Poor Quality of Management Issues - Essay Example

Lecturer: Presentation: Leadership Style and the Poor Quality of Management Success or failure of an organization is dependent on the leadership style that it adopts. Although there is no one particular leadership style that can steer the organization to success, an efficient leader should employ different leadership styles on different levels of employees, and situations. To choose the most effective approach, a leader should consider the level of skills and experience of the team members. In this regard, different approaches should be considered when dealing with skilled, semiskilled or unskilled employees. Unskilled and illiterate employees can be dealt with effectively using autocratic leadership style (Edwards 2006 p 59). However, skilled employees may not tolerate it because they are mobile and can effectively secure employment elsewhere. The nature of work that the employees are engaged in is equally important. For instance, routine work calls for a different approach from a new or a creative job. Bureaucratic leadership could work well in routine work but fail in jobs requiring creativity. In addition, the environment under which the organization works under is of paramount importance. Organizational environment could be stable or changing, conservative or adventurous. A good leader should therefore be flexible and change leadership styles depending on the type of employees and the prevailing environment (Collins 2008). The type of leadership exhibited by the Zinn Company is exclusively autocratic. The owner of the company commands high level of authority over his employees and team members. In this regard, he is the sole decision maker and does not tolerate opinions, ideas or criticism from the employees. He runs the organization by inculcating fear and dismissing disobedient employees. Therefore, employees dread making suggestions even if they are in the company’s interests. This has resulted to low motivation, which affects their productivity adversely. In addition, he does not offer incentives or rewards to the employees when they attain targets; those who fail to meet targets are laid off at the whim of the owner. Since the owner is also responsible for hiring new employees, nepotism characterizes these appointments. Friendship and favoritism rather than professionalism results in appointment of inefficient employees, who compromise the quality of the company’s products particularly in the manufacturing department. Though this style would work if applied to illiterate and unskilled employees, it does not yield good results and can lead to high employee turnover, especially the skilled employees. A leader should demonstrate good judgment, and should be approachable by the employees. In addition, a leader should demonstrate problem solving skills and should provide visionary leadership in times of crises (Edwards 2006 p 61). The owner of Zinn Company hires and fires not mainly basing on the employee performance, but on perceived threats that they poses to his management. Poor quality management is prevalent from senior management level to the lowest level. This is best illustrated by lack of interdepartmental communication which results to lack of coordination. This adversely affects relationship between departmental heads and the respective employees. Investing in training and hiring competent staff should be a top priority for an organization. Qualified staffs are not only productive, but are also satisfied in their duties. Investing in their training could improve confidence in their abilities tremendously. In Zinn Company, little investment is provided for training. The process of hiring employees is also very unprofessional and wanting. Incompetent personnel are hired to run departments that require skilled staff. To streamline these leadership and management shortcomings, the management ought to consider on how they can incorporate other leadership styles, besides autocracy. In this regard, styles that enhance participation and cooperation in decision making should be tried, in departments where autocracy has failed. Bureaucratic leadership could work well in the manufacturing, human resources and financial departments. Participative leadership could work quite well in the production department while charismatic style could be crucial in motivating the demoralized employees (McKain 2004 p 51). The chairman should therefore lead by example by setting a clear vision for the company, and instinctively changing his leadership style depending on the prevailing circumstances. Porter’s Five Force Model Zinn Company operates in an industry which is characterized by low competition. Its major line of operation is manufacturing and servicing specialized machine vision technology system for monitoring agricultural production. The five forces that determine profitability of this industry and its suitability are; the presence of similar goods in the market, negotiating powers of consumers, negotiating power of raw material providers, the degree of competition between the existing players in the market as well as the threat of emerging businesses (Porter 2001 p 64). The threat of substitutes The company’s product portfolio is dominated by a single product that is used for agricultural production. The product market share has dropped from 80% to 50 % presently. Though there is no apparent threat from substitutes, the decline in market share could be attributed to the company’s failure to maintain high product quality and inability to market the product aggressively. In addition, the cost of switching to an alternative product could be prohibitive. This makes the industry quite attractive and profitable in the long run. However, the launching of additional product, customizable OMR machine, though slow has a bright future because there are no substitutes (Baker 2000 p 56). The Threat of New Competitors Attractiveness of an industry can be greatly diminished by new entrants. This increases competition which results in price reduction, and consequently low profits. In this industry, a high capital investment is needed. In addition, economies of scale prevent many investors from venturing in the industry. This is due to high entry barriers, which lock out many investors. Demand in any given industry is created by consumers. The negotiating capability of buyers increases when they are few, while the sellers are many in the market. When the industry is not a major supplier group for buyers and the product is standardized, consumers’ negotiating ability increases. Zinn Company’s products are not standardized. In addition, there are few dominant buyers and the industry is not a key supplier group (Doyle 2006 p 46). Therefore, the customers’ bargaining power is low, and this contributes positively to its attractiveness. Bargaining Power of the Suppliers Suppliers provide industry with raw materials and components for manufacturing products. In high attractive industries, the bargaining power of suppliers is low. Bargaining power of suppliers increase when there is high demand and low supplies. In addition, availability of highly valued products increases their bargaining power (Baker 2000 p 63). In this respect, Zinn Company is quite unattractive due availability of other cheap supplies, which sell components at low prices. More over, failure of the Company to start its own retail outlets increases the bargaining power of suppliers, thereby reducing the attractiveness of the industry. Intensity of rivalry The force of rivalry between competitors is dependent on a number of factors. These are; intensity of competition is high when there are many equally sized competitors, rivalry is less when there is a clear market leader in the industry, industries with high fixed costs for instance encourage competitors to occupy the unutilized capacity by lowering prices, industries where rivals can differentiate their products have less competition, competition reduces when there is high cost associated with the decision to buy a product from a different supplier, competition increases when the rivals are aggressively pursuing their expansion strategies and also the fact that the intensity of competition increases when the costs of leaving an industry are high when there is significant cost associated with the decision to buy a product from an alternative supplier (Baker 2000 p 64). The intensity of rivalry in the Zinn Company industry is less because there is an established market leader. In addition, there is a high degree of differentiation in its products. Moreover, there is no high numbers of equally sized competitors. However, high exit barriers associated with buying alternative components from suppliers increase the intensity of rivalry. The 7s Frame Work The frame work is applied to run and to organize an organization in an effective way (Rasiel and Friga 2001 p 56). This framework consists of seven factors, which are mutually dependent and vary with time; Shared values means that every successful organization must have central beliefs and attitudes of operation.Shared beliefs accord an organization strategic intent, which ensures that it remains in operations for long time. Zinn Company does not have shared values and it is characterized by despondent leadership, with no clear strategic mission. Strategy entails plans to distribute or allocate the resources of a firm in a given period of time, to reach identifiable and measurable goals. Zinn Company does not allocate sufficient funds to cater for staff training. In addition, enough resources should be allocated to cater for the customers needs such as technical expertise on operation of the equipment. Equally important, sufficient funds should be provided on order to market and survive in the competing market (Rasiel and Friga 2001 p 56). Structure in Zinn Company is indicated by the centralized top down management structure, in which the chief executive officer is responsible for making key decisions on behalf on the entire organization, without consultations. Systems encompass the procedures, processes and routines regarding how the work should be done. Zinn Company has no systems governing recruitment, finance, promotion and appraisal in addition to information systems. The chief executive officer operates single handedly and makes personal decisions. In staffing, the Company employs about six hundred workers and the Company has senior and juniors personnel. The senior personnel are responsible for administration and management, while the juniors are responsible for performing non managerial tasks. The company’s style is unique. It does not have a well established cultural tradition of how managers behave on achieving the organization goals. The chairman sometimes gives bonuses to achieving staff members, in form of money. Promotions based on performance and within the organization are rare. Skills entail the core competences of the personnel and the entire organization. The personnel are comprised of skilled, semiskilled and unskilled employees. The entire organization is however plagued by incompetence, due to lack of proper supervision and inept management (Rasiel and Friga 2001 p 57). Management of Financial Risk Could be likely a Question and Financing New Projects The manner in which the business structure is organized largely determines the fiscal risks that the business is faced with. More over, the dealings that a business is involved in as well as the monetary system that it employs are also major factors determining its monetary risks. In order for managers to discover these risks they are supposed to assess their day to day operations, mainly the cash inflows and outflows. High dependence on a sole consumer for a company’s products poses a great financial risk to the organization particularly when such a consumer fails to pay for the products (Wilson and Gilligan 2005 p 77). Lack of a financial manager in Zinn Co. is a major failure in the organizational structure that can contribute to a great extent on the financial risks. For example, the organization has been engaging in risky ventures that usually result in huge losses. The organization made huge losses due to improper monetary risk management due to its trends of continuously changing suppliers in order to source the cheapest possible materials. The presence of a financial manager could have saved it from adhering to this policy in spite of several expensive failures. For example, the supplier of blank circuit boards charging $20 per unit and with a 99.5 per cent quality level being abandoned in favor of another supplier charging $12 needed careful analysis of the financial risk associated with this venture. It was later realized that this move brought unwarranted expenditures to the business. Lack of a financial manager also contributes to reduced profits in spite of the company’s enormous financial potential. It has remained without a cash reserve, a factor that has contributed to its failure in regard to generation of profits. More over, the owner of the company does not put financial issues in to consideration. A financial manager could have offered essential advice regarding drawings from the business (Brassington and Pettitt 1999 p 115). Literally, the owner is bringing the company down through his enormous drawings, which leads to diminishing of finances that could be used to expand and maintain the business operations. Any investment decision in an organization is supposed to be discussed and agreed upon by the management in totality, but not by a number of them without informing everyone who needs to be involved. This enables the management to evaluate the potential of the undertaking in regard to the profitability of the business, as well as the available resources for implementation of the decision. Two managers of Zinn Co. made a serious mistake for engaging in an expensive transaction without involving or informing their counterparts. Such a trend is likely to open opportunities for fraudulent deals. This leads to failure in the management structure as well as the financial structure of the organization. The financial manager is important in the identification of such activities or any suspicious deal that may occur in the system. He/she is capable of identifying the most viable deals, especially when evaluating a customer’s eligibility for credit facilities. Management of financial risks is essential in protecting the organization from failures emanating from individuals, improper procurement of raw materials whereby the organization’s guidelines are ignored, or failure of evaluating potential customers before accepting their orders, an issue that contributes to losses later on when customers cancel their orders just after preparations and the initial stages of delivery have been completed. On the other hand, development of new products should be done carefully in order to ensure that it is going to serve the desired purpose. In many occasions, the managers who do not consider the effectiveness of engaging in the production of a new commodity resort to blaming each other regarding its usefulness once it fails to accomplish the original objective (Rasiel and Friga 2001 p 45), such as the projects that were initiated within the sales team. Complaints later emerged from the sales team about the lack of support from other managers who were never consulted in the beginning. Strategies for Exploiting Overseas Market Opportunities Overseas market opportunities have arisen as a result of globalization whereby investors are allowed to cross political boundaries to invest in foreign countries. Companies wishing to exploit overseas markets need to ensure that they utilize their innovativeness profitably through using it to improve their competitiveness. In order for innovativeness to be beneficial to the business, it is important to ensure that the market potential is known by the investors. It should take time before engaging in any transaction in order to develop the most appropriate plan for implementation of an innovative decision (Kotler 2006 p 91). This means that even after identifying the market, the investors should not rush in to implementation of requests whose delivery may be hampered by limited resources. It is also important to consider other factors affecting the sale of products such as the channels of distribution as well as the level of commitment amongst the requesting companies in regard to the product (Kotler 2006 p 92). This is significant in the identification of a reliable distributor as well as the consumers whose request to agree. It is important to seek professional advice before entering in to agreements. The organization can then empower the distributors of its products for example by offering them display samples for their potential clients. This can take a relatively longer period especially if the product is new in the market. It is also significant to work closely with the distributors in order to ensure that they are capable of offering the best results. The organization should also set long term growth plans for example through entering in to partnerships. Ansoff’s Growth Matrix The Matrix consists of four quadrants. It serves as an indicator of the risks that a business might be exposed to whenever a move to a new quadrant is made. Most likely a move increases the risk. The strategic options in the matrix include; Market development is where producers target new marketing areas selling similar products to many different people. They target markets situated in different locations using different channels for sales. The market may be located near the producer or abroad. Online sales have been in use since internet technology was developed. This option targets a variety of customers who might be of different age; gender e. t. c. The second quadrant involves diversification, which is a risky option whereby there exists limited scope for utilizing any available expertise in marketing. In this case, producers rarely enjoy the economies of scale. This is because producers offer different services to different consumers (Wellman 2008 p 72). However, it is advantageous in the sense that if one product is affected by unfavorable circumstances in the market, there is the likelihood that the other will not be affected. Market penetration is the third quadrant with the option whereby producers offer more of a particular product for sale to the same consumers. Advertisement is a major tool for encouraging consumers to purchase the products. Loyalty schemes are usually introduced as well as purchasing a company that may be owned by a competitor. Activities to boost sales are usually adopted such as price launch and sales promotions. The fourth quadrant consists of product development, which involves selling a variety of products to the same consumers. Innovations are applied intensively in order to produce a variety of products. It can even be a change in the method of packaging or developing complementary products. The time for marketing is extended as well as the levels of customer service. The matrix assists marketers to manage risk suitably. It is useful especially when moving between the quadrants. Through it, the marketer is able to do the appropriate research in order to ensure that he is capable of satisfying the requirements of the quadrant which he intends to move to. He is also able to plan carefully the possible measures to take in case the move does not favor the business (McDaniel and Gates 2007 pp.67-80). New Product Failure Introduction of new products in the overseas markets is usually faced with many challenges. Competition is the major challenge since other investors may be competing for the same market. On the other hand, it might take time before consumers become fully aware of the organization’s products. Once awareness creation has been achieved, the organization is faced with the challenge of meeting the expectations of the consumers. However, there are several key issues that need to be addressed in order to maintain the success of new products; the person who comes up with the innovative decision should be allowed to be part of the implementation team. If it is implemented by other people, there are usually high chances of failure. The customers should be in focus when developing new products. Research and development should be more customer oriented (McDaniel and Gates 2007 p 71). This is because if a new product does not present the desired qualities to the consumers, they usually prefer the original commodities. Understanding what the competitor has introduced in the market is important, though it would not be prudent to reproduce their ideas to develop a new product for the company. Ideas need to be original. This is because reproduction of the same idea calls for a reduction in product prices in order to attract customers, leading to product failure. In general, organizations need to identify the product that is lacking in the market. This should be accompanied with the identification of the potential consumers (Blythe 2006 p 66). They should be enough in order to maintain the new product in the market. Internal Network and Strategic Alliances Alliances are significant for businesses in order for them to accomplish a common objective. They are also important in helping businesses to cope with competition in the market. On the other hand, alliances help the participating businesses to form barriers to entry in the market, thereby raising competition for emerging organizations. They also facilitate growth in the sense that instead of competing, they assist each other with innovativeness as well as reducing the risk associated with growth, especially when the organizations plan to establish in foreign companies. It would be more risky for an organization to expand its operations in foreign markets individually than through an alliance (Blythe 2006 p 66). The organizations that form an alliance usually engage in beneficial joint ventures whereby they unite through a common decision for example benefiting from economies of scale, as well as reduction in the cost of raw materials through making mass purchases as a group. The companies are capable of penetrating the market in a better way than as individuals. In such a situation, they are able to deal with barriers to entry than a single individual against cartels. They are also able to conduct sophisticated joint research for the purpose of product improvement. Companies usually benefit through narrowing their interior focus and widening their capability in particular production fields while on the other hand depending on their partners in the alliance to widen their expertise in particular areas that they are not competent. This expertise is then shared and each firm benefits from the other’s area of specialty (Wellman 2008 p 81). Sharing expertise is significant in ensuring that each company is competent in virtually all important fields in the market. This enhances competitiveness as well as a reduction in expenditure which could otherwise have been used in research and development in all the fields. However, there are tests and threats that emanate from the alliance, which each partner needs to overcome. These include sharing of expertise as well as achieving almost the same levels of profits while investors usually prefer to earn profits as individuals and not as groups. Bibliography 1. Baker M J. 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