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Growth of the Beavers Company - Essay Example

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"Contributing Factors for Growth of the Beavers Company" paper argues that the external environment differed in 2008 in that there was not enough space for the business to operate in; in the year 2008 when the TXT rentals were launched, the Company was located in a 400 square foot room…
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Growth of the Beavers Company
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Management: Case Study By Management Case Study The external environment differed in 2008 in that there was no enough space for the business to operate in; in the year 2008 when the TXT Rental’s was launched, the Company was located in a 400 square foot room, the room was not sufficient for the operations of the Company. The lack of enough space for the business to operate on affected the Company negatively because the Company wasn’t able to effectively carry out its functions. The following are the three contributing factors that enabled Alex Beaver to spot this opportunity. Firstly, the book store of the campus where Beaver was studying was mismanaging the book store and was overcharging the students expensively for the books. Secondly, Beaver was inspired by the success of the Chegg book rental Company where he worked in course of his studies. Thirdly, the fact that there was no book Rental Company operating near the Campus where Beaver studied made Beaver to spot the opportunity of starting a books rental Company. Although there is looming changes and challenges in book rental industry, continued growth in the Beaver’s Company is still achievable. The following are the three main ways in which Beaver’s TXT Book Rental’s can maintain exponential growth rate despite the imminent changes and challenges in the business. Firstly, the Company can maintain its exponential growth rate by giving high quality services to their customers; to maintain its high growth rate, the Company should give better services to their customers than their rivals. Through the excellent services, therefore, the Company would be able to maintain high level of sales, thus maintaining its exponential rates. Secondly, the Company can maintain its high rate of growth by being innovate and coming up with new ways of increasing their sales; for instance, the Company can come up with new innovate marketing strategies meant to reach more customers, thus increasing sales. Thirdly, TXT Book Rental’s can maintain its exponential rate of growth by diversifying. Although TXT Book Rental’s was founded with the exclusive aim of renting books, there is nothing wrong with the Company diversifying and coming up with different services or products so as to boost its profits, thus maintaining its exponential growth rate. Going forward, the following should be TXT Book Rental’s strategy. To begin with, given the fact that the whole book industry is undergoing a rapid digital revolution, the TXT Book Rental’s Company should not be left behind, but they should also join the digital revolution of the industry. What this means is that the Company should start offering digital services; to cope with the challenges occasioned by the digital revolution of the book rental industry, the TXT Book Rental’s should start offering digital book rental services. Through this digital service, the Company would be able to compensate for the decline in hard copy book rental services. Secondly, given the many competitors in the industry, the Company should open many Franchises. Through opening many branches, the TXT Book Rentals would be able to effectively compete with their rivals in the book rental market, thus maintaining their status as dominant book rental Company. Thirdly, given the uncertain nature of the future of book rental business in the future, the TXT Book Rental’s should consider diversifying as a way of increasing their profits and minimizing their loses. Through diversification, the Company would be able to minimize any loss that would come in the future in case the book rental industry collapse. Through these three steps, therefore, the TXT Book Rental’s Company would be able to remain a strong Company in the future. Going forward, the following are the major risks that the TXT Book Rental,s faces. Firstly, the Company faces the challenge of being edged out, by their competitors, from the dominant position in the book rental industry. This is especially the case given the fact that the competitors of TXT Book Rentals have already started offering digital book rental services and yet the TXT Book Rental’s has not yet taken a decisive action to counter this challenge. For this reason, therefore, the TXT Company faces the challenge of being edged out from the dominant position in text book rental industry by their competitors. The second risk that the Company faces is becoming obsolete. This is because, with the digital revolution that is increasingly taking the whole of text book industry, the “hard copy” services offered by the TXT Book Rentals are likely to become obsolete in the future. The third major risk faced by the TXT Book Rental’s Company is sharp decline in profits. This is because with the stiff competition in the book rental services coupled with the inevitable digital revolution in the book industry, the TXT Book Rentals is likely to experience sharp decline in profits in the future, unless it takes drastic measures to avert the challenges that faces it. Synopsis of how the Company is doing based on the financial data given in the case. According to the financial data provided, the TXT Book Rentals Company is growing at a very high rate. This fact is clearly evidenced by the steady rise in sales since the Company was started in 2008; also, the fact that the Company has had to constantly look for a loan because of the exponential rate of growth of the Company shows that the Company is doing very well. Let us look at the facts from the financial data provided to show that the Company is doing very well financially. In the year 2009, barely a year after the Company was launched, the sales of the Company tripled. The high rate of increase in sales can be attributed to the fact that the services of TXT Book Rental’s were in high demand for the students. Following this unprecedented increase in sales, Beaver had to borrow a loan of $ 700 from his family. In the first part of the year 2010, the sales of the Company increased by 80% and in the second part of 2010 the sales of the Company increased by 130%, making the Company to need more cash for expansion. To meet the financial need occasion by the high rate of growth, the Company acquired a line of credit from a local bank worth $ 100,000. In the following year, 2011, the line of credit for the TXT Book Rental’s was increased to $ 250, 000 because the Company was in high need of cash for expansion. These fact shows that the TXT Book Rental’s Company is doing very well; the Company is growing at an exponential rate. Yes, I would open this type of Business in Valparaiso. I would locate the business near higher institutions of learning, especially near Valparaiso University. I would market this business through different methods; one of the methods that I would use to market this business would be social media. Through social media, I would be able to reach many students, who are mainly my potential customers. Also, I would be going to institutions of higher learning in Valparaiso to talk with the students about the business. I would also market the business through the use of posters and billboards. In this business, I would offer affordable and high quality services that would set me apart from my rivals. My business operation model would be as follows. At the management level, there would be three managers. I would be the CEO of the business and I would employ the operations manager and the marketing manager. The three of us would work together in managing the operations of the business. Besides the three managers, I would also employ some workers who would be dealing with the selling of the company’s services and marketing of the Company’s services. To set myself apart from my competitors, I would adopt flat organizational structure, whereby the employees of my Company would be able to freely interact with the management of the Company without any bureaucracy. This would make the employees to feel motivated and respected, thus working harder and better for the Company. Read More
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