BUSINESS PROPOSAL FOR LEXILIAP FASHION BOUTIQUE Research Paper

BUSINESS PROPOSAL FOR LEXILIAP FASHION BOUTIQUE - Research Paper Example This proposal therefore illustrates the various economic factors that will influence the operations of Lexiliap Fashion Boutique. This report lays particular emphasis on the economic dynamics of the proposed fashion boutique by including assumptions about the elasticity of demand and the market structure in the operational environment. Revenue To begin, revenue is an important factor for the success of Lexiliap Fashion Boutique. Capozzi (2013) highlights the importance of looking at the revenue prospects of a fashion boutique by recognizing the challenges of setting up and deriving gains from one. Fashion boutiques present a challenge to owners because they should find a balance between attracting and retaining customers on one hand whereas striving to achieving or even surpassing the set revenue limits (Gerring, 2007). The fashion boutique intends to use multifaceted promotional campaign to ensure that it drives sales volumes that will surely lead to increased volumes. In particular , the boutique will have an active online presence that will make sure that many clients are targeted and are aware of the enterprise’s products (Ferguson, 2008). Market segmentation strategies will be used to ensure that promotions are custom made to target the youth, women, men and children separately. The shop will also offer competitive pricing so that customers from competing firms are attracted. Determining the Profit-Maximizing Quantity The boutique will deal with different fashion items and accessories. As such, the challenge is to constitute a viable and standard profit maximizing quantity for each of the items. Since items like jewelry and clothing may have defects especially when volume purchases are used to source for the products, the proposed structure relies on this conditionality to propose a standard quantity to be ascertained. Given a unit cost of 10 USD, each product’s price; is it a dress, pant, bangle or ring will be compared against the unit cost value. Taking into consideration that the more items are sold, the higher the revenue; the report then sets the revenue threshold at 100USD meaning ten unit items. As a result, the more valued the item in the boutique, the lower will be its profit maximizing quantity. The projected dollar value for the business is shown in Appendix 1. Profit Maximization Profit maximization is at the core of any enterprise’s operations (Mankiw, 2011). The proposed Fashion Boutique will ensure that there is value for customers on one hand, and value to the owner on the other. To be able to strike this delicate balance between satisfying the needs of the customer whilst maximizing the profits needed for business growth. The marginal cost and marginal revenue concept can be applied to illustrate the technique that will be used to ensure profit maximization. This will be done mainly in the area of stocking for some commodities. Given that fashion industry is dynamic, it is important to stock the current trends for profit maximization (Boyes & Melvin, 2011). As a result, the boutique will review fast moving products and stock them in large number to derive more gains from the sales volumes resulting from the trending items. This is in accordance with the concept that marginal revenue should always be equal to marginal cost for profit maximization (Taylor, 2006). Subsequently, the boutique will require market information on the trending products. This can be obtained from relevant agencies, the media and other