XGBBMM5312

Business Development

ASSESSMENT

Student name: Ion-Florin Apetroaie

Student ID: 2019477
 Table of Contents

Executive Summary ..................................................................................................................3

Tucano Coffee Background.......................................................................................................4
Internationalization ...................................................................................................................4
Market Entry Strategy................................................................................................................5
France Coffee Market................................................................................................................6
United Kingdom Coffee Market................................................................................................7
SWOT Analyses.........................................................................................................................8
Porter’s five forces analyses.......................................................................................................9
PestleAnalyses .........................................................................................................................10
Conclusion................................................................................................................................12
References................................................................................................................................13
Executive Summary
 Background of company

Company Name: Krew Cuts Limited

Company number: 08449669
Company type: Private limited company
Nature of business (SIC): 96020 - Hairdressing and other beauty treatment
Registered office address: Potterdyke House,31-33 Lombard Street, Newark,
Nottinghamshire, United Kingdom, NG24 1XG

Krew Cuts is a children’s salon and gent’s barber shop, was founded in 2013 and is based in
Newark-on-Trent. The children’s hair salon offers a whole haircut experience for children,
benefitting from a range of novelty chairs, game consoles, and TVs, keeping children
entertained, and helping some other children to overcome their fear of having a haircut. For
gents they offer stylish haircuts as well as Traditional Hot Towel Wet Shaves, using high-
quality Bluebeard’s Revenge products.
A wide range of products can be purchased from Krew Cuts salon, such as Muk products,
Tangle Teezer, Magic Flowerpot, the traceless hair ring from Invisibobble, and Nitty Gritty
products.
The salon benefits from free parking, and disabled access and also offers a variety of
discounts to their clients and competitive prices.

Table 1: Price List

Boys (Up to 15 Gents
Years) Girls (Up to 15 Years)
1st Hair cut £15 £15 -
Haircut & Finish £15 £15 £15
Restyle - £30 -
Source: Krew Cuts Salon, compiled by the author
 Market analyses

In the United Kingdom the hairdressers and beauty salons industry are growing strong. By
2020, alongside with the number of enterprises for hairdressing and the treatments used
reached a high record for the last 13 years. More than 10,000 beauty salons were opened from
2015 to 2016 and by 2020 the total number reached 44,500 (Statista 2022).

Numbers of bussineses in the hair and beauty industry in the United

Kigdom
50000
45000 43292 43437 44466
40877 42097
40000
35000
30729
30000 28981 29418
27474 27588
25339 25083 25025
25000
20000
15000
10000
5000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Statista, compiled by the author

Over 90% of the companies operating in the hair and beauty industry are small and mainly
populated with self-employed people, around 63%.
The industry has also recorded the highest figures in regards of the annual turnover delivered
by this business over the last two years. Consumer demand for these services offered by the
hairdressing industry saw a similar trend of a steady increase observed within the fourth
quarter of 2018. As the cost of basic beauty treatment for females compared with male
consumers was higher in 2017 (Statista 2022).
The industry mainly offers personal care and haircare services, but due to the progress of the
industry through the years, the services provided by the salons are a lot more diversified,
therefore on the market we can now find specialized haircare shops, such as hairdressing
salons, barber shops, and beauty salons as they can reach the various type of services and
customers needs.
 Customers and Competitors of Krew Cuts Salon

The population in Newark and Sherwood has increased over the last 10 years from 114,800 in
2011 to 122,900 in 2021, with an increase of 26.7% of people over 65 years, 2.9% increase in
people aged between 15 and 64 years and 1.3% for children under 15 years (Office for
National Statistics, 2022).
Krew Cuts salon clients are mainly Newark residents, the children’s hair salon offers its
services to boys and girls up to 15 years old, and by adjoining the children’s salon, gents will
be able to benefit from the haircut services offered by the modern barber’s shop.
As for the competitors, the industry is very competitive in the United Kingdom, as well as in
Newark where the competitors for Krew Cuts are all the hairdresser’s salons and all the
barber’s shops, but due to the services offered by Krew Cuts Salon in the present, the main
competitors are the barber’s shops especially the ones that offer haircut services for children
and they are as follows: Featherstone Barber, Best Cut Gents Barber, and Chappells
Gentlemens Barbershop.

Table 2: Competitors for Krew Cuts Salon

Name Description Competitors type

Featherstone Barber Offers services such as, The main competitor due
gents’ haircut and beard trim, to being placed in close
child haircut, senior citizen, proximity and offering
buzzcut, back and sides only, similar services and more
and beard trim
Best Cut Gents Barber Offers haircut and beard cut The secondary competitor
services for gents and offers haircut services
children (over 5 years old) more for gents than
children and is also placed
in close proximity
Chappells Gentlemens Offers haircut and beard trim Also, the main competitor
Barbershop services for gents and has similar services to
haircuts for children under 16 Krew Cuts but is not
years placed in close proximity
 Source: Adopted by the author based on the recent literature

Table 3: Competitors vs Krew Cuts Salon

Featherstone Barber vs Best Cut Gents Barber vs Chappells Gentlemens
Krew Cuts Salon Krew Cuts Salon Barbershop vs Krew Cuts
Salon
More services for gents Lower prices than Krew Similar prices and services
and also higher prices than Cuts for both
Krew Cuts Salon Doesn’t offer haircut Discounted prices offered
The children price services services for children under for families in both salons
are lower 5 years Senior citizen’s discounts
Specialized staff in Some clients have been offered by Chappells
working with children for complaining about their Gentlemens Barbershop
both salons services Extended working hours
Extended working hours Extended working hours

Source: Adopted by the author based on the recent literature

Krew Cuts Growth Opportunities

The current competitive environment but also the current period of economic uncertainty
forces companies to find and exploit new opportunities in an attempt to remain competitive,
but also to develop.
In periods of economic recession, large organizations have more chances to survive due to
greater resources and more strategic options than small firms (Smallbone et al, 2012).
In the United Kingdom, over 90 percent of the companies in the hair and beauty industry are
small companies, therefore establishing development strategies is essential. While large
companies pursue business development and implicitly economic growth by entering
international markets, small companies pursue economic growth and reduce business risk by
establishing strategies that involve expanding the business nationally or adding new
products/services closely related to those sold to date (Soni, 2005).

Due to the competitiveness of the barbering sector in Newark on Trent, the services currently
offered by Krew Cuts are not sufficient to face the competition in the area in the long term.
Therefore, it is considered that the introduction of haircut services for women is the next step
for Krew Cuts to offer more services in this industry in the future, but also for an increase
from an economic point of view,

Business Environment

According to Johnson et al. (2017), the business environment involves the creation of
opportunities but also threats to companies. The meaning of survival for any organization is
given by the environment (Johnson et al., 2009), the environment in a business includes all
the government and social institutions, suppliers, competitors, and customers (Lynch, 2015).
The macro-environment, the industry, and the market are terms to be considered by the
business. As for the macro-environment aspect, a set of environmental factors needs to be
taken into consideration as they can affect any organization (Haberberg & Rieple, 2001), also
for this aspect Pestel analysis can be used to collect any information which can help the
company to make changes and constructive scenarios to enter on the market, but the Pestel
cannot be applied due the fact that Krew Cuts only wants to add services and grow on the
market they are already in.
Within the second aspect, Porter’s five forces need to be used to understand the nature,
intensity, and also external threats faced by the competition.
Markets, which is the third aspect to be analysed, in this state the SWOT analysis technique
can be used to clearly identify what the business objectives are and also to only use the
adequate information gained through this process for your organization.
 Porter Five Force’s Model

Porter’ Five forces analysis is an extremely important to analyse the competition on the
market, by using the Porter’s Five Forces scheme we can analyse the industry and identify
how attractive is in terms of rivalry among the existing competitors, the threat of new
entrants, the threat of substitutes, power of buyers and also the power of suppliers (Johnson et
al., 2017).

Competitive Rivalry Within Industry

Within the haircare industry, the competition is very high and for this reason, the customer’s
power is also high, mainly barbershops can easily lose their customers if even only once the
service offered to, them doesn’t match the customer’s standard.

Threats of New Entrants

The new entrants are not such a big threat to Krew Cuts, due to that in the Newark area there
are fairly enough haircut salons and currently is a moderate rate in regard to opening a new
haircut salon.
Bargaining Power of Suppliers

The suppliers are the ones who provide the organization with the goods they need to produce
(Johnson et al., 2017) .
For haircut services, there are not that many products to be used, in comparation with the
hairstyle salons. Taking into consideration that the product demand is low, but also the fact
that on the market exist a huge number of suppliers who are able to offer the same products,
the supplier’s power is very low.

Bargaining Power of Buyers

The buyers are always interested in buying the best and paying the lowest price if that’s
possible, so the smaller and more powerful the customer base is for Krew Cuts, the
bargaining power is higher as well as their ability to get bigger discounts and offers, taking in
consideration that Krew Cuts has already a base of clients, and the main clients will be
children’s mothers who are already clients, bargaining power of customers is moderate.

Threats of Substitute Products or Services

By adding a new service that meets the customer’s needs, but in a different way, could lead to
losses in regard to profitability. Generally, in this industry, the risk of replacing an existing
service with a substitute is pretty low, but for the haircut services we have a substitute and
this is the hair clipper. But for ladies’ haircut services, the substitute of these is not easy to be
done and the risk is low.

Figure 3: The Porter Five Forces – Krew Cut

Moderate Bargaining Power of Buyers

Low Risk Bargaining power of suppliers

Moderate The threat of new entrants

Low Risk The threat of substitutes products or services

Very High Risk Rivalry Among Competitors

Source: Adopted by the author based on the recent literature.

SWOT Analysis

SWOT analysis is essential to help you to understand and analyse the external environment
with what the opportunities and threats are for any business, as well as being used also for the
internal environment that includes both, the strengths and weaknesses faced by the company.
The positive factors such as strengths and opportunities are to be used by any business owner
to highlight the strength of any organization over competitors, weaknesses, and threats it
needs to be identified carefully, are both negative factors that are used to improve the
company’s capabilities and opportunities on the market (Team FME, 2013).

Strengths
Krew Cuts' greatest strength is its children's services, with no age limit. There are few salons
in Newark that offer services like the "first haircut". Krew Cuts' greatest strength is its
children's services, with no age limit. Moreover, it is the only barber shop in Newark on Trent
specially set up for children. There are few salons in the town that offer services like the "first
haircut". The specialized staff for children's services is another strength of Krew Cuts over
competitors. They also offer discounts for parents of children who get their hair cut there.
This helps to attract new customers and thereby increases the number of customers (Widani,
et al., 2022).

Weaknesses
The main weakness of Krew Cuts is the small number of services offered. Apart from
haircuts for men and children, they do not offer any other services. Also, the weak promotion
of the products and implicitly of the salon is another weakness. Apart from social media
platforms, it does not use other methods of promotion, and for the competitiveness that exists
in the market, this is insufficient (Quincy et al., 2012).

Opportunities
Introducing women's hair services could be a business development opportunity due to the
specifics of Krew Cuts salon. Men's barbering services have been successful because the
main customer category of this service is fathers. Both kids and dads are excited to get their
hair cut at the same time. The same experience could be true for moms if there were hair
services for ladies. If this works well, in the future we might consider creating a brand with
the family concept (Team FME, 2013).

Threats
Competitiveness is the biggest fear for Krew Cuts. Already having a narrow range of services
in this sector and introducing the same services but for a different category of customers is a
real fear for Krew Cuts. Keeping in mind that there is a multitude of hair services other than
haircuts offered by the competition. Only the family concept promoted by Krew Cuts can
stand up to the competition.

Figure 3: SWOT Analysis – Krew Cuts Salon

 Strengths Weaknesses
High Competition
New Servicies
Lack of promotion and advertising
Environment for kids
Specialized staff for kids
Family Discounts
SWOT Threats
Opportunities
Higher demand for quality coffee High Competition
Growth opportunities Same category of services offered
New Brand

Source: Adopted by the author based on the recent literature.

The financial plan of the business

The main purpose of financial planning is to know the total costs of starting a business or
introducing a new product or service and to keep the profit above or at the same level as the
break-even point (Bhimani et al. 2012).
A detailed financial plan involves the projection of income and expenses for two months, but
also the projection of cash flow, the balance sheet on the opening day, and the cost-volume
analysis (Le, 2018).

Considering that financial planning will be done for expanding the range of services with a
similar service, and not for opening a business, financial planning is easier.
Expenses

Estimating expenses is extremely important because it helps estimate the budget (Bhimani et
al. 2012).

We will make an estimate of the expenses for the first three months to be able to make an
estimate of the necessary budget.

There are one-off costs, in the first month, but also costs that cannot be estimated, such as
rent or utilities, because the company already pays these expenses.

Table 5: Expenses – 1st Quarter

 One-time Costs Price (£)
1*barber chair/hair dryer/haircut kit + other 1000
accessories
Monthly Fixed Costs
Rent- Not applicable
1*Salary for Employees (gross) 1750*4

Total Fixed Costs 8000

Monthly Variable Costs
Marketing 300*4
Raw material expenses 60*4
(wax, hairspray, and others)

Total Variable Costs 1440

Total Costs 9440

Source: Adopted by the author based on the recent literature.

The cost of raw materials is variable because it will depend on the number of services sold,
therefore the cost of running the business for the first quarter will be £9440.
It is not necessary to apply for financing to cover the costs. The costs will be covered from
the company's profit for the previous years. (See Appendix 1 - Financial Statement of the
company.

Table 6 – Price List for Ladies haircut

Term Price

Haircut Long 40 minutes 25

Medium Haircut 30 minutes 20
Short Haircut 20 minutes 15
Source: Adopted by the author based on the recent literature.
If we consider that in 8 working hours in Krew Cuts Salon, can be offered 4 short haircuts, 6
medium haircuts, and 5 long haircuts then we can obtain:
5 long haircuts*£25= £125
6 medium haircuts*£20= £120
4 short haircuts*£15=£60
Daily income total= £305
£305*22 working days=£6,710
Utility costs are unknown, but if we estimate a total cost of £2 per haircut service provided,
we will obtain:
15 services per day*22 working days= 330 haircut services per month
Utility cost value estimated for a month will be:
330*£2= £660
Quarterly income=£6,710*4=£26,840
Quarterly costs=£9400 + £660 = £10,060
Quarterly profit=Total income - Total expense = £26,840 – 10,060 = £16,780
Following all the analyses done, we can clearly identify that adding the hairstyle services for
ladies is a huge opportunity to increase the Krew Cuts income.
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