Document 1 of 100

CHOOSING A LANDING SITE FOR WRIGHT AIR & SPACE CENTER

Author: Gulas, Charles; Blair, John; Premus, Robert

ProQuest document link

Abstract:

The case provides a study of the interesting challenges involved in making a site selection decision. It can be used as a "how to" guide for businesses, non-profit organizations and communities seeking sites for recreational, educational, cultural or other sorts of facilities. The decision would require analysis of quantitative issues such as regional demographics as well as qualitative issues such as the "mommy factor." This term, coined by a member of the board, refers to a set of factors that would make a location desirable to parents. Perhaps most important, lessons from the site selection process are applicable to other major not-for-profit projects that rely on community support for capital and operating funds.

Full text:

ABSTRACT

The case provides a study of the interesting challenges involved in making a site selection decision. It can be used as a "how to" guide for businesses, non-profit organizations and communities seeking sites for recreational, educational, cultural or other sorts of facilities. The decision would require analysis of quantitative issues such as regional demographics as well as qualitative issues such as the "mommy factor." This term, coined by a member of the board, refers to a set of factors that would make a location desirable to parents. Perhaps most important, lessons from the site selection process are applicable to other major not-for-profit projects that rely on community support for capital and operating funds.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 7

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412133

Document URL: http://search.proquest.com/docview/192412133?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 2 of 100

BUSINESS OR SOCIAL EXPERIMENT?

Author: Kunz, David A

ProQuest document link

Abstract:

Since the 1980's it has been an accepted principle that the objective of business management is to maximize long-term shareholder wealth. Most finance textbooks emphasis this point in the first chapter.

"Shareholders are the owners of a corporation, and they purchase stocks because they want to earn a good return on their investment without undue risk exposure. In most cases, shareholders elect directors, who then hire managers to run the corporation on a day-to-day basis. Because managers are supposed to be working on behalf of shareholders, they should pursue polices that enhance shareholder value. Consequently, throughout this book we operate on the assumption that management's primary objective should be shareholder wealth maximization."

Financial Management Theory and Practice, Eugene F. Brigham and Michael C. Ehrhardt, 11th Edition, 2005, Thompson, South-Western.

A similar statement can be found in most financial management textbooks.

A firm's stock price is used to measure shareholder wealth and long-term shareholder wealth is measured by the cash flow the business is expected to generate. This principle provides management a framework for decision-making. Management must determine if a decision will contribute to the company's long-term shareholder wealth by increasing its cash flow or reducing its risk.

The following article recaps the story of a local shoe manufacturer and raises a number of interesting questions regarding the enterprise. Did the owner/founder have reasonable expectations regarding starting a shoe manufacturing operation in the United State? Did the owner/founder have a workable business model? And most importantly, was the owner/founder operating a business?

Full text:

THE OBJECTIVE OF BUSINESS

Since the 1980's it has been an accepted principle that the objective of business management is to maximize long-term shareholder wealth. Most finance textbooks emphasis this point in the first chapter.

"Shareholders are the owners of a corporation, and they purchase stocks because they want to earn a good return on their investment without undue risk exposure. In most cases, shareholders elect directors, who then hire managers to run the corporation on a day-to-day basis. Because managers are supposed to be working on behalf of shareholders, they should pursue polices that enhance shareholder value. Consequently, throughout this book we operate on the assumption that management's primary objective should be shareholder wealth maximization."

Financial Management Theory and Practice, Eugene F. Brigham and Michael C. Ehrhardt, 11th Edition, 2005, Thompson, South-Western.

A similar statement can be found in most financial management textbooks.

A firm's stock price is used to measure shareholder wealth and long-term shareholder wealth is measured by the cash flow the business is expected to generate. This principle provides management a framework for decision-making. Management must determine if a decision will contribute to the company's long-term shareholder wealth by increasing its cash flow or reducing its risk.

The following article recaps the story of a local shoe manufacturer and raises a number of interesting questions regarding the enterprise. Did the owner/founder have reasonable expectations regarding starting a shoe manufacturing operation in the United State? Did the owner/founder have a workable business model? And most importantly, was the owner/founder operating a business?

"The Mysterious Mr. Fishman"

Southeast Missourian ~ Wednesday, August 10, 2005

By Scott Moyers ~ Southeast Missourian

As an 18-year-old in the late 1960s, Eli Fishman drove a Good Humor ice cream truck on the politically charged streets of Chicago. One summer afternoon, Fishman, a Vietnam War objector himself, drove his truck into a park packed with police and protesters. "I wanted to sell the ice cream to the protesters, but I also wanted to make my commission," Fishman said. He opted to sell to both. That was one of Fishman's first dilemmas as a self-described "entre-radical." Put away your Webster's. It's a word Fishman made up to describe his admittedly curious world view, a messy mixture of pure entrepreneurial spirit and a radical save-the-world mentality that defies traditional business acumen. "That's sort of been the theme of my life," Fishman said. "Odd, huh?" Maybe. But that philosophy, flawed or not, was the driving force behind the unique experiment that was the Cape Shoe Co., a business Fishman poured his passion and his fortune into for five years until closing its doors in July. The experiment: Try to reverse, in some small way, the alarming trend of sending U.S. manufacturing jobs overseas while at the same time using only U.S. materials to create a product that could compete with cheaper imported footwear.

After Fishman started the company from the remnants of the old Florsheim Shoe Co. - which had followed suit and sent its jobs overseas - the business struggled along for five years, selling 10,000 shoes a year, about half the amount Fishman estimates he needed to survive. Along the way, Fishman spent - and subsequently lost - millions of his own dollars. He admits he lost his shirt. "But it's only money," he said. "You can't tell people who don't have money that, but it's true. It doesn't mean anything at this point. I've enough human capital to last a lifetime." Still, he acknowledges the experiment failed, due to lack of sales and his dwindling coffers. But those are only ancillary reasons. He says the main reason was a disingenuous customer base as much as foreign competition. "Bring on the foreign competition," Fishman said in a Chicago accent, pronouncing "the" as "da." "I can deal with the competition," he said. "I underestimated the strength of unbridled consumerism. People say they want to buy American-made products, but only if it's at the same price. It's the WalMart mentality." Fishman compared it to people saying they're not racist, but then cringing at the thought of black children being bused to their child's all-white school. "But it's a joke, it's strictly a ruse," he said. "It's just people talking. They don't mean it. Same with American-made products. It just seems like the right thing to say."

Fishman, a self-described contrarian, came to Cape Girardeau in 1999 from Chicago in a slightly better disposition. In Chicago he owned a factory that manufactured shoe racks. One of his customers was Florsheim. A representative told him the company was shipping its jobs to India and closing in Cape Girardeau. "I said, 'Jeez, how do you throw away all that talent?'" Fishman said. "I knew there were a lot of people out there talking about supporting U.S. -made products, so I got this idea." He sold his factory and another he owned., slapped down $1.1 million of his own money and bought the Florsheim Shoe Co. factory on Southern Expressway, hiring many of the laid-off employees.

"I thought I wouldn't have to sell a lot of shoes to maintain a profit, just enough to prove my point and keep some people in good paying jobs," he said. "But I overestimated the niche. " One of the first people he met was Jay Knudtson, who was then a Cape Girardeau mayoral candidate and banker at Bank of America at the time. Though Knudtson is now at First Missouri State Bank, he remembers that Bank of America loaned Fishman some working capital. But most of all he remembers Fishman himself. "He was one of the most interesting characters to arrive in Cape Girardeau that I can remember," Knudtson said. The mayor recalls Fishman was wearing all-American made clothes, even down to picking out the right sort of Levis that are made in America. He also drove an inexpensive Americanmade car. "It was like he did not want this international movement to occur, and it was like he really believed in his heart that he could penetrate it," Knudtson said. "I really think, with all due respect to Eli, that maybe it was hard for him to differentiate between his passion for patriotism and making good, sound financial decisions." But Knudtson said he came to admire Fishman's dedication to the American worker and American products. "He thought he could buck the system," he said, "but the system is an international system that nobody could buck." Knudtson warned Fishman that his goal was too far-reaching. He said he questioned in this age where price drives everything whether there were enough Americans out there who would make a decision with their heart rather than their pocketbook. "I told him, ? hope you're right, but I don't know that you are,'" Knudtson said. "From the day he opened, he had an uphill battle. He was going to a gunfight with a switchblade. That's a sad fact. But I still think Eli did a good thing by trying to leverage the American theme."

Not that there weren't high points. In 2001, the Wall Street Journal did a post-9-1 1 article on Fishman's patriotic "made in America" theme. A U.S. government contract after Sept. 11, 2001, boosted sales by 15 percent, but that dwindled as the ground war abated. Fishman beat the pavement, placing his work boots and shoes in several area stores, such as Bob's Shoe Service, Brown's Shoe and Qwick Fix Shoe & Boot Repair. He also had them in stores across the Midwest, from Chicago to Detroit. "He had his loyal customers," said Qwick Fix owner Gene Benthal. "I've had a lot of people who have come by since he closed because they knew they weren't going to be able to get them anymore. Some people are bumming about it." But not enough. Benthal said Cape Shoe never sold as many as the brand names, like Red Wing and Wolverine. "He was competing with the big names," he said. "His boot was as expensive as their boot, but he didn't have the name recognition. Cape Shoe was a fine name, but maybe it could have been catchier."

Fishman later unionized his own workers, another puzzling move, some say, though he says he did it to back up his "worker first" mentality. The union also promised to promote his shoes to its members, which resulted in only moderate improvement in sales. Cape Shoe switched to a smaller, more affordable building on Rusmar. His work force remained stable at a manageable 30 to 40 workers. Still, he couldn't compete. "They said they wanted American made, but they really wanted to spend a little less money," Fishman said.

Now, he says, he's ready to move on. He's finishing up his doctorate at Southern Illinois University-Carbondale. Soon, he will return to his beloved Chicago. His new dream is to start a not-for-profit tutoring program for elementary school children on the Internet. "A lot of these groups do it for profit, but not me," he says.

THE TASK

1. Was Fishman starting a business or conducting a social experiment? Explain your answer.

2. Is maximizing long-term shareholder wealth always the appropriate primary objective?

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 17-19

Number of pages: 3

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412067

Document URL: http://search.proquest.com/docview/192412067?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 3 of 100

A MODEL FOR PRIVATE-PUBLIC HEALTH CARE SUCCESS

Author: Palmer, David W; Parker, Jeffrey A; Arthur, Burt F

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Abstract:

The Sarrell Regional Dental Center (SRDC) was founded in March 2004 as a not-for-profit dental center in Calhoun County, Alabama, with the goal of providing preventative, restorative and emergency care for Alabama Medicaid eligible children ages 3 to 20 and emergency care for qualified adults. The dental center's primary mission is to provide care for children in Calhoun County and surrounding counties who do not visit a dentist on a regular basis and may not be able to afford dental care. Services are free to children on Medicaid and other low cost plans like Blue Cross and Blue Shield of Alabama's (BCBSAL) All-KIDS insurance. The SRDC was founded with donations from corporate sponsors, the Alabama Department of Public Health and the School of Public Health at the University of Alabama-Birmingham. Founded as a not-for-profit corporation, the center opened without a full-time dentist and was staffed with personnel typical for most public dental facilities.

Full text:

INTRODUCTION

The Sarrell Regional Dental Center (SRDC) was founded in March 2004 as a not-for-profit dental center in Calhoun County, Alabama, with the goal of providing preventative, restorative and emergency care for Alabama Medicaid eligible children ages 3 to 20 and emergency care for qualified adults. The dental center's primary mission is to provide care for children in Calhoun County and surrounding counties who do not visit a dentist on a regular basis and may not be able to afford dental care. Services are free to children on Medicaid and other low cost plans like Blue Cross and Blue Shield of Alabama's (BCBSAL) All-KIDS insurance.

The SRDC was founded with donations from corporate sponsors, the Alabama Department of Public Health and the School of Public Health at the University of Alabama-Birmingham. Founded as a not-for-profit corporation, the center opened without a full-time dentist and was staffed with personnel typical for most public dental facilities.

A MARKET IN NEED OF SERVICE

A report by the US Department of Health and Human Services (HHS) in 2000 indicated that the major barriers to improved oral health among low-income children include several socioeconomic factors. The primary factors are a lack of dental insurance and/or the inability to pay out-of-pocket. Secondary problems involve access to facilities and the inability to get transportation or the time off from work to address health needs (US Department of Health and Human Services, 2000). Over 100 million Americans lack dental insurance while nearly 45 million lack health insurance. Insurance is a key factor in oral health maintenance. Insured children are 2.5 times more likely to receive dental care than uninsured children. Those children without dental insurance are 3 times more likely to have unmet dental needs as compared to their insured peers. Minimal coverage is provided for adults in the public sector, and programs like Medicaid are available for children. However, many of these programs have not reached the eligible beneficiaries.

The 2000 HHS report addressed the need for public-private partnerships. These partnerships are a key solution to dental health-related problems. Free oral care, or oral care paid for by programs like Medicaid, can help alleviate this epidemic problem by reducing limitations to receiving proper care. The SRDC was started in Anniston, Alabama, to help alleviate this problem. The area of Eastern Alabama served by the SRDC includes Calhoun, Cleburne and Talladega Counties. The total population of these counties is approximately 210,000. Of those, 27% are under 21 years of age and 45% of these children are Medicaid eligible (see Table 1). Therefore, the market is underserved but has great potential.

REPORTED BUSINESS PROBLEMS OF INDIGENT CARE

Several issues have been cited as problems in establishing privately funded clinics in support of indigent health care. In the dental arena four areas of concern have been mentioned: oral health programs are not ordinarily integrated with other public health programs; it is difficult for public dental facilities to retain qualified dental personnel; Medicaid reimbursement for services are below the reasonable and customary levels paid by insurance carriers; and, there is a perception that there is a general apathy among Medicaid patients towards fulfilling appointments. These major areas have led to the failure of many public-private dental health facilities (Griffith, 2003). Important it is to recognize that all of these reported business problems can lead to an unattractive business climate, increased operating costs and possible failure of public-private enterprise clinics (Griffith, 2003).

A PRIVATE SECTOR MODEL IN THE NOT-FOR-PROFIT SECTOR

SRDC began in 2004 with $450,000 from corporate sponsors including the Alabama Department of Public Health and the School of Public Health at the University of Alabama- Birmingham. Since that time the clinic has operated primarily from payments for services rendered. These payments come from Medicaid and a public non-Medicaid health insurance plan, All-Kids, supported by Blue Cross and Blue Shield of Alabama (BCBSAL). The State of Alabama has fully funded Medicaid Dental Reimbursement for the immediate future (through 2007.) A cutback in reimbursements or the dental services payment schedule would have a significant negative impact on the SRDC.

With reimbursed revenues of only $300,000 in 2004, the success of the center was in doubt. A change had to be made and it was. A retired CEO, with experience in the package goods field, agreed to take over in January 2005. Things quickly changed, from the quality of care and equipment to employee pay and culture.

PERSONNEL AND BUSINESS CHANGES

Personnel changes were the first issues to be addressed under the new CEO. With these new changes the SRDC grew from just 4 employees at the new CEO' s arrival to over 30 by year end. In fact, the culture was changed to focus on hiring only the best candidates and assuring them of being part of the highest paid workforce in the area' s dental community. Soon dentists, hygienists, dental assistants and front office staff from all over the area approached the SRDC for employment.

Even with a substantial increase in payroll, labor cost as a percentage of sales decreased. Higher salaries led to raised expectations and an emphasis put on pay for performance. Performance was measured daily. Daily revenue and output per employee numbers were posted daily. As a result, revenue increased dramatically and was reinvested in the business by purchasing state of the art equipment and information technology. The center itself was also refreshed by changing the "sterile" practice environment to being "kid friendly."

MODEL PRODUCTIVITY AND FINANCIAL DISCUSSION

Fottler (1987) stated that one of the keys to the success of new clinical operations was to shift the power from the doctors to the professional managers. This shift was done at SRDC and in doing so the clinic has been able to use the refined business skills of the managers to make sound business decisions, to integrate clinical and financial cost accounting and to apply new technologies in business management as well as in patient care. The management has also applied the same skills to lowering costs. Since R&C from Medicaid (and All-Kids) has traditionally paid less than private insurance, keeping costs low is a primary consideration to the operation of the clinic.

The SRDC must balance efficiency of operations with effectiveness of care in order to succeed. Efficiency is measured in cost of operations versus revenues. In 2005 the clinic' s average revenue per procedure was $47.28 (19,755 procedures) and the average expense per procedure was $39.51. As a percentage, indirect overhead was 7% of revenues. Dentists and Hygienists salaries were 46% of revenues. The remaining costs were direct in nature. This gives a profit of $7.77 or 16.4% per procedure.

The SRDC uses a low-cost leader functional business strategy. That is, the management tries to limit their indirect costs and create a high volume of services through the clinic. Indirect costs (not related to dental services) are limited to administrative salaries, facility rental and some depreciation of equipment. Because the CEO takes a minimal salary, the office managers and office support staff can be paid salaries commensurate with their experience and expertise. Facility rental cost is also kept low. Through an agreement with the local health department, rent is set at $1 per year. Rent expense is a key factor in lowering overall expenses and a key negotiation point for future expansion.

Direct costs are those associated with servicing the dental patient. These include materials and supplies, hygienist salaries and dentist salaries. Efficiency for the dental center is built around these direct costs. By increasing the number of patients per day, having fewer missed appointments, performing more procedures per hour and managing materiel the clinic is able to keep direct costs per patient/procedure low.

"[Effectiveness] is not to be in terms of expansion and growth, but in terms of how well patients, physicians, employees, and payers are satisfied with the quality of health services being provided" (Fottler, 1987). SRDC has been successful in retaining patients. The SRDC listed 3,557 active patients on their patient analysis report for 2005. Sixty percent of the clinic' s active patients have been seen in the last year, and over ten percent have appointment times in the future, a good sign of patient retention. The employee turnover rate is low, and the recent audits from the state Medicaid administrator and OSHA were completed with minimal recommendations for correction. In order to continue providing dental care in the counties served by the SRDC, the clinic must continue to operate with a financial gain. This gain can then be reinvested into new clinics, new public-private healthcare opportunities, better equipment and continuing education for SRDC employees. These operational gains will also allow the clinic to continue fulfilling its mission to low-income families in need of dental care.

PUBLIC-PRIVATE OPPORTUNITIES FOR THE FUTURE

All seems well at SRDC. So what could concern the leadership? First, there is the question of what to do with the excess cash. This is a good problem for the SRDC. Although this seems easy to handle, the leadership is uncomfortable with a non-profit sitting on cash reserves while there is a demand and need for dental care in the surrounding counties.

The possibilities of expansion into new counties with the dental clinic are enticing to the leadership of SRDC. Fottler (1987) mentioned the importance of economies of scale and scope in making a health clinic more effective. Multi-clinic systems can lead to fixed administrative costs being spread over more activities, facilities and procedures, thus reducing overall cost per procedure. A multi-clinic system would fit into the SRDC business model that has been designed around low overall costs and high volume of services.

Second, there are opportunities in medical clinics, optometry clinics and childcare centers. The management feels that their model for not-for-profit administration can be used in opportunities like these, also. However, they are concerned about the nuances and special business needs of each particular business.

Finally, continued growth may cause changes to the culture, overhead structure and flat organization. It may even complicate this simple business model. Many opportunities are presenting themselves. The question is: What to do for the future?

ASSIGNMENT

Use data from the case to identify critical issues related to the SRDC and its ongoing success. From your informational analysis, answer the following questions.

1) Perform a SWOT analysis on SRDC. What are the SRDCs competitive advantages? Are they sustainable?

2) The SRDC is looking to expand to two nearby counties (Cleburne and Talladega). Should SRDC expand? Quantify and defend your answer.

3) The SRDC s business model works well but is predicated on volume. What are the risks to their overall model?

4) What inhibits public health facilities like the SRDC from being successful?

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 21-25

Number of pages: 5

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412330

Document URL: http://search.proquest.com/docview/192412330?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 4 of 100

FIDUCIARY FOLLY LEADS TO FIASCO: THE CASE OF CONSOLIDATED PIPELINE AND EQUIPMENT CORPORATION (CPEC)

Author: Sullivan, Laura; Stretcher, Robert

ProQuest document link

Abstract:

The primary subject matter of this case involves the agency relationship between Steve Shelton, a fiduciary (the accountant) and his client and friend, Paul Jameson. Paul's son, Jim Jameson, is bringing a lawsuit against Paul and Steve, because of his dissatisfaction with a payment made to him recently for questionable purposes. Secondary issues include gratuitous agent issues, agent liability, and confidential relationship liability. The case has a difficulty level appropriate for undergraduate Business Law or Accounting courses. The case can be taught in 1-2 class hours, depending on the desired detail level for the discussion. It should take approximately one hour of outside preparation by students.

Full text:

CASE DESCRIPTION

The primary subject matter of this case involves the agency relationship between Steve Shelton, a fiduciary (the accountant) and his client and friend, Paul Jameson. Paul's son, Jim Jameson, is bringing a lawsuit against Paul and Steve, because of his dissatisfaction with a payment made to him recently for questionable purposes. Secondary issues include gratuitous agent issues, agent liability, and confidential relationship liability. The case has a difficulty level appropriate for undergraduate Business Law or Accounting courses. The case can be taught in 1-2 class hours, depending on the desired detail level for the discussion. It should take approximately one hour of outside preparation by students.

CASE SYNOPSIS

Jim Jameson, former president of Consolidated Pipeline and Equipment Corporation (CPEC) has brought an action against his father and his father's accountant. His father, Paul, is the 100% owner of CPEC, and has arranged the sale of the business to a third party for $65 million. Jim's position (CPEC president) had been terminated for alleged mismanagement in the y ear prior, and his father had taken over Jim's responsibilities during the structuring of the sale of the business.

Jim had recently been paid $6.8 million by CPEC (at his father's direction) for a parcel of land that Paul had given to him five years before. The value of the land was about $1.2 million. The purpose of the purchase in excess of the actual value was to transfer an "inheritance " of sorts to Jim while avoiding the tax consequences of a gift tax. The burden of the tax was then Jim's, a further irritating aspect of the transaction.

Jim claims that the $6.8 million that he received for the land did not represent an amount acceptable for an inheritance. Jim also felt that the land was of substantially higher value to the firm, and that the sale of the business was somehow tied to the inclusion of the land. His conclusion was that the land is actually worth substantially more than the $6.8 million he was paid.

Interestingly, if Jim's conclusion is correct, then the amount paid does not exceed the value of the land, and there would be less suspicion of a fraudulent avoidance of taxes by Paul. If Jim is wrong in his conclusion, Paul and the firm would be suspected of fraudulent avoidance of taxes, but would have greater wealth to offer the firm's purchaser. The main question addressed by the case is whether or not the accountant owes Jim a fiduciary duty as well as being a fiduciary to the firm.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 27

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412134

Document URL: http://search.proquest.com/docview/192412134?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 5 of 100

PAINTING A PICTURE THAT IS REPRESENTATIONALLY FAITHFUL: ACCOUNTING FOR MAINTENANCE COSTS OF A MERCHANT MARINE FLEET

Author: Coffee, David; Swanger, Susan L; Carton, Robert B

ProQuest document link

Abstract:

This case addresses issues in accounting for certain repetitive maintenance costs occurring at multi-year intervals. Is a more meaningful measure of periodic economic performance obtained by allocating apart of these costs to each accounting year or allocating all of the cost to the year in which the maintenance takes place ? The student is confronted with key issues in accounting theory involving expense and liability recognition, definitions of elements of financial statements, the matching principle, objectives of financial reporting, the issue of income smoothing, the concept of quality of earnings, and the characteristics that make accounting information useful.

Full text:

CASE DESCRIPTION

This case addresses issues in accounting for certain repetitive maintenance costs occurring at multi-year intervals. Is a more meaningful measure of periodic economic performance obtained by allocating apart of these costs to each accounting year or allocating all of the cost to the year in which the maintenance takes place ? The student is confronted with key issues in accounting theory involving expense and liability recognition, definitions of elements of financial statements, the matching principle, objectives of financial reporting, the issue of income smoothing, the concept of quality of earnings, and the characteristics that make accounting information useful.

CASE SYNOPSIS

A decision must be made about how to account for materially significant maintenance costs which occur periodically every few years. In this particular case, management of the company incurring the maintenance costs prefers allocating a part of the costs to each annual accounting period as opposed to charging all of the costs to the annual period in which the costs are incurred. Management believes this is the most accurate way to account for the costs because each accounting period benefits from the maintenance and therefore each accounting period should be charged with some of the costs. In addition, management prefers allocating the costs to each annual accounting period smooth periodic income. This will avoid overstatement of income in annual accounting periods which had no maintenance and the understating of income in annual accounting periods in which maintenance was performed.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 33

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412159

Document URL: http://search.proquest.com/docview/192412159?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 6 of 100

THE CASE OF REOPENING THE MAQUILADORA PLANT-TEACHING AN INTERNATIONAL NEGOTIATION

Author: Arnesen, David W; Weis, William L

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Abstract:

Negotiating successfully in international business requires understanding cultural influences that impact business and the negotiation process. Every country has unique economic, legal, and political influences. Not as transparent to the international negotiator are the culture, ethics and moral values that influence the negotiation process. An effective negotiator in international business must gain an understanding of these influences. The case of "Reopening the Maquiladora Plant" provides a comprehensive international negotiation for the participants and instructors notes to guide the process. This negotiation simulation will help students gain an understanding of the influence of differing business cultures upon international negotiations.

Full text:

ABSTRACT

Negotiating successfully in international business requires understanding cultural influences that impact business and the negotiation process. Every country has unique economic, legal, and political influences. Not as transparent to the international negotiator are the culture, ethics and moral values that influence the negotiation process. An effective negotiator in international business must gain an understanding of these influences. The case of "Reopening the Maquiladora Plant" provides a comprehensive international negotiation for the participants and instructors notes to guide the process. This negotiation simulation will help students gain an understanding of the influence of differing business cultures upon international negotiations.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 35

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412343

Document URL: http://search.proquest.com/docview/192412343?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 7 of 100

SHOULD ABC COSTING BE USED?

Author: Bruton, Carol M; Schnieder, Gary P

ProQuest document link

Abstract:

The primary subject matter of this case concerns the appropriate use of ABC costing. Secondary issues include cost allocation in general. The case has a difficulty level of two or three. The case is designed to be taught in an introductory managerial accounting course or a cost accounting course in one to two hours and is expected to require two hours of outside preparation by students.

Full text:

CASE DESCRIPTION

The primary subject matter of this case concerns the appropriate use of ABC costing. Secondary issues include cost allocation in general. The case has a difficulty level of two or three. The case is designed to be taught in an introductory managerial accounting course or a cost accounting course in one to two hours and is expected to require two hours of outside preparation by students.

CASE SYNOPSIS

This is a case about the non-profit, Tribeca. Tribeca desires a more detailed cost accounting system to ensure the proper charges are made for outside groups using their retreat center for on campus meetings, daily stays, and overnight stays. Tribeca has five departments that they use for their financial statement breakdown: (1) retreat center, (2) cemetery, (3) development and marketing, (4) museum and church, and (5) snack and wine shop. Tribeca's administrative overhead needs to be allocated to the five cost centers. Tribeca's overhead includes administrative salaries, utilities, workman's compensation, data processing, insurance, and repair and maintenance. The majority of the overhead appears to be a result of the retreat center's overnight rooms, meeting rooms, and kitchen. Tribeca needs to ensure that the proper amount is allocated to each cost center such that the correct figures are used to determine meeting room charges, charges for daily stays with meals, and charges for overnight stays with meals. The cost allocation becomes more complex when it is learned that employees are allowed to eat meals from the kitchen during the day and some employees live on campus and regularly eat all meals on campus from the retreat kitchen.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 37

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412139

Document URL: http://search.proquest.com/docview/192412139?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 8 of 100

MEDIMMUNE - ENABLING GROWTH THROUGH MANUFACTURING ALLIANCES IN THE BIOTECH INDUSTRY

Author: Ross, Douglas N; Sanford, Douglas M; Darrow, William P; Pillutla, Sharma

ProQuest document link

Abstract:

During the first quarter of 2006 the Senior Vice President of Operations for MedImmune was asked to evaluate the manufacturing strategy for FluMist, the company's newest product. Of particular interest was the potential impact of a proposal to sharply reduce the price. FluMist had failed to meet sales expectations because it is priced at about three times the cost of the standard flu shot. Important health care providers such as HMOs and other health insurers have refused to pay a premium over the common flu shot, which is therapeutically equivalent. In order to improve sales consideration is being given to sharply reduce the price of FluMist to compete directly with the flu shot. If approved, the price change would greatly change FluMist sales revenue, profit margin, and production requirements. There is no certainty that the proposed strategy would increase earnings. For the strategy to work production economies must reduce costs enough to support the price decrease. At present FluMist manufacturing is subcontracted to others.

Full text:

INTRODUCTION

During the first quarter of 2006 the Senior Vice President of Operations for MedImmune was asked to evaluate the manufacturing strategy for FluMist, the company's newest product. Of particular interest was the potential impact of a proposal to sharply reduce the price. FluMist had failed to meet sales expectations because it is priced at about three times the cost of the standard flu shot. Important health care providers such as HMOs and other health insurers have refused to pay a premium over the common flu shot, which is therapeutically equivalent. In order to improve sales consideration is being given to sharply reduce the price of FluMist to compete directly with the flu shot. If approved, the price change would greatly change FluMist sales revenue, profit margin, and production requirements. There is no certainty that the proposed strategy would increase earnings. For the strategy to work production economies must reduce costs enough to support the price decrease. At present FluMist manufacturing is subcontracted to others.

COMPANY HISTORY

Biotech firms employ the biological sciences to produce products for agriculture such as improved crop seeds, the environment, such as substances to treat sewage or oil spills, and biopharmaceutical products that are medical drugs developed from living organisms. MedImmune was able to develop, manufacture, and market a blockbuster drug, Synagis. Many biotech firms sell the firm to an acquiring firm once they develop a product with the potential of becoming a blockbuster. The acquiring company proceeds to manufacture and market the drug. MedImmune has been different, retaining ownership and control of manufacturing. In doing so, MedImmune has set up strategic alliances, which conserved capital.

Founded in 1988 and headquartered in Gaithersburg, Maryland, Medlmmune is committed to advancing science to develop better medicines that help people live healthier, longer and more satisfying lives (Medlmmune annual report, 2005). The company operated facilities in the United States and Europe to manufacture and distribute one or more components of each of its products. A U.S. -based marketing team and a highly trained technical sales force sells primarily to physicians through personal/professional relationships that have been developed over a lengthy period. A large highly skilled scientific staff conducts research, clinical trials, and product development. Together they manage an impressive pipeline of product candidates for potential commercialization. In addition to their internal efforts, the company has established clinical, R&D, manufacturing, clinical testing, and marketing collaborations with other companies and organizations.

The company has three areas of product focus: infectious disease, cancer, and inflammatory disease. Four products were being marketed in early 2006: Synagis (palivizumab) and FluMist (Influenza Virus Vaccine Live, Intranasal) to help prevent two common respiratory infectious diseases; Ethyol (amifostine) to help reduce undesired side effects of certain anti-cancer chemo- and radiotherapies; and CytoGam (cytomegalovirus immune globulin intravenous (human)) to help prevent cytomegalovirus (CMV) disease associated with solid organ transplantation (Medlmmune 1OK Report to the Securities & Exchange Commission, 12/31/2005. Unless other wise cited, the information used in this case is based upon Medlmmune's 1OK and annual report for 2005).

The company's success has been primarily due to Synagis, an antibody medication that was approved by the FDA in June 1998. Synagis prevents serious lower tract respiratory disease caused by respiratory syncytial virus (RSV), which threatens a small percentage of infants, about 125,000 each year in the U.S. By 2003 MedImmune passed the $1 billion mark in sales.

RESULTS OF OPERATIONS FOR 2005

A brief summary of financial results from 2005 give some sense of the profit potential of the company, its aggressive growth through acquisition, its commitment to R&D. Total revenues for 2005 were $1.2 billion, an increase of 9% over $1.1 billion in 2004, primarily reflecting 13% growth in sales of Synagis to $1.1 billion. A net loss of $17 million, or $0.07 per share, was reported for 2005 compared to a net loss of $4 million, or $0.02 per share, in 2004. Both periods included significant charges associated with the acquisition of research and development (R&D) assets that expanded the product pipeline. The 2005 results reflect the impact of $48 million of charges for acquired in-process research and development ("IPR&D"), and 2004 results include acquired IPR&D and impairment charges totaling $102 million for the reacquisition of Wyeth's interest in the influenza vaccines franchise. Medlmmune continues to invest aggressively in building its future with R&D expenditures excluding acquired IPR&D, which increased to 31% of product sales in 2005, compared to 29% in 2004.

MANUFACTURING

Medlmmune operated commercial manufacturing facilities and distribution facilities in the U.S. and Europe. In addition, the company entered into manufacturing, supply and purchase agreements with other companies to provide certain portions of the production capacity for all marketed products and to produce clinical supplies for development- stage products. Certain materials necessary for commercial manufacturing of MedImmune's products were proprietary products of other companies, and in some cases, these proprietary products were specifically cited in the drug application with the FDA such that they must be obtained from that specific source. In addition, certain materials necessary for commercial manufacturing were only available through one approved single source supplier, although other unapproved suppliers were capable of providing the materials. The company managed the risk associated with sole-sourced and single-sourced materials by active inventory management and, where feasible, alternate source development. Suppliers were subject to continuous review.

The primary manufacturing facility for Synagis bulk product was Medlmmune's Frederick, Maryland manufacturing center ("FMC"). The FMC was a biologies facility with cell culture production and associated downstream processing equipment for recombinant products. Supplying Synagis bulk was Sicor Pharmaceuticals, Inc. Packaging was performed by Cardinal Health PTS, LLC. Supplemental supply of Synagis for the U.S. market was from Boehringer Ingelheim Pharma GmbH & Co. KG ("BI") under a manufacturing and supply agreement. BI also filled and packagee Synagis produced at its German facility. BI was also the sole supplier of Synagis outside the U.S. BI was responsible for obtaining regulatory approval of its facilities.

All bulk drug substance for Ethyol was from a contract manufacturer. In 2005, filling and finishing of all bulk products was completed at Medlmmune's manufacturing facility in Nijmegen, the Netherlands. To backup the company's filling and finishing capabilities, Medlmmune had an agreement with Ben Venue Laboratories, Inc., a subsidiary of BI, to fill and finish Ethyol for sale in the United States.

FluMist was produced at several facilities either owned or leased by Medlmmune. It manufactured key components, specifically the bulk monovalents and diluents, at a facility in Speke, the U.K., pursuant to a sublease arrangement with Evans Vaccines Limited, a division of Chiron. The master virus seeds were prepared at the company's Mountain View, California facility. In 2005, the bulk monovalents and diluent were produced at leased facilities in Speke, in the United Kingdom. In December 2005, the FDA approved Medlmmune's recently constructed bulk manufacturing facility, which is also located in the United Kingdom. The company planed to manufacture FluMist at this site later in 2006. Blending FluMist into its trivalent formulation and filling of the final vaccine into the Accuspray applicators, the non-invasive nasal spray delivery system developed and supplied by Becton, Dickinson and Company, took place in Medlmmune's Philadelphia, Pennsylvania facilities. In addition to these manufacturing facilities, the company owned a distribution facility in Louisville, Kentucky from which FluMist was distributed to physicians, pharmacies and government agencies.

Medlmmune was in the process of transferring CytoGam manufacturing responsibilities to a different contract manufacturer, a process which was expected to be completed during the second half of 2006. Until the transfer is complete and the new manufacturing sites were approved by the FDA, the company expected supply to be limited and sales to be adversely affected.

RISK FACTORS FOR OUTSOURCING AT MEDIMMUNE

1. A significant portion of Medlmmune's business is dependent on third parties. This reduces the degree of company control over the both product pipeline and supply chain and thereby increases the risk of unforeseen or unanticipated events disrupting sales and earnings. This is situation is more difficult in the pharmaceutical industry than in others as the supply of products is affected by several industry-specific manufacturing variables, including the number of production runs, production success rate, product yield and the outcome of quality testing.

2. Ninety percent of MedImmune's sales are from Synagis and FluMist, both of which are highly seasonal in nature, as sales are tied to the flu season. The severity of flu season varies from year to year, which further complicates forecasting. While the seasonality factors are known, forecasting demand remains difficult. Outsourcing introduces added uncertainties which make it more difficult to forecast demand and reduces control over supply. This increases inventory buffering costs and the risk obsolescence due to out-of-date products, as MedImmune's products have a finite shelf-life.

3. MedImmune's primary manufacturing facility for influenza vaccines is in the U.K. If there is in an influenza pandemic, the U.K. government may limit the company's ability to export product outside of the UK, or may nationalize the plant to produce vaccines to defend against a flu pandemic.

4. Defending product liability claims that may arise is costly and diverts management's attention from business operations. An adverse finding in court may have very serious economic consequences for the company. The loss of control over outsourced manufacturing operations increases the risk to the public and exposure to product liability. It should be noted that there are safeguards, as the FDA must approve and license any manufacturing facility that produces pharmaceutical products for sale in the US.

5. Medlmmune's dependence on outsourcing includes packaging, such as inhaler-type devices for FluMist, and precursor materials used by it and by its contract manufacturers, for which there is no redundant supply.

6. Because various company and contractor manufacturing processes are highly complex and are subject to a lengthy FDA approval process, alternative qualified production capacity may not be available on a timely basis or at all.

7. Manufacturing facilities in the UK are unionized and manufacturing may therefore be interrupted due to a labor action.

8. Technological developments by competitors may render MedImmune products obsolete. One of the benefits of outsourcing is reduced exposure to the risk of obsolete manufacturing facilities.

9. Changes in foreign currency exchange rates or interest rates could result in losses. Expenditures relating to MedImmune's manufacturing operations in the U.K. and the Netherlands are paid in local currency. The company has not employed hedging strategies with regard to these expenditures, which increases the currency risk.

10. Outsourcing may facilitate technology appropriation. It is more difficult to safeguard knowledge of proprietary product formulations and processes technology. This knowledge could be used to pirate or counterfeit expensive prescription drugs. The risks are greater with overseas expansion where law enforcement agencies may have fewer capabilities than those in the US and where laws respecting intellectual property may be weak, or not well enforced.

SUMMARY: FLUMIST PRICING AND CONSEQUENCES FOR MANUFACTURING

The Senior VP of Operations had a lot to consider. Strategic alliances had made it possible for his company to grow quickly by conserving capital for R&D and by avoiding delays for plant construction. Manufacturing alliances had also reduced risk exposure should sales projections fail to materialize due a change in the business environment. While some of his dedicated staff people could crunch the numbers and work out the details, they needed some direction. He needed to convey the forces that would be at work if the price cut was put into effect. If a decision is made to sharply reduce the price of FluMist to compete directly with the flu shot, what effect would there be on the overall business? To what extent should outsourcing be used to meet the sharp increase expected in FluMist demand? Should the firm's basic manufacturing strategy be revised to cope with this new development? In particular, should MedImmune assume direct control for all FluMist manufacturing? Are there any deficiencies in MedImmune's current outsourcing strategy that should be looked at as part of the current analysis?

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 39-43

Number of pages: 5

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412117

Document URL: http://search.proquest.com/docview/192412117?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 9 of 100

WILD FLOWER WINERY, PART 1: BACKGROUND

Author: Scott, Stuart; Olson, Philip D

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Abstract:

The primary subject matter of this case concerns entrepreneurship. In particular, the case contains information on the background and psychological traits of the person starting Wild Flower Winery, plus information about the wine industry. The case has a difficulty level of four, appropriate for senior level. The case is designed to be taught in one class hour and is expected to require three hours of outside preparation by students.

Full text:

CASE DESCRIPTION

The primary subject matter of this case concerns entrepreneur ship. In particular, the case contains information on the background and psychological traits of the person starting Wild Flower Winery, plus information about the wine industry. The case has a difficulty level of four, appropriate for senior level. The case is designed to be taught in one class hour and is expected to require three hours of outside preparation by students.

CASE SYNOPSIS

Wild Flower Winery is the oldest family owned wine producer in Idaho. Producing about 2000 cases of wine per year, it is considered a "boutique winery" within the industry. Stu Scott started the winery in 1983, as a second job in the basement of his home. Its creation and evolution are very much part and parcel of his hopes, dreams and lifestyle. The case is largely Stu 's story and the fictionalizations are few. That is, the story for the most part is a factual account of his thinking, planning process, successes and mistakes.

Stu moved to Moscow, Idaho in 1981 from one of California's many wine regions. In California, as a hobbyist, he made wine and had planted his own vineyard. He loved the lifestyle that he saw among the small wineries, and found satisfaction in making and sharing his wines. He saw a small winery as his "dream" future activity. His assets included serving in the military, directing a school for disabled children, and completing a BA and MA in psychology. His MA thesis concerned "locus of control. Stu believed that he could significantly control his own fate through planning and hard work and thus saw himself as being "internally controlled. " Another asset included running his own office for a branch of the Federal Courts. This required self-direction, independent thinking, investigative skills, personal discipline and time management. What he lacked regarding starting a business, perhaps, was any formal training in business.

Also included in the case is a review of the wine industry, which originated in colonial Virginia. The modern Northwest wine industry started in 1968, and by 1983, there were about 50 wineries each in Oregon and Washington, and 10 in Idaho, one of which was medium-sized and nine were very small- sized producers. Never having seen itself as a wine producing state, Idaho liquor laws were slow to come around to being supportive of the fledgling industry. For example, prior to 1986, producers could only sell their wines at their own tasting room or through licensed distributors who resold the wine to stores and restaurants. This is often referred to as a "three tiered system." When a distributor is used, it costs the winery 30% of the potential profit on wine sales.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 45

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412075

Document URL: http://search.proquest.com/docview/192412075?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 10 of 100

SIT EASY FURNITURE COMPANY GOES INTERNATIONAL: PRELIMINARY CASE

Author: Sjolander, Richard

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Abstract:

The SitEasy Corporation is a small privately held manufacturer of tables and chairs made from the hardwoods of the northwest located in Colorado Springs, Colorado, USA. The company was formed 12 years ago by two old college friends, Bill Martin and Greg Huth. They had been involved with industrial design for a number of years and were quite successful. They wanted to furnish their homes with quality, contemporary pieces and found it difficult to find the type of furniture they desired to match their lifestyles in the marketplace. After an extensive search of the furniture market in Colorado, they identified a niche in the market for residential furniture that they stated in the following way: people desiring high quality pieces if contemporary furniture, made largely by hand, resembling some of the early twentieth century classics and bringing them into the contemporary homes of the affluent. Each piece should be signed by a craftsman and numbered. Given the vision for the products to be produced, great emphasis was placed on quality workmanship in production and achieving placement in the right retail environments. These were defined as retailers of similar lines of expensive, quality furniture, who could be counted on to properly display and merchandise their products. The company achieved moderate success during the first five years with distribution in west coast markets. They have since expanded into east coast markets, primarily in the northeast.

Full text:

INTRODUCTION

The SitEasy Corporation is a small privately held manufacturer of tables and chairs made from the hardwoods of the northwest located in Colorado Springs, Colorado, USA. The company was formed 12 years ago by two old college friends, Bill Martin and Greg Huth. They had been involved with industrial design for a number of years and were quite successful. They wanted to furnish their homes with quality, contemporary pieces and found it difficult to find the type of furniture they desired to match their lifestyles in the marketplace. After an extensive search of the furniture market in Colorado, they identified a niche in the market for residential furniture that they stated in the following way: people desiring high quality pieces if contemporary furniture, made largely by hand, resembling some of the early twentieth century classics and bringing them into the contemporary homes of the affluent. Each piece should be signed by a craftsman and numbered. Given the vision for the products to be produced, great emphasis was placed on quality workmanship in production and achieving placement in the right retail environments. These were defined as retailers of similar lines of expensive, quality furniture, who could be counted on to properly display and merchandise their products. The company achieved moderate success during the first five years with distribution in west coast markets. They have since expanded into east coast markets, primarily in the northeast.

SUCCESS BRINGS NEW PROBLEMS

Sales grew steadily and the company expanded two years ago into a much larger factory capable of doubling their output, while maintaining their quality level. The new factory had both a larger production floor for more specialized machinery and a much larger warehouse for storing raw materials. One problem they had experienced was high materials cost for the small orders of exotic hardwoods the company was forced to make in its original factory. They moved into the new factory in 2004 and material cost per unit did decline in the second half of that year by almost 5 percent. In 2005 the new housing market peaked and in 2006 it actually started to soften. Sales of all kinds of furniture are closely correlated to, and slightly lagged from, the amount of new housing. This relationship is known in the industry.

Thus, in early 2006, Lisa Morgan, Vice President for Marketing, was meeting with Bill and Greg regularly to discuss strategies for continued success in this new, more competitive market for high end furniture. Bill, CEO, outlined the issues for the group.

"Clearly, we made a risky strategic move three years ago when we decided to double our capacity. I have reviewed that decision and while it looked like a slam dunk at that time, we may have placed an overly high probability on our forecast of continued almost double digit growth for the rest of the decade. Our new factory is fantastic, but, as you all know, we need $15 million in new sales just to break even on the cost of our additional overhead. So far the best we have been able to come up with is 8 million. Sales for the fourth quarter of 2005 were actually flat from the previous year and the first two quarters of this year have seen negative growth. Greg, production manager of the plant reminded the group that at least in terms of materials cost, the new factory, even at current operating levels showed a significant savings. We are also able to attract a higher quality of wood, given our larger orders, which is further improving the quality of our product. They turned to Lisa, hoping for answers. She responded with the same 'excuses' for the flat sales that they had already heard.

Under further questioning, Lisa mentioned that two of her best performing retailers, both in the Boston area, had mentioned when she was last in their showrooms that they were getting a healthy trade from Canadians taking delivery in Quebec, Montreal, and as far away as Toronto. One of them stated that the Canadian dollar, 'the Loonie', was appreciating against our dollar. "I looked into this and they were correct. Four years ago their dollar was only worth 72 cents U.S. and today it exchanges for 90 cents. That's quite a difference. Maybe we should consider moving into international markets?"

They agreed that Lisa should do some preliminary market scans, which she did. In the process she contacted the Colorado Office of Economic Development and International Trade, which led to them inviting SitEasy to attend a Trade Show being organized for furniture manufacturers and distributors in Düsseldorf, Germany. Bill decided to personally attend the show in September, 2006 with a group of business people from the Denver Chamber of Commerce. His purpose is to explore new markets for the specialty line of tables and chairs manufactured by the SitEasy Corp. Their line of furniture has come to be accepted in 'better' middle class homes across the United States. This is Bill's first experience on a trade mission and he was understandably shocked to find that people actually come to these shows with their checkbooks in hand.

While he was still in Germany, Lisa returned from lunch to find the following e-mail message from his boss marked URGENT! - This was not the way she planned to spend her Friday afternoon.

Lisa: Great trade show. More interest in our model 1308 and 1600 chairs than I thought possible. Check market in Sweden for viability. Looks like that will be our first move into the EU.

Need your reply tomorrow. Have a meeting scheduled for 10 am with our new distributor.

Bill

Lisa looked at her watch and tried to remember the time difference to Frankfurt - Düsseldorf, whatever. Failing on the instant conversion, the next step was to punch in 'time in Germany' on her favorite search engine: 10:12 pm. Looking at her watch she noted that it was 2:12 pm in Denver. Eight hours time difference meant that tomorrows meeting would actually take place in a few short hours. She would have to make use of materials on hand and whatever she could find on the internet to provide the needed answers.

Lisa quickly identifies three general areas for research on the Swedish market. First is the overall size of the market. The company would like to expand into new markets to optimize capacity utilization in their plant, without causing capacity constraint problems for the firm of 62 employees producing 73 million dollars in sales for 2005. They are currently operating at about 73 % of capacity and domestic expansion, which had been at the rate of 8% per year for the first four years of the decade slowed to 6% last year and has been flat so far this year. However, their labor productivity gains have been averaging higher than the average for non-farm labor over the same period, or about 4%. This is due primarily to the fact that the business is relatively new and invested in the latest equipment. This has helped to hold down labor cost. She ponders how to answer. First, she decides it would be good to have an estimate the number of years to capacity for their facility given current estimates of domestic demand?

Getting back to the issue at hand, answering her boss, she decides to begin her search for Swedish data at government websites, http://www.buyusa.gov/sweden/en/ccg.html and choosing Sweden as the country brings her to the Country Commercial Guide for Sweden, produced by the Department of Commerce staff at their office in Stockholm, Sweden. Here she finds a general narrative about the country and its business climate. Nothing specific to the market size here, but there is a wealth of information on her second issue: general economic climate. Information includes an assurance that Sweden has signed the European Patent Convention of 1973. She notes although import tariffs should be low, there is a 25% V.A.T. This is a form of sales tax preferred in a lot of countries, Lisa remembers. She finds the following list:

The value for customs purposes is directly based on the value of transaction and the following additional costs:

* freight costs up to the place of importation to EU

* insurance costs

* loading/other handling costs

* broker fees

* package costs

* royalties or license fees

* the seller's yield in case of further sale to a third party

Most goods imported to Sweden are subject to customs duty and also a value-added-tax (VAT). The general VAT rate is 25%, with a lower rate of 12% for food and certain services, and 6% for books and periodicals.

She makes a note to tell Bill about that so he will be sure to specify who is to pay this in the contract. It appears that the way customs calculates the applicable fees is by the following formula: (CIF + duty) * 25% = VAT. She finds what she hopes is the applicable tariff information on the web (Table 1), but is still not entirely clear about the VAT. A mistake here could easily turn any foreign sale from profitable to a large loss. For the purpose at hand she decides to assume that the beginning point for negotiations on selling price to the Swedish distributor should be at least as profitable as domestic sales. Therefore, she makes the following notes;

Our fob East coast distributor's dock cost is currently $602 for the 1308 and $791 for the 1600 model chairs. These prices allow for a 15% mark up on cost for SitEasy.

A quick call to her freight company tells her that a ballpark figure would be an additional $50 per chair for export packing and shipping in container loads to Gothenburg or Oslo, Norway, and an additional $10 to Malmö, or Stockholm.

Marine insurance is an additional 1% of product cost and a 40 foot container will hold 32 chairs.

Lisa realizes that the firm attempts to earn a minimum of 15% mark up on cost on all domestic sales, she decides to use this target as her starting point on the pricing of the international sales, as well. At the same time is gathering this information she notices that families get 12 months of childcare leave after the birth of each child to be taken by either spouse. She wonders if Bill is aware of this, as he just had his second child.

She looks in the World FactBook for general information about Sweden. At https://www.cia.gov/cia/publications/factbook/index.html The World FactBook is compiled and published by the CIA, which seems to be interested in gathering information useful to business, as well as government. Here she found interesting comparisons between the statistics for Sweden and the US markets. Remembering that her market is particularly upper-middle class consumers with high disposable incomes, she paid particular attention to the Household consumption figures. The CIA reported that in Sweden the income of the highest 10% of households was 20.1 % of total income and the lowest 10% was 3.7%. Comparing with data listed under the US she found it was 30.5 % and 1.8%. She will need to examine this information further to determine how it might affect demand for furniture.

Next, she looks at the Composition of the market. At http://www.census.gov/ipc/ www/idbnew.html The international database of the US Census Bureau provided a wealth of statistics on the population of Sweden. She stumbled on this data almost by accident and realized her time was running out. She copied the following tables for Sweden and the US. Highlighting the target age group of 40 - 70 and computing some summary statistics, she arrives at the following tables. She assumes that their products are currently marketed to approximately one third of the United States population and given the small size of the Swedish market she thinks she should include all of it.

She realizes that the information she has gathered so far may be somewhat biased, given its US governmental sources. Therefore, she looks for a Swedish source and found the Swedish Statistical Bureau. At http://www.scb.se/eng/index.asp Lisa found little to help her here. A wrong keystroke put her into what she assumed was a wealth of statistical information. Unfortunately, it was written in a foreign language, probably Swedish. She was right, and had stumbled onto a stark fact of international research. Governments tend to publish data in their own languages. In fact, Sweden was the first country to begin conducting a regular census of the population hundreds of years ago. Information was readily available - in Swedish - on median disposable income for households by age, number of households by age, size of households by age, and the usual variety of statistics used in secondary marketing research. Making a note to herself to find out more about researching international markets, Lisa began to prepare her e-mail to Bob around the three themes: Market size, Economic climate, and future potential for SitEasy expansion.

What should her response include? After exhausting the information included here, visit the websites she used in her analysis and look for facts she overlooked in her haste to compile her response. How could this new information affect her response concerning the Swedish market? Be specific in your comments and remember to source all information.

CASE QUESTIONS, INSTRUCTOR'S NOTES and REFERENCES

Available from the author upon request.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 47-52

Number of pages: 6

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412453

Document URL: http://search.proquest.com/docview/192412453?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 11 of 100

STRAYER EDUCATION, INCORPORATED

Author: Stotler, James

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Abstract:

This case will require the student to value the equity of Stray e r Education, Incorporated, (NYSE:STRA) and make a buy or sell recommendation as an independent analyst. The data given should be examined to determine whether or not the company's stock is valued above or below the market price in order for investors to make a buy or sell decision. The student must assess the real estate industry environment using Porter's five-force model of competitive strategy and the DuPont identity. Valuation techniques employed include the capital asset pricing model, the two-stage dividend-discount model, the P/E valuation approach, and the Gordon model.

The student is placed in the role of an equity analyst and asked to prepare a buy or sell recommendation/or Stray er Education, Incorporated(NYSE: STRA) stock. Stray er Education, Inc. through its subsidiary, Stray er University, offers graduate and undergraduate degree programs in business, information technology, education and public administration. The student must assess the competitive environment of Strayer using the DuPont identity and Porter's five force model of competitive strategy as well as estimate the value of the stock. All information in the case is publicly available.

Full text:

ABSTRACT

This case will require the student to value the equity of Stray e r Education, Incorporated, (NYSE:STRA) and make a buy or sell recommendation as an independent analyst. The data given should be examined to determine whether or not the company's stock is valued above or below the market price in order for investors to make a buy or sell decision. The student must assess the real estate industry environment using Porter's five-force model of competitive strategy and the DuPont identity. Valuation techniques employed include the capital asset pricing model, the two-stage dividend-discount model, the P/E valuation approach, and the Gordon model.

The student is placed in the role of an equity analyst and asked to prepare a buy or sell recommendation/or Stray er Education, Incorporated(NYSE: STRA) stock. Stray er Education, Inc. through its subsidiary, Stray er University, offers graduate and undergraduate degree programs in business, information technology, education and public administration. The student must assess the competitive environment of Strayer using the DuPont identity and Porter's five force model of competitive strategy as well as estimate the value of the stock. All information in the case is publicly available.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 57

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412292

Document URL: http://search.proquest.com/docview/192412292?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 12 of 100

FEDERAL RESERVE DILEMMA: 1974

Author: Tuttle, Mark; Stretcher, Robert

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Abstract:

The U.S. macroeconomy was considered relatively healthy at the end of 1973, but some problems loomed. Growth of real output was healthy and the unemployment rate was on the decline. By the fourth quarter of 1973, the U.S. was enjoying robust growth in Gross Domestic Product (GDP), which was up an annualized rate of 3.9 percent in the fourth quarter. In fact, real output had increased in thirteen of the fifteen quarters following the 1969-1970 recession (from the fourth quarter of 1969 through the first quarter of 1970).

This certainly wasn't the longest expansion following World War Two. Yet, real GDP had grown at an average annual rate of 4.8 percent, which exceeded average real GDP growth of 3.9 percent following the Second World War Concurrently, national unemployment rates fell. Unemployment reached a forty-two month low of 4.6 percent in October, 1973. This rate was down substantially from the post-recession high of 6.1 percent during the summer of 1971.

The positive increase in real output fueled a faster rate of increase in prices. Inflation had decreased following the 1969-1970 recession, and reached a low of 4.5 percent in 1972. However, inflation was rising through the year (measured as the percentage change in prices for Gross Domestic Purchases), averaging 7.1 percent during 1973. A higher rate of growth in the money supply was one cause of higher inflation rates. M2 (one measure of money) increased 13.4 percent in 1971, twice as high as the average annual rate of growth for the 1959 through 1970 period. This high rate of money growth was sustained through 1972, increasing 12.9 percent in that year. Consumers bore a large portion of these price increases. One measure of consumer prices, the Consumer Price Index (CPI), grew 6.2 percent in 1973. Therefore, inflation became a looming concern at the end of 1973.

Full text:

INTRODUCTION

The U.S. macroeconomy was considered relatively healthy at the end of 1973, but some problems loomed. Growth of real output was healthy and the unemployment rate was on the decline. By the fourth quarter of 1973, the U.S. was enjoying robust growth in Gross Domestic Product (GDP), which was up an annualized rate of 3.9 percent in the fourth quarter. In fact, real output had increased in thirteen of the fifteen quarters following the 1969-1970 recession (from the fourth quarter of 1969 through the first quarter of 1970).

This certainly wasn't the longest expansion following World War Two. Yet, real GDP had grown at an average annual rate of 4.8 percent, which exceeded average real GDP growth of 3.9 percent following the Second World War Concurrently, national unemployment rates fell. Unemployment reached a forty-two month low of 4.6 percent in October, 1973. This rate was down substantially from the post-recession high of 6.1 percent during the summer of 1971.

The positive increase in real output fueled a faster rate of increase in prices. Inflation had decreased following the 1969-1970 recession, and reached a low of 4.5 percent in 1972. However, inflation was rising through the year (measured as the percentage change in prices for Gross Domestic Purchases), averaging 7.1 percent during 1973. A higher rate of growth in the money supply was one cause of higher inflation rates. M2 (one measure of money) increased 13.4 percent in 1971, twice as high as the average annual rate of growth for the 1959 through 1970 period. This high rate of money growth was sustained through 1972, increasing 12.9 percent in that year. Consumers bore a large portion of these price increases. One measure of consumer prices, the Consumer Price Index (CPI), grew 6.2 percent in 1973. Therefore, inflation became a looming concern at the end of 1973.

POLITICAL INSTABILITY

Political instability in the U.S. and abroad complicated the situation in late 1973. President Nixon was battling for his political life over the Watergate scandal. As a result, active fiscal policy waned and monetary policy became the primary means to alter the short run path of the macroeconomy. The U.S. withdrew all combat troops from South Vietnam and hostilities with North Vietnam ended in January, 1973. One side-effect was a reduction in the budget deficit as defense spending fell. The lessening of fiscal stimulus aided in cooling aggregate demand. The reduction in spending and rise in revenues due to the expanding economy had some impact on GDP growth during 1973.

International instability followed the domestic political instability and the withdrawal from Vietnam. Egypt and Syria attacked Israel on October 6, 1973, the day of Yom Kippur. Initial Arab gains were reversed after forty-eight hours into the fighting. By the time the U.N. cease-fire went into effect on October 24, the Israelis were driving towards Damascus and Cairo. The U.S. fully supported Israel during this conflict, which infuriated the Arab nations that supported Egypt and Syria. During the same month, these Arab members of the Organization of the Petroleum Exporting Countries (OPEC) initiated an oil embargo against the countries that supported Israel. As a result, energy prices in the U.S. soared. Prices paid by the consumer for energy rose 7.3 percent in the last two months of 1973 (an annualized rate of 52.3 percent). This supply shock started to ripple through the U.S. as suppliers' marginal costs (especially for energy inputs) increased at the end of 1973.

WEAKENING AGGREGATE DEMAND

Despite the strong growth in real output, there were signs of weakening aggregate demand. Business fixed investment growth was anemic by the end of 1973 due to rising interest rates. By the end of that year, the Aaa bond rate rose sixty-eight basis points to 7.83 percent and the yield on the ten-year treasury was nearly seven percent (a rise of fifty-five basis points). Even more alarming was the change in short-term interest rates. The three-month treasury yield rose an astonishing 236 basis points over the year, and the yield of 7.77 percent by the end of 1973 was greater than the long-term treasury yield. The yield curve inversion convinced bond market participants to expect higher inflation in the short run relative to the long run. Residential investment also declined substantially during 1973.

Another sign on slumping aggregate demand was the drop in real consumer spending. Real personal consumption expenditure growth was strong through 1972 at 6.1 percent. For 1973, the change in consumer expenditures was 4.9 percent. However, most of this change came in the first quarter. During the last three quarters of 1973, real consumer spending was stagnant falling 0.02 percent. Consumers were reducing spending on durable and nondurable purchases through the year. One contributing factor to this fall in spending was the decline in the growth of household wealth. During the 1971 and 1972 periods, real household wealth grew at an average annual rate of 7.2 percent, which helped to fuel consumption and aggregate demand. However, by 1973, real wealth grew 3.0 percent.

The health of the U.S. macroeconomy was certainly questionable at the start of 1974. The U.S. had experienced exceptional growth in real output in the years following the 1970 recession, but the growth was slowing. One reason was declining aggregate demand. Rising interest rates and falling household wealth softened business and household spending, respectively. The end of the Vietnam War and rising tax revenues reduced the budget deficit, therefore reducing fiscal stimulus on aggregate demand. On the supply side, the oil embargo increased energy costs, which raised marginal costs and reduced aggregate supply. Unemployment was low, but the potential for a weakening economy suggested that the reductions in unemployment were potentially at an end.

ADDITIONAL EXHIBITS

Table 1 provides several macroeconomic variables mentioned in this case.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 59-61

Number of pages: 3

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412306

Document URL: http://search.proquest.com/docview/192412306?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 13 of 100

BAHAMASAIR: THE NATIONAL AIRLINE OF THE BAHAMAS PONDERS PRIVATIZATION

Author: Rarick, Charles A; Nickerson, Inge

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Abstract:

Although not technically located in the Caribbean, the Bahamas is viewed as a Caribbean tourist destination. The islands of The Bahamas are located in the Atlantic Ocean, close to the Florida coast and within easy reach either by sea or air. Air travel has been a popular means for tourists to travel to The Bahamas; however, increasingly tourists are arriving to The Bahamas by cruise ship. With a population of just 317,000, the Bahamas benefits greatly from this tourism. Over 5 million visitors per year, the vast majority from the United States, are attracted to the islands for shopping, beaches, water sports, and the attractions offered by the luxurious hotels such as Atlantis in Nassau. The Bahamas offers visitors parasailing, diving, snorkeling, historical tours, Caribbean dining, and much sunshine. Most tourists visit the capital, Nassau, or the other major city, Freeport. The tourism industry employs about 50% of the Bahamian workforce and contributes approximately 40% of the country's GDP. Currently, tourists spend over $2 billion a year in The Bahamas. Tourism is expected to increase in the coming years as resorts such as Atlantis expands and new mega-resorts, such as those planned in Nassau's popular Cable Beach, become operational. The government of The Bahamas is planning to develop the outer islands to attract even more tourists. The outer islands offer a slower-paced vacation and are of special interest to some tourists.

The Bahamas does face stiff competition for Caribbean tourist dollars as tourists opt for sometimes more trendy destinations such as Barbados, St. Kitts, or the Turks and Caicos Islands. The Bahamas has remained a popular tourist destination despite this increasing competition. One threat facing the entire region is a new homeland security regulation. Beginning in January 2007, Americans returning from the Caribbean must present a U.S. passport for reentry into the United States. Previously other forms of identification, such as a birth certificate or driver's license, were sufficient documentation. The effect on tourism as a result of this new regulation is uncertain.

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TOURISM IN THE BAHAMAS

Although not technically located in the Caribbean, the Bahamas is viewed as a Caribbean tourist destination. The islands of The Bahamas are located in the Atlantic Ocean, close to the Florida coast and within easy reach either by sea or air. Air travel has been a popular means for tourists to travel to The Bahamas; however, increasingly tourists are arriving to The Bahamas by cruise ship. With a population of just 317,000, the Bahamas benefits greatly from this tourism. Over 5 million visitors per year, the vast majority from the United States, are attracted to the islands for shopping, beaches, water sports, and the attractions offered by the luxurious hotels such as Atlantis in Nassau. The Bahamas offers visitors parasailing, diving, snorkeling, historical tours, Caribbean dining, and much sunshine. Most tourists visit the capital, Nassau, or the other major city, Freeport. The tourism industry employs about 50% of the Bahamian workforce and contributes approximately 40% of the country's GDP. Currently, tourists spend over $2 billion a year in The Bahamas. Tourism is expected to increase in the coming years as resorts such as Atlantis expands and new mega-resorts, such as those planned in Nassau's popular Cable Beach, become operational. The government of The Bahamas is planning to develop the outer islands to attract even more tourists. The outer islands offer a slower-paced vacation and are of special interest to some tourists.

The Bahamas does face stiff competition for Caribbean tourist dollars as tourists opt for sometimes more trendy destinations such as Barbados, St. Kitts, or the Turks and Caicos Islands. The Bahamas has remained a popular tourist destination despite this increasing competition. One threat facing the entire region is a new homeland security regulation. Beginning in January 2007, Americans returning from the Caribbean must present a U.S. passport for reentry into the United States. Previously other forms of identification, such as a birth certificate or driver's license, were sufficient documentation. The effect on tourism as a result of this new regulation is uncertain.

BAHAMASAIR

Bahamasair, the national airline of The Bahamas, was born out of the energy crisis of the 1970s when British Airways ended its service to The Bahamas due to rising fuel costs. Fearing the effect of other carriers also ending service, the government decided to begin its own airline in 1973. The company has experienced difficulties with financial performance, labor unrest, and customer service throughout most of its existence. Currently, the airline requires a government subsidy of around $10 million a year to operate. Bahamasair has been accused of being poorly managed, as represented by recent groundings due to poor maintenance record keeping and late payments of a U.S. Customs bond.

Bahamasair flies out of four cities in the U.S. - Miami, Ft. Lauderdale, West Palm Beach, and Orlando, and it has service throughout The Bahamas. Bahamasair also flies to Jamaica, the Dominican Republic, and the Turks and Caicos Islands (see Figure 1). In 2004, Bahamasair entered into a code- sharing agreement with US Airways that allows an expansion of its market into Charlotte, Philadelphia, and New York. Code sharing allows one flight to be marketed by more than one airline and increases the market reach of cooperating airlines. Bahamasair had expanded into the U.S. market in the 1980s to include Philadelphia, Newark, and New York, but it found those routes to be unprofitable at the time. The airline is a small carrier with only eleven aircraft that includes Boeing 737 jets and smaller turboprops. Bahamasair competes directly or indirectly with a number of different international airlines including US Airways, Continental, American Airlines, Jet Blue, Spirit Airlines, and Air Tran. All six American carriers fly into The Bahamas, most to Nassau or Freeport. Bahamasair would like to compete on the basis of its country identity and slogan (We don't just fly there. We live there); however, more often Bahamasair competes on the basis of price (see Figure 2).

At one time Bahamasair had exclusive intra-country routes; however, a number of private airlines have now begun operating within The Bahamas, including Pineapple Air, Cat Air, Seair Airways, Western Air, and Southern Air. These domestic competitors compete with Bahamasair on some of the same intra-country routes, and they are operating with a lower cost structure than Bahamasair. In order to offset this loss of revenue due to domestic competition, Bahamasair is considering expanding into smaller cities in the U.S. such as Cleveland and Richmond.

PRIVATIZATION

Faced with increased competition and a poor record of profitability, the government of the Bahamas has begun to explore the possibility of finding a foreign investor for Bahamasair. The government has requested bids from investors who would purchase a less than 50% equity interest in the airline. International investors will find in The Bahamas a favorable tax structure, close proximity of the country to the United States, an English speaking population, political stability, and a developed infrastructure. Additionally, the Bahamian dollar is pegged on par (1-1) with the U.S. dollar, thereby reducing exchange risk volatility.

In an effort to explore the privatization issue, the Bahamian government contracted with the American consulting firm McKinsey & Co. to provide an assessment of the issue. The consultants, reporting on the airline industry, stated that "domestic markets are mature and saturated; Florida is over-serviced; and penetration of U.S. markets will not likely generate positive margins for Bahamasair in the short or long run." Additionally, the consultants stated that it was essential that Bahamasair improve operating efficiency, reduce costs, increase market share, and right-size the present aircraft fleet. Without improvements, finding a foreign investor would be very difficult.

Bahamasair is expecting a loss of $10 million on revenues of $76 million for the fiscal year 2005-2006. Bahamasair is essentially bankrupt, and according to its managing director, the company has a negative equity of around $84 million. The company survives only through government subsidies that have ranged between $10-32 million a year. Attempts at cost-cutting have resulted in labor resistance, including groundings due to sickouts by employees.

Some see Bahamasair as a typical example of the problems of government ownership of industry. They argue that governments typically do not generate the interest in efficiency and customer service found in private companies. Furthermore, government-owned industries can become vulnerable to destructive political meddling in economic decision-making.

Others argue that many countries have state-owned airlines. Some airlines are fully owned by the government, such as British Airways and Japan Airlines International. In other cases, the government has a partial equity interest in the national carrier. Government ownership of airlines varies from 100% ownership to only a token equity interest. Scandinavian Airlines (SAS) is owned 50% by the government and 50% by private investors. KLM Royal Dutch Airlines is 25% state-owned, and the German government has a small equity interest (1.6%) in Lufthansa. According to the Bahamian Ministry of Works and Utility, "The provision of reliable, efficient, low-cost airline service is essential to the social and economic development of the Bahamas and the continued growth and development of our tourism industry." Not all government officials agree with this position, and a decision regarding the future of the airline must be made.

DISCUSSION QUESTIONS

1. Would you invest in Bahamasair as a foreign investor? Explain your answer.

2. Why do governments typically own airlines and not grocery stores?

3. Should the government of The Bahamas privatize Bahamasair, liquidate the airline, or continue to operate it? Explain your answer.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 2

Pages: 63-66

Number of pages: 4

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412153

Document URL: http://search.proquest.com/docview/192412153?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 14 of 100

IT Uptake and Integration Across a Temporary Project Organisation in the Construction Industry

Author: Brewer, Graham J; Gajendran, Thayaparan; Swee Eng Chen

ProQuest document link

Abstract:

The case study, funded by the Co-operative Research Centre for Construction Innovation (CRCCI) in Australia, examines the adoption and integration of IT to facilitate supply-chain activities by a temporary project organisation that was assembled to complete a portion of a major construction project in New Zealand. It consisted of a number of consultants, suppliers, and contractors from three different countries operating in a fourth country, which delivered the major architectural feature for an award-winning building. The case study explores both the interplay between IT and its various users, and its impact on business relationships in an industry traditionally characterised by its litigious, short-term, project focus. [PUBLICATION ABSTRACT]

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ORGANISATIONAL BACKGROUND

This case study describes that part of the project supply chain formed around the focal company during the construction of a landmark construction project in a major city in New Zealand. This supply chain is unusual for a number of reasons:

* It is centred on the activities associated with an atypically successful company.

* It involves a highly geographically dispersed supply chain.

* It would not have been feasible without the use of IT.

The focal company has existed for about 30 years. It operates in both the property development and engineering sectors. This case concentrates on the section of the company that acts as a specialist subcontractor for the design and management of the erection of engineered facades on major buildings. Their projects are located worldwide, but are all coordinated from Australia. They have 25 staff members who manage a set of business relationships with trading partners from around the world. They have won awards for export and design excellence, and would describe their product as intellectual property. The management structure is very flat, and a key component of their management strategy is the involvement of all staff in weekly meetings at which both operational and strategic matters are discussed. The gross receipts of the company are around $20 million per year and their margins, though undisclosed, are reported as "considerably higher than the industry norms," which are traditionally very low (typically less than 5%). They have recently completed a technically demanding project, to clad a landmark building in New Zealand, that used architects and contractors from that country, but incorporated components built to their specification in Australia and China. Additionally, another firm of engineers from the UK collaborated with them on certain aspects of the project. It is therefore this temporary project organisation that provides the context for this case study.

The focal company uses fairly conventional IT infrastructure and applications, utilising MS Office, AutoCAD for design, intranet and extranet for domestic file exchange, and e-mail for data distribution to supply chain partners. On a number of previous projects, the company has been required to use proprietary, Web-based project collaboration Web sites for data exchange and communications functions. Major aspects of this case arise because of a number of issues: the focal company's position within construction projects, sometimes as an IT follower rather than as a leader, other times dictating its use to its suppliers; the alignment of often conflicting quality assurance requirements; and the geographical dispersion of projects and supply chain partners.

The focal company's involvement in this project came about subsequent to a design competition where the winning architect prepared sketch plans. These were approved by the client (city council), and were then used to prepare the documentation and cost plans. The key feature of the project was the front facade, known as the "sculpture wall," which consisted of an extensive glass curtain wall, curved in three planes. Subsequent to an audit of domestic facade engineering expertise and in accordance with the client's wish to minimise contractual risk (i.e., pass on risks/costs associated with design and construction flaws and delays), an overseas facade engineer was appointed as consultant to the client, who then recommended the focal company as a suitable specialist subcontractor.

The design package was put out to tender ahead of the main contract for the building. Although slightly dearer than the lowest bid, the focal company's bid was accepted. There followed a round-table meeting to resolve any remaining difficulties, at which the focal company pointed out that the steel content of the design was 50% higher than they would have expected. They subsequently tabled an alternative design that used cast-aluminium elements, and over the next 7 months, this was collaboratively refined to produce significant improvements at lower cost, with most components being sourced in Asia.

Not the perfect project, but a fantastic outcome for all stakeholders, including the city... (Client)

SETTING THE STAGE

The benefits of collaborative work in a project environment are obvious and well reported, as are the benefits of using various IT tools to facilitate collaboration. While it might be assumed by many of those working in the IT application development sector that the construction industry is simply a subset of the manufacturing sector, this is emphatically not the case. When it comes to working collaboratively as part of a temporary project team, the overwhelming majority of construction-related firms are simply not good at doing it, which is all the more surprising given that most, if not all of their work is generated by projects that can only be completed as part of a team.

There are a number of reasons for this, most of which are not IT related. Rather, they centre on the culture of the industry, the conflict between the commercial objectives of the individual firm and the project objectives, and the transient nature of working relationships created as a consequence of winning subcontracts. Furthermore, these conditions are often accompanied by high levels of risk aversion by all parties.

The introduction of innovative work practices is often accompanied by difficult bedding-in periods, which many project participants will seek to blame for poor performance on their part. Typical examples would be where requests for additional information or details of design variations were delayed by the use of new technology; other examples might arise where some project participants would be reluctant to share design details electronically for fear of misuse of the data by third parties. Any of these occurrences, and many others besides, could result in an unreasonable transference of contractual risks to project participants who had not factored it in their tender prices.

The application of IT to the construction industry is the domain of specialised researchers into construction informatics typified by those associated with CIB W78, an organisation set up by the Counseil Internationale du Baitment (International Council for Building), which is the leading international research organisation for the industry. Naturally, the majority of their work focuses on technical issues of software and hardware development. Nevertheless, there has been a parallel move to investigate why the construction industry is slow in the adoption of leading-edge construction-specific technologies, which themselves lag far behind those available in other industries.

This case was conducted as part of a major research project designed to reveal the issues concerning industry participants in regard to adoption and integration of IT. It is of interest to students of IT who may be interested in working in this sector because it reveals the challenges that they might face when either developing new applications, or adapting existing applications for use in the sector. Sensitivity to contextual issues is vital if IT developers are to deliver optimal solutions for the construction industry that are also likely to be accepted across the spectrum of users. This means that within a firm, commitment and a positive attitude to both the IT and the possibilities it presents are essential.

However, these sentiments, backed by a serious commitment of resources, will prove fruitless if they are not reflected in the actions of their trading partners. A clear statement of the rights and duties of each party to an IT-mediated project must be matched by expressions of respect between trading partners, themselves supported by actions that will foster trust. The IT technologist has to provide solutions that will support such actions, providing easy-to-use, verifiable, and secure environments within which to do business.

To this end, the case variously examines a focal company, the supply chain that it assembled, and the wider temporary project organisation to which it briefly belonged in order to fulfil its contractual obligations on a job in New Zealand, using interviews (and supporting documentation) with key project participants (as mapped in Appendix A). The innovative feature of this case is thus its exploration of the business context within which IT is employed, rather than the technology itself. The focal company is atypical of the construction industry in that it has established a set of relatively stable business relationships with a compact group of suppliers with which it is happy to trade (and vice versa) on a continuing basis. Therefore, this case examines the nested interdependencies between an individual organisation, its regular trading partners, and the temporary project organisation to which it was a party for a single project.

CASE DESCRIPTION

Clearly, as can be seen from Appendix A, a supply chain had formed around the specialist subcontractor who had preexisting business links with most of their supply-chain partners. These were variously described by partner organisations as "of mutual benefit," "strategic and valued," and "important to our company."

The existence of a stable and enduring supply chain was ascribed to a number of factors. Alignment of business interests was the predominant sentiment, integrated with which was alignment of business processes, the use of IT being of central importance.

It is important to note that the competition for award of contracts to supply the various components was highly competitive, albeit from within a limited pool of trusted suppliers whose quality and reliability were all previously known: in fact, those with whom the focal company had a strategic relationship. Such relationships are comparatively rare in the construction industry since it is usually the client or the client's representative who dictates the selection of trading partners. In this case, the focal company had amassed about 10 parties with whom they did regular business.

On the basis that the "customer is always right," and that a high level of substitution products exist in the construction industry, the focal company was able to exert influence over the working practices employed by their suppliers, particularly when it came to IT and related issues. That said, the existence of a relatively stable strategic group of suppliers could only be explained in terms of the demand for, and relative uniqueness of the focal company's product.

To reinforce their position, the focal company took the unusual (for a construction subcontractor) step of embedding a member of their staff within each of the supplier organisations for a week. They would then work with the supplier to ensure that compatible software was being used, that data exchange protocols were standardised to the satisfaction of the focal company's QA needs, and that document/version control systems were not conflicting between companies.

The focal company regarded this as essential groundwork, which in many instances required significant expenditure on international travel. However, it was regarded as a clear demonstration of confidence in both them and their product on the part of the focal company by all of their suppliers, and considered to be indicative of the likelihood of repeat business.

Given the geographical dispersal of the various participants, the focal company expressed the view that IT was a pretty-much indispensable tool for modern businesses on an international stage. It was noted that the early design processes were exclusively electronic, with distribution by e-mail attachment or by CD.

Ironically, the only part of the project that was detailed by hand was the sculpture wall, where an early CAD wire-frame diagram was developed and built upon. A mixture of geometric complexity and a lack of suitable CAD operators was the reason most often cited for this anomaly. Interestingly, this allowed the designers of both the wall and the building to check the geometry and interface between them by overlaying them in a number of ways: by hand, by mathematical calculation, and by reference to the CAD wire frame. However, this has left the architect with the headache of scanning a mass of 3'3'' x 2'3''-sized drawings for digital inclusion within a building manual printed on 8 2/3'' x 11 1/4''-sized paper.

We will either have to...break down the A0-sized drawings into sections then scan the sections at A4 so that they are page sized at full scale, or source a large image scanner and reduce each drawing to A4, but I can't see the sense in that when it comes to seeing details... ... .... They'll all need to be pdf'd of course. (Architect)

Outside of the focal company's supply chain the motivations to engage became far more conventional, and although the use of IT was a conspicuous feature of the project communications, the notion of making it a prerequisite for involvement with projects was not considered viable by anyone interviewed.

If I say that I can't work with such and such a consultant because he doesn't work my way then I'm giving the client options. He can work with me and sack the other guy or he can give me the flick! I think adaptability and willingness to be flexible is the key. (Steel contractor)

This theme recurred:

You must be willing to work with anybody and everybody, be adaptable. And the removal of ego. I am not precious about things. I think that ego gets in the way of a lot of things. (Architect)

Consequently, few barriers to IT adoption were evident within this supply chain relative to industry norms. All of the consultants used in the facade subcontract and on the main contract had broadly compatible IT capabilities.

Unusually, there was little apparent tension in regard to the sharing of commercially sensitive information within the facade subcontract, although there was initial reticence from the head contractor when faced with such an open communication structure. This was initially overcome by client/architect persuasion and, subsequently, by favourable experience.

Interestingly, during the early stages of the project it was felt that e-mail was the predominant form of communication (together with e-mail attachments). However, once the focal company had established an on-site presence, telephone and face-to-face meetings, together with drawings burned to CD supplanted this. This transition broadly coincided with an increase in the size and complexity of the drawings associated with the sculpture wall, leading to a move away from electronic drawings for distribution, which were ultimately replaced by paper copies.

No matter how good the collaborative system you use, there's nothing like face-to-face discussion to thrash out the problems that happen on-site. I dunno whether it's being there in person or whether it's the big paper drawings you can scribble on, or what... But somehow it just seems easier to work that way when the job reaches that stage. (Steel contractor)

At all times, it was unclear as to the precise role that IT played in the constitution and running of the supply chain. Everyone agreed that IT had become an integral part of their firm's business processes. Everyone agreed that their IT capability had the potential to improve their communications with their trading partners, leading to tangible efficiency savings. Yet no one expressed an unequivocal view that IT was indispensable to their business. Again and again, key members of different firms involved in the project supply chain talked enthusiastically about the benefits of IT use on this project, and about their hopes for increased IT integration on future projects. Yet when pushed on the subject, none would recognise IT as an indispensable part of their firm's business processes, merely an efficiency-aiding tool. It appeared as if many of the firms felt that the benefits of IT that they had experienced on this project could vanish just as quickly on the next one. One explanation advanced for this was the dominance of superior product over complimentary business process alignment as a criterion for trading partner selection:

I don't doubt that IT has made our lives a lot easier. When we work with companies in other countries it's fantastic to think that drawing sent by e-mail will be with them almost instantly. But if we didn't have this capability, or if they didn't have a matching capability we would still be able to do the job, albeit more slowly. In the past we managed to get by using faxes and drawings sent by courier. I'm not saying that this is ideal but there's no reason why we couldn't do this again-that is if there were compelling reasons for us to do business with a firm like this. I mean their product would have to be pretty damn good! (Focal company)

However, the superiority of one supplier's product over another could not be enough of a convincing explanation for the absence of wholehearted enthusiasm for IT across an entire project supply chain, especially one within which so many preexisting, long-term business relationships could be found. A search was conducted through all of the interviews in order to ascertain what the participants' attitude was to the role of IT within the current project supply chain. Indication was sought as to whether the various parties considered the use of IT within the supply chain as a trigger to, enabler of, or hindrance to improve supply-chain function. Content analysis of the case study interviews was conducted and structured to categorise responses into one of the three options (trigger, enabler, and hindrance). Each of these categories was further subdivided into affirmation, ambivalence, or refutation.

Within the interviews conducted with members of the facade supply chain, the overwhelming majority of references (t=0, e=27, h=1: all affirmative) were construed as affirming the role of IT as an enabler of improved business processes within this part of the project. None of those questioned said that they had felt coerced into adopting any, or particular forms of IT in order to be considered as a potential supplier to the focal company, although several interviewees spoke of IT use as a prerequisite for modern international trade (itself an affirmation of IT as an enabler).

Extending the analysis further out to include all interviews conducted with all members of the project supply chain produced a more mixed response, still within the "enabler" realm, but now distributed across the entire spectrum (t=1, e=7, h= 6: all affirmative except for t, which was negative).

These figures require further explanation in order to understand their full implication, namely that the majority of "enabler" comments came from the client, client's project team, and the architect. "Hindrance" comments were also made by them, but in the context of exploring hypothetical situations.

By contrast, three project-specific instances were cited by members of the construction team (all related to the electronic transfer of design/contract documentation) that they felt demonstrated that the reliance on ICT-mediated communications had resulted in negative impacts upon project performance.

From this analysis, it appears that two distinct sets of results have been returned, one from a relatively stable supply chain (associated with the focal company), the other from a more conventional construction industry temporary project organisation (associated with the construction of the building).

However, it is also possible to divide these results into two other sets of participants, namely those who were able to dictate the nature of IT-enabled communications and those who followed their lead. In this particular case, that could be broadly equated to designers vs. constructors.

It is therefore important to note the extent to which the facade supply chain appears to have been somewhat insulated from these tensions. It would therefore be reasonable to conclude that the stability of a supply chain and the maturity of the relationships within it have a considerable bearing upon the success, or otherwise, of interorganisational IT use. However, several of the interviewees expressed opinions indicating that they, and others, were waiting for issues of common technology and exchange protocols to be decided before moving to the next level of IT integration.

CURRENT CHALLENGES / PROBLEMS FACING THE ORGANISATION

The frequently chaotic nature of the construction industry has forced the focal company to look into ways of improving productivity. Unlike the majority of the construction industry, their uptake of IT has delivered something approaching the anticipated performance improvements.

Nevertheless, this case has raised some fresh concerns when implementing IT in an integrated manner across supply chains. IT should no longer be viewed as an enhancement to raditional construction procedures, but rather as an innovative agent that enables new and different alternatives to organising and operating construction enterprises. Consequently, the focal company, as a change leader, is faced with opportunities as well as challenges: these will inevitably have an impact on its trading partners, both in their immediate, strategically aligned supply chain, and with others that they work with on a once-off, single-project basis.

Thus, it can be seen that the challenges are three-tiered: at the level of the firm, their domestic supply chain, and the industry. While some of the challenges might be clearly associated with a single tier, more often than not they span two or more tiers, making their solution more complex, requiring interfirm cooperation. Indeed, some of the problems are so complex that they require to be addressed on an industry-wide plane.

CAD/Modelling Issues

* The lack of a project Web site for the sharing of documents/concurrent working on a common 3-D building model was noted and flagged by the architect for future inclusion on other projects, as was the use of manual drafting for parts of the sculptural wall. This was attributed to a lack of availability of skilled personnel in the country, the result of a number of downturns in the industry over the last 3 decades, leading to a brain drain.

* There was a high degree of standardisation around AutoCAD as the system of choice, although some respondents indicated a personal preference for Microstation or ArchiCAD. Interoperability was not surfaced as a concern. The architect expressed the desire to move towards a situation where all of their jobs were modelled in 3-D, and that the model was resident upon the Net in a password-protected environment so that all of the consultants could work on it concurrently, secure in the knowledge that it was "live" and current. At that point, interoperability issues would become of far more pressing concern.

* The use of rudimentary virtual prototyping prior to the construction of a full-size mock-up of the cladding was possibly the most interesting innovation on the project. Both the architect and the facade subcontractor undertook aspects of testing prior to finalising the unitary design. This included dimensional control, and earthquake and wind load simulations, aspects that were later confirmed during tests conducted on the mock-up. Many design defects were picked up during testing-zero defects was thought to be a realistic goal:

I've seen entire planes, bridges and cars constructed and punished in a virtual world, and I don't think that can be far away for our industry. Yet it is interesting to look at the costs of leaky buildings, of faulty designs that have been continued for years unchanged...and they say that there is not enough money in a job to make it worthwhile. I'd argue that building owners pay heavily for decades for these mistakes and they could be so easily avoided with testing. (Architect)

* The cost of moving to a fully 3-D CAD environment was noted by several supply-chain participants as being considerable, as was the time required to train up their workforce for such a move. There were indications from several quarters, particularly subcontractors and suppliers, that such a move was excessively complex for their needs. Generally, the more international the firm's market, the more likely they were to embrace such a move. One respondent reported working in three different time zones, and found the fact that the ability to make revisions or post queries, then go home to find answers waiting online the next morning, was incredibly useful.

Data Exchange/Common Standards Issues

* The issue of drawing exchange, including version control and file size, was the most crucial challenge facing all of the participants interviewed on the current project, even though during interviews all respondents were found to be fully electronically enabled.

We invested heavily in streamlining our document control as part of our QA push, headhunting someone from Boeing to sort us out. But when we came to interface with customers we had the same problems all over again whereby our drawing numbering convention, which was an integral part of our QA process, didn't suit that of the client...and you can't tell them how you want to do it-it's their way or the highway! (Focal company)

* The desirability of universal adoption of industry-wide standards would appear obvious. However, the sentiment was repeatedly expressed that no matter how desirable such standards appeared, their implementation would be impractical if they didn't meet the needs of all users.

No one wants to go back to the mix and match of the good old days of paper, 2-D and 3-D. But equally, alignment [of technologies and systems] is not an issue at present as everyone is predominantly 2-D. Advances in software and Web sites will mean that we won't have to change how we do things. However for anyone accessing it, it will need to suit their needs.... (Focal company)

It was noted that this situation could be further compounded by the involvement of international participants, where the use of home-country standards, techniques, and protocols could lead to increased costs when applied to the country in which the project was being hosted.

* It was felt that most consultants should, and did generally keep abreast of each other's technical standards/capabilities. It was acknowledged by the focal company that smaller or more specialised consultants/specialist subcontractors tended to have simpler, less sophisticated CAD systems, and that these could occasionally lead to technical glitches, such as 2 m diameter smoke detector symbols! Nevertheless, it was felt there was always a workable solution to these situations, and these ought to be accepted by others for the sake of supply-chain stability.

* Whilst the focal company utilised wide-area network technology to facilitate data exchange between their head office in Australia and site offices worldwide, data exchange with their strategic suppliers was conducted at the level of "lowest common denominator," specifically using the technology that everyone in the supply chain could access, namely e-mail. When dealing with project-specific trading partners, their capability to competently navigate large PDF drawings electronically, or even to generate their own printed copies was often more of a hindrance to supply-chain activity that more than offset the advantage of speed of transmission.

There are often times where we are way ahead of the head contractor in terms of capability. I've seen us ask [leading Australian contractor, not involved in this project] to give us electronic drawings in such and such a way and they've been unable to comply, so I've said 'give it to us anyway you can and we'll work round it.' Yes, we are often way ahead of the game... (Focal company)

The issue of FTP sites or project Web sites as the mechanism for data sharing did not arise in this project, since none of the participants whose position/power would have made them capable of imposing such a protocol on the project supply chain chose to do so.

Trust/Shared Culture Issues/Risk

* There was general agreement that this particular project had "something special" about it that somehow enabled the various parties to work together very well; it was implied that the conduct of the focal company had a bearing upon this. However, there was also the recognition that processes and protocols had developed in a somewhat ad hoc fashion (indicative of aberrant, extracontractual actions on the part of the focal company), something that might not have worked elsewhere, and something that some of the project participants felt would be undesirable on future projects.

* Costing the setup of communications infrastructure into the fee for a project was one way of avoiding haphazard development of protocol, as was the appointment of an independent consultant for the purpose, a development signalled in current research regarding the creation of the Project Information Officer. Either way, it was desirable that project environments should move towards the all-electronic.

* Concurrently, there was a recognition that new working practices entailed new risks, and that by being in the vanguard of advances, it was unlikely to be possible to foresee with any accuracy what form these risks would take.

It is not nearly as litigious over here as it is in Australia. We update our disclaimers periodically but ultimately you don't know what t expect until someone is caught out. (Contractor)

There appeared to be a high reliance on trust in some quarters:

Ultimately if you do things in a reasonable and honest fashion, and unless you are the victim of what I would call...shall we say...'behind closed doors' practices, things can be worked round. (Focal company)

* With regards to the related issues of trust and copyright, it was noted that within the facade subcontract team, and at the interface with the architect, there was a sense of common purpose. Where normally a fully dimensioned CAD drawing with full functionality might have been regarded as a risky proposition leading to the leakage of intellectual property, on this project they were exchanged freely upon request. The rationale was expressed thus:

If we were asked for a fully dimensioned drawing we made it available on the basis that it assisted everyone to get the correct result...any other action would have led to a suboptimal outcome. After all, the Sculpture Wall is the main feature of the building! All that we asked was that people kept these things to themselves. No one abused that trust or the team spirit. Once trust had been established it was not a problem to provide commercially sensitive information. (Architect)

Return on Investment

* In terms of IT investment, no one expressed doubt about the voracity of their organisation's IT investments, past or present. These were simply regarded as essential to the conduct of their business. It should be noted that none of these technologies extended beyond the boundary of their own organisation: highest levels of sophistication were typically 3-D CAD, with interfirm file exchange by e-mail.

* When discussing electronic vs. paper communications, two respondents mentioned a situation where a tranche of paper drawings became lost in transition. This caused problems and entailed a degree of rework as a result. Interestingly, both parties decided that the politic response was to keep acrimony to a minimum, and split the costs between them in order to maintain good working relations. One party described this as "the best money spent on the entire project."

From these points, it can be seen that the type of IT employed by the focal company (and its trading partners), and use to which it is put, is unremarkable. Indeed, when viewed at the intrafirm level, the challenges posed by its use are indistinguishable from those experienced in any other complex industrial setting. What makes the construction industry a problematic context in which to achieve optimal IT performance is the constantly shifting pattern of trading partners, each with their own commercial objectives and work practices.

The focal company has taken the expedient step of stabilising its immediate trading environment through strategic relationship formation and maintenance, investing substantial resources to ensure technical and business process alignment. As a consequence, it appears to be reaping rewards in excess of industry norms.

This can be explained by the focal company's apparent regard to key issues described in previous research (Brewer, Gajendran, & Chen, 2005a; Brewer, Gajendran, & Chen, 2005b; Gajendran, Brewer, & Chen, 2005), found to be critical to the success of IT deployment in a project setting, specifically their:

* Commitment to programmed IT rollout and upgrade within their organisation,

* Open and supportive attitude to IT alignment with trading partners,

* Active desire to move away from operating as part of a perennially fragmented project team, coupled with,

* Willingness to move away from "lowest cost" towards "best value" when selecting trading partners, where best value is represented by time, cost, and quality certainty, cemented with aligned IT business practices, thus demonstrating,

* Willingness to adopt the mantle of an IT "champion" for the project supply chains with which they are associated, and finally,

* Openness and trust-creation, especially when distributing intellectual property electronically.

In doing so, the focal company could be said to be addressing the majority of influences on IT success in a project setting, facilitating process improvement at both intra- and interfirm levels. Nevertheless, certain factors were not, or could not be addressed on this project:

* The need for common processes and applications across the entire project team could not be brought about by the focal company from their position as a "follower" of the IT practice used by the entire project team. For this to happen, a "champion" from the highest level of the project (e.g. client, head contractor, or architect) would be necessary. From the focal company's perspective, this might not have been a concern since their own part of the project ran smoothly, and largely in accordance with their business processes.

* The ideal long-term benefits of integrated IT use for a project ultimately accrue to the client, who will be left with comprehensive design documentation, as well as a full set of "as built" documents-invaluable for use by their facilities managers during the operational phase of the building's life. The ideal way in which such an outcome could be generated would be by the use of a 4-D CAD model, generated and developed synchronously by all parties via a shared database, hosted on a project Web site. At present, although such technologies do exist, their use in this way remains a Utopian dream. This can be explained predominantly as a consequence of the prevailing industry culture, which is highly litigious, riskaverse, and conflicted when trying to simultaneously satisfy commercial objectives at the level of the firm and project objectives for the client.

* The lack of available forms of contract containing conditions specifically designed for the use of IT-enabled business processes. This meant that communication by electronic means (excluding faxes) could be found to be not contractually binding if challenged in court. This might seem surprising to an outside observer used to the world of IT projects, but comes as no surprise to construction industry practitioners, who would be familiar with the highly inefficient and risk-averse "do nothing until confirmed in writing" syndrome prevalent in the construction industry.

In summary then, it has been seen that the interface between the technology and the humans who are asked to use it is peppered with a myriad of complex, often conflicting issues. On one hand, there is the recognition across all sectors of the construction industry that the use of IT within an organisation has now become ubiquitous, whether it is for traditional secretarial functions, more complex design and costing purposes, or for automated communications such as e-mail, with others outside of the firm. Furthermore, the majority of users recognise the potential benefits of extending their organisations services electronically.

However, those whose business is to generate project information equally recognise that they lose control over their intellectual property once it is publicly released in an editable format (Gajendran et al., 2005). Furthermore, it has been shown that while the release of more detailed and comprehensive project data can be beneficial to trustworthy trading partners, it can also empower the less scrupulous to utilise this information for their own commercial purposes, often at the expense of the source firm (Brewer et al., 2005b).

It would be foolish to believe that business advantage comes without cost, and in the case of IT this is twofold, both in terms of the financial cost of such investments and the initial loss of productivity during the necessary roll-out phase and attendant staff development programme. Moreover, once an organisation commits to IT, it quickly finds that there is no way back. It therefore follows that the attitude it adopts in respect to the return-on-investment period has a major impact upon this initial decision. While some firms are prepared to take the decision to invest in IT as an act of faith (e.g. the focal company), others are very arbitrary in their approach, rejecting investment in any tools whose payback period does not fall within the project within which they are introduced (e.g. many of the subcontractors on the project).

Furthermore, those who take the first step of automating previously manual tasks (such as drawing board to 2-D CAD) are often reticent about reengineering their business practices by taking the next step (in this case, 2-D CAD to 3-D/4-D/nD modelling) citing both the resource implications and the consequent reliance on the rest of the supply chain being able to keep pace (3-D building models driving automated cost and quantity calculation, life-cycle modeling of the completed building, etc.). This wide disparity in technological capability between players in the same industry is often attributed to the availability of a plethora of alternatives, combined with a dearth of independent advice or industry-wide standards in this regard.

Lastly, not only does it appear that IT adoption and integration requires a degree of faith on the part of organisational decision makers, but it also necessitates a high level of employee buyin, combined with visible managerial "championing" at the intrafirm level, and project-wide "championing" by someone with sufficient "power" to impose project-wide protocols.

ACKNOWLEDGMENT

The research team is grateful to acknowledge the assistance of the Cooperative Research Centre for Construction Innovation in funding this work. They may be contacted for further details of this research project by e-mailing any requests to this address: enquiries@constructioninnovation. info

Subject: Construction industry; Information technology; Supply chains; Project management; Computer aided design--CAD; Studies

Location: New Zealand

Classification: 9179: Asia & the Pacific; 8370: Construction & engineering industry; 5220: Information technology management; 9130: Experiment/theoretical treatment

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 3

Pages: 11-23

Number of pages: 13

Publication year: 2006

Publication date: Jul-Sep 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: References

ProQuest document ID: 198656747

Document URL: http://search.proquest.com/docview/198656747?accountid=38610

Copyright: Copyright Idea Group Inc. Jul-Sep 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 15 of 100

A Database Project in a Small Company (or How the Real World Doesn't Always Follow the Book)

Author: Mallach, Efrem

ProQuest document link

Abstract:

The case study describes a small consulting company's experience in the design and implementation of a database and associated information retrieval system. Their choices are explained within the context of the firm's needs and constraints. Issues associated with development methods are discussed, along with problems that arose from not following proper development disciplines. [PUBLICATION ABSTRACT]

Full text:

EXECUTIVE SUMMARY

This case describes the development of a database system used to track and analyze press comments by experts on the information technology industry. The system was developed in a haphazard fashion, without the benefit of professional developers, originally based on a loosely organized collection of data assembled by a staff member, with little visibility into its ultimate uses. Design decisions made early in the project without careful consideration were difficult to change, or were never changed later, even after their negative impact was evident. The system provided real value to its users, but use of proper development disciplines could possibly have reduced some problems while not reducing that value.

ORGANIZATION BACKGROUND

The job of an industry analyst (Columbus, 2004) is to interpret goings-on in a particular field to nonexperts, advising them on where the field is going and which vendors, products, or services are most likely to suit a particular user need. Because information and communication technologies (ICTs) are complex, rapidly changing, and "mission-critical" to businesses of all types, analysts1 are especially important in that field. Their recommendations move large amounts of revenue toward vendors whose products and services they favor, or away from those about whom they feel negatively.

In 2005, there are about 500 (Kensington Group, 2004) industry analysis firms (also known as research firms when this is unlikely to cause confusion with other types of research) worldwide. Total industry revenue can be estimated at roughly $3 billion, based on published annual revenue of industry leader Gartner being about $900 million (Gartner Group, 2005), and the existence of several privately held firms employing over 100 analysts each, such as International Data Corporation with over 600 (IDC, 2005) and Forrester Research with nearly 200 (Forrester, 2005). It is reasonable to estimate that the industry employs at least 2,000 analysts, probably considerably more.

As a result of analysts' influence on the market, ICT vendors pay a great deal of attention to them. Most large vendors have a dedicated analyst relations department. The efforts of Alcatel (2005), Computer Associates (2005), Sybase (2005), and Hewlett-Packard (2005), all in different segments of the IT industry, are representative. Vendors spend large sums courting analysts, visiting them, putting on events for them at which they showcase their products, and generally trying to convince them that the vendor's offering is superior. Since they want to do this as well as possible, vendors often look to outside advisors (Insight Marketing, 2005; Tekrati, 2005) to evaluate and improve their analyst relations programs.

The organization discussed in this case, which will be referred to2 as Balmoral Group, Inc., was such a consulting firm. It specialized in advising ICT vendors about the impact of industry analysts on their business, and on how to work with them most constructively. As the case opens in 1999, it employed 5 full-time people plus a few part-time contractors for peak survey work. At the end of the case in the summer of 2003, it employed 18, over half of whom were primarily involved with the system described here.

Balmoral Group was founded when its two cofounders, Isabelle Oliviera and Lawrence Ackerman, met. Ackerman had a solo consulting practice in this field. Among other things, he had begun conducting multiclient studies in which analysts told him what they needed in terms of support from vendors, and rated vendors based on how well they provided this support. Oliviera worked for a large hardware vendor and was about to leave it to start her own consulting practice in the same field. Since the two were on opposite coasts of the U.S., they chose to join forces and named their joint venture Balmoral Group. Ackerman was named CEO; Oliviera president. A few years later, in 1996, they incorporated to set the stage for further expansion.

The firm's initial offerings included the multiclient studies originally done by Ackerman, workshops at which vendor analyst relations professionals could learn the elements of their profession, and custom consulting services. Among the questions that arose frequently in consulting work were "Which analysts are most influential in our space, which are most likely to be quoted about us, and what are they saying?" Balmoral Group, at that time, lacked a systematic way to approach these questions.

The database system described in the rest of this case was originally intended to answer such questions. It eventually provided another offering for the firm that accounted for a large fraction of its income by 2002 and led to expanding its headcount to over 15 people. However, its development proceeded in an unplanned fashion and was characterized by technical decisions that, in retrospect, might better have been made differently. The situation described in the case is in this respect typical of many small organizations. The system development processes described in books are often followed, at least in principle, by larger firms with dedicated MIS staffs, but the small-business reality is not usually as professional in that respect.

Oliviera and Ackerman remained in charge of the firm through 2002. In 2000 they divided their responsibilities, with Oliviera in charge of external activities including sales and customer relations, and Ackerman in charge of internal ones including research projects and databases. In early 2002, Oliviera took over as sole manager while Ackerman prepared for a career change. As a prearranged part of this orderly transition, he remained with the firm through the period covered by this case, leaving in the summer of 2003.

Other than the two cofounders, only one other employee had any management responsibilities. In 2000, a research staff member, Tamara Hudson, was given the title of project manager and put in charge of many of the database activities described later in this case. Because of the small size of the organization-18 people at most, about half of them working in support positions on the database described in this case-more of a formal management structure was not necessary. Figure 1 shows an organization chart of the firm as it was toward the end of this case. At that time its annual revenue was in the high six figures in U.S. dollars.

Strategic planning as such did not exist at Balmoral. At the start of the case and for most of its existence, it had no direct competition. Some public relations agencies offered overlapping services, but Balmoral's specialization in analyst relations tended to remove general agencies from direct competition. In addition, since Balmoral had a policy not to offer agency services to its clients, agencies tended to treat it more as a partner than as a competitor.

Balmoral had a multiplatform policy for its information technology. Staff members (almost all of whom worked from their homes) could choose either Windows3 or Macintosh systems, as they preferred. There was no consistency in individual choices of hardware or OS. The firm reimbursed employees for whatever they chose.

Consistency existed at the application level, however. The firm required multiplatform applications. It used Microsoft Office for word processing, spreadsheets, and presentations; PageMaker for document layout; and Dreamweaver for Web page development. E-mail and Web browser software were not standardized as that was not required for interoperability. With occasional exceptions involving graphics embedded in Word documents, the multiplatform approach caused no problems.

SETTING THE STAGE

In early 1999, CEO Ackerman was reading InfoWorld while waiting between flights in the American Airlines lounge at Chicago's O'Hare Airport. While he was used to seeing analysts quoted frequently in the trade press, for the first time he realized that listing and organizing their comments could provide insight into their influence areas.

He opened his laptop and created a spreadsheet to capture information about these quotes. It had these columns:

* Analyst Name

* Job Title

* Firm

* Location (city; also state if U.S., country if not U.S.)

* Topic of Article (a few words indicating what the article overall was about)

* Article Title

* Publication Name

* Date of Issue, Volume, Number (as applicable)

* Writer(s)

* Point(s) Made (summary of what the analyst was quoted as saying)

* Vendor(s) Mentioned

* Entered by (initials, for the possibility that others might enter quotes at some time)

* Date Entered

The spreadsheet version of this listing is seen in Figure 2. Some information items, such as an analyst's job title, are not always available. Those cells were left blank. In Excel, this permits information from the cell to its left to spill over into the blank cell, as do the first two analysts' names. Common publication names were abbreviated, for example "CW" for Computerworld in several rows.

A few months later, at a company meeting, Ackerman showed the spreadsheet to his colleagues. By that time it had grown to a few hundred entries, all gathered through his reading of the trade press. The group agreed that the information in it, or that could be in it with a concerted effort to continue and expand its coverage, could be a valuable tool. Its availability, presented as evidence that Balmoral Group's recommendations are based on hard data, could also provide a competitive edge in obtaining clients.

However, the spreadsheet did not lend itself to these uses. It suffered from all the problems of a flat-file structure in what ought to be a multitable database. It had no retrieval facilities other than the text-search capability of its underlying package (Excel, at the time in versions 97 and 98 for Windows and Mac OS, respectively). Finally, the group came up with other data elements that were not being captured but which could be useful, such as the attitude (positive, neutral, or negative) expressed in a quote toward each vendor mentioned in it.

As a result, it was decided to develop a "real" database for quotation capture and analysis. Since Ackerman had more background in this area than anyone else then in the small firm, though he was far from an expert, he offered to develop the system, with the others testing it and providing feedback. Balmoral Group's multiplatform philosophy, and the fact that they had no database server capability at the time, narrowed down the choice of DBMS to FileMaker Pro (FM Pro for short) (Coffey, 2005; FileMaker, 2005; Schwartz & Cohen, 2004). Release 5 was then current and was used. Release 6 appeared during the period covered by this case, but was not felt to offer enough advantages to justify upgrading. (Release 7, which did offer major conceptual improvements, came out later.)

An informal version of prototyping4 was used for development. Ackerman bypassed conventional methods for requirements determination5. Instead, he intuited system requirements from his experience with the Excel spreadsheet and from colleagues' comments. Along similar "quick and dirty" development lines, no functional or design specifications were written. Ackerman developed a "first cut" system, populated it with quotes imported from his spreadsheet, and sent it to colleagues to try out, review, and comment.

CASE DESCRIPTION

The first FileMaker Pro version of the database implemented the entity-relationship diagram in Figure 3.

This ERD was not drawn at that time. It is an after-the-fact description of the original database. It represented these facts:

* An analyst may be quoted many times, but quote is by one analyst. (A handful of exceptions arose later, where a reporter attributed a quote to two or more analysts. Most of these were excerpts from reports by multiple authors. These were handled as multiple quotes, one by each author, with identical content and cross-reference(s) to the other author(s) in the "article summary" text field.)

* A firm may employ many analysts, but each analyst is employed by one firm. (Job changes result in updating the analyst's record with his or her new employer. This system was not intended to, and did not store analysts' complete employment histories. There was a text field in each analyst record where free-form information about previous employers could be entered if desired.)

* A firm may have many offices, but each office belongs to one firm. (Two firms may have offices at the same place, such as when one is a subsidiary of the other that does business under its own name, but these were considered conceptually separate.)

* An office may house many analysts, but each analyst works at one office. (An analyst whose work location varies, such as a telecommuter, is associated with only one location in the database.)

It may seem that linking an analyst to a firm is not strictly necessary, since an analyst is at an office, which in turn belongs to a firm. This link exists because analysts' office locations are not always known. Many quotes identify the speaker's employer, but not his or her location. While it is usually possible to find it with a little detective work, it is not always worth the time to do so, and not always possible when a quote is being entered, such as when reading a newspaper on a plane. A more detailed ERD would show this relationship as optional-an analyst is located at zero to one offices-while that of an analyst to a firm is mandatory, with a minimum cardinality of one on the firm side.

Keys to these four tables were as follows:

* Analysts and offices were assigned unique numerical sequential keys by FM Pro.

* Firm names were used as primary keys to firm records on the assumption that a firm would not choose a name already used by another. This is a dangerous assumption in theory (Connolly & Begg, 2005, p. 451; Hernandez, 2003, pp. 262-263; Riordan, 2005, p. 34, as well as many other places), but was considered safe as a practical matter, and held up in practice. Its biggest problem came from violating Hernandez's final requirement ("its value can be modified only in rare or extreme cases") because firms change their names, if not frequently, at least more than rarely. (This is not a formal requirement of database theory, but is an important practical guideline.) The choice of firm name as a primary key required someone to update the records of all analysts at a firm when a firm changed its name, since it is a foreign key in those records.

* Quote records did not have a key. It was felt that quotes would be accessed only through searches on their contents, so a key would not be needed. While this assumption also held up in practice, the decision not to have a key for quote records had implications for database normalization that will be discussed later.

These tables had the following columns (data fields). Many of the informational items about analysts, firms, and offices are optional.

* Quote: Analyst ID no. (foreign key), publication, date of issue, cover date, page number, author, summary of article, content of quote, vendor(s) mentioned, attitude of quote toward each vendor mentioned, initials of person entering quote, date quote was entered. Having both "date of issue" and "cover date" may seem redundant. "Date of issue" was a calendar date of type Date to facilitate searching and sorting. (One often wants to know what analysts said during specific time periods, such as before and after an announcement.) Some publications do not have a calendar date as their date of issue; for example, a monthly might have an issue dated July 2005. This is not a valid Date data type, but someone seeking an article in a library needs this information. The "cover date" field held it as a text string. It was left empty if the date of issue was a single calendar date, as is true of dailies and most weeklies. When it was not, the first date of the period in question was used for "Date of issue": the July 2005 issue in this example would have been assigned July 1, 2005 as its "date of issue."

* Analyst: ID no. (key), family name, given name, middle name, courtesy title (Mr./Ms./etc.), job title, firm name (foreign key), office ID (foreign key), professional specialization, service or other division of the firm, previous employers, telephone numbers (direct, fax, home, mobile), e-mail address, list of vendors covered, other notes.

* Office: ID no. (key), firm name (foreign key), address (first line, second line, city, state/province/etc., postal code, country), main telephone number, main fax number.

* Firm: name (key), category (industry analysis, financial analysis, other, unknown), names of key people, capsule description, client base, major services, size, home page URL, usual e-mail address format, office ID of headquarters6 (foreign key).

From a theoretical database design perspective, this design has several flaws. For one thing, it violates normalization (Codd, 1990) in (at least) two ways.

First normal form (1NF) is violated because the vendors mentioned in each quote were listed in a repeating field within the Quote record, not in a separate table. This was done as a practical implementation matter. It was considered unlikely that any quote would ever mention more than 10 vendors. The wasted space of leaving room for 10, even if none were mentioned, was negligible. However, the decision not to have a key to quote records also played a part here. Absent such a key, it was impossible to set up a separate table for vendor mentions, and link each mention to its associated quote.

The Quote table is also not in second normal form (2NF) because there can be several quotes in one article. The bibliographic data of the article, combined with the analyst's ID no., is a candidate key for the quote record. (A unique numeric key might be better, but it will do.) Information such as the name of the article's author and the content summary of the article depend only on part of this candidate key: the bibliographic data. It is repeated in the record of each quote appearing in an article. It was not necessary for the person entering data to retype it-an FM Pro script copied all the article-related information from the first quote into all subsequent quote records for the same article-but the redundant data remained in the database, and it was theoretically possible to modify it in one quote record but not the others, creating what is known as an update anomaly. A better database design would use a separate table for articles, and would include the key of that table as a foreign key in each Quote record.

These deficiencies were the result of not following a systematic database design approach. When database design begins with an ERD and develops tables from it, normalization violations such as this tend not to occur (Connolly & Berg, 2005, p. 399; Hoffer, Prescott, & McFadden, 2002, p. 192ff; as well as many other places), though "the E-R approach alone does not guarantee good relational design" (Kifer, Bernstein, & Lewis, 2005, p. 87).

A better ERD on which to base the database would therefore have been as illustrated in Figure 4.

Despite these design deficiencies, the database system worked well enough for one person to enter data. As the content of the database grew, Balmoral Group was able to sell it to clients. There was no strategy for doing so, but the attraction of additional revenue was strong, and this had always been part of the concept. The clients who paid for its use soon wanted more complete coverage than the random initial data collection methods that depended on Balmoral employees encountering quotes in their professional reading and sending them to Ackerman.

As interest in the information grew, however, it became necessary to hire additional people to obtain more complete coverage of the ICT trade press. Balmoral did not then have a database server and did not want to invest in one, due to the cost and complexity of moving from a singleuser to a multiuser database. The issues were not only hardware and software, but the need to add a "real" IS capability to an organization that had managed to do quite well until that point without one. It was felt, perhaps wrongly in retrospect, that it was worth making some technical sacrifices in order to continue in this informal mode of operation, and to avoid either having to hire an IS specialist or outsource this aspect of the firm's work.

Instead, procedures were adopted to handle the necessary coordination, with a staff member assigned (in addition to her other duties) to coordinate it.

The number of people entering data eventually grew to 10 on a regular basis, with a few others augmenting their efforts at peak times. Having this many people enter data required a complex operational procedure, as follows:

1. Each "reader" (person reading articles and entering quote data from them) received a fresh copy of the database each month, containing the most recent version of the Analyst, Firm, and Office tables7. This version included all the updates, such as new analysts or firms, entered by other readers during the previous month.

2. The database coordinator, Sandi Carpenter, would assign each reader a range of keys for analyst and office IDs. The reader would reset the number at which FM Pro begins its sequence of keys to the first number in this range. Thus, analyst records created by different readers would all have unique keys. When the reader exhausted this range, the database coordinator would give him or her a new range to work with. The database coordinator, in turn, kept track of the key range assigned to each reader.

3. Each reader would work independently, using hard-copy publications assigned to him or her and articles that Tamara Hudson downloaded from online sources, such as LexisNexis, and distributed to readers.

4. Periodically, the readers would send files to Carpenter. Specifically, they would send seven files:

* New quotes

* New analysts

* Modified analysts (firm changes, title changes, finding information not previously known, etc.)

* New firms

* Modified firms

* New offices

* Modified offices

The first of these files was the reader's entire Quotes file, since each reader started each time period with an empty Quotes file. The others were extracted from the complete Analysts, Firms, and Offices files. New entities were extracted based on record-creation date being within the current time period. Modified entities were extracted based on record creation date being before the current time period, but record modification date being within it. FileMaker Pro maintains both these dates automatically, though it is up to the database designer to make them user-visible.

5. Carpenter would then check for duplicate data entered by more than one reader. This arose in part because new firms and analysts often showed up in multiple quotes at about the same time. If the first two times John Jones of Jones Associates was quoted occurred in the same week, two readers might find him and create records for him at about the same time. In addition, two or more online search strings would occasionally return the same article. The nature of online information retrieval, and the limits of LexisNexis on the complexity of a single search string, required multiple searches in order to retrieve all the articles of interest. It was not practical to read all the articles these searches retrieved in advance to eliminate duplicates before assigning the retrieved articles to readers.

Carpenter would also check updates for consistency and overlap. For example, one reader might find, via a citation, that an analyst was promoted from Research Director to Vice President. Another might find that she moved from Massachusetts to California. Her record in the master copy of the Analysts' table must be updated to reflect both these changes. FM Pro has a command to find all duplicated values in a given field, so identifying potential duplicates is not difficult. However, the word "potential" is important. Human names are not unique. With 2,000+ high-tech industry analysts, identical names occur from time to time. Carpenter had to check other information to determine if two records having the same analyst name represent the same person or different ones.

6. When duplicate records were found, one was deleted. In addition, if the duplicate was of an analyst or a firm, it was necessary to take all the records that had been linked to the deleted record and relink them to the one retained. For example, suppose one reader who has analyst keys starting with 7000 and another who has keys starting with 8000 both found John Jones, who was not previously in the database. Carpenter would get two John Jones records, one with a key of (say) 7012 and the other with (say) 8007. Suppose she determined that they represent the same person. If record 8007 was deleted, all quotes having 8007 in their foreign-key Analyst ID field had to have it changed to 7012. This is not conceptually difficult, but can be time-consuming.

Carpenter also had to check for multiple records referring to the same person in different ways. People use different forms of their names: Robert Enderle is often called "Rob"; some reporters who do not know him well also assume the more common "Bob." They change names, with Traci Bair becoming Traci Gere and sometimes cited as Traci Bair Gere. Reporters misspell names, with Dan Kusnetzky cited as Dan Kuznetsky or any of several other variations. Family and given names, especially but not only Asian, may appear in either order: Sun Chung in one article could be Chung Sun in another. (These are all real examples.) Some of these variations result from reporter errors, not database design or business process deficiencies, but they must be dealt with no matter what their cause is.

The database, which looks up analysts by family name, will report no match in all these cases except the first, causing the reader to create a new entry for an analyst who is actually already in the database. Individual readers cannot be expected to keep up with every analyst in the database (over 8,000 by 20038) in order to prevent confusion. All these names must be made uniform, with extra analyst records removed and their quotes relinked to the correct analyst record, before the database can be analyzed for reports or made available to clients.

7. At least monthly, more often if the number of changes or additions warrants, Carpenter sent updated versions of the Analysts, Firms, and Offices tables to the readers.

8. After all quotes for a given month were entered, she sent the complete tables to Balmoral Group research analysts to write client reports and upload the database to Balmoral Group's Web site.

These procedures worked because Balmoral Group clients saw only monthly updates to the database. This kept the internal updating and quality control processes from their eyes, and prevented them from becoming a client satisfaction issue. The database was visible to them in two ways:

* Online, to download to their own computers as a freestanding application that does not require the user to have FileMaker Pro installed. (A license for the FileMaker Pro Developer package allows royalty-free distribution of such applications. A person using an application it creates can modify database contents, but can be prevented from changing database structure, screens, predefined queries, reports, etc.)

* Through reports, written each month by Balmoral Group analysts and sent to clients. These reports analyzed the quotes about the client and its chief competitors during the previous month, including subjects accounting for the lion's share of analyst attention, and trends in analyst attitudes toward the client and its competitors. Clients were given a report on one month's quotes by the 15th of the following month. This allowed time for these four steps:

a. quotes published at the end of one month to become available at online information retrieval services about 3 or 4 days into the following calendar month;

b. those quotes to be entered by the readers;

c. the database updates to be merged and the database cleaned up; and

d. the data to be analyzed and the reports themselves written.

The start of a typical report, edited to remove actual company names, is shown in Figure 5. A typical report would be 8 to 10 pages long. About half of this content summarized overall industry analyst quotation activity for the previous month, and was generic to all client reports. The other half was specific to each client, though some parts of the analysis could often be reused when two clients were in the same industry segment. In this situation, one report client would often also be in other clients' "key competitor" lists.

By this time the database had several user clients, and was responsible for about a third of Balmoral Group's revenue. Feedback from clients and internal users (the latter using it primarily in the context of report writing) highlighted several areas of potential improvement. Ackerman, who continued to be the sole database developer throughout the period covered by this case, implemented them, again without benefit of a formal development process.

The second major version of the database was released to customers in October 2001. It improved the appearance of most user-visible screens. Functionally, this version of the system provided users with easy-to-use standard queries. While FileMaker Pro's "Find" facility is not difficult to master, far easier than (for example) SQL's "Select," it can intimidate those whose computer literacy consists of word processing and e-mail. By this time Balmoral had gained sufficient experience answering client inquiries, as well as using the database for writing reports and its other internal needs, to know what most queries would be. These common queries were supported by forms that showed only the data fields needed for the query at hand, backed up by custom scripts (FM Pro's term for programs in its proprietary language) as needed, and made available through buttons on a main menu page.

For example, a client who wanted to know how favorable comments by analysts about a particular firm were during the past month needed only to click on "Show Quotations Mentioning a Vendor," select the vendor name from a dynamic pull-down list, and enter the starting and ending dates of that month. The query screen looked like Figure 6.

The result would list all the queries and provide a count of those that were positive, neutral, or negative, with a summary score from 0 to 2 reflecting their distribution among these three groups. (Zero meant all negative quotes, 2 was the positive limit.) By clicking on the summary line of a quote in the list, the user could see all the available information about that quote. The top of a results page could look like Figure 7.

The result, according to users, was a major improvement in ease of use. The underlying data model, however, did not change.

Another change made at this time was to enlarge the repeating field for vendor mentions from 10 vendors mentioned in a quote to 12. The assumption made early on, that "it was considered unlikely that any quote would ever mention more than ten vendors," turned out to be wrong. Reporters often quote reports from "market watcher" firms such as International Data Corporation (IDC) that list the top vendors in various markets. While these vendor lists are usually shorter than 10, there is no absolute upper limit. Twelve took care of just about every case, but not all. As a practical matter, it was felt that the inaccuracies resulting from omitting vendors after that point was negligible, since important vendors tended to be among the first few mentioned. Still, this is an area where poor database design had user-visible repercussions.

Finally, Ackerman also wrote a full user's manual at this point. This was initially about 20 pages long, growing to 35 as the system (and Balmoral's understanding of what tended to confuse users) evolved. It reduced the number of support calls for the system, and was a selling point for new clients.

An enhancement to this release in May 2002 added a new table for publications. This table was added to allow categorization of publications by region (North America, Europe, Asia/Pacific, Rest of World) and coverage (IT, general business, specialized business, general/other). This was done in response to customer requests to be able to track coverage by these criteria. This table used the name of the publication as its key. That, in turn, led to difficulties later, since many general-interest publications have traditional names such as Times, Journal, Courier and so on. It was necessary to add location information to their "titles" in order to make the keys unique and tell the publications apart: Times (London), Times (Seattle) and so on. It also required readers to know the correct form of a publication name to check the database: is it "Times (New York)," "New York Times" or "The New York Times?" Guidelines were developed to deal with this problem, but guidelines can never foresee every possible situation, and humans never read guidelines perfectly in every case.

The logical database design at this point looked like this, with one publication potentially having many quotes, but each quote appearing in a single publication (see Figure 8).

Version 3 of the database was released to clients in November 2002. The major change here was in the forms and queries for accessing analyst information. These were totally redone to resemble those used to access quote information. The underlying data tables, however, did not change.

In February 2003, a new table was added to Version 3. It did not affect the essential functions of the database, but was introduced to deal with an operational issue. Clients used the notes column of the analyst table to record information about their interactions with the analyst-things they have learned about him or her, and other items that may be of future use in planning how they will work with that person. However, when clients get an updated copy of the database each month, it includes a new analyst table that does not have these notes. Adding them to the main Balmoral Group database is not a viable option, since it would make one client's notes about a particular analyst visible to all other clients, as well as creating problems when more than one client had notes on a given analyst. Merging a client's existing notes with the newly updated Analyst table, when it is downloaded each month, is possible, but is more technical work than many database end users are ready for.

By adding a separate table to contain these notes, the table can be left in place when the new version of the database is downloaded. The new table contains two columns: the note and the analyst ID as a foreign key. It has no key of its own since it is only accessed as an adjunct to the Analyst table. Conceptually, database design principles allow two tables in a one-to-one relationship to be combined with each other, but in this case, the need for separate operational treatment of different data elements led to splitting it (see Figure 9).

At this time, providing quotation tracking and analysis services was a major line of business for Balmoral Group. It kept eight readers busy, some full time and some part time. It also supported the database coordinator, about three-quarters of the project manager's time, and about a quarter of the time of three other professionals (most of it during a 1-week period of intensive report-writing activity each month). Clients found the service to provide valuable information and to be cost-effective, as the major expense items were spread over multiple clients.

In terms of cost, eight readers were about $15,000 per month, with the other professionals adding about the same amount, for a total of about $360,000 per year. Income was slightly more than this. There was a great deal of leverage in the system, in the sense that over 60 percent of the expenses (the readers, database coordinator, and project manager) were fixed in the short run. Revenue from additional clients, other than the additional analyst time required to write their monthly reports, was largely profit. Conversely, the loss of a client would be felt severely.

In addition, Balmoral Group management felt that the system was a major factor in selling its other products and services.

CURRENT CHALLENGES / PROBLEMS FACING THE ORGANIZATION

By the first quarter of 2003, it was generally recognized at Balmoral Group that:

* Clients wanted online access to the database. Downloading it once a month was not an acceptable option. There was concern that lack of online access would lead to clients dropping the service.

* Waiting as long as 6 weeks for a quote to appear in the database was also not acceptable. (The maximum delay occurred when a quote from the beginning of one month was not available until the database update in the middle of the following month. For example, a quote published on June 2, presumably reflecting an analyst's feelings in late May, would not be available until July 15.) It was hoped that putting the database online would make it possible to shorten this lag by having individual quotes available soon after they were entered. This lag was also a potential client loss issue.

* The operational complexity of coordinating the readers' database updates was a burden. A shared database would reduce it. Consider the earlier example of two readers finding John Jones at different times in the same month. With a shared database, the first reader to encounter him would enter him into the database. The next reader to enter a quote by Jones, whether a minute or a week later, would find him in the database and would therefore not create a new record.

* The deficiencies of the original database design, which had not been changed even though the user interface had been modernized, were beginning to show in data quality issues as the database expanded. This was not yet a client-loss issue, but the analysts preparing monthly reports found themselves spending what they considered an excessive amount of time resolving quality issues, and working considerable overtime to get reports out on schedule despite this.

These requirements were the subject of a great deal of discussion among Oliviera, Ackerman, and senior staff members of the firm. Two changes in the business environment influenced the decision. One was Ackerman's planned departure, which has already been mentioned, and which left Oliviera as the sole owner and decision-maker. The other was the expected purchase of Balmoral Group by a marketing firm with multiple synergistic subsidiaries. This was expected to provide both financial and technical resources with which to develop a "real" IT infrastructure and take this system to the next level.

Oliviera decided to initiate two parallel development projects. One was to take the existing FileMaker Pro database and put it online on a server. This was to be a short project intended as an intermediate step. This database would retain all the good and bad points of the FM Pro system, including its data model. The other was to develop a new SQL-based database with a totally redesigned, properly normalized database. Its user interface would be different, since it would use different software, but would offer at least the same functionality as the mid-2003 version of the system. Both these development projects would be outsourced to IS professionals in the acquiring firm. With this in mind, the FM Pro application was frozen in May 2003 except for bug fixes and mandatory changes.

Subject: Analysts; Consulting firms; Small business; Information technology; Data base management; Systems design; Studies

Classification: 9130: Experiment/theoretical treatment; 9520: Small businesses; 5240: Software & systems; 8310: Consultants

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 3

Pages: 24-40

Number of pages: 17

Publication year: 2006

Publication date: Jul-Sep 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Diagrams Illustrations References

ProQuest document ID: 198738108

Document URL: http://search.proquest.com/docview/198738108?accountid=38610

Copyright: Copyright Idea Group Inc. Jul-Sep 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 16 of 100

The Use of Information Technology in Teaching Accounting in Egypt: Case of Becker Professional Review

Author: Dahawy, Khaled; Kamel, Sherif

ProQuest document link

Abstract:

The use of information and communication technology has become an integral component and a vital tool in teaching accounting. Over the last few decades, the blend of using state-of-the-art technologies has improved the effectiveness and efficiency of the learning process. Respectively, some predict that physical campuses will decay and crumble in the near future with the continuous growth of borderless societies and the diffusion of extended enterprises leading to a hybrid model for knowledge delivery that extends beyond distance and time barriers. The main emphasis of this case is to study the deployment of technology in teaching accounting in Egypt, using the case of Becker Professional Review in providing trainees with the required training that enables them to pass exams and get professional certification using emerging information technology tools and techniques. The case demonstrates how information technology adaptation can provide a platform for knowledge dissemination and demonstrates a model that can be replicated in similar environments. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATIONAL BACKGROUND

Becker was established by Newton Becker as in-house training for PriceWaterhouse and Company in Cleveland, Ohio in 1957. In the early 1960s, Newton expanded the activities of the company to cover other cities throughout the United States. In 1996, Becker was bought by Devry Inc., a large publicly held higher-education company whose main objective is to provide trainees with the required knowledge that enables them to be prepared for passing the qualification exams required to obtain professional certification in a variety of disciplines. In 2001, Devry Inc. acquired Stalla, which specializes in finance courses. Today, Becker and Stalla, as a division of Devry Inc., offers courses in three areas: certified public accountant (CPA), certified management accountant (CMA), and certified financial analyst (CFA).

This case covers the Becker Professional Review (BPR), which has around 2,000 employees spread in 325 locations worldwide, of which 290 are in the United States and 35 in the Middle East, Europe, and India. It has more than 45,000 trainees per year, and more than 700 instructors. Since 1999, BPR trainees have always scored as top three in the CPA exam. One of the activities offered by BPR is the certified public accountant (CPA) examination, which is administered by the American Institute of Certified Public Accountants (AICPA). CPA is the qualification required by accountants who want to enter public practice, that is, to sign audited financial statements in the United States. The globally uniform CPA examination has a long and trusted history in the licensing of Certified Public Accountants (CPAs) since 1917. It is important to note that the essence of this case is the fact that the need for U.S.-based qualification has grown tremendously over the years because businessmen and investors in the market in Egypt view the holders of the CPA as being superior to their counterparts that hold local certification that is not globally accredited and acknowledged.

In view of the increasing globalization of accounting standards and practices, the addition of the credentials mentioned above is becoming increasingly invaluable. Completing the requirements and holding a certification as a public accountant has proven to be very beneficial when dealing with multinationals or local companies. In many countries, the CPA allows credits towards fulfilling requirements of obtaining a local designation. In Egypt, the CPA holder can get to be a member of the Egyptian Accountants and Auditors Society, which is the most renowned accounting certifying body. CPAs on all levels are often called upon to act as management advisors, to use their highly developed and often broad-ranging knowledge to help companies improve its use of resources in order to meet its organizational objectives. CPAs can provide various services including (but not limited to) auditing, tax advisory and planning services, international accounting, financial reporting, internal auditing, management acounting, nonfinancial positions, and government accounting. It is important to note that the CPA designation is committed to professional excellence and protection of the public interest in a rapidly evolving business and financial environment.

This case focuses on the representation office of Becker that is located in Cairo under the name Becker Professional Review (Egypt). The office was established in 1996 as an affiliate of the Institute of Management Development (IMD) of the School of Business, Economics and Communication at The American University in Cairo (AUC). IMD is the executive education arm of the school. BPR's main line of business is professional development through the conduct of a variety of training courses, awareness seminars, and tutorial sessions in preparation of the qualification exams. BPR uses a wide range of information technology tools to help its candidates pass their exams. Example tools include CD-ROMs, video tapes, flash cards, pass masters, online courses and starter kits that accompany the course textbooks, and materials which enable trainees not attending classes due to working hours or being located in different cities to still go through the review program, reflecting the idea of telecommuting.

The management team of BPR consists of two staff members: the country manager and the program coordinator reporting to the Regional Office in Beirut (Lebanon). Appendix A demonstrates the duties and responsibilities of both personnel. The team is responsible for developing the annual business plan that continuosly aims at introducing the tools and techniques that keeps the office competitive in the local marketplace. Appendix B demonstrates the income statement of BPR for the financial year ending 31 December 2003.

SETTING THE STAGE

Information and communication technology can develop or hinder the learning process. Therefore, the literature shows that proper planning, rather than the identification and allocation of funds, is a prerequisite for the effective implementation of information and communication technology in education and training (Cradler et al., 1993). The use of technology provides the ability to cut cost; reach a wider audience through tools such as the World Wide Web, electronic mail, video and desktop conferencing, and moderated class sessions that enables standardization of quality of instruction; and provide each trainee with the opportunity to learn at his/her own pace, confirming that technology is rapidly emerging as a vital component of teaching and learning (Means et al., 1993).

The use of information technology in classrooms allows schools, universities, and training centers to expand their markets both regionally and globally, respond to the business and environmental requirements, adapt to the changing conditions in the global marketplace as well as in the organization, support cross-cultural and cross-functional teams of trainees, encourages them to engage and work together, and allows faster and more practical cooperation between instructors from various nations and different institutions, adding to the benefits of collaborative work in the educational field in general. The use of information and communication technology in the classroom allows more time and space flexibility for instructors and trainees to use the educational material, enables continuous testing of users of the educational content, provides trainees with more freedom in taking initiatives, learn on their own and be more creative individually as well as in teams, helping them to construct their own ideal learning model and environment.

However, the advantages are sometimes hindered by the technology itself due to the need for expensive infrastructure and large start-up costs which can only be solved through a variety of issues. This could include a funding strategy, finding qualified and computer literate instructors, in addition to identifying the investment in staff development. But it should be noted that some issues remain to be addressed such as the lack of face-to-face instruction that may diminish the trainees interpersonal, social, and communication skills, although cultural elements sometimes play a major factor in identifying the extent of the effect of this element. Many studies have been developed recently to react to these issues that are further intensified in developing nations, because the quality of accounting education is relatively lower. Therefore, it is crucial to find ways to speed up the educational process and the knowledge dissemination arms for its citizens. One of the promising venues that capitalize on information and communication technology can be distance learning and computer-based technologies, which could lead to a more effective, deliverable-oriented and relatively less expensive infrastructure for learning. The current literature shows that most of the cases implemented took place in the developed world, and it is inevitable that developing nations could benefit substantially if such a mechanism is available: therefore, there is an urgency to test the environment in a developing setting like Egypt. Table 1 demonstrates some of the issues that need to be considered when implementing information and communication technology in education and training (Cradler, 1992).

The case of BPR represents an opportunity to assess the level of acceptance of technology in teaching accounting in Egypt. The introduction of information and communication technology in the field provides an intriguing example to explore the opportunities presented for teaching accounting. The case aims to explore the services offered by BPR in teaching accounting, where the hunger for technological advancement in such discipline is hindered by the lack of financial resources needed to develop the basic infrastructure required, despite the recent investments that took place in infrastructure development in the information and communication technology infrastructure (World Bank, 2002). The case addresses a number of questions including (a) assessing the role of trainees as facilitators or barriers to the use of technology in teaching, based on their cultural background, (b) identifying the major advantages and disadvantages of introducing technology to the teaching process, (c) determining the requirements needed to effectively use innovative technology in teaching, (d) providing a benchmark for technology implementation in developing nations, and (e) reporting the lessons learnt from the experience of BPR in Egypt to work as a model for other countries with similar socioeconomic environment.

Information Technology in Egypt

Egypt is the cradle of an ancient civilization dating back to 3,000 BC. It has a population of 70 million with an average growth rate of 1.9%; over 16 million are in different education stages, where 49.4% are students at school level (http://www.idsc.gov.eg). In 2004, more than 1.2 million university students graduated; 1.2 million students were enrolled at the undergraduate level, and 25,0000 students were enrolled in postgraduate studies (http://www.mcit.gov.eg). The public expenditure on education represents 4.1% of GDP (Arab States Regional Report, 2002). Egypt has the second largest economy in the Middle East, and its current economic growth rate stands at 3.1% annually, with an inflation rate of 3.6% as of March 2005 (http://www.economic.idsc.gov.eg).

Egypt is trying to modernize itself technologically, and one of the main sectors the government is focusing on is education (Kamel, 2002). There is a low PC penetration rate, standing at 1.6 million stations, although increasing at 50% growth ate annually (http://www.mcit.gov.eg). However, the investment and build-up of Egypt's information and communication technology infrastructure has taken massive steps since the early 1990s in different building blocks including human, systems, procedures, and hardware and information infrastructure (IDSC Annual Report, 2000). In June 2005, the number of IT companies exceeds 1,300 working in the sales and technical support of hardware, software, and in the development of IT solutions (http://www.citegypt.com) as well as the leading IT vendors and multinationals that are establishing businesses in the IT sector that are growing in number annually as the potential for a large IT marketplace grows http://www.idsc.gov.eg). With respect to the telecommunication sector, there are 12 million fixed lines and over 7 million mobile subscribers (http://www.mcit.gov.eg). Moreover, there are 3.6 million Internet users served by over 1,000 cybercafés and IT clubs that represent the outcome of a successful win-win partnership between the government and the private sector. It is important to note that Egypt ranks 119th out of 174 nations in the United Nations Development Program's Human Development Index (HDI), placing the nation in the medium human development category (ITU, 2001).

Information Technology in Education in Egypt

There are so many challenges facing Egypt while embarking on its ambitious development plan for the educational sector. Such challenges include the population growth and the deployment of a state-of-the-art information technology infrastructure. The most important building block of the infrastructure is human capital. This could be translated in the fact that to capitalize on the benefits of information technology, there are a number of elements that should be made available, including highly trained instructors, committed leadership, standards, and ongoing professional development opportunities. Therefore, since 1999, Egypt has been working on integrating information technology in different stages of the learning process. There are a num ber of elements that are associated with this objective including (a) having instructors effectively integrating information technology into their curricula, (b) encouraging administrators to promote the use of information technology, (c) enticing education policy makers to create modalities that reward the integration of technology into the curricula, and (d) ensuring that all stakeholders of the education community, including corporations and local businesses, collaborate to help ensure that trainees graduate with twenty-first century workplace skills.

Education is the main path of development, progress, and growth. It is an integral part for societal development, especially within a global world led by information and knowledge-based societies. In Egypt, the extent and quality of its human capital will determine its social and economic future development (Kamel, 2000). Investing in human resources will help build an information society that can compete in the global marketplace. Thus, the challenge in the current educational sector is to enable an effective platform that trainees would be exposed to through the use of information technology. The following is a description of the Becker Professional Review program in teaching accounting using information technology tools in Egypt.

CASE DESCRIPTION

The case demonstrates the deployment of emerging and innovative information technology tools while delivering courses in the field of accounting. It covers the conditions in the local marketplace, the tools utilized, and the challenges faced and opportunities created, as well as the conclusions for future implementations. The focal point of the case is the identification of the experiences accumulated in using information technology in teaching accounting, and how such know-how can be replicated in similar environments.

Overview

Accounting instructional methods have recently witnessed rapid changes in a relatively short period of time. Before the mid-twentieth century, the technology used for accounting instruction consisted of nothing more than chalk and talk. The 1950s and 1960s witnessed minor changes, with the rare use of a flip chart on an easel in addition to audiovisual equipment like movies, filmstrips, and projectors. Video tapes and overhead transparencies began to appear in classrooms during the 1970s, and by the end of the 1980s, there was the establishment of computer labs, as well as the adoption and incorporation of computing applications in the accounting curriculum. The progression of the 1990s brought rapid developments in computer technology and its applications. Computers are now becoming more and more user friendly, and a large number of students entering colleges are computer literate. Computer applications like presentation tools help enhance education delivery.

Additionally, the establishment of the Internet and World Wide Web gave infinite access to information and knowledge dissemination. Moreover, the development of CD-ROM-authored courses and tutorials had many advantages in content delivery. All the progression in technology raised the issue of the importance of possessing and developing the necessary technological skills among accounting professionals, professors, and trainees around the world, so as to maintain a competitive edge. Much of such developments was more evident in developed than in developing nations, due to the fact that the integration of information and communication technology in teaching accounting was hindered by the lack of required resources and infrastructures (Apostolou, 2001; Watson, Apostolou, Hassel, & Webber, 2003).

Using IT in Accounting Education

Researchers and educators in accounting education have reported that the use of information technology in the classroom enhances the educational process (David, MacCracken, & Reckers, 2003; Selim, 2005,). Technology usage provides (a) the ability to cut cost while reaching a wider audience through tools such as the World Wide Web and video conferencing, (b) allows for standardization of quality of instruction, (c) enables each student to learn at his/her own pace, and (d) allows for continuous collaboration between students and their peers, as well as between students and their instructors through a learning environment that extends during the duration of the course and beyond. The use of information technology in classrooms allows schools to xpand their markets, responds to the business and environmental requirements, supports crosscultural and cross-functional teams of students to engage and work together, and allows faster and more practical cooperation between instructors from various nations through the development of a network of learners and education material providers, thus adding to the added-value enabled to the recipient groups including but not limited to students. The use of information technology in the classroom can allow more time and space flexibility for instructors and students to use the educational materials; can allow for continuous testing of users of the educational materials; and can allow students more freedom in taking initiatives, learning on their own, being more creative, and studying at their own pace (Al Hashim, Sankaran, & Weiss, 2003).

However, such advantages are hindered by the presence of several hurdles that arise from the use of various information and communication technologies including the need for expensive infrastructure and large start-up costs, finding qualified instructors, and the lack of face-to-face instruction, which may diminish the students interpersonal, social, and communication skills. Many studies have been developed during the period 2000-2002 to react to these issues (Watson et al., 2003). Such issues are further intensified in developing nations where it has been documented that the quality of accounting education is rather low. Therefore, it is crucial to find ways to speed up the educational process of its citizens, and one of the venues could be distance learning and computer-based technologies that could lead to a cheaper process and at the same time, capitalize on the large number of trainees that could be accommodated (Kantor, Roberts, & Salter, 1995). However, a question always presents itself, "What could be the added values of introducing information technology in teaching accounting?"

Accounting Education in Egypt

The state of accounting education in Egypt is imperfect. According to a set of interviews conducted with a number of senior administrators in the Ministry of Higher Education and the Higher Council of Education, Egypt has approximately 1.6 million students attending 12 public universities, including 50,000 students studying accounting in public universities and about 6,000 students attending 4 private universities that offer accounting degrees. Appendix C demonstrates extensive statistics on accounting students both graduating in 2004, and registered in 2005 across all universities. It is important to note that accounting education is still mainly dependent on face-to-face teaching, with minor dependency on common overhead projectors. Most universities have computer labs, but the ratio of computers to the number of students is minimal. The instructor in the classroom is basically a lecturer who delivers his lecture through a one-way communication from his end to the recipients. Due to the large number of students in the classroom, ranging between 3,000 and 6,000, the possibility of individual interaction between the instructor and students is virtually impossible. Moreover, due to cultural elements, students are not used to being interactive in the classroom. The teacher-student ratio in accounting departments of large public universities is about 1 to 1,000, which hinders instructional quality and constrains essential teacher-student communication.

Moreover, the quality of accounting education further suffers from the lack of modern curricula, and the fact that there are few teachers for too many students. Additionally, the accounting curriculum has not changed for many years and needs to be updated. Most courses focus on elementary topics and application of standards, but do not include international standards and practices. Although many faculty members have been educated in the United States and Europe, they lack appropriate textbooks and educational materials in international accounting and auditing standards. Respectively, as a result of outdated curricula and lack of appropriate learning materials, the student's knowledge of modern accounting and auditing is diminishing, and all available academic programs are not improving students' critical thinking (World Bank, 2002). Such a problem is better handled within private universities and at the American University in Cairo (AUC), which offers an accounting major within the Department of Management of the School of Business, Economics and Communication. This program combines American teaching systems while accommodating to the requirements of the market. Its graduates become wellrounded accountants who are frequently employed by multinational organizations. However, the problem still prevails because only a limited number of students join the program, leaving the majority of the students not qualified or possessing the knowledge to join the public accounting profession in Egypt. What could be the competitive advantage such small cluster of students have over their competitors in the local marketplace?

The accounting program at AUC started in 1996 with only two students and has been increasing since then: in 2004, the number of graduates reached 46 students. Figure 1 demonstrates the growth rate in the number of students since the inception of the accounting program. However, with so few graduates, the program has no impact on the national accounting profession. Recently, some private universities started offering accounting programs using internationally comparable curricula. However, high tuition fees are prohibitive, giving access mostly to selected students in the community capable of affording the tuition requirements.

Moreover, a few public universities, including Cairo University, Ain Shams University, Helwan University, and Alexandria University, have started their own English-language section in the accounting department; but the few graduates from these programs are unlikely to have significant impact in the public accounting profession. More are expected to be introduced in the years to come to realize the critical mass of students that are qualified, and that can make an impact in the sector and in the community at large. What could be the strategy that can help realize a multiplier effect that can lead more qualified personnel to join the accounting profession?

Case of Becker Professional Review, Egypt

When BPR started, the teaching method was simply based on handouts and slide presentations. The main advantages of this approach were that instructors delivered the courses live with no complex technological interference, and trainees were used to this approach. In 2000, BPR introduced its new, live, multimedia system and new textbooks. Although the number of trainees was not large, it represented a role model for other institutions, and management believed that the strategy was effective, allowing wider market penetration taking the operation into another level in the following years.

During its inception, BPR only offered the Certified Public Accountant (CPA) designation. There was only one class running twice a year with a total of 10 to 15 trainees per term. In 1997, the volume expanded to two CPA courses running at the same time, with a total of 44 trainees per term. Unfortunately, the number of trainees studying for the CPA decreased to around 40-60 trainees per year after the September 2001 events because the exam had to be taken in the United States, and trainees were facing problems trying to get their entry visa to the United States. The average passing rate was 70%, which was a very high passing rate when compared to other courses offered in Egypt (as indicated earlier that BPR passing rate is superior in the United States and in Egypt). Figure 2 demonstrates the change in the number of trainees in the CPA program in BPR (Egypt).

In 1999, BPR introduced the Certified Management Accountant (CMA) designation, with 28 trainees per year. In 2001, the number of trainees in CMA increased to 109 trainees per year, due to the fact that the CMA exam was offered in Egypt. Figure 3 demonstrates the change in the number of trainees in the CMA program in BPR (Egypt).

Additionally, in 2001, BPR introduced the Certified Financial Accountant (CFA) designation. The trainees studying for the CFA had constantly stayed at around 8-9, with 2005 being the best year, increasing by 20% to around 11 trainees. Figure 4 demonstrates the change in the number of trainees in the CFA program in BPR (Egypt).

Introducing Information Technology (Case of Becker Professional Review-Egypt)

In terms of information technology deployment, BPR (Egypt) started using the new teaching methodology that incorporates different information technology tools in 1999. This in itself represented a challenge in the context of a developing nation like Egypt, where the barriers of introducing and diffusing information technology usage relate to technology deployment, technology acceptance, and human development readiness, amongst other elements. What other elements could be considered as building blocks to smoothly introduce and diffuse the use of information technology?

With respect to teaching technologies and tools, BPR (Egypt) mainly depended on prerecorded CDs that offer comprehensive explanation; examples; and problems that cover the concepts, constructs, and information needed to be accessed by trainees. The CDs usually run in the classroom, and are used as the primary source of instruction by different moderators and facilitators, who are always available to explain the issues that might not be self-explanatory or that need further in-depth coverage. The CDs are developed to ensure that all trainees from around the world receive the same quality of education as well as similar content, although adaptable to the local conditions and needs of the marketplace. However, it is important to note that trainees with English as their second language frequently find it difficult to keep up with the tutorials without the moderator, since they have been set for native English language speakers. Respectively, the presence of the instructor becomes vital in the classroom due to the need to introduce some translations, usually for some technical terms. Moreover, from a cultural perspective in some markets, in-class interaction and class discussions are still favored due to the personal contacts trainees develop with their instructors. How is technology accepted within different marketplaces, how is it valuated from a cultural perspective, and what are the conditions for its successful penetration and adaptation?

Prior to the use of technology, BPR depended on tapes and CDs, but only for the self-study program. In 1999, it introduced in-class CDs. The new tool consisted of an in-class CD with a videotape delivered by a Becker instructor from Becker, who presents all topics and reviews them. The CD includes a set of presentations with highlights on keywords, phrases, and concepts, with salient points being stressed so trainees learn exactly what they need to know to pass the exam. The tool mainly depends on prerecorded CDs that offer comprehensive explanations; examples; and problems that cover the concepts, constructs, and information needed by the trainees. CDs usually run in the classroom, and are used as the primary source of instruction. However, during the class time there is always a local instructor who acts as a moderator to explain some of the issues that might not be self-explanatory in the CD. The concept of the CDs is developed to ensure that all trainees from around the world receive the same quality of education. Would such a model be successful in a marketplace like Egypt, and if not, what are the key factors needed to render it a successful model?

The use of CDs in the classroom was expected to introduce dramatic change in the management of the program during the early stages because they were not sure how the instructors and the trainees would receive technology, and how they would react to it. The BPR manager in Cairo reported that she was not sure if trainees would be able to adapt to the use of the technology introduced. The starting point of the change required a plan to coordinate the needed equipment, such as the LCD projector, and the layout changes that are required in the classrooms and in the labs used in training. These changes included the setting-up hardware and software on all workstations. It is important to note that almost all the instructors used in the delivery of the programs were not familiar with the use of computers, and it was invaluable to organize training sessions for the instructors, which made them more relaxed because the introduction of the new technology made them very uncomfortable. Some even viewed the new technology as a threat to them and their value as the sole disseminators of knowledge. BPR personnel had to spend many hours with the instructors in additional public and private sessions to convince them of the added values and advantages of the new technology. The central focus of these sessions was mainly to convince the instructors that the use of technology can help them in the classroom and allow them to be more creative and innovative.

The CDs introduced new features and facilities to the classroom, but it also introduced the feature of a moderator that can help the local instructor pace the lecture and manage it more efficiently. The role of the recorded instructor was to maintain the quality of the program, and to ensure that all issues are covered by the local moderator, following the content of the CD. One challenge that was faced was the fact that local moderators, to some extent, perceived the recorded instructor as a threat to them rather than an element of support. It is important to understand that the use of the CD was not optional for the instructors. However, BPR found that not all the instructors make use of the features available, and some of them believed that it was even more complicated, making things more difficult instead of facilitating the process. However, such belief was only felt among those instructors who had not attended the training sessions, because it is also worth noting that the instructors who had taken the time to learn how to use the new tool used it in classes, and mentioned that they felt that it was a good and effective supportive tool to help them manage the program. It is important to note that BPR gives each instructor a free personal copy so that he/she can get prepared and become familiar with the topics, inserts, and interjections. Would a full-fledged self-training model be more successful in a developing nation like Egypt, or would a hybrid model be optimally more effective?

Since the start of using the technology in 1999, and when the exam was computerized in 2004, BPR were the pioneers since they were the only program providers that were able to give trainees examples of simulations and search-engine tools just like the ones available in the exam. As for the trainees, most of them were not comfortable in the beginning, since most BPR trainees come from Egyptian universities such as Cairo University and Ain Shams University, where there are no labs and no technology used such as the ones used at the American University in Cairo with respect to similar programs offered. Most of the trainees wanted the interaction and the live lecture that they are used to. As a result, BPR changed the style of the lecture and the total hours so that it could accommodate both (hybrid model) including the CD, and the local moderator offering full lectures. BPR Egypt was the only location outside all the Becker Professional Review locations worldwide that provided extra total hours and also extra revision sessions. It was an attempt to adapt the program to the needs of the trainees to realize optimal quality delivery possible.

BPR realized that the accent used in the CD was very difficult for some of the trainees, and the examples and jokes made-up by the Becker instructor were not understood,due to the difference in cultures and backgrounds (some of them were localized). As a result, the local moderator used to stop the CD whenever he or she felt necessary, and started to explain in his or her own words using personal experience and his or her own jokes, which could be understood. BPR reported that after a while of using the CD, the trainees were used to it, and did not want to go totally live as they did in the beginning. They realized that this was better as they were introduced to a new culture, and they were getting more familiar with the language that they will be using in the exam.

Using the technology had other obligations from BPR's side because when the instructor used to give the lecture live, the program coordinator did not have to stay the whole lecture: he or she was able to start the lecture and then finish any pending work in the office. But now with the CDs being used, the program coordinator has to be available all the time just in case something is needed or things are not going smooth. This is because sometimes the machine stalls or the CD sometimes does not work properly, and the program coordinator should handle the problem on the spot. Additionally, there is the pass-master, a CD that has hundreds of multiplechoice questions that the trainee takes home and practices on. This is a very important tool, as it gives trainees the experience they need before sitting for the exam. Moreover, it should be noted that the pass-master is an effective tool, because if a trainee answers a question incorrectly, the CD automatically takes him/her to the part of the textbook where this point is explained, so that he/she can recheck it. As for the self-study CD, not all trainees were interested in it as it was very expensive, and also trainees prefer the interaction with the local moderator. However, the CD was very important for the trainees who do not live in Cairo, and also for those who cannot leave their work during class hours and prefer to study on their own, capitalizing on the use of emerging technologies.

BPR (Egypt) was faced with problems such as the delay of the CDs, whether from headquarters in the United States or when being held in customs. Due to copyright infringement, CDs have a validity of 8 months; afterwards the CD expires and does not work, which yields complaints from trainees that CDs do not work; that they did not get a chance to finish the whole program. Also, some of the trainees do not adhere to the CD booklet guide where all the points are elaborated. One of the major issues is that trainees cannot install the CD on two different PCs; however, trainees do not take that into consideration and try to install it at home and work. Respectively, the authorization disk does not work and so they are delayed. Usually trainees have to contact the headquarters to get an extension access code to have the CD running if it expires. With respect to the customs problem, the material is always delayed due to the very highvalue customs requests, and also because the material goes through customs clearance where they have to check the CDs to make sure that there is not anything illegal in them. Sometimes BPR had to postpone the programs due to such delays. Moreover, some other times there were mistakes in the CDs and it was not easy to fix these problems, which had to be fixed in collaboration with headquarters. Another technology element deployed was the computer-based testing that made the knowledge of technology an integral part of studying for the CPA examination, making the exam self-scheduled with preregistration. The exam contains multiple-choice questions and case-based simulations.

PROBLEMS AND CHALLENGES

The use of information technology created several challenges for BPR (Egypt) that related to language, culture, information technology usage, curricula, cost and trainees, or the recipients of the knowledge disseminated, among others. The first challenge was language-related in the sense that trainees with English as their second language frequently found it difficult to follow up the tutorials that are set for native English language speakers. The Becker instructor usually had an accent that the local trainees were not familiar with and therefore, they missed a lot of what was said as they did not understand it. The second challenge was culture-related, whereas the examples, cases, and even jokes used were from a completely different culture, and therefore local trainees did not understand them and did not comprehend the idea or get what the instructor wanted to say. As a result, the local moderator had to stop the CD more often to either repeat what the Becker instructor said or translate it, ad also give other local examples. The need to cater for the local cultural background and needs proved to be very important in order to entice the instructors and the trainees to engage with the technology and promote its use and effectiveness in learning.

The third challenge was information technology related because as a result of using information technology, many instructors refused to deliver the program either because of lack of the required technological knowledge, or because they believed that it has resulted in wasting valuable time. Many of the qualified local instructors were not skilled to handle the new technology introduced, or were unwilling to learn it due to the time required. Also, instructors that accepted and delivered the programs asked for higher fees that increased BPR financial liabilities. The fourth challenge was curricula related since the instructors that accepted the technology and learnt how to use it suffered from time and duration of lectures problems because they had to stop the CD more often, leading to the fact that the time needed for the lectures was extended more than planned by the international standards of BPR. Therefore, BPR had to run extra review sessions to cover the material that was not covered in the allocated time. The fifth challenge was cost related, whereas the amount of investments that was needed to get classes ready was substantial, amounting to around 50,000 USD to equip each class, which can accommodate up to 20 PCs. Other options included renting space that had the required equipment already installed. Both scenarios resulted in higher fixed costs as compared to the American University in Cairo. As a result, BPR programs are considered very expensive when compared with other competing programs being offered in the market in Egypt by other competitors, a problem that needs to be handled in the short-term or else it will greatly affect its competitive position in the marketplace. The sixth challenge was trainee-related, whereas there was a need to identify the critical mass of trainees that would be willing and capable to go through the curricula, possess the skills and capacities needed to pass the exam, and effectively join the accounting profession.

CONCLUSION

The case of BPR (Egypt) reflects the introduction and use of information technology in education in the context of a developing nation. It was implemented in the field, teaching accounting as a model that could be replicated in other disciplines. The challenges faced and the opportunities created mainly related to design and delivery of the newly introduced hybrid teaching methodology. The case has shown how culture and local adaptation of the use of technology is important for its proper and successful use. Learning from the implementation and fine-tuning the tools, whether digital or traditional, becomes vital for the continuation and its effective use. The findings of the case also indicate that more studies need to be made before the implementation of technology tools within the teaching methodology that do not only relate to the technology itself, but also to the language used, the skills of the instructors delivering the knowledge, and the trainees attending and using the technology. Investing in human capital is extremely vital as a building block in successful technology deployment that complements stateof-the-art technology together with effective financial resources and a workable strategy of implementation. The case of BPR use of technology in Egypt could be used as a model for future implementation within similar environmental conditions, although it is important to note that variations in socioeconomic and infrastructure conditions always entails adaptations and transformations to meet the local needs and requirements.

Subject: Computer assisted instruction--CAI; Educational materials; Accountancy; Teaching methods; Developing countries--LDCs; Studies

Location: Egypt

Company / organization: Name: Becker Professional Review; NAICS: 611691

Classification: 9177: Africa; 5220: Information technology management; 8306: Schools and educational services; 9130: Experiment/theoretical treatment

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 3

Pages: 71-87

Number of pages: 17

Publication year: 2006

Publication date: Jul-Sep 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Tables Graphs References

ProQuest document ID: 198654595

Document URL: http://search.proquest.com/docview/198654595?accountid=38610

Copyright: Copyright Idea Group Inc. Jul-Sep 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 17 of 100

Online Calculator Training in Mathematics and Technology

Author: Brescia, William; Cline, Tammy

ProQuest document link

Abstract:

This is the case of three institutions attempting to identify and address a need for professional development training for high school algebra teachers. Teachers across the state were facing two problems: (1) a need for training on how to successfully integrate the graphing calculator into the math curriculum and (2) training was not available that would fit into a teacher's schedule. Teachers rarely had time to attend the instruction necessary to integrate new technology into the curricula being offered at remote sites. With Web-based training, teachers should be able to complete the training at their own pace and convenience. Online Calculator Training in Mathematics and Technology would demonstrate the effective use of online training to teach the basics of graphing calculators and the integration of graphing calculators into the math curriculum. [PUBLICATION ABSTRACT]

Full text: Not available.

Subject: Studies; Professional development; Secondary school teachers; Algebra; Integrated curriculum; Online instruction

Location: United States--US

Classification: 9130: Experiment/theoretical treatment; 6200: Training & development; 5250: Telecommunications systems & Internet communications; 9190: United States

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 2

Pages: 1-29

Number of pages: 29

Publication year: 2006

Publication date: Apr-Jun 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: References Tables

ProQuest document ID: 198738227

Document URL: http://search.proquest.com/docview/198738227?accountid=38610

Copyright: Copyright Idea Group Inc. Apr-Jun 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 18 of 100

Using the Railway Mobile Terminals in the Process of Validation and Vending Tickets1

Author: Horvat, Marko; Zagar, Mario

ProQuest document link

Abstract:

This article describes the functional and technical side of Railways Ltd. mobile terminals project. The advantage of mobile terminals lies in the greater efficiency of railway tickets vending, the control and real-time supervision of complete process of vending tickets in the country. Mobile terminals allow railway conductors to automatically vend and verify tickets. Also, information about each sold ticket is transmitted wirelessly via GSM/GRPS in real time or near real time. The information about sold tickets is received by the central server and stored in the main database. The data are available for analysis and report making. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATION BACKGROUND

Railways Ltd. is one of the railway companies in the Republic of Croatia. The company was founded in 1990 after the country gained its independence from Yugoslavia. However, the history of railway traffic in Croatia starts in the 19th century with the first railway line operating in 1860.

Today, the national railway network connects all major Croatian cities except Dubrovnik. As can be seen in Figure 1, due to geographic reasons, Croatian national railway network is quite spread out. Statistically, railroads are mostly mountainous with only one truly straight and fast line in the Slavonia lowland region that connects the capitol Zagreb and the city of Vinkovci.

The country of Croatia is located well geographically on the crossroads of Central, Eastern, and Southern Europe. There are three Pan-European Corridors running through Croatia forming the backbone of the railway infrastructure (see Figure 2). Croatia has direct railway lines to Slovenia, Hungary, Italy, Austria, Switzerland, Slovakia, France, Germany, Bosnia-Herzegovina, Serbia, and Montenegro. Also, there are indirect lines to almost all other European countries.

Public transport of passengers and freight in domestic and international railway traffic and construction and maintenance of railway infrastructure are the company's main, or core, business. Railways Ltd. employs more than 15,000 people located throughout the country and many more than 50,000 passengers travel by train in Croatia every day. As a large railway operator. Railways Ltd. is of obvious national interest. Railways Ltd. is a limited liability company in the state ownership. The company has a management board, supervisory board, 14 offices, and five regional subsidiaries. Railways Ltd.'s total annual budget is approximately 373 million Euros. Many capital investment projects, such as the mobile terminals project described in this case and the modernization of the railway infrastructure, are financed directly by International Monetary Fund (IMF) and European Bank for Reconstruction and Development (EBRD).

The implementation of the mobile terminals project is a part of the company's global modernization project. In the last five years, Railways Ltd. has gone through a series of different restructuring and modernization projects like upgrading basic railway infrastructure, dismissing unnecessary personnel, and implementing new information technologies. In the next few years, the company should be intensely privatized and divided into several smaller, more efficient, and specialized companies. The intent is to make the company completely self-sufficient and profitable.

SETTING THE STAGE

Railways Ltd. has more than 35 years of experience in implementing and maintaining IT (Information Technology) systems. As a result, the company currently uses a mixture of information technologies for its operations. The significant acquisitions of new information systems have been carried out in three distinct periods, or waves, at the beginning of 1980s, 1990s, and in the last three years. The new systems were acquired approximately every 10 years, which was followed with intense schooling of personnel and subsequent project development. The company's corporate strategy is to seamlessly shift all existing information systems to the newest technologies using synergy and mutual integration/cooperation of all available resources. In this process, many existing systems will merge, and some will become redundant, but the main imperative is to continue to provide the current level of IT service while implementing brand new systems at the same time.

The oldest IT system in operation is Enterprise Resource Planning (ERP), which is responsible for such matters as Human Resources (HR), finance, analysis, and reporting. It runs on an IBM mainframe acquired 20 to 25 years ago. Of course, this IBM's DB2 database holds millions of data rows due to decades of operation and the company's significant business complexity. The limits of scalability were reached a long time ago, and even the limits of physical functionality could be reached any time soon. The second system in everyday use during the last 10 to 15 years is MAPPER. As a contemporary system at that point, it was acquired to relieve IBM DB2 and to improve on overall project development and management. Numerous core business projects have been developed successfully with MAPPER, like maintaining train schedules, train lists, cargo lists, ticketing, trafficking, and so forth. Many of these systems are critical for the functioning of a railway company.

In the last three years, great attempts have been made to move the entire business to the latest technologies like Microsoft's .NET Framework, Active Directory (AD), IIS Web server, SQL Server, and others. Other development platforms like Java + Oracle are in the focus, too. It is interesting to note that Railways Ltd. operates the second largest Windows Datacenter Server in Europe.

The mobile terminals project, described in this case, is at the forefront of the company's mobile computing development. The project was commissioned by the Railways Ltd. Office of Public Transport. The entire software development on the project was accomplished by the IT division of Railways Ltd. The Railways Ltd. Accounting Office also took part in the project.

The next few chapters will bring out important information about the project such as its cost and duration, the project team and its composition, the technology used, constraints and resources, implemented software, acquired hardware, and so forth.

CASE DESCRIPTION

The mobile terminals project supports Railways Ltd.'s core business - vending and validation of passenger tickets. However, the mobile terminals are used primarily to improve the overall quality of railway service. The reasons for implementation of this system are (a) faster data input, (b) machine ticket printout, (c) direct wireless connection to the central database for ticket validation (using the barcode), and (d) counterfeiting prevention and data protection (with database replication and synchronization). To accomplish these targets, the following conditions had to be fulfilled: (a) it is necessary to have a robust mobile device; (b) the transfer and synchronization of data has to be possible anywhere and anytime; (c) it is necessary to develop intuitive software user interface; and (d) user requirements have to be taken into account.

Depending on the project's development phase, the project team consisted of five to 15 persons in the roles of project leader, technical project leader, IT consultant, chief business process consultant, business process consultant, and software developer. Members of the project team came from three Railways Ltd. offices: Public Transport, Accounting, and IT. Because of the complexity of the railway business cases, the number of business consultants was equal or even greater than the number of technical personnel from the IT Office. During the project development, the project team had help from a consulting company specialized in mobile computing. The consulting company helped with a few algorithms and parts of the code that were incorporated into the project's software. Overall, the development team needed very little additional education, as they had strong experience in corporate computer software design and implementation using various object-oriented (OO) technologies. Only the project's mobile corporate architecture was truly a novel and previously untested approach that required the most attention from the development team. The project's users were more than 600 railway conductors and revisers from the Railways Ltd. Office of Public Transport.

It was chosen to use the iterative project development cycle and Microsoft Solution Framework (MSF) (Hansen, 2004; Thomsen, 2004) as a method of project management. MSF generally is similar to Rational Unified Process (RUP) (Booch, 1998; Hausmann, 2001; Heckel, 2001; Jacobson, 1998; Krutchen, 2000; Rumbaugh, 1998) and defines iterative project development with each iterative loop having the following development phases: envisioning, planning, developing, stabilizing, and deploying.

In order to speed up the software development and reduce errors and costs, it was decided early on in the project to use only off-the-shelf components. Such components are easily available, pre-tested, and often simpler to use than custom components. They have easily available support and a large pool of experts who can offer valuable help in crucial moments. It was also very important that all components were mutually integrated according to international IT standards. For all these reasons, the chosen software architecture was Microsoft .NET. All software was written in object-oriented languages (VB.NET and C#.NET) and database languages (SQL/ SPL). Mobile terminals had the Windows CE 4.2 .NET operating system (Nienaltowski, Arslan, Meyer, n.d.), local SQL Server CE 2.0 database for storing data, and Conductor Compact Edition Railways Ltd. software application. The mobile application was written by using Microsoft .NET Compact Framework (.NET CF). The project's central server was Microsoft Windows 2000 Datacenter operating system. The server ran Microsoft SQL Server 2000 database and Microsoft Internet Information Server IIS 6.0 Web server. More detailed information about the project's architecture, software, and hardware can be found in the next chapters.

The biggest concerns or problems noticed before the project development started were related mainly to the used mobile technology and how well it would perform in the actual situation in the field. The second group of perceived concerns, the non-technical, was related to the project management and the users - will the company be able to successfully manage and carry out such a project, how well will 600 computer-illiterate people use the new devices, and how much will they actually help them. All major concerns perceived before the project started are listed in Table 2.

The entire project development from start to finish lasted two years. This was due mainly to the usage of new technologies and several changes to the project's use cases that occurred relatively late in the development. Total project cost was 3.5 million Euros. This included acquisition of the hardware, education of the development personnel and project's users, development of the software, consulting, and all other fees.

At the moment of writing, the project development has been finished successfully, and the project is undergoing final testing and awaiting implementation. The last chapter of this use case explains in detail the most valuable lessons learned during the development and how the most prominent concerns were solved.

Architecture

The mobile terminals project has a multi-tiered (n-layered) client-server architecture (Chow, 1994; Socic, 1994; Wijegunaratne, 1994). The schema is shown in Figure 3. The mobile terminals and their accompanying mobile software represent the client side. Clients dial a specific number and connect wirelessly over GPRS to the infrastructure of mobile telephony provider (Cartwright, 2002; Chakravorty, 2002; Pratt, 2002).

The provider routes any IP or HTTP requests to the RADIUS (Remote Authentication Dial-In User Service) server used exclusively for the Railways Ltd. mobile terminals project. RADIUS server performs centralized connection authentication, authorization, and accounting for many types of network access, including wireless, authenticating switch, dial-up and virtual private network (VPN) remote access, and router-to-router connections. RADIUS server is the access point to the Railways Ltd. intranet network infrastructure, and together with Active Directory (AD), it authenticates a connecting wireless client. After the successful authentication, AD assigns the appropriate network group policy to the client. With the policy client is granted specific rights related to accessing and sending data in the Railways Ltd. intranet.

After the netpad mobile terminal is connected, it can start making requests to the project's Web server. Web server runs XML Web services for exchange of Extended Markup Language (XML) data files between netpad mobile terminals and server-side database. Instead of a NET-capable Web server that receives and sends HTTP requests, any IP server could be used. In this case, the exchange of data would be by sockets. The server side, or the server layer, consists of the mobile's provider infrastructure, RADIUS server, AD, Web server, and database server. In this architecture, security is guaranteed by several methods. The first one is the verification of login/ password by the RADIUS server. Login and password are unique, administrated and manually defined by administrator personnel in Windows CE settings before netpad mobile terminal is put into service. Each netpad has its own SIM card, so it is possible to track completely the usage and network traffic of every mobile terminal. Also, the whole server architecture for mobile terminals located in Railways Ltd. is separated and inaccessible from other parts of company's intranet. In the future version of mobile terminal's software, it is planned to secure the entire project's network traffic by VPN (Virtual Private Network) standard. RADIUS server and other hardware for VPN support already exist.

Hardware

A single mobile terminal set consists of two devices: Psion Teklogix netpad (5000 series) mobile computer (PDA) and Extech Bluetooth (S3500T series) mobile printer. A conductor wears both devices at the same time. The netpad (Figure 4) is placed in a leather holster and worn over the shoulder, and the mobile printer is strapped to his belt. Each netpad has Windows CE 4.2 .NET SP2 real-time operating system with color touch-screen with pen navigation, Bluetooth (Haartsen, 2000) and IrDa communication interfaces (IRDA, 1997), SecureDigital/MultiMediaCard (SD/MMC) slot (Praca, 2003; Praden, 2003), SIM card slot, inbuilt laser barcode scanner, and GSM/GPRS wireless connection (Kalden, 2000; Meirick, 2000; Meyer, 2000). Wi-Fi 802.11b module is optional. The netpad has Intel SA-1110 Strong ARM processor at 206 MHz, 64MB SDRAM, and 32MB flash ROM. LCD screen has 8-bit color depth (256 colors) and half VGA resolution of 640x240 pixels. Using a user interface picture can be dynamically rotated to portrait or landscape the mode. The size of the netpad is 215 x 85 x 25 mm, and its mass with standard battery is 620 g. Two battery packs are available: standard battery has 1800 mAh, and the larger (and heavier) has 4400 mAh. Both batteries supply 7.2 V and guarantee eight to 14 hours of operation. The netpad can have either tranreflective or transmissive screen. In the so-called netpad outdoor model, the screen is transreflective and, therefore, more readable in the direct sunlight. The backlight can be turned off. In the indoor model, graphics are less readable in the sunlight. The screen is transmissive, the colors are more vivid, and the backlight can be turned off. The netpad is certified according to IP67 (Ingress Protection) rating, which ensures its robustness. It was specifically designed for use within demanding mobile computing environments. Netpad is completely dust-proof. The netpad can sustain a 1.5-meter high fall on the concrete and is protected from temporary immersion in water one meter deep for 30 minutes. Also, apart from having a metal casing and being covered in the protective rubber, the netpad also has a very tough screen. That kind of ruggedness is highly needed, since the devices will be deployed in the field in tough conditions exposed to hits, drops, rain, and different weather conditions. The alternative to the durable netpad was the standard Pocket PC, but since it cannot withstand a great deal of physical abuse, it would be necessary to acquire additional units to quickly substitute the one that has been broken. Therefore, the acquisition of netpads was judged to be the most prudent choice.

Extech Bluetooth printer is visible in Figure 5. This is a monochrome thermal printer. It has serial (RS232), IrDa, and Bluetooth communication interfaces. It also has Magnetic Stripe Reader as a factory-installed option. The printer's size is 152 x 120 x 57 mm, and mass with paper and battery pack is 580 g. Operating voltage is 5V, and with one battery charge, approximately six rolls of paper can be printed. All settings are configured with DIP-switches. In Mobile Terminals, the project netpad and its mobile printer communicate only with Bluetooth interface. When each mobile printer is turned on, it first automatically pairs itself via Bluetooth (Morrow, 2002) with netpad in its mobile set. Afterwards, the netpad freely can send data to the paired mobile printer using Bluetooth wireless connection.

Software

In order to fulfill their tasks outlined in the introduction, the netpad mobile terminals, which constitute the client's hardware, must have a mobile application called Conductor Compact Edition installed as the client's software.

The application Conductor Compact Edition is designed for use on a Windows CE mobile computer with Bluetooth, GSM/GRPS wireless networking, and barcode reader. These components make one of the most capable all-in-one configurations in the mobile development today. This, in turn, means that the software developers can have a lot of IT tools at their disposal to accomplish the project's goals.

The application uses all the features of a large color touch-screen to enable faster and simpler data input. In accordance with the software requirements, Conductor Compact Edition allows maintaining encrypted data in a mobile database, replication between the mobile and the central databases, the transfer of data and synchronization of databases by fixed docking station, serial connection (RS232), IrDa interface, or GPRS wireless connection. Conductor Compact Edition loads on netpad startup, and the user is required to log on. The user enters his unique access code in the application's login screen. The data are checked against access codes stored locally (on the netpad) in a separate SQL Server CE database file, which is encrypted and protected. This feature enables user login, even when GSM/GRPS connection is unavailable. In its business logic, Conductor Compact Edition uses graph representation of railways and the network of railway stations to calculate the route and distance with Floyd's algorithm (Floyd, 1962). The price of each passenger ticket is calculated using these data and mathematical algorithms with the business logic. The price of the ticket is proportional to the route length and a number of parameters, such as various fare reductions, class, single or two-way ticket, and so forth. Conductor Compact Edition executable is permanently stored on a single SD card, so it cannot be erased by loss of power on the netpad. The most important application's use case - ticket vending - is displayed in Figure 6. While the user is working with the application, it dynamically stores all the data about the vended tickets on the mounted SD card. The data are stored in a single SQL Server 2.0 CE database file.

The data located on the card are erased after each successful synchronization session when the central database is over. This is done because several conductors can use a single mobile terminal. Therefore, permanently maintaining their data on the mobile device can be a security problem, but it also serves no logical purpose, since the data already have been replicated to the server. The project description dictates that the database synchronization and the data replication are done via GPRS in real time. If at any point GPRS connection isn't available, Conductor Compact Edition waits until GPRS connection is working, so it can send data to the server. GPRS can be unavailable due to a number of reasons (e.g., the mobile terminal can be in a tunnel or in a remote area without GSM/GPRS signal coverage). At the end of each working shift, the mobile terminal is returned to the supporting IT center; if the local database has not been synchronized already with the central database, then it is synchronized by using the netpad cradle and PC workstation. The PC is connected to the Internet with the telephone lines via a standard modem, ISDN, or DSL. Because lower-level software (Windows CE, netpad drivers, and API functions) handles the basic networking issues, Conductor Compact Edition application uses the same .NET functions for the data replication over wireless and cable networks. In other words, the application doesn't care how it is connected to the Internet, as long as it can communicate with the project's Web services and synchronize local and central databases. After a successful synchronization, the data are erased from the SD card as with GRPS synchronization.

Mobile Graphical User Interface

GUI (Graphical User Interface) of a mobile computer application that is intended to be used in field conditions outside the office is quite particular in its design and functionality. Although Pocket PC and Windows CE mobile devices have one of the richest and most capable user interfaces in the mobile world, using all of its complicated features would be a huge mistake.

Even though the elaborate user interfaces can show more graphical and textual data in a given display area and allow different types of user input, they obviously are not always the best choice. In moving environments, the varying lighting conditions and cramped areas complicating user interface only would thwart the user. For example, it is completely plausible that at some point, the pen stylus might be dropped or lost, so the user must be able to continue the work with his or her hand instead (i.e., slowly, but steadily). Because of this, Conductor Compact Edition application has only a few full-screen forms (windows). Some of them can be seen in Figure 7. Conveying the information with the standard message boxes has been avoided completely, and the usage of overlapping forms has been reduced to the very minimum. Critical messages are displayed in the currently displayed form or in a custom message box. Usage of any more complex user interface controls, such as dropdown menus, checkboxes, combo boxes, lists, list views, and tree views, also has been avoided completely. Only textboxes, standard buttons, toggle buttons (as a replacement to the checkboxes), and lists were used. All parts of the user interface have increased the width, height, and font size to make sure that they all can be read clearly and used in out-of-office conditions. The colors are used to relate intuitively the basic information (i.e., red borders around buttons indicate command termination and green borders continuation).

Printing and Validating Tickets

One of the most important capabilities of mobile terminals is printing and validation of tickets. Therefore, it was important to ensure good ticket printing quality and to pay attention to possible counterfeiting. Various use cases that can occur in everyday situations were analyzed. It was decided that tickets printed by mobile terminals should have two levels of prevention against forgery. First, tickets would be printed on a special paper that cannot be photocopied. A conductor would be able to determine with a simple visual examination whether a ticket is genuine or not. Second, each ticket bears a barcode containing the information needed for its verification. Importantly, each printed ticket has a unique identification number and a fare's data stamp encoded in the barcode with all other important fare data. Since a large quantity of data has to be encoded in the barcode, it was decided to use a high density Code 128 standard (Bushnell, 1998; Meyers, 1998).

Data are encrypted (scrambled) in the barcode with a custom mathematical algorithm. The data encoding algorithm was improved throughout the project's development and judged to be adequately safe. The barcode would be horizontally centered in the upper part of the ticket, so it was clearly visible and scanned. This way, it was less likely that during handling the barcode would be smudged, painted over, or torn off from the ticket altogether. The appearance of a single test ticket printed with the terminal set is shown in Figure 8. Commands to the mobile printer were issued in formatted escape codes and transmitted via Bluetooth along with the ticket data.

Since Extech S3005T is a thermal printer, the quality of printed text greatly depends on its battery power level. As the printer's battery output falls, so does the quality of its printouts, and, at some point, tickets will become unusable. Therefore, it is very important to determine the quality of a printed ticket before it is handed over to the passenger, and as outlined in the UML diagram in Figure 6, it is sometimes necessary to bend the business processes a little and to accommodate for the limitations of the project's hardware.

The project's system tests have yielded encouraging results concerning ticketing. By using mobile terminals, the time required to vend a single ticket has been reduced three to five times, which is visible mostly when several tickets are vended in a row. All users have pointed out that their workload has been reduced significantly. As can be seen in Table 4, a conductor can type in a single ticket in 30 to 45 seconds or even less, if several identical tickets have to be produced. Then, it takes another 10 to 15 seconds for a ticket to be printed. Parallel to these tasks, if the GSM/GPRS signal is present, the mobile computer wirelessly transmits the vended ticket's data. Information about one vended ticket is transmitted to the server in 25 to 50 seconds. As can be seen, all these tasks are measured in seconds, and they are quickly finished, but when 150 to 200 tickets have to be vended per hour, which is expected to happen, this certainly will be a more significant task for the system than it is designed to handle.

CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION

As was already mentioned, the project development has been finished successfully, and the project is awaiting implementation, after which the actual benefits or drawbacks will become visible. However, from the test runs, it is already evident that the mobile terminals greatly improve the speed and efficiency of the railway conductors and revisers.

The mobile terminals project is not the only project of its kind in the world, but it has several special and advanced characteristics that distinguish it from the others. First, this is a nationwide project with more than 600 users and a large data turnaround. Second, the unique technical features are (a) database synchronization via GSM/GPRS, (b) ticket validation via custom barcode and GSM/GPRS, and (c) printing on Window CE-based proprietary device via Bluetooth. Third, only off-the-shelf components have been used, reducing the project's price and time to market.

In the future, some of the planned improvements to the project are two-way communication (messaging and information-on-demand) between the mobile terminals' users and the control, enabling reservation of seats on the train, data analysis with data warehousing (DW), and data mining and printing of Railways Ltd.'s timetable.

All significant project issues noticed after the project development was finished and the lessons learned can be found in Table 5.

Finally, Table 6 lists all the questions and problems that the organization faced before the project was completed, as well as the challenges that the project and the organization will face in the future.

Subject: Studies; Efficiency; Reservation systems; Transportation terminals; Real time; Wireless communications; Railroad transportation

Location: Croatia

Company / organization: Name: Croatian Railways Ltd; NAICS: 482112

Classification: 9130: Experiment/theoretical treatment; 9176: Eastern Europe; 5250: Telecommunications systems & Internet communications; 8350: Transportation & travel industry

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 2

Pages: 30-44

Number of pages: 15

Publication year: 2006

Publication date: Apr-Jun 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Tables Maps Diagrams Photographs References

ProQuest document ID: 198656833

Document URL: http://search.proquest.com/docview/198656833?accountid=38610

Copyright: Copyright Idea Group Inc. Apr-Jun 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 19 of 100

Information Systems Dispatching in the Global Environment, Acer, A Case of Horizontal Integration

Author: Wang, Yu Chung William; Ho, Shun Chuan

ProQuest document link

Abstract:

This case study presents the implementation of information systems in a context of global enterprise restructuring. Based on the background of the second organisational restructuring of Acer Group, it evidences the combinations of corporate strategy and information technology (IT) practices and shows how this enterprise shifts and reallocates its resources in order to concentrate on the most profitable segments of the entire supply chain. Drawing upon IT adoption and supply chain management (SCM) literature, we discuss the issues of organisation restructure affecting the information systems dispatching along the supply chain from by theoretical and practical lens. Particularly, this article provides an aspect looking into the installing of global logistics management (GLM) information systems, which requires the integration of existing enterprise resource planning (ERP) systems in different sites. It offers a direction to academics and practitioners to rethink the necessary elements required to enact adoption plans of information systems in a digitally enabled global business. [PUBLICATION ABSTRACT]

Full text:

ORGANISATIONAL BACKGROUND

Acer Group, a Taiwan-based multinational corporation, acts as a set of Roman legions and ranks among the top 10 information technology (IT) vendors in the world. Its major business consists of product designing, global marketing, channel delivering, and after-sales servicing. The branded products of Acer Group encompass desktop and mobile PCs; servers and storage; displays; peripherals; communication devices; and systems solutions for enterprises, government, education, and home users. Established in Taiwan in 1976, Acer Group has been restructured two times, the first time in the early 1990s and the second time in 2000. The key successful factor of Acer Group was initially its strong capability of product innovation, which brought about the corporate strategy and confidence in competing with other global giants by its own brands. For example, it inaugurated the era of 32-bit PC to the market ahead of IBM Corp. and authorised ChipUpTM technique to Intel Corp. in the early 1990s. The antecedent efforts had enabled the products of Acer Group to penetrate into each segment of the international markets, which led to the first organisational restructuring (Table 1). That was when Acer Group started to enjoy the upswing of company reputation; it had expanded its operation through setting up various business units and subordinates around the world in order to achieve the strategy of global logistics management.

The second organisational restructuring of Acer Group occurred in the year 2000. It was driven by several issues that included the decline of profit margin in PC-related products, (Table 2). Beginning in the year 2001, Acer Group was divided into three large global business units (GBU); namely, Acer Inc., BenQ, and Wistron (Appendix 1). Each of them focuses on particular markets, products, or segments of the supply chain; all of them enjoy the revenue scales of billions of U.S. dollars (Acer Inc.: $4.6 billion; Appendix 2, BenQ: $2.8 billion; Wistron: $2.3 billion in 2003, based on the public information of Taiwan Stock Exchange Corporation); and all of them reached a total of $15.69 billion. Incorporating all the enterprises owned by Acer Group, there are more than 30,000 staff members supporting dealers and distributors in more than 100 nations. The current GLM information systems are dispatched in different sites of the global business units that create an information-sharing platform, playing the roles of vascular systems in a human body to support and to foster the business flows in this IT giant across continents. Consequently, Acer Group becomes capable of targeting the markets located in the different segments of the entire supply chains and growing continuously.

SETTING THE STAGE (1996-2000)

On December 26, 2000, Acer Group formally announced its second enterprise restructuring project, which was a major change since the year 1992. The content of this project included the annulments of the pre-established five strategic business units (SBU) (e.g., Texas Instruments-Acer Inc., the DRAM business in Acer Group, was sold to TSMC), integration of repetition investments, and stressing of vertical disintegration (Chang & Yu, 2001) and horizontal integration by which the three global business units (GBU) could focus on the business of original design manufacturing (ODM) and branded operations, respectively, to avoid inner competitions and to target profitable segments of the IT supply chain. The canvas of second enterprise restructuring consists of external environment changes and serious internal problems that are described next.

External Conditions

There was a trend of merging and acquisition to enable large operation scales because of the price competition of IT products in the late 1990s. Accompanied with such a trend, the amount of outsourcing in the global brand owners (e.g., Hewlet Pack, Compaq, Dell) also had increased, which sped up the growth of professional original equipment manufacturing (OEM) firms in Taiwan (i.e., Quanta, Compal, Inventec). Compared to these professional manufacturers, Acer Group, which had both its own brands and OEM business and had no clear strategic focus, lost its competitiveness, which led to the decline of sales. Despite the threats from new entrants to the OEM market, Acer Group had not been aware enough to react to the changing environment and over-invested in a failed dot-com business.

Internal Conditions

The major problem encountered inside Acer Group was the conflict between its own brand business and the OEM markets before the second enterprise restructuring, since conflict turned Acer Group into a competitive situation with some of its OEM customers. Moreover, the overlapped responsibilities among the SBUs of Acer Group caused the animadversions on decreasing by each other and to erode the overall competitiveness. Therefore, there was a need to reallocate corporate resources and to assign duties to newly established GBUs subjected to the two types of businesses, respectively.

To overcome the existing problems, Acer Group enacted three major principles: simplifying, focusing, and foreseeing (Shih, 2004). By following them, Acer Group had strategically given up two businesses in the area of semiconductor and electronic commerce that were initiated in late 1990s. Additionally, it attempted to strengthen the control over its operations in the global environment in order to manage the finance and logistics flow and to upgrade the capability of customer fulfilment.

This case can be seen as an attempt to enrich the current knowledge of the IT adoption study in a supply chain context. Formulated in another way, it tries to investigate, apply, and extend the adoption processes to the use of computer-based information systems in integrating the supply chain entities as the focus. Particularly, the experiences that Acer Group has gained in utilising IT to link its internal functions and external trading partners presents an example of how to synchronise market information, product delivery, and customer service, and to leverage the capabilities and resources of business network (Gulati, 1999) by the installation of global logistics information systems.

CASE DESCRIPTION

With the coming of the digital era, global competition has resulted in every industry, expanding the requirements in supply chain integration and enterprise resource planning. In particular, competition evolves from interfirm levels into business network levels (the segments of an entire supply chain system) (Banerji & Sambharya, 1998; Benedetti, 1999; Wang & Heng, 2002). Of the two levels, the business networks behave as Roman legions or ancient Chinese feudatories on which the situation depends, whether the collaborations are with subordinates or with trading partners. Moreover, when all kinds of industries seek to manage the supply chain and to establish cooperative partnerships, trying to exploit cooperation in order to acquire more competencies in the market, the importance of information system integration and new business models for interfirm activities also increases with time. The implementation of enterprise-wide information systems in Acer Group also has integrated its own business network into a global context, as mentioned previously.

Beginning as a domestic manufacturer of electronic equipments, Acer Group is now a global enterprise with its own brand products and distribution channels. Such achievement derives from several business strategies; one that associates with the implementation of information systems for global division labours is the Acer Channel Business Model. Specifically, it is a strategy to outsource manufacturing processes to suppliers, making alliances with wholesalers and focusing on product design and distribution channels. This strategy aims to acquire the most profitable segments of entire IT supply chains; namely, the smile curve theory by Shih the Principal of Acer Group. To support it, the adoption of sophisticated information systems, including Enterprise Resource Planning (ERP) systems, enterprise Portal, and interorganisational systems (IOS), becomes essential.

Acer Group has adopted Baan Triton Enterprise Resource Planning (ERP) systems for transaction processing across various functions and locations. From a demographical aspect, it consists of three major teams and 10 physical sites in the regions of Asia Pacific, Europe, and North America that are associated with hundreds of IT specialists and systems servers. The development of Triton is to underpin the information transmission and decision making throughout the whole enterprise and is designed for operations during and after the second organisational restructuring.

The Architecture of Acer ERP - Triton (Single Site)

As previously studied (Chen, 2000), there are four major barriers to the ideal situation of Global Logistics Management (GLM), which are associated with assets input, distribution channel, information systems, and human resources across countries.

1. Asset input encompasses finance control, interest expenses, resources allocation, adjusting of production capacity, and so forth.

2. A distribution channel involves establishing distribution systems, which includes setting up an operation network and a warehousing centre for delivery of goods.

3. Construction of information systems for multi-sites is one of the most difficult tasks in GLM due to the long duration of the implementing process.

4. Human resources encompasses recruiting and fostering management staff that become experts in cross-national issues such as knowledge of foreigner legislation, labour, customs, taxation, and accounting.

In addition to the previous considerations, Acer Group was designed to maintain its brand business and the OEM business by dividing into three GBUs - BengQ, Acer (own brand), and Wistron (OEM manufacturer). It also attempted to minimise the risk of a high inventory level along the supply chain. Acer Group encouraged and helped its suppliers and Wistron to build up logistic centres adjacent to each of the manufacturing, composing, and delivering sites that provide products for its own brand operations and industrial customers. In other words, every site acts as a systemic business network consisting of warehouses with suppliers, collaborative manufacturers, and distributors, and plays the role as a buffer zone of stocks, which speeds up the responsiveness to modify production lines and gains better control of material supply.

The new blueprint of organisational restructuring in Acer Group not only needed clear global strategies but also required adequate infrastructure to support the cross-national operations. As to the use of information technology (IT), Triton, a self-developed ERP system, was prepared to launch in the late 1990s. Triton was designed initially at Acer Group headquarters in the Hsin Chu Science Industrial Park, which is within the area of the heartland of Taiwanese IT industry. Triton was customised several times in the implementing procedures and was supported by other subsystems to suit various business requirements in the changing global business scenario. The development of Triton involved the adoption of the Supply Chain Operations Reference Model (SCOR)1 as the antecedent analysis of business flows, and the architecture is designed to synchronise the primary functions of finance, logistics (manufacturing and distribution), and common activities (Figure 1).

Each of the functions is associated with several subsystems and ERP modules by the specific purposes, respectively. Triton ERP system exists in each of the SBUs in the world. It consists of Oracle databases for information storage and ERP modules as the database application with the connection of XML and Electronic Data Interchange (EDI) techniques, which act as the interfaces to archive the operation goals. For instance, manufacturing function involves the information system of Product Design Management (PDM) and the module of Weekly Forecasting Acceptance (WFA) (Appendix 3), while the finance function involves the information system of Fixed Assets Management (FAM) and the module of Cash Management (CM).

Acer Group used to deploy as many of its production bases as possible in order to increase its economic scale in the past, but contrarily, the focus principle of second organisational restructuring led to a decreasing number of production bases-from 50 to less than 15 major sites. Some were replaced by distribution centres at the same locations, and others were integrated into the major sites with the functions of collaborative design, manufacturing, and delivery.

Systems Dispatching Strategy (Multi-Sites)

Unlike the implementation of ERP systems that occurred in most enterprises, Acer Group adopted a different approach that combined the Parallel and Phased methods (O'Brien, 2001) as its system conversion processes; that is, to use both the existing IT infrastructure and Triton ERP concurrently and to adopt the new systems from one site to another sequentially. In addition, these processes were different from other cases, since Acer Group began the installation from its subordinates and did not replace the legacy systems by Triton at headquarters until all other SBUs and subordinates had done so. This strategy was germinated by the previous experiences of systems adoption in Acer Group that the commencing of systems transition from its headquarter triggered strong inner resistances by the employees and generated high costs in business process modifications.

To begin, there were 15 cadres in the information systems (IS) department of Acer Group involved with this project of global ERP implementation. Ten of them were recruited before the test server was installed in the system laboratory in Taiwan. Each of them was assigned to specialise in one or two of the major functions of the Triton system and to participate in other activities by collaborating with the rest of their project teammates. The test sever was built at the end of 1996 before the real implementation in other GBUs and SBUs in order to avoid potential risks. After initial adjustments based on the feedbacks of a user requirement survey, the project team then was divided into two groups to support the Phased adoption procedures that had lasted four years, commencing in a Philippine manufacturing base and a Taiwanese SBU of Acer Group simultaneously in 1997. The construction of ERP systems in the two sites simultaneously not only allowed the project team to complete the first installation tasks but also allowed the team to test the EDI module of Triton and to verify the reliability of information transmission across countries by this sample.

The first installation of the two sites was very successful, since the tasks that comprised system establishing, user training, and modification of Triton to fit into the local working conditions were accomplished within a working duration of six months. The experienced IT staff who had participated in the first phase adoption subsequently were sent to the Netherlands, Canada, and the United States in 1998 and 1999 respectively to finish the dispatching of Triton systems. They hence became the coaches of each site in this project to train the end users and to recruit new local IT professionals. The number of IT professionals consequently reached more than 100, compared to 31 IT staff members in the entire Acer Group before the implementation processes.

The global ERP dispatching, therefore, was done from the edge to the centre within the boundary of Acer Group. The overall considerations and benefits are summarised as follows:

* There were no existing ERP systems in the overseas SBUs of Acer Group, which means less employee resistance and fewer constraints on the new ERP modification compared to the implementation directly at headquarters.

* Business volume is relatively smaller in the SBUs, which means that it is easier to test and adjust system functions.

* After the surrounding changes, the business centre naturally will accept such a system; that is, employees become adapted to and familiar with the new trading platforms of Triton, since their business operations involve the gradual changes of information exchange channels between Acer Group headquarters and its subordinates.

* By first establishing new ERPs in small sites, it brought confidence to the project team and the end users on the new system. In addition, the experience of a previous installation in overseas SBUs reduced the adoption duration of the Acer Group centre in Hsin Chu, where the adoption potentially might have greater impacts.

Thus, the negative effects of business flow modification and the resistance of employees were minimised during the implementing period. Accordingly, Triton has become the major support in routine operations of the Acer Group in the late 1990s.

Problems Encountered in the Adoption Processes

Although the installation processes were well designed, there were two problems encountered in the area of IS outsourcing and post-implementation maintenance.

There were no major difficulties regarding the system at all since the pre-testing and adoption sequences were well organised. Nonetheless, there was a problem of IS outsourcing in supporting the need of overwhelming business expansion in the late 1990s.

Ho, the ex-chief officer of e-commerce of the Acer Group, said:

We were trying to enlarge our sales volume in order to avoid loss from the decreasing profit margins in IT products. We had partially outsourced our system developing to third parties in Taiwan, India, and China. However, the outcome was far from our expectation since the third parties did not share the same vision as we did, and the shortness of time to communicate with them caused our extra work to modify Triton. (Interviewing record: ACER050102)

The GLM project team was hoping that external system providers could provide fast and cheaper solutions for the downsized IT budget and urgent needs of business expansion. However, contracted work had not successfully filled the gaps between system requirements and organisation supports. As a matter of fact, the initial idea of outsourcing IS development had not generated expected benefits to the GLM project of the Acer Group. It had delayed the processes conversely.

In addition to the problem of IS outsourcing, the operations and system functions were not as synchronised as predicted at the ERP site in El Paso, a production base in the United States. There were only newly recruited IT staff members in charge of the system maintenance immediately after the installation of Triton ERP. They did not have the awareness of regularly adjusting the systems to fit business changes. This situation led to the unwillingness to use the system and to the reluctant acceptance by general employees, since the database and accessing forms became different from the real operation. Consequently, the project team spent an additional six months at this site to modiiy Triton and to retrain the employees in El Paso.

Systems Upgrading and Business-to-Business Integration

At about the same time that Acer Group was about to finalise the first round of global systems installation, the Taiwanese government was seriously concerned about the imminent hollowing out of the domestic manufacturing sectors, which were shifting to mainland China for cheaper labour costs there (Chen, 2003). Hence, the Taiwanese Ministry of Economics had initiated an A/B Supply Chain Integration project to link domestic enterprises to the major multinational buyers (e.g., IBM, HP, Dell) that encompassed Acer Group and another 14 IT manufacturers (Wang &Heng, 2004).

As mentioned in the foregoing sections, Acer Group had its own brand products and OEM business. The sales of branded products mostly belonged to independently registered SBUs. Both its own brand operations and OEM businesses faced challenges due to the rapid changes in the markets of IT products, especially the pressures from major multinational buyers. Ho said:

We were required to prepare materials for manufacturing based on the forecasting orders, which could be either long-term contracted documents or sometimes short-term personal information exchanges from the procurement managers of the business customers. Besides, the customers would tend to indicate the design of supply chains for ensuring the agile production in order to react to the market change quickly. Normally, the forecasting orders provide estimated demands for 26 weeks (half a year) of production plans, and the customers adjust weekly the details of the coming four weeks. We also need to negotiate and discuss with the customers about the price and production period and give them the final answer as soon as possible. In the end, we all agree that there is a need to build up electronic media for the information exchanging accurately. (Interviewing record: ACER041203)

In fact, customers asked for direct product delivery to sales locations, and normally, the confirmed orders that occurred more frequently were far smaller than the periodic forecasting orders in terms of volumes. The standard procedure defined the delivery of final products within two to five days after the confirmed orders. It is necessary to adjust production plans by confirmed orders, although Acer Group has already prepared the production line according to the estimated bill of material (BOM) in a rolling forecast of a two-week horizon. Otherwise, the holding costs and risks are generated by a high inventory level without the capability of quick reaction and the visibility of supply chain (Lee et al., 1997).

Partially sponsored by the Taiwanese Government, Acer Group had upgraded its Global ERP systems for the supply chain management (Table 3). From 1999 to 2001, each manufacturing site adopted the Factory Planner (FP) module, which is designed by i2 Technologies (see http:/ /www.i2.com/). Based on the information of sales demand, production capability, and material souring provided from the pre-established Triton ERP, FP facilitates decision making on production scheduling and delivery commitment. Further, each site connects to the Supply Chain Planner (SCP) module of regional headquarters in order to coordinate the channel activities in different SBUs. By the two modules, Acer Group not only attempted to adjust the demand forecasts with the customers but also planned to further exchange long-term information with its suppliers in order to ensure the supply of raw materials and product components and to control the quality.

Since there had become more frequent electronic information exchanges among multiple sites with the adoption of SCP and FP, the number of EDI channels was increased. In addition, XML formatted platforms were used further in RosettaNet standard (see http:// www.rosettanet.org), which allowed the aligning processes between Acer Group and its supply chain partners on a global basis. There are also other upgraded modules to enhance the GLM operation; for instance, the export/import, order tracking, and EIS modules. Notably, the travel and expense system is a unique module compared to other ERP systems that record the business trips of employees and the confidential data carried by them. Acer Group gains the ability of quickly receiving orders, adjusting production plans, and directly shipping to the sales points after the completion of system upgrading.

CURRENT CHALLENGES/PROBLEMS FACING THE ORGANISATION

Building up Patterns for the Rapid Reallocation of ERP Systems

In spite of the successful completion of the GLM project and the overall increase of sales in the brand markets and OEM business, manufacturing and delivery sites have been shifting continuously with the changing investment environment. The shift resulted in the need for information systems reallocation into new manufacturing and delivery bases (Figure 2). For instance, there was a rundown in several offices with the reduced production volume in the Philippines and the operation scale in Canada. Because of the purpose to minimise the labor and land costs, new factories were established in China and Eastern Europe. In fact, ERP systems were installed in new sites almost every year from 2000 to 2004.

Although the members of the GLM team have attempted to minimise costs associated with the in formation system reallocations, which involve the expenses of user training, system installation, and maintenance, they have not been able to do it. In particular, most experienced IT professionals of the subordinates quite often cannot work in the new sites for personal reasons. Additionally, they have had good opportunities to acquire better positions in other enterprises with their unique experiences in developing Triton ERP in the global environment. It causes a low retention rate of IT professionals, and it is difficult to keep the know-how of Triton maintenance in overseas branches. Eventually, more than 70% of the IT staff members who participated in the Triton installation processes resigned.

Thus, it has become a major challenge to identify the patterns and standard procedures for reducing costs in the process of subordinates shifting and system reallocation.

E-Procurement with Suppliers

The EDI and barcode systems are not yet widely adopted by the suppliers compared to the distributors and business customers, who are mostly multinational buyers. Acer Group has categorised three types of trading partners by the information exchange channels used. Less than 5% of them use RossettaNet XML or EDI connection; 12.5% use Enterprise Portal; and more than 80% still communicate with Acer Group by traditional ways of e-mail or fax.

This situation undermines the integration of the entire supply chain of Acer products. Therefore, Acer Group needs to persuade more suppliers to participate in and coordinate with the system development processes for inbound and outbound logistics. The idea is associated with an e-procurement portal, which is anticipated to provide information such as product specifications and BOM for open bidding. Additionally, the adoption of RosettaNet XML interface in Acer Group seeks to identify the needs of firms requiring an open environment in order to convert these needs into standardised tools that may be used within the context of the information interchange process.

However, these anticipations of further increasing the supply chain visibility is yet to be successful, even in the trading relationships with the first-tier suppliers, since there is a lack of enthusiasm among them to adopt the same standard as Acer Group. Some of the large suppliers may have business relationships with Acer Group's competitors, while the small firms are less willing to upgrade their legacy systems to RosettaNet Standard due to cost. Hence, it is still necessary to customise the procurement process for each specific situation.

Avoiding Potential Conflicts and Creating a Positive Competing Environment

The GLM project of Acer Group was designed to support the second organisational restructuring, which intended to avoid the internal conflicts between its own brand products and the OEM business. The idea is not complete, as expected, due to the retirement of Acer Group's president, Mr. Shih. Although Acer Group has enjoyed a period of growth, the coordinating function of the original headquarter has weakened recently after separating into three GBUs as profit centres - Acer Inc., BenQ Corp., and Wistron Corp.

Owing to their specific characteristics, ideally they should focus on the markets of computer products/business solutions, communication devices, and OEM productions. Nonetheless, the expansion of GBUs in the markets elicited competition from them again. For example, since December 2002, both BenQ and Acer Inc. have had sales of Liquid Crystal Display (LCD) monitors (Appendix 4). Top managers of Wistron claim that they are going to announce their own brand products in the near future. While the GLM project has led to more centralisation in terms of supply chain controlling by Triton ERP systems, the business operation is bound to be so. There is still a long way for Acer Group to go in balancing the global applicability for the systems development against the different needs of information sharing among the GBUs.

Subject: Computer industry; Information technology; Case studies; Supply chains; Enterprise resource planning; Corporate reorganization

Location: Taiwan

Company / organization: Name: Acer Group-Taipei Taiwan; NAICS: 334111, 551112

Classification: 9179: Asia & the Pacific; 8651: Computer industry; 9110: Company specific; 2320: Organizational structure; 5220: Information technology management

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 2

Pages: 45-61

Number of pages: 17

Publication year: 2006

Publication date: Apr-Jun 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Tables References Diagrams

ProQuest document ID: 198650556

Document URL: http://search.proquest.com/docview/198650556?accountid=38610

Copyright: Copyright Idea Group Inc. Apr-Jun 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 20 of 100

Competing in the Age of Information Technology in a Developing Economy: Experiences of an Indian Bank

Author: Sachan, Amit; Anwar, Ali

ProQuest document link

Abstract:

This case describes how banking in India has changed after developments in information technology in the last decade. The new private and foreign banks, which are strong in technology, are giving tough competition to old public sector banks. Private banks have pioneered Internet banking, phone banking, anywhere banking, mobile banking, debit cards, automatic teller machines (ATMs), and retail banking in urban India. This case is about the VN Bank, a public sector bank that has to formulate its strategy in order to compete in this new environment. The case also explores the opportunity and challenges for the bank in rural India and makes readers think about how information technology can help the bank in building a strong position in the rural markets. The findings of the case study also can be generalized across other developing countries, where domestic companies are facing tough competition from foreign and private players. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATION BACKGROUND

Veerat National (VN) Bank was founded on November 14, 1939, by the family of Anupam Chandra under the name Veerat National Banking Company Ltd. It became a Public Ltd. Company in December 1944, and subsequently, the name was changed to Veerat National Bank Ltd. In July 1969 VN Bank Ltd., along with 13 other major banks, was nationalized and is currently a Public Sector Bank (PSB) constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act of 1970 (see Appendix I to understand the Banking History in India). The bank's comparative performance over the last three years is shown in Table 1. The income statements over the last two years are shown in Table 2. The interest income of the bank amounted to $158 million for the year 2003-2004 compared to $151 million for the year 2002-2003, showing a marginal rise of 2.08%. The amount of interest expended also has declined by 5.06%. The non-interest income of the bank has registered an impressive growth of 41.28%, thereby reaching a level of $167 million for the year 2003-2004 compared to $116 million for the year 2002-2003. VN Bank has a network of 1,368 branches in the country and has 12,461 employees. The number of branches statewide is given in Appendix II.

SETTING THE STAGE

Changes in Indian Banking After Liberalization

Mathur (2002) stated that PSBs have been exposed to an increasingly competitive environment through (a) entry of new private banks, (b) relaxations on the entry of foreign banks (branches only), (c) near total deregulation of interest rate structure, and (d) increased functional autonomy and operational flexibility in a large number of areas for PSBs. After the second phase of financial sector reforms and liberalization of the sector in 1992, the new private sector banks first entered into business after the guidelines permitting their entry were issued in January 1993. These private and foreign banks, due to their late entry, had access to state-of-the-art technology, which, in turn, helped them to save on manpower costs and to provide better services. Table 3 provides the cost by channel data, which shows why private sector banks were inclined toward these new channels. In the case of private banks, bank automation was relatively easier, given that their size was small and that they started their operations afresh. Foreign banks already had the advantage of good automation experience in several banking applications (Kaujalgi, 1999). The private players, however, cannot match the PSB's great reach, size, and access to low-cost deposits. Therefore, one of the techniques in order for them to compete with the PSBs has been through the merger and acquisition route, taking different delivery channels and customization of services. Private sector banks pioneered Internet banking, phone banking, anywhere banking, mobile banking, debit cards, automatic teller machines (ATMs), and customized services to consumers.

The diffusion of technology was somewhat slow in PSBs compared to private banks and foreign banks (Banker, 1998). Wolcott and Goodman (2003) stated that liberalization in India resulted in an emphasis on service quality, process efficiency, and overall modernization in both the public and private sectors. Furey (1991) suggested that IT can help to enhance service quality of banks by increasing convenience, providing extra services, and collecting service performance information for management use. Fitzsimmons and Fitzsimmons (1997) recommended several competitive roles of IT in services, such as the creation of entry barriers, the enhancement of productivity, and an increase of revenue generation from new services. One of the most cited contributions of IT-based service enhancements was convenience (Allen, 1997; Baily & Gordon, 1988; Cline, 1997; Milligan, 1997; Reed, 1998). To customers, convenience referred to a generous number of accessible service delivery points that were available when customers needed them. Some scholars noted that IT-based service options might indirectly improve customer service, because such types of service provide the means for gathering customer data. Customer data control can be useful in managerial decision making in order to improve operational efficiency and service quality (Cline, 1997; Furey, 1991; Randle, 1995).

Table 4 provides the details of branches and ATMs of five banks, three private and two public sector banks (State Bank of India [SBI] and VN Bank). Table 5 details declining branch business for Industrial Credit and Investment Corporation of India (ICICI) Bank.

Tables 4 and 5 show the shift in the theory of banking business in India due to developments in IT. In new banks, the number of ATMs are three times the number of branches. The declining branch business of the ICICI bank indicates the shift in the preference patterns of consumers. Drucker (1994) mentioned that a theory of the business has three parts. The first part is that there are assumptions about the environment of the organization: society and its structure, the market, the customer, and technology. Second, there are assumptions about the specific mission of the organization. Third, there are assumptions about the core competencies needed to accomplish the organization's mission. Drucker (1994) further mentioned that the theory of the business has to be tested constantly because it is a hypothesis about things that are in constant flux - society, markets, customers, technology. When a theory shows the first signs of becoming obsolete, it is time for the organization to start thinking again, to ask again which assumptions about the environment, mission, and core competencies reflect reality most accurately.

Banks in India traditionally have claimed the strength of their networks based on the number of branches. The logic was that the increase in branch network corresponds to more transactions, more business, and therefore, more profits. But now, things have changed, as shown in Tables 4 and 5. The PSB, which has realized and understood this change early, is investing aggressively on the technology front. SBI Group was a slow starter in the ATM game but now has built up an impressive network of more than 3,900 ATMs, the single largest ATM network in the country. Even a relatively smaller PSB like the Corporation Bank is relying on ATMs to expand its business. In a single year, the Corporation Bank has networked 185 ATMs, and it now has the second largest ATM network among public sector banks. PSBs are realizing the benefits of managing ATM networks compared to running branch networks, and banks also are encouraging customers to make the switch, as well. Like other banks, VN Bank also has set up 112 ATMs.

Banks are using ATMs and desktops to offer utility-based services because of the convenience factor to customers. Corporation Bank, for example, has introduced Corp BillPay, a utility payment facility in select cities. Through this, bank customers either can issue standing instructions to their bank for paying their utility bills or Life Insurance Corporation (LIC) premiums, or, alternatively, they can go to the online facility to view and pay bills over the Internet. The SBI ATM at central railway station in Mumbai also dispenses season tickets. Analysts believe that as banks discover the marketing power of ATMs, they will see a trend where ATMs will be used to deliver products of other vendors, as well. ICICI Bank has gone one step further by allowing devotees of Tirupati god to offer payments to the temple at Tirupati through their ATMs. Normann and Ramirez (1993) mentioned that ATMs have made a change in the entire value-creating system of banking services. The scenes, the script, and the roles of the relevant actors have been radically transformed by ATMs. They mentioned further that the goal of business is not so much to make or do something of value for customers but to mobilize customers to take advantage of proffered customized services and to create value for themselves by making use of such services. On technological advancement, Mr. Krishna, IT officer in VN Bank, mentioned:

Half of our branches are located in the rural and semi-urban areas without Internet facility. Further, the installation of ATM costs $40,000 and there should be at least 300 transactions daily to arrive at break even. In some places, we have removed ATM due to consideration of cost. In India, about 65% of the population lives in semi-urban and rural areas, where there are many problems in banking. Some of such problems are low profitability, large number of accounts, and transactions are less in number and low in value. There are few activities and less opportunity for services other than deposit and credit, huge staff cost, difficult to implement technology, large coverage area of operation, difficult reach, and staff unwilling to serve in rural areas.

In regard to the decrease in operational cost due to the introduction of the low cost channel, Singh, an expert at the Reserve Bank of India (RBI), India's central bank, adds:

Since the late 1990s, public sector banks in India have been focusing on different channels of transaction, mainly to compete with private banks. But they have not been very successful in getting their customer transactions to migrate from the from the high-cost branch networks to lower-cost electronic channels such as ATMs, PC banking, and online banking. One of the reasons could be the heterogeneous customer profile of these public sector banks. Many banks have encouraged customers to alter their transaction behavior by attempting to educate them about the availability and convenience of these alternative lower-cost channels to de-emphasize the [higher-cost] branch network. However, the convenience factor has encouraged customers to increase transaction volumes to a level which offsets cost saving. For example, people earlier withdrew money once or twice a month, but now, due to ATMs, withdrawals have increased to five to six times per month.

Each additional channel has provided the opportunity to reduce cost per transaction over the previous channel for banks and has increased flexibility for customers. This addition further caused customers to increase the number of transactions with the bank by the addition of each new channel (ATMs, Internet). But the problem starts when the number of transactions reaches such a level that it supersedes the cost saving for the bank. D'Souza (2002) stated that the profitability of public sector banks did improve relative to the private and foreign banks in postliberalization period, but they lost ground in their ability to attract deposits at favorable interest rates in their slow technological upgradation and in their staffing and employment practices, which has implications for their longer-term profitability.

Advances in banking mainly have taken place in urban areas of India. In the last decade, the level of urbanization also has increased. The share of urban and metro population increased due to migration from rural to semi-urban to urban to metro. In urban and metro, population per branch has decreased, whereas in rural and semi-urban, population (about 650 million) per branch has increased during the last decade. In India, there was a total of 67,897 bank branches in the country in 2002; 32,443 or 47.7% was in rural India. The average population served by a bank branch was 15,000. Fifty-eight percent of the rural households does not have a bank account, and only 21% has access to credit from a formal source. Over 70% of marginal farmers has no deposit account, and 87% has no formal credit. Only a little over 1% of rural households can rely on a loan from a financial intermediary to finance unforeseen expenses. Approval for such loans takes between 24 and 33 weeks. Often, consumers need to bribe officials to get loans, with the bribe varying between 10& and 20% of the loan amount. In 2002, the number of rural deposits was 30.2% of the total deposits in the banking system. However, the amount of deposits mopped up in rural India is only 14% of the total deposit liability of the system. Similarly, there are 560,000 rural advance accounts, which is 44.5% of the total number of advance accounts. However, the share of rural pockets in the total credit kitty is only 14%. Overall, 18% of the rural population has bank accounts. The comparative figure in urban India is 103%. It is clear that the supply of formal finance is biased against the rural population. The per capita deposit in rural areas stood at $50. In contrast, in urban India, it is $800. Credit per person in rural India is $25 compared to $600 for urban centers. The number of credit accounts in rural areas relative to the total rural population is only 3.4% compared to around 10% in urban areas.

These differences are hindering the progress of the country. Professor Malhotra, Economics Department, Jawaharlal Nehru University (JNU), commented:

It is the responsibility not only of the government but also of banks, insurance companies, corporate, social service organizations, NGOs, even individuals to work for the synergy of urban and rural India. Public Private Participation (PPP) is essential for the development of rural economy. More and more corporates are planning to enter into agriculture for large-scale tenant farming and building cold storage in rural/semi-urban places; state governments are developing e-governance Web portals. With such initiatives, our rural India will grow and contribute significantly to the national growth.

The honorable president of India, Dr. APJ Abdul Kalam, has posed an important reflection before the nation for bridging the rural-urban divide and for achieving balanced socioeconomic development. He has initiated a project called PURA- Provision of Urban Amenities in Rural Areas. Indian companies like Indian Tobacco Company (ITC) have taken up e-choupal initiative. Through the e-choupal initiative, ITC aims to confer the power of expert knowledge on even the smallest individual farmer, thus enhancing the farmer's competitiveness in the global market. Multi-National Companies (MNCs) like Hewlett Packard (HP) also have initiated a program called e-inclusion in rural India. These initiatives are described in detail in Appendix III.

Another area that has developed in banking is Retail Banking. Retail loans, which for years were less than 5% of bank advances in India, account for a lion's share of bank advances in developed markets. For instance, it ranges from 45% to 70% for the USA and 65% to 75% for Switzerland. However, banks in Asian countries do not have as high of an exposure in the retail segment. The retail portfolio to total advances in China, Malaysia, and Thailand ranges between 10% and 20%, while in South Korea, it is about 30%. Large Indian banks like HDFC Bank, ICICI Bank, and HSBC India are expecting to achieve a retail portfolio of 50% of advance within the next couple of years, while SBI is targeting to increase retail assets to 30%. At present, VN Bank retail loans account for a mere 8% of the bank's total advances. The bank has a lot of catching up to do in order to match its peers in this respect. VN Bank has taken some steps in the direction of retail banking such as housing loan scheme, tractor finance, insurance, and so forth, which will be listed in the next section.

CASE DESCRIPTION

Veerat National Bank in this Competitive Environment

Like other banks, VN Bank also embraced technological advancements; 1,106 branches out of its total 1,368 branches are computerized, and 720 are fully computerized. The facility of Multi-Branch Banking (MBB) is available at 215 branches covering 42 centers of the country. At present, there are 112 ATMs of the bank. The bank has introduced a telebanking facility in selected metropolitan centers. It also has introduced the system of credit cards in rural India, known as VN Farmer's Card. It also has drive-in ATM counters at Madema, Chennai, and smart card at selected branches in Chennai. There is also a customer rating system for rating the bank's services. VN Bank has launched its International Debit Card in association with Visa Electron. The card is available free of cost to all VN Bank account holders who maintain a quarterly minimum balance of $150. Alternatively, the card can be acquired at an annual fee of $5. Cardholders will have global access to cash through the Visa ATM network in addition to the bank's own ATMs. The Visa network covers more than 3,500 ATMs across India and more than 780,000 ATMs globally. VN Bank also has gone for a strategic alliance with a life insurance company. The bank is providing insurance products to its customers from its branch networks with a charge of a referral fees. It also has entered into an agreement with a tractor manufacturer for the retail financing of tractors to Indian farmers. Though VN Bank has adopted strategies to remain competitive, the competition posed by the private sector banks cannot be ignored. Talking about the success of private sector banks, a senior VN official remarked:

They have many advantages over us: First, their front desk employees are not permanent; they are on contract. Second, they have a flexible structure Teller-me-type (can offer customized services). Third, there is distribution of power to the staff, especially branch managers. For example, with regard to the recent RBI policy of Know Your Customer (KYC), since I am in a public sector, I have a problem implementing it. Why? Because I have to send a staff member from the bank to the customer s place to gel verification. This is a non-routine job, and I have to do it with the existing staff. Had I been in a private bank, I would have outsourced people who could go out and get the job done. But here, we can't make these decisions.

Joshi and Joshi (2002), in their book titled Managing Indian Banks, mentioned:

The adoption of IT in the nationalized banks in India, which commenced in the mid-1980s, had been fraught with issues regarding acceptance of process changes and the fear of job losses due to automation. Employee unions, perceiving that their concerns had not been adequately addressed, had offered considerable resistance and had significantly slowed the process of IT adoption in the banks.

Banks compete in the marketplace with generally undifferentiated products, and hence, service quality becomes the primary competitive weapon (Kim et al., 1998; Stafford, 1996). Past researchers have shown that improved service quality and customer satisfaction leads to higher productivity (Reicheld & Sasser, 1990), increased loyalty (Reichheld, 1996), lower transaction cost (Bolton, 1998), price premium (Anderson, 1996), favorable word-of-mouth referral (Anderson et al., 1994), market share (Fornell et al., 1996), repurchase intention (Kordupleski et al., 1993), and customer retention (Rust & Zahorik, 1993). Private banks charge customers on the facilities that they provide (e.g., there is a limit on the number of transactions; the minimum balance should be $200 for a savings account). On loans, they charge a fee of $10, and so forth. Regarding these service charges, the Okhla branch manager of VN Bank mentioned:

If you look at the consumer profile and locations of the private banks, they are catering to upper class or the upper middle class in metros and some big cities. We have got consumers of all types: uneducated, class-four employees, etc. Private banks put a fine when the balance is less than $200. But many customers of this branch are getting monthly salaries less than $200. And this is true for other parts of India, especially in rural India, were account holders are many but money in transaction or deposit is very less.

Figure 1 provides an idea for the distribution of the branch network of VN Bank. From Figure 1, it is clear that VN Bank draws the majority of its customer from the rural areas.

On the issue of taking technology to rural India for aggressive rural banking, chief technology officer of VN Bank mentioned:

There are many limitations in introducing technology to rural India. First, IT requires uninterrupted power supply, which is not available there; second, communication networking by cable is very expensive. Third, villages are sparsely distributed, with large distances, low requirement of banking services, and lack of good roads and transport facilities. Fourth, there are few people with technical knowledge in the rural areas; technicians for troubleshooting/ upgrading/maintenance of the IT infrastructure have to come from nearby towns, which is time consuming and expensive. And for similar reasons, alternate delivery channels to rural areas are difficult.

While the banking industry was in a state of flux, the customers were evolving, too. The media boom, information technology (IT) developments, and the advent of several satellite channels changed customer attitudes further. Sophisticated ambience and customized services of banks have raised the customer expectation level in terms of quality and service. Prahlad and Ramaswamy (2004) mentioned that the modern customer is active, informed, and connected, and hence, the traditional firm-centric approach of business will not work. Firms now have to pass on more value to customers and involve them in cocreation of value. Sureshchandar et al. (2003) focused on investigating the critical factors of customer-perceived service quality in banks of India. They compared and contrasted the three groups of banks in India with respect to the service quality factors from the perspective of the customers. Customers perceived that the technological factors (core service and systematization of the service delivery) appeared to contribute more in differentiating the three sectors; vis-à-vis, people-oriented factor (human element of service delivery), which contributed less to discrimination. Singh, a customer for 15 years with the VN Bank and director of AJZ Ltd., said:

The day-to-day dealing with the staff is okay. The staff is very cooperative, and I am very comfortable here. But very few people are aware of the bank; it is not visible like other public sector banks may be due to regional concentration of the bank. The loaning process is also complicated compared to other PSUs, PNB, and SBI. There is no customer toll-free number. There is no centralized data server. Door-to-door facility (private banks are giving) is absent in the bank.

On the loaning process, Okhla, Branch Manager of VN Bank, commented:

It is the Branch Manager s decision to give a loan or not, and later on, he also has to follow up with the party. Here, people come with different types of loans-loan for manufacturing, loan for export-import business, loan for construction business, etc. I have a Masters in History; sometimes I face difficulty in finding out the feasibility of these projects. The responsibility is completely on us. While in the case of private banks, if the manager has difficulty, he will immediately consult with the specialist sitting in the head office, and their communication is very fast due to a good communication network of information technology.

A 42-year-old customer of VN Bank, Mr. Seth, mentioned:

Today, I am associated with VN Bank only due to cordial and friendly staff relations, prompt and personalized service, and for that extra effort put in by the entire staff to accommodate us in each and every situation. We really appreciate the branch manager and the staff from the core of our heart. The only thing which hinders the growth of the VN Bank vis à vis other private and MNC banks is the system and its effective implementation. Changes in policy matters from top management are required. More power should be given to the branch manager and higher-level staff to work fast so that they do not have to rush to the regional office on small issues. Though computerization, etc. is in place, still paper work has not reduced at all. There is an urgent need to replace outdated dot matrix printers where we cannot differentiate between 0 and 8. Bank stationery needs to be replaced, especially for FOREX (foreign exchange) transactions. The staff is burdened with extra laborious tasks that hamper their productivity. Top management should avoid frequent transfers of branch managers and FOREX department people. It has been observed that before the person is able to settle down and start functioning in the branch, he is transferred to some other branch.

On the complaints of customers about the infrastructure of the VN Bank, Senior Manager Mr. Mathew, in the regional office, said:

The infrastructure of these private banks is new. Our infrastructure is old. We have to incur huge investment, if we go for rapid upgradation. No doubt, the return may be high, but risk is also high. That's why we have followed a middle path. We are upgrading but not at their pace.

Mohan et al. (1990) mentioned that managers in public sector enterprises are not enthusiastic about using Information Systems. The primary reasons given by him are a low comfort level with the use of computers and a lack of awareness of applications relevant to the organization. Nidumolu and Goodman (1996) suggest that perceptions toward IT can change from unfavorable to favorable as more projects are undertaken and more functions are computerized. Change management has been suggested as an especially important issue in government organizations because of their entrenched processes (Caudle et al., 1991). As Joshi and Joshi (2002) have pointed out, it is relatively easier to work toward a middle and lower management commitment after a top management commitment has been secured. In a study of e-government initiatives in the Indian state of Kerala, Kumar (2003) reports that top management drive has been an important issue in driving IT adoption in various government departments and has facilitated the acceptance of IT at lower organizational levels. Studies by Amabile (1996) have suggested that the work environment often becomes negative in times of new technology implementation and significant business process changes. This is because the difficulties associated with adjusting to the changes often result in collective cynicism and confusion. Zhu et al. (2002) found the impact of IT on service quality in the consumer-banking sector. Their results indicate that IT-based services have a direct impact on the service quality dimensions and an indirect impact on customer-perceived service quality and customer satisfaction. Their analyses also showed that customers' evaluations of IT-based services are affected by their preference toward traditional services, experiences in using IT-based services, and perceived IT.

CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION

Future Banking Scenario: Challenges and Opportunities for VN Bank

Rajeev Sharma, Chairman and Managing Director (CMD) of VN Bank, is worried about the latest Financial Express India's Best Bank Survey in 2003-2004. VN Bank is ranked 25th among the 27 Nationalized Banks in the country. The ranking criteria and VN Bank's ranking on those criteria are provided in Table 6. Other causes of concern include the decline of market share of VN Bank in deposits and advances, from 1.22% and 1.21 % as of March 2003, to a further decline of 1.16% and 1.17% as of March 2004. VN Bank's share in the booming retail segment is much less (about 8%) compared to other banks (30% to 40%). Only 28% and 25% of the branches were able to achieve their core deposits and net advances target. One hundred fifty-six branches have shown negative growth in deposits, while 390 branches have registered deposit growth rate of less than 10%. As many as 489 branches have shown negative growth in advances, while 276 branches could achieve a growth rate of below 10%. The continuous reduction in the market share is a serious threat to the existence of the bank. Compared with the peer group banks in business, VN's growth has been below average. Most of the IT adoption in the bank to date is driven by the requirements of high-volume transaction processing, but now the bank needs to focus on the strategic use of IT.

With fund-based income coming under stress (as margins on traditional banking business have declined due to lower interest rate on loan and advances), banks are now looking toward non-fund-based business. This is an important phenomenon in the Indian banking industry. In the future, if PSB want to earn profits, it has to focus on segmenting the customer, customer acquisition, cross selling, income from fee-based services, and creating value service. In metro and urban areas, private and foreign banks have given PSBs tough competition. But some PSBs, like SBI, PNB, and Corporation Bank, also are providing tough competition to the private banks in urban areas. They have incorporated all the latest technologies in their systems and are trying to provide the same service level to the customers. Other PSBs are in line, and by 2007, they also will have the same infrastructure. Dr. Srikant, professor of strategy at Management Development Institute, Gurgaon stated:

It is true that by 2007, PSB will be able to achieve the same level of infrastructure and will be able to provide the same services as private banks, but private banks will always have first-mover advantage in metro and urban areas. One of the strength of PSB, which they are not exploiting, is their branch network and credibility in rural India, where private banks have not entered too much. Rural India is also getting importance from government, and many corporates are now moving there, as it is an untapped huge market (about 650 million). There are ample opportunities for banks in rural India due to the following reasons. First, the services sector is getting increasing importance in the rural areas also - from coffee shops to cable television operators. Assessing and meeting of credit needs of this sector is important. Second, the integration between rural and urban areas has increased significantly, with the results of mobility of labor, capital, products, and even credit between the two increasing. Third, commercialization of agriculture, particularly the increasing role of cash crops like cotton, has resulted in a substantial role for suppliers' and buyers' credit. Fourth, compared to cereal production, other food items, including poultry and fish, are growing at a faster pace. Rural agriculture is getting increasingly diversified in terms of products and processes. Fifth, in areas where commercialization of agriculture has reached significant levels, the traditional landlord-based tenancy is replaced with commercial-based tenancy. However, the present credit and banking procedures do not cater to the working capital needs of such commercial-based tenancy relationship.

SBI has come up with State Bank Institute of Rural Development (SBIRD) with the primary objective to bring about proper orientation among the operating bankers toward agriculture and rural development. The programs in the institute are designed to bring out a balance of inputs covering behavioral aspects of rural sociology and are fine-tuned for proper integration with technology. The Institute imparts training in micro-enterprises pertaining to small and village industries. It also enhances knowledge about emerging new credit delivery systems such as Self Help Groups (SHGs), which have the potential for effectively covering relatively less privileged masses among rural populations. Equal emphasis also is given on covering technology transformation relating to high-tech agriculture such as floriculture, aquaculture, and tissue culture, and are made part and parcel of the overall training system. Now, the time has come to move to integrated point of sale terminals to be provided in various places with one person for each terminal to operate. The point-of-sale terminal can be integrated to provide banking, insurance, e-governance, and other information services related to marketing and so forth at a single place.

Regarding opportunities for banks in rural India, Dr. Gupta, professor of Information Management at Institute on Rural Management, Gujarat, mentioned"

The branch network of PSB banks in rural India is very strong; they can earn a huge profit, if they exploit it properly. Besides providing basic banking service, they can provide services like land revenue collection, request for issuance of caste certificate, birth/death certificates/ registration, and nativity certificate. If the bank starts providing these services, then people need not go to faroff places and spend time getting these services, and banks can charge for it. Other information services that banks can provide are market price information for purchase of input and selling output, access to details such as where the market is located, which commodities are sold or purchased in that market, what is the latest price, in which market prices are good, and so forth. Information on production and price forecast for selling or holding decision. Whether the agricultural production this year is more or less than the average. Forecast for Price movement, whether it will increase or decrease. When to sell. There can be many services which the bank can provide (e.g., weather forecast, knowledge about latest developments such as hybrid seeds, fertilizers and pesticides, telling farmers better farming techniques followed worldwide); other information can be to tell about farmers about crop rotation, mixed crops, and so forth. Self-employed persons can upgrade their knowledge from Web portals. Contacting doctors through the Internet and getting telemedicine is popular in Western countries. Such concepts are yet to catch up in India. If any PSB is able to do half of the things which I have mentioned, it can earn huge sustainable profit. For this, banks need proper support of technology.

ATM acquisition has become a large source of income for some of the banks. This means that revenue streams are now arriving in the form of customers and credit card holders of other banks that use these banks' ATMs. ATMs are the most successful delivery channel, followed by telephone banking and Internet banking. But the biggest potential could lie in mobile banking. With cell phone tariffs falling and increased bandwidth, the potential for a banking player to tap this channel is enormous. The number of cell phones was 35.87 million in May 2004 and is expected to rise to 100 million by the end of 2005. The future delivery channel will have various mobile portals using technologies such as GPRS. The customer would prefer to do banking transactions not only anytime, anywhere, but also through any device. With the current rate of evolution in the wireless industry, the mobile channel is poised to become the de facto banking channel within the next three years.

Another important factor for consideration in the evolution of delivery channels is the requirement of a multi-channel architecture that should support all future delivery channels, while also seamlessly integrating with existing delivery channels. This is the reason the majority of banks still have not launched Internet banking as a feature, as most of them do not have back-end integration. Effectively, this means that if a person holding an account with the bank wants to apply for a loan, he or she would have to enter the same details already disclosed earlier to the bank. This is where players like HDFC Bank, Citibank, or ICICI Bank hold an edge, as they have an end-to-end integrated system already in place. This gives them the ability to cross-sell their products based on the customer profile they have with them.

Mulligan and Gordon (2002) said:

Evolving customer expectations are also impacting e-business strategies. Customers now demand access to real-time data and expect this access to be available at anytime, anyplace, and via any means that the customer may choose. Financial transactions are now being executed on customer terms, not industry or individual company terms. Customers are also more technically and financially savvy, which motivates them to self-manage their investments. The desire to self-manage requires the firms to make market and analytical data available to customers - data that was formerly only available to internal financial analysts.

Rajeev Sharma, CMD, VN Bank is concerned about how to uplift the bank's image in this changed business scenario. The urban market is extremely demanding, and the rural market is poor in infrastructure. The bank has a problem competing with big banks like SBI, ICICI, and so forth, whose branches are present all over the country, while 70% of VN Bank's branches are located in the southern part of the country (Tamil Nadu and Kerela). Top management of the VN Bank has realized that the problem that they are facing today is the result of their more than required cost benefit analysis. Top management has to decide more on how to proceed. Nidumolu and Goodman (1996) have mentioned that top management plays a key role in deciding the thrust and direction of IT adoption in public sector organizations, because the planning and decision structure with respect to implementation of changes is usually centralized. Top management should realize the importance of branch managers and should impart to them proper training and support for the information they require in this dynamic information. There is evidence that middle managers play a very critical role in driving IT implementation and use in public sector organizations (Caudle et al., 1991). This is because these organizations are usually large, with multiple levels of decision hierarchy, and it is not possible for top management to oversee the details of the implementation processes.

Today, most banks are offering facilities like mobile banking, stock trading, Internet banking, multi-city cheque facility, any branch banking, bill pay services, telebanking, kiosk, and online money transfer from foreign countries. In VNs, only 70% of the branches are computerized. The bank's intranet is limited to some of the branches. Neither bank has its proper fast communication channel. VN has to do a lot, as the bank knows that if it does not take any strong step now, it will lose most of the profitable customers (it has already lost some of them). In order to offer more customized services to the customers, private and foreign banks are now focusing on business intelligence.

Karmarkar (2004) pointed out:

To survive the revolution, service firms of all stripes must start defending themselves, just as their manufacturing cousins did a generation ago, by putting themselves through competitiveness boot camp. The work ahead will require proactive, far-reaching, often draconian changes, focusing on customer preference, quality, and technological interfaces. Specifically, companies will need to rewire their strategies to find new value from existing and unfamiliar sources, deintegrate and radically reassemble their operational processes, and restructure the organization to accommodate new kinds of work and needed skills.

Subject: Banks; Competition; Information technology; Developing countries--LDCs; Public sector; Case studies; Bank automation

Location: India

Company / organization: Name: Veerat National Bank Ltd-India; NAICS: 522110

Classification: 9179: Asia & the Pacific; 8100: Financial services industry; 5220: Information technology management; 9550: Public sector; 9110: Company specific

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 2

Pages: 62-81

Number of pages: 20

Publication year: 2006

Publication date: Apr-Jun 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Tables References Charts

ProQuest document ID: 198670752

Document URL: http://search.proquest.com/docview/198670752?accountid=38610

Copyright: Copyright Idea Group Inc. Apr-Jun 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 21 of 100

Developing a Learning Organization Model for Problem-Based Learning: The Emergent Lesson of Education from the IT Trenches

Author: Kam Hou Vat

ProQuest document link

Abstract:

This case describes the initiative to develop a learning organization model to support the pedagogy of problem-based learning (PBL) as an approach to conduct teaching in the author's undergraduate curriculum development. Specifically, an organizational scenario is described to support introducing the PBL method of course delivery. This is based on an action research depiction on some of the experiences and issues involved in conceiving and developing a Web-based course-support environment called REAL (Rich Environment for Active Learning). Our case then deliberates on the idea of setting up a Center for PBL Research as an important mechanism of institutional innovation. This center could be considered as an essential effort to encourage individual organizational units within the university to provide suitable electronic-services toward the realization of a virtual university. The dilemma of this effort, however, remains the emergent changes of organizational behavior in education, which is essentially subjective, eclectic, individual, context-specific, and often one-off, making it traditionally the most difficult to support with technology. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATION BACKGROUND

The Department of Computer and Information Science (CIS), one of the six organizational units of education under the Faculty of Science and Technology at the author's affiliated university, is installed to offer degree programs in both the undergraduate and graduate levels in Software Engineering. The department has a current population of about 150 undergraduates and about 30 graduate students, mostly part-time. It has to coordinate per academic year the enactment of about 20 graduate and about 40 undergraduate courses. The department is headed by a full professor, who manages the work of an academic team composed of other full professors, associate professors, assistant professors, lecturers, research and teaching assistants, as well as laboratory technicians. There are currently five laboratories installed for the IT education of our students: Software Engineering Laboratory, E-Commerce Technology Laboratory, Distributed Systems Laboratory, Computer Graphics and Multimedia Laboratory, and the Motion Capture Laboratory. Besides, there is a computer barn with more than 200 PCs provided by the university to offer 24-hour computer service to our students, including Internet access. To help to manage our course delivery, the university also has provided the WebCT to our teaching staff since the beginning of 1998. Currently, we are using WebCT Version 4.1 Campus Edition. The means of education delivery in our department has been largely didactic; yet, we are open enough to blend the best of our old values of good teaching through the instructivist approach with the constructivist way of thinking, such as problem-based learning (PBL). We also are interested in the continuing efforts to extend our curriculum and instructional practice over the Internet through our continually renewed Web-based course support, both for the teaching staff and for the students.

SETTING THE STAGE

As an organizational unit of our university, the Department of CIS has always relied on the mainstream IT resources continually made available for the utilization of our staff and students. To set the stage for our case discussion, it is important to understand the build-up history of IT infrastructure in our university.

Campus Network with Internet Access

Starting in 1993, our university was the first in Macau to introduce fiber-optics and structural cabling system to link all the campus computers. In 1998, our university laid the first high-speed ATM (Asynchronous Transfer Mode) network in Macau with a speed of 622Mbps, the highest standard of ATM network technology at that time. In 2000, we also got an upgraded campus network of Gigabit Ethernet with the backbone speed up to 8Gbps. Meanwhile, in about March 2000, the university launched the Net-Port service to install network outlets in all classrooms, meeting rooms, and library auditoriums throughout the campus. Teachers and students could then connect their notebook computers to the campus network. At the beginning of 2001, our wireless campus network had been incrementally put in place. Our wireless coverage is currently over 90% of our campus, and is the largest wireless local area network (LAN) in Macau, allowing both teachers and students further mobility with the notebooks. To allow remote access to the campus network, we also enjoy a modem pool of about 270 dial-up lines, so that teachers and students working at home can connect their computers to the campus network with Internet access. Our Internet access service could be traced back to 1994, when the university established the first leased line to the Internet in Macau before the establishment of any local Internet Service Providers (ISPs). In 2003, our university launched the Net-VPN (Virtual Private Network) service for students and teachers, which supports the execution of secure applications at home through broadband services provided by the local ISP. This VPN service is essential to accessing valuable e-journals to which our university library has subscribed. Currently, there are about 560 computers installed in the various computer rooms and computer laboratories distributed throughout our different faculties and institutes. With the adoption of smart-card access control and digital surveillance system, our computer rooms are open 24 hours a day, seven days a week to provide the maximum access time possible for students to use the computer facilities.

Online Education with Mobile Access

In 1998, an online education working group was established in our university to examine the possible delivery of our educational services over the Internet. The university decided to use WebCT, which then was available from WebCT Educational Technologies in Vancouver, Canada, as the course management software and started a staff-engagement initiative to encourage its usage in individual courses offered by various academic units. Currently, we have more than 200 courses that actively rely on WebCT for Web-based course support, and around four to five thousand student accounts are set up and maintained annually. Meanwhile, with the coverage of our wireless campus network reaching over 90%, it was envisioned that mobile access would make various Web-based resources available for students' learning to take place anytime and anywhere on campus. The university provided notebook computers to academic staff for conducting lectures in class with the support of wireless network access. In 2002, in order to encourage more students to acquire their own notebook computers to use our wireless network facilities for learning purpose, a subsidy program was launched to help lower the cost of personal purchase of notebook computers by students. In addition, to support the university's initiative in online education, a SAN (storage area network) infrastructure was deployed to accommodate the various amount of storage required for different types of important data (i.e., user e-mails, research profiles, and other necessary database records like course archives). The SAN system consolidated data from the heterogeneous environment of storage systems distributed over various server computers onto a single platform for centralized management and resource sharing. It now supports more than several thousand users, including teachers, students, and administrative staff.

CASE DESCRIPTION

Against the backdrop of the university's top-down IT efforts in support of online education, our case description begins with the bottom-up course-support initiative sustained by individual staff members from the Department of CIS. In 1999, in parallel to the university's preliminary IT efforts in WebCT, the construction of a Web-enabled course support environment for learner-centered education was undertaken with the participation of a group of graduating seniors in Software Engineering. The system was then given an acronym - REAL - with the connotation of a Rich Environment for Active Learning (Grabinger & Dunlap, 1995; Vat, 2000a, 2001a). The system was designed to encourage student responsibility, to make learning meaningful, and to support active knowledge construction in the specific curricula of study. REAL was meant to facilitate the interaction among students and teachers by two notions. The first is maintaining a course-specific Web site for students to look up course-related information. The second is providing a collaborative Web-based inquiry service with which students could initiate query requests through a specific inquiry Web page, which should act as an interactive medium for teachers and students to exchange ideas, record actions, use e-mails, and upload/download files of relevant items. The REAL experiment created new possibilities to support and enhance communications between teachers and students while retaining the familiar face-to-face classroom interaction as one of the essential aspects of a learning process. It is understood that interaction, as an important component of education, must be designed intentionally in the instructional program in order to improve the quality of learning (King & Doerfert, 1996). Thus, the design of REAL then was divided into the instructional aspect and the presentation aspect. As instructional designers, the guiding question in tackling the REAL project was this: How do we create a technology-enhanced learning environment that engages students in the types of activities that will take on their initiative and responsibility for their own learning?

Instructional Design of REAL

The instructional design of the REAL environment is expected to extend the service of a good teacher by increasing student participation and communication through redesigning the delivery of college lectures to incorporate more student activity and instructor feedback. The environment is expected to develop students' abilities to generate problems, to engage in collaboration, to appreciate multiple perspectives, to evaluate, and to actively use knowledge. Through reviewing the necessary literature (Collins, Brown & Newman, 1989; Grabinger & Dunlap, 1996; Scardamalia, Bereiter, McLean, Swallow & Woodruff, 1989; Vygotsky, 1978), the following enabling ideas were articulated:

1. Enable students to determine what they need to learn through questioning and goal setting. It is believed that students should work to identify their knowledge and skill deficits and to develop strategies in the form of personal learning goals for meeting those deficits. Also, they should learn to relate what they know to what they do not know and ask questions to guide their quest for new knowledge. The emphasis is to foster a sense of student ownership in the learning process. If teachers through the REAL environment can guide students in the identification of what they already know and what they need to learn, then knowledge gaps and mistakes can be viewed in a positive way, such as another opportunity to learn. Students can assume more responsibility in addressing their own learning needs during any instructional unit.

2. Enable students to manage their own learning activities. It is believed that students should be enabled to develop their learning plans, which should describe priorities, instructional tactics, resources, deadlines, roles in collaborative learning situations, and proposed learning outcomes, including presentation and dissemination of new knowledge and skills, if applicable. Traditionally, these instructional events are arranged by teachers to be obeyed by students throughout a semester or school year, in order to accomplish a specified set of predetermined objectives. Yet, in that case, it is not advantageous for students to learn to take the initiative. To manage their own learning activities, students must be guided and supported by the teacher, slowly taking on more and more responsibility of their own learning.

3. Enable students to contribute to each other's learning through collaborative activities. It is believed that students should be motivated and supported in discussing and sharing information. Particularly, we should enable students to become co-builders of the course resources through evaluating and refining the entries that their peers put into the coursesupport environment. Collaborative learning seems appealing to achieve that purpose; however, it involves not just creating a group and then dividing up the work. Students must be educated to recognize what they are trying to learn in group-work, value it, and wish to share that value with others. Teachers can provide this sense of accountability by structuring the group work to include both individual and group assessments.

Presentation Design of REAL

The REAL environment collectively constitutes a course-specific Web site, where students can look up course-related information, and the collaborative Web-based inquiry service (CWIS), where students and teachers can interact asynchronously (Vat, 2001c) for such activities as initiating inquiry requests and responding to posted questions. In presentation design, the design of the course-specific Web site was explored in terms of some continually expanding service modules (Collins, Brown & Newman, 1989; McCormack & Jones, 1998), which could be customized for the Web-based learning environment. Of particular interest here is the Collaborative Web-based Inquiry Service module, or, more briefly, the CWIS module.

The CWIS Illustrated

The CWIS module (Figure 1) is one of the four major service modules (Courses, Resources, Assessment, and Inquiry) incorporated in the REAL environment. Both students and teachers are provided with their own areas on the CWIS site, where they can goby clicking the Teachers or Students links. Clicking the Inquiry Requests link takes users to an area where they can get a list of all pending and archived collaborative inquiry requests. Clicking the Feedback link allows users to give feedback comments for future system improvement.

The Teachers link (Figure 2) provides students with a number of teachers/consultants to choose from when initiating an inquiry. Each of the consultant links leads to a personal profile as well as the pending and closed inquiries of the teacher. From a specific teacher's personal Web page (Figure 3), we can go deeply into the teacher's background information, including research/ teaching details. We also can look into the pending and closed inquiries of that teacher. Through the individual inquiry links made available, we can go directly to seethe details of any inquiry, be it pending or closed.

The Students link (Figure 4) provides users with the information on the current clients of the CWlS service, allows the user to add itself as a CWIS client and to view the current pending and closed inquiries of the module. Clicking on the Clients Listing (Figure 5) shows the current set of students already added as clients of the CWIS service. Clicking on the individual student's link on the clients listing brings up the student's personal Web page (Figure 6) created after the student has added itself as the CWIS client.

When a client initiates a new inquiry request within the student's personal Web page, a form is returned to record the question. The form also allows the client to select a consultant and to specify an expected deadline. This form, when submitted, creates a request Web page (Figure 7) for the specific inquiry request. This newly created request also is entered into the student's and the consultant's pending requests. This request Web page serves as the interactive medium between the student client and the consultant. It carries the inquiry reference (e.g., Inquiry 112), the date the request is posted, and the expected due date when the request should be completed. Also made available are the client's and the consultant's contact details. The following Figures 7 and 8 show the newly created request Web page for Inquiry 112, as well as the same Web page after some collaboration among the consultant, the student client, and other interested parties. All interactions between the client and the consultant occur on the inquiry Web page. This page is used to record all actions and provides information on the progress of each inquiry. The inquiry Web page has links back to the client's or the consultant's personal pages. All pending inquiries have the status set to open, which could be changed to a closed status when the consultant completes the request. In the upper right portion of the page, the client's question appears in full. Below that is the interaction area, where comments and actions are recorded and where files may be downloaded and uploaded. It is designed that clicking on the Comments, Actions, and Files links brings up a form appropriate to the activity to be returned. Entering suitable information into the response forms and submitting the form causes the action to appear, as shown under suitable headings. It should be noted that links to the commentators' personal Web pages provide social networking opportunities for the informal collaborative experience in learning.

Retrospect of REAL

The REAL project, conceived to provide a Web-based course-support environment for active learning among undergraduate students, was aimed to make our educational delivery more efficient, more enriched, and more learner-centered according to its instructional and presentation design. As developers of learning environments, we are often confronted with the issue of design outcome: What should be the outcome of the learning process using the environment? In this regard, we identified with Laurillard (1993), who argues that the production of a clear set of educational objectives at the start of the project is crucial. Yet, with the prototyping experience of REAL behind us, we shared the experience of Vaughan (1994), who suggests that the objectives of any project are something that evolves from an initial inspiration. There has been a considerable amount of work developing the initial idea into a specification of the objectives for a project like REAL. Actually, the REAL experience demonstrates that as instruction becomes more learner-centered, the instructional design process must include a number of strategies to accommodate the likely needs of users (teachers/learners). Technically, this involves creating a series of function prototypes used to clarify the objectives of the system in light of design exploration between the designer and the users (teachers and students), so that the users gradually understand what can be achieved with the technology. The formative assessment derived from the examination of different skeletal prototypes leads to a clarification of a number of analytical issues. Consequently, the statement of objectives and supporting information for project development then can be characterized.

Challenges Perceived in REAL

If the motivation behind the REAL project were to encourage student responsibility, to make learning meaningful, and to support active knowledge construction in the specific curricula of a student's study through the naturalistic creation of virtual communities of student learners in the process of using the REAL services, there were many gaps to bridge in our design and prototyping efforts. As a course-support environment, there are many possibilities for further refinement. Currently, the REAL environment is not conceived as an e-learning system providing specific packages of computer-aided instructions (CAI) on particular topics of interest. Depending on the peculiar expertise of individual course instructors, this extension of CAI-based e-learning could be incorporated in a course-by-course case. On the other hand, the challenges of how to enhance the value of course support through a Web-based medium have rendered at least three main design reflections: (1) support the actual practices and daily tasks of the participants (teachers and students); (2) collect experiences and represent them in an accessible and equitable manner; and (3) provide a framework to guide the learning process.

* Support the actual practices and daily tasks of the participants. The REAL environment should support the actual practices and daily tasks of teachers by helping them guide students' learning process through the creation of a visible history of student work. For students, REAL should support learning practices and tasks by making the thinking of their peers more visible and by illustrating the process of group inquiry, not just individual inquiry through the CWIS module. Moreover, from a knowledge integration perspective, the practice of teaching and learning involves developing a repertoire of models for explaining situations. What type of knowledge integration framework can help students and teachers in their daily practice? Perhaps this is done through illustrating the repertoire of models, which provides guidelines for designing learning projects and serves as an inspiration for creating design guidelines for online communities.

* Collect experiences and represent them in an accessible and equitable manner. The REAL environment should collect experiences and represent them in an accessible and equitable manner in order to promote the process of connecting ideas so that participants (students and teachers) can use them in consequential tasks such as follow-up clarification and illustration. Communities, if viewed as a network of relationships and resources, can be structured to elicit ideas, develop shared understanding, and promote the integration of a diverse set of perspectives. It is important to investigate the potential of structuring discussions in different ways based on the type of discussion and the associated pedagogical goals. Linking different types of pedagogical goals to design strategies is a challenging task, because most of the REAL users are not accustomed to reflecting on the nature of their contributions.

* Provide a framework to guide the learning process. The REAL environment should encourage participants to make sense of their learning by creating a culture where people ask each other for justification and clarification (Linn & Hsi, 2000). It is essential to investigate how participants adjust their learning behavior as their peers prompt them to support their ideas with evidence (Cuthbert et al., 2000). One strategy is to create commonly agreed upon criteria and to examine how these criteria are adopted and transformed by community members (mostly students), as they interact with one another. In order for communities to maintain coherence and to develop a sense of what is desirable behavior, it is important that a strong community culture be established with a common set of values and criteria for making contributions (Brown, 1992). Communities need a general framework to help define the mission and vision for the learning process.

Continuation of REAL - The Adoption of PBL

Indeed, the continual refinement of REAL could be considered a creative act out of the interplay between inspiration and the educational formalisms that discipline the shape of the whole project, especially in areas related to supporting students' project work in groups (Guzdial, Kolodner, Hmelo, Narayanan, Carlson, Rappin, et al., 1996). In 2001, we started experimenting with different strategies of the constructivist teaching (Duffy & Cunningham, 1996; Honebein, Duffy & Fishman, 1993; Squires, 1999). Meanwhile, we also have been examining how best to tailor the incremental development of REAL (Perkins, 1991) to the pedagogy of constructivism, which, according to Bolye (1997), represents the dominant intellectual trend in the design of a modern interactive learning environment. Constructivists argue that experiencing and becoming proficient in the process of constructing knowledge is important. Namely, learning how to learn and how to construct and refine new meaning on the part of the learner is of most concern. In group project work, the REAL environment must support the actual practices and daily tasks of teachers and students. We must provide a clear framework to guide the learning process in order to encourage student responsibility, decision making, and intentional learning in an atmosphere of collaboration among students and teachers. We need to promote study and investigation within meaningful, authentic, and information-rich contexts. We also need to utilize participation in activities that promote high-level thinking processes, including problem solving, experimentation, original creations, discussion, and collective examination of topics from multiple perspectives. Upon examining the varied work of the constructivist literature (Albanese & Mitchell, 1993; Barrows, 1985, 1986; Bruer, 1993; Duch, Groh & Allen, 2001; Evensen & Hmelo, 2000), we came to realize the potential of problem-based learning (PBL) in supporting various learning interactions, especially in group-based project work, an increasingly important component in many of the core courses required in our undergraduate Software Engineering program offered by the Department of Computer and Information Science (CIS).

Before describing the IT (information technology) efforts to support the PBL initiative, it is essential to provide our version of what PBL means in the learning context.

Why Problem-Based Learning?

The workplace of the 21st century requires professionals who not only have an extensive stock of knowledge but also know how to keep the knowledge up-to-date, apply it to solve problems, and function as part of a team. Those of us who teach undergraduates in higher educational institutions are obligated to rethink how we teach and what our students need to learn in order to prepare them for this challenging time. With few exceptions, college and university faculty members embark upon the business of teaching with little instruction or training in pedagogy; we simply teach as we were taught.

For most of us, that experience revolved around lectures. In a traditional undergraduate classroom, lectures are usually content-driven, emphasizing abstract concepts over concrete examples and applications. Assessment techniques focus on recall of information and facts, and rarely challenge students to perform at higher cognitive levels of understanding. This didactic instruction reinforces in students a naïve view of learning in which the teacher is responsible for delivering content, and the students are the passive receivers of knowledge.

In 1998, the Carnegie Foundation's report, Reinventing Undergraduate Education: A Blueprint for America's Research Universities (Boyer, 1998, p. 6), stated that "many students graduate having accumulated whatever number of courses is required, but still lacking a coherent body of knowledge or any inkling as to how one sort of information might relate to others. And all too often they graduate without knowing how to think logically, write clearly, or speak coherently. The university has given them too little that will be of real value beyond a credential that will help them get their first jobs." Unquestionably, traditional lectures, though still an efficient means of educational delivery, do little to foster the development of process skills to complement content knowledge. Quoting John Dewey's observation that "true learning is based on discovery guided by mentoring rather than the transmission of knowledge" (Boyer, 1998, p. 15), the Boyer report urged universities to:

facilitate inquiry in such contexts as the library, the laboratory, the computer, and the studio, with the expectation that senior learners, that is, professors, will be students' companions and guides. ... The research university's ability to create such an integrated education will produce a particular kind of individual, one equipped with a spirit of inquiry and a zest for problem solving; one possessed of the skill in communication that is the hallmark of clear thinking as well as mastery of language; one informed by a rich and diverse experience. It is that kind of individual that will provide the scientific, technological, academic, political, and creative leadership for the next century. (Boyer, 1998, p. 13)

Student-centered, inquiry-based instruction, particularly problem-based learning, falls right into line with this philosophy.

What is Problem-Based Learning?

The basic principle supporting the concept of problem-based learning (PBL) is that learning is initiated by a posed problem, query, or puzzle that the learner wants to solve (Boud & Feletti, 1997). In the PBL approach, complex, real-world problems are used to motivate students to identify and to research the concepts and principles that they need to know in order to work through those problems. Students work in small learning teams, bringing together collective skills at acquiring, communicating, and integrating information. PBL addresses directly many of the recommended and desirable outcomes of an undergraduate education (Wingspread, 1994); specifically, the ability to do the following:

* Think critically and be able to analyze and solve complex, real-world problems.

* Find, evaluate, and use appropriate learning resources.

* Work cooperatively in teams and small groups.

* Demonstrate versatile and effective communication skills, both verbal and written.

* Use content knowledge and intellectual skills acquired at the university to become continual learners.

The PBL Cycle of Collaboration

Operationally, the PBL approach follows a cyclical process:

* At the outset, before the PBL group work begins, students must get to know one another, establish ground rules, and help to create a comfortable climate for collaborative learning. Meeting in a small group for the first time, students typically introduce themselves, stressing their academic backgrounds in order to allow the facilitator (instructor) and each student to understand what expertise might potentially be distributed in the group. The most important task is to establish a non-judgmental climate in which students recognize and articulate what they know and what they do not know.

* Students are presented with a problem (e.g., case, research paper, videotape). Students working in relatively permanent groups organize their ideas and previous knowledge related to the problem and attempt to define the broad nature of the problem.

* Throughout ensuing discussion, students pose questions (referred to as learning issues) that delineate aspects of the problem that they do not understand. These learning issues are recorded by the group and help to generate and focus discussion. Students are encouraged continually to define what they know and, more importantly, what they do not know.

* Students rank, in order of importance, the learning issues generated in the session. They decide which questions will be followed up by the whole group and which issues can be assigned to individuals, who later teach the rest of the group. Students and instructor (more appropriately called the facilitator) also discuss what resources will be needed to research the learning issues and where they can be found.

* When students reconvene, they explore the previous learning issues, integrating their new knowledge into the context of the problem. Students also are encouraged to summarize their knowledge and to connect new concepts to old ones. They continue to define new learning issues as they progress through the problem. Students soon see that learning is an ongoing process and that there always will be (even for the teacher) learning issues to be explored.

The PBL Perceived Benefits

Problem-based learning, as a pedagogy, has been observed to foster in our undergraduate students the ability to identify the information needed for a particular application, where and how to seek that information, how to organize that information in a meaningful conceptual framework, and how to communicate that information to others. Use of the cooperative working groups fosters the development of learning communities from a class of empowered individuals, enhancing student achievement as responsible learners. In addition, students who learn concepts in the context in which they will be used are more likely to retain that knowledge and to apply it appropriately. Some students even could recognize that knowledge transcends artificial boundaries, since PBL highlights interconnections between disciplines and the integration of concepts.

The PBL Students' Feedback

Admittedly, from the students' feedback collected at several semester-end town-meeting occasions (recorded from video and written media), the student responses to the PBL approach are not without barriers. Some students frankly expressed that since they came from the didactic model of education, they did not have the skills and psychological preparation to work inside a self-functioning group whose tasks involved setting individual learning objectives and having to research them independently. There are always students who just prefer to be given the instructions of what to do and fulfill them in order to secure their passing score. They encountered the discomfort of "learn to learn." They often found the group process and the notion of independent learning with group-based integration particularly hard to cope with. Other students, understanding the morale of PBL, enjoyed the experience of self-directed learning; however, they also confessed that the PBL cycle of operations did exert high cognitive demands on individual team members to collaborate. Indeed, team building within the PBL cycle of collaboration is an iterative process that requires the facilitator's constant attention and counseling for conflict resolutions that are inevitable in any professional work, such as software development.

The Perceived Implications of the PBL-Based Collaboration

Problem-based learning, according to Barrows (1986), is designed to actively engage students divided into groups in opportunities for knowledge seeking, problem solving, and collaboration necessary for effective practice. PBL acknowledges the possibility of prior knowledge held by the learner. Further knowledge is acquired on a need-to-know basis, enabling the learner to diagnose his or her learning needs. Knowledge gained is fed back into the problem in an iterative loop (Margetson, 1994; Ryan, 1993). PBL allows the synthesis of topics and subjects. According to Woods (1994), one specific advantage of this approach is increased motivation; namely, learners learn because they are interested. More importantly, Woods maintains that because of the way in which knowledge is acquired in PBL, links are provided with experience, which help in future recall. This is invaluable for students' future professional life (Barrows, 1986). There are common themes in the literature on PBL. First, as mentioned previously, PBL usually is conducted in small groups (Barrows, 1988; Neufeld & Barrows, 1974; Woods, 1994). Learning is self-directed with an emphasis on a learner-centered as opposed to a teacher-centered approach. PBL also is held to promote lifelong learning, making knowledge relevant by placing it in context. The small group format of PBL is invaluable in the development of negotiation, communication, and collaborative skills. Students also develop inquiry, thinking, and problem-solving skills. Peer-based and/or self assessment helps the individual to become a reflective practitioner; namely, there is an expectation that the PBL student becomes a more active partner in the educative experience as a result of planning, organizing, and evaluating his or her own learning (Boud, 1985; Woods, 1994).

The Provision of PBL-Based ICT Support

It is designed that a Web portal is needed for each course adopting the PBL initiative. This portal should lead to a Web-based organizational space for the particular course, OS^sub Course^, which renders a number of peculiar services to teacher and students in the form of distributed applications, which are also customizable to their PBL cycle of activities. In a specific course context, there also must be a number of Web-based collaborative spaces, CS^sub PBL^ (also named group space), to enable group-based project work to be performed. Actually, each PBL group is given a separate CS^sub PBL^. In addition, in order to support interactions among students and between the instructor and students, the provision of a personal electronic space for either teacher or student, PS^sub Individual^ (PS^sub Teacher^ or PS^sub Student^), is essential in order to facilitate individual work performance. The linkages from the course space to the respective collaborative spaces to the individual personal spaces must be updated closely to facilitate the auxiliary processes of teaching and learning over the Web. The challenge is to ensure that the sites should complement the course enactment by enabling both teacher and students to interact asynchronously or synchronously through the different customizable services offered.

The simple expression for this PBL-based ICT (information and communications technologies) support could be written as follows (Vat, 2004): <ICT-Support>^sub Course^ ::= OS^sub Course^+ { CS^sub PBL^ } + { PS^sub Student^ } + PS^sub Teacher^, where the braces {} represent the repetition of the element embedded. It is intended that the provision of the collaborative spaces in the course space could facilitate the formation of a virtual community of student learners made up of different PBL groups. It is also our experience that each PBL group, besides its CS^sub PBL^, must be associated with an electronic project space, WS^sub Project^, in order to develop project-based learning, an extension of the PBL concept to any project development work in Software Engineering. Specifically, in a project course, each WS^sub Project^ is affiliated with a project sponsor (played by the instructor), a project client (played by another PBL team), a project team (any PBL group), a project mission, a project schedule (semester-long), and a number of project activities (application-specific), each of which is composed of a number of tasks. A specific task consumes resources and produces a work product. It is worth mentioning that working out the specific ICT support for the project space is always a dynamic challenge in a sense that no predetermined set of services could satisfy all the needs of different groups of PBL students. However, the use of design scenarios to answer such questions as what services, for whom, in what ways, and under what circumstances could help to visualize the needs of individual PBL groups, such as a project portfolio that includes milestones achieved and a member portfolio that comprises individual contributions accomplished.

An Illustrated Walkthrough

Imagine you have just attended the lesson on PBL and group project work. You realize that the PBL support available on the Web comprises both the learning and performance aspects. These are actually a series of strategies and Web-based solutions that use instructional design principles to improve students' work-based performance according to the real-life PBL activities. You are invited to visit the PBL-specific Web site to register as a PBL user. The registration process invites you to fill in a Web form that includes a simple questionnaire for teaming purposes. You now are allowed to enter the PBL support environment with your PBL identifier and personal password returned after the registration.

For exploratory purposes, you have just navigated to the PBL Course Space for the Software Engineering course SFTW 300 Software Psychology (Vat, 2000a, 2000b, 2001b) (Figure 9). Here, you are presented with a number of projects in order to express your preferences to join through filling in another Web form activated by clicking the link Join a Team on the same page. You can then find out which team and project actually have been associated with you by clicking the link Identify Your Team also on the same page. On knowing which project to engage, you could click the suitable PBL Project Space link (i.e., S300F99P3 in this case) to navigate to the suitable Project Space (Figure 10). The PBL Project Space is assigned for each PBL group for project management on the Web. It contains links to the PBL Group (including its members' links), the PBL Client, and the PBL Supervisor. Each link is associated with a set of related links for information and support of the project. Among the numerous support links in the PBL Project Space, you can find the Work Space link, which leads to the Group Work Space (Figure 11) Web page. This page contains links to individual group members and to specific PBL support, as well as to the project interim progress. Clicking on the individual member's link (PWS) leads to the Personal Work Space (Figure 12), where each group member's progress in terms of PBL activities (analysis, research, reporting, and implementation) is tracked.

CURRENT CHALLENGES/PROBLEMS FACING OUR WORK

From the discussion built up so far, it is not difficult to foresee that PBL is the kind of group-based project work that has many educational and social benefits; in particular, providing students with opportunities for active learning. However, teaching, directing, and managing such project work is not an easy process, because projects are often expensive, demanding considerable supervision and technical resources, complex combining design, human communication, human-computer interaction, and technology to satisfy objectives ranging from consolidation of technical skills through provoking insight into organizational practice, teamwork, and professional issues to inculcating academic discipline and presentation skills. In preparing our students to get started with group-based project work, we need some sort of course support that goes beyond what our REAL environment currently can accommodate and whose characteristics must be delineated and thoughtfully designed in a practical learning scenario in order to stimulate any learner-centered involvements. This section discusses the challenges behind providing such course support by describing an effort in setting up a Center for PBL Research. Of importance here is a description of the Center's mission in terms of Peter Senge's (1990) learning organization model to promote PBL through encouraging self direction and learner control in the students and to provide support to teaching staff members who are interested in adopting PBL in their course delivery. The case concludes by discussing the problems behind rallying support for the Center in relation to the organizational context of change and in terms of its vision, renewed mindset for education, and attendant ICT problems of putting the educational services online.

The Problems Behind the Adoption of PBL

It is experienced that the conventional approach to education remains the instructivist one, in which knowledge is perceived to flow from experts to novices (Booth, 2001). This transmissive view of learning is most evident in the emphasis on lectures, in the use of textbooks to prescribe reading, and in the nature of tutorials and assessment methods. It assumes that the process of good teaching is one of simplification of the truth in order to reduce student confusion. Yet, this simplification could deny students the opportunity to apply their learning to dynamic situations. We often question the transferability of the instructivist learning and ask how much of that which is assigned to academic learning ever gets applied to actual scenarios (Salomon & Perkins, 1989), when there is such a rapid surge in knowledge commonly associated with the advent of the Internet. This is a transference problem. Actually, the content product of learning is assuming a less important role relative to the process of learning as the life of information content shortens and the need for continual learning increases.

Relatively recent discussions in the literature (Cobb & Yacket, 1996; Marshall, 1996; O'Connor, 1998; Vygotsky, 1978) suggest that learning is viewed increasingly as a constructive process occurring during one's participation in and contribution to the practices of the community of learners. This issupported by a current shift (Brown, Ash, Rutherford et al., 1993) from the cognitive focus on knowledge structures presumed in the mind of the individual learner to a constructivist focus on the learner as an active participant in a social context. Indeed, we have been witnessing classroom culture shifting away from the obsession with knowledge reproduction and enriched with tools such as Web-based search engines that mediate knowledge building and social exchanges among peers as participants in discourse communities (Bonk, Medury & Reynolds, 1994; Bonk & Reynolds, 1997; Fabos & Young, 1999). These communities open opportunities for learners to interact with multiple perspectives that challenge their existing knowledge constructions and impose cognitive conflicts (Piaget, 1952) requiring teachers' continual interventions.

Undoubtedly, it takes a certain amount of independence and determination to change the way one teaches. It also takes time and involves risks. Where do instructors acquire the commitment to get started with this change? Frequently, commitment grows out of the recurring frustration most instructors experience when they realize how little their students understand or remember from a semester of charismatic lectures. If not ignored, that frustration leads to reflection on what it means to teach and to learn. In this regard, problem-based learning (PBL) addresses these issues and offers an attractive alternative to traditional education by shifting the focus of education from what faculty teaches to what students learn. Content remains important, but emphasis shifts more to the process. Indeed, Greening (1998, 2000) describes PBL as a vehicle for encouraging student ownership of the learning environment. There is an emphasis on contextualization of the learning scenario, providing a basis for later transference, and learning is accomplished by reflection as an important meta-cognitive exercise. In addition, the execution of PBL, often done via group-based project work, reflects the constructivist focus on the value of negotiated meaning. More importantly, PBL, which is not confined by discipline boundaries, encourages an integrative approach to learning that is based on requirements of the problem as perceived by the learners themselves. Consequently, our learning organization model identifies with a learner-centered perspective of PBL based on the idea of collaborative learning, where it is necessary to clarify the new roles of the teachers and the students, and then to present our philosophy of the Center for PBL Research, a collaborative learning environment in support of PBL.

A New Role of the Teacher

Instead of performing as the sage on the stage transmitting knowledge to a class of innocent students, in the collaborative learning environment of PBL, teachers' roles often are defined in terms of mediating learning through dialogue and collaboration, where knowledge is created in the community rather than being transferred from the individual. More specifically, the idea of mediating could include such aspects of facilitating, modeling, and coaching (Chickering & Gamson, 1987; Chung, 1991; Mayer, 1988). Facilitating involves creating rich activities for linking new information to prior knowledge, providing opportunities for cooperative work and collective problem solving, and offering students a multiplicity of authentic learn ing tasks. Modeling serves to share with students not only the perceived content to be learned but also the important metacognitive skills of higher-order thinking in the process of communication and collaboration. Coaching involves giving hints or cues, providing feedback, redirecting students' efforts, and helping them use a strategy. A major principle of coaching is to provide help only when students need it, so that students retain as much responsibility as possible for their own learning. In fact, we need to teach students to rely less on teachers as the source of knowledge. We need to help them learn to learn as self-directed groups of active, autonomous, responsible individuals. One of the specific goals in the PBL setting is to have students rely more heavily upon their classmates for assistance in doing a task and in evaluating a possible solution. Only after they have checked with everyone in the group should they ask their teacher for help. Operationally, it is the teacher's job to specify the instructional objectives, usually in discussion with the learning (PBL) groups; explain the cooperative goal structure; observe students' interactions in terms of the learning process and social relationships within the group; give feedback on the group-based evaluation of the learning products; and maximize social interaction among groups through suitable design of intergroup interacting patterns in order to create the expected community of learners among the students in the class.

A New Role of the Students

In collaborative learning settings, students are expected to assume their new roles as collaborators and active participants. It may be useful to think how these new roles influence processes and activities before, during, and after learning. For example, before learning, students set goals and plan learning tasks. During learning, they work together to accomplish tasks and to monitor their progress. After learning, they assess their performance and plan for future learning. In practice, students constantly need help from the teachers to help them fulfill such new roles. Specifically, students need to learn to share rather than to compete for recognition, and they need to evaluate the learning outcomes rather than hurrying to finish the task. It is important to nurture a group-based atmosphere for comfortable trial and error as well as for asking questions and expressing opinions. Students must learn to become teachers of their own, and the group-based interaction should serve as the incubator for codevelopment of ideas. Indeed, a frequent formula (Dilworth, 1998) that action learning proposes has been quite useful in constantly reminding students of their new role in collaborative learning; namely, L = P + Q + R, where L (learning) equals P (programmed instruction) plus Q (questioning) plus R (reflection). Here, P represents knowledge coming through textbooks, lectures, case studies, computer-based instruction, and many others. This is an important source of learning but carries with it an embedded caution flag; that is, P is all based in the past. Q means continuously seeking fresh insight into what is not yet known. This Q helps to avoid the pitfall of imperfectly constructed past knowledge. By going through the Q step first, we are able to determine whether the information available is relevant and adequate to our needs. It will point to areas that will require the creation of new P. R simply means rethinking, taking apart, putting together, making sense of facts, and attempting to understand the problem. Following the use of this formula, action steps are planned and carried out with constant feedback and reflection as the learning takes place. In short, what this formula can provide for PBL students is elevated levels of discernment and understanding through the interweaving of action and reflection.

A Renewed Pedagogical Organization

After experimenting with the PBL model of providing educational services, we experienced that a major shift from the linear view to a dynamic view of managing education (Bates, 1995; Orlikowski & Hofman, 1997) must be accommodated. In the traditional linear model of education, learning design proceeded in a linear fashion from defining objectives to lesson planning to course delivery. First, educators engaged in a comprehensive learning-needs analysis process often based on assessments done by others about competencies and learning objectives. Comprehensive syllabi were developed. Finally, the course was delivered, as planned. Associated with this linear approach was a set of teaching strategies that matched its linear qualities, characterized by being predominantly one-way, centralized, and broadcast-oriented. When students appeared bored and unengaged in this type of program, the solution was to find ways to use new media to make the one-way broadcast more entertaining. Much transmissive learning was nothing more than a way to generate a broadcast of an expert and his or her multimedia slides with good production values. Today, we need a renewed mindset for education, especially when it is offered through the perspective to achieve collaborative learning. Teaching and learning must be seen as an ongoing process rather than a program with a fixed starting and ending point. The importance of widespread participation by learners in the design of their own learning must be emphasized (Kimball, 1995). The first challenge for educators is to figure out how to harass the power of the new media (i.e., the World Wide Web) to take advantage of its capacity to support flexibility, concurrency, and just-in-time design instead of merely using the new media to deliver the same old stuff. ICT (information and communications technologies) are particularly well suited to a more dynamic approach to managing education. Good teachers also have always been open to changing their lesson plans based on student input. New media make it easier. Online environments can provide electronic spaces for continuing conversation among students and teachers about what is working and what is not working in the process. The idea of participatory course design is not to be neglected. The possibility of a well-enhanced online environment (Vat, 2001a) should provide an opportunity to support collaborative learning in ways we have not been able to do before. Yet, just putting participants together in some kind of common electronic space will not turn them into a collaborative group automatically. The key is to design a framework for group work that requires the team to grapple with roles, protocols for working interdependently, and mutual accountability. In this regard, PBL serves as a very good instrument to experience cooperative group work. The establishment of the Center for PBL Research should help to promote and to coordinate the PBL efforts in other undergraduate programs.

The Mission of the Center for PBL Research

It is expected that the working philosophy for the Center for PBL Research should be built upon the learning organization model of Peter Senge (1990). It is conceived to be a place where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people continually are learning how to learn together. At the core of the learning organization are five essential learn ing disciplines: personal mastery, mental models, shared vision, team learning, and systems thinking, that may be briefly described as follows:

* Personal Mastery. Personal mastery means learning to expand our personal capability to create the results we desire, together with creating an organizational environment in which members are encouraged to develop themselves toward the goals and purposes they choose (Senge, 1994). Basically, personal mastery connects the individual's learning with the learning of the organization.

* Mental Models. Mental models are about how individuals reflect on their own knowledge, using such models to improve their internal understanding of an organization's various functions and processes. Through mental models, we may examine the nature, advantages, and disadvantages of the process we go through. Based on the lessons learned, we may conclude about what future directions to adopt and to follow.

* Shared Vision. Shared vision means building commitment in a group by the development of shared images of the future that the group seeks to create and by the principles and guiding practices by which the group hopes to get there (Senge, 1990).

* Team Learning. Team learning describes a sharing and utilization of knowledge involving collective thinking skills. It has to smooth a lot of teamwork elements, such as listening, knowledge sharing, patterns of interaction, and the way the team operates. Ideologically, team learning means the transformation of collective thinking skills in a way that enables groups of people to develop an ability that is greater than the sum of individual members' talents (Senge, 1994).

* Systems Thinking. Systems thinking is a conceptual framework based on patterns that may explain different events as instances of one phenomenon. Abstraction is at the core of systems thinking, since it helps us to ignore details and to examine what different events have in common. Such a perspective may improve our analysis abilities and may guide us in decision-making processes. Unquestionably, this understanding is based on learning, examination, and reflection of what has happened in the past.

Thus, the term learning organization model is used here to refer to a specific type of working environment that fosters and supports learning processes both at the individual and the collective levels so that individual and collective learning are intertwined in order to improve the organization's performance. The atmosphere of a learning organization considers learning as an integral part of everyday work and daily routine, and it rewards members (not necessarily financially) who improve their performance, promote teamwork, and enhance the organizational targets. Operationally, the mission of the Center includes the following lines of action.

* To provide specific aids to course instructors wishing to join the PBL initiative. The Center should serve as a resource location for any course instructor who would like to know something about PBL and what specific PBL design or services could be made available to his or her course delivery. Once agreed, the course instructor could join as the PBL participant of the Center, which should provide him or her with a consultant in the PBL style of learning. The instructor also will be given the opportunity to interact with a task force from the Center, which is considered an aspect of staff engagement strategy to identify the need for a Web-based course/PBL support environment. This environment should serve the needs of both the instructor and the students during the course of their PBL learning. Rapid prototyping workshops (Collis, 1998) to demonstrate how the ideas of PBL could be employed for group-based project work then could be arranged for clarifying further user-driven requirements until the teacher feels comfortable with the technologies of his or her choice.

* To manage the accrued knowledge resources contributed by both teacher and students over the PBL study period. The Center should serve as the administrator for the specific Web-based course/PBL support environment in support of PBL teaching. The basic setup of the support environment should accommodate the accumulation of course-specific contributions of both the instructor and the students' communities. The former could include the general course information, class schedule (including time and location), class resources (including texts, references, Web links, project archives, and course notes), and possibly online class assessment facilities. The latter could include group-based project reports, demos, and presentation videos, plus possibly the ongoing process of team-based records in terms of meetings minutes and individual members' profiles tracking personal progress and responsibilities fulfilled. For every semester, there ought to be some archive to keep track of the course memory related to the specific contributions as well as the activities performed. This course memory should serve as some precious resources for students in the coming semesters, especially when group-based projects are the themes of PBL.

* To help to publish PBL-based course materials for curriculum development and evaluation plus experience reports for academic research. The Center should serve as the publisher that supports individual instructors in their efforts to publish their ongoing works in applying PBL to the CIS (Software Engineering) context. These could include course materials designed for PBL projects as well as the experience reports in conducting PBL teaching in the various core courses of CIS. To this end, we need the coordination of the teacher-authors, some field experts in the specific areas of CIS education for review purposes, as well as the skills of several editors for publication trimming. Perhaps the Center should provide a shared workspace through the Web for such a team to work together in shared editing.

Remarks for Continuing Challenge

What make the Center for PBL Research work is people's mutual understanding of their own and others' interests and purposes, and the recognition that their interests are somehow bound up in doing something to which they all contribute. When a group of people over time learn to enhance their capacity to create what they truly desire to create, this is an instance of a learning organization. Looking more closely at the teamwork development, we often see people being changed somewhat profoundly. There is a deep learning cycle. Team members develop new skills and capabilities that alter what they can do and understand. As new capabilities develop, so do new awareness and sensibilities. Over time, as people start to see and to experience the world differently, new beliefs and assumptions begin to form, which enables further development of skills and capabilities. This deep learning cycle constitutes the essence of the learning organization model - the development of not just new capacities but also of fundamental shifts of mind, individually and collectively (Senge, Roberts, Ross, Smith & Kleiner, 1994). Today, an organization's ability to learn is often considered as a process of leveraging the collective individual learning of an organization to produce a higher-level organization-wide intellectual asset. This is a continuous process of creating, acquiring, and transferring knowledge accompanied by a modification of behavior in order to reflect new knowledge and insight and to produce a higher-level organizational asset. Often conspicuously missing, however, is a discussion of collaboration (Schrage, 1990) as a regenerative source of ideas that will advance the organization to learn, to change, and to excel. Garvin (1993) characterizes organizational learning as a continual search for new ideas. To collaborate through the Center for PBL Research is to work in a joint intellectual effort to partition problem solving in order to produce a synergy such that the performance of the whole exceeds that of any individual contributor. The central issue in the learning organization model is how individual learn ing is transferred to the organizational level. Here, we are assuming an organization of learners that takes ownership for its development and learning on a self-directed basis. Yet, only with a clear understanding of the basic learning disciplines (personal mastery, mental models, shared vision, team learning, and systems thinking) can we manage the learning processes consistent with organizational goals, issues, and values. Personal mastery is learning to expand our personal capacity to create the results we most desire, which is about creating an organizational environment that encourages all its members to develop themselves toward the goals and purposes they choose. Mental models include reflecting upon, continually clarifying, and improving our internal pictures of the world, and seeing how they shape our actions and decisions. Shared vision is concerned with building a sense of commitment in a group by developing shared images of the future that we seek to create and the principles and guiding practices by which we hope to get there. Team learning is about transforming conversational and collective thinking skills so that groups of people can reliably develop intelligence and ability greater than the sum of the individual members' talents. Systems thinking is concerned with cultivating a way of thinking about and a language for describing and understanding the forces and interrelationships that shape the behavior of systems. This discipline helps us to see how to change systems more effectively and to act more in tune with the larger processes of the external world.

Today, it has been widely recognized that the organizations that will truly excel in the future will be the organizations that discover how to tap people's commitment and capacity to learn at all levels in an organization (Senge, 1990; Vat, 2005). To harvest the knowledge and experience of people and make it available to the organization as a whole, ICT needs to be managed differently to support dialogue rather than mere databases. With the rapid advances in networking technologies and the commercialization of the Internet today, universities are well poised to enhance their delivery of educational services. But this vision often requires establishing an electronic infrastructure within the physical university in order to take advantage of the new technologies and opportunities. We call this the virtual university (VU) (Chellappa, Barua & Whinston, 1997), an electronic entity constructed to enable a re-engineered vision of a university's educational process. In this information age, education and training in organizations, particularly the VU, consist of large amounts of explicit knowledge made available through huge archival databases. Nonetheless, today's knowledge or learning organizations create environments where experiential knowledge is learned through dialogue and day-to-day interaction. Communication technologies are needed to support this interaction. The learning environment should stimulate and nurture the complex network of interpersonal relationships and interactions, which are part of an effective communications and decision-making process. People must be allowed to make choices about whom they need to communicate and learn with, without regard to traditional organizational boundaries, distance, and time. In other words, they need to manage their own learning in order to form new groups and teams as requirements develop and change. The new framework for managing the VU should be about managing the learning process as well as managing course contents. The kinds of questions we need be asking ourselves are not only about how to plug one type of technology into another but also how to use technology to leverage resources and group dynamics in new ways in order to make fundamental changes in every part of the learning process. Accordingly, this is what the essence of our learning organization model for PBL is all about.

Subject: Action research; Studies; Organizational learning; Curriculum development; Information technology; Colleges & universities

Classification: 9130: Experiment/theoretical treatment; 8306: Schools and educational services; 2500: Organizational behavior/operations research; 5220: Information technology management

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 2

Pages: 82-109

Number of pages: 28

Publication year: 2006

Publication date: Apr-Jun 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Equations Illustrations References

ProQuest document ID: 198654667

Document URL: http://search.proquest.com/docview/198654667?accountid=38610

Copyright: Copyright Idea Group Inc. Apr-Jun 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 22 of 100

ERP Implementation in Higher Education: An Account of Pre-Implementation and Implementation Phases

Author: Okunoye, Adekunle; Frolick, Mark; Crable, Elaine

ProQuest document link

Abstract:

Enterprise Resource Planning (ERP) systems long have been known as systems that bring integration to numerous business activities within complex organizations. However, in today's contemporary organizations, ERP systems are becoming a standard information system, irrespective of size and nature of the business. This case focuses on the implementation of an ERP system in higher education. The case covers the key stages of implementation. Particular emphasis is placed on the selection of the ERP system and the organizational dynamics involved. The implementation of the first two modules and the views of users are discussed. The depth of the case can enable managers to understand the complexity of an ERP system selection and the organizational issues involved. The analysis of the case sheds light on the activities involved in ERP projects and what to expect during the implementation stage. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATIONAL BACKGROUND

Agora University

This case is about an ERP implementation effort at Agora University, a private co-educational university in the midwest USA (see Table 1). While the following school statistics might seem impressive, they only reflect the challenges facing the university in order to maintain high standards and to remain competitive. There must be continuous efforts to ensure that the university remains in the league of best universities without putting undue financial burden on the students. As with any organization, the most viable solution is to improve efficiency and to lower cost through an improvement of internal operations.

The University is headed by a president and supported by seven vice presidents:

* The Academic Vice President and Provost heads up all academic and faculty affairs.

* The Senior Vice President for Financial Administration heads up the human resources and financial affairs areas.

* The Vice President for Mission and Ministry is responsible for mission and ministry and promotion of the Jesuit tradition of the university.

* The Administrative Vice President is responsible for government and community relations.

* The Vice President for University Relations is responsible for the office of marketing and public relations, all phases of Agora's development efforts, alumni relations, and special events.

* The Vice President for Student Development supervises campus dining, discipline, security, student development assessment, and student activities.

* The Vice President for Information Resources heads up the division of information resources (see Figure 1) and provides leadership to enable the university to progress in the use of technology and information resources in order to enhance the teaching and learning environment, supports scholarly activity, and improves service and productivity.

Information Systems and Services Division

The Information Systems and Services (ISS) division is responsible for the management and administration of information technology at Agora University. The division is headed by an Associate Vice President. The mission of ISS is to provide the students, faculty, and staff of Agora University with computing, information technology, and telecommunications support and services necessary to achieve the institution's instructional and administrative goals and objectives. This area provides support for the computer hardware and software used in instruction and administration. In addition, ISS manages the ongoing development of administrative systems to facilitate the business processes. ISS also supports the campus data and voice networks and provides business information to aid administrators in decision making. There area total of 32 staff members in ISS with varying skills that cut across the functionalities of all departments. Over the past five years or more, they have been able to attract and retain professionals for all the managerial and technical positions. ISS is divided into three main departments: application services, client services and technology services (see Table 2).

The Environment - Higher Education

The similarity and differences between educational institutions and business organizations have been an issue of discussion in the literature (Balderston, 1995; Heiskanen et al., 2000; Lockwood, 1985; Pollock & Conford, 2004). According to Pollock and Cornford (2004), it is tempting to see the educational institutions as unique organizations that are different from other organizations. This uniqueness can be based on a combination of certain characteristics, which, according to Lockwood (1985), could include complexity of purpose, limited measurability of outputs, both autonomy and dependency from wider society, diffuse structure of authority, and internal fragmentation. A university specifically can be "thought of as a band of scholars coming together in pursuit and dissemination of knowledge, governed by a more or less collegiate model of organization, based around a complex structure of committees and with a high degree of individual and departmental autonomy" (Pollock & Cornford, 2004, p. 36). Thus, the decisionmaking process in the university could be fundamentally different from business organizations, and the information systems developed for business may not be directly appropriate in universities (Heiskanen et al., 2000). This also can be extended to the process of implementing such a system and its usage.

While higher educational institutions have interacted with each other in a collegial fashion, they all are striving to achieve administrative excellence and to provide the best experience for the students. They understand that they all seek the best and the brightest students and that they need to provide a strong reason why their particular institutions should be chosen over others. The universities also need to be able to support the activities of the faculty in teaching, research, and service. Federal and local research funds continue to be more competitive, and faculty members require a more conducive environment to be able to function effectively in order to attract research money. Administratively, educational institutions are under pressure to perform at the same Internet speed as business organizations do. Despite the inherent differences in the orientation and functionalities of educational institutions and business organizations, they all share the need for efficiency and productivity.

At the turn of the century, higher education was being redefined through advances in information technology (i.e., many courses were made available online and many manual processes in higher education were becoming automated). The rise of many virtual universities challenged the traditional university model. Many universities responded through the development of many Web-based courses and through an increased use of information technology in the classroom. Administratively, there were challenges to reach prospective students without the limitation of location and time. With the reduction in government support and increasing costs, universities began exploring ways to strengthen their fundraising activities, to increase their efficiency and productivity, and to become more accountable to their stakeholders.

The immediate response of universities has been to look at how the corporate world has been able to deal with the issue of efficiency, productivity, and competition, along with how some of the leading educational institutions are running efficient administrations. Considering the influence of Information Technology in the 21st century, it was not surprising that Agora University looked to pursue new ways to remain competitive and to deliver the best services to their stakeholders. They investigated and adopted a system for the purposes of improving their administrative processes using information technology.

SETTING THE STAGE

It was this situation - a need to respond to growth in the education sector and the increasing environmental challenges - that made the leadership of Agora University request the assessment of their dated administrative information system. The system had been in use for more than a decade and was seen as no longer meeting the requirements of the university and the demands of the growing global competition in higher education. The assessment revealed that many users were no longer happy with the dated system, and more importantly, the underlying technology was viewed as obsolete. This denied the user from benefiting maximally from recent advances in information technology. There was a long list of problems, and university users called for more integrated, user-friendly, Web-enabled information systems.

On December 4, 2001, Patti Boulay, Associate VP for Information Systems and Services, was coordinating a meeting. She had an agenda as well as an opportunity to prove her expertise and professional proficiency. She was concerned about the big responsibility that was about to rest on her shoulders; she needed to call upon her leadership ability and all the knowledge she had acquired over the last 25 years in the areas of information technology design, implementation, and management. More importantly in her mind was the risk associated with the mission and the charges of the committee that she was chairing that day. If the committee succeeded, it would go down in the history of the university as a team that led the university to a new era. It had specific charges from the President, Reverend Fr. Clement Gordon, S. J. The task was challenging, and it had to be done. Fr. Gordon had been a faculty member since the mid-1980s and also the Vice President for University Relations before he assumed the presidency in January 2001. Fr. Gordon, a great visionary for the university, had recorded a number of successes since he became president. He believed that in order for Agora to reach the height he envisioned, it was paramount that the operation of the university run smoothly, consistent with the demands of the environment and the reality of the digital age. The university could not afford to be complacent and to not take advantage of the revolution occurring in information technology. He personally formed a committee and charged it with some specific responsibilities:

* Undertake a detailed review of the current status of Agora University's administrative systems with special attention devoted to the long-term viability of software and hardware platforms used.

* Solicit extensive input from both system owners and end users concerning functionality of current systems to meet business operations and reporting needs.

* Develop a list of features and functionality considered essential in current systems.

* Develop a gap analysis highlighting additional features and functionality desired.

* Identify business process changes/improvements necessary to effect the desired changes.

* Prioritize identified features and functionality.

* Evaluate available systems and ERP options in light of the results of the needs assessment.

* Forward a recommendation with project timeline and budget estimate to the President by April 2002 (Project Document, 2001).

In 2001, Agora had been using the Vendor B 2000 suite of systems from Vendor B Corporation for primarily administrative functions of the University. This suite of systems was supplemented by a number of satellite server-based systems for functions such as financial aid, classroom management, online instruction, housing management, and various Web applications developed in-house. Agora's server network was primarily a Novell infrastructure using NDS as the primary means of authentication. A number of customized modifications had been made to the Vendor B 2000 administrative systems over the past several years. A separate central identification system and an in-house written admissions system also interfaced to the Vendor B 2000 administrative system The most current suite of administrative systems ran on a VAX 7000 Model 74 with 4 CPUs, 1 GB Memory, 4 HSJ40 Controllers, 60 RZ29 4.3 GB disks, and 2 TZ87 DLT tape drives. A mixture of servers was currently in use for some of the satellite systems.

At this first meeting, Dr. Katrina Maakinen, VP for Information Resources, read the charges:

[T]he committee would evaluate our current administrative systems. If warranted, investigate replacement systems, and make recommendations to the President by April 2002 (before the board's meeting in May 2002). We need to look at the business processes and reporting and become more knowledgeable about how the systems interrelate across the institution. The committee will look at the long-term viability of software products. This needs to be a university decision and include input from the system owners as well as the end users. Find out what would people like to see in our current systems and review our business processes. Vice presidents need to prioritize their needs. We will evaluate systems that are available to Higher Ed. We will provide additional resources, if necessary, and have a workshop to help us with team dynamics to keep us moving forward with this project.

Despite the charges, the committee was very open in their approach from the beginning; they were not looking for one system, but they wanted to explore all options for improvement in efficiency and productivity. The chair of the committee suggested:

[W]e evaluate our systems and then evaluate what's next, we might decide to keep what we have and do nothing or we might decide to modify our current system or even replace our system.

The committee was named Administrative Systems/ERP Assessment and Recommendation Steering Committee, a.k.a. the ERP Steering Committee, with the following membership:

* The Associate Vice President for In formation Systems and Services (Chair)

* Director for Internal Operations for Development

* University Registrar

* Associate Academic Vice President for Enrollment Services

* Assistant Vice President for Student Development

* Budget Director

* Director of Application Development

* Director of Institutional Research

* VP for Information Resources

* Assistant Vice President of Human Resources

* Director for Web Communications

* Director of Finance

* Representatives of Faculty This was the beginning of the process that extended through the period of this case. The selection of the ERP system took a period of one year, and the implementation is still ongoing; it is still difficult to predict the true completion date. Before continuing with the details of the case, the theoretical background of ERP implementation will be presented. Although most of the findings are based on business organizations, the knowledge still guides the data collection process and the approach to the case preparation. Details of the selection process and the problems that relate to the actual implementations will be presented next. The success factors and the challenges during the implementation stages complete the case discussion.

THEORETICAL BACKGROUND

The name of this class of information system (IS) - enterprise resource planning systems - clearly explains the bias in the literature and practice toward business organizations. Enterprise resource planning (ERP) evolved from materials requirement planning (MRP) and manufacturing resource planning systems (MRPII) (AI-Mashari et al., 2003; Kumar at al., 2003). As the names indicated, these systems were used predominantly to support manufacturing operations in the 1960s and 1970s. Due to shortcomings of MRPII (Chung & Snyder, 1999) to cover all major organizational functions and also due to the increasing demand for additional features, ERP systems were developed during the 1980s and 1990s. This was made possible by the advancement in computing technology and the falling price of computer hardware. According to Yusuf and Little (1998), the key difference between MRPII and ERP systems is that ERP includes functionalities, such as financial accounting, sales and distribution, human resources planning, decision support applications, regulatory control, quality, elements of supply chain management, and maintenance support, which are beyond the traditional focus of MRPII (see Figure 2).

From Figure 2, it can be seen that ERP systems still focus primarily on business; in fact, the modules in many ERP systems are fashioned after the traditional business functions of sales and marketing, manufacturing, finance and accounting, human resources operations, and logistics (Umble et al., 2003). There is a general assumption that all organizations operate in similar ways and most likely have these functions. Although ERP systems are highly parameterized to cater to varying organizationally specific requirements, provisions originally were not made for the use of ERP in other types of organizations. However, at the turn of century, the need for efficiency and performance drove many higher education institutions to acquire ERP systems.

ERP systems also are referred to as Enterprise systems (Davenport, 1998, 2000) or Enterprise information systems, which are defined as the computer-based technologies that integrate data across an organization and impose standardized procedures on the input, use, and dissemination of that data. According to Nah and Lau (2001), ERP systems have the ability to automate and to integrate an organization's business processes, to share common data and practices across the entire enterprise, and to produce and access information in a real-time environment. Examples of companies' supplying ERP systems are SAPAG, Baan, ORACLE, SCT Banner, and PeopleSoft. An ERP system can be highly beneficial to organizations, if they are able to overcome the implementation hurdles. According to Holsapple and Sena (1999, 2003), ERP systems can speed decision making, reduce costs, and give managers control of organizational processes and operations.

The drivers for ERP implementation, irrespective of the type of organization, have been categorized into technological and operational factors (Al-Mashari et al., 2003). Technological factors include replacement of disparate systems, simplification of integration of processes and systems, simplification of integration of technology infrastructure, replacement of older, obsolete systems, and acquisition of support systems for organizational growth. Operational factors include process improvement, simplification of ineffective and complex processes, provision for new processes, and standardization of processes.

During the preliminary interview with the project manager, the drivers for Agora University's ERP implementation project included the need to replace an existing system as well as the integration into other existing applications. The ERP project manager was also of the opinion that the ERP system would enable the re-engineering of some processes and possibly provide the opportunity to see what improvements could be made in the existing processes.

The high rate of failure in implementing ERP systems and the general difficulties associated with ERP implementation has been well documented. This has led to the isolation of the most important factors that could enhance ERP implementation success. These factors are commonly called critical success factors (CSF) (Al-Mashari at al., 2003; Hong & Kim, 2002; Nah & Lau 2001; Umble et al., 2003). Various authors have presented lists of critical success factors (see Nah & Lau, 2001 for detailed review) but with not many differences. Among the main CSF in literature are ERP teamwork and composition, change management program and culture, top management support, business plan and vision, business process re-engineering (BPR), minimum customization, effective communication, project management, software development, testing and troubleshooting, monitoring and evaluation performance, project champion, appropriate business, and legacy systems (Nah & Lau 2001).

While CSF could enable success of a project, it does not guarantee success or provide a means for evaluation. Al-Mashari et al. (2003) proposed a means of assessing ERP project success. They argued that an ERP project can be considered successful (1) where there is a match between the ERP system and the stated objectives of implementation (correspondence success), (2) when the project is completed within time and budget (process success), (3) when users' attitudes toward ERP are positive (interaction success), and (4) where the ERP system matches users' expectations (expectation success).

On the other hand, an understanding of the reasons why many ERP implementation projects have failed could be a recipe for success in a new project. Umble et al. (2003) summarized reasons for project failure into 10 categories. They contend that ERP could fail when:

1. Strategic goals are not clearly defined.

2. Top management is not committed to the system.

3. Implementation project management is poor.

4. The organization is not committed to change.

5. A great implementation team is not selected.

6. Inadequate education and training results in users that are unable to satisfactorily run the system.

7. Data accuracy is not ensured.

8. Performance measures are not adapted to ensure that the organization changes.

9. Multi-site issues are not properly resolved.

10. There are technical difficulties.

The reasons for ERP implementation failure and the CSFs point to similar issues, which, if organizations consider carefully, could increase the chance of project success. These factors were drawn carefully from a detailed and rigorous analysis of cases of ERP implementation in many organizations. The only drawback of the list was the lack of evidence in the literature that shows that organizations that follow these suggested factors actually did well. Also, there is an intrinsic assumption about the nature of organizations and their primary interest in making profit. On this basis, the question is whether these critical success factors will hold for organizations that do not conform completely to these particular assumptions.

ERP Implementation Phases, Key Players, and Activities

ERP implementation phases have been categorized in a number of different ways in literature. In each phase, there are a number of players that are directly involved and whose activities are required for the success of the phase and the implementation in general (see Table 3).

For the success of ERP implementation, it has to involve many players with varying roles. The success of the ERP implementation project is hinged on communication and collaboration among the various players. The main players that have been identified in the literature include top management, the project champion, the steering committee, the implementation consultants, the project team, the vendor-customer partnership, the vendors' customization tools, and finally, vendor support (Somers & Nelson, 2003). Many activities also have been identified in ERP implementation. The key activities that are common include selection of the ERP product, the project manager, implementation partners, configuration of project team, development of detailed project plan, selection and assignment of project team members, ongoing project management, user training and education, infrastructure upgrade, software configuration, testing, rollout and startup, data analysis and conversion, business process re-engineering, change management, education on new processes, communication, and finally, problem resolution (Somers & Nelson, 2004; Kumar et al., 2003).

ERP IMPLEMENTATION AT AGORA UNIVERSITY

This case used the Markus and Tannis (2000) phases of implementation to present the case of ERP implementation at Agora University.

The Chartering Phase (December 2001-July 2003)

After the first ERP steering committee meeting, each representative of the functional areas was requested to analyze his or her current system and report suggestions. They were advised to consult with members of their unit and get the necessary inputs. They made the process as inclusive as possible; all interested parties within the university system were taken into consideration, and the process was set to be open and participatory. The committee needed input in order to develop a business case for the project and to provide justification to proceed with the project.

Patti suggested we evaluate our systems and then evaluate what s next, we need to decide to keep what we have and do nothing or modify our current systems or replace them. If we make a recommendation to replace the systems, the various departments will need to review available systems. The ultimate goal is to choose a system that is best for the university as a whole. Cost and implementation timeline must also be considered. The university will evaluate current systems in December and January. The committee will come up with specific questions to find out what we want to know about every system. We also will seek input from the deans to obtain their visions.

From the early days of the project, there had been discussion of communication with the university community and even the external stakeholders. They disseminated information through Web pages and communicated with stakeholders through the university newsletter. They also posted information on educational resources like EDUCAUSE (www.educause.edu).

The goals of the first phase also were set clearly; as mentioned earlier, the committee was resolved to find the most appropriate solution to support the vision of the university.

There are at least three outcomes from the initial phase of the committee s work: the committee can recommend (1) keep the existing systems and do nothing; (2) keep some existing systems, change some, and fix some; or (3) evaluate other ERP systems with the intention of replacing our existing systems.

However, it appeared that some committee members already knew the direction of the outcome. They had started making provisions for how to evaluate some systems and how to proceed.

If we recommend the third option, we could evaluate the systems available first based on cost, next on technology, and last on functionality. Since some of the vendors are already contacting us, we can get them to submit ballpark prices of their system for our size of institution. Vendors include Vendor A, Vendor B, Vendor C, Vendor D and Vendor E. We need to visit other schools that have these products in use. This information will be gathered and presented to the group at a later date.

As soon as the steering committee started its work, each committee member was directed to form subcommittees in their respective areas to evaluate Agora's current systems. The decision about the composition of this project team was left to the leaders. The subcommittee was formed around primary functional areas of Student Information, Human Resources, Alumni Development/University Relations, Financial Records and Admissions/Financial Aid/PREP, and other associated functional areas of Housing/Board/Campus Security/Event Scheduling, Focus/Library/Hospital Administration, and Infrastructure/Miscellaneous Administrative Systems.

During this early stage of the project, the steering committee established the support of the executive committee. At one of the committee meetings, this was reiterated. The support of senior management has been identified as an important factor for the success of any ERP implementation.

The question was raised whether this committee had the clout in getting other departments to be uniform in their system use. Patti stated Fr. Gordon [the President] formed the committee and thought we did have the necessary clout.

During the first year of the project, the steering committee and various subcommittees were meeting every week and sometimes more frequently whenever an issue needed to be discussed immediately. They paid careful attention to all details and did a lot of consultation within and outside the university.

By the end of December 2001, all the subcommittees had completed the assessment and evaluation of their current systems. They used this opportunity to document their processes and to reveal some inefficiencies in the process along with the problems associated with the current systems. At their December meeting, the steering committee decided unanimously to take the third option - evaluate other ERP systems with the intention of replacing the existing systems. A potential timeline was developed, and a list of vendors also was discussed. At this stage, they discussed more about the merits of keeping the existing systems, the viability of the hardware platform, and how the various areas would influence the ultimate decision.

The next tasks were discussed and a potential timeline developed. It was also agreed that we should bring in system vendors for presentations in an effort to expand our knowledge about the potential of the administrative systems. We should plan to do this before we put together our initial recommendation. The tasks and timelines would be as follows:

Evaluation Reports complete by 1/30/02

Reports Read by Each Committee Member 1/4/02 thru 2/15/02

Vendor Presentations 2/18/02 thru 3/22/02

The discussion continued on the preparation of the request for information (RFI) to be sent to the vendors by January 30, 2002. The committee wanted to give equal opportunity to all qualified vendors, especially when one of the vendors was the supplier of the current system. While the steering committee was working on the RFI, some vendors had already started prospecting and finding ways to know more about the plan of the university. One member of the steering committee expressed this problem.

Anthony asked how he should handle vendors who have contacted his office to meet and have lunch. Patti asked that we tell them there is a process for a RFI and they will be invited on campus to meet with the end users to demonstrate their software.

By February 2002, the RFI was ready and was sent to the five vendors. The steering committee already was discussing the hardware vendors. There was also more discussion on the process of the ERP system selection. There was a plan that all vendors should visit the university to make a presentation of their system in March or early April 2002. The vendors were asked to send an electronic copy of their responses to the RFI to enable easy sharing within the university community. The committee invited key people to attend specific presentations of the vendors. Evaluation forms to be used to assess each vendor's presentation were also designed. While the details of cost were not required at this stage, the vendors were required to supply a negotiable ballpark figure for the administrative systems. There was deliberation on the possibility of eliminating the vendors with an overly high bid; however, it was resolved that all the vendors should be allowed to make a presentation of their product. A copy of the RFI was sent to the President, and he sent a written appreciation for the good job of the committee and his understanding of the complexity of the work of the committee.

After the presentations and evaluations, Vendor D emerged as the clear winner, and Vendor C was completely eliminated. The decision was based not only on the evaluation but also on other factors like comments from other schools that had experience with the vendors and their performance in general. There was even a plan to make Vendor D the only choice. Many of the groups were not happy with Vendor B and those that supplied and maintained their current system. The committee decided to engage the service of GlobalCon Group during the second phase of the selection. Even with the decision to go with Vendor D, the committee was of the opinion that a consultant could help the university to choose the best system. They contacted Greg Koloki, Vice President - Education Sector, at GlobalCon Group. A copy of the RFI was sent to Koloki in preparation for a conference call with the committee. During a conference call, Koloki suggested that they should:

Apply six criteria to vendor selection: 15% technology, 20% vision of company and do they know the business, 25% ability to execute implementation, 15% functionality, 15% cost, 10-15% for service and support. We need a good relationship with the vendor we choose. The leaders in the quadrant are Vendor D 3, Vendor A 2, and Vendor B 1. Look at the vision and question strength and the monitoring of the case tools. This is important because we cannot afford to change often. It will take 15-20 years to switch the chosen product.

Koloki presented a thorough analysis of all the vendors based on his experience without making any final recommendation. The committee requested more time to present their report to the President, since the April date was not realistic in view of the complexity of choosing a vendor. Vendor D was expensive, and the possibility of Vendor D's product emerging as the best was already generating some concern for the Senior VP for Financial Services. He requested a five-year breakdown of cost, including maintenance and answers to the following questions:

What is the benefit for purchasing your system for double the cost? What is the return on investment? What is the marginal cost benefit? What is the easiest migration? What will be our best long-term value?

At the end of April 2002, this was the view of the committee on the vendors:

Vendor C did not have enough history, service, and support for student records. BSR was to be eliminated for Maria's area. Vendor E was in financial distress, and the existing system had problems with functionality and reporting. This leaves Vendor D, Vendor B, and Vendor A for us to consider. Vendor B is iffy because of their Jekyll/Hyde traits. This does not include housing, portal, and alumni. We need to give a best guess for the cost of ownership. We need to conduct visits and contact customers. We had a discussion on Vendor B, and now we are questioning their customer relations. It s about relationship. People feel good about the process of ERP and choosing a vendor for new software on campus. Vendor D is still the leader. We need to do a reality check. We have eliminated Vendor E and Vendor C, and the overwhelming favorite vendor is Vendor D because of their service, Web, and a good platform. The committee is feeling that Vendor B is somewhat lukewarm, and Vendor A seems inconsistent.

During the months of May and June 2002, using various parameters, Vendor D and Vendor B emerged as the finalists in the selection process. Vendor A was dropped for technical reasons.

It has been decided that Vendor A will be eliminated. Two reasons why Vendor A has been eliminated are that it does not work on Macs, and it works on a client server. Patti will notify Vendor A at a later date that they have been eliminated. We will go forward with Vendor D and Vendor B.

Yet, there were still mixed feelings about Vendor B, and the committee was still finding ways to justify the superiority of Vendor D. The committee members felt that they were being manipulated to select Vendor B simply because of the higher cost of Vendor D. Senior management was really concerned about the high cost of Vendor D, and they made their opinion clearly known to the committee.

We will put the burden on Vendor D to justify why their system cost is so much more than the other vendors. We will ask for five installations and make a case for our recommendation. Salodeck County has Vendor D across the board, and Francis will speak to someone there. The committee feels that Vendor D will get us further into the future. We need to develop a better sense of project management.

We need to work out a plan to investigate Vendor D and Vendor B. Most committee members feel we are being manipulated into selecting Vendor B. We need to give both vendors a chance.

After the two final vendors were selected, the GlobalCon Group was engaged, and the committee prepared a detailed Scripted Scenario to be used in the evaluation and final selection (see Appendix 1 for the sample Scripted Scenario). Vendor D and Vendor B were invited back to the university, and this round of evaluation was coordinated by the consultants from the GlobalCon Group. The committee was also under pressure to present their final selection to the President before the next Board of Trustees meeting in September 2002. At one of the meetings in the month of August and during the preparation for the final evaluation, many of the most senior university executives attended the steering committee meetings to clarify their concern.

The question had been asked why the urgency for the September Board of Trustee meeting. Patti responded that she needed all this information for the Board of Trustees since we would be investing several million dollars in a new administrative system.

Discussion followed on the perception of Vendor D as being of high quality in service, marketing, and sales. Vendor B was thought to not be as good with their reputation for service. Nathan stressed that we work with as many people as we need when we choose a vendor. We can decide post-implementation service and then weight that element higher. The GlobalCon Research will provide information from the industry perspective and find out the total cost of ownership from the vendor in relation to maintenance fees and the cost break down on licensing, hardware, and software. The question was asked whether there would be a need to hire additional staff. Nathan replied we would probably need to hire extra staff for backfilling people that will be working on the implementation. We will also need to add the cost of upgrade for whichever vendor we choose. Traditionally, maintenance is cut off at a certain point, maybe 24 months, and then there will be upgrade costs to move to the next level. This is an additional service cost. We need to understand the total cost of ownership for five years. There is more to the initial snapshot of the vendors. We need to calculate the benefits that may be realized in two, three, or four years after implementation.

In early September 2002, Vendor B was selected after the final evaluation and scoring (see Appendix 2 for the final criteria). All other costs were considered, and the final evaluation was submitted to the President for his presentation to the Board of Trustees. With this selection, the steering committee was able to focus on some related issues. They discussed the selection of a reporting tool and hardware. They choose a name for the project through an open contest within the university. Also, it was estimated that the project duration would be two and a half to three years. The contract would be signed by the end of the year. However, as of December 2002, the contract was yet to be signed due to some issues that needed to be resolved before the committee could agree to sign a 10-year maintenance contract.

The Project Phase (January 2003- )

In the first quarter of 2003, the project was formally named Project IRAWO, and a substantive project manager (Francis Livingstone) was appointed. This project leader was a member of the steering committee. The ERP steering committee was renamed, and the activities of the committee were redefined. The frequency of meetings was reduced to bi-monthly compared to the weekly schedule during the selection phase. A hardware vendor was selected, and the VP for Information Resources, who had been the executive sponsor, stepped down to join the faculty.

Once the vendor had been identified and the contract for the project was signed, the project manager, in consultation with the vendor's consultant, began working on the project definition document. By mid-February 2003, the final version of the project document was agreed upon, and it was approved by the Administrative Information Technology Committee (AlTC). This particular document defined the project and would serve as the framework for the implementation process (IRAWO Project Definition Documents, 2003).

Project Definition

The document restated the objectives of the project: (1) enhanced data integrity, consistency of results, and faith in the quality of data; (2) accurate, detailed, and speedy access for students and faculty to whatever information they need; (3) Reduction in the use of paper forms and manual data entry and re-entry; (4) reduction in staff time spent handling routine inquiries; and (5) reduction in the reliance of functional staff upon technical staff for administrative information needs. The scope of the project also was defined to cover the major administrative systems-Student, Financial Aid, Finance, Human Resources, Alumni/Development, and other satellite applications, especially the campus Web portal. Also, this project would implement the Vendor B software following Vendor B's methodology for replacing the Vendor B Plus suite currently in use at Agora.

There was a preliminary plan that the Alumni/Development system would be the first major administrative system to go live in February 2004, followed by Finance, Student Admissions, Human Resources, Financial Aid, Student Registrations, and finishing up with Student Billing in April 2005 (see Table 4 for detailed milestones).

The project definition document discussed the scope of the project; the milestones; assumptions; and other dependent projects, products, and resources. It also covered the issues of budget and how to track expenditures. The issue of risk and constraints and the associated risk of the project were comprehensively highlighted. The document laid out the approaches to change management, documentation, communication, measurement, and training. A significant focus of this document was the listing of the criteria to measure project success.

Success Criteria

* All issues and action items completed and signed off

* All required work products produced and signed off

* All variances logged and signed off

* Verification that the project met project and institution standards

* Validation that the project met the requirements

* Successfully completed functional and physical configuration audits

* A project termination statement existed

The issue of measuring success is an area that is usually fuzzy and difficult to determine in many IS projects; however, this fact was duly considered and discussed from the onset.

Project Execution

While the project definition discussed the plan to follow with the project, the reality quite often was different. The AITC made all efforts to ensure the success of the project. So far, they had achieved success in selection of the product through a process they considered rigorous, fair, and transparent. The main challenge was for the product selected to fulfill the promise. The burden of responsibility had shifted from the Associate VP of ISS to the project manager, although the AITC still was collectively responsible for the project.

To encourage the active participation of the core implementation teams, some reward and recognition programs were initiated. There was a plan to recognize members of the team as the Star of the Month. A specific amount was budgeted as incentives for people that exhibited extraordinary dedication to the project. Extra funds also were made available to hire extra staff to help with the expected additional tasks that the ERP system implementation would create.

We had a discussion on how the Star of the Month would be selected. It was decided that someone on the AITC committee would nominate the Star of the Month and that person would receive a gift certificate. We discussed passing out lapel pins for small recognitions. ... We need to celebrate small victories. Overtime and bonus dollars need to be built into the cost and into the project budget. We should have a contingency fund for bonuses and incentives. ... It is critical to commit to dates and report back to the committee to stay on track. Every "go live" will be celebrated! We need to have a kickoff party.

Some groups also expressed concern about the effect of the changes that the ERP implementation might bring; the committee was quite aware of such issues, and their strategies on communication become handy. They were able to talk to all groups and alleviate the concerns.

There was discussion on the letter received by Patti from the Campus Justice Committee. Judy Manny gave information on the Campus Committee and said we do not need to respond to the memo; we just need to be aware of issues on Justice.

There was also a comprehensive training schedule designed by the Vendor's consultant in consultation with the team lead. The training schedule was designed with consideration to the implementation schedule. Adequate provisions were made to train as many users as possible. Some users were designated as Superusers, who received comprehensive training with the plan that they, in turn, would train others in their unit. There also was a comprehensive technical education plan to train core ISS staff on the technology underlining the product.

To address the communication issue, a special task force was formed, and several programs were implemented. The level of importance attached to communication was reflected in the kind of support given to the task force. The committee approved an initial budget of $10,000 to support various promotional activities. The aim was to ensure that people were aware of the imminent changes and that all stakeholders were duly informed.

Stella brought up the need for better communication with the campus community on the IRAWO project. We might need information sessions on the changes people will experience. Stella asked for $??? and gave a breakdown on the cost associated with the promotion of the portal. ... The committee voted and agreed we should go forth with the promo for Vendor B Systems.

During all these periods, the committee continued to meet regularly to discuss the progress of the implementation. As the go-live date of the first module approached, it became clear that the data conversion and some other issues that related to the integration and common files were yet to be resolved. The go-live dates of the Advancement and Finance modules that were scheduled for February 2004 were shifted to June. This did not cause any major problem, since such situations had been expected and a solution was provided in the project definition document. Following the guidelines, they postponed the implementation, since it would grossly disrupt the functioning of the affected unit.

Finally, on a sunny summer day, Tuesday, June 1, 2004, after many trial runs and testing, the Advancement module and the Finance module of the new administrative system for Agora University "went live" without any major event. As planned, it was done with lots of fanfare.

Advancement went live on June 1 and everything seems to be going well. Patti asked how we support people when they are on the road and need to access the Web for work. At the next project lead meeting, there needs to be a discussion on addresses. Financials went live June 1, and everything is going well with purchase orders, checks, etc. The Vendor B consultant was on hand in the event assistance was needed. Tom is going to recommend Peter King for Star of the Month for June.

CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION

Problems

Portal vs. ERP Systems

Four months after the go-live date of the two modules (Advancement and Financial), users of the new system were facing the reality of the implementation. The major problem did not deal directly with the product selected but rather surrounded user expectations. The main problem and concerns from the majority of the users had to do with the functioning of a satellite system the Web Portal. The portal system was purchased to present a single and common point of contact to the administrative system and other systems within the university. It included an e-mail system with a calendaring functionality and other features. Many users complained about major features of the Portal system, and many users wished to have choices.

The portal postponed the "go-live" date because the e-mail system was deemed not robust enough for some faculty and staff. ... Vendor B said a more robust version of e-mail would be available in June for the August/September go-live date. The portal demos would continue, beginning May 16 through June/July 2004 for employees.

The Portal system directly affected all users within the university and mobile users. Only a handful of the university community was affected directly by the two modules of the ERP system that had been implemented. However, since the portal system implementation was combined with the ERP system implementation, many users were attributing the problem to the ERP system implementation.

Training and Network Problems

There were no major problems reported with the progress of the implementation of the first two modules. This was not because the users were not facing major problems, but the involvement of the users and the well established communication strategy from the project planning stage was working as planned. The users did complain about a lack of adequate training and accused the training consultant of not paying careful attention to their needs. Also, what the committee considered to be an excellent and modern feature in the new system turned out to be a major source of concern. The system was Web-based, and thus, any problem with the network immediately affected the functioning of the system. Not many users were able to separate the problem of the network from the ERP system. They could be disconnected in the middle of data entry, and the new system was freezing due to network errors. In the Advancement module, the Gift officers, who were always on the move and needed to access the system via the Internet, expressed more frustration. They were hopeful that things would get better in the future.

Unexpected Changes and Increased Workload

The users were daunted by the amount of changes involved and the unexpected rise in the workload. Despite the unflinching willingness of users to make the systems implementation a success, they could not endure the frustration of the significant changes in the new systems. They were satisfied with how they did things in the old system, which many considered to be a better system. The number of data input screens for a particular process had increased, in many situations by more than 500%. This was due primarily to the fact that data conversion, data entry, and data cleaning were still in progress. The users acknowledged that they had some problems with the old system, but they were familiar with it; all their aspirations and hopes that the new system would bring relief to their frustrations and eliminate the limitations of the old system had not yet been met. The users expected some changes and the need to compromise, but they complained about the fact that no one told them how extensive the learning curve would be.

Challenges

The project has been running without budget overrun. Apart from a few changes in the timeline, the project is going according to schedule. However, measuring the project success remains a challenge. The project teams are finding ways to ensure that the project progresses as scheduled, that the users' expectations are met, and that all the main problems associated with implementation are addressed.

The Report Generation System is still a challenge. The system cannot be used to support decision making and planning without effective reporting systems. There is pressure on the committee to fix the problems with the portal system in order to control proliferation of multiple email systems, which emanates because of problems with the portal.

Some users also have begun to complain about the choice of the product; they heard through the grapevine that financial consideration was part of the major decision that forced the committee to select Vendor B over a more preferred product. The university, through the AITC, will need to convince the users about their choice and, more importantly, prove that the product will deliver on its promises.

During a workshop organized about 10 months after the first two modules went live, there were discussions about the problems and the challenges highlighted earlier and the lessons learned during the pre-implementation and implementation phases of the project.

Subject: Enterprise resource planning; Higher education; Information systems; Selection; Business process reengineering; Technological planning; Case studies; College administration

Location: United States--US

Company / organization: Name: AGORA University of Oradea; NAICS: 611310

Classification: 8306: Schools and educational services; 5200: Communications & information management; 9110: Company specific; 9190: United States

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 2

Pages: 110-132

Number of pages: 23

Publication year: 2006

Publication date: Apr-Jun 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Tables References Charts

ProQuest document ID: 198718794

Document URL: http://search.proquest.com/docview/198718794?accountid=38610

Copyright: Copyright Idea Group Inc. Apr-Jun 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 23 of 100

Evaluating Benefits of e-Procurement in a B2B Marketplace: A case study of Quadrem

Author: Ash, Colin G; Burn, Janice M

ProQuest document link

Abstract:

This paper reports on an investigation into the benefits from eProcurement implementations within a public eMarketplace for the mining trading community. Data was collected from nine established trading companies in this eMarketplace with respect to the perceived benefits from their market interactions. The findings are analysed according to the level of eProcurement sophistication between buyers and suppliers provided by the eMarketplace. The results indicate that the more active the buyer-supplier trading relationships become the greater level of benefits realised. A conceptual framework is used to identify how strategic e-procurement systems can be developed to ensure two-sided value propositions for buyers and sellers in the martketplace and sustained innovation and financial returns. [PUBLICATION ABSTRACT]

Full text: Not available.

Subject: Coal mining; Electronic procurement; Export trading companies; Business to business commerce; Advantages

Location: Australia

Company / organization: Name: Quadrem; NAICS: 212111

Classification: 1300: International trade & foreign investment; 5250: Telecommunications systems & Internet communications; 5120: Purchasing; 9179: Asia & the Pacific; 8500: Extractive industries

Publication title: Journal of Information Technology Case and Application Research

Volume: 8

Issue: 2

Pages: 5-23

Number of pages: 19

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Ivy League Publishing

Place of publication: Marietta

Country of publication: United States

Publication subject: Computers--Data Base Management, Computers

Source type: Scholarly Journals

Language of publication: English

Document type: Feature, Business Case

Document feature: Tables References Diagrams

ProQuest document ID: 214896196

Document URL: http://search.proquest.com/docview/214896196?accountid=38610

Copyright: Copyright Ivy League Publishing 2006

Last updated: 2011-08-30

Database: ABI/INFORM Complete

Document 24 of 100

THE CHICAGO MERCANTILE EXCHANGE: REDEFINING CORPORATE GOVERNANCE

Author: Alexander, Christopher S

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Abstract:

Corporate governance represents the relationship among stakeholders that is used to determine and control the strategic direction and performance of organizations. (Lynall, et. al., 2003; Hillman, et. al., 2001).

The board of directors is a group of elected individuals whose primary responsibility is to act in the owners' interests by formally monitoring and controlling the corporation's top-level executives (Fama & Tensen. 1983). As a result, if the board of directors is appropriately structured and operates in an effective manner, it can protect owners from managerial opportunism-the tendency to put a manager's interests above the interests of the firm (Baysinger & Hoskisson, 1990).

The composition of boards differs; however, most experts agree that a board should consist of the following members; insiders, related outsiders and outsiders (Zajac & Westphal, 1996). Insiders are represented by the firm's CEO and other top-level managers. Related outsiders are individuals who are not involved in the firm's day-to-day operations, but may have a relationship with the company. Examples might include the firm's legal counsel, a large customer or supplier, or a close relative of one of the firm's top-level managers. Outsiders are individuals who are independent of the firm. They are neither involved in the firm's day-to-day operations, nor do they have other relationships with the firm.

Because the primary role of the board of directors is to monitor and ratify major managerial actions to protect the interests of owners, there is a call by advocates of board reform that outsiders should represent a significant majority of a board's membership.

The drawbacks of outside boards: because outside directors do not have day-to-day contact with the ongoing operations of the firm, they must obtain detailed, in-depth information about the quality of management decisions. Generally this information is obtained through frequent interactions, often developed over time, with inside directors (generally, at board meetings). In the absence of rich information, boards may be forced to emphasize financial rather than strategic controls. Potentially, This means that outsider-dominated boards-because they lack sufficient information-will evaluate managers, not on the basis of the appropriateness of their actions (which the board ratified) but based on the financial outcomes of those actions (Tosi, et. al., 2003).

Full text:

THE THEORY

Corporate governance represents the relationship among stakeholders that is used to determine and control the strategic direction and performance of organizations. (Lynall, et. al., 2003; Hillman, et. al., 2001).

The board of directors is a group of elected individuals whose primary responsibility is to act in the owners' interests by formally monitoring and controlling the corporation's top-level executives (Fama & Tensen. 1983). As a result, if the board of directors is appropriately structured and operates in an effective manner, it can protect owners from managerial opportunism-the tendency to put a manager's interests above the interests of the firm (Baysinger & Hoskisson, 1990).

The composition of boards differs; however, most experts agree that a board should consist of the following members; insiders, related outsiders and outsiders (Zajac & Westphal, 1996). Insiders are represented by the firm's CEO and other top-level managers. Related outsiders are individuals who are not involved in the firm's day-to-day operations, but may have a relationship with the company. Examples might include the firm's legal counsel, a large customer or supplier, or a close relative of one of the firm's top-level managers. Outsiders are individuals who are independent of the firm. They are neither involved in the firm's day-to-day operations, nor do they have other relationships with the firm.

Because the primary role of the board of directors is to monitor and ratify major managerial actions to protect the interests of owners, there is a call by advocates of board reform that outsiders should represent a significant majority of a board's membership.

The drawbacks of outside boards: because outside directors do not have day-to-day contact with the ongoing operations of the firm, they must obtain detailed, in-depth information about the quality of management decisions. Generally this information is obtained through frequent interactions, often developed over time, with inside directors (generally, at board meetings). In the absence of rich information, boards may be forced to emphasize financial rather than strategic controls. Potentially, This means that outsider-dominated boards-because they lack sufficient information-will evaluate managers, not on the basis of the appropriateness of their actions (which the board ratified) but based on the financial outcomes of those actions (Tosi, et. al., 2003).

Because of the board's importance, the performance of individual board members as well as that of entire boards is being evaluated more formally and intensely. As a result, many boards have voluntarily initiated changes, including:

- increasing the diversity of board members' backgrounds

- strengthening internal management and accounting control systems

- establishing and consistently using formal processes to evaluate the board's performance (Marshall, 2001).

The findings from research regarding the effectiveness of board involvement in the strategic decision-making process are mixed, indicating the following:

- Board involvement in the strategic decision-making process may improve firm performance because it provides the firm's managers with access to outside opinions, and outside directors should be more objective and more interested in protecting shareholders' interests.

- Boards are more likely to be involved in strategic decisions when the firm is smaller and less diversified, since information regarding strategic actions is more readily available and both the scope and size of the firm are manageable.

- Boards are less active in large, diversified firms.

- The board's access to sufficiently rich information on appropriateness of strategic actions in large diversified firms is limited.

- Board assessments may be limited to evaluating financial outcomes (rather than appropriateness of action).

Research shows that boards working collaboratively with management:

- make higher quality strategic decisions

- make decisions faster (Simmers, 2000).

- become more involved in the strategic decision-making process.

Recent research suggests that inside director performance increases if they hold an equity position.

THE SITUATION

As quoted in Business Week, Gregory P. Taxin, chief executive officer of institutional adviser Glass, Lewis & Co. states that "Public companies must have a preponderance of directors whose interests are only in serving the public shareholders" When most directors have "potentially other interests at heart, the public shareholders con no longer rely on that board" (Weber, 85). Most academicians and practitioners would agree. This is not the case at the Chicago Mercantile Exchange (The "Merc"). The Merc is a giant market for futures contracts. For most of its 107-year history, the Merc was a club run by and for its members. When the Merc went public, members still wanted to run the show. As electronic trading loomed, many also wanted the floor to survive, and, in spite of this, the member-friendly board has obliged, allowing 70% of the Merc's trading to become electronic. While the Merc is thriving, it is debatable whether the floor could survive without such backing. Because of, or in spite of this, the Merc has developed a corporate governance policy that is exceptionally flexible. Their CEO, auditors, exchange consultants are not independent. However, traders on the floor, executives at firms that have done business there for twenty-five years, and most importantly, a past chairman who draws $200,000 a year, plus fees, as a special board adviser can be independent. The mindset at the Merc is that there is no "special relationship" in this case.

In order to comply with NYSE listing standards, the Merc's Board must have a majority of independent directors. But most of the directors-those in office when the Merc went public and ten elected since, are not, according to anyone's standards, truly independent. Of the twenty directors, thirteen earn their livings from the exchange as employees, paid advisors, or executives of member firms. Only seven are outsiders, including a former member and another whose firm is a big client of Merc futures. Merc Chief Executive Officer Craig S. Donohue argues, "The industry knowledge on our Board has helped guide us and insured harmony, trust, and confidence as we've gone through dramatic changes." (Weber, 85).

Due to its interpretation of "independence," the Merc meets the NYSE's listing standards. The Merc's regulator, the Commodity Futures Trading Commission (CFTC), is working on board composition guidelines. The SEC doesn't oversee the Merc, and a proposed rule requiring board independence does not affect futures markets.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 1-3

Number of pages: 3

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412110

Document URL: http://search.proquest.com/docview/192412110?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 25 of 100

LEADERSHIP IN COMPENSATION PLANNING

Author: Berardino, Lisa; Welker, Jan; Little, Beverly

ProQuest document link

Abstract:

The director of physical therapy at St. Lucas hospital was reviewing his notes for an important meeting with his department. Barry Barnes had called a meeting of all 20 physical therapists (PTs) and the topic was one of interest to all of them - revising their compensation plan. He had attempted to manage the grapevine by saying that he wanted to explain to everyone all at the same time to avoid confusion.

Prior to the meeting, the director reflected on his decision to make changes to the compensation system. Specifically, he was seeking the development of a new process to assess performance for the purpose of allocating raises. Leading employees to change the compensation system was challenging, but doing nothing would probably result in high turnover. Pay compression (the high starting salary of new hires compared to the salaries of incumbents) and current shortages of PTs created a situation in which the best PT could leave the organization and get higher pay at the next organization.

The PTs were all on time for the meeting. The director explained the agenda of the meeting. "I've called this meeting for the purpose of seeking your input and participation in a process of reviewing our compensation plan. First, I'll present where we are now. Second, I'll update you on budget realities at this hospital and the cooperation I have from administration. Then I'll present my proposal for updating the compensation plan for physical therapists. Are there any questions at this time?"

Full text:

INTRODUCTION

The director of physical therapy at St. Lucas hospital was reviewing his notes for an important meeting with his department. Barry Barnes had called a meeting of all 20 physical therapists (PTs) and the topic was one of interest to all of them - revising their compensation plan. He had attempted to manage the grapevine by saying that he wanted to explain to everyone all at the same time to avoid confusion.

Prior to the meeting, the director reflected on his decision to make changes to the compensation system. Specifically, he was seeking the development of a new process to assess performance for the purpose of allocating raises. Leading employees to change the compensation system was challenging, but doing nothing would probably result in high turnover. Pay compression (the high starting salary of new hires compared to the salaries of incumbents) and current shortages of PTs created a situation in which the best PT could leave the organization and get higher pay at the next organization.

The PTs were all on time for the meeting. The director explained the agenda of the meeting. "I've called this meeting for the purpose of seeking your input and participation in a process of reviewing our compensation plan. First, I'll present where we are now. Second, I'll update you on budget realities at this hospital and the cooperation I have from administration. Then I'll present my proposal for updating the compensation plan for physical therapists. Are there any questions at this time?"

"How much of a raise do we get?" joked one physical therapist.

The director took the question seriously, "How much of a raise are you getting? That is a good question. Let me address that up front. I've met with hospital administration. Due to budget constraints, we are under a pay raise freeze for one year. That is the bad news. The good news is that after one year, a budget for pay raises for physical therapists has been approved. Part of what I'm proposing here is to spend this next upcoming year, while we are under a pay raise freeze, to create and gain approval for a revised compensation plan. My idea is that we can implement a new compensation starting in the next budget year." (The director did not mention that the merit raise pool was estimated to be 3% per physical technician.)

At this point, the questions started flying "Are some people not going to get raises?" How much of a pay raise pool becomes available in a year?" "Who determines who gets what?"

Barry tried to reassure and settle the meeting. "Let me tell you what I am proposing. I've been working on updates to our compensation plan. I'm here today to get your input and your help in finalizing a proposal which will be approved."

JOB ANALYSIS AS A STARTING POINT

"I started by asking the following questions: What are the differences in work behaviors between a good physical therapist and an excellent physical therapist? What are the things that PTs do that should be considered when assigning raises? I answered by listing things such as community service, hospital service, leadership efforts, additional education."

A few people brightened up at this point. "Oh yes, I sit on the hospital safety committee, would that count?" "Six of us are working to complete our terminal degree online." One woman complained, hearing all these extra effort activities, "I have a new baby at home, I don't have the time for extra committee work or an online degree program."

EMPLOYEES DEFINE AND MEASURE EXCELLENT PERFORMANCE

Barry then clearly stated the purpose of this meeting. "I am asking for a group of you to meet and work on a final plan about how we can make decisions for allocating pay raises. First, we'll need to look at the current job description on file for the physical therapist position. Our main task is to clearly define excellent performance by a physical therapist. Who would like to continue to meet for the purpose of creating a performance scoring plan which can be used to assign pay raises?" All of the physical therapists raised their hands.

CASE QUESTIONS

1. What are some of the advantages and disadvantages to employee involvement in the compensation process?

2. What information does this group need?

3. Use library and online sources to get information about the job description for physical therapists. What are some average salaries for physical therapists?

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 5-6

Number of pages: 2

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412113

Document URL: http://search.proquest.com/docview/192412113?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 26 of 100

RANDY DANDY'S CAREER SWITCH

Author: Brown, Steve; Brewer, Peggy; Gakpo, Seth; Gober, Wayne

ProQuest document link

Abstract:

Randolph Dandy was sitting at his kitchen table wondering whether he made the right decision. It had been a month since he had quit his job and had gone into business as an independent contractor in the construction industry. For the past 22 years he had been working in manufacturing. The first 12 years were spent as a supervisor at the Nissan plant in Smyrna, Tennessee, and the last 10 years were spent as plant manger for the Tennsmith Company.

Tennsmith is a family owned business that manufactures metal fabricating machines. The company contracted with an executive recruitment firm to find a new plant manager after the previous manager quit and opened up a similar company just a few miles from the Tennsmith facility. Randy was hired based upon his training, experience and recommendations gained while at Nissan. This time Tennsmith included a non-compete clause in the employment contract.

During the interview process, Randy discovered the owner was virtually retired, but the owner's sons worked in the business. Randy thought it was strange to hire a plant manager rather moving one of the sons into this position. It did not take long to discover why. The owner's lack of confidence in his sons was readily apparent. From Randy' s very first day on the job the family bickered among themselves and had difficulty reaching decisions. The father was constantly second guessing his sons.

Full text:

RANDY'S CAREER SWITCH

Randolph Dandy was sitting at his kitchen table wondering whether he made the right decision. It had been a month since he had quit his job and had gone into business as an independent contractor in the construction industry. For the past 22 years he had been working in manufacturing. The first 12 years were spent as a supervisor at the Nissan plant in Smyrna, Tennessee, and the last 10 years were spent as plant manger for the Tennsmith Company.

Tennsmith is a family owned business that manufactures metal fabricating machines. The company contracted with an executive recruitment firm to find a new plant manager after the previous manager quit and opened up a similar company just a few miles from the Tennsmith facility. Randy was hired based upon his training, experience and recommendations gained while at Nissan. This time Tennsmith included a non-compete clause in the employment contract.

During the interview process, Randy discovered the owner was virtually retired, but the owner's sons worked in the business. Randy thought it was strange to hire a plant manager rather moving one of the sons into this position. It did not take long to discover why. The owner's lack of confidence in his sons was readily apparent. From Randy' s very first day on the job the family bickered among themselves and had difficulty reaching decisions. The father was constantly second guessing his sons.

The family squabbling spilled into the factory making the work environment difficult for all of the employees including Randy. The sons constantly second guessed Randy's decisions and rescinded them without his knowledge. When disagreeing with Randy, the sons would swear at him in front of employees. The family fired people without due cause and without consulting Randy. The company was known for paying its employee's minimum wages and had just elected to drop everyone' s health insurance in order to save money. As a result, the company had a high turnover rate, and it was getting worse.

The environment was beginning to affect Randy' s health. The plant was over an hour drive from his home in Murfreesboro. It was common for him to work 60 hours a week and as many as 80 hours when they were testing prototypes or introducing a new product. In addition, he did not have a retirement plan. He had been interviewing for other plant manger jobs in the middle Tennessee area and had been considering branching out on his own.

Randy's father-in-law, Harold Butts, was aware of Randy's work situation and his desire to change jobs. Harold was getting close to retirement and was looking for something to do after he retired. He had started several businesses in the middle Tennessee area and had been investigating the possibility of buying a business that he could run while holding his current position. He had been working with several Nashville business brokers in order to find something that might be viable. Over the years he had looked at Early's Honey Stand, a mail order specialty food company and Berkshire Sandwiches, a company that made and delivered sandwiches to C-stores. He looked at several other small businesses, but was especially interested in Early's and Berkshire because of his background in the food industry.

Both of these companies would need an on-site manager. Harold contacted his daughter, Rosemary, about the possibility of quitting her job and taking over the operations of these companies. He thought of her because she was always calling him to get advice about opportunities to go into business for herself. She was currently operations manager for a Nashville insurance company and had over 20 years of business experience. She told her dad that she would need a minimum salary of $60,000 and health insurance because she would have to give up a good job to work for him.

Rather than having Rosemary give up a job she liked, Randy and Harold began talking about either starting or buying a small business that they could grow over time. This would allow Randy to quit his job when the business was large enough to financial support him on a full time basis, reducing the monetary risk associated with a start up company. Randy met with his attorney to see how solid his non-compete contract actually was and was informed it would be very easy to break.

Randy was sure he could cherry pick Tennsmith's current employees if he started his own equipment fabricating business. He had 22 years of experience and contacts in the industry. Tennsmith had a constant demand for some of its older non-patented products it had quit making, and Randy felt he could start a competing business like the previous manager. After giving this serious consideration, he felt the risks, including a possible lawsuit and increasing competition from mainland China, were too great.

USING A BUSINESS BROKER

Harold and Randy kicked around a lot of other possible opportunities. Most of them were related to the fabrication industry, but none of them seemed a good fit for both of them. Harold remembered the early experience he had with Sunbelt Business Brokers.

Sunbelt was one of the business brokers Harold had been using to find companies he might be interested in purchasing. All of the companies he was shown looked like good possibilities and felt Sunbelt saved him a lot of time and due-diligence through its prescreening process. He was especially impressed with Sunbelt when they backed off of Early's and dropped them as a client because they could not get a clean set of financial statements, and he decided to set up a joint meeting with them.

During the initial meeting, Randy and Harold outlined criteria they felt would help find and screen a business that would fit their needs. They were only willing to look at manufacturing firms that fit Randy's fabrication experience, had well a established customer base, could be managed in absentia, that were scalable, were being sold for a good reason, and were within their financial means. Only one firm seemed to fit their requirements. It was a small plastic injection molding company located in Crossville, Tennessee that could be relocated to middle Tennessee. Although it was not a fabrication company, it met the other criteria. The manufacturing process was very simple, and Randy was sure that he could use his experience to grow the company.

Two weeks later the agent called Harold when he was on his way to a meeting in Memphis and explained that the owner had a letter of intent to buy the company from another party, but he had for it three months and intended to have it voided if he had not completed the sale within two weeks. Harold found out later the reasons Sunbelt did not know about the letter of intent was because they had let the contract lapse. After three weeks, Harold contacted Sunbelt and was told that the letter of intent had been voided and that Sunbelt had re-signed the firm for sale. Harold noted that immediately after the phone call, the company had been removed from the available properties for sale and now had reappeared on the Sunbelt web site.

Sunbelt provided a set of their standard financial reports on the firm's financials for the past four years to Harold and set up an on-site meeting with the firm's owner. Randy and Harold asked to have separate visits to the firm because of scheduling difficulties. The agent originally agreed to this and later insisted that they would have to have a joint meeting between Randy, Harold, the owner, and himself. This made scheduling a suitable meeting time difficult because all four individuals had busy schedules. This was particularly difficult for Randy because he was needed at Tennsmith. The agent said that if he was really serious, he needed to get with the program and make time to meet with owner.

The need for a joint meeting did not make a lot of sense to Randy and Harold, but they agreed to it. When a suitable time was found and the meeting took place, Randy and Harold felt the business was just what they were looking for. The agent was silent during the entire meeting and told them when they were getting ready to leave the next step was to make an offer. They were interested in making an offer, but needed further information on the customer base and some discrepancies in the financials cleared up. Harold asked to have a second meeting set up between himself, the owner and his accountant.

A month later, after many repeated phone calls and emails trying to get the financial and marketing questions cleared up with no response from the Sunbelt agent, Harold felt he was being given a runaround and called the owner out of frustration. The owner explained the company was already sold although Sunbelt still had it listed on their Web site. He further complained about his dealings with Sunbelt complaining that they had mislead him tying up his efforts to sell his company for over a year. He told Harold that he had not released the buyers from their letter of intent and that he had not renewed his contact with Sunbelt. He had only given the Sunbelt agent permission for a one time showing to Harold and Randy. Harold called and e-mailed Sunbelt to find out if these were true facts. Sunbelt never responded.

FLIPPING HOUSES

While Harold and Randy were trying to find a business in which to invest, Randy formed a partnership, A-Plus Construction, with a Murfreesboro building contractor and started building a spec house. Randy already had some experience in private contracting. Three years earlier, he had purchased a farm near Watertown in Wilson County close to the Tennsmith Company as an investment opportunity. In order to make payments, he built decks whenever he could squeeze in the time. The extra payments for the farm were creating a lot of financial strain, and Randy ended up listing it with a Realtor.

The situation at Tennsmith deteriorated to the point Randy was never sure from one day to the next whether he would have a job when he came to work. The day after he sold the farm, he paid off most of his debt, cleaned out his office and left Tennsmith. ?-plus had lined up more work than it could handle, and Rosemary's job provided insurance for the entire family. Most of the work was for small jobs, but Randy used his contacts to line-up a long-term maintenance contract with Swafford Properties, one of the largest builders and property owners in Rutherford County. A month after quitting, Randy sold his spec house at sizable profit.

Harold was making an addition to his home in Sumner County and contracted with A-plus to build it. While constructing it, Randy approached Harold with a proposition to help finance some more spec homes because building several at the same time would be more profitable. Harold spoke with several contractors in the area that were subdividing small parcels of land and were building starter homes ranging from 1,000 to 1,300 square feet. The builders said these were being sold before they were finished. After explaining to the contractors what he and Randy wanted to do, one of them recommended approaching Dan Middget, a Realtor in Wilson County, for help in finding land that could be subdivided. Wilson County sits between Rutherford County and Sumner County where Randy and Harold live.

During the first meeting with Dan to discuss possible property that could be subdivided, the Realtor asked Harold if he would consider being a property wholesaler. Dan already had a network in place to find under-valued older homes in Wilson and Sumner Counties and was interested in expanding his network into Rutherford County where Randy lived. Fannie Mae was now prohibiting realtors from flipping house within a years time and other mortgage companies were taking a dim view of this practice. However, nothing prevented private contractors or individuals from doing this.

He suggested that he, Harold and Randy form an alliance where he would find the properties, Harold would buy them and Randy would renovate them. Dan had in mind making a commission on both the front and back ends of the deal. Harold spoke with his bankers, and they suggested that he could float a short-term loan to purchase the property or take out a line of credit. The short-term loan would require a down payment of 20 percent; however, the line of credit would not require any down payment.

Within two weeks, Dan called Harold and asked him to look at a house that could be bought under market value and resold with minor repairs. Harold inspected the house, but Randy could not make it because he had an emergency job that he had to finish for the Swanson Company. Dan pressured Harold to make an offer on the house, but Harold was unwilling to make an offer until Randy had a chance to inspect it to see what renovations would cost.

The following week, Harold and Randy went by to inspect the house and found someone already repairing it. The next day, Dan informed them that the owner had decided to fix and rent rather than sell it. Dan also pressed Harold to establish a line of credit so when a property came available it could be purchased immediately. He also indicated that he felt Harold and Randy should have acted faster. Harold explained that he and Randy were looking for a long-term relationship and that there would be other opportunities.

DISSOLVING THE PARTNERSHIP

In the meantime, Randy had his partnership dissolved because he felt that his partner was not making enough contribution to the business. Randy was bringing in all of the jobs and knew he could still contract out the work to his former partner even if they were no longer in the same firm. Randy was sure he could grow the business but was uncertain how to proceed. He could continue as a sub contractor, expand the maintenance business, flip houses, or build more spec houses. Unfortunately, Randy did not have his own contractor licenses. He also knew all of these options would require capital, and he did not have any.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 7-10

Number of pages: 4

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412144

Document URL: http://search.proquest.com/docview/192412144?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 27 of 100

RFI / RFP CASE APPLICATION OF INFORMATION SYSTEM PURCHASING PRINCIPLES

Author: Clark, Renae K; Green, Todd; "Jep" Robertson, Paul J

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Abstract:

The primary subject matter of this case concerns using an Request for Information (RFI) and a Request for Proposal (RFP) as part of an organizations purchasing principles as they relate to purchasing a new information system for a small business. Secondary issues to be examined include identification of technology issues for a small business and the design of a new system. The case has a difficulty level of five. The case is designed to be taught in three class hours and is expected to take approximately fifteen hours of outside student preparation.

Full text:

CASE DESCRIPTION

The primary subject matter of this case concerns using an Request for Information (RFI) and a Request for Proposal (RFP) as part of an organizations purchasing principles as they relate to purchasing a new information system for a small business. Secondary issues to be examined include identification of technology issues for a small business and the design of a new system. The case has a difficulty level of five. The case is designed to be taught in three class hours and is expected to take approximately fifteen hours of outside student preparation.

CASE SYNOPSIS

Students are presented with a business scenario in which they need to have a new information system installed for a small company where they have just started working. Students are asked to review the scenario, create an organizational overview to be used as part of an RFI, create a functionality list for a new information system, create an internal memo to justify the expenditure on the new system, and outline what the possible responses to an RFP might be.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 11

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412385

Document URL: http://search.proquest.com/docview/192412385?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 28 of 100

GETTING STARTED IN THE THOROUGHBRED HORSE BUSINESS: A CASE STUDY REVIEW OF SOME BASIC ACCOUNTING PRINCIPLES

Author: Fern, Richard H

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Abstract:

This case introduces beginning accounting students to some common accrual accounting concepts in an interesting setting. It addresses the issues of cash flows, profit and loss, revenue and capital expenditures, product and period costs, fixed assets, depreciation and cost of goods sold. Due to the variety of concepts covered, it is appropriate to use during the second half of the course after students have been exposed to these areas. Each of the three sets of questions should take about 30 to 45 minutes of class discussion time. Out of class preparation is about two hours.

Full text:

CASE SUMMARY

This case introduces beginning accounting students to some common accrual accounting concepts in an interesting setting. It addresses the issues of cash flows, profit and loss, revenue and capital expenditures, product and period costs, fixed assets, depreciation and cost of goods sold. Due to the variety of concepts covered, it is appropriate to use during the second half of the course after students have been exposed to these areas. Each of the three sets of questions should take about 30 to 45 minutes of class discussion time. Out of class preparation is about two hours.

SYNOPSIS

The case centers on the breeding and racing operations of a small Thoroughbred horse business. The owner has little accounting knowledge and asks her CPA friend for help in evaluating her degree of success in the business. The business has two distinct operations, racing and breeding. Students are asked to apply accrual accounting principles and identify the product and period costs for each operation and recommend a depreciation period for the capitalized costs. Students also compute cash flows and net profit or loss for each operation and reconcile the two.

The Thoroughbred breeding industry is primarily a manufacturing business with the brood mares serving as production equipment and the foals serving as inventory. Racing operations are similar to many other businesses with fixed assets (racing stock) and operating costs (board, transportation, vets, race entry fees, jockey purses, etc.). Both activities are extremely risky business ventures since there are no guaranteed markets or customers. Revenue streams for both types of activity are highly unpredictable and depend as much on luck (e.g. racing success or favorable breeding combinations) as on good business practices. In this case, the owner financed her operations with a large bank loan so the concept of cost allocation and indirect costs for interest are also introduced.

Instructors are given sufficient background information on accounting and reporting issues in the Thoroughbred industry to allow adequate feedback and guidance to the students. Although the case is presented on a full accrual basis, in reality most Thoroughbred horse business are not public companies and primarily report only on an income tax basis which is generally cash-based. Some basic, relevant tax issues are presented as background for instructors to add depth and interest to class discussions. Short summaries of the history of the Thoroughbred breed, naming foals and the Triple Crown of racing are provided for interest.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 13

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412085

Document URL: http://search.proquest.com/docview/192412085?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 29 of 100

APPLYING ERGONOMICS FOR A LOCAL COMPUTER SALES AND SERVICE CENTER

Author: Erinjeri, Jinson J; Ker, Jun-Ing; Jaganathan, Srihari

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Abstract:

Small retail businesses in local towns have fewer employees working for long work hours. However, little has been done to study if these small retail stores are acquainted with terms of ergonomics and human factors and suggest improvements to make them aware of the advantages of incorporating these laws of work (Ergonomics). A study was performed at a local computer store located in the Northeastern Louisiana region of the U.S. The study showed that the ergonomic aspects have not penetrated to the retail market comprising of small businesses. Information was shared and improvements were suggested in regards to design of works space and work methods.

Full text:

ABSTRACT

Small retail businesses in local towns have fewer employees working for long work hours. However, little has been done to study if these small retail stores are acquainted with terms of ergonomics and human factors and suggest improvements to make them aware of the advantages of incorporating these laws of work (Ergonomics). A study was performed at a local computer store located in the Northeastern Louisiana region of the U.S. The study showed that the ergonomic aspects have not penetrated to the retail market comprising of small businesses. Information was shared and improvements were suggested in regards to design of works space and work methods.

Keywords: Retail Businesses, Ergonomics, Workspace, Work Methods

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 15

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412081

Document URL: http://search.proquest.com/docview/192412081?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 30 of 100

"MISUSE" OR "THEFT" OF UNIVERSITY FUNDS: A CASE STUDY

Author: Kraut, Marla A

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Abstract:

The former Director of Auxiliary Services at a northwest university was recently indicted for making unauthorized expenditures during a three-year period, including purchasing tools, supplies, and building supplies for personal use. A forensic audit performed by a regional CPA firm listed the alleged $4,740 of illegal expenditures as well as $73,000 of other questionable expenditures made by the Director of Auxiliary Services (Director). The prosecutor said his office charged the Director with only the $4,740 amount because those were purchases that were determined to explicitly be unauthorized and criminal.

The other questionable expenditures identified in the forensic report included expenditures for other university activities, church youth functions, and various community activities. The forensic report stated that the university has to decide if these expenditures were appropriate use of public funds and if the Director misused his budget to benefit these activities.

As Director of the Auxiliary Services, he was responsible for overseeing all university services that generated revenue, such as the bookstore, dining services, the golf course, the athletic facilities, and student housing. The expenditures were allegedly made within a special budget account with an annual budget of $154,000, which could be spent at the discretion of the Director.

The forensic examination determined that the Director used University funds for personal gain. He admitted in a signed statement to using University funds to purchase tools worth $1,200 to $1,500 and in materials to remodel his kitchen worth $1,200 to $1,800. The examination found a total of $4,700 of these expenses.

Full text:

ABSTRACT

The former Director of Auxiliary Services at a northwest university was recently indicted for making unauthorized expenditures during a three-year period, including purchasing tools, supplies, and building supplies for personal use. A forensic audit performed by a regional CPA firm listed the alleged $4,740 of illegal expenditures as well as $73,000 of other questionable expenditures made by the Director of Auxiliary Services (Director). The prosecutor said his office charged the Director with only the $4,740 amount because those were purchases that were determined to explicitly be unauthorized and criminal.

The other questionable expenditures identified in the forensic report included expenditures for other university activities, church youth functions, and various community activities. The forensic report stated that the university has to decide if these expenditures were appropriate use of public funds and if the Director misused his budget to benefit these activities.

As Director of the Auxiliary Services, he was responsible for overseeing all university services that generated revenue, such as the bookstore, dining services, the golf course, the athletic facilities, and student housing. The expenditures were allegedly made within a special budget account with an annual budget of $154,000, which could be spent at the discretion of the Director.

The forensic examination determined that the Director used University funds for personal gain. He admitted in a signed statement to using University funds to purchase tools worth $1,200 to $1,500 and in materials to remodel his kitchen worth $1,200 to $1,800. The examination found a total of $4,700 of these expenses.

The auditors also found $73,000 of other questionable expenditures made by the Director. $20, 584.24 of Auxiliary Services funds were used for Jazz Fest expenditures. According to the report, the evidence indicates that the Jazz Festival and Jazz Choir budgets were tight and the Director used funds from his account to supplement the Jazz related expenditures. The report included several e-mails from the Director of the Jazz Festival requesting funds from the Director of Auxiliary Services. Note that the two men are members of the same church.

The Director also allegedly paid $3,500 from the Auxiliary Services budget to sponsor football game day events. These expenditures should have been paid by the Athletic department budget.

Also included in the report were expenditures for organizations that the Director has a personal interest: (1) $6,614 in expenditures that went towards youth functions of the church that he is a member, (2) $1,200 in funds that were given to the local little league association for advertisement while his son was playing in the organization, and (3) $10,500 in sponsorship for an annual community musical event in which he was a founding member.

The students will be asked to address several ethical issues in the case. They will be asked to relate the specifics in the case to the Association of Certified Fraud Examiners 'Uniform Occupational Fraud Classification System. The Director allegedly engaged in fraud schemes that should be classified as corruption (conflicts of interest), asset misappropriations (fraudulent disbursements for personal purchases and theft of inventory), and fraudulent financial reporting (expense understatements in specific budgets). The students will also be asked to discuss the affects of the fraudulent reporting in this case. The university administration decided not to discontinue the Jazz Festival and even paid bonuses, based on the Festival showing a profit, instead of losses that had occurred in prior years.

This case will be appropriate for the senior-level auditing course. It can be used during the discussion of SAS 99, auditor's responsibility in assessing fraud risks. The case is very relevant in today's business environment of unethical behavior, especially since it illustrates both fraudulent financial reporting and misappropriation of assets.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 17-18

Number of pages: 2

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412455

Document URL: http://search.proquest.com/docview/192412455?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 31 of 100

MANULIFE FINANCIAL AND THE JOHN HANCOCK ACQUISITION

Author: Lento, Camillo; Grégoire, Philippe; Poulin, Bryan

ProQuest document link

Abstract:

June 2003. It has been almost ten years since Dominic D'Alessandro was appointed President and CEO of Manulife Financial. There have been many changes at Manulife during his tenure and today Dominic D'Alessandro is currently facing a different future with room to maneuver. Manulife has a large cash reserve that was accumulated to bid for Canada Life Financial. D'Alessandro must decide where to invest the cash now that a competitor, Great West Life, won the bid. There are many options, including the relatively safe bond market; however, a more rewarding option is required if D' Alessandro wants to continue Manulife's exceptional financial performance. The three most viable alternatives are: 1) attempt to takeover another insurance company or 2) lobby the government to ease restrictions and merge with one of the big five Canadian banks or 3) formulate a new strategy since industry consolidation is ending.

Whatever course is chosen, D'Alessandro must devise a plan to face an apparently less certain world. The risk of terrorism is much larger than originally thought since the September 11th, 2001 attacks and the war in Iraq now has investors seeking greater security. The Sudden Acute Respiratory Syndrome (SARS) scare in Asia reminds health officials and insurers that pandemics are not beyond the realm of possibility even in this century. Finally, the rapid appreciation of the Canadian dollar is expected to hurt profitability since Canadian services will now be relatively more expensive internationally and overseas profits will be smaller when converted into the Canadian currency. These circumstances make it difficult for D'Alessandro to achieve Manulife's objectives of earning a return of 16 percent on equity and increasing earnings per share by 15 percent per annum. D'Alessandro must convince investors that Manulife will continue as a superior performer in the face of these new market realities.

Full text:

INTRODUCTION

June 2003. It has been almost ten years since Dominic D'Alessandro was appointed President and CEO of Manulife Financial. There have been many changes at Manulife during his tenure and today Dominic D'Alessandro is currently facing a different future with room to maneuver. Manulife has a large cash reserve that was accumulated to bid for Canada Life Financial. D'Alessandro must decide where to invest the cash now that a competitor, Great West Life, won the bid. There are many options, including the relatively safe bond market; however, a more rewarding option is required if D' Alessandro wants to continue Manulife's exceptional financial performance. The three most viable alternatives are: 1) attempt to takeover another insurance company or 2) lobby the government to ease restrictions and merge with one of the big five Canadian banks or 3) formulate a new strategy since industry consolidation is ending.

Whatever course is chosen, D'Alessandro must devise a plan to face an apparently less certain world. The risk of terrorism is much larger than originally thought since the September 11th, 2001 attacks and the war in Iraq now has investors seeking greater security. The Sudden Acute Respiratory Syndrome (SARS) scare in Asia reminds health officials and insurers that pandemics are not beyond the realm of possibility even in this century. Finally, the rapid appreciation of the Canadian dollar is expected to hurt profitability since Canadian services will now be relatively more expensive internationally and overseas profits will be smaller when converted into the Canadian currency. These circumstances make it difficult for D'Alessandro to achieve Manulife's objectives of earning a return of 16 percent on equity and increasing earnings per share by 15 percent per annum. D'Alessandro must convince investors that Manulife will continue as a superior performer in the face of these new market realities.

HISTORY AND DEVELOPMENT OF MANULIFE FINANCIAL

The Manufacturers Life Insurance Company, or simply Manulife, has a rich history steeped with Canadian culture. The company was incorporated in 1887 with the former Prime Minister of Canada (Canada's first Prime Minister), Sir John A. Macdonald, elected as the first President. Ten years after inception, Manulife had expanded into Asia and entered the U.S. market a few years later. Its head office in Toronto, Ontario Canada is still presently the Company's global headquarters. Throughout its history, Manulife was known as a company that anticipated change and, for example, it was the first insurance company in Canada to offer low-policy rates to non-smokers, adopt mainframe computer technology, and open an online bank. Manulife's vision is expressed as:

"Our vision is to be the most professional life insurance company in the world: providing the very best financial protection and investment management services tailored to customers in every market where we do business."

Manulife experienced significant expansion during the 1980s. Growth in the U.S. was led by two acquisitions: the National Liberty Life Insurance Company and the Maine Fidelity Life Insurance. Manulife began a demutualization process in 1993 whereby shares were sold to the public and began trading on the TSE and the NYSE under the ticker 'MFC'. Manulife used proceeds from equity issues to acquire other insurance companies. The acquisitions have proven worthwhile as consolidation in industry has led to greater scale and scope efficiencies. Today, Manulife is a firm with operations spanning the globe, and divisions set up by geographic locations. The Company has experienced rapid change and growth, as reported in Canada's National Post Newspaper: "When Dominic D 'Alessandro came to Manulife, it was a staid, old-school insurer. Today, he presides over an innovative financial-services giant that rivals the banks in size, services and global ambition" (2002 and pp. 52 - 53).

Dominic D'Alessandro has been President and Chief Executive Officer of Manulife since January 1994 and has guided the Company to nine consecutive years of exceptional financial performance, as revenues and net income have quintupled. During his tenure, D'Alessandro led the company's successful demutualization, and was named Canada's Outstanding CEO of the Year 2002. D'Alessandro has an extensive and varied background. He graduated with a Bachelor of Science degree in Physics and Mathematics from Loyola College, became a Chartered Accountant in 1971, and he was awarded an Honourary Doctorate from Concordia University in 1999. In 1975, D'Alessandro joined Genstar Ltd. where he worked as General Manager, and later as Vice President of Genstar's Materials and Construction Group. D'Alessandro next moved to the Royal Bank of Canada, in 1981 where he held a number of positions including Controller and Executive Vice President of Finance.

Manulife has generated a 25 per cent compound annual growth rate in earnings per share (EPS) over the past nine years and earned record profits in 2002. However, Manulife's financial performance has slipped in 2003. In the first quarter of 2003, the U.S. division contributed $107 million in profit, down $11 million from a year earlier, while the Canadian division profit was $94million, up by only $1 million. The first quarter annualized return on shareholders' equity was 15.8 per cent compared to 16.3 per cent for the same period last year, while EPS, which includes a one-time charge of $15 million related to the abortive takeover bid for Canada Life Financial, increased four per cent to $0.73 from the $0.70. First quarter results did not meet financial objectives and D Alessandro responded: "I am pleased that we were able to perform so well this quarter given the extremely challenging conditions" (Manulife 2003a).

THE LIFE INSURANCE INDUSTRY

Manulife' s main source of revenue is premiums from Term, Universal, and Whole Life Insurance. In 2002, the Canadian division experienced an increase in premiums, while the U.S. division seen a decrease. However, the most concern surrounds the Asian division as it may suffer a decrease in revenues for various reasons. For example, the Sudden Acute Respiratory Syndrome (SARS) outbreak has become a major factor in Hong Kong and parts of mainland China. Sales activities have been hit hard in mainland China, where SARS is believed to have originated, as agents are worried about meeting clients face to face and vice-versa. Manulife is trying to bridge this gap by using the telephone and direct mail, but these do not have the same sales impact as face to face selling. SARS also has the potential to increase expenses, as claims due to sickness and mortality may increase. Thus far, its Hong Kong operation has received two or three death claims and one for hospital benefits. Although the disease seems to be under control right now, Manulife must be prepared for new waves of SARS contaminations. Manulife has made changes to their operations in the brink of SARS. Following an increase in public concern after the government took preventive measures to control the spread of the disease, Manulife is offeringSARS-related insurance coverage and services, including:

1. Health insurance policyholders that contract SARS are eligible to claim for medical expenses.

2. The daily hospital income benefit related to SARS will be doubled for hospital confinement.

3. If quarantined at home, 50% of the daily hospital income be payable during the period.

INVESTMENT AND ACQUISITION OPTIONS

In the wake of all the uncertainties and emerging issues, Manulife still has to ensure that their premiums are invested in a vehicle that provides superior returns and meet financial objectives. On December 27, 2002, Manulife attempted to acquire all the outstanding common shares of Canada Life Financial to create Canada's largest insurance company. Manulife's plans were foiled when Great-West Lifeco made a takeover bid on February 17, 2003. There was an approximate $l-billion difference between the Great-West and Manulife offers. Even before Great West made an offer, Manulife failed to get Canada Life's board of directors and management on its side. To help persuade Great West to come in as a white knight, Canada Life agreed to give the company the right to match any competing offer and to pay it a break fee of $287-million or about $1.75 a share.

After failing to acquire Canada Life Financial, D'Alessandro still has a few viable acquisition/merger targets, in a market that's rapidly winding down. A potential target for acquisition is John Hancock Financial. John Hancock's CEO made it clear that he fully expects more takeovers and mergers, including cross-border deals. The second candidate is the Canadian Imperial Bank of Commerce. Having been burned by the loss of Canada Life, Manulife wants to make sure its next major transaction is nailed down solidly before it becomes publicly known. If these potential acquisitions are overly risky, D'Alessandro still has the option of the much safer bond market. D'Alessandro and the Manulife management team are aware of the risks inherent in purchasing another company. Studies show that the acquirer should have a deep understanding of the target's business and industry before negotiations (Kaplan, S., et. al. 1997). It is also evident that successful acquisitions are directly related to the post-acquisition integration strategy (Singh H. and Zollo M. 1998).

John Hancock Financial Services is one of the U.S. A' s leading financial services companies, providing a broad array of insurance and investment products and services to retail and institutional customers, primarily in North America with revenues over $8 billion. The Company operates its business in five segments. Two segments serve retail customers, including the protection segment and the asset-gathering segment, and two segments serve institutional customers, including the guaranteed and structured financial products and investment management. The fifth segment is the corporate and other segment. The CEO of Hancock Financial has indirectly confirmed that he sees Manulife or Sun Life Financial Services of Canada as potentially suitable merger partners.

Canadian Imperial Bank of Commerce (CIBC) is one of the largest banks in Canada, with a presence in the United States. CIBC has consistently generated profits and a combination with Manulife would provide for a host of potential synergies, cost-savings and cross-sales. However, cross-pillar mergers are currently not allowed in Canada. Many CEOs of large banks believe these maybe likely in the future by arguing that the large number of financial institutions makes the affects of a merger on competition negligible. On January 14th, 2003, Manulife attempted to buy CIBC, but then-Finance Minister John Manley cancelled the deal. Mr. Manley declined to void the federal policy that prohibits the big banks from merging with either of the two biggest insurers, Manulife or Sun Life Financial. Analysts believe that the Manulife-CIBC deal would have gone through had the government not been confronted with another merger proposal (Scotiabank and Bank of Montreal). As such, it may be worthwhile for D'Alessandro to lobby the government to lift these restrictions and allowing for cross-pillar mergers.

CIBC is the natural target. Royal Bank and Toronto-Dominion bank are too big, and neither would want to become the lesser partner in a merger. Scotiabank and Bank of Montreal were engaged in their own merger talks and may also be waiting for restrictions to ease. That left CIBC, which had two key advantages. The first was that CIBC's share price, thanks to lending losses and the ailing Amicus bank system, had fallen from about $57 to the mid-$40s, making it a less expensive target. The second was that CIBC has an extensive retail and wealth management network. Together, Manulife and CIBC would be one of the most powerful financial institutions with more than 70,000 employees, 16.5-million policy holders and customers, and annual revenue of about $33-billion. By merging with CIBC, Manulife could offer banking, brokerage, insurance and wealth-management services and products.

Investing in the bond market is a lot less risky that the other two alternatives, but bonds do not provide high potential for growth in earnings. U.S. Treasury's have fallen hard over the past three years, pushing the yield on the 10-year note from 6.79 per cent in early 2000 to a recent 45year low of 3.11 per cent. From 1970 to 1999, the average return on long term corporate bonds has been 7.64 per cent with a standard deviation of 10.57 per cent, while treasury bills have returned 6.04 per cent with a standard deviation of 4.04 per cent. Currently, Manulife's bond portfolio is diversified across many different industries, with the highest percentage invested in the government sector.

REINSURANCE DIVISION

Reinsurance refers to insurance purchased by an insurance company to cover all or part of certain risks on insurance policies issued by that company; retrocession is a form of reinsurance involving the assumption of risk from other reinsures. A dramatic change occurred to the Reinsurance operations on September 11th 2001, when terrorism risk appeared to be more serious than previously thought. The Reinsurance Division incurred a $145 million expense for anticipated claims in 2001. The risk of terrorism involves prospective losses of potentially high severity and unknown frequency, which makes risk quantification difficult because it reaches beyond first-party property coverage to involve other coverage's (workers compensation, business interruption) that are difficult to quantify. Since the attacks, reinsurance premiums for property and casualty have nearly doubled. Manulife recorded claims resulting from the September 11th attacks as a nonrecurring expense; however, the recent war in Iraq may have increased the probability of future attacks, thus increasing the likelihood of similar losses in the future. Warren Buffett, of Berkshire Hathaway, said that insurers and reinsurers were foolish for not pricing man-made mega catastrophes before the attacks. "In effect, we and the rest of the industry, included coverage for terrorist acts in policies covering other risks - and received no additional premium for doing so. That was a huge mistake, and one that I, myself, allowed. Had the attack on New York been nuclear, it is likely that most of the U.S. insurance industry would have been destroyed" (Berkshire Hathaway 2001).

RISING CANADIAN DOLLAR

On May 20th, 2003, the Canadian dollar climbed above 74 cents US, the highest it has been since the autumn of 1997. In general, economists claim that once the exchange rate starts to move, it's virtually impossible to predict where it will find its next equilibrium. The belief at Export Development Canada (EDC) is that as the world economy gradually returns to normal during 2003 and into 2004, the Canadian dollar will slowly make its way back to the US 70 cent level, possibly a little higher. Manulife's profits are going to be negatively affected from the recent resurgence of the Canadian dollar value against the U.S. dollar. Analysts predict that Manulife's profits could fall by as much as 9 per cent in 2004 ($129 million) if the dollar remains at its current level of 73.28 cents relative to the U.S. dollar. Estimates are based on projected profits from Manulife's foreign operations that have to be converted into Canadian dollars for accounting purposes. Manulife doesn't hide the fact that "the Company may be exposed to losses resulting from adverse movements in foreign exchange rates due to the fact that it manages operations in many currencies and reports financial results in Canadian dollars" (Manulife 2002). Manulife has a policy of reinvesting its U.S. profit in the U.S., so it technically does not lose money on the currency conversion; however, it could affect the company on an accounting basis, since Manulife is required to report its results in Canadian dollars. The effects of the appreciating Canadian dollar are already visible. In the first quarter of 2003, premiums and deposits were up four per cent, but excluding the impact of the dollar, the growth rate would have been eight per cent. Acquisitions could also help to mitigate any loses as a rising Canadian dollar makes it more affordable to purchase a U.S. insurer.

STRATEGIES FOR THE FUTURE

As Dominic D'Alessandro sits in his office in late June 2003, he knows that is was time to make decisive decisions regarding the future of Manulife Financial. The current market conditions and uncertainties require a thorough analysis of all relevant external and internal factors, assessment of feasible options, and formulation of a renewed strategy that is accompanied by an equally compelling implementation plan. The formulation and implementation of a plan must address the issues facing Manulife as well as to set a new direction for the company now that industry consolidation is coming to an end. Many questions need to be answered including these three major groups of questions:

1) Where should the large cash reserves be invested? What is the feasibility of Manulife acquiring John Hancock Financial, or merging with the Canadian Imperial Bank of Commerce? Would the safer bond market be the best place to invest the money?

2) If further acquisitions prove the best option, how would Manulife Financial handle the post-acquisition strategy to ensure that Manulife adds value in its offerings in different markets over the long term?

3) What, if anything, should be done with respect to the environmental factors such as appreciation Canadian dollar, the increased risk of SARS and other potential pandemics?

All of these circumstances will make it difficult to achieve Manulife's current objectives of earning a return of 16 percent on equity and increasing earnings per share by 15 percent per annum. D'Alessandro must determine how he can convince shareholders that Manulife will continue as a superior performer in the face of these difficulties. Finally, there is the nagging suspicion that much of Manulife's success is owed to the aggressive acquisition spree engineered over the decade past. What must be done to ensure a bright future for Manulife in the next decade, assuming it will not include many more acquisitions?

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 19-24

Number of pages: 6

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412207

Document URL: http://search.proquest.com/docview/192412207?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 32 of 100

PREPARING THE MASTER BUDGET FOR THE SOUTH CAROLINA PUBLIC BROADCASTING COMPANY

Author: Letourneau, C Angela; Letourneau, David E

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Abstract:

In not-for-profit (NFP) organizations, people often rise to middle management positions by virtue of their experience within the organizations, and perhaps not because of specific experience in their new jobs. This can be especially true in the cases where personnel that are promoted into a position that entails accounting responsibilities. People interested in careers working in museums, local theatre or communications will typically have only the most modest accounting education, or that experience may not be with an NFP.

In our case an experienced non-accountant manager, Laura Bauer (Jack Bauer's sister), is promoted into the Chief-Financial-Officer's position for the South Carolina Public Broadcasting Company. During her 15-year career with the company, Laura had started as the weather girl. Later Laura was proved to be very successful at producing programs and selling advertising. Three yeas ago she was named manager of the marketing department. In 2005, largely due to her outstanding results in marketing the station's products, she was offered the position of Financial Vice-President where one of her tasks would be to supervise, and work with, the small accounting office.

Full text:

SITUATION

In not-for-profit (NFP) organizations, people often rise to middle management positions by virtue of their experience within the organizations, and perhaps not because of specific experience in their new jobs. This can be especially true in the cases where personnel that are promoted into a position that entails accounting responsibilities. People interested in careers working in museums, local theatre or communications will typically have only the most modest accounting education, or that experience may not be with an NFP.

In our case an experienced non-accountant manager, Laura Bauer (Jack Bauer's sister), is promoted into the Chief-Financial-Officer's position for the South Carolina Public Broadcasting Company. During her 15-year career with the company, Laura had started as the weather girl. Later Laura was proved to be very successful at producing programs and selling advertising. Three yeas ago she was named manager of the marketing department. In 2005, largely due to her outstanding results in marketing the station's products, she was offered the position of Financial Vice-President where one of her tasks would be to supervise, and work with, the small accounting office.

In late 2005, when Laura first accepted the position she examined the company's proposed programs, capital requirements, expected donations etc. for 2006. The Accounting Department had developed a set of pro-forma quarterly income statements and balance sheets for 2006. Those statements indicated that the revenues and donations would be adequate to cover all of the expected expenses and capital requirements of the company for that year,

Towards the end of December, the Board advised Laura that they wished to initiate a new fund campaign in January 2006 for the purpose of funding the purchase of new video series at a total cost of $400,000. Laura immediately sought the assistance of a CPA acquaintance, Brucia Willis, Bruce Willis' sister. This first major initiative under her leadership gave Laura an opportunity to both show what she could do, and to verify that the processes in place in the Accounting Department were effective. Brucia directed Laura to have a new budget prepared. Once the budget was completed, Laura set up an appointment for Brucia to come in and examine the processes and results, and to advise Laura on any method she could employ to improve the results.

BUDGET

NFP Budgeting Problem

Following the directions of the CPA, Brucia Willis, Laura, the Chief Financial Officer of the South Carolina Public Broadcasting System Company (SC PPS), provided the accountants with the information she had gathered. The Accounting Department was to develop a new budget for the first quarter of 2006. Among the considerations were that the Board wanted to buy a series of video programs for $400,000, that the funds necessary for the purchases must come from a new funds campaign conducted in the period January through March, and that current cash balances were only $1,200. The budget should make clear the steps necessary to assure that the funds for both continuing operations and the purchase of new programs would be forthcoming.

Pledge averages:

25% of the pledges are for $100 - half of these individuals pay in cash during the month of the pledge - the rest pay in the following month

75% of the pledges are for $200 - one fourth of these individuals pay in cash during the month of the pledge. Credit contribution collection is as follows: unfortunately, 5% never submit their pledge contribution; the remaining contributors pay 30% in the month the contribution is made, 60% pay in the month after the contribution is made, 10% pay in second month after the contribution is made.

SC PPS gives a gift to all members pledging $200. The gift is a financial planning CD by Suzie Ball, a nationally known financial planner. Suzie charges SC PPS $15 to cover shipping and handling for each CD. SCPPS pays for these disks in the month following purchase. They currently have no inventory of Financial Planning Disks. The Board would like to consider having a safety stock of least 10% next month's disks.

SC PPS expects to incur the following expenses, paid in the month they occur, for each month of the third quarter of this year:

CASE QUESTIONS

1. How much projected cash will SC PPS generate during the first quarter 2006?

2. How much cash will be needed to purchase the Suzie Ball CDs for the third quarter?

3. How much cash will be needed to pay for the general and administrative expenses during the third quarter 2004?

4. Prepare the Cash Budget for SC PPS for the third quarter 2004.

5. Should SC PPS order the new series?

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 25-27

Number of pages: 3

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412096

Document URL: http://search.proquest.com/docview/192412096?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 33 of 100

LORI COLLIN AND IMÁGE BEAUTY SALON

Author: Mick, Todd D

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Abstract:

The primary subject matter of this case concerns Lori Collin, who was raised in a Christian home, but the home was abusive and she left at a young age to marry not one, but two abusive husbands. At the same time, she started a successful business and worked to provide a stable home for her children and herself while also working to regain her faith. The case presents Lori 's history from her point of view and how she eventually found what she needed to succeed both professionally, personally and spiritually.

Creating and successfully operating a small business is a challenge for virtually all entrepreneurs. In particular, the challenges facing women can often seem insurmountable. Lori Collin was raised in an abusive Christian home, yet she eventually returned to her faith in her own way and has continued to feels God's presence in her business operations. Yet she married two abusive men and nearly lost her children, business and life while trying to keep her family and its major source of income afloat. This case study chronicles the trials and tribulations of one woman that weaves common threads for many students; from spiritual loss and awakening to abusive relationships to substance abuse to the value of family. The teaching note reviews the pivotal points in the case; entrepreneurship and spirituality, reputation building, and resource-based theory.

When considering the fast-changing roles of women and men in our society and around the world, positive tales of overcoming the worst of gender inequalities and dysfunctional relationships can be powerful tools in the classroom. The dramatic growth of Christian businesses is also gaining increasing attention; however, this case is not about a Christian business, rather a faith journey. This case is designed for an undergraduate entrepreneurship or management class and is based completely on Lori's own words.

Full text:

ABSTRACT

The primary subject matter of this case concerns Lori Collin, who was raised in a Christian home, but the home was abusive and she left at a young age to marry not one, but two abusive husbands. At the same time, she started a successful business and worked to provide a stable home for her children and herself while also working to regain her faith. The case presents Lori 's history from her point of view and how she eventually found what she needed to succeed both professionally, personally and spiritually.

Creating and successfully operating a small business is a challenge for virtually all entrepreneurs. In particular, the challenges facing women can often seem insurmountable. Lori Collin was raised in an abusive Christian home, yet she eventually returned to her faith in her own way and has continued to feels God's presence in her business operations. Yet she married two abusive men and nearly lost her children, business and life while trying to keep her family and its major source of income afloat. This case study chronicles the trials and tribulations of one woman that weaves common threads for many students; from spiritual loss and awakening to abusive relationships to substance abuse to the value of family. The teaching note reviews the pivotal points in the case; entrepreneurship and spirituality, reputation building, and resource-based theory.

When considering the fast-changing roles of women and men in our society and around the world, positive tales of overcoming the worst of gender inequalities and dysfunctional relationships can be powerful tools in the classroom. The dramatic growth of Christian businesses is also gaining increasing attention; however, this case is not about a Christian business, rather a faith journey. This case is designed for an undergraduate entrepreneurship or management class and is based completely on Lori's own words.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 31

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412092

Document URL: http://search.proquest.com/docview/192412092?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 34 of 100

DEALING WITH AUDITOR CHANGES-THE UNUSUAL CASE OF CALLAWAY GOLF COMPANY AND ITS FOUR DIFFERENT AUDITORS IN ONE YEAR

Author: Reed, Brad J; Rose-Green, Ena

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Abstract:

While most publicly held companies go years without changing auditors, Callaway Golf Company (Callaway) changed auditors four times in one year. The unusual series of events that led Callaway to have four different auditors in one year provides an interesting setting to discuss Generally Accepted Auditing Standards as they pertain to auditor changes. Additionally, the Securities and Exchange Commission (SEC) has disclosure rules that apply to the company and to the auditor when an auditor change takes place. In this case the student will be exposed to actual SEC filings (Form 8-K) detailing the events surrounding the auditor changes as well as the auditors' filings with the SEC regarding the auditor changes. As the SEC filings are reviewed, the rules governing Form 8-Ks will be reviewed. The student will be exposed to the Code of Professional Conduct as it relates to confidentiality issues. Finally, client acceptance issues that auditors must deal with will be addressed.

Full text:

ABSTRACT

While most publicly held companies go years without changing auditors, Callaway Golf Company (Callaway) changed auditors four times in one year. The unusual series of events that led Callaway to have four different auditors in one year provides an interesting setting to discuss Generally Accepted Auditing Standards as they pertain to auditor changes. Additionally, the Securities and Exchange Commission (SEC) has disclosure rules that apply to the company and to the auditor when an auditor change takes place. In this case the student will be exposed to actual SEC filings (Form 8-K) detailing the events surrounding the auditor changes as well as the auditors' filings with the SEC regarding the auditor changes. As the SEC filings are reviewed, the rules governing Form 8-Ks will be reviewed. The student will be exposed to the Code of Professional Conduct as it relates to confidentiality issues. Finally, client acceptance issues that auditors must deal with will be addressed.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 33

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412170

Document URL: http://search.proquest.com/docview/192412170?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 35 of 100

AUNTIE ANNE'S PRETZELS: A KNOTTY PROBLEM

Author: Robinson, Sherry; Finley, John T

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Abstract:

Auntie Anne's Pretzels started selling soft pretzels atas a single stand at a farmers' market in Pennsylvania, selling soft-pretzels to shoppers. Through the development of its franchise system, Auntie Anne's now offers customers its productscustomers can purchase Auntie Anne's products at more than 850 outlets in 43 states and 13 international countries including Japan, Thailand, Malaysia, Saudi Arabia, the Philippines, and England. The company's sales have been growing every year as has the price of a franchise outlet, paving the way for Auntie Anne's current status as segment leader. The story of Auntie Anne's begins with founder Anne Beiler, whose overall goal for the business was to make enough money to fund a counseling center that would help people of Amish background find psychological help and healing. Anne and her husband Jonas had become interested in mending people's lives after their daughter died in a tragic accident. They wanted to help people the way his fellow friends and neighbors had helped his family. As a family business, Auntie Anne's Pretzels' goals were closely intertwined with the goals of the founders, so it is important to understand the Beilers in order to understand the company.

Full text:

INTRODUCTION

Auntie Anne's Pretzels started selling soft pretzels atas a single stand at a farmers' market in Pennsylvania, selling soft-pretzels to shoppers. Through the development of its franchise system, Auntie Anne's now offers customers its productscustomers can purchase Auntie Anne's products at more than 850 outlets in 43 states and 13 international countries including Japan, Thailand, Malaysia, Saudi Arabia, the Philippines, and England. The company's sales have been growing every year as has the price of a franchise outlet, paving the way for Auntie Anne's current status as segment leader..

The story of Auntie Anne's begins with founder Anne Beiler, whose overall goal for the business was to make enough money to fund a counseling center that would help people of Amish background find psychological help and healing. Anne and her husband Jonas had become interested in mending people's lives after their daughter died in a tragic accident. They wanted to help people the way his fellow friends and neighbors had helped his family. As a family business, Auntie Anne's Pretzels' goals were closely intertwined with the goals of the founders, so it is important to understand the Beilers in order to understand the company.

BIOLGRAPHY OF ANNE BEILER

According to her autobiography (Beiler, 2002), Anne's story begins on January 16, 1949, on a farm in Lancaster County, Pennsylvania. Born to Amish parents, she grew up without using electricity and with a horse-drawn buggy as the only means of transportation. As the third of eight children, Anne gained a lot of experience baking and loved doing it. When she was 12 years old she baked her own cakes and pies for a Philadelphia market stand where she worked with her parents. By the age of 14 she had her first job as a waitress in a truck stop, where she developed her philosophy that kindness and a smile would open the door to anyone's heart.

Anne met her future husband, Jonas Beiler, at a friend's birthday party and they were wed in 1968. They moved to Texas and lived there for 20 years. Upon returning to Pennsylvania in 1987, Anne managed a soft pretzel stand at a farmers' market in Maryland. After seven months, she and Jonas purchased a booth at the farmers' market in Downington, Pennsylvania, where they sold pizza, Stromboli, ice cream, and hot hand-rolled soft pretzels.

As she worked with the stand, Anne noticed the pretzels were the most popular item and they appealed to people of all ages. She set out to develop her own pretzel, and for two months Anne tinkered with the recipe but with disappointing results. Just when she was about to give up, Jonas suggested some ingredients his mother used when he was a young boy. They added them to the pretzel mix and a "new" recipe was created-the Auntie Anne's pretzel. The hot, salty treat was a hit with customers. Long lines of people who wanted only pretzels and fresh lemonade formed in front of the stand. Within a year they opened a second stand and then a third and fourth. The Beilers' garage became an office and family and friends helped her mix batches of pretzels, paint signs, construct booths, and deliver ingredients, in addition to working at the market stands. The familiar pretzel logo on the Auntie Anne's signs came from a photocopy her sister Becky made of one of the actual pretzels.

The success of the stands made the news and Anne received her first request for a franchise. She knew nothing about franchising but decided to try it, learning the business by trial and error. The first franchise outlet went to her brother in 1989 for $2,500. Cousin Sam Beiler was another of the first franchisees. In a few years the price for a franchise rose to $7,500 and by 2005 it had risen to $28,000.

Auntie Anne's 2003, sales were approximately $234 million, and rose to $247 million in 2004. Same-store sales were up 2.1% during this time with an average check of $3.45. Although it is segment leader, Auntie Anne's faces competition from several other franchises. The Pretzeldog, the most successful new product in many years, takes Auntie Anne's closer to the sandwich market, yet, like a pretzel, is easy for consumers to eat on the go.

COMPETITION

Although the pretzels sold by Auntie Anne's have their own special taste, they are not the only such product on the market, and franchises are common in this industry. Two of the largest competitors, Pretzel Time and Pretzelmaker, are owned by Mrs. Field's Famous Brands. Each brand has more than 200 units, which Pretzel Time mostly in the east, and Pretzelmaker in the west. Customers spend an average of $3.90 at each on items such as cheese stuffers (pretzel dough wrapped around cheese cubes), pretzel bites (small bits of pretzel with toppings) and pretzels around hot dogs.

In addition, Wetzel's Pretzels, with well over 200 locations, is a national competitor with 2004 sales of almost $45 million. Same-store sales were up 7.5% from $346,000 to $372,000 between 2003 and 2004. Wetzel's pretzels weigh 6 ounces, 50% more than competitors' average 4 ounce pretzels. The pizza pretzel, topped with cheese and pepperoni, and a pretzel wrap with a hot dog and cheese are two items that are, like Auntie Anne's pretzeldog, closer to the sandwich category.For example, Hot Sam's, Pretzel Plus and Bavarian Pretzel are not as well known in all locations, but offers similar products and similar prices.

The quickest and easiest way for potential competitors to set up a soft pretzel outlet is to go through a type of generic company such as Pretzel Plus. This company provides supplies and ingredients needed for a potential entrepreneur to open a pretzel shop under any name (not restricted to Pretzel Plus). To open a 500-1,000 square foot franchise outlet with this organization, a total investment of approximately $80,000 to $ 103,000, with a minimum net worth of $ 150,000, of which $40,000 needs to be in liquid assets. The franchise fee is $12,000 with 4% royalties.

Another up and coming potential threat to the Auntie Anne franchise is Hot Sam Pretzel Bakery based in Cleveland, Ohio. Hot Sam offers traditional Bavarian-style pretzels as well as a sweeter, soft-dough variety. Hot Sam Pretzel Bakeries currently operates 140 company-owned stores located in malls and expects to add five to eight more. It is now targeting the Tri-State area in its first-ever franchising plans. The biggest challenge that Hot Sam faces is transforming its corporate structure into a franchise system. The company must scrutinize its programs for site selection, lease negotiation, store openings, and retail operations.

Auntie Anne's is the current leader in the soft pretzel business, but it does face competitors that would like their own piece of the market. This may hinder Auntie Anne's future ability to charge premium prices as the market comes closer to saturation. In addition to the Pretzeldog, a hotdog wrapped in pretzel dough, Auntie Anne's is now considering expanding its operations with a new café concept. Unlike the typical pretzel outlets that offer no seating, each Auntie Anne's Café would seat approximately 30 people. Similar to other modern cafes, these would serve gourmet coffee, offer a lunch and light dinner menu (sandwiches, pizzas, breads, soups, etc.), and provide wireless internet access. Most items on the menu would be made from the same pretzel dough, but prepared in different ways. The first Auntie Anne's Café has already opened in Lancaster, Pennsylvania. Others may be opened if this one proves to be a success.

CHANGE IN OWNERSHIP?

Charitable work is Anne and Jonas Beiler's passion. Auntie Anne's was not created to make the Beilers rich, but to support their charitable projects. In 1992, Joas opened the doors to the Family Resource and Counseling Center, which is still in operation. The company also funds a nonprofit organization, the Angela Foundation, named after their daughter that was lost to them years before. Anne feels that this is the part of the company that extends the belief to give back a portion of the gifts God has given her and her husband.

Now Anne is considering selling Auntie Anne' s to her distant cousin Sam Beiler, who is also the President and C.O.O. of the company. He has been part of the Auntie Anne's family since 1989 when he became one of the company's first franchisees. Since then he has concentrated on opening 137 foreign stores and overseeing 37 company owned units. If the company is sold, it is likely that he will take it in a new direction. Sam Beiler has already stated that he would like to open about 40 pretzel stores a year. He also plans to introduce the Auntie Anne's Café slowly to see if it will be profitable. With the right marketing and products the Auntie Anne's Café may be a very profitable franchise.

By selling the business she created, Anne will have the time she wants to work towards her long-term goal of helping families in need. Anne and her husband would also be able to work to open a family center that will provide help to children in their hometown. However, Anne wonders if her strong beliefs in commitment, giving, and customer satisfaction will continue to be instilled in employees if she leaves.

If Sam buys Auntie Anne's, he will be purchasing a brand that is synonymous with good quality, reliability, and profitability. He will have to maintain the good reputation that the company currently holds. Since he has succeeded in the past with providing more business opportunities for Auntie Anne's, he may be able to further succeed with the business. However, the question remains as to the future of Auntie Anne's Café.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 35-38

Number of pages: 4

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412165

Document URL: http://search.proquest.com/docview/192412165?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 36 of 100

E. M. MAPALAD AND THE MAPALAD BUS LINERS, INC.: THE BUSINESS ENDED DESPITE A TALENTED ENTREPRENEUR

Author: Ruane, Maria Claret M; Rummel, Amy B

ProQuest document link

Abstract:

The primary subject matter of this case is entrepreneur ship. Secondary issues examined in the case include strategies involved in family business startup, growth, and decline, including profitmaximizing strategies (revenue maximization in particular), as well as international business environments and their impact on businesses, in general, and family businesses, in particular. This case has a difficulty level of three and up, appropriate for junior level and beyond. The case is designed to be taught in two to three class hours in a management or international business course, and is expected to require about three hours of outside preparation for students, consisting mainly of reading the case and familiarizing themselves with the business implications of a Martial Law regime.

Full text:

CASE DESCRIPTION

The primary subject matter of this case is entrepreneur ship. Secondary issues examined in the case include strategies involved in family business startup, growth, and decline, including profitmaximizing strategies (revenue maximization in particular), as well as international business environments and their impact on businesses, in general, and family businesses, in particular. This case has a difficulty level of three and up, appropriate for junior level and beyond. The case is designed to be taught in two to three class hours in a management or international business course, and is expected to require about three hours of outside preparation for students, consisting mainly of reading the case and familiarizing themselves with the business implications of a Martial Law regime.

CASE SYNOPSIS

The case is about E. M. Mapalad, an entrepreneur, and the successful transportation business he created in the Philippines after World War II and operated for more than 50 years. The case traces through the history of his business, from its beginning as a surplus U.S. Army jeep that was leftover from the war to a fleet of thirty five full- sized buses at its peak in 1965-1972. In doing so, the case illustrates an example of how a highly motivated and very talented entrepreneur started his businesses from limited resources, and how his skillful management of these and additional resources and his ability to identify and pursue opportunities made him the number one bus operator in Manila twenty years after he started his business. The case also shows how a drastic change in the political environment adversely affected his businesses and drove this once motivated, dedicated and successful entrepreneur to give up on the business that he created.

This case secondarily provides a glimpse of the transportation industry in the Philippines between 1945 and the 1980s for which no explicit study exists and for which data are generally not available. It also gives a personal account of the political, economic and cultural environments faced by the entrepreneur and how these environments affected a number of his major business decisions.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 39

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412244

Document URL: http://search.proquest.com/docview/192412244?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 37 of 100

HANDLING DIFFICULT SITUATIONS: FOUR ROLE PLAY CASES

Author: Stumpf, Stephen A

ProQuest document link

Abstract:

The primary subject matter of these role play cases is the communication skills needed to handle difficult situations - among clients, consultants, and team members. Since difficult situations often stem from people having different goals, different approaches, and/or different personal styles, diagnosing and attending to these differences are secondary issues. Resolving difficult situations and retaining the relationship often requires planful dialogue - communications that: (1) are open to and respectful of the others 'point of view, (2) treat others' as equals in the situation, and (3) seek to understand the others' views and the assumptions underlying those views. The role play cases have a difficulty of five. Each of the four role play cases is designed to be used within 30-40 minutes. No outside preparation is necessary.

Full text:

CASE DESCRIPTION

The primary subject matter of these role play cases is the communication skills needed to handle difficult situations - among clients, consultants, and team members. Since difficult situations often stem from people having different goals, different approaches, and/or different personal styles, diagnosing and attending to these differences are secondary issues. Resolving difficult situations and retaining the relationship often requires planful dialogue - communications that: (1) are open to and respectful of the others 'point of view, (2) treat others' as equals in the situation, and (3) seek to understand the others' views and the assumptions underlying those views. The role play cases have a difficulty of five. Each of the four role play cases is designed to be used within 30-40 minutes. No outside preparation is necessary.

ROLE PLAY CASE SYNOPSIS

CASE 1: Jan Whijting, a newly promoted team leader, recalled to a group of interns, "We had done previous phases of work that led to a new client strategy. There were four teams facing off against various senior clients in order to define the techniques and costs associated with implementation of the new strategy. As time went on, the client, Moesha Haughe, proved less and less willing to provide us with information and cost estimates. It became very adversarial - I used up all my good will, and even called on a partner to try to get them to cooperate."

CASE 2: Terry Marquette, a second-year analyst, was having trouble with the client. This was Terry's first experience as a team leader - one that would not be forgotten. It started when Irmi Dunne, the client's e-business expert, mentioned to the team something to the effect of "not being really happy about working with them, and prefers another consulting firm."

CASE 3: Dale Zand, a seasoned executive and ex-consultant, was hired to serve as the vice president of the new online business unit that was being formed. In addition to hiring Dale, Sara Sharp, President of Premier Publishing, brought in a consulting firm to develop an Internet strategy to take her business-to-business publishing company into the online world. The offline business was struggling with declining growth in circulation. Three days after Dale arrives, he asked to meet with the consulting team to discuss the project scope. Dale proceeded to redefine the engagement without Sara's approval, to the dissatisfaction of the consulting team engaged to do the work.

CASE 4: Luis Cruz was excited about meeting the new job manager, J.C Marshall. J.C. had joined the firm last month from industry to lead this consulting engagement - working on new products and a media channel strategy for a major entertainment company. So far it has been a positive experience. The project is going well, your client seems satisfied, and the hours have been reasonable. Then J.C. asked to meet with you. The meeting did not go as expected. After a few pleasant comments, J.C. became direct and autocratic. You tried to discuss the current situation and your good relationship with the client, but he didn't seem to hear it.

JAN WHIJTING (CASE 1)

Jan Whijting, a newly promoted team leader, was recounting to a group of interns a client experience that stretched the team to the limit. As Jan recalled, "We had done previous phases of work that led to a new client strategy. There were four consulting teams facing off against various senior clients in order to define the techniques and costs associated with implementation of the new strategy. There was a marketing team, a distribution team, a servicing team, and a technology team. My client face-off reported directly to the CIO."

"We were tasked with evaluating what the technology requirements were for the new strategy. Given the new marketing, distribution, and servicing approaches, as well as any shortcomings in existing technology, we needed to determine what projects were necessary, including timelines and costs."

"At the start, my client counterpart, Moesha Haughe, was very enthusiastic about working with us, and was proposing an aggressive timeline for completion. We began to review technology requirements and planned projects. We also began to question some of the budget assumptions for the projects, and to question the need for many of the projects."

"As time went on, the client proved less and less willing to provide us with information and cost estimates. It became very adversarial - I used up all my good will, and even called on a partner to try to get them to cooperate."

"It became obvious to me that it was only the technology team client counterparts that were not cooperating. All of the other teams were easily getting their cost/project estimates; our documents were blank. It began to feel as if my team was part of a hostile takeover, given the lack of cooperation."

TERRY MARQUETTE (CASE 2)

Terry Marquette, a second-year analyst, was having trouble with the client. This was Terry's first experience as a team leader - one that would not be forgotten. It started when Irmi Dunne, the client's e-business expert, mentioned to the team something to the effect of "not being really happy about working with them and prefers BCG."

Terry was aware that the relations with Irmi had been deteriorating before this announcement, and had spoken to the team about it. During these discussions, the team confirmed that Irmi had cancelled two meetings with specific team members - and neither had been rescheduled. The team was becoming disenfranchised and isolated. The work was still interesting, but interactions with the client were strained. As they had only two more weeks of work on this engagement, Terry was thinking that it might be best to 'wait it out'.

Then the OIC, Paul Allison, came into the team room - apparently having just received an earful from Irmi. Irmi feels that some of the team members are uncooperative and behave in ways that say, "I don't like you." And, Irmi may be right. According to Paul, this is the first major project that Irmi has been asked to lead, and it is the first time Irmi has been on a team with us. Irmi's previous involvement in a BCG engagement seems to have contributed to Irmi's latest promotion. Apparently, BCG really supported Irmi's ideas. As Paul left the room, he said, "Even though Irmi looks young and may act immaturely - we must still cooperate."

DALE ZAND (CASE 3)

Sara Sharp, President of Premier Publishing for less than three months, brought some in consultants to develop an Internet strategy to take her business-to-business publishing company into the online world. The offline business was struggling with declining growth in circulation for many of the company's publications. Sara believed that with a vision for a more robust Internet offering, she could turn the company into a leading online content provider for business professionals.

The first step was to hire an ex-McKinsey consultant, Dale Zand, to serve as the vice president of the new online business unit, and to lead the engagement from the client side. Three days after Dale arrived, Dale asked to meet with the consulting team to discuss the project scope. Dale had recently been in a meeting with Sara and the CEO of the holding company, Worldwide Enterprises, which owned several other publishing companies. During that particular meeting Sara had been eager as the new President to share her vision for Premier's online strategy, but the conversation had quickly turned towards the state of the offline business. Sara was abruptly put on the spot in front of a group of executives by the CEO, who asked her to explain why a turnaround plan was not in place. Dale quickly sensed that this was a bigger priority for the CEO than it had been for Sara.

During Dale's meeting with the consulting team, he expressed skepticism about the grandiose online vision that Sara had asked them to research the viability of this vision. To Dale, it was more important to think about how to revive the offline business that accounted for 95% of the company's revenues.

Dale started the meeting by describing the recent executive meeting with the CEO and conveyed several thoughts about how the company should be focusing more on how to revive its offline business before coming up with an online strategy. As the project lead for the client, Dale was in a position to influence the nature of the assignment. Dale proceeded to say, "I'd like you to hold off on thinking about an online strategy. The project scope now is to help us come up with a winning offline game plan that I can take to the CEO. " Dale wanted the consultants to come up with some answers before the next Board meeting, which was two weeks away.

After the meeting was over, the consulting team was confused. It had already spent two weeks on the issues and hypotheses part of the engagement, and was making good progress. To stop work on the Internet strategy now, and to redirect the effort into the traditional publishing world would be a let-down for the entire team. Several members of the team were on this particular engagement specifically because it was b-to-b e-business. It was a skill set that their passport required for their development.

LUIS CRUZ (CASE 4)

Luis Cruz, a second-year Associate, was excited about meeting the new job manager, J.C. Marshall. J.C. had joined the firm last month as an industry hire to lead this engagement - the previous job manager was leaving for another career opportunity. Luis heard that J.C. had previously worked at AT&T and Turner Communications after earning an MBA from the University of Hawaii.

This engagement - working on new products and a media channel strategy for a major entertainment company - has been a positive experience. The project seems to be going well, your client counterparts are satisfied, and the hours have been reasonable. You have had good access to all levels of client staff, often learning as much from them as they are from Booz Allen. Lunch and dinner meetings with the client have become weekly events to which you look forward.

When the departing job manager briefed J.C., you felt his comments accurately reflected your experience: "These are a bunch of good people. Any time we've asked for access, data, or their inputs, it has been provided. People are responsive, and the quality of work we are doing is clearly acceptable. The report revisions that we make seem to pose no problems - the team makes them and the client accepts them. Even when we have been late on a deliverable, the client is understanding."

J.C. asked to meet with Luis and the other Associate on the job, Molly Bello. Molly joined Booz Allen upon completing an engineering degree from the Federal University of Rio de Janeiro four months ago.

The meeting with J.C. did not go as expected. After a few pleasant comments, J.C. became direct and autocratic. You tried to discuss the current situation and your good relationship with the client, but J.C. didn't seem to hear it. Molly said almost nothing - she didn't even support you. It was as if you had done something wrong. The following captures what you recall as directives from the meeting:

Only J.C. will initiate direct client contact; if someone from the client organization wants to discuss something, they should be referred to J.C.;

The team will not be late on another deliverable - even if it means working all night;

There will be no errors in our reports - six sigma was the goal;

All report pages will be reviewed by J.C. before they are shared with any more senior BAH staffar the client; and,

All client contact will be at the office and task focused

Following this meeting, J.C. requested several additional analyses, to be completed by 9:00 tomorrow morning. The idea of doing these analyses was not new - but informal discussions with the client indicated that they would be low value added. As it was already late afternoon, someone would have to work late. You have a family-related party with your girlfriend in four hours to celebrate her father's 50th birthday.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 43-46

Number of pages: 4

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412321

Document URL: http://search.proquest.com/docview/192412321?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 38 of 100

MANAGING CLIENT RELATIONS: THE CASE OF PETER VOSEK AND JOAN CHAROEN

Author: Williams, Michele; Stumpf, Stephen A

ProQuest document link

Abstract:

The primary subject matter of this role play case is the interpersonal skills needed to handle a difficult client situation involving power and trust. Since difficult situations often stem from people having different goals, different approaches, and/or different personal styles, diagnosing and attending to these differences are secondary issues. Resolving difficult situations and retaining the relationship often requires planful dialogue - communications that: (1) are open to and respectful of the others 'point of view, (2) treat others 'as equals in the situation, and (3) seek to understand the others 'views and the assumptions underlying those views. The role play case has a difficulty of five (graduate). It is designed to be used within 50-80 minutes. No outside preparation is necessary.

Full text:

CASE DESCRIPTION

The primary subject matter of this role play case is the interpersonal skills needed to handle a difficult client situation involving power and trust. Since difficult situations often stem from people having different goals, different approaches, and/or different personal styles, diagnosing and attending to these differences are secondary issues. Resolving difficult situations and retaining the relationship often requires planful dialogue - communications that: (1) are open to and respectful of the others 'point of view, (2) treat others 'as equals in the situation, and (3) seek to understand the others 'views and the assumptions underlying those views. The role play case has a difficulty of five (graduate). It is designed to be used within 50-80 minutes. No outside preparation is necessary.

ROLE PLAY CASE SYNOPSIS

The "Peter Vosek" and "Joan Charoen" cases and roles for a role play (totaling 5 pages) discuss the same management consulting engagement from different perspectives. Peter, the officer in charge (OIC) of the engagement, and Joan, the job manager for one of the five teams on the project, relate their perceptions of the different stakeholders involved in this project and the challenges of managing these stakeholders.

In the Peter case, CRC (a top tier international management consulting firm) is hired by a chemical manufacturer to leada large service implementation project. Early in the project, Peter's counterpart on the project, the Corporate Manager of Service, is replaced. Peter finds it difficult to maintain a good working relationship with his new counterpart, Senal Dhola. His project is falling behind schedule, and he finds himself in a situation in which he has little access to the top management team of the company. We see Peter pondering how to turn the engagement around and prepare an effective, mid-engagement presentation for the top management group.

In the Joan Charoen cases, Joan is the job manager (senior associate) for the information technology (IT) team on the project. Joan has created a collaborative environment for her team, which is composed of both CRC consulting staff and managers from the chemical company. Joan's team makes a recommendation (A case) that is rejected by the company's CEO, Shawen Walsh (B case). Joan believes the senior members of the consulting team need to actively strategize ways to gain buy-in for the project from the company's top management. After one failed attempt to convince Peter and other more senior members of the consulting team that they need to pay more attention to stakeholder management, we find Joan pondering how to "sell" her point of view (end of B case).

In the C case, Joan reveals her views on the performance of her IT team and on the quality of the overall engagement. Joan suggests that while her team performed well, the lack of stakeholder engagement at more senior levels of the project compromised the effectiveness of the overall project.

CASE CONTENT

Peter Vosek

Peter Vosek, a partner at CR Consulting (CRC), was 6 months into the largest project he had ever led. He was the officer in charge (OIC) of a service implementation project for a chemical company. Peter had five teams on this project, each with a job manager, and a senior job manager who coordinated all of the teams. From the start, Peter, a Wharton MBA, had looked forward to the challenge of this $10 million project.

Two months into the project, Senal Dhola became the chemical firm's corporate manager of service and Peter's new counterpart on the project. Senal thrived on challenges and had progressed rapidly in the chemical company. Peter was relieved when he learned that Senal was heading up the project as he had worked well with Senal in the past. Peter knew Senal from a 12week assessment project he had did several years earlier. Senal liked CRC's work and had implemented several of its recommendations. Peter felt that Senal respected his ability. He had keep in contact over the past few years and they had lunch together twice. Senal seemed eager to take on this large project, which was in the implementation planning stage.

In their first few meetings, Peter was uncomfortable with way that Senal questioned many of the decisions that were made with the former corporate manager of service. However, after several more meetings, Senal had agreed with the plan Peter laid out and Senal even convinced the CEO, Shawn Walsh, that this was the way to proceed. For several weeks, Peter thought that he and Senal were in agreement, but then he noticed that Senal's easy-going style was becoming more distant. His weekly meetings with Senal became more formal. Senal started to ask to see every document, every interview, and each spreadsheet. Senal also excluded Peter from two key project meetings with the top management team which included the CEO, CFO, VP of Sales, and VP of Manufacturing. Peter was acquainted some members of the top management team but did not know any of them well, and he was extremely uncomfortable knowing that they were discussing the project without his input.

Peter was uncertain about how to proceed but believed that his best bet was to continue to work with their original plan. Over the next month things did not improve. When problems arose with different streams of the project, Senal showed no flexibility in working around them, refusing to work with Peter to re-structure the project in ways that would efficiently deal with the issues they faced. As a result, intermediate deadlines were missed, even though the CRC people were working longer and harder.

Six months into the yearlong engagement, Peter prepared for a mid-engagement presentation to top management. The meeting would be difficult because of his limited access. Peter thought about calling a senior partner at CRC for advice, but he believed that he could still deliver on the project if he and his people just worked harder. He would present the CEO with a step-by-step plan for getting back on track and then keep his nose to the grindstone.

Joan Charoen (A)

Joan Charoen was the job manager in charge of the information technology (IT) team on a large service implementation project for a chemical company. Her team was two-thirds client and one-third CR Consulting (CRC) staff. Joan felt her team was working well. The client members of her team were all senior managers and everyone seemed to share the project's objectives. Just yesterday one of her people said, "Hey this is great! You rarely work with clients like this!" Joan recalled, "When we got started. We invited everybody in and said, 'Well we've been given these objectives. How do we use our time against the resources we have to accomplish the task?' There was a sense of collaboration even in building the plan."

Joan, an engineer by training and a Harvard MBA, was pleased with the efficiency with which her team was operating, but she was also facing a serious challenge. There were coordination problems between IT and the Firm's logistics area. The lack of integration among the company's current systems created redundancy in some areas and inefficient processes in others. Her team had recommended establishing another top management position - a Chief Information Officer (CIO) -who would report directly to the CEO, Shawn Walsh.

This was one of the recommendations to be presented to Shawn and the top management team this afternoon. Joan was not certain of the outcome. She had heard rumblings that the CEO was not pleased with some parts of the larger engagement. CRC was halfway through the project. She had heard that several streams of work were behind schedule and likely to run over budget. Joan was not confident that OIC, Peter Vosek, would be able to get buy-in for her team's recommendations.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 47-49

Number of pages: 3

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412369

Document URL: http://search.proquest.com/docview/192412369?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 39 of 100

WHERE IS THE REAL RISK? SEXUAL HARASSMENT AND COMPANY RETALIATION

Author: Thomson, Neal F

ProQuest document link

Abstract:

Susan* works in the Scanning department of a major corporation. She has been working for the company for several years, has a solid work history, and is well respected by her peers. However, recently, she has been having problems with a co-worker, and has reported these problems to a supervisor. The details of this problem are explained in the following case.

Full text:

INTRODUCTION

Susan* works in the Scanning department of a major corporation. She has been working for the company for several years, has a solid work history, and is well respected by her peers. However, recently, she has been having problems with a co-worker, and has reported these problems to a supervisor. The details of this problem are explained in the following case.

THE PROBLEM

Susan approached he supervisor with a problem. One of her female co-workers, was making her uncomfortable, by engaging in questionable actions. These included unsolicited shoulder massages and hugs, as well as a tendency to stand very close while speaking, and occasionally brush against her, including private areas such as her breast. She also alleged that this co-worker made sexually explicit, and inappropriate comments to her.

Her supervisor encouraged her to "work it out" and even went so far as to suggest that a promotion was riding on her ability to do so. She was unable to affect any change in her co-worker's behavior, and two days later, she filed suit with the EEOC alleging sexual harassment.

At this time, the company asked the EEOC to oversee mediation of the dispute. After weeks of effort, the mediation failed.

One week after the mediation failed, the company fired Susan, alleging that she had threatened violence to the company, and violated a confidentiality agreement. She retaliated by filing suit, alleging 1) sexual harassment, 2) retaliation, and violations of whistleblower statutes.

DISCUSSION

1) Was this sexual harassment, and if so did Susan have the right to file suit alleging Title VII violations?

2) Does Susan have a legitimate claim of retaliation?

3) What could the company have done differently?

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 51-52

Number of pages: 2

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412185

Document URL: http://search.proquest.com/docview/192412185?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 40 of 100

A METHODOLOGICAL APPROACH TO MODERN DIGITAL ASSET MANAGEMENT: AN EMPIRICAL STUDY

Author: van Niekerk, Albert

ProQuest document link

Abstract:

The essential characteristic of a digital asset is that it is an asset and assets must be managed. The most important characteristic of a business's DAM solution approach must be an "asset orientated solution". If a twenty-dollar note is ripped in two, the result is not two ten-dollar notes - it is worthless paper. The same principal is true from a technical point of view for an asset orientated solution which implies security, transparency, flexibility and control which all rely upon the definition of an asset as an organising principle. However, literature reveals no such solutions. A new methodology, based on the principal of the value chain theory as reported by Porter (1996), for the approach to DAM was designed. The methodology was introduced to the managers of five major technology driven companies which operate in global markets and are market leaders in their respective industries.

The results proofed a high return on invested capital. A reduction of human resource input, the conception and enhancement of intellectual property, the effectiveness of the functional value chains and flatter market orientated management structures.

The implication of the results supports the hypothesis that digital assets are a valuable and essential advantage to companies.

Full text:

ABSTRACT

The essential characteristic of a digital asset is that it is an asset and assets must be managed. The most important characteristic of a business's DAM solution approach must be an "asset orientated solution". If a twenty-dollar note is ripped in two, the result is not two ten-dollar notes - it is worthless paper. The same principal is true from a technical point of view for an asset orientated solution which implies security, transparency, flexibility and control which all rely upon the definition of an asset as an organising principle. However, literature reveals no such solutions. A new methodology, based on the principal of the value chain theory as reported by Porter (1996), for the approach to DAM was designed. The methodology was introduced to the managers of five major technology driven companies which operate in global markets and are market leaders in their respective industries.

The results proofed a high return on invested capital. A reduction of human resource input, the conception and enhancement of intellectual property, the effectiveness of the functional value chains and flatter market orientated management structures.

The implication of the results supports the hypothesis that digital assets are a valuable and essential advantage to companies.

Publication title: Allied Academies International Conference. International Academy for Case Studies. Proceedings

Volume: 13

Issue: 1

Pages: 53

Number of pages: 1

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 1948-3198

Source type: Conference Papers & Proceedings

Language of publication: English

Document type: Feature, Business Case

ProQuest document ID: 192412154

Document URL: http://search.proquest.com/docview/192412154?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-16

Database: ABI/INFORM Complete

Document 41 of 100

Competing E-Purse Systems: A Standards Battle

Author: de Vries, Henk J

ProQuest document link

Abstract:

Electronic purse systems can be an alternative for cash payments as well as PIN payments or credit card payments. For retailers as well as banks, this is attractive for reasons of cost and speed. One common system seems feasible, but in The Netherlands there have been two competing systems for several years. The common banks started with one system, but one of these banks introduced a competing system. This resulted in a costly battle. In the end, the banks decided to return to one system. This case can be seen as a battle between two standards, and standardization theory can be used to analyze it. The challenge for each stakeholder is to make a decision without knowing what the other stakeholders will do. In this case, we take the perspective of the bank that initiated the competing e-purse system. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATIONAL BACKGROUND

Electronic purse systems have been introduced in many countries in the world (Committee on Payment and Settlement Systems, 2004). Success stories alternate with stories of failure (Van Hove, 2004a). Electronic purses may form an alternative for cash payments as well as small PIN or credit card payments. For payment systems, network effects apply: the more the users, the more the system's functionality for an individual user(Farrell & Saloner. 1985; Katz & Shapiro, 1985; Leihbrandt, 2004). Therefore, one system per country is the preferred solution. However, one might argue that two or more systems within one country might be feasible as well, because competition may form an incentive for innovation.

This case tackles this issue by presenting a case of two competing banking chipcard systems in The Netherlands. Initially, Dutch banks agreed to operate one system. However, one of the banks decided to introduce their own system in cooperation with the major Dutch telecom company. After a severe battle, they ended up with one system again. The cost of this battle is estimated to be more than $100 per Dutch inhabitant.

Our description of the case is based on a chronological description developed using more than 100 written newspaper and journal articles completed with our own field research (De Vries & Nielen, 2001) and some recent data (Interpay, 2004). English-language studies that address the Dutch case include Birch (1998), ECR (1999), De Nederlandsche Bank (2001 a, 2001b), European Committee for Banking Standards (1997), Lelieveldt (2000), Proton World International (2000), Rolfe (1998), Van Hove (2004c), and Welch (2001).

Three companies dominate the Dutch banking scene: ABN-Amro, ING Group, and Rabobank, as seen in Table 1.

The banks cooperate in Interpay, a clearinghouse service provider mutually owned by the Dutch banks. Interpay offers, among other services, credit card, payment transfer, switching, and clearing services to its members and customers. Above all, it offers services for debit-card payments and payments by giro (national transcash service). In this cooperative body, the banks had agreed to start preparations for a multifunctional e-purse called Chipknip.

In this case, we take the perspective of the bank that introduced the competing e-purse system - Postbank. Postbank, which used to be state-owned, is the biggest bank within the ING Group of banks and insurance companies. This history still has consequences for the IT systems used - the Postbank system next to the systems of the other banks. For instance, there are two separate groups of cash dispensers, one offered by the Postbank and the second by the other banks. Formerly, many people had to receive their salary on a Postbank account, which is the reason why Postbank has maintained 50% market share in money transfer. Interpay provides connection to the proprietary Postbank payment circuit.

SETTING THE STAGE

In 1994, the banks decided to introduce chipcard payments for small transactions. These would form an alternative for small cash payments and also for small PIN payments. The user electronically downloads and stores money on the card in advance before spending it in a shop. So, the chipcard is like an electronic purse. The maximum amount of money was set to be NLG 500, approximately $250. Purchases can be made at so-called Point-of-Sale (POS) terminals. The card should be reloaded at reload points to be placed next to the traditional Automatic Teller Machines (ATMs). These points should be connected with the central computer systems making use of the network also used for other forms of money transfer, such as PIN payments.

In 1995, the e-purse, called Chipknip, was introduced in the medium-sized town of Arnhem. The only functionality of the card concerned payments. The technology chosen had proven its value in the neighboring country of Belgium, which has a comparable size and payment tradition. The technology appeared to function according to expectations, retailers were willing to join, and enough consumers were in favor of the card. Therefore, the banks intended to roll out an e-purse system nationwide.

CASE DESCRIPTION

Introduction of a Competing Chipcard

Quite suddenly, on December 18, 1995, Postbank announced a competing chipcard called Chipper. Until then, they had cooperated with the other banks in the common Chipknip project. To be able to introduce the competing e-purse system, they joined forces with KPN Telecom, the largest, formerly state-owned Dutch telecommunication company. The Chipper should use the KPN telephone network. Public pay phones were to be re-equipped for recharging cards. In the second stage, all personal telephones should be enabled for Chipper payments. Using the expertise of KPN Research, the Chipper would make use of a superior technology enabling multifunctional use, whereas the Chipknip was initially only for payments. Additionally, the alliance offered extra market access since KPN Telecom had 7,500,000 customers covering almost the entire Dutch population of 16,000,000 inhabitants. Moreover, the 8,000,000 telephone cards in circulation might be replaced by a Chipper. The Postbank and KPN Telecom announced that they were willing to involve the other banks in the form of licenses to use their concept.

Moment and Speed of Technology Introduction

The competing banks tried to introduce their chipcards and related technology as soon as possible. In February 1996, the Chipknip banks announced the speeding up of the nationwide introduction of their Chipknip; by summer 1996, the cards should be distributed. They launched the Chipknip in May 1996, in the Arnhem region. They did not keep their promise - the nationwide introduction of the Chipknip started in October 1996. The Netherlands was the first country in the world with a nationwide electronic purse. In November 1996, lots of Chipknips were distributed, but there were hardly any POS terminals. This was said to be due to logistic problems of the terminal supplier. In January 1997, Interpay ordered 8,000,000 Chipknips in addition to the 4,000,000 cards they had bought already.

Time and again, Postbank announced moments for introduction of their Chipper. However, Postbank was not able to deliver it for a substantial period of time. Finally, Chipper distribution started in May 1997. The delay was due to the time needed to develop and test the advanced technology needed for multifunctionality, including paying and recharging per telephone. The production of Chippers was hindered by a shortage of chips and by the certification procedures of the Dutch national bank, which was necessary to secure safety for the payments device. By January 1998, the first Chipper terminals were certified.

From the outset, the Chippers could be loaded in public pay phones. From October 1997 onwards, it was also possible to initiate Chipper payments via normal telephones at home. The phones were to he used as a recharge device for the Chipper and to make payments from one giro account to another.

By November 1997, there were few points of sale terminals available that could handle Chippers; they only handled Chipknips, which meant that Chipper owners could hardly use their card. The installed base of both cards is presented in Table 2. It shows that the Chipknip banks were earlier in providing their clients with cards and were more successful in offering pay points. The number of Chipper pay points included 20,000 public pay phones. By June 1997, however, KPN Telecom agreed with the Chipknip banks to create the possibility of using Chipknips to pay telephone calls in all 20,000 public pay phones. In August 1999, paying with an electronic purse was possible in 64% of all shops; 56% of these accepted both cards, 8% only the Chipper, and 36% only the Chipknip. The Chipper had a better position in the number of public reload points1. Moreover, the Chipper was earlier in providing tools for loading chipcards at home using the telephone network.

Card Functionality

The chip to be used in the Chipper was more powerful than the Chipknip's chip. Therefore, the Chipper could carry more additional functionality; for instance, retailers' loyalty programs, library subscriptions, membership information, and tickets for public transport. The Chipknip could carry some additional information beyond its payment function; for instance, identification for library use, but it was less equipped for future multifunctional use.

In January 1997, the Chipknip banks introduced a much stronger chip in their cards. This enabled the Chipknip to have more than payment functionality. Cardholders could exchange their card for a new one. Reload points and POS terminals could handle both Chipknip versions. The new Chipknip carried generic functions for identification, savings programs, and tickets. These generic functions could be activated by an authorized customer; for instance, railway tickets sold by a railway company to its passengers or cinema tickets sold by a chain of cinemas to its clients. The chips could deliver the same functionality as the chips used in the Chipper.

Chipper and Chipknip had size, chip, and places of contact points in common. All other features differed; for instance, the operating system, the technology for processing transactions, and control and safety measures, so the two sets of technologies were not compatible. Nevertheless, technical solutions to handle both cards had been found, but at the cost of elegance, efficiency, and extra money. A practical difference between Chipper and Chipknip concerned the codes for loading the purse. Chipknip users could use their (online debit) PIN code; Chipper users had to learn an extra code.

Alliances

Consumers pay in shops, at gas stations, in public transport, and so forth. So, retailers and other organizations should be willing to install POS terminals. They have to outweigh the cost of this investment against the benefits of more efficient transactions.

For retailers, another argument for using the cards also may apply. Many of them operate loyalty programs (e.g., paper coupon systems or electronic systems) using customer cards. Electronic purse and loyalty programs could be combined and might reinforce each other in strengthening customer relations. Therefore, the Chipknip as well as the Chipper group of banks tried to form alliances with retailer organizations not only to get POS terminals installed but also to combine their chipcard with retail-loyalty functionality.

Since Spring 1996, Chipknip banks have tried to join forces with partners in the most important Dutch loyalty program: Air Miles. They allied with the connected companies: market leaders in supermarkets, department stores, gas stations, confectionaries, a chain of fashion stores, and the Body Shop. The role of the market leader in supermarkets, Albert Heijn (market share 26%), may illustrate the uncertainty of retailers on what to do with the systems offered or only announced by the banks. In the summer of 1996, the Chipknip consortium succeeded in making a deal with Albert Heijn. who cancelled their mutual project with Shell and the market leader in department stores on a joint client card for the benefit of their own client card. The Chipknip should handle both payments and credit points. However, Albert Heijn had to wait until summer of 1997 to install POS terminals that could handle PIN payments and chipcard payments combined with their loyalty program. But by autumn 1996, there were rumours in the press that Albert Heijn was not satisfied and had forced its home banker ABN-Amro to offer help to Postbank clients: Albert Heijn customers should be able to charge their client card at recharge terminals of ABN-Amro or other banks of the Chipknip consortium. Payments done with this client card then would be processed onwards by making a withdrawal charge (i.e., collection) toward the Postbank client's current account later on. The additional costs would have to be paid by ABN-Amro. The Albert Heijn client card then could be used as a Chipknip and could not be loaded at recharge terminals based on Chipper technology.

During 1997, Albert Heijn announced the real start of a client card, based on the Chipknip technology, with electronic purse functionality as well as Air Miles facilities. Albert Heijn customers should be able to use the card in all Chipknip POS terminals and also use it to gather Air Miles in other companies and for other Albert Heijn loyalty programs and actions. But in January 1998, Albert Heijn still had no client card available using the Chipknip technology. It decided to change its strategy and introduce a simple bonus card without purse function. The card provided Albert Heijn customers with discounts - a real incentive for consumers to use any card. It provided Albert Heijn with information on purchasing behavior and offered possibilities for customized advertising. The card can be migrated to more functionality.

During the years, alliances with other retailers and, for instance, organizations of restaurants, bars, and hotels were announced, but mostly not effectuated. An organization of butcher shops was the first to activate the Chipknip's savings function. Since the end of 1998, it has operated a client card with Chipknip functionality. For clients without Chipknip, they introduced a special chipcard.

Postbank also tried to ally with retailers and other organizations, including the national alliance of small and medium-sized enterprises. It appeared that supplying retailers with POS terminals was easier for the Chipknip banks, because their market penetration in the retail sector was much greater than that of Postbank.

The banks continuously tried to form new alliances in order to stimulate chipcard use (e.g., for use in public transport). At the end of 1999, Postbank invited young people to a pop concert of one of the most popular Dutch groups; tickets could only be bought using a Chipper. The chronological case description (De Vries & Nielen, 2001 ) shows many attempts and even agreements to use additional card functionality, but most of them were not implemented. By December 1999, four years after the Chipper had been announced, only a few were really operational.

Financial Instruments

Banks can stimulate chipcard use by making the alternatives more expensive or by giving price reductions for consumers or retailers. Traditionally, Dutch consumers do not have to pay for money transfer within their country. Chipper or Chipknip use was also free of charge. However, users received no interest for the virtual money loaded on their card. Banks could ask money for tools such as chipcard readers or telephone-connected recharge points, but they offered them for free or at reduced price.

In 1995, 84% of all transactions used paper money and/or coins, representing 6.5% of the amount of money. Because electronic purses should replace cash payments, banks decided to make cash money more expensive: per roll of coins NLG 0.40 - 0.60 should be paid extra, no matter whether these are five-cent or five-guilder coins. For retailers, a monthly subscription fee for POS terminals and a tariff per transaction applied. In October 1996, one of the banks announced that all its payment acceptance points would be free of monthly fees for customers during 1997, and another one replied that its card POS terminals were also free during this period. The press mentioned in March 1996 that Albert Heijn succeeded in agreeing to a tariff of NLG 0.01 per Chipknip transaction. Smaller companies had to pay more: NLG 0.08 for a Chipper and NLG 0.115 for a Chipknip transaction. The organization of small and medium-sized enterprises, therefore, advised their members to install neither a Chipper nor a Chipknip POS terminal. Moreover, shops faced a double subscription rate for both cards. According to them, NLG 0.02 or 0.03 would be reasonable. The Chipknip banks answered by suggesting not to lower tariffs; the Arnhem test demonstrated that electronic purses entailed savings for all parties involved. In 1997, the organization for SMEs succeeded in agreeing with Postbank and another bank of the ING Group on lower tariffs for Chipper and Chipknip. In 1999, the banks agreed that until the start of 2001, POS terminal owners would not have to pay monthly subscription fees but only the tariffs per transaction (separately for Chipper and Chipknip).

Actual Use

Until recently, the banks did not provide any data on the actual use of Chipper and Chipknip. Only some second-hand data were available. But, no doubt, the factual use was far beneath expectations. In 1995, the Chipknip banks had expected 200,000,000 Chipknip transactions during 1998, the same as the number of PIN transactions in 1995, but in March 1998, an investigation by the Consumentenbond showed that although about 50% of the consumers owned an electronic purse, 70% of them never used it for payments. In March 1998, the only Chipper application that, according to Postbank, was satisfactory concerned use in public pay phones - 700,000 times per month. By October 1998, the amount of money on Chippers and Chipknips was 0.02%; of the total amount of transferable money and circulating currency. By December 1998, only 0.2% of all retail transactions were initiated by electronic purse, whereas 6% were by PIN transactions. By November 1999, market research showed that the primary use of Chipper and Chipknip concerned public telephone and car park ticket machines.

Joining Forces Again

From the outset in December 1995, Postbank and KPN Telecom were willing to involve the other banks in their Chipper project in the form of licenses to use their concept, but these banks refused. In turn, in June 1996, Postbank was invited to return to the Chipknip alliance in order to avoid wasting money. Postbank answered that it would not even consider this; thanks to technological innovations, more was possible at a lower cost, and there was less necessity to centralize in order to save money. Only in the area of technical infrastructure was cooperation considered conceivable. In particular, all banks saw a need for cooperation in the area of POS terminals in order to avoid a customer being unable to pay.

Postbank switched its strategy of competition into one of cooperation in January 1998. Because Postbank was still a member of Interpay, it was allowed to use Interpay's payment infrastructure based on the Chipknip technology. It met with the other banks and agreed on shared usage of reload points. So, Postbank no longer needed to develop a separate proprietary network for the Chipper, and the Chipknip acceptor network compensated for the lack of installed bases. Ever since, the battle has shifted from specifications to price and added extras. The Chipper and Chipknip consortia could continue to offer differences in the area of multifunctionality of the cards. For charging the cards, two different circuits remained. However, the double monthly subscription fees (NLG 15 per subscription) still formed a stumbling block in coming to a final agreement in April 1998. Some problems remained, and the integration was not realized.

The two alliances finally agreed on a covenant on March 29, 1999. All 120,000 POS terminals should be modified to handle both cards by the end of 1999. They agreed on the division of costs of several million guilders. Different systems for loading cards should continue to exist until European-wide solutions would become available. The alliances agreed to cooperate in promoting chipcards. They also agreed on one subscription per POS terminal but did not agree on the monthly tariffs. At that point, both alliances did not charge any subscription tee in order not to create obstacles for merchants wanting to install POS terminals.

Developments Since 2000

Since their agreement, electronic purse use in the Netherlands has grown gradually, especially in contract catering; however, apparently, it was not enough. On March 5, 2001, the Netherlands Bankers' Association announced that in the early part of 2002, all Chippers would be replaced by new cards that use Chipknip technology, and there would be one common technical infrastructure. The banks expected that this agreement would stimulate electronic purse use. Indeed, since then, Postbank has replaced all of its Chipper-technology cards, and (Chipknip-technology-based) card use has increased (see Table 3) (Interpay, 2004).

Most of the growth occurred in the market segments of parking and catering. In several parking lots, it is no longer possible to pay cash or with PIN or credit card-the Chipknip is the only payment device allowed. This was said to be done in order to avoid robbery. For the same reason, several vending machines no longer accepted coins. In the canteens of many companies and schools, other ways of payment than with a Chipknip were no longer allowed in order to speed up the process at the checkout.

Chronological Survey

Table 4 summarizes the case in the form of a chronological survey. Except for the initial Chipper announcement, the many other announcements that often were not effectuated are not mentioned.

CHALLENGES/PROBLEMS FACING THE ORGANIZATION

Because in The Netherlands, most forms of payment traffic are free of charge for consumers, banks face losses on money transfer. These have to be compensated by gains from other activities; it is no wonder the banks look for opportunities for savings in costs. This was the main reason to initiate an e-purse system; it is the most cost-efficient payment product (De Nederlandsche Bank, 2004). The banks profit from yields of interest on a shared pool account. Expensive production and handling of coins and paper currency are partly avoided. Compared with PIN payments, the number of online transactions is much smaller, because retailers make a connection to the banking system once per day instead of per payment transaction. So, the more users and the more use, the better. Cost of computer systems, reload points, POS terminals, and connecting telecommunication infrastructure hardly depend on the number of users, whereas the savings depend on the amount of card use. Therefore, the common banks were and are strongly in favor of one common e-purse system.

The general cost savings argument applies to Postbank, as well. So, they must have had strong arguments to introduce a competing system. Apparently, Postbank expected a competitive advantage that outweighed the disadvantages of having two systems next to each other. We do not know the deliberations in the boardroom, and, as far as we know, they are confidential. Our perception is limited to what happened in the country and what was written in the press, and we can combine these with some interviews and with general findings from literature.

A Standardization Approach

The case can be regarded as a battle between competing standards. Scientists, especially economists, have described and analyzed several examples of such battles. Examples include standards for cellular telephone services (West, 2000), microcomputers (Hergert, 1987), interactive videotex (Schmidt & Werle, 1998), and high-definition television (McKnight, Baily, & Jacobson, 1996). Shapiro and Varian (1999) provide various short examples.

One standard has obvious advantages, such as economies of scale, transparency, and the avoidance of the costs of converting to an alternative standard. However, the standardization process often results in a battle between various designs, because the advantages of a particular standard are unevenly distributed among the involved parties, so that the efficient standard may not emerge. The number of users of a standard is called the installed base (Farrell & Saloner, 1986). There may be one solution, commonly used (e.g., QWERTY typewriter keyboard), a limited number of sets of different solutions (e.g., ANSI X 12 or EDIFACT syntax rules for EDI messages), or a large number of different isolated solutions (e.g., the use of function keys as shortcuts in software operations).

Once the installed base has been created, users tend to stick with one standard, even when the technology has become old-fashioned or inferior. The reason for this is that conversion to a new standard is costly. This is called lock-in (Arthur, 1988). QWERTY is a famous example; conversion to an easier keyboard would require expensive and time-consuming courses for typists to learn the new system.

A dominant design is "the distinctive way of providing a generic service or function that has achieved and maintained the highest level of market acceptance for a significant amount of lime" (Lee et al., 1995, p. 6). Users determine a dominant design's emergence. Once a limited number of them has chosen to implement a certain solution, others tend to choose the same. They bandwagon the early adopters' choice. The reasons for bandwagoning are, in logical order (each reason presupposes the foregoing):

* Availability of the solution. Often, the only reason for bandwagoning is the availability of the solution. Bandwagoning prevents reinventing the wheel.

* Informational increasing returns. A solution that is more adopted enjoys the advantage of being better known. This stimulates its spread (Arthur, 1988).

* Avoiding uncertainty. An already implemented solution has proven to be feasible. Most users dislike experimentation and uncertainty (Cowan, 1991, 1992) and, therefore, bandwagon the early adopters' choice.

* Economies of scale. In general, standard solutions are cheaper than tailor-made ones.

* Functionality. In the case of compatibility, there is a functional need for bandwagoning, as interoperatability is not possible without sticking to the specifications used by another actor or only possible by adding a converter. Such functionality applies, for instance, to tracking and tracing systems.

* Network externalities. In a telephone system with n users, the number of possible connections for one user is n-1; the total number of connections is n (n-1). So, the total functionality of the system is proportional to the number of users raised to the square. The more overall functionality, the more functional profit individual users gain from their investments, and the more willing they are to bandwagon the system (Katz & Shapiro, 1985). Apart from such direct network effects, indirect network effects can apply. The value, for instance, of a barcode system increases with the availability of scanning equipment. The more barcode users there are, the more scanners will be available, and the lower their price. Thus, without improved system functionality for the individual users, they profit from growth of the number of users: indirect network effects (Nicklas, 1997).

Some technologies need standardization in order to obtain enough critical mass. Without standardization, they would not diffuse. Therefore, it can be profitable for a company to have competitors that offer clone products, using the innovator's technology, since, due to network externalities, this enhances the user quality of the company's products due to network externalities (Connor, 1994). In the case of network externalities, the lock-in effect is extra strong. Conversion to a new better technology is only profitable when a large number of players do the same, so nobody dares to change since, unless a collective action is organized, a player does not know whether others will follow.

Because of the bandwagon effect, the first standard available has an advantage later, competing standards, if any. The first agent is the first player to set a standard for a certain topic. The player will not always be the winner in terms of profit. In spite of having income from early adopters and advantages in terms of goodwill and brand loyalty, other early entrants using the same standard can free-ride on the first mover's investment in infrastructure and training (Landis Gabel, 1994). In a market with great uncertainty, the second mover can learn from the first mover's mistakes and gain a competitive advantage by improving product quality or by positioning this second mover's offerings closer to the customer's preferences (Nicklas, 1997). In a case about microprocessor standards, Swann (1987) also mentions the attractiveness for the new entrant to produce a second-source copy of an industry standard rather than introduce its own product.

It is not a law of nature that first agents dominate the game of competing standards. Often, several standards can co-exist, each of them having a part of the market. In the case of network externalities, however, it is more probable that one standard will win, because this is the most profitable situation from a user's point of view, not counting the drawbacks from monopolistic situations. Of crucial importance for the success of standards in such situations, however, is not their current rate of use, but the expectation of their future use. In such a situation, a standard proposed by a powerful party having little or no current market share may displace an existing standard that has a considerable market share. The shift from WordPerfect to Microsoft Word in text processing was an example of this; the expectation that Word would win was related to the shift from MS DOS to Windows. Moreover, Word offered additional functionality and partly backward compatibility to WordPerfect. A powerful party like Microsoft can be called a dominant agent. Its dominance, for instance, may be due to market share (Braunstein & White, 1985), power image, or status.

It is possible that two standards in the market exist concurrently. When competing standards differ in the advantages they generate for different categories of users, each of them may develop its own installed base and subsequent lock-in effects, which may prevent one of them from winning (Arthur, 1988). In a market with network externalities and competing standards, the preferred solutions are (1) an adapter that enables conversion from the implementation of one standard to that of the other standard, assuming that costs of an adapter are not too high (Baake & Boom, 1997) or (2) a joint modification (Cowan, 1992). These solutions increase the functionality of the system for customers. For suppliers, they enhance the likelihood that the technology, as such, generates enough customer confidence to obtain the critical mass necessary for a breakthrough. Such gateway technologies that bridge the two incompatible technologies generate ex post compatibility (Nicklas, 1997). Competing standards may cause market and buyer uncertainty, as they do not know which one, if any, will win-they face the danger that products that fail to receive enough support cease to be supported and further improved (David, 1995). Licharz (1997) has argued this in a case about IBM's OS/2 standard for operating systems. OS/2 competed with the Windows 95 standard and reinforced the loss of market share of IBM's own DOS standard. On the other hand, an early choice of one standard can build confidence to invest in a new technology. The early setting of an American standard for color television, on the one hand, was the reason why colors in the US are prone to deterioration in transmission through the ether. On the other hand, this situation strengthened the leading role of the US in producing programs and films and provided the public with the new technology at an early stage (Overkleeft & Groosman, 1987), even though it look another 10 years for any real breakthrough (Farrell & Shapiro, 1992).

Challenge for Postbank: Be and Remain Competitive; Decide Under Uncertainty

Apparently, Postbank expected to have a competitive advantage by introducing the Chipper. It is not clear whether this bank aimed at pushing the Chipknip from the market or at achieving a considerable market share next to the Chipknip. At least, its aim will have been to consolidate the 50% market share in consumer payments. It had at least two important arguments for the decision to withdraw from the Chipknip alliance:

1. Thanks to the alliance with KPN, it had a superior technology. It had access to the knowledge of KPN Research and the experiments with multi-functional cards. This enabled them to come up with an electronic purse with added functionality. Apparently, Postbank expected the Chipper to be a dominant design that would be bandwagoned because of superior functionality.

2. The alliance with KPN enabled Postbank to profit from KPN's installed base; it could use reload points everywhere in the country (via public pay phones) and, after some time, in almost everybody's home (via private telephone). So, the alliance would have a larger number of reload points than the Chipknip banks. The size of the bank (30% market share, 50% share in consumer payments) was not enough to make it a dominant agent next to the Chipknip banks, but the alliance with KPN should outweigh this. Postbank could not be the first agent, although it had participated in the Arnhem pilot project. It should be as fast as possible - fast in developing and introducing the technology and fast in allying with other parties that are willing to use the additional card functionality.

In the case of disappointing results, Postbank could return to the Chipknip technology, which reduced its risk. The Interpay membership rules allowed for this.

Postbank and its partner KPN Telecom had to decide without knowing how the market would react and what the other banks would do. They decided to introduce the Chipper. We do not know to what extent they were aware of the available standardization theory. It could be worthwhile reconsidering their decision using this theory.

The decision was followed by various strategic moves. The war between the two standards involved publicity campaigns, strategic alliances, and price cuts. It resulted in a lack of acceptance of the technology, as such. Moreover, compared with a situation with one standard, lots of extra costs were incurred, not only by Postbank, which left the common chipcard initiative, but also by the other banks. Chipknip banks were losers, too, because the battle hindered market acceptance, and the 1999 covenant to create a common infrastructure for two different cards created lots of conversion costs. Their estimated losses, due to investments in the cards and infrastructure that were hardly used, are comparable to those of Postbank: about $250,000,000. They would probably have profited more if they had accepted Postbank's invitation to participate in the Chipper project, despite all the preparations that were made for the introduction of Chipknip and despite all the uncertainty surrounding the Chipper initiative.

In order to be successful, Postbank depended on the willingness of retailers to cooperate. E-purses can be a blessing or a curse for retailers (Van Hove, 2004b). Chipcard payments are cheaper for them than online debit card payments, because they make an electronic connection to their bank once a day instead of at each payment transaction and because of speed of payment. They are cheaper than cash payments, also, because of the speed of payment and because of less coin exchange with the bank. In The Netherlands, credit cards are not used in supermarkets, but this alternative would have been more expensive, as well, because then the retailer would be required to pay a transaction fee to the organization providing the service. So, from a retailer's point of view, the e-purse is better than the three other options. However, retailers have to invest in the installation of POS terminals before they can profit from an e-purse system. In the case of two e-purse systems, there is a double investment. For a retailer, it is not only the cost argument that is important; there is also the option to combine loyalty programs with a payment system. The main challenge, then, for a retailer will be to create a competitive advantage, and if a payment system could enhance loyalty, this might be a major argument for installing it. In the beginning of 1997, Postbank had not yet managed to establish partnerships with retailers. The challenge at that moment was whether to continue or to return to the Chipknip project.

Postbank chose to continue, and it look another four years until this bank finally decided to stop the Chipper technology. Since then, e-purse use has shown considerable growth, although the overall share in payment traffic remains small, and the present figures are only a fraction of the expectations predicted in 1995. Moreover, most growth concerns applications where the consumers no longer have a choice to use coins (e.g., parking and contract-cat ring). In voluntary applications, such as chipcard use in shops, there was and still is little growth. Moreover, it was costly to maintain and extend an infrastructure suitable for two cards. Probably, these were the considerations that finally led to the decision to use one card and one infrastructure - back to square one.

Some Lessons Learned

This case and its analysis may be informative for parties involved in strategic choices related to the introduction of new IT systems in markets characterized by network externalities and, more particularly, for parties intending to introduce a competing e-purse system. Some lessons emerge from this study.

1. The case demonstrates that a battle between standards can stimulate innovations. Compared to the Chipknip, the Chipper had superior functionality, hut this stimulated the Chipknip alliance to innovate their system and to speed up the process of card distribution. The Netherlands was the first country in the world to have e-purses distributed among all households. However, they were hardly used, so the innovations were not successful.

2. The destructive development of the Dutch banking chipcard market may facilitate coordination and stress the importance of one chipcard standard in other chipcard markets. Two standards may be feasible, but, in general, it will be better for most parties that only one standard is implemented. The expensive experience in The Netherlands may deter the implementation of two standards in other countries.

3. Cases regarding competing standards usually stress the choices that are available to potential users. In this case, two categories of users apply - consumers as well as retailers and other organizations where consumers have to pay. Both may wait for each other, and this, therefore, forms an additional threshold.

Subject: Standardization; Cash payments; Payment systems; Competition; Electronic banking; Studies

Location: Netherlands

Classification: 8100: Financial services industry; 9175: Western Europe; 5250: Telecommunications systems & Internet communications; 9130: Experiment/theoretical treatment

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 1

Pages: 1-15

Number of pages: 15

Publication year: 2006

Publication date: Jan-Mar 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: References Tables

ProQuest document ID: 198657252

Document URL: http://search.proquest.com/docview/198657252?accountid=38610

Copyright: Copyright Idea Group Inc. Jan-Mar 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 42 of 100

Lab Development for Delivering Information Systems Courses Online at Small Campuses

Author: Li, Chao

ProQuest document link

Abstract:

In this case study, you will encounter some of the issues of lab development for delivering lab-based information systems courses online. Many small campuses have very limited budget or no budget at all for the computer lab specifically designed for information systems majors. Sometimes, even with new computers purchased, very few people know how to set them up for lab-based information systems (IS) courses. What are the software and hardware requirements for getting the lab online? How much will it cost? Where can you find resources for the lab development? To ensure quality teaching on IS-related topics, you have to deal with these issues. This case study will discuss how to create a lab that allows students to get hands-on practice for courses such as network management or database processing online with a shoestring budget. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATIONAL BACKGROUND

Jackson University was founded in 1973. The university's primary teaching site is established in a rural area surrounded by ranches, farms, and small towns. The primary role of the university is to provide junior, senior, and graduate level courses for the students graduated from several local community colleges. The university offers bachelor's and master's degrees in education, business administration, accounting, marketing, management, computer science, mathematics, English, psychology, communication, criminal justice, history, biology, and other areas of arts and sciences. About 1,600 students are taking classes in three major teaching sites that are about 100 miles away. Some of our students may need to drive 50 to 100 miles to attend classes. Faculty members travel from campus to campus to teach the classes. There are some online courses; most of them are lecture-based courses. The computer science and computer information systems program currently has about 100 students enrolled. The program offers more than 30 undergraduate and graduate courses for the upper division (junior and senior level) undergraduate and graduate students. On today's job market, students majoring in information systems-related fields are expected to know the theories about information technology and have hands-on skills for problem solving. To prepare information systems students to meet these expectations, the emphasis should be on both theory and hands-on practice in teaching. There are many publications emphasizing the combination of theory and practice (Swanson & Fouad, 1999). For the hands-on practice, the information systems majors need a teaching lab specifically designed for them. The students also should be able to access the labs through the Internet to reduce the burden of long-distance driving. However, like many small campuses, there is limited budget and support from computer service for the technology-based courses. The following sections will discuss the challenges and how to overcome the difficulties in order to meet the needs of teaching and learning of information systems courses.

SETTING THE STAGE

In this section, let us get started with philosophy, technology utilization, and management practice. First, the discussion will be on the description of various IS courses and their lab needs, particularly those that use the same resources but have conflicting requirements. After describing the courses and lab needs, the discussion will be on why a special lab is necessary for our information systems students. Then, it will focus on how the students use the lab and on the conflicts caused by multiple courses using the same resources. It will include current computer service staffing, resources, and requirements vs. needs. This discussion will illustrate why it is hard to put information systems courses online. Finally, you will see how much budget and support a small campus can gel.

From the previous section, it is known that multiple teaching sites are involved in this case study. For each teaching site, a special teaching lab should be developed for hands-on practice. Each special teaching lab is designed to handle multiple courses. Each of these courses has its own requirements for lab resources.

This case study will include several hands-on practice-intense courses that are required courses for computer science and computer information systems majors. These courses are offered in multiple teaching sites and require the computer labs to perform hands-on practice. Multiple courses often share the same resources in a computer lab. As mentioned in the previous section, the teaching sites are away from each other, and all the students live off campus. Therefore, these courses also require that students be able to access the labs through the Internet.

Normally, there are about 20 classes offered each semester, and some of the classes may be offered at multiple teaching sites. There are about 15 students enrolled in each class. Often, the same course offered at different teaching sites is taught by different instructors, and therefore, the class needs its own lab and only allows its own students to access the lab.

To secure these computers, Windows Service Pack 2 and MacAfee VirusScan will be installed on each computer. The lab should be separated from the university's main network to protect the university's normal business operations. Since the main objective of the labs is for learning, the security requirement for the teaching labs is less restricted than that in the production environment for reliable business operations. However, for the teaching labs, reinstallation is often due to malfunction caused by students' mistakes. Also, at the end of each semester, the computers in the labs will be reimaged for the next semester.

Course Descriptions

As already mentioned, multiple courses share a teaching lab. The following are detailed descriptions of each of the courses. The descriptions provide information about the contents of each course and the requirements for the resources in the teaching lab.

Database Processing Systems. This is a senior-level database system development course (Association for Computing Machinery, 2005). The objective of the course is to understand the fundamentals of database processing. The topics include database design, database implementation, and database application developments. Some up-to-date topics, such as Web databases, three-tier architecture, XML, OLAP, and data warehouse, also will be introduced in this course.

To gain hands-on experience in developing and managing databases, the SQL server database management system will be used to help students to understand the features, functions, and characteristics of an enterprise DBMS.

The lab requires resources including desktop computers that can handle Microsoft Windows XP, SQL Server 2000, client-server computing architecture, and some database design and application development software such as Microsoft Visio, Microsoft Visual Studio .NET, and Microsoft Office. In each lab, at least four local area networks should be attached to the classroom backbone network. The networks should have Internet access.

Telecommunication and Networks. This is a junior-level networking course. The objective of the course is to teach telecommunication and network theories and their applications. The topics may include application of communication/network in organizations, networking protocols, communication/network design, transmission media, networking equipments, performance tuning, and network architecture.

To minimize the cost, the Linux operating system is used to serve as the network operating system. With Linux, students can configure local area networks, set up Internet connections, perform network security tasks, create routers, develop distribution computing environments, and manage the network involving multiple subnets.

The lab requires resources including desktop computers that can handle the Red Hat Linux package. To enhance the group learning experience, in each lab, at least four local area networks should be attached to the classroom backbone network.

Network Management. This is a senior-level networking course. The course covers network management at the enterprise level. The topics may include planning and designing WAN and Internet architecture at the enterprise level, directory services theory and application, implementing network services, performing network management and administrative tasks, enforcing corporate policy, and managing distributed computing systems.

To handle the enterprise-level networks, Windows Server 2003 should be installed on each computer in the lab. It is required that each computer should have 4GB or larger hard drive and a minimum of 256MB RAM to handle Windows Server 2003. Four routers are used to separate four domains, and another router will be used to separate the lab from the Internet. Switches and hubs are needed to create the subsets in each domain.

Application Development with GUI. This is a junior-level application development course. It is a programming-related course (Koneman, 2004). The objective of the course is to develop business applications with Visual Studio.NET. Students will create various GUI projects with VB.NET, ASP.NET, ADO.NET, and XML Web services.

For hands-on practice, the course requires the installation of Visual Studio.NET and SQL Server 2000 on each computer with Windows XP Professional or Windows Server 2003. Unlike the previous three courses, this course prefer a stable computing environment, which means that there is no frequent changing of the network structures, reconfiguring of operating system setup, altering of database server configurations, and so forth.

To be more focused, only the previous four courses will be included in this case study. These courses will be used to demonstrate the lab resource sharing from different aspects. Many other courses also will use the teaching labs. For example, the data mining and data warehouse-related courses often require Oracle to be installed on a client-server structure (Han & Kamber, 2000). The software engineering and project management-related courses need to use Microsoft Project. Courses such as Data Structure and Operating Systems require Java programming packages to be installed in the labs. Similar to the Application Development with GUI described previously, these courses prefer a more stable computing environment. Therefore, in terms of sharing lab resources, these courses can be treated similar to the course Application Development with GUI by using different software.

Teaching and Learning in the Labs

The university emphasizes teaching. The standard teaching load is 12 credit hours. There are five full-time faculty members in the department. For each course, the instructor decides how to use the lab resources. Based on the textbook chosen by the instructor and the instructor's experience with certain hardware and software, the instructor designs his or her own lab activities. The instructors cannot do everything they want. They have to try their best to develop the lab activities under the constraints of the availability of resources and the budget. The situation often requires the instructors to have some experience in lab development. However, for many new professors with doctoral degrees in computer science or related fields from major universities, the first difficulty is how to set up the lab for the courses they are going to teach. Setting up labs is not part of their training for their doctoral degrees. From their universities, they have learned abundant knowledge about computing theories, computer structures, software management, and programming skills. They learned these on a well-established platform. Technicians in the major universities already have set up well-defined labs for them. When they come to a small campus like this one, all of a sudden, they are facing problems they have not encountered before. They have to learn from scratch on wiring the networks, setting up operating systems, and configuring database servers.

Most of the lab development and management workload will be on the shoulders of the instructors. Occasionally, they may get help from student tutors, who also work in the computer labs at the main leaching site. Most of the student tutors have no experience in lab development, and their duties are mainly helping other students with their homework assignments.

The background information about the university indicates that many students live in rural areas. Some of them drive more than 100 miles to go to class. It is a great convenience if these students can access the lab resources through the Internet to complete their assignments. There will be a section later to address the difficulties of setting up an online computer lab.

Many of the lab activities involve the configuration of operating systems or networks. These activities require students to work as system administrators. Therefore, the students performing these activities are given an administrator account. With the system administrator account, the students can perform system configuration tasks. On the other hand, it is very likely that a student may misconfigure the system and crash the computer.

Group activities often are used to accomplish the lab objectives. It is preferable to have two to five students in a group. When grouping students, each group ideally should have a student who has more hands-on experience than the other group members. Group learning is particularly good for courses that involve intense hands-on activities. For example, the course Telecommunication and Networks requires students to work in a local area network environment. Each subnet includes a server, at least two client computers, and some network equipment such as switches and routers. A group of students can be assigned to work on each subnet. It is more efficient to assign a student to operate on the server and the other students to work on the client computers. While some students are checking the hardware connection, the others can install the network service components. After completing the lab project, the students will have a group discussion to put the findings together to write a lab report. For some programnning-related courses, hands-on practice often focuses on a single subject. In such a case, students can work individually in the lab.

Sharing Resources

As described earlier, there is a great demand for lab recourses from multiple courses at the three teaching sites. Also, students need to access the labs through the Internet. This section will investigate issues on resource sharing, since several classes share the resources in the same lab and each class has its own need for the lab. It is a challenge to meet everyone's needs. The positive side is that the class size is relatively small. Normally, there are 15 to 20 students in each class. At each teaching site, there is only one class session for each course. On the down side, each semester there are about five to 10 classes offered at each teaching site. These classes compete for the same lab resources. In general, the needs for the lab resources can be categorized as follows:

* Courses that need database server support. Database Design, Database Processing Systems, Data Warehousing and Data Mining, Decision Support Systems, Client-Server Computing, Application Development with GUI, Web Engineering, E-Commerce, and Internet Computing.

* Courses that need Web server support. Web Engineering, E-Commerce, Internet Computing, Database Processing Systems, Client-Server Computing, and Application Development with GUI.

* Courses that need reconfiguration of operating systems and network structures. System Administration, Systems Analysis and Design, Network Management, Telecommunication and Networks, Operating Systems, and Computer Communication Protocols.

* Courses that need the Linux operating system. Telecommunication and Networks, System Administration, Systems Analysis and Design, and Operating Systems.

* Courses that need a stable computing environment. Fundamentals of Programming, Intermediate Programming, Data Structures, Information Security and Privacy, Information Systems Security, Project Management, Software Engineering, Application Development with GUI, Web Engineering, E-Commerce, and Internet Computing.

The first four categories also need labs to provide the client-server computing environment. The multiple courses offered in the same semester will compete for the lab resources. The conflict will be illustrated by the following example. The description of the courses provides the detailed information about four courses - Telecommunication and Networks, Network Management, Database Processing Systems, and Application Development with GUI, which are from four different categories. Suppose that these four courses are offered in the same semester and at the same teaching site. The Telecommunication and Networks class will need the Linux operating system installed on a network constructed with four subnets connected to the backbone network. Each of the subnets is structured as a client-server system. Therefore, there will be four client-server systems connected to the backbone network. At the same time, the Network Management class will need Windows Server 2003 installed on the same network. These two classes need two different operating systems. The students in these classes have to change the configurations of the operating systems and the network from time to time. Meanwhile, on the same network, the Database Processing Systems class needs to install SQL Server 2000, Visual Studio .NET, and other software packages on the computers with Windows XP Professional or Windows Server 2003. The students in this class prefer a stable operating system and network structure. However, they often have to change the configuration of the database server. Last, the class Application Development with GUI requires that SQL Server 2000 and Visio Studio .NET be installed on each of the computers in a single client-server structure. The students in this class need a stable computing environment regarding operating system, network, and database system.

The needs of students from one class conflict with the needs of those from the other classes. As mentioned by the background information, there is not much budget and support for the computer teaching labs. The options, such as hiring a consulting company, buying more new computers and network equipments, or letting computer service people do it, are not on the table. The instructors have to find a way to solve the problem. It will be helpful to examine what the current situation is on the leaching labs, budget, and support from computer service. The following sections will address these issues.

Need of Special Teaching Labs for Information Systems Majors

For hands-on practice, the first thing you need is computer labs that can get the job done. The general purpose university computer labs will not do. Those labs are designed for users who surf the Internet and use application software. Heavy security prevents students from getting any system administration work done. In fact, lab managers would prefer that information systems students stay away from their labs. These students need to work on network configuration, system management, database administration, Web-based application development, and software and hardware maintenance. These types of training are necessary to meet the requirements from the e-commerce industry. Our students need an administrator account. Being a system administrator or database administrator gives students a good opportunity to gain the serverside problem-solving skills. So, the information systems majors have to have their own labs.

Tight Budget

As described in the previous sections, the labs need more up-to-date software and hardware in order to meet the course requirements. However, the budget for the teaching labs is very limited. For the hardware, in the past 10 years, only one teaching lab got funded once. To solve the problem, the faculty members collected the surplus Dell (Dell Inc., 2005) computers, replaced PCs from the university's offices and from a general purpose computer lab and installed them in the special teaching labs. Most of these computers are Pentium II or Pentium III personal computers with CPU speeds ranging from 400 MHz to 600 MHz. Most of these PCs have a 10- to 20 GB hard drive. Some of the computers have two hard drives with two operating systems: Windows XP (Microsoft Corporation, 2005) and Red Hat Linux (Red Hat Inc., 2005). Sometimes, the faculty members cover some of cost on the hardware by using their grant stipend, if it is allowed. For the software, there is budget of $800 per year to cover the cost of the Microsoft software and $500 per year to cover the cost of Oracle database software.

Limited Technical Support

Like many small college campuses, there is a shortage of technical support for the fast-changing computer technology-related courses. Due to the shortage of manpower on a small campus, technicians are busy keeping the university running. The computer service department provides support in the areas of purchasing hardware and software, shipping the surplus computers to the dedicated teaching sites, searching for computer parts needed for replacement, tracking the computers' serial numbers, providing the computer security information, and maintaining software licenses. There are no dedicated computer service personnel for the teaching labs at the teaching sites. The computer service staff is not familiar with most of the software and network setup in the teaching labs, and they usually do not manage the teaching labs. It is hard for them to design the labs to meet the requirements of the ever-changing teaching plans. Even the maintenance of the labs is a challenging job for them. Every student has an administrator account. It is easy for a student to crash a computer in the lab with a wrong configuration. Since help from the technicians is limited, lab development and management are often the responsibility of faculty members. From hardware and software installation to creating hands-on teaching materials, it takes many hours for faculty members to complete these tasks. It is especially hard for new faculty members to develop their own labs. As mentioned before, most of the new faculty members do not have the skills in network management, system administration, database administration, and hardware and software troubleshooting. These skills normally are provided by professional development training courses such as Microsoft Certified Systems Engineer (MCSE) or Red Hat Certified Engineer (RHCE). Often, the veteran faculty members lend a helping hand to the new faculty members in lab development.

Difficulties of Putting Computer Labs Online

As mentioned in the background information, the university's teaching sites are 100 miles apart. Traveling is a burden for both professors and students. Why not online? Well, it is not easy to put information systems courses online. These courses are not lecture-based courses like history and literature where students can read and download the online course materials. Information systems students need hands-on practice on the network or database in a lab. Among many difficulties, allowing students to access the computer lab through the Internet is a challenging one. Il is doable if you have money; once a consulting company said the discount price for setting a lab that can get the job done is about a quarter of a million dollars. Obviously, the labs cannot be built in this way.

CASE DESCRIPTION

Earlier, it was described how the instructors and students use the teaching labs, the course contents, the need for lab resources, the budget for the teaching labs, the support from the computer service department, the skills needed to develop and manage the teaching labs, the conflict caused by lab resource sharing, the need to have a teaching lab for the information systems students, security issues, and the difficulties of constructing an online computer lab. As mentioned earlier, the need for lab resources is high, but the budget and support are limited. The following will demonstrate how the instructors and students overcame most of the difficulties to develop the teaching labs to meet the requirements of various courses in the information systems curriculum.

Lab Resources vs. Needs

This section gives a detailed description of the hardware, software, and lab setup, and how the resources meet the needs in teaching and learning.

Hardware Requirements. There are aboul 10 to 30 computers in each lab. Most of these computers are Pentium II or Pentium III personal computers with CPU speeds ranging from 400 MHz to 600 MHz. Most of these PCs have a 10 to 20 GB hard drive. Some of the computers have two hard drives with two operating systems: Windows XP (Microsoft Corporation, 2005) and Red Hat Linux (Red Hat Inc., 2005). The Pentium II computers are configured as routers to reduce cost. The Pentium III computers are powerful enough to host Windows XP Professional, Windows Server 2003, and SQL Server 2000. Even though students often complain about the computers running too slowly, they understand that this is the best the teaching labs can get.

For security reasons, a router is configured to separate the lab network from the university's main network. In the description of the courses, it has been stated that several courses need the client-server architecture to perform their lab activities. Depending on the course requirements, the labs normally are configured with one backbone network and several subnets attached to the backbone network. Through a hub or switch, each subnet is connected to the lab's backbone network, where the primary domain controller and the secondary domain controller are installed. On each of the local area networks, one of the computers is used as a server with Microsoft Windows Server 2003 installed on it. Other computers in the same LAN are used as clients. On each of the subnets, a three-tier client-server computing environment is constructed. Courses such as Database Processing Systems, Telecommunication and Networks, and Network Management can use this type of lab setup. For another type of lab setup, a computer is configured as the backbone network server so that all other computers in the lab can be used as clients that communicate with the backbone server. This type of lab setup is good for courses like Application Development with GUI and courses that need to work on a single client-server system.

Some of the courses need the Linux operating system, and the others need the Windows operating system. To meet the needs of every course, most of the PCs in the special teaching labs have dual boot operating systems - Windows and Linux. The labs have been using Red Hat7.1 and Red Hat9.0. Red Hat no longer supports these versions. Instead, Red Hat is promoting Red Hat Desktop and Red Hat Enterprise Linux. For learning purposes, these old versions are still valuable for the students. There are a few newer PCs with the newest Red Hat Linux operating system - Red Hat Enterprise Linux version 3. This type of setup will let both the Network Management class and the Telecommunication and Networks class share the same lab.

To allow the course Application Development with GUI, which prefers a stable environment regarding operating system and network, to share a lab with other classes, a third operation system - Microsoft XP Professional - is added to each computer. It requires 10 GB to install all the application software such as Microsoft Access, InfoPath, Visio, Visual studio.NET, Oracle Database, Oracle Developer Suite, and Java Software Development Kit.

For the Database Processing Systems class, you can install SQL Server 2000 to the hard drive with Windows XP Professional as the operating system. You need to make sure that students from the Application Development with GUI class and students from the Database Processing Systems class use different database servers. One database server is used as a data provider for GUI, and the other one is used for the students in the Database Processing Systems class to perform database design, implementation, and administration tasks.

Software Resources. All the software installed in the teaching labs and on the students' home computers are supported by the MSDN Academic Alliance (MSDNAA) program (MSDN Academic Alliance, 2005), the Oracle Academic Initiative (OAI) program (Oracle Academic Initiative, 2005), and Sun Microsystems (Sun Microsystems, 2005). For more detailed information aboul these programs, please visit their Web sites. You can browse http://www.msdnaa.net/ about the MSDN Academic Alliance (MSDNAA) program, http://oai.oracle.com/en/index.html about the Oracle Academic Initiative (OAI) program, and http://www.sun.com/ about downloading J2EE and J2SE.

The MSDNAA program has provided rich resources for the special lab development. The program includes Windows Server 2003, Windows XP Professional, Visual Studio.NET, Access2003, InfoPath2003, Project2003, Visio2003, SQL Server 2000, BizTalk Server 2000, Commerce Server 2000, and many more. The software provided by the MSDNAA program is particularly helpful for the following courses in the curriculum:

* Database system design and application-related courses such as Database Design, Database Processing Systems, Data Warehousing and Data Mining, Decision Support Systems, Client-Server Computing, and Application Development with GUI.

* System-related courses such as System Administration, Software Engineering, and Systems Analysis and Design.

* Network management courses such as Telecommunication and Networks, Network Management, and Computer Communication Protocols.

* Internet computing courses such as Web Engineering, E-Commerce, and Internet Computing.

* Security-related courses such as Information Security and Privacy, Information Systems Security, and Project Management.

* Programming-related courses such as Fundamentals of Programming, Intermediate Programming, and Data Structures.

The Pentium III computers in the labs can handle most of the software provided by the MSDNAA program. The installation of the software is relatively easy. The software supported by MSDNAA is placed on a Web server. Students are able to download the software with a user name and password provided by the university. After the students have downloaded the software on their home computers, they need to contact the computer service department to get the installation key.

The OAI program is another great program for supporting the special lab development. It provides all the database-related software such as Oracle Database, Oracle Developer Suite, which includes the software for developing forms, reports, graphics, and PL/SQL development tools. Oracle is used in most of the courses that teach enterprise-level topics in information systems such as Data Warehousing and Data Mining, Decision Support Systems, and Client-Server Computing. The classes with hands-on practice on Oracle are very popular among students.

For courses such as Application Development with GUI, Internet Computing, and Data Structures, besides C++, C#, J#, VB.NET, ASP.NET included in Visual Studio.NET, the J2SE and J2EE packages are also installed in the labs for JAVA programming.

Besides the Windows operating system, Linux is added to the labs to give students an opportunity to explore a different operating system. Linux operating system is used in the Telecommunication and Networks, and System Administration courses (Petersen & Haddad, 2004).

The Cost

From the previous descriptions of the labs, it seems that the labs may cost a lot. In fact, with the support of the MSDNAA and OAI programs, they are affordable even for small campuses. As described before, the software provided by MSDNAA and OAI can cover almost all of the needs for teaching and learning. The cost of MSDNAA is about $800 per year. Under the agreement with MSDNAA, these software products can be used by the entire department. That is, they can be installed in the computer labs. Each faculty member or student in the same department also can install the software on a desktop computer or notebook computer at home or in the office. The cost of the OAI program is also about a few hundred dollars per year. The JAVA packages can be downloaded from the Sun Web site free. Unlike the previous versions that you could download from the Red Hat Web site for free. Red Hat charges a small amount for the academic edition of Red Hat Desktop and Red Hat Enterprise Linux. The academic prices are as the following (Red Hat Academic Products, 2005):

$25 per unit for Desktop Academic Edition

$50 per unit for Enterprise Linux AS/ES Academic Edition

For each lab, the hardware cost is small. There is no cost for the surplus PCs. For the network equipments, the lab simply can configure a PC as the router with no cost. Several four-port hubs or switches are needed to create the subnets in the lab. Each of the hubs or switches costs about $30 to $50.

Impact on Key Stakeholders

The previous discussion shows that in order to support ilie needs of IS courses, special teaching labs can be created. As you can see, with $1,500 per year, a small information systems department can keep several labs like the previously described ones going. With minimal cost, resources in these labs can support multiple information systems courses. These teaching labs allow students to access the lab resources through the Internet. After years of effort, these teaching labs are now supporting many information systems courses such as Network Management, Database Processing Systems, Telecommunication and Networks, Application Development with GUI, E-Commerce, Data Mining, Data Structures, and so forth. In the past, students only could learn the theories in the books. Some of these courses could not even be offered due to lack of lab support. As mentioned before, without hands-on practice, it is difficult for students to meet the expectations of today's job market. Now, the students can gain the knowledge and skills through both theory learning and hands-on practice.

For the instructors, developing the labs is not just to meet the course requirements; it is also a great learning process. To be able to teach hands-on based course materials, the instructors have to know how to get the lab done first. By developing the hands-on teaching materials, the instructors will have a much better understanding of course contents. Their teaching contains not only theories but also design activities, project implementation strategies, and problem-solving skills.

The client-server structure in the teaching lab makes the students work together as a group. Each student in the group has a role. They must work together to get the job done. By working together, the students have learned teamwork skills, which are important in the real world.

To see how to develop a lab to meet the requirements of an information systems course and how students can access the labs through the Internet, let us look at a detailed case study example. In the example, you will first go over the teaching plan, which gives the required lab activities. Then, based on the teaching plan, a list of hardware and software will be specified for hands-on activities. The last part of the case study example will explain how to configure the computers in the lab in order to meet the requirements of the teaching plan.

Case Study Example: Meet the Requirements of the Course Network Management

Hands-On Activity Requirements

Hands-on skills are essential in order for students to carry out the network management tasks. The lab should be configured to conduct the following hands-on activities included in the teaching plan.

Lab Activity 1: Getting started with Windows Server 2003

Students will learn how to install Windows Server 2003, connect to the lab server with Remote Desktop, join the existing domain, access the resources on an existing domain, and use Active Directory management tools.

Lab Activity 2: Active Directory Design

The activities involved in a design process are identifying data owners, service owners, support from administrators, and organizing a team.

Lab Activity 3: Creating Active Directory

The topics covered in this lab activity are configuring the DNS server, delegating the DNS authority to a subdomain, installing Active Directory, creating a new domain, and promoting a computer to a domain controller.

Lab Activity 4: Developing Active Directory

In this lab activity, students will establish trust relationships among domains in a forest, create trust to another forest, create OUs (organization units), and move OUs in a domain.

Lab Activity 5: Managing Users, Groups, and Resources

This lab activity will leach students how to create and manage Active Directory objects such as Users, Groups, and Resources.

Lab Activity 6: Protecting Networks

In this lab activity, students will deal with network security issues such as access tokens, access control lists, group security, permission control, network auditing, Kerberos settings, NTML authentication, and authentication with smart cards.

Lab Activity 7: Building Active Directory Sites

This lab activity will let students design, create, and manage sites. Students also will learn how to create and manage subnets, bridgehead servers, and group catalog servers.

Lab Activity 8: Replicating Active Directory

Students will perform some replication activities such as intrasite replication and intersite replication, and will generate replication reports.

Lab Activity 9: Maintaining Active Directory

Students will learn how to maintain an Active Directory by performing the tasks such as defragmenting and compacting an Active Directory database, backing up the Active Directory database, and recovering the Active Directory.

Lab Activity 10: Enforcing Corporate Policy

This lab activity includes creating a group policy for an OU, modifying the group policy, restricting the group policy, managing desktop with the group policy, distributing applications with the group policy, and managing security with the group policy.

Lab Activity 11: Managing Network with Lightweight Directory Access Protocol

This lab activity will cover topics such as finding LDAP names, querying Active Directory with LDAP (Howes, Smith, Good & Howes, 2003), and accessing various directories with ADSI.

Lab Activity 12: Upgrading to Windows 2003 Native Level

In this lab, students will upgrade the existing Windows NT and Windows 2000 to Windows 2003 at the Windows 2003 native level.

To support the lab activities included in the teaching plan through both the Internet and the on-campus special computer lab. The following are the lab resources needed for the class.

Hardware Resources

* Computers with Pentium III with 550 MHz. or higher CPU and 256 MB RAM are recommended.

* 4 GB or larger hard drive, floppy-disk drive, and CD ROM are required.

* Servers that serve as routers should have mutable IP addresses, and each of them should have two network cards installed.

* A hub or a small switch for each local subnet.

* Internet access via university network or through DSL or cable connection.

* A switch to connect the subnets and the lab server.

* Network cables with RJ45 connection.

* A printer.

Software Resources

* Microsoft Windows Server 2003.

* It is recommended that Microsoft Office should be installed on the lab computers so that students can write their lab reports.

Network Resources

* In the description of the university, it was mentioned that the enrollment in each class is often not very large. In the lab, these students are usually divided into groups with two to five students in each group. Figure 1 shows the network topology of the lab. It also shows how the students are connected to the lab through the Internet from home.

* There are several subnets in the computer lab. Each of the subnets is connected through a hub or a switch (Comer, 2004).

Students Accessing Lab Resources Through the Internet

Students can access the servers through the Internet. One way to access the servers from home is by using the Terminal Server technique. To allow students to access the servers from home, the servers in the lab should have the Terminal Service component installed, and the students should have the privilege to log on to these servers. After Terminal Service is installed and the students have Windows XP installed at home, they can access the servers for configuration through Remote Desktop Connection.

Most of the time, the home computer setup and configuration will not work during the first try. In class, the instructor will demonstrate how to set up the computers properly in order to logon to the server in the lab. A checklist is posted in the lab. The students can use the checklist to verify if their home computers are configured properly. Next, check the network connection to see if the communication is established. Then, check if the logon is properly configured. If all of these failed, the students can bring their computers to the lab so that the instructor and other students can help with the configuration. For detailed information about Windows Server 2003 Network, please read the books by Eckert and Schitka (2004) and Carswell (2004).

CURRENT CHALLENGES FACING THE ORGANIZATION

The labs work. The students and professors are enjoying them for now. However, in the long run, some lab issues do present challenges for the university.

Need for a Safe Place for the Labs

Due to the shortage of space, only one of the labs has its own room. The other two labs are shared with regular classes. The computers are arranged along the walls inside the classrooms. Often, these classrooms are unlocked. Security is a great concern. Even though these computers are protected by user names and passwords, the hardware equipment is not protected.

Conflicts in Lab Configuration

As more and more courses in the information systems curriculum involve hands-on activities, the computer labs have become very popular. This has led to another problem. Since many of the classes require students to have administrator accounts and often to reinstall the hardware and software for practice, this will delete the setup and configurations for other classes. Sometimes, there are multiple operating systems installed on the same computer. Installing hardware and software for one operating system may cause problems for other operating systems. One of the solutions is to use movable hard drives. This method has been used by some universities to allow multiple classes to share the same computer lab. Each class may have its own bootable hard drives. Before the class starts, the lab assistants switch the hard drives. Although the method is good for teaching, it is not convenient for students. For students who rely on the computer lab to complete their assignments, they will find that the lab setup for their class may not always be available.

Responsibility for Developing and Managing the Labs

Due to the shortage of manpower on a small campus, technicians are busy keeping the university running. It is hard for them to design the labs to meet the requirements of the everchanging teaching plans. Even the maintenance of the labs is a challenging job for them. Every student has an administrator account. It is so easy for a student to crash a computer in the lab with a wrong configuration. Since there is little help from the technicians, the lab development and management are often the responsibility of faculty members. From hardware and software installation to creating lab teaching materials, it takes long hours for faculty members to complete these tasks. Teaching at a university with multiple small campuses is already a challenge. Except for some Internet-based classes, faculty members often travel from one campus to another to teach. Students especially prefer the faculty members to be on site during lab sessions in order to quickly solve technical problems encountered during hands-on practice. To prepare the students to meet today's demands on technology, faculty members need to update their knowledge on the technology used in the lab. Professional development for faculty members takes a lot of time and energy. The hours spent on teaching and in lab development are often well over 40 hours per week. Also, professors have to do research even at a small university. The research requirement is in their job evaluation description. The workload is a big concern. Dedication to teaching is often the motivation for the faculty members to keep updating the special computer labs. The question is how long can this last? In colleges and universities like the one described here, the teaching load is 12 to 15 credit hours. It is the standard, which cannot be changed. The only other option is to give up the lab development work since it is not a standard. Then, how about learning those hands-on skills and problem solving skills for real-life jobs? It is hard to see the information systems majors graduating without these skills.

Subject: Laboratories; Information systems; Computer science; Case studies; College campuses; Curriculum development; Online instruction; Technological planning

Location: United States--US

Classification: 9190: United States; 8306: Schools and educational services; 9110: Company specific; 5250: Telecommunications systems & Internet communications

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 1

Pages: 16-30

Number of pages: 15

Publication year: 2006

Publication date: Jan-Mar 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: References Diagrams

ProQuest document ID: 198654872

Document URL: http://search.proquest.com/docview/198654872?accountid=38610

Copyright: Copyright Idea Group Inc. Jan-Mar 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 43 of 100

The Case of Telepsychiatry Adoption and Diffusion in a Healthcare Organization in New Zealand

Author: Al-Qirim, Nabeel

ProQuest document link

Abstract:

This research investigated telemedicine adoption and usage in psychiatry in one hospital in New Zealand (NZ). This research utilized the technological innovations theories as a guiding theoretical framework to develop a set of determinants of telemedicine adoption in healthcare organizations. The research looked at two stages in the case study concerning the adoption process of telemedicine, utilizing the video conferencing technology (TMVC). Prior to TMVC adoption, the findings suggested that TMVC was adopted according to its relative advantage and cost effectiveness, along with other facilitating factors such as image enhancement. None of the deterring factors seemed to impede the adoption decision of TMVC. Results from the postadoption stage suggested that TMVC was used minimally in the case study. The superficial assessment of important factors such as complexity and compatibility, prior to TMVC adoption, further suggested this weakness. In comparison with the literature, the incompatibility of TMVC in psychiatry stood as a unique cultural identifier pertaining to TMVC adoption in the NZ case study. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATIONAL BACKGROUND

Information systems (Austin, Trim & Sobczak, 1995; Conrad & Shorttel, 1996; Neame, 1995; NZHIS, 1995a, 1995b, 1996), information technology (IT) (Bomba, Cooper & Miller, 1995) and technology (Little & Garland, 1991) have been emphasised as strategic tools for enhancing healthcare delivery and improving performance, leading to optimized services and efficiencies (Telehealth, 2002).

However, in view of the New Zealand (NZ) studies (Neame, 1995; NZHIS, 1995a, 1995b), it was indicated that the health sector is relatively devolved, with purchasing contracts being the main vehicle to drive sector-wide change at the provider level. Much of the information needed is unavailable in the form needed or at the time that it is most needed. This, in part, is related to gaps in the conceptual understanding of service delivery, which in this sector is a very complex business spanning what has been an extensive range of relatively autonomous functional areas. But it is also due to a lack of reliable information about outcomes, effectiveness, and actual costs on which improvements can be based. Because of this lack of empirical data, the tools for dealing with this complexity and for understanding what happens and why are deficient (NZHIS, 1996). Various organizational issues and the lack of coordination at the national level also were identified. Expertise in health information management and systems is limited. Currently, few health and disability sector personnel have the knowledge or skills to understand the issues or to make informed judgments about the validity of the advice they obtain.

However, NZ is not alone in this situation, and the literature suggested that different countries in the world face similar difficulties (Austin, 1992; Bakos & Tracy, 1986; Bangs et al., 2003; Conrad & Shortell, 1996; Shortell, Morrison & Friedman, 1990; Topping & Hernandez, 1991). This literature pointed to different organizational, technological, and environmental impediments in adopting and making use of IS/IT in healthcare organizations (Austin, 1992; Austin, Trimm & Sobczak, 1995; Ward, Griffiths & Whitmore, 1990). For example, Bangs, et al. (2003) pointed to a similar situation in describing the status of information systems in National Health Services (NHS) in the UK. They found that medical information about patients is stored in various places and that access to such information is restricted at various levels of care. They suggested a telemedicine solution based on store-and-forward and real-time video as one of the viable solutions to such fragmentation in healthcare delivery at the national level in the UK.

The Importance of Telemedicine to NZ Healthcare Organizations

The philosophy underlying the National Telehealth' Plan is that telehealth should be mainstreamed as far as possible. That is, telehealth is not an end in itself, but rather it should be utilized as an alternate delivery mechanism for mainstream services, or to enhance the effectiveness and efficiency of mainstream services. (Telehealth, 2002, iii)

Diminishing funds from the government and cost control have led to the need for alternative and more cost-effective means of providing healthcare (Al-Qirim, 2003a, 2003b, 2005; Bangs et al., 2003; Edelstein, 1999; Neame, 1995). In many cases, this has become necessary for survival (Edelstein, 1999) in order to sustain the increased competition among healthcare providers. The business of healthcare has become so competitive that many small rural hospitals are trying to align themselves with larger tertiary care centers in a community health-information network, a telemedicine network, or some other type of partnership in order to survive and to retain their local patients (Huston & Huston, 2000). Within these challenges, telemedicine emerges as one possible solution to NZ health providers, for example, in reaching out to rural patients (Charles, 2000; Harris, Donaldson & Campbell, 2001), in areas where patient volumes for certain services are limited (Edelstein, 1999) in order to conduct administrative and clinical meetings and to conduct different training courses to patients (e.g., smoke treatment centers), doctors, nurses, and other medical staffs (Perednia & Allen, 1995; Wayman, 1994). Therefore, telemedicine improves the access to healthcare services and the overall quality and cost-effectiveness of these services (Guedemann, 2003) and even to a level where telemedicine could be used to promote disease prevention, lifestyle management, and well-being (Lymberis & Olsson, 2003).

Telemedicine means medicine from a distance where distant and dispersed patients are brought closer to their medical providers through the means of telecommunication technologies (Charles, 2000; Noring, 2000; OTA, 1995; Perednia & Allen, 1995; Wayman, 1994). Noring (2000) provided an interesting comparison between the former definition for telemedicine and telehealth. This researcher defined the term telehealth as expanding the capacity of telemedicine in order to provide the full continuum of care, from health promotion and disease prevention through curative treatment and terminal care. This term also implies including nonphysician-based healthcare providers.

Telemedicine covers a wide spectrum of benefits through the use of telemedicine, utilizing video conferencing technology in areas such as consultations, diagnostics, therapeutics, transfer of patient-related records, case management, training, and meetings. Researchers envision telemedicine to be an important building block in the strategic plan of many healthcare organizations (Charles, 2000). In a rural setting, telemedicine could help NZ health providers in supplying quality, fast, and economical medical services to rural patients and, hence, save doctors and patients valuable time wasted in commuting large distances. Specialists could utilize this extra time in seeing more patients at the main hospital.

Initial Stock-Take of Telemedicine Projects in NZ

All the hospitals in NZ are managed by regional organizations known as District Health Boards (HHS). Some HHSs have one hospital and others have more than one. A survey by Al-Qirim (2003a) found that medical schools in NZ were among the early adopters and users of the technology. Out of 23 DHBs in NZ, only 12 have actively adopted telemedicine utilizing video conferencing technology (TMVC). The adopted systems ranged between one and four TMVC systems with the majority of HHS adopting one system only. Those HHS that adopted one TMVC system used it mostly for general purposes such as managerial meetings, case discussion, and occasionally clinical training. Such initiatives were described as being initial and experimental. Where an HHS owned more than one TMVC system, it was oriented for clinical purposes such as psychiatry, pediatrics, dermatology, and other medical areas. Hence, an attempt was made to adopt TMVC to provide prompt and quality medical care even to geographically dispersed patients in different parts of rural areas, which otherwise was not possible or expensive. This finding was further investigated in this research by undertaking one case study from the hospitals that adopted more than one TMVC system.

Challenges Facing Telemedicine Success

At the outset, high-quality information about the costs and benefits of telemedicine applications, particularly in the context of routine services, is still relatively limited (Hailey et al., 2003). In review of the literature, it was observed that despite the rapid growth and high visibility of telemedicine projects in healthcare (Grigsby & Allen, 1997), few patients actually were being seen through telemedicine for medical purposes. Earlier success stories of telemedicine in countries such as the U.S. demonstrated that telemedicine was feasible while maintaining diagnostic accuracy, which challenged the widely held belief that a patient and a provider must be in close proximity for healthcare to take place. However, recent research reported mid-level success for telemedicine projects (Guedemann, 2003). In almost every telemedicine project, teleconsultation accounts for less than 25% of the use of the system (Perednia & Allen, 1995). In a large study in the U.S., Edwards and Patel (2003) found that the clinical uses of the telemedicine network did not exceed 30%. The majority of the online time was used for medical education and administration (Edwards & Patel, 2003; Hassol, 1996; Perednia & Allen, 1995; Wayman, 1994). The low level of telemedicine usage can be explained in part by the federal government position on reimbursement for telemedicine consultations (Hassol, 1996). However, this author did not find any association between reimbursement and telemedicine utilization in his research. He pointed to other issues that need to be resolved in order for telemedicine to succeed in healthcare. These unresolved important issues revolve around how successful telemedicine can be in providing quality healthcare at an affordable cost and whether it is possible to develop a sustainable business model that could maintain profitability over time. Perednia and Allen (1995) provided more influencing factors: (1) clinical expectations; (2) matching technology to medical needs; (3) economic factors like reimbursement; (4) legal issues (e.g., restrictions of medical practices across state lines [licensure] and issues of liabilities) and social issues (e.g., changing physician behaviors and traditional practices and workflow) (Anderson, 1997); and (5) organizational factors. Edwards and Patel (2003) addressed some of these factors and, at the same time, attributed the relative success of telemedicine to addressing defined clinical needs, organizational support, acceptance by physicians and patients, measurable cost and clinical benefits, and moving toward sustainable operations. Edwards and Patel (2003) described the success of telemedicine networks in the U.S. They attributed this success to addressing defined clinical needs, organizational support, physicians' and patients' acceptance, exhibiting measurable cozy and clinical benefits, and moving toward sustainable operations. Recent research confirmed the same in terms of raising the importance of broadening the assessment of telemedicine success in healthcare organizations to include other factors beside equipment and communication modalities, such as administrative, clinical, economic, and social outcomes (Hailey et al., 2003).

In the psychiatry area, Simpson, et al. (1999) found that the continued high satisfaction with telepsychiatry service was attributed to reduced wait and travel time, ease of referral and scheduling, and the quality of information provided to both client and physician. The qualities of the psychiatrist was one of the major influences on how satisfied consumers are with a consultation, and this may not differ between face-to-face and telepsychiatry delivery. The utilization of the telepsychiatry service would appear to have been determined by a combination of factors, including: the availability of psychiatric expertise locally, distance of patients from psychiatrists, other available methods for accessing psychiatric advice, and integration with other mental/ general health services. In addition they reported the following findings:

1. The provision of psychiatric consultations over video technology is a viable option in areas with limited psychiatric resources. Their results showed high satisfaction and acceptance among general practitioners, consumers, and psychiatric consultants with an overall satisfaction rate of 89%. Although 29% of those interviewed suggested they would rather use telepsychiatry than see a psychiatrist in person, most comments that were received, especially from family doctors, suggested that face-to-face consultations would be the more desirable option. As for geriatric assessment, psychiatric consultants suggested that an adequate assessment only could be achieved on an in-patient basis, where a full medical assessment and observation can take place.

2. Reduced wait time for an appointment (7.4 days), reduced travel time, and cost ($200 per consultation) were identified as the major benefits to the consumer.

3. Depression was the most common diagnosis (28%).

4. Equipment problems were noted in 17% of all consultations, but this did not seem to affect acceptance of the technology.

5. A cost analysis comparing the costs of a consultation provided by a visiting psychiatrist and those of telepsychiatry found a break-even point of 350 consultations a year. However, when use of the video-conferencing network for administrative and other meetings was taken into account, the break-even point was 224 consultations a year, substantially below the actual utilization of telepsychiatry.

6. Surprisingly, 38% of those who received consultations were referred to local mental health services. While the number of individuals referred for repeat telepsychiatry visits increased, the number of individuals referred for hospitalization decreased.

7. This finding suggested that the long-term impact of telepsychiatry may mean increased demand for community mental health services, which would exert great pressure on rural GPs, let alone the fact that mental health was under-serviced in rural areas. This meant that telemedicine is becoming an integral part of the continuum of services in these communities.

8. The need to consider the use of telepsychiatry for immediate and emergency assessment and the need for targeted marketing strategies (services available and the success of the technology in providing consultations) were identified as common themes and areas of concern for communities, consumers, and general practitioners.

The few available research studies in the area of dermatology in NZ provided interesting insights. Research in Health Waikato (HW) in NZ (Oakley et al., 1996, 1997, 1998, 2000) reported the following advantages for adopting telemedicine:

1. Patients positively viewed the telemedicine systems and faced no difficulties in communicating with the dermatologist through the telemedicine equipment.

2. Telemedicine represented an opportunity for rural GPs to learn from the telemedicine encounters involving the specialist. This was not possible earlier, as they had to refer the patient directly to a specialist.

3. A protocol was adapted from another hospital in Ireland that assisted HW in administering its telemedicine encounters with rural patients. The diagnoses were discussed over the telemedicine, and a management plan was formulated that included a treatment plan and a follow-up plan (Oakley et al., 1998). Prior to the telemedicine encounter, a database record that included the patient's details was sent to the dermatologist by e-mail. After the encounter, the dermatologist filled a database report and was sent to the patient's GP by e-mail (Oakley et al., 2000).

On the other hand, there were concerns regarding the accuracy of clinical diagnoses made with the telemedicine compared to face-to-face (one-on-one) consultations. There also were some concerns about rapidly moving patients in front of the video camera, but no specific difficulty was reported about examining infants (Oakley et al., 1996, 1997). HW further investigated these concerns and found that early diagnosis was better to be performed on a face-to-face basis (Oakley et al., 1997). This was related to low clarity of the images transmitted via the telemedicine system and its failure to show sharp skin lesions (e.g., pigmented lesions, rashes). This could be enhanced with greater experience and improved image and communications technology. Accordingly, these studies concluded that telemedicine could be used with a reasonable degree of accuracy and that telemedicine is moderately useful in dermatology.

After adoption, HW implemented a cost-benefit analysis (Oakley et al., 2000). Findings revealed that TMVC consultations were less time-consuming and less costly for patients than hospital consultations. Patients reported that they travel an average of 271 km to see a specialist at HW. This would have cost them NZ$160 compared with the NZ$7 spent on commuting to the TMVC center. The TMVC link seemed beneficial to them. Further, the average consultation time was almost similar to traditional appointments. Waiting time was reported to be less than traditional dermatology consultations (Oakley et al., 1998). The study showed that the economic benefits of TMVC favored the patient rather than the secondary health provider (Oakley et al., 2000).

This research will attempt to discuss the factors mentioned later upon completing the research analysis.

Statement of the Problem and Research Questions and Objectives

The obstacles pointed out by the research discussed raise several issues about the success of the telemedicine technology as an effective medical tool in healthcare organizations. Despite the sophistication of the TMVC technology, it was clear that its uptake and use in medical areas necessitated addressing other influencing factors besides the technological ones; namely, organizational, social, and environmental factors. Whether this assertion applies to NZ HHS is yet to be identified from this research.

Therefore, this research was interested in developing an understanding about how one of the hospitals in NZ viewed telemedicine and, accordingly, posited the following research question: What are the factors that influence TMVC adoption and usage in healthcare organizations and how can these factors influence its adoption and success in healthcare organizations in HHS in NZ? Thus, the objectives of this research were to identify potential determinants of TMVC adoption and to explore how these determinants could influence TMVC success in the NZ case study. The first objective implied investigating the telemedicine literature in order to develop such influencing factors and, hence, to identify which of these variables influence TMVC adoption and success. The second objective involved explaining the effect of these factors on TMVC adoption and success in HHS in NZ, thus highlighting salient features pertaining to the adoption decision of TMVC in one HHS in NZ.

In order to answer these research questions and to achieve the previously mentioned objectives, this research introduces the technological innovation literature as a guiding theoretical framework in order to assist in introducing factors that could influence TMVC adoption. The research then introduces the methodology section detailing data collection and analysis techniques and highlights important propositions and rival propositions. The research then expands on the case study itself and introduces different sections to cater to for case findings, analysis, and discussion. This research ends with a conclusion section.

THEORETICAL FRAMEWORK

In search for models that could explain technology adoption in organizations, researchers found that Rogers' (Rogers, 1983, 1995) model appeared to be the most widely accepted model by researchers in identifying critical characteristics for innovations (Al-Qirim, 2003a; Moore & Benbasat, 1996; Premkumar & Roberts, 1999; Thong, 1999). Rogers' (1995) classical adoption model is made of the following factors: relative advantage, complexity, compatibility, observability, and trialabilily (Table 1). Cost has been outlined as an important determinant of adoption by Rogers (1995) and other researchers (Bacon, 1992; Elliot, 1996; Tornauky & Klein, 1982). The image factor was found to be an important determinant in innovation adoption research (Rogers, 1995). Even though Rogers (1995) highlighted the importance of the image factor on IT adoption, he suggested that it could be studied from within the relative advantage characteristic. However, Moore and Benbasat (1996) stressed the image factor as an independent factor on its own. The social aspects laden in Rogers' (1995) definition of the different characteristics of the innovation (Table 1) are quite apparent.

Despite the limited empirical research about the effective use of telemedicine in healthcare delivery, the results of using telemedicine (observability) at the outset in different clinical areas were quite observable to the different hospitals (Grigsby & Allen, 1997; Perednia & Allen, 1995). The image factor was found important to the adoption of technologies in the health literature as well (Little & Carland, 1991).

ORGANIZATION BACKGROUND

The hospital under study represents a leading HHS in NZ. It provides a range of community and mental health services (Table 2). For the purpose of this study, a single ease study was selected and is represented here by the fictitious name Mental Health Services Directorate (MHS) in one of the HHSs in NZ. MHS identified the need for a solution to the rural community mental health needs and the various options available in establishing mental health services there. The rural center has three nursing staff serving 100 mental health patients.

The hospital maintained a simple and almost flat organizational structure with five directorates as shown in Figure 1. The general managers of each directorate reported directly to the chief executive officer (CEO) of the hospital. The Mental Health Services Directorate (MHS) was one of the five directorates and covered mental patients at the two hospitals and at the rural community center, as shown in Table 2.

SETTING THE STAGE

Due to the exploratory nature of this study, the researcher decided to conduct semi-structured and open-ended interviews first, followed by focused interviews later. Interviews were face-to-face, one-on-one, and in-person. Interviews were recorded on audiocassettes. The researcher conducted several in-depth interviews with the following persons in the mental health directorate: general manager, clinical director, and registrar. The general manager of MHS was 44 years old and had been working in the health industry since 1975. He and the clinical director identified the need for a solution to the psychiatry requirements in the rural center. They went through different steps to investigate the possibility of adopting a suitable technological solution in the rural center and to achieve different objectives from this technology. These steps are described alongside two phases:

1. Pre-Adoption. Attempted to capture the interviewees' experiences and behaviors prior to TMVC adoption in MHS.

2. Post-Adoption. Attempted to capture the impact of the different factors in this research on TMVC usage and success after its adoption in MHS.

The general manager was responsible for the adoption decision of the TMVC in MHS. The clinical director assisted during the decision-making process. The general manager of the mental health directorate reported directly to the CEO of the HHS. This flat organizational structure facilitated efficient communication channels among the different directorates and the CEO.

CASE DESCRIPTION

Table 3 highlights the perceptions of MHS about TMVC prior to and after TMVC adoption. This was essential in order to highlight the importance of the innovation characteristics on the adoption decision of TMVC. The main issues emerging from the case study are discussed next.

Pre-Adoption Phase: Relative Advantage, Observability, and Image Enhancement

The rural center is a one-hour drive from the main hospital, and psychiatrists used to visit the rural mental health patients regularly. For providing effective mental health services to the rural area, MHS either has to establish a full psychiatry center or ensure regular visits by the psychiatrists. MHS has decided on the latter course due to lack of finances to set up a full psychiatry center. The clinical director of MHS is a member of a regional society for psychiatrists. The clinical director has attended one of the society's conferences where the benefits of TMVC were presented. He also witnessed the usage of TMVC in mental health services and its wide usage in Australia. Upon his return, he shared the idea of introducing TMVC in his hospital with the general manager of MHS. The introduction of the TMVC systems was intended to eliminate even those regular visits by psychiatrists so as to enable them to concentrate on their clinical responsibilities.

The general and clinical managers identified various benefits that would accrue by introducing TMVC. The system allowed instant and continuous access to remote rural patients and a solution to their recruitment problem in finding psychiatrists accepting working in the rural community center; it saved on psychiatrists' travel time to see patients and reduced their workload; it could be used for managerial meetings and for reviewing medical journals, either with rural a community center or with the other hospital; and it could be used for medical training (continuing education). The general manager indicated that MHS desired to be a leader in the use of TMVC in mental health services in NZ.

Return-On-Investment (Cost)

As per the discussions, the general manager saw an opportunity by adopting TMVC and presented this TMVC project to top management, which highlighted the financial gains along with other advantages. Like any other HHS in NZ, the hospital under study was under tight financial constraints. The project plan anticipated to save NZ$100,000 annually on psychiatrist time and on travel expenses. It was a cheaper option than establishing a psychiatry center in the rural area. The plan envisaged implementing the project on a lease-to-buy basis rather than requesting the whole amount of money in advance from top management. He even arranged the funds for the project through internal funding. In addition to clinical advantages, it could be used for various managerial and training purposes.

Finally, after approval was obtained from top management, the TMVC project was adopted. Three TMVC systems were installed in the two hospitals and in the rural community center with the ISDN 128 Kbps bandwidth. Each system was placed in a separate room equipped with electrical and data points and a good lighting system. After conducting the training on the system by the supplier, the system was put into use. All the consultants and registrars showed interest in using the TMVC for general purposes (i.e., meetings, training) across the two hospitals and not for clinical purposes. MHS decided to dedicate two psychiatrists for the clinical use of TMVC in the rural center.

Complexity, Compatibility, and Trialability

Since it was a novel project, there were concerns regarding the availability of a technical person who could understand and maintain the ongoing operation of the system. The supplier aggressively promoted its video conferencing product to MHS and demonstrated the basic features of the system to the clinical director and to two psychiatrists by dialing into the regional head office of the supplier in Australia. The general perception developed that the system was compatible with MHS, not complex and easy to operate with minimal training. There were not many difficult technical operations to master other than controlling the camera (scanning, zooming) and the use of the remote control device.

The general manager in this regard made sure to take a guarantee from the video conferencing supplier for the ongoing support and the availability of the system. Surprisingly, a short period after supplying the TMVC systems to MHS, the supplier closed its business. The regional office in Australia promised to maintain the ongoing support of the supplied TMVC equipment afterward.

Post-Adoption Phase

After embracing the TMVC project from its inception until its adoption, the TMVC project progressed from the general manager to the clinical staff to start using the system. This leading role was not matched by the clinical director. This is explained next.

Complexity and Compatibility

After adopting the system, various difficulties were highlighted by clinicians in MHS. In order to provide proper treatment to psychiatry patients, seeing them in person (one-on-one) was essential. Visual images of patients' facial reflections and their voices were essential and could not be compromised by the psychiatrists. The use of other technologies like audio conferencing, video images, and photos were inadequate to see mental patients. However, basic follow-up techniques utilized by MHS psychiatrists relied heavily on telephone conversations (i.e., whether patients were taking their medications regularly). TMVC was seen as the only acceptable solution in the psychiatry area and as a follow-up tool only. Seventy percent of psychiatrist's activities in MHS were based on home visits (one-on-one) to their mental health patients, where the actual examination look place. Patients can be seen in their real environment (where they live, the people surrounding them, etc.).

Psychiatrists had to move to the TMVC theater to operate the system and to establish the connection with the rural center. There was no dedicated staff for the installed TMVC system. The clarity of the images and the voices were highlighted by the psychiatrists as being poor and not acceptable for seeing remote patients. This hindered the frequent usage of the system afterwards. Consequently, the bandwidth was upgraded from 128 kbps to 384 kbps. and the clarity of the images was enhanced, although the voice quality did not improve to acceptable standards. The interviewed registrar indicated that the supplier of the TMVC equipment could have sourced the speakers from a third-party supplier and raised the fact that these speakers were not compatible with the existing TMVC system. Sometimes the TMVC encountered lots of blackouts due to the unreliable ISDN connection and related devices such as network-bridge, which crashed under overloading. Likewise, the bandwidth and video conferencing suppliers encountered difficulties in finding solutions to such technical problems. The lack of a dedicated help-desk facility to attend to psychiatrists' urgent technical calls created lots of frustrations among the clinicians in MHS.

Further, psychiatrists found it burdensome to leave their offices and conduct a TMVC session in the theater. They had to learn how to maneuver the camera across the room to interview the mental health patients and their families that accompanied them. Getting mental health patients to focus on the camera rather than at the television screen was also highlighted as another challenge. Fear of technology (i.e., afraid to touch the video conferencing equipment and damage expensive equipment) and the dislike of seeing oneself on the screen were witnessed among the computer-illiterate clinical staff, which was more evident among the elderly doctors. In one instance, one of the nurses in the rural community center almost fainted when she saw herself on the television screen.

The majority of psychiatrists in MHS developed a strong opinion about the TMVC encounters (one-to-one vs. one-on-one) as being unacceptable technology in the psychiatry-clinical area. Issues concerning patients' reactions, hand movements, facial reflections, and, above all, the home visits and the one-on-one basis encounters were quite prevalent among those psychiatrists. If a psychiatrist was present at the rural center, there was no advantage in having TMVC consultation simply because the psychiatrist was a specialist. Surprisingly, the clinical director seemed to agree with these views, and he stressed that seeing new patients should be based on one-on-one and in person. He confirmed that locating junior psychiatrists in rural areas supported by TMVC uplinks was not recommended, as this move was risky clinically as well as legally.

The situation was further worsened with the technological complexities and the failure of the TMVC technology and its bandwidth in providing quality services, which created lots of frustrations among the TMVC users in MHS. The lack of a dedicated help-disk resource to attend to urgent faults further aggravated this frustration. The clinical director indicated that although telepsychiatry is successful in Australia, the Australians are ahead of NZ in TMVC by many years and developed the hands-on skills in going along with the technology.

However, there was some evidence to suggest that some psychiatrists were enthusiastic about the TMVC technology, and this enthusiasm seemed to encourage TMVC adoption and usage in the rural center. This was supported by the fact that there were some psychiatrists who were consistently using the technology in seeing their patients, specifically the psychiatrists in the rural areas, driven in part by the relative advantage of the technology, as indicated earlier, and by the fact that they showed a personal interest in technology and in developing and mastering the man-machine interactions. Being in a rural area with fewer loads has helped to bridge the gap between those psychiatrists and TMVC, as well. When those psychiatrists left MHS to go to another hospital, the hospital had to revert back to their earlier practices in seeing rural mental health patients in person by other psychiatrists residing in the main hospital.

The Inability of MHS to Sustain the Investment Made on TMVC

One year after adopting the TMVC system, KMHS was able to attract a donation from the local telecommunication provider to sponsor the expenses of one psychiatrist-registrar for one year to manage and empower the TMVC initiative in KMHS and to implement a protocol that would coordinate TMVC sessions and schedules. Adopting and implementing a protocol in coordinating TMVC sessions and schedules is of paramount importance to the success of the TMVC in HHS, as it could allow for better cost control and efficient time allocation and management. At the same time, this registrar explored other opportunities where TMVC could be utilized further. For example, TMVC was used in conducting interviews for recruitment purposes and for judicial reviews where judges used TMVC technology to review the status of mental health patients and for various legal proceedings. In these instances, the judicial encounters with patients were recorded on videocassettes and kept securely as legal evidence. Other than that, the regular TMVC encounters were not recorded for privacy and legal reasons. Also, on some occasions, the system was rented to rural businesses to conduct overseas TMVC sessions.

However, MHS was not able to have the donation renewed, and the registrar had to go back to his earlier duties as a psychiatrist. The registrar indicated that he spent most of his time responding to technical queries from frustrated psychiatrists who were using the TMVC system and in coordinating the technical visits for the TMVC supplier. The registrar concluded that TMVC should be "fast, intuitive, robust, stable, and trustworthy (FIRST)" before it could be relied on for clinical purposes. The inability of MHS to dedicate a registrar to empower the TMVC activities posed a challenge in justifying the investment made (cost/benefit) on TMVC, as it was clear that a dedicated clinical champion was needed to empower the utilization of the TMVC technology in MHS. Patients' perceptions were not considered before the adoption decision but after adoption results showed that rural patients were curious and comfortable with the technology and saw it as easier than traveling to the main hospital.

CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION

Determinants of Adoption

Cost-Benefit Analysis

MHS have undertaken a rigorous cost-benefit analysis to justify the investment made on TMVC and, hence, to make the relative advantage and cost the most significant factors to the adoption decision of TMVC in MHS. However, MHS was not able to achieve most of the envisaged advantages, because the psychiatrist used the TMVC minimally in MHS. MHS encountered different difficulties and discovered that TMVC required further resources and integration into core clinical practices. The inability of MHS to dedicate and finance a registrar to empower the TMVC activities resembled a challenge in justifying the initial cost-analysis and the ongoing investment in TMVC. Perednia and Allen (1995) and Wayman (1994) confirmed the same, where they attributed the failure of telemedicine projects to the inability of hospitals to justify the costs involved in adopting and running the telemedicine system. On the other hand, adopting and implementing a protocol in coordinating TMVC sessions and schedules is of importance to the success of TMVC in HHS. as it allows for better cost control and efficient time management. Therefore, including it as part of the feasibility study of MHS and other hospitals is recommended here.

Facilitation Factors

MHS perceived adopting TMVC to further endorse their image and position as a leader in the psychiatry area in NZ. However, it was not as significant as the cost and the relative advantage factors to the adoption decision of TMVC. The interviewees indicated the same for the observability factor. The observability of TMVC in healthcare was one of the initiating factors to the adoption decision of this innovative technology in MHS. It was an important determinant but the controversies that surround telemedicine projects and their limited usage in seeing patients (Perednia & Allen, 1995; Wayman, 1994) was not observable to the case study in this research. This recent telemedicine research showed increased usage of TMVC in healthcare delivery, even in the area of psychiatry (Simpson et al., 1999). The clinical director admitted that Australia is ahead of NZ in using the TMVC technology. Potential adopters could benefit from published TMVC research in their area of medical practices. Such hospitals should not be lured to adopt it by media hype or by technology vendors' push, and hence, hospitals need to look at their adoption context first and assess their readiness for adopting the telemedicine technology. The intertwined and seamless integration between telemedicine and key clinical areas (i.e., psychiatry) is very important, and ignoring this fact could lead to the failure of the telemedicine technology in healthcare organizations. The absence of empirical data and evidence to substantiate TMVC's effectiveness in healthcare delivery could further limit its success in healthcare.

Weak Assessment of Important Factors Prior to Adoption

Other factors like complexity, compatibility, and trialability were not tackled rigorously by the case study before TMVC adoption. Initially, the TMVC was viewed by MHS as not complex and as compatible with the psychiatry practice. The limited trialability (simple demonstration) of the TMVC system gained MHS's satisfaction and acceptance. However, the complexity of the TMVC in general and its incompatibility in the psychiatry practice specifically proved to be the most significant deterrents of TMVC usage in MHS afterwards. These conclusions were backed by findings from the current limited utilization of TMVC in MHS. Experimenting with TMVC before adopting it could have detected key clinical issues pertaining to the complexity and compatibility of TMVC in the psychiatry area in MHS.

The Uniqueness of the NZ Context

Rogers' (1995) compatibility characteristic has revealed essential social and cultural implications in the telepsychiatry practice in MHS in NZ specifically. TMVC seemed to penetrate core clinical paradigms in the psychiatry practice in MHS. Issues like one-on-one, in person, facial and body reflections, voice and hands movement of patients, and their real environment setting were all practiced in person by psychiatrists to achieve a better rapport with their patients in order to achieve effective diagnoses and interventions. Using the TMVC seemed to create lots of rejection to the technology among the psychiatrists. This fact could be used here to suggest the uniqueness of the adoption culture among psychiatrists in MHS in NZ. The clinical director reported that TMVC was used successfully in Australia, which further confirmed the preceding conclusion. However, it is worth investigating this finding further by undertaking more case studies in the psychiatry area in NZ and then comparing the results with other countries in the world. Further, confirming the research findings with respect to other clinical settings such as dermatology, paediatrics, radiology, and so forth, could yield more insights, as well. These are potential areas for further research.

The situation in MHS was aggravated further by the failure of the technology and the bandwidth in supplying reliable and clear images and voice of the patients (complexity characteristic). The fear of misdiagnosing or mistreating psychiatry patients using the TMVC technology could lead to tragic consequences and legal liabilities, which has limited further the usage of TMVC by psychiatrists in MHS. This, in fact, eliminated one of the essential applications of the TMVC technology as a clinical tool and as a vital tool in a rural setting. This highlights a disadvantage and incompatibility issues concerning TMVC adoption among psychiatrists and the importance of the preparatory stage to the adoption and usage of TMVC among users. Wayman (1994) has pointed to this perspective and to the importance of teaching doctors first about TMVC before introducing it. This gradual process is stressed here. Resolving technological impediments and deficiencies in the TMVC technology could lead to the success of this technology in clinical areas such as psychiatry. Therefore, providing reliable and precise technology to adequately see and hear remote patients and to diagnose diseases more accurately could lead to more satisfaction among clinicians.

One of the greatest advantages of TMVC to NZ is that NZ does not face similar challenges to the ones faced by large countries such the U.S. NZ's small area and population (3.82 million) (NZStat, 2001) could lessen the impact of many of the these challenges that hinder telemedicine adoption in the U.S. Major impediments highlighted in this research, such as licensure and reimbursement, are major issues in the U.S. but not in NZ. There is one legal system in NZ, and hence, interstate legalities and boundaries are large issues in the U.S. only.

At the outset, MHS viewed the research factors favorably in influencing their adoption decision of TMVC. In line with Table 3, factors like relative advantage, cost-benefit analysis, observability, and image were the main contributors to TMVC adoption. According to their limited trials of the TMVC system, they viewed it as compatible in psychiatry and as not complex. In reality, the first two factors were the main contributors to the adoption of TMVC, and the remaining factors acted as facilitators and accelerators to the adoption decision of TMVC in MHS but were not as significant as the cost and the relative advantage characteristics. Accordingly, in line with telemedicine research and findings in the case study, this was not sufficient to guarantee TMVC adoption and success afterwards.

The findings in this case study substantiated the studies of Bacon (1992) and Elliot (1996) in which they indicated that organizations adopt IS/IT projects based on their support for explicit business objectives and on their cost effectiveness. It is worth noting here that these studies targeted organizations in general, not hospitals (life-threatening), which raises the importance of HHS doing a better job assessing the introduction of complex technologies such as the TMVC in vital clinical areas. The use or misuse of technology in hospitals could be a decisive factor in their survivability in the healthcare business. The findings in this study supported similar results in psychiatry research in the U.S. (Simpson et al., 1999), where it was found that seeing patients was more favored to one-on-one and in person, but the US study confirmed that this finding did result in canceling the use and the expanded use of the TMVC technology in the psychiatry area (Hailey et al., 2003).

Interestingly, the cost, complexity, and compatibility of TMVC in MHS supported the adoption decision but proved to be detrimental to the usage of the technology after adoption. The implication here is twofold. Initially, this points to the weak assessment of these factors prior to TMVC adoption, which needs to be addressed by potential adopters. Second, it could be argued here that, due to the importance of these factors in the post adoption stage, it was important to look at the whole adoption process of TMVC starting from its initiation and ending with its actual usage in MHS, not just the mere adoption/rejection decision. As justified in this research, the post adoption stage in MHS has provided important surrogates to the adoption decision of TMVC in psychiatry. This finding represents a contribution to the innovations adoption literature.

This research has demonstrated that Rogers' (1995 (characteristics of the innovation supported by other technological innovations characteristics helped to gain an understanding about factors influencing TMVC adoption and usage in MHS in NZ and in identifying the most important ones. Thus, suggesting the suitability of the technological innovation theories in capturing the adoption and success of complex technologies such as TMVC in MHS. Undertaking more case studies in the psychiatry area in NZ could yield more generalizable results.

Finally, the general manager's leadership in facilitating TMVC adoption in MHS was quite apparent and, indeed, facilitated the adoption decision. Being an administrative manager, a clinical champion was needed to further facilitate and empower the utilization of the TMVC technology in MHS. This role was absent in MHS. MHS recognized this shortcoming and attempted to dedicate a registrar for the TMVC project but could not sustain the sponsorship funds to maintain this registrar in this role. This is a major finding in this research. Expanding on this issue is necessary and could highlight essential features of entrepreneurs2 and product champions in organizations in facilitating the adoption and the usage of TMVC in HHS.

Subject: Telemedicine; Psychiatry; Technological change; Video teleconferencing; Hospitals; Studies

Location: New Zealand

Classification: 9179: Asia & the Pacific; 8320: Health care industry; 5250: Telecommunications systems & Internet communications; 9130: Experiment/theoretical treatment

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 1

Pages: 31-48

Number of pages: 18

Publication year: 2006

Publication date: Jan-Mar 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Diagrams Tables References

ProQuest document ID: 198719105

Document URL: http://search.proquest.com/docview/198719105?accountid=38610

Copyright: Copyright Idea Group Inc. Jan-Mar 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 44 of 100

Nazar Foods Company: Business Process Redesign Under Supply Chain Management Context

Author: Polatoglu, Vichuda Nui

ProQuest document link

Abstract:

Nazar Group of Companies has been a leading producer and distributor of cookies, crackers, cakes, chocolate, and other products in Turkey for more than 40 years. This case is about the group's management roles in transforming the companies into a more consumer-focused orientation using supply chain management philosophy as a strategic framework. Descriptions of supporting business systems were summarized along with the challenges and problems facing managers in effective utilization of these systems in practice. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATIONAL BACKGROUND

Nazar Cookies Company (NCC) was founded in 1961 by an entrepreneur who had seen a business opportunity in providing new cookie varieties for Turkish consumers. Having graduated from a European university with a management degree, he was expected to manage the family business of flour milling. After a short stay in his father's business, however, he decided to go on his own way with a clear vision of bringing new tastes to Turkish consumers at the highest possible quality. He also decided to establish his company in his hometown, which is a strategically located central Anatolian city that already had considerable industrial activity.

After a year of intensive work both in product and process development, NCC could begin production in 1962 with a capacity of three tons per day of a few varieties of products that already existed in the market. Since NCC was essentially a production-focused company, and since there had not been any other marketing companies to work with, the products were sold in bulk (4-5 kg boxes) to individual merchants at the factory door, who would then distribute them to retail shops in their own territories.

During the first few years, workers, foremen, engineers, and the owner were all working together very closely and with high motivation toward getting a share in the market, which was dominated by three major players, all of which were located in Istanbul, the heart of trade in Turkey. In addition to his quick learning ability, the owner/president was very successful in transferring a few critical people from competitors and bringing know-how through his European friends and their networks.

The company established the first semi-automatic production line in Turkey in 1967. NCC grew rapidly by the addition of new production lines and new brands. In 1971, NCC became a family-owned company under the trade name of Nazar Food Company (NFC). In 1975, together with its major competitor today, NFC successfully employed the packaging machines, which were able to produce individually wrapped portions in its process lines. This led these two companies to differentiate their products and earn strong consumer acceptance in the marketplace. Also, in the same year, management decided to lease a computer from IBM to handle personnel files and payroll, which marked itself in history as the first private organization using a computer in Turkey. In 1979, a machinery company (Nazar Machinery Company) was established in the city industrial zone to produce special bakery machines both for Nazar companies and others. Also, during that time, the accounting activities were fully computerized.

As NFC was about to become the market leader in 1980 with sales reaching 39,400 tons, the country experienced its strongest social unrest, which created unfortunate problems with worker unions. The operations had suffered for almost a year, during which the two companies faced grave financial problems. In 1981, the president decided to establish a new production company (Bonjuu Food Company) in the industrial zone and a new marketing company (Nazar Marketing Company) in the city, both with the minor partnership of a big industrial conglomerate.

Until 1990, the Nazar Group of Companies experienced stagnation. Computerization reached operational levels in each company. The marketing company organized wholesalers across the country and executed its sales operations through them. There were about 50 large wholesalers who sold Nazar products to more than 2,000 smaller local wholesalers, who also could procure directly from NFC. The transportation between the factories and wholesalers was outsourced.

In 1993, the president decided to establish a new and modern production facility for NFC in the industrial zone and to transfer the production in the old factory entirely to the new one in time. This new plant started production in 1995 with one highly automated production line. In 1997, the marketing company was moved to Istanbul, and the sales operations were reorganized under a new distribution system where individual and exclusive distributors were hired as business partners. Most of the old wholesalers became exclusive distributors of Nazar brand products.

Between 1990 and 2000, the business grew on the average of 5% every year, reaching about 74,000 tons annually (see Exhibit 1 in the Appendix). Until that time, export business had been given little attention. In 2000, however, the export directorship was formed within the marketing company, and exclusive distributorships were initiated in about 40 countries. In 2001, a new approach to production planning was implemented, which transformed then predominantly production-focused system into a sales-driven system.

The Nazar group management decided to enter into the chocolate business, and a new chocolate factory was built in 2003 in the industrial zone under NFC. By the end of that year, the marketing company sold about 111,000 tons of about 80 different Nazar brands, including cookies, crackers, digestives, light products, baby biscuits, specialties, cakes, pies, wafers, and breakfast cereals, out of which 21,000 tons were exports. The revenue exceeded $250 million US, while the group had almost no debt (see Exhibit 1). Nazar brand became one of the top five brands recognized in Turkey.

According to Nielsen data, between 2000 and 2003, the Turkish packaged bakery products market was stagnant. Since per capita consumption of packaged bakery products is about 3.8 kg in Turkey, which is well below developed countries (e.g., 7.2 kg in Germany, 11.4 kg in England, 14.2 kg in Holland), the reason for market stagnation was explained by the economic crisis that the country had been going through in recent years that adversely affected disposable incomes of the people (Euromonitor, 2003). Therefore, as economy improved in Turkey, the market was expected to grow considerably. This expectation hud been luring most of the multinational companies and local industrial conglomerates to move into FMCG market through acquisitions, joint ventures, or direct investments.

In this market, from 2000 to 2003, Nazar's share rose from 29% to 33% (see Exhibit 1), while its major competitor's share declined from 59% to 50%. The rest of the market was filled by almost 50 small, mostly local producers, the largest of which had 5% share. The duopolistic market structure created by Nazar and its major competitor had been a big entry barrier for the newcomers. Both had established very strong brands and distribution patterns during the past 40 years. While Nazar's major competitor had been successfully moving into different food categories, from beverages to cooking oil. during the past few years, Nazar had chosen to remain focused at its core business until recently when it had moved into the chocolate business.

Nazar production companies currently operate under LSC) 9002 quality standard leading towards TQM. This is in compliance with the group's objective of producing and selling the best quality products at affordable prices to Turkish consumers. In the late 1990s, NFC had turned down a joint venture deal with a giant multinational food corporation, closing the opportunity for higher competition in this market.

Among the distribution channels, the chain stores sales in Turkey had been rising from 19% in 2000 to about 40% in 2003, still far below developed countries, while the individual grocery stores' share dropped to 51% from 71% in terms of Nielsen's Retailer Measurement Index. The rest of the channel comprises confectionary stores, kiosks, gas stations, and so forth remain about the same. Nazar's distribution pattern altered similarly in that the share of national chain stores rose up to about 15% in 2003 in volume.

Nazar Marketing Company (NMKC) is the only customer of the two production companies and functions as a service (transportation, sales, marketing, etc.) provider for them. By design, these four companies cannot function independently in that together they form a big supply chain that is administered by the Group Management Team (see Exhibit 2 for the list of group managers.) Some of the members of this team have been elected for the Management Council, which the president established in 1999 (see the list of council members in Exhibit 3.) The council sets strategic directions and gives organizational and financial decisions regarding the group of companies.

All of the Group Management Team members are placed under the payroll of NFC. Also, NFC holds the industrial property rights of Nazar branded products. On the other hand, each company has a general manager who is responsible for its board, which is comprised of family members, professionals, and a few external consultants (see top levels of the organizational charts of NMKC and NFC in Exhibit 4.) Vice President of Procurement oversees the Procurement Director who manages a group of officers responsible for executing the MRP system through which the material requirements of the production companies are satisfied collectively. They communicate with the Supply Chain Group Manager and the factories' planning managers.

Vice President of Planning and IT oversees the Supply Chain Group Manager, the Information Systems Group Manager, and a number of technical analysts, and administers the Production Inventory Management System (PIMS), which is the key interface between sales and production functions. The Supply Chain Group Manager communicates with the procurement officers, Sales Forecast Manager, and country managers in the NMKC and planning managers in the production companies. The Information Systems Group Manager administers central data processing, the help desk for the Nazar intranet, and computer program development projects. The Vice President is also responsible for corporate governance and strategic planning, for which he or she establishes and coaches project groups to satisfy certain organizational needs.

The Technical Coordinator oversees the Quality Assurance Group Manager and a number of technical analysts and administers the use of technology and feasibility of investments in the production companies. The manager also coordinates group resources for process design, facility layout, Total Productive Maintenance projects, and quality assurance activities.

The NMKC has Marketing, Sales, Exports, and Planning directorships located at the head office in Istanbul, who report to the General Manager. NMKC has eight regional sales offices, each with sizable warehouses geographically dispersed across Turkey. Each office has a regional manager directly reporting to the Sales Director. There are about 150 distributors who execute exclusive sales routes. These distributors are individual merchants who serve about 180,000 sales points, including small kiosks, confectioneries, gas stations, groceries, and local chain stores. Each distributor is served by a Distribution Manager, who reports to the Regional Manager, who looks after daily local business affairs in addition to administration of financial and operational obligations of the distributors towards NMKC. Distributors own their service trucks, which are driven by their sales representatives who are trained and equipped according to the standards established by the Sales Director. Each sales representative carries a hand-held terminal through which they view the individual account of a sales point, issue an invoice, take backorders, or view promotion programs. The Sales Director designs and administers incentive packages for distributors, which include various operational and financial targets. If a distributor meets these criteria, he or she earns additional sales premiums.

The Marketing Director oversees a number of brand managers who are assigned to certain product groups. Brand managers administer standing of brands in the market, monitor competitors' activities, design promotion programs, develop brand advertisements, conduct consumer surveys, and contribute new product development projects. In addition, there is a Sales Forecast Manager under the Marketing Director who operates the Demand Forecasting and Production Order System (DFPOS) in collaboration with the Supply Chain Group Manager.

The Export Director and a number of country managers operate the Export Order Management System (EOMS) in collaboration with the Supply Chain Group Manager. The Planning Director of NMKC administers improvement projects as a project leader, which involves cost cutting, technology implementation, TQM, and other organizational issues. The Director also manages a local IT group, which acts as a help desk for the Distributor Management Information System (DMIS).

The General Managers in two production companies oversee Production, Technical, Planning, Quality Assurance, Finance, and Personnel Managers. The production companies are organized along the production processes, where each process has an owner who reports directly to all of the managers. Planning Managers operate PIMS in collaboration with the Supply Chain Group Manager.

SETTING THE STAGE

Prior to 1990, computer utilization had been limited to data processing for payroll and accounting purposes, which was administered under the Finance Coordinator. This involved a backroom operation lacking a clear vision or strategy. In 1990, Deniz Batu was hired as the Vice President responsible for planning and IT. His main task was to identify critical business processes and to develop IT applications to enhance and, if necessary, to redesign them according to a priority given for him at that time. Batu's concerns were on redesigning business processes using an IT-enahled approach to organisational change (Al-Mashare & Zairi, 2000; Davenport & Short, 1990; Davenport & Stoddard, 1994; Grover et al., 1993).

Until 1990, there had been an officer working under the General Manager of NFC who would communicate with NMKC through telephone, receive sales information, negotiate with them, and establish a production scheduling program for the following month. The manager would take into account capacity limitations, material, and workforce requirements based on some scheduling patterns coining from personal experience. Batu thought that this approach had been successful in the past when the system was compact enough, but then it eventually became too ad hoc and myopic, which did not allow structural business growth. He envisioned a new approach.

Batu decided to start from the business transactions of the wholesalers; that is, he formed a project group that developed an IS for order processing, credit status reporting, and payment collection. Shortly after the implementation of this system, the project group developed an additional IS module, which included warehouse inventory management and shipment operations.

Having collected sizable data through the use of this IS platform, Batu decided in 1992 to develop a performance measurement system that summarized financial and operational data as graphs and tables in order to support business decision making as well as to measure the performance of the marketing and production companies. This approach, however, changed the atmosphere of the group management meetings adversely, because until then the decision makers were used to relying on their instincts and limited information. The production people were more reluctant to accept the measurement results, while marketing people were disturbed mostly by someone else watching their operations.

One of the positive outcomes of the performance measurement system, however, was that the group management realized that the overall profitability of the group had been affected adversely by demand fluctuations. Thus, a lesser degree of demand variation would lead to less shortages, lower inventories, and higher capacity utilization. The group management started to search for remedies.

The friction between Batu and the rest of the group, however, did not stop him from proceeding. As a next step forward, he initiated another project group to work on sales forecasting. This group developed an IS module that generated monthly sales forecasts for each SKU based on the past 36 months' sales data. Users would input pricing and promotion information and choose among alternative analytical and subjective forecasting tools. As a result, the program would output forecast intervals (minimum and maximum values) for the following three months. Unfortunately, even though the users in NMKC liked the idea of forecasting, they were not willing to adapt for change. Thus, the use of this system failed in the implementation stage.

Batu's next target was to improve the procurement operation performance, measured as production loss due to material shortages. To this end. he decided to develop an MRP system for the Procurement Director and his team. He formed a project group that included production people and procurement officers. This group developed an MRP platform, which was essentially a decision support system to optimize total cost of procurement while improving the relationship between production planning and material availability. The system has been upgraded several times since its launch in 1995.

In about 1994, based on performance measurement results, the group management started to exercise the idea of implementing an exclusive distributorship instead of working with wholesalers. Even though the operational cost of a distributor system would be higher, it was believed that, among other benefits, this system would yield more accurate sales forecasts, which, in turn, would improve the overall performance of the Nazar group.

In 1996, the group management made its decision in favor of distributorship. Thus, Batu decided to develop an operation management system that would replace the existing system for the management of wholesalers. To this end, the Distributor Management Information System (DIMS) was developed and implemented in 1997. DMIS included order processing, inventory and account management, and promotion and pricing modules, which were presented as a decision support platform for the distributors. On the other end, the financial and operational performance of each distributor was monitored daily, since the system was synchronized by dial-up connections every night.

Together with DMIS, a newer version of the sales forecasting IS, called Demand Forecasting and Production Order System (DFPOS) was also launched. Being a monthly-operated, three-month planning horizon system, DFPOS was designed to administer production orders for Nazar production companies based on sales forecasts. In the first phase of the run, each Distribution Manager (64 individuals at that time) entered their subjective views as a function of 10 critical factors, including competitors' activities, new product launches, and distributors' stocks for each SKU. This information then was provided for each Regional Manager as a regional sum, and their acceptance or revision was asked.

Following this stage, the regional forecasts were integrated together with the analytical forecasts obtained by running three forecasting methods using the past 36 months' sales data, corrected for seasonality, price, promotion, and advertisement effects. The resulting forecast intervals for each SKU were passed into the second phase of DFPOS run, where the weekly production orders for the next 12 weeks were obtained. In this process, annual budget figures and market research parameters also were taken into account.

Implementation of DMIS continued smoothly, since there was an urgent need for such an operating system to run the new distributor system. DFPOS was launched in 1997; however, it could not be implemented successfully, because between 1997 and 1998, the top management of NMKC had been almost completely renewed, and there were more urgent organizational problems to deal with.

Between 1997 and 1999, Nazar Group's operations grew considerably, which required more synergy between the production and marketing companies. However, it seemed to Batu that the production companies were making their production plans on their own, while NMKC was trying to respond to market dynamics in the short term. As a result, the group management meetings were dominated by inconclusive discussions between the marketing and production people.

In the Management Council, Batu argued that the group management team had not been able to manage the Nazar supply chain efficiently. Thus, the subsystems developed that far had to be integrated further in order to establish more group synergy. Batu commented:

From my side, supply chain management concept is a management model which extensively utilizes the systematic approach to run the business. ... Our efforts/practices could not be seen as the picture of a developed supply chain and its administration, but only a part of it. These efforts only show our consciousness on the way to have a supply chain management system and its practice. The transition is still going on. (See Chandra and Kumar, 2000; Ho, et al., 2002; Kopczak and Johnson, 2003; Larson and Halldorsson, 2002; Mentzet et al., 2001; for reviews of supply chain management).

After long discussions, the Management Council accepted Batu's proposal and, in addition, decided to move the group management from production-focused (push-type) orientation to a more customer-focused (pull-type) one.

In 1999, the General Manager of NFC and the Technical Coordinator left the group, which was the initial sign of change. Batu had to revise his implementation strategy; thus, he had to determine where to start the integration project and how to proceed. In 2000, a new Technical Coordinator was hired as a council member, who also had background in supply chain management. He became Batu's major partner in system design.

CASE DESCRIPTION

In mid 2000, Batu decided to start the integration project right at the interface between Production and Sales, where the majority of management problems originated. He formed a steering committee, which assigned certain projects to cross-functional project groups. The steering committee reported to the Management Council. The objective of the initiative was to develop and implement an IS, called Production-Inventory Management System (PIMS), which would integrate sales forecasts coming from NMKC and production planning, while optimizing the overall operational efficiency of the Nazar supply chain.

Prior to the PIMS project, Batu pointed out that production companies were undertaking pseudo-production planning activities without an obligation to meet production orders taken from DFPOS. Although a production order for each product was given each month, orders were rarely met. For this reason, production cost control in that kind of environment had been very difficult. Finch and Luebbe (1995) state that planning for operations is essential because operation function controls a large percentage of a firm's resources, including inventories, capacities, and workforce.

Basic supply chain components of Nazar Group are shown in Exhibit 5, where the system boundaries of PIMS and its relational diagram also are indicated. Having looked at this picture, Batu realized that in the first stage of the project, conceptualization of PIMS had to be agreed upon collectively. To this end, many project meetings were organized where production, marketing, and procurement people were presented with a number of alternative approaches to system design. Alter many discussions, a list of protocols was established between marketing and production, and another one between production and procurement functions under which the selected system (shown in Exhibit 6) was defined.

The protocols were designed to underline the responsibilities of both parlies and to resolve or avoid conflicts. For instance, under the protocol between marketing and production, the planning period was established as 12 weeks rolling horizon and the time step was taken as one week. Therefore, NMKC had to enter the sales forecasts for 12 weeks for each SKU. That is, every week, sales forecasts for the following 11 weeks could be revised, and the 12th week had to be entered for the first time. Sales forecasts, however, only could be revised under certain revision limits that were previously agreed upon. The correlation between weekly sales forecasts (revised) and actual shipments was a part of performance measurement for NMKC. On the other hand, the production company was responsible for the realization of production orders and preparation of stocks, including safely stocks, for shipment in the beginning of the assigned week. The correlation between production orders and actual production was a part of the performance measure of the production company.

Under the protocol between production and procurement, the production company was responsible for validating daily raw material usage, while it was procurement's responsibility to update supplier information, net cost of procurement, batch sizes, and so forth. Also, it was the procurement department's responsibility and its performance measure to provide the correct materials at the required lime. To this end. the materials were divided into two groups; namely, major and minor materials, where the major materials were the ones with high usage, short shelflife, or short leadtimes (less than two days), and minor materials were the ones with low usage or long leadtimes. It was agreed under the protocol that the procurement department would have to provide minor materials needed at the beginning of the week and provide major materials not longer than two days before their use. The timing of usage of the materials was given by the Production Planning Program (PPP) output (see Exhibit 7).

Having established the systems concept, Batu decided to move forward to the next stage, where a number of project groups would examine the MRP, production, production planning, human resources, and warehousing functions in order to identify their weaknesses under the new system requirements. After several upgrading studies, these functions were improved, especially, in terms of IT and decision-making abilities. User terminals were transformed into Web-based, and the underlying database operations were streamlined to achieve a higher speed of data exchange. Also, the connections to remote locations, especially within factory floors or warehouses, were improved.

In the mean time, a group of analysts started the development of PPP with an objective of generating a 12-week production plan that utilized production means and sources in the most economical way. To this end, PPP was designed as a hierarchical optimization model (Schneeweiss, 1999), as shown in Exhibit 7. At the Master Production Schedule (MPS) level, the optimal weekly production plan for the 12-week planning horizon was determined. This plan optimized the use of production line capacities in order to fulfill the sales forecasts and safety stock requirements so that shortages and inventory carrying costs were minimized. MPS was modeled as a periodic review, partial backlogging, and capacitated production-inventory model (Hax & Candea, 1984).

The output of MPS (weekly production quantities) was entered into the Scheduling Model. This model used a heuristic solution procedure to obtain the detailed production schedules for 63 shifts (three weeks) that minimized the completion times and setup losses. The output of the Scheduling Model was entered into the Assignment Model, which determined the optimal workforce assignments for the 63 shifts given by the Scheduling Model so that the use of workforce skills was maximized. Under this hierarchical structure, an iterative method was used so that the lower-level optimization programs checked feasibility of the higher-level program solutions. If the feasibility test did not pass, then the higher-level program searched for the next solution. The iterations ended when a feasible and satisfactory solution was obtained.

The MPS model, developed for one of NFC's plants where 120 SKUs were produced in 12 production lines, was structured as a Mixed Integer Programming (MIP) model with about 10,000 constraints and 5,000 decision variables. The Scheduling and Assignment models also were designed as MIP models with 52,000 constraints and 41,000 decision variables, and with 4,500,000 constraints and 5,350,000 variables, respectively. The optimization models were developed using GAMS modeling tool. The iterative hierarchical solution procedure was developed in-house using a C++ code, which called in Cplex solver for MIP. The entire system is located in a server with 2 GB RAM and 2.4 GHz Pentium IV microprocessor. It took 90 minutes for the program to obtain a satisfactory solution.

One of the critical success factors of the project was the effective use of IT so that the resulting system would allow fast and accurate decision making and be open for future system extensions. This required a careful database management on the mainframe, because there were many distributed network users from different disciplines, and their interactions involved data entry, report/graph viewing, and local decision making.

In the next phase of system integration, Batu decided to launch user training programs. MRP users were trained for the use of materials management according to new rules. Human resource departments at the production companies were trained for updating operator skill levels, developing operator training programs, and getting performance measurement information. Also, the production planning people at the production companies were trained for updating product and process parameters, setup times, operator skill definitions, and so forth.

In the last quarter of 2001, Batu decided to launch the PIMS system starting at one of NFC's production plants. There were minor IT- or IS-related problems, which were solved immediately. However, there was major resistance from both production and marketing users, but not from the procurement people. In fact, in the beginning of 2001, a new general manager was hired for NFC and appointed to the Management Council as well, who was hesitant to show leadership for implementation, since most of the major decisions were made before him.

The production people also were arguing strongly about the success of the new production paradigm (customer-focused, planned production), and they were defending the performance of the old paradigm (production-focused, myopic production planning), where they enjoyed full control of production resources. For instance, they claimed that the finished goods inventories were higher compared to one year before. However, after a short analysis, it was shown that the difference originated partly from the safety stocks, which did not exist before, and the rest of the stocks on weighted average were moving at a rate faster than before. Batu thought that the production people were used to giving short-term tactical decisions, which mostly optimized local factors, and they were not willing to see easily that PIMS was concerned about group-wide optimization that involved longer-term strategic decisions; for this reason, the model outputs seemed Hawed to most users.

Marketing people also were resisting change. The sales forecasts coming through DFPOS were still short-sighted. They were complaining about PIMS not being able to adapt to changes in the market quick enough, which, they argued, had been leading the company to a high loss of sales.

Amidst all these low user adoptions, the system was operating technically quite smoothly. Batu was able to reply to almost all of the complaints with performance measures. These complaints continued until mid-2002, when Batu decided to move ahead and promote his project leader as Supply Chain Group Manager, thereby collecting most planning decisions under one manager. From that point on, PIMS was administered by this group manager, who was knowledgeable about the entire system.

In 2002, the sales grew 12%, and the market share rose 2%. while the Management Council decided to remain neutral about PIMS. In 2003, Batu decided to include the other NFC plant and Bonjuu Foods under PIMS. The implementation took about nine months with almost no implementation problems on the production side. DMIS also was upgraded from a dial-up connection to a Web-based application in 2003. adding features to streamline the process and adding value for the distributors. Since the distributors are Nazar's customers in its supply chain, this application is hoped to form a basis for more collaboration. (See Fawcett and Magnan, 2002, for a study of supply chain integration practice; and Lancioni, el al., 2003, for Internet application trends in SCM.)

CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION

By the end of 2003, all existing production lines were administered under PIMS except for those in the new chocolate plant, which would be joined later. It seemed to Batu that a procurement and production mechanism was built, which operated at a reasonable efficiency; however, the sales forecast errors were still too high to get the most out of this system. The marketing people were still operating the system with shortsighted forecasts, which led to imposing too many forecast changes and thus, higher stock levels than expected. In return, this often caused wrong management concerns about the effectiveness of PIMS. It seemed to Batu that adapting marketing people to change would take longer than expected, and he had to initiate another process to motivate them.

Batu also believed that the group management organization was not adequate anymore for the current size of the overall supply-chain operations. Under the current group management structure, the cross-functional decisions were not made as fast nor as effectively as they should have been. As a result, the implementation of PIMS was affected adversely by the lack of a collaborative group management platform. In fact, all collaborative group operations, such as product development, were affected adversely by the current management structure. Thus, the problem would have to be solved through a holistic strategic management approach.

On the other hand, users were complaining about the long response lime of the system, as they were trying to test the performance of several implementation scenarios. Batu believed that there were still a number of improvements to be realized about the optimization algorithms within the PIMS and MRP systems in order to speed up the overall solution time. The current runtime of about 90 minutes seemed to be a practical limit to undertake what-if type manual decision interventions regarding the use of production resources, such as overtime or hiring/firing decisions.

In addition, there had been a strong demand from users in that they needed more variations about the output report formats. Batu considered these continuous improvement projects as a step toward higher user adoption, where he placed utmost emphasis.

Note: Dedicated to the memory of Mustafa Ozturk.

Subject: Food processing industry; Business process reengineering; Supply chains; Case studies; Cookies; Information technology

Location: Turkey

Company / organization: Name: Nazar Foods Co; NAICS: 311821

Classification: 9178: Middle East; 9110: Company specific; 8610: Food processing industry; 5220: Information technology management

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 1

Pages: 49-62

Number of pages: 14

Publication year: 2006

Publication date: Jan-Mar 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: References Tables Diagrams

ProQuest document ID: 198651162

Document URL: http://search.proquest.com/docview/198651162?accountid=38610

Copyright: Copyright Idea Group Inc. Jan-Mar 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 45 of 100

European International Freight Forwarders: Information as a Strategic Product

Author: Lehmann, Hans

ProQuest document link

Abstract:

This case study is about information systems in one of the largest freight forwarding companies in Europe, here named Spedition Chur AG (SCA)1. With a long tradition of computers, data processing, and information systems on a global level, SCA has used information technology extensively since the 1960s. Over the years, their systems have become a truly strategic resource; many of the services SCA offers today are based solely on information management - the physical side of the transport business has taken a back seat and is often outsourced. The problems and issues SCA is dealing with now are the dichotomy of its IT strategy: how to coordinate a stringently standardized core of systems with its critically important but highly individualized system-to-system interfaces with its key customers. Furthermore, the rapid change in technologv and the very wide range and reach of its operations now means that the global implementation of new information systems often cannot be completed before the technologies underlying them have become obsolescent. The case describes the development of the systems that underlie the business success and sets out the governance and management structures that make this possible. [PUBLICATION ABSTRACT]

Full text:

ORGANIZATIONAL BACKGROUND

Spedition Chur AG

The traditional freight forwarder's market is defined as "managing the door to door transportation of goods (larger than parcels but smaller than bulk) by reselling transport capacity purchased wholesale"2. European companies, mostly of German-speaking origin, seem to dominate the global market. The traditional reliance of European business on trade across country borders and the centuries of experience in it seem to have given European firms a distinctive advantage in the global market. SCA is one of the largest, as Figure 1 shows.

European companies on lhe whole are significantly larger than their American competitors; Air Express, the largest American freight forwarder, is only about a third of the size of SCA.

Figure 2 compares SCA with the largest U.S. companies.

The freight forwarding industry was influenced by two events over the last two decades. First, the swing to just-in-time manufacturing since the late 1980s has increased the importance of transport. Second, world trade has continued to expand and has accelerated since the 1993 GATT round. Both those developments meant that the markets for forwarding have grown considerably, bringing with it a large number of profitable opportunities, all of which involve information technology on a global scale.

The case illustrates with the example of a highly successful multinational company (MNC) what the key issues are for the development, implementation, and maintenance of a set of systems for an enterprise that is entirely knowledge-based and where information technology is the main core competence of the firm. The case touches on two major research areas in the field of information systems; namely:

* The role of architecture and infrastructure with a specific emphasis on the issues in an MNC; and

* The strategic management of change and the role that information technology plays in this regard, again with particular reference to the implications for MNCs.

The increasing importance that the nature and structure of the technology infrastructure was first recognized and developed by Weill (1992, 1993), Weill, et al. (1994a, 1994b, 1995, 1998), and Broadbent, et al. (1997). With the ever-increasing ubiquity of information technology and its everincreasing pervasiveness, infrastructure has now acquired the role of the main technology architecture. This notion has been developed further by Weill, et al. (2002) and Weill and Vitale (2002), as discussed in more detail by Ross (2003) and elaborately summarized by Tucker and Woolfe (2003).

Facilitated by this ever more important role of architecture is the role of information technology in enabling and often catalyzing organizational change. Building on the seminal work by Benjamin and Levinson (1993), Gibson (2003) sets out a framework for the risks inherent in IT-enabled change, and Burton, et al. (2001) provides an up-to-date catalogue of users' issues in lhis field. Kuruppuarachchi, et al. (2001) discuss the implications of IT-driven change on project management (setting a backdrop for SCA's development slructure), and Venkatesh (2003) summarizes and amalgamates a unified view on change management in the information age.

SETTING THE STAGE: A BRIEF HISTORY OF SCA

Friedrich Schuster, an astule entrepreneur, began to work in the transport industry in Vienna after the Second World War. In 1948, he founded his own trucking company to engage in the trade fired by Marshall Plan aid between Austria and its neighbors across the Alps. In the 1950s, he expanded the company through acquisitions, and in the 1960s, as he began to acquire international freight forwarders in Switzerland, it became more economical to move to Switzerland, too. Since then, SCA expanded in rapid succession across the globe by first cooperating with local firms and then entering into joint ventures before acquiring them outright.

This growth by stepwise acquisition has formed the global management style and philosophy of SCA. Giving considerable freedom to the independent agencies in order to let them build up the business to the best that their local knowledge would allow, global control was only impressed onto the subsidiary offices as far as the integration into worldwide operations dictated. Furthermore, the emphasis on the international nature of the business was building up a solid understanding of working with different business cultures in a positive, effective way. This resulted in a transnational mix of global control over the operations and systems aspecls of the business and local aulonomy to maximize customer opportunities.

As is customary in Switzerland, SCA is governed by a supervisory board, of which Friedrich Schusler is still the honorary chairman. The firm is run by the Executive Board of the holding company (shown in Figure 3). The head of MIS is on an equal level with the executives responsible for the operation in each of the regions. In a recent management move, the (previous) head of MIS moved on to take the head position in France, as the previous head of France took over the Group Chief Executive role. All executives and the large majority of regional management staff were Swiss.

Business Strategy

SCA has followed the same two-pronged strategy for most of its 50-year existence, growing geographically and beating the market by working together more effectively than the competition. Information technology has always played a major role in all the main components of this strategy in the following ways:

* As an accelerator for geographical expansion, it establishes all standard business processes in the key operational areas, shortening the learning curve for new local staff.

* As a major enabler in the development of the niche markets, complementing the core business competencies required there. Friedrich Schuster coined the phrase "to maintain the pole position in niche markets" for this distinct strategic thrust.

Consequently, information systems are a key competency in the forwarding industry. SCA have recognized this very early on: Friedrich Schuster was one of the first users of IBM's card-based computer equipment in Austria. His view of information systems as a major driver of competitive advantage is still a high priority for the firm today.

Nature of the Business

Engaged in the door-to-door delivery of goods, the activities of SCA can be grouped into two interdependent areas:

1. The traditional management of air, sea, and overland (road and rail) transport - the physical side of the business; and

2. Value-added services, which in the main are used to feed the traditional business.

The proportions to which SCA's income is derived from the respective areas of its physical business are depicted in Figure 4. In terms of gross revenue, about a quarter each comes from Europe. North America, and Asia, with the rest of the world sharing the last 25%.

Maintenance of the pole position in niche markets means, in essence, the development and honing-to-perfection of value-added services that generate feeder business for the traditional business activities. The most important one of those is the provision of logistics services for multinational clients.

The reason is its future potential. There is a high degree of leverage that can be gained from each client for introducing their own customers as new SCA clients.

It consists in its simplest form of the exclusive delivery of a client's products to its customers worldwide. A further stage of this service is where SCA is linked to the client's sales and inventory systems and fulfills orders automatically as they arise from the client's customers. A logical extension is the application of this link-up to both ends of the client's value chain (i.e., also automatically picking up consignments from the client's suppliers). As it then becomes more economical for SCA to keep a buffer stock, it is only a short step for them to take over inventory management as a further service. Figure 5 depicts this service.

CASE DESCRIPTION

The case description begins with an overview of the information systems in SCA and then describes the management of ICT on two levels: first, the philosophy of global vs. local systems and management is set out, and finally, the way in which SCA manages its international systems projects is outlined.

Information Systems in SCA

Freight forwarding is a business where the effectiveness of operations depends almost entirely on information and knowledge about consignment details, routing, and tracking as well as client and carrier schedules. Because of this, information systems have been closely mirroring the physical operations very much from the inception of computerization in the mid-1960s.

Today, information technology is an essential ingredient of the business and considered a key core competency for SCA. Figure 6 illustrates the way in which information systems are integrated into the forwarding operations across the three strategic domains of physical operations, local client interaction, and central coordination. There are four logical stages (following the black numbers in the figure) in the transactions of SCA with its customers:

1. The client advises SCA that there is a consignment to ship - mostly computer-to-computer electronic linkages or PC front ends - which initiates the physical transport chain. In parallel, the data enter ORTRAC, the main consignment routing and ORder TRACking system;

2. The system establishes a route for the consignment and generates records for all of SCA's branches involved with the consignment. It subsequently updates the databases in all the servers to which the respective branches are connected and establishes linkage for the life of the consignment. From now on, every movement and/or transaction connected with the consignment will be updated in all databases concerned;

3. Now FORWARD, the second major information system, comes into play and generates the necessary documentation for the consignment as it passes through the stations of its route. The documents then are handed forward to the next branch office en route. Based on this, and where applicable:

4. The documentation necessary for whichever physical transport agent is involved is generated and either produced in paper form or converted into the input format for the respective carrier interface; these carrier interfaces are often local (e.g., third-party information agencies such as TDNI or STAR for specialized air freight and ocean carriers in the U.S.) but some (such as airline connections) are international;

5. The third form of documentation that is produced (or the major items of data collated for manual processing) is for local statutory or regulatory authorities, who increasingly deal through online channels;

6. Once a reliable estimate is available of the consignment's arrival at its final destination, the respective SCA branch office can advise the receiving client, either system-to-system or by e-mail, fax, or phone. Following this, the physical delivery can be scheduled, and the documentation (delivery notes, etc.) is prepared.

This deep integration of the system into the business is critical for SCA for two reasons:

* First, it allows the prediction of delivery times with maximum accuracy, as the physical transport performance is visible instantly all the way to the final destination. This allows SCA in the first instance to take corrective action on its own to bring the consignment back on time. Should the problem still remain, then the client can be forewarned at the earliest possible time; and

* Second, the in-built early advice of physical transport requirements for the total life of a consignment allows SCA an early and accurate accumulation of capacity needed. In this way, the best possible advantage can he taken of volume and pre-booking discounts with carriers. As SCA's profits are made in the difference between rates paid and rates charged, this directly affects the Group's profitability.

While these core systems are in a state of continuous stepwise improvement and upgrading to keep pace with the ever-changing technology, new systems are being built on top of their databases, their real-time capabilities, the interfaces to third-party carriers/haulers, regulatory authorities/agencies, and the client linkage connections with customers. These may be called second-generation systems, because they derive their foundations from the basic operational systems, which, in turn, now have become utility systems - they feed data and information into the new information systems.

One main area where these second-generation systems are being developed and used with great success is in the Project Management of logistics activities. These systems utilize the consignment database and the real-time capabilities of ORTRAC together with carriers' timetables and schedule databases as well as the linkage with a multitude of shipping firms. In this way, SCA can take over the management and coordination of time-critical, often interdependent consignments. Figure 7 illustrates this.

These developments in information technology reflect the movements in the industry as a whole; the main strategic thrust for forwarding companies seems to be the ability to add value to their basic freight hauling capacity. While other companies progress toward this goal by merger and strategic alliances, SCA utilizes its information technology competencies to build competitive advantage.

The backbone for all of SCA's information systems and applications is a series of IBM servers connected to third-party networks that run ORTRAC and FORWARD. These base systems interface with two further layers of systems:

1. LANs in the local offices, with PCs that also act as terminals for ORTRAC and the FORWARDING system; they, in turn, link to third-party carriers, haulers, and regulatory agencies; and

2. Material Handling Systems, which use information technology extensively to automate the flow of goods between customers and SCA.

Figure 8 gives a conceptual view of SCA's main information technology infrastructure.

Although seemingly just one branch of local interfaces, the linkage to, and as deep as possible, into "Clients' IS" is of key strategic importance for SCA. These interfaces are designed to make the collaboration between the client and the transport function as efficiently, conveniently, and transparently as possible in order to erect as high a barrier to change for the client as possible. The warehousing service depicted in Figure 5 was the first such area of client interfaces, and together with second-order information systems such as Project Management (as illustrated in Figure 7), they soon amounted to a capacity to take over all of the logistics functions that a client needed. This gave SCA's clients the ability to focus and concentrate their efforts on the essential elements and functions of their business in line with the current management philosophy3 of concentrating on the firm's core competencies.

The key backbone systems have been written in-house and are now maintained exclusively by in-house teams. Application systems such as warehousing systems and accounting systems nearly always are sourced from ready-made application systems, often on a large scale, such as the intended global standardization of Group Finance systems using the SAP enterprise resource system.

Management of information systems

Two aspects of the management of information technology within SCA may be regarded as key factors for the successful management and operation of the information technology portfolio:

* The philosophy and its resulting strategy and policies of what should be a common standard for all SCA business units and what should be initiated, designed, and managed locally.

* The role of ChurInfo-Centre (i.e., the international MIS head office in Lausanne) in the development and implementation of international information technology projects.

The Global vs. Local Philosophy

SCA firmly subscribes to the philosophy of "Think global, act local." This means that there is a balance between the autonomy of local operations and global management by fiat from the center; where business operations dictate a unitary process, the information system used will be a globally standardized one maintained by ChurInfo-Centre. Other than that, every local or regional office has full freedom to:

[R]eact to local or even regional needs within [their] sphere of influence...we're doing a lot of local country business and for that we need [that autonomy]4.

The approach is based on a deep-seated understanding that it would not be possible to create a system that reflects the totality of all user requirements worldwide:

We don't want to cover all of SCA world-wide to a 100%. That is just not possible, not even in an international team, which is spread all around the world. We're also forever extending the business into more and more new things, everywhere. It simply can't be done4.

This declared absence of any intent to impose systems or business practices from the center unless there is a rational benefit for the local office is important, because it delimits clearly the extent and nature of the core information systems applications. Furthermore, there is a clear management process to decide what should be a global standard functionality and what should be left to vary with individual local business requirements5. The reaction of the users to the global systems, the way in which they interface with local systems, and how they adapt to local requirements on the whole indicates that the approach works. The business people interviewed were very complimentary about the functionality of the information systems and their degree of fit with local requirements. A case in point are the Austrians, who, because of the significantly different nature of their business6, are only marginal users of the global systems but have extensive and sophisticated local information systems and technology.

There are, however, requirements that are more than local but not yet global - not business processes compulsory for everyone, but where a number of local users might benefit. Examples follow:

* The UK suffers from not being able to customize client linkages (partly because there are very few MIS people supporting a major region), but Austria has an automated interface generator for this purpose ready and working; for similar reasons of resource shortage for developing system-to-system interfaces, Los Angeles limits client linkages and warehousing services to large multinational accounts;

* The UK has a working EDI interface in place with key clients at the same time that ChurInfo-Centre had written an add-on for ORTRAC with essentially the same functionality.

ChurInfo-Centre approached the commonalization of local solutions with the acquisition of software for requirements that are common for a number of offices, such as a third-party warehousing system. This was bought and used in Asia originally and will be offered to any other office that wants to use it, once it can be shown that the operation warrants ChurInfo-Centre support for the installation. This support philosophy underlines the importance of information technology for the business and the self-image of MIS as an integral part of the Group's operations; nothing less than in-depth support is acceptable. However, like in any other area of SCA, cost-effectiveness is a significant consideration.

The Management of Projects

SCA's information systems development approach reflects the deep integration and strategic significance of information technology. It is characterized by the following:

* Continuous stepwise improvement of information systems rather than big wholesale replacement projects;

* Careful piloting with experienced sections of the business; and

* Making adjustments and refinements at each phase of a project.

The definition of an information systems project and backing within the organization is the first concrete step toward its realization. Clarity of mandate and responsibility of the project sponsor are the main considerations at this stage of the project7:

This is not something that someone just thought of along the way somehow, no, we will have spent perhaps two, three months just to clarify the problem in our minds and [we would have been] working with the "Auftraggeber" (sponsor) to come to a final job/problem definition.

Once the project has found a sponsor, the other parts of the organizational structure are put into place:

There are two additional committees we have installed: One is the Project Committee, which is at the functional business level and which clarifies functional questions and sanctions functional solutions; that is not always easy in an international environment, there [always] are conflicts. In addition to the functional committee we then have the Clearing Committee, which is essentially the executive level management [affected by the project] who have the ultimate supervision and who have to give the final blessing to whatever they decide.

Assembling the project team for carrying out the work of defining and specifying the proposed information systems solution is the next step:

What we have done to cover the international [character of the projects] is to have a project team of about 15 people on average, user representatives from around the world which we have invited to us here in Lausanne. They then spend about 70% to 80% of their time on the project, although that changes from phase to phase. We also went out and travelled around the world, went to the local branches, presented our point-of-view and got information from them." This process takes time: "[for the SAP project] we've spent more than two years at a conceptual level, so as to get the whole system absolutely clean from a conceptual perspective, before we even started the realization - and today, I think, we're cashing in on that.

This project organization structure model is depicted in Figure 9.

Project teams are staffed with specialists from both the technical side (i.e., IT people familiar with the respective systems environments) and representatives from the business areas affected. Different people take on phase leadership of the team, which is under the overall command of a Project Manager. This role reports to a project committee, which unites representations from all the stakeholders in the business function that the systems purport to support - one has to be the declared Sponsor of the project. The chair of the project committee then is also a member of a Clearing Committee (at Executive Board level), which has the sole purpose to arbitrate and establish consensus between stakeholder interests where this cannot be achieved in the Project Committee.

It is in this phase that conflicts and contradictions are resolved in the committee process:

It was first of all a team forming process [which] the project team underwent themselves, until all the people ... speak a common, uniform language and develop a common understanding for the [analysis and requirements specification] techniques we use. And, of course, there are discussions, and they stem from the work of the team itself - it's quite clear that the representative from New York has different needs from the representative in Frankfurt, and in parts their requirements will be contrary. So you try and find a solution acceptable to both sides. And sometimes we went a step further and asked for the heart of the problem: what are the business and operating policies underlying the problem? Does it have to be like that? Can it not be done in any other way? And you try and find an optimal solution. And where that was not possible, we just had to say: OK, we'll do it this way or that way in the core system, the rest is local enhancement, and can you please do that yourselves.

The careful approach to the specification of the business solution is then complemented by an equally participatory development process led by the best domain experts at each stage. Any changes to business processes (e.g., to resolve conflicts), however, have to be ratified by the executive level steering committee. Similarly, any changes to the core information system has to he sanctioned by the executive director MIS to assure that their technical impact is analyzed, understood, and accommodated.

Implementation of the new system goes through a series of pilot stages before it is rolled out to more locations simultaneously in a series of cascades; ChurInfo-Centre in Lausanne quite often leads the first pilot projects with key people from the regions as integral parts of the team. These understudies, in turn, then lead teams from the local offices, teaching local key staff how to provide front-line support for the new system. Figure 10 illustrates this concept.

ChurInfo-Centre maintain that its way of project management is a key ingredient to its relative success in making large international information systems an integral part of SCA's business core competence.

CURRENT CHALLENGES FACING SCA

When information systems have become a strategic core competence, the main issue is one of keeping pace with both business developments and the growth in technology opportunities. For SCA, this is by far our most difficult challenge. Despite the high efficiency that we have developed in rolling out technology, it still takes years, not months, to install new infrastructure in our offices.

Theo Mürli, the Executive Director for MIS, in his penthouse office overlooking Lac Léman, points to a wall chart where schedules of major developments are sketched out - well into 2006.

For this reason, we will need to leave major parts of the infrastructure untouched and have to concentrate on developing new products, each with their own technology.

SCA is in the middle of a strategic turnaround: having moved away from the physical business of transport into the management of information, their ability to plan, schedule, and predict has reached a point where it can be translated into a superior core competence for running an airline and a shipping company. The concept, developed jointly between MIS and the Operations executive, is dubbed Integrated Forwarding and builds on the existing primary systems (i.e., ORTRAC and FORWARD) as well as on secondary information technology services such as Logistics and Project Management. The wall chart behind Mürli's desk, shown in Figure 11, illustrates the point.

Integrated Forwarding is demanding in terms of the mastery of advanced information technology in two dimensions: the value chain within SCA as well as between SCA and its alliance partners consists almost purely of information per se, as does the actual service the way SCA's clients see it - the integration of multiple planning paths (e.g., for the different components of an oil platform), forecasting functionalities (when will they all come together at their respective places of subassembly?) and specification of logistic elements (what modes of transport are optimal for the nature of the part, the cost of different transport modalities, and their speed?).

Another area where SCA has mastered the art is the seamless integration of these technologies (from outsourced warehousing over logistics and project management all the way to fully Integrated Forwarding) into companies of nearly any size in virtually every kind of environment, and in the process, having had to master a wide variety of technology platforms and working with a massively divergent population of users with an enormous spectrum of technology literacy.

However, the technology that underlies all of SCA's information systems is essentially outdated; distributed processing on multiple platforms with replicated installations of standard software has been overtaken rapidly by Web-centric client/server technology. Migrating from yesterday to tomorrow is a big challenge but needs to be faced:

The problem with this sort of a strategy is that it will take some major efforts to do both things at the same time: look after the "legacy" technology and pioneer new technology. Our customers, too, are forcing us into their own technologies - that might well run counter to our own platforms. How do you plan in an environment like this?

Subject: Freight forwarding; Business process reengineering; Success factors; Studies; International; Information technology; Systems development

Location: Europe

Classification: 9175: Western Europe; 8350: Transportation & travel industry; 9130: Experiment/theoretical treatment; 9180: International; 5240: Software & systems

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 1

Pages: 63-78

Number of pages: 16

Publication year: 2006

Publication date: Jan-Mar 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Graphs Diagrams Charts References

ProQuest document ID: 198650882

Document URL: http://search.proquest.com/docview/198650882?accountid=38610

Copyright: Copyright Idea Group Inc. Jan-Mar 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 46 of 100

The Online Effect: Transitioning from the Legacy Help Desk to the Online Task Management System

Author: Mawson-Lee, Kym

ProQuest document link

Abstract:

This case centres on a request management system that was developed and implemented in response to the growing requests to the Information Technology (IT) unit for assistance. Primarily, this assistance was with a core corporate application called WorkDesk, a back office processing system. The request management system, an IT unit initiative, was designed in collaboration with representatives of the organisation's business units. The initial development project lasted for approximately two months and upon implementation was well received by the organisation. This first implementation turned out to be a proof of concept for a much larger system called the Request System that has been developed and implemented as a single online channel to manage all requests made of the IT unit. The Request System has greatly increased the ability of the IT unit to strategically manage IT and its support across the organisation. The core benefit of this case is the discussion of the successful development of an online task management system and its 10 key functions. This system effectively manages all requests made to the IT unit and introduced accountability for its completion. The system described can be easily repurposed based upon the knowledge demonstrated in this case study for a wide range of task management purposes. The situation described in this case resulted in the organisation's maturing in terms of IT understanding, an issue with which many organisations are struggling and one that, if understood, will assist students to have a positive impact on similar organisations. [PUBLICATION ABSTRACT]

Full text:

ORGANISATIONAL BACKGROUND

The Office of the Employment Advocate (OEA) was established under the Australian Workplace Relations Act (1996). The Employment Advocate's role includes providing assistance and advice to employees and employers on workplace legislation, especially related to Australian workplace agreements (AWAs) and freedom of association, particularly in small businesses (OEA, 2003). The OEA, an agency of the Department of Employment and Workplace Relations (DEWR), is based in Sydney with regional offices in each state and the Northern Territory and consists of 180 staff. For a recent 2004 summary of the OEA, see http://www.oea.gov.au/ graphics.asp?showdoc=/corporate/newsletter-sept2004.asp&Page=0 (Accessed 11/26/04).

The OEA's mission is improving Australian workplaces (OEA 2004). The primary way in which the OEA achieves this mission is through AWAs. AWAs are individual agreements struck between an employer and an employee about the employee's wages and conditions of employment. AWAs were introduced by the Australian government to give employers and employees flexibility in setting wages and conditions, allowing them to customise arrangements to their workplaces.

In terms of management structure, the OEA is very hierarchical both physically and culturally for an organisation of 180 staff with two layers of management that report to two layers of executive. In order to manage the entire organisation, the OEA has implemented the organisational structure depicted in Figure 1. From this organisational chart, it is possible to see that the IT unit is located at the third level of the hierarchy. The IT unit is a subunit of Corporate, which is an internal organisational enabler considered a supporting business unit of the organisation. The purpose of Corporate is to assist the OEA in meeting its business objectives as an internal enabler; the IT unit is considered one component of that. Having this structure has required the National IT Manager to carefully manage the Information Technology Steering Committee (ITSC) as the main channel of communicating with the rest of the executive level of the OEA. The ITSC comprises the National IT Manager (Chairperson), together with the two deputy Employment Advocates, the Corporate Director, and the Director - the Strategic Advice Unit. Outside of the ITSC, high-level strategic actions regarding IT are approved in consultation with the Corporate Director, an otherwise non-IT-related role. The IT unit is based in Sydney as part of the OEA head office and supports regional offices in each state and the Northern Territory supporting a total of 180 staff.

Financially, the OEA is funded via an Australian government budget allocation provided to the OEA through the parent organisation, DEWR. For budgeting purposes, internally all business units are operated as cost centres. The IT unit budget, in particular, is split into two core categories: infrastructure service from DEWR and normal operating costs. The OEA has grown steadily over the last seven years from approximately 30 staff to 180 (a 600% increase with 40% of this growth being in the last two years) this year with 30 roles being filled just in the last 12 months (OEA, 2003). A strategic plan is developed each year in order to meet organisational objectives. The OEA's strategic plan is a three-year rolling plan, meaning it is updated on a yearly basis to address the next three years.

For further information about the OEA, please refer to www.oea.gov.au.

This case study is about a request system developed by the OEA. Primarily, this case will examine task management and coordination of these tasks within an IT environment, as well as the capture of the information related to these tasks. As an example, these requests currently are broken up into six key areas. The first area is for requesting a modification to a Web page either on the OEA intranet or the OEA Internet site. These requests can be as simple as changing a word to something as complex as developing a new section on the intranet for a new team and all of the related pages that go with it. The next four areas are for requests specific to four different corporate applications that the IT unit support for the OEA, and the final area is for suggestions relating to anything that the IT unit can implement to improve the organisation.

The OEA and the IT unit are approximately seven years old, and until 12 months ago, the IT unit handled most requests as ad hoc issues with no formalised process for handling them. The IT unit was staffed with six individuals whose average tenure was three years, with most of the knowledge being held tacitly (i.e., knowledge that is not explicit and highly personal). Approximately 12 months prior to the writing of this case, two of these key staff left the agency, taking with them the knowledge of how to provide key IT functions. The IT unit supports four core corporate applications as well as an intranet and Internet site. This case describes one of the ways that the IT unit planned to manage this transition in staff.

SETTING THE STAGE

Within the OEA, there are varying levels of IT utilisation from a cutting edge .NET Internet application to an archaic Visual Basic (VB) application. This VB application contains vital organisational data that only a few people can access and that was found to be impossible to migrate to a more accessible system. The management of IT within the agency has a hierarchical approach. Representatives from the many levels attend a monthly ITSC meeting where a range of IT-related strategic issues are discussed, such as new projects and their related business cases. The National IT Manager chairs these discussions and prepares the agenda and minutes. Decisions are made at the ITSC level and are carried out primarily by IT staff. The other members of the ITSC have varying levels of IT knowledge.

In the past, as an organisation, the OEA has not placed a high priority on IT. Previous experiences of IT projects had left the executive and management teams with a poor view of IT and its utilisation. One example of this is WorkDesk, the OEA's core corporate application. WorkDesk is both a workflow and content management system that has tailor-made user interfaces, functions, and workflow specifically designed for the purpose of filing, assessing, and approving AWAs. More than half of the organisation's staff is required to use WorkDesk on a daily basis. This application cost the equivalent of the annual IT budget to build and implement but was found wanting in some of its basic functions, such as searching and retrieving some specific types of AWAs within complex queue arrangements, causing many users to contact the IT unit on a daily basis for assistance to find these AWAs. Another example is the client service system (CSS), which cost approximately 5% of the annual IT budget and was developed inhouse. This application is a basic customer management system used by the Client Services Network (CSN) business unit. During its informal development, it suffered massive scope creep, and while the application essentially is successful, some staff felt that the system should have been developed following a more formal process.

This was a difficult situation for the IT unit, as it did not have any allocated budget for the development of new systems; however, as the following scenario will show, there was a definite need.

Twelve months ago (2003), the IT unit of the OEA underwent a major change in staff. One of the key concerns in this situation was the loss of corporate systems support knowledge. After this change of staff occurred, a diverse range of skills was available; however, four of the staff were relatively new and inexperienced. The departure of two key staff at a time when there were few established or documented processes and only moderate application documentation created operational challenges. When the primary WorkDesk administrator left the IT unit, it became clear that there was little understanding about what support the previous administrator was providing. This required a carefully managed transition to the new WorkDesk staff. WorkDesk being an idiosyncratic application required a vast amount of knowledge to be maintained effectively.

In order to manage this transition effectively, a consolidated approach to handling requests was required. The aim was for the IT unit to be able to service the OEA's business units quickly, effectively, and professionally. It was from these requirements that the Request System was born. With the implementation of this system, the IT unit was able to move from a reactive position to a position of effectively managing their workload. This system is the subject of this case study and is called the Request System.

The main issue confronting the IT unit at this time of staff turnover was that it required an effective way to manage requests for support. The IT unit now services a massive variety of requests, ranging from help-desk requests for WorkDesk and expert system design style requests to requests for designing whole applications such as the CSS. The ongoing management of this variety of requests was quite complex. The Request System was proposed to handle these requests and overcome this complexity.

Initially, the Request System was required to handle the capture, notification, processing, and completion of requests for assistance with WorkDesk. However, very quickly, the system was enhanced to facilitate requests for the following:

* Web modifications to both the Internet and intranet (Webmods);

* AWAonline II, an Internet application;

* AWAMS 1, a legacy application;

* Other organisational applications: COMS, CLOCS, CSS, System Monitor; and

* Suggestions relating to AWAonline II, intranet, Internet, online polls, and the ITU Request System itself.

For some months prior to the Request System, requests would come to IT staff in all manner of ways, including e-mail, telephone, hallway chatter, chance meetings, during meetings, mobile phone, and third-hand messages. The before and after of the methods requests for assistance were handled as presented in the diagram presented in Figure 2.

Some of the challenges associated with the Before diagram (Figure 2) and having so many avenues to make requests include:

* No record of the request.

* No centralised archive of those requests that were recoded.

* No way to track the amount of workload currently being experienced by IT staff.

* Little opportunity for management reporting.

* No process documentation; therefore, little opportunity for process improvement.

* No knowledge retention and management.

In the After diagram, the communication flows are marked by the letters a->e, which signify the task artefact. As an example of the flow of a task artefact, each request for assistance with AWAonline II is assigned to a staff member, who has the necessary skills to complete a request about AWAonline II. Importantly, once the request is completed, the original requester is notified of its completion.

In summary, the development of the Request System started in May 2003. The impetus for the project was to better manage IT staff turnover and to overcome the ad hoc manner by which requests for assistance were being made to the IT unit, combined with the ad hoc manner by which these requests were handled. There was little reassurance from the staff involved as to whether a task had been completed or whether the business unit was happy with the actions taken to complete the task.

CASE DESCRIPTION

In early 2003, the OEA IT unit had found itself in a challenging situation. There was no funding for systems enhancement or development such as the Request System, and staff with important tacit knowledge about handling requests for core corporate applications were about to leave the organisation. The members of the IT unit with support of the National IT Manager worked hard to overcome these challenges. As a starting point, the project manager of the request system development needed to identify what functions were needed and if such a system for managing these task-based requests existed. Two key literature sources - collaborative systems and knowledge management literature - were used , and an action research methodology was adopted. The goal was to identity a way to assist the OEA to facilitate the management of tasks being requested of IT staff. This case will follow the development and implementation of this application, which has centred on the development of an effective e-based task artefact (an electronic instance and record of a task).

Supporting an organisation's teams in routine and ad hoc tasks is a continual goal of Information System (IS) (Mahling & Craven, 1995). However, for every IS-related solution developed and implemented, there are generally some drawbacks. Influenced by the role of technology in business processes, this case begins to develop a continuous thread, drawing upon collaborative systems theory for current and future e-based information systems development. In particular, the case study reviews the support for facilitating, requesting, documentation, communication, and overall management of tasks.

Considerable literature utilises the concepts of artefact and task artefact; in particular, the fields of Computer Supported Cooperative Work (CSCW), Interorganisational Information Systems (IIS), and Software Engineering (Daneshgar, 2001; Dustdar, 2004; Giaglis, Paul & Doukidis, 1996; Schulz & Milosevic, 2000). However, it appears that very little has been done to combine these disparate uses of the concept into a single holistic thread in order to establish task artefact utilisation as part of task management, a fundamental research component of IS. It is intended that this case will begin to address this issue and form the basis of future work. From initial readings, there seemed to be no unified approach to e-based task management within the literature.

E-based support for task management dates back to the origins of computing machinery (Mahling & Craven 1995) and provides a solid foundation for this case study. As e-business becomes adopted more widely, one of the emergent research areas is the identification of models that are generalizable in order to support the process of e-business (Mukhopadhyay, Smith, & Muniz, 2003). The particular aspect of e-business support that this case covers is that of task management within e-based task management systems in order to support requests for IT support.

This case also begins to evaluate the usefulness of designing a model for e-based task artefacts in order to facilitate and improve the process of task management within the OEA. Furthermore, in order to support the integration of task management within business processes, e-business task management systems require clarity in the identification of task artefacts and how these artefacts can be used to support OEA processes. As an example, a fairly simple task artefact is provided in Figure 3.

In response to needs of the system requirements identified so far, an action research approach was taken to facilitate the iterative development of the request management system. The action research methodology adopted was based on McKay and Marshall (2001) with specific attention to their linked spiral model that develops research knowledge based upon the actions being taken. These authors provide an excellent illustrative example of this process, of which a representation is provided in Figure 4. For further information on this model and how it is implemented, please refer to McKay and Marshall (2001).

The Request System needed to handle requests for any type of IT assistance as well as the consolidation and recording of these requests.

A core requirement of the system was the capturing of all of the required information that the IT unit needed in order to service a request within what is called a task artefact. Initially, the scope of the application was to manage and store requests from business units in relation to one specific corporate application, WorkDesk. The scope for the project quickly grew to encompass requests in relation to all corporate applications as well as the OEA intranet and Internet sites. The road map in Figure 5 provides an overall view of the path taken - Stages 1, 2, and 3 correspond to the investigation and analysis sections of the Systems Development Lifecycle (SDLC) and stage 4 to the design and implementation sections. More detail is provided in the Development Process section that follows.

Development Process

The OEA already had a corporate intranet. In order to facilitate ease of access for the entire organisation, the request system was to be built into the intranet. The intranet was based on Active Server Page (ASP) technology, which seemed fairly ideal as a development environment, particularly since it was a known technology. The following three phases are the iterative stages in the development of the Request System.

Phase 1

While conceptually each of the IT staff had their own idea of what should be developed, it was important to develop a shared understanding among IT staff and across the organisational business units. The project team facilitated the following steps:

1. The IT staff work-shopped the following:

a. Requirements in terms of what information needed to be captured in order to complete a request for assistance for the WorkDesk application; and

b. Some indicative categories into which requests for assistance with WorkDesk could be broken down.

2. With the guidance of the project team, expert users of WorkDesk work-shopped the following:

a. The types of questions that they ask regularly;

b. Those questions that tend to be novel; and

c. The overall requirements of such a system.

On the basis of these workshops, the first component of the system was developed. It consisted of a limited interface with a corresponding backend database. This component, which also served as the basic prototype for what was to become the Request System, was tested by IT staff and two designated expert users for a period of two weeks. During this time, all information about each request was collected, not only in the task artefact via the Request System but also comments made about the request and additional e-mails that were sent. After two weeks, the collected data were analysed with the goal of facilitating 100% of all requests for WorkDesk assistance though the request system. A series of recommendations was made on how to improve this component, which was then prioritised and developed. This improved component was then made available to those staff that had contributed in the first instance to the requirements specification for further comment.

This is a very brief description of many hours and weeks of work that resulted in the first version of the WorkDesk component of the request system. As this was the first attempt to consolidate the channels for making requests within the organisation, it was important that a clearly defined model for developing the interfaces for each of the other OEA applications be developed in order to make subsequent development easier. The knowledge developed from this process is presented at the end of phase three as well as how other organisations could utilise these aspects far more easily. The finalised interface for inputting the required information for the WorkDesk task artefact is presented in Appendix 1a.

Phase 2

Based upon the knowledge from phase one, phase two commenced soon after the completion of version one of the first component. Phase two was the development of a new component that would facilitate requests for changes to be made to the OEA Internet and intranet sites known as Webmods. This phase was made somewhat easier by the existence of a previous database that was used by the Webmod staff to help them keep track of the requests made. However, this database was not accessible to non-IT staff and essentially involved a lot of copying and pasting from e-mails received. The project team replicated the process from phase 1, identifying the requirements of the staff who carry out the Web modifications and then working with regular requesters of Web modifications to identify their requirements.

From the requesters' points of view, their requirements were simple: (a) make the requested change to the Web site and (b) let them know when it was completed. The main challenge was making the job of updating Web pages easier and more efficient. The Webmod staff requirements included which page needed changing, whether there were other pages affected by this change, and when the changes needed to occur? This essentially meant asking the requester to supply considerably more information with the request than normally was provided in the first instance. Once this range of requirements was identified, version one of the Webmod request component was developed. The finalised interface for inputting the required information for the Webmod task artefact is presented in Appendix 1b.

Phase 3

The third phase was to roll out the request system to all OEA employees. The system to this point contained a component for WorkDesk requests and for Webmod requests. A third feature was added to drive further developments of the system; namely, Other Requests. The motivation behind this was to ensure that all requests made to the IT unit could be received via one channel - the request system. It was the role of the project team to process these Other Requests by breaking them down into existing or new request categories and having requirements specified for the development of an appropriate new task artefact interface, if required.

During this third phase, collaborative systems literature, particularly that of Dustdar (2004) and Dustdar and Gall (2003), was employed to take full advantage of previous research work in the area. As this literature was reviewed, key characteristics were identified and recorded into a task artefact characteristics chart. This chart is presented in Appendix 2 to assist readers in identifying the basis of what was built into each task artefact and the system overall. Each of the characteristics was assessed for suitability for inclusion in the request system. The main criterion by which each of the characteristics was assessed was whether its adoption would assist users or administrators to make or complete requests more effectively. Interestingly, many of the characteristics identified in the literature had already been developed into the request system intuitively as part of the requirements identified by members of the IT unit. However, there were also quite a few characteristics, such as notification and status, that enabled a more effective end-to-end process to be established.

Once these three phases were completed, the Request System project team began the process again, although not so formally and not in as much depth. The purpose of the iterations was to calibrate the effectiveness of the system, which is summarised in the following 10-point summary of the key aspects of the Request System. The iteration of all three phases occurred three to four times in varying levels of depth.

The task artefacts provide the basis of the success of the system and much of the knowledge gained. These task artefacts started as a blank file asking high-level questions. As a result of the three-phase iterative action component of the action research approach adopted, the task artefacts now had the following core functionality and contributed to the research component. These ideas can be draw upon for other task support systems:

10 Core Functions for E-Based Task Artefacts

1. Each task artefact is prepopulated with identifying information of the task requester, such as name, contact number, time stamp of the request, IP address, and physical address.

2. The requests are categorised on the basis of the required outcome to facilitate relevant detailed questions being presented automatically to the person requesting the task. This is done in order to capture all of the pertinent information required for completing each task.

3. The requester can set a date by which the request needs to be completed, which is particularly useful for work prioritisation. A review date is assigned automatically to all Webmods so that all OEA intranet and Internet Web pages will be reviewed on a six-month basis.

4. Prior to submitting selected requests, the requester is presented with a Frequently Asked Questions (FAQ) page that includes explanations of how requesters can complete a common range of requests without IT staff intervention, if, for example, a user receives an unexpected response from an application.

5. The request is given a unique identifier. This request ID is sent immediately to the requester with a copy of the request just made.

6. Each request is assigned automatically to an IT staff member on the basis of the type of request made and the skills it will require to be completed. This ensures that the staff member with the required skill will complete the request. This is managed by a skills matrix, identifying all IT stuff and their associated skills. Each IT staff member is able to navigate via the intranet to a page identifying all of the outstanding and completed requests.

7. The staff member who has been assigned the request then can set a status to the request such as analysing, or if more information is required, there is an option to ask for further specific information and then set the request to User Reply Required, at which point the original requester is notified by e-mail that further information is required.

8. Requesters are able to view the status of their requests at any time through a Web interface.

9. When requests are completed, there is an e-mail notification to the requester, advising the requester that the IT unit believes the request is completed, but that if the requester believes it is not completed, the requester is asked to reply to the e-mail with further details of the request.

10. Each of the requests is counted by category and by whether it is completed or not. These counts are fed into a reporting component that is used to assess the IT unit's performance on a monthly and quarterly basis, facilitating a more strategic approach to IT management.

In terms of the research component of action research, most of the work to date has been related to identifying literature that is of assistance and developing the task artefact characteristics chart provided in Appendix 2.

Summary of System Outcomes

The three-phase approach to the development of the Request System has proved to be effective. This effectiveness is demonstrated through the greatly reduced number of follow-up phone calls and e-mails that previously were required to complete the root cause analysis often required to complete tasks. The Request System also assisted the IT unit in identifying opportunities for innovative ways to support the other OEA business units by facilitating the analysis of request patterns and request types. If there is a significant increase in a particular type of request, this now can be managed in a more effective manner. Often, any request, even those that were trivial to complete, required a phone call or an e-mail to identify specific information; however, now, only highly complex requests require further information, which is facilitated by a requester-reply-required status that automatically sends an e-mail to the original requester for further information.

From the reporting module of the Request System, for the last six months, the system has been handling between 300 and 400 requests per month. The system has approximately 40 regular users (more than one request per week) and approximately 100 less regular users. Importantly, prior to the Request System, il was unknown how many requests for assistance IT staff was handling each month. An unplanned benefit is that the IT unit managers now have concrete evidence of what work the IT unit staff is doing and can ensure consistent responses to requests made. For illustrative purposes, a screen shot of the July 2004 report is available in Appendix 1c.

Key aspects of the request system's success came from two core business decisions. One consisted of ensuring that the application was designed to effectively handle processes from end to end. This facilitated the second decision: making the system usage mandatory. The decision for mandatory usage created a lot of buy-in from the business units, as their representatives had a vested interest in ensuring that they understood and communicated the needs of their business unit in terms of making requests. The project team was able to make it clear that those requests that had not been clearly specified in terms of the business requirements would not be handled by the request system and, therefore, could not be requested. When combined with the commitment of the developers, this led to the development of a system that has received excellent feedback from users both in terms of ease of use and completeness of how the tasks were handled.

As a result of the Request System, the following three goals were achieved:

1. Centralised location for self-help information. The Request System has provided the ideal location for answers to commonly asked questions

2. Reporting. Real-time reporting of all requests is made available to all staff. The report provides details ranging from an individual request to a report on the number of requests received in relation to a specific issue.

3. Correct assignment of requests. Previously, various requests would be made to staff members who did not have the knowledge to complete the requests. Now, the request is assigned automatically to the correct IT staff member on the basis of skill sets that are contained in the skills matrix component of the system.

CURRENT CHALLENGES/PROBLEMS FACING THE ORGANISATION

The current stage of the Request System is that of maturing. Business units are starting to leverage the concepts utilised in the system for their own benefit, creating task artefacts for their own use and for requesting tasks of business units other than IT. However, some staff members within the organisation are still only beginning to familiarise themselves with the opportunities that the Request System provides.

Within the organisation, the IT unit holds regular meetings with other business units in order to explore and address issues that arise as a result of requests made in the Request System.

Some of the issues experienced so far include the following:

* Some users do not utilise the request system as designed. They use incorrect categories and do not supply the information specified in the user interface.

* Users sometimes do not read information readily available in the system to resolve issues. For example, those requests that are covered in the FAQ would allow users to resolve their own request.

* Some users lodge requests that they could have completed themselves, because they prefer IT staff to complete the task to save their own time.

* Users lodging requests that are not IT tasks. IT staff has to forward such a request to another business unit for completion.

* Non-IT staff members who have requests assigned to them do not have their performance measured by completion of such requests. As a result, some of the non-IT staff who are trialing the use of the system for their own purposes have many outstanding requests, which reduces the overall perception of the effectiveness of the system.

* There are significant differences in the requests from experienced users and those received from new users of the request system. As an example, there are varying levels of clarity in the request description. This may cause misunderstandings between the IT staff and the requester.

* Despite best efforts in communicating the existence and usage of the system, some staff members are still not sure of its use and tend to use other methods to resolve their requests.

* There is room for more executive involvement in terms of reporting.

While this list provides an understanding of the day-to-day issues facing the OEA, at a strategic level, there is a more complex issue. The Request System has been somewhat evolutionary in its design; as staff members within the organisation become aware of its effectiveness and add their own new task artefacts online, it has become somewhat confusing for some staff to use. The IT unit developed a plan to tackle this by involving the business units in developing a new menu and navigation structure; however, as is often the case in IT development, this has been challenging, since these business units have other tasks that they consider to be a higher priority. Another related issue is the user interface. Due to original design restrictions, the layout and colors are quite bland; however, the original restrictions no longer apply, and a new layout has been designed. The IT unit is ready to release this new design but can't until it addresses the menu structure.

Key benefits for students and managers include a description of iterative application development using action research, using business requirements driving application development, and drawing upon collaborative systems research when designing a task management system.

Subject: Action research; Information systems; Small & medium sized enterprises-SME; Information technology; Case studies; Public sector; Data bases

Location: Australia

Company / organization: Name: Office of the Employment Advocate-Australia; NAICS: 923130

Classification: 9110: Company specific; 5220: Information technology management; 9179: Asia & the Pacific; 9550: Public sector; 9520: Small businesses

Publication title: Journal of Cases on Information Technology

Volume: 8

Issue: 1

Pages: 79-96

Number of pages: 18

Publication year: 2006

Publication date: Jan-Mar 2006

Year: 2006

Publisher: IGI Global

Place of publication: Hershey

Country of publication: United States

Publication subject: Business And Economics--Computer Applications

ISSN: 15487717

Source type: Reports

Language of publication: English

Document type: Business Case

Document feature: Diagrams References

ProQuest document ID: 198738493

Document URL: http://search.proquest.com/docview/198738493?accountid=38610

Copyright: Copyright Idea Group Inc. Jan-Mar 2006

Last updated: 2011-07-21

Database: ABI/INFORM Complete

Document 47 of 100

SAVE-A-BUCK GROCERY: INCREASING ITS SALES THROUGH A RAFFLE

Author: Williams, Robert J; Reddy, Allan C; Holland, Phyllis G

ProQuest document link

Abstract:

Firms are constantly seeking ways to increase their sales. A raffle involving a cash prize may be an excellent technique for accomplishing this objective. A raffle might be a way to "pay" customers to buy more, and is usually appropriate for any size firm. This case shows how a simple raffle technique can be used to increase sales, and also demonstrates the type of data and the statistical technique needed to examine the effectiveness of a raffle. Students will learn the type of data needed to evaluate the raffle and how the data can be collected and tested. Further, students will be exposed to the types of questions they must ask themselves in order to properly conclude whether a raffle has been cost effective in stimulating firm sales and profits. This case is an excellent teaching tool that is appropriate for an introductory statistics course, an introductory marketing course, a promotions course, a course in marketing strategy, and business policy. [PUBLICATION ABSTRACT]

Full text:

HISTORY

Save-A-Buck Grocery was a small, family-owned business located in Capital City, Florida, and was involved in the sale of various types of grocery items. Save-A-Buck had experienced rapid growth in its four years of operation, due primarily to its ability to bring a large volume of discount grocery items at very low prices to a wide range of customers. The owners, John and Myra Williams, stood by the store's slogan, "If you don't shop with us, it costs us both money." The Williams' credited their early success to the use of effective cost control, selected customer discounts, and the use of a raffle contest that seemed to have stimulated sales and served to promote the store and its low priced products. The Williams wondered if they should "fine tune" the contest to further increase sales.

Save-A-Buck opened in the late summer of 200 1 . To the owners' delight, sales grew rapidly, and averaged about 18-20% growth per year. By the end of its first year of operations, store sales had reached $233,000. By the second year, sales totaled $280,000, and by the end of the third year the owners reported that sales had reached approximately $329,000. To meet this growth, the store employed three full-time employees and three part-time employees. The hiring of an additional full-time employee within the next three months was being considered. The day-to-day operations of Save-A-Buck were under the direction of Ms. Mary Mason, Myra's sister.

The owners attributed the rapid sales growth to the use of discounts to selected customers, including senior citizens and college students, and the store's delivery service to community retirement centers. Students at the local college and university, who possessed a current student ID, were allowed a 5% discount on their purchases, as were customers who were 62 years or older. Also, a cash contest was begun in the summer of 2002 for regular customers who did not qualify for other discounts. The idea for the contest came from customers who expressed an interest in a cash drawing. One customer expressed it this way; "Students get financial aid and a Save-A-Buck discount, the elderly get social security and their Save-A-Buck discount, what about the rest of us?" So far, students and senior citizens who are regular customers have not complained or seemed offended about not being eligible for the cash prize.

CUSTOMERS

During an average month, between 2000 and 2500 customers shopped at Save-A-Buck. The owners observed a great deal of diversity in the customer base, particularly with respect to occupational backgrounds and income levels. Mary Mason told the interviewer, "We serve all types of folks including college students, retirees, state employees, upper income, lower income, and no income - the last category applies to folks in local homeless shelters to which we donate quite a bit of food items on a monthly basis." Mason continued, "In fact, we are very proud of the fact that last year alone, we donated over $15,000 worth of food to the Second Harvest Food Bank - as the community supports us, we will support the community."

John wanted to gather some data on the store's customer base, and so, customers who completed and returned a short survey were granted $2 off of their next purchase. An analysis of the data revealed a great deal of diversity among the customers. Nevertheless, a few demographic findings were noteworthy. For example, the survey results indicated that the average customer visits Save-A-Buck 3.2 times per month. The majority of customers surveyed had an average income of $25,000 or less, traveled 3-4 miles to shop at Save-A-Buck, and the majority of customers had 1-2 children or grandchildren living at home. Several survey respondents did support John' s contention that many customers tended to buy the majority of their canned and prepackaged grocery items at Save-A-Buck, and then proceed to the larger supermarkets to make additional purchases, especially in dairy and meat items.

MARKETING STRATEGY

When John and Myra were seeking a store location, they were careful to locate the store in a lower rent district, as cost control was of paramount importance. By and large, these neighborhoods were composed of working class families with medium to lower income levels. While Save-A-Buck' s location was within one mile of two large grocery chains, Winn-Dixie and Food Lion, John saw this is an opportunity rather than a threat. Since Save-A-Buck was located on the edge of town, and between the town and the two large grocery chains, John felt that customers would first stop at Save-A-Buck to pick up bargains and then proceed to the larger chain stores. John's strategy hinged upon his ability to locate low-priced suppliers and to keep his store prices 20-30% lower than his competitors. Also, John decided to stress the sale of dry goods and prepackaged meat products, and to limit the sale of dairy items and fresh meats.

Within a year of opening, Save-A-Buck, which had originally sold a limited line of health foods and health and beauty aids, was evolving into a limited line general grocery store. John's marketing vision, which seemed to be working; customers were buying about 75% of their grocery items at Save-A-Buck, and they were proceeding to the large chain stores to purchase dairy and meat items.

MANAGEMENT AND GROWTH ISSUES

While Save-A-Buck offered far more items than a typical convenience store, it was also fairly small in size, occupying about 2800 square feet. An additional 1250 square feet was available for storage. The storage space was crucial to the store's success, as it allowed John to purchase grocery items in bulk from suppliers in Alabama, Florida, Georgia, and Mississippi. By buying nonperishable grocery items in large quantities, Save-A-Buck maintained low inventory costs. After careful analysis of sales and purchases records, John determined that Save-A-Buck' s gross profit margin was about 33% of sales.

John and Myra both realized that the store was too small to allow room for much more sales growth, however, given the low rent area and the excellent location, they were reluctant to move at this time. John's landlord admitted how surprised he was to see such sales volume coming from such a small store. The landlord quipped "It's awesome to watch the people coming in and out of there, especially on a Saturday - it reminds me of holding a carnival in a phone booth." Fearful that Save-A-Buck might seek a more spacious location, the landlord offered John a four year lease with no rent increase during this time. Both John and his landlord seemed happy to continue their business association.

PROMOTION

The owners had used a number of promotional techniques. Radio ads were placed on local station WBZE ("The Breeze"). Few people reported hearing the ads so they were discontinued early in 2002. Ads were also placed in the Thrifty Nickel (a free newspaper containing some news and lots of ads). These were also discontinued in 2002, as the cost ($1,274 per year) did not justify the benefits (few people reported seeing the ad). The only advertising the company did by summer 2002 was to place flyers in the six local Goodwill Stores. The Goodwill stores manager was also a customer of Save-A-Buck. These flyers cost $20 per month and the owners believed these were effective. This method of promoting the store had been used for about two years.

THE EXPERIMENT

For some time, John had considered ways to increase total store sales by increasing the average customer "basket number", or the amount the average customer buys per trip to the store. John was aware that other stores in the area had used various marketing techniques to boost sales, including double and triple coupon savings, special sales on certain items, and "buy one, get one free" specials. One store even offered extra low prices to customers who bagged their own groceries.

One afternoon, John came up with a simple idea; why not pay people to buy more from Save-A-Buck? With this notion, the idea of a contest was born. John checked other stores, and there seemed to be no stores in the area that gave away cash to a lucky contest winner. John recalled that several customers had asked about such a contest. From this idea, a monthly cash drawing was begun in order to give approximately 1,000 customers, who fail to qualify for store discounts, an opportunity to win cash prizes. By offering a monthly cash prize, John was hopeful the store would be able to increase the size of the average basket, and, therefore, total monthly sales.

The contest rules were simple: for a minimum purchase of $10 a customer received one ticket that was entered into a drawing box. For each additional $ 1 0 purchase the customer received an additional ticket. A purchase of $40, for example, entitled a customer to 4 tickets. The larger the purchase, the greater the customer's chance to win. At the end of the month, one winning ticket was drawn, and all non-winning tickets were discarded.

Between summer 2002 and summer 2003, the cash prize was $25 per month. The prize was raised to $100 in the summer of 2003, and the effects on the basket number were statistically examined. Store employees quickly noticed that many customers would purchase an additional item or two if their total purchase was close to the next $10 increment in order to obtain an additional ticket. Also, many customers made an effort to purchase the $ 1 0 minimum in order to obtain at least one ticket.

THE RESULTS

Data for the basket measure and for total monthly sales were obtained from state sales tax records. It was observed that both the average basket and average monthly sales could be determined for 44 weeks before the contest began, for 49 weeks in which the cash prize was $25, and for the past 64 weeks in which the prize was raised to $ 1 00. John decided to compare both the average basket size and average monthly sales during the three periods of (1) no contest, (2) $25 prize, and (3) $ 1 00 prize. As a business professor with ample statistical training, John felt he would be able to test the effect of the contest on the basket size. Analysis of variance (ANOVA) was used and the results were analyzed.

The basket means and average monthly sales for the three periods are presented in Tables 1 and 2 respectively. The results John obtained from the ANOVA analyses appear in Tables 3 and 4.

The results seemed to support the conclusion that the addition of the contest has increased both the average basket size and average monthly sales. With no contest, customers bought, on average, $10.29. With a $25 cash prize, the basket increased to $10.48. Once the prize was set at $100, the average basket increased to $11.65, and statistically, this basket size was significantly larger than the other two baskets.

While conducting the experiment, John was careful not to change any other factors that might bias the results. John estimated that most of the increase in basket size was due to the contest. He conservatively estimated that about two-thirds of the basket increase was due to the increase in the cash prize to $100.

WHAT NEXT?

John had planned to increase the cash prize in the fall of 2005 in an effort to further increase sales. Both Myra and the store manager, Mary, were worried about giving away too much money and conveyed their concerns to John. In response, John informed them that he would give it further thought, therefore, no decision about whether to increase the prize, and, if so, by what amount, has yet been made.

QUESTIONS

1 . What are the benefits of a raffle over other types of promotion available to Save-A-Buck?

2. Assume that an estimated 1 000 customers per month are eligible to participate in the contest and that 2/3 of the increase in the basket size is due to the contest. Also, assume Save-A-Buck' s gross profit margin is 33% of sales. Is John right, has Save-A-Buck made money by giving away money?

3 . What can you say the effect was on the basket size between offering a $25 prize and offering no prize, i.e., is there statistical evidence that the $25 prize actually increased the basket?

4. If John had increased the store's advertising during the contest period, what impact might this have had on interpretation of the results?

5. Are there any other factors that are not controlled for in this experiment? Any alternate explanation for the increase? Does John take these into account?

6. In Table 1 , what does the minimum basket number of $10.17 during the $ 1 00 prize period suggest about customer behavior?

7. Did John use the correct statistical technique to test the effectiveness of the contest?

8. In tables 3 and 4, what is meant by the expression "Comparisons between means are significant at the .05 level?"

9. At the end of the case, John is planning to give away more money. Mary and Myra object. Whom do you support and why?

Subject: Grocery stores; Retail sales; Sales promotions; Case studies; Profit maximization

Location: United States--US

Classification: 7200: Advertising; 8390: Retailing industry; 9190: United States; 9130: Experimental/theoretical

Publication title: Journal of the International Academy for Case Studies

Volume: 12

Issue: 5

Pages: 1-8

Number of pages: 8

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 10784950

Source type: Reports

Language of publication: English

Document type: Business Case, Feature

Document feature: Tables References

ProQuest document ID: 216304746

Document URL: http://search.proquest.com/docview/216304746?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-18

Database: ABI/INFORM Complete

Document 48 of 100

SURVEY RESEARCH: QUESTION WORDING AND DESIGN

Author: Allen, Charlotte A

ProQuest document link

Abstract:

Do you need a case on marketing research, but do not need anything to do with statistics? Do you want an interactive case that will generate a lot of discussion? Survey Research: Question Wording and Design is the case for you. It is designed to be used in a marketing research section of a Principles of Marketing class or in a Marketing Research class itself. This case follows the career of Ann Horton, the new Director of Marketing Research at a large metropolitan hospital. Ms. Horton is presented with a finished customer satisfaction survey by William Whedon, who is in charge of Public Relations. He has to have her approval to administer the survey and is impatient to find out the results of the survey to include in a new marketing brochure for the hospital. Should Ms. Horton approve the survey or not? This case deals with bias in survey research that can occur when questionnaires are designed. How does one find the bias in how surveys are worded or presented? This case will allow students to critique the proposed survey and try to spot any biases that may occur in the survey or how the survey is administered. There is also an interesting ethical question of what should Ms. Horton's actions be in this situation. [PUBLICATION ABSTRACT]

Full text:

INSTRUCTORS' NOTES

Overview

Ann Horton was recently hired as Director of Marketing Research for a large, metropolitan hospital. The hospital is under new management and is interested in re-positioning itself in the market as having the best medical care in the area (there are four other hospitals in the area that are in direct competition with Ms. Horton's hospital). She is excited about the new job since this is her first opportunity to be in charge of a research unit- she has worked in survey research and focus groups, mostly in the medical and services areas. Therefore, this new job is certainly a large leap for her career wise. As a new hire, she has been meeting with all of the other directors and the employees in her research unit. During her first week, she is introduced to William Whedon, the Director of Public Relations for the hospital. He welcomes her to the hospital and makes an appointment to come back and talk to her later in the week about some research he needs to have done.

Fast- forward to a week later and Ms. Horton has met with Mr. Whedon. She is looking over the survey he presented her at the beginning of the meeting (See Table 1 for actual survey). It is a customer satisfaction survey to be handed out in the hospital to patients. Everyone receiving care at the hospital would receive a paper copy of the survey. The survey time period would run one full week and Mr. Whedon is anxious to administer the survey and collect data: "We could then use the results in our new marketing brochure- it would be good pr for us". Mr. Whedon spent quite a bit of time discussing the printing deadline for the brochure and before he left he told Ms. Horton that Mr. Paris, her predecessor, had "unofficially approved" the existing survey. Mr. Paris had left the organization to go to work in another city, but had left detailed notes and examples of previous research done at the hospital. Most of the previous research was conducted with in-depth interviews and focus groups. The results of focus groups and interviews were generally positive with specific criticisms that were addressed by changes in rules or instructions to staff. However, the sample sizes used in previous research were too small and not representative enough to generalize to the whole consumer base. This survey would not only be the first organization-wide survey of their customers, but it would be used as a benchmark for future studies. Ms. Horton must approve any marketing research that is done at the hospital and, with this authority and responsibility in mind, begins to analyze the survey.

Assignment for Students

Put yourself in Ms. Horton's position. Answer the following questions concerning the case: (1) Is the survey a good survey? (2) Are there any ethical considerations in the survey design?, and (3) Should Ms. Horton use the existing survey?

RECOMMENDATIONS FOR TEACHING APPROACHES

This case is designed so that it can be read and worked on in one class period; however, if the instructor wishes to the case could be handed out ahead of time for students to read and work on their answers to the questions before class time as well. This case could be used for group work or for students to do on an individual basis.

1. Is the survey a good survey?

The survey purports to measure customer satisfaction or how satisfied patients were with their treatment in the hospital. The survey seems to cover the overall list of areas that there could be problems with concerning satisfaction; however, there are areas of the survey which have some bias.

2. Are there any ethical considerations in the survey design?

First, the scale used in the survey (very satisfied, somewhat satisfied, not satisfied, not applicable) is biased toward a positive response. An example of a balanced scale would be: very satisfied, somewhat satisfied, somewhat dissatisfied, very dissatisfied, and not applicable. The scale could also include a neutral option as well. The positive bias is further seen with four lines given to respondents to write what they liked about the stay and only two lines given to respondents to write about what they disliked. The last question (Are there any staff members you would like to recognize for outstanding care or service?) is a yes or no question, but lines were given as if an explanation or names were expected to be written in the blank area. There are a few questions on the survey that some respondents may also have problems answering. First, some respondents may not know what "unit" they are in and may not have any opinion of billing and financial services at the time they leave the hospital. A true measure of customer satisfaction for billing and financial services could not be collected until after the patient receives the bill along with insurance information concerning payment. While it may seem logical to a marketing researcher to place a checkmark or other mark in the answer blank that corresponds with their opinion, there are no instructions to that effect with the survey. Also, respondents may feel pressured to write the name of the person who handed them the survey in the field for the last question (Are there any staff members you would like to recognize for outstanding care or service?) since the staff member would see what their opinions were of the hospital. The respondent may also feel pressured to have more positive comments since the survey is not completely anonymous. Lastly, most people who are leaving the hospital from receiving treatment are not in the best frame of mind nor are they probably feeling very well; the last thing they may want to do in fill out a survey. Not to mention the fact that if the patient has had eye surgery or a cast put on their writing hand, they may not be capable of filling out the survey. Finally, the word "car" in the last question should be replaced with the word "care"- a mistake that spell checking alone would not catch.

3. Should ms. Horton use the survey?

Mr. Whedon seems to be a great deal of hurry to find out the results of the survey to use in the brochure. After analyzing the survey, it is obvious why- the results will be positive based on how the survey is written. How should Ms. Horton deal with this? First, she needs to remember that the survey must be approved by her before it is used. Obviously she can make recommendations as to what needs to be changed in the survey. There are possible political issues that Ms. Horton may need to deal with as well. It may be common knowledge that Mr. Paris had "unofficially" approved the survey and many may wonder as to why she did not immediately approve it herself. There are many interesting subjects that can be addressed in regard to the ethical considerations for this case and students should be encouraged to discuss what their beliefs are and why they believe in such a manner.

IfMs. Horton does use the existing survey as is, she is doing so with the knowledge that the results will be skewed toward a positive view of the hospital and will not be accurate or reliable. This is in direct violation of the ethical guidelines for the marketing research profession. Also, if others in the hospital know that she had made this kind of ethical compromise now, they may expect the same treatment in the future. Since Mr. Paris may have "unofficially approved" the survey, it is possible that this kind of behavior is already part of the organization culture. Since most of previous research done by her predecessor (Mr. Paris) was through focus groups and interviews, there is very little information available to Ms. Horton that she could use to compare the existing survey to previous surveys.

If Ms. Horton does not use the existing survey as is and alters the survey to meet basic research guidelines, she may come into conflict with Mr. Whedon (and any others who needed the survey results to be positive). Hospitals and hospital administrations are under a great deal of pressure to give the impression that they are continually improving customer service. This hospital is trying to improve its image and is looking for any and all alternatives to help it make its case for excellent customer service. It is not known at this time whether a re-designed survey would give positive or negative results for the hospital; however, it would be an accurate view of what the patients (customers) think of the hospital. Word-of-mouth is very important in medical situations and, if there is already negative word-of-mouth in the community about the hospital, positive results written up in a brochure will not sway anyone's opinion to be more optimistic about the service at the hospital. Furthermore, it is just basically unprofessional and quite sloppy to have misspellings on a survey.

Subject: Market surveys; Questionnaires; Research methodology; Bias; Case studies

Location: United States--US

Classification: 9190: United States; 7100: Market research; 9130: Experimental/theoretical

Publication title: Journal of the International Academy for Case Studies

Volume: 12

Issue: 2

Pages: 1-5

Number of pages: 5

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 10784950

Source type: Reports

Language of publication: English

Document type: Business Case, Feature

Document feature: Tables

ProQuest document ID: 216277107

Document URL: http://search.proquest.com/docview/216277107?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-18

Database: ABI/INFORM Complete

Document 49 of 100

THE MILTON HEALTH AND REHABILITATION CENTER

Author: Schwab, Robert C

ProQuest document link

Abstract:

This case is set in a private mid-western rehabilitation center. The new owner has implemented an operating philosophy based on Biblical principles, and the born-again assistant administrator now begins all staff meetings with prayer. The situation is exacerbated when the assistant administrator persists in inviting staff to attend evangelistic meetings at his church. A few workers are concerned about this new imposition of religion in the workplace, and become more alarmed when they discover that the highest raises have been given to workers who attended some of the evangelistic meetings and who regularly volunteer to pray at the staff meetings. After an employee quits and files a complaint with the Michigan Department of Civil Rights, an investigation discovers that a couple of workers have felt somewhat annoyed, while the majority at the center feel the working environment has never been better. Are the new owner's religious values appropriately expressed and displayed at work, or has the work environment become one of religious discrimination, harassment and intimidation? [PUBLICATION ABSTRACT]

Full text:

THE MILTON HEALTH & REHABILITATION CENTER

The Milton Health and Rehabilitation Center is the largest private nursing home in Milton, Michigan. The owner and founder of the center recently sold the business and moved to Chicago. The new owner, Sid Southington, was a conservative man who believed he should follow Christian values in the operation of his new business.

At their first staff meeting, Mr. Southington announced that he intended to retain all the current staff, but the operating philosophy of the rehabilitation center would now be guided by Bible-based values. The Golden Rule was to be the major guiding principle when dealing with patients, staff, visitors, suppliers, insurers and even governmental agencies. Honesty, integrity and respect for others was to be the norm, and a conservative Christian image was to be projected by all supervisors and staff. Swearing, smoking, drunkenness, and rude behavior would not be tolerated on the premises. The nods of approval Mr. Southington saw in the audience implied that the workers thought his expectations were reasonable, and the fact that no one quit in the following weeks seemed to confirm this. Most workers at the rehabilitation center were already religious and held conservative values so their level of comfort with the new operating philosophy was assumed to be high.

One person who was particularly impressed by the new philosophy was Bill Bush, an assistant administrator at the center and a "born-again" Christian. He had been hired just four months earlier by the previous owner, but was already known for his sincere concern for the staff and patients at the center. If he learned that someone had a personal problem or illness, he would often reassure them by saying that "...the Good Shepherd will take care of you," and "...I'll keep you in my prayers." He also frequently ended his conversations with the staff by saying "...May the Lord bless you in your work today." Now that the new owner wanted a Christian philosophy to permeate the center, Mr. Bush felt it was important to introduce some changes.

A few of the changes were immediately obvious. All meetings called by Mr. Bush now began with a simple prayer. Sometimes he would just offer a prayer himself, and on other occasions would ask if there were any volunteers who would "...pray for us as we begin this meeting." While most employees did not seem to mind and several willingly volunteered prayer, there were a few who seemed to be uncomfortable with the idea of praying at work.

One worker who seemed particularly troubled by the new changes was Sarah Roberts. Sarah had been employed for almost one year before the change in ownership. She was young, attractive, outgoing, and tended to dress in trendy, somewhat revealing garb. She liked to socialize and often talked with her co-workers about the parties she attended and all the people she dated, etc. She had a boyfriend who frequently visited while she was working at the center, and the rumors were that he had recently moved in with her at her apartment.

Since Sarah worked as a receptionist, she was usually the first person visitors saw when they entered the premises. Mr. Bush was concerned about the image that Sarah was projecting to the public, and he tried to explain to her that tight clothes and flashy jewelry did not project the image he and Mr. Southington wanted the public to see. He suggested that she wear more modest attire to work in the future and asked that her boyfriend not visit during working hours.

A few days later Mr. Bush stopped by Sylvia Smith's desk to sympathize with her about her daughter' s poor lifestyle choices. He had learned that Sylvia was distraught about her daughter, and they had a good conversation about the evils of excessive drinking, immoral relationships, the virtues of the Christian lifestyle, and the power of God to change people's lives. Sylvia seemed quite pleased by Mr. Bush's concern and prayer for her daughter at the end of their conversation, but the entire conversation and prayer was overheard by Sarah, whose desk was located just a few feet away. Sarah wondered whether Mr. Bush had deliberately talked loudly so she could hear what was being discussed. Was he trying to give her some advice indirectly? Did he know that she sometimes drank on the weekends and had a live-in boyfriend? She felt it was none of Mr. Bush's business what she or anyone else did in their personal time outside the workplace, and she resented the idea that he might be trying to drop her a hint. After getting the reprimand a few days ago and now overhearing the conversation with Sylvia, Sarah felt even more resentful toward Mr. Bush and anything that smacked vaguely of conservative values and Christians.

A few weeks later, Mr. Bush began to invite the staff to attend his church where a series of meetings was being held by a tele-evangelist of some renown. He said, "If you're interested, come to the meeting tonight and get a real blessing from the Lord." All the workers politely turned him down but he didn't seem to mind. On subsequent days, Mr. Bush would tell whoever would listen what a blessing the previous-night's meetings had been. Again he urged his staff to try to come at least one night a week so that they too, could ... "see the light " and "...find the love of Christ that can transform your life." Some of Mr. Bush's co-workers actually did go to some of the meetings, but many were not interested and a few began to feel intimidated. Sarah thought, "How many times do we have to turn him down before he gets the hint that we don't want to hear about his church or his religion."

Sarah was quite upset about all this religious talk at work and complained to the owner, Mr. Southington, about Mr. Bush and his religious pressure. Mr. Southington listened politely to Sarah, and then stated that Mr. Bush was a sincere Christian who just couldn't contain himself. "He just wants to help others find the joy of serving Christ as their Saviour." Mr. Southington tried to reassure Sarah that it was ok to refuse Mr. Bush's offers to go to the meetings or to offer prayer if she didn't want to participate. "Just tell him ...'no thanks,' and that should take care of it," Mr Southington said.

When Sarah's received her annual performance appraisal, the evaluation was mixed. Mr. Bush made a few positive comments, but he also made several specific suggestions as to how she could improve her work performance, and he continued to express concern about her appearance on the job. Since these evaluations were linked to the annual pay raises given to the workers, Sarah was disturbed when she received only a modest increase, while other workers had received more. She noticed that the biggest raises seemed to be given to the workers who were most willing to offer an opening prayer, or to those who had attended some of the religious meetings at Mr. Bush's church.

At the staff meeting on the following week, Mr. Bush announced that a new RN, Joan DeMarco, had been hired to be the evening nursing supervisor for the north wing of the facility. Sarah was the receptionist at the center and knew that several people had interviewed for the position. One applicant had been an old high-school friend with previous nursing experience. What bothered her was that Ms. DeMarco was a member of Mr. Bush' s church! To Sarah, this looked like just one more example of Mr. Bush's religious favoritism.

Sarah was really upset now and felt she had been unfairly judged by Mr. Bush because of her religion (or lack of it). She complained a second time to the owner, Mr. Southington. After listening to Sarah' s concerns about religious discrimination at the center, Mr. Southington defended Mr. Bush as a person with high integrity who would never allow religion to bias his assessments, but he offered to personally review Mr. Bush's evaluations to double-check their accuracy. About a week later, Mr. Southington sent Sarah an e-mail message confirming that he had personally reviewed the performance appraisals done by Mr. Bush and had not found any evidence of unfair bias or discrimination against her. He also revealed to Sarah that he had reviewed the application materials and selection criteria that had been used by Mr. Bush to fill the RN position, and he agreed that Ms. DeMarco was the best choice from all the applicants. In other words, Mr. Southington claimed he had not found any religious bias in Mr. Bush's actions.

A few weeks later, Sarah resigned her position and filed a religious discrimination complaint with the Michigan Department of Civil Rights. She claimed that she had no choice but to resign her position because she could not acquiesce to the religious demands of Mr. Bush. His constant pressuring about prayer, changing her life and attending church was giving her a nervous breakdown and was an unfair imposition of religion on her private life. She claimed constructive discharge and sought financial compensation for her trauma.

When the Michigan Department of Civil Rights began to investigate, they talked with a number of employees at the center. Most of the workers they spoke to described Mr. Bush as a sincere and kind man who made no apologies for his belief in God and his concern for the well-being of his patients and co-workers. They noted that he prayed regularly with many of the patients and staff, but that he never imposed his religion on anyone. These workers felt that words of comfort and assurances that "God cares about you" improved the quality of life for both the patients and the staff, and they saw Mr. Bush as a good role-model to emulate as they did their work at the center. These employees did not feel offended, harassed or intimidated by either Mr. Bush, Mr. Southington, or the policies and practices of the rehabilitation center.

Two employees (who wished to remain anonymous) said that Mr. Bush was a good man, but his persistent invitations for church meetings, prayer requests, and offers to pray for THEM was a bit annoying. As one said, "Mr. Bush needs to respect our right to refuse. IfI say NO, I'm really not interested in going to your church or hearing about what God has done for you today; why does he bother me again about the same thing a few days later? Why doesn't he leave me alone after I've said ...No thanks, I don't want to talk about religious things today?" Neither of these employees felt Mr. Bush had been unfair in the evaluation process, and both felt prayer and religious discussions with the patients was appropriate because it comforted them; they just wished Mr. Bush would stop trying to impose his religious views on them. These workers were Christians but their theological views were quite different from those espoused by the church Mr. Bush attended.

DISCUSSION QUESTIONS

1. Is it acceptable or inappropriate for Mr. Southington to impose his conservative values and religion-based business philosophy on the operations of the Milton Health and Rehabilitation Center?

2. Is Mr. Bush's conduct acceptable or inappropriate in this work setting? Has he created a climate of religious intimidation and harassment at the center? Explain.

3. What do you think the Michigan Department of Civil Rights will conclude? Is Sarah Roberts entitled to any damages or relief? Defend your position.

4. What specific advice would you give to Mr. Southington if he wishes to avoid or minimize future claims of religious discrimination or harassment at the Milton Center?

Subject: Health care industry; Religious discrimination; Work environment; Case studies

Location: United States--US

Classification: 6100: Human resource planning; 8320: Health care industry; 9190: United States; 9130: Experimental/theoretical

Publication title: Journal of the International Academy for Case Studies

Volume: 12

Issue: 3

Pages: 1-5

Number of pages: 5

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 10784950

Source type: Reports

Language of publication: English

Document type: Business Case, Feature

ProQuest document ID: 216276879

Document URL: http://search.proquest.com/docview/216276879?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-19

Database: ABI/INFORM Complete

Document 50 of 100

CAN WORK REALLY BE THIS MUCH FUN?

Author: Kavanaugh, Joseph; Gilcrease, Kathy

ProQuest document link

Abstract:

The case involves a highly performing work group, which displays many characteristics of a high performance team, in the setting of a small office on a university campus. Through displays of their strong interpersonal relationship, one can see why the group is so successful, but the continuing success of the group is in jeopardy when one member announces her retirement. The group is left to ponder the question of how to sustain their team, or were they a team anyway? [PUBLICATION ABSTRACT]

Full text:

RECOMMENDATIONS FOR TEACHING APPROACHES

Clearly, the teaching note relies heavily on the work of Katzenbach and Smith, The Wisdom of Teams (1999). Therefore, it would be advisable to make this book a text for the course, where appropriate. It clearly draws the distinction between high performing work groups and teams, and discusses the conditions under which each is the preferred operating choice. If not a course reading, the instructor may wish to become familiar with this work and outline it for students.

Prior to introducing the case, class discussion can be helpful to tease out the differences between work groups and teams. The table in response to question 2 can be helpful in this regard, as well as material contained in most textbooks on organizational behavior or team work. Help students understand and appreciate that "getting to team" is not necessarily the required organizational response. In many circumstances, work groups that perform well are quite satisfactory, indeed preferred, and require far less personal and institutional commitment than teams.

While sports analogies are often not appreciated, they are apt here. Students are quite conversant with such, and are generally able to identify the differences in personal performance required by athletes when compared to, say, most decision-making groups in their lives or student organizations. "Only the team wins;" "Everyone has to pull on the rope together;" " Do something sacrificial for the team;" reflect a different orientation than a committee environment that may be dominated more by personal agendas, power issues, low commitment, and compromise as a decision mechanism.

DISCUSSION QUESTIONS AND ANSWERS

1. Is Beatrice correct when she calls the group a team?

Yes and no. The group displays characteristics of both a high performance work group and a team. The intermingling of the appropriate characteristics of a work group and team leads to the group's success. Overall, the group meets the definition of a high performance work group, which is "a group that can achieve its performance challenge entirely through the combination of individual performances" (Katzenbach, 1999).

Work groups are not mutual accountable for their work and usually have a single leader. They interact primarily to share information and to help other work group members perform better in their individual roles (Katzenbach, 1999). This is exactly the environment that is displayed at the office in the case study. The performance goals of the office of Academic Affairs are handled through the combined individual efforts of each staff member which has assigned responsibilities with the Vice President being the single leader of the office.

Works groups tend to have a leader that controls the group and assigns work. The work group goals are determined by the organization with emphasis on individual performances and communication flowing down from the leader (Pell, 1999). This is the behavior displayed by the group in the case study with the work group goals determined by the university and flowing down from the Vice President to the other office members.

In contrast, teams tend to have a leader that is a facilitator with goals and work assignments determined by team members. Team communication tends to flow up and down with decisions being made by the entire team (Pell, 1999). Table 1 illustrates the differences between work groups and teams. The group in the case study displays the characteristics of work groups listed in the table. The group has a clearly focused leader, the Vice President, which delegates the work with the office members being individually accountable for their work. The group's work does not have direct performance measures, and its purpose is to achieve the broad university mission.

2. What team characteristics does the group display?

The group displays many team characteristics even though, overall, they would be considered a high performance work group. A team is described as "a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable" (Katzenbach, 1999).

The ideal size of a team is between four and approximately twelve members. As the size of the team grows, the team structure will begin to deteriorate, and the team will begin to break into smaller teams or subgroups (Katzenbach, 1999). This group does meet the qualification of a small number by having six members, who are Dr. Gaines, Dr. Richards, Dyan, Beatrice, Jamie, and Ruth.

The next characteristic of a team is to have complementary skills. These skills fall into three categories: technical expertise, problem solving, and interpersonal (Katzenbach, 1999).

The group does have complementary technical skills. Each group member has a field in which he or she specializes. Dr. Gaines and Dr. Richards make all the pertinent decisions and focus their attention on coordinating the division of academic affairs. Dyan and Jamie specialize in budget, curriculum, and faculty issues. Beatrice concentrates on any issues that concern the four colleges within the Division of Academic Affairs, and Ruth handles any matters concerning academic services. When these categories are combined, together they are able to handle the wide variety of tasks that are required of the office.

The group in the case study does not display the complementary skill of problem solving because the group leader makes the significant decisions. On the other hand, the case study group does display numerous examples of their interpersonal skills. Some examples of interpersonal skills are communication, trust, constructively handling conflict, support, and recognizing the achievements of others (Katzenbach, 1999).

The category of interpersonal skills is probably the strongest team characteristic displayed by the group in the case study and attributes significantly to their success. Effective communication and trust are displayed on several occasions, but probably the most significant example is the group's Friday lunch sessions. During this time, the ladies openly share with each other their frustrations regarding office matters as well as personal affairs with the assurance of complete trust and confidentiality. Another important interpersonal skill, handling conflict, is displayed when Beatrice becomes upset with Dyan regarding the copier. Instead of brooding or pouting about the situation, Beatrice vents her anger by over dramatizing what she wants to do to resolve the situation by asking the Vice President for permission to slap Dyan. The Vice President in turn handles the circumstance with humor by making light of the situation when he responds "ok, but no hair pulling". Humor serves as a catalyst to change the situation from a potentially tense setting to a relaxed atmosphere.

Support is another interpersonal skill the group exhibits when they sacrifice their work time to help Beatrice meet her deadline. They give her the benefit of the doubt that she has worked diligently, but was not able to complete the task on time without the help of the other members. They also show support to Dyan when they agree to sacrifice their time after work to help fix her dress for the awards program. The group recognizes the interest and achievement of others as they share in Dyan' s success when she wins the Staff Evaluation Award.

Another team characteristic is to be committed to a common purpose and performance goal. This group is committed to the broad common purpose and performance goals of the office of Academic Affairs; however, to fit the team definition, they would need to transform these goals into specific and measurable performance goals (Katzenbach, 1999).

The last two team characteristics of a common approach and mutual accountability are not displayed by the case study group. The members of the group approach their work assignments by methods each feels is best, and are individually accountable to the vice president for their performance.

3. In this job setting, would a work group or team approach be recommended?

A leader needs first to evaluate the circumstances and determine which approach is best suited for the situation. Work groups are suited for settings in which performance goals can be met through individual efforts (Katzenbach, 1999). Since planning for work groups is done by the supervisors and decisions are implemented though individual assignments, work groups need little time to plan. Work groups are usually considered less risky, less time consuming, and less disruptive than teams (Pell, 1999).

Teams can be valuable in settings when a project requires individuals with diverse backgrounds, the culture of the organization is participative, and the managers are committed to implementing a team concept (Pell, 1 999). Teams will typically outperform a work group by being more flexible, responsive to change, and allowing the group to draw upon the talents of all the members to create synergy, which is defined as the whole being greater than the individual parts (Robbins, 2000). If an organization is pursuing a creative tactic, developing employees' potentials, and is synergistic, it should use a team approach (Pell, 1999).

The setting for the case study group is more suitable to a work group approach since the performance goals can be met through individual contributions. An office environment lends itself to having predetermined goals, while a team approach is more suited for project type situations. Furthermore, for the sake of time, the case study setting is more conducive to having a single leader, the Vice President, making the decisions for the office instead of each decision being hashed out by the group. Also, there are many decisions in the office that only the Vice President can handle.

Teams are frequently found in large organizations with multiple departments, multiple divisions, and numerous employees. Teams are used in this setting to help with problem solving, special projects, and to unite a widely dispersed group of employees (Devine, 1 999). Teams are used in the university setting drawing members from various departments and divisions to work on special projects that concern the university as a whole. The work group in the case study does have the advantage of being ready to come together as a team for special projects required of the office since they already have the foundation of a team within the work group. As demonstrated by this case study, one does not have to have a work group or team in its purest form. Characteristics of each can be combined in the appropriate setting to accommodate unique work environments.

4. What makes this group so successful?

As stated in the answer to a previous question, one reason the group is so successful is the members have incorporated appropriate team characteristics of communication, trust, constructively handling conflict, support, and recognizing the achievements of others into a work group setting to enhance their relationship. When a group has a strong interpersonal relationship, it will lead to higher levels of productivity. If a group is cohesive, members have a stronger desire to attain the goals of the group (Robbins, 2000). These individuals take great pride in their work and know they can depend on each other to produce quality work. Each attempts to do her best on each assignment to assure she will not let down the other group members. Each feels she is a part of a group and, even though they might not be mutually accountable for their work, they feel a sense of responsibility to perform at the high standards that have been set by the office.

In the case study, it is noted that the ladies are known on campus as a group. This feeling of being a part of the group fulfills the basic need of belonging for the group members. It provides security, status, self-esteem, affiliation, and power, which gives the members the necessary attributes to be successful at their jobs (Robbins, 2000). The ladies obviously work at enhancing their relationship by spending time together. As mentioned in the case study, they took a trip together which helped the ladies bond by providing the group with time outside the office. Groups tend to be more cohesive if they spend a significant amount of time together (Robbins, 2000).

Another reason the group is successful is they enjoy the environment in which they work. Ruth enjoys it so much that she has had trouble making the decision to retire. One reason the group members are attracted to the group is because they share similar work habits and personal traits. As stated in the case study, they are all hard workers and go above and beyond the call of duty. If the group felt that one member was not doing her share of the work, this would lead to animosity among the other members and interfere with the group's cohesion. Their work styles may be different to a certain extent, but their broad work traits are the same. The two members of the group that work together, Dyan and Jamie, have similar work styles as well as broad work traits which contribute to their successful partnership. Also, the group shares common personal traits. Even though this might not play as significant a role as the work traits, common personal traits add additional common ground to bring the group members closer. The fact that three of the four members of the office group have strong roots in the community seems to be an added bonus that provides them with close ties drawing them together. This situation has apparently not caused problems for the fourth member of the group because it appears the other three group members include Ruth in their conversations regarding the community, and Ruth has not allowed the situation to alienate her from the group.

Another reason for their success is the manner in which they handle conflict. It is apparently customary for the office members to express their dislikes or disagreement openly, but with humor in order to buffer the situation. It is important they let the other members know when they are having a problem instead of letting the problem escalate, but the manner in which they handle the situation is the key to their success.

5. What can they do to make sure the group will continue to be successful after Ruth's retirement?

The answer to Beatrice's question at the end of the case study, "Do you think our team will ever be the same?" is "no". The group will never be the same because there will not be the same members, but this does not mean the new group cannot continue to be successful (Katzenbach, 1999). Initiating a new group member will frequently impede the group's progress, but there are some tactics that will help make the transition as smooth as possible. The existing group members need to be involved as much as possible in the selection of the new member. Furthermore, they need to assign a person to be responsible for orienting the new member and providing the new member with all relevant background information regarding office procedures (Harrington-Mackin, 1996). The group is on the right track at the end of the case study when they start listing the qualities of the new group member they wish to fill the open position. One reason for their success is their common work and personal traits. They need to find an individual that shares these common traits to fit into the group.

First, the group needs to make sure the new group member will possess the abilities to perform the technical aspects required of the job. This can be achieved by making sure the candidate meets the educational and experience requirements outlined in the job description and qualifications form utilized by many human resources departments. The more difficult task will be to find an individual that possesses similar work and personal traits desired of the existing group. The existing group members need to make a list of the traits they wish for the new group member to possess and formulate interview questions so that the answers will reveal the existence of these traits. They also need to make clear to the new member the standards of the office so the new group member will have a complete understanding of what is expected.

After the selection of the new group member is made, the existing group members need to welcome the new member into the group and help the new member feel a part of the group (Katzenbach, 1999). They need to nurture the relationship and realize it will take time to build a strong interpersonal relationship of trust, communication, and support with the new member. The existing group members need to realize the group will never be as it was in the past, and it will be important not to compare the new member with the old member. They need to look at the new member as an opportunity to bring new insight to the group, and be open minded regarding ideas from the new member (Katzenbach, 1999).

The new member also has a role to play to fit into the group by realizing he/she will need to earn a place on the team (Katzenbach, 1999). The new member needs to try to fit into the group culture that already exists, but not be afraid to bring his/her ideas to the group. A new team member can be a threat or an opportunity to the group (Katzenbach, 1999). When a new member joins a group, two situations can occur. The new member can become a part the group, and the newly formed group has the opportunity to grow with the insight of a new member. On the other hand, the new member can remain an outsider that will cause disruption in the group that could prove detrimental to the group's success (Katzenbach, 1999). When a group that works so closely together is faced with adding a new member, a great deal of effort needs to be put forth to assure the new member is a good match with the existing group members. Furthermore, the new relationship needs to be nurtured and given time to grow. This may seem like a great deal of work but, as evidenced in the case study, the results will be worth the effort.

Every organization needs to learn to deal with changing group members, which in today's transit society will occur on a regular basis. Even though a group does everything possible to assure the group's continuing success when selecting a new member, success is not guaranteed. When dealing with the complex human factor, no one knows exactly the right combination of skills and personal traits that will provide the right chemistry. Although, a group that has been successful in the past, as the one in the case study, has the advantage of assessing the factors that have contributed to its success, and try to emulate these factors for future success.

EPILOGUE

Several months have passed since this case study was written. To everyone's surprise, these months have brought about tremendous change to this normally stable office. Jamie received notification from the President of the university that she had been selected to replace his assistant who was retiring. Consequently, she will be leaving the office of academic affairs to assume her new position next month.

With the announcement of Jamie's promotion, Ruth has once again decided to delay her retirement. The office has already selected the replacement for Jamie. During the selection process, the applicants were first screened to make certain they evidenced the skills and abilities for the position, which narrowed the field of candidates. Then, probably the most important part of the selection process for the office came when each member of the office, including Jamie, visited with each applicant. Afterward, the office met as a group, and each group member cited his or her top two choices and stated the reasons for the choice. Surprisingly (or not), each group member had selected the same individuals. After some discussion, the group came to a consensus regarding the new employee. The office did the best they could when they selected the replacement for Jamie to make certain the new employee will be a good "fit" with the group. However, the question still remains, will the group ever be the same?

Subject: Group dynamics; Teamwork; Success factors; Colleges & universities; Case studies

Location: United States--US

Classification: 2500: Organizational behavior; 8306: Schools and educational services; 9190: United States; 9130: Experimental/theoretical

Publication title: Journal of the International Academy for Case Studies

Volume: 12

Issue: 6

Pages: 5-12

Number of pages: 8

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 10784950

Source type: Reports

Language of publication: English

Document type: Business Case, Feature

Document feature: Tables References

ProQuest document ID: 216298627

Document URL: http://search.proquest.com/docview/216298627?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-12

Database: ABI/INFORM Complete

Document 51 of 100

THE UTAH SUMMER GAMES MARKETING RESEARCH PROJECT

Author: Roberts, Wayne A, Jr; Steed, Emmett

ProQuest document link

Abstract:

In 2004 the new director of the Utah Summer Games, an athletic event modeled after the Olympics that draws almost 7500 athletes, is concerned about the lack of any data other than anecdotes and annual registrations. No one was sure how satisfied athletes and their families are with the athletic events, the opening and closing ceremonies, and the products, services and environment of Cedar City. They also do not know how people learn about the events. The case depicts the planning, implementation, and some results of a marketing research project developed to measure satisfaction levels regarding the community and the opening ceremonies, and to assess what other activities participants do in conjunction with the games. Manageable in scope, the case illustrates marketing research steps, has some shortcomings for students to identify, and has enough results to permit them to reach some tentative conclusions. The case is simple enough to be used in a marketing principles course. Its value is probably greatest in a marketing research course, where it can also be used as an illustrative project in the beginning, and referred to throughout the course as sampling and non-sampling error, questionnaire development, and data analysis topics arise. It could also be used as a model for semester-long student projects. [PUBLICATION ABSTRACT]

Full text:

INTRODUCTION

Every year thousands of people participate in athletic events sponsored by members of the National Congress of State Games. Forty states conduct summer games, and 14 conduct winter games. Started in 1978 in New York, more than 90 sporting events, ranging from basketball to arm wrestling to bass fishing, are offered across the country during the summer games, which are modeled after the Olympics.

In Utah, the Utah Summer Games (USG) were started in 1986 by Gerald Sherratt, then president of Southern Utah University (SUU) in Cedar City. Sherratt' s belief was that if young athletes and their parents visited the campus and the surrounding area they would be more inclined to consider attending the university. The USG office is maintained on SUU' s campus, and the university supports the games financially. The office has a small staff, which is supplemented by roughly 1000 volunteers.

In January of 2004 Kyle Case, a recent MBA graduate, was hired as the director of the Utah Summer Games. He has a strong interest in athletics, and has also participated as an athlete in the USG Case has a strong interest in seeing the summer games expand and develop.

The total budget for the Utah Summer Games is roughly $375,000. Approximately $ 1 65,000 comes from athlete registration fees, and sponsorships account for another $135,000. The rest comes from city, county and state contributions. In addition to donating office space and most utilities, Southern Utah University allows the summer games to use their facilities for free. The total value of SUU' s contribution is roughly equivalent to $25,000.

THE 2004 GAMES

For the 2004 USG there were 44 different competitive events. Soccer, as usual, was expected to be the most popular by far, with roughly 2600 participants. Basketball, the second most popular event, was expected to have around 400 to 500 participants. In total almost 7500 athletes were expected to participate. An abbreviated event schedule is provided in Table 1 . Most events were to be held in the Cedar City area, but a few were to be held elsewhere. For example, sculling was to be held near Salt Lake City, and bass fishing was scheduled at a reservoir 30 miles south of Cedar City.

The cost for participation varied by event, but for most ran about $25 per person. People could register by mail or electronically via the Internet. Internet registrations, initiated in 2000, had increased from roughly 20% to an expected 45% to 60% in 2004.

The USG has an elaborate opening ceremony each year, complete with the community ' s best fireworks display, a parade of athletes, a band, and other events. The opening ceremonies are held in the Eccles Coliseum, Southern Utah University's football stadium. Athletes are admitted free, and the price of admittance for others varies depending on seating location. Ticket prices for 2004 varied from $7 to $12. Opening ceremonies account for approximately $45,000 of the USG's total budget. Historically, revenues from ticket sales have fallen short of the cost of the event.

After finals for each event awards ceremonies are held in the Eccles Coliseum, where ribbons and trophies are presented to the top three teams or participants. The award ceremonies occur as each event wraps up.

THE DESIRE FOR INFORMATION

A major concern of Kyle Case's was the lack of hard information:

"We know how many athletes participate each year, in which sports, where they live, and we have lots of anecdotal information that suggests we are doing okay. But we don't know how satisfied the athletes are and, if they are kids, how satisfied their parents are with the games and their Cedar City experience. We advertise and get lots of publicity, but we don't know how they hear about us. Are there other potential athletes out there we aren't reaching? We don't know."

"And there is more we don't know. We don't know how much of an economic impact the games have on the community. We don't know the impact on our sponsors, and we don't know how satisfied sponsors are with us. We want the city and local businesses to continue to support us, and we want to do a good job for our sponsors. However, it sometimes is hard to talk to these and other folks without having any good, specific data."

In addition to discussions with the staff of the USG, one of the researchers also consulted with the mayor of Cedar City, who happens to be the former president of SUU and founder of the Utah Summer Games, Gerald Sherratt. He agreed with the notion of discovering participants' perception of Cedar City resident friendliness.

In discussing the possibility of collecting information to help the USG decision-makers during May 2004, the staffai the USG made it clear that their resources were stretched to the limit for the current season. The many volunteers were all assigned to various needed duties.

In late May Kyle Case and Steve Ahlgreen, the Utah Summer Games Marketing Director, met with two researchers to discuss the possibility of conducting a marketing research project.

RESEARCH PURPOSE AND OBJECTIVES

Given the time and resource restraints it was decided that the objectives of the research would be as follows:

1. Determine how satisfied attendees are with various aspects of the opening ceremonies.

2. Determine if attendees would prefer that the opening ceremonies be changed, with the price of admittance being changed accordingly. Should prices and the quality of the opening ceremonies be raised? Should they be kept about the same, or should the admittance price and the quality of the show be lowered?

3. Determine satisfaction levels of USG participants with their Cedar City experience.

4. Determine what other activities visitors participated in while at the USG.

The first two objectives were of particular interest to the director and the marketing director. The third objective was believed to be of interest to everyone concerned with the summer games, in particular the mayor and local service and merchandise providers. The last objective was intended to provide at least a rough indication of who was impacted by the large influx of visitors. The purpose of all these objectives was to aid in planning future summer games, and in garnering local support for the games.

DESIGNING THE RESEARCH

It was clear that there was little time for any real exploratory research. While it would have been appropriate to talk to individuals and groups, particularly participants, about their experiences associated with the Utah Summer Games, two major hurdles prevented this. First, there was a lack of researcher time to conduct many interviews. Second, given the desire to assess the opening ceremonies, such exploratory research would either have to rely on recall among the previous year ' s attendees, or would mean that collecting information about 2004' s opening ceremonies would have to rely on post-event telephone interviews, email, or mail surveys.

With regard to the objectives regarding opening ceremonies, the interest was in measuring opinions and satisfaction levels of all who attended. Many people from around the area, it is believed, attend open ceremonies - not just USG participants and their families. At the opening ceremonies Delta Airlines was going to give away two first-class round trip tickets, and in order to enter people needed to fill out a form, complete with their telephone numbers and addresses, and drop it into a box. This data, it was believed, could be used to generate a mailing list, or a telephone list, for a subsequent survey.

There were some other things to consider. First, if a questionnaire was to be generated that was meant to provide information regarding all the research objectives, it would have to be designed to be easily filled out by both USG participants and non-participants. Second, it was against university policy to allow surveys of people under 18 years of age unless parental permission was granted. Third, during the event everyone's attention would be glued to the show. After the show, around 11:00 p.m., it seemed questionable whether anyone would be willing to participate in a survey. Lighting would also be a problem. Finally, there was a concern that asking people too long after the event was over might result in some non-sampling error. Non-response would likely be a problem, and depending on how long after the event the data was collected, there might be recall errors.

While not free from all concerns, it was decided to employ a drop-off and pick-up approach among parents of soccer players as well as other event fans in the days following the opening ceremonies. Since over 2600 soccer players would have been in Cedar City two full days prior to the ceremonies, many with their parents, it was believed that during the day following opening ceremonies they would be able to provide responses appropriate to all the objectives. Further, since players were supposed to arrive early to their competitive events in order to get organized and warm up, it was felt that parents and friends on the sidelines would not be reluctant to fill out questionnaires while waiting for the game to begin. The plan was to randomly choose fields and games, and to make two trips around each playing field. On the first trip questionnaires and pencils would be handed out, and on the second trip the completed questionnaires and the pencils would be picked up.

Regarding the target number of respondents, it was decided, based on experience more than anything else, that 250-300 respondents would suffice.

With the data collection approach chosen, the questionnaire was developed. After several iterations the questionnaire, presented in exhibit 1, was finalized. The questionnaire was developed by the two researchers, without input from people from the Utah Summer Games or from anyone else. However, the final questionnaire was approved by Kyle Case and Steve Ahlgreen.

COLLECTING THE DATA

Opening ceremonies were held the evening of June 10. On the morning of June 1 1 one of the researchers showed up at a field where 3 soccer games started out simultaneously, donned a Utah Summer Games volunteer shirt, and tested out the procedure. It worked out well, except that 3 fields tended to take too much time if data collection was to occur between the time when the players showed up and the game began. Nevertheless, all respondents were very accommodating.

The researcher had arranged for 3 soccer players to help in data collection for several hours after their first game. Unfortunately, the soccer players decided at the last moment against the job based on the advice of their coach. Hence, the plan to randomly choose games for data collection went out the window. Instead, the lone researcher scrambled from location to location in an effort to garner as many completed questionnaires as possible. In choosing among the many soccer fields used in the area, he chose those fields where he could get a mix of players of various ages. While not quite a quota sampling technique, it was the best that could be accomplished under the circumstances. A total of 1 76 completed questionnaires were obtained. Remarkably, only two folks refused to fill out the questionnaire. A few others failed to fill out the questionnaire due to getting involved watching the game.

The other researcher, between June 1 6 and June 1 9, distributed and collected questionnaires at basketball, swimming, track and equestrian events. He attended events in the SUU swimming pool complex, the Centrum basketball arena, the equestrian arena in Parowan, and the Eccles Coliseum for track events. Parents and coaches were handed surveys in a pass around the sports complex. The surveys were then retrieved in a second pass. Very few people refused to fill out a survey. An additional 89 questionnaires were completed, bringing the total to 265.

DATA PREPARATION AND ANALYSIS

Each questionnaire was numbered, and the results input into SPSS.

With regard to the opening ceremonies, 49.8% of the respondents attended the event, and 55.6% had a minor in their care attend. Predictably, attendance varied by sport, with 68% of soccer field respondents attending, and 75.6% of the soccer field respondents indicating a minor in their care attended. This was to be expected given the timing of the soccer and opening ceremony events.

Tables 2 through 6 show the results from question 2, regarding the satisfaction levels of adults with the opening ceremony. Tables 7 through 1 1 show the results from question 4 regarding satisfaction levels among youths and children.

With regard to assessing whether respondents wanted to see the price and quality raised, maintained, or lowered, the results from question 5, ignoring those who were not sure or had no opinion, are shown in table 12.

Tables 13 through 19 depict results to question 7, regarding participant satisfaction levels with various aspects of their Cedar City and Utah Summer Games experience.

An interesting question is whether satisfaction levels with the Utah Summer Games, and with activities between events, is a function of where people stay. If people stay at home or with relatives, they may not need as many activities between events to keep them occupied. Also, people who have to travel longer distances and therefore incur more expenses may be less satisfied with the USG overall. To examine these possibilities, cross tabulations and chi-square tests were performed to test the hypotheses that satisfaction overall, and satisfaction with regard to activities between events, are independent of where people stay. In order to get cell numbers up towards satisfactory numbers collapsing of the data was necessary. The results are shown in tables 20 and 21.

Finally, with regard to determining what other activities people participate in while at the Utah Summer Games, table 22 provides the results from question 6.

INTERPRETING THE RESULTS

At this point the two researchers were ready to interpret the marketing research results. To help they constructed table 23. What should they report and recommend to the director and marketing director of the Utah Summer Games?

SUGGESTED QUESTIONS

1 . What other specific research objectives could have been pursued? Why do you think they weren't chosen?

2. The researchers did not do any real exploratory, or qualitative, research prior to designing their research or their questionnaire. What might they have missed by NOT conducting indepth interviews and focus groups? What are the dangers of skipping this step?

3. The chosen method for collecting data was to drop off and pick up the questionnaires at competitive events following opening ceremonies. What other methods could have been used, and what are the pros and cons of each? Was the sampling method appropriate for achieving the objectives of the study?

4. Critique the questionnaire. The researchers did not do a pretest. What are the risks of skipping this crucial step, and how might it have helped in this particular case?

5. What additional analyses of the data would you recommend?

6. Evaluate the cross-tabulations and the associated chi-square tests. What do the significance level numbers mean?

7. Construct the 95% confidence interval for the overall satisfaction level with the Utah Summer Games. Interpret this number. Is there any non-sampling source of error with which you would be concerned?

8. What conclusions can be reached, and what recommendations would you make?

Subject: Market research; Sports festivals; Research methodology; Case studies; Customer satisfaction

Location: United States--US

Classification: 8307: Arts, entertainment & recreation; 7100: Market research; 9190: United States; 9130: Experimental/theoretical; 2400: Public relations

Publication title: Journal of the International Academy for Case Studies

Volume: 12

Issue: 1

Pages: 5-21

Number of pages: 17

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 10784950

Source type: Reports

Language of publication: English

Document type: Business Case, Feature

Document feature: Tables

ProQuest document ID: 216299265

Document URL: http://search.proquest.com/docview/216299265?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-18

Database: ABI/INFORM Complete

Document 52 of 100

INNOVATION IN EMPLOYER HEALTH COVERAGE: THE CONSUMER DRIVEN HEALTH PLAN (CDHP) AT LOGAN ALUMINUM

Author: Hatfield, Robert D

ProQuest document link

Abstract:

Healthcare costs are soaring in the U.S. and in other developed nations. The model used in the U. S. is that the government provides healthcare insurance for the poor and for senior citizens, while employers traditionally provide healthcare coverage for employees. Employers and government have tried approaches to containing the costs of healthcare insurance while still providing coverage. The government created the "health maintenance organizations" (HMOs) and the marketplace created "point-of-service" (POS) and "preferred provider organization" (PPO) plan designs. Managed care approaches were introduced into virtually all plans in an attempt to control runaway costs in recent years. Some feel that the a "free ride" approach causes consumers of healthcare to have no financial stake in the costs of health services which, in turn, makes such costs hard to control. Consumer driven health plans (CDHPs) have emerged as plans designed to get the consumer to take a normal consumer interest in the cost and quality of healthcare service. CDHPs must have two elements: some type of medical spending account and high deductible healthcare coverage insurance. Logan Aluminum manufacturing company provides a graphic illustration of the positive elements of a CDHP with lots of additional plan elements, such a wellness, financial incentives, and free health services. Since Logan has implemented the CDHP healthcare costs have not seen the huge increases seen in the U.S. The fact that Logan uses participative management and team approaches in other areas of its operation is seen as helping to get participation and teamwork on solving the healthcare cost problems. [PUBLICATION ABSTRACT]

Full text:

INSTRUCTORS' NOTES

RECOMMENDATIONS FOR TEACHING APPROACHES

The special aspect of this case is that it presents a novel approach to a well-known problem involving healthcare costs. It also brings realistic details to help the student understand the abstract concepts and acronyms associated with these issues.

The primary goal is for the student to understand what is considered a consumer driven healthcare plan (CDHP). The secondary goal is for the student to be able to place this innovation within the mix of other standard healthcare plans. Further, it is useful for the student to see the broader policy, social, and political implications. The fit between being consumer driven and being an empowered employee is also an interesting relationship that is illustrated by the Logan case.

The standard case approach will accomplish these goals. Assign the case as homework, and then have the student teams answer the questions. Open class discussion based upon the answers of the teams. Finally, update the case with the information on results found in the epilogue found here in the instructors' notes.

If the course includes a unit on types of healthcare plans (e.g. POS, HMO, and PPO) then this case would be a good way to demonstrate how innovation can modify these "standard" approaches. If the course only approaches the topic of healthcare plans offered by employers in a broad way, then this case will provide just enough information about the plan types to allow learning and discussion.

There are a number of short videos provided by publishers and/or available commercially. I recently used a 10 minute clip titled "Crisis in Healthcare" that would provide a good set-up for this case. Spring boarding off of a video on healthcare is a good way to bring in students of varying learning styles.

There are a number of topics in this case that would be worthy of a short (or long) research paper. The articles in the References section provide an example of the amount of academic and other information available. While students may not be able to write a long research paper on CDHP they certainly can write a multitude of topics surrounding healthcare issues in the U.S. and around the world.

In a course stressing international dimensions of organizations students could choose countries or regions of the world and research how healthcare insurance and/or coverage is handled in the chosen countries or regions.

I have brought guest speakers into class to discuss these issues. I have used guest speakers from the universities own HRM department and from the private sector.

This case will allow you to spend as little as an hour or as much time as a unit might take in your course. It will work for junior level students on up through graduate classes. It has traction in business, sociology, political science, psychology, medical fields, public sector, and other content and industry domains.

QUESTIONS FOR TEACHING THE CASE

1. Why are healthcare costs increasing faster than inflation in the U.S. and other developed nations?

The case points out that prescription drug costs are rising sharply in the U. S ., Canada, and in European nations such as Italy. Advances in the effectiveness of pharmacology, competition between pharmaceutical companies leading to heavy advertising, and research and development costs are all part of the high costs of drugs. Students may think of other reasons.

However, healthcare costs also include the costs associated with doctors, hospitals, medical hardware and other diagnostic tools, improvement in technologies, legal and insurance coverages for healthcare professionals, billing and records, and complying with regulations. Patients in developed nations continue to demand and expect higher and higher levels of healthcare.

2. What are the types of healthcare insurance approaches used currently in the U.S. and how are they different?

This is sometimes referred to as the "alphabet soup" of healthcare insurance plans. Students need to understand the playing field to recognize the innovation revealed in this case of CDHP.

The oldest active plan is the point-of-service plan (POS). This is much like the comprehensive coverage students may have in their car insurance plan. The out-of-pocket expenses to the patient are a deductible, a co-payment (often 20%). POS plans allow the covered person to use any provider or doctor as long as the fee is "reasonable and customary" (which means some of those who charge the most for their services are a problem for the patient since the insurance will not pay abnormally high prices) and is an approved medical procedure (which can be a problem when a therapy or procedure is "experimental"). An attractive aspect of POS plans is that they allow the patient to pick his/her own "point of service" - that is, they can pick whatever doctor or provider they wish.

This is in contrast to the health maintenance organization (HMO). HMOs have come under attack in the past few years because of publicized cases where managed care professionals at the HMO failed to "authorize" or pay for certain procedures. However, it is sometimes enlightening for the student to realize that this "bad-boy" insurance approach is the only one that is directly from the government. The HMO act of 1972 set this plan up to manage the high costs of healthcare. HMOs must encourage preventative and diagnostic care (like "well baby" and annual check-ups) that POS plans used to refuse to cover. It is notable that it will not pay a provider who is outside a predefined list of "in-network" providers. The rare exception is that it may pay for a specialist when no such specialist is provided within the network.

The preferred provider organizations (PPO) really developed as a reaction to a) the HMOs inability to pay "out-of-network" providers and b) the mergers among large healthcare providers and insurance companies. The main distinction of a PPO is that it only "prefers" its own "in-network" providers by paying more to them (often 80%). It still will pay, unlike an HMO, to providers "out-of-network". Since it doesn't "prefer" them, it generally pays less (perhaps 50%). Since PPOs and POSs aren't under specific insurance regulation the plan details of these two types of plans can vary. For instance, many POS plans now pay for "well baby" visits where the baby has not symptoms of illness.

3. Whose responsibility is it to provide healthcare?

This is a question that is hotly debated in political and other circles. The U.S. model is that the federal government provides coverage to those 65 and above in age (Medicare) and states provide coverage to those below a certain line of poverty (Medicaid). Some estimate that the government's share of coverage amounts to about one-third of all Americans once you combine Medicare, Medicaid, and the insurance that U.S. governments provide to their employees.

The rest of the nation relies primarily upon private employers for their group healthcare coverage. Small percentages buy individual coverage or join a group or association to facilitate group coverage (thereby spreading the risk).

There are different explanation reasons offered to explain why the U.S. ended up with the employer model rather than the governmental model. One reason is an aversion to "socialistic" solutions. The historical underpinnings of the U.S. suggest a distrust of large central governments and associated totalitarian measures. "Socialized medicine" has served as a pejorative slur used to limit the entrance of the government into healthcare. Employer healthcare programs precede the movement to more socialistic or governmental approaches. This means that employers were using healthcare coverage as a recruiting and retention tool before the nation had an appetite for federal social welfare programs (like those in the "Great Society" in the 1960 's). The free-market approach in the U.S. may also explain the employer model. Innovations (like the one in this case) and adjustments occur faster and more often in the free market. If one employer has superior insurance coverage a competing employer may copy or "up the ante" by offering a better compensation package.

Students should be able to argue that spreading the risk across the whole nation and exercising pricing pressure might work in the U.S. This case mentions the case of Canada where things are not as rosy as they once were in that government-model program. There are problems in Europe as well. At least in abstract, spreading the risk and exercising controls at the level of the nation seems appealing if the goal is simply that everyone should be covered.

Lively debate can be prompted here - Canadian model vs. U.S. model. Listing the pros and cons of each would be an interesting approach to take.

4. What is a consumer driven health plan (CDHP) and why does in include the word "consumer"?

The case states that a CDHP needs only two features: a) a medical spending account of some type, and b) a high-deductible insurance plan. In the Logan case, each family is allotted $800 worth of healthcare expenses. This means that the employee can spend up to $800 on healthcare without being out-of-pocket. Students should realize that this was not originally cash, but rather an "account" from which Logan paid directly to healthcare providers. Employers using CDHPs will normally handle and fund these medical spending accounts themselves. The CDHP employer will contact a medical insurance company to write a policy only for the high-deductible plan aspect. For instance, Logan uses a company to insure its employees for healthcare after a $2,000 deductible is satisfied (or Logan might self-insure this aspect).

Employers can create whatever gap they wish between what the medical spending account will pay and what the high-deductible plan will pay. In the Logan example the gap for family coverage is between the $800 in the spending account and the $2,000 deductible insurance. Therefore the gap is $1,200 for Logan families. Sometimes these are called "bridge" plans because the employee has to bridge the difference between the two coverages. Plans can have small or large gaps and still be considered CDHPs.

It would be interesting to discover whether any student is currently under any type of plan that might be considered a CDHP.

"Consumer" refers to the type of behavior that the employer wants employees to engage in when dealing with healthcare. Consumers shop, are aware of prices, are aware of quality requirements, gather information, and then make the best decision they can make. In governmental models and in the POS, HMO, and PPO models, the only entity with a consumer interest seems to be the insurance companies. The patient seems to have no stake in the cost. The consumer-driven approach would re-attach the patient and employee to the decisions surrounding the cost and quality of healthcare. The idea is that if the consumer cared what things cost, and could compare the cost and quality of alternatives, then better decisions would be made. The hope is also that the real consumer, the patient, would put pressure on the healthcare providers to offer high quality but reasonably priced medical choices.

5. Students are left with a question at the end of the case. "Observers wonder if the benefits in the first year can be repeated in the second year, or whether the first year may have merely squeezed out some efficiencies that caused a temporary effect." What do you believe happened in the second year - did the savings continue or was the effect just a short-term effect? Why did the benefits continue or not continue at Logan in the second year?

The epilogue provides additional information that updates the case. It provides the details of the savings in the first year (which is mentioned briefly twice near the end of the case). Here's what the update in the epilogue reveals.

There was almost a 5% decrease in costs in year one (2003) at a time when the rest of the nation was experiencing at least a 13% increase.

Costs in year two were either stable or up only 1%. This is remarkable since the beginning of the case points out that increases in healthcare costs have been in double-digits for each of the past four years. This means that an increase in a give year of something like 5% would actually be a "savings". However, Logan actually reduced spending in year one and held it even in year two. This is a real savings of over 23+%.

The "why" question is complex. Advocates for consumer-driven programs focus upon the consumer. An engaged consumer exercising discretion and informed choice should be expected to make wiser choices. The most common illustration is switching to generic drugs rather than paying the higher prices of "brand" drugs. There are also different kinds of MRIs. The more pleasant ones ("open" machinery rather than closed "closed" tube style) cost more. Both do the job equally well. The informed choice would be selecting the alternative that a) meets the quality requirements necessary and b) provides the best price.

Another "consumer" or free market outcome can be that the market may adapt to meet this "informed choice" demand by a) making it easier to discover the quality of its services and b) making the price easier to obtain.

Opponents of CDHP say that employees are simply neglecting their health to keep from paying the "bridge" amount. Information in the epilogue indicates that there was no statistically significant change in visiting the doctor in year one (2003). Employees went to the doctor about the same amount. However, employees went to the emergency room less. Managed care and other cost control approaches have frequently focused upon the emergency room since it seems to be the most misused medical service. People routinely go to the emergency room, where costs are very high, when they could have simply visited their own doctor. If you have no stake in the costs, what do you care if the emergency room costs three times the cost of an average doctor's visit? At Logan, the numbers seem to indicate a more informed and wiser choice in relation to the use of the emergency room.

The whole area of wellness and the preventative care benefits at Logan surely have an impact. Logan partners/employees are focused upon their health, the costs associated with healthcare, and are being counseled on how to improve their health. Since the average age of Logan partners/employees is 43 we cannot assume that only the young and healthy work at Logan. However, some would argue that the big savings are really found in the wellness and the improving fitness of Logan partners/employees.

ASSIGNMENTS AND TEACHING METHODOLOGIES

1. The standard approach of reading the case, discussing the questions in a student group, and then sharing the analyses of the various groups will work very well. I have used this case in class and it can stimulate some interesting discussions.

2. DEBATES:

An alternative is to have the students read the case, then divide the class into a "proCDHP" team and an "anti-CDHP" team and have a debate. This is a good way to get the pros and cons out into class discussion. Introducing the epilogue information would be a good way to take the debate up "another notch".

A variation on the pros-cons debate is to assign a team to sell and defend the four different types of healthcare plans in the U.S.: POS, HMO, PPO, and CDHP. Teams could start by saying "The plan detail that makes this the best overall approach is. . ." For instance the most attractive plan detail for POS is unlimited choice of healthcare providers; for HMO is the emphasis on preventative care often not found in other plans; for PPO is that it will pay out-of-network providers; for CDHP it seems to create savings and emphasizes choice.

A major debate is whether the U.S. should move from an employer-based healthcare insurance model to more of a government-based model. Require the teams to explain why the opposing model has flaws - why it does not work well (e.g. why are the governmentbased approaches having trouble or why is there a crisis, if there is, with the current employer-based approach?).

This could be turned on its ear if students had additional information about either the Canadian or European models that feature the government-based approach. Then the debate between models could be whether Canada or a European country should return to an employer-based model.

3. Homework assignments could include asking students to find out what healthcare they are under (if they are working) or what healthcare plan a family member might be under. As the student to categorize the plan within the "alphabet soup" of plan types: POS, HMO, PPO, and CDHP. Make sure the categorization is correct. It is worth noting that some plans are really a mix since only the HMO has legally required elements.

Another homework assignment is to have students find a copy of a healthcare insurance plan on the Internet, at their workplace, or from a family member. Reading all of the provisions gives the student insight on how complex any insurance plan can be.

4. Initiate the case by spring boarding off of a video or news snippet found online concerning healthcare costs.

5. Have students bring in news items over several class periods concerning problems relating to healthcare costs and insurance. Have each student give the news worthy aspect of the news item and relate that item to the case.

EPILOGUE

Year One: In 2003, the first year Logan used the CDHP model, company costs actually declined compared to 2002. There was a net cost reduction of 4.6 percent compared to 2002. These numbers are particularly impressive since it reverses the national trend of 1 3- 1 4 percent of expected healthcare cost increases for 2003. These 2003 costs were about a million dollars less than expected had Logan not changed plan designs and continued the wellness focus.

In addition, prescription drug costs have been impacted by this plan that promotes "employee consumerism". In 2002, Logan had changed its prescription drug plan design to the extent it encouraged employees to choose either generic drugs or preferred brand drugs. Drug costs declined by nearly 6 percent in 2002 and by another 5 percent in 2003, the first year of the CDHP. Prescription drug savings amount to more than a half million dollars in 2002 and 2003, when inflation is considered. Logan attributes the savings to employees being wise consumers and talking more about prescriptions and therapies to their doctor. Anecdotal evidence from area doctors reveals that Logan employees and dependents are asking more questions about treatment options and drug alternatives than ever before. This is the consumer behavior hoped for in CDHPs.

Year Two: In 2004 overall costs were up slightly, but by less than one percent. Medical and drug costs were nearly flat in 2004 compared to 2003. This amounted to another significant savings for Logan, since the increases nationally for healthcare was in the double digits for most plan designs.

One objection that is frequently voiced by opponents of the consumer directed healthcare model is that people will avoid medical care and fail to get needed medical attention in an effort to conserve their health care spending account dollars. The 2003 results at Logan do not seem to support that argument. While doctor's office visits and emergency room visits were down slightly in 2003 compared to 2002, the change was not statistically significant. Hospital days of care stayed about the same in 2003 as 2002, but the average length of stay declined in 2003 compared to 2002. On the other hand, there was a significant change in the number of out patient surgeries. Out patient surgeries fell by a double-digit percentage. There was also a positive trend of not going to the emergency room for non-emergencies and visiting urgent care clinics or their family doctors. This behavior is more appropriate as well as a wise consumer financial decision.

Another result of the changes that made at Logan is the national attention it is receiving. In February, 2004, Logan testified before the Joint Economic Committee of the U.S. Congress. Logan has also been featured in several major newspapers, including USA Today and the Chicago Tribune. Several magazine articles and radio shows have discussed the innovations at Logan Aluminum. The attention has generated a lot of calls from employers who are considering changes to their plan design.

Are employers ready to attempt to design an integrated approach to containing healthcare costs using the CDHP model? When asked about the likelihood of offering a high-deductible plan with a savings arrangement within the next two years, firms employing 13 percent of the covered workforce indicated that the firm is "very likely" to offer an HRA-type plan in the next two years; firms employing 26 percent of covered workers reported that they are "somewhat likely" to do so (Gabel, 2004). This level of interest, particularly among the largest firms, suggests that these arrangements could grow considerably in the near future. The case of Logan Aluminum may provide some excellent insight into CDHP design and integration with wellness and incentives as well as aspects of HR and general management.

Subject: Case studies; Health care expenditures; Consumer-driven health plans; Aluminum industry; Cost control; Employee benefits

Location: United States--US

Company / organization: Name: Logan Aluminum; NAICS: 332431

Classification: 9130: Experimental/theoretical; 8660: Metalworking industry; 9190: United States; 6400: Employee benefits & compensation

Publication title: Journal of the International Academy for Case Studies

Volume: 12

Issue: 4

Pages: 7-15

Number of pages: 9

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 10784950

Source type: Reports

Language of publication: English

Document type: Business Case, Feature

ProQuest document ID: 216278706

Document URL: http://search.proquest.com/docview/216278706?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-18

Database: ABI/INFORM Complete

Document 53 of 100

IS IT TIME TO UNLEASH A SOCIAL ENTERPRISE INTERNET BUSINESS ON THE GLOBAL MULTIBILLION DOLLAR WEDDING INDUSTRY? A CASE STUDY

Author: Stephenson, Harriet; Lockwood, Diane

ProQuest document link

Abstract:

This case revisits a business plan that won first place in 1999 in its university's business plan competition. Subsequent to winning the award, the team had concluded the opportunity, as they had explored it, was a "too-little-too-late" Internet startup, and the team members were not in a position to want to pursue an online wedding information site at the height of the dot-com boom. Six years later, Bill, the would-have-been CEO of Wedding Information Site, received an e-mail from his instructor urging him to revise the strategic position of Wedding Information Site and secure an MBA team to enter the business plan competition again. The instructor proposes that a social enterprise component be added to the business strategy that would result in a significant impact for good (i.e., the "triple bottom line" of people, profits, and environment) on the $70 billion a year wedding industry in the United States alone. The key issue is how to position Wedding Information Site's social enterprise strategy and practices to become a competitive force, to secure initial financing, and ultimately to become a desirable buy out from an established competitor or to become a significant competitive force in the multibillion dollar industry. Venture capitalists are not traditionally known for looking first at social return, then financial return. However, this is potentially a very compelling investment opportunity for the right investor. This case is a teaching tool to explore how to use social enterprise and the triple bottom line strategies and practices from the startup as a viable market entry strategy. This model can potentially change an industry and have a significant impact on people, profits, and environment while meeting the needs of various stakeholders, including shareholders. It is arguably the predominate model of the 21st century for doing business. [PUBLICATION ABSTRACT]

Full text:

INSTRUCTORS' NOTES

Case Overview

The WeddingInfoSite.com won the University's grand prize business plan award in 1999, the first annual business plan competition. The team's members, however, were at career spots that did not lend themselves to engaging in any startup at that time. Also, at this time TheKnot.com was emerging as a serious force in that space, and it went public later that year. The Knot became profitable in 2003, seven years into its business, and has been in a strong growth mode ever since. The Knot has stayed the course with a clearly profitable "bottom line" approach focused on giving the best source of information for those getting married. The wedding related market is an estimated $70 to $150 billion market in the United States alone. China and Europe are also seeing a real surge in this market. In the emerging social enterprise/sustainable era of post 9/11, post dot-com, post Enron, post Martha Stewart, post Hurricane Katrina, it is conceivable that strategies not previously considered as being viable will be impacting entire industries and businesses from small to large. Indications are that there is increasing demand for value-oriented wedding/marriage starts. The average cost of a wedding at $26,000 means large segments of the population are spending increasingly large amounts of money for weddings. It also means large segments of the population are not able to participate, at least not in the way the wedding industry is now serving the market. Is there an opportunity now that was not there before? The WeddingInfoSite.com is revisited six years later by the original designated CEO, who is now ready for a career change but maybe not another business plan competition with an updated Wedding Information Site. Bill reviews an e-mail challenge from his instructor for Wedding Information Site to become a Ben & Jerry's of the wedding industry- a Ben & Jerry's social enterprise with a triple bottom line strategy. Wedding Information Site's tag line theme could be: "Quality weddings to meet your price and quality of life and planet concerns."

The detailed Instructor's Notes provide an opportunity for the instructor to get background materials on the areas of social enterprises, triple bottom line, and social responsibility to be able to incorporate into courses. It also includes a suggested student consulting assignment to the CEO of The Wedding Information Site which has been used successfully at the undergraduate and graduate levels, including classes with culturally and ethnically diverse student populations. A potential debate assignment is proposed to explore the pros and cons of business plan competitions. The international diversity of students and the age range of senior undergraduates to older MBA's, many who are considering marriage, allows for discussion of the potential global wedding market. Usually several students have used a service such as TheKnot.com or have been involved with someone else who was registered on one of the sites such as The Knot. Also included are social enterprise definitions and Web links for instructors to see how companies actually applied the concepts. It is timely to address values, ethics, and social responsibility. Hurricane Katrina is only the latest concern to cause people to question "abusive consumerism."

This works well for introducing concepts of triple bottom line, social enterprise, sustainability, social responsibility, values, social justice, and maximizing stakeholder returns. It is useful in entrepreneurship, strategy, and management courses. This case is about entering the U.S. market. Would this be applicable in any country? What role do business plan competitions play in introducing new ideas into the marketplace? Suggested case discussion questions and student exercises are included, followed by social enterprise background material, links for the instructor, and mini lectures.

DISCUSSION QUESTIONS AND STUDENT LEARNING ACTIVITIES

1. Are "social enterprises," "triple bottom lines," "sustainable businesses," and "social return on investment" just academic discussions in the competitive world of bottomline focused U.S. businesses? Didn't the social responsibility and ethics era cover it all? Note to students, for definitions, the "Social Enterprise Lexicon" is useful: http://sealliance.org/resources_lexicon.cfm.

Social Enterprise Lexicon: http://se-alliance.org/resources_lexicon.cfm

For a quick primer on the triple bottom line in action, go to http://www.rolltronics.com/ ppl/tbl.html. There is a definitive article "The 'Triple Bottom Line': A Boardroom Guide" (Sauvante, 2001) plus a "Sustainability Whitepaper" (n.d.).

For additional background notes on social responsibility, triple bottom line, social enterprise, and sustainability, refer to J. Andriof and C. Marsden OBE (n.d.) "Corporate Citizenship: What It Is and How to Assess It?"

We have included a mini lecture based on Andriof and Marsden's article with some updates on trends and forces that are making a case for this being a required strategy for businesses to be competitive in the 21st century. It is necessary to consider impact on social, economic, and environmental stakeholders:

Mini Lecture- Background Notes on Corporate Social Citizenship, Social Responsibility, Triple Bottom Line, Social Enterprise, Sustainability. Corporate social citizenship is not a new idea. Its importance in the workplace has increased significantly in the last ten years in the United States and globally. We have gone from bottom line talk to including double and triple bottom lines in the for-profit and not-for-profit sectors. It is increasingly clear to the great majority of businesses in industrialized nations that for a business to truly succeed, it must prosper in the areas of profits, people, and planet. This is still a less clear recognition for nonprofits, who are moving into double bottom line areas with social entrepreneurship and efforts to generate income from business activity. The way a business chooses to conduct itself can have tremendous global impact. Negative examples of this are the Nestle Baby Food debacle of 1970; Nike Corporation's use of child labor, which came to be a public issue in 1996; and the Anderson/Enron debacle of 2002. The way a nonprofit chooses to conduct itself can have a tremendous global impact.

Good corporate citizenship can be defined as understanding and managing an organization's wider influences on society for the benefit of the organization, its constituents or stakeholders, and society as a whole (Andriof & Marsden, n.d.). Furthermore, organizational citizenship embraces an understanding that everything an organization does has some flow or effect either inside or outside the organization, from customers, volunteers, and employees to communities and the natural environment. Corporate social responsibility (CSR) encompasses the environment, the workplace, the community, and the marketplace which refer to triple bottom line concerns of economic prosperity, environmental quality, and social justice (Elkington, 1998). Within these four areas, companies are able to make a difference by conducting specific programs and actively becoming involved in monitoring and changing the effects of their operations (Andriof & Marsden, n.d.).

Aspects of responsible management include:

* Employees/volunteers are most productive when they do meaningful jobs at fair wages/relevant compensation, in a healthy environment, are empowered to have a say, are respected for their contributions, and have a good balance between work and family life.

* Organizations function best over the long run when the community they are in is healthy and has a below average crime rate, adequate education and health care, available skilled labor, and robust economic activity.

* Companies that treat the environment with respect in all aspects of their operations have reduced waste output, higher quality products and services, high resource efficiency, reduced costs of regulatory compliance, experience low incidence of litigation, and enjoy a high degree of loyalty from customers, business to business clients, staff, volunteers, and funding sources.

* Organizations must take a long-term view of their operations and make decisions, which consider a more holistic view of the constituents and world. Sometimes this means forgoing short-term profits in favor of longterm benefits.

* An organization's brand and reputation are becoming more and more important as consumers, investors [grantors, donors, funding agencies] [often] consider reputation and performance, contribution to social/human good, and care for the environment as important as price in making purchasing decisions (Andriof & Marsden, n.d.).

The Forces of Change Towards a Triple Bottom Line. What are the factors that make an organization want to change? Why in the last ten years have the pressures and business factors for change been more prominent than ever?

(1) 9/11- In a global CSR study by APCO Worldwide opinions of 419 elite panelists from ten countries in North America, Europe, and Asia-Pacific in 2004, it found the greatest forces perceived to drive change in social responsibilities of companies tend to be external media,government regulations, and lawsuits. Internal company stakeholders-employees, business partners, executives, and shareholders-were viewed as very important also.

(2) Deregulation, Globalization, and Internet-which has provided business and nonprofits with many opportunities previously denied to it. Among these opportunities has been the ability to compete in most of the world's markets; the ability to raise funds from numerous different and competing sources; and the opportunity to buy supplies from anywhere in the world and sell goods to anywhere in the world. The effects of these changes have included more competitive local markets and the squeezing out of the small business. For example, WalMart has been blamed for the demise of countless local retailers. Other effects include crosscultural business investments and transactions. Many factories are located so as to make use of cheap foreign labor. However, Article 29 of the Universal Declaration of Human Rights (1948) provides that "Everyone has duties to the community ..." and that is a global community. Business for Social Responsibility (2005) is a global partner for responsible business leaders with more than 1,400 members and affiliated companies worldwide. "BSR helps businesses achieve commercial success in ways that respect ethical values, people, communities and the environment" (http://www.BSR.org).

(3) Rapid Advances in Communication Technology-which has allowed information to be relayed around the globe almost instantaneously and with minimal costs. There are few areas of our global community that have not been affected by the changes that have occurred in communication technology and those that are still developing-e.g., the Internet and wireless technologies.

(4) The Rise in the Power of the Consumer-the combination of the forces described above has resulted in what many have termed 'the information age.' With access to instant, free information from a variety of sources; a multitude of service and product providers; a multitude of global investment opportunities; and, the unopposed spread of capitalism as the dominant economic structure; the rise in the power of the consumer has been unrestrained (Andriof & Marsden, n.d.).

(5) Availability of socially conscious investment funds- e.g., Domini funds. Sources of funds-investment-options-social-investors-need to consider revenue generating opportunities, especially if they further the mission of the organization.

(6) Evidence that "good marketing/management" pays off.

(7) Curriculum in business schools, beyond the grey pinstripes, business plan competitions that include a social enterprise, sustainable, or triple bottom line awards. Programs MBAs are engaging in such as the University of Washington's Challenge for Charity Auction partnering with Special Olympics, over four years volunteered over 5,200 hours and donated over $275,000 to Special Olympics.

(8) Other topics and headlines indicate a "movement" has begun from hybrid energy cars driven by higher gas prices and a carrot approach of government to allow credits of tax up to $2,000 for purchasing a car/truck that uses alternative energy sources.

(9) Growing awareness that working on a triple bottom line increases probability of an even better profit bottom line. The financial industry is watching. For example, in Who Cares Wins: Connecting Financial Markets to a Changing World: Recommendations by the financial industry to better integrate environmental, social, and governance issues in analysis, asset management, and securities brokerage (United Nations Global Compact & Swiss Federal Department of Foreign Affairs, 2004), institutions endorsing the report believe that

Companies that perform better with regard to these issues can increase stakeholder value by, for example, properly managing risks, anticipating regulatory action, or accessing new markets while at the same time contributing to the sustainable development of the societies in which they operate. Moreover, the issues can have a strong impact on reputation and brands, an increasingly important part of company value.

The report further clarifies roles of different market actors: companies, regulators, stock exchanges, investors, asset managers, brokers, analysts, accountants, financial advisors, and consultants.

(10) Natural disasters and future hypothetical disasters:

a. The December 26, 2004, India Ocean earthquake, Sumatra-Andaman earthquake generated a tsunami that killed more than 150,000 people.

b. Hurricane Katrina, August 25, 2005, thousands dead, New Orleans decimated, hundreds of thousands displaced in Gulf area.

c. Hypothetical future disasters (List of disasters, 2005):

i. Overpopulation

ii. Supervolcano

iii. Asteroid impact event

iv. Mega-tsunami such as recurrence of Cascadia Earthquake of Juan de Fuca Plate in Pacific Ocean (originally January 26, 1700)

v. Global warming

vi. Hypernova

(11) John Elkington's seven revolutions driving the triple bottom line challenge.

1 . Markets will be driven by competition, largely through markets. As a result, business will shift from using competition as an excuse not to address the triple bottom line agenda to a new approach, using the triple bottom line as part of the business case for action and investment.

2. Values-the worldwide shift in human and societal values. The transition from 'hard' commercial values to 'softer' triple bottom line values.

3. Transparency already under way, is being fueled by growing international transparency and will accelerate. As a result, business will find its thinking, priorities, commitments, and activities under increasingly intense scrutiny worldwide.

4. Life-cycle Technology-'X-ray environment,' in which their value chains and product life-cycles will be exposed (often in excruciating detail) to wider scrutiny. New forms of 'X-ray environment' can switch on without warning, illuminating activities, processes, and companies way back down a value chain.

5. Partnerships-will dramatically accelerate the rate at which new forms of partnerships spring up between companies and between companies and other organizations.

6. Time, driven by the sustainability agenda, will promote a profound shift in the way we understand and manage time. By contrast, the sustainability agenda is pushing us in the other direction, towards 'long' time. Bubble environments which-as illustrated by the history of spectacular economic crashes around the world-can delude and destroy even the deepest-rooted businesses. Unless companies can balance the short-termism of most 'wide time' markets with a real sense of 'long time,' they are extremely unlikely to survive the sustainability transition.

7. Corporate Governance-ultimately the triple bottom line agenda is the responsibility of the corporate board.

(12) Corporate citizenship is a powerful influencer of consumer behavior-40% of respondents to survey of 3,500 Americans said that good corporate citizenship makes them more willing to do business with a company (GolinHarris, 2005).

The Top 12 Corporate Citizenship Drivers that are viewed as being important in building a company's reputation as being a good corporate citizen:

1. Values and treats its employees well and fairly

2. Executives and business practices are ethical, honest, responsible, and accountable

3. Goes beyond what is required to provide safe and reliable products and services

4. Responsibly markets and advertises its products and services

5. Committed to social responsibility, economic opportunity, environmental protection, etc.

6. Committed to diversity (gender, race, etc.) in the workplace and its business practices

7. Listens to community or customer input before making business decisions

8. Is active and involved in the communities where it does business

9. Company's products and services enhance peoples' lives

10. Corporate values and business practices are consistent with my own beliefs

11. Donates or invests its fair share of profits, goods, or services to benefit others

12. Supports a cause or issue that has led to improvement and positive change

(13) Examples of corporate brands/companies which embrace corporate citizenship and "have also succeeded in making corporate citizenship an essential and vital part of their business strategy, value proposition and stakeholder relationships" (GolinHarris, 2005).

Johnson & Johnson

Ben& Jerry's

Disney

Whole Foods

SC Johnson

Kraft

3M

McDonald's

Procter & Gamble

Southwest Airlines

(Note to instructor: This may be a real weakness for Wedding Information Site's CEO/founder. This is a totally integrated concept and maybe too "foreign" to CEO to implement successfully. There was no indication of awareness in 1999 business plan social responsibility.)

(14) Need to make management education responsive and actively engaged in solving challenges business currently faces like:

A general public-including investors and consumers-that has become cynical about the integrity and the motivations of business;

Challenges like public outrage at executive compensation; and

Calls for reform of the SEC, the audit system, the way market analysts work and are compensated; and most important,

The growing public expectation that corporations accept responsibility for what has previously been presented as economic "externalities:" the environment, public health, impacts on families and communities and employees of boom and bust cycles driven by share price (Gentile & Samuelson, 2003).

(15) Social Impact Management (not ethics or corporate social responsibility) is a way of thinking about business activities. It explicitly considers and evaluates 3 aspects of a business:

First, Purpose: What is the purpose-in both societal and business terms-of a business or a business activity?

Second, Social Context: Are the legitimate rights and responsibilities of multiple stakeholders considered? Employees, pensioners, local populations, natural resources.

And Third, Metrics: How is performance and profitability measured? What is being counted, and more importantly, what is not being counted? Are impacts and results measured across both short and long term time frames? How do we compute the impacts of what we tend to call 'externalities' but that increasingly rebound directly to the business environment, to intangibles like reputation and the ability to attract talent, and the franchise to operate around the globe?

Social Impact Management is about how to manage a complex interdependency-an interdependency that is unavoidable in today's business world (Gentile & Samuelson, 2003).

(16) Emergence of international reporting standards such as the Global Reporting Initiative (GRI; 2000, revised 2002), performance standards such as Organization for Economic Cooperation and Development (OECD), Guidelines of Corporate Responsibility (2001), the UN Global Compact (1999), and socially responsible investment ratings of stakeholder performance-INNOVEST, Core-Ratings, Sustainable Asset Management (SAM)-this vague notion of planetary ethics is becoming measured, tracked, and publicized. Planetary ethics is entering the global marketplace, not because business has suddenly adopted a conscience-it has always had one-but because there is a growing demand for values and principles of sustainability (Laszlo, 2003, pp. 21-22).

2. Bill's instructor says to follow the Starbucks model of stating triple-bottom-line concepts in the mission statement. What values are reflected in Starbucks mission statement? How do they translate these values into specific business practices? On Starbucks' website, the Corporate Social Responsibility 2004 Annual Report "describes our social, environmental and economic impacts on the communities in which we do business."

Starbucks Mission Statement (See also the answer to Question 3.)

Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.

The following six guiding principles will help us measure the appropriateness of our decisions:

* Provide a great work environment and treat each other with respect and dignity.

* Embrace diversity as an essential component in the way we do business.

* Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee .

* Develop enthusiastically satisfied customers all of the time.

* Contribute positively to our communities and our environment.

* Recognize that profitability is essential to our future success.

This is a benchmarking triple bottom line mission that clearly delineates the importance of people, planet (community), and the environment.

3. An effective assignment has been to request the students to write a report to the CEO of The Wedding Information Site. He has hired you to develop a new Wedding Information Site mission statement. Use the Starbucks' model as a guide and keep in mind the criteria for University's business plan competition (http://www.seattleu.edu/asbe/ec/newventure/Executive%20Summary%20Screening%20Round.pdf). He has also asked you to give examples of programs, practices, policies, and services that would reflect the triple bottom line mission and strategic positioning. This is a particularly useful assignment to help clarify that individual students understand and can operationalize the concept. This assignment can be for individuals or teams. We prefer it as an individual assignment even though the class is teamed.

Or

Assign this as in-class assignment. Allow one hour to work on assignment. Work is to be done by teams with a report given at the end of class.

Or

Assign mission statement for homework. Each student brings five copies of mission statement to class. Break out in class into teams. Each team picks one mission statement. Teams then brainstorm practices, policies, services ... identify 10. Then conduct a round robin with whole class, getting one suggestion from each team until all suggestions have been put up on blackboard or transparency or PowerPoint. This has been run successfully several times at graduate- and undergraduate- level. It clarifies if students understand what it is and how it can be operationalized.

Try to get students to capture the competitive edge/value proposition in the mission statement and to spell out the importance of backing people, planet/environment, and profit issues. Ask students to self- or team critique to see if the spirit of the eight triple bottom line criteria are reflected in mission statement.

The judging criteria for the business plan competition which were added since the 1999 competition are noted here. The entire form can be accessed online: http://www.seattleu.edu/asbe/ec/newventure/Executive%20Summary%20Screening%20Round.pdf

Triple Bottom Line/Sustainability/Social Enterprise Aspects of Plan

2 4 6 8 10 12 14 16 18 20

Does it describe how benefits to people will be manifest- e.g., living wage, people valued?

Does it describe how impact on and of environment is considered?

Do operations of business/organization improve the local community?

Do operations improve environment or at least not make it worse off?

Does it acknowledge fiduciary responsibility to owners, society/relevant shareholders?

Are relevant stakeholders identified and importance clarified?

Does it describe the importance of solving the social problem or the value of doing the social good?

Are there at least two clearly delineated bottom lines?

Old mission statement: The mission of Wedding Information Web Site is to provide continual improvements in services to our online users. This is the formula for business success at Wedding Information and prosperity for our employees and investors.

Example of possible new mission statement: In its quest to provide highest quality diverse priced earth- and human-friendly wedding resources, services, and products for all those at both ends of income spectrum, Wedding Information Site and its employee-owners shall commit to:

Constantly working to improve the customer experience in terms of information provided, services performed, and products offered on The Wedding Information Site.

Constantly work to improve the product, service, and advertiser/sponsor experience to make this the site on which to profitably showcase one's business.

To provide a working environment that inspires creativity, passion, and commitment to the customer and company.

Embrace diversity in the workplace, customer experience, and community.

Commit to finding environmentally and socially responsible good buy products and services that will leave the world and those who produce, pay for, give, and consume the goods and services . . . better off.

Conduct business in a fair and accountable way to foster customer, shareholder, employee, the investment community, and service partners confidence and trust in the Wedding Information Site.

Commit to making the wedding experience accessible to the bottom of the financial pyramid as well as the top.

Commit to providing quality benchmarking shoestring wedding alternatives at prices that leave more time and money to buy the shoes and leave a planet to walk on.

Commit to providing a source for the underserved and under represented in the wedding market in the whole financial range-open the doors to enabling a high quality socially responsible experience to build one's future for oneself, one's family to come, one's community to live in, and one's planet for the future.

Stay forward looking while not forgetting the importance of profitability to our shareholders, stakeholders, investors, employees, and team. The more profit we make the better we should be able to carry out our other commitments.

The following are several practical examples of programs and policies that would support a triple-bottom-line corporate mission and potentially increase revenue:

Wedding Gown Donations and Exchange: Provide a place where people can donate or sell their "slightly used" wedding gowns and bridesmaid dresses. The donations will provide a valuable resource to less fortunate brides-to-be and provide a way for newlyweds to generate some additional money for starting their lives together.

Wedding Information Site can charge a nominal rental fee or possibly a transactional fee for the exchange service.

"Wedding on a Shoe String" Editorial: Truly challenge your editorial staff to provide compelling editorial for the large percentage of people that cannot afford $22,000 (industry average) on their wedding. This initiative could increase site traffic and advertising revenues significantly.

Offer or promote environmentally friendly wedding products (i.e., no toxic dyes, natural or organic foods, etc.) and/or vendors that provide "living wages" (no sweatshops). Besides appealing to environmentally conscious consumers, this opens up new advertising and e-commerce from suppliers dealing in natural fibers/products and whole food bakeries/caterers. Additionally, this may raise the social consciousness of all vendors to Wedding Information Site and create a new industry segment.

Wedding Information Site Deserving Fund-Donate a small portion of proceeds to train unemployed people on different facets of the wedding industry. From catering to wedding coordination, by educating and training people to work in the wedding industry, Wedding Information Site is also potentially expanding its supplier and revenue base while improving society. Hire from this pool where appropriate.

Employee Volunteer Program: Provide your employees the option of taking up to five hours a month of paid volunteer time. This will promote employee participation in socially and environmentally beneficial volunteer opportunities while leading to happy, loyal employees.

Where can recycled products be used by Wedding Information Site?

Make energy use green. Encourage less energy usage by employees. Pay "bonus" for alternative energy source vehicles.

Encourage energy saving policies/practices at suppliers.

The instructor might find it useful to raise the following observations/suggestions to the class. Look for practices and policies in people, planet, and profit arena. How to make weddings/bridal activity accessible to those at poverty level? How to make wedding more friendly to handicapped, mobility impaired. How to target the senior market, youth, disabled.... How to create win- win situations.

Who could Wedding Information Site partner with who has these bits of expertise? Can Wedding Information Site make a market for goods in developing countries or partner with someone who does?

4. What would be a SWOT for the new Wedding Site?

Strengths

* Not viewed as competitive-low-profile-time to enter market.

* From startup-build-in-easier than trying to change strategy/brand. It's a long process to change existing relationships for established ones.

* "Personalize" feedback from users to rate local vendors.

* Viral marketing still works- model should get "airtime/PR" as well as viral.

* Building base for long-term relationships based on meaningful, long-term impact experiences.

* Giving/charity model is increasingly popular.

* Should be easier to attract committed top talent with cause.

* Tap into global need.

* Provide outlet for those who want to "give"-be a part of something doubly cool.

Weaknesses

* CEO not knowledgeable about current wedding industry.

* Team is not evident.

* The need may be being met by a new competitor.

* May not be able to communicate/reach market.

* Not access to bridal registry-some exclusives.

* No recognized brand.

* Financial model is not evident/compelling.

* CEO would need a lot of coaching on social enterprise strategy and how to operationalize.

Opportunities

* Extend reach of weddings truly to mass market.

* Venture capitalists looking for opportunity to have big social impact- like Greater Good Hunger Site. Investing could impact environment globally. Good PR and returns.

* Provide people starting life together opportunity to help new start for someone else-wedding service 10 percent of item.

* PR to advertise.

* Rising gas prices-less disposable income-even more need for ways to save money.

* Build to sell to The Knot to get money to expand- have impact on industry like Ben & Jerry's on Unilever.

* PR-good image for the wedding industry in this post 9-11, post Enron, Katrina Hurricane era. Legitimizes spending $26,000 on wedding. Help save money and make environment and community better off as a result of you having a wedding.

* Partner with providers- capture sponsor who might like/get exclusive with green line values.

* Jumpstart market exposure through business plan competitions-Social Enterprise Berkeley exposure-get-visibility-may be a partnering opportunity rather than competing opportunity from the beginning.

* Triple bottom line-quality-ratings-feedback from customers. Give more information to customers and gift giver.

* Increase disposable Y or target from one-shot blowout to responsible building for future.

* Increase ability to get top quality employees due to value orientation.

* Opportunity to impact working conditions and quality of life through giving preference to "Fair Trade" products-make the world healthier than if you had not done business.

Threats

* Hard to get top quality employees.

* Patent infringement

* Can't get venture capital funding.

* The Knot will become triple bottom line (not now part of branding) on its own-no need for it to buy out Wedding Information Site.

* Software or necessary database information may be patented/copyrighted.

* Not enough money in bottom third or ways to reach it.

* Another competitor may be meeting this need now. Have not done adequate due diligence.

5. Debate: Assign half of class to one side of argument and the other half to other side of argument. Bill should enter the University business plan competition again and the Global Social Venture Competition.

Global Social Venture Competition Judging Criteria: http://www.socialvc.net/index.cfm?fuseaction=Page.viewPage&pageld=113&parentID=110&grandparentID=58&nodeID=1

Pros

Exposure to VC's-social enterprise/triple bottom line/sustainable is better return possibly than-13% now running at

* Possible to secure other team members from student or outside population participants, class members

* Force me to get going on plan

* Inexpensive way to get feel for validity of idea.

* Would have to sink/invest a lot to get VC ears in non-business plan channels.

* Feedback on whether business proposed meets potential success criteria and how well. Many eyes input. Find gaps/shortcomings/strengths before commit to cause.

* May be able to secure advisors and possibly board of directors through process

* Greatly enhanced network

* Process is valuable for development of CEO/founder- capacity building

* Requires rigorous

* Dry run excellent

Cons

* Takes too much time

* Trade show

* Incubator pitch

* Final round presentation

* Lot of weight on one-page executive summary

* Can't get why should

* Students not changed

* Doesn't give real feel- "just collegiate"

* CEO/founder not in best position to

* Time long- window of opportunity could be shut before the competition date/process

* Precludes stealth entry into industry

* Too much diverse "undereducated" (possibly not informed) feedback can cause loss of focus.

6. The Global Social Venture Competition Judging Criteria (http://www.socialvc.net/index.cfm?fuseaction=Page.viewPage«&pageId=113«&parentID=110&grandparentID=58&nodeID=l) require a social impact assessment and calculating an SROI-social return on investment. What would be some of the venture's potential social impacts both quantitative and qualitative?

Refer to mission statements and policies and practices that the students have generated. What impacts do the values statements say they will have? What are they committed to? Refer to Answer in Question 3.

What are the measured benefits to society, and what are the data that are going to be used to represent those benefits? The field is still quite new with guides though existent for the Global Social Venture Competition Social Impact Assessment Guides 1, 2, 3 being helpful (http://www.socialvc.net/index.cfm?fuseaction=Page.viewPage&pageID=96&parentID=58&nodeID=1). SROI is a concept developed to account for both traditional financial value created by an enterprise and the social value. There are 5 main steps to calculating SROI:

Defining the Outputs-determining which outputs are you considering most important. Amount of C02 reduced from wedding guests shopping online for gift? Number of dollars donated to charities? Numbers of trees saved from promoting green products? Numbers of lives extended from encouraging healthy lifestyles? Numbers of jobs created in developing countries from fair trade policies?

Monetize: translate outputs into a dollar value where possible. Reduction in C02 and use of fossil fuels reduces pollution by certain amount which reduces deaths/illnesses by how much. (Research on each required.)

Develop social cash flow "pro formas." Calculate social benefits and costs as in projected discounted cash flow analysis.

Where outcome is purely qualitative discuss what it is and how you will know it's happening. E.g., wedding guests feeling better as a result of contributing to social good will potentially treat each other better. It will potentially affect other expenditures and increasing awareness of people and planet issues thus increasing consumers awareness of need for socially responsible proactive behavior.

Cite sources and articulate assumptions clearly. There is lots of room for creative thinking. Brainstorm and research. And for more information go to Research and Resources at http://www.socialvc.net.

The competition now stresses an assessment of the business ' "Blended Value" which stresses high economic and social returns.

EPILOGUE

After investing a great deal of time and effort into our idea to develop a wedding website with feature strengths in gift registry (the mega-database) and localized links, we came to the conclusion that we could not go forward with this approach.

We came to this realization near the end of the quarter after we received feedback about our plan from our peers and mentors. We thought we could entice many large retailers to use our mega-database that would seamlessly link their database with ours for this website. The feedback we received indicated that this was unlikely, as retailers would have no incentive to do so. They could keep their own database and not pay to have someone else manage it. They would not leave themselves open to competitive pricing and risk their same giftware being purchased elsewhere, and they would not provide this proprietary customer base to another company.

This left us with only one major competitive advantage-localization. We wanted to be a portal site that would instantly localize information for the user. To see if this advantage was still strong, in March we revisited our competitors' websites to see if anything had changed. Not only were our competitors stronger, but we looked at these sites with clearer eyes and dug much deeper.

We found that the weddingchannel.com had vastly increased and improved its local hyperlinks to wedding vendors. We also found a new competitor, ultimatewedding.com, whose strategy mirrored our localization portal-site strategy. Not only did we see our plan eroding, we saw the lead our competitors had on us.

A more thorough investigation ofTheKnot.com revealed many things we overlooked when we thought we had a grand e-commerce scheme. What we discovered was this: The Knot had added maps to its local vendors as well as credit ratings and business profiles that could be purchased. It still did not have extensive hyperlinks, however. But what did amaze us was the strong brand that this site was building. It was doing this because it had deep pockets and great visibility. The Knot had received seed money to start its site from AOL. It had an exclusive wedding site on AOL where it was receiving 6 million page views per month. In addition, it had established agreements with Intuit, and its wedding planning site was tied in with Quicken's pages. It was able to make these moves because of the venture capital provided by Hummer Winblad Venture Partners. The Knot was also building its brand offline. It was publishing wedding planning books through Bantam Doubleday Dell and developing a wedding planning series with a PBS affiliate. It also had numerous alliances with other large retailers and commercial entities.

We realized we had no competitive advantages that we could pursue in the short time left in the quarter. We do believe, however, there is opportunity in this marketplace. If we had to do it again, we would seek a niche market within this arena. A site could be developed and marketed to all wedding websites. Some ideas could be:

A rating service similar to AAA that would provide couples an expectation of the services provided by a vendor.

A wedding insurance clearinghouse. This site could pull together various policies from national insurance companies that relate in any way to putting on a wedding or function.

A localized wedding planner. Make the plans, arrange contracts with vendors, and offer cookie-cutter packages to couples for set prices.

Bill was rather intrigued. He had wanted a career change, and he wanted to do something that would make a difference. He had not previously considered that a triple bottom line Wedding Information Site might be an answer.

Subject: Business plans; Business growth; Social entrepreneurship; Weddings; Web sites; Business models; Consultants; Startups; Case studies

Location: United States--US

Classification: 8310: Consultants; 9520: Small business; 7000: Marketing; 5250: Telecommunications systems & Internet communications; 9190: United States; 2310: Planning; 9130: Experimental/theoretical

Publication title: Journal of the International Academy for Case Studies

Volume: 12

Issue: 6

Pages: 13-28

Number of pages: 16

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 10784950

Source type: Reports

Language of publication: English

Document type: Business Case, Feature

Document feature: References

ProQuest document ID: 216289616

Document URL: http://search.proquest.com/docview/216289616?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-12

Database: ABI/INFORM Complete

Document 54 of 100

IS THIS A BONA FIDE OCCUPATIONAL QUALIFICATION?

Author: Thomson, Neal F

ProQuest document link

Abstract:

This case examines the Bona Fide Occupational Qualification (BFOQ) exception in discrimination cases. Title VII of the Civil Rights Act of 1964 prohibits discrimination based on race, color, religion, sex or national origin. The Age Discrimination in Employment Act expands this protection to cover age discrimination against people over 40. However, there is an exception, the BFOQ. Under certain circumstances, an employer can discriminate, if age, gender or national origin can be shown to be a legitimate requirement, in order to perform the job. In this case, the BFOQ is defined, the criteria for a BFOQ are listed, and the limits to BFOQ are discussed. Several real examples are given of cases in which a company has alleged a BFOQ exists. Students are asked to examine each example, and determine which, if any are legitimate BFOQs. The main focus of this case is to teach students to apply the criteria from Title VII of the civil rights act BFOQ exemption, to real situations. [PUBLICATION ABSTRACT]

Full text:

INSTRUCTORS' NOTES

RECOMMENDATION FOR TEACHING APPROACHES

I have often found that students do not clearly understand the concept of Bona Fide Occupational Qualifications, without seeing specific examples of BFOQs. This case was designed to help clarify this particular issue, in a manner that allows insightful discussion of the topic.

Generally, the approach I take with this is to divide the class up into small groups, and assign them each one or more of the cases to discuss. Then each group will present their determinations to the class, and we will discuss, as a whole, whether the analysis picked up the important facets of the case. Each of these cases is based on a specific real situation, and all but one have been decided in a court of law. The specifics of each case follow:

CASE 1 - ROLE MODEL

This is based on two specific cases. The first is Robinson vs. Kenosha Youth foundation. In this case the Wisconsin Labor and Industry Review Commission determined that it was a legitimate BFOQ, to require male counselors for positions in which they were to provide same-sex role models for pre-delinquent male children. Similarly, in Stonecipher vs. DILHR, a The Dane County (WI) Circuit court upheld sex as a BFOQ for child care workers in a juvenile detention center, based on the need to provide same-sex role models. To answer the specific questions the students are to reply to:

1) Is this practice discriminatory?

Yes, this practice discriminates based on sex of the applicant.

2) Is the BFOQ defense legitimate?

Yes. Providing a same-sex role model for children, particularly delinquent, or pre-delinquent children, has been upheld as a BFOQ.

3) Why, or why not?

Psychologists can show compelling evidence of a relationship between same-sex role models, and the success of programs designed to avoid delinquency, or rehabilitate delinquents.

CASE 2 - FAA REGULATIONS

This case is the case of Western Air Lines Inc. Vs. Criswell 472 U.S. 400 (1985). This particular case was decided by a U.S. District court, and appealed to the U.S. Supreme Court. The Supreme Court upheld the district court decision, which found that age was not a BFOQ.

1) Is this practice discriminatory?

Yes, age is being used as the determining factor in hiring.

2) Is the BFOQ defense legitimate?

According to the U.S. District court, and upheld by the U.S. Supreme court, no.

3) Why, or why not?

In order for a qualification to be a legitimate BFOQ, all or nearly all of the excluded group must be incapable of performing the work. While the airline was able to establish that more people over 60 were incapable of performing the duties, they could not convincingly show that the whole class of workers was unable. In fact, the airline used individual testing to determine fitness of its under 60 employees, and there was no reason that they could not continue to assess the fitness of the employees on an individual basis, once they hit 60. The plaintiffs in this case also used the practices of other airlines, who allowed flight engineers over 60, and had not had problems from doing so, to rebut the airline's claim.

CASE 3 - SEX SELLS

This case is loosely based on several suits filed against Hooters. Most notably, a class action suit was filed against the chain by 7 males who applied for wait staff positions, and were rejected based on their sex. Hooters settled the case in 1997 for $ 3.75 million, avoiding a legal decision in the case. The lack of a court decision is an important item to note, as they avoided a legal condemnation of their business as unacceptable. This leaves the actual BFOQ question unanswered. The specifics of the settlement raise more questions than they answer.

1) Is this practice discriminatory?

Yes, men are not considered for wait staff "hooters girl" positions.

2) Is the BFOQ defense legitimate?

There is not clear unambiguous legal precedent. On the side arguing no, there is the fact that Hooters was forced to pay $3.75 to settle a class action suit, thereby supporting the idea that they were doing something wrong. However, on the side arguing BFOQ, they point to the fact that the settlement allows Hooters to continue their operations, with an all female wait staff. However, they were required to make some other positions (eq. bartender and host) gender neutral.

3) Why, or why not?

One issue to discuss here, is the centrality of "vicarious sexual recreation," to their business model. Hooters says the "Hooters girl" experience is a central part of their business model. Opponents say that Hooters operates as a restaurant, not a sex show, and therefore the sex of the wait staff is not an important facet of the business model.

It should be pointed out at this point, that business operating sex shows (strip clubs) have successfully defended sex discrimination as a BFOQ. The sex of the stripper is crucial in the delivery of the desired service to the customer. On the opposite side, it should be pointed out that customer preference is not an acceptable BFOQ. Whether the majority of customers in a truck stop prefer that a female waitress serve their eggs and toast, is irrelevant. If a male waiter can do the job, then the fact that the customer would prefer a female is irrelevant. It might also be pointed out that customer preference was one of the arguments that many businesses attempted to use to defend race discrimination, during the 1960s.

CASE 4 - THE NURSE

This is based on the case Slivka vs. Camden Clarke Memorial Hospital (2004). The details of the case are exactly as described in the main portion of this paper.

1) Is this practice discriminatory?

Yes, sex is used as a criterion for hiring

2) Is the BFOQ defense legitimate?

According to the West Virginia Supreme Court, Yes.

3) Why, or why not?

. In determining the BFOQ in this case, the court focused on the privacy of the patient. Due to the highly personal nature of obstetrics, and the necessity for the patient to have their private parts exposed during examinations, requiring same sex nurses was determined to be an allowable BFOQ. This was in spite of evidence that other hospitals successfully used male obstetric nurses. In fact, the plaintiff in this case, Mr. Slivka, had served previously as an obstetrics nurse at Marietta Memorial Hospital.

Subject: Employment discrimination; Civil Rights Act 1964-US; Age Discrimination in Employment Act 1967-US; Case studies; Qualifications; Litigation

Location: United States--US

Classification: 6100: Human resource planning; 9190: United States; 4320: Legislation; 9130: Experimental/theoretical

Publication title: Journal of the International Academy for Case Studies

Volume: 12

Issue: 4

Pages: 17-21

Number of pages: 5

Publication year: 2006

Publication date: 2006

Year: 2006

Publisher: Jordan Whitney Enterprises, Inc

Place of publication: Arden

Country of publication: United States

Publication subject: Business And Economics

ISSN: 10784950

Source type: Reports

Language of publication: English

Document type: Business Case, Feature

Document feature: References

ProQuest document ID: 216293483

Document URL: http://search.proquest.com/docview/216293483?accountid=38610

Copyright: Copyright The DreamCatchers Group, LLC 2006

Last updated: 2013-09-19

Database: ABI/INFORM Complete

Document 55 of 100

MONOCHROMATIC PERSONNEL SCANNING AT TECHMARK

Author: Swinkin, Robert; Armandi, Barry; Sherman, Herbert

ProQuest document link

Abstract:

This field-based case provides a powerful example of how changing market forces and changes at the top of an organization can uncover core operational problems, which corporate growth and profitability have been allowed to fester. It is also a cautionary tale. A company may espouse equality, empowerment and management, but failure to train, execute and enforce these policies may have substantial repercussions. This is a case with misdirection and a twist ending; a grievance based upon racial discrimination. It is not evident from the case what the ethnic origins of the people involved are in the case although perhaps the students might hazard a guess as to Katherine's national origin given the mention of Mexico and Latin America. Moreover, the case seems to focus more on Pat's maintaining her "old girls network" and indoctrinating new employees into that network. Katherine seems to be a maverick, someone always bucking the system, and therefore is not allowed to join Pat's "tea party." Katherine is ostracized by most of the workers in her unit and even Gloria, the top performer in the group, does not go out of her way to challenge the way Pat manages the group. The group dynamics of the participants in the case seem to hold the students' attention therefore creating the "smoke and mirrors" for the astonishing finale. [PUBLICATION ABSTRACT]

Full text:

INTRODUCTION

"Mike, I need you and Pat to come to my office immediately," said Jim Taylor, Senior Director of Employee Relations and EEOC, over the phone to Mike Arend, Senior Director of the Telesales Group of TechMark. "We have a serious problem regarding possible discrimination in your group."

BACKGROUND AND HISTORY OF TECHMARK

TechMark was a global, integrated provider of mobile computing, wireless networking and barcode scanning products sold to an array of customers in several core markets. TechMark' s products were used to amass, access and distribute information throughout an organization, thereby increasing efficiency and minimizing human error.

TechMark was headquartered in the New York Metropolitan area and employed 4500 people globally. In addition, it had a network of 3000 partners across geographic areas to ensure that the demands of the marketplace for its products were adequately served. In 2003 sales were approximately $1.320 billion.

The company was founded in 1973, in the garage of current Chairman and Chief Scientist Richard Johnson. Johnson was a former physics professor who began with a simple idea, which was to ensure the quality and readability of barcodes. After creating a verifier that ensured that printed codes could be accurately read by the large, expensive and poorly functioning scanners of the day, Johnson would go on to revolutionize an industry. By harnessing laser technology and with advancements in miniaturization, Johnson, with a handful of early employees, invented a barcode scanner that was accurate, inexpensive and could be held in the palm of one's hand.

This advancement led to the proliferation of the barcode, spreading from retail to manufacturing, to warehousing and healthcare. This rapid success served as impetus to further innovation as TechMark moved to combine scanning with the nascent computing industry and invented the portable data terminal. Now, instead of bringing the barcode to the scanner, the worker could move freely about, capturing and storing information with ease.

TechMark's technology progressed further, and by 1990 it had released a wireless network infrastructure to the marketplace. "Spectrum One" portended another revolution. Now, users of TechMark's data terminals could not only collect data at the point of activity, but transmit it as well.

As the tech bubble of the late 90s began to inflate, TechMark was growing sales at 25-50% per year. Profits were accumulating at an even more rapid rate. Every Internet company that opened a warehouse, every manufacturer that was adding capacity, every shipper that was adding more trucks was calling TechMark for the infrastructure to manage their supply chain. TechMark was expanding its scope of activity - consumer scanning, web based business concepts, personal shopping, new wireless and voice products - at a rapid rate. Head count was added, and more partners were signed on.

Unfortunately, leadership was unprepared for the swift and brutal downturn - first in technology and then the economy as a whole -beginning in March of 2000. CEO Tom Randazzo, repeatedly and passionately testified to employees, customers, analysts and shareholders that nothing had changed: TechMark would defy the industry and continue to grow and take market share. Indeed, for several quarters, Randazzo seemed to be proven correct as sales and profits continued to rise, albeit at a somewhat diminished rate. Unfortunately, on both Wall Street and within TechMark's halls, rumors about questionable accounting and sales practices began to surface. Adding to the tension were TechMark's first major headcount reductions in its history. Manufacturing was moved offshore. Sales and support ranks were aggressively reduced. Morale and optimism plummeted.

By early 2002 a new fiscal reality suddenly surfaced. The final quarter of 2001 was a disaster. Sales dropped nearly 30% from the previous quarter. Profits became losses. Analysts rushed to downgrade the stock, shocked by how poor TechMark's guidance had been. Years of credibility were lost.

The next several months were a whirlwind. Nearly all top-level executives in finance and sales were purged. SEC and 1RS investigations into TechMark's accounting and financial reporting were launched. Several shareholder lawsuits were initiated. Randazzo and Fred Blair, former VP of Sales, as well as several key finance managers were reportedly under investigation for illegal sales practices.

Rich Johnson stepped back in as CEO, joined by Dave Gable, one of TechMark's first employees, as President and COO. Damage control was their imperative. Though layoffs continued and morale sagged, change was in the wind.

By June of 2002 employees were shocked to learn that Bill Naughton, a Vice President at Chance Systems, a staunch competitor, was to join TechMark as its new President and COO. Johnson was back in his role as Chief Scientist; Gable would take the CEO spot.

Following Naughton came a host of top Chance people: Al Tracy became VP of Worldwide Sales, John Biondo the Chief Information Officer and head of strategic business development. Finance and Operations received new leadership from former Chance executives as well. (See Appendix A)

GROWTH THROUGH CHANNELING: PARTNERSHIPS

As TechMark's sales and scope, both geographically and technically, continued to expand throughout the 1980s and early 1990s, it became clear that the company needed partnerships to adequately address the marketplace.

While servicing large retail and government clients on a direct basis had always been the core business, TechMark did not have the headcount, software development, integration skills, or the geographic reach to penetrate new markets and develop new applications on its own. TechMark simply could not expand quickly or effectively enough to meet demand.

Hence, as in the rest of the Information Technology (IT) business, a "Channel" was developed. TechMark' s Value Added Resellers (VARs) would buy its products, integrate them with software and/or other computer hardware and provide a solution for their customer. This symbiotic relationship offered tangible benefits to all involved. TechMark cultivated what was, in effect, an outsourced sales force. VARs accrued margin dollars on TechMark hardware, received access to new products and services and gained affiliation with a well-known and well-respected manufacturer in key market segments.

Perhaps the most critical benefit of being a loyal TechMark partner was the receipt of the "golden nugget," i.e. a sales lead. Potential customers who contacted TechMark for a product or solution to a business problem (route accounting, inventory management, access control, etc) were directed to a partner for fulfillment.

In the early days of the channel, these partner relationships were rather loosely defined and managed; lead-distribution and tracking was haphazard at best. However, by the mid-90s it was clear that this "indirect" part of TechMark' s business was the fastest growing and might benefit greatly by increased investment.

THE TELESALES GROUP

In 1 999 this investment in partner relationships was realized through the large expansion of the Telesales Group. The group was formed in 1994 by Mike Arend, with the assistance of Pat Hagen. Telesales was a polyglot, performing both customer service and marketing activities.

Most of the staff was comprised of older women who had risen through TechMark's ranks, often coming off of the manufacturing floor. In many ways their job was administrative: answering calls, sending out product literature and calling prospects culled from tradeshows, direct mailings and other corporate marketing efforts. To assist in this effort, a third-party call-center (ETI) was employed and did much of the outbound calling.

The group tracked its performance by "sales closed against leads" that they delivered to TechMark partners. In 1 994 the annual quota was 4 million dollars. By 1 999 it had grown to nearly $40 million and the workload, or growth expectations, showed no signs of diminishing.

In response to this success, the company funded a "College New Hire" program to grow the Telesales group. New grads would be positioned as "Team Leaders," each responsible for managing partner relationships and small to mid-market sales opportunities within a given geographic area. Any solid sales leads that developed out of the efforts of ETI or the in-house telesales team would be distributed to partners and tracked by a Team Leader until a sale was completed.

The job was promoted to new applicants as an early opportunity to learn TechMark's business while having line responsibility and performing a junior management role. The job was seen as a stepping-stone to a field position or grooming for a mid-level management job within another TechMark division. (See Appendix B)

THE NEW HIRE

Katherine Anderson was quite pleased. Though she had done exceedingly well in school and the economy seemed to be besting the most optimistic forecasts, she never expected to land such a desirable position so quickly. Not only was TechMark a technology company, but it was local, sparing her the commute to Manhattan that her classmates were enduring.

The job, as it was positioned to her by her recruiter, allowed her to learn many aspects of TechMark's business, played a key role in directing sales activity, and prepared her to take an official management position within a two-year time frame. The job was phone-intensive, but Katherine was very sociable and thought that speaking with customers was interesting, if not fun.

She acclimated quickly and was soon appointed "Team Leader" of the Western Territory. While not officially managing staff, she directed the flow of leads produced by a call center staff of 10 people, as well as 8 in-house reps. Though it made her somewhat uncomfortable to be leading a team of older women, some of whom had been working for TechMark for a decade or more, she quickly adapted.

Initially, she spent much of her time learning about the skills and capabilities of partners in the Western Territory to better match sales leads with the companies best able to fulfill their customers' requirements. Nevertheless, as the incoming volume of calls was often very heavy, she readily helped the others by answering the general line. This often produced some uncomfortable conversations, as she found herself unable to answer seemingly basic questions about TechMark's products and services.

When Katherine went to Pat with questions about her job or TechMark's products, she was always referred to Gloria or one of the other older women for answers. As the other new hires - Tara, Rob, and Rhonda - joined the team, they were instructed to do the same.

PRODUCT TRAINING QUESTIONS

When Katherine asked Kerri how she managed to deflect calls requiring product knowledge she simply shrugged:

"I tell them that it's not my job to know, but that I can get them help. I either transfer them to tech support or get a partner to talk to them. . ."

Katherine replied, "I thought that tech support was only for customers who already purchased equipment, not présales . . . .and aren't we supposed to send qualified prospects to business partners, and not people just fishing for information?"

Kerri shrugged, "I haven't gotten too many complaints yet ..... "

Unsatisfied, Katherine approached Pat.

Katherine: "Pat, I wanted to talk to you about something that keeps coming up - and the rest of the new hires are experiencing it too."

Pat: "What is it Katherine?"

Katherine: "I was wondering about getting some formal product training for us. Quarterly sales training is coming up for the field sales force. I was wondering if we could attend."

Pat: "Well, Telesales never has before. . .Besides, we need to have people on the phones. . ." Katherine: "But the customers are asking questions that we don't know the answers to. Sometimes I feel stupid that I can't answer questions about our own products."

Pat replied, "How you feel is your concern. We all know that you are not stupid. In your job, we find it is counterproductive to know too much about product... we diagnose, we don't prescribe....''''

Pat continued, "If we direct a caller to a specific product and then refer that prospect to a partner for purchase and the partner thinks that an alternative product is a better fit, then we just caused confusion for the customer and complicated things for our business partner. . . Besides we have so many products, it can get very confusing. . .believe me, it's easier this way."

Later, Katherine pulled Gloria aside.

Katherine: "Gloria, you know a lot about TechMark equipment. How did you learn?"

Gloria smiled; she took pride in her reputation as a resource. "Some of it comes from the days on the shop floor, some of it from calling the product managers; the rest from sneaking a peak at the sales kits when they are sent out."

Katherine: "So, you never went to any training classes?"

Gloria: "Oh no, Pat doesn't like that. ... She says we don't need it, but I think it's because it is too much trouble to set up, coordinate schedules and everything. Besides, Pat thinks training is boring."

Katherine: "But isn't that a manager's job? I mean, what exactly does Pat do?"

To which Gloria laughed and shrugged. "The girls and I have wondered about that for years! On the other hand, it's very nice to have a boss that just lets you do your job and doesn't interfere. . .you'll learn. . ."

Soon, however, tech support was sending callers back to Telesales, as they were being told not to spend their time on pre-sales inquiries. One afternoon, after a particularly frustrating call, Katherine popped her head into Mike's office.

Katherine: "Mike, sorry to bother you. . .do you have a minute?"

Mike: "Sure, Katherine. When the door is open I am always available. You look concerned. . .is there a problem?

Katherine: "Well, the group and I feel that some product training will really help us do our jobs better. Callers are asking us questions about our products all the time, and we don't know how to answer them. Tech support is refusing to take any more présales calls and my partners are complaining about being used as a help desk."

Mike asked: "Product knowledge has never been that important before... has something changed?"

Katherine: "I think it's always been important, only that the women in the group have tried to get bits and pieces on their own. . .besides, in the four months I've been here, the levels of inquiries keeps increasing. . ..buyers are getting smarter. ..."

Mike: "Does Pat know about this?"

Katherine: "I talked to her twice but she doesn't think it's a problem."

Mike: "I'll see what I can do."

The next week, a manager from the Mobile Computing Systems Group came up to do an overview on the product line. During the 2-hour session Katherine could swear that she saw Pat - seated between Kerri and Tara - glaring at her from across the room.

Over the next several months, training would continue to be a casually implemented, somewhat haphazard affair. As such, it would remain a point of contention.

TELESALES INTERACTIONS

Through the remainder of 2000 Katherine continued to do well. She had consistently made her quota and received bonus pay at the end of each quarter. The group had continued to grow, with two new graduates joining the Telesales group. Though the NASDAQ had swooned, TechMark seemed secure in its core markets and all the talk in the hallways centered on expansion, growth and new opportunities.