Essay paper on Business Report

by John Darren

Environmental Control Systems Limited (ECS) was established in 1998 as a result of the need for Auckland Regional Council to outsource non-core activities and to streamline its internal operations. ECS is primarily responsible for bio-security and the eradication of harmful and invasive pests, such as possums, which carry bovine TB, and the painted apple moth that could have a negative impact on the Auckland region s natural environment.

The start of the ECS was quick and it was developing as a strong company. The leaders of the company are ex-employees of the council, who later established ECS.  They were experienced in this form of pest control and they were also familiar with the internal funding mechanisms, which paid for these services through local and central government.

Later the ECS started having problems and serious difficulties in its work. The major shareholder didn’t participate in the day-to-day management of the operation and leaves this to the Business Manager. Contracts were awarded to independent service providers through a tendering process administered by the Auckland Regional Council (ARC) and there were clear quality and operational requirements that needed to be complied with.

The company succeeded at start-up in securing a number of lucrative pest control contracts and set about putting their operational plans in place. The company’s staffing levels grew as more contracts were awarded and territory coverage expanded into the lower North Island. The company also offered its services to other regional councils further south and secured this work as well by providing effective, quality solutions to their clients. When ECS had won a contract, it immediately scheduled and budgeted the operation, allocated the required resources and performed the work.

Company has faced a number of difficulties. The level of contract rework due to non-compliance with quality standards was significant and needed to be addressed. The company has got wrong reputation, which led to predicaments of the performance. It has chosen the wrong strategy, which actually became the reason for the process of slow collapse.

One of the reasons for this situation was the attitude and behavior of the Business Manager, which actually wasn’t really performing his direct obligations. Businesses have different responsibilities depending on whether they hire permanent staff or contractors. And full-time or part-time employees have an ongoing contract with a number of obligations. Contractors are usually engaged to perform some specific tasks, after which their employment with the company terminates. (Business Victoria)

Cash flow was a problem and creditors were beginning to demand payment before releasing goods to the company. ECS could stay without support and be closed. An important part of making accurate cash flow projections is detailed knowledge of amounts and dates of upcoming cash outlays. That means not only knowing when each penny will be spent, but on what. Have a line item on your projection for every significant outlay. In a big growing company the expenses must be watched carefully. (Money Matters)

There have been some unexplained expenses claimed by Business Manager in the accounts that looked suspicious.  There was a lack of communication between Business Manager and his management team, particularly the financial controller, who must often scratch around for urgently required information when the Business Manager was not there. In this case the lack of market communication can cause the dissolution of the work, team and  the whole company.

But when it comes to ethics in business, many accept that standards can not only be different from, but even lower than, ethics in everyday life. That should definitely not be so. In fact, a corporation’s obligations to its stakeholders bind it to those stakeholders, in turn creating new and specific moral obligations.

There is one more problem, that no budgeted funds allocated for the work and it’s not sure if the company will be able to make any further claim against council to facilitate the work.

Morale among staff was low resulting from promises made by management that bonuses would be paid over Christmas whilst the company had insufficient funds to fulfill this obligation.

The company has gone through various problems, which were caused by wrong marketing strategy and irresponsible staff. It wasn’t controlled properly, what made serious difficulties in relations with creditors and could lead to bankruptcy of the company.

       Recommendations:

1. The company must start renewing its reputation, by making new contracts. These contracts must be possible for performance. They also should be long term for developing a better stability of the company.
2. The company should hire another Business Manager, who would be more responsible in his work.
3. The company should co-operate with other companies to promote its own stability and development.
4. The company’s leaders should meet the creditors and discuss the way of repayments. Should be done some compromises, if possible, and created new way of getting cash income.
5. Cash flow projections should be prepared for next year. An accurate cash flow    projection can alert the company to trouble well before it strikes.

   References:

Cisco, 2007. Submit Business development opportunities. Retrieved from:

 http://tools.cisco.com/BDApps/coldcall/index.do

Money Matters, 2007. Understanding your obligations. Retrieved from:

 http://au.pfinance.yahoo.com/small-business/understand_obligations.html

Business Victoria, 2007. Employing staff and contractors. Retrieved from:

http://www.business.vic.gov.au/BUSVIC/STANDARD/1001/PC_60497.html

Queensland Government, 2006. Managing legal issues and obligations. Retrieved from:

http://www.sd.qld.gov.au/dsdweb/v3/guis/templates/content/gui_cue_cntnhtml.cfm?id=64

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