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Read the pages and make a BRIEF summary of them with your own words, please. Mention important parts.

Read the pages and make a BRIEF summary of them with your own words, please. Mention important parts.

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
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Read the pages and make a BRIEF summary of them with your own words, please. Mention important parts. Also, you will put your comments and ideas about the topic. please don't write item by item. Please do not write long

session statement that would encompass their dreams for DMC. The both commercial and military markets (one of DMC's po- tential competitors in the commercial marketplace had just been purchased by a larger company and its entire marketing team had been eliminated as part of the buyout). 4. Quality. DMC is committed to delivering the highest quality products possible on time, every time. vision statement developed reads as follows: Delcron Manufacturing Company will be an internation- al leader in the production of low-voltage power supplies for aircraft. 5. Employee empowerment. DMC is to seeking, valuing, and using employee input and feedback. committed Threats Participants identified and reached consensus on the following threats: DMC's pending loss of its 8A status, potential cutbacks in the development of new military air- craft in the United States, a tight labor market that could in- flate labor costs, and the potential for ever-increasing levels of competition from foreign and domestic sources. The SWOT Analysis 6. Partners. DMC is committed to treating its custom- ers, suppliers, and employees as partners. Prior to beginning the SWOT analysis, the authors placed four large flipcharts in the room. The flipcharts were labeled strengths, weaknesses, opportunities, and threats. Beginning with strengths, the authors led participants through a brain- storming session. Each time a strength, weakness, opportu- nity, by the group, the authors recorded it on the flipchart. Every time a flipchart page would fill up, the au- thors tore it off and a visible record of their work. Developing Broad Strategic Goals The final component of the first strategic planning session involved developing broad strategic goals. These goals had to represent actions that, if accomplished, would move the company ever closer to the full realization of its corporate vision. Before beginning development of the goals, the au- thors gave participants typed copies of the SWOT analysis. They explained to the executives that the Developing the Mission threat was identified by a participant and agreed on The executives at DMC found that developing a vision an- swers many important questions. With the vision in place, developing a mission statement was not overly difficult; it was just a matter of following the criteria set forth by the authors for well-written mission statements. Most of the discussion focused on wording as opposed to concepts. The mission statement the participants finally decided on reads as follows: corresponding she results of taped it to the wall so that participants had a broad goals developed should all satisfy one or more of the Discussion was intense at times, and there were dis- agreements among participants. One executive would iden- tify a weakness in another executive's area of and arguments would ensue. It took the authors a while to convince the executives to drop their defenses and to be open and frank without getting their feelings hurt or territorial. Another dynamic was that what one executive saw as a strength was perceived by another as a weakness. Once the authors worked through these and other issues that inevitably occur during strategic planning sessions, a cohe- sive group emerged and began to cooperate well as a team. The results of the SWOT analysis follow. following criteria: (1) exploit one or more of the organiza- tion's strengths, (2) correct one or more of the organization's weaknesses, (3) take advantage of one or more of the op- portunities available to the organization, or (4) respond to one or more of the threats facing the organization. With this guidance given, participants developed the following broad strategic goals for DMC: responsibility, of one on Delcron Manufacturing Company (DMC) is a design and manufacturing firm dedicated to providing high-quality products for the aircraft industry. To this end, DMC de- signs and manufactures low-voltage power supplies for military and commercial aircraft in the United States and abroad. 1. Expand the company's business base to include both military and commercial markets in the United States and abroad. Developing Guiding Principles 2. Strengthen all functional units in the company in the area of commercial products and markets, Strengths Participants identified and reached consensus on the following strengths: strong manufacturing capabil- ity, solid business contacts in the Department of Defense industry, a proven track record of excellent performance in completing contracts on time, low turnover rate with regard to critical employees, comparatively low labor rates (most employees of DMC are retired military personnel who view their salary as a second income), and an up-to-date facility equipped with modern technology. The authors described "guiding principles" to participants as written statements that convey DMC's corporate values. They encouraged the company's executives to mentally put the following sentence before the guiding principles in order to better understand what they represent: "While our vision and mission, we will principles in everyday operations and in all decisions made. The authors asked participants to brainstorm important corporate values without concern, for the moment, about wording. Participants were encouraged to simply offer up value-laden terms (e.g., ethics, quality, customer satisfaction) that the authors recorded on flipcharts. Once the terms had 3. Expand the company's core capabilities to include both design and manufacturing. 4. Fully achieve a Six Sigma quality level in manufacturing low-voltage power supplies. 5. Develop and implement a supplier certification pro- gram to create a reliable group of dependable, high- quality supplier partners. 6. Establish a comprehensive training program to mavi- mize the capahilities of all employes at all levels in the apply pursuing the following guiding Weaknesses Participants identified and reached consen- sus on the following weaknesses: no experience outside of the Department of Detense market, no marketing compo- nent, no experience being the lead contractor on a major project (all of DMC's work up to tracted to it by larger Department of Defense contractors, such as Boeing and Lockheed-Martin), no experience in the international marketplace, no design component (DMC had been a build-to-print operation up to this point), and no re- search and development component. company. With the broad strategic objectives established, the all been listed, the authors asked participants to select the six to ten that were most critical. With the most important corporate values identified, participants worked with the authors to develop more explicit wording for each one. The guiding principles developed are as follows: "strategic" portion of the plan was completed. Developing an action plan tor carrying out the strategic portion ot the plan would be scheduled later, after DMC's executive management team had communicated the vision, mission, guiding principles, and broad strategic goals to all employ- ces. The this spoint bad been subcon- All of DMC's employees and management 1. Ethics. personnel are expected to exemplify the highest ethical standards in doing their jobs. took place two months action planning later, and DMC began implementation of the new strate- gic plan graduated from the 8A program, it had expanded from immediately thereafter. Just two years after DMC Opportunities Participants identified and reached consensus on the following opportunities: expansion into commercial aircraft markets, expansion into international commercial markets, expansion into foreign military mar- kets (military aircraft of America's allies), and availability 2. Customer delight. In dealing with customers, DMC will go beyond customer satisfaction to achieve cus- tomer delight. under 500 employees to almost 700, and its business base 3. Continual improvement. Continually improving its products, processes, and people is a high priority for DMC. was growing steadily. The company now is well established in both commercial and military markets in the United States and abroad. The plan developed during a three-day, off-site session is working. of a strong international marketing team that can work in
Transcribed Image Text:session statement that would encompass their dreams for DMC. The both commercial and military markets (one of DMC's po- tential competitors in the commercial marketplace had just been purchased by a larger company and its entire marketing team had been eliminated as part of the buyout). 4. Quality. DMC is committed to delivering the highest quality products possible on time, every time. vision statement developed reads as follows: Delcron Manufacturing Company will be an internation- al leader in the production of low-voltage power supplies for aircraft. 5. Employee empowerment. DMC is to seeking, valuing, and using employee input and feedback. committed Threats Participants identified and reached consensus on the following threats: DMC's pending loss of its 8A status, potential cutbacks in the development of new military air- craft in the United States, a tight labor market that could in- flate labor costs, and the potential for ever-increasing levels of competition from foreign and domestic sources. The SWOT Analysis 6. Partners. DMC is committed to treating its custom- ers, suppliers, and employees as partners. Prior to beginning the SWOT analysis, the authors placed four large flipcharts in the room. The flipcharts were labeled strengths, weaknesses, opportunities, and threats. Beginning with strengths, the authors led participants through a brain- storming session. Each time a strength, weakness, opportu- nity, by the group, the authors recorded it on the flipchart. Every time a flipchart page would fill up, the au- thors tore it off and a visible record of their work. Developing Broad Strategic Goals The final component of the first strategic planning session involved developing broad strategic goals. These goals had to represent actions that, if accomplished, would move the company ever closer to the full realization of its corporate vision. Before beginning development of the goals, the au- thors gave participants typed copies of the SWOT analysis. They explained to the executives that the Developing the Mission threat was identified by a participant and agreed on The executives at DMC found that developing a vision an- swers many important questions. With the vision in place, developing a mission statement was not overly difficult; it was just a matter of following the criteria set forth by the authors for well-written mission statements. Most of the discussion focused on wording as opposed to concepts. The mission statement the participants finally decided on reads as follows: corresponding she results of taped it to the wall so that participants had a broad goals developed should all satisfy one or more of the Discussion was intense at times, and there were dis- agreements among participants. One executive would iden- tify a weakness in another executive's area of and arguments would ensue. It took the authors a while to convince the executives to drop their defenses and to be open and frank without getting their feelings hurt or territorial. Another dynamic was that what one executive saw as a strength was perceived by another as a weakness. Once the authors worked through these and other issues that inevitably occur during strategic planning sessions, a cohe- sive group emerged and began to cooperate well as a team. The results of the SWOT analysis follow. following criteria: (1) exploit one or more of the organiza- tion's strengths, (2) correct one or more of the organization's weaknesses, (3) take advantage of one or more of the op- portunities available to the organization, or (4) respond to one or more of the threats facing the organization. With this guidance given, participants developed the following broad strategic goals for DMC: responsibility, of one on Delcron Manufacturing Company (DMC) is a design and manufacturing firm dedicated to providing high-quality products for the aircraft industry. To this end, DMC de- signs and manufactures low-voltage power supplies for military and commercial aircraft in the United States and abroad. 1. Expand the company's business base to include both military and commercial markets in the United States and abroad. Developing Guiding Principles 2. Strengthen all functional units in the company in the area of commercial products and markets, Strengths Participants identified and reached consensus on the following strengths: strong manufacturing capabil- ity, solid business contacts in the Department of Defense industry, a proven track record of excellent performance in completing contracts on time, low turnover rate with regard to critical employees, comparatively low labor rates (most employees of DMC are retired military personnel who view their salary as a second income), and an up-to-date facility equipped with modern technology. The authors described "guiding principles" to participants as written statements that convey DMC's corporate values. They encouraged the company's executives to mentally put the following sentence before the guiding principles in order to better understand what they represent: "While our vision and mission, we will principles in everyday operations and in all decisions made. The authors asked participants to brainstorm important corporate values without concern, for the moment, about wording. Participants were encouraged to simply offer up value-laden terms (e.g., ethics, quality, customer satisfaction) that the authors recorded on flipcharts. Once the terms had 3. Expand the company's core capabilities to include both design and manufacturing. 4. Fully achieve a Six Sigma quality level in manufacturing low-voltage power supplies. 5. Develop and implement a supplier certification pro- gram to create a reliable group of dependable, high- quality supplier partners. 6. Establish a comprehensive training program to mavi- mize the capahilities of all employes at all levels in the apply pursuing the following guiding Weaknesses Participants identified and reached consen- sus on the following weaknesses: no experience outside of the Department of Detense market, no marketing compo- nent, no experience being the lead contractor on a major project (all of DMC's work up to tracted to it by larger Department of Defense contractors, such as Boeing and Lockheed-Martin), no experience in the international marketplace, no design component (DMC had been a build-to-print operation up to this point), and no re- search and development component. company. With the broad strategic objectives established, the all been listed, the authors asked participants to select the six to ten that were most critical. With the most important corporate values identified, participants worked with the authors to develop more explicit wording for each one. The guiding principles developed are as follows: "strategic" portion of the plan was completed. Developing an action plan tor carrying out the strategic portion ot the plan would be scheduled later, after DMC's executive management team had communicated the vision, mission, guiding principles, and broad strategic goals to all employ- ces. The this spoint bad been subcon- All of DMC's employees and management 1. Ethics. personnel are expected to exemplify the highest ethical standards in doing their jobs. took place two months action planning later, and DMC began implementation of the new strate- gic plan graduated from the 8A program, it had expanded from immediately thereafter. Just two years after DMC Opportunities Participants identified and reached consensus on the following opportunities: expansion into commercial aircraft markets, expansion into international commercial markets, expansion into foreign military mar- kets (military aircraft of America's allies), and availability 2. Customer delight. In dealing with customers, DMC will go beyond customer satisfaction to achieve cus- tomer delight. under 500 employees to almost 700, and its business base 3. Continual improvement. Continually improving its products, processes, and people is a high priority for DMC. was growing steadily. The company now is well established in both commercial and military markets in the United States and abroad. The plan developed during a three-day, off-site session is working. of a strong international marketing team that can work in
the company was classified as an "8A" firm, it became eli- gible for government set-asides. Set-asides under the gov- ernment's 8A program are contracts awarded outside of the bidding process give such firms an opportunity to gain a foothold in busi- ness while learning how to compete without the set-asides. DMC entered this QUALITY TIP Importance of Executing Strategic Plans Good strategic planning is essential if an organization is going to outperform the competition. But just having a good strategic plan is not enough. The plan must be effectively executed. Execution is what separates the winners from the also-rans in the global arena. The work is really just starting once the plan has been developed. Effective execution is the key to outperforming the competition. to minority-owned firms. The idea is to arena sa manufacturer of low-voltage power supplies for military aircraft. Its 8A status lasted for five years. During this time, DMC grew from a small shop in a garage to a company that employed almost 500 people. When the company was just over a year from having to make the transition from 8A status to the competitive marketplace, company needed a strategic plan. For several years, these executives had been so helping it grow that they had given little thought to what would happen to DMC once it graduated from gram. Would the company be able to compete successfully in the open marketplace? Should it attempt to diversify into other markets? Should the executives simply sell the com- STRATEGIC PLANNING IN ACTION: A "REAL-WORLD" CASE its executive management team decided the This section guides the reader through the strategic planning process undertaken by a company that contracted with the authors to facilitate it. The process involved the company's exccutive management team and took place over a three- day period at an off-site location away from the company's facility. The strategic planning process always varies from organization to organization in specific details. However, this particular company was selected as an example because the process it underwent is representative of what most com- panies go through in developing a comprehensive strategic plan. This case should help the reader see how the various Developing the Vision busy establishing the company and Before developing a vision for DMC, the company's ex- ecutive management team had to decide if there would even be a DMC after graduation from the 8A program. Going ahead with the company would mean risking the investment of both their time and their money in DMC. On the other hand, these executives could probably sell their shares in the company, walk away with a handsome profit, and find high-level positions with other firms in the 8A pro- open pany and move on to other endeavors? These questions had begun to weigh heavily on the minds of the DMC execu- tives when the CEO suggested they hire a strategic planning consultant, go through the process, and see what transpires. The DMC executives hired the authors and went through the strategic planning process. The remainder of this section documents the process and its outcomes. their respective fields or even help start another 8A com- pany. After a lively discussion, the executives decided they had invested too much of their money and them- selves in DMC to walk away from the company now. Consequently, they turned to the task of developing a post-8A vision for DMC. The authors led participants through a lengthy discus- sion that revolved around the following questions (which came from the SWOT analysis): Should DMC stick with just domestic military markets or expand into the com- mercial marketplace, too? Should DMC consider pursu- components of the strategic plan fit together as well as how cach respective component is actually developed. Overview of the Process Developing a Strategic Plan: Delcron Manufacturing Company The authors set up the strategic planning process in the conference center of a resort about 75 miles from DMC's Delcron Manufacturing Company (DMC) started as a small, minority-owned Department of Defense contractor. When facility The idea, as they explained it to the company's ex- ecutives, was to conduct the strategic planning process at a location that would guarantee both privacy and focus. No ing contracts with foreign militaries? Should DMC parsne cellular telephones or visits to the office or home were al lowed. In addition, family members were not included. The authors explained that in order to come away with an accept- able draft of a strategic plan, the executives would need three entire days of uninterrupted, fully focused work. The group would be given a morning and afternoon break each day to international commercial contracts? Should DMC stick with low-voltage power supplies as its principal product or diversify into other product lines? Should DMC add a de- sign function or continue as just a build-to-print company? Should DMC add a research and development function to develop new product lines? Answering these questions was the most difficult part of the telephone calls that, their administrative assistants and family members knew how to reach them in the event of an The first hour of the first day was devoted to learn- ing the process and how it works. The authors explained all of the various components of the strategic plan (vision, the SWOT strategic goals). This first three-day session would conclude with the development of broad strategic goals. Another ses- sion would he scheduled during which the executives would develop the action plan component. The action plan session would involve a broader group that, in addition to the execu- tive management team, would include other management and supervisory personnel. The session would be conducted by the authors after each member of the company's executive management team had solicited input from all these employ- ees directly reporting to him or her Hew product and check e-mail messages. Beyond strategic planning process for DMC's executives How they answered these questions would determine everything else about the future of the emergency hese company and, correspondingly. about their professional futures. After an intense discussion, participants decided that DMC would need to expand into both commercial and foreign markets, while retaining its Department of Defense base. They also agreed that the com- pany's expertise is in the production of low-voltage power supplies. Consequently, they ruled out adding a research and development function, but they did decide to expand into design. The rationale of DMC's executives was that the com- pany would always be at the mercy of other, larger contrac- tors unless it could design power supplies in addition to just manufacturing them. With these questions answered, the authors were able to lead participants through the process of developing a vision analysis, mission, guiding principles, and broad
Transcribed Image Text:the company was classified as an "8A" firm, it became eli- gible for government set-asides. Set-asides under the gov- ernment's 8A program are contracts awarded outside of the bidding process give such firms an opportunity to gain a foothold in busi- ness while learning how to compete without the set-asides. DMC entered this QUALITY TIP Importance of Executing Strategic Plans Good strategic planning is essential if an organization is going to outperform the competition. But just having a good strategic plan is not enough. The plan must be effectively executed. Execution is what separates the winners from the also-rans in the global arena. The work is really just starting once the plan has been developed. Effective execution is the key to outperforming the competition. to minority-owned firms. The idea is to arena sa manufacturer of low-voltage power supplies for military aircraft. Its 8A status lasted for five years. During this time, DMC grew from a small shop in a garage to a company that employed almost 500 people. When the company was just over a year from having to make the transition from 8A status to the competitive marketplace, company needed a strategic plan. For several years, these executives had been so helping it grow that they had given little thought to what would happen to DMC once it graduated from gram. Would the company be able to compete successfully in the open marketplace? Should it attempt to diversify into other markets? Should the executives simply sell the com- STRATEGIC PLANNING IN ACTION: A "REAL-WORLD" CASE its executive management team decided the This section guides the reader through the strategic planning process undertaken by a company that contracted with the authors to facilitate it. The process involved the company's exccutive management team and took place over a three- day period at an off-site location away from the company's facility. The strategic planning process always varies from organization to organization in specific details. However, this particular company was selected as an example because the process it underwent is representative of what most com- panies go through in developing a comprehensive strategic plan. This case should help the reader see how the various Developing the Vision busy establishing the company and Before developing a vision for DMC, the company's ex- ecutive management team had to decide if there would even be a DMC after graduation from the 8A program. Going ahead with the company would mean risking the investment of both their time and their money in DMC. On the other hand, these executives could probably sell their shares in the company, walk away with a handsome profit, and find high-level positions with other firms in the 8A pro- open pany and move on to other endeavors? These questions had begun to weigh heavily on the minds of the DMC execu- tives when the CEO suggested they hire a strategic planning consultant, go through the process, and see what transpires. The DMC executives hired the authors and went through the strategic planning process. The remainder of this section documents the process and its outcomes. their respective fields or even help start another 8A com- pany. After a lively discussion, the executives decided they had invested too much of their money and them- selves in DMC to walk away from the company now. Consequently, they turned to the task of developing a post-8A vision for DMC. The authors led participants through a lengthy discus- sion that revolved around the following questions (which came from the SWOT analysis): Should DMC stick with just domestic military markets or expand into the com- mercial marketplace, too? Should DMC consider pursu- components of the strategic plan fit together as well as how cach respective component is actually developed. Overview of the Process Developing a Strategic Plan: Delcron Manufacturing Company The authors set up the strategic planning process in the conference center of a resort about 75 miles from DMC's Delcron Manufacturing Company (DMC) started as a small, minority-owned Department of Defense contractor. When facility The idea, as they explained it to the company's ex- ecutives, was to conduct the strategic planning process at a location that would guarantee both privacy and focus. No ing contracts with foreign militaries? Should DMC parsne cellular telephones or visits to the office or home were al lowed. In addition, family members were not included. The authors explained that in order to come away with an accept- able draft of a strategic plan, the executives would need three entire days of uninterrupted, fully focused work. The group would be given a morning and afternoon break each day to international commercial contracts? Should DMC stick with low-voltage power supplies as its principal product or diversify into other product lines? Should DMC add a de- sign function or continue as just a build-to-print company? Should DMC add a research and development function to develop new product lines? Answering these questions was the most difficult part of the telephone calls that, their administrative assistants and family members knew how to reach them in the event of an The first hour of the first day was devoted to learn- ing the process and how it works. The authors explained all of the various components of the strategic plan (vision, the SWOT strategic goals). This first three-day session would conclude with the development of broad strategic goals. Another ses- sion would he scheduled during which the executives would develop the action plan component. The action plan session would involve a broader group that, in addition to the execu- tive management team, would include other management and supervisory personnel. The session would be conducted by the authors after each member of the company's executive management team had solicited input from all these employ- ees directly reporting to him or her Hew product and check e-mail messages. Beyond strategic planning process for DMC's executives How they answered these questions would determine everything else about the future of the emergency hese company and, correspondingly. about their professional futures. After an intense discussion, participants decided that DMC would need to expand into both commercial and foreign markets, while retaining its Department of Defense base. They also agreed that the com- pany's expertise is in the production of low-voltage power supplies. Consequently, they ruled out adding a research and development function, but they did decide to expand into design. The rationale of DMC's executives was that the com- pany would always be at the mercy of other, larger contrac- tors unless it could design power supplies in addition to just manufacturing them. With these questions answered, the authors were able to lead participants through the process of developing a vision analysis, mission, guiding principles, and broad
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