19. Also, being a student, I’m a regular buyer of stationery and as a member of my target market I know there is a need for low priced, good quality, stationery in Southall.

My business opportunity

I think it will be a good business opportunity setting up in this area as there is already an established local competition such as Woolworth’s, one pound shops and newsagents. This means that there are already potential customers in the area. However, these shops do not specialise in selling good quality stationery at competitive prices.

1.2 The Three Generic Strategies

The generic strategies suggested by Michael Porter in his book, Competitive Strategies (1980) are strategies that any business uses to gain competitive advantage over rivals in the market. There are three main generic strategies, and they are;

• Cost leadership: This is where a business attempts to produce goods or services at a lower cost than its competitors by using economies of scale. It will do this to charge lower prices than rivals and to compete in price wars that may take place. Organisation, production, marketing and distribution will all be geared at reducing costs. Firms that adopt this strategy are likely to offer standard, adequate, medium quality products. E.g. Wal-mart and Tesco.

• Differentiation: This is where a business tries to make a product or provide a service that is seen as unique by customers. For example, a business may add special features or a USP to their products to give the goods or services a distinctive identity. A business can charge a premium price, higher than other prices, and so gain a competitive advantage.

• Focus: This is where a business concentrates on a particular segment or consumer group. The business tries to identify, anticipate and meet the needs of this group. The segment could be a geographical area, age group, gender or income group. The segment is often referred to as a niche market. E.g. apple ipods.

The generic strategy that my business will be adopting is DIFFERENTIATION, as cost leadership and focus are strategies which are usually taken by large or well established business who can either achieve economies of scale or have the necessary investment to focus on a particular area. Therefore these two strategies would not necessarily suit my small start up business. Although, many businesses in this area aim at low prices so as to differentiate and compete with their rivals.

The stationery I’ll be selling at my store will be differentiated from other rival products in my...
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