Business Studies - Case Study What a Spectacle Essay
1 - Business Studies - Case Study What a Spectacle Essay introduction. A Franchise is when a franchisor of a business gives the franchisee of another business the right to supply its product or service under the same brand identity. Specsavers is a very successful franchise for example.
2. Apart from franchising, two sources of business ideas are identifying a market niche which involves noticing that something is missing from the market or that can be improved on. Also spotting trends and anticipating their impact which involves creating or develop a product or service to suit patterns or trends in the market.
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3. The first benefit of Stephen Halpin taking on a boots franchise business is that they involve the least amount of risk when starting up the business unlike an outlet under your own name. The second benefit is that the franchisor provides intensive initial support followed by more general ongoing support and advice once the business is running successfully. Examples of this would be, the franchisee offers support and training which is paid by Steven as the franchisee. Also the franchisor helps in setting up the business, including putting together a business plan, helping the franchisee to gain funding for the business, selecting an area for the business to be located and giving operational and technical support where needed.
4. If it costs £7.00 to make a pair of glasses, opticians are likely to charge £140.00 according to Murray Wells. (£7 x 20)
5. Steven Halpin and Murray Wells are likely to have faced a lot of different levels of risk when developing their business idea. The store that Halpin wanted to take over was previously a Boots opticians and so financial records will be transferred into assets and so he had most of the equipment he needed to sell his products and provide a good quality service.
Furthermore Halpin will gain access to the old Boots store’s patient database meaning that he will still provide a service to Boots’ existing customers plus new customers. Also, the location is low risk as Halpin is taking over the only old opticians and so his business is the only one in the area meaning there is less competition in the area resulting in higher revenue and so higher profit.
However, opening a Boots franchise is a high risk as the original Boots was obviously not making enough money to survive and Halpin is opening under the same business name so he chances of gaining a reasonably high profit from selling the same products and services is unlikely. Glasses Direct was at a high risk as Murray Wells is only 22 and still at university and so he started the business through his £1000 student loan. This means that he has to earn enough to gain a profit allowing the business to survive as well as paying off his student loan. Finally, Glasses Direct is an online store and so Murray doesn’t have to pay rent or electric bills meaning that overall he had lower outflows than Halpin because Halpin has to pay rent and electricity bills.
6. The web-based, Glasses Direct business may have more potential to grow than a Boots franchise as Halpin can make his own decisions about the business allowing further growth. Also selling online means that he can sell his products globally but the cost of delivery and advertising will increase. Furthermore, Murray has the choice to add new suppliers to sell a different range of products unlike boots because in the franchise agreement all Boots stores have to sell the same products.
Also, Glasses Direct sell much cheaper products and so potential customers will buy their glasses from them instead of more expensive stores because of this. He may however, get more repeat customers once the existing customers realise the products are of as good quality as that of designer brands and so hopefully through word of mouth advertising his business will grow. However, Glasses Direct may have less potential to grow in comparison to Boots opticians as the brand name for Boots is already strong and so people will go to boots instead because more reliable as a known brand. People might think the products of Glasses Direct are of a low quality because of the cheap price and so even though they are of a similar quality to boots, people won’t see past that and so will shop more expensively for their glasses. Finally Boots offer a service as well as product in store whereas this can’t be offered online.
Overall glasses direct have more potential to grow because the business is not a franchise and so there is more opportunity for the business to create become more diverse and unique meaning there is more opportunity for growth.