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Introduction

The establishment of a company by either an individual or a group is to meet the goals set. Entrepreneurs start businesses by investing on what they have while assuming the risks involved. They do not gamble but rather take calculated risks, as their main agenda is to minimize on input while maximizing on output. However, not all companies become so successful as to achieve the target of its establishment. Crisis typically affects the operations and functionality of most companies at varying capacities.

The managers and stakeholders have the responsibility of looking for ways of solving such crisis. To address the problem that this company is facing, we have contacted independent research, and we have come up with different strategies that are likely to address the problem. For the sake of the company, everyone who is related to it should participate in the implementation of the stated strategies.

Situation

The level of debt that this company incurs has been enormous. The cause of this debt was mainly caused by the borrowing of $350 billion from the America Bank, JP Morgan Chase and Wells Fargo. For the last three years, the debt and its interest had amounted to over $500 billion. The amount of income the company obtained during that period amounted to $250 billion. These debts have a direct impact on the balance sheet. Impacts on the balance sheet lead to the complex problems the company is facing.

On closer observation of operations in the company reveals that the amount of resource waste is very high. Improper utilization of labor and bills for water and power were leading, by example. The amount of money spent on miscellaneous activities was considerably higher. Another observation made was that the company was overpaying its workers. The amount of salary each employee gets was much higher compared to the amount earned be employees of other companies, working at the same level.

Background of the problem

Financial resources play a significant role in the survival and growth of a business. When a company is unable to meet its financial obligations, then its operation is paralyzed, leading to a reduction of its sales and a risk of being bankrupt. This company made a mistake by borrowing a large amount of money without considering its repayment power. Also, the company never conducted job evaluations to determine the number of salaries it pays its employees. There is a poor control of outflow of cash from the accounts department creating a window for withdrawal of a large amount of money for miscellaneous activity. (Capron & Mitchell, 2012)

Complex problems

Financial constraints- the amount of debt that the company accumulated within the three year period and the amount of money it uses in its daily operation are abnormally high. These two have led to the financial crisis it is currently experiencing.

Product quality- the amount of money the company is using in trying to clear its debts has led to the company buying cheaper inputs, leading to the production of poor quality goods. The poor quality of products results in a reduction of sales as customers preferences shift to higher quality goods.

Human resource- the net amount of money available in the company is small, leading to delay in the payment of its employees, demoralizing the workers leading to the little amount of output (Gerhart, Kochan & Barocci, 1986).

Corporate issues- the level of debt the company is in has scared some stakeholders, and this has resulted in them selling their shares, leading to the instability of the price of its products in the market, further reducing its sales.

Environmental issues- the cost of treatment of waste is high. Due to its financial situation the company is unable to meet the cost of treating its waste. The release of these wastes into the environment without treatment is an environmental concern to everybody.

Public relations- media coverage of the state of finance of the company has painted a negative picture of the company, causing reduction sales as the public, who are the customers; do not want to be associated with the company.

Objectives

1. To ensure an increase of sales the company makes

2. To ensure reduction of debt of the company

3. To improve the public perception of the company

4. To develop transformative products and services that meet the changing needs and demand of customers.

5. To transform lives through business innovation.

6. To maintain a productive, safe and conducive working environment.

7. To promote operations that the company environment can sustain.

8. Ensure the maintenance functionality of the company through continuous regulation of conformity and employment.

Creative alternatives

Debt is responsible for most of the complex problems that it is facing. But these debts have to be paid fully. There should be a reduction of interest incurred. The company must, therefore, adopt strategies aimed at improving its financial status.

First the company should consider retrenching some of its employees. The number of employees in the company is more than twice the required number, making the company’s labor cost higher. There should be a reduction in the amount payable as salaries because the amount is abnormally high.

Secondly, the company should minimize waste. The quantity of water running to waste is very high. Also, the amount of power waste has resulted in large bills. By controlling the utilities of water and electricity, the amount spent on paying bills will be lowered.

Lastly, the company must reduce its expenditure on miscellaneous activities. For example, the large sum of money used in purchasing soft drinks and entertainment by the company. By reducing this cost, on miscellaneous activities, the company can save some money to be used for more important activities like treatment of waste.

Evaluation of alternatives

Average monthly expenditure by Verizon Company

Consequences

Implementing the three strategies will make the company reduce its expenditure to up to 45%. For a company undergoing financial difficulties like Verizon, such a reduction is highly welcome. The company will be able to pay its debt and also the employees of the company will be paid on time.

Risk

Retrenching of employees is a crucial matter in the running of the organization. The remaining employees will likely side with their colleagues and paralyze the operation of the company. Also by reducing the amount of salaries of workers is likely to demoralize them leading to a reduction in the level of output. When the company undergoes complex difficulties as set above, the strategies that should be adopted should be geared towards the revival of its activities. Though some action can be painful, they are worth taking.

Recommendation

In the future, the company should avoid actions that are likely to lead to a financial crisis. The company should try as much as possible to reduce its expenditure. For now, the company should embark on the full implementation of all the given strategies.

Conclusion

In conclusion, crises are common to many companies. The way each company handles such crisis is the difference between successful companies after the crisis and unsuccessful companies after the crisis. The strategies proposed in this report aim at making this company a success.

References:

Capron, L., & Mitchell, W. (2012). Build, borrow, or buy. Boston: Harvard Business Review Press.

Gerhart, P., Kochan, T., & Barocci, T. (1986). Human Resource Management and Industrial Relations: Text, Readings, and Cases. Industrial And Labor Relations Review, 39(3), 465. http://dx.doi.org/10.2307/2524121