A lot of what we have been talking about in class is different methods of forecasting. We have talked about forecasting using trend projections, moving averages, weighted moving averages, and exponential smoothing, just to name a few. What if these common forecasting methods didn’t work for a business? What could the business rely on to make predictions for the future? This is one of the main challenges that face the new CEO of Research and Motion (RIM). Thorsten Heins was recently named the new CEO of RIM after two longtime co-CEOs step down from their management role. RIM long ago was best known for pioneering the smartphone industry with its Blackberry device. Then along came Apple, who changed the idea of a smartphone from a corporate device to a consumer friendly device. The biggest problem RIM has faced in the past was not being able to keep pace with the likes of Apple and Google’s Android operating system, which have continued to evolve and capture a majority of the market share away from RIM. One of Thorsten Heins first tasks will be to get RIM out of the whole that it’s in. To do that he will have to make some important decisions to regain investor confidence and to reshape RIM.

“One thing’s for sure: it would be unwise to rely on tried-and-true approaches that don’t fit the times. Trend lines, market sizing, and competitive benchmarks that served companies well during periods of gradual market evolution do little good in industries where new technologies create seismic shifts, demand is uncertain, and rivals emerge from left field” (Wunker, HBR).

How can RIM (and other companies in the same boat) chart effective strategy in uncertainty?

 

This article was obtained from Bloomberg Businessweek that was originally posted on Harvard Business Review on January 23, 2012.

http://www.businessweek.com/management/when-annoying-your-customers-is-best-practice-01242012.html

 

Where I work, I am responsible for analyzing how the documents we create are doing. We post them on our website and I conduct quarterly analyses, sometimes I am happy with the results, but sometimes I am not. I take the analysis and predict how to target market will react to the potential introduction of a new document. If the numbers are looking hopeful, I then provide a “green card” to that type of document to go forward on spending our resources on such documents. With that said, these analyses are not always stable. They can be seasonal; can depend on the economy, and/or what our clients are concerned about that quarter. Being able to forecast the public reaction toward a given document is crucial to our business, so we do not waste time on a project that might not do great when published.

When I was reading an article in Businessweek titled, Hewlett-Packard’s Shares Plunge After Forecast Misses Estimates, I thought of our class and what I do. HP experienced a major plummet in their stock prices because of a shortfall on demand for their services. This happens to every company eventually, but it was a little out of nowhere because analysts’ predicted otherwise. If only they knew how good their tracking signal was, maybe this would have been avoidable.

When should a company know better than trusting numbers? I believe a company should hope for the best, but always be prepared for the worst.

 

The article has been provided for your reference.

When learning about the product life cycle, it made me think about the different stages products experience. The stages are: Introduction, Growth, Maturity, and Decline. There are lots of different aspects that are considered during each stage and the long hours that are invested to extend the product life cycle for a product as long as possible.

The stage that interests me the most is the introduction stage. The introduction is a very important stage. It is the start to the whole cycle and once the product has made it out of the introduction stage it can then extend its life through the cycle. But there are many products that don’t get the chance to make it past the first stage. Since this year has only just begun I was interested in looking at all of the products that had been introduced or launched within the last couple years.

One product launched that did catch my eye was the iPad. There are lots of key bullet points within the introduction stage that developers need to pay close attention to: product design and development critical, frequent product and process design changes, attention to quality, high production costs, short production runs, limited models, etc. The introduction stage is the most important because it is the chance to finally get your product out in the open for everyone to see. But, if the product does not successfully make it through this stage it will not continue on a journey through the cycle with many years to come. The iPad has clearly made it past the introduction stage in the present year and did a great job at executing all of the key points when it was first being introduced. The developers at Apple Inc. has to endure a long list of questions and prototypes to nail down the touch-pad tablet. They also used a series of promotion techniques with videos of conferences and commercials to make the new device known and distinguish it against their competition. They needed to understand what was important to their customers and competitors to be able to release the product with a bang. Apple isn’t new to the market and had the advantage after already being established. But what about other products that enter the introduction stage? New products or product launches endure a similar process to Apple’s when first being introduced and can experience the same types of questions and challenges.

So my question to you is…

Which out of the four stages (introduction, growth, maturity, and decline) do you feel is the most important? and why?

Or

Can you think of a product that did a good job in the introduction stage or any other stage? and why?

 

Your typical foreign car (BMW, Mercedes-Benz, Toyota, etc.) is almost always classified as being “well-made”or reliable. On the other hand, the quality of your average American car tends to be looked down upon. But why? The idea that American cars are unreliable or poorly made has no real facts to support itself.

In my opinion, the notion that “Perception is Reality” is the main reason why this rationalization exist(and maybe the Ford Pinto lol). Supposedly, we each make our own realities through our own perceptions. Quality can be categorized as either perceived or objective. Objective qualities include performance, usefulness, responsiveness, etc. Perceived quality is directly related to how satisfied the customer is. For instance, some may think a Cadillac is more stylish than a Lexus or that a Ford truck has more use than a BMW SUV, therefore more “quality” in their eyes.

Obviously, if a company wants to become a profitable organization their product or service must cater to the needs/desires of  their consumers. Additionally, consumer  expectations tend to all stem from various personal needs, popularity, word of mouth, and past experiences. In actuality, two average priced vehicles, American or foreign, usually perform about the same. Many of these foreign cars also happen to be built in America. BMW has invested $4.83 billion in its sole U.S. assembly plant located in South Carolina and Toyota has several plants across the nation. Don’t get me wrong, I personally love foreign cars.

The formal definitions of quality include: product -based(measurable attributes), user-based(better performance), value-based(quality vs. price), and manufacturing -based(conformance to standards).

I believe quality is considered to be subjective because what may be a quality product to you may not meet the standards or needs of someone else. With that being said, do you think that companies should always strive to exceed consumer expectations or just consistently meet them (in terms of product quality)? Do we each have our own idea of what we consider a “quality” product or service?

This past class we learned about the “Product Life Cycle” as well as the decisions management has to make when introducing a new product.  A company usually has many strategy options on how to go about offering a new product, but overall the main goal is to “meet the consumer’s wants and needs.”    Not only that, but they also want to be sustainable and create a competitive advantage.  Well, in the past couple of years Apple has done a great job doing just that with its innovative products.  The technology that has recently been receiving a lot of attention is their tablet, the iPad.

Apple’s introduction of the iPad was clearly a successful one, and this then began the tablet phenomenon.  All of a sudden, it became a necessity in the eyes of many consumers.    Upon seeing Apple’s success many companies followed and created their own tablets.  For many of these “followers”, this was not even the right market for them, but upon seeing Apple’s success they felt compelled to.

I was one of the many individuals that decided to go with the “inexpensive option” and buy a “follower’s” tablet.  At the time it looked like a great idea because I would have something similar to the iPad, but at a much cheaper price.  What I did not know at the time was that the price mirrored the quality.  This specific tablet turned out to be a “low performance, low cost” product, hence why it was cheap on the market.  It seemed as if it was put together without any proper research—simply created just to compete with Apple.  The issues were endless; everything from the actual hardware to the software and I was left unsatisfied.

Typically in a PLC, the introduction stage is the most important stage for a product.  The reason being is because the growth stage depends on it; the phase where you actually begin to profit.  If you succeed in your introduction stage which includes proper research and development, constant quality tests, good marketing, etc., you are able to enter the growth stage and go beyond.  It seemed as though this specific tablet company literally crashed every path in the process of their introduction phase just so that they could get their tablet out on the market.  The consequence of that was that this product ended up being a loss for the company because it never went past the introduction stage.

This article I found on KnowThis.com breaks the introduction stage into two parts—an early and a late stage.  It talks about the basics of what it takes to get past the introduction phase and the challenges faced by many companies when introducing a new product, similar to what this tablet creator was faced with.  Read the complete article at: http://www.knowthis.com/principles-of-marketing-tutorials/planning-with-the-product-life-cycle/introduction-stage-of-the-plc/

My question is:  why do these major companies set themselves up for failure like that, even though there have been plenty of examples in the past where a similar mistake was made and it led to nothing but disappointment?

The notion of having friends in life is powerful. But even more powerful is the importance of supply-chain management. In a recent

article, Apple, Inc’s various suppliers are readily learning the importance of inviting other mobile devices companies as friends into their supply

chain management circle. According to the article “Down the Apple food chain, profits and some worry”, Apple, Inc’s suppliers are so hung over their relationship

with Apple that business elsewhere has nearly gone extinct.

 

For example, Tri-Quint, a supplier of power amplifiers that help Iphones communicate with cell towers are experiencing growth due to

its decreasing shares of stock by 58% in 2011. A good reason is due to the fact that Tri-Quintis so focused on its biggest customer rather than leveraging its

relationship with Apple, Inc’s many competitors. According to the Chron.com, “things have gotten so bad for Tri-Quint that the company had to help makers of Android mobil devices find new suppliers.

 

Despite the problematic concerns over Apple, Inc’s various suppliers, one suppliers of the technology company (Cirrus, Inc) has seen the better days–since its price of stock has risen 39% this year. The success of Cirrus, Inc is due to the intorduction of Apple 4S–whose intro is mainly due to the Cirrus technology. However, Cirrus has plenty of other suppliers. It is easy to claim that if indeed Cirrus keeps Apple, Inc as its only market, then stock prices will indeed fall.

 

As a question to my classmates, what is the importance of keeping many buyers in hand instead of dealing with one big buyer?

Below is the link to the article:

http://www.chron.com/news/article/Down-the-Apple-food-chain-profits-and-some-worry-2697299.php

 

We recently discussed forecasting in class, and it made me realize how important this step is in operating a successful business.  I think it was a great way for me to understand the “behind the scenes” operation of a business, and what they usually do to achieve those goals.  I personally thought companies just forecasted their sales goals simply by percentage, which may be the case for most business but not all.  If for example a company did 100 sales in a given period, they would want to increase those sales by a certain percentage.  I never realized that they used a moving average, a weighted moving average, or even a trend projection.  It seems like all of these things are potentially a good way to project sales, but which one should a company use?  Should companies use different forecasting methods based on their industry, or would they use all methods to get an idea of their sales goals?  What if they’re not in the sales industry?

I currently work for a worldwide bank in a department that doesn’t produce any revenue, but we still set goals for ourselves.  Instead of forecasting sales goals, what we try to do is forecast future spending.  We are looking to continually decrease our spending, and trying to determine why our spending is so high.  What we found is that the quality of the products we had purchased was very low, and in turn causing us to frequently replace those products or requires much maintenance.  With the approval of management, we decided to purchase quality products that will work well with our systems, and which will not require frequent maintenance.  We found that spending the extra money on these quality products will decrease our maintenance budget by a significant amount and will save money in the long-run.  Although our spending was higher in the last few quarters with the purchase of quality products, we are hopeful to see results that would prove our speculations to be true.  If all goes well and these products are as good as they make them sound, we should start seeing our spending reduced by at least 12% each quarter.  I think Senior Management will be glad to see that we were able to come up with an action plan to significantly reduce our spending, while maintaining the same quality service that people expect (if not more).

Do you think there’s other ways to forecast goals?  What ways?  Can you think of any type of company or industry that will not be able to forecast their goals?

Most of us can agree that around every corner, we are bound to see some sort of Apple device, whether it is an iPhone, iPod, iPad, or Macbook.  Apple has found a way to sneak up into our everyday lives.  The last time I remember Apple computers being in demand was during elementary school, when all the kids fought to play Oregon Trail on the Macintosh.  But somehow Apple has managed to penetrate the market and dominate its competitors

In class we went into detail about the product life cycle and its different stages.  So far, Apple has passed its Introduction, and Growth Stage.  Currently Apple is without a doubt in their Maturity Stage.  Their stock price just keeps rising, and they are seeing nothing but profits within the company.  Orders of high volume are constant, and they are always finding new ways to innovate their products.

Recently, Apple released their 4^th quarter earnings and they are apparently now worth 97.6 billion dollars.  This makes them the worlds most valuable company.  I’m curious to see when, or even if they will ever go through their Decline Stage.  It will be interesting to see how they will deal with this situation, and how long will it take for this Apple to go stale.

 

What is your opinion? Do you see Apple reaching its Decline Stage within the next couple of day or the next couple of decades?

 

Reference: http://online.wsj.com/article/SB10001424052970203718504577182750231602744.html

http://money.cnn.com/2012/01/24/technology/apple_store_sales/index.htm

The link above is an article about how the value of a single Apple store compars to the value of the White House. It says that the total value by each square foot is almost the same with a single Apple store. The Apple store is worth $4,709 per foot and the White House is $4,752.  This does not mean all the Apple stores that are all over the world, but just ONE single apple store compared to the White House.

In class we are learning about product quality. One of the nine dimensions of product quality is reputation. The article says that one of the main reasons that Apple is doing so well is not only because of their products, but because of their brand identity. Their brand identity goes along with their reputation for having trendy designs, reliable, and top quality products.

Other companies that did not create this brand identity for its reputation do not have the same kind of intangible qualities for its product. If you see a picture of a white apple you automatically know that its an Apple brand product. Even if you just see an apple, the fruit, you think of Apple and how you want their new iPad. The fact that I have to insert “the fruit” so you do not mistake it for the store is an example of their reputation. Whenever you hear the word apple you are probably thinking of the store and do not remember you actually eat them. When you even read the title of this post, you could probably picture an Apple store with its clear glass walls and huge Apple on the front and you can picture the White House just as clearly if not a little less.

This dimension of product quality is not seen in many other companies. If you think of Dell there is no such image that comes up to your mind except for just a regular laptop. Picture a Dell store. I can’t and I am not even sure if they have one other than selling them through retailers like Best Buy. That should be a problem. If you ask any random person what the logo for Dell is they probably won’t even know that inside the circle of their logo one of the letters of the word Dell is actually sideways.

My question is should reputation be one of the most important dimensions for product quality? Should other companies follow Apple’s example and try to create an identity for themselves that others can see as an icon?

In class we talked about the differences between natural variations and assignable variations.  Variations that affect all parts of production are natural variations or common causes.  Variations caused by a specific reason are classified as assignable variations or special causes.  I’m sure you’ve all seen the movie Elf.  If not, you must go out and see it because it is the perfect example for variations.  Buddy is a human who was raised by elves so he believes he is one too.  When the elves are preparing to make toys for the holidays, Buddy always under performs in his quota.  In this case, Buddy would be the special cause since he is sub par with his products and numbers.  So what does the management decide to do with a self-proclaimed cotton headed ninny muggings?  Well, in Buddy’s case, they keep him as a toy tester and I think we all know the rest of the story.

As a manager in the real world, things aren’t as easy as running Santa’s toy factory.  Variations can be tricky to determine and how to handle them because ever decision made costs the company money.  Had the problem for a production facility been a common cause, there would have been certain tests to tell whether the process was in or not in control.  In special causes it is usually more difficult to determine because one specific issue can lead to problems.  To deal with special causes you get rid of the bad and incorporate the good.  Control charts are looking to determine problems are natural or assignable variations.  Based on the shape of the curve, we can tell what the problem is likely caused by.  If Santa wanted to find where his variations were coming from he could look at the frequency, size, and consistency of the curves.  Clearly Buddy would obviously be inconsistent with the rest of the chart and Santa would then find his problem.  Although I’m sure that in the real world, the cotton headed ninny muggins, or a poor performing employee, wouldn’t be sent to the back to test jack-in-the-boxes.