Key issues facing the company
After the death of the company founder, the board offered longtime employee Shirley Smith a chance to run the company as a general manager. She was offered a pay rise of 30%. Further scrutiny revealed that she lacked formal managerial experience and therefore, did not have the capacity to turnaround the company. This presented itself as a major setback for the success and growth of the company. Shelby Givens joined the company in the position of a general manager to repair the falling company.
At the time of her joining, the company faced financial challenges. The company experienced declining sales and increasing costs. Revenue declined while costs took an upward trend. Especially costs for employee health insurance, maintenance, and utilities. Further, before his death, Dane Sugar funded the improvement of the business with credit. In addition, in late 2008 the board loaned the business $00,000 from a personal savings account in order to sustain the collapsing business.
Givens also realized that there were plenty of unpaid invoices and unopened mails. She realized that payables were 50% more than the estimates the board had given to her. Apart from financial challenges, the condition of the
facility was deteriorating and this forced the management to charge fairly low prices. Further, on her first day at work, she realized that the employees were demoralized. The boards infrequent communication left the employees disgruntled. The employees never had a job description and they just carried out their routine jobs. They imagined that the business would be closed down soon. She noticed that the low morale of the employees made the business sluggish.
Another challenge that the business faced is outdated machinery. These machines had fully depreciated. This increased maintenance costs. Givens further was not able to obtain important information about the business. The staff member kept simple records.
They lacked detailed records on the performance of the business. For instance, she could not obtain details of revenue in terms of how many customers are served per hour and average spending on a customer per hour. Finally, Givens learned that the business was not well advertised. The previous management used the traditional form of advertising, that is, newspaper which was costly. The previous management did not explore other cheap ways of advertisements such as the internet.
Analysis
Correct use of strategy concepts