Sales Generation: Impact of Product Quality and Supply Chain on Revenue

The report discusses the impact of product quality and supply chain on revenue generation for Pro-Gro Pty Limited. It highlights the issues of poor product quality, customer satisfaction, and weakening downstream supply chain. The report recommends improving product quality, opening own outlets, and selling cameras to the Australian police as strategies to revive sales.

Running head: SALES GENERATION
SALES GENERATION
Name of the Student:
Name of the University:
Author Note:

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Executive summary:
The discussion below shows that the deterioration in the product quality has devastating results
on the revenue generation of business organisations. Moreover sudden losing of distributor
channel in a strategically important market can lead to massive revenue loss. The company in
the study namely, Pro-Gro Limited was a company manufacturing and marketing cameras. The
company products of the company showed sudden deterioration with the cameras exploding. The
Chinese distributors ended their relationship with the company which led to a fall of revenue by
50 percent. The senior management of the company in order to deal with the sudden loss of
business was bound to take steps. The aim of the report was to find out the relationship between
product quality, customer satisfaction and revenue generation. The report then unveils the two
findings which could be responsible for business losses to companies. The first finding is that
poor product quality leads to lowering of customer satisfaction. The second finding which could
be pointed out from the study is that weakening downstream supply chain leads to business
losses due to loss of end consumers. There are three recommendations which would be suggested
to the apex management of Pro-Gro to deal with the issue. They are improvement of product
quality, opening its own outlets and selling the camera to the Australian police.

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Table of Contents
Introduction:....................................................................................................................................4
Aim:.................................................................................................................................................5
Discussion:.......................................................................................................................................5
Issue 1. Poor product quality and lowering of customer satisfaction:.........................................5
Issue 1.1. Poor product quality and competitor threats:..........................................................5
Issue 1.2. Legal risks:..............................................................................................................6
Issues 1.3. Environmental risks:..............................................................................................6
Issue 2. Weakening downstream supply chain:...........................................................................6
Issue 2.1. Losing of access to customer base:.........................................................................6
Issue 2.2. Impact on revenue generation:................................................................................7
Issue 2.3. Lack of liquidity in inventory management:...........................................................7
Theoretical Consideration................................................................................................................7
Strategy formation...........................................................................................................................8
Conclusion:......................................................................................................................................9
Recommendations:........................................................................................................................10
Improving product quality:........................................................................................................10
Opening its own outlet:..............................................................................................................10

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Selling camera to the police:......................................................................................................10
References:....................................................................................................................................11

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Introduction:
Revenue generation is one of the main key performance indicators of the financial
strength and market position of manufacturing companies. Increase in revenue is generally
considered as the sign of growing revenue generation as well as increasing market positions.
Increase in sales show customer acquisition and retention. That is why the apex management of
business organisations view revenue generation very closely and decrease in sales lower than the
accepted limit calls for urgent actions from the apex managers. Revenue generation to a great
extent depend on the quality of the products. The fact holds more truth for high-involvement
products like camera. Deterioration in the quality of products results in lowering satisfaction
among customers which ultimately lead companies to lose customers and consequent revenue
generation. The downstream supply chain partners namely, the distributors and retailers,
collectively called as channel partners cancel orders to purchase for finished goods which lose
end customer support. These negative changes hit revenue generation of manufacturing
companies devastatingly urging their respective management boards to take urgent decisions to
deal with the situation. The aim of the report is to delve into the issue of lowering sales
orders and consequent fall in revenue generation which Pro-Go, an Australia based camera
company is facing. The company was a private limited company which manufactured and
marketed superior quality action camera. The company carried out innovation which enabled it
to manufacture camera powered with small batteries with longer life time. The cameras the
company produced were hardy and gained acceptance in foreign markets like China. However
the products started showing quality issues and exploded (Engler, Winter & Schulz, 2015). The
Chinese distributors through which the company operated in China terminated their contracts.
The company due to losing its access to the Chinese markets suffered a revenue loss of as high as

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50 percent (Bhatt & Bhanawat, 2016). The context against which the research stands is
revival of sales. The company was suddenly faced with fall in revenue generation due to
some of its camera models exploding which resulted in losing of customers. The case study
would then go on to recommend strategies which the camera company can implement to
revive its sales. The main audience of the report would be the stakeholders like the management,
the employees and customers.
Aim:
The three key themes which the paper would address is are the importance of product
quality to ensure customer satisfaction, the impact of the customer satisfaction on the
downstream supply chain of a company and the impact of the first two key issues on the
profitability of business organisations.
Discussion:
The following are the three key issues Pro-Gro Pty Limited are facing according to the
case study:
Issue 1. Poor product quality and lowering of customer satisfaction:
Falling product quality results in falling customer satisfaction which ultimately lead to
lowering customer satisfaction. Lowering of customer satisfaction results in lowering of revenue
generation. The following are the three issues which lowering of quality and customer
satisfaction can attract:
Issue 1.1. Poor product quality and competitor threats:
Poor product quality results in competitor threats. This is because owing to experiencing
lower rate of customer satisfaction, the customers tend to choose competitors’ products over the

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products of the company concerned. For example, the cameras of Pro-Gro faced defects like
explosion. These explosions resulted in safety issues of customers which resulted in customers
shifting to products of competitors. This means that Pro-Gro would lose customers to
competitors (Engler, Winter & Schulz, 2015).
Issue 1.2. Legal risks:
Lowering of product quality would attract legal risks for the company. This is because
exploding camera have the capability of causing fire or damage to the users. The users might file
legal cases against the company, thus attracting legislative risks (Suhaily & Darmoyo, 2017).
Issues 1.3. Environmental risks:
Poor quality products have detrimental effects on the environment. This is because
products like cameras on explosion release harmful gases which harm the environment.
Secondly, disposal of these defective devices have potential risks to the environment as well.
Thus, it is clear that defective products attract environmental risks.
Issue 2. Weakening downstream supply chain:
The following are the issues which Pro-Gro Pty Limited faced due to weakening
downstream supply chain:
Issue 2.1. Losing of access to customer base:
Weakening of downstream supply chain would lead to losing of access to customer base.
The companies without direct access to customers are dependent on their downstream supply
chain members like distributors and retailers to sell their products to their end customers. This
means that weakening downstream supply chain would result in weakening of sales of products
to end customers. For example, the case study clearly mentions that Pro-Gro Pty Limited sold its

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products in China (Bhatt & Bhanawat, 2016). The distributors based in China cancelled their
orders which resulted in the sale of the company fall by 50 percent. Thus, it is clear that losing of
downstream supply chain would result in losing direct access to customer base.
Issue 2.2. Impact on revenue generation:
Weakening of downstream supply chain would result in weakening revenue generation.
The case study clearly mentions that Pro-Gro operated in China using its downstream supply
chain and did not have any direct presence in the country in spite of the fact that China was its
only foreign market (Sivapalan & Jebarajakirthy, 2017). The distributors located in China
cancelled the orders and as a result the company lost control over the Chinese market which
resulted in its sales falling as much as 50 percent. Thus, it is evident that losing of downstream
suppliers would result in fall of revenue.
Issue 2.3. Lack of liquidity in inventory management:
The losing of distributors and consequent losing of customers would result in falling
liquidity in inventory management. This is because falling distribution channel would mean
losing customers. This would mean lowering sales orders. For example, Pro-Gro lost its Chinese
distribution channel which resulted in lowering of customer demands. This resulted in stocking
of finished goods inventory for longer span of time. This means that amount of capital which the
company invested in manufacturing and maintaining of the finished goods remain locked and
could not recovered (Jena & Sarmah, 2015). This resulted in falling liquidity in the company as
far as inventory management is concerned.

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Theoretical Consideration
It is important to note the Pro-Go faces significant challenges with the previous versions
of their cameras. Thus, it becomes much important that all the major issues that were found in
the previously manufactured devices are thoroughly checked before rectifying them through the
new models. The current situation is very much challenging for the organization. This is mainly
because the cameras have been reported to burst into flames. This is a serious issue that can even
be life threatening for the users based on the given circumstances. To tackle this challenge,
business model generation is required greatly. It is important that a new production technique is
used for the newer models. However, internal and external organizational communication also
becomes important. This would ensure that the requirements for making the new products and
the intended outcomes from the manufacture of the products are clearly communicated to the
internal and external stakeholders. The next step would be the creation of a business model. A
business model canvas needs to be created (Nguyen, de Leeuw & Dullaert, 2018).). The canvas
helps to identify some key areas that a business needs to consider either when launching a new
product or re-launching an existing product. In this case value can only be generated effectively
if a new kind of camera is released by Pro-Go. The business model ontology canvas essentially
considers the aspects of key activities, partner network, key resources and cost structure on one
side. On the other side are the aspects of client relationships, client segments, distribution
channels and revenue flows. These two sides are joined together by the value proposition. A
strong framework needs to be made considering the values of the customers, customer
engagement, value delivery and linkages and monetization. In this case it becomes very
important to note that the target customers are the Australian Police. Hence, meeting government
regulations also become very important.

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Strategy formation
Firstly, the strategy needs to be formed keeping the target market at the central position.
This means that the police department of the country and their needs and requirements
concerning this new camera need to be evaluated primarily. The police would require a camera
that can perform up to the standards required for the security and surveillance cameras. However,
at this point it becomes important that the cameras are made in accordance of the latest in
technology. The cameras need to be well equipped with state of the art lenses that can capture
good shots even in low light. According to the regulations of the Australian police the minimum
regulation of surveillance cameras should be 320 television lines (www.police.qld.gov.au, 2019).
However, as the cameras would be selected after the trial, the cameras need to be much above
the minimum requirements. The other important requirements as per the regulations are
compatible lens and camera, effective focus that can work effectively in all light conditions all
day throughout the year and door cameras require to vary fast their intake of the amount of light.
These are very important conditions that need to be met in order to effectively reach out to the
target markets.
Secondly, customer engagement becomes an important factor that needs to be assessed.
Here, as the customers belong to the police department it becomes important that multiple
functionalities of the camera are provided. Investment should be made towards greatly
improving the zooming functionality of the camera. This is much important since the camera
would be used for security purpose. The faces of the criminals or trespassers need to be clearly
seen through the zooming function (Grant, 2016). The lenses also need to be adjusted to cover a
large area into the frame. The camera needs to be effective when capturing shots at fast rate. This

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is because police cameras require both video and still camera functions at the same time in the
surveillance cameras.
Conclusion:
It can be concluded that product quality and supply chain management, both upstream
and downstream have strong impact on the revenue generation of business organisations. The
discussion clearly shows that Pro-Gro in the initial stage enjoyed a steady market growth owing
to its superior product quality. However, the product quality of the camera s the company
produced deteriorated which resulted in customer complaints. The Chinese distributors of the
company cancelled the orders which resulted in the company suffering immense losses by as
much as 50 percent. This situation calls for certain strategies which the management of the
company can take to deal with the issue.
Recommendations:
The following are the recommendations which can be made to the management of Pro-
Gro:
Improving product quality:
The management of Pro-Gro should improve the quality of its main products, namely the
cameras. The company should invest in advanced technology and acquire new plants to bring
about drastic improvement in the quality of the cameras.
Opening its own outlet:
The company should open its own outlets to sell products in China. This would enable
the company to reduce its dependence on distributors in the country for its sales of products and
consequent revenue generation.

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Selling camera to the police:
It can be recommended that the company should sell the cameras to the Australian
police. This is because the police department is owned by the government which would
guarantee secured returns. It can also be pointed from a financial perspective this would generate
higher profits because in order to replace old cameras with new camera would place more orders.
This would generate higher profits for the company.

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References:
Bhatt, A. K., & Bhanawat, D. S. (2016). Service Quality in Retail-a Literature
Review. International Journal For Research In Business, Management And Accounting
(ISSN: 2455-6114), 2(3), 27-35.
Engler, T. H., Winter, P., & Schulz, M. (2015). Understanding online product ratings: A
customer satisfaction model. Journal of Retailing and Consumer Services, 27, 113-120.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Jena, S. K., & Sarmah, S. P. (2015). Measurement of consumers' return intention index towards
returning the used products. Journal of Cleaner Production, 108, 818-829.
Nguyen, D. H., de Leeuw, S., & Dullaert, W. E. (2018). Consumer behaviour and order
fulfilment in online retailing: A systematic review. International Journal of Management
Reviews, 20(2), 255-276.
Sivapalan, A., & Jebarajakirthy, C. (2017). An application of retailing service quality practices
influencing customer loyalty toward retailers. Marketing Intelligence & Planning, 35(7),
842-857.
Suhaily, L., & Darmoyo, S. (2017). Effect of product quality, perceived price and brand image
on purchase decision mediated by customer trust (study on japanese brand electronic
product). Jurnal Manajemen, 21(2), 179-194.