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Foremost, unlike the previous alternative solution, the profitability of the sports equipment manufacturer would not be negatively affected by problems in the vendor-supplier relationship.
A b) Supplier-vendor relationship
Unlike changes in the priority of payments, the contracting of a bank loan would not affect the relationship between Lawrence Sports Inc. And its purveyors. The suppliers would still receive their payments at regular dates and would therefore continue delivering high quality commodities in a timely and efficient manner. If something, the relationship would improve as more orders would be made and the company would have a better possibility of honouring its obligations to the suppliers.
A c) Ability to resolve the problem now and in the future
The immediate future could pose some threats as the company would also have to pay the bank loan. However, the additional financial resources would allow the company to further invest in their human resource and through this, retrieve significant positive results. The morale and performances of the staff would increase alongside with their commitment and loyalty to the organization. As such, contracting a bank loan would stand increased chances of retrieving the desired results in the present and would also have the capability to sustain these results in the long run.
A d) Corporate goals
Using the established corporate goals as criteria to assessing the second alternative solution would present the following findings:
the employees would get their payments on time, combined with other financial incentives (such as bonuses and premiums); this would not only result in higher performances, but also in increased on the job satisfaction and increased loyalty to the employer, to finally materialize in reduced employee turnover and reduced costs with replacing the personnel the constant relationship with the purveyors and the higher performances of the staff would lead to a superior efficiency of the operational processes at Lawrence Sports due to better paid and motivated employees who also increase their performances, the satisfaction of the customers served by Lawrence Sports Inc. would also increase the profits of the sports equipments manufacturer would increase and would be sustainable on the long-term
4.3 Take no action
The third alternative sees that the officials at Lawrence Sports Inc. turn a blind eye on the high employee turnover and hope that the problem would resolve by itself. The primary characteristics of this alternative are that it requires no additional time, efforts and financial resources, but it also has no benefits. The outcomes of implementing such a solution are rather difficult to foresee, but one can only expect a worsening of the current problems.
A a) Profitability
The overall profitability of Lawrence Sports Inc. would most likely decrease as the employees would continue to leave the company, generating as such increased costs with replacing and training the staff. Foremost, the quality of the work performed by the employees would at least stagnate, but most likely decrease, resulting as such in unsatisfied and lost customers and culminating with decreasing levels of profitability.
A b) Supplier-vendor relationship
No major changes would occur in the relationship with the suppliers as long as payments would be made in time. However, it would be rather difficult for Lawrence Sports to guarantee the timely payment in the given circumstances of unsatisfied customers and low profitability.
A c) Ability to resolve the problem now and in the future
However the strategy proposed does not imply additional costs, it neither has benefits. In other words, taking no action to resolving the matter of increased employee turnover is not a strategy to retrieve beneficial results in neither the short nor the long-term.
A d) Corporate goals
Relative to the corporate goals, turning a blind eye and hoping the problem would resolve by itself has the following impacts:
the rates of employee turnover would most likely increase and the costs of replacing the staff would be larger than ever; the performances of the staff would also be extremely poor the efficiency of the operational process would decrease the poor performances of the staff would result in unsatisfied and even lost customers the overall profits of Lawrence Sports would decrease
5. The Solution
In order to identify the most suitable solution out of the presented alternatives, one should try a simplistic presentation of the effects each alternative would have on the corporate features established as selection criteria.
Present and future
Goals - employee turnover efficiency of operational processes customer satisfaction profit maximization beneficial outcomes; - negative outcomes; ~ fluctuating outcomes
However it requires additional time, energy and most importantly, additional financial resources contracted through a bank loan that increase the levels of debt, the second alternative seems to be the most appropriate one to resolving the current problems and sustaining their resolution in the long-term. By attracting more financial resources, Lawrence Sports Inc. would be better able to remunerate and motivate their personnel. This would then have two distinct effects upon the corporation as a whole. First of all, it would help it resolve the impending problem of increased employee turnover as the staff would be better satisfied on the job, would become more loyal to the employer and would remain at their current positions. Secondly, the increased morale of the better remunerated staff would make them increase their performances. This would then lead to products and services delivered at superior qualities, better satisfied customers and increased sales revenues.
The sole risk that has to be considered in implementing this particular solution is given by the company's ability to pay back their loan. In order to reduce the risk of insufficient funds to make the reimbursement, Lawrence Sports could contract the loan in special conditions that foresee that during the first 3 to 6 months, the company will only pay the interest rate, and starting with the 4th or 7th month, they will commence the actual reimbursement of the loan. Provided that such a solution is not available, the sports equipments manufacturer will assure their payments based on that:
the company has no debts other than operating debts to purveyors, employees and utility bills the company has some economies that will help it pay three moths rates the investment will return after three months in increased productivity, profitability and reduced costs with replacing the staff
Lawrence Sports Inc. is a reputable manufacturer of sports equipments selling high quality products to teams across the United States. The company has placed high emphasis on maintaining a good relationship with its purveyors and has prioritized their payment over the employees' wages. The result was a rather unsatisfied staff, which began to leave the company and caused as such large expenses with their replacement. The company now has to develop and implement new strategies that align it to the modern approach and treatment of the human resource. The most viable course of action is that of contracting a bank loan to further invest in the personnel. The implementation of the strategy would commence with a timely payment of the monthly wages and would also be completed with other incentives, such as premiums and bonuses for performance. The beneficial results derived from investing in the human resource would materialize in lower employee turnover, reduced costs with the replacement of the staff, increased morale and performances and consequently, increased productivity and profitability.
Cameron, E., Green, M., April 2004, Making Sense of Change Management: A Complete Guide to Methods, Tools and Techniques of Organizational Change, Kogan…[continue]
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