VGL - Objectives

VGL - Objectives

1. Revenues to rise by 6% in Real Terms

   • Rise of 6% after correcting for inflation.
   • 6% represents a real increase in revenue of £1.98 million over 2 years.
   • As revenue increased by 9.6% in one year it seems unambitious
     • This could be due to threats in VGLs business environment
       • Businesses are reducing the amount of packaging for products = less waste = less revenue
       • Spot markets may be volatile
   • Revenue could be increased by: -Maintaining companies share of business in a market which is growing dynamically. -Taking business from competitors. -Increasing prices. -operating in new areas ie products and / or markets. -Busines out a competitor
   • VGL could improve operations so contaminated waste is minimised so more can be sold on International spot markets

2. To Gain at Least two additional LA contracts

   • VGL currently has 7 LA contracts running until 2019, these provide revenue from the collection service and materials to sell on spot markets
   • As the case study does not state that this objective is part of the revenue objective, this indicated VGL's objectives have not been clearly thought through
   • VGL will have to take contracts from a competitor or contracts with the LA which has not yet contracted out collection services
   • If collections are made outside of the current area, the collection costs will increase (petrol, wear on vehicles)More capital and labour expenditure

3. Keep Labour Turnover below 10%

   • Those leaving for unavoidable reasons e.g retirement, ill health, pregnancy should be excluded to enable identification of internal problems
   • The objective is to maintain the 10% target.
   • Costs associated with labour turnover include: increased overheads, drop in productivity, low morale and management time increase
   • Further improvements on the rate of labour turnover will help the business as costs are kept down

4. To support one new major charitable community initiative

   • This is NOT a business objective. It is not directly connected to the business and will cost money without a direct return
   • It would be better for VGL to allocate a specific amount such as 2% of all profits for this purpose
   • If the charitable initiative is publicised this is likely to raise awareness of the business and build up a positive brand awareness and can potentially lead to more business and LA contracts with VGL

5. Absence of Operational Objectives

   • VGL has no objectives relating to improvement in operations. This can be seen as a surprise considering the market is very competitive; Phoebe is keen for the business to improve; the focus on price, excellent customer service and innovation. Operational efficiency would be crucial in keeping prices down and maintaining competitive