Key Issues Facing the Company AcQuire - Case Study Example

Video Business Case Report [Name] [Professor Name] [Course] [Date] Executive Summary AcQuire is faced by precarious conditions due to its global presence and vulnerability to revenue losses and loss of staff in the event of a global financial crisis. The key issues facing the company include susceptibility to revenue loss and loss of staff. The two issues were caused by the 2008 global financial crisis. Consequently, the company remains in a fragile position because of its weak job creation strategies. The company had also failed to rebalance its globalisation strategies resulting to revenue loss during the financial crisis. The company is in a vulnerable position since it relies heavily on uniform products. AcQuire’s key decision criteria should be based on the principle that financial limit should be set on investment decisions through differentiating between severe and nonfatal risks. Several options exist. These include selling into the emerging markets, adding new product options or opening up newer operations. The business may also consider strategic pricing to increase sales output and creating compensation system to offer incentives to sales staff. Based on risk analysis of the various options, three alternatives are selected for the company, namely increasing product mix: establish new sales regime, expansion in emerging markets and diversify product line. The report concludes the company should train its staff to be geographically-focused. Further, having multi-product software solutions will ensure that the company has a diverse range of products that appeal to more global customers. Therefore, cross-selling performance should be increased to gain maximum share of the mining industry. By improving sales process such as using online sale of products, online advertisements and training the existing sale force, sales and marketing efficiencies can be ensured cost-effectively. The company should also use local distributors in its new frontiers as it is cost-effective. New value-added mining software should also be introduced. A) Issues The issues of concern include possible revenue loss and loss of staff. The CEO of AcQuire Technology Solutions has expressed concern over the need to develop a strategy to protect the company from being in a loss position. The CEO also expresses concern over the need to make the organization sustainable in a way that it can offer long term career to its workforce. B) Causes The global financial crisis causes the two issues. It is paramount that the company should focus on strategies that will hedge revenue loss and loss of staff. The company remained in a fragile position because of its weak job creation strategies resulting in massive loss of workforce. The global financial crisis presented the company with an opportunity to reassess its pattern of global growth that would lead to employment recovery. The company had failed to rebalance its globalisation strategies resulting to revenue loss during the financial crisis. The global financial crisis also presented the company with an opportunity to reassess its globalisation strategies. A major issue that faces the company includes the imbalances that characterises its globalisation process. The company is in a vulnerable position since it relies heavily on export of uniform products to developed economies. Due to collapse in demand during the crisis, such organizations face unexpected reduction in demand of their products leading to revenue loss. Discussion C) Decision Criteria Decisions on how to avoid financial loss have to be made after considering alternatives and assessing each alternative’s the costs and benefits. The company is in a precarious position since all the decisions are potentially risky since the outcome may be unexpected and can expose the company to financial loss (Usher and McClelland, 2004). However, the key is to understand the risks and apply risk management strategies to minimize financial loss. A comprehensive risk analysis is conducted to determine potential risks with regard to the alternatives using risk management principle (Hollingworth, 2010; Arsham, n.d.). First, the financial limit should be set on investment decisions by differentiating between risks – fatal and nonfatal. An underlying risk is that if acQuire invests heavily in new product concept, the product may not effectively expose the company to business risks. On the other hand, investing in part of the company’s surplus cash assets to try the new concept is less fatal. The company is likely to lose that investment incase customers reject the new product. However, it will continue operation (Hollingworth, 2010; Dye, 2009). The business expansion decisions need to be evaluated. The company may consider selling into the emerging markets, adding new product options or opening up newer operations. For AcQuire, expansion signifies strategic expansion into emerging markets (Liabotis and Baer, 2009). However, there is the risk that the return on investment may not be realized. The company needs to plan its expansion in phases. For instance, in a bid to expand in emerging markets, a conservative step would be to collaborate with local distributors. Such a step is less financially risky compared to establishing new operations or distribution centres (Cross and Bonin, 2010). The business can consider strategic pricing to increase sales output. The possible risks include unexpected events such as price fluctuation, increased costs of wages, reduced cash flow and profits. Although the company cannot prevent price increases, it can apply strict cost controls to hedge losses (Liabotis and Baer, 2009). The company has the option of restructuring a new sale model. For instance, it has the option of designing compensation to encourage behaviours in its workforce that supports sales goals. The compensation system may be designed in a manner that directs the sales team to deliver on certain goals such as getting new customers, penetrating newer markets or cross-selling to the current customers. The underlying risks include costs risks and lack of performance from sales staff (Lepsinger, 2010; Loballo and Sibony, 2006). D) Alternatives The company has three set of the more realistic and less risky alternatives from which it can choose from: Increase product mix. For instance, the company should use CRM system to boost awareness of its full product mix. It can also capitalise its extensive retail presence to increase penetration. Diversification of its product line from mining software will ensure the company products appeal to a broader global market (Shannon, 2013 : Rosato, 2012). Use its free cash flow to make strategic acquisitions in emerging markets to expand its global presence. Create a new sale regime. For instance, it can invest in new sales force to penetrate new markets, win new customers and increase sales output. This will achieve the much-needed global acceptance of AcQuire’s product line and make inroad for further expansions (Rosato, 2012). In sum, the alternatives include improving sales and marketing power, diversifying product line and frontier expansion. CONCLUSION E) Solutions Improved sales and marketing power will improve the overall sale of acQuire software. AcQuire has a global presence. Managing the sale of the software presents a set of issues which can be solved by a strategic sales team to improve the company’s revenue base, in the end protecting the customer against potential losses in the event of another global financial crisis (Liabotis and Baer, 2009). In this case, training sales-force to be geographically-focused sales team for global customers is a powerful structure for maintaining local accountability and leveraging regional purchasing behaviours (Lepsinger, 2010). A global sales team distributed in the company’s various worldwide operations will ensure that the company attracts allies and loyal customer base to promote the company across regions (Cross and Bonin, 2010). Having multi-product software solutions will ensure that the company has a diverse range of products that appeal to more global customers. In this way, the company will not be vulnerable to loss of revenue when demand for one line of product goes down during another global financial crisis (Shannon, 2013). Through frontier expansion in emerging markets using distributors, acQuire will appeal to a larger customer bases. The company will not be susceptible to changes in the global market structures. For instance, the company may still be able to experience sales and stable revenue from some regions, when other regions experience inflations, political risks or financial crisis (Cross and Bonin, 2010). F) Implications and Implementation Improving sales and marketing power As a revenue strategy to be considered, the cross-selling performance should be increased to gain maximum share of the mining industry. By improving sales process such as using online sale of products, online advertisements and training the existing sale force, sales and marketing efficiencies can be ensured cost-effectively (Shannon, 2013; Rosato, 2012). Indeed, social media strategies that target players in the mining industry such as investors and mining firms can attract a huge base of customers globally. Leveraging on online promotional strategies and training of the available staff is a cost-effective method of providing solutions to the company. AcQuire can improve is online and offline sales staff by using mining industry best practices. Part of the company’s marketing strategy should identify how effective the company understands and reacts to the mining industry trends (Liabotis and Baer, 2009). Expansion in new frontiers To expand into new frontiers, AcQuire needs to focus on the sales opportunities provided by the emerging markets. At present, the company has not invested extensively in Africa, as it only has three bases in the region. Using local distributors is cost-effective as the company wouldn’t need to invest heavily in new offices and human resource (Cross and Bonin, 2010). The continent however offers vast opportunities that the company can make inroads into through local distributors. In any case, for each branch, gaps should be identified between the current share for Acquire’s flagship products and the market demand. The analysis will offer an objective basis for initiating short- and long-term goals for each of the company’s global operation (Shannon, 2013). New product line The company has introduced new value-added mining software to grow its revenue bases and to position itself as a market leader and innovator in the mining solutions industry. Mining industry is diversified (Shannon, 2013). Therefore, instead of focusing on the engineering software, acQuire should also aim to introduce innovative software that cut across the board in the mining industry. Possible software includes human resource solutions in mining industry. The new product should then be assessed to determine cost of delivery as well as their potential to cut distribution cost. In any case, since acQuire has established itself across the globe, it can use its existing distribution channels. This will be both cost-effective and will require little management (Liabotis and Baer, 2009). In conclusion, in order to solve the revenue loss issues, the company should improve its sales and marketing power, diversify its product line and engage in aggressive frontier expansion. Reference Arsham, H (n.d.). Tools for Decision Analysis: Analysis of Risky Decisions. Retrieved: Cross, B. & Bonin, J (2010). How To Manage Risk In A Global Supply Chain. Ivey Business Journal. Retrieved: Dye, R. (2009). "Flaws in strategic decision making: McKinsey Global Survey results." McKinsey Quarterly. Retrieved: Hollingworth, M. (2010). "CRrisk Management: A New Suit Of Clothes For The Naked Ceo." Ivey Business Journal. Retrieved: Lepsinger, R. (2010) "The Execution Imperative: The Gap-Closing Trade Secrets Of Companies That Consistently Get Things Done." Ivey Business Journal. Retrieved: Liabotis, B. & Baer, D. (2009). "Managing A Portfolio Of Growth Options: The Strategic Tradeoffs Between Growth And Risk." Ivey Business Journal. Retrieved: Loballo, D. & Sibony, O. (2006). "Distortions and deceptions in strategic decisions." McKinsey Quarterly. Retrieved: Liabotis, B. (2007). "Three Strategies For Achieving And Sustaining Growth." Ivey Business Journal. Retrieved: Rosato, A. (2012). Selling Substitute Goods to Loss-Averse Consumers: Limited Availability, Bargains and Rip-offs. Berkeley: University of California Shannon, D. (2013). Alternative Revenue Strategies to Improve Bank Profitability. Retrieved: Usher, M. & McClelland, J. (2004). "Loss Aversion and Inhibition in Dynamical Models of Multialternative Choice." Psychological Review, Vol. 111, No. 3, 757–769 Read More