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Case Study: A Leading DIY Company

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Case Study: A Leading DIY Company
(a) A leading DIY company is considering expanding its customer base by analyzing the two possible options. The management evaluates the alternatives of increasing the online sales or opening a retail store. The budget is important for implementing the decisions made by the management.
The management is choosing the alternatives based on its objective to increase its sales in the upcoming years. These objectives may be stated in terms of the number of units to be produced, the desired quality, the expected unit cost and the desired stock levels. It has a set target to increase its revenue by at least 10% every year. The company needs to consider the number of items it wishes to sell and the value of each of them. High value products such as …show more content…
For an online store, the costs involved are the shipping costs, buying a domain name, development of the domain name. Online shopping need not require expensive storefronts, rather cost effective warehouses are used to hold inventory. Opening a new central warehouse can help increase the sales for an online store by providing quicker shipping. Shopping online can also help you find lower prices than in a retail store as most ecommerce sites do not add tax to their prices and opening an online store has a lower starting investment as compared to retail store in which the starting investment is comparatively higher.
Decision making consists of two main processes namely, the planning process and the control process. After setting the objective, searching for alternatives and examining the pros and cons of each option, the company needs to take the decision and choose the best alternative which helps the organization attain its set target. The company also needs to keep in mind the non-financial objectives they need to …show more content…
The products might also have slight variances from what the client has ordered online. Online shopping is also difficult for customers who are not well-versed with online shopping. Also, opening an online store increases the competition as there are numerous businesses selling the same good and most of them would already be recognized, making it difficult for a newly set up company to flourish. The profit margin would also be comparatively less for online stores as the prices are much lower than in a retail
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