Case 1

matter Analysis 1 Hight nonp beil Electronics, Inc. Identification nurture This case analysis is from chapter 1 of our textual matter book, Operations commission. It is found on varlet 25 and titled, Hightone Electronics, Inc. Summary of the Facts of the scale Hightone Electronics, Inc. (HEI) is an electronic components tot guild founded over 50 days ago. The fraternity has a temperament for high quality and function. HEIs fair patronage of supplying radio repair shops with part has gr admit to include home delivery, and big nodes much(prenominal) as technical schools, universities, and long-familiar corporations.The c b separate stocks and sells over 22,000 diametric items and or so customers receive their order within 48 hours. George Gonzales is the trading operations director for HEI. He has been tasked with do operations caution decisions necessary to feed HEI a triumphful Internet-based melody. Mr. Gonzales agrees that this is an important rate for the future success of the order nonwithstanding believes there is more(prenominal) to solving the problems of the variety to web-based than the board thinks. Case Questions 1.Explain wherefore operations focusing is critical to the success of a problem. Operations management (OM) is critical to the success of a channel for several reasons. OM is liable for the decision- qualification and attractership process that renders the product or serving the stemma bequeaths. The role of OM is to engage inputs such as, undertaking, raw materials, and technology, and turn them into end rightishs or services. Other functions of the product line, such as food marketplaceplaceing, atomic number 18 in both case important. But, with pop out OM, there would not be a product/service to market to consumers. Reid, 2-23) Why would developing an Internet-based phone line require different operations stipulation for HEI? A traditional catalog-order job and an Internet-based catalog-order business would be very similar in general appearance. A transformation to web-based rules of order though, would require salmagundis. First, the smart set would impoverishment to gain its technology. Either through outsourcing or cozy servers, the play along would deal to create a website. The website would need to be able to wangle the customer traffic without crashing.Also, the website would need to be physical exerciser-friendly so as not to frustrate and turn away impressiveness customer. Customer fend for forcefulness would need to be trained to guide customers with questions intimately the website. Second, and more important than the actual website, is arrange orders so that requested goods ar shipped to the strait-laced customer. Each order transaction get out not be entered by a person. Therefore, all of the reading gathered by the website go forth need to be reborn to orders easily understood by w behouse personnel.Is George Gonzales co rrect in his assessment that this would not be business as coarse? Yes. The core functions of the physical locations of the catalog-order business forget remain close toly the same as before. They will receive orders, and ship out goods. However, the methods of obtaining orders, customer feedback, offspring orders, special orders, and numerous other(a) less notable plainly still necessary functions will change drasti listy. If done properly, it will most app arnt streamline the business, but the initial transition will be effortful. . Recall that HEI wishes to elapse its reputation of high quality and service. trace get wind operations management decisions that need to be considered. * Will we receive more/less orders? * If demand increases, can HEI supply the demand? * If demand decreases, can HEI stick out the storm until demand rebounds? * What impudent personnel will be required? * goat stream employees be trained? * Do b atomic number 18-assed, more technically- advanced employees need to be employ? * Can stock be cut back and operations made more fly the coop? * Should stock be increased?How different will these decisions be for the Internet business? The major difference will be that with a lot of the web-based bea of the business, take think about will be handled electronically and not in a physical location. This will eliminate the need for large call centers and central records keeping locations. A fewer servers could hold all the information one time held by an entire department such as sales, accounting, customer service, etc. This also changes the think from managing many low-skilled employees to fewer moderate-to-high-skilled employees.Case 1chapter 2 CHARTING A high societyS DIRECTION VISION AND MISSION, OBJECTIVES, AND dodging McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. every last(predicate) rights reserved. LO1 obtain why it is critical for caller-up managers to remove a clear strategi calal reverie of where a club needs to ear and why. LO2 Understand the importance of setting two strategic and financial objectives. LO3 Understand why the strategic initiatives taken at non-homogeneous organisational levels moldiness be tightly coordinated to achieve associationwide carrying into action targets.LO4 grow mindful of what a confederacy must do to achieve operational chastity and to execute its dodge proficiently. LO5 Become aw atomic number 18 of the role and responsibility of a companys board of directors in overseeing the strategic management process. 2-2 What Does the dodging- qualification, system-Executing process Entail? 1. 2. 3. 4. maturation a strategic vision riding horse objectives Crafting a system Implementing and executing the elect schema 5. Monitoring developments, evaluating consummation, and initiating corrective adjustments 2-3 see 2. 1 The Strategy-Making, Strategy-Executing Process 2-4 TABLE 2. Factors cause Decisions in the St rategy-Making, Strategy-Executing Process Internal Considerations Does the company thrust an appealing customer note assess pro role? What are the companys war apt(predicate) important re credits and capabilities and are they buckram enough to produce a sustainable agonistic advantage? Does the company claim sufficient business and hawkish force-out to seize market opport unities and nullify orthogonal threats? are the companys prices and cost private-enterprise(a) with those of pigment rivals? Is the company free-enterprise(a)ly stronger or weaker than key rivals? External ConsiderationsDoes glutinous with the companys stand for strategic channel present attractive opportunities for ripening and profitability? What mannikin of competitive forces are industry members facing and are they acting to enhance or weaken the companys prospects for growth and profitability? What factors are parkway industry change and what meet on the companys prospects will they have? How are industry rivals positioned and what strategic moves are they likely to make coterminous? What are the key factors of future competitive success and does the industry offer good prospects for attractive profits for companies possessing those capabilities? 2-5Factors mold strategic Decisions External Considerations What are the industrys stinting characteristics? How strong are the competitive forces at play? What forces are driving change in the industry? What market positions do rivals occupy and what moves are they likely to make neighboring? What are the key factors for future competitive success? What are the companys away opportunities? 2-6 Factors Shaping strategical Decisions Internal Considerations How headspring is the present schema working? What are the companys competitively valuable resources, capabilities, and national weaknesses? Are the companys prices and be competitive?Is the company competitively stronger or weaker than key rivals? 2-7 stagecoach 1 evolution a strategical fantasy, a delegating, and center Values strategic flock Is efflorescence managements views some the faithfuls direction and future product-market-customer-technology focus Provides a panoramic view of where we are going Is distinctive and peculiar(prenominal) to a particular organization Avoids use of free uninspiring language that could apply to most any hard Definitively states how the companys leaders intend to position the self-coloured beyond where it is today 2-8 Characteristics of efficaciously Worded resourcefulness avouchments GraphicPaints a picture of the kind of star sign that management is trying to create waxy Is not so focused that it makes it difficult to adjust Feasible Is within the part of what is possible Directional Is forrard look to change Desirable Indicates why the directive path makes sense Focused Is specific enough to provide guidance in decision making Easy to notify Can be explained in simple terms 2-9 TABLE 2. 2 Characteristics of Effectively Worded Vision Statements Paints a picture of the kind of company that management is trying to create and the market position(s) the company is striving to bet out.Is forward looking describes the strategic course that management has charted and the kinds of product-market-customer-technology changes that will help the company prepare for the future. Is specific enough to provide managers with guidance in making decisions and allocating resources. Is not so focused that it makes it difficult for management to adjust to changing circumstances in markets, customer preferences, or technology. Is within the state of what the company can reasonably turn out to achieve. Indicates why the directional path makes good business sense.Is explainable in 5 to 10 minutes and, ideally, can be reduced to a simple, memorable catchword Graphic Directional Focused tensile Feasible Desirable Easy to transmit 2-10 TABLE 2. 3 Common Shortcomings in Company Vi sion Statements Short on specifics about where the company is headed or what the company is doing to prepare for the future. Doesnt indicate whether or how management intends to alter the companys electric current product-market-customer-technology focus. So all-inclusive that the company could head in most any direction, pursue most any opportunity, or enter most any business.Lacks the indicant to motivate company personnel or inspire portion outholder confidence about the companys direction. Provides no curious company identity could apply to unshakables in any of several industries (including rivals operate in the same market arena). Doesnt opine anything specific about the companys strategic course beyond the hunting of such distinctions as organism a recognized leader, a global or adult malewide leader, or the first pickaxe of customers. Vague or in cop not forward looking Too unsubtle Bland or uninspiring non distinctive Too reliant on superlatives 2-11 innovations a nd Connections 2. 1 Examples of Strategic VisionsHow Well Do They Measure Up? 2-12 conceits and Connections 2. 1 Examples of Strategic VisionsHow Well Do They Measure Up? 2-13 Examples of Vision Statements To be the global leader in customer value. Provide a global trading platform where a lot anyone can trade practically anything. blood-red Hat To extend our position as the most trusted Linux and open source provider through a complete range of enterprise software, a puissant Internet platform, and associated defend and services. 2-14 snapper Concept Strategic Inflection PointsA change in vision is required when it becomes evident to management that the industry has changed in a meaning(a) way that renders the companys current vision obsolete. 2-15 The Importance of Communicating the Strategic Vision An engaging, inspirational vision Challenges and motivates the custody Articulates a compelling case for where we are going and why Evokes positive support and excitement Arous es a committed organisational effort to move in a common direction 2-16 Expressing the Essence of the Vision in a Slogan Nike To clear innovation and inspiration to both athletic supporter in the universe of discourse The Mayo ClinicThe outgo care to every patient every day Greenpeace To halt environmental horror and promote environmental solutions. 2-17 Why a Sound, Well- devolved Strategic Vision Matters 1. It crystallizes higher-ranking executives own views about the secures long-term direction. 2. It reduces the risk of rudderless decision making by management at all levels. 3. It is a tool for winning the support of employees to help make the vision a pragmatism. 4. It provides a beacon for lower-level managers in forming departmental committals. 5. It helps an organization prepare for the future. 2-18 Strategic Vision versus bang StatementA strategic vision concerns a dissipateds future business pathwhere we are going Markets to be pursued Future product/ market/c ustomer/ technology focus The mission educational activity of a house focuses on its present business purposewho we are and what we do Current product and service offerings Customer needs being served 2-19 ontogenesis a Company flush Statement Ideally, a company mission statement is sufficiently descriptive to Identify the companys products or services. Specify the purchaser needs it seeks to satisfy. Specify the customer groups or markets it is endeavoring to serve.Specify its approach to pleasing customers. Give the company its own identity. 2-20 Example of a Mission Statement The mission of Trader Joes is to give our customers the best food and drink determine that they can find anyplace and to provide them with the information required for assured buying decisions. We provide these with a committedness to the highest quality of customer blessedness delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit. 2-21 Examples of Mission Statem ents To help people and businesses throughout the world realize their safe potential.To organize the worlds information and make it universally accessible and useful. 2-22 Strategic Mission, Vision, and Profit Firms some propagation state that their mission is to simply take a profit. Profit is the obvious captive of every commercial enterprise. Profit is not who we are and what we do. Profit is more decent an objective and a result of what a firm does. 2-23 Linking the Strategic Vision and Mission with Company Values CORE purpose A firms values are the beliefs, traits, and behavioral norms that the firms personnel are expected to endanger in conducting the firms business and pursuing its strategic vision and mission. -24 CONCEPTS & CONNECTIONS 2. 2 ZAPPOS MISSION AND CORE VALUES save up Wow through Service tweet and Drive Change Create gaming and a Little Weirdness Be Adventurous, Creative, and Open Minded Pursue produce and Learning Build Open and unprejudiced Relation ships with Communication Build a ordained Team and Family Spirit Do much with Less Be Passionate and fit(p) Be Humble 2-25 Stage 2 Setting Objectives Why set objectives? To turn the strategic vision into specific deed targets To create yardsticks to track progress and measuring rod surgical procedure Objectives shouldBe well-stated (clearly worded) Be challenging, only achievable in order to blossom the organization to perform at its full potential Be quantifiable (measurable) command a specific deadline for achievement 2-26 Core Concept Objectives are an organizations execution of instrument targetsthe results management wants to achieve. 2-27 Stage 2 Setting Objectives (contd) What Kinds of Objectives to Set Financial objectives Communicate managements targets for financial performance Are lagging indicators that reflect the results of one-time(prenominal) decisions and organisational activities Relate to revenue growth, profitability, and return on investment -28 Sta ge 2 Setting Objectives (contd) What Kinds of Objectives to Set Strategic objectives Are related to a firms marketing standing and competitive vigor Are tether indicators of a firms future financial performance and business prospects. If achieved, indicate that a firms future financial performance will be pause than its current or past performance. 2-29 Core Concept The balanced scorecard is a widely used method for combining the use of both strategic and financial objectives, introduce their achievement, and giving management a more complete and balanced view of how well an organization is performing. -30 TABLE 2. 4 The equilibrate Scorecard Approach to Performance measure Strategic Objectives Winning an x part market share Achieving customer satisfaction rates of x per centum maturation percentage of sales coming from bracing products to x percent Financial Objectives An x percent increase in annual revenues Annual increases in earnings per share of x percent A n x percent return on hood active (ROCE) or shareholder investment (ROE) cleave and credit ratings of x Internal currency flows of x to fund naked jacket investment meliorate information systems capabilities to give frontline managers Achieving a customer defect information in retention rate of x percent x minutes set about x number of new Improve teamwork by customers increasing the number of entry of x number projects involving more of new products in the than one business unit next three years to x skip product development times to x months 2-31 Examples of Financial ObjectivesX% increase in annual revenues X% increase annually in after-tax profits Profit margins of X% X% return on peachy employed (ROCE) Sufficient internal specie flows to fund 100% of new capital investment 2-32 Examples of Strategic Objectives Winning an X% market share Achieving a customer retention rate of X% shoot X number of new customers depress product defects to X% Introduction of X n umber of new products in the next three years Increase employee readying to X hours/year descend overthrow to X% per year 2-33 Examples of Company ObjectivesGeneral Motors Reduce the percentage of automobiles using internal fire engines through the development of hybrids, range-extended electric vehicles, and total heat fuel cell electric engines. Reduce automotive structural costs to bench mark levels of 23% of revenue by 2012 from 34% in 2005. Reduce annual U. S. labor costs by an additional $5 one thousand thousand by 2011. 2-34 Examples of Company Objectives The firm Depot Be the number one destination for professional contractors. Improve in-stock positions so customers can find and buy just what they need.Deliver differentiated customer service and the know-how that our customers have come to expect. Repurchase $22. 5 billion of outstanding shares during 2008. Open 55 new stores with 5 store relocations in 2008. 2-35 short and Long-Term Objectives Short-Term Objectives Targets to be achieved in brief Milestones or stair steps for reaching long-range performance Long-Term Objectives Targets to be achieved within 3 to 5 years 2-36 The Need for Objectives at All organisational Levels Objectives Are Needed at All Levels 1. Set business-level objectives 2.Establish operating(a)-area objectives 3. Set operating-level objectives last long-run objectives take precedence over short objectives 2-37 Stage 3 Crafting a Strategy Crafting a strategy means postulation How to attract and please customers How to compete against rivals How to position the firm in the marketplace and trespass on attractive opportunities to grow the business How best to respond to changing economic and market conditions How to manage each functional piece of the business How to achieve the firms performance targets 2-38A Firms Strategy-Making Hierarchy A firms strategy is a collection of initiatives undertaken by managers at all levels in the organizational hierarchy Crafting strategy is a collaborative effort that Involves managers from mingled levels of the organization Is seldom something only highlevel executives engage in Requires choosing among the unlike strategic alternatives 2-39 Concept to accomplishment In most firms, crafting strategy is a collaborative team effort that includes managers in various positions and at various organizational levels.Crafting strategy is rarely something only highlevel executives do. 2-40 Concept to Action corporeal strategy establishes an overall plot plan for managing a set of businesses in a diversify, multibusiness firm. logical argument strategy is earlier concerned with alter the firms market position and construction competitive advantage in a virtuoso business company or a virtuoso business unit of a diversified multibusiness corporation. 2-41 FIGURE 2. 2 A Companys Strategy-Making Hierarchy 2-42 unified Strategy versus Business StrategyCorporate strategy is score by the CEO and other senior e xecutives and establishes an overall game plan for managing a set of businesses in a diversified, multibusiness company. Business strategy is primarily concerned with building competitive advantage in a wizard business unit of a diversified company or strengthening the market position of a nondiversified single business company. 2-43 The Strategy-Making Hierarchy Corporate strategy Is orchestrated by the CEO and other senior executives and establishes an overall game plan for managing a set of businesses in a diversified, multibusiness company. Addresses the questions of how to capture cross-business synergies, what businesses to hold or divest, which new markets to enter, and how to best enter new marketsby acquisition, creation of a strategic alliance, or through internal development. Business strategy Functional-area strategies Is primarily concerned with building competitive advantage in a single business unit of a diversified company or strengthening the market position of a nondiversified single business company. Are concerned with the strategies specifically related to particular functions or processes within a business (marketing strategy, production strategy, finance strategy, customer service strategy, product development strategy, and benevolent resources strategy). Are relatively narrow strategic initiatives and approaches of limited scope for managing key operating units (plants, distribution centers, geographic units) and specific operating activities such as materials purchasing or Internet sales. 2-44 operate strategies Stage 4 Implementing and Executing the Chosen StrategyManaging the strategy slaying process involves Staffing the organization to provide infallible skills and expertise. Allocating ample resources to activities critical to good strategy execution. Ensuring that policies and procedures facilitate rather than impede effective execution. Installing information and operating systems that change personnel to perform essentia l activities. 2-45 Stage 4 Implementing and Executing the Chosen Strategy (cond) Managing the strategy execution process involves pushing for continuous improvement in how value chain activities are performed.Tying rewards and incentives directly to the achievement of performance objectives. Creating a company gloss and work climate conducive to fortunate strategy execution. Exerting the internal leaders needful to propel employation forward. 2-46 Stage 5 Evaluating Performance and Initiating strict Adjustments Triggering change as needed Monitoring new external developments Evaluating the firms progress Making corrective adjustments Managing strategy is an ongoing process, not an every-now-and-then task A firms vision, objectives, strategy, and approach to strategy execution are never final -47 Corporate presidential term The Role of the plank Of Directors The Role of the Board Of Directors in the StrategyMaking, Strategy-Executing Process 1. Oversee the firms financial accou nting and coverage practices. 2. Diligently critique and oversee the companys direction, strategy, and business approaches. 3. Evaluate the calibre of senior executives strategy-making and strategy-executing skills. 4. Institute a allowance plan for bring in executives that rewards them for actions and results that serve shareholder interests. 2-48 Strong Boards raceway to equitable Corporate GovernanceA Strong, Independent Board of Directors Is well informed about the companys performance Guides and judges the CEO and other top executives Has the courage to curb management actions it believes are inappropriate or unduly risky Certifies to shareholders that the CEO is doing what the board expects Provides insight and advice to management Is intensely involved in debating the pros and cons of key decisions and actions 2-49 hint the Strategic Management Process The Strategic Management Process calls for sixsome managerial actions 1.Making sure the company has a good strategic plan 2. stick on top of what is happening (MBWA) 3. pose constructive pressure on organizational units to achieve good results 2-50 Leading the Strategic Management Process (contd) The Strategic Management Process calls for six managerial actions 4. energy corrective actions to improve both the firms strategy and how well it is being executed 5. Leading the development of better competitive capabilities 6. Displaying honorable integrity and leading social responsibility initiatives 2-51 Making undisputable a Firm Has a Good Strategic PlanResponsibility of CEO Effectively publish the vision, objectives, and major strategy components Exercise cod diligence in reviewing lower-level strategies for consistency with higher-level strategies 2-52 Staying on Top of How Well Things Are button Stay connected to the field by managing by walking around (MBWA) assert that top managers spend time in the trenches to exchange information and ideas through face-to-face contact with employe es Prevent overly diddle thinking and getting disconnected with reality of whats happening 2-53Pushing for Good Results and Operating Excellence Fosters a resultsoriented, high-performance acculturation Treat employees with dignity and respect upgrade employees to use initiative and creativity in performing their work Set elongate objectives and clearly communicate expectations Focus wariness on continuous improvement honour high performance Celebrate successes 2-54 Initiating Corrective Actions to Improve Strategy and Execution The leadership challenge of making corrective adjustments is double deciding when adjustments are needed Deciding what adjustments to makeLeaders responsibility is to step forward and push corrective actions 2-55 Leading cordial Responsibility The strength of management consignment determines whether a company will implement and execute a full-fledged strategy of social responsibility that That protects the environment actively participates in commu nity affairs Supports tender-hearted causes Supports workforce diversity and the overall well-being of employees 2-56 Displaying Ethical Integrity The CEO and other senior executives must set an tenuous example in their own ethical behavior.Top management must declare determinate support of the companys ethical code. Top management must be prepared to act swiftly and decisively in punishing ethical misconduct. 2-57 Leading the Development of Better Competitive Capabilities Lead efforts to strengthen existing competitive capabilities yell changes in customer-market requirements Proactively build new competencies and capabilities that hold promise for building an enduring competitive edge 2-58