Strategic Recommendations For Tronica Electronics

By Author: Balvinder Singh
Total Articles: 55
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This report was prepared by Tactica Consulting with an objective to analyse the causes for the problems being faced by Tronica Electronics. It was observed that a lack of long-term vision is hurting the company. The company lacks long-term supplier relationships, has no differentiation strategy, and no internal processes to hold the top management accountable. The company is only surviving because of its strong brand equity which it has acquired in the last 80 years. With the customer service deteriorating, the brand equity has also suffered in recent times and the company has posted flat figures for the past three years. Based on these observations, a change process needs to be initiated if the company is to survive in the coming years.

Recommendations

Before making any recommendations, it is essential to prioritize the problems being faced by the company.

1. Lack of internal processes: This is the root of most of the other problems including the attitude of top management and lack of vision and need urgent attention. Thus, it is identified as the most important problem.

2. Lack of long-term ...
... supplier relationships: This is hurting the viability of the company in a low margins market as they are not able to get low cost and consistent supply of components. This has also caused a loss of customer goodwill. Thus, it is also an important problem.

3. Lack of a differentiation strategy: While this is not an critical situation, the lack of differentiation strategy is hurting the ability of the company to charge higher price. This can be a major issue when the market matures even more. A clear differentiation strategy is vital for the sustainability of the company in the long run.

The recommendations can be prioritized as follows

1. HR policies and Internal Processes: The Company needs to frame HR policies and develop internal processes at the earliest. The CEO is likely to oppose such a move as it will make him more accountable. The owners need to engage external consultants who are free from bias and any external pressure. The details of the policies are out of scope of this report. The speed of strategic decision will determine the firm’s performance in the short run (Baum & Wally, 2003).

2. Long-term supplier relationships: The Company needs to develop long-term supplier relationships for at least key components to prevent them from fluctuation of costs. This will also reduce the bargaining power of suppliers and reduce the incidence of stock outs.

3. New Product Innovation: The Company has core competency in developing innovative products and can utilize its vastly experienced assembly staff for this. A new “New Product Incubator” division can be opened under the guidance of experienced staff members. The experienced staff members can be hired as consultants after their retirements for this division. At least 2% of company’s total revenues should be allotted to this division. This strategy should be pursued for a longer term (over five years) to show any benefits.

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