Business Management: New Life Brewery (Research Paper Sample)

New Life Brewery Case Study
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Affiliation
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Business Background
New Life Brewery is an upcoming organization that has an authorized and issued share capital of 10 m pounds made of one-pound shares owned by 20 members with equal ownership. The managing director of the organization aims to float the shares holdings in LSE manner in the next five years. To achieve the objective, the managing director has embarked on a growth strategy. Currently, the brewery is manufacturing cask ale and has a strong international and national reputation. However, the business has not yet distributed through key retail outlets. The business is located in Kent with 80% of their sales being within the South of England. The organization has two Lorries that distribute the beers 6 days a week for eight hours a day. The general manager wishes to expand the operations of the organization by introducing newer products for the firm.
The manager intends to venture into gins, spirits, Vodka, and Cognac distillation. The new distilled products will be stored in the used beer casks to infuse the flavors of the brands. The business has consulted externally and the assessors have given estimates for the new project. They have estimated the wholesale price of the bottle to be 8 pounds, staff production cost per bottle to be 3 pounds, and the cost of expanding the firm to accommodate the new distillery to be 5 million pounds. The cost of the new equipment has been estimated to be at 2 million pounds and they will be replaced 6-8 years. The expected sales of the in 1-3 years is 100, 000 bottles per year rising to 250, 000 bottles thereafter.
Some directors have indicated that the project has not been adequately estimated and the assessors have omitted costs of the ingredients for manufacturing that amounted to one pound per bottle. The directors indicated that the estimators had not financing needs, financial indicators, as well as operational factors. One director that had served in a brewing industry indicated that the other organization had sought 9% external funding of their funding. The writer will prepare a detailed report for the director about the new desired venture. The report will cover the evaluation of the operational and regulatory factors to be considered by the business. The report will identify the financial needs of the business that will be short and long-term. The report will include the critical financial analysis of current proposal against another alternative that will include other key factors influencing the success and performance of the new venture. The report will provide a recommendation for the board to consider with rationales.
Operational and Regulatory Factors to be Considered by the Board
The business will require observing and operating within the legal, professional, and ethical requirements within South West England and the entire scope where the organization wishes to expand. One of the initial considerations would be about legal regulations in the liquor industry. The law in England recognizes the liquor industry and issues licensure and operating regulations within the region. One of the critical requirements by the law and for the best of the business would be the intellectual property ownership. The intellectual property in this case will include the trademarks and the brand names that the new business wishes to introduce. There are many other similar organizations operating in the region and they have their recognized brands and trade names. It will be required by the law that the new products be not similar to those of other organizations unless by a legal agreement between the owners of the other trademarks, patents, and brand names and New Life Brewery (Mayer, 2011).
Patenting trademarks, brands, and other intellectual property of the new products will be beneficial to New Life Brewery for the protection by the law of their products. In addition, legal recognition of the brands will give the business marketing an upper hand in the event of brand marketing that is a critical success factor in the liquor industry. On the other hand, the business may have a developed production design that is different from the rest of the distilling organizations. In that case, the new distilling model will require to be patented so that the business will have exclusive ownership and control of the new production design Mayer, 2011, p. 726).
The liquor industry is faced by critical operations laws aimed to protect the users as well as the environment. In England, the production laws for the consumer products provide for the quality standards that are required to be followed. The laws apply to the marketing and advertising as well as to the sale of the products. The products are not to be advertised or sold to the minors. The operation laws promote equal opportunities and competition in the sector. Thus, New Life Breweries should not enter into any agreements with similar or non-similar businesses aimed to inhibit free and fair competition in the market or promote monopoly Mayer, 2011, p. 738).
Environmental and labor laws will require to be considered by the organization. England has established environmental protection laws that may differ from operational regions. The form will require to understand the implications of these laws to their intended operations. Issues such as environmental pollution in the form of air, water, and soil pollution in the intended production area may raise the cost of production significantly. The consideration may be used to relocate the production plant to the areas that have favorable environmental protection laws. The disposal and recycling of the by-products or the used materials such as the liquor containers should be considered. The cost of disposal or recycling will be employed in the determination of the best packaging equipment and materials to employ Mayer, 2011, p. 753).
The firm needs to understand the social and corporate responsibilities as well as the ethical expectations of the operations of the business. The integration and accommodation of the new plant within the social and economic settings of the region will play a critical role to its success. If the business violates the socio-economic balance and the expected ethical business practices, the immediate communities will not support it. In the similar manner, the employment and labor laws in the region will influence the operations of the firm. The business should consider and incorporate the employment and labor laws as well as ethical business practices in their recruitment and hiring practices (Jaiswal and Kaushik, 2005).
The business will need to understand the implications of the new venture to the operations of the entire organization. Most of the new developments are accompanied by critical influence on the operations of the former business. The impact of the change to the business may be significant to produce negative performance in the entire organization. Change management theory may be applied in the development of the adoption and implementation plan of the new venture in the business. Conflict management theory may be employed to investigate the possible conflicts of the new project to the entire business. Change management theory will be employed to eliminate and manage the possible negative impact of the desired change to the organization (Raineri, 2011).
According to the value and systems theory, the association between the systems employed in the organization determines the success of the organization. The interaction f the different operation and production systems to produce synergy are critical for the success of the organization. The theory proposes that the successful adoption and implementation of new ventures perform better when aligned to the operations of the entire organization. Enterprise resource planning is critical for the appropriate interaction and synergy between the different working systems of the business. The design involves separation of the different business operations into different tasks and processes given to the different teams and department. The design identifies the rate determining steps and focus on project crashing as well as substitution of the resources for optimal performance. The design for this case could involve separation of the supply and distribution network, marketing, production, compliance, product research and development, as well as human resource management. All these departments should work under individual and collective responsibilities (Henry, 2009).
Short and Long-term Financing needs of the Business
The expansion plan will require critical long and short-term financial needs for it to be a success. One of the critical financial needs for the organization that will be long-term will be the equipment and systems, human resources, real estate and fixtures, as well as means of transportation. The new distillery plant will require additional space to accommodate the production unit. If the business has a limited space, it will be forced to acquire additional space through renting or purchasing. On the other hand, the firm will require meeting the maintenance costs as well as the overheads in the form of insurance for the new plant equipment, systems, and materials. Human resource will be required to operate the new plant. The need for the human resource will be required now and forever as long as the business is in operation. In addition, the current transport that includes two Lorries is already overwhelmed by the current scope of operations. The new expansion will require adequate supply-chain networks for the transportation of their production raw materials and to transport their products in the market. The supply-chain may be owned or contracte...