...Introduction Superior Manufacturing Company is a company that had a loss of $688,000 in 2004. Manufacturing products 101, 102, and 103, cost analysis shows that products 102, and 103 have been unprofitable. SMC is also a company that has many competitors with products that are very similar so raising prices would cause customers to search for alternatives. The dominant competitor, Samra Company has been the cost regulator in the market by setting prices to be matched by competition. The manufacturing process uses three horizontally integrated dedicated factories that do not typically operate at capacity. Superior Manufacturing Company also uses a standard value costing method that is based on past performance. Decision to keep Product 103 Continuing production vs. Stopping production assumptions * Continue to pay fixed costs, not sell machinery immediately, and cut power to the building * Immediately reduce all direct labour costs, and reduce indirect labour costs to 5% for administration involving the property Table 1 (In thousands $) | Continue Production | Stop Production | Rent | $ 1,882 | $ 1,882 | Property Taxes | $ 401 | $ 401 | Property Insurance | $ 534 | $ 534 | Compensation Insurance | $ 458 | $ 5.77 | Direct Labour | $ 6,879 | | Indirect Labour | $ 2,309 | $ 115.45 | Power | $ 302 | | Light and Heat | $ 106 | | Building Service | $ 75 | | Materials | $ 4,851 | | Supplies | $ 350 | | Repairs | $ 104 | | Total | $ 18,249...
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...JAMES W. CULLITON DAVID F. HAWKINS JACOB COHEN Superior Manufacturing Company New Management Do No Upon taking office in February 2005, Waters decided against immediate major changes. Rather, he chose to analyze 2004 operations and to wait to see results for the first half of 2005. He instructed the accounting department to provide detailed expenses and earnings statements by products and departments for 2004 (see Exhibit 2). In addition, he requested an explanation of the nature of the company’s costs including their expected future behavior (see Exhibit 3). Company and Industry The Superior Manufacturing Company made only three industrial products: 101, 102, and 103. They were sold by the company’s sales force for use in the processes of other manufacturers. All of the sales force, on a salary basis, sold the three products but in varying proportions. Superior sold ________________________________________________________________________________________________________________ Professor James W. Culliton prepared the original version of this case, HBS No. 156-004. This version was prepared by Professor David F. Hawkins and Jacob Cohen, Affiliate Professor of Accounting and Control at INSEAD. HBS cases are developed solely as the basis for class discussion. The company mentioned in the case is fictional. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2004 President...
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...Molex Case Study Molex is the world’s second largest manufacturer of electronic components located in Chicago Illinois. However, they are truly a global Corporation, which established an international division in 1967 to handle exports and build manufacturing facilities in Japan in 1970 and Ireland in 1971. The company generates 1.84 dollars billion in revenue annually, about 61% of these revenues are generated outside the United States. Molex operates 50 manufacturing plants and 21 different countries and employs 16,000 people worldwide. The following case study is an analysis how Molex faces the legal, cultural and ethical challenges of globalization. The analysis will address various roles that the host governments have played in the operations of Molex and will conclude with a summary on how the Molex Corporation handles the strategic and operational challenges facing their global managers. Molex has faced legal, cultural, and ethical challenges in a manner that has set standard of global business practices at a higher level. The key element to this unique standing is Molex's human resources department. Molex’s hiring policy is to hire only experience, human resources managers from other countries in the same country in which they have a manufacturing facility. The purpose of this hiring practice is to have qualified people who know the language, knowledge of local laws, will have the ability to recruit the right people in the country and will posses local credibility...
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...Warning, this is a study guide, not a cheat sheet. 1. Prepare a statement showing the incremental cash flows for this project over an 8-year period. -Initial investment: The initial investment (I) is the sum of the investment in plant and equipment. I = $1,000,000 -Working Capital: The additional net investment in inventory and receivables is the working capital needed for the project: WC = $200,000 There is no additional info about the WC, so we can assume that it will not change over the project's life. Then Working Capital Change for each year Yi is: this is a study guide, not a cheat sheet. ChWCi = Previous Year WC - Current WC = 0 (for i=1 to 7) and ChWC0 = -$200,000 The working capital is recovered, this means that for the end of the year 8 it will be zero or: this is a study guide, not a cheat sheet. ChWC8 = $200,000 -Depreciation: For the first five years Yi (i = 1 to 5): Di = (Invest in plant and equipment)/5 = $1,000,000/5 = $200,000 For the years 6 to 8 the depreciation will be zero. this is a study guide, not a cheat sheet. -Revenues: For the first year the expected revenues will be: R1 = $950,000 For the years Yi (i=2 to 8): Ri = $1,500,000 -Expenses: Indirect incremental costs will be $80,000 all the eight years. For each year the direct costs will be 0.55*Ri. Then for each year Yi (i=1 to 8), the expenses (Ei) will be: this is a study guide, not a cheat sheet. Ei = $80,000 + 0.55*Ri...
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...committed within the scope of employment. Mr. Stokely’s actions fall within the scope of employment because driving to the manufacturing facility was business related. Mr. Stokely’s boss accompanied him to the manufacturing facility. Facts John Stokely is a sales executive for AAA Auto Dealers, a local automobile dealership. He often drives to the manufacturing facility, which is 150 miles from the dealership, to check on new orders. John’s employer reimburses him for gasoline, food, and lodging, and provides John with a dealer car to drive. While driving to the manufacturing plant, John decided to stop by his cousin’s house for dinner. His boss accompanied him on the visit “to get a decent meal for a change.” While on the way there, John collided with and injured a motorcyclist. Discussion In the case of Largey v. Intrastate Radiotelephone, Inc a motorcycle driver was severely injured by an individual driver who the courts found to be an employee of the appellant. The court found that the driver was negligent in causing the accident, and that the appellant was vicariously liable for negligent conduct because the driver was on his way to the appellant’s supply company. The jury concluded that the automobile driver who was responsible for the accident was the appellant’s employee and that an exception to the going and coming rule applied. The above case is similar to the John Stokely...
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...and the lower control limits for a process are calculated by adding and subtracting three times standard deviation respectively to the base control limit. When a point that exceeds control limits then it used to produce signals that contains an alarm for action to be taken to maintain the standards of production process. [pic] Control Chart for Standard Material [pic] Control Chart for Super Plastic Analysis of the calculated control limits for both the standard plastic and the super plastic shows that both the processes are controllable. The data depicts that defects are under control limits and can be controlled. The company needs to continue with the research and development of raw materials and the associated manufacturing process. This in turn would be helpful to the company in effective monitoring and controlling defects which occurs during the process...
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...Question 1 In this case the managerial accountant is faced with an ethical dilemma. It involves integrity and objectivity. The managerial accountant cannot request an immediate meeting with the Board of Directors. The appropriate way to deal with this problem is presenting the situation to the next higher managerial level firstly. According to CIMA code of ethics for professional accountants, a distinguish mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. [1]Therefore, a professional accountant’s responsibility is not exclusively to satisfy the needs of an individual client or employer. In acting in the public interest a professional accountant should observe and comply with the ethical requirements of the CIMA code. [2] For instance, 100.4 of the code state that a professional accountant should be straightforward and honest in all professional and business relationships. In this case, as managerial accountants, when suspecting our immediate superior of wrongdoing, we should report and support the related information to appropriate department. [3] What's more, a managerial accountant ought to be objectivity, which means we should not allow bias, conflict of interest or undue influence of others to override professional or business judgments. Though he or she is our immediate superior, when they do something improperly, we still need to point out and impeach it. Besides, a professional account should comply with...
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...Summary of case study Pest = opportunity and threat The social environment deals with the demography (baby boomer, ages 45 t0 65) and the consumers trend and this is an opportunity to the industry. Economic environment deals with the influence of the economy on the industry “people within the ages 54-65 generally earned higher income, and has higher level of home ownership” PORTER ANALYSIS Bargaining power of suppliers: in this case the power of supplier is low. “as it is common for retailers to change suppliers frequently if their product were not selling well” Bargaining power of buyers: the wholesale buyers in this industry i.e as Walmart, Canadian tire etc. have a lot of power in this industry because they buy in large quantity and has the power to influence price. The other small retail who are just two third have “limited shelf space which means they only carry a small selection of items and ordered in small volume”. This buyers have backward vertical integration as they have the ability to become suppliers ‘many large retail chains also opened sourcing offices in Asian countries, bypassing intermediaries by buying directly from local manufacturer. Threat of new entrant: the barrier to entry of the furnishing industry market is low as manufacturer have moved there business to Asia which is a low base production therefore making the market easy to enter and retailers have direct access to the manufacturing companies. Rivalry among competitors: rivalry is high due to the...
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...Caroline Regis at Excel Systems The case describes the effects of a proposed change in Excel's manufacturing strategy as seen through the eyes of the company's VP of Manufacturing, Caroline Regis. Regis’ employer, Excel Systems, merged with another company Gemini, a former competitor. The merger was followed by several changes to Excel's and Gemini’s old business approach. Excel System’s new CEO advocates a new manufacturing strategy: outsourcing, which he successfully ran with Gemini prior to the merger. Regis, who was in charge of in-house manufacturing at Excel Systems, feels threatened by the VP for Supply Chain Management at Gemini, Margaret Ogilvie, and her proposed changes. The case focuses on Regis's reactions to the outsourcing proposal and her actions to clarify her new role at Excel Systems. Initially, Regis seems to consent to the new organizational politics and support the new outsourcing strategy as well, only to change her mind at the last minute and exasperate her superiors, who had all thought she would support the plan. She attempts to regain control of the situation and threatens to resign if she would not be allowed to determine the appropriate strategy for the newly merged entity. The case further analyses and discusses the career and personal development issues that lead up to Regis’ determination to either be in charge of manufacturing at Excel Systems, or resign and move on to another company. The case describes Caroline Regis as an independent...
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...Analyse the events that contributed to the current state of the motherboard transition Following a careful analysis of the case and the several events that contributed to the overall situation, we conclude that a multiplicity of factors converge to generate the situation described. To properly assess these different factors and events we have decided to develop a multi-causal analysis: * Company structure and organizational culture events – Introducing change and its consequences * Technical complexity and technical risk * Rapport and follow-up strategy events – Superior-subordinate relationship, feedback and interpersonal conflict * Priorities and workflow coordination events Structure and culture: Manufacturing vs. Design We can identify strong evidence that there is a deep lack of understanding of the culture of manufacturing by the design unit and vice-versa. This factor is perfectly clear when the manufacturing engineers’ complain about the working procedures of the design unit, as quoted “They can’t work the production problems from an office… each week we had to spend time trying to convince them that we knew what we were doing”. Such lack of understanding might contribute to inefficient communication between the two teams, affecting the execution of the project. The manufacture part of the project requires the active contribution of engineers from both units. It is, therefore, essential that those two teams work closely together in order...
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...CONTENTS Analysis of the case 2 Q1) Do you agree with Walters decision to keep product 103? 3 Analysis of Profit and loss statement 4 Sensitivity analysis 6 Strategic scenarios 8 Q2) Should superior lower as of January 1, 2006 its prices of product 101? To what price? 10 Q3) why did Supreme improve profitability during the period of January 1 to June 30, 2005? 13 Analysis 14 Q4) why is it important that Superior has an effective cost system? 17 What is your overall appraisal of the company’s cost system and its use in report to management 18 List the strengths and weaknesses of the system and its related reports for the purpose management uses the system’s output 18 What recommendations, if any, would you make to waters regarding the company’s cost accounting system and its related reports? 19 Initial Analysis of Superior Manufacturing Company Case :- 1) After death of Richard Harvey (2004), founder and president of Superior Manufacturing Company (SMC), Paul Harvey took over. Paul Harvey had only 4 years of experience. Soon followed serious management problems because of some bad decisions made by Paul Harvey. The income statement of 2004 reflected net loss of $0.68million in a good business year. To solve this problem Herbert Waters was brought over as General Manager of SMC. 2) SMC manufactured 3 different products namely 101, 102, 103 and was among the top 8 companies in the industry. Samra Company was market leader and announced price annually and other...
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... Master of Science in Management, Economics and Industrial Engineering [pic] Management Control Systems Prof. Paolo Maccarrone Second Assignment: Analysis Group Ferrario Andrea Rognoni Susanna Taiana Marco Trifonov Angel A.Y. 2007/2008 Q1.Based on the 2004 statement of profit and loss data (Exhibits 1 and 2), do you agree with Water’s decision to keep product 103? In order to support an opinion on the side we decided to analyze all the probable scenarios. If the company management decided that it is better to stop the production of product 103, they could do this in one of the following manners: 1. Stop production and any business related to product 103. 2. Stop production but outsource it to another company and continue the distribution. 3. Stop production and use the available production capacity in order to produce product 101 or 102. If the company management decided that it is better to continue the production of product 103, they could do this in one of the following manners: 1. Maintain the same volume of production. 2. Increase the volume of production. 3. Lower the volume of production. 4. Substitute 102 production capacity with 103 if the 103 facility has not sufficient capacity to exploit economies of scale Analysis of the P&L statement of 31 December 2004 If we have a look at the P&L statement for the 2004 it is obvious that product 103 is bringing...
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...Strategic Management-2 Case Study Synopsis Of Case:-1) Competitive Advantage in new patent regime 2) Strategic leadership and competitive advantage 1) Competitive Advantage in New Patent Regime: A Study of the Indian Pharmaceutical Industry In the global business environment, traditional factors e.g labour costs and superior access to financial recourses and raw materials can still create a competitive advantage in the current competitive landscape. In the current landscape, the recourses, capabilities and the core competencies in the firm’s internal organization likely have a stronger influence on its performance than do conditions in the external environment. The IPI is one of the largest and most advanced among the developing countries. It is the 4th largest by volume i.e. around 8 percent and 11th largest in terms of value i.e. around 1.5 percent. The Indian pharmaceutical industry is a heterogeneous mixture of firms split between the organized and unorganized sectors. The control and support of the Indian government plays a critical role in the competitiveness of the IPI. According to Sampath (2006), areas of government support critical to the IPI include speed of processing of patent applications, R&D conducive environment, and reduced price Control, access of land for expansion and the patent amendment act, 2005. The government can also help increase the potential of the nascent venture capital industry in India, with an emphasis...
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... (2013) Company-specific production systems and competitive advantage: A resource-based view on the Volvo Production System. International Journal of Operations & Production Management, Vol. 33, Iss. 11/12 Post-print. This is an Author's Original Manuscript of an article accepted for publication in the International Journal of Operations & Production Management, Vol. 33, Iss. 12. Forthcoming. Company-specific Production Systems and Competitive Advantage: A resource-based view on the Volvo Production System Torbjørn H. Netland1, 2 and Arild Aspelund1 1 Department of Industrial Economics and Technology Management, NTNU 2 McDonough School of Business, Georgetown University Abstract Purpose: In order to improve competitiveness on a global scale, multinational enterprises increasingly develop a company-specific Production System (XPS) and deploy it in their worldwide operations. An XPS is synonymous with a tailored corporate-wide improvement programme. The purpose of this paper is to explore the circumstances under which an XPS can provide a competitive advantage. Methodology: We use an explorative case study methodology to investigate the link between the establishment of an XPS and competitive advantage. Specifically we investigate the part of the Volvo Group’s globally implemented Volvo Production System (VPS) that aim to improve the manufacturing processes worldwide. Due to its historical trajectories, Volvo constitutes a unique case for studying...
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...shared the same business philosophy, which is aiming at niche markets, that most times are left untouched or under-served. How did Fenix identify and tap into different niche markets? Knitwear Manufacturing Niche Market The Group first niche was knitwear manufacturing after which they diversified into fashion and general merchandise retailing. Fenix identified every new niche market out of experience and knowledge gained from previous business opportunites. For instance, knowledge gained from working at a yarn manufacturing supplier enabled them them to move from trading imported Japanese yarn to Hong Kong knitted factories to expanding into knitwear manfacturing and setting up their own manufacturing company in Hong Kong. This venture was successful in the Japanese market due to increasing demand for high quality knitwear due to increased labor cost of local production. Fenix opened knitwear factories in South and Central China to minimize cost and improve their competitiveness by concentrating only on high quality knitwear due to increased price competition. This strategic move to China laid the foundation for the duo future development in knit wear manufaturing which earned them a value of US$ 100 million from producing nine millions units of knitwear per year. The company also exported to the US and developed relationships with European brand such as Armani and Maxmara. Fashion Retailing Niche Market Fenix first experience with brand retailing was in the early...
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