My Home Solution: Company Analysis

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Mission statement

A mission statement is a summary of the business or organization’s goals or/and values which are geared towards paving or charting the ways or defining the courses of actions in a given organization. A mission statement is designed to motivate or improve the performance of the people inside the organization; however, to outsiders, it is used as a public relations tool. It, therefore, acts as the defining factor of the organization’s goals (Schwartz 2001).

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A company, especially a big one, should have a mission statement for that is what keeps the stakeholders grounded on what the organization aims to achieve, hence reduces the chances of losing focus. The larger the organization, the higher the need for a mission statement since it serves to show the employees what is expected of them hence keeps all the people in the organization at par. It also serves to show the minimum expectations of the organization making business planning easier (Schwartz 2001).

The statement should be updated every so often to ensure that it reflects the current values or goals of the organization. It should embody achievable objectives which are honest, and the more pronounced it is the better or the purposes of the ease of remembrance (McNamara, N.d).

Home Solutions is a middle-sized fashion firm that is headquartered in Johannesburg, South Africa, and has a permanent workforce of 326 employees. The company is an independent subsidiary of Malcolm Design, an international clothing apparel manufacturer and marketer. Since its inception in 1998, the company has expanded its business from just dealing with the sale of second hand and middle-class clothes to incorporate into their services other apparel like footwear and home appliances

My Home Solution’s mission statement is ‘We have it if you need it. Together we can do more.’ The company mission through effective does not give a clear indication to the outsider what the organization is involved in. This is mainly because it gives just a sketch in that it neither states what the company does nor does it describe its functions or goals.

A better and more descriptive mission statement probably build upon the present statement would serve better to explain to the public and the employees what exactly the organization is involved in. This could be ‘We strive to ensure cheaper goods and services with minimal or no adverse effects to the environment, and do vow to put the environment and customers’ needs before profits.’

This mission statement is more explicit for it shows what the organization does, joins the stakeholders as a group, and acts as a public relations statement. The company is very committed to environmental conservation hence the statement is truthful (Mission, 2008)

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Porter’s five forces model

Michael Porter said that in purely competitive markets, the returns of the different competitors should be the same but due to forces influencing the markets, this is not possible; these are the forces he referred to as porter’s five forces and include barriers to entry, buyer’s power, the threat of the substitutes, supplier power and the rivalry in the market. These, according to him, will help determine the market situation by determining the nature and the levels of competition in the market (Strategic management, 2007)

Rivalry

This is where the companies put to gain an upper hand over their competitors, and the concentration of the companies can be used to gauge this. High concentrations mean a less competitive market and vice versa.

In South Africa, the concentrations were low, showing that the competition levels were very high with no company with a substantial market share. For Home Solutions to gain a competitive edge driving up demand through lowering the price was practiced, the quality and quantity in terms of diversification improved. This was followed by the need to refine the distribution channels. Rivalry was further increased by a large number of operators, large numbers of fixed costs, and the presence of exit barriers.

Threat of Substitutes

The market in South Africa is saturated with manufacturers and importers of clothing apparel. This is to say that the threat of the competitor with the substitute commodity taking over your market is real. The importers flooded the market with second-hand imports which were cheaper compared to the newly manufactured goods (Strategic management, 2007).

The Buyer Power

The buyers’ powers may be great or limited; it is high if the buyer has the power to determine prices. The South African market sought to control the prices for the manufactured goods, for the buyers threatened to buy the cheaper second-hand products if the prices were not regulated (Chapman, 2009).

Suppliers’ power

This is where the owners of the raw materials try to influence the prices of the raw materials. This may be seen in the case where the cotton farmers from Botswana threatened to stop supplying cotton unless they were offered a percentage cut of the total sales (Chapman 2009).

Barrier to entry

This can be done by the state or through the existing firms; the state may bar entry through legislation especially through patents while other companies may collaborate to thwart others from accessing the market (Strategic management, 2007).

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The potential competitors are those who currently have no stake in the market and the probability of their entry into a market is dependent on the barriers in place which make the entry more expensive. The more expensive the entry is the weaker the competition becomes (Hill and Jones, 2009, p. 44).

Since there were no major market holders, the competition among the companies was a struggle to gain a share of the market. The firms were many and this led to unhealthy competition as each player tried to outsmart the other. This would therefore entrench them in the market and therefore make their exit when the markets become worse, not economical due to the large investments

Macro-environment’s impacts

The South African economy has been experiencing high levels of unemployment and the trend has been going up hence widening the gap between the rich and the poor; there has been an increased shift to the informal sector. In addition, the cost of hiring labor has gone up leading to more job cuts and the use of alternatives such as labor-intensive techniques (Department of Environmental Affairs and Tourism, 1999).

The economy does not operate in a vacuum but functions in an environment where the different conditions that exist there can either be controlled or not by the businesses operating therein. Micro factors are internal to the organization whereas the macro factors are beyond the control of the organization; these factors apply to all the organizations that are operating in that particular economy (Gillespie: Foundation of Economics, 2007).

These factors are manifested in among other areas, the political arena whereby the government decides on how much to be involved in the business or what services to offer. The government of South Africa in this case has embarked on improving infrastructure and the education system and this has eased transportation and provided qualified workers for the industry (Gillespie: Foundation of Economics, 2007).

In the case of the economic factors, a change in the economy affects the business, and they may come in the form of inflation, deflation, taxation, or even the exchange rates. Basically, the South African currency is very sensitive to changes in the exchange rates in that decrease in the exchange rates leads to high costs of import. This helps the internal producers for it cushions them against competition from the imported goods (Department of Environmental Affairs and Tourism, 1999).

The economic differences between the rich and the poor have led to the reduction of purchasing power of the majority population and this has resulted in lower sales as the poorer population seeks alternatives which they find in the secondhand sector. The social aspect of this is that the population is willing and ready to work but due to the increased costs of labor and changes in the modes of production, the workforce has shifted to informal industries. The population structure has changed due to the increased birth rates. This has changed the demand trends as the need for children’s clothes has increased (Department of Environmental Affairs and Tourism, 1999).

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Technology has helped fill in for the unavailable workforce as the firms in South Africa have started mechanizing to reduce the costs of hiring the expensive labor forces. The home appliances departments of Home Solutions have experienced increased demand for the new products in the market as the customers associate them with efficiency.

The clothing sector is highly influenced by the environment. Weather and/or climate dictate what to wear when. Good and reliable weather patterns allow for easier access to goods and services. The government has also put restrictions on the issue of environmental conservation through proper disposal of wastes and recycling of materials (Department of Environmental Affairs and Tourism, 1999).

On the legal aspect of the macro-environment, the government has sought to increase employment by offering subsidies to companies that increase employment facilities. The unemployed have received welfare and those in employment are protected against exploitation. The government has encouraged foreign investment to diversify from the over-reliance on natural resources and this has increased competition.

Dominant Production Philosophy

My home solutions is a middle-sized fashion firm that is headquartered in Johannesburg South Africa and is an independent subsidiary of Malcolm designs, an international clothing apparel manufacturer and marketer. The parent company, Malcolm Designs, is a conglomerate of clothing and home appliances manufacturers with branches on all continents.

My Home Solutions was part of the conglomerate’s plans to enter the African market and it opted to form a subsidiary as the African market was not predictable enough to warrant the conglomerate taking the liability for Home Solutions. Since the world market trends have changed through the opening up of the national borders to external forces, my home solutions operate on the post-Fordism philosophy. This followed Fordism which argued for the faster and larger production for lesser; post-Fordism argued for the increased flexibility and diversification of the production process (Holland, 2005).

The flexibility in the home solutions was increased by integrating the workers fully in the production process such that they were involved in the production from the beginning to the end. The products produced by the company could also be regulated and shifted according to the needs of the buyers or the demand. The increased demand for children’s apparel led to an immediate shift in their production (Beek et al N.d).

Diversity in my home solutions was achieved by the production of different types of clothing apparel and also dealing with other commodities like shoes and housing appliances. This allows for diversified streams of income which cushions the company against the market instabilities (Beek, et al, N.d).

This philosophy calls for the reduction of costs by setting up companies in areas where labor and/or raw materials are readily available and cheap. This calls for among other things outsourcing if it’s considered more profitable than setting up companies. My Home Solutions was set up due to increasing labor and the availability of raw materials. This was compounded by South Africa’s proximity to the market targeted (Holland, 2005).

Post Fordism stood for the need to join the production and the sales department on the issues of decision making and information flow as this would allow for the production of goods that were driven. This means that the production is to be at par with the demand. Due to the constant changes in the market and the need for flexibility, the company has a strong data management sector outsourced from a leading data management organization that allows for the comparison of the production and demand to stabilize them by putting them at par (Beek, et al, N.d).

As a result, there has been an increase in the numbers of companies that are cutting down on their operations in their home countries as they go out looking for more viable places to invest which will reduce the overhead costs while increasing the profits. Post Fordism has led to increased organizational centralization and peripheral location of the towns (Holland, 2005).

Operational Management

Operation management is the process of dealing with everyday and not so often occurrences in an organization together with controlling the activities and the repairs in the organization. It is the design and the way the facilities within the organization are managed so that the responsibilities are executed according to expectations and schedule so that the business can meet its desired needs. This process may involve acquiring the needed resources, developing them to meet the expectations and usage through proper maintenance.

Staff operational management

The most important component of the organization is human resources. Human capital needs to be developed and well used to achieve the desired results in an organization. Operations management’s main concern is the management of resources that are used in the direct production of a product. This is the control of the production process from the input until the outputs are gotten (Rowbotham 2007, p. 2)

Staff operational management is therefore the process of utilizing the workforce in the process of production. The worker’s usefulness depends on their job satisfaction and their qualifications for the assigned job. Their management is a function of the management to ensure that they do their best (Robinson, 2009, p. 68)

Henry Fayol came up with an approach to management in which he gave the different principles that regulated management. These principles gave the guidelines on how management should be run. According to him, there should be a specialization where the workers are molded and encouraged to do what they are best at. This is seen at my home solutions where when hiring, the employees are tested for other skills they might possess so that they can be well placed (Management, 2008; Wood and Wood, p. 126).

The remuneration of the workers should be according to the work done hence the organizations should compensate the worker’s efforts. Home Solutions has a policy on individual payment as that will put more emphasis on individual performance. Incentives like medical and dental plans are used to entice and therefore command employee loyalty.

The management according to Fayol has the duty to source and choose the best-suited employees for the vacant positions in the organization. Since they are also responsible for quality management, they must determine where the problems are and what the causes are and therefore make the necessary decisions to correct them (Management, 2008).

After getting the right candidates for the job, the managers ease the new employees into the company through induction and training. The worker needs to be conversant with what the organization deals with hence the need for training so that he/she can familiarize himself with the job.

Further occasional training is important to ensure that the worker is knowledgeable on the current advancements in the field so that he/she becomes competitive. This is done at home solutions through the use of seminars and discussion forums. Workshops are important in this (Management, 2008). A well-satisfied employee will be satisfied with the organization and the rates of turnover reduced. The staff is integrated to view each other as colleagues. This home solution is achieved through team building and team workmanship.

Reference List

Beek, V. E. et al., N.d. The impact of Fordism and Post Fordism on Urban Space. Web.

Chapman, A., 2009. Porter’s five forces model: Michael E Porter’s five forces of competitive position model and diagrams. Web.

Department of Environmental Affairs and Tourism. 1999. Economic Environment. Web.

Gillespie: Foundation of Economics. 2007. Pestel Analysis of the Macro-Environment. Oxford, Oxford University Press. Web.

Hill, C. and Jones, G., 2009. Strategic Management Theory: an Integrated Approach. 9th Edition, Ohio: Cengage Learning. Web.

Holland, J., 2005. Fordism/Post-Fordism. Web.

Management. 2008. Henri Fayol: Management Gurus. Web.

McNamara, C., N.d. Basics of Developing Mission, Vision and Values Statements. Web.

Mission. 2008. What’s the Difference between Mission and Vision. Web.

Robinson, P., 2009. Operations Management in the Travel Industry, UK: CABI. Web.

Rowbotham F. et al. 2007. Operations Management in Context, UK: Butterworth-Heinemann. Web.

Schwartz, M. B., 2001. What’s the Difference between Vision and Mission Statements?. Web.

Strategic management. 2007. Porter’s Five Forces: A Model for Industry Analysis. Web.

Wood, J. C. and Wood, M. C., 2002. Henri Fayol: critical evaluations in business and management. London: Taylor & Francis. Web.

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