Garden Centres are confronted by an unfriendly environment that inevitably points to the direction of change. Applying the PESTEL analysis on the centres reveals a situation that paints a grim picture of the centres. This section shall discuss two key macro external factors that cumulatively add up to posit a rough situation to the business.
The technological advancement within the industry comes out as one key macro external factor that the business ought to be wary of. For starters, the business is still left wallowing with traditional approaches of management and production over technological applications. The system of management is still heavily manual without any application of forecasts, scientific analysis and utility of technological devices. As is reported, even the financial management, performance evaluation and financial input output analysis is still largely manual and traditional. However, other firms in the industry have adopted technological applications that inform their managerial decision making and performance evaluations. The lag in technology has incapacitated the firm to the extent that it is unable to compete favourably in the market. Even the marketing techniques are shy of technological application. John still prefers word of mouth over other technological applications in marketing. The fact that the firm is run on a limited amount of technological knowledge effectively negates any aspirations as to its success. Closely in relation to technological lapses is the managerial approach in use, which is essentially inconsistent with the general modern managerial approach. In the same vein, the managerial approach is incompatible with basic technological applications and falls largely off the general technology in use. It is imperative for the business to undertake an overhaul that would see the exodus from the traditional approach and entertain application of modern technology.
Another factor that affects the business negatively could be seen in the social factors. Indeed, social factors relate to the cultural practises, believes and to an extent the societal norms. As it stands, the business is facing a changing face in societal norms that affect it in the negative. One needs to consider the fact that most of the clients of the business are aged above fifty five years old and that the better part of this client base are first time buyers. This could only posit two things for the firm and needs to get them worried on a social scale of reasoning. First, that the larger client base is aged fifty five and above indicates that their products are no longer attractive to the society. It should also be seen in light of an unfavourable demographic. This is because ordinarily in any society the larger population portion is constituted by the younger generation. That the product has not attracted this latter group indicates a lot on the societal norms, practices and believes.
The business, like all businesses, has its own strengths and weaknesses. Usually, the way forward for business would be to maximize on its strengths and leverage on its outcomes which should be positive and at the same time minimize the weaknesses through introduction of mitigating measures. This section would dwell on the strengths and weaknesses of the business with the overall objective being to identify the positives that the business should be able to leverage on and the negatives that the business should be able to address with the objective of minimising.
The biggest strength of the business lies in its strategic positions of the three centres. As it is documented, the three centres are located in accessible and strategic places where they are close to the potential customers. This means the management does not have to invent the will in its attempts to market the products and improve on delivery and efficiency in distribution. Given that plants could be perishable, a proximity to the market is key to the business’ overall success. Since the business centres are located at strategic points, it is only the inclusion of a few steps and mechanisms that remains necessary for the realisation of overall success. In addition to the strategic location of the business, the parcels of land are said to be expansive and large with a pretty good portion of the land pieces lying fallow and unused. It is incumbent on the management to utilise this resource which as at now only shoots the value of the balance sheet assets without bringing in a return. No wonder the net profit margin is only two percent annually yet the business is endowed with resources.
Flexibility of the business is also one of its strengths. From the onset, it comes out clearly that the business does not require highly skilled workers. With John having known quite a substantial amount of the business, employees can learn from him. This factor can be used calculatedly to ensure the business incurs the least amount of expenditure on operating costs especially in relation to labour. It also comes out that the business may not require additional competence from the market at an arms-length relation. This is because, the competencies of John, Malcolm and Jane are applied collectively is enough to address and tackle the managerial requirements. The business could also exploit the cheaper labour in the form of students employed on part time basis. Experience has shown that part time workers especially the fresh ones from colleges if given the requisite environment can easily address a lot of technical hiccups in the business. In the same light, they avail to the business an untapped potential that is innovative and determined to succeed. The only accompanying requirement is the goodwill and proper leadership by the management.
On the other hand, the business is also faced with a number of internal weaknesses that ought to be minimized in the interest of the performance of the concern. The biggest weakness lies in the managerial lapse. First, the top management is staffed by siblings and their father. John has discharged upon him the singular performance and execution of all top decisions. This system of management where decision making is unilaterally pursued without consulting other stakeholders within the workforce has been criticised for its alienating consequence on the workforce. Junior and middle level employees do not feel like they are esteemed part of the system. They feel used and enslaved by processes and decisions they hardly believe in. To make matters worse, the system of management and decision making applied by John does not fall anywhere within any managerial leadership theories. It is amorphous and negative in nature. As the case notes, John has the habit of employing his cronies and has placed his two children in the managerial team without substantive powers and responsibilities. This managerial approach also fails to develop personnel and places the success of the firm squarely on the life of John. In other words, no succession plan suffices for purposes of continuity.
Other than the managerial lapse, the technological lapse is equally a big limitation on the part of the business. The financial evaluation and performance management is manual and lugs behind as compared to other firms’ applications. In addition, the firm lacks decision making models, risk analysis and other scientific devices that characterised decision making and general modern management. This technological lapse is not made any better by a team of incompetent employees who are far from being interested in the business.
Another glaring limitation which weakens the strategic standing and risk absorption ability is the firm is the non-diversification. Despite the fact that competitors in the industry have since diversified the company is still locked up in pursuit of only one product. This places it at a disadvantage especially since the product’s demand is seasonal with high and favourable demand only recorded between March and June. The firm ought to have pursued a diversified portfolio which would address the limitations of one product through the production of another. These weaknesses arise from poor forecasting and the poor record keeping which prevents the organisation from gaining any useful deductions from the records.
In light of the position of the business and the on-goings at the three centres, a strategic plan that charts the way forward is inevitable. It is this paper’s contention that business is yet to employ a good strategy that would exhaust its potential and equally improve its standing in the market. In addition, the paper contends that the business is sitting in a goldmine that needs extraction and exposition to full exploitation. This section shall discuss the business strategy that the management ought to exploit with full cognizance of the prevailing situations and circumstances.
The business needs a complete overhaul with the adoption of new systems and a better managerial application. However, given that the business has been making losses, it would be important to source for cash to fund the overhaul process. In this regard the business should pursue the leaning option. This option means it should restructure the entire organization. One restructuring mandate shall be the closure of one of the centres. The returns realised in the sale and disposal of assets tied down in the closed centre should boost the financial reserves of the firm. In addition, the firm will have set free one piece of land previously hosting the closed centre. Since the location was strategic and accessible for business, the management should put the piece of land vacated on a leasehold to external parties. This would generate both an initial cashflow in terms of the leasehold fees charged and assure the business of a continuous cashflow stream that should be used to cushion the firm as it engages in the overhaul. Secondly, the business needs to diversify. This is inevitable given the fact that the current product only enjoys high sales during March to June. It would be essential to look out for products that could attract a high market demand all the year round. In this regard, the new product developed must be out of the seasonal class of products. This will ensure the business sells all the year round. In addition to the diversification, the business must engage technology and modern managerial techniques more seriously in consideration of the fact that the world is going global. It should seek to integrate concepts and technology that facilitate not only transactions within the town but across to the entire globe. This will enable it enjoy an international market which is larger, conscious of quality and ready to consume the best the market has. This way, the business would model its production as to benefit from its competitive advantages. In addition, it would offset its large inventory base which point to a case of low sales. In the long run, the success of the business depends on how much it exploits it potential. The management and by extension the owners of the centres must see the bigger picture.
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