Management

Reducing product line by dropping non-system telephone products looks like another good alternative for Executone since these items had a positively high cost of good sold and did not generate a large amount of return for investors. To complicate the matter, the company might not have enough money to invest in any sales or marketing strategies because its income before taxes was practically small. Therefore, the critical issue at this time was operating decision that could control cost of good sold, sales, general, and administrative expenses (SG&A), as well as other expenses, not promotion strategy. In another words, the company should consider whether it was worthwhile to trade-off some revenue from healthcare system with its creditability and reputation in this industry. Second, Porter declares, “A company can outperform rivals only if it can establish a different that it can preserve” (qtd. Moreover, because the company spent a half of the total R&D expenses on healthcare system at that time, this process could significantly reduce R&D, SG&A expenses, resulting in higher return on sales from 1. With adopting its strategy, the company could gain more sales, resulting in increase in return on investors. With dropping its healthcare system, the company also could have an extra resource that used to be responsible for those tasks that could use in other portions. Dropping healthcare system and making some changes in its organization

u Analysis of each option

Continuing every product line on the market by putting more advertisement and introducing promotion campaigns is not the best solution in helping Executone to become successful in this situation since there were some flaws from this approach. Capitalizing on competitors’ weaknesses is another essential approach.