Derek: “Clayton SpA failed to penetrate the Italian market as anticipated due to local competitors with strong brand equity, acquiring only 21% market share by 2009, far behind the leading Italian company that captured a 36% share.”
Luccie: “With new targets purposed by CEO, Dan Briggs, for Clayton’s Europeans companies’ sales had a deficit of 5.3% from 2.7% gain in the previous year.”
“With new offices in Europe, Clayton Europe office shows that only 7% of homes in Italy has an air-conditioner vs. the 71% penetration in the US.”
In the activity 8, we prepared three problem statements. First, penetration of new market for companies from other regions has been a challenge to many companies. Consequently, Clayton SPA failed to penetrate the market due to already established competitors on the market. This made the company to control only 21% percent of the market share.
Secondly, C.E.O is obligated to meet the targets of the company. In order to achieve this, they must mobilize resources and receive support from the other employee. In this case, the new CEO Dan Brigs has a duty to turn tables around and overcome a deficit of 5.3% which had fallen from 2.7%.
Thirdly, companies are required to carry out an effective market research for their potential customers. In this case only 7% of European homes use air-conditioners as compared to 71% of American homes. Expectedly, this is a major challenge that the company needs to tackle in order to expand its operation not only in Italy but also other parts of Europe.
We prepared a fishbone diagram that was pivotal in determining the alternative solutions for the company’s financial crisis (rewrite in better way)
first we wrote the problem, losing $1 million monthly, on the Head of the Fish. Second, we determine the related Factors to the Head which is management, prices, design and brand. Finally, we grouped more factors/causes into the categories we already had.
We spend time to define the three problem statements. There are many purposes of doing this exercise as a group. First, it creates a sense of ownership as a team. Second, it keeps the tea focus on an accepted problem. Finally, it describes the symptoms in measurable terms. Then, we moved on to the Fishbone diagram. The purpose of this activity is help us as a team to categorize the many potential causes of of having $1 loses monthly in an orderly way. It also helps in determining root causes. Essentially, this analysis breaks the “whole” into “parts.” Another purpose of doing the diagram is to clearly breaking down the relationship between a topic and all of the possible factors that are related to it. When used as a Cause-and-Effect Diagram, a Fishbone Diagram can represent the amount of influence of each cause.
ASH: change management
Derek: re designs product to be more universal
Luccie: Established stronger marketing team
Kun: Outsource wear to buy steel
Key Criteria for Evaluation:
Kun: Long term financial impact and short term costs. How it will affect business strategy. How it will affect key stake holders.
Derek: Time horizon.
Luccie: Potential Risks
During the activity 9. First and foremost, we agreed there should be change of management which would be helpful in making critical decision. It is imperative to note; management is responsible for all the financial decisions that can affect the operation of the business. In this context, a new manager can spearhead the financial goal and ensure increase in sales volumes. Secondly, as a group we agreed there was need for the redesign of products to be more universal. In most cases, universal products gain access to markets around the globe as clients are familiar with it. This can be helpful to this company as it is trying to penetrate new markets in Europe from America. Thirdly, we reached an agreement that a stronger marketing team would be beneficial to this company. It should be noted that, before any firm expands its operation to new markets. This requires extensive research on the market. Fourthly, we decided that the company needs to outsource wear to buy steel. It will reduce the expenses incurred in terms of manpower and financial resources. Outsourcing is the new trend in most business world as it ensures efficiency.
Collectively, we agreed the key criteria for evaluation was to analyze the long term financial and short term costs. The long term financial impact is crucial in determining the financial strategy of the business as it helps in designing of projection or expected financial growth in years to come. On the other hand, short term cost resulting from the daily operations of the business can in the long run affect the net profits of the business. The firm must therefore, design a strategy where the scales of economies are used to reduce expenses due maximization of resources. Additionally, time horizon is useful in business as every activity must be gauged in certain period and the benefit accrued noted. Lastly, we identified there is need for the potential risks for the business as result of penetrating the Italy market and Europe in general be evaluated. This can be helpful as the planning team use this information to design the contingency plan.
We prepared weighted decision to evaluate the alternative we have identified:
the purpose of using the fishbone diagram we prepared on activity 8 is to show how useful is this brainstorming sessions for the team to focus on conversation. After the team has brainstormed all the possible causes for a problem, the facilitator helps the team to rate the potential causes according to their level of importance and diagram a hierarchy. In addition, being able to use Decision Matrix Analysis in this activity helped us to take decisions confidently and rationally without struggling to make a decision. The matrix was particularly powerful for the team because we already have a number of good alternatives to choose from, and different factors to take into account.