The managing business
This report will discuss most of the materials covered in operations management course. Describing and discussing the transformation process in terms of transformed resources, input resources and transforming processes. In relation to the company chosen, it will present and discuss the operations in terms of the four V's, the five performance objectives, the strategy of the company: its order winners and order qualifiers, the volume variety effect on its process design and it will also discuss the modularization, commonality or standardization of its products and services.Presentation of the company
The company chosen for this project is Acer-group the holding company of Acer, Emachines, Packard Bell and Gateway, its respective sub-brands offers products with different brand characteristics that target different customer needs in the global pc market. (Jan 2010, Acer Group)
Acer produces electronic equipments, laptops computers, desktop computers, servers, LCD monitors and projectors. As well as its other brands: Emachines, Packard Bell and gateway that also produces computers and equipments related to computing in general.
Four years ago, Acer celebrated the 30 years of long term growth in the IT industry. Now, it bases strongly on its commitment in developing easy-to-use and dependable products that satisfies its customer needs. It concentrates on breaking the barriers separating the technology from people trough the creation of developing and improving hardware, software and services. Acer believe that ''innovation is not the mere creation of new technologies and solutions, but the guarantee that users receive the benefits of these developments, and feel truly empowered''. Focusing on the improvement of usability and adding the value to their customer needs. (Jan 2010, Acer Group overview)Transformation Process / Operations Management
Every organization should do operations management, because most of the companies produce mixtures of products and services. Unless it is a small company and the operations management will not be needed but will be done by other people who execute many other types of tasks such as accounting and marketing. (TARIK BRAHIMI, 2009)
First we will describe the transformation process of Acer. The company uses different parts and components to build a computer. A desktop or a laptop pc needs at least the essential parts to function: Motherboard, Processor, Memory (Random Access Memory, RAM), Hard disk, Keyboard, operating system and a screen. The Acer Company deals with different suppliers like Intel and AMD for processors and do make their own equipments in order to achieve the quality desired and satisfy their customer needs.The Four V's
According to Mr. Tarik Brahimi, the operations are different from each others, we distinguish between different types of operations by using the four dimensions referred to as the 4 V's of operations that are: Volume, Variety, Variation in demand and VisibilityAcer versus Competitor
The Four V's graph above shows that the Acer company has high volume of products produced, high variety of products (different specifications: Processor speed, capacity, memory and performance), high variation in demand since Acer target different customers from teen gamers to business people(ultraportable, gaming, business, entertainment known as: Acer travel mate, Acer aspire, extensa, etc...). (Acer website, 2010)The Five Performance Objectives
In order for a company to improve its performance, many techniques were developed to help improving operational performance, like the 5 performance objectives: Speed (being fast), Cost (being productive), Quality (being right), Dependability (being on time) and Flexibility (being able to change). The operations functions can provide a competitive advantage through its performance at the five competitive objectives. (Mr. TARIK BRAHIMI, 2009)
Here are the performance objectives of Acer:
- Speed: The time taken by Acer to achieve the customer order. (Sales, Services.)
- Cost: An appropriate price for the level of the quality of the product (Compared to competitors product specifications)
- Quality: Good quality computers that can last for a given period of time and that can provide the consumer with ease of use and full performance.
- Dependability: This would be related for example to orders online, shipping on time and warranty.
- Flexibility: Being able to make different computers (gaming, business, media) with different specs like the new Intel Xeon and i7 processors, high performance graphic card for gaming and nice design like the Acer Aspire Ferrari. (Acer, 2010)
The polar diagram consists of a very useful way to illustrate the relative importance of the five performance objectives; it is useful for illustrating the difference between different products and services. The polar Diagram below shows the difference between the Acer Company and another company producing similar products and services. (Pearsoned, 2010)
Blue Colored Line: Acer
Red Colored Line: Competitor
P.S: The similar industry player used (competitor) is made up for the example and not real.Strategy Bottom Up versus Top-Down
Every company needs a strategy if it aims at achieving its goals. In order for this strategy to be efficient the manager of the company should take into consideration the four steps of strategy formulation.
- A primary task should be defined: "What is the firm doing in business?"
- Being able to access core competencies: "What does the firm do better than anyone else?"
- To be determine its order winners and orders qualifiers: "What makes the people think the company have something that the others do not have and what qualifies an item to be considered for purchase ?"
- The positioning of the firm: "How will the firm compete" (TARIK BRAHIMI, 2009)
According to MR TARIK BRAHIMI ''the bottom-up view of operations strategy is to see strategic decision making as an accumulation of practical experiences, each idea is formed from previous experience faced by the company like dealing with the customers, suppliers and their own process.
According to the information on Acer group website: The Acer CEO and Acer INC Chairman J.T.WANG "is tasked with overseeing the group's global competitiveness. Since he assumed chairmanship in 2005, Acer INC's consolidated revenues grew from US$9.7 Billion to US$16.7 Billion in 2008" (Acer, Financial Reports, 2010)
This is absolutely one of the goals achieved in Acer's Strategy. Nowadays, Acer is the World top 3 companies for total pc's and number 2 for notebooks and it is planning on becoming number 1 mobile PC Company. This is the result of the good and efficient work of Mr. WANG and his promotion to Acer group in the summer of 2008 that insured smooth integration that follow the successful mergers and positive synergy of Gateway, Packard Bell and the future success and growth of the group. (Acer Group: Investors relations, 2010)Order Winners and Order Qualifiers
As reported by MR TARIK BRAHIMI. There are two factors that influence the customer behavior on buying a product:
- Winning factors: these are the perfect arrangement of resources that are assigned to the production and delivery of products and services. These things directly tend to win the business. They are the key reasons that make the consumer choose and purchase the product or service.
- Qualifying factors: those are the performance dimensions on which the customers expect a minimum level of performance. In other words, something that someone else could make. ''The operation's performance has to be above a particular level just to be considered by the customer.
For example, Acer's order winner factor this year is their new latest ultraportable notebooks, the Acer Aspire Timeline series. It packs the latest technology in the IT industry. The Intel Core 2 Duo ULV Processors with DDR3 RAM. The variety of screen size choice: 13.3, 14.1 or the 15.6 inch LED Technology display. Plus, the longest battery life called ''delight of road-warriors'' going up to 10hrs. (SLASHGEAR PC news, 2010)The Process Design Volume-Variety Effect
MR TARIK BRAHIMI provided us with a summarized definition of process design: ''Design is the activity which shapes the physical form and purpose of both products and services and the process that produce them''. He also confirmed that the volume and variety effect strongly influences any process. The concept of process types summarizes how volume and variety affect the overall process design.
In order for a manufacturer to increase volume and decrease variety he uses different types of processes exists, the jobbing process, the batch process, the mass and the continuous process.
As far as the volume increases, the variety decreases and vice versa. (MR TARIK BRAHIMI, 2009)
In the case of Acer, it concentrates on increasing variety as well as a medium volume depending on the demand-offer. (Acer, Products and Services, 2010)Bill of Materials Used for Acer Computers
Bill of materials is a list of the raw materials, assemblies, components, parts and the quantity of each needed to manufacture a final product.
Let's take for example an Acer Business Desktop Computer: It consists of a Tower that packs a motherboard, processor, memory, DVD/CD Reader and Writer, MB integrated Sound and Graphic Card, Chipset, Power supply, Wires, etc... A screen for display, mouse and a keyboard
All this components are assembled in order to have a final product (Central Unit)Productivity
"Productivity is a common measure on how well resources are being uses. In the broadest sense, it can be defined as the following ratio: Outputs/Inputs." (MR TARIK BRAHIMI, 2009)
There are 3 types of productivity measurement:
- Total Measure Productivity = Goods and Services produced/All Resources Used
- Partial Measures of Productivity= Output/Labor or Output/Capital or Output/Materials or Output/Energy
- Multifactor Measure Productivity= Output/(Labor + Capital + Energy) or (Labor + Capital + Materials)
For example, let's measure Acer productivity: A labor takes approximately 1 hour to pack components in a Central Unity (Desktop Computer). Which Productivity Measurement should we apply in order to know if the productivity is increasing or decreasing depending on the time gained or lost. (MR TARIK BRAHIMI, 2009)Modularity
Most IT companies uses Modularity for their products. The example of Acer modularization is computers with 5 choices of amount of ram, 5 hard drive sizes, 5 choices for CPU and 4 modem choices (500 possible computer configurations with only 19 different parts) (MR TARIK BRAHIMI, 2009)
All these parts can be used together to give a different finished product. For example a computer with 2 G of RAM, a 320 G Hard Disk, a Intel Core 2 Duo CPU and another one could pack 4 G of ram a 500 G Hard Disk, and a Intel Core 2 Quad CPU. These parts can be assembled depending on customer specifications and need. A gamer would need a good graphic card, a fast processor and a big size Hard Drive. A Student wouldn't need that much performance for text editing, internet and chatting.
I conclude that Acer is facing extreme competition in the PC Market like SONY and APPLE for example, but Acer is concentrating on developing its technology in the IT industry, by means of a top down process and by setting the goal to be a global PC and IT player in the market. It products are highly sophisticated, it already offers LED Technology screen like its competitors and a battery life of 10 hours that is the key of their competitive advantage. In my opinion, Acer computer are good values Quality-Price. It will soon be the leader in the PC Industry followed by its sub brands: Packard Bell, Gateway and Emachines. It is a successful move that I would call positive synergy. Since the two brands (Gateway and Packard Bell) merged Acer seeks to strengthen its global image with a new multi brand strategy and solid partnerships. Now it sets its goal on closing the gap from the world's number 2 PC Maker in the world.
References and Bibliography
- Acer Global Web site, www.acer-group.com 2010
- Acer Web site, www.acer.com 2010
- Acer, Corporate, www.acer-group.com/public/The_Group/management.htm 2010
- Acer Products and Services, www.us.acer.com 2010
- Acer, Investors relations www.acer-group.com/public/Investor_Relations/index.htm 2010
- Acer, Corporate News www.acer-group.com/public/News/corporate_news.htm 2010
- SLASHGEAR PC NEWS, www.slashgear.com/acer-timeline-ultraportables-8hrs-runtime-from-699-0840484/ 2010
- MR TARIK BRAHIMI LECTURES, BM204 Managing the Business 2009
- ECOUSTICS NEWS, www.news.ecoustics.com/bbs/messages/10381/179234.html 2010
- Online Research Papers, TQM, www.freeonlineresearchpapers.com/total-quality-management-objectives 2010
- The Strategic role and objectives of operations, PEARSONED 2010 www.wps.pearsoned.co.uk/ema_uk_he_slack_opsman_4/0,8757,1144836-,00.html
- Beta News, Branding Strategy www.betanews.com 2010