Strategic Management: A Stakeholder Approach - Essay Example

Analysis of the Operations of Garden Ltd Part Stakeholder analysis A stakeholder is any group or individual whoseactions can have an impact on or can be impacted by an organisation’s performance (Freeman 1984). In order to be successful at making changes to the organisation the management at Garden City Ltd needs to be able to identify its stakeholders and where possible gain an understanding of their man interest and any potential for conflict. It is also important that the level of influence and power as well as their importance and likely impact on the business as a result of their action or inaction is known. The table below represents analysis of six of the company’s stakeholders. Table - Initial Stakeholder Analysis of Garden City Ltd Stakeholders Main Interest & Potential for Conflict Influence and Power Importance Net Impact Optimal Way Forward Customers Interested in wide range of high quality products. The potential for conflict arses when the conditions under which the service is provided is poor. High High High Identify their changing needs and make the necessary changes to facilitate them Suppliers Interested in continued business with the company. Conflict can arise when they also compete with Garden City Ltd Moderate Moderate Moderate Ensure that more than one supplier is used so that shortages can be avoided. Employees Interested in maintaining their jobs Moderate Moderate Moderate Train them and ensure that they are motivated so that they can provide quality customer service Shareholders Interested in the profitability of the business and maintaining or improving their net worth. Moderate Moderate Moderate Ensure that the business maintains or increases its value so that they can sell their shares easily. Manage it in such a way that people will be willing to invest in the company The Community Interested in the continuity of the business. Potential for conflicts may arise if the company is not obeying government rules and regulations Low to Moderate Moderate Moderate The company needs to ensure that it meets its obligations in relation to the environment and make contributions to the uplift the community. Loan Creditors Collecting debts as they fall due. Borrowing in excess of certain limits and expending funds on unprofitable projects place them at risk and are likely to cause conflicts. Moderate Moderate Moderate Avoid conflicts and ensure business continuity by ensuring that agreements are adhered to. The table shows six of the stakeholders of Garden City Ltd - customers, suppliers, employees, shareholders, the community in which the business is operated and loan creditors. It shows their main interest and matters that could potentially cause conflict. It also shows their level of influence, importance and net impact. Based on the information provided by Sally the customers are the stakeholders with a high level of power and influence, importance and net impact. It therefore means their needs should be satisfied if Garden City Ltd wishes to remain in business. The other stakeholders are not as influential and important as customers. Without customers the business ceases to exist. However, it is important to note that loan creditors can wield a lot of power, especially when a company is in financial distress. A business’s ability to remain in good favour with loan creditors depends on how its finances are managed and whether it discharges its obligations when they are due. Anything to the contrary may result in loan creditors using their powers to take over the assets of the business. Although the shareholders are owners of the business the influence that they wield depends on the percentage of shares that they own. The decisions that management makes are highly likely to coincide with the interest of the customers. Maintaining shareholder value is of paramount importance. The community has the power to bind the company to act in accordance with government regulations. It is through the community that companies find a supply of workers to enable the business to fulfill it need for labour. The business has an obligation to employ environmentally friendly procedures in carrying out its operations and the community is the watch dog as far as the enforcement of these is concerned. They want to ensure that the business will remain in the community for a long time and so ensure job security for its citizens Part 2 In addition to Sally’s reasons for the decline in sales there are a number of other possible reasons. Some of these include: i. Limited supply of plants; ii. Comparatively High prices; iii. Local market exhausted; iv. Inadequate information on plants; v. Poor quality customer service; vi. Limited space; vii. Increased competition in the market; and viii. Lack of adequate facilities to provide comfortable shopping experience. The diagram below represents a cause and effect diagram which categorises the 8 causes. The customers in the immediate surroundings do not have enough space to accommodate many additional plants and will only buy more if they see new varieties. Fishbone Cause and Effect/Ishikawa Diagram The Ishikawa diagram shows that the problem that the company faces is a decline in sales. This is shown on the horizontal line. The causes for the decline are shown under six major categories – materials, methods, machines, measurements, environment, and people. Part 3 The diagram below provides a clearer picture of the trends in sales over the period August 2009 to November 2010. Graph - Trends in Sales The graph shows that sales for the Welwyn Centre have been fluctuating over the period. Sales for the last three months – September, October and November has shown significant declines of between 12 and 15% over similar months in the previous year. In addition to the sales information a postal survey carried out by Sally in relation to the Welwyn Centre provided six reasons why at least 65 customers have not continued to do business with the company. The most frequently cited reason was trouble getting into the centre from the by-pass during peak periods – 65 ex-customers. This was followed by poor parking conditions – 55 ex-customers and the unavailability of refreshment facilities – 40 ex-customers. Some other reasons noted include: the availability of better centre’s elsewhere; poor sales facilities; and limited range of products elsewhere. Part 4 Garden City Ltd and specifically Welwyn Centre need to find a solution to the problem of declining sales revenue. There are a number of possible ways in which this can be realised. Three possible solutions to this problem is as follows: i. Making use of the internet to show off plants and to facilitate online shopping; ii. Change the current location at Welwyn centre to one which is both easily accessible at peak times and have proper parking facilities; and iii. Expand the space to include a refreshment area The diagram below shows a solution matrix for the above. References Freeman, R.E. (2010). Strategic Management: A Stakeholder Approach. 2nd ed. UK: Cambridge University Press Read More