Lawrence Sports Inc. Today\'s Companies

Lawrence Sports Inc.

Today's companies have to undergo major processes of organizational change in order to ensure their success onto the markets and industries where they operate. Presenting the audience with the manufactured items and simply selling them is no longer the recipe for success and this must be backed and sustained with multiple strategies. In this order of ideas, companies have to identify the needs of the population and accordingly serve them; in this particular instance, the public is no longer purchasing the items produced by a company, but it demands what articles the company should manufacture. Similar to the changing status of customers, the role of employees has also changed. As such, the employees are no longer the obedient workers who simply do what they are told and cash in their monthly pay. Today's employees are the means to achieving organizational success and they represent the liaison between corporate officials and end customers. As such, the workers represent the possibility to better identify, address and satisfy the needs of the customers and through this, they stand increased chances of adding more value to the organization.

Lawrence Sports Inc. is a highly reputable company activating in the sports industry and manufacturing sports items. The primary customers of the organization are sports teams which make large purchases and the company does not yet address individual buyers. The organization has often prided in the treatment they offer their employees, but the current situation is not as great as presented. Due to financial difficulties, Lawrence Sports is unable to accordingly remunerate and stimulate its staff members, shortages which resulted in high levels of employee turnover. The alternative solutions to resolving the issues have to be compared against four major aspects: corporate goals, profitability, vendor-supplier relationships and the solution's possibility to resolve the matter in the present and sustain it in the future.

2. The Problem

The main problems within Lawrence Sports Inc. originate from its incapability to properly manage their funds, which then results in a series of chain reactions, all posing present and future threats for the organization. The problem to be discussed now has also originated from a rather poor financial management, which often placed emphasis on the payment of purveyors, rather than staff. As such, the personnel would most often be delayed on the wage payment or would have to receive only parts of their salaries. Foremost, the officials at Lawrence Sports invested little financial resources in the training, development and motivation of their employees, which then resulted in low quality of the services delivered to end buyers, but also in low on the job satisfaction. As a consequence, without being presented with the proper incentives, large numbers of employees began to leave the organization. The high rates of employee turnover pose major threats for the company and affect its capability to best serve the needs of customers.

The primary problem posed by high employee turnover is a financial one and revolves around the high costs of replacing the staff. The current issue raises two distinct effects, one materialized in an opportunity and one in a challenge. The opportunity is that of making a statement that the organization will not change its practices to give in to the demands of the staff. This then allows them to save money from not investing in future human resource strategies. The challenge materializes in that high turnover rates generate additional time and financial resources spent on replacing the living personnel, which then affects the quality of the products and services delivered to end consumer, which then affects the company's overall level of performance and its stability and market position.

3. Corporate Goals

In order to best develop and implement a solution to resolving the problem encountered by Lawrence Sports Inc., one must first state the company's goals. This stage is necessary as to get an idea into the criteria used for choosing the most suitable alternative. For instance, if a corporate goal would be to end commercial affairs and simply produce the items and then sell them through intermediaries, the officials at Lawrence Sports would not need to invest in the sales force. But the company does not desire to put an end to commercial activities. The corporate goals at Lawrence Sports Inc. could be summarized as follows:

reduce employee turnover and save money with replacing staff increase the efficiency of the operational process increase customer satisfaction maximize profits

The four goals reveal that the commercial operations will not be ceased and that the sports equipment manufacturer will carry on its activities with the intent to maximize efficiency and profits. The goals also stand for judging criteria for the alternative solutions that will be developed.

4. Alternative Solutions

The officials at Lawrence Sports Inc. have come up with three possible courses of actions to addressing the matter of increased employee turnover. The solutions have been identified in regard to the financial limitations and they are as follows:

prioritize staff payments in the detriment of purveyor payments get a loan to further invest in the motivation of the personnel take no action

4.1 Prioritize staff payments in the detriment of purveyor payments

This basically means that payments of employee wages will be completely honoured at the specified time and this would then increase the on the job satisfaction, would offer a security of the income and would help reduce the employee turnover. The major advantage of this alternative is that it requires no additional funds, therefore no additional debt. But before actually implementing it, the solution must be analyzed from four different angles: profitability, supplier-vendor relationship, ability to resolve the problem now and sustain it in the future and finally, corporate goals.

A a) Profitability

The effects on profitability are rather difficult to establish beforehand mostly because of two opposite features affecting it. In this particular instance, the profitability of the operations conducted by Lawrence Sports Inc. is given by the efficiency with which employees and vendors operate. The efficiency of the staff is prone to increase as the personnel would be better motivated to increase their performances. In other words, when being able to rely on a certain income, and even other incentives, the employees will perform their tasks at a superior level. Then, the quality of the products and services delivered to the end consumers would increase significantly, to finally materialize in increased numbers of satisfied customers, more orders, larger sales revenues and finally, increased profitability. However, the increased efforts of the staff would only be sustainable if they have sufficient commodities to work with; but this is rather uncertain in the case when payments to the purveyors are delayed.

A b) Supplier-vendor relationship

As established before, the relationship between vendor and supplier could suffer some negative implications as the latter would not receive its payments on regular basis. Then, he would not be motivated to make the deliveries on time, affecting as such the quality of the products and services offered by Lawrence Sports.

A c) Ability to resolve the problem now and in the future

Making a switch in the payment obligations has the primary benefit that it does not imply additional costs. But it also has the downside of being only a short-term solution. Due to the fluctuating effects on productivity and the damaging relationship with the vendor, other solution must be found for the long run.

A d) Corporate goals

In terms of corporate goals, the delaying of supplier payments in favour of employee wage payments would have the following effects:

the satisfaction of the staff would increase, resulting in lower employee turnover rates and reduced money spent on replacing the leaving staff the efficiency of the operational process would fluctuate; it would decrease due to lack of sufficient commodities and a damaged vendor-supplier relationship and it would increase due to better motivated personnel customer satisfaction would also fluctuate; it would increase due a better quality of the products and services delivered by the employees at Lawrence Sports, but it would decrease due to an untimely delivery caused by problems in the vendor-purveyor relationship the profits would increase in the immediate period after the implementation of the strategy, but they would decrease in the long-term

4.2 Get a loan to further invest in the motivation of the personnel

Relative to switching the priority of payments between suppliers and employees, the second alternative has the main disadvantage of employing additional expenditure. And since Lawrence Sports does not currently possess sufficient funds, they will have to acquire a bank loan and increase their debt levels. But the strategy is expected to retrieve more positive outcomes which will allow the company to both pay its debt and increase its profits.

A a) Profitability

The short-term effect on profitability would be a negative one as the company would have to struggle with additional expenses. On the long-term however, this would increase due to a better motivation of the staff and consequently increased performances that would materialize in better satisfied customers, more orders and increased sales revenues. 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