BLZ Stores, an established men’s clothing retailer with a chain of stores in a major metropolitan area, is selecting a plan for expansion.
Using the facts below, write an essay in which you argue for one of the following plans over the other based on the following two criteria:
• The company wants to increase its profits.
• The company wants to ensure its long-term financial stability.
The “national plan” is to open a large number of men’s clothing stores throughout the country over a short period of time. In doing this,
the company would incur considerable debt. It would also have to greatly increase staff and develop national marketing and distribution
capabilities. Many regional companies that adopted this strategy increased their profits dramatically. A greater number tried and failed,
suffering severe financial consequences. BLZ is not well known outside its home area. Research indicates that the BLZ name is viewed
positively by those who know it. National clothing chains can offer lower prices because of their greater buying power. BLZ currently faces
increasingly heavy competition in its home region from such chains.
The “regional plan” is to increase the number and size of stores in the company’s home region and upgrade their facilities, product quality,
and service. This could be achieved for the most part with existing cash reserves. These upgrades would generally increase the prices that BLZ
charges. In one trial store in which such changes were implemented, sales and profits have increased. The local population is growing. BLZ
enjoys strong customer loyalty. Regional expansion could be accomplished primarily using BLZ’s experienced and loyal staff and would allow
continued reliance on known and trusted suppliers, contractors, and other business connections.
BLZ Stores is making an important decision for its business strategy, between a national plan and a regional plan to expand. The primary goals of this expansion is to increase profits of the company while maintain its long-term financial stability. Both options are attractive, but the regional plan is better than the other in the following aspects.
To begin with, the regional plan takes advantages of BLZ’s well-established reputation among customers and growing population in the home region, which provides a solid foundation for a successful expansion by promoting sales of growing market. In fact, in an experiment where one trial store adopted such a strategy, increased profits was observed. So, it is very likely that other BLZ stores in the home region, which share similar characteristics with the trial store, will reap the benefit of profit growth.
Moreover, with strong customer loyalty and connection with business partner, opening more stores in the company’s home region can boost sales at a low cost. BLZ’s experienced and loyal staff can help with the setup of new stores, training new employees to ensure a seamless expansion. On top of that, new customers attracted by that tend to develop a high recognition of the brand, as the existing customers do, and that ensures a stable flow of sales in the long term.
Most importantly, the national plan requires much more stores and labor forces than the regional plan and thus adds great financial burden on the company and puts its continuous operation on risk in case of fail. Severe financial outage is reported by the a great number of regional companies that tied this approach but failed.
Admittedly, the national market is much larger than the regional market and hence the higher possibility of earning large profits, but the later still offers the chance of a fair amount of profits and can serve as the first step to a nation-wide expansion in the future. The regional plan is a good balance between risk and return.
In the end, BLZ Stores should choose the regional plan because it takes advantage of its good position in its community, offers a fair amount of profits, and can allow the company to improve its branding and popularity for the future. Although the national plan might produce higher profits if it succeeds, it does not satisfy the company’s objective of having long-term financial stability. With a solid strategy in mind, BLZ Stores are bound to fare better under the regional plan.
