Strategies for Improvement of Business Performance - Essay Example

A Report of Strategies for Improvement of Business Performance Introduction Lack of development and implementation of effective strategies in a business organization renders a business organization uncompetitive. In today’s competitive consumer electronic markets, managers need to rise up to the occasion and implement competitive strategies in order to guarantee survival of their respective business organizations. According to my personal research, I have found out that this electronic organization has got many problems which need to be addressed amicably. The issues range from purchasing to selling of the electronic products. In this regard, effective strategies need to be implemented in order to guarantee prosperity of the organization in future. Supplier Consolidation Strategy The company is being faced by issue of high number of suppliers which drive its cost of procurement high. Besides, due to increased number of suppliers, the quality of products purchased and efficiency of services provided by the suppliers is compromised. In this regard, adoption of supply consolidation strategy is of great significance. According to the research conducted by Hackett Group, a business organization can save substantial amount of money by reducing the number of its suppliers to a manageable state. According to the study, world class organizations which use consolidated supplier strategy spend 27% less than typical business organizations which do not embrace the strategy of reducing the number of suppliers significantly. Besides, by adopting the consolidated supplier strategy a business organization ends up operating with 38% fewer procurement staff (Smart Pros, 2009). The business organization is going to benefit from reduced cost of procurement once the number of suppliers is reduced. Reduction of the cost of operation is essential since it lowers the break even point thus resulting to increased profitability. Besides, when a business organization reduces its suppliers, it is in a good position to focus more of its resources on developing stronger and more strategic relationship with its suppliers. The company will be in a position to gain purchasing leverage and significantly lower the cost of supplier management and monitoring. Due to improved monitoring and management of suppliers as well as improved relationships, the company will be in a position to access and receive high quality products from suppliers without delay. Bearing in mind that the company currently faces frequent stock outs, a good relationship with suppliers and improved supply management will prevent more stock outs in future. The business organization is going to experience substantial increase in sales volume due to increased quality of its products and prompt delivery of products. Customers are usually motivated to purchase high quality products sold at reasonable price and delivered at the right place in the right time (Smart Pros, 2009). Effective Marketing Strategy The company needs to embark on effective marketing strategy in order to boost its sales and revenues. Currently, the company is experiencing little growth in sales and revenues. Moreover, the distribution channel of the products is ineffective resulting to low sales volume. Nevertheless, all these issues can be addressed amicably if effective marketing strategies are employed. To start with, the company needs to increase its advertisement budget. Customers usually buy a product when they are well informed. Extensive and effective advertisement will ensure that the customers are well informed and willing to purchase the product. There are various forms of advertisement which can be used. However, advertisement through the internet, television as well as through newspapers will be more effective. The company utilizes its website to ensure that customers get to know more about its products. Moreover, the company should provide options for customers to place orders through the website. Many countries have access to internet thus advertising through the internet will enable the company to cover both domestic and international market. This is the right time for the company to start thinking about going global. Global market is the future for business organization thus any business organization which has vision of operating in global market may not survive the market (Marand & Little, 2003, p.11). According to the theory of the 4P’s of marketing, place is one of the elements of marketing which should be well addressed. Goods are supposed to be delivered to the right customers, at the right place and in the right time. However, in this company distribution factor is not efficient since goods are only sold through large retail stores such as Target and K-Mart and small independent stores. This is a clear indication that the company has no control on its distribution channel thus it is hard to ensure that customers get the products whenever needed. In this regard, it is recommendable for the company to establish its own stores in various cities and towns. By doing so, the company will be able to interact with its customers and also deliver products in time. Interaction with customers is very essential since it will help the organization to understand the needs of the customers effectively. A business organization is required to understand the needs of its potential customers before embarking into production. Increased sales volume and revenue will be attained when the needs of customers will be addressed effectively during production, pricing, promotion and distribution (Marand & Little, 2003, p.17). Extensive Investment in Research and Development Research and development is a marketing tool which can easily enhance competitiveness of an organization if well applied in an organization. It is evident that the organization has relaxed as far as research and development is concerned. This is the major reason why the company’s aggressive policy of new product development and strive to be a major player in fledging electronics market has gone down. Electronic market is a competitive market which requires a business organization to adopt the most recent and advanced technology in production or operation in order to hold a competitive position. However, this can only attained through effective marketing research and development. The effective research and development is missing the organization and it needs to be revived before the company is thrown out of the market (Abrams & Kleiner, 2003, p.169). In order to address this issue amicably, the company should start by recruiting highly qualified research and development staff. Currently, the company has only two experienced and qualified research and development personnel. However, the situation is likely to worsen in near future since the experienced research and development staffs are going to retire very soon. In addition, the company should provide adequate resources for research and development which ensure smooth and effective operation of the research team. Without managerial support the team assigned to carry out research and development is likely to fail in its mission. Through vigorous research and development, the company will be in a position identify new and advanced technology and introduce new desired products before their competitors. According to the Sun Tzu’s art of war theory, a fighter who reaches the battle field earlier is more likely to win than the one who comes later. In this regard, a business organization which utilizes advanced technology first or introduces a new design of product first is more likely to dominate the market. The company should not always be a follower of other electronic business organizations but should aim at being the leader. This can only be attained by investing in extensive research and development (Abrams & Kleiner, 2003, p.170). Effective Top Management Effective management is very essential for a business organization to prosper. A manager is supposed to direct, coordinate and control the operations of an organization. However, it has dawned to me that the management in this organization is too reluctant in executing its duties. The fact that the CEO is about to retire in two years time does not give the CEO and other managers permission to relax in executing their management duties. The management of the company should embrace participative leadership strategy which is very essential for growth and development of a business organization operating in a competitive market. Through participative leadership theory, staffs are allowed to contribute in decision making process thus decisions made are rich as well as motivating. This theory of leadership is essential since it encourages employees to be innovative and more creative. In addition, promotion to leadership positions should be based on merits but not hereditary. The post of the CEO should be given to the most qualified and experienced person who can steer the organization into the next level of competitiveness. Though this is a family business organization, the chief executive officer should be highly qualified person with effective leadership skills. In this regard, selection of the CEO should go through a competitive process to come up with the most qualified person based on merit (Zussman, 2008, p.34). Obstacles and Challenges Expected Implementation of the aforementioned strategies will be faced by some obstacles and challenges. One of the major challenges which will face implementation of the strategies is lack of enough funds. Intensifying marketing operation and research and development will require more funds. Based on the fact that the financial performance of the company has not been impressive for the past three years, internal sources of funds will not be possible. However, in order to address this issue amicably the company will borrow funds from financial institutions to finance the new developments (Fabozzi & Nevitt, 2000, p.147). Another obstacle expected is resistance of change from management and also employees. In nature people are resistance to changes thus this is expected. Due to various developments, some employees or managers may fear that they may lose their job positions. Nevertheless, this issue will be well taken care of since employees and managers will be involved in the whole transformation process. Managers as well as employees will be given opportunity to contribute in decision making in order to ensure full involvement (Zussman, 2008, p.42). Conclusion It is evident that the problems facing the company can be overcome by implementing effective strategies. Consolidation of suppliers is one of the major strategies which will enhance proper management and control of suppliers as well as minimization of cost of procurement. Extensive advertisement and introduction of retail stores will boost the sales volume of the company substantially. Increased investment in research and development is also essential to guarantee future competitiveness in the electronics market. Managers are also supposed to carry out managerial roles effectively till they retire. The obstacle of limited finance will be addressed by borrowing funds from financial institutions while that of resistance of change will be addressed amicably by involving employees and managers in transformation processes. Recommendations 1) The company should utilize supply consolidation strategy which requires substantial reduction of number of suppliers 2) The company should strengthen its marketing strategy by intensifying advertisements for its products and improving efficiency of its distribution channel through development of retail stores. 3) Research and development should be intensified by allocating adequate amount of money and recruiting specialized people towards these new developments. 4) The management team of the organization should execute their obligations effectively and promotion to management positions should be based on merit. References Abrams, R. & Kleiner, E. (2003). The successful business plan: secrets & strategies. London: The Planning Shop. Fabozzi, F.J. & Nevitt, P.K. (2000). Project financing. London: Euromoney Books. Marandi, E. & Little, E. (2003). Relationship marketing management. New York: Cengage Learning-EMEA. Smart Pros. (2009). Focus on key suppliers and save, Retrieved March 9, 2010, from http://accounting.smartpros.com/x49141.xml Zussman, D. (2008). The role of the managers in the management of change. New York: Institute of Public Administration. Read More