Bus 5910 Management Capstone: Clearview Assessment Answer

Section Two 

The market of the company was divided into two of the different units namely retail sales and contractor sales. The retail sales of the company were usually based on the doors or the products that were individually purchased by the different types of the customer. On the other hand the contractor sales consisted of large number of products that were sold to a single or a large retailer. This included stock or custom sized units of the organization. The notable difference between the retail sales and that of the contractor sales were that the retail sales were generally made for cash whereas the contractor clients generally had their accounts with the company through which the amount was paid gradually. The main target market of the company was Nova-Scotia mainly because of two reasons. First of all the company was managed by just 15 to 20 employees and apart from that it was also recognized as a small scale enterprise that was never comparable to the other companies of the same time. The annual reports of the company in the year 1981 highlighted an annual sale of close to $2.2 million which was quite good for a small scale organization (Batsakis et al. 2018). The primary focus of the management of the company was in the Halifax-Dartmouth area of Nova Scotia. Apart from this a number of different sales were regularly carried out by the organization in the South Shore Area and the Annapolis Valley which was more than 200 kilometers away from Halifax.

The area where the company served was generally called as the maritime region. In the following region windows and the doors manufactured by different types of the companies were sold in three different ways. This included the likes of the direct sales to the customers (retail sales), direct sales to the contractors (generally by the use of the salespersons) and lastly by sales to dealers by building different types of supply companies (linkedin.com, 2018). The major competitors of the company in Nova-Scotia and in and around the organization were namely Heritage Cedar Homes, Quebec, Mason in Quebec, Schurmans in Prince Edward Island, Westmount Windows Limited, Lockwoods in New Brunswick. The company was much smaller in terms of sales and productive capacity than all of the competitors. The companies including Schurmans, Westmount and Heritage had retail outlets (Cho & Arthurs, 2018). The following retail outlet was a major threat to the success of the company in the market as they were not able to afford such an outlet to display their products. The management of the company advertised their products through the yellow pages and the phone directories of that time. The main business of the company was mainly hold by that of the contractors.

Problems with the new management

The acquisition of the company by Firth happened at a time when the company was placed at a quite good position in the construction market. However lack of proper expertise and the inability to handle such a new sector by a new and inexperienced person was the main reason behind the creation of a vast number of different problems. This included operational, financial as well as management problems in the business.  According to, Choi, Chan & Yue (2017) the major uniqueness of the products of the customer was the low price and the customized products of the organization. Most of the products of the organization were different from that of the other traditional customers and thu8s had a niche market for them. However the ownership change brought in a number of other changes. The main problem that occurred after the change in the ownership was the absence of a proper expertise. This led to a crisis in the basic area of the company. The company started having problems with the suppliers which severely affected the production process. The company started having problems with the availability of the main supply materials like lumber and also space to dry them to become manufacture worthy. In addition to this the absence of proper storage facilities led to major problems as the company was unable to manage the following elements in a proper way (Hilmola et al. 2015). The following problems led to huge delay in delivery and a time came when most of the calls coming to the company were complains regarding delay in shipments. The presence of uncoordinated product runs, poor quality inputs along with the presence of crowded storage facilities can lead to a large number of problems. The company also faced a number of different financial issues which was as a result in the decline of sales and an increase in the bad debt of the company with the bank. The loan interest which was just 16% during the transfer of the ownership rights to First, jumped up to a whopping 22% in just a few months of time (Choi, Chan & Yue, 2017). The absence of proper management expertise in this particular case thus turned out to be a major problem for the organization.

The Proposal

The problems in the organization were threatening to displace the identity of the company and also threatened the existence of the company. The severe cash flow problem in the company led the suppliers to put the organization on the COD list and in the year 1981 it was seen that operating the company on a smooth way was totally impossible for the new management of the organization. The management in a last ditch effort tried to arrange adequate loans and funds for recovery from the traditional financial institutions like Federal Business Development Bank, Small Business Development Corporation and many other new potential investors. However, the management was unsuccessful in convincing the financial institutions for any other additional funds as they feared that the company would become bankrupt. However, only one medium scale investor in the name of Scotia Sales Limited showed some intentions to invest around $75,000 through a joint venture capital company (Howson, 2017). The company decided in this investment in return of a 49% equity position in Clerview as part of the informal proposal package. The owner of Scotia sales Limited, John Marsh was a successful local businessman who had a great round of experience in that of the management of small business. He was capable of such a management just because of his involvement with a number of different joint venture projects. He decided to work as a financial consultant for the company in the late 1981. Lin (2014) suggested that the main focus of Marsh was to improve the information and the cash flows of Clearview to bring it on to the right path. The main reason for his strange decision to bail out the struggling company was that he knew that Clearview could be turned into a profitable business unit with the implementation of proper strategies and a inflow of proper managerial expertise. The company was thus ready to bail out Clearview in the time of crisis.

Outlook for the Future  

As mentioned earlier John Marsh, the owner of Scotia Sales Limited had the belief that the company can script a great turnover in the future and with the proper implementation of skills and expertise can turn into one of the very best companies of Nova-Scotia. The first and foremost task carried out by marsh was to ensure a smooth flow of cash and also a smooth and efficient flow of information in the organization. The sudden increase in the prices of the materials forced the new management to change some of the policies as well as the strategies to ensure the sustainability and the successful turnover of the company in the market. A number of significant changes were taken in the marketing and the production policies of the organization but before these changes could have been implemented, the organization again saw a severe cash crunch. However, the proposal if agreed by the major unsecured creditors 25% of the money owed to them by the company would be returned. The following suggestion will help the company the necessary space to operate freely and easily turn the company into a much more profitable and viable business unit. The absence of a proper auditing by the management of the company and the lack of a proper investigation by the bank on the future state of the company led the organization to a severe financial crisis (Lin, 2014). Apart from this the main decisions of the organization were done mainly without the idea of the proper financial data. This led to much more damage to the company. The management crisis of the company was present mainly due to the lack of the required expertise in the company. The lack of required experience with the new owner turned out to be devastating as the owner started hiring different people for performing a lot many functions to avoid problems. However, the appointment of so many persons to different positions itself created a major problem as it led to the increase of the overhead costs which often led to loss for the company.   

Section Three

The handover of the company to firth without a proper market study and also the absence of a proper audit by the bank involved in the financial transaction over the sales of the company was the major fault (Plataniotis, Proper & de Kinderen, 2014). The following faults led to the actual problem within the company. The problems of the organization have been divided into three major issues namely financial issues, operational issues and management issues. The lack of proper knowledge of Firth can be identified as the major problem in the whole regards. The owner had no idea to deal with such small businesses. He was advised by the previous owner for the initial few months after which he was left in a void to identify, analyze and select the suppliers, dealers and other related people of the business. The appointment of different people in different expertise in a small scale company like Clearview naturally increased the overhead costs and threatened the smooth operations of the business organization. The increase in the costs of the raw materials and the absence of proper suppliers also increased the cost of the products. There were also problems with the storage facilities as absence of prompt delivery to the clients led to a space crumble and thus delayed the deliveries by large time (Plataniotis, Proper & de Kinderen, 2014). The financial crisis was further summed up when inspire of regular efforts by the new management of the company, the banks were not convinced enough to provide a sum of loan for recovering the organization. The unconvincing attitude of the banks was mainly due to the different types of problematic transactions of the company in the past and any further loan or financial help could have led Clearview to bankruptcy (Batsakis et al. 2018). The absence of proper managerial skills, financial issues and the lack in knowledge to lead a small scale organization on a right note led to the failure of the organization in the market.

The major cause of the following problem in the particular case is more than one in number. The irregular delivery of the products also led to a severe loss of reputation of the company among the customers in the market. As mentioned in the above part the company faced huge losses due to the irregular delivery of the products. The losses stood at a staggering amount of $30,000 in the financial year of 1980 and 1981. Apart from this the company under Firth’s management also failed to maintain a clear transparency of the accounting and financial records. The reluctant nature of the new management to pay much less attention to the accounting and financial calculations and proper management led to the failure of the company.

Section Four

The following case can be cited as the best example that highlights the problems of most of the small scale organizations. There are many cases like the one highlighted which shows the organizational failure to control the market. The analysis of the following case will help to provide some exclusive recommendations to the organization. The recommendations are as follows;

1. A marketing audit of the firm that is acquiring the business must be done to ensure the capability of the organization in the market. The marketing audit helps to have an idea on whether the acquiring firm can be capable of carrying on the organizational ability to ensure the success of the firm in the future
2. The financial institution or the bank which will be involved in the financial transaction must carry out an individual financial audit of both the companies to ensure the market position of the companies and identify whether or not there is any financial risk in the transaction or any future financial risk in it or not
3. The organization must be run by an expert who is capable to change the course of the business in a positive note. He must be able to lead the business to a bright future and must be well knowledgeable on the different types of the marketing strategies and techniques to be adapted by the business to attain success in the market
4. The arrangement of adequate funds for the business will help the organization to strive an sustain itself in the market and will also help it to avoid any kind of severe financial crisis
5. The presence of a proper strategy and proper acquisition strategy will help the organization to prosper in the market
6. The presence of the new proposal can be helpful if implemented properly but the steps in the proposal have to be implemented with every possible precaution
7. The adaption of a new accounting system will help the organization to maintain the accounting and cash flow in a strictly disciplined fashion. A good accounting service will help the management to be updated on the progress or regress of the company
8. The management must also provide a proper plan to ensure the payment of the total debt of the company to establish a good communication with the creditors, financial institutions and the shareholders of the organization
9. A new marketing and production policy can do the trick for the organization as such a new policy will focus on the needs of the customer in the most efficient and the least expensive way. The marketing and promotional policy should be addressed in such a way that it helps to deliver the products at the right time to the consumers

Section Five

The following study has provided the complications of an acquisition process in the market. The lack of a proper monitoring and absence of financial and marketing audits can be destructive for the growth of the business organization. The problems therefore have to be tackled from an early stage to ensure satisfaction and success. The proposal to save the company from destruction is quite encouraging. Firth and Marsh's proposal, if accepted, would see the company's major unsecured creditors agree to accept 25% of the monies owed them by Clearview. This would give the company the breathing room to try to deal with their problems and attempt to restructure the company into a viable, profitable business. Marsh, the financial consultant and a potential investor of Clearview has predicted great opportunities for the business if the proposal succeeds. The case of Clearview can be highlighted as one of the best examples where improper management decisions can spell doom for any organization. The new proposal thus contains an efficient plan that can help the company to bail out from the sudden crisis. The importance of auditing and a thorough market research is thus utmost important to avoid any similar cases of impending business failures.

References

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