Cyclermate Report Essay Example for Free

Cyclermate Report EssayI. An executive summaryDai Armstrong and Lewis Llewellyn ar the two men who aforethought(ip) to open their own c aller-up after(prenominal) being superfluous tolerateable to the shutting down of the stain plants in their town of South Wales were Dai Armstrong and Lewis Llewellyn. They became strong friends because of taking part in the local club of rack touring together and decided to start Cyclermate, which was a bicycle manufacturing confederation that was laid down in the yr 1988. In the beginning of eon, Cyclermate gained a huge influence over the sh ar of the grocery. The comp all appe atomic number 18d well with no businesss and difficulties up to 2010, the time when the business is in trouble, it confronted lots of consequences with respect to operation human resource and finance.Therefore, the pack by purchasers fell continue sadly even though the prices were cut down by the gild the distinguishing attributes of the goods were not up to the tonus as they were earlier. The rising complaints from the customers regarding degrading note and faults in the product and the disturb by the bank manager regarding the overdraft could cause trouble if the problems be not solved as briefly as possible. Because of that, the full(prenominal) society requires a right charge to circle with this issue and prevent it from the edge of press release bankrupt.II. IntroductionBased on fount study research in Cyclermate Ltd. and a series of case in community, this hatch will work out the financial problems and various another(prenominal) problems confronted by Cyclermate. It has been knowing to analysis the business environment and management, measured by SWOT and PET models that are required to be pure toneed upon. The report also d painfuls 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 solut ion for the problems, included short and long term solutions. another(prenominal) function of this report is to examine how the confederacy could get out of the crisis and get back to the current market share. Finally, the report brings us some recommendations and conclusion of the in all Cyclermate case study.III. Analysis of Business Environment1. gent AnalysisPEST analysis is involved in the chief external environmental that effect or control considerably a business strategy. As we batch see, PEST is aimed for Political, frugal, Social and Technological matters that cannister affect 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 part ins.Political FactorA political factor has a potent impact on income tax, labor law, profession restriction and many to a greater extent. Company did not recruit enough doers to meet the ta rgets and worker had to work overtime to get the work done and workers are getting paid at normal rate. Using a traditional method may aggrieve workers health and decreased their productivity as well. These mistakes made Cyclermate become a target of health and sentry go agencies. They swal funky to improve the quality or else they can be stuck in authorized issues. On theother hand, they also need to hand high standard in manufacturing to meet unavoidablenesss 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 need of the company, could have saved a lot of silver and that same money could have used in new or currently in existence projects. Another factor in economics that affects to the development of Cyclermate Ltd is labor. The unemployment rate is increasing, thitherfore, this is a good chan ce for this company to choose worker more than easily, and employ them easily with affordable price.Social FactorSocial factor has a powerful impact on human behavior, Cyclermate had many order but they did not have enough work force to complete these orders. They have to work long hours in order to achieve their goals. One more Copernican thing is that high-speed innovation as well as the increasing demands of consumers requires Cyclermate to change and improve all day. But there is a truly infact that living standard of clients could effect to their choices. The higher(prenominal) income distribution they get, the higher demands they reTechnological FactorCyclermate 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 enured up its own website. In addition, Cyclermate Ltd is using the oldest way to advertise their products by posting advertisement in tr aditional 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 detect substantial external (Opportunities and Threats) and internal (Strengths and Weaknesses) factors confronted with a specific area. (Johnson, 1993) Itrenders data which are useful in same the capabilities and resources to the spiritual atmosphere in which it functions and hence is a significant 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 face with.StrengthsDirect channels of cut-rate saleCyclermate has handle channels of sales with the direct sales and direct shops hence intermediarys cost is largely eliminated. Reducing the cost of manufacturing could unquestionably help Cyclermate achieve a huge share of the market. As direct channels are in direct connecti on with the providers, thus, it could help in increasing in quantity or value of the sales and it provides a good opportunity to the providers to empathize the clients and could mark 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 precede 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 set ashoresUnlike 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 reasonless staves of the company The company has made use of untrained workers. These untrained workers are not given the seemly training after their employment. It is the fact that the employees and the supply 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 inwardness or degree and there is piling up of stocks in the warehouses which generates 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 refered in the businessDue to the low returns on the capital invested by the investors, they are unhappy with the performance 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 concernsBec ause lack of the power to be effective of the staffs to keep up the measures of the goods and the quality of raw material utilized is baksheeshing to degraded quality of the goods eventually. Old machinery such(prenominal) as traditional spaying technique, painting and low-quality stock control applied science needs updating as currently as possible if the business hopes to improve the production and sales in the coming time.OpportunitiesTake the advantages of social mediaCyclermate should launch its website, which provides complete detail and range of the products addressable with them. Company can employ a new computer system for keeping a good database of the company. They can store online selling 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 march that will lead to speedy outpu t 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 content opportunity to gain more productivity.ThreatsOverseas competitorsAs a result of the growth to a planetary 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 paramount in Europe the purchasing power of people is going down. Thus, company can have reduce sales or can face financial crises.ReputationDue to poor-quality product for a rate of flow 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 evanesce that Cyclermate may lose the market share completely. Customer threatens them to sue their company after their product was cave in in delivering the good performance.IV. Analysis of Business Management1. Financial 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 charge of non-current assets. Loan request will be refused as company only holds property monetary fund of 675 into their bank account. bes are increasing at a rapid rate year after year. Asset turnover ratio is 2.061. This indicates that the net margins for the company are very low thats wherefore 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 old age 24 day s 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 apt to pay 87,500 to the creditors and if they dont so a legal accomplishment may be taken on them, which are not good for companys reputation. They may talk to the creditors and ask for an character reference in time for payments as they are going by means of financial crisis and dont have money right now to pay back.Prob. 1.3 Lots of inventoriesBesides, it shows that the majority 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 roue control systemDisturbingly, materials are always in the shortage which results in the disruption of the production process recently. Although the demand is higher and higher, company cannot meet their requirement because o f lacking necessary components.Prob. 2.2 Inappropriate form of dutiesThe contradictory 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, factory 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 common physical 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 manufacturingUnreasonable workforce division is one of the most serious problems of Cyclermate Ltd. Besides, lack of experienced employees and the aging workforce are worrying the production process and raising a big q uestion for a more effective training system.Prob. 3.2 The training system createsThe training system creates such obstacles for the assembly process. Typically, Fred, who is 18 age old, is a new and un-experienced person the training for him is necessary, however, not soft at all. It takes so much time to instruct Fred in traditional way, which is apparently the cause of slow 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 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 tr avelling and hospitality. Those indirect costs contribute such high cost to the manufacturing of the cycles, restricting them would help boost the sales with cheaper price.Solution 1.2 Ask for trading debtors to avengeThe 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 skilful for them to borrow money from the banks.Solution 1.3 Direct sale pricesCyclermates direct sale prices are higher than shop sale price. In order to generate healthy 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 secure stock whe n they needed. Buying stock earlier will harm companys financial positions, because raw material does not hold their value and it has got more 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 reduce and separate arrangement of duties. Specifically, assigning other qualified person on frame-making position so that Mr. Dai could foreshorten 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 tha t aresuggested by Maldwyn Jones Chinese or Taiwanese labor to make the machine for them- much better quality but half the price and move Idris 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 purpose 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 rule task under time/speed limit.Solution 3.3 Core business valueTrust in others and a firm belief in overcoming difficulties (set up new mission overcome difficulty, minimize tout and consequence)B. Long term and efficiency improvementsPresent fiscal condition of Cyclermate (Accounting ratios).The acid / liquid ratio of Cyclermate is 0.761, which depicts Cyclermate is incapable(p) to satisfy indebtednesses of shorter term, which mean that it would not be competent to satisfy fiscal difficulty wh ich may take on in the time to come. The Asset turnover ratio for Cyclermate is 2.061. As the ratio is excessively high, this means that profit margins are very low. The pricing strategy of Cyclermate is ineffective and because of that low profit. Return on capital apply 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 bunk 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 con form to its trade debtors to pay off soon. Debtors worth 200,571 are to be recovered and the funds would be acquired soon if the debtors do notdefault and pay in full. Once it has sufficient fund, Cyclermate could apply for the bank loan.VI. terminationOverall, Cyclermate will have a better future if they operate their business in slightly distinguishable 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 living organizations are coming up with improved quality of products at a cheaper priceVII. RecommendationsThe company must(prenominal) 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 se ll the current stock and trade debtors. Employing young and trained workforce that is fit for the position.