PLEASE READ THIS AND RESPOND IN 3 PAGES FOR $100.00 Issue Statement Over the yea
ID: 3587371 • Letter: P
Question
PLEASE READ THIS AND RESPOND IN 3 PAGES FOR $100.00
Issue Statement
Over the years, the Pay Zone organization has successfully established its place as a reputable consulting and software solutions firm within the oil and gas industry. What sets them apart, is their specialization in exploration and production, thus finding innovative solutions for an assortment of firms within this domain.
It’s founding members are approaching retirement with no apprentices to impart knowledge. As a result, the Pay Zone company could be facing closure. Furthermore, as it currently stands, Pay Zone is facing a dilemma whereby current operations must be altered in order to assure the long term sustainability and the future success of the company as a whole.
The principal owners are looking to find the right solution that would help grow this company and reach its potential profit earnings, while at the same time maintaining the enjoyable lifestyle that comes by working as a virtual organization.
The following report provides a thorough analysis of Pay Zone’s current set of circumstances, and explores possible solutions which can benefit those who have heavily invested into the prosperity of this company.
Analysis
In reference to authors McShane and Steen, we can see that the aspect of Emerging Employment Relations is clearly demonstrated within the Pay Zone business model. At it’s core, the marriage between work-life balance and virtual work is what drives this company’s operations, activities, and success (McShane and Steen, 2015). As previously mentioned, being able to maintain a lifestyle where each partner has the liberty to work within their own physical location (which means having their own ideal environment) is the highest priority. As a matter of fact, we’ve learnt that this is part of Pay Zone’s core values and identity. In our text, we can see that the Pay Zone partners/principals fit perfectly within the “openness to change” quadrant of the Schwartz’s Value Circumplex model (McShane and Steen, 2015). This simply means that they have the propensity to easily adjust to major changes due to the innovative nature that each of the 5 members personify. Their motivation for success is the very same thing that stimulates their business operations.
Pay Zone’s niche in the market is the fact that they are highly specialized in oil & gas exploration and production. These core competencies are what have allowed them to receive lucrative contracts from reputable companies such as BP, IBM, and Petro-Canada. The following SWOT analysis provides a brief synopsis of Pay Zone’s current state (Friesner, n.d.). We will use the analysis from this table to later on find the best solution for Pay Zone to move forward accordingly.
Strengths
No direct competitors and plenty of contracts for projects
Experts in improving business performance through effective and efficient information discovery and management
Each partner is highly skilled and specialized in oil and gas solutions
Collaboration and sharing of information among Pay Zone staff members to provide optimal customer service
24/7 Help Desk
Costs are greatly reduced (operating, capital, start-up, building) due to the virtual nature of their business model
Weaknesses
Only working with 10% of their potential clientele
Unable to increase the output of designing new software solutions due to the lack of availability from the principals
Opportunities
Pay Zone did not invest in any marketing whatsoever yet still obtained plenty of clients based on merit and reputable services
Attractive company for larger firms to acquire Pay Zone
Discovering new solutions for the scarce oil and gas commodities is at a high demand
Threats
The long term sustainability of the company is in jeopardy due to the lack of young available talent who are qualified to replace those who will be retiring in the near future
Other firms might develop similar software solutions, consequently taking away a large portion of Pay Zone’s market share
Alternatives Analysis
Option 1
Borrow capital to acquire additional programmers to sell more software solutions.
Pros: This will certainly increase the number of potential clients which presently stands at only 10% of the market. Furthermore, this would alleviate 50% of the workload of the principals, and they could concentrate solely on consulting activities.
Cons: New software design and development was exclusive to the principals and they are unable to allot any time towards new designs or knowledge transfers.
Option 2
Acquire new consultants.
Pro: This will expand consulting capability, hence expanding Pay Zone’s profit potential.
Cons: Pay Zone’s consulting services is highly specialized and requires specific skillsets to fit the mold. Finding such talent would be difficult as there only 10 people who are available within the industry. These individuals would require significant compensation and might even oblige Pay Zone to make them principal partners. Furthermore, existing partners who have been a contributing factor on the onset would want to be compensated differently thus causing a limitation for a new consultant to become a partner with shareholder equity.
Option 3
Hire any additional consultants on a contractual basis.
Pros: This will resolve the issue of shareholder equity, and principal partnership.
Cons: This solution would however hider the long-term sustainability of the company as it will decrease the possibilities of finding people who would fit well within this company’s culture. Moreover, the annual salary costs would most likely exceed one who would be a permanent employee.
Option 4
Sell Pay Zone software fleet to evade other firms from entering the market and developing products which would directly compete against Pay Zone’s software solutions.
Pro: Capitalize monetarily from Pay Zone’s software fleet while it is still unique and with out competitive products.
Con: A substantial amount of costs must be poured into marketing. An area where Pay Zone is weak in experience
Option 5
Sell the whole company.
Pros: Pay Zone is well established and would could be sold at maximum value. The income of the principals would increase significantly
Cons: This action however would relinquish all control, and the principles would not be able to reap from any future growth, expansion, and profits in long term.
Option 6
Do nothing.
Pros: Steady flow of income will remain while maintaining the desired lifestyle.
Con: The opportunity to maximize on growth and sustainability will be forfeited without any adjustments to the current way of doing business.
Recommendations
After careful evaluation of the aforementioned options, I would recommend the following solutions for Pay Zone to consider moving forward. My suggestion is to implement a combination of Option 4 and Option 2.
First, invest heavily in marketing and sell their software solutions at a premium price. The return on investment speaks for itself. The indirect market survey suggests that there is a great demand for such unique automated solutions. Now is the time to monopolize the market and maximize on the fact the Pay Zones software solutions have not competitors. Patent and sell the intellectual property to any big players who would be interested in creating their own software spin off. This solution in-turn will increase Pay Zone’s potential clientele from 10% (to a significantly greater value) and open more opportunities for more consultation projects.
Secondly Option 2 will be a by-product of Option 4. Mainly due to the fact that software sales inadvertently create a demand in consultation. I would suggest soliciting talent from the 10 known specialists within the field. They don’t necessarily have to have equal share of the company’s assets, but compensate them accordingly. An investment in young talent gives these prospects opportunity to learn and become acclimated to the Pay Zone company culture.
Conclusion: Action and Implementation Plan
Over the next 5 years, evaluate the performance of the newly hired consultants/partners to see if they would successfully fit the mold. If there has been steady growth and the goal to maintain a successful business model and personal lifestyle without compromising the company’s core values is achieved, then this investment was well worth it. If, however, there has been no significant growth and sustainability, sell Pay Zone to the highest bidder (option 5), but continue to generate income from future software licensing sales by obtaining profits from royalties (option4). As a result, all 5 principle partners can continue to reap from Pay Zone’s success for generations to come.
Strengths
No direct competitors and plenty of contracts for projects
Experts in improving business performance through effective and efficient information discovery and management
Each partner is highly skilled and specialized in oil and gas solutions
Collaboration and sharing of information among Pay Zone staff members to provide optimal customer service
24/7 Help Desk
Costs are greatly reduced (operating, capital, start-up, building) due to the virtual nature of their business model
Weaknesses
Only working with 10% of their potential clientele
Unable to increase the output of designing new software solutions due to the lack of availability from the principals
Opportunities
Pay Zone did not invest in any marketing whatsoever yet still obtained plenty of clients based on merit and reputable services
Attractive company for larger firms to acquire Pay Zone
Discovering new solutions for the scarce oil and gas commodities is at a high demand
Threats
The long term sustainability of the company is in jeopardy due to the lack of young available talent who are qualified to replace those who will be retiring in the near future
Other firms might develop similar software solutions, consequently taking away a large portion of Pay Zone’s market share
Explanation / Answer
As the problem says, the weaknesses of the the comapany are :
1) Only working with 10% of their potential clientele.
2) Unable to increase the output of designing new software solutions due to the lack of availability from the principals.
So, for the sustainance of the company, these are the fields on which the company should work upon.
So, the option 1 is the best alternative solution for the problem, as it is resolving the issue of the working with 10% of their potential clientele.
Borrowing capital to acquire additional programmers to sell more software solutions, will certainly increase the number of potential clients which presently stands at only 10% of the market. Furthermore, this would alleviate 50% of the workload of the principals, and they could concentrate solely on consulting activities.
Now, if we talk about the cons of this alternative solution, new software design and development was exclusive to the principals and they are unable to allot any time towards new designs or knowledge transfers. This can be overcome by hiring skilled and experienced programmers. So that the softere development section is handled in proper way producing the required output in minimum time and minimum cost i.e, focussing optimization in the production section.
So, skilled programmers handling the development department, Principals can focus on increasing activities to reach more clients and explore the market in a better way and bringing more contracts on the table for the company. They can share their expertise in software designs and knowledge transfers whenever they get chance to meet the programmers team or by holding company meetings regularly.
THANK YOU.
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