To become one of the leading ecommerce organizations
To become one of the leading ecommerce organizations that provides for mutual development of all stakeholders.
To provide a world class shopping experience to customers by offering best quality products.
- To create a world class online platform that is secure, user friendly and creates a lasting impression.
- To create a high degree of customer reach with dedicated marketing and advertising efforts.
- To increase and maximise conversions of visitors to the website and aim for high customer loyalty.
- To promote an atmosphere of integrity, practice of fair trade and mutual growth of all internal and external stakeholders.
Products & services offered by an organization can play a decisive role in deciding about various financial and non- financial strategies of the enterprise (Wise, 2016). Synergy Inc plans to offer a bouquet of products ranging such FMCG products, consumer durables and apparels. The company also to set up dedicated customer support centre for suppliers and customers.
Business and Organization Structure refers to the flow of command and hierarchy in an organization. A well-organized structure helps in achieving goals and objectives of the enterprise (Schell, 2017). Synergy Inc has divided its functions into IT, finance, operations and marketing departments led by vice presidents who report to the CEO. Vice presidents are subordinated by respective department managers. Managers lead various assistant managers, who in turn supervise various teams.
In the initial years of operation company plans to use equity from owners and take loan from financial institutions for starting business operations. Company plans to increase its debt throughout all five years for funding expansion and will have a balanced capital structure. Company many also explore options for private equity and venture capital funding after 5 years of operations.
Business decisions and plans should be carried out after taking a view of strengths, weaknesses, opportunities and threats an organization faces. SWOT analysis is a tool evaluating business enterprises (Pahl & Ritcher, 2009).
Strengths
- Well organized business and organizational structure.
- Adequate initial funding in form debt and equity for business operations.
- Experienced team consisting of CEO, vice presidents and other junior team members.
- Well-developed centric E-commerce portal and logistic capabilities; and broad range of products.
Weakness
- Lack of customer loyalty due to new business operations.
- High expenditure in initial years.
- Product distribution is limited to few cities only.
Opportunities
- Expansion in other product categories and regions.
- Increasing number of online users will result in expansion of customer base.
- Cost effectiveness can be increased by optimizing supply chains.
- Opportunities for expansion by acquiring small businesses.
Threats
- Risk of online frauds and hacking
- Competition from brick and mortar stores ;and established online players
- Threat from changing laws and trends in shopping.
Synergy Inc will initial open a premises for head office. Head office will house finance, IT, marketing and operations department. Company also plans to rent a space for a warehouse for storing products. Synergy Inc will hire a place for setting up dedicated customer support centre. Company will also invest in all necessary office and warehouse facilities.
Synergy Inc will develop an IT system for E-commerce platform. Enterprise resource planning software will be developed for internal information flow within the organization. Telecommunication system will be planned and developed for internal communication as well as for support of customers and suppliers. Company will house team of IT and telecommunication experts.
Intellectual Property, Licences and Memberships Insurances
Synergy Inc will also try to develop e-commerce platform that is unique and may try to patent technologies that it may develop various phases of expansion. It also plans to take exclusive distribution licences for some FMCG products.
- To Target a customer base of 200000 by the end of 5 years
- To achieve sales revenue of $2 million by 2023.
- To be among the top 5 shopping websites of the country in terms of customer experience.
- To be among top 10 small ecommerce websites of the country.
Products and services offered by Synergy Inc
Marketing strategy should consist of series of steps and processes at that are aimed at promoting and advertising products for maximizing revenues (Iyamabo & Otubanjo, 2013). Synergy Inc marketing will focus on use of digital and online medium in first 3 years; and later on use of television and traditional marketing. This will be through online mailers and social media website advertisements. It will also encourage customer loyalty by running membership programs and promoting its wallet. Customer centric approach will be taken with the help of the easy return policy.
Sales will be handled by a dedicated marketing team. Sales team will make use of IT tools for product promotion on social media and online platforms. Sales team will also focus on contacting premium sellers and on-boarding them on the e-commerce platform. YouTube, LinkedIn and Twitter will utilised for promoting memberships programmes. Sales function will ensure maintaining coordination between sellers, warehouse and customers. After 3 years, sales function will coordinate with television channels for product promotion.
Marketing strategies of organization fail and become ineffective if enterprises do not take steps for customer satisfaction and retention (Spotts, 2014). Synergy Inc will have a dedicated focus on customer management and retention. Dedicated customer support for query resolution and product returns will established. Customer experience will be enhanced by optimizing speed, improving navigation and enhancing responsiveness of the portal. Royalty programmes will be planned for increasing retention. Regular touch will be maintained with the help of online mailers.
Pricing Policy of a company plays an important role in determining market for its products. A well planned policy can help in creating a demand for the products (Schindler, 2011). Synergy Inc will maintain a pricing policy that is consistent with current market trends in e-commerce industry for most of the products. The company will offer discounts on various products. Products in the category of consumer durables and electronics will offer more discounts as compared to FMCG category. Pricing policy will remain consistent throughout the year for first 3 years. Price policy will be aggressive during holiday season of winters when the focus will be more on increasing revenues by increase number of products sold.
Synergy Inc will develop a business strategy that will aim at identifying the target audience and segmenting them into various groups. Company will focus on developing quality content for targeting customers. This will be done to SEO enhancement of website. Various groups will be target by suitable content that suits their choices. Choices will be identified by market research. Consistent brand management will also be the focus of the company. Company will help sellers on the platform in optimizing their operations for better delivery management and improving product quality.
Business and Organizational Structure
Competition helps organizations in enhancing their products and services. It also makes enterprises develop better systems and improve existing processes (Fleisher & Bensoussan, 2015).
Ecommerce industry is growing at a rapid pace globally. Sales grew at 23% in 2017 reaching an all-time high of $2.3 trillion. By 2021, two third of the global market will be confined in Asia-pacific region. Global players like Amazon, Ebay and Alibaba still dominate the markets. However some new organizations like Flipkart in India are giving tough competition to these giants. It shows that new players can create niche for themselves by going out the way and delivering better services. Discounts and mobile platform dominate this industry. Companies after initial years of operation also differentiate into other areas such as partnerships with brick and mortar stores. With growth in technology and better logistic facilities, industry is set for massive growth along with intense completion (International Post Corporation, 2018).
Synergy Inc will largely be dealing in FMCG, consumer durables, electronics and apparels. Target groups can be identified by segmentation in various categories. Segmentation can be done on the basis of demographic and geographic factors (Mcdonal, 2012). Target group of Snergy Inc for apparels and electronics will focus more young generation but will not be confined to them. On the other hand FMCG and consumer durables are demanded by middle aged in majority of circumstances. Company will initially focus on geographic regions with high density of population and high incomes. Far flung hilly areas and inhabitable areas with low density will not form the target group of Synergy Inc.
With the development of technology, e-commerce industry is one the fastest growing industries in the world. Synergy Inc faces intense competition from existing established players in the industry. Apart from that company also faces threat from traditional shopping avenues like malls and stores. Industry also has low barriers to entry as a result companies are not willing sacrifice market share. Companies in the industry tend to reduce price and sacrifice of margins for increasing revenues. Synergy Inc will try to nullify all these affects by offering differentiated services and high quality products.
Power of Suppliers
Supplier’s power in e-commerce industry is limited. Online companies can choose which products to sell on their websites. Suppliers tend to follow the rules of online website. Synergy Inc will have advantage over suppliers
Power of Buyers
Power of Buyers is high in this industry. Majority of clients keep switching the websites for their purchases. Synergy Inc will have to maintain its focus in maintaining customer loyalty.
Funding strategy
Threat of Substitutes
Retail stores and malls offer substitutes for Synergy Inc. These also offer similar products. Therefore threat of substitutes is high.
Threat of New Entrants
Barriers to entry in the industry are high. It requires technological innovation and capabilities to enter into it. Threat of new entrants is moderate for Synergy Inc.
Rivalry
Rivalry for Synergy Inc is high because of large number of established and new players. This will result in intense competition.
Financial Forecasts has been planned for Synergy Inc. Financial forecasts help in giving a view about future projects of financial position of an organization. Financial forecasts are prepared for setup costs, profit & loss statement, balance sheet, cash flow statements & break even analysis (Kao & Liu, 2003).
Financial forecasts of Synergy Inc suggest that, $402000 will required for setting up the operations. Company will purchase its own head office for the cost of $250000 and spend on IT infrastructure, hiring, office equipment and ware house development.
As far profit & loss statement is considered, Synergy Inc will be able to generate sales of $1million and net profit $14553 from first year on the basis of projections. Sales will grow continuously and reach to about $2million by the end of fifth year. Net profit will also grow to $68970 by the end of fifth year
Company will make use of both equity and debt financing for raising funds. Organization will boost a steady mix of both of current and fixed assets. Borrowings are expected to increase every year to fund for expansion of operations.
Operating cash flow is expected to negative in first year of operations due low cash sales. However they will pick up as demand picks up and collection process is rationalized. Synergy Inc will have cash surplus in all the five years. Cash flow from investing activities will be only part of the statement in the first year and second year of operations. Continuous use of debt financing will result in positive financing cash flows in the all 5 years.
Break even analysis has been carried for the Synergy Inc. Since the company deals in multiple products, a weighted average contribution margin has been calculated. After carrying out the analysis, break even quantity was found to be 860 units.
References
Fleisher, C. S. & Bensoussan, B. E. (2015) Business and competitive analysis: effective application of new and classic methods. New Jersey: FT Press.
International Post Corporation (2018) State of e-commerce: global outlook 2016-21 [online]. Available from https://www.ipc.be/en/knowledge-centre/e-commerce/articles/global-ecommerce-figures-2017 [Accessed 2 April 2018].
Iyamabo, J. & Otubanjo, O (2013) A three-component definition of strategic marketing. International Journal of Marketing Studies. 5(1) , pp.16-33.
Kao, C. & Liu, C. (2003) Predicting bank performance with financial forecasts: a case of Taiwan commercial bank. Journal of Banking & Finance 28 (2004) , pp. 2354-2368.
Mcdonal, M. (2012) Market segmentation: how to do it and how to profit from it. New Jersey: John Wiley & Sons.
Schell, J. M. ( 2017) Private equity funds: business structure and operations. New York: Law Journal Press.
Schindler, R. M. (2011) Pricing strategies: a marketing approach. London: SAGE Publications.
Spotts, H. E. ( 2014) Creating and delivering value in marketing: proceedings of the 2003 academy of marketing science (ams) annual conference. New York: Springer.
Wise, T. P. (2016) Trust in virtual teams: organization, strategies and assurance for successful projects. Florida: CRC Press.
Pahl, N. & Richter, A. (2009) Swot analysis – idea, methodology and a practical approach. Norderstedt: GRIN Verlag.
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