A Service Provided by HBT ANSWER Hick Bickington Tile (HBT) Ltd is a renowned company in the field of tile manufacturing. The basic and the core business of the company is to produce and sell tiles. Tile is the product that HBT manufactures and over the years their product has become such renowned and dominant that HBT has captured 6% of the UK ceramic tile industry. This boost is only because of the fact that the company has used great quality of raw material and with the help of their first-class designers; the company is able to produce best quality tiles for its customers.
The service that HBT is providing is by assisting their corporate clients to find suitable products which are in line with their needs and the market trend. This service provided by HBT helps them to enhance their value amongst their high profile clients. HBT realizes the fact that the major issue in the tile industry is basically related to designing of their product. To ensure this, the company has brought together their best designers to work with their corporate clients in order to identify different trends in the tile market and properly designing their product accordingly.
Q2. Identify two stakeholders of HBT and explain how they might be involved in stakeholder conflict. ANSWER Stakeholder is defined as a “person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies”. (Stakeholder, Business Dictionary. com). Besides this definition, a stakeholder is a person or a group which affects or gets affected by the operation of an organization. The two major stakeholders of HBT are its customers and its suppliers.
The customers of HBT include normal retailers as well as other influential corporate client of the company. The suppliers of HBT are its raw material suppliers of white clay. North Devon Clays Ltd is a major supplier of good quality white clay to HBT. Both the customers and the supplier can have their individual interests and the main collision of interest would occur when the customer would want the product i. e. the tiles at a low price while the suppliers of the raw material would want a better and higher price for the white clay that they would be providing.
(Phillips, 2003) Q3a. Explain the difference between profit satisficing and profit maximizing [8 marks] ANSWER Profit satisficing is the behavior in which profits are kept to minimum acceptable level, the level is decided by international equity and bond markets. Profit maximizing on the other hand is the opposite of the above situation. The highest level of profit is targeted by a company and the employees strive hard to work for that.
The difference between profit satisficing and profit maximizing is that profit maximizing targets the highest possible limit, whereas profit satsficing technique is adopted to either keep a target for an underperforming company or to improve customer perception of the company. (Tutor2u, 2010; b. On the basis of the information in the case study do you consider HBT to be a profit satisficer or a profit maximiser? [12 marks] ANSWER According to the case study, HBT Ltd seems to be a profit satisficer.
According to the salient features of a profit satisficer, a profit satsficer would always seek to keep a limit on its profits and would try to achieve those. This would help in satisfying the shareholders of the company. The company, over the years, has brought an immense reduction in its production costs; this is only being done to keep enough profits so that HBT Ltd could compete in the market and with the great Chinese pressure, the basic aim of HBT Ltd would be to keep such a level of profit that can help the company to survive in the long run.
With the survival objective kept as a primary motive, HBT Ltd could move on to reduce their costs further and could try maximizing their profit and be a profit maximizing firm. (Hanan, 1982) Q4. Identify and explain one external factor which you believe may limit HBT’s growth and development in the UK market.
ANSWER The external factor that may limit HBT’s growth and development in the UK market is the extra competitive nature of the tiles industry. The tile industry in the UK market is facing severe competition due to the Asian manufacturers. This competition is such that the UK market is dominantly conquered by the Asian manufacturers.
These Asian manufacturers carry a low unit cost making them more profitable as compared to HBT Ltd and this factor can restrain the growth prospects for HBT Ltd. (Environmental analysis) Q5a. What is a SWOT analysis? ANSWER SWOT analysis is a internal and an external analysis of an organization. It focuses on the Strengths, Weaknesses, Opportunities and Threats of the organization and after all these factors are analyzed a proper strategy is developed. “The SWOT analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates”.
(Quick MBA; United States, 2008) b. Identify and clearly explain one strength of HBT ANSWER One of the major strength of HBT is that the factor the company has kept a positive focus on the environment in which it operates, this clearly suggests that the company is socially responsible. The company has kept up measures to keep its carbon footprints very low over the years, it has created certain department to deal with such issues and this corporate responsibility factor has been formally informed in the whole organization. This helps them to increase their image in the eyes of the customers and such responsibity always helps as an advertising campaign.
Q6a. What do you consider to be HBT’s unique selling proposition [USP]? ANSWER HBT’s unique selling proposition is their continuing aim of producing and selling high quality goods. b. Explain your answer to Q6a. ANSWER This shows that the company does not compromise on their product quality at the expense of reducing their costs. Although the company has reduced its production costs over the years but this has not been achieved at the expense of the quality of their products.
The raw materials that HBT Ltd still opts for is one of the best quality white clay. This enhanced quality of the raw materials ensures that the company has kept its quality standards intact and has reduced its costs too. Q7. Using Porter’s five forces model, analyse the likely profitability of HBT in the UK. ANSWER According to Porter’s five forces model, the company’s profitability can be analyzed as such: The barriers to entry are good because of the high capital costs, this eliminates the risk of new entrants. The bargaining power of the supplier can be considered high as there is only one good supplier of white clay in the region where HBT Ltd’s factory is based. The bargaining power of customers is a bit a mixed up, the corporate client might have a better bargaining power as compared to the retailers. The threat of substitute product is always there for any organization but the current customer preference is with the tiles market.
It cannot be sure if the substitute product manufacturer (wood flooring, marble flooring, etc) come up with some innovative idea that can dent HBT Ltd’s operation. The competition in the tiles industry is considerably high because of the Asian manufacturers that pose a clear threat of winning t market share of HBT Ltd because of the lower prices that they offer. (Swaan et al, 1999; Porter, 2008) Bibliography Alternatives to profit maximisation theories, tutor2u, 2010 http: //tutor2u. net/economics/content/topics/buseconomics/non_profit_max. htm Environmental Analysis, Business Dictionary. com http: //www. businessdictionary. com/definition/environmental-analysis. html HANAN, M. (1982). Key account selling: new strategies for maximizing profit and penetration. New York, AMACOM. PORTER ME.
(2008). The five competitive forces that shape strategy. Harvard Business Review. 86, 78-93 PHILLIPS, R. (2003). Stakeholder theory and organizational ethics. San Francisco, Berrett-Koehler Stakeholder, Business Dictionary. com, 2010 http: //www. businessdictionary. com/definition/stakeholder. html SWAAN ARONS, H. D., & WAALEWIJN, P. (1999). A knowledge base representing Porter's five forces model. Publikaties, 9938. Rotterdam, RIBES, Rotterdam Institute for Business Economic Studies SWOT analysis, QUICKMBA, Knowledge to power your business. http: //www. quickmba. com/strategy/swot/ UNITED STATES. (2008). SWOT analysis: a tool for making better business decisions. [Washington, D.C. ], U. S. Dept. of Agriculture, Risk Management Agency.