Problems and Issues That Cash Computer Supplies Are Facing - Essay Example

ID CC: TA June 20, 2007 Recommendation for Cash Computer Supplies’ Immediate Problems Problems and Issues That Cash Computer Supplies is Facing Cash Computer Supplies has indeed shown an excellent performance very well last year, considering the fact that it was just in its first year of operations. The mail-order business concentrating mainly on computer supplies that are sold at a much lower price than its competitors is quite unique in St. John, Newfoundland; however, the business was confronted with difficult issues based from the phone-survey gathered by Mr. Whiteway. The phone survey, eventually, suggested that the target market prefers buying from a company that has a physical store even though the price of the item is a little expensive. Another reason why the people chose this kind of set-up is because of fast delivery of the item that they will be buying – they can immediately possess or take-home their purchased item(s). On the other hand, purchasing good quality products is also one of the concerns of the target market, and that is the area where Cash Computer Supplies is at par with its competitors. Cash Computer Supplies’ first year operations profited a low income because their market or buyers are very limited. The company only markets to the students of Memorial University and due to the University’s high turnover of students, it is hard to maintain regular customers on the student market segment. Closing down the business because of the above reason is not the solution to take because the company has a real potential in pioneering and leading the mail-order computer supply industry in Newfoundland. And also, opening up a retail store as a means to combat their competitors head-to-head is not a good option as well as this will only add them up overhead costs and carrying costs on their inventory. Possible Recommendations for Cash Computer Supplies to Consider Cash Computer Supplies has the potential to compete in the computer supply industry in Newfoundland, it only needs a little re-organizing within the company management to be able to sustain and increase their market share. The several recommendations which are considerable are as follows: Continue on with the business, closing it down because of the unfavorable result from the phone survey is not a viable option. The company has great potentials which can still be enhanced if careful studies on the internal and external SWOT will be conducted. Expand market share to at least 30% to 40% of the current market share. Increase profits by at least tripling the value incurred from its first year of operations. Criteria In Support of the Recommendations for Cash Computer Supplies What the company needs to do now is to reform its management operations by: First, the company must create and establish its own mission/vision as this will help and guide them follow a certain direction and achieve a successful long-term goal for Cash Computer Supply (see Exhibit 1). By having a mission/vision, just like all other successful companies including their competitors, who started out small, but with a clear vision of what they want to become as years would go by and adhering to the company mission – what they want to pursue to achieve excellence in their own field, Cash Computer Supplies can also make it big specializing on their own expertise – in this case mail-ordered computer supplies. Next, the company should diversify or expand its market much more (limited only to Newfoundland territory as of the moment), the company must not settle with the university market alone because potential market can also come from members of the Association of Collegiate Entrepreneurs Canada and Junior Achievement Canada where Mr. Whiteway is a member of both organizations; through these network of contacts, especially those who reside in Newfoundland, they can at least refer and testify that the products being sold by Cash Computer Supply is very much reliable and budget saving. Advertising campaigns must be intensified as well. They should create a more attractive brochures, flyers, and posters or even post billboards on busy locations such as bus stops and train stations; more newspaper campaigns and distribution of flyers not only in Memorial University but also in any randomly selected main streets or sidewalks, as long as the place is busy and people will took notice of their promotions, these will possibly increase their potential market share in the computer supply industry excluding their usual door-to-door mailed brochures to their previous customers (see Exhibit 2). With a more effective advertising through different but less-costly media, Cash Computer Supplies can now tap and expand into new target markets and with the help of Mr. Whiteway’s connections from the organizations he’s been with. If their market share increases through this, Cash Computer Supplies will now be more inclined into establishing more permanent customers which can help bring them regular income as per monthly basis. Lastly, the company must also start to integrate information technology in their business such as taking orders through e-mails and most probably through their own website; the company also must device a way where they can deliver the goods ordered by their customers at the fastest time possible; they would need to study the routes where their services is well in-demand so as to provide quality, dependability, and low-cost computer supplies on the part of their customers. The I.T. industry is fast growing and evolving, other businesses will soon engage into using I.T. resources in order to integrate it to their businesses to offer much better services to their customers. Cash Computer Supplies can capitalize on this aspect because they are the only mail-ordered computer supplies company in Newfoundland and if they can provide shopping convenience to their customers, offering them high quality and low-cost computer supply products, and delivered to their door step in the fastest manner possible, they will be able to gain customer loyalty and more referrals from these delighted customers will come in the way by ‘word of mouth’. Since Mr. Whiteway is a commerce major, he can incorporate a little management science into discovering how they can deliver their goods to their customers I the fastest manner possible. Through this way, their customers don’t have to worry about their orders because it will be delivered at their own houses and/or companies in good condition and still, at a much lower price compared to their competitors. In so far, these proposed strategic steps for Cash Computer Supply to undertake for its second and probably third year of operations will definitely increase their present market share to about 30% to 40% more. Analysis of the Alternatives why Cash Computer Supplies Would Stick to its Proposed Strategy Aside from the proposed strategies written in the earlier sections, other alternatives for Cash Computer Supplies to do is to: battle head-on with their competitors by establishing their own retail store. However, by doing this, the company will incur the same high overhead costs and high inventory levels which can even lower their chance to profit more compared to retaining and expanding their mail-ordered business, overhead and inventory costs can be minimized, and the funds that they will be using for their overhead and inventory costs can still be used in some other expenses such as utility expenses, carrying costs in delivering ordered items, etc. By closing down the business, all efforts and sacrifices spent in establishing Cash Computer Supplies will just be put in vain because the management team didn’t even tried hard to explore how they can profit more and offer their services to the Newfoundland market. That is why, stressing the importance of expanding the current situation of Cash Computer Supplies will take the entire management to new levels and challenges in using their knowledge and skills in entrepreneurial management. The least that they can do is do nothing with the business, however by just doing nothing and be contented with what the company is doing at the present situation, the company is inclined to doom itself to closure sooner or later because competitors might derive good ideas from the performance of Cash Computer Supplies and eventually outrun them even further in the competition of the computer supplies industry. Again, by expanding the business despite the negative feedback of the survey conducted, will at least give this newly established company a chance to prove itself and grow, anyway, there won’t be so much money at risk from the recommendations given as it will definitely help the company profit really well in the long-run. Implementations of the Recommendations Given Below is a scheduled plan of activities – short-term – in implementing the proposed recommendations for Cash Computer Supplies to execute for its fiscal year 1993 to 1994. Mission / vision planning and implementation can only take for a month or even less. Starting on April, in the present year – 1993 – the company can start planning out what mission and vision they would like to pursue. Now at the same time, the company can also start strategizing on where will they start expanding their market, planning would be done probably for a month or two and then as soon as their new advertising campaigns are ready, they can fully reach out to their new sets of potential market to sell their company services. As for the I.T. integration, Cash Computer Supplies can start initializing it by the end of 1993 or by the start of the following year 1994, the reason for which they cannot start with this integration is because they have to establish first their new market in Newfoundland so there will be customers who will benefit from it in the long run. Contingency Plans for the Proposed Business Expansion of Cash Computer Supplies As for the mission / vision creation, after successfully operating for a year, the company should have at least known what it wants to become in the future. Changing of mission / vision is easy, as long as the company aspires what is best for them in the long run. With the market expansion, it will not be easy to expand and gain the trust of many other people living in St. John and other locations of Newfoundland, but nevertheless, Cash Computer Supplies should take it slow but surely as we don not want any mistakes or wrong marketing tactics to occur in the process, because when that happens, it will cost the company not just money spent on advertising and marketing, but also it will damage heavily the company reputation which we cannot afford – when the company reputation is tainted, it will be very hard to gain back the trust of the customers and it will drastically affect the sales of the company where income is being derived. Another thing to consider during marketing expansion is the threat of the competitors trying to outrun the company’s effort into reaching out to other potential market (they may see this as Cash Computer Supplies is penetrating their own market). When these things occur, the company can do nothing further but to push through with its strategic marketing plans, because what we are after here is to slowly gain the trust of the people who will try-out the services of Cash Computer Supplies, and when more and more people becomes satisfied, then there will be no need to react violently to the threat of the competitors because it is the people who will decide where they want to purchase their needs. In intensifying their advertising campaign, designs incorporated in the new media should constantly be changed because if the same advertisements appear every time, people will get bored and will not show interest with the company. Cash Computer Supplies could probably hire students who are design practitioners who may have good ideas on creating an effective advertisement for the company, plus, these students can be paid in a much cheaper amount compared to advertising agencies who charges so much because of professional fees. Cash Computer Supplies should deal with this kind of set-up first because the company would want to save enough funds as for the moment so it can support its expansion strategies. And lastly, for integrating I.T. into the business system, bugs, programming syntax errors might occur if the system is not properly programmed, that is why it will still take some ample time before this integration can be fully utilized by the company and to its customers. But with regard to the e-mail, Cash Computer Supplies can simply tap in first with web companies who offer free e-mails, they can use this for the moment just to be able to offer online services to its customers. From these suggested strategies for Cash Computer Supplies, it will help the company expand its business not only in terms of profit but as well as their market share in the computer supplies industry. Not only that, when the I.T. integration is fully implemented, the company might be forced to expand even outside Newfoundland and maybe capture other Canadian provinces who may become interested in trying out their services. Exhibit 1 Sample Mission/Vision Statement MCCAW CELLULAR COMMUNICATIONS “To develop a reliable wireless network that empowers people with the freedom to travel anywhere – across the hall or across the continent – and communicate effortlessly.” Source: http://www.csuchico.edu/mgmt/strategy/module1/sld014.htm Exhibit 2 Possible Increase the Market Share of Cash Computer Supplies 1992 Radio Shack 45% Dicks and Company Limited 22% Paragon Information Systems 13% H F Fanning and Sons Ltd. 16% Cash Computer Supplies 4% 1993 Radio Shack 37% Dicks and Company Limited 22% Paragon Information Systems 13% H F Fanning and Sons Ltd. 16% Cash Computer Supplies 12% Read More