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Студенческий документ № 025542 из ИМЭ

1) Give a brief history of Darling's Chocolate plc and explain why Colonel Darling chose a sole proprietorship to start his business.

In 1933 a retired army colonel Joshua Darling returned to Liverpool, the city he was born in, from India where he used to serve. In Liverpool the Colonel intended to open a chocolate factory. J. Darling interviewed the candidates for being employed in his business himself to be sure they would meet all his requirements concerning experience, skills, attitude to work, traits of character, etc. He interviewed over forty people but hired only about 20 employees, because his type of business at the very beginning was a sole-proprietorship. The founder chose this type for his business as it didn't demand complicated formal procedures to be founded, the colonel could have personal contacts with staff and customers, could make independent decisions and didn't have to share profits with anybody. If the business went up or not depended just on Darling. The competitive point of Darling's business was the highest quality of the chocolate. It was made only from the finest ingredients and initially it was made by hand. As the factory produced high-quality chocolate, its target audience was upper market. Therefore, the production wasn't cheap.

In 1934 his daughter Alice married a businessman Mr. Windbourne. Several years passed, the factory needed expansion. So he invited Mr. Windbourne to be his partner. Then Alice's husband joined the chocolate factory and the business was turned into general partnership in 1940.

In the 1950th they started export campaign to penetrate overseas markets. The most popular brand, exported to Europe, Australia and South America, was "The Colonel's Choice".

Further more Darling wanted to avoid difficult legal procedures of inheritance in the event of his death. Also the popularity of Darlings' chocolates was growing very fast. Due to all of these reasons the partnership was reorganized into private limited company. In 1955 Alice finally joined the company. He died in 1963 and she became the new majority share-holder.

In the 1960th the prices for raw materials considerably increased due to the poor harvest of cocoa beans and sugar. The company needed more assets, in fact in 1964 it was changed into public limited company to be able to appeal to the public for extra funds. Mrs. Alice Windbourne sold 40% of shares on the stock-exchange, the company "Fountain Foods" bought of 39%. She retained the controlling interest as she kept 51%. In 1983, the company celebrated its golden jubilee.

But by 1983 Darlings had been loosing their profits for many years. They needed extra investments but it was difficult for the company that was not profitable to find good investors. But at that time Fountain Foods made the company an offer to sell them 30 more per cent of Darling's shares. The offer contained several attractive points so the deal between Fountain Foods and Darlings was signed.

2) Explain how Darling's legal status changed from 1933 to 1983.

In 1933 a retired army colonel Joshua Darling returned to Liverpool and decided to open a chocolate factory in Liverpool. He started his business as a sole trader as it didn't demand complicated formal procedures to be founded, the colonel could have personal contacts with staff and customers, could make independent decisions and didn't have to share profits with anybody.

Several years passed, the factory needed expansion because of an increasing demand for the chocolate, but Darling couldn't afford it without changing the type of business (a sole-trader has few opportunities to attract capital, develop technologies; a number of workers is limited). So he invited Mr. Windbourne, a husband of his daughter, a businessman, to his business. Then Alice's husband joined the chocolate factory and the business was turned into general partnership in 1940.

Due to that fact it began expanding: the territory widened, scale of production increased, more workers were employed, the factory started to use machines, though the tradition of finishing chocolate by hand remained.

In the 1950th they started export campaign to penetrate overseas markets. The most popular brand, exported to Europe, Australia and South America, was "The Colonel's Choice".

The export campaign was a very risky step. If it had failed the colonel and Mr. Windbourne would have been liable with all firms's property including their own. It was one of the reasons for their decision to issue shares and reorganize their business into private limited company. Also Darling wanted to avoid difficult legal procedures of inheritance in event of his death (the partnership isn't inherited). Also the popularity of Darlings' chocolates was getting higher, so the business was reorganized to be able to satisfy the expanding demands (limited companies have more opportunities). The company had widened the range of production: it started launching several brands, including "Darling's Delight", "Devonshire Cream Bar", "Villager's Block", which were sold only in Britain, and of course "The Colonel's Choice", the chocolate was of different kinds: bars with various fillings and boxed chocolate. In 1955 Alice finally joined the company. He died in 1963 and she became the new majority share-holder.

In the 1960th the prices for raw materials increased very much due to the poor harvest of cocoa beans and sugar, but the company had to buy the finest and the most expensive ingredients in order to maintain a good image. The company needed more assets, in fact in 1964 it was changed into public limited company to be able to appeal to the public for extra funds. Mrs. Alice Windbourne sold 40% of shares on the stock-exchange, the company "Fountain Foods" bought of 39%. She retained the controlling interest as she kept 51%. In 1983, the company celebrated its golden jubilee.

3) Describe Darling's old organizational structure and give reasons for introducing changes

Since Fountain Foods bought 30 per cent more of Darlings' shares James Brady became the new Managing Director of the company. Following to his promises Brady began to analyze the company's system and started with its organizational structure.

By that moment Darling's structure had been organized by a functional principle. The company had 3 departments, and 3 directors reported directly to the Managing Director, J. Brady.

The first department, Sales and Marketing one, was headed by David Edwards who was responsible for domestic sales, export sales, advertising and marketing policy. The department was subdivided into 4 divisions. General sales division was headed by Robert Lee whose official responsibilities were organizing and controlling sales in Britain and overseas. He was assisted by Elaine O'Reilly as she was in charge of exactly organizing and controlling export campaigns. At the head of Marketing division there was Lewis Keane who was responsible for organizing and directing marketing policy. Steven Crawshaw was in charge of directing and organizing of advertising policy. It should be noticed that actually divisions were engaged partly in the same activities. in fact they weren't working efficiently. The second department was Administrative with Richard Elvin at the head of. He was engaged both in production and finance spheres and his competence covered the matters from shipping raw materials, the process of production of different brands and their finishing to their packing and packaging, warehousing and transportation, and moreover all finance matters. Several people worked under his command, they were master confectioners, warehouse manager and cocoa&sugar buyers. Master confectioners included Andrew Donaldson and Jeremy Roberts who had been working for the company for the longer time than other employees; Susan Atkinson and Thomas Arnott. The matters of buying raw materials were in the competence of Adam Smith and Simon Delaney: they organized and controlled cocoa and sugar purchase. And the head of Warehouse division, Douglas Cooksey was in charge of organizing, controlling and directing warehousing and transportation of ingredients and finished goods. This department had several hindrances including the fact that 3 managers were close to their retirement at the same time and soon the company would have to search for somebody to replace them; and the lack of any separate financial division which was highly necessary for such a large company as it gather financial data, solves all the questions and matters concerning finance, gives an opportunity for potential and actual customers to get information about the financial situation in the company to decide whether it's profitable to deal with or not. Because of that the administrative director had to undertake extra duties and responsibilities as a finance director.

And finally, there was the third department headed by Personnel director Pauline Dormer. Her official duties concerned recruitment and training labor force.

In accordance with this organizational structure the company had not very many departments and divisions, so it was easy enough to run, control it. Managerial staff wasn't too large and the risks of bureaucracy were smaller. Probably this system would be appropriate for a small business like a partnership, but exactly not for a big company. Anyway this structure obviously had several disadvantages. Unclear chain of commands, several divisions partly fulfilling the same functions, the lack of necessary departments made Brady to conduct a reorganization.

4) Speak about changes in Darling's organizational structure introduced by J.Brady and prove they will help to revitalize the company

Having made close analyses James Brady found out that the organizational structure of Darlings had several disadvantages and he decided to reorganize it. Sales and marketing are different spheres so Sales and Marketing department was divided into 2 separate departments. After the death of David Edwards, the director of Sales and Marketing department Ann Davies joined the company as the Marketing director and Robert Lee was promoted to the board as the Sales director with overall responsibility for all sales matters. Ann Davies came from Fountain foods. where he had been working with Brady for many years. In Darlings she was responsible for all marketing and advertising and had a particular responsibility for new product development. Both Ann Davies and Bob Lee were professionals with a good experience in their spheres. There were not Marketing and Advertising divisions any more as they fulfilled partly the same responsibilities and duties. Instead Marketing department had 2 divisions organized by product. One division considered the matters concerning boxed chocolates and the second division dealt with chocolate bars. This reorganization was reasonable as these two types of goods played different roles in Darlings' business. Boxed chocolates were exported, and Steven Crawshaw maintained its position, controlled their sales on overseas market. Chocolate bars were sold in Britain, and Loise Keane's duties were to improve their image, promote this type of goods, probably to start working out a strategy of their exporting. And the Sales director Robert Lee was supposed to solve the problem of declining sales.

After reorganization Richard Elvin, a former administrative director, remained responsible for production, but was off from the duties concerning finance matters due to a new position of a finance director in Finance department. Finance department was was highly necessary for such a large company as it gather financial data, solves all the questions and matters concerning finance, gives an opportunity for potential and actual customers to get information about the financial situation in the company to decide whether it's profitable to deal with or not.

Besides that changes, Cocoa&sugar buyers and Warehousing manager began to report to both Production and Finance directors, there was a matrix structure, which gave the highest level of control - they got informed what exactly and how many raw materials they had to buy or store and transport and how much money they had at their disposal.

Despite the most important problems of the previous structure had been solved reorganization generated some new difficulties, for instance managing costs got higher as the number of departments increased, making decisions demanded co-ordination of more people, the organizational system became more complicated but it was more appropriate and useful for such a large PLC as Darling's Chocolate.

5) Introduce the candidates

1) Mr. W was 35-years old. Speaking about his qualifications there was following information. He graduated as a bachelor of science in Economics with Hons in 1969. In 1970 he became a Master of Economics with Hons. Later in 1974 Mr. W passed an Professional Accountancy Examination for Grade 1. Concerning his experience it was known that since 1967 until 1980 he had been an Assistant Finance Manager and since 1980 he had been working as a Finance Manager with Johnson plc. Taking into consideration his personality it was important to point out the fact that he was a very capable and likeable man, a talented amateur cricketer, which meant he took time off for training and to represent his county (with the full support of his employers). He was married but had no children.

2) Mr. X was 40-years old. Speaking about his qualifications there was following information. He graduated as a bachelor of science in Economics with Hons in 1964. In 1970 he passed an Professional Accountancy Examination for Grade 2. Speaking about his experience it was important to stress on that since 1964 until 1967 he had worked as a Trainee Graduate with Sawyers, Meiners and Moore (accountants). Since 1967 until 1969 he had been an Under-manager with Gleb and Hudson (accountants). Since 1969 until 1970 he had worked as a Finance Manager for West Trucks, Durham. Since 1970 till 1974 Mr. X had been a Finance Assistant for Foundation Estates (Property Developers) Ltd. Since 1974 until 1979 he had worked as an Assistant Finance Manager for Associated Chocolates Ltd. Since 1979 he had been working as a Loan Administrator for Witness Brewery plc.

Taking into consideration his personality it was important to point out the fact that he was a very ambitious, creative man with a forceful personality. Mr. X wasn't married and had no children.

3) Mr. Y was 55-years old. He had no qualifications. Concerning his experience it was important to stress on that since 1946 until 1951 he had worked as an Apprentice Accountant with Geofries and Andrews (accountants). Since 1951 until 1954 he had been a Finance Clerk, since 1954 until 1960 he had been an Assistant Finance Manager, since 1960 until 1971 he had worked as a Finance Manager with Superchain Supermarkets. Since 1971 till 1982 Mr. Y had been an Assistant Finance Director with Fast-Eats Catering Supplies Ltd.

Speaking about his personality assessment it was important to mention that he was a very likable, sociable man who always maintained good relations with his staff.

4) Mr Z was 31-years old. He graduated as a bachelor of science in Maths with Hons in 1973. In 1974 he became a Master of Maths with Hons. Later in 1978 Mr. W passed an Professional Accountancy Examination for Grade 1 and in 1981 he passed Higher Professional Accountancy for Grade 1. Speaking about his experience it was important to stress on that since 1974 he had been working for 3 years as an Graduate Trainee Accountant and as financial adviser to industry with Mayhem, Burton and Winney (accountants). His clients included an engineering company, a publisher, a large biscuit manufacturer, a furniture supplier, an important agent. Concerning his personality assessment he was considered to be rather quiet but very hard-working with an exceptional financial brain.

6) Introduce Peter Long, a new Finance Director of Darling's Chocolates plc. Explain why he was chosen for this position

After changes in the structure a new post of Finance Director was created and Darlings company needed a suitable person for this position. The sales were declining, the production capacity were decreasing, so in order to improve this situation they had to find an experienced person. That is why Darlings used two methods of seeking new Finance Director. They published a job advertisement and applied to a recruitment agency. Both advertisements included the information about the applicant, who would be responsible for an overall finance policy. This person should have appropriate qualification and should have held a similar post in the confectionery or catering industry. The recruitments agency made a list of four suitable candidates and gave it to Darlings company. Analyzing all applicants Darlings company chose Mr. Peter Long. He was 35 years old. His qualifications were relevant as he was an Honorable Bachelor of science and an honorable Master of science in Economics. Moreover he passed Professional Accountancy examination for Grade I. His working experience was also relevant because during 9 years he worked in catering industry (in coffee importing) as required. His work experience started in 1971 right after he graduated from the institute. During 3 years he worked as a Trainee graduate as an accountant. Then he was promoted and during 6 years he worked as an Assistant Finance manager. After 6 years he was promoted again to the position of Finance manager and worked there for 3 years. During his career he gained good managerial skills. He went in for sport so it could mean that Mr Long was self-disciplined, motivated, self-confident, he developed a strong personality, competitiveness, responsibility. Cricket is a team game so was able to feel and share team-spirit. Cricket is a prestigious kind of sport so he might get used to communicating with rich, successful and influential people and probably had business links.

Regarding the requirements Darlings announced that Peter Long possessed many traits of character that were necessary for fulfilling the duties of Finance director and in fact he was appointed to this position.

7) Present the story of Darlings land occupied by Warehouse Suggest what the company should do with the land.

Darling's land was bought in 1933. This land was located in the industrial district of Liverpool. Several production premises were built there including a cocoa warehouse No2. It was constructed as a temporary one for certain needs. In the 60s Darlings had a lot of problems (increasing prices for materials, declining sales, etc) and needed extra money badly. So they decided to evaluate their territory and probably to sell the land occupied by the Warehouse no 2, which condition was very old and unsafe. In 1969 Darlings requested estate agency Cridge &Co.LTD. to carry out a valuation of the land. Then, in 60-70s the agency failed to find a buyer for the site. But in 1983 there appeared a client who was interested in the acquisition of the land in order to develop a shopping and office complex. He was willing to pay up to ?2 mln for the site. And Darlings were to decide whether to sell it or not. Of course, the company needed money badly and 2 mln was a very large sum, moreover they could get new partners and clients due to a business and office complex. But in 1983 they stored cocoa in a warehouse no 2 so they would have to place it somewhere else if they had failed to spend it. For instance, after turning down the offer they could keep a land in order to lease or to place some necessary production premises.

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52 Кб, 25 декабря 2011 в 13:57 - Россия, Москва, ИМЭ, 2011 г., doc
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