Opening a New Branch

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Opening a New Branch The purpose of this report is to make a recommendation to the management of Supastores Ltd. The company is going to open a new branch. They are considering Bellport and Causton. In this report, I examine the case for and the case against Bellport and I make a recommendation. Supastores is a large retail company. It has over 50 branches across the country. The company employs ten people in each branch. All are unskilled except for the manager. On average, each branch occupies premises of 500 square metres. It is supplied daily by road from a warehouse near London. The company is expanding. In the last three years, total sales have risen from 734.000 to 1.056.000. Last year, sales rose by 18 per cent. This year, they have gone up by 22 per cent. There are many factors in favour of opening a new branch in Bellport. Firstly, it is easier to recruit staff in Bellport because the town is much larger than Causton. Also, the employment rate in Bellport is 10 per cent whereas it is only 3 per cent in Causton. Secondly, they will get higher sales in Bellport because the town has a much larger population. Thirdly, Supastores supplies its branches by road. The motorway from London is much closer to Bellport than Causton. Finally, there is a set-up grant of 10.000 per unit in Bellport. This is a government incentive to bring business to the town. There are several factors against opening a branch in Bellport. Firstly, salaries are higher in Bellport. Secondly, rental costs of shop units are also higher there. Finally, there are fewer shop units in Bellport. I recommend about opening a new branch in Bellport. The company will be able to recruit staff easily and will be able to attract a large of customers. It will benefit from cheaper transportation costs from their warehouse. These benefits are greater than drawbacks which include higher salary costs,
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