INTRODUCTION

This report is written in accordance with the problems faced by Wow Sight and Sound and it also provides solution for the given problems. It primarily focuses on problems which the company faced during financial crisis of 2012, where it almost got declared bankrupt. Furthermore, it analyzes the behavior of two of the company’s management functions in relation to the ways they tackled management problems with the help of different management theories and techniques. As per primary research from the website and other consumer feedback websites, the main problem of Wow Sight and Sound is the inability to forecast, plan and positively respond to the changing economic environment, both on micro and macro level. This report attracts reader’s attention towards areas of planning and organizing which were ignored by the management. Discussion will be carried out by concentrating on single theory of planning i.e. scenario planning and single theory of organizing i.e. matrix structures. More than one possible solution will be proposed in the report and the plan which is the most ideal for the company, will be followed in order to drive better results specifically in financial terms.

 

 

PROBLEM IDENTIFICATION

In recent years, there has been a worldwide increase in consumer products purchased online. This has spurred Australian bricks and mortar stores, such as WOW, to establish an online presence with retailing services. As a result of globalization, these turbulent and fast-moving markets have borne the need for organizations to grasp and practice effective management principles (Loebbrcke & Jelassi, 1997). Scenario planning is a management issue that is pertinent to Australian businesses providing online retailing. When effectively practiced it provides a solid foundation from which further managerial actions of organizing, in particular matrix structures can emanate. This is another critical management challenge of Australian online companies. Allowing organizations to plan for likely scenarios such as revolutionary online capabilities, improves both the organizations focus and flexibility (Hutter, 2006). Whilst matrix organizational structures integrate functional expertise, to support the clear divisional focus on a product. Hence, it is crucial for the immediate, long-term success and competitive edge of Australian online retailers to scenario plan and organize with matrix structures. By not effectively planning and organizing, online businesses may risk facing many challenges and issues. Foundations of management, in particular planning and organizing, should effectively be administered and applied for the success of online Australian retailers (Chen, Qiao, & Lee, 2014).

 

 

DISCUSSION

As previously discussed, Wow Sight and Sound failed to respond positively to changing global economic requirements and the two important management functions that contributed to this failure were planning and organizing. They were overlooked by the management to the extent that the company not only went bankrupt but also could not expand virtually with right pace (Kuye & Oghojafor, 2011). Starting from planning, new owners of the company were able to identify the potential right path. Their decision of perusing online business met short term requirements of the company. Due to market and economic conditions, the decision of online store did not comprehend current company requirements (Venkatraman & Henderson, 1998).

Planning  itself means to establish goals and objectives according to the demand of internal and external environment of business (Canetta, Cheikhrouhou, & Glardon, 2013). In context of Wow Sight and Sound, new management prioritized accurately the issues of the business. They closed down brick and mortar stores in order to save cost and only trusted virtual means of revenue i.e. website for Wow. Doing this, they ignored the risk attached to their decision of generating revenue through virtual means. They should have considered other options for the accumulation of profits. According to the experts, it is necessary to have a backup plan behind every decision made by the management. In more technical terms, scenario planning means to forecast four to five different alternatives from any situation (Varum & Melo, 2010). In case of Wow Sight and Sound, the new owners of the company made a firm decision of generating sales from their website. They did not comprehend the external forces of the market at that time (Rochell & Lynham, 2014). For instance, virtual entertainment market was already at the point of saturation  which meant that it was almost impossible to meet the standard of budgeted sales or the behavior of its competitors who were selling the same quality products at cheaper rates than Wow. All of these factors should not have been  neglected if they concentrated on scenario planning. Following is the eight step process which should have been adopted by new owners.

Researchers have emphasized upon using scenario planning in order to avoid losses which are caused by unlimited uncertainties. It should also be noted that scenario planning is difficult to adopt due to the fact that measurement of qualitative and quantitative variables is not very easy because of standardized tools and techniques used for this purpose (Visser & Chermack, 2009). However, scenario planning has been suggested by most of the business owners as well as managers because of the fact that it is one of the most important tool for determining future outcomes of a particular project, external environment of the business and better understanding of different interdependent forces affecting the business (Soste, et al., 2015).

Furthermore, Wow Sight and Sound seemed to be lacking proper organizing skills from the area of management. New owners successfully set priorities and were able to take steps that most of their competitors did not think of, for example, setting their customers free from shipment fee. However, things got out of hands of Wow’s management when they failed to implement the organizing strategies for the company. They failed to take appropriate actions in relation to external and internal stakeholders of the company which included customers, employees and suppliers etc. With the passage of time, new owners were able to identify the right customer base and they were able to formulate strategies which started leading them towards success.

On the other hand, one of the most important organizing strategy which would have decreased the level of ambiguity for Wow is matrix structure. Matrix structure is the idea where an employee is not supervised by a single manager but from a group of managers who have different expertise and skill sets. For example, first line employee from production department will be supervised by production manager as well as the project manager who will only be responsible for the completion of one specific project (Kuprenas, 2003).

In case of Wow, electronic and entertainment market has been changing trends rapidly which made it difficult for the company to sustain the pressure of meeting customer’s demands.  The need to be flexible in relation to the formulation of production methods as well as marketing strategies was very crucial. Employees and managers were expected to be faster and accurate in their communication (Randolph & Ford, 1992). Matrix structure technique is the answer to all the above mentioned needs of Wow. Under this technique, employees would be more skilled and they could communicate their problems more effectively to the concerned managers. In this way, Wow would be able to respond to demands of different customers more effectively (Davidovitch, Parush, & Shtub, 2013).

On the other note, implementation of matrix structure can be considered as the most difficult part. The reason behind it is that in case of supervision of the two managers, there will be a conflict of interest between the managers or the employees will not be able to respond to both of the managers at the same time (Owens, 1998). One solution to this problem will be the division of functions between managers but ut this will create more problems as it is almost impossible to divide the functions and tasks of managers and employees. J.A. Kuprenas has provided the solution for this potential problem as he has specified ten tasks for each of the functional and project managers. They are the following;

(Kuprenas, 2003)

Inspite of all the problems stated above, researchers have found that technique of matrix structure results in improvement of organizations’ response towards completing their projects. Experts recommend that virtual organizations who face more challenges than brick and mortars, follow this specific organizing theory because of the fact that the matrix structure theory is specifically built to improve the performance of the organizations (Nesheim, 2011). As Wow has faced management challenges with respect to its functions of planning and organizing, a mix of scenario planning and matrix structure would not only help in improving the performance of the company but it would also result in growth of the business as well as its stakeholders. Wow would have to do scenario planning not only for each of its potential project but for the general decision making of the business as well. On the same note, it would also require to break traditional hierarchical patterns and employ multiple chains of command for better results.

 

 

RECOMMENDATIONS

Wow will have to incorporate a new retail model which will meet the changing economic global and local requirements. This retail model should be in accordance with both management theories; scenario planning and matrix structure. This will enable Wow to develop an aptitude for tackling business problems with a particular mindset which is related to the functions of management.

The company needs to expand the circle of scenario planning beyond its competitors and their online strategies. In this way, they will be in a position to take decisions which are optimal for financial health of the company. Moreover, management will have to be careful about the fact that scenario planning is based on practical happenings of events and forecastings. This may prove fruitful in helping the management to set rational goals and objectives with respect to their projects (Pagani, 2009).

Though Wow has been already offering number of promotion strategies but it also needs to pay special attention towards its marketing strategies as these strategies are able to attract customers even in case of saturation. This refers to marketing strategies for the virtual world.

Wow will need to invest more on training of its staff so that they struggle more for the growth of the company. In this way, employees will remain positive while responding to the internal issues of the company (Nyuur, 2015).

Management of Wow will need to be careful while constructing the matrix structure of the company in order to save the employees and managers from hectic schedule of teams. Matrix structure will provide more benefit if it is built for achieving the primary objective of improving skills of the employees and reducing communication gaps between the managers. They have to be designed in such a way that they will reduce personal differences between the employees. Wow will need to pay special attention to matrix structure of the organization. It will minimize any type of confusion between the roles and duties of managers as well as the employees. Employees will be clear in terms of feedback, they need to provide managers with. On the other hand, it will also help managers and it will keep them from any conflict of interest (Loebbrcke & Jelassi, 1997).

 

CONCLUSION

Concluding the report, Wow faced many difficulties in its initial set up of being a virtual organization but with the passage of time, it has been able to identify the goals and objectives which would lead it towards development and growth. It lacked proper management skills which are needed in all levels of the organization specifically in planning and organizing. In this report, proper guidelines are given in relation to the above mentioned management functions. Moreover, one theory from planning  (scenario planning) and other theory from organizing (martrix structure) were identified which would help in overcoming the current problems of the company. It has been proven from the researches of different authors that both of these management functions are positively linked with better performance of the organizations. Virtual organizations are advised to follow and implement these startegies more rapidly than brick and mortars who deal with customers on basis of face to face transactions (Hutter, 2006).

Furthermore, this report has provided practical recommendationS for Wow as it still needs to be more proactive and flexible in relation to the changing entertainment market requirements and the effects of globalization. Willingness to change according to customer requirement is the key to success for a virtual organization (Loebbrcke & Jelassi, 1997).

 

REFERENCES

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Chen, H. H., Qiao, S., & Lee, A. H. (2014). The impacts of different R&D organizational structures on performance of firms: Perspective of absorptive capacity. Journal of High Technology Management Research, 25(1), 83-95.

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Kuye, O. L., & Oghojafor, B. A. (2011). Scenario planning as a recipe for corporate performance: The nigerian manufacturing sector experience. International Journal of Business and Management, 6(12), 170-179.

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Nyuur, R. B. (2015). Unlocking the potential barriers on SMEs’ uptake of scenario planning. Journal of Strategy and Management, 8(2), 139-154.

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Pagani, M. (2009). Roadmapping 3G mobile TV: Strategic thinking and scenario planning through repeated cross-impact handling. Technological Forecasting & Social Change, 76(3), 382-295.

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Soste, L., Wang, Q., Robertson, D., Chaffe, R., Handley, S., & Wei, Y. (2015). Engendering stakeholder ownership in scenario planning. Technological Forecasting & Social Change, 91, 250-263.

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Visser, M. P., & Chermack, T. J. (2009). Perceptions of the relationship between scenario planning and firm performance; A qualitative study. Futures, 41(9), 581-592.