SituationAnalysis: Digby Company
SituationAnalysis: Digby Company
PartOne: Competencies and Competitive Advantage
Fromthe analysis of Digby Company, it is evident that the profitabilityof the company is projected to go down. Three core competencies havebeen developed to meet the long-term goal of the firm. One of them isthe product redesigning. This entails the overhaul of the brand ofthe product through changing some of the vital aspects of theproduct. In this prospect, we give much attention to the changing ofthe packing style to change the perception of the product in themarket. Additionally, there is the notion of making sure that thequality of the product is improved with respect to the tastes andpreference of the consumers. The second core competency is theautomation. This involved the use of technology to create high-levelefficiency in the carrying out of various sets of operations withinthe company (Prahalad, Hamel, & Harvard University. 2011). Abetter example is the automation of different authorizations that areneeded by various departments to ensure a high level of effectivenessby reducing the effect of bureaucracy and possible time wastage. Thethird competency is the human resource empowerment and restructure.This competency involves the inception of a well-structured system ofrecruitment which not only gives the company qualified staff but alsoprovides the staff that suites the available job description withoutany stance of overlapping (Zacker, 2014).
Numerousdecisions exist that should be made to ensure that these competenciesare well developed. In product redesigning, the most importantdecision to be made the line of redesigning to undertake. In thisprospect, we would have the choice of changing the product quality inagreement with the preference of the customer or transforming thepackaging of the product to match the uniqueness of the same. Thetranscending effect of these choices would be to transform the marketsegment and perception of the product by the target market.Additionally, the decision to make while developing the competency ofautomation is the need to develop an enterprise resource planningsystem which would ensure the automation of various sets ofoperations within the company. In this decision, there is a need tocarry out a cost-benefits analysis of the whole context of ERPdetermine its profitability both in the short and in the long run(Zacker, 2014). As per the third competency of human resource, thereis the determination of whether the current workforce is best suitedfor the tasks that are ahead of them. Additionally, there is a needto understand whether the job description in each department is wellaccentuated to suit the skill of every employee and to give muchattention to the notion of cost effectiveness.
Thereare various ways in which these competencies contribute to the adventof competitive advantage. The product redesigning has the effect ofensuring that the product is of higher quality and therefore would bepreferred by the customers than the competitor’s products.Additionally, the automation will ensure that there is higherefficiency in the product and service delivery, which will help inboosting the level of reliability on the products’ levels ofsatisfaction. With profound human resource in place, there will beproper handling of customers with keen attention to creating a largerclientele base, which would ensure high sales turnover hence higherprofit volume (Prahalad, Hamel, & Harvard University. 2011). Thecombination of these three levels of competencies has the effect oftransforming the operational stance and service delivery for thecompany to the esteemed customers.
PartTwo: Performance Measures
Fromthe analysis, the strategy of high profitability of the company isdeemed to be accomplished accentuating the following performancemeasures in terms of priority as follows. The Profit is set to be28%, Market Capitalization 22%, ROS 8%, ROE 11%, Market share 19%,and Stock price to 12%. The main reason for prioritizing theprofitability and the capitalization at a higher stance is becausethese are the tenets that make the company depict an increase ordecrease in the accumulation of the wealth of the shareholder.
Inthe simulation the internal weakness of the company is depicted wherethere is the expected fluctuation in the return on equity for thecompany and the investor therefore would expect a return of below 15%in most occasions. Furthermore, the organizational performance isdeemed to increase as from year 15 as depicted by the global unitsales which would also start increasing at this year (Campbell,& Luchs, 2007).An external weakness for this company as simulated and applied inthis company is the notion of lower global market share which isexpected not to go beyond 15%. It is from this concept of externalweakness that we can deduce that the company requires high level ofcapital to not only amass the market share but also to gain acompetitive advantage.
Creditrating is very essential for building of a profound reputation forthe company. As the results of the simulation connotes, the creditratings for all the years surpasses the expectation of the investorswhich reveals that the company has a higher reputational stance. Oneof the areas where we went wrong was this aspect for credit ratingsince at the point of start of the company the organizationalperformance is deemed to be quite low and hence the credit rating isexpected to be low. This has not been described in the simulatedmodel of this project (Prahalad,Hamel, & Harvard University. 2011).
Onearea that we did right was on the calculation of the prices by use ofwholesale marketing. In this prospect, every cost that is associatedwith marketing has been encompassed in this calculation and hence theprice also entails the profit margin that would ensure that thecompany does not go at a loss. One of the lessons that we have learnton this simulation model is that in any business context, for theshareholders’ goal to attained, the company must make strategicdecisions which mostly benefit the firm in the long run rather thanin the short run. The main reason for this argument is that the shortterm goals have lesser gain to the shareholders and hence wouldresult into high levels of conflicts of interest between themanagement and the shareholders.
Campbell,A., & Luchs, K. S. (2007). Corecompetency-based strategy.London Boston: International Thomson Business Press.
Prahalad,C. K., Hamel, G., & Harvard University. (2011). Thecore competence of the corporation.Boston, MA: Harvard Business Review.
Zacker,C. (2014). IntegralView of Core Competences and Core Processes in a Company.Munich: GRIN Verlag GmbH.