SYNOPSIS In late August 2020, Desiree Johnson was completing arrangements for the start-up of Tropical Delights (TD), her indoor plant store in Brampton, Ontario. Desiree had been working at a leading garden store in Toronto each summer for the past 3 years while she was completing her diploma at Humber College. Now, Desiree was seriously considering opening her own plant store next year April 2021 in a plaza closer to her home in Brampton. DESIREE JOHNSON Desiree's parents migrated from the Caribbean twenty years ago when Desiree was just 2 years old. She grew up in Brampton where she was active in basketball and volleyball for her high school and also in her church youth group and choir. She strives for excellence in all her activities, which led to her Valedictorian nomination at her high school's graduation. However soon after this, Desiree's parents got divorced which led to a difficult period for Desiree. She became depressed and had difficulty focusing on her studies in Business Management at Humber College. She however managed to graduate with the help of her family. After graduating in 2020, she returned to the garden store job that was very therapeutic in enabling her to take her mind off the separation of her parents. While she does not feel fully cured from her depression, she knew that she needed to put her diploma to work as she would soon need to pay her own way. THE PROPOSED PLANT STORE LOCATION Brampton is a major Ontario city outside of Toronto that had a large residential population 600,000. Most of Brampton is comprised of residential detached, semi-detached and townhouse dwellings. Brampton has one of the highest immigrant populations in Canada with 52% of Brampton's residents being were born outside of Canada, predominantly from South Asia. Brampton's residents tend to have strong family ties and values. The idea of opening her own business had been in the back of Desiree's mind for some time. However, she did not consider the plant store idea in earnest until she noticed the sign announcing the development of a new shopping plaza not far from home. Desiree thought that the location was desirable for the following reasons: Traffic volume was very high at that intersection. Several new subdivisions had recently been constructed in the area. The location was close to Desiree's home. The product line Desiree planned specialized in tropical indoor plants that could enhance any home throughout the year. So this product line avoided the seasonality of regular gardening shops. She was very familiar with these from her work experience over the past 3 years. Also on Desiree's mind was the opportunity to expand Tropical Delight's product range from plants to other indoor decorative pieces, to expand her services through providing more in-home guidance and plant recommendations, and even offering online ordering and delivery. But she did not want to try to do too much in her first year. Desiree was not worried by the fact that there was a shopping mall across the street that contained a gardening store. She reasoned that two plant stores located close together could be an advantage. She believed that people looking for plants would prefer to go to an area where there was more than one store. She believed that the gardening store in the mall was more seasonal, that the service was poor and the staff had limited knowledge of tropical indoor plants. Thus, she thought that her store would employ two part-time but knowledgeable sales staff, and would have little difficulty in attracting customers. PLANT STORE FINANCIALS As a result of the global Coronavirus pandemic, plant store sales in Ontario had declined by 25 per cent in 2020. It is expected that normal sales trends will gradually rebound once the pandemic subsides in Spring / Summer 2021. The introduction of flowers in large grocery stores, Big Box retailers such as Wal-Mart, Canadian Tire, Home Depot, Lowe's, Costco and the growth of online sales of floral arrangements have also affected sales of independent flower and plant shops. However, Desiree believes that her unique focus on tropical indoor plants year-round and consumer concern about the quality of big-box retailer plants will enable her to sustain a price premium of 15% above market prices. Gardening stores generally open from Spring to Fall, and close for Winter. It was recommended that the store design be modern with plenty of light and accent lighting to illuminate plant designs and attractive displays. Furthermore, a variety of clearly priced, attractive plants and unobstructed glass window displays to showcase the unique tropical plant varieties would be an advantage over competitors. The cost of goods sold for plant and flower stores had averaged 47 per cent over the past few years and most gardening shops, after all expenses, earned a net income after tax between 10 and 12 per cent of gross sales. Most customers purchased plants for themselves and visited a gardening store four to five times a year. Desiree did some research through observing traffic through gardening shops. She recorded an average of about 10 customers per hour, for which about half of them made purchases. These customers spent an average of $25 per purchase (before taxes), but many customers bought basic supplies like soil and mulch for example. Tropical plants would normally fetch a higher average price point of about $30 per transaction. Desiree estimated the store's supplies and bookkeeping to cost $1,500 each annually. Part-time employees would work eight hours per day, six days a week for 50 weeks. She planned to rotate two workers so the store will be open 7 days / week from 9 am - 7 pm. Minimum wage was $14 / hr. Benefits (EI, CPP, etc.) for employees would average 10 per cent of their wages. As she was now starting her business, she planned to pay herself $4,000 per month. She also wanted to add an annual expense of $750 for maintenance, repairs and office supplies. The Tropical Delights store would be 820-square feet at a rental cost of $22 per square foot per year plus $10 per square foot per year for the common area maintenance. Insurance cost for a $2 million general liability insurance policy would cost $1,000 annually. Telephone, internet and utilities combined would average $1,500 monthly. To advertise her new store, she could choose among one or more promotional methods, such as flyers, an online presence through her website, social media, google ads, advertisements in the Brampton Community newspapers. She was also considering communicating special offers on new plant varieties through direct marketing such as email and direct mail, maybe even through a Tropical Delights loyalty club. Everything Desiree read had suggested that gardening stores needed to spend around $3,000 to $5,000 for advertising annually. Finally, taxes for small businesses tend to average about 10% of Net Profit. Based on the size of her proposed plant store, she projected her investment costs to total $25,550. Exhibit 1 provides the breakdown of these costs. Just the in-store equipment, Leasehold Improvements and store signage were considered fixed assets depreciable at a rate of 25% per year. The balance of the start up expenses would need to be expensed in the first year. With respect to financing, Desiree had saved $10,000 and planned to borrow Cdn$20,000 from her family, thereby saving on bank interest costs. She planned to re-pay half of this loan from her family by the end of her first year of business. CONCLUSION Desiree was excited for a new start. She always dreamed of starting her own business. She figured that if she can survive post pandemic, she will have her business well poised for more success once the economy rebounds. She has poured all her spare time into researching her own plant store and will continue working out the details until her proposed store's opening next year. Desiree knew she would have to make her decision soon in order to secure the location for the opening of Tropical Delights next year.

1.Environment Analysis:

Prepare an Environmental Scan for Tropical Delights (TD)

2. SWOT Analysis: Prepare a SWOT Analysis for TD

3.Strategy / Positioning:

Do you believe that TD has a clear strategic positioning? How do you recommend Desiree build on TD's value proposition to support this positioningjQuery2240027192818767946214_1608300008214

4.Finance:

Using the information in the case, first year projected Profit and Loss Statement and Balance Sheet for TD (State your assumptions)

5.Marketing:

Which marketing channels do you think would work well to build awareness and trial for TD's launch? Which channels or programs would you recommend for marketing promotions?

6.Operations:

What would be the daily volume (in terms of customer transactions) required to breakeven? Show your calculation of fixed and variable costs.

7.Leadership:

Considering your previous analysis and Desiree's mental health, should Desiree proceed to open her plant store next year? Why or Why not?