Ethics_Product Quality HighTech Inc_manufactures computer chips and component

Ethics_Product Quality HighTech Inc_manufactures computer chips and component

1-32 Ethics, Product Quality HighTech, Inc., manufactures computer chips and components. HighTech has just introduced a new version of its memory chip, which is far faster than the previous version. Because of high product demand for the new chip, the testing process has been thorough but hurried. As the firm’s chief of operations, you discover after the chip has been on the market for a few months and is selling very well that it has a minor fault that will cause hard-to-discover failures in certain, very unusual circumstances.

Required Now that you know of the chip’s faults, what should you disclose and to whom should you disclose it?

2-55 Value Chain; Harley-Davidson Harley-Davidson Inc. (HD) is one of the most recognized brands worldwide. The motorcycle manufacturer has one of the most loyal owner groups of any company. Unfortunately, the firm’s success has come at a price. New customers are sometimes frustrated at long waiting lists for a new bike, and other potential new customers say they are turned off at the enthusiasm of some of the current owners. The average age of a Harley rider has risen from 35 in 1987 to nearly 47 in 2006. Harley has a Wild Bunch reputation that drives some customers away, and a “this is for a different generation” effect on some potential younger customers. Other poten- tial customers are simply intimidated at the idea of riding a 400 pound Harley-Davidson. To deal with these concerns, and to try to encourage new owners, HD developed the Rider’s Edge program in which anyone who could pass the Motorcycle Safety Foundation’s written test and driving test would be eligible for instructions on how to ride a Harley. The instructions are provided by local dealers.

Required Where does this program fit in the Harley-Davidson value chain? From a value chain perspec- tive, how does the Rider’s Edge program at Harley-Davidson support the firm’s strategy?

3-50 Executional Cost Drivers, Internet Retailer Assume that you are a consultant for a start-up Inter- net retailer, Bikes.com, which provides a variety of bicycle parts and accessories in a convenient and effective customer service approach. The firm operates from an office building and nearby warehouse located in Danville, Virginia. Currently, the firm has 10 permanent administrative staff, 6 customer service representatives who respond to customer inquiries, and 12 employees who pick, pack, and ship customer orders. All orders are placed over the firm’s Web site. An 800 telephone number is available for customer service. The firm’s sales increased at about 20 percent per year in the last two years, a decline from the 50 percent rate in its first three years of operation. Management is concerned that the decline will delay the firm’s first expected profit, which had been projected to occur in the next two years. The firm is privately held and has been financed with a combination of bank loans, personal investments of top managers, and venture capital funding.

Required What specific executional cost drivers are important in this business? How should the firm use them to improve its sales rate?

3-51 Structural Cost Drivers Case A. Food Fare is a small chain of restaurants that has developed a loyal customer base by providing fast-food items with more choices (e.g., how the hamburger should be cooked; self-serve toppings) and a more comfortable atmosphere. The menu has a small number of popular items, in- cluding several different hamburgers, grilled chicken sandwiches, and salads. Recently, to broaden its appeal, Food Fare added barbecue, seafood, and steak to its menu.

Required: identify the important structural cost drivers for the company and the related stra- tegic issues that it should address to be competitive.

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