Btec Business Unit 7 Exam Revision 2024 .( Business and Decision making) revision which will help you to revise january 2024 exam. This documents contains detail information and structure and will give you detail idea of what you have to do for the exam . All you need is to look at the question an...
In this report I will be advising my client (Sofia) to set up her own fashion retail
business. She has some experience of working as a buyer for a well-known fashion
retail business. I will determine benefits and drawbacks of both options that are
considered in the case study. In this report I will also be making recommendations
and justifications for both options with counter arguments which would assist Sofia to
open her own fashion retail business.
Current Market and business info
The fashion market has seen substantial change over the last few years after the
market growth of 4.5% between 2018 and 2019, sales fell by more than 30% in 2020
due to covid-19. The people were social distancing which made the high street retail
businesses to close down and the sales were between 5% and 15% lower by the
end of 2021 compared to 2019. The UK fashion retailers had difficult trading
conditions from 1010 onwards which came from different market influences factors
such as average sector profitability of 5% in 2019, reducing the number of shops
such as M&S closing their stores and going into different market and increase online
selling such as Nike closing their stores operating during coccoid-19 and started
focusing on online purchases which has been successful for some businesses as in
2018 online purchases were almost 20% which increases to 30% of sales by late
2020. Other factors also impacted the fashion retailers include; supply chain
disruption due to Brexit and the pandemic, increased demand of customers through
social media purchase, personalised fashion trend, customers buying niche brands
and currently the government have major impact on businesses such as fashion
industries as the mini budget scheme took the businesses into loss due to the fact
that less customers buying clothes as the cost of import and export duties raised and
businesses who wholly depends export businesses shuttled down because of
materials to be shipped in the UK is not affordable for some businesses.
For Sofia there are two options that she could choose either to
· Set up affordable designer clothing business
· Luxury designer fashion shop
Option 1 business located in a popular city market and Sofia would use the stall to
display a range of clothes she has designed that customers can purchase at the stall
at their size in stock. She would also display a wider range of designs on the tall and
on her business’s website that she made to sell clothes. Customers could also
personalise the clothes by changing colours, sizes or materials and customers could
order their personalised items from a stall or website but would have to pay for them
when they ordered them. Sofia would consult the overseas suppliers where she
would design all her products and place orders where the costs are much lower than
in the UK. The selling price would be £45 which would be affordable for customers to
, buy designed clothes. Sofia also has online competitors and stallholders but these
businesses do not have USP of Sofia’s business model due to the fact that they
don’t sell personalised made to order clothes. The personalised clothes designed
would give Sofia a competitive advantage due to the clothes being made to the
customer’s own size so they would be less likely to be returned unless they had fault.
In order to build Sofia’s brand, she would need to rent a stall in a popular city market
and also invest in the website and social media campaigns. She would also need a
small start-up loan for the initial stock and display shelving for the stall.
Gross profit £40,000
Net profit £69250
Return on Capital employed £250,000
Gearing £567
Current ratio £16750
Acid Test Ratio £1.1
The option 2 for the new business is to open a small boutique in a popular area in
the city centre where Sofia can offer luxury handmade clothes to wealthy customers.
Sofia has also found a suitable retail area to rent. Sofia would need a start-up cost of
£30,000. The gross profit margin for this option would be over 50% more than for
option 1. The clothes would be unique and the starting point for any order would be a
series of original designs which would be produced by Sofia for her specific
customer. The design and sizes would be sent to one of Sofia’s most trusted
suppliers for hand cutting and sewing of the high-quality finished product. There
would be approximately four weeks to deliver to the customer from designs.
Net profit 70,000
Gross profit 98,900
Current Ratio 86900
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