Dragonfly appears to be a feasible business opportunity. Thompson proposition meets two of the key components of a successful venture: a market need of an upscale store serving Cattle’s teenage segment, and low competition in the local area. However, these elements do not provide Dragonfly with the competitive advantage required to successfully dominate the market. Its products (teenage clothes and accessories) do not differentiate from its few competitors.
Further, the loathes and accessories were sold at fairly high price points. The Thompson failed to develop a new value curve that offers product superiority and value to their customers. At this time, Dragonfly does not offer a value proposition or benefit that will make its market segment to pay the cost for switching to Dragonfly. Unless the Thompson implement a new value innovation marketing strategy that offer benefits such quality, better prices, and/or convenience, Dragonfly will not be able to gain the market share required to Increase sales and completive advantage. II.
Business & Marketing Strategy The business goal of Dragonfly is to become a thriving chain of retail stores targeting the upscale teenage market, Initially In Seattle. As a result of vigorous due diligence, Dragonfly believes that It Is very well positioned In the undeserved teenage market. But their strategy is weak. At the very beginning of the Dragonfly venture, the Thompson elected to lease a space in the Crossroads Mall, which is described as an older mall that is being renovated; the fact that they did that shows that they were to cognizant of the most important aspect of retail: the location.
The risks here are large. This is because of several factors such as (a) Dragonfly is very delinquent on the rent at their initial location, (b) inventory has increased year-over-year since Dragonfly’s inception, (c) gross sales are down from the prior year, even with a new location, and (d) Crossroads Mall and Bellevue Strip are within a 4 mile radius of each other, which puts them further at default according to their lease.
At this point, Dragonfly needs to negotiate a settlement with their landlord that releases them from section 27 of the lease and allows them to vacate the premises (with past-due payments to be made, plus a separation fee) so that they can focus on the store with better location. Also, sales and inventory levels need to be presented by store (not combined numbers) in order to have a clear picture of the situation.
Ill. Management IV. Analysis and Recommendations unfortunately once launched, Dragonfly’s original store TLD live up to the expectations: the sales were Insufficient, margin too small, they had Inventory management problems and they fell behind on their lease payment. To offset their losses and the inventory surplus, the Thompson decided to open a second store in an enhanced location. Undeniably their strategy worked; Inventory was down, sales were up, turnover had Increase, and most payable were In time except for the Crossroad’s unpaid lease. The addition of the second store certainly improved the company’s financial position, but is not enough to support Dragonfly overall. They still deteriorating, there is no potential and profitable future for Dragonfly there.
Dragonfly’s best option is to negotiate an early exit from the lease. This would get them out of the struggling mall and allow them focus more on the Bellevue location. This deal will allow them to pay Crossroads from their profitable operations without incurring further liability. However, given that Crossroads is about to lose 1/6 of their tenant base, they may be unwilling to accept such a deal with 1 h years still left on the lease.