Symptoms of a Firm's Strategic Problems

There are some symptoms that indicate a firm may have some strategic problems. I believe two symptoms that show a firm may have strategic problems are a deteriorating company/brand image and a firm’s product being viewed as relatively substandard. If a company’s product is viewed as being relatively substandard, wouldn’t a customer want to purchase a product that is standard or better? If a product is substandard, it means the product might not have the ability to meet the needs of customers and satisfy their desires. It could also potentially mean the current customers may not trust not only the product, but possibly other products/services the company has to offer. So, these customers may be deterred from purchasing from the company in the future. This is a sign that a firm may be exhibiting strategic problems because they know that their product(s) are being perceived as substandard and they aren’t doing anything to change or prevent this perception. Also, this perception may be caused by other factors indicating strategic problems such as not enough investment in R&D and quality control, outdated technologies, not hiring the right personnel to produce better products, etc. If management had a better strategic plan, they would work to prevent their products from being viewed as substandard because they know this could cause a deteriorating company/brand image, which is the second symptom of a firm having strategic problems.

A deteriorating brand/company image is a sign of strategic problems because that company had a good image, but because of their strategic problems, their image is poor. If the image is poor, this can lead to several possibilities, such as investors might not feel confident in investing in the company, or customers might not want to purchase from the company since there’s something negative associated with the company. For example, if Taco Bell frequently has news about people finding rodents in their foods or mice & rodents in their restaurants, this would obviously lead to a poor and deteriorating brand image. Customers would not want to purchase their food because of fear of uncleanness associated with Taco bell. This is a sign of a strategic problem the company is enduring because if the firm was well, they would take acts to prevent the company from having their image deteriorate. They would realize their problems earlier on and take preventive steps to make sure the image of the firm remains positive in customers, investors, and the public’s minds. An example of a company with deteriorating image is Sharper Image.

Sharper Image was once perceived as an innovative and elite company, offering customers differentiated products that they were either able to use or entertain themselves with in their everyday lives. However, because it seemed as though they didn’t position the company correctly, meaning they had a lot of diversification and they weren’t able to compete with the market. They had many different products sold to different consumers; it seemed as though there wasn’t really a particular aim for target customers. For example, they sold products like umbrellas, headphones, robotic toys, and massage chairs. Many different people could’ve had use for these products. Also, since they sold luxurious massage chairs at very high prices (perhaps several thousands of dollars), when the market for massage chairs became popular, it seemed like Sharper Image’s massage chairs didn’t compete well. A lot of Sharper Image’s products were adopted by other companies like Brookstone, who sold their products at more moderate prices. Thus, the firm’s image began to deteriorate. They were no longer the leading and well known company that offered innovative products which would suit luxurious living and they failed to compete effectively in the market. Their brand image began to deteriorate because consumers simply didn’t turn to them for their needs and eventually, this would lead to their bankruptcy.