That the name of the business is F N Lyte suggests that was named after another member of the Lyte family, so George is not the founder, but is now the owner through major shareholdings. It is small business, regardless of if it is judged by the number of employees or the profit levels or the number of building it has.
That George is hardly in his office and managing by walkabout means that he won’t be easy to locate. The highly skilled craftsmen and likely to bring high wage costs to LCL, and the job of these highly skilled craftsmen because LCL has almost new CAM equipment and it has case designers.
The exports made by LCL will be affected by exchange rates making it very volatile.
As LCL wants to show that it always acts with integrity and honesty, it may then be obliged to refuse Major Doodes’ order because it is in doubt. CSR stands for Corporate Social Responsibility.
Constraints which may affect the LCL include legislation by government, maybe affecting the acquisition of aluminium.
LCL adds value by changing raw materials into a finished product, but also more subtly through their reputation for quality, therefore creating an image for their products in the mind of consumers which may persuade them to pay more for their products as they believe they are getting more for their money. As a result of the added value, LCL may be able to achieve a high profit margin on each sale, covering their production costs, but this may be neutralised by what Shelia, the Finance Director, considers being over-engineering, whilst on the other hand, this may have contributed greatly to the added value.
LCL’s products are consumer durable goods and it operates in the secondary sector, turning raw materials into finished products.
LCL’s USP (unique selling point) is their reputation for quality. Factors that may affect LCL’s future success include effective employees, effective managers, sources of finance, reliable suppliers, loyal customers, effective marketing, a clear business plan and luck.
LCL is more product-orientated, therefore doing little marketing and not focusing as much as they can on profitability.
The opportunity cost of not accepting Major Doodes order is that they won’t meet their targets. If they do accept it, their reputation is at stake.
The fact that the other members of the senior team feel George’s views dominate too much suggests that although, George listens to the views of others, he does not take it into account. This is also an indication of resentment in the senior team. The extent to which LCL and George are considered to be one may explain the reluctance of the managers to make any decisions in his absence. He does not delegate the authority or train others or give the opportunity for others to make decisions.
LCL’s Stakeholders
Shareholders/Owner – George Lyte, Banks, Minority Shareholders
Managers – George Lyte, Dave Short, Chris Hodder, and Shelia Ranger
Employees – Highly Skilled Craftsmen (20)
Customers – Major Doodes, Musicians, IT companies, aerospace industry, manufacturers of scientific instrumentation, companies that participate in exhibitions and trade fairs.
Governments – EU, USA, Australasia and others
Suppliers –
Indirect Stakeholders
Suppliers – Supplier’s Banks (while they do not directly supply LCL, they supply LCL’s suppliers with finance and financial services, therefore allowing LCL to be supplied.)
Importance and Impact of Each Stakeholder group on the business:
It may be said that LCL takes a stakeholder approach to business as opposed to a shareholder approach because it needs to.
Owners – George as a majority shareholder has the most influence on the business. With a 60% share of the business, his decisions can not in theory, be effectively opposed. The other shareholders with a total of 40% of the shares cannot exert much control or influence the business too much individually or collectively, other than withdrawing their financial support.
Managers – They make all the tactical and strategic decisions. They have a lot of control in the short term, more so in their own departments and divisions of the business. George still has overall control here as managing director.
Employees – They have operational control of the business and as highly skilled workers, they may not be easy to come by. They have even more control with industrial action because they cannot operate if the workers go on strike. Geroge doesn’t have much choice but to listen to their views, which he enjoys doing.
Customers – These are also of great importance to LCL, because some of them are hard won as mentioned in the case study. Due to LCL’s size (and bank loans), LCL needs their customers to survive.
Governments – The Governments of all LCL’s markets has great control over LCL’s future success, which is at the same time limited. The government could enact new or amend existing legislation to affect, the way LCL trades, obtains materials, taxes that LCL must pay, LCL’s exports and imports and trade relations. If the governments do not specifically target LCL, any changes they make will also likely affect other businesses in the same market in similar ways, therefore not affecting LCL’s position. This is however dependant of the skill of management at LCL and how lucky LCL is.
Suppliers – A refusal to supply LCL will very much destroy LCL because they seem to have quite a trusting relationship (which may weaken, because of the worry from the banks of LCL’s suppliers). LCL does appear to have any alternative suppliers, but they do make items for stock.
As can be seen, George, in effect controls the strategic and tactical running of the business. If not using the weight as the owner of LCL through his shareholdings, he can do so as the Managing Director.
What George enjoys doing is also what LCL must do to survive, so showing just how intertwined the two are and George may be holding the business back.
Finance
LCL currently uses overdraft, which it seems, may no longer be available, as a source of short-term finance to obtain working capital. Another source of finance for LCL appears to be trade credit from its suppliers because the supplier’s banks are worried that someone else might not be as trustworthy, which means that LCL currently gets trade credit but that George is good at paying them off. LCL itself also offers trade credit as can be seen from the balance sheet.
LCL could possibly raise finance through the issuing of shares but this is likely to result in George losing some control of the business.
The retained profit for LCL seems small in comparison to the other figures on the profit and loss account. The business may also have access to some Government assistance.
Reading from the Balance Sheet, Everything physical the business owns comes to a total value of £92,050. This means that their building and machinery are individually less than this. They all add up to this figure.
Since it has been mentioned in the case study that LCL IS George in many ways, any questions asking about George may also want to know about LCL, or vice versa.