Zeal Optics Restructuring - Case Study Example

of Zeal Optics restructuring Zeal Optics is a company owned by Michael and wink Jackson, which deals with theproduction and sale of fashionable, ski goggles and high- performance sunglasses. The products then are sold through retailers located in different parts of the country as well as via the Internet. Michael as the CEO handling sourcing, production, and Wink as the president overseeing marketing and sales, the company had made $2.3 million worth of sales in 2008. The performance was quite commendable bearing in mind the competitive nature of the industry, but the Jacksons believe there is potential to get the annual revenue values to the tune of $25 million over the next years. To realize this, the company has to overcome some particular limitations that may come in the way of realizing this dream. Some of these challenges include how to raise the growth capital, improve marketing in the social media and how to expand its distribution among optical stores and sports retailers. For this reason, they invited some Fortune Small Business experts to help them plan the way forward. The first challenge that the Jacksons have to deal with is that of distribution. How best to expand their distribution network to more optical stores and sports retailers around the country. The company has immensely benefited from the network that it already has with sports and fitness companies. These partnerships have helped achieve the high performance despite the current domination by the top three brands that own about 70% of the market; Oakley, Mar and Smith and Costal del. With the expansion of the distribution centers, it is possible to reach a larger audience across the country (Gilson and Altman). It will also improve the discoverability of the items being sold by retailers. Zeal has also established links with some professional athletes that have served as Zeal spokespeople. Independent sales reps handle other outdoor-gear accounts that Zeal has made use of in the past. However as Scott Jaeger (a senior analyst at Leisure Trends Group) observed, the company has the potential to open up to 2,500 retail doors across the country. He also emphasized the fact that is of paramount importance to maintain a close relationship with the sales reps as they to ensure that they are carrying out their duties as required. Scott also proposes that the Jacksons consider focusing on the products that had the best sale values. The view comes from the fact that Zeal Optics had achieved a 86% sales growth in goggles, a product that that, in general, was down by 14%. The fact that retailers are also investors and wish to stock up and deal in products that consumers want and buy led to this analysis. With the limited resources that Zeal has, In Jaegers estimation it would be better to focus on what seems to have the best results. Actually, at that time Zeal had the top-selling ski goggles in the market at outdoor-gear retailer REI. Jaegers recommendation that the company establishes a closer relationship with the sales reps is imperative. Such a move would help monitor the activities of the sales reps and ensure that they handle the company business as expected of them. It would also be a good move to increase the number of retail outlets as Jagger had proposed to widen the distribution network across the country. However focusing on just one product as Jaeger had proposed may not have been the best way to proceed. There are many advantages of diversification of products that contributes to the success and growth of small businesses (Zilka and Bischoff, 78). Diversification helps in mitigating the risks that may befall a given product. It is always wise for a business not to depend upon a given product since risks and some unforeseen circumstances may come about that can affect the sales of that product. With diversification, such risks are limited and the growth opportunities maximized by the expansion of the operations of the business while utilizing the same factors of production. Another big hurdle in the way of Zeal Optics realizing the projected revenue values lay in the underutilization of the social media. Scott Jaeger had observed that Zeals Face book and twitter accounts might help in putting together a community of salespeople at RE1 and in any other retail outlet. The sales reps could respond to twitter posts mentioning Zeal and a Face book page would create an area where the sales reps would offer feedback to customers. Social media has a significant impact on the current business environment that is indispensable. Social media can indirectly boost any links to a website content thereby improving search traffic results and increasing online sales. (Blatz, Kraus and Haghani, 56). Relevant and compelling content can also be used to increase brand visibility as well as grab the attention of new customers. Laura Kornish, an associate marketing professor at the Leeds School of Business, had the same view with regards to the significance of the online platform. She observed that the company website though being sophisticated and many weak points. It was not possible to tell whether Zeals products were being sold online from the site. She also observed that certain words that search engines look for were not on the companys website. The womens line also looked very different from the rest of the site thus not creating the best impression. She advised that the company consider building relationships with bloggers and use analytics to improve its online presence and reach a broader customer base. Jaeger also noted that giving a pair of sunglasses to all retail employees was a commendable marketing approach since, in most cases; retailers love to sell products that they love and own. The experts are right on this; Zeals image can greatly benefit from the initiatives they proposed. Social media can help Zeal respond almost immediately to any industry developments and offers a much cheaper promotion and advertising avenue as compared to the traditional methods. Dave Money, co-founder of Headwaters MB, a Denver investment bank, was of the opinion that with regards to capital, the company was not ready to enter the capital markets. Though this may not have been the news that the Jacksons had wished for, it was right that they first needed to work on the groundwork and try to make Zeal an attractive investment. He was right on this; it is important for a business to tighten its accounting and operation nuts and bolts as well as be financially sound before entering the capital markets (Zilka and Bischoff, 65). Conclusion In effecting the changes as recommended by the experts, it would have been prudent to begin with the simplest and that which will not take a lot of time to effect. The redesigning of the website and activation of the social media platform should have been the first recommendations effected. The optimum use of the social media and fine-tuning of the website does not need many resources and would not require a lot of time to achieve. The expansion of the retail outlets should be next. As the experts had advised, this would greatly help in the marketing of the product to the different parts of the country. Afterward, the entry into the capital markets can be worked on. It was also important that the Jacksons did not heed to Jaegers recommendation of limiting themselves to just one product. Such a move, however feasible it might be in the short term, might carry unforeseen risks that could be detrimental as far as the survival of the business is concerned. Work cited Blatz, Michael, Karl-J Kraus, and Sascha Haghani. Corporate Restructuring. Berlin: Springer, 2006. Print. Gilson, Stuart C, and Edward I Altman. Creating Value Through Corporate Restructuring. Hoboken, N.J.: Wiley, 2010. Print. Zilka, Carla, and William K Bischoff. Business Restructuring. Hoboken, NJ: Wiley, 2010. Print. Read More