TolTek is a multi-billion dollar global conglomerate which, although not in danger of collapse cannot be said to be overly healthy from a pecuniary perspective. The magnitude of the company is commendable as it is able to turn in a net profit of almost half a billion dollars. Further, the size of the company is also exponential as all its divisions have a global presence. The company deals in internet routing, security appliances, consultancy, and risk management, all on a global scale. However, the company’s highest net profit was attained four years ago and although it has been gradually improving over the last three years, it has not yet matched that net profit record. Further, the record stands at 5.5% which is lower than the optimum profit margin for a stable multinational (Kennedy, Welch, & Monshipouri, 2017). Other critical factors including human talent are also beginning to show signs of decline. TolTek has a great potential based on its global reach, the nature of the industry it is in, and the future prospects of its industry but it is definitively less healthy than it ought to be.
Summary of Financials
The company’s financials as reflected by appendix B show a company that is getting by and has a potential for improvement but not per se a financially healthy one. The best year for the company was four years ago while the worst was two years ago. The company is thus in the middle of a monumental recovery, having shifted from a profit of 0.3% two years ago to 5.2% currently. The primary difference between good and bad years seems to be predicated on the sales of products, making it the most important segment of the company. Two years ago when the least profits were made, expenses went up without a congruent increase in the sale of products, leading to the losses. With sales gradually increasing, therefore, the company needs to invest in lean management and better supply chain management to increase its profit margins (Kennedy, Welch, & Monshipouri, 2017).
Delegate your assignment to our experts and they will do the rest.
Summary of Competitive Environment
TolTek faces fierce competition in all the market niches that it has ventured into, both locally and globally according to Appendix C. Magnum and NBM seem to be the primary competition on a global scale who are also stronger on the cloud-based segment where TolTek seems to be especially weak. The company’s biggest advantage lies in its being the second largest player in the local market of USA and Canada, which is also the largest market globally. The weakest link is Asia Pacific where the company is ranked sixth overall. Based on the overview of the competitive environment, TolTek can improve by focusing on its strongest markets such as the USA, Europe, and Japan and relinquishing its weakest markets.
Summary of Labor Relations
The human talent segment of the company reflects both advantages and disadvantages for the company according to appendix D. On the one hand, the company has a relatively young top management team with most of its leaders being below the age of 40. If the company is able to retain its leadership talent, future prospects would be better as its leaders grow both in general leadership competence and internal specialized competence to run the company within the industry. The employee engagement and motivation is passable in almost all departments except for the finance department. However, human talent turnover, although relatively low seems to be on the rise, which is detrimental to the company’s human talent future (Shu, 2015).
Strategic Direction to the Business Unit
Based on the three chats as summarized above, the company has the capability to increase its income while contemporaneously decreasing its expenses. A careful evaluation of the last year and two years ago shows that the company was able to increase income and reduce expenses at the same time, thus reflecting the potential for attaining the same in future. The focus should thus be made to improve the sales and marketing departments to augment sales. At the same time, the company also need to invest in a combination of lean management and innovative supply chain management to reduce expenses. The recommendations above will ensure better profits even in the event that sales in general decrease.
Achieving Financial Results
TolTek has a total operating revenue of over 8 billion dollars, which has been increasing gradually for the last five years, even in its worst years. Most of these massive revenues do not come from a global market but from a select few markets such as the USA, Europe, and Japan. The primary issue in the company is not income, but rather expenses. As the company moves into the future, it can benefit from being selective about where it invests to get the best returns from all its investments. Focusing on the best markets while avoiding poorer markets would enable the company to successfully achieve its ideal financial results. A smaller geographical market with the same or slightly fewer sales volumes would make the company more profitable than it is now.
Leading the Business Unit Team
Proper leadership for a business unit combines getting the best available talent, training them properly, then ensuring that they are well motivated and fully engaged as they work within the company (Shu, 2015). Based on an analysis of Appendix D, TolTek has been successful in leadership only in the human resource department with all the other departments lagging behind, more so the accounting department. The variance between the HRM and other departments can only be explained by a failure in leadership within the business unit since HRM seems to be doing well. To improve in this segment, therefore, the company needs to invest in better training for leaders within the business unit.
Building Needed Talent and Capabilities
Talent and capabilities in HRM involve a combination of raw competence that comes with hiring the right people and specialized competence that comes through a combination of training and motivation. Based on how well the HRM department is doing, it would be right to assume that the company has hired right, hence the improvement needs to be in the training, motivation, and engagement segments (Shu, 2015). The leadership improvement section above will play a role in improving motivation and engagement. When it comes to training, the business unit leadership needs to establish comprehensive programs for employee training and development then find means of motivating the employees to participate in these programs.
Managing Relationships with External Partners and Groups
TolTek’s external partnerships include shareholders, the respective governments where the company operates, its customers and finally its supply chain partners. Shareholders are interested in getting a return on their investment which they already are at US$ 7.8 per share. Further, shareholders also need to associate with a company that has a good reputation as social citizens. Customers want a good value for their money and also reliability in service proviso. Governments need business partners who adhere to laws, business ethics, and participate in corporate social responsibility activities. Finally, supply chain partners need a reliable partner. Each of these relationships, therefore, must be cultivated independently based on its particulars. From a generalized approach, adherence to business ethics and good social citizenship is among the basic measures necessary to improve external partnerships.
Installing a Customer Mindset
A customer mindset combines the proviso of customer value, while also seeking to acquire loyalty and trust. TolTek’s main customer niche is the SOHO market that involves small businesses and individual consumers. The company has a large number of customers thus a heightened need for its employees to have a proper customer mindset. The company can install a good customer mindset by training its employees to under-promise and over-deliver. The combination of under-promising and over-delivering will ensure that value is in the mind of the employees wherever they are dealing with customers, a fact that will instill a customer mindset in them.
Ensuring Business Compliance and Organizational Citizenship
The business niche of TolTek involves the delivery of both goods and services each of which has a different set of rules and regulations when it comes to business compliance and organizational citizenship (Kolk, 2016). The services industry includes risk management which is an intangible product where the company can even make money while providing no services with the clientele being none the wiser. In the services niche, therefore, the company needs to embrace business ethics fully to ensure that customers get the full value that they are paying for. In the products department, the need to provide value is still important but it is also combined with the need to protect the environment in the production process. When the company has met its full duty as a social citizen including adherence to the laws and payment of taxes, it also needs to go the extra mile such as assisting the poor through corporate social responsibility (Kolk, 2016).
Conclusion
TolTek is doing well but needs to do better in all its departments including sales, supply chain management, and human resource management. The company has a global reach in all its departments, with revenues in billions of dollars and profits in millions of dollars. However, the current profit of over 5% comes after a recent profit of 0.3% which signifies instability. There is also stiff competition from global and local players as well as major risks including the proliferation of cloud usage. As the company moves into the future, it needs to make some improvements to be more stable and more profitable. Among the recommendations made is to limit activities to the most profitable geographical markets, invest in better employee training, and adopt lean management and more efficient supply chain management. The revenues made by TolTek should be resulting in higher profits even if they suffer a marginal reduction.
References
Kennedy, E. T., Welch, C. E., & Monshipouri, M. (2017). Multinational corporations and the ethics of global responsibility: Problems and possibilities. Human Rights Quarterly, 25 (4):965-989
Kolk, A. (2016). The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business , 51 (1), 23-34
Shu, C. Y. (2015). The impact of intrinsic motivation on the effectiveness of leadership style towards on work engagement. Contemporary Management Research , 11 (4), 327-350
