Project management assessment Essay Example | Topics and Well Written Essays - 2000 words

Project management assessment - Essay Example A project is acknowledged as unsuccessful if it fails to offer what was needed, in line with prospects. In other words, in order to be successful a project has to be completed within estimated budget, with required performance, and on time; as well as it has to offer the advantages valuable in the business scenario. However, the project requirements should be apparent and absolute. Unluckily, it is not that simple. In addition, the second element of definition of project success is that the project has to be completed along the lines of expectations (Pritchard, 2004; Lewis, 2006; Mind Tools Ltd., 2011). In addition, in many cases a project had to cross its initial or expected budget, but the project still was considered as successful. On the other hand, if a project complied with all the instructions which were in the wide-ranging project designs, but it was still considered as failure in view of the fact that it did not comprise the fundamental elements those were required by primar y stakeholders. Though, it does not look reasonable, but project success and failure is not directly about the facts, nor is it simply about what was delivered. But, it is regarding how the project has to be completed (Pritchard, 2004; Lewis, 2006; Mind Tools Ltd., 2011). ... In this scenario, majority of projects fail due to the changes in time, budget and various other restrictions that can take place in a project. Additionally, there are a number of unique attributes connected with the project that direct to unnecessary as well as inherent problems, those increases risk profile of a number of projects which makes others less dangerous. In this scenario, the risk profile of each project is at extremely high level and this is for the reason that the reality that a lot of projects do not convene their performance aims and objectives. In addition, it should be kept in mind that project management literature is paying more and more attention on significance of different methodologies that could help project managers achieve desired competence and success (Kerzner, 2003; Hughes & Cotterell, 2002; Schwalbe, 2005; DevTechnologies, 2010). Furthermore, the literature also outlines that almost all the projects that are carried out by businesses and institutes are executed in parallel with each other. As a result, there is a high level stress on project managers and project team associates inside corporations to tackle with the demands of these parallel executing projects. On the other hand, the human resources inside a corporation are partial as well as the intellectual capital that is united with the project demands and deliverables is even additional limited. Thus, when the number of projects executing in parallel grows then a net shortage of the trained team associates takes place, which takes toward the opposition of projects for the intellectual capital essential for attaining its deliverables as well as performance objectives (Kerzner, 2003; Hughes & Cotterell, 2002;

Wedgwoods Supply Chain Management Essay Example | Topics and Well Written Essays - 2000 words

Wedgwoods Supply Chain Management - Essay Example Rudzki et.al) Planning: A strategy is to be developed for the cost-effective utilization of resources required to develop the product that meets the demands of customer. The planning of the supply chain thus should be such that it is efficient, less costly and the products that are delivered are of high quality and value to customers. Source: The important thing is finding suppliers, who can effectively deliver the services or goods to the customers. An improvement in the relationship should be developed with the suppliers for delivery, payment process and pricing. In short, improving the processes for the management of inventories received from the suppliers including receiving, verifying shipments, transferring to the manufacturing facilities and authorizing payments to the suppliers. Making: This is the step, manufacturing step, where intensive study is required to improve the quality levels, production out-put and workers productivity. For the effective delivery of the goods, there should be scheduling of activities such as testing, packaging and preparation for the delivery. Delivering: This is referred to as logistics, there should be an improvement in the coordination of the activities such as taking the receipt of orders from customers, developing a network of warehouses, picking the carriers so that customers receive the products and setting up an effective in-voice system for payments. Returning: The most important and the problematic part of the supply chain that needs improvement is creating a network for receiving defective and excessive products from the customers and checking the delivered products which have problems and supporting customers with problems. Operation management issues at Wedgwood: The company adopted the inflexible push model which is driven by the forecasts of the expected sales which were generated centrally, and the challenge for the company is now that the company is finding hard, to match the high quality of the product with equal levels of service to the customers. According to the operations director of the company, when benchmarking was done with the other companies, they found out that there is a need for improvement in the area of customer service and responsiveness. The overdue orders were high, despite there were high inventory levels. The main objectives of the company is thus to reduce inventory, cutting the supply cycle time. The company therefore has decided to overhaul the supply chain processes to achieve the goals. As identified by the experts of operations management of the company, in three areas of the supply chain. Dealing with customers and order fulfilling is the first one, the second area is operations in the manufacturing and supply, the third one is introducing new products To tackle the problems, the company formed different teams to tackle each area, the teams were instructed to look into the key processes which are existing and bench mark them against the other parties so that they can redesign. The teams were supported by the methodology and expertise from the consultancy wing of the Texas instruments. The main objectives of the company are reducing the inventory, cutting the supply cycle time and overall improvement of the customer services. (Buy IT, 2002). Key performance objectives at Wedgwood: Existing model has been changed to the pull model driven by the real demand from the customers, even this new

The Management of Industrial Relations

The Management of Industrial Relations How Has The Management Of Industrial Relations In Britain Changed In The Last Three Decades? What Does This Tell Us About The Respective Roles And Influence Of Employers, Management, Trade Unions And The State In Industrial Relations? This paper attempts to examine the changes which have taken place during the 1980s, the 1990s and the period 2000-2010 within the field of industrial relations. According to Edwards (2003:9) The employment relationship is by definition a relationship between an employee and an employer this direct relationship may be mediated by the two other key institutions to IR, the trade union and the state. Therefore this essay will also seek to explore the respective strategies, roles and powers of these actors. The paper has two sections; the first one represents the 1980s and the 1990s whereas the second one represents the period from 1997 into the last decade. In the first section the essay starts by describing the interventionist role that the Conservative government of Margaret Thatcher adopted when it came in power in 1979. The legislations passed by the government constitute the reason of the development of very confrontational industrial relations throughout the two decades as they caused an imbalance of power in favour of the management and against trade unions. After seeing the legislative initiatives launched by the government the paper will attempt to describe the advantageous position of managers and employers who managed to re-exert managerial prerogative and to impose harsh managerial strategies. With the power always on their side managers imposed their own â€Å"rules† in the employee relations and showed a preference for individualism (employee/management relationshi p) rather than collectivism (union/management relationship) as they saw benefits such as greater flexibility and greater control over employees. Managers in the UK also start placing attention to HRM policies in the 1980s and seek to implement them in an effort to achieve business goals. But evidence suggests that they failed to implement appropriate Human Resource Management strategies. After that this paper will examine the decline in union membership, in unions ideology and therefore the decline of their overall power. In the second section of the essay we will study the period during which â€Å"the New Labour† was in power. In its effort to put an end to the special relationship it had with the trade unions in the past and to promote neo-liberalism the â€Å"New Labour† kept most of the legislation of the previous government but also established its own. Its main goal was to promote workplace â€Å"partnership† which meant that all actors; employers, employees, trade unions and government would work in collaboration to obtain mutual benefits. The strategies implemented by the government in order to promote workplace â€Å"partnership†, on the one hand helped in fostering employee involvement and communication within the workplace and on the other hand helped unions to reassert some of their lost power. During the period 1979 and 1997 the government clearly allied itself with the side of managers and employers in an effort to protect capitalism (Salamon 2000:92). Later on we will see that the alliance between employers and government against trade unions and the unequal distribution of power meant the beginning of an adversarial employment relationship and industrial relations. Committed to its liberalist/laissez-faire ideologies the Conservative government of Margaret Thatcher which came in office sought to achieve one goal: to aid management to reassert its authority and power by constraining the power of trade unions. By adopting a very interventionist role the government proceeded with the launching of eight legislations within thirteen years and targeted at curbing unions ability to organise, their ability to pursue industrial action and particularly strikes and it interfered with their internal affairs (Salamon 2000:103). Salamon (2000:65) itemises a number of laws passed by the government during the period 1989-1997 and which account for the decline of the power of trade unions: The Thatcher Conservative government abolished the closed shop and removed the statutory recognition procedure. It prohibited secondary industrial action. Trades unions were required to ballot union members and proceed to industrial action only with the consent of the majority. The government legally enforced the trade unions to use the ballot process for their national elections. Although the costs of conducting ballots were initially subsidised by the government, the Trade Union and Employment Right Act of 1993 put an end to the provision of funds but the procedure was still legally required (Salamon 2000:152). Furthermore they were considered responsible for unlawful actions authorised by unions officers, committees or shop stewards unless they denounced them. Unions were deprived of their right to punish members who opted not to partake in industrial action even if it was legal. In addition to all these, it was easier for employers to fire employees who took part in strikes. In addition to the legislative restrictions that the government imposed on trade unions it also proceeded with the abolishment of tripartite institutions on which the trade unions were represented such as the MSC and the NEDO (Salamon 2000:65). During the 1980s and 1990s managers saw the balance of power shifting towards their side. This was due as we have seen to national legislation suppressing trade unions. Salamon (2000 :248) argues that this reassertion of power as well as the economic climate with the economic recession, the high rates of unemployment and the competition taking place at the international level prompted managers to adopt a managerial style called macho management. Purcell (1982) cited in Salamon (2000:248) explained macho management as the style of tough managers who neglected and scorned trade unions and whose ultimate interest was to manage and establish order. They were characterised by a great unwillingness to change their policies, to negotiate and to make concessions and they preferred dealing directly with employees rather than through unions. This desire to deal with employees on a individual basis also accounts for the a shift from collectivism to individualism. In other words managers used to have to deal with employee issues through their intermediaries that is to say bodies that represented them, such as trade union whereas now they have to confront employees directly (Salamon 2000:66) . Salamon (2000:82) also explains that the new strategies initiated by the management during the period meant that employees were now engaged through individual contracts and whose terms and conditions were different than the rest of their colleagues and that their reward was dependent on their individual performance. Salamon (2000:66) explains that managers embraced individual employment relationships rather than collective ones as they were more flexible. This flexibility and this emphasis on individualism was also explained by managers attempt to introduce Human Resource policies which made their apparition in the UK in the early 1980s and promised managers what they sought: organisational effectiveness and increased performance (Salamon 2000:234) by eliciting employee commitment. According to Salamon (2000:235-236), these strategies were also ways of enhancing managerial authority because employees were directly now accountable to managers, managers were more able to obtain control and now had the freedom to design strategies that would limit empowerment conceded to employees, and set some boundaries to the terms and conditions of the employment contract. Generally from now on they had more freedom in the decision-making while at the same time employees were committed to them. Once more Salamon (2000:239) explores the possibility that managers took advantage of HR practices in order to manipulate employees and claims that in reality managers only desire is to be able to do their work with the slightest possible confrontation from employees. Kessler and Purcell (2003) claim that there is little evidence, from the WIRS data, demonstrating that organisations were willing or had the potential to use HRM strategies. Instead during the period most managers opted for Bleak House strategies. They also claim that managers mostly resorted to opportunistic and cost minimisation strategies. On the same tone, Blyton and Turnbull (2004:129) explain that the economic downturn during the 1980s and 1990s, the acute international competition, the low skills equilibrium in which the UK was entrapped and the feelings of job insecurity made it impossible for employees and employers to develop the trust needed for the implementation of HR practices and therefore the management relied on opportunistic and pragmatic strategies. The issue of employee voice and most particularly employee representation elicited great attention by the government and the management when the European Court of Justice held in 1994 that the legislative initiatives of the government run counter to the EU directives and that the UK had ended up not respecting employee collective consultation rights. The Conservative government was enforced to amend its regulation which had come to mean that managers should either recognise unions at their workplace or/and set up other forms of collective representative bodies elected by the employees. This prompted some organisations too set up work or company councils. The creation of these councils raises three issues. First of all, they might be a threat to employee rights because managers might use them to by-pass trade unions. Secondly, they are not legally recognized so they have no rights and thirdly, employee representatives in these councils have not the training or experience of trade unio n officials and might therefore not elicit the attention and the respect of the management (Salamon 2000:188). As an example Salamon (2000:189) presents the case study of Bristol West, a non-unionised company which in 1994 introduced the â€Å"partners councils† which were employee representative bodies which allowed employees to express their opinion on the firms Human Resource issues. Although the councils were reserved only for employee representatives the company tried to ensure that there was a professional or manager with them. However, according to Ackers and Payne (1998) cited in Salamon (2000:260), it turned out that the reassertion of managerial authority , the HRM strategies introduced aiming at promoting individualism and employee voice and participation and the decline of powers of trade unions did not give to managers what they sought: order, cohesion and employee commitment. That is why they turned to the â€Å"workplace â€Å"partnership approach in pursuit of these goals. The governments hostile position towards the trade unions as well as the harmful measures it took against trade unions had as subsequent repercussion the decline of union membership. This is illustrated by the figures presented by Salamon (2000:67) according to which during the period 1879-1998 union membership dropped by 5,5 million and by the figures provided by Blyton and Turnbull (2004: 139) which demonstrate that during 1979 and 1997 the number of trade union members fell by over 41 per cent. Nevertheless Salamon (2000:109, 111) also reckons that union membership experienced a striking decline in membership in the 1980s and 1990s because of the changes that took place in industrial and employment structures. The economic conditions of the time meaning low inflation and high levels of unemployment kept workers away from joining unions. Unions used to recruit as members full-time male manual workers who worked in large manufacturing firms as well as the public sector. The shift fo r the manufacturing sector to the service sector, the reduction in the size of firms, the rising female and part-time employment had meant that the trade unions not only lost members but they also had to turn to other types of industries and organisations, in order to seek members, which had not been easy because these organisations had no tradition in union organisation. Diamond and Freedman (2001) cited in Blyton and Turnbull (2004: 143) mention that many unemployed union members had no inducement in maintaining their membership because trade unions were not concerned by people who were on welfare while Cully et al. (1999: 212-213) cited in Blyton and Turnbull (2004:143) argue that other employees contested the unions ability to offer benefits and that is illustrated by the WERS98 data according to which only a 46 per cent of union members believed that trade unions actually provided them with benefits. The trade unions collective consciousness was also negatively affected by the governments legislative measures aiming to (Salamon 2000:152) promote ‘responsible unionism, ‘return the union to its members and protect the individual member against union ‘tyranny. Through the Employment Act of 1988 union members obtained individual rights to inspect the unions financial data to ensure that funds were not spent on illegal actions, to resort to the help of court in case the union would be pursuing unlawful industrial action affecting the member, to be protected from being punished by the trade unions whenever they refused to partake in industrial action even if it was lawful. Salamon (2000:153) argues that now the individual member had the right to refuse to accept and to call into questions decisions of the unions even if they were taken democratically. The individual member could go against the unions. Salamon (2000:124) also argues that the ideologies on which trade unionism relies with the most important one its â€Å"collective solidarity† had also declined due to the fact that trade unions started offering â€Å"modern services† to employees individually. The decline in union membership and collective solidarity that have been already discussed overwhelmingly account for the erosion of power of trade unions. Nevertheless other factors have also contributed. Trade unions found themselves not only confronted to managers and employers who have always been reluctant to cooperate but they also had to face the governments hostility (Salamon 2000:111). Moreover the trade unions were further alienated due to the shift from the concept of collectivism endorsed by trade unions to the concept of individualism embraced by the managers who introduced HRM practices such as direct manager/employee consultation and information or performance-related pay. Salamon (2000:118) discusses the loss of the power of conducting collective bargaining by trade unions due to three main reasons. First their collective bargaining power was curbed by the legislation launched by the Conservative government. Secondly there was the decentralisation of collective bargaining, meaning that the terms and conditions obtained in collective bargaining were no longer applicable across an industry. Furthermore the managers tended to prefer deciding the terms and conditions of employees based on an individual basis as well as to opt for a system of remuneration based on the individuals performance or ability. Millward et al. (2000:197) cited in Blyton and Turnbull (2004:150) claim that during the period 1984-1998 the proportion of employees covered by collective bargaining dropped from 70 per cent to 40 per cent. During the 1980s and the 1990s trade unions were on the defensive. They tried to survive during the 1980s and early 1990s because of the unfavourable economic, political and organisational conditions. In other words they had no choice but to make concessions in order to be become more attractive to managers. These concessions included the establishment of single-union agreements with no strike activity and employee councils (Salamon 2000:130). In 1997 The â€Å"New Labour† came in power with the intention to promote its neo-liberalism strategies. In the past the Labour party had close links with the trade unions with the most significant one their financial contributions to the party (Salamon 2000:122). However when it took over in 1997 it attempted to distance itself from the trade unions and in its intention to do so, it maintained most of the legislative initiatives of the predecessor government. Nevertheless it launched two laws in support of the trade unions. The first of them was the National Minimum Wage Act of 1998 which allowed for the introduction of a national minimum wage (Salamon 2000:68). The second one was the Employment Relations Act in 1999 which allowed for the establishment of a statutory procedure permitting union recognition, provided that an employer could not refuse to employ, punish, fire or discriminate against an employee who is or intends to join a trade union or has taken or intends to pa rticipated in industrial action. The legislation provided for time off from work for trade union officials of independent recognised trade unions without pay loss in order for them to respond to their responsibilities within the union and also allowed for union members to be accompanied by trade union officials during grievance and disciplinary procedures (Salamon 2000: 197). The labour government also signed the social protocol of the treaty of Maastricht and as a result the European Working Time directive as well as the European Works Council directive became part of the UK law (Hyman 2003:54). In addition, the government passed legislation regarding part time employment and parental leave. From the late 1990s towards the beginning of the 2000-2010 period the UK workplace experienced the emergence of the notion of â€Å"partnership† a notion that alludes to the idea that the state, employers, employees and trade unions can collaborate in order to achieve common targets and benefits (Salamon 2000:21). The emergence of the workplace partnership approach was allowed when the â€Å"New Labour† came in power. This approached seemed to be desired by the main actors involved in industrial relations who saw it as the solution to their concerns. The government was determined to eradicate the conflicts in the UK workplace, trade unions saw it as a way of striking an alliance with the management and the government in the pursuit of common benefits and the management saw is as way of achieving order and cohesion at the organisation level as they wished (Salamon 2000:260). Salamon (2000:263) highlights two attributes of the â€Å"partnership† approach which are the commitment for actors to cooperate in order to enhance organisational effectiveness and performance and the recognition that employers and employees have different interests and that is why they should use employee voice and communication mechanisms in order to foster their relationship. Blyton and Turnbull (2004: 253) mentions that during the last years the Labour governments wish to promote the aforementioned â€Å"partnerhip† and the European social policies and Britains effort to put in place the EC Information and Consultations Directive have resulted to an acute interest in various forms of employee involvement and participation. Apart from the improvements that took place during the previous two decades in the matter employee voice and employee representation with the set up of work councils (Salamon 2000:188) , the new governments decision to accept the European Work Council Directive has strengthened even more employee voice but most particularly the adoption by the management of direct forms of participation. Kersley et al (2006:139) searched for evidence of direct forms of communication such as face to face meetings, written two-way communication and downward communication and found out that 63 per cent of all workplaces offered face- to- face meeti ngs as well the opportunity for feedback, and that this figure covered 67 per cent of all employees. They also argued that the WERS2004 data demonstrated that there was a decline in union representation and an increase in direct forms of communication. Although union membership and union recognition had fallen between 1998 and 2004 this decline was much smaller than during the 1980s and 1990s. Between 1998 and 2004 methods of employee representation dropped from three-fifths to approximately one half. On the contrary direct forms of communication were more common and sometimes they had increased (Kersley at al. 2006:143) This emphasis on employee involvement and participation is illustrated by the case study provided by Marchington and Wilkinson (2008: 407) who mention the example of Midbank a firm which won a Saturday Times award for implementing high commitment Human Resource policies and facilitating Employee Involvement and direct and indirect methods of Participation. More precisely, some of the forms of information dissemination as well as employee participation they adopted were the presence of a single union, consultation forums and company newspaper to which employees could contribute. Within the context of partnership Johnstone et al (2007) cited in Marchington and Wilkinson (2008:417) give us the case study of NatBank which signed a partnership agreement in 2000 with the recognised union (Unifi) in their effort to ameliorate the union-management relationship , to contribute to organisational effectiveness and performance, to work for the interest of employees, shareholders and customers an d to commit to the implementation of best practice HRM. The partnership has so far proved to be a success with some of the advantages being a better decision making, and improved employment relations thanks to better communication. From 1997 trade unions were given the opportunity to reassert part of their lost power and influence due to the favourable legislation launched by the â€Å"New Labour†. Trade unions were now able to abandon their defensive position of the 1980s and 1990s and to adopt one more proactive position. Salamon (2000:21) argues that trade unions considered â€Å"partnership† at work as a way of developing a more positive and proactive relationship with managers and play the part in order for the idea of â€Å"social partnership â€Å" to successfully work. This would simultaneously allow them to defend their members interests and to contribute on their part to the workplace and society (Salamon 2000:21). Munro and Rainbird (2004) present the example of the UNISON/employer partnership, a partnership concerning workplace learning and explain that the partnership does not only generate benefits for union members but it also generates benefits to employers who provide cost-effec tive and high quality development to employees through this partnership. The government also seems to be placing great emphasis on this partnership as it has passed legislation (Employment Act of 2002) allowing to Union Learning Representatives to take paid time off in order to carry out their duties and most significantly it has set up the Union Learning Fund. Moreover in 2007 the government conceded the management of the fund to Unionlearn within the TUC acknowledging in this respect the important role of unions in governmental strategies.(Hoque and Bacon 2008). This essay has endeavoured to examine the changes in the roles and in the exertion of power of the actors involved in industrial relations, and most particularly the roles of the government, of the trade unions, of the management and of employers, during the 1980s, the 1990s and the period 2000-2010. It has demonstrated that during the 1980s and the 1990s the legislative agenda of the Conservative government led in very confrontational and adversarial industrial relations as it increased the gap between employers power and trade unions power. Macho management, shift from collectivism to individualism and the attempt of the introduction of HRM practices are the most important processes of the period. In 1997 the â€Å"New Labour† which was elected in power committed itself to implementing the European social model, by promoting fairness and social justice in UK industrial relations as well as harmonisation by promoting the model of â€Å"workplace† partnership. References Blyton, P. and Turnball, P. (2004). The Dynamics of Employee Relations. 3rd edit., Basingstoke: Palgrave Macmillan. Edwards, P. (2003)(ed.). Industrial Relations: Theory Practice in Britain. 2nd edit., Oxford:Blackwell. Hoque, K. and Bacon, N. (2008). Trade Unions, Union Learning Representatives and Employer-Provided Training in Britain. British Journal of Industrial Relations, 46(4), 702-731. Hyman, R. (2003). The Historical Evolution of British Industrial Relations in Edwards, P. (2003)(ed.). Industrial Relations: Theory Practice in Britain. 2nd edit., Oxford:Blackwell. Kersley, B., Alpin, C., Forth, J., Bryson, A., Bewley, H., Gix, G. and Oxenbridge, S. (2006). Inside the Workplace: Findings from the 2004 Workplace Employment Relations Survey (WERS 2004). London: Routledge. Kessler, B., and Purcell, J. (2003). Individualism and collectivism in industrial relations in Edwards, P. (2003)(ed.). Industrial Relations: Theory Practice in Britain. 2nd edit., Oxford:Blackwell. Marchington, M. and Wilkinson, A. (2008). Human Resource Management at Work. 4th edit., CIPD Munro, A. and Rainbird, H. (2004). Opening doors as well as banging on tables: an assessment of UNISON/employer partnership on learning in the UK public sector. Industrial Relations Journal, 35(5), 419-433. Salamon, M. (2000). Industrial Relations, 4th edit., London: FT Prentice Hall.

Girl interrupted Essay -- essays research papers fc

Rory Boyan   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Writing 1  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  04/19/02   Ã‚  Ã‚  Ã‚  Ã‚  Considering all the treatment methods used at Mclean Hospital, harsh physical treatments were rarely productive. Methods such as seclusion, ice-baths, Electro-shock therapy, and even the Hospitals atmosphere itself can make one wonder how anyone came out of there better than they went in. It seems odd that people teetering on the edge of sanity were subjected to such horrible treatments. Although such treatments sometimes worked, it in no way outweighs the horrible side effects that usually happen.   Ã‚  Ã‚  Ã‚  Ã‚  One of these treatments is seclusion. It is as simple as it sounds but the side effects were not. Not only are the patients totally alone for however many days the guards wanted, but they are stripped of basically everything they have except clothing. It is more of a punishment than a treatment. If a patient acts out in any way or ran away for a day or two, off to seclusion they would go. When taking mentally unstable patients and putting them in solitary confinement all they can do is sit there and think crazy thoughts; so when they come out they were usually like zombies. â€Å"One of the worst things we watched, though, was Lisa coming out of seclusion two days later.† (Page 21). How can that help anyone?   Ã‚  Ã‚  Ã‚  Ã‚  Another type of treatment used is wrapping a patient in freezing cold sheets. It is possible, by a far stretch of the imagination, this could be used to calm down patients. If hypothermia is what made people sane, this should do the trick. The last thing about this is that, when the body gets cold, the immune system get weaker. It seems like they wanted patients to get physically sick too; maybe the nurses get commission on medication.   Ã‚  Ã‚  Ã‚  Ã‚  The worst treatment used is electro shock therapy, also known as ECT. This is when one is shocked by strong amounts of electricity, repeatedly, for however long the doctors decided to keep the patients there. There are a few incidences when ECT actually worked and completely cured a patient, but these were few and far between; the truth of the treatment is much worse. â€Å"In fact... ...er. After all the hel, these people were put through freedom seemed all the much better. It seems that after being there, anything is better than hospital life. Think of it this way, starve a man half to death, feed him nothing but bread and water, then give him a Ritz cracker. That will be the best cracker that man has ever eaten. On the opposite end of the spectrum you give a person Ritz Crackers everyday for the rest of his life, and he will despise them. The Hospital did not treat people as much as it did make them appreciate the society they were locked off from. This is why hospitals like this can thrive; the only treatment they have is appreciation for the life they take away from a patient. WORKS CITED PAGE Quote #1- Page 21-FREEDOM- Girl, Interrupted Quote #2- Page 80-SECURITY SCREEN-Girl, Interrupted Quote #3 Page 54-CHECKS-Girl, Interrupted   Ã‚  Ã‚  Ã‚  Ã‚  Girl, Interrupted- By Susanna Kaysen Copyright 1993 Originally published by Turtle Bay Books, A Division of Random House, INC, NY 1993 Web Pages . www.antipsychiatry.org Article on------- Psychiatry's Electro-convulsive Shock treatment A Crime Against Humanity ---Lawrence Stevens, J.D

Logistic: Inventory and Total Logistics Cost

Supply chain is a network of logistic systems. Logistics concerns one company's system. Supply chain includes different companies. E. G. Dell computer – the logistics is Just their company but the supply chain includes all the part suppliers. Their logistics system is a part of dells supply chain. It includes also the retailers and supplier. Other company's logistics included in Dell's supply chain. Logistics is an early version of the supply chain. Logistics originated in the US military. Flow of cargo (people, weapon in war is logistics. ) Organizing a course/seminar – logistics needed for success.Today all the successful companies find their competitiveness from logistics, not from the product itself. E. G. Walter (retailer, wholesaler, supermarket chain) – their competitive edge comes from logistics. They are not selling anything different from others. They have a superior logistics system. Logistics make them succeed. Dell also, service is good, price attrac tive – success comes from logistics. Another definition people define logistics differently but they mean the same thing. Slide Logistics/Concept 4 Instead of saying process, they say optimization, etc. Process of location.Says movement and storage of resources instead of saying goods/services and information. They call logistic activities economic activities. Transport is one of then, port services, production, storage, distribution, etc. – take place bet. The point of origin and point of destination and consumption. Logistics is about the 5 RSI. What are the 5 RSI? Logistics is about getting right goods at right place at right time in right form at right price. Military is really about this. In commercial entities we emphasize on the price a lot. This is also the definition of logistics.Right goods, right in quality in correct quantity. Different level of logistics. In-bound, out-bound logistics. Logistics of production (table, book, car, etc. ), there are two levels of logistics. Logistics within the production process – in the factory. How do you optimize the production within the factory? We call this operational logistics or workers together. How do you put temporary storage along the assembly line? All this is logistics. E. G. WHIM library – lack of space. How to maximize space? Library space layout. It's about logistics. Different factories have different layouts – this is logistics.We are interested in logistics before the production starts. The cargo coming into the factory and when the production is finished, the cargo moving out to the next step – all towards the final consumption. This is what we call in-bound and out-bound logistics. This is what we are interested in. Maritime transport takes part in inbound and out-bound logistics than for production logistics. We are interested in how to move material to production and from production to consumers. When we try to understand logistics, we look at some lo gistics questions for example a typical question is about where to find the raw material needed.Raw material may be in different places. Some places might have different quality and prices. The difference between that place and the production might be different and therefore remonstration time and cost might be different. Where to find energy supply? Labor supply? Should you move your factory offshore to benefit cheap labor? If you do that be careful that higher prices might have to be paid on other services for example transportation. Where to set up production bases? In shipping, where should the port be located? Where to build warehouse and distribution centre. E. . Toyota car has their distribution centre for the Nordic countries at the port of Mammal. Before that they had centre in all the countries. So many distribution centre, different logistics cost than if there is a concentration of activities. Where to have branch organizations? The answers consider a lot of activities i ncluding transportation. We are in maritime transport so we are affected by the customers decision. Other types of logistics questions for ex. How to transport from A to B and choice of transport mode – air sea, road. Egg. Oslo to Mammal – road, sea. Air, rail.Different modes of transport have different logistics implications. Ex field trips – logistics question, how to transport students – sea (too long), air, road, rail. How to transport container? Hub and spoke – benefit from economies of scale. More cargo handling costs. The best solution must be a logistics solution. Best way to transport cargo from A to B. Flow and storage from point of origin to destination to comply with customers' requirement. Moving from A to B different options – different solution. When should transport start – how long should it take. Route? Storage? How, when needed?Mat of cargo to be transported at one time? Economies of scale? Packing needed? Logistics is everywhere. Farmer from southern Sweden – buy fertilizer in Sweden, buy from Germany (expensive land transport), buy from US where its much cheaper, but he has to pay more transportation cost. Where to find the material? Emphasis is on maritime transport – movement of goods. Shipping co. Transport goods – need info to do so. Port and shipping concerned with flow and storage of goods. October 28, 2008 Session 2 Slide Logistics/Concept 9 There always has to be a logistics concept. And a logistics concept is what?It's about total cost concept. This is the most important concept. It looks easy but total cost concept is not always observed, so people make mistakes as a result. It is a customer service requirement. Logistics concept is also about outsourcing, integration, global about concept, it is also about processes. The processes we call drivers. It drives the logistics process. It can't all be about concept. It has to be something tangible. Logistics is abou t processes. We are doing these everyday, ex. Manufacturing and transportation, distribution, inventory control, procurement.These are all activities, but the difference between these and logistics are that we are doing these in an integrated manner under the concept of logistics. So we have the concept and the drivers. The difference between these activities and logistics, we are doing them under the total cost and the customer service concept, so this is relatively new. Third is IT. We call IT enablers – that enables us to do the processes under the concept of logistics. Sometimes we can't do the processes (drivers) without IT. Ex. Dell computers. They obtained their competitive edge from logistics.Logistics means to get a computer from the production to the customers without any retailers. No middlemen. Order online, design own computer. The aim of logistics is to minimize the total cost. Can only do this with IT tools. So the three components have to come together using t he IT tools. We need to understand the role of IT in the whole process. Ex. Just in Time system. This is Inventory control under the concept of egoistic using information technology. The 3 components have to work together. How do we take all these functions (MFC, transportation, distribution, warehousing, etc. In an integrated manner under the concept of logistics using IT tools. Ex. Individual delivery. Concept is to minimize total cost. Total cost is manufacturing, transport, didst. , etc. How do we minimize that? Use IT. Dell used IT to find out that their total cost will be minimized if they cut out the middle man. IT enables the cutting out of the middle man. Good online service. Shipping line is not making anything – it is a part of transport. Shipping companies as a company have logistics problems also. Shipping has a double role to play.Shipping is a part of the logistics chain of a customer, but at the same time they have their own logistics problem. Shipping's logis tics problems include arranging bunkers, choosing port of call, types of service to provide, empty container management, repositioning of containers, terminal logistics, fleet logistics, agency logistics, but shipping as a service provider is part of the logistics of customers. Ex. KEA – furniture maker – shipping important. Shipping has a double role to play. Ex. Wimp's logistics service. Logistics in third world countries is not good enough. Read World Bank Report.The three components of logistics are important. Dell manages their total cost through logistics, so does Wall-Mart. All the processes have to be IT enabled. Control-implementation-control. HP has a fixed model on the shelf. Dell, make your own – different customer service. One is enabled by IT. Logistics has 3 components – concept, process, IT. Slide logistics/Concept 10 Supply chain – different sources to choose from. Take one then the next step and the next. This is the flow of cargo from origin to destination – the flow of information from user to origin. Information flow and cargo flow go in opposite directions.Ex. Dell – the information goes from the customer to Dell and the cargo from Dell to the customer. How will the producer know what kind of products the consumer will need? The consumer will have to tell. Opposite directions. Dell transport one computer to each customer so the customer pays more for transportation, but other costs like the shops and overhead related costs do not exist. If we compare this cost with the cost is very important. Total cost concept can be better understood by looking at slide Logistics/Concept 1 1 . This is a Total cost in Logistics and Supply Chain System.Marketing and logistics are closely related. This picture is very true. What is marketing? It is about the 4 As – product, price, promotion, place. So in this marketing there is one component about place which is about logistics. In the logistics about the place and the customer service (where the customer wants the cargo to be) and there are other cost elements. Ex. Related to place, transport cost has to be incurred – also warehousing cost, flow and storage. Other costs like inventory costs will be incurred. What is the difference between inventory cost and warehousing cost – inventory cost for keeping goods in stock).Inventory cost is the value of the goods. Books for new WHIM students – cost of book (inventory) plus storage (warehousing). Processing and information cost – each time we order, we have to follow procedure, fill in forms, etc. Processing cost can be high. Egg. When we are transporting our boxes home, have to have bill of lading. This has a cost (processing and information cost). Lot quantity cost – economies of scale. Purchasing/transporting/buying a big amount and will benefit from economies of scale, this is called lot quantities. Put all these 5 elements together and this is total cost.The objective of logistics is not to optimize a cost element, it's not to minimize a cost element, but rather to optimize the total cost and minimize the total cost. Minimize the total cost – this is what logistics is all about. This is easier said than done. KIT, the idea is to reduce the inventory cost to zero if possible. At the same time warehousing cost is being reduced – this is a good system. What other cost will be affected – transport cost. All these cost elements are interrelated and interdependent. So interaction and interdependence are also important.Change of inventory will affect transport cost, lot quantity cost, etc. KIT system for example – daily consumption of rice. Let's say we eat egg of rice each time. Based on KIT, each time we need rice, we should buy only egg. Do we do this? No, then against KIT principle. We buy 200 kilos – 2 cost occur – inventory cost and the money spent on the rice cannot be used (capit al tied up – cash flow problem). If this money was put in the bank it would generate some interest. Where is the rice put? The place occupied by the rice can't be used for something else.In production if you buy too much to get economies of scale from purchasing, we'll incur a high inventory cost. If we are not buying kilos, we buy a quantity in between – say 2 kilo. Optimal total cost. If we buy egg each time inventory cost is zero – have to buy each time we need to cost. That is time and transport cost. Lot quantity cost will change as there is no savings to be got through economies of scale. And each time we buy there are other costs like information and processing (maybe not in the case of rice, but generally). Put all these costs together, and find a good place in between. We do this by Cost Trade-off.Cost Trade Off Slide Ex. Manufacturing activity involves making projectors in Mammal, Sweden and need to supply them to the rest of Europe. No distribution ce ntre, or warehouses, or depots, o because we cover the entire Europe, each time we have an order from someplace in Europe, we pack the projector and send it off. What do we save – inventory, we do not keep inventory. What do we have to spend more – transportation cost will be very expensive. We therefore have to find out if we have a warehouse somewhere in them from Mammal to the customer; we send it from that storage which is closer so we save transportation cost.How many such warehouses we need to cover Europe? It depends on the elements: transport, inventory, lot quantity, warehouse costs. In optimizing all these costs together is a logistics decision. Ex. In the case of the depots, we might have 8, 10, 12 to cover the entire Europe. What cost elements we have in the case of the distribution of projectors in Europe. First the systems cost, the processing and information cost. When there is a centre there needs to be a computer system, a financial system, etc. If the re is no centre, the system cost is very low.The more centre, the higher the system cost and this is a storage cost. If there is only one storage at the headquarters in Mammal, the cost would be relatively low. As the numbers of depots are being increased the storage cost will be very high. Inventory cost – more depots, more stock – higher inventory cost. Trucking cost – tree has trunk and branches. Trunk means main transportation, branches mean local delivery. Transport cargo from production to main distribution centre = trunk transport and then from distribution centre to each individual apartments = local delivery.Trucking cost – the more centre, the more trucking cost. If there are no depots, each time to ship from mammal to each individual location will be very high. The more depots, the less the local delivery cost will be. The total distribution cost is the addition of all cost, this is what we call total logistics cost. When we have the total logi stics cost curve it corresponds to the number 8 meaning there should be eight distribution centre. So this is the solution – 8 centre. As costs change, oil, etc, the optimal numbers of centre will change. Its not static, its dynamic (the Total Didst. Curve).Logistics – one has to plan, implement, control. If the individual costs are changed then total cost will be different – high/low. E. G. If the interest becomes low – inventory cost will be affected as the capital will become cheap. If oil cost increase, interest rate decrease – could end up with more centre which means saving more rainspout cost, esp.. Local delivery cost. Transport cost in total will be less. Inventory cost is dependent on interest rates. May have 9/10 depots. # of depots depend on cost elements. Cost trade off is important. With depots total cost is lower, so this will save cost.Having depot is a cost but the cost is lower than not to have them. E. G. KEA used to rent warehou ses, now they build – benefit of depreciation. Next Slide Logistics cost in the USA Logistics cost include transportation cost, inventory, warehousing, distributing, etc. How much logistics cost people pay as a percentage of a country GAP – 10% in the US. Inventory cost increase faster than the transportation cost bet. 1980 and 2005- why? Better inventory control, interest rate lower so inventory cost lower. Interest was low in the rest of the world until about 2005. Deflation = lower inventory cost.In other countries this percentage is much higher. China – 18% of GAP spent on logistics (used to be 20%). China is more representative of developing countries. So in developing countries logistics systems are not as efficient as those in industrialized countries. 9. 5% is similar in Europe and Japan (COED countries). In developing countries it's much higher. Includes all logistics cost element – transport, inventory, etc. – big room for improvement. Ne xt slide Customer service is another concept. Customer service is the output of logistic based, performance-based, philosophy based.Activity based e. G. After sales service, marketing, public relations. Performance based – what is the standard? Ex. Dell computer is performance based, delivered in 48 hours – performance-based customer service. Can be measured. Ex. , ports – waiting time for ships – rush. Philosophy based on what customers require is the customer service – according to customers taste – before, during, and after transaction. What is transaction? Buy goods, pay. Customer service can take place before this, during, after. Changes in CSS level affect total logistics cost. Next slide CSS High, Low.Cost Low/High – the higher the customer service level, the higher the cost. No ship should wait in port for more than 3 hours. This will cost a lot of money – will have to build more berths. Define customer service level. T ry to minimize total cost based on this pre-condition. Why CSS level increase and inventory level affected. The higher the CSS, the higher the inventory level. Goal: increased SSL, so high inventory level. It's a decision the company makes – customer service level is very important. (Refers to graph on the right) Try to find a way to push the line by introducing a better way of production e. . Using IT, new production method. Reduce cost but still satisfy goal – IT, use better system. Next slide: industry norm, etc. Customer's response to stock out. Is a risk being run of losing the customer? All different ways to define the customer service level. KIT System Developed by Toyota. Called the Kanata system. When a container of parts is chosen to be used from inbound stockinet in-out in-out This is the production. Eng the assembly line how do you get different stages to work together in harmony. The system has two cards. KIT works with 2 cards – the move cards and the production cards. Hen you see the move card, time to move the container or the other card, time to produce. Work centre 1 the card moves along the production line from one work centre to the next. Toyota manage to have minimum inventory along the assembly line. They have one container of part. Cards are turning around and the parts are being moved from one centre to another. For logistics a better understanding of Just in time is very important. 9 Cot 2008 There are two circulations of cards. How do the 2 circulations make the KIT system work? Why does it work? Key elements: to reduce inventory therefore reduces the capital tied up in inventory.Planning, staff commitment including suppliers, suppliers' ability to meet the demand. Some inventory is kept because there is a container. One piece at a time is being used from the container so the rest must be inventory. What is the average inventory? What is the customer requirement? It's the size of the container. The container is fu ll – how big is the container. How is the size of the container defined? The size of the container is planned based on production. Supply 20 units at the beginning and then it's consumed and a new container comes. The container is consumed during a cycle. The cycle is the time needed.The average inventory is a half of the container what ever the amount it contains. Typical KIT, there should be no inventory so why is inventory kept? When we need egg rice why don't we get exactly that? Other costs would increase too much. KIT – to keep as little inventory as possible. The size of the container depends on what? Transportation two don't match then the size of the container needs to be changed. If the transport sakes more time then increase the size of the container and vice versa. Transport time important. Volvo had KIT between Gent and Mammal. How much inventory should be in the Volvo factory in inventory?A lot. Why? Engine parts are made in Sweden to be used in Belgium. This transport takes one week by ship. As it takes one week, there should at least be spare parts for one week. Toyota has KIT. In the city of Toyota in Japan within 30 kilometers of the factory all Toyota parts are made there. This is the perfect KIT system. KIT emphasizes the reliability of the transport system. The two containers must have the same matching size. If parts can't be produced in time, the cart must be moved earlier. At the moment one container is taken to the in stock point, another container load of part should be produced.Suppose the production takes more time than when one cart comes back? Egg. If production takes 20 hours, parts can be made in 10 hrs. The time information is sent – information flow is the key. Plan to know how long production will take. In Japan, transport is guaranteed (Toyota). What is supplier commitment? Shortcomings of the KIT system? Now we assume we only need 20 parts in 10 hours, how about if the demand change and we need 30 parts in 10 hours. If the speed of production is variable the whole system is challenged. If the demand is certain/flexed then it can be planned – production rate and transportation.But what if production rate changes? This is a challenge for some of the production down the line that may need more time and material which might have to come from far. Not easy to adjust production. Shortcomings: Does only one supplier have to be used with KIT? No, Honda uses more than one supplier. In KIT, anything that goes wrong will collapse the entire system. In KIT the entire chain has to be KIT, it can't be at only one stage of the production. If not it forces other suppliers downs the line to keep inventory. KIT of big companies push inventory down the line if the don't plan effectively.Because smaller suppliers want to satisfy big companies, they are forced to keep inventory. KIT has to be along the entire supply chain. KIT may be only at the very large suppliers who push the inventory down the line to smaller suppliers. Toyota case: 1/52 weeks car production stopped because of a fire at one supplier – ripple effect. The decision of Toyota to do nothing was based on the total minimum cost of they did various studies. CCITT Case: The reliability of transportation and the uncertainty factors make logistics system key. The importance of information. Logistics concept drivers enablers, under total cost and customer level.KIT will never work without IT. Everything works together with IT supporting the processes under total cost and customer level. The process, concept or IT cannot work separately. Information is critical for success as well as the reliability of demand. Forecast and planning important to know when demand change. Transportation is also important for this system. If the transport distance is long, the container has to be big. The size of the container is influenced by time (transport). Transport is via sea – only use air in case of emergency. If transport takes a long time or is unreliable then more inventory needs to be kept.Gent is the biggest Volvo manufacturer. Terrines transport the parts from Sweden to Belgium. The shorter the interval of the shipping service, the lower the level of inventory required. This can make the transport expensive. So it's the total cost that is important that will Supply chain 2 definitions (see slide): it's a network, not port to port. In logistics there is no procurement. The 2 key words in logistics are flow and storage. Supply chain includes manufacture. Transformation = manufacturing. 1st law of dynamics – don't create anything, only change the form. Supply chain includes much more than logistics.Logistics narrowly defined. Supply chain is broader. Procurement also concerned with about origin of the goods. Optimization Integration Collaboration Synchronization Optimization – optimize one stage, the entire thing is not optimized so integration has to take place then consol idation then synchronization (concerted manner, happening in the same time). Relationship along supply chain. Start from optimization to synchronization. The idea of supply chain is relatively recent compared to logistics. 1960/ass people start to talk about total cost. E. G. In stage one warehousing and transport are separate functions.Management focus was operations performance. No integration. Logistics integrated both to see how they can be optimized. This is called total cost management. So the focus changed to optimizing total cost and customer service. Customer service put together with cost. Organization design is a centralized function. 80,s integrated logistics function. This moved today to supply chain MGM. Put logistics together to get supply chain. Supply chain broader than logistics. Stage 1 -separately treated, not optimized. Optimization done within the company. Optimize internal functions – transportation and inventory.Intra company and intra functional. This function is a logistics function. The logistics function today is moving still in the company but inter functional. Everything in the company put together – integration. Toyota inter company – higher level of integration. Toyota owns the supplier – easier to do KIT. Companies are integrated supply chain – Inter company and inter functional. Dell and their suppliers are integrated. Also Wall-Mart. The producers don't take orders from Wall-Mart – the ‘cards' in KIT comes from individual supermarkets. Producers can check storage level of Wall-Mart outlets.Everything is totally integrated. No personal intervention to place order etc. The system is integrated – good supply chain – inter company. Next Slide From fragmented logistics to integrated supply chain. In the fist stage do one function at a time – inventory or warehouse or transport. In the later stage, intra functional – the whole function optimized. From fragm ented logistics to integrated SCM. Suppliers, manufacturer, distributor, retailer, customer are all integrated with he other functions in the company and go to the next stage you integrate between the functions in the companies and between the companies.This is interception and will become in the true sense a supply chain. Supply chain broader today than the logistics. SC have to work with other companies. To satisfy your customers require more than one company: need supplier, manufacturer, distributor, and retailer. E. G. Markers – their system integrated with some of their key customers – key client management. Copra's definition of supply chain. Within an organization there is a supply chain. Egg. WHOM, teaching, supply services, library, canteen, etc. Al depots. Work together to satisfy customer. SC decisions – have to have supply chain design and strategy.Strategic level, medium term, short term – operational, daily and based on the company's competi tive strategy. Michael porter: define competitive strategy in terms of product differentiation or cost cutting leadership. How to achieve strategy: SC strategy. Balance bet. Efficiency and responsiveness. How to respond to demand? Efficiency includes cost-effectiveness, I. E. Cheap. Fast response – this is provided at a cost. Efficiency might compromise cost. Decision making is from lower level to higher. Many competitive strategies come from SC strategy. Wall-Mart is from logistics.Dell is from Supply chain Beer game: Once demand is variable SC difficult to maintain. KIT difficult to maintain. Long time to reach an equilibrium. In the end have to keep large inventory. Once demand is unstable KIT is not suitable. SC Design. Planning is important. SC design is about planning. When suppliers design their supply chain maritime and port services is a part of that. So mapping is important. Stockholders point is storage. Horizontal line represents move. When it stops – verti cal lines = storage or waiting. Egg. BBC container tracking. This is SC mapping.Horizontal line is lead-time (time from production centre 1 to production centre 2). Lead time depends on inventory to determine when order is to be placed. SC starts from the fiber and end with the clothes on the shelf. Through this we see pipeline length and volume. E. G, coca cola. Postponement of safety stock What is postponement? H and Ezra – they use postponement principle. Clothes must be in fashion. Don't know faction of 09. Try to postpone as much as possible the manufacturing time. Forecast, ii, postpone. Dell also uses this strategy. Don't develop their machines until last moment.Can use the latest technology and the price gets cheaper. Anticipate time needed and kind of product needed. Decision is postponed to the last moment. Postponement principle can reduce stock. Has bearing on transport too. Better information flow will impact SC. Next slide Sometimes for material flow speed might not be appreciated. Transport is used as storage to adjust transport time to match with performance. Sometimes it's because of the price. E. G. Iron ore in China, there is too much now. Information speed is always good but for material sometimes it needs to be fast and other times not so fast.Compression of lead-time in manufacturing activity. Supply chain map – length (vertical) volume (horizontal) – try to compress it to see possibilities to reduce some of the variable. Ocean transport can't be adjusted as speed can't be reduced. SC design. Lead-time is transport. Port of Amsterdam case study summary Market research – likelihood to attract new carriers / guarantee – balance and supply (elasticity). When port built no congestion in Europe – more port than ships. Impossible to get firm commitment – plenty choices. More supply than demand. Demand price inelastic. Shipping companies never give guarantees.Optimization, integration, collaborati on, synchronization. Have to synchronize. Increase speed of one operations but the speed of other things remained unchanged. No synchronization. If the discharged boxes cannot be moved this is a logistics problem. The concept of logistics: most important – total cost. Port of Amsterdam forgot total cost. Typical failure case that should never have been done. Restricted berths – bigger ships cannot fit in today – size is restrictive. How wide and long should ship be. (Panama Canal has size restriction and is thus a constraint – ships in the Asian Logistic: Inventory and Total Logistics Cost Supply chain is a network of logistic systems. Logistics concerns one company's system. Supply chain includes different companies. E. G. Dell computer – the logistics is Just their company but the supply chain includes all the part suppliers. Their logistics system is a part of dells supply chain. It includes also the retailers and supplier. Other company's logistics included in Dell's supply chain. Logistics is an early version of the supply chain. Logistics originated in the US military. Flow of cargo (people, weapon in war is logistics. ) Organizing a course/seminar – logistics needed for success.Today all the successful companies find their competitiveness from logistics, not from the product itself. E. G. Walter (retailer, wholesaler, supermarket chain) – their competitive edge comes from logistics. They are not selling anything different from others. They have a superior logistics system. Logistics make them succeed. Dell also, service is good, price attrac tive – success comes from logistics. Another definition people define logistics differently but they mean the same thing. Slide Logistics/Concept 4 Instead of saying process, they say optimization, etc. Process of location.Says movement and storage of resources instead of saying goods/services and information. They call logistic activities economic activities. Transport is one of then, port services, production, storage, distribution, etc. – take place bet. The point of origin and point of destination and consumption. Logistics is about the 5 RSI. What are the 5 RSI? Logistics is about getting right goods at right place at right time in right form at right price. Military is really about this. In commercial entities we emphasize on the price a lot. This is also the definition of logistics.Right goods, right in quality in correct quantity. Different level of logistics. In-bound, out-bound logistics. Logistics of production (table, book, car, etc. ), there are two levels of logistics. Logistics within the production process – in the factory. How do you optimize the production within the factory? We call this operational logistics or workers together. How do you put temporary storage along the assembly line? All this is logistics. E. G. WHIM library – lack of space. How to maximize space? Library space layout. It's about logistics. Different factories have different layouts – this is logistics.We are interested in logistics before the production starts. The cargo coming into the factory and when the production is finished, the cargo moving out to the next step – all towards the final consumption. This is what we call in-bound and out-bound logistics. This is what we are interested in. Maritime transport takes part in inbound and out-bound logistics than for production logistics. We are interested in how to move material to production and from production to consumers. When we try to understand logistics, we look at some lo gistics questions for example a typical question is about where to find the raw material needed.Raw material may be in different places. Some places might have different quality and prices. The difference between that place and the production might be different and therefore remonstration time and cost might be different. Where to find energy supply? Labor supply? Should you move your factory offshore to benefit cheap labor? If you do that be careful that higher prices might have to be paid on other services for example transportation. Where to set up production bases? In shipping, where should the port be located? Where to build warehouse and distribution centre. E. . Toyota car has their distribution centre for the Nordic countries at the port of Mammal. Before that they had centre in all the countries. So many distribution centre, different logistics cost than if there is a concentration of activities. Where to have branch organizations? The answers consider a lot of activities i ncluding transportation. We are in maritime transport so we are affected by the customers decision. Other types of logistics questions for ex. How to transport from A to B and choice of transport mode – air sea, road. Egg. Oslo to Mammal – road, sea. Air, rail.Different modes of transport have different logistics implications. Ex field trips – logistics question, how to transport students – sea (too long), air, road, rail. How to transport container? Hub and spoke – benefit from economies of scale. More cargo handling costs. The best solution must be a logistics solution. Best way to transport cargo from A to B. Flow and storage from point of origin to destination to comply with customers' requirement. Moving from A to B different options – different solution. When should transport start – how long should it take. Route? Storage? How, when needed?Mat of cargo to be transported at one time? Economies of scale? Packing needed? Logistics is everywhere. Farmer from southern Sweden – buy fertilizer in Sweden, buy from Germany (expensive land transport), buy from US where its much cheaper, but he has to pay more transportation cost. Where to find the material? Emphasis is on maritime transport – movement of goods. Shipping co. Transport goods – need info to do so. Port and shipping concerned with flow and storage of goods. October 28, 2008 Session 2 Slide Logistics/Concept 9 There always has to be a logistics concept. And a logistics concept is what?It's about total cost concept. This is the most important concept. It looks easy but total cost concept is not always observed, so people make mistakes as a result. It is a customer service requirement. Logistics concept is also about outsourcing, integration, global about concept, it is also about processes. The processes we call drivers. It drives the logistics process. It can't all be about concept. It has to be something tangible. Logistics is abou t processes. We are doing these everyday, ex. Manufacturing and transportation, distribution, inventory control, procurement.These are all activities, but the difference between these and logistics are that we are doing these in an integrated manner under the concept of logistics. So we have the concept and the drivers. The difference between these activities and logistics, we are doing them under the total cost and the customer service concept, so this is relatively new. Third is IT. We call IT enablers – that enables us to do the processes under the concept of logistics. Sometimes we can't do the processes (drivers) without IT. Ex. Dell computers. They obtained their competitive edge from logistics.Logistics means to get a computer from the production to the customers without any retailers. No middlemen. Order online, design own computer. The aim of logistics is to minimize the total cost. Can only do this with IT tools. So the three components have to come together using t he IT tools. We need to understand the role of IT in the whole process. Ex. Just in Time system. This is Inventory control under the concept of egoistic using information technology. The 3 components have to work together. How do we take all these functions (MFC, transportation, distribution, warehousing, etc. In an integrated manner under the concept of logistics using IT tools. Ex. Individual delivery. Concept is to minimize total cost. Total cost is manufacturing, transport, didst. , etc. How do we minimize that? Use IT. Dell used IT to find out that their total cost will be minimized if they cut out the middle man. IT enables the cutting out of the middle man. Good online service. Shipping line is not making anything – it is a part of transport. Shipping companies as a company have logistics problems also. Shipping has a double role to play.Shipping is a part of the logistics chain of a customer, but at the same time they have their own logistics problem. Shipping's logis tics problems include arranging bunkers, choosing port of call, types of service to provide, empty container management, repositioning of containers, terminal logistics, fleet logistics, agency logistics, but shipping as a service provider is part of the logistics of customers. Ex. KEA – furniture maker – shipping important. Shipping has a double role to play. Ex. Wimp's logistics service. Logistics in third world countries is not good enough. Read World Bank Report.The three components of logistics are important. Dell manages their total cost through logistics, so does Wall-Mart. All the processes have to be IT enabled. Control-implementation-control. HP has a fixed model on the shelf. Dell, make your own – different customer service. One is enabled by IT. Logistics has 3 components – concept, process, IT. Slide logistics/Concept 10 Supply chain – different sources to choose from. Take one then the next step and the next. This is the flow of cargo from origin to destination – the flow of information from user to origin. Information flow and cargo flow go in opposite directions.Ex. Dell – the information goes from the customer to Dell and the cargo from Dell to the customer. How will the producer know what kind of products the consumer will need? The consumer will have to tell. Opposite directions. Dell transport one computer to each customer so the customer pays more for transportation, but other costs like the shops and overhead related costs do not exist. If we compare this cost with the cost is very important. Total cost concept can be better understood by looking at slide Logistics/Concept 1 1 . This is a Total cost in Logistics and Supply Chain System.Marketing and logistics are closely related. This picture is very true. What is marketing? It is about the 4 As – product, price, promotion, place. So in this marketing there is one component about place which is about logistics. In the logistics about the place and the customer service (where the customer wants the cargo to be) and there are other cost elements. Ex. Related to place, transport cost has to be incurred – also warehousing cost, flow and storage. Other costs like inventory costs will be incurred. What is the difference between inventory cost and warehousing cost – inventory cost for keeping goods in stock).Inventory cost is the value of the goods. Books for new WHIM students – cost of book (inventory) plus storage (warehousing). Processing and information cost – each time we order, we have to follow procedure, fill in forms, etc. Processing cost can be high. Egg. When we are transporting our boxes home, have to have bill of lading. This has a cost (processing and information cost). Lot quantity cost – economies of scale. Purchasing/transporting/buying a big amount and will benefit from economies of scale, this is called lot quantities. Put all these 5 elements together and this is total cost.The objective of logistics is not to optimize a cost element, it's not to minimize a cost element, but rather to optimize the total cost and minimize the total cost. Minimize the total cost – this is what logistics is all about. This is easier said than done. KIT, the idea is to reduce the inventory cost to zero if possible. At the same time warehousing cost is being reduced – this is a good system. What other cost will be affected – transport cost. All these cost elements are interrelated and interdependent. So interaction and interdependence are also important.Change of inventory will affect transport cost, lot quantity cost, etc. KIT system for example – daily consumption of rice. Let's say we eat egg of rice each time. Based on KIT, each time we need rice, we should buy only egg. Do we do this? No, then against KIT principle. We buy 200 kilos – 2 cost occur – inventory cost and the money spent on the rice cannot be used (capit al tied up – cash flow problem). If this money was put in the bank it would generate some interest. Where is the rice put? The place occupied by the rice can't be used for something else.In production if you buy too much to get economies of scale from purchasing, we'll incur a high inventory cost. If we are not buying kilos, we buy a quantity in between – say 2 kilo. Optimal total cost. If we buy egg each time inventory cost is zero – have to buy each time we need to cost. That is time and transport cost. Lot quantity cost will change as there is no savings to be got through economies of scale. And each time we buy there are other costs like information and processing (maybe not in the case of rice, but generally). Put all these costs together, and find a good place in between. We do this by Cost Trade-off.Cost Trade Off Slide Ex. Manufacturing activity involves making projectors in Mammal, Sweden and need to supply them to the rest of Europe. No distribution ce ntre, or warehouses, or depots, o because we cover the entire Europe, each time we have an order from someplace in Europe, we pack the projector and send it off. What do we save – inventory, we do not keep inventory. What do we have to spend more – transportation cost will be very expensive. We therefore have to find out if we have a warehouse somewhere in them from Mammal to the customer; we send it from that storage which is closer so we save transportation cost.How many such warehouses we need to cover Europe? It depends on the elements: transport, inventory, lot quantity, warehouse costs. In optimizing all these costs together is a logistics decision. Ex. In the case of the depots, we might have 8, 10, 12 to cover the entire Europe. What cost elements we have in the case of the distribution of projectors in Europe. First the systems cost, the processing and information cost. When there is a centre there needs to be a computer system, a financial system, etc. If the re is no centre, the system cost is very low.The more centre, the higher the system cost and this is a storage cost. If there is only one storage at the headquarters in Mammal, the cost would be relatively low. As the numbers of depots are being increased the storage cost will be very high. Inventory cost – more depots, more stock – higher inventory cost. Trucking cost – tree has trunk and branches. Trunk means main transportation, branches mean local delivery. Transport cargo from production to main distribution centre = trunk transport and then from distribution centre to each individual apartments = local delivery.Trucking cost – the more centre, the more trucking cost. If there are no depots, each time to ship from mammal to each individual location will be very high. The more depots, the less the local delivery cost will be. The total distribution cost is the addition of all cost, this is what we call total logistics cost. When we have the total logi stics cost curve it corresponds to the number 8 meaning there should be eight distribution centre. So this is the solution – 8 centre. As costs change, oil, etc, the optimal numbers of centre will change. Its not static, its dynamic (the Total Didst. Curve).Logistics – one has to plan, implement, control. If the individual costs are changed then total cost will be different – high/low. E. G. If the interest becomes low – inventory cost will be affected as the capital will become cheap. If oil cost increase, interest rate decrease – could end up with more centre which means saving more rainspout cost, esp.. Local delivery cost. Transport cost in total will be less. Inventory cost is dependent on interest rates. May have 9/10 depots. # of depots depend on cost elements. Cost trade off is important. With depots total cost is lower, so this will save cost.Having depot is a cost but the cost is lower than not to have them. E. G. KEA used to rent warehou ses, now they build – benefit of depreciation. Next Slide Logistics cost in the USA Logistics cost include transportation cost, inventory, warehousing, distributing, etc. How much logistics cost people pay as a percentage of a country GAP – 10% in the US. Inventory cost increase faster than the transportation cost bet. 1980 and 2005- why? Better inventory control, interest rate lower so inventory cost lower. Interest was low in the rest of the world until about 2005. Deflation = lower inventory cost.In other countries this percentage is much higher. China – 18% of GAP spent on logistics (used to be 20%). China is more representative of developing countries. So in developing countries logistics systems are not as efficient as those in industrialized countries. 9. 5% is similar in Europe and Japan (COED countries). In developing countries it's much higher. Includes all logistics cost element – transport, inventory, etc. – big room for improvement. Ne xt slide Customer service is another concept. Customer service is the output of logistic based, performance-based, philosophy based.Activity based e. G. After sales service, marketing, public relations. Performance based – what is the standard? Ex. Dell computer is performance based, delivered in 48 hours – performance-based customer service. Can be measured. Ex. , ports – waiting time for ships – rush. Philosophy based on what customers require is the customer service – according to customers taste – before, during, and after transaction. What is transaction? Buy goods, pay. Customer service can take place before this, during, after. Changes in CSS level affect total logistics cost. Next slide CSS High, Low.Cost Low/High – the higher the customer service level, the higher the cost. No ship should wait in port for more than 3 hours. This will cost a lot of money – will have to build more berths. Define customer service level. T ry to minimize total cost based on this pre-condition. Why CSS level increase and inventory level affected. The higher the CSS, the higher the inventory level. Goal: increased SSL, so high inventory level. It's a decision the company makes – customer service level is very important. (Refers to graph on the right) Try to find a way to push the line by introducing a better way of production e. . Using IT, new production method. Reduce cost but still satisfy goal – IT, use better system. Next slide: industry norm, etc. Customer's response to stock out. Is a risk being run of losing the customer? All different ways to define the customer service level. KIT System Developed by Toyota. Called the Kanata system. When a container of parts is chosen to be used from inbound stockinet in-out in-out This is the production. Eng the assembly line how do you get different stages to work together in harmony. The system has two cards. KIT works with 2 cards – the move cards and the production cards. Hen you see the move card, time to move the container or the other card, time to produce. Work centre 1 the card moves along the production line from one work centre to the next. Toyota manage to have minimum inventory along the assembly line. They have one container of part. Cards are turning around and the parts are being moved from one centre to another. For logistics a better understanding of Just in time is very important. 9 Cot 2008 There are two circulations of cards. How do the 2 circulations make the KIT system work? Why does it work? Key elements: to reduce inventory therefore reduces the capital tied up in inventory.Planning, staff commitment including suppliers, suppliers' ability to meet the demand. Some inventory is kept because there is a container. One piece at a time is being used from the container so the rest must be inventory. What is the average inventory? What is the customer requirement? It's the size of the container. The container is fu ll – how big is the container. How is the size of the container defined? The size of the container is planned based on production. Supply 20 units at the beginning and then it's consumed and a new container comes. The container is consumed during a cycle. The cycle is the time needed.The average inventory is a half of the container what ever the amount it contains. Typical KIT, there should be no inventory so why is inventory kept? When we need egg rice why don't we get exactly that? Other costs would increase too much. KIT – to keep as little inventory as possible. The size of the container depends on what? Transportation two don't match then the size of the container needs to be changed. If the transport sakes more time then increase the size of the container and vice versa. Transport time important. Volvo had KIT between Gent and Mammal. How much inventory should be in the Volvo factory in inventory?A lot. Why? Engine parts are made in Sweden to be used in Belgium. This transport takes one week by ship. As it takes one week, there should at least be spare parts for one week. Toyota has KIT. In the city of Toyota in Japan within 30 kilometers of the factory all Toyota parts are made there. This is the perfect KIT system. KIT emphasizes the reliability of the transport system. The two containers must have the same matching size. If parts can't be produced in time, the cart must be moved earlier. At the moment one container is taken to the in stock point, another container load of part should be produced.Suppose the production takes more time than when one cart comes back? Egg. If production takes 20 hours, parts can be made in 10 hrs. The time information is sent – information flow is the key. Plan to know how long production will take. In Japan, transport is guaranteed (Toyota). What is supplier commitment? Shortcomings of the KIT system? Now we assume we only need 20 parts in 10 hours, how about if the demand change and we need 30 parts in 10 hours. If the speed of production is variable the whole system is challenged. If the demand is certain/flexed then it can be planned – production rate and transportation.But what if production rate changes? This is a challenge for some of the production down the line that may need more time and material which might have to come from far. Not easy to adjust production. Shortcomings: Does only one supplier have to be used with KIT? No, Honda uses more than one supplier. In KIT, anything that goes wrong will collapse the entire system. In KIT the entire chain has to be KIT, it can't be at only one stage of the production. If not it forces other suppliers downs the line to keep inventory. KIT of big companies push inventory down the line if the don't plan effectively.Because smaller suppliers want to satisfy big companies, they are forced to keep inventory. KIT has to be along the entire supply chain. KIT may be only at the very large suppliers who push the inventory down the line to smaller suppliers. Toyota case: 1/52 weeks car production stopped because of a fire at one supplier – ripple effect. The decision of Toyota to do nothing was based on the total minimum cost of they did various studies. CCITT Case: The reliability of transportation and the uncertainty factors make logistics system key. The importance of information. Logistics concept drivers enablers, under total cost and customer level.KIT will never work without IT. Everything works together with IT supporting the processes under total cost and customer level. The process, concept or IT cannot work separately. Information is critical for success as well as the reliability of demand. Forecast and planning important to know when demand change. Transportation is also important for this system. If the transport distance is long, the container has to be big. The size of the container is influenced by time (transport). Transport is via sea – only use air in case of emergency. If transport takes a long time or is unreliable then more inventory needs to be kept.Gent is the biggest Volvo manufacturer. Terrines transport the parts from Sweden to Belgium. The shorter the interval of the shipping service, the lower the level of inventory required. This can make the transport expensive. So it's the total cost that is important that will Supply chain 2 definitions (see slide): it's a network, not port to port. In logistics there is no procurement. The 2 key words in logistics are flow and storage. Supply chain includes manufacture. Transformation = manufacturing. 1st law of dynamics – don't create anything, only change the form. Supply chain includes much more than logistics.Logistics narrowly defined. Supply chain is broader. Procurement also concerned with about origin of the goods. Optimization Integration Collaboration Synchronization Optimization – optimize one stage, the entire thing is not optimized so integration has to take place then consol idation then synchronization (concerted manner, happening in the same time). Relationship along supply chain. Start from optimization to synchronization. The idea of supply chain is relatively recent compared to logistics. 1960/ass people start to talk about total cost. E. G. In stage one warehousing and transport are separate functions.Management focus was operations performance. No integration. Logistics integrated both to see how they can be optimized. This is called total cost management. So the focus changed to optimizing total cost and customer service. Customer service put together with cost. Organization design is a centralized function. 80,s integrated logistics function. This moved today to supply chain MGM. Put logistics together to get supply chain. Supply chain broader than logistics. Stage 1 -separately treated, not optimized. Optimization done within the company. Optimize internal functions – transportation and inventory.Intra company and intra functional. This function is a logistics function. The logistics function today is moving still in the company but inter functional. Everything in the company put together – integration. Toyota inter company – higher level of integration. Toyota owns the supplier – easier to do KIT. Companies are integrated supply chain – Inter company and inter functional. Dell and their suppliers are integrated. Also Wall-Mart. The producers don't take orders from Wall-Mart – the ‘cards' in KIT comes from individual supermarkets. Producers can check storage level of Wall-Mart outlets.Everything is totally integrated. No personal intervention to place order etc. The system is integrated – good supply chain – inter company. Next Slide From fragmented logistics to integrated supply chain. In the fist stage do one function at a time – inventory or warehouse or transport. In the later stage, intra functional – the whole function optimized. From fragm ented logistics to integrated SCM. Suppliers, manufacturer, distributor, retailer, customer are all integrated with he other functions in the company and go to the next stage you integrate between the functions in the companies and between the companies.This is interception and will become in the true sense a supply chain. Supply chain broader today than the logistics. SC have to work with other companies. To satisfy your customers require more than one company: need supplier, manufacturer, distributor, and retailer. E. G. Markers – their system integrated with some of their key customers – key client management. Copra's definition of supply chain. Within an organization there is a supply chain. Egg. WHOM, teaching, supply services, library, canteen, etc. Al depots. Work together to satisfy customer. SC decisions – have to have supply chain design and strategy.Strategic level, medium term, short term – operational, daily and based on the company's competi tive strategy. Michael porter: define competitive strategy in terms of product differentiation or cost cutting leadership. How to achieve strategy: SC strategy. Balance bet. Efficiency and responsiveness. How to respond to demand? Efficiency includes cost-effectiveness, I. E. Cheap. Fast response – this is provided at a cost. Efficiency might compromise cost. Decision making is from lower level to higher. Many competitive strategies come from SC strategy. Wall-Mart is from logistics.Dell is from Supply chain Beer game: Once demand is variable SC difficult to maintain. KIT difficult to maintain. Long time to reach an equilibrium. In the end have to keep large inventory. Once demand is unstable KIT is not suitable. SC Design. Planning is important. SC design is about planning. When suppliers design their supply chain maritime and port services is a part of that. So mapping is important. Stockholders point is storage. Horizontal line represents move. When it stops – verti cal lines = storage or waiting. Egg. BBC container tracking. This is SC mapping.Horizontal line is lead-time (time from production centre 1 to production centre 2). Lead time depends on inventory to determine when order is to be placed. SC starts from the fiber and end with the clothes on the shelf. Through this we see pipeline length and volume. E. G, coca cola. Postponement of safety stock What is postponement? H and Ezra – they use postponement principle. Clothes must be in fashion. Don't know faction of 09. Try to postpone as much as possible the manufacturing time. Forecast, ii, postpone. Dell also uses this strategy. Don't develop their machines until last moment.Can use the latest technology and the price gets cheaper. Anticipate time needed and kind of product needed. Decision is postponed to the last moment. Postponement principle can reduce stock. Has bearing on transport too. Better information flow will impact SC. Next slide Sometimes for material flow speed might not be appreciated. Transport is used as storage to adjust transport time to match with performance. Sometimes it's because of the price. E. G. Iron ore in China, there is too much now. Information speed is always good but for material sometimes it needs to be fast and other times not so fast.Compression of lead-time in manufacturing activity. Supply chain map – length (vertical) volume (horizontal) – try to compress it to see possibilities to reduce some of the variable. Ocean transport can't be adjusted as speed can't be reduced. SC design. Lead-time is transport. Port of Amsterdam case study summary Market research – likelihood to attract new carriers / guarantee – balance and supply (elasticity). When port built no congestion in Europe – more port than ships. Impossible to get firm commitment – plenty choices. More supply than demand. Demand price inelastic. Shipping companies never give guarantees.Optimization, integration, collaborati on, synchronization. Have to synchronize. Increase speed of one operations but the speed of other things remained unchanged. No synchronization. If the discharged boxes cannot be moved this is a logistics problem. The concept of logistics: most important – total cost. Port of Amsterdam forgot total cost. Typical failure case that should never have been done. Restricted berths – bigger ships cannot fit in today – size is restrictive. How wide and long should ship be. (Panama Canal has size restriction and is thus a constraint – ships in the Asian

Integrative Running Case Study: Starbucks Essay

Starbucks A case analysis of Starbucks can provide a much closer look at the company, its strengths and weaknesses, as well as the company’s ability to do business on a global scale. In order to best analyze this company, a SWOT analysis, along with answers to the case study questions is provided below. Furthermore, a few recommendations are included that are brought to light by reviewing the facts of the Starbucks case study. This thorough investigation of the Starbucks company adds a rather complicated â€Å"flavor† to my favorite caramel macchiato that had never before been considered. Starbucks has been serving coffee domestically since the early 1970’s. After experiencing success in the domestic market, Starbucks entered the global marketplace, including opening its first stores in China in 1999. (Lamb, p.139) The company entered the Chinese marketplace knowing the vast opportunities that were available, but quite aware that many factors had to be accounted for in its marketing mix and product offering strategies. Cultural, political, and economic factors played important roles in discovering the best plan for delivering a lucrative coffee business to a land where the majority of consumers had never even had a cup of coffee. Partnering with local developers provided a safer market-entry strategy that Starbucks was ready to relinquish in 2006. After gaining several years of experiencing in the business environment of China, Starbucks embraced the chance to try its own hand at delivering a lucrative business operating in an environment that had many similarities to its domestic marketplace in the United States. A discussion of the strengths, weaknesses, opportunities,  and threats for the Starbucks company is provided to further understand its success in the global marketplace. Strengths: The decision Starbucks made to enter the Chinese marketplace wasn’t without extensive research. Starbucks had an already-existing marketing mix that was working well and generating large profits in its homeland. The knowledge and expertise found in the existing Starbucks employees were an important strength for the company as it planned its business venture in China. As a successful domestic coffee-seller and cafe business, Starbucks had funding and financial resources to work with when entering the foreign Chinese market. Furthermore, the reputation of Starbucks and its business growth and success certainly attracted additional funding from shareholders when taking the Starbucks brand globally. Weaknesses: Though Starbucks was a well-tested brand in its domestic market, Starbucks faced new market-entry obstacles. The idea of entering a foreign market on its own was not a wise decision, and therefore, Starbucks would have to rely on foreign partnerships to expand its brand globally. (Lamb, p. 140) This reliance on a partnership could be costly as profits are shared even though market-entry risks are lowered. The expense of making mistakes and learning from them, as well as creating a whole new marketing mix for Chinese consumers was certainly a costly investment. Opportunities: Even though entering the Chinese market would prove to have some obstacles, the company certainly realized the many opportunities that existed for creating its brand in China. Entering a market that consisted of consumers who had very little experience with coffee would leave Starbucks as a unique product with potential for elasticity in its pricing with very little competition from other â€Å"coffee† shops. Furthermore, changes in the Chinese youth’s view of collectivism was drastically changing as they focused more on individuality. (Lamb, p.139) This offered a similar environment to the domestic market in the United States. Additionally, the research Starbucks initiated would show that a specific need for a place for  people to gather together was in high demand in China. Starbucks knew that providing that experience combined with the distribution of â€Å"coffee† (a symbol of the modernizing of China) could provide a whole unique experience that youth would be quick to embrace. Similarly, economic success in the region proved the needs for disposable income for expensive coffee drinks could be met easily by the growing and expanding economy. Threats: Just as there are many opportunities when a company enters a whole new marketplace, there can also be many external threats as well. A booming economy that may at first seem ripe for market entry could change at any time, and prove devastating to the Starbucks China operation. Furthermore, political and legal factors could change just as swiftly and cause many problems for Starbucks as the company has no influence over these external factors. Similarly, social factors can always pose a threat as well. With a business focused on mainly the Chinese youth, any trend that in some way denounces or disqualifies Starbucks as a meaningful experience to the youth would cause a dramatic breakdown in the Starbucks marketing mix. A further analysis of Starbucks’ entry into the Chinese marketplace can be accomplished by investigating the questions at the end of the case study. 1. Many of the same environmental factors, such as cultural factors, that operate in the domestic market also exist internationally. Discuss the key cultural factors Starbucks had to consider as it expanded into China. Several cultural factors impacted Starbucks entry into the Chinese market. One such factor was the cultural reliance on mostly â€Å"tea† as a drink of choice among the Chinese. Starbucks knew that entering the market with a strategy of simply trying to sell various facets of coffee would be a challenge if not carefully executed in a way that would inspire and empower the consumers to actually stimulate the desire for coffee. A second cultural factor that enabled Starbucks to overcome the obstacle of the tea vs. coffee concern is that the Chinese people do not have much space in their homes etc. for gathering with their interest groups. Starbucks quickly determined that providing a need (such as space to â€Å"hang out†) would be an excellent way to offer its products in an environment that would be  providing a solution to the problem of having limited spaces to just be with friends. (Lamb, p.139) 2. Discuss the key political and legal factors Starbucks had to consid er in the Chinese marketplace. What are the risks of entering a country with these factors? What changes have occurred in China’s political and legal structure to the advantage of foreign companies? China is a communist country, and politically this type of government can be volatile. Any changes to the government and/or its officials could have fast and devastating effects on businesses operating in China. (Lamb, p.140) Legislation could be created overnight that may involve the removal of foreign businesses or simply make it impossible for them to compete in the Chinese market by placing restrictions on their allowable business practices. Although there are risks associated with entering a foreign market with uncontrollable political and legal factors, China has proven to have a political and legal structure that has been very conducive to foreign companies. Beijing entered the World Trade Organization in 2001, and since has provided economic stability as well as political stability to businesses. (Lamb, p.140) Legally, China has mandated that each family is allowed one child. This mandate has resulted in a shift of the normal â€Å"collective† view of communist consumers to a more â€Å"individualistic† view for young consumers, creating a very ripe environment for businesses that provide modernistic, Western-individualism style products and marketing mixes. 3. What demographic factors were important for Starbucks to understand in China? What were the demographics they decided to target? In order to enter the Chinese market, Starbucks had to consider demographic factors such as age and population in order to be successful. According to Lamb Starbucks initially focused on the economically upwardly mobile population, including 20-40 year olds. (Lamb, p.139) Finding much success there, Starbucks wanted to grow that success over time, and is strategically focused on the youth of the Chinese population since they have the economic backing of their families to support disposable needs, such as pricy cappuccinos. 4. What was the initial global-market strategy Starbucks employed to enter China? Discuss the advantages and disadvantages to this early strategy. How has their strategy changed since then and why? According to Lamb the initial global-market strategy Starbucks entered China with involved partnering with other businesses as a joint venture, along with authorizing local developers to use their brand. (Lamb, p.140) This strategy had an advantage of entering the market in a gradual way, and gaining the trust of the Chinese while simultaneously avoiding the added risk of entering the market on its own. The disadvantage of this style of market entry is seen in the profit margin for Starbucks. Joint ventures and partnerships do not share equally in profits (and Starbucks would need to work hard to find a management position in such ventures to make sure it could hold onto its profit margin as sales increased). Since then, Starbucks has bought out its partners and now individually owns its own stores. While this strategy is drastically different from its market-entry strategy, the company is now much more confident in how to do business effectively in China. Furthermore, the fact that Beijing entered the World Trade Organization has had a securing and positive economic and legal affect on foreign companies doing business alone in the Chinese marketplace. In lieu of the facts provided in the case study, it is possible to recommend additional ways in which Starbucks can continue to successfully operate in China. One such recommendation is for Starbucks to keep a very close watch on social media trends among the Chinese youth. Knowing that the Asian community is very embracing of social media, it is imperative that Starbucks maintain its reputation as â€Å"modern† and â€Å"forward-moving† by participating in the social media trends of the youth. A second recommendation for Starbucks is to provide social benefits to the communities in which it operates. Providing benefits to surrounding communities can help to establish a successful business relationship with local government officials as well as encouraging the trust of the local people. Furthermore, these philanthropic efforts can have an impact on the consumers of Starbucks products domestically as well. Domestic patrons can find value in these efforts of â€Å"doing good† for global communities and become encouraged to support the company with more purchases. In conclusion, the review of the Starbucks case study has been both  informative and interesting as I am a consumer of Starbucks myself. The knowledge gained here has certainly changed my thoughts from salivating for a simple caramel macchiato when I pass the Starbucks logo, to wondering where and how they do business elsewhere. References Lamb, C.W., Hair, J.F., Jr., McDaniel, C. (2011). Marketing (11th ed.). Mason, OH: South-Western.