A major challenge with an insourcing/outsourcing analysis involves gathering reliable data.  Discuss the various groups that should be involved when conducting an insourcing/outsourcing analysis.  What information can each of these groups provide

A major challenge with an insourcing/outsourcing analysis involves gathering reliable data.  Discuss the various groups that should be involved when conducting an insourcing/outsourcing analysis.  What information can each of these groups provide

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Purchase Management

Attempt Any Four Case Study

CASE 1 -The Santek Images Business Unit

            Consolidated Products is a $21 billion company headquartered in Atlanta, Georgia.  The company’s five business units, which offer a wide array of products and services, are the result of an aggressive strategy of mergers and acquisitions starting in the late 1980s.  The corporate staff is surprisingly small, comprised of general management, legal staff, and human resources.  Part of the reason for this small staff is due to the eclectic array of businesses housed within one corporate entity.  A Business Week editor recently commented that “Consolidated Products could easily be broken up into five separate companies, since at one time it was five separate companies.”  The editor also said that if the company “ever learned how to leverage its size in the marketplace, Consolidated Products could be a Wall Street powerhouse!”

            While Consolidated Products is a global corporation with facilities around the world, it operates each business unit as a highly independent and decentralized company.  The corporate culture is best described as entrepreneurial, with each business unit being headed by an executive vice president who has complete profit and loss accountability.  One of the business units, Santek Images, is the focus of this case.

A major challenge with an insourcing

Santek Images

Santek Images produces instant film and the imaging products that use that film for industrial applications.  Increasingly, Santek has shifted much of its production requirements to oversees producers.  The outsourcing of finished products, also called contract purchasing, represents a 180-degree shift from the vertically integrated model that Santek pursued during the 1970s and 80s.  A key driver behind the outsourcing of non-core products was the realization that previous ways of doing business could not support 10-20 new-product launches a year, which is the target that Santek’s executive vice president has established.

Many products at Santek use self-contained instant film, which Santek refers to as media.  Only one other company in the world has similar technical capabilities.  However, Santek now faces intense competition from digital technology, forcing the unit to make digital imagery part of its image acquisition core competency.  Most outsourcing at Santek now involves product hardware, such as the product casing, rather than media. 

There are several reasons why Santek insources media while outsourcing hardware.  Most of the innovation valued by customers occurs within media rather than hardware, making media a primary area to focus research and development efforts.  Furthermore, the margins for media products are higher than the margins for hardware products.  From an investment and financial perspective, limited corporate resources are best allocated to media rather than hardware.  While hardware is necessary, it does not offer the best financial and innovative opportunities.  This does not mean that hardware is not important.  Santek recently suffered through an embarrassing recall because a contract manufacturer produced a finished product casing that cracked when exposed to high temperatures (above 90 degrees).

Asian suppliers provide virtually all outsourced hardware requirements.  While Japan is the epicenter for hardware manufacturing, other low cost areas in Asia are emerging.  Outsourcing to Asia offers two major benefits—access to technology and low cost.  As with most electronics and their supporting components, U.S. and European producers are no longer competitive.

Beginning in 2002, Santek began to actively search for contract or outsource manufacturers, particularly for camera hardware.  Unfortunately, there was no organization in place to formally support that effort.  While a small OEM group worked to find contract manufacturers during the 1970s to 1995, Santek did not endorse or focus on outsourcing as a key corporate strategy.  As a result, creating an outsourcing organization was not a major concern at Santek.

A major challenge with an insourcing

In 2001, Santek formed a contract purchasing organization, which has primary responsibility for hardware outsourcing.  The contract-purchasing director (also referred to as the outsourcing director) reports to the vice president of new product delivery.  This group has responsibility for procurement (identifying and qualifying outsource manufacturers), product quality, and working with contract manufacturers during new product development.

To date, the contract-purchasing director believes his staff has done a good job of shifting production from internal to external sources.  In addition to managing two international procurement groups, the contract-purchasing director is responsible for managing relationships with the outsource providers.  After several years of outsourcing, the director of contract purchasing, Steve Keller, started to notice that the performance gains from outsourcing were flattening out quickly.  When he recently surveyed his contract manufacturers about their perception of doing business with Santek, he was surprised by their answers.

Of the 12 contract manufacturers currently used, seven thought of Santek as just another customer.  These suppliers did not believe there was anything unique or special about the relationship.  Three other suppliers expressed serious concern about doing future business with Santek since they were dedicating their capacity (through longer-term contracts) to other customers (who were not competitors of Santek).  Two other suppliers expressed an interest in developing a closer relationship with Santek.  It appeared that these suppliers were developing new technology and products that aligned well with Santek’s future product plans.  These two also had the longest working relationship with Santek of the current suppliers.  Steve could not help but wonder if his group could do more to develop or elevate the relationship with these two suppliers.  And, if he could develop the relationship, could his group achieve greater performance improvements?

Questions:

1. Many outsourcing decisions involve the concept of a core competency. Define what is meant by this term.  Discuss if film technology is truly a core competency of Santek.

2. Develop a process that would guide firms through the insourcing/outsourcing process. Create a process that is robust enough to use across a variety of product/service applications. 

3. A major challenge with an insourcing/outsourcing analysis involves gathering reliable data. Discuss the various groups that should be involved when conducting an insourcing/outsourcing analysis.  What information can each of these groups provide?

4. Do you think hardware suppliers are candidates for alliances or partnerships with Santek? Why?

5. Partnerships and alliances are special forms of supplier-buyer relationships. First, define the concept of partnerships and alliances.  Second, identify when a firm should pursue a partnership or alliance with selected suppliers.  Use the portfolio segmentation tool to assist with your answer.

6. Develop a process that firms can use when identifying and developing supply chain alliances.

A major challenge with an insourcing/outsourcing analysis involves gathering reliable data.  Discuss the various groups that should be involved when conducting an insourcing/outsourcing analysis.  What information can each of these groups provide

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A large city government was putting on a number of seminars for managers of various departments throughout the city. At one of these sessions the topic discussed was motivation—how to motivate public servants to do a good job.

A large city government was putting on a number of seminars for managers of various departments throughout the city. At one of these sessions the topic discussed was motivation—how to motivate public servants to do a good job.

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Organizational Behavior

Note: Solve any 4 Cases Study’s

CASE: I    Pushing Paper Can Be Fun

       A large city government was putting on a number of seminars for managers of various departments throughout the city. At one of these sessions the topic discussed was motivation—how to motivate public servants to do a good job. The plight of a police captain became the central focus of the discussion: I’ve got a real problem with my officers. They come on the force as young, inexperienced rookies, and we send them out on the street, either in cars or on a beat. They seem to like the contact they have with the public, the action involved in crime prevention, and the apprehension of criminals. They also like helping people out at fires, accidents, and other emergencies. The problem occurs when they get back to the station. They hate to do the paperwork, and because they dislike it, the job is frequently put off or done inadequately. This lack of attention hurts us later on when we get to court. We need clear, factual reports. They must be highly detailed and unambiguous. As soon as one part of a report is shown to be inadequate or incorrect, the rest of the report is suspect. Poor reporting probably causes us to lose more cases than any other factor.

I just don’t know how to motivate them to do a better job. We’re in a budget crunch, and I have absolutely no financial rewards at my disposal. In fact, we’ll probably have to lay some people off in the near future. It’s hard for me to make the job interesting and challenging because it isn’t-it’s boring, routine paperwork, and there isn’t much you can do about it.

Finally, I can’t say to them that their promotions will hinge on the excellence of their paperwork. First at all, they know it’s not true. If their performance is adequate, most are more likely to get promoted just by staying on the force a certain number of years than for some specific outstanding act. Second, they were trained to do the job they do out in the streets, not to fill out forms. All through their careers the arrests and interventions are what get noticed.

Some people have suggested a number of things, like using conviction records as a performance criterion. However, we know that’s not fair—too many other things are involved. Bad paperwork  increases the chance that you lose in court, but good paperwork doesn’t necessarily mean you’ll win. We tried setting up the team competitions based on the excellence of the reports, but the officers caught on to that pretty quickly. No one was getting any type of reward for winning the competition, and they figured why should they bust a gut when there was on payoff. I just don’t know what to do.

Question:

1. What performance problems is the captain trying to correct?

2. Use the MARS model of individual behavior and performance to diagnose the possible causes of the unacceptable behavior.

3. Has the captain considered all possible solutions to the problem? If not, what else might be done?

A large city government was putting on a number of seminars for managers of various departments throughout the city. At one of these sessions the topic discussed was motivation—how to motivate public servants to do a good job.

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A handful of major players, compete head-to-head around the world in the chemical industry. These companies are Dow Chemical and Du Pont of the United States

A handful of major players, compete head-to-head around the world in the chemical industry. These companies are Dow Chemical and Du Pont of the United States

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General Management

CASE: 3 DOW CHEMICAL

A handful of major players, compete head-to-head around the world in the chemical industry. These companies are Dow Chemical and Du Pont of the United States, Great Britain’s ICI, and the German trio of BASF, Hoechst AG, and Bayer. The barriers to the free flow of chemical products between nations largely disappeared in the 1970s. This, along with the commodity nature of bulk chemicals and a severe recession in the early 1980s, ushered in a prolonged period of intense price competition. In such an environment, the company that wins the competitive race is the one with the lowest costs. Dow Chemical was long among the cost leaders.

For years Dow’s managers insisted that part of the credit belonged to its “matrix” organization. Dow’s organizational matrix had three interacting elements: functions (such as R&D, manufacturing, and marketing), businesses (like ethylene, plastics, and pharmaceuticals), and geography (for example, Spain, Germany, and Brazil). Managers’ job titles incorporated all three elements (plastics marketing manager for Spain), and most managers reported to at least two bosses. The plastics marketing manager in Spain might report to both the head of the worldwide plastics business and the head of the Spanish operations. The intent of the matrix was to make Dow operations responsive to both local market needs and corporate objectives. Thus the plastics business might be charged with minimizing Dow’s global plastics production costs, while the Spanish operation might determine how best to sell plastics in the Spanish market.

A handful of major players

When Dow introduced this structure, the results were less than promising: Multiple reporting channels led to confusion and conflict. The many bosses created an unwieldy bureaucracy. The overlapping responsibilities resulted in turf battles and a lack of accountability. Area managers disagreed with managers overseeing business sectors about which plants should be built where. In short, the structure, didn’t work. Instead of abandoning the structure, however, Dow decided to see if it could made more flexible.

Dow’s decision to keep its matrix structure was prompted by its move into the pharmaceuticals business is very different from the bulk chemicals business. In bulk chemicals, the big returns come from achieving economies of scale in production. This dictates establishing large plants in key locations from which regional or global markets can be served. But in pharmaceuticals, regulatory and marketing requirements for drugs vary so much from country to country that local needs are far more important than reducing manufacturing costs through scale economies. A high degree of local responsiveness is essential. Dow realized its pharmaceutical business would never thrive if it were managed by the same priorities as its mainstream chemical operations.

Accordingly, instead of abandoning its matrix, Dow decided to make it more flexible to better accommodate the different businesses, each with its own priorities, within a single management system. A small team of senior executives at headquarters helped set the priorities for each type of business. After priorities were identified for each business sector, one of the three elements of the matrix—function, business, or geographic area—was given primary authority in decision making. Which element took the lead varied according to the type of decision and the market or location in which the company was competing. Such flexibility that all employees understand what was occurring in the rest of the matrix. Although this may seem confusing, for years Dow claimed this flexible system worked well and credited much of its success to the quality of the decisions it facilitated.

By the mid-1990s, however, Dow had refocused its business on the chemicals industry, divesting itself of its pharmaceutical activities where the company’s performance had been unsatisfactory. Reflecting the change in corporate strategy, in 1995 Dow decided to abandon its matrix structure in favor of a more streamlined structure based on global product divisions. The matrix structure was just too complex and costly to manage in the intense competitive environment of the time, particularly given the company’s renewed focus on its commodity chemicals where competitive advantage often went to the low-cost producer. As Dow’s then-CEO put it in a 1999 interview, “We were an organization that was matrixed and depended on teamwork, but there was no one in charge. When things went well, we didn’t know whom to reward; and when things went poorly, we didn’t know whom to blame. So we created a global divisional structure and cut out layers of management. There used to be eleven layers of management between me and the lowest-level employees; now there are five.

Questions

1. Why did Dow Chemical first adopt a matrix structure? What benefits did it hope to derive from this structure?

2. What problems emerged with this structure? How did Dow try to deal with them? In retrospect, do you think those solutions were effective?

3. Why did Dow change its structure again in the mid-1990s? What was Dow trying to achieve this time? Do you think the current structure makes sense given the industry in which Dow operates and the strategy of the firm? Why?

A handful of major players, compete head-to-head around the world in the chemical industry. These companies are Dow Chemical and Du Pont of the United States

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A guest walked up to the front desk agent in an upscale hotel, ready to check out. As she would normally do when checking out a guest, the agent asked the guest what his room number was.

A guest walked up to the front desk agent in an upscale hotel, ready to check out. As she would normally do when checking out a guest, the agent asked the guest what his room number was.

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Professional Communication Skills

Case II – Checking Out a Guest

A guest walked up to the front desk agent in an upscale hotel, ready to check out. As she would normally do when checking out a guest, the agent asked the guest what his room number was. The guest was in a hurry and showed his anxiety by responding, “I stay in a hundred hotel rooms and you expect me to remember my room number?” The agent then asked for the guest’s name, to which he responded, “My name is Mr. Johnstein.” After thanking him, the agent began to look for the guest’s last name, but the name was not listed in the computer. Because the man had a heavy accent and the agent assumed that she had misunderstood him, she politely asked the guest to spell his last name. He answered, “What? Are you an idiot? The person who checked me in last night had no problem checking me in.” Again, the agent looked on the computer to find the guest.  

The guest, becoming even more frustrated, said, “I have a plane to catch and it is ridiculous that it has to take this long to check me out. I also need to fax these papers off, but I need to have them photocopied first.” The agent responded, “There is a business center at the end of the counter that will fax and photocopy what you for it. Haven’t you ever heard of customer service? Isn’t this a five-star hotel? With your bad attitude, you should be working in a three-star hotel. I can’t believe they let you work here at the front desk. Haven’t you found my name yet?” The agent, who was beginning to get upset, asked the guest again to spell out his full name. The guest only replied, “Here are my papers I want faxed if you are capable of faxing them.” The agent reached to take the papers, and the guest shouted, “Don’t grab them from my hand! You have a bad attitude, and if I had more time, I would talk to someone about getting you removed from your position to a hotel where they don’t require such a level of customer service.” The agent was very upset, but kept herself calm in order to prevent the guest from getting angrier.

       The agent continued to provide service to the guest, sending the faxes and making the photocopies he had requested. Upon her return, the agent again asked the guest to repeat his last name, since he had failed to spell it out. The guest replied by spelling out his name, “J-o-h-n-s-t-o-n-e.” The agent was finally able to find his name on the computer and checked him out, while he continued to verbally attack her. The agent finished by telling the guest to have a nice flight.

Questions:

1. Is it appropriate to have the manager finish the check-out? Or, should the front desk agent just take the heat?

2. Would you have handled the situation in the same manner?

3. What would you have done differently?

4. Communication improvement is required for both of the parties involved or any one of them? Justify your opinion.

A guest walked up to the front desk agent in an upscale hotel, ready to check out. As she would normally do when checking out a guest, the agent asked the guest what his room number was.

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A fictitious data set consisting of thirty respondents was created. The data was mainly constructed to find the relationship between the dependent and independent variable.

A fictitious data set consisting of thirty respondents was created. The data was mainly constructed to find the relationship between the dependent and independent variable.

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Marketing Research

CASE – 2   Chi-square Test

Methodology

1. A fictitious data set consisting of thirty respondents was created. The data was mainly constructed to find the relationship between the dependent and independent variable. Age was taken as the independent variable and choice of a drink as dependent variable. Six brands of soft drinks were considered as the different choices for the respondents.

2. The age group coded into six categories as 1 to 6 and the brands of soft drinks were coded into six categories and the codings are as follows:

   (a) Independent variable
             Age                         Coding

            <15                               1

           16 – 25                          2

           26 – 35                          3

           36 – 45                          4

           46 – 55                          5

            >55                               6

    (b)  Dependent variable
          Different brands          Coding

              Coke                           1

              Pepsi                           2

              Mirinda                       3

              Sprite                          4

              Slice                            5

              Fruit Juice                   6

3. Chi-square test has been used to cross-tabulate and to understand the relationship between the independent and the dependent variable.

4. Calculation of contingency coefficient and the lambda asymmetric coefficient is done to find the strength of the association between the two variables.

5. Sample size is taken as thirty.

6. Analysis of cross-tabulation.

7. SPSS software package for the cross tabulation analysis.

Problem

This is a bivariate problem. The basic intention of the problem is to understand the relationship between AGE and BRAND PREFERENCE of different brands of soft drinks.

Input Data Table

Output Data

Age by Drink Preference

                                                  Age

             Minimum Expected Frequency ─.500

             Cells with Expected Frequency <5─36 of 36 (100.0%)

   *1  Pearson Chi-square probability

   *2  Based on Chi-square approximation

         Number of Missing Observations: 0

Analysis

In a Chi-square test, for a 90 per cent confidence level, if the significance level is greater than or equal to 0.1, it signifies that there is no association between the two variables in the cross-tabulation and if significance level is less than 0.1, then it signifies that there is a significance relationship between the selected variables.

A fictitious data set consisting of thirty

The result of the cross-tabulation

From the output tables, the Chi-square test read a significance level of 0.08325 at 90 percent confidence level. For 90 per cent, significance level is 0.1, that is (1─0.9), so the above result shows that at 0.08 (which is less than 0.1), there is a significant relationship between the two variables. At 95 per cent confidence level, significance level being 0.05, and the above output giving a significance level of 0.08 which is greater than 0.05, there is no relationship between the variables:

If contingency coefficient value is greater than +0.5 then the variables are strongly associated. In the above case the contingency coefficient value being 0.6 which is greater than 0.5, hence the variables are strongly associated.

The asymmetric lambda value (with DRINKCODE dependent) 0.21739 means that 21.7% of error is reduced in predicting brand preference when age is known.

From the above result we can conclude that there is a significant relationship between AGE (independent variable) and BRAND PREFERENCE (dependent variable), of the respondents.

Thus we can conclude that the age of the respondent plays an important role in the purchasing intention of a particular brand of soft drink.

Question

Case 2:  Conduct Chi-square test to cross-tabulate and to understand the relationship between the independent and the dependent variable. Also calculate contingency coefficient and the lambda asymmetric coefficient to find the strength of the association between the two variables. Take Sample size as thirty. Analysis of cross-tabulation using  SPSS software package would be required.

A fictitious data set consisting of thirty respondents was created. The data was mainly constructed to find the relationship between the dependent and independent variable.

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