The trade performance of Malaysias manufacturing good can be determined by its comparative advantage. Comparative advantage measures the cost of producing a particular product in country X against the similar product in country Y. Economists analyze the ratio of two trading countries as an indicator of its trade performance (Bowen & Pelzman 2008). Hence, Malaysia can have a comparative advantage when it produces fewer goods.
According to trade analysts, comparative advantage measures a country living standard and revenue (Gangnes 2010). The factors that influence the comparative advantage of Malaysias manufacturing goods includes abundant resources, efficient communication, technology, low-cost of manufacturing goods and the pattern of demand (Bowen & Pelzman 2008). The presence of raw materials such as timber influences the production of cheap furniture for export.
Communication is an important factor of production. Malaysias cheap labour influences the cost of production. Thus, the comparative advantage of a country can be affected by the factors mentioned above. Malaysia has abundant timber; hence the cost of producing wood products is low compared to China and Japan. Malaysias industrial policies remain open while maintaining the 21st position on the world export table (Wen 2005).
The growth of its manufacturing goods remains steady because of its abundant resources and low-cost production. The revealed comparative advantage of Malaysias manufacturing goods exceeds Singapore, Thailand, Indonesia and the Philippines (Viilman 2009). The increase in the production of E&E accounts for the increase in the economy. The steady growth of Malaysias Exports is influenced by its international presences and trade performance. Malaysia export performance of E&E products increased by 104%. Malaysias export value grew by 37.5%. The result indicates Malaysias trade performance against the US, China and Singapore. Malaysias E&E trade performance surpassed Thailand, Singapore and the US (Shapira 2011).
References
Bowen, H & Pelzman, J 2008, US export competitiveness, McMillian Press, New York.
Gangnes, B 2010, Global production networks in electronics ad intra- Asian trade, Hawaii, Manoa, Economic Review, China.
Shapira, P 2011, Knowledge economy measurement: methods and insights from the Malaysian knowledge content study, Asia Fellows Program 2010-2011, China.
Viilman, N 2009, Market share analysis of Malaysian exports: implication on its competitiveness, Review of Economics and Statistics, China.
Wen, C 2005, Export competition between Thailand/Malaysia and China in the US market: survey on electrical and electronic product. Asia Fellows Program 2000-2001, China.
Manufacturing was outsourced to a Mexican company.
Manufacturing in Mexico is cheaper than in Canada. This is especially due to the low labor cost in Mexico. This move has helped to reduce Bravados cost of goods sold therefore expanding their gross profit margin.
Payment for materials was made six months before delivery.
Bravado negotiated 30-day contracts with the Mexican companies. Payment is now done after the work is complete.
Prepayments usually hold up a lot of working capital. Negotiating the 30-day contracts frees up 5 months worth of working capital. This can be reinvested in short-term projects to earn Bravado a profit.
Bravado purchased raw materials in advance and stored them in their offices until the demand for them arose.
Bravado does not purchase any raw materials. The Mexican companies handle that part of the supply chain. However, Bravado now purchases the finished garments at $6 each from the Mexican companies.
Inventory is costly to maintain. Eliminating the storage of materials reduces the risk of obsolescence, theft, and pilferage and insurance payments on the materials. The space set aside for materials storage can be put into a different use.
Bravado staff checked raw materials for quality before receiving them to the store. They also checked the finished garments from the factories.
There is only one quality checkpoint after the garments leave the factory.
This change has reduced the amount of time spent on quality control.
Financial relations
A financial relationship is still necessary at Bravado. This is because banks can be a good source of short term financial assistance. Bravado might need to call upon their help at some point. Thus, it is necessary to maintain good credit ratings. However, for their long term investments, equity finance is the best option for Bravado (Scarborough, Wilson, & Zimmerer, 2009). This is because no regular interest payments are required by equity holders. Debt finance has to be paid back at regular intervals and with an interest. These conditions may prove difficult to meet for a firm that has barely started breaking even. Bravado can also regulate how much equity finance they would like to raise as opposed to debt finance which is at the discretion of the owner who decides how much to grant.
Industrial impact
Manufacturing clout means influencing the manufacturer. This comes with the size of purchases made by these manufacturers. Bravado uses the same manufacturer with well-known brands such as Victoria Secrets and La Perla. The two major brands have more negotiating power with the manufacturer than Bravado. This is the reason why Bravado says they have not much manufacturing clout. Economies of scale are the benefits attained by operating on a large scale. In Bravados case, it would refer to benefits attained from large scale manufacturing in Mexico. These benefits would include lower costs of production and high quality of goods due to efficiency in manufacturing. These are the benefits that From is out to exploit.
Inventory
Nordstrom says that the inventory is centralized (Scarborough, Wilson, & Zimmerer, 2009). This means that the entire inventory is found at one location. This is in the case of online stores where virtual stores have unlimited space in which to display their inventory. They can place pictures of all kinds of lingerie on their websites for customers to see. This is unlike normal stores where display space is limited. This can be an advantage to Bravado since customers can easily view their products if they search the website. However, competition with other brands displayed in the same online store is quite high.
Impact of exchange rate fluctuations
The impact of fluctuating currency exchange rates on Bravado is not surprising. Foreign exchange risk is one of the major risks facing businesses in todays globalized world. Bravado cannot eliminate this risk as they are an export company. However, there are a few ways to minimize their exposure. The best way would be to invoice their foreign customers in home currency. Customers would be persuaded to pay in Canadian dollars. This transfers the foreign currency risk to the customers completely. Any change in exchange rates would have no impact on Bravado (Scarborough, Wilson, & Zimmerer, 2009). The second option is to negotiate currency forwards and futures with their bank. This way, Bravado can hedge against the risk of foreign currency risk and minimize the risk of loss. Finally, Bravado can purchase currency options that allow them to buy or sell foreign currency at a pre-determined amount in the future.
Office building rental
Kathyrn can convert the former materials store to an office block and let it out. This would be a good source of extra finance. She can also consider setting up a factory in the US where most of her sales are made. This expansion into a foreign market would require a huge initial capital outlay. Kathyrn could consider making franchising deals. This way, she would be assured of regular income from the franchisees. She could also make licensing deals. These are the easiest ways for her to enter the American market using minimum capital outlay.
Reference
Scarborough, Wilson, & Zimmerer. (2009). Effective Small Business Management: An Entrepreneurial Approach. Chicago: Pearson Prentice Hall.
Most successful multinational companies have ventured into foreign markets where they establish subsidiaries in countries with favorable economic factors. The subsidiaries seek business environments that are favorable in terms of the country of choice economic growth, the business cycle, unemployment and employment levels as well as inflation levels. Specifically, those entering the foreign markets assess and evaluate market factors concerning the countrys business cycle which highlights the market fluctuations in a country. This is because every business works towards gaining a profit and such factors may hinder that accomplishment.
Economic factors
Businesses require funding for start up and this is usually sourced from banks and other lending institutions. The loans usually are granted inclusive of interest rates and are usually charged as per annum. If interest rates are too high, businesses will be constrained and therefore keep away investors. This enables businesses to assess their businesses viability. This includes issues such as recession which indicates a slowdown in a countrys economic activity, which when it lasts too long it becomes a depression.
Other factors that shed light on economic conditions in a country include rates of inflation, exchange rates and national incomes. Inflation acts as a mirror of a countrys existing economy whereby it shows increases in the price of goods and services. This means that the subsidiary will suffer if the inflation rate is high as the cost of goods needed for production will also rise hence running the business to a loss. In these situations, lending institutions do not lend money to businesses and if they do it is usually at high interest rates.
Exchange rates define the current market prices that different currencies are exchanged at. If currencies in existing countries are higher than in countries where raw materials are being sourced, the cost of production will be low translating to good business. The reverse will mean negative impacts on the subsidiary. Current exchange rates show a strong dollar than the Turkish lira. The subsidiary will use available local materials and import most of its products. This means that the subsidiary will earn profits as the cost of production and exportation will be low in addition to available markets in Turkey and America.
Turkey reported a steady growth of 9% in 2010 and it was anticipated to decline to 5%. Unemployment levels have also been rising with time but it has become steady with a low of 11.9%. Inflation rates have also been fluctuating from 10.4% in 2008 and 6.3% in 2009 with a rise in 2010. This shows the unfavorable current market conditions. Persistence of the market forces and the dire predictions of ever increasing make the current business environment dangerous for investors. High levels of inflation and unemployment will make life more difficult as the cost of goods needed for production will rise. This will mean the end for many businesses as the subsidiary will be hard pressed in trying to make a profit when the prices are too. It is important to mention that many changes have been put in place to address the current situation and the investment climate is primed to be better. More research and vigilance on market fluctuations will need to be carried out to ensure that changes are positive and thus enabling establishment of a subsidiary (Datamonitor Plc 4).
Legal requirements
Businesses in foreign markets are expected to adhere to the host countrys regulation of the business environment. As such, companies that establish subsidiaries in other countries are subject to that countrys business laws, whereby the management assesses the legal requirements governing establishing a new business. Different countries have different legal requirements. For instance, in Turkey a subsidiary can be established in the private sector with limitations in some areas especially in the civil aviation and maritime transport among others. On the other hand, American requirements allow entry of businesses in every sphere of American life and hence more opportunities for business. Both American and Turkish law allows formation of limited liability companies, joint stock companies, and partnerships limited by shares. Turkey encourages most forms of businesses enabling flexibility of making or changing ones choices. The business legal environment in America is complex as different states have different regulations in establishing and running of businesses.
The new Turkish commercial code has also simplified the time taken to establish a subsidiary compared to American law that takes a long process before one is registered (Price Waterhouse Coopers 18). The American corporate income tax is currently at 30% flat rate (Wise 8) while that of turkey is at 20% (Price Waterhouse Coopers 9). However, foreign investors are required to pay an advance corporate income tax based on their quarterly based statutory financials at 20%. This is offset after corporate annual tax returns are deducted. In consideration to the information, business in Turkey is predicted to be favorable. The legal issues have been really simplified so as to attract more foreign investors. This will enable the management to successfully establish a subsidiary and make good returns due to the enabling environment. However, the decision will have to be considered in the light of the current market forces which are too unpredictable and therefore relatively dangerous.
Works Cited
Datamonitor Plc. Turkey Country Profile. Country Analysis Report. Web. 2012.
Price Waterhouse Coopers. Doing Business in Turkey. 2010. Web.
Wise, A. N. Doing Business in the U.S.A: A Bullet Point Guide For Foreign Business People. 2009. Web.
Riordan manufacturing was opened in 1991 in San Jose, California. It has since then been involved in manufacturing of plastic products used for automotive, appliance and aircraft parts. In addition, it produces plastic materials which are used in medical sectors and in beverage companies. In order to attain a future of profitability and growth, the company has set its goals which include; focusing on research and development and good customers and employees relationship.
Riordan Manufacturing uses various accounting tools to measure its performance. One of the most important approaches is ratio analysis. This involves examination and interpretation of correlation between numerous financial variables, by shareholders or creditors. Riordan uses ratio analysis to benchmark itself in the market.
Some of the ratio analysis uses in Riordan Manufacturing include: liquidity ratios, such as current ratio, and quick ratio, to measure its solvency levels. This is done by taking the current assets and current liabilities to ascertain the various ratios; it also measures its debt structure, which is measured by dividing the net debts against the net assets; Riordan expresses its gross margin as a percentage.
The profit margin is net sales less the operating expenses during that period; and profitability ratios to show the profitability of the company during a particular accounting period. Some of the profitability ratios used by Riordan Manufacturing include; return on assets, debt ratio, earnings per share and dividend payout ratio. Riordan uses these tools to identify changes in the companys operations and the trends in the market against other companies.
The companies systems are interconnected and dependent, and they are functional from the reception of the raw material shipment to the release of the finished products.
The sub-systems involved involves passing the incoming materials documents, from the deliverer to the receiving staff who compare the document against the order and in validation, the data is fed into the inventory system by the inventory clerk. In addition the information regarding the amount of raw material used and the number of assembled produced are submitted to the clerk who inputs the date into the inventory system (Docstoc, 2010).
When a sell is in process, the information concerning the customer and the amount ordered are entered into the shipping and billing systems by the sales system. Accordingly, the shipping system produces a document from the inventory system based on the amount ordered. After the ordered goods have been loaded into the truck the trucks number, date and time of departure are fed into customers billing system. Later upon shipment, the copies of order are entered into the inventory system.
In addition, to verify the amount of raw materials, assembled and finished products, an annual physical inventory is carried out against the figures of inventory system. To facilitate this, the department uses two types of desktop computers, which are the Dell Optiflex computer with Windows 2K operating system and Compaq Presarios operating on Windows 98 and Microsoft Office.
These systems are used by different facilities, where each facility and individual members of the sale team uses a variety of softwares and procedures to gather the customers information and to trace down sales.
The whole IT system, involved in the receiving of raw materials and release of produced goods is used by all the three Riordan companies in Georgia, Michigan, and China, although they produce different commodities. However, the sub-systems involved, which are; reception, inventory, manufacturing, branding and delivery, require some improvement to make the whole process successful. For instance, the reception does take a lot of time in comparison on the delivered materials and their order.
A more integrated method of electronically weighing the material delivered could save the company a lot of time for other processes (Docstoc, 2010). This can be achieved by comparing the weight of delivered goods and the ordered weight. In the inventory, the weight of the delivered good will be noted and since each plant processes one product the finished manufactured good can be compared against the weight.
Moreover, the sales department needs to install software that will compare the customers information and the market demand to production system records to determine the amount to be produced. This will curb the problem of dead stock, a major problem in Riordan manufacturing process.
In the same case, there should be a connection between the inventory system and the production system. This will enable the production team to assess the quantity needed to avoid the loss incurred in holding finished products. Also, the connection needs to be extended to delivery department, on which automatic hand sensor should be used to delete the released products from the inventory system. This will save time used in feeding the information manually.
Reference List
Docstoc, (2010). Improving Riordans Networks. Riordan manufacturing business systems. Web.
The motor vehicle industry mainly concerns itself with manufacturing and selling of motor vehicles and all the related parts to users. Motor vehicles have gradually continued to grow in their usefulness, influencing demand from the markets as users seek to gain from the additional features and technology that manufacturers introduce in their numerous designs and models.
At present, motor vehicles come with many added features that seek to address different areas of concern, including safety, security, and efficiency. The trend, however, has been reduced costs for acquisition of such improved vehicles as the industry targets to improve profits while maintaining lean costs. However, the industry experiences numerous challenges that threaten to derail the gains that have been achieved over the years.
Motor vehicles mainly depend on oil for their running, which is a challenge for the industry because global crude oil prices have been increasing almost on a daily basis (TheCapitol.Net 183). This makes it expensive to own and run a vehicle.
The global financial crisis has further reduced the demand levels as more potential buyers and users have been electing to invest their money on other assets rather than buying vehicles. Changing customer tastes and preferences have equally been putting manufacturers on continuous strategy development and improvisation as efforts are pursued to beat competition and maintain profit levels.
This case write-up seeks to illustrate some solutions that manufacturers have adopted in addressing the problems that afflict the industry. Firstly, the paper will explore on the changes in manufacturing strategy currently being witnessed, which includes the shift towards the developing economies in as far as locating manufacturing plants is located.
Secondly, the paper will explore on the new changes in production systems that mainly aim at achieving efficiency and eliminating over dependence on oil. Lastly, the paper provides recommendations that vehicle manufacturer can adopt as a perfect way of tackling the challenges that they encounter in their activities.
Strategic Analysis: SWOT Analysis of the Industry
Strengths
The industry boasts of an expansive product line. Different manufacturers are dealing in varied brands, which enable the companies to spread their risks. Thus, poor performance affecting a particular brand may not necessarily affect an entire company (U.S. International Trade Commission xxxi).
With increased competition among the various manufactures, the industry has generally developed manufacturing competence to sustain the competition. This has increased the quality of the manufactured vehicles and, thus, acted as a surety to the buyers that the products they buy are worth the value of their money.
To further sustain the intense competition, players have improved on their research and development skills, as well as leadership. This has seen quality products being released to the market, and which match the expectations and needs of the customers accurately. The motor vehicle industry enjoys reputable brand names that have been in existence for many years.
Such brand names are interpreted to mean high skills, long-term expertise, and reliable experience, which cannot be affected easily by changing market trends and patterns. Thus, more customers continue to have trust in the companies (U.S. International Trade Commission xxxii).
Weaknesses
Fast changing customer tastes have effectively made products to be obsolete and have narrow product lines. This makes it costly for the companies as they continuously engage in strategy formulation to achieve a perfect match between the products they manufacture and the market expectations.
Costs of manufacturing have been increasing with expanded production owing to the rising cost of the raw materials. The industry relies on different raw materials for the production of motor vehicles, including aluminum, glass, and rubber. The prices of these materials have been increasing over time, thus equally increasing the cost of production for the industries that rely on such materials, like the motor vehicle manufacturing industry.
Customer goodwill has been declining for industry players who fail to maintain positive performance. GM and Chrysler, for instance, are likely to have lost some level of customer goodwill in the wake of their bankruptcies following the biting global financial crisis. This has also contributed to their struggling performance even after the economy is on its recovery path.
With the industry pursuing portfolio management as a strategy of keeping pace with the market and competition pressures, there is the danger of poor performance as a result of bad portfolio management. Companies are focusing on pursuing too many portfolios, which in turn posses the danger of losing focus and encountering losses.
Opportunities
Motor vehicle manufacturers have the potential of expanding their core businesses to include other areas, such as motorcycle or ship engine manufacturing. This could help in increasing demand especially at a time when their core business demands are low. The industry has the potential of widening the product range as research and development activities lead to new products. This helps in spreading risk over a wider selection of products.
Industry players have the potential of vertically integrating forward and backward, thus eliminating challenges and limitations of relying on suppliers and distributors. This increases efficiency and also lowers chances of experiencing unwarranted delays. The trend in the industry has been that of making acquisitions, particularly with the best performing companies buying out those facing difficulties. This helps the companies in achieving additional markets and thus increasing their chances of making huge profits.
Threats
There is growing competition, especially within the domestic market, as foreign manufacturers establish their operations in different countries. The foreign market is also experiencing high competition as manufacturers from different countries target the international market for their operations.
Consumer tastes are gradually changing over very short periods. This is forcing manufacturers to endlessly engage in strategy planning and development, which is costly and time consuming. It also leads to losses due to delayed sales that occur as a result of the market not wishing to acquire vehicles they consider outdated.
Barriers to market entry are also being lessened throughout the world as most countries enter into international market treaties. This forces them to lessen the entry protection mechanisms, thus providing foreign companies with an opportunity to exploit the markets. Changes in economic factors are affecting the industrys demand, with the global recessions lowering market demands for motor vehicles. Such recessionary patterns push manufacturers into debts and also limit their production capacities.
Nature of Problems
Changing customer tastes
Buyers of motor vehicles often base their purchase decisions on various aspects, which make up their tastes. These purchase decisions are not permanent and keep on changing with time (U.S. Bureau of Labor Statistics 65).
Because manufacturers have to make quick sales in order to achieve their desired profits, it is important that they study the market trends carefully and design vehicles that will accurately reflect on the customer demands and wishes. This entails a lot of activity, including conducting market research and designing strategies to enable their products attract higher demands.
However, with the short-lived customer tastes, it becomes difficult for the manufacturers to fully address them. Once the companies clear their research and design the vehicles to specifications, they realize the tastes have shifted. In essence, this causes their vehicles to stay for long as finished stock in the warehouses and on the floor shops without being purchased. In other instances, the prices are forced to be lowered in order to raise demand for such products.
American motor vehicles manufacturers, mainly GM, Chrysler, and Ford, concentrated on the manufacture of sports utility vehicles, SUV, and light trucks because the local market preferred this type of vehicles. With the growth for these companies mainly relying on the sale of SUVs and light trucks, the market changed its taste and preferences as most buyers opted for the small passenger vehicles that were mainly manufactured by foreign companies.
This decision was mainly informed by the fact that the SUVs consume a lot of fuel, which is not economically viable at a time when oil prices are increasing at alarming rates. This change of market preferences and consumer tastes has in particular been responsible for the slow recovery of the American leading manufacturers, especially GM and Chrysler (U.S. Bureau of Labor Statistics 65).
Global economic patterns
Global economic patterns are highly fluctuating and are very difficult to be predicted accurately. This subjects the car manufacturing companies to highly risky business environment because any abrupt changes could affect their production and profit levels.
Economic recessions, in particular, have negative effects to the operations of car manufacturers as they diminish the buying capability of users, thereby reducing on the market demand levels. As the overall market demand declines, companies are also forced to cut down on their production capacities in order to control the likelihood of running at losses. This involves cutting down jobs, closing down on a number of manufacturing units, and borrowing funds from governments to assist in mitigating the crisis.
With production having been at normal prior to the onset of such recessionary patterns, it means the finished vehicles already released to distributors and showrooms will take longer before being purchased. The longer these products remain at the shops the more the costs also increase. Eventually, this pushes the manufacturers into losses and makes it difficult for them to recover even after the recessionary periods recede and markets demands increase to normal.
Rising cost of oil
Global prices have a huge bearing on the purchase decisions that customers make in as far as their acquisition of motor vehicles is concerned. Thus, the ever rising global prices for the commodity has posed a challenge to the motor vehicle industry, especially given that many vehicle engines rely on oil to run.
As a remedy to the challenge, industry players have constantly been engaging in research to find alternative energy sources that can be able to power their vehicles. Such research findings have determined other viable alternatives, including the manufacture of hybrid vehicles that are set to lower the overdependence on oil as the main energy source.
However, these researches are expensive for the car manufacturers as they require a lot of time and expertise. Equally challenging is the fact that vehicles running on a fuel cell require hydrogen that combines with oxygen in order to run. However, there are very few hydrogen stations, which make the alternative less viable. Liquid hydrogen can only be stored in very low temperatures, thus making this option further less attractive for the industry.
A different alternative has been developed in which lithium ion batteries that are rechargeable are used to power vehicles. This alternative, too, faces its own drawbacks as the batteries can hardly retain their charge for significant durations. With these ventures being comparatively expensive, these types of vehicles are expensive to acquire and would still discourage the buyers from purchasing them.
Rising competition
The motor vehicle industry and market has been experiencing increased competition from the varied players as the scramble for purchasers continue. In particular, most countries have reduced the entry barriers that previously locked out foreign companies from competing with their local manufacturers. In essence, more foreign companies have gained access to other national markets, including establishing manufacturing in such markets to maintain their production costs at minimum levels.
Japans Toyota motor manufacturing company, for instance, has gained a foothold of the American domestic market following the companys entry into the market. This has seen the company establish several manufacturing units within the USA to make their operations easier.
The market share for the American companies, GM, Ford, and Chrysler, has particularly waned with the introduction of mainly Japanese and European manufacturing plants. Subsequently, the foreign manufacturers now enjoy a bigger market USA auto mobile market share, thus piling more challenges to the home companies.
Control Systems
Extending activities into the developing world
Vehicle manufacturers have particularly embraced the idea of extending their operations into the developing world to address some of the challenges that continue to afflict the industry. The main reasoning behind such a move is to target the huge market in such countries, including China, India, Brazil, and Russia, which have high populations.
The developing world, despite the fact that it also registered a decline in demand levels for motor vehicles during the global financial crisis, was not as worse of as the developed markets. Thus, the slight drop in demand levels has given hope to the manufacturers from the developed world that the markets can offer substantial ground for growth.
In addition, the cost of operation in the developing world is also comparatively low. The huge population makes it easy to acquire labor at very cheap rates. This translates to high efficiency for the companies as they are able to save significant costs and thus improve on their profitability.
Integrating advanced technology in manufacturing
The industry is adopting the use of advanced technology in order to address the problem of overreliance on oil for running vehicle engines. The new technologies have seen the introduction and release of hybrid type of vehicles that use alternative sources of energy. The vehicles use batteries and hydrogen as an alternative to oil and can be recharged as the vehicles run on oil.
New technologies have also seen companies achieve fast and reliable production capacities that do not delay the production cycle. This is significant for the companies because the finished vehicles take only few days between the start of manufacturing and the market release date. The technological advancements also aid the production of different product models using the same production plants and materials.
Restructuring supply functions
Most industry players are restructuring their supply departments to achieve high efficiency. Such restructure programs include spurning off the supply department such that it operates independently. This program achieves efficiency because the restructured supply organization cleanly understands the internal operations and production patterns of the main company.
Production by order
Motor vehicle manufacturers are attempting to tie their production to specific orders by the market rather that mass production of their products. This seeks to gain the automatic market demands while eliminating cases where vehicle products stay for long at the distributor and shop locations without being purchased.
External Industry Environment: Porters Five Forces Analysis
Buyers bargaining power
Buyers have a moderate bargaining power. This is because the global population, which forms the industrys market, is huge and provides a wider alternative for the manufacturers. There are also varied manufacturers who target the same global market with their varied products (Grant 112).
Suppliers bargaining power
The supplier bargaining power in the motor vehicle industry is also moderate. Most of the manufacturing companies are huge and have capacity to achieve forward integration. However, suppliers of other important material parts still enjoy some level of monopoly over the manufacturers.
Barriers to market entry
The level of market entry barriers is high. The motor vehicle industry relies on high capital amounts to set up operations. Equally, the market has more trust on brand names and customer loyalty, which a new company may find difficult to acquire and build over a short term.
Rivalry and competition
There level of rivalry and competition is intense. Different manufacturers are competing with each other in order to acquire significant market shares. This has seen manufacturers establish operation units in different regions of the world in order to achieve low production costs and market customization.
Threat of substitute products
The threat of substitute products in the industry is high. Many manufacturers are increasingly relying on market tastes and preferences to manufacture their products. Thus, different products from varying manufacturers resemble each other and could easily be picked by customers as a perfect substitute for their brands (Grant 115).
Solutions and Recommendations
The industry needs to spend more in the area of research and development. Although companies are sending more in this area, additional spending should be encouraged as a way of creating competitive advantages over competitors.
As competition increases, companies can only develop their competitive edge by undertaking continuous research and development activities in order to keep up to date with the market expectations and preferences. Equally, technology is constantly changing and without maintaining pace with it, the companies may not be able to achieve the advantage of efficiency and high quality that comes with it.
Having an elaborate research and development strategy will enable manufacturing companies to work on alternatives that may address effectively the challenges of over relying on oil fuel as the main source of power for motor vehicles. It will also come in handy in addressing the challenge of changing market preferences by exploring on other viable alternatives, such as pursuing special manufacture by market order.
Production in some countries is too expensive and is not viable at all. Manufacturers, therefore, need to consider the cheap production countries in the world and relocate their production there to maintain minimal production costs. Production of motor vehicles in the USA, for example, is not viable because of the added costs that are involved. Companies need to pay high costs in maintaining their pension workers, which eventually increases the cost of production.
Companies, such as the GM, Chrysler, or Ford, may consider transferring their labor intensive processes to such developing countries as China or India, which have considerably low labor rates. Other processes that require a lot of mechanization, such as vehicle assembly can remain in the USA owing to the countrys extensive industrialization. This will reduce the production costs significantly for the companies, and enable them sell their finished products at highly competitive prices.
Companies should consider expanding their product portfolios in order to spread their risks and thus cushion themselves from such threats as bankruptcy. Even though the core business for a vehicle manufacturer involves designing and producing vehicles, relying too much on this one business can prove to be dangerous.
Apart from introducing several motor vehicle brands under one manufacturer, players can consider exploring the manufacture of other closely related products, like motorcycles, power generators, or mechanized sawing machines.
The market demand for such products is independent of each other and thus a manufacturer can be assured of a different market in case one product type struggles with poor market demands. The variety of products should be different but employ similar technology in order to make it easy for the company to enhance its performance in the other product areas.
Works Cited
Grant, Robert. Contemporary Strategy Analysis: Text Only. Hoboken, NJ: John Wiley, 2010. Print.
TheCapitol.Net, Inc. Recession, Depression, Insolvency, Bankruptcy, and Federal Bailouts. Alexandria, VA: TheCapitol.Net, 2009. Print.
U.S. Bureau of Labor Statistics. Career Guide to Industries, 2006-07. Washington, D.C.: U.S. Department of Labour, 2006. Print.
U.S. International Trade Commission. Foundry Products: Competitive Conditions in the U.S. Market, Inv. 332-460. Washington, D.C.: U.S. International Trade Commission, 2005. Print.
The problem in the research is presented in the process. The root of the problem can be traced back to the functioning of the blow molding and assembly processes. It is important to note that there are over 120 shells that go into waste every day. The target of the research will be to modify the process so as to ensure that there are no cold shells at any stage of the process.
Cold scraps have the effect of increasing costs and lowering revenue. Due to cold scraps, the company is not able to maximize its profitability. Dealing with this problem has been identified as being one of the best ways to ensure that the company is back to its profit making ways. The project objective statement is: To reduce the number of cold shells scrapped to 0.
Scope of the Project
To better understand the scope of the project, it is important to look at the key terms used in the project. The term unit refers to scrap. These are the cold shells at the end of the project that cause high scrap cost. Defect may refer to a product or a process. The cold shells that are scrapped by the robot in the course of production are referred to as defects.
Although the project is concerned with the entire production process, the focus will be on the cooling and assembly processes. The project seeks to establish the root of the problem through assessing the process of cooling as well as the assembly line.
The fixtures and details contained in the cooling fixtures as well and in the assembly line will be the main focus of the project. Although the project is set to encounter constrains, the major constrain will be in regards to the two different customer programs which share the same blow molding process.
Stakeholder Analysis
An analysis will be conducted on the stakeholders to evaluate their position in regards to the goal of the project. Some of the critical analyses that will be conducted are in regards to the facility controller, VP operations, executive VP, and business unit management. In analysis of the Executive VP, the action taken will initiate a meeting with the DC to bring him up to speed.
In analysis of the VP operations, the action taken will be centered on the great involvement from D and the excellent support since he has taken over the VPO position. In the facility controller, the action taken will be focused on the savings that can be realized as a result of achieving the goal of this project.
In regards top the business unit manager, the focus will be on the assigning of staff members and the amount of personal involvement. The nature of decisions being made will also be an important factor to take into consideration.
Methodology
The research will commence on the assessment of the blow molding. The focus here is laid on the cooling process on machine 5. In this analysis, the position where the robot waits for the signal is an important area of assessment.
Other areas of assessment will include the process of picking the tanks, the weighting process, and the cooling process. Because so much scrap is realized from this section of the entire process, it will be important to look at the fine details and the process involved in weighting, molding, and cooling.
Timeline of the project
In the first, there will be important activities that will take place. This will include the project charter, assessment and implementation of the CTQ tree, and the project financials. The majority of the processes that will take place in the first month will be concerned with the definition and envisioning of the future state. The second month of the project will be concerned with measurement and mapping.
Here, the process mapping will be done as well as the screening of tools to be used in the process. The MSA will also be tackled extensively during the second month. In the MSA, there are a number of processes that will be dealt with extensively. This will include assessing constrains, providing training, assessing the baseline capability, high level process map. The third month will deal with analysis.
Most of what will be done in the third month will be to analyze. There will also be a focus on the waste priorities and detailed analysis. The analysis conducted here will be divided into the passive quantitative analysis and passive qualitative analysis. The fourth month will be all about improvement the activities therein concerned with the selecting lean methods as well.
This will be divided into improvement summaries, experiment execution, and experimental plan. The fifth month will be concerned with control. This will be divided into the process controls, handing off to process owners, final process capability, as well as project sign off (Kock, 2007).
Measurement system analysis
The achievements made in the course of the process are centered on the system analysis. The measurement system analysis is the gauge through which the different processes contained in the research are weighed. This tool is also important as it provides information about how the system records different aspects involved in production.
One of the greatest changes the system has been able to achieve through this system is in regards to the recording process. One of the important things that took place in regards to the MSA is the recording of cold scrap at different internals. This was done from the blow mold controller. It was done manually and the data was automatically recorded. A paired T test was also done.
The main aim of this was to compare the two methods (Infoman and Mold controller) that are contained in production. The practical problem was presented in the question; is the mold controller recording method identical statistically to Infoman recording method? Baseline capability and process stability were also important in the analysis.
A fish bone diagram was created where the different factors involved in production were analyzed. These were all gauged in regards to their effect on production, performance, and the goal of the project. Some of the factors analyzed include label accuracy, light curtain status, swipe card reader, part present sensors, lumberjack processes, torque, arrow mark, alignment line, leak, pressure, and continuity.
The fish bone diagram also looked at the tank shell, ORVR, ROV, studs, pads, nylon tubes, seals, rings, clamps, hoses, oil, markers, heat shields, and racks. Lean hand, operator, and downline technology were also some of the factors that were analyzed in regards to performance. Some of the amendments that were made in regards to these factors include water, protective equipment, light, and space.
Maintenance manuals were also amended as well as the work instructions and the operating manuals. In a bid to increase performance, some of the important issues that were taken into consideration included tank lifters, air guns, continuity testers, leak testers, light curtains, transfer stations, welders, pad stations, FDM stations, and swipe card readers (Kock, 2007).
Reference
Kock, N.F. (2007). Systems analysis & design fundamentals: a business process redesign approach. California: Sage Publications.
Kraft Foods Group is an American company based in Northfield, Illinois. It is a grocery manufacturing company, as well as a processing conglomerate. The company deals in a variety of food, snacks and beverages. Kraft Foods Group is a public company that is listed on NASDAQ.
It is one of the largest food companies in America. The purpose of this essay is to carry out an external analysis of the company. This will be done by conducting an analysis of Porters Five Forces and then a PEST analysis. A critical analysis of these two will lead to formulation of the companys threats and opportunities.
Porters Five Forces Analysis
Threat of entry of new competitors
The food industry is usually very competitive. Very many companies are involved in this industry across the world. The companies in the industry today have invested heavily in brand building (QuickMBA, 2007).
This makes it difficult for any new company to come in and threaten their existence. As a result, there are very few chances of new entrants in the industry. Therefore, Kraft Foods Group does not face a lot of threat from new entrants or competitors.
Rivalry among existing companies
As mentioned earlier, there is a lot of competition in the food industry. The competition in this industry is international. Therefore, Kraft Foods Group faces competition from many companies from all over the world. One of the sure strategies that the companies execute to win their customers is brand building.
Every company wants to create the impression that their brand is the best. Food companies strive to produce high quality. The competition is even made worse by the fact that customers have a variety of brands to choose from.
Therefore, switching brands does not have any significant effect on customers. This makes it difficult for companies to maintain consumer loyalty (QuickMBA, 2007).
Threat of substitute products
Food and beverages companies offer products that are highly similar. This offers the consumers a wide range of substitutes to choose from. The best way a company can avoid customers from switching to substitute products is by ensuring they produce high quality goods and offer them at a low price (QuickMBA, 2007).
This is an issue that Kraft Foods Group can easily deal with through the help of its innovative ability. The threat of substitutes is real and the company should be ready to deal with it accordingly.
Bargaining power of suppliers
Any organization or individual who does business aims to make maximum earnings. It is not different for suppliers in the food and beverages industry. The suppliers have many companies to whom they can sell their products.
However, the high competition in the industry forces the companies to go for suppliers whose offers are favorable.
This factor makes suppliers less influential in the industry since almost all the companies are looking for fair deals. The threat of suppliers bargaining power to Kraft Foods Group is not too much (QuickMBA, 2007).
Bargaining power of buyers
Buyers are always willing to spend as little as possible and get the highest possible quality for products or services. Buyers will always go to the company or brand that satisfies their needs. Buyers bargaining power, therefore, becomes highly influential in this industry.
They can easily switch to other brands since the costs they will incur are almost insignificant. Kraft Foods Group faces a serious threat from buyer bargaining power.
For Kraft Foods Group to maintain its customers, it needs to offer high quality products, lower its prices, and at the same ensure that it satisfies other customer needs (QuickMBA, 2007).
PEST Analysis
Political environment
The company is affected by the political environment in America, as well as other countries outside America. Kraft Foods has been involved in political activities, some of which involve supporting politicians whose policies are in line with its business interests.
There is a political committee known as Kraftpac that was formed by Kraft Foods Group. The purpose of this committee is to fund the United States Federal candidates, as well as political parties. The committee also funds other political committees. It only raises the funds if it is allowed by the law to do so.
However, Kraft Foods has to follow a certain criteria in determining the candidate to fund.
First, it considers public policies that have a positive impact on Kraft Foods business.
Secondly, it considers the presence of its facilities and/or employees in the state or district where the candidate comes from.
Finally, Kraft Foods considers the leadership position of the candidate (Kraft Foods, 2011).
Economic environment
The world has experienced a period of economic slowdown over the last couple of years. In particular, America which is the home to Kraft Foods Group has been affected by the housing bubbles. This has had a major effect on Americas economic growth.
The poor economic growth has affected all the companies that operate in America, including Kraft Foods Group. However, the companys earnings have been positive despite the fact that they have dropped. Kraft Foods Group has been highly involved in marketing its brands and products.
It is, therefore, no surprise that it has continued to make profits. The quality of its foods and services has been vital in maintaining its earnings through the period of economic difficulties.
The company has been named on several occasions in the Dow Jones Sustainability World Index, as well as in the Dow Jones Sustainability North America Index (KFSPFS, 2009).
Changes in interest rates have also had an effect on the companys business. The company is listed in the stock exchange and, therefore, changes in the exchange rates have an effect on its stocks.
Social environment
In the modern world, the involvement of an organization in corporate social responsibility (CSR) gives it a competitive advantage. These activities bring the organization closer to its customers. Customers feel that the organization is caring about their well being, compelling them to buy the companys products in the future.
Kraft Foods Group has continuously been involved in CSR activities (Value Based Management.net, 2013). For instance, in the year 2010 the company prepared a CSR report that called for the creation of a world that is more delicious.
In so doing, the company was to engage in production of foods that are safe and healthy for human consumption. It focused on developing policies and partnerships that would realize a healthier nation and ensure the wellbeing of people.
In addition, the company formed partnerships with farmers, a move that would help them improve their living standards. In the partnership, the company was to buy the farmers cocoa and coffee at a better price.
Kraft Foods has also taken initiatives to reduce its emission of greenhouse gases in order to reduce environmental pollution.
Technological environment
Innovation is the key to success in the current economy. Kraft Foods Group embraces all aspects of innovation in order to make improvements in their products and ensure customer satisfaction.
The company has been developing innovative products, as well as offering innovative services in a bid to gain a competitive edge (Value Based Management.net, 2013). Technology is given emphasis in Kraft Foods Group. It is enough to conceive how much technology is embraced at Kraft Foods Group by visiting its website.
The company also has a technology known as SAP Netweaver that ensures enhances information storage and management. Finally, the company has an R&D team that is responsible for all innovations. This team carries out researches that help in innovating services and products.
Overall Impressions Concerning the Companys Environment (Opportunities and Threats)
Kraft Foods Group operates in an industry that presents a lot of opportunities for its growth, as well as threats that could severely affect its business.
Among the opportunities that are available for Kraft Foods include its ability to produce innovative goods, its involvement in CSR programs, as well as the low bargaining power of suppliers (Marketing Teacher, 2009).
The ability to produce innovative goods and embrace technology will help the company improve on its quality and lower prices. This will give it a competitive advantage. Its involvement in CSR will also help in creating consumer loyalty and a strong brand.
The threats that the company faces include competition and bargaining power of buyers. Competition in this industry is high, and it is easy for a company to lose its customer. This makes the bargaining power of buyers relevant (Zahorsky, 2009).
Conclusion
Kraft Foods Group operates in a highly competitive industry. It should, therefore, take advantage of any opportunity that comes its way.
In addition, the company should try to improve on areas that are likely to expose it to threats and loss of sales. This will help the company to stand strong and make it through in the tough economic times and in this competitive industry.
Whenever every fiscal period of any firm ends, the accounting department has the noble duty to prepare journal entries adjustments. This constitutes a crucial accounting exercise since any manufacturing firm or any other profit making organization requires a financial cut-off free from errors to be drawn at the end of every financial period as a chief milestone of ensuring accurate and complete accounts. In process of posting balances especially in non-computerized accounting systems, erroneous entries occur perhaps due to transaction entries omissions or failure to honor contra entry accounting concept among other reasons.
In an accounting book called the journal or general ledger, individual T (tee) accounts are prepared for every transaction made, whether encompassing liabilities, assets, expenses or even any other transaction such as drawings and direct deposits, which affect the owners equity. To reflect the true balances at the end of every financial year of the business, it crucial for the journal entries to be adjusted accordingly since the balances are utilized in drawing other financial statements such as the trial balance or balance sheet (Adjusting, 2010, Para. 2).
As a way of example, failure to have ledger accounts that portray the true balances would result to a disagreement of balance sheet invoking preparation of other accounts such as the suspense accounts in n attempt to provide an accounting basis for the observed misappropriation. However, there exist four ways of adjusting the journal entries.
Four ways of adjusting entries and manufacturing examples
According to Miegs, Williams, Haka, and Bettner (2003, p. 137), there are four types of journal entry adjustments: accrued revenues, expenses, unearned revenues and deferred expenses. Deferred expenses or alternatively called prepaid expenses entangle expenses paid in cash but prior to their usage are recorded in the respective journal as an asset. In a manufacturing company, perhaps the most obvious example of deferred expenses adjustment is that of utilized portion of insurance premiums.
For example, supposing the purposes of insurance premium payments receive $ 1000. If only a portion of $ 500 is anticipated to be used, then the procedure would be to debit $ 1000 prepaid insurance in an asset account. An adjustment will however, be required when the $ 500 portion is utilized by crediting the asset account by the same amount.
Unearned revenues comprise revenues that are received in form of cash but recorded as part of the liabilities before they are actually earned. For instance, supposing a customer orders for the manufacture of certain goods according to his specifications and as a way of certifying his/her commitment pays some deposit. This deposit is treated as a liability until the goods are delivered to the customer. The procedure would thus be to credit the earned revenue account and debit it immediately the delivery is made.
Accrued expenses or liabilities comprise the already incurred expenses, which have not yet appeared in the recorded or payment and thus treated as part of revenues. An example in a manufacturing establishment would be an expense such as payrolls released at the end of a given payment period but remains ineffective until the end of the next period. The approach is generally to reverse the entries in the respective journal accounts at the end following payment period and create the appropriate journal account.
The term accrued revenues refers to all revenues earned but the customers have not yet paid them or alternatively appropriate journal postings have not yet been made in the general ledger. An example in a manufacturing firm would entail a custom ordered machine that has been shipped FOB shipping point on the day the accounts receivable module is closed and the approval to bill the customer has not been received by the billing clerk (Gibson, 2007, p. 67). ). Adjustments are necessary if the revenue needs recognition in the right period immediately after the remittance of an invoice to the customer.
How the entries would be made in a computerized accounting system
Computer based accounting software permits a thorough analysis of the trial balance at the end of every economic year. Such performance entails performance budget to actual and month to month to ensure all of the accounts are correctly stated (Gibson, 2007, p.91). The protocol is to identify a journal adjustment entry and then making a preparation of an appropriate input form. Crucial to note is that, the form requires approval by the requisite manufacturing organizations accounting management head. It should thus be backed by source documents providing information justifying the perceived erroneous entries. On fulfilling these preconditions in either self-reversing format of journal entry or standard format, the journal entries are feed into general ledger computer system.
Two ethical issues resulting from the preparation of the manufacturing entries
The accounting practice in general deserves a tentative compliance with various ethical rules established within an organization. One of the greatest concerns is that, failure to observe the codes of ethics such as honesty in case an accountant discovers to have made an erroneous entry would have enormous repercussions on the ability to portray accountancy integrity and hence reflection of true financial position of the manufacturing firm is amicably hindered.
Another concern is that journal entries adjustments forms one of the crucial mechanisms that organizations money fraudsters utilize to miss-appropriate organizations cash. One can achieve this for instance by accruing more expenses or revenues as it ought not to be.
Under the conditions of the modern constantly changing and developing world of business relations, companies have to be aware of the latest trends in production, processing, promotion, etc. of their goods in the markets so that not be left behind by their competitors. The issues of logistics and production management are especially important in this respect as they allow reduce the costs of production and increase income at the same time (Blanchard, 2003). Therefore, innovations in production logistics, lean production, and rapid prototyping technologies are vital for companies development.
All the above-considered issues were faced by the Valley Manufacturing Company (VMC), whose CEO Frank Richard sees the urgent need to reform the companys approaches to production, planning, logistics, and outsourcing. The essence of the situation with VMC lies in the fact that production processes are uncontrolled, production sites are located not in order but in every possible space in the companys plant. Drawing from this, VMC is behind its competitors in logistics and outsourcing initiatives because too much time and effort is spent on the regulation of the inside issues within the company and its plant. Finally, VMCs partners turn it into their outsourcing location so that control over production becomes verbally impossible. Understanding this, Frank Richard sees lean production and reform of logistics policies as the only way out for VMC.
Accordingly, the first area of VMCs performance that needs improvement is a production planning and operations management. The determinant of every successful process is its clear focus and proper organization (Blanchard, 2003). Therefore, to structure ones work, it is necessary to plan its work to trace future developments and make necessary timely improvements (DHL, 2009). Operations management is also significant as it allows the company to structure its work with the produced goods, their promotion, distribution, etc. Thus, not only inside but also outside interests of the company are considered in case if operations management is at the proper level of development (DHL, 2009).
One of the theories of operations management is the Theory of Constraints that presupposes that for success the companies should not focus on their internal developmental processes exclusively but can reach out for experience, help, or assistance to other companies, whether they are partners of competitors (Goldratt, 1990). Based on this theory, a company can learn the experience of others so that to avoid their mistakes or take up the successful activities carried out by other companies before (Goldratt, 1990). Although originality is valued by the customers most of all, the usage of previous positive experiences will never damage companies image (Goldratt, 1990).
As for the increase in working efficiency and reduction of production costs, the so-called lean, or just-in-time, production is of great help. The essence of this production policy lies in the cutting of excessive materials supply, equipment, and labor force expenses for the purpose of the increase in the efficiency of the remaining parts of those components (Blanchard, 2003). Moreover, production processes are order-oriented, i. e. is launched as soon as specific orders for certain amounts of goods are received. This allows the companies to have just enough products to supply their customers and avoid storing excessive amounts and trying to sell them at least at reduced prices.
The creation of an adequate supplier interface for successful production planning is also a significant step (Huang & Mak, 1999). The essence of the supplier interface lies in inviting the suppliers of a company to participate in the production process at its early stages. For instance, the supplier interface can be a computer program that monitors the requirements of the suppliers as for the final result of the production process and records the capabilities of the supplier as for its contributions to the production planning and the very production process, equipment updating, etc (Huang & Mak, 1999).
The customer interface has equal importance for production planning. As well as the supplier interface, the customer interface is about the introduction of the customers into the production process of a company (Huang & Mak, 1999). For instance, the customer interface can be developed by inviting customers and potential clients of the firm to its production premises so that they could get acquainted with the production details and make their suggestions as for the improvements possible either in the product quality or production techniques (Huang & Mak, 1999). Thus, both supplier and customer interface are interconnected and are sometimes referred to as supplier-customer interface which not only allows both parties to participate in production but facilitates the direct connection between suppliers and customers without the very production company playing the role of an intermediary.
Further on, one of the techniques used in the lean production process is the so-called concurrent engineering carried out through the design interface creation (Huang & Mak, 1999). Concurrent engineering presupposes the use of a multi-skilled labor force to enable the company to deal with design engineering, manufacturing engineering, etc. all at the same period of time. Thus, the production process becomes more time-saving and less costly as there is no need to employ for example 10 people with different skills when there are 5 people who have skills in two or more areas of engineering. Therefore, the design interface is the introduction of design engineering to the production process carried out by the lean method.
The rapid prototyping technique is also a valuable mass production tool as it allows the company to produce large amounts of similar goods at small periods of time and at little cost (Blanchard, 2003). Mass production, and rapid prototyping, involve little manual work of employees while the production process is computerized, which allows reducing costs of goods produced by the rapid prototyping techniques. Rapid prototyping suggested first by Henry Ford in the form of mass production can actually reduce production expenses and goods prices by the little costs it demands from the producing company (Blanchard, 2003).
Finally, the resource allocation procedure is another important tool of production efficiency increase and costs cutting. The essence of resource allocation lies in distributing the resources observed among the parts of the company in accordance with their needs. In other words, the department of the company that brings the bulk of income will be provided with more resources, while the departments proving to be inefficient is either provided with fewer resources or restructured to work effectively at the lowest costs possible (Blanchard, 2003). Thus, resources allocation allows saving funds and resources and using them with the highest degree of efficiency.
To conclude, innovations in production logistics, lean production, and rapid prototyping technologies are vital for companies development. The major phenomena that might assist in increasing the companys efficiency and cutting its expenses are production planning and operations management, supplier, customer, and design interfaces, rapid prototyping techniques, and the proper resource allocation practices. If implemented properly, these policies allow the company to reduce its expenses and increase the efficiency of its production process.
References
Blanchard, B. (2003). Logistics Engineering and Management. Prentice Hall; 6 edition.
DHL. (2009). The Important Form Question for Production. Retrieved July 17, 2009, from Discover Logistics.
Goldratt, Eliyahu M. (1990). What is this thing called Theory of Constraints and how should it be implemented? North River Press.
Huang, G. Q., Mak, K. L. (1999). Modelling the Customer-Supplier Interface over the World Wide Web to Facilitate Early Supplier Involvement in New Product Development , Institution of Mechanical Engineers Proceedings, Part B Journal of Engineering Manufacture, 2000, B214(9): 759-769.
The five processes of this theory are identification, exploitation, subordination, elevation, and repetition. In terms of the theory of constraints, first of all, it is necessary to search for system limitations. The second process implies decision regarding the potential ways to maximize the use of system constraints. According to the third phase, one should subordinate the system elements to the decisions taken.
The mentioned steps allow monitoring the system and increasing its predictability and reliability. The next phase refers to the expansion of system constraints by tension relief, which is caused by these limitations. This can be achieved through the growth of production capacity, the acquisition of additional orders, and reduction of time spent on fulfilling orders (Costas, Ponte, de la Fuente, Pino, & Puche, 2015). The last phase states that if a company eliminated the constraints, it should then return to the step one and continue to look for restrictions. It is important to ensure that after the first four steps, there is no state of calm passivity.
It would be advantageous to implement the above processes in the work of the Global Disaster Control Headquarters due to the nature of the companys performance. In particular, subordination and repetition would work better with the rapidly changing natural disasters. Considering that Nissan works well with the identification of the existing constraints, yet it still fails to address them effectively, the mentioned processes are likely to enhance its ability to properly and timely react on limitations.
Total Quality Management (TQM)
TQM aims at a continuous provision of the high quality performance in order to meet customers expectations and keep them interested in a certain product. As noted by Oakland (2014), it is essential to understand the current needs of customers. In the latest line of products, the company may utilize TQM tools and principles to enhance the immediate needs after the disaster. For example, the need for cars with GPS seems to be evident in this case. The strategy of systematic implementation of TQM may be applied to use various quality management tools, thus improving the key business processes and the work of units within the company. Among the potential tools of the introduction of the above strategy, there are the use of a quality circle, statistical process control, Taguchi methods, etc.
Data Analysis
Cause-and-Effect Diagram
Diagram 1. Causes of Partners Struggle with Implementing Frontier Vehicle.
The Diagram 1 shows that there are several causes of the product ineffectiveness. The consultations with dealers revealed that they are rather concerned with cost and environmental issues. Taking into account that the product is based on a large engine, it is likely to produce harmful pollutions, thus damaging the environment. At the same time, partners consider the products cost inappropriate that also impedes the process of implementation. The construction and complexity in operation as well as the unavailability of resources compose the specified problem.
Hypothetical Process (Time-Function) Map
Process Map 1. Time-Function for Producing a Recently Released Product.
The above Process Map 1 reflects on the three stages of the product operation, including product development, product technology, and production. As an operations manager, it is possible to use this value map to review the current state of the product and its production peculiarities as a system. This process map identifies the product as a set of the necessary attributes of expediency, integrity, and consistency.
Acting as competitive business, the companies should design their products not only for competition with each other, but also to consider individual aspects of their behavior and course of performance. More to the point, this hypothetical process map presents an appropriate methodological basis for developing, monitoring, and analyzing the implementation of the business plan as it is clearly divided into several units. It also seems important to point out the fact that an operations manager using this tool would have a rather beneficial vision of the general situation and details in terms of processes, timeline, and their correspondence to the standards accepted in the company.
Location
The given data and options relate to the three countries and present various plant location opportunities. Among others, the plant in Mexico City seems to be the most adequate decision. In particular, the mentioned location provides minimum cost of operations. Even though Mexico City is characterized by low labor productivity, this challenge may be addressed by applying various methods of labor organization.
For example, outsourcing may be utilized to increase labor productivity. It should also be noted that it is quite difficult to resolve the problem of location based solely on the given facts. It would be better if some information regarding the countries laws, culture, and other peculiarities were provided. The other factors that may be critical to consider are associated with the level of professionalism, readiness to share the company vision and mission, etc. In general, without considering some additional aspects, it is possible to state that Mexico City is the best decision for the new manufacturing plant.
References
Costas, J., Ponte, B., de la Fuente, D., Pino, R., & Puche, J. (2015). Applying Goldratts theory of constraints to reduce the bullwhip effect through agent-based modeling. Expert Systems with Applications, 42(4), 2049-2060.
Oakland, J. S. (2014). Total quality management and operational excellence: Text with cases (4th ed.).New York, NY: Routledge.
