Two events of significance took my attention yesterday, my daughter’s Business Studies exam and the failure of North East based Garlands Call Centres with the sad loss of 1000 jobs.
The AS level exam centred on a case study of a fictitious South East based stonemasons, SRCL Ltd, and the ambitious growth plans of their MD, Joe Kring. Joe’s plans to grow turnover by 50% over 3 years would have involved opening regional offices with the consequent increase in SRCL’s fixed cost base. Within SRCL the other senior managers were uncomfortable about the risks involved and there was a clear signpost to a question about the “dangers of over expansion” particularly expansion based on goals of increasing turnover and not profitability. I’ve an encyclopaedic mind for clichés and “turnover for vanity, profit for sanity, but cash is reality” comes to mind.
As it happened the question did not appear in the exam but it must have been a topic of discussion in Garlands as apparently 3 years ago they employed 3000 and turned over £50million. The decline in business brought about by the credit crunch and the loss of contracts to offshore competitors left Garlands with the fixed costs of an infrastructure that they clearly could not sustain. We had an idea of their desperation some months ago, we had been competing with them for a contract with a price comparison website and due to one of those infamous email errors we were sent the provisional contract between Garlands and the unnamed customer. Our view of Garland’s pricing was that it was so low it was suicidal as indeed thats exactly what it turned out to be.
Chey Garland, the owner of the failed company will no doubt have made her millions, but our hearts go out to the Agents, Team Leaders, Trainers and Administrative staff who no doubt gave their all to Garlands and today wake up to the reality of their unemployed situation whilst the senior managers lick their wounds and question the wisdom of those expansion decisions.
By Martin Blain
Sales Director
