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AGR9005M Commercial and Operational Management Case Study Assignment
- Number of Words: 2500
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The Case Study
TPC Ltd was established in 2017 to grow and sell potatoes. The business operates from the site of the original farm near to Holbeach and delivers its products to a wide range of retail and business to business (B2B) customers around the UK. The company has rapidly established a reputation for quality potatoes which has resulted in some financial success for the business and reasonable (albeit reducing) margins.
The business was established, and is run, by three directors; Gary (49) the Production Director, Martin (56) the Site and Logistics Director, and James (46) the Managing Director (MD). James was appointed MD as he has a business degree and previous experience of running a large agri-business, Gary and Martin have farming backgrounds. All are local to Holbeach and between them, have extensive agri-business experience.
However, the three directors have challenging relationships. They have a regular scheduled meeting once a month with the firm’s external accountant to review the business’s financial figures. Other than that, there is very little communication between them and they do not meet at other times. The monthly meetings to review the financial figures often become heated, not about the success of the business, but because the directors are easily distracted by operational matters. It has been said that ‘the business survives despite its leadership’!
The success of the business to date has been driven by appointing a number of experienced, and well qualified senior managers to run the different aspects of the business. There are 50 people in total who are employed in the business. These 50 people are all employed on full-time contracts and there is generally a good working spirit amongst the workforce. The senior managers of the key functional areas of the business have a weekly meeting with James, who acts as a demanding but listening leader. The business has gained a very high service reputation amongst its customer base.
Eight months ago, James and the external accountant persuaded Martin and Gary to appoint a non-executive director (Karen) to bring additional professionalism into the business structure and to help to drive new ‘added value’ opportunities for the business. Karen has wide commercial experience in the food sector and at her third board meeting she introduced the other directors to a new business idea – the development of a range of ready-to-cook potato meals. Karen had exploited the reputation of TPC Ltd for quality amongst its retail customers to establish contact with one of the major national retail chains TPC Ltd sell to about options for developing a range of ready to cook potato products. Figure 2 shows some examples of the type of product line that Karen has suggested TPC Ltd develop.
Karen’s presentation to the three directors outlined a plan for TPC to produce own-label added-value, ready to cook potato products for sale to retail customers. Karen told the directors that she had meetings with one retailer who had expressed an interest in the idea. The plans for the new product lines would bring a number of significant business challenges and change requirements to the business and its people. Karen outlined some of the main challenges of the project, which would include:
- The products would need to be sold on a tight margin, which would mean that operational costs would need to be minimised.
- The new products would require the business and its people to acquire and develop new competencies around packaging, material, processes, and supply chains, and include the importance of recognising issues around allergens.
- A new factory would need to be developed to produce the new product lines. Karen explained that the cost of building the factory and equipping it with appropriate machinery would cost £4 million and would require both bank and director funding. This £4 million would not include the operating costs of the new factory. Accessing the funds to build and equip the factory was not seen as a problem.
- A new site has been identified near Sleaford (Lincolnshire). Some of the team would need to be moved to the new facility but without risking quality and continuity of the existing business.
- The factory would need to employ new workers. Most of the new workforce would need to be part-time or agency to align with the likely varying volume requirement throughout the year.
- In Karen’s meetings with the retailer, it had expressed an interest in the new product lines but in line with common practice, the retailer had only committed to indicative orders and no contracts had yet been signed. However, Karen noted that based on historical data on similar products from other manufacturers and future forecasts, the overall sales volumes are likely to be high, and Karen suggested there was the potential for significant financial return in the future.
In acquiring some background information for your consultancy role, you have spoken to the three directors and Karen, and the following information has come to light as a result of those meetings.
- Karen and James are very excited about this prospect and have been talking to the senior managers about the potential, the timing, and the implications. They have fixed plans and ideas in their minds which have not yet been fully communicated to Martin and Gary.
- Karen has told you privately that she is not sure that James is capable of running the bigger operation and sees herself as being the obvious person to take over.
- James has told you privately that he is really looking forward to the opportunity to run a bigger business with the technical complexity required for added value products.
- Gary is concerned at the pressures of a new facility and the impact it will have on his current workforce. He does not like the uncertainties related to part-time and agency workers and feels the development is moving too quickly.
- Martin is bored with his current role and feels dominated by the other directors. He sees an opportunity to earn some additional money quickly and then retire early. He does not appear to have thought through the full business implications of the change.
- The company is fully owned by James, Gary, and Martin who own all the shares in the business. Karen, at this stage, has no financial stake in the ownership of the business.
The senior management team have mixed views about the planned development. Some are excited, some are very wary of the extent of the change, and some are comfortable with what they currently do and feel the new development would fundamentally change the nature of the business and its culture. It is clear that there would need to be full support and a joint commitment from both the board and the senior team towards the development if it is to have a chance of success.
The plans for the development have filtered through to the workforce but there has been no official announcement to them about the plans or any detail about the development. As a result, there is a mixture of excitement about the potential and fear about the possible consequences. There has been talk amongst the broader workforce of the potential for redundancies following a rumour that full-time workers are going to be replaced by part-time and agency workers, and by automation.
Your report should include:
- A consideration of both the commercial and operational management implications of the proposed new product lines. This will be likely to include not only a financial analysis but also the leadership and management issues faced by the business in adopting and implementing the new product lines, the supply chain implications, how forecast sales and costs have been derived, quality management, and management control systems. You should use appropriate theories, concepts and models as the basis for your report and ensure that points made are appropriately supported by relevant literature.
- A financial analysis of the proposed new product lines will be essential to enable you to arrive at any conclusions or recommendations on the commercial viability of the plan.
- A conclusion drawing together the key points of your report which will also address the assignment title.
- References in Harvard referencing format.
- Appendix (if appropriate).
Learning Outcomes (LOs) Assessed:
LO1: Evaluate and critically assess the high-level perceived financial strengths and weaknesses of a company based upon appropriate tools of financial analysis and decision-making.
LO2: Demonstrate an awareness of the differing commercial and non-commercial expectations of organisational stakeholders.
LO3: Analyse, evaluate, and critique an operational systems flow.
LO4: Determine the meaning of ‘success’ at different parts of a commercial enterprise
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