Catapult Communications Ltd. is an Internet Service Provider (ISP) based in Auckland, New Zealand that supplies domestic broadband Internet services. Despite a good start, the business has encountered several problems internally such as the inability of the Sales and Technical team to deliver their performance target while externally, the company is currently facing massive competition from other firms within the industry. It is noted that other broadband companies have diverted their strategy to speed and price rather than just the latter itself, which threatens Catapult’s profits and viability. Hence, this essay will depict the strategic position of Catapult in developing a sustainable competitive advantage and recommend suitable strategies regarding the company’s human resource management to better approach the present staffing issues.
2.0 HUMAN RESOURCE MANAGEMENT
Human resource management (HRM) is described as an organizational structure designed to maximize employee’s performance in delivering services within the scope of the business’s strategy, mission and objectives (Schermerhon et al., 2014). Firstly, the HRM process involves attracting quality workforce that emphasizes on Human Resource planning, recruitment and selection of the workforce to create energetic and committed employees. Secondly, the process also includes the development of the workforce, which focuses on employee orientation, training and career planning development. Thirdly, the process also highlights the sustainability of the quality of employee through retention and turnover, performance appreciation, remunerations and work benefits.
The present HRM at Catapult is rather ineffective and inefficient as stated by the case study. This hypothesis is synthesized from skewed organizational objectives, missions and goals. Firstly, the current workforce is lacking in numbers and the company resort to heavily pressurizing present personnel to multi task such as Alrick Meier who manages the Technical, Network and Installation team. It is observed that the primary reason behind this is mainly on the decrease of quality and quantity of fresh hire. Next, the firm is not putting in an effort to further develop the quality of the workforce as it is noted that the personnel received little feedback regarding their working performance. Thirdly, the quality issue roots even further as remuneration and reward scheme is not parallel to the workload received by the Tech Team.
2.1 STRATEGIC DIRECTIONS
Strategic direction is defined as a course of action that includes the central forces that drive an organization towards its envisioned objectives, missions and goals (Kokemuller, 2017). The strategic direction or better known as strategic management process comprises of two components, which are strategy formulation whereby the company creates strategies and strategy implementation; applying the strategies. In order to determine Catapult’s strategic position, the company needs to revise its strategy formulation by assessing the organization internally and externally. The most appropriate tool to accurately examine the internal environment of the business is by performing a SWOT analysis.
Figure 1.0. SWOT analysis of Catapult Communication Ltd.
A SWOT analysis is an evaluation framework that is made up of assessments on strengths, weaknesses, opportunities and threats from competition, which provides an outline for strategic decision-making for an organization (Colbert, 2018). In reference to Figure 1.0, Catapult’s major strength is controlling a good market share. This is because, Catapult entered the market during broadband penetration was low. By offering of low-cost broadband packages, Catapult managed to dominate the market share over other competitors in the industry. However, this advantage is constrained by its weakness, which is obsolete technology. The Network team leader, Robert Leicester complained that the present hardware for the network is gradually degrading, which resulted in slower connection speed and outages. Meanwhile, an opportunity for Catapult is partnership with other organizations. It is suggested in the case study that partnering with a major electronic company or a big-box retailer, the company could possibly overcome the boundaries on consumer uptake. By offering a package that supplies SIM Cards in bundle with hand phones, Catapult could potentially expand its market penetration. Despite a favorable opportunity, the firm needs to consider possible threats that involve competition within the industry. Participating in price war or technology race will definitely be a threat to Catapult.
Figure 2.0. Porter’s Five Forces Analysis Model. (Adapted from Schemehorn et al., 2014, p. 235)
Externally, Sarah should implement the Porter’s Five Forces Model to examine the competitive environment in the industry. The Porter’s Five Forces model is an analysis medium that uses five industry forces to determine the intensity of the competitive environment within an industry (Jurevicius, 2013). In reference to Figure 2.0, the model is based on five strategy forces that consist of industry competition; the rivalry among competing firms, suppliers; the bargaining power possessed by suppliers as well as customers with their bargaining power as buyers, new entrants that brings potential threats to the existing businesses and substitute products and services offered; homogenous products related to the company.
In this case study, it is evident that rivalry competition is high as the corporation competitive advantage is obsolete due to rivals producing better strategy in gaining consumer’s interest. Initially, Catapult dominated the broadband industry with their ADSL low-cost, unlimited download package broadband, however competitors have introduced newly improved fast fibre connections that computes at greater speed and evolved to high-definition video streaming (VDSL) by partnering with online video streaming services such as Netflix. Also, the rebranding of Spark, previously known as Telecom with its new product called the Spark’s Skinny mobile that is performing predominantly well with price-conscious young people and students has affected Catapult as this could potentially increase their cost as the company rents network capacity for both broadband and mobile from Spark.
According to The Economic Times (2018), the bargaining power of buyers plays a huge role in determining a company’s profit as the price structure is highly influenced by the customers demand. In Catapult’s situation, the buyers have high bargaining power as the customer holds the ability to decide from a variety of Internet Service Providers (ISP) that offers different products and services. The bargaining power of suppliers on the other hand is crucial in minimizing the costs of the firms. In this case, the bargaining power of suppliers is high because suppliers are in the position to dictate terms, set prices and determine availability timelines of the services.
Another force that should be taken into account is threats of new entrants. The risks of new entrants are considered low for Catapult as the industry only consists of several companies. This is because the industry has high barriers to entry such as technology, high capital and patents. In addition, Catapult should recognize the possible threats of substitute products or services, which in this situation is relatively high. This is mainly due to the fact that the business is operating in a competitive environment, in which the product and services are considered homogenous and identical.
2.2 HUMAN RESOURCE PLANNING
Figure 3.0. Steps in strategic human resource planning. (Adapted from Schemehorn et al., 2014, p. 332)
Human Resource Planning is the first and most fundamental process in implementing a strategic HRM (Schermerhon et al., 2014). Human Resource Planning is described as the process of anticipating the future human resource requirements of the firm and determining as to how the existing human resource capacity of the corporation can be utilized to satisfy these requirements (MSG, 2017). The current staffing at Catapult has caused problems and challenges for the business to achieve its organizational goals. Sarah should consider addressing the matter in accordance to Figure 3.0, which portrays the steps of strategic human resource planning.
The first step is that Sarah should ensure that the employees are fully aware of the organizational objectives, missions and strategies. Clearly, the organization would desire to be the cheapest yet fastest Internet service provider domestically as well as globally. However, currently the company’s objectives focus on increasing the profit, resolving the staffing issues and achieving a competitive advantage ahead of its competitors. Henceforth, step one is vital for Catapult to establish itself a platform for the firm to grow on.
Secondly, Sarah should revise the human resource objectives and strategies by considering whether it is manageable, achievable and within the capacity of the company. This step is important for the company to be positively convinced on the possibility of grasping the objectives and goals proposed.
The next step is analyzing the current human resources in the business. Internal analysis can be performed by gathering data and feedbacks. This will assist Sarah in being alert regarding the availability and type of employees in possession and segregating them based on qualifications and experience accordingly. A clear problem faced by the company is the demoralization amongst subordinates caused by unwanted working conditions such as the unfair incentive scheme and structure of the work schedule. This step will ease the distribution of work efficiently and equally among the workforce.
Step four is estimating human resource needs whereby Sarah will need to determine the amount of workforce and the type skill set needed to accomplish a certain job. By doing so, Sarah will be able to properly allocate tasks and responsibilities to employees efficiently. Moreover, Sarah will need to assess the present economic conditions, patterns and trends in order to evaluate the performance of the staff. The reason being is because employees’ performance is directly affected by the market conditions such as customer’s demand, new competitors and latest trends.
The ultimate step is developing and applying human resource to match people and job offerings. It is pointed out that the employees are suffering from an unfair incentive scheme, which caused work demotivation. Also, the staff was unaware of their working performance as they received little feedbacks from their superiors, which stunted their career development. To curb this issue, this step requires Sarah to acknowledge the recruitment and selection of workforce, career training and development, remuneration and benefits and other labor-management relations as the response from the employees is essential to determine the acceptance of the firm’s requirements, objectives and strategy.
2.3 COMPETITIVE ADVANTAGES
In the modern technological era, any values or attribute possessed by a company that is unattainable or not easily replicated by other competitors is considered as a competitive advantage (Jurevicius, 2013). Competitive advantage comes in many forms, however the most common and basic competitive feature is the cost advantage, differentiation advantage and innovation advantage. Catapult specializes in supplying customers ADSL service packages at an affordable and cheap price. Clearly, the business practices cost advantage to compete with competitors which the method granted satisfactory returns since initially there was lesser competition in the market, however now companies have been entering the market trying to seize bigger market share.
Instead of approaching buyers via cost advantage, the innovation advantage should be the best solution for Catapult in order to be ahead of competitors. The reason being is due to the rapid technological development such as the VDSL and the fast fibre connections, which enable competitors to advance further than Catapult in the industry. The company needs to adapt to the competitive environment by establishing a new and improved product and services that is up to date to current trends. However this effort requires great financial funding and support, which currently the company’s board is unwilling to compromise. This is because innovation is parallel to new machinery and equipment which is too costly for Catapult’s current financial standing.
A more suitable and affordable alternative for Sarah would be by applying the differentiation advantage, which is by offering exclusive products and services and charging premium price for it. Since Catapult mainly pursued affordable broadband package that is sold with low profit margin, Sarah should come up with a premium broadband package with special subscription benefits. Currently, the present community prefers Internet service providers that promotes ‘special deals’ such as unlimited Internet quota or premium features that suits the user (Fischer, 2017). This will not only grant Catapult greater profits but also extends its market to high end users rather than only middle-average class income earners potentially attracting new customers.
In conclusion, to further ensure the sustainability of the Catapult in the future, it is suggested that Catapult reconstruct the human resource management strategy and human resource planning to curb the staffing issue. It is instrumental for Sarah to immediately resolve Catapult’s management crisis by incorporating the Porter’s Five Forces Model in interpreting the competitive environment of the industry. In addition, the business needs to closely monitor the quality of the workforce by consistently referring to the steps of the strategic human resource planning. Lastly, Sarah should consider applying the differentiation advantage over cost advantage to compete in the market. Ultimately, Catapult will be able to accomplish its organizational goals, objectives and strategies as well as obtaining a sustainable competitive edge over other competitors.