Management Problems at Cumnor Ice Cream Ltd

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Introduction

Given the current position and the management problems in Cumnor Ice Cream Ltd, the company has sought to solve the major problems, challenges, and issues facing it. The key issues are found in marketing, operations, human resources, and the finance departments. The report seeks to explore these challenges and offer the appropriate recommendations that would assist the company.

Two significant developments in the macro external business environment that influence demand for ice cream

Social cultural developments: Demand of ice cream is influenced by the social cultural factors which are part of the macro external business environment. The purchasing behavior, attitudes, and perception are based on social cultural factors. Consumers have become health conscious prompting them to acquire low calorie foods (Lancaster n.d). This attitude has been passed on from people through social media and other channels.

For example, Cumnor Ice Cream ltd consumers especially the schools and the hospitals have threatened to stop consuming the ice cream that has high calorie and sugar content. People are conditioned for having certain products based on the attitudes and beliefs (Lancaster n.d). These determine and influence the demand of ice cream and are all related to the social cultural factors.

Rise in cost of production: As a result of the 2007-2008 market financial crises in the world and inflation, the cost of production has increased. This has been as a result of the increase in supply prices as well as the cost of fuel (Nieuwenhuizen Rossouw & Badenhorst 2008, p.22). This has reduced the quantity demanded for ice cream because of its increased prices.

Key marketing issues at Cumnor Ice Cream Ltd and recommendations

Sales productivity: Based on the case study of Cumnor Ice Cream Ltd, the company lacks a well planned selling and marketing department that would foresee product development, brand positioning, segmentation, and targeting. This can be realised through the establishment of a well sales and marketing department with employees that would foresee the establishment of brand image, target, segments, and position.

Has no established marketing mix: Cumnor Ice Cream Ltd is lacking a well established marketing mix. For instance, it does not apply the 4ps well in its day to day operations. To gain a proper market share in the ice cream industry, the company has to establish a unique marketing mix. It has to formulate and designed an executable marketing mix based on the 4ps. The 4ps are product, price, place, and promotion (Dogra & Ghuman 2010, p.80) and discussed below

Price: Cumnor Ice Cream Ltd needs to develop a pricing strategy that would compete favorably with other competitors in the ice cream industry. For example, it may use the penetration pricing strategy where upon entry in new markets it sells its product at a low price to attract new customers.

It can also devise a pricing strategy for different segments in the market (Dogra & Ghuman 2010, p.80-81). It can also make its prices affordable and pocket friendly. Lastly, the company can reduce its prices operating under low prices or offer discounted prices (Ewing Marion Kauffman Foundation 2006, p.1) to some of its esteemed and loyal consumers like the hospitals and schools.

Place

Cumnor Ice Cream Ltd sells its product in institutions like hospitals and schools. It has also placed two ice cream parlors and independent retailers. The company lacks a distribution channel and placement strategy.

Cumnor Ice Cream Ltd can need to expand its business to new places and expand its distribution channels (Dogra & Ghuman 2010, p.83). Upon expansion, the company could be able to meet different consumers (Kumar 2010, p.47). It would also ensure segmentation which currently is not well elaborated in the Cumnor Ice Cream Ltd.

Product

Cumnor Ice Cream Ltd needs to develop its product to include aspects like quality, variety, size, and design/shape. Currently there have been complaints by some of the consumers on the quality of the ice cream. The company needs to do market research (Lamb Hair & McDaniel 2011, p.174) and come up with complaints of the consumers which can be used in the production of the ice creams.

It can design different flavours other than the available three flavors. Based on the analysis of the Cumnor Ice Cream Ltd case study, the company sells ice cream in 10 litter packs and two litter tubs. It can develop much smaller ice cream tubs that can be available and affordable to low class citizens.

It can also be availed to different segmented groups especially children. Some of the loyal and major customers are threatening to stop consuming the products of Cumnor Ice Cream Ltd. The company needs to develop and produce ice cream products that have low calorie and sugary percentage. Product development (Lamb Hair & McDaniel 2011, p.174) would attract and retain consumers who are health conscious.

Promotion

It involves different methods and strategies that are used to reach different consumers in the market setting (Dogra & Ghuman 2010, p.83). Some of the advertising methods applicable to Cumnor Ice Cream Ltd are personal selling and door to door advertising strategy. It can promote the products through sponsoring of activities in schools and hospital institutions. Though sponsoring of events, the company has the capacity of marketing its products and increase its publicity.

Through the use of billboards, radio, newspapers, magazines, and television, the company can advertise its products (Kumar 2010, p.47). The advancement in technology and the emergence of social media networks, the company has a better avenue to reach a larger number of consumers.

For example, it can install a blog, a website, and even market its products through the social media networks like the Facebook, Twitter, and MySpace. Social networking would market the product to the emerging segments like the technology savvy population.

Key operations issues at Cumnor Ice Cream Ltd and recommendations

Cumnor Ice Cream Ltd has operational issues that have impeded its progress. For instance, the production plant has been facing increase in the price of raw materials. Increase in raw materials leads to increase in production cost. The operational manager seems to be on bad terms with the suppliers and threatens to get new suppliers without giving it consideration of the loyalty aspect.

Instead of cancelling the suppliers, the operational manager ought to have meetings with the suppliers (Lewis & Brown 2003, p.72). Negotiation can be used to arrive at affordable prices of the raw materials. It can also outsource or locate its production plants near the raw materials or suppliers to reduce the transport costs and other costs incurred by both the plant and the suppliers.

Poor quality: Although the operational manager has come up with new strategies that reduce the operational costs, the quality of the ice cream products has been compromised. Complaints have been made by consumers on the poor products quality. The manager has to improve the quality products to avoid further and future complaints. This can be achieved through quality treatment of employees at the production plants and training (Hill & Jones 2010, p.129).

The employees should also be given adequate time to relax. According to the case study, the operational manager has forced the employees to work harder without relaxation. The management can introduce work flexibility to ensure that employees have time to relax. Shifts are the most appropriate solution. Relaxed employees will not be stressed and this increases the chances of producing quality products. Lastly, the management can look at the main cause or the origin of the poor product quality (Hill & Jones 2010, p.129).

Poor working conditions: The employees in the operational department are working in poor working conditions. For instance, there have been reports of minor accidents in the operational plants. Although Julie the operational manager has introduced new methods, the strategies have proved to be futile.

To avert the accidents in the operational plant, the management should include safety, measures and train the employees on working safety and productions safety measures (International Institute for Environment and Development 2002, p112). This would improve the current working conditions which even jeopardizes the quality of the products.

Production of the same products: According to the sales and the marketing manager Richard Julie’s brother, the operation department has been concentrating on the production of the same product. Instead, the operational department should be in a position to introduce new products in the market.

It should concentrate in product development and produce other flavors of ice creams. This would ensure that the consumers have variety of products. Although product development is a cost, it is also a long term investment that allows expansion of a company. The company should invest in research and development to come up with a product that meets the demands of the consumers.

Key human resource issues at Cumnor Ice Cream Ltd and recommendations

Poor leadership skills and power: Cumnor Ice Cream Ltd leadership is more of an autocratic leadership. For example, the operational manager has used coercive powers to make the employees work for more hours. The leader is also an opportunist; as she has used the current unemployment rate level to threaten the employees.

There is no negotiation between the employees and the operational managers hence the poor quality products production. Lack of communication is evident in the company. The employer should be in a position to communicate effectively with the employees, listen to them and involve them in the decision making process (Ulrich 1997, p.233).

Transformational leadership is required as it involves employees and gives a room for innovation and creativity. The coercive power should be abolished and instead rationality be applied. This would ensure that proper management and team work is necessitated.

Absence of motivation: Employees at Cumnor Ice cream Ltd are not appreciated and motivated as employees need to be. This has reduced their performance level, production quality, and team work has also been reduced. The management can introduce motivational and appreciation strategies in the workplace (Lindner 1998).

Some of the commonly used motivational strategies include work flexibility, good working environment, salary increment, bonuses, vacations and overtime payment (Lindner 1998). The employees also need to be trained to increase and improve their skills to enhance quality production. Communication plays an integral part in the success of an organization. The management team especially the operational department should be able to communicate with the employees.

Administration wrangles: There seems to be an administration wrangle in Cumnor Ice Cream Ltd. For example, Richard who is the sales and marketing manager has different opinions from those Julie who is the operational manager. For an organization to be successful, harmony and communication are essential (Keyton 2011, p.13). Therefore, there should be managerial understanding and communication between the different departments.

On the other hand, it is essential to set a mechanism that allows the transfer of information from one department to another (Keyton 2011, p.13). It is advisable to have a consultant implement some of the changes. Lastly, the company has an administrator who has less power. The company needs to increase the powers of the administrator and make his/her decisions without external interference.

Poor working conditions: Human capital is the main driving force of any organization. How an organization treats its employees determines the success of the organization. Based on the case study, the employees of Cumnor Ice Cream Ltd are not well treated. They are lowly paid, coerced, and work under poor working conditions. Poor working conditions lead to low product quality (International Institute for Environment and Development 2002, p.112).

Key financial issues at Cumnor Ice Cream Ltd and recommendations

Currently, Cumnor Ice Cream Ltd is not financially stable. For example, the Cool Ice parlours are operating at a loss which is dragging the whole company backwards. The can company averts this situation by looking another viable market for the products. It can also inject some funds to boost its current financial situation.

However, if the situation persists and it is not in place to support it while making losses, then it should shut down and reopen later. The company’s financial position cannot pay the many permanent employees salary, increase their pay or employ more supervisors. The company can get loan to boost its current financial state. It can also concert some of its current liabilities to assets. For example, instead of continuing to operate from rented premises it can build or lease the premises. This would reduce the incurred costs

Conclusion and recommendations

Based on the analysis of the Cumnor Ice Cream Ltd, the company needs an organizational change that would change the management system, leadership, and operational management. It should also concentrate on developing new products and penetrating new markets. This would ensure that the company gets adequate market share.

The company lacks proper marketing mix. For it to be successful, it has to develop a marketing mix that puts into considerations the 4ps. Through this it would be able to regain its place in the industry. It should do rebranding, public image, brand and product segmentation, positioning, and targeting.

The company needs to interlink all the departments to ensure flow of information which is essential for decision making process. This would make the company more harmonious and well operated. This can be achieved through establishment of new management information system.

The human resource department of Cumnor Ice Cream Ltd needs to be restructured and employees motivated. This can be reached through different motivational approaches. Lastly, the consumer has to review its operational budget and evaluate the costs incurred and profits made.

Reference List

Dogra, B & Ghuman, K 2010, Rural marketing: concepts and practices, McGraw Hill, New Delhi.

Hill, CWL & Jones, GR, 2010. Strategic management theory: an integrated approach, Houghton Mifflin, Boston, MA.

International Institute for Environment and Development 2002, Globalization & cities, IIED, London.

Keyton, J 2011, Communication & organizational culture: a key to understanding work experiences, Sage, Los Angeles.

Kumar, P 2010, Marketing of hospitality and tourism services, Tata McGraw Hill Education, New Delhi, India.

Lamb, CW, Hair, JF, & Mcdaniel, CD 2011, MKTG5: student edition. South-Western Cengage Learning, Mason, OH.

Lancaster, G n.d, Marketing and the organization’s micro- and macro-environments. Available from: <http://www.dagroup.co.uk/index.php?option=com_%20content&view=article&id=31:micro-and-macro-environments&catid=2:marketing-lectures&Itemid=3> [11 December 2011].

Lewis, C & Brown, DR 2003, Controlling restaurant & food service operating costs, Atlantic Pub. Group, Ocala.

Lindner, JR1998,’ Understanding employee motivation’, Journal of extension, vol. 36, no.3

Nieuwenhuizen, C, Rossouw, D & Badenhorst, JA 2008, Business management: a contemporary approach, Juta, Cape Town, South Africa.

Ulrich, D1997, Human resource champions the next agenda for adding value and delivering results, Harvard Business School Press, Boston.

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