CRITICAL ISSUES * lack of smart and strong decision making because of owner and CEO’s different perspectives/priorities * sales have increased, but profitability have decreased * ineffective management of A/P and A/R have made the company insolvent * may lose loans because bank requires current ratio of 1.25 SITUATION ANALYSIS The major decisions for the company are taken by the owner rather than the CEO. The owner lacks business sense and his decisions are based on emotional feelings, not for the benefit of the company. The owner is not willing to outsource operations and wages are above industry average. From 2001 to 2005 sales have increased by 186%; whereas, COGS and selling and admin has increased by 199% and 166% respectively. High operating expenses and ineffective management of A/R have led the company to insolvency by demonstrating a quick ratio of 0.38.
The larger expenses coming along with high quality and services render salespeople a disadvantage when talking to their clients for business. The standards of performance (SOP) set for extra compensation seem unrealistic, with 75% of salespeople earning no commission in the first half of 1992, and so conceivably, fail to motivate them. This makes the result control less effective as they failed to evoke the desired behaviors – achieving sales targets. Together with other offers by competitors, this resulted in high turnover rate. Profit Sharing - Result controls may serve well with congruence between employees’ and company’s objectives, but employees take for granted the law-required 10% profit sharing of the company’s income and so their motivational effect seems little.
This perception has a direct effect on employees’ engagement and organizational citizenship behavior towards the goals of the company. Branch employees are not fully committed to the organization (OB, p. 108) therefore the turnover is very high. Contextual: * Recruitment policies: * Managers are hired mostly on “relationships of mutual favor”, and not based on managerial ability or integrity. * Long term personal goals for these people are mainly to flourish their relationships, because that increases their personal value in that market. The goals of the company do not fit managers’ personal goals.
Social Responsibility Company Q seems to currently have an economic attitude toward social responsibility. An economic model is based on the traditional concept of business. If the business is providing a quality good or service, showing a profit and providing jobs then it is successful. Company Q is more concerned with profits and lost revenues then maximizing a positive impact. They have shown this by closing a few stores in a higher-crime-rate area because they were losing money, by only offering a very limited amount of health-conscience and organic products because they are high margin items and by declining to donate to the local food bank because of worries over lost revenues.
The company is currently experiencing losses and this is causing shareholders and suppliers to become wary of D’Leon. This report presents a financial ratio analysis of the firm to determine the impact of the expansion and provides the company recommendations as to how to proceed. D’Leon needs to increase its current ratio at 1.2 and quick ratio at 0.4 to at least the current industry average. This can be done by holding less inventory. This would also help improve the company’s inventory turnover ratio from 4.7 to the industry average of 6.1.
As we know, people don’t like changes, especially the ones they can’t predict. If they feel uncomfortable after the acquisition, they will leave the company. High employee turnover rate will lead to vest cost of training expense and reverse effect of working environment. 1 BADM 590 Home Assignment 2 2.Return on investment Yue Wang Cisco had the acquired company’s products appear on its price list on the day the deal closed so that Cisco’s sales force could immediately begin to sell the new products. I find it is a great method to raise the acquired company’s sales.
Alternatively, it finds its sales increasing but profits declining and cannot understand why. Perhaps the company keeps losing competitive bids for products and services and does not understand why. In many cases, accurate cost information is the answer to these questions. Improved understanding of the use of resources and the assignment of their related costs provides a competitive advantage. It helps a company or organization to develop and to execute its strategy by providing accurate information about the cost of its products and services, the cost of serving its customers, the cost of dealing with its suppliers, and the cost of
However, there are people who are feared it will not be good and has an opposite impact for all concerned. It looks like a win-to-win scenario; it creates a good amount of jobs needed and reduces tariffs that benefit all members involved, but some are concerned about the agreement will benefit some specific groups and some will not. The problem is while the cost of labors in the US is expensive the labor’s cost of neighbor countries is cheaper; this leads to the jobs loss for the American people and workers. For example, Columbia is still one of the most dangerous places on Earth because of the government and its persecutions for those who against it; just like Chinese government. Next, the working condition for Columbian workers is poor and that concerns of some the human right group.
But this irreprehensible customer service does not come easily. It requires very dedicated employees that go above and beyond to ‘wow’ the customers. Ironically, the same elements that enabled Nordstrom’s success are responsible for its current misfortune. The controversial Sales Per Hour System (SPH), the decentralized management structure, and the not very clear distinction between working hours and non-working hours, have had very damaging consequences for Nordstrom. This firm’s significant earnings growth came to an end in the late 80’s when employee complaints, union allegations, law suits and regulatory orders began to arise.
They assess potential risks before making investment decisions which is shown through Bob and Maggie refusing to take out a loan when they don’t have the means to make repayments as the majority of their money is tied up to their inventory, and their inventory faces a huge unpredictable risk from the weather. In addition Bob and Maggie both have calculations and predictions made using information available to them showing efficiency and awareness of the market conditions; alongside this Maggie’s conservative nature in regards to cost saving has helped them garner up more cash. The company’s weaknesses seem to be their low liquidity levels, which could see them in financial difficulty in an unexpected change in the market conditions, or potentially hazardous weather that could damage their inventory. To add to this risk Maggie has a strong deterrence towards any type of debt financing. 2.