Consultancy Report Marine International Ltd Commerce Essay

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M and L have some form of structure which is based on the relationship pattern of the individuals and the three business units namely Boatyard, Surveying and Brokerage. Normally there are two structures a vertical structure of responsibility and authority with set limits of financial authority and a horizontal structure that groups activities and uses the resources to achieve the objectives.

In M&L's case the vertical structure that takes care of leadership, communication and decision making is lacking. The company is structured from the board of directors directly to the three business units and not as a functional structure where a General Manager would oversee the proper running of the business and identify day to day resource problems and or financial problems as these arise

Functional Structure has certain advantages namely;

Efficient use of specialist resources

The same functional area specialists can enhance Quality

Opportunity to use the division of labour extensively

People can advance career wise within their sphere of specialism

Grouping specialists together makes management of them easy

Communication between the specialists enhances knowledge and skill

It prevents specialist duplication of resources resulting in economies

There are however disadvantages to the functional structure but this would be in an organisation that has a Role culture whereas we see your company as having a Power culture. We will explain this point in the culture section below.

As M&L grows the functional structure will probably change to a divisional structure particularly in light of establishing perhaps profit centres or holding companies based on surveying and brokerage in geographical areas. This form is a more responsive and flexible than the functional form which tends to be rigid. This will enable the grouping of activities and will go a long way to ensuring customer closeness in that particular region. It will also enhance market research as M&L gets to know the businesses in that area and perhaps open new undiscovered avenues to extend the business e.g. in super-yachts. Perhaps an Alliance with an established firm in the region dealing with super yachts could initially help M&L gain a foothold in this market.

The profit centres will help to promote accountability and enlarge the horizons in planning and help to develop senior executives of the future who have experience in general management as leaders of a division.

There is however disadvantages which have to be overcome should M&L wish to progress down this road. There will be costly resource duplication across departments and coordination across divisions will be difficult. A problem of control which is crucial can lead to between the divisions and the head office. If there is too much control from head office it will tend to stifle innovation and if the divisional manager has too much power he/she can spend excessively on a pet project.

To establish a geographical based divisional structure M&L would still have the board of directors and perhaps a head office in England with a divisional manager for say Middle East and a divisional manager for Southwestern Europe and perhaps one for Northern Europe.


The leadership in M&L is somewhat authoritarian where the autocratic leaders are holding on to decision making and as much power as possible. The focus of power is with each manager in each unit. Communication is one way from the top down and there is no real formal system of command and control. No consultation with the employees is evident and the use of rewards and penalties is not apparent. There is very little if any delegation and the approach is McGregor Theory X.i.e. M&L does not display trust with their employees and as a result perhaps any ideas suggested are not valued.

We think M&L could adopt a more democratic style of leadership where the focus of power is more with the group as a whole. Leadership within the group is shared and employees are involved in decision making where practicable. The final say however still rests with the leader. Motivation and morale is enhanced under such a leadership style.

However it should be noted that the best leadership style will depend on the firm's situation. The autocratic style you have would be appropriate if you think that the business is in need of a rapid turnaround or is heading for trouble, but if you want high performance depending on effective team work then autocratic is inappropriate.

Organisational Culture

Organisational culture is hard to change whereas corporate culture can be easier. M&L culture is important as it has an effect on the motivation and morale of employees, recruitment, efficiency in productivity, product quality, creativity and innovation. As M&L expands its operations geographically the culture will impact on organisational structures, power structures and control systems.

Culture is a set of customs, beliefs and practices that people share as a result of working together. Culture consists of two types corporate and organisational. The latter is a deep seated unconscious pattern whereas the former is often looked at as four types of control and power throughout the organisational structure and are distinct namely;

Power culture is based on a few powerful individuals who do not have practically any special written rules and motivates by patronage and perhaps fear. This type of culture is dominant in family run businesses such as M&L.

Role culture relies on formalised procedures and rules which guide the decision making process in a bureaucratic way and is typically found in organisation where mass production takes place in a mechanistic way.

Task culture is based on team work with a commitment to the objectives being achieved as opposed to the emphasis on authority and a formal hierarchy. This culture is desired where large companies seek total quality management.

People culture is based on individual employees' technical expertise or organisations that exist to benefit the members as opposed to the external stakeholders.

Strategic Management

Existing strategy

There is a need in M&L for strategies to attain agreed goals and objectives to give direction to the company and a sense of purpose because of competition from rival companies and recent technological changes. The strategy needs to look at the functional elements of the company e.g. marketing, financial, technological, manpower etc. so that targets and objectives can be achieved. It will use all of M&L's resources and will result in senior management adopting a set of policies to guide and focus the company in the right direction in the environment in which it operates.

It appears in M&L that there is not a strategic plan in place and we assume that on the spot decisions are made as issues arise which could be construed as muddling through.

Mission Statement and Business Vision

The competitive environment in which M&L operates is continually changing and therefore the company must continually adapt to these changes. There are however core standards that provide guidance and remain reasonably steady when the decision making process of strategic planning is addressed. These unchanging standards are stated as the business vision and will be conveyed in the company's Mission Statement.

M&L's Mission Statement must communicate the firm's visionary goals and the core philosophy and will normally address the three components listed below.

Core values to which M&L are committed

Core purpose of M&L

Visionary goals that M&L will pursue to achieve its mission

M&L's core values will remain somewhat constant in the firm's ideology. The mission statement will express what already exists in M&L and is not the core ideology as it will probably change with time.

Three elements of the business vision are discussed below.

Core Values

Usually these consist of no more than approximately five values that are essential to the firm. They are something that is deeply held as important to the values of M&L and have nothing to do with the industry environment currently being displayed.

It is important to determine if a core value is really a core value in other words if circumstances changed could it become a liability, if not then it can be kept and is a core value. There is another way to check and that is for M&L to imagine itself in a completely different industry. Could the core values selected and then carried forward become the core values of the new industry?

Core values therefore will not change even if the industry changes and if the industry changes to such an extent that the core values are no longer relevant then M&L should look at new markets where the core values are seen as an asset.

M&L core value suggestions are as follows;



Excellent customer service

Social responsibility

Pioneering technology

Core Purpose

Core purpose is the reason M&L exists and it should be stated in a carefully worded mission statement. Similar to the core values the core purpose remains relatively unchanged and can last for the duration of the firm's operational life. M&L needs to set itself apart from other firms and set the direction and way forward it wishes to proceed. While M&L exists to earn a profit but the motive for doing so should not be part of the mission statement as it will give very little direction to its employees. The important part is how M&L will earn the profit.

We suggest M&L does not focus on products and services for the mission statement but start by asking itself "why" which will lead to the firm's core purpose for being. The core purpose is not selected it is discovered through perhaps brainstorming sessions with the board and managers.

Visionary Goals

These are high objectives that are selected by M&L and on which they wish to pursue. The vision can be where the firm sees itself in five or ten years and describes the milestones along the way to enable the objectives to be achieved. These goals are ambitious and very challenging and perhaps may fall short of 100% success but it is important that M&L set off believing that it can be done. These high objectives usually require serious stretching in order to achieve the desired result and M&L should consider this when setting the visionary goals.

It is important to note that once the goal is achieved it needs to be replaced to ensure the continued success of M&L.

Competitive Strategies

Competitive Advantage

M&L's business strategy is to sustain and achieve a competitive advantage. Porter identified competitive advantage as two basic types namely, cost advantage and differentiation advantage. These two basic types of competitive advantage when combined with the firm's activity scope for which it wants above average performance leads to three generic strategies, namely cost leadership, differentiation, and focus. Cost focus and differentiation focus are the two variants of the cost strategy.

Cost Leadership

This is where the firm tries to become a low cost producer in the industry it serves. This will however depend on the industry's structure to enable it to have a cost advantage and relies on such things as preferential access to materials and technology etc. We do not see M&L in this category as it is more in keeping with very large companies who are able to exploit all avenues of cost advantage.


This is where the firm tries to stand out and be unique in the industry making it highly valued by its buyers. The attributes it selects are viewed as very important to many buyers in the industry and therefore it positions itself accordingly to meet those needs. The firm because of its uniqueness in the industry can then charge a premium price.


Generic strategy of focus is where a firm looks at a very narrow competitive scope in its industry. We feel that this is where M&L are at present. We feel that M&L are selecting certain segments or group of segments in its industry and tailoring its strategy to serve them by excluding others.

There are two variants in this strategy namely cost focus where a firm looks for a cost advantage in its targeted segment of the market or market segments and differentiation focus where a firm looks for differentiation in the targeted market segment. Both these variants of the focus strategy relies on the differences between the firms targeted market segment and the other industry market segments.

As the word differentiation suggests the product must differ and address unusual needs of buyers or is different from the other industry market segments

Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments.

Cost advantage

This would be the situation when M&L delivered at a lower cost the same benefits as its competitors (cost advantage) or exceeded the benefits of its competitors (differentiation advantage). This situation would enhance M&L's profits. These are known as positional advantages and would make M&L either a leader in cost or differentiation.

Creating a competitive advantage that creates a superior value emphasis a resource based view. In other words if M&L use their resources and capabilities which results in a cost or differentiation advantage it will result in a value creation.


M&L's specific assets such as proprietary know how, customer base and reputation could create a cost or differentiation advantage and needs to be accessed.


M&L's ability to use its resources effectively should be identified and are usually found embedded in the firm's organisational routine and not found in procedures which make it difficult for competitors to copy.

Distinctive competencies are the firm's resources and capabilities and will enable efficiency, innovation, customer responsiveness and quality which can together be leveraged to create a differentiation advantage or cost advantage. M&L will need to position itself in the industry either as low cost or differentiation.

Developing M&L's Strategy

M&L will need to identify which strategies to develop e.g. increase profitability, gain customer satisfaction or gain a bigger share of the market. To enable M&L determine their strategy they will need to understand fully the internal and external environmental factors which are currently affecting the firm.

The creation of strategy follows three stage processes. i.e. analysis where the firms is currently operating, identify strategic options and evaluate and select the best options.

Stage 1.

Analyse M&L's context and environment

Analyse M&L liabilities, capabilities, strengths and weaknesses { SWOT analysis appendix No 1}

Look at M&L's core competencies

Analyse M&L's current operating environment and identify opportunities and any impacts arising from the industry.

Conduct a PEST analysis {appendix No 2}

Conduct Porter's five forces {appendix No 3}

Conduct Ansoff Matrix{appendix No 4}

Analyse M&L's stakeholders and customers to ensure the customers and shareholders are happy and satisfied. It is important to identify what M&L customers want and who are the key stakeholders involved in that success.

Analyse M&L's market in great detail and identify the market segment and the cost effective way to reach the optimal market mix.

Analyse M&L's competitors and make comparisons with their products compared with M&L's products, and what competencies the competitors have that could easily enable them to enter the market.

Stage 2.

Identify Strategic Options

In stage 1 M&L developed clarity on how the organisation fits within the external and internal environments. M&L now needs to concentrate on how to find a clear advantage and in doing so meet the firm's objectives. This can be done by brainstorming and trying to focus on the products that could be used to gain a competitive advantage.

Use a SWOT analysis (see appendix 1) as a starting point where opportunities are shown and also try to minimise M&L's threats or better still turn some of the threats into opportunities.

It is also important at this stage to adopt problem solving, if M&L are not reaching the goals and objectives this could produce a competitive advantage just because the firm deals with it. M&L could look at customer satisfaction for example where there is obviously overall low satisfaction. Strategic options should be created to increase satisfaction and this could be tackled through brainstorming. Risk management should be part of this process to identify the probability of risks threatening profitability and then mitigations put in place to reduce it to an acceptable level before proceeding with the strategy. Risk can either be ignored and "adopt a wait and see policy' which is very risky or it is dealt with for example by reducing the probability, deflect or share the risk perhaps by insurance, or treat it as an opportunity. In some scenarios you may have to move to an alternative environment.

Stage 3

Evaluating and Selecting Strategic Options

By this stage M&L should have identified some good projects it could run. It is important to evaluate and choose the strategic options that are best but also it is important to consider all the options identified and make a final judgment only when the assessment has been completed. Then using the factors in shown stage 1 above evaluate thoroughly each option to see what it tells you. Risk analysis can help to show negative consequences for each option which otherwise may be missed. Financially such techniques as Cost-Benefit Analysis, Break Even Analysis and Decision Trees can be used for further analysis.

It is important when choosing the best strategic options and the way forward that resources are not over stretched by perhaps choosing too many options. Look now at the firms Vision and Mission Statement and Values to see if the strategic options contribute to the firms overall purpose and are in line with it. If it is not update as necessary.

Finally strategy has to be implemented successfully otherwise it is waste of the firm's valuable resources.


Change management is an aspect of management that is important as it tries to make the business respond to the operating environment.

Change management consists of four key features

Dissatisfaction with existing strategies results in change

A vision needs to be developed for an alternative that is better

Develop strategies that management has to implement change

Resistance to change will take place

Four forces identified by Lewin

Driving change will consist of forces driving it and restraining it. In a stable equilibrium there will be no change unless the driving force exceeds the restraining force.

It is necessary to see where the balance of power lies in an issue and who are the stakeholders. Look at opponents and allies and find out how to target and influence the groups.

There will be external forces and internal forces

Internal forces will come from a desire to increase profitability. Increase efficiency by reorganising department conflicts and a change in organisational culture.

External forces could be demand of customers, competition, political, inputs costs technological change or taxes and legislation.

Incremental change versus step change

Change can be gradual in incremental stages or it occurs rapidly. Rapidly will result in a dramatic change leading to a radical change in the business, but it gets it over quickly and will probably require a lot of coercion.

Incremental change can occur as a result of the organisation's development and evolution and tends to be more comprehensive.


Management needs to identify the changes and it will help them if they use a SWOT and PEST analysis. Find out what the major issues are identify the key stakeholders and see where there are obstacles. Carefully look at level of risk involved and ascertain the cost of the change. Understand the reasons why change will be resisted and how best to manage it.

It will depend on the willingness and cooperation of employees and management to ensure successful implementation. The key to getting over the resistance to change rests with the people of the organisation.

It is therefore imperative to communicate the vision and reasons for change to the employees. They need to know how they are involved and what it means regarding the proposed changes ,the time scale, why it should be done and what will be the effects on the organisation.

To overcome these barriers M&L needs strong internal communications ,action planning , negotiation appoint champions of change who need to apply a certain amount of coercion and manipulation.

To assist employees top management needs to demonstrate momentum and act decisively , consider how the change will affect them and involve them in the change get them to buy into the change and consult and inform them frequently. Build a sense of security and trust and offer support and training Act firmly but also be flexible and monitor the change.

Managing Resistance to change

Nearly always change is resisted and can be disruptive and stressful. Employees are always concerned about what this means for them that is why it is so important to communicate effectively and with adequate information as there will be a certain amount of insecurity.

There will always be disagreement over why we should change and over the advantages and disadvantages of the change. There will be a lot of mainly negative white noise but sometimes a certain amount of skepticism is healthy if the changes proposed are weak. Resistance will however impede the business objectives planned.

Organisational Barriers to Change

Disinclination to move; power structures existing within; previous change failures or work groups resistance.

If the change is poorly managed it will most probably not achieve its targets and this can be down to poor preparation and lack of planning; employees cannot understand the need or the purpose for change; resources and rewards are less than adequate .

External pressure is usually the main reason for change driven by the external environment.