JVA Corporation: company overview and analysis

JVA Corporation has a presence and expertise within the market of nearly two decades, during which period they have been faced with a wide array of challenges, but also opportunities. The company, for instance, has been able to expand into the increasingly popular and evolving technological sector, hiring better trained and specialized staffs. On the other hand however, the company has also faced challenges as a result of macroeconomic conditions, such as the terrorist attacks or the global recession.

Today, the company finds itself in a complex situation in which they have to continue to function at high levels of performance and productivity, but also to reduce their operational costs. This need resulted from the financial hurdles brought on by the economic crisis. When numerous firms have downsized or even declared bankrupt, the JVA Corporation continued to operate and secure the employment of its thousands of employees.

The company as such employs 185,000 individuals across the globe, most of whom however are located within the United States facilities of the corporation. 3,500 of the employees are full time salaried managers, and the rest of 181,500 are operational staffs. The compensation packages of the operational staffs are based on a fixed hourly payment, plus bonuses based on the quantity of items produced. Additional compensation incentives include premiums, profit sharing, travel rewards and commissions. All together, the additional compensation and perks for the 150,000 employees in the United States account for 8 per cent of the company's revenues. A new target is set on reducing these additional compensations to 5 per cent of corporate revenues.

At this specific level, a question is being posed relative to the mechanism that should be employed by the company in order to reduce costs and avoid any drastic measures, such as the closing down of some of the international plants. In this specific setting then, the proposed recommendation is of capping the current salaries of the employees (proposed strategy number one). This measure would be characterized by the freezing of the salaries at their current levels, without the provision of any new raises and bonuses. Additional compensations would also be frozen throughout the duration of the economic recession. In this specific context, the company would continue its operations as these have been completed so far, without integrating changes in its mission, vision or overall strategy. Furthermore, the company's performance appraisal system would be stopped during the period.

All in all, the company would focus on preserving its financial and operational stability and would prioritize this over the provision of employee compensation. Such a decision is likely to generate financial sustainability within the future, yet it can also generate a series of disadvantages, such as employee dissatisfaction and low employee morale and performance. Throughout the following lines, the various dimensions of the proposed strategy are assessed:

The nature of the proposed change is a temporary one, being expected to last for one or two years, until the economic environment renters a growth cycle of business.

The measure should be applied to both the employees in the United States, as well as the staffs in the company's international facilities; this will ensure unity and an integrated approach by the firm.

The loses of the employees will mostly be financial ones, felt at the level of the 35 per cent staff members currently eligible for additional compensation.

By implementing this proposed strategy, the company will come to save the entire 8 per cent it already spends on additional compensation, rather than the 3 per cent hoped for.

The impacts of this proposition onto the JVA Corporation will have a dual nature, materializing in both opportunities as well as challenges. At the level of the positive impacts, these will mostly include financial security and stability within the future. In terms of the negative impacts, these will mostly revolve around employee dissatisfactions, which could translate into the loss of staff members, higher employee turnover rates or even lower levels of operational productivity.