Clemency Prior LTD Management Issues Report

Outline

The changes in business management strategies call for changes in business operations. Many businesses are facing constant challenges ranging from internal operations to external factors. They have to keep up with challenges like poor market positions, unreliable consumer dynamics, stiff competition, complex human resource issues, production technology and costs (Baker, 2008, p.3). This paper therefore outlines the challenges faced by Prior LTD that they currently face and offers some of the basic tenets of management and marketing strategies that they can use to realize the desired growth and competitive advantage.

Introduction

Today’s business environment has gone through significant transformational changes, with many businesses facing constant challenges ranging from internal operations to external factors. The businesses have to keep up with the constantly changing market positions, consumer dynamics, competition, employee managements, production technology and costs, and lately the fluctuating global economy (Baker, 2008, p.3). Every business therefore struggles to position itself with overall business management strategies that will ensure a consistent production and service delivery to keep up with or outsell the competitors (p.4).

Clemency Prior is one such business, struggling with the dynamic challenges of business despite establishing its market niche for the luxury ice cream the business produces. With the brand positioned in the luxurious segment of the market, it could do more in the management issues, considering both internal and external factors in production and service provision. From the story, it is easy to notice how clemency is struggling with issues such as cash flow policy, marketing issues, growth strategies, human resource management, quality management issues, competition, and credit policy.

Marketing issues

Despite achieving a turnover of £250,000 and net profits of £20,000, Clemency Prior has no marketing strategy; a fact justified by Susie the marketing manager, who said “sales have just grown”. The company has realized a decline in sales growth rate in the past year due to price cut on special offers aimed at increasing sales to the retailers. With such a trend, Clemency Prior needs to launch a marketing strategy that would save them from the current unplanned market approach that is likely to run the company down.

Baker (2008, p.5) defines a marketing strategy as “a written plan combining product development, promotion, distribution, as well as pricing”, and can identify the marketing goals of the firm, and outline a clear procedure of attaining the specified goals within a stated time frame. A well documented marketing strategy will define Prior LTD’s target market (socio economic groups AB) and their preference, marketing matrix and positioning, and most importantly establish criteria for resource allocation. It will define how this company will engage customers, its prospects, as well as the competitors in the same line of business. Pepper (2004, p.13) states that it is the customer who constitutes the source of the company’s revenue, since marketing strategy and sales are closely linked.

Prior LTD is basically one consumer-centric kind of business. It is therefore important for the company to adopt the theory of running their business focusing on the consumer. Presently, the company seems to be concentrating on the retailer’s needs. Unfortunately, these retailers may not reflect the price cut strategy by the company to the consumer, thereby not making any significant sales increase on the company’s products. One would not deny that Clement Prior has excelled on, albeit intrinsically, differentiation and focus strategies of unique products and market niche identification respectively. According to Kaynak (2008, p.26), the latter “usually generate higher profit margins due to minimal competition and less operation costs”. However, the challenge comes in this pricing strategy by Clemency Prior. The question is; did Clemency prior intend to penetrate and control the market? Or was their desire to have quick cash? It is sensible to state that the company applied a skimming strategy to price its products. This strategy is meant to amass quick cash as opposed to market penetration strategy (Callebaut, J., et al. 1994, p.79).

Operations

The company’s operation is not up to standard. It is stated that some retailers have complained in the past, and at worse, there has been significant increase on returned orders, resulting from poor packaging, labeling and sending wrong orders to the wrong destination. The channels of distribution are limited, with Clemency shunning the big retail chains, and instead give preference to small retailers, who may have limited access to the target market when the business expands. The operations manager also applies a cautious approach to stock management, holding stock in preparation of unforeseen circumstances like change in weather. Pfeffer, (1998, p.91) states that “common introduction problems like failure to adhere to industry standards, unavailability of materials, poor quality control, regulatory problems, and the inability to explain the benefits simple failures” are caused by lack of clear focus in operations, and they are more costly that poor sales strategy.

As Michael J. Brooks puts it, “many companies appear to run smoothly under the status quo, so they may not think of improvements. Minor product inconsistencies or customer complaints are normal, and the owners may think that overhauling the entire system to save a little money might not be worth it” (Manage, 2009, web). However, such simple improvements like quality improvements can save thousands of dollars (Laermer & Simmons, 2007, p. 89). The company should assess its distribution channels that would allow it reach the entire target market. The operation team should be committed to product development and improvement, to reinforce long term strategy of penetrating the market.

Human Resource

The last two decades has witnessed an increased interest in human resource management practices all over the globe (Story, 1996, p.330). These developments have witnessed the division of human resource policies. “Best fit” advocates for specific criteria for managing human resource that will fit in a specific organization’s internal and external environment, while “best practice” advocates for a set of best human resource practices that can be applied universally to improve businesses (Redman & Wilkinson, 2006, p.10). In fact, the importance of human resource issues is summarized bay Wall & Wood’s diagram below (2003, p. 45).

However, it is visible how Prior LTD’s human resource structure is unclear and unprofessional. Many of their management staff is either drawn from relatives or long term family friends, and at worse, lack prior trainings in areas they head. I would recommend Prior LTD to implement a proper human resource structure to keep up with the industry standard.

Structure and Culture of Business

According to Brooks & Weartherston, culture refers to “the collective values, beliefs, attitudes, assumptions, and behaviors of a group”. An organizational culture is a very important aspect in any business (Edwards $ Wright, 2001, p.612). Prior LTD has a culture of mutual working relationship, emphasizing the informal structure of managements, with no apparent control of quality, financial systems and reward criteria. Handy structure could be used to help Clemency in applying power culture, where the whole organization relies solely on her decisions, no formal communication and trust (Wall & wood, 2005, p.411). Clemency should instead resort to either role culture or task culture (with a balancing act), once a competent team is established, to ensure proper delegation of duties and professionalism.

The Financial Issues in an Organization

A company’s cash flow system in the core of business success. Prior LTD’s cash flow policy is not defined, with Clemency relying on her intrinsic personal experience to manage the business. Paying the suppliers earlier that she receives payments from her debtors is not a proper way of managing cash flow. Pepper (2004, p. 24) states that “a clear and accurate recording of all cash received and disbursed will help an organization balance its daily cash flow”. Prior LTD also needs to critically monitor its credit policy. According to its data, the 100 debtor days and 30 credit days is not balancing. A clear credit policy will help the organization manage the gap that exists, in a professional manner.

The importance of cash flow for any small and medium businesses should be steady, and consistent. Customers paying for goods and services, and the company paying for the outsourced services and raw material should balance for Prior LTD. It is therefore important if the company establishes a clear policy and procedure to manage the cash flow matrix with the organization and its trading partners. Sloppy approaches to cash management like the one applied at Prior LTD presently may lead to financial crisis and reputation destruction in the long term.

Pepper (2004, p.26) observes that “not only do proper cash policies and useful cash procedures send a clear signal to auditors; it also creates the required operating environment for employees”. With diligence and transparency, regular management activity (including creating and updating cash policy and procedures), it will sets a tone that professionalism is the standard in Prior LTD hence identifying mistakes that are quickly caught and corrected (p.27).

Conclusion

The balance of management in Prior LTD calls for a strategic management that would help the firm’s growth strategies. The “power balance” between the firm, the customers, and the outside teams composed of partners and suppliers is what will enforce the changes proposed above. This is because it will help the management team monitor their long term objectives and assess the growth rate and plans.

Prior LTD should observe and monitor the constantly changing market positions, consumer dynamics, competition, employee managements, production technology and costs, and the fluctuating global economy (Baker, 2008, p.3) to enable sustainable growth. It should observe the basic concepts of best management practices to look into the overall business management concepts for best results, considering both short and long term goals.

References

1. Baker, M, 2008. “The Strategic Marketing Plan Audit”, ISBN 1902433998, p.3
2. Armstrong, M., 1987, “Human resource management: a case of the emperor’s new clothes?” Personnel Management, Vol.19, No 8, pp30-35
3. Pfeffer, J.1998, “The Human Equation: Building profits by putting People First”. Boston: Harvard Business School Press. Pp.64-98
4. Redman, T and Wilkinson, A. 2006, “Contemporary Human Resource Management: Text and Cases”. Second Edition. Essex: Pearson Education Limited. p10
5. Story, J. 1996. “Blackwell Cases in Human Resource and Change Management”, Oxford: Blackwell Publishers. p. 330
6. Wall & wood, 2005, “The romance of HRM and business performance, and the case for big science”, Human Relations, Vol 58(4), 2005, pp. 429-462
7. Manage,2009.Four Strategic Types (Raymond Miles and Charles Snow)
8. Laermer, R. & Simmons, M, 2007, “Punk Marketing”, New York: Harper Collins, ISBN 978-0-06
9. Edwards P., Wright M. 2001, “High-involvement work systems and performance outcomes: the strength of variable, contingent and context-bound relationships”, Human Resource Management 12: 2001
10. Callebaut, J., et al. 1994, “The naked consumer”. Antwerp, Belgium: Censydiam Institute
11. Pepper, T. (2004,), “Building a bigger star” Newsweek, Issue 52. Pages 12-27
12. Kaynak E. 2008. “Strategic global marketing- issues and trends”, New York, Sage Publishers