The Performance of Organizations within the Modern Market - Essay Example

? Draper Engineering case study Table of contents Introduction 3 2. Draper Engineering – SWOT analysis – improvement of weaknesses 3 2 SWOT analysis 3 2.2 Improvement of weaknesses 8 3. Analysis of the way in which Draper’s could re-organise the maintenance department to improve efficiency. 9 4. How Draper’s should deal with Bang IT and Bend IT in order to improve the performance of this contractor. 11 5. Conclusion 12 References 13 1. Introduction The performance of organizations within the modern market is depended on a series of factors. Usually, the conditions in the organizational environment – internal and external – influence the potentials of the organization for growth. At this point, the ability of organizational leaders to introduce strategies that will help the firm to increase its competitiveness is critical. Current paper focuses on the examination of the performance of Draper Engineering, a firm operating in the automotive and transport industry. The SWOT analysis is used as a strategic tool in order to identify the firm’s advantages and weaknesses and to check whether its potentials within the particular industry are significant or not. Moreover, the relationship between the firm and its contractors is reviewed and evaluated; measures are also suggested so that the above relationship to be improved, as possible, taking into consideration the current market conditions and the resources available. It is concluded that, currently, the performance of the organization is characterized by a series of failures; the introduction of certain policies, as suggested below, can help the organizational performance to be improved, even in the long term. 2. Draper Engineering – SWOT analysis – improvement of weaknesses 2.1 SWOT analysis In order to understand the current status of the firm in terms of its performance, it would be necessary to develop a SWOT analysis. The specific technique helps to identify a firm’s strengths, weaknesses, opportunities and threats. The advantage of the specific technique is that its elements are not standardized – only their classification in the four above categories needs to have the particular format (Analoui et al. 2003). Otherwise, a variety of organizational characteristics and elements can be included in the specific analysis – depending on the information provided by the organization and the market conditions, which can lead to different assumptions on a firm’s potentials for growth (Burtonshaw-Gunn 2009). For instance, for a specific organization, outsourcing can be a competitive advantage (when the technology used by the firm’s partner is significant and the increase of the firm’s productivity is important); however, for another firm outsourcing may be a weakness, when the contribution of the contractor in the increase of the firm’s performance is quite low while the costs of outsourcing are high. From this point of view, the SWOT analysis of Draper Engineering will be based on the information available but also on the expected performance of the firm in accordance with the current market performance – in other words, the potentials of a firm of this size within the specific industry would be considered as a standard – minimum – of performance which the firm should reach. If it is proved that such performance is not achieved, then the causes for this outcome will be identified and evaluated. The SWOT analysis of the particular organization could be developed as follows: a) Strengths The firm operates in the automotive and transport industry, a sector with many perspectives, if taking into consideration the level of the use of its products in markets worldwide. Moreover, the products of the firm are not quite common in the market; in accordance with the case study the firm focuses on the production of ‘drive shafts and track rods’ (case study, p.1) for the particular industry. This means that the firm has two significant advantages: it is part of an industry which has an important presence in the global market and it focuses on products which are not common – referring to the difficulty in identifying firms that activate in the specific sector. It is further derived that the firm has an advantage towards its rivals in the automotive industry. However, its potentials to achieve a high performance will be depended on its weaknesses and threats; on the other hand, the opportunities of the firm, as a member of the particular industry, need to be taken into consideration in order to decide on the improvements that are required on the firm’s strategies and practices, so that the performance of the firm within its industry to be standardized at high levels (DuBrin 2008). b) Weaknesses The fact that the firm operates in a sector which is high competitive, as explained above, cannot establish an advantage for the organization. The reason is that the operations of the organization are characterized by a series of failures, which can be regarded as the firm’s weaknesses and which can be analyzed as follows: b1) the firm’s existing customer base is quite limited; in accordance with the case study, the firm’s current customers are just six; this number is quite low, being a barrier towards the potential development of the organizational performance, b2) The firm has been improved the technology used in the production process aiming to increase the quality and the volume of its production (case study, p.1); however, it is noted that the above target has not been achieved. It is explained that the relevant systems have remained inactive, not being able to operate properly until today. The above fact has the following implications: the firm invested a significant amount of money on this technology; this means that it was expected for this technology to pay back its cost. Since the expectations of the firm’s managers regarding this technology were not met, a problem seems to exist regarding the funds invested: will this investment be paid back or it should be considered as a loss? In the meantime, the firm’s production needs, referring to the production of products of a specific quality and volume, have not been served. This means that the emergent need for technology appropriate to support the specific organizational process (the production process) has to be addressed. The organization is expected to face a severe financial pressure for responding to the particular need, b3) the production level of the organization is not standardized; in fact, during the last 5 years, a continuous decrease has been identified in the staff turnover, a problem which needs to be resolved in the order for the performance of the firm to be improved; the causes of the problem are not clear – taking into consideration the fact that employee loyalty to the organization is high; b4) cooperation and co-ordination among staff are not satisfactory; this is problem identified mostly in the project engineering department of the organization but it could affect all organizational sectors; for this reason, the specific problem should be addressed the soonest possible ensuring that it will not lead to permanent organizational damages, b5) in the maintenance department also, a lack of communication and co-ordination has been identified; in the specific department, employees do not recognize the power of the Engineering Maintenance Manager to monitor the progress of project in the above department; instead, the employees report the progress of their work to the shift manager, ignoring the role of the Engineering Maintenance Manager as a supervisor on their work; the above phenomenon has led to severe conflicts among employees in the particular department. The above problem should be taken into consideration when updating the structure of the maintenance department is updated (question 2) in order for its efficiency to be increased, b6) the choices of the firm regarding its contractors can be characterized as quite disappointed; the first of its contractors, Hardy Logistics Ltd, has failed to meet deadlines regarding the delivery of the projects assigned; as for the firm’s other contractors, the Bang IT and the Bend IT, these firms also showed severe delays in completing the assigned tasks on time. Suggestions for improvement of the above weaknesses are indicatively presented in the section 2.2 below. c) Opportunities The firm’s opportunities within its industry are closely related to the effective handling of the organizational weaknesses – as described above; otherwise, the firm will not be able to be benefited from the opportunities of the particular industry. These opportunities could refer to the following issues: a) limitation of the competitors in the global automotive industry – as a result of the crisis; only firms which are able to face the market pressures will manage to keep their position in the particular industry, b) in the same context, the firms operating in the same sector – production of drive shafts and track rods – with the specific organization will manage to survive; if the firm’s weaknesses are improved, as suggested below, then the firm will have to chance to stabilization its position in the particular industry having to face limited competition, in the context described above. d) Threats In addition to the issues discussed in the previous sections, the firm has to face a series of threats: the financing of the firms operating in the particular industry – as also in other industries worldwide may be further limited under the influence of the global crisis; such perspective would cause severe organizational problems, taking into consideration the investment of the firm on the technology used in the production process – an investment which has been proved a failure, at least up to now. Moreover, through the increase of competition across industries worldwide, it is possible that the firm’s current competitors manage to improve their performance – standards of production, a fact that would result to further pressures for the particular organization. 2.2 Improvement of weaknesses As noted above, the firm’s current performance face severe delays mostly because of a series of organizational weaknesses – which have been analyzed above. Measures would be introduced for the improvement of these weaknesses, so that their (negative) effects on the organizational performance to be minimized. Five of these weaknesses have been chosen as a basis in order to suggest measures that could help the organizational performance to be increased: a) the increase of the firm’s customers would require the introduction of a series of appropriately customized marketing strategies (Finlay 2000); currently, no marketing plans seems to be incorporated within the organization’s strategic framework – as indicated through the case study. The firm could employ a series of effective marketing strategies, for example newsletters, offers for loyal customers, publication of advertisements in the media or the press, in accordance with its financial potentials (Gilligan et al. 2009), b) the failure of the technology currently used in the production process could be addressed as follows: the firm should proceed to an arrangement with an IT developer; the tuning of existing (new) technology should be attempted at a first level; if such effort would fail, then the replacement of the technology with new one should be decided. The costs related to the particular project would be reduced through the following plan: an arrangement should be made with the providers of the firm’s new production systems – on the basis that these systems have not performed as expected; the providers of these systems should provide the firm with new systems – appropriate ones, in terms of the firm’s production needs – reducing their cost in accordance with the amount paid for the firm’s current systems – which are inactive; c) the low level of the firm’s staff turnover is a significant problem for the organization; the fact that employees are loyal to the organization has not helped towards the avoidance of this problem. This fact reveals the following issue: employee motivation in the organization is low; employees are not given the necessary incentives so that to keep their performance at high levels (Griffin 2007); they may be loyal to the organization but their willingness to perform well is quite limited. For this reason, measures should be taken for increasing employee motivation in all organizational departments – mainly in the production sector where the particular problem is emergent. Such measures would include: c1) introduction of monetary and non-monetary rewards for employees (Kaufman 2003), c2) introduction of a performance-based pay system and c3) differentiation of compensation at various levels of the organizational hierarchy; such policy would urge employees to increase their performance in order to improve their position in the organization so that their benefits in the workplace to the be significantly increased (Morrill 2007); d) the lack of coordination and cooperation within the organization, another weakness of the firm, would be addressed by updating the firm’s existing HR strategies; the allocation of tasks would be based on specific criteria: the skills of employees and their ability to participate in the tasks developed in each organizational department. The hiring process should be also differentiated: the teamwork capabilities of a candidate would be set as a criterion for his entrance in the workplace. Finally, the internal organizational structure should be reviewed; a network structure – instead of an hierarchical order – would help the cooperation within the organization to be increased (Stahl et al. 1997); e) the refusal of employees to comply with the organizational rules – including the organizational hierarchy regarding the development of the firm’s operations – should be considered as a reason for the dismissal of the employees involved – at least after a warning to these employees in order to comply with the firm’s rules related to the organizational hierarchy; reference is made to the hierarchy not as an order of positions within the organization but rather as the role assigned to each employee, a role which should be respected by the other employees across the organization. 3. Analysis of the way in which Draper’s could re-organise the maintenance department to improve efficiency. Currently, the firm’s maintenance department under – perform. Its update would help its performance to be enhanced. The update of this department would focus on its restructuring. The new structure of the firm’s maintenance department could be as follows: Maintenance Department Routine Maintenance Design Project Engineering Development Engineering Fabrication Site Services Through the above structure, time spent on arranging the development of tasks would be reduced: the Routine Maintenance Department and the Project Engineering Department would be set at the main departments through which the activities of the firm’s other maintenance department would be monitored and managed. 4. How Draper’s should deal with Bang IT and Bend IT in order to improve the performance of this contractor. The performance of the above contractor would be improved through the following strategies: a) new arrangements should be made regarding the compensation of the contractor; its fees would be increased but only under the terms that the project would be completed on time; otherwise, a term for the elimination of the contractor’s fees would be applied, b) a performance-based reward would be included in the new contract – referring the contract signed between the firm and its contractor; in this way, the motivation of the contractor to complete the project on time would be increased, c) at the same time, the firm should try to locate other contractors which would be available in case that another failure is identified on the cooperation between the firm and Bang IT and Bend IT, d) a deadline should be set to the contractor for entering the new agreement, otherwise a breach of the contract would be initiated – in favour of Draper Engineering, e) in any case, the level of compensation in cases of breach of the terms of the contract – one or more of these terms – would be increased; in this way, the above contractor should try harder to meet the requirements of the contract; as a result, the firm’s exposure to relevant risks would be decreased. 5. Conclusion The development of firms in the global market is a challenging task; the size of a company is a decisive factor in order to evaluate its potentials for further growth – taking into consideration the high competition in all industrial sectors. The firm under examination has a limited customer base – just 6 customers. This fact has been considered as the most important of its problems. However, this problem, as also the other weaknesses of the firm can be effectively addressed by adopting a series of strategies, as indicatively described above. In this way, the chances for organizational growth can be significantly increased. In the long term, the stabilization of the firm’s performance will be depended on its ability to limit its weaknesses – compared to its strengths, in the context explained above. References Analoui, F., Karami, A. 2003. Strategic management in small and medium enterprises. Belmont: Cengage Learning EMEA Burtonshaw-Gunn, S. 2009. 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