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In 1906, H.F.S Morgan, the founder of Morgan Cars opened a motor garage in Malvern Link in which he was running a bus service that proved to be very successful. H.F.S Morgan never intended to become a manufacturer of cars, but it was his interest in cars that began with him designing his own three wheeled motor vehicle. Interest in his three wheeled vehicle lead to the extension of his garage and the manufacturing of the vehicle in 1910 and the Morgan name was made public at the Olympia Motor Show. By 1912 the Morgan Motor Company was formed as a private limited company.
The nature of Morgan's business
After viewing 'Troubleshooter 1990' which looks at the potential threats and opportunities faced by Morgan Cars it became apparent that they are a reserved company, with old traditional values in which their staff have a "job for life" attitude and fear any change could "ruin the magic". They aim to provide completely handmade cars that are affordable and reliable. They seem to have a very niche target market which appeals to enthusiasts, with almost 500 cars ordered the year before the 'Troubleshooter' video.
In the video Sir John Harvey Jones made comments like "I haven't seen tools like these since I was a boy" and "a company that isn't progressing is regressing" because they were basing everything on existing methods and basing demand on their capabilities, they weren't exploring opportunities and progressing as a company. During the video it was also said that they seemed to be more like a group of enthusiasts as opposed to a business.
Problems faced by Morgan as a business
One of the most striking problems at Morgan Motor Company was its inability to meet demand and their waiting list which was as long as 4-5 years. Demand of this amount is a great opportunity for Morgan Cars as huge demand equals huge profit. However, Morgan hasn't made any serious changes as a business to enable them to improve productivity. For years they had been producing 9 cars a week and they were aiming to increase this to 10 but only managed to increase it to an average of 9½ cars per week.
The actual process of producing the cars is also very poorly managed and the wheels are added to the vehicle at a very early stage as they are then pushed between different areas to have different parts added. All the time spent moving the vehicle during production is a waste of both time and money and some major changes are needed. One possible solution could be to produce all the parts separately within different areas of the warehouse and then bring them all together at the end.
Producing the parts separately would also help eliminate the amount of money they have tied up in stock, as very often they are left with chassis waiting for engines. Having money tied up in stock isn't an effective way to run a business as it is a waste of space within the warehouse and if the production was better managed so that all the parts were ready together at the end they would be able to eliminate this problem.
When Sir John Harvey Jones returned to see if they had managed to increase production, he asked one of the workers if they had managed to reach 10 cars a week, the worker replied, "we have been trying but one blokes been on holiday, which has slowed everything down a bit".
The workers at Morgan are one of their biggest assets as the idea of the cars being completely hand made is one of their biggest selling points. However, as mentioned previously it is also a major limitation due to slowed production during absence of staff. The staff at Morgan are extremely valuable as it can take up to 4 years to train up new workers, fortunately for Morgan they have a high staff retention rate with workers that have been in the job for as long as 30 years.
Future recommendations to ensure the survival of Morgan Cars
When Sir John Harvey Jones visited Morgan cars he said that the huge demand for the cars is hiding the lack of profit and that sales and profits have remained the same - constantly selling all they manage to produce. Harvey Jones cannot believe that a company which such a tremendous image and huge demand are so reluctant to implement any change. Morgan have the perfect opportunity to sacrifice a percentage of their sales by increasing the price, this would reduce the length of the waiting list and lead to an increase in profits. If Morgan wants to avoid going into regression then they need to jump at the opportunity to increase turnover. The only thing stopping Morgan Cars progressing forward is themselves and their fear of change.
Morgan as a company need to look into the implementation of a computerized stock taking system as at present all of their stock checks are visually assessed by individuals and when an individual in the warehouse notices stock of a particular part getting low he requests permission to order in more stock.
The demand for Morgan cars is an interesting one and when asked the actual demand they were unable to provide figures. However, it appears they had huge demand as the waiting lists were very long and they achieved this demand without any form of advertising. In its present state advertising would not even be worth considering, due to the fact they are already managing to shift all of the cars they produce easily. Should Morgan implement any future changes which could result in an increase in production, price or manufacturing methods then perhaps advertising would be required to convince the public that these changes are for the best and improve sales to reflect upon the changes.
When recommending future change at Morgan it is worth taking the following Sir John Harvey Jones comment into consideration; "any change will be hard, so there is little point in introducing any small changes and just go straight for the big change".
Morgan Cars need to begin by carrying out some major market research into finding out what the end consumer is willing to pay for one of their cars. Especially as certain individuals by cars from Morgan and then sell them at an increased price. From this research they will need to identify what price increase they can add to each vehicle and begin to set aside this increase in revenue for future investments.
To help ensure a successful future, Morgan should consider moving into two separate motoring markets and continue to offer their handmade Morgan Cars at an increased price to car enthusiasts whilst developing a new mass produced range of vehicles under the same Morgan name and offering them at a lower cost and at much higher volumes than the handmade range. This new mass produced range of vehicles would be invested into and run separately from the existing garages and ensure a consistent flow of income.
Change would still need to be implemented along the existing handmade Morgan production line. The management needs to consider alternative approaches to the production of the vehicles, to maximize the use of floor space as well as the workers they need to start producing all the components within separate departments and then constructing the vehicle at the end. This would involve the chassis parts being assembled simultaneously to the interior and the engine, and then once the parts are ready the car will be assembled instantly rather than wasting floor space in the warehouse awaiting individual components. Implementing this change would require careful planning and the involvement of staff as all staff will need to be made feel valued and an important part of the change. The new process will need to be well documented and closely monitored by management at the early stages, to help ensure all staff are following these new guidelines. Prior to carrying out the changes the management will need to gather the thoughts and opinions of the staff as it is them that can offer the most valuable information with regard to the production of the vehicles. It is important that all of their comments are taken into consideration because they are likely to be de-motivated by too many changes in which they don't agree with.
Something that Morgan will need to be careful of is the recruitment of new staff during these changes as new staff will threaten those long term workers at the company during what will be a very stressful time for them. Morgan should also introduce the use of a selection of power tools to help speed up certain process of construction. For example, they should use powered metal grinding tools rather than hand filing tools as they are still being made by hand but with certain aids in production.
After the new production process has been carefully structured within each department and is ready to be rolled out along with the new equipment which could also include a circular saw for cutting down the ash wood to size, the staff will need to be trained in their specialist areas to ensure that each worker can carry out their responsibilities efficiently.
The recommended changes at Morgan are aimed to meet the requirements of two different types of market. They will specialize in the production of the existing handmade Morgan range which will be sold at a premium rate to enthusiasts, while still offering the "affordable car" to the individuals that want to purchase your average road vehicle for typical day to day use. This new range of vehicles will be mass produced in factories and marketed as a new range of vehicle from Morgan Cars.
These factories will be funded by the revenue gained from the current range of Morgan's and also any other sources of funding available as well as a large sum of capital from a bank loan. Morgan will need to invest in machinery and also experienced workers that can operate all the equipment. It is important that the mass produced vehicles don't feature as many benefits as the handmade range and that a handmade vehicle is easily distinguished from the rest to maintain the demand of the handmade vehicles and continue to be known for the production of both desirable and affordable vehicles but as two different variations.