Category: Management

It goes without saying that high-quality customer service plays an immeasurably important role in the companys stable growth and development. In the present day, Lenovo manages one of the largest and highly complex global supply chain networks with more than 30 manufacturing sites and 2,000 suppliers across the globe aiming to deliver approximately 100 million products to retailers, partners, and end-customers in 180 markets (Arora, 2020). At the same time, the company understands that even a single weak link in the chain can lead to major breakdowns in the customer experience (Arora, 2020, para. 1). That is why it constantly develops the capacities of its supply chain incorporating big data analytics, including blockchain, IoT, 5G, AR, and AI, and integrating customer data for sharing and feedback in real-time.

In relation to its supply chain, Lenovo is guided by the principles of the prevention of quality problems that will inevitably lead to customer dissatisfaction after-sales costs by looking forward. Thus, the companys smarter supply chain assesses customer data throughout the systems entirety for the reduction of redundancy and lag response and the achievement of reasonable planning, order delivery, and network layout (Arora, 2020). In addition, in order to avoid supply chain-related errors and satisfy consumers, Lenovo has implemented the Digital Distribution Center (DDC), a smart warehouse solution for highly optimized and accurate performance. It comprises smart feedback lights, smart cameras, and a gateway equipped with a management solution device. Created in collaboration with NVIDIA and Microsoft, this solution is highly efficient in relation to small packages at physical stores as it uses machine learning, AI, and multi-video stream analytics to track, validate, and detect products, find mission ones, and identify damaged packages in real-time.

Thus, communication with suppliers, partners, retailers, and consumers and the incorporation of big data analytics and new technologies while operating on a global scale provide multiple benefits for Lenovo, including shorter cycle times, fewer errors, extended visibility, and greater reliability, that positively impact total logistics costs. The companys model of integrated business planning is based on manufacturing, procurement, and logistics  it manages the network to reduce costs and increase value. Lenovo aims to determine the most suitable landed cost, including transportation costs, packaging charges, taxes, insurance, and other fees optimizing manufacturing and routes to deliver products carefully and in a time-sensitive manner.

In addition, Lenovos response to societys demand for sustainability not only in manufacturing but at all stages of the supply chain creates competitive advantages in the market. Identifying sustainability as its main logistics strategy, the company aims to reduce freight emissions and waste from packaging. Thus, it works closely with partners for the optimization of transportation and container utilization (Smart Freight Center, n.d.). Lenovo distributes products according to their size and destination for cost-efficient transportation, increases rail transportation where it is available, and switches from wood pallets to light plywood ones to improve their utilization (Smart Freight Center, n.d.). All in all, the company is constantly improving its programs and implementing new ones, such as the SAP Advanced Planning and Optimization component on the SAP HANA to plan and execute supply chain processes, perform calculations related to cost forecasting, and support supplier collaboration (Ward, 2017). Product security, sustainability, customer centricity, and real-time planning are the elements of Lenovos supply chain that made the company competitive and respectful all over the world.

At the same time, the companys stock-turn ratio in inventory management may provoke particular concerns. In general, this ratio indicates how many times the companys inventory has been sold and replenished during an identified amount of time. In 2021, Lenovos inventory turnover ratio was 1.70 (Lenovo Group inventory turnover ratio 2010-2021 | LNVGY, no date). On the one hand, high ratio is more preferable and indicates the companys development. On the other hand, ratio may vary in dependence on the industry  thus, for large corporations, especially with high-end product, relatively low ratio may be regarded as a norm.

Reference List

Arora, R. (2020) Supply chain solutions made smarter by one of the worlds top supply chains. Web.

Smart Freight Center (no date) Lenovo. Web.

Ward, J. (2017) Lenovos disciplined supply chain drives global leadership. Web.

Introduction

Performance management refers to the activities that are undertaken in a certain company, organization institution, department and an individual to ensure that all the set goals and objectives are met in an efficient and effective way. This is a concept that is usually applied mainly in the work places but still is very applicable in as far as the interaction with people is concerned. This is because it acts as a principle through which the relationship of people is improved. It can also be defined as a strategy or rather an integrated approach set up by a certain organization as an effort to improve the employees performance through increasing effectiveness (Ansoff, 2007). It aims at capacity development of teams and individuals as well as the organization. This means that it also tries to harmonize individual goals of the employees with the goals and objectives of the organization so as to ensure that all employees are working towards reaching the same target for the benefit of the organization.

Types of Performance Management Plans

There are a number of performance management plans depending on the target group, the period of time the performance management system is intended to serve and their role in the organization. There are therefore the short term and the long term plans. The short term plan is a performance management plan that is intended to last for a short period of time and that is usually targeted for short term projects and employees with a short term contract. The long term plan is designed for the employees with a permanent or a longer period of contract. It is also used in the implementation of the organizations long-term projects goals and objectives (Hill & Jones, 2007).

Impact of Performance Management on Employees and Organization

Performance management is very beneficial to both the organization and the employees in a number of ways. Performance management improves the gains of the organization or the individual directly through cost reduction. This is achieved through the minimization of unnecessary expenses or the complete avoidance of any form of project overrun. This is because performance management enables the employees to manage their time properly hence ensuring that a project does not extend more than it should. The organizations goals are also directly aligned with the goals of the managers or the chief executive officer (Hill & Jones, 2007). Through performance management, the time for creating any changes in the organization is minimized since the change is introduced in the organization in the form of a new goal. It is also a way of managing control improvement in any organization and is very helpful to the organization because it assists in controlling the employees behavior.

The Relationship between Performance Management and Compensation

There is a significant relation between compensation and performance management. This is because compensation can be a way of performance management. Compensation refers to the payment given to people for the work done. It can be in the form of finances through the remuneration of workers or damages as a result of injuries incurred during work duties (Cole, 2003). The compensation package therefore can be direct or indirect. In every organization, compensation is a very important aspect in the establishment of the relationship between the organization and the workers. This is why in every successful organization there is a well established and managed compensation system. The two relate to each other because they deal with the behaviors of the employees. Compensation and performance management can both be used to influence the behavior of the employees, for instance, to increase their productivity or commitment to the organization. If well and properly managed, the two can lead to an increase in the performance of the organization. It should be noted that both compensation and performance management deal with the skills of the employees. Through a compensation system and the performance management of an organization, the culture of that particular organization can easily be known. This is because both of them entail the values, philosophies and practices of that organization (Cole, 2003).

Factors to Consider when Implementing Performance Management

Performance management must be carefully implemented for it to be successful. This is because it is an aspect that can interfere with the normal routine of the organization, the behavior and the working conditions of the employees in the organization. Therefore, any organization needs to seek and implement a good plan or strategy. A number of factors must be considered before its implementation. The benefit of the system as far as the profitability of the organization is concerned must be considered. If the performance management strategy will not be of any help in increasing the organizations profit then it should not be implemented. All performance appraisals should be eliminated because they are a liability to the company in the sense that they consume a lot of money. A performance management strategy should also be used for the employees rather than the managers. Lastly, a performance management strategy should be applicable and easy to implement (Ansoff, 2007).

Reference List

1. Ansoff, H. (2007). Strategic management. New York: Macmillan.
2. Cole, G. (2003). Strategic management. London: Cengage Learning.
3. Hill, C., & Jones, G. (2007). Strategic management: An integrated approach. London: Cengage Learning.

Orpic is one of the largest organisations in the Sultanate of Oman and one of the most rapidly growing enterprises in the Middle East oil and gas industry. One of its recent strategic goals is to increase the asset base by more than $9 billion and the product output  by over 4 million tons of fuels and polymers per annum (Oommen 2018). It is clear that without an excellent operations management approach, maximising the efficiency of the organisation processes in multiple areas of performance, Orpic will not be able to achieve these objectives. Considering this, the purpose of the present report is to analyse critically Orpics existing operations management practices, focusing on such areas as human resources (HR), quality management, and supply chain.

Analysis of Operations Management Decisions

Quality Management

Quality is a perceptual attribute of products and services and it guarantees that they are liked and demanded by customers. It means that quality management plays an essential role in generating companies competitive advantages by increasing organisational capabilities to foster greater customer satisfaction (Kim-Soon 2012). Orpic pays a lot of attention to the quality aspect of their products and services and implements the ISO 9001-2008 Quality Management System (Orpic n.d.).

ISO 9001-2008 requires enterprises to show abilities to consistently provide product that meets customer and applicable regulatory requirements and an aspiration to enhance customer satisfaction through the effective application of the system (International Organization for Standardization n.d., para. 1). To meet this standard, Orpic carries out a periodic analysis of its oil products in laboratories located across the territory where it operates (Orpic 2018).

Moreover, as part of its quality assurance system, the company aims to minimise the environmental impact and utilises effluent water treatment systems, as well as other technologies, such as leakage detection systems, allowing to reduce the potential negative effects on the ecology (Orpic 2018).

Noteworthily, the strategic quality planning is part of the companys current vision and mission of putting health, safety and environment first (Orpic 2018). As stated by Sadikoglu and Olcay (2014), such an approach is positively associated with the integration of quality and safety initiatives across a range of areas, including inventory management, customer service, corporate social responsibility, and so forth. For this reason, it is possible to say that Orpics current quality management strategy is comprehensive and effective.

Supply Chain

In the oil and gas industry, the supply chain incorporates various players with different levels of access to resources, technology and knowledge. Within it, Orpic takes the position of a middle link between an oil extractor (Oman Oil Company) and the final consumers of petroleum products produced by the firm (Orpic 2018). Across its own supply chain, Orpic operates four industrial plants situated in Muscat and Suhar, which are connected by a 266-kilometer crude pipeline, delivering feedstock from Mina Al Fahal Refinery to the Suhar plants (Orpic 2018, p. 4).

After raw materials are transformed into final petrochemical products, they are transferred through pipelines and ships to Al Jifnain and Raysut terminals, from where distinct fuel marketing companies distribute them across the country and abroad (Orpic 2018). In addition, polypropylene products are sold by Orpics Polymers Marketing Team that works to promote its products, identify new customers, capture market information and customer needs, and manage agents and distributors (Orpic 2018, p. 4). It means that the companys supply chain operations are informed by market requirements and the understanding of internal capabilities to meet those requirements.

Overall, the companys supply chain scheme is consistent with a standard downstream section of the oil and gas supply chain, which focuses on the procurement of raw materials, storage and supply planning, scheduling, and so forth (Ahmad et al. 2017). The efficiency of Orpics supply chain is defined by many industry characteristics. For instance, the demand for oil and petroleum products is not very volatile (Ahmad et al. 2017) and, thus, it is relatively easy to schedule and plan production, supply, and delivery processes. Secondly, due to such product characteristics as inflammability, the company can utilise a limited range of viable transport (Ahmad et al. 2017).

Noteworthily, Orpic strives to optimise logistics operations: the establishment of the direct pipeline from Jifnain to Muscat International Airport allows reducing the circulation of more than 20,000 delivery trucks per annum (Orpic 2018). It is also valid to say that a relatively small number of facility locations allows the firm to increase the cost-efficacy of shipping.

Human Resources

In terms of increasing operational efficiency and ensure a smooth flow between various organisational processes, Orpic relies on a plethora of professional teams with specific job duties and specialisations. HR management implements many practices in order to attract talents and retain competent personnel. For instance, to pool qualified candidates to the organisation, Orpic recently conducted a massive recruitment campaign in which experience and field-related knowledge were crucial selection criteria (Orpic 2018).

At the same time, the company frequently offers jobs and training opportunities for emerging talents, students, and beginner workers in the oil and gas industry while also investing in the development of its personnel (Orpic 2018). According to Sohrabi and Hazini (2007), training is a particularly important HR management practice in the circumstances when the talent is scarce, and it is observed that the oil and gas industry has a significant shortage of competent workforce.

The organisational culture and motivation systems play an essential role in employee retention as well (Sohrabi & Hazini 2007). Overall, Orpic aims to acknowledge employees achievements, praise them for good performance, and create both physically and psychologically safe workplace environments for workers by implementing various safety standards (Orpic 2018). Therefore, it is valid to say that the company aims to minimise costs associated with employee turnover that can have a wide spectrum of negative effects on operations efficiency.

The Four Vs of Operations

It is chosen to compare the performance of Orpic in accordance with the Four Vs of Operations framework with a fashion corporation, Gap Inc., because the latter organisation operates within an industry that is drastically different from the oil and gas market (Appendix A). In contrast to petroleum products, fashion products are associated with faster life cycles and greater volatility in demand that frequently changes based on consumer preferences and interests.

Therefore, compared to Orpic, it should have more flexible operation systems to be successful and profitable. To achieve this, Gap Inc. works with an extensive number of proximate vendors and producers of raw materials, while also gaining speed by positioning those raw materials further downstream in the supply chain (Gap Inc. 2018). At the same time, Orpic enjoys a significant level of predictability determined by high utilisation of petroleum and polypropylene products. Some degree of demand volatility is possible in the oil and gas industry, but it is rather not substantial and critical.

Orpic also differs from Gap Inc. in terms of product variety and visibility. Due to the seasonal nature of fashion, the latter firm must design a plethora of products on a regular basis, whereas Orpic always has relatively few offers. Thus, although it may benefit through innovation and the introduction of more competitive offers into the market, it does not need to change production standards and routines too often. As for visibility, Orpics operations processes are generally not seen, whereas Gap Inc. renders a greater number of visible services related to both online and offline purchasing experiences. Lastly, both companies have high production volumes, which means that their operations are capital intensive, systematic, and highly repeatable.

Recommendations

Overall, Orpics current strategies allow it to meet the core operations management objectives: quality, speed, cost, and so forth. It utilises a vertical integration approach with a sole sourcing partner (Oman Oil Company) from whom the company gets necessary raw materials. This system fosters significant control over the supply chain assets and processes than standard outsourcing. According to Chima (2007), vertical integration is beneficial when input materials are relevant to the firms specialisation and in line with its current focus. Considering that Orpic does not plan to expand operations to other sectors, there is no need to change anything in this regard.

Nevertheless, it is observed that in refinery operations, the decision-making process may be divided among various departments with conflicting objectives (Ahmad et al. 2017, p. 582). Additionally, a problem may arise when information systems are poorly coordinated and are not compatible between different departments and partners. In order to avoid the potential negative effect on performance and increase operations efficiency, there is a need to develop and implement an integrated information system for the storage and open sharing of data related to exploration, production, refining and marketing operations among distinct organisational units (Chima 2007).

Chima (2007) states that the creation of an integrated, supply chain-wide information technology system can result in greater flexibility and adaptability to modern-day environmental changes. It may also increase the companys operational innovation capabilities and, in this way, add more value to its services and products.

Conclusion

In conclusion, it is valid to say that Orpics approaches to the management of different operations areas  quality, HR, and supply chain  are effective and suitable for the industry in which it operates. Based on the companys emphasis on quality initiatives, use of employee development and retention strategies, and its overall supply chain structure, it is clear that Orpic aims to eliminate all types of waste, reduce and manage risks, and facilitate processes to achieve greater competitiveness and profitability.

No significant deficiencies were identified in the companys current operations management practices. Nevertheless, it is recommended for Orpic to focus on the creation of an integrated information system across its supply chain as this measure is considered to add more flexibility and strengthen operational innovation capabilities that are important for success in the present-day business world.

Reference List

Ahmad, NK, Brito, MP, Rezaei, J & Tavasszy, LA 2016, An integrative framework for sustainable supply chain management practices in the oil and gas industry, Journal of Environmental Planning and Management, vol. 60, no. 4, pp. 577-601.

Chima, CM 2007, Supply-chain management issues in the oil and gas industry. Journal of Business & Economics Research, vol. 5, no. 6, pp. 27-36.

Gap Inc. 2018, Three ways Gap Inc. is using scale to speed up its supply chain, Gap Inc. Web.

International Organization for Standardization n.d., ISO 9001:2008. Quality management systems  requirements. Web.

Kim-Soon, N 2012, Quality management system and practices. Web.

Oommen 2018, Driving growth, Oil & Gas Review. Web.

Orpic 2018, Orpic magazine. Web.

Orpic n.d., Inside Orpic. Web.

Sadikoglu, E & Olcay, H 2014, The effects of Total Quality Management practices on performance and the reasons of and the barriers to TQM practices in Turkey, Advances in Decision Sciences, vol. 2014, pp. 1-17.

Sohrabi, M & Hazini, K 2007, Strategic human resource management and its challenges in oil & gas industry projects. Web.

Appendix A: The Four Vs of Operations

Key Issues

Short-Term Objectives

The major component of TSCs Project 275 aimed to achieve growth in sales, EBITDA, and RONA is distribution center storage and throughout capacity. The analysis helped the company to reveal some constraints in distribution and inventory management which are primarily correlated with poor logic and lack of integrity in the system. Since the effective inventory management is directly linked to the organizational ability to reduce bank debt and increase profitability, this issue represents an immediate concern for TSC.

There is the need to enhance logistical capability to support business expansion. The developmental strategy requires TSC to have more locations for inventory and greater logistics flexibility. According to Grigore (n.d.), flexibility includes three major components: machines, product handling, and transportation; elaborated supply chain system; and appropriate technology enabling the system to cope with environmental changes and strategic needs. Based on this, to fulfill its short-term objectives, TSC may implement third-party logistics services to support turnover during high seasons, establish new storage and distribution locations, and store some merchandise at its retail stores.

Long-Term Strategies

TSCs long-term supply chain strategy is primarily focused on the improvement of logistics infrastructure which is needed for the maintenance of the increased inventory turnover and a greater level of logistics service. This goal is associated with the growth in logistics flexibility as well, and it requires the development of an efficient and systematic approach to inventory handling. A responsive supply chain needs a constant information flow among the internal organizational units and external partners (e.g. suppliers), and appropriate policies which allow hedging inventory against uncertain demand (Perez, 2013).

Nowadays, there are many logistics models which can help organizations to improve financial outcomes. Since TSC performs in the market characterized by a high level of competition, it may implement the efficiency-oriented supply chain model which implies the optimization of end-to-end results. It means that the company should achieve a high degree of asset utilization in combination with the increased overall equipment efficiency which leads to cost reduction (Perez, 2013). Moreover, it is important to improve forecasting accuracy and ensure that the outbound logistics can effectively meet demand during high seasons. As stated by Perez (2013), the efficiency of supply chain modeling will also largely depend on the decrease of the SKU portfolio because excess SKUs often create barriers to smooth performance of logistics operations.

SWOT Analysis

Strengths and Weaknesses

The main TSCs internal strength is the high degree of criticism towards its existing practices and activities as well as a profound understanding of both short-term and long-term objectives. It seems that the management is aware of major alternative solutions which may support the company in its expansion initiatives. Nevertheless, there are many internal weaknesses as well. The underdeveloped supply chain model, lack of accurate forecasting system, logistics inflexibility, and absence of extra storage capacity are the major ones. These weaknesses challenge TSCs ability to realize the opportunities and mitigate potential risks of failure.

The review of the organizational strategic targets makes it clear that the managerial focus which allows the linkage between supply chain and distribution activities and strategic financial goals is strong enough. However, other essential components of TSCs current supply chain strategy are lacking. For example, researchers emphasize the significance of organizational unique value proposal (i.e. competitive positioning) and the systematic maintenance of internal logistics processes for the smooth supply chain performance (Perez, 2013). Moreover, as Grigore (n.d.) states, the flexibility of organizational supply chain management should be regarded from the perspective of firms value chains aimed to increase customer satisfaction. But is seems TSC does not consider the given factor when setting its strategic goals. However, it could be useful to integrate the data on customer needs and preferences in the design of new supply chain strategies because, in this way, it would be possible to understand the interests of the targeted consumer groups in a better way and increase forecasting accuracy.

Opportunities and Threats

TSCs opportunities are mainly related to its expansion and enhancement of current operations and practices. Nowadays, the external environment in the retail market allows companies to achieve the desired goals and significantly increase firms competitiveness. The identified internal organizational strengths and the understanding of own weaknesses, as well as a well-determined strategic orientation, may help the company to improve service quality, establish a standardized approach to management which may substantially facilitate the achievement of greater productivity and mitigate potential financial risks.

The researchers observe that infrastructure investments are positively correlated with increased revenues because they allow companies to obtain opportunities to use savings realized due to infrastructure enhancements and reinvest them in the creation of new competitive advantages (Jacoby & Hodge, 2008). Thus, if TSC succeeds in the remodeling of its supply chain system, it will achieve greater cost efficiency which will positively affect the companys profitability. At the same time, aggressive competition is one of the major threats TSC may face during business expansion. The underdeveloped supply chain and distribution systems, as well as niche segmentation, may inhibit organizational success in meeting continually changing customer demands. Therefore, it is possible to say that along with the expansion of business operations and opening new stores, TSC should endeavor to capture the attention of more versatile customer groups by expanding its product portfolio.

References

Grigore, S. D. (n.d.). Supply chain flexibility. Romanian Economic and Business Review, 2(1), 66-70.

Jacoby, D., & Hodge, D. (2008). Infrastructure investment: The supply chain connection. Supply Chain Quarterly. Web.

Perez, D. H. (2013). Supply chain strategies: Which one hits the mark? Supply Chain Quarterly. Web.

Employees are the organizational members of staff who are directly in touch with the targeted clients and this makes them the most critical feature of the organization¹. For a successful operational fiscal year, the Human resource managers have to ensure that they do recruit employees with potential and possess qualifications that will enable them to create value that is anticipated by the clients. Human resource managers would not be able to realize improved performance were it not for the hard work of their employees; thus, human resource managers delegate authority to their employees for them to achieve organizational goals. However, the amount of delegated authority may span beyond their perceptions, the customers, the shareholders, and the other managements perceptions; therefore, human resource managers need to be wary in their delegation of authority². The creation of value is paramount to the satisfaction of the customers needs. Satisfaction of customer needs requires the collection of various views and opinions from different personnel; this information must then be passed to the personnel who are responsible for satisfying customer needs to ensure that they are in a position to deliver the product that is anticipated by the customers³.

Value creation has made the integrated human resource team have their managers and the employees amongst other partners such as the customers serviced at strategic and particular positions or in other words at the specific business units with the sole target of having to realize the roles and tasks that are beneficial to the holistic corporate⁴. Human resource teams do in some instances have the implementation of work specialization which has been in practice for industrial relations in most instances and in other areas specialization is done on basis of the responsibilities that are awarded per personnel such as the ones that are centered in the production process⁵. All these efforts have been made with the sole aim of having the organization realize its goals and targets which can only be achieved through the full involvement of the employees in their areas of operation to ensure that the clients are satisfied⁶.

Opinions that are communicated to the human resource managers and the relative directors from the customers cannot be implemented to the betterment of the customers requirements satisfaction if the same was not delegated to the respective employees⁷. Employees eyes are meant to ensure that all the issues raised are well communicated to the human resource team with the sole aim of enabling sufficient management of the members of staff that is within the organization unit.

The shareholders and other relative partners eye gives opinions on how well the organization could be managed with the sole aim of ensuring that value creation is attained from the value for money to value being added to the final product⁸. The company must give their opinions to the team that is managing the enterprise as a synergy but it is argued too that the investors need to have confidence in the management team and the general process. The shareholders realization of each of the employees roles in the creation of value in most instances is different but this can be brought to par by the promotion of the employees efforts as far as the attainment of the organization success is concerned⁹. The reports that are done annually should be done in such a way that they do emphasize the organizational communication and the engagement and involvement of the employees which should also incorporate the growth of the business due to the effectiveness of the communication that is implemented within the enterprise.

Employees are a very critical factor in an organizational setting because they are the ones that are liable for the first impression and relieve the clients of the tense and discouraging environment⁸. Unsatisfied employees will in most cases ignore the clients to an extent that they will be forced to somehow clear the throat with the sole aim that they will receive the attention that they are trying to seek but only to be assisted by some averted faces. Employees that are not given the motive to do the job and give quality service and products as per the clients demands would frustrate the clients hence lowering the overall organizational performance¹⁰. Being the very first part of the organization employees are used by the human resources team to ensure that they do communicate to the overall management on the clients preferences with the sole aim of gaining an upper hand as far as the customer portfolio is concerned. On the other hand, the managerial perspectives which come from the fellow management team such as the sale and marketing directors need to be communicated to the fellow employees to ensure that the whole human resource portfolio is at par as far as the overall organizational direction perspectives are concerned¹¹. The human resource director has the sole role of ensuring all eyes that are fundamental to the realization of the value for all that is in the business are given a chance and their worries and comments are going to be communicated effectively to the designated members of staff¹².

The creation of the value which is the main goal of all organizations does involve the considerations of all the feedback from the customers and the other parties perceptions of the same then communicating to the employees the expectations of all of them with the sole aim of ensuring that they are going to enable them to customize the products to meet the clients needs and expectations¹³. Employees must play the role of the eyes to the human resource managers as they are the ones that did recruit them into the job to ensure that they can facilitate the growth of the organization¹⁴. Despite having other parties give their perceptions of the general expectations as far as the overall organizational performance is concerned. A quality product that is not delivered to the customers by some very unwelcoming employees will not have the overall value for money attached to it¹⁵.

Conclusion

In conclusion, the human resource manager is based by the fact of the job in the back of the office and for them to be able to reach to their clients they need to incorporate the employees eyes fully in their assessment of the overall company performance¹⁶. Despite having to listen to the other stakeholders opinions it is argued that the employees points of view need to be well looked at as they are the people who are directly in contact with the clients as well as the human resource directors and other parties as well. In an organization, employees are the sole producers and the other parties are just there to evaluate their work and efforts¹⁷. Being the most involved party in the production process; employees are used by the human resources as their representatives in the attainment of the overall organizational targets as far as the creation of the value is involved.

Reference List

Burke, Lewis. and Hsieh, Christine. (2005) Operationalizing the strategic net benefit (SNB) of HR. Journal of Human Resource Costing and Accounting. 9(1). 26 39.

Barney, John. (1991) Firm resources and sustained competitive advantage. Journal of Management. 17(1). 99120.

Belcourt, Mathew. (2001) Measuring And Managing The HR Function: A Guide For Boards. Ivey Business Journal. 12(3). 56-64.

Boudreau, John. and Ramstead, Paul. (2003) Strategic HRM Measurement in The 21st Century: from Justifying HR to Strategic Talent Leadership. Hoboken, NJ: John Wiley.

Hutchinson, Slush. and Purcell, Joseph. (2003) Bringing Policies to Life: Executive Briefing. London: Chartered Institute of Personnel and Development.

Hirsch, Wilson., Silverman, Mark., Amkin Pitchman and Jackson, Cosmos. (2005) Managers as Developers of Others. Brighton: Institute of Employment Studies. Report No. 407.

Tyson, Slays. and York, Arron. (2000) Essentials of HRM. 4th ed. Oxford: Butterworth- Heinemann.

Ulrich, Daniel. (1997) Human Resource Champions: The Next Agenda for Adding Value and Delivering Results. Cambridge, MA: Harvard Business School Press.

Ulrich, Daniel. and Brockbank, William. (2005) The HR Value Proposition. Boston, MA: Harvard Business School Press.

IRS. Roles and Responsibilities 2006: Benchmarking the HR Function. IRS Employment Review. 839(20). 917.

Footnotes

1. Burke, Lewis and Hsieh, Christine. (2005) Operationalizing the strategic net benefit (SNB) of HR. Journal of Human Resource Costing and Accounting. 9(1). 2639.
2. Hirsch, Wilson., Silverman, Mark., Amkin Pitchman and Jackson, Cosmos. (2005) Managers as Developers of Others. Brighton: Institute of Employment Studies. Report No. 407.
3. Barney, John. (1991) Firm resources and sustained competitive advantage. Journal of Management. 17(1). 99120.
4. Tyson, Slays. and York, Arron. (2000) Essentials of HRM. 4th ed. Oxford: Butterworth-Heinemann.
5. Barney, John. (1991) Firm resources and sustained competitive advantage. Journal of Management. 17(1). 99120.
6. Belcourt, Mathew. (2001) Measuring And Managing The HR Function: A Guide For Boards. Ivey Business Journal. 12(3). 56-64.
7. Ulrich, Daniel. and Brockbank, William. (2005) The HR Value Proposition. Boston, MA: Harvard Business School Press.
8. Hirsch, Wilson., Silverman, Mark., Amkin Pitchman and Jackson, Cosmos. (2005) Managers as Developers of Others. Brighton: Institute of Employment Studies. Report No. 407.
9. Burke, Lewis and Hsieh, Christine. (2005) Operationalizing the strategic net benefit (SNB) of HR. Journal of Human Resource Costing and Accounting. 9(1). 2639.
10. IRS. Roles and Responsibilities 2006: Benchmarking the HR Function. IRS Employment Review. 839(20). 917.
11. Ulrich, Daniel. (1997) Human Resource Champions: The Next Agenda for Adding Value and Delivering Results. Cambridge, MA: Harvard Business School Press.
12. Tyson, Slays. and York, Arron. (2000) Essentials of HRM. 4th ed. Oxford: Butterworth-Heinemann.
13. Ulrich, Daniel. and Brockbank, William. (2005) The HR Value Proposition. Boston, MA: Harvard Business School Press.
14. Boudreau, John. and Ramstead, Paul. (2003) Strategic HRM Measurement in The 21st Century: from Justifying HR to Strategic Talent Leadership. Hoboken, NJ: John Wiley.
15. Hutchinson, Slush. and Purcell, Joseph. (2003) Bringing Policies to Life: Executive Briefing. London: Chartered Institute of Personnel and Development.
16. IRS. Roles and Responsibilities 2006: Benchmarking the HR Function. IRS Employment Review. 839(20). 917.
17. Ulrich, Daniel. (1997) Human Resource Champions: The Next Agenda for Adding Value and Delivering Results. Cambridge, MA: Harvard Business School Press.

Internal and External Factors that Impact the Functions of Management

Several internal and external factors impact the functions of management. Among them are the buyers, suppliers, competitors, local government, unions, employee groups, the financial community, owners and shareholders, and trade associations. Globalization, Technology, Innovation, diversity, and ethics are common factors that impact the functions of management. These factors influence decision-making in an organization. External forces are uncontrollable and they are not within the organizations boundaries unlike the internal forces (Koontz & Weihrich, 2006).

The domination of the world economy by multinational companies as a result of free trade policies and practices is termed globalization (Vogel, 2009, Para. 4). The driving force of globalization is the need for new markets and thorough exploitation of existing ones to maximize some multinational companys profits (Vogel, 2009). Toyota one of the largest companies in the world is set to surpass General Motors and become the top in the auto industry (Vogel, 2009). Toyota motor cooperation is the world standard of globalization and its policies and practices are imitated worldwide (Vogel, 2009, Para. 7). The Toyota forces of change are racking the auto industry and undermining working people including their communities across the North American continent (Vogel, 2009). Extensive exploitation of cheap labor and the reduction of operational costs through the state, boost the organizations revenue more than their manufacturing. This shows how globalization works and its impacts on local workers, their community, and the environment. The Toyota Company is a good example that shows how the domination of capital over labor in the auto industry has been achieved in collaboration with the state (Vogel, 2009).

The Impacts of Globalization, Technology, Innovation, Diversity and Ethics on the Functions of Management

Technological strategies in an organization start with the skills and knowledge as corporate assets. This plays an important role in the process of change within an organization, especially in management processes. Technology creates a range of new products, enables new production techniques and good management (Urabe, Child & Kagono, 1988). Organizations work on improving their technology to have a competitive niche. Advancing technology gives more room to organizations to venture into markets that could be unavailable to them. Management and communication are improved with the development of new technology. Computerization and networking management enable information to be available when needed and whenever it is needed. Technological advances create innovations. Organizational strategies that are created from technology create a competitive advantage for an organization (Urabe, Child & Kagono, 1988).

To achieve a companys goal and move to new markets, managers require innovative thinking, in developing new products as well as marketing the products. Innovation helps to generate and maintain a competitive advantage in domestic and international trade (Urabe, Child & Kagono, 1988). With innovation, there is a quality production, cost minimization, increase in productivity, and maximization of product performance. Innovation has both positive and negative impacts depending on how managers choose effectively. Managers who are creative come up with successful innovations thus higher organization profitability (Urabe, Child & Kagono, 1988).

Diversity is a good strategy to promote the perception, acknowledgment, and implementation of diversity in an organization to achieve its goals (Arredondo, 1996). Diversity can be a good source of innovation for future development and competitiveness. Diversity helps an organization to develop and give a broad range of products and services. Diversity creates equal opportunity for all as it reduces discrimination. Open-mindedness is the key to achieving organizational diversity (Arredondo, 1996).

Ethics holds that an action is good for an organizations development. The values of ethics are honesty, loyalty, fairness, integrity, respect, responsibility, and pursuing excellence. Ethics are for the common good of an organization to achieve its goals fairly. Ethics create a good image of an organization. Making ethical decisions needs an understanding of the implications of the issue, being aware of which actions are morally defensible, and the power to act by your ethics. Managers contribute to ethical planning, organizing, leading, and controlling improvements and hence the achievement of organizational goals (Petrick & Quinn, 1997).

Delegation to Manage the Impact of these Factors on the Functions of Management

Responsibility and authority must be assigned by managers to know who is performing a certain task, where, and when. Before delegating work, managers should consider the desired results, the risk involved, and his/her confidence in the available resources. Planning ascertains specifications including expected results and constraints (Tomey, 2004). The delegated authority must be specific and there should be supportive when needed. There should be understanding as the manager delegates authority, give and receive feedback and respond to arising issues. Delegation helps to develop others and it is time-saving. It maximizes individual talent and reduces managerial costs thus contributing to an organizations development (Tomey, 2004).

References

Arredondo, P. (1996). Successful Diversity Management Initiatives: A Blueprint for Planning and Implementation. New Barry Park, California, SAGE.

Koontz, H. & Weihrich, H. (2006). Essentials of Management (7^th ed.). West Patel Nagar New Delhi, Tata McGraw-Hill.

Petrick, J. & Quinn, J. (1997). Management Ethics: Integrity at Work (Vol. 6 of SAGE

Series in Business Ethics Business Ethics Series). New Barry Park, California, SAGE.

Tomey, A. (2004). Guide to nursing management and leadership (7^th ed.). Amsterdam, Elsevier Health Sciences.

Urabe, K., Child, J. & Kagono, T. (1988). Innovation and Management: International Compartisons. Berlin, Walter de Gruyter.

Vogel, D. (2009). US Forum on Combating Globalization. How Globalization Works: Toyota Motor Manufacturing, Texas (TMMTX) Case Study. Web.

Case Summary

Emma Robertson, the Executive VIP in TerraCog, faced a critical challenge in the process of the product launch. Hence, her company is losing a market competition as it has refused to update its product for a couple of years even though the competitors introduced their redesigns long ago. Now that TerraCogs sales keep falling, the company has finally decided to renovate the product.

In the meantime, the team members cannot come to a consensus regarding the products design. Hence, the sales manager insists on reducing the cost of the new product so that it is competitive with that of the rivals, while the product development team assures that the cost reduction is impossible, and the new product will cost 75$ more than the rivals offer in any case. Emma Robertson needs to find an alternative solution to ensure a successful product launch.

Underpinning Factors

On the face of it, the root of the disagreements within the team is evident. Hence, the sales VP bears his own interests  he realizes that the simplest way to sell a product is to offer an attractive price and does not want to consider any alternative options. The product design and Development VP wants to avoid the mistake of poor cost estimation, which his team has already made before, and insists on the safe cost.

In the framework of the situation analysis, it is likewise essential to note that the company already faced a similar precedent when the TerraCog team failed to make the necessary effort to hold its competitive advantage. Hence, according to the case study, when the Posthaste introduce its innovative GPS concept, the team decided not to update the companys product of a similar type, even though it was evident that it was apt to lose in the market competition.

Moreover, it should be pointed out that according to the case study, the TerraCog team performs poor outcome evaluation on a regular basis. Thus, when the companys sales fell because of its failure to compete with the rivals new product, the team wrongfully attributed the success of the competitor to the high shopping season.

Another critical flaw of the companys management that should be pointed out is the lack of the corporate mission and vision. Hence, it appears that TerraCog team substitutes these crucial concepts by the objective to push up the sales. Thence, their decision to update the product was initially determined by the sales decrease. Meanwhile, it should have been determined by the intention to meet the customers needs, to pursue a consistent and innovative policy, and to maintain the leaders status in the market (Martins & Terblanche, 2003). In this case, the product would have been timely updated, and the sales would not have fallen at all.

In addition, the decision making process seems to be poorly managed in TerraCog. Hence, the record of the first meeting that targeted to discuss the implementation of the new product shows that little attention was paid to the product design and potential placement. Instead, the only emphasis was put on the problem of the low-cost production.

One of the critical mistakes that the management made was its failure to involve the product development team that could have shared valuable recommendations regarding the change. Meanwhile, the team was not involved in the common discussion; as a result, it was initially unmotivated. This example illustrates that Emma Richardson fails to ensure effective decision making in her team. As it is reported in the case study, the woman avoids involving different specialists as she is afraid that the numerous members of the discussion will complicate the process of decision making.

The report of the intermediate meeting represented in the case study shows that the teamwork is almost unmanaged. Hence, the member of the product development team has no idea of what he is requested to do; in addition, he is already occupied with other projects. The meeting objective is not indicated; as a result, the members shift from pricing to product positioning and fail to come to any consensus.

The Problem

The urgent problem that needs to be addressed is the product pricing. Thus, Emma Richardson has to decide whether the company should set a competitive price or assign the cost assessed by the product development team.

The Options

Emma Richardson can consider several options to address the problem. First and foremost, she can agree with the sales VP and set a competitive price for the new product hoping that the project development team will gradually find a solution how to reduce the production cost. In this case, Richardson can ask the product development team to revise the projects design and work out a new low-cost concept.

Another option that might be considered resides in setting the price suggested by the product development team that is rational from the design expenses perspective but is significantly higher than the rivals offers.

Finally, Emma Richardson can likewise consider redesigning the product concept, so that it acquires some new characteristics that ensure its innovative character and compensate the high cost.

The Evaluation of the Options

Before making the decision, it is essential to evaluate each option and its outcomes.

Option 1: Set the Price Proposed By Sales VP

The Sales Department suggests setting a competitive price that will not exceed the cost of the rivals offers. Choosing this option ensures two positive outcomes. First and foremost, the company receives a chance to make an agreement with the retailers. Secondly, the competitive price will ensure high sales.

In the meantime, Product Development Department states that such price does not cover the expenses cost. Therefore, it can be assigned only on condition that the company is sure it will find alternative solutions to cut the production costs in future. If Emma Richardson chooses this option, she will need to motivate the product development team to redesign the products concept so that its production cost allows assigning a competitive market price.

In order to use this option, Emma Richardson needs to have a long-term plan that explains how the cost of production can be reduced and guarantees that the launch of the new product offered at a competitive price will not be loss-making. It should be realized that once the prices are set at a low level, it is highly problematic to raise them preserving the sales (Hinterhuber, 2004).

Option 2: Set the Price Proposed by Production Development VP

The Production Development Department suggests setting a price that is non-competitive in the market but covers all the production expenses. This option can be considered in case Emma Richardson can rely on the professionalism of the sales VP. The latter will have to reconsider the product launch strategy and define the beneficial features of the new product that will compensate the high price and ensure sufficient sales (Sherman, Berkowitz, & Souder, 2005). However, it should be noted that it will be problematic to find such features as the product copies the concept of those offered by the competitors; therefore, it cannot be represented as an innovation.

Option 3: Redesign the Products Concept

The last option implies reviewing the current products design so that it acquires some innovative features. As long as the Product Development Department insists that the price of the new product cannot be reduced, Emma Richardson can consider upgrading its design so that it acquires some new features that will distinguish the product from the rivals offers and ensure its competitive advantage in the market. The product redesign might require additional expenses. Moreover, the deadlines for the products launch might need to be reviewed and extended.

The Recommendation

It is recommended that Emma Richardson chooses the third option. The first option cannot be chosen as it is irrational to rely on the expectations that the Product Development Department will find an alternative solution to cut the production cost. Even the so-called intuitive decision-making requires evaluating the risks and analyzing the previous experience (Dane & Pratt, 2007).

As long as the product development team did not demonstrate its aspiration to overcome challenges in the past, it is impractical to expect it to demonstrate it in the future. Meanwhile, the product does not possess any features that could ensure its market advantage at present, so it is likewise irrational to choose the second option.

Moreover, if the product design is upgraded and the product becomes an innovation, it will still be associated with the products introduced by the rivals a few years ago. In other words, it will be an incrementally new product rather than a radically new product. According to the recent studies, the former are more likely to be in demand, as customers tend to search for a novelty without taking additional risks (Debryune et al., 2002).

In addition, whatever option Emma Richardson chooses, it is recommended that she organizes an efficient communication between the team members. It is crucial that all the employees share the vision of the projects aim and the desired outcomes (Snowden & Boone, 2007). It seems that every member pursues personal aims that reside in minimizing the difficulties for their departments at present. Therefore, it is recommended that Richardson explains the purpose of designing the new product and, most importantly, outlines the benefits that the team will receive from a successful project realization.

Action Plan

Hence, it is proposed that Emma Richardson organizes another meeting. This common discussion should, first and foremost, explain the need for redesigning the products concept. Hence, the product development team should understand that their task is to design an innovative product with some peculiar characteristics that will ensure its competitive advantage in the market.

The sales VP, in his turn, should start preparing a selling and promotion strategy that will be based on the unique quality of the new product. It is critical that Emma Richardson communicates the projects purpose and the desired outcomes to both departments and ensures their effective collaboration.

Reference List

Debruyne, M., Moenaertb, R., Griffinc, A., Hartd, S., Hultinke, E.J., & Robben, H. (2002). The impact of new product launch strategies on competitive reaction in industrial markets. Journal of Product Innovation Management, 19(2), 159-170.

Hinterhuber, A. (2004). Towards value-based pricingan integrative framework for decision making. Industrial Marketing Management, 33(8), 765-778.

Martins, E. C., & Terblanche, F. (2003). Building organisational culture that stimulates creativity and innovation. European Journal of Innovation Management, 6(1), 64-74.

Sherman, J. D., Berkowitz, D., & Souder, W.E. (2005). New product development performance and the interaction of cross-functional integration and knowledge management. Journal of Product Innovation Management, 22(5), 399-411.

Snowden, D. J., & Boone, M. E. (2007, November). A leaders framework for decision making. Harvard Business Review.

Introduction

The world of business in the twenty first century is getting more and more competitive as time goes by. The concept of globalization and free trade has only increased the issue further. This is true for any sector in the market which includes manufacturers, retailers, wholesalers, and service providers. In such a scenario, organizations have to become very efficient and competitive in order to survive and grow. One of the key elements that contribute to this is the management of its supply chain. This paper is a review of the supply chain management process in a shoelace manufacturing company. The assignment will draw out a supply chain process map for the product. In the process, the following factors like key problems faced, the background of the situation, the concept, the relent statistics and possible solutions will be given.

Supply chain management

All well managed organizations take the concept of supply chain management very seriously. The level of complication will vary depending upon the type of activity and the size of operations for a company. The concept of supply chain management as a discipline is not very old. This concept was first thought of by a person called Forrester way back in 1958, even though the name of supply chain management came about only later. This visionary wrote that Management is on the verge of a major breakthrough in understanding how industrial company success depends on the interactions between the flows of information, materials, money, manpower, and capital equipment. (John et al 2001, p.1). The study of the above concept as a discipline in itself called supply chain management came about only in the last ten years or so. The journal article in which the above statement by Forrester was given also states that supply chain management is viewed as a process, a management philosophy or just a management of the movement of goods and services by different people. As a process, the Council of Logistics Management has defined supply chain management as The process of planning, implementing, and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished good, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements. (Levi and Kaminsky 2004, p.3). A simple supply chain diagram is given below:

The Shoelace Company: The Company in question is a shoe lace manufacturing concern located in the United States. The company has a single manufacturing base, situated alongside its administrative and head office. There is no retail marketing for the company and its only customers are two major shoe manufacturers. The manufacturing process is fairly simple. Three types of yarn are used namely cotton, polyester (both textured and spun), and polypropylene. The piece at each end which allows easy insertion into the hole (eyelet) in the shoe is called aglet and is usually made of plastic (metal was used earlier). The gum acetone is used to bind the aglet to the lace. Several types of machinery are needed to finish the whole process. The braiding machine will braid the yarn first. Then a machine will apply the glue and another will cut the long lace into the requisite size. Next a machine will fix the aglet at each end, after which they are paired and packaged as a unit (two laces). Finally each unit is bundled and packed into boxes which are now ready to be shipped. (Bryk 1998, p.2).

Each box contains 100 pairs. The supply chain consists of the following players apart from the company itself. They are the yarn supplier, dye suppliers, the aglet suppliers, transportation and logistics service providers, the customers, acetone suppliers, and packing material suppliers. The retailer and the end customer are beyond the control of the company and hence not considered a part of the supply chain in this case. The machine has the capability to manufacture 150 individual laced every thirty minutes. In an hour, 150 pairs (one set) can be manufactured. The company works for only one shift and hence the daily production will come to approximately 1,500 pairs. The internal and external supply chain maps of the company are given in the appendix.

The problem: The Company supplies laces to two major manufacturers. It is to be noted that the manufacturers also use other lace suppliers since the current capacity is not enough to cater to the completed needs. Approximately 44,000 pairs are shipped out at the end of every month in rented trucks to the shoe (both) manufactures premises which lies in a radius of 25 miles from the companys plant. Both shoe manufacturers buy around half each of the monthly production. In such a scenario, the company does not have any excess stock at the end of each month apart from 1000 pairs that are damaged during the production process. The problem occurred when the company received an emergency order for 45,000 pairs. The increase resulted due to the holding of two mass marathons in the country, the New York marathon, and the Boston marathon. About 100,000 and 22,000 people participate in the New York and Boston Marathons respectively. The shoe manufactures calculated that an additional 75,000 pairs would be needed in total. They faced an emergency because one of their regular suppliers had gone out of business and another company agreed to supply only 25,000 pairs. They contacted the company about 45 days in advance of their requirements and it was agreed that the supply could be produced and delivered if an additional shift with temporary workers were taken for 45 days. An unexpected flooding damaged the plant of the yarn manufacturer and they expressed their inability to supply the additional yarn required for production. The normal supply was supplied by the yarn company out of existing stock and outside purchases.

The background of the supply chain management system in the Shoelace Company

All raw materials are delivered to the company by suppliers themselves and hence transportation and insurance is included in their selling price. After the manufacturing process is complete, the company delivers the product to the two shoe manufacturers in rented vehicles. The cost of transportation and insurance is included in the price of the laces. Both supplies (of raw materials) and deliveries (of finished products) happen every month and are fixed. In normal circumstances, the quantities are fixed in both cases and do not vary from month to month.

The concept

The supply chain management system within the company is based on the concepts discussed below.

Supply chain decisions

The first step in planning a supply chain management system is the decision to set up a particular system that will ensure the smooth flow of raw material and finished products at minimum cost. The whole supply chain process for the Shoelace Company is simple and uncomplicated since it is a single product firm. There are two categories into which this decision process can be divided, namely strategic and operational. (Ganeshan and Harrison 1995). As the name suggests, strategic decisions are taken over a long period of time. Beginning at the strategic level, a company must address such key issues as overall corporate objectives, market share and profitability goals, business and product mix, etc. (Framework for Continuous Distribution and Supply Chain Performance Improvement: A Supply Chaining Framework. 2007).

Strategic decisions are usually taken for a period of three to five years in advance and will not change unless absolutely necessary. Of course, minor adjustments can be made. It could also change if some technology or other factor that can have impact on the cost comes about. Production level planning, the required raw material, the logistics involved, delivery of finished products etc must be taken into consideration. In the case of the Shoelace Company, the decision was to ask the suppliers (of raw materials) to handle the issue of transportation themselves. It would have entailed a slightly higher cost, but it can be offset by reduction of at least one personnel for the company. The suppliers were decided on by assessing their reliability, quality and cost of products. Operational decisions are more related to the day to day activities of the company and may change occasionally. For example, the time of delivery may be changed for raw materials. Another example would be changing of the transportation provider in favor of another company. All supply chain decisions are divided into four distinct areas namely, location, production, inventory and transportation. (Logistics Management: An Introduction to Supply Chain Management. 2008). The location of the plant of the Shoelace Company was decided on due to its proximity to suppliers and customers. The production capacity was planned according to the demands from customers. A change in strategic decision may come about because the company is now nearing full capacity production. Inventory is minimized and is delivered every month. Practically no inventory of raw materials and finished goods exist at the end of each month. Transportation is fairly simple and only requires one mode of transport both from the suppliers and to the customers.

Risk factors

 Certain risk factors also exist within a supply chain management system. They can be classified into external and internal risks. (Supply Chain Risk Management. 2005). External drivers of risk can be due to demand, supply or the environment. In demand and supply, availability of raw materials, unexpected price increase, shipment delays etc can occur. (Aberdeen et al. 2008).

In the present scenario, both demand and supply risks have been present. In a way, environmental risk is also there because the conducting of the marathon is something beyond control of the company. Internal risk drivers are processes and controls. In this case there no risk in both cases since the problem is totally external. If the company had the required raw materials, the order would have been completed without much of a problem.

Table 1. Statistics

Table 2. Chart showing cost components of 100 pairs of laces

(Normal profit)

The solution

The only solution in this case was to find a new supplier of yarn. This was done, but at additional cost in the price of yarn. The company had to pay 25% over the usual price enjoyed by the company.

(Profit in current scenario)

Net reduction in profits: 13,500  8,505 = 4,995

% reduction in profits: 4,995/13,500 x 100 = 37%

Appendix

Bibliography

Aberdeen., et al. (2008). Supply Chain Risk Management: Building a Resilient Global Supply Chain. [online]. SupplyChainBrain. Com.

BRYK, Nancy. (1998). Shoelace: How Products are Made. [online]. BNET: The Go To Place for Management. 9. 2.

Framework for Continuous Distribution and Supply Chain Performance Improvement: A Supply Chaining Framework. (2007). [online]. Future Pharmaceuticals.

GANESHAN, Ram., and HARRISON, Terry p. (1995). An Introduction to Supply Chain Management.

JOHN T, Mentzer., et al. (2001). Defining Supply Chain Management. [online]. Journal of Business Logisitics. 1.

LEVI, Edith Simchi., and KAMINSKY, Philip. (2004). What is Supply Chain Management. [online]. Managing the Supply Chain. 3.

Logistics Management: An Introduction to Supply Chain Management. (2008). [online]. NSL World: Narayan Shipping and Logistics.

Supply Chain Risk Management. (2005). [online]. The Decision Makers Direct.

TEIGEN, Rune. (1997). Definition: An Example of a Supply Chain.

Introduction

The Strategic Management Process (SMP) is made up of four elements viz. situation analysis, strategy formulation, strategy implementation, and strategy evaluation. These elements are steps that are performed, in order, when developing a new strategic management plan. Existing businesses that have already developed a strategic management plan will revisit these steps as the need arises, in order to make necessary changes and improvements.

The case under study is if JetBlue Airways Corporation has established itself as a low-fare passenger airline with a differentiated product and a high-quality customer service. The case describes how the company was started up and the strategies that were taken by the owner of the company David Neeleman. In this paper we will describe the strategic management process that was adopted by Neeleman in setting up his company and evaluate the same and deduce how the mission of the company had driven the business objectives of the company and provided competitive advantage.

Mission and Objective

But before we plunge into the analysis part the SMP process requires a mission of the company which guides the corporate objectives which are then reflected in the strategy formulation and implementation process. Strategies are the broadly defined four or five key approaches the organization will use to accomplish its mission and drive toward the vision. Goals and action plans usually flow from each strategy.

This emphasizes how vision and mission of the company provides a guideline in developing a strategy for the company. This was seen in the case of JetBlue, wherein the mission statement of the company emphasizes its customer orientation. JetBlue Airways exists to provide superior service in every aspect of our customers air travel experience. (www.jetblue.com) In order to focus on this mission, the company formulated it objectives of providing low-priced, no-hassle ticketing and refreshingly efficient customer service. The objective of the company was to attain the following:

• To attain an employee strength of 5000 in next 4 years.
• To provide air fares 65% less than the market.
• To provide convenient, paperless, hassle-free travel solution.

Hence we see that the mission of the companies drive the building of strategy which gives it a competitive edge over its competitors.

Situation Analysis

The first step in SMP is Situation analysis. The situation analysis provides the information necessary to create a company mission statement. Situation analysis involves scanning and evaluating the organizational context, the external environment, and the organizational environment (Coulter, 2005, p. 6). This analysis can be performed using several techniques. To begin this process, organizations should observe the internal company environment.

This includes employee interaction with other employees, employee interaction with management, manager interaction with other managers, and management interaction with shareholders. In addition, discussions, interviews, and surveys can be used to analyze the internal environment. On doing an internal analysis it was found that JetBlue had numerous advantages. Aggressive expansion plans provided a cutting edge to the culture and working style of the company. Innovation in operations and technology was evident. JetBlue opted for Airbus rather than the more conventional Boeing.

The operations were managed by software programs which were preloaded in laptops provided to all pilots. The technological use in the company was immense and they use information systems to increase efficiency and output. It is the first company to have used e-ticketing facilities.

Excellent /high quality, friendly customer service gave and edge to their service offering. Low fares (65% less than competition), one class, no discount seats was an important aspect that many low cost airlines failed to bank on. Capitalize technology to make the customer experience better than existing lines/hassle-free technology. Technology was used to increase employee and aircraft productivity.

Laptops were used by pilots to communicate, provide information, and access manual, road maps, etc. On-line facilities for checking bags, boarding pass and boarding helped to reduce queues. Commitment was shown to safety and to the people to travel in the airlines. A state-of-the-art revenue management system was opted. Providing voucher $159.00 for delayed for more than four hours for reason other than weather/traffic, $25 for misplaced bags.

A well selected and experience management team was hand picked who had the drive to create something new. Hiring the very vest people and treating them exactly the way they wanted their customers to be treated. A customized HR policy which emphasized on fair compensation/benefits programs, great two-way communications, terrific training, career growth opportunity and a safe, fun environment and a non-unionized staff. They emphasized on selecting right people by employing different styles or types of interview, attention to cultural fit and initial orientation. Immense emphasis was placed on people who were productive, safe (no drug/alcohol) and customer-oriented. A 360 degree management process rating, work in teamwork/communication.

Organizations also need to analyze the external environment. This would include customers, suppliers, creditors, and competitors. Several questions can be asked which may help analyze the external environment. What is the relationship between the company and its customers? What is the relationship between the company and its suppliers? Does the company have a good rapport with its creditors? Is the company actively trying to increase the value of the business for its shareholders? Who is the competition? What advantages do competitors have over the company? We employ Porters Five Forces model to scan the environment of JetBlue Airways.

Five Forces analysis we see that there exists high degree of competition for the company from competitors. US have the maximum number of low cost airlines. So it faces high competition. Suppliers of aircrafts are few and so they have a high degree of bargaining power. Customers have alternate choices of transport and so they too have high bargaining power. Entry barriers are high as setting up an airlines operation is very difficult. Exit barriers are high, as it involves high investment cost. So we see that the industry does not provide any support to the company to start up but it is through sheer.

The approaches to implementing the various strategies should be considered as the strategies are formulated (Coulter, 2005, p. 8). The company should consider how the strategies will be put into effect at the same time that they are being created. For example, while developing the human resources strategy involving employee training, things that must be considered include how the training will be delivered, when the training will take place, and how the cost of training will be covered.

Strategy Formulation

Strategy formulation involves designing and developing the company strategies. Determining company strengths aids in the formulation of strategies. Strategy formulation is generally broken down into three organizational levels: operational, competitive, and corporate.

Operational strategies are short-term and are associated with the various operational departments of the company, such as human resources, finance, marketing, and production (Coulter, 2005, p. 7). These strategies are department specific. For example, human resource strategies would be concerned with the act of hiring and training employees with the goal of increasing human capital. As in case of JetBlue, the HR policy was customized to attain customer focused HR policy. Their hiring was aligned to hire people who were customer oriented and their performance and growing up the ladder depended on their customer orientation. Their use of technology was also based on their objective of providing good customer service. They used e-tickets and pre-allotted seats to beat the problem of queuing in airports.

Competitive strategies are those associated with methods of competing in a certain business or industry. Knowledge of competitors is required in order to formulate a competitive strategy. The company must learn who its competitors are and how they operate, as well as identify the strengths and weaknesses of the competition. With this information, the company can develop a strategy to gain a competitive advantage over these competitors.

JetBlue had adequate knowledge of its competitors such as that of Southwest airlines, etc as most of its top management and the founder himself had extensive experience in such airlines and was part of the airline setting up process. For instance, when Neeleman decided on buying Boeing as was done by Southwest, they decided on to buying Airbus320 for Boeing refused to sell at the price they sold their airplanes to Southwest. This turned out to be a win-win deal as Airbus had more space for passengers and the space did not reduce at the tail of the plane.

Corporate strategies are long-term and are associated with deciding the optimal mix of businesses and the overall direction of the organization (Coulter, 2005, p. 216). Operating as a sole business or operating as a business with several divisions are both part of the corporate strategy. The company was geographically dispersed and had several headquarters. But their forte was to serve their customers best and to provide hassle free travel experience. This was followed diligently in all their policies be it human resources or operations. The COO of the company wanted happy employees who would serve the customers best and not unsatisfied, neglected workforce. All their business strategies in the short-term were focused on providing the best customer service in the industry.

Strategy Implementation

Strategy implementation involves putting the strategy into practice. This includes developing steps, methods, and procedures to execute the strategy. It also includes determining which strategies should be implemented first. The strategies should be prioritized based on the seriousness of underlying issues. The company should first focus on the worst problems, then move onto the other problems once those have been addressed.

They focus on serving underserved markets and large metropolitan areas that have high average fares. They offer both short-haul and long-haul routes that are point-to-point rather than the hub and spoke route system that has been adopted by most major U.S. airlines. The company began with the goal to eliminate many of the complexities and asininities of commercial air travel and set a new standard for customer service.

Thus far the company has flown beyond these goals and everyones expectations while returning a handsome profit to whom ever chooses to invest in this airline industry success. On doing an external analysis we see that high competition in the low cost airline market and high rate of exits in the market was making operation and entering the market more risky. The major competitors of JetBlue were Southwest airlines, UAL etc. the labor market for the airlines industry in the US was highly unionized and in certain routes the air traffic was high but so were the fares.

JetBlue targeted those areas with a very low price offering. An external analysis of the company revealed that the company. The conventional technology then being used in the industry is Boeing. There were no facilities of e-ticketing and passengers had to face long queues to board and get a middle seat allotted. Further there was a need for low cost airlines in areas where other airlines did not operate due to heavy traffic.

Strategy Evaluation

Strategy evaluation involves examining how the strategy has been implemented as well as the outcomes of the strategy (Coulter, 2005, p. 8). This includes determining whether deadlines have been met, whether the implementation steps and processes are working correctly, and whether the expected results have been achieved. If it is determined that deadlines are not being met, processes are not working, or results are not in line with the actual goal, then the strategy can and should be modified or reformulated.

Both management and employees are involved in strategy evaluation, because each is able to view the implemented strategy from different perspectives. An employee may recognize a problem in a specific implementation step that management would not be able to identify.

The strategy evaluation should include challenging metrics and timetables that are achievable. If it is impossible to achieve the metrics and timetables, then the expectations are unrealistic and the strategy is certain to fail. JetBlues growth plans were very aggressive. They wanted to be a 5000 employee company by the third year and wanted to operate in as many as 50 airbases. But there was a problem that was being foreseen by the company top management the company was still working in an entrepreneurial style while they were aspiring to be a big company.

VRIO Analysis

In this section we do a VRIO analysis of the above companies along with that of JetBlue. Values: The values of JetBlue were to provide customer oriented service. In doing so they maintained high level of satisfaction among internal customers (i.e. employees) too. They believed that if employees are not happy they cannot make others happy. Further they wanted to provide standardized service and hassle free air travel experience to customers. Their customer orientation was reflected in the HR policy which cultivated teamwork.

The value of Starbucks is the quality of their coffee and its diversified offerings. In order to ensure quality of the coffee beans the supplier shipments of coffee were quality checked thrice in three different stages of the supply chain and if they were found not to meet the companys quality expectation, the whole lot was rejected. Further to maintain their quality of servings in their retail stores they had well trained baristas, who underwent a 24 hour training regarding coffee and its making before they could serve a coffee in the stores.

LOreal, Pepsi and Coke are companies who are aggressively growth oriented with very little concern to values. Their values can be fast growth by any means. As in case of LOreal, it eliminated Body Shop to gain market share by entering natural cosmetic product market and beat competition in the Western European market.

Rarity: JetBlue was the first airline company who used e-tickets and brought about the concept of virtual management team. Further they first brought about the concept of providing vouchers to customers on late flights and misplaced baggage. But to a great extent such move could be imitated. But that of Starbucks wherein they had a direct control over the supply of beans directly from the farms was a definite advantage to them to maintain their forte of high quality. But rarity can hardly be found in the strategies followed by Coke and Pepsi. The only way they can attain rarity is through product diversification and differentiation.

Imitability: JetBlues strategy can be imitated and implemented in other start-up airline, but the only problem is the team of top management who were the best in their field in the airline industry. Human skills cannot be imitated. The strategy of Starbucks is difficult to imitate as they change their strategy and emphasize on human skills and services to customers. Services are difficult to imitate. The strategies of Pepsi and Coke are definitely imitable, that is why they went to the cola war.

Organization: The aggressive growth strategy employed by JetBlue was becoming a hindrance to the adaptability of the company to its strategy. This was because the organization is very loosely structured around a small company feel which fails to sustain a very aggressive growth strategy. This was one problem that the company was facing. On the other hand companies like Starbucks or Pepsi or Coke well structured and organized there was the right alignment of their organizational strategy to their structure

Conclusion

The strategic management process is a continuous process. As performance results or outcomes are realized  at any level of the organization  organizational members assess the implications and adjust the strategies as needed (Coulter, 2005, p. 9). In addition, as the company grows and changes, so will the various strategies. Existing strategies will change and new strategies will be developed. This is all part of the continuous process of improving the business in an effort to succeed and reach company goals.

References

Strategic Management Theory an Integrated Approach, 6th ed. Cases:

1. Robert Mondavi and the Wine Industry by Roberto, Michael A;
2. Cola Wars Continue: Coke v. Pepsi in the Twenty First Centry by Yoffie, David B.
3. Starbucks by Crossan, Mary M.; Kachra, Ariff;
4. LOreals Growth Strategy: The Body Shop Acquisition by Gupta, Abhijit, Majumdar, Supratim;
5. The Golden Age of Home Video Games: Grom the Reign of Atari to the Rise of Nintendo by Coughlan, Peter J.

Coulter, M. (2005). Strategic Management in Action. (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

UnitedHealth Group Incorporated (UNH) is a managed healthcare company located in the United States of America. In 2019, it was ranked as the second biggest healthcare provider in the world with a revenue of 240.3 billion dollars. Certain factors most likely contributed to its high place in the industry, including the quality of the products and services it provides and the advertisement that goes into it. However, an important part of any business success is its human resource management (HRM). This term covers the process of hiring, training, and assessing new employees, structuring the workflow, and providing a satisfactory working environment. The goal of this paper is to look at some of HRM components and, according to them, to evaluate HRM at UNH.

UnitedHealth Group Incorporated

UNH was founded in 1977, in Minnesota, where its headquarters are located to this day. Its growing success in the industry since then can be determined from its acquisition of a number of competing healthcare providers. UNH offers potential customers healthcare products, health-related services, and health insurance policies. In 2011, a separate branch called Optum was created to focus on the technological side of the business, including data analytics, delivery, and pharmacy services. UNHs clientele includes approximately 130 million citizens of the US, Brazil, Chile, and over 130 other countries, with most clients purchasing medical insurance.

UNHs business model is similar to those of other companies providing medical insurance. The business stays profitable with the help of its healthy customers essentially paying for the sick ones. Another reason for UNHs growing revenue is the way the health industry is structured in the US, where a large part of UNHs clients live. According to this structure, a citizen will have to resort to the company that provides their medical insurance even for a short checkup at the doctors.

However, one should also account for UnitedHealth Groups success among organizations providing similar services and products. In 2019, UNH has managed to rank as the second biggest healthcare provider in the world with a revenue of 240.3 billion dollars. This accomplishment can be attributed to the quality of their products and the constantly ongoing analysis of what UNH needs to offer to potential customers in order to be chosen by them. This is achieved, in part, due to the fact the company is the workplace of a lot of people who can be considered experts in their own field. In order to attract those employees, UNH has to keep them happy which is where human resource management plays its role.

Human Resource Management

HRM covers a wide array of responsibilities related to the prospering development of a company. Human resource management includes hiring and training employees, appraising their performance, devising the work structure and designing a reward system. The goals that HR departments strive for is to create a positive and engaging work environment, providing the employees with a sense of fulfillment and maximizing work efficiency in order to guarantee the companys success. It is also important that all the components have an interactive relationship where the combined effect of different HRM practices is greater than the sum of the individual effects (Hauff 4). Unfortunately, the dominant models within HRM theory and research continue to focus largely on ways to improve performance, with employee concerns very much a secondary consideration (Guest 22). However, ideally, the chosen HRM strategy should benefit both the employers and the employees.

Hiring and Training New Employees

Considering people retiring or switching their place of work it is important to maintain an approximately equal number of workers. For companies that are constantly growing by starting new branches, opening in new locations or acquiring new businesses, it is vital to raise their human capital in order to keep up with an expansion. The process of hiring new workers is particularly crucial to figure out for big organizations that receive thousands of applications every day. For those corporations, it is important to take into consideration all particularities that go into hiring a new employee.

First of all, the company needs to pick a set list of requirements that will frame the job opening as one that demands a high level of expertise. However, big corporations can often afford to extensively train their new employees so this list should not dissuade candidates with great potential from applying. It is also vital to remember that applicants try to show their best side in their CVs and employers should be aware of the inner motives and unconscious mechanisms that motivate a person for action (Janetius et al. 259). Second, as not to read through every single application that comes through, a company also needs to devise a way to skim the CVs. This can be achieved by deciding internally on a list of skills and background information that deems an application worthy. Lastly, it can help to devise a test that one can administer to the applicant during a job interview. On the one hand, it should not take up too much time. On the other hand, the test should evaluate the potential employees skill level and whether or not they fit the company.

Employee Perks

A competitive salary is still one of the most important things an applicant looks at when choosing between two or more jobs. However, nowadays, in order to entice smart graduates and expert workers switching companies, it helps to offer a set of employee perks. The benefits can often be split into two categories. One group of perks ensures a fun working environment which will be covered in the next section. The other category includes a list of discounts and account plans that guarantee a better quality of life for the employee. The most common such perk is a 401(k) plan which is a pension plan that ensures that a person will have enough money saved up to not work after retiring. Another benefit could be a work health insurance which is typically cheaper than an individual health plan. The last common perk of this category is a substantial number of paid sick days and vacations that make sure that employees get to rest without worrying about supporting themselves and their families.

Overall Atmosphere at the Company

Ensuring a pleasant working atmosphere can be very ineffective if it becomes the sole focus of the company. Most employees still prefer to have concrete benefits that will make their life considerably easier and save money to those that guarantee a fun workplace. However, if an organization has provided everything else, it is vital for it to consider its overall atmosphere. There is a number of ways that can be achieved. It can include going for a more casual office look, establishing a less official and hierarchical relationship structure between employer and employee and equipping the office with things that make ones day more enjoyable. Considering, the amount of time one spends at the office, ones workplace can be regarded as a persons second home. It would be beneficial for the employer if employees do no dread coming to the office and spend the workday in a pleasant mood, well-rested and well-fed. However, the company should also ensure that all the atmosphere-making practices do not distract and interfere with the workers assignments.

Human Resource Management at UnitedHealth Group Incorporated

Hiring and Training New Employees

UNH gets thousands of applications every day which causes them to devise faster ways of evaluating them. When applying for a job at UnitedHealth Group, one also has to answer several qualifying questions. An automated response is then generated on the basis of the answers and the candidate gets an invitation to a job interview. The meeting itself is often fairly short and entails either a small test or a set of questions after which the applicant waits for the final decision to be made (UnitedHealth Group Company Reviews). This could take from several days to a couple of weeks. Overall, this process is structured in a way that is balanced between minimizing the time spent and correctly assessing the candidates. The only problem is the possible long period of time between the job interview and a positive response during which the applicant could get a job from a different company.

Employee Perks

The pay at UnitedHealth Groups can be considered competitive as even people working at the lowest positions receive twice the minimum wage (UnitedHealth Group Company Reviews). Considering that UNH is a healthcare company, it would be logical to assume that most candidates are hopeful that the corporation provides medical insurance as one of the employee perks. Indeed, that is one of the benefits that UnitedHealth Group offers its workers and it includes dental, life and disability insurances (UnitedHealth Group Company Reviews). UNH also provides its employees with a 401(k) plan and paid vacation days. However, the workers complain about short maternity leaves and bad conditions for future mothers (UnitedHealth Group Company Reviews).

Overall Atmosphere at the Company

One of the best benefits at UNH is the flexible schedule and ability to work from home which allows employees to define their workday in terms that are convenient to them. As far as work attire is concerned, UnitedHealth Groups asks its workers to dress in a way that would allow comfort while still looking professional. The company also arranges free lunches and unlimited coffee for its employees which helps keep them well-fed and rested and maximizes work efficiency (UnitedHealth Group Company Reviews).

Conclusion

A corporation can provide the best products and services but unless it hires good workers and presents them with certain benefits and a good atmosphere within the company, it can never become successful. Hiring capable employees and keeping them satisfied with the work they do is the prerogative of the HR department. This paper described some of the components of human resource management, according to which UnitedHealth Group was evaluated. Overall, the global healthcare company has a well-structured HRM that provides its employees with a pleasant work experience and maximizes work efficiency.

Works Cited

Guest, David. Human Resource Management and Employee WellBeing: Towards a New Analytic Framework. Human Resource Management Journal, vol. 27, no. 1, 2017, pp. 22-38.

Hauff, Sven. Analytical Strategies in HRM Systems Research  A Comparative Analysis and Some Recommendations. The International Journal of Human Resource Management. Web.

Janetius, S.T., et al. Projective Tests in Human Resource Management and Hiring Process: A Challenge and a Boon. The International Journal of Indian Psychology, vol. 7, no. 4, 2019, pp. 258-265.

UnitedHealth Group Company Reviews. Indeed, 2020. Web.