Economic Downturn Hits Oz clothing - Essay Example

?Economic Downturn Hits Oz clothing Introduction: Oz clothing, a manufacturer of clothing in Australia is facing serious threats to their operation in the business due a variety of internal problems and also due to the policies incorporated by the Australian government. The organization cannot withstand the competition from the foreign competitors in the market and is facing a threat for existence. The Industrial relations and the practice maintained by the organization were poor in nature and are adding up to the resistance in the process of revival. The importance of Industrial relation has been highlighted over here and efforts have been made to identify that how the success of various elements and process in the organization depends on the proper alignment to the Industrial relations. The impact of the policies of Industrial relation on the employees helps to have a clear understanding on the motivation of the employees. The employees and the laborers of the organization are a prime part and contribute a lot to the organizational success. The organizations should provide proper care and maintain their responsibility towards them by framing policies in line with the industrial relations. In matters of Oz clothing the paper critically analyzes both the internal and external set of problems and provides suggestions in matters of strategic planning of the organization. New set of business objectives are recommended which are in close adherence to the policies of industrial relation and the impact of the objectives on the stakeholders are also considered. An assumption is also held regarding the operation of the organization in the past and how the previous strategies of the organization might have an effect on the policies and practice of Industrial relations. The problem with Oz clothing The overall problems of OZ clothing can be segregated into two factors, internal and external. The internal factors denote the set of issues which are present within the organization and prevent the organization to reach its desired goals, and the external influences are the factors outside the organization which prevents the cause of the organization. The overall impact of the influences of both the factors are providing a tough time for the business. Internal influences: The primary problem which Oz clothing is encountering is the inability to compete in the market of Australia. The primary reason for the failure of the organization can be contributed to lower productivity which has occurred due to the adoption of obsolete technologies used by the firm. As a result of the use of the obsolete technology an overall increase in the price of the products per unit is also increasing. The company is facing serious issues with the process of manufacturing. The increase in cost of the manufacturing is also associated with the high amount of labor costs. The process of effective utilization of labor is absent in the company and thus labor has emerged to be a factor of high cost for the company. The skills of the labors in the production department are also under question. The organization also faces serious issues with the line of products they deliver to the customers. The organization generally deals with underwear as their commodity product. Customers believe that their products are not original and are also not fashionable. In view of the perceptions from the customers; the retailers are canceling the orders of the products. The products are also highly priced than the competitors and it is also acting as a major cause for being unpopular in the market. The product designing team of the organization has not brought any innovation in the design or the quality of the products and has failed to satisfy the needs of the customers. The absence of fashionable products in their product line has also been a major cause for the customers easily falling to the low priced products outsourced from China. The organization also has low source of capital and this further prevents them to opt for the new technologies or look after alternatives which involves huge amount of investment. The overall marketing techniques of the organization have also been in question and the marketing professionals are not trying out new ways to capture the market or attract the customers towards the products. Niche marketing skills is absent and it is becoming significant for the failure of the organization. External influences: The rise in threat for the operation of the Oz clothing is mainly due to the threat of the products from China. The products which are imported from China are far more fashionable, high in quality and involve low cost. The internal problems in the organization are preventing the organization to handle the issue effectively. Oz clothing is an organization which is based in Australia and the economic downturn faced by the country has also forced the government to implement certain policies which had harmed the cause of the organization. Owing to the recession, the organizations had to pay an increased amount of corporate tax and all the associated subsidies have been rose which has resulted in the overall increase of the cost for the organization. The organizations also have to pay extra amount of cost for every personnel recruited by the organizations and the government had passed the circulation to the organizations so that they do not resolve to the process of employee attrition, in order to maintain balance in the economy. The government of Australia has also changed various regulations in the Industrial regulations which have strengthened the cause of the Labor unions and have resulted in the increase of the overall cost of the organizations. The governments have increased tariffs on a regular basis and hardly taken any steps to promote the local market from the Chinese competition. The impact of the increased burden on the debt system in Australia has in fact forced the government to adopt such measures. The newly incorporated industrial relation by the government has made provisions to protect the interest of the workers in a large extent. It has forced the organizations to implement minimum ten employment conditions and increased the protection of workers from any sort of unfair dismissals from the organizations. The reformed industrial policies have also increased the bargaining power of the low paid workers and provided the workers with the right to request the management to provide them with flexible working arrangements (Workplace legislation, n. d). Based on this laws and regulations, the Oz clothing also could not adopt the policy of increasing the work pressure of the employees or decrease their wages and remuneration or simply reduce the employee strength. The strengthening of the unions will also create a barrier on the outsourcing plan of the organization as massive resistance will be raised by them. The government will also raise their voice against any mass sacking measures opted by the organization as it has invested millions of dollars in the industry and the mass sacking will lead to the rise of the unemployment in the country. The external forces are harming the overall cause of the operation of the business of Oz clothing and are harming their revival process. Strategic business objectives of Oz clothing: The present problem which Oz clothing is facing can be attributed to their overall strategic business objectives which the organization might have followed in the past. In the past Oz clothing might have simply formulated their business objectives without incorporating any strategic plans. The organization might have just started their business in order to gain profitability but no short term or long term planning was framed. Absence of effective strategy can be observed in each area of the business starting from the production stage till the marketing and the selling of the goods. In the past the organization has focused on the production of large volume of products so that the sale of a huge volume of products will provide them with a lump sum amount of profitability. In order to raise capital for the business, the organization took huge amounts of loans without careful analysis of the projects in which they have invested their money and ultimately their project failed , and the economic condition of the organization degraded considerably. In matters of recruitment of the employees, the organization recruited huge number of unskilled labors and failed to utilize them in the best possible way. Absence of proper training to the employees was indeed one of the prime causes for labor under utilization. The organizations policy to provide inadequate training to the employees was a cost cutting measure which had given rise to adverse consequences for them. Oz clothing also did not maintained any flexible relation with the labor unions and there was no effective communication between the either sides. In matters of setting up business objectives, the organization implemented policies without much concern regarding the industrial relations. The marketing efforts of the organization also were poor as the objectives of the organization never aimed at becoming a market leader and never aimed at establishing themselves as a brand. As a result not much of effort was put by the organization in order to capture the market by the innovation in their product designing or conducting a market research on the taste and preference of the organization. The business objectives of the organization focused on a particular margin of profit, and the organization had to set the price of the product in such an extent which can reap that amount of profit. However it was observed that the competitor’s price was much lower than the price offered by Oz clothing and the organization was put out of the competition. The objectives of the organization also did not maintained any provisions for the benefits of the employees as it only focused on the profitability. The overall objective of the organization has some pluralistic perspective and this has often led to the conflict of the management and the workers (Pluralistic-Perspective, n. d). Strategic objectives and Industrial relations and practice: The strategic business objective of Oz clothing had an implication on the industrial relations and practice maintained by the government of Australia. As the strategic objectives of Oz clothing had revealed that the organization may have always maintained their focus over their profitability and the cause of the employees have been overlooked significantly. In matters of industrial relations, the key elements of the system comprises of employees, employers and the government (Gospel & Palmer, 1993, pp.265-266). The management or the employers in the organization plays a crucial role in maintaining proper relation with the employees. The management of the organizations affects the interest of the workers significantly by exercising their power to relocate their units, cut down employee strength and to introduce other technological changes within the organization. The policies of industrial relation aim to avoid the conflicts based on these issues by the mutual understanding between the two parties. In the case of Oz clothing, the overall relation between the employees and the management was not that strong in which an amicable result would have achieved in case of any disputes within the organization. The worker in the organizations always aims at improving their working condition and wants to take part in the decision making process of the organization. However Oz clothing always had exhibited low level of concerns for the employee and this have significantly harmed their industrial policies of the labor market. The government is another crucial player in the Industrial policies and as the organization also did not maintained any communication with the government, so it has provided no scope for them to discuss the implications of the new policies with the government and ask for any moderation of the policies. The poor adherence to the industrial rules and regulations by Oz clothing has harmed their cause. In view of the problems which Oz clothing has been facing, the organization can adopt some policies which could have provided some respite to its turmoil situations. The utilization of the labor and the employees in an effective way or transferring their production unit to China would have made it competitive in the market but the poor relation with the employees will lead to the mass conflict and act as effective barrier to the process. The help from the government in matters of decrease of the tax rate or the subsidy could also have been significant, but the opportunity to access the government virtually does not exist for Oz clothing. Thus the overall policy of gaining profitability has disrupted the adherence to the industrial policy and is causing sufficient problems for the organization. Recommendation of new strategic business objective for Oz clothing: The strategic business objective of Oz clothing was narrowly focused with the prime concern for seeking profitability for the organization. The organization should implement a business objective which should enable Oz clothing to continue its business operation effectively for a long period of time and effectively handle the obstacles which may arise in the future for them. The business objectives should be specific and goals should be quantifiable which should be developed at all levels of the organization. The goals or the objectives set by the organization should be challenging enough. Besides setting up the strategic objective of the business Oz clothing needs to set up an effective communication between different levels of the organization. After the alignment of the objectives to different levels in the organization, the objectives of the organization should be made clear and understandable to every employee in the organization. A common objective should exist among all the employees of the organization so that every employee become aware of the priorities and should know what is required out of them. It also encourages the process of employee participation of the employees in a better manner. In matters of strategic business objective the organization should set a target of sales every year and that would help them to attain their desired profitability without much difficulty (Information: Strategic Business Objectives, 2007). The organization should also aim to achieve world class quality of their product and should focus on meeting the customers demand through innovation in their product and analyzing the latest trend in the fashion market. The organization should adopt the objective of cost saving in their overall business without hampering the cause of the employees. Oz clothing should also understand the roleof the employees and the laborers associated with production process and provide a major focus towards them in the new set of strategic business objectives. The objective of the organization should focus on reaching the desired target by the active involvement of the employees and benefitting them to the fullest. Oz clothing should also focus on their corporate social responsibility as a part of the business objectives and this in turn would be efficient in satisfying the government to a major extent. The strategic objective of the organization should focus on ways to make it more competitive in the market and should enablethe organization to participate in the competition which has emerged in the market. The business objective needs to be set in a manner so that the employees have faith in the operation of the organization and they also believe that the organization is striving for long term goals and feels motivated to provide their own efforts. The strategic business objectives of Oz clothing need to be culminated with the HR objectives in the organization. The behavior of the employee can be modified accordingly and the HR should implement the own set of guidelines over them by exhibiting efficient qualities of leadership (Jackson, et al, 2011, p.129). Effect of new policies on Industrial relations: The implementation of the new strategic objectives will be significant enough in the maintenance of the policies and regulation of the industrial relations. The recommended objectives of the organization will provide the scope to the employees to address their problems to the management of Oz clothing. The employee’s problem will be addressed through the process of collective bargaining and the mutual agreement between the management and the union of employees of the organization. The mutual cooperation between the employees and the management will help to create an environment of industrial democracy within the organization. The presence of the industrial democracy in the organization will in turn motivate the employees to provide their best effort for the overall growth of the organization and will help them organization to meet the primary aims of the business. .The new set of strategic objectives recommended will also generate good industrial relation in the organization and will result in the increase of efficiency of the employee and the laborers in the organization which will provide higher productivity to Oz clothing. The overall morale of the workers will be increased and this will in turn help the organization in the long run. The overall protection and promotion of labor laws willalso increase the welfare of the labors and will be detrimental in protecting the interest of all the parties in the Industrial relations against the unfair practices. The objectives of the industrial relations will be attained by the new set of corporate objectives of Oz clothing. The employees will be developed to adapt themselves for any kind of changes within the organization which can be in the form of technological, economic or social change. The employees will be provided with better working and living conditions as the new set of objectives of the organization will also compel the management to be concerned about the perspective of the employees, which is another objective of the organization. If the recommended strategic objectives are implemented by Oz clothing, it will also lead to the constructive contribution of the trade union present within the organization and will help the top management of the organization in providing effective solutions to any sort of obstacles which the organization faces in the operation in future. The overall economic development of the country which is another objective of the policies of industrial relation will also be attained if the strategies are implemented and Oz clothing manages to gain profitability by capturing a considerable portion of the market (Wooden, 2000, p.2). Overall the new set of strategic objectives will have a positive effect on the on the policies and practice of industrial relations and will also in turn help the organization to revive its condition. It has been observed that the recommended strategies of Oz clothing has been suggested based on the guidelines of the policies of industrial relations and thus the importance of industrial relation has been signified in the case of Oz clothing. Benefits of Stake holders from the new objectives: The new set of strategic objectives recommended is expected to help the organization in its progress and various stake holders associated with it is expected to be benefitted from the correct implementation of it. The stake holders who will be benefitted from the policies are the top management, the shareholders, the employees in the organization and also the government. The adherence of the policies will lead to the establishment of the harmony in the organization and the employees of the organization will be motivated to deliver their best and the laborers will not feel the pressure of the extra work which the management of the organization may demand to raise productivity. The marketers will innovate the product design and quality based on the customer demands and this will help the organization to compete with the Chinese products in the market of Australia. Even if the organization decides to transfer some part of their production to cheap labor market, it will not receive any obstruction form the labors or the workers union. The sales of the organization will rise and will make the top management of the organization happy as their primary goals will be met. The expected increase in the value of the market share of Oz clothing will also make the shareholders of the organization happy and they will have nothing to complain. The policy recommended being in close connection with the practice of industrial relation will also protect the cause of the employees. The employees can raise their demand to the organization via the union and reach at a settlement with the help of collective bargaining process (Bean, 1994, p.74). They can claim for an increase of salary and ask for favorable working conditions to suit their needs. Under the present corporate objectives, the organization will treat the employees as asset and would be much more responsible towards them. The employees of the organization also would not have to worry about their future in matters of carrier as the management of the organization just cannot be eliminated without any valid reasons. The new policies of the organization also will help the overall economy of the country and the Australian government will also be satisfied based on the progress. If Oz clothing manages to gain a considerable portion of the market share, in respect of the Chinese competitor, it will also add a vital portion to the Australian economy and the implementation of the policies of industrial relation will also mean that Oz clothing just cannot eliminate or dismiss the employees, which would otherwise have increased the unemployment level of the organization. The strategic policy will also help Oz clothing to establish their business in Australia and in the future it may look to add more value to the country and help Australia to revive the economic turndown which the country is facing in the recent times (Jackson, 1982, pp.69-72). Oz clothing may also enter into an alliance with the Chinese competitor and enhance the bilateral trade agreements between both the countries. Conclusion: The study of the case of Oz clothing highlighted the issues of the organization which has prevented it from gaining operational excellence. The organization had problems in the overall strategic objectives and the planning of the organization. The prime focus of the organization was to attain profitability, but effective planning was missing from the perspective of the organization in order to attain the objectives. The situation of the organization was further worsened by the change in the policies of the industrial relation by the government. The Chinese products were becoming immensely popular in the market and Oz clothing was lacking in resource from all the sectors to make a firm stand in the market. The careful investigation of the case reveals the fact that the operational objective of Oz clothing was also not in adherence to the policies of the industrial relations and as a result the organization faced difficulty in manipulating the employee and the unions to act according to the situation and incorporate few policies like outsourcing the production process or utilizing the employees and laborers to perform more than their desired limit. Such steps also would have raised opposition from the political parties owing to the laws pertaining Industrial relations and the huge amount of investment made by the government in the industry. Various recommendations are provided regarding the strategic objective of Oz clothing and the recommended strategies are in adherence to the policies of the industrials relations. The adherence of the strategic objective of the organization to that of the policies of the industrial relation will help to create an environment of industrial democracy within the organization and will motivate the employees to perform better. The overall satisfaction of the employees will also be increased considerably owing to the support from the management and they will be motivated enough to deliver their best for the organization and willadjust to the changes. Thus the overall strengthening of the employee commitment will enable the organization to restore back its position in the market and will benefit the associated stakeholders. References Bean, R. (1994). Comparative industrial relations, London: Routledge Gospel, H, F & Palmer, G. (1993). British industrial relations, London: Routledge Information : Strategic Business Objectives. (2007). available at http://www.bmpcoe.org/bestpractices/internal/mdwes/mdwes_22.html(accessed on January 17, 2012) Jackson, M, P. (1982). Industrial relations: a textbook, London: Taylor & Francis Jackson, S, E, et al. (2011). Managing Human Resources, Kentucky: Cengage Learning Pluralistic-Perspective.(n. d). available at: http://industrialrelations.naukrihub.com/pluralistic-perspective.html(accessed on January 17, 2012) Wooden, M. (2000).The transformation of Australian industrial relations, Sydney: Federation Press Workplace legislation (n. d), available at http://www.alia.org.au/employment/workplace.html(accessed on January 17, 2012) Read More