If scaling up of operations results in a corresponding drop in the quality of work, then it will be unwise to scale up. The key thus to a successful scaling up of operations level is in creating an operating process within the company that fulfills three requirements: 1. Maintain, if not increase, quality of output 2. Increase volume of output 3. Maintain, if not increase, profit margin levels without corresponding increase in sales unit price of service. The to the maximum volume of operation is also function If scaling up of operations results in a corresponding drop in the quality of work, then it will be unwise to scale up. The key thus to a successful scaling up of operations level is in creating an operating process within the company that fulfills three requirements:
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Maintain, if not increase, quality of output
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Increase volume of output
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Maintain, if not increase, profit margin levels without corresponding increase in sales unit price of service.
The upper bound in terms of operating volume is function of the barrier to entry against new competitors. This factor in the equation has a negative coefficient.
Efficiency and effectiveness of the operating process that will need to come into existence has a positive coefficient.
The chief executive's ability in terms of leadership, salesmanship and analytical abilities has a positive coefficient.
Explained in layman terms, for factors with a positive coefficient, the greater is the value of the factor, the greater is the output of the function. Vice versa, the greater the value of the factor with a negative coefficient, the lesser is the output of the function.
Examined using this abstract framework brings to light one of the major weakness in this current situation. The chief executive has had no corporate experience.
Major effort needs to be put into the following if better results are to be visible.
- More research into operating processes being used by the market leaders in this industry
- More effort into building up the leadership qualities of the chief executive
- More effort into building up the salesmanship qualities of the chief executive
If one subscribes to the Darwinian theory of evolution, further efforts towards building up the analytical abilities of the chief executive will be futile. Analytical abilities is a function of the Intellectual Quotient (IQ). IQ is an external manifestation of genes that has been predetermined from birth.
Salesmanship and leadership are thus important qualities that a leader will need to cultivate in order to attract the cooperation of talents to the company mission. Talents is defined as people with specific innate abilities or skill sets that the chief executive has not, or should not expend further resources cultivating within himself.
An extensive research into all public companies listed on the SGX and Dow Jones and Nasdaq might shed some light unto the market leaders in different industrial sectors providing more clues as to future directions.