Root Cause of Problems in Oz Clothing, New Strategic Business Objectives - Example

Running Header: Case Study of Oz clothing in Australia Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Case Study of Oz clothing in Australia Executive Summary In the recent years Oz Company has been threatened by negative growth. If this tread is to continue, then the company is likely to close down. This would not be a move that would be welcomed by the stakeholder. Poor company leadership, poor staffing that have resulted to lack of innovation, lack of proper strategic business direction, negative interferences from the government and the staff unions are the major factors that have contributed to poor growth of the company. However, even under all these challenges, the company still has the capacity to regain its rightful position in the in the market and further be able to achieve steady growth. Through carrying out proper total quality management system aimed toward achieving customers need, the company can still gain the reputation it deserves. To achieve this objective, the Oz clothing needs to put together the combination of factors that would lead to its success. Continuous training of the employees, development and innovation of new products based on market research, making the production line to be more efficient and ensuring that there is good relationship among all the stake holders should be the major driving factors toward the success of this company. Since higher demands shall be made to stake holders to improve the current situation of the company, caution should be taken to ensure implementation of the strategies are done in a way that they are going to be supported by majority of the stake holders. Table of Contents Executive Summary 2 Table of Contents 3 1.0 Introduction 4 1.1Aims/ Objectives 4 1.2 Scope 5 2.0 Root Cause of Problems in Oz Clothing. 5 2.1Leadership 5 2.2 Innovation and New Ideas 6 2.3 Strategic Business Direction 7 2.4 Government 8 2.5 Workers Unions 9 3.0 Industrial Relations 10 4.0 New strategic business objectives 12 4.1 Benefits of the new strategies 13 5.0 Conclusion 14 6.0 Recommendation 15 7.0 References 16 1.0 Introduction Oz clothing is an Australian based company that makes clothes and sells them to consumers in the local market. It is owned by stakeholders who get dividends from the profit that the company makes. The company is run by management teams which are employed on contract basis by the stakeholders. Due to globalization in the last two years, the company has been experiencing stiff competition especially from the Chinese market. The government, in an effort to create good relationship with the China created way for Chinese to establish a new clothing market in Australia. This is what has majorly resulted to stiff competition has been experienced in the last few years. In an effort to rescue the company against this problem, the management in consultation and permission from the stakeholders borrowed funds in order to improve the internal operation of the company. Even with implementation of this effort, Oz clothing is still finding it hard to find market for its products. Currently, the company is facing numerous challenges all of which are majorly contributed by low productivity and high cost of its products. This report is the first stage toward setting the company on track since. It explains the entire environment on the challenges that are being faced by the company. However, with all these challenges, Oz clothing needs to find its rightful place in the market. 1.1Aims/ Objectives This report therefore seeks to identify the combination of the problems that have led to the failure of Oz Company. It shall further seek to find the alternative to solve these problems from the human resource management perspective. 1.2 Scope The report starts by identifying and explaining the internal and the external influences that have contributed to continuous failure of the company. It explains how the business objectives affected the industrial relations. Finally, the report gives recommendations on what should be done in order to improve the situation. 2.0 Root Cause of Problems in Oz Clothing. The current challenges that are experienced in the company are poor productivity, high cost of producing cloths, competition from the Chinese company, high labor cost and low skilled labor. These challenges are the results of internal and external influences that team up to create a difficult situation for the company to gain momentum. The major internal factors are poor leadership, lack of proper strategic business direction, ineffective system to accommodate innovation and new ideas. Major external factors are government interferences and the workers union which the company has no control of. 2.1Leadership Leadership is a very critical institution in the management of any organization. The success or failure of an institution is largely determined by the kind of decisions that are made by the top leadership (Andre 2011, p. 597). The decision by the management not to monitor the progress of the industry and take the decision at the appropriate stages have largely contributed to the failure of the Oz clothing meeting its basic demands. Once the doors were opened by the government for the Chinese as their competitors, the management needed to have taken immediate steps in reorganizing its production and sales department so that they are not overshadowed by those of the new competitors. The role of human resource management in administration is to ensure that the future of the industry they are in remains competitive at the current times and in future (Kaiser 2001). In this case therefore, the human resource of the Oz clothing ought to have taken the necessary steps at the appropriate times in order to prevent the problems from reaching the level they are now. Most of the stakeholders and workers of Oz clothing are Australians who would wish that the company was having positive progress. It is therefore possible that their influence would have prevented any foreign competitors from entering and conquering the market at their disadvantage. Failure of the top management to advice the politician and the government on the possible result of opening the market without any condition to the China is something that contributed to the stiff competition that the company is experiencing at the moment. At the time when the government was making decision to bring in Chinese clothes in the Australian market, Oz clothing should have made itself relevant to be involved in making such a decision. This is because it had been the major player in the industry. This shows that the management was not structured in a way that it could be able to fully handle. 2.2 Innovation and New Ideas The set up of the Oz Company seems not to include innovation. According to Brewster & Mayrhofer (2009, p 23) any organization that intends to compete against its competitors needs to find a way of periodically improving on its products. It is lack of innovation and product improvement that have seen the productivity being too low yet the cost of production being very high. Most of the production company that have remained relevant in the market have a department that is periodically finding ways of improving the products and reducing production cost of whatever product they are involved in (Kimberly, Jeff & Joan 2006, p. 111). This department regularly checks on new technologies that are emerging in the market and finds ways of incorporating them in their industry. In the production line, the team identifies areas or avenues through which the system can be changed, eliminated or other mechanisms introduced so that the overall cost of production is reduced. In terms of quality, the team is responsible for identifying new models and designs that are in the market and how they can be improved so that they impress the customer. The Oz clothing has remained with the same technology that was introduced since the company was started. Chinese company on the other hand has been coming up with new models that impress the customers therefore outshining those of the Oz companies. The Chinese have also been able to perfect their manufacturing lines better than those of the Oz clothing. Proper skills are the key factors that determine the extent of innovations and quality of products that are produced in a given company (Gary, Tage & Per 2004, p. 652). The human resource department has the responsibility of reviewing the skills of their employees to make sure that they match those of the industry. Furthermore, this department has responsibility of matching the talents and interests of the individual employees to the strategic positions that the employees are working in (MacGregor, 2010, p 252). This way the employees are given the capacity to give out all that they have for the improvement of the industry. Unfortunately, Oz clothing seems to have fallen short of this. 2.3 Strategic Business Direction Human resource plays the leading role of planning the direction which the organization is moving. Fiedler & Welpe (2010, p 393) observes that in this case, this team is responsible for spearheading the organizational mission and goals and putting appropriate measures to ensure that all levels of management drive the organization towards achieving these goals and objectives. To do this, the team needs to identify their brand product that will compete effectively against those of their competitors. Through the role of personnel policy and practices, the management identifies the best procedures to fall in order for the organization to meet its objectives. Oz clothing has products that are not only of low quality but also of low quality which makes them to be disliked by the consumers. On the other hand, the Chinese have identified the shortcoming in this industry and developed a strategic business direction aimed at giving consumers what they have been denied by the Oz clothing. As a result, Oz clothing continues to meet more challenges of maintaining its customers in this kind of situation. When competition arises, the management need to review the strategic direction of the company or organization to ensure that it still progresses in the direction it is intended to (Hefernan 1998, p. 42). 2.4 Government The governing institution in any country plays a major responsibility in ensuring in ensuring the life hood of the people is improved. In Australia, the government decided to bring in Chinese company to provide what Oz clothing had failed to provide to the citizen. At the same time, other relations in other sectors that are prioritized by the government were strengthened. However, to Oz clothing, this became a major challenge in terms of competition. It is the responsibility of Human resource management to foresee a possible future situation both positive and negative and be prepared to handle them when they arise. Without doing this, the company they are in may experience challenges that are hard to deal with in future leaving it in a delicate situation. Forces from institution like the government which the company may not have control over are some of the challenges that any company should be prepared to deal with (Jones & Farquhar 2007, p. 242). However, since the government represents the interest of the people, the management should have a way to influence the decision taken by the government so that they are at least favorable in company’s operating environment. To be able to achieve this, the management of the company should ensure that it has good relationship with the government through assisting the government in its objective of making the country progress in positive direction. Whenever the government meddles with an institution which has its own management, then the direction of progress of such institution is likely to take ineffective direction. Internal cooperate affairs need to be fully left in the hand of the corporate management. At the time of formation of Oz clothing, the government major objective was to create room for employment to the people without appropriately considering the skills that the employees needed to have. It then went ahead to protect the company from the external competition without considering the quality of the products that were being produced. As a result, the management enjoyed this protection and therefore made only that decision that aimed to please the government and sustained the company. When competition crops up, the company finds itself in a very delicate situation and place to turn to. 2.5 Workers Unions The staff union seems to negatively contribute to the success of the Oz clothing. Most of the members that are in these union are low skilled who are poorly paid by the industry. Due to the challenges that are encountered by the industry, it is difficult for the Oz clothing to offer good remuneration to its employees. If anything is done to improve company’s situation at the expense of the workers, then the Clothing Workers Union (CWA) would turn against the company making the situation more complicated. From human resource management perspective, the major reason that unions are allowed in the organization is to create good relationship with the employees (Macaulay & Cook 2011 p. 14). Moreover, the unions are allowed to contribute to the policy making of the organization in order to give the company a good working environment. Further, union serves as a better tool for disciplining the forwarding grievances by the employees which greatly simplifies the work of the management. When the unions turn against the management, the company would face a very dangerous situation in terms of internal operation (Brown, Mehta & Armenaks 2011, p. 209). Human resource managers should always seek to have good relationship with the workers unions especially when it is experiencing hard times. Where the unions are well treated and respected by the management, then such an industry enjoys support and positive ideas from the workers therefore strengthening which would be translated to high output (Roland, & Jessica 2011, p 55). In this case therefore, if Oz clothing retrenches some of its employees, then the move would be badly welcomed by the union. Furthermore, this move would also not be welcomed by the government or any representative of the people. 3.0 Industrial Relations Good industrial relations that are in line with the objectives of the company involve relationships that cut across the following groups of people (Accel 2011). i. Workers of all levels. This includes formal and informal groups among them the trade unions and representatives of the company or the organization. ii. The employees and their management and their formal organizations such as professional or trade associations. iii. The government and government or legislation agencies. Legislation agencies serve like the advisory bodies that create a harmonized working environment between the company and the rest of the citizens. In the case of Oz clothing, most of the decisions had initially been solely made by the government on behalf of the company therefore only creating environment that favored industrial relations with only the government. The strategic business is likely to have been for creation of employment for the Australian citizens without adequately considering the quality of the products that were being produced and the future direction of the company. It is for this reason that the company stagnated in terms of quality of clothing that it produced. Furthermore at this stage the company finds it hard bring in new products that are able to compete against those of the competitors due to the rigidity of the combination of factors it needs to consider before it makes any move. The policies that were created made the clothing brand to be of low quality. The underwear produced for example ended up having very high cost of production due to use of low skilled labor. It is these bad policies that have seen the company finding it hard for workers to relate well with formal and informal groups. Workers and employees initially employed in this industry were of low quality than the required level. Due to this, they are unable to perform to the required business specifications. Pushing the employee hard to do things they are not well trained or familiar with would make them feel uncomfortable and run to their union who would definitely support them. The kind of industrial relation that results does not go favor the operating environment. The government on the other hand makes decisions that negatively affect the company without adequately consulting the management which creates a bad relationship with the management. 4.0 New strategic business objectives Oz clothing needs to carry out a total quality management system with the aim of identifying fulfilling the need of the customer. The major objectives that have been set by the company were those of helping the employee; creating the employment. Shifting the focus toward fulfilling the needs of the customer would see the company focus on things that will help the company make profit. Quality management system prioritizes the needs of the customer first which therefore offers the best direction for any business (Asgari etal 2010, p 70). Moreover, the company should ensure that it carries total quality management system every year. The management would need to periodically update the employees on new technologies that are in the market. An effective company management periodically trains its staff and reviews how the staffs are using the newly acquired skills to contribute to the company. Training, not only keeps the workers updated, but also motivates them to give out their best (Schein 2010, p. 24). In this case, the Oz employees shall remain competitive against the Chinese competitors. The company should also incorporate a new team responsible for improving the quality of the products that are produced. A team, consisting of all levels of management should be coming up with innovative way of producing designs that suits those of the customers. Furthermore, the team should be able to identify a clothing brand that is of high quality, low cost to the customer that uniquely identifies Oz clothing. Again the team need to find ways of making the production and manufacturing line come up with different model so that changes can be made whenever there is need to improve on the quality of the product. A good production line should be dynamic in a way that it can adapt different form if need arises. To carry most of these activities, the Oz clothing needs funds which at the moment it doesn’t have. At this stage, all the efforts should be geared toward rescuing the company. In this case, the management should use the dividend given to the shareholders to carry out these recommendations in order to rescue the company from completely falling. The company should ensure it creates good working relationship with all stakeholders in the industry. It should be ready to offer its contribution in future to the government whenever there is need to do so and also support the government in making the lives of the citizens better. To the stakeholders, the management should periodically update them on the cause of direction they intend to take and ask for further advisory input from them. Through communication, stakeholders of the organization are offered a platform to express their input in making the company a better place (Moss & Hollye 2007, p 55). However, caution should be taken to ensure that the stakeholders do not turn against the management. 4.1 Benefits of the new strategies Upon implementing of the new strategies towards various stakeholders would be affected differently. The major aim of these strategies is to ensure that the customer who is supposed to be the major beneficially of Oz products gets the best services. Due to total quality management, the Oz clothing management would experience some changes which would change the way things are operated in the company (Ozman 2010, p 67). Since the top management understands the situation that the company is in at the moment, it shall be easier to change their focus from focusing only on self interest and company interests to customer’s interest. Oz employees would partially find it hard to adapt to the new strategies. But through involving their union in making of the decisions, then they shall embrace the new strategies, accept to be trained and give out their best. The government will need to offer more freedom to the company to carry out what it sees fit for the company under the environment which it is operating in. The Chinese industry is likely to deploy mechanism to ensure that it dominate the Australian clothing industry when the new strategic business objectives are implemented. In this case, the Australian clothing industry needs to be prepared to handle consistent competition from China through ensuring that the company sticks to giving out the best to the customers. The unions (CWU, ACTU and TWU) are also likely to rise complains in short term which may temporarily slow down the growth of the Oz clothing. The management needs to be firm while perusing the objectives while and constitute an open forums to explain to the union groups on the collective responsibilities that the unions need to have in order to have positive progress in the industry. With the implementation of the new strategies, all the stakeholders shall experience some difficulties in short term but good and constant benefits at the long run. 5.0 Conclusion Oz has is in experiencing poor growth mostly due to its inability to match with the Chinese competitors. Poor leadership and lack of proper business strategies is what has made the company experience the numerous challenges it is having now. However, it is still possible for this company to reclaim its customers in the market. From the research, the major things that need to be done are to carry out total quality management. The research has proved that any new company that comes into market should be prepared to periodically review its objectives and improve on the services. Kocak & Abimbola (2009, p. 16) observes that failure to do this, the company is likely to experience strong forces from the competitors which it may not be able to handle. For a company like Oz clothing to smoothly face the challenges that comes with the business, the top management should be committed to coming up and implementing business policies that aim to keep the business moving (Patrick 2007, p 45). The strategic business direction should be that of fulfilling the customer need first (Herrera etal 2011 p. 2630). The management should always encourage innovations and new ideas from the staff. Of importance also is to keep good industrial relations with all the stakeholders that are involved in the market. 6.0 Recommendation 1. Oz clothing should implement the new strategies in a friendly manner to the stakeholders. It should ensure that it implements the new business strategies in an ethical manner especially to the competitors, shareholders and the employee. This way, it shall be able to gain trust from the customers. 2. Where sacrifices have to be made by the shareholders and the staff, caution should be taken by the management to ensure this does not bring a very negative effect to the employees and the stakeholders. 3. During and after the implementation of the new strategies, the management should ensure that departments assigned to implement new strategies have been given continuous support. This will ensure that the new strategies remains remain relevant. 4. The government should be made not to negatively interfere with the affairs of the company. This way independent decision shall be made by the management of which the consequences would be easier to handle. 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