Informal Report on XXX Ltd.
Three studies of the business have been included.
The investigation starts with a SWOT analysis (appendix 1). This examines both internal and external factors affecting the business.
From the findings in the SWOT, a STEEP analysis was drawn up. In the STEEP a list of ‘issues’ is included. In addition, how external factors are affecting the business is detailed.
Following the STEEP is a stakeholder analysis. This explains how and why stakeholders in the external environment are relevant.
Recommendations on how to address issues raised, with some possible solutions, are in the final section.
STEEP Analysis: With Detail about External Factors.
- Patterns of purchasing: Competition from Supermarkets and people are buying online. (Preston 2006)
- Patterns of work
- Business Culture
- Age: Owners and staff are getting older
- New Greenhouses
- ICT systems
- E-commerce (Preston 2006)
- Cheaper deliveries: Loss of quality is loss of reputation.
- New Greenhouses: Costs of purchase and running under external control.
- The small steady profit that used to be coming in is now a loss.
- Advertising: External factors of this are cost and effect. Success of campaigns will affect demand.
- Wage increases: Government and Union will force these through.
- National Minimum wage
Stakeholders are people or groups with a legitimate interest in the business. There are two types of stakeholder we look at here, internal and external. Internal stakeholder have strong connections to and in the business. These will include employees, owners and managers. External stakeholder may also have strong links to the business and be affected by the activities of the business. These include customers, suppliers and in some circumstances competitors.
I was told “… Tom joined the rival XYX Ltd.” and “Tom knew his customers well”. Tom was an internal stakeholder but is now an external stakeholder. Customers, who are also important external stakeholders, defected with him.
XXX Ltd.’s competitors XYX Ltd, may have acquired customers by continuing lines no longer stocked.
A drop in quality of delivery “… cheaper, but not quite so careful …” is an issue. Although an external stakeholder it can be noted that the quality of service of one small part of the business can have a large effect on other parts and other stakeholders. The delivery company is a point of contact for this business and its customers. The delivery company’s standards will be effecting XXX ltd.’s reputation.
Without customers you do not have a business. The “… expensive advertising campaign …” is another external issue. The cost and effect have to be addressed.
Inference was made to external financiers. “… large investment required …” for the new greenhouses and “… small steady profit year by year …”. These may be considered external stakeholders unless the funding has taking the shape of part ownership or they have become shareholders.
Finance should be looked for long-term survival. “… moved into loss …” “… present position could not be sustained …”
- Investigate if the greenhouses can produce required specialised products to re-establish former customer’s loyalty. This will lead to more income.
- Re-hiring Tom could be advantageous. Customers may follow.
- Quality of delivery must be improved to re-establish your reputation for quality.
- Analyse advertising campaign results. Cut this to a trickle campaign now that the ‘new brand’ of XXX Ltd has been launched.
- Investment in e-commerce should be considered in the long term. “… opens up great global opportunities …” (Preston 2006)
- The ‘formal structure’ (Preston 2006) should not be ignored. Inform staff why they are doing their jobs this ‘new’ way. Train them as required. “… to participate in its activities the structure must be explicit,…” (Preston 2006)
Appendix 1 SWOT
- Personal service
- Relationships with customers by trusted staff
- Specialised work force
- High staff moral
- Specialised products available to meet specific needs.
- George was the business
- Not much diversification
- Part time staff
- Employees not consulted about changes
- No formal structure
- Potential to expand using ITC e-commerce
- Update to greenhouses lead to larger production capacity.
- Quality of haulage dropped thus company reputation
- Competitors: National Nurseries, Speciality Plants, Supermarkets
- Implementation of National Minimum wage.
- New general manager didn’t ‘know’ the business
- No relationships with advertising mediums
Preston D. et al (2006) B120 An Introduction to Business Studies, book 1, What is a Business? Milton Keynes, Open University, [p16 The STEEP model], [p17 Example 2.1], [p79 Analysing stakeholders], [p17 Technological factors], [Freeman, 1972-3, pp. 152-3], [p. 35 Formal and informal structures]
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