Internal and External Analysis of M-TRONICS

Internal and international Analysis of M-TRONICSM-TRONICS was founded during the consolidation of small local political machine shops in the early 1900s. From early 1900s to 1999, M-TRONICS has struggled and faced with m some(prenominal) operating and personnel problems within its geological formation. One of the overbearing aspects of this attach to is EBIT Margin. According to the EBIT Ratio, M-TRONICS has d one very well in the last decade (90-99). At record it has a bright approaching. M-TRONICS has to consider every alternative they have in clubhouse to make veritable that their organization is able to continue with its maturement outline. The alternative that is mentioned below for M-TRONICS impart allow them to solve the issues that ar being restricted in the organizations maturement strategy. After analyzing the main issues and the internal and external factors, the best alternative for M-TRONICS is to realign the organization so they can think closely about o n one strategy and one focussing. This type depth psychology will recognize the issues that are being faced by M-TRONICS, an analysis of the external and internal factors, and to provide the most feasible solution for the organization.Key IssuesM-TRONICS must evaluate the several(predicate) options they have that would allow their company to grow within their competitive industries. The key issues and questions that needs to be turn to in this case analysis are1. Should the Entrepreneurial Subsidiaries be a key part of M-TRONICS growth strategy?The Entrepreneurial Subsidiaries at M-TRONICS is causing a money drain as large amount of money of the companys budget is going towards the subsidiaries instead of their cardinal major divisions (Electronics and Machinery class).2. Should changes be made within the organizational twist and strategy?The structure and strategy at M-TRONICS are unlike in individually division. As each division has operated in different manner, it has resulted in conflict of culture, structure, and strategy of the overall organization.M-TRONICS has been faced with an increase in turnover over the past few years. The increase is due to employees being unsatisfied with how the organization is operating.External Analysis (page 7 )There are two industries in consideration have vastly different characteristics. The industrial machinery industry is characterized by its inactive nature. Success in this industry relies more on reference and a strong sales force rather than on innovation. As it is a slow growth industry, being a food market attracter is not necessarily dependant on having a first-mover advantage. The market is in a mature phase therefore, factors like cost, lumber, and reputation are important for survival.The electronics industry is contrary to the machinery industry. The electronics industry is constantly development and evolving. It is characterized by innovation and development, and longevity is dependant on an evolving harvest-home line. query and technology are the cornerstones of the industry and being a pioneer is essential to success.Other industries are winding depending on which industry a subsidiary is created in. These industries generally have synergy with the two above and are interchangeablely reliant on development.Internal AnalysisM-TRONICS structure has made its culture luxuriouslyly musing of its history. By keeping the electronics and manufacturing divisions separate, each was able to retain the characteristics and direction of Datronics and McKenna Machine Company respectively. Before getting Datronics to form M-TRONICS, McKenna Machine Company was a leader in industrial machinery. Datronics was a highly modernistic fledgling engineering company focused on high-tech developments. The two together formed a comprehensive manufacturing company with an emphasis on stability in the manufacturing division and development in the electronics division. gross revenue foll owing the acquisition increased from $600 million to over $2 billion and gross profits grew from $12 million to $104.3 million. Henry McKenna, who had little involvement with the actual operations of the company, but was acting more as a figurehead until his retirement, oversaw the two divisions.The manufacturing division is essentially the McKenna Machine Company percentage of the company, who is led low the same leadership of George McElroy. McElroy was an essential part of the companys success and was extremely involved with the company. McElroys division is driven by performance and stability, reflecting the stagnancy of the industry and the division. Compensation reflected this, as its basis was only 10% based on return on coronations and a lower use of incentives.Datronics founder John Martell led the electronics division, effectively what the Datronics component comprised. Martells style was entrepreneurial, and he believed in fostering innovation and a creative atmosphere . The division was constantly growing and searching for invigorated enterprises to engage in. This dynamic style of leadership is what led to Martells appointment as McKennas permutation as president and CEO of M-TRONICS.Martells appointment as president brought several wide sweeping changes as he infused his entrepreneurial spirit and open culture throughout the organization. This was to help develop into new high growth markets, while retaining their on-going customer base. One of Martells biggest implementations was the Entrepreneurial Subsidiary approach.The Entrepreneurial Subsidiary syllabus was to hedge risks while capitalizing on new investment fundss and retaining talent within the company. The program gave M-TRONICS 80% ownership of the new subsidiary formed by M-TRONICS employees and otherwise staffed by new talent. Depending on the success of the subsidiary, it would eventually commix into the company. The program was designed to entice employees to develop breakthr ough concepts without losing out on the benefits of the innovation or the issue of talented employees. Employees were able to expand their ideas in independent ventures with the security and support of M-TRONICS backing them while also making potential substantial gains.Martells changes to the company were very effective in promoting growth and development. However, these changes began to have disconcert integrating into the company and dissatisfaction with employees began to rise. Martells appointment of Grennan as the new leader of the Electronics division was creating some dissension as his alliances from his subsidiary were causing some dissension. Another issue was that the focus on electronic development had leftover the manufacturing division behind their competitors and as a result their top-rated sales force was beginning to leave. Costs were go up considerably in the electronics division with some products obsolescing before they reached their break-even mark. The succ esses of the subsidiaries were now showing weaknesses as loyalties were forming cliques within the company and as returning employees felt dissatisfied in their roles back in the company. Meanwhile, the manufacturing division affectd an investment of $200 million to $250 million to update their facilities and product line to keep up with the industry.AlternativesRealignmentThe alternative that we graded number one is that of realignment. We chose this alternative because we feel that it would bring the company back to one strategy and one focus. This would enable the company to reduce the money drain of the Entrepreneurial Subsidiaries, reduce the talent loss, and allow for investment in both the machinery and electronics divisions.In order to realign the company, the first step would be to eliminate any future subsidiaries and bring any existing subsidiaries that are profitable into the company under the electronics division. This would stop the losses and loans to those compani es, as well as bring back the talent that left to manage those companies. This would leave M-TRONICS two divisions, which could then be managed with one strategy.Under a single strategy both units would have the same, or very similar, compensation packages and rewards. This would create an environment for all to flourish while retaining and attracting talent, while also change magnitude morale. It would also create an innovative company, which could return to the high profits while being a leader in the industry. It would also ensure that both divisions would be managed under the same concern style, which is not the case at the moment.Eliminating the Entrepreneurial SubsidiariesThe second alternative that M-TRONICS can consider is to eliminate the Entrepreneurial Subsidiaries. M-TRONICS is better mop up eliminating the Entrepreneurial Subsidiaries because it has been a money drain on the company. By eliminating the subsidiaries, it would be beneficial to M-TRONICS, as it would en able them to invest more money towards the Electronics and Machinery Divisions. With the savings in cost, it would allow M-TRONICS to directly invest more money into the RD discussion sections of the Electronics and Machinery Divisions. It would enable the divisions to enhance and improve existing products as well as developing new products. alike by eliminating the Entrepreneurial Subsidiaries, it would reduce the tension within the organization between the employees from the different departments within the divisions. In doing so, it would eliminate the conflicts in the divisions and improve the productivity of the organization.Flatten OrganizationThe last alternative that M-TRONICS could adopt is to dismiss the organizational structure of the company. Warring factions were developed in many of the organization departments, particularly in the RD department and between research and other departments (for example, marketing and manufacturing). The conflicts led to poor decisions , lack of cooperation, and wasted energy, which could have check the future growth of M-TRONICS. It is necessary to make changes to the organizational structure. The result of the changes could benefit the organization just by using resource more efficiently. They could join the two divisions research and development department together, which could help Machinery Division improve their product quality by using Electronics Divisions resources. They can also join other similar function departments, such as marketing departments. Machinery Division have too many salespeople, they could use say sales force to sale both divisions products. This could result in a reduced total sales force. For Electronics Division, they could also join their sub research departments and division research departments together in order to nevertheless research costs and increase development speed.ImplementationIt is time for M-TRONICS to rethink their strategy and approach. This will require a realignme nt of the existing strategy with an increased focus on latest profitable subsidiaries and talent memory rather than future subsidiaries. Initially all ideas for future subsidiaries and interests will be put aside and a thorough re-assessment of existing profitable subsidiaries will be conducted. In order to determine if the current approach, they are using needs to be modified or changed in any way.By using a single strategy to manage both departments, a new compensation and rewards package will be introduced to both departments. This new reward system will be implemented immediately with increased focus on boosting shapeer morale, giving workers more empowerment then before, and an improved rewards system. A similar management style will be introduced to both departments as well, which will make organizational practices in both departments more consistent with each other. With increased rewards, career growth opportunities and higher levels of recognition by stop number managem ent, these wild ducks will not only get the opportunities to challenge themselves in a competitive work environment, but also grow as talented individuals. This new rewards system will insure that current talent is retained and new talent is attracted.If strategies for profitable subsidiaries are modified then there will be a 6-month test period for their new strategies. Afterwards, performance will be evaluated against pre-set benchmarks regarding revenues and operating margins along with potential growth opportunities. At the moment, there will be a shift of focus from future subsidiaries, as they will not be considered for some time in order to reduce current financial strains. Focus will be reduced mainly to existing profitable subsidiaries, which will herald under the electronics division, and the machinery division.The main area of focus in the machinery division will be employee motivation and product quality. The main aim will be to reduce turnover and bring back the motiva tion that the employees had, specially in the sales force. However, one of the reasons why the sales force was losing its motivation was due to inferior quality products that were being produced. This new strategy will cause a shift of focus in the organization and reduce financial strain. It will allow M-TRONICS to invest more in the machinery department in order to bring back the quality that M-TRONICS have been known for.With improved product quality, more standardized management practices throughout the organization, improved rewards and bonus systems, increased worker empowerment and morale, and a new approach, M-TRONICS will be on its way to once again becoming the market leader it was before.