Escola Universitària d’Enginyeria Tècnica de Telecomunicació La Salle
Final Thesis
Graduate in Management of Business and Technology
INTERVENTION OF SMALL BUSINESSES AGAINST BIG SUPERMARKETS:
A Multiple Case Study in:
Andorra
& La Seu D’Urgell (Spain)
Student Promoter
MERITXELL EGEA NAVARRO GERMAN ARAGON
ACTA DE L'EXAMEN DEL TREBALL FI DE GRAU
Meeting of the evaluating panel on this day, the student:
D. MERITXELL EGEA NAVARRO
Presented their final thesis on the following subject:
INTERVENTION OF SMALL BUSINESSES AGAINST BIG SUPERMARKETS:
A Multiple Case Study in Andorra & La Seu D’Urgell (Spain)
At the end of the presentation and upon answering the questions of the members of the panel, this thesis was awarded the following grade:
Barcelona,
MEMBER OF THE PANEL MEMBER OF THE PANEL
PRESIDENT OF THE PANEL
2 Case management Pere Egea Meritxell Egea
Intervention of small businesses against big supermarkets:
A Multiple Case Study in: Andorra & La Seu d’Ugell Village (Spain).
By Pere Egea and Meritxell Egea
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ABSTRACT
The objective of this project for the end of our coursework is to realize a detailed study that will allow us to develop a marketing plan and introduce new technology in small businesses to help them successfully face competition from large supermarkets.
Small businesses in La Seu d'Urgell have seen a large decrease in their business since the opening of a large supermarket (Mercadona). The same situation exists in Andorra, but with somewhat less of a negative impact. Therefore, there is a necessity for a detailed study to determine who is aware of this problem and what measures can be taken to correct the problem.
The findings of this case study recognize a very negative effect at a global level on small businesses. There must be an important restructuring, at both the internal and external levels to be able to compete successfully with large stores.
Keywords: Competence, Demand, Small businesses, Restructuting.
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TABLE OF CONTENTS
ABSTRACT ...... 4 LIST OF TABLES AND FIGURES ...... 7 FIGURES ...... 7 TABLES ...... 8 GRAPHS ...... 8 ACKNOWLEDGEMENTS ...... 9 EXECUTE SUMMARY ...... 10 WHY DID WE CHOOSE THIS TOPIC? ...... 11 INTRODUCTION AND PROBLEM STATEMENT ...... 12 LITERATURE REVIEW ...... 13 DEFINITION OF COMMERCE ...... 13 THE GLOBALIZATION OF MARKETS ...... 14 BRIEF HISTORY OF SMALL BUSINESS ...... 15 BRIEF HISTORY OF SUPERMARKETS ...... 16 COMPARISON: SMALL BUSINESS VS SUPERMARKETS ...... 17 HOW OTHER COUNTRIES ARE DEALING WITH THIS PROBLEM ...... 18 BACKGROUND OF THE CHALLENGE IN ANDORRA ...... 19 ANDORRA, THE PYRENEAN COUNTRY ...... 19 EVOLUTION OF COMMERCE ...... 20 COMMERCE NOWADAYS ...... 22 CURRENT PRACTICES TO DEAL WITH THE PROBLEM IN ANDORRA ...... 24 BACKGROUND OF THE CHALLENGE IN LA SEU D’URGELL ...... 26 LA SEU D’URGELL, THE CRADLE OF CHEESES ...... 26 EVOLUTION OF COMMERCE ...... 27 COMMERCE NOWADAYS ...... 29 CURRENT PRACTICES TO DEAL WITH THE PROBLEM IN LA SEU D’URGELL 30 PRIMARY RESEARCH ...... 32 ANALYSIS OF RESULTS ...... 32 ANALYSIS OF THE DIFFERENT ALTERNATIVES ...... 42 PROPOSED SOLUTION...... 43 PHILOSOPHY ...... 43 COMPETITIVENESS ...... 43 PROFITABILITY ...... 43 UPDATING ...... 44 COMMERCIAL FOUNDATION ...... 44
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INTERNAL STRUCTURE ...... 45 STRUCTURE OF MANAGEMENT ...... 45 COMMUNICATION ...... 45 COMPANY FLOW CHART ...... 46 OBJECTIVES ...... 47 PRINCIPAL MOTORS ...... 47 CONCLUSIONS ...... 54 APPENDIX ...... 55 LITERATE REVIEW ...... 55 CHARACTERISTICS OF SMALL BUSINESS ...... 55 CHARACTERISTICS OF SUPERMARKETS ...... 56 BACKGROUND OF THE CHALLENGE IN ANDORRA ...... 57 HISTORY, INSTITUTIONAL ORGANIZATION, ECONOMY AND SOCIETY OF ANDORRA ...... 57 CURRENT PRACTICES TO DEAL WITH THE PROBLEM IN ANDORRA ...... 58 PEDESTRIAN STREET ...... 58 THE CREATION OF ANDORRA SHOPPING FESTIVAL ...... 59 THE CREATION OF VIVAND ...... 60 THE THYSSEN COLLECTION ...... 61 THE FERRIS WHEEL ...... 62 THE “CIRQUE DU SOLEIL” ...... 63 GRANDAVALIRA AND THE WORLD CUP ...... 64 MOUNTAIN BIKE & TRIALS WORLD CHAMPIONSHIPS ...... 65 BACKGROUND OF THE CHALLENGE IN LA SEU D’URGELL ...... 66 HISTORY, INSTITUTIONAL ORGANIZATION, ECONOMY AND SOCIETY OF LA SEU D’URGELL ...... 66 CURRENT PRACTICES TO DEAL WITH THE PROBLEM IN LA SEU D’URGELL ...... 67 REPRESENTATIONS OF THE “RETABLO DE SAN ERMENGOL” ...... 67 SEASON OF THEATER AND DANCE ...... 68 MEDIEVAL MARKET OF “CANONIGOS” ...... 69 TOWN FESTIVAL ...... 70 OPEN AIR THURSDAYS...... 71 PRIMARY RESEARCH ...... 73 SURVEY ...... 73 PROPOSED SOLUTION...... 76 DIREFENT COMMITTEES INSIDE THE COMPANY ...... 76 FUTURE STUDIES ESSAYS, FALL 2015 ...... 79 ORGANIZATIONAL MANAGEMENT ...... 80 SOCIAL CHANGE – SUSTAINABLE DEVELOPMENT ...... 82 ECONOMICS – THE ECONOMIC RISE OF AFRICA ...... 84 MARKETING AND THE NEXT GENERATION ...... 86 THE BEST WAY TO PREDICT THE FUTURE ...... 88
Word Count: 8.350
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LIST OF TABLES AND FIGURES
FIGURES Figure 1: Article from an Andorran newspaper ______11 Figure 2: Laternenmacher-1568 ______15 Figure 3: The original Piggly Wiggly Store, Memphis, Tennessee ______16 Figure 4: Illustration of a small business ______17 Figure 5: The illustration of a supermarket ______17 Figure 6: Map of Andorra______18 Figure 7: Andorran Euro coins ______18 Figure 8: Shopping in Andorra ______22 Figure 9: Example of sales ______23 Figure 10: Pedestrian Street Andorra ______22 Figure 11: Andorra Shopping Festival ______23 Figure 12: The creation of vivand ______22 Figure 13: Thyssen Collection ______23 Figure 14: Ferris wheel Andorra ______23 Figure 15: Cirque du Soleil Andorra ______23 Figure 16: Ski World Cup ______24 Figure 17: Mountain Bike World Championships ______24 Figure 18: City center of La Seu d’Urgell ______26 Figure 19: Livestock fair in La Seu d'Urgell, 1890 ______27 Figure 20: Cheeses from the Cadí region ______27 Figure 21: Weekly Market, La Seu d'Urgell ______28 Figure 22: Representation of the “Retablo de San Ermengol” ______29 Figure 23: Theater and dance ______29 Figure 24: “Mercat medieval dels canonges” ______29 Figure 25: “Dances i balls” ______30 Figure 26:”Correfoc amb els Diables de l’Alt Urgell” ______70 Figure 27: “El pregó” ______70 Figure 28: Outdoor movie in the cloisters of the catedral ______30 Figure 29: Advertising of bars and restaurants in summer 2015 ______71 Figure 30: Company Supply Chain ______51 Figure 32: Andorra pariatges 1278-1288, Government of Andorra ______57 Figure 31: Pin of the Andorran constitution ______57 Figure 33: Cathedral of Santa Maria ______66 Figure 34: Future studies______79
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TABLES Table 1: Comparison between Small businesses and Supermarkets ______17 Table 2: Management Committee ______76 Table 3: Committee to Supervise Procedures (Controller) ______76 Table 4: Committee for Control and Development ______77 Table 5: Commerce Committee ______77 Table 6: Committee of Stores ______78
GRAPHS Graph 1: Small businesses turnover during the last years ______12 Graph 2: World Exports as Percentage of GDP, 1820 to 2009 ______14 Graph 3: Andorra GDP Per Capita 1970-2015 ______20 Graph 4: Composition of GDP (2014) ______21 Graph 5: Distribution of businesses by number of employees ______21 Graph 6: Shops and businesses in La Seu d'Urgell. ______29 Graph 7: Solution question 1 ______30 Graph 8: Solution question 2 ______31 Graph 9: Solution question 3 ______31 Graph 10: Solution question 4 ______34 Graph 11: Solution question 5 ______34 Graph 12: Solution question 6 ______35 Graph 13: Solution question 7 ______35 Graph 14: Solution question 8 ______36 Graph 15: Solution question 9 ______34 Graph 16: Solution question 10 ______37 Graph 17: Solution question 11 ______37 Graph 18: Solution question 12 ______38 Graph 19: Solution question 13 ______38 Graph 20: Solution question 14 ______39 Graph 21: Solution question 15 ______39 Graph 22: Solution question 16 ______40 Graph 23: Commercial foundation of the company to be created ______44 Graph 24 : Company commercial basis ______45 Graph 25: Company flow chart ______46
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ACKNOWLEDGEMENTS
We would like to thank everyone who has helped us in the extensive process of investigating and writing this thesis:
- All the employees and owners of the establishments of Andorra and d'Urgell who have collaborated with us in the polling process.
- Also the tourist information offices of Andorra and La Seu D'Urgell who have made our work easier by helping us with localizations of small businesses and large stores in both locations, with the evolution of tourism and various other matters.
- The Ministry of Tourism of Andorra, which has provided us much valuable guidance in how to develop and finalize this project.
- The Comu of Escaldes-Engordany, for all help and advice given to us.
- German Aragon who is our promoter and has guided us through out the whole project giving us feedback and advice.
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EXECUTE SUMMARY
This thesis analyzes the situation of small businesses when faced with competition from large stores, perhaps owned by multinational companies.
This is a case study based on businesses located in the country of Andorra and the city of La Seu D’Urgell, Spain. We have looked at the background of the challenge and current practices to deal with the problem in both locations. We hope that our study and the conclusions we reach will serve for similar businesses, which find themselves in the same or similar circumstances, wherever located.
To conclude this project and be able to propose a realistic and satisfactory solution, first, we explained the problem that exists today for small businesses due to the emergence of large stores. Next, we analyzed the rise of commerce and the situation of global markets. Next, we researched and documented the appearance of the first stores and of the first supermarket; in order to later make a comparison between them. Finally, we have researched practices being used by small businesses in various parts of the world to enable them to stay in business.
Next, we have analyzed the various alternative solutions to the existing problem and, finally, we have developed a proposal that we believe most likely to produce a satisfactory outcome to the situation.
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WHY DID WE CHOOSE THIS TOPIC?
The idea occurred to us after reading an article in an Andorran newspaper (see below). The article concerns the opening of the Mercadona supermarket in La Seu d'Urgell on the frontier between Spain and Andorra and how to attract Andorran customers.
Figure 1: Article from an Andorran newspaper Source: www.elperiodic.ad
The article raises a current issue and a very recent problem, in such a way that it fulfills all the requirements for making a study and developing a viable solution, as we have done.
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INTRODUCTION AND PROBLEM STATEMENT
Businesses today face a need to better understand consumer behaviour due to high competition existing in the marketplace. Small businesses face a big challenge from large supermarkets. They must do something if they want to survive in the market because large supermarkets are taking control of the food sector all over the world. We live in a world where people are in a constant rush with very little free time so it is much easier for them to go to a supermarket and buy everything they need from food to home equipment rather than going to several small stores. Moreover, big supermarkets in general belong to multinational enterprises, which have resources and capabilities to reduce the prices of their products and offer promotions and discounts. Even though the quality of service or products is not always as good as in small shops, the ease of one stop shopping catches consumer’s attention. Price has always been very important in the consumption process and it is another strong point that big supermarkets are focusing on in order to attract more customers. We chose this topic because we think there is a need and the problem is serious. We live in Andorra where there used to be only small shops and in the last 20 years several large supermarkets operated by international companies have been opened, attracting the majority of the population, with a resultant closing of many small businesses. Therefore, we consider there is an important need for small businesses to react to this new form of competition and try to understand consumers in order to fully meet their needs and attract them to buy in small shops rather than in big supermarkets. This paper focuses on the problem in general of explaining what is happening at a global level by stating the similarities of small businesses and big supermarkets as well as the differences between them. After that we will be focusing more on the two places where we did primary research: Andorra and la Seu d’Urgell (Spain). We are going to explain a little bit about the history and the evolution of commerce in both places which is completely different, because Andorra is a small country and la Seu d’Urgell is a small city in a large country (Spain); therefore they have different approaches towards doing business. Having said that we will look more deeply into how small businesses are affected by big supermarkets in both places and what small businesses are doing now to try to solve the problem. We will analyse the strategies they are using to try to solve the problem and then we will try to propose possible solutions to help small businesses survive in the marketplace.
In the graph below we can see the fall of the Spanish Small Businesses in recent years:
Graph 1: Small businesses turnover during the last years Source: www.porcentual.es
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To study this problem we used the following methodology:
Secondary research, we did a literature review.
Primary research (page 30) for which we did Interviews with the Chamber of Commerce, the Tourist Information Offices, the Ministry of Tourism and “El Comu” (Town hall). In addition to this, we did questionnaires with merchants and some of their customers.
LITERATURE REVIEW
DEFINITION OF COMMERCE
Commerce is the socio-economic activity that is the exchange of goods and services for use, for sale or processing. It is the change or dealing with something in exchange for something else of equal value. Commercial or industrial activities are the exchange of goods or services that are performed by a trader or a merchant.1
There are two types of commerce, domestic trade and foreign trade. But we are only interested in domestic trade, the trade that is conducted with the boundaries of one country.
After this brief introduction to the concept of commerce and trade, we are going to focus on two of the many business sectors that exist today and that compete with each other.
Small businesses:
Small businesses are establishments in which consumers receive direct attention from the salesperson (often the owner) who also gives advice about the different products he offers and the benefits and features of the different products trying to create a friendly relationship based on trust. 2
Supermarkets:
A supermarket is characterized by making all the products available to be selected by consumers (self-service) who then bring them to the cashiers to pay for them. The supermarket is organized by dividing the space through shelves in which the products are organized according to a more or less specific order. The purpose of this arrangement is that consumers can walk through the different halls freely to select the necessary items.6
1 www.definicion.de 2 www.definicionabc.com & www.wikipedia.com -Final Project 2016- 13 Case management Pere Egea Meritxell Egea
THE GLOBALIZATION OF MARKETS
Small firms play a larger role in the economy that it is often realized. Taking the United States as an example, close to 90% of American firms employ fewer than twenty persons, and companies employing almost half of the workforce have fewer than 500 employees. What is very important is that these smaller organizations are creating many new employment opportunities. Since World War 2, international trade has increased dramatically and foreign direct investment (FDI) as well. Domestic producers who have enjoyed the luxury of a highly protected home market find themselves facing direct competition from foreign owned multinational enterprises with better reputation and lower costs, resulting from economies of scale and scope, as well as systems for cheaper and better sources of labour, vendors, materials and subassemblies. Accelerated technological diffusion, integration of capital markets, reduced transportation costs and liberalization of trade barriers have all combined to increase the intensity of global interdependence. These trends are seen as giving preference in the future global market to big firms, reducing the future role of small business or even questioning its ability to survive. Small businesses need to find a way to gain competitive advantage over large firms such as by focusing on a sophisticated product for which world demand is limited, and developing firm specific advantages and nurturing them into globally competitive advantages.3
Graph 2: World Exports as Percentage of GDP, 1820 to 2009 Source: Angus Maddison, World Bank World Development Indicators.
3 Pankaj Ghemawat, 2010, Theodore Levitt, May 1983 & Harvard Business Review, May – June 1983 -Final Project 2016- 14 Case management Pere Egea Meritxell Egea
BRIEF HISTORY OF SMALL BUSINESS
Small businesses were not invented by anyone, but have arisen from a human need over time. That is why, to explain the history of small businesses, we must go back to the origin and the history of trade.
Commerce began to develop when humans started living in society, once families became established and communities appeared. The growth of communities resulted in new ways of social interaction and new requirements arose for the improvement of food and clothing production and distribution, as well as general living conditions. With advances in techniques and the search for greater variety of commodities, division of work gradually arose. Instead of one man covering all of his and his family’s needs (search for food, garments, housing, etc.), he specialized in one activity and swapped his good for others, with other people who specialized in other tasks and products. At the beginning there was a barter system, which means the direct exchange of one good for another.4 Nevertheless the barter system is not enough. A point is reached where not all goods are directly exchangeable for other goods, meaning that some goods cannot be used as payment for others. For example, if a man produces apples and the other one garments and the tailor wants apples but the apple man does not want garments the swap cannot be completed. Because of that, precious metals and rare and valuable objected began to be used as part of the trade system: from salt, to grain to precious stones, later including shells or spices. This is how the monetary system developed and little by little it homogenized into coins of precious metal, such as gold and silver.5 With the introduction of coins the banking system was created, first in Italy and then the rest of Europe.6 Nowadays commerce is an essential activity in every country, either nationally or internationally, or both. The currency of each country is used to measure transactions and because each country has a different currency it is necessary to exchange it and keep in mind its exchange rate. After a brief introduction to the history of commerce, we can understand better why small businesses are specialized in a specific type of product.
Figure 2: Laternenmacher-1568 Source: Kolossos, 1 july 2005. Wikipedia
4 www.economiaes.com, March 2014 & www.wikipedia.com 5 www.wikipedia.com 6 Dr. D. Omar Ricardo Gómez Castañeda, 2015 & www.economiaes.com, March 2014 -Final Project 2016- 15 Case management Pere Egea Meritxell Egea
BRIEF HISTORY OF SUPERMARKETS
Clarence Saunders created the first self-service market in the United States on September 16, 1916. He wanted to save money by reducing the number of clerks in his small shop. He thought of creating a store where the customer was served everything he needed, employees took care of consumers by trying to help them find what they wanted and making it easy for customers to find what they were looking for and then pay a cashier who was responsible for collecting all payments. Consequently self-service stores were born supermarkets as we know today. On October 21, 1916 Clarence Saunders patented the idea and not only reduced the number of store clerks and saved more money, but also increased the speed of sales to his customers and provided them a comfortable shopping experience. Clarence Saunders created the first supermarket chain in the world, which was called “Piggly Wiggly”.7
Figure 3: The original Piggly Wiggly Store, Memphis, Tennessee Source: Mattes, Feb 2007. Wikipedia
7 Alfred López, enero 2007, The Western Fruit Jobber IV, July 1917 & Gray, Christopher, sept 2006 -Final Project 2016- 16 Case management Pere Egea Meritxell Egea
COMPARISON: SMALL BUSINESS VS SUPERMARKETS
Small Businesses Supermarkets
Figure 4: Illustration of a small business Figure 5: The illustration of a supermarket Source: Jamesn, Nov 2014. Eurobricks.com Source: Admin, Jul 2015.Httpporedastore.info
Small local size Big local size. (Less than 15,000 square feet) (Around 15,000 square feet).
They are in the centre of villages They are in the outskirts of villages
Little variety in the products they offer Wide variety of products
High quality in the products they offer Medium quality in the products they offer
They are not specialized in the products they They specialize in the products they offer offer
They offer a personalized service to their They do not offer a personalized service to customers their customers
The prices of their products are high The prices of their products are low
Annual revenues of $2 million or less Annual revenues of $2 million or more
Table 1: Comparison between Small businesses and Supermarkets
For more information about the characteristics of supermarkets and small businesses, please look at pages 54 and 55 in the appendix.
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HOW OTHER COUNTRIES ARE DEALING WITH THIS PROBLEM
Various payment plans for shoppers, organization of contests, cultural activities and playground areas for shoppers' children, prizes for customer loyalty and encouraging words for owners of troubled businesses. These are some of the methods by which small businesses try to defend themselves in the face of competition from giant superstores and commercial centers, or malls.8
Small business owners all over the world, although very pessimistic about the future of small business in general, do not want to face the future with their arms crossed. The difficulty of competing on the basis of price with large stores and the negligible notice or help afforded by local government to their plight has sharpened their imagination, and they have begun a wide variety of activities to try to compete on factors other than price, to the benefit of consumers.9
Owners of small businesses, although supporters of different formulas to deal with the problem, agree on the identity of their principal problems: the loss of purchasing power of consumers, large stores and malls and the deterioration of inner city streets and plazas. Aware that these factors keep consumers away from areas where their stores are located, the business owners are obsessed with attracting the largest number possible of potential customers to their neighborhoods.10
“It's about creating an image that distinguishes us”, explains a small business owner in Barranquilla, Colombia. “We have to differentiate ourselves from the large stores that are doing so much damage to small, traditional establishments” he adds.11
Other business owners are supporters of activities that give a direct, easily recognizable benefit to their customers. These businesses offer a variety of payment plans to their customers.12
In cities around the world there are many small businesses, which appear to have lost hope and resign themselves, in the face of the large stores, to joining in an ever-increasing flood of closings and liquidations.13
Returning to Spain, the president of the Business Owners Association of Barcelona Street, in La Coruña, admitted he felt “overwhelmed” after having checked the results of the latest sales figures and affirmed that those who are able to maintain their businesses should feel fortunate. “The sales are the worst I have seen”, said Jose Manuel Martinez.14
As we can see, there is no one solution that is being attempted by the majority of business owners. They simply resign themselves and close their shops.
8 www.laopinioncoruna.es 9 www.economia.elpais.com 10 www.prensa.com 11 www.zonacero.com 12 www.destinocartagena.co 13 hwww.cnnexpansion.com 14 www.laopinioncoruna.es -Final Project 2016- 18 Case management Pere Egea Meritxell Egea
BACKGROUND OF THE CHALLENGE IN ANDORRA
ANDORRA, THE PYRENEAN COUNTRY
The Principality of Andorra is a European state in the heart of the Pyrenees between France and Spain. Its territory is made up of 468 square kilometres. Andorra has the largest area suitable for skiing in all the Pyrenees. The official language is Catalan, although Castilian and French are also spoken.15 Andorra is the only country of Europe, which uses EURO as its official currency without formal agreement with EU. Andorra has never had its own currency. In 2013 as a result of negotiations with the European Union Andorra received the right to mint its own Euro coins.16(Figure 7) Today there is a population of more than 70,000. The capital of the Principality is Andorra la Vella.
Figure 7: Andorran Euro coins Source: all-andorra.com/euro/
Figure 6: Map of Andorra Source: ezilion.com/europe/Andorra-maps.html
For more information about the history, institutional organization, economy and society of Andorra, please look at page 56 in the appendix.
15 guiAND 1998/99. (p.9) 16 all-andorra.com/euro/ -Final Project 2016- 19 Case management Pere Egea Meritxell Egea
EVOLUTION OF COMMERCE
The great economic and social changes of Andorra began during the 1930s, and strengthened in the course of the second half of the century, to culminate with the adoption of the Constitution, in 1993. The economy gradually oriented itself to the service sector, with scarce repercussion in the primary and industrial sectors, and it is sustained by trade, tourism and financial activities. The impact of mass tourism has radically changed the country in last half century. The analysis of commercial exchanges makes evident the capacity of adaptation of the commercial sector, as a historical constant, while the financial sector is completely consolidated.17 The geographical position and the availability of land for construction in Andorra la Vella and Escaldes-Engordany constitute key factors for economic development. The development of tourism and commerce began in the urban nucleus of Andorra la Vella and Escaldes-Engordany and spread throughout the country. The economy is oriented to the service sector with little impact on the primary and industrial sectors. There are three main pillars on which the economic activity in Andorra is based: trade, tourism and financial activity. All three are closely related and form the essential features of the Andorran economy.18 The Gross Domestic Product per capita in Andorra was last recorded at 33,377.52 US dollars in 2013. The GDP per Capita in Andorra is equivalent to 264% of the world's average. GDP Per Capita in Andorra averaged 33,801.22 USD from 1970 until 2013, reaching an all time high of 41,821.12 USD in 2007 and a record low of 27,574.57 USD in 1994. GDP Per Capita in Andorra is reported by the World Bank.19
Graph 3: Andorra GDP Per Capita 1970-2015 Source: www.tradingeconomics.com | World Bank
17 Maria Jesús Lluelles Larrosa, Universitat d’Andorra 2007. (p.72)
18 Maria Jesús Lluelles Larrosa, Universitat d’Andorra 2007. (p.74) 19 www.tradingeconomics.com -Final Project 2016- 20 Case management Pere Egea Meritxell Egea
The last time that Andorran GDP data was collected was in 2014, therefore we are going to focus our analysis on that data in order to analyse the different economic sectors:
As we can observe, the financial sector represents 23.22% of the total GDP and the commercial sector represents 15.82%, together they are the most influential. We will focus on the commercial sector, as it is the most relevant for us in order to develop our research paper.
Graph 4: Composition of GDP (2014) Source: Crèdit Andorrà At a Glance (p.8)
In the commercial sector there are around 1,400 enterprises representing 17.3% of Andorran service companies and 30.5% of employees in the tertiary sector of the country. The commercial activity in Andorra is affected by the poor industrial production in the country, which implies a strong dependence on the outside. There are three types of small businesses in the official classification of Andorran businesses, where the most important one is the retail trade. The distribution by number of employees shows the dominance of small business. Thus, 72.8% of businesses have five or fewer employees and only 4.3% have a workforce of over 25 employees. . However, the average size is 7.3 employees per company, exceeding the average of the services sector and the overall economy.20
Graph 5: Distribution of businesses by number of employees Source: Andorra básica (p.78)
20 Andorra básica. (p.78) -Final Project 2016- 21 Case management Pere Egea Meritxell Egea
COMMERCE NOWADAYS
The global reputation of trade in Andorra comes from the commercial tradition for decades.
The particular taxation system in the country results in a significant price difference in consumer goods compared with neighbouring countries, especially in the range of luxury items, with prices being lower in Andorra.
The opening times of small businesses are a very important factor because they are very flexible. Andorran small businesses are open almost every day of the year including the weekends.
The shops across the country have innovated and modernized and are adapting to the modern world, offering a wide range of products and brands. Andorra has 8 commercial centres, located in the city centre and in the outskirts. There are more than 1,400 stores specialized in one "product" that are located in the centre of every parish.
We can therefore say that Andorra has three main advantages: the specialization of trade, the concentration of small shops in a small area and the flexibility of the opening hours.
We must also emphasize that we are still in recovery after the great crisis of 2008, however, it seems that the measures taken to revive consumption are appropriate.
Figure 10: Shopping in Andorra Source: enjoy-andorra.com
Figure 8: Shopping in Andorra Source: enjoy-andorra.com
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COMMERCIAL SITUATION THROUGHOUT THE CRISIS
The economic situation of the country has traditionally been excellent; it has always had healthy public accounts, also boasting the lowest unemployment level in the world (technically zero). However, the financial and real estate crisis that began in late 2008 put the country in a more complicated situation. The two main sources of revenue of the country (stamp duty and tax on consumer products) were drastically reduced due to a significant drop in demand.21
Andorra's population decreased dramatically since 2008 because a large part of the foreign labor force returned to their country of origin to look for new opportunities. At the same time, small businesses were affected as the number of tourists decreased and the few visitors coming preferred to go to supermarkets to do their shopping because the prices were more affordable. Big supermarkets then saw an opportunity to attract customers and began their campaigns already known as discounts/offers making the situation even more difficult for small businesses. (Figure 12) Since then, small business owners, together with the state and councils of Andorra, have tried to come up with possible solutions to reactivate trade as it is one of the most important sectors for the development of the country.
Figure 9: Example of sales Source: Newspaper Sant Eloi
21 Syzmon Admin, Aug 2015 | www.paraisos-fiscales.info
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CURRENT PRACTICES TO DEAL WITH THE PROBLEM IN ANDORRA
To help resolve the present problems of small businesses in Andorra, the following trade initiatives were instituted to help stimulate consumer impulse spending.
PEDESTRIAN STREET
THE CREATION OF VIVAND
Figure 10: Pedestrian Street Andorra Source: www.ara.ad
THE CREATION OF Figure 12: The creation of vivand ANDORRA SHOPPING FESTIVAL Source: www.summa.es/vivand/
THE THYSSEN COLLECTION
Figure 11: Andorra Shopping Festival Source: www.caldea.com
Figure 13: Thyssen Collection Source: www.revistalove.es
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THE “CIRQUE DU SOLEIL”
THE FERRIS WHEEL
Figure 15: Cirque du Soleil Andorra Source: www.visitandorra.com
MOUNTAIN BIKE & Figure 14: Ferris wheel Andorra TRIALS WORLD CHAMPIONSHIPS Source: www.dandovueltasfotos.com
GRANDAVALIRA AND THE WORLD CUP
Figure 17: Mountain Bike World Championships Source: ww.vallnordworldchampionships.com
Figure 16: Ski World Cup Source: www.lugaresdenieve.com
For more information about the current practices to deal with the problem in Andorra, please look from pages 57 to 64 in the appendix.
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BACKGROUND OF THE CHALLENGE IN LA SEU D’URGELL
LA SEU D’URGELL, THE CRADLE OF CHEESES
La Seu d’Urgell is located in a valley of l'Urgellet, between the axials of the Pyrenees and the Pre-Pyrenees. It is bordered by the Principality of Andorra, the Barida and the Pallars Sobira. The municipality has a land mass of 15.44 Km2 and a population of 12,366. The proximity to Andorra and the concentration of the population in the capital, La Seu, confers favourable economic and demographic characteristics. In the primary sector, diary farming is very important; there is also a very diversified agricultural alimentary sector, as well as industrial and artisanal aspects, also an important industry in the subsector of machinery and mechanical equipment.22 On the other hand, the third sector represents almost 70% of the PIB, equivalent to the Catalan median.
Figure 18: City center of La Seu d’Urgell Source: www.fcoc.info
For more information about the history, institutional organization, economy and society of La Seu d’Urgell, please look at page 65 in the appendix.
22 www.turismeseu.com -Final Project 2016- 26 Case management Pere Egea Meritxell Egea
EVOLUTION OF COMMERCE
Traditionally, La Seu has been an agricultural region, based on subsistence farming. Until the end of the XVIII century, farmers basically lived in poverty, but with the introduction of irrigation, the local economy changed for the better. Usual crops for cultivation were oatmeal and corn, among others, and since the XVIII century the economy broadened to include a wide varietyof legumes, some textile products and olive oil and wine, which were exported to Andorra and other mountainous regions.23
Figure 19: Livestock fair in La Seu d'Urgell, 1890 Source: Josep Xicota, May 2010
As to industry, the comarca has not been an area characterized by industrialization, although by the XIX century there was a textile industry, which included spinning and knitting wool and hemp. Today, dairy farming is the most important industry; the Cooperative Lletera del Cadi was founded in 1915 by Josep Zulueta. The coop presently boasts 375 members, and processes 65 million liters of milk annually, with an annual value of 5,500 million euros (5.5 billion euros). Some 120 workers are employed in this industry.24
Figure 20: Cheeses from the Cadí region
Source: www.cadi.es
23 www.enciclopedia.cat 24 www.enciclopedia.cat -Final Project 2016- 27 Case management Pere Egea Meritxell Egea
Commerce formerly gave the city its character. The “fira” or fair of La Seu dates from the first half of the XI century, and it has known many ups and downs. This fair and the weekly market have favored exchanges between different parts of the Pyrenees. Banking activity in the city is quite high with respect to the number of inhabitants: there are 9 bank offices and 10 offices of savings institutions.25
Commercial development in the city has been marked since ancient times by the weekly market, first documented in 1029, and by the local fair, known since 1048. Today, a good example of modern, dynamic commerce, the market is fully integrated with local small businesses specialized in alimentary, artisanal and native, or local, products. The market has converted the city into a real center of commerce and services. Among the fairs celebrated in La Seu, of special importance is the Feria de Sant Ermengol, which takes place the next to last weekend in October of each year and is commonly known as the Artisanal Cheese Fair of the Pyrenees.26
Figure 21: Weekly Market, La Seu d'Urgell Source: www.turismeseu.com
25 www.enciclopedia.cat 26 www.lleidatur.com -Final Project 2016- 28 Case management Pere Egea Meritxell Egea
COMMERCE NOWADAYS
Small businesses of La Seu must navigate through waters ever more turbulent. To the competition of big business in Andorra, it must be added the increasing presence of large chain supermarkets, the decrease of sales due to general economic circumstances and the forecast of a breakdown in the commercial fabric surrounding the historic old town center.27
The problem is in the commercial prospects for the short term for the old central business district of La Seu.
La Seu has 112 stores and businesses distributed in the following manner:
Graph 6: Shops and businesses in La Seu d'Urgell.
As we can observe from the anterior graph, the businesses dedicated to nutrition form the largest segment, with 30% of the total.28 Also, this takes into account the recent opening of Mercadona wich is situated strategically at the entrance to La Seu. Until recently, both Andorrans and residents of La Seu could often be found in the historic center of La Seu, making daily purchases. Now, many of them do their shopping at Mercadona.
This situation is very prejudicial to the small businesses of La Seu, who are finding their customer base diminished more and more.
27 www.elperiodic.ad 28 www.laseucomercial.cat -Final Project 2016- 29 Case management Pere Egea Meritxell Egea
CURRENT PRACTICES TO DEAL WITH THE PROBLEM IN LA SEU D’URGELL
La Seu d'Urgell has been a crossroads of commerce for centuries and wants to continue this tradition. City government and some merchants have engaged in various practices to boost business: promoting the historic center and special offers at stores on Saturday afternoons.29
REPRESENTATIONS OF THE “RETABLO DE SAN ERMENGOL”
Figure 22: Representation of the “Retablo de San Ermengol” SEASON OF
Source: www.es.globedia.com THEATER AND DANCE
MEDIEVAL MARKET OF
“CANONIGOS”
Figure 23: Theater and dance Source: www.ellitoral.com
Figure 24: “Mercat medieval dels canonges” Source: www.naciodigital.cat
29 www.lleidatelevisio.xiptv.cat -Final Project 2016- 30 Case management Pere Egea Meritxell Egea
TOWN FESTIVAL
OPEN AIR THURSDAYS
Figure 25: “Dances i balls” Source: www.fmlaseu.cat
Figure 28: Outdoor movie in the cloisters of the catedral Source: www.gruparxiverslleida.wordpress.com
For more information about the current practices to deal with the problem in La Seu d’Urgell, please look from pages 66 to 71 in the appendix.
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PRIMARY RESEARCH
To prepare this project, we designed a survey as our basic instrument for information gathering. This survey is located from pages 72 to 74 in the appendix. Small and medium sized businesses in La Seu d’Urgell and Andorra answered the survey for us. In the next section we can see the analisys of the results we obtained after we did the surveys.
ANALYSIS OF RESULTS
Graph 7: Solution question 1
In this graph we can see the variety of businesses that we visited to do our research as thoroughly as possible.
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Graph 8: Solution question 2
The majority of stores that we surveyed are family businesses that have been passed down from generation to generation.
Graph 9: Solution question 3
As we can see, the majority of the surveyed stores have been in business for more than 40 years. This indicates to us that the stores have evolved and have been able to adapt to changing conditions, although it appears that the time has come to ask for help.
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Graph 10: Solution question 4
Of the 30 stores surveyed, 53% responded that their customers come from the city and surrounding area where the store is located. This is very favorable because it signifies that the store carries quality products, otherwise customers from surrounding areas would not come to the store.
Graph 11: Solution question 5
This graph corroborates the previous question; effectively, the majority of surveyed stores are characterized by the fact that they sell a specialized product of very good quality at a competitive price.
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Graph 12: Solution question 6
Sixty three percent of stores surveyed responded affirmatively to this questions, due in large part to the fact that many customers are long time (repeat) customers, since the stores are well known in the city and surrounding areas for the quality of their products.
Graph 13: Solution question 7
We can see that the answer to this question is almost evenly divided between good and very good service, with a small percentage answering”some service”. Service in small stores is almost always more personalized that in large supermarkets. Often the customers are friends and neighbors.
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Graph 14: Solution question 8
As we have stated before, small businesses often are specialized in high quality products, which command higher prices.
Graph15: Solution question 9
The answers to this question are more varied. There are stores that offer only one type of product and others that, although offering specialized products also offer other products. There are also general merchandise stores, or “bazaars” that have a wide variety of products but no specialty items.
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Graph 16: Solution question 10
Very few stores consider that the variety of products offered in their stores is less than that of larger stores, since they will always have a larger selection. The small stores have a higher quality and they are referring to this fact when answering this question.
Graph 17: Solution question 11
Most stores have only two people attending customers. The persons surveyed emphasized the family nature of the business, which implies a lower cost in salaries and a higher degree of confidence in coworkers.
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Graph 18: Solution question 12
Nearly three quarters of the stores buy their products directly from producers whose quality products can be depended upon.
Graph 19: Solution question 13
A third of the stores order daily, to minimize spoilage, since they specialize in products which require freshness. The rest of the stores order less frequently, but at least once a week.
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Graph 20: Solution question 14
Specialty stores do not consider competitors' prices since quality is not in question. Stores that have a variety of products do watch competitors' prices in order to have the same or lower prices.
Graph 21: Solution question 15
Just slightly over half of respondents answered yes to this question. The other respondents supplement their income with one or more family members working someplace else.
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Graph 22: Solution question 16
Stores we surveyed had an average of 450 people per month come to their stores.
17. ¿Does your store have long time customers?
In general, neighborhood stores answered that most of their customers have come all of their lives, or their parents and grandparents before them. What these stores have not noted is an increase in customers.
On the other hand, more centrally located stores have lifetime clients as well as occasional and repeat tourist clientele.
For larger supermarkets customers are tourists and occasional shoppers.
18. ¿How have your customers changed their buying habits?
Today, customers only buy necessities, due to the continuing effects of the “crisis”. Formerly, customers bought more impulsively.
In Andorra, Spanish tourists buy products that are not available in Spain and French tourists buy tobacco and alcoholic beverages which are considerably less expensive in Andorra than in France.
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19. ¿How can small businesses increase their sales?
All the businesses we surveyed are in agreement that one solution would be to have increased parking near to their stores, to make it more comfortable for customers.
Another solution that respondents suggested is to have a very high quality product at affordable prices to compete with low prices on poor quality products.
Lastly, more resources are needed to conduct wider advertising campaigns that reach more people and attract new customers to the stores.
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ANALYSIS OF THE DIFFERENT ALTERNATIVES
Although our work is a Case Study based on Andorra and La Seu d'Urgell, the problems described here are found all over the world; we are suggesting various alternatives that could be applied anywhere.
Based on the obtained results stated above in the primary research, we can say that commerce in La Seu d'Urgell is characterized as being a traditional form of commerce, going back generations, with specialization of products of very high quality, often produced or grown by the sellers themselves.
We are now going to discuss the different alternatives in order to find a solution to our problem.
These are the alternatives that can be implemented by small businesses to help them effectively compete against large stores:
1- Create a cooperative of small businesses with a central office that oversees orders and inventories of all members.
2- Consolidate small shops into one or more supermarkets.
3- Create a commercial center where all the small businesses could operate.
4- Create various commercial centers.
As we can see, all the alternatives are valid; we recommend putting into effect the first option before trying out the others mentioned, as a cooperative could form a basis for later implementing one or more of the other options.
Which of the various options would be most effective would depend on the number of businesses that would form the cooperative, the market to which it is directed (number and kind of inhabitants, etc.) and the volume of existing or potential competitors. Once a cooperative is established and operating the second, third and fourth options could be considered for implementation.
We have based our possible solutions on the current small business communities of Andorra and La Seu. These are communities which each has relatively few small businesses and a small volume of competitors. These small businesses are well located in the historic center of the city and we would not recommend relocating them.
Thus, the solution that should be applied is the formation of a cooperative. If, in the future, a need arises for one or more of the other options, a firm base would be in place for implementation as needed.
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PROPOSED SOLUTION
In this section we are going to apply the knowledge acquired at La Salle and UOC universities in order to develop the best solution for this problem.
With the passage of time, supply and demand evolves, and the situation of markets changes. Today, it is not possible to recover the high activity levels of artisanal commercial activity of the 1950s and 60s. Nor can we go against the chain supermarkets, symbols of tremendous commercial power. Therefore, we must find a solution for small businesses to successfully continue in existence, although perhaps in a modified form.
Of the various alternatives discussed above to solve the problem that small businesses are facing, the most viable alternative, with the best outlook for the future, and which could be combined with the other alternatives, is: Create a cooperative with all the small businesses as members with a central office to control orders and inventories of all the members.
Below, we will describe what we believe to be the best operating philosophy and functional structure of such a cooperative.
PHILOSOPHY
The solution is to create a company structured as a cooperative. The obligation of this company will be to offer tools and services to its founding members (small businesses), which will help them, be competitive and profitable. It will also help to update/modernize the member businesses.
COMPETITIVENESS One of the obligations of this newly formed company will be to provide certain tools to its members to help them be competitive. Knowledge of consumers' needs Ongoing analysis of suppliers Keep up with current market tendencies Continually update commercial strategies
PROFITABILITY The cooperative must assume and fulfill its responsibilities to provide the necessary elements to its members so that they can be competitive and profitable. An increase in sales volume should lead to profitability.
Keys to achieve this goal:
Efficiently manage the human resources and the materials that each business depends on. The responsible person(s) in each area must require professionalism and high performance from each member of his team, Manage purchases effectively. Management style that will induce members to stay in the cooperative long term.
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UPDATING The cooperative will be obligated to provide to all its members necessary commercial and technical resources, which will help them to maintain their stores up to date and well positioned in the market.
- Introduce new products that appear in the marketplace - Detect and help resolve problems in the management of each member's store. - Advise members with respect to distribution of products, locations, etc. in their stores. - Update technological tools and services. Maximize utilization of modern technology and explain the benefits of these technologies to the members.
The members must be fully involved in the life of the cooperative.
COMMERCIAL FOUNDATION
Suppliers
Central office
Partner shops Competitiveness / Profitability
Customers
Graph 23: Commercial foundation of the company to be created
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INTERNAL STRUCTURE
STRUCTURE OF MANAGEMENT So that the business can improve in: Management, Communication, Participation, Input, Control of procedures, Followup on projects, Detect and solve problems, Development.
Teams, or work groups, called “committees” should be created for specific types of work. The different types of committees with their purposes can be find between pages 75 and 77 of the appendice.
COMMUNICATION
General management
Management Committee
Controller committee
Committee for Control and Development
Commerce Committee Committee of Stores
Graph 24 : Company commercial basis
-Final Project 2016- 45 Case management Pere Egea Meritxell Egea
COMPANY FLOW CHART General Management
Logistics, Financial Human IT Commercial Sales Marketing Stores Management Resources Management Manager Maintenance
Contract / Salary Price Stores Location / supervision Position Staff training Central Commercial Price advising advice Productivity Works / control Commercial Installations management Promotion design
Advertising Purchases campaigns General Merchandise Accounting Events Promotional Reception Support
Finances Purchasing Perichable management Merchandises Central Dispatch Fiscal / Tax Software Network advertising Refrigerated Stores foods Software Replacement
Graph 25: Company flow Network chart Logistic operator Support -Final Project 2016- 46 Case management Pere Egea Meritxell Egea
The head of each department must be approachable by his coworkers and should meet with them at the beginning of each week to review what needs to be done. If a department has many professional members, several shall be chosen as spokespersons. It is fundamental to the success of the cooperative that the head of each department maintain a positive attitude. The functions of each department should be well defined and distributed among the members of the department. The personnel of each department should be involved and informed as to the general evolution of the cooperative. Each department should have equal importance for the cooperative.
OBJECTIVES So that the newly created cooperative can fulfill its philosophy, grow rapidly, and reach desired economic objectives, it must be able to adapt to new situations and the professionals who work there should be motivated, beginning with:
- Rigorous compliance with organizational plans and management policies. - Be very demanding, starting with themselves, to obtain the best possible results from the resources available, both personnel and materials. - Specify objectives.
Personally, we believe that the best way to work is to have objectives, without having a fixed working schedule, but being very strict as to meeting deadlines. This way, workers will not feel exploited since they can organize their time themselves and the business will grow rapidly as objectives are met. Some objectives should be permanently in place, such as:
- Commercial development. - Develop new commercial and logistic strategies. - Work very closely with the members. - Develop plans for advancement.
PRINCIPAL MOTORS The principal motors that a company with these characteristics should have are:
Excellent software. An efficient department of logistics and conservation of products. Effective publicity and promotions. A solid corporate and commercial identity for the business. Simple and relatively short procedure for incorporation of new members.
SOFTWARE In this type of business, two types of software should be distinguished:
- Software used by central management. - Software used by member businesses.
It is very important that both types are in communication with each other at all times, so that central management can have access to all information input to the software of each small business. The objective is simple, to be able, at any time to have an overview of sales, types of customer, marketing, etc., from each member business.
-Final Project 2016- Case management Pere Egea Meritxell Egea
Both types of programs should be simple and easy to use, without a need for extensive training periods or lengthy instruction manuals. Both should have the following abilities:
- CUSTOMER MANAGEMENT: Management of customers is one of the pillars of all PYME. Instilling loyalty and conserving the most profitable clients will guarantee the survival of the business. The software must include tools which permit adequate management of the customers, including critical aspects such as mass emails for marketing campaigns and control of payments.
- MULTI-CURRENCY: The cooperative we are designing should be able to function in any part of the world where it is necessary. We believe it convenient that the software have the ability to administer prices in pesos, dollars, euros, reales, yens, and other currencies. The billing program should permit billing in the currency that the user chooses, respecting daily fluctuations in currency exchange rates, to send accurate invoices.
CENTRAL SOFTWARE This software should include the ability to:
- MANAGEMENT OF PRODUCTS AND INVENTORY: Management of inventory is a critical aspect of all businesses. If inventory is not properly managed, the possibility for losing important sums of money increases substantially. The software that we propose must correctly manage inventory, beginning with acquisition, allowing for modifications in pricing, and the importing from Excel, and including complex processes such as the relationships between purchases and sales.
o UPDATE FROM EXCEL: The software should be able to import products and update prices and descriptions from its own worksheets to Excel format, with the ability to update thousands of prices and product descriptions instantaneously, easily and without wasting time on repetitive tasks.
- MANAGEMENT OF BUSINESSES: It should have the ability administer key aspects of businesses, together with statistics and projections.
- MANAGEMENT OF SUPPLIERS AND PURCHASES: Suppliers are a key element in the success of a business. The program will calculate key functions that make possible the accurate management of suppliers, including aspects such as the direct link between purchases and purchase orders in the management of inventory.
- ELECTRONIC CORRESPONDENCE: The software should have the ability to send mass notifications and promotional material to clients of each establishment to help maintain a constant level of sales. With a system that permits personalization of emails, each client could be greeted by name be sent a birthday or other special message, or followup on sales according to the last invoice sent.
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- ELECTRONIC COMMERCE: It is important to synchronize the data base of products with the virtual store of the business, to update prices and inventory automatically. Maintaining an online store should not cause a headache, product and price modifications made by management will be automatically published on the web page of the business.
- BUSINESS CALENDAR: This serves to keep track of business activities such as meetings with members and suppliers, events, important dates and tax payments due dates. A business calendar can be totally integrated with the system.
- STATISTICS: This software would provide all kinds of information, organized in a manner that would help users to make overall decisions for the immediate growth of the business. It would permit users to move more intelligently in the market, achieving a better position with respect to competitors.
SOFTWARE FOR COMMERCE This software should include:
- MANAGEMENT OF SALES AND INVOICES: A system designed to invoice and emit all kinds of vouchers in a simple, rapid manner. A system that could invoice any type of products and services, including combinations of products or articles that are administered by size or color.
o BAR CODES: Bar code readers are used to speed up the invoicing process and print price stickers of different sizes on any type of printer. Also, more than one bar code can be associated with a particular product, and stickers can be printed in over 20 different formats.
As I emphasized earlier, there should be a data base shared between central management and the small businesses in such a manner that the small businesses update the data base through their software as to customers who come to their store, inventory on hand, money owed by customers and sales. On the other hand, the central office should update the database with respect to prices of inventory (for example, if there is a marketing campaign in effect), quantity of inventory (only the supply to businesses of required products), operating costs and invoices.
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LOGISTICS AND PRODUCT STORAGE The base of this cooperative will be products for commercial sales. These products must clearly show the difference between the members and their large competitors.
To achieve this distinction, great care must be taken with the products, especially food items, from the moment they are chosen and bought until they are on the shelves of the member stores. The following considerations must always be treated with the highest degree of attention:
- Management of purchase and selection of quality - Care of products on platforms. Foods requiring refrigeration, and all fruits and vegetables, should never be out of cold storage. - Great care must be taken in the preparation and supervision of orders for the businesses. - Close supervision of products upon delivery to check for spoilage during transport. Products, which arrive in unacceptable conditions, must be quickly returned. - Presentation in each section of merchandise in the most attractive manner possible. - Managers of each section should always be careful to ensure that products are presented in the best conditions for sale. - Repositioning, or restocking of products according to rotation. There should never be overstock in any of the stores. - Special attention must be paid to expiration dates on food products. - Segmented cold storage where necessary.
We must keep in mind that certain commercial sectors, such as jewelry stores, will not form a part of our cooperative since they are not affected by the presence of large competitors.
To enable the implementation of the above requirements, warehouses used must be designed with logistics in mind, having sections for storage of all kinds of products (food, pharmaceutical items, cosmetics, clothing and footwear, items for bazaars, etc.). There must be adequate technology and machinery available for localization and transport of products within the warehouse. If possible, a refrigerated receiving dock should be included so that food and other perishable items are never out of cold storage. To transport and distribute products, trucks equipped with hydraulic systems will be needed to facilitate loading and unloading. One or more of the trucks must be refrigerated.
The supply chain of the business can be seen in Figure 35 below. The central office of the cooperative will order, from various producers and suppliers, all products necessary to maintain correct inventory levels for all the small businesses of the members. These products will be stored in warehouses of the business until they are distributed to the stores. With proper inventory control, there will always be sufficient products available to each member store, without problems of overstocking.
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Figure 30: Company Supply Chain
PUBLICITY AND SPECIAL OFFERS General sales materials must include a sufficient number and variety of products to give an image of competitiveness. Sales materials should provide a positive image of each store and its products, designed to appeal to existing customers and to attract new ones. Sales materials should be updated often with respect to image, products, variety, photographic approaches, and placement decisions.
As to general publicity, the market should be inundated with messages that characterize the business of company. Throughout the year, various ad campaigns should be undertaken. Participation in community activities should also be undertaken to promote customer awareness and loyalty. Publicity should be reviewed often and revised as necessary to update and improve the company's image.
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CORPORATE AND COMMERCIAL IDENTITY OF THE COMPANY INTERNAL IMAGE Managers of various sections of the company should require that all employees under their supervision be aware of the importance of the following:
- ORDER: Well designed and located loading docks, product storage shelving, furniture, machinery, offices, etc.
- CLEANLINESS: Closely associated with order is cleanliness. There should be no dirty corners, uncollected garbage, dusty products, or dirty bathrooms, either in the warehouses or in the stores. Every corner of the business should be spotless.
- UNIFORMS: All personnel working on the loading docks should always wear a uniform, to be supplied by the business. All office employees should be required to wear a jacket.
- P.P.E USE: The business is subject to the law of Prevention and Labor Risks, and must make necessary investments comply with these obligations.
EXTERNAL IMAGE The external image depends on two fundamental factors:
First, the presentation of all material elements through which the company presents itself to the world: company logo or identification on company vehicles, the outside of company offices, the condition of the inside of company facilities, order, cleanliness, treatment of customers, publicity image, etc.
The second is, the perception of third parties who deal with the company as to the treatment they receive from company employees. This can begin in the physical reception area or by way of telephonic or electronic communications. It is very important to treat everyone with courtesy and respect, not just potential customers. It includes truck drivers, cleaning people and other behind the scenes workers who are all important to the success of the company.
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EMPLOYEE TRAINING With the objective of motivating personnel, as well as helping the company to evolve, training classes for employees of all areas will be available. The classes will be structured in four levels:
- Directors - Department heads - Specific departments - Support personnel
Therefore, the Committee for Control and Development will define the most interesting subjects of formation for the company. Likewise, the human resources department with its formation area will manage the selection of the most appropiate trainers.
Formation plans must be annual and continuous.
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CONCLUSIONS
In researching and writing this project, we have become aware of the difficulty involved in the process of development of an idea/improvement and then putting that idea into effect. Likewise, we have learned that a business must be structured in keeping with the type of society where it is to be located and according to outside factors (market sector to which it is directed, locality, population, competitors, etc.).
We are sure that our proposal for improvement for small businesses can be effective, since this proposal can be adapted to external conditions existing in locations where it is to be put into effect. After completing the primary research described in the page 31, we believe that the creation of a cooperative as described above could have important market repercussions, and we hope that our proposal will be implemented.
We have opted for the first solution described in the analysis of different alternatives set out above, based on present circumstances of Andorra and La Seu d'Urgell, since this alternative is the one best adapted to the necessities of these locations. Whichever of the alternatives if chosen in a particular locality, the first step should always be to form a cooperative of small businesses with a central office to control purchases and inventories of all members. After that, expand the solution as necessary according to external conditions.
For example, if the proposal was to be acted upon in Barcelona, where there is a very large population and many competitors, it would be better to create one or more supermarkets made up of small businesses in and around Barcelona. If that alternative is chosen, the first step would still be to create a central office that would control the orders and inventory of all of the supermarkets in the group.
This has been a difficult project, but we hope that it will provide help to those to whom it is directed, small businesses.
Anything is possible and within reach, it is just a question of finding the appropriate strategy. We have to put aside our own limitations and be conscious of our own capabilities. Future development depends on us and our capacity to adapt to new challenges as they arise.
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APPENDIX
LITERATE REVIEW
CHARACTERISTICS OF SMALL BUSINESS
Small businesses have always been significant for the growth of the community, but nowadays their importance has lessened.30 These stores are very important for the development of the city where they are located. According to our investigation in small villages where there are a lot of small businesses, traders usually live and spend their money in the same area so there is a constant flow of money.
These are some of the characteristics of small shops:
Small shops
Little variety in the products they offer
Few hardware and software systems to manage the stocks
Neighbourhood stores provide personalized customer service.31
Gathers regional food production, goods and services as well as hand made products with local identity signals.10
Facilitates the life of important social sectors with limited access to supermarkets located in the outskirts of cities: young people, pensioners, the unemployed, the elderly and workers.10
It is essential for the maintenance of traditional urban centres.32
It represents a fundamental support to the tourism sector.11
Ensures the supply of rural areas.11
It is a very important part of the culture and lifestyle of society.11
30 J. Mariah Brown, Demand Media 31 José Allende, sept.2009 – www.ibaiarte.com 32 Marrero, 1996 -Final Project 2016- 55 Case management Pere Egea Meritxell Egea
CHARACTERISTICS OF SUPERMARKETS
Increasingly supermarkets are having more impact in our society and these are some of the reasons:
Use of the self-service system.
They offer products at low prices
They offer a wide variety of products
Little specialization in the products they offer.33
Supermarkets have a wider timetable than small shops.34
Big locales with big surfaces.
Usually located on the outskirts of cities but the parking is free
33 Timothea Xi, Demand Media – www.smallbusiness.chron.com 34 David Bautista, 26 Jan 2011 – www.linkedIn.com -Final Project 2016- 56 Case management Pere Egea Meritxell Egea
BACKGROUND OF THE CHALLENGE IN ANDORRA
HISTORY, INSTITUTIONAL ORGANIZATION, ECONOMY AND SOCIETY OF ANDORRA
The first written record of Andorra is the deed of consecration of the cathedral of Urgell, dating to the 9th century, where it is referred to as belonging to the country of Urgell.35 Andorra’s unique political system began in the 13th century, when two treaties were signed in 1278 and 1288, called “pariatges”, ending the rivalries that existed between the bishop of Urgell and the Count of Foix for possession of Andorran territory. These treaties granted indivisible joint ownership to the two lords, which survived until the end of the 20th century, although the rights of the Count were handed down to the King of France and subsequently to the President of the French Republic.36 (Figure 9) In 1982 the first government of Andorra was set up. The last historic date is March 14, 1993, when the first written constitution was approved by referendum and Andorra became a constitutional democracy.37(Figure 10) The country’s economy was based on agriculture and livestock. It was not until the first third of the 20th century, with construction of road connections to neighbouring countries and the arrival of electricity, that Andorra began to open up to the outside world and the economy diversified. Since then, Andorra’s economic development has been based on services. Specific natural assets, such as the snow, the scenery, the cultural heritage (especially Romanesque architecture) as well as certain tax advantages, have turned Andorra into a major tourist destination, with numbers of visitors varying between 8 and 10 million a year.38
Figure 31: Pin of the Andorran constitution Source: Own collection
Figure 32: Andorra pariatges 1278-1288, Government of Andorra
Source: todocoleccion.net
35 guiAND 1998/99. (p.11) 36 The country in figures, Credit Andorrà 2014. (p.2) 37 guiAND 1998/99. (p.11) 38 The country in figures, Credit Andorrà 2014. (p.3) -Final Project 2016- 57 Case management Pere Egea Meritxell Egea
CURRENT PRACTICES TO DEAL WITH THE PROBLEM IN ANDORRA
PEDESTRIAN STREET
The Town Hall chose to make the Carlemany Avenue a pedestrian street, one of the busiest streets of Andorra where the majority of the shops are located. This decision took place in mid-2012 with the aim of revitalizing commerce. It is an ongoing project and a benefit not only for the different parishes but also for the whole country. The Pedestrian Street, which is in use today, measures about 750 meters in length. It is decorated with new street furniture to make the area more attractive. There are also terraces, which belong to the small shops along Carlemany Avenue. Since mid-2012 the council has worked together with merchants to help to boost consumer spending. Business owners elected a spokesperson to represent them in this task. The Town Hall also reported that it would be good to close part of Meritxell Avenue, together with the Carlemany Avenue, another of the busiest streets in Andorra, but they recognized that the situation in Andorra la Vella is more complicated, because the commercial network is more extensive.39
Figure 10: Pedestrian Street Andorra Source: www.ara.ad
39 Diari d’Andorra -Final Project 2016- 58 Case management Pere Egea Meritxell Egea
THE CREATION OF ANDORRA SHOPPING FESTIVAL
The Andorra Shopping Festival is an annual event that began three years ago. This Festival was created by the government of Andorra to consolidate the country as a shopping destination. The average number of Spanish visitors tends to increase annually 5%, and 3% for French visitors.40 The last Shopping Festival event took place from October 9 to November 1, 2015. The Festival tries to make shopping a fun experience for all. This event primarily involves the commercial sector of the main shopping areas of the city center, but also includes the leisure sectors such as Caldea, which also participates in the event. The country was divided in 6 different shopping areas, each of them presenting a different look. These different looks invited visitors to have a different point of view of Andorran shops and to enjoy the different shopping circuits proposed Besides all the new decoration of the shops and the new furniture in the streets, the small shops in Andorra and Escaldes Engordany wanted to create different activities in the street to make it a unique experience for the visitors such as musical entertainment, shows, street games, children’s activities and chill out zones.
Figure 11: Andorra Shopping Festival Source: www.caldea.com
40 www. gobern.ad -Final Project 2016- 59 Case management Pere Egea Meritxell Egea
THE CREATION OF VIVAND
The Town Hall, after creating the pedestrian zone in the Carlemany Avenue (which we discussed above); decided to bring together around 200 shops in the area as well as restaurants and hotels.41 This group is named “Vivand" and aims to provide an impulse to trade for the new pedestrian area and the metropolitan area of Escaldes-Engordany in Andorra la Vella. The Carlemany Avenue is becoming a unique outdoor space with a remarkably diverse range of shops, with international brands. In addition, at the beginning of the avenue is located the Art Center of Escaldes- Engordany (CAEE), which hosts temporary art exhibitions and which is intended to accommodate the private art collection of the Thyssen family.
Figure 14: The creation of vivand Source: www.summa.es/vivand/
Figure 12: The creation of vivand Source: www.summa.es/vivand/
41 www.visitandorra.com -Final Project 2016- 60 Case management Pere Egea Meritxell Egea
THE THYSSEN COLLECTION
Carmen Cervera, Baroness Thyssen, a native of Barcelona and an important art collector, has established a residence in Andorra. The government has taken advantage of this fact to reach an agreement with the Baroness to make available to both residents of Andorra and to visitors, the extraordinary works of art in her personal collection at the Art Center of Escaldes-Engordany. Various traveling exhibitions will also be on display at the Center from time to time. The Art center is located in one of the busiest areas in Andorra. This collection will attract many additional visitors to Andorra. From now on, the Baroness not only will expand her personal art collection but she will add value to the country’s culture as well. “The Thyssen collection will provide the paintings while Andorra’s administration will take care of all expenses related to maintenance, personnel, security, logistics and insurance. The museum will be called Carmen Thyssen and it is expected to open in winter 2016». The first exposition will include a wide variety of international artists, from 20th century to the present. It is also being considered to, in the future, move the entire collection to a new building, which is still under construction, known as The Cloud..42
Figure 13: Thyssen Collection Source: www.revistalove.es
42 www.abc.es -Final Project 2016- 61 Case management Pere Egea Meritxell Egea
THE FERRIS WHEEL
The Town Hall permitted the temporarily installation of the biggest Ferris wheel in Europe in the city center in order to attract more visitors to the country. The Ferris wheel was installed in Andorra for 7 months, from July 2014 to February 2015. In return, the company that manages the Ferris wheel gave free and discount tickets to the Andorran council. The government distributed those tickets to small shops in the area in order to help encourage purchases. So for every purchase, visitors would have a free ticket for the Ferris wheel. The Ferris wheel is similar to the London Eye. In order to bring it to Andorra 25 trailers were needed.43
Figure 14: Ferris wheel Andorra Source: www.dandovueltasfotos.com
43 www.andorradifusio.ad -Final Project 2016- 62 Case management Pere Egea Meritxell Egea
THE “CIRQUE DU SOLEIL”
In 2012 the Andorran government brought the “Cirque du Soleil” for a month in the summer, when tourism generally decreases, and has continued to bring the Cirque every summer since. Nowadays, Andorra is being promoted as a holiday destination in summer because in addition to its natural attractions it also provides the “Cirque du Soleil” show. The show represents an investment of 2.5 million euros, which resulted in a return of tourism revenue of nearly 15 million euros in 2014. The Andorran “Cirque du Soleil” is unique in the world because it is the only one which is performed outdoors, while the rest are normally performed in theaters. Half of the capacity can watch it for free and the other half who have seats only pay 15 euros.44 Commerce in Andorra in the summertime has grown exponentially during the last the last three years.
Figure 17: Cirque du Soleil Andorra Source: www.visitandorra.com
Figure 15: Cirque du Soleil Andorra Source: www.visitandorra.com
44 www.elmundo.es
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GRANDAVALIRA AND THE WORLD CUP
Grandvalira is a ski resort located in Andorra; it was founded in 2003 when two of the Pyrenees’ oldest ski resorts, Pas de la Casa-Grau Roig and Soldeu-El Tarter, joined together. This fusion gave rise to the largest ski resort in the Pyrenees and one of the largest in Europe. Grandvalira has made huge investments (a total of over €100 million) and its commitment to constant investment has been recognized by international bodies. It has hosted events such as the 2012 Women’s Skiing World Cup and the trials for the 2012 and 2013 Speed Skiing World Cup.45 These events have also impacted favorably the commercial areas of Andorra. Thousands of people who attended or participated in the Ski Championships also went shopping, taking advantage of the competitive prices of all kinds of products.
Figure 18: Ski World Cup Source: www.lugaresdenieve.com
Figure 16: Ski World Cup Source: www.lugaresdenieve.com
45 www.grandvalira.com -Final Project 2016- 64 Case management Pere Egea Meritxell Egea
MOUNTAIN BIKE & TRIALS WORLD CHAMPIONSHIPS
Andorra also takes advantage of its wonderful mountain facilities to organize the World Championship mountain bike and trail during the summer. During the summer, the Vallnord resort turns into a huge Mountain Bike Park, which has become a reference point for excellence in southern Europe for the quality of its facilities and for having the most varied circuits and slopes.46 Much like the Ski Championships discussed above, the mountain bike events attract many people, both participants and spectators, who all patronize local shops and restaurants. Coupled with the performances of the Cirque du Soleil, tourism during the summer months in Andorra has improved greatly the last few years.
Figure 17: Mountain Bike World Championships Source: ww.vallnordworldchampionships.com
46 www.vallnordworldchampionships.com -Final Project 2016- 65 Case management Pere Egea Meritxell Egea
BACKGROUND OF THE CHALLENGE IN LA SEU D’URGELL
HISTORY, INSTITUTIONAL ORGANIZATION, ECONOMY AND SOCIETY OF LA SEU D’URGELL
La Seu d'Urgell was one of the most important cities of medieval Catalunya; today it is an active city, a center for services and culture for a wide area of the Pyrenees. The historic center of la Seu d'Urgell is presided over by the cathedral of Santa Maria, a Romanic building of the XII century, unique to Catalunya, considered a unique example in the Catalan Romanic heritage.47
Figure 33: Cathedral of Santa Maria Source: www.festacatalunya.cat
The shadow of the Civil War dominated a long period of economic and moral recession (1936 – 1939). During the 1960s La Seu began to experience some economic growth and beginning in 1979 actively took the reins for the growth of the city and possible future expansions.
After the floods of November, 1982, the River Segre was converted into a navigable channel and it is now an important part of contemporary La Seu: the construction of the Segre Park and the participation of La Seu in the Olympic Games of Barcelona of 1992, as part of the whitewater, rafting and water sports has also contributed to La Seu’s economic well being.48
47 www.ca.wikipedia.org 48 www.laseu.cat -Final Project 2016- 66 Case management Pere Egea Meritxell Egea
CURRENT PRACTICES TO DEAL WITH THE PROBLEM IN LA SEU D’URGELL
REPRESENTATIONS OF THE “RETABLO DE SAN ERMENGOL”
Each year, since 1957, the cloister of the Cathedral of La Seu d'Urgell is converted to the scene of the dramatic work The Altarpiece of Sant Ermengol. This play, written by the poet Esteve Albert, portrays various episodes in the life of Sant Ermengol, bishop of La Seu from 1010 – 1035. A hundred actors and behind the scenes workers, all amateurs and residents of La Seu and the surrounding area, work to put on this play yearly. This medieval show has evolved into a social phenomenon that gets people, from the beginning of rehearsals, to greet one another in the street with phrases from the original text. And, although each year there are some new faces, there are also some persons who have participated every year since the first performance of the Retablo in 1957.49
Figure 22: Representation of the “Retablo de San Ermengol” Source: www.es.globedia.com
49 www.barcelona.cat -Final Project 2016- 67 Case management Pere Egea Meritxell Egea
SEASON OF THEATER AND DANCE
The theater and dance season is celebrated in La Seu each year during the months of February and March. During these months there are daily performances that have a common theme of humor. This is an excellent cultural offering and attracts many tourists.
Figure 23: Theater and dance Source: www.ellitoral.com
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MEDIEVAL MARKET OF “CANONIGOS”
Each year in the month of June a medieval market of “canonigos” is held in La Seu. This market is located in the central historic district of the city and offers market goers all kinds of artisanal objects and foods. The artisans themselves can be seen performing their traditional tasks. Local restaurants offers menus featuring dishes based on medieval recipes. There are also many street performers, including jugglers, storytellers, circus and trapeze artists, and exhibitions of falconry as well as guided tours.50 This market contributes substantially to local commerce.
Figure 24: “Mercat medieval dels canonges” Source: www.naciodigital.cat
50 www.lleidatur.com -Final Project 2016- 69 Case management Pere Egea Meritxell Egea
TOWN FESTIVAL
La Seu's fiesta mayor is held annually during the month of August. There are approximately 90 activities related to the festival; there is something for everyone, young and old. Some of the highlights of the festivities are: the “correfoc”, which is a traditional kind of parade featuring fireworks and, in this case, figures representing “devils” of the Alt Urgell (Figure 30); various types of traditional dances (Figure 31) and “el prego”, which is an oral presentation of various items of interest to the community (figure 32).51 During the Fiesta Mayor the streets of La Seu overflow with people and the shops are full of customers as well. Attendance at the Fiesta Mayor increases each year due to positive comments on social networking sites.
Figure 26:”Correfoc amb els Diables de l’Alt Urgell”
Source: www.fmlaseu.cat
Figure 25: “Dances i balls” Source: www.fmlaseu.cat
Figure 27: “El pregó” Source: www.fmlaseu.cat
51 www.fmlaseu.cat -Final Project 2016- 70 Case management Pere Egea Meritxell Egea
OPEN AIR THURSDAYS
Every Thursday during the months of July and August businesses in La Seu stay open later in the evening, and bars and restaurants have tables outside to entice people walking in the area to stop and have a drink or some tapas. Each Thursday evening a movie is shown out of doors at the cloister of the Cathedral of La Seu.52
These open air Thursdays result in increased foot traffic in the downtown area, which helps local businesses.
Figure 28: Outdoor movie in the cloisters of the catedral
Source: www.gruparxiverslleida.wordpress.com
Figure 29: Advertising of bars and restaurants in summer 2015 Source: www.movimenth.com
52 www.radioseu.cat, www.movimenth.com -Final Project 2016- 71 Case management Pere Egea Meritxell Egea
Another highlight of La Seu is the Segre Park, constructed in 1992 in conjunction with activities of the Barcelona Olympics. A network of whitewater and still water channels run through the park and incorporate advanced technology for the practice of rafting and a variety of other water sports. Another attractive natural resource in the area is the Natural Park of Cadi-Moixeró, the largest protected land mass in Catalunya, a great variety of ecosystems with numerous plants and animals indigenous to the area.53
Thanks to these parks, La Seu can offer year round outdoor sports and activities:
Canoeing Rafting Hang gliding Paragliding Sport aviation Hot air balloon rides Hiking Mountain climbing Golf Canyoning Four wheel drive off road vehicles
53 www.lleidatur.com -Final Project 2016- 72 Case management Pere Egea Meritxell Egea
PRIMARY RESEARCH
SURVEY
We are students at the La Salle University in Barcelona and we are doing a study on how small businesses face competition from large stores.
1. ¿What is the main activity of your business?
a) Pharmacy b) Optical c) Butcher d) Seafood e) Bakery f) Cosmetics and perfume g) Food h) Other
2. ¿Is this a family business?
a) Yes b) No
3. ¿How old is your business?
a) 0 – 10 years b) 10 – 20 years c) 20 – 30 years d) 30 – 40 years e) Más de 40 years
4. ¿Where is your customer base located?
a) The Street b) The neighbourhood c) The city and surrounding area
5. ¿Why do customers come to your store?
a) Proximity to their homes b) Hours that store is open c) Specialized products d) Variety of products e) Good prices
6. ¿It is easy for you to recognize your customers’ tastes?
a) Yes b) No
7. Do you consider that the service you give to your customers, compared to that given by large supermarkets, is:
a) No service b) Very little service c) Some service d) Good service e) Complete service
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8. ¿Do you think your prices are better than those in large supermarkets?
a) Yes b) No c) On some products
9. Do you think that the variety of products in your store is:
a) Insufficient b) Little variety c) Pretty well stocked d) Well stocked e) Very well stocked
10. ¿Do you think that your store has a wider variety of products that competing stores?
a) Yes b) No c) On some products
11. ¿How many people work in your store (including yourself)?
a) 1 person b) 2 persons c) 3 persons d) 4 persons e) 5 or more people
12. Do you purchase most of your products from:
a) A wholesaler b) Directly from the producer
13. ¿How often do you order merchandise?
a) Daily b) Once a week c) Twice a week d) Three times a week
14. ¿Do you consider competitors' prices when you set prices?
a) Yes b) No
15. ¿Is this store the principal source of income for your family?
a) Yes b) No
16. ¿How many people come to your store on a daily basis?
a) 0 – 10 people b) 10 – 20 people c) 20 – 30 people d) Mas de 30 people
17. ¿Do you have the same customers as always?
18. ¿Have customers' preferences changed in acquiring goods? If so, how?
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19. ¿How can small businesses increase their sales?
Name of store: ______Location: ______
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PROPOSED SOLUTION
DIREFENT COMMITTEES INSIDE THE COMPANY
Management Committee
Members include: President, General Director, Director of Commercial Development, Director of Sales and Director of Finance.
The purpose of this committee will be to:
- Receive information directly from the General Director. - Continually analyze the overall situation of the company. - Evaluate objectives. - Analyze problems as they occur. - Supervise strategies as they are developed. - Advise the General Director in the design of objectives.
Table 2: Management Committee
Committee to Supervise Procedures (Controller)
Members include: Director of Finance, Director of Human and Resources, Director of Technology and Director of Stores.
The purpose of this committee shall be to:
- Evaluate all internal procedures. - Detect lacks and needs. - Supervise the development of ongoing projects.
This committee will be authorized to evaluate all departments of the business to determine whether they are functioning efficiently.
This committee will be coordinated by the Director of Finance.
Table 3: Committee to Supervise Procedures (Controller)
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Committee for Control and Development
Members include: Director of commerce, Director of sales, Director of finances, Department of technology, Department of Human and Resources, Director of stores, Director of logistics, Director of maintenance and Director of marketing and publicity.
The purpose of this committee shall be to:
- Resolve problems and needs. - Exchange information. - Contribute proposals and ideas. - Develop strategies and approaches - Analyze problems that could arise. - Evaluate the development of projects that are underway.
This committee should be coordinated by the General Director.
Table 4: Committee for Control and Development
Commerce Committee
Members include: Director of Commerce, Director of Sales, Director of Marketing and Businesses
The purpose of this committee shall be to:
- Analyze the commercial viability of the stores. - Be aware of common incidents and problems. - Contribute information on the behavior of consumers. - Analyze the competition. - Design and evaluation commercial strategies.
This committee should be coordinated by the General Director.
Table 5: Commerce Committee
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Committee of Stores
Members include: Director of Commerce, Director of Sales, Director of Stores and Businesses
The purpose of this committee shall be to:
- Involve the businesses in the management of the cooperative. - Receive information from the store owners. - Make decisions which affect the points of sale. - Provide information on commercial strategies currently underway.
This shall be coordinated with the Director of Commerce.
Table 6: Committee of Stores
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FUTURE STUDIES ESSAYS, FALL 2015
Figure 34: Future studies Source: www.stratagemgroup.com
This section is formed by 5 different (reports, essays) that I wrote and developed this past fall of 2015.
The topics of these reports are:
1. Organizational management 2. Social Change - Sustainable Development 3. Economics- The Economic Rise of Africa 4. Marketing and the Next Generation 5. The Best Way to Predict the Future
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ORGANIZATIONAL MANAGEMENT
Today the way that companies distinguish themselves is not by what they sell but by how they deliver those products and services. This fundamental shift in the market has not induced any significant change in the way that most of the companies are managed. The majority of companies today are using the same strategy and the same management way as 20th century companies.
Business agents are shaping the modern world; they have revolutionized our lives with technological innovation. Their decisions affect our lives very strongly.
Vineet Nyar who is the CEO of HCLT recognized the need for change and came up with a new philosophy for the company, which is “Employees First, Customers Second”. This new approach set HCLT on a journey of transformation that has made it one of the fasted growing and profitable global IT services companies.
Vineet Nyar’s approach can give valuable insights for managers seeking to realize their aspirations to grow faster because HCLT transformation is a clear example of success and growth. Such an approach is mainly about considering how the company is organized internally before starting thinking about change and growth.
So there are three fundamental questions that managers need to think about: I. In what business are we? II. Where does the unique experience come from and who creates it? III. If our employees are the ones who create unique value in our company, which is what makes us grow, what is the role of the company managers?
HCL implemented a four-phase transformation: I. Mirror Mirror, Confronting the truth II. Using transparency to build trust III. Inverting the management Pyramid IV. Recasting the office of the CEO
Managers today need to be conscious about these four steps and implement them as mush as they can if they really want to succeed in the future. Managers today need to confront the truth; they need to be transparent in order to give trust to their employees. Transparency is equal in all the cultures because it is a basic principle. In order to succeed CEOs need to invest first internally (employees) and then start thinking about investing externally (outside the company). The risk of investing in the employees of a company is the same as launching a new product open into new markets so what is important today in management is transferring ownership and collaboration because employees don’t like to be told what to do, they like to have challenges to solve.
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21st century managers can make this stance acceptable among their employees because as I stated above employees will have the “power” in a way and will collaborate in the decision- making, having challenges every day and problems to solve at work. Managers will only need to give the tools to their employees and employees will have the power in their hands. Moreover they will be very motivated and will want to go to work every day.
Finally I would like to mention three main steps that managers need to think about in order to implement a successful execution in the company:
I. Create happiness inside the company II. Define a compelling vision for the future for both managers and employees III. Move from where we are to where we want to go using absolutely the opinion of all the people who make up our company
Time is money and managers need to be aware of that and act as fast as they can to position themselves in the top rankings of 21st century companies.
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SOCIAL CHANGE – SUSTAINABLE DEVELOPMENT
Sustainable development has one main objective, which is to create balance between our social, environmental, economic and governmental needs while maintaining equality and justice. The way we have chosen to live our lives has been responsible for the damage caused to the environment. Moreover humanity is changing the climate, changing what species survive on the planet, changing the chemistry of the ocean, changing the safety of the air, changing the access and availability of fresh water. It is a fascinating situation and this will be the challenge of our generation, we need to figure out how to deal with it.
We need to start thinking about how do we make the world prosper, fair, and also environmentally sustainable so that our economy don’t overrun the physical planet itself. We need to understand the world and of course to help improve it, we need to get into that complexity and embrace it. Humans need to learn how to make more informed choices, about using new technology, chemicals or activities.
Our productivity is so high that it has become overwhelming. The water we are using, the energy we are burning, the land that is being devoted feeding the planet, the chemicals that are produced and the pollution that results from that, poisoning the air and the water is leading to an unprecedented environmental crisis.
One of the main drivers of these changes is humanity’s massive use of coal, oil, or natural gas, the energy sources we call fossil fuels. When we burn oil, coal and natural gas to produce electricity we end up with carbon dioxide immediately into the atmosphere and carbon dioxide in the atmosphere changes the climate. Carbon dioxide has increased to levels of 400 parts per million something never seen before. This is causing massive disruption of the climate system, global warming and more extreme situations like floods. Humanity is changing the basic earth process.
So me, as an individual living in Spain I think people should share what they have and care for the planet. Humanity must not take from the planet more than what it is able to replace. This implies adopt lifestyles and develop patterns that respect the limits of nature. This can be done without rejecting the many benefits that modern technology has brought, provided that the technology also operates within those limits. For example in Bogotá there were great innovations in using rapid transit and bus systems to move people much more cleanly and effectively than individual car ownership. Congestion was reduced, pollution was reduced, and carbon dioxide was reduced.
Another lifestyle that we can adopt is recycling as much as possible; we need to be conscious of the vast amount of materials that can be renewed.
Another important point, in my point of view is the abolishment of cars inside the cities. It would be very helpful for our planet to use only electric cars, bicycles, and rapid transit inside the cities. The amount of pollution would reduce at least by half.
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Finally I think that our generation needs to create a global consensus of sustainable development, which is a real problem for us and for our future generations. Every part of the world will have to be involved in brain storming in determining new and creative ways to ensure inclusive and sustainable growth.
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ECONOMICS – THE ECONOMIC RISE OF AFRICA
Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries. Strong growth and employment opportunities improve incentives for parents to invest in their children’s education by sending them to school. This may lead to the emergence of a strong and growing group of entrepreneurs, which should generate pressure for improved governance.
Now what people want is what politicians try because most parts of Africa now have a democracy. They don’t always succeed but they try and deliver. Democracy is encouraging governments to invest in education and education is helping growth an investment and that’s giving Budget revenues, which is giving governments more money, which is helping growth through education. It is a positive virtuous circle.
A successful strategy of poverty reduction must have at its core measures to promote rapid and sustained economic growth. The challenge for policy is to combine growth- promoting policies with policies that allow the poor to participate fully in the opportunities unleashed and so contribute to that growth. This includes policies to make labor markets work better, remove gender inequalities and increase financial inclusion.
Africa has fundamental weaknesses but it also has a lot of opportunities. The biggest challenge that is facing Africa is the creation of wealth. Wealth is a function of income and incomes comes from us finding trading opportunities or a well-paid job. We need to put money where it can productively grow and knowledge is an important part of wealth creation. No one gets rich by receiving charity the entire life. But the fundamental source of Arica’s inability to engage the rest of the world in a more productive relationship is because it has a poor institutional and policy framework.
There are several key factors that will determine the level of prosperity in the African continent:
. Developing transport and ICT infrastructure: in Africa there is inadequate infrastructure including unreliable energy, an ineffective urban-rural road network, and inefficient ports as main impediments to better performance of the agriculture sector. Increased spending on rural infrastructure (irrigation, roads, and energy) will help reduce the continent’s dependence on rain-fed agriculture by supporting intensified irrigation, increasing resilience to climate change, and improving access to markets for intermediate inputs and agricultural produce.
. Increasing the quality of education: Most importantly, increasing levels and quality of education will be essential to raising productivity across all sectors. Although the continent has made considerable progress in improving access to primary education, enrollment rates in higher education—especially in tertiary institutions—remain disappointingly low. Increasing levels and quality of education, including enhancing skills in biotechnology as a way to increase agricultural productivity, will be important to raising productivity in the agriculture sector
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. Reducing Barriers to trade: The reduction of barriers remains a critical component for increasing Africa’s competitiveness. Beyond the poor quality of physical infrastructure and high tariffs,
. Strengthening the regulatory framework: land access based on customary rights that disadvantage women, unequal distribution, and the absence of land markets that are preventing the most efficient farmers from the opportunity to scale up their production. Insecure land tenure also limits farmers’ ability to use their land as collateral and thus to access credit markets.
To conclude, I personally think that unlocking the large human capital potential by empowering disadvantaged groups such as women, youth and the poor is critical for boosting inclusive growth in Africa.
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MARKETING AND THE NEXT GENERATION
We live in a world of constant change. Technology has recently boomed our world and we need to keep up to date with it constantly. Marketers are constantly looking into the future, trying to predict the next big trend. Change is natural nowadays and what we have today will be totally different from what we will have tomorrow.
Marketers have difficult jobs in terms of predicting future trends because with the new generation Z we never know. This new generation is totally different from the millennial (GEN Y). Generation Z are born with technology, they believe in inspiration, creativity and failure. They believe that the only real failure is the failure to try, improve and evolve; they want to break the rules and don´t follow the traditional way of doing things.
Some of the Ford trends that will affect marketers over the next ten years are the following:
Expanding “Next of Kin”: Family is conceived totally different than a few years ago. Nowadays friends are considered family as well because good friends are always there for you, they share our dreams. There is no need to be married to form a family. Marketers will need to be very careful with the term “family” because it doesn´t have the same meaning anymore.
Elusive Health: The global population keeps getting fatter and sicker. Marketers will need to change the way they advertise the food industry if they want a change. Products are either mislabeled or contain additives, a lot of people are very busy and they don´t have time to think about if what they is healthy or not.
Flaunting Failure: marketers will need to change their strategy somehow in the next decade because the new generation accepts failure as a way of learning and evolving. They believe that without failure there is no success. Marketers are not use to that because nowadays failure is seen as a bad thing.
When considering generation Z, there are three things that marketers need to change about their strategy to ensure success in the future:
I. TV Advertising: The new generation is always connected to the Internet through their tablets, computers and phones. They, of course, watch television but with an electronic device in their hands. They never stop communicating and this could be very useful for marketers in order to extract more information about this new generation. Marketers should invest a lot more in advertising through the social media than through television.
II. Awareness: Generation Z is more independent than any other generation in the past. They are more self-aware and brand aware. Marketers will need to change their advertising strategy because young people today are very into the new trends and sometimes they can know a lot more than marketers. What I mean with that is that marketers can no longer “lie” when advertising a product because they will very easily be caught.
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III. Global: This alone was unconceivable even 25 years ago with the formative years of generation Y. Common global media, global product launches, shared news and a similar take on popular culture have unified the generation Z globally. The new generation doesn´t care anymore about race differences, or social status differences anymore. This means marketing campaigns will need to be designed with a global audience in mind.
To conclude, marketers need to forget everything they have learned about millennial. In many ways, Gen Z is the opposites or extreme versions of millennials and marketers need to adjust to them. The challenge this generation poses from a marketing perspective is immense.
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THE BEST WAY TO PREDICT THE FUTURE
The use of technology is increasing day by day, we all depend on technology and we use various emerging technologies, which impact our lives in different ways. Technology is being implemented in almost every section of our lives and business structures. Technology is implemented in all the industries. Technology is evolving more and more everyday and technology will be changed, what is working today might not work tomorrow because the software won’t be updated for instance. It is better to stay up to date with new emerging technologies and learn how to use them in our daily life.
One of the main advantages nowadays relates to saving in business expenses. Small business nowadays can operate successfully. Key components of small business infrastructure including sales, accounting and data storage can now be managed only by renting software remotely rather than installing and operating software physically in-house. The advantages of the new technology nowadays for small businesses include cost savings, tracking and increased efficiency.
However, there is a big problem, which is climate change. So our generation needs to take advantage of the technology we have to create new technologies that affect the environment in a good way and I will be one of the people who will try to make this happen. People are afraid to fail but as the video say: “willingness to fail is a great opportunity to innovate” and “a great opportunity to innovate results in maximizing success”.
We need to be constantly connected and we have a technology called 3G and Wi-Fi. There is Wi-Fi almost everywhere but in some places there is no Wi-Fi yet so I would invent another system in order to be able to be connected to the Internet everywhere around the world. I discovered doing research that there is something called Li-Fi, which is recently created almost the same as Wi-Fi, but Li-Fi is a new concept and an alternative to Wi-Fi. Li-Fi will work through light rather than the traditional use of radio waves (wireless). So it would love to do something similar in order to promote a better world and a friendly environment. Li-Fi means communication through visible light pulses by which information is transferred, which means, transmitting information at the speed of light.
It, of course, has advantages and disadvantages. Some of the advantages are: Safer than Wi-Fi More energy efficient than Wi-Fi The electricity does not bother or interfere with communication; it does not cause interference with other systems. It's cheaper than the Wi-Fi, it is said that up to 10 times cheaper. It can deliver speeds of 500 mbps (megabits per second), nearly 5 times faster than the optical fiber used by Wi-Fi.
Some disadvantages: It doesn’t work in direct sunlight It does not work with the lights off which may result in an increase in your rate of light. Only works with those devices (tablets, phones) having a receiver for such technology, that is, which have a receiver capable of decoding the signal light.
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Finally I would try to improve this technology making it available with direct sunlight, which would be very environmentally friendly but it is very difficult to solve because it requires a lot of research and engineers prepared for that without fear to lose. So my specific goal would be to develop a technology similar to Li-Fi or just improve it because it has a lot of potential and it is a 100% certain that people will use it because as I said before we are in a world which needs to be connected 24/7.
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