Competitive Strategies: Benchill and Sons - Essay Example

?BENCHILL & SONS Question Evaluate which of the Porter’s competitive strategies each company is adopting and justify your evaluation with information from the case study? Answer: Benchill & sons is using cost reduction strategy. The company’s basic focus is to control the task and manufacturing process by achieving the economies of scale by producing high volumes of furniture and selling them in bulk to cost sensitive customers. Since, many players in the industry are using the same strategy; therefore the company has enormous pressure to keep the cost low. As a result, the company will have to compromise the quality of the product by purchasing cheap raw materials and using less sophisticated manufacturing process so that the final product is cheap and of inferior quality. Moreover, the furniture will be standardized and customer’s requirements will not be met because it can probably increase the cost. However, the company is not in a position to cope up with any unplanned change because it can’t afford any changes in the production process and the design of product due to the excessive cost of implementing the changes. Question 2: Based on your evaluation of the strategy approached by each organization what would be the most likely HR strategy? Answer: The working conditions and job descriptions will be fixed and rigid. The job descriptions will cover clearly defined tasks and responsibilities with no room for flexibility. The job duties will give little or no room for career progression to the employees because the tasks will require specialization in one specific area and the employees will not be able to learn new skills and abilities. The chances for training and development are extremely limited because the furniture is manufactured on basic standards which don’t require updating the skills. As a result, the performance appraisal will be done on efficiency and effectiveness of the employees. In other words, the employees will be evaluated on the quantity of items produced irrespective of quality. The wages of front line employees will be based on number of items produced each hour and bonus/rewards can be expected on overproduction. The salary structure of the employees will be competitive and company will pay at/below the industry standards. Efforts will be made to recruit cheap labors and the jobs of highly paid workers will be unsecured so that cost can be minimized and the supervisors will ensure that labor productivity is enhanced and employees don’t sit idle. Overall, a short term profit making approach is adopted. Question 3: Is this approach of linking Porter’s competitive strategy to HR strategy has its limitations? Evaluate what you consider these limitations can be. Answer: the porter’s competitive strategy is very generic and its approach is very limited and narrow. Porter says that the company should follow only one strategy at a time so that it doesn’t lose focus. On one hand, Benchill & Sons uses tight cost control to reduce prices but on the other hand, it needs to change its policies with the changing trends in the market and the economy. For e.g. the company can go for technological advancement or may be it can purchase raw materials form cheap countries like china or India, in order to reduce cost. However, this approach is very practical for non-profit organizations because their sources are limited but for benevolent owners this approach is not good for the reputation of the company. On the other hand, for profit making companies, the background of entrepreneur, the nature of industry, competitors, buying patterns of customers, technology and minimum standards set by ISO are important factors to consider before adopting any competitive strategy. The best employment practice is to ensure better utilization of resources while not exploiting the workers, maintaining a fair quality standard and using relationship marketing approach to ensure repeat sales in order to beat the competitors. SPEKE FURNISHINGS Question 1: evaluate which of the Porter’s competitive strategies each company is adopting and justify your evaluation with information from the case study? Answer: Speke furnishing is using quality enhancement strategy in order to attract quality lovers and high paying customers. The operations and tasks at the manufacturing plant will require close supervision of raw materials, work in progress and finished goods. The company will incur huge expenditures on product inspection and prevention cost. The company may use 6 sigma or zero defect approach to minimize the defect rate or failure cost. As a result the end product will meet the high quality standards and will have limited or life time guarantee. Since the company is not making enough efforts to design new products therefore, only those customer requirements will be fulfilled that require quality assurance. The company has a moderate/low risk taking approach and focuses on meeting the goals of the organization by improving the processes. Overall, the company has medium term focus and wants to establish and maintain its image as high quality furniture dealer. Question 2: Based on your evaluation of the strategy approached by each organization what would be the most likely HR strategy? Answer: the job descriptions of the employees will be explicit and will cover clearly defined roles and responsibilities. The working conditions will give room for flexibility in areas where effectiveness and improvement is needed. But on the whole, close supervision will be done at every step and efforts will be made to improve quality at all levels. Employee feedback will be taken to gain the first hand knowledge of on-site activities so that continuous improvement can be ensured. Rewards will be given for ideas that improve the profitability and goodwill of the company. 360 degree performance appraisal can be used in order to remove biasness of the appraisal method and the criteria of performance appraisal will focus on the achievements of objectives set at the beginning of the year/quarter. The objectives will be specific and will be result-oriented. Equal opportunities will be given to employees and promotions will be based on exceptionally good performance that leads to the production of high quality products, increased customer satisfaction and high profit realization. Employees will be paid at market standards and incentives will be designed to improve the morale and motivation of the employees. Also, training and development will be given to top and middle management about implementing total quality control. Question 3: Is this approach of linking Porter’s competitive strategy to HR strategy has its limitations? Evaluate what you consider these limitations can be. Answer: Porter’s model is not a good approach to evaluate the HR strategy because when the company is focusing of quality enhancement it has to look at the factors affecting quality which are completely ignored in Porter’s model. For instance, the registration of suppliers should be done on quality of raw materials, timely delivery and credibility. Moreover, ISO certification is essential for the good reputation of the company and total quality management must be adopted by using quality tools such as such as check sheets, histograms, control charts etc to record the variance in the quality. This approach is not applicable for non-profit companies as it requires high expenditures and the company needs to change its practices and processes according to the changing trends of the economy, which requires major capital investment and business process redesign. The best employment practice for Speke Furnishing will be to implement total quality control and conduct regular audits to test the performance. This approach is extremely practical for benevolent employees for whom the reputation of the company is the major issue. THORNTREE OFFICE SOLUTIONS Question 1: Evaluate which of the Porter’s competitive strategies each company is adopting and justify your evaluation with information from the case study? Answer: the company is using innovation strategy in order to attract variety lovers. Since the company is making customized products therefore, the control over operational activities will be limited and will allow flexibility in the production process. Thorntree office solutions will have a greater tolerance to ambiguity and uncertainty. Efforts will be made to record the customer satisfaction level achieved by making customized products. The company will focus on building medium quality furniture and will have moderate concern for the quantity produced. The company will focus on end-results to secure its market share but it will have a long-term focus where short term profits may be ignored for achieving long-term benefits. The long term results can be achieved through creative ideas provided by the design department and a higher level of cooperation from top-management is needed to support the risk associated with implementing the ideas. Company may incur additional costs on market research to understand customer needs. Question 2: Based on your evaluation of the strategy approached by each organization what would be the most likely HR strategy? Answer: the recruitment of the employees will be done on their creativity and innovative ideas. While the job descriptions will be simple and will focus of general roles and responsibilities of the employees. Moreover, job rotation and job enlargement will be used by the company so that employees can learn different skills required to perform different kinds of jobs. Also, training and development will be provided to teach employees from all departments, the basic skills needed improve the quality of their work. As a result, employees can expect broader career paths and career progression opportunities can be acquired in the development sessions. Performance appraisal will be based on their “out of the box” thinking and creativity. Teamwork and will be appreciated and employees from different backgrounds will work together to generate ideas and solutions and independent projects can be given to each team. The participation of employees in team projects will be the basis for performance evaluation. Performance appraisal will focus of long-term achievements of the group and the soundness of the group decisions. The pay structure can be lower than the market standards but employees will be given flexible compensation and benefits to make up for the low salaries. The supervision and control will be limited and employees will be empowered to perform their duties. The jobs of the employees will be unsecured because the company is taking huge risk in implementing new ideas and a bad idea can lead to job loss if the profitability of the company is badly affected. Question 3: Is this approach of linking Porter’s competitive strategy to HR strategy has its limitations? Evaluate what you consider these limitations can be. Answer: Since tastes and preferences of customers change rapidly and customers ask for more variety in the products therefore, it is appropriate to adopt innovation strategy to meet the individual needs of customers. However, Porter doesn’t mention the link between innovation strategy and the HR policies. For e.g. two heads are better than one, therefore, employees should work in teams to generate good ideas and for this purpose group based performance evaluation system should be used in such firms. The organizations using this strategy should identify market opportunities and adjust its strategies accordingly. However, this approach is not good for non-profit agencies or benevolent entrepreneurs. It would most likely work for owners who have risk taking nature and the best employment practice will be to do the market research before implementing any idea to check out the feasibility of that idea. REFERENCES: 1. Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York. 2. Wikipedia, (2010). “Porter generic strategies”. Online. Available at: http://en.wikipedia.org/wiki/Porter_generic_strategies . Accessed: 1st May 2011. Read More