OzWidget Company Business Expansion - Case Study Example

Name Tutor Course Date Executive Summary The success of a business organization depends on the strategies that have been put in place. These strategies may either lead to the success or failure of the company. OzWidget Company is described in the report and the proposed strategies have also been analyzed in details. The strategies proposed are aimed at saving on the operation costs of the company and also increase the market share of the company in other geographical regions. The relocation of the manufacturing plat is one of the strategies that will save the company millions of dollars. The western sate has been found to be the most suitable state for relocation due to its potential. Staffing issues that the company face after the relocation has also been discussed and the United Kingdom market has been found to be the most suitable source of employees. On the other hand, the expansion strategy in other geographical regions is a must for the company. This will lead to the generation of more revenue and thus, lead to the success of the company. It is thus important for the company to adopt the recommendations of the report concerning all the strategies before they are implemented. The recommendations will certainly lead to the success of the organization. OzWidget Business Report Introduction OzWidget Company is located in Australia and it deals with the manufacture of OzWidget which is an important component in the mining industry. The company has a potential of expanding its business if proper strategies are put in place. The mining industry in Australia is very lucrative and attracts a lot of profits. The stakeholders in the sector are also confident that the sector is registering a lot of growth and development. The company needs to expand its business for the purpose of serving its clients better and also increase its market share. This may be costly for the company during the initial stages but in the long run, it will be very beneficial to the company. The expenses may be due to logistics and human resource problem. This is because the expansion of the company will mean that more investments are put in place (Barlett, 2008). The company thus requires proper strategies that ensure the process is successful and profitable. Any minor mistake by the company during the process may lead to massive losses which will have great impacts on the operations of the company. The report thus discusses the strategies that the company should adopt so as to successfully expand its operations. The strategies are divided into three sections for the purpose of capturing all the details required during the expansion of the business. Statistical data are the main items used in the report for the purpose of making conclusions and recommendations to the company. Relocation of the company manufacturing plant is one of the approaches discussed in details in the report. This strategy is important in terms of reducing the cost of transportation. The human resource problems like staffing is also an important strategy discussed in the report in details. This is for the purpose of enabling the CEO make proper decisions on how the new plants will be operated. The expansion of the business in new geographical markets is a strategy that the report critically analyzes. This strategy is important in terms of building the brands of the company as well as increasing sales (Sheffrin, 2003). The report is quite useful to the new CEO and it will make the process of decision making easy and thus expanding the business successfully. The report is also quite analytical and the recommendations are based on the statistical analysis. Background Knowledge This report is mainly based on the analysis of the Board concerning the expansion of the company. As a consults for the company, the report analyses al the strategies suggested by the board by providing clear analysis and recommendations. All the strategies suggested by the board are backed by statistical data in relation to the trends in the sector. This increases the accuracy of the report and thus making it quite useful in decision making. The trends in the sector are also discussed in the report for the purpose of determining the effectiveness of the strategies proposed by the board. The statistical figures also represent real data from the industry that is very relevant to the company. The conclusions and recommendations are also based on the statistics and the general trends in the industry. All the information gathered are also accurate and very useful for the expansion of the company. Analysis Strategy 1: Relocate manufacturing plant One of the main strategies that the board had proposed includes the relocation of the manufacturing plant. This is because the company incurs a lot of expenses when transporting the manufactured products. To determine which state the company should relocate the manufacturing plant, statistical; analysis is important for guiding the process. The data used was from the year 2000 to the year 2011 and it includes the export by merchandize and the export by the each of the states (International trade in goods and services Australia, 2012). New South Wales Year State export (x) Metalliferous ores and iron scrap (y) 2000 21114 13382 2001 231116 14868 2002 21909 13889 2003 18409 13968 2004 21360 16333 2005 24961 23806 2006 27949 32664 2007 28370 35606 2008 36599 50045 2009 32994 45798 2010 33839 69212 2011 39531 86243 Year State export (x) Petroleum products and related materials 2000 21114 10465 2001 231116 9212 2002 21909 8622 2003 18409 7244 2004 21360 7088 2005 24961 9054 2006 27949 9812 2007 28370 11211 2008 36599 13808 2009 32994 9600 2010 33839 12957 2011 39531 14396 Victoria Year State export (x) Metalliferous ores and iron scrap (y) 2000 20854 13382 2001 22731 14868 2002 21127 13889 2003 17312 13968 2004 18911 16333 2005 18307 23806 2006 19950 32664 2007 19990 35606 2008 21488 50045 2009 18076 45798 2010 19086 69212 2011 20854 86243 Year State export (x) Petroleum products and related materials 2000 20854 10465 2001 22731 9212 2002 21127 8622 2003 17312 7244 2004 18911 7088 2005 18307 9054 2006 19950 9812 2007 19990 11211 2008 21488 13808 2009 18076 9600 2010 19086 12957 2011 20854 14396 Queensland Year State export (x) Metalliferous ores and iron scrap (y) 2000 19009 13382 2001 23136 14868 2002 22136 13889 2003 19965 13968 2004 22841 16333 2005 31145 23806 2006 36334 32664 2007 33660 35606 2008 52328 50045 2009 43256 45798 2010 50112 69212 2011 51757 86243 Year State export (x) Petroleum products and related materials 2000 19009 10465 2001 23136 9212 2002 22136 8622 2003 19965 7244 2004 22841 7088 2005 31145 9054 2006 36334 9812 2007 33660 11211 2008 52328 13808 2009 42356 9600 2010 50112 12957 2011 51757 14396 South Australia Year State export (x) Metalliferous ores and iron scrap (y) 2000 6906 13382 2001 8935 14868 2002 9165 13889 2003 7495 13968 2004 7742 16333 2005 8198 23806 2006 8988 32664 2007 9709 35606 2008 10470 50045 2009 8318 45798 2010 9246 69212 2011 11937 86243 Year State export (x) Petroleum products and related materials (y) 2000 6906 10465 2001 8935 9212 2002 9165 8622 2003 7495 7244 2004 7742 7088 2005 8198 9054 2006 8988 9812 2007 9709 11211 2008 10470 13808 2009 8318 9600 2010 9246 12957 2011 11937 14396 Western Australia Year State export (x) Metalliferous ores and iron scrap (y) 2000 29467 13382 2001 31036 14868 2002 30913 13889 2003 32108 13968 2004 34942 16333 2005 43616 23806 2006 55016 32664 2007 61609 35606 2008 83400 50045 2009 76973 45798 2010 102110 69212 2011 120546 86243 Year State export (x) Petroleum products and related materials (y) 2000 29567 10465 2001 31036 9212 2002 30913 8622 2003 32108 7244 2004 34942 7088 2005 43616 9054 2006 55016 9812 2007 61609 11211 2008 83400 13808 2009 76973 9600 2010 102110 12957 2011 120546 14396 Tasmania Year State export (x) Metalliferous ores and iron scrap (y) 2000 2463 13382 2001 2355 14868 2002 2502 13889 2003 2335 13968 2004 2457 16333 2005 2741 23806 2006 3313 32664 2007 3751 35606 2008 3637 50045 2009 3070 45798 2010 3245 69212 2011 3153 86243 Year State export (x) Petroleum products and related materials (y) 2000 2463 10465 2001 2355 9212 2002 2502 8622 2003 2335 7244 2004 2457 7088 2005 2741 9054 2006 3313 9812 2007 3751 11211 2008 3637 13808 2009 3070 9600 2010 3245 12957 2011 3153 14396 Northern Territory Year State export (x) Metalliferous ores and iron scrap (y) 2000 4172 13382 2001 3476 14868 2002 2755 13889 2003 2119 13968 2004 2034 16333 2005 2312 23806 2006 3617 32664 2007 3875 35606 2008 6005 50045 2009 5223 45798 2010 5418 69212 2011 5209 86243 Year State export (x) Petroleum products and related materials (y) 2000 4172 10465 2001 3476 9212 2002 2755 8622 2003 2119 7244 2004 2034 7088 2005 2312 9054 2006 3617 9812 2007 3875 11211 2008 6005 13808 2009 5223 9600 2010 5418 12957 2011 5209 14396 Australian Capital Territory Year State export (x) Metalliferous ores and iron scrap (y) 2000 28 13382 2001 11 14868 2002 8 13889 2003 1 13968 2004 0 16333 2005 6 23806 2006 8 32664 2007 4 35606 2008 8 50045 2009 10 45798 2010 1 69212 2011 4 86243 Year State export (x) Petroleum products and related materials (y) 2000 28 10465 2001 11 9212 2002 8 8622 2003 1 7244 2004 0 7088 2005 6 9054 2006 8 9812 2007 4 11211 2008 8 13808 2009 10 9600 2010 1 12957 2011 4 14396 According to the analysis of the data collected and the regression analysis performed, it is evident that the state exports is linked to the exports of metalliferous ores and scrap together with the petroleum products and related materials. This affects the location of the manufacturing plant as the most suitable state must have a high number of customers and export rates (Productivity Commission, 2004). High export rates of the products related to the company means that the performance of the company will be good in the particular state. According to the regression analysis, it is evident that the current location of the manufacturing plant of the company is not good enough. The returns of the company can be increased through the relocation of the plant. This strategy is very important for the growth and development of the company. The relocation does not mean that he customers in the current location will be inconvenienced. They will continue enjoying the products of the company at an affordable rate. Once the relocation is done, it will be easier to transport the goods to any state at a reduced cost. The analysis thus shows that the area with the best potential is the Western Australia state. This is due to the steady growth of the export market regarding the products offered by the company. As compared to other states, the company stands to save a lot of costs in terms of transportation. Although the company may also relocate its plants to the Queensland State which is also performing well according to the correlation data, it is advisable to relocate to Western Australia. The growth and development of the company depends on the location of the manufacturing plant. This location will ensure the expansion of the company and increased revenue for the company. Once the cost of transportation has been reduced, then the company will be able to export more products at a reduced cost. This will definitely lead to mass production and good prospects for the company (Menon, 1999). According to the correlation analysis, it is evident that the more the exports in the states the higher the amount of products related to the company being exported. This is therefore a direct link between the products of the company and the export market. It is thus evident that the company will not face any difficulties in terms of marketing its products after the relocation of the manufacturing plant. Instead a steady growth of the company will be witnessed as the demand for its products is high in the Western Australia State that registers high exports. From the data collected in the export market by the different states, it is evident that the relocation of the manufacturing plant in Western Australia is essential for the company. The export of the products related to the company is high at the moment despite the low levels of supply of the company’s products due to transportation costs. This means that once the company relocates to the western state, the products will become easily accessible to the market as the transportation cost will have been reduced greatly. Due to the low cost of transportation, the company will benefit a lot as indicated by the trends in the export market. However, some research may be required to clearly understand the market trends in the other regions so as to ensure a steady supply of the products of the company in the other states (Australian Bureau of Statistics, 2008). The decision by the board to relocate the manufacturing pant of the company is also timely. This is because the statistical analysis of the data available shows that the current state that the manufacturing plant is located does not have enough potential and hence limiting the growth and development of the company. It is thus important for the CEO to consider relocating to the Western State due to the correlation between the export in the state and the products manufacture by the company. High growth rates will be experienced and the cost of transportation will be greatly reduced. Strategy 2: Staffing of new plant The strategy by the company to relocate the manufacturing pant is quite beneficial in terms of reducing the cost of transportation and increasing revenue. However a human resource problem can lead to the failure of the initiative. This requires appropriate action to ensue that the company benefits from the relocation plan. Only twenty percent of the two thousand workers are wiling to relocate to the other states. This leaves a huge gap in terms of labor within the organization. Some of those who are not willing to relocate could also be experienced and this may end up affecting the performance of the new plant. It is difficult to hire such a large number of employees at once without affecting the operations of the company. It is important to ensure that the new employees have the right skills and knowledge to begin working immediately (Rakesh, 2005). This will prevent any delays in terms of operations and hence benefiting the company. The solution to this problem lies in the ready job market in the United Kingdom. The increasing number of unemployed youth in the United Kingdom provides a perfect solution to the problem. Most of those who are unemployed are also willing to take up any jobs immediately. Employment and unemployment data in the United Kingdom Description percentage Employment rate 70.7 Unemployment rate 7.9 Inactivity rate 23.2 Total pay 2.6 Regular pay 2.2 Unemployment rate by gender Gender Number (millions) Men 1.45 Women 1.05 It is evident from the reports on unemployment that there is a huge job market in the United Kingdom (BBC News, 2011). The company requires only 1600 employees . However from the records and data there are millions of unemployed people in the United Kingdom. It is also important to note that some of them have been searching for jobs for over one year. The reports also suggest that the people from the United Kingdom are always ready to take up any job provided they earn a living from it. The nature of the job that the company requires the employees to perform is not complex in nature. Although some of the positions require a lot of skills and experience, others do not. Since the company is mainly a manufacturing one, a lot of manual labor is required in most areas. This means that the employees can learn concepts on the job. It only takes a few days before the employees settle down completely. The issues of relocation of the company are thus important and can be achieved successfully if the new job market in the United Kingdom is tapped. This opportunity also provides the people with an opportunity to participate in the nation building exercise. Other reports also suggests that the youth are the most affected group in terms of being unemployed. The youth are usually active at work and can increase the prospects of the company. Although the older people could be experienced in the industry, the youth may bring new ideas and changes that are required in the current unpredictable economy. It is therefore important that the CEO should take into account the age of the employees during the recruitment exercise. This is not to be confused by discrimination or unfair employment practices but it is an important consideration as the nature of the jobs in the company requires active employees. The issue of unemployment in the United Kingdom is a serious matter and the government is also wiling to take any measure that will avert the crisis (Energy news bulletin, 2012). The measure by the company to recruit employees from the country will thus receive a major support from the government and the local people. It is also evident that the government in the United Kingdom has to incur a lot of expenses in paying the inactive groups and the unemployed. Measures taken to reduce the costs will be highly appreciated and welcomed. It is important for the company to consider this option since the other employees of the company cannot relocate to the other states. Hiring of employees from the United Kingdom will not only benefit the company but also the unemployed people. The cost of labor will also be reduced greatly once the company hires the employees from the United Kingdom. This is because the statistics and available data indicate that they can work at any reasonable pay. New employees will also benefit the company in terms of innovations and production. This is because new employees always come with levels of morale in their work. This will be useful to the company in terms of increasing the prospects of the company and hence more profits. Since the company will be hiring a high number of employees, it will greatly benefit from the initiative. The job market in the United Kingdom therefore provides the company with a perfect solution in regards to the relocation issues (Office for National Statistics, 2011). Millions of dollars will be saved at the end of the initiative and hence enabling the company to improve on its revenue. This option is very relevant to the situation of the company and it should be implemented once the relocation plan is complete. Strategy 3: Business expansion The expansion of the company to new geographical areas is very important in terms of increasing the profits. This is because the focus on Australia a lone is not safe in the current unpredictable economy. The consumers of the products from the company can be found in large numbers in other countries. In some of the geographical regions, the production of bauxite, iron ore and crude petroleum is very high. This means that they require the products of the company in large quantities to enable them carry out their operations. The company needs to expand its market share to countries that produce the products so as to generate more profits. Expansion of the business may come with initial challenge but the company can mange the challenges if proper mechanisms are put in place. This requires a thorough knowledge of the production of the related products in the geographical regions. The company should start its expansion to countries that produce large quantities then move to the other countries over a period of time. According to the analysis, several options are available for the company and will definitely lead t the success of the company in the sector. Bauxite Country 2006 2007 2008 2009 2010 Guinea 18,783,928 18,519,010 17,682,330 14,774,240 16,427,300 Brazil 23,236,300 25,460,700 26,074,500 28,097,400 32,028,00 China 18,981,600 20,446,000 25,176,900 29,213,100 30,000,000 Australia 61,781,000 62,428,000 64,038,000 66,138,000 68,535,000 Iron ore Country 2006 2007 2008 2009 2010 China 588,175,400 707,073,000 824,011,100 880,171,400 1,071,555,000 Brazil 317,800,229 354,674,378 351,200,000 331,000,000 372,300,000 Australia 275,042,000 299,038,000 342,435,000 394,069,000 433,452,000 Crude petroleum Country 2006 2007 2008 2009 2010 Saudi Arabia 514,300,000 494,200,000 515,300,000 459,500,000 467,800,000 Iran 208,000,000 209,700,000 209,800,000 202,400,000 203,200,000 China 184,765,700 186,318,200 190,430,600 189,489,600 203,000,000 Australia 20,605,000 21,567,000 21,569,000 22,527,000 24,844,000 (Bide, 2012) It is evident from the data collected that the company needs to expand to other geographical regions. From the data collected, the company has a lot of potential in other regions since the production of bauxite, iron ore and petroleum products are very high. The products require the products of the company during the extraction. The company can expand its operations in Africa, Asia and South America. It is evident that the production of bauxite is high in Australia compared to other countries. However if the company expands its operations to Guinea, China and Brazil the prospects of the company will increase. This is because the regions also register a high production of bauxite which will increase the prospects of the company. On the other hand, the statistics show that the production of iron ore in Australia is lower compared to China and Brazil. The company should thus explore ways of expanding its operations to those geographical regions so as to maximize on the profits. The production of petroleum products is also lower in Australia compared to Saudi Arabia, Iran and China (BP Statistical Review of World Energy, 2011). This means that the Asian market presents a huge opportunity for expansion. This should be done in order to generate more revenue for the company and hence growth and development. It is therefore recommended that the company should explore means of expanding its business to other geographical regions. This is based on the data that suggests that the high production of the products consumed by the customers of the company is high in those geographical regions. It is also evident that the operations of the company in those regions will lead to an increase in revenue. However before the company makes the decision to expand its business in those geographical regions, more research is required. The details about the competitors in the region should be obtained so as to clearly come up with strategies to beat (Drazen, 2008). Other factors should also be considered. A PESTLE analysis should be conducted so as to establish the potential of the company in the regions (Armstrong, 2006). The data obtained should then be used for the purpose of decision making. Although the data collected shows a high potential for expansion in the stated geographical regions, risk analysis should also be done to avoid making loses due to other factors. This additional information is therefore important for the company in order to make proper decisions. However the idea of expansion is timely and should be implemented for the purpose of increasing the profits of the company. Summary and Conclusion The relocation of the manufacturing plant is a noble idea for the company and it will save the company millions in terms of transportation. The analysis of the data shows that the current location of the company is not suitable enough as the export trends shows low values. It is therefore important for the company to relocate to the western state as it has a high potential. This should be done after all the possible problems of relocation have been identified. Be Measures should be put in place to deal with any possible problem that may affect the process. One of the problem that has been identified and it may affect the process is the lack of willingness by most of the employees to relocate. This brings about the issue of staffing of the new plant. The hiring of the new staff members may be difficult in the Western state but a new job market has been identified. The staff members can easily be hired the United Kingdom as the rate of unemployment is increasing in that region. This provides an opportunity for the company to easily fill the vacant positions. The company will also benefit as the new employees may come with new innovations and techniques tat may benefit the company. On the other hand, the issue of expanding the business is also very important to the organization. Other geographical regions need to be explored for the purpose of increasing the revenue for the company. The perfect markets according to the data analyzed includes, Africa, Asia and South America. These regions may be in high demand for the products of the company. The expansion is thus very important for the company. However, it is also important for the company to clearly analyze the market situation in those regions to avoid making any losses. This is because the data analyzed does not provide the real information regarding the market situation of those geographical regions. The strategies proposed by the Board are thus very relevant for the growth and development of the company. If the recommendations are well adopted, then the company may end up being one of the best in the industry in various geographical locations. The CEO should consider the proposed strategies as very important and all the efforts should be focused in implementing the strategies while following the recommendations. Recommendations for Further Investigations Further investigations should be done in the third strategy which is the expansion of the business to other geographical regions. Although the company has prospects of succeeding according to the available data, the data requires more investigation to ascertain whether the company will succeed or not. The investigations should be in the area of PESTLE and SWOT analysis. These analyses are important in determining the market situation in the geographic region. A further research on the five forces analysis is also required before the implementation of the third strategy. The results from the strategies will be important in determining the steps to be taken by the company during the implementation period. Limitation of the Data On the second strategy on staffing, the data provided does not clearly indicate what the foreign employees will be wiling to earn. This is despite their willingness to work in any state. On the other hand, the data on the employees does not indicate the required skills and knowledge in order to make suitable conclusions. The data on the first strategy was also generalized. Although it gives good information regarding the situation some of the data are supposed to be more specific. Works Cited Bide, T, et al, 2012, World mineral production, British Geological Survey. BP Statistical Review of World Energy, 2011, Review of World Energy, Retrieved on 8 September 2012 from, . BBC News, 2011, Worrying' jobless rise needs urgent action – Labour, Retrieved on 7 September 2012 from, < http://www.bbc.co.uk/news/uk-politics-14558369>. Office for National Statistics, 2011, Labor market, Statistical bulletin. International trade in goods and services Australia, 2012, Export by merchandize, Merchandize exports. International trade in goods and services Australia, 2012, Export by states, State Exports. Australian Bureau of Statistics, 2008, Australia at a Glance 2008, Retrieved on 7 September from, Productivity Commission, 2004, Trends in Australian Manufacturing, Pdf Energy news bulletin, 2012, Staff problems not limited to Australia, Retrieved on 7 September 2012 from, < http://www.petroleumnews.net/storyview.asp?storyid=8682872>. Barlett, T, et al, 2008, Transnational Management: Text, Cases and Readings in Cross-Border Management, 5th ed. New York: McGraw-Hill. P. 60-63. Sheffrin, M, 2003, Economics: Principles in action, Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 57, 310. Drazen, A, 2008, Political business cycles, The New Palgrave Dictionary of Economics, 2nd Edition. Armstrong, M, 2006, Handbook of Human Resource Management Practice (10th edition), Kogan Page , London. Menon, A, et al, 1999, Antecedents and Consequences of Marketing Strategy Making, Journal of Marketing (American Marketing Association) 63 (2): 18–40. Rakesh, M, 2005, International Marketing, Oxford University Press, New Delhi and New York. Appendices Strategy 1 graphs New South Wales Victoria Queensland South Australia Western Australia Tasmania Northern territory Australian Capital Territory Strategy 2 diagrams Strategy 3 diagrams Read More