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CMNGD Commongood Linens Scaling A Work Integration Social Enterprise Case Solution
HR department role is very important as the issues identified in CMNGD are line with increasing turnover and rising training costs. Steps need to be taken by HR department in ensuring employee retention by increasing their focus on extrinsic and intrinsic motivation tools such as employee of the month, a word of appreciation from Hannah and Dave, etc.
Following questions are answered in this case study solution
From an internal company perspective, evaluate MacPhie’s functional areas and assess the situation by:
Reviewing management and the company’s effectiveness across its other functional areas such as Finance, HR, IT, Operations, Legal.
Identifying key issues, priorities and or skills and capabilities that must be put in place to support and capitalize on the recommended growth opportunity.
Developing a 5 point action plan in bullet form that summarizes your views on how Common goods management team can manage the recommended growth opportunity given the key issues that you have identified externally and internally.
Developing 1 to 3 recommendations for the important functional areas so that those departments can dovetail their efforts with management’s 5 point action plan.
Case Analysis for CMNGD Commongood Linens Scaling A Work Integration Social Enterprise
1. From an internal company perspective, evaluate MacPhie’s functional areas and assess the situation by:
a. Reviewing management and the company’s effectiveness across its other functional areas such as Finance, HR, IT, Operations, Legal.
Commongoods Linens (CMNGD) as envisioned by Hannah and Dave, as “a social responsible provider of high-quality, affordable and contact free services to restaurants and other businesses situated in Calgary” was able to raise substantial funds of $11, 265 through crowd funding their initiative using a platform called ATB Financial BoostR platform. This was only possible due to the social mission of CMNGD centered on the provision of employment opportunities to homeless Calgarians with the sole purpose of ending poverty.
CMNGD for the financial year of 2016 and 2017 displayed a profitable performance evident from the operating margins of 81% in terms of $10,000, Operating profit made per restaurant. Looking at Exhibit 2, CMNGD made a net operating loss of $4200 for the year 2016 which was transformed in to net operating income of $ 98,470 due to the fact that the no of locations it served increased from 15 to 35 making the Gross Revenue rise from $ 180,960 to $ 414,960 for the year 2016-17 indication of the CMNGD’s increased ability to penetrate the market and gain more clients due to their affordable, high quality and contract free services armed with a social purpose.
CMNGD also partnered with Drop-In Centre for the purpose of recruiting those homeless people at their enterprise combined with the social license that it had managed to obtain making it much easier to operate through the ongoing donations they received from renowned figures in the community who wanted to support an initiative centered on putting an end to poverty. CMNGD was able to recruit employees at a rate of $ 18 per hour thus creating a safe and comfortable environment to work in while the partnership with Drop-In Centre helped the recruits to overcome their mental obstacles through counseling and encouraging a positive thinking attitude. However on the other side, CMNGD had to offer the recruits substantial training ranging from the usage of computers to customer support to getting the driver’s license to personal development taking an average of at least 120 hours to train making it expensive to train and time-costly.
Thus in light of the social mission undertaken by Hannah and Dave in form of CMNGD, the enterprise was able to operate smoothly given their financial performance but did suffer from higher turnovers and rising training costs.
b. Identifying key issues, priorities and or skills and capabilities that must be put in place to support and capitalize on the recommended growth opportunity.
The key issues already identified above were the increasing turnover combined with the recurring training costs that need to be borne by CMNGD to train the recruits from making them learn the use of computers and smartphones to learning how to deal with clients to getting driver’s license to finally being focused on their personal growth. This is evident from Exhibit 2 which showed that the total training plus the salaries and wages costs accumulated to be $108,880 for the year 2016 representing 86.5% of the total expenses amount. Secondly the enterprise had only 4 full-time employees making it difficult to serve numerous clients.
Hannah is faced with three recommended growth options for the purpose of scaling from the option of consolidating its foot-print in the industry through the target of a set customer base to the decision of market development by targeting other cities in Canada ranging from Alberta to Vancouver to Edmonton aided with the option of franchising to lastly abandoning the social mission and acting as low-cost linen services provider in the industry.
The recommended strategy chosen should be the first option where Hannah and Dave should focus on consolidating their presence in Calgary. Here Hannah and Dave by capitalizing on their long term relationship with their clients and the positive word of mouth generated from their social mission can provide high quality and contract free linen services to range of new consumers in form of schools, hospitals, salons and etc.; all of them requiring uniform and other linen services.
On the other side, the second option of pursuing market development strategy involving expanding CMNGD operations to a range of cities will be difficult to pursue as Hannah and Dave do not have any knowledge about how the franchises business model operates combined with the risk that the franchises under CMNGD can deviate from the social mission of providing homeless people in Calgary with employment opportunities and move towards making profit.
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