I would like help coming up with steps for these question. I would also like the
ID: 328533 • Letter: I
Question
I would like help coming up with steps for these question. I would also like the resources needed to complete each step in the process and the justification for the step.
Startegic implementation steps involved with vertical integration into a new market? (Can you include 3 steps and the resources involved and justification for the steps)
Steps involved with a Startegic alliance or aquistion of a firm abroad? (Can you include 3 steps and resources involved and justification for the steps)
Steps involved with implementing a just in time inventory system? (can you include 3 steps and the resources involved and the justification for the steps)
Explanation / Answer
Vertical integration can be forward integration, backward integration or balanced integration. Integration in business terms is the amalgamation of all the processes involved in a business from raw material stage to after sales stage. The type of integration a business should adopt would depend on its business. Backward integration for a Car sales company would be manufacturing of spare parts while forward integration would be offering after sales service also. A balanced integration would be implementing both the options on either side.
Let us take an example of a steel manufacturer. For vertical integration he should take the following steps :
1) Raw materials are an important factor for the stability of steel business hence backward integration by purchasing iron ore mines would be a wise decision. This would provide inputs at lower cost and dependable quantities so output can be maximised according to raw material mined.
2) Construction of rail road to deliver the raw materials to the manufacturing unit would be another wise investment in the long run as the construction and operation cost would be recovered over a short period, considering transportation by alternate means would be much more expensive. Backward integration.
3) Purchase of trucks to supply the manufactured material to the distributor network. This is also a commendable step in forward integration as it will ensure meeting supply deadlines and maintain monitoring and control over the supply system which is the backbone of the sales.
This overall approach would be balanced approach with two steps of backward and one forward integration the business has absolute control over its inputs and sales of outputs.
A startegic alliance is an agreement between two companies with common goals and business to come to an understanding on pursuing a common objective which is mutually beneficial to them.. They do not enter into a contractual or legally binding relationship but just agree to follow a set of guidelines which create a win-win situation for both. This alliance between companies headquartered in different nations is an international alliance.
1) Identification of strategic alliance partner on the basis of requirement. For example a company in the USA manufactures Laptops which it sells in India also. Due to non-availability of after sales service sales suffer greatly. Hence, the company identifies a laptop service brand in India and enters into a strategic alliance with it to provide after sales service to its customers. There is no legal contract just a set of guidelines, no pooling of resources but a win win situation results for both parties.
2) Setting down clear cut guidelines for the alliance to ensure success of the alliance. For example it is important to decide factors like in case of hardware issues how is replacement of the parts or laptop to be done, what part of the service charges will be shared by the manufacturer and what is the spares backup provided by him. The extent of liability of the service company and the manufacturer for the product. It is mandatory to write down clear cut guidelines which impact business as ambiguity could severely impact the alliance as well as result in serious implications like loss of existing sales in the area.
3) Identify further areas in which the partners can work together to improve profits by combined efforts. For example in this scenario it would be sensible to allow the service partner to handle marketing of the product in that country as they have the required infrastructure and better knowledge of the domestic markets to make effective inroads into existing customer base and overturning competition.
A just in time inventory system cuts cost by avoiding holding of huge inventories and ordering inventory only just when it is needed. This is mostly used by producers whereby raw materials are or inputs are ordered just when needed. This system is very dependant on accurate forecasting of requirements and poses a high risk if forecasting is inaccurate by delaying the entire manufacture process. Its advantages are reduced cost by not requiring warehouse facilities and no blocking of capital in huge inventory.
1) Identify the exact demand of each product and the time lapse make an inventory production plan wise of the entire requirement for the month with a daily break up. For example the laptop manufacturer manufactures n laptops daily and this requires at different times x hard drives, y RAMs, z dispaly units etc. An accurate monthly, weekly and daily requirement needs to be drawn up.
2) Identify the time taken to receive each part and compare with the requirement to analyse and arrive at the exact order quantity and schedule for each part.
3) To curtail and control the major rist of JIT system identify the spares which have maximum sensitivity to unforeseen delays and mainatain a 3 day requirement inventory for them to prevent production shutdown. To prevent losing out on sudden surge in demand a close monitoring of the markets and availability of a ready emergency procurement solution should be in place.