Generally growing business is not an easy work. One needs to come up with a viable idea that will serve as the motive for the business. After developing an idea then a profitable niche is formulated, defining the targeted group in the market and then coming up with something of value that is to be sold to customers (Beske, 2012 p.89).
Whether one is selling services, products or information coming up with the strategy to operate the business is the major factor in business. Without the apt measures to drive growth in business, securing profits and satisfying customers then the business will float and fail to achieve its goals in the market. Johnstone Company experienced a lot of competition from the market.
Management strategies for success of company.
To overcome the challenges Johnstone focused to analyse and improve the supply chain process within his company.Johnstone was in position to detect the non-value practices which company had been doing (Busse & Marcus, 2011 p.98).The company was in position to follow the following measures which enabled it to incur huge profits despite the increasing competition within the market.
Making good decisions by use of the available logistic data.
The executive body in Johnstone’s company were much concerned with the issue of decision making by using the relevant data (Daugherty, 2011 p.56).Analysing the company’s data and other related information assisted the company to come up with apt decisions that assisted increasing the profitability level, increasing the company’s performance and generally helped in designing products of high value. From the company the data was analysed in different ways;
First was the descriptive logistics data analytics which helped company to answer such as what happened? Why it happened? Why the turnover of the company is increasing? How long were it to take to hire new employee to increase production level? All these forms a criteria which helped the company to succeed in decision making (Daugherty, 2011 p.56).
Reducing the time for receipt of order to the final delivery.
Johnston realised that the key part that keeps the company running was the customers. The issue of punctuality and time factor was addressed (Dekker, Fleischmann, Inderfurth, Van, 2013 p.78).The company realised that many of its customers needed their orders earlier and the company started working directly with needs of their customers.Johnstone realised the following factors on customer satisfaction;
- Growing the customer’s base .In most cases, the business finds that acquiring new customers is problematic. Therefore, the company focuses to retain existing customers than to lose them (Dekker et al,2013 p.156).The company realised that it was losing customers and they started designing their products targeting the customer’s preferences and taste. More strategic plans were formulated which targeted to build relationship with the company.
- Coming up with a vision on how to serve customers.Johnstone came up with a new technique of reaching customers in the market. He made changes and some requirements in the products and this idea helped the company to incur huge profits in market. There was no delay in production and delivery of the products to customers (Govindan, Palaniappan, Zhu, Kannan, 2012 p.74).
- Knowing the customers better. Monitoring the production process and listening to the views from the customers.Johnstone followed the voice of the customers and he decided to design those products which could suit to what the customers demanded for. Internal discussions held provided adequate decisions about the progress of the company.Johnstone targeted those customers who were more profitable .For instance; the Burberry customers had changed the seasons for ordering the products. This helped the company to produce more textiles of different features thus increasing the production output(Govindan et al, 201 p.200).
Cutting the low margin clients, products and then investing saved money in high producing business.
The company had decided to invest more on the profitable projects.Johnstones realised that the number of customers had increased from different regions and therefore he decided to invest new projects in different places. By carrying the margin analysis of the vital products, Johnstone was in position to come up with the profitable products therefore increasing the production level.
Understanding competitors and being ahead of them.
Competition is hindering factor in the business (Halldórsson & Kovács, 2010 p.81).Market cannot run without competition. When the customer number is slowing down marketers tries to come up with the strategies that will focus to defend and maintain the competition.
The company in order to thrive in competition it realised the following measures;
Knowing the competition. Finding out who is competing helped the company .Johnston was in position to select those areas to concentrate with starting with selling unique products different from what competitors were providing (Halldórsson & Kovács, 2010 p.81). By this it targeted more customers in the market. This increased sale volume and therefore Johnstone was in position to enjoy huge profits.
Differentiating and coming up with a step in marketing environment. In most cases, Johnston realised that it was essential to come up with the criteria that will try to convince customers to come for the products rather than creating a rivalry (Hazen, Cegielski, Hanna, 2011 p.80).The company also improved on the positioning .Johnstone concentrated on telling customers the type of product sold, why the customers were to forego other companies products and the price of the existing products. This attracted more customers and the company used to enjoy large economies of scale thus fetching adequate profits that enabled the company to succeed.
Being a good employer. Employer serves as the cornerstone of the business. Only the owner of the business and the management organ in business that will try motivate the staff.Johnstone employed skilled staff and he motivated his employees (Jim, Kevin, Goh,Hsieh,2013 p.21).The company also looked on expanding the offers .Diversifying was a key factor that enabled the company to succeed. This was done to target other segments in the market which were not using textile products. As the issue of diversification increased the company was able to reach large number of customers .This led to expansion of the business.
- Vertical integration.
Basically in vertical integration the arrangement of the supply chain management is owned by the company (Jim et al, 2013 p.57).For the company to get huge profits and market gain, the company decided to incorporate different vertical integration platforms. Here every member of the company produces different product or service and then the total output is combined to offer a satisfaction for a certain need (König & Spinler,2016 p.86).
The aspect of the vertical integration and expansion is crucial for business survival .This because it is used by the firm to produce products and also to identify the market where to sell the products.
Vertical integration is associated with the vertical expansion in business. Johnstons Company use the vertical expansion mechanism whereby it targeted to increase the scales and at the same time gaining more marketing power (Lai & Wong, 2012 p.100).This concept is efficient since it gave the company an opportunity to lower the costs at same time gaining more profits from the available market. In some situations when a company experiences a monopolistic control on the products or services its selling, then a regulative action and procedure is used in order to rectify the anti-competitive behaviour .The company also experienced the aspect of the lateral expansion where the management focused on acquiring other companies of same type in the market.
Types of vertical integration used by the company.
Vertical integration is the degree in which a company or any given organization owns the upstream suppliers and downstream buyers in the market (Li, Liu, Chen, 2011 p.85).
There are three varieties of vertical integration in the company;
- The forward vertical integration.
- The backward vertical integration.
- Balanced vertical integration.
In most cases, a company exhibits the backward vertical integration mostly when it opts to control the subsidies that helps in controlling the inputs used in production process. For instance, Johnston Company owned different businesses (Li et al, 2011 p.189).
On other side a company shows forward vertical integration when it controls its distribution channels and also controlling its retailers where products are sold. The textile controlled other related firms in the market. Balanced vertical integration occurs when the purchasing departments in the organization takes the role of purchasing products or the wholesalers in the market (Lieb & Lieb, 2010 p.90).
Vertical integration has benefits and problems. This depends on the technology or mechanisms each company is using in the market sphere. There are different internal and external problems stemming with the aspect of vertical integration (Lieb & Lieb, 2010 p.90).
The internal gains of vertical integration are;
- Reduced transaction costs.
- Incorporating the supply and demand criteria across the chain products.
- Increasing investments and reducing uncertainty.
- Monopolizing market through the market foreclosure.
The internal challenges of vertical integration in the company are;
- Increased expenses when switching to new buyers and sellers.
- Reduced motivation at the beginning of supply chain since there is guaranteed poor quality provided.
Efficiency in supply chain mechanisms.
Companies have supply chains which are driven by different factors. The factors focus to induce efficiency and responsiveness in the company (Myerson, 2012 p.100).The driving mechanisms for the company are;
This discusses on questions such as what, when and how the company will produce products. This is facilitated or established through designing adequate factories with enough space in order to produce a large quantity (Myerson, 2012 p.180).Here the company will target to produce products in different small organs so as to ensure efficiency is met in market. Also companies obtains efficiency through centralization whereby a large factory is designed so as to get economies of scale.
This is concerned with how much the company will produce, how much the company will stock. Stocking large stocks ensures responsiveness. Also stocking products in different locations ensures efficiency since more products are close to the customers (Rushton, Croucher, Baker, 2014 p.78).Efficiency in stocking is enjoyed especially to the products which are frequently sold. The idea of economies of scale and the total cost savings is obtained through stocking the products in a few central regions.
This gives an answer on where best in market to perform or carry out an activity. Company ensures responsiveness and efficiency by establishing appropriate locations where it will be able to reach customers easily. The company opened more stores in those areas which had the more volume markets. Here efficiency is created through working in new locations and centralizing within the common locations in the market (Schönsleben, 2016 p.89).
Transportation formulates strategies on how and when to move products from the company premises to the customers in the market. The issue of efficiency is always emphasized through the transporting products in large quantities and doing it less often. Using transportation modes such as roads, railways and pipelines in market is always efficiency (Schönsleben, 2016 p.89). Also transportation in company is efficiency when it originates from the central point other than the branches of the company in different locations.
- Employing upstream to downstream production and the finishing processes in the company.
Every company produces products in a different manner. Production behaves like a river .It is unusual to hear the departments involved in production referring to production in a straight approach. Upstream refers to those inputs or materials that aids the production process. While downstream is the issue of products produced by the company and then distributed to the respective customers (Sweeney, 2013 p.89).
Upstream production process emphasizes on searching and extracting the raw material needed by the company. It is not involved in any procedure or step of processing the materials. It concentrates on extracting materials that facilitates the production process. For example, locating appropriate locations to obtain textile materials in Johnston’s Company forms the extraction or the upstream process.
Downstream involves the whole procedures of collecting the materials and then processing them after the upstream process (Sweeney, 2013 p.159).It also includes the sale of the final products to other companies, selling to government and even selling to private organizations. Each end user varies and this depends on the end products produced by the company. This process forms direct contact with the customers in the market since it involves selling end products (Thun & Hoenig, 2011 p.34).
- Lean and agile logistic strategies.
When describing the supply chain there two logistics which are fundamental to consider in business.
This strategy in business focuses to reduce the costs and the waste. It emphasizes on the aspect of efficiency and also streamlining the operating in the organization (Viani, Salucci, Robol, Oliveri, Massa, 2012 p.78). It is argued that the supplier and the company have a single contract which abides their relationship.
According to the lean approach in management logistics, anything in production process that does not induce any value to the customers then need to be eliminated. The concept is to reduce the waste and always consider those mechanisms that will add value to the product or the services produced by the company.
Lean strategies depends on the determining the inventory that is needed by the company to meet a certain demand in market (Viani et al, 2012 p.82). In many situation some companies produce products on basis of as-needed by consumers thus reducing the issue of overproduction.
This concept in supply chain emphasizes on the adaptability. It is good for the organizations that want to adapt quickly with changing market situations. It’s a good method that will help a company to adjust to logistics such as the changing technology, changing economic swings and increased customer demand.
Typically agile approach waits to see what the market is demanding before producing the products (Viani et al, 2012 p.182).This helps companies to be more responsive and therefore responding to demand as soon as possible. Generally the agile approach is always quick to respond to customer’s needs. If a supplier fails to provide then there is flexibility thus reducing issues of delay in supply chain.
- Recommendations for analysed issues.
The following are key factors to consider in order to increase profitability in the company (Wagner & Kemmerling, 2010 p.67)
- Based on competition company should come up with a platforms that differentiated itself with other companies.
- The concept of lean strategy is always appropriate to those markets that don’t vary. This reduces wastage and focuses on generating profits.
- Upstream and downstream production process need to be handled in appropriate manner. This will target to increase production in the company.
- Drivers for efficiency in supply chain forms the basis for reaching the customers. Companies ought to take the efficiency drivers so as to ensure constant supply.
- Vertical integration forms the foundation for avoiding the hold-up problems in the organization. This results to a reduced monopoly known as the vertical monopoly in companies.
In conclusion, the concept of reducing competition level in market helps companies to reach large number of customers (Winter & 2013 p.75.The supply chain and the aspect of efficiency in business helps companies to satisfy customers by ensuring there is constant supply in the market. Also, company need to realise that lean and agile strategies are to be given first priority .This will help to reduce costs and wastes in company and at the same time assisting company to adjust to situations in the market. In addition, upstream and downstream processes need to be employed (Winter & 2013 p.131).This will assist in coming up with the appropriate raw materials which will determine the end products anticipated by the customers in the market.
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