Market Analysis Of The Cleaning Sector Management Essay

Market Analysis Of The Cleaning Sector Man get on withment EssayThe Cleaning Industry National Training Organisation (CINTO) has suggested that the UK cleaning attention is valued in the region of 12bn, 2.7 million households in the UK spend as much as 11 billion annually on domestic help, the climb in two-salary household and more disposable income but limited time for domestic chores necessitates this, the cleaning patience presently employs about 820,000 people.The sedulousness is mainly rule by small organisations and has 72% of all UK cleaning staff employed in firms with less(prenominal) than ten employees. A third of these firms atomic number 18 operated by furbish up proprietors.CINTO is of the opinion that the cleaning industry is resistant to economic recession as a result of the huge demand and inevitability of service. Competition is stiffer however in commercial cleaning sector than domestic. This can therefore affect profit margin. Regardless of the intense comp etition, the cleaning industry is a booming industry with an sensational growth in the contract cleaning market from 4 billion in 1996 to 6 billion in 2004.Below is a tabulated STEP summary of the cleaning sector.SocialPopulation and market consist of 61 million people with 67% in the prevailing class, 16.2% aged and 16.4% under aged.Labour is predominantly made up of migrant workers.Industrial servicing.Subject to environmental protection agency lawsEconomicThe sector is slightly affected by the economic downturn but not significantly as it is a service sector and inevitable to all households in the UK.Demand cuts through all class and age structure in the UKespecially the working class which accounts for 67% of the UK population.This sector is a sub sector of the service sector that accounts for a large portion of the UK GDP.Theres been a shift in demand preference to price from quality and innovation because of the economic downturn.Increased competitiveness.TechnologicalGen eral services of cleaning, trash pickup, floor polishing, and the military posture services of cleaning carpet and ducts and washing windows.Staff cleaning buildings and houses by hand or with the help of basic equipment like floor polishers. Operations is labour-intensiveSector is labour intensiveSimple machines and technology needed.POLITICALGovernment legislation and regulation with respect to waste disposal.Organised and influential association dead body with intense squelch on government.Low government aid policies.According to MBD (Market and Business Development) report on the sector, Contract cleaning in the UK has cock-a-hoop by over 12 per cent in the past five years and is expected to increase by a further 13 per cent between now and 2011.The UK Cleaning Market 2004-2012-There were over 4,300 individual contract cleaning firms active in the UK in 2008, though the industry the Great Compromiser particularly consolidated in value terms, with the firms in this study co ntributing more than 80% of the total market revenue.It has been suggested that 30% of contract cleaning firms be considered at risk in 2009 with the growing problem of node retention. Customer loyalty is considered less prevalent, and customers of contract cleaners atomic number 18 continually searching for more competitive prices. This competitive trend in the market is pushing price competition in an environment where demand is reducing as smaller firms are internalising certain cleaning duties instead of outsourcing.The downturn in capital expenditure of contract cleaning firms will undoubtedly affect cleaning equipment manufacturers and suppliers in the short-change term, with a reduction in demand also aggravated by increasing price pressure as Contract Cleaning firms attempt to light upon greater cost reduction measures. The impact for as well asl and equipment manufacturers are less positive with regards to supplying to this sector in the short term, the need for feel ingive selling strategies therefore arises to target those companies who are per changeing well in the market.The cleaning sector provides employment for over 450,000 people in nearly 32,000 firms.Table 2 Workplaces and Employees within the Cleaning Sector in Great Britain.Source Annual Business Inquiry, ONS, 2005 200685% of all cleaning companies turn over 10 or less employees. 1% of companies has over 200 staff and provides jobs for approximately half of all the cleaning employees.The current uncertain world economy makes analysis of current and future tense economic performance very difficult. Staffing and retention remains key themes for the sector as it struggles to maintain a stable workforce. This has been made worse by the pressure on sales and the stiff competition within the environment. The effect of the global economic downturn on the sector has been viewed as been less subjective as with other sectors since cleaning is an inevitable service. As expected however, emp loyee training suffers a decline as profit margin reduces. Profit margins remains reduced in the sector, at about 5% in 2006, having been squeezed by 28% between 2002 and2006. Labour costs consist of about 73% of all costs, this having been increased by 13.2% over the period 2002-2006. Gross Value Added (GVA) per worker (measured as the average financial contribution to turnover each employee within a sector generates) was 9,600 in 2006 compared to a whole economy average of 33,300.In 2006, seven companies had 25% of the market share (as a percentage of total value), as seen below.Table 1 Market share, (as a percentage of total value) in 2006Source Marketing Research for Industry, Feb 2000A major challenge of this sector is the credit crunch and the effect it has on the sectors quality service delivery given the budget.Recruitment and retention are also key issues, issues regarding labour force attraction and motivation to family amiable labour policies.Future issues to be consider ed include the need to improve marketing to attract forward-looking clients, management of skills gap and planning is vital.The take-up of qualifications within the industry has been low and almost half of employers dont have a Level 2 or equivalent qualification. 16% of the sector is not aware of Vocational Qualifications, though their appropriateness is called into question. A third of all firms believe they take too long in delivering and five in ten believe they are too complicated. The BICSc (British Institute of Cleaning Science) is the most common qualification held.Cleaning firms suffer from increased rate of staff turnover which has been known to be closed to 75% in some cases, with most cleaning staff staying in employment for up to 12 weeks cleaners.6% of cleaning firms advertised skills vacancies in 2007 -according to the National Employer Skills deal 2007, this was primarily in elementary occupations and machine operatives. 80% of elementary occupations were categori sed as difficult to fill positions. Almost 800 companies advertised these positions and were located within the watt Midlands, South West and South East.Reasons for these difficult to fill vacancies are pitiful personnel interested in engaging in this type of job (28%). Inadequate number of applicants generally (16%). Low number of applicants with the required attitude and motivation (13%).The implication of these vacancies is the increased workload of other staff.Cleaning firms have alleged that they have increasing cost of operation Difficulty in matching quality standards requirements Delay in developing new products.As a result of the higher up issues, 50% of firms have increased their advertising and recruitment campaign and most of the firms are increasingly trying new ways of recruitment.Reductions in some skills sphere of influence have been identified in the Cleaning Industry, these include Management and leadership Technical skills and Literacy, numeracy and ESOLA key driver in the sector is the changing form of procurement. The process of procurement has become increasingly formalised and has most part been subject to European Union Commission guidelines, more challenges are therefore placed on cleaning firms in this sector.A recent report implied the importance of migrant workers within the industry.Firms in the cleaning sector are faced with an aging workforce and recruitment issues, these firms have therefore been able to tap into the large resource of migrant workers, this has culminated in 37% of Englands cleaning labour be separate as migrant labour. Firms have been able to recruit more efficiently and cost effectively as well, however the only hinderance to this is the issue of language which is being sub collectd by coping the strategies from employer.Regional Distribution of cleaning companies within England, 2006There are increasing demands being placed on the industry due to increased regulation and Visibility which, in time, it i s anticipated will reveal greater skill needs.There are a couple of key issues as regards the cleaning sector, they include, Recruitment difficulties for domestic cleaning jobs because of competition from other sectors. Increased day-time cleaning and expanding skill mix needed Employment of migrant workers without language barrier. Employing expertness cleaning operatives into supervisory and managerial positions with inadequate training. Forecasted job losses of over 90,000 between 2004 and 2014 but concerns of replacement demand still workable. Pressure from customers for more work per capita in order to deliver contracts with less people Low rate of retention. Lack of long term investment in staff Difficulties in recruiting new employees into the workforce Misconstrued negative image for the sector discourages prospective minds to commit to a career in the industry. Skills gaps in managing teams, project management, problem solving and resource allocation, customer care, and man aging change for supervisors and managers Mixed quality of training provision with low retention rates and qualification Inadequate filling of management training slots in the industry A small size of employers in the industry had a budget for training of employees. Unaccredited training for staffs. Employers want tailor fit training that meets their conterminous needs and well as their budget. The key issues to training to training include the margins on contracts where training is perceived as a cost, career progression is seen as a mirage, shift work and problems of release, and inflexible modes of delivery.The cleaning sector is a low tech business characterized by ease of entry and entry. Highly competitive, reduces pricing and subsequently profits.Convenience is key in the cleaning sector, location to the market and fast turnaround on clothes so also cleanliness of the item are important. Consumer care little about what euipments or technology dat has being used as long as th e the cleaning service is fast, convenient and effective.A model has been designed to address a couple of the sectors issues and it is outlined