Reference no: EM132707596

There is one quality in men and women that Paul Mooney believes has more than doubled in the past three years: their appetite for glossy pictures of themselves. His business concept is simple. Customers work into one of 12 shopping center studios run by Starshots Glamour Photography, and after being attended to by make-up artists, hairstylists, and wardrobe consultants - have their photograph taken. It is a classic before and after scenario.

• Mooney, the founder, and chief executive of Starshots, has built a thriving business in the nine years since he opened his first studio. In the 12 months to June 30, 2001, operating income is forecast to reach more than $2 million, compared with $1.6 million in 1999-2000, and net profit is expected to exceed $250,000 this year...

• Mooney says: "Most of our customers are women, but now we are getting far more single men and couples, and an increasing amount of business from men and women who go to the gym a lot". He says Starshots has eliminated the "tittering behind the hand" stigma of having a photograph taken just to look glamorous or sexy. "We actually took the word glamour out of the company name five years ago but had to reinstate it because the business didn't work without it".

• Prices are kept low by staying up to date with technology. Mooney will not say how much Starshots has spent on software and hardware in the past two years, but he does say that the cost of new digital technology is coming down every month. "That means our capacity improves and we can keep prices very competitive".

• A standard session of two and a half hours, which includes hairstyling, make-up, and photography, costs $175. At the top end, a professional modeling portfolio can cost about $1350. The staff are usually full time and are trained in the Starshots system of make-up, hairstyling, and fashions. At Christmas, the busiest time of the year for the company, additional part-time staff are hired...

• Marketing has been fairly low key, with advertising limited to local publications and promotions at events such as the Home Show. This year, the company plans to spend $200,000 on television advertising.

Required:

Write a report to Paul Mooney, the owner of Starshots Glamour Photography,

Question 1. Outlining the advantages to his business of the use of a comprehensive budgetary system.

Question 2. The report should also explain the factors he will need to consider in budgeting for the opening of three more studios in the coming year.