Based on all the facts and analysis, we’ve given our suggestions for Mikromess. But there are still some risks in these strategies we need to take into consideration.
First, changing investment portfolios may bring the company the first mover advantage and new business growth the sales performance and profitability of Mikromess is low compared to other competitors, so reclassifying business unions and extra investment will probably lead to a tight cash flow, which may be a threat to the operation process. Moreover, investing in emerging industry such as 3D printing is still risky and can be a huge loss if it doesn’t work out. So the company has to make trade-offs and be very careful in these decisions. Recombining multiple services in order to increase the capability of solving emergencies is good for company reputation and customer relationship, but it may affect its ability to provide other services and make the company less attractive to some customers. If Mikromess wants to enter into the loT industry, network system vulnerability to attacks is another problem that should be taken into consideration.
Secondly, customer segmentation strategy is sort of a marketing strategy and requires extra expenses for promotion. That’s another challenge for Mikromess’ profitability. And, although seeking other big customers is helpful to diversify Mikromess’s customer base, it may still lower its bargaining power. Due to the intense competence in this industry, big customers usually don’t have the problem of lacking suppliers. And since the marketing strategy and service model is quite similar among all the competitors, the most possible way for Mikromess to gain a place is to lower its price. Its whole pricing policy may even have to be changed.
For the supply chain design strategy, it may be hard to name the price for different situations and customers, which will increase the difficulty of pricing strategy management, and get customer confused.
A strong customer relationship is key to a company’s reputation and brings it the higher chance for referral. In Mikromess’ case though, there are some tricky issues. For example, if the supply chain design cannot meet customers’ changeable needs, it will hurt customer relationship. And although product standardization is good for reducing uncertainties, it may still cause potential conflicts between standardization and diversity. If Mikromess cannot develop its core competence here, it will face the low bargaining power problem again in the negotiation with potential big customers.
We think the digital human resource management will undoubtedly lead to higher efficiency and lower cost, but Mikromess should maintain vigilance on the network and system security issue. There are also some risks in the recruiting process. Young employees will bring the company new ideas and energy, but the majority of fresh graduates are inexperienced. They need more training and longer time than skilled ones to undertake their jobs. On the other hand, younger employees have much more career choices today. Many of them are always seeking better opportunities, which means that they have lower stability than old ones. Mikromess is still not a big name in the industry, so it needs to take efforts to keep the talents. Also, employees from different backgrounds, genders and majors will definitely bring new ideas and ambience, but they may also have conflicts in the first place and need a run-in period, during which the efficiency might be damaged.
After discussing the benefits and risks of all the strategies, we have our conclusion here, as we can see on this picture, option 3 provides the best path to long term sustainability and profitability, but with near term risks.
So we have some performance improvement suggestions. We’ve already mentioned that Mikromess’s re-investment budget is lower compared to investments, so if it wants to introduce new products, an in-depth project analysis and valuation should be done beforehand. The company must be sure that a new product will generate profit, or at least break even in a certain time.
To make sure that the marketing expenses can finally be paid off, Mikromess needs to do a careful market research before doing advertising. An estimation is necessary before the searching process of other big customers. Mikromess should know the influence about the possible change of its pricing strategy and set the bottom line at the negotiation table.
For the supply chain design strategy, Mikromess better develop detailed pricing rules and control methods, which are clear enough to customers. Also, since the supply chain is highly dependent on the system security in loT, a regular system maintenance is quite important.
Product standardization is necessary to the company, but there are still some space for product diversity. We suggest Mikromess to communicate with its current and potential customers to get a knowledge of their needs and preferences. Personalized details and services will also strengthen the customer relationship without affecting the main product line.
Finally, for the human resource risks, we think that Mikromess can develop a featured personnel system, such as providing great working environment, humanized welfare system, flextime, etc., to attract and keep more talents. Mikromess can also introduce a standard performance assessment method to check if every employee’s growth is keeping up with the company’s growth regularly. To resolve the potential conflicts between employees from different backgrounds and minimize the inefficiency, a visionary leader that can take control of everything is necessary in the whole process. This is a person that should be responsible of setting clear goals, indicating the right direction and giving a ruling when conflicts happen.