CONSULTANCY PROPOSAL FOR SCATTERBOYS

16 Pages   |   3,938 Words
ScatterBoys is a producer of surfboards and related products of sports. The company sells its products directly to consumers, as well as, to middlemen. The organization is facing difficulties in maintaining efficiency in its operations due to rapid growth in operations. Abridge Consulting is a consulting organization with the objective to enable its clients to form an objective idea of ​​the environment needed to improve management decisions and formation of long-term competitive advantage in relation to market. The objective of the consultancy services is to increase the involvement of IT infrastructure in the operations of ScatterBoys and to improve HR systems of the organization.

The case analysis finds loss of potential customers at ScatterBoys, and dissatisfaction of the management of the organization with the quality of service leads to lower sales volumes which adversely affect the company's reputation. Several types of problems have been identified in the case analysis of ScatterBoys which can directly linked to inefficient IT system and most importantly to an absence of a comprehensive ERP system.
Implementation of a well-integrated ERP system is essential for the project to operate in accordance with the recommendations of the quality management in order to meet its objectives. The IT system proposed for the organization will be integrated with the E-commerce suite of Scatterboys and linked with production and supply chain function of the organization. Implementation of the proposed solutions at ScatterBoys will take place in phases so as to create buy-in of all stakeholders within the organization. It is anticipated that the adoption of IT system will pave the way for growth of the organization is new markets while maintaining efficiency in operations.
 

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Table of Contents
Executive Summary. 2
Company Introduction. 4
Team of Abridge Consulting Working on the Project 6
Objectives of the Consultancy Services. 6
Business Issues Identified. 7
IT System (ERP and E-Commerce) of ScatterBoys. 7
Cost-Benefit Analysis of the Proposed ERP System.. 8
Global Expansion. 9
PESTLE Analysis. 9
SWOT Analysis. 10
Proposed Solutions. 11
Proposed ERP and E-Commerce Systems. 11
CBR and Investment Appraisal 12
Ansoff Matrix Analysis. 12
Lewis Model of Change. 12
Implementation. 12
Timescale. 13
Conclusion. 14
References. 15
Appendix. 16
Abridge Consulting’s Mission Statement 16 Abridge Consulting is a consulting organization whose purpose is to provide authoritative, independent and impartial advice to companies of any type on the basic problems of control. The consulting service of our organization is aimed at identifying the priorities of our clients, to set goals and prepare an action plan to achieve them. The objective of Abridge Consulting is to improve business efficiency and impart a high degree of control to the host organization by creating an efficient allocation of functional responsibilities between departments and individual employees and introduction of control mechanisms. Our consulting service will enable our clients to form an objective idea of ​​the environment needed to improve management decisions and formation of long-term competitive advantage in relation to market.
The essence of Abridge Consulting’s services is to analyze and improve existing business processes of the customer, implementing a process approach to management, the establishment of regulations and performance standards, guidelines for the performers. We have a proven track record of consulting our clients in the area of quality management, project management and business automation. The unique feature of our organization is that we provide consultations in distinct areas of organizational management through specialized teams. Thus, the client gains access to a wide of services, all under one roof. The consulting services of our organization are available in the following areas:
Personnel Management – services in the field of personnel management can create a list of distinct functions of each employee, pay system, focused on the company's objectives, procedures, algorithms for searching and selection, adaptation, development and evaluation of employees, to calculate the number of newly established companies (divisions) to optimize the existing staff.
Management Strategies Consulting – we provide consulting services in the development of management strategies, strategy, business development and support strategy, marketing, market research, franchise development and staff recruitment.
Strategic Management Consulting – strategic management is the backbone of any business and focus on the development prospects and the future direction of the company. The result was a range of services, whereby any business idea is transformed into a formal company's strategy, translated into a set and set measurable goals.
Business Process Management Consulting – management of business processes determines how the company works in general, as interacting with external organizations, customers and suppliers, as organized activities at each workplace. Modeling business processes is an effective means of finding ways to optimize the company's activities, a means of predicting and minimizing the risks that arise at different stages of company development. This method allows a valuation of each individual process, and all business processes of an organization together.
IT Consulting – the importance of information technology for business is growing rapidly. At the same time increases and the rate of change in business as a whole. All these processes require support and effective involvement of resources within the company, which will allow organizations to achieve certain strategic advantages in the market. As a result, IT is a large segment that requires a significant investment, carefully considered as a resource from which to extract some advantage to the business. Under these conditions, the problem most effectively manage IT infrastructure comes to the fore. The range of IT consulting services for our organizations includes technical audit automation systems and development of IT-strategy.
Marketing Consulting – every company strives to manage the market behavior of its potential and current customers, giving them many reasons to choose this company right now and it is for the purchase of goods (services). Management of market behavior of potential and current clients is a fairly complex task. We can help solve it by introducing to the company marketing the system function, representing the introduction of a marketing sense in every contact with a potential customer into the system and provision of services and sales. Abridge Consulting’s marketing consultancy has some unique marketing services, for instance, conducting market research with elements of deep competitive intelligence and the study of satisfaction with business partners work with the company. Based on our market research clients successfully adapt their market and marketing strategy.
Team of Abridge Consulting Working on the Project of ScatterBoys comprises of the following key members:
James Taleriko – is a change management advisor. He possesses in-depth knowledge and experience of the working of manufacturing businesses and has six years of experience of highly competitive US market. He has been working in Australia since last three years and has been engaged with a diverse range of projects majorly concerned with improving efficiency of production processes.
Roger Connors – is an IT implementation specialist with more than nine years of diversified and well groomed working experience across different domains in Information Technology. His expertise lies in creation of a customized CRM and ERP solutions for clients.  
Michael Randy – is a Human Resource professional with specialization in Workforce Planning including mobilization, recruitment and performance management. Her HR consultancy expertise has been found to be highly useful by various Australian manufacturers. Randy is bilingual and creates rapport with the entire staff of the client and manages to reach hidden HR issues to come up with effective resolutions.
Tom Smith – is an accomplished leader who is an expert at Small and Medium Enterprises in Manufacturing Operations and Supply Chain with a rich history of driving bottom line performance. Tom thrives on challenging opportunities to impact organizations through top line growth. Tom’s characteristic strength is that he develops a partnership with leadership of client organizations and helps in process optimization and benchmarking.
Objectives of the Consultancy Services Analysis if the issues at ScatterBoys has revealed that the organization needs major improvement in its IT systems to inculcate state-of-the-art ERP and E-Commerce system’s functionality in its systems. These measures are required to bring ScatterBoys closer to its consumer markets and increase efficiency of operations. Also, HR systems of the organizations also need to be updated owing to significant changes needed within the organization to motivate workforce (Henry, 2008). Therefore, the objective of the consultancy services would be to increase the involvement of IT infrastructure in the operations of ScatterBoys and to improve HR systems of the organization. The attainment of these primary objectives is expected to bring about positive changes in the bottom line and top line of the organizations.  After reviewing the case analysis of ScatterBoys, several issues has been identified pertaining to different functional areas within the organization. The success of a manufacturing company depends not only on product quality and its relevance in the market, but also on the effectiveness of the company's management, customer loyalty and teamwork of all employees. The case analysis finds loss of potential customers at ScatterBoys, and dissatisfaction of the management of the organization with the quality of service leads to lower sales volumes which adversely affect the company's reputation. No coordination of different services, the company leads to inefficiency of the production process. The complexity of operations of ScatterBoys owing to geographical expansion and two modes of business – direct sales and through middlemen – calls for a holistic identification of business issues. These issues are discussed under:
IT System (ERP and E-Commerce) of ScatterBoys it must be recognized that the IT system of ScatterBoys is not equipped to deal with the rapidly changing environment of contemporary business. Production system at ScatterBoys is characterized by inefficiencies and delays because IT system is not integrated with the operations of the organization. Several types of problems have been identified in the case analysis of ScatterBoys which can directly linked to inefficient IT system and most importantly to an absence of a comprehensive ERP system. This lacking in operations of ScatterBoys is evinced through a lack of a single workflow system and the lack of opportunity to get information about the current state of manufacturing processes.
There is no evidence of ERP-based production planning at ScatterBoys which has been widely adopted in contemporary production and operations of various organizations. There is lack of reliable information on cost of production (Botha, 2004). Without automation manufacturing integrated with ERP to build a system for the effective management of the company is virtually impossible. Automation helps to objectively assess the problems of existing business processes, and encourages the construction of efficient and transparent management of key business processes of an enterprise (Reynolds, 2004). Project to automate manufacturing facility is implemented in order to create a system of accounting and business management standards in accordance with ERP system. Implementation of a well-integrated ERP system is essential for the project to operate in accordance with the recommendations of the quality management in order to meet the most important time limits, the boundaries of the project, costs, resources and quality of the work.
Cost-Benefit Analysis of the Proposed ERP System The model used for cost-benefit analysis of implementation of ERP system is Net Present Value analysis. This method of analysis is suitable because the initial cost incurred for the acquisition of the system would eb considerably high, while the benefits of the system will be gained over a considerably long period of time (Henry, 2008). NPV analysis is capable of comparing future benefits of an investment with the present upfront costs.
The benefits or positive cash flows generated through ERP and E-Commerce system at ScatterBoys include:
  • Reduction in the cost of labor and materials by implementing lean manufacturing strategies and cost-effective production management ($3,000 per annum)
  • Increase profitability and maximize sales opportunities through the use of functionality for customer relationship management for bulk customers ($6,000 per annum)
  • Reduction in maintenance cost of production equipment by the inclusion of measures of preventive repair and maintenance of production schedules  ($4,000 per annum)
  • Cost-cutting by integrated supply-chain function with the CRM and saving on storage cost of raw material and finished goods  ($4,200 per annum)
  • Additional profit of increased sales through initiation of direct sales to consumer by implementation E-Commerce solution  ($1,400 per annum)
For the increased in revenues mentioned above, only the profit component is taken for the purpose of NPV calculations. All the above figures are best estimates which could be generated for each component. On the other hand, the cost associated with implementation of a comprehensive IT solution for the company - which includes both ERP functionality and serves as an E-Commerce solution – is estimated to be $30,000. The cost of the IT system is considerably high since the entire suite is custom-made keeping in view the unique needs of the organization. This cost includes both implementation cost of the IT system and needs to be paid at the present time. For the purpose of comparison of future benefits with present costs of the comprehensive IT system, the discount rate of funds is taken at 5% per annum. For the simplicity of calculations, it is assumed that the above mentioned monetary benefits are gained for only three years. The NPV calculation is performed as given under:
NPV Valuation
Monetized Benefits of IT System Year 1 PV Year 2 PV Year 3 PV Net Benefit
Reduction in the cost of labor and materials 3000 2857 3000 2721 3000 2591  
Increase profitability and maximize sales opportunities 6000 5714 6000 5442 6000 5183  
Reduction in maintenance cost of production equipment 400 381 400 362 400 345  
Cost-cutting by integrated supply-chain function 4200 4000 4200 3809 4200 3628  
Additional profit of increased sales through initiation of direct sales 1400 1333 1400 1269 1400 1209  
    14285   13605   12957 40,849
Since the cost of implementation is $30,000 and the Net Benefit from implementation is $40,000, the IT system should be implemented in the organization. 
Global Expansion a global expansion initiative is also under consideration for ScatterBoys. The proposed global expansion is through acquisition of an Australian manufacturer of surf boards and other lines of related products (Kriesler, 2000).
Two tools of strategic management are adopted for evaluation of the above mentioned opportunity of global expansion (Henry, 2008). PESTLE analysis and SWOT analysis are utilized to assess the initiative of acquisition of an Australian company.
PESTLE Analysis PESTLE analysis takes into account the impact of external environment on a business. Pestle analysis for growth of Scatterboys into Australian market through acquisition is given below:
Political – Political variables for ScatterBoys are rather negative. Anti-trust laws are considerably stringent in Australia and there is greater control on large-sized businesses in the country.
Economic – Economic variables in the country are becoming highly competitive. The purchasing power of consumers is shrinking in the region due to recessionary impacts in the business cycle (Kriesler, 2000).
Social – Social variables are rather positive because Australia is characterized by a culture in which surfing is quite common. Also, the market for outdoor sports products in the region is sizeable due to cultural variables.
Technological – Technological variables are neutral for this region because there production technology of surf boards is not different in this region.
Legal – Legal environment of the business is also neutral because there are no particular favorable or unfavorable laws in the country pertaining to production and marketing of surfboards.
Environment – Environmental impacts are not relevant in this industry because the industry does not emit harmful substances in the environment
PESTLE analysis shows that there is no particular advantage gained by ScatterBoys after making investment for acquisition of Australian firm
SWOT Analysis SWOT analysis for foreign acquisition is given under:
Strengths – Key strengths of ScatterBoys is a loyal client base and financial strength of the organization to be able to invest in any business area or to geographically expand its business (Bohm, 2009). Also, skilled workforce for production of high quality surfing equipment is also an advantage for the organization.
Weaknesses – Weaknesses of the company is a high degree of reliance on a single product for its revenue source. Also, business of ScatterBoys is concentrated geographically which limits growth potential of the organization and increase riskiness of operations. 
Opportunities – The major opportunity for the organization is growing trend for out-door and beach sports in different parts of the world. Most notably among them are emerging economies of Asian region which are adopting surfing as a major sport.
Threats – Most prominent threat to the industry is growing competition in the industry with introduction of newer brands in the product category.
SWOT analysis shows that the strategic direction for ScatterBoys lies in growth potential of the organization in emerging economies of Asian region. Rather than seeking to acquire an Australian company, the organization should channel its resources to create growth in markets which has lower competition and are adopting surfing as a sport. A number of solutions have been found through the aforementioned analysis using tools of NPV NPV, SWOT and PESTLE analysis. The proposed solutions found as an outcome of the analysis are discussed below:
Proposed ERP and E-Commerce Systems The proposed ERP solution will be integrated with the E-commerce suite of Scatterboys and linked with production and supply chain function of the organization. The ERP will be a suite of software solutions for global enterprise resource planning (ERP) developed for the needs of ScatterBoys to respond quickly to demand changes in its product (Abramowicz, 2008). The proposed ERP solution will help ScatterBoys for the production outside the traditional boundaries of ERP systems in the field of advanced production scheduling (APS), financial management company functional extension of cost accounting, product lifecycle management (PLM), as well as, in customer relationship management (CRM).  
The ERP system will be formed through advanced design technology and will be coupled with performance management suites and backed by experience of experts. This IT system will ensure that the needs of the customers are met in a timely manner and cost effectively. Manufacturers of surf boards are faced with very specific challenges (Abramowicz, 2008). Apart from the need to comply with complex technical standards and requirements engineering companies are forced to conform to the needs of its customers to improve product quality, reduce production costs and accelerate delivery. 
CBR and Investment Appraisal is carried out to evaluate the potential for growth by entering US market as a producer and seller of surfboards and expansion into Japanese market by the organization. Cost Based Reasoning and Investment Appraisal Methods use a range of quantitative methods for reaching a business decision. Internal Rate of Return (IRR) is used to evaluate the attractiveness of an investment. The investment for expansion into Japanese or USA requires an investment of at least a $100,000 to be able to make its presence felt in the market.  The anticipated cash flows generated are around $5,000. This gives an Internal Rate of Return of 6% per annum. This expansion does not seem feasible due to its low rate of return.
Ansoff Matrix Analysis for cultural change of the organization is important because it will give the direction at which the firm should seek growth. The ‘Product and Service’ quadrant for Ansoff Matrix analysis should comprise of existing product because ScatterBoys possess expertise in production of surfing products (Henry, 2008). On ‘Markets’ axis, ScatterBoys should seek to create presence in new markets which are emerging in surfing trends and in terms of disposable income. Therefore, ‘Market Development’ is the recommended strategy for ScatterBoys.
Lewis Model of Change offers an analysis of a firm’s strategy in terms of macro-economic variables. The analysis using Lewis Model of Change exhibits that the per capita income is on the rise in Asian economies of Malaysia, Thailand, India, etc. Population growth rate in these regions is also considerably high in comparison to their western counterparts, which entails a consistent growth in long-term demand of the product (Wrycza, 2011). Also, the investment barrier in these countries is lower because they seek to offer lucrative conditions to foreign investors, so as to attract them towards investing in their region. For this reason, Lewis Model of Change indicates that ScatterBoys should invest in Asian markets. Implementation of the proposed solutions at ScatterBoys will take place in phases so as to create buy-in of all stakeholders within the organization, as well as, maximize the benefits which will be accrued as a result of implementation of the solutions. Prior to implementation of the solutions, it is essential to communicate the imminent changes to the stakeholders of the organization. The rationale for this step is to alleviate apprehension of all stakeholders regarding the intention behind the change. Also, true benefits of investment in technology are achieved only if the users of the technology are skilled enough and trained to utilize it. A meeting should be held with all stakeholders of the organization including representatives of employees, managers, member of the board and ownership of the company to discuss ways of maximizing benefits of the new technology implementation.
An organization-wide survey should be conducted to understand computer literacy among the employees.  An investment of $30,000 is being made for acquiring a customized IT system. The system is only going to be beneficial if computer literacy among employees is high. Meeting should be held with the technical staff of the organization to discuss which functions of the organizations needs to be adapted first to the new system. The proposed IT system will comprise of modules pertaining to finance, HR, marketing, sales and production, all integrated with each other. However, implementation will be in phases in different functions of the organization. Lastly, and most importantly, there should be a provision for providing help and counseling to the employees to enable them to cope with the changes taking place in the environment. The timescale for the implementation of the IT system is given below in the form of a Gantt chart:
  Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10
Decision to implement the new IT system                    
Assessing the need of the IT system                    
Selection of a vendor                    
Evaluating the skillset of organizational staff                    
Meeting with stakeholders                    
Meeting with technical staff                    
Implementation in Production and Marketing function                    
Implementation in HR system                    
Implementation in Finance and Accounting                    
Feedback of the IT system                    
Help and counselling to employees                    
Evaluation of the new system through cost-benefit analysis                    
 

Conclusion

Analysis of ScatterBoys reveals the key problems within the organization lies with the integration of different functions of the organization with each other. It is concluded that the proposed IT system will result in greater benefits than the costs which are associated with the implementation of the system. Also, it is concluded that the growth potential of Asian market is much potent than acquisition of an Australian firm. Abramowicz, W. (2008) Business information systems, New York: Springer.
Bohm, A. (2009) The SWOT Analysis, Norderstedt: GRIN Verlag.
Botha, J. (2004) E-Commerce, South Africa: Paarl Print.
Hamilton, R. (2003) Maximizing Your Erp System: A Practical, New York: Mc-Graw Hill.
Henry, A. (2008) Understanding Strategic Management, New York: Oxford University Press.
Kriesler, P. (2000) The Australian economy, Sydney: Allen & Unwin.
Reynolds, J. (2004) The complete e-commerce book, California: CMP Books.
Wrycza, S. (2011) Research in Systems Analysis and Design: Models and Methods, New York: Springer. Abridge Consulting’s Mission Statement Abridge Consulting’s mission is “to provide consulting services and products that meet the needs of clients and companies to improve the quality of its target market. Abridge Consulting is driven by the mission of business expansion of its clients and their integration into their respective target market and to gain competitive advantage in their relevant industries”.

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