Growing of the Business - Essay Example

?Question a) Imagine that you are Sanjay Anand, owner of Madhu’s, and you are considering how to grow your business. You decide to complete a SWOTanalysis so you can fully understand where the strengths and weaknesses of the business lie. You should evaluate the strengths, weaknesses, opportunities and threats for its human resource management, accounting and finance, and marketing functions. You should then summarise, in a short paragraph, which parts of the business you need to strengthen. Madhu’s, an Indian restaurant, as well as the catering and ready meal businesses owned by Sanjay Anand, is a relatively successful organization that makes ?5m sales. However, as the external environment of the company is changing, it is facing some challenges. In particular, while the sales are stable, the profit has decreased to ?300,000, down from ?500,000 in the previous year. Therefore, it is necessary to determine which aspects of organizational functioning can be improved in order to improve performance. A SWOT analysis of the human resource management, accounting and finance, and marketing functions of the company should be conducted for this purpose. Human resource management Strengths Weaknesses Opportunities Threats Most of Madhu’s chefs are professionals in cooking traditional Indian meals. They are brought from India and taught additional skills, such as, for instance, hygiene standards. New British immigration laws do not allow Sanjay to hire people from India. There is no strategy for finding non-Indian chefs. It is possible to hire Europeans and then teach them. This requires organizing special courses. It might be problematic to find people willing to train new employees. In addition, training unskilled people will call for additional expenditures. Other aspects of business operations may suffer. So, it is clearly seen that the hiring strategy of the company is not efficient under the new conditions of the external environment. The new legislation requires Madhu’s to introduce new strategies and tactics for finding, recruiting and training employees. The company should reconsider its whole mode of operations in order to determine how to implement new strategies at the lowest cost and with the greatest advantage. Accounting and finance Strengths Weaknesses Opportunities Threats Much attention is devoted to financial position of the company, performance is evaluated regularly. The owner is not willing to risk and increase prices as the external conditions change. Financial resources are limited. Cut spending for some aspects of operations in order to finance new activities. Reduced financing of some company’s functions may negatively impact the overall performance. Since Madhu’s has limited financial resources to be invested into business development, it might be reasonable to consider some alternative sources of financing. Additional capital can be received from banks or external investors, for instance. Marketing Strengths Weaknesses Opportunities Threats The company has a number of loyal and returning customers, as well as good reputation in the market. The products are well-positioned and reasonably priced. Promotional campaigns for catering services target mostly weddings, thus not covering other groups of potential customers. As an option, distributing Madhu’s ready meals in supermarkets will allow to strengthen the brand and make it more recognizable by the clients. If not designed correctly, marketing programs for the new services will, while call for expenditures, bring low results, forcing the company to withdraw the promoted service or product from the market. Though the brand is well-established and quite recognizable, it is possible to increase sales by means of providing alternative services and products to other customer groups. Diversification might be a good alternative that will help to cover wider audience and strengthen the brand, thus making even corporate clients, such as supermarkets, for instance, willing to cooperate with Madhu’s. (b) Identify the factors that seem to be influencing the organisational culture of Madhu’s and explain which of these factors seem most important in determining that culture. The peculiarity of Madhu’s organizational culture is that the company employs many Indians. The differences in cultural values of Indians and Europeans determine business ethics and strategic decisions, as a result (Baker 2007, p.8). Western societies are more self-centred, while Asian nations favour group action (Preston 2011, 44). These differences form different understandings of business practices and might be the reason for Sanjay’s not willing to take risks. In addition, Madhu’s culture seems to be very influenced by the dominant leader - Sanjay Anand. While changes require new ideas and approaches, Sanjay is not willing to change his vision and management style. At the same time, it should be noted that the changes of legislation and of the overall business environment are to force Madhu’s culture to change as well. The company’s culture is also dependent on how the business is organized and resourced (Preston 2011, 51). Limited number of the sources to finance expansion or innovation make the company more vulnerable to the changes in external environment. The procedures and policies within the business are also an important aspect of Madhu’s organizational culture. Though Sanjay Anand does listen to others, including his son, who wants to help, Sanjay still holds the final vote in determining procedures and policies the business follows. Question 4: marketing function (a) Who do you think are the most likely customers for Madhu’s wedding planning business? Describe what you think will be their buying behaviour, using concepts from Book 4, Session 3.1. The most likely customers for Madhu’s wedding planning and catering business are people planning a wedding, as well as people planning some celebration. Madhu’s services are used by both individual and corporate customers. The first category of customers includes those to be married. In this case not only a bride and a groom might be the direct clients, but some of their relatives or friends, who want to help, too. The second category of clients includes people planning to celebrate some important event. It might be an anniversary, a birthday or some other important event in individual’s personal life, which one wishes to celebrate. The third group of clients is people organizing small events, such as a romantic dinner for two. The fourth group is corporate clients, who order Madhu’s services for organizing some corporate events. All the four groups of clients have different buying behavior and are motivated to use Madhu’s services by different things. There also exists a difference between those choosing the service, those using it and those paying for it. In most cases an individual, or a company, that chooses the service, pays for it, while the group of users might be different, though not necessarily excluding the payer. At the same time, an option is when one individual chooses the service, but some other person pays for it. In any case, the most important marketing stimuli encouraging people and organizations to use Madhu’s services are economic and cultural. Economic stimuli refer to the price, which is lower than that of other similar companies. However, a more powerful stimulus is cultural one – people willing to experience something unusual and exotic become the clients of the company (Schaefer 2011, 37). So, they are not actually buying food served by the trained staff. They buy new experiences and emotions. Analyzing everything stated above, it can be concluded that Madhu’s clients, in most cases, show either complex or variety-seeking buying behavior. Complex buying behavior is shown when there is high involvement and significant difference between brands (ibid). – Madhu’s service is relatively unusual and is much different from that of the competitors. This difference also leads to variety-seeking buying behavior of the clients. People choose Madhu’s service willing to experience something unusual and, though variety-seeking behavior involves low involvement, people choose this particular company due to the uniqueness of the service. (b) Assume that Sanjay Anand and his son have decided that they want to develop the retail side of the business, offering ready meals under their own Madhu brand through supermarkets. They will now need to develop a promotional strategy for this side of the business. Advise them on the promotional mix that you think they should employ for the retail business. Use concepts from Book 4, Session 4.4 to help formulate your answer. The ready meals of Madhu’s bring the core benefit to the clients by means of being ready (the customer does not have to cook), unusual (traditional Indian food), and of high quality. Though the brand itself is relatively known, a new line of products requires some marketing support. Sanjay Anand has to decide on packaging, for it to support the promotional message and represent the brand as well as possible. He also has to negotiate with the supermarkets how in particular Madhu’s ready meals will be sold, in which place of the supermarket the food will be located, and whether the supermarket will support Madhu’s marketing campaign (Schaefer 2011, 51). These are the very first things Sanjay should consider when developing the product. Then, as the strategy is outlined, Madhu’s meals are to be introduced to the market and supported by a promotional campaign. The most active marketing activities are to be performed at the introduction stage of product life cycle (Schaefer 2011, 53). Then, as meals become better known and come to the growth and maturity stages of the product life cycle, they may be supported by less intense marketing activities. Another important element of the marketing mix to be determined is pricing. In this particular case pricing can be cost-based, customer-based or competition-based (Schaefer 2011, 55). Since Sanjay prefers cost-based pricing, it can be assumed that this strategy will be used for ready meals as well. This will give the company the advantage of selling a cheaper than competition’s product, and more accessible for the clients. In addition, since the product will be distributed from manufacturer to retailer and customer, its cost will be lower due to avoiding other intermediaries. As the company starts selling meals at the supermarkets, Madhu’s has to build customers’ awareness and interest (Schaefer 2011, 60). This effort should be supported by the supermarkets. A good strategy would be to use promotional boards in the supermarkets. Also, leaflets featuring Madhu’s meals may be given to the visitors of those supermarkets for them to receive more information about the product. It will be pioneering advertising, since the product is in the early stage of its life cycle. Then, as the product grows and matures, competitive advertising that distinguishes Madhu’s meals from similar products can be used. As for sales promotions, it may be appropriate to give some discount coupons to the customers for them to return and buy the product again. Product based promotions might include giving free samples (Schaefer 2011, 62). Sanjay may also consider the personal selling function of marketing. However, this will require Madhu’s employee to be continuously present at each sales location and communicate with clients to inform them on the features of the product, as well as to find out the needs that might be met. As for PR, word-of-mouth and personal recommendations are very important for creating a buzz around the new product (Schaefer 2011, 63). Therefore, all the aspects of the product, including taste, price and packaging, are to be developed carefully, to support the positive image of the company. An option is also to present some press release – a story that is built around Madhu’s meals. A press release will make more people know about the product and will, potentially, increase sales. The promotional message should combine featuring both the company and the product, because brand visibility will help to sell the product. So, word-of-mouth and personal recommendations would be the strongest elements of Madhu’s marketing mix. They would be followed by personal selling, but this strategy is more expensive. Discounts and free samples of the food will also help to encourage people to buy Madhu’s meals due to the nature of the product – it is impossible to fully describe the taste in any promotional message, so if an individual will experience it oneself, he or she is more likely to buy. (c) Imagine that you are Sanjay Anand and, in order to plan the future of the company, you are trying to identify the most pressing human resources and accounting and finance issues for the company. Describe two human resources and two accounting and finance issues currently faced by the company. The most pressing human resource issue of the company is inability to hire chefs from India. Another problem is in finding good trainers to teach people to cook Indian food. Therefore, it is necessary to, in the first place, design a new recruitment strategy. In addition, it would be helpful to ensure that the job offered at Madhu’s is satisfying (Preston 2011, 10; Book 2). Creating a good work space, plus supporting and encouraging employees at their jobs will make Madhu’s a place where people actually want to work. Sanjay may think of positioning his company as a great place to work, thus attracting a wider pool of potential candidates for Madhu’s open positions. It would also be helpful to work on the knowledge transfer aspect of organization’s functioning. Chefs working at Madhu’s now could teach the newcomers, develop their skills and give the necessary knowledge. This will eliminate a problem of finding trainers for new employees. The company’s culture should support this beginning and promote sharing and distributing knowledge internally. This will also help new people to fit in. Their introduction and socialization will be conducted easier and will save some money otherwise spent for special training. More experienced chefs could coach and mentor newer ones for them to develop and grow professionally. As for the accounting and finance issues, the most pressing ones are scantiness of financial resources and increasing prices for products, gas, electricity and other resources the company uses. Lack of sufficient amounts of free money is the challenge that does not allow the company to grow more rapidly. Any expansion, or even launching a new product, is to be financed properly. So, since this business does not have any excessive resources, it is more difficult for it to grow. Furthermore, since Sanjay does not want to increase prices for his products and services as the prices for resources grow, he earns less. Question 5 (a) Explain the extent to which you think that the Madhu’s business is globalised. Globalization may be defined as a process of countries’ economies, politics and cultures becoming more interrelated and interdependent. Nikitin and Elliott define this process as “an establishment of the global market free from sociopolitical control” (Nikitin and Elliott 2000, 14). This leads to an assumption that globalization entails economic integration, exchange of knowledge, as well as interdependence of political and legislative decisions of world countries. Among the latest definitions of globalization is that of Al-Rodhan, who concludes that “globalization is a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities” (Al-Rodhan 2011, 5). Therefore, it can be said that globalization is the process which makes integration and communication between countries, nations, businesses and individuals easier and less dependent on political or territorial constraints. This means that state boundaries or long distances play a less important role in communication and cooperation of nations (Ball 2011, 34). As countries become more integrated, they become more interconnected and interdependent in many aspects of their operations. As for Madhu’s business, it can be said that it is globalised in some aspects. In particular, Sanjay wants to hire his chefs from India. This makes his company dependent on immigration laws and the relationships between the two countries. Though today it is impossible for Sanjay to bring people from India, globalization is what helped him to do it initially and, in such a way, save on workforce. In addition, globalization provides the company with an opportunity to buy cheaper products for its meals, to work with low-cost producers and suppliers of food products (ibid). This leads to more competitive prices. (b) Evaluate the relevance of each of the four drivers of globalisation to this case. Which do you think is the strongest? Analyzing Sanjay’s business it can be stated that it is highly impacted by the cost driver of globalization. Expanding, increasing the size of the business, as well as introduction of new services and products allows Madhu’s to gain economies of scale. In addition, hiring Indians lowers the labor costs of the company. Developed communication technologies make it easier for Sanjay to find people in other countries (Ball 2011, 34). As for the market drivers, they have a relatively negative impact on Madhu’s. In particular, since Sanjay’s company is relatively small, it cannot adequately compete with large globally-established brands. At the same time, increasing low-cost travel widens the pool of potential clients for Madhu’s. The growth of per capita income increases the purchasing power of consumers, thus ensuring the company will not loose its clients, both individual and corporate (Ball 2011, 35). Government drivers also have a controversial impact on Madhu’s. While the reduction of trade barriers provides the business with a wider choice of potential suppliers, government regulations have disabled Sanjay to hire people from India. Global competition drivers are the least influential for Madhu’s, because the company operates in one country only and is not planning to expand internationally. References Al-Rodhan, N. 2006. Definitions of Globalization: A Comprehensive Overview and a Proposed Definition. Geneva Centre for Security Policy. 2006. [online]. Available at: [Accessed 6 April 2012]. Baker, W., 2007. A Reflection on Business Ethics: Implications for the United Nations Global Compact and Social Engagement and for Academic Research. Commissioned Paper for the UNESCO Forum on Higher Education, Research and Knowledge. [online]. Available at: [Accessed 6 April 2012]. Ball, K. 2011. Book 5. Different ways of looking at business. The Open University. Nikitin, P. and J. Elliott. 2000. “Freedom and the Market” Forum for Social Economics 30(1): 1-16. Preston, D. 2011. Book 1. What is a business? The Open University. Preston, D. 2011. Book 2. What is a business? The Open University. Schaefer, A. 2011. Book 4. An introduction to marketing. The Open University. Read More