Assessment 3 Workshop
The task for Assessment item 3 is to prepare a comprehensive 4000 word start-up organisational plan including details of how a new company or a new innovation unit in an existing company (your choice) should structure and run itself to become a cohesive start-up.
Decide on product/service and the destination market. Your written report should be in the form of a formal organisation plan for the entrepreneurial team to move forward with this. This report will include a brief situational analysis, recounting of the company’s goals and objectives, and a short description of the company’s strategies.
The majority of the report will concentrate on proposing an “ideal organisation” for the company moving forward. This will propose how, given what the current state of the organisation is, it should change to better meet future challenges.
You are recommended to justify your recommendations by drawing upon material covered in this unit and making multiple references to academic papers on innovation, creativity and success. The organisational plan is an individual written business report.
Title: Start-up Organizational Plan
For increasing the business profitability, it is always essential for any organization in expanding their product offerings so that they can attract more number of customers towards their organization. For extending the product offerings, it is always essential for any company in developing a new innovative business unit because without proper innovation and uniqueness; it is difficult in attracting the attention of customers. This report describes a way to establish a new business unit under an existing business, and it also explains how the business unit can reduce every type of future issues.
Five forces are one of the competitive analysis tools that can conclusively determine the competitive position of any company. Therefore, for facilitating a useful situational analysis of Aesop, porter five forces analysis is applicable that can help in getting a better idea regarding the current cosmetic market. Five forces analysis of Aesop is showing below:
|Buyer bargaining power||Vast numbers of cosmetic companies are there that are present in the cosmetic market of Australia that can create a threat to Aesop. This is because these competitors of Aesop can provide enormous opportunities for the customers to select their required product from a range of organizations. This fact creates a switching tendency among customers and increases the bargaining power among customers.|
|Supplier bargaining power||Along with a large number of the cosmetic company, there are a large number of suppliers such as Cosmark, Truluk etcetera that is present in the cosmetic markets of Australia that are associated with supplying the raw materials to the cosmetic producing company (Mordorintelligence 2018). As there are a large number of suppliers in the Australian markets, so every supplier offers their products at the affordable costs to make customers influenced to buy a product from them.|
|Competitive rivalry||Some competitors are present in the cosmetic market of Australia such as Eye of honours, The base, A’Kin, Inika, ModelCo, Grown alchemists, La Mav etcetera that has created massive competition in the cosmetic market of Australia (Mordorintelligence 2018). Therefore, the competitive rivalry of Aesop is high in the Australian market.|
|the threat from a new company||Risk regarding new entrants is relatively low in the cosmetic manufacturing industry. The main reason behind it is high start-up costs, the high effort required to identify good suppliers and develop a better supply chain to make product reachable to customers.|
|threat regarding substitute company||Danger regarding substitute product is relatively high in the cosmetic market of Australia. The main reason behind this top substitute products is the higher level presence of organic cosmetic manufacturing companies such as Jurlique, Miessence etcetera (Statista 2018).|
For achieving competitive advantage, Aesop follows various types of strategy. For facilitating product research and development, Aesop maintains an aggressive approach (Aesop 2018). They involve their scientists to work in the custom-built laboratory in the head office of their organization that is associated with conceptualizing various ideas, blending research and developing some prototypes (Aesop 2018). Aesop is associated with sourcing ingredients from the repudiated suppliers so that they can receive the best products and after that, they launch new products if they observe that there is a genuine need among customers regarding their products. For reducing the chances of imitation, the organization uses a unique label. Additionally, Aesop has an active and highest level of interests in the sustainable along with the intelligent design so that they can develop a sustainable business for their organization (Aesop 2018).
For making their product reachable to the customers, Aesop has developed a various point of sale. For seeking a new location, they also follow a new strategy so that they can make their new store acceptable to customers (Aesop 2018).For finding new locations, the main concern for Aesop is working with the thing that is already available in that place so that they can improve it and represent better visibility among customers.
For developing a new innovative unit, Aesop makeup will be established under Aesop. Aesop makeup has decided to sell different makeup products for face, lips, and eyes. They have agreed to sell lipstick, lip gloss, primer+ lip care, liquid lips for lips. They have decided to sell eye shadow, mascara, eyeliner, brow, lash, eye primer etcetera for the eyes of customers (Gao & Chen 2017). On the other hand, Aesop makeup has decided to sell foundation, face primer, blusher+ bronzer, glitter, face palettes, contouring and highlighting, concealer etcetera. Aesop makeup has decided to sell every product under the trade name of Aesop so that it can be said that Aesop makeup will operate under the legal structure of Aesop.
As Aesop is one of the Australian cosmetic brands whose 100% stake is holding by Brazilian cosmetic company (public limited company or publicly traded company), therefore, Aesop is a public limited company by nature. The main reason behind it is their parent company is one of the public limited company. For this same reason, the new business unit Aesop makeup will be a public limited (Hall & Joergensen, 2015). Though, it is difficult for a new business unit or a new company to become a publicly traded company because a lengthy legal process is involved in it such as issuing the shares to the public of at least £50000 or having at least two shareholders etcetera. As stated by Hall & Joergensen (2015), it is difficult for a new company in becoming a public limited company as a considerable investment and turnover of the company is required. However, the case of Aesop makeup is different because the organization is developing under a parent company which is itself a public limited company. For this reason, the organization is a public limited company the 100% equity share of which is holding by Aesop (Galea 2016).
By following the public limited legal structures, Aesop makeup can get better access to the capitals from their existing as well as new investors. Along with that, the new business unit can get a better value for their innovation that can help the organization in establishing a better brand image in front of the existing customers of Aesop that can assist the new business unit in achieving sufficient amount of profit. Therefore, using the legal structure of the parent company which is a public limited company, Aesop makeup can get a prestigious profile. Moreover, the public limited legal structure of the new company can create trust among customers that the organization has the capacities in offering a good quality product that can increase the sales of the company.
Organizational structure is associated with performing different types of things such as offering a framework of reporting relationship, responsibilities along with groupings and providing coordination among various elements of the organization as a whole (Goffee & Scase, 2015).
Relative strengths and weaknesses of various organizational forms:
There are different forms of business organizations such as sole proprietorship, partnership, limited liability, corporation, and co-operative businesses. The main advantage of a sole proprietorship is it is less costly to start up, it has some tax benefits, and the owner has direct control over the decision making (Bogers et al 2017).The disadvantage of a sole proprietorship is raising capital for a business tough, and the continuity of business ends with the death of the owner. The advantage of partnership mainly includes the achievement of more capital, easy to develop business, limitation in the external regulations.
On the other hand, the disadvantage mainly includes a higher degree of disagreement among owners can create difficulties in maintaining operations (Della Porta 2014). The advantage of corporations includes mostly raising additional funds by selling shares.
Along with that, the shareholders of corporations are not liable for any debts. Forming corporations requires the involvement of more time and money along with that the paperwork of this kind of business is huge because government agencies are associated with monitoring corporations (Bogers et al 2017). The advantage of cooperative organization mainly includes having an excellent democratic control and these types of business are generally owned by the members. The disadvantage consists of mostly keeping extensive records, and it requires members for participating in the success.
The main advantage of limited liability organizations is the excellent protection of the personal asset of members from the liability. Moreover, it protects the partnership name of partners and creates a flexible business. Public disclosure is the main disadvantage along with that; the organization can retain profit in the similar way the company limited its share (Della Porta 2014). Among these organizational forms, it will be useful for Aesop makeup in following the limited liability forms. This is because their parent company is one of the public limited company and following this public limited liability form can help the organization in gaining revenue for their business in the initial stage to develop the innovative unit, manufacturing products along with marketing the products to attract a vast number of customers.
Legal advantages and disadvantages of organizational structure options:
Mainly three different types of organizational structures are there such as functional structure, divisional organizational structure, along with the matrix organizational structure. Among this organizational structure, functional organizational structures work well for small businesses, and it ensures a higher division of the labour (Lozano, Ceulemans & Seatter 2015). On the other hand, the disadvantage mainly includes confusion, difficulties in fixing responsibilities, lack of coordination. This organisational structure is really effective for facilitating the innovation because in this organisational structure, every tasks and skills are effectively recognised in different departments because in this organisational structure, the organisation is divided in various departments. Moreover, this organisational structure maintains a clear line of communications among department supervisor as well as technical experts that helps in encouraging innovation. Therefore, for the new business unit i.e. Aesop makeup, the functional organisational structure is effective.
The benefits of the divisional organizational structure are it helps in meeting needs more effectively, and it facilitates communication among employees with more efficiency. The disadvantage includes the size and scope is very costly. The advantages of matrix organizational structure are in this organizational structure; employees are effectively allocated to work, improving team spirits, retaining expert teams, rapid flow of information (Lozano, Ceulemans & Seatter 2015). The disadvantages of the organizational structure mainly include the conflict between two managers, it increases overhead costs, and it increases organizational complexity.
Advantages and drawbacks of departmentalization options:
For controlling various business functions such as HR, marketing, administration, operation etcetera in a more effective way, it is necessary for any organization in departmentalize the whole organization (Heino et al 2015). Different benefits of departmentalization include achieving a higher level of specialization in the organization as departmentalization segregate the function of every department where every department performs various tasks. Along with that, departmentalization is also useful for fixing the responsibilities, development of management, developing better customer services, developing a good performance appraisal and facilitating optimum resource utilization. Therefore, this clear sense of duties among different department and effective management of tasks among different department is really helpful for the new innovation unit Aesop makeup in developing some extensive quality products that can satisfy the need of customers. This departmentalisation strategy can helps the researchers of Aesop makeup in identifying the need of customers and develops the proper products that can satisfy the need of customers.
The disadvantage of departmentalization includes the isolation among different departments, miscommunication, rigidity, myopia etcetera. According to Heino et al (2015), for achieving effective operations and maintaining every organizational task in more effective ways, it is essential for the Aesop makeup in following the departmentalization with more efficiency. That means the new business unit needs to segregate the manufacturing, research, and development, marketing, selling, operation, and administration so that every function can be effectively performed.
Likely growth patterns of the company:
Aesop has mainly achieved active growth in their organization with the help of selling the shares that have helped them in making a sufficient level of external financial support. After that, the organization has sold their organization to the Natura. Along with selling the shares, the organization has developed different types of quality products that help the organization in achieving an active continuous growth (Dingemanse & Enfield, 2015). For securing the constant growth pattern for their new business unit Aesop makeup, they need to develop quality products with the help of an efficient set of suppliers, and they need to build a better outward supply chain so that they can make their product readily available to their customers.
Reporting relationships that are currently in place:
In the present time, Aesop mainly follows the hierarchical structure because Aesop has decided to follow functional organisational structure for their new innovation unit. By following this organisational structure, employees are mainly supervised by the functional manager who has the expertise in the similar field that helps the employees in performing their job with efficiencies and understanding their responsibilities in the organisation. This expertise helps employees in developing some extensive quality products for the customers and achieving the objective of the organisation. By following the organizational structure, employees are associated with reporting their immediate boss who is the lower level of manager in every functional unit. In this reporting relationship, employees have a clear idea about who is responsible for overseeing their output. The main disadvantage of this reporting relationship is it creates a slower flow of information in various organizational level.
Reporting and authority relationships that will be implemented in the future:
For the creation of a practical outcome in the organization, the new business unit of Aesop that is Aesop makeup need to follow the hybrid of divisional and functional organizational structure which is called a matrix organizational structure. This organizational structure is complex, and employees are associated with taking more responsibilities to report two people (Heino et al 2015). In this organizational structure, employees belonging from a department such as marketing need to inform both the immediate boss of the employee ( who can be the marketing manager) and the project manager of the company so that better quality product can be developed for the customers (Della Porta, 2014).
The main benefits that Aesop makeup can obtain are related to the optimum ratios among the supervisor or managers to the subordinates that reduce the unnecessary complexity in the process of making an effective communication (Heino et al 2015). This encourages the innovation because it helps the researcher in accessing different necessary information regarding the need of customers from the marketing department with an ease. Moreover, reporting to project and departmental manager can helps the Aesop makeup in developing and launching different types of good quality makeup products. In that case, the departmental manager can guide the employees in developing different products as per customers’ need and teh project manager can initiate different types of innovation. Another advantage that Aesop makeup can achieve with the help of the matrix organizational structure motivated team. This is because, matrix structure provides sufficient level of autonomy to the employees to communicate with various degree of the organization that can help the employees in identifying their value in their organization and increases the level of motivation in the organization that can improve employee satisfaction and develop a higher degree of organizational performances (Della Porta 2014). It is observed that the matrix organizational structure can help the organization in developing a better operational efficiency because it creates an effective information exchange.
Alvesson & Sveningsson (2015) commented that organizational culture include the system of the shared assumptions, values and the beliefs that lays down rules regarding the ways an individual should behave in the organizations. Based on the culture of organisation, innovation in an organisation is dependent. This is because for making the innovation to have an effective impact on the operation, an organisation needs to embrace some values or develop some behaviour among employees that can create an innovative mindset among employees. Without the innovative mindset among employees, innovation is really difficult. Therefore, the for the new innovation unit in Aesop, it is important to create a better organisational culture that can create innovative mindset among employees and make them develop innovative range of products.
The shared values create influence on employees working in the organization and also affect their job performance. Aesop is a brand that is small organization and has limited number of employees. Although the organization has focused on culture regarding the development of the products and increase the sales but still regarding the organization culture. The organization did not pay much attention (Aesop 2018).
For discussing the present culture of Aesop in Australia, it is crucial to discuss about Handy’s model of organizational culture. The four cultures that exist in the organization are power, role, and task and person culture. Glisson (2015) commented that power culture include few individuals who are able to influence the work and performance of the organization. The organization that has power culture possess few rules and regulation as the higher level management are responsible for all the decisions and the employees need to work accordingly. In Aesop, power culture is followed that include the limited involvement of the employees. The challenges involved in this organization culture include:
Considering the above challenges, it is crucial to change the organization culture while restructuring the organization so that it can encourage the innovation. This is because, for facilitating an effective innovation, offering freedom to the employees is must because it encourages the innovation. Moreover, offering the control in the hands of employees and involve them to work without any further involvement always initiates innovation among employees. Additionally, offering automation can improve the morale among employees and increases the motivation among employees that increase the innovation. Therefore, for creating innovation, Aesop need to follow the organisational culture that can offer automation to employees. The other three culture of the organization include role culture. In this type of organizational culture, people have their personal roles and responsibilities. Organization with role culture has highly defined culture. All the employees in the organization wield power based on their position. In task culture, different teams are formed for solving different problems and the power is used by the expertise teams. The performance of the teams plays a crucial role in the development and the functioning of the organization. doCarmo Silva & Gomes (2015) commented in people culture, the individuals play an essential role in the organization and they are considered to be important and superior in the business organization. The business organization includes people with same training skill, background and the expertise.
Presently, the power culture in Aesop has declined the flexibility of the organization. The increased organizational rigidity and the inability of the employees to undertake the decisions for the organization hamper the creativity. This creates future challenges for Aesop when the organization would be planning for expansion and increasing the business or restructuring the organization. The organization is focusing on innovation and moving online and hence it is crucial to develop proper organizational culture (Aesop 2018).
The role culture would be effective for Aesop. In this form of organizational culture, people seem to have delegated roles and the responsibilities and they work based on their roles. The organization follows the hierarchical structure and every individual seem to use power based on their position. There is equal and justified division of the power and decision making process involve the employees from different fields and area.
The role culture is selected for Aesop because of the following reasons as illustrated below:
Coller, Cordero & Echavarren (2018) commented that recruitment is the procedure of the identification the candidates who would be recruited in the organization for the employment. Selection, on the other hand, includes the processes that include choosing the right candidates for accomplishing specific roles and tasks in the organization. Effective strategies for the recruitment and the selection are essential for the organization as it helps in improving the performance and address the organizational objectives.
Presently, Aesop has simple recruitment and selection strategy. Simple job advertisements are posted and the employees need to pass through one round of interview for getting selected in the organization. The internal recommendations play an essential role in the selection of the people for the jobs. For the selection of the leadership position, the employees working within the organization are given due importance. Internal promotions have led to the growth and the development of the people (Shackleton 2015). However, in the management position, the leaders consider reference and people of their own position to come up and attain certain leadership position for the organization. In Aesop, the selection process is simple. It consists of the following steps:
Taylor (2014) mentioned that recruitment and selection forms the important function of the organization as it help the organization to grow and develop. In Aesop, internal recruitment and references of the employees are given much importance and this creates challenges for the organization in future:
Considering the above future challenges, Aesop needs to create a new recruitment and the selection strategy and the prime reason for the same is that the organization is planning to restructure by focusing on innovation and creating s strong online presence. The recruitment strategy that is selected for the organization are listed below:
From the above discussion, it can be concluded that for gaining success from a new business unit, developing a better organizational structure as well as corporate culture is essential so that it can create a better flow of information among different level of organization. However, for selecting a better organizational structure, new organization need to conduct a better a situational analysis to analyse the current condition of the organization in the market so that organization can develop a better strategy and decide a better legal structure along with organizational structure to achieve good sustainability.
For achieving a higher level of profitability and achieving success from the business, selecting a better legal structure is always essential as per the nature of business so that the operability regarding the company can be effectively achieved. Along with that, for the achievement of competitive advantage, it is also essential in developing a better selection and recruitment strategy so that the organization can hire only efficient employees and increase the performance ion the organization