Word Formatting Assignment I.

INTRODUCTION

Susan's Special Lawns, a small entrepreneurial business in the landscape industry, currently offers wildflower seeds for sale, and lawn maintenance and design. The company has been in existence three years and has experienced a moderate amount of success. The owners of the company have now come to the major crossroad of deciding if it is feasible to give up all outside employment and concentrate their undivided energies on the business. This report will analyze the current situation of Susan's including an in-depth discussion of the industry and the competitors, a financial and ratio analysis, and an evaluation of the company's strengths, weaknesses, opportunities and threats (SWOT). We then will offer alternatives the company can consider including the strengths, weaknesses and financial forecasts of each option. Finally, we will select the alternative which best suits the company, offer an implementation plan for that alternative and provide a back-up plan. II. In analyzing Susan's Special Lawns, we made the following assumptions:

That the implied mission and goals of the company are to deliver quality landscaping services, market unique wildflower products, and impart an appreciation for nature's beauty to customers. That the company is located in Grand Junction, Colorado. We selected this city because it meets the criteria outlined in the supplied information including: size and population; distance from a major city; inclusion of a state university and a hospital; city revenues that are derived from agriculture, light manufacturing and extractive industries; and a history of boom to bust periods. Using Grand Junction as a reference and 1990 U.S. Census information, we determined the median income to be $19,000. Employing that as a guideline, we determined that the Jensen's could "live comfortably" on $35,000. For the financial/ratio analysis, we forecasted the figures to complete the partial information supplied for 1991 and used pro forma figures for the alternatives' financial forecasts. We will begin by thoroughly examining the implied mission, goals and objectives because the analysis uses this information throughout the report. III. Implied Mission Statement

Based on our studies of the company's history, activities, and future plans, we perceived the following implied mission statement, goals and objectives, all of which express the owners' vision about the venture:

We provide our customers with quality service, knowledge, and understanding of landscaping while helping them better appreciate and utilize the unique characteristics of nature's beauty. In doing so we uphold the following values: I. II. III. IV. V. VI. Delivering quality in everything we do Taking pride and enjoyment in our work Maintaining our love and respect for each unique plant variety Making a positive difference in the lives of our customers Working closely with our customers to realize their yards' potentials Continuing to learn about new varieties of wildflowers1

Susan began her business out of her love for studying and growing wildflowers. When she realized what impact she had on the people that admired her garden, she decided to share her special "world" with as many people as she could. As the company grew, she continued to follow her basic mission. However, once her business expanded enough for her husband to join her, their mission and goals began to stray from Susan's original path. At this stage of the company's life, Susan's vision encompasses activities that relate to a wider variety of landscape services other than wildflower seeds. However, the values that Susan's maintains have remained unchanged. GOALS "Make the business large enough to support us comfortably without other sources of income." --David Jensen Continue to sell wildflower seeds and educate people about wildflowers' characteristics and special requirements. Work closely with our customers to determine the best designs and products to fit their needs. David and Susan's intention was to grow the business enough to enable him to quit his job and allow the family to live "comfortably." In a city of 29,000 in the Rocky Mountains at this time the median income was approximately $19,000 (see Exhibit 1). Therefore, we determined a salary of $35,000 would provide a "comfortable" living because this is in an above average range for the area but not extremely so. In addition, analyzing past and possible future revenue streams, this salary is "attainable." Even with additional business units, the company would continue selling wildflower seeds as a core venture. Wildflower seed sales has brought Susan's significant profits and helped the company grow and move into other business segments. Moreover, wildflower seeds growing and design is Susan's core competency, her pride and enjoyment, and the main reason for starting the company in the first place. Therefore, regardless of what other business segments the company moved into, it preserved the seed segment.
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David Jensen- A famous writer

Some of Susan's key values include preserving the company's personal attention to its customers and providing quality of service. That is why a goal that derives from the mission is to work closely with customers, listen to their demands, and work toward accomplishing their needs. Objectives The objectives that have been derived from the implied mission and goals include: * Deciding on a specific direction in which to take the business in order to meet goal of self-sufficiency; and * Incorporating CAD into the business, to facilitate landscape planning. Currently, Susan's is in a position of uncertainty as to what course of action that it should undertake. That is why one of the company's primary objectives is to decide on the direction. Later, we will propose several alternatives, evaluate these, and identify the alternative that most closely satisfies Susan's goals. Porter's "five forces of industry competition" The influence of structure on an industry often determines the level of its profitability. Structure variables affect competition and profitability in industries of all types. Most industries fall into a category somewhere between a monopoly and perfect competition. For any industry in this range, the competitive behaviors most likely to emerge, and the resulting levels of profitability, are predictable by examining structural features and their interactions. Michael Porter's "Five Forces of Competition" model provides a useful framework for classifying and analyzing structural features. It is based on five sources of competitive pressure common to all industries and examines how each of these sources affects the industry's profitability. Although each industry will differ slightly from others in the degree of impact from each source, all industries are affected at least somewhat by each factor. These sources include threat of entry, intensity of rivalry among existing competitors, pressure from substitutes, bargaining power of buyers, and bargaining power of suppliers. Threat Of Entry Economic theory supports the idea that a company will enter an industry upon the assumption that it can make a profit. This generally holds true, unless there are established barriers making a profitable entry much more difficult for the newcomer. These barriers are usually created by established firms to prevent a drop in their own profits, which commonly results from the addition of competitors. In addition to these barriers to entry, the new entrant's expectations of retaliation from existing firms will greatly affect its strategy. Barriers To Entry

Porter identified six separate barriers to entry to help determine the extent to which potential new entrants affect competition in an industry. We used these to help determine how new entrants affect Susan's Special Lawns and the lawn care industry. Capital Requirements necessary for entry into an industry create a huge barrier, especially if the costs are required all at once and are basically unrecoverable. In the industry we defined as 'local residential landscape and lawn care,' there are no major capital requirements unless the entering firm desires to compete directly with large commercial installation providers. This would require the purchase of unique, specialized equipment such as bucket trucks for tree trimming, clam shells for transplanting mature trees, and power spraying equipment. Although this equipment can only be used for its designed purpose, it has market value and can be liquidated if necessary. In the area of wildflower seed sales the only capital requirement in addition to the cost of inventory and packaging is the cost associated with customer credit. A small entrant into this industry faces definite barriers to entry in dealing with retailers and other resellers if it lacks the resources to withstand a drop in sales while continuing to carry customer accounts. This is the only capital requirement Susan's faces. Economies of Scale are defined as the concurrent decline in cost per unit as production volume increases. These are especially evident in large sprinkler system installation firms that can capitalize on quantity discounts on parts. In addition, companies that are large enough or have enough contracts to justify owning sophisticated equipment, can greatly reduce their labor costs. This remains accurate in sprinkler system installation and landscaping markets, and creates barriers to new entrants that wish to compete for large-scale installations. However, these barriers will not affect firms wishing to compete only for small, labor-intensive jobs. Susan's has begun to enter the commercial market on a scale that is large compared to its prior jobs, but it does not directly compete with big, commercial firms that benefit from economies of scale. Most of Susan's customers are residential putting it in an industry segment that is not affected by this barrier. In the wildflower seed market, large mass-market distribution by the major national companies creates a barrier to entry at one level. However, such a barrier does not affect the specialized niche in which Susan's operates. Susan's niche is based on wildflower seeds as a gift. In addition, Susan separates her seeds into specific wildflower varieties, which the major national companies avoid. Cost Advantages Independent of Scale represent factors other than size and scale that create cost advantages in existing companies that new entrants are unable to reproduce. In a small, local market such as the one Susan's is in, the major cost advantages presenting barriers to entry are name recognition, local reputation, experience, and the availability of high-quality, low-cost labor. Susan's has a loyal following in the wildflower seed market, helping it to overcome these barriers while expanding into other areas of the industry. However, as a new entrant in other areas of the landscaping business, Susan's will still have to face these types of barriers to be successful. Product Differentiation creates a barrier to entry built around the uniqueness of the product or service and associated customer loyalty. This represents a huge barrier to new entrants in the form of up-front costs required to advertise heavily and possibly undercut prices to try to sway customers from existing

firms. In this industry, products are basically similar, so service and knowledge are key areas of differentiation used in creating loyalty among customers. Differentiation represents a major barrier in Susan's industry, and Susan has capitalized on it by her use of unique packaging ideas for wildflower seeds. The utilization of wildflowers in landscape designs is also somewhat unique, but may not create the advantage for Susan's that the specialized wildflower seed packaging does.