Issues faced by Edmunds
Although Edmunds has been making decent profits in the last couple of years, lately, however, the company’s revenues have stagnated, and this is a cause for alarm to Larry, the company’s owner. In addition, most of the employees are old now almost nearing retirement and the management is finding it hard to replace its workforce. This is because the best and brightest people in the locality cannot be expected to take local jobs like their parents did many years ago. They will most likely head to the city in search of better jobs.
In addition, those left behind lacked the work ethics that Larry desires to see in his workforce (Daft, 2008, p. 266). The cost of raw material was also very high, and this has been brought about by a sharp rise in steel prices. However, Larry was mainly concerned with the changes that the box industry has witnessed in the last couple of years. To start with, the box industry had already been hit by recession a number of times. Consequently, demand for the products had fluctuated, thereby affecting the manufacturing output.
Lately, reusable plastic containers and flexible plastic films were also reappearing, and it was still not clear the level to which they would affect the demand for products in the box industry (Daft, 2008, p. 267). Moreover, the paper industry in the US had undergone consolidation, wiping many of the plants served by Edmunds. The remaining survivors either opted for joint ventures abroad, or opened overseas operations (Stodghill, 2005). The surviving manufacturers opted to purchase higher quality machines and because they did not breakdown too often, they only required very few parts from Edmunds.
Strategy for addressing the situation at hand
Seeing that the export industry in the US had already attained its maturity stage, there are very few prospects for growth in this industry. As such, Edmunds should consider exporting its products to overseas markets where the demand for its products is still high, or where the company can still stimulate demand. Such a move would help to increase the company’s sales volume and in the process, increase revenue. In addition, the company should also consider entering into a joint venture with an overseas company in an emerging or developing economy to benefit from affordable raw materials, reduced cost of production, and affordable labor. This would help Edmunds to save money spent buying raw materials, thereby increasing revenue.
In addition, the company could also benefit from cheap and available labor, thereby helping to overcome the problem of the retiring employees. Moreover, since the local young people who would be expected to replace the aging workforce have no desire to work for local companies, this strategy would be essential for Edmunds because it would ensure continuity of the human resource.
Elements in the strategy that would be the hardest to implement
Entering into a joint venture with a foreign company would be a difficult strategy to implement. This is because of the difficulty in identifying an organization with similar goals and objectives as those of Edmunds. Secondly, it would mean that each of the two companies have to compromise some of their prior goals and objectives in order to reach a common ground. This is not always an easy move. One of the partners could end up mismanaging funds or breach certain confidential information. He could also breach the actual contract itself (O’Donnell Sweeney Oversheds n. d., para. 1). In addition, Edmunds shall be required to make a substantial financial investment and the company is currently faced with its own financial woes.
Strategy that Edmunds could use in the future to reduce crises before they happen
Organizations should take the earliest chance to prevent crises from occurring in the first place. This can be done by first examining crises vulnerabilities to the company in question. This process is referred to as crisis vulnerability assessment (CVA) and it entails data collection and perspectives of the different stakeholders (Crandall, Parnell & Spillan, 2009, p. 73).
After this assessment, an integration process of the collected data should then be undertaken with a view to identifying specific threats to the company, especially the most prominent ones. Edmunds should consider undertaking a crisis vulnerability assessment to help prevent crises from occurring. Crises vulnerability assessment also entails a SWOT analysis for the company.
Performing a SWOT analysis for Edmunds shall enable the management to identify the strengths of the company and capitalize on them to face the competition. In addition, identifying the weakness faced by Edmunds is also very important because the company can work out a strategy to convert these weaknesses into strengths. Also, an identification of the opportunities available to Edmunds will enable the company to plan how to benefits from them, whether locally, on in overseas markets. Moreover, once the company knows its weaknesses, it can be bale to cushion itself against potential vulnerabilities, especially from the competitors.
Reference List
Crandall, W., Parnell, J. A., & Spillan, J. E. (2009). Crisis management in the New Strategy Landscape. London: Sage.
Daft, R. L. (2008). New era of management. Stamford, Mass: Cengage Learning.
O’Donnell Sweeney Oversheds.(n. d). Challenges of Joint Ventures. Web.
Stodghill, R. (2005). Boxed Out. SIC 2653 Corrugated and Solid Fiber Boxes. Encyclopedia of American Industries. Web.