Finance Assignment: Business Strategy Responses for Case Scenarios

Question

Task: For this finance assignment, you will need to pick 2 scenarios – one from list A and one list group B and you need to write 2 responses for each scenario. Your response should include short business strategy response for how you, as business owner and leader, will respond to that scenario. The 2 scenario responses should be of roughly equal length, i.e. about 2 pages or 800 words on each scenario response.

Scenarios
You need to choose ONE scenario from EACH list and prepare TWO responses for each scenario.

List A
Scenario 1
Your small company, of which you are a part owner along with 2 other owners, is under some financial stress. The company is a successful boutique project management consultancy. The industry is quite sluggish at the moment although it is expected to pick up again in about 12 months. You have a large project that has recently finished where you haven't yet received the final payment but you do expect it in about 1 month, so this is causing cash flow pressures as you have bills for key suppliers that need to be paid in the meantime. Because you're the owner that is responsible for business operations, you need to write a strategy to get through the current financial stress. It will be presented to the other owners at the next monthly owner's meeting.

Scenario 2
Your company, which is a carpentry company operating in the regional Victoria area around Geelong, is facing some stiff competition from a new competitor who is targeting your existing clients and the same type of projects as you. The company is setup as a sole trader, and you had to take out some loans to buy a vehicle and some tools which you are still paying back. Over the last few months you haven't gotten many new projects (about half the number you normally would), so you decide to write a response strategy for how you're going to deal with the new competition.

Scenario 3
You manage a medium size construction company that has about 25 employees in total and you specialise in industrial and commercial projects. You're halfway through a project that is relatively big for your company, for a client who you've worked with a number of times before. Unfortunately, your client missed the last monthly payment, but since you have a longstanding relationship with them, you agree that they can pay you a bit later than normal and you (and your subcontractors) keep working on the project in the meantime. But... you then get formal notice that the client has gone into receivership and they don't have the money to pay you for either the outstanding money or the work you have done since then. This sends the company owners into a spin, because they're not sure how the business will cope with the lost income - the company might eventually receive some of the expected income, but it won't be soon and it almost definitely won't be the full value. The company owners have tasked you with writing a strategy on how to deal with this situation.

List B
Scenario 4
You already have a small business that has been successfully operating for about 3 years now, working as a scheduling consultant within the construction industry (so your core business is to write programmes for client organisations or construction companies). You have a small team of yourself, 2 other full time employees, and 1 part time cadet. You have decided that you want to expand somehow, but you're not sure on the right strategy. Do you expand by acquisition? Or by opening up somewhere else? Branching out to another consulting service / type of product? Write an expansion strategy that you could take to a investor or a bank to get some financing for the expansion.

Scenario 5
Your small construction company has been successful over the last 5 years in the residential sector, but you've decided that you want to start doing some projects in the commercial sector - mainly, small projects for government clients, particularly with the Department of Defence (because before you started your building company you spent 6 years in the army). You know that the commercial projects are bigger, with a lower profit margin, but they are a lot more reliable. Write a strategy for how you could position your company for this new goal.

Scenario 6
You started a building surveying business about 2 years ago, and the team is now yourself and 2 other employees. The company has a very good reputation within the industry, and you are busy enough that you can pick good projects to work on and have the luxury of being able to decline to take on a project if you so choose. The owner from another small surveying has approached you to merge the 2 companies, and you would have joint ownership. However, you are concerned that the other owner has a bit of a reputation for phoenix business operations (Links to an external site.) as he has started and then shut down previous consulting companies. But if you just reject the offer without looking at it seriously, this might cause issues in the future because you do sometimes work alongside the other company. Besides which merging the companies would solve a lot of issues and grow your business. Because you're a diligent business owner, you decide to write down a response strategy before you make a decision whether to merge the 2 companies.

Answer

List A
Finance AssignmentScenario 2
This scenario deals with the competition carpentry business have to face in Geelong, Victoria. The business response discussed below would enable the company to deal with the existing competition in the business line.

Business Planning: Carpentry has been regarded as one of the most promising career paths as it is deemed that new and beautiful buildings would always be in high demand.

Market Analysis
There has been massive growth of population in the city since previous 10 years. Hence Miles Home Carpentry ha the opportunity to offer services to the owners of the home. Hence the market would be segmented amidst existing owners of home and the new ones emerging due to growth in population Hence, the aim of the organization must be primarily on two groups of consumers namely the remodelingprojects and construction of new homes. In order to establish proper niche Miles must focus on developing relationship or amalgamate with interior companies that would enable it to expand its services by properly distributing the expenses (Nenonenet al., 2020). To be precise, the organization must focus on schemes of integrated wooden decking of creative nature. In this way, it would be able to decrease the number of companies that are directly competing with it. This amalgamation would be profitable because none of the small companies has any kind of relationship or association with interior designing companies of the city.

Market & HR
Any construction company can survive only if it is able to make proper revenue. Earning profit or revenue is possible only if the company is able to market or promote its service properly among their target audience. Hence, for the purpose of proper marketing the firstly, company is designing ideal message for the target clients. Hence, in this step, the target audience would be defined, message would be drafted and we would even make sure that the message is viewed by the target consumers (Cartmell, 2019). In this section, the company would target its dream clients and the message would be such that it would be able to answer the questions often raised by our dream clients. Secondly, we have a team of content creation who would display the content out in public and make sure that is able to catch target audience’s attention. Currently, the business is on the spree to hire

• Data Analyst
• Editorial manager
• Designer
• Video person

Thirdly, the company is engaged content type planning and here it would post work of instances of completed work, videos of those projects that are in progress and a video that shows giving advice to the home owners or other contractors. This would even handle the posting to done on Instagram, facebook and our personal website. Apart from this, the company would engage in promoting their content with the help of emails and would forward sales pitches to their target clients with the aid of emails.

On the human resource front, the department has planned to perform the following:

• Search and entice skilled workers
• Choose, train and appreciate the best workers
• Deal with conflicts and absences
• Motivate workers

The company has invested in human resource planning where it would be evaluating the supply of labor depending on their skills, qualification and performance level (Stone et al., 2015). In the second step, the company would be focusing on the requirements that would be element into the forthcoming needs. In the third step the company would balance the supply and the demand by analyzing if there lies the requirement of learning new skills, if the organization requires new managers and if every employer has been putting full strength into the business. In fourth stage, the company would develop a plan as per the research done previously.

Income statement and cash flow statement
The projected income statement and cash flow statement would be the focus of the company for enabling growth and for paying of the loan it has already taken for financing its business.

Figure 1: Projected Income statement

Figure 2: Projected cash flow statement

Business structure: The company is sole proprietorship business presently but in order to combat the ongoing competition it is soon partnering with the interior designing company Finance and business: As it would be soon turning into partnership business soon hence it can source its funds by the procedure of bootstrapping (Cox and Nguyen, 2018). It can even go on exploring the venture capital. Other sources are small grants of business and crowdfunding.

Risks in business:
The carpenters working are exposed to dust from woods that risks the staff with lung disease and asthma. They even have the danger of catching nose cancer. Hence for the purpose of mitigating this risk the company has installed local installed ventilation and the workers are trained to use it (Chuluunbat and Empson, 2018). A specific vacuum cleaner is used to clean up the wood dust and protection equipment known as RPE have been provided to the workers and they have been taught to use it for avoiding the respiratory diseases There is a risk of the workers getting affected due to cut injuries while dealing with machinery’s moving parts such as saw blades. In order to combat this risk, the company would guard every machine as per guided in its manual. They would go through necessary inspection weekly for checking their working condition and the workers are properly trained to use the machine with utmost safety.

List B
Scenario 5
Business Planning: The construction company is turning towards handling the government project and the following discussion would help the company to do so through mentioned actions.

Market & HR:
The company has set out its objective of successfully monitoring the time & delivery of project along with its quality and cost. The company would have ample of targets to achieve through a simplified business plan such as enhancing the brand awareness, boosting the revenue and obtaining more followers of social media. Hence, the company has made a choice of marketing plan that has analyzed its market, recognized trends and watched for areas they can capitalize. The company is targeting the government clients (Goncharovaet al., 2019). Accordingly, the company would be planning to invest around $7000 and it would be concentrating on

• Tools of marketing
• Constructing and maintaining a website
• Paid advertising

The efforts of marketing of the company must aim on offering robust investment return hence, the organization must aim to positively influence the bottom line. Further, the company would be analyzing the market of its competitors such as Nexus Infrastructure and accordingly optimize its websites through publishing suitable content on a regular basis and ensure that no 404 errors take place (SAVANT and PANGANTI, 2018). The company can choose to concentrate towards SEO strategy.

On the HR front, the company would enhance the HR department by:
• Developing HR self-service portal
• Application of employee management
• Attendance records and monitoring of time
• Offering easy checking in case of staff rotas
• Employment of skilled workers
• Training of the existing employees to cope up with requirements of government projects and to enable them to use the smart and upgraded technologies in the construction industry.

The projected income statement and cash flow statement of the company:

Figure 3: Projected income statement

Figure 4: Projected cash flow

Business structure: It is a small private company and for getting the government projects the company would concentrate on:

• Acquiring the data of tender
• Respond to entire data in connection to the tender
• Concentrating the terms and conditions with utmost care
• Evaluation of tender depending on money worth
• Initiate small
• Follow the present trends of market and circumstances

Finance and business
Since, the company is focusing on small government projects, the sources of finance for the company would be:

Owned capital – Equity is a type of owned capital that can be source of finance for the company. It would originate from the promoters and the types of sources are equity, preference, convertible debentures, retained earnings and venture fund. Moreover, when the business prospers and accruals of internal nature such as benefits of the organization are not suitable enough to meet the financial requirements (Singh and Wasdani, 2016). The promoters have an option of choosing the ownership or non-ownership capital. The choice is to the owners and in this case they would have the benefit of not having the burden of paying installments of interest.

Borrowed capital – In case debt or borrowed capital, the company would be turning towards the commercial banks, financial institutions and common public through debentures. In such capital type, the borrower would be creating a charge on the business’s assets that implies the organization by disposing off the assets in situation of liquidation. Another characteristic of the borrowed capital is a steady payment of capital repayment and fixed interest. In this situation, the company would be enjoying certain benefits as there would be no reduction in control and ownership of business. Further, the borrowed fund’s cost would be low as it is a kind of deductible expenditure.

Risks in business
The most prominent risk on the face of construction business is of productivity issues and labor shortage. In the absence of manpower, any project taken up by the company might take longer time than expected. In this way there lies the risk of potential delays. Hence, for the purpose of mitigating the risk of labor delays, the company must provide benefits and competitive wages to the workers and generate a robust company culture that appreciates the employees with rewards for their dedication and hard work. For the purpose of retaining the workers, the company would offer opportunities to them through mentoring and training.

The second prominent risk of the company is probable harm and accidents of the workers. Any occurrence of serious accidents might delay the project and decrease the productivity of the workers. Hence, the company must invest in proper PPE kits for the purpose of avoiding accident (Serpellet al., 2017). The company would make sure that the subcontractors are able to comprehend their commitment towards safety and offer training before the work begins. While dealing with the subcontractors the company has the risk of underperformance by the sub-contractors and this might entirely crash the project. Hence, the company would be proactive in controlling the subcontracts if the company is able to suspect that certain things are getting off track. The company would have a stern watchoutdelayed deliveries of materials and the catastrophe of payments of suppliers. It is important for the contractor to acknowledge and address red flags irrespective of their performance.

Reference
Cartmell, K., 2019. Making It Out of Wood: Luxury marketing through social media for small business.
Chuluunbat, N. and Empson, R., 2018. Networks and the negotiation of risk: making business deals and people among Mongolian small and medium businesses. Central Asian Survey, 37(3), pp.419-437.

Cox, J. and Nguyen, T., 2018. Does the crowd mean business? An analysis of rewards-based crowdfunding as a source of finance for start-ups and small businesses. Journal of Small Business and Enterprise Development.

Goncharova, N.A., Solosichenko, T.Z. and Merzlyakova, N.V., 2019. Brand platform as an element of a company marketing strategy.Finance assignment International Journal of Supply Chain Management, 8(4), p.815.

Nenonen, S., Storbacka, K., Sklyar, A., Frow, P. and Payne, A., 2020. Value propositions as market-shaping devices: A qualitative comparative analysis. Industrial Marketing Management, 87, pp.276-290.

SAVANT, A.S. and PANGANTI, A.A., 2018.

CHALLENGES FACED BY HUMAN RESOURCE MANAGEMENT IN CONSTRUCTION FIRMS.

Serpell, A., Ferrada, X. and Rubio, N.L., 2017.Fostering the effective usage of risk management in construction.Finance assignment Journal of Civil Engineering and Management, 23(7), pp.858-867.

Singh, C. and Wasdani, P., 2016. Finance for micro, small, and medium-sized enterprises in India: Sources and challenges.

Stone, D.L., Deadrick, D.L., Lukaszewski, K.M. and Johnson, R., 2015. The influence of technology on the future of human resource management. Human resource management review, 25(2), pp.216-231.