Corporate Management - Assignment Example

?Management Table of Contents Table of Contents 2 Overview 3 Diagnosis 6 Planning 11 Implementation 14 References 16 Overview The paper talks about acompany into the industry of designing and manufacturing sportswear and equipments such as swimming costumes, surfboards and others, operating from China and distributing them in Singapore. It has been found that the company was affected by losses and missed the forecasts of revenues during the last two years. The company was further facing severe threats both from internal as well as external environments. External threats were those from its competitors and internally, they were resulting from the conflicts among various departments. For example, the sales department had pointed out that there was inadequate support from the marketing department and for this reason, poor sales had resulted. On the other hand, according to the Director of the marketing department, the design and quality of the product were the major causes of the problem. In order to deal with the problems, a restructure plan was required to be formulated which would best suit the company. The following restructure model can be used: Source: 1 Chinese Apparel Industry Facts From the year 2003, there has been an increase in the market size of the Chinese apparel sector from USD 47,194 million to USD 78,459 million in the year 2009 at a CAGR of 8.8%. In the year 2009, there was a sharp decline in growth rate, where the market slumped due to economic chaos. From USD 95,540 million in the year 2008, the market declined to USD 78,459 million in the year 2009, which was estimated to be a decline of 17.9% of growth2. Diagnosis Internal Analysis of the Sportswear Company in China There were multifarious reasons that led the sportswear company in China to suffer losses such as lack of support from the marketing department and poor design and quality of the products. The departments of the company lacked cohesion amongst themselves and due to this lacuna, problems in effective communication also aroused. The personnel were interested in blaming each other but did not bother to sort out problems cohesively and viewed “resignation” as an effective solution to the problems. External Analysis of the Sportswear Company in China Political: The sportswear company in China is required to be aware of the country’s political environment. They should be aware of different rules and regulations imposed by the government including the taxation policy. Since the Sportswear Company in China is itself manufacturing the products, there is possibility of unfavorable changes in political and trade relations between Singapore and China. The political instability in China, increase in labor costs, or unfavorable weather conditions could considerably get in the way of the production and the shipment of the products of the company, which would in turn affect their operations and financial results. Economic: The sportswear company is also affected by the economy of the country. The stability of interest rate in the country is also a significant factor which can have an impact. A high rate of interest will result in the fall of demand of the product making the borrowings expensive and savings attractive. On the other hand, a low rate of interest leads to increase in the inflation. The company should also take the tax into consideration. Mainly the taxes are of two types namely direct and indirect. Direct tax cannot be avoided and it affects the personal disposable income. People can avoid Indirect tax such as VAT by not purchasing the products. The high rate of interest in China has led to the fall in the demand of the products in the last two years thereby resulting in the losses for the company. But with the improvement in the living standards of the people of China and also changes in their consumption level, sportswear companies are becoming popular among the people, thereby enhancing the businesses of sportswear manufacturing companies in China. Social: The company should also take into consideration the different social backgrounds of the people such as their race, religion, culture, gender, education levels, lifestyle and buying habits. It should then design their products accordingly maintaining the quality and meeting the requirements of the people at the same time. Technological: The advances in the technology such as machinery, affect the sportswear company. It is, therefore, required that the company be tuned with the new technology in order to speed up the production, cut down the labor and save energy. If the company fails to take the technological advances into consideration, they will move out of the business as the other firms will take the advantage of the same. Internet is gaining popularity in China with many people using it everyday. Environmental: The raw materials required for the sportswear company in China for manufacturing their products are actually taken from the animals. The company needs to search for substitute raw materials to manufacture their products, thereby reducing the harm to the animals and at the same time cutting down the costs. China has poor working conditions for their employees and low pay as well. This is not a good sign for the company as this leads to bad publicity preventing the people from buying their products. Therefore, the company should increase the wages of the employees and at the same time stimulate the working conditions. Legal: The company should be aware of all legal aspects as they could be imposed heavy fines if they fail to comply with the laws. The company should obey the Trade Descriptions Law which means that the company cannot make false advertisements of their products. The company should also follow the Sales and Supply Act, which prevents the organizations from exploiting the customers3. Along with the exceptional growth of the sportswear companies in China, it is found that the competition is also becoming more intense. Large Multinational Corporations with popular sports brands are making their investments in China. After the entry of China into WTO, the barriers of the market have reduced. The company does not only compete with one single company but there are several competitors such as Nike, Reebok, Adidas, Kappa, Puma, Peak and others. SWOT Analysis of the Sportswear Company From the prevalent scenario in the sportswear industry in China the following are the strengths, weaknesses, opportunities and threats of the company. Strengths: The sportswear company in China manufactures and designs the products in the country itself. They do not have to depend on outsiders for their products. There is easy availability of the labor in the country. Weaknesses: Poor working conditions and low wages to the employees can lead to bad reputation for the company, which can prevent the people from buying their products. Furthermore, poor design and quality of the products can affect the buying behavior of the people. Opportunities: The company can look to produce the sportswear products from the manufacturing waste and can also emphasize on the corporate marketing strategy. These aspects can provide them potential for growth. Threats: The company might face threats from the competitors such as Adidas, Lining, Kangwei, Anta, Xtep, Gweat, Reebok, Converse, Nike and Puma. Large multinational corporations with popular sports brand make their investments in China4. The primary elements of competition in these markets comprise of product functionality, brand awareness, quality, design, customer service, pricing, distribution and marketing. Planning In a business environment that is highly competitive, planning based on forecast is not sufficient for the business to prosper and survive. The sportswear company must engage in the strategic planning which clearly defines the mission and objectives assessing both the external and internal situation in order to formulate and execute the strategy. Finally, they should assess the progress and make the necessary adjustments required in order to remain on the track. Corporate Mission and Objectives: The aim of mission statement is to illustrate the business vision of the company including the use of the firm’s resources as well as ‘forward-looking visionary goals’ that would act as a guide for persuading the future opportunities. With the help of the business vision, the leaders of the firm can define the quantifiable strategic and financial objective. Strategic objectives are mainly concerned with the business position of the firm such as reputation and market share. Financial objectives are concerned with the earnings’ growth and sales’ target. The sportswear company in China should set a mission of recognizing that the satisfaction of the customers is vital for succeeding and should strive to design and deliver the products of high quality to their customers. They should also support the success of their employees and conduct their operations prudently in order to ensure that sufficient resources and financing are available necessary for achieving the objectives of the business for future growth5. Objectives: The sportswear company in China should recognize that they must set up concrete goals to help the management in determining whether the company is attaining its objectives or not. For the purpose of ensuring successful implementation of the goals of the company, the following objectives should be kept in mind: With the help of debts and investment strategies, the company should secure the start-up fund and the subsequent funds The company should establish the sales and marketing initiatives in order to expand the company’s sportswear line Generate strong sales revenue in the coming three years Reinvest the profits generated for the growth of market share Create, take care of and enhance the relationships of customers through opportunity and problem awareness Strategies to be adopted by the Sportswear Company in China The company should adopt a strategy of maintaining a globally diversified, flexible and a low cost manufacturing unit. The company should contact the third-party manufacturers in order to produce certain sportswear products or provide support to the company’s internal process of production. It is believed that the internal manufacturing operations of the company will enable it to make rapid changes in the production, providing the company with flexibility to respond quickly to the demands of the people throughout the year while outsourcing would enable them to make profit from the efficiencies and cost benefits of using contracted manufacturing services. This strategy will help the company in reducing the production costs, increasing overall operating efficiencies and cutting down development and production times. The company should also adopt the integration strategy which means that it should be its own supplier in order to reach and distribute their products to outbid its competitors. This will help the company to maintain leadership position in the market. The company should also adopt the development strategy by producing new product lines, for example, making special women sneakers. Tactical planning: The company should also go for tactical planning in which the strategic plan is broken down into short-term and specific plans and actions6. They can appoint Human Resource Manager to manage internal conflicts arising between sales and marketing departments. Implementation Action Plan: In order to implement the strategies, the company should design various information systems for the purpose of supporting a number of areas of the business, including order management, retail point-of-sale, warehouse management and internet point-of-sale along with various other systems that provide interface between these systems and reduce the conflicts arising in various departments. These systems intend to aid in streamlining the company’s operational processes and getting rid of certain processes that are done manually. The company should focus on designing and delivering the products of high quality and reasonable cost which in turn will help the company to increase its sales revenues. The company should design their products that are highly collaborative by allowing the design team to meet frequently with the supply and production managers, marketing and sales people in order to further refine their products and prevent conflicts among the different departments thereby meeting the needs of the target customers. The company should increase the wages of the employees and improve their working conditions including compliance with the applicable environmental, labor and other laws prevalent in the country. They should speed up the production, cut down the labor and save energy by using the latest technology in order to meet the requirements of the customers in time. Unique sportswear designs, price of the products, expanded product-line, brand awareness and distribution network will enable them to position themselves well in the market place and increase their sales revenue. Since the internet is becoming popular and the people are making purchases through internet without moving from one shop to another, the sportswear company should keep up-to-date with all these advances. They should continuously monitor the progress. Thus, an efficient and effective formulation as well as implementation of strategic planning will lead to the growth of the company enabling it to make profit at the same time. The sportswear company in China should launch its own brands and discover a suitable market position to make possible coordination on all levels and accomplish common development. The company should also strengthen its technological advancement as well as develop new products and technologies in order to win the market with better quality and at the same time, satisfying their customers. References Business Coaching Executive, No Date. “Tactical Planning”. “Home”. http://www.businesscoachingexecutive.com/tactical-planning Business Teacher, No. Date. “SWOT Analysis of Nike, Inc”. “Business Resources”. http://www.businessteacher.org.uk/business-resources/swot-analysis-database/nike-swot-analysis/ Business Wire, 2011. “ Research and Markets: China Apparel and Footwear Market - Sportswear Leading the Demand in Market”. “News”. http://www.businesswire.com/news/home/20110408005577/en/Research-Markets-China-Apparel-Footwear-Market-- Deakin, L., No Date. “Pestle Analysis”. “Marketing”. http://www.google.com/url?sa=t&source=web&cd=6&ved=0CEQQFjAF&url=http%3A%2F%2Fwww.digitalbrain.com%2Fknhluked98%2Fweb%2FUnit%25203%2520-%2520Marketing%2FPestel%2520Analysis.doc&ei=f9DATYCxO8OqrAeE1KnsAw&usg=AFQjCNH-eDIm13zk05QuMb-01mVvBckZ9g Kriemadis, T. & Terzoudis, C., 2007. “The Proposed Strategic Marketing Planning Process for the Sport Sector”. “Strategic Marketing Planning in the Sport sector”. http://www.choregia.org/3.pdf Palo Alto Software, 2011. “Mission”. “Objectives”. http://www.bplans.com/family_clothing_business_plan/executive_summary_fc.cfm Read More