Conditions of Organizational Development †MyAssignmenthelp.com

Question: Discuss about the Conditions of Organizational Development. Answer: Introduction: In the recent times, organizational development is a significant tool to plan and mange the overall corporate growth. The process of organizational development identifies all the crucial areas related to the company operations, where change is required. Dick Smith was known to be one of the most iconic retailers in Australia. Nonetheless, the overall business failed as a result of various internal and external factors (Han, 2016). The report will present the cause and issues that led to the collapse of Dick Smiths company. Moreover, the SWOT analysis for the organization will also be provided to evaluate the underlying problem. Understanding the cause for the business failure is crucial in identifying the business lifecycle and making strategies to revive the business (Klochko, Fomenko Nekrasova, 2016). Therefore, in the report recommendations will also be provided that can save the organization from getting collapsed. Dick Smith was once a renowned company but got collapsed in the year 2016 by implementing unethical accounting standards and also showcased fake financial reports. Both the internal and stakeholders of the company were adversely affected. Dick smith Holdings limited was initially known as Dick Smith Electronics (DSE). The organization deals in electronic components, consumer electronic goods and project kits. The retail store is wide spread in all over Australia and the company also expended in major part of New Zealand. The firm had more than 300 numbers of employees. In the month of January in 2016 the company severely collapsed and the exact reason was unknown to the public (Pash, 2018). Later on, McGrath Nicol was appointed as the administrator and the reason for the collapse of the organization in such a short period was revealed. Accounting issues was recognized as the major problem within the regulation and operation of the firm (Quattrone, 2015). It was found that the organizations accounts displayed that the firms was running under huge loss since the last six month and it was not identified till December in 2015. This led the company to bear a loss of almost $116.7 million (Chung, 2018). The firm was therefore unable to create sufficient sales to improve such huge financial pressure. In addition to this Dick smith was unable to attain favorable credit terms, which affected the store presentation, product mix and stock levels. Huge inventory buying failure besides expensive expansion was result of such failure. The expansion plan of the company was not reviewed thoroughly and stocks purchased by the company were over estimated and not marketable. The companys cash receipts were quite insufficient to meet the overall requirements. Therefore Dick Smith was purchased by Anchorage for a total amount of $ 20 million from Woolworths. Later on $500 million of amount were floated on the stock exchange and thus the company Dick Smith collapsed with an overall debt of $390 million. The organizations revenue growths were mostly based on the growth of the store as well as commercial sales at a very low margin. Ultimately the organization was left with a vital level of outmoded and inactive stocks. Hence, accounting issues such as huge debt, inventory buying failures and unable to create adequate sales lead to the collapse of Dick Smith Company. Problems and challenges faced by the organization: The management of Dick Smith carried out enormous purchasing failures of its inventory because of costly expansion strategies and ill-thought. Surplus income of the employees with expensive expansion plan led the firm to get involved in to crucial borrowings. This process resulted in the decline in the entire surplus of the organization (Celik Ozsoy, 2016). Dick Smith as a result began to decline its market condition due to change in the preferences of the customers. Moreover, the expansion plans of the company were also not checked or reviewed since a long period of time. This situation ultimately resulted in carrying high overvalued stocks by the retailers that could not be sold. Later on, a rapid sale clearance was needed in spite of the fact that it was an efficient period for adequate sales. The retailers also could not achieve strong margins from their inventory (Domnguez Gonzalez Martins, 2014). The cash receipt of the company was insufficient to fulfill the entire commitmen ts. There were no adequate cash resources to meet both the future and current commitments that led to the failure of the business. The loss was caused due to poor sales provisions; inventory write downs and various other asset impairments are as follows: Dick smith faced huge cash flow pressure, which forced the diminishing of banking covenants. The inability of the firm to obtain to obtain favorable credit terms had a major and greater negative impact on the store presentation, product mix and business stock level. The companys sales generated inadequate sales or margins to increase the financial pressure that the organization was facing. The electronic market is highly competitive in nature and rapidly changes as per the demand of the customers. Henceforth, it required strategic and drastic marketing and sales plan to achieve the organizational goals. The management also made inventory decisions that have proved to be inconsistent as per the consumer demand and failed in the competitive business environment. The electronic retailer was finally left with an adequate level of obsolete and inactive stock that included a major write down. The financial plan prepared for the retailers required effective financial and suppliers commitment besides bank borrowings. The revenue growth of the organization was mostly based on store growth and commercial sales at a very low margin. Accounting issues: Ample accounting reasons are held responsible for the collapse of the company Dick Smith. The main reason for the collapse was that rebates was treated very inefficiently that resulted in the inflated earnings of the company. Overstatement of the performance also proved to be another reason for the companys downfall. The issues related to the accounting standards interpretation violated the International Financial Reporting Standards (IFRS). Inventory issues: the companys inventory issues resulted to become apparent in the November end and the company indicated that it should write down its value of inventory by the 20%. The organization purchased its inventory to reach a particular sales level and observed that it did not only attain the sales level accordingly but also declared clearance sales by reducing its price of its old stock by 70%. The management of the company further discovered the procedure of alternative funding and it was revealed that the achievement in alternative funding was not revealed in a timely manner for supporting companys short-term financial needs. The faulty management decisions, the company also struggled a lot in clearing out the entire excess old inventory besides facing various issues in attaining sufficient finance to acquire new stocks (Martin Roychowdhury, 2015). Failed Consumer services: Dick Smith Company failed to offer effective online services to its customers. The group was alleged for not delivering the online orders for various weeks and the service representative also did not address the consumers complaints. Failure of the fundamentals and basic of the companys management functions has led to the demise of the organization. Moreover, Dick Smith has also experienced various enquiries from the business market due to the decreasing share values. Over dependence on the rebate-driven inventory purchasing also proved to be a major factor for the mismanagement of the inventories of the organization and its collapse. Increased discounts are needed for selling the rebated stock, which destroyed the margin uplift (Fernandez-Feijoo, Romero Ruiz, 2014). Negative impact on Stakeholders: Stakeholders have interest in the business and are highly affected by the business operational actions. Due to the collapse of the organization both the internal and external stakeholders are adversely affected. Employees are the core element of the organization as the major business activities are depended on them. A company is the important source of income for the employees. In exchange of the provided services, the employees obtain salary from the organization. As the company collapsed, the employees were highly affected for losing their jobs. A lot of people had invested their huge amount of money by reviewing the healthy financial statement of the Dick Smith Company. The share price of the company was highly affected due to the collapse of the organization and as result it affected the wealth of the shareholders. The failure of the organization highly influenced the stakeholders as large amount of money were invested in the stock of the organization. The inventory and revenue of the company was not treated by the accountant as per the accounting principles. The whole process has led to the contribution for wrong decision making of the company. The auditors failed to audit the companys financial statement on the basis of public interest. This affected the business stakeholders as the financial statement of Dick Smith failed to showcase the real picture of the organization. The company failed to provide expertise and value in the business and thus created a negative impact on the stakeholders. The crucial stakeholders of the organization were the capital partners of Anchorage. Customers are the major stakeholders that determine the fall or rise of the business (Ramesh Kumar, 2014). This also included ten former companys manager and Director. They were called by the court to answer all such questions related to the collapse of the company. Moreover, the companys staffs, lender and creditors of the firm received few amount from the total income that they have owned, though they suffered a significant shortfall SWOT Analysis: STRENGTHS Strong supplier relationships Program to continuously train staffs Retail stores well positioned Effective online strategy High growth rates Reduced labor costs WEAKNESSES Strategy poorly executed with uncertain future. Not-in store affiliated product financing options. Future market size OPPORTUNITIES Increase in customer needs in complex electrical devices New market Venture capital Current electrical devices provide potential for value added products and services. Development of technologically advanced household electrical devices that continually grows the supply of new potential products line. THREATS Economic fluctuations directly impact the retail activity. Changes in price. Competitors have broader diversity and are very less sensitive to the changes or fluctuations affecting the electrical devices (Gabriel et al., 2106). As a listed organization that sells many electronic products, the companies own various important market shares in the related industry. The report aims to analyze the key capability identification, stakeholders values and analysis of generic business level strategy. Strengths: the company strong brand name is still its strong point in the recent times. Large consumer electronic store network is widespread in Australia and New Zealand with over 359 stores. The companys efficient management strategy is also advertizes through various promotional media. Effective online strategy and improved inventory management is very effective operating activities. Dick Smith has also created a more robust forecasting system. This system leads to minimize all the unwanted and excess interviews (Domnguez Gonzalez Martins, 2014). Weaknesses: Dick smith is a limited industry and focuses on the electronic products and computer retailing. High fixed cost is also another major weakness of the company the expansion of the business of dick smith is generally concerned with the operation of new stores. The market localization is limited to Australia and New Zealand. The brand retail strategy was very poorly executed with quite uncertain future. Opportunities: technological development has increased the demand for the electronic products; it can prove to be a great advantage for the electronic products. Entering global market will also prove to be a growth opportunity for the company (Chen et al., 2104). Dick Smith can lay more focus on online retailing by expanding sales channels more efficiently and conveniently. Economical recovery of the company is also possible through beneficial selling throughout the world. High increase in the underlying profitability has also led to the increase in the profit of the organization or EBIT. Threats: electronic related products frequently changes in the form of obsolete inventory risks. Increase in the renting costs for all the present and new stores is a major threat for the organization. Fierce competition within the business environment further leads to the changes in the prices of the goods and services. The profit margins are highly sensitive to fluctuations due to the present exchange rate. Recommendation: The major recommendations that are to be provided in relation to the collapse of Dick Smith Company are as follows: All the accounting procedures practiced within the organization should be done according to the accounting principles. There are many accounting principles available, the one that suits the best for the organization should b practiced. The accounting calculations should practice these accounting regulations and rules. The code of ethics and all the code of principles should be followed by the accounting principles. All the relevant material facts of the company should be properly considered during the time of preparation of all the major financial reports. The auditors of the firm should also audit all the companys financial statement and reports properly. An auditor is generally the representative of the public therefore it is important to consider all these facts while carrying the auditing practice. On, the other hand, an auditor also cannot make any kind of false agreement to the companys board of directors. This practice is against the ethical practices of audit. The accountant of the organization of Dick Smith should effectively follow the ethical practices in order to avoid any kind of errors and confusion that is caused by the organization. It is recommended that the organization should follow better accounting framework that would help the accountants and auditors of Dick Smith company to clearly understand whether the financial statements are properly review or not. The management of the organization could have been very successful if the company could have adopted both adequate accounting practices and theories. There are few important conceptual frameworks and principles present in the accounting system. The professional accountants should properly consider all the rebate calculations related to the damage repair and the company. Rebates miscalculation from suppliers was the major cause of accounting misstatement. Therefore, it is suggested that the rebates should be calculated in a very proper manner. Conclusion: Dick Smith Company collapsed due to various factors but the main reasons for the cause of such kind of business failures is irrelevant accounting and management practices. Therefore, it can be concluded that if the companys management was properly implemented or followed, then the organization would not have suffered from getting collapsed. Hence, it is clear that the accounting practices and theory are very interdependent and integral to each other. The accounting practices followed by the firm were inadequate and failed to communicate the business progress. Moreover SWOT analysis of the organization is also done to ascertain both the internal and external practices of the firm. It is revealed that the company has growth opportunities and could achieve success in the long run by practicing proper accounting practices recommended above. References: Buono, A. F., Subbiah, K. (2014). Internal consultants as change agents: Roles, responsibilities and organizational change capacity.Organizational Development Journal,32(2), 35-53. Celik, A., Ozsoy, N. (2016). 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