Case 1

subject ara Analysis 1 Hightone Electronics, Inc. Identification Information This case analysis is from chapter 1 of our text book, trading operations focusing. It is found on page 25 and titled, Hightone Electronics, Inc. comp comprise of the Facts of the consequence Hightone Electronics, Inc. (HEI) is an electronic components tag on extravagantly society founded every(prenominal)place 50 years ago. The companion has a reputation for high quality and service. HEIs simple stemma of supplying radio repair shops with parts has grown to include root word delivery, and larger nodes such as technical schools, universities, and well-known corporations.The participation stocks and sells over 22,000 different items and virtually customers match their order at bottom 48 hours. George Gonzales is the operations director for HEI. He has been toiled with making operations c be decisions necessary to collapse HEI a successful lucre-based duty. Mr. Gonzales agrees that this is an important step for the forthcoming success of the alliance but believes there is more to solving the problems of the transition to web-based than the board thinks. Case Questions 1.Explain why operations management is small to the success of a employment. Operations management (OM) is critical to the success of a lock for several reasons. OM is liable for the decision-making and leadership accomplish that pull ins the product or service the channel provides. The determination of OM is to take inputs such as, labor movement, raw materials, and technology, and plait them into finished dependables or services. some impudent(prenominal) functions of the business, such as securities industrying, argon also important. But, without OM, there would non be a product/service to market to consumers. Reid, 2-23) wherefore would developing an lucre-based business require different operations consideration for HEI? A traditional catalog-order business and an Inte rnet-based catalog-order business would be very similar in general appearance. A transition to web-based ordering though, would require salmagundis. First, the guild would shoot to upgrade its technology. each finished outsourcing or indwelling servers, the corporation would need to create a website. The website would need to be able to handle the customer traffic without crashing.Also, the website would need to be user-friendly so as not to frustrate and turn away potential customer. Customer hurt personnel would need to be trained to guide customers with questions about the website. Second, and more important than the actual website, is organise orders so that requested grievouss are shipped to the proper customer. Each order touchment will not be entered by a person. Therefore, all of the selective discipline gathered by the website will need to be converted to orders intimately understood by warehouse personnel.Is George Gonzales correct in his assessment that this would not be business as usual? Yes. The core functions of the physical locations of the catalog-order business will remain mostly the selfsame(prenominal) as before. They will receive orders, and ship out corrects. However, the methods of obtaining orders, customer feedback, occur orders, special orders, and many other less notable but still necessary functions will counter diverge drasticlaimy. If done properly, it will most likely streamline the business, but the initial transition will be difficult. . Recall that HEI wishes to continue its reputation of high quality and service. Identify distinguish operations management decisions that need to be considered. * Will we receive more/less orders? * If demand affixs, stooge HEI supply the demand? * If demand decreases, can HEI weather the storm until demand rebounds? * What sweet personnel will be ask? * tin current employees be trained? * Do new, more technically-advanced employees need to be hired? * Can stock be reduce d and operations made more endure? * Should stock be increased?How different will these decisions be for the Internet business? The major difference will be that with a administer of the web-based area of the business, practise will be handled electronically and not in a physical location. This will eliminate the need for large call centers and central records keeping locations. A few servers could hold all the info once held by an entire department such as sales, accounting, customer service, etc. This also changes the focus from managing many low-skilled employees to fewer moderate-to-high-skilled employees.Case 1chapter 2 CHARTING A COMPANYS DIRECTION VISION AND MISSION, OBJECTIVES, AND outline McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. LO1 Grasp why it is critical for smart set managers to have a clear strategicalal stack of where a company needs to head and why. LO2 Understand the importance of bandingting both strategic and pecuniary objectives. LO3 Understand why the strategic initiatives taken at mingled organizational levels must be tightly coordinated to achieve companywide surgical operation targets.LO4 Become aware of what a company must do to achieve operating ex stallence and to execute its strategy proficiently. LO5 Become aware of the reference and righteousness of a companys board of directors in overseeing the strategic management process. 2-2 What Does the dodge- qualification, Strategy-Executing Process Entail? 1. 2. 3. 4. Developing a strategic vision Setting objectives Crafting a strategy Implementing and executing the chosen strategy 5. supervise developments, evaluating cognitive process, and initiating disciplinal adjustments 2-3 go in 2. 1 The Strategy-Making, Strategy-Executing Process 2-4 display panel 2. Factors Shaping Decisions in the Strategy-Making, Strategy-Executing Process Internal Considerations Does the company have an appealing customer valuate pro spotl ight? What are the companys free-enterprise(a)ly important resources and capabilities and are they potent bountiful to produce a sustainable competitive returns? Does the company have sufficient business and competitive strength to grab market opport unit of measurementies and nullify outdoor(a) threats? argon the companys prices and be competitive with those of key rivals? Is the company competitively stronger or weaker than key rivals? outdoor(a) ConsiderationsDoes sticking with the companys comprise strategic course present realiseive opportunities for growth and profitability? What kind of competitive forces are assiduity members facing and are they acting to enhance or weaken the companys prospects for growth and profitability? What factors are driving sedulousness change and what impact on the companys prospects will they have? How are industry rivals ordered and what strategic moves are they likely to make future(a)? What are the key factors of future competitive success and does the industry offer good prospects for attractive profits for companies possessing those capabilities? 2-5Factors Shaping Strategic Decisions External Considerations What are the industrys economic characteristics? How strong are the competitive forces at short-change? What forces are driving change in the industry? What market positions do rivals occupy and what moves are they likely to make next? What are the key factors for future competitive success? What are the companys external opportunities? 2-6 Factors Shaping Strategic Decisions Internal Considerations How well is the present strategy workings? What are the companys competitively valuable resources, capabilities, and internal weaknesses? Are the companys prices and costs competitive?Is the company competitively stronger or weaker than key rivals? 2-7 present 1 Developing a Strategic Vision, a Mission, and Core Values Strategic Vision Is top managements views about the unattackables direction and future product-market-customer-technology focus Provides a panoramic view of where we are going Is distinctive and particular proposition to a particular organization Avoids use of innocuous uninspiring language that could reserve to most any self-coloured Definitively states how the companys leaders point to position the firm beyond where it is today 2-8 Characteristics of Effectively Worded Vision rehearsals GraphicPaints a picture of the kind of firm that management is trying to create whippy Is not so focused that it makes it difficult to adjust Feasible Is within the realm of what is possible directive Is former looking to change lovable Indicates why the directional road makes sense Focused Is specific enough to provide guidance in decision making Easy to kick the bucket Can be explained in simple terms 2-9 TABLE 2. 2 Characteristics of Effectively Worded Vision Statements Paints a picture of the kind of company that management is trying to create and the market position( s) the company is striving to stake out.Is before looking describes the strategic course that management has charted and the kinds of product-market-customer-technology changes that will aid the company prepare for the future. Is specific enough to provide managers with guidance in making decisions and allocating resources. Is not so focused that it makes it difficult for management to adjust to changing circumstances in markets, customer preferences, or technology. Is within the realm of what the company can reasonably expect to achieve. Indicates why the directional path makes good business sense.Is explainable in 5 to 10 minutes and, ideally, can be reduced to a simple, memorable slogan Graphic Directional Focused Flexible Feasible Desirable Easy to communicate 2-10 TABLE 2. 3 Common Shortcomings in confederacy Vision Statements Short on specifics about where the company is headed or what the company is doing to prepare for the future. Doesnt bespeak whether or how manageme nt intends to alter the companys current product-market-customer-technology focus. So all-inclusive that the company could head in most any direction, have most any opportunity, or enter most any business.Lacks the office staff to motivate company personnel or inspire shareholder sanction about the companys direction. Provides no unique company personal identity could apply to firms in any of several industries (including rivals operating in the same market arena). Doesnt say anything specific about the companys strategic course beyond the pursuit of such distinctions as beingness a recognized leader, a global or earthly concernwide leader, or the first choice of customers. Vague or incomplete non forward looking Too broad Bland or uninspiring Not distinctive Too reliant on superlatives 2-11 archetypes and Connections 2. 1 Examples of Strategic VisionsHow easily Do They Measure Up? 2-12 Concepts and Connections 2. 1 Examples of Strategic VisionsHow Well Do They Measure Up? 2-13 Examples of Vision Statements To be the global leader in customer value. Provide a global trading platform where a good deal anyone can trade practically anything. Red Hat To extend our position as the most trusted Linux and open source provider through a complete range of enterprise software, a powerful Internet platform, and associated avow and services. 2-14 Core Concept Strategic Inflection PointsA change in vision is required when it becomes evident to management that the industry has changed in a significant way that renders the companys current vision obsolete. 2-15 The grandness of Communicating the Strategic Vision An engaging, inspirational vision Challenges and motivates the workforce Articulates a compelling case for where we are going and why Evokes positive support and excitement Arouses a committed organizational effort to move in a common direction 2-16 Expressing the Essence of the Vision in a Slogan Nike To bring innovation and inspiration to every athlete i n the world The Mayo ClinicThe beat out care to every patient every day Greenpeace To halt environsal abuse and promote environmental solutions. 2-17 why a Sound, Well- spread abroadd Strategic Vision Matters 1. It crystallizes major(postnominal)(a) executives own views about the firms long-term direction. 2. It reduces the risk of rudderless decision making by management at all levels. 3. It is a tool for winning the support of employees to help make the vision a reality. 4. It provides a beacon for lower-level managers in forming departmental missions. 5. It helps an organization prepare for the future. 2-18 Strategic Vision versus Mission StatementA strategic vision concerns a firms future business pathwhere we are going Markets to be pursued Future product/ market/customer/ technology focus The mission narrative of a firm focuses on its present business purposewho we are and what we do new product and service offerings Customer needs being served 2-19 Developing a Company Mission Statement Ideally, a company mission statement is sufficiently descriptive to Identify the companys products or services. set apart the buyer needs it seeks to satisfy. Specify the customer groups or markets it is endeavoring to serve.Specify its approach to attractive customers. Give the company its own identity. 2-20 Example of a Mission Statement The mission of Trader Joes is to give our customers the best food and drink values that they can find anywhere and to provide them with the information required for informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit. 2-21 Examples of Mission Statements To help people and businesses throughout the world realize their full potential.To organize the worlds information and make it universally accessible and useful. 2-22 Strategic Mission, Vision, and clams Firms somemultiplication st ate that their mission is to simply earn a profit. lettuce is the obvious intent of every commercial enterprise. Profit is not who we are and what we do. Profit is more correctly an objective and a result of what a firm does. 2-23 Linking the Strategic Vision and Mission with Company Values cell nucleus CONCEPT A firms values are the beliefs, traits, and behavioural norms that the firms personnel are expected to display in conducting the firms business and pursuing its strategic vision and mission. -24 CONCEPTS & CONNECTIONS 2. 2 ZAPPOS MISSION AND CORE VALUES Deliver Wow through military service Embrace and Drive Change Create Fun and a atomic Weirdness Be Adventurous, Creative, and Open Minded Pursue Growth and discipline Build Open and Honest Relationships with Communication Build a positivist Team and Family Spirit Do More with Less Be aroused and Determined Be Humble 2-25 Stage 2 Setting Objectives Why set objectives? To convert the strategic vision into specific perfor mance targets To create yardsticks to track progress and measure performance Objectives shouldBe well-stated (clearly worded) Be challenging, yet achievable in order to stretch the organization to perform at its full potential Be quantifiable (measurable) Contain a specific deadline for achievement 2-26 Core Concept Objectives are an organizations performance targetsthe results management wants to achieve. 2-27 Stage 2 Setting Objectives (contd) What Kinds of Objectives to Set Financial objectives Communicate managements targets for pecuniary performance Are lagging indicators that excogitate the results of past decisions and organizational activities Relate to revenue growth, profitability, and return on investing -28 Stage 2 Setting Objectives (contd) What Kinds of Objectives to Set Strategic objectives Are think to a firms marketing standing and competitive invigoration Are leading indicators of a firms future financial performance and business prospects. If achieved, indi cate that a firms future financial performance will be correct than its current or past performance. 2-29 Core Concept The equilibrise scorecard is a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing. -30 TABLE 2. 4 The Balanced lineup Approach to Performance Measurement Strategic Objectives Winning an x portion market share Achieving customer satisfaction rates of x per centum Increase per centumage of sales coming from new products to x share Financial Objectives An x percent increase in annual revenues annual increases in earnings per share of x percent An x percent return on capital employed (ROCE) or shareholder enthronization (ROE) Bond and credit ratings of x Internal cash flows of x to investment firm new capital investment Improve information systems capabilities to give frontline managers Ach ieving a customer defect information in retention rate of x percent x minutes Acquire x procedure of new Improve teamwork by customers increasing the number of Introduction of x number projects involving more of new products in the than one business unit next tercet years to x Reduce product development times to x months 2-31 Examples of Financial ObjectivesX% increase in annual revenues X% increase annually in after-tax profits Profit margins of X% X% return on capital employed (ROCE) Sufficient internal cash flows to bloodline 100% of new capital investment 2-32 Examples of Strategic Objectives Winning an X% market share Achieving a customer retention rate of X% Acquire X number of new customers Reduce product defects to X% Introduction of X number of new products in the next three years Increase employee training to X hours/year Reduce turnover to X% per year 2-33 Examples of Company ObjectivesGeneral Motors Reduce the percentage of automobiles using internal combustion engin es through the development of hybrids, range-extended electric vehicles, and hydrogen fuel cell electric engines. Reduce automotive structural costs to benchmark levels of 23% of revenue by 2012 from 34% in 2005. Reduce annual U. S. labor costs by an additional $5 million by 2011. 2-34 Examples of Company Objectives The Home Depot Be the number one destination for skipper contractors. Improve in-stock positions so customers can find and buy exactly what they need.Deliver secern customer service and the know-how that our customers have come to expect. Repurchase $22. 5 billion of outstanding shares during 2008. Open 55 new stores with 5 store relocations in 2008. 2-35 Short-Term and Long-Term Objectives Short-Term Objectives Targets to be achieved soon Milestones or footprint steps for reaching long-range performance Long-Term Objectives Targets to be achieved within 3 to 5 years 2-36 The Need for Objectives at All organisational Levels Objectives Are Needed at All Levels 1. Set business-level objectives 2.Establish functional-area objectives 3. Set operating-level objectives finally Long-term objectives take precedence over short-term objectives 2-37 Stage 3 Crafting a Strategy Crafting a strategy means asking How to attract and please customers How to compete against rivals How to position the firm in the marketplace and trespass on attractive opportunities to grow the business How best to respond to changing economic and market conditions How to manage each functional piece of the business How to achieve the firms performance targets 2-38A Firms Strategy-Making pecking order A firms strategy is a collection of initiatives undertaken by managers at all levels in the organizational hierarchy Crafting strategy is a collaborative effort that Involves managers from miscellaneous levels of the organization Is rarely something only highlevel executives engage in Requires choosing among the various strategic alternatives 2-39 Concept to Action In most firms, crafting strategy is a collaborative team effort that includes managers in various positions and at various organizational levels.Crafting strategy is rarely something only highlevel executives do. 2-40 Concept to Action Corporate strategy establishes an overall game plan for managing a set of businesses in a diversify, multibusiness firm. Business strategy is primarily pertain with strengthening the firms market position and make competitive gain in a hotshot business company or a single business unit of a diversified multibusiness corporation. 2-41 FIGURE 2. 2 A Companys Strategy-Making Hierarchy 2-42 Corporate Strategy versus Business StrategyCorporate strategy is orchestrated by the chief executive officer and other senior executives and establishes an overall game plan for managing a set of businesses in a diversified, multibusiness company. Business strategy is primarily concerned with building competitive advantage in a single business unit of a diversified company or s trengthening the market position of a nondiversified single business company. 2-43 The Strategy-Making Hierarchy Corporate strategy Is orchestrated by the chief operating officer and other senior executives and establishes an overall game plan for managing a set of businesses in a diversified, multibusiness company. Addresses the questions of how to capture cross-business synergies, what businesses to hold or divest, which new markets to enter, and how to best enter new marketsby acquisition, creation of a strategic alliance, or through internal development. Business strategy Functional-area strategies Is primarily concerned with building competitive advantage in a single business unit of a diversified company or strengthening the market position of a nondiversified single business company. Are concerned with the strategies specifically related to particular functions or processes within a business (marketing strategy, production strategy, pay strategy, customer service strategy, product development strategy, and human resources strategy). Are relatively narrow strategic initiatives and approaches of limited scope for managing key operating units (plants, dissemination centers, geographic units) and specific operating activities such as materials purchasing or Internet sales. 2-44 in operation(p) strategies Stage 4 Implementing and Executing the Chosen StrategyManaging the strategy execution process involves Staffing the organization to provide require skills and expertise. Allocating ample resources to activities critical to good strategy execution. Ensuring that policies and procedures facilitate rather than impede effective execution. instal information and operating systems that enable personnel to perform essential activities. 2-45 Stage 4 Implementing and Executing the Chosen Strategy (cond) Managing the strategy execution process involves Pushing for continuous improvement in how value chain activities are performed.Tying rewards and incentives directly to the achievement of performance objectives. Creating a company culture and work climate conducive to successful strategy execution. Exerting the internal leadership needed to propel practiceation forward. 2-46 Stage 5 Evaluating Performance and Initiating restorative Adjustments Triggering change as needed Monitoring new external developments Evaluating the firms progress Making corrective adjustments Managing strategy is an ongoing process, not an every-now-and-then task A firms vision, objectives, strategy, and approach to strategy execution are never final -47 Corporate Governance The employment of the Board Of Directors The Role of the Board Of Directors in the StrategyMaking, Strategy-Executing Process 1. Oversee the firms financial accounting and reporting practices. 2. Diligently critique and oversee the companys direction, strategy, and business approaches. 3. Evaluate the caliber of senior executives strategy-making and strategy-executing skills. 4. Institute a allowance plan for top executives that rewards them for actions and results that serve shareholder interests. 2-48 Strong Boards Lead to honorable Corporate GovernanceA Strong, Independent Board of Directors Is well informed about the companys performance Guides and judges the CEO and other top executives Has the fortitude to curb management actions it believes are inappropriate or unduly tough Certifies to shareholders that the CEO is doing what the board expects Provides insight and advice to management Is intensely involved in debating the pros and cons of key decisions and actions 2-49 lead-in the Strategic Management Process The Strategic Management Process calls for sextette managerial actions 1.Making sure the company has a good strategic plan 2. Stay on top of what is happening (MBWA) 3. set constructive pressure on organizational units to achieve good results 2-50 Leading the Strategic Management Process (contd) The Strategic Management Process calls for six manage rial actions 4. Pushing corrective actions to improve both the firms strategy and how well it is being executed 5. Leading the development of better competitive capabilities 6. Displaying ethical integrity and leading social responsibility initiatives 2-51 Making Sure a Firm Has a Good Strategic Plan office of CEO Effectively communicate the vision, objectives, and major strategy components Exercise due application program in reviewing lower-level strategies for consistency with higher-level strategies 2-52 Staying on Top of How Well Things Are overtaking Stay connected to the field by managing by walking virtually (MBWA) Insist that top managers spend time in the trenches to exchange information and ideas through face-to-face contact with employees Prevent overly abstract persuasion and getting disconnected with reality of whats happening 2-53Pushing for Good Results and Operating Excellence Fosters a resultsoriented, high-performance culture Treat employees with dignity and re spect Encourage employees to use initiative and creativity in performing their work Set stretch objectives and clearly communicate expectations Focus attention on continuous improvement Reward high performance Celebrate successes 2-54 Initiating Corrective Actions to Improve Strategy and Execution The leadership challenge of making corrective adjustments is twofold Deciding when adjustments are needed Deciding what adjustments to makeLeaders responsibility is to step forward and push corrective actions 2-55 Leading Social Responsibility The strength of management commitment determines whether a company will implement and execute a full-fledged strategy of social responsibility that That protects the environment Actively participates in community affairs Supports charitable causes Supports workforce variation and the overall well-being of employees 2-56 Displaying Ethical Integrity The CEO and other senior executives must set an excellent example in their own ethical behavior.Top ma nagement must declare unequivocal support of the companys ethical code. Top management must be prepared to act swiftly and decisively in punishing ethical misconduct. 2-57 Leading the organic evolution of Better Competitive Capabilities Lead efforts to strengthen existing competitive capabilities tarry changes in customer-market requirements Proactively build new competencies and capabilities that hold promise for building an abide competitive edge 2-58