The name of the business is 'Midland Quilters Limited' (MQL). They do many things at MQL:
- Quilting
- Lamination of clothes
- Embroidery
The business is in an established market with many competitors. MQL is a fairly large company that has grown rapidly over recent years and it is now one of the leading quilting manufacturing company's in the Midlands. It employs about 30 workers and is situated in Smethwick, West Midlands.
At the moment the company only operates in the Midlands but the proprietor is considering expansion to other parts of the company. His objectives for the business, apart from maximisation of profits, is to make MQL a large recognisable company with a good reputation. He feels that there are three steps that he needs to take. Firstly, to expand to other parts of the England. Secondly, expands to all parts of the England and finally, begin exporting goods to other parts of Europe. However, this process will take a long time.
4. The Market
The quilting and manufacturing market in which MQL operates in is an established one as it has been running for many years. However, the amount of people entering the market does seem to be levelling off. A few years ago, there were many people entering the market and as a result the market was growing. However, in recent years, there have not been many people prepared to enter the market. I went around and asked a few owners of businesses in the market and they all seem to agree that there probably wont be a large amount of people entering the market.
Most young people nowadays tend to go on the computers side and not the quilting and manufacturing side. On the whole there does not seem to be a very big future in the market once the current crop of company's decide to stop as many owners will find that they cannot pass it on to their children as they are not prepared to do it. On the bright side the market is going pretty well at the moment due to there being many competitors.
In the market, you will very rarely find one-off customers, there is a lot of loyalty in the market as customers tend to stick to their own suppliers as long as the goods produced are of good quality. If the goods are not up to the standard required then customers will find a new supplier mainly through 'word of mouth' and not investigation of the quality of the goods and service.
5. The Competitors
MQL has many competitors in the market and that means that quality of the goods and service must be high if they want to survive in the market. MQL have seen many competitors fail in the market due to lack of quality and due to the fact that they were unable to compete with other established rivals like MQL.
Due to the level of competition being great, MQL must keep a close eye on all its rivals to monitor any activities that they do to try and get customers. For example, price cuts, promotional activities etc. If any rivals do any marketing activities then MQL must act accordingly to keep customers.
The majority of MQL's rivals are situated extremely close to each other- in Smethwick. This would make it easier for company's to monitor each others progress. This increased competition is good news for customers and for the past 3 or 4 years, MQL have managed to beat off rivals and attract customers and gain a good reputation which has seen them emerge as an established company. For the past 2 years, there has only been approximately 2 newcomers in the market apart from that the company's competing have been the same which means this competition has become more and more fierce.
6. The Process of the Business Start Up
Below is the procedure that Mr Kuldip took in the process of starting up his business:
The results were conducted using interviews, refer to appendix A
- Firstly, he had to decide whether or not to open up a business by himself or not. He was working at M.K Textiles in a partnership so he would have to know whether he could handle the business and its responsibilities by himself. He eventually decided that he could and was prepared to take the risk as he was effectively running M.K Textiles on his own as his partner was more involved with his other business.
- Kuldip then prepared a business plan as that would help him get finance and enable him to start up his business effectively.
- Finance was the next problem- where would Kuldip get the necessary finance from? There was three sources from where Kuldip eventually got it from:
- Having been impressed with Kuldip's business plan, his bank manager granted him a loan, which covered for approximately 60% of his start up costs. Now Kuldip had to raise the remaining 40%.
- He got most of the rest of the money from family and friends of whom already had businesses. All of this money was good for Kuldip because although he had to repay it, there was no time limit or any interest to be paid.
- The remaining money came from Kuldip himself. This money was saved in the bank.
- Location is a very important factor, which Kuldip had to consider. He wanted to stay in the Midlands and decided that he should stay near to his market. This location was the industrial area in Smethwick. However, this was where most of his rivals would be situated but on the other hand most customers were there so he decided to give the location the green light.
- He had to decide where to get his workforce from and stated the need for loyalty from his workers. Hence, he recruited some workers from M.K Textiles who he knew were reliable. The other workers were gained through advertising that he had vacancies at his factory. In the advertisement he stated clearly that the workers must experience, he did this because he did not have the time and money to train workers.
- Kuldip got his machinery and equipment from the people that supplied it at M.K Textiles because the machines were very reliable and did not require much maintenance and they very rarely broke down- this would save him any unnecessary costs as the last thing he would want is useless machinery that brakes down as he wont be able to satisfy demand causing customer dissatisfaction.
- From his time at M.K Textiles, Kuldip got to know a lot of suppliers of raw materials and he decided that those would be his suppliers. He decide that he would have a number of suppliers and use a just-in-time processing system (JIT). Therefore he would not have any storage costs etc as stock is ordered when needed. Stock must have zero defects hence if supply is not good then he can change to a different supplier. This JIT processing would only be short term so that costs stay low. Kuldip said that he would change to a different system as demand rose because buffer stocks would be required.
- Next, Kuldip had to determine the price of his goods. He decided not to start off with a lower price because he was worried of sparking a price war and with his business being new he wouldn't be able to compete and he didn't want to be forced out of the market. Therefore he charged the same price as most of his rivals and hoped he would at least break even. However he was not worried at operating at a loss as he was confident that in the long run his business would be a success.
- Once the price was set he needed to attract the customers. He did this by persuading some of the customers he had at M.K Textiles to try his goods and service because he had free delivery etc. as a result he managed to gain a lot of customers from M.K Textiles. Eventually, M.K Textiles closed down as management wanted to concentrate on their other business. This was great news for Kuldip and at a great time as Kuldip gained many customers and a few more workers from M.K Textiles. Kuldip did advertise in the 'Asian Directory' from where got a good response.
- Finally, once the business was ready Kuldip needed to keep track of the income and expenditure of the business. Therefore he started to do a regular cash flow to monitor this.
- The business start up was complete!
7. The Proprietors motivation through
Motivation theory
7.1 ABRAHAM MASLOW (appendix B)
Kuldip's motivations can definitely be linked to Abraham Maslow's hierarchy of needs. As you can see below, he 'climbed' two steps and then started back on the first. He has now reached the fourth step with a possibility of reaching the top- 'Self-actualisation'.
When working at M.K. Textiles he managed to satisfy this need (for food and shelter). Then, he was able to move up in the hierarchy of needs.
As a partner at M.K Textiles he did not feel job security and job safety, as this business was not his partner's priority- his other one was. Hence, Kuldip left in search for security and safety. As a result he opened up his own business and started the hierarchy again.
He managed to satisfy this need so he moved up in the hierarchy.
Due to Kuldip being the sole owner of the business, he felt great job safety and job security. This helped him go to the next step.
He gained this by trying to get customers and suppliers etc. Also, his communication skills were very good.
At the moment, Kuldip is getting a lot of recognition of his achievements of opening up a successful business from customers, suppliers, family and friends. He is also very happy of his own achievements.
- STEP 5; Self actualisation:
Kuldip has not yet gained this yet but he intends to expand in the future. That will help learn new skills and face new challenges which both are parts of self-actualisation.
7.2 HERZBERG (appendix C)
Kuldips motivations can also be linked with Herzberg's theory. His motivations are similar to what Herzberg said were motivators:
- Kuldip quit M.K Textiles so that he could open his own business and have a chance of achievement. He did this by opening up his own business.
- Although Kuldip had a fair amount of responsibility at M.K Textiles, he wanted to be fully in control of activities and have full responsibility. This motivated him to open up his own business and gain that responsibility.
- Kuldip wanted interesting work. At M.K Textiles his job was quite interesting but due to him only being half of an owner he was unable to enjoy his job to the full limit. Hence, now he that has moved on to be a full owner he believes he has never been happier. The need for interesting work motivated him to the extent that he left his previous work and found a new one.
- Another thing that really motivates Kuldip is the recognition for his achievements as a sole trader. He gets this from customers, suppliers, family and friends. This motivates him to go on do even better in the future. Herzberg states that recognition of achievement is a big motivator.
- Kuldip's next step in business is to expand throughout England. Kuldip seems very determined to succeed in his short-term objective of expansion. This motivation is what Herzberg describes as the 'chance for advancement'.
Overall, Kuldip's motivations were not pure and simply to make money. His real motivations were the desire for achievement, the recognition for this achievement, responsibility and the chance of having a challenging but interesting job. So far in Kuldip's career these motivations have helped him become a successful businessman. However, this does not imply that in order to become a successful businessperson you need to have the same motivations. You could have completely the opposite motivations and still be a success.
8. The extent to which the entrepreneur uses
Business methods.
Kuldip only really uses one business method- cash flow forcasts, which can be seen in appendix D. However, he does not do cash flow like many others do. Normally with cash flows you would do it over a certain period of time (e.g. 6 months) and have an opening and closing balance. Kuldip does not do it this way.
He does a monthly cash flow to keep track of the income and expenditure for the given month and he does not have an opening and closing balance. After 6 months of trading he gathers the six cash flows and manually sees the cash flow over the period. He puts an opening and closing balance then. As you can see from the cash flow, it is fairly straightforward with only the income and expenditure.
He does not do break even analysis at the moment but he intends to do so soon. The reason is that demand is constantly varying and as a result expenditure rises and falls. When I asked Mr Kuldip about the future prospects of using business methods he replied by saying "Once we have expanded I will need to keep a close eye on a number of things. So I will end up doing cash flow forecasting for the future and break even analysis".
Overall, Kuldip only uses monthly cash flows but in the future he intends to make the cash flow more complex by trying to predict future trends. Also, he intends to do break even analysis on each of his products.
- The Future of Business through survey of customers
9.1 Evaluation of Findings
I will now critically analyse each question individually, from appendix E.
This graph shows that, from sample of customers, all of them have some sort of satisfaction with the goods supplied by MQL. There was not one person that said that they were unsatisfied. However, MQL should try and get more people 'very satisfied' because if they let standards slip then that will leave many people 'unsatisfied'. On the whole this graph shows some good reading for MQL. In the future they must try and improve this further and further. If this graph shows a good reflection of all customers then the future looks good. The reason for this is because satisfaction of goods leads to brand loyalty and pretty soon MQL will have a lot of loyalty through its customers.
9.2
This graph also shows good reading for MQL because the delivery service seems to be doing alright. There is a high percentage of people who say that goods get delivered on time in most cases but this may be due to distance. For example, MQL has a few customers that are situated on the other side of Birmingham (near the airport). As a result, it is hard to get delivery times dead on perfect. On the good side at least these people are not complaining because if MQL expands then it would be difficult to deliver everything on time. Hence 'in most cases' is a good substitute.
9.3
This graph shows amazing results for Kuldip as every single person in the survey said that MQL was such a good supplier that they would definitely recommend them to others. Customers genuinely believe this because I told all the people I surveyed that they will remain anonymous- this means that they can be honest and not fear about people knowing what they said. Hence this graph shows that the level that MQL is operating at is so high that they can look for a very successful future.
9.4
This graph is not very conclusive as to whether customers think MQL should expand or not because although approximately 64% of people think that they should expand, 36% of people have doubts. If I had just asked 'Do you think they should expand?' I would have expected virtually everyone to say yes. However, I deliberately said '…bearing in mind increased competition etc.?' Due to that, people started thinking about the implications of expansion. I believe that the results mean that the decision should be well thought through by Kuldip. This question was asked for Kuldip to see whether or not customers think he should expand. It is now up to him.
9.5
This graph is a brilliant indication that the future of MQL is very bright. You can tell that MQL has a lot of loyalty from it's customers and that would be increasing in the future. Everyone in the sample of customers said that if the service remained the same they would stay with MQL- remember, Kuldip wants to make the service better and better so these people and others will be customers of MQL for may years to come. These customers will act as marketing weapons for MQL in the future as they will advertise for them for free through word of mouth. Overall the future is looking good for MQL and it seems the business is heading in the right direction.
10. The role and the rewards of being an
Entrepreneur
Becoming an entrepreneur is very difficult and those who succeed are the ones with the desire to succeed. Starting up a business by yourself is extremely difficult as there is so much to do. The role of being an entrepreneur is very big because all the responsibility is on the proprietor's shoulders. The start up of the business is the hardest job because that contains many factors that are essential for the business to operate. If the start up is not correct then the business will fail. The start up of a business includes finding the necessary finance, finding a location, finding workers and machinery, determining price etc. the role of being an entrepreneur is to do all of these by performing some sort of research of how he/she will do it.
Once the start up is complete and the business is operating, the entrepreneur has to do the marketing side of the business- selling the product by creating 'product awareness'. Also, the proprietor has the job of motivating himself as well as workers. The entrepreneur has also got to keep the stakeholders of the business happy. The entrepreneur also has to keep tabs on his rivals and try and be one step ahead of them. The entrepreneur also has to train employees and find a suitable way of recruiting them. Also, he has to monitor the progress of workers as well as the business as a whole.
The main rewards of becoming an entrepreneur is that you would be making good money because the risk that you took would have paid off. As well as money, you would also get tremendous recognition for your achievements. For example, Kuldip took a big risk in opening his own business and the merits he has received, apart from money, is recognition for his achievements and that recognition has gained him a good reputation and status in society. The reputation of Kuldip has reflected upon his business and now the company has a good reputation.
The greater the risk, the greater the rewards as long as it pays off. As well as recognition from others, success would greatly motivate the entrepreneur and give him/her the sense of personal achievement that would spur them on form more success.
Those were the rewards of being an entrepreneur, however those rewards only count if the business succeeds. The bad thing about being an entrepreneur is that everything is a risk and if that risk does not pay off then the entrepreneur would be in deep trouble. Not only would there be financial trouble but the entrepreneur would get a bad reputation which could haunt him/her in the future if they decide to open a business later. It is a big risk being an entrepreneur especially if you are a newcomer in the market with no experience. Kuldip was okay because he was familiar with the market but a proprietor that is inexperienced in the market could encounter many problems and those problems could de-motivate him and the employees.
