Andrea I.

Montenegro Quintero
BMBA 100 Fall Term 2020

Contenido
Assignment 5 | Marten Arts Gallery Case..............................................1

Describe the problem the company is facing............................................1

What are the corporate and personal objectives?....................................1

Prepare PEST and SWOT analyses............................................................2

Political:..............................................................................................2

Economical.........................................................................................2

Social - Culture...................................................................................3

Technological......................................................................................3

SWOT Analyse....................................................................................3

Prepare a competitive analysis? Is there sufficient opportunity in the

marketplace? Where is the greatest opportunity for Dennis Marten Pal?. 4

Prepare a brief financial analysis..............................................................6

Statements of earnings:.....................................................................6

Balance Sheet.....................................................................................6

Ratio Analysis.....................................................................................7

What alternative courses of action should be considered and which do

you recommend? (Explain and justify your recommendation.).................7

Given your recommendation, what market segment should the company

target?......................................................................................................8

Design a marketing mix (4/5Ps) to support your recommended direction.

..................................................................................................................9

Assignment 5 | Marten Arts Gallery Case

 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

Describe the problem the company is facing.

Marten Arts Gallery is facing different types of problems. First, I consider
that due to economic recession and changes in the fine art industry,
MAG have been suffering financial problems. Second, a big number
customers have lack information about fine art and only buy products
based on price or first sight. Third, since 2000 other galleries open their
business and start suffering a big competition, some of them are: Pier 1,
HomeSense and Bouclair.

What are the corporate and personal objectives?

It is clear identify corporate and personal objectives.

Corporate MGA Personal Dennis Pal

Offer unique pieces of Go back really into

arts to customers photography.
Restore the level of Supply to his family
sales to a profitabel (Wife and children)
amount. Enjoy being an
Keep well reputation in entrepreneur and do
the arts industry. not retire soon.
 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

Prepare PEST and SWOT analyses.

Now it is important to analyse some external factors that are affecting to
MAG. For this I will present the main situations in Political, Economical,
Social /Culture and Technological issues.

Political:

Recently policy markets and commercial restrictions are in all danger to

affect the art businesses. Another factor is the taxation changes that
affect the profit, most of the time this tax is added to the final customer
hence, it will affect the level of sales in the future. The government
always offer help for business in specific chains, so MAG could ask for
technical advice to improve the business, look for new horizons or
alternatives. Finally, some travel restrictions in the borders restrictions
as a result of Western Hemisphere Travel Initiative (WHTI) are affecting
the free movement of tourist from US to Canada, that normally this
target of people go to visit MAG.

Economical

The main factor that is affecting the MAG is the economy. The decrease
in sales, the low revenues and so on is crucial. One of the factors is the
appreciation of the Canadian dollar vs. the US dollar, the cost of
Canadian goods has increased for American customers. Another issue is
the fluctuations in interest rates that may translate into higher or lower
costs for the purchase or sale of items and administrations provided by
MAG. In the same order, the employment rate will affect MAG sales. If
people lose their jobs will decrease the possibility to buy some goods in
the art industry.
 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

Social - Culture

Social factors will affect the MAG level of sales. Nowadays customers
have been changing their behaviours, likes, needs and so on. Some
patterns change the quantity, quality, the volume of the items or
services as well. Most of the time all the high volume of sales depends
on trends or what important people and influencers indicates in social
media. It is a big challenge to Pal to develop a great staff of social media
or communication to persuade clients and potential customers.

Technological

As wrote in the case, Pal has been interested in develop a website for
the Gallery, but it is quite important to give a special budget for this
factor. The website must be update minimum twice a week, include
promotions, events and become more interactive with viewers.
Nowadays most of the people around the world are more interested on
ecommerce. Through this platform many transactions are gaining space
in economies and people like to buy and look for other options. Also,
communication in the website will let to MAG interact directly with
customers and develop strong business link.

SWOT Analyse

Then I will develop a matrix to identify the strengths, weaknesses,

opportunities and threats.
 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

Weaknesses
Strengths
The crucial issue for MAG is the decreasing of sales and profitable.
MAG is a business that enjoys a good reputation and recognition in Four new locals business of gallery opened in Bayfield.
Bayfield. Major dependence on the market as the country of origin market
It is located in a strategic tourist place. Despite being in operation for decades, has standard procedures and
Unique pieces of arts. regulations for all portfolio items
As a family business, Pal and his wife work with passion and give a Imitability possible by competition
special treat to customers and business.

Opportunities SWOT
Dabble in social media sources to increase potential customers.
Threats
If Pal managed to expand, workload would greatly expand and he would
Innovate marketing stategies. need additional resources to perform duties such as book-keeping,
New regions available for expansion – emerging markets. inventory management and look after other day to day operations at
Acquisition of medium-sized similar companies and shops in Bayfield.
developing countries. Increased marketing from competing players, which might affect sales
negatively.
Growing number of independent producers and marketers.
Increased and full competition.

Prepare a competitive analysis? Is there sufficient

opportunity in the marketplace? Where is the greatest
opportunity for Dennis Marten Pal?
Now I will analyze each of the competitors in some factors such as:
Product, Price, Customers, Objective and Social media.

MARTEN ARTS GALLERY

Product Diversity of fine artist with many pieces.

Price From 50 to 10.000

Customers Local and some provinces of Canada and USA tourists.

Objective Unique galleries of arts.

Internet Recently develop a website to offer and sell some pieces.

LOCAL GALLERIES
 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

Product Different than MAG'S

Price Aprox 50 to 10.000. Similar as MAG'S

Customers Local and some provinces of Canada and USA tourists.

Objective After open 4 new galleries in Bayfield, they want to become it an artist location .

Internet Local artist and community research in websites.

WEB SITES

Product A lot of products sustitive of Marten Gallery and also to find new artists.

Price People are able to find great prices from other sources.

Customers Local and some provinces of Canada and USA tourists.

Objective Available to offer wordwilde and wake the like of arts and other countries.

Internet Local artist and international research in websites.

As can be seen, MAG has several competitors but not many differences
in products or means to sell art. The most valuable thing about MAG is
their exclusivity. I consider that the most important thing is that MAG
develops an extraordinary membership program, special offers on the
website as it has been implemented and understanding that today it is
easier to have access to information through the web and it is important
to strengthen ourselves in that area. Furthermore, I respectfully consider
that it may be time to invite one or two significant artists to join forces
and further strengthen their market.
 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

Prepare a brief financial analysis.

Statements of earnings:

According to Exhibit 1, I will analysis some components of the income

statement about the financial results of MAG’s gallery activities during
the years 2006, 2007 and 2008.

- Gross profit grows from 39.1% in 2006 to 43.4% in 2007, but then
the gross profit margin decreased between 2007 and 2008
although it is almost the same value (43.4% and 43.3% in
reference). This is explained by the possible fact of having not very
high product sales prices related to the recession.
- Operating expenses decrease from 47.2% in 2006 to 37.7% in
2007, and then decreased between 2007 and 2008 (37.7% and
37.6% in reference). Hence it could conclude about the investing
in advertising from 2006 and 2007 almost 1.5%, and in 2008, the
investment decrease to 0.9%. In addition, the other expenses from
2008 rise to 4.5% compare to other years.
- MAG's gallery operating income has increase from -8.1% in 2006
to 5.5% in 2008. This is explained by the possible fact of the
company is not generating income.
- MAG's gallery net income has recovered in 2008 with a -1.4%
compared to 2006 with -14.5% in 2006.

Balance Sheet

According to Exhibit 2, I will provide some analyses: Current assets have

been changing first from 2006 to 2007 increased from $83,657 to
$98,114. Now from 2007 with $98,114 to $95,818 in 2008. This
changes shows that MAG is losing the level of sales, they are losing
customers and the incomes has been affected quite much. Second, Total
assets increased from $142,123 in 2006 to $147,807 in 2007 but then
decreased from 2007 to $202,111 in 2019 exceeding the 2017 level.
 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

Ratio Analysis

According to Exhibit 3 I will talk about the ratios:

This records shows 1.88 in 2006, 1.23 in 2007, and in 2008 was 0.9 that day by day MAG are
loosing the capacity of have cash available to pay orders, some inventory or debts. That is not
great for companies.
Acid test shows a reduction of this ratio from 2006 to 2007 and 2007 to 2008 that show me that
Liquidity company are loosing the support to pay debts in short and midle future. They are loosing assets
and easily they would be in bankrupty

The age of receivable grows until 5,7 days during 2006 to 2008, this means that MAG's gallery has
some accounts receivable effective in an average of 5 days.
The inventory is growing year by year, it can conclude that sales are decreasing and do not have
Efficien enough profit from the pieces of arts.
The avearage age payable ratio is growing in 2008 to 140.6 days, it says that there are a lot of
cy debts that is not paying and are loosing credibility with banks or suppliers.

The sales are decreasing from 9% between 2006-2007 to -5.7% between

2007 to 2008. This is a big alarm to attende because there is not sales
Growth the future of his familly and company is.

What alternative courses of action should be

considered and which do you recommend? (Explain
and justify your recommendation.)
I believe that MAG is at a crucial time in its financial area, this requires
injecting capital to improve its cash flow and invest in strategies that
promote sales growth, which are the backbone of the gallery.

Due to its geographical location, I would suggest a strategic alliance

between the local galleries to attract more tourists from Stratford, which
is relatively close to Bayfield. It is important that more people consider
Bayfield a reliable and exclusive place for art.

Likewise, according to Pal's tastes and objectives for photography, I

consider that he could gradually include art through photography in his
 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

portfolio. It would be innovative and would generate more passion and

commitment that will be reflected in the increase in sales. the more
people traffic, the more sales possibilities.

Given your recommendation, what market segment

should the company target?
The target market is indisputably people who like art. that they consider
that the money they invest in art is not a loss, but an investment that
satisfies their tastes and needs.

In addition, Pal and Judy could expand the art gallery offer to universities
or institutes that within their undergraduate or graduate programs have
a faculty of arts. These students can be encouraged to be the future
artists of the gallery and in turn they can recommend MAG to others and
in return they can be offered a small bonus for each effective sale that is
made of their referrals.

I also want to recommend you to promote and improve the website that
you have been developing and additionally combine them with social
networks that make the products become known in a massive and faster
way.

Design a marketing mix (4/5Ps) to support your

recommended direction.
Product

Unique and special pieces of arts from 500 artists that clients can use in
their events or save an excellent memory through special and high-
quality photographs.
 Andrea I. Montenegro Quintero
BMBA 100 Fall Term 2020

Appreciate the product in both local and international galleries.

On the website, you can find a complete review of the manufacturing

process and the motivation of the artist when creating each piece.

Price

Prices between $50 to $10.000 according to the size and the artist.

For renting are between $50 to $5.000. and if include photography it will
cost between $500 to $10.000.

As I recommended above, pay a commission to a referrals program to

university students.

Place

According to my recommendation about websites, offer in the website

and social media the newest, the seasonal piece of art will have a great
place to sell the pieces of arts.

Another excellent place where you can promote your products is at art
fairs in Toronto to make yourself known with clients from other countries
and regions.

Promotion

According to my suggestions, promoting the product in arts schools and

social networks will be a plus.

Also Pal have developed a great customer service, the promotion of

renowned artist and loyal customers.

You can print some flyers to distribute them among tourists or strategic
areas that allow to publicize the art gallery.