Homeboy Industries

BUS608M First Trimester, SY 2011-2012

Submitted To: Prof. Willy Cuason

Submitted By: Joanna Chan Ian De Guzman Anicka Estrada Joy Moreno Van Ramos (Group 1)

I.

Introduction

Homeboy Industries is the living example of the mission statement, nothing stops a bullet like a job. Homeboy Industries traces its roots to Jobs For A Future (JFF), a program created in 1988 by Father Gregory Boyle while he was serving as pastor of Dolores Mission parish in Boyle Heights. Started as a jobs program offering alternatives to gang violence in one of the toughest neighborhoods in Los Angeles, Homeboy assists at-risk, recently released, and formerly gang involved youth to become contributing members of their communities through a variety of services in response to their multiple needs. Thousands of young people have since walked through the doors of Homeboy Industries looking for a second chance, and finding community. Gang affiliations are left outside as these young people work together, side-by-side, learning the mutual respect that comes from shared tasks and challenges. Free programs that enable young people to redirect their lives include counseling, education, tattoo removal, substance abuse and addiction assistance, job training and job placement. After completing job-readiness programs, clients can be placed in one of our four businesses, where former rivals work side by side baking bread, learning to silkscreen, developing retail skills, or running a restaurant and catering business. The true business of Homeboy Industries is not business -- it is the fostering of a community of kinship, gang rehab, a therapeutic place where former gang members, recently released, atrisk, and those cast aside are given what they need to return to society, whole, healed and resilient. The "bottom line" for Homeboy is to infuse hope in those for whom hope is foreign. And hope is a job. Since its founding in 1992, Homeboy Industries had launched a series of business venture. By 2004, Homeboys commercial ventures comprised four units.

Homeboy Bakery (1992) Father Boyle saw his vision become a reality. His homies turned the bakery into a fully operational, successful business. It put troubled teen to work, gave them handson job experience, and generated profits to fund other Homeboy ventures. Homeboy Silkscreen (1996) The idea of silkscreen came from Ruben Rodriguez. Ruben, struggling with drinking and holding down a job had looked up to Father Boyle for direction. Ruben wants to repay Father Boyles kindness and saw an opportunity to utilize his wifes silk screening skills. In 1996, he presented the idea of starting a business that would offer custom silkscreen and embroidery services for t-shirts, sweatshirts, hats, bags, and several other products Homeboy Silkscreen employed 11 to 15 workers at any time and had employed a total of 350 homies over the life of the business.

Homeboy graffiti removal services and homeboy maintenance services Homeboy Graffiti Removal Services removed graffiti in an effort to beautify Boyle Heights and reduce the violence that gang graffiti provoked. While the maintenance program, a separate but related business. Homeboy Maintenance acted as a general service to keep the neighborhood clean. Homeboy Maintenance also sponsored neighborhood cleanups and trash collection for the residents of Boyle Heights. Both services proved very powerful, as they not only put the teens to work, they also helped to make the neighborhood a better place to live. Homeboy Merchandise

It started soon after Homeboy Silkscreen began production in 1996. Homeboy Industries began printing a wide range of Homeboy-themed products. Their new catalog contained all of its current merchandise. Its approximately 40 items included T-shirts with the Homeboy or Homegirl logo, childrens and baby clothes, bags, mouse pads, wallets, hats, and coffee mugs. Their T-shirts displayed various catchy phrases associated with Homeboy Industries. All items came in a range of colors and some has different artwork on them. Homeboy Merchandise was in charge of the design, marketing and distribution and it outsourced the production of its clothing to Homeboy Silkscreen. Its biggest sales occurred at religious conferences at which father Boyle spoke. The Religious Education Congress was Homeboy Industries biggest sales event each year.
II. Statement of the Problem What strategy should Homeboy employ to optimize the contribution of the merchandising venture to the overall business? III. Objectives

To determine what is Homeboy Industries current situation. To know the strengths, weaknesses, opportunities and threats of Homeboy Industries by doing the SWOT analysis. To provide alternative courses of action. To determine the best strategy that would optimize the contribution of the merchandising venture to the overall business.

IV.

Analysis A. External Analysis 1. Political The year 2003 was highlighted by the war versus Iraq with the goal of removing Saddam Hussein from Power. By early May, President Bush declared that the war has officially ended. In December, Hussein was captured (2000s The war on terrorism). October of the same year started Arnold Schwarzeneggers career as the Governor of California (United States 2003 Timeline). 2. Economic The year 2003 was highlighted by the depreciation of the U.S dollar against the Euro, which enabled the country to experience expansionary effect, create more jobs for they have more exports than imports (10 most significant economic events). Speaking of exports, a significant event in 2003, was the export of human capital through outsourcing of Information Technology and Engineering jobs in countries such as India, Russia,

Philippines, Ireland, Israel and China. The outsourcing of jobs diminishes the comparative advantage of US as the knowledge is being transferred to low paying workers of other countries (10 most significant economic events). The Iraq war consequently drove the oil prices to almost $40 per barrel but since it ended sooner than expected ( from march to end of april/early may), the oil prices fluctuated between $28-$31 per barrel (10 most significant economic events). The weak world economy prompted OPEC to reduce oil output by 3.5 % (Timeline of key economic events in 2003). Among the laws and propositions made in 2003 were tax cuts to stimulate the slumping economy, and benefits for unemployed citizens. Despite the efforts, the unemployment rate increased to 6.4% in June and poverty rate increased to 12.1% in September. Only in the third quarter did US show some growth in GDP, at about 7.2% (Timeline of key economic events in 2003).

3. Social 2003 and early 2004 was a period when social media started. Internet site LinkedIn was launched in May 2003, Skype went public in August 2003, MySpace was launced in January 2004 and Thefacebook (which later on becomes Facebook) was commenced in February of 2004 (Computer history 2000 to today). 2003 was also a period when Sever Acute Respiratory Syndrome or SARS broke out in April and eventually declared controlled by World Health Organization in July of the same year (Timeline of key economic events in 2003).. Renewed popularity of T-shirts was seen in the early first decade of the 21st century. The designs were consists of humorous, ironic, political and social statements. The statements may be found to be offensive,, shocking, or even pornographic. Later on, the statement-making trend was adapted by organizations such as chain and independent stores, websites and schools (Tshirt History)

4. Technological 30 years after the first public telephone call was placed, 2003 was said to be the beginning of an era when internet becomes unrestricted. Personal Broadband system was introduced and it delivers high-speed and affordable mobile internet access (Martin Cooper- history of cellphone)

B. Marketing Mix 1. Product Homeboy Merchandise offers Homeboy-themed products such as T-shirts, childrens and baby clothes, bags, mouse pads, wallets, hats and coffee mugs. 2. Price Price range for Homeboy Merchandise is between $15 to $25. 3. Place

Homeboy Merchandises products can be browsed in the websites by clients but online ordering is not yet available. 4. Promotion Most of the promotion is being done by Fr. Boyle. He is able to encourage customers to support Homeboys mission of helping gangsters change their lives. Through the Religious Education Congress, they made their first ever biggest sale of $6,000-7,000. Another promotion mentioned was the free commercials for Homeboy Silkscreen in Power 106FM.

5. Process
In general, no formal structures and consistent processes were implemented in Homeboy Industries. Most of the decisions are being made by Fr. Boyle with minimal consultation from the management or board of directors. They do not have full-time managers except for Michael Baca. The organization finds it hard to re-build relationships because it does not have a database of their past customers and supporters. For fund-raising, they heavily rely to Fr. Boyle.

6. Physical Evidence
As for Homeboy Silkscreen and Merchandise, customers may mail or fax orders and products will be delivered to them. 7. People

Management focuses on their mission of helping rather than profits. They often seek help from professionals and volunteers for additional support to their businesses. Heads of the divisions are mostly professionals. Community-based board of directors mostly consisted of professionals who support the organizations mission. Donors also play a big role in sustaining their businesses through Fr. Boyles fundraising events Employees are mostly former gangsters or homies whose lives changed because of the hope given to them by the organization. Most of them got their employee training and work experience from Jobs for a Future (JFF). Most of them are paid $9 per hour. They have low sales and marketing skills because most of them cannot handle rejections. Customers are usually supporters of the organization: radio stations and record labels for Homeboy Silkscreen, organizers of religious conferences as well as individual customers for Homeboy Merchandise. C. SWOT

Strengths Homeboy Industries has over 20 years of experience in transforming the lives of at-risk and gang involved youths. recognized as the largest gang intervention and re-entry program in the county. headed by Fr. Greg, a prolific fund-raiser and also a consultant to youth service and governmental agencies, policy-makers and employers. partner with many local non-profits, schools, and law-enforcement agencies. Supported by many celebrities Successful in recruiting highly skilled volunteers Weaknesses Homeboy Merchandising is seen by some to be a poor fit to Homeboy Industries Homies has no marketing and sales expertise; difficult to face rejection

 Homeboys image is still seen negative by some Weak relationship with merchants No database of past supporters or customers Do not account free merchandise given to donors, visitors, and friends No tracking of inventory No assigned general manager for the division Sickness of Fr. Boyle Opportunities Opportunity to sell to colleges and universities Renewed popularity of T-shirts There are fashion colleges present in L.A. E-business (Direct mailing and online ordering capability) There are many teen tv shows aired Gang culture had become so popular Hip-hop culture had been lucrative for the past few years Urban youth and anti-establishment segments are growing Licensing, a lucrative business even for organizations that were not part of the fashion industry Tax Cuts to support slumping economy Threats

According to the CA Dept of Education, the rate of 9-12th dropping out among black high school students rose to 43.5% and to 36.1% for Hispanic/Latino students in 2009 Business Outsourcing Fluctuation of oil prices and supply reduction FUBU, Phat Farm, Hot Topic are already leading the competition In East Los Angeles, over 53% of adults never completed high school In October 2010, Education Week labeled Los Angeles the "dropout epicenter" of the nation LAC is home to 34% of Californias poor, with a poverty rate of 16.1% 75% of youth gang homicides in the state of California occur in Los Angeles County Recidivism among youthful offenders is extremely high: 2/3 will be rearrested, up to 1/3 re-incarcerated within a few years after release

V.

Alternative Courses of Action ACA # 1 Expand Homeboy Merchandising Pros: Strong support from Homeboy organization members Additional profits will help Homeboy increase its capacity Increase brand recognition Business growth will help improve Homeboys financial status Tie ups with various colleges and universities Endorsed by celebrities Cons: Homeboy merchandise clothing may be tagged as gang wear Homeboy may have to hire external personnel since the current workforce lack skills needed in marketing and sales activities

If Homeboy kids will not be employed in the merchandise division, the goal of Homeboy of training and keeping kids out of gangs is taken for granted

ACA # 2 Discontinue Homeboy Merchandising Pros: Loss from the merchandise division is eliminated. Resources can be rechanneled. Cons: Loss of potential market. Loss of employment. ACA # 3 Status Quo Pros: Least risky among the alternatives Cons: Presents the least growth among the alternatives May de-motivate invigorated organization members No increase in Homeboys capacity to accept additional kids to train Opportunity loss Maintain high reliance on donations

VI.

Conclusion & Recommendation Father Boyles initiative of establishing Jobs For A Future and Homeboy Industries is to be admired. Instead of organizing simple charitable events and activities, he pursued a venture no normal priest would even think about doing. As seen from the impact of his organization, lives around his community were improved. Kids were distanced from gang violence, existing gang members were removed from their gang bonds, while providing training and skills that can be used to land them permanent jobs outside Father Boyles organization. What Boyle offers ex-gang members men/women with criminal records, violent pasts is a way to transition from gang life to honest, legal work. So for those who believe in redemption, Homeboy Industries is an indispensible part of the community. Among the alternative courses of action, the group recommends undertaking activities towards the growth and further development of Homeboys merchandising division for the following reasons: 1. The 2003 financial standing of Homeboy Industries indicate that the organization needs more sources of funds other than those that are from Father Boyles proceeds from his talks. If no improvement is seen, Homeboy may just as well close the business leaving the kids jobless and again left without direction. 2. There is a strong support among organization members. 3. Numerous promotional strategies are available. 4. Although non Homeboy employees would handle the operations, management may decide to train homies to replace the original workforce consisting of non-gang affiliated personnel. 5. Given Father Boyles deteriorating health, Homeboy should start relying on other sources of funds big enough to replace and even provide more cash inflow to the business. 6. Enlargement of the business will help achieve both the social goal of Father Boyle and at the same time sustain the financial needs of the business. It should be noted that profits can fuel growth, hire more workers, and create additional businesses. Furthermore, the more "businesslike" the businesses, the more real and relevant are the job experiences of the homies.

VII.

Action Plan A. Market Profile Homeboy Merchandise should target urban youth which is the most appropriate market of their products. The urban youth culture can be the focus since most of the teenagers have a sense of

self and identity. Urban youth are perceived as the new consumers who can be heavily influence by pop culture and media messages that can shape their identity. Having the positive messages in their products will most likely attract this market. Moreover, most of the homies are familiar with this culture which is a strong point for the organization. B. Needs Analysis 1. Basic Needs Target customers are usually in need of clothing and accessories with reasonable prices. 2. Expected Needs Customers expects quality in products especially most of them are home-made products. 3. Desired Needs

Differentiated products for kids, men and women will help address these needs. Extending the clothing line and accessories may help attract customers.
4. Unanticipated Needs

Positive messages in their products will provide inspiration to target customers. This will become their form of self expression in terms of the message and design of the product.
C. Revised Marketing Mix 1. Product 2. Price 3. Place 4. Promotion

5. Process 6. Physical Evidence

VIII.

References

1. 10 most significant economic events. Retrieved June 30, 2011 from the world wide web
2. http://www.worldgameofeconomics.com/EconomicEvents2003.html

3. 2000s The war on terrorism. Retrieved June 30, 2011 from the world wide web
http://americasbesthistory.com/abhtimeline2000.html.

4. Computer history 2000 to today. Retrieved July 1, 2011 from the world wide web
http://www.computerhope.com/history/2000.htm.

5. Martin Cooper- history of cellphone. Retrieved July 1. 2011 from the world wide web
http://inventors.about.com/cs/inventorsalphabet/a/martin_cooper.htm

6. Tshirt History. Retrieved July 1, 20011 from the world wide web http://en.wikipedia.org/wiki/T-shirt 7. Timeline of key economic events in 2003. Retrieved June 30, 2011 from the world wide web
http://www.worldgameofeconomics.com/EconomicEvents2003.html

8. United States 2003 Timeline. Retrieved June 30, 2011 from the world wide web
9. http://www.mapreport.com/years/2003/countries/usa.html

10. Urban Youth Culture. http://www.unfpa.org/swp/2007/youth/english/story/angelo_youth.html 11.http://trueslant.com/matthewnewton/2010/05/14/l-a-s-homeboy-industries-facesfinancial-shortfall-lays-of-most-employees/