Six Sigma Quality Management: Strategies for Organizational Growth

This report delves into the decline stage of the organizational life cycle, a critical phase characterized by reduced revenue and resources. It explores the causes of decline, distinguishing between quantitative factors like reduced workforce and market share, and qualitative factors such as fierce competition, obsolete technology, and economic downturns. The report then proposes strategies for organizations to navigate out of the decline stage, including discontinuing unprofitable product lines, forming collaborations or acquisitions, and expanding product lines through cost reduction and innovation. It emphasizes the importance of analyzing customer data, identifying new markets, and expanding distribution channels. The report highlights the role of effective leadership, management skills, and a proactive approach to adapt to changing market dynamics and customer preferences to ensure organizational growth and sustainability.

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Introduction
The decline stage of the organizational life cycle refers to a phase where an organization
undergoes continuous reduction of revenue and resources over a substantial period (Jirásek and
Bílek, 2018, pg. 9). This stage might occur after any growth stage since there is always a
possibility of long periods of stagnation. The decline stage at times can be recognized when it’s
too late to recover since its early signs can be easily mistaken to be temporary. The decline stage
is marked by declining profitability and sales and therefore, due to market stagnation a firm
begins to decline completely (Jaafar and Halim, 2016, pg. 39). Profitability goes down primarily
due to external challenges and lack of innovation. As firms react to this adversity, they may turn
out to become stagnant. On the other hand, poor sales are as a result of unappealing product
lines. Besides, decision making is distinguished by extreme conservatism. Communication
across departments is also abysmal.
Reasons for decline stage.
The decline that the CEO might have experienced can be as a result of various reasons.
Besides, the causes of the decline stage are distinguished into quantitative and qualitative
reasons. Quantitative reasons tend to be easier to detect while qualitative reasons may be hard to
detect (Gupta, 2010). Quantitative reasons are generated through the quantitative analysis of
information located in the organization’s internal operations reports, financial statements or other
mathematically measurable parameters. The reasons include; one, reduced workforce. A
reduction in the workforce may reflect the reduced need of products, total market, or capability
of delivering the products (Hasan, M.M. and Habib, A., 2017, pg. 34). However, at times,
cutbacks may seem as temporary measures set to revitalize or realign an organization for another
phase of growth.

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Two, reduced market share. The decrease in market share can signal several concerns.
For instance, the contraction of the overall market can be due to outdated technologies and
products or growing competition in the market (Gupta, 2010). Three, reduced share price and
profit. If an organization share price goes down, investors may opt out since according to their
assessment of the organization’s operating margin, the organization might not be able to show
the prospects of growth in the future.
On the other hand, qualitative reasons for the decline include; one, fierce competition.
Competitive forces may bring about barriers to entry for new organizations. For instance, the big
players in the market may have the advantages of economies of scale which results into lower
overhead and production costs (Katsanos, 2019). In addition, these organization might employ
aggressive pricing strategies including selling products at lower costs for the purpose of gaining
more customer traffic. This may put out a potential new company out of business. Besides,
takeovers by large and established organizations occur for the purpose of terminating a
competitor hence acquiring a larger market share (Gupta, 2010). Even though an organization
may at times overcome this hurdle, effective leadership and strategy should always be in place to
counteract these threats.
Two, lack of customers. The reduction of a niche in the market due to either change in
customer choice or lack of finding the proper market for a product may lead to the unexpected
decline of an organization. This can happen at any stage of the life-cycle and therefore, revenue
or quarterly sales can be good indicators in determining a change in the customer base (Zhou,
Chen, and Cheng, 2016, pg. 191) Three, obsolete technology. As organizations get older, their
main aim may be capitalizing on profits thus leaving behind the allocation of resources to replace
old systems or investing in innovative technologies. Therefore, obsolete technology may lead to

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inefficient communications, compatibility issues, poor customer retention and slower business
processes (Katsanos, 2019). In addition, an organization can decide not to invest into new
technology since the current technology may be meeting the needs of the organization. However,
competitors may be adopting new ways of doing business through new technologies hence
gaining a competitive advantage.
Four, economic downturn. Economic downturn affects many departments of an
organization, and therefore, it may lead to decline. For instance, the increase in unemployment
levels may reduce customer spending by reducing discretionary and disposable income
(Katsanos, 2019). In addition, an organization may decide to discontinue research and
development so as to downsize or even cut other costs. This may affect the quality of services
and products. Poor economies also reduce the ability of organizations to obtain lines of credit or
pay debts. This may leave an organization without the ability to stay afloat.
Lastly, economic atrophy. This is mostly encountered by old organizations that have
already experienced healthy growth and stability. The bureaucratic culture and hierarchical
structure of such organizations cause the slow degeneration of the organization (Jirásek and
Bílek, 2018, pg. 11). Due to the organization's size in terms of personnel, the incompetence from
middle management due to incumbency can result in excessive management processes that are
unproductive. In turn, this may lead to a leadership crisis. Employees of the organization can lose
interest and trust with the leadership and vision of the organization. Therefore, as employee
satisfaction rates continue dropping, the operational efficiency also goes down hence causing the
decline.

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How an organization can move from the Decline’ stage of the lifecycle?
Before developing an action plan, the CEO must first investigate the reason for the
decline. For instance, falling market share may portray the decreasing demand for products due
to the change of customer preferences or the presence of strong competitive activity (Linton,
2019). Therefore, having a product portfolio that includes a wide range of old products portrays
the overreliance on existing products or lack of the desire to invest in new product development.
In addition, a shrinking or static workforce may reflect the lack of enough investments in
recruitment and training hence causing employees to leave or retire.
After understanding the reasons for the decline, the CEO can adopt various measures so
as to move out of the decline stages. To begin with, the CEO can decide to discontinue a product
line if its profitability disappears. This decision is crucial since managers can continue to sell
money-losing products out of optimism (Gerber, 2019). As a result, organizations tend to decline
in growth as well as fail. In discontinuing a product, the CEO can consider various factors. One,
the total costs. In discontinuing a product, the decision should not just incorporate pre-unit costs
but the entire total costs. This includes manufacturing costs, storage costs, selling costs, customer
service costs, and transportation costs and other costs related to a product. By reviewing these
costs, the CEO can determine if the product is worth keeping.
Two, opportunity costs. Keeping a product up to date without making sales incurs
opportunity costs. For instance, the physical factory space can be used for other products that
bring in more revenue. Therefore, if the opportunity costs are high, the CEO can decide to
discontinue the product line. Three, desired rates of return. This is crucial for each business
owner since it determines the profitability level. If the product line the CEO has is lagging in
producing the desired rate of returns, the CEO can consider discontinuing the product so as to

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adopt more profitable products (Gerber, 2019). By deciding to increase capacity in order to both
keep the low-returning product and add new ones, the business overall business performance can
be hampered.
Four, employee morale. In deciding to discontinue a product, the CEO can consider
evaluating employee morale. For instance, if the CEO shuts down a specific product line as well
as lay off workers, the remaining workforce may feel insecure, and therefore their performance
may decrease hence resulting to the complete decline of the organization. Thus, the CEO might
consider determining a transition whereby the workers will not be affected (Gerber, 2019). In
addition, as the CEO discontinues a product line, the employees can be adopted in other new
areas of operation.
Lastly, cannibalization. This is where one product causes other products to underperform
(Gerber, 2019). For instance, the CEO might be offering two slightly differentiated products
having different prices. Therefore, customers can decide to purchase one of the products because
of price hence leaving the other. In this situation, the CEO should consider the tradeoff of
deciding whether to offer an upgraded product or both. If selling the upgraded product is more
profitable, the CEO should, therefore, consider discontinuing the other product.
On the second measure, the CEO can decide to collaborate with other startups or acquire
them altogether. Corporates and startups are teaming up as they chase for innovation. A startup
may be ideal since it can sit anywhere on the organizational curve and therefore, by acquiring a
partnership with a startup the CEO can acquire various strengths (Lucenet, 2018). For instance,
the CEO can be able to move around in search of disruption. By being more flexible and open-
minded, attracting new opportunities might allow the CEO to move and stay away from the
decline stages is possible.

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For instance, companies such as Google and Apple have remained in business as well as
prevent decline by acquiring startups that give them current technologies and ideas. Therefore,
these companies have been able to design new products and services that meet the diverse needs
of customers (Lucenet, 2018). Besides, the CEO is able to attract fresh, young and dynamic
talent. This may allow his/her organization to incorporate new knowledge and ideas hence
making execution of action plans easier and competitive.
In addition, since startups have the opportunity to try out what works best without having
to lose much, the CEO can leverage this aspect hence being able to understand the steps to take
in order to ensure the organization comes out of the decline stage and remain profitable. Lastly,
acquiring a startup can help the CEO refresh the corporate structure of his/her company by
reviving the management team. This can be instrumental in shifting the style of the company
hence allowing the company to reach its goals and objectives (prooV Team, 2017).
On the third measure, the CEO can decide on expanding its product lines through cost
reduction and innovation. To achieve this, the CEO can implement effective leadership and
management skills to ensure the firm comes up with new and improved versions of product lines.
However, various aspects such as industry changes, consumer behaviors and evolving trends
may set the bar of product differentiation very high (DeFranzo, 2012). Therefore, the CEO can
consider evaluating the following aspects so as to come up with products that appeal to the
customer base, yield increased sales and create actionable results.
To begin with, the CEO should analyze customer data. By developing customer survey
data, the CEO is able to generate information about what the customers really need. Therefore,
expanding the product line can be easy and effective since customer preferences and tastes are
already determined (DeFranzo, 2012). Secondly, the CEO should consider finding new market

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for the new products. Emerging markets may need specific types of products, and therefore, in
order to penetrate the markets, the CEO must be open-minded and ready for change. This will
allow the CEO to understand which products might be required in a particular time hence being
able to attract more customers. The CEO will also be able to move out of the decline stage much
easier.
Thirdly, the CEO might consider expanding distributions channels. Distribution is crucial
since it helps one to expand and grow revenue as well as reach. Various distribution methods can
be considered including; direct marketing through mail, internet or catalogue,
wholesaler/distributor, or retail (DeFranzo, 2012). Lastly, the CEO can consider targeting repeat
customers with new products. Repeat customers cannot be ignored since they are the backbone
of every business. This is because they can be won over by competition. Therefore, if the CEO
strategizes his/her products perfectly, acquiring new and repeat customers can be quite easy.
Lastly, on the measures, the CEO can consider adopting or creating an environment of
innovation in the organization. By breaking down various barriers that discourage teamwork or
new ideas, the employees are able to contribute new ideas that may promote new improvements
in the organization (Linton, 2019). For instance, it may be the old systems in the organization
that cause slow progress. Therefore, by bringing new innovative systems, business operations
can become more efficient and quicker. In addition, the CEO might need to identify new
training requirements and programs that promote workforce performance. An analysis of the
workforce gaps in essential skills can be instrumental in determining which skills the
organization might be lacking (Linton, 2019). Hence, filling those gaps by recruiting and training
key positions can allow the organization to increase productivity.

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Conclusion.
The decline stage is a tipping point for every organization. This is because, if volumes
and margins begin to erode and continue to do so, an organization can lose a piece of the market
share specifically in a stable market. As a result, the organization may be unable to reinvent itself
as well as define new products and services, new markets, and brands. In addition, the value of
an enterprise begins going down and may end in dissolution or liquidation. However, when a
company addresses the necessary changes, a company beginning to decline can enter a new
growth phase hence ensuring the company survives and prospers for a longer time. The essential
changes may involve a number of measures that ensure the organization is able to attract new
customers. This may be through innovation, expanding new product lines, acquiring startups or
dropping specific product lines. Besides, in ensuring the measure are effective, leadership and
management skills should be on point.

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