Risk Management and Capital Structure and Lending at Banks - Assignment Example

OPERATIONS AND INFORMATION MANAGEMENT Name: Institution affiliated: Date of submission: Tutor: Question 1 There is an increase in new markets as the world continues to take a bold step to make it a global village. Many of the companies are trying to win over the loyalty of the consumers in the new markets. New products are increasing being produced that are more efficient in terms of the performance and the type of services that they produce. Some areas in the World are never reached by some of the services that are offered by the large companies, yet such areas stand as potential markets for the products of such companies. Most companies have their operations in perfect competitive markets and thus their products are the same only that they are differentiated. The automobile industry for example is one that faces a lot of competition. The process of designing and developing outstanding products for the automobile industry requires that major factors be considered. Decisions are required to be made on the processes to be implemented and proper planning to be effected. The company developing the new product design should understand the interrelationship that exists between the designs and the processes. Product design involves a number of stages namely functional design, process design and production design. The functional design involves the determination of the form that the product will take in terms of the materials to be used, the size and shape of product. The production design focuses on the production line and the plant layout for the project. Finally, the process design, being the point of discussion focuses on a number of factors which include the processing technology required, the tooling, the nature of the market place, the nature of the product and the nature of the business [Jok05]. While there are many types of process designs, the automobile industry has its priorities on three major types namely the product focuses designs, process focused designs and the technology focus. The automobile uses the discrete unit for the product focused that is mainly referred to as the production line. In this type of process design, the conversion of the raw materials to become a finished product is done based on the sequences of operations required. Products in this system move through different stages and in each stage a new component is introduced as the product is assembled to become a finished product as per the demands of the public. Factors affecting process designs Nature of product The nature of the product encompasses a number of factors among them being the demand for the product, brand management, customer relationship, strategic expansion, quality of the product and product development. The demand for any given product fluctuates over time and thus a number of factors need to be considered to help keep the demand high even during the low demand seasons. The price of the product highly affects the demand of the product and thus the quality of the product should be consistent with the prices set by the company. Likewise, the prices set by the company should also be consistent with other prices that are set by the competitors in the market. The production processes for a company where the demand for the product is high, must have an adequate capacity to manufacture extra volumes of the products as per the wants of the customers. Provisions to keep pace with the demand patterns of the automobile company must be made for expanding the capacity. Product development management is a factor that seeks to enhance quality of the final product. It ensures that all the components of the product are manufactures within the set standards such that after the assembly of the components into a final product, quality is achieved. The management of the product helps focus on developing and broadening the company’s competencies in new technologies to enable the companies optimize and standardize their processes to better quality products. Under the product management program, the issue of quality management arises and it seeks to encourage value addition on every product that they produce. Both quality management and product development management help increase the product’s responsiveness to the desires of the consumers. The business World has always been the most dynamic in terms of the events and activities that take place each day, each hour, each minute, each second and every single millisecond. It is such changes that some investors take advantage while some others are taken advantage by the changes. The emergence of new companies in the automobile industry has increased the competition between companies in the same industry. The companies ensure that their products are more appealing to the consumers since they develop products that go beyond customer satisfaction by enhancing value creation for the customer. The customers of these companies have thus developed confidence in the products, the brand names and the companies that develop these products. It has enhanced customer loyalty by locking in these customers to the products that become difficult to convince them that any other brand can satisfy their needs. Degree of vertical integration Vertical integration refers to the quantity of production that is under the ownership of the business. The distribution chain is also an important factor in vertical integration. Both the production and the distribution chain helps in the planning and designing. Changes in the production and distribution chain thus determine the planning process and the designs that need to be made to fit the current consumption requirements. Both the production and the distribution chain in the planning process determine whether the company has the ability to keep up with the production or they should use strategic outsourcing. The decisions to be made on vertical integration are determined by the costs, availability of capital, technological capabilities and the quality of the products to be made. In case the new product designs costs exceed the revenue, then strategic outsourcing should be conducted. Strategic outsourcing is the process of contracting out business processes to other parties or companies due to lack of capital, lower technological capabilities and cost reduction. The outsourcing process is done in order to act fast to the changing needs of the customers, changes in competitor actions and changes in technology. Vertical integration in the automobile industry is thus an important factor that affects the product process designs. Production flexibility The production flexibility entails two major factors namely; product flexibility and volume flexibility. The consumers’ needs and preferences are often changing and to keep an automobile company ahead of the others, then they have to be flexible in both the quality of product they provide and the types of product they offer. Product flexibility in the automobile industry allows for the availability of the products to the consumers. The products in the automobile industry are usually differentiated in such a way that they provide satisfaction to the different classes of people. To allow for different classes of consumers to use the products in the automobile industry, then they should ensure they are flexible in their production. Production flexibility affects the process designs as it allows for quick system changes from producing one product to another as per the demands of the consumers. Once a company in the automobile industry acquires a good market share, then the company should ensure flexibility in the volumes of the products. The changes in the customer preferences would mean that at one time, more of a particular product is in demand thus the need to increase the production of that product. Volume flexibility affects process design as it allows the automobile industry to quickly increase and decrease the volume of production. Production flexibility essentially affects the product design through both product flexibility and volume flexibility Degree of automation The degree of automation is mostly affected by the level of technology that has been adopted by the automobile company. Advancements in technology are encouraged as they offer better quality goods that are reliable and meet all the interests of the customers to increase customer satisfaction and sustainability. Product process design is a very vital factor to customer satisfaction. In order for a company to be successful, they have to ensure that they continually satisfy their customers. It is only possible when they improve their current product and continually designing new ones. For a new product design to be successful, the manufacturer should consider the research design, product lifecycle, safety in use, production costs, reliability, regulatory and legal issues, maintainability and sustainability. Sustainability of the product encompasses four major aspects namely; life cycle assessment, value analysis, remanufacturing and recycling. The life cycle of the product focuses on the environmental impact that the product has through the course of its life. Value analysis looks at the part within which the products seek to increase its revenue while reducing costs incurred. The value analysis therefore includes analysis on basic quality, excitement quality and performance quality. The basic quality entails the requirements that are placed on a product that do not necessarily affect the satisfaction of the customer but may lead to dissatisfaction if they miss on the final product. In the automobile industry, the quality of the seats may not be the best and may end up bringing dissatisfaction to customer. The excitement quality brings in the impression that unexpected feature may cause the customer extra excitement. Finally, the performance quality can either lead to satisfaction or dissatisfaction depending on the usefulness of the product and its intended functions. The remanufacturing aspect in the automobile industry provides for the replacement of old and worn out or defective parts of the product. The recycling involves the recovery of old materials for future use. The aspect of reliability could be viewed as a measure of the ability of a given product to perform its intended functions. Reliability has a positive impact on the company’s sales and thus bringing out a positive reflection on the brand’s image. To improve the reliability of the final product in the automobile industry, the manufacturers should use provide for improvements on the individual components through improved testing, improving the system design and improving the user education. The degree of automation has its advantages both to the end user and the manufacturer in that it helps improve the product quality. When quality is achieved, the end user get value for money on the products purchased and the manufacturer enjoys more profits as the demand of the product increases. Similarly, the automation factor helps in the reduction of labor and other related costs. The automation factor however, has its shortcomings among them being that the purchase of the new equipment for the new technology may be very expensive to the company. Similarly, the integration of the new automation process into the market may also be difficult. Quality of the product The traditional point of view had it that for high-quality products to be manufactured in the automobile industry, then they had to be manufactured in smaller quantities. The increase in demand for a variety of products would later force the manufacturers to design and produce more of the products. With the current advancements in technology, the production of the automobiles can be produced in mass production industries that have automated their machinery. The automated machinery can produce products of incredible uniformity where the consumers are demanding for similar products. The choice of the designs for the automobile industry for the production process is usually affected by the customers demand for superior quality product. As a result of the globalization, regionalisation and market convergence and the increasingly diversified consumer collective behaviour, the manufacturers have new demanding requirements in the automobile industry. Where the quality of the product is concerned, there is an increasing pressure from the consumers as they demand for innovation and flexibility in the development of the products. Risk management Projects involve a lot of risk taking. The type of technology to adopt, the adaptability by the consumers, innovation is part of the risks that the businesses take. Risks affect the process design and should be considered always before undertaking any project. Risk management identifies the inherent risks of a project and hence helps in planning, mitigation and tackling the essentials of a project. The early identification and mitigation of risks is an important risk management tool for the projects. Most management practices agree that risk cannot be eliminated in full, it can however be reduced to effectively manage the project [Sin04]. The major sources of innovation include the customers’ demands, research and development for the basic and applied research, engineering alternatives and managerial decisions made. Innovation in management is considered as the application of better processes and promoting the development of new ideas to meet the new requirements in the changing markets. Competing companies have embraced research into their market to find out the demands and requirements of the consumers of their products. The consumers’ demands are always changing with changes in the income and needs. These changes in demand are as a result of changes in consumer tastes and preferences [Sin04]. Question 2 For any given project management, the management team works towards ensuring that the project acted upon within the set criteria and does not exceed its set limits. The established criteria cover the budgets, contractual requirements and scheduling. The contractual requirements consist of the performance of the organization, quality observation, safety and regulatory requirements and reliability. For a project to be acquiring acceptability of being a project, it should have a number of constant factors. The project should be unique and should adopt innovative strategies. Research and development should be encouraged in a project to allow better processes to be adopted and more quality goods to be manufactured. A project should be unique and should have a single, definable purpose or goal and well defined end items or deliverables. Project management defines a project as being a largely unfamiliar and risky undertaking, should be a contemporary activity, having something at stake and being in the process of working towards achieving a goal. The project management also identify that a project should utilize the talents and skills from different professions in the organization Projects, especially in the automobile industry may have many processes and thus continuous evaluation of the project should be made. Evaluation allows the project to adopt changes where the management identifies gaps or weaknesses in the project. The evaluation thus ensures that the project meets its desirable criteria as per the preferences of the client. Planning and scheduling is another operational performance management that influences the decision making process of an organization. During the course of the project, necessary changes need to be effected and may require the scheduled plan to be realigned to make way for the changes. In such a case, more resources may be necessary for the changes to be adopted. The management should thus factor in the necessary changes for the project and determine whether they would still be economically viable for the project. Constant review of the resources is necessary for the project management to ensure efficiency and effectiveness in the management process. Both the human and natural production resources should be effectively managed to ensure that that the manpower and the resource handling techniques do not overlap the expectations of the project. The management of a project should be done in phases. Each project has five defined phases; the introduction, definition, planning, project execution and product delivery. When the management proposes a project, they start with the strategy and concept definition phase. This phase comprises of five stages starting with the project planning, an agreement on the accompanying business case, a feasibility, information of the ongoing market monitoring systems and understanding the performance, prices and expectations of the customers, their potential for purchase and the effects on the competitors. The second phase entails the approval phase for the project. In this phase, the additional customer and market research is done to ensure that the project would become feasible to the organization. The phase allows for strategy implementation and risk management. The third phase is the design and validation phase. When phase two of the proposed project is approved, the project is released for production risks are accounted for and carefully evaluated and final irreversible decisions are made in this phase. The phase allows for techniques to be completed and the control system to be designed or redesigned for the new design project. The volume ramp phase is the fourth stage and it allows for the preparation for production and sales to approve new design project. The final phase is the market entry where the manufactured vehicles and distributed to new markets to launch the market. The identification of options allows the organization to achieve its set sales estimates. Conclusion With the competitive structure in the automobile industry, companies in the sector need to identify their competition both from within and from the external competitors. Competition can help a company increase its market share and move ahead to become a market leader. Competition, on the other hand, can make a company lose a grip of its previous market share and become a market follower. This depends on the competitiveness of each market player. Project management should be encouraged to help understand each project that the company takes and its expected estimate sales and costs expected. With highly skilled personnel and the adoption of up to date technology, a company in the automobile industry would work to manufacture unique automobiles to help increase their market share. The study identifies that the automobile industry however, has its shortcoming. With the diversity of the consumers that the industry serves and the many manufacturing companies available, it may be hard to maintain a proper market share. For a project based organization, the management it tasked with the duty of constantly sourcing for new projects to suit the diverse needs of the consumers. Nevertheless, with a flexible management team, the organization is able to achieve new ideas for new projects and ensure proper resource management. REFERENCES Jok05: , (Joke, et al., 2005, p. 6), Sin04: , (Sinan & Philip, 2004), Read More