D Bamboo Home And Garden Shop Case Solution

Also, with the success of D-Bamboo’s business model, competitors had begun to spring up. A shop with similar product offerings opened just a kilometer away from D-Bamboo. There was also speculation that another home and garden shop would open in a nearby mall in December 2009. Also, one of D-Bamboo’s larger competitors changed its product offerings to resemble the mix that D-Bamboo had. Harry had previously decided to relocate to a more visible location by Christmas 2009. Also, the Christmas season would be 25% lesser than the previous year because of the competitive landscape. If D-Bamboo relocates as per the initial plan, it would lose 50% of the loyal customer base. However, the small space would also add to the product losses if he decided not to relocate. 

2. Analysis of the Situation

i. Financial Situation

Shortage of working capital is one of the major issues faced by entrepreneurs. Competition is the issue that ranks first in the challenges faced by entrepreneurs followed by financial issues, and marketing challenges (Bena, 2014). Harry had $55,000 in savings on which he could get a loan of $110,000 on these savings. The cost of relocating would be $80,000 for a greenhouse and shop sign only. $5000 per month rent was also a fixed cost. To increase sales by 40-50%, aggressive marketing, and promotional campaign was required.  This means that only $30,000 is left for the promotions and there is no financial backing for the rent of the subsequent months. In the start-up world, Murphy’s Law is prevalent. This means that things will go wrong. Because opening up in another city would mean restart of the business and presumably adding to the supplier costs of transportation. Initial costs should be overestimated rather than underestimated to assure that the cash reserves don’t run dry in meeting the expenses of a new business (Barringer & Ireland, 2015). 

An analysis of the profit margin percentage shows that compared to 2008, the profit margin has declined from approximately 47% in 2008 to 45%. Also, over the two years, it is seen that profit margin dips during December. Therefore, the approximation of sales and expenses for December in 2009 might be overestimated. 

ii. Competitor Situation and Suppliers

One of the USPs of D-Bamboo was its unique product mix that offered a one-stop solution to the customers for home and garden supplies. Also, D-Bamboo had remained competitive because of the price level. Harry had chosen small-scale suppliers and partnered with other plant shop owners to purchase products in bulk to forward advantage of the profit margins. One of Harry’s customers had turned into one of the largest herb suppliers in the country. However, other than that, seedlings, pet, fish, and turtle supplies, as well as chemicals, were sourced from suppliers in the Chaguanas.  

This means that moving to another location would mean starting off as a new business and establishing supplier relationships again. If D-Bamboo decides to continue supplier relationships their strategic focus of competitive pricing would change. If D-Bamboo were to refocus its competitive USP to quality, then they can bear the transportation costs of the existing suppliers. However, it is not known the purchasing behaviour of the customers of the new location. Furthermore, since other competitors with similar offerings are opening in the nearby locality, focusing on speed-to-market and profiting from a high volume of sales rather than high margins would drive out the competition (Uluskan, Godfrey, & Jones, 2017). 

Furthermore, since the highway linking the south and north of the Island passed just 200 meters from the shop’s current location, it would be an additional expense but not exceptionally costly to maintain the supplier base in the Chaguanas because both cities Chaguanas and San Fernando were located in close proximity. D-Bamboo could opt for a transportation cross-docking supplier system to minimize supplier costs (Murray, 2019). 

iii. Landscaping Services

Landscaping workers require on-the-job training. However, landscaping architects require a bachelor’s or master’s degree to qualify for the job. Landscape designers should hold an associate degree to work (study.com, 2019) while Harry had a degree in chemistry and management. Therefore, to pursue this option for the future, Harry would have to complete a degree. Therefore, this option might be suitable in the long term to expand the business. 

iv. Discussion

In the current situation analysis, it is evident that the competitor situation is the most pressing one. Also, Harry needs to make investment decisions for his store. The first option is to direct this investment towards an aggressive marketing campaign to cash on the sales volume during the Christmas season which is soon followed by Valentine’s Day. This marketing campaign could mean putting up advertisements in the busiest locations with promotional bundles. The other alternative is to relocate to the other location which requires a thorough feasibility analysis and financial backing. 

3. Alternative Solutions

i. Relocate

Many customers liked the current location of the shop due to its accessibility. Furthermore, D-Bamboo had gained a lot of customers because of the location in one of the busiest areas in Chaguanas. Relocation to a nearby area would not eliminate the competitor threat. D-Bamboo would still require investment in marketing to drive out the competition. Furthermore, relocation would have several issues in managing suppliers and developing a loyal customer base from scratch. This is because he would lose about 80% of his customer base if he moved out of the Chaguanas area.