Marten art Gallery Harvard Case Solution & Analysis

Marten art Gallery Case Study Solution

Opportunity

The company can exploit the opportunity of expanding the business operations in Strat ford, Ontario in order to return the sales to the same level as the prior year sales. The area is considered a premier art town with the population 30000. The store would be surrounded by the huge artsy customer base, hence helping the company to attract huge customer base and accelerate the growth in terms of strong reputation, customer loyalty, brand image and increased sales. The company can opt for business expansion to increase the productivity, improve performance and maximize the market share.

Since, the population of current location Bay field is only 7000 people, creating difficulty for the company to expand and expose the new market to increase the sales above the business beak of $437000 sales in 2005.

Option / considerations

Below are options available to MAG

1. Status Quo

• The cost of goods sold have estimated to reduce by 2% from 2008 level due to the improved inventory control.
• Reducing total operating expenses for FY 2009 by 25% through reduced advertisement, wages and administrative cost.

2. Sale on the internet

• Investing $8000 to online purchase function
• Invest $15000 to change and upgrade POS
• Generate $60000 in sales during its first year of business operations
• 5% service fee on all completed transactions
• $1000 maintenance expenses for each month
• Profit generated $14500.

3. Expand to Strat ford

• Strat ford city is a Canada’s premier arts town, with 30000 population.
• The city tends to draw huge population base from all over the US and Canada, throughout the year
• New sales generated would be $400000 in the first year of business operations.
• Expected utilities amounted to $400/ month, advertisement $20000, wages $75000 / year, travelling $5000, administrative cost $5000 and displays $4000.
• The city held Strat ford Shakespeare Festival, which is one of the most prominent annual theater and arts festival of Canada.
• Estimated positive net income i.e. $286200

4. Arts Expos

Toronto Art Expo

• $17000 one time fixed expense
• One weekend
• The company must sell 7 pieces at an average price of $6000.

Affordable art fair

• One time fixed expense amounted to $21000.
• Features 60 galleries at price of $5000.
• 3 days/ year.
• To reach at break even, it must sell 14 piece at the average price of $3500.

5. Sell the business

• $177623 at 8 percent over 5 years.
• Estimated income pending the status quo option’ implementation.

6. Winding down of gallery

• Gain a salary of $40000 per year.
• Pay expenses amounted to $17350 that includes insurance, mortgage payments, utilities, maintenance, property tax and insurance.
• Renting out the gallery space for $2000-$2500 / month.

Recommendation

The company should work on status quo to pay complete attention to its store, hence increasing sales of company’ product. In addition, one of the significant factor is that the family of Pal live at the extension near to gallery, which was purchased for $217000 about half of its premise value in 1995 and as a last resort, he would sell in in case business would not pick as predicted in future. Also, it is important for Pal to ensure his presence at the floor to make sure that the exceptional quality product or service is provided to the customers.

Also, it is recommended that the company should expand the business operations in Strat ford, Ontario since the city is populated and the projected net income is positive, it would bring financial benefits to the company.

Market segment

The population of Strat ford city would be targeted by the company because the people in Strat ford city are art lovers and willing to buy the art and craft products.

Marketing mix

The marketing mix is used to define the strategies and tactics that the company would be using to increase its sales in the selected market arena by reaching to the target customers.

Product

MAG’s would use product standardization strategy to maintain the consistency’ quality and nature. It would allow the company to attract the customers on the product quality. Also, the infirmity and consistency of the products are cost effective.

Price

It is recommended to either adapt the competitive based pricing or demand based pricing strategy to grasp the market share.

Place

The company would likely choose internet selling relative to the supply chain and distribution network. This technique would allow the company to gather maximum number of customer who would access the products with minimum efforts. The cost of marketing via online marketplace would be reduced in comparison to other sales channels and it would allow new overseas opportunities. Also, the customer would easily compare the products and prices from the single source.

Promotion

The company should opt for most effective means or promoting the products, hence drive brand visibility. The company should select online marketplace to bring potential customer and to get traffic as well. Furthermore, the company can promote its product or brand through e-commerce website that would help the company in obtaining the useful information from its customers. Also, it can promote its products through art and craft festivals, music festivals, reaching out to bloggers and influencers and local events and markets.

Appendix - Financial Outlook

The financial performance of the company can be evaluated on the basis of the following concerns.

1. Quick ratio was weak i.e. 0.07:1
2. Current ratio was weak i.e. 0.9:1
3. Operating expenses have reduced since 2006 by 17.7 percent
4. Negative income ($4639)

Liabilities are more than assets.............

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