Term Paper on "Strategic Plan for a Hypothetical New Business"

Term Paper 17 pages (4637 words) Sources: 1+

[EXCERPT] . . . .

Strategic Plan for a Hypothetical New Business

Gekko Consulting and Recruiting will be opening its new recruitment agency in the center of Lauderdale Lakes, Florida , on one of the most important avenues in the town, the State Road 7. Its location will allow it to be in the close proximity of all the local large businesses, thus providing a good presence on the market. The company will aim to penetrate the small, medium and large companies in the area, on a radius of around 10-15 kilometers. At the same time, it will also market its services via the Internet and attempt to establish a non-geographical related clientele in other states within the United States.

The company will be recruiting individuals for placement in one of the client company's, according to the opening position specifications that these companies have provided. In this sense, the actual consumer paying for the service will not be the recruited individual, but the company where the employee will be placed.

Despite being a small start-up company with yet limited human and financial resources, the company is basing its hopes for success on the capacity to penetrate a niche market by attracting an incipient portfolio of clients via a network of relations that the experienced team already has. Among its most important strengths is the team's longtime participation in the HR recruitment industry and their dedication to making this idea work.

On the other hand, the company is prepared to extend in the future to connected business segments. In this sense, it will aim to develop its it infrastructure and set up its own database and search engine.

External Assessment

PEST Analysis - Political, Economical, Social, Technological

Economic Forces

At U.S. level, the economy is currently on the brink of a potential economic recession, generally led by the crash of the mortgage market and the decrease in house prices. This has been seen in the last months in low consumer confidence figures and the constant decrease of the U.S. dollar to all time lows against all the major currencies. With the Federal Reserve decreasing the interest rate at 4.75%, from 5.25%, we may see this trend changing in the next couple of month. This would be a good time to invest, in hope of future positive developments.

Florida, on the other hand, is among the fastest growing states in U.S., with a GDP growth of 4.2% in 2006, compared to a U.S. GDP growth of 3.4% (see Appendix 2 for comparison in GDP growth between Florida and U.S. average). Of this, 28% was provided for by the services segment, with 24% covered by finance, insurance and real estate. This shows a good potential for this recruiting company, since the services sector is not yet fully saturated (see Appendix 3 for Florida's GDP by Industry Group).

In 2007 the annual percentage rate for mortgage was 5-6%. The interest rate for payment to health care providers was 11% with 2% points higher than the previous year and 4% points higher than 2005. Business loans interest rates vary from 3-4% to 6-7%, depending on the type of loan (private/government; long-term/short-term; small business/large business). The country's unemployment rate dropped to 4.5%, getting close to a 5-year low.

The gap between imports and exports decreased with 3.8% since December 2006. The inflation rate as measured in December 2006 was 2.5%.The main concerns, at country level, are the high inflation and the slow economic growth (2.5-3% for 2007). The prospects for the next two years for the economic growth are not very optimistic, as is the tendency in the entire U.S. economy, situating the indicator below 4%. Nevertheless, this is still a reasonable figure for future development.

Social, Cultural, Demographic, and Environmental Forces

The state's official language is English, but 16.46% of the population speaks Spanish. This can diversify the potential workforce in the company in terms of the languages spoken and may open up new potential markets. The population counts for more than 16 million individuals. The state's economic growth, which is due to the increase in job growth and the fact that the cost of living is quite low compared to other states, make the life conditions in this state satisfactory.

In terms of education, Florida constantly scores in the lowest 25% in national surveys concerning test-score ranking. The average spending per student is around $1,000. This may affect the local recruitment intended for the company, or at least the capacity to locally recruit employees with a good educational background. Relocation may be needed for future employees at Gekko Consulting and Recruiting.

19% of the state's population is old. Across country the life expectancy growth is forecasted as follows: older than 65 - increase from 12.4% in 2000 to 19.6% in 2030. In 2025, Florida's population is expected to increase to 26%. Many have referred to the state as the most favorite for older people, because of the mild weather, respect for age and good life conditions. Nevertheless, this type of demographics is not likely to impact the company: there is also a strong business service segment and recruitment does not necessarily have to be local.

Political, Governmental, and Legal Forces

At the level of the United States as a whole, the political climate is stable and does not affect the business segment in which the company is operating. While there are no expectancies of laws that will radically change the business climate, the company will still be subject to general governmental and legal forces that will regulate the business area through different acts.

Florida's constitution specifies the responsibilities, functions and operations of the state government. Historically, Florida was viewed as a Democratic fief. Lately, however, many democrats have switched to the republican side. This led to an overwhelming proportion of Republican outnumbering the Democrats by 251,929 to 132,432, with 123,985 not affiliated with either party.

The current political distribution in the State of Florida changed to a small extent the government's attitude towards the economic activity, in the sense that taxes are kept to a level so as to encourage the development of local business.

On the other hand, the Cuban minority, very strong on the political scene in Florida, is bound to play an important role in future evolutions. While originally traditionally Republican, the Cuban community, with the appearance of a new voting generation, began to favor the Democratic Party. This may lead to a new reversal of voting preferences in Florida.

The state's position on minimum wage changed in 2004 when the state voted a minimum level and that this minimum would be adjusted every six months with the inflation rate. Until then, Florida was one of the few states that didn't have a minimum wage established by law.

Currently, Florida is one the few states in U.S. that doesn't charge a personal income tax. Until 2007, there was a tax charges on "intangible personal property" for goods such as: bonds, stocks, etc., but this was abolished.

Technological Forces

Florida, as part of United States, is a major contributor in terms of technological innovation. The majority of Research and Development funds are private, rather than coming from government taxes. The technological level allows for the products in general to have a better quality and to become cheaper after a given period of time, in which the production technology reaches maturity.

There are 11 state universities, 4 medical schools and a large number of private colleges in Florida. The amount spent by those in R&D in 2005 counted for $1.5 billion and the royalties paid to the state, by those entities since 2000 were over $14 million.

Florida set a Technology Development Fund to help creating new centers of excellence in the state. The centers are created with the purpose of reducing the gap between the academic environment and companies. Also, this state hosts a considerable number of technology and research parks in which universities and companies join together in research projects.

The intellectual property is encouraged at national level. Copyright is protected by federal law. The law may have different interpretations in different states, but the regulation is the same across country.

Competitive Forces (esp. Porter's Model)

Entrants

The threat of new entrants comes from companies that, similar to this company, will enter the market with a portfolio that is already formed. Generally these are small companies in terms of resources (both human and financial), but with experienced HR manager, who are generally also founders and who bring along a portfolio of existent clients. The usual large HR companies remain a potential source of new entry threat as well.

Suppliers

Since the company is specialized in a particular type of offer (HR recruitment services), the suppliers it will be dealing with are also represented by service providers, such as marketing designers, web hosting firms or, in a certain way, even the employees, as work suppliers.

The marketing designers will play an important role in defining the company's brand identity on the market. They are not only responsible… READ MORE

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