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Triangle Pty Ltd is company owned by three designers which deals in garments. This retail store is popular in Australia but the decrease in the profit rates is currently an issue of concern. Even the grievances of the employees have multiplied with the passage of time. It has opted for two different options as its long term goals. Therefore, the company needs to employ the appropriate strategy in order to meet its goal in the future.
a) State the business’s long term goal(s)
Jade Harris, Joe Jones and Jacqui Smith are the owners of Triangle Pty Ltd which was put up during the 1980s. The three of them have opted for two options as their business strategy in the long term. Either they are going to sell the company as a running firm and retire, or they are going to list it on the Stock Exchange for increasing the capital of the company (Kadi, 2016). For the execution of any one of these options, the owners have to ensure a few things about their business. They need to make sure that the company maintains its profit share in the market. The company must elevate its status in the world of fashion and hold a larger consumer base. They have opted for two different strategies which might help them to fulfil their plan.
b) Review the SWOT analysis of factors influencing the manufacturing section of the organisation. Expand on the factors discussed and put the SWOT analysis in a table form and use it to help you decide the future direction of the business.
A SWOT analysis helps the administration of a company to identify the opportunities of growth and act on them (Fraser-Sampson, 2013).This Australian company manufactures premium quality garments and their production can be increased with growing demand because the manufacturing work is done near the company. The machines need to be upgraded to increase productivity. In order to enhance the market share of the company, the workers need to work at flexible hours.
The company produces garments which are of superior quality.
The designers of the company reside at nearby places which make it easier for the owners to solve any kind of problem relating to design.
With an increase in demand, the production of the garments can also be raised since the goods are produced locally.
If the demand decreases or there is a growing unpopularity regarding a particular garment then the production can be stopped instantly.
The employees have been working for a long time in the company. So, they are loyal to the owners and are extremely efficient in their work.
There is a stiff competition between triangle and other rival companies. So, the management has asked the staff members to increase their working hours leading to conflicts between the employees and the higher authority.
The workers often get bored with their work and opt for sick leaves. The majority of the work takes place in particular seasons which make the workers idle during certain periods of time.
The machines are extremely old and a number of workers have suffered from injuries while trying to mend those.
The factory is old and suffers from the extremes of temperature.
Bill Sparks, the long-term manager of the company, has found out that there are several designers who are willing to use the factory of Triangle for making their own garments.
A fashion business from New Zealand named WWW.com, is interested in merging with this Australian company.
The government has come up with policies to reduce the import taxes. This means that foreign companies will be able to sell garments at a much cheaper price. In this way the competition between triangle and other foreign companies will gradually rise.
Several companies are exporting their commodities to other Asian companies, increasing their profit margins.
Moreover, a sharp decline has been noticed in the sales of the retail stores as more customers are keen on purchasing garments from online sites.
Triangle Pty Ltd can give their factory on rent to other designers and make some money from this process. The merging of the firm with the New Zealand Company can be a good option to survive against competitors. Triangle can also think about expanding its business to other developing countries. This SWOT analysis explains the various opportunities which the firm should consider for generating profit (Harrison, 2010).
2. Complete a cost/benefit analysis of the two strategy options for the manufacturing operation. For each strategy determine potential costs and benefits.
1. A certain amount of capital needs to be spent for shifting the manufacturing process offshore.
2. It not only requires money but also a long span of time.
3. A number of employees will be retrained which will involve a certain amount of money.
4. Upgraded machineries need to be purchased (Campbell and Brown, 2016).
1. The cost of production reduces as the raw materials are available nearby
2. Efficient labourers will help to increase the productivity of the company.
1. It is mentioned that triangle wants to persuade the New Zealand based company to shift its centre to Australia. This will require Triangle to provide some incentive to the other company which might involve some capital investments.
2. Certain money will be spent on legal issues.
3. The presence of intangible costs is the biggest disadvantage of merging with another company which involves unemployment of several employees and lack of control on production.
1. Merging with another company will help to increase the range of products.
2. The number of skilled labourers will increase thus, enhancing the productivity.
3. The rate of competition will reduce as compared to the previous scenario.
4. Both these companies have a definite customer base which will expand due to merging.
5. The cost of production will reduce as the investment will get divided. Moreover, the majority of the investment will be done by the bigger company (Ferenczy, 2016).
3. Choose one of the two strategies as your preferred strategy. Explain how your choice of strategy will help achieve the founder’s long term plan to sell or put the business on the stock exchange as a Public company.
The second strategy, merging with the New Zealand Company, can be an appropriate way of achieving the plans of the owners to either sell the company or list it on Stock Exchange. In order to list the company on the Stock Exchange, a company needs to have a high profit share as well as the price of its assets needs to be high. With growing profitability, the number of shareholders will also increase which is a pre-requisite of listing a company on the Stock Exchange. All these will be possible if triangle merges with internet as the amount of capital involved will also increase (Sustainable Stock Exchanges, 2010).
Merging can also help the owners to sell their company in the future. For selling a running business, the owners need to show the high profitability of the company which is possible if they merge with the New Zealand businessmen. The profit also needs to be constant which will make the firm attractive for its buyers. If Triangle merges with the other company, its reputation will improve helping the company to achieve its future endeavours (Steingold, 2012).
4. Identify current performance gaps. Indicate how your chosen strategy will eliminate or reduce these gaps and contribute to improvements in the businesses productivity and profitability.
If Triangle merges with the bigger company, then the old factory will be renovated and the old machinery will be replaced by the new ones. The workers will not be required in the old dilapidated factory and will be able to work with better equipments. This will automatically increase the productivity per person. We have noticed that the management wants the employees to work for flexible timings. As most of the women working are married, it is not possible for them to opt for any work timing. With the merging of the company, new workers will be recruited who are willing to work for longer time periods. The investment cost will get shared enabling Triangle to produce better quality garments. They can also increase the rates of the garments if required. Merging of these two companies will safeguard Triangle from other rival companies in the market. The number of customers will increase leading to higher production and increase in profit.
5. Draw up a draft of the key terms and conditions of the new enterprise agreement. These will reflect management’s aims for increased productivity and changed workplace practices.
If a company wants to increase its profitability then it needs to provide better working conditions for the workforce. Any enterprise stands on its employees. A few privileges will help the employees to work better enabling the company to increase its production and therefore, increase its profit share. The new enterprise agreement will include the following terms and conditions:
1. Appropriate salaries of the employees.
2. Decent working hours of the employees, adequate number of leaves, extra pay for extra working hours and so on.
3. To take measures for solving differences between the employees and the authority.
4. Stating actions which will lead to a deduction from the salary of an employee (Fair Work Commission, 2016).
5. The way the agreement needs to be executed.
It must also contain a few more terms:
1. There must be a date for the expiry of the agreement which will be a few years from the issue of the agreement by the Fair Work Commission.
2. The desired relationship between the employees and the employer must also be mentioned. It includes fulfilment of the basic wants of the employees.
3. The management needs to consult the working employees before making any massive change about the workplace.
6. Operational/implementation plan
Strategy 2 – Growth
Draw up an operational (implementation) plan (include a timeline, staff responsibilities). Show how you intend to integrate/induct the New Zealand staff into the Australian operation.
For a successful merging of two different companies, an implementation plan of almost a year needs to be made. It must include:
1. It is important to settle disputes between employees and management very swiftly.
2. Capable leaders need to be selected for dealing with difficult situations.
3. Differences between the working cultures appear during merging. The work culture should be flexible and should keep the working conditions of both the companies in mind.
4. The work of the employees needs to be monitored very closely.
5. Decisions should be taken very quickly and without any biasness.
6. The higher authority should be approachable by the workers.
7. Benefits and incentives should be given to workers to increase their eagerness of work.
8. The employees who will come from the New Zealand firm must not feel aloof in the working atmosphere of Triangle.
7. Identify sources of potential conflict between management and employees/union. Develop tactics/arguments and strategies management can use in the negotiation stage to deal with grievances and disputes arising from the strategy you have adopted.
The merging of two companies means the merging of the employees of the two workplaces. When the employees start of these two companies start working together then disputes and conflicts may arise between the different working groups.
1. Both these groups of employees have worked in different conditions before merging together. There is often a clash between the working cultures of these two groups.
2. A conflict between the two unions of these two companies can also take place for establishing their hierarchy.
3. When two companies merge, a few employees often lose their job and some of them require additional technical training. This process leads to a feeling of resentment among the workers.
4. The workers work under a constant fear of losing their respective jobs which has a negative impact on the productivity of commodities.
5. The management of Triangle needs to follow a few steps for resolving the grievances of the workers:
6. The most important way in settling disputes among workers is to speed up the entire process. The officials need to be extremely swift in looking into the matter of dispute.
7. The management and the union should cooperate with each other in resolving issues and maintaining a good working atmosphere (Avgar, 2010)
8. The authority needs to look into the matter and collect genuine facts.
9. Decision making should be swift irrespective of any adverse working conditions.
10. The management can also chose to provide incentives to the employees and try to keep them content.
8. Your choice of ER strategy may involve some Employee Relations risks (conflict - work to rule, strike, adverse publicity) as well as other business risks. Identify the risks and provide a contingency plan to deal with the risks.
When two companies merge, several Employment Relations risks often crop up. These include:
1. A competition between the employees for hierarchy.
2. Poor work culture can often lead to strikes.
3. With the presence of a strong media in today’s world, these kinds of conflicts can lead to negative publicity hampering the productivity of the company.
The contingency plan involves various characteristics in order to deal with the different risks related to Employment Relations:
1. The plan must include the principles on which the organization works.
2. Managers are trained in such a way so that they are able to deal with various problems when they occur.
3. The salary of the workers needs to be updated with time.
4. Officials look into the matter for solving it and not for enhancing it.
5. Any kind of problem needs to be solved very swiftly and the presence of a positive approach is necessary (Singh and Kumar, 2011).
9. Identify training needs required to support the management team in this period of change. Determine what type of training they need and how and when it will be delivered.
After the merging of two companies training needs to be given to employees so that they are able to collaborate with the management in times of disputes.
1. Employees need to be trained to deal with the conflicts in the workplace. When two companies merge, a number of employees leave their job. In such cases these trained officials should be able to find efficient workers to fill in those gaps.
2. The team building qualities of an employee should be enhanced thorough training.
3. Communication skills need to be developed so that the managers are able to interact with the workers and find out the reasons of discontentment.
4. Training can also be provided so that a person is able to inculcate leadership qualities within him (Weber, Tarba and Oberg, 2014).
5. If the workers lack in computer skills then training can be provided in order to develop skills for operating a computer.
6. The employees need to be taught how to meet deadlines and how to work during stress hours.
All these trainings can be provided after the companies merge with each other and all the workers are available in one place. However, the Human Resource officials can be trained beforehand. Trainers and experts from the technical fields can be appointed for a few months to provide the workers with sufficient training.
10. Indicate how you will monitor and evaluate the success of your new strategy over the period of Implementation.
If Triangle merges with internet then the success of this strategy can be studied by keeping various things in mind.
The profit share of the company at the end of a financial year.
An extensive study on the position of the company in the stock market will also be helpful to determine the success of the strategy.
In order to calculate the overall profit, the revenue sheets of both the companies need to be studied properly which will give us the total profit.
Lastly, if the number of grievances reduces from the employees then it will be proved that the company provides ideal working conditions.
If the cash flow is continuous with increase in profit share then the company can list itself in the Stock Exchange or sell the company when it is running smoothly. It is very important to monitor the processes during the time of merging. Training facilities need to be provided to those who require them. The relationship between the employees and the employers should be good. Cultural differences need to be resolved for the success of this strategy.
If the owners, Joe Jones, Jade Harris and Jacqui Smith wish to sell the company in the future then they can do so due to the increase in the revenue of the company. Any buyer will be interested to buy the company due to its high profit generating capacity. Even the owners can consider listing the company in the Stock Exchange market because it will have the required amount of capital. Therefore, merging with the New Zealand based company; it can be a good option for Triangle for acquiring its future goals.
Avgar, A.C., 2010. Negotiated capital: conflict, its resolution, and workplace social capital. International Journal of Conflict Management, 21(3), pp.236-259.
Campbell, H. and Brown, R. (2016). Cost-Benefit Analysis: Financial and Economic Appraisal Using Spreadsheets. Routledge.
Fair Work Commission. (2016). [Available online at]: https://www.fwc.gov.au/about-us . [Accessed on 16th September, 2016].
Ferenczy, I. (2016). Employee Benefits in Mergers and Acquisitions. Wolters Kluwer.
Fraser-Samson, G. (2013). Intelligent Investing: A Guide to the Practical and Behavioural Aspects of Investment Strategy. Palgrave Macmillan.
Harrison, J. (2010). Essentials of Strategic Planning in Health care. Health Administration Press.
Kadi, X. (2016). Advantages of Stock Exchange Listing. European Scientific Journal.
Responsible Research. (2010). Sustainable Stock Exchanges: Real Obstacles, Real Opportunities. World Investment Forum and United Nations Organisation (UNCTAD). [Available online at]: https://books.google.co.in/books?id=k2YwnFEHLMYC&pg=PT6&dq=criteria+for+listing+a+company+on+stock+exchange&hl=en&sa=X&ved=0ahUKEwi07f70o5PPAhVE2mMKHcOzDO8Q6AEIMzAA#v=onepage&q=criteria%20for%20listing%20a%20company%20on%20stock%20exchange&f=false . [Accessed on 16th September, 2016].