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I present this business assignment 1 for Business Management for Advanced Business Management HETAC Level 6 on the company Cuisine 365 Limited. I am currently working in the accounts department of Cuisine 365 Limited as an accounts assistant and office manger.
2 Terms of Reference
Due to the economic downturn in Ireland, companies are fighting for survival in a country that has seen consumer spending decline by 3.3 % in non specialised stores including supermarkets (www.cso.ie). Everywhere we look now we see businesses setting up and advertising local banners, signs and posting leaflets detailing their price reductions on goods to entice people into their businesses. Supermarkets especially need to make sure their stock turnover remains pretty much the same. They need to make sure stock is not wasted as this will result in a loss of stock and low profits. This industry is highly important to Cuisine 365 Limited as supermarkets are seen as our largest customer. The country has seen some of its biggest companies fail at this time with surprisingly small to medium sized businesses 'getting through the recession'. People are literally afraid to spend any 'spare change' they may have. The Consumer Market Monitor conducted by UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland showed the Irish Market continued to be in a very weak state in the 2nd quarter of 2009. The report states "consumers have reacted cautiously to the ongoing economic problems by increasing savings and curtailing expenditure". As a small to medium size hot and cold food production company it is vitally important to Cuisine 365 Limited to become aware of identifying new opportunities and threats that may affect the company. Companies need to internally analysis the value of each department to determine the sustainable competitive advantage if any. We will need to look at a couple of tools that analyse the internal value chain of the company.
3 Method of Procedure
A variety of sources were used to construct this report. The report comprises of mainly secondary research and academic theories. These theories and the research have been applied and used to support the findings. I have used the Internet search engine for any statistic figures relating to the report and I have reverted to college handouts for my academic theories.
a) Description of Cuisine 365 Limited
I have prepared the business report on the company Cuisine 365 Limited. Cuisine 365 Limited was established in October 2004, the company is a small to medium sized private limited company, it is a family business that supplies the convenient food market with ready made meals.
The company is a flat organization and has a small span of control comprising of 3 main departments.
Preparation, Cooking and Product department
Quality Control, Stock and Storage and Despatch Department
Accounts and Administration Department
The company is located in Units 1-3 of Oxmantown Lane, Dublin 7.
These premises are rented from Spade Enterprise and are approximately 140 m² each. Each workshop is specifically equipped with all hot and cold food preparation facilities with built in washing and cleaning facilities. These premises also facilitate cold storage fridges for the holding of stock and the storage of products prepared and ready for dispatch to customers. Both premises have built in offices on the upper levels for use of the daily functions such as ordering of products, stock, customer orders and queries and all administration and account functions.
The company prepares and supplies hot and cold ready made meals with products consisting of a range of sandwich fillers, cold salads and convenient hot foods such as Lasagna, Shepards Pie and a variety of Curries. These products are supplied to a number of small and medium size wholesale and retail Irish businesses. Cuisine 365 customers are made up of small businesses such as petrol garages and stations, delicatessen shops, butchers, take away establishments and larger supermarkets. Cuisine 365 Limited also prepares and caters for private, family and company functions.
The company employs over 30 staff members. The staff numbers are made up as follows:
- 2 DIRECTORS (1 OF WHICH IS ALSO HEAD CHEF)
- 1 SECOND HEAD CHEF
- 5 FOOD PRODUCTION NIGHT STAFF
- 8 FOOD PRODUCTION DAY STAFF
- 4 COLD FOOD PRODUCTION DAY STAFF
- 3 KITCHEN PORTER CLEANING STAFF
- 1 DESPATCH MANAGER
- 3 DESPATCH PACKAGING STAFF
- 1 QUALITY CONTROL MANAGER
- 2 FOOD TRANSPORT DRIVERS
- 1 OFFICE MANAGER
- 1 FINACIAL CONTROLLER
Cuisine 365 Limited is a flat organisation with all decisions, goals and strategies coming from the directors.
Below is a diagram of the organization chart:
- 2 Directors (one of whom is also a head chef)
- Head chef and second head chef
- Food Preparation &Production Quality Control and Despatch Accounts/Office
From the organisation chart we can see all staff members report to the director and the second head chef, however a change was introduced to reduce the responsibility of the director. I was brought into the company to deal with all customer and staff queries. I will outline my duties further on in the report.
The director sets out the daily orders and tasks for the company and delegates the information to the individual department members through staff meetings or individual talks. Each department has its own daily functions supporting the company's production.
Preparation, Cooking and Product Department:
This department consists of two sections for the hot and cold food production preparation and is located in unit 3 of the premises. Members of staff prepare the ingredients for the products needed for the customer orders. Our customers are provided with our product list as there are is a selection of sizes available to them for their needs therefore our products for each customer are specificaly made to order. The director reviews the daily orders for the department and lists the amount of ingredients needed for each hot and cold product. The director then delegates this information to the second head chef who in turn delegates the daily orders and ingredient tasks to the preparation staff.
Once the ingredients are prepared the cooking production stage takes place and when all hot and cold food products are ready staff members weigh out the orders and package them in the individual containers and boxes and send the goods to dispatch for labelling and transport.
Both sections include cleaning staff who maintain the kitchen hygiene and utensils. Their duties may also include assisting in the preparation of products if the kitchens are short of staff members.
Quality control, Storage, Despatch and Logistics
The quality control department is located in unit 1 of the premises beside the storage facilities for dry and frozen food stock. The quality control department is made up of one staff member who checks all incoming delivery of supplies and the stock levels. Quality control maintains all our products are of good quality and deals with any queries relating to the products. As Cuisine 365 Limited is a food production company it needs to keep in line with food quality standards. The quality control officer needs to keep on top of these rules and regulations and will inform the director of any changes.
All storage facilities are located in unit 1. All stock for hot and cold foods are stored here. The unit contains a walk in fridge for all frozen stock. The dry goods are stored upstairs in the unit.
The dispatch department is made up of four staff members. This number can be broken down to a dispatch manager, dispatch packer and two drivers. When the finished products are sent to dispatch, the staff members allocate the products to each order. The products are labeled with the product name, ingredient content and size of the product. Label packages were implemented to the company to provide good presentation of the finished products and to speed up the packaging process. Excel delivery dockets are set up to confirm the customer name, address and breakdown of the orders ready for despatch. These dockets are then printed off for the drivers for transportation of the goods to each customer.
The logistic department is made up of two drivers who deliver the finished products to our customers. Both drivers also assist in the preparation of the delivery orders and collect any supplies that are needed urgently from our suppliers.
Accounts and Office Administration Department
The accounts department is located in the upstairs of unit 2 of the premises. The department is made up of one account assistant and office manager and one financial controller. I was hired to maintain all daily functions of the company. For the first half of my day my responsibilities include taking the orders from the customers. The orders are then sent down the kitchen for preparation. I then prepare all delivery dockets needed for dispatch that day. Quality control checks stock levels and once this is done both quality control and the head chef put together a list of stock needed. The list is in turn given to me to call the suppliers and order the stock needed.
For the second half of my day I am responsible for the accounts department. I prepare the sales invoices from the accounting system and forward them to each customer. I input all purchase invoices received and allocate payments and lodgements into the bank for daily reconciliations. I run daily reports for the financial controller and directors to check the cash in and cash out situation. I also run the weekly payroll and maintain all employee record files and deal with any employee queries. The financial controller is out-sourced from an accounting practice and maintains the financial accounts twice a week.
As Cuisine 365 Limited supplies ready made foods to the convenient food market the company needs to be aware of the importance of customer satisfaction and value to gain competitive advantage and more importantly sustainable competitive advantage in a tight market and also to survive through an economic crisis. The company needs to be able to deliver these two factors and to see the added value of the company's functions. So how can a company analyze itself? We can use two tools to internally analyze what is happening within the company to see if it is of added value.
These internal analysis tools are known as
- Resource Based View
- Value Chain Analysis
Let us see how these analyzing tools work for the company.
b) Internal influence on organization
To determine if sustainable competitive advantage is achievable we need to look at the resources that are of value to the company. As mentioned above we can use two tools to internally analyze our company. The first tool we look at is the Resource Based View.
This analysis tool looks into three parts of the company.
- Tangible Assets- we look at the premises, fixtures and fittings, cash-flow, motor vehicles, systems implemented within the company
- Intangible Assets- we look at the company's brand name and reputation
- Capabilities- we look at the company's ability to do something better than other companies.
To determine if any of the above areas add value to our company we can look at some headings to aid us in making our decision.
These headings are as follows:
Let us look at the tangible assets of Cuisine 365 Limited.
Premises- Cuisine 365 rents the premises from Spade Enterprise. Spade Enterprise previously installed all the kitchen equipment in the buildings for the rental of these specific units. The premises are of value to the company for the production of their goods to the company's customers.
The premises are specific to the company's needs for production of the goods however they are not rare. Although the buildings are immobile the company is looking to move to larger premises in Ashtown to achieve it's economies of scale so we know there are similar premises available and are therefore substitutable and imitable.
Motor Vehicles-Cuisine 365 limited use two vans to transport the finished products to each customer and to collect any urgent supplies. The vans add value to the company for this purpose as without the vans the company would not be able to put deliveries into action as part of the company's customer service.
Fixtures and Fittings- The company's directors purchased and installed it's own computer equipment and software required for the daily running of the company. The accounting package in use assists in the daily functions of the accounts and administration department. The accounting package is not rare and has been substituted and imitated by a number of different software companies. The company still uses separate labeling and delivery docket systems adding time and money to the company. Cuisine 365 limited needs to implement a system that incorporates all accounting, stock control, labeling and delivery docket functions in one package. There is no IT department within the company so any advice or assistance needed is out-sourced adding more costs to the company.
Intangible Assets of Cuisine 365 Limited
Brand Name- Although Cuisine 365 limited has been established since 2004 the company has not yet gained nationwide recognition like other convenient food suppliers in the Irish market. The company has focused on smaller start off businesses to supply their products too. This is great if you can provide them with good products and services that are not available from other companies. The company needs to focus on larger more established food suppliers with the Irish market to gain this recognition. Their brand name has no added value to the company at this time.
Reputation- a lot of major established companies have been recognized for their customer service reputation. This has been established through word of mouth from previous and existing customers. Being a part of the Cuisine 365 limited team I have noticed that the company does not pride itself on this theory. Both directors are quite un-approachable and lack empathy for staff and customers. They tend to focus on gaining new business instead of providing a better service and reputation for their existing customers. This type of reputation spreads fast and would not gain the company competitive advantage never mind sustainable competitive advantage so again their reputation adds no value to the company.
Capabilities of the company- I don't feel Cuisine 365 Limited has the capability to provide better services and products compared to what is already available in the convenient food market. With the likes of larger well known stores such as Fresh and Marks and Spencers who prepare their own ready made meals and cold products and have repeated customers, Cuisine 365 would have to come up with an amazing product and offer that will see them put on the convenient food market map. Without a good brand name and reputation Cuisine 365 Limited could still be upstaged for another four or five years if the company does not put a new strategic plan into place.
The second value analysis tool is known as the Value Chain Analysis. Below is a diagram of Michael Porter's value chain framework. Michael Porter designed this model to help analyze certain activities in the company that can create value and competitive advantage.
1. Inbound logistics: Cuisine 365 limited uses a number of different suppliers for the stock needed for the final products. The list of stock needed is put together by the quality control department and the director and is then ordered over the phone. Orders are made every day for stock. Each supplier delivers the stock to our units the following day. This process adds value to the business as we can prepare all goods in time for our customers needs. If any raw materials are needed urgently or may have not been ordered when it should have, the drivers usually pick the order up, so all stock is always on the premises when needed. The use of so many suppliers has caused confusion to staff members as the same stock is being ordered from different suppliers or new suppliers are being introduced with cheaper products and it has not been communicated to staff members. All stock is stored in the warehouse for dry goods and frozen stock is stored in the fridge facilities built into the premises. All staff members have easy access to all storage facilities within both the building.
2. Operations: the kitchen or assembly line is always fully staffed and ready to make our raw materials into our finished products. The process begins by weighing out the raw materials needed for each product. The weighed raw materials are then allocated between hot and cold products and once this has been done they are prepared and cooked for the final outcome. All staff members are fully trained so they are able to work without supervision. This adds value to the company as there are no hours lost by training new staff members and all finished products are prepared correctly. When the final products are ready staff members contain and package each product and allocate each product to the customers orders and are ready for dispatch. As packaging is part of the operations this adds value to the company as there is no separate department needed for packaging staff. As our products are made to order it is very important to the company to have trained staff members to keep up with the just in time process.
3. Outbound logistics: Our finished products are then sent to dispatch. All finished products are sent up from operations. As the units are close to each other there is no need for forklifts or extra machinery to shift the finished products. The despatch department input all customers orders into delivery boxes and a delivery docket is prepared for the drivers. The finished goods are ready for transportation to each customer. There are two drivers covering our North side customers.
4. Marketing and sales: The directors prepare all marketing strategies themselves. They are both very busy so the marketing ideas are never really put into action. This saves the company money by not having a marketing department however it does not add value to the company as Cuisine 365 limited have been established since 2004 and the company still struggles to gain customers and recognition in the convenient food market. A sales member of staff has been introduced to increase the sale of our products but without a marketing background this may not be achieved.
5. Services: Cuisine 365 limited has an efficient just in time service for their customers. All products are made to order and delivery days were allocated to suit customers needs. However I find the directors lacking in skill when it comes to after sales customer service. The attitude of the directors is once the finished products are sent out to customers the money comes in for the product and that's how it works. Customers can pick up on these attitudes and it may turn a customer to buy from other companies who have a good reputation in customer service. There is no communication between the directors and Cuisine's customers. Companies need a good reputation to add value to their business and having a good customer service reputation can add that value.
6. Procurement- Cuisine 365 does not employ a purchasing department. All purchasing of goods are prepared by the director and quality controller by checking stock levels. As the company prepares the same products for each customer the director has an instinct of what stock is needed. The purchasing orders are then given to me in the office to phone each supplier and order the stock. The directors look around themselves to see what suppliers stock the goods that are needed. The company has a number of different suppliers in use for dry and frozen goods. I feel the company could shop around for a supplier that supplies most of the goods under one roof.
7. Technology Development- Cuisine 365 does not have a technology department in place therefore does not add value to the company.
8. Human Resource Management- Cuisine 365 does not have a human resource management department in place therefore does not add value to the company.
9. Firm infrastructure- The building adds value to the company as without it Cuisine 365 would not be able to operate. The building was fully equipped with all facilities needed to operate so there was no added building costs needed for starting the business.
Cuisine 365 Limited, as a company, needs to be able to analysis internal and external influences on the organization. What are these influences on the organization?
Let us have a look.
The Marketing environment is made up of the factors and forces outside marketing that affect marketing managements' ability to develop and maintain successful transactions with its target customers. The Marketing Environment allows us to scan the company's internal and external factors that may affect us in the future. A company needs to constantly watch out for any changes that may affect it. The company needs to be prepared and able to adapt to any of these changes in the marketing environment. We can analyse the marketing environment internally and externally by looking at the Micro and Macro environments by using a number of different marketing tools.
When we look at the Macro environment we are mainly looking at the external factors affecting our organisation. The factors involved in the Macro environment are listed below:
- Politics and Law
Some or all these factors may be taken into account for scanning the external environment for Cuisine 365. The main factors affecting Cuisine 365 are Economical, Political and Social which we will analyse using the SWOT and PEST method.
When we look at the second environment, the Micro environment we take into account the factors affecting the company internally. The Micro environment looks at the following:
- Company -
- Suppliers- who can give us the best prices and products? Which suppliers can supply us with the products we need? Is there a need for our product?
- Customers- Are we taking our customers circumstances into consideration.
- Marketing Intermediaries- do we have the correct marketing skills, are we being advised correctly on our marketing, does the company utilise the marketing market?
We look at the Top management who implement the targets, goals and strategies of the company. Are these target and goals realistic, approachable?
Is this an affordable product for our customers?
c) External Influence on Cuisine 365 Limited
I have prepared two analysis reports using the marketing tool methods PEST and Porters Five Forces for Cuisine 365 Limited.
My first analysis involves the PEST method. The PEST analysis is similar to the SWOT analysis the difference being the PEST analysis the Macro Environment. We will look at some of the outside factors affecting Cuisine 365 Limited.
Porter's Five Forces of Competitive Position
- Competitive rivalry within Cuisine 365 industry is quite high as we already have larger well-known established convenient stores such as Fresh, who have a total of four large stores already open within Dublin and plans to open a total of twenty over the coming years. Fresh pride themselves on the range of in store product choices and the value. Fresh also prepare hot and cold convenient food products in- store eliminating the need for external ready made meal suppliers. Cuisine 365 need to become more established within this market to get nationwide recognition like Fresh. "Competition among rival firms drives profits to zero". (www.quickmba.com)
- Bargaining Power of Customers is at a high as the Governments increase in the higher VAT rate in the April emergency budget resulted in the increase of across the border buying and has seen the decrease in consumer spending in retail sectors in the South of the country. Businesses have been dropping their prices to compete with the prices in the North and to maintain consumer spending in the south. Even with all the advertising and lower prices consumers continue to purchase in the north.
- Bargaining Power of Suppliers is at a low due to the economic downturn. Previously suppliers had the upper hand due to the economic boom. Suppliers were in a position to stop orders if customers were not adhering to their credit limits, now they tend to hold onto to any customers they have already and offer better prices and terms for payment to hold onto their business and to see some sort of cash flow.
- Threat of New Entrants into this industry due the economic downturn is weak. Companies in the same industries are tending to work together as opposed to competing against each other to survive the recession. However once the economy stabilises we may see a growth in the convenient food market again.
- Threat of Substitutes is nil.
d) Internal and External influence on Cuisine 365 Limited
The SWOT analysis for Cuisine 365 Limited scans both the internal (Micro) and external (Macro) environments. These marketing tools are used as visual aids for the directors to pinpoint the areas where improvement is needed and also prepare the company for any threats that might deter success and also lists the opportunities that will help Cuisine 365 to grow.
Cuisine 365 limited has the ability to be a very successful company in the convenient food market. They need to focus on the weak areas within the company and implement a system that will provide a more effective and efficient work place and also achieve sustainable competitive advantage. Cuisine 365 needs to utilise the marketing and advertising market available to them. A good marketing strategy could increase their sales alone. The directors need to work together with the financial controller on a regular basis to view cash flow projections and to review the company's financial status and accounts, they need to listen and be aware of the legislation that is put by the Government and take any advice given to them from the accounts department. The directors should allocate time for weekly review meetings of sales with the financial controller and sales team. If all departments are involved in the weekly meetings this could result in brainstorming between departments resulting in new ideas to gaining new business and new products that could see sales growth. Individual departments need to communicate affectively between the company to provide and effective working environment.
I recommend Cuisine 365 focus more on the marketing area to build up recognition and sales. I would also recommend the directors set up networking meetings with some of the larger established convenient food markets to introduce their products and the business to potential new customers. In crucial economic times businesses in the same industry can work together to help their businesses survive. I would also recommend that the directors adhere to the rules and regulations put in place for employment laws and Health and Safety regulations.