Magoosh GRE

Retour Aux Origines: A business plan

| March 31, 2015

1. INTRODUCTION
A. BUSINESS DESCRIPTION
Retour Aux Origines is a clothing range and label which will be conceptualized and developed by a collection of London based fashion designers that are concerned about the environmental issues facing the world today. The textile industry, according to Dr Dorothy Maxwell, has a detrimental effect on the environment. She states, “The business of producing, selling, wearing and disposing of clothing and fashion accessories is amongst the most environmentally damaging. A greater understanding of the environmental and social impact of the product lifecycle has culminated in consumer, media and industry awareness, which is reaching unprecedented heights.”

The clothes of “Retour Aux Origines” would be produced using ethical labour standards in low emission factories, using only organic natural fabrics or recycled man-made fabrics. Our garments can be washed at 30 ˚C and under to reduce energy consumption.

B. ENTREPRENEURIAL SKILLS AND THE BUSINESS OPPORTUNITY
This business plan will examine Alexis’ career up till now and his goals in relation to his experience, qualifications and current studies. The first part will focus on key moments of inspiration from his background, his skills and the reasons why he has chosen to fellow the specific career path of business entrepreneur.

C. ACADEMIC HISTORY
The qualifications that Alexis has gained through his years of academic experiences have broadened his knowledge and understanding of the state of the fashion industry in terms of macroeconomic and marketing factors that affect the industry. Alexis’ qualifications, together with his current study on creative advertising and strategy at London College of Communication has transformed his learning process and given him relevant insight into the industry.

After graduating from the University of Creteil in Paris (France) with an undergraduate degree in Communication and Marketing in 2000, Alexis Temomanin lived and worked in the Ivory Coast until 2005. Due to political tensions in that country, he came to the U.K in order to learn English, to pursue his career as Market Research Executive for Research International. This together with living in fashion conscious London generated strong interest in the fashion business. He then studied a one-year Fashion Portfolio course at London College of Fashion. Upon realizing that he would be difficult in being as talented in fashion designing as successful designers, Alexis Temomnin sought about applying his marketing research background in the field of fashion. He is currently in the process of completing his degree in creative advertising and strategy.

D. PROFESSIONAL EXPERIENCE AND SKILLS
Before coming to London, Alexis worked for three years as a Market Research Executive for Paris-based company called Research International in the Ivory Coast, which is one of the pioneering companies in the market research industry

During those three years, Alexis was responsible for end-to-end projects in the management of domestic international studies, including proposal writing, briefing, supervising and interviewing teams, conducting consumer discussion groups and analyzing and interpreting research findings.

Alexis’ first job in London was as sales assistant at Zara (retail store), which introduced him to the world of fashion retail.
E. FURTHER SKILLS
Studying creative advertising and strategy at London College of Communication, Alexis has been transformed in the learning process. As a French speaker his communication skills have been improved by being immersed within an English-speaking establishment and working in groups on some projects were a key aspect of progression. Alexis has recognized the positive outcomes associated with teamwork and the gains derived from driving a team towards performing efficiently.

For example, when assigned the Integrated Project, a vast amount of students from different fields of study collaborated. This enabled Alexis to learn from others, to challenge preconceptions and foster his open-mindedness. His writing skills have also been improved because he attended Personal and Professional Development lectures. These lectures challenged him to improve his critical thinking and have good time management skills, which are essential in an entrepreneurial realm. By making timetables, notes and checklists Alexis structured his work by prioritising, using Covey’s “Organize and Execute around Priorities” Theory.

Finally, using the research method of the Career Path Analysis, Alexis has undergone a Psychometric test, and has carried out a SWOT Analysis to identify his strengths, weakness, skills and interest. This has enabled him to analyse what he likes or dislikes, in relation both to work and play. It has made him think harder about what he enjoys doing, what kind of activities he avoids, helped him identify his passions, skills development, talents and abilities. His profile showed that he is a people focused individual. He is willing to take responsibilities and to provide support.

An entrepreneurial role includes being in contact regularly with clients having good communication skills. As a person Alexis is culturally aware. The SWOT Analysis has established that Alexis’ can apply his Marketing background and communication to building close good relationships with the clients and pursue a career in the fashion industry. As an experienced professional, Career Path Analysis will enable Alexis to know how to get ahead in his career, to perform excellently and beat all performance expectations.

F. SOCIAL NETWORK
Having studied fashion and working in both high street and boutique fashion retailers has given me a solid foundation from which to build my fashion network. Also, due to a friend and a family member’s profession (a fashion designer and fashion executive, respectively) I had the opportunity to get to know influential people working in the fashion industry in London. Additionally, being a subscriber to a business network for the fashion industry who shares knowledge regarding fashion, style and design, I have gained valuable insight into the workings and management within the industry. Some have shared their experience in starting their own businesses, thereby increasing both my awareness and knowledge as well as refining my eye to spot new trends. This information has also made me more receptive of the potential pitfalls and challenges in starting a venture. I have met Camille Godet, sales executive for Hermes (www.hermes.com) who was in charge of developing the brand strategy for jewelry worldwide. She advised me on how to position my design label within a current economic downturn.

G. ROLE MODEL
Sarah Ratty is a British fashion designer who has been at the forefront of eco-friendly design. Everyone from Cate Blanchett to Sienna Miller and Jasmine Guiness wears her pioneering luxury fashion label, Ciel.

Her clothes – gold hemp-silk party dresses, skinny-fit satin jeans, organic cotton T-shirts, certified faux furs are ethical but gorgeous. She’s collected by the V&A and her designs regularly turn up in Vogue and Grazia magazines.
Fashion has always been in Ratty’s blood. Her mother, a lecturer in fashion, taught Barbara Hulanicki of fashion label Biba.

Ratty usually sat in the Biba store on Kensington High Street as beautifully dressed women paraded in and out. She was drawing dresses before she could write a word. She has a lovely energy. Apart from the cane she uses to walk longer distances, you would never know she broke her back, leg, arm and shoulder in a car accident in South Africa nine years ago. She was in a wheelchair for two years. She had post-traumatic stress. Out of her painfully slow recovery came the launch of Ciel.

Today she travels the world in search of green fibres. Over the past 20 years, she has seen a major evolution in green fashion. She credits organizations such as the Organic Exchange, a consortium set up to increase the use of organically grown fibres such as cotton, for bringing together brands and retailers with farmers and to learn about the social and environmental benefits of organic agriculture. She said, “these days we want to feel good about the provenance of our clothes, to know they weren’t made using sweatshop labour. It is cool to be more considered about what you are wearing”. (Hoggard, L. Green Machine, The Evening standard, P.40-41)

Her career path is inspirational and a good template upon which to base Retour Aux Origines, which is planned to be set up, because it belongs to the same industry as the one she is working in. The courage and determination she has shown after the difficult times she has been through has enabled younger fashion entrepreneurs to build upon the groundwork she has done.

H. PERSONAL TRAINING
Alexis is starting a work placement at Hermes high fashion brand in London, in the communication and marketing department, where he expects that it will help him make valuable industry contacts and apply the knowledge learned during his tenure in the workplace before starting up his own business. The work placement will give Alexis an overview of a variety of different areas within fashion marketing (promotion, advertising, etc). Alexis will be working on projects that involve visual and market research, introduction to styling, creating promotional literature, trend and colour analysis and developing skills in computer graphics and photography.
Upon graduating Alexis would like to develop his IT skills by working at, say, a HR department. He would like to improve his management skills of both company and staff to ensure his business gets off the ground. All businesses must be financially resourceful and this requires sound economic knowledge, especially if Alexis seeks to make Retour Aux Origines successful.

Alexis’ dream would be to get a work placement in the fashion prediction department or fashion forecasters as they are also known. This would be to gain knowledge or expertise to produce forward thinking for all initial ideas and decisions on colours, fabrics and theme directions, and guide all support staff in their roles.

2. ABOUT THE OPPORTUNITY
A. ENTREPRENEUR’S BACKGROUND
As a kid, Alexis had always been engrossed in the fantasy of being able to create, design and produce fashionable clothing. A fantasy fuelled by frequent sewing sessions with his mum, through whom he learnt how to cut dress materials and work effectively with the sewing machine. The production process and the amount of creativity needed were usually challenging, however the excitement that the customer got when their clothes were made to perfection, was usually satisfying and motivating.

Alexis’ upbringing in Ivory Coast also exposed him to the struggling environment and the impact of globalization on the livelihood of millions. Most third world countries are being exploited due to cheap labour and corrupt law practices by multinationals from developed countries (Ethical Fashion Forum, 2010). These multinationals have no concern for the health and security of workers in these factories that work day and night just trying to satisfy the artificially created demand for fashionable clothing that has become a norm in modern western lifestyle. A change in the practices of these multinationals, though small, could change the lives of so many people who depend greatly on them for sustenance.

Both factors – the flair for fashion designing and ethical trading – inspired genuine curiosity in the consumer and retail operations within the Fashion Industry, thereby leading Alexis to seek out jobs at Fashion Retail stores such as Zara, then subsequently enrol at the London College of Fashion to study Fashion Portfolio. The vast amount of knowledge he has gained through these experiences have led Alexis to propose an effective business on an Ethical Fashion Trading company, known subsequently as “Retour Aux Origines”, illustrating the four major ethos he intends to run the label by: Fair Trade, Organic, Recycled and Ethical.

Through the understanding of business practices gained through these work and academic experiences, Alexis now believes that ethics could be a strong guiding principle towards to sustenance of humanity, and that through ethical trading, the lives of a higher number of individuals could be enriched, as opposed to the pockets of a few.

Therefore, following this individual ideology, if ethics could be combined with fashion in such a way that all stakeholders benefited from the production and sales. Then it may be possible to enrich the lives of millions with an innovative corporate strategy.

B. MARKET OPPORTUNITY
According to Mintel (2009), the ethical fashion industry is currently small, worth £175million, but growing, owing to the involvement of high street stores and small labels that promote ethical fashion. However, most of the ethical and organic clothing products usually sold on the market are being sold at a premium and targeted mainly at the ABC1 45+ consumer demographic. The fashion industry targeting the younger 15 – 25 year old population is currently dominated by high street stores such as Top Shop, Next and Zara who sell fast moving fashion products that are in vogue at the moment, and may be out of fashion next year.

There is currently no fashion label currently explicitly targeting the younger population with ethical clothes and shoes, which are made to be affordable, fashionable, and yet ethical. These clothing labels such as Edun and Izzy Lane are usually sold with a high price tag and could therefore not be easily patronized by younger university students.

By capitalizing on this new market segment, Alexis believes he has discovered a Blue Ocean. According to Chan and Mauborgne (2004), a Blue Ocean is a business opportunity, market segment or corporate strategy that has not yet identified or proliferated by several competitors within the market, thereby giving the one company that comes up with it, a sustained competitive advantage and excessive profits over a prolonged period. Through the discovery of this Blue Ocean, in which Alexis intends to target younger consumers with affordable ethical clothing, he would be able to build, grow and expand his fashion business, without having to worry too much about the actions of immediate competitors, while new entrants would need to build a brand name and critical mass before they would be able to compete effectively (Collis and Montgomery, 2008). Porter (2008) concurs with these arguments as he states that companies with low competitive rivalry and unique resources would be able to achieve sustainable growth in their respective industries.

Therefore, based on the Market Report and related theories, Alexis believes there is a gap in the market to target lower priced ethical fashion at the younger demographic. Collis and Montgomery (2008) states that successful business strategies are based on a company’s ability to identify gaps in the marketplace and take full advantage of the opportunities present in building sustainable competitive advantage. Based on these, we believe youths who are interested in affordable fashion, yet knowledgeable enough to understand the impact on Ethical Fashion on the environment, would make an ideal market segment. According to Domeisen (2006), ethical fashion is a niche that could pave the way for a future revolution in the way people dress and perceive fashion. It is also being supported by UN initiatives on Diplomacy and Humanitarian Assistance for third world countries. Thereby promoting a reasonable platform through which Alexis could establish his business.

All these factors – the flair for fashion, understanding of ethical issues, niche ethical fashion market, market opportunity and humanitarian assistance – are all strong factors that have pulled Alexis into proposing this business plan. The following subchapters would outline his intended market segment, together with financial data on expected earnings and the amount of investment needed.
3. CUSTOMER ANALYSIS
A. PRIMARY RESEARCH
i. METHODOLOGY
Quantitative and qualitative interviews were conducted on a variety of sources in order to find substantial data on the ethical fashion industry, and also to understand consumer behaviour. Oppenheim (2000) states that quantitative data presents a measurable method of finding relevant information, while Saunders et al (2007) states that qualitative data aids the researcher in understanding the underlying thoughts of respondent, and also paving way for deeper sociological understanding regarding particular issues. These interviews comprised quantitative questionnaires and face-to-face interviews with varied individuals. The particular interviews carried out and the number of respondents they were carried out on would be outlined in the following subchapters, while the results derived from the primary research would be outlined in the results section followed shortly.

1. QUANTITATIVE QUESTIONNAIRES
Quantitative questionnaires were handed out to 16 individuals, all of who were young, below 25 and fit the demographic that Retour Aux Origines intends to target with its ethical brand. Their ethical fashion preference was unknown at the time the questionnaire were being administered, and they were all students of the university having their lunch break when they were approached.

Questionnaires were chosen as the most appropriate form of getting information off these individuals because it was quicker and involved less of their time (Oppenheim, 2000). No interviews had been booked prior to meeting them; therefore it would have been inappropriate to hold them for more than 5 minutes to answer the questions we sought.

Results were collected individually from each respondent and analysed using Microsoft Excel. Their responses were translated into numbers, which were then inputted into Excel and analysed as graphs and tables.

2. FACE TO FACE INTERVIEWS
Several face-to-face interviews were also conducted with owners, managers and business advisers. These individuals were questioned on their views regarding new fashion ideas and specific developments that one could watch out for in the fashion industry. This method was deemed appropriate for the information sought due the importance of insight from these individuals. They are industry captains and have high experience in the fashion industry, therefore information obtained from them would be very crucial understanding the underpinning nature of the fashion industry (ethical and non ethical), and ideas that one could look out for in order to be successful

According to Arksey and Knihts (1999, p.2), “Interviews are a method for collecting data in which selected participants (the interviewees) are asked questions to find out what they do, think or feel. Prompts and probes may be required. Interviews are concerned with exploring data on understandings, opinions, what people remember doing, attitudes, feelings and the like, that people have in common”. The results gathered from these respondents were compared against each other in a bid to summarise key findings and points that were common amongst all respondents. These points are regarded as the key findings from the research and are illustrated in the results chapter below.

 

14008The results from the questionnaire handed out to recipients were collated and analysed using Excel, and the results are illustrated in Figures 1 – 5. The

following is a description of the results gathered and highlighted in these figures.

11 out of 16 respondents chose yes (69%), when they were asked if they saw themselves as being eco friendly. However, only 38% would voluntarily choose a public transport over driving a vehicle, and only 25% shop specifically for fair trade, organic, recycled or ethical clothing, as opposed to high street fashion.

Figure 5 also depicts that 50% of respondents do not usually shop for ethical clothing, and have none of it in their shopping baskets on a regular shopping day. Only 31% report buying up to one quarter ethical clothing whenever they go shopping. None of the respondents buy up to 100% of their clothing as ethical. However, 81% of respondents reported that they would choose to buy ethical clothing instead of one from the high street, if they were of similar designs and price.

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Questions 6 – 10 in the survey did not receive that much input due to the open ended nature of the questions, and the manner in which the respondents were approached. They were in a rush and could not spare the time to answer more questions. The most prominent results from those questions are therefore outlined below.

The major respondents to these questions said that they bought their ethical fashion clothing from leading retailers such as Marks and Spencer. Only 2 respondents confessed to patronise specialist ethical stores online such as Adili and Ethical Superstore, while one respondent confessed to have shopped at a Salvation Army outlet for ethical clothing.

Only four of the 16 respondents were able to identify their favourite ethical brands, which were Edun, People Tree, and Noir, while all four who responded claimed to be very satisfied with the current brands they currently patronise. 91% of the respondents claim to have donated part of their income in order to protect the environment.

2. Face to Face Interviews
The face-to-face interviews were conducted in a semi-structured way in which sets of questions were already set, but not the direction of the interview, according to procedures outlined in Bryman and Bell (2007). Therefore each respondent was asked a number of questions, the answers were noted and usually directed the format for the interview. The general questions asked related to the general direction of the industry, what these industry players thought would be the best way of entering into the market, and best channel to sell the products through.

The following results were collated from the semi-structured interviews I had with the recipients:

– The industry is unique and has a number of loyal customers. Therefore there are always going to be individuals attracted to ethical fashion and the demand could only increase from there on.

– Most of the customers that patronise ethical stores are over 45 and usually higher earning individuals. It has been difficult to raise awareness about ethical clothing amongst youth, and even if the brands are successful in doing that, the youths may be unable to afford such clothing. The price tag currently placed on ethical clothing makes it increasingly difficult to raise awareness amongst individuals that can’t afford it.

– There has been a major proliferation of ethical retailers. Everyone seems to want to sell ethical clothing. But they all seem to miss the point; they’re either too expensive or grossly unfashionable. If these retailers can thrive to promote ethical fashion in a more fashionable and affordable way, then they can begin to make leeway in the industry.

– The major factor that can really drive growth in the industry is when high street retailers begin to absorb the enormity of their unethical nature and decide to introduce new ranges of clothing that are priced similarly to the products they already sell, but marketed differently as ethical fashion. This strategy could go a long way in communicating the impacts to youths and adults the nation over, as opposed having them think that ethical clothing are being made for the elite few.

B. SECONDARY RESEARCH
i. Data Source
A number of secondary research sources, particularly market reports, were utilized in finding data on ethical fashion within the UK. These reports were found online and were particularly significant to my ethical fashion business. The most prominent of which were Mintel (2009) report on ethical fashion within the UK, published in February 2009; and by Keynote (2005) on Green and Ethical customers within the UK; and the Cooperative (2009) Ethical Consumerism Report, which reports on spending on ethical goods within the UK.

Several other newspaper articles and online websites were also utilized in collecting secondary data on the ethical fashion industry, a number of which were prominent ethical friendly and widely known websites such as Ethical Fashion Forum (www.ethicalfashionforum.com), Labour Behind The Label (www.labourbehindthelabel.org) and International Trade Centre (www.intracen.org). These websites actively promote ethical fashion and voice out their opinions against the unethical practices of high street retailers, there were therefore chosen as an effective platform for gathering information regarding the current state and future of the industry.

ii. Results from secondary research
Based on the market data analysed, the ethical fashion industry in the UK, which Alexis intends to target with his line of affordable fashionable clothing, is a growing market. The Cooperative (2009) reports that spending on ethical products, such as food, appliances and clothing has increasing by as much as threefold since 2000. Keynote (2005) also forecast that there has been recent changes in consumer behaviour and a considerable rise in the sale of fair trade products, whilst the awareness for ethical goods has also risen considerably.

Mintel estimates that the market is currently worth £175 million, a figure that has quadrupled over recent years, but still constituting just 0.4% of the total market. While the International Trade Centre (2008) estimates that the ethical fashion industry within the UK is currently worth £680 million. Thereby judging by both analyses, it could be estimated that the ethical fashion industry within the UK is worth anywhere between £175 million and £680 million.

iii. Key players
The main industry players that have advocated the need for an ethical sense of clothing and fashion, are invariably the specialist designer labels that have been set up for the sake of designing and retailing ethical clothing either through online, retail or wholesaling outlets. These retailers such as Edun, People Tree, Izzy Lane and From Somewhere, are prominent and widely known ethical brands that are sold at a premium to ethically conscious customers.

However a vast majority of high street stores and retailers such as Tesco, Sainsbury’s, House of Frasier, Marks and Spencer and even Topshop, have adopted some ethical trading practices, and have also introduced several low level clothing such as t shirts and shorts, that are ethical, organic and or adhere to free trade specifications. Recent news also highlighted that Tesco is collaborating with a known ethical retailer From Somewhere, in order to sell a number of recycled clothing in their stores (Ethical Fashion Forum, 2010). The entry of high street retailers and supermarket chains into the ethical fashion industry provides a leeway for the growth of the industry, and a reasonable platform for new ethical fashion labels to leverage their message and distribute their products in several outlets.

iv. Threats and opportunities
The following are opportunities and threats for companies already operating in, and those aspiring to invest in the ethical fashion industry.
1. Opportunities
The major opportunities present in the ethical fashion industry are the long-term spread of positive views and behaviour that has been promoted by the mass media and ethically conscious consumers. These views have promoted the growth of certain coffee and chocolate brands, and could also help in promoting the growth of ethical fashion and help sustain the industry (Keynote, 2005).

Current consumer beliefs regarding the positivity surrounding ethical shopping could go a long way in driving purchases of eco friendly, organic, fair trade and recycled clothing. Also, if consumer behaviour were to favour quality clothing over quantity, the decision to choose an ethical fashion label, as opposed to high street labels could become more widespread over the long run, and could further favour ethical fashion labels (Cooperate, 2009).

2. Threats
However, the level of market competition, especially between a huge number of ethical fashion labels and high street stores, all competing for their respective share of the £175 million market, could create a huge competitive rivalry in the foreseeable future. According to Mintel (209), this proposed competition could help reduce the price of ethical clothing, or even do its share and make these clothes more fashionable and even more widespread. However, this would also increase the critical mass required for new startups, that aim to build market share by promoting their brands.

Also the high price that usually accompanies most ethical clothes could act as a deterrent in the growth of the market (Mintel, 2009). Consumers, especially those already used to quick and cheap fashion, may not be able to afford such high prices and would therefore continue to opt for the brands they are currently used to. Without affordable pricing on ethical clothes, the market growth may continue to be restricted to the ABC1 population who regularly patronise such brands (Ethical Fashion Forum, 2010). The impact of price on the growth of ethical labels could also be further impacted on if the recession lasts longer. High earning residents who had previously supported the growth of these labels may not be able to do so with decreased earnings, thereby leading them to cut down on shopping expenses or resort back to purchasing from high street stores.

While a almost 75% of individuals have reported that they have no concern for ethical issues whatsoever (Mintel, 2009). This high figure illustrates that though ethical issues may be highly publicized, it has not been done so in a way to sway the public in such a way that it affects the current sales and growth of predominant fashion retailers. Thereby illustrating that the growth of ethical fashion, in no way threatens that of predominant industries.

v. Recommendations
However, all these factors point to the fact that the market is growing, and with continued press from ethical supports, the market could experience further growth.

According to Mintel (2009) the most effective ways to target this market, based on all the information provided, would be to associate the brand to being fair trade, ethical, recycled and organic, that way customers that are conscious of these core issues, would be more attracted to the brand.

Also, a mass market appeal would need to be generated for the brand, in such a way that they are not just sought by higher earning individuals, but also by individuals who are drawn to more affordable clothing, such as youths that invest more in buying clothes so they could have a fulfilling social life.

C. CORRELATION WITH PRIMARY RESEARCH
Therefore based on the primary and secondary findings discussed in previous chapters, the following assertions about the industry and my product offering have been deduced.

• The industry is currently targeted at the ABC1 population of affluent individuals who can afford the premium price placed on ethical clothing
• Not a lot of people are currently aware of the impact that fair trade, organic, recycled and ethical clothing have on the lives of millions of people.
• Ethical fashion is especially rare amongst youth.
• Entering the youth market with ethical clothing would be the best way to expand the market and drive demand for such products.
• High street retailers are also a driving force in the fate of the industry. If they actively promote ethical fashion, then other industry leaders would follow lead and drive consumer awareness, thereby leading to increased sale of ethical fashion.

4. COMPETITOR ANALYSIS
A. PEST ANALYSIS OF THE ECO-FASHION MARKET
i. Political
• The government’s environmental legislative program (Climate Change Act 2008 and Carbon Reduction Commitment) requires all major businesses to reduce emissions by 26% by 2020 and by 80% by 2050 (Keynote, 2005).

• The government’s Waste Reduction Strategy sets stiff targets equivalent to a fall of 50% per person from 2000 to 2020.

• The UK government announced in September 2007 that high-energy incandescent light bulbs would be phased out by 2011 and replaced by low-energy bulbs.

ii. Economical
• The impact of the recession is forcing people to look to cut costs and trade down but high (and rising) levels of concern on these issues suggests that people are happy to be greener and more ethical, but only if it saves them money.

• With money being tight in many households, it is less likely that households will be able to invest in sustainable technology (even if it saves money in the long term) because they cannot afford to spend now and are reluctant to put more equity into their properties due to weak house prices.

iii. Social
• Big companies are doing their best to tell the world about their good citizenship. “Society now has higher expectations of business taking on public responsibilities than it did five years ago” McKinsey, the Economist.com/special reports, 2009

• Local community work is increasingly becoming global community work (young staff get month assignments in the developing world to work on worthy projects)

• Companies are committing themselves to eco friendly principles such as promoting environmental responsibility and combating corruption.

iv. Technological
• Only companies that make sustainability a goal are those that achieve competitive advantage, illustrated by the example of HP. (Harvard Business Review, Sep 2009)

• Innovations in energy efficient technologies are increasingly being adopted as an effective method of reducing carbon emissions.

B. SWOT ANALYSIS OF THE ECO-FASHION MARKET
SWOT is an effective method of understanding the various advantages and disadvantages of establishing a company within an industry. Though the following points have already been explained in varying degrees in the previous chapter, they have been re-introduced to explain the factors affecting the Ethical Fashion industry, especially within the UK.
i. Strengths
• Fits the ethos of the times – conserving the environment and demanding higher ethical standards.
• Growing awareness of wider issues, particularly production workers’ conditions.
• More widely available online and in the high street.
• Strong media interest.

ii. Weaknesses
• Current economic downturn
• Many consumers – especially young – prefer to buy often and buy cheap.
• Limited availability of ethical ranges
• More stylish and varied clothing on offer.

iii. Threats
• Competition
• Price
• No concern to ethical issues
• Recession lasts longer.

iv. Opportunity
• Long term spread of positive views and behaviour (as with food products such as fair trade coffee and chocolate.)
• Consumers’ ethical beliefs drive purchases
• Ethical and sustainable choice can appeal longer-term if quality is chosen over quantity.

C. FIVE FORCES ANALYSIS
Most of the elements of the five forces analysis have already been expatiated in earlier discussions. Forces such as the threat of buyers, competitive rivalry, substitute products and barriers to entry have already been explained and analysed with reference the ethical fashion industry, and the Retour Aux Origines label. Please see PAGE 14 – 17 for analysis.

However the supplier power, being the major force for this industry has not been thoroughly analysed yet. Due to the nature of the industry, the sources of raw material and finished products have to be different from that of their substitutes (businesses that sell high fashion products at knock down prices). According to Ethical Fashion Forum (2010, these companies personally exploit or use companies that employ cheap labour, child labour, and engage in unethical business practices, or sell products made up of animal or inorganic materials.

The following factors therefore exist with respect to suppliers within the industry:

• It is increasingly difficult to find truly ethical suppliers that are wiling to abide to fair policies and ethical ways of doing business. Some may pose as being ethical, but may still engage in illicit activities (Mintel, 2009).

• Being an ethical supplier illustrates that the company cannot engage in cheaper ways of producing goods, thereby illustrating that there products may be more expensive than those offered by unethical suppliers. Thereby warranting an increase in prices.

• Due to the scarcity of a huge number of ethical raw materials locally in the UK, a variety of these products have to be sourced abroad. The cost of sourcing abroad, though low initially, may increase with distance, as the cost of transportation would also increase. Thereby increasing the effect of suppliers.
These factors therefore point out that it may be difficult for Retour Aux Origines to acquire its products without having to engage the services of international suppliers who may be difficult to manage. However, the company intends to have several suppliers who have a strict supplier framework and adhere to several ethical codes. All of which would help ensure that the raw materials being bought for the label are indeed what they are purported to be, and that they also going to be delivered on time, at the right price, and would in no way impact on the production and or sales of Retour Aux Origines clothing.

D. IMPACT ON PRODUCT OFFERING
The following conclusions and recommendations have both a positive and negative effect on my product offering, both of which would be outlined and discussed below:

i. Negative Effect
• The high proliferation of ethical retailers may make it increasingly difficult for the Retour Aux Origines fashion label that I am introducing to get it to the market. It seems everyone is setting up an ethical retail label, therefore it may be difficult for me to capture the market with my brand, compared to a market that was not so competitive with several market entrants.

• The lack of awareness of ethical fashion amongst the youth is a huge negative factor affecting the growth of the industry. If youth who are the main impulsive shoppers are not willing to adapt to ethical shopping, then it may be difficult for a brand like Retour Aux Origines to target them specifically and gain market share by doing so.

• There is currently a bad association between ethical clothing and premium prices. Most people seem to stay away from buying these brands because of the high premium placed on them. Therefore in order to gain market share, ethical clothes need to be sold at affordable prices.

ii. Positive Effect
However, the analysis also portrays a number of positive results for the Retour Aux Origines brand.

• The demand for affordable ethical fashion in the youth market is well in line with Retour Aux Origines’s strategy, thereby creating a situation whereby the new company aims to satisfy a rising demand.

• The products could be sold through high street retailers, since they already witness high patronage for other products. Shops such as Topshop and Zara, which are favourite youth destinations could be targeted for these products, thereby making it increasingly possible to realise sales gain and market share through those channels.

• Results from the quantitative questionnaire illustrated that most individuals would opt to buy an ethical cloth that is fashionable, as opposed to one that is not. Therefore if Retour Aux Origines aims to promote fashionable clothing, that closely matches those of high street stores, then it may be possible to drive sales growth and make consumers switch their choices that way.

Therefore based on this, it could be concluded that though it may be hard building brand equity in the market at first, if we stick to our core strategy of affordable and fashionable clothing, sold through high street chains, then it may be possible to gain market share within the ethical fashion industry.

E. EVALUATION OF RESEARCH METHODS
Saunders et al (2007), Bryman and Bell (2007) and Oppenheim (2000) have all certified the research methods adopted in this study as effective methods of ascertaining information about the market from primary and secondary sources. Saunders et al states that obtaining information through qualitative semi structured interview method enables the researcher to obtain information that may have otherwise not existed in previous texts. Sociological issues that may pertain to individual differences could be uncovered effectively using these methods. Oppenheim (2000) also states that quantitative research allows values to be quantified and understood easily. They are objective and deductive, and based on that, the research gets a clearer picture of the question he intends to answer.

Bryman and Bell (2007) however state that another method that may have been effective in data gathering is Focus Groups, which was not utilized in this study. If it were, we would have been able to put together groups of individuals who all have common knowledge of the industry and would be equally willing to share and argue about their assertions. However, this method could not be adopted because it would have been impossible to get together these different individuals, all busy in their various activities, to discuss ethical fashion for the sake of my business plan.

5. MARKET TESTING
The designs were portrayed to 16 individuals, 9 females and 7 males, all of who had previously answered my questionnaires on their ethical clothing preference. 6 of these individuals were White British, 7 were British Asian, while 3 were African. They all reside in London, due to their proximity, and 12 of them are fellow students at the London College of Fashion.

Each respondent were given sheets of paper to note down their comments regarding each piece of clothing. They were asked whether they would purchase the cloth if they were available in stores, and also asked to include any other comments they may have regarding the fashion label, branding and dress designs. Wu and Gelinas (1992) propose that product testing using these methods provides a reasonable framework through which a startup could understand its customers and their perception regarding its products, before the products get introduced. Saunders et al (2007) however claims that reviews using these methods may not be thoroughly effective as the individuals are not totally representative of the business’ market demographic.

The following are comments received from respondents in response to questions asked during the showcase:

• I like the design, they are quite fashionable, look simple like something I could wear to uni and out with friends” – Female, 24, White British.

• “They look good, I like them, I would definitely buy one because of good design.” – Male, 21, African.

• “The design showcases a combination of fashionable and ethical clothing, if they are really ethical, I think this is something I might enjoy wearing for the fun side of it” – Female, 25. British Asian

• “The designs look good, but I believe they could be more fashionable”. – Female, 21, White British

• “These clothes look good, if they are affordable, I would definitely patronise the stores” – Male, 22, African

• “I believe the focus is too much on marketing an ethical cloth. That should not matter, the clothes should still be more fashionable” Female, 24, British Asian

11 out of 16 respondents claimed that they would purchase these designs if they were available in stores, and if they were equally affordable, while, 13 respondents liked at least 3 one of the 5 designs that they were shown.

However, 7 respondents claimed that they would prefer if the clothes were more fashionable, and 12 respondents said they would not pay a premium even if the clothes were ethical.

The major issues from this market testing are therefore that most respondents did not believe the clothes could attract a premium, while another majority did not believe they were fashionable enough. These could be as a result of the initial design we adopted for the showcase and the fact that we do not yet have an established brand that could attract premium pricing.

The major strategies that Retour Aux Origines would adapt in order to get around these issues would be to introduce more fashionable clothing over time based on consumer preference and target market segment, that would appeal to their class and their social needs. If our products are preferred by individuals aged 25 – 35, then our design strategy would be based on satisfying their everyday needs such as office and casual wear; while a market audience below 25, would result in more fashionable clothing designed for schools and parties. However, we intend to keep the designs basically fashionable for now so as to test the market and find out what segments of customers would be more attracted to our fair trade, organic, ethical and recycling strategy.

Based on response we got during the market testing, I am convinced that there is a market for the products we have on offer. The respondents showed enthusiasm regarding the products, and expressed interest in purchasing them. Market reports also depict that consumers are generally positive regarding ethical clothing, therefore we believe our range of ethical fashion would be a success within the market.

Jackson and Shaw (2006) state that entrepreneurs aiming to introduce new fashion products into the market should make sure their products have been tested and accepted amongst their target market prior to product launch. Failure to do so has been depicted as one of the primary reasons why new fashion labels usually fail to lure customers and build brand image. Easey (2008) depicts that one of the major factors influencing successful launch of fashion products, and those of other related products, is the investment in effective research and development, therefore if a product requires market research, then that should be provided with the aim of understanding what the consumers need and providing it. The primary and secondary researches conducted in this business plan have accurately identified the market segment that we aim to target and consumer preference. Based on that we believe we have invested in ample amount of R&D that would aid us in successfully launching our product.
6. GROWING THE BUSINESS
A. HARVEST STRATEGY
The major harvest strategy that Retour Aux Origines is being guided towards is to build the brand up until the point where it could be attractive enough for Private Equity investment within the next five years. A portion of equity (1 – 30%) would be sold to a reputable private equity company that already has experience within Ethical businesses, or the fashion industry as a whole. Through this, we believe we could obtain substantial capital and technical expertise to grow the business further into international markets such as Paris, New York and Tokyo. Improved business performance after the equity investments may further guide us towards an initial public offering one or two years after that.

Timmons et al (2004) states that harvest strategies are important for startup companies as it aids them in planning their growth and investment strategies. Harvest strategies have also been depicted by Kuratko (2008) as options available to entrepreneurs, through which they could truly realise the gains of investing in the business and expand their businesses to further into the business arena. Available strategies as depicted by Timmons et al, are through public offering, organic growth, buyout and private equity investments. Though each of these have their merits and demerits, they depict private equity investments as a method of widening the scope of a business and bringing in new capital and expertise that could drive the business further.
B. GROWTH STRATEGY
The major growth strategy we intend to employ in achieving this harvest strategy would be to invest in our resources and adopt a Product Differentiation strategy, according to Ansoff’s (1984) matrix. Retour Aux Origines intends to enter into the existing market as an ethical fashion brand that introduces innovative style and well thought out design, into ethical clothing.

Ansoff Matrix. Source: Ansoff (1984)

Doyle (1998) argues that the product development strategy is utilized when the market is growing, rapid change is needed, competitors have better products, and a business could be built on existing brands. The new product being built would be our range of ethical designs that are made to be affordable, yet fashionable; while the existing market being targeted is the youth and young adult target market already crowded by high street brands, selling unethical clothes at knock down prices.

The product development growth strategy is being utilized as opposed to the market penetration strategy (Ansoff, 1984), which requires the company to introduce an existing product into an existing market. Doing that would entail producing ethical clothing that have basic designs and are expensive, just like most other fashion brands in the market (Mintel, 2009).

However, we are not adopting this strategy because the market is already crowded. There is a wide array of companies already providing these services, and venturing into it would deter our growth and differentiation potential. We would not be able to differentiate ourselves effectively from competitors if we are adopting the same growth strategy that they are. Lynch (2009) states that the product development strategy is effective for companies that aim to make a difference in an existing market. Though the initial cost of establishment may be substantial due to the nature of the product, the major advantage is the uniqueness of the product.

C. ADVANTAGES AND DISADVANTAGES OF GROWTH AND HARVEST STRATEGY
The growth and harvest strategies that we have selected as appropriate for our business are not totally foolproof. Just as they have advantages, they also have disadvantages. The following are a list of possible benefits and issues that we may encounter as a result of these strategies.

i. ADVANTAGES
1. Growth Strategy
Targeting an existing market with our new products ensures that the competitive rivalry would be low. Our products would be considered as new in an increasingly crowded market, thereby giving us the necessary leverage needed to attract customers and build brand equity.

Being a new product, we would not have to invest as much in advertising our product differentiation, as opposed to a situation whereby we had a number of competitors.

2. Harvest Strategy
According to Timmons et al (2004), a harvest strategy favouring private equity investments and public offering, presents the best opportunity for the entrepreneur to realise substantial returns on invested capital within a shorter period of time.

Private equity investments could result in required technology and managerial expertise transfer to the management within our company. They could help in improving business operations, marketing and financial capabilities, all of which could further boost our brand image and help drive sales

The private equity and public offering planned would lead to capital inflow that could drive international expansion and product extension, through this the company could further boost sales and solidify its position within the ethical fashion market

ii. DISADVANTAGES
1. Growth Strategy
Developing a new product range into an existing market, as a start-up company may be risky. We do not currently have any marketing expertise needed to target this market, whilst our financial capabilities are somewhat limited.

We run the risk of developing these ethical fashion designs and introducing them into the marketplace, only for our desired youth customer segment not to like them.

Companies already operating within the ethical fashion industry have an advantage over Retour Aux Origines since they are widely known for their products amongst ethical conscious customers. Though our strategy intends to introduce a new product, we may still be competing indirectly with these established labels. We therefore run the risk of competitive pressures if they intend to start selling ethical fashion designs that are affordable.

2. Harvest Strategy
Private equity companies may be predatory and try to extract as much equity from the company. Our ability to obtain private equity or venture capital funding is not certain, neither is it certain that we would find companies that have the technical and managerial expertise to take our business forward.

The price we receive for equity sales may not be in line with expectations or sufficient enough to drive further growth within the business.

The economic climate poses a significant threat to initial public offering. If actual business earnings do not meet our forecast, or investors do not believe there are growth prospects within the industry, then there is a high likelihood that they may be unwilling to invest in our business.

7. THE MARKETING STRATEGY
This chapter depicts the strategies through which we intend utilize in marketing our ethical fashion designs to our target market segment. According to Doyle (1998), a market strategy contains a detailed plan aimed at exploiting the current opportunities and competitive advantage present to the company, in attaining set organizational goals. The marketing strategy details actions that are going to be taken, how they would be taken, when it would be done, and who would be responsible for each plan (Hooley et al, 2004).

A. MARKET SEGMENTATION
Retour Aux Origines would adopt complex segmentation techniques in order to identify the target customers more precisely. Kotler et al (2008, p335) defines a market segment as consisting of “a group of customers who share a similar set of needs and wants”. Therefore for our fashion brand to target its customers more precisely we would employ geographic, demographic, behavioural and psychographic segmentation measures, such as customer response, use of clothes or brands for particular occasions.

Furthermore we would determine the different characteristics attributable to each customer segment. For example, what segment of customers want ethical clothing that have good quality and style, as opposed to those who just want a cheap and affordable clothing. These customers could differ with respect to their geography, demography, psychology or probably just their individual behaviour.
i. Geographic Segmentation
Kotler et al (2008) defines geographic segmentation as the practise of dividing the market into different geographic segments, such as countries, regions, cities or quite simply neighbourhoods. According to Mintel (2009) the cities with the most concentration of ethical conscious customers are London and the Anglia Midlands.

Therefore our initial geographic segmentation would be focused in these regions. We intend to start by opening stores in London, then progressing steadily to other cities and regions in the South East and Midlands.

ii. Demographic Segmentation
This segmentation is defined by dividing markets into groups, based on differences within the population, with respect to race, religion, education, social class, or income (Kotler et al, 2008). Based on research reports by Mintel (2008), women buy more eco-fashion items than men, especially women in the ABC1 social class, aged from 25 – 34, and 45 – 54. The customers with the highest potential would be those who are married, without children and have achieved higher educational qualifications.

Mintel also confirms that the level of education amongst prospective customers is an effective method of understanding the market, as those that are more educated are more likely to understand ethical issues. They are also more likely to understand the potential link between low prices on goods, and unethical business practices in foreign countries.

iii. Psychographic Segmentation
Kotler et al (2008) defines psychographics as a science of using customer psychology and demographics as a tool in understanding consumer markets better. Psychographics differentiates customers based on their personal traits, lifestyle, and value.

A highly influential reason behind targeting the ABC1 women is due to their higher concern for ethical issues and their educational attainment. Women that belong to this demographic are described as thinkers, matured, satisfied and reflective. They are motivated by ideas and value order, knowledge and responsibility; seek durability, functionality and value in products they purchase (Cooperative, 2009).

iv. Behavioural Segmentation
This segmentation entails dividing customers based on their knowledge and attitude towards particular products (Kotler et al, 2008). Doyle (1998) also states that the potential for consumers to adapt to a product and use it continuously is based on effective behaviour segmentation. The behaviour of customers regarding particular products have to be ascertained by monitoring their usage and perception regarding the product, then adapting the company’s brand and product development to specifically suite those needs and perception.

With respect to behavioural segmentation, Retour Aux Origines would be seeking to understand the current behaviour of customers regarding ethical fashion products. Once these are understood, a loyalty scheme would be put in place, which ensures that customers spend more in the future, and recommend us other people.

v. Segmentation Summary
Therefore based on these segmentation methods, we would be adopting the following segmentation strategy:
• Target individuals primarily within London and the Midlands.
• Mainly ABC1 social class of individuals primarily aged 25 – 34.
• Educated individuals that understand the relevance of ethical industries, and actively promote sustenance and value in their everyday lives.
• Have the behaviour reminiscent of an ethical customer.

B. POSITIONING STRATEGY
Retour Aux Origines would adopt a customer driven positioning strategy. According to Hooley et al (2004), companies seeking to succeed in today’s competitive environment need to be customer oriented. Therefore we aim to win customers from competitors, then keep them and watch them grow with the organization by delivering better value.

Positioning, according to Kotler et al (2008), entails arranging a company’s product or service so that it occupies “a clear, distinctive and desirable place relative to competing products in the minds of target consumers.” Retour Aux Origines therefore aims to target the previously mentioned customer segments and position itself with an appropriate strategy that caters specifically for those needs.

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Our positioning strategy would be based on Porter’s (1980) generic strategy and would adopt a differentiation strategy, in which our products would be targeted at the broad market, but would be sold with a level of differentiation and product quality. Our differentiation would be based on selling environmentally friendly, yet stylish clothing at an affordable price.

C. MARKETING MIX
The marketing mix, as defined by Doyle (1998), are tools that are applied in an organization’s marketing strategy, in order to inspire response from a specified target market. The four Ps have been formulated as effective methods of targeting the desired market segment and strengthening our positioning strategy. The marketing mix however extends beyond the 4 Ps, and includes service and selling environments, both of which customers would be exposed to when patronising Retour Aux Origines.

i. Place
The first Retour Aux Origines store would be opened in Gloucester Road, West London. This area has been chosen due to its high accessibility and the availability of all forms of transport. Locating the store in the inner city also befits the retailer’s image, which an out of town hypermarket may have damaged. This location has been thought out as a likely location to bring the company wide brand recognition and establish prestige as a competitive brand.

ii. Product
The products being sold would be an extensive line of ethical fashionable clothing, that have been differentiated from high street clothes based on its ethical nature, and also differentiated from basic ethical labels, based on its affordability and fashion designs. These clothes would be regarded as fashionable, stylish and of high quality, and would be made up of raw materials derived through fair trade, organic and ethical means.

iii. Promotion
The initial promotion channel for Retour Aux Origines would be based on advertisement inside and outside individual stores. Window displays would be utilized in aggressively advertising the company’s products. As Retour Aux Origines is a new startup, the financial costs associated with mass advertisement would be high, compared to brand equity and predicted revenue, therefore adopting such costs at an early stage would be unsustainable (Kuratko, 2008).

The brand would also achieve promotion through the use of an iconic clothing line and the firm would increasingly make use of online advertisement to promote its line and store location, as sales increase. Subsequently a website would be set up that displays all the products the store currently has on sale, with the option of picking them in store or buying them online.

iv. Price
Mintel (2008) depicts that pricing within the fashion industry is usually a key factor that differentiates customer segments. Retour Aux Origines therefore aims to set comparatively middle age prices, not too low that it does not cover the cost of raw materials, and not too high that customers may categorize it as a premium brand.

This pricing however does not illustrate substandard products, however they illustrate our willingness to sell ethical fashion to the mass market at a price they can afford it for.

v. Selling Environment
The environment within which sales is made has been proclaimed by McGoldrick (2002) as an essential addition to the 4 Ps of marketing. He further states that the environment is important, as it is one of the major factors that impact on the consumer’s perception about the business. The sorts of music playing and decorations within the environment all have an effect on consumer behaviour (Hooley et al, 2004).

Retour Aux Origines would aim to appease consumer behaviour by adopting a stylish image, which creates a simple, yet sophisticated environment and atmosphere for the customer to browse the store’s products. The use of colours and pleasant music would be employed and tailored specifically to suite the environment.

vi. Service
In addition to the selling environment previously discussed, McGoldrick (2002) also highlights service as an important factor in any customer interacting sales environment. Customers that are generally happy about the level of service received would be happy to return to the stores, and patronise at other periods. Store employees would be attentive and adequately trained in customer service techniques. Customers would be offered appropriate help, and sales assistants would never be pushy or over eager.
8. FINANCIAL ANALYSIS

The objective in this part is to analyse whether the project “Retour Aux Origines” is realistic in the real world, in other words to find out whether the business can be profitable.

A. COST/PROFIT ANALYSIS
There are three types of costs for the shop:
– Fixed costs, such as rents, telephone, advertising, etc.
– Variable costs, which are defined as raw materials for the products
– Investment costs, costs to acquire a sewing machine, ironing press, computers. Etc.

The cash flow projection (2011) on the next page shows a detail of all costs incurred in the business. As can be seen the fixed costs are £5,443 per month and include 13 different sources of costs, among which wages are the most important. There are six sources of investment costs for a one-off cost of £9,630. Note that these are just a variant from fixed costs. Finally, the variable costs are raw materials and account for 40% of sales.

It follows from the above that the cost per unit will depend on the number of products sold. Indeed, whilst the variable costs will be the same per unit sold (in this case 40% of the sale price of a product), the fixed and investment costs will per unit dependent on the number of products sold: the higher the turnover, the lower their cost per product.

B. TURNOVER EXPECTATIONS
The cash flow projection (2011) on the next page shows a detail of the expected turnover in the business for the first year. Per month for the first six months, the expected turnover is £15,000 per month. That comprises the sale of 250 articles/items at an average sale price of £60 per item. After six months, it is expected that sales will rise by 10% (from July) to reach £16,500 per month. This gives an annual turnover of 189000 for the first year (6×15000+6×16500). The increased turnover in the second half of the year is the result of the increased brand awareness, itself the result of advertising and marketing action, and that means it is the number of products sold that rises (to 275) rather than the average price per item, which remains stable at £60.

For the year as a whole, turnover is expected to reach £189000 and that is 3150 items (6×250+6×275) at £60 per item.

In practice, with one collection per year, the 3150 items sold will come from 50 different styles and six sizes per style (from 8’ to 16’). On average, that means each different item will be sold 10.5x per size.

The shop is expected to be open six days a week. If we then assume the shop will be open on average 25 days per month (4.3x week per month x6 rounded up to the lower full number), that means the shop will sell 10 items per day (250/25) in the first six months, rising to 11 items (275/25) in the second semester.

Per month, the number of items sold will be 250 in the first six months, rising to 275 in the second semester. Per quarter, these figures are multiplied by 3 to give 750 and 825 respectively.

There is no seasonality expected on average per se, with one collection produced per year. The increase in sales at the start of the second semester is thought to reflect an increased presence and brand awareness of the shop, although theoretically, it could be combined with clients’ increased inclination to buy products, which in turn might be driven by seasonal factors.

The assumptions behind the sales figures are the results of secondary research based on competitors’ sales figures.

C. FINANCIAL SNAPSHOPS
For this section of the financial analysis, we will draw heavily from the cash flow projections that follow, for the years 2011-2015 (please see appendix, pages x to xx).

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D. TOTAL TURNOVER
In year one (2011) as calculated above, the turnover is expect to reach £189000. In 2012, with 16500 per month in the first six months and then a 10% increase (to £18,150), the turnover will reach £207,900.
Following the same patter in the ensuing years, turnover will be in the following years:
– Year 3 (2013): £228,690
– Year 4 (2014): £251,559
– Year 5 (2015): £276,715

E. TOTAL OUTGOINGS
In year one (2011) as a result of the investments, other fixed and variable costs, the above cash flow projections highlights total outgoings of £150540, comprising £9630 of investments, £65310 of other fixed and £75600 of variable costs (0.4xturnover). In 2012, the outgoings will actually decrease to £148470. This is the result of no more investments (9630 of costs gone), the same other fixed costs (65310) and an increase in variable costs as a result of the increase in sales to 83160. However, as the increase in variable costs in 2012 (83160-75600=7560) is less than the investments that disappear in the year when compared to the first year, the total outgoings decrease by £2070 (9630-7560) in the second year, from 150540 in 2011 to 148470.

Following the same pattern as in year 2 (2012) in the ensuing years (increase in variable costs, zero investments, 65310 of fixed costs), total outgoings will be in the following years:
– Year 3 (2013): £156,786
– Year 4 (2014): £165,934
– Year 5 (2015): £175,996.

F. BREAK-EVEN
In 2011, the first year of operation, with costs of £9630 for investments and 11443 in other fixed costs per month, knowing that the gross profit margin is 60% (with 40% of variable costs that are raw materials), the break even point can be calculated as “fixed costs”/”gross margin” (note that the gross margin is also defined as the contribution per pound).

Given total fixed costs for the year of 74940 and a gross margin of 60%, the break-even point is £124,900 of sales (£74,940/0.6).

That is reached in the ninth month of operation, which is September, given that the total sales achieved by the end of August are £123,000 and that September adds another £16500. In units, with each item sold at a price of £60, the break even in unit is 124900/60=2082 (remember that 250 items per month are sold in the first six months, increasing to 275 thereafter).
9. MANAGING THE START UP TEAM, HUMAN AND OTHER RESOURCES
A. MANAGEMENT PHILOSOPHY
Porter (2008) defines management philosophy as those ideologies that guide the everyday action of a business, with respect to its operations, strategy, marketing capabilities and sales function. Adopting a management philosophy in functions of business ensures that all parties understand the direction of the business and that the business aims to achieve clear and accountable objectives (Lynch, 2009).

i. Business Operation
“Ethical first, Quality next, then service”: Retour Aux Origines aims to adopt an ethical first philosophy in guiding its operations. Whatever is being procured or sold must first be declared ethical, assessed for quality, and delivered to customers using good customer service. Kirkeby (2000) supports a management philosophy on business operations as it protects the value of the organisation throughout its existence and could be passed through to lower hierarchies.

ii. Managing People and Customer Services
Happy employees, Happy customers: Retour Aux Origines believes that for us to attract the required customer segment, we must ensure that they are content with our service delivery standards. Therefore we aim to train our employees and provide them adequate motivation that would ensure they are happy enough to treat our customers the same way they have been treated. Van Dolen et al (2001) argues that employee motivation is a substantial indicator of the level of the service quality that customers expect to get within an organisation, therefore making sure that each employee is happy, could go a long way in promoting good service.

iii. Management and Leadership styles
Things get done faster and better, when there are fewer ladders to climb: Retour Aux Origines intends to adopt a flat organisational structure, in which there are fewer people to report to and lower level employees can get work done faster, without having to wait for permission or direction from senior employees. According to Lynch (2009), a flat organisational structure is a more effective method of promoting communication and motivation within an organisation. Companies that promote these two principles usually gain substantial customer loyalty developed through service delivered by employees.

We also intend to adopt a transformational leadership style, in which we would inspire all employees to be the best they can be, through motivation and inspiration, both within the stores and outside. We intend to train them on effective sales methods, and motivate them into coming up with relevant designs and ideas, which they believe would be essential for our target market audience. Transformational leadership according to Bass and Riggio (2006) is a more effective form of leadership than transactional as it inspires all employees to act in accordance with the overall vision of the establishment.

iv. Quality and Creativity
Never downgrade on high quality. Ethical first, then quality and creativity: Retour Aux Origines intends to adopt the same ethical stance it is adopting in business operations, with regards to the quality of products we sell. Our products would be sourced with high quality and ethical standards that even surpass those of currently operating ethical stores. Though this may result in higher priced raw materials, we intend to manage that by establishing supplier relationships and negotiating with multiple suppliers in obtaining products cheaper.

v. External Stakeholders
Leverage our reputation in gaining stakeholder acceptance: We intend to build our core reputation as a brand that is ethical and sells fashionable clothing. We intend to leverage that in gaining stakeholder acceptance. The general public should have a positive outlook regarding our brand, so should our customers and investors.

B. FINANCIAL COSTS OF PHILOSOPHY
The main financial costs related to these philosophies are:
• Extra costs associated with placing an emphasis on ethical and quality raw materials and business operations.

• Costs of training, motivating and providing incentives for staff so they could in turn provide quality customer service to employees.

• Cost related to adopting transformation leadership styles, in which most managers and supervisors would be trained on effective methods of motivating and inspiring staff.

• Cost related to communicating our brand image and ethical position to external stakeholders.

Costs represented in Cash Flow

C. MANAGEMENT PHILOSOPHY AND PERSONAL STRENGTH
• Adopting an ethical and quality focused stance matches my personal strength, as it is a viable cause that I believe in, and would be ready to support along the way, due to my upbringing and personal ideology.

• Working at Zara, I understood the relative importance of being a happy employee before you can deliver quality customer service. I would need to train myself to be a better manager that can make employees happy and motivate them appropriately to deliver quality service.

• I have always been an advocate of flat hierarchical structures; therefore I believe that being closer to lower level employees would go a long way in improving communication processes within the company. I am very friendly and can utilize a range of communication channels; therefore I have the strength to drive that philosophy.

• I have not yet established contact with international suppliers; neither do I have a full understanding of all relevant procedures to go through to have this done.

• I am a social individual, so I should not have issues with communicating the brand’s image and intentions to external stakeholders.

The disparities mentioned illustrate that I would need to be trained in motivational and managerial skills. This cost has already been included in the training costs for managers previously discussed. I may also incur extra costs associated with establishing contact with industry players and international suppliers who could grow my business.

Cost of training and development included in cash flow forecast

acx

The costs associated with each entrepreneurial plan have been included in the financial forecast, while the timeframe for each activity is included as part of the Gantt chart designed. Most of my strengths and weaknesses with relation to these activities have been highlighted in the previous chapter.

I may have difficulties in establishing contact with international suppliers and obtaining raw materials at an affordable price from domestic and foreign markets. I may not be able to get an affordable retail location in Gloucester Road, while gaining audience at a fashion show, or getting a fashion magazine to review my designs may be a challenge.

However, I have the ability to develop and design these fashionable clothing lines. I can incorporate designs from several other fashion designers and utilize these in establishing my fashion range. I can easily set up an online website and a social media pages on Twitter and Facebook, while releasing these products online and in retail stores should not be a problem once I already have enough brand awareness and a strategic retail location.

Alison Morrison (2000) in her article on the motivational forces that drive entrepreneurship, define culture and society constructs as the two major drivers for startup businesses. My background has motivated me to aspire towards providing ethical clothing, while the society within which I am residing has presented the best opportunity for me to exercise that dream. Kuratko (2008) identifies the most effective process for entrepreneurship development as creative idea, market opportunity, resourcefulness and encouraging environment. This business plan for our proposed startup incorporates a creative idea, a market opportunity and an encouraging environment for our product. However we are somewhat limited on resources, which could impede our growth and brand image.

11. CONTINGENCY PLANS
The following are contingency plans that I intend to put into action, in the advent that my aforementioned action plans do not come into plan.

actionafshion

Most of these contingency costs are not included in the cash flow forecast due to the nature of their costs. In most cases we may have to reduce prices, number of employees or set up our business in a different retail destination. Some other cases entail increased advertisement and higher set up costs, all of these cannot be correctly ascertained now until the nature of the business has been determined, and initial costs have been expended.

In the advent that these threats arise, I believe I have the relevant social skills and resourcefulness required to find local suppliers who would be willing to sell their products cheaper and also employ the use of a real estate agent in finding an appropriate retail destination that match our brand promise. I have some technical skills that I could use in setting up fan pages on social websites, and a basic website that details our mission and showcases some of our designs.

12. CONCLUSION
Retour Aux Origines is a promising brand. It has the required set of initial resources: an enthusiastic entrepreneur and a fantastic opportunity. With the right level of managerial, staff and financial support, the brand could grow from just an idea to a multinational entity. The plan to is collate a number of fair trade, ethical, recycled and / or organic clothing from various designers (both in house and external), ensure they are fashionable enough to appeal to our target market segment, then positioning ourselves appropriately to ensure we develop the right set of branding and reputation required to be profitable in the highly competitive fashion apparel market.

Primary research conducted on individuals aged within our target market depicts that our products are sought after, but need to be marketed aggressively in order to gain considerable reputation. Secondary research conducted from several sources also depicts that the market is currently growing, albeit with huge competition. However, there is a favourable reputation about ethical clothing in the market and that could act as an advantage for our venture. The government actively supports entrepreneurship, however we may have sever issues convincing the populace due to the economic climate. In a showcase of our items, prospective consumers stated that they would be happy to patronize our brand, a big testament to our entrepreneurship foray.

The plan is to start small, with our flagship store on Gloucester Road, an initial start up cost of £20,000 and a number of staff and limited range of designs. As we begin selling, we intend to expand our reach by opening more stores, employing more stores, and investing more capital. Our growth strategy is to differentiate ourselves, while our exit strategy is to enlist the financial and managerial aid of venture capitalists, or better yet go public. We have identified several strengths and weaknesses for this approach, but we do know we have made the best choice based on our internal resources and external environment. We believe Retour Aux Origines is a brand to look out for. A brand that could change the fashion industry.

13. REFERENCES
Ansoff, H. I. (1984) Implanting Strategic Management, Prentice-Hall: NJ, 455pp

Arksey, H., and Knight, P. (1999) Interviewing for social scientists: An introductory resource with examples, London: Sage, 341pp

Bass, B. M., and Riggio, R. E. (2006) Transformation leadership, Routledge, 282pp

Bryman, A. and Bell, E. (2007) Business Research Methods, 2nd Ed, Oxford University Press: Oxford, 786pp

Chan, K. W. and Mauborgne, R. (2004) Blue Ocean Strategy Harvard Business Review, Vol. 82 (10), p76-84

Collis, D. and Montgomery, C. A. (2008) Competing on Resources, Harvard Business Review, Jul-Aug p140-150

Cooperative (2009) Ten years of Ethical Consumerism: 1999-2008, www.goodwithmoney.co.uk, [accessed: 08/03/10]

Doyle, P. (1998) Marketing Management and Strategy, Prentice Hall: NJ, 4334pp

Easey, M. (2008) Fashion marketing, John Wiley and Sons, 280pp

Ethical Fashion Forum (2010) Changing Perceptions: Market Impact, www.ethicalfashionforum.com, [accessed: 08/03/10]

Harvard Business Review, Sep 2009 – substitute for main text

Hooley, G. J., Saunders, J. A. and Piercy, N. (2004) Marketing Strategy and Competitive Positioning, 3rd Ed, Pearson Education: London, 622pp

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Kirkeby, O. F. (2000) Management philosophy: a radical-normative perspective, Springer, 274pp

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Kuratko, D. F. (2008) Entrepreneurship: Theory, Process and Practice, Cengage Learning, 544pp

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Morrison, A. (2000) Entrepreneurship: what triggers it? International Journal of Entrepreneurial Behaviour & Research, Vol. 6 (2), pp59-71

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Porter, M.E. (1980) “Competitive Strategy”, The Free Press, New York

Porter, M. E. (2008) The Five Competitive Forces That Shape Strategy. Harvard Business Review, Jan, Vol. 86 (1), p78-93

Saunders, M., Lewis, P. and Thornhill, A. (2007) Research methods for business students, Pearson Education: NJ, 624pp

Timmons, J. A., Spinelli, S., and Zacharakis, A. (2004) How to raise capital: techniques and strategies for financing and valuing your small business, McGraw-Hill Professional, 245pp

Wu, L. S. and Gelinas , A. D. (1992) Product testing with consumers for research guidance, ASTM International, 95pp

14. APPENDIX
LITERATURE BIBLIOGRAPHY
Porter, M. (2008) The Five Forces That Shape Strategy, Harvard Business Review, Vol. 86 (1), pp78 – 93

This paper is a revision of the previously written seminal work of Porter (1980) in which he identifies five industry forces that affect the profitability and nature of industries. These forces are competitive rivalry, bargaining power of buyers; bargaining power of suppliers, barriers to new entry and substitute products. The paper postulates that firms operating within any industry should understand how these factors affect their profitability and growth potential and use this as a method of sustaining competitive advantage.

For instance, organizations competing in industries with high competitive rivalry or high buyer power should differentiate themselves from competitors, thereby giving them higher leverage and making their products valuable. Those with high supplier power should develop necessary negotiation skills and economies of scale, which could be used to renegotiate supplier terms, while those with low barriers to entry or high threat of substitute products could also differentiate themselves based on branding, reputation or product development. That way they would be able to ride the tides of industry competitiveness, and emerge more profitable than competitors.

This paper is of huge importance to Retour Aux Origines, as understanding our environment would enable us differentiate our products effectively against competition, new entrants, substitutes and to buyers, that way building our reputation and seeking to expand through effective differentiation strategies.

Collis, D. and Montgomery, C. A. (2008) Competing on Resources, Harvard Business Review, Jul-Aug p140-150

David Collis and Cynthia Montgomery in this influential paper, expand further on Porter’s industrial forces from another perspective. Rather than focusing on the external effects of the industry as depicted by Porter, they focus on the internal factors, mainly on how an organization can build its resources and core competences in a way that differentiates it from competitors and also ensures that can drive sustainable competitive advantage within its industry. They define an organization’s core internal factors as its resources in terms of finances, employees and assets; capabilities with regards to its technical know how, supplier or buyer relationship amongst others; then core competences that are indigenous to the firm alone and differentiate it from competitors.

For these resources and core competences to quality as the basis of a sustainable competitive advantage, they asset that it must be durable, owned by the company not its employees, not easily substituted or imitated, and finally it must have competitive superiority to similar products by competitors. These could be achieve by continuously investing in resources, upgrading existing resources or better yet leveraging existing resources from previous functions and utilizing them into a function that could help boost competitive advantage. Common problems associated with carrying out these functions has been identified as lack of necessary funds or capacity to invest in or upgrade resources, and in terms of leveraging resources, they state that firms usually overestimate their ability to compete in new markets, lack transferable skills or leverage common generic resources that do not add value.

The relevant lessons learnt from this paper has guided us towards building the right kind of resources and targeting them at a market segment, that we know would be most beneficial to build our industry. Our products are designed by a select number of designers; however, they are easily substituted and imitated. Understanding the effect of these, we would strive to build core competences such as a brand and reputation, and then generate sales, financial capability and supplier relationships to be able to further sustain competitive advantage. I would be hard for a small start up like Retour Aux Origines, but we intend to make it.
Morrison, A. (2000) Entrepreneurship: what triggers it? International Journal of Entrepreneurial Behaviour & Research, Vol. 6 (2), pp59-71

Alison Morrison in this journal aims to research and illustrate the main factors that trigger entrepreneurship within societies and individuals. The main hypothesis is that there must be some universal factors amongst entrepreneurs worldwide, whether in terms of individual traits or external environments that actively pushes individuals to starting their own enterprise and venturing out on their own.

The paper discusses the cultural and societal factors that have a major influence on entrepreneurship, such as uncertainty avoidance, masculinity, power distance, individualism and long term orientation. The findings illustrate that in certain cultures more than others, individuals are more motivated to venture into entrepreneurship due to their predominant culture and environmental factors surrounding them. There is a high correlation between a supporting culture and individual decisions to start up businesses.

This paper is really important with respect to our venture into the ethical fashion industry. Alexis’s upbringing in Ivory Coast is a major factor influencing his decision to start up a business. He has been able to identify a business opportunity and capitalize on that primarily because of past experience with his mother, and also because he comes from a culture and currently resides in an environment that actively promote entrepreneurship.

Chan, K. W. and Mauborgne, R. (2004) Blue Ocean Strategy Harvard Business Review, Vol. 82 (10), p76-84

This seminal paper on organizational strategy focuses on an organization’s ability to diversify into unchartered territory. The Blue Ocean Strategy depicts a strategy in which no other competitor has been able to identify or capitalize on. Therefore an organization’s foray into a blue ocean would result in higher competitive advantage, it would have little or no competition, and would be a leader and sole player within its industry for a long time.

This paper identifies companies like Google, Microsoft and even Apple that have ventured into customer segments, product segments, or positioning strategies that are very unique from that of competitors, and through that they have been able to identify opportunities that have driven organizational growth. Kim Chan and Renee Mauborgne state that organizations venturing into crowded industries would have to compete based on price, or invest substantially to differentiate their products, whereas those within new customer segments, are king of their territory and can conveniently expand and gain customer share, without worrying about competition.

The article was chosen because of its relevance to the business plan depicted. Our plan is to establish an ethical fashion chain. However, that market was already crowded, therefore we had to seek a blue ocean territory which has not yet been recognised by competition, which led us to choose lower priced ethical but fashion clothing for youths and young adults. This segmentation is new and an unchartered territory, and we hope that through this, we would be able to build our brand and profitability with little competition.

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