Performance Management Eerie Ltd

Question: Discuss about thePerformance Managementfor Eerie Ltd. Answer: Evaluation Our company Eerie Ltd has been in operations for 8 years. We manufacture sensors and we implemented a hybrid strategy of cost leader and differentiation strategies to manufacture and sell our products. The performance analysis showed that we took some business decisions, out of which, some turned out to be productive and others were a failure. The overall performance outcomes were not good as expected. The company did well in managing the costs and maintained a balanced financial structure throughout the course of 8 years. What backfired at us was that during the implementation of the hybrid strategy we forgot that it needs time for a new company to gain a strong and competent brand image, and it put the company at risk of missing customers. It resulted in a loss for the company, as high expenditure in plant expansion could not be handled because of insufficient customers and led to taking emergency loans twice. In addition, we made some poor investments in TQM initiatives that resulted in low returns. (Ward and Peppard 2016). The hybrid strategy worked for us in the case of product identity. Due to the objective of the company in being present in every segment of the market and improving RD competency the company readily passed high provider costs to consumers due the absence of alternative products in the market. A loyal customer base helps keep the revenue flow of the company st eady and diminishes the impact of recessions and inflations. The strategy was not ideal for the company as there was a risk of being imitated by competitors at every stage (Rothaermel 2015). By implementing cost leadership, Eerie Ltd tried to beat competition by offering products at a low price than others, compromising on RD costs, material costs and production costs. It helped us in competing with other companies in the price segment and improved our sales. We also were able to maintain a good balance between debt and equity. Manufacturing of low end and conventional products helped us minimize labor costs also. The benefits that our company reaped were the minimization of costs, but missed acquiring significant market share. It brought profits and a good volume of demand because of the lower prices. The thin profit margin does not allow the competitors to regain their previous positions in the market (Lechner and Gudmundsson 2014). Focusing on cost and price reduction took away the attention from catering to customer choices and preferences. Competitors imitated this strategy of making money fast and lowered their product prices. Low investment in RD slowed down imple mentation of innovative and new technologies. It resulted in reduced introduction of customer demanded products. The firm suffered from loss in the context of ROS and ROE, which resulted in lack of confidence from the investors side. Later on ROE improved due to proper utilization of assets and stocks. Low investment also made the whole research and development process slow, and by the time a new product was developed the technology became obsolete. It made the firms high-end product segment suffer and lose out from the competition. To focus in expenditure reduction we did not concentrate of customer satisfaction, and it is a very important factor in acquiring maximum market share. Moreover, initially we were conservative in introducing new products due to low capital. To focus on recouping the costs, our company decided to charge customers above average prices. It did not agree with the previous decision of price reduction to bring in good volume of sale. However, with the increase in price, the customer base began to decrease and the demand of our products came down. Sales and profit margins went down (Hill, Jones and Schilling 2014). While evaluating the decisions we took, while implementing some business strategies, we learnt how to avoid mistakes in future and take better decisions to bring in maximum profits for the company. After finding out about our low profit margins and reduced demand we understood that we forgot to give importance to one thing i.e., customer satisfaction. We also understood that the way to satisfy customers is to provide them with products and services that fulfill their tastes and preferences. Customers are satisfied when they are provided with new and innovative products regularly. The product should also abide by the factors of low price and high efficiency. Ultimate customer satisfaction results in high demand and in turn increases profit margins. A good amount of revenue generation leads to the acquiring of more market share and winning over competitors. Thus, it is imperative that a companys products and its prices are satisfactory and reasonable enough to attract the maximum numbe r of clients and create high demand in turn (Oliver 2014). What I learnt from this whole success and failure situation is how to solve problems and manage crises effectively. I learnt a lot of things through this simulation and certain aspects of my decision making improved. I improved on how to identify the purpose of the decision to be taken. Identifying the problem and the requirement is the first step to taking good decisions. I bettered on gathering information related to the problem. My data collection relevancy improved and so did my ability to judge information on the basis of amount. Not all data gathered is required, and unwanted data needs to be eliminated (Clinton 2012). I improved on how to judge the alternative solutions, on what criteria should they be assessed and then formulate the appropriate solution to the matter in hand. I learnt how to examine each alternative and calculate their possible outcomes and consequences. The cons and pro analysis of each alternative is necessary so that a suitable solution can be decided upon . The next thing I improved upon is how to implement and transform the solution chosen into the specific action plan and how to execute the whole plan effectively. I finally learnt and polished on my skills evaluating the outcomes of my decision in the matter and how to decide on my further action steps (Ferrell and Fraedrich 2015). The gaps I identified in the whole evaluation process are my inability to depend upon my intuition and reasoning skills. I failed to give importance to my sense that arose from my experiences and my perceptions. I also could not improve upon my reasoning skills. I acted impulsively and only took decisions based on short-term objectives instead of long term ones (Betsch and Haberstroh 2014). Because of that, my company had to incur debts and had to take emergency loans after falling short on capital and funds. Companies take decisions to reduce risks in any new and uncertain ventures. Decisions get influenced by surrounding uncertainties that are not in control of the company at times. Identifying and attempts to control these factors put the company in the path of accurately improve their decision making processes. Some other factors that influence my decision-making in any situation are different cognitive biases, rise in commitment and sunken results, individual differences and a belief in individual relevance. Cognitive biases over dependence on previous experience of decision making, viewpoint bias, belief bias, omission bias and confirmation bias. Cognitive biases help individuals in relying more on observations and taking efficient decisions (Arceneaux 2012). Sometimes people take decisions at the heat of the moment and give rise to irrational commitment. They get a tendency of taking risky decisions when they sense they are responsible for negative outcomes. Individual differences like demographic and socio-economic factors influence the ability to take decisions and add in personal preferences. Personal relevance gives rise to decisions based on the belief of individuals that they are providing material and effective decisions. All these factors have a direct influence on decision making processes (Saaty and Vargas 2013). References Arceneaux, K., 2012. Cognitive biases and the strength of political arguments.American Journal of Political Science,56(2), pp.271-285. Betsch, T. and Haberstroh, S. eds., 2014.The routines of decision making. Psychology Press. Clinton, J.R., 2012.The making of a leader: Recognizing the lessons and stages of leadership development. NavPress. Ferrell, O.C. and Fraedrich, J., 2015.Business ethics: Ethical decision making cases. Nelson Education. Hill, C.W., Jones, G.R. and Schilling, M.A., 2014.Strategic management: theory: an integrated approach. Cengage Learning. Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small firm performance.International Small Business Journal,32(1), pp.36-60. Oliver, R.L., 2014.Satisfaction: A behavioral perspective on the consumer. Routledge. Rothaermel, F.T., 2015.Strategic management. McGraw-Hill. Saaty, T.L. and Vargas, L.G., 2013.Decision making with the analytic network process: economic, political, social and technological applications with benefits, opportunities, costs and risks(Vol. 195). Springer Science Business Media. Ward, J. and Peppard, J., 2016.The Strategic Management of Information Systems: Building a Digital Strategy. John Wiley Sons.