Category: Corporation

Introduction (Mission Statement)

The company Able Corporation is considered to be an old American manufacturer of electric power tools; it specializes in professional quality of its goods and service making a significant part in industrial and consumer channels. Able Corporation has a high reputation on the market, though recently it has not got any investment for further development and widening. As a result, the company product lines appeared to be outdated and stale; the operations are costly and inefficient leading to significant losses in the business process running.

Business strategies development for market operations of Able Corporation is to become an important step for high competitiveness financial health of the company; the principle mission lies in the outline of strategic tools and direction leading Able Corporation to successful business operating environment.

The basic objective of a business plan is aimed at a clear understanding of current problems faced by the company in order to make sufficient steps and strategies turning the weaknesses into the strengths.

Key Elements of Market Analysis

The basic elements in market analysis for Able Corporation are considered to be the following:

Market Growth Rate  the company is to identify the size of the market and its growth rate on the basis of target customers identification. People interested in electric power tools are to demonstrate the determination of the market growth rate through the development of a selling strategy plan and buying decision.

Profitability  this aspect is to be reached through determination of minimal market area of operating activities. Able Corporation is to aim its strategies at calculation the balance between supply and demand taking into account the rate of competitiveness; it is necessary to consider the threats of entry barriers and substitute products.

Industry Cost Structure  the determination of business success increase depends on the analysis of industry cost structure. This aspect in the business plan will help to stress the opportunities for competitive advantage development and analyze the central stages of manufacturing, such as, processing, fabrication, assembly, marketing (Coulter, 2007).

Distribution Channels  Able Corporation is to identify the peculiarities of distribution system through channels analysis. This aspect will be helpful in identification of possible additional channels for distribution with direct access to the customers. Besides, it will influence the improvement of the competitive advantage of the company.

Market trends  Able Corporation is to focus on the principle market changes in order to be aware of all the threats and opportunities to be face in future. The analysis of the trends will give an opportunity to investigate the customers, its competitors and the functioning of the industry in general. This aspect will be helpful in the determination of basic needs of the target customers and identify the competitors basic strategies.

Key Success Factors  Able Corporation is to focus on reinvestment of resources, being the part of a long term marketing strategy. The basic aspect in business plan development is concentrated on the reputation maintenance which can lead to profits increase and high service promotion. It is necessary to underline the fact that long term strategy development will became a significant step in companys financial health (Coulter, 2007).

SWOT Analysis

Strengths. One of the most important elements in a companys functioning is its direct connection to industrial and consumer channels. It should be noted that able Corporation has a curricular saws market share of dominant 40%. Besides, the company gained the reputation of cordless innovator through having success in the segment of cordless business. An important strength in the company development is considered to be strong brand equity and consumers and professionals loyalty. Able Corporation is a significant manufacturer because of the high service quality and fixed reputation on the market.

Weaknesses. It is necessary to underline the fact that the number of weaknesses is greater than that of strength. Marketing is one of them; the company has weak position on the market despite its reputation. The problem is caused by insufficient market operations investigation. This aspect appeared to be a link to the problem of low sales rate of the company; the identification of marketing importance in business sphere allows understand the principle drawbacks in Able Corporation operations. One should underline the fact that the company makes little investments in the development of its managements; as a result, it lowers the productiveness of organization and decreased quality of performed service.

One more weakness of Able Corporation is connected with unionized placement of manufacturing plans causing costly and inefficient operations; it should be stressed that the companys plants never perform to full potential. This factor as well as down equipment are the principle reasons for low productiveness and profitability of the company. Besides, the company has outdated product lines leading to low competitiveness and operating losses. Able Corporation has experienced lowering in its service quality, productiveness, as well as job performance by its employees.

Opportunities. Cordless power tools require construction workers; it is important for the company to meet the deadline in projects development, otherwise the company can suffer magnificent costs losses. Currently, Cordless segment reached 10% in its growth rate, though it is to be raised due to battery technology improvement. This aspect is closely connected with the opportunity of consumer channel growth increase.

Threats. The principal threat of companys development is related to industrial channels by 5% annually. The problem is caused by cheap and inefficient quality tools introduction. It is necessary to underline the fact that future unsuccessful companys functioning can lead to business destruction in Able Corporation; the threat of low quality measuring is the background for no competitiveness and low consumers rate. (Coulter, 2007)

Business strategies and Operating Principles

Corporate strategy. Able Corporation is on the way of losing market share, so, its basic strategy is to be directed at the improvement of marketing. The company is to provide high investment to the marketing department which is to be the first step to prosperity.

Success Metrics. The issue of success metrics is connected with compete control over inventory management, head count and inventory turnover. It is necessary to stress that the strategy will cover peoples reallocation, additional resources involvement and metrics flexibility.

Metrics Resolution. It is necessary to underline the fact that Able Corporation desired outcome is closely connected with metrics flexibility. It can be explained by company being forced for changes moderation within provided guidelines in case of non flexibility introduction.

Business strategy. This strategy is developed on the principles of the companys micro interests. It is aimed at insurance of effectiveness of the organization functioning. Able Corporation is to follow this step in accordance with the following steps:

• Management Department investing;
• Human Resource Management Development;
• Business Trainings within companys activities to increase the quality of the staff work;
• The improvement of competitive position of the organization;
• The growth opportunities are to be based on services and products development in order to exceed the expectations of the clients.

This strategic step is to take into account all the analyzed weaknesses of Able Corporation in order to see a clear picture of required changes and improvements.

Functional Strategy. The step is connected with support of Able Corporation service and product development. It is necessary to underline the fact that research center of the company is to develop the investigation of marketing and thorough study of its competitors. The company is to be customized for the purpose of strategy adoption within business team. Competitive advantages of the company completely depend on the introduction of this functional strategy. (Forsyth, 2002).

Operating Principles. Able Corporation functions in accordance with the following operating principles to be further developed in future:

• The outsource of specialized service allowing to obtain professionals and expertise within the industry;
• The raise of competitive level by means of building trust, risk sharing with the clients, practicing good judgment and communicating the vision to the customers;
• Provide the customers with responsiveness, predictability, business advocate, cost effective services, stable price programs and value for money. (US Housing Market Conditions. (2006)

Objectives of the Company

1 year. The period is to be aimed at the development of efficient business plan evaluating all weaknesses and possible consequences. Besides, objectives should be presented in the form of thorough market research a well as competitive level investigation.

5 year. A five years program is to be connected with the following long term strategies aimed at marketing improvement. The increase of market share will cause vivid positive changes in companys position and reputation; it will influence the productiveness of the company.

10 year. Able Organization is on its way to stabilization and fixed operating, business and functional goals. It is necessary to underline the fact that this period will give an opportunity to widen the innovatory sector of the company and get the support on the part of new investing partners. (Butler, 2000)

Conclusion

The development of a business plan for able Corporation gave an opportunity to balance the chances for the companys business prosperity. It is necessary to underline the fact that one of the most significant problems faced by the company is connected with market sharing and competitiveness; so, the strategies based on the developed; objectives, are to be formed in accordance with the possibility of their solving taking into account time and investment factors.

References

1. US Housing Market Conditions. (2006). Business and Finance. Web.
2. Coulter, M. (2007). Strategic Management in Action. Upper Saddle River, NJ: Pearson Prentice Hall.
3. Forsyth, P. (2002). Business Planning. Capstone. 128 pp.
4. Butler, D. (2000). Business Planning: a Guide to Business Start-up. Butterworth-Heinemann.

Abstract

Nucor is a renounced organization in steel. Thus, it is essential to understand and evaluate its working process and opportunities. The paper would evaluate its production based on its Economic characteristics, and this would be followed by its Business characteristics. To attain this goal, Michael Porters Five Forces of Competition model would be enforced and analyzed in the context of Nucor. Then the types of Generic Strategies of Nucor would be studies, followed by the reality of Investment opportunity in Nucor from the perspective of investors.

Summary

In the year 1998, Nucor Corporation recorded sales of $4.3billion in steel and steel-related products. In the year 1972, the firm was renamed Nucor. Nucor also demonstrates a dedicated technological focus. With expenses for scrap metal climbing, production outlay for steel to amplifies. A large fraction of steel revenues is resultant of the large purchasers. Switching costs for purchasers are low. The threat of substitutes is fairly low in the steel sector. The rivalry scenario in the steel industry is intense. Here also, steel importation creates massive competition amongst companies as imported steel can time and again be procured for more economical prices. It divulges no plans of expanding beyond steel and steel-related products.

Economic and Business Perspectives

Nucor is recognized in the market as a Fortune 500 corporation with a strength of more than 6,900 employees. In the year 1998, it recorded sales of $4.3billion in steel and steel-related products. (Pederson, 2006) The companys chairman, F. Kenneth Iverson, had been leading the firm for over 30 years. During his occupancy of the chairmanship, the steel markets faced numerous problems, incorporating overseas competition, stressed labor affairs, and dipping demand for steel (associated in part with the changeover to alternative materials). Regardless of these tough market challenges, Nucors performance under Iversons leadership climbed up at an annual compound rate of approximately 17 percent per annum (Pederson, 2006).

Nucor has established its varied services in rural areas throughout the United States, instituting healthy relationships with the local societies and its own labor force. As one of the foremost recruiters, along with the capability of paying excellent wages, it drew reliable, dedicated, and ready-to-toil employees. These issues also enabled Nucor to choose from among contending conditions, positioning its operations in locations that presented a tax structure that was conducive for business growth and legislative policies that endorsed the firms pledge to continue as a union-free outfit. By the year 1998, Nucor and its auxiliaries comprised nine businesses, possessing 25 plants. These businesses included the following: Nucor Steel, Nucor-Yamato Steel Company, Vulcraft, Nucor Cold Finish, Nucor Fastener, Nucor Bearing Products, Inc., Nucor Building Systems, Nucor Grinding Balls, and Nucor Wire (Pederson, 2006).

Nucor was at the beginning founded by Ranson E. Olds in the year 1897. On the brink of bankruptcy, Nuclear Corp. of America was set up in 1955, subsequent to unification with the Reo Truck Company. After recording substantial losses for successive years, a further restructuring in 1966 is referred to as the foundation of Nucor. In the year 1972, the firm was renamed Nucor. In more recent times, Nucor has been faced with few major challenges in relation to upholding Nucors repute for distinction and status in the industry (Thompson, 2004).

Nucor is still posting continuous growth due to many key success factors and tactical organizational potencies. The firms organizational approach is admired by many and presents a number of issues that which has had an important role to play in Nucors success.

Firstly, the corporation makes use of a decentralized business method. This approach has enabled Nucor to empower its managers and human resources to a large extent. The enhanced extent of empowerment enables every divisional authority to exercise proper control over everyday decisions that will boost productivity.

This decentralized business method also facilitates the company adopting a lean production approach as defined lean manufacturing refers to the fabrication of products by means of utilizing fewer resources, i.e., production of less waste, usage of lesser human exertion, raw materials, tools, inventory, and time. Nucor is continually determined to achieve improvement, i.e., an unvarying objective to trim down production cost is at all times the main concern, and this eventually facilitates lowering the costs of steel for the purchasers. Furthermore, a focus on caring for employees helps to lessen the employee turnover problem and thus increases the production efficiency. Safety is also a significant issue and a priority with Nucor and is constantly scrutinized and enhanced. Finally, Nucor emphasizes a healthy rapport with external entities. Consequently, the company is capable of instituting long-term sustainability with these entities. In addition, construction and supply outlay can often be lowered, which facilitates lowering the prices for customers (Thompson, 2004).

The categorically thriving business infrastructure of Nucor in conjunction with the aforesaid key management approaches has enabled the company to emerge as an industry leader. Nucor has surfaced as a highly regarded brand and boasts of first-rate brand awareness both internally and globally. Additionally, Nucor Corp. currently records a 22.4% market share in the U.S. and is coming into sight as an international leader in an industry which is extremely tough to contend in. Their dimensional growth has also enabled them to boost up production competence. Added facilities together with unvarying enhancement in the manufacturing procedures have allowed them to realize this enlarged capacity. Nucor also demonstrates a dedicated technological focus. The firm is continuously making efforts to amplify manufacturing and production rapidity. Sustainable innovation is at all times a priority and helps the firm maintain its status as a market leader (Pederson, 2006).

Porters five Forces of Competition Model

An industry atmosphere examination with the help of Porters five forces of competition model facilitates a better explanation of the present state of the markets and signifies the force of competition within it. The model is carved up into five divisionsthe threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products, and rivalry among competing firms.

First, among the issues- the threat of new entrants is moderately small or practically non-existent. This is consequential to the fact that there exist exceptionally difficult barriers to entry into the market. Launching a company within the steel industry is incredibly expensive and necessitates enormous capital investment attributable to high-priced initial machinery prerequisites. Furthermore, the competition is basically too severe for bigger corporations. In a market where size does matter, it is tough for new players to participate alongside well-known, recognized firms that have a stronghold over the market. Thus, their deficiency of necessary experience and lack of substantial dimensions aftermarket ingress normally does not let them survive long enough to get recognized and post-growth figures. Typically, such a situation can be contested by placing a distinctive product in the market that contends with rival brands. Nevertheless, the steel industry allows little or practically no opportunity for product demarcation. And thus, bigger established companies are able to offer their products at lower costs that meet the requirements of the purchasers. New entrants in the market are unable to counter such competitive initiatives and thus cease to exist (Cohen, 2005).

Next in consideration, the bargaining power of suppliers is comparatively high in the steel industry. The supplier factions are influential as a result of the significance of raw materials in the manufacturing procedure. In essence, the supplier group has authoritative powers on account of their crucial role as acceptable replacements to scrap metal and iron ore are not at present available to the industry. In the course of supplies of raw iron ore going down, costs shoot up. With expenses for scrap metal climbing, production outlay for steel to amplifies. In essence, scrap metal and raw iron ore are intangible merchandises, given that there are no substitutes available, and thus manufacturers are required to accept the prices that suppliers quote. In this case, too larger companies have an edge as suppliers are often more inclined to trade with larger manufactures as order magnitudes are superior (Cadle & Yeates, 2007).

The third component of this model is the bargaining power of purchasers. In the same way as the bargaining power of suppliers, the authority of buyers is substantial. As there is little product differentiation, outlay becomes the key driver in the industry. Competition from overseas manufacturers is severe, and steel importations in the U.S. are soaring. As a consequence, purchasers increase the pressure on the company, which has to make every effort to be as economical as possible. It is also extremely vital to strive to procure bigger accounts and then devote the required concentration so as to sustain them. A large fraction of steel revenues is resultant of the large purchasers. Its vital for manufactures like Nucor to strive to institute healthy relationships with such buyers to engender large and long-term benefits. Switching costs for purchasers are low. Consumers may bring in steel from overseas or acquire it from other domestic producers at lower costs. With the aim of remaining competitive, steel producers have to minimize costs and employ strategic managerial and business approaches to be capable of quoting the lowest value. (Cohen, 2005)

The fourth issue with which the model deals is the threat of substitutes. The threat of substitutes is fairly low in the steel sector. Basically, no other material can provide identical advantages per cost than that of steel. Aluminum is perhaps the most prevalent substitute for steel. However, aluminum is not as strong as steel. Most applications of steel have immense strength necessities (for example, infrastructure) that aluminum basically cant provide. Another possible substitute for steel is composites. Composite metals may be sturdy and lightweight but are usually substantially more expensive as contrasted with steel. Therefore, both these alternatives are unable to meet the demands as effortlessly or economically as steel can. Nevertheless, the upcoming times may present dissimilar results. As technology enhances, the performance potentials of alternatives like aluminum may also be improved. Sustainable innovations like metal heat treating immensely amplify strength and may emerge as a viable alternative. The likelihood of using alternatives will grow if steel prices climb steeply. If the availability of mineral ores decreases or if production costs increase, purchasers would be more inclined to consider substitutes for steel (Cadle & Yeates, 2007).

The final part of Porters model deals with rivalry among competitors. The rivalry scenario in the steel industry is intense. The key factor here is the cost as a result of very little or almost no product differentiation. This results in stiff competition among manufacturers and summarizes the magnitude of trimming down costs in the manufacturing process. In addition, joint ventures are especially widespread, and such occurrences give larger companies that control the markets by economies of scale a considerable competitive edge. The large corporation can push costs down by using experienced techniques and placing outsized supply orders that less significant companies plainly cant combat. Here also, steel importation creates massive competition amongst companies as imported steel can time and again be procured for more economical prices. Parallel labor legislation within the United States drives up production expenses that global firms dont have to deal with. As mentioned previously, switching costs are also quite low. The industry is rather inundated and offers purchasers a range of alternatives when considering purchases. Steel companies that are able to quote the lowest values generally tend to acquire the accounts (Cohen, 2005).

Strategy

The Nucor Corporations strategy primarily pays attention to two key proficiencies: instituting steel manufacturing facilities cost-effectively and streamlining their operations so as to make them more productive. The companys core competencies are incessant innovation, state-of-the-art equipment, personalized customer service, and a dedication to manufacturing premium-quality steel and steel products at viable costs. Nucor was amongst the first in the sector to implement several new products and pioneering development processes, such as thin-slab cast steel, iron carbide, and the direct casting of stainless wire.

In 1998 the company manufactured a larger variety of steel produces than any other steel producer in the whole of United Statesboth low-end (non-flat) steel, like reinforcing bar, and high-end (flat) steel, such as motor lamination steel which finds application in dishwashers, washers, and dryers, in addition to stainless steel utilized in the production of automotive catalytic converters and exhaust systems.

Nucors key client segments are the construction business (60 percent), the automotive and appliance sector (15 percent), and the petroleum industry (15 percent), while the residual 10 percent is split amongst various assorted purchasers. The companys low-end steel produces (half of the total output) is distributed by steel service networks, while the high-end produce (the other half) is marketed directly to equipment producers (OEMs), manufacturers, or end-use consumers (Pederson, 2006).

Nucors relative amount of debt in relation to the total capital was held within the mark of 30 percent. In the fiscal year1997, this ratio was recorded at 7 percent. The company is not inclined towards mergers and acquisitions and focuses heavily on internally generated growth. It divulges no plans of expanding beyond steel and steel-related products.

Investing in Nucor Corporation

It may be said undeniably that Nucor has posted an outstanding performance reviving from the close proximity of bankruptcy to emerge as a market giant. A large number of challenging issues have been tackled and prevailed over by the company. Their time-honored organizational approach, administration, human resources, and the dynamic quest for growth methods have enabled them to become known as a contemporary international industry giant. (Cohen, 2005) Nevertheless, this does not imply there will be any more tough challenges in the future for Nucor. Nucor is at present faced with rising competition from both national as well as global rivalries. The moderately new management (including Daniel DiMicco as president) poses significant questions about long-term success. Its very important that Nucor carries on growing and capitalizing on its international market share. The present administration must continue focusing on Nucors core competencies and make the most of a verified thriving organizational formation. The final verdict would be a yes to investment in the company with some degree of caution and restrain. (Cadle & Yeates, 2007)

References

1. Cadle, J., & Yeates, D. (2007). Project Management for Information Systems. New York: Pearson Prentice Hall.
2. Cohen, A. (2005). Secrets of special OPS leadership: dare the impossible, achieve the extraordinary. LA: AMACOM Div American Mgmt Assn.
3. Pederson, J.P. (2006). International Directory of Company Histories. London: St. James Press.
4. Thompson, A, A., Strickland, J., Strickland, A. J., & Gamble, J. (2004). Crafting and Executing Strategy: Text and Readings with Online Learning Center with Premium Content Card. NY: McGraw Hill Professional.

The significance of debt with respect to corporation acquisition is that it can be utilized as a source of finance. Corporation can in turn use the fund sourced through debt to finance the corporations acquisition of other entities. Moreover, corporation can as well use the debt feature to fight take over attacks from its competitors (Louis S, 2004, pp.314). In this case the corporation incurs large debt by deferring interest. Huge debt will in effect make the corporation unattractive to buyers.

Corporations employ the deferred interest feature with the intent of increasing the amount of debt (Louis S, 2004, pp.317-318).This is whereby the corporation delays to pay the interest on loans or bonds, and pay later together with the principal loan amount. This implies that the accrued interest is added to the principal loan amount. This in essence enables the corporation to fight takeover attacks as well as achieving enough funds for acquiring other corporations. On the other hand interest rates resets allow the corporation to increase interest on loan bearing assets such as bonds and loans. The corporation debt increases when interest rates resets are positive (Louis S, 2004, p.319).

Interco in acquiring a large amount of debt made her look unattractive to buyers. Typically, very few firms would like to acquire with a large debt. This can effectively assist corporation in fight takeover.

Bonus plan and the approach of giving employees option to buy company stocks are techniques employed by firms to maintain talented workers as well as attracting new ones, in effort to improve corporations productivity (Anne B & James S, 1998, p.862).

Bonus plan allows the company to reward her workers for excellent performance. This motivates the employees to work harder, which consequently translates to high companys productivity (Anne B & James S, 1998, p.869).

Another significant element of bonus plan is that is independent of the time span on which the employee as been with the company. This is to mean that both old and new employees are treated in similar way. This in turn can result to a vibrant workforce, which can improve the companys production. Bonus plan therefore can impact positively on Buzzyears net income when implemented appropriately.

On the other hand the option of allowing employees to purchase company stock creates the feelings of ownership in his/her mind (Anne B & James S, 1998 p.856). This spirit encourages the employee to work more diligently. The knowledge that he/she will share the companys profit can boost his/her morale. These in turn can results to overall increase in productivity in the company. Moreover, the worker in effect takes the leadership roles which ca result to better management of companys resources.

Considering the both options, would advice Buzzyear Company to adopt bonus plan. This is due to the fact that bonus plan prospects of establishing continuous improvement in companys productivity.

For subsidiary 1, that is MEOiL Oil Company, International Inc should adopt equity accounting method even it owns 75% of the Oil Company. This is because the government as issued a threat of nationalizing the subsidiary. This can be illustrated by the governments removal of non-native employees from the operation of the company. Equity method considers the element of voting rights. International Inc can utilize this technique to reduce the voting rights of the Government (Shannon P et al, 2000, pp.39-50). This in effect will minimize the governments influence on financial and operational policies of the Oil Company

For subsidiary 2 that is Ecological Inc, International Inc. should adopt cost accounting method. This is because Ecological Inc. is widely owned and also International Inc. owns only 15% of this subsidiary.

For subsidiary 3, that is Harmon national bank, International Inc should adopt consolidation method. This is because International Inc owns 100% of the Banks outstanding stock.

Works cited

Adrew Oswald (1997). Happiness and Company Performance.Economic journal Vol. 7 pp. 1815-1831

Anne Bruce and James S. Pepitone (1998). Motivating Employees. Oxford University Press. pp. 851-870

Baumol William, L, and Edward P. (2007) Economic Theory. The Quarterly journal of Economics 115(1) pp.99-146

Louis S. Freeman (2004). Tax Strategies for Corporate Acquisition, Dispositions, Spin-offs, Joint ventures, Financing, Reorganizations and Restructuring. Practicing Law Institute. pp. 311-320

Shannon P. Prat, Robert Reily and Robert P. (2000) Accounting Methods.McGraw-hill Professional. pp. 39-50

Introduction

Strategic sourcing is one of the most critical areas of strategic management that regulates all procurement activities of a company (Oshri, Kotlarsky, & Willcocks 2015). Successful organizations recognize that procurement should not be treated as only a cost function, but rather it has to be regarded as a valuable instrument that can help them to meet their long-term objectives. Therefore, if a company wishes to acquire a competitive edge in a market, its chief procurement officers (CPOs) have to be concerned with the creation of a system of effective strategic sourcing. To this end, it is necessary to take a strategic sourcing orientation and use the most current technological solutions for centralizing and managing procurement data. Not only do such instruments allow effectively control all aspects of procurement such as spend analysis, capability sourcing, supplier selection and evaluation, contract management and relationship management (Oshri, Kotlarsky, & Willcocks 2015, p. 30) among others, but they also help to analyze sourcing activities in the performance dimension. Moreover, heads of procurement department can use modern electronic systems for procurement management in order to align their activities with organizational objectives.

The aim of this paper is to examine a case study of a siding manufacturer, Durable Vinyl Siding Corporation (DVSC), and to provide its director of sourcing and procurement with extensive information on methods for reduction of procurement costs. The paper will analyze the differences between computerization, e-commerce, and outsourcing while focusing on the advantages and disadvantages of each option.

Overview

The desired reduction in procurement costs is not possible without the close management of material and information flows (Poluha 2016). Taking into consideration the fact that in manufacturing, the entire organization hinges on the effectiveness of the supply chain, its optimization can influence many variables of business governance. Therefore, the procurement department has to make sure that it explores all avenues for improving its performance criteria. Given that procurement activities have to be conducted with compliance with laws and regulations, it is especially important to make sure that the methods used for the reduction of procurement costs do not violate them. Currently, DVSC relies on manual methods for keeping track of its procurement processes (Coyle et al. 2009). Not only do these methods increase a chance of legal violations by introducing a substantial number of human errors into procurement documents, but they also cause data disintegration and redundancy. Therefore, the director of sourcing and procurement is recommended to consider alternative options for the companys purchasing strategic plan.

Computerization

Computerization has completely changed the landscape of modern management. Supply management has not been an exception in this respect and has seen a radical transformation of all procurement processes. No one would deny that the competitive nature of the modern business environment makes the effective use of computer-based procurement an operational necessity (Gitau & Iravo 2014, p. 319).

The use of the Internet for business operations has made possible placing purchase orders through web platforms, which would not have been possible two decades ago. Computerization can help to boost productivity and reduce cycle times generated through the automation of routine processes such as requisition and purchase order generation, quotation, bidding, order tracking, expediting, supplier payment, and procedural compliance (Sollish & Semanik 2012, p. 267). By leveraging computer systems, it is possible to make buying decisions in accordance with market trends in buying and availability (Sollish & Semanik 2012, p. 267). Computer systems also allow procurement departments to standardize and speed up their requests for information (RFIs), thereby substantially reducing the cost of the procure-to-pay process. Using such systems, businesses have even been able to improve their selection in areas such as maintenance, repair, and operations. Moreover, transaction costs for low-value items necessary for these areas can also be reduced with the help of computer technology. Furthermore, computerization serves as an effective research tool allowing purchasing professionals to shop around and compare suppliers capabilities and to peruse online catalogs (Gitau & Iravo 2014, p. 321).

A supplier-managed inventory program is a computerized tool that has to be considered for use in DVSC by the director of sourcing and procurement. The instrument allows a higher level of collaboration between buyers and sellers, thereby facilitating the sharing of demand and supply data. With the help of supplier-management inventory programs, procurement departments can have access to all sellers inventories and pay only for those items that they use. (Sollish & Semanik 2012). This method of managing ones procurement process is called consignment inventory, and it allows freeing substantial share of resources across the whole supply chain of an organization.

It should be noted that the use of computer-based procurement tools necessitates internal and external integration to ensure a high level of procurement efficiency, which can be considered a minor drawback of the option. Companies that are willing to maximize their procurement performance have to coordinate their purchasing processes on an organization-wide basis. Therefore, the successful integration of computer-based procurement solutions depends on the companys ability to create unified interfaces across its distinct functions and processes. Effective managers have to go beyond the traditional approach to supply chain in which the various functional-level decision-makers primary concern focuses on their own departments (Gitau & Iravo 2014, p. 320). External integration requires treating suppliers as an essential component of the procurement process and necessitates active collaborative efforts on the part of buyers.

E-commerce

E-commerce (EC) is an effective method for improving the efficiency of operational processes of procurement departments. Amani (2015) defines EC as the act of buying or selling goods or services over the Internet (p. 10). The use of EC for the facilitation of interactions between business (B2B) is called e-procurement, and computer-based platforms for conducting B2B commerce operations are known as electronic procurement systems (Amani 2015). There are many areas of e-commerce; however, the rate of adoption and rapid progress of B2B e-commerce suggests that it is the most important one. The differences between computerization and e-commerce are not pronounced; therefore, they do not merit rigorous scrutiny. However, it has to be mentioned that widespread adoption of computer-based procurement solutions by organizations in both private and public sectors has led to the promotion of e-procurement platforms, which can be viewed as a logical continuation of computerization.

In recent years, procurement managers have recognized that the use of the Internet for the facilitation of purchases can have a revolutionary effect on the way companies conduct their purchasing practices. Whereas computerization can only spell benefits in the areas of maintenance, repair, and operations, e-procurement systems can be used for streamlining and reducing costs of purchases related to sales, administration and maintenance, travel-related items, cleaning, solvents, and transportation services among others (Amani 2015, p. 2). If companies that adopt e-procurement solutions are able to eliminate manual purchases, they can achieve savings of more than 40 percent in transaction costs for direct procurement (Amani 2015). According to Croom and Brandon (cited in Amani 2015), implementation of e-procurement systems can reduce up to 75 percent in purchasing transaction costs and up to 18 percent at purchasing price for indirect procurement.

Just like computerization, e-procurement can speed up the processes of identification, negotiation, and evaluation of products offered by different suppliers. Another advantage of both e-commerce and computerization is the ability to render procurement process invisible for outsiders. Similarly, both methods allow making procurement process completely transparent for insiders, thereby increasing the efficiency of purchasing operations and reducing inventory management costs (Amani 2015).

It should be noted that similar to computerization, e-procurement is associated with minor disadvantages. Technology that is being used for both methods of cost reduction can become a barrier that hinders integration with suppliers that do not have a technologically-friendly organizational culture. Adoption of computerization and e-procurement or e-commerce can also be impeded by a lack of employees support or absence of skilled staff with a sufficient level of information system knowledge (Amani 2015). Amani (2015) notes that even if a company has qualified personnel in its information systems department, the professionals will have to face another type of technology, which necessitates new maintenance activities and costly learning process.

The prohibitively high cost of implementation of e-procurement platforms may prevent organizations from heading to change. Another disadvantage of e-procurement is the necessity to have an external environment that is supportive of the system in terms of regulatory and legal boundaries of the industry (Amani 2015). Procurement department managers should also be cognizant of the fact that security of transactions can be compromised when it comes to e-commerce. This disadvantage of the technology has to do with the fact that data transmitted on it can be garbled and reassembled wrongly at the other end, or can display only partially because of incompatible software (Amani 2015, p. 15). The realization of computerization and e-procurement benefits is hard to measure because the success of the implementation of both methods of cost reduction is radically different across various companies and industries. Therefore, not all organizations are willing to adopt e-procurement solutions given a lack of evidence on the impact of the replacement of existing procurement methods and technologies. Moreover, choosing a proper e-procurement platform is a daunting task that prevents the heads of procurement departments from heading to change.

Outsourcing

With the ever-growing level of complexity of supply chain management (SCM) functions of the modern businesses, many managers of procurement departments opt for outsourcing their procurement activities to a professional third-party (Lu, Meng, & Goh 2012). The providers of outsourcing services help their clients to manage one or several areas of their SCM thereby increasing its responsiveness. Other advantages of procurement outsourcing over computerization include but are not limited to, a third-partys demand pooling, expertise in SCM, and intricate IT or operational infrastructure (Lu, Meng, & Goh 2012). Given that purchases of goods and services can account for 50 to 90 percent of a companys cost of goods sold, it would be unwise for managers of procurement departments not to consider outsourcing some strategic and tactical processes related to procurement function of their companies (Brewer, Wallin, & Ashenbaum 2014). According to (Brewer, Wallin, & Ashenbaum 2014), an additional benefit of procurement outsourcing is a reduction of administrative costs by up to 70 percent. Other advantages of the option are enhanced contract compliance and increased behavioural and process discipline (Brewer, Wallin, & Ashenbaum 2014).

Procurement outsourcing can be divided into two categories: direct outsourcing and indirect outsourcing (Lu, Meng, & Goh 2012). Direct procurement outsourcing includes all goods purchased which then directly enter into the production process of the company (Lu, Meng, & Goh 2012, p. 33), whereas indirect procurement outsourcing includes the purchases that a company makes to enable its activity. Indirect procurement outsourcing is being rapidly accepted across the globe because organizations tend to rely on third-party suppliers of services that lay beyond the scope of their procurement departments. Unlike computerization and e-commerce, procurement outsourcing is associated with advantages of better leverage, professional negotiators, and smaller headcount (Brewer, Wallin, & Ashenbaum 2014). The extant literature on the issue provides competency performance as the main reason for adopting this cost-reducing strategy. From a competence perspective, a company will be better off if it focuses on its core competencies while outsourcing all remaining activities (Lu, Meng, & Goh 2012).

However, it should be noted that some scholars recognize procurement as a strategic function, and argue that outsourcing this function may lead firms to miss important innovations that could maker manufacturing more efficient (Brewer, Wallin, & Ashenbaum 2014, p. 5). Moreover, supplier relationships are also referred to as strategic; therefore, a companys procurement competence is related to its ability to leverage these relationships (Brewer, Wallin, & Ashenbaum 2014). This disadvantage of the cost-reducing option is especially important since DVSC seeks an effective way to improve its financial performance. However, taking into consideration the fact that the companys resources are constrained, it might be better off focusing on other activities. For example, the procurement of indirect materials cannot be considered a critical area of SCM strategy of DVSC; therefore, it is recommended that the company joins third-party outsourcing agreement. Additional disadvantages of procurement outsourcing, which are not inherent to computerization and e-commerce, are reduction in supply-base visibility that can result in the unauthorized replacement of suppliers, exploitation of suppliers, overbilling, loss of buying-firm leverage and general risk of supplier opportunism (Brewer, Wallin, & Ashenbaum 2014, p. 7).

Recommendations

The strategic sourcing plan for DVSC should establish a high-level approach to cost reduction that is only possible through the implementation of improvements in the form of inventory reduction, better quality, and lower prices (Sollish & Semanik 2012). The review of current market conditions and cost profiles of the company has helped to identify three cost-saving opportunities: computerization, e-commerce, and outsourcing. Supplier performance and spending history in the areas that are directly related to the companys mission suggest that DVSC has to put more emphasis on value engineering as a means of finding ways to consolidate its spending and use fewer suppliers. Moreover, there is a need to overhaul the entire internal procurement process in order to implement cost-saving opportunities covered by opportunity analysis.

Opportunity analysis has helped to better understand each of the three avenues for cost reduction that exist in the market, outside of the relatively limited picture taken from the organizations experience (Sollish & Semanik 2012, p. 69). The results of the analysis suggest that in order to resolve the procurement issues at DVSC, it is necessary to combine two cost-reducing options: e-commerce and outsourcing.

In the area of direct procurement, the director of sourcing and procurement of the company, is advised to take e-commerce approach to the improvement of the efficiency of operational processes of the procurement department. By implementing e-commerce solutions, DVSC will be able to eliminate manual purchases, thereby saving up to 40 percent in transaction costs (Amani 2015). Furthermore, the company will be able to streamline its maintenance, repair, and operations-related procurement process, thereby substantially reducing the headcount of its procurement department. Moreover, the processes of identification, negotiation, and evaluation of products offered by different suppliers will be invisible to outsiders, which is extremely important in the area of direct procurement.

In order to achieve cost-reduction in the area of indirect procurement, DVSC is recommended to use outsourcing services of a professional third-party. Taking into consideration the fact that procurement of indirect goods and services often lays beyond the scope of procurement departments the company will be better off if it focuses on its core competencies while outsourcing all remaining activities (Brewer, Wallin, & Ashenbaum 2014). By doing so, DVSC will be able to enjoy numerous advantages of the option, which include but are not limited to a third-partys demand pooling, expertise in SCM, and intricate IT or operational infrastructure (Lu, Meng, & Goh 2012).

Conclusion

Opportunity analysis has shown that the combination of e-commerce and outsourcing is the optimal approach to resolving the procurement issues at DVSC and achieving maximum cost-reduction. E-commerce should be applied in the area of direct procurement, while the benefits of outsourcing will be more pronounced in the area of indirect procurement.

Reference List

Amani J 2015, Critical assessment on effects of e-procurement in enhancing project performance among private sector organizations in Tanzania: A case of applied technology, Web.

Brewer, B, Wallin, C, & Ashenbaum, B 2014, Outsourcing the procurement function: Do actions and results align with theory?, Journal of Purchasing & Supply Management, vol. 171, no. 1, pp. 4-11.

Coyle, JJ, Langley, CJ, Gibson, BJ, Novack, RA, & Bardi, EJ 2009, Supply chain management: a logistics perspective, Cengage Learning, Ohio.

Gitau, M & Iravo M 2014, Factors affecting computerization of procurement functions in the service industry in Kenya: A case study of CIC Insurance Group LTD, The Strategic Journal of Business & Change Management, vol. 2, no. 17, pp. 318-338.

Lu, Q, Meng, F, & Goh, M 2014, Choice of supply chain governance: Self-managing or outsourcing?, International Journal of Production Economics, vol. 154, no. 1, pp. 32-38.

Oshri, I, Kotlarsky, J & Willcocks, L 2015, Achieving success and innovation in global sourcing: Perspectives and practices, Springer, New York.

Poluha, G 2016, The quintessence of supply chain management: What you really need to know to manage your processes in procurement, manufacturing, warehousing and logistics, Springer, New York.

Sollish, F., & Semanik, J 2012, The procurement and supply managers desk reference, John Wiley & Sons, New York.

Globalization has led to unprecedented opportunities for International trade and business investments. Varieties of multinational firms are expanding their global operations by applying entry strategies such as subsidiaries and joint ventures. For instance, the Ford Company has been in a joint venture with Sollers for the last two years. Another company that has expanded its global operations is the Coca Cola Company. The success of these multinational companies never came on a silver platter. These companies encountered various challenges that are discussed in this work.

Issues The Host Country Could Face Because Of The Expansion

The expansion of PPQ will create a number of issues to the host countries. To begin with, the subjects of constant competition will emerge. As a matter of fact, an increase in the number of companies will lead to an increase in the level of competition. This will lead to production of power brands by the different companies involved in the competition. To give a further explanation, power brands are designed by firms to specifically give the firm a comparative advantage over others. Another issue that will emerge from the competition is lower prices. Most customers tend to prefer lower priced commodities as compared to highly priced commodities. The same competition will lead to a reduction in prices of commodities in the host country. Consequently, the companies involved in the industry should prepare to lower the prices of their commodities.

Another issue that may crop up is the threat to the local industry. This is because the newly established will company will also try and command the local market (Masters, 2004, P. 7). This is a major threat to the already established companies.

Common Cultural Barriers by Multicultural Companies

Cultural difference is also another barrier to streamlining the operations in multinational corporations. It is crucial for multinational companies to consider the cultural differences prior to investing in a foreign geography. These differences can be political states, language, religion, demand types, or even preferences. Foreign nations have a tendency of having different thoughts and priorities on how they conduct their businesses. In fact, culture influences the behavior of managers and other employees when interacting with others (Dreari, 2008, P. 15). This affects the perception of employees on their manager. Furthermore, expected behavior is linked to cultural values. The failure by Wal-Mart in Germany is a good example of some of the cultural barriers to any multinational company. Wal-Mart expanded into Germany by using the same management and business tricks it used in the U.S. It is sad that the management failed to recognize the disparity in the two countries thus, leading to the failure in Germany. Nonetheless, Wal-Mart learnt from their mistake and improved on their decision when expanding to China. The use of local brands and joint ventures enabled Wal-Mart to earn a considerable section of the Chinese market.

Importance of Diversity to the International Arena

Diversity has grown to become a vital concern in the current world of International business. The effect of cultural diversity varies depending on the companys culture and the type of environment. The effect and significance of cultural diversity has increased with the increase in the number of multinational companies. In fact, dynamic organizations are constantly searching for different employees owing to the fact that a diverse workforce is essential in the international business. This is because a diverse workforce brings different ideas, interests, and talents. Any organization that fails to clinch diversity efficiently and do not take a holistic style of eliminating injustice and prejudice negatively affects their clients and employees. Organizations have to focus on holistic policies that tackle wider human resource problems, and appreciate a diverse employee atmosphere (Kundu, 2003, P.1).

Effects of Ignoring Multiculturalism

Any organization that fails to clinch diversity efficiently and do not take a holistic style of eliminating injustice and prejudice negatively affects their clients and employees. Organizations have to focus on holistic policies that tackle wider human resource problems, and appreciate a diverse employee atmosphere (Kundu, 2003, P.1). Actually, companies that ignore multiculturalism are deemed to fail. This is because clients and employees have a tendency of discriminating against firms that do not diversify their cultural preferences. In fact, employees are apt to work harder when they are assured that their company knows no cultural boundaries. On the other hand, companies with cultural prejudice tend to demoralize the alienated staff. This cuts down on their output thus, limiting the firms human resource. Cultural boundaries do not only affect the staff, but also affects the clients. To elucidate further, a company with a diversified culture provides goods and services to all. This improves on their sales and boosts the profits of the company.

Political and Economic Issues Arising From Global Expansion

Any company with a motive of expanding its operations beyond its borders should be prepared to counter some political and economic challenges. To begin with, the topic of compensation benefits is a major political concern for multinational companies. The laws from different nations create a challenge in compensating employees. For instance, the laws in the U.S. make compensation for employees than other countries. A good example of a country where the employees receive low compensation is china. In multinational organizations, the wages of employees especially the salary of the Chinese managerial work force much relates to their performance. This implies that there is not much benefits and compensation for Chinese staff. A related outcome for such a system is an increased number of job frustrations with an experienced and qualified staff (Wu, 2008. P. 3). This can make employees to give little effort to the company. Another political challenge to multinational companies is political instability. The safe political environment is necessary for efficient business transactions. This ensures that any investments made by a multinational company have enough time to reap benefits. This owes to the fact that political instability can lead to wars, which may in turn lead to losses for multinational companies.

Economic challenges may also be experienced in foreign countries. Evidently, different populations have different purchasing power. For instance, the purchasing power for citizens in developed countries is far much higher than the purchasing power for citizens in developing countries. In fact, the citizens in developing countries spend have little to spend on luxuries (Govindajaran & Gupta, 2004, n.p.). This is majorly because the poverty levels in their countries only allow them to purchase the basic needs. That said multinational companies should analyze the purchasing power of different countries before making their expansion decisions. Ultimately, the availability of funds or loans in foreign countries is also another economic challenge. Countries that provide loans to investors always give room for investments by multinational companies. That said it is important for companies to expand to countries where access to loans and credit is readily available (Dreari, 2008, P. 23).

Importance of These Issues To Germany And Japan

Both Japan and Germany have a tendency of restricting their cultural diversity to their customs and traditions. Thus, when expanding to these nations PPQ must consider the cultural barriers in place. For instance, Japan has cultural issues involving the ethnic minorities and the Yamato Japanese. In Germany, the conflict between the resident Germans and the immigrant Muslims is escalating. Therefore, it is important for PPQ to invest in these countries while favoring the majority. However, it will be necessary for PPQ to try to consider the minorities due to cultural diversity. The Political and economic reasons above will not apply to Germany and Japan. This is because the countries are politically stable, developed, and provides access to loans and credit.

References

Dreari, A. (2008). Barriers for Multinational corporations. Web.

Govindajaran, V., & Gupta, K. A. (2004). Taking Wal-Mart Global: Lessons From Retailings Giant.Web.

Kundu, S. C. (2003). Managing Cross-Cultural Diversity. Delhi Business Review, 2(2), 1-8.

Masters, G. (2004). Wal-Marts Global Challenge. Web.

Wu, J. (2008). An analysis of Business challenges Faced by Foreign Multinationals Operating the Chinese Market. International Journal of Business Management, 3(12), 1-6.

Introduction

Over the recent past, the business environment has become very dynamic. The changes in the business environment, have forced businesses to be more concerned with developing their strategic direction. Strategic direction refers to an organizations strategic intent (Simons, 2000, p.45). This paper analyzes the strategic direction of Telstra by taking into account a number of issues such as the organizational tensions facing the firm and how it can confront them.

Identify and explain the strategic direction of the organization

According to Horngren, Datar, Foster, Rajan, and Ittner (2009, p.1), an organizations strategic direction is illustrated by its vision. Strategic vision defines the organizations purpose and direction. It also outlines the organizations mission and goals. An organizations strategic direction also incorporates the firms culture. By establishing a strong organizational vision, an organization is able to establish a link with the companys values hence increasing the probability of achieving each of the predetermined goals. Strong vision contributes towards increased participation, enhanced communication, and employee commitment. Horngren et al (2009, p.1), further asserts that an organizations strategic vision is critical in an organizations effort to ensure that it is strategy-focused.

Telstras vision entails improving how people live and work. On the other hand, the firms mission entails providing its customers with diverse telecommunication technologies that are easy to operate and result in maximum customer value. The firm is also committed to serving its customers more effectively compared to its competitors. Telstra is also committed to developing a comprehensive understanding of its customers (Telstra, 2012, para. 1-3).

Telstra has also integrated a set of values in its strategic direction. The core values which guide the firms operations entail ensuring effective service and respect for all stakeholders and developing a high level of trust and integrity. With regard to integrity, Telstras management team is committed to ensuring that it operates in an ethical and honest manner. One of the ways through which the firm intends to achieve integrity in its operation is by complying with the law. Telstras management team is also committed to nurturing teamwork and accountability within the firm.

Telstras strategic direction is also well illustrated by its culture. Over the years, Telstra has developed a strong organizational culture. The firm has taken into account three main categories of culture. These include relating to being customer-driven, increasing the rate of collaboration and innovation, and the winning culture. To become customer-driven, Telstra is committed to understanding its customers needs, ensuring reliability, and ensuring that it offers its customers ready products, being courteous, and keeping its promises.

How strategic direction can be used in the context of the organizational tensions

Telstra is experiencing a number of tensions for example the need to balance its short-term results against its growth opportunities and long-term capabilities. Telstra has to ensure that it establishes a balance between its long term investment and short term profit demands. In order to achieve this, Telstra has diversified its operations by owning other firms which include Foxtel and HFC.

The second tension that the firm is facing arises from new legislation within the Australian telecommunication industry. The legislation requires firms to cease from being an owner and service provider. This is causing tension within Telstra with regard to its profit, growth, and control. The new legislation is limiting Telstras ability to attain its profit maximization objective. The new legislation requires Telstra to divest some of its investments such as Foxtel which is a major contributor to the firms competitive edge with regard to its sales. The legislation has made Telstra experienced a decline in its share price.

As a result of the above legislation, Telstra is facing a third tension arising from the need to balance its performance with the expectations of the various interest groups such as the shareholders, suppliers, financiers, employees, customers, and government bodies such as regulators. The continued support of Telstra by these parties is dependent on how effective it meets their expectations. For example, the firm has to ensure that it creates value for its shareholders. Failure to do this may force the shareholders to sell-off their shares. The resultant effect is that the organization may experience financial strain.

To confront these organizational tensions, Telstras management team has to ensure that it adheres to its strategic directions. One of the strategic directions which the firm should focus on is its vision which entails delivering a unique experience to its customers. In its operation, Telstra is committed to offering its individual and institutional customers technology solutions characterized by one click, one touch, one button, one screen, and one step solutions.

One of the ways through which Telstra can attain this is by engaging in research and development. This will lead to an increment in the range of products that the firm offers. The resultant effect is that the firm will be able to offer its customers diverse and high-quality products (Langfield-Smith, 2009, p.42). Currently, mobile phones are the main source of Telstras sales revenue. Therefore, in line with its strategic direction, Telstra has to ensure that it focuses on expanding its wireless spectrum when conducting its research and development. This will increase the firms ability to satisfy its customers.

If Telstra attains this, it will be able to deliver high value to its customers. This will culminate in the attainment of a unique customer experience hence increasing customer satisfaction. Increased customer satisfaction will translate into increased sales revenue and hence the firms level of profitability.

As a result of increased profitability, Telstra will be able to attain its wealth maximization objective. The resultant effect is that the firm will be able to offer its customers higher dividends. For example, during its 2010/2011 financial year, Telstra paid dividends amounting to $3.5 billion to its shareholders. Investing in research and development will enable Telstra to become more customer-focused (Ferguson, 2012, p.5).

Telstras organizational structure and how it seeks to focus the attention of the employees to its strategic directions

Designing an effective organizational structure is very important for the success of an organization. An organizational structure ensures that there is a free flow of material and information in addition to ensuring that the employees are focused (Simons, 2000, p.45). In its operation, Telstra has integrated a hierarchical organizational structure. The organization is headed by the Chief Executive Officer. To ensure effectiveness and efficiency in its control processes, Telstra has integrated a number of work units which are based on work processes.

The work units have significantly contributed to the firms effectiveness and efficiency in its operation in a number of ways such as through increased specialization, minimizing cost and avoiding time wastage as a result of switching tasks. The firm has a number of work units which include customer care department, finance department, information department, human resources, operations department, sales and services, digital media department, strategy and corporate services, research and development and marketing departments.

Through these work units, Telstra has been able to ensure that its employees become focused to the organizations strategic direction. For example, through its human resource department, Telstra has been able to ensure that its employees are satisfied. One of the ways through which the firm attains this is by ensuring that its employees are effectively compensated. The firm has attained this by integrating an effective employee reward system which incorporates salaries and promotions.

To ensure that its employees are committed towards attainment of the firms strategic directions, Telstra has incorporated the concept of employee development by integrating an employee training program. This has played a significant role in improving the firms competitive position in addition to enhancing the level of satisfaction amongst the employees.

Considering the dynamic nature of the information and communication industry, training has enabled Telstra to enhance the effectiveness and efficiency with which its employees deal with changes occurring within the business environment. The firms training program has enabled the employees to attain their potential through increased employee empowerment. The resultant effect is that they employees are able to offer high quality services to the customer which is in line with its strategic direction of delivering customer value.

Delivery of quality services to the customers is also enhanced by the fact that the firm has a sales and services department which enables the firm to effectively handle diverse customer issues. On the other hand, through its information department, Telstras management team ensures that its employees are committed towards the organizations strategic direction. This is attained by ensuring that the employees become customer focused (Blocher, Chen & Lin, 2008, p.34).

Reporting relationships within the organization

In an effort to establish the reporting relationship within Telstra, I evaluated the companys organizational structure from its website which is accessible to the public. From the evaluation, I identified that Telstra operates as an interdependent entity. This has arisen from appreciation of the fact that communication plays a very important role in an organizations success. As a result, Telstra has integrated a comprehensive internal reporting relationship.

Despite the fact that Telstra has adopted a hierarchical organizational structure, the firm has established both vertical and horizontal reporting relationships. Telstra has attained this by incorporating the concept of delegation. The firm delegates some of the management duties to the various line managers. In their horizontal communication, departmental managers are required to be accountable on different issues associated with their respective departments. To achieve this, departmental managers are required to maintain a good communication relationship with the line managers and supervisors on various issues associated with their department. This increases the effectiveness with which departmental managers attains operational efficiency.

To ensure development of an effective reporting relationship, Telstra has incorporated both a top-down and bottom-top communication process. For example, employees are required to report work-related issues to their respective supervisors who in turn report to their departmental managers. The departmental managers report directly to the Chief Executive Officer. On the other hand, the CEO communicates to the departmental managers who in turn communicate to the employees through the supervisors. The vertical and horizontal reporting relationship illustrates that the firm has adopted an effective chain of command. Additionally, the firm has been able to lower the managers span of control.

Performance measures

There are different ways through which Telstra measures its performance. Some of these include determining the firms profitability, solvency, liquidity and financial efficiency. The profitability measure is used to evaluate the extent to which the organization generates profit by utilizing the factors of production such as labor, land, capital and management. The profitability of an organization can be evaluated by determining the net revenues that an organization generates from its normal operations less the variable expenses. To ensure effectiveness in determining profitability, the accrual basis should be used. Additionally, an organization can also determine the rate of return on assets. Another profitability measure that can be integrated is the operating profit margin.

On the other hand, the liquidity measure is used to evaluate the effectiveness with which the organization meets its short term financial obligations without affecting its normal operations. One of the ways through which an organization can measure its liquidity is by calculating its current ratio. The third measure that an organization can use is determining the organizations solvency. This measure is used to assess an organizations ability to pay its financial obligations if all its stocks are sold. One of the solvency measures includes assessing the debt to equity.

The fourth measure that the organization uses is financial efficiency which is used to evaluate how an organization utilizes its asset to generate gross revenues. This measure is also used to assess the firms effectiveness in production, making financing, product pricing and purchasing decisions. Through these measures, Telstra is able to determine whether it is moving towards attainment of its strategic directions.

Financial performance measures

A companys financial performance can be assessed using a number of measures such as operating profit, Return on Equity (ROE) and Return on Asset (ROA). Over the past few years, Telstra has experienced a mixture of strong and weak financial performance. However, the firm has managed to maintain a relatively high level of financial profitability. During its 2011 financial year, Telstras earnings before interest, tax and depreciation amounted to $ 4, 750 million which was an increment with a margin of 3.7% (Ferguson, 2012, p. 2).

Additionally, the firms ROE at averaged 25%. This has been very impressive to its shareholders because they are assured that their financial investment is effectively being utilized. Information on an organizations return on equity can be used to show the effectiveness with which the firm can generate cash internally. However, the firms decision to distribute a significant proportion of its earnings to shareholders depicts a weakness with regard to re-investment and capital management.

Telstra has also managed to develop a strong return of asset. For example, during its 2011 financial year the firms ROA was 15.9% (Ferguson, 2012, p. 15). ROA is an important component in a firms strategic direction. This is due to the fact that existing and potential investors can be able to determine the effectiveness with which the organization manages its assets. This forms the basis of their financial investment decision. A high return on asset shows that the firms management team is very effective in utilizing its resources to generate profit. Additionally, Telstra can use its ROE and ROA to source funds externally for example by issuing shares.

On the other hand, these performance measures can also be used by the organization to seek financial resources from financial institutions such as banks. When advancing loans, financial institutions take into account organizations efficiency in managing its assets. Therefore, on the basis of its ROA and ROE, Telstra can be able to enhance its financial stability. The firm will also be able to increase its long projects such as research and development.

Having a strong ROE and ROA indicates that the firm is very effective in managing the shareholders equity and maximizing returns using the organizations resources. This will increase the level of confidence amongst the shareholders and potential investors.

Conclusion

Formulating and adhering to a strategic direction is paramount in the success of an organization. Some of the issues which should be taken into account relate to defining the organizations mission, vision and values. The strategic directions should be used to counter organizational tensions facing the firm. Additionally, an effective organizational structure should be incorporated so as to develop a strong working and reporting relationship.

However, a manageable span of accountability should be integrated so as to ensure that the employees are focused towards the firms strategic direction. The analysis also illustrates that an organization can analyze various performance measures so as to determine its efficiency in meeting its strategic directions. In case of any deviation, the management team can be able to integrate the necessary measures to counter such deviations.

Reference List

Blocher, E, Chen, K & Lin, T, 2008, Cost management: A strategic emphasis, McGraw-Hill/Irwin, London.

Ferguson, S, 2012, Telstra Corporation Limited financial resuslts for the half year. Web.

Horngren, C, Datar, G, Foster, S, Rajan, M & Ittner, C. 2009, Cost accounting: A managerial approach, Prentice Hall, Sydney.

Langfield-Smith, K, 2009, Management accounting: Information for managing and creating value, McGraw-Hill, London.

Simons, R, 2000, Performance measurement and control systems for implementing strategy: Text and cases, Prentice Hall, New York.

Telstra. 2012. About Telstra. Web.

Duties of directors in a corporation

Directors roles include coming up with values that the corporation needs to promote and develop goals to be achieved in the company. They also determine the corporations vision and mission. Directors of corporations play the following roles. They are supposed to act within their powers to ensure the corporations they lead run in accordance with their constitution as stipulated in the articles of association. They are mandated to act in true faith to ensure stakeholders interests are achieved.

Directors are supposed to carry out their duties in a competent and professional manner. Directors are supposed to direct other, senior, and junior staff in a way that will make the organization achieve its objectives. Directors roles include ensuring the companies engage only in lawful business dealings. They should ensure they exercise fair judgment to all stakeholders. They need to ensure organization properties are secure and are not misused them. The directors role includes ensuring employees and stakeholders do not have a conflict of interest in the corporation.

Duties of shareholders

The shareholders roles include providing capital to the organization; they appoint directors of the company. Shareholders prove the corporate budget and the companys external auditors. They also make key decisions in the company; this is, for example, when the corporate wants to take over another company or when making a merger. Shareholders duties include attending meetings called upon by directors. It is shareholders mandated to remove and replace directors whose term has expired or who misuse the company resources.

Duties of Officers

There are several officers within the organization. They include:

• Chairperson of the board: The chairperson position is of considerable importance. His roles include that of the managing board of directors and are its facilitator. He calls upon board meetings and presides them. In case there is a tie in voting chairperson gets a second chance to vote thus breaking the tie.
• CEO or the President: Corporation presidents role is to ensure the corporations day-to-day activities run smoothly. CEO signs significant contracts on behalf of the corporation. The CEO signs any legal document. CEO does participate in board meetings though he has no voting rights (Loos, 2010).
• Vice president: He acts on behalf of the CEO, mostly when the CEO is absent he makes a decision on behalf of the CEO.
• Chief financial officer: He is responsible for the matter concerning finance in the company. The chief financial officer maintains corporation financial records as well as presenting these records to the board and shareholders.
• Secretary: The main duties of this officer are to take corporation minutes and maintaining records of the corporation. The secretary should avail of certification to financial institutions such as banks. Secretary of the corporation avails information to agencies with interest to corporation affairs and public.

Difference between a publicly held and a close corporation

A public company is a company whose ownership is in public hands. Individuals purchase shares of a public company and become shareholders thereby becoming owners of such a corporation. In publicly held companies, ownership shares are traded publicly on the international stock market. Shares of publicly owned companies are easy to buy and sell through brokers. Shareholders who restrict other individuals from accessing the shares, on the other hand, own private companies fully. Incase a shareholder needs to sell his shares he has to give first priority to existing shareholders. Closely held corporations are not subjected to strict requirements as the public owned corporations (Sharma, 2010).

References

Loos, A. (2010). Directors Liabilities:A World Review. Chicago: Kluwer Publishers.

Sharma, A. (2010). Company Law. New Delhi: V.K. Enterprises.

This is a company that deals with the tobacco business and has the economic and voting interest in the worlds largest brewing companies. It deals with the selling of tobacco and it is the largest in the world in the selling of this product. It is found in New York City therefore the country makes many sales from this product benefiting the people economically and raising their standards of living. (Damaris, 1999)

The company has spread its branches to other countries like the UK where it is able to sell its products and also have the product been processed in such a country making its sales to be high as it is the only tobacco company that is able to have support on the FDA regulation meaning that most of the worldwide producers of this product will be affected as people will switch to this company for the product that is proved to be safe for human consumption.

The company will have many branches in all the countries because their products are safe. But meanwhile, the company seems to lose most of its profitable consumers because of the measures that are taken that is the banning of advertisement of the product this means that few people will have the knowledge about the product and thus the people without the knowledge will not buy from the company and therefore low sales will be made. The campaigns in tobacco control have the focus on the efficiency of the industrys role in promoting tobacco use and therefore to increase sales the people need to have knowledge concerning the use of the product.

Due to the negative effects that resulted from tobacco the company had to change its name from the Philip Morris companies to Altria so that they can be able to retain the product profit. The product leads to effects on peoples health like cirrhosis that is caused by the use of cigarettes for a long time therefore the health warning campaigns against the use of this product have affected the sales of tobacco.

The company was able to raise its sales after the changing of the name where it made the world have the impression that this company will have the impact of increasing the sales and thus the people are benefiting as they charge low prices as compared to the other companies. The company has done all the things that can raise its sales by changing the name so that the users understand the company as providing the best products that have followed the legislation laws of the health institutions this brings a clear outlook of the company were by the consumers are willing to make use of the product because it is seen to be safe.

The change of the name had the implication of providing a full description of the company as the leading consumer products company that led the people to rate the company as the most favorable company to make the purchase of its products. The use of consumer food beverages had no meaning to the people and therefore the only advice that was given to the company was to reduce the size of the business and with these products all been provided by the company it meant high prices because of its monopolistic nature leading to people have to fear in buying from them.

The company has done all the best to ensure that it raises the sale of the product and this has been achieved and the world is benefiting from the operation of this company in terms of the products it provides the people. The worlds impression is that the company has been able to undertake the basic needs of the people who take the products from the tobacco with the best legislation been undertaken by the company and provide them at low prices that are affordable to all the people. (Morris, 1992)

This has been achieved by changing its name where the sales are maintained with the people having the knowledge about the effects that result from the use of tobacco products. the company has drawn the attention of the people whereby it is able to make the sales it made without the people having recognition that it is the same company that has only changed the name this has allowed the country to benefit from the sales of this product through getting a foreign exchange from other countries in the world.

The analysis has provided the crucial information of the company that is required for the business and competitor intelligence needs in that through such research then one is able to get the information about the Company in terms of its operations. There is also the information of the companys major internal and the external factors that are affecting the operation of the company in the form of the SWOT analysis and the breakdown of the leading product revenue streams where one is able to know how the company benefits from its sells in the product components.

One is able to know the company history, the business description, its location, and the list of the products as well as the latest available statement concerning the company. With this information then one is able to figure out the companys background and how it has led to the operation of this company for that time that it has been able to capture the attention of many consumers. The company representatives have to make the purchase of the product so that they can support the sales activities by understanding the consumers businesses better through which they will improve the sales of the product. (George, 1998)

When a person makes use of a product and finds it gives him or her best satisfaction then the person will continue to make use of this product. The consumers learn a products satisfaction from the use of the product to ensure that they are not given the wrong product. One will be able to know the qualified prospective partners and the suppliers and this will enable the consumer to know the people who sell the product well and be willing to ask the questions in case they find the product having defects thus the company should ensure that it employs the qualified people who can market the product well.

One will keep up to date with the competitors business structure, strategy, and prospects. This will enable the concerned to know how to make changes to the company working schedule in order to improve the sales of the company comparing it to the other companies who are also producers of the same product. One is able to receive the information of the company that is recent and therefore one will not be confused about the company layout as he or she will have the information of the working of the company that is collected recently.

The company has a competitive advantage because it is able to make high sales with the high competition that exists from other countries that have companies with similar products. The company has spread over in the whole world due to its fame and therefore it has a good stand in the competition because it is able to use its branches to make the product available to the consumers. It is well recognized for the products have followed the health regulations concerning the use of these products therefore the side effects for the users are limited. For any company to be able to be recognized it should make sure the product has no side effects to the users and thus they end up making more sales meaning that the company will have to pursue the competitive world without problems. (Lillian, 1985)

One of the products that are made from tobacco is a cigarette and its components include: the tobacco that is grown and harvested is used to manufacture cigarettes this tobacco is mixed with chemicals like tar and there is also the need for the filter tube that is then used to put the contents of this cigarette. This cigarette smoke has got effects on human health has the smoke contain nicotine that is very dangerous to human health this is because this product leads to the addiction of the user and thus the person is not able to leave smoking and the diseases that are related to smoking like the liver cancer leads to the affecting of the person and nothing can be done if one is addicted.

Smoke also contains carbon monoxide that is also harmful to human health the concentration of this gas in the body leads to problems in the breathing of the user as it closes the breathing track and thus the person experiences this problem and end up to other severe attacks in the users body leading to death.

The representatives of the company have adopted a stockholder rights plan in order to have the best strategies that will enable the company to make the best plan so as to be able to retain its shareholder value. This is achieved through the engagement of the company in activities like wholesaling where it sales its products to retailers and also consumers at a reduced cost, they also ensure the consumers get the product at the right time this is done through the selling of the products to wholesalers at the right time whereby the product will be sold to the retailers who are near the consumers.

Through this, the value of the company is maintained at all levels. The company has the likelihood of maintaining its shareholder value as it has extended to other countries where it is producing the same product and providing it to the consumers at low costs therefore the consumers are benefiting in that country the same as those in the country where it began. (Jones, 1987)

The company is the largest producer of products that are made from tobacco this means that the country of America has greatly benefited from the sales that are received from this company. The company has opened other branches in other countries meaning that the working of this company has benefited many people in the world. People are able to make purchases from this company that is ready to work in ensuring that the users are safe in using the products.

The country gets foreign exchange from the countries they trade with and thus it has led to the improvement of the standards of living of the people in the country through the creation of jobs and it has also led to people from other countries seeking jobs in the country. This company has played a role in the country of ensuring that it retains its post as a super nation which is a country that does not depend on others. The country has proved to be among the best that is able to deal with the heath precautions of people and therefore they have the been able to have the stand of making high sales in all the companies that are working in the country. This company has been the parent company that is able to carry the business of being a monopoly.

Reference

Damaris, J (1999). The origin of the altria company and its operations. New York: oxford press.

Fredrick, K (1997). Americas massive producer in economic development. America publishers, Louisiana.

Jones, S (1987). Tobacco smuggling in America. New York: Oxford University.

Lillian, W (1985). The effects that the corporation has on the human health. American journal, pp, 23-45. Washington.

George, D (1998). The massive produce of the Altria Company. New York: oxford press.

Morris, R (1992). The tobacco industry and its related components. Harvard: university press.

WorldCom Collapse

The collapse of WorldCom remains a historical corporate mistake. WorldCom was a model corporation whose collapse shocked many. WorldComs collapse has been attributed to poor corporate governance and misuse of business intelligence data to befit executives rather than serving consumer interests.

WorldComs executives are accused of mining information and turn it into business practices that would benefit the company illegally.

Eventually money was lost after auditor unearthed these unscrupulous practices. Subsequently WorldComs clout began to crumble. This lead to; its value at Wall Street go through crunches, investor anger and reform campaigns. Investors and consumer dissonance further exposed the conglomerate to bad economic weather and subsequent collapse.

How WorldCom misused data leading to subsequent collapse

Audit reports by senior accountants unearthed massive fraud at WorldCom. The accounting fraud at WorldCom reached critical mass after accounting malpractices using data collected by experts at the company to cover the company losses were unearthed (Backover, Andrew & Michelle Lessler, 2002).

WorldCom executives analyzed stocks performance in Wall Street, identified bookkeeping as a way to generate financial reports that indicated WorldCom was growing, to meet Wall Street expectations, subsequently, keeping the company stock and growing in value.

WorldCom was masking its losses using accounting data. The company also engaged in giving its executives huge loans to protect the company share value at Wall Street. The executives at WorldCom bred a culture of cutting corners to meet business needs (Why Smart Executives Fail, 2009).

Subsequently, when revenue audit was unsatisfactory, the executives used alternative financial figures along with instructions to change them for WorldComs actual financial audit data. The company also engaged in allotting high reserves for bad debts to be used as back-ups to operating revenue in order to meet fiscal objectives. Overwhelmed by its internally approved fraud the company overstated its fiscal results by $3.8 billion which is largely seen as the worlds largest corporate bookkeeping malpractice (Backover, Andrew & Michelle Lessler, 2002).

The results of planned corporate bookkeeping

WorldCom was able to cash in through this planned bookkeeping. However, these made up financial results did not reflect the truth about WorldComs actual value and financial health. The massive fraud which had the blessings of the company head led to the dramatic loss of WorldComs value from $180billion to just $350 million. The scum was unearthed by Cynthia Cooper, Vice President of Internal audit. She found out that WorldCom was fraudulently capitalizing on cost lines and treating them as expenses (Drezen, Yochi, 2002).

When federal authorities intervened, WorldCom was accused of violating antifraud laws through the corporate bookkeeping that manipulated earnings to meet Wall Street requirements and protect the company stock at the bourse.

Limitations and significance of data

Data collected to aid business intelligence units in WorldCom was aimed only at assessing threats on the company, identifying ways to help the company avoid impeding financial storms, meet Wall Street expectations and manage the company stocks value through proper governance practices. However, the data was misused as a tool to mask internal lending so as to protect the company stock value, limit shareholding, and increase hype so that share value would resonate to the alleged gains made by WorldCom (Drezen, Yochi, 2002)

Ethical Implications of data misuse on WorldCom

Federal authorities closed in on WorldCom execs and charged them with committing fraudulent audit that eventually led to a $9billion profits misrepresentation. The intentions of this fraudlent book keeping were to fix things for WorldCom (Wayne, 2004).

Authorities sued the company execs who were involved in the scum.

The company lost its value from $200 million to a mere $350 million.

The company was declared bankrupt and was put under receivership.

References

Backover, Andrew & Michelle Lessler, (2002), Internal rifts threaten WorldCom Section: Money; pg 1B

Drezen, Yochi (2002) Push for sales fostered abuses at WorldCom The Wall Street Journal: B1

Wayne Michael, (2004), The WorldCom Collapse Citigroups Guiding Hand .

Why Smart Executives Fail, (2009).

The presented team in the case makes it impossible for TotsToys Corporation to achieve its business goals. The members of the self-managing product development team appear to have diverse expectations, competencies, and strategies. This discussion gives a detailed analysis of the team and proposes the best approaches that can make it successful.

Teamwork Problems

The presented team continues to face numerous problems that affect its effectiveness. The major problems include low morale, selfishness, ineffective leadership, poor communication, and the lack of clearly-defined objectives. Such issues have affected the teams ability to come up with new products.

Leadership Style and Problems

The current situation reveals various leadership approaches that fail to deliver meaningful results. The team members embrace the power of shared leadership. This kind of leadership emerges whenever members of a given group are involved in decision-making and problem-solving problems (Lumsden, Lumsden, & Wiethoff, 2010). Although this kind of leadership can deliver meaningful outcomes, the team members focus on their personal goals instead of having a common vision.

The leadership model also presents numerous problems or challenges. For instance, Harrington and Vonich are expected to lead their followers and ensure that positive gains are realized. However, Vonich appears to be busy and expects Harrington to support the emerging needs of the team. On the other hand, Harrington is unable to act due to the lack of adequate leadership skills. The other team members also focus on their expectations. Consequently, the situation has affected the teams effectiveness.

What should be Negotiated and How?

The current situation indicates clearly that the team has not developed new products that can support TotsToys Corporations business goals. Any form of negotiation should, therefore, focus on the best methods and approaches to develop superior products that can compete in the market (Nanjundeswaraswamy & Swamy, 2014). The negotiation process can also be expanded to address things like leadership, roles, and responsibilities of every member, and coordinate every persons obligation. By so doing, the team members will agree on every step that must be undertaken throughout the product development process.

The leadership duties of every member should also be negotiated. The members can also come up with a team policy that dictates the behaviors, goals, roles, and expectations of every individual (Lumsden et al., 2010). Such agreements will minimize most of the above problems. The negotiation process should be undertaken by ensuring that all members are involved. Conflicts and personal expectations must be addressed before implementing the negotiation process.

Resolving Conflicts

Several strategies can be used to resolve the existing conflicts among the members. The first one is compromising (Lumsden et al., 2010). This model can ensure that every person forgoes his or her expectation. This move will empower the individuals to focus on new products that can support the companys goals. This means that Harrington will no longer focus on his personal goals such as promotion. The second approach is problem-solving (Peleckis, 2014). This strategy can ensure that the members collaborate to address their challenges using evidence-based strategies. This will be followed by an action plan focusing on the roles and goals of the team. This model will make it easier for the team to achieve its aims.

Conclusion

Team leadership is a powerful model for dealing with conflicts in an attempt to achieve the best outcomes. The presented team has failed to realize its potential due to misunderstandings, conflicts of interest, and poor leadership. The proposed conflict resolution methods will ensure that the process is successful. These initiatives will empower the team members to focus on their objectives.

References

Lumsden, G., Lumsden, D., & Wiethoff, C. (2010). Communication in groups and teams: Sharing leadership (5th ed.). Boston, MA: Cengage Learning.

Nanjundeswaraswamy, T. S., & Swamy, D. R. (2014). Leadership styles. Advances in Management, 7(2), 57-62.

Peleckis, K. (2014). International business negotiations: Innovation, negotiation team, preparation. Procedia  Social and Behavioral Sciences, 110, 64-73. Web.