Bkal 3063: Case Study on Waji Boutique

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- Hiring employees without an official way

Mr Bashir hired Mr Khawar Iftikhar, the referral from the gardener, as a sale assistant who could handle all aspects of the boutique business. Hired employees without an official way cause Mr Bashir failed to get employees who are responsible to the boutique.

- Improper delegation of authority

Mr Bashir had handed the keys to Khawar from the very first day he work and made him responsible for opening and closing the shop. This improper delegation caused incorrectly completed tasks which are the inventory mismanaged, discrepant accounts and loans on business.

- No implement any marketing strategies

Mr Bashir started boutique business without any marketing strategies. Without marketing strategies, there is no products attract customer to buy, only one sale made for the first two months.

3.2 Inventory management policy

Mr Bashir started up boutique business without any experience. For the first purchasing of inventory, his wife helped to buy around 300 dresses she liked. After 2 months, he bought 200 additional clothes from suggestion of neighboring shop. After that, he would ask Khawar on the type of merchandise to order. Besides, Mr Bashir had devised a two tag system for managing inventory. He made 2 tags for every outfit; one he put up on the dress at the outlet with the sale price on, the other he kept at home and wrote description of the outfit, cost price, sale price and date of purchase on it.

At the end of every month he asked Khawar to hand him the tags of the sold merchandise and matched it with the tags at home. This way he knew how many clothes were hanging in the boutique at any one time. At the end of every month Mr Bashir would go and visually check all the clothes placed in the boutique. He also randomly picked samples and noted their tags so to match them with the ones at home. This helped him to keep a check on inventory and gauge the type of merchandise to order. Mr Bashir randomly storing products in inventory, it caused transferring in and out of inventory could not occur smoothly. By using two tag system for managing inventory, the inventory items didn’t match the records occurred.

Inventory management technique appropriate for the firm to adopt best on its prevailing circumstances is automation stock review. Automation stock review is a regular analysis of stock versus projected future needs by using inventory software. Mr Bashir should define minimum stock level which set up regular inspections and reorders of supplies. Investing in software to automate the review of stock will help the boutique keep track of the inventory, ensure timely records and avoid costly shortages.

3.3 Pricing Strategy

Mr. Bashir needs to settle out the source of the product. Before this, Mr. Bashir and his wife went to Tariq road and bought around 300 dresses with high price. He got the dresses within the cost of Rs 2000 to Rs 3000 for each outfit, and then simply doubled the price of each outfit for sale purpose. When we buy with wholesaler, we can buy more with a cheapest price. Therefore, Mr. Bashir can sell the outfit for less than Rs 2000. This is much better than the first and second month of the business where Rs 2000 is the cost of the outfit.

The first alternative is competitor-based pricing. If there is strong competition in a market, customers are faced with a wide choice of who to buy from. They may buy from the cheapest provider. But customers will certainly be mindful of what is a reasonable or normal price in the market. Mr. Bashir must do a price survey compare with his competitors and normal market price of the dresses. Mr. Bashir must use “going-rate” pricing; setting a price that is in line with the prices charged by neighbor’s shop. Most of his competitors shop set Rs 2000 as the maximum price for sale.

An advantage of using competitive pricing is that selling prices should be line with rivals, so price should not be a competitive disadvantage. The main problem is that the business needs some other way to attract customers. It has to use non-price methods to compete such as providing distinct customer service or better availability.

For the second alternative is cost-based pricing which is Mr. Bashir use double pricing policy (mark-up 100%). Mr. Bashir needs to make an analysis to compare the price of outfit with competitors and market. Double pricing policy is good to use when the cost of product is lower. Mr. Bashir manages to get a lower cost for its inventory by bought with wholesaler in Sadar. He manages to lower its cost from Rs 2000-Rs 3000 to Rs 700-Rs 1200 only. For the outfit that cost less than Rs 1000, Mr. bashir can double up the price. Let say, the dress cost is Rs 800, the price will become Rs1600. Then the price is affordable to customers.

Then at the second month, Mr. Bashir uses another alternative for pricing. He added half of the cost as the profit margin (mark-up 50%). After Mr. Bashir manages to get an inventory at lower cost, he uses this policy for product that cost more than Rs 1000. For example, if the outfit cost Rs 1200, after added half of the cost as profit margin, then the price to sell is only Rs 1800 per unit. The price is still affordable and not more than Rs 2000.

The main advantage of cost-based pricing is that selling prices are relatively easy to calculate. If the mark-up percentage is applied consistently across product ranges, then the business can also predict more reliably what the overall profit margin will be.

3.4 Hiring employee

Before opening the boutique, Mr Bashir makes an advertisement on local shopping malls and grocery shops regarding sales assistant position for his boutique. Mr Bashir also asks his relatives, friends and his house servants to recommend any person that may be suitable to be the sales assistant in his boutique. His gardener suggests Khawar that was matriculated and had worked in a jewelry shop for about 7 years. So, Mr Bashir choose Khawar as he think Khawar is the best candidate for the position after his gardener said all Khawar’s criteria. Mr Bashir straightly chooses Khawar as his sales assistant after recommended by his gardener. Mr Bashir did not making any proper process in recruit Khawar to be his sales assistant. Mr Bashir only realize that Khawar is not a responsible person and making fraud after Khawar leave Mr Bashir’s boutique with many problem.

There are two alternatives that maybe suitable to solve the problem about hiring worker.