Case Analysis on Winston & Homes

7/21/2019 Case Analysis on Winston & Homes

http://slidepdf.com/reader/full/case-analysis-on-winston-homes 1/15

Written Analysis and Communication

Individual Assignment No 4

Case Analysis Report on

‘Winston & Holmes’

Submitted by:

Name : Ritika Siddharth

Roll No : 141242

Section : B

Batch: BA !"#$% 2&14'1(

Institute of Management, Nirma ni!ersity

)ate o* Su+mission: 14th Novem+er 2&14

"or ,**ice -se: .rade



"#ecuti!e Summary

#he case deals /ith 0inston olmes /hich /as +rought into e3istence in 151 +y A+raham

6andau7 #he -S8 o* the company /as cigar and the 0 /as seen as a *ine to+acco shop7 #he

customer +ase gre/ and a gro/ing trend /as seen in the sales7 Soon therea*ter t/o more shops

/ere opened to cater the customers o* di**erent location7 A*ter proper research 6andau9s

managers suggested *or e3pansion o* the orkville location7 ;3pansion /as not seen as a

pro+lem +ut A+raham /as in a dilemma /hether the e3pansion /ill +ring the estimated returns

along /ith the sustaina+le market7

Word Count: 99



Situation Analysis

A+raham !Bo+$ 6andau% president o* 0inston and olmes !0$% started his +usiness o*

to+acco in 1517Although +eing a success*ul <ean salesman *or 6ee throughout the 1=&s and

5&s% he /as passionate a+out pipes7 is dreams came into e3istence in the *orm o* his *irst *ine

to+acco shop at Cum+erland Street in orkville7 8lease re*er to e#$ibit % /hich sho/s the

variations o* Bo+9s career7 By o+serving these *acts it can +e in*erred that Bo+ /as a passionate

and hard/orking7

Customer satis*action /as his mantra *or a success*ul +usiness7 e /as a person +elieving in

personal touch and hence% he himsel* interacted /ith customers personally7 It can +e in*erred that

he /as an innovative person /ho kne/ his <o+ /ell7 is continuous hard /ork paid o** and his

+rand 0 /as no/ seen to +e associated /ith premium >uality% outstanding service and

trust/orthiness7

#he target customer o* the to+acco company !0$ /ere persons +et/een ?@'(&yrs /ho hadmedium to high disposa+le income7 As the customer +ase increased so the +usiness e3panded in

terms o* the num+er o* stores and the product line7 8lease re*er to e#$ibit /hich gives the

insight on the same7 "ive administrative managers /ere employee to run the operations%

accounting% mail'order +usiness and purchasing7 Re*er to e#$ibit ' to understand the di**erent

stores in terms o* sie and employees% time o* operation7

#he year 1? /as seen as a +oon *or the sale o* cigar and this led to the rapid e3pansion and

increased sales o* 07 #he passion o* cigar came into e3istence in the year 1& in -nited

States and Canada7 8lease re*er to e#$ibit ( to understand ho/ the pu+licity a**ected the sale and

consumption o* cigars7 #he pu+licity o* cigars /ere done +y various media *ronts such as printmedia in the *orm o* magaine7 Cigar A*icionado% a popular magaine portrayed the cigar as

sym+ol o* lu3ury% a**luence and the good li*e7 edia also sho/ed the glamor o* a /oman

smoking a cigar and hence% ignited the passion o* cigar among /omen as /ell7 #he market /as

at +oon *or cigar +ut at the same time the researchers *ound that the e3cessive cigar smoking

leads to various health concerns such as mouth% lung cancer etc7 It caused emission o* car+on

mono3ide almost ?& time higher than normal cigarettes7 6andau /as a risk taker as he did not

change its +usiness o* to+acco even though there /ere so many concerns raised7

0 continued to remain one step ahead o* its competitors +ecause o* innovation% customer

demands and catering to ne/ niches /ith ne/ product and services7 By 1(% 0 diversi*iedinto a num+er o* non'to+acco products such as humidors% *ragrances etc7

artin uck% 6andau9s partner in 0 along /ith )oron .old came up /ith the idea o*

e3panding the orkville location as this location accounted *or @5 o* the company9s overall

sales7 8lease re*er to e#$ibit ) /hich provides us the details o* their proposal *or e3pansion7

;3pansion +rought a lot o* cost and *or the detailed cost please re*er e#$ibit *+ 8lease re*er to the



e#$ibit to kno/ company9s capital structure7 6andau /as perple3ed and /as surrounded +y a

lot o* >uestions% such as +ene*its o* e3pansion% +ene*its versus the cost o* e3pansion etc% /hich

crossed his minds regularly7

-roblem Statement

Bo+ /as in a dilemma /hether e3panding +usiness /ill lead to ma3imum +ene*it out o* it along

/ith sustaining its current market position7

.b/ecti!e :

S$ort term ob/ecti!e:

• #o sustain its market position during the construction period7

0ong term ob/ecti!e:

• #o have an increment in the consumer +ase and the sales a*ter the renovation7

• #o get the ma3imum return o* investment *rom e3pansion7

• #o reduce the inventory levels7

• #o sustain or improve the +rand image7

• #o reach out all the sections o* #oronto +y diversi*ying its product line according to the

target markets

.1tions:

• ;3panding the orkville store as proposed +y )oron and artin7

• Restructuring the company9s product line so that it can cater the needs o* all age group

and gender7

•#o e3pand the mail order services in orkville so that the market share is increased andthe needs o* customers outside #oronto is catered7

• Improvising its +rand image +y cross +randing7



"!aluation of .1tions:

•

-ro1osed e#1ansion :

#he proposal made +y the t/o managers came /ith the *ollo/ing pros and cons

-ros

Sales /ill increase7

0ill +e +ene*icial *or the company *or a @'5 year period7

Cons

igh cost /ill +e incurred7

Risk as no there is no surety that e3pansion /ill +e +ene*icial *or complete

5 years

0ith increase in the retail space additional inventory level /ill +e needed7 Additional capacity /ill +e re>uired7

• 2estructuring t$e com1any’s 1roduct line:

#he store has already made its position in the cigar +usiness /hich has sho/n pro*its *or

the company7 Restructuring the product line along /ith e3panding /ill capture and make

a stronger consumer +ase7

-ros:

Sales /ill increase /hich /ill lead to huge pro*its

Consumer o* all age and gender /ill +e startled to *ind the products o*

their use under the 0 and hence% /ill create strong consumer +ase Customer loyalty to/ards the +rand /ill increase as they /ill try to +uy all

the product under the kno/n +rand as it is kno/n *or its >uality7

Cons:

No additional advertising cost /ill +e incurred as the +rand is /ell kno/n7

#he cost /ill increased7

A lot num+er o* products can lead to con*using consumers

• "#1anding mail order ser!ice

In order to cater and target the consumer outside #oronto% 0 can e3pand the mail

order service7 "ollo/ing are the pros and cons: -ros:

Brand name have visi+ility all around the /orld7



0ill +e a+le to cater consumer o* di**erent locations +y this system7

Increase in market share7

Sales /ill +e high leading to higher pro*its7

Cons:

Resources /ill need to +e increased *or delivering purpose7

Cost /ill increase7 Inventory +ase /ill rise as many consumers /ill need to +e catered7

• Cross brandingCross +randing is a concept /here a +ig +rand <oins hand /ith a smaller non competing

+rand to promote their product7 "or eg 0 and any +rand o* lighter7 -ros:

Company9s image /ill +e increased and /ould +e seen as a +ig +rand7

Consumer /ho are loyal to the smaller +rand /ill s/itch to 0 as /ell7

ence% sales /ill improve and consumer +ase /ill gro/ stronger7

Cons: Cost /ill increase

7#he identity o* the +rand kno/n *or to+acco can get lost as there /ill +e

many products7

indly% re*er ;3hi+it 5 /hich sho/s ho/ /e arrive in taking a correct decision7

3ecision :

;3panding /ith a restructured product line is the most appropriate solution *or 07

#his /ould lead to sustain as /ell as improvise the +rands7 )iversi*ying the product line

/ill attract many customers o* various section o* the society and hence% +rand /ill not

only +e popular among the age group o* ?@'(& +ut also to younger age groups7 oreover%

the products /ill attract +oth the genders and hence% this can increase the sales and

market share o* the company7



Action -lan:

• 0 can target di**erent section o* the society and not only the posh clientele7

• ,nce the target market is set% then 0 should restructure its product line

catering to the set target market7• #he restructured product line should +e introduced to the target market and hence%

the same should +e tested to kno/ the consumer9s response7

• ,nce 0 gets a positive response% it should go *or e3pansion and renovation o*

the store7

• #he ne/ renovated store should +e opened /ith a lot o* ne/ products /hich can

cater all sections o* the society7

Contingency -lan:

As an alternative plan 0 should e3pand according to the proposal made +y his long term

managers7 #he +rand image o* 0 is already set in the minds o* the consumers and hence% it

can proceed /ith the same product line7 #he company should check *or sustaina+ility during the

construction process7 In order to cater this issue% 0 can turn its *ocus to other store and create

a delivery system there *or the customers7 #he cost is high +ut in the long run it /ill +e +ene*icial

to 07

"#$ibit %: 4ariation in career of 5ob



"#$ibit : 4arious location of stores and its features

Stores Yorkville store Queen’s Quay

store

King’s west store

Year of

establishment

1981 1987 1990

Location 138 Cumberland

street

207 Queens Quay

West

130 King street West

Attractions • Shopping

destination

• rime

lo!ation o"

#isit "or!elebrities or

star ga$ers

• %a&or tourist

attra!tion

• 'rea

"re(uently

#isited bylo!als

• )o!ation

!atered the

pro"essionals

o" *oronto+s

,nan!ial

distri!t

"ull time employees 4 2 4

8art time employees 2 ' '

Store9s sie 2@9D2@9 ?@9D2@9 2@9D?&9

-.'/

1970 1981 y 1990 y 1993

eans

salesman

"or )ee eans

perat

ed

W45as a

part

time

#entur

e

perate

d W45

as "ulltime

along

6ith his

partner

6ner o"

t6o

other

stores



"#$ibit ': Calculation of em1loyees’ cost in eac$ store

Stores Yorkville store Queen’s Quay store King’s

weststore

"ull time employees 4 2 4

8art time employees 2 ' '

Cost o* electricity%gas% /ater

17=@E 17=@E 17=@E

ours o*operation!/eekdays$

11

ours o*operation!/eekends$

)ays o* operation per /eek

= ( (

Cost o*employeesFhr

12E !*ull time$1&E !part time$

12E 12E

#otal cost o**ulltimeemployee F/eek

E?@&4 12(E 2@2E

)uring Christmas

#otal employees !(G&7@D($ ?!2G&7@D2$ (!4G&7@D4$

#otal cost o**ulltimeemployee F/eek

E4@?( E144 E?555

Calculation:

For Yorkville store

No. of full time employee * Cost/hr *no. of days* ours of operation !

"#*$%*&*$$' ( "#*$%*%*)' !+&,#

-imilarly we alulate for every store.



"#$ibit (: 6rend of gro7t$ in t$e sales of cigar

"#$ibit ): -ro1osed e#1ansion

8888888888888888888888888888888888888888888888888888888888888888888888888888888888888

;3isting -nit Ad<acent unit

Se!ond oor

Wal in humidor

arber

shop irst oor

asement 'rea

)easing this unit and epanding the basement



)otted line '''' indicates the ne/ proposed plan *or e3pansion

#he proposed e3pansion has *ollo/ing *eature:

17 Basement is e3panded to increase the sie o* o**ice *acilities

27 Second *loor is added to the e3isting and ad<acent unit

?7 #he e3pansion >uadruple the e3isting retail space

47 Second *loor includes an e3pansive /alk'in humidor

@7 "irst *loor *eatures an in house +ar+er shop /ith its o/n resident +ar+er7

"#$ibit *: Cost incurred due to e#1ansion:

Cost o+<ect Cost

"urniture and *i3tures E12&&&&&

)epreciation o* *urniture!1&

years li*e$

E2@&&&

)epreciation o* +uilding!?&

years li*e$

E1&&&&&

Advertising +udget E15@@&2

#ravel ??%(?

;mployee salary and +ene*its =@5%=@1

Administrative &=%&12

Rent 1=(%?&4

Credit card commission 1&&%=44

Interest and +ank charges 1&%=4

Research E?@&&&

#otal estimated cost E?@%?2%5&&



Cost 5enefit analysis

Incremental analysis E(5?(?(

Costs

C,.S E?1=@@&(

.ross pro*it E?((&5&

Rent E@?@(472

Interest E=2?54&

Salaries E=?=(

)epreciation E(2(4(4

Advertisement E=5=2?74

;lectricity E15&&&&

0ater E&&&&

.as E4@&&&

E?2==?(5

Net benefits 9'')+*

"#$ibit : Ca1ital structure of W&H

Capital o"

20 ;80 ;

)andau 4

5u!+s e(uity

stae

perating line o"

!redit and long

term debt



"#$ibit : Matri# of e!aluating o1tions

#o sustain

in the

market

Increase in

sales

.et

ma3imum

return o*

investment

a*ter

e3pansion

Reduce

inventory

level

Improve

the +rand

image

Reach all

the section

o* society

oving*or/ard /ith

.pe!ted to

earn 1< ;

Credit "a!ilityinterest rate 8;

p=a

,+<ectives

,ptions



the proposede3pansion

Restructuringthe product

line

;3pand mailorder service

Cross +randing

#his matri3 helps in taking the +est option *or 0 *or e3panding7 #he *irst column is the

various options /hich 0 can choose *rom in order to achieve its o+<ective7 #he *irst ro/ o*

the matri3 is the o+<ective9s ro/7 #hese are the o+<ectives /hich 0 /ants to achieve a*ter

e3panding7 #he tick indicates that /ith the respective options /hat the o+<ectives /hich can +e

achieved are7 #he option /hich is a+le to cater to the entire o+<ective is the +est option *or 07

N3"26A;IN<

#o 0hom It ay Concern:

I% Ritika Siddharth here+y declare that this assignment is my original /ork and is not copied

*rom anyoneFany/here7 I* *ound similar /ith sources% I shall take complete responsi+ility o*

action taken thereo* +y 0AC #eam7



Signature

Name: 2I6I;A SI33HA26H

2oll No: %(%(

Section: B

5atc$: BA H "#% !2&14'1($

Case Analysis on Winston & Homes

Documents

Transcript of Case Analysis on Winston & Homes