Introduction
HCHE has been known to serve its customers with the various products used by them in their houses for serving the electrical purposes. These products could be anything, but related to solve the domestic electrical needs of the customers. The company HCHE came into existence in the year 1959. HCHE is also known as the High Class Home Electrical Company.
History and Gradual growth of the company
Harry Haroldson was the founder of the company HCHE and since its inception; the company had aimed at fulfilling the consumers need in context with the electrical products. Harry started the company in order to create a buzz in the market and capitalize customers who wish to buy electrical good as their major house hold item. From the beginning of HCHE’s establishment till 1962, all the pressure of the firm was on Harry’s shoulder partially shared by her wife (Sally). At that time Harry was engaged in buying, selling and delivering the products to the customer’s end and his wife use to help him with keeping a record of the invoices.
HCHE continued to grow with the each passing day. By the year 1981 that is after 22 years of company’s inception Harry registered the company as HCHE Ltd. Harry’s offspring Fred and Bill (sons) and Ethel (daughter) had also joined the family business and they together enlarged the branches of the organization. More and more workers were hired to work in the office building in order to increase the profit rates of the business for HCHE Ltd.
Retirement of the founders
After Harry and Sally Haroldson retired in the year 1985, Fred had to take the entire responsibilities of the running the organization. This is due to the fact that Bill was not much interested in business and Ethel got married and settled down. It was almost impossible for Fred to take care of the company all alone. So he decided to hire supervisors who can lend him a hand in handling the work pressure. Yet Fred had to sub divide the work most importantly for the goods delivery section. He had HCHE’s own transportation services that distributed goods and products from the manufacturer’s end to the local customer’s door step and for longer distance customers, he use to rent national distribution services. The company continued to prosper more and more.
Recreation of then the company
It will not be wrong to say that by this time the company had a rebirth and within a year’s time HCHE became HCHE plc and Fred as a part new Board of Directors along with Charles Marks as the new Chair Person. Both of them with determine and firm about the strict rules and regulations that were to be followed in the organization by both the new joiners and the old joiners of HCHE plc. Both Fred and Charles have decided to expand their business with the buying and selling of the electrical products that have the highest demand in the market. The new members whom Fred and Charles were hiring became successful to convince the Chairman and the Board of Directors to diversify the office manufacturing department and start selling computer and computer oriented items.
Best time of HCHE
Humberside region was ruled by HCHE plc from the year 1987 – 1991. This was the time when HCHE rules the area as a small IT department. Everything was going great and the share holders were content too. This was possible because HCHE had senior employees to run the show and few computer experts who supported the senior supervisors to tactfully run the business.
Problems occurred
Whenever a business runs an organization, down the line he or she knows that at some point or the other point of time, one or the other problem might occur. Therefore the owners of an organization should be very careful and smart enough to handle the problem with care. From the year 1992, the HCHE plc had started facing some problems in a number of sections. First one is probably the “buy direct” concept which offered the customers to deal directly with the market and get their products at a much lower cost. Naturally the customers were inclined to this new concept which was in their favour and so they gradually stopped buying electrical products from HCHE plc.
At this hard time HCHE plc could not bear the loss in their business. This was due to the reason that they neither could cut the cost of their products nor could they deliver the goods faster to the customer’s end. HCHE plc faced severe and huge losses and to save them from this turbulence they took help from giddens, stanworth + hope (gs+h).
Role of giddens, stanworth + hope (gs+h)
Giddens, Stanworth + Hope (gs+h) suggested ways to HCHE plc in order to improve their business so that they can again rule their area with their dominance of business and by serving the customers with their necessary products.
Though the damage was already done, it was definitely not the end. Immediate steps were taken to take matters into control. Business plans and various work practices were immediately reviewed by Giddens, Stanworth + Hope (gs+h).
Analyzing the problems
With as many as eight departments, HCHE had a daunting time coping up with the problems. Poor management with poor cash flow became the major concern for the management. The root problem was analyzed to be the lack of proper flow of information along with the lack of proper decision making, as far as the different departments were concerned. A close analysis and interview with the top management and the various departments revealed a few drawbacks that were the main cause of the company’s downfall.
Sales strategies
HCHE has always been a company who sold products. A successful strategy is extremely important when scenes because are concerned. Business practices and policies are all responsible for the successful sales figures. A strategy planning plays a crucial role in determining the sales figure is. In this case, the HCHE was not able to analyse and identify the correct client needs along with targeting the potential client group correctly. Another factor that affected the sales figure for HCHE was the products range. With the sales team working in ignorance, it was quite natural that the problems would be there. It is extremely important that the entire department worked in collaboration with the others to benefit the company in the long run. The incapability to understand the needs of the client and accordingly plan a sales strategy was one of the major trial packs that the company faced.
Sales policy of HCHE
From the time of its inception, HCHE has always been selling products. But with the changing time and demands of the market, it was found that HCHE was not able to keep pace. They were not capable of identifying the customer needs along with not directing the correct group of customers. Their sales strategies and plans needed reshuffling along with thorough analysis of the market trends. The major findings revealed wrong identification of the client needs, targeting their all kinds and incorrect product range war the major reasons why HCHE was fading out of the market. The sales team definitely was not operating well as the analyzed reasons above are the responsibilities of the said team.
For any business to aspire, a clear strategy planning and management plays a crucial role. There were the other major reasons that was bothering HCHE. It was essential to closely monitor the client activities as far as creditworthiness was concerned. It was also essential to follow at those clients who not making their payments within the stipulated time. Overall, ignorance was reflected in all the major departments of the company.
Even the recent campaigns that were tried to boost up the image of the company, lack essential information and thus naturally did not work out.
Buying strategies
A proper functioning of the company reveals a proper and concrete buying strategy which is responsible for the ultimate progress. The credit facility and time management are extremely important to the company. In an ideal situation, it is important to acquire the maximum possible credit facility from the suppliers itself why did at the same time reducing those of the clients’.
The current recession also had a negative impact on the business strategy of the company with clients asking for more credit facilities along with extension of time. This was another major reason and it had a severe impact on the cash flow that affecting the company badly. The sales and marketing department was called in for a thorough analysis. Headed by Malcolm Percy, the department had a crucial role to play.
Effective purchasing strategies
In an effective purchasing strategy, HCHE should have minimized the credit facilities as far as the customers were concerned while maximizing the same from the suppliers. With extended credit facilities, partial payments and poor collections, the company suffered even more. The issues of customers credit control and stock management is extremely important and required detailed reviews and planning. All the aforesaid problems mark the lack of decision making capacity of the management levels along with the departmental levels in HCHE.
The major problems faced by the various departments can be segregated as:
Sales and Marketing Department
With no proper strategy planning and course of action, the Sales and Marketing Department was completely at a loss. With no idea of the market trends and client regional demands, they were confused with the orders. Additionally they needed updated information as far as customer credit rating was concerned.
Malcolm Percy
The supervisor of the Sales and Marketing Department, his sole responsibilities included researching and marketing to develop new products as per the market trends along with appointing new salesman. His other responsibilities included producing the sales brochure and the advertising copies along with working closely with the Customer Service and Stock Control Department. However, it is very clear right from the beginning that this daunting task would need equal participation from the other departments included in this sub-system. The head of these departments also needed to participate actively to solve the problems together.
One such major department was the customer service department headed by Linda Briggs.
Customer Services Department
This department being the backbone of the business needed utmost efficiency. However, with the halted flow of communication, the department was completely at loss to decide how to deal with problems of increasing customer credit limit. With a manual system for maintaining the details, they often ended with mistakes along with the process being time consuming. With just one Staff and one secretary, it was a difficult time for Linda Briggs. Updating all relevant customer details, approving new customers all at the same time proved to be a daunting task with just three members.
The credit checking, general correspondence, customer record maintenance along with sending invoices to the customer at regular intervals all depended on the Customer Service Department. The department is supposed to work closely with the Invoicing and the Payments Department along with the Stock Control Department and of course the Sales and Marketing Department for the maximum benefit of HCHE.
Sales and Marketing Department
Linda Briggs headed the Sales and Marketing Department assisted by one Secretary and one Clerk. The main functions of the department were in appointing you a salesperson or implied mainly on the basis of commission. There are also responsible for producing the sales Brochure along with advertising copy. However, their major function was to research and develop the new products as per the market trends. All these needed working closely with Malcolm Percy.
Invoice and Payment Department
Supervised by Betty Smythe, the department had three clerks along with one secretary. The major function of the department was professing the payment and producing the invoices and needed to work closely with the tool major department of the company-the Stock Control Department and the Customer Service Department.
The table below analyzes the problem that the particular department faced. With a limited budget and lack of communication, meeting the challenges was a real problem. The main duties of the department involved maintaining and producing the invoices, payment processing and working closely with the Stock Control and Customer Service Department.
Stock Control Department
Supervised by John Baker and assisted by one secretary, two clerks and two ware house persons. They had a huge responsibility on them and more responsible for maintaining stock levels, packing orders and selecting suppliers depending on how cheap are how fast their service would be. Along with these, they are also supposed to work closely with other major departments of the company- the Customer Service Department, Distribution Department and the Payment and Invoicing Department.
This was the worst hit department after the IT Department. With a budget more than the turnover, things were grim. Their main aim was to maintain the stock level and select the suppliers – keeping in mind the cheapest and the fastest one. Along with these major functions, they were also responsible for working in liason with the other departments to ensure the smooth running of HCHE.
The main business
The main problem of the business was the incapability of the management to take proper decisions which was again dependent on correct and available information. It was extremely important for the aforesaid departments to respond to the challenges. The information that was possessed by the individual departments can be utilized properly to benefit all.
The major problem and the management information systems review
It was recommended by Mr. T R Pareto that HCHE can capitalize on the data that was captured by the new operational system changes. It was efficient in providing much information that is essential in managing the business.
The problem of part payment
This was another major problem that bothered the company. Within your systems being introduced, it was extremely easy for the Invoicing and Payments Department to cater to the needs of accurate invoicing. It makes things easier to search for the invoice and also mark it as paid. However, if a customer does not make a full payment it was then the problem arose and this left the staff confused in how to deal with the situation. Though the team members marked the old invoices but the problem persisted.
Proposal by MIS
It is extremely important for any business organization to know the outstanding balance for any customer. And this is where MIS steps in. It was agreed on if creating an invoice where the customer will not be allowed to take any extra credit limit beyond what was already agreed upon. It will also important to identify the customers if they have exceeded the agreed credit limit, so that the company could recover the payments. It is also important to encourage the customer to buy more product of the company, which however should not be done where a customer crosses the agreed credit limit.
The problem that has been faced by the staff members of HCHE regarding the invoice and the payments system of the company occurs when either the customer pays a lesser amount than their actual bill or even if they pay an amount more than the invoice registered with their name. A simple example is explained in the following table:
Invoice Number Invoice Amount
13333 ÂŁ 376
28738 ÂŁ 492
38573 ÂŁ 504
For the first invoice number if the customer pays three seventy six dollars then there is a no problem situation. Then again in the second case if the customer pays five hundred dollars, it is a problem since the amount paid by the customer is more. And finally in the third case if the customer pays four ninety nine dollars the company faces a severe problem situation in order to make up the situation with the amount of money that is lacking. So the path payment system or the MIS system should be followed in order to check the problem in the company.
How to deal with it
It was extremely important to keep all the files updated and mark them properly to keep a steady track of the payment details. Identifying the problematic areas and according restructuring the staff and the departments were extremely needed. Keeping all the relevant data and other needs of the company in mind, it is important that the company uses trained management staff who will be better equipped to deal with the situation and the changing needs of HCHE.
Conclusion
The solution to the above mentioned problem is that the company should decide a perfect balance and an outstanding true solution to the MIS system of HCHE. This will encourage the customers to buy more and more products from the company but within their possible credit limit. The records of the customers are well maintained so in case there is a problem with the customer’s payment then the people of the company HCHE can catch hold of them.
There should be one invoice of the customers and they should be maintained that for a longer time. This could be explained a bit by adding that there should be one invoice and a number of payments. Therefore whenever a customer pays off his or her old dues the amount should be added or updated in the invoice and the left over amount should be informed to the customer. The second report of giddens, stanworth and hope ask the employees of the company HCHE to be aware of various issues that will come in the way of success of the company.