Managing and Running a Small Business on Rowlinson Knitwear

TASK 1

P1. Major Considerations A Small Business Needs To Address When Planning And Allocating Resources To Achieve Business Objectives

Overview of the Company

Rowlinson Knitwear is a manufacturing cloth manufacturing company that was established in 1972 and they conduct their business operations and function in the market of the United Kingdom. They generally deal in the apparel and textile production industry, in which they manufacture quality school wear and corporate wear (Rowlinson, 2019). There are various planning strategies and allocation of resources that are considered by the respective company in order to achieve goals and objectives in an effective manner; some major of them are described below:

Research: When a company wants to conduct or start their business or enterprise, it must conduct research to identify appropriate plans and resources that it will require to fulfil objectives and goals in an effective manner (Bridge and O'Neill, 2012). So when Rowlinson Knitwear started their operation in manufacturing cloth for kids and corporate people. They will conduct research so that they know what the current trends and requirements of the market are. By this, they are able to understand the approaches, needs, and demands of customers, and according to that, they can plan and allocate their resources for achieving goals and objectives.

Determine the purpose of the plan: Before starting a business or enterprise, it is essential for the owner to identify and determine the purpose for which they want to establish and run the business. When a person is clear with their purpose, they are able to plan strategies in an effective and appropriate manner. That, directly and indirectly, helps them in managing and running their business in an effective manner. When a person has a clear purpose, they are able to make strategies in an appropriate manner according to the needs and demands of customers.

Identify the resources: When Rowlinson Knitwear is clear with its purpose, they are able to decide on resources and plans in an appropriate manner, which helps in conducting its operations and functions in appropriate ways (Burns, 2016). So management of the respective company identifies resources that they are required to manufacture kids' schoolwear and corporate wear. When a company identifies their resource requirements, it conducts its operations and functions in effective and appropriate ways.

Evaluate the human resources: In this management of Rowlinson Knitwear analyse and determine the human resources that they require to achieve their target and goal in an appropriate and effective manner. Such as according to requirements, the respective company hires and trains employees so that they conduct work in an effective and quality manner. When employees get trained, they can do their work or task in a quality manner and in an effective time.

Promotional activities: When a company decides to start a business, they have to do promotional and advertisement so that the target market knows about the product and services. So the management of Rowlinson Knitwear promotes their products and services so that customers know about them and purchase their products in high quantity.

By conducting all this Rowlinson Knitwear, they are able to operate and function its plans and resources in an effective manner and by doing so, it is also able to achieve goals and objectives in an appropriate and effective manner.

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TASK 2

P2. Explain And Evaluate Different Processes Of Customer Relationship Management.

Customer relationship management refers to practices, technology, and strategies that organisations conduct and operate in order to maintain and establish relationships with customers or clients (Chiliya and Roberts-Lombard, 2012). This company can maintain and retain customers in an appropriate and effective manner. For this, Rowlinson Knitwear develops and adopts various processes or techniques for maintaining effective customer relationships that help in maximising profit in an appropriate manner. When the respective company maintains and establishes effective relations, customers become loyal and purchase their products to fulfil their needs and demands. For evaluation of this Rowlinson Knitwear, adopt techniques that are mentioned below:

Customer portfolio analysis: This respective company can analyse an appropriate group of customers for their business by which they gain maximum profit. Along with this, according to this company, it can decide on its target customers (Crane and Matten, 2016). It is important for Rowlinson Knitwear to develop customers portfolios so that they can evaluate and identify customers' needs and d demands. Moreover, the respective company is able to design products according to needs and current trends.

Customer intimacy is known as the process of customer relationship management by which Rowlinson Knitwear gets familiar with the individual customer that the organisation is targeting. This is based on how effectively the company knows and understands its customers, habits, and other related things like birthdays, etc. For this respective company, they take feedback and suggestions from their customers and when they again develop strategies and plans, they consider those feedbacks and suggestions to make effective products that attract customers at a high rate or ratio.

Value proposition development: In this process, companies collect information or data related to their target customers. Which helps the company create a value proposition for customers. When a company creates value for customers, it is necessary to also create value for the company, by which they are able to get benefits for business. Such as Rowlinson Knitwear develop proposition values according to their target customers, which helps them attain success and growth in an effective and appropriate manner.

Customer life cycle management refers to the process of the continuous journey of customers, which includes all steps starting from identifying potential customers and ending at providing products and services to them in an appropriate manner (Fayol, 2016). To conduct this process in an effective and appropriate manner, the human resources manager of Rowlinson Knitwear gives their full efforts and attention. They also develop effective strategies and plans by which it can be done in an appropriate and proper manner. Along with this, the company is able to handle their customers in an appropriate manner and also develop products accordingly. In the respective company, they develop appropriate strategies by using CRM systems and strategies.

P3. Explain How A Small Business Can Develop Transnationally And Determine The Benefits And Drawbacks

Transnational business refers to activities or business operations that help another company carry out its business in the international market. By which a company can enhance their sales, profit, and customer base, which helps in obtaining goals and objectives in an effective manner (Hatten, 2015). Through this Rowlinson Knitwear company, they are able to carry out their business operations and function in the global and international markets. In this management, the company invests its assets or funds in international countries and then conducts operations in the international marketplace. This company, try to make effective connections with other countries so that they can operate their business in an effective manner and make a proper profit. A small business or enterprise can adopt traditionally but during this, they may face various benefits and drawbacks. Some major of them, which are faced by the respective company, are explained below:

Benefits:

Expansion of Business:  One of the major advantages of transactional business strategy is that it helps in expanding the business operations and functions of a company in the international market. In other words, a company is able to sell its products and services in a worldwide market, by which it can enhance its profitability ratio and customer bases. This company can also be able to understand different or diverse country cultures, which helps them design products and services according to their needs and demands. In the context of the respective company, by adopting a transactional strategy, they are able to enhance their business in the international market in an effective and efficient manner.

Adopting Innovation:  When a company expands their business in an international market, they are able to expand its business by adopting innovative and creative techniques (Herbane, 2013). This company can adopt innovation and new techniques according to the needs and demands of customers or the public. When Rowlinson Knitwear adopts a transactional business strategy, they are able to adopt new and innovative strategies according to the needs and demands of customers and the population. By adopting new innovations, the company is also able to conduct its operations and function in an effective manner.

Deep understanding of culture:  When a company expands its business in an international market, they are able to understand and analyse other countries' cultures in an effective and appropriate manner. This helps them in designing products and services according to need, demand, and culture leading to enhancement in profit and customer base. So when respective companies adopt traditional business strategies, they understand the cultures of different countries and then they design products and services accordingly. By which they are able to design products accordingly, which leads to an increase in sales and profitability ratio.

Drawbacks:

Complex to Implement:  When a company decides to implement a transactional business strategy, it may face various difficulties and problems. This is so because it is complex and difficult to implement in a business or company (Karadag, 2015). Due to this, the manager and leader have to make creative and innovative ideas in order to overcome this.

Implementation is Costly:  When a company wants to expand their business, they have to arrange funds from various resources like bank loans, investments, financial institutes, and many more. This is so because implementation or expanding business in the international market requires huge funds. So when the respective company wants to expand in the worldwide market, first they analyse their financial status and if required, then they arrange according to the requirement. So that they conduct business operations and function in an effective and appropriate manner.

When Rowlinson Knitwear decides to adopt a transactional business strategy or expand its business, it must conduct analysis and evaluation of respective things so that it can develop strategies and plans accordingly. This will help them in operating business operations and functions in an effective and efficient form.

TASK 3

P4. An Annual Itemised Monthly Cash Flow Forecast Showing Fixed And Variable Costs Set Against Income

Cash flow refers to the net amount of cash equivalents and cash, which is transferred inside or outside of business operations. It is prepared by a company in order to identify its financial position in the marketplace (R.A. and Ullah, 2014). Every organisation estimates and tries to enhance its profit as compared to its part-year profit. The cash flow statement of Rowlinson Knitwear is given below: -

(Amount in £)

Interpretation: The above-given cash flow is from January to December, which shows a continuous enhancement in profit due to an increase in sales. To get the total net cash flow, the respective company deducts the total outflow amount from the total inflow amount.

P5. Explain how break-even analysis could be applied to an organisational situation.

(Source: BEP Analysis, 2019)

Breakeven analysis refers to techniques that are used by production, accounting, and management sections. In it, the total cost of variables and fixed cost are compared with the whole revenue of sales, through which the company can determine the volume of sales or production at which point the business is where there is no profit and no loss situation arising (Sampaio, Thomas, and Font, 2012). This respective company can identify and analyse the quality or number of products and services that a company has to sell to achieve a breakeven point. The break-even analysis, which is done by Rowlinson Knitwear, is mentioned below: -

Note: To conduct this analysis, the respective company perceives their sales at 10,000 units in the current situation and further Rowlinson Knitwear does analysis by considering current sales units.

Note: Breakeven point (in units) = fixed cost/contribution per unit 

(Amount in pounds)

Interpretation: It can be evaluated from the above breakeven analysis that the respective company's breakeven analysis is 10,000 units, whether they have no profit and no loss. If they want to gain profit, they have to sell more products than 10,000 units because if they sell less than the respective amount, they face a situation of loss. So it is a recommendation to the company that for gaining profit they must reduce their variable cost or sell more units of products.

P6: Interpretation of financial statements of Rowlinson Knitwear:

Financial Account:

It refers to the balance of an organisation's debt, profit, investments, cash flow, balance sheet, and many more. Which is mainly used by banks, investors, and financial institutes for identifying the financial stability and performance of a company (Schaper et. al., 2014). For the interpretation of financial accounts, there are various methods that a company can use, such as cash flow, trading accounts, profit and loss accounts, and many others. The below financial statement of Rowlinson Knitwear Company is given:

Income Statement of Rowlinson Knitwear for the year ended 25^th March 2018

Balance Sheet of Rowlinson Knitwear as of March 25, 2018

Cash Flow of Rowlinson Knitwear for the year ended 25^th March 2018

Interpretation of financial accounts by using ratio analysis:

(1) Current Ratio: Current Assets / Current Liabilities 

Interpretation: The relationship between current assets and liabilities is known as the current ratio and it is also known as the working capital ratio. The ideal ratio of Rowlinson Knitwear is 2:1, which means the current ratio is greater than the ideal ratio. This shows that the liquidity position of the respective company is better.

(2) Quick Ratio: Quick Assets/CCurrent Liabilities

Interpretation: The quick ratio is considered more rigorous as compared to the current ratio. The ideal quick ratio of the respective company is 1:1, whereas the quick ratio of Rowlinson Knitwear is 1.78:1. This shows that the respective company has a better quick ratio to compete and survive in the market or industry.

(3) Gross Profit Ratio: Gross Profit / Sales * 100 

Interpretation: Gross profit ratio refers to the percentage of gross profit in regards to sales of units or products. Every company must enhance or maintain its gross profit as compared to its last-year profit. Rowlinson Knitwear Company has a gross profit ratio of 17.25%, which is considered a quite better ratio.

(4) Net Profit Ratio: Net Profit / Sales * 100

Interpretation: The net profit ratio refers to the percentage of net profit, which is represented in terms of sales. The current net profit ratio of the respective company in the years 2017-2018 is 13.40%, which is viewed as a good performance of Rowlinson Knitwear. This is so because it is positive. Due to this company earns a good net profit ratio.

TASK 4

P7. Key legislation and regulations that have implications for small businesses

Legislation is the main process that mainly focuses on the business environment, which includes the Consumer Protection Act, various environmental laws, and some health and safety rules and regulations. The main purpose of legislation and regulation in Rowlinson knitwear is to meet all obligations that help to provide some certainty and priorities to conduct various activities in the business that meet fair and pellucid needs.

Minimum Wage Act, 1998—It is the act that provides the minimum wages to both skilled and unskilled labourers. Rowlinson Knitwear provides fair payments to all the labourers that include proper self-respect and maintaining a healthy environment within the organisation. This makes the government fix the wages for all the labourers and meet basic needs like food, shelter, and clothing (Steingold, 2017). It provides benefits to their families, like proper education for children and travel allowances. This act is an important part of Rowlinson knitwear in which they meet all the needs of the labourers by providing fair wage payment on time.

Equality Act, 2010: This is a law that provides the characteristics based on age, race, sex, disability, etc. Rowlinson Knitwear made different regulations that provide equal values to all the labourers in the organisation, such as education, employment, maintaining good public relations and transportation facilities (Yeoman, 2012). It provides medical facilities in organizations. If labour is ill, then it makes all the payments to their illness programs.

Safety and Security Act, 1974: It is a process that provides safety and security policies that help to implement various plans and procedures. Rowlinson Knitwear ensures that all labourers follow the guidelines in order to meet the requirements and follow all the rules and safety programs. If the labourer is ill, then it provides the safety guidelines to him/her.

Handling the taxes: This is a very important part in which different taxes are made to implement various programs and policies. In Rowlinson Knitwear, all labourers have to pay taxes on time so that they handle all the policies in the organisation. It is important for every employee to pay the taxes on time so that they receive the payments. If they do not pay the tax on time, then labourers have to pay more tax. The labourers have to pay the taxes on time.

Bonus Act, 2013: In this act, if the labour is working beyond the working hours, then they will receive an increment in salary, i.e., a bonus. According to the act, within 8 months the bonus has to be paid in the form of cash (Yeoman, 2012). It is a necessary act that employees should be inherited and plan various outcomes in the given organisation. They receive bonuses on festive occasions and employees should maximise their profit every year.

Conclusion

From the above-discussed point, it can be concluded and evaluated that for running and managing a business's operations and function, the owner has to develop various strategies and plans. Management and owners of small business enterprises conduct evaluations decide strategies accordingly and allocate resources that are required for a complete task in an appropriate manner. This company also develops and maintains customer relationships, which help them attain goals and objectives. This also helps them in identifying customer needs and demands, and this company conducts analysis by using methods like customer portfolio analysis, customer intimacy, and many more. Along with this, the company also adopts transactional business strategies, which help it expand business operations and functions in the international market. By this, they are also able to enhance their profitability ratio, market shares, and customer base. For this company, do analysis of funds by using various methods like cash flow, breakeven analysis, and many others. When a company expands their business in different countries, they have to follow various legislation and regulations that help them operate in the marketplace in an effective and smooth manner.

References

Books and journals

• Adisa, T. A., Abdulraheem, I. and Mordi, C., 2014. The Characteristics and Challenges of Small Businesses in Africa: An Exploratory Study of Nigerian Small Business Owners. Petroleum-Gas University of Ploiesti Bulletin, Technical Series. 66(4).
• Bridge, S. and O'Neill, K., 2012. Understanding enterprise: entrepreneurship and small business. Macmillan International Higher Education.
• Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.
• Chiliya, N. and Roberts-Lombard, M. (2012. Impact of the level of education and experience on the profitability of small grocery shops in South Africa. International Journal Business, Management, and Economic Research. 3(1). pp. 462-471.
• Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
• Fayol, H., 2016. General and industrial management. Ravenio Books.
• Hatten, T.S., 2015. Small business management: Entrepreneurship and beyond. Nelson Education.
• Herbane, B. (2013. Exploring crisis management in UK small and medium-sized enterprises. Journal of Contingencies and Crisis Management, 21(2), pp. 82-95.
• Karadag, H., 2015. Financial management challenges in small and medium-sized enterprises: A strategic management approach. EMAJ: Emerging Markets Journal. 5(1). pp. 26-40.
• Anderson, A. and Ullah, F., 2014. The condition of smallness: How what it means to be small deters firms from getting bigger. Management Decision. 52(2). pp. 326-349.
• Sampaio, A.R., Thomas, R. and Font, X., 2012. Small business management and environmental engagement. Journal of Sustainable Tourism. 20(2). pp. 179-193.
• Schaper, M. T., and et. al., 2014. Entrepreneurship and small business.
• Steingold, F.S., 2017. Legal guide for starting and running a small business. Nolo.
• Yeoman, I. and et al., 2012. Festival and events management. Routledge.

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