Sales in the wig and hair goods industries in the U.S and Canada alone has increased from 900 million in the late 90’s and above 2 billion dollars in the early to mid-2000’s with the introduction of newer products. The recent recession has seen more women entering the market looking lucrative business opportunities. A spurt in hair add-ons such as ponytails, braids and assorted lengths attached to clips and combs have attracted younger clientele. In the view of globalization and dynamic markets strategic management and environmental scanning are a necessity. Their role is intertwined with business decisions because of how economic condition affect them. Seven years after the great recession and four years after it ended the state of global economic recovery is surprising precarious.
Simple elegance is a lace wig retailer that is determined to provide hair units that sell reasonably priced wigs using the highest quality hair. For too long the hair industry and hair providers have been producing wigs of questionable quality at exorbitant prices. Elderly and other low-income consumers purchase many of these units that start to fail and look atrocious within weeks of being purchased. The coming of age of the youngest baby boomers (men and women) represent a large clientele consumer base that deserves high-quality products and a reasonable price. In addition, simple elegance will offer product cleaning and care to lengthen the life of products sold.
A manager must understand many factors such as supply and demand, price elasticity, and market stability. They must understand them to make decisions to about production levels, cost and market structure in making business decisions. Business are concerned with revenue and profit as well as minimizing loss. A firm enters the market when there is profit, and it is the managers’ responsibility to determine production levels that will be profitable for the firm. He is also responsible for profit-maximizing, pricing strategies and cost reduction strategies to improve profit and the bottom line.
Global economic conditions, despite continuing concerns are strengthening in large economies. The global economy is expected to grow by 3.6 percent this year. The three largest economies (US, Japan, EU) which produce a little under half of the global total (35 trillion) in nominal (based on prices when output produced) output a year will push GDP growth in OECD economies to 2.2 percent this year. Real GDP (adjusted to reflect inflated or deflated prices) grew in the US at an annual rate of 3.6 percent a large revision from government’s initial estimate of 2.8 percent. This year it is expected that world GDP, measured in purchasing power parity (theory that says goods should cost the same) exchange rates to grow by 3.6 percent which is a respectable improvement over the 2.9 percent the government predicted.
The Macroeconomic and Microeconomic indicators for the US are encouraging. The Economic Intelligence Units (EIU) place them as 8.20 and 7.30 respectively, with 1 being low and 10 being the high, in the overall business and environment rating. The US for now is the best performing of the advanced economies. A survey of manufacturing managers seemed to show that business confidence remained high. An average of 200000 new jobs were created a month. Job growth was significant and the unemployment fell to seven percent. Nominal GDP for 2014 is 35661 billion with a PPP of 34424.0 billion. PPP indicates that exchange rates are closely related to the level of prices.
Market Structure “The market structure for simple elegance is monopolistic competition due to the large number of competitors in the marketplace (McConnell, 2009, p. 223).” Market entrance is relatively easy since there is no large cash investment in terms of startup ($2000). The