ISFM-300 Case Study Stage 1: Business Environment Analysis
ISFM-300 Case Study Stage 1: Business Environment Analysis
Analyze Kelly's Salon's business environment using Porter's Five Forces model, justify the chosen cost leadership strategy, and explain how a selected business process improvement supports this strategy, including potential technology solutions.
Paper For Above instruction
Introduction
Kelly’s Salon has been operating since 1995 in an increasingly competitive environment, with the imminent threat of a new Hair Cuttery opening nearby. As the business analyst team, our task is to evaluate the salon’s external environment, determine a competitive strategy, and recommend process improvements supported by technology to sustain and enhance competitiveness. This paper applies Porter’s Five Forces model to Kelly’s Salon, justifies the cost leadership strategy, and links an improved business process—customer and employee scheduling—to this strategy, proposing how technology can facilitate these enhancements.
Five Forces Analysis
| FORCE | EXPLANATION | IMPACT | AFFECT STRATEGY? |
|---|---|---|---|
| Buyer Power | Customers of Kelly's Salon have numerous options and can influence pricing and service expectations easily, especially with the entry of a nearby Hair Cuttery. They can choose where to spend their hairstyling dollars based on price, convenience, and quality. | Negative | Yes |
| Supplier Power | Vendors providing hair products and equipment have some leverage, particularly if there are few alternative suppliers for certain premium or specialized products. | Neutral | No |
| Threat of Substitutes | Alternative grooming options like home hair coloring, DIY products, or unisex salons pose a threat, though standard salon services remain favored for quality and professional care. | Negative | Yes |
| Threat of New Entrants | The industry has moderate barriers—start-up costs are manageable, and the beauty industry is open to new entrants, increasing competition. | Negative | Yes |
| Rivalry Among Existing Competitors | With established competitors and new entrants like Hair Cuttery, competition for customers and loyalty is intense, especially on price and service offerings. | Negative | Yes |
Justification of Selected Strategy for Competitive Advantage
Kelly has opted for a Cost Leadership Strategy aimed at offering a broad range of salon services at lower prices than competitors like Hair Cuttery. This strategic choice is supported by the Five Forces analysis, which highlights significant threats from buyer power, substitutes, new entrants, and rivalry. By focusing on cost reduction, Kelly can attract price-sensitive customers and differentiate her salon from higher-cost competitors, thereby gaining a competitive advantage.
Analyzing each force, the strategy’s positive impact is evident in reducing the competitive threat posed by buyers and new entrants. Lower prices can diminish buyer power and discourage new competitors from entering the price war. For substitutes, cost leadership can make traditional salon services more attractive than DIY options. However, supplier power remains neutral, as suppliers are unlikely to be influenced significantly by Kelly’s strategies, and rivalry among existing salons remains high, but a focus on cost efficiency can help Kelly distinguish herself.
Overall, the Cost Leadership Strategy aligns with the external pressures identified via Porter’s Five Forces, enabling Kelly’s Salon to optimize operational efficiency, reduce prices, and improve customer retention, ensuring sustainable competitive advantage.
Business Process
The process Kelly considers crucial for improvement is customer and employee scheduling. Enhancing this process directly supports her cost leadership objective by streamlining operations and reducing overhead costs associated with manual scheduling errors, employee downtime, or customer booking inefficiencies.
The scheduling process links to the competitive strategy because efficient scheduling ensures optimal staff utilization, reduces labor costs, and enhances customer satisfaction through timely service. Improving this process with technology—such as automated scheduling software—can provide real-time updates, decrease scheduling conflicts, and enable better matching of staffing levels to customer demand patterns.
A technology solution for scheduling can provide Kelly with a centralized platform that integrates customer appointments, employee availability, and walk-in traffic forecasts. This integration allows for dynamic adjustments, ensures staff are efficiently allocated, and minimizes idle time or overstaffing—key factors in maintaining a low-cost position in the market. Such automation also enables analytics for future planning and operational efficiency.
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