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Студенческий документ № 025543 из ИМЭ

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

In 1933 a retired army colonel Joshua Darling returned to his native town Liverpool from India, where he had served. His goal was to open a chocolate factory, because at that time chocolates were not as good they used to and, besides, the market of high-quality chocolates was not saturated enough. He decided that his product would be made only of the finest ingredients and his competitive advantage would be hand-made finishing. I believe that he chose Liverpool because it was a sea port and in future it would be easier for him to develop sea freight. Moreover, it was a time of high unemployment there and it gave him an opportunity to find a qualified but cheap labor force. He interviewed over forty people but hired only about 20 employees, because his enterprise was a sole-proprietorship. It was a good form of business to start with because of several reasons:

- Joshua Darling wanted to produce high quality chocolates for the upper market because initially this segment wasn't saturated. That meant that his target audience from the very beginning wouldn't be large and there was no necessity to open a huge factory.

- his starting capital wasn't so big because he didn't have enough money

- he was the only owner and he could control everything himself

- he didn't share his profit with anybody else

- he had personal contact with all employees

But it also had a large negative aspect - it was an unlimited liability, which meant that he was fully liable for all debts and damages. He could even lose all his personal assets in case of failure. But, as he was a newcomer and he was not aware of all the details and risks of running a business, he decided to discover everything in this industry by himself with the aim of attracting somebody else into his business in future.

In 1934 his daughter Alice married a businessman Mr. Windbourne, who could become a potential partner. The colonel's business needed to be expanded and that's why it was necessary to change the type of his business into a partnership. And Mr. Windbourne helped him to fulfill this task by joining him in 1940.

In 1950 they started their export campaign. It was a very risky step because they penetrated a new overseas market even in other countries like Australia and South America. They exported the most popular brand - The Colonel's Choice.

Furthermore, Joshua Darling was very old and it was time to start thinking about inheriting his firm. Due to it the partnership was reorganized into a LTD (private limited company). Five years later Alice finally joined the company. Joshua died in 1963. As a result, she became the majority shareholder.

In the 1960's the prices for raw materials increased substantially and the company needed more capital and that's why they started to sell theirs shares on the stock market. It resulted in another changing of the type of business into PLC (public limited company). 40 percent of shares were sold to Fountain Foods but Alice retained her controlling interest to save the family business.

Darlings needed extra capital to be invested in the company but it was difficult for the company to find investors. Fountain Foods made an extremely attractive offer to Mrs. Windbourne - the Darlings sell to Fountain Foods 30 more percent of their shares in exchange of the promise to revitalize the factory. That was a brief history of the Darlings company.

2. Explain how Darlings' legal status changed from 1933 to 1983.

As Joshua Darling was a newcomer in running a business, he started as a sole trader. He interviewed over forty people but hired only about 20 employees, because his enterprise was a sole-proprietorship. It was a good form of business to start with because of several reasons:

- Joshua Darling wanted to produce high quality chocolates for the upper market because initially this segment wasn't saturated. That meant that his target audience from the very beginning wouldn't be large and there was no necessity to open a huge factory.

- his starting capital wasn't so big because he didn't have enough money

- the colonel was the only owner and he could control everything himself

- he didn't share his profit with anybody else

- he had personal contact with all employees

But it also had a large negative aspect - it is a limited liability, which means that he was fully liable for all debts and damages. He could even lose all his personal assets in case of failure. But he decided to discover everything in this industry by himself with the aim of attracting somebody else into his business in future. Darlings' Company was a success, profits were increasing steadily. For future development of the company it was reasonable to change its status. His daughter married a businessman which helped them to reorganize into a partnership. This change gave Darlings more opportunities such as expansion, employing more workers and help the company raise and attracts extra capital.

About 15 years later Mrs. Windbourne joined the company in order to inherit the family business and it led to a change of it into LTD (private limited company). In this case they would have no more unlimited liability; they could open a way to the world market. As the result the turnover increased in 10 times. After Joshua's death they had to convert their business into PLC (public limited company). Their shares were sold on the stock market to attract extra financial resources. So that's how Darlings' legal status changed from 1933-1983.

3. Describe Darlings' old organizational structure and give reasons for introducing changes.

The Darlings' old organizational chart had 3 departments formed by a functional principle:

- sales and marketing department controlled by David Edwards.

- production and finance headed by Richard Elvin

- personnel department headed by Pauline Dormer

They were all responsible to the managing director. I'd like to give a more detailed description of these 3 departments.

- The sales and marketing department consisted of 4 divisions: general sales, advertising sales, export sales and marketing. They were responsible to the sales and marketing director.

- production and finance had 3 divisions: Master confectioners, Cocoa and sugar buyers, Warehouse. They were accountable to the administrative director.

- the personnel department had no divisions

But in spite of the fact that at first sight the Darlings' organizational structure seemed to be not so bad, it had its disadvantages which gave the grounds and reasons for the reorganization.

Grounds: - increasing production costs (labor fees, transportation, raw materials and so on)

- tough competition (the market was saturated because new organizations penetrated and new products appeared on the market

- market changes (changing market trends, different marketing and pricing policies, different target audiences segmentation)

Reasons:

- declining sales and profitability

- retirement of the managing director

- the managerial system of Darlings was not efficient

- the system of organizing and controlling was not efficient too

- lack of diversification (of advertising, channels of distribution and so on)

- inefficient distribution of resources

As a result Darlings faced a lack of flexibility and the company didn't react to new market trends and changes. Their sales had been declining steadily, because of the inefficient management. Moreover, there where too many responsibilities for one person. It was acceptable in the beginning of the business, but after several years it only prevented the company from their further expansion. For example, Richard Elvin was responsible both for production and finance. It meant that they didn't have a separate financial department. It was their weakness because they couldn't organize their financial policy correctly and analyze what happened in the company.

These were the reasons for changing their old organizational structure.

4. Speak about the changes in Darlings' organizational structure introduced by James Brady and prove they will help to revitalize the company.

First of all I'd like to name the grounds and reasons for introducing changes.

Grounds: - increasing production costs (labor fees, transportation, raw materials and so on)

- tough competition (the market was saturated because new organizations penetrated and new products appeared on the market

- market changes (changing market trends, different marketing and pricing policies, different target audiences segmentation)

Reasons:

- declining sales and profitability

- retirement of the managing director

- the managerial system of Darlings was not efficient

- the system of organizing and controlling was not efficient too

- lack of diversification (of advertising, channels of distribution and so on)

- inefficient distribution of resources

As a result Darlings faced a lack of flexibility and the company didn't react to new market trends and changes.

After the change the new organizational structure had 5 departments formed by functional principle:

- Marketing controlled by Anne Davis,

- Sales controlled by Bob Lee,

- Production held by Richard Elvin,

- Finance, which was newly created,

- Personnel controlled by Pauline Dormer.

All these directors joined the board. Marketing department was subdivided into 2 subdivisions according to the product principle:

- boxed chocolate and

- chocolate bars.

They changed their marketing approach and focused on different brands to maintain export and to promote their product on the domestic market. The position of advertising and marketing managers didn't exist any longer. Sales department had 1 division - export sales which was responsible for expanding their export campaigns. Production and finance spheres were separated; their responsibilities were shared according to the matrix principle. Warehouse and cocoa and sugar buyers were responsible to the production and to the finance directors, master confectioners were responsible to the production director. It was almost the only position that hadn't been changed because all the confectioners worked in one team from the very beginning and it was unreasonable to make any changes in this department in order to keep their traditions of production.

After these changes Darlings achieved a positive result.

- all top managers had clear and separated responsibilities

- they could develop new products because 2 specialized brand divisions had appeared

- the position of a finance director was created which meant the financial operations of the company would be put under control

- more efficient purchasing and warehousing were accomplished

These were the main changes.

5. Introduce 4 candidates applying for the position of the Finance Director of Darlings' Chocolates PLC, paying attention to the strengths and weaknesses of every applicant.

In the new organizational structure the new position of a finance director was created. As a result Darlings had to find an appropriate candidate for this position. They needed to find the relevant applicant in a short period of time so they had to use the help of the headhunter agency. This agency gave an advertisement with the following requirements approved by Darlings:

- relevant education

- appropriate qualifications

- similar post in the confectionary or catering industry

These were 3 main requests. There were many resumes that the agency got and according to the data they made a shortlist of 4 potential employees and gave it to Darlings. Let's consider these 4 potential candidates: Mr. W, Mr. .X, Mr. Y and Mr. Z. I'd like to consider the strengths and weaknesses of each candidate.

Let's start with education. It can be said that there were 2 most appropriate candidates Mr. W and Mr. X because they both had a higher education in Economics. Mr. W was the master and Mr. X was the bachelor of Economics and both of them had passed the Professional Accountancy Examinations (W- first grade, X-second grade). Concerning others - they didn't meet Darlings requirements because Mr. Y's information was not applicable and Mr. Z had a degree in Mathematics.

Now let's speak about experience. Mr. W perfectly fitted this position. He had been working for three years with coffee importers and also he held a position of an assistant finance manager (6years). Mr. X had a good and relevant experience too. He worked as an assistant finance manager for Associated Chocolates ltd and besides he had an experience as a finance manager but not in confectionary sphere. Mr. Y had been a finance manager for 11 years with Superchain supermarkets and was an assistant finance director with Fast-Eats catering. In spite of the fact that Mr. Z had held a post in a confectionary industry (biscuit manufactory), in comparison with other applicants his working experience wasn't relevant at all, because he had no managerial skills and he wasn't able to control the whole financial policy.

The last point is the personality assessment. Mr. W was a very capable and likeable man. He also was a talented amateur cricketer which meant that he was ready to work in a team and he might have useful connections with businessmen because cricket is a game for rich people. His hobby didn't badly interfere his work, because he had a full support of his employers. Mr. X has changed too many work places and that meant that he was not stable, but he was an ambitious, creative man with a forceful personality. Mr. Y was the oldest one and might retire soon, he was more appropriate for the personnel manager because he was a very likeable and social man who always maintained good relations with his staff. Mr. Z was more relevant for a financial adviser because he had an exceptional financial brain.

In conclusion, we can say that Mr. W was the most relevant applicant for the position of a Finance Director for Darlings plc.

6. Introduce Peter Long, a new Finance Director of Darlings' Chocolates plc, and explain why he was chosen for this position.

In the new organizational structure the new position of a finance director was created. As a result Darlings had to find an appropriate candidate for this position. They needed to find the relevant applicant in a short period of time so they had to use the help of the headhunter agency. This agency gave an advertisement with the following requirements approved by Darlings:

- relevant education

- appropriate qualifications

- similar post in the confectionary or catering industry

According to this data one of the candidates in the shortlist was chosen for the position of finance director of Darlings' Chocolates plc. His name was Peter Long.

Let's start with his education. It can be said that he was the most appropriate candidate because he had a bachelor's degree and a master's degree and besides he graduated with an honor. He passed the Professional Accountancy Examinations (first grade). This meant that he could analyze financial data, make accountancy loans, financial planning, organize and control finance resources.

Now let's consider his working experience. Mr. W perfectly fitted this position. He had been working for three years with coffee importers and also he held a position of an assistant finance manager (6 years). We can mention that he had been steadily promoted (from assistant manager to the finance manager). By the way applying for the position of the finance director would be a great motivation for him taking into consideration the fact that he was young enough and ready to go further. He also was a hardworking, ambitious man and was able to work under stress and pressure.

Personality assessment: Mr. W was a very capable and likeable man. He also was a talented amateur cricketer which meant that he was ready to work in a team and he might have useful connections with businessmen because cricket is a game for rich people. His hobby didn't badly interfere his work, because he had a full support of his employers. According to his personal traits of character we can say that he was able to motivate his team, make decisions without hesitations and be attentive to the ideas, proposals and suggestions. He was also flexible and respectful.

That's why Peter Long was a great candidate for Darlings and was applied.

7. Present the story of Darlings' land occupied by the Warehouse #2 and suggest what the company should do with the land.

I would like to present the story of the land occupied by the warehouse. In 1969 Darlings/ company requested an estate agency to carry out evaluation of the lands occupied by their factory and offices. On completion of the valuation they expressed interest in selling the piece of land. On this piece of land the warehouse №2 was situated, which was located on the Vinery Street in front of the Europe Hotel. It stood apart from the other premises and it measured approximately 4 acres. At that time there was no ability to sell that land. After some time a client who was interested in acquiring the site in order to develop a shopping and office complex appeared. The value of this piece had appreciated considerably since the construction of the Europe Hotel and the Transcontinental supermarket. The client was able to pay up 500,000 pounds per acre. So that's why Darlings had to make a very important decision - whether to sell this land or not.

On the one hand it would be very profitable for them to sell this land taking into consideration that Darlings needed a lot of money for their own needs - it could help them to reduce their taxes and fees for short term period.

But on the other hand I believe that there was no sense of selling it. Here is my point of view. At first, let's consider warehouse's location on the site. The company should have its own private land and shouldn't share it with other companies not to interfere Darlings functioning system. It would be useful for Darlings not to sell this land because otherwise they wouldn't have enough space for cocoa stocking because the prices for cocoa beans increased steadily and they needed extra building to store it. Besides, it would be more profitable to lease it for long-term period. If they had sold the warehouse there would have been no room for new development. After selling the land they could risk loosing their labor force, because the new owner could create competitive workplaces offering a larger wage. That is why it is unreasonable to sell the land (premises).

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58 Кб, 25 декабря 2011 в 13:56 - Россия, Москва, ИМЭ, 2011 г., doc
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