AUT MBA 468911 Operations Management Assessment One_Group Project

Name Vivek Anand Michelle Chung Mahsa Dordahan Ro Marks "acl#n $hil%o&& Angelina Rodrigue'

Stu ent !"# 0792735 9902843 0437571 114070! 1132740 0432359

Summar$ report o% t&e meeting o% t&e Boar o% "irectors (his re%or& %resen&s a gro-&h and %ros%eri&#. rie) su**ar# o) &he issues )aced # +alan' in rela&ion &o &he o%era&ions

*anage*en& o) &he co*%an# and reco**ended o%era&ional s&ra&egies &o ensure +alan',s con&inued

1. Or er 'inners an (ua)i%iers
(he order -inners and order /uali)iers )or &he usiness in &he earl# s&ages o) -as &he sa*e 0

%rice1cos&. (his co*%e&i&ive charac&eris&ic is -ha& caused &he cus&o*ers &o choose &he co*%anies good and services over &hose o) our co*%e&i&ors along -i&h *aking +alan' a via le co*%e&i&or. (he )ac&or o) %rice1cos& lead &o reduced %ro)i&s )or &he co*%e&i&ion and allo-ed an increasing hold in &he Chinese Do*es&ic Marke&. *+ O,jecti-es (he i*%or&ance o) +alan' o%era&ions o 2ec&ives in &er*s o) i&s V3C and V34 in &he earl# da#s -as

Flexibility Quality Speed Cost

&o deliver a lo- cost *icro-ave -hich -ould e a))orda le # *os& Chinese households. 5e elieved &ha& # &echnolog# e)i-ering and a&&rac&ing &he *asses -i&h ne- &i*e saving -a#s o) cooking eco*e indis%ensi le -i&hin &he household. A)&er %urchasing &he

&hen &his &echnolog# -ould

lue %rin& )ro* (oshi a6 sales have e7%onen&iall# gre- %roduc&ion ever since. 8igh

volu*e %roduc&ion -as &he ke# &hen &o kee% &he cos& lo- )or a s&ock s&andard6 asic )o. /ua)it$ *icro-ave. (he %olar diagra* elo- sho-s &he i*%or&ance o) each %er)or*ance o 2ec&ive &o &he +alan' o%era&ion in &he earl# da#s.

9arl# :ears ;Then< V34 V3C

3ver &he #ears our o 2ec&ives needed &o change as -e )aced &ough si&ua&ions. =o*e o) our co*%e&i&ors li*i&ed su%%l# o) %ar&s -hich %ushed &he usiness &o-ards inno-ation0 &o uild i&s o-n co*%onen&s and *ee& &he de*and. 5hile our core o 2ec&ive s&ill re*ained &o share. >n order &o impro-e /ua)it$ an 1eep t&e cost e cos& driven6 delivering lo- %rice &o &he cus&o*er and kee%ing i&s o-n e7%enses do-n &o ca%&ure &he *arke& o.n6 -e inves&ed *ore &han 3? o) &he elo- sho-s &he co*%an# revenue in R@D and con&inued &o *anu)ac&ure 90? o) &he *icro-ave co*%onen&s in house using &echnolog# &ha& -e had develo%ed ourselves. (he %olar diagra* #ears. 3ver &he :ears ;Now< V34 V3C i*%or&ance o) each %er)or*ance o 2ec&ive &o &he +alan' o%era&ion as &his has changed over &he

Flexibility Quality Speed Cost

>n &he earl# #ears6 +alan' -as a le &o use all o) i&s o%era&ional e))iciencies &o crea&e *icro-ave ovens -i&h lo- co*%le7i&# and &here)ore -ere eas# &o %roduce in a *ass volu*e. Aro* Diagra* 1 -e can see &here are no *a2or ga%s e&-een &he V3C and V34 and +alan' -as a le &o crea&e an e7cellen& s#nerg# e&-een &he &-o -hich led &o increased *arke& share. >n recen& #ears -e have seen &he 34M *arke& gre- and -i&h &his so has i&s o%era&ional co*%le7i&#. >n recen& #ears &he V3C has had a *a2or in)luence on &he o%era&ions o) &he usiness and has caused in&ernal issues -i&h &he e7%anded %roduc& lines. Diagra* 2 sho-s &he V3C is de*anding grea&er /uali&# )or a lo-er cos& -i&h innova&ion and de%enda ili&#. +alan' -ill need &o address &hese ga%s and look &o inves& in R@D o) i&s %roduc&ion in order &o close &hese ga%s. 2+ Tec&no)og$ (echnolog# has %la#ed a grea& role in &he success o) &he usiness. 5i&h li&&le &o no %roduc&ion edge in earl# #ears6 a nu* er o) &echnolog# ini&ia&ives including have ensured &he usiness has *oved )or-ard. $roduc&ion and design are &-o s&rong areas -i&hin &he usiness in -hich &echnolog# has had an in)luence in &he )ollo-ing -a#sB

(he %urchase o) &he lue%rin& )ro* (oshi a )or &he original *icro-ave over6 (he i*%or& o) asse* l# &echnologies has hel%ed reduce cos&s )or &he usiness. (he a ili&# &o %rovide *ore %roduc&s -i&h di))eren&ia&ed )ea&ures. (he *as&ering o) &he *agne&ron &echnolog# has ena led &he usiness &o %roduce onC *asse. (echnolog# change over &he #ears has ena led &he reC rand )ro* Made in China &o Created in China. Docalised design o) our %roduc&s. >nves&*en& in R@D has %roven )rui&)ul along -i&h learning )ro* overseas %ar&ners and i*%or&ing &he *os& advances &echnologies &hrough &hese rela&ionshi%s. Cos&s have )le7i ili&#. een reduced as di))eren&ia&ed )ea&ures in i&s %roduc&s give increased

Manu)ac&uring around 90? o) our o-n co*%onen&s has ensured grea&er e))icienc#.

(he usiness has een a le &o unders&and &he i*%or&ance o) ad2us&ing %roduc&s availa le &o *arke& &hrough ne- o))erings as a direc& resul& o) inves&*en& in research and develo%*en&. All o) &he a ove ini&ia&ives have seen grea&er e))icienc#6 grea&er e7%or&s6 rand a-areness and a grea&er use o) resources.

1+ 3ompetiti-e an Operation Strategies (he co*%e&i&ive s&ra&eg# o) +alan' is cos& leadershi% -hich has resul&ed -i&h increased *arke& share # eing aggressive in &he local *arke& -i&h ongoing %rice cu& c#cles leading &o a %rice -ar in &he Chinese Do*es&ic Marke&. (he %rice -ars -hich s&ar&ed in 199! and have een ongoing &hrough un&il 2002 has ensured &ha& co*%e&i&ors have reduced %ro)i&s in &he *icro-ave oven *arke& as sho-n in &he elo- &a le. =&ages o) +alan' $rice 5ars 199! 40? discoun& =ales increased !506000 Eni&s Marke& =hare increased &o 35? 1997 29C40? discoun& (o&al annual sales reached Do*es&ic *arke& share -as 47.!? Marke& share increased &o !0? Do*es&ic *arke& share reached 7!? >n&erna&ional *arke&

260006000 uni&s 1998 30? discoun& Annual %roduc&ion ou&%u& reached 460006000 uni&s 2000 40? discoun& Annual sales reached 1060006000 uni&s 2002 30? discoun& Annual sales reached 1360006000

uni&s.

share -as 40?

+alan',s cos& leadershi% s&ra&eg# is &rans)erred &o i&s in&erna&ional 34M *arke&s -here i& is kno-n )or i&s a ili&# &o undercu& local co*%e&i&ors. (he o%era&ional s&ra&egies +alan' has under&aken has een &he &rans)er o) %roduc&ion &hrough 39M Agree*en&6 a )ocus on research and develo%*en& and %roduc& innova&ion6 *aking use o) resources # increasing %roduc&ion ca%aci&# &hrough running %roduc&ion 24 hours a da#6 ringing &he %roduc&ion o) co*%onen& )acili&ies in house and an overall drive and need )or sel) su))icienc# in &he ever changing *arke&. As a s&ra&egic )i& o%era&ion6 +alan' has een a le &o reduce *anu)ac&uring cos&s &hrough &he o%era&ions s&ra&egies ou&lined6 ensuring a lean *anu)ac&uring usiness &ha& has &he a ili&# &o increase %roduc&ion -hen re/uired.

(he o%era&ions s&ra&eg# su%%or&s &he co*%e&i&ive s&ra&eg# &hrough eing %roduc&ive &ransla&ing &o lo- %roduc& cos&s6 having a high degree o) )le7i ili&# 0 eing a le &o change -hen re/uired # &he de*ands o) &he *arke& or %o&en&ial )u&ure o) &he *arke&6 de%enda ili&# 0 ensuring &ha& all %roduc&s *ee& s%eci)ica&ions and arrive on &i*e6 s%eed 0 eing )as& a& deliver# and ne- innova&ion and /uali&# 0 eing righ& and having a high degree o) nonCerror. *+ O4M5O"M -ersus OBM 2+ "e-e)opment O4M5O"M Pro uction >s ased in clien& s%eci)ica&ions . $roduc&ion is *ass %roduced )or nu*erous rand co*%anies. Dola our cos&. $roduc&ion cos&s driven do-n &hrough econo*ies o) scale. OBM =%eci)ica&ions are ased on design )ro* &he R@D de%ar&*en&. $roduc&ion nu* ers are ased on )orecas&ing )ro* &he Marke&ing De%ar&*en&.

"esign

3DM design co*es )ro* &heir inC house R@D &ea*. Design eco*es 3DM,s >n&ellec&ual %ro%er&# 39M driven # clien& design s%eci)ica&ion.

Docalised design &o sui& each &arge& *arke&. Fe- %roduc&s are designed ased on i&s inChouse R@D &ea* and research s&a&ions in &he 34M,s &arge& *arke&. $roduc&s are *arke&ed -i&h &he +alan' rand. =ales )orecas&ing is co*%le&ed # +alan',s *arke&ing de%ar&*en&. +alan' is res%onsi le o) &he *arke&ing s&ra&eg#. 34M uilds rand e/ui&# and crea&es rand a-areness ;s&ra&egic s&re&ch< and rand lo#al&# ;incre*en&al innova&ion<

Mar1eting

39M13DM Clien&s *arke& &heir o-n %roduc&s -i&h &heir o-n randing. (he# &ake res%onsi ili&# )or &he *arke&ing s&ra&eg#6 )orecas&ing and associa&ed cos&s. Fo rand e7%osure )or &he 3DM139M %roducer.

"istri,ution

Dis&ri u&ed &hrough Clien&s o-n chain or valueCadded resellers.

Dis&ri u&ed &hrough %ar&nershi%s or 34M,s o-n dis&ri u&ion channels. (heir o-n unless &his is ou&sourced.

3ustomer Ser-ice

Clien&s have &heir o-n a)&er sales su%%or& cen&res.

OBM &he 34M usiness re&urns higher %ro)i& *argins and &here)ore should e con&inued and develo%ed in &he in&erna&ional *arke&. (here are associa&ed risks &ha& have een iden&i)ied in doing &his such asB $o&en&ial issues -i&h )orecas&ing A -ider range o) *odels -i&h lo-er volu*e %roduc&ion runs 8igh overheads Risk o) eing seen &o co*%e&e -i&h 39M cus&o*ers

4eing &he larges& *icro-ave *anu)ac&urer in &he -orld6 -i&h s&rong co**i&*en& &o R@D6 e7%er&ise in *anu)ac&uring6 logis&ics and /uali&# con&rol6 and increased rand recogni&ion in &he overseas *arke& +alan' has gained &he co*%e&i&ive advan&ages )or 34M e7%or& usiness. 5e need con&inue &o increase inves&*en&s in innova&ion and randing in order &o sus&ain &he co*%e&i&ive advan&age in &he glo al *arke&s and ensure &ha& incre*en&al gains are *ade &o ensure %ro)i&a ili&#. O4M5O"M (he 39M13DM usiness should e con&inued due &o i&s o%era&ions s&reng&hs o) lo- cos& in overheads6 &he %rovision o) )orecas&s )ro* cus&o*ers -hich ena les risk &o e *anaged %ro%erl#6 high volu*e and lo- variance and due &he +alan' eing a curren& indus&r# leader. >n &oda#,s viciousl# co*%e&i&ive -orld o) 39M6 *a2or 39M cus&o*ers *igh& seek lo-er cos&s else-here i) %roduc&ion -as &o e s&o%%ed or *a# -i&hdra- )ro* *icro-ave oven and )ocus on o&her goods. 8o-ever6 i& is signi)ican& &ha& +alan' co* ines o&h 39M13DM and 34M e7%or&s. 9lec&ronics is scaleCin&ensive indus&r#6 39M13DM on an in&erna&ional level. 9s&a lished rela&ionshi%s -i&h *a2or 39M rands -ho are seeking &he econo*ies o) scale and &he gro-ing 3DM *arke& -ill ena le us &o consolida&e our 39M13DM usiness -hile %ursuing &he 34M %o&en&ial in &he e*erging in&erna&ional *arke&s. 1+ T&e 6uture (o lead &he usiness &o a grea&er success6 Mr. Diang and &he oard o) direc&ors )or +alan'6 *us& concen&ra&e on rene-ed s&ra&egic )ocus &o-ards innova&ion and increase i&s inves&*en& and resources in&o &o crea&e a leading 3DM in &he -orld *arke&. >n &he curren& co*%e&i&ive *arke&6 &he direc&ors should give %riori&# &o )ocussing on develo%ing &he 3DM and 39M sec&ors o) &heir usiness es%eciall# since &he 39M usiness has een i&s core and *a2or revenue genera&ing usiness so )ar. (he con&inued %roduc&ion o) innova&ive %roduc&s -hile usinesses are crucial &o )ull# u&ili'e +alan',s %roduc&ion ca%aci&#. >n addi&ion6 3DM crea&es our o-n in&ellec&ual %ro%er&# -hich -e are %roac&ivel# %a&en&ing

*aking incre*en&al gains -ill ensure %ro)i&a ili&# and &he innova&ion )ocus -ill crea&ive )ur&her usiness o%%or&uni&ies &hrough a varied %roduc& o))ering. innova&ive %roduc&ion lines *ini*u*. 5his& )ocusing on &heir 3DM and 39M sec&ors6 &he# could con&inue &o look )or solu&ions )or so*e %ro le*s &he# have encoun&ered in &heir %ursuance &o e an 34M co*%an# i.e. dela#s in ne%roduc& develo%*en& %rocess due &o )ailure &o arrange %ro&o&#%e %roduc&ion and &es&ing6 &he need &o %rovide co*%e&i&ive level o) cus&o*er service &o a -ider *arke& -i&h varian& needs6 desires and e7%ec&a&ions and o&hers. >& -ould e advised &ha& +alan' )or* a coCo%e&i&ion alliance ;in es&a lished *arke&s< -i&h local ehind i&. +alan',s 34M usiness has >nves&*en& should also e *ade in researching and develo%ing %roduc&ion )acili&ies -i&h &he ca%a ili&# &o &ake on *ore diverse and u& s&ill have a lean %roduc&ion s&ra&eg# and kee% inven&or# &o a

%roviders o) a)&erCsales and cus&o*er service su%%or& in *ore so%his&ica&ed *arke&s -here consu*ers are looking )or lo- cos& -i&h a good service %o&en&ial risk and could i*%ac& on o&her areas o) &he usiness i) i& da*ages i&s rand &hrough %oor cus&o*er service and a)&erCsales su%%or& es%eciall# i) looking &o *ake head-a# in&o A*erica. Recommendation to the Board of Directors: >n order &o gro- +alan' *arke& share and )u&ure6 &he oard *us& )igh& and -in i&s a&&les on all )ron&s. >& is our reco**enda&ion &ha& i&s )u&ure resources *us& e inves&ed in innova&ion o&h in design and %roduc&ion ca%a ili&#. 5e elieve an o%era&ional s&ra&eg# &ha& )ocuses on innova&ion and *arke& leadershi% in 39M and 3DM -ill have a %osi&ive )lo-Con e))ec& &o i&s 34M 4usiness. 4ene)i&s include using i&s resources and %roduc&ion )acili&ies -i&h increased %roduc& lines *ore e))icien&l# and &here)ore allo-ing +alan' &o deliver a highl# innova&ive %roduc& a& a))orda le %rices. OBM Domestic Market: >n &his highl# co*%e&i&ive do*es&ic *arke&6 +alan' has los& ground &o i&s co*%e&i&ors ;losing 10? *arke& share )ro* 2002 &o 2003<. >n order &o regain *arke& share6 +alan' *us& )ocus on *ee&ing i&s cus&o*er de*ands )or innova&ion cou%led -i&h &he need &o kee% %rices lo-. >ncreased inves&*en& in&o &he $roduc&ion R@D -ill ena le +alan' &o deliver cos& e))ec&ive %roduc&s -i&h innova&ion. 5e reco**end +alan' con&inues &o kee% i&s cos& leadershi% s&ra&eg# in &he do*es&ic *arke& u& &his is onl# %ossi le &hrough heav# inves&*en& in +alan',s %roduc&ion )acili&ies &o *ee& &he )u&ure de*ands o) i&s cus&o*ers. OEM/ODM Market: +alan',s 39M Marke& has eco*e &he corners&one o) &he usiness and no- *akes u% 47? o) i&s &o&al sales uni&s co*%ared &o 25? &hree #ears ago.

5e reco**end heav# inves&*en& in R@D

o&h in design o) ne- co*%onen&s6 *ore e))icien&

%roduc&ion &echni/ues and inves&ing in research ins&i&u&es o&h in China and in &he Eni&ed =&a&es. 5e elieve &ha& )ocussing on eco*ing a -orld leader in 3DM -ill allo- +alan' &o re&ain and groi&s 39M *arke& and gro- i&s *ore %ro)i&a le 34M *arke&. 4# con&inuing &o drive 39M 4usiness in -i&h i&s innova&ive %roduc&ion ca%a ili&ies6 +alan' -ill e a le &o crea&e e&&er e))iciencies )or i&s *ore innova&ive %roduc&ion lines and &here)ore reduce overall %roduc&ion cos&. (he increased )ocus on 3DM -ill crea&e a si&ua&ion -here # 34M cus&o*ers are locked in&o +alan',s 3DM innova&ions and -ill re/uire grea&er de%endenc# and &here)ore a grea&er sure&# o) )u&ure orders. (his could also %ro&ec& +alan' -hen )igh&ing &hese sa*e co*%e&i&ors in &he *ore %ro)i&a le 34M *arke&s. OBM International Market: +alan' con&inues &o gain *arke& share in &he >n&erna&ional *arke& ;)ro* 35? in 2001&o 44.5? in 2003< u& &his gro-&h has also rough& on a grea&er degree o) risk due &o &he increased co*%le7i&# crea&ed # an increased %roduc& line and &he need &o %rovide a *ore co*%le&e a)&erCsales service &o 34M cus&o*ers in order &o %ro&ec& i&s rand. +alan' -ill need &o inves& heavil# in&o *arke&ing and crea&ing an e))ec&ive in&ernal sales )orecas&ing s#s&e* in order &o %ro&ec& i&s risk o) carr#ing &oo *uch inven&or#. 5hile -e reco**end inves&ing in )orecas&ing and *arke& research s#s&e*s -e also reco**end ou&sourcing &he a)&erCsales service. 5e reco**end &ha& &he oard inves&iga&e %ossi le alliances ;coCo%e&i&ion< -i&h o&her 34Ms in order &o %rovide &he necessar# level o) cus&o*er care.

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