Three Challenges When Setting Up A Business

624 words - 3 pages

1. Identify at least three challenges when setting up a business. Explain why they are challenges.
There are many challenges to a business. Three main challenges may be capital, demographics and human resources are three challenges that am entrepreneur may face when setting up a business. Funding is very important and in order for the structure to take flight, it has to have a good amount of capital. For some businesses loans are an option while others search for a venture capitalist that gives them proper funding. While not the only reason failure happens, capital is usually the catalyst that plays the detrimental role. A lack of insufficient funding can cause no start up or a slow start up and limit business planning a development. It can also cause high debt, which affects business ownership. This could cause a layoff of employees and make them seek other places of employment ...view middle of the document...

Chauffeurs mostly drive it. Abercrombie & Fitch’s cologne Fierce is mostly for young men. Vera Wang’s bridal gown the Eleanor is for wealth and petite women.

3. Explain why a niche company might have an advantage in a market. Would price necessarily be an advantage? Explain why or why not.
A niche company might have an advantage in a market because its products are very unique and custom made. Rolls Royce is a perfect example of a company’s advantage in the automobile market. Just its reputation, built on exclusivity and the products they offer, dwarfs their competitors. Although the market for this car is small and geared to the wealthy, they have attained great success. A niche company’s product is usually a limited edition that is not for sale anywhere else. Whether price would be an advantage depends on the customer expectations. Some people think that paying a high cost for a valuable item says that they are superior because they wealthy enough to buy the product. Other people think that paying a lesser price for a valuable item says they are smart.

4. Identify and explain three reasons why customers would pay more for exclusivity. There are many reasons why a customer would pay more for exclusivity. (1) Exclusivity caters to most people’s innate desire for validation. Most people are looking for something to make them feel valuable. (2) Secondly, customers often pay more for exclusivity to impress other people. Many people have the need to feel superior to others. (3) Thirdly, an exclusive product has a dramatic effect on peers. If a person’s friend has an exclusive item of value that person does not have, there is a very good chance that person will inquire as to where the friend got that item.

5. Explain how a niche player “chips away” at a larger competitor’s base. Give three examples of retailers who have done this. A niche player “chips away” at larger competitor’s base by increasingly attracting customers with more innovative marketing. Three examples of retailers who have done this are Burger King, Wendy’s, and Checker/Rally’s

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