• Internal Code :
  • Subject Code : BUSI3008
  • University :
  • Subject Name : Economics

Economics, Ethics and Entrepreneurship

Contents

Introduction.

Business Start-up Details.

Company Details.

Management Proposal

Operations Proposal

Financials.

Marketing Fundamentals.

Target Market

Location.

Product / Service.

Price.

Promotions.

Ethical Statement

Conclusion.

References.

Introduction to Economics, Ethics and Entrepreneurship

While starting a new business, it is important to check the viability of the business before investing significant time or money in the idea. One way to do so it to write a business plan which helps to articulate a strategy for staring a business, and provides clarity on all aspects of the business (Deepak & Jeyakumar, 2019). This paper deals with the idea of a starting a dealership of pre-owned luxury cars, with an inbuild service centre in Toronto. It presents an analysis of business fundaments and the relevant market which can help to create a business plan for the same. The said business will provide pre-owned luxury and exotic cars according to the lifestyle of customers and will provide car service facilities too. The business will operate by purchasing pre-owned cars from dealers and directly from customers and after a quality check, the cars will be up for sale.

In terms of investment, the business will start with a small inventory and will expand as it becomes successful. Therefore, the initial investment will mainly include legal fees for forming an LLC, startup costs including rental property, beginning inventory etc., insurance and dealer license. The total investment cost will be 500,000. The business will mainly make money by selling used luxury cars and by providing a servicing facility. In terms of the marketing plan, the business will operate in Toronto, Canada, and will provide pre-owned luxury cars. The target market includes upper-middle-class individuals and value-based pricing. Moreover, the advertising channels include social media, customer testimonials and partnering with local businesses.

Business Start-up Details

The business start-up details include key information regarding the company, management and operations proposal and business financials.

Company Details

The business will operate as a Limited Liability Company or LLC, due to the simplicity and flexibility offered by such a business structure. Operating as LLC will also provide protection for personal assets (Mancuso, 2016). Also, even though LLCs are easy to maintain and from, such as they not required to hold annual meetings, assign formal officer roles, or record company minutes, they provide more credibility than a partnership or sole proprietorship (Bankvall, Dubois & Lind, 2017). This makes it a good choice for small business as it gives a sound middle ground between different types of business structures and is suitable for current business needs.

Management Proposal

The proposal management approach of the business is mentioned below. It outlines the way certain activities are guided in the organization and includes the flow between different levels within the company (Gonzalez, 2017).

The management structure of the business will be led by the managing director who will oversee the operations of key managers. Considering the scale of business, a single manager will be hired for key operational functions, which includes marketing, quality check, legal, HR and finance. The quality manager will also manage the service centre with the help of an assistant manager. The finance manager will supervise budgetary functions and will manage the accountant and cashier. 

Operations Proposal

Moreover, in order to set-up the operations, the business will require two a showroom for displaying cars and a service centre. Both of these sections have their own requirement of human resources and equipment. The showroom will require phones, furniture, software and lighting, while the service centre will require wheel care equipment, commercial vehicle equipment and tools, vehicle washing and cleaning tools, along with vehicle service and diagnostic equipment (Suh, 2018). In terms of human resources, the HR manager will hire sales personnel and workers for the service centre according to business needs.

Financials

Table 1 Fixed Expenses

Describe the Item

When will you need it?

Cost

Salary

1

1,00,000

Land cost

-4

250,000

Electricity bill

1

800

Interest on debt

1

1,000,000

Insurance

1

30,000

Table 2 Variable Expenses

Describe the Item

When will you need it?

Cost

Floor plan interest

-2

Varies

Demo expense

1

Between $100-$200

Delivery expense

1

Between $100 to $500 for a short distance, and $500 to $2000 for long-distance

Advertising

-3

Around 25,000

Employee benefits

1

Around $11 per hour

Marketing Fundamentals

The importance of market research for business cannot be overemphasized, especially in the case of new businesses. It helps to provide a sturdy foundation for the business and prepares the business for any weakness and threats (Baines, Fill, Rosengren & Antonetti, 2017). This section mentions the key details related to the marketing function of the business, which includes the target market and the marketing mix for the business.

Target Market

Target market is the market population under consideration for sales. Marketing efforts are focused on this population to target customers according to their unique characteristics, finding opportunities and to create more effective marketing campaigns. The target market for the said business is mentioned below and is divided according to their demographic, psychographic and geographic features.

Demographic segmentation

The target population is between 35 to 65 years old males with an annual income between $100,000 and $350,000 (Sipho, 2016). The target population is a part of the upper-middle-class social strata and the members of the population are highly educated with at least a masters degree. This population is chosen as while the lower-middle-class population cannot afford preowned luxury cars and the upper-class population buys new ones.

Psychographic segmentation

In terms of psychographic features, the population values status and is willing to pay high prices for vehicles if they feel that the price reflects the value. Luxury cars act as a status symbol and facilitate the satisfaction of the target market's hedonic needs (Makgopa & Daniel, 2017). The market also gravitates towards expensive purchases to boost their self-esteem, and believe in exclusivity.

Geographic segmentation

Geographic segmentation refers to the geographic boundary or the area associates with the target population. The target population resides in the urban area and live in a rich neighbourhood around Toronto, such as Forest Hill South and York Mills. These areas are associated with individuals who can afford pre-owned luxury cars and are located in the near vicinity of the dealership.

Location

The business is located in Toronto as the region is strategically located among regions with high-income population, which is vital for long term sustainability of the business. Moreover, Flynn (2019) found that Toronto offers the most cost-effective business and investment climate for business and the population in Toronto is highly educated with will provide the business with required human resource. The city is also regarded as the true North American gateway, with multi-modal railway facilities, major highways, lakeport and airports. This will help the business to deliver cars all around the region and will also support the future expansion of the business.

Product / Service

In a marketing mix, the product refers to the intangible services or the physical goods that the business offers. In the said business, the product offered to customers includes pre-owned luxury cars and the car service facility. It will allow the customer to get a luxury experience, and to enhance their social status without spending extremely high prices. The offered product will be checked for quality assurance and will deliver value to customers. While the product will not be limited to a singly brand, the company will mainly focus on highly demanded brands like Mercedes, Range Rover, Bentley, Porsche and BMW. Service facilities provided by the company will include complete care of cars ranging from diagnostics to spare part replacements.

In terms of the pricing strategy, the business will follow a value-based pricing strategy because the business will attract the target market mainly by promising high value. This will also help the company to focus on customer satisfaction. Key competitors of the business include Ontariocars.ca and Bell Auto. Both companies offer pre-owned luxury cars to customers at comparatively low prices. However, the business under consideration will be competitive in the market mainly as it will deliver high value, by offering complete care solutions for the customers.

Price

It is also vital to choose the right prices for the service or product to ensure that customers get the value for their money and that the business can remain financially viable. In this business plan, a value-based pricing strategy will be used (Wu & Li, 2018). The key reason behind opting for this pricing strategy is that the target market is mainly concerned with the value they derive out of the product and does not mind paying extra for better services. Under this strategy, prices will be based on the perceived value of the service and the product (Hameed et al., 2019). This is also a suitable pricing strategy considering that considering different types of cars, and the cost of the company for repairing them is not consistent. This will allow the business to remain flexible in terms of setting prices and will make it deliver better value to customers, rather than focusing on business competitors (Datta, Ailawadi & Van Heerde, 2017).

Promotions

Promotion refers to the communication tactics used to tell the target market about the offering of the business. It lets the target population know that the business can cater to their specific needs. For promoting the car dealership, the business plan includes the following:

Social media

Social media presents a huge opportunity for business promotion mainly due to its wide reach and ability to deliver different formats of messages at relatively low prices. It can be used to show the positive experiences of other customers and to share behind the scene video related to quality checks and others. The company can also use team events, tips and vivid videos, and similar content to build a follower base on social media and to deliver the promotional content (Thabit & Raewf, 2018).

Community events

Investing some money and time into promoting engagement and hosting community events are also great ways to improve brand awareness with the help of word of mouth marketing. This will also help potential customers to interact with the new business which can help to increase sales and establish loyalty (Festa, Cuomo, Metallo & Festa, 2016). Such events can include free car washes, charity drives and sponsored events.

Partnering with local business

The company can also partner with a local business that has a similar audience base. This will allow the company to reach the customers connected with its partners and to facilitate word of mouth and new connections in the community. However, this method of promotion is not as simple as others and will require trials with the business to effectively understand the audience (Pomering, 2017).

Ethical Statement

Ethical branding is an emerging concept in business and management literature and represents the companies whose activities, products and services are morally correct, contribute to society and the public good, and do not harm people, environment and animals (Gringarten & Fernandez-Calieness, 2019). The given business can incorporate an ethically focused idea in its approach to differentiate itself from market competition. One of the ways to do so would be to aggressively screen cars for environmental pollution and not dealing with such cars. The company can set the desired level of pollutants and cars that cause more pollution should not be bought or sold.

Conclusion on Economics, Ethics and Entrepreneurship

The said business plan is possible especially considering the high demand in the luxury car market. Moreover, the company will be able to effectively compete in the market by offering better value. The increased demand will support the new business while better product and services will enable the business to get a competitive advantage.

References for Economics, Ethics and Entrepreneurship

Baines, P., Fill, C., Rosengren, S., & Antonetti, P. (2017). Fundamentals of marketing. Oxford University Press.

Bankvall, L., Dubois, A., & Lind, F. (2017). Conceptualizing business models in industrial networks. Industrial Marketing Management60, 196-203.

Datta, H., Ailawadi, K. L., & Van Heerde, H. J. (2017). How well does consumer-based brand equity align with sales-based brand equity and marketing-mix response?. Journal of Marketing81(3), 1-20.

Deepak, R. K. A., & Jeyakumar, S. (2019). Marketing management. Educreation Publishing.

Festa, G., Cuomo, M. T., Metallo, G., & Festa, A. (2016). The (r) evolution of wine marketing mix: From the 4Ps to the 4Es. Journal of Business Research69(5), 1550-1555.

Flynn, A. (2019). Filling the Gaps: The Role of Business Improvement Areas and Neighbourhood Associations in the City of Toronto. Institute on Municipal Finance and Governance.

Gonzalez, G. (2017). Startup Business Plans: Do Academic Researchers and Expert Practi-tioners Still Disagree. Muma Business Review1(15), 189-196.

Gringarten, H., & Fernández-Calienes, R. (Eds.). (2019). Ethical Branding and Marketing: Cases and Lessons. Routledge.

Hameed, A., Bulezi, B. G., Arinze, B., Nano, D., Singh, B., Nagpal, C. M., ... & Amirhosseini, Z. (2019). Proceedings of the 4th Global Conference on Business Management and Economics, July 2019–Toronto, Canada Format: Electronic Book. In Proceedings of the 4th Global Conference on Business Management and Economics.

Makgopa, S. S., & Daniel, T. (2017). External environmental considerations in the planning of strategies of car dealerships. Environmental economics, (8, Iss. 1), 83-92.

Mancuso, A. (2016). LLC Or Corporation?: Choose the Right Form for Your Business. Nolo.

Pomering, A. (2017). Marketing for sustainability: Extending the conceptualisation of the marketing mix to drive value for individuals and society at large. Australasian Marketing Journal (AMJ)25(2), 157-165.

Sipho, M. S. (2016). Planning of marketing communication strategies by car dealerships. Problems and Perspectives in Management14(4), 212.

Suh, J. T. (2018). Strategies for Used Car Dealership Owners to Sustain Business in a Competitive Environment.

Thabit, T., & Raewf, M. (2018). The evaluation of marketing mix elements: A case study. International Journal of Social Sciences & Educational Studies4(4).

Wu, Y. L., & Li, E. Y. (2018). Marketing mix, customer value, and customer loyalty in social commerce. Internet Research.

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