John, President of Plastic Packaging (a small bottle manufacturing company locat
ID: 434931 • Letter: J
Question
John, President of Plastic Packaging (a small bottle manufacturing company located in western Massachusetts), has decided that downsizing is the solution to the recent financial struggles that the company is experiencing as a result of a decrease in customer demand. Last Friday afternoon, John sent a mass e-mail to all of the employees at the facility to explain some of the disappointing financials and his decision to use a downsizing strategy to deal with the situation. The 75 employees of Plastic Packaging start to panic. During the afternoon break, the rumor mill is on overdrive in the breakroom. People are anxious, confused, surprised, and upset with this executive decision. Many of them wonder if there are better alternatives to the financial problems the company has recently experienced and they know that their president could have handled the situation at hand in a much more effective manner. Please respond to the following questions in four distinct and labeled sections: Identification: What are some of the main problems and related issues that you see within this scenario/case? Analysis: What are the root causes and relevant factors contributing to the main problems that you identified? Alternatives and Recommendations: What could John have done differently? Action Plan: How should John carry out these alternatives that you recommended?
Explanation / Answer
Identification :
Due to recent financial struggles John, President of company has decided to downsize the employees as he thinks that would be a solution to overcome this problem.
Analysis :
Here, root cause is decrease in customer demand which ultimately resulted in financial struggles for company. Generating demand for your product requires much more than simply releasing it onto the market. Company need to conduct research, determine what customers needs are, establish as a leader in the industry and repeatedly prove products worth.
Alternatives and Recommendations :
One of the biggest expense for many companies are the cost associated with hiring, training and maintaining employees. Downsizing can contribute to lower employee morale and may even lead to other employees concerned about their jobs to leave on their own.
Some of alternatives for downsizing can be :
1. Solicit employees for their ideas
2. Offer Job Sharing
3. Cut back on Employee Benefits
4. Change Work Week
Action Plan :
1. Solicit Employees for their Ideas : John should ask employees for their suggestions and ideas, even if their ideas do not make any business sense and cannot be put into action still it proves beneficial to employer for morale booster of employees who remain in the employment
2. Offer Job Sharing : Combining the skills of two employees into one position, job sharing can help both employees keep their jobs but will cut hourly wage costs.
3. Cut back on Employee Benefits : Benefits like Vacation pay, Sick leave may be trimmed down, or policies can be revised to make them more cost effective.
4. Change Work Week : Staying open for business four days a week instead of five can save on salaries as well as operating costs.
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