Internal and External Constraints Facing Venetian Ices Ltd Essay

Constraints are laws, which the company must abide by. There are two different types of constraints; these are internal and external constraints. Internal constraints are those that the company controls their selves such as: * Availability of finance * Existing company policy * Peoples behaviour External constraints are decisions that are made outside the company’s control such as: * Government and EC legislation * Competitors behaviour * Lack of technology * The economic environment The internal constraints facing Venetian ices include: 1.Equipment Venetian Ices need equipment in order to produce their goods and also keep the ice cream frozen. So obviously they will need equipment such as freezers (to store the ice cream), new ice cream making machines in order to produce the ice cream for the customers. They will also need a mobile van, so that customers could get ice cream in different areas. Another equipment that Venetian Ices could have is packaging, this will be for customers who would want to buy a whole tub of ice cream from them. There are some problems, which may occur when replacement or extra equipment is needed. Venetian ices could in fact find themselves in a position where they are unable to afford the equipment that they would want available to them. In the case of additional equipment there may not be enough room on the sight of enough employees to operate all the machinery. 2. Financing the development of a Franchisee operation Venetian Ices must provide finance to their franchisees in order to get them started and set up in the business world. Venetian Ices can get their finance from a number of places and ways. The first is retained profit, but that can possible prove difficult for them, as small companies such as themselves only tend to make a small profit. They can also get their finance from selling as much ice cream as they possibly can. Venetian ices would have to buy all the equipment and premised that they would require when they are setting up a business up and also paying all of the workers in their franchisee. This means that when a new franchisee joins at first Venetian Ices have to spend a lot of capital and get little back in return. 3. Staffing for Increased Production Output By increasing the number of staff it would increase the output of the company, but this will mean having to pay out more money in order to pay their new employees. Also they may have a problem with the size of the premises. There could be a problem with the amount of people allowed to work in the building, if there isn’t enough room for everyone they would have to employ less people then they would like. Some External constraints that may affect Venetian Ices include: 1.Raising finance How much finance Venetian Ices can raise depends a lot on the public who purchase ice cream from them and also investors who decide to invest money in the company. This could cause a problem though because in winter ice cream is less popular and a whole lot less people would come and purchase ice cream during the cold period. This could therefore mean investors will not want to invest in an ice cream company, which for part of the reason will not raise much finance. 2. Planning Permission If Venetian Ices decided they wanted to expand their premises or decide to build new premises for their company, they would require planning permission from the local council or the government. If Venetian Ices did decide to go ahead with an extension or the building of a new building without a contract from the authorities then they could be taken to court and forced to abandon work on their new premises completely. 3. Franchising Venetian Ices do not have complete control over its franchisees, as the franchiser does not always check them on. This can mean that franchisees may run the business against the company policy and use different and methods. For example if the franchisee trains the staff in how to recruit then the staff must do exactly as they are told to, if they recruit people in a different way or people who Venetian Ices don’t want. This could lead to the company having a bad reputation. 4. Law Venetian Ices must follow and work by all the laws. There has being laws set about methods of employment, training, European regulations and also food which would defiantly apply to Venetian Ices. These laws can be checked often by government inspectors. 5. Tourism Tourism is a big market for Venetian Ices as they make up a large percentage of customers in some areas where there are mobile and ice cream parlours. Tourist also often purchases goods on impulse. However, Venetian Ices cannot insure that the number of tourists in a certain area will remain the same all the time. 6. Foot and Mouth Disease Another outbreak of foot and mouth can cause serious problems for Venetian Ices. Foot and Mouth affect cows, which Venetian ices, depends on for its main ingredient, which is milk. Another foot and mouth epidemic breaking out would make it hard obtaining the milk and also getting it transported as certain areas of the countryside would be shut off, therefore making transportation hard. Foot and mouth can also cause tourism to drop in certain areas and possibly even close. This would lead Venetian Ices in an awful position in them areas affected by foot and mouth. There could possibly be people who would want to stay away from the ice cream due to foot and mouth.