Examining the business prospects of any market is considered vital and highly pragmatic for the effective functioning of an organization. For a company such as Duque Papetiers Gros, it is crucial to understand the potential risks and situation of expanding their operations to other countries. Duque is a small organization owned by Donald Duque which specializes in the distribution of stationery products in France. The company would like to expand its businesses in countries such as Switzerland and Germany. A proper market analysis will be carried out in this paper enabling the firm to determine a suitable market.
An Overview of the Whole Sale Stationers Market in Germany
In Germany, the demand for stationery items is high. Revenue generated from the products is more than 15 billion Euros in a year. A notable growth of 3.5% was noted in 2015 as the total revenue of the stationery industry; this was as a result of the increase in consumer demand that grew by 2.5% (Hullgren, 2016). The growth was also due to an increase in consumer demand abroad. The per capita spending of stationery products in Germany every year is 182 Euros. Germans spend 35 euros annually on writing and stationery products taking the second place in the European Union when it comes to the expenditure of stationery products.
Figure 1: Production of selective stationery items in 2014
(Source: Schmidt, 2016)
The figure above represents stationery items production in 2014. It can be noted that the production of these items was approximately 510 million Euros. In terms of the net revenue, at least 50% of the wholesalers have a minimum of 500,000 euros justifying their success. Almost all the wholesalers sell their items directly to consumers, others utilize business to business channels. Germany is the most significant exporter in the European Union in terms of stationery products, more than 19.5% of sales were accounted for (Schmidt, 2016).
Figure 2: Export rate of stationery items in 2014
(Source: Schmidt, 2016)
The figure above represents the export rate of stationery items in Germany all over the world. The value of exported stationery items is 676 million Euros. The export and production rates suggest that the expansion of the business to Germany will be suitable for the organization.
Annual Spending on Writing/Drawing Materials per Capita
Figure 3: Yearly costs on stationery items of 7 countries
(Source: Schmidt, 2016)
Since Duque Papetiers Gros is planning to expand its operations to a suitable European country, it is necessary for it to analyse every potential market. The graph above represents the annual expenditure on stationery items on 7 European Union markets. In Switzerland, Germany and Austria per capita spending on writing and drawing products was over 35 Euros. The expense was under 10 Euros in Spain and Slovakia (Kim, 2016). The per capita spending in France was 28.3 Euros. The company should consider expanding to countries such as Germany, Switzerland and Austria since individual spending in these countries is above 35 Euros (Sungau and Ndunguru, 2015).
Per capita spending is among the various indicators of a thriving industry in a country. The expenditure on drawing and writing items is among the critical elements which determine the profitability and viability of the wholesale stationery business. Donald Duque can also use per capita spending to determine which EU market it should first enter. The total expense on customers associated with writing and drawing materials amounts to 35.2 Euros (Kau, 2014); this conclusion is led by countries such as Denmark, Belgium, Bulgaria and Austria. Germany took the second position while France was the fourth.
Analysis of Duque’s Last Three Financial Years of Sales Data (2015-2017)
Table 1: Duque’s annual sales for 3 consecutive years
(Source: Created by the learner)
After examining the data in the table, it can be deduced that in 2017, lower results were recorded than the previous year. An increase in sales was, however, observed.
B. The pie chart represents annual sales for Duque Papetier Gros that were made between 2016 and 2017. In the sales of 2016, it can be observed that witnessed high sales in shredders and drawing/writing materials. From the charts, it can also be deduced that the sales of drawing/writing materials increased in 2017.
Figure: 2016 sales of Duque
(Source: Created by the learner)
Figure: 2017 sales of Duque
(Source: Created by the learner)
C.
Year
2015-2016
2016-2017
Correlation Co-efficient
0.90089
0.84751
Table 2: Annual sales Correlation Coefficient
(Source: Created by the learner)
Figure 4: Duque’s financial sales represented through scatter diagram
(Source: Created by the learner)
Y=6,500x-12,929,000
R2=0.53
R=√0.53= 0.728≈0.73 Strong positive correlation
Y=6,500X-12,929,000
R2=0.53
R=√0.53=0.73 Strong positive correlation
The scatter diagram above represents Duque Papetiers Gros’ annual sales for three consecutive financial years. In the above diagram, R² indicates that there is a relation between two variables. When R tends nearer to 0 the values’ appropriateness and its prediction is considered fragile. When the value of R tends closer to 1, the prediction and the appropriateness of the value are considered to be strong. R² existence originates amid 0 and 1. The financial sales of the company in the year 2015-2016 generate the value of 0.9 implying that the prediction is strong, and the value is relevant. 2016-2017 financial sales generate the value of 0.85 which also indicates the strength and the appropriateness of the value. The sales of 2015-2017 financial years generate R² value as 0.53 implying that the existence of the relation between the two variables is weak.
D. The above linear progression diagram indicates the potential increase in the growth of the firm in the coming years.
Forecast for 2018 Forecast for 2019
Y= (6,500×2018)-12,929,000 Y= (6,500×2019)-12,929,000
Y=13,117,000-12,929,000 Y=13,123,500-12,929,000
Y=£188,000 Y=£194,500
Feasibility of Expanding to Germany " International Standards
Pros
Score/10
Cons
Score/10
More sales
9
Regulatory problems
10
Bigger individual spending (over €35)
8
Cut-throat competition
9
Raising brand awareness
5
Problems with business registration
4
Selling online
5
Investment to expand
8
Learning about the new market
3
Learning new language
4
New products for a new audience
3
Adapting to new business culture
4
Total Pros
6
Total Cons
6
Average Pros
6
Average Cons
6.6
Table 3: Advantages and Disadvantages that Duque Paper tiers Gros can incur
(Source: Created by the learner)
B. Expanding to other European markets will cause Duque Papetiers Gros to be the subject of a lot of regulations. Critical standards that the organization is required to comply with include the ISO regulations. Compliance to international standards ensures that the business experiences fewer obstacles while initiating its products and services while during the implementation of a new strategy in its organizational structure. Some of the ISO standards include:
ISO/IEC 17901:2015 - outlines the approach for specifying scanning productivity through measuring scan to network folder speed and scanning speed. It includes test procedure, test setup procedure, test files and the reporting requirements for scanning productivity measurements (ISO.org, 2018).
ISO 12641-1: 2016 - defines the colorimetric values and layout of targets to be used in the calibration of an input scanner/ photographic product combination. One target is defined for colour photographic paper and the other for positive colour transparency (ISO.org, 2018).
ISO 9707:2008 - offers guidance on the keeping of national statistics to offer standardized data on various aspects of distribution and production of electronic, printed and micro publications. It also provides recommendations on the classification of subjects (ISO.org, 2018).
ISO 21550:2004 - outlines the approach for measuring and reporting the different range of electronic scanners for continuous tone photographic media. It is applicable to scanners for transmissive and reflective media (ISO.org, 2018).
Costs of a New Building
A.
Since interest is applied at the start of every year the monthly cost for loan repayment will be
200,000*-12X=0
200,000*17.45-12X (164.49) =0
3,490,000-1,973.88X=0
=X
€1,768.09=X ≈€1,769
£1,769*12*30=£636,840 repayment in 30 years
Duration for loan repayment = 30 years (Time, t)
Initial loan amount = €200,000 (Principle, P)
Cost to be paid every month= €1767.99
B. When the interest is applied at the beginning the repayment cost will change as follows
The formula to be used for calculation is:
P = R*[(1-(1+r)^-n)/i]
Here,
The size of the payment is (R), which is to be identified
The principle loan amount is €200,000 (P)
The interest rate is 10% (r)
Total number of days is 360 (n)
Interest every year will be 1 + [0.1/12 ]12(i) = 0.1047
Hence, R’s value is found to be €1868
APR = - 1
APR = - 1
APR= (1+0.0083333)12-1
APR= (1.0083333)12-1
APR=1.104713-1
APR=0.104713
APR=0.1047= 10.47%
A*-12X=0
200,000 * - 12 * X * = 0
200,000 * - 12 * X * = 0
200,000 * - 12 * X * = 0
200,000 * - 12 * X * = 0
200,000 * - 12 * X * = 0
3,966,000- 12 * X * = 0
3,966,000- 12 * X * = 0
3,966,000- 2,151.408* X = 0
3,966,000 = 2,151.408* X
X=€ 1,843.443921≈€1,843
1,843.443921 *12 *30= € 663,639.8116 repayment in 30 years
Mean Value of Orders
SE (standard error) =
SE (standard error) ===6.08≈6
Acceptance region:
Here, the value of the mean hypotheses and the magnitude order is same, which is €240.
For generating sample mean 50 accounts were chosen at random and the mean was found to be €230, mainly indicating that the order of the magnitude cannot be considered as €240.
H0µ = €240
For the 50 accounts that were chosen at random the standard deviation was found to be €43 and the case is considered to be reasonable.
The significance level is assumed to be 5% according to the problem, which implies that the use of standard deviation is necessary.
The use of standard error is important here which is s√n/ and after the values are inserted it is found to be 43√50/. The result generated is 6.08 (decimal has been moved up to 2 points)
It will be easy to identify every sample mean if the interval value is considered to be 228,252.
Thus, the null hypothesis and middle value of the Duque is €230 and 230 respectively.
Therefore, it can be said that the approximate value of the order of the magnitude is €240.
Customer Satisfaction
A. it is crucial that a company should be able to retain customers’ loyalty. If the customers stop purchasing the products, the business will incur losses; this will not lead to growth and development for the company. Duque has, however, not been able to generate sufficient feedback from customers to make reliable alterations of their services and products (Dash, 2018). This occurs since the company has a policy of distributing questionnaires during Christmas time through emails. To generate reliable feedback from customers, instead of carrying out the survey during Christmas break, the company should try to initiate the services all year round (Michaelidou, 2006). The questionnaire should pop up on the company’s website every time an individual makes a purchase. The customers can also provide the feedback upon the delivery of the products on their door steps.
B.
CUST_SERV
QUAL_P"S
SALES_STAFF
PRICE_VALUE
MEAN
3.5
3.15
3.45
1.95
STANDARD DEVIATION
0.76088591
0.366347549
0.825577947
0.510417786
Table 4: Descriptive statistics of the four mentioned variables
(Source: Created by the learner)
From the statistics above, the standard deviation of the sales staff and customer service is high, however, that of price value is less; this means that customers are not being offered products that are valued for their money. The above statistics state that the price value is 1.95 implying that the business has not been able to gain customer loyalty. Duque needs to improve its services.
Conclusion
The most viable markets for Duque Papetiers Gros are Switzerland, Austria and Germany because individual spending on writing and drawing materials is more significant compared to France. Various expansion problems such as competition exist. However, if the company can penetrate the market and cultivate a reputable brand image then it will be able to gain market share in Germany and Switzerland. If the company is to expand, it is required to comply with ISO regulations. If the organization maintains its current trend, the sales of the company are projected to go through a steady increase in France to reach 195000 euros in 2019.
References
Dash, M., Sharma, K., Bose, A. and Lakhani, A., 2018. Impulse purchase and impulse non-purchase in book " stationery retail outlets in shopping malls. International Journal of Marketing " Business Communication, 7(1), pp. 556-559.
ISO.org., 2018. About us. [Online] Available at: https://www.iso.org/about-us.html [Accessed Dec. 14, 2018].
ISO.org (2018). ISO 21550:2004 [Online] Available at: https://www.iso.org/search.html?q=ISO%2021550:2004
[Accessed Dec. 14, 2018].
ISO.org (2018). ISO 12641-1:2016 [Online] Available at: https://www.iso.org/search.html?q=ISO%2012641-1:2016
[Accessed Dec. 14, 2018].
Hullgren, M., 2016. Borrower characteristics and mortgage rate choice in Sweden. International Journal of Bank Marketing, 34(5), pp. 649-669.
Kau, J. B., Keenan D. C., and Lyubimov C., 2014. First mortgages, second mortgages, and their default. The Journal of Real Estate Finance and Economics, 48(4), pp. 561-588.
Kim, H., 2016. Stationery box with rotary calendar. U.S. Patent Application 14/722,988.
Michaelidou, N., 2006. Using email questionnaires for research: good practice in tackling non-response. Journal of Targeting, Measurement and Analysis for Marketing, 14(4), pp. 289-296.
Schmidt, T., 2016. Germany – a potential stationery market. MGCC Perspectives, p. 8.
Sungau, J. J. and Ndunguru, P. C., 2015. Business process re-engineering: a panacea for reducing operational cost in service organizations. Independent Journal of Management " Production, 1(6), pp. 141-168.
