Introduction
Business dynamics are always changing and this calls for proper management to ensure that business organizations attain profitability. In today’s business world, most companies are competing on the basis of flexibility, speed, and innovation and this requires excellent technical expertise as well as proper management. There seems to be more emphasis on organizational development (Ulgen, 1991) amongst various business entities. There is therefore the need to construct a proper management scheme that will always define a good path for the company. In addition, companies need to embrace proper management plans if at all they intend to remain competitive in the market. Companies ensure that the contacts that they have with prospective and existing customers remain up-to-date.
Customer management is essential for any organization to succeed. Most of the customer management processes involve using business process management and customer relationship management to make the services offered better. Thanks to the use of technology in the business world, it is now easier to strengthen existing customers and also attract new ones. This allows for the provision of personalized services to the clients. Understanding the company’s situation and what customers want will go a long way toward creating a profitable marketing strategy (Teradata, 2003).
Jamboree Marquees Limited needs to embrace strategic management to have a good layout on how to improve its operations. This will help to attract new markets which were found to be missing in JML. Financial accounting will come in handy to ensure that desired results are achieved. Good accounting is the only way to achieve optimization of the cash flows. Proper accounting ethics has a positive impact on increasing profits through constant assessment of historical facts and trends (Morgan et al, 2008).
Proper running of a company also translates into the financial health of an organization. A company should not rely on overdrafts or loans to sustain its operations; this would act as a signal that things are not moving in the right direction. Jamboree Marquees Limited is a company that deals in marquees and has a solid customer base. Since the company has so far been in business for three years, it has managed to build a considerable clientele. However, this clientele base has failed to bring good business to the company. The company has its target market, mostly in the suburbs of the city. However, it can also conduct business outside the city when they get bookings, this is vital in increasing the market base. The company is defined by the services that it offers to the clients and there is no need to receive complaints from customers who are not satisfied with the quality of service they get (Newman, 2007).
Profit is the foremost core purpose of any business. The invested material and non-material resources must be properly utilized so as to earn enough to cover up the cost of running a business and generate an additional mark up. Earnings are supposed to be increased and this is done through increased strategic sales and marketing that increases the turnover of the company. This is done by keeping the associated unit cost as a constant i.e. the costs should also not skyrocket as they will eat into earnings. The company should strive to decrease costs while keeping the earnings constant as is seen in the financial results. More emphasis by JML management should be placed on the way financial issues are approached. The company needs a proper chain of command that will help in the proper execution of activities and running of the company (Kurutz, 2010).
Discussion
Problems facing the business
Seasonal business
JML mostly deals in hiring out marquees to its clients to be used in events such as race meetings, cricket matches, weddings, parties, and corporate hospitality functions. The business is not all year round as these events are mostly held during the dry season because the marquees cannot be used in cold weather. Business should be all year round and this is no excuse to the company as we can see. When you look at earnings in this low season, they are very minimal to transform the business. This calls for diversification as the company should be in operation no matter the season. This is all seen in the financial results when the company records low earnings in some months.
Business strategy
This is the direction and the extent of a business over a long time period and this can be achieved through the optimization of the resources available. From the findings, it is quite obvious that the company does not have a clearly laid down business strategy as it only operates in suburbs but when they find business in distant places they don’t hesitate. The business only focuses on a small market. The business lacks a strategy by which it wants to grow. This is very myopic as far as increasing earnings is concerned (Campbell et al.,2002). The business ends up getting a bank overdraft as it cannot finance its own operations. The business should place operational strategies in place and thereby focus on how it can expand its market to other areas away from the suburbs.
Demand
The business is facing a very imbalanced demand as it is only high during the summers. This is seen in the financial results when we have a high turnover, especially in some months more than others. This is a challenge to almost all businesses and JML should come up with ways to see that demand is sustainable throughout the year. The business will not operate well if it is not getting orders to offer its services. This seems to be a reason why the business is not posting good profitability though it has a good turnover. This problem seems to be a hindrance towards growth in turnover (Buxey, 2003).
Poor relationship with the banks
The bank seems to have a bad working relationship with the company as its cheques are sometimes returned unpaid. This is because the company does not complete the necessary paperwork when closing deals and doing business. Banks form an integral part of the business and this explains why the business is struggling financially in some areas. The bank can be helpful in mending the company’s books besides providing financial and managerial services to the business. A working relationship with the banks can even help the business get funding for its entrepreneurial schemes.
Administration
The business has a poor administration system as it ignores all the other business ethics that go with proper administration. This is seen where they have only involved paperwork when they are looking for orders. The business has completely ignored that it can as well improve on management by ensuring that everything they do is well documented and catered for. This problem has been translated to the cash flow as they have a problem in their turnover simply because other vital payments might go unaccounted for. The administration has also not been able to figure out how to rent a small warehouse or office that will not eat into their earnings. They seem to be paying a lot of money to rent yet they are not making full use of the house. This is a problem that needs to be corrected.
Customer relations
The business is experiencing problems in that there are no formal documents that are signed when they are doing business with their customers. This is dangerous as it can translate into a breach of contract and in the process, one party might not be able to honor the deal. This is a bad practice as most of the financial transactions will not be accounted for as there is no proof that they indeed took place. The company is not getting enough customers because it has in the past not served some of its customers well and neither attends to their complaints in the right manner. There are also cases where the company has not been paid for its services because it did not give out the invoice about a given deal. Some clients are also settling their bills after such a long time despite them being paid on time. All these seem to affect the cash flow.
Pricing
The company has a big problem when it comes to its pricing strategy. They fix prices depending on the customer, this is dangerous as the prices can be so low and not translate into business. Prices are fixed by the person who is dealing with the client at that particular time. This has a bad impact on the firm’s turnover as it can not be projected because you can not tell of the firm’s pricing. The management of the company should adopt pricing mechanisms that will enable them to have a competitive advantage over other businesses of the same line. Such mechanisms include geographical pricing where prices vary according to regions or skim pricing where they take advantage of their competitive advantage and charge higher prices.
Poor accounting methods
The company seems to be employing poor accounting principles as their accountant is incompetent and only appears at the firm to record transactions when he feels he should come. The accountant has not adopted a computerized accounting system that would record all the business transactions and even be used for analyses. These business records can also be used by the company to acquire a loan from financial institutions.
Recommendations
The business priorities need to be reviewed and given a more strategic approach. As the business is only booming in some seasons the firm needs to try and capitalize on the high season so as to ensure maximum revenues for the firm. In addition to these, the company needs to diversify its service portfolio so as to also cash in on other related businesses when it will be in a low season (Kaplan, 2005). The company needs a bolder business approach so that it can tap into the market that it has not been able to penetrate before. They could offer transport services using their trucks during the off-peak season thus penetrating into other market segments. This is where a business growth strategy comes in with a view of increasing turnover and hence profitability (Stettner, 2000).
The management needs to change the way it’s running the business because it’s quite obvious that there is poor management. There is no executing authority of the business. Most of the undertakings in the business are not planned. The company needs to plan ahead as this will chart the way forward on how they will increase profits and the general improvement of the firm. The management needs to have an employee strategy instead of employing randomly the way it is doing. This is a very costly method of recruiting staff in the organization. Its impact is mostly felt when it comes to variable costs (Caroselli, 2000).
The company needs a good pricing strategy that will go a long way to help in ensuring that all the revenues are accounted for and this will always give the true picture of the company’s turnover. Through a good pricing strategy, they can be able to forecast their financial results and know whether they will hit the target and if not they will devise ways to ensure that the company records high profits (Head, 2007). They can adopt a geographical pricing mechanism for charging their services.
The company needs to review the way it is recording its financial results as they normally tell the true picture of the company. The current accounting system will not guarantee proper financial recordings; all transactions must be recorded in an organized manner. The system in use is too costly and in the process, the company is losing a lot of money (Ohmae, 1982).
The company also needs to come up with a new customer care approach that will lead to more personal attention being given to the customers and in the process create customer loyalty and open more markets. The company is not marketing itself adequately and this explains why it has a low turnover. It has only capitalized on its traditional clients without more penetration into the untapped markets. So the company can increase marketing but at a minimally strategic rate so that it does not eat into the earnings. Another way of increasing sales is through value addition to the services that the company is offering. In the process, it will increase demand for the company’s services which automatically increases turnover (Meijerink, 2001).
The company is facing a lot of problems because it has not thought it wise to embrace technology in its operations. Through the use of technology, they can computerize their activities. This will enable easy booking for their services which will automatically be cheaper. The use of technology will make it easy to record all their transactions and in the process, all the earnings will be recorded unlike presently where the company does not record some transactions. Technology will eliminate a lot of paperwork that seems to be increasing the firms operating costs which reduces earnings (Bacal, 1999). Embrace of technology will also allow for analyses in the various departments, be it finance or in the marketing department.
The company should review its management. Currently one can not tell who is running the company and as a result, there is no accountability. The current system is very costly as many processes are unaccounted for as there is no specific person to coordinate the operations (Sanwal, 2007). The company should therefore employ some professional staff to manage the various sectors of its operations. This includes a competitive accountant as the current one is spending much of his time on personal matters.
Jamboree Marquees Limited must improve on their relations with the bank and must avoid relying on overdrafts for their operations. Improvement of operations by the management as discussed above will directly lead to an increase in the business turnover and hence more profits.
Conclusion
The company needs to have a plan of how it will achieve some of these recommendations. Most of these recommendations are aimed at increasing profitability. The company, therefore, needs to reduce variable costs more so on direct labor and expenses and this will increase turnover. The company will have to reduce on fixed costs like rent and also administrative costs that it’s currently incurring. When all these are reduced they lead to an increase in the turnover of the company. This will steer the company to more profitability. Activities like increased marketing will increase the company’s sales and hence the turnover.
By increasing the demand for the firm’s services there will be increased sales of the company’s services which will improve the balance sheet. Good debt management will help the firm to improve on its books of accounts and in the process, it can easily get financing for expansion purposes. All these recommendations are cost-cutting measures that are aimed at making the company economical in running its activities but on the other hand, it will be in a position to achieve a high turnover.
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