Wiitten executive

communication iepoit on:

The changing landscape for Chinese small
business: the case of ~Bags of luck



Submitted to Dr. Payal Mehra

By: Abhineet Singh
PGP27068

27
th
October 2011
2
Table of Contents
Executive Summary 3
Case Analysis 3
1. ntroduction
1.1 Purpose 4
1.2 Scope 4
1.3 Limitations 4
1.4 Assumptions 5
1.5 Methods 5
2. Relevant Facts 6
3. Assumptions 7
. Contextual Analysis 8
5. Audience Analysis 10
5.1 Group 1: Upper Management 10
5.2 Group 2: Higher Paid Full Time Employees 10
5.3 Group 3: Medium Paid Full Time Employees 11
5.4 Group 4: Lower Paid Full Time Employees 11
5.5 Group 5: Part Time Employees 11
5.6 Group 6: Customers 11
5.7 Group 7: Other Companies 12
6. Business Goals 13
7. Communication Goals 1
8. Strategies and Tactics 15
9. Bibliography 17
CHARTS
Exhibit 1: ProIit and Loss Statement 16
Exhibit 2: Balance Sheet Statement 16

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Executive Summary
With the company heading Ior bankruptcy, the Chinese company 'Bags oI Luck has
asked us to help them aggressively address the issue by providing a solution. This report
takes an analytical look at the diIIerent audiences and how they will be aIIected by the
changes. Beyond our analysis, we have developed strategies, tactics, and an
implementation plan based on our analysis that will help us introduce and execute the
plan.

Case Analysis
$9,90/ !74-02
BOL has a loose and relaxed management structure whereby decisions are made by a
consensus; this is not proving as the best method given the changing circumstances. The
Iactory has not been operating at Iull capacity mainly due to labor shortage. As a result
they have not been able to complete their production Ior dispatch by sea-Ireight. The use
oI air-Ireight Iurther erodes their Iinancial situation.
&389,90/ !74-02
There is a lack oI communication between the Iour key people involved in running the
business. The production process is heavily dependent on labor-intensive operations
which is an added disadvantage. This outdated machinery also results in more downtime
Ior repair.
4
ntroduction
Purpose
This report explores the challenges Iaced by Bags oI Chinese manuIacturing Iirm Bags oI
Luck. It is almost on the verge oI bankruptcy due to a combination oI several internal
structural deIects and circumstances beyond its control. The report identiIies the key
problems behind the crisis, oIIers situational analysis, recommends strategies, tactics, and
ideas Ior turnaround oI the company and eventual growth and development.

$.ope
This report investigates the impact that changing to a more capital intensive procedure
and better technology will have on BOL. It also examines the potential reactions that
people may have to these changes. Personal preIerences are explored and
communication tips are provided. Finally a change in top management structure and
employee selection and retention policy is also suggested.

29,9ons
There are a Iew Iactors that could impede the success oI the recommendations discussed
in this report. Some oI these limitations include time, money, and support. II the
changes cannot be implemented in the recommended time Irame and the rationale behind
them properly explained, acceptance may be extremely limited. Also, iI the company
cannot contribute the Iinances necessary to provide things such as the Iinancial advisor or
the recommended packets, it will be diIIicult to successIully implement the changes.
Finally, support oI the plan will be a key aspect. The people implementing the changes
Iirmly have to Iirmly support these changes. To acquire this support, careIul personality
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and communication preIerence assessments should be made and communication should
be tailored accordingly. Finally the recommendations might not prove to be eIIective in
case oI major changes in the US market structure or demand pattern, or imposition oI
trade restrictions or other unIoreseen macro-economic or geo-political Iactors.

ssu2p9ons
A number oI basic assumptions are made in this case. These assumptions serve as
cornerstones to the case, creating context and structure Ior the decisions and inIormation
expounded upon in this report. These assumptions are explored in more detail later in
this report.

e9ods
Personal experience, internet searches, personal discussions, and some independent
reading comprised most oI the research done Ior this case. InIormation gathered through
these methods and other research provided a base Irom which to Iorm all contextual
analysis. All oI this inIormation was considered when making decisions concerning this
case.








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Relevant Facts
Understanding Iacts about a situation is absolutely necessary in order to successIully
solve any problem. These Iacts become knowledge, which leads to a more thorough
analysis and appropriate decisions. We noted Iive relevant Iacts as we examined our
case.
O Most oI the businesses in the People`s Republic oI China are labor intensive
because oI cheap labor.
O BOL`s business model was copied by other players with more advanced
Iacilities.
O Major turning point in BOL`s history in 2000 when they started exporting to the
US.
O The system used by BOL is time consuming to maintain and inIormation it
generates is oIten inaccurate and becomes available too late.
O BOL does not have a dedicated sales Iorce and do not consider commercial
advertising as necessary.




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Assumptions

Assumptions provide Iramework Ior analysis and implementation oI any situation. They
put decisions into perspective and present needed answers to important questions. AIter
discussing this case, we decided there were six main assumptions we need to make.

O Most oI the candidates who turn up Ior the job interviews have not even
completed their primary education, there is no way they can perIorm production
tasks stringent to US quality standards.

O The only way to attract decent standard workIorce is to make their wage rate more
competitive by increasing their basic piece rate by another 25.


O The Iactory has not been operating at Iull capacity mainly due to labor shortage.

O The continuing rise in oil prices will Iurther worsen the situation.


O In the long run there will be an increase in decline oI migrant workers available at
XMN.

O The US Government continues to put pressure on the Chinese Government to
strengthen the value oI Yuan and to do it Iast.

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Contextual Analysis
Context sets the Iramework Ior interpretation. There can be a diIIerent context Ior each
person in the situation; thereIore it is extremely important to determine our context beIore
proceeding with the analysis.

It is still important Ior us to conduct contextual analysis oI the case so we deIine the
context our group will be using. Contextual analysis is essential in order to determine our
direction and understanding in this case. The major building blocks oI our context
involve the complexity oI the change, the need Ior the change, the employees` reaction to
the change, and the type oI change it is.

The change we are proposing and implementing is complex. This makes it less
manageable and more diIIicult Ior the employees to understand. We need to make the
change less complex by breaking it into steps.

This change will keep the company competitive in the marketplace, which makes it
advantageous over the past practices. Companies are constantly looking Ior ways to
increase their bottom line and remain a key competitor in their industry

Another implication oI this situation is the employees could associate this change with
their own Iinancial loss or company problems. Money is taken very seriously, and iI the
employees associate this with a loss oI money they earned, it would cause a great deal oI
dissent. They could also view this change as a loss oI money because their beneIits are
not as lucrative as when they accepted their position at the company. An association with
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company problems would be a cause Ior concern as well. II a company is experiencing
Iinancial diIIiculties, the employees` positions could be in jeopardy. This idea could
create stress, Iear, and anxiety among the employees. This would aIIect employee morale
and productivity.



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Audience Analysis
During our brainstorming oI audiences, we Iound there were many categories oI people
aIIected in this case. We began consolidating these groups and were able to develop
groups: upper management, higher-paid Iull-time employees, medium-paid Iull-time
employees, lower-paid employees, part-time employees, customers, and other companies
that conduct business with our company. We then looked at the impact this change will
have on the group, what the resistance points will be Ior this group, the intensity this
change will have on the group, the communication preIerences oI the group, and our
goals when working with the group.
roup 1: Upper 2,n,e2en9
The Zhang Iamily will be impacted the most by the backlash Irom the change. They are
making enough money, but since they will be the head oI this change and will have to
deal with the aIIects. As they know all about the change, so we decided that on a scale oI
zero to Iive with zero being no knowledge and Iive being Iull knowledge, her knowledge
rating is a Iive. They need to understand their employees will need inIormation and will
have questions, but the best way oI dealing with it all is to be open. II the employees are
misled or they Ieel they are being deceived, the situation could turn into a crisis

roup 2: Her-p,d full 92e e2ployees
They have less oI a Iinancial burden than a responsibility burden. They will be the one oI
the targets Ior the employees when expressing emotions and aggravations. They know
that a change will be coming in the company, so their knowledge rating is a Iour. The
resistance points Ior this group are trade-oIIs and backlash. Even though they have more
income than other employees, they still have to make trade-oIIs but their trade-oIIs will
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not be as major as will be those with a lesser income. The biggest impact Ior them will be
the added responsibility oI the system. They will have to do more work and put more
eIIort.
roup 3: edu2-p,d full-92e e2ployees
The medium-paid Iull-time employees are impacted by a Iinancial inconvenience. They
are making more money than the lower-paid Iull-time employees, but they are not living
without money concerns. This group`s knowledge rating is a one. This is because this
group includes many people, and we predict that although some will have knowledge oI
the change, many will not.
roup 4: ower-p,d full-92e e2ployees
The lower-paid Iull-time employees will be impacted because they do not have much
income .They will be in a Iinancial struggle and will have to do major adjusting in their
standard oI living .They have the same amount oI knowledge as the previous groups,
since they are also a large, diverse group oI people.
roup 5: P,r9-92e e2ployees
The part-time employees will most probably lose out on their jobs because oI the change
to capital intensive technology. They are a large, diverse group and, just like the other
groups with this characteristic, there are some people who know about the change, but
more who don`t. With this reasoning, we rate this group a one Ior knowledge. There are
no resistance points Ior this group as they stand, although iI the part-time employees were
considering Iull-time employment, they would have a resistance point.
roup : Cus9o2ers
The customers oI this company will be worried about the company. They buy Irom the
company Ior a reason and will be worried about whether the store is in a Iinancial crisis
or not. A resistance point Ior them will be a worry about the company`s Iinancial status.
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The company will Iind other ways to increase the bottom line iI it is in a crisis. For
example, they may worry that the company will no longer provide the service or product
that makes them a customer oI the company. II the customer values the quality the
company provides, the customer may be concerned about a loss oI quality will occur in
order to increase the bottom line. Our goal Ior the customers is to assure them oI the
company stability. We need them to understand the company is not in a Iinancial crisis,
and the rest oI the store and system will remain intact.

roup 7: O9er .o2p,nes 9,9 .ondu.9 busness w9 our .o2p,ny
Other companies especially the US retailers will be worried about the stability and
Iinancial situation oI our company. They choose do conduct their business with us Ior a
reason, and just like the customers, they worry about a loss oI that reason to continue
business with our company. The other businesses are worried about their own business,
and thereIore are worried about BOL. Our goal with this group is to assure them oI our
company stability. These companies need to know we are still strong and the other
aspects oI our business will remain the same.









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Business Goals
Any action done at any time by any person is meant to accomplish a goal. Goals deIine
values and identity and provide rationale Ior decisions. We know very little about our
company, so we do not know its company goals. We do know that it is a Ior-proIit
business, and through that, we can determine two main goals.

One goal is to improve the Iirm`s Iinancial status to remain competitive in the market.
We chose this as a goal because our company is a retail business and needs working
capital. It needs to remain competitive and proIitable or it will not exist.

Another goal is to increase the employee base. This goal relates back to the company`s
proIits. Since it is a labor intensive business, they need labor supply to meet the
production demands. Labor shortage leads to the Iactory running at less than its Iull
capacity.

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Communication Goals
In creating our plan Ior this change, we need to be aware oI the business goals and
develop goals that will help accomplish them. The messages the employees receive need
to be consistent Ior them to be successIul. Keeping this in mind, we developed two
communication goals.

One goal is to maintain or improve the company`s reputation. We have no input on the
product or services the company provides, but this is one area we can impact. Reputation
is important Ior trust and maintaining relationships. It can also help create loyalty, which
directly impacts the bottom line.

Another goal is to maintain or increase the employee morale. This creates a better
working environment and increases the chances the employees will want to stay with the
company. It also could create loyalty and positive Ieelings about the company. In this
case, the power oI word-oI-mouth would be beneIicial.
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Strategies and Tactics
Co22un.,9on $9r,9ey
A communication strategy helps Iocus the campaign. It is an overall strategy and is
necessary in the narrowing oI our plan. We determined our communication strategy
beIore the strategies oI our individual groups Ior this reason.

We decided to develop individual strategies and tactics Ior each impacted group. This is
because each group has its own degree oI impact, knowledge, intensity, and goals. We
need to address each group based on its concerns and needs in order to successIully
communicate with them.

It will be important to clearly communicate about the changes to all groups involved. We
cannot leave any group out oI our plan because our goals involve all groups. We do not
want to miss accomplishing our goals due to deeming someone not important enough.

It is also very important to reinIorce company values through stories, logos, and personal
examples. ReinIorcing these values could help employee morale and the chances oI a
smooth transition.

To be successIul in this implementation, we need to remain respectIul oI employee needs
and concerns. They cannot Ieel Iorgotten-about or unimportant. II we do not validate
them as important parts oI our company, we will devastate our goal oI maintaining or
increasing company morale.

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Exhibit 1
Profit and Loss Statement (year ending 31 December)


Exhibit 2
Balance Sheet (year ending 31 December)
17

Bibliography
Clampitt, Phillip G. Communicating Ior Managerial EIIectiveness, 3
rd
Ed. CaliIornia:
Sage Publications Inc., 2005.

Clampitt, Phillip G. and Robert J. DeKoch. Embracing Uncertainty: The Essence oI
Leadership. New York: M. E. Sharpe, Inc., 2001.


'Dwight D. Eisenhower Presidential Library and Museum.
http://www.eisenhower.archives.gov/.

Smith, Ronald D. Strategic Planning Ior Public Relations. New Jersey: Lawrence
Erlbaum Associates, Inc. Publishers, 2005.