Small Business Critical Appraisal: Sun WorldWide Express
1.0 BACKGROUND ON SMALL BUSINESSES
Prices start at $12
Prices start at $11
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Prices start at $12
Public perceptions of the small business have been influenced by politicians and theorists from the extremes of neglect and ignorance to hype and over-expectation. In the 1950’s and 60’s small business’s were seen as out-of-date. By the 1970’s and 80’s they were seen as a great contribution towards the economy and by the 1990’s, SME’s were seen as the post to improving employment.
Record numbers of people have launched companies over the past two decades, from 2.4m to 3.7m (Appendix 1(i)) in the UK. A variety of competitive, economic, demographic shifts have accounted for this, “society depends on entrepreneurs to provide the drive and risk-taking necessary for the business system to supply people with the goods and services they need”. (Scarborough and Zimmer, 2000, p. 34)
On a global comparison, the increase has a common feature across all borders. The UK and Europe have similar profiles. The USA concentrates its workforce in larger companies compared to Europe and Japan. (Appendix 1(ii)) It is worth noting the difficulty to compare as definitions vary.
The failure rate for small businesses is high; primary cause is incompetent management. Successful entrepreneurs hold a positive attitude that these are just stepping stones to success.
2.0 BACKGROUND & HISTORY
Sun Worldwide Express (SWE) is a courier company founded in 1999, pioneered by Mr. Desai and Mr. Thompson. The partnership emerged when one of the entrepreneurs risked facing job loss from the parent company; United Cargo Handling (UCH). Mr. Desai and Mr Thompson own an equal share of the company of 49% and UCH owns 51%, however, SWE operates independently. Initiation reasoning results from several factors, e.g. redundancy, experience development, customer support and determination.
2.1 SWE OPERATIONS SWE is concerned with business-to-business transactions in the Courier and Despatch sector. Service involves deliveries from small packages at very short distances at very short notice and to despatch or parcel delivery tends to demand speed and reliability, with time constraints usually on a 24-hour, 48-hour and 72-hour basis. The internet revolution has aided SWE for proof of delivery which is invariably required. (Appendix 2(i))
2.2 COURIER AND DESPATCH INDUSTRY
The sector has seen an increase in 1999, from £4.21bn to £4.5bn in 2000. (Mintel International Group Limited, 2000) The reason for such an increase is a number of external developments impacting on the market SWE have to adapt to a rapidly changing business environment. The most obvious factor is the development of email and E-commerce generally. The speed with which businesses can now transfer documents between each other on a global basis is such that one of the courier and despatch service industry’s key selling points is speed in relation to conventional postal services.
3.0 MATTER OF SIZE There are differences in the comparable definitions of ‘small’, (Appendix 3(i)) due to objective opinions from various sources on quantitative and qualitative grounds.
3.1 OWNER VIEW Mr. Desai, states “this company is considered relatively ‘small’ in terms of the Balance Sheet total and number of employees”. It can be said, overall the company is ‘small’ due to the sector it operates in; there is an abundance of competitors in the transport industry, 99.8% accounts for small firms, not to mention the key players, DHL, FedEx and UPS.
3.1.1 REFLECTION & PUBLISHED CRITERIA
It is evident that SWE fits into the published definitions to some extent; the most dominant; the EU and pragmatic definition of Wynarkcyk et al. (1993) The EU does not specify financial statistics and the fit requisites, employees, at micro level. The Wynarkcyk can be implemented on all three aspects in various senses. Uncertainty corresponds to employees; limited resource, this conflicts the customer base present. There are marginal differences to key players in the industry which SWE mirrors in terms of global transportation to over 200 destinations. Lastly, they are continuously evolving through market and structure; the logistic operation is rapidly expanding due to growth of economies in developing countries, e.g. China and Africa.
Bolton’s definition does not coincide with SWE as turnover resides under two headings; road transport and turnover, these variables consider the company to be ‘small’. Although SWE operates under a parent company, in respect to characteristics, it is personalized to the employee’s needs. There is no formal structure and representation of employees, metaphorically speaking is a ‘family’. In addition, they have a low market share in proportion to the sector.
3.2 DEFINITION FORMATION
The Bolton and Law definition CA85 requires updating; this may be the reason why their definition does not shape SWE. Bolton at one extreme uses very low figures whereas the CA85 has a large distance criterion.
According to research carried out it is impossible to define ‘small’. A broad definition utilising the classification from the numerous sources has been formed, “A small business should possess a small market share accompanied by a small customer base, employing fewer than 15 people, with a turnover of £100,000”.
Therefore, if ‘small’ were to be defined it should be qualitative, if not for government policy measures, quantitative terms can be argued till the light of day.
4.0 ENTREPRENEURS 4.1 “TO BE OR NOT TO BE, THAT IS THE QUESTION?” A trait test was conducted to identify the constitution Mr. Desai represents; entrepreneur or owner-manager; results observe that he is entrepreneurial. Hence, traits possessed are aggression, profit seeking and determination; however 3/8 can also be interpreted as an owner-manager. Section 2 reflects entrepreneurial traits, (Appendix 4(i)) however; there has been controversy in that such theories suggest entrepreneurs carry specific traits although this is not wholly true for the fundamental reason that everyone is unique.
4.1.1 REFLECTION OF RESULTS
There are debates to whether entrepreneurs are born or made. Several psychologists believe that the ‘enduring, inner characteristics’ Hollander (1971, quoted in Bolton & Thompson, 2000, p. 15) come from core and is relatively permanent. Backed by this statistical evidence from Eysenck (1965) states in Bolton & Thompson (2002, p. 15) that genetics contribute 75% to personality and 25% due to environmental influence (Appendix 4(ii)).
Contradictory to this some argue that there is too much diversion from the learning and development process, “the individual entrepreneur acquires skills and abilities through entrepreneurship”, (Deakins & Freel, 2003, p. 34) however, Karatko (Karatko, 2001, p. 17) believes “educators cannot make people into entrepreneurs”.
4.2 FINAL DECISION
Studies have been carried out from economic to psychological standpoints (Appendix 4(iii), such as, Cantillon, Schumpeter, Bolton, Burns, Hisrich, Kirzner and Drucker. Drucker, for example, defined an entrepreneur as someone who “always searches for change, responds to it and exploits an opportunity”, (Stokes, 2002, p. 30) He consequently embedded innovation. Whereas Hirsrich summarised this as “entrepreneurship is the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychic and social risks and receiving the resultant rewards of monetary and personal satisfaction”; (Stokes, 2002, p. 30) innovation is the focus of thinking and behaving. Owner-managers are not a single body that can easily be defined and their background is the focal point, which identifies them.
Therefore it is difficult to assess which category Mr. Desai falls under, force to do so consequents in classifying him as an entrepreneur solely upon the need for achievement (McClelland, 1965), wealth (Cantillon, 1734), determination (Zaleznik, 1990), the risk-taking trait is not present (Carsud et al, 1986) as well as the creative (Shackle). Mr Desai holds typical characteristics of an owner-manager identified by Bolton (1971), thus justification cannot be made upon characteristics.
The implications of characteristics can have an impact on the learning experience and struggle to arise, externalities such as the environment can affect the business, where businesses can fail if run by people who don’t have the suitable qualities. In this case Mr Desai has a balanced attitude and personality to further the business in its growth and success, over-optimism is not present this allows for a more realistic approach to goals.
This is proved by the double-loop learning experienced by Mr. Desai. (Appendix 4(iv)) 5.0 START-UP New business ventures arise for a number of reasons; these factors are known as ‘push’ and ‘pull’. These initial ideas proceed through a number of stages before moderate stability is sustained.
5.1 ‘PUSH’ & ‘PULL’
(Appendix 5(i)) The principal reason for SWE initialization was due to force. Mr. Desai quoted, “I was a victim of the situation”; parent company was forced into liquidation. As Mr. Desai has accumulated knowledge through past work experience; ‘human capital’ (Becker, 1962) he was influenced to pursue this idea.
5.2 REFLECTION (Appendix 5(ii))
5.2.1 IDEA FORMULATION
The spur behind SWE was the recognition that “the job could be done in a better way”, Cressey (1999, quoted in Carter et al, 2000, p. 117) this is an important factor in creation. Simultaneously, Timmons comments “the notion that creativity can be learned or enhanced holds important implications for entrepreneurs who need to be creative in thinking”. (Deakins, 1999, p. 52) Although Mr. Desai does not bear a significant amount of educational qualities, experience has made up for this as evident from the life of a small business. (Appendix 5(iii))
Mr. Desai has an advantage as bank managers rate previous experience when lending, however, he has chosen not to take up an overdraft facility and represents the Pecking Order Hypothesis perfectly (Myers, 1984) who suggests “new entrepreneurs prefer to avoid raising external finance”. (Carter et al, 2000, p. 117) This breakthrough process was quick to pursue as the business had to generate finances from profit alone.
5.2.2 OPPORTUNITY RECOGNITION
Mr. Desai recognized that the exploitation of the idea had been considered before, however, due to macro-environmental factors, particularly social and economic it was not pursued. Thus, the idea was converted into an opportunity when these factors were in place, “new business ventures require entrepreneurs to formulate ideas and fit them into opportunity”. (Deakins et al, 1999, p. 53) The increased pace of technological change has also created opportunity.
Although there are benefits, there is also the risk of failure which are averagely high (Appendix 5(iv)), the main risk is the financial as there is a relatively high reliance on profits. However, SWE has an advantage because mentoring of the parent company exists, who have encouraged them in the next step of the development process.
5.2.3 PRE-START PLANNING
The existence of a secure customer base, financial assistance from the parent company and partnership relationship, SWE was on solid ground to proceed. The parent company owns 51%, hence financial assistance exists, therefore there is the elimination of the length of time and search activity.
The qualities possessed by the dominant partners have coincided well through complementary skills. The matching process is “crucial to the success of the relationship and growth and performance of the firm”. Deakins et al (1998, quoted in Carter et al 2000, p. 122)
5.2.4 ENTRY AND LAUNCH
The pre-observance of the service climate and the path taken at the particular point was beneficial as costs would have rose significantly if, for example, excessive marketing was carried out. However, some customers might be apprehensive initially as the previous employment of Mr. Desai is known; therefore trust may need to be regained to retain customers.
Hence, SWE has acknowledged and been fulfilled by the role of serendipity, “entrepreneurs must be prepared to exploit opportunities and be able to recognize and take advantage of them”. Martell (1994, quoted in Carter et al, 2000, p. 123) SWE’s grasp on chance minimizes the chance of risk.
5.2.5 POST ENTRY DEVELOPMENT
Customers, suppliers, bank managers and employees existed before the business start-up; therefore a small amount of credibility is needed to succeed. The invaluable experience of the entrepreneur overcomes the naiveté of the start-up and provides a sense of mentoring. A network with the parent company has been established from the commencement, although, the white paper highlights, “they are not exclusively for SME’s”; it can be argued networks can assist in the creation of the “entrepreneurial economy”. (Carter et al, 2000, p. 123)
As evident from the formulation Paradigm, SWE had a fortunate advantage for a moderately secure base on which to build upon. Customers, family and friends support, experience, network and financial assistance are key reasons. Demonstration of significant and visible personal commitment over a long period has led to the creation of the business. If these factors persist in the future, room for expansion can be considered.
6.0 MINORITIES Ethnic firms now account for 7% of all small businesses and 9% of all new business start-ups. (www.businessvision.co.uk) (Appendix 6(i))
6.1 MR. DESAI’S ETHNICITY
Mr. Desai is of a Ugandan-Asian origin. Thirty years ago thousands of Ugandan Asians were frantically packing their bags to beat Idi Amin’s deadline to leave the country for their wealth prosperities. In Britain they rebuilt their lives showing an extraordinary entrepreneurial spirit and self-reliance.
6.2 MODEL APPLICATION
The issue of one’s identity is a complex subject, on one hand it is a very individual and personal process and on the other there are many external issues acting upon and influences a person.
6.2.1 ASSIMILATION STUDY
Sociologist, Milton Gordon provided identification on different types of assimilation. (Appendix 6(ii)) The assimilation Mr. Desai first experienced was behavioural; he was exposed to English culture which had to be absorbed. Consequently, Cultural Pluralism takes place emanating from different cultures coming together; Mr Desai retains his Hindu culture, while still sharing common national values.
6.3 ETHNIC ENTERPRISE DEVELOPMENT MODEL & RESEARC
Waldinger and Waldinger et al (1988) compiled a model to assess the qualities of different ethnic entrepreneurs to determine their ability to access resources and markets to be successful.
6.3.1 ACCESSING RESOURCES
The generation of sources of finance was derived from the parent companies’ investment. Although informal networks exist for financial assistance, he did not pursue this option. SWE approached financial institutions for assistance; however, this was refused as they required 2 years of accounts to obtain facilities. Some studies carried out by Barrett (1997); Jones et al (1992) and Woodward (1997) believe that it is difficult to secure finance for ethnic businesses.
However, Curran and Blackburn (1993) advocate; “small firms owned by ethnic minority entrepreneurs are no different from white-owned small firms”. (Deakins et al, 2003, p. 92) Although Mr. Desai does not fall into this category it is stated in Carter et al (2000, p. 193) that “the acquisition of bank finance does not appear to be problematic” for Indians. Thus generalizations cannot easily be made.
6.3.2 ACCESSING MARKETS
It is evident that Mr. Desai does not incur different problems to a non-ethnic minority when entering into markets; this is due to his partner and employees being of white origin. The Ethnic Minority Business Initiative (EMBI) has researched that there are constraints that minorities have to overcome to receive the same recognition.
6.3.3 MOTIVATION SWE is set-up in London, where there is a high concentration of Asians and Mr. Desai has never faced problems due to his partnership characteristics. However, if the business was set up where there is a low count of Asians he may be likely to face issues of discrimination.
6.4 IMPLICATIONS Due to the nature of the company and Mr. Desai’s and Mr. Thompson’s differing cultures the models do not apply, therefore, the company will face constraints, barriers and issues like any other company as it has done in the past.
As identified in section 2, there is no clear distinction between an owner-manager and an entrepreneur. In application to the partnership of SWE, the two key ingredients of leadership involve “the need to have a clearly articulated and agreed vision and the need to manage others effectively”. (Chell, 2001, p. 173)
7.1 MANAGEMENT STYLE
At present, there is no recognized management style. (Appendix 7(i)) The stakeholders concerned are in a partnership of equality, bearing different skills and decision-making collaborates. Mr. Desai could be categorized as 1 in the diagram, however, he does not take on this role solely.
Although Mr. Desai is partly classified as 1, he possesses 3 and 6 traits, where his managerial and delegation skills are utilized, complementing Miller and Droge’s theory (1986); “the need for high achievement that drives the entrepreneur may result in the centralization of decision-making”.
Mr. Desai fits Mintzberg’s (1973) interpersonal and decisional category, (Appendix 7(ii)) where formal and informal networks are formed due to the size and maturity. In addition, leadership traits exist; implementing the vision, while now management plays the more dominant role. Therefore, it can be seen that management and leadership overlap. However, Kotter in Chell (2001, p. 188) highlights, “they concern two entirely different systems of action”, they may be two different systems, but, they can be amalgamated to emanate a new one. (Appendix 7(iii))
Management and leadership are combined and there have been no defined designated roles amongst the partners previously. This has so far proved to be effective through a counterbalance of planning, organizing, problem-solving, motivation and envisioning. In the future, a hierarchical system implemented could disrupt organizational culture and put the company into jeopardy if the company remains small. Conversely, if SWE expands operations they will require more employees, the use of a flatter structure is recommended.
8.0 GROWTH Entrepreneurs need to recognize the importance of decision-making; “a critical issue in the growth of emerging ventures”. (Kuratko et al, 2001, p. 79)
8.1 GROWTH OF SWE
SWE has concentrated utilizes external resources; networking, where an established relationship has been formed with UCH, SWE has taken advantage of resource acquisition of intangible and tangible assets. This has aided them in developing their market position, through an informal, centralized, non-specialized management style of decision-making.
8.1.1 GROWTH WISH
Mr. Desai has expressed a desire to grow, however, a number of hurdles need to be overcome to precede expansion, and these are principally profit-related issues. “Businesses who wish to grow have more acute finance problems because of their need for development finance”. Buckland et al (quoted in 1995, Carter et al, 2000, p. 340) Research has shown; only 10% of firms want to grow and of this only 10 % actually do. (Hakim 1989) Issues of macro-environmental are outside SWE’s control, this in turn influences growth.
8.2 GROWTH MODEL
SWE have reached near the end of the growth phase. The inception stage took off well due to the identification of market and financial back-up. This has led to a volume of production reaching across many borders, market share augment of up to 20% and minimal marketing efforts. SWE are in preparation for the expansion phase. The growth has been relatively slow in contrast to the inception stage which was rapid. Stages 3-5 will be reached if barriers are overcome. (Appendix 8(ii))
There are criticisms of such models of growth, namely, Churchill and Lewis (1983) (Appendix 8(iii), Greiner (1972) (Appendix 8(iv)) and Storey (1984) as all firms do not follow the ‘S’-Curve as boundaries between phases are merged and phases are not always in a logical order. Greiner’s and Churchill & Lewis’s models are process-orientated and rigid. For example, SWE has not implemented any strategies or supervision in stage 1 of Churchill & Lewis and the crisis of leadership is not present as Greiner’s model states. Stages 3 and 4 of Churchill & Lewis show a functional and management style, however, this exists during stages 1 and 2 in SWE. Therefore there is no logical progression in the sophistication of the individual factors.
The predictive model approach concentrates on financial variables, predicting failure and success from implications; however, this cannot be relied upon as factors outside the control of SWE cannot be predicted. Although, Storey et al claim a 75% success rate in determining success or failure.
The characteristics model of Storey, postulates “small firm growth is driven by three integral component sets: characteristics of entrepreneur, firm and strategy”. (Deakins et al, 2003, p. 289) This model is complex and there is an uncountable number of factors to consider.
The growth cycle provides a useful basis on which to underpin key issues influencing SWE. As SWE has not reached further than the expansion stage it is difficult to predict what might happen in the future. There is a need for a close eye on internal and external factors that may influence company performance and outcome. Control systems and strategic implementation should be considered.
The wish to grow statistic remarked in the growth section is due to a minority of firms realizing their ability in responding to market conditions and benefiting from these which, derives from operating flexibility. “They promote competition within sectors in which they proliferate” Bolton (quoted in 1971, Stanworth et al, 1991, p. 50) moreover, they “operate at the marginal of structural change, with their entry to and exit from different sectors facilitating economic restructuring”. Binks et al (1990, quoted in Stanworth et al, 1991, p. 50) 9.1 SWE FINANCING (Appendix 9(i & ii)) As mentioned throughout, SWE is financed through the UCH’s investment from initial set-up, thus repayments have been successfully met. Profit generation is their current method of finance.
9.2 PUBLICATIONS APPLICATION IN RELATION TO SWE
As far as publications go, SWE has solid foundations to work from which has been influenced by the companies’ life-cycle, Courier and Despatch sector and desires of Mr. Desai.
A number of studies have shown a link between small firm’s annual reports and accounts, providers of finance, and the difference between small and large firms. From a financial-economic perspective, small firms need to generate profits and large firms have the advantage of the stock market.
SWE was fortunate that UCH had invested with the knowledge of the high risk involved. From the socio-economic standpoint, in this context, it can be argued that SWE could be defined as a medium-sized company as this describes the relationship between the partners and UCH, all being shareholders, while SWE hold independence.
9.2.1 FINANCE GAP
At the inception stage, SWE held a narrow finance gap; (MacMillan Committee) exploitation of opportunities. This ‘hard capital rationing’ has proved somewhat successful; nonetheless, they have experienced fluctuations. The current financing has widened the financing gap, thus relying on profit could be stagnated at any time.
9.2.2 EQUITY GAP
There is a clear problem faced by SWE, this is the equity gap where there is a mismatch of debt and equity, this is evident from repayment periods; debtors: 30days and creditors double this. SWE’s growth could be at risk if the gap persists and could unfavourably affect the economy.
The last year’s financial profits have fluctuated due to repayments to UCH. In a sense it has been beneficial to SWE credit facilities were refused; avoiding high-interest rates, an oversupply of credit and moral hazard. Careful financial planning is a necessity if SWE wishes to be a minority of successors of small businesses. Cost-cutting methods are required to retain profits to obtain facilities from financial institutions, which demand to observe another couple of years of financial accounts. Debt and equity are of concern as are the high overhead costs; reduction could lead to retained profits, in which resource investment could be undertaken.
“The simple premise of marketing is that to be successful, any organization must understand its customer requirements and satisfy them in a manner that gives the organization an edge over its competitors”. (Dibb et al, 2001, p. 1)
This is the case for many larger firms however, marketing is different for small businesses as Gronroos (1994) advocates “the purpose of marketing is to establish, maintain, enhance and commercialize customer relationships so that the objectives of the parties are met. This is done by mutual exchange and fulfilment of promises”. (Stokes, 2002, p. 284)
10.1 SWE MARKETING TECHNIQUES
The techniques used by SWE are cold-calling, word-of-mouth, direct mail, brochures and Internet. Mr. Desai’s simple view of marketing; “It is a very expensive way of getting your view across”. This view is taken by many owner-managers.
10.1.1 REFLECTION ON METHODS
The methods used by most small businesses are interactive marketing, where they have a preference for personal contact with their customers. SWE represents a perfect example where they seek conversational-relationships. For example, word-of-mouth (Appendix 10(i)) is said to increase customers through recommendations, cited as the “number one source of new customers for small firms”, (Stokes, 2002, p. 295) however, it is uncontrollable.
The personal methods of telephone and direct selling are preferred as owners have frequent contact with customers and able to respond to needs quickly and is cost-effective. These active methods do have constraints, for example, SWE has avoided a few by employing a salesperson, thus eliminating training and support, although this could also cost them a fair amount.
10.2 SMALL BUSINESS MARKETING IN RELATION TO SWE
Marketing in small firms consist of the 4 I’s, (Appendix 10(ii)) SWE conforms to the ‘bottom-up’ approach; innovation has been influenced by UCH’s services, thus it can be argued that it is not classified as an innovation; the idea was looming and knowledge of promotion existed.
A considerable amount of information emanates through the UCH network. This allows for ‘surely but slowly’ progression inheriting experience, profits and resources. Disadvantages however prevail, for example, limited customer base, resource constraints, dependency upon management competencies, lack of planning and adventure.
Small businesses are apprehensive about marketing, regarding it as “something that large firms do”. Stokes (1997, quoted in Carter et al, 2000, p. 355) There is also a lack of knowledge of what marketing really is. Research by Kingston University (1997) has indicated that marketing equates to “selling and promotion only” and “product development, pricing and distribution is largely ignored”. (Stokes, 2002, p. 283) This conforms to SWE’s marketing practices as evidence shows.
10.3 IMPLICATIONS As SWE is fairly young, marketing practices have been successful in the past and match the company size and resources. The need for marketing strategies is essential for the future wish to grow and consideration of all 4 P’s is necessary.
In conclusion, the outlook of SWE through critical appraisal has observed several positive and negative factors in relation to theories and research on small businesses. The theories can be criticized as some are out-of-date and do not directly relate to the general Courier and Despatch service sector or in particular to the company, therefore it has been difficult on some occasions to specifically relate.
The performance of SWE has come with fluctuations in certain areas; however, Mr. Desai and Mr. Thompson have overcome hurdles and dealt with arising concerns effectively and efficiently. The active and informal approach has led to the success in simulation with a solid foundation of customer base, UCH network and accession to resources.
There are fundamental problems that could be the underlying causes of limitations or absence of strategic implementation, innovation, Human Resource Management, support and business planning, hence, these issues require attention. The appraised issues of concern are financial, marketing, management and growth in nature.
The principal concern is the financial instability and uncertainty, if these are resolved with patience, time and vigilance, SWE could follow their wish to grow. The macro-environmental factors heavily influence the performance; they cannot be seized and are uncontrollable, though careful planning of internalities could be beneficial in the long-term to an extent.
Under close scrutiny from the succinct analysis and appraisal of SWE, it can be observed it has built something of recognized value. Identification of support elements has had a positive influence upon the company; however, it is still a journey fraught with difficulty, demanding strength as well as courage.
The market, economy, legal system and politics are four important sectors that can have an impact on a company’s performance but there is one particular issue that is prevalent throughout; RISK, this is inherent throughout. “The ordinary rate of profit rises with….risk”. Adam Smith (quoted in Bolton & Thompson, 2000, p. 330) In a discussion of future aspirations and issues of concern, recommendations have been sought to assist the desire to grow.
12.1 ASPIRATIONS Additional resources – computer systems, E-commerce and booking collections Obtaining credit facilities from external sources, e.g. banks, and government Developing sales/doubling present turnover Setting targets Organizational structure Recruitment 12.2 RECOMMENDATIONS 12.2.1 MACRO-ENVIRONMENTAL ISSUES Political, economical, social, technological, environmental and legal will affect SWE at any point; a watchful eye can aid in decision-making.
12.2.2 FINANCIAL Reduction of distribution, administrative expenses. Buying land and buildings could be an option for the future, to increase space size.
Overtrading due to widened financial gap; creditors period require a decrease in days to match debtors period, thus minimizing errors in accounts to present a true and fair view.
Precise financial planning necessary through managing budgets and cash flows to hypothesis future.
Though Mr. Desai is apprehensive about approaching the government for funding, this could be dealt with at a later stage when financial accounts show a stable picture.
12.2.3 MANAGEMENT Need for further development of skills and reflecting them upon current/future employees.
A simple flat organizational structure could be adopted for perceived professionalism.
12.2.4 HUMAN RESOURCE MANAGEMENT Recruiting and selecting suitable candidates, who complement others, bring skills, loyalty, creativity, commitment, reliability and diligence to the company.
Training and group dynamics enhance relationships.
12.2.5 BENCHMARKING Compare and measure the company on different business functions such as financial, management, production and general business excellence factors by employing a business consultant to reveal strengths and weaknesses of SWE.
12.2.6 INNOVATION Developing innovation for a competitive edge, can only be undertaken with sufficient funds and resources at the later stage of expansion to seek market opportunity.
12.2.7 MARKETING Expansion requires awareness of the long-run goals and objectives. This will involve the assessment of market potential and developing the capability to make SWE’s service more competitive.
The growth mission is to indicate how the service should grow through business planning of on-going reviews of progress; life, tactical and strategic and budgeting accordingly for the survival of the business. Any area where a downfall has occurred could put the company image at risk and a phase of rehabilitation may prolong growth.
Continuing the understanding of the present and potential customer needs will allow for a provision of superior customer service. As SWE is an integrated organization accompanied by a good network, they can respond to changing needs and competitors’ activities to exploit opportunities/threats and recognize strengths/weaknesses.
Segmentation of target markets would be advantageous in the future for enhancing their tailored service.
Consideration of the 4P’s.
12.2.8 E-COMMERCE AND TECHNOLOGY
This goes hand-in-hand with innovation. This should not be rushed, as research has shown that many businesses ventures into this area without the competencies and investment that is required; it is known fact e-commerce is overwhelmed. If this technique is used
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