Question
1. )Answer the following bullet points based on the case study Summary of Findings* Supporting documents for findings (charts, diagrams) and explanation of potential losses
1. )Answer the following bullet points based on the case study Summary of Findings* Supporting documents for findings (charts, diagrams) and explanation of potential losses Recommendations for recovery strategies (for people, process, technology), based on risk and critical function Executive summary Objectives and Scope
Fair Deal Trading was founded by Arthur Pleasance and his wife Agnes in the Midlands in 1962. The business started as a small shop selling boots and shoes to local factory workers. In those days their supplies came from nearby Northampton. In 1965 they extended their range of goods to include workers' overalls and dungarees. The business really began to take off when jeans and boots became rather more fashionable and the younger generation started flocking to the shop. With the increased demand and rising costs in the UK, Arthur began to import goods from the Far East. The need for expansion and a flourishing fashion trade came as a rather nice surprise to the owners of the shop and they renamed their operation 'Pleasance Supplies'. In 1974, Arthur's son Ronald (the current Chairman) took a stall in the local open air market where he sold imported jeans and other items of casual wear. By 1979 he was operating a successful business with 5 teams working in markets in the Midlands. When Arthur and Agnes retired in 1981, Ronald decided to move up market and transfer his business operation into a chain of shops. He re-launched the business under the name of Fair Deal Trading and most of his original team of market traders took up senior positions in the new company. By the mid 80s they had extended their business to cover the booming furniture market and had established themselves in over a dozen locations. They continued to expand and regrouped to form three regional operations in 1991. In the early 90s they formed the office division with a focus on office supplies and PCs for the home worker. During this period they also migrated their range of shoes and clothing towards modern casual wear. The current business has 37 outlets, most of which offer the full range of Fair Trade Deals, and a magnificent headquarters building in Smart Park House. Smart Park is a small country estate with about 30 acres of land, most of which is parkland and woodland. It is a grade II listed building which means it may not be demolished, extended or altered without special permission being granted by the local planning authority. There are also three regional offices where most of the operational management is based. KEY PERSONNEL The Chairman - Ron Pleasance Ron regards himself as a self made millionaire and has a passionate belief in self sufficiency and independence. He does not tolerate fools gladly and expects unswerving loyalty from his friends who are all employed by him. Fair Deal Trading - A Case Study Copyright 2007, Jim Burtles. License is conveyed to paid purchasers of the associated book, "Principles and Practice of Business Continuity" to use and adapt this material within one organization. This Copyright notice shall appear with all instances of this material. Page 3 of 9 He plays golf on a regular basis, usually with his fellow directors or other business contacts. Golf is an opportunity to relax and get to know what other people are thinking; it is a very useful context for testing out new ideas without committing to them. Susan is his 3rd wife and the mother of Bill and Marie. The eldest son, Timothy is from a previous marriage and lives away from home. Ron likes to think that his old buddies love him for the opportunities he has given them, especially the 'High Five' who were all market traders with him back in the late 70s. The High Five consists of Harry Carver, Mike Marsh, Terry Barnes, Geoff Green and RP himself. Company Secretary - Joan Adams Joan, who prefers to be referred to as Ms. Adams, studied law and was called to the bar where she practised for several years before retiring in order to raise a family. However, before she had a chance to do so, she discovered that her apparently faithful husband was in fact having an affair with his secretary. After a rather acrimonious divorce she reverted to her maiden name and took up residence with Lucy Bellman. Lucy managed to get her a job with Fair Deal Trading as a legal secretary and in due course Joan was promoted to Company Secretary. Joan is regarded as a rampant feminist these days and is also interested in history, especially the Tudor period. Corporate Affairs - Lucy Bellman Lucy Bellman is a happy outgoing sort of person who believes in enjoying life. Always immaculately dressed and beautifully groomed, she has never been married but has had a succession of admirers, including RP himself. She is very keen on opera and regularly attends the Wagner Festival in Bayreuth. For the past couple of years she has taken Joan with her on the pretext that she is trying to 'educate' her away from the frothy confection of Gilbert and Sullivan towards the noble and heady experience of Wagner. Lucy has the reputation of being a party animal who really lets her hair down whenever there is something to celebrate. She is regarded as a very fair and supportive boss who people feel they can talk to. Sales and Marketing - Peter Sopwith Nicknamed 'The Camel', Peter is a trained sales and marketing person with degrees and memberships to prove it. He sees himself as the principal secret of the company's success. He doesn't believe that the High Five have the education and contacts to really succeed in a big way. The son of a wealthy gentleman farmer, Peter was, of course, privately educated and graduated from Oxford. Fair Deal Trading - A Case Study Copyright 2007, Jim Burtles. License is conveyed to paid purchasers of the associated book, "Principles and Practice of Business Continuity" to use and adapt this material within one organization. This Copyright notice shall appear with all instances of this material. Page 4 of 9 His hobby is flying and he owns a share in a small light aircraft, the other partners in the syndicate being Alan Solomon and Geoff Green. Peter is also on the board of governors of his old school. Peter's wife, Wendy, is a local Councillor who is very active in the local community. Finance Director - Adrian Solomon Adrian is a highly qualified and well respected accountant. A Fellow of the Institute of Directors and a member of several other institutes he has a number of business interests and a couple of hobbies. His wife, Norah, says he is rarely at home, always on the go. Apart from his interest in flying which he shares with Peter and Geoff, Adrian has a half share in a racehorse. He sees the racehorse as an investment as it should prove to be a money spinner when it goes out to stud. The horse, 'Fair Winds' has a very good pedigree and after it has won a few races they hope to recoup their investment through the stud fees. Norah Solomon collects antiques and paintings. She loves auction sales and says it gives her something to do when he is out playing with his toys. OPERATIONAL STRUCTURE There are 7 divisions, 4 of which are the trading divisions. Corporate Affairs and Sales and Marketing are based in Smart Park and the other five are based in the regional offices (Estates, Footwear, Clothing, Furniture and Office). Head office also houses the corporate functions such as Finance, Accounting and Purchasing. Corporate Affairs division includes Technology, Administration and Personnel. Sales and Marketing is responsible for the brands and the image of the company as well as promotional activities to assure market share. STATISTICS At the end of the last financial year there were: - 1,450 employees, 112 of whom were employed at head office and 45 in the regional offices. At that time, approximately 1,300 people were directly involved in the retail operations of the group. The turnover for the group was 107 million with an aggregated net profit of 6.8 million (6.4% profit margin). This year's target is 112 million turnover (+4.7%) with a net profit of 8 million (7%). By Division The figures for the divisions were fairly evenly spread. Furniture contributed the highest income and Clothing provided the best profit margin. The lowest income and the smallest margin came from the Office division which is, after all, the newest of the divisions. Fair Deal Trading - A Case Study Copyright 2007, Jim Burtles. License is conveyed to paid purchasers of the associated book, "Principles and Practice of Business Continuity" to use and adapt this material within one organization. This Copyright notice shall appear with all instances of this material. Footwear turnover was 28 million with a profit of 1.6 million, a margin of 5.7%. Page 5 of 9 Furniture turnover was 33 million with a profit of 2.1 million, a margin of 6.4%. Office turnover was 22 million with a profit of 1.2 million, a margin of 5.5%. Clothing turnover was 24 million with a profit of 1.9 million, a margin of 7.9%. Reserves The company's capital reserves are about 6.4 million and the chairman wants to see that rise to 'at least double figures' before he feels comfortable about extending or expanding the business in any way. Furthermore he is beginning to think about residual value for when he retires in a few years time. PLANS The short term game plan is to consolidate and focus on profitability rather than turnover. This will probably mean reducing overheads wherever possible and a freeze on capital expenditure. The company are talking to their bankers about the possibility of launching some form of loyalty card or a credit card scheme. This project is being led by the Peter Sopwith, who is the sales and marketing director. Mike Marsh, who has been with the company since the early days in the street markets, is considering, together with his team, the possibility of a management buy out for his furniture division. If successful they will continue to trade from the current outlets as a franchise. In the longer term they will open up a series of furniture superstores. Harry Carver thinks this will give him the opportunity to expand his range of office products and bolster his profits. A large part of the current operation is stationery where the margins are very slim because it is such a competitive market. He believes he could improve the profitability by buying much larger volumes and holding his own stock in his own warehouses. But that is not in line with established company policy, nobody else on the board wants to get into the logistics side of the business. They all think it is best to concentrate on what they do best and leave the other stuff to the specialists. 'After all they've never let us down really badly and we could shoot ourselves in the foot before we know it' is a favourite saying of Ivor Knowles, the Head of Group Purchasing. KNOWN PROBLEMS During World War II, Smart Park was requisitioned and used by the American Forces in Europe as an Intelligence base. There are unconfirmed rumours that there may be unexploded bombs or land mines buried in the grounds. Legend has it that the grounds were booby trapped to deter counter intelligence intrusions. Another version of the story says the Germans bombed the place and their bombs came to rest deep in the soft muddy soil around the river and lake area. However no one has seen any direct evidence in recent years. Fair Deal Trading - A Case Study Copyright 2007, Jim Burtles. License is conveyed to paid purchasers of the associated book, "Principles and Practice of Business Continuity" to use and adapt this material within one organization. This Copyright notice shall appear with all instances of this material. Page 6 of 9 Bill Blunt takes the view that these rumours are likely to deter intruders and trespassers, thus making his job easier. Technology 1.3 terabytes of corporate data, spread across 5 servers, 1 for each trading division and 1 for corporate. Directors and executives have laptops, provided and maintained by the company. Many senior managers who travel around the regions have acquired themselves unofficial laptops. Some of these laptops are 'on loan' demonstration models from the Office Division's regional offices. The 'Smart Suite' software was originally developed as an in-house group of applications by members of the IT team. The 'Smartledger' accounting system was the first application to go live and it was designed to work in conjunction with 'Qwikstock' and 'Qwiksales' which were acquired as off-the-shelf packages from a local software house. Later they developed their own 'Smartstock' and 'Smartshop' applications to generate better information feeds into the main accounting system. Soon after these applications were fully implemented, the workload in the IT department diminished and the 5 'Smart' programmers were made redundant about a year ago. They have set themselves up as 'Smartware Software' selling applications into the retail and distribution trades. There have been some arguments about intellectual rights to the programme design and the actual source code but no actions have been taken by either party. The source code is 'owned' by 'Smartware' whilst the applications are being used by Fair Deal Trading. 'Smartware' feel confident they would win if the case ever came to court whilst Fair Deal are unwilling to risk losing the right to use their key applications For the time being, Fair Deal has agreed to pay 'Smartware' a regular retainer to perform maintenance on their 3 key 'Smart' applications. CORPORATE CULTURE The basic culture is for the company to be independent and self insured wherever possible. People are treated fairly if they pull their weight but slackers are not tolerated. All employees get a share in the success of the company. After two years they have the opportunity to invest in the company share scheme. The company runs a successful social club for its entire staff. Any breaches of trust are subject to instant dismissal. Shoplifters are always prosecuted.
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