The company’s strengths are the following. First, it operates in the oligopoly market. The market of virtual management is characterized with the small number of competitors. Apart from Organization Big Time, there are also only two similar companies: Virtual “R” Us and Virtual/Reality Makers, Inc. In such a market it is much easier to discriminate a price and yield extra rent.
The company’s other strength is that it has rich experience in consulting firms. For example, it has already consulted large companies which were constituents of the Fortune 500. As a matter of fact, its reputation and name can be a green light for signing more consulting contracts. The company’s 20 year old history of preserving jobs of all their employees is another proof of the company being stable and reliable.
The company is also fast growing. Over the past year they have made over $30 million in profits which was a 20% increase from the previous year. Given the oligopolistic nature of the market and the firm’s ability to earn positive profits, I assume that these profits were sufficiently large to keep up with competitors, and the growth rate can be considered more than satisfactory.
The company did not fire any of its employees over the last past years is one more strength. Given such loyalty to its workers, the firm may experience the increased interest in working for the company from fresh university graduates and already mature professionals. This facet is especially important, given that in the consulting industry human resources is the chief input in the firm’s production process, namely consulting.
I assume that the company’s other strength is its active management. For example, their decision to specialize in a particular operation (HRM consulting) means that the company tracks the level of market demand for its services and compares it with the inside capacities of the firm (e.g. their consultant’s education, qualification, experience, etc.) needed to meet the demand.
Finally, they have picked a strategy of concentration. At the moment, they are developing their consulting branch related to the human resource management. This may gives them an edge over competitors, if there appears a company requiring consultancy in this particular field.
The company’s weaknesses are the following. To begin with, it has a poorly developed marketing department. This may harm their business, because underdeveloped marketing may create an adverse impression of their firm. Lack of advertising or wrong positioning of the company may turn away potential customers otherwise willing to become the clients. So, even if the company is overall competent, its marketing department may create a wrong impression of the firm.
Since underperformance of marketing department and inability to sign a new consulting contract threaten with 500 workers being fired, there is a clear issue in the long term planning of the firm. It means that either a firm is weak at sustaining its long term goals, reaching its short term objectives or both. Another related problem is that might keep short term assets below those that are actually needed for the company’s transaction and precautionary needs (Anderson and Carverhill 2005). For example, it may experience irrational spending behaviour by making poor project investments or providing its top executives with expensive perks (such as buying them private jets).
Deeper concentration in the particular branch of activity can be beneficial, but it also can be hazardous. So, overconcentration on the HRM consulting can be another possible source of the company’s weakness. In case of overconcentration in this particular field (or lack of diversification), the company may lose its market share in other spheres, such as formerly mentioned business, management, organizational change and organizational leadership.
The company’s major threat is the following. First, there is a risk of firing 500 workers. Provided that such unfortunate event occurs, the company may face a number of negative consequences. For example, its stock price might go down (Johnson et al 1985). Labour force lobbying might fire up as well. It also may create a negative image of the company which is the matter of its pride at the moment. Apart from everything mentioned, firing 500 people is the great loss for the consulting company which makes profit thanks to the qualifications and experience of its labour force. As a consequence, the risk of losing employees poses the greatest threat to the firm.
The company’s opportunity is related to their nature of the oligopolistic market. In particular, in the markets not intensely competitive (such as the virtual management where there are only three firms) the informal price agreements may exist. So, they have an opportunity to form a collusion to prevent potential entry of new firms with the realistic perspective of keeping their market share (Sullivan and Sheffrin 2003). Nonetheless, it might be unethical (though legal) and the government may create juridical obstacles for it to happen.
The great opportunity for the company is to enter new markets. The case does not provide an in-depth analysis where Organization Big Time operates. In case it is only domestic market, the company may expand its grasp of activities overseas and enter foreign markets in virtual consulting. On the other hand, if the company is already a global market player, it may benefit from deeper diversification in its operations. For example, it could enter the market of consulting services in informational technologies (IT). IT is a fast growing industry that could boost the firm’s total revenue without much additional costs.
- Ronald W. Anderson and Andrew Carverhill. (2005). A Model of Corporate Liquidity. Available at http://eprints.lse.ac.uk/24643/1/dp529.pdf
- B. Johnson, R. Magee, N. Nagarajan, and H, Newman. (1985). An Analysis of the Stock Price Reaction to Sudden Executive Deaths. Journal of Accounting and Economics 7, 151-174.
- Sullivan, Arthur, and Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall.
