McLoughlin and Son Case Study

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4. The main problem

After the SWOT analysis it is clear that the company has to face not only one main problem, but several major issues. One of them is that the manager and owner Brian McLoughlin finds it extremely difficult to compete in this market, and he is overburdened with operational tasks instead of focusing on strategic planning and innovation. The small local market is saturated with competitors with lower prices. Furthermore the fluctuation of employees is way higher than the normal percentage, which generates additional costs and frequent layoffs. Moreover the only formal training is the mandatory safety training, but there is not a formalized training for using and cleaning the spraying equipment, which can increase the production efficiency of the firm. The last problem I noticed is the lack of research and development and the fact that the website and the technology used by the company is outdated.

5. Recommendations

First of all, one possible solution to tackle the problems is to split the company into several different subsidiaries. By implementing this action the business will operate with lower risks because of the diversification of its activities. It will also enable McLoughlin and Son Decorators to focus mainly on profitable niche markets just like fireproofing or flooring. After the split Brian McLoughlin will have more time to pay attention to research and technology development and strategic planning, besides he will be able to take a trip to the USA to study the use of more efficient equipments and work methods. Of course this action needs new managers, who have the special skills, but Brian can promote the senior foreman to one of these positions because after six years he has a huge experience in coordinating the work. Implementing this change has some disadvantages too that need to be mentioned. One is the slower communication and decision-making, which can decrease the flexibility of the company. Another one is the smaller market share that the companies will have in the decorating market. But in the long term the advantages clearly outweigh the disadvantages.

Secondly the problem of market seasonality and high employee fluctuation can be solved by subcontracting the majority of the painters. The owner only should keep the core group of hard working loyal employees he would not lay off and lose to competitor companies. In this case the firm will be more flexible because they only employ painters for the duration of a project and it can reduce the losses that fluctuation causes. Moreover the incrementally increasing insurance costs will only be paid after the remaining employees, which also mean cost reduction. Subcontracting has its own disadvantages too, for example it is harder to coordinate painters, who have never worked before as a team and are not familiar with the company culture of McLoughlin and Son Decorators. As long as the subcontractor’s wage is lower than the daily rates of painters it is worth to implement.

As I already mentioned the company does not have a formal training for using and cleaning the spraying equipment, so this should be changed as well. They should develop a formal in house training because the machines are quite expensive and the competitive advantage of it depends on how efficient the workers are maintaining it.

Last but not least, another recommendation for McLoughlin and Son Decorators is to expand their business in Ireland. Based on the assumption that a huge amount of the costs are materials, spraying machines and other equipments they should exploit the long term strategic relationship that they have with McDonnell Paint Sales Ltd. Due to the fact that the supplier has four other shops in Ireland they can gain competitive advantages by opening businesses in the same places and buy the paint at wholesale prices, while receiving retail services. So with this expansion they will decrease the risk of depending wholly on the saturated and small local market.

5. Conclusions

To summarize the above, McLoughlin and Son Decorators has always been a reliable and profitable company, but the recent circumstances and changes in the decorating industry has provoked a question: how the company will be able to maintain its growth and profitability?

The possible solutions listed in this report might be time consuming and radical in the short term, but in the long run they will definitely help the manager to tackle the revealed problems. So the family-owned business can continue to grow from generation to generation.