Business Plan of RiverRocks : Report

BUSINESS PLAN

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Industry overview........................................................................................................................1
Background of the organization...................................................................................................2
Market trends...............................................................................................................................2
Primary research..........................................................................................................................5
Definition and justification of shareholder value.......................................................................10
Objectives of business and KPI justification.............................................................................11
Financial plans and projections.....................................................................................................12
Key risks within proposed plan.....................................................................................................16
CONCLUSION AND RECOMMENDATION............................................................................17
REFERENCES..............................................................................................................................19

INTRODUCTION
UK is a leading nation in the publishing sector, in which, professionals publish different
types of books as per readers need. RiverRocks is a Bitain’s largest book retailer that runs 47
branches along with e-commerce trading. Despite its impressive growth, it is facing competitive
market challenges and financial turbulence due to highly leveraged capital structure and others.
Therefore, the key aim of the research is to create plans and strategies like product
diversification, expansion into international market, refinancing and others that will help the
business to ensure long-run survival.
Industry overview
As per International Publisher Association, UK book market is the 5th biggest sector all
over the world after US, China, Germany and Japan. Recently, published records by the
association reveals that UK publishing market outer-performed in 2016 by reaching a sales
record of £4.8 billion, the sales grown up by 7% Year-on-Year growth from previous year (UK
Publishing has record year up 7% to £4.8bn, 2017).
Key highlights:
 Despite consistent decline in sales of ebooks by 3%, overall digitalized sales increased by
6% to £1.7 billion.
 Sales at the store rose by 8% YoY growth and came to £3 billion.
 Europe is the largest exporter, which accounted 35% of the total export.
The industry gains extreme success in the overseas market also, because, around 54% of
the total industrial revenue is generated through export. In this regards, children’s book export
shows maximum contribution and its export increased by 34% holding £116m. However, export
of primary and secondary learning material increased by 11% to £144m, The highlights clearly
shows that UK gains leading position in the publishing market and hard work, superb publishing
houses, workforce and their genuinely work flourishing the sector (Great Expectations for UK
Book Sales, 2017).
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Background of the organization
RiverRocks is a national chain of bookstore that is operating in UK through its 47
branches. It also engaged in e-commerce trading where products are offer through its website to
the consumers. Its product portfolio includes adult fiction, adult non-fiction, children & teenager
books, gifts and stationery items. It generates 88% of the revenue through physical stores and
only 12% through online dealing. Despite this, company also launched in-store “River Café”to
attract more audience. Although, the business is operating profitably, still, looking to the tough
competition in the market, managerial team is looking for adopting alternative strategies to
strengthen its core competitive strength by refinancing, expansion, product diversification and
others.
Market trends
UK is the leading market in the book and publishing sector and all the readers from all
over the world are familiar with the contribution of UK. The country has number of famous
writers who publish the best quality publications to the people. Earlier, the books were only sold
through high street shops, while, over the period, new media forms emerged, as now-a-days,
electronic and online channels are used. Despite the wonderful growth, country is facing tough
market challenges due to changing preferences among people, print media, e-commerce and
many other factors. Emergence of e-commerce threatensor challenged conventional publishing
houses, because in the technology-led world; internet helps entities in redefining their
publication format and access (House, 2013). It also influence public desires because evolution
of recreational forms gains more preference over books or magazines. In addition to this, in
modern era, virtual schools show a significant growth as a way of digitalized version of e-books.
PESTLE analysis: Scanning macro environment is important to examine various market factors
that may affect RiverRocks performance.It can be done through carrying out PESTLE analysis,
done below:
Political factors: In the political enforcement, book industry of UK is needs to comply
with Office of Fair Trading (OFT). It lay down principles and a rule to protection consumer
rights i.e. customer jurisprudence enforcement and has authority to punish the enterprise who
violate any of act requirements. Recently, EU refendum in June 2016 may threaten UK Book
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market due to devalued pound, new rules and regulatory framework, downward trend in sales
due to Europe exclusivity and loss of EU funding (Trentacosti, 2017).
Economic factors: Inflation rate affects printing costs as the monetary value of paper is
increasing regularly. Besides this, pound value is struggling against currencies alike Euro and US
dollar in the worldwide battle.
Social factors: People’s preferences and desires are changing as, now a days; they are
preferring varied books. Currently, Ebook sales continually reported decline because younger
generations preferring print books. Young generation readers under the age of 18-34 are greatly
committed towards physical books, which rise sales of paper books. As a result, consumers are
spending more on purchase of physical books from street shops (Cain, 2017).
(Source: Cain, 2017)
It can be evident through 2016 statistics, in which, total 360m books sold @ 2% increase
due to 6% higher consumer spending. Shop selling reveal growth by 7% whereasebook sales
dropped by 4%. Every 3 people out of 5 Brits bough a book whereas just 1 in four purchased had
bough digital book.
Technological factors:With the change in period, offset printing is used as an innovative
method for publishing press paperback release. It uses chemical method for visualizing pictures
to gain huge demand. Besides this, digital book printing is evolved in which, books are published
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as per the user demand (Clark and Phillips, 2014). Although the sector reported fall in ebook
sales, still, it helps in knowing actual demand of the users.
Environmental factors:Every firm needs to run their operations in an environmental-
friendly manner. In such respect, ebooks helps to reduce deforestation and wastage of paper by
using electronic channel.Despite this, green printing is also emerged that uses chlorine-free and
recycled paper to reduce wastage (Man, 2016).
Legal factors: All the booksellers are abiding to follow Publishers Association Code of
Practice to produce clear, comprehensive and unambiguous publications. In addition, Office of
Fair Trading, Copyright Act, Intellectual Property Right,Patent Act, Equality Act and others are
the laws enforced on the industry.
Porter’s 5 forces
RiverRock is operating in a tough market challenges, thus, industry competitiveness can
be assessthrough porter’s 5 forces as follows:
Bargaining power of suppliers: Resource availability such as paper, labor and others
affects the survival of the market.Environmental issues tendto control the supply of paper, which
rise suppliers bargaining power. Besides this, as the sector requires talented people to produce
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HighBargainingpowerofsuppliers:ResourceconstraintsLowBargainingpowerofcustomers:ProductdifferentiationHighRivalrythreats:(Priceandnon-pricecompetition)LowNewentrybarriers:EnforcementofcopyrightandIPrightsLowThreatsofsubstitue:Digitalizedpresencedidnotconsiderablyaffectssalesofprintedbooks