The production capacity issue that is facing Byte Inc is one that is rooted in poor capacity planning
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The production capacity issue that is facing Byte Inc is one that is rooted in poor capacity planning. Due to this poor capacity planning for the long term, The Bullwhip Effect Has now plagued the company. As a leader in the market, Byte management should have expected the eventual peak of the business cycle thereafter leading to an influx of competitors that are eager to enter the market. The competitors will probably attempt to differentiate themselves through lower costs, which would eventually force Byte to do the same. Differentiation could be an option; however it is extremely difficult to differentiate a product that is seen more as a raw material in the electronic market. The Long term plan, buying the new plant was a good solution, irrespective of the long, three year time frame. The short term, however, becomes an extremely delicate situation. (Lee et al; 1997) The idea of licensing is not a viable one at all. Creating a Licensee to Licenser relationship between Byte and any other company will give the Licensee a rapid increase in the capabilities allowing them to become an influential competitor in the industry Byte is dominating. This is because Byte would have to share certain technologies with the licensee, which the licensee could research and develop during the three year contract. After the three years Byte would have to deal with other, inevitable, competitors as well as the licensee they have made powerful through their own doing. Another issue that arises with licensing is that the employees of the licensee must be trained, quickly and rigorously in order to ease the pressure of over demand in the field. These costs will undoubtedly be placed on Byte Inc as the employees of the new firm must produce products of the same quality. This flows well with the following problem with licensing-Quality Control. It is very difficult for a Company to manage the quality of products manufactured by another firm, even if the firm is a licensee. (ITC; 2009) The only advantageous route that could be entertained by Byte is making their, currently small, competitors Licensees in an attempt to create some form of supplier dependence to Byte Inc. Corporate “Minions” if you will. This, however, is too risky on the part of Byte Inc, especially because they do not hold the Monopoly over
the intellectual property involved and because the licensee will know that after three years Byte Inc will be withdrawing the License after the new firm is built. (Quick MBA; 2008) Buying the temporary plant also has its advantages and disadvantages. As mentioned by T. Kevin Williams in the article, “The Recalcitrant Director at Byte Inc Products, Inc.: Corporate Legality vs. Corporate Responsibility”
The temporary plant would employ some 1,200 people. Again, this means the infusion of over 4,000 to the community and surrounding areas. Byte Products, however, intends to close this plant in three years or less. If Byte informs the community or the employees that the jobs are temporary, the proposal simply won’t work. (Dalton et al ;)
Workers will not be motivated to work if they know that the contract will end in three years. However, people would be motivated more if some incentives were thrown in, such as bonuses based on volume manufactured etc. Another way to motivate the workers and cut time as well as costs down is to contractually agree that employees will have positions in the new firm once it has been built. This saves the company more training and development cost when the permanent firm is complete, allows for the development of a culture and cohesion amongst those employees working together at the temporary firm and also allows top management to perhaps pick out key members to lead the training and development procedures in the new firm. Moreover, Employees of the current operational firms will be made aware of the happenings in the temporary firm, which will cause those searching for higher positions in the new firm to work harder to achieve them, as there is now competition for the new posts in three years time. This motivation will boost production output of the employees in the operational firms leading to, even if minor, an increase in production output, leading to an increase in supply that eases the pressure of over demand. (Bernatek; 2011) I am sure T. Kevin Williams would not have objected if some form of social
responsibility, such as the idea of transferring employees from the temporary firm to the new one. The company has three production shifts that stretch 24 hours a day, 7 days a week. This means offering Overtime to current employees to increase production an option that cannot be undergone. Another option that cannot be followed is the one pertaining to Exporting, which goes against the company’s policy of staying within the United States of America. This does not leave a lot of choices for Byte to attempt on a short term basis. With rising competition and high demands that cannot be met immediately by Byte Inc, the smart thing for Byte inc to do is purchase the firm, for the reasons stated in the above paragraph, as licensing would undoubtedly create more competition for the firm. Furthermore, the knowledge ascertained by the licensee might be the breakthrough information the firm needs to implement a new product that may render the Byte technology obsolete, leaving Byte technology in a more disadvantageous position than before. Social Responsibility, unfortunately, can never be a defining matter in a capitalist system as capitalism is driven by labourers and run by corporations. Without the one, the other cannot function correctly as a capitalist system. There are labour laws, incorporating social responsibility through corporate governance, that protect workers in this system and if those laws deem the action of the temporary factory employing 1 200 workers as viable then the firm should not add any more sympathy towards the well-being of the temporary employees. Especially if it is in an effort to prevent a dropping of market share, which could lead to much larger budget cuts and leading to more than just 1 200 workers being out of jobs. At the end of the day…profitability is paramount…not excessive social responsibility.
REFERENCES
Bernatek Bradley T. “Training and Development” available at http://www.referenceforbusiness.com/encyclopedia/Thir-Val/Training-andDevelopment.html accessed on 11th April 2011 Lee Hau L, Padmanabhan V, Whang Seugjin, (1997) “The Bullwhip effect in supply chains” Sloane Management
ITC Authors (2009), “What are the advantages and disadvantages of Licensing” available at http://www.exporta.gob.sv/docDetalle.ashx? tipo=2&ext=6&codigo=496 accessed on 11th April 2011 World Trade Net Business Briefing QuickMBA Authors (2008) “Foreign Market Entry Modes” available at http://www.referenceforbusiness.com/encyclopedia/Thir-Val/Training-andDevelopment.html accessed on 10th April 2011 QuickMBA.com Dalton Dan R et al, “The Recalcitrant Director at Byte Products, Inc.: Corporate Legality Versus Corporate Responsibility”
the intellectual property involved and because the licensee will know that after three years Byte Inc will be withdrawing the License after the new firm is built. (Quick MBA; 2008) Buying the temporary plant also has its advantages and disadvantages. As mentioned by T. Kevin Williams in the article, “The Recalcitrant Director at Byte Inc Products, Inc.: Corporate Legality vs. Corporate Responsibility”
The temporary plant would employ some 1,200 people. Again, this means the infusion of over 4,000 to the community and surrounding areas. Byte Products, however, intends to close this plant in three years or less. If Byte informs the community or the employees that the jobs are temporary, the proposal simply won’t work. (Dalton et al ;)
Workers will not be motivated to work if they know that the contract will end in three years. However, people would be motivated more if some incentives were thrown in, such as bonuses based on volume manufactured etc. Another way to motivate the workers and cut time as well as costs down is to contractually agree that employees will have positions in the new firm once it has been built. This saves the company more training and development cost when the permanent firm is complete, allows for the development of a culture and cohesion amongst those employees working together at the temporary firm and also allows top management to perhaps pick out key members to lead the training and development procedures in the new firm. Moreover, Employees of the current operational firms will be made aware of the happenings in the temporary firm, which will cause those searching for higher positions in the new firm to work harder to achieve them, as there is now competition for the new posts in three years time. This motivation will boost production output of the employees in the operational firms leading to, even if minor, an increase in production output, leading to an increase in supply that eases the pressure of over demand. (Bernatek; 2011) I am sure T. Kevin Williams would not have objected if some form of social
responsibility, such as the idea of transferring employees from the temporary firm to the new one. The company has three production shifts that stretch 24 hours a day, 7 days a week. This means offering Overtime to current employees to increase production an option that cannot be undergone. Another option that cannot be followed is the one pertaining to Exporting, which goes against the company’s policy of staying within the United States of America. This does not leave a lot of choices for Byte to attempt on a short term basis. With rising competition and high demands that cannot be met immediately by Byte Inc, the smart thing for Byte inc to do is purchase the firm, for the reasons stated in the above paragraph, as licensing would undoubtedly create more competition for the firm. Furthermore, the knowledge ascertained by the licensee might be the breakthrough information the firm needs to implement a new product that may render the Byte technology obsolete, leaving Byte technology in a more disadvantageous position than before. Social Responsibility, unfortunately, can never be a defining matter in a capitalist system as capitalism is driven by labourers and run by corporations. Without the one, the other cannot function correctly as a capitalist system. There are labour laws, incorporating social responsibility through corporate governance, that protect workers in this system and if those laws deem the action of the temporary factory employing 1 200 workers as viable then the firm should not add any more sympathy towards the well-being of the temporary employees. Especially if it is in an effort to prevent a dropping of market share, which could lead to much larger budget cuts and leading to more than just 1 200 workers being out of jobs. At the end of the day…profitability is paramount…not excessive social responsibility.
REFERENCES
Bernatek Bradley T. “Training and Development” available at http://www.referenceforbusiness.com/encyclopedia/Thir-Val/Training-andDevelopment.html accessed on 11th April 2011 Lee Hau L, Padmanabhan V, Whang Seugjin, (1997) “The Bullwhip effect in supply chains” Sloane Management
ITC Authors (2009), “What are the advantages and disadvantages of Licensing” available at http://www.exporta.gob.sv/docDetalle.ashx? tipo=2&ext=6&codigo=496 accessed on 11th April 2011 World Trade Net Business Briefing QuickMBA Authors (2008) “Foreign Market Entry Modes” available at http://www.referenceforbusiness.com/encyclopedia/Thir-Val/Training-andDevelopment.html accessed on 10th April 2011 QuickMBA.com Dalton Dan R et al, “The Recalcitrant Director at Byte Products, Inc.: Corporate Legality Versus Corporate Responsibility”
