Organisation of Treaty Beer Company strategy Essay

Contents Introduction1 Purpose1 Organisation of Treaty Beer Company2 Beer industry2 Environmental Scan2 Internal environment2 Physical2 Financial3 Human4 External environments5 Natural environment5 PEST factors6 Five Forces Analysis9 Bibliography11 Introduction Purpose The purpose of this article is to help Treaty Beer Company making a strategic analysis that is about the enterprise internal and external environment analysis. This analysis will out look the future environment, which is the basis for the development of the strategy that makes business development, climate change and company capability achieve dynamic balance.

Organisation of Treaty Beer Company The organisation structure of Treaty Beer Company shows bad corporate governance. From the top of the owner to the lowest employees, they are in either family or friend relationships. John Murphy doesn’t take the role in company seriously. However, human resource is the most valuable factor for company’s strategic development (Frempong, E. O. , Ahenkora, K. ; Asamoah, A. , 2013). Also, he manipulated the financial data of company and took an excessive salary last year. Then it leaded to a poor net income of Treaty Beer Company. Beer industry

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According to Market Line (2013), the Irish beer market has declined from 2008 with an average annual growth rate of -2. 1%. The total value of the market was €2672. 4 million until 2012. There is a forecast that the market will continue to shrink with an average annual rate of -2%. 2017 will see a market value for around €2410. 6 million. Environmental Scan Internal environment Physical Treaty Beer Company has a high quality product and quick delivery reputation since their products are made from natural ingredients and won a number of international quality awards for beer in the 1990s.

Also John Murphy is regarded as a top class brewer widely. The ingredients which made for their products are only coming from local suppliers may ensure an important factor to brew an authentic traditional Irish beer. So only for their products, it seems they are running in a good business. Quality assurance could maintain their high reputation, however, their reputation still suffered for the rumours of bankrupt. Though Treaty Beer Company established in 1990, but now it is still located in the building without repaired.

The old building not only has negative effects on their further development, but also their work place for employees. Meanwhile, their IT system lagged behind the worldwide growth that they only have one computer for administration and marketing. The website of TSC doesn’t play a role of advertising which is simply enough that seems like totally useless at all. Financial After calculating, the current ratio of Treaty Beer Company was 0. 68, which means it is quit hard for the company’s current assets to cover its current liabilities.

And their finance showed a negative working capital last year. That indicates Treaty Beer Company couldn’t pay off their short-term liabilities immediately for they were overleveraged. From the liquidity ratios, Treaty Beer Company was struggling to maintain their business. The mainly reasons are they paid their raw materials by cash for the suppliers didn’t trust TSC and plenty of customers couldn’t settle their accounts. Mainly paying by cash is quit dangerous for a company that would make their finance running ineffectively.

In terms of their activity ratio, the asset turnover was 1. 67, which means they could turn over their assets 1. 67 times a year. This frequency of asset turnover is quit low. The reason for this problem is their poor inventory management which was managed by a former barman who had no qualification on this. But there is no data of industry standard or other competitors’ for comparing, so the limitation is existing. Although beer manufacturing industry is not a capital-intensive industry, the debt to equity ratio of TSC reached 1. . There are too much debts were operated by the company which made their financing too aggressive to handled. A potential probability is that the company may feel hard to cover their shot-term and long-term liabilities and there is a problem to pay off their debts by earnings which may lead to their bankrupt. The net profit ratio and return on capital employed ratio were 1. 67% and 5. 4% respectively. In spite of none comparison, the utilization of funds was very low. Human

This organisation structure shows a bad corporate governance of Treaty Beer Company, a family-run company. From the top of the owner to the lowest employees, they are in either family or friend relationships. John Murphy thought it is extra unnecessary costs for a systematic management and financial controls. He doesn’t take the role in company seriously. Also, he manipulated the financial data of company and took an excessive salary last year. Then it leaded to a poor net income of Treaty Beer Company.

Furthermore, the employees in the company are not skilful and there are no trainings for them to be qualified. This factor will have negative impact on their products’ quality. Human resource is the most valuable factor for company’s strategic development. Rational use of human resources can maximize corporate resources. In order to achieve the goal effectively by employees’ creativity and decision-making for the firm, employees should be empowered (Frempong, E. O. , Ahenkora, K. & Asamoah, A. , 2013).

Treaty Beer Company is a small family-running company that they didn’t implement a professionally organisational system. John Murphy works on all of the sales and public relations business, which means there is only one sales person and he is without professional selling skills. Recently, couples of customer went into liquidation and didn’t pay for their bills. That made a number of bad debts for Treaty Beer Company. While, some of the customers were worried about the capacities of Treaty Beer Company and afraid they could not offer beers sufficiently for a long term business.

These indicate that Murphy didn’t establish the relationships with their customers well. However, several sales people had been employed, but were dismissed since Murphy thought they could not be trust. According to the organisational structure of Treaty Beer Company, the three managers (John Murphy, a former barman, Murphy’s wife) are without any formal qualification on what they engaged. It would have a huge probability leading the company to a wrong way. Further more, the production employees are unskilled and some of them are doing a part time job.

Brewing a high quality beer required professional skills and Murphy doesn’t have any spare time to inspect what is going on in the factory and warehouse. These unskilled employed may make the quality of beer ragged. All in all, humans in Treaty Beer Company are not skilled and knowledgeable; all of them only rely on their experience. The only thing they do well is choosing local suppliers. These series phenomena show that Treaty Beer Company didn’t focus on applying technical and systematic human resource, which made the resource waste and results to the downfall of Treaty Beer Company.