Precision Engineering Works Pvt. Ltd is the manufacturer of the equipment those are needed in the telecommunication industry. The company is doing the business for 30 years and has the good reputation in the market (Tenera & Luís Carneiro, 2014). The clients of this company are famous telecommunication companies. However, there are sudden changes notices in the business of the PEW. In the recent time the profitability of the company has gone down by 45%. There are some factors which are responsible for this decrease of the profit percentage. This raises the constraint for the expansion of the business of the PEW (Kanamori et al.,2015). The main aim of this paper is to identify the causes for the loosing of the profit percentage of the Pew and conducting the root cause analysis of the situation. In order to do the root cause analysis the problem different tools has been applied (Borse & Attarde, 2016). The identification of the problem has helped the Pew to mitigate the problem by taking proper management and the strategic solutions (Maskell, Baggaley & Grasso, 2016) . Apart from that the technical and the improvement of the leadership quality in the organization for the implementation of the plan has been described in the paper. The conclusion is drawn from the summary of the discussion.
The main problem of PEW is that the company is losing the market in the manufacturing of the equipment needed in the telecommunication industry. Recently the company has lost 45% profitability which is not a desirable situation. Apart from that this is becoming the constraint for the expansion of the business of the company (Seppänen, Modrich, & Ballard, 2015). There are certain cause those are responsible for this situation (Alhava, Laine & Kiviniemi,2015). Earlier the Pew was the only company in the market manufacturing the products needed to the telecommunication industry. The company has enjoyed monopoly in the market in earlier days (Arashpour & Arashpour,2015). However, the field regarding this industry is emerging. Many of the industries are investing the money in this filed. In this situation, the competitor in the market are increasing. Pew has to face the competition with the other companies. Another factor regarding the loosing of the profitability in the business is the pricing of the products provided by the PEW (Cherrafi et al.,2016). Other companies are following the smart pricing strategy where the prices of the products are comparatively low with respect to PEW. In this situation the consumers are getting more options for buying the products. In this case they are choosing the products with low price.
In order to conduct the root cause analysis on the factors for decreasing of the profitability of the PEW several tools regarding the root cause analysis are used.
Problem: the company is losing the profitability by 45% in recent time.
Tool used for the root cause analysis: The tool used for this analysis is 5 why tool.
Usage of the tool: Why PEW is losing the profitability?
The PEW is losing the profitability as the there are many competitors in the market. The consumers have many options for choosing the right product.
Why the selling of the products made by PEW has gone down?
The selling of the products by PEW has gone down as the pricing of the products provided by the PEW is high compared to the products made by the other companies.
Why the consumers are preferring the products of the other companies?
The consumers are preferring the products of the other company because the p[rice of the products are cheaper than the products produced by the PEW.
Why the pricing of the products produced by PEW is not relevant?
The pricing of the products made by PEW is not relevant as the organizations lacking the smart piecing strategy for the products.
Why the implementation of the smart pricing strategy is not done in the organization?
The company has known the significance of the smart pricing strategy and is going to implement the smart pricing strategy in the company.
From this root cause analysis tool the main problem or the root cause is identified. The main cause of the loosing of the profitability is the high price of the products made by PEW.
Tool used for the root cause analysis: Fishbone diagram
Usage of the tool in the evaluation of the root cause analysis: the fish bone diagram is also known as the cause effect diagram(Sunder ,2016). The main head of the diagram is the main effect or the main problem. The sub causes are pointed and associated with the main problem. The whole structure looks like the fish bone. In this case the main effect of the problem is the decrease of the profitability of the company. There are various causes or the sub causes which can attribute this effect. The two sub problems are the increase of the competent in the market and the lack of the smart pricing strategy in PEW (Vidyasagar,2016). Apart from that the lack of the market research can be counted as the cause of the decrees of the profitability of Pew by 45%. The identification of the main cause from the subcases can be done through the brain storming sessions.
Tool used for the root cause analysis: The tool used for the root cause analysis in this case is the brain storming sessions.
In the brainstorming session the discussion is done regarding the different aspects of the problem. The members in the brainstorming session put different ideas regarding the solving of the problem (Brioso,2015). The possible solution can be derived from the discussion. The main advantage of this technique is that all the members can put their own opinion in the decision making process.
In the following situation the discussion can be done regarding the possible way for solving the problem, regarding the decrease of the profitability of the PEW (Holweg & Maylor,2018). Different ideas and the opinions can be derived from the discussion. It can be said from the brain storming session that the possible cause of the decrease of thye profitability of the PEW is the high cost of the products provided by them.
Tool used for the root cause analysis: Data tables are used as the root cause analysis in this context.
Usage of the tool for the root cause analysis: The data table is generally used to describe the current situation of the organizations through the data presented in the table. It has be checked that the data used in the table is meaningful and valid (Svensson et al.,2015). Moreover the data presented in the table are relevant (Vashi et al.,2018). The collected data will reflect the current situation of the organization and the sample of the data will be helpful in the decision making process.
In this case the data can be collected regarding the profit of the business before the increase of the number of competent in the market and the after the increase of the number of companies in the market. The cause can be found out from the analysis of the data from the table.
Tool used in the process: Pareto Analysis is used as the tool in this case.
Usage of the tool in the process of root cause analysis: The graph used in the Pareto analysis focuses on the matter that causes the problems in the organization. The analysis of the problem can be done through the graphical interpretation.
In this case the identified problems causing the effect for PEW is the high price of the products provided by PEW and the increased number of competitors in the market. It can be also said from the analysis that the organization have the lack of pricing strategy.
Use of the tool for the root cause analysis: The tool used for the root cause analysis in this case is the Current Reality Tree.
Usage of the tool in the root cause analysis: The current tree diagram is used for the analysis of the current business situation the analysis of the current business situation will indicate the areas for the improvement for the overall situation.
In the current reality tree in the context of the case study of the PEW it can be seen that the decrease of the profitability is happening for the high price of the product (Conger,2015). This indicates that the profitability can be improved through the implementation of the smart marketing strategy.
Tool used for the root cause analysis: The check sheet is used for the root cause analysis in this case.
Usage of the tool in the root cause analysis: the check list contains all the relevant data regarding the market situation (Chay et al.,2015). The checking of the list will indicate the possible areas for the improvements for the improvement of the overall situation.
In this context, the data regarding the overall business situation of the PEW has been taken. The analysis of the data is done (Cheng et al.,2015). The root cause indicated in this context is the high price of the products made by PEW.
Tool used for the root cause analysis: The tool used in this context is the kaizen process.
Usage of the tool for the root cause analysis: the kaizen process is the tool which is used for the root cause analysis (Perry III et al.,2016). And the improvement of the overall situation of the organization. In this process short time or the duration has been taken in order to improve the overall situation.
In this case through the application of the kaizen process it has been seen that the main cause for the decreasing of the profitability of the organization is the high price of the products provided by the company.
There are some of the assumptions made in the context of the root cause analysis.
It has been assumed that the quality will not play an important role for the enhancement of the profitability.
Price will be the only parameter for determination of the selling statistics.
The number of competitors are limited in this context.
The innovation will not play the significant role.
The identified problem for the Pew is the decrease of the profitability by 45%. In this case it has been seen the supplying of the equipment for the telecommunication industry is an emerging filed. Many organizations are investing their money in this sector. Hence the number of the competitor is increasing in this case (Anderson & Kovach, 2014). The market is breaking the monopoly. The other organizations are providing the products in the lower price compared to the PEW. In this case,, the cheaper price is attracting the consumer. These are the factors PEW is losing the consumer base and the profitability.
The actions can be taken regarding the improvement of the overall situation. In this context certain steps can be taken in order to mitigate the negative effect on the selling of the products made by PEW. The actions can be classified into two categories- long term and short term actions.
Long term action: The long term action are taken for the drastic change in the organization. It can be said that the change will bring the positivity in the business process of the organization. The long term goal that can be taken in this context is the implementation of the smart pricing strategy in the organization.
Short term goal: The short term goal in this case can be reduction of the price of the products made by PEW. And the analysis of the business market for the revised price.
Resources required for the implementation: In order to implement both long and short term goals for the organization certain resources are needed. In this context both human resources and the resources like time and the money is needed
In case of the human resource the business analysts are required for the analysis of the market situation along with the determination of the pricing strategy. The dedicate team for the implementation of the marketing plan can also be formed.
In order to reduce the price of the products the expert advice is needed to be taken. The advice can be provided by the business analysts and the experts.
For the implementation of the pricing strategy in the organization the project is needed to be carried out in a certain way. In this context, the recruitment of the project manager is needed. It has to be seen that the flow of the communication between the business team and the technical team is happening in a proper way.
The technical team can be recruited for the application of the emerging technology in the organization for making of the products.
Certain follow ups are needed to be taken in order to evaluate the progress of the proposed plan. In this case, the follow up can be taken by the management of the PEW (Al Hattab & Hamzeh,2015). The follow up of the project can be provided by the project management team and the business analysts. It has to be seen that the proper flow of the information is happening between the project management team and the technical team.
Management of the business and the strategy:
The development of the business process and the strategy is important for the managing of the project. There are various methodologies for the managing of the project. However, the selection of the methodology can be based on the type of the project. Some of the project management methodologies are Agile, Prince2. PMBOK is used for providing the guideline of the project. According to the PMBOK there are five stages in the life cycle of the management of the project. The project starts with the gathering of the requirement. On the other hand this step is followed by the planning and the execution phase. The control and the monitoring phase is concerned about the evaluation of the performance of the project.
In this case, the requirement of the project is to implement the smart pricing strategy for the PEW. The planning and the execution is done on the basis of the requirements. The monitoring and control of the implemented strategy is done by the project manager and the management of the project.
The technical team can be indulged from the innovation of the new products and the application of the emerging technologies for producing the products in the organization. It is needed to be concerned that the technical team has the enough knowledge for the implementation of the emerging technology in the organization. The team can be managed by a team leader
There are different kinds of leadership preset for managing the project in the organization. In this case the application of the democratic leadership can be maintained (Gijo & Antony, 2014). In the democratic leadership the opinions of all the members present in the discussion will be taken care of. The employees and the stakeholders will feel that they are involved in the decision making process for the company. The democratic leadership also supports the idea of brain storming.
Conclusion
The paper discusses about the different aspects of the root cause analysis. Apart from that the analysis of the case study is done in this context. The main problem has been identified and the root cause analysis is done on the basis of the problem. It has been found out that the PEW is losing the profitability and the main cause of this problem is the price of the products provided by the company. The other causes like the increase of the number of the organizations in the market has also been mentioned in the paper. The root cause analysis of the problem has been done with the usage of the seven tools. The mitigation strategy for the identified problem is also been mentioned in the paper. It can be said that the proper implementation of the pricing strategy can be beneficial for the improvement of the business situation of the organization.
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