Operations and Management of Mothercare - Example

Mothercare Executive summary The report highlights the overview of the Mothercare organization, how it carries its operations and the management of the organization. The overview entails the financial position of the organization and any services that the organization delivers. The key stakeholders and the shareholders of the organization are also brought to view as they help in the running of the company in one way or the other. The sources of finances and revenues of the organization are also discussed in detail in this report. It is also necessary to note that challenges hit the organization, and hence the challenges are also uncovered. A recommendation for the company’s future improvement is then discussed. 1.0 Introduction Mothercare plc. is a company that specializes in the production of merchandise necessary for the expectant mothers. Moreover, it also specializes in the production of merchandise meant for children aged below eight years. The company operates on the London Stock Exchange and has risen to become one of the most productive companies in London. The company was started in 1961 and came to be operational on the London Stock Exchange in 1972. The company has its headquarters at the Cherry Tree Road, Watford, and Hertfordshire. Most of its operations are conducted via the online platform that has seen to it that the company grows in its capital base over the years (Papatheodorou, p8, 2006). Moreover, the company employees new applicants into the organization and shapes them into a more productive form. Employees of the company are dedicated to achieving the best possible results for the company. As per 2012, the company had five thousand, eight hundred and fifty-two employees all of who were permanently employed by the company. The company is retail and deals with products for the expectant mothers as well as the merchandise for the children below the age of eight years. Their marketing strategies entail a vigorous advertisement either online or through published materials to enhance their revenue collection. The company aims at becoming the best company in terms of the retails of the products of the expectant mothers and the children below the age of eight years. Moreover, the company plans to expand its business base in the coming years. 1.1Financial information of the company The company has continually enjoyed its revenue collection over the last decade attributed to the fact that the market has been a fan base to them. As at 2015, the company’s market capitalization lay at 379.22 million Euros while its shares in issue stood at 168.22 million shares. Clearly, these are indicators that the company has been on the upward spiral over the last decade. The company’s good and effective marketing strategies have seen to it that the company remains viable in the market. The table below shows the financial history of the company for the period 2012-2014 in Euros. To march 2012 To march 2013 To march 2014 turnover 813m 749m 725m Eps profits -8.2b 8.1p -8.8p Operating profits -103m -18m -19m Total operating expenses 915m 767m 744m Net profits -92m -24m -28m Net profits before taxes -103m -24m -26m Net profits after taxes -92m -24m -28m From the table, it is clear that the company’s turnover kept on decreasing from the year 2012 to 2014 on the other side, its net profits after taxes increased from 2012 to 203 but slightly decreased in the following year. The company also invested massively in the shares that so to it that it issued out 168.22 million shares in the year 2015 as compared to its 150.33 million shares in 2014. To purchase a share, one needs to have 15.36 p, and the individual can purchase as many shares as possible (Financials.morningstar.com, web, 2015). Moreover, the company continued to collect a lot of revenue due to its comprehensive marketing strategies. It should also be noted that the company faces a number of operating expenses that makes it not achieve a full revenue collection base. However, the company’s management is looking for ways to ensure that it cuts costs while increasing productivity. The information about the company’s turnover over the period 2012to 2014 can also be represented in the pie chart as shown below. 1.1.1Mothercare competitors When entering the market, it is obvious that a given organization has to face competition in the supply of the merchandise to the consumers. Most companies find it hard to cope with the competition in the market and end up getting oust (Ltd, web, 2015). However, Mothercare has remained viable in the market competing with companies such as Metro AG, Zalando SE, Dufry AG and Granvision NV. A comparison is made amongst these companies as highlighted in the table below. The figures reflect the operations of the period 2009-2014. company 5-year revenue% CAGR Med operations margin% Interest coverage% D/E Mothercare plc 1.0 -2.5 -2.7 2.1 XXL ASA 2.3 10 2.5 2.2 Metro AG 3.6 6 2.5 1.0 Zalando SE 4.8 7 2.0 0.0 Grandvision NV 2.7 9.8 - 1.5 The figures in the table reveal that the market is very competitive. Unlike the other companies, Mothercare is affected slightly by the high interest levels in the market. All the companies have an average operation tag and all aim at ensuring that they meet high-profit levels. A healthy competition is necessary in ensuring that the companies compete in the market as well as come up with strategies that will see to it that they attain the highest market share (Financials.morningstar.com, web, 2015). Consumers need that satisfaction from a product. When consumers are pleased with a certain product, they end up preferring the manufacturer of the product. Another comparison of the companies above arises from the strategies they use in marketing their products (plc, web, 2015). The online platform is used by these companies in ensuring that the consumers get their products within the shortest time possible. 2.0 industry and competitor analysis The market has various organizations trading in it, hence; it depends on the type of strategies employed by the given organization in ensuring that it becomes the best in the market (Hoovers.com, web, 2015). Mothercare plc. Have various competitors in the market that want their products to meet the consumer demand. The acquisition of the Early Learning Centre in 2007 was one of the biggest development stride made by the company in ensuring that it acquires its goals. The company’s plans for more innovation also seem to be on course as new technology has already been integrated into the system (Higgins, pp 67-68, 1995). With the implementation of the advanced technology, the company has been on the cutting edge in terms of competition taking over most of the market share. Moreover, the company’s products have a baby touch thus making them unique as compared to those of the rival companies. The company has opened over sixty stores around the world that ensure that the company collects enough revenue from the stores. Expansion is a good strategy for the business as it ensures that there is an increase in revenue collection. 2.1Factors affecting Mothercare productivity In the quest for production, the company is affected by various social, economic, political and legal factors. All these factors help in the shaping of the company’s business as well as my help in guiding the operations of the company. The social factors affecting the company include the general view that the consumers have for the company. The company has to uphold its conduct and ethics to ensure that it wins the hearts of most of the consumers. Consumers and stakeholders will always prefer dealing with organizations that have a good reputation (Learning and action in the first decade — the Mothercare experience, p127, 1998). Mothercare plc. has kept its good reputation over years, making it one of the most preferred toy factories in the UK. Moreover, its employees are friendly and work to ensure that they deliver the best to the consumers. The market environment also affects the operations of the organization. Mothercare has to be prepared for the stiff competition already in the market (Seven Power Strategies for Building Customer Loyalty, p56, 2002). Through the invention of new strategies, the company has remained viable in the market over the years. The company is also guided by rules and regulations that govern its operations. The government of UK has passed some rules that all manufacturers need to uphold. Failure to following the rules may lead to the company being penalized (Learning and action in the first decade — the Mothercare experience, p 130, 1998). Some of these regulations that need to be followed include fairness in the market and the respect to other competitors. Moreover, it is also stipulated that the company needs to stick to its codes of conduct to ensure that its reputation remains remarkable. Political factors also influence the operations of the Mothercare plc. Politicians with vested interests invest into the company leading to an increase in its capital base. When a given country that is a major consumer of the Mothercare’s products is engaged in a political conflict, the company registers low sales because of the shrunk market (Esty and Winston, p 55, 2006).. Hence, the company needs to come up with new strategies that ensure that it attains an increase in revenue collection. 2.2 Company’s social media Social media is a key tool for the company in that it helps in the transfer of information. As compared to the rival firms, social media is widely used by Mothercare plc. for advertisement. With and improved technology, the company believes that the social media is the way forward. Most of the company’s products are sold via the online platform because of the large population that has turned to social media as a way of purchasing products. Most of the companies use different marketing strategies like publications and involvement with people directly. Social media marketing strategy is very effective, in that it captures the attention of most people within the shortest time. Moreover, most people detest distances; thus the online platform used by the Mothercare organization brings the products to their doorstep. 3.0 Challenges facing the company All organizations face challenges from time to time, and it’s only how the companies face and fight the challenges that determine whether the company attains progress or fails to perform. Mothercare has not been exempted from those companies that are hit with challenges. The company has been rocked with challenges over the years (Mothercareplc.com, 2015). One of the major challenges that face the organization is the ever-increasing competition in the market that leads to a smaller market share. Moreover, the aspect of competition has led to the company experiencing a reduction in the amount revenue collected. Moreover, the problem of an increase in the costs of production has led to the company registering low rates of annual revenue collection. The company’s costs, for instance, in 2014 rose by a whopping 4%. The management team attributed the rise to the internal problems experienced in the company over that year (Fool.co.uk, web, 2015). A section of the employees also complains that they work so hard and diligently but rarely get promoted. Clearly, this is a major problem in many organizations and it ends up lowering the employees’ motivation and morale leading to underproduction. Moreover, the political conflict in some of those countries where that company has its stores located has led to a decline in revenue collection as the merchandise is never consumed. Instead, people in those countries concentrate on wars. Countries from the Middle East serve as consumers for the products but in times of war, low sales are registered in these countries. 3.1 Social media channel Different people using the social media platform have different views on the company. Most people think that the company is one of the best Toy and Doll Company in the world. The thought that it is the best company in the world comes from the fact that it manufactures high-quality products that meet the consumers’ attention. However, a small fraction of the social media users think that the company needs to improve its customer service base, especially the way the employees relate to the children. Moreover, they state that the company needs to diversify so as to increase its revenue collection. The management team has also been criticized severally especially with the way they use to handle their employees. Most of the social media users feel that the employees of the organization work long hours but never see to it that they get promotions, and this ends up reducing the company’s productivity. 3.2 Official investigation into the company There has not been any official investigation in the Mothercare plc. relating to its equity and financial use. Hence, the company has maintained its reputation over the years. In so doing, it has led to an increase in consumer base over the years. 3.3 Strength, Weaknesses, Opportunities and Threats of the company The company’s strength entails a good marketing strategy. Good consumer-interrelation and an effective organizational structure. The company’s strength has made it one of the largest forces in the market with an increased capital base (Just-food.com, 2015). However, the company also has a number of weaknesses that include the lack of involvement of suggestions from the consumers. Consumers usually have a lot of say in any company (Customer-service training boosts Mothercare, p 40, 2008). Hence, they have to be involved in the offering of suggestions of what needs to be improved in the products distributed to the market. Moreover, the company does not engage the employees in decision-making. In return, it leads to the company coming up with decisions that do not prove useful to the organization. Finally, the stakeholders also need to be a part of the board as they play a large role in the society. However, this is not the case at Mothercare plc. The opportunities for the company entail a strategic business concept that ensures that the company remains viable in the market (Long, Jacques, and Kepos, p 67, n.d.). Moreover, the company’s social media platform serves as an opportunity to market the company’s products. However, threats such as lack of productivity, global economic crisis and competition in a wider view affect the company. 4.0 Market analysis Market analysis entails how the market is made up, segmentation in the market and the differentiation in prices. Market analysis also looks at the target population when it comes to the consumer base. 4.1 Target market The company ensures that it produces goods and merchandise that meets the satisfactions of the producers. Mothercare plc targets expectant mothers and children below the age of eight years. Clearly, the toys are meant for those children under that age cohort (Long, Jacques, and Kepos, p 33, n.d.). The company ensures that its marketing strategies are effective enough to attract its target consumers. At some point in time, they offer discounts to the customers, and this serves as a way to attract more consumers to purchase their products. 4.2 Social trend affecting the market People will purchase a product depending on the social trends. Over the Christmas period, people purchase dolls related to the period. Usually, when one family spots the other with an impressive product, it is natural for them also to want to acquire the product. Hence, this makes them go for the product in the market. Interactions in the community also serve as a social trend affecting the market. 4.3 Social media consumers The company does most of the sales under the online platforms. Consumers prefer the online platform because it lacks inconveniences and challenges brought about due to traveling long distances to acquire a given commodity. Hence, the social media users think that the company is amongst the most productive companies in Europe. 4.4 Company’s engagement with customers on social media The company uses the social media as a platform for the advertisement and marketing of its products (WIRE, web, 2012). Through the aggressive marketing and involvement with the customers, this has boosted the interactions between the customers and the company and in return, it’s a benefit to the organization. 5.0 Conclusion Mothercare is an example of those companies that have made it in the market due to the strategies that they employ in the marketing of the products. As seen from its profits collected over the last five years, the company enjoys an impressive revenue base attributed to the increase in the number of consumers purchasing the product. However, the company also face challenges that may hinder its progress, but it’s effective ways to fight the challenges keep the company on its toes. 5.1 Recommendations In order to remain on top in the market, the company needs to diversify and increase its production. Clearly, this will ensure that its revenue collection is impressive as well as creating a room for expansion. Moreover, the company needs to increase its number of stakeholders in order to increase its capital base. In so doing, the company’s productivity will be boosted. Customer service training is also necessary as it enhances the relationship between supplier and consumer. Reference List Customer-service training boosts Mothercare. (2008). Industrial and Commercial Training, 40(5). Long, S., Jacques, D. and Kepos, P. (n.d.). International directory of company histories. Just-food.com, (2015). Mothercare plc (MTC) - Strategic SWOT Analysis Review. 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MOTHERCARE PLC Names of Competitors. [online] Available at: http://www.hoovers.com/company-information/cs/competition.MOTHERCARE_PLC.0895b655946ccb32.html [Accessed 7 May 2015]. Papatheodorou, A. (2006). Corporate rivalry and market power. London: I.B. Tauris. Esty, D. and Winston, A. (2006). Green to gold. New Haven [Conn.]: Yale University Press. ltd, R. (2015). Mothercare plc Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis. [online] Researchandmarkets.com. Available at: http://www.researchandmarkets.com/reports/2237603/mothercare_plc_fundamental_company_report [Accessed 7 May 2015]. WIRE, B. (2012). Research and Markets: Mothercare plc Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis | Business Wire. [online] Businesswire.com. Available at: http://www.businesswire.com/news/home/20120925005993/en/Research-Markets-Mothercare-plc-Fundamental-Company-Report#.VUtX8PB0rIV [Accessed 7 May 2015]. Seven Power Strategies for Building Customer Loyalty. (2002). Measuring Business Excellence, 6(4). plc, m. (2015). MOTHERCARE PLC (MTC:London Stock Exchange): Financial Ratios - Businessweek. [online] Businessweek.com. Available at: http://www.bloomberg.com/research/stocks/financials/ratios.asp?ticker=MTC:LN [Accessed 7 May 2015]. Read More