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In the process of organizational management, several strategies are deployed to ensure that organizational goals and targets are met. Some of the strategies deployed include marketing, restructuring and new products launches. The situation presented in this case looks into a company by name of Toro involved in selling snowblowers and lawn products.
The company had been facing problems related to the sale of snowblowers. However, a program launched by the company and an insurance company changed the company fortunes. As an analyst, it is imperative to analyze the changes conducted by the company on different perspectives to see if this program was successful.
Toro has been conducting good business as a result of the Company’s S’No Risk program. This program made the company sell more snowblowers through guarantees handed out to distributors. The company took up an insurance policy that cushioned the company from risks related to product recalls.
Dick Pollick of Toro was against the continuation of the program given that consumers might not be enthusiastic of the deal in the second year. Toro’s perspective is based on the fact that the snowfall levels might drop slightly meaning customers will be partially funded for their snowblowers (Bell, 1994). As a result, the campaign might put off potential customers in the second year.
The insurance in this case offered a good deal to Toro that ensured that the company could not suffer high financial losses as a result of customer product recall. The insurance raised its rates based on past statistics that showed the climate might change leading to decreased snowfall (Albright, 2010).
As a result, the insurance had a reason to cushion itself from losses that might result from decreased snowfall in the future leading to massive product recall from customers. Based on the analysis of the sales figures for Toro and the past agreement they had with distributors, it is acceptable for the insurance company to charge 8% of sales as the insurance rate.
This is because prior to the No Risk Program, Toro used to offer distributors of its snowblowers a 10% discount for every sale. As a result, if Toro incurred 2% on marketing fees and 8% as insurance rates then it would amount to the 10% rate that was there previously. The risk taken by the insurance company could also cover all regions where snowfall is going to be less than the anticipated levels.
Toro customers are pleased with the S’No Risk program which allows them to be repaid for unused snowblowers bought from Toro. However, the paybacks are restructured in a manner that paybacks will be offered when the snowfall falls below 50% of the historical snowfall levels (Bell, 1994).
Although, the customer could suffer if snowfall falls below the 70 and 50% levels since no refunds would be availed. The paybacks could be restructured so that customers are repaid through the selling distributor instead of the issue being handled at Toro’s headquarters.
The S’No Risk program was successful since sales increased to unprecedented levels and the customers felt that value for money was respected. In the case of Dick Pollick, I think he should continue on the program to protect the sales of the company.
The program was successful based on the fact that the company increased its sales at no additional making the company achieve healthy financial margins. In case, management of the S’No Risk program was handed over to me, several factors would have to be looked at. One of the factors that I would look into is the insurance agreement which should be concise to avoid fluctuation in the insurance rates (Albright, 2010).
The analysis of the three stakeholders in the case of the S’No Risk program a matrix of common factors they regard highly should be drawn as shown in figure 1. For instance, the customer is susceptible to payback not being respected while Toro is losses resulting from high payback request as a result of poor snowfall. The insurance company would suffer the greatest loss if poor snowfall was to occur in a consecutive manner.
The S’No Risk program affects the customer in that the customer might regret purchasing snowblowers from Toro if paybacks take a long time or they are not honored. From Toro’s perspective, the payback form lists that the customer should write his/her name on purchase of the snowblower and mail the form to the company (Grant, 2005).
Toro might deny the receipt of the customer forms while the insurance company would want to deal with Toro directly as opposed to the customers since the agreement was between them and Toro.
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Insurance companies play a vital role in business because of their risk management line of business. In the case of Toro, the American Home takes care of the risk of product recalls for Toro while the company concentrates on selling its products. The analysis of the S’No Risk program shows that if American Home maintains it insurance rates then Toro could continue to sell its snowblowers without hitches.
However, the S’No Risk program has its downside based on poor climatic conditions which could force the insurance companies or Toro to suffer losses related to paybacks. Customers could also duffer the loss of paybacks taking long to materialize.
Albright, S. & Winston, W. (2010). Data Analysis and Decision Making. Chicago, IL: John Wiley and Sons.
Bell, D. & Schleifer, A. (1994). Decision making under uncertainty. Detroit, MI: Course Technology.
Grant, R. (2005). Contemporary strategy analysis. Boston, MA: Greenwood Publishing Group.