Overlook

BPL is currently set in over 200 hectares. To buy the 25 hectare land being discussed will increase BPL’s land by at around 12.5%. Belvoir is a premier sporting country estate which means their target market will primarily be those who wish to take a sporting holiday. Aside from the hotel, BPL seems to have a lot of sporting facilities such as a golf club, a leisure centre which contains a health club and gym and clay pigeon shooting is also mentioned.

As BPL aim to be a top international luxury destination, it will most likely need to be easy to get there and will need to somehow promote itself abroad.

BPL is an Ltd and most of the shareholders seem to be members of the golf club, whose main interest, according to lines 121-122, is to be able to continue playing golf and for this reason invest in BPL. This suggests therefore that Wilhelm Deboos-Parker is likely to have a lot of control over the company. His fastidious attention to detail can be inferred to mean he would like to be involved in everything which is going on, being very hands on, and would most likely then be an autocratic leader. This is further seen from lines 9-10 which states that staff have found he is someone not to argue with, line 89 says that Wilhelm made the decision concerning how tips should be distributed, how this was decided is unknown because Sue and Beatrice outnumbered Chris.

Price Discrimination means that BPL offers different people, the same service at different prices, this is likely to involve time-based price discrimination such as charging people who check-in after 10pm for example more than those who check-in at 4pm, but this may also be charging married and single people differently for the same room. This is most likely because the service BPL offers is price elastic and so they change prices accordingly.  An advantage of this is that BPL will be able to increase revenue by convincing guests to stay who might not have stayed at a higher price. A disadvantage is that there may be administration costs in separating the market to determine who gets what price.

Membership of the golf club is limited, so BPL could make a lot more money if the cap was raised. What is the ethos that BPL is trying to portray by limiting membership?

If the land BPL has been offered is 20% over typical local agriculture land values, then that’s £60,000 BPL could save.

Other factors which BPL will need to consider before deciding if they should buy the land or not include if they can raise the required finance. BPL has current assets of £252,000 which is not enough to purchase the land, although they have £3,952,000 of shareholder’s funds.

AOB stands for Any Other Business.  The picture of Jack James is may have been against privacy legislation, but in the UK, taking photographs in public, however isn’t an issue. If other people can see what you see, then it’s probably ok. Other people more than likely could have seen Jack James’ conduct.

A Maitre’d is the headwaiter of a dining establishment, responsible for ensuring that the connection between kitchen and dining room runs smoothly. Duties include keeping wait staff organized, smoothly dealing with customer complaints and issues, and to serve as the liaison between the kitchen and the dining floor. The Maitre d’ is usually the first person guests of the restaurant interact with and also when reservations are made.

A sommelier is a wine expert trained in wine tasting, pairing wine with foods, wine purchasing, wine storage, and the creation of wine lists. They are to help guests find a wine within their budget that fits their tastes and complements their food.

Objectives and Strategy

Objectives

The corporate aims of a business are its overall purpose, what the business is trying to achieve in the longer term.

In BPL’s case:

Strategic:

  • The business aims to be a top international luxury leisure destination with guests attracted from all over the world. (Corporate Strategy as concerns position of business) (Not SMART)
    • Figure 1, a bar chart depiction of the percentage of their guests from differing nationalities, shows that they are making progress in achieving this. Whilst the proportions of their guests from the UK and USA have dropped when comparing 2009 and 2010, other nationalities have increased.
    • This is an example of a strategic level decision because it affects the direction of the entire organisation.
    • For the par 72 Golf Course to contribute to the surrounding landscape and not detract from it (Business Level Strategy as it’s a plan to gain competitive advantage by obtaining goodwill) (Not SMART)

Tactical:

  • To  reverse the decline in revenue and net profit margin in 2011 for BPL (Not SMART)
  • To get room occupancy up to 75% by the end of 2013 (May be Smart)
    • One of the SMART criteria is that objectives must be achievable, and this is questioned by Sue on line 127

Tactics are short-term and strategies are long-term and far-reaching.

BPL’s objectives are determined by:

  • Size and Status of Business
    • BPL can pursue a goal of growth to be a top luxury leisure destination because it’s an established business as opposed to being concerned about survival.
    • The power of stakeholders
      • The most powerful stakeholders in BPL will affect the direction of objectives. In BPL, these are not shareholders because lines 121-122 says most of the shareholders’ investments represent a lifestyle choice and they wish to keep BPL open so they can continue playing golf.
      • This may be the guests (customers) for BPL because lines 7 – 8 say the main focus is on the guest’s perspective and lines 45-47 mention that BPL’s services must reflect guests’ needs and managers are encouraged to listen to suggestions from guests. Guests can therefore greatly influence objectives.
      • Ownership
        • BPL is an Ltd meaning shareholders are the owners and would have the most power but shareholders don’t appear to be that way inclined.
        • External and internal pressures
          • External pressures such as changing market trends can influence objectives for example increasing demand for products may encourage growth objectives.
          • Internal pressures can affect objectives such as the appointment of a new chairperson may completely alter the objectives.
          • Risk
            • Depending on how risk-averse BPL is, they may pursue objectives not as risky as others, seeking stability rather than risk. If the reward outweighs the risk then a risker option may be more tempting.
            • Corporate and business culture
              • BPL’s culture will affect the direction of its objectives. For example, a business that has a caring culture is likely to have different objectives to a business with a competitive culture. BPL appears to be guest (customer) orientated and so will have a culture of satisfying the guest.

Mission statements are descriptions of the overall aims of the business. BPL’s is unknown but can be inferred from lines 2-3. They tend to be aimed at stakeholders in the business and they may:

  • Help a business focus
    • A summary of what the business is trying to do may aid decision making when different options are available and direct objectives.
    • Provide a plan for the future of the business
      • Can be used as a blueprint of the path the business should take as the mission statement is their destination.
      • Make clear to all stakeholders what the business is trying to achieve
        • This should help reduce conflicts and attempt to prevent stakeholders from obstructing the business.

But the problems are that:

  • Mission statements have been suggested as being publicity stunts
  • Staff may not remember the mission statement and a business may not be committed to it rendering it redundant.

Corporate plans are where a business publishes what they plan to do and is similar to mission statements in what it may do and the problems it carries.

Decisions with greater risks usually carry greater rewards. Few methods of reducing risks include:

  • Market Research
  • Situational Analysis
    • This is a marketing term, and involves evaluating the situation and trends in a particular company’s market. Situation analysis is often called the “three c’s”, which refers to the three major elements that must be studied (Customers, companies, competitors)

Stakeholder Objectives

Owners: Generally, owners have an interest in the success of their business, but for BPL’s shareholders, success means survival.

Employees: Some of BPL’s employees have expressed that they wish to maintain if not improve their earning potential.

Customers: They want to have a quality experience obtaining value for money.

Government (Local Council): Job creation

There are potential stakeholder conflicts between Owners and the Government,  and more jobs will result in greater wage costs thereby eating into profits.

The stakeholders who triumph will be the ones who have the most power over the business, but differing stakeholder objectives may cause tension and is likely to reduce efficiency and more.

Planning

SWOT

Strengths:

  • Ostlers’ (the Michelin listed fine dining restaurant)
  • Excellent and imaginative food
  • Golf Club (Have a waiting list)
  • Attracts guests from all over the world
  • Guests find Managing Director, Wilhelm, charming
  • The integrity of BPL’s image

Weaknesses:

  • Reliance of peripheral income streams on the hotel.
  • Tension at monthly meetings and disputes over tips.

Opportunities:

  • £300,000 25 hectare land
    • Off-road driving
    • Shooting

Threats:

  • Change in the law regarding tips
  • Decline in revenue and net profit margins

 

The SWOT analysis  can be used to:

  • Set objectives – defining what the organization is going to do
  • Environmental scanning
    • Internal appraisals of the organization’s SWOT, this needs to include an assessment of the present situation as well as a portfolio of products/services and an analysis of the product/service life cycle
    • Analysis of existing strategies, this should determine relevance from the results of an internal/external appraisal. This may include gap analysis which will look at environmental factors
    • Strategic Issues defined – key factors in the development of a corporate plan which needs to be addressed by the organization
    • Develop new/revised strategies – revised analysis of strategic issues may mean the objectives need to change
    • Establish critical success factors – the achievement of objectives and strategy implementation
    • Preparation of operational, resource, projects plans for strategy implementation
    • Monitoring results – mapping against plans, taking corrective action which may mean amending objectives/strategies.

PESTLE (PEST-G) Analysis

Political: Obtaining planning permission from local council. Any immigration control or caps may affect the achievement of their objectives to attract guests from all over the world.

Economic: Difficult trading year (maybe recession – line 119)

Social:

Technological:

Legal:

  • Change of law on tips.
    • Businesses can no longer use tips to “top-up” staff pay to meet minimum wage
    • Game Act 1831 may affect plans to use land for shooting.
      • The act established a close season in which game birds cannot be killed or taken and this includes all Sundays and Christmas Days

Environmental:

A business analysis might assist in the formulation of strategy because then a business will be able to exploit what it does well, diminish its weaknesses, make use of opportunities and protect against threats.

Business Analysis

Market Analysis

The different market structures are:

  • Perfect Competition – This is a market structure with perfect knowledge, many buyers and sellers, freedom of entry and exit and a homogenous product. Firms usually price takers.
  • Monopolistic Competition – Market with freedom of entry and exit, differentiated products and a large number of small firms competing.
  • Oligopoly – Small number of dominant firms, producing heavily branded products with some barriers to entry.
  • Monopoly – Only one firm supplied the entire output, there is not competition and barriers to entry exist.

The degree of competition in a market will affect how prices are determined. The type of market a business operates in reflects the uniqueness of its product and the presence or otherwise of barriers to entry. This is why business work hard to establish and maintain scarcity, and to develop a USP.

Porter’s Five Forces

Michael Porter suggested that in certain circumstances business can influence the market in which they operate, outlining five forces which determine the extent to which businesses are able manage competition in their market.

  • Rivalry among competitors
  • The  threat of new entrants
  • The threat of substitute products
  • The bargaining power of customers
  • The bargaining power of suppliers

Forecasting

Anything a business can predict accurately will reduce their uncertainty and allow them to plan. Most forecasts are based on back data.

Time series analysis involves predicting future levels from past data. The assumption is that past data are a useful indicator of the future.

When identifying the trend, a moving average can be used. If the time period used is even, then centring needs to be used. For example, if a 4 year period is used, the 8 year moving total would also need to be found to find a mid point.

4 Period Time-series analysis for GDP Percentage Change

Year Quarter Percentage change GDP 4 Month Total 8 month Total 4 Period Moving Average
2006 Q2 0.4
Q3 0.5 2.40
Q4 0.8 2.60 5.00 0.63
2007 Q1 0.7 2.60 5.20 0.65
Q2 0.6 2.30 4.90 0.61
Q3 0.5 2.30 4.60 0.58
Q4 0.5 1.60 3.90 0.49
2008 Q1 0.7 0.40 2.00 0.25
Q2 -0.1 -1.90 -1.50 -0.19
Q3 -0.7 -5.10 -7.00 -0.88
Q4 -1.8 -5.60 -10.70 -1.34
2009 Q1 -2.5 -5.30 -10.90 -1.36
Q2 -0.6 -3.40 -8.70 -1.09
Q3 -0.4 -0.60 -4.00 -0.50
Q4 0.1 1.10 0.50 0.06
2010 Q1 0.3 2.30 3.40 0.43
Q2 1.1 2.60 4.90 0.61
Q3 0.8
Q4 0.4

4 Period Time-series analysis for Room Occupancy percentages

Year Quarter Percentage Occupancy 4 Month Total 8 month Total 4 Period Moving Average
2006 Q2 78
Q3 81 321.00
Q4 82 318.00 639.00 79.88
2007 Q1 80 309.00 627.00 78.38
Q2 75 297.00 606.00 75.75
Q3 72 285.00 582.00 72.75
Q4 70 281.00 566.00 70.75
2008 Q1 68 277.00 558.00 69.75
Q2 71 271.00 548.00 68.50
Q3 68 265.00 536.00 67.00
Q4 64 255.00 520.00 65.00
2009 Q1 62 247.00 502.00 62.75
Q2 61 241.00 488.00 61.00
Q3 60 237.00 478.00 59.75
Q4 58 231.00 468.00 58.50
2010 Q1 58 226.00 457.00 57.13
Q2 55 224.00 450.00 56.25
Q3 55
Q4 56

4 Period Time-series analysis for Golf Club Membership

Year Quarter Golf Club Membership 4 Month Total 8 month Total 4 Period Moving Average
2006 Q2 250
Q3 250 1000.00
Q4 250 1000.00 2000.00 250.00
2007 Q1 250 1000.00 2000.00 250.00
Q2 250 1000.00 2000.00 250.00
Q3 250 1000.00 2000.00 250.00
Q4 250 1000.00 2000.00 250.00
2008 Q1 250 1000.00 2000.00 250.00
Q2 250 1000.00 2000.00 250.00
Q3 250 1050.00 2050.00 256.25
Q4 250 1100.00 2150.00 268.75
2009 Q1 300 1150.00 2250.00 281.25
Q2 300 1200.00 2350.00 293.75
Q3 300 1200.00 2400.00 300.00
Q4 300 1200.00 2400.00 300.00
2010 Q1 300 1200.00 2400.00 300.00
Q2 300 1200.00 2400.00 300.00
Q3 300
Q4 300

4 Period Time-series analysis for Golf Club Waiting List

Year Quarter Golf Club Waiting List 4 Month Total 8 month Total 4 Period Moving Average
2006 Q2 315
Q3 301 1218.00
Q4 288 1224.00 2442.00 305.25
2007 Q1 314 1241.00 2465.00 308.13
Q2 321 1251.00 2492.00 311.50
Q3 318 1242.00 2493.00 311.63
Q4 298 1235.00 2477.00 309.63
2008 Q1 305 1204.00 2439.00 304.88
Q2 314 1151.00 2355.00 294.38
Q3 287 1044.00 2195.00 274.38
Q4 245 904.00 1948.00 243.50
2009 Q1 198 780.00 1684.00 210.50
Q2 174 695.00 1475.00 184.38
Q3 163 655.00 1350.00 168.75
Q4 160 626.00 1281.00 160.13
2010 Q1 158 593.00 1219.00 152.38
Q2 145 564.00 1157.00 144.63
Q3 130
Q4 131

Decision Making

Ansoff’s Matrix

This is an analytical tool based on products and markets.

Existing Products New Products
Existing Markets Market Penetration

  • Getting more International guests
  • Increasing room occupancy rates
Product Development

  • Adding shooting to services offered to guests (if given planning permission)
  • Off-road Driving course
New Markets Market Development Diversification

Ansoff’s matrix might assist in decision making because by classifying movements from the existing position the degree of risk can be identified. It is useful for a business aiming for growth.

Diversification is the most risky strategy because a business is moving into a market in which it has little or no experience. Market penetration is the least risky option as it seeks to increase usage. The other two are of middle risk. Increased risk should be accompanied by increased reward.

Decision Trees

A decision tree is a method of tracing alternative outcomes so as to compare them and the business will then be able to choose the most profitable. It can be used when a business is faced with a decision to make.

Decision trees are best used:

- For tactical decision-making

- In familiar situations

- Where the data is reliable

The branch probabilities leading into a single event node must sum to 1.

EMV stands for expected monetary values.

The decision tree in Appendix 1 shows that there are 5 decision points in total. With a decision usually comes a cost, but we only have the costs for the initial decision point.

Advantages of Decision Trees are:

  • Creating the tree diagram may show possible courses of action not previously considered. It can be dangerous to make spur-of-the-moment decisions without considering the range of consequences. A decision tree can help you weigh the likely consequences of one decision against another.
  • Decision trees only consider quantifiable criteria; results usually improve from placing numerical values on decisions.
  • They force management to take account of the risks involved in decisions and help to separate important from unimportant risks.

Disadvantages are:

  • The information obtained from a decision tree is not always accurate. Much of it is based on probabilities which are often estimated. When actual decisions are made, the payoffs and resulting decisions may not be the same as those planned for.
  • Decisions are not always concerned with quantities and probabilities. They often involved people are influenced by legal constraints, PESTLE.
  • Business owners and managers may need to have a certain level of quantitative or statistical experience for the decision tree to be fairly accurate.
  • Time lags may occur which may mean some of the data used may be out of date by the time the decision is made
  • The process can be quite time consuming using up valuable business resources
  • Any change in any data can alter the decision indicated. Decision makers may, in an attempt to encourage a particular decision, manipulate data.
  • Does not take into account the dynamic nature of businesses

ICT Decision Making and MIS

A Management Information System (MIS) uses data from internal and external sources combined into and easy to read format in tables or graphs to help managers make effective decisions and plan appropriately making them essential to decision making.

MIS software can be generic, commercially acquired or bespoke. MIS is a tool for data handling, analysis and interpretation.

Advantages:

  • Helps automate the managerial process
  • Creates a competitive advantage
  • Improves personal efficiency by handling large amounts of data

MIS can highlight progress to achieving corporate objectives.

With the information in Fig. 2, an MIS might assist decision making because using past data, it can show trends in the information and make predictions, such as reservation forecasts for example.

As BPL operates profit centres, it can be used to show revenue generated per day/week/month by profit centre.

Possible Implications of Decisions

BPL’s decisions are holistic and can impact on the business at local, national and international level.

BPL is faced with the decisions of:

  • Invest
    • Internal
      • Refurbish restaurant/kitchen
        • Lines 20-31 suggest restaurant and kitchen is already doing very well
        • Upgrade leisure club
          • The waiting list and asymmetric arrangement suggest that the golf club is doing better than the leisure club. So investment might be necessary if leisure club not doing so well.
          • Still not spreading financial risk
          • Untouched departments might be resentful
          • Risk of wasted investment as the changes might not be necessary
  • External
    • Buy shares
      • If in other hotel groups, will provide source of finance which may help their performance and increase competition with BPL, but may be able to exert some influence on the organisation.
      • Will be subject to the successes and failures of the other companies.
      • Will be able to lessen the effects of inflation
      • Place in Bank
        • Opportunity cost – not using money for anything
        • Risk bank closure (Northern Rock)
        • Money loses value due to inflation
  • Opportunity cost – loss of the potential return in the range of £700,000 – £400,000 if the land had been purchased and they had been able to obtain planning permission.
  • Will be unable to extend the list of services offered to guests.
  • May result in unhappy managers
  • May reduce financial risk of BPL being dependant on a single venture.
  • May slow achievement of its corporate aim (to be top leisure destination) by not developing its services, current facilities don’t seem to be  posing a problem.
  • Would still have the problem of complaints from neighbours about clay pigeon shooting. (line 56)
  • The investing options considered are still in the UK, so they would still be vulnerable to the performance of the UK economy. (line 70)
  • May then not be able to create jobs (line 59)
  • Buying the £300,000 Land
    • If able to obtain planning permission
      • Use it for shooting
        • Ethical consequences and activists/animal rights groups
        • Will increase costs to ensure safety here and increase wage bill and staff will be needed to rear and care for game birds.
        • Will be able to reduce complaints by moving clay pigeon shooting facility away from village.
        • Use it for off-road driving
          • More people drive
          • Will need to provide support if cars break down and other things
  • If unable to obtain planning permission
    • Agricultural Use
      • Loss of some of the investment money
        • May offer walks
        • Growing Kitchen ingredients

[----------------------------------------------------

Key:

  • A decision option
    • Related to the above decision option (either other options resulting from it or consequences of it)
      • About the result above (More options and consequences dependent on above).

----------------------------------------------------]

Measures of Business Performance

Employee Contribution

Measuring the contribution of employees towards objectives is important because it allows decisions to be made as to how many employees to get and allows the business to set itself realistic targets as it knows what it’s workforce is capable of. Employee contribution can act as a source of competitive advantage.

Budgets

A budget is a plan of incoming and outgoing monies, expense and income.  It provides target spending levels and profit estimation by allocating particular sums of money for various things.

Budgets help a business achieve their objectives (reverse decline) because:

  • Budgets provide a way of regulating the spending of money and draw attention to waste, losses and inefficiency.
  • They act as a review for a business allowing time for corrective action.

However, budgets might:

  • Lead to resentment because of budgeted figures or lack of their involvement which may result in lack of motivation and targets being missed
  • Cause the business to suffer if it is too inflexible. For example BPL might not be able to…
  • Lose their importance if actual business results are repeatedly very different from the budgeted ones.

The Business Cycle

The business cycle is the upward and downward fluctuations in business activity through the states of

  • Boom (spending, investment and confidence high with profits and wages usually rising)
    • BPL is likely to have a lot of guests at this point as people have more disposable income
    • Recession (where incomes and output start to fall as there is a fall in demand and therefore profits)
      • Guests will start to reconsider leisure holidays and BPL may be making staff redundant.
      • Slump (bottom of the cycle with unemployment high, confidence, spending, investment and profits low)
        • Very few people will be visiting BPL now but BPL will still need to pay its overheads. BPL’s main concern will probably be survival
        • Recovery (where incomes, output, confidence and spending start to rise again)
          • Guests will start coming again and profits should rise.
          • Change of law on tips.
            • Businesses can no longer use tips to “top-up” staff pay to meet minimum wage
            • This will have little effect on BPL if they were already compliant
            • Game Act 1831 may affect plans to use land for shooting.
              • The act established a close season in which game birds cannot be killed or taken and this includes all Sundays and Christmas Days
              • If planning permission is obtained and the land used for shooting, it will be idle on close seasons, Sundays and Christmas Days.
              • Planning permission is legally required and thus, BPL’s actions are restricted unless it can gain planning permission.

Legal Issues

It is in BPL’s best interests to comply with the law so as not to be fined (or even closed) or have key individuals arrested which may affect business survival.

Change

Businesses operate in a dynamic environment and as such they have to accept that changes will occur. Change is caused by:

  • Developments in technology
  • Changes in the economy
  • Changes in consumer tastes
  • Legislation
    • Change of law on tips

BPL has changed its remuneration policy and Wilhelm believes the change was not effectively managed. It is important that businesses respond to change else they are likely to go out of business.

Businesses are likely to face some resistance to change from parts of the workforce and this can be seen in BP through the unhappy comments from staff as they were informed of the changes and the fruitless investigation into the two chambermaids accused of keeping tips.

Some consequences  of this change are that:

  • Some staff may become unmotivated

Resistance to change  is likely to exist because:

  • Workers sometimes fear the unknown. As staff at BPL no longer keep their tips, they have a lot less control over how much they can earn and it is now left to someone else to decide their wage, with any bonus coming from tips unrelated to their hard work.
  • They feared a fall in earnings (lines 92-93).

If change is to be carried out effectively, BPL must take these fears into account and only if employees  feel they can cope with the changes will BPL be operating to its full potential.

In order to remove resistance to change:

  • BPL’s employees should have been kept informed about all changes before they were finalised.
  • As one of the options was giving the tips to all members of staff, then everyone should have been consulted about the changes being considered as this will give them a feeling that they are involved in shaping change and have a stake in its outcome.
  • BPL should have attempted to prevent misinformation and rumours as they would decide their stance in relation to the change based on the erroneous information without knowing the truth.
  • BPL should  try and ensure its organisation culture fits in with its new operations.

BPL has used a total imposed package to implement the change on tips as the managers made the decision without any consultation with the employees.

BPL could have considered an imposed piecemeal initiative perhaps where pooled tips were only for those who worked in the front of house, then maybe everyone. This would have allowed staff to slowly get used to the change and any teething problems can be resolved.

A negotiated piecemeal initiative would perhaps have worked better for BPL because employees would have been consulted, either through representatives or individually. Not only would this have allowed them to get used to it slowly and adjust over time, but they would have known of the coming changes before hand, due to their involvement.

A negotiated total package may also have worked well for BPL because even though employees are consulted, for efficiency’s sake, the change is implemented as a whole.

As it affects earnings, this is a change that possibly should have been anticipated, controllable, and incremental.

Possible Questions

  • Q1(a)         13 Marks (Calculation)
    • Calculate the Net Expected Values for BPL if they bought the land?
    • Calculate the time series analysis of percentage change in UK GDP?
    • Calculate the time series analysis of percentage occupancy for BPL rooms?
    • Calculate the time series analysis of the golf club waiting list?
    • Calculate four ratios using the balance sheet (Current Ratio, Acid Test, Gearing, Debtor days, Creditor days, Stock turnover, Working Capital, Net profit margin, Return on equity)
    • Q1(b)         18 Marks (With Reference to Calculation)
      • Recommend whether BPL should go ahead with any of the options being considered in the decision tree? Justify your view.
      • Recommend a strategy for BPL to continue reducing the golf club waiting list?
      • Evaluate Sue’s objective of a 75% room occupancy rate?
      • Discuss how changes in the UK’s GDP will affect BPL?
      • Recommend a strategy for BPL to reverse the decline the revenue and net profit margin?
      • Q1(b)                   Other 18-23 Marks (Use figures available in case study)
        • How does price discrimination assist BPL in achieving its objectives?
        • How does purchasing the land offered to BPL reflect the needs of BPL’s guests?
        • Should BPL purchase the land? Justify your view?
        • Should the land BPL is purchasing be used for shooting or for an off-road driving course?
        • What should BPL use the £300,000 for?
        • How should the change of BPL’s remuneration policy have been handled?
        • Evaluate how BPL should handle Jack James’ breaches of the conditions of his employment?
        • Recommend what BPL should do about the reliance of the peripheral income streams on the hotel?
        • How can Sue boost the success of her department?

 

SRCL is a LTD (Private Limited Company) which means that it has limited liability. Set up in 1968, it is now 42 years old. SRCL’s are specialists in what they do. A management buyout (MBO) is a form of acquisition where a company’s current managers buy the business from its owners, possibly because this may be to save their jobs, either if the business has been scheduled for closure or if an another buyer would bring in its own managers. It may also be because they want to maximize the financial benefits they receive from the success they bring to the company by taking the profits for themselves. There is also less potential for conflict between stakeholders as managers are now the owners.

The business is UK based and therefore operates on a national market and may not be as affected as multinational competitors by the exchange rates set by Governments.

The fact that SRCL’s stonemasons are experts’ means that their skills will be much in demand and the overhead costs of SRCL in terms of wages and salaries is likely to be quite high.

Who Value of Shares Percentage
Joe Kring £22 800 38%
Fred Emerald £7 800 13%
Six Senior Managers £29 400 49%

SRCL seems to be growing rapidly in terms of turnover. Joe’s approach to business seems to be taking a stakeholder stance, which means they give all stakeholders equal importance, as opposed to a shareholder approach where they would only be interested in making profit.

The market size of the restoration and conservation of famous crumbling building and monuments, in terms of value, according to the case study, is £4 billion. For the 2010 turnover value of £8, 310, 106 means that (£8310106  ÷  £4000000000) × 100 = 0.21 %. This means that SRCL currently has 0.21% of the market.

The 2010 figures on the balance sheet are currently unaudited, but it would appear as though SRCL has managed to increase their working capital because their current liabilities have reduced substantially and their total current assets have increased.

SRCL is going to need some form of waste management for waste from humans or otherwise.

SRCL has the benefits that because it is a LTD, shareholders have limited liability and more people might be prepared to risk their money although profits have to be shared. Control of the company cannot be lot to outsiders, with new shareholders joining with the permission of all current shareholders. There is also business continuity because the business continues if the owner dies.

“SRCL has always competed on quality rather than price” might mean that they have no clear pricing strategy. This also means that SRCL may have lost customers who are more concerned about price, maybe SRCL should consider competing on price and quality.

Bespoke projects means that SRCL will need some way of taking these orders and finding out what the clients want, visiting locations of big jobs. This also suggests that they make use of job production for one-off projects.

From Hampshire, Surrey is 38.2 miles (61.4 km) away and North London about 55 miles (115 km).

As it used to be part of a civil engineering business and currently only does civil stonemasonry, Stonemasonry for the military is a possibility which is open to the business, such as training facilities or fortifications.

It is questionable if accepting small jobs is cost effective for SRCL, are wage, time and material costs of repairing a front step covered in £50, also bearing in mind supply and demand, the exclusivity of SRCL could add value and increase the prices they can charge and maybe SRCL should not just accept any job that comes their way.

SRCL’s Objectives: £10 million (may be SMART, but we’re not told), £15 million by 2015 (Boosting turnover by 50% in the next 5 years) is SMART in form but there is question as to whether 50% is realistic and may not be SMART in that way.  Attract more work in the high value, new-build housing.

The high value, new-build housing is a growing market because of those, according to the case study, flocking to UK.

Joe takes a stakeholder approach to business, which costs SRCL in time, money, paper and privacy, but may brings its own benefits (good PR and fulfilment of their Corporate Social Responsibility [CSR]).

The highest quality at the headquarters, if it cannot be matched by other offices, then there may be varying degrees of quality and risks to SRCL’s reputation.

By purchasing the saw which can satisfy the requirements for most of their work quickly, they have increased capacity because they can produce more in the same space and time that they used before.

The Corinthian shields are labour intensive while the saw indicates that the mass production is capital intensive.

Clare Bennett splitting her time between the Hampshire workshops and various worksites will most likely incur travel costs that may be covered by the business.

The company may want to consider the philosophy of lean production to combat waste. They need a way of turning the stone chips from the machine into a by-product. The fact that Mike thinks a use should be found for the waste from the machine means that he’s sure that the machine is staying and that his concerns about the machine will be briefly considered, if at all. Mike believes the machine is only as good as it’s operator which is a further argument for training.

 

Staff motivation is an issue, how can SRCL ensure job security, possibly by retraining Mike Harris and others. It costs SRCL £400,000 – £500,000 every 3 years for apprentices.

The risk of subcontracting is that they may not do it to the standard of quality customers expect from SRCL. The labour turnover has complicated decisions because they will need to replace those who leave before considering growth. Replacing them will eat into funds for subcontracting.

The business can respond to labour turnover issues by hiring more apprentices 4 years before those who will retire reach the retirement age retire. They can also use the usual labour turnover strategies concerning earnings and transport. They could even try getting more young people and ingrain within them the culture that the managers would like to see at SRCL.

The marketing manager needs to choose between organic growth, inorganic growth, and diversification. The other three elements of the marketing mix which are not mentioned are price, product, and place.

The Stone Federation is the official trade association for the natural stone industry. The Federation co-ordinates all aspects of the industry and provides those who request it and users with a first point of contact for information, advice and guidance in sourcing an appropriate material and a reliable service which is evidently beneficial for SRCL if they have won an award from them.

RoSPA is The Royal Society for the Prevention of Accidents and have been recognising health and safety success for over 50 years. The president’s award which SRCL won is categorised on the RoSPA website as an achievement award. The President’s Award is given to businesses who have gained 10-14 consecutive gold awards. Gold awards are given based on their health and safety performance, which SRCL most have obtained for 10 years as stated in the case study. The next step up from the President’s Award is the Order of Distinction which is for 15+ consecutive gold awards. The Order of Distinction award is the highest level that can be attained. SRCL has now received the President’s Award for 4 years, which means that at the next assessment, it should receive an Order of Distinction.

All the managers are not aligned with Joe’s vision for SRCL which could be problematic.

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