Cango Case Analysis Six Key Issues Facing Essay

  • Length: 8 pages
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  • Subject: Business
  • Type: Essay
  • Paper: #20300639

Excerpt from Essay :

CanGo Case Analysis

Six Key Issues Facing CanGo

Effective organizational management requires going beyond managing the daily business operations. Organizational management requires paying attention to the financial and strategic side of the organization. However, strategy does not end with the mechanics of operating the business. Managers must attend to the "people" side of the organization as well. This firm has been hired as a business consultant to the CanGo company to explore the issues that confront the organization and to offer recommendations to help solve these issues. The following issues were identified during an exploration of business issues and practices. They are presented in priority of importance.

Issue #1 Lack of Strategic Plan

CanGo is an aggressive and enthusiastic group of entrepreneurs. They have their sights set on rapid growth and expansion. They have the best interests of the company at heart, but their enthusiasm overcomes their strategic thinking ability at times. They are excited about the opportunity of offering an IPO, and want to get started with projects that they feel will make the IPO a success. Their passion and enthusiasm are assets. However, their strategic planning is not in alignment with their strategic goals. This new project may make the IPO a success, but the IPO is still just an idea on the drawing table at this point in time.

As a result of their excitement over the IPO and the growth potential that it affords, they are neglecting current projects and clients. The new project may create excitement among stockholders, but their excitement will soon fade when they see that the company has sacrificed its foundation and stability to jump at the chance for fast money. This could have a negative long-term effect on shareholder and consumer confidence in the company. If this happens the company could face not only the failure of the IPO and a loss of stock price, they could face disaster due to their lack of strategic planning. Strategic planning will result in a lack of direction and focus. It will result in the inability to prioritize and utilize resources wisely.

Issue #1 Resolution

Strategic thinking requires more than considering the possibilities and excitement new projects. It requires considering the needs of the organization and engaging in a careful planning process. Although the enthusiasm of CanGo managers is admirable and their passion can be an asset, when passion is not combined with careful planning the result can be disastrous. The first thing that the organization needs to do is to clearly define organizational and strategic goals. Once these are in place, then they can devise a solid plan for getting the business where they want to be. This can include the new projects associated with launch of the IPO, but with careful planning they will not have to sacrifice the foundation of their business.

Sacrificing core products is a violation of social responsibility to their shareholders and current customers. Risky opportunities cannot be allowed sacrifice a solid foundation and the ability to take care of their current obligations. Slow stable growth will result in sustainability that will assure continued growth in the future. Rapid growth that does not take into account the longevity of the company will not be likely to yield the results desired. The company must carefully develop a strategic plan for reaching their strategic goals so that they do not sacrifice their current client base and reputation. The company needs to take a rational approach to growth, rather than letting their emotions and passions drive the company (Othman & Sheehan, 2011).

Issue #2 SWOT Analysis

Managers at CanGo are willing to launch into an IPO, new products and other new expansion products without taking a close look at their position in doing so. The company has many strengths, but it also has many weaknesses. New product launches are based on the success of other companies in a certain product area, particularly online gaming. However, there are many considerations that management is not taking into account. They have not considered that those companies that are already making money in online gaming represent their greatest competitors. They have not analyzed the size of the market, or considered that they will be entering a market where someone else already has brand equity. They have not considered their strengths or how they will differentiate their product.

Issue #2 Resolution

Once the company's strategic goals have been established, the next step is to conduct a SWOT analysis to determine where the company stands in relation to their competitors (Othman & Sheehan, 2011). They need to determine what they have to offer and where their weaknesses lie. They need to address their opportunities and their threats. The current plan of management sees an incredible opportunity in the online gaming sector and in the IPO, but they are not considering the threats to the success of the plan. A SWOT analysis needs to be conducted for the company as a whole and for any projects that they wish to undertake (Pugh & Bourgeois, 2011). A SWOT analysis needs to be considered as part of their strategic plan.

Issue #3 -- Strategic Resource Management (Personnel and time)

Time is a resource and every action that we take has an effect on another element of our business day. Every minute spent on one project takes away time from another project. Time is a resource that is often left out of the strategy. When CanGo decided to launch an initial public offering (IPO), it placed demands on staff members and beyond their normal workload. They found that they had no underutilized human resources. Yet, they still decided to shift extra work onto everyone for new, lucrative, and risky projects. This left personnel stressed and unable to complete projects for which resources had already been spent and that were almost complete. Adding to much workload to an employee means that they must sacrifice something else. As a result, staff was unable to complete assignments for established clients. The IPO is important, but CanGo's still needs to attend to its daily business and take care of its customers that made it a success. Time sacrifices are often not taken into account when assigning work tasks.

Issue #3 Resolution

In an organization with limited resources, including personnel, when another project is added onto their workload, it has a cost. The cost is something that must be dropped in order to attend to the opportunity. Many times, quality is the cost of the opportunity. When employees are stressed they are more likely to cut corners or make a mistake (Othman & Sheehan, 2011). Calculating opportunity costs differs among organizations and takes into account different elements depending on the situation.

Warren and Maria need to maximize their human resources in order to achieve the rapid growth necessary in their company. CanGo is continually starting new ventures. When human resources are short this can mean that manpower must be taken from other routine projects. Time has a monetary value when it comes to human resources expenditures vs. income generated from a particular project. CanGo must carefully weigh the outcomes that they expect from the new ventures against that already spent on old projects that are almost complete. Abandoning old projects prior to them coming to fruition means time and expense wasted (Rao, Griffis, & Goldsby, 2011). While it is true that growth is important to a business, if the growth takes away from resources that are limited, it will be more harmful than beneficial to the company. CanGo needs to adopt a more economic way of looking at new projects in terms of overall strategy. The opportunity cost in terms of personnel and resources needs to be considered in the calculation of opportunity cost.

Issue #4 Communication

CanGo lacks direction and as a result has a difficult time engaging all members of the staff in the strategic plan. Their goals are not communicated in a clear manner that all members of the team can embrace. During meetings, managers engage in power struggles that are apparent through their language. Employees continually have their work and responsibility increased with no input. They do not feel as if they are a part of the decision process. The most recent example of this is the work increase at the expense of projects that are almost complete. The staff does not directly express distress, but it is apparent in their responses. Employees are frustrated by a continual barrage of new responsibilities and changing priorities. They are allowed little input into the process. This increases their stress and lowers their productivity, as they struggle to determine which projects are the most important (Othman & Sheehan, 2011).

Issue #4 Resolution

A formal system of communication needs to be established so that employees are aware of their priorities and can get a clear view of how to plan their work. This would make them more productive and would reduce their stress considerably. Formal communication strategies would be beneficial in helping the employees better plan…

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