Case Study: Debriefing Report for VoIP2 Biz Inc.
The VoIP 2 Biz Inc used Voice over Internet Protocol; to facilitate telephone communication which was a new telecommunication technology used by small and medium-sized companies (Vyas, A. Liu, Schmitt, Wood, Russell, Ramadurai, & Rauenbuehler, 2015). The company wanted to dominate the Indianapolis market by enhancing the ancient legacy systems to the current modern ones. Lawrence R. Milkowski, the CEO of VoIP2 Biz Inc developed two phases; one to concentrate on developing the market and the other to invest a lot in the market so as to benefit the firm. Below is a report of options that the Board of Directors has to consider for the future of the company. This is a Student Sample ORDER YOUR PAPER NOW
- Staying with the current plan
VoIP2 Biz Inc was operating at Phase Two of the program where it was expanding its sales and marketing activities in five additional markets and targeting large call center opportunities. However, the plan was generating negative cash flows to the firm. Continuous use of the scheme would lead to the company to incur debts, sell its assets and finally, it would be liquidated (Pierce, & Aguinis, 2013) therefore, for the company to continue operating, it had to change the Phase Two plan.
- Closing down the company
Milkowski said that shutting down the firm would cause disruption to the 22 primary customers of the enterprise. It would also lead to loss of job opportunities to the senior employees such as the engineers as well as the junior workers. This would result in inadequate living standards since such employees would not be able to meet their mortgage and daily expenses after the firm is closed. Considering the economy and welfare of Indianapolis, the board of directors should drop this option to avoid disruption among individuals depending on VoIP2 Biz Inc.
- Selling the company
Selling the company would mean the acquisition, or absorption by a predator company (Yücel, & Görener, 2016). The CEO thought it would be a better option to sell the firm to its competitors such as ILECS, ISPs, and CLECs. This process could help the earlier investors to recover their investments; it would secure the job opportunities of his employees, and a price would be set for the 22 contracts which presented nice cash flow in the running of the business. Selling of a company makes the senior employees maintain their involvement with the business they have worked for it for years; potential customers may decide to stay with the firm since they know as long as the employees from the absorbed company are present; there will be a small risk and disruptions Delport, 2014).
- Slowing down rate of growth
The company increased its rate of growing by adding additional sales resources, approaching smaller geographic markets, and recruiting franchise partners. The Phase Two of the company required it to spend $ 3 million for additional investment. VoIP2 can be advised to reduce its rate of growth which at times causes adverse effects such as loss of control, increased employee and staff turnover, and putting the management under pressure (McLean, McGovern, & Davie, 2015). Slowing down the rate of growth would assist the firm to minimize costs, reduce complexity and gradual increase market shares. This is a Student Sample ORDER YOUR PAPER NOW
- Asking for a 90-day extension to take care of the cash flow problem
Negative cash flow for a short term is typical for firms. However, the situation becomes scary and difficult to change with time. For the VoIP2 Biz Inc, it has spent extreme funds for diversification of the market and investments which may not generate revenue within 90 days. Improving cash flow would mean collecting debts and receivables, increasing sales, reducing credit, and securing loans to provide finances (Faulkender, Flannery, Hankins, & Smith, 2012). However, it takes longer time for big businesses like the VoIP2 Biz Inc to change its cash flows. Therefore, the Board of Directors should drop this option since it may be ineffective.
- Reduce expenses
Costs incurred by firms include administration, selling and distribution, salaries, and wages, depreciation and utility expenses (Chaykovskaya, Grigoryeva, Duvanova, Pasynkova, & Chekudaev, 2015). The company incurred much expense in the implementation process of Phase Two where it recruited sales manager, project manager, and authorized distributors. More was incurred in advertising, campaigns and local seminars. The expenses were too much for the company to recover them especially with a competitive market and advancing technology. The directors can be advised to accept this option so as to improve the revenue due to reduced expenses.
- Other possibilities
The organization can consider alternatives so as to continue surviving. It can lessen the number of part-time staff and contractors which minimize the costs for salaries and wages. They can be employed when necessary. (Gholston, S. 2015) explains that it is better to rehire retired employees who know about the business practices. The directors can consider having virtual offices instead of building office premises. It may also be a good idea to involve employees in the decision-making process for they have much information to share which may be useful to the organization. Instead of the company spending so much on Phase Two plan, it could have used the funds to acquire its competitors who would diversify the sales and make it familiar to the public. This process could have made it more of a monopoly since the remaining competitors may not have much strength to overcome it.
VoIP2 Biz Inc was a company that worked and performed well in 2005. It implemented two plans, Phase One and Phase Two. It was able to accomplish the first one but due to high competition, the introduction of technology and financial challenges resulting from diseconomies of scale, it became difficult to operate, and the Board of Directors is considering different options to be applied. This is a Student Sample ORDER YOUR PAPER NOW
Vyas, A. K., Liu, A. S., Schmitt, D. A., Wood, J., Russell, L., Ramadurai, A., & Rauenbuehler, K. W. (2015). U.S. Patent No. 9,220,084. Washington, DC: U.S. Patent and Trademark Office.
Pierce, J. R., & Aguinis, H. (2013). The too-much-of-a-good-thing effect in management. Journal of Management, 39(2), 313-338.
Yücel, M. G., & Görener, A. (2016). Decision Making for Company Acquisition by ELECTRE Method. International Journal of Supply Chain Management, 5(1), 75-83.
Delport, P. (2014). Acquisition of shares in a holding company by its subsidiary. Journal of Contemporary Roman-Dutch Law, 77, 99-108.
McLean, T., McGovern, T., & Davie, S. (2015). Management accounting, engineering and the management of company growth: Clarke Chapman, 1864–1914. The British Accounting Review, 47(2), 177-190.
Faulkender, M., Flannery, M. J., Hankins, K. W., & Smith, J. M. (2012). Cash flows and leverage adjustments. Journal of Financial Economics, 103(3), 632-646.
Chaykovskaya, L. N., Grigoryeva, V. V., Duvanova, J. N., Pasynkova, O. M., & Chekudaev, K. V. (2015). Classification and Evaluation of Internal Transaction Expenses Emerging during Conduct of Managerial Activities. Mediterranean Journal of Social Sciences, 6(6 S4), 376.
Gholston, S. (2015). Developing Strategies for Hiring Managers: A Case Study on Hiring Employees.