BUSM3031-001-11000230

BUSM3031- Managing Emerging Issues – Assignment 1

BUSM3031-001-11000230

2

BUSM3031-001-11000230

Table of Contents

...............................................................................................................................2

1.0.Executive Summary...........................................................................................4

2.0.Introduction......................................................................................................4

3.0.Critical Analysis of Current Situation.................................................................4

3.1.Analysis and Issue Identification.......................................................................43.1.1.The Organisation......................................................................................................................................5

3.1.1.1.The Balance Scorecard...................................................................................................................... 53.1.1.2.KPI.............................................................................................................................................................. 5

3.1.2.Stakeholders...............................................................................................................................................73.1.2.1.Customers................................................................................................................................................ 73.1.2.2.Employees............................................................................................................................................... 83.1.2.3.Shareholders.......................................................................................................................................... 83.1.2.4.Bank........................................................................................................................................................... 93.1.2.5.Local Government............................................................................................................................... 93.1.2.6.Local Community................................................................................................................................. 9

3.1.3.Sector/ Industry....................................................................................................................................113.1.4.Macro Environment.............................................................................................................................11

3.1.4.1.PESTLE Analysis................................................................................................................................ 113.1.5.Decision Orders......................................................................................................................................12

3.1.5.1.Wicked and Tame Problems......................................................................................................... 143.1.5.2.Crisis Action......................................................................................................................................... 14

3.2.Issue Evaluation..............................................................................................143.2.1.Categorisation and Prioritisation...................................................................................................143.2.2.Root Cause Analysis.............................................................................................................................163.2.3.Risk Assessment....................................................................................................................................163.2.4.SAFe Review............................................................................................................................................17

4.0.Strategic Recommendations............................................................................18

5.0.Reference List..................................................................................................20

6.0.Appendices List...............................................................................................226.1.Appendix A...................................................................................................................................................226.2.Appendix B...................................................................................................................................................236.3.Appendix C...................................................................................................................................................24

3

BUSM3031-001-11000230

1.0.Executive Summary This report identifies the complexity of issues challenging Lucky MT (“LMT”) and its future to remain successful within the EMS sector. Both internal and external analysis have identified wicked and tame issues with a range of time horizons and a multitude of impact levels. LMT’s ambition to dilute its dependence on TeleNet and MedTech is the driving force behind many of the issues it is currently facing. A list of proposed recommendations are justified by the analysis of the issues and the benefit the adjustment and addressing of the issue will bring to LMT.

2.0.IntroductionSince the end of the Joint Venture (“JV”) in 2002, LMT has experienced many challenges to the company in order to establish itself as a successful independent limited company. Opportunities to grow such as, setting up overseas to reduce costs in the future, in comparison to present financial issues and on going personnel challenges, is increasing pressure on LMT’s Managing Director, Johnson Pang (“JP”). Furthermore, external Global risks could impact LMT; the World Economic Forum et al. (2005) report suggests environmental concerns such as climate change has the potential for extreme impact, geopolitical risk poses terrorism with major-to-extreme global impact, social issues of migration are predicted to likely happen with a moderate impact and the economic coming fiscal crisis is predicted to have a major global impact.

3.0.Critical Analysis of Current SituationLMT is currently facing an array of challenges; in order to understand the issues this paper will conduct environmental scanning as defined by Albright (2004) as the “internal communication of external information about issues that may potentially influence an organization’s decision-making process. Environmental scanning focuses on the identification of emerging-issues, situations and potential-pitfalls that may affect an organization’s future”. Davis (2013) outlines, “a holistic view of an organisation and its environment displays the big/wider picture of an organisation”; application of this approach to LMT will enable a critical overview of the organisations and the challenges presently facing it.

3.1.Analysis and Issue IdentificationIn order to identify and analyse the challenges within the current situation, Collins and Porras (1994) outline that the “key to prolonged business success is the ability and capability to align an organisations processes and adaptation to the change in external environment”; however, an organisations priorities vary from employee-to-employee as well as shareholder-to-shareholder, therefore problem identification can be difficult as it is dependant on particular perspectives.

4

BUSM3031-001-11000230

3.1.1.The Organisation

3.1.1.1.The Balance ScorecardIn 1988, LMT was set up as a Joint Venture between MedTech and TeleNet, ultimately to avoid the raising labour costs in USA. JP outlines LMT’s values are “to provide good service rather than maximize profit” (Boulton 2012: p.3). Furthermore, LMT’s vision is to be a low-volume, high-mix and high-value service organisation, a niche company within the EMS industry. However, since the independence of LMT the focus from being a specialised company within its sector has changed, as establishing independence by the introduction of new customers has taken a priority. Furthermore, the nature of the new customer’s services seems to be less of a priority in comparison the origin of LMT.

3.1.1.2.KPI

Upon analysis of Figure 1 (Boulton 2012) it is apparent LMT has a gradual revenue increase year-on-year, however with the cost of sales increasing the audited gross profit is decreasing and not reflecting growth in revenue and cost of sales. As displayed in Figure 2 (Boulton 2012) a possible explanation of this is LMT is not selling at the same price as it has done previously, as the gross profit margin percentage has decreased year-on-year to-date representing a lack of efficiency. The full year forecast for 2005 is also not reflective of the 2005 Q3 (Figure 1) as it is suggested that LMT will double its gross profit in the final quarterly, of which has yet to be reached to-date. Figure 2 (Boulton 2012) exhibits the working-capital ratio of which is significantly higher than the optimum level of 2, but expresses an increase in risk to LMT with these working-capital ratios. Moreover, Inventory days (Figure 2) also suggest risk at LMT, as it is progressively taking longer to turn inventory into sales resulting in obsolete inventory on hand and high investment in inventory.

5

BUSM3031-001-11000230

Furthermore, the budget for 2006 is an unrealistic financial projection due to the giant comparison between previous audited years gross profit coupled with the recent loss of a large contract, as exhibited in Figure 2 (Boulton 2012) Debtor days, LMT have allowed for excessive credit, which suggests possible issues surrounding the financial position of a major customer/s.

Figure 1 (Boulton 2012) displays revenue, cost of sales and gross profit figures including the forecast and budget alongside Figure 3 (Boulton 2012). Both figures display the linear forecast trend-line for both charts; upon analysis Figure 1’s (Boulton 2012) forecast trend-line suggests a gross profit of less than US$20,000 in FY06, raising doubt on the given US$24,250 gross profit budget. Similarly, Figure 3’s (Boulton 2012) linear forecast trend line suggests a US$12,000 gross profit for FY06. In conclusion, the current projections are quixotic, preventing management to make informed decisions about the future of LMT.

6

BUSM3031-001-11000230

The key performance indictors currently at LMT are failing to incorporate the vision to short-term goals, as the long-term goal of independence has rapidly changed to the sole short-term goal at LMT (Kaplan and Norton 1996).

3.1.2.Stakeholders

3.1.2.1.Customers Upon analysis of Figure 4 (Boulton 2012) it is apparent LMT remains dependant on its previous joint-venture owners totalling combined revenue of 50%. Previous to 2004, financial dependence on these two companies was a necessity in order to maintain positive revenue. However, in 3Q 2005 MedTech has shown some serious concerns due to revenue of US$3,200 significantly lower than the expectation. It has been suggested this is due to MedTech’s latest infusion pump, which has now been postponed for a further 12 months negatively impacting the current revenue-by-customer 2006 budget.

Similarly, TeleNet have recently announced a cash flow issue resulting in several months of outstanding invoices unpaid, and a loss of a large contract, which will need to reflected in the projections. The loss of the Latin America contract has resulted in financial issues as some components have been bought without an authorised purchase order, these too will need to be accounted for in the financial records.

LMT has successfully gained two medical customers, Jones and Miller (“J&M”) and DM Schwarz both of which are valuable customers due to their year-on-year sales growth. J&M have proposed a move to Malaysia, which is a proposition that is being considered by LMT, in order to dilute dependence on MedTech and TeleNet, grow, and save money in wages.

Spatiale is an aerospace large first tier supplier who joined LMT for the production of initial trail parts. Initially, producing aerospace parts seemed like the ideal venture for LMT as the aerospace quality award was not much more complex than the one required for the Medical Equipment production. Therefore, Spatiale’s resistant to move production from its longstanding European supplier is a disappointment for the future of LMT. However, the

7

BUSM3031-001-11000230

ability to help progress this relationship may have been clouded by the other issues LMT is facing.

Finally, LMT’s most recent new customer, Erfde-Auto, has raised many concerns within the organisation. It is the only automotive venture taken on by LMT that has intern started to cause an issue on the production lines, highlighted by the Operations Manager and Quality Manager. It is also a low-margin, high-volume service customer, which directly conflicts with the low-volume, high-mix, and high-value service of LMT, which had raised concerns by Kang and Low early on. However, it is financially doing well with 12% revenue in 2004 and continuing to show growth.

3.1.2.2.EmployeesBernie Chen is an outsourced VP-of- Marketing employed at the time of independence. He is an unusual candidate for LMT as his experience is in mid-tier EMS firms with low-value, high-volume services. However, Chen had high salary demands that resulted in JP changing overall salary scales. Chen won the Erfde-Auto customer contract; in order to justify the contract both Chen and JP invested their personal reputations. Chen has also been idolised in JP eyes for being a go-getter, a trait JP desired his other employees to have; however, Chen’s trait has now resulted in a financial issue for LMT, as he gave the instruction to the team to order the components for the TeleNet Latin American order which has since fell through, resulting in LMT having expensive inventory that cannot be used (Boulton 2012).

JP is the Managing Director of LMT, promoted from General Manager in the independence of LMT. Whilst, JP has the characteristics of a good candidate of the role of Managing Director, as he is well organised, hard working and exhibits a systematic approach. However, he has recently been raising doubts, for example, he was unaware of both the TeleNet financial issues and Chen’s ordering of components without an authorised purchased order. He has been consistently defending Chen’s decisions as well as defending the employment of Chen, disregarding the concerns raised by other members of the senior executive team.

Mr Ho, VP of Finance, was promoted also in the independence of LMT by JP because of his methodical, hard working and attention to detail traits, regardless of his lack of analytical and financial modelling ability. His ability and position has been called into question due to the financial issues that are facing LMT currently, which were not raised as a concern previously.

3.1.2.3.Shareholders KS Lee, Non Executive Chairman, has inherited an advisory role to JP originating from a previous employment colleague relationship. He raised concerns about the general state of financial performance. It is therefore disconcerting that these issues were not set as apart of JP’s strategic priorities/proposals (Appendix A). Furthermore, Lee informed JP of a conflict of issue when dealing with TeleNet and Erfde-Auto due to the issues as stated previously, another concern that was not outlined in JP’s priorities/proposals.

8

BUSM3031-001-11000230

Another member of the Board, Melissa Tan of SEA Partners, believes the strategic priorities/proposals produced by JP do not reflect the real issues that LMT is facing nor is the priority of the ones listed. Her aggressive approach places Mr Ho in question, alongside the sacking of the employee who ordered the Latin American components, and the dismissal of any movements abroad.

In comparison, Dinesh Varma of STAR Private Equity, remains positive and excited about the possibility of the Erfde-Auto move to India. Nevertheless, she has also raised concerns over finances and MedTech sales fall.

Non Executive Director, Lau Su-Min is yet to comment on these on going issues. As outlined by the Higgs Report (2003) the role of the Non Executive Director is to, “challenge and contribute to the development of strategy, scrutinise and monitor the performance of management in order to meet goals, should be satisfied financial information is accurate, risk management is robust and defensible”; Raising doubt on the competency of Lau Su-Min as a Non Executive Director.

3.1.2.4.BankLMT’s bank, SD Bank, have recently made an agreement with Mr Ho to extend the $5m overdraft facility to $10m that was originally set up as a precaution for short-term fluctuation in working-capital, a facility JP did not think would be utilised. Furthermore, LMT has 2 years left on the 5 year $8m loan. The current financial issues question the involvement of the bank in LMT’s future.

3.1.2.5.Local Government According to the Economic Development Board the aim is to “develop Singapore into a world class electronic and precision engineering hub for manufacturing solutions and high-value-added components”, reflective of LMT (Sector Report 2004: p.1). However, the government’s decision on high wages prevents Singapore from competing amongst other countries; resulting in the attractiveness of moving production/part-of-production to Malaysia and/or India.

3.1.2.6.Local Community Furthermore, companies moving abroad due to high wages are affecting the local community, as the result is the loss of jobs. This issue coupled with the need for specialised trained staff is preventing locals being employed. LMT’s choice to move abroad will affect the local community negatively.

9

BUSM3031-001-11000230

In conclusion, a change is imminent at LMT and the stakeholders will be impacted by this change; however, stakeholders also have power to change and a level of interest in change as exhibited in Figure 5. The different sizes of the circles represent the influence upon change that each stakeholder has, for example, whilst SD Bank have mid level power of change and mid level interest, it’s influence has been represented by a large circle as without its increase in the overdraft facilities, the possibility of moving facilities abroad is highly unlikely. The stakeholder map also highlights the complicated nature of decision-making by JP as he is personally primarily influenced by Lee, Bernie Chen and TeleNet and secondarily influenced by MedTech and Erfde-Auto; resulting in complex decision-making for complex issues.

10

BUSM3031-001-11000230

3.1.3.Sector/ Industry

Figure 6 (Porter 1979) highlights the nature and degree of competition in the EMS industry for LMT to remain in Singapore. Whilst new entrants get a first mover advantage, Singapore has made it difficult for smaller EMS organisations to remain due to a increase in wages; resulting in high substitutions for LMT’s current customers to move production from LTM to a competitor in China for example. Subsequently leaving suppliers and buyers with the power, evidence of this within LMT has prevailed through the proposition from J&M and Erfde-Auto to move abroad. Porter (1979: p.144) suggests “combining the framework [Porters 5 forces] with judgement in its application, a company may be able to spot an industry with a good future…” however, it is apparent from Figure 6, the framework is not analytical and lacks depth to the understanding of why LMT may be better positioned in Singapore without any regard to comparison of different opportunities of change.

3.1.4.Macro Environment

3.1.4.1.PESTLE Analysis

3.1.4.1.1.Political Bussière and Mulder (2000: p.326) found that “political and economic variables have to be used jointly to give an accurate picture of an economy”. Therefore, the impact of Singapore’s 2001 sharp economic downturn and its current political instability make for an unstable economy. As Singapore’s government focuses on the current concerns regarding terrorism, the survival

11

BUSM3031-001-11000230

of the EMS sector is not its priority, resulting in organisations like LMT considering a change to move abroad (Boulton 2012).

3.1.4.1.2.Economy Singapore has seen a decrease in electronic domestic and non-oil domestic exports since 1988, the year Lucky MT moved to Singapore. However, Singapore still relies on the EMS sector for economic growth, especially with the sector employing a quarter of all of manufacturing labour force (Sector Report 2004). Moreover, electronic exports are up 5.1% year-on-year in 2003, with a bright outlook it is believed the governments “aggressively pro-business environment and excellent infrastructure for manufacturing, logistics, and transportation, will continue to be an advantage in areas where labour costs or proximity to customers are not central” (Sector Report 2004: p.6).

3.1.4.1.3.SocialThe Singaporean Government has admitted that Singapore cannot compete in low-cost assembly operations; one aspect of this is the high wages (Sector Report 2004). LMT is experiencing pressure for its customers to move abroad because of the high wages. In 1988, wages were S$568 but have since raised to S$3114 in 2000 (Sector Report 2004). Also, Singapore are experiencing a shortage of skilled labour workforce; Infocomm Development Authority suggests Singapore will need about 10,000 skilled IT workers per year to sustain growth in the electronics sector, but will have to look abroad for individuals (Sector Report 2004). Therefore, raising doubt on remaining within Singapore as variable costs increase year-on-year.

3.1.4.1.4.TechnologyPrice compression coupled with the fast pace of technological change is a challenge for Singapore’s electronics industry. It is costly to install and train for the new technologies but more initially; it is harder for weaker firms to fund R&D for these technologies. The variety of customer sectors hinder LMT’s ability to invest large sums of money to their customers as each sector may require costly research and development for new technologies.

3.1.4.1.5.Environmental and Legislation After 1st July 2006, European legislation requires the elimination of six substances (including Pb) from electronic products, a law that is already practiced in United States. These environmental legislations will impact LMT as current equipment would need to be changed, as well as components ordered, both of which will be costly. Furthermore, the current inventory stocks at LMT will cause an issue if they are not utilised or sold within the next 6 months.

3.1.5.Decision OrdersScherpereel’s (2006) decision taxonomy explores the application of developed theories in complex real world situation as problem characterisations can be used as a guide for future solution development. Figure 7 (Scherpereel 2006) categorizes the issues discussed thus far in conjunction with the methodology in the paper.

12

BUSM3031-001-11000230

13

BUSM3031-001-11000230

The decision order framework enables organisations to identify decision problems in order to find a course of action or solution to these problems, however, as discussed in Scherpereel (2006: p.132) a criticism of this framework is the “implementation of the taxonomic classification is based on a subjective description of the decision or problem”.

Mr Ho’s unrealistic financial projections are of high-risk, however, the classification is dependent on the “decision-maker (problem-solver) using first, second or third-order language” (Scherpereel 2006: p.129). It is first-order language used by JP when discussing the unrealistic projections, as Mr Ho’s inability of financial modelling was known at the point of promotion, therefore this first-order problem is understood. Similarly, TeleNet’s unpaid invoices pose a medium-risk as Chadwick Murkowski (Appendix B) outlines he is “keen to pay outstanding invoices”, however the concept of one of LMT’s biggest customers experiencing serious financial issues is high-risk and a long-term issue; It is classified as a second-order problem because of the language used. However, the unstable economy is complex, important, high-risk and long-term issue resulting it is classification of third-order problems.

3.1.5.1.Wicked and Tame ProblemsFigure 7 (Scherpereel 2006) highlights the wicked problems in bold that currently face LMT. Issues such as inventory and financial issues can be solved by gathering and analysing data, however the wicked problems lack a definitive solution. Upon analysis of the table it is apparent that the majority of these issues involve personnel; Moreover, Hancock (2011) found that wicked problems tend to involve a high level of behavioural complexity.

3.1.5.2.Crisis Action JP’s behaviour has changed over a period of time whereby his analytical approach diluted he became unaware of TeleNet’s financial difficulty. Weick (1988: p.306) suggests in crises “people often don’t know what the ‘appropriate action’ is until they take some action and see what happens. Thus, actions determine the situation”. Therefore, it is possible that JP’s change in behaviour, for example, is a reactant to the crises situation or it could also be the action fuelling the crises situation.

3.2.Issue Evaluation

3.2.1.Categorisation and Prioritisation Evaluation, categorisation and prioritisation are conducted to determine the most appropriate recommendations for future strategy. Figure 8 displays the list of issues categorised. Upon selection of three must be addressed issues:

TeleNet unpaid invoices, JP’s priorities/proposals are not reflective of current situation, and, Erfde-Auto causing issues to production line

Apgar (2006: p.9) suggests, “The usual way to prioritize a lot of projects is to measure their expected returns or value”. Therefore, Erfde-Auto issue to production line should be number one, as this customer has high-value financially, socially and proposed opportunities for growth. Furthermore, the

14

BUSM3031-001-11000230

issues to the production line could potentially affect LMT’s reputation amongst other current customers and future customers. TeleNet’s unpaid invoices should be addressed second as this customer holds high-value in sales as well as its contribution to LMT’s profit. Finally, JP’s priorities/proposals are a document that can be altered at anytime, however the lack of clear direction could suggest an issue with JP’s personal outlook on LMT. Therefore, this is a second order tame problem with short-term, static properties, suitable for third place prioritisation.

3.2.2.Root Cause AnalysisAs discussed previously, unusable inventory is causing an issue at LMT for a variety of reasons yet to be identified clearly and coherently. Figure 9 displays

15

BUSM3031-001-11000230

the root-causes for this issue using a root-cause diagram that is used to identify the proximal cause “that, if were replaced, would allow the process to work correctly” (Okes 2008: p.21). Upon analysis of the unusable inventory at LMT, the root causes identified are past financial benefit, customer financial issues inflicted upon LMT, sector changes, sector conflicts and environmental issues; of which ultimately have been driven by the desire to be less reliant on previous JV Partners.

3.2.3.Risk Assessment Stoneburner et al. (2002: p.8) define the risk-assessment process, as “risk is a function of the likelihood of a given threat-source’s exercising a particular potential vulnerability, and resulting impact of that adverse event on the organization”. Figure 10 isolates four key issues that LMT is currently facing and the risk that those issues are posing followed by the impact, likelihood, timing and priority.

The issue with the highest priority is the Erfde-Auto issues with production lines, as it has the potential to affect LMT reputation, and the affects it may have on other customers and their production lines. This issue has not been formally addressed (medium-likelihood), but its impact will be high and will occur in the short-term. The customer is also a potential growth opportunity therefore the conclusion of this matter will directly impact their proposal. Secondly, the current unrealistic budget and forecast is threating LMT’s projections to understand its situation of its future likelihood dependence on JV Partners, possibility to move production abroad, and general financial position. The wide range of risks this issue poses justifies its high-impact.

16

BUSM3031-001-11000230

However, without a new financial projection it is difficult to suggest the likelihood of these risks happening but its impact will be medium-term due to the projection ending in one year. Singapore’s wages are threatening LMT as customers’ may/are interested in moving production abroad in order to cut costs. Thus far, LMT has not lost its customers for this reason, however, J&M and Erfde-Auto have proposed a move, potentially suggesting a move abroad regardless of LMT decision, therefore it has been categorised as medium-high-likelihood, likewise medium-high-impact as a loss of customer, or setting up abroad will negatively financially impact LMT. Neither customers has suggested a sense of urgency around the issue therefore, this risk is likely to impact in the medium-term consequently placed as third place priority. Finally, LMT’s dependence upon the previous JV Partners will have a negative financial impact upon LMT due to the current circumstances of TeleNet financial issues and MedTech’s issue with its infusion pump. It has be placed a the fourth priority regardless of the high-impact and high-likelihood of this risk because of its comparison to the other isolated issues that display urgency and potential for future growth.

3.2.4.SAFe ReviewThe complexity of issues facing LMT are threatening its future, however, it is possible for the opportunities proposed to LMT to diffuse some of these issues. One opportunity in particular seems to be favoured by JP is the proposal by Erfde-Auto to move production to India, as he has placed his reputation at risk for this customer that otherwise would not be suitable due to the difference in services between the two. The SAFe review, proposed by Johnson et al. (2011), is a tool used to approach such decisions from a rational design perspective.

17

BUSM3031-001-11000230

Figure 11 (Johnson et al. 2011) displays the SAFe review. Whilst the proposal addresses some constraints at LMT its acceptability is low and the feasibility is yet to be fully determined. The model, however, fails to draw analysis upon the constraints or risks that it may pose upon LMT; for example, one current issue is the power the customers currently have. By moving to India as proposed by Erfde-Auto the current power will increase and may also deter the other current customers. It must also be considered the current issues that Erfde-Auto is causing currently to production lines. The lack of legitimate financial records, that do not include the costs of proposals, causes an issue to determine if LMT can afford to move abroad.

4.0.Strategic RecommendationsKinston and Algie (1989: p.127) found that “crisis causes decision makers to focus only on opportunities allowing immediate action”, however, Appendix C outlines recommendations addressing both tame and wicked problems of all time-horizons that this paper identifies as key issues that the analysis has showed need to be addressed regardless of the immediate action. The issues created by Erfde-Auto to the production line have been identified as the top priority as outlined previously it could impact LMT’s reputation and fraction relationships with existing customers, and determine if a move to India is worthwhile. This short-term issue is a strategic goal according to the SLC Method as it is within LMT means to solve this issue (Braybrooke and Lindblom 1970).

LMT have previously considered the implementation of Pb-free equipment with a mix of responses, however, the introduction of a company policy will ensure LMT is complying to environmental standards, improve LMT’s reputation and reduce customers powers as identified in Porter’s Five Forces.

18

BUSM3031-001-11000230

The proposal to demote and employ a new VP-of-Finance is addressing both the financial issues and the personnel challenges as Mr Ho from the offset of his employment was identified as unable to financially model a skill that has prevailed itself as a necessity in this position. Levinthal and Rerup (2006: p.503) suggest managers need to show a “high level of sensitivity to errors, unexpected events and… to subtle cues suggested by the organisation’s environment or its own processes”; attributes that JP is failing to show currently, it has been proposed that a consultant executive coach will mentor JP to ensure he is more sensitive to the organisation and all its aspects. The proposed bonus scheme and salary review by JP has been dismissed due to the nature of the other challenges currently facing LMT. It has been suggested this will be reviewed within the fiscal year, in order to give the organisation time to focus on other issues that are currently threatening the organisation. JP’s executive coaching will also give JP an opportunity to review these proposals. Furthermore, the dismissal of any movement abroad has been proposed as the SAFe review outlined the availability and feasibility is not to a recommended level. This will also give LMT an opportunity to review their financial circumstances with the possibility of an independent move abroad to another ASEAN country, reducing the power customers have and the financial benefits of lower wage rates.

19

BUSM3031-001-11000230

5.0.Reference ListAlbright, K., S. (2004) Environmental Scanning: Radar for Success. The Information Management Journal. [Online] Available from: http://www.arma.org/bookstore/files/Albright.pdf [Accessed 9th January 2014].

Apgar, D. (2006) Risk Intelligence for Project Prioritization. Industrial Management. [Online] 48 (6), 8-13. Available from: Business Source Premier. [Accessed 11th January 2014].

Boulton, C. (2012) Lucky MT Case Study. BUSM3031 Lucky MMT Case Study Final (inc appendices), 14th October. [Online] Available from: http://worcester.blackboard.com [Accessed 16th October 2013].

Braybrooke, D. and C., E. Lindblom (1970) A Strategy of Decision: Policy Evaluation as a Social Process. New York, United States, The Free Press.

Bussière, M., and Mulder, C. (2000) Political Instability and Economic Vulnerability. International Journal of Finance and Economics. [Online] 5 (4), 309-330. Available from: Wiley Online Library [Accessed 5th January 2014].

Collins, J., C. and Porras, J., I. (1994) Built to Last: Success Habits of Visionary Companies. New York, United States, HarperCollins.

Davis, P. (2013) Conversation with Demi O’Shea, 23rd September.

Hancock, D. (2012) Tame, Messy and Wicked Risk Leadership. Surrey, UK, Gower Publishing Limited.

Higgs, D. (2003) Review of the role and effectiveness of non-executive directors. [Online] Available from: http://www.dti.gov.uk/files/file23012.pdf [Accessed 3rd January 2014].

Johnson, G., Whittington, R. and Scholes, K. (2011) Exploring Strategy: Text and Cases. 9th Edition. Essex, England, Pearson Education Limited.

Kaplan, R., S. and Norton, D., P. (1996) Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review. [Online] 74 (1), 75-85. Available from: Business Source Premier [Accessed 12th January 2014].

Kinston, W. and Algie, J. (1989) Seven Distinctive Paths of Decision and Action. Systems Research. [Online] 6 (2), 117-132. Available from: http://www.thee-online.com/Documents/A-Endeavour/8-K%26A7DM1989OLD.pdf [Accessed 11th January 2014].

Levinthal, D. and Rerup, C. (2006) Crossing an apparent chasm: Bridging mindful and less-mindful persepectives on organizational learning. Organizational Science. [Online] 17 (4), 502-513. Available from: Business Source Premier. [Accessed 11th January 2014].

20

BUSM3031-001-11000230

Okes, D. (2008) The Human Side of Root Cause Analysis. Journal of Quality and Participation. [Online] 31 (3), 20-29. Available from: Business Source Premier. [Accessed 11th January 2014].

Porter, M., E. (1979) How Competitive Forces Shape Strategy. Harvard Business Review. [Online] 57 (2), 137-145. Available from: Business Source Premier [Accessed 5th January 2014].

Scherpereel, C., M. (2006) Decision orders: a decision taxonomy. Management Decision. [Online] 44 (1), 123-136. Available from: Emerald Insight. [Accessed 11th January 2014].

Sector Report (2004) Singapore’s Electronic Industry – Facing challenges, but first mover advantages. [Online] Available from: http://singapore.usembassy.gov/uploads/images/kT16tWH8gc2pmfpb1PPV7g/ElectronicsInd_04.pdf [Accessed 6th January 2014].

Stoneburner, G., Goguen, A., and Feringa, A. (2002) Risk Management Guide for Information Technology Systems. National Institute of Standards and Technology. [Online] NIST Special Publication 800-30. Available from: http://www.security-science.com/pdf/risk-management-guide-for-information-technology-systems.pdf [Accessed 11th January 2014].

Weick, K., E. (1988) Enacted Sensemaking in Crisis Situations. Journal of Management Studies. [Online] 25 (4), 305-317. Available from: Business Source Premier. [Accessed 11th January 2014].

World Economic Forum and Merrill Lynch (2005) Global Risks to the Business Environment. [Online] Available from: http://www.weforum.org/pdf/CSI/Risks_Report_2005.pdf [Accessed 9th January 2014].

21

6.0.Appendices List

6.1.Appendix AJP’s Priorities and Proposals (Boulton 2012)

6.2.Appendix BChadwick Murkowski Jr of Telecom Networks to Johnson Pang Email dated 09/10/05 (Boulton 2012)

BUSM3031-001-11000230

6.3.Appendix CReport Recommendations – Proposals and Priorities

Priority Item Proposal Cost/Benefit

1Issues to production line

Complete an assessment of the issue and provide facilities to decrease risk

Save LMT reputation and relationship with current customers

2Lead free initiative

Introduce a company policy for all components and equipment to be Pb free

• $40,000 for oven• Blanket policy for all

customers to conform• Satisfying

environmental issues• Reducing control of

customers

3Mr Ho’s inability to financially model

Demote Mr Ho, VP of Finance

• Keeping a loyal employee

• De-stressing Mr Ho from the pressures of that position

• Reducing the risk of future financial issues

4Mr Ho’s inability to financially model

Outsource a new VP of Finance

• Availability for employment locally, satisfying local community

• More accurate financial projections

5JP’s inability to fulfil his role

Introduce an Executive Coach consultant to mentor JP in his role

• Improving JP as an Managing Director

• Easing the board that JP is fully equipped to fulfil his role

• Re-directing JP for more positive outcomes

6

SD Bank: Overdraft increase and new term loan

Increase overdraft with Bank from $10 to $15mConvert existing outstanding loan of $3.2 million to a new loan of $10m

Only c$300k p.a. (interest rates still low – paid for in increased sales

• To cover short term working capital requirements

• Fund any future opportunities or proposals on this list

24

BUSM3031-001-11000230

7

Take action for the responsibility of ordering $4m worth of components without an authorised order

Issue Bernie Chen with a formal warning

• To satisfy shareholders• To clarify the impact

his actions have on the organisation

8

TeleNet: late invoices and component costs

Communicate with Chadwick Murkowski of TeleNet will give the $500,000 worth of components, without discount

• Reducing dependence• Utilise it as

compensation for late invoices

• Reducing the power of customers

9Unusable inventory

Bulk buy inventory for customers contributing 15%+ in revenue for maximum 6 months

• Decreasing chances of unusable inventory in future

• Reducing cost of inventories

• Reducing risk

10Lau Su-Min lack of contribution

Introduce an Board Coach consultant

Maximise performance

11MedTech sales fall

Focus and improve relationship with J&M and DMS (medical sector customers) to increase revenue, reducing the financial impact of MedTech sales fall

Reducing dependence upon JV partners

12Erfde Auto and J&M: Proposal to move abroad

Dismiss

13 Singapore high wage rates

Upon financial review of new VP of Finance, look at the possibility to move part of production to another ASEAN country, inviting customers

• Reduce power of customers

• Reduce dependence upon JV Partners

• Financial benefit of lower wage rates

• Potential new customers

25

BUSM3031-001-11000230

14CEO & VP Bonus Scheme

Dismiss. Review within the fiscal year.

15Staff Salary Review

Dismiss. Review within the fiscal year.

26