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Unit 3 Managing Small and Medium Sized Enterprises BTEC Level 5 HND Diploma Business Regent College Higher Education

646 Downloads I Published: 15 May ,2020

INTRODUCTION

For effective management of small and medium size enterprises need to conduct proper research of market for identification of the factors which have direct and impact upon their business functions. This will enhance the capability of manager regarding formulation of more appropriate strategies for attainment of positive impact from such factors. There are many initiatives are taken by government for development of small businesses (Wynarczyk and et. al., 2016). Ella's Kitchen is a organisation which prepares organic baby and toddler food which is sold internationally in supermarkets including UK, China, Canada, US etc.

In the present report explain about, Nature of business, process of starting up of new business, sources which helps to attain competitive advantage, challenges which are faced while managing and running business. Also, Application of growth and development of strategy and government support measures to overcome from challenges.

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TASK

1. Nature of Ella's Kitchen

It is an organisation which was established in 2006 in UK. This organisation is manufactures organic baby and toddler food which further sold in many countries. The countries in which the product of such organisation is sold at present includes UK, China, Norway, Sweden, Finland, Belgium, Netherlands, Canada and US. It is observed that Ella's Kitchen has 30% of share of the UK baby food sector and having the global turnover of $121 million. This organisation is also the member of The soil Association and The Organic Trade Board. This organisation is small in nature and only 62 employees are working at present for conducting their business operations (Thun, Drüke and Hoenig, 2011). The number of revenue which is earned by organisation is around £ 51.2 million.

Aim: The main aim of organisation is to provide the healthy food with use of organic ingredients which are specially made for the babies for fulfilment of the criteria of nutritions which are needed to intake in a day.

Nature of business

The nature of organisation is understood with the following points which are defined below:

  • Amount of budget: It is seen that all the small organisations are working in tight budget. It means the amount of funds which are available for conducting business operations is limited. Ella's Kitchen is also small organisation which is suffers from same issues regarding amount of budget.
  • Community based: This includes about functioning of organisation for satisfaction of the different requirements of particular segment of society. Ella's Kitchen is prepares healthy food for babies (Smit and Watkins, 2012).

2. Process of start-up

It is a fixed process which helps in conversion of their idea into a business or start-up. The different steps which are need to follow for starting new business activities are defined below:

Market research: Conducting research activities for the purpose of determining current market trend which is present in particular business sector and impact of macro-environmental factors.

Securing intellectual property rights: Before starting business activities it is important to secure their innovative ideas and technologies through application of the tools of patent, copyright, trademarks etc.

Make decisions regarding branding: This includes the procedure of selection of name through which organisation is recognised in market. It helps in creation of different identity in market.

Incorporate: This step includes the process about the incorporation of business. It can be formed in the nature of partnership, sole proprietorship, limited (Santos, Mendes and Barbosa, 2011).

Formulation of business plan: Here need to formulate business plan which includes their objectives, mission, vision, goals etc. It helps in directing to the employees in performance of their different functions.

Picking up of workplace: It is the place where organisational activities are started for providence of their products and services to end customers.

Identification of leader: Here, there is need to select leader which assist other employees in deployment of the organisational functions in more effective manner.

Taking the help from outsiders: Takes the support of outsiders for accomplishment of desired objectives. This will includes about taking the help of suppliers to gather different food materials for preparation of their different product as per current demand in market. Their target segment where they provide their full emphasis is children’s. This includes attraction of more number of children’s in UK by providing tastier and healthy food.

Raising of capital: Here, for effective performance of their functions need to raise capital for satisfaction of their different requirements (Hillary, 2017).

3. Business concept and sources of competitive advantage

Business concept: This includes the basic information about the organisation regarding their products and service, target segment and approach which is used for marketing of their existing products.

In the present report, Ella's Kitchen is small organisation which prepares healthy food by using organic ingredients. The main target market of this organisation is to capture baby food sector. It is observed that in current period of time it already holds 30% share of this market sector. The main of organisation is to provide such baby products which delicious and healthier.

Sources of competitive advantage

The major sources which are available with the management of Ella's Kitchen which contributes in achievement of competitive advantage in future is defined below:

  • Employees: Employees are considered as major force which helps in attainment of competitive advantage. From the past business operations of Ella's Kitchen noticed that the current employees have great extent of skills and knowledges regarding production of healthier baby food. As it is not possible for competitors to copy their employees (Gunasekaran, Rai and Griffin, 2011).
  • Organisational Culture and Structure: The culture of organisation includes about habits, behaviour, beliefs, norms etc. which is required to follow by employees while providing their functions. It helps in removal of the cultural differences and bring effective communication and coordination in the functions of employees comes from different cultures.
  • Process and Practices: This includes about the adoption of effective techniques and methods of production which helps in improvement in the quality of their products. Through use of high quality organic ingredients, Ella's Kitchen is able to drive tehir competitors out of the market. The main aspect which helps them to attain competitive advantage in market is maintain the quality and taste of their products through use of high quality food ingredients. This will provides the opportunity to maintain effective relation with customers and attain their trust and loyalty.

4. Current level of demand and competitive environment

Current level of demand

There are many products are provided by Ella's Kitchen for satisfaction of the different requirements of kids regarding their tastes. Such products which are in huge demand in market includes Tomato-Y pasta with plenty of veg, sweetcorn+ carrot melty sticks, mild chilli con carne etc. Still there are many cooking books which are famous in market are The Easy Family Cookbook, The First Foods Book etc. Due to use of organic ingredients in their baby food products they are in demand in market because everyone wants provide healthier foods items to their kids.

The current level of demand of their products is understood from the fact that this organisation has 30% of share in actual in food market (Chittithaworn and et. al., 2011).

Competitive environment

There is huge competition in the UK baby food sector. There are many big organisations like Nestle and Unilever Plc provides their products in market. Both the organisation are well established brand and famous for the quality of their products. After that Ella's is performing good in UK market and attained the turnover of $121 million. Through use of healthier ingredients in their food products they are able to create their value in mind of customers and attains the 30% of UK market share.

5. Growth and development of the business over past years

Past year performance of Ella's Kitchen

2011

2012

2013

2014

2015

2016

EBITDA

600936

781677

1209518

1600823

1723810

Profit after Tax

217849

339646

613280

1025475

1185706

Working Capital

3364439

4241614

4622761

4739258

5758066

Employee Numbers

42

44

58

62

65

Total Liabilities

2256191

2572244

2642656

2983298

3702930

Total Assets

5648346

6185747

6637145

7332151

8598253

Reporting period

12

12

12

12

12

Turnover

10050170

9770009

9112834

10255579

11608761

Net Assets

3392155

3613503

3994489

4348853

4895323

From the above statements of past years, it is ascertained that organisation is grow with effective rate. It seems that customers are satisfied with their products. There is significant increase in the amount of sales in last two years.

Non financial information about growth of Ella's Kitchen

  • Connection with customers: Ella's kitchen is famous for production of high quality food items which ensures proper safety of the heath of children’s. In this regard, they use organic food ingredients. It helps to attain their trust and loyalty.
  • Particular achievement: It is observed that this organisation holds 30% of market share of the UK baby food sector.

6. Challenges which arise while managing and running business

There are many issues and problems are associated with working and management of the small organisation (Small business enterprise.2018). The different challenges which arise in front of Ella's Kitchen are defined below:

  • Time: In present business environment organisation is need to take prompt decisions for ascertaining success in their business operations. Ella's Kitchen is having less amount of time to plan about their future business functions and objectives which has direct impact upon their earning figure (Chan, 2011).
  • Money: One of the major challenge which is arise in front of the management is lack of availability of funds. This will reduce their ability regarding application of innovative techniques. On the other hand, it is also difficult to earn instant profit from their earlier business operations.
  • Lack of direction and planning: The management of new organisation has less amount of experience which has direct impact upon their capacity of planning and directing of their existing employees. It reduces their capabilities of effective management of employees.
  • Innovation: On of the important aspect which contributes in improvement of the ability of small organisation regarding accomplishment of desired objectives. But it is difficult for small organisation like Ella's Kitchen regarding implementation of new technologies due to lack of funds.

7. Current growth of Ella's kitchen and development strategy

Current Growth

 

2016

EBITDA

1723810

Profit after Tax

1185706

Working Capital

5758066

Employee Numbers

42

Total Liabilities

3702930

Total Assets

8598253

Reporting period

12

Turnover

11608761

Net Assets

4895323

As per above statement, it is observed that sufficient amount of income is attained by the organisation from their business operations. Also, having total assets of the amount of 8598253 which shows they have the capability to easily pay off their debts.

The different strategies adopted for different period of time

  • Short term: This includes formulation of strategies and business plans which guides employees in performance of their functions and contributes in performance of day to day functions.
  • Medium term: Development of market capturing strategies for improving their market share.
  • Long term: This will includes preparation of strategies which helps to raise funds which is used in future for the purpose of purchase of fixed assets.

Development strategy

The strategy which is adopted by the management of Ella's Kitchen regarding development of their business is defined below:

Market research: It is one of the important step which provides the opportunity regarding determination of their current position. It helps in assessing actual market trends which are present in market. According to such trends new baby food items are prepared which enhancing their relation with existing customers and attraction more potential customers. It used for ascertaining total market value and market share in current scenario (Chan, 2011).

Competitive analysis: This includes the process in which management has the duty to know about their current competitors in market. After that identification of their strengths and weaknesses which they possess regarding their products, price, brand value, reputation, exposure etc. It provides the opportunity to build their new strategies which are more better their their competitors.

Current client relations: This step includes making of effective relations with customers of target market segment. This can be achieved by the organisation through fulfilment of their different preferences. It helps to attain their trust and loyalty.

Reaching out to new clients: This includes the application of new approaches of marketing which provides chance to grab he opportunities which are available in new market segment. It includes the activities related expansion of their business operations.

Networking Events: This includes the process of attending the events which are happen in market and meet new people to ascertain their views. It helps in learning of new things which are present in market and contributes in earning of large number of profits (Brunswicker and Vanhaverbeke, 2015.).

8. Government support measures which helps to overcome from challenges

After impact of Brexit large number of initiatives are taken by the UK government for the development small businesses activities. The different benefits which are provided by government in this regard includes providence of funds, tax benefits etc. It helps the small organisation like Ella's Kitchen is to effectively build their business operations and attain sustainability in their operations. Such government supporting measures are defined below:

  • Funds: The major issue which is associated with the running of small businesses is lack of amount of funds. In this regard, Government takes many initiatives and provides adequate amount of interest free funds and subsidies which further helps in development of their business activities in more optimum manner (Cerrato and Piva, 2012).
  • Reduction in regulatory burden: For promotion of the small business activities, UK government takes many initiatives regarding fulfilment of different regulations which is need to follow by organisation while providing their activities. In the context of small organisation, they don't need to fulfil many requirements and also exempt from the amount of taxes.
  • Contract with government: This will includes about development of bond with government to take their support while performing their functions. The indirect impact is assess on their brand image which becomes more sound.

CONCLUSION

It has been concluded from the above report that Ella's Kitchen is small organisation in nature where only 62 employees are working. From their business activities it is observed that from last past years this organisation is continuously growing with effective report. There are many challenges are faced by the management of organisation while providing their functions which are related to employees, funds, higher competition etc. There are many initiatives are taken by government to overcome from such issues.

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RECOMMENDATION

It is recommended to Ella's Kitchen is to adopt effective development strategy which provides opportunity to attain success. There are many initiatives are taken by government so, organisation is need to effectively use such options to grab future opportunities. There are many opportunities are available in front of the management of Ella's kitchen through application of all the development strategies. This will includes about penetration into new market, better source of organic food, improvement in exiting marketing strategy and application of modern promotional tools which helps to bring awareness among the individuals of society about quality of their food.

REFERENCES

  • Wynarczyk, P. and et. al., 2016. Managerial labour markets in small and medium-sized enterprises. Routledge.
  • Thun, J.H., Drüke, M. and Hoenig, D., 2011. Managing uncertainty–an empirical analysis of supply chain risk management in small and medium-sized enterprises. International Journal of Production Research. 49(18). pp.5511-5525.
  • Smit, Y. and Watkins, J.A., 2012. A literature review of small and medium enterprises (SME) risk management practices in South Africa. African Journal of Business Management. 6(21). p.6324.
  • Santos, G., Mendes, F. and Barbosa, J., 2011. Certification and integration of sized enterprises (SMEs): External knowledge sourcing strategies and internal organizational facilitators. Journal of Small Business Management. 53(4). pp.1241-1263.
  • Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business imperatives. Routledge.
  • Gunasekaran, A., Rai, B.K. and Griffin, M., 2011. Resilience and competitiveness of small and medium size enterprises: an empirical research. International journal of production research. 49(18). pp.5489-5509.
  • Chittithaworn, C. and et. al., 2011. Factors affecting business success of small & medium enterprises (SMEs) in Thailand. Asian Social Science. 7(5). p.180.
  • Chan, E.S., 2011. Implementing environmental management systems in small-and medium-sized hotels: Obstacles. Journal of Hospitality & Tourism Research. 35(1). pp.3-23.management systems: the experience of Portuguese small and medium enterprises. Journal of cleaner production. 19(17-18). pp.1965-1974.
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