I – Interviewer, E – Expert

Date: 2015-10-07; view: 451.

Brown

S J – Simon Jacobs, S M – Susan Manx, P T – Paul Taylor, G B – Gordon

S J – Well, you've all read the report and I think we'd all agree It makes pretty

depressing reading. Before we go on to decide what we are going to do, I'm

determined to get to the bottom of this. I want to know why we made these

mistakes.

S M – Well, as far as we were concerned, Gordon Brown represented a very sound

investment. If the company had continued to operate profitably, we would have

expected annual profits of around 350,000 pounds – which would have

represented a good return on our initial investment of 2.5 million.

S J – So you were pretty confident when we bought the company. Paul, what was your

view?

P T – Well we were attracted by their customer base in a part of the country in which

Manx was not well represented. Our projections were based on the successful

launch of Manx products through Gordon Brown outlets.

G B – If you don't mind me saying, that's were you went wrong. My father established

a very successful family business based on a fairly traditional product line. If

you wanted to achieve the sort of profit figures Susan mentioned, your best bet

would have been to continue selling our range of products.

P T – I disagree. Our market research showed that your established customers would

be interested in updating their office accommodation and they liked the look of

our catalogue when we showed it to them.

G B – Maybe. But they thought they'd be dealing with the same Gordon Brown team.

In fact what you've done is to remove most of the sales staff who'd been with

the company for many years.

S J – Gordon, I think you are exaggerating and I'd like to remind you that we are all

part of the same team – we're not looking for scapegoats.

G B – I'm not blaming anybody personally. I just think we underestimated our

customers' loyalty to the traditional products and well, the people they are

dealing with. You know what they say – 60 % of sales are down to the personal

relationship between customer and supplier.

P T – Sure, we all know that. But we couldn't stand still. If we'd continued offering

the same products, I reckon our results would have been even worse.

G B – No, now you've no evidence for that. Susan's profit projections were based on

existing products.

P T – But surely you don't think we should have stood still – just done nothing.

S J – Well, I'm not so sure about that. It we've done nothing, we might be looking at

some sort of return on our investment. And, as it is, we've not only paid 25

million for the company but we've also spent an additional half a million,

updating showrooms, introducing a computerized order system. Where's it all

got us?

P T – I think you ‘re all ignoring the economic climate over the last couple of years.

We all know that it's been very tough and sales are down in all our sales areas.

The investments we've made in Gordon Brown will give us a good return in

time. We've made the necessary changes in staff and organization; we've

launched the Manx range. I'm convinced that if only we are prepared to wait,

Susan will see the sort of return she was expecting and better.

S M – The question is when? We can't afford to wait forever. Look, if we don't start

breaking even this year, we'll have to dispose of the company.

G B – That would be a crime! You bought a successful company with a loyal

workforce two years ago and now you're talking of disposing of it like a piece

of refuse!

S J – Calm down, Gordon. Susan was just pointing out the commercial reality. We're

not in business to make losses. If we can't turn this company round, this year,

we'll have to look closely at the options.

I – What's going wrong with Texan Chicken, Susanna? It used to be a star performer.

Now, no one seems to want to buy their shares. What's all it about?

E – There are a number of problems, as I see it. First, demand has fallen for their food.

I'm not sure if it's because people are eating less chicken these days. But certainly

there's lots of competition from the fast food chains. McDonald's, Burger King,

Kentucky Fried Chicken and so on.

I – But I thought Texan Chicken was a bit special? Different from the others? Spicier,

better tasting, and so on?

E - That may be true. But it's rather expensive. You pay a lot more than a similar meal

at, say, McDonald's.

I – So is that the problem, pricing?

E – It's not just that. They've been expanding very fast, probably too fast, and they've

run into financial problems. They couldn't pay back some of their loans on time –

the banks don't like that – and the wrong gets round. Investors don't like that

either.

I – Mmm, no wonder the share price fell.

E – Another thing. They've built up the business by franchising. But some of the

franchisees aren't running their business properly. Customers are complaining

about long queues, poor service and dirty restaurants. The décor is also dull and

unexciting.

I – So what's the solution? What are they going to do about that?

E – I called Eva Martinez yesterday and asked her what plans they had to turn the

business round. She didn't tell me much, but she did say they had called in a team

of management consultants to advise them on their future strategy.