Every company strives to increase revenue and stabilize or decrease operating expenses. The Yellow Book once had a steady revenue stream, which coincided with the operating expenses. The steady rise in sales and revenues also means an increase in production while maintaining an equal level of customer service. This displays several archetypes, including limits to growth. The Yellow Book will continue to experience growth, however if deadlines are not met and mistakes are made in advertising, this will cause the direct customer to be influenced negatively, and ultimately reduce revenues with loss of customers. In order to maintain balance, production must be equal to revenue and customer service should be stable.
Growth and underinvestment is an archetype that The Yellow Book is currently moving towards. The graphic designers and production teams are being stretched beyond their limits. While they are currently working hard to keep up production with demands, the overworked employees will not be able to maintain the motivation and morale needed with sales gradually on the rise. Advertising is not an area where performance standards can be lowered. If a 95% satisfaction rate is the current standard and the organization decides to decrease to 85%, there is a strong change that the 15% of unhappy customers will either not renew their ads, or could be granted free advertising, which will negatively affect revenue.
The diagram below shows how growth and underinvestment and increase in demand causes a need to reinvest in production to stabilize customer satisfaction. The capabilities and core competencies give The Yellow Book a competitive advantage. The strategy it needs to adapt is a long term plan to maintain service levels year after year, not just book after book. A customer may give The Yellow Book a second chance if they experience an error, but it is doubtful there will be more chances and advertisers will be lost.
Please join StudyMode to read the full document