Evaluating the Performance of Lojack and Micrologic Company before and after the Alliance - Case Study Example

Running Head: Evaluating the Performance of Lojack and Micrologic Company before and after the alliance. University Name: Introduction LoJack is a company that manufactures stolen vehicle recovery system. Bill founded it due to the need to fight the increased rate of stolen vehicles in the US. The operation involved a Lock jack unit that is installed in a vehicle and a registration database that correlated a specific code for each vehicle. The LoJack is activated once the vehicle is stolen. This help to facilitates the recovery of the vehicle by the police within some hours after being stolen. On the other hand, micrologic firm is a firm that specialized in the design and construction of electronic equipments. This firm was started by Sheldon Apsell and Don crown. Apsell have a PhD in energy physics while Don crown has a bachelor of degree in electronics. It was founded as a contract development company in 1978. Question One Evaluating the strategy paradox and perspectives underpinning strategic thinking, strategic formation and strategic change with reference to the history of LoJack and micrologic The LoJack had a need to develop a Lock jack car recovery system that will help to track and recover stolen vehicles. Because they did not have the technology behind it, they consulted the micrologic firm, which agreed to provide the required technology. This was not the best decision to undertake as it would have looked a company with the technology to alliance with and Micrologic Company could have been a good choice. This step would have facilitated the LoJack Company to move faster in their process of manufacturing the recovery system that is taking them a very long time to implement. Instead of organization on a strategy on how they can alliance with Micrologic Company and work as a team, they are hiring the staff from micrologic firm to come and help them design and maintain the recovery system this is proving expensive to the company as they getting short of fund to finance the project. The high cost of production the company is experiencing could have been cut down by alliance of the two firms as they will share the cost of production and responsibility such that they do not have to pay for the technology any more. The micrologic firm would have been assigned the role of designing, installing and maintaining of the car recovery system while LoJack firm would have concentrated on the process of establishing and enhancing the market of this product. (Bob and Ron, 2OO2) This could have promoted an efficient production and sale of their product. It could have been a very effective strategy for the two young firms to transform faster to measure up to the standards of the other global co-operate firms for their product to be able to compete better from similar products from other companies. There was also lack of strategic thinking of the LoJack Company in their way of operation. The LoJack firm is rushing into global market instead of first creating an effective awareness of their product locally to the domestic customers to increase the demand of the product at home then they can look for other places to market their product once they are well established at home, with the help of revenue realized by the company from the sale of it’s product locally. The company will use this money raised to expand its product market internationally. This could have been achieved through creating effective product awareness through the media and Internet. This could have promoted the sale of the product worldwide, as the people from other countries could been motivated to buy the product due to the high rate of sale of the product locally. (Schutz A. 2000) Lack of strategic thinking of the two firms at first instance was their major contribution to their slow growth and development. For the company to successively be able to grow and expand to fit into the global market the two companies need to see the need for a very strategic change that could only be realized through their alliances so as they can boost each other. This is because they lime very well and could easily supplement the need of each other. The LoJack Company was still facing a stiff competition from other companies such as Teletrac. This was because some of these competitors apart from offering the theft recovery system were also providing auto theft prevention device that made their products to sell well in the market than the LoJack product that was only offering a means of recovering the stolen vehicle but could not prevent the vehicles from being stolen. Lack better of strategic thinking had lead to the absence of successive strategic change of these firms as it have brought some of following factors that hinder their good performance. Poor management of the two companies The founder of LoJack Company was Bill Reagan who was a former Navy Pilot. His professional qualification was not sufficient for him to manage an organization like LoJack Company effectively as he lacked efficient managerial skills that were vital for the success of the LoJack. Therefore there was need to hire relevant professionals in the field of business and who have also worked in manufacturing company to make the required decisions for a strategic change of the organization to be achieved. Also he could have hired people who had electronics skills to look on the design of the LoJack recovery system and see the modifications that should have been done to increase its efficiency, in order to compete well with the other similar products from other companies. The electronic manager should also recruit other people on how the LoJack car recovery system operates such that they can assist the sales people to demonstrate how it works during their exhibitions. The LoJack Company should also have employed a professional marketer to research on the best marketing strategy to be adapted by the company. The manager should have tried to locate the most strategic areas the firm should expand to. The areas chosen are those that are predicted to offer high sale of the product. This will be determined by the population density on those areas and the rate of the car theft in the areas. This information could have been obtained from the police with the assistance of their records of stolen vehicles. The marketing department should have established also tried to determine the living standard of people on those places by observing the lifestyle of the people living there. This will help to determine whether the people can afford to install the LoJack recovery system on their vehicles. The marketing department could have established an effective awareness of this product in those areas. This could have been achieved by organizing exhibit project where the sales people and the electronic technicians could have explained and demonstrated on how the product operates to the people. This should have been conducted on the site where vehicles are sold. This could have been facilitated by human resource department establishing a good relationship with the car dealers who could have helped the sales people convince the customer on the importance of installing their vehicles with the LoJack car recovery system. Then there was a need for the Company to have a human resource department headed by a person with the necessary qualification such as someone who had pursued public relationship who could have been responsible for the existence of a good relationship among all the parties involved for the success of the production and sale of the company’s product. There was a problems of lack of good co-operation of the police force which could not have been there if they had established a human resource department as it could have looked for a very effective way to solve that problem since they know the right approach to use. This department could still have assisted the market department and mostly the sales people work in harmony with the electronic technicians and the car dealers in the promotion of the product. This could have increased the creation of an effective communication to the peoples, which could have increased the sale of the product. Question Two What are the merits and demerits of LoJack- micrologic strategic alliance, in the context of opportunity and in the market place. The alliance of LoJack Company and the micrologic company will have some weakness and strength to the organization as discussed below. Merits The alliance of the two companies will help to improve their services to their customers. This will occur when the two firms share their responsibility and improve the quality of their product. Each company will be assigned the task that is best suited for it. The micrologic company that had proved very efficient and competent in manufacturing and production of electronic equipment should be assigned the role of designing, installation and maintaining the car recovery system. This will then make them have an opportunity to specialize in their field only which will boost their performance and quality. The level of production of the LoJack car recovery will go high and its quality will increase. The managers of Micrologic Company are very knowledgeable in their field of specialization and given this chance can discover some ways of modifying this product. This will help to increase the demand of the product in the market when the consumer realizes the added services of the product and its improved operation because of these adjustments made. This will increase its sale and the company will get enough money to research on more market of the product outside the country and create enough awareness internationally. Micrologic on the other hand will assist the LoJack to get more customers form their former customers. This will help to boost the sale of the product when the customers of the two companies merge. This is because these customers have always had faith in the products of Micrologic Company, as the company is well known to produce high quality products. So when the two companies merges their former customers will still have confidence with the product they will produce in alliance. The companies will also share the managerial positions. This will help the company to have a very effective leadership in the various departments of the firm. The micrologic firm should take position of the manufacturing manager, as they are well experienced in this area. (Bob and Ron, 2OO2) On the other hand, the LoJack Company should be given the role of marketing the product. This is because they are more skilled in this field. The LoJack Company will have to establish a very good market for the product. It will have to launch an effective advertisement for the product. This can be done by the use of media like radio and TV to communicate to the people the importance of installing the LoJack product in their vehicles. They should also inform the people on its mode of operation to enhance its awareness. This will also help people who had bought vehicles before to bring them to be installed with this system. This is because according to the case study, the system is only being installed only on new cars but the people with the old cars have not realised the need to install their cars with this system which shows poor product awareness. This lack of enough information to the people have contributed to the poor market of the product and will easily be eliminated when the LoJack company is assigned this responsibility of marketing the product. LoJack Company should then develop a proper marketing strategy through effective advertisement. They will also emphasize on the need concentrate on local production and sale by good create awareness locally and sell the product at home first before going global. This will help the firm to learn and amend the shortcoming of the product first, and when they establish their sale well locally they can go global. According to Bob and Ron (2OO2) this will be ensured by first locating the strategic places to expand their geographical area by conducting a market research to establish the best countries to sell their products. These countries should be densely populated and the rate of car theft should be high. They should then create a good awareness to these people the by informing them the importance of installing their vehicles with this garget that will help to facilitate the recovery of their vehicles in case they are stolen. This will be achieved by proper advertisement through the radio, TV and Internet. The firm should also upgrade its IT department to allow proper communication with the other offices they will open in the other countries. This will allow good distribution of the product in all the offices opened. The firm should select a human resource department, which will help to facilitate effective communication between the two companies, and all the teams involved. It should also be responsible to research on the government policy governing the sale of such a product in a country before opening an office in that state. Thereafter they should create a good relationship with the police force for effective success of the sale of their product, as the cooperation of the police force is vital for the successive operation of the product. This will not be a big problem because before they market their product internationally most of the countries would have heard the good performance of the system and would then wholly support it as it will make the work of recovering stolen vehicles more easier than before. (Ron, 2OO2) The decision-making will now improve as now before any decision is made, all the parties involved will have to meet, discuss the changes to be implemented before any change is made. This will result to better decision made as all the parties will contribute by sharing their challenges in their work place and offer their suggestion on the best way forward. This will be discussed by the board of directors, manager, and then passed on or rejected depending on their consensus. This will help to promote the production of the LoJack recovery system sold and increase their sale. The losses incurred because of uninformed haste decision made will reduce as decision will be made after a very well consultation. The brand name of the product is well chosen, as it is an international brand name and not a local one. So when the company go global the product will sell well in international market. This could not have been possible if the brand name was a local one as they should have looked for another name which will serve as an international brand name and this would have affected the sale of the product greatly as people would have thought it was a new product, rather than the one which is already well established in the market. The two companies will also share the responsibility of raising the capital required to produce and market the product. This will be easier than when only one company is financing all this. Demerits Decision-making will be slow; this is because the members from the two companies have to agree before any major change is done. (Kervin, 1998). This can take time and can contribute to low production and even may lead the organization into a loss as some decision are better when they are made and implemented quickly. Therefore, the bureaucratic nature of the organization might affect it negatively unless an efficient way of coming into a consensus of the two companies is established. The establishment of an efficient human resource department that will try to facilitate decision-making process is vital for the success of the alliance. The total return generated by the sale of the produce might go down at first due to the slow production or sale because of the slowness of the decision-making process. Maybe to decide on the best marketing strategy to be adapted, or the design amendment to be done. The other factor that still can affect the return is the increase of the parties involved who are sharing the profit realized. The revenue would have been higher if the LoJack Company instead to alliance had hired permanently some staffs with electronic knowledge to work for them. Alternatively they should have taken their employers to college to learn these electronic skills then come to work in this area of designing the product. This could have been better as it could have been cheaper to the company than to hire skilled labour from outside or through the alliance with the micrologic company .The production would remain high throughout as the workers are adapted to the working conditions of the company and do not need to take time to learn them as it would have been if new workforce was employed. Cross-Culture communication Conflict- when the firm go global, It will need to open offices in other countries and create awareness of the product in those countries. There will be a problem of efficient communication in some of those places due to barrier in language communication. The firm will then look for the locals to train them on the operation of the product so that they can help them to explain and demonstrate its operation to the people. These people will help the sales people market the product. The brand name used should also be ensured it does not conflict with the culture of the people in the countries where the product will be sold. This will help ensure where the product is sold there will be no conflict of the brand name with the culture of the people living in those places as it can hinder its sale. Question Three With the reference to the response to Q1 and 2, above and the financial data and information in the case study, reflect critically on the future strategic direction of the LoJack – Micrologic alliance post 1999. According to the Mike Daley the CEO of the LoJack Company. For a successful expansion of the company for domestic and international market he knew an alliance with a compatible company was very essential. Micrologic Company predicted to be a very good option for the alliance. This is because the directors of Micrologic company were supportive to the LoJack company by offering them their professional skill to the LoJack company. Apsell and Abey had worked well in the past in harmony and they had solved their differences very well. The Micrologic stuff was the one responsible for the design and installation of the LoJack car recovery on vehicles and hence new how LoJack operates and were familiar to the stuff of the company. This predicts a high performance of the two firms when they alliance. The quality of the product will also increase and the market of the product will improve. This will result due to the specialization of task assigned to the two firms depending on their efficiency in a particular area, which will boost the quality and efficiency of the production and improve the marketing of the product. The Micrologic Company will try to modify this product to offer better services to the customers than before. This can be done by in cooperating a mechanism that prevents a vehicle to be stolen to help the product to compete better to in the market with similar products from other companies. They should also modify their line of production by producing extra products. The two firms should still exploit the idea of Micrologic of manufacturing their product which was used to recover stolen equipment mostly construction equipment. The establishment of an efficient management structure that facilitates quick decision-making will help the alliance to realize its objective in the future, as it will allow high performance of the alliance. This is due to the unpredicted changes that arises in the market as a result of change in the technology or political changes and decision needs to be made faster for the issue to be addressed in time before the situation go out of hand this will help to prevent the company incurring a huge loss if the right measures hand not been taken on time. (Kervin, 1998) The firms should also establish an effective awareness of their products locally and internationally and this will boost the sale of the products greatly and promote the growth and development of the firms. It will also help to strengthen the alliance due to the good performance of the firms after the alliance. The future of LoJack micrologic appears to be a bright one. Using the financial data provided it becomes very certain to predict the future of the company. For instance the income statement presented reveals continued positive trade on the company’s’ operations. The net sales have been gradually increasing from $ 17,535,000 in the year 1992 to $ 83,210,000 in the year 1999 the gross income has also increased with a very big figure all through during the year 1922 gross income recorded a low of $ 6,160,000 but this figure has multiplied to $ 45,645,000 in the year 1999. Pre-tax income has equally increased from negative $4,638,000 to positive $ 18,049,000. Through the accounts payable has continued to increase the Accounts receivables has also grown sharing that the business is expanding thus increased profitability. The merge and acquisition because of the proposed alliance will no doubt bring in some positive development,. The proposed merge will help in cutting down manufacturing costs a thing that translates into increases profitability. The provided financial data together with the information at the case studies reveals that the alliance will succeed in terms of business. 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(2000) Sales Promotion Essentials, New York, McGraw-Hill BIBIOGRAPHY Advertising Standards Authority - http://www.asa.org.uk/asa/ (Retrieved on April 29th 2007) Bob, W. and Ron M. (2OO2): Strategy Process; An International Perspective, Third Edition, London, Oxford University Press. Camille, P. (1999): Newer Insights into Marketing: Cross-cultural and Cross-national Perspectives, London, Haworth Press Danielle, M. and Walker, T. (2002): Doing Business Internationally: the Guide to Cross-cultural Success, New York, McGraw-Hill. Marketing Association www.mmaglobal.co.uk (Retrieved on April 27th 2007) Martin, C. and Anne-Marie, S. (1998): Cultural dimension of international mergers and acquisitions, New York, Walter de Grunter. Nigel, F. (2002): Market led strategic change, Butter worth, Heinemann. Schultz A. (2000) Sales Promotion Essentials, New York, McGraw-Hill Udell, J. (1996): Successful Marketing strategies in American Industries, Madison, Wisconsin Mirren. Michael, E. (2000): Competitive Advantage: Creating and sustaining superior performance. Cambridge, Oxford University Press Michael, P. (1998):On Competition. London, Harvard business school press, www.LoJack.com(Retrieved on May 2tnd 2007) www.miclog.com(Retrieved on May 2nd 2007) Read More