In response to your request in evaluating the strategic management of Brithinee Electronics I have used the Porters PEST analysis, tried covering the SWOT analysis by looking at the company’s strengths, weaknesses, opportunities and threats. I have also analyzed the financial status of the company by applying the ratio analysis. What technology is used and how is the social responsibility taken care of are all stated in this report. In the end the action plan is given in the form of matrix structure to bring some changes as required.
The essential recommendations are:
- Market Penetration
- Market Development
Should you have any questions in this regard please do not hesitate to telephone me.
Statement of Recommendation
Brithinee Electric is an engine repair workshop, which has done very well in terms of the services they deliver. On a steady basis, the number of clients is increasing. Given all of this there are several big obstacles that must be taken into consideration in order for the enterprise to achieve success in all regions. I have compiled some problems since analysing the whole business via the Porter analysis, SWOT analysis, financial analysis and Mckinsey analysis method, which will perform hundreds of times better than their current performance if managed by the company.
I have stated the recommendations below:
In order to appeal to the growing number of clients, Brithinee requires to add more trained staff.
2. Market Penetration:
In order to place the business on the basis of quality and service offered to local consumers, market penetration is needed. This will be achieved by way of a communications technique.
3. Market Penetration:
Launch a website to cater those customers where the repair workshops have been currently shut down and even those who are unaware of this company and its services.
4. Customer Services:
Those consumers who did not compensate for their restored engines used to abandon the business with their engines. In the form of paying their sums by instalments, the organisation may promote them. The corporation would not have to think about the untaken vehicles here but would only have to keep track of the fees for the instalment. Inside the workshop, this will leave extra room.
5. Ethics and Social Responsibility:
There is no question that the organisation has UL approval, but ISO certification recognition is keeping consumers more conscious about where to purchase the service. Getting ISO certification will also help us appeal to those clients who are sure of the standard offered by ISO.
The business would not immediately have any wage calculation. The organisation should compensate its workers in the form of part rate in order to empower their employees and optimise production. Here some basic compensation, as well as additional pay for each engine that they have helped fix, will be charged to the workers.
The business is in desperate search of accountants. Based on past evidence, a lot of stuff is being done, which will be unhealthy in the long term.
8. Research and Development:
Do study on electric motors for use in the water industry as the review reveals that improvements in the water business will soon be made.
In producing advanced devices, be imaginative and inventive.
Unknown explanations for winding faults have been found. Why not employ some professional workers to investigate this issue? A response to this will be the company’s lottery.
11. Customized Control Panels:
Compared to producing unique control panels, Brithinee has a competitive edge. Why not advertise our ability and make our abilities be known to the untapped sector.
Because of its carbon emissions, the business is losing quite a lot of revenue. To slash prices, there is still a solution. Find out how to reduce these negative pollutants. Look at what is seen by other repair shops.
13. Customer Site:
Find solutions for catering the customers at their own site. The more we expand our services the more value we create.
14. Emergency Repairs:
The company should make some arrangements to cater the emergency repairs by adding more staff to their current company. We know emergency repairs give us premium pays. Why not avail this opportunity before someone else grasps it.
Distribute the power amongst the staff. Keep regular meetings with the staff. Communicate the goals to the Staff and ask the staff for their recommendations as to how to achieve those goals. Survey the customers to find out more about the needs and demands.
Remote External Environment
There were no such economical changes that had affected the repairing industry in any way.
There were no such social issues arising from the motor repairing and manufacturing industry except for the health issues arising from depletion of the ozone layer that was affected by the emissions made by motors.
When Iraq invaded Kuwait in 1990, threatening western oil supplies, legislators in the US and Canada, passed more stringent requirements mandating greater electric motor efficiency.
While considering draconian measures such as licensing schemes or even the banning of motor repair in favor of replacement with new, energy efficient models, the sentiment for less government intervention led to voluntary compliance programs to improve motor repair practices in ways that would boost efficiency and reduce electricity consumption.
California is a toughest state to get permits in. Regulatory developments are closely watched by regulatory agencies.
In the 1990’s the demand for electric motors had increased due to its reliability and user friendliness.
There was a development of a microprocessor controlled variable frequency drive, which improved process control as well as improved energy consumption of the driven system.
Two climate change treaties were signed by US government, which agreed to pursue actions to reduce greenhouse gas emissions. Since fossil fuel power plants were large contributors to such emissions, any action that increased the efficiency of electric motors and dampened electricity consumption helped meet greenhouse gas emissions standards.
Variable frequency drive produced highly corrosive ozone and charged particles that eroded the organic insulation from windings. There was a partial discharge and corona.
- Provided first-rate service to customers.
- Had won an assortment of industry and manufacturers award.
- In 1988 the firm commemorated 25 years in business.
- They were providing services like repairing or replacing a malfunctioning motor both for the customers, which was uncommon.
- Made customized control panels.
- Provided value added service by giving internal computer report to the customers.
- Wally Brithinee’s experience in EASA helped him in how to improve motor repair practices to better address the maintenance problems that users were having.
- Wally and Lynda’s involvement with EASA helped Brithinee gain access to latest technology.
- The motors that Brithinee repaired were able to maintain 0.5% of efficiency as when originally designed.
- Brithinee was among the top 20 US companies to have UL 845 certification.
- Brithinee had the ability make its own electrical products.
- Brithinee’s competitors sometimes referred their customers to Brithinee when they could not fulfill any of the tasks.
- No positioning strategy was used.
- Personal selling was the only means of communicating.
- Brithinee had to pay for matter emissions like sulfur oxide, methane, hydrogen oxide and so on in California.
- Brithinee could not repair at the customer’s site due to lack of ability to carry the required equipments to the site.
- Customers not having sufficient funds would leave their motors with the Brithinee without any time limits.
- There was a need for new skilled workers as the workload was too much.
- The longest lead-time was needed for acquiring the metal structure that housed the electrical components.
- Cost estimates were based on historical data.
- They required staff to look at cost accounting and purchase tracking of the company.
- There was no official website of the company.
- Emergency repairs needed more workers to have more shifts.
- Competition in selling electric motors was stronger by 1999.
- Customers did not have the equipment to accommodate change in the size of the variable frequency drive that Brithinee was supplying.
- New motors would fail within a few hundred hours of operation.
- Did not have ISO 9002 till 1999 where as most of the big companies like General Motors and Boeing already had it. This certification would ultimately benefit in internal savings associated with improving the company’s administrative procedures and eliminating clerical errors.
- The customers required more sophisticated control devices.
- Customers did not have the equipment to accommodate change in the size of the variable frequency drive that Brithinee was supplying.
- Most of the repair shops were being closed in Southern California by 1992 therefore its was an opportunity to cater those customers who were going to already closed repair shops.
- The decline in aerospace and defense in the early 1990’s taught not to have all the eggs in one basket.
- There was a need to find the causes of increased winding failures through research and development.
- In 1999 several large manufacturers with repair shops had withdrawn from the Southern California market. A chance to make more customers.
- Water industry was going to have upgrades of water and wastewater treatment facilities. Therefore having more staff workers would give them an opportunity to provide their services related to electric motors to the water industry.
The past 5 years shows a mixed trend for the company in terms of Gross Income. From increase of 17% in 1995 the company’s gross income fell by 5 % in 1996. There was a major recovery in terms of income in 1997 where it rose by 14%, which it seems was more of a recovery of the lost ground in 1996.The gross income increase of 8 % seemed more rational.
The cost of sales also in line with Gross margin shows a somewhat inconsistent trend.
Increase in 1995 by 15% which is very much in line with increase in the cost of sales also in line with Gross margin shows a somewhat inconsistent trend. Increase in 1995 by 15%, which is very much in line with increase in gross income. Falling down in 1996 by 9% we believe is probably due to revenue. A huge increase by 24% in 1997 is a sign of major lapses in costs controls. However, the increase in costs by just 3% seemed only due to abnormally high increase in 1997.
Such an erratic performance over the period is a typical example of a company which is either highly influenced by its country’s economy or is managed by a very weak management.
The current ratio of the company in 1995 improved to 4.08 mainly due 17% increase in profits, which may have lead to overall increase in current assets. The trend for subsequent months remains the same except in the year 1997 where the ratio fell to 2.73. This was probably due to company increasing current assets through Current liabilities. However, the current ratio of the company is pretty healthy and it would be safe to conclude that the company is solvent in short run.
Overall company performance based on its equity position is pretty reasonable. Then only concern could be the erratic key performance indicators but in long run the company have fared pretty well. We can also conclude that the company may be a good option to invest on a long-term basis rather than a short-term venture.
Closed loop aqueous parts water was installed to load weights up to 20,000 pounds.
Brithinee had installed Vacuum Pressure Impregnation (VPI) tank as an integral part of the company’s repair capabilities.
Documents were electronically stored on a Macintosh. There was also a use of digital cameras to take the pictures of motors before going through the testing phase.
AutoCAD software was used to design control panel on the computer.
Windows NT based machines were also used for data transmission over the LAN.
Government agencies in the US and Canada estimated that the use of electric motors in equipments and appliances used 70 percent of electrical energy consumption. Proper maintenance and repair practices had a positive effect on the electric motor efficiency. The process was risky as a poorly repaired electric motor could end up using significantly more electricity than was necessary and worsened the reliability of electric powered equipment and increased the cost of electric power.
The insulation life of previous motors was 10 to 12 years without a failure but with new electronic frequency drives, wire failure would occur within a few hundred hours of operation. This made the task a bit risky.
Usage of UL 508 and UL 845 had reduced the risk of liability.
- Shared Values
The standards and guidelines for repairing were used as a marketing tool to attract new customers and win business away from the rivals. Word of mouth was the only way of acquiring the new customers.
In 1992 the company bought some changes in the structure like acquiring 13000 square foot building, secondly inventory was moved out of the main building into the new building, the winding machine shop areas were enlarged and special floor space was given to EMD motor repair activities and thirdly the company established more stringent quality procedures.
Brithinee was using personal selling as the only means of promoting itself and the word of mouth from the satisfied customers.
By 1999 the company’s accounting statement provided single consolidated statement due to which job rotation and job shifting was made possible.
The incoming motors underwent two tests, rewounded with new magnet wire and then connections and inspections were done before the final testing. Then in the end the motor would be delivered to the customer.
Work was scheduled at a daily production meeting where the day and night shift production and customer service team discussed work in progress and promised delivery times.
Orange jobs went to the head of the queue as they could be meant for any emergency. The costs for such motors were premium.
The monitoring of propane gas was outsourced.
Brithinee was a subcontractor to Square D who sold the product to a distributor, who would sell it to an electrical contractor, who would sell it to a general contractor who would actually provide the control panel to municipality or utility company.
Brithinee had also instituted drug testing as part of its job applicant screening.
Management style was very forgiving.
Employees were not automatically granted annual pay raises. Pay would depend on profitability, labor market conditions and the value of individual to the company.
In 1992 in order to make the system more efficient, fax machine, laser printer and modem were added.
AutoCAD software was used.
Used Dun and Bradstreet “Marketplace” CD ROM set, which would help in making customers.
By 1999 the company had improved employee training through more formalized methods, worked through the job rotation issues encountered earlier, and solved most of the dependency issues.
Brithinee had designed process flow charts for the jobs it did for General Motors, which were later, incorporated into the company’s motor repair process.
Work orders were color-coded: green for go, red for stop and orange for a hot rush job.
Three fourth of the repairing cost were for the labor and one fourth went for parts and materials.
Brithinee sometimes charged separately for designing the control panel and related software and manufacture.
It was Brithinees style to over design a product in order to guarantee product performance.
It was their style not to ever miss the ship date.
Brithinee was using 401 k plan to fund its employees.
Hard job and operating around the clock often was the schedules of employees.
Work assignments and repair process were scheduled to let the work go in timely fashion.
Workers were skilled in order to repair the motors.
Brithinee’s main emphasis was on repairing motors for water pumping and treatment areas, rock crushing, cement facilities and the food industry including wineries and breweries.
Wally and Lynda’s involvement with EASA had helped in initiating and maintaining contacts with wire, insulation materials and equipment manufacturers.
Brithinee has the expertise and capabilities to tailor make certain kinds of electrical products to customer satisfactions giving it the ability to add value through its own internal activities and deliver something to buyers other than a standard package stocked by a variety of electrical suppliers.
Brithinee Electronic repaired industrial motors, distributed motor/control devices and designed and built control panels, primarily for municipalities and other businesses.
The new structure brought in 1992 pushed Brithinee into new strategic direction by designing and building customized control panels and avoided being dependent on one customer or category.
The strategy for bringing change in the company in, 1992, by purchasing new land and renovation was to create such an environment where people could work more efficiently. The changes reduced the noise created with air handlers and pumps. Secondly the controls were centralized to reduce lighting and electrical consumption.
In 1993 Brithinee Electric used to provide customers with internal computer report on why a motor fails and the state of motor when it arrived and left the shop.
|External Analysis||Ratings out of 4||Internal Analysis||Ratings out of 4|
|Market size||3||Strength of assets and competencies||3|
|Market growth rate||2.5||Relative brand strength (marketing)||2|
|Market profitability||Not stated in the case study||Market share||2|
|Market trends||2.5||Market share growth||2|
|Competitive intensity/ rivalry||3||Customer loyalty||3|
|Over all risks of returns in the industry||2||Relative cost position||Not stated|
|Entry barriers||3||Relative profit margins||2|
|Opportunity to differentiate products and services||3||Distribution strength and production capacity||2|
|Damand variability||3||Record of technological and other innovation||3|
|Distribution structure||1||Access to financial and other investment resources||1|
|Technology development||3||Management strength||1|
External 44/27 = 1.63 Internal 44/24 = 1.83
Ethics and Social Responsibility
The Brithinee brothers had developed a formal mission statement centered on “enabling the customer”. This had led to an effort to encourage and empower the company’s multi ethnic employees to provide literature, materials, specifications and some learning opportunities to their customers.
Wally Brithinee as the chairman of EASA had led the development of a set of standards and guidelines for repair of electric motors that met most of the regulators concerns.
Closed loop aqueous installations improved efficiency by eliminating the need to dispose of large quantities of water from a wash down area.
Most Possible Recommensations
Over here I would like to suggest the most possible recommendations, which the company should take into account immediately and some in the longrun.
- Recruitment of new workers
- Position the company appropriately
- Consider the installment option
- Compensate through piece rate
- Hire accountants to look specifically at current transactions
- Take immediate measure to overcome gas emissions.
- Give priority to emergency repairs
- Find solutions to work at customer site
- Launch a website
- Get ISO certification
- Research on issues arising from electric motors
- Be innovative
- Promote customized control panel
- Distribute power
|Marketing||Human Resources||Customer Services||Finance||Supply Chain||Ethics||Research and Development|
|Project 1||Market Penetration:
Position the company on the basis of quality and service provided
|Maximize skilled staff in order to maximize the output produced||Customers who are unable to collect their motors due to lack of funds should be made to pay in installments so that the company can restore its place previously occupied by the motors||Accountants should be hired to record the current transactions rather then relying on historical data||Backward Integration
The longest lead-time was needed for acquiring the metal structure that housed the electrical components.
The company should try being their own suppliers.
|Get ISO 9002 certification to avoid clerical errors||Research on electric motors to be used in water treatment so that the opportunity to cater the water industry can to availed.|
|Project 2||Market Penetration:
Launch a website to promote the products and services provided
|Usage of compensation and benefits like piece rate||Work on reducing the emissions of ozone affecting gases||Concentric Development:
There was a need for sophisticated devices, therefore a department should be added where highly skilled staff must be made to make such devices to cater the niche available
|Project 3||Market Development:
Cater the customers where the repair shops were being shut down.
Research on causes of winding failures
- McKinsey’s 7 S and Pascale’s Adaptation Thereof. Date of Access: 30th March 2006 <URL: http://www.chrisfoxinc.com/7SAndPascale.htm#Shared%20Values>.