Managerial Ways for Mathmos Ltd - Dissertation Example

Download file to see previous pages In this report, an in-depth analysis of Mathmos Ltd has been done with the help of different tools such as SWOT Analysis, PESTEL Analysis, and Porter’s Five Forces Model etc in order to determine the key areas of strengths as well as weaknesses to improve and enhance the overall performance of the company. In the second part, different methods have been discussed that can be used to increase the revenues and establish the brand in the industry. The main objective of this paper is to identify managerial ways for Mathmos Ltd which is facing a decline due to lack of innovation and proper management. Recommendations are given that can be implemented to boost the business as increased competition offers many challenges in today’s world. Mathmos Ltd. Introduction: Mathmos Ltd is a privately owned company located in London, United Kingdom. It primarily sells Wholesale lamps, Ceiling Light, Ceramic Lamps, Modern Lamps and Tiffany Lamps. The annual revenues of the company are 4,822,851. It strives to produce new light technologies to delight its customers.

The Mathmos Mobile range was the first rechargeable LED which developed many products such as Aaron Rincover’s Bubble and color changing ‘aduki’ range etc. Bubble became very popular and also received many awards like an IDEA award, D&AD commendation, Red Dot Award and many more. Some of their products are also invented and designed with the help of external designers. Talented designers are always encouraged to be a part of Mathmos products. Background of the company: It was established in 1963 by Mr. Walker who invented the first lava lamp. The lamp immediately gained the attention of the customers and sales increased at a higher rate in UK. It also appeared in many movies and films. In 1989, the company was taken over by Cressida Granger and David Mulley. They modified the lamp according to the modern times and introduced a whole range of ambient lights. Initially, the products were designed and manufactured in the house but due to its popularity and increased demand, the company doubled in size each year. In the late 1990s, cheap duplicate copies of the lamp begun to appear in the market. This was a potential threat to Mathmos and change was required for the survival and success of the company. In 1998, the sole owner of the company was Cressida Granger as David left the company. The company was hit by the global recession and the size of the organization was reduced in order to compete in the rapidly growing environment. Since then Mathmos is following the strategy of constantly offering innovative designs. A program of new product development was launched to differentiate their products from the copied ones. Product manufacturing was shifted overseas to offer more competitive prices. Mathmos is a small company now but it still has a wide range of good quality products. Their main focus is towards lighting and it markets its product on the international level through retail and wholesale channels.

Products: It offers a wide range of products which include: Lava Lamps LED & Mood lights Space Projector Airswitch lights Candlelights Lamp shades SWOT Analysis: SWOT stands for Strength, Weaknesses, Opportunities and Threats. It is a strategic tool to audit the organization and its environment. It specifies the objective of the business and evaluates these four factors to determine the key issues faced by an organization. Thus, we will determine the key issues faced by Mathmos on the basis of which future predictions and measures can be taken. The aim of this analysis is to discover new alternatives to increase the performance and profitability of Mathmos Ltd. Strengths: It is the pioneer in the light manufacturing equipments. It enjoys a dominant position in the light manufacture industry due to their high-quality products. It provides free advisory services by consulting spaces. It has a strong network of distribution channels which enhances its efficiency in the delivery of products at the right time. In order to stay in the world of light, Mathmos constantly concentrates on innovative and creative ideas to gain competitive edge from its competitors and come up to the expectations of their loyal customers. Weaknesses: The management of the company lacks the skills and competencies to compete with the strong competitors. This has been a major reason in the decline of company’s sales. The team/ staff of the company are small in number which restricts the company in terms of efforts, ideas and performance. The type of products manufactured by Mathmos is obsolete in modern times. The technological advancements have not been a part of Mathmos production. They lack the necessary software and other equipments that can assist in lessening the work burdens and increase its effectiveness. Opportunities: New product line and updated products with the touch of modern style can serve as a great opportunity for Mathmos. It can market their existing products in different segments to increase its customer base. It can use the idea of local customization whereby the company can create products according to the preferences of its users. It can take advantage of seasonal fashion influences to capture the attention of more customers. Threats: The increase in prices of commodity will affect the cost of raw material as well as the returns in terms of profit.

The government regulations regarding light bulbs, battery and waste that contributes towards global warming is also a blockage for its progress. As competition is getting more intense, it is hard to retain the customers. It also creates pricing problems in comparison with the competitor’s strategies. There is a major threat of being replaced by other products because the cost of LED is decreasing and improvements are taking place on teleology. PESTEL Analysis: Managers have recognized the fact that the long-term survival and success of the business largely depends upon its external environment. The combination of right marketing mix and best product portfolio are not enough to make a product/service successful in the market. In this rapidly growing environment, external factors are not stable and change from time to time. Thus, PESTEL Analysis is a very effective tool in this regard and can be used to understand the influence of macro environmental factors on Mathmos Ltd. Political Factors: Mathmos has to deal with the regulatory pressures placed on the manufacture and usage of light bulbs and battery. There are many restrictions on the product design of such equipments. The taxation policies are also fluctuating very frequently which increases the cost and price of the products. The expansion of this market is not supported by many countries due to the environmental issues. Economic Factors: There is an increasing trend of globalization and free trade which can help in reaching the masses in different regions of the world. The rapid growth of Chinese companies can be a threat because they are constantly increasing their share in most of the industries. The increased competition with the Chinese products which have made their place in the market can further weaken the position of Mathmos. It is a seasonal product and most of the time it relies on trade which gives low profits. Social/Cultural Factors: This is one of the major problems faced by Mathmos that is the corporate social responsibility. Electricity is a contributor in global warming. Thus, all such products are not much encouraged in this regard. The use of child labour and cheap labour in developing countries is also a social consequence. The concept of sustainable development is becoming very common these days. People appreciate such brands and products that are eco-friendly and save energy. The involvement of customers with lighting products is high to give a new look to house, hotel interiors.

The lack of knowledge of Mathmos management has affected its performance as they are unable to gain the customer insights. Technological Factors: The use of technology can help Mathmos in the production of more creative items with less time and effort. Internet can be used as a promotion tool to make people aware of their products. Mathmos need to improve its system by transforming it into an automated system. This helps in inventory control, delivery process, production etc. The competition is growing as E-business has become more common. Online Shopping websites such as Ebay, Amazon are a major threat. The rate of efficiency is low at Mathmos due to the use of old systems and equipments. Environmental Factors: The environmental concerns are important and should be realized by companies like Mathmos. Energy saving equipments can be used as a competitive advantage in this market. The green ideas will help in increasing the sales as people support such companies to a greater extent. Legal Factors: There are many legal obligations regarding the quality of products and their manufacture. Mathmos should fully adhere to all legal obligations in order to avoid any legal problems. Porters Five Forces Model: Different aspects of the competitive pressures in light industry can be described by Porters Five Forces Model. Rivalry among established firms: The competition is tough with the Chinese companies who produce the copies of Mathmos products with more variety in colors and shapes but the quality is not up to the mark. The competition is strong but Mathmos has a bigger advantage of manufacturing high quality products and is also the innovator in its industry. The prices of Mathmos are fix for many years with no considerable changes.

Price Dumping is the strategy of Chinese manufacturers but a huge segment of people are not price sensitive and buy products of high quality for long term usage. Threat of new entrants: It is not very easy for the new entrants to establish in the lighting industry. This is because there are many electronic governmental regulations which vary from country to country. For instance, the requirements of voltage are different for various products. Moreover, specialists are required for its manufacture which means the costs is high in the lighting industry. Threat of substitute products: The threat of substitute products will be higher if Mathmos don’t take into account the following things: Substitute performance/ quality Product features Relative price of substitutes On the basis of these factors Mathmos should restructure its overall strategy of product, price and promotion to yield higher returns. Strength of Suppliers: The bargaining power of suppliers is high because the cost of switching to another supplier is high. Mathmos takes minimum quantity for its production and distributors are also limited. The number of suppliers varies for different countries depending upon the level of production. Strength of Buyers: The bargaining power of buyers is more because very few people are loyal to companies with products like lighting bulbs etc. There are greater chances of switching with low price brands. Similarly, the business buyers have also the many options to re-negotiate with the suppliers having low cost products. Evaluation of the Current business strategy: Mathmos has been focusing on making more money without paying much attention to the needs of the customers. This is one of the major reasons of its decline. With the advent of low price copies of Chinese lamps, the strategic position of Mathmos has been pushed back. This has imposed great challenges in terms of product innovation and pricing. The strong market position is under pressure due to the low cost lamps of China. The reduction in the employees and innovative features has not been able to resolve the problem.

Key findings: From the above discussion, it can be seen that there are many areas where Mathmos needs to focus its efforts to regain its market: The management of the Mathmos is not capable enough to deal with the changing patterns. Lack of technological use has been a reason of its decline. The invention of Chinese products (copies) has stolen the company’s share. People are price sensitive when it comes to lighting equipments and are more inclined towards low price companies. Mathmos has failed to match the needs of customers due to the lack of customer research. The current strategy of Mathmos is not serving the right purpose of bringing the business back to its original position. With the help of Porter Five Forces, SWOT and PESTEL analysis, the key factors that have contributed towards the success and failure of Mathmos have been identified. In the next section, recommendations and models are suggested to improve the performance of the business. Porters Generic Competitive Strategies: Mathmos can compete with its competitors through these competitive strategies formulated by Porter. Cost Leadership: In order to become the cost leader, Mathmos need to integrate the use of technological resources with its production system in order produce higher levels of output with the minimum input. This would not be an easy task since the prices of Mathmos have been constant throughout. This strategy would be useful against the low price Chinese producers.

This can only be possible by the efficient and effective use of all possible resources. Differentiation: The implementation of this strategy would be easier in case of Mathmos by seeking a unique attribute in its products to provide value proposition to its customers. Mathmos has always been trying to achieve product differentiation attributes that can justify the premium price it charges as compare to other manufacturers. Focus: This strategy refers to target a particular segment and accelerate all the efforts to serve them in the best possible manner while excluding the other segments. In case of Mathmos, this is not a very recommendable option because its product is not an unusual need of the common people. Customer Oriented Strategy (customization): In the modern times, a customer centric approach is appropriate in modifying the products and services according to the level of customer sophistication in different countries. This strategy has worked well for companies like Toyota and has pushed their business to overseas markets. In my opinion Mathmos must develop new technologies; new ways of marketing by keeping in mind the preferences of the customers in a particular region.

They must capture customer insights to create a product or service. The research and development department should work harder to understand the consumer behaviour. The production team should experiment by taking smaller but continuous steps towards innovation. Bigger goals with regards to saving energy should be break down into manageable challenges. This will enable future growth and will also provide many learning opportunities from the consequent successes and failures. Open culture: In order to keep pace with the ever-changing markets, culture can be used as a managerial tool to meet the higher standards. Each culture goal should be aligned with the business change process to make it accessible. High involvement of all the members is essential for the change development as it requires constant interaction between the thinking processes and actions. This will create new links for all the participants since the inception of the cultural change. Innovation: In everyday life, people are always looking for change. This means that products who are modified on a regular basis with different features appeal most of the customers. Mathmos should change the lighting equipment with such innovative ideas that people rush towards the creativity and elegance of its new or existing products. Increase in the number of highly- skilled employees: The management should establish highly trained change teams to utilize their full potential and power to be a hard hitting model of organizational success. The employees must fit with organization’s purpose. This is very critical for Mathmos success because the lack of core competencies, abilities and intellect will always have a negative impact on the overall performance of the company. The number of employees should be increased to bring diversification in its workforce who will come up with different ideas and ways of doing business. It should employ those people who believe in the same values and can be a representative of Mathmos. This can be possible by interacting with prospect employees before entering the organization as a new employee. Once the best candidates join the organization, their shared norms and attitudes will solidify the Mathmos personality.

Flow of Communication: In order to make the communication more effective between the management and employees, the company should direct the flow of communication upward, downward and crosswise. A flat organizational structure is recommendable as it directs a great flow of communication between the management and workers. This is due to fewer layers of managers and wide span of control. It promotes better team spirit and makes the decision making process more easy and rapid. As the number of managers decreases, the overall costs also declines. Leadership Style: In this dynamic and rapidly changing environment, the management at Mathmos should choose the democratic leadership style as it offers a great deal of flexibility to handle a range of situations. In this way, ideas will move freely amongst the group and discussion will be relatively free-flowing. This will facilitate the conversation with the employees and will encourage them to share their ideas and synthesize the available information in the best possible way. It will capitalize their skills and talents by increasing their involvement in decision making activities coupled with new concepts and opinions. Kotter’s Change Model: The present situation of Mathmos suggests a change process for the company which will motivate the management to discover new horizons of success by hard work and a new mindset. In order to implement and lead a change process, Kotter’s eight stages can be useful for long term benefits. 1. Need for change: This is the first stage in the change process. All the members of Mathmos including the head of the company should realize the importance of need. The managers must determine the potential threats and develop scenarios that can be seen as future opportunities.

Gerstner 2. Form a coalition: At this stage, management should identify the effective members in terms of idea, knowledge etc in the organization. This is necessary because strong leadership and a clear vision are necessary to implement change. The management and all the other members should join together as a team to build momentum around the change movement. 3. Create a vision for change: A detailed review of the Mathmo’s strategy, goals and objectives should be done in order to remould them according to the change process. The management should incorporate those values and beliefs that are central to the change. 4. Communicate the vision: It is the responsibility of the management to effectively communicate the change. This could be done by delegating different tasks to every department which at the end will help in achieving the main goal of the company. 5. Empower other to act on the vision: Changes always face obstacles. It might be possible that employees will not respond to the proposed changes. The management must encourage employees to conceptualize new ideas and opinions which are fruitful for the progress of Mathmos. The management should understand the needs of the employees in order to use them as sources of motivation such as short term bonuses etc. 6. Short term incentives: The efforts of the employees should be treated and rewarded in order to continue the change process. This will make the employees more committed and loyal to the company’s goal and objectives. Bonuses should be given for higher production as it will generate positive emotional and intellectual reactions from the employees. 7. Consolidate improvements and procedure more change Kotter argues that by informing about the victory in the beginning is the end towards transformation. Mathmos management should make the employees so competitive that they should come up with innovative ideas at all times.

They should not get relax after the accomplishment of a single task. But it should be viewed as a continuous learning process. The management should monitor performance of employees and business to ensure new vision is successful. They must then identify these achievements and ensure that these changes continue to be implemented. If vision is not successful then they must alter to help it succeed. 8. Institutionalize new approaches: These change approaches should be integrated within the organization i.e. Mathmos at all levels to make it a principle or role of thumb. Such as when hiring new employees, success stories and their way of doing things should be well informed to the new employee in order to share the same goal. The efforts of the individuals should be recognized publicly so that the old and new employees get motivated and also pay due respect to their contributions. Burke Lit win Model of Organizational Change: This model is designed to increase the performance of a team or an organization by the establishment of linkages between the performance, internal and external environment. There are 12 dimensions of the Burke Lit win Change Model namely: 1. External environment: The key external factors such as the economic conditions, governmental policies that have an impact on Mathmos operation must be identified and their direct and indirect impact on the organization should be clearly established. 2. Mission and Strategy: The vision, mission and the strategy of Mathmos should be defined by the top management with the employees’ point of view. 3. Leadership: A study of the leadership structure of the organization should be carried out, which will clearly identify the chief role models of Mathmos to train and motivate the other members of the company. 4. Organizational Culture: An organizational culture study should give the insight on the explicit as well as the implied rules, regulations, principles, norms, attitudes and values which are influencing the organizational behaviour at Mathmos.

5. Structure: The study of structure should not be confined to hierarchical structure; rather it should be a function based structure focusing on the responsibility, authority, communication, decision making and control structure that exists between the people of Mathmos. 6. Systems: This includes all types of policies and procedures with regards to both the people and the operations of the organization. The system should be evaluated on a quarterly or annual basis to ensure it is leading in the right direction. 7. Management Practices: This would entail a study of how well the mangers conform to the organization’s strategy when dealing with employees and the resources. 8. Work Unit Climate: It is a collective study of how the employees think, feel and what do they expect. The kind of relationships the employees share with their team members and members of other teams is also an important aspect of work unit climate. This is essential for Mathmos as it operates worldwide and should be aware about employee perception. 9. Tasks and Skills: This involves understanding what a specific job position demands in terms of skills and knowledge that an employee must have in order to fulfill each function of the job. It is essential to see how well jobs and employees have been matched. This is a very important factor for Mathmos performance.

10. Individual Values and Needs: This dimension seeks to explore the employee’s opinion about their work so as to identify the quality factors that will result in job enrichment and better job satisfaction. 11. Motivation Level: Mathmos should identify the motivation level of the employees. This will make it easier to determine how willingly and happily they would put in their efforts to achieve organizational goals. This would also involve identifying motivational triggers and means to motivate the workforce. 12. Individual and Overall Performance: This dimension refers to the level of performance, both on individual and organizational levels, in the major areas such as productivity, quality, efficiency, budget and customer satisfaction etc. Organization Development Model of Change: This is another model which can be used to handle the internal issues and direct the employees to match the organization’s need: Anticipate a need for change: This is the first stage in the change process. Before the successful implementation of any change program, the realization of its change is necessary. The manager should understand the state of disequilibrium of the company and the need of improvement. This disability can occur from the growth or decline of competitor’s or any legal, political, technological or economic change from the external environment. If the need is felt, then it will be easy for the individuals to actively participate and adopt the new change. Develop the Practitioner Client Relationship: The client is the organization for which the change is required. Practitioner is the person who initiates the change process. The relationship between these two is very significant in determining the probability of success or failure. The practitioner i.e. manager should know his/ her role and the right time to enter the system for change. The top management at Mathmos should work in alliance with the junior staff to prepare them for the expected change. The commitment of the higher authority should be gained to make the process more achievable. Diagnose: After the development of a working relationship with the other members of the organization, they must gather relevant data to identify the key areas of problem in order to give a better diagnosis.

After getting the information regarding the perceived problem, the manager along with the other employees should analyze the situation to make the change more effective. This will help determining the exact problem on the basis of which strategies can be developed. Plan of action – Techniques and Strategies: At this stage, the management is aware of the underlying issue and has a variety of options to utilize in order increase the organization effectiveness. Programs such as goal setting, role analysis, team building, technology driven change can be aimed to overcome the issue. Monitor to stabilize: After the implementation of the planned actions, the fourth step is to check whether the program is serving its purpose or not. This is important to stabilize the desired changes. Each stage of the program should be assessed in order to gain the feedback of the employees regarding the change efforts. This feedback will make decisions regarding the continuation or modification of the activities. Once the problem is corrected, the management should make sure that the proposed change is internalized and stabilized. Continuous Improvements: In this rapidly growing environment, companies who seek success and survival are facing the need to continually introduce change. Mathmos management must learn the change is a way of life and the most critical job is to inspire individuals to absorb this change. One important thing in managing change is the use of power by the practitioner. People should be motivated in such a manner that they continually become a part of change process and must be constituted in the power structure. The management should act as a facilitator to promote problem solving activities. He must encourage openness, trust and consensus among the organizational members. This model of organizational development is suggested for the change management plan as it will integrate the team activities with the organizational goals by involving and improving the way people work together.

McKinsey 7s Model: This model was developed by Tom Peters and Robert Waterman in the early 1980’s. They have identified seven internal aspects that are the drivers of organizational success. They are categorized into two main categories: Hard elements which include strategy, structure and systems and soft elements include shared values, skills, style and staff. This figure shows that all the elements are interrelated to one another and the change in one element depict a considerable change in the other element. Strategy: It refers to the plan devised to compete with the other companies by means of a competitive edge. Structure: The hierarchy of the organization and how will report to whom. Systems: The daily tasks, duties and responsibilities each member performs in the organization. Shared Values: The core values of the company which are reflected in the organization’s culture and general work ethic. Style: The leadership style to manage the workforce in the most efficient manner. Staff: It refers to the members (employees) of the organization and their capabilities to meet the desired results. Skills: The core competencies required to perform each function of any job assigned to an employee. Application of the model: The main idea of this model is that for excellent performance and results, Mathmos should align these seven factors to reinforce one another. This model can be used for a variety of changes such as new processes, restructuring, new systems, organizational change and development etc. With the help of this model, Mathmos can analyze its current situation and can propose the future situation by identifying the gaps and inconsistencies in all these elements. Before any successful change, Mathmos should answers many questions to get a clear picture of the actual situation and then compare it with the desired situation. A few questions are listed below: What is the strategy of the company? How do we deal with competitive pressures? Is the strategy in alignment with the environmental regulations? Is the decision making is centralized or decentralized? The flow of communication is implicit or explicit? What are the main systems used by the company for its operation? Is it effective? What is the reputation of the company among the customers and other stakeholders? What are the expectations of the customers when they walk in? What routines and rituals reflect the core principles of the company? What are the factors that have the strongest or weakest controls? Who has the real authority in the organization? How are the employees skills monitored? All these answers will help Mathmos in making decisions regarding organizational or team effectiveness. Other recommendations: They must discover new ways to attract the individual customers in off seasons. The trade show in this regard is a good move from Mathmos. They should identify more ways to increase their sales at all times. It is not necessary that Mathmos should introduce a new product every season as the cost of a new product is considerably high. Another way of staying in the business is promotional activities or alliance with other complementary products. There are many distributors (partners) who are in search of similar products to promote their own products. The name of Mathmos has earned a good reputation and can be a means of investment to reduce the current burden and increase its growth. Mathmos has been introducing new products but they are not according to the wishes of the target market. They should listen to the needs of customers rather than creating by their own will and choice. The use of IT can also provide new ways to design products with the collaboration of customers and suppliers along with the IT specialist. This will help in producing customized products with superior quality. They must utilize their money in gathering information as to what skills are not present in the workforce? What kind of trainings is required? Are we equipped with the expert people? Conclusion: In this assignment, the different issues faced by the Mathmos Ltd have been identified along with the suggested solutions to encounter the stated problems. One can conclude from the above discussion that Mathmos has great potential to grow its business but it must focus on change management process to deal with issues at hand. A positive environment can be a starting point for the creation of a winning organization. The workplace should be comfortable that people must enjoy and value their work as well as the organization. To do this, managers should minimize the boundaries between parts both within the organization and with other companies. Managers should support their words by means of their actions to let people know how much they are important to the organization. This will allow coordinated actions and a continuous learning process with a climate of trust and care for one another. A strong aligned culture is marked with high level of productivity, creativity and loyalty of the employees which are essential for company’s strategic and financial success. Mathmos should also identify ways to reduce its cost in order to lower price as compares to the Chinese competitors. The R&D department should carry out extensive research about the latest consumer trends. There should be a strong connection with the staff and Mathmos objectives. To keep the employees motivated and aligned with the core values managers should encourage a culture that allows a higher purpose for their work. The individual and interdependent roles should be clearly defined at all levels and in all areas of the organization to attain the corporate vision. It should be based on the idea that people are rational, honest and interested in achievement. Everyone has to contribute in some way or the other and employees should be involved to a greater extent in decision making activities. Thus, all these guidelines can be viewed as a road map of success and serves as a competitive weapon to support the organization’s purpose and makes for a better place to work. It is a bottom-line business advantage to discover new dynamics of success.  ...Download file to see next pages Read More