Address: Illawara Crt, Beaconsfield, Qld, 4740

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Situational Analysis

Barbara’s Beauty & Nails

Owner: Barbara Preston

Address: Illawara Crt, Beaconsfield, Qld, 4740

Table of Contents

3Executive Summary

3Business description

4The Market of the Business

4Target Market

5Competitors

6Industry trend and market share

6The Workplace

7Technology

8Finance and Record Keeping

8Government regulations

9Global Business Environment

9SWOT Analysis

9Strengths

10Weaknesses

10Opportunities

10Threats

10Conclusion

12Bibliography

Table of Figure

5: Market analysis of the target segmentFigure 1

7 structureorganisational: Barbara’s Beauty & Nails Figure 2

Executive Summary

Barbara’s Beauty & Nails is a fully-fledged beauty salon keen on providing value-added services to customers. The salon offers quality hair care services, quality products and providing a pleasant atmosphere to customers (Nails by Barbara 2014).

The company’s goal is to be profitable and stable. Its mission is to provide low-cost convenient hair styling. The company’s objectives include creating a service-based company that exceeds customer expectations, increasing customer base by more than 25 percent each year and developing a sustainable business and promotes employment of community residents (Barbaras Beauty & Nails 2014).

Barbara’s Beauty & Nails has several success factors. These include: the salon’s key to success has been the location, convenience, environment and reputation. The location is strategic as the salon is situated in an easily accessible location (Nails by Barbara 2014). The environment also provides competitive advantage as the salon is situated in an environment that is contributive to giving professional and relaxing services. Convenience is also a factor as the salon offers customers a broad range of services in a single setting. The salon has also earned a reputation because of its professional services and superior personal care.

Business description

The Barbara’s Beauty & Nails is based in Illawara Crt, Beaconsfield in Queensland. Barbara Preston, who is the owner, has worked in the upscale salon over the past five years. She has created a large client base. Together with her staff of beauticians, she has enabled the salon to grow to a small enterprise with 10 workers (Barbaras Beauty & Nails 2014).

The business’s core products and services include hair care services, such as shampoo, cut, waving, weaving, perms, reconstructing, colours, conditioning and curling. It also offers nail services, such as pedicure, manicure, sculptured nails and nail polish (Barbaras Beauty & Nails 2014).

The core products include selling broad assortment beauty products for skin, nail and hair care. Other key products on offer include conditioners, shampoos, nail polish, facial masks, nail files, hair spray and mousse among other beauty products. The salon’s strategic advantage has been offering a range of products and services at a convenient location (Nails by Barbara 2014).

The salon has a competent team, which is also committed and qualified. The company’s mission statement is to ensure everyone has access to quality nail and hair care. Since it was started, the company has had the goal of becoming a leading provider of personal care services in Australia (Napier 2014. The company has generally performed well despite the hard economic times in Australia, due to the high Australian dollar. The high performance has ensured increased customer and potential clients who have ensured steady revenue stream (Buzzle 2014).

The Market of the Business

Target Market

The business targets everyone in the market, regardless of the age, ethnic group, gender, religion, tribe and nationality (Ko et al. 2007; Dolnicar 2008). More specifically, Barbara’s Beauty & Nails targets three market segments. These include females who may not afford upscale salons (25%), men who will make up (53%) and women with children (22%).

Address: Illawara Crt, Beaconsfield, Qld, 4740

: Market analysis of the target segmentFigure 1

Competitors

There is however stiff competition in the industry because of the changeful fashion trends, preferences and tastes. The salon has however always sought to ensure it outperforms its competitors and gains competitive edge. Generally, it offers high quality services that meet customer expectations and industry standards (Kotler 2001).

There are several salons offering salon services such as that of Barbara’s Beauty & Nails. However, competitors such as HairClipper only offer minimum services. At the same time, those that offer upscale salon services such as Stefan Hair Fashions are more expensive and tend to be inconvenient to clients because of its scheduling requirements. The owner of Barbara’s Beauty & Nails however understands the demand for low-cost upscale salon services and convenience in scheduling (Nails by Barbara 2014). Barbara’s Beauty & Nails therefore provides high flexibility in terms of scheduling. It also offers stronger customer focus. Basing on this strategy, Barbara’s Beauty & Nails has managed to acquire substantial market share and establish long-term relationship with the customers (Porter 1996; Karadeniz 2010).

In terms of competitive advantage, the demand for nail and hair care services is driven by population growth in Australia due to the increase in the number of immigrants. This implies diversity in hairstyles based on certain cultures. It also implies that Barbara’s Beauty & Nails must consistently engage in research and development to ensure it satisfies the diversity issues (Rasoava & Russell 2003; Kanagal 2004). However, competitors such as Stefan Hair Fashions are larger companies and enjoy economies of scale in terms of marketing and purchasing. Barbara’s Beauty & Nails, which is a smaller company, has managed to compete by securing strategic advantages, such as location and offering superior service.

Industry trend and market share

The Australian beauty services and hairdressing industry has showed modest growth in spite of the harsh economic conditions. Statistics by IbisWorld (2011) indicates that in the next five years, the revenue in the industry will grow by approximately 0.9 percent each year. Much of the services in the industry, such as nail care, are optional, hence demand for the services has often been low during periods of economic uncertainty. The industry is cited to have comparatively low barriers to entry, as showed by the high number of competitors, since starting a salon business requires low capital. Barbara’s Beauty & Nails has a high market share in the region it operates due to low number of competitors in the location (IbisWorld 2011).

The Workplace

Barbara’s Beauty & Nails is owned entirely by Barbara Preston. She handles all recruitments and training, retail sales and purchases. She is assisted by the salon manager in the duties. The salon manager and salon owner share specific roles such as budgeting (Evans 2013).

Address: Illawara Crt, Beaconsfield, Qld, 4740 1

structureorganisational: Barbara’s Beauty & Nails Figure 2

The salon manager also takes care of point of sale transactions, as well as overseeing the works performed by the 10 therapists and the technicians (the beauticians and stylists). The reception takes care of all salon appointments. She also receives the payments on behalf of the company. The salon assistant assists in running errands for the company and ensuring housekeeping and office management (Napier 2014).

All the workers are paid on monthly basis. The salon manager uses partial commission to promote incentives to ensure superior customer focus. The more the therapists and technicians fulfil customer needs, the more money they are paid. All employees have signed long-term employment contract with Barbara’s Beauty & Nails. Barbara also personally trains the employees and new recruits, so as to ensure the customers receive the best experience. The salon manager reports to the salon owner. The receptionists and the stylists and technicians report to the salon manager. The salon receptionist may report to the salon owner, the manager or the stylist and technicians (Napier 2014).

Technology

In order to keep pace with the changing technology, Barbara’s Beauty & Nails integrates a range of technologies that also ensure it maintains a competitive edge. These include the salon management software solutions, such as SuperSalon. The software helps beauty salons with financial reporting, inventory, payroll and appointments (Napier 2014).

The technology also helps the salon to create a list of clients, matching with their styles and preferences. They also help the beauty salon in managing appointments. The salon also uses chemical and physical technologies to address client needs. These include equipment that reduces frizz and static through active ion technology (Napier 2014). Others include treatments and products such as blow dryers, straighteners, and ceramic plates. These also include treatments and products that apply heat adaptation and nanotechnology that promote colour conditioning and processing.

Finance and Record Keeping

Barbara’s Beauty & Nails is wholly owned by Barbara Preston. She finances the business using personal savings, a bank loan and profits. The salon performs bookkeeping cash accounting, where transactions are recorded when cash flows into or out of the salon. Barbara’s Beauty & Nails (2014) maintains manual and computerised records. It also handles bookkeeping using single entry method. The salon manager keeps records of all finances.

Government regulations

There is low level of regulation in the beauty and hair care industry. The pertinent regulations include general employment laws, business registration certificate and the beauty therapist and hairdresser training requirements. Typically, the hairdresser and nail care training, along with vocational course of study takes between 10 and 50 weeks (IBISWorld 2011).

In terms of the legal structure, Barbara’s Beauty & Nails is registered as a limited liability company to protect the owner from personal liability, and to enable the business to operate as a distinct and separate entity (Evans 2013).

Barbara’s Beauty & Nails is subject to local government and state laws on shop registration, hairdressing registration, local health regulations, vocational training and education and occupational health and safety regulations (IBISWorld 2011).

Global Business Environment

The global nail and hair care industry generates some $160 billion. The major sources of growth include Australia, United States, and China. The changing cultural norms due to effects of globalisation have also driven demand. These show that Barbara’s Beauty & Nails has the potential of growth due to ready market. Additionally, the effects of globalisation imply changeful hair styles, which also depict ready market. Globally, competitors within the industry operate barbershops and hair salons and include Australia’s Stefan Hair Fashions, Canada’s Premier Salons, India’s CavinKare, US-based SportClips, Ratner and Regis and Germany’s Frisor Klier.

SWOT Analysis

The salon operates in a competitive industry that has diverse target markets. Since the industry is ever changing based on the trending fashion, the salon must have strategic and aggressive approach that promotes and sustains its competitive edge (Porter 2004). SWOT analysis, short for strength, weaknesses, opportunities and threats analysis, is a tool that can be applied in creating these strategies. It can enable the business to identify the areas it excells in and those that need modification (Piercy & Giles 2007).

Strengths

The strength of the salon is based on its clientele. The business has a large client base, which shows that it has excelled in customer management, operations management and marketing. This ensures that it has a constant revenue base all year round. Additionally, the company has a strong and competent team of beauticians that ensures customer satisfaction (Pulendran et al. 2003). The location is also a key advantage as it is situated in a high-traffic location.

Weaknesses

Weaknesses are indicated in the company’s register receipts. It lacks properly trained personnel to manage its accounting and bookkeeping, forcing the sales manager to do the task. Since it lacks proper record keeping strategies, loss of funds may often go unaccounted for. The salon also operates in a limited space, which limits the number of customers it can attend at any one time, especially on the eve of festive seasons when ‘business is good.’

Opportunities

The change-full hair trends or fashion presents a lot of opportunities for business. Such opportunities may include customers seeking hair styles and designs that are in vogue. By introducing new brands and product lines, the salon has often attracted a new line of customers (Civic Technologies 2009).

Threats

Several factors threaten the salon’s sources of revenue, including new competitors in the industry and the new regulations. For example, new salons have mushroomed in the area, as a result taking away some of the salon’s customers. This has reduced the salon’s revenue base.

Conclusion

Barbara’s Beauty & Nails has managed to maintain a high sales and revenue by providing quality services. The strategy has enabled it to operate in the competitive Australian beauty and hair care industry. Its key to success has been the strategic location, as the salon is situated in an easily accessible location. The environment also provides competitive advantage as the salon is situated in an environment that is conducive to giving professional and relaxing services. Convenience is also a factor as the salon offers customers a broad range of services in a single setting. The salon has also earned a reputation because of its professional services and superior personal care.

Bibliography

Barbaras Beauty & Nails 2014, Gallery, viewed 30 Aug 2014, http://www.barbarasbeautyandnails.com.au/

Buzzle 2014, Choosing Your Beauty Salon, viewed 30 Aug 2014, http://www.buzzle.com/articles/choosing-your-beauty-salon.html

Civic Technologies 2009, Using Market Segmentation for Better Customer Service and More Effective Strategic Planning, A White Paper for Public and Academic Libraries, viewed 25 Aug 2014, <http://www.businessdecision.info/whitepaper/pdf/BusinessDecisionWhitepaper110909.pdf>

Dolnicar, S 2008, Market Segmentation in Tourism, in: Woodside, A & Martin, D (eds.), Tourism Management, Analysis, Behaviour and Strategy, CABI, Cambridge

Evans, K 2013, “A Beauty Salons Organizational Structure,» AZ Central, viewed 25 Aug 2014, http://yourbusiness.azcentral.com/beauty-salons-organizational-structure-26536.html

IBISWorld 2011, Perception makeover: Industry services are increasingly seen as a necessary luxury, IBISWorld Industry Report Q9526 Hairdressing and Beauty Salons in Australia

Kanagal, N 2004, «Role of Relationship Marketing in Competitive Marketing Strategy,» Journal of Management and Marketing Research, pp.2-17, viewed 25 Aug 2014, <http://www.aabri.com/manuscripts/09204.pdf>

Karadeniz, M 2010, «The Relationship Marketing Approach and Strategies In Retailing Management To Constitute Customer And Brand Loyalty,» Journal of Naval Science and Engineering, vol. 6 no. 1, pp. 15-26

Ko, E, Kim, E & Taylor, K 2007, «Cross-national market segmentation in the fashion industry: A study of European, Korean, and US consumers,» International Marketing Review, Vol. 24 No. 5, pp. 629-651

Kotler, P 2001, Marketing Management Millenium Edition, 10th ed, Prentice-Hall, New Jersey

Nails by Barbara 2014, Get Niaks Miltoon Keyness at Nails by Barbara, viewed 30 Aug 2014, http://www.nailsbybarbara.com/gel-nails-milton-keynes-at-nails-by-barbara

Napier, K 2014, «A Beauty Salon’s Organizational Structure,» Houston Chronicle, viewed 24 Aug 2014, http://smallbusiness.chron.com/beauty-salons-organizational-structure-61375.html

Piercy, N & Giles, W 2007, «Making Swot Analysis Work,» Emerald backfiles, pp.5-7

Porter, M 1996, What is Strategy?” Harvard Business Review, November-December: 61-78

Porter, M 2004, Competitive strategy: techniques for analysing industries and competitors with a new introduction, Free Press, New York

Pulendran, S, Speed, R & Widing, R 2003, “Marketing planning, market orientation and business performance,” European Journal of Marketing, vol. 37 no. 3, pp.476-497

Rasoava, R. & Russell, A 2003, “A framework for concentric diversification through sustainable competitive advantage,” Management Decision, vol. 41 no. 4, 362