High Flyers Limited (HFL) is a UK company based in the South East and employs 150 staff in the manufacture and wholesale of high quality handmade gymnastics wear and associated products. The product range includes costumes, bags, footwear, exercise mats and cosmetics. HFL sells 60% of its products to the UK sports retailers, exports 35% to the USA and Canada and 15% directly to the sports clubs via its own website. The gross profit margin for sales to UK sports retailers is low and they take up to 90 days to pay their invoices. The majority of website sales to clubs are for personalised costumes which are special orders produced to the customers requirements. There are around 6 other companies in the UK who manufacture similar products to HFL and many hundreds who compete in the lower quality fashion market. The average selling price for HFL is 65, whereas the lower quality rivals average price is 25. HFL promotes its products on the basis of high quality materials and is well known for its handmade long lasting costumes. Sales of gymnastics wear in the UK is rising particularly in the quality end of the market due to the popularity of the sport following a number of sporting initiatives supported by the UK Government. HFL are at full capacity and can sell all that they can produce. The UK government have suggested they may increase the level of VAT on sporting goods to 22% to raise additional tax receipts. Industry commentators have suggested that if the VAT increase went ahead this would cause the domestic sportswear market to shrink by around 5%. Following the UKs decision to exit from the European Union in 2016, the cost of imported products has increased dramatically, and export demand for UK products in the USA and Canada is expected to rise. There is a very good supply chain of specialised gymnastic material in the UK but HFL are finding it difficult to recruit skilled designers due to the skills needed. Although the company has invested in technology to automate some of the initial cutting, the process is labour intensive. The industry remains traditional but HFL have introduced some new initiatives such as a costume design website where sports clubs can create a drawing of a bespoke item of gymnastics wear before it is submitted to the design office for a fixed price quotation. Required: Produce a report for HFL analysing the issues facing the industry and an evaluation of the competitive pressures facing the company. Your report should include a discussion of how HFLs external environment may influence its future strategy. Scenario 2 SCH is a privately owned care services company which offers home nursing care for 800 patients in the South East of England. The services provided are mainly targeted at the elderly who require help at home ranging from the preparation of meals to specialist nursing care. The patients may pay the fees themselves or they may be paid by their relatives or by the local government authority. SCH has recently produced a Mission Statement which states We treat our customers with respect and dignity and provide highly personalised and tailored home care services All of SCHs patients are located in and around two cities both located in the South East of England. SCH employs around 150 staff in the community, working a range of hours from part time to full time. There is also a small call centre team who are the main point of contact for both patients and nursing staff. SCHs employs a mix of qualified nursing and auxiliary staff who are motivated and highly trained. SCH is profitable and expects to increase its market share from its current 20% in the South East which it believes can be done using its spare capacity. The remainder of the market is shared by a small number of local government funded operators and some other small private businesses. A significant amount of SCHs total expenditure is travelling costs which is paid to staff in respect of the journeys to patients homes. Due to rising costs in motoring many of the small privately owned care services companies have closed or are being considered for sale. This trend is typical of the rest of the UK. A national shift in the demographics of the population in the last 30 years has resulted in a significant rise in the proportion of elderly members of society. Reductions in hospital funding have also resulted in increased demand for care services in the community. SCH receives the majority of new customers through recommendation and referrals from local hospitals and doctors. The prices charged to home care patients by the local government authority are lower than those charged by SCH, due to central government subsidies. However, SCH believe that the services and facilities provided by SCH are superior to those offered by the local authority. Compared to the local authority SCH pays a higher wage rate per hour and its average visit time is 20% higher. It plans to increase visit times by a further 10% next year and acknowledges that this will impact on its capacity and therefore additional staff may be required. The Managing Director is confident that these initiatives although costly provide a competitive advantage. Although SCH currently offers daily home care for mainly elderly patients, there is a growing need for the market to offer services to families for short term respite where a member of the family has a requirement for 24 hour care. This is to allow the normal carers to take a rest period. Many of SCHs patients attend the local hospital or GP surgery for routine treatments but many of these procedures could be carried out by SCHs qualified nurses at the patients home. This would require investment in portable medical equipment and additional training. Patients would prefer for these treatments to be carried out at home in familiar surroundings. A local newspaper has reported that a new franchised home care operator is intending to offer services in the South East area and has been quoted as saying we hope to offer a competitive alternative to local authority services in these times of austerity Required: Produce a corporate appraisal report for the shareholders of SCH to analyse its strategic position and propose and evaluate its strategic options to meet its objectives. Your report should include: the use of appropriate tools and models of strategic management to analyse and evaluate the strategic position and strategic options. a discussion of the key strategic challenges facing the company Analysis of the opportunities available to the company, using Ansoffs strategic directional growth vector matrix. Evaluation of these opportunities using Johnson, Scholes and Whittingtons framework Recommendation of which strategic directions would be most
High Flyers Limited (HFL) is a UK company
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