Managerial Decision Making
Managerial Decision Making Block A
Assignment Case Study: Brush with Nature Cosmetics
Read the attached case study about Brush with Nature Cosmetics
You are the Senior Management Team at Brush with Nature Cosmetics (BNC). You report directly to Caroline Charles, CEO and a founder of the business. Carolinecommissioned a team of final year undergraduate business students to do a consultancy project for her. They have been working with the organisation for the past few months, studying the business and some aspects of its external operating environment. They have submitted their report and Carolinehas asked you as her trusted senior member to analyse and evaluate their report andprepare a complied report to present your findings to her
You have to read and analyse the report and determine what it means for the business. Your task will involve some reading and research in addition to reading the case study. Some sources are provided for you, however you are also expected to do your own research and find additional sources to support your work.
An individual written report. (5000 words, +/- 10% excluding cover, contents, bibliography, appendices)
In the report, first Identify all the key managerial decision-making issues and their context (internal and external) in the BNC case study. Thenselect and analyse the main managerial decision-making issue(s) at BNC and provide evaluated and justified recommendations to resolve them.
You need to prepare the report by answering the following requirements step by step.
- What is the nature and context of the keyissues/problems for the business that require management level decisions to be made? Consider both internal and external context (STEEPLE, Balanced Score Card, Schein culture, Stakeholder analysis, SWOT).
- Identify the issues/problems for the business and justify why you think they are issues/problems, and what impactyou think these issues are having on the business now/will have on Caroline’s future plans for the business?
- Identify one Tame problem/issue that you think is having a significant impact on the business and that should be addressed; explain your rationale.
- Critically analyse the different approaches that you could use to solve the problem/issue (eg rational model, bounded rationality, six step decision making etc.
- Select the structured approach that you will use to solve the problem, and justify why you think this is the most appropriate
- Work through the problem/issue, using your chosen structured approach, and applying appropriate tools and techniques at each stage of the process.
- Show clearly how you:
- Have fully understood the problem and why it is having a negative impact on the business
- Identify the root cause of the problem (this is important – once you know what is causing the problem, you have found your real issue/problem, and this is what you have to resolve)
- Generate solution options
- Systematically evaluate the options until you can identify the ideal solution; this will require several stages where you reduce the number of options until you have one preferred solution
- Ensure that your solution is legal, ethical, cost effective, practical, and politically acceptable (make sure that you explain all of these things)
- Recommend your preferred solution, and justify why it will benefit the business to implement this solution
All work should be supported with relevant academic theory and reference to sources from the module, your reading and your research. Please use Harvard referencing throughout.
You may include tables and diagrams in your work where these are relevant and appropriate and reasonably sized. You may also include a reasonable number ofrelevant appendices.
Pay close attention to the assessment criteria which are detailed in the module handbook.
Submission Deadline for component:
Submit the report no later than 16.00on 8th December 2020via VLE where your work will be automatically checked for Plagiarism. NO PAPER copy is required.
Assignment Case Study: Brush with Nature Cosmetics(BNC).
Introduction to the business
Brush with Nature Cosmetics(BNC)is an online retailer based in the United Kingdom. It is an independent business, which sells a range of cosmetics, skin care and body care products for men, women and teenagers as well as accessories such as brushes, mirrors and bags.
Caroline and her friends Angela and Rupert established BNC on 1 March 2007;they all still work in the business and form the senior management team.
The business is successful and has a head office, warehouse and call centre in Leeds; there are now200 staffemployed in these operations.BNC use agency staff as well as their own employees in the warehouse.
The senior management team all earn six figure salaries, though Caroline earns more than the other two;Caroline owns 50% of the shares, Angela and Rupert each own 25%, and all three are on a performance related bonus scheme. No other employees in BNC are on a bonus scheme, and there are no plans to extend the scheme.
CarolineCharles’spersonal vision for the business is to expand the range to include skin and body care products for the elderly, forbabies and forchildren; more make up products for men; extend the hair care range and extend the cosmetic accessories range. She is also keen to build a reputation as an eco-friendly and responsible business.
The BNC mission is to “To be a responsible andprofitable business, providingaffordable cosmetics, skin and body care products and accessories and givingfantastic,friendly and personal service to all our customers.”
All current customers are based in the UK, and whilst Caroline would like to export in the future, there are no immediate plans to do this.
Carolinehas set some challenging objectives for BNC:
- To at least double theprofit from UK sales by the end of 2021,
- To significantly increase the range of products and the age range of customersin order to increase profits
- To position the BNC brand so it is perceived by customers to be aresponsible organisation
Caroline’s perception is that being a ‘responsible organisation’ will become increasingly important in the future and that this will help to maintain and grow the company and its profits. The annual performance bonus for Carolineand her senior management teamare linked to achieving the business objectives.
The call centre
- In order to expand the business according toCaroline’s vision, BNC has recently opened acall centre. They used to just have a small team of people working from an office in the Head Office building. Carolineresisted pressure from hersenior management colleaguesto locate this new call centre overseas and thus benefit from cheaper labour and overhead costs. She feels it important that all employees of the business are based at the same location and able to operate as a team. The BNCcall centre is situated on the company Head Office site on the outskirts of Leeds, alongside the warehouse and packaging hall. The call centre benefits from investment in the latest technology in order to provide fast and accurate services to clients, and also to monitor record and measure staff performance. The technology also allows call centre staff to store, update and access all customer information and to track orders and payments in real time. Within the next 12 months Caroline wants the call centre to function as a 16 hour a day, seven day a week operation as the business competes for more customers and for greater customer loyalty. The key management positions in the call centre have been filled with people known to the senior management team who have worked in other parts of the business so they know and understand BNC, but have no call centre experience. They are implementing policies and procedures based on those at Head Office, regardless of whether they are ideally suited for the high pressure environment of the call centre. The managers are doing the best they can. Due to the planned expansion of the product range, and the investment in the call centre, finances are tight and the budgets available for such things as training and development throughout the business (Head Office, warehouse, packing and call centre) are limited. If managers were to submit a sound business case to the senior management team it would be considered, however, to date, no such bid has been made.
Working conditions and issues at the call centre are the subject of a separate report, and you are not required to consider this aspect of the business in detail, though you need to be aware that the call centre exists and is an important part of the business. Dealing with customer complaints and cancelling membership to the box scheme takes a considerable amount of their time.
Two hundred and fifty staff are now based at the Leeds site, 200 at Head Office and in the warehouse and packaging halland an additional 50 in the call centre. About one third of the staff in the business are full-time, permanent staff; one third are part time, permanent staffwith the biggest percentage of part-timers working in the call centre. The remainder of the staff are from an Agency, and most of these work in the warehouse and packaging hall. UNITE is the recognised trade union in BNC; membership for the business as a whole is about 20% of staff (those on permanent full or part-time contracts only), but the figure is much less than this in the call centre. Most of the UNITE members work in Head Office.At the moment, there is no other formal (or informal) channel for communication or consultation with staff.
Rates of pay are relatively low compared to the local labour market, with manywarehouse and packingstaff on the minimum wage.Many of these workers are under the age of 25. The warehouse is operational between 6am and 10pm Monday to Friday and 8am to 6pm Saturday and Sunday. The call centre currently operates between 9am and 5pm Monday to Friday.Fringe benefits for permanent staff(both full time and part time) are relatively good.There is an excellent staff canteen and a staff discount on products; all staff have a 20% discount on everything they buy up to a fixed upper limit depending on seniority. This upper limit ranges from £200.00 a year for the lowest paid to £2000.00 per year for senior managers. Part time staff have a pro rata upper limit according their hours. Staff maysubscribe to the ‘cosmetic boxes’ under the same terms as customers, though at their reduced price and as they collect their boxes from the warehouse, they pay no postage and packaging. Alternatively, they may purchase individual items that are displayed in a staff shop; these items tend to be stock that does not sell well to the public or stock that is nearing the end of its shelf life.
Agency staff have no access to staff discounts, though they are able to buy from the staff shop at full price, saving postage and packaging costs.
Staff are encouraged to cycle rather than drive to work, there is no financial incentive to do so, however there are plenty of cycle racks in the car park. Many of the racks are unused since staff seem to prefer driving to cycling.Drivers struggle to find space to park and when they cannot find space in the car park, they look for street parking in the surrounding residential area, where there are currently no parking restrictions.
The Head Office building is well appointed and each of the senior managers hasa comfortable office with good quality furniture and carpeting. They each have the latest version of relevant IT including smartphones, tablets and computers. There is a meeting room where senior managers can take visitors, this is equipped with comfortable seating, a high specification coffee machine, fast wifi access and a quality snack bar which is kept fully supplied with healthy choices by the canteen staff. All senior managers have top of the range company cars and personal parking spaces. There is a separate canteen which can be used by all staff.
All staff have access to the canteen during the hours 8.00am – 5.00pm; breakfast is served between 8am and 10.30am; lunch between 11.30am and 2.00pm, snacks and hot drinks are available all day. There is an area of the canteen where management can reserve seating for visitors, when they do, they can ask for waitress service at the tables. The canteen seats a maximum of 85 people. When the canteen is closed, staff can still use the seating area, and have access to vending machines (for hot drinks and snacks such as crisps and chocolate) and one microwave oven.
Although it is possible to buy ‘one off’ purchases at full price plus postage and packaging from the BNC website, most of their money is made from a ‘membership’ based business model. Customers are attracted to BNC by the offer of carefully selected, good quality products at low prices, and they can sign up for bronze, silver or gold membership, each for a different monthly fee. Bronze membership costs £20 per month; silver is £30.00 and gold is £40.00 per month. There is a minimum membership period of 12 months. Within that time, customers can change to another type of box at the same membership level, or upgrade to a more expensive box, as long as they give 2 months’ notice of the change. They cannot change to a cheaper box. Ten percent of customers have been buying for five years or more; ten percent for 2 years or more, the remaining eighty percent cancel their membership after the minimum membership period. Postage and packaging is £3.50 for all deliveries, regardless of size and value.
Customers may select from a range of options as summarised in the following table:
|Membership Options||Bronze – £20.00
RRP – £30.00 min
|Silver – £30.00
RRP – £45.00 min
|Gold – £40.00
RRP – £60.00 min
|Family||1 Accessory per month
1 male product
1 female product
1 teen product
1 other product
|2 Accessories per month
2 male products
2 female products
2 teen products
1 other product
|2 Accessories per month
3 male products
3 female products
3 teen products
1 other product
|Teenager||1 accessory per month
4 products for teens
|2 accessories per month
7 products for teens
|2 accessories per month
10 products for teens
|Women||1 accessory per month
4 products for women
|2 accessories per month
7 products for women
|2 accessories per month
10 products for women
|Men||1 accessory per month
4 products for men
|2 accessories per month
7 products for men
|2 accessories per month
10 products for men
The Recommended Retail Price of the items in each monthly box is listed above; so customers are receiving goods, which, if bought individually would cost them more than the monthly fee they pay. The boxes are therefore marketed as ‘value for money’. BNC offer loyalty points to customers based on their total spend (excluding p&p). £10.00 gains 1 point, and once a customer has gained 10 points, they get a free gift with their next delivery. Customers can also gain 10 loyalty points for every friend they introduce to the brand, who joins the membership scheme and pays monthly for the minimum of twelve months.
All sales are via the BNC website which is professionally presented, (one of the senior management team specialised in website design during their time as an undergraduate) there are no shops or physical outlets for the BNC brand, and there are no plans to ever introduce any. The procurement team have developed good working relationships with three wholesalersand they are good at negotiating prices based on batch quantities. The more they buy from any individual wholesaler, the better the price they can agree. No single wholesaler supplies everything that BNCwant to sell, though all provide a range of cosmetics, skin care and accessories. The three wholesalers all buy from manufacturers in the UK, Europe and China. The procurement team have been investigating whether they could buy accessories cheaper if they went direct to the manufacturers in China rather than buying via wholesalers. A small number of products are bought from independent UK producers who are friends and acquaintances of Caroline and her family.
BNC market their cosmetic boxes as exclusive,good quality and value for money; they feel they can do this as they are, to their knowledge, the only online retailers in the UK who offer the range and mix of products and accessories contained in any box.
The product quality is reasonably good, and most of the products sold are brands which are recognised in their country of manufacture. No products are designed or manufactured exclusively for BNC. The BNC tree logo is on all of the packaging, but not on the products themselves.The senior managers chose a tree for the logo because it gives the impression that the business cares about the environment.
The BNC procurement team place orders for what they think will sell; they buy as cheap as they can, and therefore sometimes find that they have been sent slightly substandard goods. Quality issues are with packaging and labelling and not with the cosmetic or skin care product itself. At times they also purchase end of line products, knowing that they can sell them in the UK as unique stock.
The products are sent to the warehouse in Leeds, packed in large crates. Warehouse staff in Leeds put individual products into branded packaging and sorts it so that it is stacked and stored correctly in the warehouse. When orders are placed for a product, there are ‘pickers’ and ‘packers’ in the warehouse who find and pack the product ready for delivery to the customer. Packers also put together the monthly boxes, in which each individual item is in a small branded plastic bag, placed in a cardboard box lined with tissue paper and a plastic sheet printed with the company logo.The monthly boxes are also printed with the logo on the inside and the outside.
BNC does not have any vehicles of its own; they use a logistics company to arrange all their incoming transport, which carries deliveries of product and packaging. They also have a contract with a courier business to deliver parcels totheir customer. The procurement department which is responsible for agreeing contracts with all suppliers are very good at negotiating and have driven down transport costs. The courier company currently contracted uses zero hour contracts for their own warehouse staff and drivers; they have a 58% staff turnover rate.
The BNC warehouseisalmost always very full and in order to store all of the stock, especially during the period immediately after a delivery has arrived,pallets are stacked on the floor at the end of the storage racks. Warehousestaff complains that this blocks visibility when using the fork lift trucks.However these complaints are never formally recorded, agency staff who do not like working in the warehouse justask their agency to place them elsewhere when they get fed up. It is easy for the agency to find alternative placements for their staff, so none of them have passed on their concerns about health and safety and working conditions at BNC – it is easier to move on elsewhere. As there is no consistent voice raising concerns about health and safety, addressing this issue has not yet been a priority.
As products are orderedin bulk from the wholesalers, once the stock has been sold, it cannot easily be replaced at the same price per unit, and is therefore shown as ‘out of stock’ on the website. Any product that does not sell at full price to customers is displayed in the staff shop and promoted at sale price on the website. Generally the buyers judgequantities reasonably accurately, but there seems to be at least one misjudgement each month with a popular itemselling out too fast and there is always some over buying ofstock due to the policy of buying cheap offers from the wholesalers.There are a few product lines that are considered to be beauty basics which are sold all year round, however many products are seasonal (eg products containing glitter for party season; floral hand creams for mother’s day; red lipsticks for Valentine’s day and luxury shaving products for father’s day) . Any stock that cannot be sold either through the website or the staff shop, and which has a ‘use by’ date, or which is too seasonal to give away as the ‘free gift’ earned with bonus points, is given to a charity. Currently the preferred charity is one led by a friend of Caroline’s, their children go to the same school, and they have been on a few family holidays together. This makes life easy for the business, though Caroline has never really asked her friend about who benefits from the charity or where the products go, she merely feels that it is important for a business to be seen to be doing some good and charity ticks this box for her. In fact, they refer to their charitable giving in their marketing publicity.
BNC aim to purchase and operateresponsibly and this is a part of their mission statement; though as there is no clear organisational definition of ‘responsible’, managers have to interpret this in their own, individual ways.
The procurement team have decided that presentationof their products on their website is an important factor in selling their brand; all products are photographed to make them look very appealing and of perfect quality. Customers are buying from pictures on the websiteand receiving their orders through the post; therefore the product should look amazing in the photo, and reach the customer in good condition and attractive packaging. BNChas a very good photographer, and the pictures present the product very favourably; products are photographed with a plain background and customers have said that this leads to confusion about the actual size of the product. Any package worth over £100.00 also includes a novelty key ring in the shape of a tree; this is packed in a plastic bag containing blue and green glitter, and then placed in the cardboard box. The company is keen to develop and maintain a reputation for quality, and they feel that the extravagant branded packing will help.
If BNC meets the annual objectives that Carolinehas agreed with her senior managers, to expand the business and the product ranges, and if they continue with the same procurement policy, they will need more warehousing space. There is limited scope for expansion at the current site as it is on the edge of the green belt. However two of the senior managers are members of the local golf club and are very friendly with the chief planning officer who plays there regularly. They are quietly confident that they will be able to get some inside information on how to put together a persuasive bid for expansion, increasing the capacity of the warehouse by lifting the height of the roof to create a second (and possibly a third) floor and adding an extension to the existing building for more offices. This is the cheapest option for the business, and they are keen to make it happen whatever it takes. They would be happy to paint the exterior of the extended warehouse green and plant a few trees to make it all blend in; after all, most of the neighbourhood is affluent and the immediate neighbourhood is residential, they might appreciate it looking ‘pretty’ and this might stop any ‘not in my back yard’ objections. The office and warehouse extension will need a small reduction in the size of the existing staff car park and no more car parking could be created; access to the warehouse loading bays, the cycle racks and the senior manager parking bays would not be affected.
Because the senior management team are all friends and have worked together since the company was founded, they do not see any purpose in completing performance appraisals for each other; although they are on performance related bonuses, none of them has ever missed a bonus payment, regardless of the business performance. What kind of friend would question either individual performance or an annual bonus? Some of the middle managers in the business have questioned why the senior managers get a bonus and no one else does. However they never really feel that they are listened to.
Reference this case study as follows:
Trem, K.R. (2019) Brush with Nature Cosmetics(Managerial Decision Making), Leeds Beckett University
If you quote from the case study, then reference in text as follows:Trem (2018 pX) where X is the page number from this document.
H5 Managerial Decision Making 2020 – 2021
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