Table of Contents
The case study that considers business of the big gas company is going to be considered in this paper. This company is called Fauquier Gas Company. The company faces some problems in business nowadays. The task of the paper is to provide possible solutions to these problems. Taking it into account, the paper is going to have the following structure: introduction, analysis of the problems, discussion, conclusions and recommendations. The following questions should be answered in this paper:
What the essence of the problem is?
What are the possible solutions to these problems?
What are alternative solutions?
Some background information about the company under consideration should be provided for the beginning. The company is among the largest in the region and in the country, in general. It serves in a changing area, where agricultural character has been transformed into residential and commercial. Respectively demand on gas has increased because of such transition. It has forced the company to plan implementation of new lines. 10 miles of new gas lines are planned for the next year. As a result, the company is now looking for the supplier that can handle such a difficult task.
The supply department of the company is under the control of Mr. Murphy. As a result, he is a person responsible for success of a new project. Respectively, he asked project managers to provide requests for new materials and works. He has received some requests and specifications. However, some specifications have changed from that time. New purchase requests have been not got by Mr. Murphy. The main question of this case study is to present all the possible economic consequences of such delays in purchase requests and changes in specifications.
Discussion and analysis
The essence of the problem can be described via the following words. The company is planning some expansion. This expansion is caused by the growing demand on the company’s services. Of course, it is a good sign for the company, since it provides growing sales, financial results, and higher benefits for employees, etc.
In order to make this expansion possible, the company has to construct 10 miles of new gas lines. First of all, the company should find a reliable supplier. Second of all, this supplier should be provided with all required facts about the future construction. Alas, here are some problems. Purchase request has not yet been received by responsible department. Moreover, technical specifications are constantly changing. As a result, this department and supplier are working in the conditions of lack of very important information.
Such lack of important information may lead to significant negative economic and social consequences. Among them the following ones may be pointed out:
The company may not meet deadlines of construction. Changes in specifications lead to delays in supplies. Such delays will finally result in falling to meet the terms of construction. According to the different calculations, such delays may reach from 3 to 6 months;
Second of all, financial losses may be very high because of such situation. It is very difficult to plan a budget in the changing conditions. The project may be underinvested or overinvested. Also, losses because of the delays in construction also should not be forgotten;
Delays in construction are able to affect well-being of the company’s customers. It is not appropriate for the company, which main goal is to make life of people better. Moreover, it is mission of the company. Every business should do anything possible to reach its mission;
The final consequence is associated with the previous ones. Delays, financial losses, complaints of customers may significantly spoil the company’s corporate image. For example, it may loose trust of its partners. Also, regulative bodies may try to influence work of the company, since its performance is socially important.
As it can been seen, the situation under consideration may lead to significant social and economic consequences. It is natural that these consequences will be negative for the company’s corporate image and financial performance. Respectively, the company should look for the ways to prevent such situation or minimize risks. Among the ways of prevention and minimization the following ones may be pointed out:
The company has to develop different scenarios of situation for the different specifications. In fact, there should be three scenarios – optimistic, realistic and pessimistic. Every scenario should account different specifications of pipes and different delays in construction. Financing of each scenario should be planned. The company will be ready for any situation in such case. The main reason for it will be that its business strategy will be really flexible;
Second of all, responsible department should do everything possible to reach purchase requests and specifications as soon as possible. They are responsible for the final results. Their well-being depends on these results. That is why they should follow active position in this case. They have to contact with suppliers, project managers and even top-managers in order to finish the project’s preparations. It would be reasonable to conduct regular meeting of the mentioned people, where they can discuss and formulate a single strategy;
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Finally, the responsible department should find optimal construction solutions. For example, they should develop a project, where almost all the possible specifications of pipes would be appropriate. Of course, it is really difficult. However, there is nothing impossible in the era of technological growth and development. Probably, external professionals should be invited to solve the problem.
All the mentioned solutions are going to minimize the losses from the situation under consideration. They can even prevent delays and financial losses. The main precondition is to implement them on time.
Conclusions and recommendations
Thus, the gas company is going to expand its performance, because of the growing demand on its services. That is why it is forced to construct 10 miles of new pipes. However, there is a problem. There are not purchase requests from project managers. Also, specifications of pipes are constantly changing. As a result, the responsible department is not able to finish preparation.
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Such delays and changes may lead to significant social and economic problems, which were mentioned in this paper. The problem is strengthened by the fact that the company performs in socially important area. Therefore, it may conquer attention of regulative bodies. The task of this study was to propose possible solutions to the problem. Three possible solutions were proposed: flexible strategy with three scenarios; active position of supply department; technological innovations that are able to minimize influence of the changes of pipes’ specifications.
Probably the best solution would be flexible strategy. It is a sort of diversification, where the company will be ready to all the possible situations. It requires a lot of work, but less financial resources. It is not only going to solve the problem under consideration, but also to improve the company’s level of stability and make it ready to the similar situation in the future. The main and only precondition is that this strategy should be developed and implemented bassoon as possible. Time is a very valuable sources in the business, especially, in the modern business conditions, which are characterized with economic uncertainty and instability, because of the ongoing difficult global financial crisis.