LEWISHAM COLLEGE
Lewisham College is a non-profit making organisation which means it is owned and controlled by the government and belongs in the Public Sector. It is an organisation that offers educational services to the general public. The organisation does not base its survival on the income and profits they but by funding from the government. They still make a small amount of capital from their students that pay their school fees.
Lewisham College is controlled by a Principal appointed by a board of Governors elected by the government to run their establishment. Also employees that will work for organisation are employed and they are called CIVIL SERVANTS. They are Tutors, Lecturers and Administrative Staff. They are employed by the college to develop, maintain and control their investments and businesses set up by the Central Government.
The advantages of the College as an organisation in the Public Sector are:
- TRAINING: Training the employees of the college is one of the greatest advantages of working in a government organisation as they are consistently trained to keep up with new technologies, office duties and teaching techniques and courses introduced to colleges. Staff get training two to three times in a College Session to enable them provide good customer service to students and carry out their activities more effectively, which is their most important aspect of being a service provider to the local community.
- FUNDING: The College gets funded by the Learning and Skills Council and other sponsoring companies to sustain it and its staff and also they provide sufficient funds so that the college can be operated effectively and successfully.
There are drawbacks in government establishment and some of them are:
- The government also interferes with the way the college operates because the college seeks funding from them to carry out both financial related functions and other activities. Therefore they ask for a lot of reasons and clarification of all activities the college carries out. They also enforce school rules and policies guiding the college, thereby limiting the amount of power that the college and its senior employees have of making minor required changes that they may personally want to see to the way the college functions. This could be easily avoided if the college was a profit making organisation that made their own money and was independently run and established.
- COMMUNICATION: Communication and information can be distorted within the college and also when they want to communicate with outside sources. Communication flow is very important to the college but because the college has a hierarchical structure, it might be difficult for employees in different departments to communicate to each other.
COMPARISON BETWEEN PUBIC AND PRIVATE SECTOR BUSINESSES
DIFFERENCES BETWEEN THE THREE COMPANIES
SIMILARITIES BETWEEN THE THREE COMPANIES
Lewisham College, Ison Harrison Solicitors and Pegasus Cycles abide by rules, regulations and legislations of the government pertaining to how they run their businesses. For example all the businesses must comply by the equal opportunity laws – which states that all organisation must not discriminate against anyone because of their race, colour, sex, religious beliefs, e.t.c. Also, these must comply by the employment law – which says that all companies must not discriminate against somebody because of their disability, race, sex and beliefs. If the businesses go against these legislations, they could face prosecution from the government.
The businesses need customer to buy their product and use their services for them to exist. Customers are one of the most important stakeholders in a business and without them Ison Harrison Solicitors and Pegasus Cycles cannot make profit to ensure survival and the government will not bother financing the college.
The three businesses also need employees that will provide for customers. Employees basically contribute mainly to running the business as they carry out all the activities in the business and ensure that the businesses run successfully.
They all train their staff to ensure that they carry out the best possible customer service possible. Lewisham College and Ison Harrison Solicitors are service providers to their customers, therefore it is important that all employees are trained on how to communicate to customers and attend to their needs efficiently. Also, Customer Service representatives in Pegasus Cycles must have the required skills needed to provide the best possible service to customers that require them.
CIRCUMSTANCES IN WHICH OBJECTIVES CONFLICT WITH EACH OTHER
Objectives of the College conflicts with the objectives of Pegasus Cycles and Ison Harrison Solicitors because Lewisham College’s main objective is to improve the services they provide to their customers (students) while the main objective of the Private Sector businesses are to increase their profits.
The college looks for improved ways through which they can teach their students, either through e-learning or a revised standard that help students understand what is taught in class better. Also, provision of extra computers and books for students in the library so they can improve on their level of achievement and success.
While Pegasus Cycles and Ison Harrison Solicitors share an objective which is to make more profits for the business and its owners. This objective is more important to them than Lewisham College because the school is sponsored by the government while the private sector businesses sell services and products to their customers and rely on the money made from the products and services to survive.
INFLUENCES THAT AFFECT SETTING AIMS AND OBJECTIVES
SALES
One of the most common objectives of every business that sell products such as Pegasus Cycles is to maximize sales of their product. If people stop purchasing their products and the business does not meet the target they set for themselves in terms of the volume of products they want to sell, the company will make one of their major objectives to maximize sales to cover cost of sales and possible make profit from it.
DEMAND
When demand for a product or service declines, it influences the aims and objectives of businesses such as Ison Harrison Solicitors and Pegasus Cycles because it affects the success of their businesses. If the rate of divorces and injury claims increase, demand for lawyers will increase and the business will benefit from it but if the government decides to start offering free or cheaper lawyers to individuals that require them for any purpose, there will be a decline in the demand for lawyers from private practices and the business will suffer immensely.
Also, if the numbers of youngsters that attended Lewisham College were to decline, it will influence the aims and objectives as they will want to invest more on promoting the college and education within the area to help attract more people to join the college
EVALUATING EFFECTIVENESS OF BUSINESS ACTIVITIES AGAINST AIMS & OBJECTIVES
The strategic aims and objectives of a company are what the employees of the company work hard towards achieving. The objectives of the businesses are affected by the way the employees of the organizations carry out the activities of the company.
PROVIDING AND IMPROVING QUALITY SERVICES & PRODUCTS: Provision of quality goods and services is essential and a vital part of both the Public and Private Sector businesses company’s activities and an important aspect of Lewisham College and Ison Harrison Solicitors as they provide a direct service to their customers. This is because any company that provides quality goods and customer service keeps its customers. Adopting quality as a major objective in a business means that the company cares and caters for its customers needs and expectations efficiently which will help the businesses grow and make more profit as good customer service influences the patronage of customers to the business.
The different sectors ensure quality in everything they do whether they are manufacturing goods or providing services to the customers so that they can beat their competitors. For example, because Lewisham College teaches their students better, provide necessary materials and equipment for study and their students have come out with better results than Southwark College; more people even existing students of Southwark College are likely to go to Lewisham College because they have a better chance of getting better quality services and learning.
SKILLED WORKFORCE: Having a skilled workforce is one of the most important aspects of a business because if the workforce does not know what they are doing, it will totally affect the way they carry out their activities and run the business. For a company and its staff to provide quality services and products, they need to have the basic required training that they need to do their jobs effectively. For Example, Ison Harrison Solicitors that offers services to their customers must ensure that all the lawyers are fully trained and qualified to give expert advice and give quality customer service to their customers. This is because first impressions that the lawyers makes will constitute whether the customer will patronize the company again and reflects the image and reputation of the company. This is applicable to both Public and Private Sector businesses because they all deal with customers.
INCREASE SALES & MARKET SHARES: Providing competitive prices and quality products and services helps the college, Ison Harrison and Pegasus Cycles increase the sales of goods and services as well help the business owners increase their market shares. Lewisham College does not look to increase market shares or increase sales of products because the government is their source of income but the Private Sector companies need to increase sales of goods and services so that the company can make enough money to survive and avoid being taken over by another giant company. They also need to increase market shares because the investors would want to see an improvement in their share value and be confident that the company is progressing and growing well.
PROMOTION: Promoting products and services are ways through which the businesses can attract people to their products and services as well as create awareness for their businesses on a wider scale. For example, if Pegasus Cycles want to increase sales of their products or maximise profit, they need promote their product through extensive media such as the TV, radio or internet so that people in other parts of the country or possibly in another country will know about the company and its products.
Ison Harrison Solicitors also need promotion to attract clientele to their business. Because there is so much competition in the industry, the business can promote their company and the services they provide in areas where there is a high percentage of lawyers required.
TABLE SHOWING COSTS, SALES REVENUE AND PROFIT OR LOSS FOR PRODUCTION OF BATS
BREAK-EVEN POINT
Formula: Fixed Cost
(Selling Price – Variable Cost)
12,000 12,000
(35 – 20) = 15 = 800 units
PROFIT AND LOSS
Formula: Sales Revenue – Total Cost = Profit or Loss
- If 200 bats are sold £9000 losses:
£7000 – £16,000 = - £9000
- if 1,200 bats are sold £6000 profit:
£42,000 – £36,000 = £6000
UNIT MARGIN
Current Output – Breakeven point (output)
Formula: % - Current Output – Break Even x 100
Current Output
1000 – 800 = 200 units: Margin of Safety
ROLE AND IMPORTANCE OF BREAKEVEN
Breakeven Analysis plays an important role in all aspects of a business from when they want to establish the business, when changes are about to be made to the business and measuring profit and loss of the business. It shows the “cut-off” point where the business starts to make a profit from maximum sales and where they are losing money because they are selling lesser units.
Before starting a business, the owner person opening the business need to calculate the level of sales of their product the new business will need to make so that they can cover their cost of sales, purchase or manufacturer and if possible, make a particular level of profit.
The role of break-even is very essential and beneficial to every business because it provides a clear and visual demonstration of some vital information about the finances of a business and how well they are doing within a financial year. It shows the level of profit or loss that the business will make at any output and it specifically shows the effect a change in costs or selling price might have on the breakeven point, profit and loss. The limitation associated with the role of Breakeven is that it tells the business how much effect the selling price will have on profit or loss but it does not tell the business how the change will affect customer demand and the ACTUAL level of income for the business.
It also helps the business predict a likely profit from a certain output and also plan ho many units they need to produce and sell in order to reach a profit target.
When a business wants to make changes such as increasing production which will affect the balances between fixed and variable cost, therefore the owner needs to consider how much money it will cost the business and the length of time it will delay production. Breakeven Analysis will be used as a part of the planning process to ensure that the business remains profitable.
AREAS COVERED BY THE HUMAN RESOURCES DEPARTMENT
Human Resources Department in Pegasus Cycles cover an important aspect of the company that deals with the way the company is run and how their employees are catered for. Areas covered by the department are:
- Ensuring that employees are provided with the best possible working condition within the company premises.
- Ensuring that all employees of the company are treated equally and fairly their Superiors.
RETENTION, RETENTION AND DISMISSALS
The Department is responsible for recruiting new staff to the organisation, retaining the already existing ones by providing their needs and expectation to motivate them to stay and as well responsible of dismissing employees that they think are under performing in their job roles.
TRAINING AND PROMOTION
Training employees is one of the most important areas covered by the HR Department as it is important to the benefit of the employees and the business that training is done regularly to update the way they carry out their job roles. It is their job to carry out appraisals which will help them identify the employees that require training to help them.
Training is important to the employees because it can help gain them promotion into higher position in the company. The department promote people that have been working with them for a long period of time. It is also a way of motivating other staff to work harder in their jobs and possibly get promoted.
HEALTH AND SAFETY
Health and Safety is sufficient in a business environment so that the employees will feel comfortable working without being in danger. For a company like Pegasus Cycles which is a manufacturing company, it is essential that the production factory is a safe place and free from materials such as spilt oil, irons on the floors, ineffective machines, e.t.c. that can cause fatal accidents.
Under the Health and Safety Act 1974, the government issued Health and Safety laws that the company must abide by or face legal action from the government. The law also is a way to protect employees in their workplace.
HOW THE ADMINISTRATION FUNCTION SERVE THE NEEDS OF THE FINANCE DEPARTMENT
The Administration Department provide the basic needs and requirements for the Finance Department because they work hand in hand together to achieve their basic aims and objectives. The Administration Department serve the purpose of keeping records. For example, the finance department keeps a lot of financial records of the income and expenditure made by the business; therefore it is an important role for the Administration Department to maintain those records for future references. They also help the finance department draw documents they require to carry out a transaction with suppliers or for any other purpose.
They provide security for the department when they want to export money from the office to the bank or when they are about to receive money from distributors (wholesalers and retailers).
PRINCIPAL AREAS OF RESEARCH AND DEVELOPMENT IN THE BUSINESS
In a company like Pegasus Cycles Research and Development plays an important role as they go out and find out the new and latest designs other manufactures are making and how successful it in the market. The areas they cover are:
DESIGNS: One of their main areas covered by the Research and Development team is to research for new designs that the company can use to manufacture new and improved bicycles. Industrial designs are increasingly important because it is a way for the company to gain competitive advantage over their competitors in the market. It is their responsibility to go out and carry out researches such as investigating other leading competitors to know the type of bicycles they are producing and how they have improved on the bicycles and even how well the product is selling in the market.
DEVELOPMENT: Then again, if the company is not looking forward to adopt new designs, the can look for new ways of developing the existing product and improving the performance of the products so that it will appeal to their customers and possibly attract new customers that use other brands to use theirs.
ROLE OF MARKETING AND FINANCE DEPARTMENTS WITHIN PEGASUS CYCLES
FINANCE DEPARTMENT
The Finance Department plays an important role in Pegasus because they handle all financial information and finances of the company. Their role is important because they are responsible for keeping and maintaining all financial records of sales and expenditures made by the company. They detail all receipts and payments as well as money paid out to suppliers and distributors.
They prepare all financial documents required by law for taxation purposes to show how much money they are making or losing and how well the entire company is doing financially. They give money to all other departments within the company and monitor the way they spend their money.
They also carry out primary functions such as paying staff salaries and wages and continually update the financial records of the business.
MARKETING DEPARTMENT
The role of the Marketing Department is important to business because they have the responsibility of promoting the company in the public eyes and helping the product sell in the market. The roles of the department include:
MARKET RESEARCH: Conducting a market research before the company launches a product is one of their specialties. The important of the market research is to find the reception of the customers towards the product and whether they will buy the product I it was distributed to the market. It also helps the company know whether their new bicycles will be a success or failure in the market. Market research can also be carried out through questionnaires. The company can conduct an internet based survey or directly give out questionnaires on the streets as a way of collecting primary information in relations to whether the product will be successful and how customers might react to the product.
PROMOTION: After the market research, the nest step would be to promote and create awareness for the product in the market. The department will use the different promotional methods such as Sports Magazines, newspapers, TV adverts, e.t.c. depending on their market segment (target audience, for example, Sports Personalities) to attract people to buy their products.
IDENTIFYING & DESCRIBING CONNECTIONS BETWEEN ACTIVITIES OF THE DEPARTMENT & THEIR STRATEGIC AIMS AND OBJECTIVES
BUDGET PLANNING: One of the activities carried out by the Finance Department is to set budget for the future financial spending and unforeseen circumstances that the business may experience. The objective that associates to this activity is that the employees of the department perform financial planning through identification of future expenses and analyse potential revenue sources. This connection is important because it helps the business prepare for the future and it avoids future financial set backs.
MAINTAINING RECORDS: Maintaining financial records which is an essential part of their job satisfies one of their objective which is to maintain accurate and efficient information to support billing, collections, accounting and document preparations.
PROMOTION: Promoting the business and their product is one of the most important activities of the Marketing Department because it helps promote the image of their company as well as create awareness for the product and it mingles with their business objective which is to make the product a “household name.” Promotion is exactly what the business needs to achieve the objective. Also, another objective that relates to promotion is that the company wants to inform their target audience about features and benefits of their products and its competitive advantage, which could lead to a 10 percent increase in sales in one year.
CONDUCTING SURVEY: Conducting a survey goes hand in hand with one of their objectives which is to increase participation from their target audience in regards to what they want to buy by 10% as their opinion are the most important that will help the business know how and what to provide to them.
TRAINING: The Human Resources Department contribute to achieving the business objective, i.e. increase the level of “on the job” and “off the job” training every year by 10% so that all staff can improve their skills and capabilities as well as work. This will help the company improve the level of output their employees produce every year and it can also help motivate the employees
PRODUCTION: Production is the main activity of the business and the objective that associates with production are many and they include
- QUALITY PRODUCT – The Company wants the department to produce bicycles that are of high quality and safety so that their customers will like their products and continue to purchase their bicycles in the future.
- HIGHER LEVEL OF QUANTITY PRODUCED – The department wants to increase the level of output so that they can comfortably satisfy the demand for the product in the market but at the same time, the company does not want to compromise on quality.
ANALYSING HOW THE FUNCTIONS CONTRIBUTE TO ACHIEVING THE AIMS AND OBJECTIVES OF THE BUSINESS
The roles of the departments in meeting objectives as described above help the directors determine the long-term direction of the business. It is responsibility of the various departments (e.g. marketing, finance etc.) that make up the organisation, to implement the strategy that has been set by the owners and Senior Management of Pegasus Cycles.
INCREASE SALES AND MARKET SHARES: The Marketing Department contribute to achieving this objective of the business as they also deal with sales and promoting sales. It is partly their responsibility to work on increasing the market shares of the company through promoting the products within the country and possibly outside the company so that they can sell their products in foreign markets. For example, in 2003, the business intended to increase their market share from 10% to 25%. Increase in sales and sales promotions inspired by the department to help increase the market shares of the business.
BUSINESS EXPANSION: Every business wants to expand into a bigger firm than they already are and the Finance Department play an important role in helping the owners (shareholders) know whether they have enough money and make enough income and profits to carry out an expansion. The department will set up a financial record that shows all the income and expenditure of the company within the financial year, how much reserve the company has and whether it is advisable to carry out the expansion. The expansion could be to buy a land and set up a new factory or warehouse or probably open new branches in another country, the Finance Department have to ensure that the company itself is ready to take on such a task in conjunction to the finances of the firm.
PRODUCTION: The objective of the business is to increase the level of bicycles they produce and the objective can be achieved by the
Production Department rotating shifts so that there will be different employees at different times working to produce more. The employees can invest more time working on producing the bicycles so that the company can increase their level of output.
SKILLED STAFF: The Human Resource Department contribute to achieving the company’s objective by training their staff regularly so that they can carry out their job roles more effectively. The business wants to employ capable and experts that have the basic required skills needed to work either in Finance or Marketing Department. For example, if the Finance Department introduces new machine that counts money and the Accountant, who is supposed to use cannot operate it, the department will send him/her on a training course to learn how to use it and possible acquire more knowledge on other aspects of the job. This helps the employees of the department carry out their job roles more effectively.
PROBLEMS FACING GROWING FIRMS WITH REFERENCE TO CASE STUDY
ORDERS/WORKFORCE: The business had a lot of orders made by customers as they fitted kitchens as well as designed them. Therefore for the company to keep up with demand of consumers, they will have to employ more staff to work for them.
PAPERWORK: There was a lot of paperwork to be done by Pete such as Accounts, bookings, legal documents, records, e.t.c. and this took up a lot of his time.
THE EXTEND AT WHICH THE COLLAPSE OF THE BUSINESS WAS INEVITABLE
The collapse of the business was inevitable from the point where he ignored the advice of his father to get more people to handle management of the business because he did not want to share control with other people.
It was also inevitable when he failed to keep an up-to-date account of the incoming and outgoing cash in the company owing money to suppliers and employees as he was owed money on several big contracts he worked on.
WAYS IN WHICH PETE’S BUSINESS CAN PLAN FOR FUTURE SURVIVAL
The business in order to survival needs many people and skills to operate and their requirements include:
FINANCIAL ACCOUNTANTS: This is one of the main problems the business suffered because he had a lot of customers owing him money from previous jobs he had done for them without being paid and he never had enough money to pay off his suppliers and employees that contribute greatly to the growth of the company.
SKILLED STAFF: Having a skilled staff is one of the greatest assets of any business because if they know their duties and responsibilities within the business and carried out their duties effectively Pete would not have been very worried about the quality of work they will produce.
TRAINING: This is closely linked with the previous point made about skilled staff because Pete should have provided training for his staff on how to do their jobs better which could have made him trust the quality of work they do rather than trying to sort out the paper work, Accounts and ensuring quality assurance.
MANAGERS: Since he did not want to share control of his business, he should employ managers that are subordinates to him that will help him oversee the operations of the business as well as have a limited amount of control over the employees.
EXPANSION: Pete should have expanded his business a long time ago when he found out that his business was growing and there was a high demand for kitchen fitters. If he opened smaller stores in different areas all over the country and employed managers to control the branches, employees and as well commission them to do their jobs from the branch, it could have made it easier for him and the business would have succeeded. He will be at the Head Office with other shareholders that might be involved or not involved in the activities of the company generally overseeing and running the company.
IMPORTANCE OF EXPANDING HIS BUSINESS FOR SURVIVAL
When a business such as Pete’s is rapidly growing, he is expected to have considered expanding from a Sole Trader which is set up and run by one person, the capital for setting up the business is raised by the owner and the business has Unlimited Liability. This means that all the debts of the company will be paid off by the owner(s) of the business if the business goes burst. The business will move into a Private Limited Liability company where by members of his family or friends can invest into the company as shareholders. They will own shares for the amount of money they invest into the business and the business has a Limited Liability. This means that the shareholders will not be responsible for all cost incurred by the company.
Although the business was successful and growing, he could have made more money from shareholders investments and extra workforce to subsidize the work load. This will give him time to check up on the works carried out by his employees to ensure they are of satisfactory quality and the customers are satisfied with the job.
