Strategy and Environment of Grand Mets - Case Study Example

Page Analysis Phase: Data Collection: Grand Mets was lead by Allan Sheppard and has witnessed significant grown since its inauguration in 1993. It is amongst the top fifteen companies in the United Kingdom. It’s past financial performance has been quiet commendable and its spread of operations world over According to balance sheet figures, net fixed assets of the company when it started were worth 22421 million pounds. This was 1983. By 1993, company’s net fixed assets were worth 5843 million pounds. Net stocks increased from 605 million pounds in 1983 to 1381 million pounds in 1992 while net debts increased from 618.5 million pounds to 1830 million pounds. On the other hand net borrowings increased from 943 million pounds to 2441 million pounds in 1992. Turn over for the year 1983 was 4468 million pounds which went on to 7913 million pounds over the course of next 10 years. Strength: Grand Mets was lead by Allan Sheppard and has witnessed significant grown since its inauguration in 1993. It is amongst the top fifteen companies in the United Kingdom. It’s past financial performance has been quiet commendable and its spread of operations world over. The biggest strength of the organization laid in its successful acquisitions through which it derived internal development. Sound financial control of the organization ever since its inception has been one of its hallmarks. More and more hotels were acquired as time passed. Despite having innumerable complex intricate operations, the structure of the organization was unbureaucratic. Their chief financial manager Joseph believed in trading purchase assets; a strategy that proved to be very effective for them.The main premise behind this was to use cash flow generated from the acquisition to cover debts. This meant good management would increase cash flow for the company while covering debts. John acquired those assets he believed would rise in cost owing to inflation and would help generate significant cash flow in future. It was Joseph’s expertise in raising good money through proper acquisition of assets that helped establish the company on a strong footing. Most of the acquisitions barring that with Express had been on good friendly terms. Even after acquisitions, the business was allowed to run in their own styles without a lot of interference from the top management. Joseph never intervened deeply into the running affairs of the business. The management philosophy adopted at the central proved to be very effective. Weakness Before the 1970s, Grand Met was largely dependent on the UK economy. Any collapses in the economy were affecting the company too. This was something they had to work on. Opportunity There were lots of opportunities all the way from the beginning. Acquisitions kept taking place as went the chance to do so turn in. The opportunities were executed none bureaucratically. Joseph’s only focus was on the fact that the existing cash flow would be able to cover any debts while operations were feasible. If everything fit the bill for him, he would then go ahead. It was with this idea in his mind that he acquired brewer Truman, Han bury, Buxton (THB). Joseph realized that the breweries were attractive in-city spots. He further cashed in on the curativeness of this offer when he saw an opportunity in “Winey Mann” as a follow up on THB. This was a huge step for the company for which a lot of hard work had to be put in. Once the deal went through, it turned out to be UK’s largest industrial acquisition. To decrease dependency on UK economy, Joseph realized the need to cash in on foreign propositions and investments. The first opportunity in this regard came in the form of the acquisition of Paddington Corporation which was a United States based corporation. Acquisition of Pittsburg was yet another opportunity they cashed in on Threat Grand met had disposed off a division of Whitney Mann, IDV which did not work in favor of the company. At the same time, economic conditions were worsening in the country marked by a collapse in property market and secondary bank crisis. -Central Problems Grand met had disposed off a division of Whitney Mann, IDV which did not work in favor of the company. At the same time, economic conditions were worsening in the country marked by a collapse in property market and secondary bank crisis. First ever fall in trading profit was announced in 1974. When Grand met looked out for diversification into US, far flung acquisitions were made without proper financial analysis of the whole situation. The company’s situation was going haywire. There was no strategy implemented at the core level which marked the root of all problems. Other than that careful management of the acquisitions was also wanted. Around 1986, another problem cropped up. These were the deteriorating performance levels while the financial situation was stable. All the controls were not in place properly and there was a high level of de-centralization. And irrespective of all orientation and acquisition, the company lacked focus. -Central Problem Defense The main focus for the company in the wake of the crisis was to generate enough trading profits that would cover up net borrowings until the position of property portfolio improved in the market. -Solutions Joseph realized the need to generate enough cash flow through trading profits that would be able to take care of debtors. This would go on till inflation rises again and is able to help them out of the problem Rationalization was opted for to deal with problems associated with US diversification. It was decided that costs would be cut down and marketing improved. How well manager’s plan determines how effective and efficient the performance level of their organization is, and will be in the long run. This was the crux of most solutions adopted at Gate Met. Controlling ensures that the managers are doing all they can within their means to ensure that the organization performs at its best. -Solution Implementation Sheppard maintained that manager should evaluate how well their organization is performing while taking action to improve its performance in the process. For instance managers should monitor the performance of individuals, departments, and organization as a whole to see if they are meeting their desired standards. They should have a complete knowledge of the employees working under them. This will inculcate unity and internalize commitment to the organization as a whole. He was also emphatic about co-ordination within the organization. He felt that it is important to strike a balance between the various facets of an organization’s activities. For this reason he proposed weekly conferences under the auspices of departmental heads. The conferences were conducted to resolve issues of common interest. He also advocated for leadership as well and called on for articulating a clear vision and energizing and enabling organizational members so they understand the part they play in achieving organizational goals. Leadership depends on the use of power, influence, vision, persuasion and communication skills to coordinate the behaviors of individuals and groups so that their activities and efforts are in complete harmony. It goes unsaid that his efforts hold sway even today and have proven to be a landmark. He clearly emphasized that leading managers should not only show a clear vision for organizational members to follow but also energize and enable organizational members. However there was no direct mention of any kind of co-relation between the individuals, task and groups. To implement the aforementioned problems, Alan Sheppard was recruited by Max Joseph and he was delegated the task of monitoring operating profitability of Wanted Mann. Further, IDV was separated and created as a separate division with its own director. To cut down on costs, the brewery’s work force was decreased by 50%. And 82 million pounds were also released by 1982. Restaurant operations were improved and excess sites were discarded. This was the prime motto of Sheppard’s team -Solution Defense The solutions strategy adopted by turned out to be a major success because Sheppard went ahead with it by cutting down on costs and total number of workers at the breweries. At the same time, he also revitalized regional demands. This led to increase in cash flow and overall profit. At the same time, IDV had proven to be a success too as through its promotion of individual brands. Both the strategies complexly revitalized the company’s financial position in the market. Its position on the balance sheet improved by heaps and bounds and so did its earnings. Sheppard’s team aimed at cutting down costs through empowering of operations. The goal was to create an atmosphere that called for continuous improvement and stability. This paved way for a very motivated work force at Shepherd’s hand. (Higgs, 2001) 2- Synthesis Phase -Historical Data Section According to balance sheet figures, net fixed assets of the company when it started were worth 22421 million pounds. This was 1983. By 1993, company’s net fixed assets were worth 5843 million pounds. Net stocks increased from 605 million pounds in 1983 to 1381 million pounds in 1992 while net debts increased from 618.5 million pounds to 1830 million pounds. On the other hand net borrowings increased from 943 million pounds to 2441 million pounds in 1992. Turn over for the year 1983 was 4468 million pounds which went on to 7913 million pounds over the course of next 10 years. -Present Strategy As discussed in the aforementioned paragraphs, strategy can have an important effect on the kind of organizational structure a manager wishes to pursue. Grand Met focused on the differentiation strategy which led to employee empower mint, risks, to develop and build their ideas and later to implement them... Thus flexibility was their key to success at Grand Met. Technology is the combination of skills, knowledge, tools, machines and equipments that are used that are used in the design and production of goods and services. Generally speaking, the more complicated an organization’s structure, the more difficult it would be to impose a rigid structure and build up on it. In such circumstances it would be necessary to give the technical staff and employees enough space and room to explore and build up on their technical skills. As far as human resources are concerned, the more well qualified a staff is and the more highly skilled employees, the probability of working in groups scales up in such circumstances. It would be thus necessary to pursue a decentralized strategy in such an organization and empower the employees to build and implement their pool of ideas. Fortunately, this was not the case with Grand Met. (Porter, 1990) The biggest strategy adopted is to use the strength of the management sector and cash in on international market in the United States. Focus is to capitalize on current functional areas and develop rapidly in key positions. At the same time, Sheppard also adopted the group strategy with more emphasis on the operations team as the top league of managers. Problem: The company had lacked focus and the shares are deteriorating rapidly. There stood a major leadership crisis at the center. Major issues associated with production and management had to be taken care of. (Lawrence, 1967) Once Grand Met decided to diversify the number of problems it was faced with intensified in the process. Instead of home furnishing, it also started producing and selling cars, fast food and health insurance are also some of its other important genres that it ended up attending to. When they tried to use their functional managers to oversee the production of all four genres, it turned out that no manager had the required skills and expertise for all the desired products and services. To execute a function effectively, managers must have the experience to work in the specific markets and industries. Hence these were the short comings that they encountered initially to begin with. (Gareth R.Jones, 2009) -Solution   Immediately after acquiring Pillsbury, around 1500 people in the staff were fired in an attempt to cut down on costs. Sheppard did created groups and emphasized heavily on team work. A grouped team work was opted for in the process. Burgeois, L. (1985). 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