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Case Analysis Report

Report Overview: After a detailed analysis of the key issues faced by choosing Fanenxu Lampshade Company to start a business, this report focuses on the three major aspects of the entrepreneurial strategic plan. Two plans were proposed, and the advantages and disadvantages of each plan were evaluated. Finally, an optimal plan was summarized, and the resources required for the optimal plan and some problems that may be encountered and their solutions were explained.

1. Key issues faced when choosing Fanenxu Lampshade Company to start a business

1.1 Introduction to the company background

Fanenxu Lampshade Company is a high-quality artificial light company on the market Manufacturer of fiber, acetate and hard-backed lampshades. Its raw materials are not only diverse, but also have different styles, shapes and colors. All of his lampshades are custom made to customer order. The company's customers include department stores and independent lamp and shade sellers, with 80% of the company's sales coming from Midwestern customers. "Fan Enxu" - the company's brand is highly respected in the lampshade industry. Because the company has a good reputation for producing high-quality products.

1.2 The acquireability of Fanenxu Lampshade Company

1.2.1 The industry status of Fanenxu Lampshade Company

The annual sales of the lampshade industry in the United States is US$70 million, split among 34 manufacturers. Manufacturers are generally family businesses with more than 25 years of industry history. The lampshade business is seasonal. Summer is the off-season, and the peak sales season is before various holidays. Lampshade manufacturers are divided into four major categories: lamp manufacturing companies, independent lampshade manufacturers, low- to medium-quality lampshade manufacturers, and high-quality lampshade manufacturers. Fan Enxu Lampshade Company falls into the last category. Competition in this industry is regional as transportation costs are quite high. The company's only closest competitor in the area is Silk, a 60-year-old lampshade company with annual sales of $2 million.

1.2.2 Customer situation of Fanenxu Lampshade Company

As a manufacturer of high-quality lampshades, Fanenxu Lampshade Company has a stable and loyal customer base. More than 60% of its annual sales are generated by sales to high-end department stores. Fanenxu Lampshade Company has a total of 65 major customers, 45 of which account for 80% of total sales. Unlike customers of mid- to low-priced lampshades, customers of Fanenxu Lampshade Company consider more than just price when making purchase decisions. These customers value product quality and product delivery as much as price. Therefore, Fanenxu Lampshade Company's more than 50 years of flawless products and services have established a high reputation for the company and formed a very loyal customer base.

1.2.3 Profitability and potential of Fanenxu Lampshade Company

With good product quality and high reputation, Fanenxu Lampshade Company has relatively good profitability. What we value most is that Fanenxu Lampshade Company has good development potential. Because the company's foundation is very good, although the sales rate is declining, it is due to the negative attitude of the company itself, but it will have little impact on the company in the short term, and through the restructuring and transformation of the company, the company will have a lot of benefits in the long term. Good development potential and profit prospects.

1.2.4 Management and employee status of Fanenxu Lampshade Company

The management of Fanenxu Lampshade Company includes service managers and production supervisors. These two managers have worked at Fanenxu Lampshade Company for a long time and are familiar with various situations of the company. It can be seen from the company's current good operation that the company's management is very effective. The only shortcoming is to strengthen its marketing management. You can consider introducing marketing managers with high salaries, preferably those who have worked in the lampshade industry for a long time and have an extensive and good customer relationship network.

Fan Enxu Lampshade Company has 16 general employees. These employees believe that Fanenxu Lampshade Company is an attractive company, mainly because the company's wages and benefits are very good. The company is now considering how to retain these employees who are experienced and love and focus on their work. This is very important because this is the company's best guarantee of flawless products and services.

2 Brief description of entrepreneurial strategic plan

Fan Enxu Lampshade Company has offered a total company price of US$800,000, but Steve can negotiate for the Van Enxu family to accept US$745,000 total price. Through the above analysis of the company's industry status and prospects, profitability and potential.

We believe that the following options are available:

2.1 Acquisition Funding Source Plan

Option One

In the total price, Steve and Michel Pay $75,000 by check and invest $50,000 yourself as a starting point. Other sources of funding are as follows: First, some of Fan Enxu Lampshade Company's assets can be used as collateral to obtain a loan from the Small Business Administration. If the bank agrees to give Steve a loan, the U.S. government can guarantee up to 85% of the loan. In this way, the government can bear certain risks and thus greatly reduce the cost of loan interest. Second, Steve could obtain additional debt financing from certain state and local loan programs for investing in local businesses. There is such a project in Chicago, and Steve hopes to raise $100,000. Another $50,000 may be obtained from the Illinois loan program. Third, some form of equity financing should be adopted to allow each lender to occupy a certain amount of equity without asset collateral to ensure dividends. Fourth, become a MESBIC (Minority Small Business Investment Corporation) so that Steve can raise four times their equity capital in loans from individual or commercial banks with government guarantees.

By obtaining funds through the above methods, investment risks can be avoided to a large extent due to the high reliability of the source of funds. However, precisely because of the diversified sources of funds, Steve may be constrained by decision-making constraints and dare not innovate due to objective and practical factors when making company management decisions.

Option 2

Of the total price, Steve and Michel paid US$75,000 by check and invested US$50,000 themselves as a starting point. The sources of remaining funds can be considered as follows: Make use of the perfect venture capital system in the United States, make a detailed enterprise development report through a comprehensive inspection of enterprise development, use this as the basis for applying for venture funds, and apply to certain investment companies that provide venture funds Loan project to obtain venture capital as a source of funds for the acquisition of Fanenxu Lampshade Company. And avoid obtaining funds from multiple channels.

This plan has high investment risks and is suitable for companies with good development prospects. Through analysis, we believe that the profitability of Fanenxu Lampshade Company is greater than that of venture capital, and this plan is also feasible.

2.2 Organizational Reorganization Plan

Option 1

Although Steve and Michele will become the company's top managers, they have no understanding of the lampshade industry. Therefore, we will encounter certain difficulties when making management decisions. However, in order not to affect the normal operation of the company, we can consider the following methods: examine the loyalty of the company's employees, screen them, and retain some employees with high loyalty, that is, to The company carried out a "partial blood change". Doing so can not only establish a certain prestige in the company, but also ensure profitability.

Option 2

After Steve took over the Fan Enxu Lampshade Company, in order to ensure the smooth implementation of orders and plans when making decisions and to completely take over the company, he also The company can be "completely replaced". Both management personnel and workers engaged in various jobs can be re-recruited from outside. In this way, it can ensure the understanding of human resources and facilitate the management of personnel, but within a certain period of time, it will affect the company's business and even cause losses.

2.3 Entrepreneurship Development Strategic Plan

Plan 1: Break the pot and go all out

As can be seen from the case, Steve and Michel’s ambitions They are lofty and ambitious, and they are very focused and work extremely hard to acquire the Fan Enxu Lampshade Company. Generally speaking, there is only one opportunity to go all out. Entrepreneurs need to urgently concentrate manpower, material resources, and financial resources. The lampshades of Fanenxu Lampshade Company have an advantage in quality, but the company's marketing channels are not perfect enough. The sales growth rate from 1983 to 1986 was only 1.3%. If this trend continues, the company's market share will gradually decline. Therefore, it is necessary to reorganize the company's marketing channels and marketing personnel. The reorganization of marketing channels is of great significance to company entrepreneurship: 1. Regarding the impact on financing, although the company has good products and brand effects, venture capital companies (including various financing institutions) will also notice Fan Enxu The sales rate of lampshade companies has been declining year by year. Therefore, only by restructuring its marketing channels and providing financing institutions with a convincing financing application report can we successfully obtain the required funds.

2. Due to the current negative attitude of the company owners towards marketing and the concerns and worries of some old customers about the changes in marketing policies brought about by the change of company ownership, it is necessary to consider the long-term interests of the company to establish a set of customer needs-oriented customers. relationship management mechanism. Make use of the good quality and brand advantages of the company's products, establish its marketing channels as part of the company's core competitiveness, and carry out "secondary entrepreneurship" for the company.

This plan may have obvious benefits in the short term, and it also involves relatively large investment risks and marketing risks, but it has good profit prospects for the company's long-term development.

Option 2: Stay the same to cope with all changes

Considering that Steve and Michele do not know enough about the lampshade industry, they are unable to make a complete long-term development plan for the company in the short term. , so after acquiring the company, the company’s business focus, management and marketing channels will not be changed. Strengthening the company's main business is the key to starting a business. Since the management has high loyalty, in order to maintain the stability of the company during the transition period and reduce risks as much as possible, no changes will be made to the management personnel. For marketing, contact with old customers should be strengthened to stabilize the cooperative relationship with them and show that the company's emphasis on them will not be weakened due to changes in ownership.

This plan is to highlight the word "stability". The impact on the company will not be great in the short term. But for the company's long-term development, it lacks motivation to move forward. In the fierce business competition in the United States, it is easy to be defeated by opponents.

3. The final choice of plan

From the analysis, our final choice is the first plan of each of the acquisition capital source plan, the organizational restructuring plan and the entrepreneurial development strategic plan.

3.1 Reasons for selection

We chose the acquisition fund source option one because: multi-channel financing can reduce financing risks, and the interest rate of state loans is relatively low, although compared with the second option As far as the plan is concerned, the company's decision-making must consider the interests of multiple investors, which will have an impact on the decision-making effect, and the financing procedures are cumbersome, but the pressure is less than that of venture capital, so overall consideration is still the best option.

We chose the first option to restructure the acquisition organization because: although the second option can establish our own prestige and allow our plans and decisions to be implemented smoothly, too much personnel changes will leave a psychological impact on the remaining employees. Especially when the company has just changed owners, employees are very sensitive about their future. The first option is from the perspective of industry competition. The cost of retaining talents is far less than the cost of recruiting new employees. Moreover, the company's employees are an experienced and dedicated workforce, which will be of great help to the company's future development.

We chose the entrepreneurial development strategy option 1 because we chose this company to start a business based on multiple comparisons and valued its long-term development potential. Compared with the second option, although short-term benefits will be affected, in the long term, improving the company's marketing channels and developing new customers are the keys to the company's development.

3.2 Resources required for starting a business

Sufficient working capital, experienced marketing personnel, and developing more lamp manufacturer representatives

3.3 Possible encounters Problems and solutions

From within the company, due to fierce competition, employees’ psychology may change during the company’s transition period, competitors may poach them, and new employees may have conflicts with old employees. A running-in period will have an adverse impact on production. From outside the company, major customers may have a crisis of trust in product quality and service due to the change in ownership. Resulting in a decline in the company's sales and profits.

For internal problems within the company, the company management should appease employees, stabilize their psychological fluctuations, strengthen employee training, and conduct humane management. Regarding the company's external issues, the company must strengthen its ties with important customers and make customers believe that the company's product quality and services and its emphasis on them will never change.

References:

1. Jeffrey, USA. Written by Timmons, translated by Zhou Weimin and Tian Yingzhi, "Entrepreneurship Translation Series", Volumes 1-5, published by Huaxia Publishing House, "Entrepreneur" "Fan Enxu Lampshade Company" case, pages 59-76.

2. Chen Dezhi, "Entrepreneurship Strategy Choice", Journal of Dalian University of Technology (Social Science Edition), December 2002

3. [US] Donald Saar, "Coping with Entrepreneurship" Challenge Strategies", Foreign Social Science Digest, January 2003

4. Related Internet sites