Inner City Paint Corporation Strategic Analysis

Topics: Management, Strategic management, 2009 Pages: 11 (3120 words) Published: April 14, 2011
1. Introduction

Inner City Paint Corporation is a small company specialized in the manufacturing of wall paint. It is established in the “downtown” business area of Chicago. The company has steadily grown from a two-person business to a company which employs thirty-eight employees. At the first year of the business, the sales represented $60,000. Now, five years later, the profit is up to $1,800,000. Inner City Paint Corporation supplies small- to medium-sized decorating companies. The company only supplies in the immediate area. In this paint manufacturing market, which is a high competing market, Inner City Paint Corporation has many competitors because of the high costs of shipping. To be differentiated from the other paint manufacturers, the company guarantees to its customer a fast service. Despite the steady growth of the company, the way Stanley Walsh manages the business still identical as when it started. It causes some difficulties, such as in the sales work. Indeed, Stanley Walsh is the only salesman. He also does all the office work. Because of that, these tasks are not done on time and Stanley Walsh is seen as a disorganized man and unable to delegate authority. It ruins the reputation of the company and the customers see Inner City Paint Corporation as a non reliable company. All these facts, added to the overall slowdown of the economy, may bring the company to bankruptcy. Now it becomes a necessity to set right the financial situation and to improve the reputation of the Inner City Paint Corporation.

2. Environmental Scan

2.1.Analysis of the key internal activities/ Departments

Operations department

The business is based on manufacturing paint and to deliver it. To do those operations the company rents a building which is sufficiently large to contend the manufacturing part and the office part. Inner City Paint Corporation also owns mixers, lift trucks and a fleet for the manufacturing process and the delivery of the products. All the equipment is perfectly sufficient for the current volume of paint produced. The company packages its products in two types of containers: the 5- or 55- gallon containers. The principal weakness of this activity is that the plant manager does not keep a clear & precise inventory record instead on keeping a mental count for it. Because of that, the warehouse manager may forget or make a mistake of what is in stock. In addition, the company cannot compares and evaluates the inventory for each day, month or year.

Sales department

The sales department is only represented by Stanley Walsh, which is also the manager of the business. The fact that he is the only salesman is a choice of him, because he cannot trust other salesmen except himself. However, his tasks consist in making calls to the potential customers and answering complaints of its customers about defective paints. Stanley Walsh is not an experienced salesman, so he might not know the sales techniques but his core competence is that he knows very well the products he sells and the way to properly use them thanks to its previous experience as a painter. Again, in this department the company did not set up training for the salesman.

Financial department

The balance sheet and the income statement for the current year (ending June 30) show that Inner City Paint Corporation has some difficulties from a financial point of view. This year, the company suffers from a deficit of $17,865. The current ratio of the business as well is below 1.0, which means that liabilities are currently exceeding assets. The company also suffers from liquidity because it has to pay cash on delivery to its suppliers whereas it offers to its customers to purchase on credit and to pay their invoices in 30 to 60 days.

Human Resource department

The company employs thirty-eight employees in total divided by the following way: -Thirty-five employees work in the manufacture. They work at every level of...
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