Riveau Yachts: Main Points to Remember

SUN GEN: Main points to remember

These are not always in the best order, but in the order they appear when reading through the case study. I have tried to link them where appropriate. I am not trying to predict questions, but giving you ideas for answers and things to say that link to SunGen, do not try and ‘shoe horn’ these points in willy-nilly, you must make sure you answer the question asked.

There is no substitute for being able to think for yourself on this paper!

This is not meant to be a complete and exhaustive list, but I think I have covered the main points of the case study. You must remember to link your answers back to Sun Gen. What would work for them? They are a fairly small company, with a good reputation, but are starting to face more competition. In general, they are a small niche company, and risk getting squeezed out by firms with more market power. This needs to be borne in mind when offering suggestions. The number (and type) of customers is fairly small; this will limit, for example, their choice of marketing. You also need to remember that we are dealing with two separate companies. Electrical solutions (a large(ish) PLC), and Sun Gen (a small(ish) Ltd.)..

 Economies (and diseconomies) of scale is a theme that runs throughout the case study. Elec Sol face competition from big MNC’s that can gain huge purchasing EofS. Could argue that they have weathered that storm as profits seem to be holding up.  Advantages and disadvantages of floating more of Elec sol on stock exchange. Remember that this could be a way for Derek to realise some of his wealth. Shares in Ltd’s can often be difficult to off-load. Shares in a PLC means he can convert his paper wealth into other things e.g. sports cars etc or into other investments to spread his risk.  Also share ownership scheme. A cheap way of paying high salaries. If company is struggling for cash, then especially good. See Microsoft.  “First mover advantage” The benefits of being first into a market. Often means that you are seen as being the best, and others cannot break that impression. You build up the expertise and contacts, so are always the best choice. Look at amazon.com. Once established, it has proven impossible for others to break their grip on online book retailing. Why would I risk going to a new company when I already know I am happy with Amazon. So, how does that new company get off the ground? However, others could learn from your mistakes.  Target market (Sun Gen) is mainly (Though not totally) home builders. This will influence their marketing. Not aiming at final consumer. Below the line is probably a more likely form of promotion, but you should not rule out things like trade magazines either. It needs to be carefully targeted.  JIT seems a possibility for SG. However, can suppliers meet deadlines? Especially if coming from overseas. Stress the importance of building up good relations with suppliers. Not just cheapest, but right quality too. Looking at stock turnover figures, not sure that JIT is particularly good at the moment.  Investment appraisal. If running at 98% capacity, should they build a new factory. Think about is demand likely to sustained:-probably. Location. Effect on existing workers, less overtime, but more regular hours.  Flexible working. Saves the firm on staff costs through quiet times. Often much lower taxes, pensions etc for temp staff. However, do these workers have any loyalty to sungen? Are they bothered by working hard, if only on a temp contract? May well leave Sungen in lurch. Increased training costs as lots of new workers. Hard to build up team spirit. Quality seems to be a big issue, and this may suffer.  TQM, possible solution to quality issues, but may clash with above.  What is public relations?  How can we make more sure that market research is not biased/more reliable?  Advantages of a flatter structure. Issues of control. Again, especially if largely temporary workforce. How can they get around coms probs? Email? Regular meetings.  Advantages of training.  Appraisal: Linked to training. See notes for pros and cons.  Sources of finance: Remember that big prob is lack of working capital, so selling shares not appropriate. Need to focus on short term solutions.  If long term project (e.g. building new factory), then selling shares is appropriate. Maybe Es does not want to loose control of SG. See above. 