Approaches to Improve the Performance of Spare Change
Spare Change is a newspaper company based in Boston. In this field of collecting and dispensing News in the region, the company faces stiff competition from more established papers like the Street News, based in New York. The company is, therefore, in dire need to develop alternative strategies to help it cope with the competition and make it an even better company, in terms of News delivery and general returns. For instance, the company currently sells its papers at $ 25, as opposed to it competitors, like the Street News, who sell their copies at $ 30. It is upon the managers at Spare Change to decide whether improving the company’s performance ought to involve increasing the prices or not. However, this should not be considered as the only option for the development of the company. The management should keep an open mind and explore a number of options before settling on the most appropriate one. Among the options that should be considered are discussed below.
The first option involves increasing the prices of the papers sold to the vendor from $ 25 to $ 30. The reasoning behind this would be that the new prices would increase the sales revenues, thereby increasing the company’s resources. Assessment shows that if Spare change were selling 7,000 copies of their newspapers in every two weeks, this increase would cause an increase of about $ 350 in every two weeks, in the overall revenue of the company. Another way of achieving the same desired effect is by increasing the price of the papers to the final consumer from $ 1 to $ 1.25. The increased revenue from sales provides management with enough resources to help develop the company to be more competitive. However, there may be disagreements with and between vendors, causing a major sabotage in the distribution and sales of the company’s News Papers. The other disadvantage is that such an approach is a long-term plan and often takes long to plan and implement. Therefore, its benefits may not be realized immediately.
It is, therefore, advisable to adopt more immediate measures, if the desire is to realize immediate results. These immediate measures may be in the form of attaching edible, like candies or chocolates, to every newspaper sold to customers by the vendors. Indeed, this tactic had been used by Spare change News before, and was effective as it increased sales revenue three folds. The reasoning behind this tactic is that, if especially adopted on an anniversary of the company, it can be viewed by customers as a way of offering gratitude to them for purchasing the papers. Although it has been proven to be effective in the past, the problem with this technique of improving sales is that it can only apply in a short time. This is because it is difficult for the company to continuously purchase candies and chocolates, over a long period, and the value of the incentive may run out if persisted on, over a long period. It is, therefore, easier to use this technique during company anniversary and make the impression that the company is gratifying or thanking the customers for buying their papers over the years. That way, its effect would be even bigger than anticipated.
The company hopes to improve its performance, so that it is able to compete with more established news houses. To achieve this objective, measurers geared towards improving sales revenue and productivity among employees ought to be put in place (Weisbord, 1987). This is because products need to be produced at the desired rate so as to make them available for sales, at the desired price and rate. These measures may have their pros and cons, but if they are vital to the effective achievement of the objective, they should be adopted. For instance, improving sales revenue involves, as mentioned earlier, either increasing prices of the commodity or offering free gifts to encourage the purchase of the commodity. These two techniques, despite their overall benefit of increasing sales revenue, have limitations attached to their limited periods of effectiveness. Increasing the prices has the potential to cause conflict and withdrawals by stakeholders and/or investors. On the other hand, offering free gifts has the limitation of incurring an extra cost in purchasing the goodies.
However, for a company to achieve excellent long-term productivity, it is essential that it enhance its employees by imparting them with skills to perform their works effectively, and motivating the employees to work towards achieving the company’s goals and targets (Smith, 1998).Enhancing the knowledge and skills of employees can be achieved thorough the holding seminars and training workshops to encourage employees to work as a team, thereby achieving maximal production (Smith, 1998). Motivation, on the other hand, can be inform of Rewards, promotions, and pay rises. These approaches are vital in the growth and development of a company since they act as the engine that drives production in the company. If production is high, and the sales strategies are right, then it can earn considerable amount of revenue from the sales of newspapers. This will provide sufficient resources for the company to expand even more and acquire more sophisticated equipments that will make it competitive (Smith, 1998).
A competitive company is more able to meet its goals because it has developed effective ways to manage the dynamics of the market, and is as such among the leading players in the target market (Weisbord, 1987). In this case, Spare change Newspaper wants to drive its sales of newspapers up in the market, so that it could acquire enough revenue and resources to develop itself. The company currently sells its newspapers at lower prices than most of its competitors. Therefore, to increase newspaper prices may not have a negative impact since it will only equal what the other companies’ charges. However, there is the risk of losing out on sales all together. This is because the lower prices that Spare charge News has been offering for their newspapers could be the sole reason they were selling at all (Johnson, 1976), considering they are the youngest of all the other established news houses.
Development strategies for Spare Change News should, therefore, be carefully reviewed to determine the most appropriate approach (es) for development. I would give recommendations to the effect that, to minimize the risk of losing ground in the market, the company should not increase its newspaper prices. Instead, it should adopt team-building strategies to increase production in the company, and participate in interactive marketing strategies, like community working (Johnson, 1976), to get to the people around, who are potential customers. The reasoning behind this is that it is easier for people to purchase something with which they can associate.