The Mode of Operation of the YOLA Company - Case Study Example

YOLA: Managing Multiple Challenges Background Facts YOLA is a business providing simple website creating software, and is operating from two distancelocations, with the headquarters at San Francisco USA, and an Office in Cape town, South Africa, where the company was initially found, under Synthesite as its original company name. YOLA Company has been initially faced with financing difficulties, since most investors have considered the investment in a small South African technology company that only derives small returns for the investment, too risky. The operation of two different offices for YOLA Company is a difficult task, since it entails the frequent transport from one location to the other, a distance which is 30-hour flight away. The operational costs of an office in Cape Town are relatively cheaper than the office situated in Silicon Valley, San Francisco, USA. There is discontent amongst the employee based in the Cape Town offices, who feel that they are being sidelined in the decision-making process of the organization. This is because, most of the decisions are made in the Silicon Valley headquarter offices, while their contribution to such decisions is through video conferencing. The move by the proprietor of the company, Vinny Lingham to base the headquarters of the company in San Francisco has been considered lack of patriotism to his mother country South Africa, considering that such company is perceived to have the potential of creating a spiraling effect in South Africa, by motivating other similar technology companies to develop, and thus promote the South African Technology Industry. The mode of operation of the YOLA Company is informal, and there is fear that an attempt to introduce formal system of running the company through hiring a Human Resource Manager will spark resistance from the workers in Cape Town offices. The economic slump has forced the YOLA Company to think of alternatives such relocating o the Cape Town office which will offer a cost reduction advantage, but such a move will distance the company from its partners, while it would be hard to find qualified staff in South Africa to execute the highly expertise needs of the company. YOLA Company sought to apply the “price of entry” strategy to gain a wide customer base, but high competition from other large companies operating in the same market segment forced the company to seek other earnings strategies, since it had o offer its product for free, as was being done by other companies. Problem Statement YOLA Company is facing multiple management problems. First, the issue of coordination between the two location offices of the company, which are situated a wide distance apart, and consequently one office, the Cape Town office is feeling left out and underprivileged, compared to the headquarter offices in San Francisco, USA. The problem of coordination has also been worsened by the feeling of discontent amongst the workers located in the Cape Town offices, who feels that much attention is being given to the Silicon Valley offices in terms of decision making, as opposed to the Cape Town offices. Further, the company is faced by the challenge of determining the mainstream source of its revenues, especially after the competition in the market forced the company to start offering its products for free, prompting the need to seek for an alternative mainstream source of revenue that would bring returns to the investment made by the company. This notwithstanding, the fact that the economic slump has hit the company at a time when it is implementing a name change from Synthesite to YOLA Company has served to lower its customer based, due to the disorientation arising from the name change, at a time when the customers has little money to spend on the website creation and advertisement. The competition with the large companies and the economic downturn of the economy has forced the YOLA Company to think of restructuring its business, so that the company can lower its costs (31). However, benefits of closeness to partners and availability of expertise in the Silicon Valley, which are the benefits lacking in Cape Town, which in turn offers the cost saving advantages, has cost a dilemma for the YOLA Company on whether to relocate to Cape Town or to remain in the San Francisco headquarters. Organizational Behavior Issues and Symptoms The simmering discontent in the Cape Town offices over the feeling of being underprivileged is likely to affect the productivity of the workers in the office. The communication between the offices in the San Francisco offices and the Cape Town offices is ineffective, resulting to immense change in the recommendations offered by the Cape Town workers during the implementation. The individuals within the Cape Town offices have adapted unstructured mode of operation where they are not controlled, and thus pose the threat of resistance to the introduction of a formal structure. The group dynamics for both offices are not in sync, since the workers in the Silicon Valley have direct contact with the business partners, and thus direct influence on decision-making, while those in Cape Town feel left out. The founder of the company has a direct influence on the workers, through introducing energy and motivation for the workers, but the influence is short-lived, since the founder spends most of the times moving from one office to the other. Organizational Behavior theory analysis Organizational behavior entails the analysis of how individuals operate within an organization, and how the individuals, teams and the organizational structure impacts on the overall organizational behavior. The OB analysis will analyze the YOLA Company under three tiers namely individual, team and organization structure: Individual At the individual level, YOLA Company the individuals are feeling discontented over the perceived privilege of the San Francisco office, resulting to low motivation and less contribution to the organizational decision-making process. In this respect, at the individual level, the employees of YOLA Company, especially those based on the Cape Town offices are not playing a very vital role in determining the decision that the organization takes in its future endeavors. Thus, at an individual level, the negative influence is affecting the overall organizational behavior, through causing demoralization. Team The team aspect of the YOLA Company can be subdivided into aspects; high-level of teamwork at the San Francisco offices and low-level of teamwork at the Cape Town offices. In this respect, the high level of teamwork in the San Francisco office is impacting positively on the organization through bringing along innovations that are helping the company become competitive in the market. On the other hand, the low-level of teamwork in the Cape Town offices is impacting negatively on the company, through creating an environment of discontent and a feeling of underprivileged. This lack of teamwork impacts the organization negatively in three major ways; first, it forces the founder of the company to keep moving constantly from one office to the other, thus consuming resources and time that could have been applied productively (). Secondly, more resources and time is wasted by the organization, in trying to establish teamwork in the Cape Town offices, through the travelling expenses for both the team to attend team building workshop in USA. Thirdly, the independent mode of operations of the workers in the Cape Town offices hinders the establishment of a formal structure of human resource management, due to the perceived resistance from the workers, thus limiting the benefits that could be derived by the company operating under a formal structure, where the roles, duties and responsibilities of each individual are well established. Organizational structure The YOLA Company operates under a system of informal organizational structure, where the founder seems to be playing all the important roles. The founder is playing the role of managing the human resources, planning for the financing of the organization, researching on the profitable products for the company and planning for the investors and the partners meetings. Such a system of organization impacts negatively on the organization, since it limits the effectiveness of the individual who is playing all the organizational roles, since the productivity would be even higher where there is sharing and delegation of roles. The second issue about the organizational structure is that it has a weak line of command, since the whole organization seems to have only one superior, who does it all. The organizational structure also lacks adequate line authority and responsibility mechanism, considering that each individual works on their own terms, under an informal organizational structure. The span of control is also very weak, considering that there lacks either a centralized or a decentralized organizational structure, an aspect that renders the control of the workers, especially those in the Cape Town offices a major challenge. Nevertheless, the advantage associated with the structure of the YOLA Company is that there is specialization for the individuals in different area of expertise. SWOT Analysis Strength The strength of the YOLA Company is that it has been able to establish solid partnerships, which has enabled the company to be able to integrate various sources of income into its revenue stream (27). This is because; the website creating software is not able to meet the revenue and returns on investment needs of the company by its own. Additionally, the company has applied the support of other internet based companies such as Google, PayPal, Constant Contact and Appointment Plus, to help the company grow its customer base (27). Further, through the partnerships, the company has been able to diversify its product offering, through availing to the customers a range of support services. Weaknesses The major weakness associated with the company is that it is operates from two different locations that are very different. This serves to increase the costs of operations of the company, rendering its profitability low. Secondly, the companies major operations are situated at the Silicon Valley in the USA, where the costs of hiring labor and other services is very high compared to the costs in South Africa (28). The other weakness associate with the company is that, it does not have a mainstream source of income, and consequently is trying to leverage itself through offering a range of supportive products that would earn low profits. Opportunities The YOLA Company has the opportunity of transferring its operations from San Francisco USA to Cape Town South Africa where the company was founded. This is a great opportunity that will help reduce the high costs of operations associated with the American market, and thus increase the chances of profitability. Additionally, the company has more opportunities of venturing into developing country’s markets, since the market is not fully served (). Threat The major threat facing the company is the threat of competition from other large and well established companies, which are able to offer similar products to the customers freely. This has caused the company to offer its main product for free also, thus lowering its chances of profitability. PEST Analysis The political environment for YOLA Company is not very favorable, considering that it has been considered as a disloyal company that lacks patriotism to its mother country (27). Such a perception may lower the market for its products in South Africa. Economic The economic environment for the company is both favorable and unfavorable. This is because, the economic environment is favorable for YOLA Company, since it has opportunities to invest and thrive in developing countries. On the other hand, the economic environment is unfavorable for the company, due to the economic slump that has caused a reduction in the customer base for the company (). Social The social environment for YOLA Company is favorable, due to the fact that the culture of Small and Medium Enterprises (SMEs) and Home Business to advertise on the internet through websites in rampant, especially in the American market. This favors the company’s line of business. Technological The technological environment is the most threatening and unfavorable factor for YOLA Company, considering that the advancement in technology has increased competition for the business from various players in the market, thus affecting the company’s profitability. Implication of Analysis The implication of the analysis is that; YOLA Company is in a very complex stage of strategy formulation, which requires that the company should make very fundamental decisions. While shifting the business of the company to South Africa would lower the costs of running the business, it is likely to miss on the opportunities presented by the strategic positioning in the Silicon Valley, which offers proximity to partners and expertise necessary for the business. To this end, the business has to assess th possible means of raising its revenues, while still keeping in touch with its major source of strength, which is the partnerships and the expertise obtainable from Silicon Valley. Works Cited “YOLA: Managing Multiple Challenges”, 2009. 23-32. Print. Read More