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Master Program in Business Administration (MBA)
Note :- Solve any 4 case study
All case carries equal marks
Case I
PANDIT TO AFAUZI
The case is based on an actual incident which took place in an Army unit operationally deployed in a field area just a few months before the 1971 showdown with Pakistan. The opposing forces of India and Pakistan were taking their respective positions in a pre-war scenario. The clouds of showdown were looming large over the horizons of both the countries. The rumbling of own tanks and guns, the reconnaissance, leaders of different arms and services establishing liaison with one another in the process of formulating plans for both defence and attack, digging of main and contingency positions was in progress, complete war machinery was being mobilized, camouflaged, and concealed. Ammunition and other explosives were being unloaded and dug down. Junior leaders were being briefed and rebriefed, communications were being checked, and troops were being motivated and looked after as most of them were green because of their sudden induction in the Army in post war days of 1965. Such was the scene which convinced all and sundry that war was imminent. Most of the troops looked forward to a showdown mainly because they wanted to get rid of the heavy ammunition as also for the mere thrill of it. Those who had not seen a battle, seemed excited over the prospects of a war and those who had seen the war, took everything in their stride, displaying a perfect cool, calm and confident countenance.
One Ram Bali Mishra (RBM) was a raw and green jawan of about 20 years of age and two years' service and naturally had not seen a war. He was relatively tall, well built with fair complexion. He had pleasant manners, turned himself out well and spoke well. He was a complete teetotaler, non-smoker, and a vegetarian. He was well educated and well versed in religious affairs, particularly, of the religion to which most of the unit belonged. In the absence of the religious teacher of the unit, he held religious institute (dharamsthal) and gave religious discourses at the dharamsthal to all officers, junior commissioned officers JCOs), non-commissioned officers (NCOs) and jawans. During the pre-war days, he was performing the duties of a Sahayak (assistant, formerly known as orderly) to Gun Position Officer (GPO), a young officer, of the rank of a Second Lieutenant with one year of service.
RBM's charter of duties included:
(a) attending all the training activities of his trade (telephone operator) which were being organized in the sub-unit;
(b) making arrangements to get the food from the officers' mess and water from the tube- well for the office; and
(c) attending the telephone and noting down all the messages for the office.
By virtue of the nature and timings of these duties, RBM was excused physical training in the morning and games in the evening which all other jawans of the sub-unit attended. He was generally happy with these duties and working with the officer: After a short span of a week or so, the officer noticed some changes in the behavior of RBM. He also looked pale and worried. He was less talkative, less lively and his interaction with other jawans decreased. He started keeping aloof except where his duties warranted interaction with others. The officer tried to find the reasons from RBM but nothing emerged except a shy and coy smile and “aisi to koi baat Nai, Sahib". The officer tried to probe further to find out if some guilt conscience was bothering him because of some bad habit which young man of his age is likely to fall prey to, in the absence, of even visual contact of civil life and members of the opposite sex.
This was denied vehemently. After another week or so, it was noticed that RBM had developed constipation, ate very little, felt tired after walking even a few hundred yards and had become weak. He was interviewed by the officer but nothing emerged once again. He was sent to the Regimental Medical Officer (RMO). The RMO inspected him and gave some medicines. On being contacted by the officer, the RMO mentioned that there was nothing wrong medically with RBM except that he was scared of the prospects of war. He even disclosed that after having been medically examined, RBM even started giving a discourse to the RMO on the bad effects of a war on environment, economy, costs, etc. He stated that people would be loaded with sufferings; killed, injured, maimed, and would become homeless. The children would become orphans, women widowed, and the humanity would suffer. He vehemently advised the RMO to make all attempts to stop the war and if he could, at least oppose it. After a brief conversation, the RMO was convinced that all the symptoms pointed to a fear psychosis of war. He gave some medicines to RBM and sent him to the sub-unit.
The RMO told the GPO that because of the worry about the war, RBM had developed problems of digestion and hence, ate less, became inactive and felt tired quickly. He had earlier been feeling shy of expressing his apprehensions about the war to others, lest they consider him a coward. The GPO gave a thought to the whole problem and interviewed RBM, advising him to attend• all physical activities, including physical training, weapon training, games, etc. thence on. The officer also planned to keep RBM among the persons of his trade, specially in the command post which controlled the firing of the guns, where from the officer himself was expected to control the' fire in case of breakout of war.
A small cadre (class) was organized for all ranks of the sub-unit to apprise them of the organization of all arms and services in the army, starting from the level of a sub-unit. They were explained the tactics in the battlefields, the deployment patterns of different arms, the pattern and modes of support by the Air Force, the capabilities of weapons held by them, the comparative sizes of the countries, India versus Pakistan, and the level of forces held by them. They were also explained the cause for which they were there. They were there to make their contribution towards the liberation of Bangladesh (then East Pakistan), wherefrom about a crore refugees had entered India because of the repression by Pakistan forces. These refugees had become a burden on the Indian economy and social structure which India could not afford. Thus, India, the foremost leader of peace loving nations, had to prepare for war to ensure return of these refugees to liberated Bangladesh. At times, to maintain peace, it becomes necessary to resort to war.
The participants were also told about the strength of their Army and deployment in that area, of course, within the constraints of security requirements. They were also told that none of them would remain alone even during the war and that their sub-unit and the unit would always fight together. They would always have their weapons and ammunitions with them, which they were very good at firing. The process of medical care, the claim of evacuation in case of serious injuries and the enhanced benefits and compensation to families in case of death of a soldier, then announced by the government, were also communicated to them. The reliability of India's friends on the international scene was also intimated. The tactics, capabilities of aircrafts and weapons, and reliability of Pakistan's friends were also brought out. The disadvantages and difficulties of supply to the then East Pakistan were explained to the participants. The geographical location of East Pakistan in relation to our country was also described. Everybody was convinced of the great advantages and superiority we had vis-a-vis Pakistan.
Thence on, RBM was a totally changed man. He was noticed to be more active, intermingling with others at the slightest pretext and opportunity, giving discourses about loyalty to the country and martyrdom. He took keen interest in all the training activities, including the digging of a number of contingency gun positions. He volunteered to go with night patrols too, which operated to shoot bursts of rounds with light machine guns in trees and groves close-by, whenever the guns were deployed at a new place. He volunteered to venture out with the line party which was earmarked to lay telephone lines over long distances through sugarcane fields. He started watching the slaughtering of goats in the unit. Above all, he started eating eggs, though he did not touch meat.
This transformation in RBM was a welcome sight and appreciated by all. Everyone heaved a sigh of relief on seeing RBM becoming a brave "Fauzi" from a timid "Pandit". The RMO was informed of this transformation. He too felt happy. His contribution had been no less in diagnosing the cause of sickness correctly. The cadre was conducted for the whole sub-unit with a view to eradicate any apprehensions from the minds of others too, in case there were any, and to educate all. The cadre proved to be a great success. It motivated the whole lot, made them more confident and ready to face the challenge bravely. This was subsequently apparent when the hostilities started.
QUESTIONS:
1. What was the cause of fear in RBM?
2. What were the symptoms of fear displayed by RBM?
3. How did the RMO come to know of the war phobia of RBM?
4. What actions should be taken to avoid building up of fear among the troops? Which of these steps were taken by the officer?
Case II
HE WHO RIDES A TIGER
In the Year of the Youth, the author took up a research project on young industrial workers. It involved comparing young and old workers. Two industries producing the same machines at similar technological level were selected. One belonged to the private sector and the other to the public sector. While the latter was started a decade later than the former, it had achieved greater expansion. Both were located in the same state.
After we obtained necessary permission to conduct our study, we reached the mofussil town where the private sector industry was located. Before we could launch our study, as a matter of principle, we wanted to meet the General Secretary of the workers' union. The Personnel Department was not willing for this. On our insistence they called the union official. We talked to him for about half an hour but Personnel Department people were all the time hovering around.
So we fixed a time in the evening to meet him in the union office in the town. We visited the union office in the evening. The union was having problem regarding wage deduction of some workers who did not show up for overtime. The overtime notice was short and they had not consented either, even then the management was threatening wage deduction for one week.
The union could hardly do a thing' as they in the past had burnt their hands when they had to unilaterally call off the 106 day old strike in which even their Treasurer had committed suicide. They were scared to the extent that they had productivity linked bonus agreement for even 12% bonus. Moreover, a new minuscue union was recently started in the company.
We visited the new union's office next evening and held a long discussion. They asked for' our suggestions. The union believed in legal battles more than agitations. After a visit to the industry the author visited the state headquarters of the new union. There every office bearer was surprisingly a lawyer. In the HQ we learnt that after we left, their union took out a procession and held a meeting in the temple. Perhaps this was the result of our discussion. While the older union was a prisoner of its past, the new union was free to write its own history. Workers' interests were being served perhaps by both.
QUESTIONS FOR DISCUSSION
1. Discuss merits/demerits of the role of strike, agitation and legal approach in union¬management relations.
2. What role does mutual trust play in building union-management relations?
CASE III
COMPETITION AHEAD: VSNL AT CROSS ROADS
The telecom sector had been functioning as a typical government department right from its inception. With the Department of Telephones (DoT) being under the exclusive control of the Ministry of Communications, Government of India (GO!), the system functioned more as a monopoly., With the advent of the LPG process (liberalization, privatization and globalization) in the early nineties, the telecom department went through a phase of modernization. A number of new and sophisticated electronic exchanges were installed which enhanced the capacity and lead to the disappearance of waiting list for telephone connections. In a landmark decision in 1995-96, the Government of India threw open its gates for private players in the area of cellular services. LCG and ACG were the two major players to enter this area in Karnataka region, while DoT decided to remain as an observer and continued as a provider of basic services only. Subsequently the Internet, ISD and other services were also opened to private participation.
The year 1998 saw the entry of Vikas Telenet (VTNL) as a basic service provider in the state of Karnataka. It launched its basic services in Bangalore district, the commercial capital of the state, in January 1998. The impact of this entry was felt by DoT as it resulted in a mass customer churning, challenging the market leadership of DoT in basic services. This growing challenge from VTNL made General Manager DoT Indore, R.L. Rawat realized the need for a comprehensive review of the competitive scenario. The situation faced by the Bangalore district was one of its kind. It was the only city where four companies were providing telephone services. LCG and ACG were providing cellular services while VTNL and DoT were providing basic services. To attract the customers all the providers had attractive tariff plans. DoT's market share was not affected by the entry of LCG and ACG as - they operated only as cellular service providers and their services carried a premium price. But the entry of VTNL as a basic service provider with attractive tariff plans showed a marked shift in customer base from DoT to VTNL specially in case of heavy users make it necessary for DoT to come up with similar competitive tariff plans.
General Manager Operations DoT Bangalore, S.N. Dutt, felt that improved services, customer care and proper pricing would help in winning back the heavy users who accounted for almost 60 to 65% of the total revenue. Keeping this in mind, a review of VTNL's tariff plans was done (Annexure I). The review revealed that the customers were getting a distinct price advantage in the rentals and free calls given by VTNL.
Along with this, a discount ranging from 2.5 to 16% was also announced by VTNL. S.N. Dutt formulated a comprehensive plan to guard DoT's market share. Officers were appointed as account holders and were responsible for rendering personalized customer care to commercially important customers hoping to retain them with better services. He also formulated a proposal of discounts which was forwarded to the Circle Head Office (Annexure-II) and a presentation was made by DGM - Marketing K.K. Sen, highlighting the rate at which customer churning was taking place and the need for implementation of new tariff plan. He pleaded with the senior officers that DoT needed to be at least reactive if not proactive, to sustain itself in the market. The proposal was well received and forwarded to the Ministry of Communications for approval. Responding to the need of the hour, the Ministry decided to offer a comprehensive discount of 2.5 to 16% for its heavy users. The scheme was introduced in Bangalore, which was extended first to the state of Karnataka and later on to the entire nation.
VTNL, which had so far been concentrating only on the heavy users, decided to now expand its network to get a wider customer base. With this view in mind, a number of promotional schemes were introduced e.g., web phone, a facility for internet usage where access to the net was provided at a cost of 60 paise per call only. It also announced free Internet facility for a year on every new connection. Besides this, VTNL went in for heavy promotion of its schemes. The careful wording of the schemes and enhancement of the number of free calls made the customers feel that they were gainers as far as rentals were concerned. These schemes when launched created very difficult times for VTNL during May -August 2001. By then, DoT had been Corporatised (October 1, 2000) and came to be known as VSNL. The Bangalore office was extremely hopeful that the corporatisation would facilitate. the implementation of new innovative schemes. For drafting a proposal of innovative schemes, VSNL first conducted a market research where in -the database of surrendered connections was used as sample and effort were made to identify the cause of disconnections. The survey revealed that of the total number of disconnections 30% were due to economic recession while 40% were due to customer turning in favor of VTNL while the remaining were due to a multitude of factors interplaying with one another.
To redeem the situation, VSNL, Bangalore prepared an innovative plan known as Business Special Plan - Plan 600-800, which offered 800 free calls on a monthly rental of Rs.600 only. The plan was put forward to Chief General Manager at Bangalore for approval. The persistent efforts of K.K. Sen bore fruits and the proposal was approved at the Circle level.
However, at the time of launch K. K. Sen realized that they needed TRAI's (Telecom Regulatory Authority of India) approval for going ahead. To ensure the unhindered approval of TRAI, modified tariff plans called 500-700 and an economy plan were suggested and sent for approval. While formulating these plans, an attempt was made to segment the market with an intention to target each segment with a customized/specific set of services. Plan 500-700 was targeted at high end users. Here, 700 calls were offered free on a monthly rental of Rs. 500 only. The economy plan carried a rental of just Rs.160 per month with a rate of Rs.l.20 per call. This plan was specially targeted at customers who had more of incoming calls and needed a facility for meeting their specific requirements. The rolling out of these schemes had an immediate impact with nearly 8,000 customers coming over to VSNL Bangalore. Along with these new tariff proposals a number of innovative strategies were introduced by VSNL, Bangalore.
• The initial registration amount was reduced and new subscribers were offered the facility of paying the amount in installments.
• Call centre functioning since February 2001 to deal with customer grievances was made proactive to ensure better customer care.
• Training was given to the front-end-people for updating their skills and changing the mindsets.
• Tele-shopping service was started which provided a one stop shopping facility, giving the customers the option to choose their telephone numbers, instrument and service.. Installation was assured within 48 hours.
• Phone-on-Phone facility was started wherein customers could obtain a connection installed by simply ringing up for it.
• A bill collecting facility was also introduced to further assist the customers.
• VCC Le., prepaid cards were introduced and even delivered at the doorsteps of the customers.
• Bill collection in the rural areas by mobile vans was introduced.
• Linemen were given pagers to facilitate prompt servicing of faulty telephone lines.
• Regular meetings between call centre members and maintenance staff were held to exchange information and solve grievances.
• For motivating and facilitating their employees, free telephone service was provided to all the employees.
• An advertising budget of Rs.30,00,000 (0.2% of the total sales revenue) was outlined for launching a comprehensive promotion programme using both indoor and outdoor media ensuring a good coverage of the market.
VSNL – Tariff Structure
Scheme Rental (Rs.) Free Colis Facilities
Business Plan - 500-700* 500 (Monthly) 700 Without STD
Economy Plan ** 160 (Monthly) Nil With STD
Standard Plan* 500 (Bimonthly) 150 With STD
* 0.80 Per Call ** Rs.1 .20 Per Call
VTNL – Tariff Structure
Scheme Rental (Rs.) Free Calls
Silver 300 349 (Monthly) 300
Golden – 500 499 (Monthly) 500
Questions:
1. What were the strengths and weaknesses of VSNL?
2. Do you think that VSNL should have changed its thrust from basic telephony to cellular services?
3. If you were the Deputy General Manager, what strategies would you have undertaken to deal with the competition?
Case IV
DISNEY’S DESIGN
The Walt Disney Company is heralded as the world’s largest entertainment company. It has earned this astounding reputation through tight control over the entire operation : control over the open – ended brainstorming that takes place 24 hours a day ; control over the engineers who construct the fabulous theme – park rides; control over the animators who create and design beloved characters and adventurous scenarios ; and control over the talent that brings the many concepts and characters to life. Although control pervades the company, it is not too strong a grip. Employees in each department are well aware of their objectives and the parameters established to meet those objectives. But in conjunction with the pre-determined responsibilities, managers at Disney encourage independent and innovative thinking.
People at the company have adopted the phrase “Dream as a Team” as a reminder that whimsical thoughts, adventurous ideas, and all – out dreaming are at the core of the company philosophy. The over all control over each department is tempered by this concept. Disney managers strive to empower their employees by leaving room for their creative juices to flow. In fact, managers at Disney do more than encourage innovation. They demand it. Projects assigned to the staff “ imaginers” seem impossible at first glance. At Disney, doing the seemingly impossible is part of what innovation means. Teams of imaginers gather together in a brainstorming session known as the “Blue Sky” phase. Under the “Blue Sky”, an uninhibited exchange of wild, ludicrous, outrageous ideas, both “ good” and “ bad”, continues until solutions are found and the impossible is done. By demanding so much of their employees, Disney managers effectively drive their employees to be creative.
Current Disney leader Michael Eisner has established the “Dream as a Team” concept. Eisner realized that managers at Disney needed to let their employees brainstorm and create with support. As Disney president Frank Weds says, “If a good idea is there, you know it, you feel it, you do it, no matter where it comes from.”
Questions :
1. What environmental factors influenced management style at Disney?
2. What kind(s) of organizational structure seem to be consistent with “Dream as a Team” ?
3. How and where might the informal organization be a real asset at Disney ?
Case V
“THAT’S NOT MY JOB” – LEARNING DELEGATION AT CIN-MADE
When Robert Frey purchased Cin – Made in 1984, the company was near ruin. The Cincinnati, Ohi-based manufacturer of paper packaging had not altered its product line in 20 years. Labor costs had hit the ceiling, while profits were falling through the floor. A solid quarter of the company’s shipments were late and absenteeism was high. Management and workers were at each other’s throats.
Ten years later, Cin – Made is producing a new assortment of highly differentiated composite cans, and pre-tax profits have increased more than five times. The Cin – Made workforce is both flexible and deeply committed to the success of the company. On-time delivery of products has reached 98 percent, and absenteeism has virtually disappeared. There are even plans to form two spin – off companies to be owned and operated by Cin-Made employees. In fact, at the one day “Future of the American Workforce” conference held in July 1993, Cin-Made was recognized by President Clinton as one of the best – run companies in the United States.
“ How did we achieve this startling turnaround ?” mused Frey. “Employee empowerment is one part of the answer. Profit sharing is another.”
In the late spring of 1986, relations between management and labor had reached rock bottom. Having recently suffered a pay cut, employees at Cin- Made came to work each day, performed the duties required of their particular positions, and returned home-nothing more. Frey could see that his company was suffering. “To survive we needed to stop being worthy adversaries and start being worthy partners,” he realized. Toward this end, Frey decided to call a meeting with the union. He offered to restore worker pay to its previous level by the end of the year. On top of that, he offered something no one expected: a 15 percent share of Cin-Made’s pre-tax profits. “I do not choose to own a company that has an adversarial relationship with its employees.” Frey proclaimed at the meeting. He therefore proposed a new arrangement that would encourage a collaborative employee-management relationship “Employee participation will play an essential role in management.”
Managers within the company were among the first people to oppose Frey’s new idea of employee involvement. “My three managers felt they were paid to be worthy adversaries of the unions.” Frey recalled. It’s what they’d been trained for. It’s what made them good managers. Moreover, they were not used to participation in any form, certainly not in decision making.” The workers also resisted the idea of extending themselves beyond the written requirements of their jobs. “ (Employees) wanted generous wages and benefits, of course, but they did not want to take responsibility for anything more than doing their own jobs the way they had always done them,” Frey noted. Employees were therefore skeptical of Frey’s overtures toward “employee participation.” “We thought he was trying to rip us off and shaft us,” explained Ocelia Williams, one of many Cin-Made employees who distrusted Frey’s plans.
Frey, however, did not give up, and he eventually convinced the union to agree to his terms. “ I wouldn’t take no for an answer,” he asserted. “Once I had made my two grand pronouncements, I was determined to press ahead and make them come true.” But still ahead lay the considerable challenge of convincing employees to take charge :
I made people meet with me, then instead
Of telling them what to do, I asked them.
They resisted.
“ How can we cut the waste on his run ?” I’d
say, or “How are we going to allocate the
overtime on this order ?”
“That’s not my job,” they’d say.
“But I need your input,” I’d say. “How in the
World can we have participative management
If you won’t participate?
“I don’t know,” they’d say. “Because that’s
not my job either. That’s your job. ?”
Gradually, Frey made progress. Managers began sharing more information with employees. Frey was able slowly to expand the responsibilities workers would carry. Managers who were unable to work with employees left, and union relations began to improve. Empowerment began to happen. By 1993, Cin Made employees were taking responsibility for numerous tasks. Williams, for example, used to operate a tin-slitting machine on the company’s factory floor. She still runs that same machine, but now is also responsible for ordering almost $ 100,000 in supplies.
Williams is just one example of how job roles and duties have been redefined throughout Cin-Made. Joyce Bell, president of the local union, still runs the punch press she always has, but now also serves as Cin- Made’s corporate safety director. The company’s scheduling team, composed of one manager and five lead workers from various plant areas, is charged with setting hours, designating layoffs, and deciding when temporary help is needed. The hiring review team, staffed by three hourly employees and two managers, is responsible for interviewing applicants and deciding whom to hire. An employee committee performs both short – and long – term planning of labor, materials, equipment, production runs, packing, and delivery. Employees even meet daily in order to set their own production schedules. “We empower employees to make decisions, not just have input,” Frey remarked. “I just coach.”
Under Frey’s new management regime, company secrets have virtually disappeared. All Cin-Made employees, from entry-level employees all the way to the top, take part in running the company. In fact, Frey has delegated so much of the company’s operations to its workers that he now feels little in the dark. “I now know very little about what’s going on, on a day-to-day basis,” he confessed.
At Cin-Made, empowerment and delegation are more than mere buzzwords; they are the way of doing business – good business. “We, as workers, have a lot of opportunities,” said Williams. “If we want to take leadership, it’s offered to us.”
Questions:
1. How were principles of delegation and decentralization incorporated into Cine – Made operations?
2. What are the sources and uses of power at Cin – Made?
3. What were some of the barriers to delegation and empowerment at Cin –Made?
4. What lessons about management in a rapidly changing marketplace can be learned from the experience of Cin – Made?
Case VI
HIGH-TECH ANSWERS TO DISTRIBUTION PROBLEMS AT ROLLERBLADE
When a manger finds that demand exceeds inventory, the answer lies in making more goods. When a manager finds that inventory exceeds demand, the answer lies in making fewer goods. But what if a company management finds that they just do not know which situation applies?
This is the situation that recently confronted management at Rollerblade, the popular skate manufacturer based in Minnetonka, Minnesota. Rollerblade has been one of the leading firms in the fast growing high performance roller skate marketplace, it matters a great deal for Rollerblade managers whether demand and inventory are in balance, or not.
Rollerblade was in a bind. The product literally could not be shipped out the door. The managers found that workers were not able to ship products because, as a result of poor storage structures, they could not find the products. Once they were found, overcrowded aisles, in addition to other space constraints, still prevented efficient shipping because the workers could barely manage to get the products out the door. “We were out of control because we didn’t know how to use space and didn’t have enough of it,” said Ian Ellis, director for facilities and safety. “Basically, there was no more useable space left in the warehouse, a severe backlog of customer orders, and picking errors were clearly in the unacceptable range,” added Ram Krishnan, Principal of NRM Systems, based in St. Paul, Minnesota.
The answer for Rollerblade was found in technology. High-tech companies have introduced a collection of computer simulations, ranging in cost roughly from $10,000 to $30,000, that assist managers in generating effective facility designs. With the help of layout Master IV simulation software, developed by NRM, Rollerblade Management was able to implement a new distribution design. As a result of the distribution improvement, Rollerblade was able to increase the number of customer orders processed daily from140 to 410 and eliminate order backlog. “Now we have a different business,” says Ellis. “The new layout has taken us from being in a crunch, to being able to plan.
Questions:
1. With retailers as their primary customers, what customer competitive imperatives could be affected by Rollerblade’s inventory problems?
2. How appropriate might a just – in – time inventory system be for a product such as roller skates?”
3. What opportunities are therefore Rollerblade managers to see FOR themselves as selling services, instead of simply roller skates?
Masters Program in Business Administration (BBA)
Note:
1. All questions are compulsory.
2. Use analytical description where required.
3. Cite references used if any while proposing solution to any question.
INFORMATION TECHNOLOGY MANAGEMENT ISMS ANSWER SHEET PROVIDED
Case 1
HOW GENERAL MOTORS IS COLLABORATING ONLINE
The Problem
Designing a car is a complex and lengthy task. Take, for example, General Motors (GM). Each model created needs to go through a frontal crash test. So the company builds prototypes that cost about one million dollars for each car and tests how they react to frontal crash. GM crashes these cars, makes improvements, then makes new prototypes and crashes them again. There are other tests and more crashes. Even as late as the 1990s, GM crashed as many as 70 cars for each new model.
.
The information regarding a new design and its various tests, collected in these crashes and other tests, has to be shared among close to 20,000 designers and engineers in hundreds of divisions and departments at 14 GM design labs, some of which are located in different countries. In addition, communication and collaboration is needed with design engineers of the more than 1,000 key suppliers. All of these necessary communications slowed the design process and increased its cost. It took over four years to get a new model to the market.
The Solution
GM, like its competitors, has been transforming itself into an e-business. This gradual transformation has been going on since the mid-1990s, when Internet band width increased sufficiently to allow Web collaboration. The first task was to examine over 7,000 existing legacy IT systems, reducing them to about 3,000, and making them Web-enabled. The EC system is centered on a computer-aided design (CAD) program from EDS (a large IT company, subsidiary of GM). This system, known as Unigraphics, allows 3-D design documents to be shared online by both the internal and external designers and engineers, all of whom are hooked up with the EDS software. In addition. Collaborative and Web-conferencing software tools, including Microsoft’s NetMeeting and EDS’s eVis, were added to enhance teamwork. These tools have radically changed the vehicle-review process.
To see how GM now collaborates with a supplier, take as an example a needed cost reduction of a new seat frame made by Johnson Control GM electronically sends its specifications for the seat to the vendor’s product data system. Johnson Control’s collaboration systems (eMatrix) is integrated with EDS’s In graphics. This integration allows joint searching, designing. Tooling, and testing of the seat frame in real time, expediting the process and cutting costs by more than 10 percent.
Another area of collaboration is that of crashing cars. Here designers need close collaboration with the test engineers. Using simulation, mathematical modeling, and a Web-based review process. GM is able now to electronically “Crash” cars rather than to do it physically.
The Results
Now it takes less than 18 months to bring a new car to market, compared to 4 or more years before, and at a much lower design cost. For example, 60 cars are now “Crashed” electronically, and only 10 are crashed physically. The shorter cycle time enables more new car models, providing GM with a competitive edge. All this has translated into profit. Despite the economic show down. GM’s revenues increased more than 6 percent in 2002. while its earnings in the second quarter of 2002 doubled that of 2001.
Questions:
1. Why did it take GM over four years to design a new car?
2. Who collaborated with whom to reduce the time-to-market?
3. How has IT helped to cut the time-to-market?
Case 2
Intranets: Invest First, Analyze Later?
The traditional approach to information systems projects is to analyze potential costs and benefits before deciding whether to develop the system. However for moderate investments in promising new technologies that could offer major benefits. Organizations may decide to do the financial analyses after the project is over. A number of companies took this latter approach in regard to intranet projects initiated prior to 1997.
Judd’s
Located in Strasburg. Virginia, Judd’s is a conservative, family-owned printing company that prints Time magazine, among other publications. Richard Warren. VP for IS. Pointed out that Judd’s “usually waits for technology to prove itself…. But with the Internet the benefits seemed so great that our decision proved to be a no-brainer.” Judd’s first implemented internet technology for communications to meet needs expressed by customers. After this it started building intranet of the significance of these applications to the company is the bandwidth that supports them. Judd’s increased the bandwidth by a magnitude of about 900 percent in the 1990s without cost-benefit analysis.
Eli Lilly & Company
A very large pharmaceutical company with headquarters in Indianapolis, Eli Lilly has a proactive attitude toward new technologies. It began exploring the potential of the Internet in 1993. Managers soon realized that, by using intranets, they could reduce many of the problems associated with developing applications on a wide variety of hardware platforms and networking configurations. Because the benefits were so obvious, the regular financial justification process was waived for intranet application development projects. The IS group that helps user departments develop and maintain intranet applications increased its staff from three to ten employees in 15 months.
Needham Interactive
Needham, a Dallas advertising agency, has offices in various parts of the country. Needham discovered that, in developing presentations for bids on new accounts, employees found it helpful to use materials from other employees’ presentations on similar projects. Unfortunately, it was very difficult to locate and then transfer relevant ,materials in different locations and different formats. After doing research on alternatives, the company identified intranet technology as the best potential solution.
Needham hired EDS to help develop the system. It started with one office in 1996 as a pilot site. Now part of DDB Needham, the company has a sophisticated corporate wide intranet and extranet in place. Although the investment was “substantial”, Needham did not do a detailed financial analysis before starting the project. David King, a managing partner explained. “the system will start paying for itself the first time an employee wins a new account because he had easy access to a co-worker’s information.”
Cadence Design Systems
Cadence is a consulting firm located in San Jose, California. It wanted to increase the productivity of its sales personnel by improving internal communications and sales training. It considered Lotus Notes but decided against it because of the costs. With the help of a consultant, it developed an internet system. Because the company reengineered its sales training process to work with the new system, the project took somewhat longer than usual.
International Data Corp., an IT research firm, helped cadence do an after-the-fact financial analysis. Initially the analysis calculated benefits based on employees meeting their full sales quotas. However, IDC later found that a more appropriate indicator was having new scales representatives meet half their quota. Startup costs were $280,000, average annual expenses were estimated at less than $400,000, and annual savings were projected at over $2.5 million. Barry Demak, director of sales, remarked, “we knew the economic justification…would be strong, but we were surprised the actual numbers were as high as they were.”
Questions:
1. Where and under what circumstances is the “invest first, analyze later” approach appropriate? where and when is it inappropriate? Give specific examples of technologies and other circumstances.
2. How long do you think the “invest first , analyze later” approach will be appropriate for intranet projects? When (and why) will the emphasis shift to traditional project justification approaches? (Or has the shift already occurred?)
3. What are the risks of going into projects that have not received a through financial analysis? How can organization reduce these risks?
4. Based on the numbers provided for Cadence Design System’s intranet project, use a spread sheet to calculate the net present value of the project. Assume a 5-year life for the system.
Case 3
Putting IT to Work at Home Depot
Home Depot is the world’s largest home-improvement retailer, a global company that is expanding rapidly (about 200 new stories every year). With over 1500 stories (mostly in the United States and Canada, and now expanding to other countries) and about 50,000 kinds of products in each store, the company is heavily dependent on It, Especially since it started to sell online.
To align its business and IT operations, Home Depot created a business and information service model, known as the Special Projects Support Team (SPST). This team collaborates both with the ISD and business colleagues on new projects, addressing a wide range of strategic occur at the intersection of business process. The team is composed of highly skilled employees. Actually, there are several teams, each with a director and mix of employees, depending on the project. For example, system developers, system administrators, security experts, and project managers can be on a team. The teams exist until the completion of a project; then they are dissolved and the members are assigned to new teams. All teams report to the SPST director, who reports to a VP of technology.
To ensure collaboration among end users, the ISD and the SPST created structured (formal) relationships. The basic idea is to combine organizational structure and process flow, which is designed to do the following:
• Achieve consensus across departmental boundaries with regard to strategic initiatives.
• Prioritize strategic initiatives.
• Bridge the gap between business concept an detailed specifications.
• Result in the lowest possible operational costs.
• Achieve consistently high acceptance levels by the end-user community.
• Comply with evolving legal guidelines.
• Define key financial elements (cost-benefit analysis, ROI, etc.).
• Identify and render key feedback points for project metrics.
• Support very high rates of change.
• Support the creation of multiple, simultaneous threads of work across disparate time lines.
• Promote known, predictable, and manageable work flow events, event sequences, and change management processes.
• Accommodate the highest possible levels of operational stability.
• Leverage the extensive code base, and leverage function and component reuse.
• Leverage Home Depot’s extensive infrastructure and IS resource base.
Online File W 15.11 shows how this kind of organization works for home depot’s e-commerce activites. There is a special EC steering committee which is connected to the CIO (who is a senior VP), to the Vp for marketing and advertising, and to the VP for merchandising (merchandising deals with procurement). The SPST is closely tied to the ISD, to marketing, and to merchandising. The data centre is shared with non-EC activities.
The SPST migrated to an e-commerce team in Aughust 2000 in order to construct a Website supporting a national catalog of products, which was completed in April 2001. (This catalog contains over 400,000 products from 11,000 vendors.) This project requires the collaboration of virtually every department in Home depot (e.g., in the figure). Also contracted services were involved. (the figure in online file W15.11 shows the work flow process.)
Since 2001, SPST has been continuously busy with Ec Intivatives, including improving the growing Home Depot online store. The cross departmental nature of the SPSt explains why it is an ideal structure to support the dyanamic, ever-changing work of the EC-related projects. The structure also consider the skills, strengtyhs, and the weeknesses of the It employees. The company offer both the online and offline training aimed at improving those skills. Home Depot is consistently ranked among the best places to work for IT employees.
Questions:
1. Explain why the team based structure at Home Depot is so successful.
2. The structure means that the SPST reports to both marketing and technology. This is known as a matrix structure. What are the potential advantages and problems?
3. How is collaboration facilitated by IT in this case?
4. Why is the process flow important in this case?
Case 4
Dartmouth College Goes Wireless
Dartmouth College, one of the oldest in United States (founded in 1769), was one of the first to embrace the wireless revolution. Operating and maintain a campuswide information system with wires is very difficult. Since there are 161 buildings with more than 1,000 rooms on campus. In 2000, the college introduced a campuswide wireless network that includes more than 500 Wi-Fi (wireless fidelity: see chapter 6) systems. By the end of 2002, the entire campus became a fully wireless, always connected community – a microcosm that provides a peek at what neighborhood and organizational life may look like for the general population in just a few years.
To transform a wired campus to a wireless one requires lots of money. A computer science professor who initiated the idea at Dartmouth in 1999 decided to solicit the help of alumni working at cisco systems. These alumni arranged for a donation of the initial system, and cisco then provided more equipment at a discount. (Cisco and other companies now make similar donations to many collages and universities, writing off the difference between the retail and the discount prices for an income tax benefit.)
As a pioneer in campuswide wireless, Dartmouth has made many innovative usuages of the system, some of which are the following:
• Students are developing new applications for the Wi-Fi. For eample, one student has applied for a patent on a personal-security device that pinpoints the location of the campus emergency services to one’s mobile device.
• Students no longer have to remember campus phone numbers, as their mobile devices have all the numbers and can be accessed any where on campus.
• Students primarily use laptop computers on the network. However, an increasing number of Internet-enabled PDAs and cell phones are used as well. The use of regular cell phones is on the decline on campus.
• An extensive messaging system is used by the students, who send SMSs (Short Message Services) to each other. Messages reach the recipients in a split second, any time, anywhere, as long as they are sent and received within the network’s coverage area.
• Usage of the Wi-Fi system is not confined just to messages, students can submit their class work by using the network, as well as watch streaming video and listen to Internet radio.
• An analysis of wireless traffic on campus showed how the new network is changing and shaping campus behavior patterns. For example, students log on in short bursts, about 16 minutes at a time, probably checking their messages. They tend to plan themselves in a few favourite spots (dorms, TV room, student centre, and on a shaded bench on the green) where they use their computers, and they rarely connect beyond those places.
• The student invented special complex wireless games that they play online.
• One student has written some code that calculates how far away a networked PDA user is from his or her next appointment, and then automatically adjusts the PDA’s reminder alarm schedule accordingly.
• Professors are using wireless-based teaching methods. For example, students armed with Handspring visor PDA’s equipped with Internet access cards, can evaluate material presented in class and can vote on a multiple-choice questionnaire relating to the presented material. Tabulated results are shown in seconds, promoting discussions. According to faculty, the system “makes students want to give answers,” thus significantly increasing participation.
• Faculty and students developed a special voice-over-IP application for PDAs and iPAQs that uses live two-way voice-over-IP chat.
Questions:
1. In what ways is the Wi-Fi technology changing the Dartmouth students?
2. Some says that the wireless system will become part of the background of everybody’s life – that the mobile devices are just an afterthought. Explain.
3. Is the system contributing to improved learning, or just adding entertainment that may reduce the time available for studying? Debate your point of view with students who hold a different opinion.
4. What are the major benefits of the wireless system over the previous wire line one? Do you think wire line systems will disappear from campus disappear from campus one day? (Do some research on the topic.)
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