Management & The Organization
This paper seeks to analyse and discuss the case study of Top to Toe, which is engaged in home selling. Focus is made on evaluating the company’s market strategy for expansion, while helping the company to set its SMART objectives on the basis of the company’s external and internal environment. It external environment is identified and explained in term of industry opportunities and threats that company is facing while its internal environment is determined in terms of its strengths and weakness which are derived from an analysis of the case study. The result of the evaluation of the strategy of the company for expansion will be reflected in conclusion which should consider the industry opportunities and threat and company’s strengths and weakness in the formulation of the correct strategy. The strategy for the company must therefore attain the SMART objectives set while the corporate strategies must be translated into operational level and reduced them into guidelines is such a way that they must be understood the lowest level of management possible in terms of guidelines for implementation that will be formulated.
2. Questions and Answers:
2.1. What is the market strategy of expansion of Top to Toe? (2 points)
Case facts say that Top-to-Toe’s strategy of expansion into home selling will involve managing and motivating a large team of part-time sales staff on a commission only salary. In addition, it is also provided that the company is also keen to address the pressure from investors and analysts.
2.2. Formulate a possible (SMART) objective to be met by the Top to Toe company as they apply the proposed strategy. You are allowed to use your creativity as you answer but try to be as realistic as possible. If your objective does not meet the ‘SMART’ requirements it will be considered wrong. (2 points)
SMART mean the objectives of the company must be specific, measurable, attainable, realistic and time bound. If the said principle is applied for the company, the following should be its objectives:
1. To reach a revenue level of not less than $12 million on a per year basis and $ 1 million of a per month level for the year 2002.
2. To attain a net income level of $ 1.2 million for the year of monthly net income not less than $200,0000
3. To attain a revenue target of not less than 20 % increase compared to the preceding year of a per annum basis for the next five years.
4. To attain net profit margin of at least 10% on a per month basis for the year 2002 and to continue attaining the same within the next five years.
Net Profit margin is the ratio of net income in relation to total revenue.
To attain the first and the second objectives will set specific and measurable amounts of revenue and profit targets that must be met by the company. By setting the absolute values of the objectives, the company’s management would have a working target from which to evaluate is performance and failing to attain these targets could mean not being able to do its responsibilities.
The third and fourth strategies will strengthen the first and second objectives by putting a long-term profit direction of expressing the targets in terms of rates. The same however may be subject to amendments should conditions change the year after year 2002.
2.3. Formulate an other objective on staff level and explain how such an objective (answer to question 2) should be used to achieve objectives of the company (2 points)
There is a need for each of the marketing managers (assuming a total of 12 managers) to attain their sales revenue quota of not less than $1 million per year while not exceeding by 10% of their budgeted costs for marketing. Each marketing manager must be responsible for sales target of its staff and each manager’s budgeted cost should not exceed 40% of the total revenues produced for the company.
This type of objective will translate the corporate objectives earlier set and this will make each marketing manager a revenue centre where expected revenues are delegated to them. This has the effect therefore of making them to be responsible in attaining their assigned targets.
2.4. Mention at least two strengths and two weaknesses of the Top to Toe organization? (2 points)
The company’s strengths are what makes the company perform better than competitors and helps the company to attain its objectives.
The company has its strength in its capacity of having proven itself as successful niche retailer of environmentally friendly toiletries and cosmetics. This selling capacity skill of the company staff could be further use in expanding the geographical area of the companies business.
It also has also as strength the local management knowledge and commitment to pursue its goal. Management knowledge is one thing while commitment is another thing but to combine the two would put the company in a very strategic position. In support of this company’ strength the case facts say that its CEO Joanne Dunne the company values the joy in the workplace and concern for the communities where raw materials are sourced and products manufactured-not just obsession with the profits. The company also recognize the fact that people are the greatest asset of the business and that the quality of customer care is increasingly the basis for competitive advantage and effective customer care depends on skilled, empowered and motivated staff (Case facts).
Another strength may be seen in the company’s advantages of convenience, demonstration, product sampling and the networking of party-givers through their friends (Case facts).
The company’s weaknesses are the opposites of strengths and hence may limit the company in attaining its objectives.
Case fact takes it as a problem how to grow once the niche is saturated and with 2001 having pre-tax profits fall by 26% to $1M, the company cannot stay glued in the saturated market.
Another weakness is the company’s failure to address its falling profits and the seeming lack of knowledge on the importance of financial profit. This is supported by case facts which provide: “Dunne also hit out at the financial institutions for their ‘short-term vision’, demanding the highest profits in the shortest possible time and failing to recognize that companies need time for reflection and re-invention.”
The company is therefore reported to have come under pressure from city analysts in recent months for its failure to address the issue of falling profits. Surprisingly, the company’s CEO just responded by saying that “the financial community ignores the human spirit and the fact that working should be about building positive and fulfilling relationships.” (Case facts). This would indicate the CEO seems to give importance to profits while valuing positive and fulfilling relationships. The company must therefore need to grow from this situation if it wants to attain its target.
2.5. Mention at least one opportunity and one threat that Top to Toe is facing? (2 points)
The has a very great opportunity to expand in other markets at it was able to be successful its niche, which has become saturated or it could developed further niches where it could compete more competitively. This is also supported by the case facts where it was provided that Joanne Dunne, the CEO has a strong belief that that home selling could provide Top-to-Toe with a significant new source of growth by just banking on the company’s advantages of convenience, demonstration, product sampling and the networking of party-givers through their friends. The company’s ability to re-invent the company is a great chance for the company to have more revenues and profits as set.
The company face a niche that is already is saturated as evidenced by falling profits in 2001. If the company cannot find ways of expanding its geographical scope operation by finding other niches or increasing its revenues while improving its profitability situation, the company may lose many of its opportunities.
2.6. Mention at least two things regarding social responsibilities of Top to Toe their customers? (2 points)
The social responsibilities of Top to Toe their customers, extends to
“She says that the financial community ignores the human spirit and the fact that working should be about building positive and fulfilling relationships. There should be joy in the workplace and concern for the communities where raw materials are sourced and products manufactured-not just obsession with the profits.
Joanne Dunne may be more outspoken than others but she is not alone in recognizing that people are the greatest asset of the business. The quality of customer care is increasingly the basis for competitive advantage and effective customer care depends on skilled, empowered and motivated staff. Perhaps joy in the work place is not at odds with maximizing profits after all.”
2.7. How can Top to Toe achieve short term profits and at the same time accept social responsibility in business? Provide the CEO at least with two guidelines for conduct and behaviour of sales representatives. (2 points)
To achieve short profits and the same time accept social responsibility, the company CEO must upon imposed upon itself the condition that its failure to do is a socially responsible act. The company is not only responsible to the community but it is also responsible to all other stakeholders like the stockholder who must have the return on capital above cost of capital or opportunity costs
To achieve either short term for long term profits is not inconsistent with accepting and achieving social responsibility. Social responsibility may understand as an ethical or ideological theory that an organization or even an individual has a responsibility to society. This responsibility could take the form of not harming the environment, hence it is a negative one or it could be doing something proactive to the community by say promoting the standard of customer care. The company’s business of selling indeed is based on building relationships with its customer hence it must be socially responsible in strengthening on building further on those relationships while helping the company to attain its corporate targets and revenues and as well as profits to keep the company going as its able to delivery simultaneous satisfaction of needs to stakeholders.
Since social responsibility is basically decision to be made by organizations, then it must indeed be voluntary and its being above and beyond what is called for by the law (legal responsibility), gives the decision makers the freedom to set their social objectives in accordance with good conscience. Present theories advocates the advantage of being proactive toward a problem rather than reactive to a problem, hence the concept of social responsibility must go for what is good by removing the corrupt, irresponsible or unethical behavior that might bring harm to the customers, to the community around, the people in general, or the environment before the behavior happens.
Maintain ethical principles is need for present business to be successful in their efforts since the use ethical decision making strengthens their businesses in three main ways like increasing productivity. This is possible in many ways. In the case of the company it can promote socially responsibility by selling only environment friendly products so that is has the effect of promoting good health to the community while ensuring or sustaining long term growth because of better relationship to the community. They will redound as well to economic benefits since people would be more productive if they are healthy.
The need to provide the CEO guidelines for conduct and behaviour of sales representatives is an important part of implementing the company strategies. The set of guidelines should include the following:
Each sale representative must be must help attain the quota assigned to their respective marketing managers buy engaging only highly productive way of selling with due consideration of to both the level of revenues and the associated expenses while corporate and operational objectives
While helping in attaining the quota assigned to their respective marketing managers, they must maintain the desire level of customer care by being responsive to all customer problems and queries as far as the quality of the products delivered to the customers while maintaining an a professional and ethical relationship with clients.
This paper was able to analyse and discuss the case of Top to Toe, and found it strategies to be not taking advantage of some of it opportunities and its strength and not trying to solve some of its weakness and threats. It weakness of failure to address falling profits will be addressed however by first having smart objectives which this paper has done. This paper was therefore able to analyse the environment by bringing out its strengths and weakness which must recognized and understood in formulating it strategies. It has also extracted opportunities and threats faced by the company. To compare now its presently designed strategies, it may be recalled that it’s “strategy of expansion into home selling will involve managing and motivating a large team of part-time sales staff on a commission only salary.” To correct the strategy it must therefore use the opportunities, strengths, weakness and threats derived from analysis.
SMART objectives on the basis of the company’s external and internal environment are now set. This paper was able to identify and explain in terms of industry opportunities and threats that company is facing while its internal environment in terms of its strengths and weakness which are derived from an analysis of the case study. The paper is also able to translate into operational level and reduced them into guidelines is such a way that they must be understood by staff level.
4. Work Cited:
Brigham and Houston (2002) Fundamentals of Financial Management, Thomson South-Western, London, UK
Case Study of Home selling with Top to Toe cited as case facts
Kaliski, B. (Ed.). Social Responsibility and Organizational Ethics. (2001). Encyclopaedia of Business and Finance (2nd ed., Vol. 1). New York: Macmillan Reference.
Meigs and Meigs (1995) Financial Accounting, McGraw-Hill, London, UK
Plunkett and Attner (1985) Introduction to Management, PWS-Kent Publishing Company, Boston, Massachusetts. USA
 Plunkett and Attner (1985) Introduction to Management, PWS-Kent Publishing Company, Boston, Massachusetts. USA
 Meigs and Meigs (1995) Financial Accounting, McGraw-Hill, London, UK
 Brigham and Houston (2002) Fundamentals of Financial Management, Thomson South-Western, London, UK
 Kaliski, B. (Ed.). Social Responsibility and Organizational Ethics. (2001). Encyclopaedia of Business and Finance (2nd ed., Vol. 1). New York: Macmillan Reference.