Located in Knoxville, Tennessee, Pro Clean is a cleaning service business owned by one Kevin Wilson. He started out as a one-man show, but expanded his business 2 years ago. His expansion plan was to imitate the leading company in the industry, King Rug’s business model. He moved his office out of his home into a commercial facility, hired 3 workers to do the cleaning job and purchased 2 more new vans on lease. He also started a basic website for his company.
Since the rapid expansion, the company suffered from poor cash flows, as business did not increase 3 folds as expected. In fact, it has turned for the worse. We believe that if things remained status quo, there will be a high chance that Pro Clean may go out of business.
Our analysis will focus on the general, external and internal environments of Pro Clean to determine their capabilities and core competencies to give them a competitive advantage. Based on their core competencies, and SWOT analysis, we will examine the value chain to determine the activities that can be improved on or be outsourced. A new vision and mission statement will also be formulated to guide both the owner and employees in the implementation of the proposed changes to gain strategic competitiveness, which should lead to above average returns. External Environment Analysis
General Environmental Analysis
The general environment is composed of the dimensions in the broader society that influence an industry and the firms within it. Therefore, firms cannot directly control the general environment’s segments. We shall examine the general environmental segments that may affect ProClean.
Demographic Segment. As of the census conducted in 2007, the estimated population was 183,546 people, 76,650 households (implying approximately 2.4 persons per household), and 40,164 families residing in the city. The median income for a household in 2005 was $30,473. Judging by the number small per household figure, we assume that Knoxville has a relatively younger population and hence, employment opportunities in Knoxville are likely to grow as compared to other American Cities. Population and household growth are expected to follow the employment growth. This bods well for Pro Clean as an increase in households is equivalent to an increase in the market size for Pro Clean.
Economic Segment. The USA has slowly but surely recovered from the 2008 recession and consumers are finally buying once again. With consumers willing to open their wallets once again, business for Pro Clean is likely to pick up. The current economic environment has also presented a good opportunity for businesses to take on loans at interest rates that are near historic lows.
Political/Legal Segment. Being situated in the USA, the political climate should be rather stable even when different political parties assume control of the country. The democratic system will also ensure fair competition. The legal system in the USA is also very well developed.
Sociocultural Segment. As indicated in their preferences, safety and quality is of utmost concern for the residents of Knoxville. Due to the proliferation of the Internet and the marketing efforts of cleaning companies cost awareness is also another factor that has crept into the psyche of the Knoxville residents.
Technological & Physical Segments. The advances in the automobile industry have allowed new vans to become more fuel efficient (40% better), and allowed for a faster set up for each job. New equipment also requires less fuel and cleaned at a faster rate. Industry Analysis
To analyze the profit potential of the industry, and identify the smartest position for the firm to take, 5 factors should be considered. (Appendix A, Figure A1) New entrants in the industry represent a considerable threat since entry barriers are high and product differentiation is low. The required cleaning equipment is not differentiated and...