Research Korner: Case Studies Samples

Strategic Management: The Case of eBay

Strategic Management: The Case of eBay     1.0 Introduction With achieving sustainable competitive advantage as the goal, organisational changes are considered to be an important part of the development process of a particular company. Aside from globalisation, technology also plays an important role in the changes among modern organisations. Technological boom, specifically through the dotcom and World Wide Web, had become one of the inevitable ways in obtaining a wealth of information about a certain issue or topic. For the organisations, the Internet was perceived to be a significant avenue for doing business and marketing per se such as being done by eBay with their online auction. Individuals are able to obtain and purchase their needed and wanted items directly, without the hassle of traveling and physically looking for the products through online auctions. Strategies are deemed important in responding to various internal and external threats and problems which can directly and indirectly impact organisational decision making. This report purports to present and discuss the case of eBay through investigating the strategies that the company employs. Likewise, the paper will also address the building blocks unique to the company. How eBay operates despite the fierce competitive nature of online auctioning business will also be addressed.      2.0 Company Background Founded on 1995 by Pierre Omidyar, eBay was considered a pioneer in the online auction industry whereby people are brought together on a local, national and international basis to serve the purpose of creating a person-to-person community where ever individual could have an equal access through the same medium which is the Internet. eBay offers wide varieties of products and services for bargain hunters, hobbyists and collectors and sellers, changing the way people engage in trading hence eBay had changed the face of e-commerce from its inception. eBay participates in the demand-based or dynamic pricing segment of online commerce where transaction prices are determined entirely by buyers. The auction is the most familiar form of demand-based pricing (Bunnell and Luecke, 2000, pp. 8-9). As Bunnell and Luecke (2000) put it, eBay has become the world's leading auction market and one of a handful of major dotcom companies to actually turn a profit while also expanding the e-commerce industry (pp. 4-6). Today, eBay is continuously the brand preference with over 39 market presence and with $60 billion of the total value of sold items on the site’s trading platform.   3.0 Current Strategy of eBay Basically, eBay introduced several crucial innovations tailor-made for the internet at the business level, a strategy which was conceived to be an improvisation. One being the online auction business model wherein eBay served as the value-added facilitator of trade between a buyer and a seller in a highly individualistic manner. The online auction model developed by eBay marked an important extension of e-commerce, offering millions of individuals a low-cost opportunity to engage in a new type of economic activity. Gomes- Casseres (2001, p. 2) firmly believes that eBay had built an online person-to-person trading community in the Internet. In addition, there had been a growth in the organisational structure which was primarily manned by Pierre as the visionary and his colleague Jeffrey Skoll as the strategist and then further growing to include Meg Whitman and other teams, striking a balance between over- and under-structuring. The integration of new systems and practices was seen to be a way to creating value than just focusing on efficiency of the people and the processes with further focus on internal innovations (Brown and Eisenhardt, 1998).   Throughout the history of eBay, regeneration and experimentation were both inherent, which were seen to be instrument of innovative processes and responding to competitive schema. EBay had developed proprietary software capable of supporting a robust, scalable user interface and transaction-processing system which can handle all aspects of the auction process. EBay users can browse through listed items in a fully automated way. The sellers are allowed to list items that they want to sell while the buyers bid on items of interest. The items on eBay’s site are arranged by topics and each type of auction has its own category. It sends e-mails when users register for the service, when they place a successful bid, and when they are outbid, and it communicates the outcome of auctions in which they participate. The same system sends daily status updates to active sellers and bidders and maintains user registration information, account information, current auctions, and historical listings. All of this information is archived to a data warehouse.   Further, eBay has been bounded by two things: a clear mission to be the world's largest person-to-person online auction company, and a focused strategy with five key elements: expanding the user base, strengthening the eBay brand, broadening the trading platform by increasing product categories and promoting new ones, fostering community affinity and enhancing site features and functionality. EBay must realised to live in the present and so strategies must be refreshed and realigned basically through clarifying the purposes of the company itself. Priorities and responsibilities must be well-established (Brown and Eisenhardt, 1998) and for eBay, there are three main strategies implemented which are: building strategic partnerships at all levels of value chain, seeking customer feedbacking and working on with the information collated and monitoring the external environment. Within eBay, functions were further subdivided intended for overseeing strategic direction and growth, business model and site development and community advocacy as well as strategic planning and analysis, competitive analysis, new business planning and incubation and customer support operations.   When Whitman arrived in 1998, brand building recognition at eBay was prioritised. The related problems of consumer product marketing were divided into two: first was clarifying what eBay stood for by which in their judgment is a personal trading community and second, brand building exercises or marketing per se. EBay made acquisitions in order to support its growth as a supplement to word-of-mouth and public relations advertising into tapping opportunities through national magazines and online alliances. These acquisitions aid in the expansion and improvement of the company’s services. EBay’s boldest and most costly effort of gaining greater name recognition began in August 1998, when it entered into a three-year marketing deal with America Online (AOL) aiming at further enhancement of the site and value-adding features to be established. Other online allies include Kinko’s, First Auction, Z Auction, Netscape and GO.com.   Broadening the products and services portfolio was another priority strategy for eBay, reaching to almost 3, 000 categories. At the onset, eBay utilised content-specific chat rooms and bulleting boards to provide real-time interface between buyers and sellers; customised home pages were also sought. EBay also collaborated with an online portal of the collectibles in exchange of affiliation referrals for Collecting Channel. Regional auctions were also established, focusing mainly on profitable markets in the US. It is believed that these regional auction sites could localise products while also providing buyers with the advantage of cutting off shipment or delivery charges. Such strategy was known as co-adoption where eBay diversified the firms into units and then collaborated with individuals within the system. Such action was known to be an element of expanding the traditional business model where eBay now shifts its focus on exploiting economies of scale and scope and extending offerings to new market segments (Brown and Eisenhardt, 1998).   The sense of community was further developed through designing an online tool with which could address more personal yet secure interactions between buyers and sellers and which is embedded on trust. Interest-based chat rooms were created, allowing a more transparent interface among individuals. These Feedback Forums, however, did not guarantee an honest community and so fraud and other illegal activities were witnessed. Synergism as another co-adoption strategy was realised. A SafeHarbour program was launched with features including Mister Lister bulk-listing tool, help boards, and My eBay, which allows a user to track multiple auctions simultaneously and also About Me, which allows a trader to customise home pages. EBay’s share of the total system consists of Sun database servers running Oracle relational database management systems and a suite of Internet servers that operate on Microsoft's Windows NT. Generally, the most important chore-reducing features have been added through arrangements with partner firms or third-party suppliers such as iShip, Mailbox Etc., Wells Fargo and E-Stamp. These are long-term strategies for eBay as the company launches more experimental products and services and creating more alliances toward nascent markets and emerging technologies (Brown and Eisenhardt, 1998).      4.0 Building Blocks at eBay 4.1 Time Pacing EBay belonged to an otherwise chaotic market, time pacing is important in the sense that any mistake that could impact real-time interfaces could affect the credibility of the company (Eisenhardt and Brown, 2008). Indeed, there are specific times when eBay was not able to respond to the ever-growing demand of traders as evident by 22 hours downtime mainly because of server problems leading to the crashed of the website in 1999. This had made eBay believed that advantage is indeed temporary and so the need to continuously look for new source of advantages (Brown and Eisenhardt, 1998). The sense of urgency was thereby developed but eBay was realised to be lacking strategic capabilities of responding to changes during that time especially because eBay was attempting to do all things at the same time. For instance, the website crashed due to the fact that the auction house is managing the processes of flow of users on the site, processing new members, accepting bids and managing huge database of list of categories while also integrating new products and services information. Nevertheless, when problems like this occur, eBay acts promptly and respond through adding workforces whom will oversee specific functions while also avoiding problems such as this.     4.2 Edge of Time In continuously evolving to be the business of tomorrow, eBay could still rely on its business model but could also consider expanding it. Black (2007) mentioned that e-commerce is becoming increasingly important to consumers, sellers, and entire communities and online marketing has become and will continue to become a full and complete business model for other companies. The increasing importance of e-commerce and the use of the Internet, led many online companies, such as eBay to engage in online auctioning. Ten aspects are attributed to the success of eBay, namely, commitment, well-spent funds, an effective and persistent marketing and public relations, great products or services to sell, not selling of junk, great customer service, efficient and pleasant facility, polished listings and photos, paying attention to details, and good recordkeeping (Mansfield 2006). These ten aspects are perceived to be contributory to the success of eBay in the industry as the leading online auction house, and determine its edge over its competitors.   4.3 Edge of Chaos The success of eBay has inspired other online companies to engage in the same business, of perceiving the same attention that it receives from consumers. With this, several competitors can be pointed out, which are also online companies that engage in the same services that eBay offers. Amazon.com and Yahoo! Auctions are the two main rivals. Amazon.com was the second largest online auction house, which is perceived to be a competitive threat to industry leadership position of eBay, is also a one-stop-shop online auction site. Compared to the business model of eBay which is trader-centric, that of Amazon.com’s is more inclined as profit-oriented. On the other hand, Yahoo! Auctions was the first online navigational auction house over the Internet, a reputation that sets its identity apart from the other two main auction houses. The advantages of eBay over Amazon.com and Yahoo! Auctions are three-fold: wider portfolio with over 3, 000 categories, low to zero transaction costs and information-support, manifesting that changes inside eBay are diverse and emergent (Brown and Eisenhardt, 1998).   In comparison with perhaps Fable, this report maintains that although eBay has proved to be lacking in strategic time pacing at certain point, experimentation and regeneration have been the survival strategies. Fable was more focused on short-term successes, missing the opportunities for new products growth. In opposite, one of the primary objectives of eBay was to strengthen products and services portfolio as evident by the incessant acquisitions of alliances and partnerships to boost categories and site features and functionality. Compared to Fable which is highly dependent on ‘repeated layering’, eBay is an epitome of a well-developed organisational structure where the top management especially Pierre was willing to accept what he cannot do for eBay and resorting to seeking the help of strategists such as Skoll and Whitman. For eBay, change is an opportunity that must be taken advantage instead of seeing it as a threat (Brown and Eisenhardt, 1998). Finally, Fable was not able to reap the benefits of changes but for eBay, the company is equipped with the capability to transition while maintaining a superior performance.   5.0 Conclusion   EBay is well aware that in order for the company to maintain its competitive advantage and make it sustainable in the long run, the company must take advantage of the changes at the corporate, organisational and business levels. EBay embraces the five building blocks which are applied randomly throughout eBay's history: improvisation, co-adaption, regeneration, experimentation and time pacing as evident by the strategies discussed. The company also embraces the 10 principles of competing on the edge about strategy, organisation and leadership.   6.0 References   Black, G S 2007, ‘EBay Users and Non-Users: Comparison and Implications for eBay Entrepreneurs’, at Association of Small Business and Entrepreneurship Annual Conference, Austin, Texas.   Brown, S and Eisenhardt, K 1998, Competing on the Edge: Strategy as Structured Chaos, Harvard Business Press.   Bunnell, D and Luecke, R A 2000, The EBay Phenomenon: Business Secrets Behind the World’s Hottest Internet Company, John Wiley and Sons, New York.     Eisenhardt, K M and Brown, S L 2008, ‘Time Pacing in Markets that Won’t Stand Still’, Harvard Business Review.   Gomes-Casseres, B 2001, ‘The history of eBay’, International Economics and Finance, vol. 1, no. 1, pp. 1-2.   Mansfield, R 2005, eBay to the Max: Be a Trading Post Owner, Trading Assistant & Power Seller, Que Publishing.

Strategic Management: The Case of eBay

Strategic Management: The Case of eBay 1.0 Introduction With achieving sustainable competitive advantage as the goal, organis...

CASE STUDY

Case Study 2.1 Choosing a New Director 1.                  Which candidate should Ms. Coke select? I believe the rightful person to be picked as the new director should be . He possesses honesty and integrity, and most of all; he puts the values and goals of the company first and foremost. However, this doesn’t mean that the two other candidates are far behind; they possess, in their own right, qualities that could possibly make them good leaders. Alexa, possesses creativity, insight and persistence which are great assets to the company, and Kelsey, who possesses intelligence and sociability also present great assets to the company. However, in my assessment, I believe that Thomas possesses the abilities that a great leader must possess. Furthermore, it has been noted that far greater intelligence would create an adverse effect on the undertaking. Having a great gap on intellectual and cognitive ability (), would make it difficult for people working under her to catch up with her views and desired undertakings. Furthermore, in Alexa’s case, though it should not be taken personally, I believe she lacks credentials that should be possessed by a director. However, I believe  is balanced on all the traits mentioned which should be possessed by a leader. 2.         In what way is the trait approach helpful in this selection? Leadership is not simply an idiosyncratic characteristic of some individuals. It is a systemic property derived from the interaction of the requirements of critical organizational tasks, the critical functions those tasks serve, and the problem-solving characteristics of the actors in "leader" roles. The nature of the critical functions and tasks is related to organizational level.  and  (1992) expanded those concepts and incorporated them into a multilevel model of leadership. His model provides an integrative perspective on the type of leadership required, critical tasks, individual capabilities needed, and the importance of organizational culture/subcultures at each organization level.             In this type of selection, the trait approach would be of great help since it highlights the traits and the capabilities many great leaders share. The trait approach could be pertained to as the shortcut method of choosing a leader with a pool of various traits that many leaders do possess. 3.         In what ways are the weaknesses of the trait approach highlighted in this case study? The trait theories focused their attention on determining what attributes and qualities differentiated leaders from followers. Theorists concentrated on the personal attributes and characteristics of 'good' leaders-extraordinary individuals who were revered by their followers. Subsequently, style theorists explored the idea that the leadership qualities could be explained in terms of how leaders behaved. For instance, it has been suggested that the behavior of leaders could be grouped into two distinct styles. What is termed theory X was a directive style and theory Y was a supportive style; both styles achieve success in different circumstances. Contingency theories considered the possibility that there was no one best solution to every problem; extraordinary individuals have to lead by making the choice that is most appropriate to prevailing circumstances (, 2004).             In this case study however, the trait approach would seem robotic and much generalized. The trait approach is somewhat like a stereotype of traits many leaders possess. But being a great leader cannot be accurately predicted by just referring to a sheet of paper filled with “supposedly” possessed traits of many leaders. A leader may not possess some of these traits but still become a great leader. The general weakness of the trait approach is the fact that it creates a stereotype of a leader.             Case Study 3.1 1.         Based on the skills approach, how would you assess Dr. Wood’s leadership style and his relationship to the members of the Elder Care Project Team? Will the project be successful?             Dr. Wood’s relationship to his research team is truly strained, as the title suggests. One cannot blame the team or Dr. Wood if they feel the way they do. The situation- lack of funds, time pressure; and the difficulty of the task also played a major part on their predicament.  However, the Dr. should have not taken the situation personally, since all of them were experiencing the same thing. He, of all people should have understood their situation and should not take things negatively. Since all of them are strained and pressured, he should at least acknowledge the fact that his research team is working pretty hard despite the fact that they are underpaid. At the rate they are going and the way that he is handling the situation, it is not unlikely that the project will fail. 2.         Does Dr. Wood have the necessary skills to be an effective leader of his research team?             Dr. Wood, as mentioned, is a very effective researcher. He has completed many works and is considered a genius in his craft. However, I believe he lacks the skills that would have made him an effective researcher. For one thing, he should be able to empathize with his colleagues and should not spit out bitter comments about having to do much of the load, without thinking that his researchers are also working hard despite being underpaid. Furthermore, he lacks sociability, making it more difficult for them to work together. 3.         The skills model approach describes three important competencies for leaders: problem – solving skills, social judgment skills, and knowledge. If you to coach Dr. Wood using this model, what type of things would you address with him?             Since Dr. Wood is already highly polished in the aspects of problem-solving skills and knowledge, I believe that the only area needed to be addressed is his social judgment skills. Dr. Wood needs to further develop these areas in order to work harmoniously with any other team he would lead.   Reference:

CASE STUDY

Case Study 2.1 Choosing a New Director 1. Which candidate should Ms. Coke select? I believe the rightful person to...

Case Study: Information Technology and Information System in Starbucks

Starbucks: Case Study Aims and Scope of the Study             This study will use the Unbounded Systems Thinking mode of enquiry in order to analyze the different strategic issues that are related to the competitiveness of Starbucks that focuses on the different external aspects, issues and factors, together with the internal capabilities of the company. It will focus on external drivers that are influencing the entire operation and performance of Starbucks in order to make more use of IT. Thus, it will also focus on analyzing the current situation and capabilities of the company and discuss the impact of Information Technology and Information System in Starbucks, by focusing the on the perspective of the customers, management, employees and other important shareholders. Above all, it will provide an overview of the different vital issues that are related to the system development. Mode of Enquiry             Enquiry is considered as the action that involves the process of seeking for truth, knowledge or information that concerns something such as search, investigation as well as examination (Study Campus n.d.). There are different modes that are used for enquiry or for gathering information in order to know the truth about a specific situation such as: inductive-consensual enquiry, analytic-deductive, dialectic, multiple realities and unbounded systems thinking.             It is important to consider that the need for systems thinking is grounded in the understanding of the different problems as messes or uncultivated as well as apparently unrelated entities, rather like patches of weeds as well as wild flowers. Where in each of the entities are affecting the other aspects that results to a whole that is incapable of rigid definition as well as identification that is required by other enquiry methods. The said messes then resulted to emergence. Emergence is attributes that is considered as the functions of the whole, however, not clear or obvious at the individual component level (Study Campus n.d.).             Mitroff and Linstone identified Unbounded Systems Thinking or UST as the fifth way of knowing, or the enquiry system that avoid the traditional hierarchical ordering of the sciences as well as professions and replaces the linear order with a circular concept or relationship among the different sciences and professions. As a result, the circular concept in UST remove the hierarchical order of the discipline superiority where in each of science is considered as vital (Hemphill n.d.).             As part of UST, multiple perspective concepts are also included where in it includes three paradigms of thinking: the technical perspective; the organizational or societal perspective; and the personal or individual perspective. Thus, it is important to focus on the perspective of the three users in order to distinguish how the research looking from and what the research looking at.             In connection, different managerial decisions are often reach dialectic gridlock due to the essentially different sets of assumptions regarding the definition of the real problem. Thus, assumptions are the properties of stakeholders or any individual, group, organization or even institution that can affect as well as affected by any policy or policies of an individual or a group, an organization as well as institution. Thus, proponents of different policies are all operating with the different assumptions regarding the behavior of the shareholders of a company. Thus, the assumptional analysis plainly identifies the different managerial stakeholders’ assumptions that allow the managers to be open regarding different challenges before a final strategic policy will be adopted (Hemphill n.d.).             The said mode of enquiry will be helpful in order to analyze the aims of the study regarding Starbucks focusing on globalization, and how it can affect the entire operation of the company using the perspective of different stakeholders. It will also focus on the different assumptions regarding the current and future status of the company.   Background Starbucks is considered as one of the most famous as well as most love brands in the world in any industry. It had literally moved beyond the walls of its traditional stores, offices and roasting and production plant (Knapp 199, p. 195). As a result, more and more people, in different places where in the Starbucks’ stores are located, are experiencing or at least heard about the brand and their products. In addition, the company has become the success story of 1990s due to its global phenomenon hits (Knapp 1999, p. 195). The company renewed its quest for a high quality coffee by offering fresh coffee that can be considered as different from the idea of different canned coffee products that are being offered by its indirect competitors such as General Foods, Nestlé, Procter & Gamble or P&G as well as Jacobs (Pendergrast 1999 p. 307) Consequently, the company focuses its effort towards improvement of management and marketing activities that resulted Starbucks to become the top 16 Best Companies to Work for in 2007, as reported by Fortune. This shows that the company doesn’t only focus on their customer relationship but also focus on their employees. The company offers different benefits for the workers together with the best working condition that enables their employee to be motivated and works at their best. Thus, it improves the retention rates of the company.   Research Assumptions             Globalization is considered as one of the major factors that can affect the entire operations and performance of any organization from any industry in the world. This can affect the human resource management as well as its relationship with the customers. This is due to the influence of the different cultures and traditions that can affect the motivational factors as well as behaviors of the employees. In addition, it can affect the perspectives, needs and demands of the customers towards a given product or service.             It is also important for multinational companies to have a centralized information process in order for the head management to know which of their branches or stores are in great need of attentions in terms of marketing, management and other important activities. Thus, in the said aspect, the issue regarding application of IT or IS enters. This is due to the fact that centralized information processing can help the company to manage their important resources, primarily information regarding the product research and development or innovations.   References   Hemphill, T, The Unbounded Mind: Breaking the Chains of Traditional Business Thinking. - book reviews, Business Horizons, FindArticles.com, viewed 22 December 2008, <http://findarticles.com/p/articles/mi_m1038/is_n5_v36 /ai_14723305>   Knapp, D 1999, The Brand Mindset, McGraw-Hill Professional   Pendergrast, M 1999, Starbucks: The Romantic Period, Basic Books, New York   Study Campus, Lesson 2 – Principles of Enquiry, viewed 22 December 2008, <http://www.studycampus.com/PgD/itnfy/lesson2.htm#unbounded>

Case Study: Information Technology and Information System in Starbucks

Starbucks: Case Study Aims and Scope of the Study This study will use the Unbounded Systems Thinking mode of enquiry in...

Corporate Finance : Case Study of Tomkins plc

Introduction             Businesses are developing to suffice the need of the society. In any current business organization, progress that the company is making is recorded as basis for, among a host of other essential things, decision-making and as a benchmark for measuring the firm’s performance for the period under scrutiny (Daroca, FP & Nourayi, MM 1996). A financial situation analysis is one such measure that documents current and future financial situation in an attempt to determine a financial strategy to help achieve organizational goals. In any contemporary operating organization, progress that the company is making is recorded as basis of assessing the stewardship of management and for making economic decisions. A financial statement analysis is one such yardstick that takes into consideration current and future financial situation in an attempt to determine a financial strategy to help achieve organizational goals. Various accounts from the published financial statements are evaluated in relation to each other to form performance indicators, which are then compared to ‘established’ standards. Financial statements are, according to Pike, R & Neale, B (1999; 15), the ‘universally accepted tools for analysis of a business entity’. If properly understood, they let the users know how good a company looks and how well it has been doing. They are, at best, an approximation of economic reality because of the selective reporting of economic events by the accounting system, compounded by alternative accounting methods and estimates (Barton, D., Newell, R & Wilson. G, 2002). The purpose of financial statements is to provide users (business owners, lenders, managers, suppliers, customers, attorneys and litigants and employees and job seekers) with a set of financial data that, in summary form, fairly represents the financial strength and performance of a business (Pike, R & Neale, B 1999; 15). They reveal opportunities and provide protection against financial pitfalls. Ideally, financial statements analysis provides information that is useful to present and potential investors and creditors and other users in making rational investment, credit and other similar decisions (Barton, D., Newell, R. & Wilson. G. 2002). Further, they are comparative measurements of risk and return to make investment or credit decisions as they provide one basis for projecting future earnings and cash flows.   About the Company[1]             Tomkins plc is the mother of a large number of subsidiaries that are organized into two separate business groups: Industrial & Automotive and Building Products. Basically, both businesses have strong market positions and technical leadership and own some of the best-known brands in their respective fields.  The group is listed in both London and New York stock exchange with revenue in the 1st half of 2008 of 2.9m USD and over 33,000 people worldwide i.e. 21,635 employees with 73 production facilities for their Industrial and Automotive sector and 11,817 employees with 65 production facilities for their Building Products sector. As of the first half of 2008, the group revenue is quite impressive despite of the current global financial crisis compared to other global businesses.   SWOT Analysis             The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. (Bradford, R.W., Bradford R.W,  Duncan, J. Peter, & Brian Tarcy ,1999). This section addresses hypothetical key strengths, weaknesses, threats and opportunities for TOMKINS PLC establishment in United Kingdom. Table 1. SWOT 	 		 			 			 			 			 			Strengths: 			 			 			 			 			 			Weaknesses: 			 		 		 			 			<ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Infrastructure in place</li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Basis for strong management team </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Possibility to evolve into range of offerings </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Location is highly suitable </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Very focused management/staff </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Well-rounded and managed business </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Marketing plan in place</li> 			</ul> 			 			 			<ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Focus maybe too narrow </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Lack of awareness amongst prospective customers </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Potential need for larger premises </li> 			</ul> 			 			  		 		 			 			 			 			 			Threats: 			 			 			 			 			 			Opportunities: 			 		 		 			 			<ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Major player may enter targeted market segment </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Economic slowdown could reduce demand </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Market may become price sensitive </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Market segment's growth could attract major competition 				</li> 			</ul> 			 			 			<ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Market segment is poised for rapid growth </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				New markets offer great potential </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Distribution channels seeking new services </li> 				<li class="MsoNormal" style="punctuation-wrap: simple; text-autospace: none; vertical-align: baseline"> 				 				 				Potential to diversify into related market segments </li> 			</ul> 			 		 	                         Basically, firms are competing to achieve above normal return, but being monopoly is not the only way to achieve it. Firms can differentiate themselves with others through innovation: competing to be different. Although the innovation itself maybe profitable, the innovating firm itself may not profit from it. Therefore it is important to establish complementary assets alongside firm’s innovative capability to capitalise majority of the gain (Teece, 1986). Scholars refer the development of complementary assets as the sixth force (Grant, 2001), in addition to Porter’s seminal five forces model (Porter, 1980). Another major problem for companies not profiting from their innovation is that they spend too much time on seeking and creating innovation but “inability of corporation to turn knowledge into practical applications and profit” (Leonard-Barton et al., 1996). Firms need to look deeper into their knowledge base, and often to exploit hidden knowledge inside the firm is more profitable than to explore new knowledge. This is partly because of the cost saving. However, when hidden knowledge inside the firms are well exploited, it is important for the firm to innovate through reconfiguration of existing knowledge and/or seeking new knowledge externally (Kluge et al., 2001).             When the knowledge of an innovation is spill over across firms, companies expect appropriability to fall during the life cycle of a technology as the cumulated search efforts and the fraction of agents knowing the code increase. However, this long-term trend may be counteracted by a number of strategies designed to limit or to compensate the fall in appropriability. The most promising way of achieving competitive advantage through innovation is to continuously innovate, and innovate in a way that competitors are unable to catch up through their incremental innovation and unmotivated for radical innovation. An interesting case would be TOMKINS PLC, a company constantly improves the services/products that suits to the taste of different nations.       Financial Analysis Typically, financial measures as well as the relationships utilized in performance measurement are designed to stress outcomes with minimal or no consideration of the decision processes of the manager. The traditional or conventional measures of performance are based on periodic profitability indicators without the consideration to particular variables that drive these measures (Daroca and Nourayi, 2002). Performance in the past is mainly based on conventional accounting and measures based on market performance. Specifically, these measures include the evaluation on net income, return on equity/capital employed, earnings per share as well as share-price return. Some financial outrages have put corporate governance in the business spotlight. Basically, the issues and interest in the subject corporate finance can be traced back at least to the eighteenth century and economists such as Adam Smith. Certainly, there is probably little new in the existing debate involving to financial negligence, except for the range of the financial and economic consequences which replicate the greater importance of finance in the current economy. The purpose of this part of the paper is to examine the financial context of corporate governance of TOMKINS PLC. It attempts to evaluate the performance of the company in terms of financial reports. Basically, corporate governance has significant implications for the performance of the financial sector and, by addition, the economy as whole. Well-organized resource allocation is supported by strapping shareholder control rights, which assists investment in fresh development actions and confines the scope for corporate over-investment. Apparently, investment decisions are further linked to corporate governance insofar as investors prefer to invest in appropriately supervised corporations and be apt to avoid investing in ambiguous environments. In this way, the investor assurance created by sound corporate governance provisions and the security of minority shareholders encourages the financial market progress by encouraging share ownership and capable capital allocation across firms. Transparent financial reporting is necessary to sending efficient corporate governance. For the last ten years, the engineering and machinery industries in United Kingdom have seen the rapid growth of the number of firms offering financial situation analysis services.  This serves as a proof that more and more organizations are realizing the importance the analysis of their financial situation in order to keep up with the demands of the business world.    Analysis of Information <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> 	<li class="MsoNormal" style="line-height: 200%"> 	Dividends and Share Price</li> </ul> Table 1.  Dividend Information 	 		 			 			 			  			 			 			1997 			 			 			1998 			 			 			1999 			 			 			2000 			 			 			2001 			 			 			Apr-02 			 			 			Dec-02 			 			 			2003 			 			 			2004 			 			 			2005 			 			 			2006 			 			 			2007 		 		 			 			 			Interim (GBp per Share) 			 			 			3.06 			 			 			3.5 			 			 			4 			 			 			4.6 			 			 			4.6 			 			 			4.6 			 			 			8 			 			 			4.6 			 			 			4.83 			 			 			5.07 			 			 			5.32 			 			 			5.32 		 		 			 			 			Final (GBp per Share) 			 			 			 			8.39 			 			 			9.67 			 			 			11.15 			 			 			12.85 			 			 			7.4 			 			 			7.4 			 			 			0 			 			 			7.4 			 			 			7.77 			 			 			8.16 			 			 			8.57 			 			 			8.57 		 	 Source: http://www.tomkins.co.uk/tomk/ir/shservices/divinfo             In accordance to the previous years of performance, Tomkins plc dividend for their shareholders reaches its peak in year 2000 and slows down as the new millennium enters.  However, as seen in the cycle, the dividend shows positive future even though there are crisis in the global business.  Even tough the 2007 is a failure as compare to their previous years of operation, the downfall of 7.4 in 2001 was still promising since the dividend as of 2007 becomes 8.57.        Figure 1. 2009 Share Price Last Trade: 16:35  02/03/2009 With regards to share price, the group was currently experiencing some impact of the global financial crisis in which their current price fell to 1.5 in London Stock Exchange and 0.24 in New York Stock Exchange.  This surge down is hopefully not too terrible for the performance of the group.  However, the group should create and innovate extensive ways to maintain their profitability and progress.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> 	<li class="MsoNormal" style="line-height: 200%"> 	Income Statements</li> </ul>             From the given summary of income statement (see figure 2), as of 2007 Tomkins Plc's net profit margin fell 0.83%. This along with an increase in selling, general and administrative costs has contributed to a reduction in net income. The return on Assets fell to 1.12%, return on equity fell to 3.42% and return on investment fell to 1.45%.  Basically, we can deviate from these values that TOMKINS PLC is not expressively performing not only in UK alone but also to other parts of the world.  As we can see in figure 2 both the revenue and net income of the company suffers from a decline particularly in 2007 net income.   Figure 2.  Summary of Revenue and Net Income of TOMKINS PLC Source: www.ft.com             From the given situation and results of revenue and net income of TOMKINS PLC Ltd., it seems that the company is not expressively performing in their industry. Thus, the organization still needs to evaluate not only their business strategies but also the political, economic, and cultural factors of their host country i.e. United kingdom. It is not whether the business is in a market oriented status or not, but the important thing is the value of their products as perceived by the consumers. The business norms in United Kingdom and global community have been changing and are becoming more compatible with international codes and norms after a series of economic reforms (Barton, D., Newell, R. & Wilson. G. 2002). Given the nature of the UK economy and the large potential of the market, doing business with UK requires a continuous process of learning, caution for instability, and flexibility to catch opportunities.   ·                                         Balance Sheet and Cash Flow             From the information gathered and as seen in Figure 3, the 2007 cash reserves at TOMKINS by 37.34m. However, the company earned 393.54m from its operations for a Cash Flow Margin of 9.34%. In addition the company generated 8.69m cash from investing, though they paid out 435.73m more in financing than they received. From this discussion, it shows that TOMKINS PLC performed very well in 2005 compared to their performance in 2007 or even in 2009.As seen in the figures, cash flow often describes as the amount of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project. Cash flow can be used to determine the performance of a certain company.  With this regards we can see that TOMKINS PLC cash flow is declining after the expressive performance in 2005.  Moreover, the increase of cash reserves of TOMKINS PLC generated in 2005 was used in 2006 development and expansion projects. According to the website TOMKINS PLC, their decline in terms of their sales performance is because of their current marketing strategies.  With this regard, the company needs to evaluate the effectiveness of their current marketing strategy.  There should have a careful evaluation in order gain business success.   Figure 3.  Summary of Cash Flow of TOMKINS PLC Source: www.ft.com   In financial analysis, the balance sheets of company reports conform to the financial ratios. The purpose of ratios is to find out how profitable the company is, we can calculate if company has enough liquid resources to pay its creditors, employees and finance charges. It is a useful to shareholders to find out their value of shares. Ratios are most powerful and simplest tool to evaluate company’s performance and its validity (Riahi-Belkaoui, A 1998). Atril & Mclaney (2004) mentioned that by calculating a relatively small number of ratios, it is often possible to build up a reasonably good picture of the position and performance of a business. Ratios help to highlight the financial strengths and weaknesses of a business, but they can not, by themselves, explain why certain strengths or weaknesses exist, or why certain changes occurred. Just by details investigation will find the reasons. Ratios can be grouped into certain categories; each of them identifies a particular aspect of financial performance or, position.  In this paper, we’ll be considering the liquidity ratios and debt ratio of TOMKINS PLC. Liquidity ratios show how quickly the company can meet its short-term obligations using its current assets (Riahi-Belkaoui, A 1998).               Figure 3.  Summary of Liquidity Ratios of TOMKINS PLC Source: www.ft.com   It is evident in the computations that TOMKINS PLC was performing expressively in 2005 and slows down as the years went up. However, the entry of 2009 shows good future for the group. This means that TOMKINS PLC is always bale to meet their current liabilities using their current assets (cash, inventory, receivables). As shown in the figure, the company should now start to use their assets to grow the business.  However, the company should be still be observant to their financial ratios i.e. not too low so as to drive creditors away with respect to the level of risk present. Since quick ratios are perceived as a sign of the company’s financial strength or weakness, the figures in the previous table shows the relative stability of the financial strength of TOMKINS PLC. A higher number would indicate stronger financial performance, and a lower one means weaker performance.             Apparently, the high financial leverage ratios of a company provide an implication that the organization is solvent in the long-term.  With this regard, the debt ratio shows the TOMKINS PLC’s position to meet it long-term obligation or liabilities. Debt ratios are dependent of the company’s classification of long-term leases and other items as long-term debt (Pike, R & Neale, B 1999). Pike, R & Neale, B 1999, stated that this is the gauge with which the financial strength of a company is a sign of the ratio of capital that has been funded by liability, counting preference shares. A higher debt ratio (which means the company has low equity ratio) does not give the firm’s creditors the security they require from an organization (Pike, R & Neale, B 1999). The firm would, as a result, find difficulty in raising supplementary financial support coming from outside sources if the firm wishes to take such action. Therefore it reveals that the higher the debt ratio, the harder it is for the company to raise funds from the outside.   Recommendations             Today, most companies like TOMKINS PLC find it impossible to create any kind of sustainable competitive advantage based on product alone. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centered competitive advantage. Thus, there are numerous aspects that every management should tackle. In TOMKINS PLC, the key internal strengths are the appropriate and effective marketing strategies used. On the other hand, the flaws of the marketing strategies implemented by the company serve as its major internal setback. Then again, the continuous effort of every company likes TOMKINS PLC to improve its operational standards is the ultimate solution to emerging conditions brought about by different occurrences such as stiff competition, globalization, technological innovations and others.             Based on the business strategies used by the company and the analyses presented, TOMKINS PLC is indeed a company that has achieved success in the engineering and  machine industry. Nonetheless, the company still has to perform other strategic moves so as to maintain its successful status. With the identified weakness and threats of the company, the following strategic moves are recommended: 	<li class="MsoNormal" style="text-align: justify; line-height: 200%"> 	Focus on strengthening foreign market 	access through consumer studies, partnerships with retailers and product 	development.</li> 	<li class="MsoNormal" style="text-align: justify; line-height: 200%"> 	Enhancement of promotion or marketing 	activities.</li>             There are reasons behind these recommendations. One of which is the growing competition in their industry. Considering the activeness of TOMKINS PLC’s rivals in enhancing their businesses, the strategies of the companies should focus on two major essentials: profit increase and market growth. These two factors are important not only in keeping TOMKINS PLC afloat in the industry but also in supporting other internal or external projects of the company. Another reason for these strategic moves is the capability of TOMKINS PLC to put them into action. Aside from the finances, the company needed to increase their access to other foreign markets not only United Kingdom for market growth and technologies for increased profit. In other words, these two predicted strategic moves are not only beneficial for the company’s current status but feasible as well. Since it is recommended for the company to expand their distribution to other foreign countries, then it is also likely for the company to have partners with other local retailers in order to distribute its products to other foreign locations while it continues on applying its direct business model to other areas. One of the important strategies that TOMKINS PLC may consider is to operate alongside a local business partner. This will help the firm adapt easily to the new and foreign business environment (Overby, 2000). A local partner can also assist in learning the culture, practices, regulations and means of interaction in the area. This will support the company’s consumer study efforts. More importantly, a foreign business partner can also help in achieving progress faster. Training the staff becomes even more important in foreign business ventures. The workforce must be supported fully particularly in adapting the business’ new concepts, standards and technologies (Humberg, 2003). The management should ensure that the local staff is also well-adjusted to the new system so as to encourage them to contribute more for the business.   Conclusion In order for a certain business to sustain their development, they should regularly assess the value of their portfolio. Stakeholders should be given importance by the company. Stakeholders, sometimes also called sponsors, or management, are extremely important to the business. Financial information is important to them because they are the ones that give political as well as resource support for the project. However, normal stakeholders are people that are influenced by any business decisions - they include stockholders but are hot limited to just that. They also include employees, surrounding businesses, competing businesses, neighborhoods of the business, customers, etc. When that business makes important decisions, including bad ones - everyone is affected by it. Thus, from this we may say that stakeholder typically refers to anyone who has a direct financial stake in a company, therefore financial report are important for them. This does include shareholders if the company issues stock, any other owner/partner and employees. Although it is argued that the vendors servicing a business and even the competing business have a financial stake in the company, these entities are beyond the scope of the definition.   Bibliography: Atrill, P & McLaney, E 2004, Financial Accounting for Decision Makers, 4th edn., Prentice-Hall, New Jersey.   Barton, D., Newell, R. & Wilson. G. 2002, When Is a Good Time to Make Strategic Advances? during a Crisis, of Course. The McKinley Quarterly, pp. 77+   Bradford, RW, Bradford RW, Duncan, J Peter, & B Tarcy 1999, Simplified Strategic Planning: A No-Nonsense Guide for Busy People Who Want Results Fast!, Chandler House Press, ISBN: 1886284466   Daroca, FP & Nourayi, MM 1996, Performance Evaluation and Measurement Issues, Journal of Managerial Issues, vol. 8, no. 2, pp. 206+.   Grant RM 2001, Contemporary strategy analysis : concepts, techniques, applications (4th ed ed.). Blackwell Publishers: Malden, MA   http://www.ft.com   Humberg, C 2003, Successfully Moving In and Setting up Business in China. TUV Rheinland World News, 4-5. Assessed: March 03, 2009 from <http://www.us.tuv.com/news/newsletter_pdfs/related_articles/janfeb03/successfullymoving.pdf>   Kluge J, Licht T, Stein W, McKinsey & Company 2001, Knowledge unplugged : the McKinsey & Company global survey on knowledge management. Palgrave: New York, NY   Leonard-Barton D & Doyle JL 1996, Commercialisation Technology: Imaginative Understanding of User Needs. In RS Rosenbloom, WJ Spencer (Eds.), Engines of Innovation: U.S. Industrial Research at the End of an Era. Harvard Business School Press: Boston, Massachusetts   Tomkins Plc.  2009, Company Report. Assessed: March 03, 2009, Available from: http://www.tomkins.co.uk.   Overby, S 2000, ‘Taming the Dragon’, Inc.com. Assessed: March 03, 2009, Available from <http://www.inc.com/articles/2000/05/19141.html>   Pike, R & Neale, B 1999,Corporate Finance and Investment Decision and Strategies, 3rd edn., Pearson Education Limited, England.   Porter ME 1980, Competitive strategy: techniques for analysing industries and competitors. Free Press: New York   Riahi-Belkaoui, A 1998, Financial Analysis and the Predictability of Important Economic Events, Quorum Books, Westport, Connecticut.   Teece DJ 1986, Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy 15(Issue 6): 285-305       	   	 		 		 		 		[1] 		All information are from http://corporate.Tomkins 		Plc.com/

Corporate Finance : Case Study of Tomkins plc

Introduction Businesses are developing to suffice the need of the society. In any current business organization, progress ...

Secret Recipe Cakes and Café: A Case Study

Secret Recipe Cakes and Café: A Case Study   Table of Contents   Task 1. 2 1      Introduction. 2 1.1       Company Background. 2 1.2       Problematic Business Systems. 3 1.3       Aim and Scope. 4 1.4       Method of Enquiry. 5 Task 2. 7 2      External Environment 7 2.1       Political 8 2.2       Economic. 9 2.3       Social 10 2.4       Technological 11 Task 3. 13 3      Consequence Analysis. 13 3.1       Applying Technology to Support Customer Relationship (IBM) 13 3.2       Launching Online Order Transaction. 15 3.3       Maintenance and Update of Current System.. 15 3.4       Installation of Wi-Fi 16 3.5       Focusing on Human Resource. 17 3.6       Training for Staffs. 18 Task 4. 19 4      Soft System Methodology. 19 4.1       The Problem Situation Unstructured. 19 4.2       The Problema Situation Expressed. 20 4.3       Root Definitions of Relevant Systems. 23 References. 25 Appendices. 28 Appendix A The Relationship between Key Driving Forces. 28   Table of Figures   Figure 1 Rich Picture. 21   Table of Tables   Table 1 CATWOE Analysis. 22             Task 1 1          Introduction 1.1        Company Background Secret Recipe is a lifestyle café was founded in 1997 by. It started a small family business, but in just short period of time, it had become leader in the market with profit soars up to 300% in 2002, alone. Aside from that, it a lifestyle café that has become household name that have successfully established its brand name in Malaysia, Singapore, Indonesia, Thailand, China and Philippines by offering line of products such as fine quality cakes, fusion food, with the help of good quality of services ( 2006; 2003). The said café chain is considered as the largest and leading player in the Malaysian industry, and it can be seen on the different awards and recognition that it had received during its years of service. Secret Recipe was also awarded by  Islam Malaysia or JAKIM with Halal certification, which signifies its high quality (Secret Recipe 2006). The principle of Secret Recipe is to give the best satisfaction to its valued customers, and it can be seen on the effort of company to offer more than 20 types of fusion food, and 40 cake creations and pastries ( 2006).   1.2        Problematic Business Systems Like other players in the food-service industry, Secret recipe is facing problems that are related to human errors as well as inconsistency in order that has great influence on customers’ satisfaction. The employees of the café chain are using pen and paper in order to take orders, take the orders to he kitchen staff and ring up sales transactions by using, using the traditional or old fashioned cash registers. The said process cause two problems, first it can cause errors in orders that will be delivered to customer that will cause time, and above all, it will cause unnecessary effort or burden for the staffs, making the time that they spend to cater to their customer longer Due to the said events in the stores of Secret Recipe, the management later on realizes that the traditional methods hinder the inventory control, reporting as well as sales analysis, at the same time, preventing the company to deliver world class customer services towards their market               1.3        Aim and Scope The aim of this paper is to focus on how the competitive environment as well as internal capabilities of Secret Recipe have combined in order to influence its IS strategies and development. It will gather information about the company by using quality sources of references, and connect it with the different theories and knowledge that are related to IT. The following issues will be tackled in this paper: ·        the external factors in the food-service industry in Malaysia that affects the operation of Secret Recipe; ·        the internal factors that can affect the decision-making process and performance of Secret Recipe; ·        the impact of IT/IS to the operation, performance and competitive advantage of Secret Recipe; and ·        the concerns that are connected to the systems development of Secret recipe based on the relationship of its external and internal environment.           1.4        Method of Enquiry It is important to consider that a system is a set of elements that are connected or interrelated with each other (2005, ). Thus, in analyzing the different elements of a system, including IT, there are different modes of enquiry that must be used. Enquiry is the act of asking or a request for information . For the process of participatory assessment it involves a process of listening, information gathering as well as interactive analysis . Essentially, the modes of enquiry are divided into three important categories: the simple (inductive-consensual and analytic deductive), complex (dialectic and multiple realities), and innovative (unbounded systems thinking). The said modes can help to break the system into smaller sub-system in order to focus in details that can help to achieve the goal of a system (2003). This paper will use the unbounded systems thinking. This is because it will enable the decision-maker to be more involved in all of the disciplines as well as context in order to come up with the most suitable actions, solutions or conclusions. In unbounded systems thinking, the complex problem solving requires the application of as many discipline professions and branches of knowledge as possible, with each one utilizing different paradigms of thoughts. In addition, there are three important perspectives that identified: technical perspective; organizational or societal perspective; and personal or individual perspective ( 1993,  2002,) . As a result, it can give an in-dept analysis of the different perspective or reactions of the different entities which are involved in the entire system. This is because each perspective gives information that cannot be obtained from others and that is the organizational and personal perspective are vital to bridge the gap between the analysis and action. Consequently, organizational and personal perspective is used in order to complement the technical perspective, not replace it. Furthermore, using the organizational and personal perspective can help to bring in the human and social factors that stuffed in complex problems, hence focusing on the human beings both as an individual and groups, as well as the ethical analysis (1996 cited in 2002, ). As a result, the said mode of enquiry will help the management of the decision-maker in Secret to choose what he or she thinks would be suitable for the company and information or data will not be limited to a certain idea but he or she can offer infinite factors and idea regarding the case of applying IT or IS in their different processes. Aside from that, with the application of the Internet, the said enquiry mode will be useful, since the Internet itself gives challenges that must be given sufficient consideration in order to have a successful result.             Task 2 2          External Environment             The external environment of Secret Recipe or the current conditions of the food-service retail industry in Malaysia. Due to the fact that the performance is the primary objective of the company, and application of IT is the primary strategy, it is commonly accepted that the structure and the process of the decision-making is affected by different environmental complexities and volatilities (2000).Thus , the alignment of the different strategies of organizations with the requirements of their given environment helps to do better than those organizations that fail to get the said alignment ( 2000). This is because of the fact that environmental scanning helps an organization to discover more regarding the different opportunities for taking competitive advantage as well as threats to its overall survival ( 1997).             The process of environmental scanning focuses on the thorough and comprehensive study of the international, macro as well as market environment, but focuses more on the relationship between the structural and dynamic characteristics of each of the environmental factors (1995).             In order to analyze the macro-environment aspects of factors that are considered as uncontrollable and inevitable for Secret Recipe, including political changes, demographics, economic status as well as social and technological changes that has an impact to the plan of the company to apply new technology, PEST analysis is used. PEST stands for Political, Economic, Social and Technological (See Appendix B).             The consumer food service industry in Malaysia is considered as one of the most successful industries, the following are the different factors that had affected the entire performance of the industry: 2.1        Political Political factors can have a direct or indirect effect on the way certain operates. This is because of the fact that the decisions that are being made by the government affect the operations of units of the company  First is the action or policy of the government towards investing in the country, primarily by foreign Multinational companies. In 2003, 100% of the foreign equity holding is allowed for all investments in new projects and investments regarding the process of expansion or diversification of project by the existing company ( 2009). The said supportive effort of action of the government enables many players in the food-service industry to develop and grow. In addition, the government also assertively launches its Visit Malaysia Year 2007 campaign in order to improve its tourism industry ( 2008). The said action was important because of the fact that food service is dependent in tourism, because tourism will help to increase the number of people in the country, thus increasing the target market for Secret Recipe. 2.2        Economic All businesses, regardless of which industry they belong, are affected by different changes and trends in the national and international economy. The improving economy of Malaysia offers opportunity for all of the businesses in the country; this is because it can affect the entire buying behavior of the citizens. Malaysia is considered as one of the most affluent nations in Asia, it had reported a GDP per-capita of about US$6,807 in 2007. As a result, the country is already considered as an upper middle income country, and ranked by the World Bank as the 8th wealthiest nation in the East Asia. In 2007, the economy of the country grew by 6.3%, 5% in 2008, and expected to rise to 3.4% to 4% this 2009 (US Government, 2009). Due to the said economic growth, together with the effort of the government to open its policy for foreign investors, expansion of different shopping malls and supermarkets or hypermarkets in the country is observable ( 2008). In addition, major retail outlets have seen a tremendous growth since 1980s, and there are about 400 such outlets in the country which include big players such as Dairy Farm Giant Retail, Jaya Jusco, Makro, Parkson, Carrefour and Tesco. Aside from that, after their debut in the 1990s, foreign-owned hypermarkets are gaining its popularity in Malaysia which attracts customers. As a result, in 2003 alone, there were 32 foreign-owned hypermarket outlets in the country (2005). Thus, it creates an intensive competition. The employment rate has a great impact on the buying behavior of the consumer. In the country, in 2003, the total unemployment rate was just 3.5%, or showing an almost full employment. The said event was due to improve labor market conditions (2005). It also resulted to stronger purchasing power of the customer as well as higher standard of living, that’s why eating away from home is considered as part of life of Malaysian, which contributed to the greater competitive edge for the consumer foodservice market ( 2008). 2.3        Social Social factor plays a very important factor in the decision of the consumers regarding what, where and when to buy something. Due to the improvement of the economy of Malaysia, the standard of living also heightened. This had affected the eating habit of the citizens. Eating is considered as an obsession for many Malaysians regardless of their races. It can be observe that eating out with family or friends are done much more regular by Malaysian tan the Western countries ( 2007). Aside from that, due to the continuing expansion of shopping malls and supermarkets or hypermarkets in the country, consumers are spending more time in different retail outlets; thus, create opportunities for the food-service retail industry (2008). In terms of demographic, it is important to consider that Malaysia has a multi-racial population; most of them are multi-lingual that speaks two languages fluently, primarily English that is widely used in the business field (2009). This is important because it can affect the decision of the company in hiring its employee that will serve the customers. Furthermore, it must also consider on the different products that they are offering. As of now, more and more women are entering the global labor force, this has an impact to the food-service industry. In Malaysia, since 1995, the employment rate for women is 80.06% ( 203). In Malaysia, 60% of the entire population is Muslim, that’s why the demand for halal foods by Malaysian consumers is high. The Malaysian halal standards are recognized as stricter than those of other Islamic countries (2009). Another important aspect that is affecting different businesses in the food-service industry is the growing demand of the people for Wi-Fi. This is because of the changing lifestyles of the people, primarily those people who are busy in their work, and who wish to work, even while they are eating or in break. 2.4        Technological Food-service industry is not only about the menu or the taste of the products or services, but it is also belong to the business groups that are in great need of fast, efficient and good quality service. Based on the different factors that have mentioned in the first part of the paper, it can be observed that the main challenges for the Secret Recipe focuses on maintaining the interests and loyalty of their customers despite of the massive number of competitors in the market. Thus, it also focus on maintaining competitive advantage which focuses on how the company will handle time pressure and will prevent any errors in the transactions that will drive the customers away. Currently, we are now living in the world where in information is already considered as an important resource for a company or organization. Thus, integration of the different systems inside the organization is a vital aspect ( 1995). Application of properly planned, implemented and maintained IT and IS in the entire process of any business, can help managers in the process of decision making. This is because the data that were gathered from the different transactions or in-flow or out-flow of data can be used in order to analyse the current performance of the company, and from that use it as a tool to decide regarding different matters or issues such as the products to be offered, the market that must be targeted. In general, it has a great influence in the process of developing the entire strategy of the company. Another important aspect is that IT or IS can help to improve the customer relationship, because it will help to improve the customer satisfaction. Customer satisfaction depends greatly on the accuracy and comprehensiveness of given or detailed information which concerns on their demand, preferences and tastes (2003,). Another important aspect to consider is the growing popularity of the different wireless connections such as Wi-Fi and mobile Internet. This can help the company in the process of connecting to their consumers. First is that it will be important to offer their customers, primarily business customers an access to a free Wi-Fi connection that will serve as an additional attraction or marketing. Above all, due to the growing popularity of mobile Internet, it is a must for the company to establish a website that is compatible in the said technology. Task 3 3          Consequence Analysis             The main purpose of the consequence analysis is to estimate the consequences values for each event for a given facility, and used to estimate the relatively security risk ( 2007,). Thus, the consequence analysis tool enables to show the different issues or actions with connection to the impact of IT or IS in the entire operation of Secret Recipe, together with the effects and the probability of a given event. The following are the internal resource, competencies as well as capabilities of the company that might affect the use of IT. 3.1        Applying Technology to Support Customer Relationship (IBM) One of the important competencies of Secret Recipe is to focus on the demand, preferences and satisfaction of their customers. It can be seen in their mission statement, and that is to give the best satisfaction to its valued customers. However, there are different hindrances that can affect directly, the effort of the company to serve their customers at their bests. The restaurant is facing the same problem of the rest of players in the food-service industry which is the human error and inconsistencies in the process of ordering Due to the said event, and the realization of the company that information is considered as an important resource for their competitive advantage, as well as the growing number of customers and growing number of stores, and their need to decrease the serving time at the same time increasing the efficiency and staff interaction with the client, the company decided to become open with the application of IT or IS in their system The said action was considered as the answer or solution of the company in the challenge of improving the customer service at the process of point of sale of POS up to the efficiencies and process of improvements in order to maintain its current position in the market. The company avails of IBM service, which focuses on the wireless POS which connects wait and kitchen staff to the streamline of serving process in the entire café chain. The said technology enables the staff or order taker to use PDA in order to input the order of the customers, and then it will be automatically generated in the kitchen, at the same time, with the payment counter in immediate manner, by this means it can reduce paperwork . Furthermore, it helped the café chain to integrate the entire café operations in order to ensure that orders are taken correctly and quickly, efficiently passed on the staffs in the kitchen; and correctly processed at the register             The result of the said effort or initiative enables the staff to have more time to spend in communicating with the customers. Thus, enable the café chain to offer more personalized and better service to the customers. Above all, it can help the managers in the process of decision-making due to the fact that the detailed information can be retrieved or accessed in immediate manner. It will enable the manager to analyze different trends that can help to improve or develop the entire operation as needed 3.2        Launching Online Order Transaction The Internet has a great impact on the business world; this is because it created a bandwagon that is full of opportunities, particularly greater target market and no time limit. In Malaysia, due to the improving or growing economy, Internet is considered as common needs.” The Internet economy in Malaysia continues its rise from the ashes, with strong spending growth in the ecommerce market. This growth is driven largely by the B2B ecommerce industry, which contributed 78.4% of total ecommerce spending in 2004," says by Lee, senior analyst of IP Communication in Malaysia ( 2005). This shows that e-business is considered as one of the most effective way of communicating with customers in Malaysia. With the said action, it enables the café chain to be connected with their customers 24/7, and everyday. This offers an advantage to the marketing strategy of the company. 3.3        Maintenance and Update of Current System It is important to consider that maintenance and update of the system after its launching or implementation is a very crucial and vital task for any business. This is because of the fact that the world of business is currently changing, and it is very important to ensure that the current system is still applicable or appropriate to the current situation of the internal and external environment of the company. Therefore, it is vital for Secret Recipe to maintain their connection to their partners regarding their system. This can be seen on the effort of the company to improve their current system, and totally reconstruct it in order to meet the increasing demand of employees, customers and other important stakeholders in the future. The company plans to incorporate the POS system with the application from Stockpro that will help to reduce the paperwork more, at the same time improve the accurateness of the different data of the company that are related to the waste management and inventory shortages. Together with its partner IBM, they are working to incorporate the front-end POS system with the back-end enterprise resource planning application from the Exact Software. This will work by the help of IBM SurePOS 500 system that will apply File Transfer Protocol or FTP in order to communication with the multivendor back-end systems at the main office of the company. By applying the said technology, all of the data regarding sales will be automatically transfer to the back-office business intelligence of inventory management systems of Secret Recipe. Above all, the IBM SurePOS systems will send the data via a Streamyx broadband connection 3.4        Installation of Wi-Fi Currently there is an ongoing craze in Wi-Fi technology, and it can be located in most of food-service stores in the world. This is an answer to the growing challenge of the changing preferences of people towards communication as well as the growing inclination of people for different hand-held device such as PDAs and laptop. Aside from that it is also a marketing strategy of many businesses in order to get the attention and cater to the needs of their business customers, primarily those foreigners who came for business travels. Aside from that, it can also catch the attention of other generation, together with the students who can stay inside a food-service store, while studying or chatting with their friends. That is the reason why, Secret Recipe decided to launch or install Wi-Fi hot spots in its stores in Malaysia. The said factor gives additional credit for the image of the café chain as modern and updated. 3.5        Focusing on Human Resource The process of selection and hiring has a great impact over the implementation of any system of project. This is because they are the one that will handle the system in the future. Secret Recipe is considered as one of the top café chains in Malaysia, not only in terms of sales or customer performance, but also on its relationship with the employees. As a result, the company is offering different benefits and other financial aspects that will motivate the interested individuals to enter the team of Secret Recipe. Furthermore, with connection to the movement or action of the café chain in applying IT or IS in their entire processes, the company focuses on applicants who posses some backgrounds in computers or IT. The said effort enables the company to save time, money and effort.   3.6        Training for Staffs Training is a very important aspect in terms of overall management. This is because of the fact that the knowledge, skills and ability of the staffs reflect the organizational image of an organization. Because of the fact that Secret Recipe is considered as one of those premium products in Malaysia and other parts of the globe, the company is establishing a high set of standards regarding the physical aspects and behavior of its employee. Furthermore, this is important because of the fact that the company has already started to focus on application of IT or IS in order to improve their entire process or performance. Thus, it will be important for the end users of the systems, particularly the waiters or order takers to become completely familiar with the application, therefore giving them confidence to face the customers. This is important because no matter how good a system is, if the end users are not that capable of knowledgeable in using it, it will not work well, by wasting time in figuring things or process or even keying the wrong code or data.                 Task 4 4          Soft System Methodology Soft Systems Methodology or SSM is essential about the process of creating multiple systemic perspectives of a given situation ( 2005,). It is an approach of inquiry into problem situations that is perceived to exist in the real world ( 1990 cited in ). SSM is consists of 7 stages, where in the first two stages take place in the real world based on the experience and knowledge of the participants, and how things are to them. Stage 1 focuses on the process of exploring the problem situation, and later on the process of gathering information about it by process of observation Stage 2 is expressed by rich picture that represent the problem situation that was found out in stage 1and 2. Stage 3 and 4 are considered as abstract processes designed that explore how things could or should be, as oppose to how they are perceived by the actors. Stage 5 and 6 focuses on comparing the model drawn from the real world and the proposed model (2002, ). 4.1        The Problem Situation Unstructured In this stage, Secret Recipe focuses on connecting the current status and trends of the food-service retail industry with the internal capabilities and competencies of the café chain. Using the analogy from the current trends and development in the social aspects of Malaysian, which has a great impact on their decision of buying products and availing service, the café chain found out that people are becoming more and more dependent in eating outside due to conflict in schedule and high standard of living. The said aspect gives a great opportunity for the café chain but also provide different threats, in terms of their performance. Secret Recipe came to realize that their current system is not applicable to the current business environment, because first it causes errors in order and billing process, at the same time it takes time for the staffs to serve the customers, which is very important because most of their customers are busy or into business sectors. 4.2        The Problema Situation Expressed During this stage, all of the important information regarding the different political, economic, social and technological factors was analyze together with the strengths and weaknesses of the café chain in order to show the problematic situation by means of rich picture. The main purpose of a rich picture is to help the analyst in order to gain an appreciation regarding the problematic situation. Furthermore, it is also used as a mean of representing the situation of the different concern entities, together with the different factors that influence the problems that cannot be picked up by using the formal methods ( 1994). Figure 1 shows the rich picture of problematic situation of Secret Recipe. The green shaded area is the real world or real situation of the café chain, and the concept of IT or IS was already there, yet it was not yet realized by the Secret Recipe. There are 4 entities that are directly connected in the entire system, the waiter or odertaker, the kitchen staff, the customer and the management. The waiter takes the order by means of pen and paper, therefore the question regarding the consistency shall be aroused. The said aspect can be observed in other relationship such as the waiter and the kitchen staff and the cash register. Therefore, the entire responsibility and the accuracy of the data and information to be entered in the company are in the hand of the waiter. Due to the different process, time is a crucial matter. It will be the basis for the satisfaction of the customers. On the other hand, the upper management or the decision-makers cannot retrieve enough and helpful information from the cash register in order to analyze the supplies, accounting as well as sales report, therefore, it can create additional works and additional costs. Outside the said direct relationship, it is also important to consider the upcoming threats and problems that will be caused by the growing number of customers and franchises. If the said process and systems continues, it can cause major problems or dilemma for the café chain because it will primarily affect their relationship with the customers, therefore will affect their company image, competitive advantage and position in the market.               Figure 1 Rich Picture       4.3        Root Definitions of Relevant Systems The root definitions affirm the heart or core of the functions of some particular action structure. In order to focus on the root definition, it will be important to use Checkland’s mnemonic CATWOE in order to describe the human activity and situation. The said analysis is consists of aspects such as: clients, actors, transformations, weltanschauung or world-view, owners and environment Table 1 shows the CATWOE analysis of Secret Recipe, it can be seen that the different entities and processes were based on the internal and external analysis of the café chain.     Table 1 CATWOE Analysis   Clients – entities who will be benefited or suffer from the change. <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Customer – receive fast service, accurate and consistent orders and bills;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Waiter/Order taker – less work load and less errors;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Kitchen Staff – less errors;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Upper Management – retrieve and access information and data for decision-making in fast and easy manner;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Franchise – manage the business with ease and with connection to the mother branches.</li> </ul> Actors <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Upper Management – pay the implementation and maintenance;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> IBM – develop and implement the system.</li> </ul> Transformation <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Create the logical design of the system based on the current business rule of the café chain;</li> <li class="MsoNormal" style="text-align: justify; line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Apply wireless POS systems and integrate the said system in the entire operations.</li> </ul> Weltanschauung/World View <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Many business in the industry are starting to apply IT or IS in their transactions;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> The increasing influence of and need for information in the decision-making process. </li> </ul> Owners <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt">  </li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Stockholders;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Franchisees.</li> </ul> Environment <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Changing demands and lifestyle of the customers;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Intensifying competitions from domestic and foreign players in the industry;</li> <li class="MsoNormal" style="line-height: 150%; margin-top: 6.0pt; margin-bottom: 6.0pt"> Growing number of possible customers;</li> </ul>             Appendices   Appendix A The Relationship between Key Driving Forces   Source: (1995,)                                             Appendix B: Secret Recipe: PEST Analysis                                                                                             Appendix C: Effect/Probability/Action Grid     Effect Probability Action 1. Up to 20% faster delivery food delivery High Implement Training and Coaching 2.Increased sales by 10% Moderate Focus on marketing strategies 3.5% improvement in staff efficiency High Focus on Motivation and  Learning process 4.Reduce paperwork High Maintain and update the system 5.Minimize human interaction and billing errors High Implement Training and Coaching 6.Minimize the workload of staffs Moderate Implement Training and Coaching 7. Create good working environment Moderate Focus on Motivation and  Learning process 8. Improve relationship with customers High Focus on marketing strategies

Secret Recipe Cakes and Café: A Case Study

Secret Recipe Cakes and Café: A Case Study Table of Contents Task 1 . 2 1 ...