FURNITURE BANK CASE
There are many alternatives at the disposal of Furniture Bank. However, it is imperative that a thorough analysis and evaluation is done of each of the proposed idea, in order to find its value for the organization and its future. More importantly, this analysis and evaluation should be done in the light of current organization’s strengths and weaknesses. This will also include evaluation done within the framework of organization’s operations. The selection of one of these proposed solutions will provide strategic direction for organization’s future endeavours. As, the organization is enjoying financial stability in the wake of profitable and reach revenue stream, it is important for an organization to use this favourable situation to exploit long-term opportunities for the organization. This will ensure long-term growth for the organization and maintenance of competitive advantage in the market. In the following analysis, an attempt is made to analyze different alternatives for the company and recommend one course of action on the basis of feasibility. Similarly, in the succeeding sections, a discussion will be conducted to ascertain the operations capabilities to ensure proper implementation of the recommended course of action.
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Acquisition of Trucks
There are numerous options available for the organization to use its present financial standing in order to gain long-term advantage. First of all, it is proposed to improve the organization’s trucking capability by acquiring new trucks. This option is quite viable keeping in mind the fact that it relates to organization’s core competency. This will also allow the organization’s trucking operation to become self-sustaining. Currently, organization’s trucking operation is suffering from certain inherent deficiencies. This can be substantiated from the negative cash flow associated with this operation. Addition of trucks in the service fleet will allow the organization to increase the magnitude of its service. The benefits will manifest in the shape of efficient delivery and pick up of the items. As a result, the organization will be able to provide satisfactory results to the customers. The end-result will be a positive flow for organization’s trucking operation. Addition of the new trucks will offset the negative effects of depreciation and replacement of the old trucks. However, it is imperative for the organization to get the best possible deal for this option. This implies that the acquisition of the new trucks must be done in most cost-effective manner. For this purpose, organization’s relationship with GM motors could come quite handy as it can buy new trucks at discounted price. However, acquisition of the new trucks is not without its share of problems. Despite sound financial standing, organization will have to find a way to finance this proposed idea. This could be done either through cash at hand, or through negotiated loan. Using cash at hand for this purpose may put the organization in liquidity problems. On the other hand, use of negotiated loan will entail payment of the principal amount along with the interest. This may offset the benefit achieved from the discounted price of trucks from GM. In addition to this, the acquisition of new trucks will also increase the operational costs of trucking operations. The increase in cost will be a direct result of the increase in salary, maintenance and insurance overheads as a result of new trucks. Nevertheless, the acquisition of the new trucks will also increase the revenue for the organization. It is estimated that the new trucks will have the capability of generating around $127,000 in the delivery income. This will provide a considerable boost to the organization and will improve its cash flow. In addition to this, this additional capability will allow the organization to bring new customers; if, the marketing and sales functions of the organization are able to effectively manage new leads.
The second option is related to the acquisition of the new site, in order to shift the premises of the business from present location. The generation of this alternative is due to external stimulus, which exists in the form of pressure from city council. It is inevitable for the organization to find and shift to the new location. In case of anticipating and conducting this change, the organization could be forced by the city government to leave the present site. In such a scenario, it will be disastrous for the organization, as it will be a shift to a new location in a haphazard manner. Therefore, it is imperative for the organization to foresee this impending risk and select remedial course of action. Currently, the organization has the financial muscle and cash flow to afford such change. The most appropriate location for the future premises for the business will be Greater Toronto Area. This is due to the presence of organization’s major client in this area. Another advantage exists in the shape of presence of accessible transportation business, which will facilitate the expansion of the business. However, this area is quite expensive in nature and could monetary constraint for the organization. Therefore, it is important for the organization to find the ideal location in this area, which may not be that expensive and at the same time allow the organization to achieve its objectives. Hence, it is important for the organization that it uses its relationship with the real estate agents to find the optimum site for the organization. At present, organization could afford new property ranging from $1.5 million to $3.5 million. Shifting to the new property will provide organization with a number of different benefits. It will provide organization with an opportunity to streamline and organize its operations, in order to increase efficiency. Secondly, it will allow the organization to increase its accessibility to the customers. This will allow the organization to increase its revenue and consolidate its position in the market. Last of all, it will also provide organization with an opportunity to acquire new customers. This is due to the fact that the presence in the downtown area will allow the organization to contact and capture large untapped market segment. Nevertheless, in order to select this option, it is imperative that cost-benefits analysis of this option is done on a monetary basis. With present financial condition of the organization, it may be suitable for the organization to shift its operations to a new location (Donald et al., 1999).
Development of IT Infrastructure
Currently, organization has very limited IT infrastructure. Likewise, it also has no information system present in the organization. Due to the absence of new technologies, the organization is at quite disadvantage when compared to the competition. It is, therefore, important for the organization to increase its information technology capability. This will not only increase the efficiency of organization’s core operations, but will also bring the organization at par with the rest of the industry. The development of information technology will also entail management of organization’s operations on rational and systematic basis. This will allow the organization to remove operational bottlenecks and redundancies. The operational benefit will take shape in the form of efficient tracking of information of clients, donors and human resource. The development of information technology infrastructure will also allow the integration of different processes and functions of the organization. At the same time, it will stop leakage of information from the business. Organization will also be able to build sustainable system of responsibility and accountability in the operations, which will improve the organization’s governance standards. The new IT infrastructure will also provide the foundations for the implementation of the new information systems in the organization.
The development of information technology in the organization will also pave the way for the front-office integration and the implementation of customer relationship management system in the organization. CRM system will allow the organization to capture customer information in real-time. The integration will allow the sharing of this information to all the functions and throughout the organization. As a result, the organization will become more responsive and efficient in providing service to customers. Similarly, it will become more equipped to deal with the customers’ problems. It will also increase the efficiency of the customer support on the part of the organization. CRM system is also very effective in capturing the needs and preferences of the customers. This will allow the organization to offer services, which are according to the needs and wants of the customers. This will facilitate the repeat buying and subsequently customer retention (Stevenson, 2009). Overall, it will allow the organization to build sustainable relationship with the customers. The implementation of CRM system will not bear the extra cost on the finances of the organization, but will also require change management effort on the part of the management. Implementation of any new information system cannot be successful, unless it is accompanied and preceded by change in the operations, processes and culture of the organization.
Operations Capability Needed for Successful Implementation
Under present circumstances, the best course of action will be the development of information technology infrastructure in the organization. The selection of this option will allow the organization to benefits from the number of advantages, which have been discussed earlier. However, the implementation of the recommended course of action would require building of certain operational capability. Usually CRM system is implemented by third party, which is a contract by the organization to carry out this task. The third party will conduct a thorough analysis of the organization’s operations and processes and devise the information system software, which could fulfil organization’s unique needs (Reid & Sanders, 2010). The whole process of the implementation will be conducted by the third party. However, there are certain measures, which need to be taken on the part of the top-management. Any changes in the operations and processes are met by resistance from the workforce. It is, therefore, important that organization lead and steer the change effort. Moreover, top management should make sure that there are proper channels of communications present in the organization. These channels will allow the top management to communicate the objectives and intended benefits of the new information system to the workforce. This will remove their apprehensions regarding the project and will encourage their participation. It is also very important that the feeling of ownership is given to the employees in order to include them in the new project. Without the active participation of all employees, the implementation of the new system will not be successful Instead; it will create further problems for the organization. Another pre-requisite for successful implementation is the training of the employees to use new information system. The training will result in additional costs but will bear numerous long-term benefits for the organization (Anderson & Kerr, 2001).
Analysis and evaluation of numerous opportunities will provide direction to the organization to make accurate strategic and tactical decisions. Each of the opportunity has both benefits and costs for the organization. The selection of the most appropriate solution can only be done through comparative analysis, which will allow the organization to view the alternatives in accurate perspective. In the present circumstances, the development of IT infrastructure in the shape of CRM system is the recommended course of action for the organization. Furniture Bank, currently, has the financial capability to afford such project. The selection of this option will allow the organization to reconfigure and streamlines its operations. This will allow the organization to increase its responsiveness in relation to customer service. It will make the organization cost-effective by increasing operational efficiency. However, the implementation of this option requires active involvement and participation of the top management as well as the rest of the organization.
Anderson, K. & Kerr, C., 2001. CRM. McGraw-Hill Professional.
Donald, C., Waters, J. & Waters, D., 1999. Operations management. Kogan Page Publishers.
Reid, R.D. & Sanders, N.R., 2010. Operations management: An integrated approach. John Wiley.
Stevenson, W.J., 2009. Operations management. McGraw-Hill/Irwin.
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