The following report has presented the current situation of the T-Square Communication Company and the restructuring required to turn the company to a better and prosperous position. The company has adopted an organization structure where the chief executive officer is the head while the chief operation officer and chief financial officer are second in authority.
Preliminary corporation situation has indicated that T-Square is in the cell phone industry, an industry that has been rapidly developing in terms of technology, innovation, and competition. The PEST analysis, on the other hand, has shown that the company enjoys good social, economic, and financial situation, while technology and politics remain uncertain. Moreover, Porter’s Five Forces model has revealed that the company needs to focus on customer power, new entry, and rivalry threat. Finally, the SWOT analysis has shown that the firm has a major strength of being in an attractive financial position and a significant opportunity in its current new production area and market. However, it still has a weakness in a bad pricing strategy and a threat of high competition in the industry.
The T-Square Telecommunication Company
The new strategic plan that has been adopted is the low-cost leadership where the company will seek to have the least production cost in the industry. It has been recommended that in-house technology, more production in Asian countries, and highly productive labor force be critical to realizing the fruits of the said strategy. At the departmental level, it has been suggested that the finance department needs to source funds for R&D and plant development in Asia while the primary focus of the operation unit will be increasing the labor force productivity, using inbuilt technology, and reducing labor production. Finally, it has been revealed that all the market that the company serves needs adequate marketing.
It has been recommended that the company take the following steps to ensure future prosperity. First, it needs to develop a strong inbuilt technology from a subterranean research and development in order to lower future production cost. The company also needs to have more of its production executed in the Asian production region because the labor force there is more affordable than in Europe and the US. Finally, the article has suggested that the company needs very competent labor force that exceeds the industry productivity expectation in order to reduce the cost of production by having few workers and also to have quality products. All the above suggestions, when well implemented, will dramatically reduce production cost, thus making the company realize its low-cost leadership competitive strategy.
T-Square Telecommunication Company specializes in manufacturing the mobile handset. It is an American company and has traditionally served the American market for years. However, in the recent past, this company has ventured in the European and Asian market and has even developed some production facilities in Asia. Despite these recent developments, this company has also been facing significant challenges of corruption and collusion cases due to its nefarious directors. Together with other leaders of other similar firms, they decided to stagnate the market technology and raise prices abnormally among other illegal operations. The US department of justice thus ordered them to be fired, and thus, the T-Square board of directors needs immediate change. However, my partners and I decided to buy the company, and now we are the next top management. This report thus provides a description of how we plan to restructure the company, from its current status of technological stagnation and collusion activities to a more competitive firm to face off with its competitors.
The report significant findings are that the company is lagging behind in technology and it also needs to reduce its production cost in order to fit into the current steadily increasing competitive market. It also faces several areas of weakness that require further concentration by the management, which include the political threat that the company faces by expanding production facilities outside the United States and the notable damage caused by the previous dishonest management. Finally, the report has identified that the company has an excellent reputation, and its products are appreciated in the market, and thus, it needs to use such status to its advantage.
The T-Square Organizational Chart
Fig 1. Organizational Chart
The above organizational chart is valid for this company, as it has a simple chain of commands. The CEO controls the CFO and COO, who in turn give instructions to the managers below them. The chart thus is simple to understand by all staffs in the company, and it also makes it easier for individuals to know who they should approach when they need something.
The chief executive officer (CEO) will be the preeminent authority in the firm. They will have a total annual salary of $200,000. The required educational qualification for this post will be a minimum of master’s level education from a recognized university in the field of business and management. The CEO will also be required to have a ten years’ experience in the same capacity or any other top-level management position. Because this is a publicly trading company, the CEO will be required to report to all shareholders via the board of directors. They will oversee the overall management of the firm, and their duties will include making strategic decisions, supervising other top departments, and coordinating other units.
The chief financial officer (CFO) will have an annual salary of $180,000. They will be required to have a master’s degree from a recognized institution in the field of finance and also have a seven years’ experience in top management of a finance department. The CFO will be required to report to the CEO. The expectation in this capacity is to help the company maintain a sound financial position today and in the future. The CFO will oversee all the financial activities, financial reporting, financial strategies, and fund sourcing among other roles.
The chief operations officer (COO) will have a total annual salary of $180,000. They will be required to have a postgraduate degree in telecommunication or electronic engineering and a five years’ experience in the same capacity. COO will report to the CEO and will be required to coordinate all primary operations of the firm. They will determine the production strategy, sales, marketing strategy, and labor force among other operation duties.
Preliminary Situation Analysis
Industry and Company Background
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T-Square Company operates in the mobile phone industry. This industry developed in the early 1980s when the first international cellular mobile telephone network emerged. However, during that time, the usage of cell phones was confined because the technology was poor and they were also too heavy to carry. But that trend started to change in the year 1991 when the second generation (2G) of more user-friendly mobile phones was produced. Moreover, the pattern persisted due to the improvement in research and development in this industry; and by 2001, the third generation (3G) of mobile telephones was produced. Presently, the industry is more competitive, as companies are investing more into research and development of future products.
T-square is a relatively small business is this industry with the annual revenue of one billion US dollars. Its products are, however, well recognized in the market due to the considerable amount of money that the company places on the research and development (R&D), thus producing phones that appeal to customers. The primary market that the firm sells its products to is the United States; but in the recent happenings, it has extended its market to Europe and Asia. The company is also developing production facilities in the Asian region in order to minimize output and transportation costs. It had attempted to arrange production in Europe, but stopped that project immediately as a result of coherent labor regulation in the region, which could have amounted to company losses.
The major competitors in the international phone industry are mostly found in the Asian and European companies, as the United States companies are not successful in this area. The company thus requires effective marketing to ensure its products are accepted in the highly competitive market. Lastly, pricing strategy also needs to be addressed in order to focus on the growing middle class across the world.
Market Condition (PEST Analysis)
The Company expects to face some political issues in the future, as it expands to markets outside the United States. The local government is friendly, but in Asia and Europe, the company may expect more taxes, mandatory fee, employment regulations, and environmental laws, which all risk the returns and the company’s productivity.
T-Square has a considerably friendly economy in the United States to operate in; however, the current competition in the country is too high for the company to depend on in that market. The recent rapid growth in the Asian countries is thus a key to success, as more people are becoming wealthier in the region. Moreover, the governments also have liberalized the market in this area.
With the increased need of the younger generation for more features on their phones, T-Square stands at an advantageous position due to its advanced R&D. The company has also joined the Asian market, which has a large and rapidly growing population that will serve as a large market. Lastly, advertising has a good response in the European and US market; hence, it will work to the company’s advantage.
The current technology in the business is insufficient based on the global trends. The company is still using the technology-one mobile phone, and thus, there is an urgent need to change to technology-two phones. T-Square is lucky because there is a large amount of technology in the industry that it can use for its present and future benefit.
The financial record of the company based on its book of account is also promising. The company had a revenue of $1.2 billion, which means it has a considerable amount of sales. It also had an after-tax profit of $59 million, which also indicates that it has a sound financial base to help it advance further in the future markets.
Market Condition (Porters 5 Forces Model Analysis)
Suppliers’ Bargaining Power
Suppliers also have a relatively strong bargaining power, as several competing companies are increasing their demand for raw materials. However, the supplies are also growing in the consistency rate, and thus, the company does not have any foreseeable fear of having constrained supplies.
Buyers’ Bargaining Power
The buyers have a strong bargaining power now, and there is an anticipation that their power will increase rapidly in the future. More companies are joining the industry, technology is becoming cheaper, and the need for more advanced phones is growing. With all these factors in place, customers will be buying phones from the company that they feel understands them better. They will have the power to determine the amount of revenue that T-Square receives; hence, the company needs to address customer interests.
The phone industry today has many big rivals that the company has to keep in close evaluation. Some are located in Atlanta, Georgia, just like T-Square, and thus, they pose a local market competition. Others are found in Europe and Asia, and therefore, there is a need to have a good competitive strategy even in the international market. The Asian and European companies are also very competitive in the technology field, thus the company needs to address this factor as well.
Threat of Substitution
T-Square has a limited fear of product replacement because no other technology has proven it can produce a substitute of a cell phone. The company thus should not focus its resources on preventing a threat of substitution, as such threat is unforeseeable in the near or far future.
Threat of New Entry
Phone industry is still very young in the global market, and thus, it is expected that more companies will join the industry. The industry market is still in the growth stage, which means that, for such industry to reach the maturity stage, the existing companies have to increase production and maintain a large market share; otherwise, other companies will join. T-Square Company thus needs to have a prudish strategy if another company enters the industry.
Current SWOT Analysis
The T-Square Company has several internal factors that work to its advantage. First, it has excellent financial resources; based on its current financial records, T-Square made a considerate profit at over $59 million. Such amount of income means that the enterprise has a financial strength that it can apply in expanding its current market. The company also has an advantage of quality and reputation of its products. The existing customers have highly appreciated the phones produced by T-Square for their unique nature of specialization achieved from research and development. Finally, the company has an edge of flexibility in its pricing, production, and distribution. The current prices do not reflect the market value of the product and thus can be adjusted; its production can be changed easily as well, and distribution is also flexible across the three continents.
T-square also has some deficiencies in its current situation. First and foremost, there is a gap in the company pricing strategy. The current company pricing overvalues the real price. Past directors intentionally made the price remain high, and thus, the present price in the market is not reasonable. There is also a gap in the technology that the enterprise is using today to produce its phones. The current technology the company applies is the technology-one mobile phone, and such gap symbolizes a weakness that needs to be addressed. Lastly, despite that the management of the company has been recently changed, it does not mean that the company immediately stopped suffering the poor management cost. The cost of previous poor leadership persists, and thus, the new management needs to determine how to improve the company leadership.
One significant opportunity that T-Square is having is the new markets at its disposal now. Traditionally, the company used to serve the US market only, but now it is in the Asian and European regions. The current entrance to new markets thus means the company has a perfect chance to increase in its expansion and reach out to a million other potential customers. The company also has an excellent opportunity to optimize its revenue and profit by reducing the present high cost of production. The development of output firms in the Asian region means that the labor force cost will be economical, and also the production will be cheaper. The company thus needs to optimize on this chance. Lastly, the company also has an opportunity in the current trends in the economic and social sector across the globe. The PEST analysis above has shown that the markets in Asia and Europe have become liberalized, and the societal use of phones has increased, both of these factors giving T-Square more chances to prosper.
One significant threat that the business faces is the competition already in the market. Most companies have started positioning themselves as market leaders, and thus, there is an anticipation of more competition in the future. Such threat is not well monitored and can thus adversely affect the company. Venturing into the new market and new production areas also comes with risk. T-Square thus should expect more threat from the new market outside the United States due to political reasons. These risks might include new regulation on foreign companies and an increase in taxes among others. Finally, the company also has a fear of technology change. T-Square is already behind in its current technology production, and thus, any change can cause a disaster to the enterprise.
To be a globally recognized company in the production of quality and reliable cell phones at affordable price.
Developing new and most innovative cell phones in the local and global market through our dedicated and resourceful research and development in order to meet the future demand of the society while still providing affordable products.
The general business objective is to be the most productive enterprise across the globe in the production of cell phones through its low-cost leadership strategy. To achieve this, the company aims at attaining the following:
Increasing its production in the Asian market to 50% of the total company production within the next five years of its operations.
- To have a competitive in-house produced technology that will focus on the current demand as well as the future demand in the decade to come.
- To have an efficient and effective labor force that is well dedicated and committed towards its responsibility for high productivity.
- To increase the current market share by twofold in the next five years and ensuring that such growth remains above 20% each year.
Justification of the Strategy
The low leadership strategy is important in the phone industry due to the rapidly increasing competition. Future companies in the industry will have a chance of survival if they can spend less to produce what their clients want. In this manner, they will remain relevant and still profitable in a harsh competitive environment. T-Square Company needs to acquire this strategy before the phone market becomes flooded with large organizations. If the company develops a reliable in-house technology, has more production done in Asian countries where labor is cheaper, and has very active employees for high productivity, then it can easily become a market cost leader. And once a cost leader in the global cellphones industry, there is a significant chance that the company will withstand competition for many more years to come.
- To increase the funds allocated to research and development by 50% in the first year of operation, by 20% each year for the next three years in a row, and lastly, by 10% in the fifth and sixth year.
- Increase the current funding for the Asian market by 50% for the next five years in order to ensure that the region has achieved the focused production level for the next one decade of the company.
- Have a reasonable highly compensated labor force that will enjoy a minimum of 5% pay over the current fair salaries and wages in the phone production industry.
- The funding of the research and development will occur in phase. Under the first step, the company will have to depend on long-term loan from a bank; equity investment will fund the second face, and the last face will be income investment. Because investment in Asian countries is a long-term investment, the company will depend on equity financing by issuing new shares to the public. The company also will cross-list its traded share to the stock exchange in Asia.
- By ensuring that the labor force has above 10% productivity capacity of average employees in the industry, they will generate enough revenue to cover their expense.
- All the finances borrowed from leading institution shall be used in the R&D without exception, and repayment shall be made over a six-year period.To fund new development by equity financing, it will require offering each share at $35 in the initial public offer; also, the company will cease altogether from using that money in any other financing activities unless they are in the Asian region.
- The company will only maintain those employees that have the capacity to have a higher productivity than the average productivity in the phone production industry.
- To have all the phones produced by the company modified as per the in-house built technology of the business without considering the option of outsourcing.
- To ensure that most of the labor-intense production takes place in the Asian nations while other non-labor intensive practices are done in the United States.
- Having a very effective and efficient marketing and sales team that spearheads well-organized marketing across the three markets.
- Ensure that, within the first years from now, the company develops a research and development center both in the United States and Asia.
- Ensure that the initial production that consumes much labor power takes place in Asian countries.
- Using advertisement and product promotion.
- The idea will guide the company that developing inbuilt technology enables an excellent learning curve.
- The company shall not allow the expansion of the production units in the United States.
- The marketing will always amount to 5% of the revenue collected by the enterprise.
Marketing Area USA
- Increase the sales by estimated 8%.
- Reduce labor force by 20%.
- Have the best technology in the market.
- Have very active marketing via television and newspaper advertisements.
- Transfer most labor intense to the Asian production center.
- Hire the most experienced staff for inbuilt technology.
- The sale budget to remain at 4% of the sale revenue derived from the US market.
- Ensure that no new production firms are developed in the United States.
- Be based on the American culture.
Marketing Area Asia
- Increase the sales by 20%.
- Increase the production by 20% annually.
- Incorporate the Asian culture to operations.
- Focus to be on holiday promotions and reduced prices sales.
- Construct more production facilities.
- Hire the local labor force into the company.
- Marketing budget to remain below 5% revenue sale in Asia.
- Have as mane products as possible produced in the Asian region.
- Make sure they are highly productive.
Marketing Area EU
- Increase the market share by 10%.
- Have reliable distribution channels.
- Incorporate the European culture into the market.
- Utilize television and newspaper advertisement.
- Use existing retail store well known in the region.
- Hire European people to sell the product.
- Budget on making only at 4% of the European revenue.
- Have a retailer where phones can be accessible to all people.
- They must be productive and committed.