The United States Postal Service - Reasons and Ways to Exit from a Continuing Financial Crisis - Case Study Example

March 23, Management Styles Scenario: The United s Postal Service government entity has been on the unfavourable net loss decline for the past few years. During 2010, the government entity generated the unfavorable $13,873 million net deficit. During 2011, the same government entity produced the unfavorable $18,940 million net deficit, higher than the prior year’s amount. During 2012, the government entity generated the unfavorable $34,846 million net deficit (USPS Postal Service, 2012). What can be done to bring back the government entity from its unfavorable net loss business operations to a profit –generating entity? Companies are normally formed to generate profits. Profits are arrived at generating revenues. The revenues must be high enough to recover the expenses of running the daily business operations of United States Postal_Service. The financial report affirms that the government entity, United States Postal_Service, failed to generate enough stamp sales needed to pay for the daily business operations (Epstein, 2011). Factors There are several factors leading to the United States Postal_Service net deficit picture. One of the factors is service. Currently, many people prefer to use the electronic mail to send their important messages. Using Gmail, Yahoo mail, and other electronic mail sites, individuals can save on post office mailing charges. With just a click of the mouse, the internet using individual can type one’s messages on the iphone, tablet, personal computer, or computer shop. Next, the same person can send the newly typed messages to the message receiver with just the click of the send button within the Gmail, Yahoo mail and other email service sites (USPS Postal Service, 2012). Another reason why people may prefer to use the electronic mail than sending their mails through the post office is the possibility that the letter or letter contents not reaching the recipient. One possibility is that the postman may steal the package contents. Another possibility is that the postman may deliver the letter or parcel to the wrong address. When this happens, the intended receiver will not be able to get the sender’s message on time (Epstein, 2011). Alternatives There are several alternatives to resolve the financial woes of the United States Postal_Service. One alternative is to increase the postage stamp prices. By increasing the stamp prices, the automatic assumption is that the revenues will increase. This alternative was implemented during the first quarter of 2014 (Mills, 2014). The United States Postal_Service increased the prices of its first class stamp price its new $ 0.49 cents price. The new price was $ 0.03 cents higher than the prior price. The new higher stamp price took effect on January 19, 2014. The new stamp price meant the one once stamps will raise the post office revenues by as much as $ 9.80. The United States government expects the new stamp price increase to generate the estimated $ 3 billion revenues starting 2014. The projected increase is expected to recoup the net deficits generated during 2010, 2011, and 2012. It is clear that the budgeted revenue amount is not enough to defray the operating expenses of United States Postal_Service. Managers and supervisors play an important role in the generation of the budget. The preferable budget requires reducing the amount allocated to operating expenses to eliminate the unnecessary or avoidable amounts. The United States Postal_Service department managers can retrench some of the employees. By reducing the amounts paid as salaries, the net deficit or net loss figure can be significantly reduced. By implementing a budget feedback mechanism, the entity can significantly reduce the amount allocated to electricity, water, and telephone expenses. By turning off lights in some unused areas of the post office, the amount paid for electricity is reduced (Nasser, 2011). Another alternative is to privatize the United States Postal_Service. Privatization means the government entity; United States Postal_Service will be converted from being a government entity to one that is owned by private persons. When this happens, the government will be able to stop the bleeding of the United States Postal_Service cash as well as cash equivalent amounts. The private individuals will implement ways to reduce or eliminate the possibility of generating net losses during 2014, 2015, and other coming years (Epstein, 2011). A third alternative is to offer electronic mail services. The post office will open an online website that prioritizes sending and receiving of electronic mails. However, the post office will institute a monthly membership fee for the service. In exchange, the post office ensures that the emails are free from relevant issues or problems. One of the issues or problems is hacking. The post office must implement the strategies needed to prevent hackers from accessing the email customers’ messages (Epstein, 2011). A fourth alternative is to offer online payment or cash transfer benefits to the United States Postal_Service current and future business customers. Under this strategy, management may offer a Pay_pal type money transfer service. Customers can send money through the United States Postal_Service online money transfer site. Similarly, individuals can receive cash from individuals sending money through the United States Postal_Service paypal type online services website. Similarly, the United States Postal_Service must ensure that the customers using the money transfer services of the post office will not be hacked. Hackers often try to discover the passwords of the email owners. Once the hackers know the username and password of the email owner, the hacker can use the information to steal money from the victims (Epstein, 2011). Another strategy is to improve the competence of the line and staff employees. Competent employees must be both efficient and effective activities. An efficient employee is one who uses the least possible time to do a certain task. An efficient employee is one who uses the least possible expense or costs to achieve the assigned goal or objective. Seminars will train the employees to be more competent in their assigned United States Postal_Service jobs. By setting up_benchmarks, the employees are persuaded to increase their work outputs (Filippov, 2011). Another alternative is to merge with another profitable company (Lahovnik, 2011). The best merger partner is a company that offers mail-related services. Since the other partner has the same line of business, there is easy blending of functions among the employees of both merged companies. If the company merges with a company in another line of business, confusion may arise. Likewise, one company may not be able to share the same data with the other company. For example, the United States Postal_Service merges with a restaurant company. The customers of the United States Postal_Service may not like to dine in the merged company’s restaurant. Likewise, the current and future business customers of the prestigious restaurant may prefer sending their emails through the electronic mail and not through the snail mail alternative. Another alternative is to merge branches. A branch in one county may be forced to shut down. The shutting down will cause the retrenchment of a majority of the employees. Some of the employees of the closed branch may be transferred to the other branch. In short, only one of the two branches will remain in operations this way, the company’s net deficit will be reduced. In places where the mail volume is really low, three branches located close to one another may be reduced. The reduction may drastically include closing down the two branches. Only one branch is retained. The surviving branch will serve the mailing needs of the current and future business customers living within the vicinity of the two nearby closed United States Postal_Service branches (Epstein, 2011). Another alternative is to replace the regular full time employees with part time employees. Management will retrench the regular employees. Retrenchment includes giving the retrenched employees their separation pay. After the retrenchment is completed, the United States Postal_Service can start hiring some part time employees. The part time employees are made to report possible twice or three times a week. This way, the company is able to save on salary expenses (Epstein, 2011). Another alternative is to open the United States Postal_Service three times a week. This way, the company is able to save on operating expenses. The expenses of paying employees for reporting for five days can be reduced to paying employees for reporting only three times a week. The costs of turning the lights of the offices are reduced by at least two working days. Similarly, the cost of using the mailing equipments is lessened by the same two days. Likewise, the gasoline and other expenses of the trucks or vehicles used in the transporting of the mails from one community to another are reduced (Epstein, 2011). Another alternative is for management to strictly implement austherity measures. Austerity measures are acts that focus on not implementing activities that may increase the operating expenses. The expenses may be increased to unnecessary levels. Management must keep an eye on such expenses. Employees must be penalized for incurring excessive expenses. For example, the mail trucks must be reduced their task of delivering mails to another destination. The normal travel of the mail trucks of delivering mails to another branch or location once a day may be reduced. The new delivery schedule can be changed to the new once every two days schedule. This way, the gasoline and oil expenses are reduced by 50 percent (Epstein, 2011). Recommendation It is highly recommended that some of the alternatives be implemented. One of the chosen alternatives is to merge branches. One branch in the same community may be forced to shut down. The closing down of the other one or two branches will favorably trigger the retrenchment many employees. A handful of the employees will be transferred to the surviving branch. In short, only one of the two branches will remain in operations this way, the company’s net deficit will be reduced. In places where the mail volume is really low, three branches located close to one another may be reduced. The reduction may drastically include closing down the two branches. Only one branch is retained. The surviving branch will serve the mailing needs of the current and future business customers living within the vicinity of the two nearby closed United States Postal_Service branches (Epstein, 2011). Another recommended alternative is to replace a majority of the regular full time employees with part time employees. Management must retrench the regular redundant employees. The retrenchment will for the hiring of the part time employees. The United States Postal_Service can now hire a handful of part time employees. The part time employees shall be made to work for two or three days within one long busy perspiring week. A third alternative is to offer the paypal type online money transfer or online payment services (Epstein, 2011). Conclusion According to the above discussion, the United States Postal_Service is faced with a continuing financial crisis. The crisis is the decline in the demand for the snail mail services of the United States Postal_Service. The focus of the paper is to determine what can be done to bring back the government entity from its unfavorable net loss business picture to a profit –generating business entity. Several alternatives were given to resolve the net deficit issue. However, only three alternatives are recommended for implementation. Evidently, the question of resolving the United States Postal_Service financial deficit issue can be resolved by implementing the three recommendations. References: Epstein, M. (2011). Advances in Management Accounting. New York: Emerald Press. Filippov, S. (2011). Competence- Building in Foreign Subsidiaries. Journal for East European Management Studies , 16 (4), 286-314. Lahovnik, M. (2011). Strategic Fit Between Business Strategies in the Post Acquisition Period and Acquisition Performance. Journal for East European Management Studies , 16 (4), 358 -370. Mills, D. (2014, January 27). Postage Stamp Price Increase Takes Effect. Walnut Creek Patch . Nasser, M. (2011). The Impact of Managers Related Variables and Department Features on Budget Characteristics. International Business Research , 4 (4), 199-211. USPostalService. (2012). Progress and Performance Annual Report to Congress. New York: US Postal Service. Read More