Case Study – Inner City Paint
University of the District of columbia| Strategic Audit Plan/ Case Analysis| Case 28 – Inner-City Paint Corporation| | [Type the author name]| 3/21/2013| Business Policy TR 5:30pm – 6:50pm Spring 2013 | I.Current Situation A.Current Performance 1.
Poor financials 2. High account receivables 3. Very disorganized system of business 4. Lack of Customer Confidence B. Strategic Posture 1. Mission: To produce a paint that was less expensive and of higher quality than what has been used commercial buildings, etc. 2.
Reputation: Built on fast service; frequently supplies paint to contractors within 24 hours. 3. Primary Market: small to medium sized decorating companies 4. Policies: Walsh handles all mail, payments, and billings II. Strategic Managers A. Top Management * Consists of Stanley Walsh who handles all mailing/billing, payments, etc. * Office is managed by Mary Walsh (Walsh’s mother) with help of two part –time clerks * Plant Manager is an acquaintance of Walsh’s who only has experience as a painter III. External Environment (EFAS) A.
Societal Environment 1. Economic a. The slowdown in the housing market combined with a slowdown in the overall economy caused financial difficulty for Inner-City Paint Corporation (T) b. Now required to pay cash on delivery (C. O. D. ) for its raw materials (T) 2. Technological: Computers and Information Technology offers opportunity to better organize the business (O) B. Task Environment 1. Rivalry High: Larger orders usually go to larger companies due to lack of customer trust. (T) 2. Competitive Prices (O) 3. Threats of Substitutes High (T) IV.
Internal Environment (IFRAS) A. Corporate Structure 1. Thirty-five employees (20 part-time); most unskilled workers who lack training (W) 2. Lack of Delegation: lacks employee empowerment and too much of workload is carried by the business CEO/President, Mr. Walsh (W) B. Corporate Culture 1. Rumors abound that the company is in difficult financial straits, that it is unable to pay suppliers, and it owes a considerable sum for payment on back taxes (W) C. Corporate Resources 1. Marketing: Lacks a professional salesman other than the owner (W) 2. Finance . Current Ratio of . 92 indicates that the company has an issue paying its short-term liabilities b. Return on Assets of 5. 98% indicates that the company is asset-heavy 3. Facilities: Cheap Rent (S) 4. Inventory: Lack of a Consistent and Reliable Inventory System; owner mental keeps track of inventory (W) 5. Human Resources: The Plant Manager lacks experience or training as a manager. (W) 6. Information Systems: No computer system used for business, very disorganized as a result (W) V. Analysis of Strategic Factors (SWOT Analysis) A. Strengths . Competitive Prices b. Family Business with origin in community c. Fast Delivery for Small Orders B. Weaknesses a. No Financial and Inventory Controls b. Lack of Business Network/Computer c. No Inventory System C. Opportunities a. Hiring professional salesmen to ensure consistent growth and consultants to identify problems and provide solutions b. Attract more market share by raising customer perception of reliability D. Threats a. No Audit of Corporation b. Large Orders usually go to larger companies VI. Strategic Alternatives and Recommended Strategy
A. Strategic Alternatives 1. Management Improvement a. Mr. Walsh needs to learn employee empowerment and delegation. He lacks trust in his employees and therefore takes on too much of the business’ customer affairs. b. The plant manager needs to be trained in management due to his lack of experience. c. Public Relations specialist and marketing specialist needed to better handle business and consultations. 2. Facility Improvement: More equipment may be needed to ensure consumers that they won’t have to worry about orders not being ready or too large to handle.
B. Recommended Strategy 1. Salary Cuts for All or Cutback of Employees: The President’s six figure salary is too much for such a small business. 2. Find and Research new suppliers: The high Cost of Goods Sold is greatly reducing profits. 3. Greatly Improve management skills and create policies 4. Hire Salesmen to increase business market share 5. Collect Bad Debt from Clients; Take less credit accounts and more cash accounts because Account Receivables is too high. 6. Create an effective Inventory System that better tracks Inventory on hand.