Posted: May 25th, 2022

Operations Management of Business

Operations Strategy

John is a man that has started a small technology service business. He has to relocate his business several times due to growth but he is now experiencing some growing pains and some customer pushback due to delegation issues relating to service time, communication quality and the hierarchal structure of his business. There are some open questions about how he should structure and operate the business going forward including whether to outsource more, whether to go more global in his business contracts as that seems to be an opportunity for him and so forth. This brief report will deign to answer those questions and beyond. While John presumably wants to grow his business more and more, he will have some important decisions to make before he can do this and do it well.

Analysis

What is obvious about the current hierarchy and business structure of the firm is that John is taking on too much of the responsibility for customer or technical support. As such, response times are starting to suffer and customers are taking note. As such, John either needs to pick the right outsourcing provider to fill the gap or he needs to hire more of his own staff and de-flatten his organization. His choice to keep the hierarchy flat and the business simple worked at first because the amount of business volume allowed for it. However, there is only so much that John can do on his own. As such, he needs to have a person (or people) or a firm do some of the work or he will need to scale back the size of his business. The current way of doing things from a cost and procedural standpoint is not going to work given the amount of customers he has grown to have.

A related yet different issue is the prospect of taking on foreign clients. There are a couple of layers and issues that must be addressed when it comes to that. The narrative notes that the clients are in Europe. Many Europeans speak English but many do not. Indeed, many countries in the European Union and beyond along that continent have a primary or official language that is nto English. As such, John should be careful about what he commits to because he cannot always control who will be picking up the phone or emailing him. Another issue is that while diversifying his business is a good thing in some ways, it makes the business more complex and arduous in many other ways and thus John should think twice about engaging in that expansion. Indeed, he is already having service quality and response issues. This leads to the last point and that is the idea that relates to the one posed earlier. Expanding the business may very well be lucrative but John needs to make sure that the proper support and technological solutions are there so that the new and existing customers are both support to a degree that is sufficient for what they expect and desire.

Based on the above, John needs to do a few things. First, he needs to add some levels to his hierarchy. Whether he chooses an outsourcing provider or whether he adds managers and other personal staff to his existing hierarchy, he is obviously not delegating enough and that either needs to change or he needs to scale back his client list. Second, John should explore diversifying his portfolio so as to protect himself if there are economic challenges. However, he should only do so if this staffing levels and management structure allow him to do so. If he goes with outsourcing, he needs to pick the right provider with the right level of service. If he goes internal, he will need to manage the people the right way and make sure that he engages in quality hires when it comes to the same (Pozin, 2012).

Something that is perhaps less obvious is the way that John is engaging in purchasing of bandwidth and technological solutions. While going for the best price is indeed a good way to go in many instances, it would also lead to him using a disparate array of vendors that may or may not mix well. Regardless, he has more and more contacts when it comes to equipment breaking down and the warranty redemption that comes with all of that. Beyond that, cost is sometimes justified when it comes to quality. While paying less up front may make a lot of sense in a lot of situations, things and services are sometimes cheaper for a reason and thus John should be careful. If at all possible, John should limit the scope of the brands he buys his products and services from so as to limit the number of parties he has to include when there is a breakage. Beyond that, John should spend enough money that he is getting the uptime and quality that he needs as there is the old adage “you get what you pay for” (Laplante, 2006).

The above recommendations will surely drive up John’s costs in some ways but the saving he will enjoy if he does things the right way will help his business in the long run. Indeed, John saving money on personnel and buying cheap services and equipment will be all for naught if he starts losing customers due to service issues. John has to delegate and release control over operations and getting things done once his business gets to a certain size. There is really no way around that. John will have to determine how big his business should be, the services he will render (especially whether he will embrace the European market) and how he will cheaply yet effectively address all of the above. Indeed, paying “as needed” is all well and good but having someone besides himself that can respond right away would be a huge asset to John right now.

Conclusion

There is a right way and a wrong way to do things cheaply yet effectively. What John has been doing worked for him when he was a smaller firm but his firm’s current size now makes such a model unworkable and he will need to restrict how much he grows or he must change the way he does things. Clients that need his services have certain expectations and requirements and those customers will indeed look elsewhere if their standards are not met.

References

LaPlante, A. (2006). Study brings new meaning to adage, ‘You get what you paid for’. Stanford University. Retrieved 25 November 2016, from http://news.stanford.edu/news/2006/january18/shiv-011806.html

Pozin, I. (2012). 80% Is Good Enough: Grow Your Business By Delegating. forbes.com.

Retrieved 25 November 2016, from http://www.forbes.com/sites/ilyapozin/2012/12/

17/80-is-good-enough-grow-your-business-by-delegating/#196358332e7f

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