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Introduction
Adrizalia Soldaduras, S.L. is a small, 10-people family company based in Barcelona, Spain; the company’s products are designed to serve the copper pipes. The company’s profit decreased after the crisis and has not recovered yet. The company has been operating since 1988, without significant changes in the structure and location. Now, its leadership is changing: its founder and general manager is preparing to retire, transferring the position to his son. The company undergoes a crisis, and its profits are low due to a lack of demand for copper pipes equipment in Spain. As the company’s leadership changes, Adrizalia should change its structure and strategy to overcome the crisis and grow further.
SWOT Analysis
To understand what the company can change, first, it needs to analyze its current state. Strength, weaknesses, opportunities, and threats (SWOT) analysis shows the strong and weak points in the company’s structure, allowing evaluation of how to improve it. Strengths and weaknesses are internal factors, while opportunities and threats are external ones. Strengths and opportunities are positive, while weaknesses and threats are negative. Below, there is a complete SWOT analysis based on the article of Gurel (996-999). It will help understand why Adrizalia’s crisis began and how to overcome it.
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Company’s strengths are internal qualities which make it better than its competitors, giving the advantage. Adrizalia’s main strength is a strong small collective: as one can see, the company is a quite stable family business, operating for more than 30 years. Thus, the collective’s members will be ready to act together in a team to solve the company’s problems. Another strong side of Adrizalia is a well-established production line that produces copper pipes equipment. It means that the company’s primary task of producing its goods is completed well. Lastly, the company’s advantage is agreements with distributors across the country. They allow Adrizalia to spread its goods in various Spain’s regions without engaging its own employees, saving costs and human capital. Those three strengths provide the company with a basis that can enable it to overcome its current crisis.
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Weaknesses are drawbacks of a company’s internal structure: in the case of Adrizalia, the main weakness is the absence of international trade options. The consequence is that the company cannot easily change its trading partners in case of necessity, such as its current crisis. Another weakness is the lack of innovations: there is no research and development (R&D) department, which is considered necessary in modern firms (Hosseini et al. 8). In that way, the company’s production risks become outdated and needless for the customers (Chen et al. 179). Those two significant weaknesses make the company vulnerable to the current crisis.
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Opportunities are external factors that facilitate the development of the company. One of those is the European Union, as Spain is a member of this international structure. It means that the company can trade its goods on territories of other countries of the EU, such as Germany or Italy, without large obstacles. The political and economic situation is beneficial for the company: Spain is a developed capitalist country with various international relations and EU membership, creating vast opportunities for the company’s development (Gurel 999). Thus, the governmental and economic situation is favorable and facilitates convenient business management.
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Threats are external factors too, but those which directly or indirectly negatively influence the company’s existence. The drop in sales in Spain is an example of such a treat: it means that the company cannot increase its profits by increasing production, as the product will be needless. The company cannot change the situation directly: it can only increase sales by marketing or innovations or seek opportunities in other markets. Thus, the societal situation is unfavorable for Adrizalia: the demand for copper pipes is low.
Future Decisions
Based on the SWOT analysis, one can see the key areas of Adrizalia Soldaduras which must be improved: a lack of international trade is one of such areas. While it is hard to increase the sales level in Spain due to a small demand, the membership of Spain in the EU opens good opportunities in entering the international markets and exporting the company’s goods. In that way, the organization of international trade should be one of the main points in the company’s future decisions. It will allow increasing sales and entering new markets, which will provide new opportunities for Adrizalia’s growth and development.
While a well-established production line is a strong side of the company, the product should be more user-centered and based on the current needs of copper pipes manufacturers. Prototyping is an excellent strategy to make its patents and products more useful for its customers (Elverum et al. 118). The company is centered on goods’ production and distribution; thus, making them more competitive will probably help the company to get out of the current crisis.
A lack of innovation is another major weakness that should be faced and fixed. While the company has several patents of products for the domestic copper pipes, which it manufactures and distributes, today’s world is constantly changing, and the technologies are developing. To be more competitive, Adrizalia would better pay more attention to developing new patents and technologies (Hosseini et al. 9). Research and development is an integral part of modern companies’ practice, and most of them have R&D departments (Chen et al. 177). Such activity is interconnected with previously mentioned prototyping, as all products are firstly designed as prototypes, and their research and development are an integral part of this design.
Improvement Plan
The company’s improvement plan should cover the mentioned areas of future decisions to overcome the internal weaknesses and use the existing opportunities. Considering a challenging situation with Adrizalia’s profits and finances, it would hardly be a good idea to hire new employees in addition to the present 10 ones. Still, employees should be relocated to ensure that the company’s significant weaknesses will be overcome while its strengths are conserved. As mentioned, providing a higher level of innovations, user-centered production, and international trading are necessary ways of improvement for the company.
For the internal situation, the company’s structure should be changed: to rebuild the sales department and create the department for researching and prototyping. As mentioned, R&D is an integral part of today’s world, where technology is constantly developing, and being modernized is vital for being competitive (Chen et al. 179). Creating and testing prototypes of all equipment produced by the company, both new and existing, will ensure that they will be helpful for customers (Elverum et al. 118-119). As for the external situation, the organization of international trade is the main point to overcome the threat of lacking the demand in the local market. In addition, it will allow the company to increase its sales further and grow.
To summarize, one can specify the following three points for Adrizalia’s improvement plan:
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Organize the international trade: appoint a person responsible for performing market research and making agreements with local traders.
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Create the Prototyping & Innovation Department, responsible for creating and testing prototypes and usability and conducting research for the products’ development.
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Make necessary relocations in the company’s staff to ensure that both mentioned decisions will be made.
New Organization Chart
Based on the improvement plan, one can suppose a new organizational chart of Adrizalia after the decisions and relocations of employees. The company’s organizational structure would better be slightly changed, too, to meet the challenges it faces. The manufacturing department may be left unchanged, as it is the strongest part of the company that allows it to produce its copper pipes strippers, repairers, and seals stable for more than 30 years. The experience in the sales department in making agreements with outer distributors may be used to organize similar outsourcing practices in national and international trade. Warehouse and logistics departments can be merged, as they both serve the same purpose: keeping and transporting final products to the end-user. The new Prototyping & Innovation Department would better be created, as the R&D and prototyping are essential practices that will ensure the usability and competitiveness of Adrizalia’s production.
Such staff relocations will allow the company to implement mentioned decisions. The sales department will contain only one employee, who will be responsible for trade relations; outer distributors will perform all other work in sales on both national and international levels. The main job of trade relations is to establish and maintain relations with distributors on both national and international levels, conduct market research, and decide when to enter the global market. The prototyping responsible should create prototypes of new and existing products based on their usability for customers and market research results provided by the trade relations responsible. Another important activity is maintaining customer feedback and communicating with them to understand their needs better. Another member of the Prototyping & Innovation Department, the R&D responsible, performs research to see how each prototype can be improved and developed.
In the Warehouse & Logistics Department, the loading and unloading responsible should ensure that all produced and packaged goods are safely maintained in the warehouse and ready for transportation. If needed to load or unload a large amount of product, the employee may temporarily engage loaders from the outer company. The transportation process is also performed by an external company, with which Adrizalia has the agreement. Another department member, the logistics and transportation responsible, ensures that all transportations are performed well, tracking and monitoring them. In case of any delays or other troubles in the transportation, the employee is appointed to resolve the issue. In that way, all major weaknesses are resolved: international trade will become possible, and prototyping and innovation will make the production much more competitive; along with that, all company’s strengths are preserved.
Discussion
Key new areas for the company’s development are international trade, product prototyping, and innovations; the two latter are interconnected. They will be the work of a new Prototyping & Innovation Department, responsible for seeking and implementing new technologies in the work of the manufacturing department: for example, computer programs for prototypes modelling. To ensure that all those areas will be profitable and help solve the company’s challenges, Adrizalia needs specific resources and knowledge. Latter is the most important, especially for the new Prototyping & Innovation Department, as its members should research, develop, and patent new prototypes of the company’s products. They need specific knowledge for that, and in general, they should be selected from those who have experience in inventing and patenting new products (Chen et al. 181). The trade relation responsible should have knowledge of local laws of various countries where Adrizalia will plan to export its goods. Lastly, the logistics and transportation responsible should be able to track a vast network of supplies and choose the best ways for product transportation.
Conclusion
One can see that Adrizalia Soldaduras, S.L. should perform several important strategy changes and staff relocations to better adjust to modern reality. First, the low demand for copper serving equipment in Spain means that the company should search for new markets to raise its sales. The membership of the country in the EU makes this process easier: it facilitates entering markets of countries that are also EU members. Thus, the company may solve the low-demand crisis by increasing its presence in international markets. Second, the company’s products may be less competitive due to a lack of innovation and user-centered design. By introducing research and development into the company, Adrizalia will significantly increase the quality of its products, ensuring that they will be helpful for its customers and will be sold.
Works Cited
Chen, Steven, et al. “Teaching Design Thinking in Marketing: Linking Product Design and Marketing Strategy in a Product Development Class.” Journal of Marketing Education, vol. 40, no. 3, 2018, pp. 176–87. Crossref.
Elverum, Christer W., et al. “Prototyping in New Product Development: Strategy Considerations.” Procedia CIRP, vol. 50, 2016, pp. 117–22. Crossref.
Gurel, Emet. “SWOT Analysis: A Theoretical Review.” Journal of International Social Research, vol. 10, no. 51, 2017, pp. 994–1006. Crossref.
Hosseini, Akram, et al. “Competitive Advantage and Its Impact on New Product Development Strategy (Case Study: Toos Nirro Technical Firm).” Journal of Open Innovation: Technology, Market, and Complexity, vol. 4, no. 2, 2018, pp. 3–15. Crossref.
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