DePaul
Introduction
DePaul is an organization that operates partially as a non-profit organization and partially as a for-profit organization. Part of DePaul’s business is to employ people with disabilities without charging them. On the other part, it deals with several businesses that generate revenues for the company. The company defines itself as a social venture since it strives to help individuals with disabilities to get employment. The social mission for DePaul is to identify people with disabilities and generate employment opportunities for them. The company wants the disabled to work and pay for their bills using the money they earn.
As a hybrid company that integrates social welfare and financial objectives, the company has adopted a system that allows it to operate well and meet both of its objectives. DePaul provides social support for the disabled by providing employment directly and helping them secure employment elsewhere. Through its several business ventures, the company can provide employment as well as generate revenues. The staffing, security, and packaging services provide employment and revenue at the same time. Since their target is to employ as many disabled people as possible, the types of ventures they operate provide the best foundation for attaining it because they are employment-intensive. The company generates revenue by organizing fundraising and from the security and staffing services they offer.
Financial Analysis
DePaul’s attempts to find financiers have always been a difficult venture. Most of the banks they have approached for loans turn them away. The difficulties in securing financing could be attributed to several factors that affect their financial status. From the financial statements, it appears that the company has been operating in losses for three years. The operating income is negative from 2010 to 2013.
From the chart above, the company has been operating under losses. Although the losses exhibit a reducing trend, it is difficult to convince financiers. Operations at the company are taking too much money than what the company generates.
The revenue that is collected by DePaul is fluctuating over the years. It is unpredictable. The chart below shows the revenue collected in five years.
The ability of the company’s business ventures and donations to raise revenue is unstable. Banks would want to provide loans to companies that show growth in their revenues.
It can be seen in the cash flow statement that cash inflows are insufficient. With the current cash flow, no bank will be willing to offer a loan. The cash inflow is not sufficient to service a loan. Finally, the company’s assets were decreasing gradually over time.
Porter’s 5-Force Model
- Competition in the industry. DePaul operates the staffing, security, and packaging industries. The number of competitors in all three industries is high. Many companies offer security, staffing, and packaging services. In this case, DePaul has less power due to stiff competition from companies employing people who can work with minimal supervision. While DePaul is employing people with disabilities who require extra support and supervision competitor can offer better services to clients.
- Potential of new entrants into the market. The industry in which DePaul operates in is easy to enter as compared with other industries that require more capital, expertise, and heavily regulated. The ease of entry increases competition.
- Power of suppliers. Clients can easily find new suppliers of security, staffing, and packaging services. It is easy for clients to switch the sources of such services provided the contract of the current supplier has expired.
- Power of Customers. Since DePaul is employing disabled people, the number of customers it serves is small. Not many companies would accept disabled security personnel or a packing labourer who requires close supervision. Thus, the range of available customers is narrow. This makes DePaul weaker since it cannot expand its market easily.
- Threats of Substitutes. The company has less power since the industries have substitutes. Clients can easily find packaging service or security services from other companies.
It the long run, DePaul profit potential in dim. There is growing competition, few customers, and superior services from other companies. If the current situation continues the company is likely to face more financial problems in the future.
Corporate Strategy
The company is optimistic that it will turn things around and achieve its mission of employing many disabled people and making profits at the same time. In this regard, the company is banking on several corporate strategies. First, the company is planning to increase grow and become a national company. To achieve this, it will open new offices that will deal with staffing services, which is the most profitable venture for the company. The new office will target to identify and seal a long-term staffing contract that will generate more revenues. DePaul is targeting large food and consumer goods, manufacturers.
To increase the demand for its staffing services DePaul looks forward to employing an innovative approach towards training and placement. Training will increase the competitive advantage of the company. Again, the company is planning to use its certifications to work with the disability to back federal government contracts. It is also considering seeking a strategic partnership with competitors to spar growth.
Recommendation
Based on the potential of growth presented by the corporate strategy in place, DePaul should pursue the packaging business. Many industries require people to package their products. Due to the high demand for semi-skilled workers in the packaging industry, DePaul should continue with plans to train their workers before presenting them for employment. By pursuing the packaging business, the company would potentially increase its revenues and most importantly provide employment to as many disabled people as possible.