Eastwind Trading Company Essay

The potential opportunity and long term sustainability of Eastwind Trading Company lies in the uniqueness of their product. The Swanson pearls are the only remaining collection of handmade freshwater pearl buttons in the world. The amount is limited and cannot be easily duplicated due to current environmental condition. Therefore, the fact that no one else carries these types of buttons is the main competitive advantage the Eastwinds Trading Company posses. This exclusiveness, however, can also result in the company’s weakness: very perishable, expensive, and difficult to handle small items that require careful organization and specialization to control costs. The company is still in the existence stage. Gail and Martha are now focusing in getting enough cash to cover all the expenses the acquisition of the business will bring. However, they may also need to center their attention in how to generate enough tools to make their business expand and become a viable company. By having a product that is unique and hard to duplicate, this advantage is long-term. There is a great opportunity in expanding the business by creating new bias of selling the pearls. Hiring sales representatives that will cover all the nation, approaching clothing manufacturers and designers that will buy the buttons at wholesale price and covering the areas that were previously uncovered by the Swansons are some of the main goals of Martha and Gail. These goals will situate the business at a competitive advantage against competitors by satisfying the needs of customers that would be attracted by the exclusivity of the buttons. The key risk for investors is that button business is such an unconventional deal that it may result unattractive. The demand for exclusive buttons in the manufacturer industry as there are other types of cheaper fastenings that can be used for clothing i. e. Zipper and plastic buttons may be decreasing. Consequently, the Eastwind Trading Company needs to implement some sort of diversity in its line to supplement the sales of the raw material when the demand for buttons is low. Martha and Gail have experience in management and marketing which makes a good addition to the development and success of their future business. Their experience can be applied in the development of a new strategy that will re- introduce the pearls in the market while expanding the product in areas that were never covered by the previous wners. The fact that the raw material could be cut off leaving a semiprecious stone that could be mounted as earrings, necklaces or rings is a plus for the business and needs to be exploit at its maximum. Despite the fact that the pair was advised by the financial counselor that they will be working in an â€Å"anemic lending environment, they sell the bankers only the concept of the buttons business, ignoring the more profitable concept of selling them as jewelry. As a result their offer was rejected by about 10 financial institutions. Finally, Stadium Bank would lend the money but only if guarantee by the Small Business Administration (SBA). By having the SBA guaranteeing their debt Martha and Gail may be removing the bank’s incentive to work directly with them. If they encounter a financial problem they may be ignored by the bank instead of getting assistance as borrowers since SBA is guaranteeing the loan by 90%. The fact that the company’s loan has to be personally assured by their owners may be a downside for the negotiation. Gail and Martha’s personal assets may be affected if this venture goes wrong. We hardly recommend Eastwind Trading Company to analyze extremely careful the terms of their loan, see if the loan is right for them and confirm that what the bank is offering is what their business really needs to flourished and succeed before they sign any agreement with the lender. As for right now we will turndown Eastwind’s project. The venture has no strategy in place to explain how the company plans to diversify itself through the use of new products or new services related to the existing product except for the vague ideas associated with the jewelry’s’ creation which is in fact the most profitable option. When a business is such an unconventional deal as the sale of buttons is, it may result unattractive. The key to success will be then to create a really strong business plan, marketing strategy, a good team of sales rep, well-organized channels distribution and an aggressive advertizing campain in order to sale your ideas and pursue your business aspirations.