Digitech Industries Limited is a company whose services include the installation and monitoring of security alarm systems. Digitech is in trouble. Their net loss for 1992 was $61, 316, a slight improvement from the loss of $93,035 in 1991 but far worse than the loss of $15,247 in 1990. The following pages contain an analysis of Digitech as it stood at the end of 1992, alternatives the company has to choose from, and recommendations for its future endeavors.
ISSUES.
ISSUE: that there is not organizational mission or plan. The first issue that arises is whether DigiTech Industries Limited should continue growth in the installation sector of their business without continuing monitoring services. Associated with first issue, another topic that needs to be assessed is how stable they currently are and could DigiTech discontinue installation operations altogether and only rely on income generated from monthly fees charged to existing clients. .
Second, the owners of DigiTech are having problems controlling the high level of costs in their day to day operations which in turn are hurting the overall gross profit earned. There seems to be an inconsistency between the sales staff delivering quotes to customers for total installation costs and the total labor DigiTech is actually paying out to its installers. Is it the fault of the sales staff or is it the inexperience of particular installers that is causing this profit loss? The overhead cost for DigiTech seems to be fixed at 46% which may be too high and needs to be evaluated to see if it can be reduced any.
Third, the amount spent on advertising has risen over the past few years, yet most of it seems to be by word of mouth and advertising in mainland yellow pages - not entirely true - they do promotions and good will. To attract new customers and increase growth, should they choose to advertise via other methods to increase total market share and profit?.