GENERAL PRINCIPLES OF MANAGEMENT
THE IMPORTANCE OF PLANNING FOR A STEREO MANUFACTURER
HERIOTT-WATT 30/12 1995
THE IMPORTANCE OF PLANNING
FOR A STEREO MANUFACTURER
There have been a continuously developing process of recording, prepare & process, and playback equipment during the last century. This has placed the music in a totally new position in our society.
Prior to the 20'th century music was only related to special occasions like concerts and the high festivals. This has changed. Nowadays we listen to music wherever we are, in supermarkets, cinemas, radios, official places and even from small pocketsized players. Earlier all music was live, today almost all music we listen to are recordings. This also states that, the trends in the music industry is ever changing. The development of sound-recording technique has matured a serious audio industry. It contains of a wide spectre of different manufacturers, which often link to each other and to other participants in the music/audio industry.
Sale of records became the modern audio industry's launch. Because all record players around the world were standardised, the sale of records had an enormous take off. This made it possibilities to earn a good profit in the music/audio industry, and many different equipment manufacturers arised.
The market was, and still is, alive because of the continuing audio developments. Radios, cassette players, CD players, DAT players, minidisk players, etc. give rise to even more sales.
In the 1960's the firs stereo recordings were made. Soon afterwards, the industry introduced the notion Hi-Fi (high fidelity) just to make clear how far the development had come.
When the cassette tape was introduced in the 1960's, many problems were solved. Now it was possible to produce a recorder which could be used when the surroundings were in motion (i.e. in a car) . Now it was workable to bring the source of music were ever people wanted. The cassette could also record, and was extremely easy to use compered to the LP. Also the cassette became standardised.
Later we got DAT, CD, minidisks, etc. which all have brought the audio market a step further.
The stereo industry of today is noticed by several manufactures that compete in the same market. Hence that competition is severe and the importance of being in front with design innovation, product consistency, value for money, sound quality and the firm's goodwill, is of greatest importance.
This also means that planning is crucial.
Planning is something that is arranged beforehand. Worked out in advance to reach a goal.
"The ability to determine appropriate objectives:'doing the right thing '.
The stereo industry consists of two main segments, the home stereo market and the professional market. Even though many manufacturers operate in both these markets, I will assume that Sonic Wave Ltd. only operate in the home stereo segment.
Sonic Wave Ltd. has over the last years achieved a sustained period of dramatic growth and prosperity without use of any strategic plan. However, over the last six months it has seen a decline in sales because of a launch of an innovative range of stereo equipment from an Asian producer. Their main problem is that they do not have a quick response to counter this challenge from Asia. This is because of their lack of planning.
As with all industries a mission statement makes the main framework of a firm. In the stereo industry the mission statement is to produce equipment to pass on music to its listeners. Furthermore each firm must decide whom they want to target, and with what sort of equipment they want to target the group.
With this as a basis we are able to set a strategic goal. This goal should include our business philosophy; I.e. sound quality, price level, etc. as well as an explanation for the chosen philosophy. It should also include what product range to develop and produce. A clear aim is set. This provides a sense of direction. By setting a goal, one opens the possibility to diversify the resources availible. Both machinery and people have limited resources, which should be used in the most effective way. This also means that controlling becomes more important, but also easier because each employer and employee have clear tasks to perform. If we are about to reach the goals we have set within the deadline, we must know our progression. This information is obtained through control. In order to guide our plans and decisions it is crucial to have a clear goal.
To obtain this strategic goal we need a strategic plan (plan designed to meet an organisation's broad goal ). Without a strategic plan it is hardly possible to have a view of the situation. People must know what to be aiming at, whom they shall cooperate with and when a task must be finished. This is quite obvious, but it requires a plan to obtain.
A strategic plan is long term. Therefore we must be cautious when developing such a plan. Often it requires a great deal of changes, both financial and personal, to be able to follow this plan. If the organisation must change its strategic goals, which they often have to, their plans also must change. So, this must also be taken into consideration when making a strategic plan. To be successful, we must always be prepared to make changes at all stages in the organisation.
Clearly the consequences can be fatal for a firm's existence, if not the development of a strategic plan is done properly.
Strategic planning does not involve the actions taken in an organisation from day to day. It is more a scope, or a direction for which the organisation is heading. That is, the top managers in an audio manufactory might say that the firm shall be market leaders in design innovation and sound quality. How to obtain this is set in the operational plan.
Operational plans are a short term plans, 'showing how strategic plans will be implemented in day-to-day activities. These plans form a hierarchy of plans that are linked by interrelated goals' .
'Operational plans fall into two general classes, Single-use plans and Standing plans.
Single-use plans are designed to be dissolved once they have achieved specific, nonrecurring goals. Standing plans, in contrast, are standardised approaches to handling recurrent and predictable situations' . As mentioned earlier, an organisation must be able to change its plans and it is (normally) this plans that must be changed.
In Sonics case there are no plans to be changed, thereby no chance to respond fast to the new range of audio equipment from the Asian producer.
Much of the components an audio manufacturer use in their production are imported. That the engineering change and updates are meticulously defined is then important. This requires a 'material requirement planning system', which is another short term plan. The MRP provides easy access to, and visibility of information on the stocks and flows of material within the supply chain and the physical capacities of selected operations. The MRP also includes a short term review of materials required in each operations, and a survey of materials availible. Without the MRP (or a similar system) it is hard to obtain the production control, and to keep on track with the operational and strategic plan.
In the electronic manufacturing also the application of just in time manufacturing has resulted in significant benefits. This mainly because these companies used to operate with high work-in-process inventory levels and long lead times.
There are also several other important features which is essential to ensue a strategic plan. Achieve greater responsiveness from suppliers on price, frequency of delivery and so on, set-up-time reduction, right firs time production, a streamlined organisation, etc. are such features.
It is the combination of all this short term activities that makes up the strategic plan.
In the audio manufacturing industry new products are launched quite rapidly. It is not necessarily innovative products, but even product improvements from other manufactures must be considered as a treat. Asian producers have the last 10-15 years been leaders in the home stereo market , both in product innovation and in design. Hence they have obtained quite a goodwill in the market, get higher returns, and thereby they can afford improvements and new product developments.
It is of severe importance to keep up with the Asian audio technology. Quick response to changes, and preferably new technology development must thereby be considered as the main goal in the European audio manufacturing industry. This can only be obtained by strategic planning.
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