Analysis Of The Case Fine Coating Inc

Published Date: 02 Nov 2017

Contents

Short Cycle

The decision maker of the Fine Coating Inc. was Don Perucci. He is the chief executive officer as well as the president of FCI. The main issue that arose was that with increasing operational costs of FCI, quality and price were decreasing .Customers were persuading Perucci to implement the electronic data interchange as the cost was increasing .The issue arises and the company needs to install the system of EDI to satisfy its customers. It builds up the pressure on the company, changing the whole system was a risk for the company. If the company doesn’t install EDI, it would be dangerous and competitors will get the advantage. This issue acted as an opportunity for FCI to invest in this system and benefit the company as it will also decrease their operational cost in long term.

The issue arose because of the absence of EDI system. It was a family business and it started with one plant only, hence the installment of the EDI system was not possible. The decision should have taken place at the right place at the right time. Perucci should gradually review the whole system and change it according to the conditions and situation prevailing at that instant. There was great amount of work to be done inside the company, the transfer of parts from one plant to another, keeping the records of customers, the crates and their deliveries, and the record of billing and sales, which was supposed to be done on daily basis. The plant manager prepared the production plan, based on the customer parts received and their expected delivery dates. All these tasks were done on a daily basis. The company must have some computer system to handle all the tasks; this will make the delivery system much more reliable and stronger. This would help the company get the competitive advantage to differentiate itself from others. Understanding the competitive advantage of a company over its rival companies is the key to creating a dominant position in the market. The business plan that has been sketched as an outline of the future progress of the business should incorporate competitive advantage management. Without it, the business plan is incomplete and will be ineffective as well (Worth, 2011).

Long Cycle

There were many immediate issues with FCI just like every newly established company. There were three main issues which came into existence immediately after the formation of five plants of FCI.

Perucci doesn’t have any formula to calculate the profit per order. He generalized everything on the basis of rule of thumb; he was not sure about the earning against every order. This type of attitude is not good for any company to sustain itself for the long term. There must be proper strategic planning for every step in an organization. There was no proper planning for the transfer of parts from one plant to another for coating and cleaning. The company should put specific machines together for example the machines for cleaning, dusting and coating must be placed in one plant. This issue has medium strategic importance for the firm. The company must deal urgently with this issue to avoid further problems because it has medium urgency level at the moment which is a level of concern

The second issue was the cost structure of FCI; it was affecting the company negatively. The competition rose enormously and it had affected the growth of FCI. They decreased their prices to increase their growth rate. To solve this issue FCI must develop a strategy to get the lead against their competitors. A focus on the management of competitive advantages will help you promote your product and service by implementing effective marketing strategies. Promotion of product and service plays an instrumental part in the marketing of your business. (Worth, 2011). One of the requirements of competitive advantage management, continual assessment of your product and service strategies, will help you sustain your edge over your competitors (Worth, 2011). This problem has medium strategic importance for the company. It has high urgency level for the company

Other coating companies have certification of IOS 9002 and QS 9000.This certification was becoming very important in industry and FCI does not have this certification. They have applied for certification but this would increase the paper work by two folds and FCI doesn’t have any computer system to keep the records in formal way. All other companies have EDI system. FCI should have implemented the EDI system before applying for certification. This was high strategic importance issue. It has urgency level, it must have solved urgently.

Cause and Effects

There were some long term issues building pressure on the company. There were environmental pressures which needed to be resolved urgently. Chemicals are used for coating purposes which have bad effects on environment. The environment protection agency (EPA) set certain limits for each type of pollutant. Any of them violating those limits would cause penalties to the company. FCI maintained a record of all chemicals drawn from the inventory but the entire withdrawn chemical was not used as a coating process right away. The composition of the chemical was tested in every machine; this needs rapid calculations and record updating. This issue builds extra pressure on FCI, but this type of pressure is developed over every coating company. The EPA members can come visit your company anytime and the company is answerable for any type of irresponsible behavior. The use of chemical cannot be stopped and the company cannot ignore its negative effects on atmosphere.

Qualitative and Quantitative Analysis:

The qualitative and quantitative analysis of any company is very important to guess the success of the company. Qualitative research is used to explore and understand people’s beliefs, experiences, attitudes, behavior and interactions. It generates non-numerical data – for example a customer’s description of satisfaction rather than a rating using a numerical scale. Techniques like focus groups and in-depth interviews are commonly used in qualitative research fieldwork to document a variety of experiences, or in studies about how an organization is functioning, revealing views and experiences of test subjects (Chris, 2011).

Every other coating company has already installed the EDI software. FCI’s customers wanted to use EDI to send request for bids, orders, queries, delivery schedules, rerouting information and payment, they also wanted to use EDI to receive bids, responses to queries, delivery information, quality certificates and invoices. Perucci wanted to implement the EDI but the cost of integrating the manual system with EDI would increase tremendously. The replacement of paper system with EDI system is difficult task it requires training session for the workers and lower staff. FCI cannot ignore this as other competitors have this system but changing the company’s IT system was also very difficult. It needs to arrange special software department and a contingency approach to fulfill requirements of the applied EDI system.

Constraints and Opportunities:

Perucci had an IT friend he helped him developing the same system locally. After the development of this new system all the supervisors would need to train. The employees are not ready for EDI .Employees don’t have the right skills

Training and development of the employees is also really important. In the case of FCI when new software is installed, many of the employees were unable to operate that software hence training sessions were required.

Want to keep your staff motivated about learning new concepts? The quality and variety of the employee training you provide is the key to build motivation. There are several reasons for employee training which range from new recruits induction training about operations, to introduction of a new concept to a workgroup and to bring a new computer system (Bodimer, 2012).

There are some major root causes of different problems. It is very important for a company to identify its weakness’ and problems and resolve them as soon as possible. In business, failure is part of the game, but this reality is often taboo in the social sector. At Root Cause, Phil Buchanan of the Centre for Effective Philanthropy provided his thoughts on the importance of learning from history from successful philanthropic cases. But just as importantly as this, it is critical to learn from failures where examples are often more difficult to identify (Brown, 2011).

In this case the root of all the problems is not unique; there are many causes behind different type of problems. The one major problem which causes many other issues is that there is no proper way of keeping the data and records .There is a lot of work, 5 plants working at the same time, large number of employees and many customers but the company does not have any proper software to keep all the records and information .If anyone needs any kind of brief information of certain type of data he or she cannot access the information easily .This problem is related to the IT department of the company. It is a qualitative cause; it can be removed by implementing local software made by the friend of Perucci.

Every business or program must address well-defined objectives which will add value, either directly to the bottom line or toward the achievement of the organization's goals and objectives. Records management programs must manage organizational information so that it is timely, accurate, complete, cost-effective, accessible and useable. Better information, at the right time, makes better business. Records management programs are not generally an organization's primary business, and even though RM programs don't usually generate income, the following are the most important reasons to set up a good records management program in your office anyway (US EPA, 2011).

The second main cause behind the problems is the environmental pressure which includes the limitation on the use of chemicals. This is not a qualitative or quantitative problem. Another problem is the competition between coating companies and their cost structure.

The main problem is training of the staff according to the new strategic system and tells them how to use the new software. Tell them the importance of the machine and its advantages .Train the people to use the EDA. This is a quantitative type of problem. The manpower is less in number and they are not skilled. The head of IT department must arrange certain training sessions of this system.

Everyone must sit together and communicate about the work. FCI lacks this property. Communication between managers and employees is an important issue in any organization. Employees want guidelines from their supervisors, and the management wants input from the entire team. Most companies have little trouble communicating downward, but getting information to flow upward is more of a challenge. When employees stay quiet about what they need, the negative results can include missed opportunities, delayed projects, and failed initiatives (Keefe, 2010).

Communication is a two-way process. Employees have as much responsibility as the management team for speaking up, setting expectations and requirements, and communicating barriers and opportunities. Encouraging employees to communicate with the senior team helps each group understand the other’s duties and what can be done given the budget and expectations (Keefe, 2010).

There are many other causes which include lack of workforce and experienced employees. The method of using the software is a big problem it needs special time of employees and managers. Train different employees to use the software, give them technique how to tackle the IT department responsibility.

Whether a company is small or large, communication is one of the most important parts of its infrastructure. When all of the employees of a business are not communicating effectively, there arises more room for misinterpretation, confusion and an unhappy work environment. The lines of communication for a company need to be open. When front-line employees feel like their voices are appreciated, the company will benefit (Dickinson, 2008)

Implement an anonymous employee communications survey where employees can give feedback about company policies and procedures. Follow up on the surveys with tangible changes that the company is making to address employee concerns (Dickinson, 2008)

Another problem is the cost structure of the company. Cost structure is really important for a company. Reducing costs are always necessary for companies, at every stage it is a must so that the company can generate more revenue. Business cost structures are of two broad classes; cost-driven and value-driven. Understanding these cost structures are a must, they differ significantly. Cost driven structures focus on reducing costs at every step, while value-driven are focused on creating value rather than the incurred costs at every step.

Value-driven structures focus on the value proposition and personalization element. Certain companies for their customer relationship model use this technique. They build a bridge with their clients; the value proposition explains that the company offers exclusive services.

Knowledge of the capacity levels associated with the existing fixed cost structure can also allow a business to increase its profits by lowering prices sufficiently to maximize the utilization of a fixed cost item. For example, if a company has spent $100,000 on a high-capacity automated machine and it is currently only being utilized 10% of the time, a reasonable action would be to obtain more work to increase the amount of cash earned from that machine, even at prices that might .normally be considered low. This type of pricing behavior is only possible if you have a detailed knowledge of the cost structure of a business (Accounting tools, 2011)

The price for EDI is about fifty thousand U.S dollars and the installation and monthly fees is about $30,000, while the local software developed by FCI is not so expensive. The cost of learning and guiding the employees is large in amount .It takes more time but it will help the company to grow hence it has long term benefits.

The products and services offered by FCI better than other coating services. The quality and standards of the products and services are really good. The use of quantitative and qualitative methods in evaluating and planning business related functions is paramount to business success. Good ideas and hard work are often unrepeatable, but proper application of pertinent analytical techniques can help assure that your company is successful by any measure. (Gabehart Valuation Services, 2009).

The qualitative and quantitative analysis of any company is very important to guess the success of the company. Qualitative research is used to explore and understand people’s beliefs, experiences, attitudes, behavior and interactions. It generates non-numerical data – for example a customer’s description of satisfaction rather than a rating using a numerical scale. Techniques like focus groups and in-depth interviews are commonly used in qualitative research fieldwork to document a variety of experiences, or in studies about how an organization is functioning, revealing views and experiences of test subjects. (Chris, 2011).

There are different ways to handle the problems regarding the performance of the company. FCI can also resolve its conflicts and problems through different ways. Finding alternatives for your business is one of the most difficult jobs. The alternatives suggested to FCI owners are as follow; instead of using the paper system for your records the company must have the computer system to store the whole data. I would have arranged the meetings and sessions to guide the employees about the EDI. With the help of IT engineer software will be taught to every employee. I would have increased the work force so that different plants can manage themselves easily.

Steps should be taken to enhance the performance of employees at every level. The CEO must develop friendly relations with all his employees in order to work with them. What is the CEO’s main duty? Setting strategy and vision! The senior management team can help develop strategy. Investors can approve a business plan. But the CEO ultimately sets the direction. Which markets will the company enter, against which competitors and with what product lines? How will the company differentiate itself? The CEO decides, sets budgets, forms partnerships, and hires a team to steer the company accordingly (Robbins, 2005)

Assessing Alternatives and Select Recommended Action

The best alternative is to build the software and give the access of this software to every employee. I have selected this alternative because it will increase the growth rate and profit. The market share will increase .It will enhance the cash flow and the structure of cost will be improved as well. The history of every order will be saved and it cannot be removed, this will provide us with better research and analysis. The record will be saved and can be accessed any time. It is more important than the acquisition of new plant in Mexico, as the already running plants must work more proficiently. By making company’s own software for data storage and customer services, FCI will win the customer satisfaction and competitive advantage over other companies. The price for developing software locally is less than the implementation of EDI. In my opinion the qualitative criteria is more significant.

Decision Criteria

The best alternative is to form an IT team and develop local software for the company in which all the requirements of storage must be fulfilled. The software must possess the following properties; large storage database, records of customers’ orders, bid for every order, details of employees, details of accounts department and the record of every machine installed in different plants. The implementation of newly develop software has been discussed earlier. According to the qualitative decision criteria, the suggestion to increase the manpower will result in better organizational structure

After the successful implementation of the software, training sessions will be held in every plant. These sessions will be mandatory for every supervisor. IT members will update the software every month and send the report to the owner. The already existing system will be synchronized with the new software to save the information and details of the company matters. After the successful implementation and trainings, employees will follow the new software system and every data records will be saved properly into computer systems.

Action and Implementation Plan

The importance of defining the course of action for any new project of your organization is very important. The role of every member of organization must be clearly defined. The managers and supervisors must arrange sessions after every two to three months, every member of organization must attend these sessions in order to get clear picture of upcoming projects. Design and schedule a series of values alignment sessions in which all members of the organization will participate. Schedule each member of the organization to attend a three-four hour session (Heathfield, 2009).

The course of action is defined in next few lines; CEO of the company has to take certain decisions on time. Don Perucci as CEO must take actions of implementing the computer systems in his plants urgently .He lacks the capability of taking decision in right place and at right time .He should form the IT department of FCI and manage the team effectively.

The general manager Mark Smith should take the full hold of any one of the department and handle it with his effective decisions. He should take care of customer services center .The networking between different plants must be made more effective. He should take the decision of implementing a system which could help in installing machines and keeping their data safe. This system is specifically needed for Warren plant urgently.