HBO Case Analysis - ABC Steel Company

Pamantasan ng Lungsod ng Maynila Graduate School of

ABC STEEL COMPANY Case analysis Submitted by: Lacsamana, Edita Mara Manay, Christer Montalbo, Hanna Kristine Ordonez, Joana Dyan Rivera, Glaiza Human Behavior in Organization 6:00pm – 9:30p.m., Mondays 2nd Semester of SY 2013-2014 Submitted to: Dr. Neri Pescadera

1. Viewpoint Mr. Robert Cruz (The newly appointed Shop Manager of ABC Steel Company) 2. Time Context Three (3) Months 3. Statement of the Problem Numerous backlogs resulting from poor production control 4. Statement of the Objectives To eliminate backlogs within the three-month time period 5. Assumptions o The newly appointed Shop Manager has substantial knowledge as to the production process and personnel involved in each process. o The Shop Manager has authority given by Top Management to revise or implement changes on certain policies that may be needed to improve the existing system. 6. Areas of Consideration Strengths  ABC Steel Company was one of the largest producers of fabricated steel products.  Its specialization in its industry gives its edge as to its competitors.  They have machineries and equipment that can be used for the production of its specialized products  Robert Cruz - his drive to implement policies and procedures  Robert Cruz – his experience as a sheet metal worker and as an instructor. Weakness  Production Control is the worst problem in the shop  Production control was a “hit and miss” affair  Shortage of skilled manpower  Serious “discipline” problems  Unwillingness to adapt to new management/new leader  Familiarity threats as to members especially on performance evaluation  Poor organizational policies  Inability to achieve cost efficiency  Lax employees  Targets were unrealistic  Shifts in manpower requirements were not anticipated  No consistent “follow-up” policies  Machine scheduling was so poor Opportunities  ABC Steel Company has penetrated the market and has its own market share  It was one of the country’s largest producers of fabricated steel products  Supervisors and leadmen (under Mr. Cruz) will be given a supervisory training

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Threats

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The Company’s inability to meet deadlines might cause loss of loyal and recurring clients The continuous inefficiency in the production may cause breach of contracts between the company and its clients that may give rise to potential law suits. Inability to cover maturing penalties (because of lack of funds to sustain such costs) may worsen the financial difficulty being faced by the company. Bad Reputation in the industry Inflation – due to the possibility of increases of price materials & other fabrication related resources Competitors may surpass them

7. Alternative Courses of Action ACA No. 1 - Finish all the deliverables by maximizing company resources (plus realignment of shifts and schedules including overtime) ACA No. 2 - Prioritize past due contracts while Sub-contracting long maturing deliverables ACA No. 3 -Re-negotiate some contracts which are most likely to be undelivered by the due date; or terminate contract 8. Analysis ACAs ACA No. 1

Advantages

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ACA No. 2

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Proper scheduling of the laborers shift can be implemented Proper utilization of equipment Good reputation to clients Targets will be reached Backlogs will be minimized and eventually eliminated ABC can obviate breach of contracts or any possible litigation/lawsuits ABC Steel Company may prioritize past due or near due contracts; thus, minimizing or avoiding penalties With lesser pressure and work to be done, effective scheduling of manpower and discipline can be implemented Proper utilization of equipment

Disadvantages

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Employees might still be uncooperative Limited time Costly

Difficulty in finding a dependable subcontractor/s Quality control from ABC of the product may be put into question

ACA No. 3

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Possible extension of deadlines with minimal or no cost Could maintain a good business relationship with customers as opposed to not meeting deadlines & causing inconvenience to our customers Termination fees could be lesser than total penalties if deliveries are not made on time Placing another estimating department under the operations manager will provide a more accurate quotation with the labor and timetable.

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Could give a negative impression of the company Having another estimating department might confuse the employees Possible opportunity loss with termination of unsettled contracts.

9. Analysis

Decision Matrix CRITERIA

ACA NO. 1

ACA NO. 2

ACA NO. 3

PROFITABILI TY

3

2

1

EFFICIENCY

3

2

1

EXECUTABIL ITY

3

3

1

REPUTABILI TY

3

3

2

Total

12

10

5

Rating: 3 – Highest 2 – Moderate 1 – Lowest

Upon consideration of all the Advantages and Disadvantages of all the Alternative Course of Actions from ACA1 to ACA3; and based on the Decision Matrix wherein criterion of

Profitability, Efficiency, Executability and Reputability have been carefully considered, WE THEREFORE RECOMMEND ACA NO. 1 AS THE ANSWER TO OUR PROBLEM STATEMENT.

10.Plan of Action ACTIVITY Formation of Rules for proposition: 1. Planning of Target Dates 2. Shifts in Manpower (Adjust schedule of the workers into three (3) shifts) 3. Quota/reward system – point system for every project or accomplished to be awarded semi-annually. 4. Reinforcement of tardiness penalties – provide ultimatums for the tardy labourers 5. Overtime Rules and Regulations Propose to Operations Manager together with the Field Manager and Production Control Manager regarding: “Rules for Propositions” made Proposition to the General Manager (with the approval of the Operations Manager the subordinate managers)

Proposal to the Executives and VP’s (with the approval of General manager) Finalization of rules and Regulations  Creation of memorandums  Allocation of budget for the

Implementation

RESPONSIBLE PERSON

TIME FRAME

Shop Manager

Shop Manager , Field Manager, Production control, Operations Manager Shop Manager, Operations Manager, General Manager

Shop Manager, Operations Manager, General Manager, VP’s, Board of Directors

Board of Directors/President/VP’s

General Manager, Operations Manager, Shop Manager, Field Manager, Production Control Manager

-=The End=-

Continuous

Thank You