TOROMARK DIGITAL MARKETING REPORT TO THE BOARD OF DIRECTORS ANALYSIS AND DECISION FOR EXPANSION LOCATION Introduction Toromark Digital Marketing has now been in business for 7 years, and I am pleased to say our company has done an excellent job in growing and expanding. From having only 4 clients to 24 clients, revenue growing every year, recognition growing among businesses. However, Toromark has created a target: $12 million in revenue (an increase from $7.8 million), and $3.5 million in profit (up from $2.35 million) within the next three years. If we want to achieve this goal and continue to thrive in our industry, we need to expand geographically, beyond Toronto, for a new, untouched market. Fortunately As a company, we would aim for a middle-sized city in the United States, that has convenient transportation links from Toronto to the location, and within the city. A steady population and economic growth rate, business friendly environment, well-educated and tech savvy workforce, as well as high quality educational institutes. After rigorous hours of discussion, research and analysis, we have concluded that Charlotte City, North Carolina, would be an excellent location to meet our needs. The following report will outline the benefits Charlotte can provide to acquire new customers and grow Toromark’s overall revenue, as well as the company’s ability to hire and retain talent which could enable growth. 1 If Toromark expanded to Charlotte, it would face a multitude of benefits in their ability to acquire new customers and grow its revenue based on: 1.1 The level of economic growth 1.2 Size of the population 1.3 Convenience of transportation 1.4 Amount of consumer expenditure 1.5 Amount of disposable income 1.6 The level of productivity The following aspects would increase the attractiveness of Charlotte which allow Toromark to hire and retain the talent, hence, will enable growth: 2.1 The cost of living 2.2 The rate of particle pollution 2.3 The mental health ranking 2.4 The gini coefficient 2.5 The poverty level Potential concerns for Toromark’s expansion to Charlotte: 3.1 Local education levels 3.2 Amount of real GDP 3.3 Unemployment rates 2 1.1 The level of economic growth of Charlotte, North Carolina According to Milken Institute’s report on the Best Performing Cities 2021, Charlotte ranks 26 and is a tier 2 city with a High-tech GDP of 178 from 2018 to 2019, and shows a 2.67% growth from 2014 to 2019 (Galdamez et. al., 2021). 1.2 Size of the population According to the World Population Review, Charlotte has a population of 912,096 in 2021. Whereas the land area is 307.2 sq mi. Therefore, the density of the population is approximately 2969 people per square mile (World Population Review, 2021). 1.3 Convenience of transportation According to The Charlotte Observer, a newspaper that reports on events that occur in Charlotte and North Carolina, Charlotte is implementing a transportation fee reduction to benefit lower income earners and those who do not own a car. This is aimed to be completed and operating by June 2022 (Editorial Board, 2021). 1.4 Amount of consumer expenditure According to Euromonitor Internationals’ statistical database, the amount of consumer expenditure in 2020 was $104,459.8 million USD. In 2019, it was $105,095.4 million USD. This indicates a decrease in consumer expenditure by 0.605% (Euromonitor International, 2021). 1.5 Amount of disposable income According to Euromonitor Internationals’ statistical database, the amount of disposable income per person in 2020 was $119,155.1 million USD. In 2019, it was $119,307.3 million USD. This shows a decrease in disposable income by 0.128% (Euromonitor International, 2021). 3 1.6 The level of productivity According to Euromonitor Internationals’ statistical database, the level of productivity in 2020 was $140,535 USD per person employed at constant prices and $136,092.3 USD per person employed at constant prices in 2019 (Euromonitor International, 2021). See figure 1 for a configuration of the productivity in Charlotte from 2016 to 2020. Figure 1: A line chart showing the productivity in Charlotte, North Carolina, from 2016 to 2020 (*Data taken from Euromonitor Internationals’ database) When examining figure 1, we can see there is a general upward trend in productivity in Charlotte. Starting with a slow and steady increase in the beginning, a slight drop from 2018 to 2019 and a 3.264% increase between 2019 and 2020. 4 2.1 The cost of living According to the United States Census Bureau, the median gross rent, otherwise known as the midpoint monthly expenses for rent, was estimated to be $1,135 from 2015-2019 (United States Census Bureau, 2021). 2.2 The rate of particle pollution According to the American Lung Association, the weighted average of particle pollution in a 24 hour time span was 0 (American Lung Association, n.d.). Indicating that the air pollution in Charlotte is very clean. 2.3 The mental health ranking According to Mental Health America’s Adult Ranking in 2020, the state of North Carolina ranked 21 (Mental Health America, n.d.) , which indicates they have a lower prevalence of mental health diseases and more access to support systems. 2.4 The gini coefficient According to a report by the United States Census Bureau that presents the median household incomes in 2019, the general state of North Carolina had a gini coefficient of 0.474 (United States Census Bureau, 2021). The closer the gini coefficient is to 0, the more income equal it is. Whereas the closer it is to 1, the more unequal the income. 5 2.5 The poverty level According to the United States Census Bureau, the percentage of people in poverty was 12.8% in 2019 (United States Census Bureau, 2021). See figure 2 for a comparison between Charlotte’s level of poverty with other tier 2 cities. Figure 2: A bar chart showing the percentage of persons in poverty among tier 2 cities, and a comparison with the percentage of persons in poverty in the United States. The data was organized by gathering the percentage of persons in poverty of tier 2 cities found in Milken Institute’s report on the Best Performing Cities 2021, and comparing that with Charlotte, North Carolina as well as the United States. From the bar chart, it can be seen that Charlotte has a lower percentage of persons in poverty with the other tier 2 cities, but a higher poverty percentage than the United States. However, since the scale of a whole country compared to a city will have varying measures, it can be concluded that Charlotte has a relatively low poverty level. 6 3.1 Local education levels According to the United States Census Bureau, from 2015 to 2019, 89.1% of people aged 25 and above are high school graduates or higher, while 44.3% have obtained a bachelor’s degree or higher. In comparison to the education levels in the United States, 88% of people aged 25 or older are high school graduates or higher, while 32.1% have obtained a bachelor’s degree or higher (United States Census Bureau, 2021). 3.2 Amount of real GDP According to the Bureau of Economic Analysis, the real GDP in North Carolina in 2019 was $511,539,864 USD. Since cities often do not produce statistical data for their level of GDP, the data was taken from the state instead. The real GDP in the United States in 2019 was $19,091,662,000 USD (BEA, 2020). Therefore, North Carolina takes up 2.679% of the United States’ real GDP. 3.3 Unemployment rates According to Euromonitor Internationals’ statistical database, the unemployment rate in Charlotte in 2019 was 3.068%. Whereas in 2020, the unemployment levels increased to 8.092% (Euromonitor International, 2021). 7 Analysis As mentioned in the introduction, Toromark Digital Marketing aims to expand geographically in order to reach the goals of earning: $12 million in revenue (an increase from $7.8 million), and $3.5 million in profit (up from $2.35 million) within the next three years. Toromark has come a long way since 2013, and can only benefit from expanding to Charlotte, North Carolina. As mentioned, Toromark would need to hire and relocate employees to Charlotte. The biggest selling point of Charlotte would be the low costs of living. Not only would this be beneficial for employees moving from Toronto to Charlotte, but also beneficial for rent of office buildings. The lower costs could decrease the company’s expenditure, and hence make increasing profits easier. With the consideration of the global impact that the pandemic, COVID19, has had on the economies worldwide, the statistical data is a promising indication of potential growth in the business. First focusing on productivity, despite the pandemic, the productivity per person employed still increased by 3.264%. A graphical representation can be seen in figure 1. As for consumer expenditure and disposable income, while that decreased, it was only by 0.605% and 0.128%, which does not even reach the 1% mark. As a result, this reveals that the city, as well as the businesses, did very well in sustaining themselves. Charlotte provides potential for an increase in the number of business transactions and the clients for the company. This is indicated through the high level of consumer expenditure and disposable income, as well as the dense population size. With an effective marketing technique, Toromark will be able to reach out to potential consumers and convince those who have the ability to, to invest or purchase Toromark products. Based on the amount of disposable income per person reveals that a vast majority of the population would have the ability to put money into Toromark to assist in the expansion and growth. Henceforth, resulting in growth in revenue. 8 As a result of the implemented plan to improve the transportation system, it will allow Toromark’s new location to become geographically accessible. Therefore, making travelling to and from the office more affordable and convenient for employees of Toromark, as well as potential buyers who wish to receive in-person consulting services. The ability for Toromark to hire and retain talent would be highly dependent on the living conditions in the city. As mentioned above, the low costs of living would be a major selling point for both employees and the company. However, additional factors such as the excellent air quality, close to income equality statistics, and the support systems in mental health, make Charlotte a very attractive place for people to move and build a life in Charlotte. With the numerous on-going social, political and environmental issues, these statistics become major decision influencing factors as the world approaches the desire for equality across all platforms. Toromark should therefore stress the significance of these factors, and the up and coming transportation fee reduction as a selling point to relocate employees to Charlotte. Potential limitations However, the local education levels reveal less than 50% of people have a bachelor’s degree or higher. Nonetheless, compared to the statistics in the United States, Charlotte is above that. Therefore, the proposed action would be to hire the majority of the talent outside of Charlotte and relocate them into the city to run the business, alongside a small percentage of the top students who have studied or have a background in Charlotte. Real GDP of an economy is often a big issue with companies. Real GDP is an indicator for how well the economy is performing. Although North Carolina does not have the highest standing real GDP, it is still relatively high and takes up 1/10th portion of the United States’ real GDP. 9 As for the increased unemployment rate, although it more than doubled from 2019 to 2020, it is important to consider the impact the pandemic has had on the economies worldwide. Nonetheless, despite the pandemic, the unemployment rate is still relatively low. Additionally, this could be a good opportunity for Toromark to hire local talent that may have been let go of during the pandemic but could be a valuable asset to the company. Nonetheless, while most people have the preconception that expansions should occur in a fully developed city, for a somewhat small company such as ourselves, our competition in fully developed cities would be companies like Accenture Interactive based in New York, SEO Digital based in Philadelphia, or WebFX based in Pennsylvania. While these could be companies to aim for in the future, our company size is not merely enough to compete with such big companies, and could risk being bought out. Additionally, by doing that, the costs incurred for setting up, renting office spaces, and salary could all become more expensive. In order to save costs during the expansion, selecting a location, such as Charlotte, which is still developing and has low costs of living would be perfect. Toromark will still receive a relatively high chance of making an earning when considering the high level of disposable income and consumer expenditure, and potential to buy out smaller digital marketing companies in the area. Ultimately, these factors are not significant enough to significantly impact the decision to expand to Charlotte. 10 Conclusion Charlotte City, North Carolina. While it may not be where the big shot companies are, we must acknowledge that although we have done incredibly well over the past 7 years, we are still a company that is making its way to the top. However, we must also acknowledge how well we have done, and should aim for bigger and better, aim for a challenge. As mentioned, the next big step for this company will be expanding geographically. This process in itself will be a challenge. However, the conditions of Charlotte will make it easier: timely transportation, low cost of living, high levels of consumer expenditure and disposable income, all make the move much easier. In the foreseeable future, I believe that if our company opens an office in Charlotte, we will gain revenue, increase profits, and tap a whole new market to drive our client numbers up. We will also gain the advantage of expanding our network, reaching out to people with a different experience, different outlook, which may be advantageous to Toromark’s approach or techniques. All in all, Charlotte, North Carolina is a great fit for Toromark and it’s future employees, from both the aspects of business and lifestyle. 11 Reference list American Lung Association. (n.d.). Compare your air. State of the Air | American Lung Association. Retrieved November 22, 2021, from https://www.lung.org/research/sota/city-rankings/compare-your-air ?msa1=Charlotte-Concord%2C+NC-SC&msa2=Austin-Round+Rock-Georgetown%2C+TX. Editorial Board. (2021, November 5). The case for free bus fares in ... - charlotteobserver.com. The Charlotte Observer. Retrieved November 22, 2021, from https://www.charlotteobserver.com/opinion /article255544196.html. Galdamez, M., Kesteven, C., & Melaas, A. (2021). (rep.). Best-Performing Cities 2021: Foundations for Growth and Recovery. Creative Commons. Retrieved November 22, 2021, from https://milkeninstitute.org/sites/default/files/2021-04/Best-Performing-Cities-2021.pdf. BEA. Gross Domestic Product by County, 2019. (2020, December 9). Bureau of Economics Analysis . Retrieved November 22, 2021, from https://www.bea.gov/sites/default/files/2020-12/lagdp1220_2.pdf. Mental Health America. (n.d.). Ranking the states. Mental Health America. Retrieved November 22, 2021, from https://www.mhanational.org/issues/ranking-states#overall-ranking. United States Census Bureau. (2021). U.S. Census Bureau quickfacts: Charlotte City, north ... Retrieved November 22, 2021, from https://www.census.gov/quickfacts/fact/table/charlottecitynorthcarolina,US /PST045219. Euromonitor International. (2021). University of Toronto Libraries. Passport. Retrieved November 22, 2021, from https://www-portal-euromonitor-com.myaccess.library.utoronto.ca/portal/?be1067Elme b%2B5G5yQFLJMQ%3D%3D. World Population Review. (2021). Charlotte, North Carolina population 2021. Charlotte, North Carolina Population 2021 (Demographics, Maps, Graphs). Retrieved November 22, 2021, from https://worldpopulationreview.com/us-cities/charlotte-nc-population . 12