Talent Drycleaners and Stain Clinic, which operated in Lagos, Nigeria, started in January 2004. In a business that Patrick Eze had in mind of opening after working in the same field, his aim was to be the best at what he does making sure no one can do a better job than him and his company.
Eze is also faced with a number of problems. In an industry that is growing so rapidly and with countless competition surrounding Talent Drycleaners and for a company that is also struggling financially, Eze is put in a situation where he must find ways to compete with his competitors and decide if he should stay in Anthony Village or relocate to Lekki-Epe where his target market is located.
While it might be tempting to relocate to Lekki-Epe from Anthony Village and get away from the competition, Talent Drycleaners’ best option of survival in the current market, be able to compete against its competitors and avoid more financial problems would be to stay in Anthony Village. Background
When Patrick Eze moved to Lagos, Nigeria, he was determined to find a better life; that would mean he needed a secure and reliable job. When the opportunity to work for Washaman drycleaners presented itself, inexperienced Eze took on training and worked his way up in the company until he eventually became the supervisor in-charge of Washaman’s Illupeju collection office. He became very well known for his talent in the dry cleaning business among Washaman’s wealthy clienteles. Eze felt it was time to follow his heart and open his own dry cleaning business after working at Washaman’s for fifteen years. He noticed that 80 percent of customers from the Illupeju office were from Anthony Village (Ojadi, 2012). Also there wasn’t a drycleaners in the area and many young professionals currently resided there. Anthony Village had all the pluses as well as Eze’s high hopes for a successful business.
He sought out and opened Talent Drycleaners and Stain Clinic in January of 2004 with six members on staff, including himself. Eze claimed that “if there is any stain I cannot remove, it means that there is no one in this country who can…” (Ojadi, 2012). But due to insufficient funds to fully advertise his business and capture the amount of clients he had hoped for, Eze was forced to resolve to hand out flyers to publicize his business upon opening. Shortly after opening in Anthony Village, many of Eze’s clients were to be relocating to the new housing domains in Lekki-Epe. Around the same time, a few other dry cleaning businesses had opened up creating competition with Talent Drycleaners and causing Eze to slash his prices three times within three months (Ojadi, 2012).
Eze later opened a collection office in the nearby severely populated neighborhood of Oshodi; but with the majority of the Anthony Village customers moving to Lekki-Epe, Eze must decide on a better path for Talent Drycleaners.
At the current state, Patrick Eze had extremely poor planning in terms of finances for his business. Perhaps a thought out strategy to keep his finances in order would have made things a little clearer and easier to understand instead of throwing all proceeds right back into the business (Ojadi, 2012). Eze may have been able to properly gauge how well and how poorly Talent Drycleaners was doing at varying times. This would have allowed him to realize if he needed to keep moving forward with his business or if defeat was inevitable. Problem statement
Eze must decide if it would be better to keep Talent Drycleaners in Anthony village or if he should move out quickly to an area where young professionals seem to be relocating. Analysis With so much competition in Anthony village and such a fast growing industry, Eze and Talent Drycleaners must decide if it would be wise to open another collection office in Lekki-Epe where the majority of young professionals are relocating to or just stay in Anthony Village. If Eze chooses to keep Talent Drycleaners in Anthony Village, he will have to figure out ways to keep up with the competition surrounding him in such a fast going industry or he can just open another collection office in Lekki-Epe for now, just to ensure that they will not be repositioning as soon as he opens this new office like they did when he opened in Anthony Village; and also to see how profitable the new office will suit before proceeding to relocate his main office to Lekki-Epe if it deems promising according to his profits.
To help Eze make a decision, there are a few factors to consider, including his target market, the facility layout of Talent Drycleaners if he decided to move from Anthony village, and the locational analysis and the process flow he would use if he were to move to Lekki-Epe, just to name a few. One of the biggest problems Eze is faced with is the relocation of his target market to a newly developed housing estate in Lekki-Epe on the outskirts of Lagos (Ojadi, 2012).
Before Eze can move forward with his decision, he should try to identify how his target market has changed, how much of his target market is still left in Anthony Village and what seems to suit these young professionals better in terms of dry cleaning and having their clothes serviced. Eze needs to really understand his target market and what their challenges, needs, desires, frustrations and preferred method of getting what they are paying for are (Schulson). Once he fully understands his target market and how they operate, then he can make a better decision as to if he should stay in Anthony Village or move to Lekki-Epe.
Another factor Eze must consider is the facility layout of Talent Drycleaners. With so many dry cleaning outfits within Anthony Village over the years and some companies charging as low as ?120 per shirt, Talent Drycleaners also had to lower their prices from ?300 to ?100 per shirt to stay competitive (Ojadi, 2012). Figure 1 shows a flowchart of the process and facility layout of Talent Drycleaners in Anthony Village. As you can see, Eze’s dry cleaning service has a number of processes.
The first step was “registration”, in this step, Talent recorded the customers contact information for drop off and pick up and also a quick inspection by the clerk for any valuable items that may be forgotten in the pockets and inspecting for any other major stains or damage. The second process of Talent Drycleaners was the “initial inspection and sorting”, in this step, another inspection was done by the technical staff after the clothes were sent back to the back office, this step determined the type of cleaning required for the clothes based on the manufacturer’s care label.
The third step of the process was “spotting”. This activity was performed to focus on stains in areas like the armpits, collar or any other areas that may have had more severe stains. The forth step was cleaning, which was broken down into two parts, the doing the “laundry” of the clothes and the “dry cleaning”. The fifth and final step of operations at Talent Drycleaners was the “finishing”. This step involved ironing, collating, quality checks, packaging and tagging of the clothes before it went through a final inspection before the customers picked up their clothes.
Eze’s business is already struggling financially, short on machines and in need of a bigger place (Ojadi, 2012). If Eze decided to move to Lekki –Epe he would have to carefully plan the new facility layout and invest wisely because he cannot afford to lose any more money than he already has. Before moving forward however, there are a few things he must consider with his facility layout. According to Kumar (n.d), “Every entrepreneur is faced with the problem of deciding the best site for the location of his plant or factory”. Before Eze makes a decision, he must also consider the cost and benefits of different alternative sites. It is a strategic decision that cannot be changed once taken (Kumar, n.d))
Locational analysis is a dynamic process where entrepreneur analyzes and focuses on before opening up a new location or facility. Eze should also research the Demographic Analysis that involves the study of population in the area in terms of age composition, per capita income, educational level and occupational structure. The trade area analysis analyzes the geographic area that provides continued clientele to Talent Drycleaners. The competitive analysis helps to judge the nature, location, size and quality of competition in a given trade area. Finally, Eze should concentrate on traffic analysis to give him a rough estimate of the number of potential customers passing by the proposed site during the working hours of the shop. The traffic analysis aims at judging the alternative sites in terms of pedestrian and vehicular traffic passing a site (Kumar, n.d)
With so many things for Eze to consider before moving forward, below are some information to help better understand Talent Drycleaners and their process. As mentioned earlier, Figure 1 shows a detailed flowchart of Talent Drycleaners and the process it follows.
Given a typical shirt and annual average relative humidity of 50%, according to Ojadi (2012, pg. 6), the maximum long-term achievable throughput of Talent Drycleaners is four days. Items with tougher stains that are precisely difficult to remove may take a longer period of time to finish the process, as well as power and mechanical failures of the machines are factors that could affect this throughput.
After reading, many people may think he opted for a three day turnaround, but Eze did not opt for the industrial practice of a three day turnaround time rather than two or less, he simply did not have a choice because he did not have a dryer which meant that he would have to wait for each item to air dry before the finishing stages of ironing, hanging and bagging. Secondly, at approximately 21.6 minutes per item on average, Eze’s average of 50 items per day, the turnaround is estimated to be 2.25 days. Anything over two days is automatically a three day turnaround from the day of drop-off.
He can possibly reduce the turnaround time to two days or less if he extended his workdays from eight hours to 10 or even 12-hour days. He must pay attention to all aspects of the operation from drop-off till pick-up, but the more important aspects which require his attention and specialty are the core aspects of spotting, laundry and dry-cleaning. The finishing is also important as it’s the stage upon completion of each item and the state they will be picked up in so he should supervise at the least, but any experienced operative could do it as during peak periods when hired casuals are taken on.
If Eze increased throughput to 70%, it would strengthen the economies of the business. And at 80%, the economies would be even better supported because the work would be done in a less amount of days. For example, at ?33,000 of fixed monthly costs with a variable cost of ?55 and a tariff of ?100 per shirt, the breakeven method results in 14.66 days at a 50 % throughput. When throughput is increased to 70%, the breakeven concludes at 10.47 days and at 80%, the outcome is a brilliant 9.16 days (See Figure 2). Clearly, the higher percentage of throughput makes for a better breakeven result, which also makes for a superior profit margin. Recommendations and Conclusions
As Eze mentioned, over the years, the dry cleaning industry has expanded considerably and it has become difficult to keep up with all the competition. After reading the case and doing my own research, it is important that Eze differentiates the services he offers from his competitors to stay ahead in the market and his clients over. Based on the options of either keeping Talent Drycleaners in Anthony Village or moving out quickly to an area where young professionals seem to be relocating, Eze should just keep Talent drycleaners in Anthony Village and just open another collection office in Lekki-Epe. Doing this, in addition to adding some extra services to his business can put Talent Drycleaners on top of the industry.
Eze is already struggling financially and is also short on equipment, relocating does not guarantee him success and can also be more of an expense for him. As mentioned earlier, Eze’s best option would be to open a collection office in Lekki-Epe for now to ensure that they will not be repositioning as soon as he opens a new office like they did when he opened in Anthony village and also to see how profitable the new office will suit, then he can proceed to relocate his main office to Lekki-Epe if it deems promising according to his profits. By only opening a collection point in Lekki-Epe, Eze can save money by not having to design a new facility layout and a new service process since all of the work will still be done at Anthony Village.
With the money Eze will be saving by only opening a collection office and not relocating, he can afford to buy more machines that he will need to get the work done faster, hire more employees and offer more features to the business. One feature Eze can offer to stay competitive is creating a queue configuration. “Queues are the time that a network is set up to help a system flow smoothly or keep the traffic moving” (Wilkins, 2011). But in Eze’s case, he can use multiple queues. Multiple queues allow customers to have the option of selecting a particular server of preferences (Fitzsimmons, 2011). With this feature, Talent Drycleaners can attend to the customers faster since they can set up the collection office to include different sections in its setup; for example, to cater to customers who need next day pick up, or who need same day service, because they will have the resources, finances and the extra employees to manage such, as well as compete.
In conclusion, Eze should remain in Anthony Village and only open a collection office in Lekki-Epe for now. It will be the best option for Talent Drycleaners to survive. It will also save them money and give them a chance to see how the market is changing over time and it will be less risky for them in case more competition was to enter Lekki-Epe.