Improving Company's Operations and Market Position - Essay Example

?A PROPOSAL FOR PROPER OILS COMPANY TO IMPROVE ITS OPERATIONS AND MARKET POSITION al Affiliation Proper Oils is a company involved in collection and processing of used cooking oil that is later sold as biodiesel or still as cooking oil. The company is primarily involved in collecting, processing and selling the product as cooking oil. Presently, the company is able to produce as much as it can collect the used oil from caterers. However, there are a number of challenges facing the company. Key Words Biodiesel, Cooking oil. Introduction A SWOT analysis of the company reveals crucial points regarding the company’s market position. The following is the detailed SWOT analysis. Strengths The company has increased in size which means stronger bargaining power over supplies. The company has employed a strong marketing campaign. The company has a motivated team that comprise of 6 people. The team provides reliable and professional service to the company. The company has also adopted a new database system that will be used to manage customer data. The company has also set to increase awareness through redesigning the company with brand and more involvement in the social media. This will create recognition for the company and its products (Kerin 2012).The company has also made liaison with a local company. This will facilitate exchange of ideas between the two companies. The company has set to increase the fleet of vehicles and hence improve delivery of raw materials and products to the market. Opportunities The world consumption of biodiesel is growing and hence this presents a perfect investment opportunity. According to a world report, this growth has been driven by government mandates, tax incentives and the need for energy independence (Fredrick 2012). Cooking oil consumption is also high. The new database system is set to significantly increase the number of customers. Redesigning and branding is set to win back old customers and improve services. The company is relatively new in the market hence it still have potential for growth as it is yet to maximize production. The company can be able to increase productivity through use of new vehicles. The company has the potential to grow through making acquisitions. Weaknesses The company has placed more focus on production of cooking oil at the expense of biodiesel. If the cooking oil products does not bring in the expected revenue the company may face financial difficulties. Brand failure is also a potential weakness for the company. For example, biodiesel produced by the company does not attract a profitable margin. Increase in price of the raw material is also a major challenge facing the company. The company is currently spending a lot on caterers for oil. Loss of customers is also a weakness for the company. There is lack of a reward system. This may make customers feel less valued (Subramanian & Sanjoy 2003). Security is also a major challenge. Threats Competition from other companies has been identified as a major threat facing the company. The local supply of biodiesel in the European market has tremendously grown. The industry is already suffering from overproduction (Thurmond 2008). There is lack of adequate finances to expand production and carry out promotions. The market for cooking fat is saturated by other brands from rival companies. Low margins from biodiesel sales are also a major threat facing the company. Production is also limited to the available used cooking oil that can be collected. A series of failed advertising attempts has also been a major threat. The company’s current situation may not be termed as severe. However, certain issues are eminent from the above analysis which may negatively affect the performance of the company. Key among these issues is the lack of a proper advertising mechanism that could see the company gain more customers. There is little communication between the customers and the company. This may not be effective in retaining customers and creating loyalty. The company is facing issues regarding the number of staff working. Limited manpower hinders the growth of the company. There are also difficulties in acquiring long term production sites. Other problems include lack of enough collections sites per day and difficulties in advertising. Overall aim and objective The aim of this proposal is to bring the management of Proper Oils to attention concerning matters that affect its market position and devising a strategy to become the leading cooking oil and biodiesel producer while utilizing its limited financial and time resources. The following are the objectives of the proposal. (a) To develop strategies that the company should use in meeting its expansion goals. (b) To analyze potential challenges that may affect the operations of the company. (c) To synthesize various solutions that the company may adopt in the face of challenges. (d) To identify the most suitable strategy to adopt in the short term. Proposed solution A number of solutions were outlined regarding the challenges facing the company. Top among them is to increase collection of used cooking oil which acts as the raw material. This can be done by increasing frequency of collections and the number of personnel involved in collection. This should go hand in hand with construction of a storage site for the oil before it is processed. The company can also improve its market position through acquisition of other related businesses. Through acquisitions, the company will be able to acquire assets, manpower and improve its market dominance. The company should also engage in nationwide advertising and promotion campaigns to drive demand for its products. For example, the company should advertise its products in the mass media to create awareness and stimulate demand. The company can also create brand recognition through advertising and hence create awareness. It is also important to improve communication with customers. Improved communication enables the company to obtain feedback about its products from the customers (Glynn, Motion, & Roderick 2007). Feedback is important since it may help the company improve its products or develop new products that suit consumers’ needs. Proper Oils should try to tap into other segments of the market. For instance, the company can diversify its customer base by targeting companies that will buy the recycled oil in bulk instead of primarily focusing on individual customers. Promotional campaigns should include activities such as offering free collection to customers in order to earn their loyalty. Proper Oils should also consider opening a chain of manufacturing centers. This may be the best way of increasing production and market dominance. However, this strategy is expensive and may require huge amounts of capital. The most viable solution to implement in this case would be a comprehensive marketing and advertising campaign. Developing good customer relations and awareness of the brand is the single most important thing that a business should consider. There is no single enterprise that may be able to operate without support of customers. Multinational corporations spend a great margin of their revenue in advertising in order to retain and attract new customers. Advertising and promotion expenditure should therefore be treated as normal expenses for the organization. Advertising using the mass media can be effective in stimulating demand and brand recognition. Though it might be expensive, the costs outweigh the benefits. Internet marketing can be used to create international awareness since it is not restricted by a country’s physical boundaries (Giesler 2012). Heavy advertising is usually accompanied by an increase in demand for products especially if the message impacts positively on the consumers. The company should therefore make plans to increase production capacity. This should be carried out by employing more personnel to collect used cooking oil. The frequency of collection should be increased up the point where full production capacity is achieved. Once full production capacity is achieved, the company can acquisition other businesses or open branches. Outcomes Once the company has implemented the proposed solutions successfully, it may be able to increase the sales volume from 1,500 units to 2,000 units. A comprehensive marketing program will enable the company create brand recognition and awareness. This will enable the company retain its current base of customers and attract new customers. Customer loyalty may also be enhanced. A proper marketing program will also enable the company to develop a positive image among the public. This may help drive sales. Involvement of more personnel in the collection of used cooking oil will enable the company increase raw material supply and hence production capacity. Potential problems Potential problems may arise, especially if the company is unable to engage a substantial number of employees in the collection of used oil. Since there is high competition in this business, Proper Oils may lose its major oil suppliers to rival companies. This may lead to inadequate raw material curtailing production. Another potential problem is negative brand publicity. This may arise especially if the customers change their perception about the products produced by the company. For example, consumers may prefer cooking oil that is extracted from vegetables since they may perceive it as healthy. Customers may also perceive the oil as of an inferior quality. To counter such negative brand publicity, the company should engage consumer education programs and maintain contact with its customers (Kotler & Keller 2012). Consumers’ tastes and preferences may also change against the company’s products forcing the company to cut production. Consumers may prefer consuming products of rival companies and this may present challenges. Lack of adequate capital may act as a hindrance to expansion of the company. Financial capital is necessary for the expansion of a company. If no credit institutions are willing to lend money to the company, it may be difficult for it to expand (Kotler & Armstrong 2009). References Fredrick, E, 2012, ‘The rising trend of green protectionism: biofuels and the European Union’, European Centre for International Political Economy, vol. 22 no. 1, pp. 9-13. Giesler, M, 2012, ‘How Doppelganger brand images influence the market creation process: longitudinal insights from the rise of Botox cosmetic’, Journal of Marketing, vol. 33, no. 3, pp. 30-49. Glynn, M., Motion, J. & Roderick, JW 2007, ‘Sources of brand benefits in manufacturer-reseller B2B relationships’, Journal of Business and Industrial Marketing, vol. 22, no. 6, pp. 400- 409. Kerin, A, 2012, Marketing: The Core, McGaw-Hill Ryerson, Canada. Kotler, P & Armstrong, G, 2009, Principles of Marketing, Pearson education, New York. Kotler, P & Keller, L, 2012, Marketing Management, Pearson Education Limited, New York. Subramanian, B & Sanjoy, G, 2003, ‘Reciprocal spillover effects: A strategic benefit of brand extensions’. Journal of Marketing, vol. 67, no. 1, pp. 4-13. Thurmond, W, 2008, Global Biodiesel Market Trends, Outlook and Opportunities. Emerging markets online. [Online] 33 (1). 1-7. Available from: http://www.unece.lsu.edu/biofuels/documents/2010Aug/bf10_16.pdf [Accessed: 27/4/2013] Read More