Introduction
Toys, Inc. is a company in need of advice. Despite the 20 years of operation, and an excellent reputation based on quality and innovation, the company is experiencing a decline in sales. The cited reason is economic instability. To combat this decline, management chose to do a number of cost-cutting measures, including cuts to production costs and layoffs in the design department. Recently, the company has been getting complaints about the build quality of its new line of functioning model factories. Two choices are presented in the study. The company can either create a return program and then sell the refurbished toys at a discount price, or increase inspection to prevent defective product. This paper will present a possible course of action for the company.
Discussion
To make an informed decision about the future of Toys, Inc., it would be useful to consider the reputation of the company. Over the last 20 years Toys, Inc. has gained the trust of its customers by providing unique toys built with quality. Unfortunately, it is not able to maintain the same level of design and production quality due to financial problems. So what does the company need to do when the quality of its product is starting to affect the clients? The answer is slightly complicated. While an increased inspection of the product would be welcome, I do not see it as a viable solution for a company that has no extra finance to spare.
To save the trust of the clients, the company can implement a trade-in program. This way, when a customer buys a faulty toy, they will know that it can be replaced at no extra cost (Sarkar, Aditi et al. 670). This program should help strengthen the trust that the old customers have in the company, as well as show that Toys, Inc. is a company willing to correct its mistakes (Saeidi, Sayedeh et al. 348). Looking at current sales, it is possible to assume that people have lost interest in the company, or they are too worried about the quality of toys in the harsh economic environment. Nobody wants to spend money on a toy that will break soon after purchasing. This program should be able to address both of these problems. It will remind the customer base about the company, and it will alleviate their fears about the toys breaking too soon (Agrawal, Vishal et al. 337). Moreover, repairing and then selling the refurbished toys at the company’s outlet store would make the toys more affordable while also making money on things that would otherwise be thrown out either by the customer, or inspection at the production facility. If this program is successful, the additional inspection could be implemented during the production process (Sarkar, Biswajit, and Sharmila 269).
Conclusion
Any established company can experience a decline. During that time it is important not to forget what brought the company up in the first place. By focusing on its reputation, Toys, Inc. should be able to recover from this situation. However, this solution does not address the cuts to the design department. To recover from its financial condition, Toys, Inc. must focus on regaining the level of its design team. Without the expected innovative approach to its product, the company might get forgotten by their client base. It is a highly competitive market, and innovation is essential to stay afloat.
Works Cited
Agrawal, Vishal V. et al. “Trade-In Rebates for Price Discrimination and Product Recovery.” IEEE Transactions on Engineering Management, vol. 63, no. 3, 2016, pp. 326-339, Web.
Saeidi, Sayedeh Parastoo et al. “How Does Corporate Social Responsibility Contribute to Firm Financial Performance? The Mediating Role of Competitive Advantage, Reputation, and Customer Satisfaction.” Journal of Business Research, vol. 68, no. 2, 2015, pp. 341-350, Web.
Sarkar Sengupta, Aditi et al. “How Customers Cope With Service Failure? A Study of Brand Reputation and Customer Satisfaction”. Journal of Business Research, vol. 68, no. 3, 2015, pp. 665-674, Web.
Sarkar, Biswajit, and Sharmila Saren. “Product Inspection Policy for an Imperfect Production System with Inspection Errors and Warranty Cost.” European Journal of Operational Research, vol. 248, no. 1, 2016, pp. 263-271, Web.