Introduction To Business And Management | The PFC Case Study Essay.

This paper aims to provide an introduction to fundamental topics in business and management. This includes business functions such as operations, marketing and finance, structure and ownership models of businesses, human and physical resources, and the business environment in New Zealand.

Q1. Identify and Explain one target segment of The PFC.

Q2. A. Explain briefly all the four stages of Product Life Cycle (PLC). Discuss which stage of the PLC is The PFC’s product-offering in.

Q3. Explain the two broad types of Equity Finance. Propose and justify the best Equity Finance option to Sam Bridgewater, CEO of The PFC.

Q4. Recommend FOUR appropriate sources of short-term borrowing to the CEO of The PFC. Provide reasons for the sources selected.

Q5. Having The PFC in consideration, conduct analysis of New Zealand’s political, economic and socio-cultural environmental factors, support your analysis with TWO points for each factor.

Q6. A. Using examples, List and explain three types of Intermittent Production Systems.Identify and discuss The PFC production system.

Q7. Assess the importance of Research & Development for The PFC. Support your answer with examples from the case provided.

Q8.A. Explain three objectives of the Human Resource Planning process. For the sales and marketing department of The PFC suggest a Human Resource Plan (HRP). Support your answer with appropriate/justified assumptions.

Q9. Identify THREE stakeholders for The PFC and discuss their importance.

Q10. In order to successfully manage rapid growth phase of the company, identify and discuss FOUR most important self-management skills the CEO, Sam Bridgewater, needs to develop. Support your answer with appropriate justification.

Target Segment of The PFC

The PFC is the pure food company, which wants to provide the solution of real food to consumers that, keeps the consumers well nourished. It provides people with meals like proteins, vegetables, sauces and carbohydrates with reduced plate size and increased nutrition. One of the target markets of the company are the aged people. Aged people often face problems while eating whole food. This may be due to lack of teeth or any other old age problem. Hence, PFC aims to target these people and help them to maintain a healthy diet. Sam, who is one of the founders of the company, came up with this idea when he witnessed his stepfather struggling with cancer and had a damaged jaw. Sam wanted to bring back the dignity of these people for these people and also give them a healthy diet and improve their quality of life.

All stages of product life cycle are as follow:

• Introduction stage
• Growth stage
• Maturity stage
• Decline stage

Introduction stage:

The introduction stage is the stage when the product has been just launched in the market. During this phase there are lot of promotion activates for the company and the costs are usually high. The sales of the company are very low. The company tries to generate as much sales as possible in this stage.

 Growth stage:

If the promotional activities have been successful, then the product becomes very successful in the market. As the product becomes more successful, the raw materials become cheaper and the produce buys in huge quantities to engage in economies of scale. Machine and labour costs get absorbed (Ebert et al., 2014). During this phase, the costs of the product go down and raise the profitability of the business and the company starts achieving its goals. 

Maturity stage:

During this stage, the growth of the company comes to a halt. The competitors of the company try their new strategies and the customers are dispersed. There will be a slowdown in the growth of sales.

Decline stage:

The last stage is the decline stage where the growth of the product falls down and the sales start falling. The product starts to lose its importance. This may be because it has lost its importance. After a major decline is observed, there are chances that the product, which has been launched, will fail.

For the Pure Food Company, the company is currently in its growth stage. The pure food company has already surpassed its initial introduction stage and therefore it is going through the next stage in the life cycle, which is the growth stage. The company is now being able to complete two days production run at food bowl once every three weeks. It has been supplying its products which are nutritious meals for 7.5$ to the aged care facilities and such homes throughout the country. The menu is changed once every six months.

Product Life Cycle (PLC) and The PFC

Two broad types of equity finance are as follow:

Internal source of finance:

• Equity finance: The method of raising fresh capital through sales of shares of a firm. In return, the shareholders attain the ownership of the company. In this case, whenever the company makes profit then it did not distributed among the members of the company but re-invested back into the business.
• External equity capital: In this method, if the shareholders or the owners of the company do not have their own capital, they can utilize the external method of raising capital through external investors, which can be the friends or relatives (Weske, 2012). They can also be external investors. Business angels can also be a source of external equity finance.
• Internal equity capital: For a small business the owner`s money which he has earned on his own is the internal capital for the fir. This amount is fixed for all the shareholders and is relative to the percentage of shareholdings in a business.
• Debentures: It is a long-term method of raising finance generally used by a large organization in order to borrow money at a particular fixed rate of interest.

2. External source of finance:

• Short-term borrowings: The owner of the business can borrow some finance for a short-term purpose to make payment to the debtors, or to purchase stock. This finance is usually paid back within a year.
• Accounts receivable financing: This finance is owned by the customers when the customer had purchased these goods on credit. This method is also called factorising and it is known as process of selling receivables in order to obtain cash for the organization.
• Factoring:  In this method the accounts receivable are sold by a company`s owner to a third party in case where it wants to get cash early.
• Floor plan financing: It can be described as a line of credit that gives permission to the borrowers to obtain finance for its business functions. This method is very popular in cases of home appliances, home electronics and computers.
• Bridging finance: This type of short-term loan ranges from weeks to few years. It is comparatively expensive than other loans.
• Export letters of credit: In international trade transactions, the companies generally depend on banks and letter of credit helps them to take a loan.
• Import letters of credit: it is an undertaking given and issued by bank at appeal of their customers.
• Long-term borrowing: This kind of loan lies with the firm for more than 12 months from its date in the balance sheet. Long-term loans are generally term loans, personal loans, mortgages and hire purchases (Carroll & Buchholtz, 2014).
• Leasing: It is an arrangement that calls for the lease to pay the one who has leased a certain amount for the use of a particular asset. The commonly leased assets are property, building, vehicles and so on.

The best option for Sam Bridgewater to finance his business idea would be external equity capital. In this method, the capital can be raised for external sources like friends and relatives. No dividend or interest needs to be paid to the relatives. In this case, the ownership of the company remains with the owner itself. Hence, this method is the best way of financing whereby the finance is also received and the ownership also stays with the owner.

Four short-term borrowings for the company are as follows:

• Short-term bank loans: These kinds of loans are the ones where the company needs immediate operating cash. It is generally for the period of one year. Banks charge comparatively low level of interest and are trusted Enders. This method can be chosen for Sam as it is backed by the image of the bank.
• Accounts payable: Either this can be referred as to the amount the business owes to the others who have supplied goods to the company or they have provided some service.
• Wages: Wages refer to the payment that is due to the employees of the company in return for their work.
• Lease payments: Lease payments refer to the payments that are due within the span of a year through lease agreements.
• These are the most suitable short-term loans, which Sam Bridgwater can use, is the Short-term bank loans (Myers, 2013). Short-term bank loans are helpful in running the business. The rate of interest charged by the banks for short-term loans is generally low and can be helpful to run their business.

PEST analysis can be described as the external environment analysis which analysis the various elements which are present in the external environment. The various factors present in the external environment are Political, Economical, Social, Technological and legal factors. These factors can affect the business in a positive or a negative manner. New Zealand is a small country located in the Pacific Ocean The country has engaged in various political processes and has been able to do good for itself.

• Political Factors – New Zealand has a stable government and a greater chance of success because of the presence of strong regulations and rules. The political change takes place in the country after every three years and each government tends to make its own rules and regulations and it the company needs to be aware of these rules and regulators in order to succeed in the business. The labour laws are very strict and the available labour force is extremely expensive. The lending rates are very high and companies would need to pay more taxes which leads to reduction of profits for the companies. The labour laws are strict and the labour force is expensive in the government. The lending rates are high in the country so the companies have to pay more taxes and it reduces the profit of the company. A huge amount of companies earning goes to the government. The country scores high on ease of doing business.
• Economical factors- The nation has a good economic condition. The per capita is extremely good and very high when compared to the other countries in the world. The population of the country is around 6-7 million hence the country has sufficient resources to look after its people. The rates of the product available in the country are also very affordable. The inflation rate in the country is low and so is the unemployment rate, which is a positive indicator of a healthy economy. People engage in the services of labour, steel, sugar and other commodities.
• Social Factors -The literacy rate of the company is 100% and the life expectancy rate is 81, which is a good sign of health. However, as given in the case study a huge percentage of the population depends on the Textured Modified food because of the many diseases prevalent in the country.  The government puts special emphasis on tourism and provide facilities to the tourists who tend to visit the country. The people are content with their lifestyle as the economic problems are few and the socio-cultural policies of the government are adequate.

Therefore, for PFC, the market is positive as a majority of population was eating the modified food and with the help of PFC, it will be eating a normal diet again. The economic condition of the country is very good and therefore, they can afford products, which are slightly high priced. The government is supportive and encourages new businesses.

The types of intermittent production system are as follow:

Project production flow:

This is subject to a single order. In this case, the company only accepts a single production at a time and completes the particular order within a specified time and for a specific cost. For example: construction of roads, airport, dam etc.

Jobbing production flow:

In this production flow, the company accepts to produce a single product of a particular design or a single unit as per the specification provided by the customer. The contract price is fixed at the time when the contract is entered into.

For example: manufacturer of special machine took repair shop services etc.

Batch production flow:

In a batch, production system the process is divided into different jobs. It is divided with respect to a specific order, which has been received. It may also be done depending on the forecasts of the demand assumed.

For example: production of medium and heavy machineries.

Importance of research and development

Types of Equity Finance and the Best Option for The PFC

Research and development has an extremely vital role to play especially in the innovation of a particular product.  Research and development plays a major role in the success of a product.  They provide platform for innovation and creativity is provided by it. Proper research and development helps the company in gaining a competitive advantage over its competitors. This competitive advantage is extremely important in today’s world where achieving the future goals and aims is extremely important. In the case of PFC, Sam and his partners wanted to develop an innovative product with a great taste so that the people who faced eating difficulties could be helped (Hall & Rusher, 2013). The partners analysed the market and further developed their case on injuries, which lead to problems in eating like dental issues, injuries and accidents. They discussed their ideas with dentists, food scientists, health boards and doctors; they even researched with the chefs. This way they formed a small niche market that catered to the needs of people with diseases like cancer, Parkinson’s, Alzheimer`s stroke or people without teeth or a jaw. Through their research, they came up with products that were nourished and healthy. These meals included proteins as well as carbohydrates with a reduced plate size. Instead of the only option, it provided the consumers with choices to choose from different kinds of food

The three objectives of human resource planning are as follow:

• It helps in assessing the number of people that will be required in the organization for all the present and future endeavours of the organization. Recruitment and selection plans as well as relevant skills are also decided in the planning phase.
• The next objective of human resource planning is to determine the development and training needs of the existing employees. This is one of the most important objectives.
• The third objective is to minimize any imbalances that are present in the organization with respect to the people present in the organization. This is an important step because the right number of people needs to be present in the organization at the right time and the right number.

 The three stakeholders for PFC are as follow:

• Sam Bridgewater
• George Bridgewater
• Maia royal

These three stakeholders are the major business partners of the business. Sam along with his partners George and Maia researched upon this texture modified and soft food to develop their innovative food. These are the three main stakeholders of the company. They have put in all their energy and time into the business and therefore their stake is the highest in the business. They also organized various tourism facilities for their business and therefore. Their stake is important. The other stakeholders of the business are its customers for whom the product is being developed.    

Self-management skills help one to be productive in all circumstances; CEOs need to have these skills because it helps in effective leadership for the business.

Given below are four most important skills for self-management

• Stress management- Business is a stressful affair. Studies have often shown that stress can hamper logical thinking ability, which is essential for decision-making. Hence, the manager should have sufficient skills to manage his stress levels for the efficiency of the decision-making.
• Time Management- Time management is another skill, which is relevant for a CEO. A business has a variety of activities, which need to be single-handed very often. Therefore, the CEO must have adequate skills to handle all the tasks and allocate proper time for each activity according to the priorities (Griffin & Pustay, 2012). Redundancy from work should be removed in order to manage time effectively.
• Organizing Skills- the CEO needs to have proper organizing skills. The schedule of the CEO must be an organized one and he should organize his files, pending work and indulge in label maker etc so that it is easy for him to  give time to all relevant business activities. If the CEO is organized, he will be able to keep a track of all his business meetings. 
• Decision Making Skill- At the end of the day the CEO has to make sure that he is the one who is taking all the correct decisions in the business domain. His decision-making skills should be such that the organization follows him easily and that trust is in-built in the organization. The CEO must be devoid of emotional attachments while he is taking the decisions. Only facts and the welfare of the business need to be taken care of.

Therefore, if the CEO of PFC has these self-management skills then he shall be successful in taking the business forward.

References

Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder management. Nelson Education

Ebert, R. J., Griffin, R. W., Starke, F. A., & Dracopoulos, G. (2014). Business essentials. Pearson Education Canada.

Griffin, R. W., & Pustay, M. W. (2012). International business. Pearson Higher Ed.

Hall, C. M., & Rusher, K. (2013). Risky lifestyles? Entrepreneurial characteristics of the New Zealand bed and breakfast sector. Small in Firms Tourism, Michael, HC and K. Rusher (Eds.). Elsevier Publishing Company, Amsterdam, Netherlands, 83-98.

Myers, M. D. (2013). Qualitative research in business and management. Sage.

Weske, M. (2012). Business process management architectures. In Business Process Management (pp. 333-371). Springer Berlin Heidelberg.