1. Viking Sewing Machines ltd, a large company, was engaged in manufacturing and marketing household sewing machines including electronic models and low priced mechanical models. Sale of domestic sewing machines was declining all over the world in view of the increasing popularity of readymade garments produced by companies using industrial sewing machines. At this stage there was a change in the ownership of Viking in 1997, when the CEO resigned and a new CEO took charge. Under his leadership, Viking considered the following mission statements for the company:
a. To develop, produce, market and sell sewing machines and related products which enhance the joy of creative sewing; b. To be consumer driven company ensuring growth, profitability and success by providing superior satisfaction to the consumers and our dealer partners by continuously adding value to the Viking brand; c. To be recognized as the leading premier sewing machine company in the world; and d. To expand our business by creating demand for more creative uses of sewing. Which one of the above mission statements should the company adopt and why?
Every business had to be managed and operated with a long term seted goal. So, they need to forecast about the upcoming future of the company and that forecasting should be done in such a way so that it can be more effective and efficient for the organization in the long run. Here, the competitors had already beat the Viking Sewing Machine ltd. So to stay in the competitive market, Viking Sewing Machine ltd should adopt such a policy so that they can be sustainable in the market. Therefore, in order to be sustainable Viking Sewing Machine ltd should follow the second mission statement “to be a consumer driven company ensuring growth, profitability and success by providing superior satisfaction to the consumers and our dealer patter and by continuously adding value to the Viking Brand.”
Because, consumers are the key assets for every company. When consumers will be satisfied with the product they have purchased, they themselves will repeatedly buy the products and they will promote the product by themselves to their close persons. Thus the company would gain some valued customers which will help them to be stable in the market. Again, when Viking will maintain a good relation to their dealers (supply chain management is very important for every organization), they will be very glad for working with such a company. They will also be loyal with the company and will do for the betterment of the company always.
2. For more than ten years till 1995, Laboni stores ltd was successfully running a a number of retail stores selling cosmetics and skin care products. From 1996, sales were stagnating and now after a year had started declining. The general manager of the company made enquiries from stores in charge at various locations of stores. All of them reported that ladies, particularly the younger generation, were found to be highly discriminating about choice of products. Demand for certain branded items widely fluctuated due to movie artists’ preferences shown on the TV. Also there is a marketed tendency to equate quality with rice. The general managed decided to have environmental analysis carried out with a focus on changes in social and cultural factors among urban ladies On that basis he even thought of recommending to the board of directors a complete change in the product lines to be decided.
Do you think the GM was right in his approach regarding environmental scanning? What other factors in the environment needed analysis? If there was a clear change in tastes and preferences of buyers of certain products, is it essential for the company to switch over to a different product line?
Every organization in the world needs to modify their business model in some context. When the demand for their products starts to decline due to the change in tastes and preferences of their customers and their competitive pressure keep increasing, they should grab a new policy for their company just to be sustaining in the competitive market. Here, considering the above mentioned fact, I would say that yes, the general manager was right in his approach regarding environmental scanning of the product. Because by scanning the environment, the company would able to know the actual demand of their products and some other factors which are hampering their market such as the quality of their competitors product, what new demand exist in the market, what their customer wants, which innovation should they bring . As there was a clear change in the tastes and preferences of their customers of certain products, the company should switch over to a different product line based on the results they have found from the scanning of the environment.
3. Avik industries ltd was a family owned conglomerate with diversified business activities including consumers’ durables, switchgears, batteries and both toilate and washing soapes. For a number of years the company prospered with growth in volumes and market share. But its performance had setback in 1999, when the net margins in switchgears, the most profitable product, declined from 12 to 11%, while in consumer durables it had halved to 6%, the batteries business was under pressure, and the ailing soaps division had just started looking up. The chief executive of the switchgear unit observed that the results would have been worse but for the focus on operational efficiency.
For years, Avik had been organized along four divisions as independent profit centres. Except for HR and finance, all other functions were decentralized. The advantage was that each of the businesses had a strong focus. It also facilitated customer focus. The flipside was that divisions became insular and inward looking. Each division had its own ad budget even separated ad agencies. The sales force was pushed to look at short term product promotions in the face of competitive pressure. The cost of sales was rising much faster than rate of growth in sales. It seemed divisional autonomy had been pushed too far down the line.
Should the divisional set up be disbanded? Or, should the divisions be converted into SBUs and spun off into separate companies? Is there any other alternative structure possible?
Decentralization makes all individual more creative as their decisions get more valued from the top level of the organization. So they get more encouraged to take all the decisions of the company very carefully as they know that they will be treated well for a better decision in future. Now considering the mentioned fact, my suggestion would be neither the divisional set up should be disbanded nor a single division should be converted in to separate companies.
Rather, Avik industries ltd should disbanded their decision of decentralizing their all other departments. I would say that the decentralization would be very better for the company. And altogether, the SBUs must be added into all their separated departments. Henceforth, the decentralization will allow all other departments to make their own decision and the SBUs will put all the information of the organization from all the separated departments together. Thus, the management board and all others can look for every decision of their organization that had taken in separated departments and would be able to make any correction if they needed in future. So, the decision would mostly come from the top level of the company which will bring the betterment for the company.