Cyclermate Report Essay

They became good friends because of taking part in the local club of cycle touring together and decided to start Cyclermate, which was a bicycle manufacturing company that was laid down in the year 1988. In the beginning of time, Cyclermate gained a huge influence over the share of the market. The company appeared well with no problems and difficulties up to 201 0, the time when the business is in trouble, it confronted lots of consequences with respect to operation human resource and finance.

Therefore, the demand by purchasers fell continue sadly even though the prices were cut down by the ompany; the distinguishing attributes of the goods were not up to the quality as they were earlier. The rising complaints from the customers regarding degrading quality and faults in the product and the concern by the bank manager regarding the overdraft could cause trouble if the problems are not solved as soon as possible. Because of that, the company requires a right way to deal with this issue and save it from the edge of going bankrupt. l.

Introduction Based on case study research in Cyclermate Ltd. and a series of case in community, this report will work out the financial problems and various other roblems confronted by Cyclermate. It has been designed to analysis the business environment and management, measured by SWOT and PET models that are required to be looked upon. The report also draws on a brief summary for the financial side of the business. In addition, this report takes into account an examination of difficulties confronted by Cyclermate and possible solution for the problems, included short and long term solutions.

Another function of this report is to examine how the company could get out of the crisis and get back to the current market share. Finally, the report rings us some recommendations and conclusion of the whole Cyclermate case study. II. Analysis of Business Environment 1. PEST Analysis PEST analysis is involved in the chief external environmental that effect or control considerably a business strategy. As we can see, PEST is aimed for Political, Economic, Social and Technological matters that can affect the business. PEST is recognized to persuade it in a utile manner of summarizing the external environment.

However, it may be adopted the ability of how an establishment should react to these factors. Political Factor A political factor has a powerful impact on income tax, labor law, trade restriction and many more. Company did not recruit enough workers to meet the targets and worker had to work overtime to get the work done and workers are getting paid at normal rate. Using a traditional method may harm workers health and decreased their productivity as well. These mistakes made Cyclermate become a target of health and safety agencies. They have to improve the quality or else they can be stuck in authorized issues.

On the other hand, they also need to achieve higher standard in manufacturing to eet requirements Of the market, especially foreign markets. Economic Factor Cyclermate had purchased a larger storehouse for goods, which indeed was essential to them but did not suffice their requirements. Purchasing a warehouse, which fulfilled the needs of the company, could have saved a lot of money and that same money could have used in new or currently in existence projects. Another factor in economics that affects to the development of Cycler mate Ltd is labor.

The unemployment rate is increasing, therefore, this is a good chance for this company to choose orker more easily, and employ them easily with affordable price. Social Factor Social factor has a powerful impact on human behavior, Cyclermate had many order but they did not have enough workforce to complete these orders. They have to work long hours in order to achieve their goals. One more important thing is that high-speed in novation as well as the increasing demands of consumers requires Cyclermate to change and improve every day. But there is a truly infact that living standard of clients could effect to their choices.

The higher income distribution they get, the higher demands they re Technological Factor Cyclermate Ltd is using the oldest way to advertise their products by posting advertisement in traditional newspapers. It has limited their goods to the customers. Instead, this company can set up its own website. In addition, customers. Instead, this company can set up its own website. 2. SWOT Analysis It is a methodical technique that is utilized to categorize and identify substantial external (Opportunities and Threats) and internal (Strengths and Weaknesses) factors confronted with a specific area. Johnson, 1993) It renders data which are useful in corresponding the capabilities and resources o the spiritual atmosphere in which it functions and hence is a significant addition to the planning and marketing procedure. (Pearce, 2005) Let have look at the SWOT of cyclermate to understand more about the current issue that company has to face with. Strengths Direct channels of sale Cyclermate has direct channels of sales with the direct sales and direct shops; hence intermediarys cost IS largely eliminated. Reducing the cost of manufacturing could unquestionably help Cyclermate achieve a huge share of the market.

As direct channels are in direct contact with the providers, thus, it ould help in increasing in quantity or value of the sales and it provides a good opportunity to the providers to empathize the clients and could make required changes are per the requirement of the customers. Motivated workforce The employees at the Cyclermate are extremely pioneering and are can fully utilize and achieve any given objective or alterations in the company but they are inhibited by the administration as a result they are unable to express their views freely.

The employees could have a crucial role in the company for its overall growth and development. Possession of buildings and lands nlike Cycler mate most of the companies don’t possess either building or land and hence have to pay the heavy rents which adds to the cost but cyclermate can make any changes in the buildings and could capitalize in whichever way they wish to as they it, which reduces the overall cost. Weaknesses Inexperience and unmotivated staffs of the company The company has made use of untrained workers.

These untrained workers are not given the proper training after their employment. It is the fact that the employees and the staff are never allowed to put forward their creative and elf-ideas due to the policies of the management, as a result of this motivation in the staff is lost. Sales are decreasing in amount or degree and there is piling up of stocks in the warehouses which generates a feeling among the staff that they are not under a good management and as this feeling flourishes they lose hopes from the company and it has a very bad impact on their morale.

The investors do not truly interested in the business Due to the low returns on the capital invested by the investors, they are unhappy with the performance of the company and are losing faith in it. In ddition, the very fact that the shareholders were not paid any interest last year, it may result in the withdrawal Of their money from the company. The quality concerns Because lack of the power to be effective of the staffs to keep up the measures of the goods and the quality of raw material utilized is leading to degraded quality of the goods eventually.

Old machinery such as traditional spaying technique, painting and low-quality stock control technology needs updating as soon as possible if the business hopes to improve the production and sales in the coming time. Opportunities Take the advantages of social media Cyclermate should launch its website, which provides complete detail and range of the products available with them. Company can employ a new computer system for keeping a good database of the company. They can introduce online selling and modification according to the wish of customers.

Introduction of new machines They should introduce some of the modern machinery in order to achieve higher-level productivity. Cyclermate could bring in new robotic machinery in the production process that will lead to speedy output and a superior quality of goods. Employ trained workers They have the opportunity to make use of the trained workforce, which has been recently laid off from the nearby production site. More workforce means opportunity to gain more productivity.

Th reats Overseas competitors As a result of the growth to a global or worldwide scale, many companies from across the globe have entered the market with products of low price and high quality, which certainly is a threat for Cyclermate as it supplies good with high cost and of lower quality. Due to recession, which is prevailing in Europe the purchasing power of people is going down. Thus, company can ave reduced sales or can face financial crises. Reputation Due to poor-quality product for a period of Cyclermate’s reputation is going down and therefore people do not like to go for their products.

Huge retail Merchants Retail Merchants like Argos and Halfords are captivating the market eventually and it might happen that Cyclermate may lose the market share completely. Customer threatens them to sue their company after their product was fail in delivering the good performance. IV. Analysis of Business Management 1. Financial problems Prob. 1. 1: Uncontrolled cost The main problem that company is in this situation is because of the ncontrolled cost and mismanaged budget. The costs are increasing yearly with the sales and selling price of the products going down.

Let have look at the financial statement that company has QI 0,800 worth of non-current assets. Loan request will be refused as company only holds cash fund of E675 into their bank account. Costs are increasing at a rapid rate year after year. Asset turnover ratio is 2. 06:1 . This indicates that the profit margins for the company are very low that’s why the ratio is so high. We can also conclude from this that the company’s pricing strategy is not effective leading to lower rofits. Prob. 1. 2: Dealing with a big loan Creditor days – 24 days leads to the company has to pay back it its debtors in 24 days and it is just left with 675E of cash.

The Company is liable to pay E87,500 to the creditors and if they don’t so a legal action may be taken on them, which are not good for company’s reputation. They may talk to the creditors and ask for an extension in time for payments as they are going through financial crisis and dont have money right now to pay back. Prob. 1. 3: Lots of inventories Besides, it shows that the majority Of inventories are stored and not ffectively managed, that is why current ratio is at such high level, which also means low sales and low revenue gained. Moreover, the company relies on the bank loan as the main monetary support. . Operation Problems Prob. 2. 1: Stock control system Disturbingly, materials are always in the shortage which results in the disruption of the production process recently. Although the demand is higher and higher, company cannot meet their requirement because of lacking necessary components. Prob. 2. 2: Inappropriate division of duties The inappropriate division of duties obviously had made such a burden on any workers. In particular, Dai Armstrong has to deal with many tasks such as making all the frames, factory manager and business director at the same time.

He himself also finds it hard to keep up the level of production (approximately 8 frames/day) because it requires the harsh physical demands. Prob. 2. 3: Assembly is a complex process Moreover, assembly is a complex process, which takes 2 or 3 hours for one person. Janice Jones and Ffred Gregory often have to work overtime to catch up with the progress. As a result, their health and time issue could be heavily damaged. 3. HR Management problems Prob. 3. : Improper workforce in manufacturing Unreasonable workforce division is one of the most serious problems Of Cyclermate Ltd.

Besides, lack of experienced employees and the aging workforce are worrying the production process and raising a big question for a more effective training system. Prob. 3. 2: The training system creates The training system creates such obstacles for the assembly process. Typically, Fred, who is 18 years old, is a new and un-experienced person; the training for him is necessary, however, not easy at all. It takes so much time to instruct Fred in traditional way, which is apparently the cause of slow roduction recently. Prob. 3. : Corporate culture The staff is highly de-motivated due to decreasing sales and profits and also the behavior of the management as in the sinking company they are not free to put up their ideas even if they do they are rejected because of the superiority of the management. V. Solution 1. Financial problems: Solution 1. 1: Cost in selling and distribution Cost in selling and distribution could be possible declined to save more money for the company such as cutting cost for postage and courier charges by substituting by cheaper service, as well as the travelling and hospitality.

Those indirect costs contribute such high cost to the manufacturing of the cycles, restricting them would help boost the sales with cheaper price. Solution 1. 2: Ask for trading debtors to repay The solution to this issue is that they should strictly resolve and for the trade debtors to repay the loans as Soon as possible. The amount of $200,571 would help the financial situation better in the coming time. Once their assets are raised through and their liquidi¶y’ are proved to be valuable enough to afford the loan, it will be beneficial for them to borrow money from the banks.

Solution 1. 3: Direct sale prices Cyclermate’s direct sale prices are higher than shop sale price. In order to generate healthy revenue, Cyclermate needs to reduce their direct sale price. By reducing the direct sale prices Will increase their sale and it will be easy for them to generate healthy revenue. Solution 2. 1: Buy stock when needed Company should only buy stock when they needed. Buying stock earlier will harm companys financial positions, because raw material does not hold their value and it has got more chances of losing its market value.

Solution 2. 2: Require clear division A good answer for this problem is that the company should require clear ivision to who is able to undertake and separate arrangement of duties. Specifically, assigning other qualified person on frame-making position so that Mr. Dai could concentrate and dedicate himself to external relations business only. Solution 2. 3: hiring more experienced labors The company should consider hiring more experienced labors for assemble line and frame-making because Mr Dai can no longer put up with the physical requirement of the task.

With those simple tasks like packaging, it is acceptable for free hand employees to help out, but only when they finished all their tasks. Solution 3. 1: Employ cheaper labors In this case, the company can consider employ cheaper labors that are suggested by Maldwyn Jones: Chinese or Taiwanese labor to make the machine for them- much better quality but half the price and move Idris Pugh to higher position as a supervisor for the whole wheel-making process. Solution 3. : Improving the staffs skills This training program involves directly in the new changes with a purpose of improving the staffs skills, expertise and methods to complete an error-free task, exposing them to unfamiliar ideas and of course, giving them the chance to practice task under time/speed limit. Solution 3. : Core business value Trust in others and a firm belief in overcoming difficulties (set up new mission: overcome difficulty, minimize waste and consequence) B. Long term and efficiency improvements Present fiscal condition of Cyclermate (Accounting ratios).

The acid / liquid ratio of Cyclermate is O. 7611, which depicts Cyclermate is incapable to satisfy indebtednesses of shorter term, which mean that it would not be competent to satisfy fiscal difficulty which may happen in the time to come. The Asset turnover ratio for Cycler mate is 2. 06:1 . As the ratio is excessively high, this means that profit margins are very low. The pricing strategy of Cyclermate is ineffective and because of that low profit. Return on capital employed -Cyclermate has far too less returns on the capital employed, just a mere 0. 1 1 or 1 1%.

Debtor days -It would take Cyclermate 115 days to get back the money from debtors. Creditor days ” Cyclermate has to pay back in 24 days to its debtors with a cash balance of 675E. The financial statement of Cyclermate shows that it has non-current assets which is of worth E21 0,800. Any request regarding a loan from the bank will be refused as it has a mere cash balance of E675. It may get a loan based on the position of its on-current assets. In place Of the above-discussed alternative, it can sell its freehold land, which is worth E160,OOO, and use the proceeds from the sale in the business.

Cyclermate could acquire funds if they pursue its trade debtors to pay off soon. Debtors worth E200,571 are to be recovered and the funds would be acquired soon if the debtors do not default and pay in full. Once it has sufficient fund, Cyclermate could apply for the bank loan. VI. Conclusion Overall, Cyclermate will have a better future if they operate their business in slightly different ways. Cyclermate products were famous for its quality and rice,if the company still provide what the consumer wants than it would be no harm to the company.

But there few changes needs to be changed and once the new rules and regulation apply into the business than it would be a great opportunity for Cycler mate to operate their services. Moreover, With the movement of new threats into the marketplace the present systematic plan of action of Cyclermate is continuously below the acceptable level in its performance due to the fact that the new firms and the existing organizations are coming up with improved quality of products at a cheaper price VI’. Recommendations The company must sign up correct individual as per the requirement of the position.

Currently the management is interfering in the process of production and is unable to focus of the activities they should be concerned. The financial hardships through which Cyclermate is going through at present could be resolved by selling the unused stock that is piled up in the warehouse. In order to generate revenues and funds to invest in other arena of the company, Cyclermate must sell its freehold land that would certainly generate high revenue. In order to achieve higher output and productivity, odern technology should be applied in the production process.

Installing a computer database through which the management could look into all the important and relevant data as and when required. Cyclermate should launch its website, which provides complete detail and range of the products available with them. Reducing both direct sales prices so as to sell the current stock and trade debtors.