Andy Lecompte is a high-end salon that is found in Los Angeles and New York in the United States. The salon works on celebrity and editorial hairstyles. The study involved an investigation whether the expansion of the business to Melbourne, Australia is a feasible option for the business. The investigation involved a look into both mega and task business environments. The data was collected through various reports such as government reports, industry research reports and data obtained from the census. The conclusion made from this investigation is that the salon would benefit from the spreading out of its outlets. A number of recommendations have been put forward concerning the establishment of the new proposed subsidiary, which includes the need to emphasize more on maintaining high quality.
Llecompte hair salon is a high-end salon opened by Andy Lacompte and his friend Leanne Citrone, within a few years, it had grown to be Los Angeles number one for appointment by celebs. The salon is located in Hollywood, some few blocks away from Beverly Hills, made up of spacious places with luxury touch making it anexclusive place for high-end clientele. The paper looks at the possibility of the salon expanding its reach to high-end market in Melbourne in Australia.
This report will look into and give apreliminary report to the client on the overall feasibility of establishing a new salon in Australia. This includes other key features such as marketing and management strategies involved in theestablishment of a new venture to ensure success and profitability. This report will look into the broad management and marketing in determining the viability and will not look into the comprehensive financial analysis.
In the analysis, two keyanalytical concepts were used; these are the task environment and mega environment. Task environment refers to situations that a business faces in its direct environment while mega environment denotes to the external surroundings in which the business takes its operations. The information used was obtained from several sources, which are included in the two environments. These include local government report, census reports, and industry research reports.
The report is divided into two segments, the findings section; which defines the environment and their relation to Lacompte salon and the recommendations sections, which define the suggestions in starting a new subsidiary in Australia.
Lacompte’s Viability of expanding into Australia is wholly dependent on the mega surroundings and the task environments.
Mega environment states to major forces external tothe organization which has the possibility to significantly affect the operation of an organization (McShane, &Travaglione, 2007). They are the broader conditions that affect the operation of an organization. The mega environment is divided into several broad areas; these are; economic, legal and political factors, social, cultural factors, technological advancements and globalization. The relevance of these factors and their relationship to Lacomptehas been discussed below.
According to Australia (SIH) Survey of Income and Housing, which gathers data from families to evaluate the level of wealth and income and hoe they changes over time. In 2013-2014, the average income for $998, which is an increase from 2011-2012, when the average income was $964, and an increase from a decade ago, where in 2003-2004, the average household income was $764. The increased income reflects an increased consumption needs. The average household wealth in 2013-2014 was $35,600 for middle wealth households and $2.5 million for the wealthy households. More families’ income reflects into ore disposable income, which is good for this kind of business(“6553.0 – Survey of Income and Housing, User Guide, Australia, 2013-14”, 2015).
Australia’s disposable household income
Taking into account the economics of the given buisness, it is probable to overlook the factors relating to global financial aftermath as Australia has consistently resisted falling into recession. Additionally, the household income has consistently risen over the years. In a reverse situation, where the income is dwindling the consumers tend to be cautious on their spending.
Being a necessity of life, hairdressing is usually less affected by changes in other customer areas. In the IBIS 2011 world report, states that the changes in real household disposables usually have some effects on beauty and hairdressing industry. The IBIS report further projected that, despite the present consumer market not being the best, the market share in the foreseeable future is expected to be positive in coming years. In 2015, the revenue from the hair dressing industry was 5 billion AUD,(“Hairdressing and Beauty Services in Australia Market Research | IBIS World”, 2016) which is a significant increase from the previous years. The economic analysis depicts that, the investment in hairdressing industry in the coming days will be a worth investment.
|Revenue in Australian Dollars||% growth|
Fig: Projected Revenue outlook inAustralia’s the hair dressing industry in 2011.
Technology aspect refers to current knowledge towards thecreation of goods and services. According to IBIS, the hair dressing has not changed much , among them the most significant is laser treatment which requiressignificant financial investment. However, the technology that is most significance in the hairdressing industry is the auxiliary technology that helps in customer support, booking and ensuring customer comfort. Another significant part of technology is the social media which is evolving at a fast rate, Facebook, Instragam, twitter, among others have become an important tool for creating connections and marketing(“Hairdressing and Beauty Services in Australia Market Research | IBISWorld”, 2016).
Some recent technologies that will need to be applied to maximize salon experience include, QR codes, cloud computing, integrated marketing, appointment-filling programs, webcams, online client surveys, mobility and geo locations. These advancements will go alongway in molding markets and the realization of the right product for the market will help any business that wants to live in the future.
Government and Legal Aspects
All businesses must strive to ensure that they meet all the government legislations. Australia is a democratic country meaning that they have a cycling system where they choose their leaders after sometime. Government policies can result in anincrease in tax, interest, or new legislations, which will have a direct effect on the business. Legislations such as occupation Health and safety law exists which ensures that a hairdressing salon safety standardconforms to a given criteria so that it is safe for the employees and the public to operate safely. There also exist regulations towards the training requirements for the profession, the minimumwage for an employee. Before the salon establishes oparations, the clients must have complied with these two areas(O’Neill et al., 2013).
On July 2012, the Australian government introduced a carbon tax, at $23 per ton of carbon (Robson, 2013), the net effect is higher cost and inversely higher electricity costs. In prospective place of operation, the business can opt for greener electricity sources thereby staying away from these costs.
Globalization and international aspects
Australian hairdressing industry has been a preserve of home market and less international imports and therefore has been less affected by international developments (Dunning, 2014). The international element is fairly a strong aspect in determining the market prospects for Australia. However,Lecompte is an American franchise that will bring American celebrity hairdressing styles; this will bring more competition and impact the industry.
Social Cultural and Demographic Aspects
The society is continually changing, and their taste and fashion are changing too. The society changes bringing up new styles and makes others obsolete. A good example is thatin traditional days luxury products were only a reserve of the rich who could afford these goods and services. However, as time has gone by and there is increased income, and there has more middle-income people are getting into the luxury market. Again, while the older people require the personal interaction, younger people are more likely to do their businesses online.
Melbourne is found in Victoria State, which has enjoyed a consistence rise in population and only second after NSW in Australia. While the population is significantly high, the luxury hairdressing is amostly untapped area, and hence an investment in Australia is a highly probable investment. The investment of the hairdressing business in Victoria state is particularly significant considering the low age of the population, with themajority being in the age bracket of 25- 29. Population forecast indicates that the population will continue in this trend and the same age group will dominate the population up to 2021(“3101.0 – Australian Demographic Statistics, Mar 2016”, 2016).
Of importance to this characteristic age group is thehype this young population gives to looks and appearance. The looks demanded by these young men have seen the decline of the traditional barbershops and replacement with unisex salons. Lecompte is a high end salon for celebrity looks, which most of theyoung people wish to achieve and thus will be a great investment.
|State/ territory||Average growth rate in%||Volatility %|
|New south wales||3.8||38.0|
Fig: Growth rate and volatility in the last four years.
Task environment is anexternalenvironment, whichaffects the ability of the business to reach its organizational goals. It is usually made up of the people or businesses, which are in direct contact with the business. These includecustomers, suppliers, competitors, and employees
Suppliers are the people and businesses who supply the various resources required by the business (Rothaermel, 2015). The main materials needed for the investment are high-endsalon utilities and hair care products. The procurement must also include an up to date IT facilities, which will work to enhance customer service as stated earlier. It is necessary that careful selection of these suppliers is made. It is highly suggested that bidding of all these required equipment be done online.
Customers are the people or businesses who purchase the products or services produced by an organization (Rothaermel, 2015)… victoria state, in which Melbourne, the probable location , is found, is a highly diverse location, with themajority of its resident born, oversees and young. This makes it easier to enter the market and flexible in developing or coming up with new hairstyles.
One of the major markets for thesalon is repeat customers; the venture must work hard to ensure that the clients are well satisfied so that they can advertise the company more through the word of mouth and return. The key goal of this business should be to provide high quality services to their clients. Melbourne is also home to a number ofaffluent individuals, severalmillionares, and billionaires, making it a prime market for Lacompte salon.
These are organizations who offer similar service(Rothaermel, 2015).; Melbourne is not short of high end hairdressing outlets which will be a formidable challenge for Lacompte. These include Ibiza Hair, Rakis on Collins and Sui Hair salon. Most of these competitors mainly concerned with female hairdressing, a thus concentration on male hairdressing can be an added advantage.
These people are potential to provide labor to the organization.The federal government of Australia has listed the hairdressing profession as among those that have ashortage of skills and possibility of employing migrants. The organization should ensure that the ethnic background rhyme with the cultural background of surrounding environment. The employer should ensure high retention of employees as high turnover of staff has been cited as a major problem for this business by service skills Australia.
The government agencies
These are the local arms of the government responsible for implementing the government regulations at the ground level. The main area of compliance is hygiene and minimum health standardsunder the public health wellbeing act of 2008, and the main control office is Melbourne.
Conclusion and Recommendations
The main aim of this report was to advice the client, Lacompte Hair salon, whether expanding to Melbourne is a viable idea. Constructed on the above examination of both mega and task environment, the deductionis drawn is that the growth of the business in such a move will be a sound move. The research also incorporated a variety of business and administration recommendations that will ensure thesuccess of the investment. These include; Investment on technology should be primarily focused on auxiliary technology, those that are responsible for improving customer service and bookings.The target client for the business should be the young, affluent population, those that are at the age of between 20 and 30. Special interest should be taken on themale customer base, which has been less exploited.To ensure the retaining of staff, special interest should be on training the employees and developing them to provide a clear pathway.Special interest should be taken into account when hiring to ensure that the staff hired to have their ethics reflect with the cultural background of the area.Areas and regions with young population, marketing should focus on social media marketing. The focus should be mainly on high quality as hairdressing business is dependent on repetition of events.
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