Kazoo & Company Business Case
Opening a new business is a challenging task for anyone, irrespectively of the type and the size of business. When it comes to building a business, which is new to you and in a way to the market, this challenge becomes even more evident. Economic and social arena outline the profile of the industries. The industries, in turn, shape the behavior and strategies of individual companies that operate in a particular market segment. In spite of the fact that all the companies are different and they choose to compete in ways that give them unique r, at least, rare competitive proposition, there are several elements in common. First of all, all the strategies and long-term plans aim at sustainable profitable growth. Secondly, any company in the market works as part of a larger external environment and, thus, has to develop a strategy to approach the opportunities as well as pressures that come from this external environment (Analoui & Karami, 2003). To do that, companies develop the business plan and further align it with long-term strategies and short-term operational and tactical plans.
In order to be able to understand the business and translate a sound idea into an actual action plan, it is important to develop a business plan, which provides milestone strategy for an individual or a group, as well as serves as a tool for presenting the business to stakeholders, partners, and potential investments. There are numerous studies and books written to help entrepreneurs in their endeavors of starting their own business. One can find many types of business plan outlines, from a simple one that does not touch upon a financial side of the business to a detailed long-term plan that outlines financial and operational forecasts. The truth is that the purpose of the business plan in a way is to explain the business and test the initial viability of the business idea. With that in mind, several major elements are critical to any effective and well-written business plan.
First of all, the plan should clearly describe the product and service that the company will provide. This should also include a roadmap of the development of the product if it is applicable to the business. Secondly, a good business plan should demonstrate an in-depth analysis of the market and the suggested competitive strategy based on the uniqueness of the company’s offer. Such analysis should outline the target market, target customer, competition, and an overview of the market and potential growth strategies as well as position a new business in this external environment. The core of a business plan is the strategy and the implementation summary. This part should draw a clear picture of the business and answer three questions: What? How and When? The strategy should include marketing and sales plan, location and facilities, milestones and key metrics as well as detailed financial forecast, including investment scheme and five years cash flow (Rogoff, 2007). It is often important to place the financial plan and forecasts as a separate part of the business plan to give more attention to this element when it comes to investment opportunity and presenting the business to the parties, interested in seeing the immediate and the long-term return on their investment. In many situations, when a company is looking at loan financing or external investors under very high debt to equity ratio, the business plan will demand even more scrutiny in preparing the financial statement and justifying the assumptions behind it. Then, a business plan should explain to the target audience the management structure of the company and defend the level of professionalism and competence of the team that will implement and run the business. Finally, a business plan should contain an Executive Summary which allows readers to have a glimpse into all the elements of the business before actually looking at the full document. In many situations, Executive Summary "opens the doors" for good ideas.
Kazoo & Company case study provides a classic example of a small business that knowingly enters the competitive market, where the major share of the business is taken by large international players. The reality of the toy industry is similar to a general retail sector, where the scale and scope of operations of such companies, as Walmart, Toy’R’Us and Amazon define the direction in which the industry develops. The truth is, while barriers to entering to this market are not very strong, the size of the competitors places a lot of pressure on potential new entrants and calls for a lot of creativity to survive and remain profitable. Diana Nelson took a well-thought decision. Her experience in corporate world gave her understanding of the market competitiveness and proved her competence in understanding the business. When Diana assumed the control of Kazoo & Company, she did so based on a specific knowledge of the market and prepared differentiation strategy to compete with the major market players. It is clear that Diana understood the dynamics of the industry at the point of acquisition. She developed and implemented the differentiation strategy based on offering to its client’s new in-store shopping experience along with a choice of products that larger retailers do not place on their shelves. This differentiation strategy proved to be adequate and effective for a small business in such a competitive business environment and allowed Kazoo & Company grow immensely over the years. The challenges that the company is facing in the contemporary business environment are the result of the changing external factor, which, as it was mentioned before, shape the direction of the businesses. While it is possible to argue that Diana could potentially foresee that larger market players will start working with educational toys and other products that were exclusive to her business, the choice made at the time when she assumed the store was a good way to re-enter the market and establish Kazoo brand as a strong player with differentiated brand. The case, however, does not provide sufficient information to make the judgment on the potential positive impact of more specific strategy on marketing and HRM policy. It is possible to assume that in the situation, where the company dedicates more time to the analysis of the layout, marketing strategy, and hiring practices, it builds on a more accurate database. This, in turn, would provide the company with more flexibility and competence to compete through adaptation and respond to the changing market conditions. At the same time, delay in adopting one or another strategy to differentiate the brand would also lead to diminishing of the brand value and lost profits (Schultz, Barnes & Schultz, 2015).
In conclusion, it is important to highlight the importance of an on-going business assessment. While Diana took the right decision at the beginning of its entrepreneurial endeavor to differentiate through product selection and in-store experience, she should have dedicated more time to strategy follow-up and external market analysis to address change management and build on the flexibility of the Kazoo brand, given the volatility of its competitive advantage. Small companies, like Kazoo, competing with giants that gain by a scale of operations and financial capital available to innovate and develop their brand should look for sustainable competitive advantage through building on rare assets and the strong focus on innovation strategy and market adaptability. Diana Nilson should, therefore, should focus more on long-term planning rather than short-term differentiation strategy.
References
Rogoff, E.G, 2007. Bankable Business Plan.2nd Edition. New York: Rowhouse Publishing.
Analoui, F. & Karami, A., 2003. Strategic Management in Small and Medium Enterprises. London: Thomson Learning.
Schultz E., Barnes B. & Schultz H.F., 2015. Building Customer-brand Relationships. London: Routledge Publishing.
