Strategic Re-Engineering for Embryonic Business Units


By

Ruchi Bhatia
Lecturer
Department of Management Studies
B.S. Anangpuria Institute of Technology & Management
Faridabad
 


Company's life cycle (CLC) behaves in a same way as that of product's life cycle (PLC). It begins with the introduction and ends at declining stage. From this stage onwards develops a new CLC for the company. This is the right stage where a company must decide, whether it needs to go for gradual incremental improvement or for heavy blasting in the form of re-engineering.

Re-engineering is not simply automation, downsizing, restructuring, continuous improvement or total quality management, rather it is a complete make-over whereby a concern seeks to achieve dramatic improvement through radically redesigning the business processes.

Generally, it is believed that three kinds of companies need re-engineering:

1) Companies that find themselves in deep trouble in the present situation, or

2) Companies who are not in trouble but the management of the company can foresight it in near future, or

3) Companies who are at peak of their business.

All these cases are applicable for the old existing companies. But what about those companies who has been establishes recently and find themselves unable to cope with the breath taking competition? Does such a firm require to re-engineer itself or should it shut down its operations or should it strive hard to earn its market share through gradual improvements?

In order to seek answers to these questions, management of such an embryonic company needs to answer some of the questions:

1) Do the management foresight any chance of improvement in the near future?

2) Can the company survive till it gets the right opportunity to improve itself or an opportunity to gain a larger market share?

3) Is the company's product or service the one, which can attract sufficient market size?

4) Are the internal and external environmental conditions favourable enough to surpass the rainy day?

If answers to all these questions are affirmative, then surely, the company need not shut down its operations or re-engineer itself, rather the company can win over the competition by formulating a right strategy and gradually improving itself. But if the answers to these questions are negative, then a company is left with only two choices, i.e., either to shut the operations or to go for re-engineering. To solve this problem, management once again needs to answer itself a set of questions which may or may not be a repetition of the earlier set of questions:

1) Is the company in possession of sufficient funds or can it arrange enough resources to re-engineer itself?

2) Is the company's product or service the one, which can attract sufficient market size?

3) Do the management of a company foresight any chance of cost reduction through a major change in the process?

4) Do the majority of the positive stakeholders agree over the issue of re-engineering? (Their consent will be regarded as a support from them).

5) Do the management foresight a greater market share after re-engineering?

6) Can the company survive against all odds till it is re-engineered? (Re-engineering is not an overnight task, it may take few months).

If answers to all these questions are affirmative, then a company must go for re-engineering. Otherwise, management must take decisions regarding shut down of the whole concern or a specific loss making product or service or a particular operation.

Irrespective of the strategies which management follows, if a company wants to achieve success in the market place, then above all measures it has to follow 80-20 Pareto Rule. That is, it must focus its attention mainly on those 20% of its customers who gives it 80% of the business.
 


Ruchi Bhatia
Lecturer
Department of Management Studies
B.S. Anangpuria Institute of Technology & Management
Faridabad
 

Source: E-mail February 15, 2008

          

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