Catapult Communication Ltd. (Catapult) is an Internet Service Providers (ISPs) and has entered the mobile market by offering mobile service and broadband. Catapult is based in Grey Lynn, Auckland and it was founded in 2013. In the past decade, Catapult was rapidly taken market share from its competitors by focusing low-cost broadband packages. However, in the recent years, Catapult has experienced a major quarterly loss for the first time in almost five years due to some issues related to human resources and strategic management. Therefore, Sarah Westerly needs to understand that human resource management process involves attracting, developing and maintaining a quality workforce. HRM process also ensures the organization’s mission can be achieved by implementing strategies and sustain competitive advantage. There are five steps in strategic HR planning. Firstly, Sarah needs to review the organization’s mission and strategies. Secondly, review human resource objectives to satisfy the needs of people within the organization. Third step is assessing the current human resource to figure problems occur in HR. Next, forecast human resource needs to solve the problems. Lastly, develop and implement human resource plans to avoid personnel shortage such as high rate of staff turnover. Meanwhile, the strategic management process involves strategy formulation and strategy implementation to achieve a sustainable competitive advantage. Strategy formulation is about creating a strategy by identifying, analyzing and accessing existing strategies while strategy implementation about allocate the resources and put the strategies into action through practices along with evaluating the results (Schermerhorn et al., 2014). Besides, a deep knowledge of the organization and competitive environment are required in order to have successful strategies. This essay will outline issue in the Catapult, which is staffing issue and what Sarah needs to consider when dealing with these problems. This essay also will discuss the solution to the strategic management by applying Porter’s Five Forces Analysis framework.
Strategic Management is how the organization managed its resources in order to achieve its objectives and mission. Strategic management also includes internal and external communication practices along with making sure that the organization meets its targets (Radcliffe, n.d.). In addition, strategic management involves continuous planning, monitoring, analyzing the internal and external environment and also formulating strategies through the results (Rouse, 2014).
Sarah has acknowledged some external issues that affecting Catapult after she addressing internal issues in Catapult. This is due to the market conditions have changed and resulting Catapult in a strong competition among the competitors. Hence, in order to re-establish Catapult’s competitive advantage, Sarah needs to gather the information on each of Porter’s five forces and use the results to formulate the strategies for Catapult.
Based on Sarah’s observation, threat of new entry is very weak. This can be seen when weak barriers for new entrants has caused new entrants can easily to penetrate the market (Jurevicius, 2013). This result the broadband market had become saturated and as a drawback, the overall prices have fallen due to other providers offer the same price point even though Catapult has offered the cheapest packages. Next, the threat of substitutes is strong. The recent reliability, slow installations and network outages have become the biggest downside to Catapult as Catapult unable to attract and retain new customers. As a consequence, buyer switch to another provider that has a better offer and network performance (Jurevicius, 2013).
In addition, bargaining power of buyer is very strong due to the significant increase in usage of broadband and mobile. The demand for high-definition video streaming and network capacity by the consumers also have risen rapidly. In the meantime, the buyers are price sensitive. This is due to Catapult rents network capacity from Spark and directly cause an increased in cost. Thus, they tend to choose the alternative that offers a better network capacity and low price for broadband and mobile (Jurevicius, 2013).
The suppliers have substantial power due to low fibre industry. This allows suppliers to have a strong bargaining power to sell the fibre with a higher price. The suppliers tend to have more power when there is a few of them. This also makes them able to control the price and withhold the quantities as Catapult lacks alternatives for fibre connection (Martin, 2014).
Lastly, rivalry among existing competitors is strong. This is because there are many providers that offer same packages as Catapult. Thus, Catapult has to compete aggressively for a market share. This also shows that the customers have the option to change to a different provider easily.
On the other hand, Catapult requires further analysis to be done such as SWOT analysis as Porter’s five forces has its limitations, which are only for analyzing Catapult’s structure and to formulate Catapult’s strategy. By using SWOT analysis, Sarah able to create a vision that can be obtained from an internal analysis of Catapult’s strength and weakness and external analysis opportunities and threats (Jurevicius, 2013). One of the main difference between Catapult and other competitors is its exclusively based operation in New Zealand as Catapult does not outsource any business to overseas. Catapult also one of New Zealand’s fastest-growing Internet Service Providers (ISPs) as they managed to take share market. This shows that Catapult was a considerable competitive advantage over the last decade. Yet some negative aspects have brought drawbacks to the Catapult which are Catapult does not has a physical store to connect with the customers and also lack communication between Sales Team and Technical Team. In order to gain the competitive advantage back, Catapult needs to identify the factors and the solution of these problems.
Next, the opportunities of Catapult lie in partnership with online video streaming services such as Netflix and a major electronics or big-box retailer. This is because there is growing in consumer demand for high-definition video streaming and usage of mobile data. Further, it will be an advantage for Catapult if Catapult combines broadband and mobile package with the aim there will be fewer consumers change providers and Catapult able to sustain the profitability in the future. With all above, saturated broadband market due to new entrants has become a threat to Catapult. This is because it will create tough competition to Catapult as the competitors also offer the same package which is unlimited broadband packages. Consequently, Catapult facing a great deal of competitive rivalry in the broadband market.
Catapult needs to do a lot of improvements regarding limited resources and employees performance to restore the competitive advantage. Limited resources can be overcome by outsourcing some or all of Catapult’s sales team to an offshore call center in India, Thailand or Philippine so that can save cost and solve some immediate problems. Additionally, Sarah is certain that employees performance and Catapult’s productivity depends on employees satisfaction. This has to be done by improving on incentive and commission system as well as sales training. Moreover, the productivity of Catapult also affected by motivational issues in the Technical Team since the staff turnover is high.
In spite of this, there are things Sarah needs to be concerned in creating the competitive advantage. First, she needs to estimate the budget that she will be needed to improve training sales team, invest in hardware and hire more staff. This is because, in the past years, Catapult has made a loss and has a poor financial performance resulting the board is unwilling to approve large expenditure. Furthermore, considering the offshoring of the sales team, Sarah needs to know that it involves a diverse culture among staff and customers. The employees also required to learn and interact effectively with customers from different cultures. Lastly, in order to adopt competitive advantage, the employees need to adapt to the changes. According to Sarah, she prepared to replace senior staff members if they are reluctant to accept the changes.
Human Resource Management is a formal term used for the management of people within the organization. Purposely, HRM takes full advantage of the productivity of an organization by enhancing efficiency of its employees. It is HRM responsibility to guide and develop the employees toward the organization’s goals.
Catapult should have the right people that are available to do the work in order to achieve and sustain competitive advantage. Therefore, HRM process has been applied to make sure the effectiveness of accomplishment in the Catapult’s mission (Schermerhorn et al., 2014). In HRM, it consists of practices that able to help Catapult to deal with various phases of employment including planning, recruitment and selection. This is for improving the satisfaction level of employees and maximize the performance by providing them a positive work environment (S.Kleiman, 2006). Thus, in order to accomplish the goals and encourage the productivity of the employees, HRM has to offer incentives to motivate them (“Motivation Incentives – Incentives to motivate employees”, n.d.).
According to Karunaratne (2016), Motivation Theory explains factors of goal-directed behavior can be affected and influences by using the approaches in HRM in order to enhance the commitment of the employees. Nevertheless, the incentive system has become a problem in Catapult. The employees only receive a small amount of commission if some members of the team performed well. This is because the commission is paid based on individual performance while taking their individual target and the performance of the rest of the team into consideration. Hence, the employees will feel dishearten to increase their productivity as they only receive a small reward although they have achieved their sales target. Other than a monetary incentive, there are some non-monetary incentives which able to satisfy the needs of the employees such as praise or recognition. Sometimes praises are more effective compared other incentives as they respond more to praises and will feel motivated to try their best to achieve the goals (“Motivation Incentives – Incentives to motivate employees”, n.d.). Nonetheless, Barbara Thompson who is a Sales Manager has referred the top four members that always achieve target sales as the “Fab Four” and praise them in a staff meeting. As a result, other employees have become demotivated as they feel they are unable to compete with the “Fab Four” and do not want working hard to achieve their target sales.
Next, research suggests that performance appraisal always took poorly or inappropriate by the organization. Performance appraisal is a professional review opportunity which enables a group of coworkers to give feedback on an employee’s performance (M. Heathfield, 2016). In this approach, superiors, subordinates, peers and even internal and external customers have involved in the appraisal of the employee’s performance (Schermerhorn et al., 2014). Based on the case study, Barbara has spent most of her time by doing work roster instead of reviewing the call and providing feedback to the Sales Team. She only gives a minimal feedback and makes notes for their monthly review. This makes Sarah worried as she afraid that this is a factor for the team is underperforming for weeks until the issue is directed. Furthermore, the late notice and split shifts as Barbara spent too much time on working schedule has caused a low morale among the employees. This is because they have to work more than 12 hours on a workday. As a consequence, this leads to frustration of the employees and may cause the high rate of staff absenteeism and turnover (“Motivation Incentives – Incentives to motivate employees”, n.d.).
To conclude, strategic management and human resource management are vital to the organization because allowing an organization to work efficiently and analyze internal and external problems. Sarah believed with the right approach, Catapult able to sustain the competitive advantage. However, there are few things that need to be considered for building competitive advantage such as cultural diversity, forecast a budget and adaptation to the changes. Besides, Sarah Westerly also played a great role in Catapult and has well contributed her expertise as General Manager since she approaches the problems by undergoing the same training and working directly as a member of each team. If Sarah focusing on establishing a sustainable competitive advantage through improving human resource management and strategic management, Catapult able to gain its profitability and ensure a strong future for the company.