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Business Corporations define objectives that are used to help in reinforcing the position of any business Company; this strengthens their position within the industry and establishes them above existing competitors within the industry. The objectives underline the processes used and the advantages that would improve any Company’s position.
The objectives revolve around the company’s key strengths and opportunities, and at the same time assist in preventing any form of weaknesses as well as protecting the company against threats. However, there is a possibility that a company could create competitive advantage through the implementation of appropriate business models (Camardella, 2003, pp. 103-107).
Any Business entity should utilize the use of the BSC which could act as source of help to the company in the area of human resource management. This makes it possible for the Company to focus on hiring and retaining of customers within the market. It should be the focus of the company to hire best and experienced personnel who are dedicated to production and customer service (Chan & Lynn, 1991, pp. 57-87).
Human Resource Performance
The central problem of CUERO ltd case is the nature of disconnect in power and authority; whereby small group of employees assumed the role of managing various sectors of the Company and maintained control of the staff and policies.
The nature of control of this core group from the two top managers determined the outcome of every production process, in turn; this has brought lots of conflict within the Company’s management team. This kind of dominance led to the production of substandard quality of products and customer related services, of which corrective attempts were made but deemed unsuccessful (Chan & Lynn, 1991, pp. 57-87).
At CUERO Ltd, there exists a non-traditional organizational setting which is clearly indicated in the manner in which the occurrences appeared. Unlike the standard power gram, where power matches authority, both factors are mismatched and positioned at different locations of the diagram. The two brothers did whatever pleases them without any consultations whatsoever. Usually shaped in a reverse triangle with power exerted from top to bottom, the direction of power is instead reversed and exerted from bottom to top.
This is revealed where the Merchandisers are allowed to fix their own prices on the products produced without any concern from the top management. In this case, the organization chart is not clearly instituted and hence according to management team that took over understood the fact that those with the most authority possessed the least power and those with the least authority possessed the most power (Walker, 1998, p. 7).
Additionally, “sloppy” and “corner-cutting” ways were second nature for the management team who never entertained the grievances of their junior employees. This is clearly depicted on Saint’s action by the end of 2003 where some employees were sacked. Employees, who attempted to challenge the Company’s practices, were immediately silenced. This, in turn, led to the high employee turnover and an undercurrent of unrest among the staff.
Aware of the situation, Saint tried to implement several administrative actions but incessantly met some opposition. In spite of his efforts, the core group blamed him through protest letters for non-follow ups and the non-relay of information to the appropriate head of departments. Instead of being viewed as the overseer, Saint emerged as a scapegoat for internal dilemmas especially within the purchasing and marketing department (Aldakhilallah, 2002, pp 39-51).
There is need to build people engagement in CUERO ltd since there seems to be total disconnect between the senior management team and the junior employees. There is a sense of confusion in every segment of the company due to poor management of resources and lack of clear protocol that should be followed.
Creating employee engagement is usually considered critical when it comes to general effective management of employees within the Company and also acts as assurance to business success. The engagement has also strong effects on the financial performance of the business (Green law & John, 1986).
However, the factors that affect and drive employee performance vary widely depending on the segment that an employee is found. True investment in these segments guarantees the Company better competitive advantage. This is since segments provides easier means of implementing Human Resource programs and also allows for development of return on investment.
For more returns to be realized in CUERO Company, the employees should have the ability to engage fully in their work and at the same time perform. Their commitment towards achieving the Company’s goals reinforces their capacity and level to engage with the Company’s businesses. The Company should have a clear target strategized by the management team which would enable them to design clear goals and the key drivers that would help them achieve the designed goals (Camardella, 2003, pp. 103-107).
The Human Resource should most importantly focus on customers. According to the case analysis, CUERO Company had poorly designed customer delivery services which hindered the level of sales within the market. This hence interfered with the financial position of the Company, because of low returns realized.
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Focusing on delivery of superior services to customers, presents one of the key drivers that could help improve employee performance within the Company. These levels of interaction could be improved within CUERO by implementing effective communication links, designing effective ways of compensation and benefits to workers, developing clear customer focus strategies, choosing integral leadership as well as establishing clear and strategic goals (Daley, 1993, pp. 201-214).
In the quest for reorganization at CUERO ltd, a formal audit should be considered. After consulting with experts in business affairs the idea should be given priority in order to settle for the most effective solutions possible. Revision of the Company’s policies should also be given first consideration.
This is since formal auditing may result into some of the harmful implications which might include negative publicity and disastrous results. The management should be at a position of scrutinizing the costs in order to settle for the less expensive analysis methods. Hence, the benefits of bylaws, including clear lines of accountability and long term effects should also help in solidifying the Company’s choices (Landy & Farr, 1983).
Due to some disorganization within the Company’s management and employees it is necessary that instead of using formal audit report to keep the staff accountable to their duties, the process of reorganizing the staff could more importantly help in establishing clear rules on accountability (Deming, 1986). The changes could help create lasting solutions on the problems facing the various departmental management issues.
The reorganization should be centred around some Company’s laid down policies which are to include some directive points some of which might be drafted as follows; Any report from the junior employees should follow the chain of command whereby all employees must not report directly to the board but first pass through the Company’s overall manager, the annual recruitment of employees should be based on academic credentials and their ability to work appropriately.
The work of the board would be to appoint the departmental heads upon the agreement with the management team, Human resource manager whose functions would be different from that of the overall manager would be appointed by the board and then the privileges to be granted to employees will be decided upon by the general executive committee (Beer, 1985, 18-100; Lansbury, 1988, pp. 46-55).
The strength of CUERO ltd is most important since it determines to a greater extent the stability of the Company. Financial stability of any company helps in creating good reputation that could be considered by banks for future loans. The management team should focus on strengths since this is the core that determines the status of each section of the company.
Whether the identified section produces higher sales or lower sales in specific items lies with the strength of the company. The strength can further be determined through the reactions of consumers and to some extent suppliers. The strength encompasses financial management, marketing, management skills as well as production. The handling and processing of money within this department posed a very big challenge, the payment and orders were often overloaded by demand.
This made financial processing to be very much slow since also the supply and purchase department found difficulties in matching demand and supply. There was no evidence of effective supply chain management within the Company. This is since the processes were not carried out by specific qualified staff members; any employee could undertake the purchase and supply processes (Chu et al, 2001, pp 39-58).
Calculations on financial ratios are basically derived from information obtained from the accounting records. The ratios provide the required guidelines of measuring the progress of the business and at the same time alert the management on the problems that might occur within the Company businesses.
The profitability ratios indicate the level of efficiency on how capital is being utilized. Liquidity ratios on the other hand help in indicating the ability of the Company to continue with its normal operations even in the midst of unexpected problems. While growth ratios are best used in the process of tracking down the financial progress of the Company (Graham, & Campbell, 2001, pp 187-243).
The current ratio of the CUERO ltd was obtained through calculations derived from current assets and current liabilities. In normal circumstances the current assets should always be twice the current liabilities. The current ratio in this case is 1:1.6 in 2009 and I: 1.2 in 2010, these shows that the current assets are almost equal to the current liabilities, hence is an indicator that the financial position of the Company is not satisfactory.
The liquidity ratio for the financial year 2009 is 0.68:1 and 0.59:1 in 2010. For satisfactory position of the business within the Company the liquid ratio is suppose to be 1:1, but in the case of CUERO ltd the ratio presents almost half of the Company’s obligations hence unsatisfactory for the stability of the Company in the midst of problems. The liquidity ratio shows that CUERO ltd has lots of difficulties in settling its bills like paying for quality services rendered to the Company (Graham & Campbell, 2001, pp 187-243).
The profitability ratio indicates the ability of CUERO ltd to plough back enough finances necessary to replace the assets and also meet the increasing cases of services rendered to the company. The gross profit margin was 4.9% for 2009 and 4.5% in 2010. Operating profit margin for 2009 was 4% and the same for financial year 2010.
Net profit margin was 3% and 45 for 2009 and 2010 respectively. The return on assets was very low for both financial years meaning that the company is not so much involved in investing on assets. Debt to Equity ratio for the Company indicated the soundness of the financial position of the Company in the long-run.
High debt to equity ratio is a representation of unstable financial position. The ideal ratio should be 2:1, which is an indication that debt is double the amount on owner’s equity. In this case the Debt to Equity ratio for both financial years was 1.2:1 and 1.4:1 respectively. This is a clear indication on the extent to which CUERO ltd depends upon outsiders for financial support (Graham & Campbell, 2001, pp 187-243).
There was poor handling of financial data concerning creditors, and debtors. The situation was that no follow-up was always done to claim any outstanding debt. This created lots of delays in payment by the private sector buyers. There was a lot of cheating and difficulties involved when it came to settling debts the Company owed to creditors. In addition to all these, the company implemented poor costing systems that lead to loss of finances during transactions.
So many items expired within the stores due to poor stock taking processes, this contributed to high production cost since the stores were considered as extension to production processes. Some amount of money, like £150,000 used for other purposes are not accounted for within the financial records, despite the invoices being approved for payment by the management.
The are various advantages of financial ratios, these include; they help in the process of communicating the indicators of the Company’s overall financial position in a more broad way which aid in easy understanding compared to data provided only within the financial statement. The ratios also help in indicating the influence of various variables on the business premise. They further help in determination of the various financial aspects within the Company (Keown et al, 1998).
The disadvantages of the financial ratios include aspects such as distortion of comparison used within the market through leading to over-dependence on book value instead of market value. The ratios also involve comparative aspects which are at times punctuated with bias based on statistics analysis. This may be due to inaccurate selection of sample size analyzed. The other disadvantage is that the tracking of the financial ratios over a period of time prove very costly due to changing norms and regulations within the financial field.
The ratios are also not easy to be applied in the process of public sector auditing and could at times mislead if analysed out of the accepted accounting principles. The financial ratios also tend not to pay much attention on some important factors that could be used to compare business entities (Keown et al, 1998).
Supply chain management in any Company is considered very strategic since it helps in overcoming some of the challenges organizations face within the market. Purchasing and supply management are responsible for variety of activities which ultimately have great impacts on overall financial performance.
CUERO ltd considers purchasing as more administrative than strategic. The purchasing department is more so concerned with the general management of the materials without paying attention to pricing and buyer-supplier relationship. The availability of critical materials at affordable costs within CUERO ltd requires excellent management of risks that may be brought by global supply and associated uncertainties involved (Monzcka, Carter, and Hoagland, 1979).
The role undertaken by the purchasing supply management should mostly focus on quality of products and the role of suppliers. There’s need for existence of cooperation between buyers and the suppliers to avoid bias and unnecessary confrontation. Management of purchasing and supplies provide avenues for the successful implementation and development of key suppliers with the ability to support the long-term strategies of CUERO ltd.
Purchasing and supply performance has got the ability to influence profitability of the Company when implemented at the initial stages of product manufacture. The company should incorporate the use of value chain mapping which would enable identification of opportunities existing within their supply chain (Monzcka, Carter, and Hoagland, 1979).
The supply performance strategy is faced with constraint in products supply which affects the demand through interference with the pricing of goods within the Company. There is lack of resources which slacken the rate of supplies due to difficulty in the production processes. The supply and purchase performance strategies lack enough support from the commercial conditions which justifies large and long-term investments.
The consumers perpetual demand for quality products posses a big challenge to the company since it requires putting together complex chains that are costly. This should be done to ensure that customers in competitive markets are supplied adequately with quality goods and services at affordable prices. The Company needs to work out on their business models through appropriate segmentation to enable them work comfortably with the changing market economy.
Professional training of the employees on purchasing and supplies management strategies needs to be done. The firm at the same time needs to diversify its sales in order to catch up with the consumers changing trends on tastes on products’ quality (Van-Weele, 2005). Measurement of purchasing performance within CUERO ltd is a very big issue.
There is need for the purchasing department to be more alert and have the ability to account for every transaction within the department. The level of purchasing and supply used at CUERO ltd are not at all linked to business strategies of the Company.
This company should pay much attention on the contribution of supply and purchasing performance measurement systems. CUERO ltd should exploit the opportunity of using available tools in measuring general performance and at the same time use the same tools in transacting purchases.
This is since purchasing performance measurement is has got direct links to other departments and this can affect general performance of the business when not considered (Monczka et al., 2005). Performance measurement tools used in various departments of the Company are sub-standard (Monczka et al., 1979).
Generally, purchasing performance within CUERO ltd should be addressed based on the overall contribution of purchasing towards the financial and production goals of the Company. Purchasing performance should contribute largely towards the general supply of quality goods and services in accordance to the consumers’ tastes.
Production of quality goods at affordable prices should be given priority by the purchasing and supply departments. The flow of goods should follow the recommended channels till it reaches the final consumer. This would be to the benefit of all stakeholders involved within the company (Monczka et al., 2005).
The major performance areas for purchasing within CUERO ltd should be focused on inbound delivery performance, quality of produced goods, total cost of expenses involved in the process of purchasing raw materials and overall cost of production. Performance management within purchasing should be handled with much attention.
CUERO ltd should own the responsibility of recognizing individual and co-operate contributions from the purchasing department. There is lack of use of modern performance measurement methods within the purchasing department (Monczka et al., 2005). In the case of this Company the purchasing manager could not easily define performance measurements on all levels since the process was open to any staff member, hence found it difficult to cover the total purchasing function (Van -Weele, 1984).
The total supply of goods to the business is not accounted for within the performance management strategies. Development of purchasing performance measurement should include some important aspects which might include first of all the definition of the purposes of purchasing performance management systems.
The purchasing performances should encompass all the opportunities that help in adapting the Company with the conditions of the suppliers for the reasons of gauging CUERO’s ltd business performance measurement. The performance of purchasing and supply departments should be attributed to the Company’s business strategies (Trent and Monczka, 1998, pp 2-11).
The Company should further consider incorporating innovation- related measures to enhance differentiation and efficient costing of goods. The purchasing personnel should be involved in the processes of developing performance indicators after which the purchasing department should be able to link performance indicators to each employee within the department.
Review of the supply and purchases made should be done quite often in order to ensure that all the operations are in line with any dynamic change within the market place. This should provide some assistance to the purchasing manager who could develop purchasing performance measurement systems that are well in operation with the rest of the Organization’s strategies.
The purchasing department should at the same time device strategies with the abilities to withstand measuring short-term and long-term performances (Trent and Monczka, 1998, pp 2-11). However, much emphasis should be focused on how to supply consumers with appropriate products that could satisfy their needs, they should also focus on consumer needs, tastes, opportunities and preferences.
Market growth requires the company to develop its existing strategies by adding more experienced and educated workers who are dedicated to the business entities that require manufacturing. There was the case where the merchandisers were the only ones left to enforce the selling prices, this allows for the existence of bias since they could twist everything to serve their self interests. The object of being innovative was left in the hands of merchandisers instead of the senior manager and his team.
This restriction is what led to the selling of old traditional brands despite the tremendous change in the consumer desire and demand for modern product designs. The lacked good procedures through which they could market their products and even performing sales promotion since their products were obsolete (Blattberg and Golanty, 1978, pp 192-202).
Planning of the marketing strategy for CUERO ltd should be aimed at improving organization performance, maximization of the profits and building of the market share.
The management should establish implementation process to include the processes of allocating resources for the purposes of winning customers and satisfying their needs. While planning, strategies helps only in identifying the desires, implementation involves convincing the market that the desires of the company are good, of quality and beneficial to consumers (Magretta, 2002, pp 86-92).
The marketing strategies implemented should be tested by use of selected measures in order to establish their effectiveness. Every activity within the company depends on the already set goals. The controls should to some extent enable establishment of company’s progress and proper implementations of right plans. The knowledge about current customers should be used by CUERO ltd to reveal preferences and buying patterns of the consumers.
These details should enable the marketing department to easily reach the desired customer with the right products. This facilitates close relationship enabling easy satisfaction of customer needs. The issue of differentiating consumers enables the marketing department to establish the purchasing power of the customers and should make it possible for the department to identify customers by their needs.
Selection of the best customers enables effective communication and reinforces the relationship between marketers and the customers. Then finally there is the issue of improving on the quality of goods in accordance with consumer preferences (Doole & Lowe, 2008).
The formation of strategic partnerships should have been the best option for CUERO ltd instead of one partner selling fifty percent of the Company’s shares without the knowledge of the management. According to the World Bank reports, partnerships are important at various levels in the global campaign for Company’s financial security reasons.
This requires Company’s to form partnerships and operate under strategic plans. CUERO ltd should also recognize the importance of a security action plan and the need for partnerships to increase security for entire consumers within the market (Magretta, 2002, pp 86-92).
CUERO ltd needs to keenly pay much attention to the value customers attach to their goods. The customer perspective pays much attention on the utilization of the given resources that the Company owns.
The business model construct for the company should express some opportunities that could better utilize the translating of the resources into goods that customers admire and at the same time willing to purchase. The Company’s resources could be utilized to create process advantages, which lead to performance benefits which ultimately make the firm to enjoy superior efficiency or effectiveness on the key variables that influence its outcome profits (Doole & Lowe, 2008).).
The use of customer charters would help in reinforcing CUERO’s Ltd commitment to excellent services. This will enable the company to clearly outline the benefits it offers to customers including compensation benefits in case of failure in the process of delivering goods. This could be used by CUERO ltd to forestall legal requirements against any failed delivery.
The need for applying the marketing needs internally results first of all in the satisfaction of internal customers which ultimately acts as a boost towards external customer satisfaction. This measure clearly defines the role of customers in the market environment (Magretta, 2002, pp 86-92).
The company views customer in the mechanistic perspective where they focus on collective rather than individual customers. The services that CUERO ltd offers to customers should have the credibility of adding value to the Company. The company basically lacks statutory foundation that would enable building of foundation supporting customer service practices.
The ideas of involving proactive approach especially in thoroughly scrutinizing the quality of products before dispatch could help is sustaining large market segment in the long run whereby the employees focuses all their efforts in delivering better services to customers (Magretta, 2002, pp 86-92).
The customers’ focuses on opportunities this is since any changes made within the Company opens up other possible avenues for satisfaction. When CUERO ltd proved not to deliver to the expected standards, the customers automatically shifts their focus to other companies delivering quality products and services.
The same case of opportunities would be utilized by the suppliers. The suppliers can shift at will depending on the level of loyalty existing between them and the company they are supplying materials to. The business environment is never restrictive on the sides of the suppliers (Doole & Lowe, 2008).
The customers will continue buying from CUERO ltd as long as they continue showing concern to their needs, delivering their orders appropriately and listening to their service requests. The company should ensure that it goes beyond, even to satisfying the customer’s unstated needs and offering them goods at fair prices.
CUERO ltd should utilize the use of advertisement and sales promotion activities since through these methods; they are able to establish consumer’s core needs. This helps them to focus on the right kind of products that the company should offer for sale to consumers. These methods help in creating friendly atmosphere between marketing department and customers hence making them comfortable to transact any kind of business.
Some crucial steps should be undertaken for the realisation of success in marketing CUERO’s ltd products these include; the making of short-term measures for the purpose of checking marketing efforts, knowledge about current customers being dealt with, knowing how to differentiate the customers, selecting the best customers and finally giving offers to best customers (Chandon et al, 2000, pp 65-81).
Each company focused on the quality, cost, performance and the issues on the prices at which their goods and services are offered to customers. The companies also focused on the level of supply of their goods to consumers at different locations. These companies analyze customers in relation to their potential and pay much attention to the processes through which products and services are administered to the specific customer groups.
The company’s effort to evaluate the performance from the customer point of view contributed largely to the performance of the company. The processes through which they developed products are defined by quality measures, cost of production and time which contribute a lot towards customer satisfaction. The improved performance of any Company could be attributed to improved image of the company which is geared towards the expansion of customer base.
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Appendix: Financial Ratios Calculations
|Current Ratio |
= current Assets/ current liabilities
|= 19250/16500 |
|Liquidity Ratio |
= Liquid Assets/current liabilities
|= 11250/16500 |
|= 11361/19100 |
|Gross profit margin (%) = (gross income/ sales)×100%||= (20500/41,500)×100% |
|Operating profit margin= (operating income/sales)×100%||=(1859/41500)×100% |
|Net profit margin = (Net income/sales)×100%||= (1265/41,500)×100% |
|= (1823/40879)×100% |
|Return on Assets%||= (1265/21750)×100% |
|= (1823/40879)×100% |
|Debt to Equity ratio |
|=( 25,000/21750) |