Critical Appraisal for Mobile Phone Company - Assignment Example

CRITICAL APPRAISAL REPORT FOR MOBILE PHONE COMPANY By Critical Appraisal Report for Mobile Phone Company 1. Background 1.1 Justification of department role A manufacturing company reserves certain roles for the director in charge of production as well as the manager in the same department. The responsibilities are many and include coordination, planning, and control among many more. The production manager must oversee efficiency in production that results into the company having adequate amount of goods while at the same time maintaining the cost of manufacturing low and the quality of production high. The production director has a responsibility of managing the capacity of the company to produce the right quantity for all the outlets in Asia, United States, as well as America. The director in charge of production provides support to satisfy the demands of all the three continents. Furthermore, the head of production has additional duties of handling manufacturing contracts to supply enough products for outsourcing. The Research and Development (R&D) department deals with improvements and innovations in new technology (Johnson, Whittington, and Scholes, 2011, 89). The department offers information new techniques of developing and improving products, which facilitates the expansion of company business activities as well as production and demand. Scholars identify that businesses have an essential to play in the manufacturing process within their operations (Johnson, Whittington, and Scholes, 2011, 67-8). Management of the same increases the competitive advantage of the company against rivals in the market. Significant relationships exist between supply and demand management therefore the company ought to undertake thorough analysis based on either supply shifter or demand shifter as environmental factors. It is possible to evaluate the capacity of the company to deal with the manufacturing process of the business in satisfying customer demands. In addition, it demonstrates the ability of the firm to minimize the cost of production that resonates with the demand management. Position analysis SWOT ANALYSIS Strengths From the marketing outlook point of view and looking at the demand for mobile phones, it is observed that the demand for handsets has significantly increased since passengers are able to use the mobile phones even in the airplanes. Looking at the cost analysis, the transportation cost expected to fall by about 6% while the production cost is expected to remain unchanged. Weaknesses The competitiveness of the economy of China has resulted in its central bank selling huge amounts of Rmb in the FX market. This has consequently made Rmb fall by approximately 10% against the USD as the Euro also rebounds (Cesim, 2013, 77-8). In China, the interest rates have risen by half a percentage while in USA it has risen by quarter. However, in Europe, the interest rates have fallen by quarter. Opportunity On the other hand, the outsourcing capacity is expected to rise by 13% in the US and 19% in China thus making the outsourcing costs to fall by about 4-6%. In the analysis of finance, experts observe that the corporate tax has been raised up to 22% in Asia. Threat However, experts expect the demand for handsets in USA to fall by approximately 3% and by about 7% in Asia although the demand in Europe is expected to remain constant (Kotler et al, 2012, 78-9). . 2. Critical review of academic literature The significance of a competitive advantage of the product in relation to its cost, flexibility, delivery, and quality is a necessity. According to the situation analysis of the product, setting up strategies for a competitive advantage of the product will contribute to the company’s developmental strategy (Cesim, 2013, 78-9). Anoff matrix strategy can be used to generate a strategic direction for the company by establishing ways and means of penetrating into the target market. This can be done based on the product’s category and the geographical dimensions surrounding the target market of the product. The figure below represents the Anoff matrix. Relevant Theories There are theories that can be used for strategic analysis of the product. The first theory considered in this aspect is the resource –based theory, which is closely related to the competitive advantage (Brooks and Barnett, 2006, 90-1). It involves four factors that include resources, capabilities, competitive advantage, and strategies. The first factor (resources) requires the manager to identify and classify the resources of the organization and then appraise the weaknesses and the strengths of the organization. The second factor, which is “capabilities”, involves the identification of the capabilities of the organization. The next factor in this theory is to develop a competitive advantage, which involves appraising the potential capabilities and resources in terms of their ability to produce a sustainable competitive advantage. The last factor is to select a strategy that would best exploit the capabilities and resources of the organization relative to the product’s external opportunities (Brooks and Barnett, 2006, 78-9). This theory can help the organization identify the resources that would enable it achieve a competitive advantage thereby making the organization become more successful than other organizations in an environment that is very competitive. The second theory is the Ansoff’s matrix theory, presented in the diagram below. Ansoff matrix theory defines the market growth strategy in terms of the market and the product. Four criteria used in the identification of the theory such as market development, product development, market penetration, and diversification (Ansoff, 1965, 90-1). The aspect of market penetration criteria used to analyze how the existing businesses sell their products in the existing market environments and determine ways of increasing and maintaining market share of the existing products. A competitive pricing strategy can be used to set the selling price in order to gain and beat more revenue in terms of sales. According to Ansoff, (1965, 89), a pricing strategy and a promotional campaign can also be used by the organization to become more attractive. The next theory is the product life cycle theory, which is presented in the diagram below. Product life cycle describes the possible policies of the product in different stages of the theory as well as helping the organization compare its product with the product of its competitors. The theory can be divided into four major stages that entail introduction, growth, maturity, and then decline. The theory is very appropriate in defining the product stage and performance of the entire market. Tech 3 and 4 are placed in the growth stage while tech 1 and 2 are put in the maturity stage. The last theory in this aspect is the Boston Consulting Group (BCG), which is a very vital tool used to determine the balance and the attractiveness of business portfolio under market growth and market share criteria. As shown in the figure below, tech 4 appears in the stars stage with the highest mark share of about 94.75% in an expanding market (Aburto, 2010, 78-9). There is need for the company to invest heavily in order to raise or sustain the product market share in the stage. Techs 2 and 3 have significantly high market growth but do not show high market share yet. Tech 1 shows high market share in a market segment that requires less investment. Application of the Application of the Theories in production and R &D The above frameworks and theories are used to support the achievement of business strategies in perspective of production and demand of the product while following the law of demand and supply. An increased price of the product when the demand is higher than the supply is likely. When supply is more than demand, there is likely to be a fall in the product price (Aburto, 2010, 89). It is of great relevance to estimate the demand for every product to expand the capacity properly. Sale promotion and advertising can enable the organization attract more customers to buy more of its products due to the good image of the organization created to the target market. Restructuring a mature market that involves driving out competitors is the difference strategy that would ensure that the organization look different and unique compared to other competing organizations. There is also the equilibrium point that encourages the organization to balance supply and demand as shown in the figure below. References Aburto, T., 2010. Ansoff’s Matrix for Marketing Objectives [online] available from http://taydeaburto.com/ansoff-matrix-for- marketing-objective/ [4 June 2013] Ansoff, I., 1965 .Corporate Strategy. New York: McGraw-Hill Avadhani, V., 2010. Investment management. Mumbai: Himalaya Pub. House. Barney, J. and Clark, D., 2007. Resource-based theory. Oxford: Oxford University Press. Brooks, R. and Barnett, S., 2006, .IMF Working Papers : Whats Driving Investment in China? Washington: International Monetary Fund (IMF) Cesim, 2013. Ratio and key financial indicators [online] available from http://sim.cesim.com/results/gc/AreaReportGlobalPage?51 [16 June 2013] Douglas, D. and Raghuram, R., 2001 .Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking. Journal of Political Economy, 109 (2). Johnson, G., Whittington, R. and Scholes, K., 2011.Exploring Strategy Kotler et al, 2012 .Marketing Management, 2ed edition, 2009, Pearson Education Limited, Essex, England Reid, P., P. and Schriesheim, A., 1996 .Foreign Participation in U.S. Research and Development: Asset or Liability? Washington: National Academies Press Read More