The purpose of this memo is to highlight the issue of strategic decisions that should be taken based on the suggestions given by the members present during the meeting. The Willy’s Candy Company has recorded low sales volume and profitability in recent years. This, therefore, calls for a proper strategic approach that can be used to ameliorate the situation.
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During the meeting, the CEO Mr. Chester A. Wonka III proposed a decision to merge the organization with the Swiss Company. The decision was rejected by some of the members who were present during the meeting. My stance as a Strategic consultant is that mergers and acquisitions are not appropriate when the organization is experiencing low sales revenues and profits. Selling the organization at this stage will result in a low valuation of the company’s assets and stocks. Instead of being merged, the organization should consider acquiring other companies in the market. It will enable the organization to increase its market share.
Another suggestion was given by the CFO, Mr. Swifty Miller, who proposed that the organization should acquire smaller companies in the same industry. The approach will enable the organization to diversify its product lines and increase and target many consumers from different market segments. Even though this suggestion was good, raising funds through debentures is not appropriate for the company, especially at this stage, when the cash inflow is low. The approach may lead the organization to more financial problems. The best approach, in this case, is to raise the funds through equity financing.
Mr. Megan Lee, who is the vice president in charge of marketing, proposed that the company needed to give more attention to advertising and new product development. The sales vice president believed that with increased investment in advertising and development of new products, the company had the opportunity to increase its sales in the market. However, as noted earlier by the CEO, the company has invested in the advertisement, the outcome has not been very pleasing. The company should change the advertising strategy. The strategy to be adopted in this should entail the adoption of consumer responsive product advertisement strategies. The idea to develop a new product should also be considered as this will enable the organization to diversify its product line.
Chief operations officer, Mr. Robert Johnson, suggested that the company has valuable opportunities to reduce the cost of operations by reducing expenditures in various areas of the company’s operations. The operations officer suggested that the organization can outsource some of the functions within the organization to reduce cost. He strongly believed that if the organization could adopt cost reduction initiatives, the margin between the cost of operations and sales revenues will be higher, hence more profits. the suggestion given by the operations officer is highly recommendable since he is the only individual in the organization who can identify various cost elements allocated to various operations. the suggestion to outsource some of the functions is also appropriate since the organization will reduce the labor cost and variable overheads associated with such functions.
From the suggestions, the adoption of effective advertising strategies should be considered. The organization should also establish cost reduction strategies. Development of new products should also be considered as the company will be able to diversify the product line.