Golden Star Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction:

Golden Star is a pram manufacturer company and is operating for over 100 years owned by a family which is proud of its traditional products. The traditional product of Golden Star has been used by many generations of the parents who have trust on the Golden Star. The current situation of the Golden Star is that it has the value of over 10 million but they are still making loss of $2 million and the managing director has asked for the consultancy services. The main assumptions of Managing directors are that the issue is related to the sales channel and production efficiency.

Challenging Assumptions:

Mr. X assumptions about the production efficiency and the low margins by the retailers are the short term issues causing loss. The first assumption about the lack of efficiency in production raises a question, if there is enough demand for the product even if the production efficiency is increased? More production will require more labor cost which will increase the expenses while company is already making loss, even if the production is increased low margins from the retailers won’t benefit and solve the problems for the company. Golden Star needs to figure out through research about the demand of its products in the market so it can take the steps to increase its efficiency of production.

Another question challenging the assumption is by comparing the current production rate with the past performance when company was making profits. If the company in the past has been making profits with the same production efficiency and the situation has changed recently that gives more hints of lesser margins from the retailers. A comparison between the current and margins in past will also help in recognizing the real problems behind the company’s failure to earn profits on its operations.

Other questions arising from the assumptions are that the labor working for the Golden Star might be only trained to make the old traditional products of the company and they might be taking more time in making the new products which are launched recently. Lack of expertise in making new products can also be the reason behind the failure of the new products of the company. In order to neutralize the expected loss Mr. X must ensure firstly the probability of loss. Company Benchmark must be changed as well as the level of advertisement must be upgraded.

Secondly the initiative of carrying down the production of new products which cannot generate profit should be taken. Comparatively the capital involve in those products generating no profit is to be transferred to the old products which consequently increases the profit margin. The traditional products of the company are performing well though the new products are not, the short term solution is to divide the results of all the products and stop the production of the products which are making loss, it will help in increasing the production efficiency and also make more profit making products in the time that will be saved by not making the loss making products.

Another factor of labor facilitation cannot be ruled out. They must be given enough encouragement by means of special packages and work allowances that resembles the flow of profit and growth management in a short term way. Training for the labor is also a very important factor. Labor might not be trained to develop the new products and are only experts in the traditional prams which resulted in the low quality products eventually rejected by the consumers which can also affect the brand name of Golden Star.Golden Star should consider the alternatives of the sales channel, low margins from the retailers has affected the performance of the company, searching for other options like, opening its own retail stores in main selling areas. Selling through the web, experience sales teams which manage to sign more beneficial contracts with the retailers.Golden Star Case Solution

Other Issues faced by Golden Star:

Golden Star is a traditional company and might have old management which is unaware of modern way optimization of business like incorporating technological and innovational advantages in the business. The business have changed the way they operate to stay relevant in the markets, we have seen businesses like Nokia, Blackberry which were so big at one time that no one imagined that these companies can fall but failure to innovate the products and foreseeing the competition has the ability to put a full stop in front of the company........................

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