Economic Projects în Commerce

The Trading Company’s Presentation

S.C. LuXuriouS S. R. L

S.C. LuXuriouS S.R.L is opening women’s lingerie stores in 3 big Moldavian cities (Iasi, Bacau, Piatra Neamt), but also an online store at www.LuXuriouS.com

The headquarters and the warehouse are located in Iasi, Podu Ros, Sf. Lazar Street, no. 27, phone number 0323 511 454. The other stores can be found in Bacau, in Center, 9 Mai Street , phone number 0234 211 790 and in Piatra Neamt, Speranta, Izvoare Street, no. 27 phone number 0233 238 653.

Company staff consists of : one manager, one commercial manager in charge of supplying and selling, an accountant, six seamstresses and one fashion designer who deals with product presentation.

According to the national economy’s classification of activities, our company is included in the CAEN code 5242 in matters of the Retail Sales of Clothing.

The target market is represented by women aged 18 to 50, who have an income over 200 RON, regardeless of profession. Our product aims to meet consumer expectations and needs.

1. Activity field’s entry and exit barriers

Taking into account the current economic crisis, consumers have begun to change their behaviours in what concerns the purchase process. The only articles that have not been neglected are the lingerie, the jeans and the shoes, because at least these ones must be replaced. Starting from this idea, we want to focus on lingerie, because this is the most important item of women’s outfits.

When starting a business, investors overlook some items that are related to its development, counting only on the attractiveness and on the growth potential, not thinking about the risks involved. The company’s ability to enter the market defines to some extent the concept of entry barrier. When starting a business is not enough just to know the consumers’ behaviours, their needs, but also to analyze the competitive process which is essential in an economy affected by globalization and innovation.

Although on the market there are many companies that deal with the same thing, we want to overcome the barriers imposed by them. Thus, so as to successfully open the company on the Moldavian market, there are two types of barriers:

1. Entry barriers:

• Legal regulations: respecting the rules imposed by the European Union and the difficulty of obtaining legal provisions such as licensing, patents, concessions, legal monopolies, customs protectionism etc.

• Barriers that take into account the production and sales process: economies of scale, product differentiation, cost advantages, etc.

• Competition and its degree of concentration: the well-known companies have already well-formed customers and that puts us in difficulty when it comes to attracting clients, as those companies resort to different strategies to maintain their position in the market and to remove the new companies; as long as competition is balanced in matters of size, resources, strength, the rivalry will be quite intense, and if a certain sector is highly concentrated, these companies will impose a discipline of competition.

• Lack of cash: difficulty in acquiring the materials needed for starting the activity (furniture, alarm system and video system etc.)

• Taxes for starting the activity: limitations imposed by the Chamber of Commerce, operation fees and taxes etc.

2. Exit barriers – are the ones that prevent or discourage a business’ disinvestment; when making the decision to leave the market or closing the business, there is the issue of sale or withdrawn.

• The high cost that comes with getting out of this activity field

• Commitment in matters of human resources

• include state aid legislation and weak enforcement of bankruptcy, and even some flaws of this legislation

• the risk of not being able to recover the remaining undepreciated value

• the impossibility of consuming the stocks of goods in the warehouse (fashion changes from one season to another, clients’ disinterest)

• emotional arguments can also be part of the exit barrier