Connor Metals. CIS Case 5. Spencer Kerber 11/5/2015

Transcription

1 Connor Metals CIS Case 5 Spencer Kerber 11/5/2015

2 Contents 1. Background The Problem The Mission Generic Strategy... 3 Threat of new entries: High... 3 Threat of substitutes: Low... 3 Supplier power: Low... 3 Buyer power: High... 3 Degree of rivalry: High Organizational Structure IT Architecture Critical Stakeholders... 4 Connor Metal Shareholders... 4 Bob Sloss... 4 Connor Metal Employees... 4 Connor Metal Customers Available Options Do Nothing Implement the system in all divisions Stop supporting outdated systems Recommended Option Works Cited

3 1. Background Connor Metal manufactured metal springs and stampings for large US original equipment manufacturers. Approximately 20 percent of Connor s business was producing coiled springs, which were commodity-like in their composition and manufacturing; the remaining 80 percent was metal stampings, complex wire forms, and assemblies, all of which varied widely in design and therefore required significant engineering expertise to produce. Bob Sloss became the president of Connor Metal in When Sloss took over, he recognized that the company could not survive by maintaining its traditional way of doing business. To respond to the threats the company faced, Sloss drove the company through significant change. To support the changes being made throughout the company Sloss hired Michael Quarrey as human resource and information systems manager. Quarrey developed an order tracking system that drastically changed access to and availability of information regarding the process for designing, manufacturing, selling, and servicing products. At the close of 1990, the system had been up and running successfully in the Los Angeles division for six months. Sloss hoped to push the technology out to the other divisions in an attempt to improve the firm s profitability (Cash). 2. The Problem The problem facing Connor Metals was the decision whether they should implement their new IT architecture system in further divisions of the company. Some managers from the smaller divisions had concerns about the systems usefulness. The main concern was whether the system would really work in the smaller divisions. In the Los Angeles shop where you have 100 people, things like the shop hold really cut through the layers. You may not need to do that in San Jose or Portland, where the internal communication is already excellent (Cash). The new system had led to dramatic improvements in the Los Angeles division. Run speeds on jobs had increased as much as 20 percent. Repeat defective jobs had reduced from 14 percent in 1989 to 4 percent, and credits issued to customers fell from 4 percent of sales to.5 percent during the same period. The installation required Connor to raise its prices, but even with higher prices, Connor Metals was still being hired. After its use in the Los Angeles division Sloss was seeing results in his bottom line when the division pre-tax profit rose 5 percent in Employee ownership had reached 42 percent and Connor s stock value had increased 35 percent in the past year. Based on the results shown in the Los Angeles division, which had been Connor s least profitable division, Sloss had to decide whether he should implement the new IT system in other divisions of the company. 3. The Mission Connor Metal manufactured metal springs and stampings for large US original equipment manufacturers. Under the leadership of Bob Sloss, Connor Metal was renamed Connor Formed Metal Products and was strategically positioned as a service-oriented business which focused on 2

4 providing custom-developed metal stampings and wire forms which were 100 percent reliable (Cash). 4. Generic Strategy Threat of new entries: High There is a large threat from new entries primarily from offshore competitors with lower cost structures and superior product quality. Threat of substitutes: Low The threat of substitutes is low due to Connor Metals new focus on custom metal products rather than commodity style products. Supplier power: Low The supplier power was low to none as Connor was working with a small number of basic materials. Buyer power: High The buyer power was high due to the customers ability to shop around. Degree of rivalry: High The degree of rivalry is high based on the flood of new entries. 5. Organizational Structure Prior to Sloss taking over the company, Connor metals followed the functional organizational model with a rigid hierarchy of management. As a functional organization, Connor Metals generic strategy had been cost leadership. Once Sloss became president, he slowly transitioned Connor Metals into a divisional organization. He created four autonomous divisions out of the four existing branches: the Los Angeles branch, San Jose branch, Portland branch, and a 4 th branch briefly consisting of the Dallas and Phoenix plants but later merging the 2 plants into a new Dallas plant. As part of its divisional organizational structure, Sloss had turned Connor Metals away from a cost leadership strategy and towards a differentiation strategy with a service oriented business model focusing on producing custom products rather than commodities. 6. IT Architecture An important factor in the analysis of Connor Metals is its position in regards to McFarlane s 4-stage model of technology assimilation. Through Sloss s push to evolve the company, Connor Metals has successfully completed the first stage of technology assimilation, initiation. The initiation phase is defined by the company s decision to purchase or not purchase the form of technology in question, which in this case is the new IT system created by Quarrey. Once completing the initiation stage 3

5 Connor Metals then moves on to the contagion stage. This stage involves the growth of the technology in question. This is the stage Connor Metals is currently. If Sloss can successfully implement the new IT system in all divisions of Connor Metals then they will be able to successfully move onto stage 3 of technology assimilation. If however, if Sloss cannot successfully implement the IT system into the other branches, then Connor Metals will have hit stagnation block B and will fail to successfully assimilate the new technology. 7. Critical Stakeholders Connor Metal Shareholders Connor Metal shareholders have a critical stake in the success of failure of the company and have monetary investments in the future of Connor Metals. Bob Sloss As president of Connor Metals, Bob Sloss has a large stake in the success of the company. The large changes introduced by Sloss also give him responsibility in whether his changes lead to success or failure. Connor Metal Employees Connor Metal employees have a critical stake in the success of the company. As of 1990, Employee ownership of Connor Metals had increased to 42% making a large portion of employees shareholders as well. Connor Metal Customers Connor Metal customers also had a stake in the success or failure of the company. After the implementation of the new IT system lead to raised costs, customers still hired Connor Metals, which suggests a loyal customer base. 8. Available Options 1. Do Nothing This option involves not implementing the IT system in any other divisions. When the new system was implemented at the Los Angeles plant, the plant was the lowest performing division of Connor Metals. While the system did lead to improvements at the LA plant, it may not lead to further improvements in the other plants that are already performing well. If this option were to be taken, Sloss would continue to see a 5 percent rise in profits. In terms of McFarlane s 4-stage model of technology assimilation, this option would lead to Connor Metals hitting stagnation block B and ending its process of technology assimilation. According to Morgan Conflict will always be present in an organization Whatever the reason, and whatever the form it takes, its source rests in some perceived or real divergence of interest. While the other options attempt to combat this conflict, 4

6 this option acknowledges that there will always be conflict and attempting to fight it would be a waste of resources. 2. Implement the system in all divisions Option 2 involves the implementation of the IT system in all divisions. This option would require all divisions to adopt use of the new system. Ideally, this option would lead to the same promising results that were seen in the Los Angeles plant. This option would allow Connor Metals to continue to stage three of the stage-4 model of technology assimilation. This option is supported by both Sloss and Quarrey as well as a number of divisional managers. The quality control manager of the Portland plant, Carl Branstetter, insisted that the adoption of the new IT system would be a wise move for their facility. We absolutely want to go to the Connor Software. We don t need most of that packaged software, so custom is perfect for us. We have long recognized the limitations of the System 36. We rail against it every day. Data entry is counter intuitive, and to correct an error is unacceptably complex. Plus, we don t even have word processors or spreadsheets. What we have no is a dog. We ll all probably go out to lunch if we get the new system! (Cash) Other plant managers had reservations about adopting the new IT system in their division. The San Jose plant manager noted: I have some concerns about switching from Job Boss to the new software. We have already invested a lot in training everyone in the office to use our current system. What if we don t like some of the new ways of doing things? Even if we do like it, were already making record profits in San Jose- why throw our information systems up in the air? (Cash) If this option was to be followed then Connor Metals would move onto stage 3 of technology assimilation and then onto stage 4 which is full integration of a technology system and successful technology assimilation. 3. Stop supporting outdated systems In discussing the control of scare resources, Morgan states All organizations depend for their continued existence on adequate flow of resources, such as money, materials, technology, personnel, and support from their customers, suppliers, and the community at large, An ability to exercise control over any of these resources can thus provide an important source of power within and between organizations. Option 3 entails Sloss using his control as president to end support for all systems other than the new IT architecture system. This option would allow those divisions that want to adopt the new system to be able to, and not force the new system on divisions who do not want to adopt it. In terms of the McFarlane 4-stage model of technology assimilation, this option would involve Connor Metal moving to stage 3: Control. This stage involves the organization ceasing all support of undesired technology. Connor Metal management would no longer support the Job Boss system used in the San Jose plant. This option reflects the theory of use and acceptance of technology in terms of facilitating conditions. By removing organizational support and creating a 5

7 positive behavioral intention Sloss would be able to, over time, convince any reluctant divisions to adopt the new IT system. Rather than the sudden and mandatory adoption of the new IT system in option 2, this option would require a longer amount of time to reach full assimilation. 9. Recommended Option My recommended option would to follow option 1. While the new system did lead to positive results in the Los Angeles division, there is a chance that the other divisions would not benefit nearly as much. The current state of the company has all divisions making profits and Sloss seeing results in his bottom line. While Connor Metals was able to attract customers despite the costs of the new IT system in one division, we are unable to see if Connor Metals would be able to continue to attract new customers if their costs significantly rose due to adopting the new IT system in all divisions. Connor Metals goal is to make money now and in the future. In its current state, Connor Metals is profitable and the risk of increased cost out way the possible benefits of full assimilation of the new IT system. 10. Works Cited Barker, Robert, and Cash, James. Management of Information Systems. Print. Goldratt, Eliyahu M., and Jeff Cox. The Goal. : Gower, Print. Morgan, Gareth. Images of Organizations. : SAGE Publications, Print. Porters 5 Forces 6