Small Business Enterprise - Case Study Example

Small Business Enterprise Name Institution Course Date Small Business Enterprise Introduction Organisation change is the change of strategies, operations and activities for the purpose of increasing organisational effectiveness. Organisation change can be caused by factors such as the desire to expand, technological changes, stiff competition to name a few (Aaron, 2009). Westward Water Solutions desires to expand and grow in terms of its operations. As a result, there are a number of factors that they should take into consideration in order for this to happen. This report will focus on Westward Water Solution Limited in the United Kingdom. The main issues discussed in the report include the overview of the weaknesses and strengths of the company, the recommendations for improvement of the weaknesses and strengths, the analysis of the competitive advantage using Porter’s Five Forces and PESTLE Analysis, and the performance measures to be implemented by the company. Task 1 1.1 Overview of the Company Westward Water Solutions Ltd is a company that builds and sells systems that are used by industries in purification of water. Furthermore, they also provide operation and maintenance services for similar equipment apart from those that they produce. In the year 2005, the company reached a point where they were both producing and selling up to eleven “MASTER” series systems. This number rose to twelve “Master” systems which also rose to 13 in the year 2007. As of the latter year, the company was worth a 1.2 million Euros. This was due to the rapid growing of sales over the years. The company aims to be the best in provision of quality water purification products as well as services. They also aim to reduce costs considerably for their clients for various solutions and maintain a profitable growth of the company and the employees as well. The company provides very flexible and responsive services to their clients. This has been one of their strategies and selling point over its competitors. The company’s flexible and responsive nature has brought immense success to the company. They are also strategically accessing overseas markets for their products, for instance, France and Poland. Furthermore, there are a number of strengths and weaknesses that affect the company. To begin with, the company has a very fast response to their clients’ demands. This is one of their strengths which make them a more probably choice over their two competitors. Employee harmony is also strength of the company. Also, strength of the company is that it embraces team work among its employees (Kellen, 2003). Nevertheless, there is a conflict that exists between the marketing director and his wife. This conflict will greatly affect the growth of the company for the wife intends acquire a dividend of 50% of the company’s revenue. In addition, the managing director’s wife is not qualified to be the financial controller of the company. Having big competitors in the market is another threat that affects the company. These weaknesses limit their growth and expansion. 1.2 Ratio Analysis Current ratio: For the year 2005  =  2.89 For the year 2006  =  = 3.02 For the year 2007  =  = 3.09 The current ratio of the company has increased over the years. The current ratio is above 2:1 which means that the company is able to meet payment of its debts with a huge margin of safety. Gross Margin Ratio: For the year 2005 = 0.495 For the year 2006 = 0.5 For the year 2007 = 0.496 This ratio represents the percentage of sales money left after subtracting cost of goods from overall net sales. The gross margin ratio indicates that the company is able to pay overheads expenses of its operations. Task 2 2.1 Overcoming Weaknesses of the Company Inexperienced Financial Controller Due to the available inexperienced financial controller in the company, the management can perform the following actions to make sure they have completely eradicated the problem. With regard to having a Financial Controller who is inexperienced in the field of accounts and having no accounting qualifications, the management ought to look for an individual who has gained knowledge in the field of finance and also who is good at planning, organizing as well as making decisions that can be beneficial to the company over a lengthy period of time. In addition, the management can effectively choose a Financial Controller who has the most interesting and the most appropriate set of skills regarding the field. Contention from Major Competitors Another major weakness facing the firm is its competitors. In the UK, the company is competing hand in hand with big competitors. The management of the company can take care of such weakness by using technology to facilitate their operations. For example, introducing web-based technologies can help the firm improve its operations (Aaron, 2009). For example, utilizing E-purchasing tools can enable the company gain more competitive prices since it will no longer be limited to its local dealers. This will also help the company reduce the costs associated with transaction cost as well as less paperwork. Also incorporating smart inventory control systems can enable the company reduce the levels of inventory and thus enhance profitability. Conflict within the Company This conflict that exists within the firm is between the managing director and the wife. This conflicts when not addressed appropriately may affect the performance of the company at a large scale and inhibit its growth and expansion (Kellen, 2003). Therefore, the management can ensure that the conflict is addressed immediately so that it does not cripple the business. The management should address the situation with careful consideration and come up with a proper decision regarding the welfare of the company in order not to affect its performance. 2.2 Improvement of Business Performance The company has its strengths which have to be further improved in order to sustain its growth and development. These strengths include its flexibility and response time, employee harmony and finally the cost of its products. Flexibility and Quick Response Time This strength is one of the company’s core strength. This flexibility has helped the company gain the loyalty of its customers. Therefore, in order for the company to improve on its flexibility and response time, the management has to incorporate online and order management systems (Kellen, 2003). This can help the company easily track its package when being delivered to its clients. It can also help the company manage movement of inventory in the firm. Finally, it can enable the company recognize peak and low periods permitting the company to adjust supply purchases. Employee Harmony The company has a very good reputation regarding employee harmony. The team work in the company demonstrates proper coordination of work. The managing director also interacts with them in a monthly basis to ensure that every issue is well addressed. Therefore, the management can incorporate team building activities in its schedule which will help the employees bond and demonstrate their capabilities and skills which will bring future success of the company. Cost of their Products The costs of their products are very customer friendly. As compared to the company’s competitors, the price of its products is a great selling point prompting more clients to purchase their products. Therefore, for the company to maintain their low costs as well as high quality products, the management should increases offshore shipping of their products in order to increase their sales and revenue (Kellen, 2003). This will give them a competitive edge over their two biggest competitors. 2.3 New Directions of Expansion Apart from Westward Water Solutions Ltd offering sales, operation and maintenance of water purification equipment, they should also invest in offering solar technology and water pumps. In terms of expansion, they ought to consider other alternatives such as internationalization and partnering with other companies. The company can invest in producing solar technology in the application to pumping (Aaron, 2009). The company can also invest more on online marketing in order to enhance their presence. Internationalization is also another brilliant alternative. The company can establish other branches in other countries. This will enable them reach more markets and increase their accessibility. Therefore, internationalization is the most preferred alternative. Task 3 3.1 Business Analysis PESTLE Analysis PESTLE Analysis is carried out with the aim of ascertaining business strategies for the future and assessing business environment. The analysis gives an outline of the situation in which a business might be in. PESTLE is an acronym that stands for Political, Economic, Social, Technological, Legal and Environmental. These factors influence the market and the business operations in many ways thereby altering the way strategies are made. Concerning Westward Water Solutions Limited, the company is affected by external factors in many ways. Political Westward Water Solutions is significantly affected by political factors. The company existence as a private company can be associated with the changes in the political environment in the United Kingdom that favours privatization. In addition, the government of any country is involved in the operations of manufacturing water purification systems in case they don’t meet the laws and regulations established. As seen in any type of business, the modification of laws by the government affects how businesses operate. For instance, issues concerning change of tax rates and revised tax laws, changes in environmental laws and changes in accounting standards affect business operations. The capacity edge and new entrants highly depends on political actors (Kellen, 2003). In the United Kingdom, political laws support foreign investments which have a strong potential to make a difference in relation to the success of Westward Water Solutions. Economic The up and down changing of the economy of the United Kingdom is one factors that can affect the success of Westward Water Solution. When there is strong economic growth, the company has the potential to grow. Nevertheless, with the current recessionary trend in the United Kingdom and other countries, the business environment is growing to be difficult. Also, the negative growth of GDP of United Kingdom can dramatically affect economic growth and therefore affect the business operation in the company. Still, one advantage of negative growth rate is the fact that borrowing interest rate will be low. Therefore, Westward Water Solution can borrow money at low interest rates to expand their business. The recent recessions seem to subdue and recovery of the economy is expected soon. Social Social factors have significantly affected Westward Water Solution Company in relation to the changing of demographics on the basis of the customers it targets. The changes in customer’s preferences, tastes and need for high-tech products coupled with changing lifestyle has fastened the pace of organisational change in the company in relation to meeting these terms. Also, the increased globalisation has led to group of customers demanding faster response to their wants and needs which has created competitive business (Kellen, 2003). In addition, customers also have become more service sensitive and quality oriented due to higher educational levels coupled with higher income levels thereby creating discerning customer types. Technological Technology is one of the major factors that have produced organisational change in Westward Water solution. Over the years, there have been new technological developments which are designed according to improved engineering standards. Many companies have opted to adopt this changing technology with an aim of increasing productivity (Aaron, 2009). However, rapid advancement of technology means complex machines and equipment which increases competition. Westward Water Solution Company is faced with pressure of adapting to the changing technology for the betterment of its operations. Technological advancement has generally led to organisational change (Aaron, 2009). In addition, this technological advancement has stiffened the competition of the company making it difficult to grow to a greater extend. Environmental Westward Water Solution Limited is within industry that is required to take into consideration the environmental factors. The company is bound by powerful regulatory scrutiny from Environmental Protection Agencies concerning the conduct of its service. Green issues also have affected Westward Water Solutions as the nature of its services and products have been ones that are considered unfriendly to the environment on the basis of chemicals used in its manufacturing process. Legal Legal factors are a concern for the company in relation to regulatory environment and changes in the safety standards in terms of the equipment it uses. These heavy machinery and equipment have been under scrutiny by legislative changes in order to reduce work related accidents. Therefore, Westward Water Solutions Limited is forced to make a huge investment in training and educating staff. Porter’s Five Forces Analysis The five forces acts as measurement for the competitiveness of market developing its attractiveness. They include; Threat of New Entrants Entry barriers in the United Kingdom for many industries are relatively low. This means that there is no switching cost or capital requirement. For this reason, there is increasing number of new companies appearing in the market thereby increasing competition in the industry. However, due to customer loyalty, it is unlikely for loyal customers of the company to try new brands. Therefore the threat of new entrants is in medium pressure. Threats of Substitute Products Since the company is manufacturing water purification systems which are few in numbers, there are few substitutes for the products as of now. In addition, as a result of the new technological advancement and the environmental friendly approach, there will be less threat of substitute in future (Kellen, 2003). Bargaining Power of Suppliers Westward Water Solutions Limited is lacking proper technology to meet the increasing demand of water treatment systems. For the manufacturing of water facilities industry, the suppliers of enhanced technology and proper equipment for water purification systems have strong bargaining power (Kellen, 2003). Bargaining Power of Buyer The buyers of water purification systems are private institutions and corporation users. In consideration of people, the pricing of such systems is under intense control and is monitored by the government and local authority. Therefore, the bargaining power of buyers is weak to fair. Intensity of Rivalry Westward Water Solutions Limited is faced with intense competition from local and international companies. With urbanisation, the country’s municipal treatment is more concerned than ever. There is a huge demand for the equipment on the market. The competitors of the Westward Company have built up a recognition and reputation in the industry. For this, the competition is very stiff in the United Kingdom. 3.2 Business Plans and Recommendations The plans of Westward Water Solutions Limited involve the expansion of the company by 300% by 2008. This would involve getting a bigger team and bigger premise in order to meet the demand of customers. In order for this to happen, the company should invest in innovation and technology. Most of its competitors are utilizing technology in offering their products and services (Kellen, 2003). This has resulted to increase in productivity and growth. Therefore, Westward Water Solution Limited should use technology in its marketing and operational activities. This may involve incorporating of order and online management systems and smart inventory control system. In addition, all workers are overworked which may be the reason for the company slow growth. The company should strive to add more production team and specialised financial controller. 3.3 Operational Action Plan An operational action plan should be instituted in the company for the changes to be effective. The action plan should be structured in a way that indicates the actions that need to be taken in solving the weaknesses in order for the company to grow. Also, the duration to which the change should be implemented should be indicated and the performance measures should also be included (McQuerrey, 2015). The implementation of technology in the company should be addressed first and should take a larger percentage of capital invested in growth since it makes up a huge part of effective operation. Also, in order to enhance harmony and teamwork, the company should invest in teambuilding. This should take place 2-3 times a year and should be monitored by human resource personnel. Expansion of the business is impossible without shifting to a larger premise. This initiative should be undertaken as soon as possible before employing additional qualified employees. It is difficult for expansion and growth to take place without increasing off-shore shipping. Off-shore shipping should also take a larger percentage of expansion investment. Task 4 4.1 Effects of Proposed Plans Implementation of technology in Westward Water Solutions will incur a lot of cost for the company. This will include the replacement of worn-out and old machinery with new manufacturing machines. Also, technology application in marketing and accounting will add some cost for the company (Aaron, 2009). In addition, the employees of the company will have to undertake training and education in relation to employing the new technology in their operations. Also, as a result of the cost incurred in this action, employees’ salary may be reduced in order to cater for the change. Teambuilding activities on the other hand will enhance teamwork among the employees but will increase expenses to the company. However, technological implementation in the marketing and operation departments and teambuilding activities will enhance the effectiveness and productivity of the business at large. Employees would be more specialized and informed which will enable them carry out their tasks effectively. 4.2 Plans for Monitoring and Controlling Progress The progress of the implemented plans should be monitored accordingly (Kellen, 2003). To start with, the plans should be reviewed regularly. This could be quarterly or monthly. In addition, a tracking system should be developed to assess the progress of the action plans (McQuerrey, 2015). A management committee should be created which will be responsible for carrying out reviewing process. The management committee should make use of reports and revenue projections in order to establish if the plans are at per with the objectives of the organisation. In addition, business plans are changeable. They can be updated or changed as the business changes. It is important to continuously revise the plans basing future predictions on past performance. 4.3. Performance Measures A number of performance measures can be used to establish whether the plans are successful or not. One way of measuring performance is by use of return on investment (Kellen, 2003). This is where one assigns a financial value to an activity result. The returns from action plans are calculated to establish if it is a good investment or not. In addition, action-profit linkage is another good method of measuring performance of a plan (Kellen, 2003). Every action plan should have profit linked to it that is measured in order to determine if it is viable enough. Balanced Scorecard is another fantastic way of carrying out performance measurement. It translates a company’s mission, strategy and vision into a set of performance measures that offer a comprehensive framework for a management system. Conclusion Westward Water Solutions has experienced growth in its operation. However, the management wants the company to expand and grow significantly by 2008. In order for this to be possible, Westward Water Solutions should implement a number of strategies that will boost their strengths and help them overcome their weaknesses. One way of doing this is implementation of technology. Technology can assist in improving its operations, accounting and marketing activities. Another method that would enable the company grow is by enhancing teambuilding and enhancing internalization. The company should expand its operation to other countries in order to increase their sales. In order to measure performance of expansion plans, a number of performance measures can be applied. For instance, balanced scorecard, action-profit linkage and return on investment are some great ways in which the performance of the expansion plans should be measured. References Aaron, B 2009, Determining the business impact of knowledge management, Performance Improvement, 48(4), 35-45. http://dx.doi.org/10.1002/pfi.20060 Kellen, V 2003, Business Performance Measurement: At the Crossroads of Strategy, Decision-Making, Learning and Information Visualization. Performance & Management Review. Retrieved from http://www.kellen.net/bpm.htm McQuerrey, L 2015, How to Monitor & Control Your Business Plan. Demand Media. 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