The November 2017 Management Case Study pre-seen that we are dealing with is based on the company ZedEx Office Furniture
- You are a Finance manager at ZedEx
- At this level, you are acting as an intermediary between the operational and strategic levels of management.
- You will consider relatively longer-term decisions compared to OCS such as investment appraisal, pricing decisions and so on.
- The accounting information would be more complex and would possibly include group accounting, consolidation, sources of finance, capital structure, cost of capital.
- Topics from E2 such as project management, formulation of strategy, relationship management are crucial as well.
Technical skills would be tested from the subjects E2, P2, F2. The technical component in MCS is 39%. The other three skills: business, people, and leadership are 24%, 21% and 16% respectively.
- ZX is a privately owned company. It is possible for the examiner to give a question where it could state that ZX would have started listing themselves (going public). Therefore do not restrict yourself to characteristics that are only applicable to private limited companies.
If this is the case, specific aspects which apply to public limited companies such as consolidation, impact on share prices, certain accounting standards (such as IFRS 8) and so on would be required.
- ZX is involved in furniture design and manufacturing business. The company specializes in the areas of development, production, supply, and fitting of high-quality office furniture.
- The development could possibly be subject to customer specifications modeled using computerized technology. After finalizing the design it will be produced. The delivery and fitting are done by the company as well.
- The organization is possibly divided and properly organized to enable these four functions.
- It is mentioned that the company is into high-quality office furniture. High quality would mean ZX will be able to charge a higher price from their customers.
- They would also have to be careful with their brand image as it carries more of a premium brand. Therefore ZX would possibly be using a premium pricing strategy or a market skimming strategy.
- The company is catering to a wide range of corporate clients which infers that this is a business to business model possibly dealing with large companies.
- ZX is located in Kordia, which is a northern European country may be impacted by the EU. But instead of the Euro, they are using their own currency which is the Kordia Dollar (K$).
- Kordia being a developed country implies that corporates would be stronger in an economic sense. Also, the disposable income of customers in the country would be relatively high. This would be beneficial for a business model such as high-quality office furniture, especially for individual clients or households.
- ZX has a 34-year history which was founded by Henry Lund in a large town called Bartown. At the start in 1983, Henry employed eight staff based in a small workshop, producing office furniture. The first two years were very successful and are indicative of the production being moved to a larger premises by 1985 with the workforce almost doubling.
- As ZX has since grown into a multi-million K$ business, we can expect Henry Lund to be a very visionary entrepreneur. He has possibly played a pivotal role in guiding this company to where it is now.
- If Henry is still controlling the business after years of experience, it would be a huge strength for ZX
- In 1992 ZX made a sizeable investment in a manufacturing plant, on a new site close to Bartown. It is very important to have a spacious manufacturing plant especially if they have a wide range of furniture due to the production line and production techniques being different.
- In the long term, it would give them a lot of cost efficiencies when doing their own manufacturing which they have clearly identified.
- This site which is close to Bartown has easy access to major motorways and railway networks.
- The material could be brought into the plant on a rail. This is crucial for transporting large quantities as a train can occupy a large amount of material. The railway being less congested than the motorways is an another advantage.
- Being close to major motorways is beneficial as the completed furniture can be conveniently delivered to the customer.
The new production machinery purchased in 2010, is said to have allowed for a more streamlined and cost-effective production flow, as well as a much lower environmental impact.
The word streamlined means arranging in a logical and efficient sequence previously discussed in E1 under lean manufacturing or lean management.
- Purchasing of these machinery will definitely reduce the time taken and make the production smoother. Research has shown that using technology can be beneficial in the long term although the initial investment is higher.
- The impact on the environment will possibly reduce due to low wastage. This could be achieved by these new machinery by reducing the normal loss, which is the small inevitable part of the output that is lost in the process.
- It would also reduce carbon emissions due to the fact that old machinery would consume more energy.
ZX’s manufacturing plant is said to cover a large area which is adequate for production and placement of material.
- Although ZX is a hypothetical company, the image given on page 2 shows that there is a rail track next to the plant that could be used to conveniently supply the required material.
- ZX now employs over 150 people in total which started with just 8 workers.
- ZX could also be having a higher level of automation after the purchase of machinery in 2010. The showroom that is located on the site would give customers to purchase standard products or specify designs that can be transferred to the factory for production.
It is clear that ZX is a growing business.
ZX’s mission statement
- A mission statement sets out the direction as to what the company wants to achieve. It would be useful for company employees as a guide on what is expected from them. It is also useful if the company is going public to give the shareholders a brief idea of the company.
ZX’s mission statement is “We are committed to offering the very best in office furniture design and excellence in customer service.”
- This is excellent as it’s customer focused. ZX wants to make sure all the designs that are undertaken should be done smoothly and should satisfy the customer. In addition to the design, supply and fitting of the furniture should be done in the same manner. The quality and durability should be high and should fit the purpose.
- ZX’s mission is focused on developing its core competencies, in order to meet its core business principles. Whatever they are ZX needs to make it a priority that core competencies are being capitalized upon.
The core business principles are as follows,
To provide quality office furniture through highly skilled employees and investment in state-of-the-art manufacturing processes.
- Quality is an area focused in P2.
- Highly skilled employees can be achieved through good level of training. This gets connected to the balanced scorecard learning and growth perspective.
- State-of-the-art manufacturing refers to the latest technology. This would definitely reduce cycle times and make sure the quality is very high.
To exceed customers’ expectations in product design, delivery and cost through continuous improvement and customer interaction.
- Product design can be achieved by patiently listening to the customer and making sure that every element specified by the customer is recorded.
- Before putting the design into production, a reconfirmation of the customer specification should be done.
- A model or built prototype would be useful before production starts.
- Delivery wouldn’t be difficult as it’s close to major motorways. It is important to have good delivery vehicles to avoid damage during transportation.
- The cost seems to be reduced through continuous improvement. This relates to Kaizen costing which is making incremental changes to cost per unit.
- A good rapport should be maintained with the customer (relationship management in E2).
To maintain focus on quality design and production by continuous education and learning and the application of best business practices.
- In order to focus on quality design and production, it’s important to train the employees very well. A thorough training should be given regardless of the job role and should be done continuously.
- It is important to encourage continuous learning and development of their work areas.
- In addition job rotation could be implemented.
- The best business practices mentioned are relevant to ethics and making sure the most modern practices are used when carrying out production and other tasks.
To maintain the highest standards of integrity in interactions with all of our stakeholders.
- Integrity refers to being straightforward and honest in all transactions. Ethics is a heavily tested area for both OCS and MCS.
- Companies should encourage its employees to maintain integrity in all business dealings. They should accept mistakes they have made without passing the blame to another party. This would give the company a good and straightforward workforce.
- It will build the business and maintain a good relationship with customers, suppliers and other stakeholders.
The design process
- “ZX employs a team of office furniture design experts”. The word ‘experts’ would mean that before employment they would require a certain level of qualification and expertise.
- It is possible that ZX has a good training program for designers.
- Their services are offered either through 2D or computer-aided design which is 3D. It is relatively clear that 3D visualization would give a better understanding to the client on how to select and optimise the office layout according to their needs.
- Using 3D would mean sufficient investment on technology and software is required. As technology and software become outdated quite quickly it should be updated periodically.
- This could give a competitive advantage to ZX if they are the first in the industry to continuously improve on technological aspects.
- Designers at ZX will use 2D and 3D planning software to help clients select and optimise the layout of the wide range of office furniture products ZX offers.
- It would possibly take two days to get to understand what the customer requires. A trial and error approach could be applied until the customer is satisfied.
- Therefore it is important that the training given to designers focuses on communication as well. This is to avoid designers from showing any sort of arrogance by giving their own opinion on what is good. This should be done to ensure that clients feel that their needs are satisfied and not the designers.
- The customer specification is analyzed by the designers for making sure its placement is optimised and meets Kordia’s health and safety laws and guidelines. Even a slight non-conformance can be a reputational risk.
- It is mentioned that client order to completion is tightly monitored. The quality check performed falls into appraisal cost in the Total Quality Management concept.
- The reduction of lead time can be facilitated by streamline production process that was implemented in 2010.
This brings to an end of the first part of the pre-seen analysis.
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Watch the complete November 2017 Management Case Study preseen analysis below.
Джабба встряхнул бутылочку с острой приправой «Доктор Пеппер». - Выкладывай. - Может быть, все это чепуха, - сказала Мидж, - но в статистических данных по шифровалке вдруг вылезло что-то несуразное.