Marketing case study
The marketing function is very important in linking sales, development, customers and prospects, and the company’s executive management. There are seven marketing functions. Distribution which is the process of deciding to get goods in customers hands, financing which is getting the money that is necessary to pay for setting up and running a business, pricing which dictates how much to charge for goods and services in order to make a profit, product/service management which obtains, develops, maintains, and improves a product or a product mix, promotion which is the effort to inform, persuade, or remind potential customers about a business’s products or services, selling which provides customers with goods and services they want, and last but not least marketing information management. Some people may believe that these are called the marketing mix.
The market analysis helps to meet the aims of the marketing functions because the research is very important and knowing what the consumers need and want and what the business needs to do. Marketing functions help businesses find out exactly how their company is working, what are the consumer’s needs, and what they need to do to meet their needs.
Red Bull has a clear leading market position and it has a 70% market share. It is on of the best energy drinks in the world and targets energy drink markets.
Red Bull’s marketing objectives are as follows:
To continually develop aggressively to become market leader through their own three products- Red Bull original, Red Bull sugar free, and Red Bull cola.
To increase and revitalize lost energy of its target audience – in the age group of 18-35 years old by stimulating concentration and enhancing the required boost.
Introduce to new category users and favorable brand switchers.
To capture a greater market share and be the leader in the energy drink segment.
The marketing strategy adopted by Red Bull has been very successful as it has been able to capture 70% of the market share of this energy drink in around 100 countries. In Qatar it has dislodged Power Horse and other energy drinks to become the number one energy drink. Its marketing strategy of getting people from the target audience to market to the target audience itself has been very successful supported by substantial advertising and sponsorship of sporting events. Students at CHN University are assigned by Red Bull to market its products in the campus as well as in the Qatari market.
The main market segments which Red Bull is aiming at are predominantly the youth in the age group of 18-35 years old. With its launch of the Red Bull Cola, the company is trying to target youngsters in school.
The market structure that the company operates within is by using unusual distribution methods, initially using established distributors and now rely more on contacting individual distributors to sell Red Bull preferably exclusively, giving them the opportunity to benefit within a time span of six months. The sales team also visits key places like popular clubs and trendy bars and use the marketing ploy of giving promotional equipments like coolers etc. This has affected their market strategy positively as more and more retail outlets are willing to stock and display Red Bull prominently beside the adequate support given by the advertising on the radio, television, and other types of media including sponsorship of sporting events.
Red Bull is supposed to have 65% market share of the energy drink. The implication of this is that in view of its marketing objective of being number one, it has to devise on strategies which will push it to the top spot. They can increase its world wide market share by becoming more global by establishing its operations in all the existing countries or even contemplate of expanding through franchising.
Sunday, March 1, 2009
Wednesday, February 25, 2009
Bized Case Study
Marketing case study
The marketing function is very important in linking sales, development, customers and prospects, and the company’s executive management. There are seven marketing functions. Distribution which is the process of deciding to get goods in customers hands, financing which is getting the money that is necessary to pay for setting up and running a business, pricing which dictates how much to charge for goods and services in order to make a profit, product/service management which obtains, develops, maintains, and improves a product or a product mix, promotion which is the effort to inform, persuade, or remind potential customers about a business’s products or services, selling which provides customers with goods and services they want, and last but not least marketing information management. Some people may believe that these are called the marketing mix.
The market analysis helps to meet the aims of the marketing functions because the research is very important and knowing what the consumers need and want and what the business needs to do. Marketing functions help businesses find out exactly how their company is working, what are the consumer’s needs, and what they need to do to meet their needs.
The marketing function is very important in linking sales, development, customers and prospects, and the company’s executive management. There are seven marketing functions. Distribution which is the process of deciding to get goods in customers hands, financing which is getting the money that is necessary to pay for setting up and running a business, pricing which dictates how much to charge for goods and services in order to make a profit, product/service management which obtains, develops, maintains, and improves a product or a product mix, promotion which is the effort to inform, persuade, or remind potential customers about a business’s products or services, selling which provides customers with goods and services they want, and last but not least marketing information management. Some people may believe that these are called the marketing mix.
The market analysis helps to meet the aims of the marketing functions because the research is very important and knowing what the consumers need and want and what the business needs to do. Marketing functions help businesses find out exactly how their company is working, what are the consumer’s needs, and what they need to do to meet their needs.
Wednesday, February 4, 2009
Is Wal-Mart good for America?
Wal-Mart is known to be the best and largest retailer in the United States. It is known to be one of the cheapest and most successful of all. The question is, is Wal-Mart good for America? Obviously like all business there are advantages and disadvantages to Wal-Mart. Its advantages are that it provides a variety of things with the cheapest prices to their customers; it also has the latest technology and is up to date. Wal-Mart strategy is that it displays the cheapest item to grab the costumer’s attention but after trying to find better qualities of the same item you will soon notice that it is not the cheapest deal available. Also that Wal-Mart has a lot of power over the businesses that work with them because they have to follow the rules and regulations of Wal-Mart, therefore Wal-Mart have power over everything. The biggest disadvantage is that Wal-Mart leaves people in the manufacturing section without work because most of the goods are imported from China and that is very bad for the working class in The United States. Wal-Mart in 2004 was not very good for America because I think even though they have more advantages than disadvantages, that one big disadvantage is greater than all its advantages put together.
Sunday, January 11, 2009
Case Study on Mergers and Acquistions
Task 1:
The reasons for mergers and acquisitions facilitate growth and expansion of a business organization in an easier manner. This growth is much faster when a business organization is able to either merge or acquire another existing business, the merger or acquisition enables a business to either increase its capacity related to products and services provided or are able to achieve economies of scale which enable it to gain a foot hold in a different market as well as increase its product portfolio and gain technological knowledge, so at to become more profitable. Just to cite an example I would consider the acquisition made by Sony to take over Ericsson, the phone making company which was based in Europe.
Task 2:
Whenever an acquisition is being made the fore most criteria which guide the growth and expansion plans of any organization is the profitability factor. Connected to this factor could be a whole lot of underlying factors for the acquisition. Growth and expansion can either be through horizontal integration, vertical integration or lateral integration. The acquisition reason can attributed depending on the outlook of the owners, and the industry in which the business operates. Usually for most beer companies, since beer is a popular drink in nearly most countries – companies that whish to grow and expand will usually go in for horizontal integration whereby they would be taking over an existing beer manufacturing brewery which gives it the advantage of increasing its capacity of beers and increasing its market share.
Task 3:
According to the case that I am looking at, the management of the firm that is doing the acquisition state that there will be minimal impact of the stakeholders. The only stakeholders that will be benefited will be the stakeholders of Fullers, but the Gales Brewery in Horndean, Hampshire will be closed down.
Task 1:
The reasons for mergers and acquisitions facilitate growth and expansion of a business organization in an easier manner. This growth is much faster when a business organization is able to either merge or acquire another existing business, the merger or acquisition enables a business to either increase its capacity related to products and services provided or are able to achieve economies of scale which enable it to gain a foot hold in a different market as well as increase its product portfolio and gain technological knowledge, so at to become more profitable. Just to cite an example I would consider the acquisition made by Sony to take over Ericsson, the phone making company which was based in Europe.
Task 2:
Whenever an acquisition is being made the fore most criteria which guide the growth and expansion plans of any organization is the profitability factor. Connected to this factor could be a whole lot of underlying factors for the acquisition. Growth and expansion can either be through horizontal integration, vertical integration or lateral integration. The acquisition reason can attributed depending on the outlook of the owners, and the industry in which the business operates. Usually for most beer companies, since beer is a popular drink in nearly most countries – companies that whish to grow and expand will usually go in for horizontal integration whereby they would be taking over an existing beer manufacturing brewery which gives it the advantage of increasing its capacity of beers and increasing its market share.
Task 3:
According to the case that I am looking at, the management of the firm that is doing the acquisition state that there will be minimal impact of the stakeholders. The only stakeholders that will be benefited will be the stakeholders of Fullers, but the Gales Brewery in Horndean, Hampshire will be closed down.
Saturday, January 10, 2009
Jessops – Case Study
Ameera Al Ansari
TASK 1
Jessops was founded in 1935 and was initially operated as a family business until July 1996 when it was acquired in a management by out. It was later bought by ABN Amro Capital, the venture capitalist owner. Jessops was floated as a Public Limited Company on the stock exchange in the year 2004. The floatation was to help increase the profile of Jessops and enable it to build and capitalize on the digital revolution as major camera companies were phasing out manufacturing of traditional cameras. Jessops has grown to become the largest photographic retailer in the United Kingdom, selling all kinds of cameras, camcorders, camera phones, and accessories. Jessops has been successful to establish itself so as to have a high standard of customer service which has proved to be its secret weapon for the company’s success over the years. This company has grown unusually and Jessops now has 262 stores all around the world. Across its stores, internet and mail order divisions it nearly has 2800 employees working in different capacities. Their total revenue for the year 2007 was £325.5 millions.
TASK 2
Stock Exchange is an organized market for the purchase and sale of listed industrial and financial securities. It is the plac where on who wants to buy a particular “security” may find an immediate seller, and one who wants to sell his holdings may find a uyer at a reasonable and fair price provided the security has been admitted on the official list of the market for the purposes of trading.
The securities dealt in at a stock exchange include the shares and debentures of public companies already issued by them, Government securities, and the bonds and debentures issued.
A Stock Exchange is an association, organization or body of individuals, whether incorporate or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities.
Floatation is when a business organization, a public limited company in particular makes efforts in getting the general public to “subscribe” to its shares. Floatation usually is for new public limited companies, which are usually termed as initial public offering; however established public limited companies can also contemplate of issuing shares to the general public. In both instances the public limited companies are trying to mobilize share capital. Floatation of a public limited company allows the business organization to be listed on the stock exchange in a country.
The Stock Exchange is almost indispensable for the proper functioning of corporate enterprise. It performs certain essential economic functions but for which companies controlling the industrial world would find it difficult to finance their schemes.
To float on the Stock Exchange helps a business enterprise like Jessop to achieve growth, through different avenues which may be discussed as follows:
Floatation of a company helps the public limited company to achieve growth in various ways. The first way is that it helps it to mobilize a sizable amount of finance as the number of shareholders in a public limited company is unlimited but this also depends on the authorized share capital of the business. This may be through offering of securities to the public for the first time – an initial public offering (IPO). The more money an enterprise is able to raise, the bigger business operations it will have, and consequently make enormous profits.
The market for the shares of such a company is naturally widened, leading to a higher Market Capitalisation. Due to their purchase and sale on a stock exchange, the market price of shares of a company is likely to be higher in relation to earnings, dividends and property values. This raises the bargaining power of the company in the event of a merger or amalgamation.
Also the company benefits in the sense that it become a prestigious organization on being listed on the stock exchange and also gives the shareholders the advantage of multiplying their wealth through trading of shares with price fluctuating based on it profitability and other factors giving them ample liquidity; as well as raises the profile of the company not just with the general public but also more specifically with customers and suppliers in terms of the company’s perceived financial reliability.
TASK 2b
The process Jessops would have had to follow in preparing for its floatation on the Stock Exchange.
The incorporation of a company involves various steps which need to be taken towards the formation of a company as a legal entity recognized by law. For getting a company incorporated, Jessops have to get the following documents prepared and filed with the Registrar of Companies:
The Memorandum of Association to which at least seven person have subscribed their names, each one of them having promised to take at least one share. It should be properly stamped. The Memorandum contains the following clauses: (i) Name clause; (ii) Situation clause; (iii) Object clause; (iv)Liability clause; (v) Capital clause; and (vi) Association & Subscription clause.
The Articles of Association which should be signed by at least seven persons. If it does not have its own Articles it will be deemed to have adopted the Model Articles given in Table A of the Companies Act. The Articles of Association are rules and regulations for the internal working of a company which are related to the following: (i) share capital and variation of rights; (ii) exercise of lien by the company; (iii) call on shares; (iv) transfer, transmission, forfeiture, and surrender of shares; (v) conversion of shares into stock and its reconversion into shares; (vi) seal of the company; (vii) alteration of capital; (viii) conduct of any proceedings at general meetings of shareholders; (ix) power, rights, remuneration, qualification and duties of directors; (x) Dividends, reserves and capitalization of profits, and company accounts and winding up; etc.
Written Consent of all the persons who have agreed to act as directors. According to the Companies Act a person name as a director of the company under its Articles as first registered, must file with the Registrar his written consent to act as such within 30 days of his appointment.
Notice of the address at which the registered office of the company will be situated. In case it is not filed at the time of registration it must be filed within 28 days of registration.
Statutory Declaration by the company secretary or the solicitor or a Chartered Accountant or any other person who has taken part in the formation of the company to the effect that all provisions of the Companies Act with regard to registration have been complied with.
The Prospectus which is a notice, circular, advertisement or other invitation offering to the public for subscription or purchase of any shares in, or debentures of, a body corporate. The object of a prospectus is to arouse the interest of the investors in the proposed company and induce them to invest in its shares or debentures. If the company can make arrangement for raising the capital privately, the company is required to prepare a Statement in lie of Prospectus. This is essential for Certificate of Commencement of Business and listing on the Stock Exchange.
All the above documents must be accompanied with requisite filing fees, stamp duty to be affixed on the Memorandum of Association and Articles of Association and registration fees at the prescribed rates.
The Registrar of Companies will scrutinize these documents. If he is satisfied, he will enter the name of the company in the register maintained by him and will issue a Certificate of Incorporation, which is a conclusive proof of the fact that the company was duly incorporated giving Jessops an independent entity. Being a public limited company jessops also has to take another certificate known as the Certificate of Commencement of Business.
A stock exchange does not deal in the securities of all companies. It has to select the companies whose securities may be allowed to be bought and sold. The companies selected for this purpose are included in the official trade list of the stock exchange. Listing of securities therefore, means the inclusion of the securities in the official list of a stock exchange for the purpose of trading.
The securities of a company can be listed only when it furnishes the necessary details about its organization and working to the stock exchange and fulfills the conditions laid down in the rules and regulations. From the viewpoint of the company, listing enhances its credit, widens the market for its securities, and raises the value of its securities.
The leading stock exchanges of the world like the London Stock Exchange and New York Stock Exchange have been exercising a wholesome influence on the conduct of company affairs by demanding the observance of certain standards of performance.
A company requiring/desiring its securities to be listed on the stock exchange must apply in the prescribed form supported by the documentary evidence mentioned below:
Copies of Memorandum of Association,
Articles of Association,
Prospectus or the Statement in lieu of Prospectus,
Directors’ Reports,
Financial Statements,
Agreements with underwriters, etc.
Specimen copies of Share and Debenture Certificates, Letters of Allotment, Letters of Acceptance, Renunciations, etc.
Particulars regarding its capital structure.
Statement showing the distribution of shares.
Particulars of dividends and cash bonuses during the previous years.
A brief history of the company’s activities since its incorporation.
TASK 3
When Jessops had floated its shares on the stock market, they were looking for a price band between 185p and 220p per share but had to settle for a floatation price of 155p due to poor demand from investors. The share price of Jessops had a high of 1625p on 8th of August 2007. However with the down turn of economies world wide, the share price of Jessops has “nose dived” to a low of 85p on 17th December 2008. The recessionary trend has put major industries into an economic melt down. Besides I would like to mention the fact that Jessops was predominantly into cameras – digital and high-tech. With the development of technology the industry has witnessed mobile companies integrating cameras into mobile phones; this negatively impacted the sales of cameras sold by Jessops.
TASK 4
The problems jessops likely faced in taking this step in its growth. Assess the measure which the company could have taken to avoid these problems.
Difficulty and Cost of formation:
The promotion and incorporation of a company is a long drawn process. There are numerous requirements of law to be complied with, a large sum of money to be spend on the preliminaries, and a large number of people to be approached for raising capital, before a company can be incorporated and start functioning. Jessops had the visionary strategy of achieving success in incorporating it as a public limited company, this combined with the financial strengths gave it the advantage to hire experts in drafting the requisite documents and setting the ball rolling to incorporate jessops as a public limited company in a short period of time.
Lack of personal incentive and Oligarchic Management:
Virtually all public limited companies are not managed by the shareholders directly as they are large in numbers and widely scattered but by a board of directors and paid officials who cannot be expected to watch the interests of the company with as much interest and enthusiasm as the proprietors themselves would. Although paid officials can take much more risk than proprietors, yet some officials are too reckless and many others lack initiative. Thus, in theory, they company is democratic, but in practice a company is mostly a case of oligarchy. The interests of small and minority shareholders are not always safe in a company. To overcome this problem, as any other public limited company, jessops has on its Board of Directors and its management team professional Directors/ Managers who can be controlled by the shareholders at the Annual General Meeting in retaining or removing them from office.
Excessive regulation by law:
A company remains well within the focus of law. Its working is governed by elaborate and none too easy provisions of law at all stages. At every step, there is a penalty for the infringement of the legal provisions and the management has to be constantly on guard against attracting any of these. A good deal of the precious time of the management may be spent in complying with the statutory requirements. Not merely this, a separate secretarial/ administrative department has to be maintained for the purpose adding to the administrative expenditure. Jessops knew of this aspect, and ensured that all compliances were met appropriately so as not to be penalized at any stage, whether it related to working environment, labour laws or taxation.
It can be aptly concluded that despite the weaknesses and problems of growing into a public limited company are there, Jessops as a plc is best suited to those lines of business activity which require huge capital outlay and maximum stability. Having become a plc jessops has acquired financial strength and given it the scope for expansion. In addition to this Jessop has Limited Liability and the stability of perpetual continuity unless it has to wind up.
Ameera Al Ansari
TASK 1
Jessops was founded in 1935 and was initially operated as a family business until July 1996 when it was acquired in a management by out. It was later bought by ABN Amro Capital, the venture capitalist owner. Jessops was floated as a Public Limited Company on the stock exchange in the year 2004. The floatation was to help increase the profile of Jessops and enable it to build and capitalize on the digital revolution as major camera companies were phasing out manufacturing of traditional cameras. Jessops has grown to become the largest photographic retailer in the United Kingdom, selling all kinds of cameras, camcorders, camera phones, and accessories. Jessops has been successful to establish itself so as to have a high standard of customer service which has proved to be its secret weapon for the company’s success over the years. This company has grown unusually and Jessops now has 262 stores all around the world. Across its stores, internet and mail order divisions it nearly has 2800 employees working in different capacities. Their total revenue for the year 2007 was £325.5 millions.
TASK 2
Stock Exchange is an organized market for the purchase and sale of listed industrial and financial securities. It is the plac where on who wants to buy a particular “security” may find an immediate seller, and one who wants to sell his holdings may find a uyer at a reasonable and fair price provided the security has been admitted on the official list of the market for the purposes of trading.
The securities dealt in at a stock exchange include the shares and debentures of public companies already issued by them, Government securities, and the bonds and debentures issued.
A Stock Exchange is an association, organization or body of individuals, whether incorporate or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities.
Floatation is when a business organization, a public limited company in particular makes efforts in getting the general public to “subscribe” to its shares. Floatation usually is for new public limited companies, which are usually termed as initial public offering; however established public limited companies can also contemplate of issuing shares to the general public. In both instances the public limited companies are trying to mobilize share capital. Floatation of a public limited company allows the business organization to be listed on the stock exchange in a country.
The Stock Exchange is almost indispensable for the proper functioning of corporate enterprise. It performs certain essential economic functions but for which companies controlling the industrial world would find it difficult to finance their schemes.
To float on the Stock Exchange helps a business enterprise like Jessop to achieve growth, through different avenues which may be discussed as follows:
Floatation of a company helps the public limited company to achieve growth in various ways. The first way is that it helps it to mobilize a sizable amount of finance as the number of shareholders in a public limited company is unlimited but this also depends on the authorized share capital of the business. This may be through offering of securities to the public for the first time – an initial public offering (IPO). The more money an enterprise is able to raise, the bigger business operations it will have, and consequently make enormous profits.
The market for the shares of such a company is naturally widened, leading to a higher Market Capitalisation. Due to their purchase and sale on a stock exchange, the market price of shares of a company is likely to be higher in relation to earnings, dividends and property values. This raises the bargaining power of the company in the event of a merger or amalgamation.
Also the company benefits in the sense that it become a prestigious organization on being listed on the stock exchange and also gives the shareholders the advantage of multiplying their wealth through trading of shares with price fluctuating based on it profitability and other factors giving them ample liquidity; as well as raises the profile of the company not just with the general public but also more specifically with customers and suppliers in terms of the company’s perceived financial reliability.
TASK 2b
The process Jessops would have had to follow in preparing for its floatation on the Stock Exchange.
The incorporation of a company involves various steps which need to be taken towards the formation of a company as a legal entity recognized by law. For getting a company incorporated, Jessops have to get the following documents prepared and filed with the Registrar of Companies:
The Memorandum of Association to which at least seven person have subscribed their names, each one of them having promised to take at least one share. It should be properly stamped. The Memorandum contains the following clauses: (i) Name clause; (ii) Situation clause; (iii) Object clause; (iv)Liability clause; (v) Capital clause; and (vi) Association & Subscription clause.
The Articles of Association which should be signed by at least seven persons. If it does not have its own Articles it will be deemed to have adopted the Model Articles given in Table A of the Companies Act. The Articles of Association are rules and regulations for the internal working of a company which are related to the following: (i) share capital and variation of rights; (ii) exercise of lien by the company; (iii) call on shares; (iv) transfer, transmission, forfeiture, and surrender of shares; (v) conversion of shares into stock and its reconversion into shares; (vi) seal of the company; (vii) alteration of capital; (viii) conduct of any proceedings at general meetings of shareholders; (ix) power, rights, remuneration, qualification and duties of directors; (x) Dividends, reserves and capitalization of profits, and company accounts and winding up; etc.
Written Consent of all the persons who have agreed to act as directors. According to the Companies Act a person name as a director of the company under its Articles as first registered, must file with the Registrar his written consent to act as such within 30 days of his appointment.
Notice of the address at which the registered office of the company will be situated. In case it is not filed at the time of registration it must be filed within 28 days of registration.
Statutory Declaration by the company secretary or the solicitor or a Chartered Accountant or any other person who has taken part in the formation of the company to the effect that all provisions of the Companies Act with regard to registration have been complied with.
The Prospectus which is a notice, circular, advertisement or other invitation offering to the public for subscription or purchase of any shares in, or debentures of, a body corporate. The object of a prospectus is to arouse the interest of the investors in the proposed company and induce them to invest in its shares or debentures. If the company can make arrangement for raising the capital privately, the company is required to prepare a Statement in lie of Prospectus. This is essential for Certificate of Commencement of Business and listing on the Stock Exchange.
All the above documents must be accompanied with requisite filing fees, stamp duty to be affixed on the Memorandum of Association and Articles of Association and registration fees at the prescribed rates.
The Registrar of Companies will scrutinize these documents. If he is satisfied, he will enter the name of the company in the register maintained by him and will issue a Certificate of Incorporation, which is a conclusive proof of the fact that the company was duly incorporated giving Jessops an independent entity. Being a public limited company jessops also has to take another certificate known as the Certificate of Commencement of Business.
A stock exchange does not deal in the securities of all companies. It has to select the companies whose securities may be allowed to be bought and sold. The companies selected for this purpose are included in the official trade list of the stock exchange. Listing of securities therefore, means the inclusion of the securities in the official list of a stock exchange for the purpose of trading.
The securities of a company can be listed only when it furnishes the necessary details about its organization and working to the stock exchange and fulfills the conditions laid down in the rules and regulations. From the viewpoint of the company, listing enhances its credit, widens the market for its securities, and raises the value of its securities.
The leading stock exchanges of the world like the London Stock Exchange and New York Stock Exchange have been exercising a wholesome influence on the conduct of company affairs by demanding the observance of certain standards of performance.
A company requiring/desiring its securities to be listed on the stock exchange must apply in the prescribed form supported by the documentary evidence mentioned below:
Copies of Memorandum of Association,
Articles of Association,
Prospectus or the Statement in lieu of Prospectus,
Directors’ Reports,
Financial Statements,
Agreements with underwriters, etc.
Specimen copies of Share and Debenture Certificates, Letters of Allotment, Letters of Acceptance, Renunciations, etc.
Particulars regarding its capital structure.
Statement showing the distribution of shares.
Particulars of dividends and cash bonuses during the previous years.
A brief history of the company’s activities since its incorporation.
TASK 3
When Jessops had floated its shares on the stock market, they were looking for a price band between 185p and 220p per share but had to settle for a floatation price of 155p due to poor demand from investors. The share price of Jessops had a high of 1625p on 8th of August 2007. However with the down turn of economies world wide, the share price of Jessops has “nose dived” to a low of 85p on 17th December 2008. The recessionary trend has put major industries into an economic melt down. Besides I would like to mention the fact that Jessops was predominantly into cameras – digital and high-tech. With the development of technology the industry has witnessed mobile companies integrating cameras into mobile phones; this negatively impacted the sales of cameras sold by Jessops.
TASK 4
The problems jessops likely faced in taking this step in its growth. Assess the measure which the company could have taken to avoid these problems.
Difficulty and Cost of formation:
The promotion and incorporation of a company is a long drawn process. There are numerous requirements of law to be complied with, a large sum of money to be spend on the preliminaries, and a large number of people to be approached for raising capital, before a company can be incorporated and start functioning. Jessops had the visionary strategy of achieving success in incorporating it as a public limited company, this combined with the financial strengths gave it the advantage to hire experts in drafting the requisite documents and setting the ball rolling to incorporate jessops as a public limited company in a short period of time.
Lack of personal incentive and Oligarchic Management:
Virtually all public limited companies are not managed by the shareholders directly as they are large in numbers and widely scattered but by a board of directors and paid officials who cannot be expected to watch the interests of the company with as much interest and enthusiasm as the proprietors themselves would. Although paid officials can take much more risk than proprietors, yet some officials are too reckless and many others lack initiative. Thus, in theory, they company is democratic, but in practice a company is mostly a case of oligarchy. The interests of small and minority shareholders are not always safe in a company. To overcome this problem, as any other public limited company, jessops has on its Board of Directors and its management team professional Directors/ Managers who can be controlled by the shareholders at the Annual General Meeting in retaining or removing them from office.
Excessive regulation by law:
A company remains well within the focus of law. Its working is governed by elaborate and none too easy provisions of law at all stages. At every step, there is a penalty for the infringement of the legal provisions and the management has to be constantly on guard against attracting any of these. A good deal of the precious time of the management may be spent in complying with the statutory requirements. Not merely this, a separate secretarial/ administrative department has to be maintained for the purpose adding to the administrative expenditure. Jessops knew of this aspect, and ensured that all compliances were met appropriately so as not to be penalized at any stage, whether it related to working environment, labour laws or taxation.
It can be aptly concluded that despite the weaknesses and problems of growing into a public limited company are there, Jessops as a plc is best suited to those lines of business activity which require huge capital outlay and maximum stability. Having become a plc jessops has acquired financial strength and given it the scope for expansion. In addition to this Jessop has Limited Liability and the stability of perpetual continuity unless it has to wind up.
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