Strayer University

Urban Outfitters Case Study
Introduction to Business-BUS 100

By
Tammy Johnson
Maitland Campus
July 21, 2010 When deciding to create a business there is at least three main challenges that most entrepreneurs come across. They are the fear of taking a risk; meaning for a business to be successful the person who is running the business should be able to take calculated risks. Sometimes the person who is running the business may be scared to make decisions valuable to running their company and therefore those businesses do not succeed or end up losing their profits in the long run. A person who is too aggressive in business may not do well, but the person who has taken a hard look at the problems facing their business and take calculated risk without the fear of the consequences and know that the steps that they are taking are right for their business will succeed. Fear should be a guiding force in business, but it should not hinder the decision making process in business. (Kumar, 2009) Another challenge is insufficient income. This means that the business may not have a sufficient income for the person running the business. This is one of the main reasons businesses fold every year. The lack or decrease of income may be due to a number of reasons; one could be the decline in management concerns over the business, also lack of money in the business may mean low salaries for the employees of that company therefore less money means low motivation for employees. This results in decreased productivity and a decrease in profits for the next year. The vicious cycle may result in the business folding. Unless management is proactive, insufficient income will be a major challenge to a new business. The main focus of a business is to earn more income, when the income of that business is less; the reason for starting the business in the first place is lost. (Kumar, 2009) The third most important challenge facing a new business is the low motivation of the management. This could mean one of two things; that it is a family owned business and the second generation of the family has taken control and does not have the same drive for running the business therefore it can lead to a lack of motivation to continue building the business and making it successful. It is very common is in businesses that are always reporting losses. (Kumar, 2009) In the case of Urban Outfitters they overcame the challenges because they had a great business idea, they kept themselves small and had no debt, and most importantly they created a niche. A “niche product” is a product that is manufactured and marketed for specialized use. Niche products are readily differentiated from other products. A “niche market” is a small segment of a market with fewer competitors than the market as a whole. They tend to be quite attractive to small firms. (McGowen, 2010) Some examples of a niche product are ethnic grocery stores, Gold’s gym for body builders, and a woman’s upscale lingerie boutique. If compared to just a regular grocery store, a fitness center, and a department store chain selling night clothes, the appeal is wide-appeal versus mass appeal. Urban Outfitters found their niche by the product that they sold; they kept it unique to the look and feel of their customer. It is that unique idea and approach to the market that has kept them successful. A niche company would have an advantage in the market place because it is targeting a particular customer base. Victoria Secret could be called a niche company; it targets that older teen from sixteen to a woman in her forties to mid fifties. They sell a wide range of beauty products that extends to clothing and of course their own line of lingerie. They have also created a web based business. Price could be an advantage if the product that is being sold is marketed to the right person; meaning the person can afford what the niche company is selling, but then again