Contents

  1. Introduction ………………………………………………………………. 2

  2. Objectives ………………………………………………………………… 2

  3. Findings …………………………………………………………………… 3

  4. Conclusion ……………………………………………………………….….. 7

  5. References ……………………………………………………………………..8

Professor`sName

EconomicIssues Facing Financial and Insurance Industries

Thefinancial and insurance industries combined provide one of thelargest sources of employment and financial aid to American citizens.Banks which form the bulk of the financial industry act theintermediaries between users and savers of capital. Insurancecompanies eliminate uncertainty in the minds of investors and assistin the improvement of financial resources. Insurance ensures thecontinuity of business and cover against losses and health. Bothinstitutions pay taxes to the government and assist in regulating themovement of cash and inflation. The financial sector`s role in theeconomic development of a country cannot be ignored. During the lastfew years, however, financial reform and communication andtechnological advancement have occurred and significantly transformedtheir ways of doing business. Technology has moved transactions frombanking halls into the phones tablets and computers of theircustomers. The new trends and emerging issues have varying impact onthe insurance and financial industries.

Objectives

Theobjective of this research paper is to determine the economicchallenges facing the financial sector and the insurance industry.Economic conditions created that can ensure that these industriesthrive and either continue to create jobs or adversely affect theperformance of these institutions. Competition among key players inthe banking sector and insurance has been seen as a major issue. Withthe continued entry into business of new players almost every year,the industry has seen a tremendous increase in the number ofindependent institutions offering these services

Findings

Effectsof competition

Theincreasingly competitive environment across both insurance and thefinancial services industry has increased the intensity of the needto develop alternative channels of delivery. Because the success andsurvival of such organizations depend on environment and strategythat can integrate the internal capabilities of the organization,coming up with new and advanced policies that tackle changes in theeconomic environment faster than the competition can creates an edgeand a distinguishing factor between organizations in the sameindustry.

Forinstance, insurance companies and even banks face new and extremechallenges in the competitive environment. This is because of achange in the services which has become the main marketing basethrough innovations and ingenuity including the creation of newservices and the delivery of those services to consumers at the righttime(Laudon, Kenneth, and Carol Guercio Traver 132),place and speed because essentials in the world of financial servicesdepend on the innovations created by this completion. This, in turn,guarantees the delivery of quality services and products to gain thecompetitive advantage, loyalty and customer satisfaction.

Governmentpolicy

Rulesand regulations set forth by the legislature have the largest effectson the financial and insurance industry. Bank regulation is createdto ensure that there are safety and dependability of the bankingsystem. It is many cases such regulation constricts the normal cyclethat exists and creates economic expansion, new job opportunities,and credit. Creating that right balance can be key to economicdevelopment since the high expenses that result from the unnecessaryregulation of the industry reduce resource devolution to lending. Thelast decade has seen the collective regulatory burden on financialinstitutions essentially more than double. This has constrictedtremendously the facilitation of credit that if unchecked couldthreaten the role of these financial institutions in communitydevelopment.

Theunequal regulation between banking and non-banking financialinstitutions has provided non-banking financial institutions with acompetitive advantage despite both offering identical products andservices. Non-bank financial institutions enjoy less regulatoryoversight, tax treatment, and consumer compliance. This has created ashift in bank activity to non-bank institutions such as credit unionsdenying the government a vital tax stream(Meropol, Neal J., et al).Creating new measures and regulations that will enhance equalityacross all financial institutions by ending the special taxprivileges accorded to credit unions and farm credit systems easingthe restriction of mortgage service rights and capital treatmentthrough legislation.

Theinsurance industry is also facing a wide range of regulatoryinitiatives which have seen an increase in the cost of insurance andcreation of a new class of risks (regulatory compliance). Theseregulations change regularly and the time required to implement theseregulations becomes the problem. The regulation process is a timeconsuming distracting management and talent from innovations and notcreating a safer system.

Costs

Thehigh costs involved in the compliance and the capital requirementsaffect the growth and profitability conditions that are unfavorabletowards the innovation of the industry. These discourage theexpansion of the industry and increase the costs of doing business.This trickles down on the consumers who incur higher premium costsdue do the costs of administration.

Cyberrisks

Therisk of network intrusion and software failure causes anxiety amongboth financial institutions and insurers. The safety of digital datastored in the cloud-based storage system is of prime concern due tothe nature of data that these companies collect. Any damage or lossof data through breached network systems results in the exodus ofcustomers whose private information has been leaked. Thesophistication of cyber criminals and the dynamic nature of threatsposed by the changing technology make these institutions primarytargets. High costs involved in the adoption and integration of newtechnology regularly with security always being a step behind. Theconcern raised on the growing number of attacks with only a fractionrequired to cause a serious disruption(Merton, Robert, and Zvi Bodie 48).

Asuccessful attack creates additional costs due to the security andthe subsequent loss of trust by customers.

Naturalcatastrophes

Inthe case of insurance huge losses incurred as a result of a naturalcatastrophe such as an earthquake, tsunami, hurricane or floodingfrom storms. With the increase in the rate at which climate change istaking effect and creating extreme weather patterns, insurancecompanies occasionally find themselves facing huge claims from theirclients in light of such calamities. This increases the cost ofcovering at the reinsurer the effect of which is ultimately paidthrough high premium rates by clients. Such kinds of high-riskuncertainty can even lead to the withdrawal of players from themarket.

Productdevelopment

Concernthat the changing markets are not met by an equally dynamic changeand development of the product is on high level. The lack ofinnovations and the inability of these institutions to create newproducts tailored along the changing tides create rigidness in theseindustries. Emerging issues such as the emerging cyber risks, drones,hover boards and driverless cars create a new and existing field thatis yet to be fully integrated into the insurance industry. Thiscreates a risky market that is supply driven rather than supplydriven.

Productdevelopment is important in creating a new product that is tailoredaccording to the available current needs of the consumer.

Conclusion

Financialinstitutions and the insurance industries have together created jobopportunities and assisted in the formation of the new business. Theyprovide an important tax revenue source to the government. Numerousmicroeconomic factors influence this role. Government policy is byitself one of the main sub-factors that have helped shaped theseindustries. Political interference through regulation to create aperceived consumer protection mechanism only creates ineffectivesystems that focus mainly on the regulation processes neglecting theimportance of innovation and product improving.

Technologybased factors such as the inclusion of cybersecurity to prevent asecurity breach on customer data and the continuous improvement ofsecurity systems to ensure intruders are repelled. The rising costsresulting from cyber security and the sensitivity of the nature ofdata that these organizations hold makes them targets of cyberhacking. Any damage or loss of information can create a lot ofdistrust among clients leading to lose of business.

Competitionsin the industry and the difficulty encountered by new firmsattempting to join these markets by established players. Thecompetitiveness and diversity of the industry are an important sourceof innovation and improvement of the product. Product developmentcontinues to be a major impediment to the creation of consumertailored products that are in line with current trends. This makesthese industries rigid and ineffective due to their supply-drivennature. The insurance and financial industries may require governmentinvolvement to a certain level that will ensure that proper andnon-exploitative business practices are followed however the amountof regulation that is effective and not a bottleneck towards businesscontinuance.

WorksCited

FloodInsurance Claims Handbook. Washington: U.S. Dept. of HomelandSecurity, Federal Emergency Management Agency,&nbsp2009. Print.

IndustryReport Financial Services.New York: Economist Intelligence Unit,&nbsp2000. Print.

Laudon,Kenneth C., and Carol Guercio Traver.&nbspE-commerce.Pearson/Addison Wesley, 2007.

Meropol,Neal J., et al. &quotAmerican Society of Clinical Oncology guidancestatement: the cost of cancer care.&quot&nbspJournalof Clinical Oncology&nbsp27.23(2009): 3868-3874.

Merton,Robert C., and Zvi Bodie.&nbspThedesign of financial systems: towards a synthesis of function andstructure.No. w10620. National Bureau of Economic Research, 2004.

Contents

BUSINESS PLAN

Contents

EXECUTIVE SUMMARY 3

BUSINESS DESCRIPTION 5

SERVICES 5

PRODUCTS 5

MARKET RESEARCH 6

STRATEGY AND IMPLEMENTATION 6

COMPETITOR ANALYSIS 7

SALES AND MARKETING PLAN 8

Sales strategy 8

Marketing strategy 8

OPERATIONAL PLAN 10

MANAGEMENT AND STRUCTURE 10

FINANCIALS 11

FINANCIAL REPORT AND PROJECTIONS 12

CONCLUSION 13

EXECUTIVESUMMARY

Thesalon will be at a place where women receive full service on theirhair, nails and skin in case they need any skin care. It will bededicated to consistently providing high customer satisfaction byrendering efficient services, quality products and providing anappropriate environment for developing relationships with customers.The business would also like to be known for diversity, great ideasand the hard work that it would dedicate to its operations. Also, thebusiness will maintain a friendly, ambient and customer responsivework environment. It will seek to provide women with a haven, wherethey can sit back relax and experience a world class grooming andposh service. The business will plan to increase profits byincreasing its client base through becoming a highly sought businessemanating from its satisfaction of customers this will be within thefirst year of operation. The report will cover a business plan forIndigo Salon.

Missionand Motto of the Business

Thefollowing will be the mission statement and motto that will guide thebusiness

TheMission: Tosupply services and products that enhances the client`s physicalappearance and provides mental relaxation to the customer.

BusinessMotto: &quotToprovide world class care.&quot

Strengthsof the Business

Thebusiness will pride itself emanating from the following strengths,which will be key to its performance

Location:- The business will be located in Kota Kinabalu town in Malaysia anarea that is well serviced by roads from every direction of town.

Diagramsof the Salon Store and Location

Environment:- The salon will be next to the Kota Kinabalu Park, where thesurrounding atmosphere is calm and temperatures are favorable.

Safety:- Clients will be safe since the business plans to install CCTVcameras at every angle of the salon to limit cases of theft. In casethere is theft, it will be feasible to notice it since there will besecurity officers taking care of the daily occurrences in the salon.

Convenience:- the salon will be accessible and offering the clients a wide rangeof services in one sitting and extended business hours since it willbe open throughout.

Agood rapport: – the beauticians that the business will hire are goingto be well trained and the best in the provision of services.

BUSINESSDESCRIPTION

Thename of the business would be Indigo. The location of the businesswould be in Kota Kinabalu town, Malaysia. At the start of thebusiness, the total number of employees would be 10. The products andservices of the business would include the following

SERVICES

  • Hair design where we make any form of hair treatments required by our clients

  • Cuts for those who require hair trims

  • Facials, peels, backrubs, and messages

  • Nail art including paintings and acrylics

PRODUCTS

Someof the products on sale at the salon would be a wide range of hairproducts, nail products, and skin care products. The prices will varyin comparison to competitors and the price offered by suppliers inthe market. The prices will be significantly lower depending onwhether they will be used outside the salon by customers. The retailprice will be at about $20 to about $100.

MARKETRESEARCH

Theindustry is stable in Malaysia. However, the market share in thecountry is on the rise with a large number of women now taking up themarket and joining the workforce. As the population in this locationincreases, it has shown that more and more women prefer to have alltheir beauty needs serviced at one location and this increasescompetition in the market. The market includes a population of about5000-7000 people who will be included in our customer profile.

STRATEGYAND IMPLEMENTATION

Thebusiness will emphasize on world class service so as to differentiateitself from the competitors by employing well-read staff who arecapable of handling clients both fast and effectively. They willalso be trained in understanding the dynamics of customer service andmaximizing the connection and relationship with the client.

Thebusiness will try to provide the best atmosphere for the clientthrough training the employees. The professional staff will betrained about creating an ambiance for the salon. The business willdistinguish itself as a trustworthy business that can listen tocustomers. Letting them be pampered to relieve the stresses of ahectic work life and everyday interactions with work family andfriends as well improving their looks.

Thebusiness will also foster the growth of a relationship-orientedworkplace that strengthens the bond of trust among the clients andguarantees them fast and efficient service. This will go a long wayin securing the customers as repeat clients due to good service. Theclients will always seek services from the business due to the goodrapport.

COMPETITORANALYSIS

Thebusiness is guaranteed to face some competition since there are othersalons in the area. The main difference with Indigo model is that thebusiness will provide a comprehensive base of services, and ensurethat all clients’ needs are met. A customer does not have to movefrom place to place in a bid for all her services to be met, now theycan stay at one place and get their hair nails and skin done all thiswith a limited budget and in a time bound environment. The othersalons are all high end, and they charge a lot for their services.Indigo Salon will be more customer-oriented in that it will choose towork with customer of all budget sizes. The products and serviceswill be fairly cheap as compared to the competitors. With time, thebusiness will also offer additional services and products that do notappear in the competitors activities. The business will pride itselfin good and efficient service delivery. The chief competitors in thearea would be Royal Salon and Beyond Beaute.

Competitive Analysis

Products And Services Offered

Services

Our prices in $

Competitors prices in $

Full Hair Dressing

70

75

Hair Cuts

15

18

Facials

20

22

Peels

30

30

Backrubs

40

42

Messages

50

45

Nail art

15

20

Acrylics

20

25

Eyebrow trimmings and shaping

20

22

Products

Our prices in $

Competitors prices in $

Hair treatments

250-300

280-350

Moisturerisers

120-150

180-220

Cutex

50-75

55-75

Lipsticks

15-20

20-25

Lipbulms

15-20

15-20

Nail polish

20-25

20-25

Sterilizers

32-35

30-35

Body soaps

20-75

20-50

Skin creams

50-100

50-75

Sun screen

20-80

15-35

Makeup kits

50-100

50-100

Makeup brush kits

70-120

nil

Makeup creams packages

100-225

nil

Hair bunds

20-25

20-25

Gels

45-75

nil

SALESAND MARKETING PLANSalesstrategy

Thebusiness’ sales strategy is to promote the women`s salon to thefemales who desire style and personal confidence, without consideringmuch to do with the budget so as to enhance their lives. The businesswill promote the salon through employees’ skills, courteous nature,and warmth while establishing loyalty and return visits. The businessintends to sell its products and services to all customers visitingits premises. In the beginning Indigo would like to use a free sampleproduct strategy to gain a customer base. By doing this, the businesshopes to get more customers who will then grow to become regulars atthe salon. The free product promotion idea will be actualized bypartnering with local product developers as they advertise theirproducts through the salon. The idea to work with and support thelocals is a good way to start since it shows that the business willbe ready to work with them and help reduce the feeling of beingindifferent. The plan of the salon is to become neutral grounds forboth new salon visitors and a place to meet and commune.

MarketingStrategy

Thebusiness’ marketing strategy will be the key to its success becauseit will emphasize on the salon’s name and sell that as a brand tocustomers through unique service and a good environment throughadvertising. The convenience of the business’ location will also goa long way to help in the accruing of more clients within the busycity area. By building good community relationships, the businessaims to deliver world class service. The greatest marketing strategythe business hopes to use is word of mouth. The business willinteract enough with the locals to make sure that it gains as much asit can in terms of local marketing. With the promotion of localproducts and entering into partnership with the people who need helpwith the promotion of the products, the salon then will become awheel by which the business will use to gain own marketing. The othergreat seller will be best service delivery and efficient work. Thiswill be one of the things the business will be most serious about atthe salon making sure customers are served with the highestefficiency possible. The business will also conduct free hairclinics, where people will be visiting to get advice on how to treatdamaged hair and the best course of action to take. This will happentwice a month to help in the marketing.

OPERATIONALPLAN

Thebusiness plans to open the salon in five months time once it hasconsolidated sufficient finances. The first step after opening wewill focus on the marketing to make sure we make ourselves known inthe new neighborhood. The business will be expecting a clientele ofabout 55 customers per week and about275 customers within the firstmonth of opening.

Thebusiness also projects approximate daily sales of about $50 a day and$1500 in a month`s time. As the client base increases, the businesswill expect a constant and gradual rise in these numbers. Theoperations of the salon are projected to grow gradually as thebusiness continues with the marketing of the salon. Word of mouthbeing what the business hopes to have as its greatest seller throughthe promotion of local products, the business projects to pick upquickly. It is also in the plans of the business to start a trainingprogram for those who may want to learn styling in future. As a wayof giving back to the society, these training programs will be freeto the public.

MANAGEMENTAND STRUCTURE

Theshop will be managed by beauticians therefore, all the employeeswill be good at handling customers and this will ensure that the bestof care is given to them. The person in charge will be one who lovesto deal with people and one who will have a drive, ambition, and thediscipline to manage a business and its employees. The other supportstaff will have to be graduates in the various fields of beauty andpeople who are passionate at what they do.

Thebeauty shop will operate as a sole proprietorship with the managerbeing a representation of the owner in the business. The manager’sresponsibilities will be to make sure those overall daily routinesare followed in the business all employees’ issues are handled andthat the employees are paid on time. The manager will also beresponsible for the finances. Management of the salon will be takenwith great seriousness in case the business is to maintain thestandards needed for operation. It is worth noting that the business’decisions will lie in the hands of all stakeholders.

Constantstaff meetings will be setup to settle all employee issues. Proper,well laid out job descriptions will be written down and will beundergoing constant reviews so as to make sure everyone is aware oftheir job descriptions and no customer leaves the salon unsatisfied.Duty rosters will also be written down to make sure daily duties arewell taken care of: these include cleaning and sterilization of allworking equipments, restacking of products, cleaning of the salon,mirror cleaning, towel sterilization, pluming checks and any otheractivity that might lead the salon to be perfect will be recommended.

FINANCIALS

Thefollowing are the financial predictions for the operation of thesalon. The salon hopes to work towards meeting its customers’ needsfrom the word go. The employees will have to have the best of skillsin their specific fields and work efficiently to achieve their goals.The plan is to always look for better ways to provide betterservices.

FINANCIALREPORT AND PROJECTIONS

FINANCING SUMMARY

services rendered

Amount in $

SOURCES OF CAPITAL

Amount in $

startup costs

62,000

personal

20,500

parents

4,500

working capital

14,000

loan

15,000

credits

36,000

TOTALS

76,000

TOTALS

76,000

STARTUP COSTS

WORKING CAPITAL

ITEMS

cost in $

cost in $

licenses and permits

200

salaries

7,433

professional fees

300

insurance

150

salon supplies

5,225

rent

1,895

furniture and displays

2,328

loan payments

1,179

utilities

150

advertising and marketing

100

inventory

450

supplies

364

renovations

33,317

payroll

722

equipments

20,000

utilities

350

TOTALS

62,000

professional fees

50

taxes

107

repairs

250

withdrawals

1,200

miscellaneous

200

TOTALS

14,000

CONCLUSION

Thesalon is set towards becoming an icon in the beauty industry byproviding services at pocket friendly prices and also the bestservice in the town. The salon is also intended to become the best attraining and looking for the best people to render the servicesneeded for an efficient working of the salon and so as to satisfycustomers. Gradual growth is also predicted as the salon workstowards more marketing and advertising.

References

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Luther,W. M. (2001). Themarketing plan: How to prepare and implement it.New York: AMACOM.

Sutton,G., &amp Kiyosaki, R. T. (2012). Writingwinning business plans: How to prepare a business plan that investorswill want to read–and invest in.Minden, NV: BZK Press.

Westwood,J. (2013). Howto write a marketing plan.London: Kogan Page.