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BM Case Study

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TingTing Lian

on 6 April 2011

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Transcript of BM Case Study

Business Management
—— Case Study

by TingTing Lian
1. Why does Joseph Obeng believe the best growth strategy for Open Views is organic growth, rather than going public or merging with other companies?

have better control and coordination.

relatively inexpensive.

maintain corporate culture.
2. Analyze whether small and medium-sized firms, such as Open Views, have commercial and competitive advantages over multinationals like McGregor’s and Blue Sea.
Government aid

Financial risks are relatively low

Cost control

More personal services

Easier and quicker communication

Making decisions timely
Less economies of scale

Restricted division of labour

Raising finance and more costly loans

Less diversification and greater risk
3. (a) Prepared a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis for Open Views.
(b) Using the information from your SWOT analysis, produce a report from Marc Leroux to Jeseph and Manjit outlining future operating and growth strategies for the next five years.
Operational Strategies:

Growth Strategies:
Open Views operates out of four small city-centre premises.

Personalized “bespoke” services.

Joseph constantly reviews ways to expand his business to create greater economies of scale.

Hired a direct marketing consultancy.

An excellent working relationship between Manjit and Joseph.
Marketing is minimal.

The brochure is glossy and expensive to print. They selling most of its holidays through mailed brochures.

Communication is poor.

Joseph tends to make decisions without all the information.

Marc lacks a true understanding of the holiday business and concentrates too much on cost control, and sales and profit targets.

Complaints about the safety of the working environment.
• Joseph frequently visits the Caribbean to explore smaller islands.

• Warm Breezes was built on an unspoilt island.

• The local government provided financial support.

• The hotels and resorts are situated in established towns and are linked to many local business.
• The business has attracted the attention of other holiday operators.

• Salaries have not kept pace with average earnings in the industry.

• The slowdown of is likely to affect the business.

• Several employees have already visited the trade union.
• Promote more environmentally friendly activities.
• Supply more “bespoke” at the front period of the development.
• For foreign country travelling, promote more local cultures, food and civilization to guests.
• Using the unique advantages of resorts to attract clients. Promoting the theme for resorts and recommend to clients according to different customers.
• Enhance the advertisements to achieve the reduction of the cost by not only brotures but also e-mails and mails.
• Registering relevant logo and noticing the company prestige.
Reconsider about the orientation of customers.

Enlarge the market of the business.

Exploring new lands such as islands.

Turning the private limited company to a public limited company. To raise more capital by selling the shares.

To become a multinational company.

achieve that there are Open Views and Warm Breezes in other countries, to get the government financial assistance.
4. Describe, with relevant examples, three internal economies of scale and consider how these will apply to Open Views as it grows in size.
• Techotical Economies

The first internal economy of scale is the exploration of new island.

Joseph frequently visits the Caribbean and finally found an unspoilt island there.

The land (one of the factor of productions) was enlarges, thus this apply to Open Views as it grows in size.
• Financial Economies

The second internal economy is the formation of a joint venture.

Joseph found Manjit in the Caribbean and formed a joint venture.

This decision made both Joseph and Manjit to share the risks and profit. Joseph saved time and money to explore the local market as Manjit is familiar with locals.

It is a good decision for those who want to develop the business to a foreign place like Open Views. It also helped Joseph grew the size of the business.
5. Assess the potential role of a trade union at Open Views in promoting the views of employees and in helping to resolve conflicts within the workplace.
Trade Union
How does it help ?
Trade union is an organization whose membership consists of workers and union leaders.
They aim to uphold and enhance the conditions of work for their members. They may seek or campaign for following purpose:
• Wages and salaries to rise in line with inflation.
• The introduction of a minimum wage.
• Better working conditions, including the provision of regular breaks or improving the physical working environment in the workplace.
In this Case
In this case, the employees in Open Views have already visited the trade union is because of their wage. Due to the increased competition and the slowdown of the United States and European economies, Open Views has been forced to cut profit margins to gain new business, and as a result salaries have not kept pace with average earnings in the industry.
there might be potential conflicts occurred.

The trade union only consider for its members.

The high requirements means the potential appearance of unemployment especially during the period of slowdown of economies.

employers may not respond.
protects the interests of those employees

builds the relationship between employees and employers.

employers still needs these employees

solve the conflicts and increase productivity

the trade union plays a useful and important role in resolving the problem.
6. Examine the commercial advantages of firms acting in an ethical and socially responsible manner.
Staff’s motivations are more likely to be improved.
A driving force for improved employee motivation, productivity and loyalty.
Acting in an ethical and socially responsible manner can:
increase customer loyalty.
Customers are more likely to be loyal to a business that does not act immorally.
cut the costs.
It may be possible to reduce certain costs of production through ethical behavior.
enhance the image and reputation of a business.
such as treating employees fairly or by being environmentally friendly.
7. Produce a set of ethical and environmental guidelines to support Joseph and Manjit’s application to expand Warm Breezes.
Evaluate how your guidelines will address the local community’s objections to the present operations and proposed expansion.
• Be environmentally friendly:

- Increasing recycling of waste materials.
- Reducing pollution by using more environmentally friendly production products.
- Recycling products used in the business based on sanitary conditions.
- Presenting an environmentally friendly manner to the public and employees.
• Treatment towards to staffs:

- Offering staff sufficient rest breaks during their work shift.
- Providing good working conditions for staff.
- Paying employees’ wages regularly and no default of bonus and holidays for staff.
• Be honest with government:

- No financial dishonesty.
- Paying the tax regularly and timely.
• Be honest with customers:

- No cheating to customers.
- Be fair to all customers.
• Concern about local community and the whole society instead of considering the business self:

- Reducing the “all-inclusive” services, outsourcing some of resources form the local community such as restaurants.
- Leading tourists into the local community and let them know more about local cultures.
- Let tourists contact with local populations.
8. McGregor’s and Blue Sea are attracting some of Joseph Obeng’s target market. Explain how a small business such as Open Views can offer a more client-centred service than a multinational company.
• A small business such as Open Views can offer a more client-centred service as it can provide a more personal services to customers.

Whereas a multinational company like McGregor’s and Blue Sea cannot achieve this as they are more standardized.

There are more innovation, creativity and flexibility for a small business such as Open Views.
• tight relationships with customers, which means the communication between the company and customers is faster and esier.

By contrast, a multinational company usually communicates with customers via telephone

There is a gap between a small business and multinational company as the relationship with customers of the front is better than that of the later one.
12. (a) Prepare a decision tree to represent Warm Breezes’ options and calculate the expected value of each.
Decision Tree
(b) Which course of action is most desirable according to your decision tree?
According to my decision tree, to develop a commercial centre is most desirable.
Organic growth occurs when a business grows internally, using its own resources to increase the scale of its operations and sales revenue.
- fianncial support (grants and subsidies)
-the costs of running a global business are huge
-owners of small business maintain control
-large scale of operations diseconomies of scale
-low cost for small business
-owners may not want to expand since higher unit cost
-more creativities, inovations
-client centred
-less chain of command
-small scale
-better equality
-the owner is onthe day-to-day running of the business
-The scale of a small or medium-size business is smaller than those multinational companies
-fewer employees in small business
-not functional
-less credibility
-more difficulties with financial raising
-the serveices of a small business are limited
-much fewer than multinational componey
-less owners, hence greater risks
• Improve the communication between customers and employees.
• Improve the relationships between employees, make sure that their complaint will be resolved, but not by promotion of the trade union.
Managerial economies

The third internal economy of scale is the employments of managers.

The firm split up management roles by employing specialist managers.

Joseph hired a direct marketing consultancy to coordinate mail drops.
He appointed an operations manager to oversee the business when he is abroad.
Manjit appointed a general manager.

The spliting up of the manage increase the efficiency and create benefits of synergy for the business. 1+1=3
My guidelines will address the local community’s objections to the present operations and proposed expansion as the guidelines.

o solved the government’s concerns

o solved the unemployment issue in local

o promote the development of local businesses

o develops the local economies as more consumers visit their country

o business has good reputations, thus improve the impressions of consumers to the country.

o Good for society as the business reach the goal of being environmentally friendly.
9. Examine the decision taken by Joseph Obeng to form a joint venture with Manjit Daswami, rather than to create a separate company.
A joint venture occurs when two or more businesses decide to split the costs, risks, control and rewards of a business project. In doing so, there are advantages for Joseph to form a joint ventures as a means of growth:
• need to form an agreement with oversea firm. National laws may make joint ventures the only option.
e.g. Manjit's firm stands for an oversea firm.
• Joseph can spread costs and risks with Manjit.
reduce finance burden and risks (loss).
• Competition may be reduced by forming a joint venture & high competitiveness
otherwise, one more competitor if Joseph creates a separate company.
• Firms that expand via joint ventures can take advantage of each other’s local knowledge and reputation.
Joseph save time and money.
• Benefits of synergy for the business.
A business can avoid duplication of effort in planning, communication, marketing, distribution and production processes.
10. Identify three problem created by the location of Warm Breezes in the Caribbean and discuss appropriate strategies that the local government could put into action to reduce these.

1. Environmental problem
The operation of the business may cause the damage to this new explored island environmentally.
2. Cultural damage
The operation of Warm Breezes will bring lots of cultures of other countries and cultural damage to Caribbean.
E.g. western the music and dances in order to satisfy European and other countries’ consumers.
3. Profit overseas
Profits earned by Warm Breezes are shared by Open Views and Manjit’s company.
The business may not promote the economy in Caribbean.
The government may help Warm Breezes to present an environmentally friendly manner to the public.
Promise that the business will be environmentally friendly.
The government may ask Warm Breezes to bring local culture into the operations as well as local civilization and population in order to preserve their own culture.
The government may require Warm Breezes to operate with local businesses or employ local residents to solve the unemployment.
The location of Warm Breezes in the Caribbean is in an unspoilt island.
(c) To what extent would the additional financial and non-financial information provided in the case study support the course of action suggested by the decision tree?
- Joseph and Manjit hope to persuade the local government to provide 50% of the funds to be matched by a loan from an international bank.
A financial information support the action of developing a commercial centre.
If their persuasion is successful, they will get the financial support to develop a commercial centre.
- The old assault course could be easily restored.
A financial information to support.
there is not too much financial support needed in restoring it, thus less cost needed to develop a commercial centre
- Local businesses appear to favour the commercial centre over the cottages, as this will create more jobs.
A non-financial information which supports the action that to create the commercial centre
It benefits other businesses and cause less unemployment.
- Manjit has even suggested to Jeseph that they would create the world’s most exclusive war game development.
A non-financial information.
It indicates that this commercial centre will be unique and most exclusive all over the world.
It supports the course of action, to develop a commercial centre.
11. Using a PEST framework, analyse the opportunities and treats facing Open Views over the next phase of its development.
Open Views has been forced to cut profit margins to gain new business.

The slowdown of the United States and European economies is likely to affect the business adversely.

Unemployment in the region is still significant.
The government changed the views to the permission for Warm Breezes development. (environmental, local economy, the trade union)

Manjit is convinced that her family’s local connections will help promote their case to the government and unions.

Manjit is already in discussions about a second Warm Breezes holiday complex in a neighboring island.
To develop a commercial centre adjacent to the main buildings, containing sales and conference facilities.

The services include trekking, climbing, scuba diving and shark fishing.

The hotel complex offers everything couples could want on site.
Nightly entertainment is essentially brought in from the United States and Europe and local bands are rarely employed.

The “all-inclusive” package offered to holidaymakers restricts the use of the local restaurants and other services.

The uniforms are designed and manufacture by an Italian fashion house.
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