FINDINGS FROM CASE STUDY 2

Through the month-long observation and subsequent interview, the following themes were formed based on the business’ characteristics.

CATEGORIES THEMES

MANAGEMENT Family-styled centralised leadership

Internally managed finances Daily stock management Ineffective employee management

OPERATIONS Manual sales system Hybrid customer relations STRATEGY Price-based competition

Delivery as a strategy Continuously growing ORGANISATIONAL GOAL Existing succession plans

Table 12: CASE 2’S THEMES

163 6.4.1.1. MANAGERIAL CHARACTERISTICS

6.4.1.1.1. FAMILY-STYLED CENTRALISED LEADERSHIP

Even though the business has four branches, the business is centrally controlled by the original owner of the business who happens to be the father/husband. He is referred to as the Managing Director (MD). Although his wife also works within the same business as the General Manager (GM), she, according to findings, does not have decision-making powers. It was also found that another member of the family manages one of the business’ branches, but he does not have any control other than just to oversee the branch.

It was found that several calls were made to the MD through the week to obtain his decision on different issues and update him on happenings whenever he was not in any of the branches. The family member overseeing a branch did not grant an interview because he was not given permission to do so. Although the MD did not grant an interview due to his busy schedule, another member of the family was given permission to be interviewed on his behalf. The respondent confirmed that all business decisions are made by the MD even if there may be some deliberations prior to any decision.

In a business where decisions are made by a single person who cannot always be available, it is important that business information is made available to such a person to help in decision- making. The constant calls made to the MD throughout the period of observation suggest this is the situation within Case 2.

Although Case 2 is a first-generation family business and the decision-making style is centralised as found from Case 1, the family composition of the business is different. The findings show how individual family businesses are unique in terms of management composition and this supports the need to research them as individual cases (De Massis and Kotlar, 2014). Also, as expected of an SFB, the decisions are usually down to the family manager’s perception, even though advice from others may be sought. The implication of this finding, as in Case 1, is that the decision to adopt the ERP system is down to the family manager’s perception of the technology. The finding is synonymous with the literature, which suggests that the family manager’s perception is important to decision-making in SFBs (Spencer et al., 2012). When considering studies by, for example, Spencer et al. (2012) and Ibrahim et al. (2015) and the aim of this study, it appears as though ERP adoption may be dependent on the family manager’s decision based on his perception. However, further

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findings in this case study help to identify that such a system of leadership is good for ERP adoption.

We seek advice from the staff members if any decision is to be made, but the final decision is always made by the Managing Director, the head of the family - family member.

6.4.1.1.2. INTERNALLY MANAGED FINANCES

There are several files where different financial documents are kept and updated. Calculating profit, losses and taxes due are some of the things that keep the MD (family manager) busy when he is not keeping an eye on the business. It was found that he had an MSc in mathematics and this was why he would not allow anybody else to handle that part of the business.

Although he does it with relative ease due to the years of experience in the business, there is no doubting the fact that the process is cumbersome and time-consuming as it takes up most of the MD’s day. This deduction came from the respondent’s concession that the business could benefit from a faster and more accurate way of keeping financial documents in-house and within the control of the MD.

The business manages its finances internally, and this is done manually by the family manager. If the four business branches and the busy nature of the business are considered, it may be said that an integrated method of financial management through ERP is needed by the business (Teittinen et al., 2013). It is also important as it was found in Section 2.18.2. that inaccurate financial management is a major problem for retail SMEs (Ahmed et al., 2015; Cant et al., 2015).

The ERP system as discussed in Section 2.7.2 is able to effectively and accurately manage business finances in real time (Teittinen et al., 2013; Songini and Gnan, 2015). While the literature suggests that long-lived SFBs tend to be comfortable with the legacy system (Dessi

et al., 2014), it was found that Case 2 already recognised the need to manage finances through integrated technology. Based on that finding and the fact that SFB’s business performance affects technology adoption (Kotlar and De Massis, 2013; Patel and Chrisman, 2014), the chances of ERP adoption within Case 2 to manage business finances could be high as adopting a technology with financial management benefits is perceived to be helpful to the business (Teittinen et al. 2013; Lasisi et al., 2017). However, the business, as at the time of data collection, lacked the knowledge of the appropriate technology to manage and integrate

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business finances and so persisted with the legacy system. While this finding is synonymous with other small businesses where the knowledge of ERP is low (Almahamid and Awsi, 2015), it is apparent that the lack of knowledge or awareness of the benefits of ERP to the business is one hindrance to its adoption. While other factors such as the cost of ERP adoption matter (Kale et al., 2010; Haddara and Elragal, 2013), establishing how ERP adoption can benefit Case 2 on financial management could help the perception of the technology and contribute towards the adoption within the business (Almahamid and Awsi, 2015).

Financial management is part of why we need technology to manage sales and stock.

6.4.1.1.3. MANUAL DAILY STOCK UPDATE

It was found that the business takes the stock record very seriously and updates it manually before sales in the morning and before closing for the day. It was observed that the manual process does not just involve counting but also checking the manually counted stock record against the daily sales to ensure that there are no discrepancies. Although this process takes a lot of time both in the morning and evening, it is deemed an effective and accurate method of stock control. However, the GM later emphasised the need for a more effective way of keeping the records as some products go missing at times. It is also not seen as stressful by the GM as it is a daily task.

However, the respondent confirmed that the business intends to adopt technology to manage the business in future. Stock management is an important part of what technology is expected to help the business with.

The daily inventory management system was found to no longer be effective with the expanding business and increasing capabilities. As this situation is similar to the one the expert warned retail SFBs about in Chapter five (5.5.2.2), the business has also recognised the need to move on from the legacy system for an effectively integrated inventory management system. It is evident that with sufficient knowledge of the managerial benefits of ERP to Case 2, the chances of committing to ERP adoption increase (Kotlar and De Massis, 2014; Carrasco-Hernandez and Jimenez-Jimenez, 2013).

The ERP system is able to manage business resources including inventories effectively (Teittinen et al., 2013; Kosalge and Ritz, 2015). Such an automated inventory system will save the time and energy that Case 2 expends in its daily inventory management tasks.

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However, the lack of knowledge of technology within the business remains a hindrance to the adoption of the technology (Almahamadi and Awsi, 2015). Considering the literature (Spencer et al., 2012) and expert findings (see Section 5.5.1.2), it can be said that ERP knowledge may not be enough to inform ERP adoption in Case 2 if not made available to the family manager. This is because of the centralised management system in Case 2 in which the oldest family member is the family manager and is the one who makes the strategic decisions.

We take stock in the morning and at the closing hour. The stock taking is manual! It is always accurate and does not require any stress as it is what we do every day.

At times they lie about the stock, but because you cannot rely on them solely, we go there to check the stock by ourselves.

We want technology to help with stock taking.

6.4.1.1.4. INEFFECTIVE EMPLOYEE MANAGEMENT

It was found from the investigation of Case 2 that there is a legacy system of monitoring and managing employees. It should be noted that there are only three family members within the business: the Managing Director (family manager), the General Manager (his wife) and the son-in-law. While the MD and GM rotate the checking of the different branches throughout the day, the son-in-law is left to oversee only one branch. However, as observed, the interview findings also confirm that there is a need for a more effective way of managing the employees. Even though the respondent initially maintained that the method of managing employees was effective, it was later confirmed by the respondent that it was one of the main problems facing the business.

Also, employees are made to pay for missing items as an accountability measure because of there not being clear job descriptions. It makes it difficult to tell who did what and who should be held responsible for any anomaly. It was confirmed by the GM that this is another part of the business that technology could help with.

As most of the employees are non-family members, the business does not enjoy the trust expected of typical SFBs that have family members within the business (Westhead et al., 2002; BIS, 2014). Despite this, the employee management system looks like it is loose, as there are existing accountability problems within the business as mentioned above.

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If the business adopts the ERP system successfully, the management of employees, finances and inventories could become more efficient, accurate and ultimately improve accountability (Pazzagllia, 2013; Teittinen et al., 2013). With the ERP system, Case 2 could efficiently enjoy the centralised, family control of the business desired by the family (Teittinen et al.,

2013). However, like other small businesses the lack of knowledge of a technology like the ERP system that can serve their purpose remains a hindrance for its adoption within Case 2 (Casia and De Massis, 2013; Almahamid and Awsi, 2015). While some studies (BIS, 2014, Chrisman et al., 2014) suggest that overreliance on the legacy system as well as family trust may be a hindrance to technology adoption in SFBs, it may not be the situation in Case 2 as the business does not have a lot of family employees and already experiences accountability problems with the non-family employees. Hence, it may be suggested that the chances of successful adoption of an ERP system for managerial purposes looks high (Smith, 2016). However, evidence, in Case 2 as in Case 1, makes it appear as though such adoption is dependent on the ERP knowledge available to the family manger as the decision-maker. Also, considering work by Carrasco-Hernandez and Jimenez-Jimenez (2013) and the expert findings, which posit that if the decision to adopt ERP is reached by a family manager, the business tends to fully commit to it, it may be said that ERP adoption in Case 2 depends on the family manager’s decision. Also, such a decision is dependent on the level of awareness of the benefits of ERP by the family manager.

We visit the outlets at least twice a day, and that makes the management of staff and finances easy. We will be there for some time to observe what is going on and check how much sales have been made. Check their stock on a daily basis.

They will tell you that they don’t know what happened if anything is missing but they all have to pay for it, and that is irrespective of who did what.

We watch them and their relationship with customers. You know there are some that are of bad behaviour and do not have good customer relation. Some will just be there not willing to do anything. They will just sit down and listen to whatever they have on their phone. But we check them and correct them sometimes.

The main challenge is with the staff as there is no permanent staff. Even if they intend to be permanent, because of their wayward attitude, they will not stay. If someone should steal your good or money, there is no way of keeping such staff. You will just let the person go.

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We will also like a technology to help monitor the performance of our staff members.

6.4.1.2. OPERATIONAL CHARACTERISTICS

After the analysis of the managerial characteristics of Case 2, this section analyses the operational characteristics, such as sales and customer relations.

6.4.1.2.1. MANUAL SALES SYSTEM

As this business deals both in wholesale and retail, it is a very busy business. Sales start as soon as the stock counting ends in the morning. All through the investigation period customers were often noticed waiting for the stock counting to be over so they could be served.

The business still uses a manual system of sales, which is the legacy system. Most customers, especially the ones buying a few units pick what they want and wait in the long queue for minutes before they are attended to. It was observed that while some waited in the queue, some came in with notes and received their products. It was further observed that most of the customers with these notes were the ones buying larger numbers of units. This was further clarified during the interview. Based on the interview, it was found that not all purchases or payments are made in-store. Some decide to make payments directly to the company’s account and arrange for delivery with the company or go to the store to collect their goods. Others make enquiries and/or purchase via a phone call to the MD or the GM.

It was conceded that the business may be outgrowing the legacy system and would need a new system in the future for sales processing.

Despite the busy and seemingly complex nature of the sales in Case 2, the business has persisted with the manual sales system for many years. While it may appear, in hindsight, that Case 2 is a typical SFB described by some studies as technology averse (Decker and Gunther, 2017), it was found that the business is already looking to adopt a technology that is capable of integrating their inventories and sales to make it faster and more effective. In an effort to ease the sales pressure on in-store staff, the company encourages remote sales over the telephone. However, such sales cannot be completed without them passing through the in- store manual system. While such a method appears to increase market reach, it does add to the sales pressure.

If the business adopts the ERP system as the technology to improve sales operations, the whole process could become faster and could ease sales pressure (Christofi et al., 2013;

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Roskill, 2014). Also, the remote sales encouraged by the business can be processed through the system without adding pressure to the in-store personnel (Shang and Seddon, 2000; Zamiri et al., 2010; Kanellou and Spathis, 2013).

Considering that the online stores are growing at a high rate in the retail industry, Case 2 can take advantage of ERP adoption to use its existing online presence for online shopping (Rhodes et al., 2015; Romero and Martinez-Roman, 2015). All this can be done without compromising the inventory and financial management craved by the business if ERP is successfully adopted (Teittinen et al., 2013; Kanellou and Spathis, 2013).

However, as evidence shows that the business, at the time of the study, was not aware of any enterprise system that can deliver these benefits, the business was yet to adopt such technology (Almahamid and Awsi, 2015). Though the lack of ERP knowledge in Case 2 is not surprising, it points to the importance for SFBs like Case 2 to understand the benefits of technology, like the ERP system, and to encourage its adoption (Carrasco-Hernandez and Jimenez-Jimenez, 2013; De Massis et al., 2016). Even though the longevity of Case 2 as a SFB suggests that it may persist with the manual system (Chrisman et al., 2014; Dessi et al., 2014), the fact that the business is growing points to the possible need for an ERP system. Available evidence also points to the willingness to adopt an integrated technology like the ERP system to improve sales operations. Although such willingness by the management may be a factor indicating possible ERP adoption (Boonstra, 2013), the obvious lack of awareness of the operational benefits of ERP affects how it is perceived, and hence the chances of adoption for that purpose (Marsh, 2014; Almahamid and Awsi, 2015).

We have wholesalers, retailers and final consumers as customers.

If you want to buy from us, you can call on the phone to confirm the price and make payment to the bank, so we deliver to you.

You will have to come into our store, and if you want us to bring it to you, you can request to pay directly into a bank account, and after seeing the alert or a confirmation of payment, we will then load the goods and arrange the delivery. Or you can pay cash in the store and request delivery.

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We want technology to help with stock taking, to be able to use the POS machine for sales processing, that is what we are looking for now.

6.4.1.2.2. HYBRID CUSTOMER FEEDBACK SYSTEM

It was found that maintaining good customer relationships is important to the company’s daily operations. A lot of effort is put into making the customers happy in terms of, for example, discounts and working on customer feedback to improve the business. As retail businesses are keen on maintaining the customer relationship, it is not unusual to find that Case 2 puts a lot of effort into this.

It was found that besides the face-to-face traditional feedback system typical of SFBs, the business also has an online presence through its website. Feedback is received from customers through this medium and is duly addressed irrespective of subject. The importance