The case under study covers the period of the 1980’s (particularly 1987) wherein the Philippine economy is experiencing difficulty due to the political turmoil.
A family enterprise known as the Baby Bloomers specializing in floral arrangement was founded in 1977. It was inspired by the Three Flowers Florists which is considered as the leading supplier of flower arrangements during the previous years. It became widely known floral trade to the market because of the imported materials they use. Also, their standardized outlet, with luxuriant interior and overall air of quality, has a great impact to the customer. This led to a large amount of cash inflows incurred by the company, mainly because of its high price being charged in their high-quality products and services. With this tremendous success, owners take into consideration business expansion.
They started establishing restaurants, automobile dealership, wine importation business, cocktail lounge, jewelry shop, European sporting goods dealership, and store specializing in remote-controlled toys. However, not all of the newly established businesses were doing too well, except the restaurant which was moderately successful. Large amount of investments was incurred and much of the funds available were being use as working capital instead of servicing of the loans. During 1983, a consequential challenge was faced by the enterprise, when devaluation of the dollar exchange rate set in. Unfortunately, expenses increase because some of their businesses were import-oriented.
It became a greater liability for the Baby Bloomers flower boutiques for it is the only enterprise generating high income. Many of its loans were defaulted, and since personal funds were not sufficient to meet the payment, troubled businesses were eventually sold to settle the problem, leaving only the flower boutiques and the restaurant.
To provide a high-quality floral products offering imported materials, and a standardized outlets for the convenience and satisfaction of our customers.
To pursue business expansion of many unrelated ventures under the Baby Bloomers Commercial Corporation.
To preserve the status of the company as the leading supplier of flower arrangements in the floral industry by providing good quality products and services.
I. Statement of the Objective/s
The primary objective of the study is to assist Baby Bloomers regain its success by devoting more time and effort in managing the money-generating flower boutiques, in order to recover the financial losses the company suffers.
To understand the background of the company.
To know the causes of troubled businesses.
To suggest means of settling pending loan obligations.
To identify businesses need to continue and discontinue operation.
II. Central Problem
How would Baby Bloomers bring back its normal condition and how would it recover from financial losses it suffers to maintain business’ soundness?
III. Areas of Consideration
Prestige that came with Baby Bloomers brand name
Sufficient experience in the florist trade
High pricing power
Strong management of flower shops
High debt burden
Rapid sequence of expansion of unrelated businesses
Weak management of other businesses
Use of imported materials
Baby Bloomers’ brand name serves as a goodwill to the newly-established businesses.
Volatile dollar exchange
Intense competition in other established enterprises
Government tax regulations
Bad reputation brought by enterprises not doing too well
IV. Alternative Courses of Action
These are the possible solutions to the problem with the corresponding advantages and disadvantages:
1. Not to expand floral boutiques and focused first in managing existing ones.
Lesser expenses may incur because the company do not need to hire new employees.
Mrs. Picache may have an idle time to train her daughters in order to continue the family business traditions. Improvement
Letting go of the chance of successful business expansion where it can put the firm in a positive place when it comes to acquiring necessary financing.
It cannot place the company in the forefront of many customers’ mind.
Sacrificing the income coming from expansion of other boutiques.
2. Foreclosed the restaurant with moderate earnings and continue to expand immensely profitable flower boutiques.
There will be more time can be devoted in well-management of the flower boutiques because the company will be focusing on one kind of business.
Greater chance of improving and innovating their products and services because they will stick to business which the family knows best.
Products of this kind of business are not necessaries which customers consumed almost everyday.
In case demand for flower arrangements decrease the company might suffer additional losses because there will be no other sources of income.
3. As the company regains its success, take into consideration expansion of unrelated ventures.
An opportunity to staff new businesses with qualified people. These people can help streamline processes, bring fresh ideas to the organization.
Exposing the brand name Baby Bloomers to a wider audience. This increased pool of potential customers can improve sales, resulting in increased profitability.
Rapid sequence of business expansion can lead to declining quality of products and services.
Expansion requires major financial investments that can turn sour if a company cannot keep up with the resulting obligations.
May encounter the same problems faced before.
V. Strategy Formulation/Recommendation
We therefore conclude that the best solution to the problem is alternative course of action no. 2, “Foreclosed the restaurant with moderate earnings and continue to expand immensely profitable flower boutiques.” Generally, expansion of unrelated ventures like the Baby Bloomers Restaurant is advantageous because of the additional income it may provide, but Picache’s family area of expertise does not lie in managing that kind of business, they are specializing in floral arrangements. Foreclosure of restaurant may result to more time and effort to be spent on the preservation and improvement of the high-class quality products and services of flower boutiques which will ensure a much higher profit, thus easily regaining its success.
It is also advisable that as early as possible, daughters of Mrs. Picache must be trained to continue the family business since she almost reached the age of seniority. As the company recovers, and plans to do expansion of unrelated ventures, by this time they need to be wiser, taking into consideration the past causes of their fall down, also the future problems they may encounter. Expansion must not be in a rapid sequence because expansion does not always connote additional profit because of the presence of economic and political risks. Additionally, there should be a defined reason for the expansion – entering into new, potentially profitable market segments, for example.
VI. Plan of Action
1. Focus on incurring cash inflows to settle part of loan obligations still unpaid. 2. Devoting more time and effort in managing Baby Bloomers floral boutiques to recover from financial difficulties, thus maximizing profit. 3. Expand the number of money-generating floral boutiques and sell the restaurant. 4. Aid in first the assistance of business consultant when making expansion of unrelated ventures.
VII. Potential Problems
1. What if Mrs. Picache has no longer personal funds to cover the unpaid loan obligation? 2. What if Mrs. Picache can no longer devote much of her time to manage the flower boutiques because of her age? 3. What if prices of imported materials become doubled and Mrs. Picache could not offer its products in a much higher price than the usual because customers are also suffering financial difficulties? 4. What if the trend for floral arrangements enterprise decreases due to innovative culture?
VIII. Contingency Plan
1. The company may sell the restaurant, at the first place she hardly knows anything about restaurant management because her family is sticking to what it knows best, the floral arrangements. 2. She may assign Mrs. Bengco to help her managing the flower shop, after all Mrs. Bengco is one of her loyal employees, working for her for almost ten years. Furthermore, she has three daughters; they can be trained to manage the business in the future. 3. The company must try to deal with local materials which will ensure her of the same quality products she is currently providing to her customer. Local materials are less costly than imported materials. 4. The company must try to come up with new ideas on how to improve its products and services to preserve the loyalty and patronage of customers to their products.
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