1. Company Background
Bazaar Ceramics Studio has been operating for 20 years. We started as a small collective, operating in the picturesque township of Hahndorf, South Australia - known for its quality arts and crafts. Over the years the studio has passed through a number of transformations. In the first 7 years of its existence - as a co-operative, it was well known for producing quality domestic ware and fine individually designed art pieces.
Each member of the co-operative was responsible for designing, throwing, glazing and firing their own work. A gallery director was employed to look after the gallery and all aspects of marketing.
As the reputation of the studio grew nationally, and production expanded to meet demand, the structure of the business changed to its present form. Kim Hayward bought the business and moved into larger premises in Stepney, Adelaide. The production staff increased and currently includes a production manager, 2 full time ceramic designers and 6 production potters.
Bazaar Ceramics has a wide range of products to meet the needs of clients both nationally and internationally. The studio produces exquisite one off sculptural pieces for the individual and corporate collector. Commissions make up approximately 40% of this work. These pieces can be found in board rooms, international hotels and private homes as far away as the US and Germany.
Bazaar Ceramics also produce unique, individually designed domestic ware, including full dinner sets and ovenware.
2. The Products
The current range of products consist of one off ceramic forms (eg vase and bottle forms and dishes) using a number of traditional glazes that are highly prized amongst ceramic collectors. These include
·Copper Red
·Reduced Lustre
·Celadon
·Jun
The other area of ceramic production is the “domestic” ware range. These pieces are also individually designed and hand crafted to the highest quality, however unlike the individual art pieces, our customers are able to purchase entire dinner, coffee and ovenware in a range of designs. Products available in this range include:
·Earthenware dinner sets in a range of brightly coloured contemporary designs
·Stoneware tea and coffee sets
·Stoneware oven and serving dishes
3. Job Profiles
Title:
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Business owner
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Reports to:
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nil
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Subordinates:
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Gallery Director/Manager Marketing and Sales
Manager Finance
Manager Production
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Major activities:
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Over all direction and scope of the company
Establishes business objectives – in consultation with managers
Authorises capital expenditure
Employs staff and negotiates contracts
Establishes distribution channels – in consultation with Manager Marketing and Sales
Negotiates with suppliers
Sets wages, commissions, and incentives
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Remuneration basis
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Based on profits (Profit = revenue – expenses)
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Title:
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Gallery Director Manager Marketing and Sales
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Reports to:
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Business owner
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Subordinates:
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nil
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Major activities:
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Develop marketing and sales plans
Responsible for external perception of company image
Negotiates sales with customers – receives most of the customer orders
Responsible for customer service
Follows up sales leads
Works from the shop sales counter most days
Monitors sales targets and achievement
Approves new designs of products
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Remuneration basis
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Rewarded for increased total sales (revenue)
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Title:
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Manager Finance
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Reports to:
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Business owner
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Subordinates:
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nil
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Major activities:
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Produce financial reports
Monitors profitability and costs
Establishes minimum pricing
Monitors local inventory investment
Authorises accounts for regular customers
Responsible for setting discount pricing for old stock
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Remuneration basis
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Rewarded for high Return On Investment (ROI)
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Title:
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Manager Production
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Reports to:
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Business owner
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Subordinates:
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Local workers (three)
Remote workers (three)
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Major activities:
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Coordinate the production of goods
Orders raw materials for local workers
Coordinates dispatch of delivered goods
Coordinates the receipt of goods from remote workers.
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Remuneration basis
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Rewarded for high productivity of local and remote workers
Rewarded for low production costs (expenses)
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Title:
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Local workers
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Reports to:
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Manager Production
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Subordinates:
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nil
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Major activities:
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Designs products
Produces products
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Remuneration basis
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Base wage, plus minimal commission on products that the worker has manufactured and the shop has sold
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Title:
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Remote workers
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Reports to:
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Manager Production
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Subordinates:
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nil
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Major activities:
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Designs products
Produces products
Orders own raw materials
Pays for costs associated with running their remote location.
Packs and freights products to the shop or direct to customers
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Remuneration basis
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Minimal base wage. Significant commission paid on products that the worker has manufactured and the shop has sold. Remote workers receive higher commissions than local workers.
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4. Organisational chart
5. Mission Statement
Bazaar Ceramics is committed to producing unique, evocative contemporary Ceramic Art of the highest technical quality.
Our Goals:
§To produce unique hand crafted pieces for the individual and corporate collector
§To showcase the best of Australian Ceramic Art and Design
§To provide an extensive range of well-crafted and designed domestic ware
§To showcase technical excellence in ceramic technology
6. Strategic Direction
6.1 Critical Issues Facing Bazaar Ceramics
In determining our strategic direction for the next five years, the following points have been considered:
·Our business has been growing steadily over the last five years. This is due in part because of our new marketing focus towards the International ceramic art market. This has had a flow on effect in terms of our overall local and international profile.
·Return on investment has decreased due to the high costs of running the gallery and maintaining our international marketing campaign.
·The main source of revenue continues to be from gallery sales.
·Direct retail sales achieve the highest mark-up.
·Sales to account customers are growing steadily but these are mostly interstate and overseas client who find the current arrangements for purchasing cumbersome. Many have suggested we develop a website to streamline the process.
·Our competitors continue to make inroads into the E-Commerce technology and there is evidence that we will be left behind if we don’t embark on this marketing tool.
6.2 Current Status
We are continuing to grow our reputation for unique highly sought after collectable ceramics and professionally designed domestic ware. The key to this success is maintaining the highest technical and artistic standards and investment in marketing our products correctly.
6.3 Longer Term Vision
We will continue to produce fine contemporary domestic ware, however we consider it is the art market where we have the greatest potential for growth. To grow in this area it is important to establish a strong international reputation. This gives our work credibility on the national stage as well.
The marketing manager recently wrote a convincing report on the benefits of the Internet as a marketing and sales tool. We therefore intend to adopt this strategy to increase our profile nationally and internationally, reduce traditional advertising costs, streamline sales and get greater feedback from customers - both retail and wholesale.
7. Strategic Plan
7.1Environmental Analysis
·Internal Environment
oStrengths
§Bazaar Ceramics Studio has been operating for 20 years
§Wide range of products
§Sells exclusive art pieces
§Established customer base
§Responsive to the requirements of their clients
§Unique and contemporary products
§Growing reputation
§Niche market
§Outstanding business growth over last five years
§Increased sales by 233% in last five years
§Exceeding targeted sales growth
§International demand for product
§Ceramic designers and gallery director communicate regularly
§High quality product
§Sales to account customers are growing steadily
§Products are made to the highest technical and artistic standards
§Existing IT infrastructure
oWeaknesses
§Cost of selling product (manual processes)
§Ordering of products must be done in person, by phone/fax, or by email
§Ordering process time consuming
§Return on investment has decreased due to the high costs of running the gallery and maintaining our international marketing campaign
§The main source of revenue continues to be from gallery sales (in person)
§Interstate and overseas clients find the current arrangements for purchasing cumbersome
§No IT or technical staff employed by Bazaar Ceramics
§Increased employee numbers have increased fixed costs of the business
§The showroom has increased fixed costs dramatically in the last three years
§Negative return on investment in the last three years
§Decline in markup on product in the last five years
§Cost of goods sold has increased over last five years
§Showroom not big enough to display all products
§Production of unsaleable products
§Inability to capture sales information about popular products
§Double handling of products made by remote workers
§Any advertising brochures become quickly out of date due to uniqueness of each product
§Orders from international customers entails time zone differences
§Inability of international customers to order by phone (time zone differences)
§Only personal customers can view products adequately
§Manual order forms (costs of printing)
§Time consuming to fill in order forms for phone/fax orders
§Staff can make errors transcribing information onto forms (5% errors)
§Redundant information due to multiple forms
·External Environment
oOpportunities
§Business expansion
§Expand into national market
§Further expansion into the international market
§Customer requests to provide online ordering facilities
§Create communication and product website
§Create website to market products (brochure site)
§Decrease marketing costs
§Increase profile
§Create website to sell products (e-Commerce technology)
§Increase customer base
§Increase business reach
§Establish a strong international reputation in the ‘art market’
§Move to smaller showroom to reduce fixed costs
§Gather and incorporate more feedback from customers
oThreats
§Competition
§Competitors continue to make inroads into the e-Commerce technology
§Competitors have a pricing advantage because of their website (reduced marketing and sales costs)
§Fear of being ‘left behind’ by competitors if website is not implemented
§High advertising costs
§High value of Australian dollar is a constraint to exporting into international markets
§Products less affordable to overseas customers
§Growing bargaining power of account customers (25% discount fair?)
7.2 Critical Issues and Strategic Objectives
§Critical Issue 1: Gallery costs
oStrategic Analysis:
§Return on investment has decreased due to the high costs of running the gallery and maintaining our international marketing campaign
§The main source of revenue continues to be from gallery sales (in person)
§Cost of goods sold has increased over last five years
§The showroom has increased fixed costs dramatically in the last three years
oStrategic Objective:
§Explore alternatives to selling in gallery sales
§Critical Issue 2: Manual processes
oStrategic Analysis:
§Manual order forms
§Cost of selling product (manual processes)
§Ordering processes time consuming
§Staff can make errors transcribing information onto forms (5%mistakes)
§Redundant information due to multiple forms
oStrategic Objective:
§Automate processes for employees
§Critical Issue 3: Double handling of Products
oStrategic Analysis:
§Double handling of products made by remote workers
oStrategic Objective:
§Develop direct shipping processes from remote workers to client
All the above could come under one heading “production costs” with strategic objective: automate production processes where possible and improve efficiency in handling goods
§Critical Issue 4: Pressure on profit
oStrategic Analysis
§Increased employee numbers have increased fixed costs of the business
§The showroom has increased fixed costs dramatically in the last three years
§Negative return on investment in the last three years
§Decline in mark-up on product in the last five years
§Manual order forms (costs of printing)
§High advertising costs
§Exchange rate
oStrategic objective:
§Reduce fixed costs
§Critical Issue 5: Ordering process for customers
§Ordering of products must be done in person, by phone/fax, or by email
§Ordering process time consuming
§Interstate and overseas clients find the current arrangements for purchasing cumbersome
§Orders from international customers entails time zone differences
§Inability of international customers to order by phone (time zone differences)
§Time consuming to fill in order forms for phone/fax orders
oStrategic Objective
§Automate ordering process for customers
§Critical Issue 6: Lack of IT support
oStrategic Analysis
§No IT or technical staff employed by Bazaar Ceramics
oStrategic Objective
§Hire IT staff
§Critical Issue 7: Lack of showroom space
oStrategic Analysis
§Showroom not big enough to display all products
oStrategic Objective:
§Explore alternatives to gallery display
§Critical Issue 8: Inadequate sales information
oProduction of unsaleable products
oInability to capture sales information about popular products
oStrategic Objective:
§Improve feedback mechanism from customers
§Critical Issue 9: Advertising processes cumbersome
oStrategic Analysis
§Any advertising brochures become quickly out of date due to uniqueness of each product
oStrategic Objective:
§Find alternative methods of advertising
§Critical Issues 10: Competition
oStrategic Analysis
§Competition
§Competitors continue to make inroads into the e-Commerce technology
§Competitors have a pricing advantage because of their website (reduced marketing and sales costs)
§Fear of being ‘left behind’ competitors if website is not implemented
§Growing bargaining power of account customers (25% discount fair?)
oStrategic Objectives:
§Explore opportunities to improve competitiveness
8. Computing Infrastructure
Company Intranet
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Item
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Specifications
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LAN Infrastructure
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Ethernet (100BaseT).
16 port switch
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WAN infrastructure
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ADSL connection to Internet
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Server (1)
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Intel Pentium 3Ghz, 4 GB RAM, 4 TB HDD, 10/100 Ethernet card
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PC’s (10)
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Celeron 2.4Ghz, 1 GB RAM, 1 TB HDD, 10/100 Ethernet card
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Server software
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Item
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Specifications
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Operating System
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MS Windows 2003 server
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Web server
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MS IIS
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Email
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Exchange
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PC software
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Item
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Specifications
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Operating System
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MS Windows XP professional
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Web browser
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MS IE 7.0
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Email
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MS outlook
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Virus checker
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McAfee VirusScan
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Bazaar Ceramics has an office/shop/workshop. This area has a basic network setup.
Some employees are remote workers – this means that that they work from their own home.
All employees have PCs, Internet access and email accounts.
There are no IT or technical staff employed by Bazaar Ceramics. If part of the computing infrastructure needs maintenance or upgrades, Bazaar Ceramics contact a service provider.
Bazaar Ceramics would like to move away from this situation.
9. Project Brief
You are employed as an analyst, project manager and a developer. In other word you will be responsible for all aspects of project implementation which may include:
vImplementation of e-commerce shopping website
vImplementation of an upgraded Network to meet the demands of increased volume of sales
vImplementation of possible Cloud Technologies for Data Storage for safety and security
vImplementation of Google Apps for emails and move away from management of Exchange Servers for Outlook emails
Your task is to review the Strategic direction, Strategic Plan, Critical Issues, Strategic Objectives and the current system of Bazaar ceramics. You are then to prepare a solution report based on your recommendations for improvements.
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