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20 Mark Business Question (Marking needed)

Case Study:
DWS Ltd was founded in 1989 by Mike Chappell, who, after five years as an apprentice metalworker,
set up his own business making metal tubing. The tubing is used in the manufacture of products as
diverse as furniture, cars and buildings. The operations process involves buying in sheet metal and,
at extremely high temperatures, shaping and joining the metal to create the shapes required by
customers. DWS Ltd has always focused on producing the very highest quality products, adding
significant value and charging relatively high prices.
Building a profitable business 1989–1994
DWS Ltd really struggled to attract customers in its first few years. Mike spent much of his time
visiting potential clients, to try to build a loyal customer base. He often did not see his two deputy
managers, in charge of operations and marketing, for several weeks – which left them waiting for
advice from Mike on how he wanted their departments to operate. Money was scarce – most of the
start-up capital was used to purchase expensive machinery and equipment. Mike struggled to track
what was happening with the finances and often had to use an overdraft. In 1991, Mike introduced a
budgeting system to help with managing the company finances. By 1994, Mike had inspired his
workforce, developed a motivated and committed management team and found enough customers
to create a profitable business.
Ongoing success 1994–2009
DWS Ltd grew to employ 120 staff. The business gained an outstanding record of customer
satisfaction and extremely high levels of repeat business. Financial performance was excellent,
allowing growth to be financed using retained profits. Mike’s approach to Human Resource
Management remained clear. He always expected 100% commitment from his staff. In return, staff
were paid salaries above the national averages for the industry. The company invested heavily in
training and at the beginning of 2008, Mike persuaded his fellow Directors to introduce a works
council. Since its introduction the works council has met monthly and discusses major strategic
issues facing the business. Mike has been described as a charismatic and inspirational leader whose
staff are fiercely loyal to him and the business. The Human Resource data provided in Appendix A
seems to support this view.
Responding to challenges 2009–now
Since 2009 DWS Ltd has been experiencing increased competitive pressures.
Problems have been caused by foreign rivals:
• improving their quality so that it is now much closer to DWS Ltd’s levels
• charging lower prices.
In response, DWS Ltd has worked to boost its operational efficiency. In 2010 Mike introduced a new
approach to operations. This new approach involved three elements:
• Just in Time production with smaller, more frequent deliveries of inventory
• a ‘right first time’ approach to quality assurance which involved extensive training for staff
• The creation of kaizen groups to discuss how to make improvements to the business’s systems and
processes

My answer:
This case study discusses Mike’s leadership and how it has improved over time. Mike starting the business in 1989 to now, has shown significant improvement.

Mike was an effective leader because he’s described as being charismatic and inspirational. As a leader, you must inspire people in the things they do. Mike is a perfect example of this because being described as a ‘charismatic and inspirational leader’ has led to his staff to be ‘fiercely loyal to him and the business.’ Since his staff is loyal to Mike and has gained a sort of respect for him, it leads to low labour turnover and high staff retention. So the business is able to keep the 120 staff employed, have high production and more sales due to high/fast production. This puts DWS Ltd higher up than their competitors because they can produce metal tubing fast efficiently. Mike being charismatic and inspirational brings in the trait theory, his traits are completely different or are on a higher level than his employees, making him an effective leader. We can see Mike has a team management leadership, or theory Y because he has satisfied employees and it says ‘financial performance was excellent.’
Another reason Mike was an effective leader is because of his willingness and good decisions to make changes. Leaders must show they want their business to improve, and have correct decisions to make that improvement, otherwise the business will fall via increasing debts and low spending money. One example was Mike introducing a budgeting system to help with ‘managing the company finances.’ Mike knew he was struggling to be on track with finances and went overdraft many times, so he was quick to introduce the budgeting system. This clearly shows his willingness, he didn’t wait for it to get worse or kept allowing himself to go into overdraft. Doing this worked for the business in the long term because from 1991-1994, he was able to build a strong work force and create a ‘profitable business.’

Mike was not an effective leader because in 1989, his deputy managers were always waiting for Mike’s advice on how the departments would operate. Mike had to be quick in getting back to his deputy managers, otherwise there will be no improvement and no communication, possibly resulting in wrong decisions or incorrect ways of department to operate. This could’ve easily harmed the business in the long run because if the managers always waited, the managers could easily leave because of no communication and involvement in the business, resulting in low staff satisfaction.
Another reason Mike was not an effective leader was because he spent too much time on potential clients to ‘build a loyal customer base.’ Mike may have wanted to do this for repeat purchase from loyal customers and gain a strong customer following, so they can possibly get a lot more sales. However, doing this wastes time because he wasn’t going out trying to find new clients, he was sticking to the same ones. This meant Mike wasn't able to branch out to different areas and spent his time with old clients. He was unable to maximise the business’ sales because he kept going back to old clients. In the long run, Mike may have not gotten sales and new clients because he kept revisiting old clients. Instead of focusing on the same clients, Mike could have asked his potential clients to share the business and the idea to their friends and family via word of mouth. This results in more sales and higher profit because he’s expanding his customer base.

In conclusion, I think Mike was an effective leader because business’ don’t always start out perfect, there’s definitely going to be some problems. Mike did encounter problems like communication and finances, but he acted quick and changed his style, introducing new changes. He noticed the problems in the business and acted fast, which is the most important factor because of his drastic changes, creating a domino effect on the business positively (seen via 120 staff employment and excellent financial performance). In the long run, Mike made good decisions and helped the whole business in the long run. In the short run, it may have taken time to establish and adapt to the changes he made earlier on, but it was good he did to improve the business highly. One problem may be, he cannot ensure his new decisions for competitors will work perfectly. Competitors almost match DWS Ltd quality for lower prices, putting DWS Ltd lower than their competitors right now. DWS Ltd introduced JIT production and quality assurance for better stock and quality. But this may not work, and if Mike doesn’t know how to counter their competitors, then they can lose sales and loyal customer base. It can also impact staff because they may feel like their work is going to waste because of little or no sales.
A solution can be to react quickly and make right decisions, like Mike was doing earlier on in the business. He must think of long term implications rather than short term implications.
In the end, I think Mike was an effective leader.