Human resource management function -Able to outsource production or manufacturing in other countries such as Italy, Morocco, Poland and Turkey which are able to make the shirts cheap enough and good enough.
-Under a smart boss who is Passionate and skilled in his business. -Limited human capital especially operation directors so that Robert can concentrate on design.
The opportunity to bring more operations director on board so that Robert can concentrate on design. -An adverse Change in the international market environment given that they are unable to manufacture cheap and good quality shirts off the road.
Accounting and finance function -Very healthy financially especially due to use retained profits to expand.
-Has been self-financed after the paternal startup deal.
-Good enough people apart from Robert who are able to do tasks such as analytics, accounting and warehousing much better than Robert. -A paternal startup deal which had higher interest rates than local bank rates.
-An extremely conservative approach to financing -Angel investors and equity financiers will be willing to invest in the business given its good financial health.
-Cutthroat angel investors who has the potential to affect the growth of the business.
– Issuing out part of equity will dilute control of ownership which may bring wrangles in future.
Marketing function -E-commerce which is already accounting for 15% of sales.
-A Loyal customer’s base that is able to market the business by word of mouth and thus no much marketing needed.
-Broad patterns of up to 500 patterns -A number of details about the expansion plan still remain sketchy.
-Marketing and promotion only rely with word of mouth.
-A chance to build itself as a brand by diversifying into other products such as jackets, shoes, belts.
-An opportunity to diversify customers seeming to be demanding diversification.
-Opportunity for increased number of outlets
-The opening up of an online shop which has potential for multiplying sales from the current 15%.
-A longer term vision of taking advantage of the growing appetite for the British luxury brands in emerging markets. -Limitation by design and material.
A number of parts or areas of the business need more strengthening so as to accelerate the growth and expansion of the business. The area that should be given priority in terms of strengthening it is accounting and finance since it will affect the other functions. The very conservative approach of financing ought to be loosened and the cutthroat angel and equity investors avoided so as avoiding problems that may arise in the future. The human resource management function should be strengthened by encouraging more specialization within the organization such as by hiring operations directors to manage operations that other may concentrate on other tasks like design. Also trying to engage in manufacturing off the road may help to overcome eventualities such as incase of change in the international market environment. The marketing function can be strengthened by having a clear and concise expansion plan and also by getting more materials and designs to help in curbing shortage in future even after outlets have been increased.
Culture is a set of shared expectations, beliefs and norms by the members of the same organization. In depth Organizational culture can be described as the ideological system that is shared by the members of the organization, this culture is transmitted through interaction and socialization in the organization and help to shape the behavior of individuals (Schwartz and Davis, 1981: p. 33).
The culture in Emmett shirts is shaped by the following factors. First the sector in which the Emmett shirts business operates in greatly influences it and in this case given that the business deals with clothes and specifically shirts where they sell them on retail to the customers. The fact that they are in direct contact with their final consumer makes them to be more friendly to consumers, listening to their suggestions and demands and showing them that they care.
Secondly the influence of the founder or the business leader shapes the organizational culture. Robert Emmett being the owner and boss of the organization is key into formulating ideas and ideologies that are embraced by the others in the organization. Robert refers to himself as a smart boss but also quick to note that he is not there yet, this depicts him as someone setting the precedent to work smart and still seeking to do it better and better. He is also very passionate about his business having has started it from scratch and also not to fail to mention his skills especially in design. The other people in the organization tend to benchmark themselves with the leader and thus in Emmett shirts Robert is very crucial in terms of changing the organization culture.
The history and tradition of the business also shapes the culture of the organization. Emmett shirts started as a really small entity with a loan from Robert`s father and now through retained earnings it has grown to three outlets all of which are doing great. The history of the business to its current position shapes the ideas and beliefs of what the business can achieve in future. These ideas and beliefs about the business in turn affect the actions and behavior of the workers and all members at large.
The organization expectations in terms the growth plan, returns expected, expectations on the workers, the objectives, long term and short term goals, mission and vision to a great extent dictates the culture of the organization. The culture of the organization should support the realization of the organization expectations. The reward system and measurement of performance of the organization also goes a long way in determining the member’s culture. Emmett`s shirts business is also dictated mostly by this factor since its culture has to support its expansion plan of establishing more outlets.
The customer base combined with the broad business environment such as legislation and other aspects like competition defines the culture of the organization. A change in the business environment may necessitate a change of culture as the organization adjusts to the changed environment. Emmett shirts may have to change a few aspects so as to address customer’s demands, respond to their feedback and move along with them. The culture of the organization can also be shaped by its environment such that an environment which is competitive may call for the organization to believe in its being the best, deliver quality products and offer excellent services.
A Stakeholder of any organization refers to any person or party with an interest in the organization, the interests of different groups may at times conflict. Financial stakeholders in an organization are those who have financial interests in the organization or they will be affected by the state of the organization financially.
Table 1.2 showing different stakeholders and their interests.
Stakeholder category. Stakeholder. Interests.
Internal stakeholders Owner(s), Robert Emmett Financial return or profits and capital gain or increase in value of his investment.
Management team or Employees of Emmett shirts. A sense of belonging, payment, job satisfaction, and training.
External stakeholders Lender, Robert`s father. Security and interest rate
Community Contribution to community.
Government/Authorities Taxes and compliance.
Customers Supply of properly priced quality goods and services.
Plans concerning future growth of Robert`s business through consideration of a number of available business opportunities. The growth plan will affect the different groups with a financial interest in the business. Robert want to expand his business by establishing more outlets, having an online shop, increasing production and in the long term the vision of taking advantage of the growing appetite for the British luxury brands in emerging markets. Implementing these expansion plans means more risks, increased costs and multiplied management problems. The costs will be elastic to changes in the market in which the organization is operating in and thus the cost is likely to vary with future plans.
The owner(s) interest to get higher financial returns could be thwarted in the short run if the expansion plans are implemented. The cash which could have been considered as returns to the owner are used in conjunction with other resources to implement the expansion plan. The owner, Robert will have to contend with nil returns for a time as he awaits the newly established projects to break-even. Expansion also means more finances are needed in the process and Robert may be forced to surrender a good proportion of the ownership of the organization to investors who are ready to invest their money in the organization in exchange to a share of ownership.
The management and employees of Emmett shirts will also encounter more management problems in the expansion process and also later as they manage the new establishment in its new environment. Some of the workers may be transferred to different locations and others assigned different and more challenging roles. The above will in turn kill the sense of belonging amongst the employees as they are shifted to different locations and probably also diminish job satisfaction. The management and workers may also have to spend cash and time training so as to be able to handle the new challenges in the organization.
Lenders of the business such as Robert`s father who provided the capital for starting the business, their financial interest in the firm i.e. repayment of principal amount and interest may be adversely affected. Loans are supposed to be repaid periodically of which it may not be possible if the expansion plan is quite over-ambitious or done over-aggressively without considering the ramifications of doing that. To avoid a scenario where loan repayment plan fails it is instrumental to plan and budget wisely.
Costs can be differentiated into different types and categories which require different treatment in the budget. Variable (VC) or proportional and fixed costs (FC) are the main costs incurred in any business. Although there are intermediaries between the two main costs such are: semi-variable costs, semi-fixed costs. The above classification depends purely on the cost responsiveness to changing levels of business activity. Fixed costs remain constant throughout and do not change even if the level of business activity changes, semi –fixed costs tend to change a little bit to changes in business activity. Variable or proportional costs change with a change in the level of business activity; semi-variable costs have an element of not being very much responsive to change in the level of business activity. In the expansion phase FC rarely change much but VC will change with a slight change in activity level.
Table 1.3 Showing the different types of costs in Emmett shirts business and their classification.
No Item(Cost) Category Description
Rent Fixed costs Cost of hiring space for retailing or warehousing.
Labor and wages Variable costs Payment to workers and casual laborers.
Designing Variable costs This is the cost used to make designs for manufacturing.
Materials Variable costs These are materials or garment used to make the shirts
License Fixed costs The newly established outlets will need licenses for them to start operating.
Research Variable cost This helps to determine aspects such as location and demand.
Depreciation Fixed cost It is the cost of loss of value of machines
Motor vehicle Variable cost It will help in transportation of materials and personnel
Marketing Variable cost Promotion and advertising especially for new outlets.
Consultancy costs Variable costs To help comply with regulations and requirements in the new environment
Packaging materials Variable costs Management Allowances Variable costs Establishing new outlets may necessitate additional allowances.
Furniture Fixed costs Such as additional tables and chairs
The human resource management in the case of Emmett Shirts is wanting in terms of specialization of tasks in the organization. Those doing design should be different from those engaged in managing the operations of the business. Hiring more talented personnel such as operation directors may go a long way in enhancing efficiency and dealing with future challenges that may arise as the business grows. Under the marketing function the expansion plan should be clear and the option to take that is whether to diversify as per customer demands. E-commerce has more potential and can help much in online marketing of the shirts. (Hurley 2011 p. 16)
Globalization is the integration of economies, markets, industries, cultures and policy formulation. Globalization has both positive and negative effects on the economy of each country that has embrace it. Emmett shirts to a really sensible extent can be termed as a globalised business, due to the following reasons and aspects that can be seen in it. First under globalization there are four drivers that drive globalization namely: cost driver, market driver, technology driver and competition driver.
Emmett Shirts have greatly embraced technology and has plans to continue to do so. Already 15% of the organization total sales are from E-commerce and plans are underway to have a well established online shop which is the same as establishing six physical stores. Having embraced E-commerce the business can be able to sell its product to any person in any place in the world and also do its promotion, marketing and advertising online. This intense online presence will help create more awareness about the product, announce introduction of new products and outlets. It is also easier to solicit support from the existing loyal customer base and even benefit from customer referrals online. Technology level is the number one determinant of whether a business is a globalised business. In my opinion I would say that Emmett Shirts is a globalised business given that it has embraced technology in its operations and has embraced E-commerce and continues to do so.
Market driver is another key driver of globalization under which companies take into consideration the various markets to invest that is giving attention to open market economics. Emmett Shirts considers as part of its long term ambition or goal to take advantage of the emerging markets in the east such as in China and others awakening giants. These markets have got high appetite and demand for British luxury products or brands. We also see the business benchmarking itself against a brand from Dunhill road which has more shops in China than in London. This action tells us more about what the business is likely to focus on in its long term plan that is establishing shops in the emerging markets in the Far East. This reason leads me to conclude that Emmett Shirts is a globalised business.
In regard to whether Emmett Shirts is globalized we realize that the business outsource its production or manufacturing of shirts from other countries such as Poland, Morocco, Ital and Turkey depending on style and material. The reason doing for this is that in the country it is hard to produce cheap enough and good enough shirts. In summary this action shows us that the business has embraced cost driver as a key factor driving globalization and thus can be termed as a globalized business.
There are four drivers of globalization which include: technology driver, competition driver, cost driver and market driver. Under market driver globalization is driven by a desire to expand the market base to the emerging markets which are growing in terms of population and increased consumer purchasing power in these markets. Companies consider investing or shifting their investment to open market economics. This also comes in handy with the aspect of competition amongst different countries and companies which are moving beyond their national or regional spheres to international spheres of the whole global market.
Technology has been a driver of globalization in quite a number of aspects such as through E-commerce and Electronic transfer, telecommunication gadgets, platforms and software’s. Platforms such as the social media examples being face book, Twitter linked in and others, the media at large, emails, video links such as Skype have continued to accelerate communication and sharing of key information. In business spheres outsourcing some business tasks have been made possible.
Government driver or change of policy framework in different countries and formation of trading blocks. Trade and non trade tariffs and shift in open market system. Formulation of G.A.T.T. (General Agreement of Tariff and Trade). Countries which are willing enter into agreements to carry free trade around the world. The tariffs were initially to protect the local infant industries I a country but the realization that countries have to work together for them to achieve economic development continues to propel countries to loosen their trade tariffs.
According to my own analysis technology is the strongest driver of globalization of all the others. This is so because at a click of a button one can buy or sell any product or service while in any part of the world. Technology has turned the world into a global village and communication is made with ease amongst people who are very far from each other as if they were just next to each other. Telecommunication devices such as tablets, smart phones and computers at large have interlinked every corner of the world through the World Wide Web.
Hurley, J. (2011) ‘Emmett’s Luxury Shirts: Deciding whether to specialise or diversify a luxury brand’, The Daily Telegraph (London), 19 July.