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Alternative Ways Digital Board Could Have Addressed Deteriorating Company Financial and Market Share Performance
Based on Kravetz scrutiny the firm should decentralize decision making to make it more responsive to the local market conditions. His analysis revealed that the company decision making was at regional level as opposed to business unit level. This silo management was affecting the company in making crucial decision, especially due to rapid changes in the market environment. Kravetz observed that this decision making hampered customer segmentation, pricing strategy and decisions on product offering and thus accounted for deteriorating financial performance. As a result of the generalized decision making important facts on these three areas were often overlooked leading to poor business intelligence gathering process. As a result, the decisions made failed to help the local firm make critical decisions. Accordingly, there is need to decentralize some management functions to the local firms and only maintain at regional level those that cut across the entire block. Kravetz observed that the silo management approach was afflicting the profitability of individual unit and in extension that of the firm. This is because in so doing, the firm compromised its ability to focus on the market and its customer. Each business unit deserved some level of autonomy in implementing its plans with regard to marketing, sales, distribution strategies, and channel management.
A second alternative in reversing the poor firm profitability would be to use local reward systems in human resource management. According to Kravetz report, the firm’s performance was being compromised by its use of a reward system that reinforced the firm inefficient organization structure. Incentives provided by the firm to its sales and marketing employees were poorly informed by this structure. The firm’s financial rewards were not matching the corporate performance. Besides, the firm market conditions were changing rapidly driven by an upsurge in the number of competitors. Having a locally developed reward system that matches specific country, would help the firm to streamline these systems with performance, and also to motivate local staffs as not to lose strategic knowledge to upcoming competitors.
Besides, it is necessary for the firm to create effective performance appraisal systems that would identify flaws in remuneration, training needs, among others. Some regional managers in the company were receiving inflated financial remuneration than they deserved. A change in the process of performance appraisal would point out those who deserve higher pay and those who do not depending on their performance. The company also needed a training program to equip the workforce with skills to handle global marketing strategies. This should be in line with needs identified in the performance appraisal system. According to Kravetz there were serious flaws in certain countries business intelligence. This was due to poor marketing research on product line and analysis methods used. One of the reasons offered for this was due to absence of qualified employees. An effective performance appraisal program would point where staffs need training and also areas within the region where such skills are available. The firm can thus be in a position to plan exchange programs, considering the different cultural dimensions. This type of a plan would ensure the firm leverage on best practices and responds to local conditions where there is need. One area that Kravetz noted disparities and where the firm can infuse profitability by paying attention to, is in sales and marketing. In some emerging markets business units in particular countries were using similar techniques for promotion of commercial and consumer products. This is in spite of the fact that consumers purchasing these products categories base their decisions on different conditions. Through training the sales teams in these countries can be in a position to understand how to go about it. An efficient performance appraisal system is the only means the company could be able to identify which country’s sales team deserved training on these aspects.
Lastly, the company needed to decentralize human resource issues like training and recruitment. The success of the company depended on improvement in terms of accountability that was compromised by existence of centralized HR management. According to Kravetz analysis career planning and development for employees working as sales representative and international sales managers, fell under the country general managers. They were also responsible for setting performance measures depending on the targets provided by International division Senior Vice-President, Rober DeLeo. In this kind of structure the managers of specific business units had very little say in terms of employee motivations. When all decisions regarding employees career planning and development are left with country general managers and the head office manager for internationalization division very few potential employees would be attracted to work for the firm. It is extremely difficult for the company to identify employee able to add value to the firm. Decentralization would improve employee’s loyalty to the firm due to improved chances of career advancement and attract potential staffs to the company. Motivated employees would work harder to deliver the company mission and improves its market share and profitability.
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