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Walmart Response
Walmart Response
Question 1
Ethical behavior is the making of decisions with positive traits such as respecting other people’s decisions, integrity, honesty, and fairness by organizations. Organizations should make decisions with a lot of consideration on the impacts on other parties, while meeting the minimum moral standards and expectations described in a society (Nikkah, Khorakia, & Jahangir, 2018). Walmart, while selling opioids, failed to consider the impact these drugs had on users. While conducting business does not impose moral responsibilities and obligations of playing a gatekeeper role, it is only ethical that organizations consider the effects and impacts of their products on consumers. Walmart continued to supply large doses of opioid drugs since the company interests were primarily on making sales, failing to address the issues of addiction that were on the rise every year. The behavior displayed by Walmart is unethical.
Walmart pharmacists and federal regulators gave several warnings to the company concerning prescription and the possibility of an addiction and other complications to consumers. Walmart’s executive branch deliberately ignored the warnings and failed to take appropriate actions. Concerned employees were also threatened with lawsuits and loss of positions. The major concern of the organization was to generate sales and maximize profits. The focus on profits shows that Walmart is not willing to take a different approach, even when that would mean doing the right thing according to societal standards and expectations.
Question 2
To address the nationwide opioid crisis, Walmart should ensure they disperse opioids responsibly and in line with medical regulations on such strong drugs. Appropriate dosage should be applied without exception, including a background search on customers and a follow up on where prescriptions were acquired. Threats and warnings of dismissal given to employees for questioning unethical practices hinder them from following professional standards and legal obligations. To address the country’s menace, pharmacists should be allowed to work freely without threats and intimidation. Moreover, Walmart should follow regulators’ rules on appropriate dispensation of prescription drugs.
Question 3
Pharmacists have high potential in addressing opioid crises by preventing addiction and improving people’s health (Compton et al., 2019). For pharmacists working at Walmart, a duty of care is expected including raising an alarm where misuse or improper procedures are observed. They should regulate prescriptions and report over prescriptions to reduce the negative consequences associated with such strong drugs. Practicing pharmacists at Walmart should check wrong prescriptions and dangerous drug combinations. Additionally, pharmacists should furnish patients with information on the risk of taking opioids, storage, and discarding medication. They can also advise addiction treatment to patients and knowledge on addiction treatment choices in the country. The attractive terms and benefits of employment should not encourage unethical behavior.
References
Compton, W. M., Jones, C. M., Stein, J. B., & Wargo, E. M. (2019). Promising roles for pharmacists in addressing the US opioid crisis. Research in Social and Administrative Pharmacy, 15(8), 910-916.
Nikkhah, F. Z., Khorakian, A., & Jahangir, M. (2018). Explaining the components of ethical behavior in employees & managers of the city.
Walmart Failed Project in China
Walmart Failed Project in China
Student’s Name
Course
Instructor’s Name
Date
Walmart Failed Project in China
Brief
Walmart is among the most valuable brands that prides itself for being the world’s largest retail business model offering both discount departments as well as warehouse stores (Statista Research Department, 2021). Walmart exists in three different divisions, that is: the Sam’s club, Walmart International and Walmart U.S; Sam’s club operates as members only retailer, Walmart International focuses on its international stores, whereas the US division concentrates on its home operations. Despite Walmart’s successful global strategy, the brand has failed in its attempt to push its corporate strategy in the Chinese market. The research analysis will aim to: describe Walmart’s attempt to penetrate the Chinese market; evaluate the losses incurred by this move; examination of the concrete reasons of why Walmart was unsuccessful in its bid; and development of alternative solutions or recommendations for Walmart’s China strategy.
Walmart’s Entry in the Chinese Market
As part of its global expansion strategy, Walmart decide to establish footing in the Chinese market by opening more than four hundred stores – of which 26 are Sam’s club, in more than one hundred and eighty cities in China. To accelerate its expansion in the Chinese market, Walmart utilized the acquisition strategy to acquire a Trust-mart, which is a hypermarket chain based in Taiwan, at 1 billion USD investment (Mun and Yazdanifard, 2012). The investment marked significant effort for Walmart in its attempt to widen its coverage across all market regions in China. To become even more recognizable, Walmart colluded with JD.com, an E-commerce site that provided competitive leverage in terms of engaging with Chinese consumers and also identifying and meeting their varying needs.
Figure 1: Number of Walmart stores in China 2016-2020
(Source: Adapted by Daxue Consulting from Statista.com)
https://daxueconsulting.com/wal-mart-in-china/daxue-consulting-walmart-in-china-number-of-walmart-stores-in-china/
During its penetration in the Chinese market, Walmart found it necessary to maintain strategies similarly used in its other global locations. Since China is generally a more tech-oriented economy, Walmart and Sam’s club invested in advanced technologies meant for retailing as well as curbing competitive pressures. To keep its prices low, Walmart opted to source for its products locally in China. According to (Xu et al., 2014), out of all the goods which Walmart China deals in, ninety five percent of them are sourced locally from suppliers within China. Due to rise in concern over corporate responsibility, Walmart China made attempts to launch a unique green flagship store which operated at forty percent less in terms of energy consumption (Rosenbloom, 2008). On top of this, Walmart boldly established its first Chinese e-tailer business model in 2012 -this was a major push for the brand in getting its name recognized by most consumers as well as increased its popularity (Hunt et al., 2018). As shown in figure 2 below, by 2018, the e-commerce market in China grew exponentially between 2012 and 2013 and has declined since, yet the total transaction value have gone up every year since 2011. Another strategy deployed by Walmart in China is focusing on low tier consumers; according to (Chuang et al., 2011), Walmart’s strategy in China included expansion in both second as well as third-tier cities. Nevertheless, Walmart’s entry to China would soon become a challenging experience; (Watch and Vail, 2015) explains that even though Walmart had ambitious growth plans in China, its progress since after 2015 has stalled crippling around 400 stores across the country.
Figure 2: China Online Shopping Market 2011-2018
Source: (China Internet Watch/iResearch, 2019)
https://seekingalpha.com/article/3104276-china-telecom-helps-fortify-alibabas-590-million-bet-on-smartphone-vendor-meizu
Losses Incurred by Walmart China
Initially, Walmart had clear strategies to expand their reign in almost every region China. However, its copy and paste method borrowed from its other market dominions seemed to become a self-inflicted barrier to growth. According to Bose and Rose (2014), Walmart China had forecasted a very low full year report for the 2015 fiscal year; more than that, Walmart’s international net sales reported in the fourth quarter declined by 0.4 percent to stand at 37.67 billion USD – again, Walmart’s operating income had declined by 45.8 percent which led to closure in most of its operation in China and its other large markets such as Brazil.
Figure 3: Chinese B2C market Share by percentage
Source: Seeking Alpha (2021)
https://seekingalpha.com/article/3104276-china-telecom-helps-fortify-alibabas-590-million-bet-on-smartphone-vendor-meizu
According to Bose and Rose (2014), things got tougher for Walmart China as market share continued to drop over time; its hypermarket segment for instance declined to 10.4 in 2015 from 11.3 percent recorded in 2008. Walmart eventually got surpassed by its closest competitor, Sun Art Retail, which became the industry leader; the decline by Walmart China soon followed with closure of over 29 stores in China to minimize operational costs. Foran, the head of Walmart’s international division said that Walmart was trying to refocus on what’s more important; which is strengthening the brand’s foundation, deciding on which stores to let go off, and becoming wiser in terms of knowing where to open shop (Bose and Rose, 2014).
Reason Why Walmart Failed to Capture the Chinese Market
The above analysis showing Walmart International’s sales decline is proof that Walmart is not only struggling in its home market but also in the China market. Despite its successful entry into China, Walmart has not attained any significant momentum in terms of establishing its brand in the second largest economy in the world (Forbes, 2014). Forbes (2014) further explains that even after operating in the Chinese market for over 18 years, Walmart was only able to fully run a total of 405 stores. The main challenge for Walmart was its inability to understand the unique attributes of the Chinese consumers. According to (Chuang et al., 2011), the Chinese consumers unlike any other were less sensitive to pricing as a strategy.
Chinese Consumer Behavior
One of the reasons why Walmart’s project in China failed is because the brand also failed to observe what Chinese customers prefer. Forbes (2014) explains that as the second largest economy, China is indeed a lucrative region for western businesses who can tap into China’s large population size – mainly comprising of middle-class boomers as well as increasing levels of disposable income. Walmart was among the few companies to take advantage of this economic growth; however, it was also among the few companies that failed to resonate the Chinese consumer behavior hence could not expand beyond their reach. To get a better understanding of how consumer behavior and perception impacted Walmart’s presence in China, Forbes (2014) highlights that despite being in the second largest economy, revenue from Walmart China division amounted to only 2 percent of its overall revenues. Chinese customers see beyond price when entering the buying decision; they are only interested in authentic and top-quality products.
Imitation of Walmart’s Business Model
Before entry into the Chinese market, Walmart was prepared to apply competitive strategies that outdo both local and other international corporations in the industry. One of the fiercest rivals for Walmart in this case is Sun Art Retail group. According to Forbes (2014), Sun Art Retail group is a native brand that connected better with locals than Walmart – their ability to comprehend what local consumers prefer, as well as their successful imitation of Walmart’s business model increased the brand’s competitive leverage making it the leading retail brand in the Chinese market. (Yoon and Suh, 2021) further explains that Sun Art Retail group managed to surpass Walmart by offering local consumers a Chinese feel and street look incorporated with fresh sea delicacies set up in table tops as well as noodle stands.
Walmart’s unfavorable Macroeconomic Environment
Walmart has had some initial success in entering the China market even though the progress was slow and somewhat uneven. Walmart’s macroeconomic environment is another aspect that weighed down heavily on this retailer brand. According to (Huang and JIA, 2015), despite the rapid increase in China’s economy in the past decade, the growth rate soon declined significantly since the beginning of 2012 – GDP fell below 7.7 percent, a historical decline since 1989 which stood at 9.3 percent; the World Bank also estimates that China’s GDP will continue to decelerate in the coming years thus affecting consumer’s purchasing power and retail sales. More than that (Huang and JIA, 2015) also explains that severe government policy to reduce public expenditure also affected Walmart’s net sales and its ability to expand.
Growth of Ecommerce in China
The other reason why Walmart failed in its attempt to dominate the Chinese market is the growing rate of ecommerce. According to Rein (2011), Walmart was among the hardest hit brands given the forty percent increase in ecommerce activity. As more native companies like Dang Dang and Mecoxlane emerged in the ecommerce world, the market share in the retail market continues to shrink, therefore intensifying competition as brands try to outdo each other’s strategic response to competition (Rein, 2011). Furthermore, changing consumer demands as well as operating costs further reshaped the retail field hence Walmart should turn the company direction towards addressing these issues or end up as a casualty of a fast-rising economy as well as industry. Figure 4 below shows the retail e-commerce sales and growth between the United States and China 2008-2016. China has performed well compared to the U.S. in every year except 2011 and 2012, a factor that was influenced by the macroenvironment.
Figure 4: Why Walmart did poorly in China
Source: Kabango and Asa (2015)
https://researchleap.com/factors-influencing-e-commerce-development-implications-for-the-developing-countries/
Recommendations for Walmart
The crucial factor in Walmart’s failure to pick-up in the Chinese market is the lack of understanding of consumer perceptions. The recommendable thing to do for Walmart is to boost its productivity as opposed to focusing on lowest price strategy. Therefore, Walmart should slow down on its expansion plans and instead invest more in enhancing its foundation in the Chinese market by reducing operating costs and enhancing store sales growth. To achieve this, Walmart must shutdown all its underperforming stores and focus on more lucrative market regions – despite a drop in sales for some time, if Walmart successfully sets up new shops in lucrative market regions, the lost sales can be recovered fast and offset the previous loss. Beyond store location, another thing Walmart needs to do is re-adjust its size to a smaller box format, as well as apply differentiation strategy in its product lines. Failure to observe these solutions could land Walmart in an inevitable downfall in the Chinese market.
The inability of Walmart to comprehend the aspects of the Chinese market and how it is different from other markets in the US and elsewhere in the world led to failure. The consequences were that Walmart developed uninformed strategic decisions that bore no fruits despite having a superior business model that worked in other regions. More than that, its closest rivals had begun imitating Walmart’s business model but while carefully integrating local preferences to boost customer appeal; this is how such companies like Sun Art Retail group managed to steal away some of Walmart’s market share. Some of the real reasons why Walmart failed in its bid to capture the market in China include: shrewd Chinese consumer behavior, imitation of Walmart’s business model by close rivals in China, challenges emerging from Walmart’s macroeconomic environment, and the rapid growth of ecommerce in China. From this, it is recommended that Walmart takes time to study the Chinese market, to review key consumer insights, to evaluate the demographics, and to localize its strategy to fit with the needs of the Chinese market as opposed to a global market strategy.
The macroeconomic environment where Walmart operated in was another aspect that contributed to the company’s failure. Specifically, the activities of the Chinese government regarding fiscal and monetary policies were unfavorable to Walmart. The macroenvironment affected the ability of Walmart in its decision-making capacity, investments, borrowing, and spending. It is recommended that Walmart creates a response strategy to the macro environment in a way that will allow the firm to avoid a reactionary approach but rather anticipate what will change and how it will affect the organization. While Walmart cannot control the macro environment, it has the capacity to implement internal changes that will respond to the changes emanating from the external environment and be in a position to formulate a plan that will create competitive advantage. In the case of Walmart in China, the company did not have a strategy to respond to the external environment, leading to failure to adjust to an economy that was heavily regulated by the government.
Another reason for failure of Walmart was the growth of e-commerce market in China, something that Walmart was unprepared for. Domestic companies including Dang Dang and Mecoxlane emerged in the ecommerce world, further shrinking the market share in the retail market, therefore intensifying competition and pushing foreign brands like Walmart into a reduced market share. To deal with this issue, it is recommended that Walmart partners with a Chinese company, one that has particularly mastered the Chinese e-commerce market, in order to penetrate a very competitive sector of the e-commerce and retail business. A partnership is recommended with an e-commerce company because it would help Walmart to bridge the gap in knowledge and expertise and provide access to the wider markets that the partner firm has already concurred. It would also provide a new perspective to further address the issue of how Walmart misinterpreted the Chinese consumer market and open up more opportunities.
Conclusion
Walmart is an important brand in the retail industry as it acts as a leader both at local and international scopes. As part of the global expansion strategy, Walmart made attempts to penetrate the Chinese retail market using same strategies applied everywhere else. The success of Walmart’s entry in China was short-lived as various factors came into play causing a barrier to progress. These aspects include: changing consumer perceptions, imitation by rivals, challenges in the macroeconomic environment and the competitive pressure arising from the rapidly growing ecommerce in China. Walmart needs to shift its strategic direction and focus on improving the brand’s image by aligning its activities to match with consumer expectations and preferences or else suffer from extreme market share loss to rising competitors who better relate with the Chinese market.
References
Chuang, M. L., Donegan, J. J., Ganon, M. W., & Wei, K. (2011). Walmart and Carrefour experiences in China: resolving the structural paradox. Cross Cultural Management: An International Journal. https://doi.org/10.1108/13527601111179519Daxue Consulting (2021). Daxue-Consulting-Walmart-In-China-Number-Of-Walmart-Stores-In-China. Available at https://daxueconsulting.com/wal-mart-in-china/daxue-consulting-walmart-in-china-number-of-walmart-stores-in-china/
Forbes. (2014). Why Wal-Mart Never Picked Up In China?. Forbes. Retrieved 23 October 2021, from https://www.forbes.com/sites/greatspeculations/2014/06/18/why-wal-mart-never-picked-up-in-china/?sh=3ca6f7c47fb8.
Huang, J., & JIA, Y. (2015). Wal-Mart development in Chinese market: problem and countermeasures-nased on the enterprise culture and ethics. International Business and Management, 10(2), 11-15. https://doi.org/10.3968/6806Hunt, I., Watts, A., & Bryant, S. K. (2018). Walmart’s international expansion: Successes and miscalculations. Journal of Business Strategy. https://doi.org/10.1108/JBS-02-2017-0013Mun, L. Y., & Yazdanifard, R. (2012). Walmart success in Mexico, Canada and China: global expansion, strategies, entry modes, threats and opportunities. https://www.academia.edu/download/56380411/Walmart_success_in_Canada_Mexico__China.pdfNandita Bose, A. (2014). Wal-Mart’s China syndrome a symptom of international woes. Reuters. Retrieved 23 October 2021, from https://www.reuters.com/article/us-walmart-emerging-idUSBREA1K08220140221.
Rein. (2011). Why Wal-Mart is Losing Market Share in China. CNBC. Retrieved 23 October 2021, from https://www.cnbc.com/id/43460941.
Rosenbloom, S. (2008). Wal-Mart to toughen standards. The New York Times, B1. http://faculty.fairfield.edu/winston/Walmart.pdfStatista. (2021). Topic: Walmart. Statista. Retrieved 23 October 2021, from https://www.statista.com/topics/1451/walmart/#topicHeader__wrapper.
Watch, C. L., & Vail, B. (2015). In China, Walmart Is Unionized, But Workers Have No Power on the Job. https://ecommons.cornell.edu/bitstream/handle/1813/102336/CLW_2015_Report_China_in_china_walmart.pdf?sequence=1Xu, L. X., Xu, Q., & Liu, X. (2014). Wal-Mart and Carrefour’s Supply Chain Management Strategies in China. International Journal of Business and Management, 9(7), 155. http://dx.doi.org/10.5539/ijbm.v9n7p155Yoon, J., & Suh, M. G. (2021). The key elements of strategic leadership capabilities to the latecomer firm: the case of RT Mart’s success in the Chinese retail industry. Asia Pacific Business Review, 27(1), 29-52. https://doi.org/10.1080/13602381.2021.1846951
Waciru Cleaning Services
Waciru Cleaning Services
Executive Summary
Waciru’s cleaning services (WCS) is a residential and commercial cleaning service serving businesses, public entities, middle and upper class families in Nairobi. Through unrestricted investment of human capital, Waciru’s cleaning services will supersede customer’s expectations. We will be providing services for middle and upper income households at different pricing levels depending on the level of quality of service warranted by the client. However, the pricing levels will not undermine the high level of professionalism and trustworthiness maintained as the core of this business.
The projected growth of Waciru’s cleaning services is very high on a yearly basis with significant profit margins as a percentage of sales. The growth will also involve investing in other cleaning services that demand hefty capital investments and higher skilled human capital case in point industrial cleaning. WCS will be operated from home with Kennedy Karanja as the sole proprietor. The business will commence with three employees with an additional three joining through the first year.
An estimated 47% of Nairobi residents are believed to pay for or consider cleaning help which has overseen an explosive growth in the cleaning service industry in the past couple of years. This number is expected to grow as the economy shifts to middle class and as more people move to the city in response to skilled job offers. As a result, WCS seeks to catch up with this new opportunity.
This business plan will act as a guide to help the owner with navigating the startup and management responsibilities that come with operating the business as well as secure additional funding from a bank.
Objectives
To attract a minimum of 20 regular customers per week for both exterior and interior cleaning services, in the first year of operation.
To offer our clients excellent cleaning services differentiated from the competition at appropriate prices, and providing outstanding customer experience, measured by a minimum of 7 percent sales growth each year, and at least 10 percent net profit from sales.
To develop a sustainable business through the generation of positive cash flows and a minimum of 10 percent net profit to sales.
Mission and Vision
WCS’ mission is to offer Nairobi residents excellent cleaning services differentiated through high levels of professionalism and trust. Our commitment remains to offer the service quality and value expected by our clientele.
WCS’ strategy, resources and systems will be employed to attract and maintain customers. We believe the growth of our customer base to be the core maxim and will go a long way in ensuring the business achieve its short as well as long term goals. Our mission is informed by our zeal to exceed the expectations of our clientele.
Our vision is to become the most sought after cleaning service provider at commercial, consumer and industrial levels-as measured by our stakeholders and the environment we operate in.
Our values are the backbone of our success. They are a strong foundation of WCS, create a picture of who we are and set us apart from the competition. These standards that inspire our vision of the future include:
Integrity: We respond to every task, one another and most importantly the client with utmost respect and dignity. Every single interaction seeks to uphold honesty, ethics and generate trust.
Performance excellence: Every action is geared towards exceeding expectations
Teamwork: WCS is a team environment characterized by our commitment to one another and bound by trust and loyalty.
Keys to success
Our keys to success include:
Top notch service delivery tailored to build and maintain customer loyalty.
Services that prove essential to our target customer base.
A business location that translates to sustainable customer flow through company visibility.
Competent management to run the business.
Total commitment to growth, continuous improvement and top notch services.
Service Description
The services are categorized according to the needs as well as the client type. The categories include:
Residential cleaning.
The services offered for residential premises include cleaning:
Exterior Cleaning
Garage floors
Down spouts/water spouts and drain gutters.
Rust stains from sprinklers deposited on sidewalks and other areas.
Building sides, bricks and stucco.
Internal cleaning
Maid services which include cleaning duties specific to the individual needs of the client or home cleaning in general.
Couch cleaning
Carpet cleaning
Doors, woodworks and walls.
Bathrooms.
Kitchens
Chandeliers
Beams and high edges
Window cleaning
This service also include post construction cleans.
Commercial Cleaning
Commercial cleaning entails services offered to business premises and offices. WCS offers custodial services in this regard, which entail cleaning and maintenance duties in offices and commercial premises. The custodial services are as follows:
Vacuuming and mopping floors
Cleaning windows
Arranging spaces
Sanitizing amenities
Emptying trash cans
The tasks carried out by WCS are not limited to those mentioned and will perform any other tasks as directed by the client inside or outside the premises.
Full service laundry
WCS will provide full service laundry which entails washing, drying, and folding clothes including pick up and drop off with a turnaround time of less than 24 hours.
WCS also plans to offer commercial laundry services in the future in line with its growth strategy. Commercial laundry service will entail providing and managing inventory of linen, as well as washing, ironing and delivery on weekly basis or at the agreed frequency.
Before/after party cleaning services.
Our competent workforce will help clients with planning an event be it working alongside and under a party planner or the client themselves. Before party cleaning services include ordinary clean up prior to the event such as rearranging furniture and helping with decoration. These services are, however, custom and tailored to the needs of the clients including extra care tasks such as window or floor care, arranging tables and chairs, and taking care of rented linen.
Post party cleaning services include but are not limited to rearranging the furniture, breaking down chairs and tents, polishing surfaces and floors, cleaning utensils, collecting and disposing litter and left overs, as well as scrubbing, disinfecting and cleaning amenities.
There are np exceptions to which event and our focus solely remains to restore the client’s venue to the original state if not make it better.
Market description
Waciru Cleaning Service will target the upper and middle end of the house cleaning market. From research and the yellow pages, there is evidence of a huge market that is still in need of basic cleaning services as indicated by the insignificant number of already existing entities pursuing this market. More importantly, there is a need for a quality, honest and trusted service and that is where WCS comes in. WCS is offering a high quality, totally trustworthy service for all clients regardless of economic class. Our service will ooze professionalism. We are perfectionists as will be indicated by our services.
We believe that each of our clientele appreciate a professional, reliable, trustworthy, cleaning service and are willing to pay exceptional amounts to get this top helf level of service. We will be marketing our service to these people through word of mouth referrals.
Nairobi, like most urban areas, has lots of cleaning services. Although this translates to substantial competition, we believe clients are looking for upper-end cleaning services which the competition is yet to realize and will allow us to have steady growth.
Market Segmentation
Waciru Cleaning Service will be focusing on two groups, commercial and consumer clients. The first includes office buildings, hotels, hospitals, and schools. All these premises are included to avoiding any restrictions on our client range. Services offered to this group may require to be scheduled in the evenings and weekends to allow space for the various organizations to operate on normal working hours.
The other group is the consumer clients whose needs are met at residential premises. This group make up our primary clientele and focus on the so called maid services. This services are those cleaning duties that specific to the needs of individuals or house cleaning services in general. Other services offered to this group include laundry.
MARKET ANALYSIS
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Potential clientele Growth CAGR
Residential clients Commercial clients Total Target Market Segment Strategy
WCS is focusing on a group people that appreciates a professional, reliable, trustworthy, and immaculate house cleaning service, and are more than willing to pay for this. We target a group that is considerably wealthy, which means consistent customers for us. Whether our target base have a house cleaning service does not depend on the finances each month. These groups can always afford our services, just as they always need/desire a clean house.
The middle and upper class desire quality and are willing to pay a premium for a service that that they can trust exclusively, that extrudes professionalism, and basically allows to relax and avoid the hustle that come with any form of cleaning. We do all of this in a seamless, customer centric manner.
Marketing Strategy
Marketing our company will entail several approaches. First is the distribution of marketing materials like color brochures, fliers, and business cards with detailed information of our services and communicate the uniqueness of our business. This documents will be distributed to our target segment through strategic relationships with individuals, organizations or any other areas that fit our target customer profile such as drop offs within the target market. The head of operations will also introduce the business in person or by phone to businesses and enquire whether the business can provide professional cleaning services.
This approach will then be augmented by word of mouth referrals from the few clients that will receive our service during the early stages of operation. The proprietor has a considerable number of friends that fit our target market are known for certain to use this service and will make a good starting point for the client network. This will require offering services with good enough quality to create confidence for these clients to be our “cheerleaders” for our business. Some cases will require economic incentives such as discounted visits to our customers if they bring us new business. The effectiveness of this approach will be owed to the tendency of people to share good things with friends.
Competition and Buying Patterns
The cleaning service space is made up of numerous competitors and with good reason since the demand is pretty high. Plenty of maid/janitorial services have waiting lists, they are unable to meet demand. Additionally, many of the maid and janitorial services are “mom and pop” operations without enough employees. Cleaning service customers want quality, and not everyone in the cleaning service space offers quality. Our research has indicated that often people report to not have found a cleaning company that they are truly happy with.
The residential house cleaning niche is a subset of the larger cleaning business. Within the cleaning business, there are both residential as well as commercial cleaners. The commercial cleaners are typically a janitorial service that offers a wide range of services from general office cleaning, to carpet cleaning, to window cleaning. Janitorial services are a one-stop service offering for commercial businesses. There are also residential cleaning services. The residential house cleaning market is serviced predominately by independent companies. There are however, a few large franchises. Residential services are divided into a couple of different categories, maid or house cleaners, carpet cleaners, window cleaners, and a variety of other services that are required on a less frequent basis. They are far more restricted in their range of offered services relative to the commercial janitorial services.
We charge rates that represent the average price in the market for our services coupled by unsurpassed level of professionalism, trustworthiness, and attention to detail. We provide the most pleasant experience possible
Strategy and Implementation Summary
Waciru’s Cleaning service will be courting businesses, party planners, and individuals across Nairobi. We will be attractive to these customers because of our commitment to professional, trustworthy service. We will achieve this high level of service through extensive training and a continuous learning process. WCS will be qualifying leads over the phone with estimates and more importantly, with in-house meetings. This sales strategy should yield a steady increase in jobs starting from the second month.
Competitive Edge
Our competitive advantage will be based on our large investment in human capital. WCS begins with a rigorous training program for new employees. At the outset, employees with be trained on how to clean. Granted everyone has some idea on how to clean, but we will show them a methodical way producing a far cleaner home more efficiently. We will then be training employees to work effectively on teams. While there are some households that prefer individual cleaners instead of a team, a request that we are more than happy to oblige, we generally work in teams as they are more efficient. Working efficiently on a team takes training, and through this team training, we are able to make significant gains in efficiency.
The next topic of training involves professionalism. We provide our employees the tools necessary to impress our most affluent clients. Professionalism is a skill that is used throughout the service call, from the way the employee greets and interacts with the client, to the way they clean, to the way they act when they break that priceless vase (which in the inevitable case that we do break something, we have specific guidelines for the employee to follow to resolve the conflict).
We finally train our employees to know what the expectations of our clients are. We will provide them the tools needed to exceed these expectations.
This extensive training, both up front, as well as continuously (called our continuous learning system) builds a trust relationship between our company and the client. It is the bond of trust that will not only earn WCS the loyalty of that customer but also the referral of several more of their friends. Satisfied customers like to tell their friends about service providers that they are happy with, people like to “spread the wealth” with their friends.
Lastly we will emphasize our use of environmentally sound chemicals. Other companies do not really use environmentally sound chemicals so this is a huge differentiation, and it is something that we are proud of, and will be mentioned.
We will also be creating the appearance of professionalism through the use of uniforms and large magnetic sign affixed to the side of the vehicle we use.
Sales Strategy
The sales process will begin through the qualification of leads generated from our marketing campaign. The marketing campaign will primarily generate leads through interest sparked from our brochures and other advertising documents. Someone will call to receive more information about our service, while we will be able to give them an estimate over the phone, we would prefer to be able to get into their home and speak with them. On one hand we would be able to offer them a more accurate estimate. More importantly however, it provides us an opportunity to impress them with our company. We feel confident that since we are dealing with the affluent, who for many services are less price sensitive, are more likely to be impressed with our professionalism, “feel” an immediate trust bond forming, and sign up for the service.
For those clients whom we are only able to speak with over the phone, we will initially quote them a price. Waciru’s Cleaning service will explain all of the different training systems and methodologies that each employee goes through, and what expectations are reasonable for the customer to form about our superior service. This conversation will leave the prospective customer the impression that WCS is indeed different from the run of the mill residential cleaning services.
We are setting up an expectation for the customer that they can indeed expect more with our service. This “angle” is based on the assumption that many people are not thrilled with their current cleaning service. Sure they clean adequately, but there is not a trust bond formed as if you had the same house cleaner for 20 years who helped raise your children. This is how we will differentiate ourselves and ultimately win over new customers.
Sales Forecast
The first month will be used to set up the business. It is unlikely much/any business will be officially transacted. In addition to dealing with legal and accounting issues for the business, office equipment will be purchased and set up. Once the physical office is ready we will then develop the employee policy and procedure manual. Then we will develop our training program. This will take a bit of time therefore it is very important it is set up at the outset, ensuring that it is completed and done properly when there are far less time constraints.
The second month will begin to see some activity. We will begin to field inquiries over the phone and expect to turn some of those into contracts. The first week of jobs will be done as a team, with Ken and one employee who will be required to have substantial experience. As the number of contracts begin to pick up at the end of the second month an additional person will be hired to form the first employee team. By the end of month four we will have built up enough demand that a new team of two will be trained and begin working. Having two teams of two will be sufficient until month seven when two more people will be brought on. We expect to remain with a six-person head count into mid-year two when we expect to bring on one more team.
The sales forecast is based on the assumption that increased demand will occur at a steady pace. This is based on the assumption that a large part for our new clients after month two will be from word of mouth referrals. The logic is that we will incrementally gain customers as we continue to serve current customers. We will need a couple of visits before we can turn a new client into a referral service. All this will happen steadily and incrementally. This forecast is on the conservative side, it is possible that because we are superior to competing services that things really take off, however, it would not be prudent to take that aggressive of a forecast. It is always better to err on the side of caution.
SALES FORECAST YEAR 1 YEAR 2 YEAR 3 Year 4 YEAR 5
Sales Residential clients Commercial clients TOTAL SALES Direct Cost of Sales Residential clients Commercial clients Subtotal Direct Cost of Sales Milestones
Waciru’s Cleaning servicewill have several milestones early on:
Business plan completion. This will be done as a roadmap for the organization. In addition to raising capital, the business plan will be an indispensable tool for the ongoing performance and improvement of the company.
Set up the office. This will be done within the first month. This includes setting up the physical office where business will be transacted and act as storage space for equipment. The storage space/office will be where all of the bulk, environmentally sound, chemicals will be mixed into the proper concentrations.
Training program. This will be the development of a training program for the employees. The employees will receive initial sessions of training up-front, but will undergo constant training, part of our constant learning process through a hands on approach.
Welcoming our more employees.
Management Summary
Waciru’s Cleaning services owned and operated by Kennedy Karanja. It will be formed as a sole proprietorship. There is no compelling need to incorporate. The advantage of incorporation, limited liability, can be offset by good insurance.
Kennedy Karanja , founder and owner, has a degree in _______ from Kenyatta University. A history of competence and interaction with the sector.
Personnel Plan
The staff will consist of Ken working full time for WCS. Initially Ken will be working in both the office as well as on jobs but on a supervisory capacity with two employees, by the end of month two he will be working only in the office and will have hired an additional employee. Month five will see an additional two people hired for a total of six employees.
We will be paying our employees a competitive wage informed by the average industry rate. The wages will be accompanied by benefits that will attract much higher caliber employees that are not looking for temporary employment, but a stable job environment. This is compounded by the fact that in order to make our training cost effective for us even if the training is offered by our experienced emplyee, we need this person to be a part of the company for an extended period of time, not just a few months until a better job comes along. In addition to paying an above market wage, we will be offering extensive training. This personal development will be another attraction for the high caliber employee. The need for the higher class employee is necessitated because of the upper end clients that we serve. In order to exceed the customer’s expectations of our services, we need to have the right employee that has been properly trained and feels a sense of empowerment on the job.
Ken will be paid a monthly salary. The rest of the profits will remain within the business.
Financial Plan
The following subtopics will provide more financial information.
Important Assumptions
GENERAL ASSUMPTIONS
YEAR 1 YEAR 2 YEAR 3
Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other Break-even Analysis
The break-even analysis is based on an average billing unit. The calculations are based on the shilling a unit of revenue and costs of sales as a percentage of the shilling.
Projected Profit and Loss
The following table will indicate projected profit and loss.
PRO FORMA PROFIT AND LOSS
YEAR 1 YEAR 2 YEAR 3
Sales Direct Cost of Sales Other TOTAL COST OF SALES Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and Other Expenses Depreciation Additional Payroll Burden Leased Equipment Utilities Insurance Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales Projected Cash Flow
The following table will indicate projected cash flow.
PRO FORMA CASH FLOW
YEAR 1 YEAR 2 YEAR 3
Cash Received Cash from Operations Cash Sales $186,598
SUBTOTAL CASH FROM OPERATIONS $178,970 $186,598
Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0
New Current Borrowing $0 $0
New Other Liabilities (interest-free) $5,000 $0
New Long-term Liabilities $0 $0
Sales of Other Current Assets $0 $0
Sales of Long-term Assets $0 $0
New Investment Received $0 $0
SUBTOTAL CASH RECEIVED $183,970 $186,598
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations Cash Spending Bill Payments SUBTOTAL SPENT ON OPERATIONS Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends SUBTOTAL CASH SPENT Net Cash Flow Cash Balance Projected Balance HeetThe following table will indicate the projected balance heet.
PRO FORMA BALANCE SHEET
YEAR 1 YEAR 2 YEAR 3
Assets Current Assets Cash Inventory Other Current Assets TOTAL CURRENT ASSETS Long-term Assets Long-term Assets Accumulated Depreciation TOTAL LONG-TERM ASSETS TOTAL ASSETS $71,491 Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities SUBTOTAL CURRENT LIABILITIES Long-term Liabilities TOTAL LIABILITIES Paid-in Capital Retained Earnings Earnings TOTAL CAPITAL TOTAL LIABILITIES AND CAPITAL Net Worth Business Ratios
The following table contains important business ratios from the building maintenance services industry, as determined by the Standard Industry Classification (SIC) Index code 7349.
RATIO ANALYSIS
YEAR 1 YEAR 2 YEAR 3 INDUSTRY PROFILE
Sales Growth
Percent of Total Assets
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
TOTAL ASSETS
Current Liabilities
Long-term Liabilities
Total Liabilities
NET WORTH
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout