Business Studies

Posted: December 10th, 2013

U51002: Foundations of Business 2012/13 – Semester 2

Assignment 2: Where next for Grant Garden Centres?

“We have got to make some major changes quickly or we should both leave” said Jane. Malcolm, her brother, agreed but how would they tell their father, John that the business he had run for so long needed to change dramatically?

John Grant had inherited the Farmoor Garden Centre from his father nearly forty years ago; it was based in Farmoor village in the South East of England. Since then John had reinvested nearly all the profits and expanded the business to two other locations. In 1980 John rebranded them all “Grant Garden Centres”.

John had been brought up working in the business and staff admired his passion for gardening. John saw Grant Garden Centres Ltd as one large family with him at the head. He had a hands-on style, often over-ruling others and making every decision of any significance. This included all staff appointments, except for the most junior. “It’s easy to select the right people within minutes if you ask them the right questions” said John. “Of course not everyone we select stays very long – they move on or we ask them to leave – but it’s always going to be a bit hit and miss.”

Labour turnover was indeed high and growing. Partly this was due to the large proportion of part time and temporary staff employed by the company; many were students and did not see this as a career. Also the company had to recruit a lot of new staff for the busy months of March and June who were only there for a few weeks. John wished they could get some of the staff to come back every year as this would make recruitment easier. However, retention was not just poor among the junior staff; more senior staff often did not stay that long except the ones who were John’s friends. Some felt they lacked feedback and were uninvolved in decisions. “When a vacancy becomes available Mr Grant decides how to fill it. Sometimes it’s an internal appointment and we are just told who has the job – there never seems to be an interview or any selection process; sometimes he decides to recruit externally and it usually ends up being a friend of a friend – he says he doesn’t like to “waste money on advertising for staff”.”

Although Malcolm and Jane admire their father in many ways, they feel the business is not going anywhere and are frustrated at their own roles. Nominally Malcolm looks after the finances and staff pay, but he does not enjoy this. He is more interested in managing the Centres but John keeps this to himself. Jane focuses on marketing – primarily this involves using billboards around the area plus some local radio advertising. The main messages are about opening hours or special offers at the Centres. Jane had hoped to host events for local groups or even schools to build community links but had lost interest because of a lack of support from John. She also kept intending to spend some time developing the company’s website; at the moment this just gave directions of how to find the Centres because John wouldn’t pay for designers. He argued that word of mouth was the best way of promoting the business.

Jane’s interest lies in developing a business that plays a big role in its community and works with its stakeholders so that they all can benefit. She has read a lot about the concept of Corporate Social Responsibility (CSR) and believes the business needs to be far more active in this area. For example, she could perhaps run educational programmes about gardening and growing your own food that might fit with the growing interest in these areas that people have. Jane is disappointed that John does not seem to share her enthusiasm for CSR and or appreciate how the possible benefits it could bring.

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The Centres themselves are quite traditional. John concentrated on the plants and has not diversified into other areas unlike some of the bigger chains. 40% of their customers are over 55 and many customers are now first time buyers with comparatively few returners. The three sites are in good, accessible locations. They consist of a big outdoor area for the plants with only a limited display area inside; there are large pieces of land at all the sites still sitting idle. Sales vary significantly with the weather.

John’s main interest is gardeners like him who really know their plants. Stocks are high as John wants to provide customers with a lot of choice and he thinks this is a selling point. Stock control is poor due to a lack of up to date IT systems; this also hinders the financial management of the business so there is no ability to assess the financial performance of the Centres individually. John is hugely knowledgeable about plants and assumes his staff will pick things up as they go along. He does not regard customer service as especially important believing it is “just a question of good manners that everyone should have … anyway it is the plants that customers come for and that’s what matters”. John is constantly busy answering staff enquiries and customer requests and moving between the Centres. He was quite ill last month and was told to rest.

Malcolm and Jane do not agree completely on what to do next. Jane thinks it might be best to sell to one of the bigger chains. If she can convince her father some of the finances from the sale of the business could help fund some of the environmental initiatives she wants to try with schools. Malcolm, however, wants to try and turn the business around. Something certainly needs doing. The business has earned a return on capital employed of around 4% a year in the last ten years on average. The returns have been squeezed further by price cutting and the use of special offers in the last few years, which John assures them is essential to the survival of the business. The opening of a DIY store last month next to their biggest centre has added to their problems. The question is how will John react if they raised these issues with him?

Extracts from accounts and financial reviews Grant Garden Centres Ltd (2009).

Current ratio
Stock turnover ROCE
Gearing Promotional budget

Question

2.4
4 times
0.3%
12%
0.05% of last year’s turnover

0.3
15 days 2% 20%

Acid test ratio
Creditor days
Net profit margin
Revenue growth 2005-2009

You are a management consultant brought in by Jane and Malcolm to assess the position of the business and make recommendations. You need to write a 2,000 word report in which you:

·  Analyse two key factors in the macro- external environment (i.e relating to the PESTEL framework) that affect the garden centre sector

·  Analyse the strengths and weaknesses of Grant Garden Centres. This must include an analysis of each of the functions of the business (i.e. marketing, human resources (including culture and structure), operations and finance

·  Produce a detailed plan for the business outlining the strategic direction the business should be moving in and the actions you think that need to be taken over the next few years. 
You should make use of appropriate models and frameworks to support your analysis and recommendations.

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Instructions

This is an individual assignment and accounts for 70% of the total marks on this

module.

Your report must:

• · · ·
• · ·
• · · · · · · ·

When answering case study questions think about:

·  The context of the case; your answer needs to be specific to this case study rather than a general answer. For example, think about the market the business operates in, the legal form and ownership of the business, the objectives and its financial position. Research the different aspects of the business to provide an insight to the challenges it might face and how it might cope with them.

·  The reading you have done during the course and the models and theories you have studied. Can you use these models and theories to help you analyse the issues in the case study and to provide support to your ideas. Your arguments need to be backed up by your research.

·  Do you have a range of suitable sources?

·  The presentation of your response. Have you used headings to flag the key sections of your answer? Have you checked your spelling and grammar? Is your answer well laid out? Have you used tables and charts if needed?

·  Your recommendations; make sure they are based on the analysis and are supported

·  Remember that the recommendations you make are likely to be interrelated; if you decide to invest in a new project for example, you need to consider where the finance comes from.

be word processed in point size 11 Arial font

have line spacing single and a half spaced

include a first page which has the course title, module name, title of the assignment,

module leader, your name, the word count, and the title of the assignment

have a statement that this is your own work attached with it

be no more than 2,000 words (excluding the front cover page, the bibliography and

appendices)

include a word count on the first page

include an introduction (but no executive summary)

have arguments that are clearly supported with research

include accurate referencing and reference list

have a clear structure with relevant headings

be written individually

use a range of appropriate sources

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Submission

To submit your paper:

·  Save your paper as a Microsoft Word document with a file name that includes your name, student number, module number and assignment number (ie in a form equivalent to “Adrian Rivers p0016732 U51002 Assignment 2”).

·  Upload your paper in the electronic drop here: http://moodle.brookes.ac.uk/mod/assignment/view.php?id=17143.

·  When you are sure you do not want to make any further changes but before the deadline of 23:55 on 29th April select “Send for marking”

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Marking Criteria

Your paper will be marked on the following criteria:

• · Analysis and evaluation (60% weighting)
o Do you answer the question?
o The ability to analyse relevant data and support your arguments with evidence o Critical evaluation and independent thinking including recommendations
• · Research overall (20% weighting)
o Evidence of research using a wide range of relevant and suitable sources
• · Overall coherence and structure of your report (10% weighting) o The organisation and structure of your argument
o The clarity of expression of your ideas
• · Presentation (10% weighting)
o The accuracy of your referencing
o The presentation of your report e.g font, presentation of data, layout,

headings.

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