The Organization: DigiTex Communication Term Paper

DigiTex communication is a leading cable company in the communication industry. The core business of the firm includes provision of internet services and call services. It also manufactures and sales computer networking cables and equipment.

The firm’s products are differentiated in the market by the fact that they are developed through the best technology. Thus they are not only of the highest quality but also the most affordable in the market. Its customer base consists of individuals, corporations, governments and non-governmental organizations.

Vision

DigiTex’s vision statement is ‘a connected world’. The firm’s vision is to create ‘a connected’ world in which individuals and organizations are able to stay in touch or communicate with each other effectively and efficiently. Thus DigiTex intends to assist its customers to achieve their communication objectives by offering tailor made communication products that suite all budgets.

The importance of this vision is that it is inline with the firm’s growth plan. The firm intends to be the leading provider of the most affordable and effective internet and call service packages. By creating a ‘connected world’, the firm has to increase its production and quality of its products across all markets. Thus the statement forms the basis for formulating the firm’s growth objectives and policies.

Mission

DigiTex’s mission is ‘to connect the world through affordable and effective communication products and service packages’. The firm has embarked on thorough research and development in order to improve its efficiency and quality of its products.

Investment in relevant research is meant to help it achieve both product and process innovation. Consequently, it will be able to produce high quality communication service packages that suite the needs of its customers (Boyes & Melvin, 2007). Besides, it will help in developing production technologies that facilitate cost reduction in order to lower the prices of the end products (Boyes & Melvin, 2007).

DigiTex’s mission is to make communication through phones and internet technology available to majority of the world population. It intends to help at least one billion people to connect to friends, relatives and colleagues through phones and internet technology in the next ten years. Thus the importance its mission statement is that it provides a road map for realizing the firm’s vision of creating ‘a connected world’.

Guiding philosophy

The success of DigiTex in the industry is attributed to the principles that guide its operations and relationships with both its customers and the community at large. The guiding principles are reflected in the firm’s values which are as follows.

Values

Engaging People

DigiTex believes that success is a journey in which all parties must be involved through active participation. The firm engages all stakeholders in its operations.

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This helps it to communicate to the world what it stands for in the market and the manner in which it intends to realize its objectives. The management engages the customers through conversations that enable it to obtain customers’ feedback on the quality of products. Besides, it enables the management to understand the customers’ preferences (Paulsen & Donnely, 2010).

The employees are engaged through appropriate training, consultation and decentralization of decision-making. The shareholders are engaged through regular meetings and active participation in decision making. The community is usually consulted before decisions that affect their welfare are made. Thus the importance of this value is to help the firm develop goals that are shared by all stakeholders (Gary, 2010).

Teamwork

The company believes that achieving success is a shared responsibility. This means that it intends to achieve its strategic goals through collaboration and partnerships. The contribution of each member of the firm is highly valued and contributes to its overall success.

This value helps the firm to take advantage of the benefits accruing from the diversity associated with its human capital. Teamwork enables the firm to fully utilize the talents of its employees who are from diverse socio-cultural backgrounds (Boyes & Melvin, 2007). This value helps in creating the culture of collaboration and shared responsibility in the firm.

Innovation

The firm prioritize innovation at all stages of its operations in order to create competitive advantages. Innovation not only helps in improving profitability, but also helps the firm to deliver its promise to the customers, ‘creating a connected world.’ DigiTex measures its innovation capacity by its ability to enable its customers to achieve their communication dreams through affordable and improved ways. It also measures its innovation capacity through its ability to understand the needs of customers and the community at large.

Service to the Community

This value defines the firm’s social responsibility plan and ethical standards. The firm believes that its success depends on its relationship with its employees and the community it operates in.

Thus it not only consult them when making decisions that impact their lives, but also avoids implementing policies or strategies that are harmful to employees and the community. The firm participates in community development activities such as funding environmental protection programs. The management ensures that its operations conform to the international standards of ethics.

How the Mission, Vision and Values Guide the Organization’s Strategic Direction

The firm’s strategic direction is to be the leading provider of most affordable and effective communication products and service packages. Thus the vision statement provides a basis for setting growth targets that must be achieved in order to realize the objectives of its strategic direction. The mission statement provides a framework for developing growth policies. It highlights the steps that DigiTex must take in order to create a connected world.

The values guide the strategic direction as follows. Engaging people enables the firm to obtain the necessary input from its owners, customers employees and community in order to make the right policies. Innovation helps in developing the strategy that propels the firm towards its strategic direction (Bryson, 2004). Service to the community helps the firm to win the support of the community and its employees in regard to its growth plan.

How the Firm Addresses the Needs of the Customers

First, the organization embarks on research and development in order to develop technologies that enable it to produce affordable and high quality products that meet the needs of the customers. Second, it is always in touch with the customers and incorporates their views while making decisions relating to product development and service delivery. Finally, it focuses on value addition by developing only products that give customers value for their money (Paulsen & Donnely, 2010).

Critique of how the Organization Achieves Competitive Advantages

The firm aims at achieving competitive advantages through low prices and producing high quality products. However, maintaining low prices can be very difficulty. This is because the cost of inputs keeps rising and this necessitates price hikes (Boyes & Melvin, 2007). Producing high quality products requires investment in advanced technology (Boyes & Melvin, 2007). The firm has to transfer the cost of such technology to its customers to avoid losses. This further undermines its ability to create competitive advantages through low prices.

SWOTT Table

External forces and trends Strength Weakness Opportunity Threat Trend
Legal and regulation Fair competition Government interference Maintaining high quality products Restricted growth Expansion into non-regulated markets
Global Larger market High cost of expansion Increasing production Intense competition Firms joining global market
Economic High sales Low sales Increasing production Pressure on prices Firms joining emerging economies
Technology Improved efficiency High capital investment New products Increased competition Existing products becoming absolute
Innovation Cost reduction Requires talent Increasing sales through low prices Low market saturation Investment in research and development
Environment Constant supply of raw materials Increase in production costs Creating positive rapport with communities Depletion of raw materials Increase in environment conservation programs
Competitive analysis low threat of new entrants High supplier bargaining power Low threat of substitute products Intense competitive rivalry Increase in low cost internet and call service products
Internal forces and trends
Strategy Clear and easy to understand Requires a lot of capital to implement High productivity Inadequate capital for implementation Linking capital expenditure to firm’s strategy
Structure Promotes flexibility Multiple management units High productivity Inadequate capital to sustain multiple management units Limiting the size of management units
Process and systems Promotes efficiency Has to be modified regularly as technology changes Cost reduction Might become redundant as technology changes Regular process innovation
Resources Financial stability Inadequate talent Ability to fund expansion plan Competing needs Prioritizing expenditure
Goals Can be achieved with existing resources Might not be understood by all employees Realizing sales and profit targets Difficult to achieve due internal inefficiencies Aligning goals to the firm’s vision
Strategic capabilities High technical competency Limited financial capabilities Improve efficiency Losing talent due to staff turnover Investment in technology
Culture Promotes excellence Some employees might not internalize it Improved productivity Cultural conflicts due to diversity Strengthening organizational values
Technology High quality products High capital investment New products Accounts for a greater percentage of capital expenditure Increased investment in new technology
Innovation High efficiency Expensive to finance Cost reduction Inadequate talent Strategic talent acquisition
Intellectual property Creating unique products Might be copied by other firms Enhance value addition Ineffective intellectual property laws Protecting intellectual properties
leadership Clearly defines organizational goals and strategy Might not perform due to unfavorable organization climate Effective execution of strategy Lack of talent Implementing leadership training programs

Summary of the SWOTT Analysis

Economic Factors

Economic factors refer to the performance of the economy in which the firm is operating in. High economic performance leads to high disposable income among the clients (Boyes & Melvin, 2007). Thus the firm is able to increase its sales. It is an opportunity to increase production.

However, poor economic performance lowers sales since the customers will have low purchasing power (Boyes & Melvin, 2007). This leads to high pressure on prices as demand reduces. Low prices might lead to loses. Thus firms are moving to emerging markets in order to take advantage of their robust economic growths.

Legal and Regulation

This refers to the laws that guide competition and operations of firms in an industry. The laws promote fair competition by discouraging monopolies and cartels (Boyes & Melvin, 2007). Fair competition encourages companies to improve their competiveness through high product quality (Paulsen & Donnely, 2010).

However, government interference through regulation limits the firm’s ability to pursue its strategies effectively. Thus the ability of a company to achieve its growth plan will be limited if the market is highly regulated. Consequently firms are moving to less regulated markets.

Innovation

The firm has been able to improve its efficiency by embarking on process innovation. This has led to a reduction in the cost of production. However, the firm’s ability to maintain high levels of innovation is threatened by loss of talent due to staff turnover. Thus the firm has embarked on strategic talent acquisition to enhance innovation.

Technology

The use of advanced technology has enabled the firm to produce high quality products as well as developing new ones. Its ability to invest in better technology depends on the availability of financial resources (Boyes & Melvin, 2007).

Global

Globalization has enabled the firm to increase its market share by joining overseas markets. Joining the global market leads to higher sales (Paulsen & Donnely, 2010). However, joining it is expensive and is also characterized by intense competition.

Goals

The main strength of the firm’s goals is that they can be achieved with the available resources. However, the firm might not be able to achieve them if its resources are misallocated or the employees can not understand the goals (Bryson, 2004).

Resources

The firm is able to fund its expansion plan since it is financially stable. Its human capital is not perfect due to inadequate talent in the industry. Strategic talent acquisition is becoming a challenge due to competing needs that limit availability of financial resources (Boyes & Melvin, 2007).

Critique of how the Organization Adjusts to Change

The company adjusts to change through innovation and creating a culture that is shared by all employees. Innovation helps in adjusting to the new trends in the market while a shared culture motivates the employees to embrace the change (Gary, 2010). However, innovation might not facilitate change since implementing it depends on availability of financial resources (Boyes & Melvin, 2007). Thus if the firm lacks adequate funds, then it will not be able to adjust to changes. A shared culture might also not lead to change since the employees might not believe in the change itself. Thus they may develop a culture of resisting change instead of embracing it.

Supply Chain Operations

The company’s supply chain system can be explained as follows. The raw materials are supplied by several suppliers in order to avoid supplier disruption risks.

Manufacturing plants are spread globally to lower the cost of transportation to the final market. Distribution is done through specialized stores, supermarkets and small retailers. Logistics services are provided by independent external firms. The operations of all parties in the supply chain are synchronized through technologies such as RFID and electronic data interchange (EDI) to enhance efficiency.

Issues and Opportunities

The main issues are as follows. First, the global communication industry is characterized by high competition. This leads to the research question, ‘what factors contribute to intense competition in communication industry?’ Second, natural resources such as copper which are used as raw materials are getting depleted thus increasing costs of production (Boyes & Melvin, 2007).

This leads to the research question, ‘are there substitutes to the minerals used to manufacture networking cables and equipment?’ Finally, regulation policies such as trade quotas are limiting the firm’s expansion plan at international level. This leads to the research question, ‘how can firms manage discriminatory regulation policies in the global market?’

Balanced Scorecard

Financial Perspectives

1. Increase market share

Metric: percentage by which the market share will increase

Target: increase market share by 20% in 3 years

2. Increase revenue

Metric: percentage by which revenue will increase

Target: increase revenue by 40% in 3 years

3. Increase profitability

Metric: percentage by which net profits will increase

Target: increase net profits by 25% in 3 years

Customer value perspective

1. Increase customer retention rate

Metric: percentage by which customer retention rate will increase

Target: increase customer retention rate by 15% in 2 years

2. Improve customer satisfaction

Metric: percentage by which customer satisfaction will increase

Target: improve customer satisfaction rate by 25% in 2 years

3. Increase customer value

Metric: percentage by which customer value will increase

Target: increase customer value by 15% in 2 years

Internal operations perspectives

1. Reduce delivery lead time

Metric: percentage by which delivery lead time will reduce

Target: reduce delivery lead time by 50% in 2 years

2. Improve productivity

Metric: percentage by which productivity will improve

Target: improve productivity by 40% in 3 years

3. Improve efficiency

Metric: percentage by which efficiency will increase

Target: increase efficiency by 20% in 2 years

Learning and growth perspective

1. Improve employee satisfaction

Metric: percentage by which employee satisfaction will improve

Target: improve employee satisfaction by 40% in 2 years

2. Reduce employee turnover

Metric: percentage by which employee turnover will reduce

Target: reduce employee turnover by 30% in 2 years

3. Increase the rate of technological innovation

Metric: percentage by which technological innovation will increase

Target: increase the rate of technological innovation by 30% in 2 years

Critical Thinking on Objectives

The above targets are meant to improve the profitability and market share of the firm, acquire and retain the best talent as well as improving efficiency and productivity. The financial objectives will help the firm to realize its vision of creating a connected world by helping at least one billion people to connect through internet and phone calls in the next ten years.

Due to the high competition in the market as indicated by SWOTT analysis, the customer perspective objectives will help the firm to maintain and increase its market share. The internal operations are meant to improve productivity. This is inline with the firm’s mission of increasing productivity in order to create a connected world.

The firm’s values focus on improving the welfare of the employees, customers, community and increasing productivity. Consequently, the learning perspective objectives aim at improving employees’ satisfaction. It also aims at increasing the rate of technological innovation. This will enable the firm to adopt technologies that are less harmful to the environment and the community at large (Boyes & Melvin, 2007). Thus it is meant to help the firm observe its ethical standards especially in production.

Strategies for Implementing and Realizing Strategic Objectives

Financial Objectives

In order to realize its financial objectives, the firm will embark on cost leadership strategy. This means that it will focus on maintaining the lowest prices in the market in order to increase its market share (Paulsen & Donnely, 2010). It will also focus on producing high quality products to attract more customers.

The firm will introduce e-marketing through its website to enable customers to make instant purchases as well as have their enquiries answered immediately. The firm expects to increase its revenue and market share by 40% and 20% respectively in 3 years through these strategies. This will translate into an increase in net profit by 20% in 3 years.

Customer Perspective

After sales services such as technical advice and repairs will be implemented to enhance customer retention (Paulsen & Donnely, 2010). Customer satisfaction will be improved through timely delivery of orders while all customers’ enquiries will be answered within 12 hours after being received.

Customers will be allowed make online purchases through the firm’s website. Customer value improvement will be achieved by introducing incentives such as discounts. Thus customer satisfaction will improve by 15% while customer retention is expected to increase by 15%.

Internal Operations

In order to reduce delivery lead time, the firm will focus on synchronizing its supply chain activities with all firms in the supply chain. This will be achieved by adopting RFID and Electronic data interchange technologies. These technologies will improve supply chain efficiency by facilitating quick and cost effective transfer of sales transaction data and documents (Boyes & Melvin, 2007). Increasing productivity and overall efficiency in production will be achieved through automating most of production and supply chain activities.

Learning and Growth Objectives

Increasing employee satisfaction and reducing employee turnover will be achieved through the following strategies. Employees will be entitled to regular technical training, remuneration packages that commensurate with qualifications and responsibilities. They will also enjoy job security through permanent job contracts. Technological innovation will be improved through strategic talent acquisition and investments in research and development.

Monitoring and Controlling the Strategic Plan

Early Warning System

An early warning system will be implemented to avoid failures in future. This will involve breaking down the targets of each of the strategic objectives into smaller targets. Each quarter of the financial year will have a specific target to be achieved. At the end of each quarter, the performance of the organization will be evaluated to determine the extent to which the targets of the plan have been achieved.

The evaluation will also help in predicting the firm’s ability to realize the overall targets within the specified timeframe (Micheli & Manzoni, 2010). Through the evaluation, the management will be able to identify the factors or problems that might prevent it from realizing the targets (Micheli & Manzoni, 2010). This will act as a basis for formulating corrective measures (Gimbert, Bisbe, & Mendoza, 2010).

Timely Response to Threats

The problems realized in the course of implementing the plan will be addressed immediately through the following methods. First, the firm will change its tactics in the event that the proposed ones become unproductive due to unforeseen factors. For example, the marketing techniques can be changed in response to market dynamics (Gimbert, Bisbe, & Mendoza, 2010).

Second, the strategy of the plan can be changed if it becomes less useful due to changing trends in the industry or the firm lacks enough resources to fully implement it. Finally, some objectives of the plan will be changed if necessary in order to realize the overall objective of the plan.

Involving the Employees

The employees will be involved in the implementation process through individual job targets (Micheli & Manzoni, 2010). Every employee will be expected to achieve his or her job targets within a specified timeframe. The performance of the employees will be evaluated twice a year to ensure that they are on track.

Recommendations to Address Ethical, Legal and Regulatory Issues

The main ethical issue facing the organization is work conditions. The standards of work conditions in overseas markets especially in Europe is very high and expensive to maintain. This has lead to employee dissatisfaction. In order to address this issue, the firm should increase its expenditure on employees in order to improve their satisfaction (Boyes & Melvin, 2007).

The legal and regulatory issues include price controls and regulation of the quality of products. The firm should focus on cost reduction in order to maintain the prices recommended by governments in overseas markets (Boyes & Melvin, 2007). The management should invest in innovation in order to produce products that meet the standards set by regulatory bodies in the international market.

References

Boyes, W., & Melvin, M. (2007). Microeconomics. New York: Cengage Learning.

Bryson, J. (2004). Strategic planning for public and nonprofit organizations. New York: John Willey.

Gary, M. (2010). Strategic planning. New York: Business Expert Press.

Gimbert, X., Bisbe, J., & Mendoza, X. (2010). The role of performance management systems in strategy formulation. Long Range Planning, vol. 43(4), 477-497.

Micheli, P., & Manzoni, J.-F. (2010). Strategic performance measures. Long Range Planning, vol. 43(4), 477-497.

Paulsen, P., & Donnely, J. (2010). Marketing management. New York: McGraw-Hill.