Unit 33 Small Business Enterprise Assignment Copy

Introduction

For an economy, small and medium enterprises are an important aspect. Enterprises which can be defined as businesses which are self-governing in nature and are majorly handled by single owners can be categorised as small business enterprises (SBE). Total size of company in terms of turnover, number of employees and overall assets of company are some of the factor on the basis of which SBEs can be classified. Reason behind importance of these businesses in the economy is that, they help in generation of huge number of job opportunity, and also provide strong support to the economy (Schaperet al, 2010). Another important observation for SBEs in society is that these organisations are based on some or the other innovative idea which market might have never seen. Even though these organisations are small in size, but if they get supportive environment they can grow from being SBE to large enterprise within no time. Organizational culture, ownership or control also helps in classifying the SBEs.

There are various important factors which impacts a SBE. For example, focus on enhancement in the business performance, analysis of the quality, performance management and overall scope of improvement. Change management is one major critical area for SBEs where close monitoring is always required. This task is focused on a small business enterprise named Cambridge Satchel Company. CSC is a satchel manufacturing company with its entire marketing and manufacturing setup in London UK itself. It has positioned itself as one of the highly popular leather satchel which are popular not just in UK, but across various countries of the world. Focus of this assignment is to understand various fundamental aspects related to operating a SBE. That is why to have a better understanding case study of CSC has been referred. Owner of CSC is Julie Deane and her mother who started their organisation with a humble beginning from their house itself. Within 3-4 years of its operation, CSC today has become one of the highly popular satchel brands, partly due to its high quality and effective pricing, and partly due to its unintentional endorsement by various celebrities form movie industry. Thus, further sections will analyse various aspects related with a SBE, and what challenges a SBE can face in its existence, and how it can grow further.

Task 1

Describe the nature and objectives of the Cambridge Satchel company Ltd and conduct a comparative analysis of it operations using the data presented.

For any economy, SBE s can be defined as the pillar support for the economy, especially when it comes to developing economy (Longenecker et al, 2013). SBEs play an important role in supporting the society, as they help in creating lots of job opportunity. CSC was founded by Julie and her mother in order to pursue their entrepreneurial dream. Started with a minuscule capital of 600 GBP, CSC has grown by leaps and bounds over last 3-4 years. Based on the case study one important point which has been highlighted is that out of seed capital of 600 GBP, more than 70 GBP was spent in the promotional activities like creation of promotion material, booking advertisements etc. Rest of the amount was invested in the manufacturing of the initial batch of product for satchel. CSC has stayed true to the philosophy of a SBE. This can be understood by the fact that initially CSC started with very less fund, and gradually they scaled their business while keep all the risk under control. CSC also represents growth of individual to pursue his/her entrepreneurial dreams. Currently CSC has clocked a turnover of more than 1 million GBO in a month. CSC has achieved this by being aggressive in its business growth strategy. That is why if observed in the case study then it can be seen that CSC has witnessed a phenomenal growth, from its turnover from 30,000 GBO in first six months to 200,000 GBP by end of first year.
Company’s financial figures which are represented in the case study tell a lot about business strategy of the SBE named CSC. One important observation for CSC is its asset and liability ratio. For any company irrespective of its size, it can always be in safe position when its assets are more than the liabilities. For example, in case of CSC currently liabilities are worth 1,620,456 GBP whereas current assets are worth 4,478,698 GBP. This not only represents the success of company, but more importantly it also represents the fact that how tightly CSC management has kept a control on the finances of CSC so that no extra money is spend in acquiring and servicing the new customers. This has ensured that CSC remains on growth path by keeping its finances under complete control. However there are numerous strengths and weakness of CSC which can be highlighted below:

• Initial capital required invested for start of the business was less, hence profitability remains high.
• CSC has been able to create a unique brand image in the market of leather satchel.
• Product positioning of CSC suits the market environment, and is focused on its target customers.
• Sustained focus on quality of product.
• Pricing strategy of company is as per its target customer. Satchels are price economically.
• Unintentional promotion by celebrities has given a major boost to brand image of CSC.
• Online e-commerce website has made a major impact on the turnover of CSC, with more than half of its annual revenue coming from online sales channel.
• Has maintained tight control over its production and supply chain, reducing unnecessary dependency on any third party vendors.

On the basis of the above strength it can be recommended that there are various strategies which CSC has adopted in order to satisfy their customer. But now they have to make greater presence on their online sales as it is becoming the latest trend in the present scenario. It will even help organisation in generating greater sales and profits for the enterprise.

Even though CSC has plenty of strengths, it has its share of weaknesses as well, which as are follows:

• With increased popularity, there has been increase in counterfeit products as well, impacting the image of original products.
• Due to nil outsourcing, cost of production still remains on the higher side.
• Brand exclusivity fading gradually, after the products by CSC have become too common in the market across the globe.

In order to overcome the weakness of the CSC it can be recommended that business must overcome their issues of counterfeits products by employing IT specialists within the business. They will help in blocking the websites which are unrealistic on the internet and it will help in creating the original presence of the enterprise. Even business must outsource their product manufacturing to countries such as China in order to reduce the overall manufacturing cost. China is a country which has got potential of producing high quality products at cheaper rates.
For any organisation, measuring its performance on various parameters is an important way through which it can analyse its current position in the market (Higón & Driffield, 2011, pp.4-24). In case of SBEs like CSC, performance measurement becomes even more critical due to size of business. With limited amount of capital available it becomes important for the business to ensure that it makes optimum use of available resources that is why, performance measurement play a critical role as it keeps indicating the company about its overall performance from time to time, and how it can further optimise its performance. Performance can be defined as number of goals and objectives which a company might have achieved over a period of time.
In this regard performance of CSC has been stellar in nature, and since its inception it has maintained a growth momentum. CSC has maintained its growth not just in terms of its growing popularity, but has also ensured that it has remained profitable since it has started its operations. Its positive growth can be understood by the example that after starting business with only 600 GBP, within 4 years of the business CSC now makes revenue of more than 1 million GBP per month. Within a span of 4-5 years achieving such kind of growth is extraordinary for a SBE like CSC.  Its growth rate and performance has also be highlighted who believes that in current scenario CSC can be comfortably placed in world’s top 10 leading satchel manufacturers.  CSC’s overall asset value was approximately 50,000 GBP which increased to more than 4, 00,000 GBO in 2012. These assets include both tangible as well as intangible assets. CSC’s liabilities are also less in range of 150,000 GBP which is far less than the assets of a company. For any SBE achieving this position where the assets are more than the liability is the most desired situation (Berger & Udell, 2006, pp.2945-2966).
There are few areas which CSC needs to focus upon if it needs to grow further in future:

• Variable cost of CSC should be restricted. This variable cost in CSC balance sheet impacts the overall growth of the company.
• CSC should further expand its manufacturing base to more location, as it will help CSC to save critical money on the logistics.
• CSC needs to channelize its liquid assets in right direction so that it can take advantage of its position in the market.

Thus, it can be said that over a period of time CSC has maintained is positions as a successful SBE in the market. In order to sustain its position and grow further it needs to capitalise on its strengths. For a SBE like CSC it is important to have complete view of its business and tight control of all its business processes and capital.

Task 2 Change Management and Business Performance

Identify and discuss how Cambridge Satchel Company Ltd managed its weaknesses and the methods deployed to reposition itself in the competitive environment.

In above sections some of the key weaknesses were highlighted which were faced by CSC. Thus, CSC dealt with these weaknesses in following ways:
Weakness related to counterfeit products was a major issue for CSC, as it not only damaged the brand image, but was also impacting the revenue of the company. This can be understood by the example that when an audit was conducted, more than 330 fake websites on internet were found which claimed to be selling the original CSC leather satchel, and cheated the customer either by selling them replica of CSC leather satchel, or by duping the customers after they deposited money to buy the product. Thus, in the end customers who were duped, they used to blame the original company for this even if there was no involvement of CSC management in this whole issue. Thus, CSC hired a full time monitoring agency named Mark Monitor in order to track this issue, and worked proactively to report any such website which claimed to be selling the original CSC product. Another weakness which CSC faced was declining exclusivity of its product due to its increased popularity. CSC Satchels initially were famous for their uniqueness, and product quality. However, over a period of time as product became more and more popular, company faced an issue of generalisation of brand image. Thus, Deane-founder of the company decided to handle this weakness by further focus on improvement in the look and feel of product. It worked towards improvement in the typical ‘English’ look and feel of the product which further boosted the USP of the product.
Manufacturing cost of the satchel for CSC is another major weakness. Reason behind this issue is that CSC has not outsourced its manufacturing processes in order to keep control on the quality (Enright et al, 2010). This also ensured that CSC had to depend on various third party small and big vendors which created unnecessary dependency and quality issues. In order to deal with this, CSC bought its own manufacturing unit within UK so that a tighter quality control can be implemented and dependency on other small manufacturers can be reduced.
Recommendations which can be initiated against the weakness which has been found in the functional operation of CSC are as follows. It has been seen that business is undergoing the counterfeit products which is spoiling out their brand image. In order to have control on this aspect business need to block all those sites which are spoiling out their image in the market. Even it is important for the company to avoid generalization of their product and services (Ghobadian & Gallear, 2011, pp. 83-106). It has been seen that organization has been famous for their product uniqueness and quality. But in order to different in the market among the competitors it is important for the enterprise to be innovative in their products. They must come with goods which are completely unique in the market in order to attract larger customer towards their product. Further, it has been found that manufacturing cost has been one of the weaknesses which organization is undergoing. It is happening because they are outsourcing their product manufacturing. This can be avoided if CSC comes with their plant with high grade technology in order to produce quality product for their customers.

Explain the measures put in place in taking advantage of the opportunities with specific reference to Personnel Management.

Since its inception CSC positioned itself in a unique position in the market. With its continuous efforts to penetrate in the market CSC has been taking advantage of several opportunities it has got (For example, it understood that important of e-commerce channel to sell the product since beginning. This is the major reason behind its focus on strengthening its online presence, and today more than half of the total turnover of company comes from online channel. Online presence has helped CSC to go global with its product, where people are able to buy its product from anywhere in the world.
In terms of personnel management, CSC has mentioned various situations, such as non-enthusiasm of small scale vendors or producers who were happy with whatever work they were getting. Whereas large scale producer with whom Deane worked eventually betrayed by launching similar rival product after stealing the core idea from CSC. This proved to be a blessing in disguise for Deane, as in order to avoid such situation in future, she has setup her own manufacturing unit, which has helped CSC in gaining better control on quality of its product. Deane has also helped the community by not outsourcing the work to any other country, as by keeping the manufacturing unit and other processes within UK, she has been able to create number of job opportunities for the region, and helping the society in a way. However, there are few areas, where company can focus on and grow further. For example, currently CSC’s business is majorly focused on the online channel business (Even though it is a good strategy keeping future in mind, but in order to provide more visibility to brand, it should also focus on setting up physical brick and mortar stores. Even if it does not want to go solo with physical stores, it can surely tie up retailers and offer its products in their stores on commission basis. It can also opt for franchise model.
Another area which can be recommended for CSC operation is to lay down focus on the needs to work upon is the marketing, branding and promotion. Rather than following ad-hoc approach, it should set up a dedicated marketing and sales function in business which will be capable of promoting the business with new strategies. CSC can initiate their marketing activities by going through the media such as social networking sites. These are the websites which consumers visit daily. It can be a channel which business can use in order to target their potential customers from all over the world.

Conclusion

Overall it can be said that The Cambridge Satchel Company has established itself as a unique company which can serve as a guideline for other similar SBEs. It has clearly highlighted that if there is proper control on capital, inventory and overall supply chain then not only business can keep their cost in control but they can also have much better control on the quality of their end product. Future for CSC is even brighter; especially with rapid emergence of internet based sales channel will surely help company to grow further as it has already based its business strategy model on the online sales channel. However, CSC should ensure that it doesn’t loses its focus from issues such as counterfeit products and cost of production, and also focuses more on setting up business function which can cater to its expanding requirement of marketing and sales.

References

Berger, A. N., & Udell, G. F. 2006. A more complete conceptual framework for SME finance. Journal of Banking & Finance, 30(11), 2945-2966.
Enright, M. J., Ffowcs-Williams, I., & Nolan, A. 2010. Local partnership, clusters and SME globalisation.
Ghobadian, A., & Gallear, D. N. 2011. Total quality management in SMEs. Omega, 24(1), 83-106.
Hagen, B., Zucchella, A., Cerchiello, P., & De Giovanni, N. 2012. International strategy and performance—Clustering strategic types of SMEs. International Business Review, 21(3), 369-382.
Higón, D. A., & Driffield, N. 2011. Exporting and innovation performance: analysis of the annual small business survey in the UK. International Small Business Journal, 29(1), 4-24.