7/25/2010

Quality Metal Service Center

let's move on. a new one, but just 2 samples i think

SAMPLE 1

Background:

Quality Metals had a very old history about 100 years. In the beginning it was a local metals distributor. Nowadays, it had been a famous national distribution, and had a great of sales which exceeded $750 in 1991. I will give the SWOT analysis and discussing some questions to explain why it can become the leader of the industry.

1. SWOT analysis.

Strengths:

1) Target markets more effectively.

2) Better understanding customers’ needs in different geographic.

3) Develop techniques to increase market shares.

4) The strategy provides the framework for the development of the goal.

5) Excellent products and services, such as clean-room, high quality plastic.

6) The focus which on market is very collect and it can identify its market position very clearly.

7) A wide variety of products and a wide market (globalization).

8) High quality standards of products and production flexibility.

Weaknesses:

1) The organization is a little bit complex to control.

2) Because it just focuses on some specialty users, it will lose other customer and reduce the profits.

3) Because of two forms for company, thus, it is very hard to control the whole organization.

4) The organization structure is very clearly but it’s difficult to communicate between the board and superiors.

5) Rapid development of technology will expense too much cost and reduce the profit of company.

Opportunities:

1) The retrenchment can save time and force size in order to improve the quality of the service of the wide product lines and increase profits.

2) Just- in- time inventory management.

3) Better understanding of customers’ needs.

4) Few competitors.

5) Have major quality and productivity improvement program.

Threats:

1) Highly competitive.

2) Fragmented industry suppliers.

3) Financial problems.

4) Pricing fights.

5) Rapidly changing in business environment.

2. The metal distribution industry is highly competitive. The reason is that there are fewer companies in this field than those retail business or service industry, so more and more newer want to share a piece of cake in the market. QMSC is in the middle of the value chain. The company has its own part to treat the two different parts such as the purchase manager and the sales manager. Their responsibility is both inside and outside. First, there are some mills but not as many as they can. QMSC can only choose from them. And the suppliers sell their products in large lots. However, the buyers buy smaller lots the threat of substitutes are smaller than other elements.

3. Yes, in the investment center. The managers are responsibility for the segment’s, investment and asset base as well as the profits. Usually, evaluate based on the return on assets employed, evaluation might include a variety of measures such as profit, return on investment, residual income, economical valued added and a range of non-financial measures. Hence the manager in the districts should consider about the acquisition of new equipment, which is an investment for the segment. And also, they evaluated equipments and accounts receivable etc. based on the return on assets employed.

May be it can also be the profit center because the managers usually evaluated in terms of effectiveness in raising segment profit level and controlling costs.

4. Investment in machine $540,000

10 years cash inflow $286,000

PV of cash inflow $39,182

5. The expenditure is more than $10,000. Thus exhibit 5 is not good for him it can get longest management goals as close as to the company.

6. Yes, it more effective. Commence:

 Multiple performance measure

 Management service histories

 Strategy paining

 Management’s knowledge different operation.



SAMPLE 2

1. Conduct a SWOT analysis

Strengths:

1) Better understanding customers’ needs in different geographic.

2) Target markets more effectively.

3) Sell high-technology metals such as carbon alloy bars, stainless steel, aluminium, titanium, copper and brass.

4) Excellent products and services, such as clean-room, high quality plastic.


Weaknesses:

1) The organization is a little bit complex to control.

2) Because it just focuses on some specialty users, it will lose other customer and reduce the profits.

3) Not in a form of a flat structure organization.

Opportunities:

1) Just- in- time inventory management.

2) Few competitors.

Threats:

1) The price of raw material increases.

2) Rapidly changing in business environment.

3) It’s a mature industry, so the company must keep up with industry trends to not to lose customers.

2. Outline the competitive strategy of QMSC. (Hint: you need to consider the metal distribution industry and where QMSC is in the value chain. You can include in your answer issues such as: supplier power, buyer power, threat of substitutes, entry barriers (if any), competition or rivalry among existing companies).

QMSC bases strategy on product differentiation. And there are three fundamental objectives guided Quality. Objective 1: To focus sales efforts on targeted markets of specialty metal users. Objective 2: to identify those industries and geographic markets where these metals were consumed. Objective 3: to develop techniques and marketing programs that would increase market share. QMSC is in the middle of the value chain. It purchases from mills including USX, Bethlehem, Aloca, ect. and is able to get inventory for a cheap price from purchasing by bulk.

The company has its own part to treat the two different parts such as the purchase manager and the sales manager. Their responsibility is both inside and outside.

3. Responsibility structure: should districts be investment centres? What else can they be? Why?

The districts should be investment centres. QMSC has 4 regions, and each of which had about 6 districts, totally 23 districts. There are staff departments in finance, marketing, operations and human resources. So, it makes it easier for operation and better manage and evaluation if the districts are investment centres.

Besides investment centres, responsibility centres can act as expense centres, revenue centres as well as profit centres.

The following questions are from the text p.305

4. Is the capital investment proposal described in Exhibit 3 an attractive one for Quality Metal Service Center?

Yes, the purpose of a company is to maximum the profit, and as Elizabeth Barret suggested, it can help company to make more profit. So the capital investment proposal described in Exhibit 3 is an attractive on for QMSC.

5. Should Ken Richards send that proposal to home office for approval?

Ken need send this proposal to home office for approval, because this proposal is good for the company and can make a lot of profit for the company. And another reason is, capital expenditures in excess of $10,000 and all capital leasing decisions require corporate approval.

6. Comment on the general usefulness of ROA as the basis of evaluating district managers’ performance. Could this performance measure be made more effective?

The Return on Assets (ROA) percentage shows how profitable a company's assets are in generating revenue. An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. ROA can be computed as

Net Income/ Total Assets

To make it more effective QMSC can use: Multiple performance measure, management service histories, or strategy paining.

Can you find the company on the world wide web? What is the history of the company? Any other information that you believe is relevant to Quality Metal?

Can’t find this company on the WWW, maybe this company has wound up, or it doesn’t have the website.

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