Halloran Metals Case Study Solution
The company catered every customer separately,which eliminated the needs of fulfilling a particular truck order in order to get the product delivered. This increased the logistic as well as the transportation cost of the company, but on the other hand it reduced the lead time for end-users (consumers).
Due to the high customization that accounted for a high pricing strategy; the company was unable to compete with its competitors on the basis of pricing. As an addition to which, by limiting the number of customers, Halloran also gave a chance to the competitors to grow enormously in comparison to Halloran itself, which is why the competitors were capturing more market share than Halloran.
Although the particular strategy allowed the company to expand its market opportunity and charge high prices,however, but the rising competition was hindering the chances that the company had for its success. Furthermore, the web structure of the company’s operations had a potential to restrict its profitability to a limited scale leading to hindrance in the operational efficiency of the company in such a competitive market.
Threats:
The high inventory ratio of each warehouse led to the high maintenance costs for a longer period of time, reducing the profit ratios in the long run as compared to the competitors’.
The company catered to each customer separately, which increased the logistic cost as well as the transportation cost of the company. This was favorable for the competitors for increasing their market share as compared to the company.
By limiting the number of customers; Halloran also allowed the competitors to grow enormously in comparison to itself, which enabled the competitors to capture more market share than Halloran.
PESTEL Analysis:
Political Factors:
The job of Non-Government Organization, Civil Society and Protest Groups
The nation has an energetic common social network, and Halloran should manufacture spans with them and search out zones of co-activities. Common society gatherings are persuasive in approach making as well as in building a general public wide account.
Likelihood of Entering into an Armed Conflict
From the data in the Halloran Metals contextual analysis, I don't think there is a probability of nation going into an equipped clash with a neighboring nation.
Democracy and Other Democratic Institutions
According to Roy D. Shapiro, the law based foundations should have been reinforced further with the goal of the business, for example: Halloran can flourish in an open, straightforward and stable world of politics. Fortifying of majority rule foundation will cultivate more prominent straightforwardness and diminish the degree of defilement in the nation.
Segregation of Political Responsibilities between Different Government Agencies
There are various government organizations that decrease the danger of overpowering weight by one office. Be that as it may, on the other side it does build both the time as well as the cost of working together and getting affirmations and clearances.
Unrest inside the Country and Chances of Civil Unrest
We don't believe that Halloran Choices' business tasks are confronting any perils from any sort of common agitation or inward activist activities in the nation.
The transition of Government and Changes in Policy
There is a consistency in the approach making, starting with one government then onto the next. Besides government from all gatherings cling to the bargains made by the past government.
International Trade and Other Treaties
The nation has a decent record of clinging to universal settlements it has finished with different worldwide accomplices. The administration of each gathering has clung to the settlements done by the past governments, so there is a consistency in both the principle of law and guidelines.
Judiciary Independence
In the matter of business and business choices, legal executive of the nation is autonomous to an enormous degree. Business does confront the issue when the contention is between open intrigue and exclusive innovation like the decision in South Africa where government and legal executive permitted conventional AIDS to tranquilize regardless of licenses of worldwide organizations.
Economic Factors:
Economic factors such as a shift in demand will be observed when the economic conditions are good for the country. When a consumer’s disposable income will increase; it will also increase the demand for the company. Along with it, an increase in employment rate and GDP rate will also increase the demand for the items related to steels, etc.
Social Factors:
When the immigration policies and the level of immigrants get effected due to various circumstances; it will also affect the demand of the industry because the level of immigrants and immigration policies have a direct relation with the demand of the company’s products. Along with it, the higher level of social concerns in society will also result from higher consumer activism and pressure from non-governmental organizations, such as NGOs.
Technological Factors:
The change in the trend of cost of productions in the economy will lead to the change in total demand of the product, because consumers move towards those products from which they receive more benefits at lower costs, due to the implementation of change in technology to produce it.
Environmental Factors:
A decrease in the national carbon emission rate is much required by the company as the consumers have started to demand the products that emits less carbon in the environment, which can shift the demand curve of the company’s product from upward towards downfall.
Legal Factors:
The health and safety laws, data protection laws, transparency in the judicial system and process and other laws might affect the consumers’ choices, needs and wants to make the perfect decision of purchases. If the company’s process is found to be consistent and transparent than Halloran consumers’ will not shift towards its competitors.
Action Plan:
In order to solve the problem; there are 5 available action plans, which are:
- Full truck policy.
- Only one warehouse.
- Bulk purchases.
- Serving just high volume customers.
- And, the implementations of Just in Time (JIT) system.
Full Truck Policy:
Halloran should deliver the products when the trucks are fully loaded with it. This policy will reduce the transportation cost which is currently 30 % of the total operating cost of the company. Because the delivery of fully loaded trucks will reduce the cost of delivery of goods as the total delivery cost will be divided into a larger number of products, which ultimately gives the lower results.
Only One Warehouse:
The second available action plan is to hold only one warehouse as its competitor Allied Steel and Aluminum were also using single warehouses. By using this action plan, Halloran could reduce the total operating cost by reducing the warehouse rents from 3016 thousand dollars to 431 thousand dollars, which can be seen in the Exhibit 1 of the document. This action plan is interrelated with the action plan of serving just high volume customers.
Bulk Purchases:
The exhibit 2 of the document has shown the calculations of the total available discount that the company can get by ordering bulk quantities of items. The seller is offering a discount of $ 35 per ton on the orders of at least 100 tons at once. Here, the company can purchase the items and stock them into one warehouse, and can sell them to others company’s according to the available demands described in the case.
Serve Just High Volume Customers:
In order to reduce the total operating cost, the company should start to serve just high volume customers who order the loaded trucks. These high volume customers will help to maintain the company’s policy of delivering the products within 24 hours, which would help in reducing and saving the transportation cost for the company. It is the interrelated action plan with a fully loaded truck plan.
Just in Time (JIT) System:
Just in time inventory system can be used to increase the efficiency of the company by decreasing the waste from the company. JIT refers to the inventory management by relying upon all of its demand to its supplier, and removing all the inventory stocks form its warehouses. JIT system will increase the efficiency of the company and remove the item handling and safety issues and risks from the company. That is why it is now being implemented by most companies just to increase their efficiencies
Exhibit 1: Action Plan of Only One Warehouse
| Total Rental Cost for Warehouses | 3,016,000 |
| Rental Cost for one Warehouse | 430,857 |
| Total Cost Saved | 2,585,143 |
Exhibit 2: Action Plan of Bulk Purchases
| Discount per Ton | $ 35 | ||
| 1 ton | = | 2,000 | Pounds |
| Concord Could Purchase | 220,000 | Pounds | |
| Lynn Could Purchase | 235,000 | Pounds | |
| Number of tons to be purchased (Concord) | 110 | Tons | |
| Number of tons to be purchased (Lynn) | 118 | Tons | |
| Available Discounts | $ 7,963 |
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