EXECUTIVE SUMMARY:
Abraham Landau set up Winston & Holmes, a premium cigar shop, in 1981 in Toronto. Gradually two more stores were also opened. After successfully conducting business for 15 years, Landau faced a dilemma whether to expand the floor space of his shop at Yorkville or not keeping in mind the objectives of adequate ROI and maintenance of image in the public. Available options to him include expansion of business, expansion of mail delivery system or restructuring product line. Among them, expansion is the most fruitful, satisfying most of the objectives. Based on this fact and calculation of expansion cost we suggested that Landau must go for expansion. Word Count: 107
SITUATION ANALYSIS:
Winston …show more content…
But, in order to increase the female customer base, it added fine writing instruments and leather accessories to its product line. By 1996 W&H had added several non-tobacco products like humidors, lighters, writing instruments and paper, high-end board games, small leather goods, toiletries, fragrance and men’s grooming products to its product line. The reason for this may be to attract the non-smokers to visit the shop even if for buying these products. The ultimate target was to increase the customer base.
There was a huge growth of cigar market in the United States and Canada in 1996 (Refer Exhibit 1). The reason was extensive use of cigar and portrayal of cigar smoking as a mainstream hobby in the movies. This promotion also popularized cigar smoking among women. As a result an increase in the customer base was very much expected.
On this backdrop, two of Landau’s manager proposed an expansion of the Yorkville location, which accounted for 58% of the total sales. The floor area (Refer Exhibit 2) at all the locations might be a worry in this booming era. With these things in his mind, Landau faced a dilemma whether to expand or to maintain the current floor space. Also, sustainability in the long run is a reason to …show more content…
Expansion of the Store Floor Area
• Pros: Expansion of store area will let even more customers to shop; especially when demand is more than normal days.
• Cons: Expansion will require huge cost to be incurred and hence could be very risky in nature. The opportunity cost is also needed to be calculated.
3. Expansion of Mail order system
• Pros: This will increase the reachability of the product to the customers who can’t visit the store. As one of the stores is located in the very famous tourist spot, tourists who try their cigar once and want to try it again can order the same via mail. This will add to the image of the store at the distant places.
• Cons: The expansion will need more cost to be incurred. Also a huge network is needed to be set up for the mail services.
RECOMMENDATION:
Based on the observations in Exhibit 4 we would recommend that Landau must expand the store floor area. As we can observe that although there is involvement of huge cost the company will not make any loss in the current year and during the course of time will build on its profit.
ACTION
Abraham Landau set up Winston & Holmes, a premium cigar shop, in 1981 in Toronto. Gradually two more stores were also opened. After successfully conducting business for 15 years, Landau faced a dilemma whether to expand the floor space of his shop at Yorkville or not keeping in mind the objectives of adequate ROI and maintenance of image in the public. Available options to him include expansion of business, expansion of mail delivery system or restructuring product line. Among them, expansion is the most fruitful, satisfying most of the objectives. Based on this fact and calculation of expansion cost we suggested that Landau must go for expansion. Word Count: 107
SITUATION ANALYSIS:
Winston …show more content…
But, in order to increase the female customer base, it added fine writing instruments and leather accessories to its product line. By 1996 W&H had added several non-tobacco products like humidors, lighters, writing instruments and paper, high-end board games, small leather goods, toiletries, fragrance and men’s grooming products to its product line. The reason for this may be to attract the non-smokers to visit the shop even if for buying these products. The ultimate target was to increase the customer base.
There was a huge growth of cigar market in the United States and Canada in 1996 (Refer Exhibit 1). The reason was extensive use of cigar and portrayal of cigar smoking as a mainstream hobby in the movies. This promotion also popularized cigar smoking among women. As a result an increase in the customer base was very much expected.
On this backdrop, two of Landau’s manager proposed an expansion of the Yorkville location, which accounted for 58% of the total sales. The floor area (Refer Exhibit 2) at all the locations might be a worry in this booming era. With these things in his mind, Landau faced a dilemma whether to expand or to maintain the current floor space. Also, sustainability in the long run is a reason to …show more content…
Expansion of the Store Floor Area
• Pros: Expansion of store area will let even more customers to shop; especially when demand is more than normal days.
• Cons: Expansion will require huge cost to be incurred and hence could be very risky in nature. The opportunity cost is also needed to be calculated.
3. Expansion of Mail order system
• Pros: This will increase the reachability of the product to the customers who can’t visit the store. As one of the stores is located in the very famous tourist spot, tourists who try their cigar once and want to try it again can order the same via mail. This will add to the image of the store at the distant places.
• Cons: The expansion will need more cost to be incurred. Also a huge network is needed to be set up for the mail services.
RECOMMENDATION:
Based on the observations in Exhibit 4 we would recommend that Landau must expand the store floor area. As we can observe that although there is involvement of huge cost the company will not make any loss in the current year and during the course of time will build on its profit.
ACTION