The Space Electronic Company’s Issues

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Table of Contents

Problems
Causes
Systems Affected
Alternatives
Recommendations
Reference

Problems

Macro

The major problem to address at the macro dimension is how to restore and increase the profit margins and restore the declining market position of the company. It is known that a drop in profit margins of a company leads to loss of reputation and consequently, the customer base reduces. The Space Electronic Corporation needs to respond to these changes by checking all the possible reasons for the decline. One of the possible causes is the increase in competition.

The threat of competitors in the market arena is an issue that needs to be addressed effectively before the company runs out of operating capital. Reduction in market position and company’s profits are delicate issues that should be wisely addressed.

Micro

The company’s vice president of finance, Oliver Whittier, is concerned about the increased overheads and the current drain in the company’s profits (Brown, 2011). The increase in sales and the decline in profits of the company show that there is a major problem in managing the company’s overheads and general expenses. It is therefore important for the company to cross-check its financial management. This is because, under normal circumstances, the profits of a company increase with the increase in sales. The other problem in the company is the probability of losing the two contracts. Ted Byron, the marketing vice president, holds that the probability of winning the contracts is low (Brown, 2011 pp. 417).

Causes

One of the major causes of the current situation of the company is the separation of R&D from the entire organization. It is well known that for a business to flourish, it has to invest heavily in its research and development. Space Electronic Corporation has failed by isolating this important aspect of growth towards the success of an organization (Brown,2011). The decline in profit and market position could also be caused by other reasons such as low productivity of the workforce. This means that the company should look at all areas of the organization in order to find a lasting solution to the current problems. Failure to counter competition aggressively could also be a cause of the problem.

Systems Affected

There are several systems that have been affected in the case. The major ones are technical, managerial, goals and values, structural, and psychosocial systems. In terms of goals and values, the company is pessimistic about winning the contracts. Optimism is one of the key drivers in the success of any organization. The managers need to be optimistic about the risks they take and apply the necessary measures towards the prevention of potential risks. Since this company deals with electronic solutions, maintaining the best technology should be at its frontline goals. This means that competitors have more improved technologies.

The rise in the company’s overheads shows that the company has not employed the best technology that would ensure low overheads. The technical operations of the company should be enhanced to ensure that each unit of sales produces a considerable proportion of profit. The company should invest in cutting-edge techniques for cost reduction and also invest in equipment that would reduce the overall production costs in the company.

The structural system is affected since it involves making the decisions of the organization. The arrangement of the company’s structure is good if different heads of departments collaborated well. The managers have equal powers in their departments and therefore decision making can be easier since proposals of every member would be taken into account.

The managerial system has been affected largely by the dimension on which they perceive the winning of the two contracts. Some managers such as Ted Byron and Glen Overton are optimistic while others such as Oliver Whittier and Paul Brown are pessimistic about the chances of acquiring the contract (Brown, 2011). This shows that the latter officials would work towards installations of safety nets in case of loss of the contracts.

On the contrary, the optimistic members would prepare for handling the tasks since they have a belief that there are higher chances of winning the contract. The two conflicting actions would affect the endeavors of the company. Such an attitude also affects the psychosocial system in that the conflicting actions towards safeguarding their opposing actions would retard the development of the organization at large.

Alternatives

The case shows that there are only two projects in the next few years. This shows that managers are not dedicated enough to the development of the company. It is, therefore, an appeal to the company to increase the activity in the company. An increase in the activity shows that the company is geared towards growth and development. The four managers should work together in preparing an efficient budget that would allocate enough funds to all areas. This is an informed step since it could help to trace the areas where inefficiencies occur. This would prevent the increased overhead expenses since the manufacturing manager would control the process within the budgetary boundaries.

Creativity and innovations are two important aspects of growth and development in businesses. The company could embrace innovative techniques for cost reduction. Methods such as kanban and kaizen could be applied to reduce the cost of inventory. Since the company has high amounts of sales, it should embark on cost reduction strategies in order to have high-profit margins. People management is also very important; the company should devise additional motivational strategies in order to increase the productivity of people. Involving the employees in decision making could also help managers discover problems on the ground that they could not be aware of.

Recommendations

Reade Exton should advise his departmental managers to find data from his junior employees in order to come up with more proposals on the projects that could be undertaken to improve the welfare of the company. The other important aspect is the increase in R&D. the company should invest heavily in R&D in order to come up with new solutions that will enable the company to regain its competitiveness in the market and operate profitably. R&D would also help to find the best techniques for cost reduction. These measures would enhance the company’s well being and would also enhance the general environment of the company.

Reference

Brown, D. R. (2011). An experiential approach to organization development. (8th ed.). Boston, MA: Prentice Hall.

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