Information Technology & Data Analytics For your midterm, you created a business that relied on selling its products or services online. The only system you needed at the time was the online platform to sell them.
Your business has been very successful, with a revenue of one million dollars a year. This means that you might need to reshape your business and invest more on it.
You hired a small consultant firm to create a database that handles your customers, orders, invoices and inventory, along with proprietary applications which interact with your Apache Webserver (for those students who decided to offer digital services, such as videogames, they are hosted in this server as well).
Based on the above, please create an IT strategy with the following considerations:
You can invest up to 25 percent of your current yearly revenue in your IT solution
You expect your sales to grow 300 percent in the next year (this means that you have to look for a solution where you can easily add additional resources)
You will use a cloud based solution for all other systems and applications
List all the applications and services your company need (at least you will need to mention applications for customers, products, inventory, orders, and invoicing)
Determine whether the above will be offered as IaaS, PaaS or SaaS (Each service can use a different delivery model)
Why did you select that delivery model for your services (IaaS instead of SaaS, for example)?
Determine which cloud vendors will host your services and why you selected them. (They can be hosted with different vendors, and they can be sold as different services)
If possible, share how much would each of those services cost
Do you need dedicated broadband for your line of business? If so, which vendor would you use and how much would it cost?
Does your cloud vendor provide assistance with migrating your services from your current solution to what you are about to acquire? If not, how will you do it?
Will you migrate all services and applications at once? Would your migration be in parallel? Justify your answer
How will you plan for your expected growth?
Which strategies will you use to protect your business from cyber threats?
Please identify which strategies will take place at the infrastructure or system design level, and which ones will take place at the end user level
How will you make sure your customer’s private and financial information are safe?
Implementation Timeline and Cost
Add a timeline (estimated), including but not limited to the following:
New system planning
New system design
Set up of the cloud environment
The paper must be between two and four pages long (including graphics), and can be single or double line. Running head: TRENDY FOOTWEAR 1
TRENDY FOOTWEAR 2
Instructor: Sam Chapper
[Individual] Assignment# Individual Midterm Comment by Sam Chapper: 89
You are missing the break-even analysis graph, didn’t mention the name of the website or provider, and didn’t specify how would you use the 1,000 USD,
Submitted on: 11/19/2021
You will create a new business that will rely on selling its products or services online. The business must be in a different industry than the one you used in the Porter Forces Assignment.
Defining your business
1. Select the name of your company
2. Choose one product or service you will sell within the industry (for example, if you select shoes, you can sell one model of shoe; if you define your industry as fashion, you can select a pair of pants)
3. What is your target market? (To whom will you sell your products?)
4. Use Porter’s Five Forces to evaluate the industry you are entering
a. Is buyer power low or high?
b. Is supplier power low or high?
c. Which substitute products and services are perceived as threats?
d. Can new entrants, like you, easily enter the market?
e. What are the barriers to entry?
f. What is the level of rivalry among existing competitors?
g. What is your overall view of the industry?
5. Use Porter to select the strategy you will use to enter the market. Justify why you are using the strategy you selected
6. Choose two competitors so you can determine your price point
a. Will you price your products lower or higher than the competition? Why?
b. How are you differentiating yourself from those competitors? (Price, quality, fashion, service, etc.)
c. Determine what is the cost per unit to make your products (just make it up by calculating a 40% margin based on your price point)
7. You need to find seed money to start your project.
a. Which platform will you use for funding?
b. Why did you select it over the competition?
c. How would you promote your project to get the funds you need?
8. Assume you were able to receive enough funds to manufacture your products or develop your services.
Your online strategy
9. In addition to the funds for your products or services, you can spend up to $1,000 USD to develop your online presence
10. What is the value of your products and services as perceived by your customers?
11. From the previous question: How will you differentiate yourself from the competition?
12. Please restate your target market
13. Look for the best options to create your online presence. You should at least consider two vendors for each service you plan to use, and mention their names. But just answer the following questions based on the vendor(s) you will use:
a. What domain (website name and domain) would you create? Is it available?
b. Will you use web hosting only, or an online store?
c. Will that vendor also assist you with developing an app?
d. Will you try entering a marketplace? If so, which one?
e. What will be your total cost per month for the services you selected?
14. Please select two social network sites you will have presence on. Explain why you selected those two for your line of business
15. Which marketing mix will you use to find your customers? Specify which services and strategies you will use and why
16. Once you selected the right marketing tools for your business, look for vendors and pricing. The vendors from (13) might also provide marketing services
17. What tool will you use to receive payments from your customers? How much does it charge you?
18. Remember you just have $1,000 USD a month to pay for all your online services
Path to Profitability
19. From the previous sections, you now have a price per unit, a cost per unit, and fixed costs (online services)
20. Run a break-even analysis. Please include the graphic.
21. How many units do you need to sell to be profitable?
22. If you wanted to be profitable faster, which costs would you reduce? How many units would you need to sell then? Is it worth it, or is it better to continue with your current costs?
Trendy Footwear is the business name and brand and venturing into the footwear industry targeting a single shoe type that is sneakers. Sneakers is shoes types that are unisex and this is what makes it possible to thrive in the industry by making the best brand targeting both genders at a time. The business is worth investing because today people have a more understanding about fashion and that is what matters in today’s footwear market and the growth of the online market.
Choosing a business to venture is a challenging experience because it needs the understanding of the market generally to understand the kind of products that the population can choose. In this Trendy Footwear, the young people under the age of 35 years especially the youth like shoe fashion. The population above the age of 15 years to 35 years is the target population and they are worth investing in them because they understand more about fashion and the more you consider developing a quality brand then it would thrive.
The buyer power is high in the industry because there is a low switching costs that makes it easy for the customers to buy shoes from other incoming businesses and not necessarily the dominant brands. There are moderate substitutes in the footwear industry and this is because there are famous brands that have been dominant and there is likely that the customers deserves something unique in the industry that serves their needs best (BusinessWire, 2015). The strong force that is evident is that there are low switching costs and customers are flexible in accepting new entry of a quality brand.
The supplier power is weak low because there is the high overall supply of the raw materials in the footwear industry and the supplier cannot bargain for high costs since alternatives are readily available (Rowland, 2017). There is a large population of supplies making it a weak force in the supply bargaining power. The impact of suppliers in the market is low and this is an indication that Trendy footwear would thrive.
There is a moderate availability of substitutes in the market because other firms also have sneakers in footwear products (Rowland, 2017). There is a concern that the moderate force is a challenge in the market but the determination is directed to the Trendy Footwear where our focus would be sneakers only and we would offer the quality and in all colors needed by the target customers.
The cost of brand development is high and this is the weak force in joining the industry. As the Trendy Footwear, it is not easy to enter the market because it requires a good strategy, planning and ways of developing the brand. Once Trendy joins the industry, getting a competitor that would focus on sneakers for unisex population is difficult since joining it is high. The benefit is that there is a high economies of scale when venturing for the bigger brands and this would act as a barrier to entry (Rowland, 2017). The rivalry of existing competitors is high and need good planning to enter.
Based on the Porters five evaluation, the market is much concentrated with various brands including sportswear and it is described to be highly competitive and fragmented. Entry requirements to the market are high for a small start-up business like the Trendy Footwear. The strategy that Trendy would use to enter the competitive market is to be fragmented and focus on sneakers for unisex population that is unique. The strategy is directed to the population of young people between 15 years and 35 years. The strategy would ensure that the needs of the target population for specific sneakers are addressed and the communication between the customer and Trendy is strengthened improving the output.
The prices that Trendy would sell a pair of sneakers for unisex are $160 and the price is lower as compared to the leading brands like the Adidas that sells a pair at $200. Another competitor is the Nike that sells its sneakers at $250 as the maximum price especially for its new brands. The reason of lowering the price is to give the opportunity to the potential customers who usually buy from the competitors to also try our products and their feedback would determine the premium price to be placed in the future. The target is to venture into the market and make small profits at the start. The pricing would be lower because that is an additional differentiating factor from competitors and it is possible since our online strategy would assist in reaching to more customers.
I would source most of the money from savings since I have planned to venture into the business in a period of 10 years and the savings is $30,000. The remaining amount would be sourced from bank loan of $25,000. Receiving the money from the bank will be achieved through developing s strong business proposal with a possible revenue generation in 5 years time to pay back. I would select the bank loan because I will have the full ownership of the business than relying on investors that would take a given percentage.
The target population for the Trendy Footwear is young people of the age 15 years to 35 years and their online presence is more than 75%. Using $1000 investment on the online strategy is worth since the target population is using the social media platforms and they rely on the online ordering and delivery of their day-to-day goods. I would differentiate m Trendy Company from the competition by investing in the online strategy and the choice of the population of interest and also the unisex sneakers product that serves all the genders (Pu et al., 2020). I would consider working with the Ignite Visibility and Social SEO vendors that would help in the online presence in the footwear market by improving my search engine optimization. Comment by Sam Chapper: How would you use this amount?
However, I would leverage the social media platforms that are Facebook and Instagram that I believe would push my brand into the next level. Facebook and Instagram are leading apps with many users and the cost for the social media is $100 monthly. The development of the website is much necessary for the Trendy Footwear including an App that the vendors would assist in developing. The Trendy app would basically play the role of allowing customers order the products online because the app would contain the catalogue of the available sneakers and the colors and sizes. Customers would be picking their products from the physical store or pay a small amount for delivery. I will apply the 4Ps marketing mix where I would consider the favorable prices that are lower than competitors, promoting the product through online presence and developing a quality product. A good physical location and online shop would work for making customers access their services. The online services are the best in reaching out to the customer (Dastane, 2020). I would use PayPal in receiving payment from the online customers at $3.2 per transaction. The total costs in meeting the online services monthly is $800 remaining with $200 for other services and emergencies. Comment by Sam Chapper: What would be the domain name and the vendor? Comment by Sam Chapper: This is probably a percentage, not a set price
Path to Profitability
Cost of production of each pair sneakers= $30
Costs of workers= $ 10,000 monthly* 12 = $120,000
Online strategy = $1000 monthly* 12 = $12,000
Rent for physical store = $300 monthly * 12 = $ 3600
Rent for physical store
Industrial service and repair
Leasing production location
Production costs in one month is $ 37,300
In the first month Trendy has to sell more than 234 units to make profit. The costs of production are better because some costs like that of acquiring equipments is not a monthly affair and the profit would be experienced better. Selling 500 units a month would generate $42,700 profit.
BusinessWire. (2015). Research and Markets: Footwear Industry in US – Porter’s Five Forces Strategy Analysis. Businesswire.com. Retrieved 15 November 2021, from https://www.businesswire.com/news/home/20130314006225/en/Research-and-Markets-Footwear-Industry-in-US—Porters-Five-Forces-Strategy-Analysis—2013.
Dastane, O. (2020). Impact of Digital Marketing on Online Purchase Intention: Mediation Effect of Customer Relationship Management. Journal Of Asian Business Strategy, 10(1), 142-158. https://doi.org/10.18488/journal.1006.2020.101.142.158
Pu, X., Sun, S., & Shao, J. (2020). Direct Selling, Reselling, or Agency Selling? Manufacturer’s Online Distribution Strategies and Their Impact. International Journal Of Electronic Commerce, 24(2), 232-254. https://doi.org/10.1080/10864415.2020.1715530
Rowland, C. (2017). Nike Inc. Five Forces Analysis (Porter’s Model) – Panmore Institute. Panmore Institute. Retrieved 15 November 2021, from http://panmore.com/nike-inc-five-forces-analysis-porters-model.