APPLIED MANAGEMENT: CASE STUDY

CASE STUDY

PORTFOLIO TASK 3

 

Organic Gift Baskets

 

 

Adele Lock runs a small business selling a food basket product. Adele realised there was a growing demand for organic produce and she saw an opportunity in the market, especially the gift market.

I thought of setting up my own business, offering only certified organic products to customers – making them aware that there are products available that contain no harsh additives or ingredients. The idea grew from there and I decided to package these products in beautiful re-usable gift boxes and luxury re-usable food baskets. I wanted people to experience the joy of receiving a beautifully wrapped gift, but with the added knowledge that they would be experiencing products that were so much better for them, their loved ones and the environment – and which hopefully would convert them to buying organic again in the future.”

BACKGROUND

 

The business has the following principles: –

 

  • Source Fairtrade certified products where available.
  • Offer an extensive range of Organic and Sustainable products.
  • Provide an excellent service to our customers being both friendly and efficient.
  • Practice what we preach – re-use, reduce or re-cycle!
  • Respect the environment.
  • Give back to the community.

STAFFING

 

The “Organic Food basket” has been in operation for three years and is an SME employing six people.  The business consists of Adele her partner Adrian and four employees.

 

Steve Tanner is a 19 year-old computer student and essentially maintains the website  and 70% of the orders are placed via this website.  Steve also contacts the suppliers and maintains the order books. This activity takes up around 60% of his time. Steve earns £15/hr.

 

Bob Charles is nearing 65 years of age and is due to retire next August. Bob is a van driver and delivers the baskets to the customers in the locality within 25 miles radius of the firm. Bob drives an 8 year old transit van that has exceeded 100,000 miles and is costing more and more to keep on the road. It has been agreed that the van will be scrapped in a few months time. Bob currently earns £10/hr.

 

Thomas Morell is also a van driver and is on zero-hours contract.  If and when customer orders peak, Thomas is called to help out and a van is hired for the period at £50 per day.  Thomas is also paid £10 per hour but it is agreed that he is awarded a full day’s pay irrelevant of hours worked (i.e. £80/day).

 

Stuart Williams is also a van driver.  Stuart’s van is only 3 years old and due to the better reliability, usually delivers the baskets beyond the locality but often helps Bob in peak periods.  Stuart also earns 10/hr.

 

Alice Warner is a personal assistant to Adele and her activities are varied. In a typical day, these might include dealing with suppliers, customers, other stakeholders, and so forth. Alice earns £15/hr.

 

 

RESOURCES

The business operates two diesel vans one which is 3 years old and the other which is 8 years old. The business has typical office and storage facilities including: –

  • Desks
  • Chairs
  • Filing Cabinets
  • Shelving
  • Stationary
  • 2 Computers including a dedicated web server
  • Printer

 

The unit also includes cold storage facilities for the food produce and further warehousing for the other stock.  There is minimal room for keeping further additional stock. The costs of keeping stock is estimated to cost many thousands of pounds per year.

 

 

CURRENT PREMISES

 

The business operates from an industrial unit within a recently opened industrial park. The industrial unit is medium sized with rental cost of £500 per week. The unit is and closed on weekends and operates on weekdays from 8.30am to 5.30pm.

 

CURRENT MARKET

 

The business sells approximately 1500 food baskets a year, all within the UK.  Gross revenue of food basket sales is approximately £300,000 per annum. Sales of food baskets have increased steadily by 15% each year and appears to be steadily increasing. The food baskets are sold mainly to small and large retail outlets predominantly in local markets within a 50-mile facility. The food basket market peaks with the Christmas period.

 

DISTRIBUTION

 

All sale enquiries occur through direct Internet enquires or via phone orders. The food baskets are then either delivered via the firm’s vans.  The costs of delivery were passed onto the customer and delivery costs have increased with the recent prices rises in diesel fuel.

 

SUPPLY ISSUES

The fresh produce is sourced from one local farm.  The supply from the local farmer has recently been problematic. The farmer Mr Ian Curtis has had to put prices up recently due to a poor harvest. The fresh fruit, seeds and vegetables are bulk purchased to reduce costs and are thereafter packaged with Organic Food basket packaging. If demand is low then there is often considerable wastage with fruit in particular having to be disposed of as it has spoilt.

The tinned, bottled and preserved goods often have to be sourced from different suppliers due to their limited availability.  This often impacts upon the price that they are purchased for because the industry continues to be price sensitive.  Another issue with the sourcing of the tinned, bottled and preserved good is the consistency of supply. Often a similar product has to be substituted for an alternative due to limited supply.

OUTSOURCING OPPORTUNITY

Adele has been contacted by a local SME who has many years of expertise in packing and the delivery of products. The company has suggested that Adele considers outsourcing.  The company has assured Adele that they can source, pack and ship the food baskets to the customer more efficiently.  This would make the van drivers redundant, but the cost savings of not having to stock goods, pack and ship the baskets, etc. along with the possibility of moving to a small office building would introduce enormous savings for the firm.

Adele has made the decision to outsource as it will allow her to spend more time with her family. Adele’s business will now focus entirely on taking orders via telephone and website and leaving the rest of the activity to the outsourcing company.  With increasing orders, Adele will retain Steve Tanner (maintain website), Alice Warner (PA) and will retain (and retrain) Stuart Williams to help out with the office work. Bob will take early retirement and Thomas will not be required further. Both vans will be sold or scrapped.

A small office unit has been identified that will cost £30 per day to hire if and when used. However, Steve, Stuart and Alice have asked Adele if their daily tasks can be done entirely from home. There are clear savings to be made in this approach as the daily use of the unit will not be necessary. Adele is a little worried about this and because you have academic and management experience, Adele, a close friend of yours, has asked for your help and you have agreed to do so.

 

Task 3 – INDIVIDUAL – 1000 words max.

 

Explore the debate surrounding working from home (for an employer) and critically outline the positives and negative considerations in the context of the case study.

  • Write a formal report addressed to Adele Lock.
  • Draw a force-field diagram in the context of the case study problem and paste into your report.

MARKING SCHEME TASK 3

Report content; quality, depth, criticality – 60%

Engagement with literature, referencing – 20%

Forcefield diagram – 10%

Report format including presentation of document – 10%

 

Given the highly managerial context of this task, one would not expect a great deal of academic literature in your report (although it will be of benefit if you do add this) but certainly an exploration of the ongoing debates on the topic, with the sources of commentary adequately referenced. You should, however, avoid blogs, wikis etc.