Global outsourcing of apparel manufacturing and human resource exploitation
Neostorm case analysis
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2. Despite, being paid wages above the national industrial average and incentives, employees lack the trust in the company & this has enforced poaching of the employees by other corporations
3. Also, one of the company’s Senior official was accused of insider trading which has caused a panic in the market
4. The market share of Neostorm has reduced from an all time high of 40% to mere 6%
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6. Also, bonuses can be tied up with the offer to award any employee who can come up with ideas for better manufacturing process, considering their only low grade workers.
7. Address the workers and state to them how the Company has taken good care of her employees in the past by paying wages above the nation industrial average and try explaining to them how the recent problems have caused a delay in delivery of their wages and assure them that their dues will be paid off and in the course of time new HR policies will be implemented.
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9. Luxury yacht marketing is a lot like Luxury House marketing. Besides, you never really need too much marketing spend for the Elite. Neostorm Ltd may invest in some talented personel / Brokers to carry out the marketing or smooth talk the Elite into buying their product. Hence, investing in the sales department is substantially important for Neostorm’s revival.
10. Appointing a Brand Ambassador would help market the product too.-Neostorm Ltd could also introduce environment-friendly ships, considering the Rich-class turning all so very eco-conscious today. Investments can be made on Designers, Builders and Equipment manufacturers developing new ship technologies.<br />-Huge investment is required in the Sales Department since high-end niche segments like Luxury Yacht’s, Luxury Houses etc. are highly dependent on the Brokers/ Sales team. Schemes wherein old and experienced Human Resources benefit can be implemented and an offer to rehire poached employees can be put out. This would help recoup them and give the competitors a set-back. Retention strategy could include long-term stock options.<br />-Neostorm can design and market/talk about their yachts having reduced fossil fuel based consumption, minimising CO 2 , NOx, SOx emissions, having increased machinery efficiency, energy saving devices, · alternative propulsion methods: fuel cell, solar, wave, wind, LNG, hydrogen reducing the environmental impact caused. This would promote Eco-Tourism as well.<br />-Firm could be opened up to FDI’s (Foreign Direct Investment). This could improve Quality, Awareness and Substantial investment.<br />-Considering the insider trading issue, Neostorm could hold a Press Conference. A public apology with an assurance of thorough investigation would be pertinent. Via the Press Conference, Neostorm’s Stakeholders could be reassured that the ownership of the Company will not change hands & hence gain their trust. (Considering insider trading happens usually in the face of a corporate takeover)<br />All these if implemented rightly would help in the overall Neostorm Ltd overhaul & revival.<br />DOES MY STRATEGY ENSURE BREAK EVEN WITHIN 6 QUARTERS? IF YES, HOW?<br />The revival strategy will have many aspects. A wide array of investments are going to be implemented for the Neostorm Ltd overhaul. A proportion of the reserves is going to be spent on clearing the due wages of the labourers so that the production can be re-started. Restarting production is a must to achieve breakeven.<br />Also, investments are going to be made on research and technology, on the sales department and recruitment of top personel & also on the brand ambassador.<br />Neostorm has been losing market share since the past 2 years and now has a mere market share of 6%. It has been facing huge losses. This could be because of over-production of yachts & submersible vessels. To avoid this, production will be controlled & be made order-based. The tender will have an advance payment of 30% which can be utilized to carry out the manufacturing cost.<br />The average price of Yachts in India is Rs. 2,82,00,000 /- <br />The company should cut down on overproduction. This will reduce the cost too and breaking even will be easier.<br />With companies revival, within 3 quarters, production can be increased. This way the companies market share, thus Neostorm’s revenue can be raised.<br />Considering these, if the investments fall in place, and the market share is regained as planned, there will be ensured break even.<br />________________________________________________________________<br />