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Cotton On is proposing to acquire Lovers by buying its rights and existing markets of Australia. This will result in Cotton On being sole owner of the other company. The company had been running efficiently but owners decided to earn steady profit by selling their brand. This will help the buyer to increase its market share and launch this unique product under Cotton On's brand name.
Buying an existing business involves a lot of risk but it helps in recovering soon. Generally such deals take place only between a large company and a small company or between comparative businesses. Choice of correct business is most crucial to this step. Entrepreneurs have to make sure that current position of the respective business that is to be bought must be feasible and irreversible (Kwak and Kim, 2013). This will help in applying innovative strategies in efficient manner and yield good profits.
Analytical Positioning of Product/Service in Australian Market
Markets are full of competition. When Cotton On will acquire the markets of Lovers, then certain tactical implications must be evaluated so that further decision making process gets easier. Financial analysis is also a part of product positioning. A marketing tool known as STP (Segmentation, targeting and positioning) is used for developing a foundation for the business. Positioning method that can be adopted by Cotton On after acquiring the business of Lovers must be based on Experiential positioning.
Experiential Positioning: The brand will target its customers based on emotional or sensory characteristics. It involves direct connection with purchasers with a humane touch. Positioning is important because it will help the company gain an insight about taste and pReferences of customers related with the new or refurbished products they are going to launch. The use of this technique will not only provide better competitor analysis but also help in formulating current customer value for the proposed product.
Financial Analysis: Process in which complete business evaluation is provided with regards to capital values, suitability, budgets and revenues, etc. is called as financial analysis. Ratios are calculated so that financial status of the company being sold can be visualised by purchaser (Lei and Moon, 2015).
Digital techniques can be utilised for analysing customer demands and needs. Several forums and platforms have emerged that perform this task on behalf of desirable business venture. In this case, Cotton On can opt for conducting a survey that will analyse current fashion trends which are adopted by all age group clients. If there is large inclination for products of Lover, then Cotton on can opt for buying this small level organisation. If the results are negative then certain changes in products can be made and evaluation can be performed. Positioning will only help in giving specific services to specific group of people.
Options for Resourcing Business
No strategy can function without application of principle theories and models. STP provides businesses a better and easy way to deliver their products and services to deserving customers. Data that is to be acquired must be distinct and differentiable (Schlegelmilch, 2016). This will help in creating proper action plans for each interpreted information. Resources are finalised after positioning is accomplished. It is well known that businesses cannot function without resources. Multiple options for gathering resources must always be available with every entrepreneur so that business operations are not disrupted at time of execution.
Human resource is most important part of every organisation. Acquiring through purchasing existing business helps in managing resources that will be required for establishing new businesses. Money can be saved in purchasing land, furniture, equipments and most important inventory for setting new branches. Human resource will also be readily available. It is essential to out weigh all possible outcomes so that investors won't face any difficulties while beginning their work procedure. Quality of resources must never be compromised for saving costs (Roberts, 2015). If potential of development is visible then, trainings can be imparted. Irrelevant materials and resources which won't be useful for Cotton On must be disposed timely for creating more room.
Correct resourcing becomes beneficial for future. If analysis and evaluation of resources is not performed with 100% efficacy then, purchaser will have to face further problems in near future. Laws and legislations that have been defined by national and local government must be followed so that no breach of contract is faced by the entities involved. Strategies must be designed by creating less reliability over law. It improves litigation costs and financial expenses during resourcing for business expansion.
Recommendations on Acquainting the Proposed Business
Clothing giant Cotton On must be consider following recommendations or suggestions which are based on the results of positioning analysis and resourcing options need to purchase existing business of Lover clothing company.
- The reason behind selling rights over a business must be clearly communicated so that no unwanted advantage is taken by the other company. Myriad of all reasons related to selling of one's practically implemented thoughts must be known to purchaser. This helps in practising ethical contract of selling and purchasing (Cartwright and Cooper, 2014).
- Cotton On must also consider the location, size and internal constructional details before making any proceedings in acquisition. This helps in getting an estimate for profits. It also helps in figuring out possibilities for likeability by audience.
- Research is essential for every business expansion. It is recommended that proper research must be conducted by company so that hidden flaws and defects are easily detected.
- The complete procedure must be handled by professionals that have sound legal and financial knowledge. Often situations arise where it becomes difficult to understand certain specific terms and policies which can be harmful for the company in long run. Hiring correct individuals will help in understanding these aspects and help Cotton On to make correct decisions.
An entrepreneur must always be handy with information on every future strategy he/she is going to make. This report helps in getting better understanding of expanding business through acquisition of existing business in Australian market. Cotton On is going to own Lovers which are two clothing companies of fashion industry in Australia. With proper analysis of products, services and components that are related with business a company can get overview of this proposal. Purchasing procedure must be conducted crucially so that no future consequences are faced by buyer. This technique is not only beneficial and less risky but also helpful in enhancing brand reputation.
Books and Journals
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Kirzner, I. M., 2015. Competition and entrepreneurship. University of Chicago press.
Kuratko, D. F., 2016. Entrepreneurship: Theory, process, and practice. Cengage Learning.
Baum, J. R., Frese, M. and Baron, R. A., 2014. The psychology of entrepreneurship. Psychology Press.
Carraher, S. M. and Paridon, T. J., 2015. Entrepreneurship journal rankings across the discipline. Journal of Small Business Strategy. 19(2). pp.89-98.
Cartwright, S. and Cooper, C. L., 2014. Mergers and acquisitions: The human factor. Butterworth-Heinemann.
Roberts, R., 2015. Finance for Small and Entrepreneurial Business. Routledge.
Schlegelmilch, B. B., 2016. Segmenting Targeting and Positioning in Global Markets. In Global Marketing Strategy Springer International Publishing.pp. 63-82.
Lei, N. and Moon, S. K., 2015. A Decision Support System for market-driven product positioning and design. Decision Support Systems, 69, pp.82-91.
Kwak, M. and Kim, H., 2013. Market positioning of remanufactured products with optimal planning for part upgrades. Journal of Mechanical Design. 135(1). p.011007.
Jones, O., Macpherson, A. and Jayawarna, D., 2013. Resourcing the start-up business: Creating dynamic entrepreneurial learning capabilities. Routledge.