CYCLERMATE REPORT I.Introduction of Cyclermate Lewis Llewellyn and Dai Armstrong were the first two men who made a plan of opening their own company after being redundant as the consequence of the closure of their town’s steel works in South Wales.Both of them belonged to the local cycle touring club and since then, they had become close friends.
With the idea of making a traditional upright cycle in sharp of the 1940’s and 1950’s, Cyclermate Ltd has been established and quickly gained success and attracted a number of attentions of customers owing to its high quality hand – made products and word – of – mouth reputation.
Over the next 15 years, the company had still expanded and continued to be successful when persuading many small cycle shops in Wales and England to display or at least to keep a stock of brochures of its products.
Everything seems to work quite smoothly until 2010, when Cyclermate has faced a lot of issues in terms of finance, human resource and operation. To be specific, the demand among buyers in this field continues to fall even price of each Cyclermate’s product has been reduced; the quality of its products are no longer as good as it was in the past which illustrated by the increase of complaints from customers about its quality and fault and the bank manager has expressed concern about the overdraft which will cost Cyclermate a big trouble if it does not solve these problems immediately.
These are just some of the obstacles which the company has faced so in this essay, I will analyze more clearly about its difficulty and recommend some positive solutions for Cyclermate which it can follows to handle these issues. II. Cyclermate analysis 1. SWOT analysis First of all, in order to have a wide vision about this company, I have used SWOT as a tool to identify and analyze the situation of Cyclermate at the moment. As regards internal factors, one of the strength of this company which makes it different compared to the other companies is unique products.
As far as I am concerned, with the development of technology, many cycle shops nowadays use a modern production chain to dispose and assemble materials. Nonetheless, the cost for this activity is quite high and most of the products will be the same. When it comes to Cyclermate, almost processes have been settled by hand; thus, staffs can easily add their creation into products and attract customers by the wide range of style of its bicycle.
Furthermore, by using traditional method, Cyclermate have brought some new things to the market making buyers feel more interesting, especially when products have been sold in the market are quite common and familiar. When it comes to the weaknesses, as almost Cyclermate’s products have been made by hand so mistakes and faults are inevitable. That is to say, besides the price paying for materials, it also has to spend some more for fixing service.
Moreover, with the lack of employees and capital, Cyclermate has struggled in operating the company and consequently, it normally has to face the insufficient production selling in the market. As regards external factors, a huge opportunity for Cyclermate at the very first is that it produces an unfamiliar product so Cyclermate can avoid big competitors and has a chance to dominate the market. Besides, according to Mr. Llewellyn, there is still strong growths to come in the cycle market as more and more people abandon their cars; hence, this is a good chance for this company to reach to its customers.
One of the most striking features which should be considered here is the economic crisis occurring in 2008 resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of US dollars, and a downturn in economic activity.
As the consequence, people will have to think about a solution to save money and one possible way at this time is reduce the usage of petrol; in another word, reduce using gas transportation and change to physical vehicle such as bicycle. So if Cyclermate can attracts customers and creates a habit of using bicycle among them, it definitely will success in the future. The only threat of Cyclermate which I want to mention here is the appearance of some competitors in this major for example Halfords which gained success at the moment even there are many cycle shops are closing – outpriced.
At the very first, Cyclermate was one of the first company entering this field so it did not have to pay much attention about how to deal with the others competitors. Nevertheless, when the time passed by, many companies have noticed about this potential market so it is time for Cyclermate to try their best to gain trust of customers if they do not want to lose the market to their rivals. 2. Current issues of Cyclermate a. Finance problem After having an overlook about the situation of Cyclermate, the next part of my essay will come closer to all the issues which Cyclermate has met.
Firstly, this company has to deal with a huge trouble which comes from finance. As I mentioned before, Cyclermate had to reduce the cost of its product to maintain sales, costs are rising and the overdraft is increase year by year which push the company on the edge of bankruptcy. Besides, according to Ms. Barry the budget for the coming year will further decline and possible trading losses as the consequence of a decline in sales. Moreover, based on the profit statement for the last five years, it is clearly that the finance issue of this company is in danger.
To illustrated, the profit retained of the company had decreased significantly compared to the last 4 year (from ? 42734 in 9/30/2009 to ? 12724 in 9/30/2010) and it did not even pay the dividends for shareholder and the cash on hand of Cyclermate in 30/9/2010 was just ? 657; put it in another words, the liquidity of this company was too low and if there was something happen for example the banks did not believe Cyclermate anymore and they wanted their money back, it could not have enough cash to pay for its creditors and had to mortgage its non-current assets; hence, this company will not have enough machine or capital to run its business.
In order to help the company overcome this problem, there are some solutions which I am considered will be possible. First, according to the financial statement, even the direct sales units sold was lower than shop sales price, the profit which Cyclermate received from direct sale was much more higher. To be specific, in 9/30/2006, even there were just 743 units sold by direct sales, compared to 1010 units by shop sales, the revenue from the former was much more higher ( 743×650 – 1010×390 = €89050).
That is to say, by reducing the products sold in shop, Cyclermate can saves and gains more money. Furthermore, in order to maintain the connection which suppliers after reducing the quantity, Cyclermate can negotiate with these suppliers and offer some extra interest rate or commission so that its supplier will still remain display and sell the product of this company. Another solution is that Dai Armstrong should allow Lewis Llewellyn to retire. The reason is that Lewis Llewellyn himself does not willing to work anymore and he usually find his work increasingly tiring and stressful.
Besides, although he is one of the first 2 men who established Cyclermate as well as the shareholder of the company, he himself thinks that this company should close down or should be sold for the others UK firms. If employees in Cyclermate know what he is thinking, will they want to work for its workplace anymore; and even they still work for this company, no one can guarantee that they will put 100% of their mind on working. So let Lewis Llewellyn go seem to be the right choice at this time.
However, Dai Armstrong must negotiate with Lewis about his share in the company because if he wants his money back; I believe that the capital of Cyclermate will not meet the standard to run its business. In my opinion, the negotiation will success as these two men has a strong relationship and has worked with each other for such a long time so if everything is ok, Cyclermate will save a lot of money for the next coming year. b. Human resources problem There are a number of problems with the human resource of Cyclermate. First of all, it does not have enough staffs to run the business smoothly after expanding.
For instance, Dai Armstrong is the chairman of the company and normally, he must takes in charge of operating and controlling the activity of Cyclermate and distributes a particular job for his employees. Nonetheless, owing to the insufficient workforce, Dai himself still makes all the frames, using the original jigs constructed in his garage all those years ago and the inevitable thing is that he is finding it hard to keep up this level of production, both because of the physical demands of the task, and because of his other duties as factory manager and business director; as regards package, it is usually taken by anyone who has spare time.
That is to say, it cannot guarantee the productivity of the firm, especially in rush time, when the staffs cannot even meet the quantity requirement of their main duty so how can they handle another. Moreover, at the moment, the company does not have as much skillful staffs as possible in order to maintain the productivity of Cyclermate and Gwyneth Morgan is one of typically example. She usually deals with internal and external enquiries, ata entry, and other routine tasks which is classify as paper work; however the main responsibility of her job is purchasing and help company avoiding disruption from stockouts; hence, the work cannot meet the efficiency as expected or Ffred Gregory who is 18 years old and quite new to the process, often has to work overtime to ensure that orders are met on time so that training him has further slowed production recently. Of course, Cyclermate still has some professional employees like Idris Pugh who was recruited from a local cycle repair shop.
He is a perfectionist in terms of wheel manufacture and never cause for any complaints but sometimes, the work were late for appointment owing to his old-age and bad healthy. As far as solutions are concerned, I have found out some possible ones which Cyclermate can applies. At the very first, it should re-train the staffs in the company in order to meet the requirement of their field. This train can be hold by the boss himself or skillful employees of Cyclermate so that they can not only save a bundle of money for the company but also have more time to chat and understand each other, especially newcomers.
Moreover, after enrolling in this course, employees should be guaranteed to understand their job clearly and easily to combat with the task given. Another thing which can be done is recruit some new employees for Cyclermate. This is kind of positive way at this time as a new and professional staffs can help the company find out a new and creative way to complete the task and maintain the requirement quantity and quality of the company. However, I do not highly recommend this solution as the finance issue of the company is in danger and it is hard for Cyclermate to hire some new employees at this time. c. Operation problem
The very last problem of Cyclermate which I want to mention here is Operation ones. First of all, the leader of the company does not have a clear distribution for each staff which leads to the unstable in their job and costs a low productivity for such a long time. To be illustrated, Dai Armstrong has to take charge of many different responsibilities included the chairman of Cyclermate, the worker who makes all the frames of products and even a packaged man. With a bunch of workloads which have been handled like that, how can this man has time to think about a new strategy, a new plan to improve the current situation of the company?
And the others workers, with a number of things have been done in a short time, how can they guarantee that no mistake will be made, not mention about some majors are not their professional field. Besides, as far as I concerned, before establishing Cyclermate, Lewis was just on his way up from apprentice to be chief mill engineer while Dai had progressed from “office boy” to a senior marketing post. That is to say, with this current position, how can they have enough management skills to lead the other in the company?
Last but not least, the problem even come from the top manager of the company which is Lewis and Dai who share management of the business, though by nature of their differing roles, Lewis tends to focus more on production issues and Dai on external relations. Like people have said “ 1 dat khong the co 2 vua”, with a different role like that, they cannot guide their employees to a single task which is break the basic rules of a corporation; consequently, Cyclermate’s staffs do not know what to concentrate on and lack of clear vision about the goal of what they have to do.
When it comes to the solution, I believe that there are some ways which can help Cyclermate improve the current situation of this company. Firstly, Dai Armstrong has to set down a clear distribution for each position in the company. He has to reduce the multi – responsibility among his workers so that they can focus 100% on their current job and maintain the productivity of each process.
Secondly, as I mentioned above, If Cyclermate accepts the retirement of Lewis Llewellyn, it can concentrates deeply on a single task at the moment for example maintain the productivity or improve the quality of its products, etc which is clear so that employees will know what they have to do to meet the goal of the company. Lastly, in order to save money, save materials and still supply enough products to meet the need of customers, Cyclermate itself should considers to apply JIT method on produce the products.
This method was described by Henry Ford in his book as a production model in which items are created to meet demand, not created in surplus or in advance of need. I absolutely think that this solution will fit the Cyclermate’s situation well, especially when it has a huge issue with finance; Thus, by calculating an exact figure of materials has been and should be used, this company can avoid the waste associated with overproduction, waiting and excess inventory. In order to support for this method, I highly recommend the company to use Kanban cards to make JIT become more efficiency. As far as I oncerned, this Kanban card is like a label which contained a number of information about products such as name, number of units and a variety of other news that clearly conveys what must be done. By applying this card in manufacturing, especially in the situation of Cyclermate when the work of each staffs does not fix, it will help employees to control and identify which should be done next by analyze the color of Kanban cards for instance the white or green Kanban cards mean that a product do not have to manufacture yet, the yellow ones mean that employees should start producing a goods immediately, etc.
III. Recommendation After analyzing the case study about Cyclermate, I want to note down briefly about some potential routes which this company can follow to reach to the market. First of all, as far as I am concerned, Cyclermate has a good supplied channel who ready to advertise and sell the product of the company and Word of Mouth method seems to bring a positive chance for it to attract customers.
That is to say, developing this supplied channel can help Cyclermate increase its image on the eyes of customers and there are many others retailers which have not been asked about selling Cyclermate’s products so this a one of a best way for this company to expand its business. Another striking feature here is that it can focus on direct sale to sell its product to buyers. This method can help the company reduce the price paid for middleman and furthermore, Cyclermate can take this chance as an opportunity to interact with customers in order to understand and identify what they really want and need.
Lastly, with the significant develop of technology, marketing is now become more and more important within any corporation around the world to approach and attract buyers. However, this way seems to be forgotten by Cyclermate indicated in the meeting’s report that the marketing activity of this company in recent year is quite rare. As the consequence, Cyclermate can spend some of the money saved from firing Lewis Llewellyn and profit retained to improve this activity to rise up its status and advertise a great hand-made bicycle to customers. IV. Conclusion
Cyclermate Ltd, in my opinion, is a brave company as it does not follow the trend of current market but identifying and having its own idea to manufacture a unique product, even in a harsh time like this. However, it has met a number of issues when trying to operate its business which I have mentioned above. In the future, there will be a lot of difficulties which this company has to handle. Having said that, with all the ideas and solutions which I have noted down in my essay, I strongly believe that it is possible for Cyclermate to recover and strengthen as it did in the past.