Changing the company’s strategy is a major step that needs to be considered closely, especially if it concerns such an important issue as the company’s relationships with its clients – or, to be more exact, the financial aspect of its relationships. No matter what steps the company decides to take, they must be justified so that the firm could retain its major clientele.
Since the Telco Company needs more funding for its logistics strategy, it must increase the costs for goods transportation by cutting the amount of discounts and changing its pricing policy (Coyle, Langley, Novack & Gibson, 2013, 317), which, when presented to the customers in the right manner and in the proper context, will not cause a major indignation.
The strengths of the given approach are obvious. To start with, by cutting the costs for transportation, Telco will be able to offer even more discounts to its customers, therefore, building a strong clientele base. In addition, the money that Telco will gain on saving on the transportation can be used for upgrading the production process and improving its various aspects.
Finally, by decreasing the number of money spent on the logistics, Telco will finally be able to focus on the development of new services. As soon as the customers see the effects of these changes, they will appreciate Telco’s services even more.
However, the method suggested by Nick Martin also has its problems. First, there are strong doubts that most of the company’s customers are going to stay as loyal as to see the changes in the quality of the products that the company is going to deliver.
It is more likely that most of the customers dissolve as soon as they start realizing that the delivery process takes longer than usual. In addition, it is highly doubtful that the customers are going to wait until the fact of them being deprived of their discounts is going to be justified.
It is worth admitting, however, that Telco can possibly retain its discounts policy and at the same time increase the budget for logistics by adopting other approaches. For instance, the company could resort to using different types of transportation or use the transportation services that are less costly than the current ones.
Needless to say, the given changes will inevitably result in the drops in transportation quality, which will also cause the customers’ dissatisfaction (Varley, 2006). The given dilemma can be solved by cutting the number of discounts and explaining the clients about the reasons behind the given policy, thus, making sure that people should be aware of the changes being made for their benefit.
Therefore, it must be admitted that Nick Martin has the point; no matter how hard it is for Telco to acknowledge that it has to change its policy towards customers, Telco must shift to a more reasonable policy on logistics. Certainly, there are other options like changing the logistics principle by using the services of a company with less expensive services, using a different means of transportation or choosing a different class of services, therefore, losing in the quality of the transportations.
However, unless Telco wants to have most of its clients be averted by the drops in the transportation quality, it is most reasonable to raise the prices for goods delivery, therefore, having more budget for logistics. As soon as Telco proves that its price policies are adequate and reasonable, its customers will accept the changes in the company’s price list.
Reference List
Coyle, J. J., Langley, C. J., Novack, B. A., & Gibson, C. J. (2013). Supply chain management: A logistics perspective, 9th ed. Stamford, CT: Cengage Learning.
Varley, R. (2006). Retail product management: Buying and merchandising. New York, NY: Routledge.