A Set of Principles and Rules of Company Management - Case Study Example

? Wobble & Strait’s Consideration of Diversification By __________________ Wobble & Strait engineering systems Ltd. is a solutions providerto the rural, forestry and fishery industries. Rising dollar and low demand may causes financial disruptions in future. To avoid this risk, the company is planning to foray into designing of solar power and heating systems. A study regarding the current scenario, a detailed SWOT analysis, and directions for business plan and organizational chart for the proposed diversified firm are drawn to ascertain whether the plan would be able to have competitive advantage in the future. Table of Contents: Sl. No. Particulars Pg. No. 1 Introduction 4 2 Outline a set of values typical for the organizational culture of a well-established small business 5 3 Current business environment for existing business in homeland and world over 7 4 SWOT analysis of newly proposed solar powered and heating units 8 5 Guidelines and directions for the proposed business plan 11 6 Organizational chart which best suits the diversified organization 13 7 Conclusion 14 8 References 14 Introduction: Wobble & Strait Engineering Ltd. is a well-established small business catering to the needs of rural, forestry and fishery companies. The Company was established in 1946 and was mainly family managed. It currently, employs 21 staff in various cadres, including Stanley the Managing Director, to support the purpose of the business. Candy, his heir is now inclined to get involved in the business matters and understands that there are questions regarding the financial soundness of the business in the present scenario of rising New Zealand dollar as against the US one. The high dollar value is forcing many forestry and fishery companies to defer their requirements with the result that the demand for the company’s products is getting thinned out day by day. While other promoters are convinced that this is just a temporary situation, Candy wants to buffer her company with additional capacity by diversifying company’s activities into designing solar powered energy and heating units. For the sake of diversification, as according to her father’s suggestion, she needs to: 1. Outline a set of values typical for the organizational culture of a well-established small business. 2. Consider a real current business environment for the existing business in the homeland and the world over. 3. Conduct a SWOT analysis of newly proposed solar powered energy and heating units. 4. Propose some guidelines and directions for the proposed business plan and 5. Project an organizational chart which best suits the new diversified organization. Outline a set of values typical for the organizational culture of a well-established small business: For any business to be a going concern, it needs to be economically viable while ensuring that the work standards are quality ensured for guaranteed future prospects. As such, it needs to develop Vision and Mission Statements which can lead it towards the goal orientation of profit maximization. This goal can be achieved only when an encouraging culture is established in the organization. Organizational culture is dependent on the values it professes towards it customers, members, manager to staff and all other related inter-personal associations. Thus, a set of values which are like a bible to the organization have to be assimilated which need to be revisited to ensure that no severe deviations occur in the activity process. W&S, being a semi-service oriented organization, has developed similar values (related attitudes) basing on which, it has developed all these years. A recollection of those values and focusing on newly required areas which were overseen in the previous years is imperative for the company’s success in the future: Having a Pro-active Attitude: The employees of an organization should be enthusiastic and believe in its purpose. They should be confident that the goals of the organization are achievable and whenever there is any slack in the business, the management needs to ensure that the employees are well assured about the sustainability of the organization. In the current scenario, though Candy is concerned about the financial viability, the remaining staff just believes that it is only a temporary phase of the business. This is a sign of a healthy organizational culture which should be continued even in the future ventures. Employee to customer/member relationship: All these years, it has catered to the lower end of the value chain in the fishing and forestry areas. As such, its deliverables were measured in terms of timeliness more appropriately. Quality was observed but, a slight disruption was acceptable owing to its lower end product. As such, the employee-customer relationship was also not put into any strenuous atmosphere that it should be able to deliver things on time. But, as the company wants to venture into designing of solar power and heating energy systems, it will try to deliver a higher end product wherein the employee-customer relationship plays a vital role in addition to the quality aspects. Thus, the employees need to ensure that they practice a proper communication and relationship maintenance behavior for the company to prosper. They should never forget that their customer is right always and they need to cater to all the customer’s requirements flawlessly. Employee to employee relationship: It should be very healthy and highly idea generating in the organizational context. The employees should realize that they are a part of the team and should always get involved in the team efforts. It is very difficult to set aside individual priorities. However, those priorities should be aligned with the organizational goal to achieve both the goals at the right time. W&S has maintained a consistent employee relationship by clearly drawing up an organizational chart and explaining the role of each employee at the outset. This clarity should be continued even in the organization’s future operations. (Rehkopf, E. 2009). In addition to these established values, the company should also ensure an environment in which: Fostering a growing atmosphere is possible: The management should ensure that it gives enough room for the employees to grow and reach up to their commitments. Small mistakes should be forgiven with little caution and ensured that big mistakes do not roll on in this process. They should be encouraged to think about new methodologies through which economical means of performing the activities can be realized. Developing new processes to tackle new challenges in the market is visualized: Any organization will have growth when it ventures into new challenges and tackle them through ideas and processes. It should be flexible enough to imbibe continuous learning process and never enter into any rigid process. In this journey of fulfilling the set of values, and the organizational vision and mission statements, overload of activities should be perfectly organized to ensure that the employees are not dissatisfied about their work pressure and stress. They should be contented about their progress in the organization and assured of their growth related sustenance even in future. Current business environment for the existing business in the homeland and the world over: New Zealand engineering systems and designs are known for their efficiency the world over. The country has a wide reputation of development of great engineering technology and availability of competent technicians to handle any situation. The company in particular caters to the support functions of rural, fishery and forestry departmental requirements. All these years, the emphasis of development of the country was mainly on the primary sectors like rural and fishery. Agriculture and fishery has accounted for 90% of GDP till recently. However, of late, industrialization has started vibrantly in this country setting aside the importance of the primary sectors. In addition to that high costs and recession has hit these sectors very badly resulting in a lack of demand for engineered products in the lower end. As the company caters to this segment, the future of it is somewhat gloomy. The company has to face pressures like: 1. Lack of demand from previous customers 2. High rising New Zealand dollar cost 3. Aging work force It needs to avoid risk by venturing into new business opportunities. (Rothwell. W.J. 2010) Even the global demand is shifting gradually to high end designer products and as such primary engineering systems may not be highly demanded. In addition to these pressures, difficulties are also visualized in the form of competition from various other companies because several of them have to struggle for the same reduced demand. This can have a negative impact of the pricing of the engineering solutions which the company offers and in the long run may become extinct if, newer models of business are not thought upon. SWOT analysis of newly proposed Solar powered and heating units: Strengths: 1. The Company’s established designing and engineering solutions goodwill in the market may prove to be a competitive advantage when solar power and heating solutions are introduced in the market. 2. Solar power is a renewable source of energy and can provide solutions for probes regarding alternative methods of power generation. 3. The abundance of solar energy is double in quantity to the availability of total non-renewable sources in total. 4. New Zealand receives an average of 2000 hours of sunshine annually which is almost equal to twice the energy requirements of the nation. 5. Solar energy is inexpensive in comparison to other forms of energy transmissions. (Lamb, J. 2009). 6. As New Zealand is known for its engineering and designing, quality technicians could be available easily who can very well fit into the current organizational culture. Weaknesses: 1. Concerns about the high rising New Zealand dollar as against the US dollar may be a confidence buster in the organization. 2. As the company is not experienced in solar power set ups, it may face difficulty in setting up of solar power units both in homes and industrial firms at once. It would be better if the company goes phase wise deciding to go to house set ups in the start and then proceed to industrial concerns. 3. As other engineering firms may also have a vision for diversifying their business, there is every scope for the firm to face competition from existing and even newer units. 4. The installation and implementation costs may be quite high which could be recouped only if the business is profitable in the future years. 5. Tapping of solar energy can be difficult in the night times and during cloudy days. Opportunities: 1. Only 1% of total demand of energy is tapped by the solar power till date implying that there is a huge scope of development for any organization catering to the needs of the customers in this field. 2. The company is known for its engineering systems, the goodwill of which, it can carry on even for its new ventures. 3. Till now, the company has catered to the lower end services of primary sectors. Venturing into this new field will allow the company to foray into high end design services to the industrial customers who have better paying power. 4. The company can boast of its environmental consciousness and efforts to forward green marketing efforts which can publicize the firm and foster brand establishment. Threats: 1. New Zealand dollar has been rising and highly volatile in the past three years. As of now, the credit rating agencies have downgraded the economy and are projecting a fall in dollar value. Volatility in terms of rise or fall is always dangerous as falling dollar will only result in lower returns for exports. 2. There can be competition from rivalries as the process is highly inexpensive. 3. Regulations of governmental authorities, though, to some extent they may be relaxed because the company is trying to tap a renewable source of energy. Owing to the fact that the company needs to plan for future, considering the lower intensity of threats, a thought into the setting up of solar power and heating energy systems can be given. A business plan needs to be developed by consolidating the various directions and ideas for such development. Guidelines and directions for the proposed business plan: Before proceeding with a business proposal, it is important that it is put in paper as a hard plan to ensure that the strategy and tactics envisaged in it are workable practically. It should have clarity in the thought process so that the followers will not find any difficulty in implementing it. There should be identification of the growth prospects, market situation, customers who are targeted, competitors and the competitive advantage which the organization wants to achieve over their products. In short, it should conduct a SWOT analysis of the business project which was already done earlier in this case. This should be presented before all the functional team who may get involved in the process if the business rolls on. The idea is that they should be able to understand it unmistakably for which, the plan presented should be coherent, cohesive and consistent with the ideologies of the organization. The plan should include: 1. SWOT Analysis 2. Financial projections and 3. Budgets These will help the stakeholders to have an idea about his returns in the organization. The future budgets and job descriptions reliable with those budgets developed can also be used as a mechanism to avoid conflicts over operational problems and build a consensus within the team. The SWOT analysis and financial projections thus prepared are then presented to the: Debt providers who in many cases are bankers Providers of equity like family members, friends or venture capitalists. Naturally, it is of a common knowledge for every equity provider that he will be the last to be answered when at times of a business collapse. As such, even though they are very close as family members, their concerns regarding profitability should always be responded in the following manner: Calculating the return on equity expected and the competitive advantage of the organization which can help the business in outperforming the market to earn that ROE. Details of funding of the business plan and if any further capital is required, how is it to be financed. If there are plans for future equity dilution what measures would be taken up and the expected streams of dividends before and after dilution. The returns the company has achieved for the present equity providers and whether they can be sustainable. What are options of exit for the equity providers? Once all such projections of SWOT analysis, financial projections, budgets and answers for equity providers are replied thoroughly, the business plan will be scrutinized by all the concerned parties. If it is prepared flawlessly with operational clarity, it is sure to be acclaimed by every individual concerned and the business can go on with the plan confidently. (Graham, F & Stefan, Z. 2009). In the current scenario, the SWOT analysis of the company has already been conducted. The financial projections can also be prepared based on the zero based budgeting system as the business plan is a new venture for the organization. Given the engineering operational expertise and Candy’s financial projective clarity, the plan is sure to be certified with all the concerned parties. Once the plan is accepted, a new organizational structure needs to be developed for the firm to perform efficiently and realize the planned growth prospects. Organizational chart which best suits the diversified organization: Conclusion: It has been observed that W&S, which specializes in providing engineering solutions for the rural, fishery and forestry industries, is facing a financial slack due to rising New Zealand dollar and decreased demand. As such, a new business plan for diversifying the business into solar power and heating systems has to be developed to avoid the risk of business extinction. To develop the plan, the current organizational culture has to be recollected and further new developments for that culture have to be envisaged to promote the smooth diversification. Further to that clear businesses plan including the current scenario, the SWOT analysis of the proposed venture and directions for financial projections and budgets of the business plan have to be analyzed. After all that exercise, a vision regarding the proposed organizational structure has to be designed to build the clarity regarding power and responsibility delegation. Thus, if all these are clearly written down and the business would establish a competitive advantage to foray into the solar power and heating systems, Candy can go ahead with her plan and establish her company with financial soundness. Book References: Graham, F & Stefan, Z. 2009. Guide to Business Planning. U.K. Profile Books. Ch-2. Lamb, J. 2009. The Greening of IT: How Companies Can Make a Difference for the Environment. U.K. IBM Press. Appendix. Rothwell, W.J. 2010. Effective Succession Planning: Ensuring Leadership Continuity and Building Talent from Within. U.K. Amacom. Internet References: Anonymous, 2011. Solar Water Heating - The Smart Choice. Solar Industries Association. Available at: http://www.solarindustries.org.nz/ date accessed: 10th May, 2011. Anonymous, 2011. Currency Exchange Rate. Automated Currency Trading System Ranking. Available at: http://www.exchangerateusd.com/NZD date accessed: 10th May, 2011. Rehkopf, E. 2009. Organizational Values. Club Resources International. Available at: http://www.clubresourcesinternational.com/media/8053/organizational%20values.pdf date accessed: 10th May, 2011. Veronika, M. 2009. ‘Wind and solar power - Solar energy', Te Ara - the Encyclopedia of New Zealand, Available at: URL: http://www.TeAra.govt.nz/en/wind-and-solar-power/3 date accessed: 10th May, 2011. Read More