It is quite evident that from the reasons behind the formation of the Wallia sports company as well as the professional qualifications possessed by its founders, the company seemed to have good future prospects. The founders had done thorough marketing survey and analysis and discovered that the products they were about to unveil could do well in the market and give the company the anticipated cash flow.
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They were in fact in full compliance with marketing strategies that required marketing research of any pilot product which was about to be introduced into the market to test its viability (Klofsten 2002,p.32). Secondly, the pioneers had a wealth of skills and experience in starting up of companies and management of the same.
The managers were people with excellent credentials and professional qualifications. They had all that was required to prosper the company and make it a success. The investors and other stakeholders had confidence and their willingness to inject their funds in the company clearly showed that they had hopes in the company. The company had the ability to expand, grow, expand tremendously, and meet the investors’ confidence.
Business Platform Framework
In order to justify the company’s current financial situation, an analysis tool referred to as Business Platform was applied. This would clearly tell to what extend a company was vulnerable to being insolvent or liquid. The financial strength of a business could be ascertained using this analysis tool at any stage and establish the chances of survival for such a company (Klofsten 2002, p. 32).
The financial stability of Wallia Sports Company would determine whether the company would be able to meet both present and future financial obligations and also the chances of its survival in the industry.
How a Business Platform can be Achieved in Wallia Sports Company
For any business entity to attain a business platform, there are crucial key elements necessary for that business to operate. The resources flow ought to be secured. One of these key elements is the market. There must be huge and reliable market where the company is planning to sell its product before developing it. The market developers would need to study general commercial potential and then report their findings to the management of the company.
Wallia Company in its initial stages of establishment collaborated with other stakeholders and marketing was carried out from all perspectives. The market analysis was done long before the company was founded. However, despite their good start the company had recorded poor sales results in the past three years an indicator that something was not going well. There has always been a link between the sales of a company and the market. How good the market is would determine the amount of sales to be realized out of sale of a product.
The second crucial element is the product being offered. The product in question in this case is digital tachometer and stepometer. These are gym equipments and the company should be ready to meet the demand for the two products. The quality of these equipments should also be remarkable to make them appealing and increase the sales of the company. This would boost the company’s image and reputation and make it popular to the different gym and sports companies.
Customers and external relations is another key element that should not be neglected. There should exist a good relationship between the customers and the company. This would enhance the communication between the two and customers would get an opportunity to express their views concerning the product being offered. The company management would on the other hand be able to adjust their products to meet the customer satisfaction.
External relations to other stakeholders would also be important for instance financial institutions as the company can obtain financial reinforcements when in financial difficulties. Like in the case of Wallia Company, it had been portrayed through the interest created by various investors who injected their money in to the company showing that they had confidence in the company. Finally, the company needs to have appropriately skilled and organized staff to manage the resources of the company.
This is a crucial ingredient in the management of a company since no matter how much resources are owned by a company, without the proper management, it is meaningless (Greiner 1972, p.85). The staff should be qualified with relevant skills and professionalism should be the guiding principle in hiring of new staff. In the event that key staff exit the company or the market disappears,the platform could be easily undermined.
Storey’s 4ms (Management, Market, Money and motivation)
Managers do rely on Storey’s 4ms to aid in the management of their company’s affairs. All business entities revolve around the four elements above to achieve their firm’s goals and objectives. The managerial structure of all organizations revolves around the four elements (Scott & Bruce 1982, p. 56). The first aspect, management is the overriding element. It simply means getting things done in a systematic and right way.
There is no company that can make any substantial progress if its management is not well coordinated.All the employees of an organization would need to observe proper delegation of duties, specialization and total commitment. The management of Wallia Sports Company seems to meet all these criteria and if this was the only determinant of the company’s futuregrowth, then it would happen definitely.
Market is another feature to consider. The nature of the market should be taken into consideration. We might have a market whereby customers are scattered over wide area and in such a case, an appropriate means of transport would be required to distribute the products. In addition, the number of competitors and the degree of substitutability of the product on sale should be taken into consideration.
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There is an issue of money management. Money aids in acquiring the inventory to put up a business, pays the bills and is used to acquire other required resources for the expansion of business. Proper financial management is called for to maintain financial stability in an organization. The management of a company would need to make various financial decisions, for instance it might decide to sell its stocks. Finally, there is motivation.
Some people do not take motivation as a major factor in management. It is always important for the management of the company to appreciate the efforts of its employees through rewarding them and promoting them when they deserve it. The future of Wallia Sports Company could be compromised because its market does not look prospective and no motivation had been witnessed on the part of employees anywhere.
Eight cornerstones of the business platform
All the eight cornerstones have been covered in the above discussion. Four of them are related to the company’s development and include idea, product, market and organizational development. Product refers to the commodities that are flooded to the market for the consumers to buy.
The other two cornerstones which are: Core group expertise and prime mover and commitment, are related to the founders and CEO of the company. “Core group expertise is the variety of technical expertise required to start and run a business. The remaining two cornerstones are related to external supply of resources and include customer and other firm relations” (Klofsten 2002, p.32). Company’s failure to sufficiently develop one of these cornerstones would imply the entire platform is undermined.
How Business Platform is applicable to a Business Enterprise
According to Klofsten (2002, p.32), if a business does not attain a platform within the first three years, it will not succeed. Some businesses cannot develop cornerstones during this duration. Failure to develop them during this time means they would never be developed and such a company would face severe repercussions.
In the event that they are developed, such a company would continue to grow and progress and there would be no possibility of it shutting down or going bankrupt. Despite the fact that Wallia Sports Company was unable to realize high profits in the first three years coupled with low sales volume, it has been able to develop all the other cornerstones thereby giving some hopes to its investors.
Stages of Growth
Small enterprises normally undergo various stages through their development processes. This is a business evolution through which every business entity must go through (Mueller 1972, p.94)
- Start-up: The firms in this stage have simple organizational structures. There is no decentralization and the firms are highly centralized with informal set up. The company’s focal point is product development and they are driven by profit motive. The mean sales revenue growth is approximately 91 percent per annum and the mean employment growth is about 29 percent per annum.
- Expansion: Firms in this stage are slightly older and bigger enterprises. Their organizational structures are more complex. There is very little decentralization if any and the firms are still centralized. The firms begin to adopt functional specialization and the firm’s focal point is no longer product development but product commercialization. The mean sales revenue growth is much higher than that during the start-up stage and is estimated to be about 297 percent per annum. The mean employment growth is about 94 percent per annum.
- Maturity: The organizational structures of firms during this stage are more complex. Enterprises are relatively larger and centralization is going down while formalization going higher. Mean sales revenue growth is about 99 percent per annum and the mean employment growth is 28 percent per annum.
- Diversification: The firms are medium-sized and they begin to have specialized structures. There is minimal centralization and formality is very high. Mean sales revenue growth is about 37 percent per annum while mean employment growth is 57 percent per annum.
These are ways of formulating decisions and delegating them to subordinates. There are different management styles that include (Scott & Bruce 1982, p.72):
- Autocratic: Under this style, the manager makes decisions unilaterally. Decisions will only reflect the views of the manager.
- Paternalistic: Decisions take into consideration the best interests of the workers. Communication is from the top to bottom and feedback to the management is advisable to boost the morale of the staff.
- Democratic: All the employees participate in decision-making. The communication is extensive in both directions and the majority agrees upon everything.
- Laissez-faire: This style of leadership is characterized by horizontal communication. There is also uncoordinated delegation of duties amongst the employees of an organization.
Product Life Cycle
Churchill & Lewis (1983, p.42) point out that there are various stages through which a product passes from the initial introduction in the market until it exits from the market. It is an analysis of the life of the product in the market with regard to commercial costs and sales measures. These stages are four;
- Market introduction stage: In this stage, costs are extremely high, there is very minimal or no competition and there are slow sales volume.
- Growth stage: There is significant increase in sales volume.There is also rising profitability and reduction in overall costs due to economies of scale (Dodge & Robbins 1992, p.54).
- Maturity: The overall costs are low. The number of market competitors has gone higher and industrial profits come down.
- Saturation and decline stage: Costs become counter-optimal. The profitability of the company diminishes and there is total stabilization of the sales volume.
The entire analysis of the case study with regard to Wallia Sports Company reflects the company’s position and its growth prospects. (Klofsten 2002,p.32) in his book “Business Platform” puts it clear that any business enterprise that is unable to sufficiently develop all the Business Platform cornerstones leaves its future in a compromising situation.
The company had been unable to adhere to all the cornerstones, for instance after three years the company was only able to employ only four employees and at the same time the company’ turnover was very low with comparison to the total capital injected into the company. The other reason as to why this company might not grow in future is low-recorded sales volume over the past years. This could affect the company revenues to a large extend and drive it to bankruptcy level.
List of References
Klofsten, M 2009, Entrepreneurship and the PhD: A Case study of a doctoral mobility program, Paper for the Triple Helix Conference, Glasgow, Scotland.
Dodge, R & Robbins, J 1992, Stage of the organizational life cycle and competition as mediators of problem perception for small businesses, Strategic Management Journal, vol.15, no.2 , pp.121-134
Churchill, G & Lewis, V 1983, The five stages of small business growth, Harvard Business Review, vol.61, no.1,pp. 1-8.
Greiner, L 1972, Evolution and revolution as organizations grow, Harvard Business Review, vol.50, no.4, pp.37-46.
Mueller, PC 1972, A life cycle theory of the firm, Journal of industrial Economics xx, vol.2, no.1, pp. 199-219.
Scott, WG &Bruce, 1972, Stages of Corporate Development-Part 1: Case No. 9-371-294, Harvard Business Review, vol.49, no.4, pp.37-46.