Scenario- Magic Kitchens
Magic Kitchens is a family run company employing around 500 people. The company is rather informal in that job descriptions are very vague for all of the employees (with the result that all employees can be used to undertake virtually any task that their supervisor or manager decrees is appropriate), but there is a very formal hierarchy and it is expected that supervisors keep a close eye on their subordinates and see that they do the job "their" way. Not surprisingly, the staff attrition rate is very high - approximately double that of comparable organisations. There are 4 directors of the company - all members of the same family; they undertake all the decisions, do not take advice from their senior management team (and certainly not from anyone below that level), and have been known to sack a manager simply for holding a different view to them. Major suppliers to the company find that the directors are very business like but are impossible to build any rapport with.
The Directors of the company are Operations - responsible for the manufacture of kitchen equipment; Commercial - responsible for ensuring that purchasing is undertaken maximising quality and minimising prices paid; Financial; Sales and Marketing.
Magic Kitchens provide quality new kitchens to anyone who wishes to purchase from them. They manufacture a wide variety of kitchen equipment, offering a wide range of colours and styles. Magic Kitchens is one of the best known companies in its field in the UK, and whilst they have an excellent reputation for high quality craftsmanship, many customers complain that there levels of after sales care is shoddy; as a result any problems that exists following a new installation may be left for weeks after a new kitchen has been installed.
Magic Kitchens have always been proud of the wide range of colours and styles they offer. However, there has been a big increase in the demands for kitchens and the directors of Magic Kitchens know that by offering the choice that they do means that they cannot respond effectively to an increase in demand for their products, as the variety conflicts with mass production. As result, there is fear that new kitchen providers will enter the market threatening their position as an industry leader.
Most customer enquiries and requests for kitchens come by telephone or email to front office admin staff who then allocate the requests to sales staff; there is no method of ordering online although they do have a website which displays their designs and colours. The sales staff currently advise on styles and colours with potential customers and when an agreement is about to be reached will negotiate and agree prices with customers; this is where sales staff get most of their job satisfaction, and commission, by negotiating the highest price possible for a kitchen installation
Magic Kitchens back-office admin staff are responsible for raising invoices, processing payments, despatching orders and producing management reports. The issue here is that none of the back-office admin staff have any of the skills that one would expect for dealing with the financial side. In addition, there is a lack of accurate and detailed management information. There are no automated systems, for example, for analysing sales of different types and styles of kitchens. This makes forward planning very difficult as trends in sales are not picked up quickly. As a result, the company's manufacturing process cannot respond to sudden changes in demand; indeed, it is so risky to manufacture in anticipation of future demand, most production only takes place as a result of a form order being placed which means that, for any order, installation usually takes place several weeks later.
You are a member of a team performing a business management study for Magic Kitchens with a view to recommending how it secures its business future.
Your job is to recommend how Magic Kitchens should proceed.
Describe the key issues that need to be addressed if Magic Kitchens are to remain a viable business
Your step by step approach to the Outsourcing of different parts of the business
Write out 5 questions that will be important in an "invitation to tender" document and explain why, in this scenario, you regard them as so.
Your thoughts about the current management style and how it will need to be modified to maximise the success of a new business model as you have described above
Discussion and Assumptions
Discussion of assumptions, what additional information that you feel you need.