PRODUCTION AND OPERATIONS MANAGEMENT – CASE ANALYSIS

TIME CONTEXT * The issue happened last 2005 – the time where some countries are starting to experience the starting wave of a major financial crisis. In order to minimize future risks and fatal losses, some companies started to take action by means of downsizing, that is, laying off some of their employees and closing down some of their facilities. As a result, those affected people who are started to seek for alternative ways of earning a living.
VIEWPOINT
* The issue will take the perspective of “Hazel”, a research assistant from a company in Texas since 1990 who got retrenched because of the company’s measures to minimize future risks and losses. As a result, Hazel decided to look for other means of employment but failed. As a last resort, she decided to create her own business by taking care of neighborhood lawns which with a stroke of luck, it became profitable, thus opening an opportunity for expansion.
CENTRAL PROBLEM * Given the situation of the economy at that time, expansion can be risky even for small businesses, including lawn-care services. Adding a factor of uncertainty, expansion attempts must be well studied in order to achieve success. Failure to understand the risks involved can lead to downfall of a business. Since Hazel’s lawn-care business is booming, she believes that she can achieve expansion; however that attempt might backfire because of the economic crisis that is happening in her country. In addition, data from the location of expansion still remains unknown, thus accurate information must be gathered in order to determine its profitability. To increase the chance of success, removing the factor of uncertainty and minimizing the risk from the impending crisis must be done before proceeding with the expansion. As for the situation, Hazel is going to attempt to expand her lawn-care business to other neighborhoods.

STATEMENT OF OBJECTIVES * “Must” Objectives * To conduct accurate forecasts regarding lawn-care services in neighboring towns to determine optimal productivity and profitability when the expansion has been established. * Determine possible competitors in target neighboring towns, if possible. * Improve service quality to increase competitive advantage.

* “Want” Objectives * Increase productivity by adding additional workers in a cost-efficient manner. * Promote the lawn-care business to other neighborhoods in order to tap new potential customers. * To work out an arrangement between her and a credit representative in order to shield the lawn-care business from possible losses due to the impending economic crisis.
AREAS OF CONSIDERATION * External Environment * Threats * Competitor / Uncertainty Risk – Until no further data has been acquired, the number of potential competitors in the lawn-care services sector, including the possible outcome of the company after expansion still remains unknown. A number of existing facilities in the target neighborhood can pose a threat in terms of profitability. At the same time, uncertain factors in the target neighborhood can skew current plans. * Price Fluctuations – Because of the impending economic crisis, probabilities of price fluctuations might happen in regards to lawn equipment such as fertilizers and weed killers. A sudden fluctuation can increase company expenses, thus minimizing the business’ profitability when not taken care of. * Environmental / Demographical Risks – Unpredictable weather can determine the need for lawn-care services in homes. Depending on the trend of the weather, frequent dry spells minimizes the growth of flora in the neighborhood, thus the need for plant nutrition is needed. Sometimes it could be the opposite, where a neighborhood under constant rainfall will have their weeds grow rapidly, thus lawn equipment service is needed. Also, there are times where some homes need no lawn-care service at all because there are some people who manages their own garden for recreation. * Opportunities * Expansion – Though it may look risky, but a successful expansion can boost the profitability of a company. A company that has successfully expanded its boarders can tap new interested group of people thus increasing profitability and company survivability. * Tapping New Consumers through Internet – In order to cut down certain amounts of slack or idle time, a company website can be established either before or after the expansion so that untapped consumers can be tapped easily with less effort. In addition, those people who are already had done business with the company can contact the company again with ease through email or telephone. * Internal Environment * Strengths * Management – Hazel is only the one who is controlling her business. Because of that, conflicts inside company are minimized, and disputes are almost none. As a result, decisions are being executed right on the dot. * No Profit Sharing – Since the business is owned only by a single person, all profits generated from the business will go to a single person. Since 100% of the profit will go to Hazel, she has more resources to allocate for her business. * Weakness * One-Man-Army – Despite executing decisions right on the dot, Hazel does not have a “second voice”. To summarize, when it comes to decision-making, Hazel can probably see only one side of the coin, which is risky once she will choose the wrong decision. * Potential Losses – If ever the company suffers from losses, there will be no one to cushion it, leaving Hazel vulnerable to all of the losses that the company will make. This could be dangerous since a fatal loss to a single proprietor could lead to a close-down.

ALTERNATIVE COURSES OF ACTION * Initiate Forecasting – Before going for expansion, the target site must be carefully studied to determine important factors such as neighborhood demographics, service demand, potential competitors and the like. Profit and loss forecasts, price forecasts, economic forecasts, and quantitative/qualitative analyses are some forecasts that must be executed. Weather forecasts must not be underestimated because it can serve as a factor in determining the need for lawn-care services. An accurate forecast data can greatly minimize the risk of uncertainty, and to prepare the company for future problems that might arise during, or even after the expansion. * Initiate Quality Improvement – Quality can help lure potential consumers in patronizing one’s business. Inside-out improvement in terms of quality can lead to customer satisfaction. * Improve Scheduling Strategies – It must be implemented before and during the expansion process so that there would be no wasted opportunities which could result in partial losses. In addition, improving scheduling can also contribute to customer satisfaction by lowering the customers who are in queue and waiting to be served. * Establish Company Website – In order to tap new people in a more efficient manner, it is advised to establish a website where the business’ essential points of contact can be seen. In making one, the company head could use free resources that are scattered through the internet, or hire an expert in the web designing field. Although it might cost a little, however these custom-made websites have a much more professional look and feel.
FINAL DECISION * Before venturing for expansion, it is highly advised to conduct a couple of tests and forecasts in order to determine the efficiency and profitability of the target site. Although it might take a while for the tests to finish, at least the business head is going to have a foresight on what would things happen in a couple of years. Consumer surveys, demographics, price fluctuations, competitor watch, and even weather forecasts are some of the important tests that should be included and executed. If possible, a test market should follow after the initial forecasts to simulate real-time situations.

* Whether or not the expansion would proceed, it also advised for the company to establish itself through the use of Internet. This low-cost method of promoting the company to potential people is highly effective as long as the web page eye-catching and is professionally done. * Practice quality improvement as early as possible. This is to ensure customer satisfaction, which should be carried over once the expansion is done. This would also serve as a competitive advantage in case there would be competitors in the target area of expansion. Scheduling should be also included in the improvement process.
ACTION PLANS * Forecasting, Qualitative/Quantitative Analysis, Market Research – Must be conducted within a month or less. Can be done by the business head to minimize costs (Hazel is a former research assistant). As an alternative, the business head can assign a researcher in case the business head is not confident enough, but with a price. * Quality Improvement – lawn-care equipment must provide satisfaction to the consumers who are in need of service. Upgrading equipment can yield additional expenses so purchasing must be in relation to the number of people who are in need of lawn-care service. This can be conducted by the business head herself. In addition, increasing the quality of consumable items such as pesticides, weed killers, etc. must be considered while lowering cost at the same time. That is, if possible, purchasing high-quality items at a low or reasonable price. Must be conducted about two weeks, but must be fully implemented if the expansion is a success. * Web Establishment – Must be conducted as soon as possible. Can be made for free, or with added costs for a much more presentable look.

[Any views or opinions presented in this document are solely for academic purposes only.]