The company specializes in the manufacturing, sales, installation, maintenance, and servicing of technological equipment. It has been in the market since 1969, operating under new management since 1997, and is currently a family-owned business.
INITIAL SITUATION
The father serves as the CEO, while his sons hold the positions of Sales Director, Operations Director, and HR Director. The company is 100% privately owned. Since 2014, the company has been undergoing a generational transition, and since 2016, there has been a significant decline in revenue and profit. The company identified the generational transition as the cause of the revenue decline, often resulting in conflicting opinions on the company’s operations between the father and his sons.
SOLUTION
Despite differing opinions on the company’s development, the Interim Manager identified the cause of the revenue decline as the adoption of the Public Procurement Act (2015). Due to the criterion of the lowest device price, there was a drop in revenue despite the company offering the best price-quality ratio. Competitors were offering underpriced devices, compensating for the difference with high fees for installation, service, and maintenance. These competitors were also purchasing lower-quality devices with shorter lifespans.
The Interim Manager suggested that the company request the contracting authority to evaluate offers based on economic advantage (§44, paragraph 3, letter a of Act No. 345/2015 Coll. on Public Procurement), rather than the lowest price (§44, paragraph 3, letter c). The Interim Manager also proposed that the company offer a “lifetime warranty” on their devices. Customers could pay for an annual warranty, and if it wasn’t used for repairs, it could be applied as a voucher for purchasing new equipment or other services.
CONCLUSION
Despite the COVID-19 crisis, the company continues to generate profit without state support. The Interim Manager developed a financial crisis plan for the company immediately after the lockdown began. He conducted a needs analysis to determine the required resources, an analysis of available resources to cover those needs, and an analysis of opportunities that emerged during the crisis. After presenting the plan to the company’s employees, they were willing to provide the company with a loan (which, fortunately, was not needed).
Author is our Interim HR Manager, a member of TOP HEADS network