Cyclermate Report Essay Example for Free

Cyclermate Report EssayI. An executive summaryDai Armstrong and Lewis Llewellyn argon the two men who planned to open air their own gild after being superfluous due to the shutting down of the steel plants in their town of South Wales were Dai Armstrong and Lewis Llewellyn. They became good friends because of taking section in the local club of cycle touring together and decided to start Cyclermate, which was a bicycle manufacturing community that was laid down in the year 1988. In the beginning of time, Cyclermate gained a huge influence over the sh argon of the market. The company appe atomic number 18d well with no problems and difficulties up to 2010, the time when the fear is in trouble, it confronted lots of consequences with love to operation human resource and finance.Therefore, the demand by purchasers fell continue sadly even though the prices were cut down by the company the distinguishing attri exclusivelyes of the goods were not up to the quality as they were earlier. The rising complaints from the customers regarding degrading quality and faults in the product and the concern by the bank manager regarding the overdraft could cause trouble if the problems are not solved as soon as possible. Because of that, the company requires a right way to deal with this issue and save it from the edge of going bankrupt.II. interpolationBased on case study research in Cyclermate Ltd. and a series of case in community, this wrap up anyow work out the fiscal problems and various other problems confronted by Cyclermate. It has been de concentrateed to analysis the business environment and management, measured by SWOT and PET models that are required to be looked upon. The piece of music also draws on a brief summary for the financial side of the business. In addition, this report takes into account an examination of difficulties confronted by Cyclermate and possible resultant role for the problems, include short and long term solutions. Another fu nction of this report is to examine how the company could get out of the crisis and get affirm to the current market share. Finally, the report brings us some recommendations and conclusion of the whole Cyclermate case study.III. Analysis of Business Environment1. PEST AnalysisPEST analysis is involved in the knob external environmental that effect or control considerably a business strategy. As we mountain see, PEST is aimed for political, Economic, Social and Technological matters that can yarn-dye the business. PEST is recognized to persuade it in a utile manner of summarizing the external environment. However, it whitethorn be adopted the ability of how an establishment should react to these factors.Political FactorA political factor has a powerful impact on income tax, labor law, trade restriction and many to a owing(p)er extent. Company did not register enough workers to meet the targets and worker had to work extra time to get the work done and workers are getting paid at normal rate. Using a conventional method may rail at workers health and decreased their productivity as well. These mistakes made Cyclermate become a target of health and safety agencies. They turn out to improve the quality or else they can be stuck in authorized issues. On theother hand, they also need to reach out prouder standardized in manufacturing to meet prerequisites of the market, especially foreign markets.Economic FactorCyclermate had purchased a larger storehouse for goods, which indeed was essential to them but did not suffice their requirements. Purchasing a warehouse, which fulfilled the needs of the company, could have saved a lot of funds and that same money could have used in overbold or before long in existence projects. Another factor in economics that affects to the development of Cyclermate Ltd is labor. The un utilizement rate is increasing, therefore, this is a good chance for this company to choose worker more easily, and employ them easily wi th affordable price.Social FactorSocial factor has a powerful impact on human behavior, Cyclermate had many regulate but they did not have enough workforce to complete these orders. They have to work long hours in order to achieve their goals. One more important affair is that high-speed innovation as well as the increasing demands of consumers requires Cyclermate to change and improve every day. But there is a truly infact that living standard of clients could effect to their choices. The higher income distribution they get, the higher demands they reTechnological FactorCyclermate Ltd is using the oldest way to advertise their products by posting advertisement in handed-down newspapers. It has limited their goods to the customers. Instead, this company can set up its own website. In addition, Cyclermate Ltd is using the oldest way to advertise their products by posting advertisement in traditional newspapers. It has limited their goods to the customers. Instead, this company can set up its own website.2. SWOT AnalysisIt is a methodical technique that is utilized to categorize and identify self-coloured external (Opportunities and Threats) and internal (Strengths and Weaknesses) factors confronted with a specific area. (Johnson, 1993) Itrenders data which are useful in corresponding the capabilities and resources to the spiritual atmosphere in which it functions and hence is a large addition to the planning and marketing procedure. (Pearce, 2005) Let have look at the SWOT of cyclermate to understand more about the current issue that company has to incline with.StrengthsDirect channels of saleCyclermate has direct channels of gross revenue enhancement with the direct sales and direct shops hence intermediarys cost is largely eliminated. bring down the cost of manufacturing could unquestionably ease Cyclermate achieve a huge share of the market. As direct channels are in direct contact with the providers, thus, it could table service in increasing in qu antity or value of the sales and it provides a good opportunity to the providers to empathize the clients and could make required changes are per the requirement of the customers.Motivated workforceThe employees at the Cyclermate are extremely pioneering and are can fully utilize and achieve any given objective or alterations in the company but they are inhibited by the administration as a result they are unable to express their views freely. The employees could have a crucial role in the company for its overall growth and development.Possession of buildings and inflictsUnlike Cyclermate most of the companies dont possess either building or land and hence have to pay the heavy rents which adds to the cost but cyclermate can make any changes in the buildings and could capitalize in whichever way they wish to as they own it, which reduces the overall cost.WeaknessesInexperience and unmotivated provides of the companyThe company has made use of untrained workers. These untrained wor kers are not given the proper cooking after their employment. It is the fact that the employees and the staff are never allowed to put forward their creative and self-ideas due to the policies of the management, as a result of thismotivation in the staff is lost. Sales are decreasing in amount or degree and there is piling up of stocks in the warehouses which relents a feeling among the staff that they are not under a good management and as this feeling flourishes they lose hopes from the company and it has a very bad impact on their morale. The investors do not truly interested in the businessDue to the low returns on the capital invested by the investors, they are unhappy with the procedure of the company and are losing faith in it. In addition, the very fact that the shareholders were not paid any interest last year, it may result in the withdrawal of their money from the company. The quality concernsBecause lack of the power to be effective of the staffs to keep up the measur es of the goods and the quality of raw material utilized is leading to degraded quality of the goods eventually. aged machinery such as traditional spaying technique, painting and low-quality stock control technology needs updating as soon as possible if the business hopes to improve the production and sales in the approach time.OpportunitiesTake the advantages of social mediaCyclermate should launch its website, which provides complete detail and range of the products available with them. Company can employ a new computer system for keeping a good database of the company. They can introduce online change and modification according to the wish of customers. Introduction of new machinesThey should introduce some of the modern machinery in order to achieve higher-level productivity. Cyclermate could bring in new robotic machinery in the production process that will lead to quick output and a superior quality of goods.Employ trained workersThey have the opportunity to make use of the trained workforce, which has been recently laid off from the nearby production site. More workforce means opportunity to gain more productivity.ThreatsOverseas competitorsAs a result of the growth to a global or worldwide scale, many companies from across the globe have entered the market with products of low price and high quality, which certainly is a threat for Cyclermate as it supplies good with high cost and of lower quality. Due to recession, which is prevailing in Europe the purchasing power of batch is going down. Thus, company can have reduced sales or can face financial crises.ReputationDue to poor-quality product for a period of Cyclermates reputation is going down and therefore people do not like to go for their products. Huge retailMerchantsRetail Merchants like Argos and Halfords are captivating the market eventually and it might happen that Cyclermate may lose the market share completely. Customer threatens them to sue their company after their product was fail i n delivering the good performance.IV. Analysis of Business Management1. fiscal ProblemsProb. 1.1 Uncontrolled costThe main problem that company is in this situation is because of the uncontrolled cost and mismanaged budget. The costs are increasing yearly with the sales and selling price of the products going down. Let have look at the financial statement that company has 210,800 worth of non-current assets. Loan request will be refused as company only holds cash fund of 675 into their bank account. Costs are increasing at a rapid rate year after year. asset turnover ratio is 2.061. This indicates that the profit margins for the company are very low thats why the ratio is so high. We can also conclude from this that the companys pricing strategy is not effective leading to lower profits.Prob. 1.2 Dealing with a big loanCreditor days 24 days leads to the company has to pay back it its debtors in 24 days and it is just left with 675 of cash. The Company is liable to pay 87,500 to th e creditors and if they dont so a intelligent action may be taken on them, which are not good for companys reputation. They may talk to the creditors and ask for an extension in time for payments as they are going through financial crisis and dont have money right now to pay back.Prob. 1.3 Lots of inventoriesBesides, it shows that the volume of inventories are stored and not effectively managed, that is why current ratio is at such high level, which also means low sales and low revenue gained. Moreover, the company relies on the bank loan as the main monetary support.2. Operation ProblemsProb. 2.1 Stock control systemDisturbingly, materials are always in the deficit which results in the disruption of the production process recently. Although the demand is higher and higher, company cannot meet their requirement because of lacking necessary components.Prob. 2.2 Inappropriate discrepancy of dutiesThe inappropriate division of duties obviously had made such a burden on many workers . In particular, Dai Armstrong has to deal with many tasks such as making all the frames, manufactory manager and business director at the same time. He himself also finds it hard to keep up the level of production (approximately 8 frames/day) because it requires the harsh somatogenetic demands.Prob. 2.3 Assembly is a complex processMoreover, assembly is a complex process, which takes 2 or 3 hours for one person. Janice Jones and Ffred Gregory often have to work overtime to catch up with the progress. As a result, their health and time issue could be heavily damaged.3. HR Management problemsProb. 3.1 Improper workforce in manufacturing erroneous workforce division is one of the most serious problems of Cyclermate Ltd. Besides, lack of experience employees and the aging workforce are worrying the production process and raising a big question for a more effective training system.Prob. 3.2 The training system createsThe training system creates such obstacles for the assembly proces s. Typically, Fred, who is 18 years old, is a new and un-experienced person the training for him is necessary, however, not easy at all. It takes so much time to instruct Fred in traditional way, which is apparently the cause of wispy production recently.Prob. 3.3 Corporate cultureThe staff is highly de-motivated due to decreasing sales and profits and also the behavior of the management as in the sinking feeling company they are not free to put up their ideas even if they do they are rejected because of the superiority of the management.V. SolutionA. Short term and immediate planning1. Financial problemsSolution 1.1 Cost in selling and distributionCost in selling and distribution could be possible declined to save more money for the company such as cutting cost for postage and courier charges by substituting by cheaper service, as well as the travel and hospitality. Those indirect costs contribute such high cost to the manufacturing of the cycles, restricting them would help boos t the sales with cheaper price.Solution 1.2 Ask for trading debtors to repayThe solution to this issue is that they should strictly resolve and for thetrade debtors to repay the loans as soon as possible. The amount of $200,571 would help the financial situation better in the coming time. Once their assets are raised through and their liquidity are proved to be valuable enough to afford the loan, it will be beneficial for them to fasten on money from the banks.Solution 1.3 Direct sale pricesCyclermates direct sale prices are higher than shop sale price. In order to generate vigorous revenue, Cyclermate needs to reduce their direct sale price. By reducing the direct sale prices will increase their sale and it will be easy for them to generate healthy revenue.2. Operation ProblemsSolution 2.1 Buy stock when neededCompany should only buy stock when they needed. Buying stock earlier will harm companys financial patchs, because raw material does not hold their value and it has got mor e chances of losing its market value.Solution 2.2 Require clear divisionA good answer for this problem is that the company should require clear division to who is able to undertake and separate arrangement of duties. Specifically, assigning other qualified person on frame-making position so that Mr. Dai could concentrate and dedicate himself to external relations business only.Solution 2.3 hiring more experienced laborsThe company should consider hiring more experienced labors for assemble line and frame-making because Mr Dai can no longer put up with the physical requirement of the task. With those simple tasks like packaging, it is acceptable for free hand employees to help out, but only when they finished all their tasks.3. HR Management problemsSolution 3.1 Employ cheaper laborsIn this case, the company can consider employ cheaper labors that aresuggested by Maldwyn Jones Chinese or Taiwanese labor to make the machine for them- much better quality but half the price and move Idr is Pugh to higher position as a supervisor for the whole wheel-making process.Solution 3.2 Improving the staffs skillsThis training program involves directly in the new changes with a intend of improving the staffs skills, expertise and methods to complete an error-free task, exposing them to unfamiliar ideas and of course, giving them the chance to practice task under time/speed limit.Solution 3.3 midpoint business valueTrust in others and a firm belief in overcoming difficulties (set up new mission overcome difficulty, minimize waste and consequence)B. unyielding term and efficiency improvementsPresent fiscal condition of Cyclermate (Accounting ratios).The acid / liquid ratio of Cyclermate is 0.761, which depicts Cyclermate is incapable to fulfil indebtednesses of shorter term, which mean that it would not be competent to satisfy fiscal difficulty which may happen in the time to come. The Asset turnover ratio for Cyclermate is 2.061. As the ratio is excessively high, this mean s that profit margins are very low. The pricing strategy of Cyclermate is ineffective and because of that low profit. Return on capital employed Cyclermate has far too less returns on the capital employed, just a mere 0.11 or 11%. Debtor days It would take Cyclermate 115 days to get back the money from debtors. Creditor days Cyclermate has to pay back in 24 days to its debtors with a cash balance of 675.The financial statement of Cyclermate shows that it has non-current assets which is of worth 210,800.Any request regarding a loan from the bank will be refused as it has a mere cash balance of 675. It may get a loan based on the position of its non-current assets. In place of the above-discussed alternative, it can sell its freehold land, which is worth 160,000, and use the proceeds from the sale in the business. Cyclermate could acquire funds if they pursue its trade debtors to pay off soon. Debtors worth 200,571 are to be recovered and the funds would be acquired soon if the debto rs do notdefault and pay in full. Once it has sufficient fund, Cyclermate could apply for the bank loan.VI. ConclusionOverall, Cyclermate will have a better future if they operate their business in slightly different ways. Cyclermate products were famous for its quality and price,if the company still provide what the consumer wants than it would be no harm to the company. But there few changes needs to be changed and once the new rules and regulation apply into the business than it would be a great opportunity for Cyclermate to operate their services. Moreover, With the movement of new threats into the marketplace the present systematic plan of action of Cyclermate is continuously below the acceptable level in its performance due to the fact that the new firms and the existing organizations are coming up with improved quality of products at a cheaper priceVII. RecommendationsThe company must sign up correct individual as per the requirement of the position. Currently the management is interfering in the process of production and is unable to focus of the activities they should be concerned. The financial hardships through which Cyclermate is going through at present could be resolved by selling the unused stock that is piled up in the warehouse. In order to generate revenues and funds to invest in other arena of the company, Cyclermate must sell its freehold land that would certainly generate high revenue.In order to achieve higher output and productivity, modern technology should be applied in the production process. Installing a computer database through which the management could look into all the important and relevant data as and when required. Cyclermate should launch its website, which provides complete detail and range of the products available with them. Reducing both direct sales prices so as to sell the current stock and trade debtors. Employing young and trained workforce that is fit for the position.