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Examine the strengths and weaknesses of the business by performing an internal audit on their current situation - By undergoing an external audit, explore the situations that could cause opportunities and threats to the business.

Extracts from this document...

Introduction

Primary Objective * Examine the Strengths and Weaknesses of the business by performing an internal audit on their current situation. By undergoing an external audit, explore the situations that could cause Opportunities and Threats to the business. Secondary Objectives/ Investigations 1. Brief introduction about the company, its history, and its market. 2. Define 'SWOT Analysis', explaining why it is used and how it can be used as a method of scientific management to help the business. 3. Identify the Strengths and weaknesses of the Business by analysing the characteristics of different functional areas in the company: a. Finances: Analyse the current financial situation in the business. A study of the Balance Sheet and the Profit or Loss account will enable the process of 'Ratio Analysis' to take place. b. Marketing: Analyse the strategic approach held by the business towards their products. This will reveal why their sales performance is what it is. It will also suggest how useful the products are to the business, and give an indication of how they will perform in the future. c. Operations management: The techniques, locations and assets used can be analysed. This will explore the benefits that are gained and the losses that are suffered due the circumstances. d. Human Resources: The management techniques used can be studied and compared to those suggested by management theorists. Furthermore, the standards of communication and motivation can be observed, to show whether there are any problems, or if the business is enhanced in any way. 4. Identify the possible opportunities and threats to the business, by looking at external events that could affect the business. These factors are out of the business's control: a. Market Factors: This will analyse the sales turnover, to suggest what may happen in the future. The growth or decline of the market will be monitored to predict how the business may be affected in the future. ...read more.

Middle

* In the manufacturing industry, job production techniques would cause huge diseconomies of scale: As the output increases, the cost per unit will also increase. * Flow production will not allow for any variety of flexibility in the products. This would mean that every single (e.g.) suit would be exactly the same. In the clothing market, this would strongly affect the sales, as clothing is a product which consumers prefer to own (relatively) uniquely. The 'batch production' method employed provides benefits and problems that are extremely relevant in the clothing industry: Advantages * This is a relatively low cost production method, enabling economies of scale with large output volumes, and costs spread over the output. As keeping costs down is an imperative part of competing with other manufacturers, this is an ideal process. * Once a batch has been completed, the business will hold stock, ready to provide to the customer. This is large advantage is the clothing/ fashion industry, especially the supplying side; as stocks run out in high street shops, they will want the new stock immediately so they don't lose sales. By using batch production, Berwin and Berwin will be able to supply the stock immediately after the request has been put through. * By using this process, as opposed to the flow process, variety and flexibility is fully enabled by modifying or completely changing each batch. As mentioned before, this is crucial, as the general public would not all want to be wearing identical clothing. Disadvantages * Holding stock can have its drawbacks, as it may take up space, and in an ever-changing world of fashion, the products may become obsolete. * The batch processing technique limits the degree to which the products can be customized. 3.3. Quality Control * Quality Control refers to the systematic attempt by the business to ensure that its production reaches its target level of quality. ...read more.

Conclusion

The higher quality will be a major factor in determining which manufacturer is chosen to supply the retailer. The process of batch production enables the business to produce stock rapidly, efficiently and flexibly. There is no requirement for stock to be held, so the cash flow is kept as high as possible. * The management style has been defined as autocratic, implying that the employees are heavily focused on the jobs that must be done, and are not allowed to get distracted. 6.2. Weaknesses * Both the balance sheet and the profit or loss account show that the costs for the business are enormously high. The costs of around �35 are fractionally higher than the sales revenue, and this is resulting in a loss of profit. The poor net profit ratio suggests that it is the overheads that are causing the high costs. The implications of this are that the business is now making a loss during the year. * The Return on Capital Employed ratio is a strongly negative figure. This means that they are continuously losing a proportion of the money that has been invested into the business. This will make it unlikely for the business to find any investors. * The liquidity ratios suggest that the business is below the minimum advised levels of cash flow. This means they may struggle to meet debts, and will find it hard to purchase new equipment/ stock. * It is evident that over half of the money invested into Berwin and Berwin is derived from bank loans. As they will not be able to re-pay these loans in the short term, the loans will be gaining interest until the cash flow levels are high enough to pay off the debt. Furthermore, the business will find it almost impossible to receive any more loans from the bank. * The move into new markets, and selling new products is quite risky; the new products may not sell well, as the company is not recognised for their expertise in the manufacture of casual wear and women's suits. ...read more.

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