MORGAN MOTOR COMPANY

IBMS 207 – Group 06

Jenny Hoang 0828313

Trinh T.M Vo 0828066

Oscar Mao 0810951

Even Lu 0815763

Table of Contents

CHAPTER 1 - INTRODUCTION 4

1.1 Presentation the main issue4

1.2 Goal of report 4

1.3 Problem definition 4

1.4 Research design9 5

1.5 Structure of report 5

CHAPTER 2 - LITERATURE REVIEW 6

2.1 Introduction 6

2.2 The value chain model 6

2.3 The merits of value chain model 7

2.4 Process mapping and describing the organization 8

2.5 Causal model, fishbone diagram 10

2.6 Merits of fishbone diagram 11

CHAPTER 3 - RESEARCH DESIGN 12

3.1 Introduction 12

3.2 The research questions 12

3.3 Data collection method 12

3.4 Reliability of the source used 15

3.5 Summary 15

CHAPTER 4 - THE MORGAN COMPANY 16

4.1 Introduction 16

4.2 General overview of the company 16

4.3 Company strategy and long-term perspective 16

4.4 Process discription 16

4.5 The problems at Morgan Motor Company 17

4.6 Determining the priorities 17

CHAPTER 5 - CONCLUSION AND RECOMMENDATION 18

5.1 Introduction 18

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5.2 The recommendations 18

5.3 Summary 19

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Chapter 1- Introduction

1.1 Presentation of the main issues

Morgan Car Company is a famous hand-made vehicle firm and they are producing

autos only by handwork since 1909. Because of the popularity, they were always

been receiving a lot of orders. But the problems come, as they are making cars

only by handwork, the production is very small. And this caused the waiting list is

enormous. In 1989, the company is still delivering orders in 1978, which is 11

years ago. So the detention is obviously. So we are going to find out what are the

main reasons that could cause the problems and come up with the solutions for

the issues.

1.2 Goal of the report

By doing the research, we can figure out all the possibilities of reasons that cause

the detention of the company. We are going to look at each section of the firm to

come up with a best solution to catch up the waiting list and secure the

development of Morgan Car Company.

1.3 Problem definition

When we look at the problems that the company faces, we can summarize that as

following:

Long waiting list.

As the company received a lot of orders over past years, the waiting list is

becoming longer and longer. The company was not able to deliver the orders to

customers. Some of the customers even have to wait over 10 years.

Losing customers

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Because of the slow production of the company, some of orders has been dead in

past years. That means some customers have no more patient to wait for the car.

So the firm is losing customers.

Slow production

The company still insists to produce each car by handwork. Every part in the

producing process has to be done by hand. So it takes a long time to produce a

single car. And also training each Morgan worker takes up to 4 years. So there is

not enough labor to make cars to speed up the production.

Low profit

The company sells car in a not expensive price, but the cost is really high

including labor cost and others. So the profit is decreasing. They do not have

enough money to reinvest the firm to ensure the production.

1.4 Research design

Information was collected by case study and survey. We obtain the information

by interviewing the manage director, sells director, financial director, workers

and inquiring the reporters, documents, summaries. We generalize and put all the

sources together to come up the research questions and research strategies.

1.5 Structure of the report

The report includes 6 chapters and also the references and appendix in the end.

Chapter 2 Literature review

Chapter 3 Research Design

Chapter 4 The Morgan Motor Company

Chapter 5 Conclusion and Recommendation

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Chapter 2 – Literature review

2.1 Introduction

This chapter illustrates the merits of the models and tools used for our research.

There are four models:

The Value Chain Model of Michael Porter.

The process chart

The Fishbone diagram of Dr. Ishikawa

2.2 The Value Chain Model

The model below is a typical Value Chain Model of Michael Porter to analyze the

specific activities in a firm in order to create competitive advantage

There are five primary value chain activities represent as following:

Inbound Logistics include the receiving, warehousing and inventory

control of input materials.

Operations are the value-creating activities that transform inputs into final

product.

Outbound Logistics include warehousing, order fulfillment to bring

product to customer

Marketing and Sales is activity to associate with buyer, purchase product,

including advertising, channel selection, pricing, etc.

Service is activity to maintain and enhance product’s value including

customer support, repair service.

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2.3 The merits of the Value Chain model

The Value chain categorizes generally what is added in value for an organization.

The Primary activities: Operations such as Production, inbound logistics, outbound

logistics, marketing and sales and services. The cost and value are being identified

for each value activity and the cost and value can also be identified by each value

activity.

This concept had been extended beyond individual organizations and can be

applied by supply chains and distribution networks. When delivering a mix of

different products and services to the end customer, different economic factors

will occur, each managing with its own value. The industry wide synchronized

interactions of those local value chains create an extended value chain, sometimes

global in extent. According to Porter terms this interconnected system if value

chains is called the value chain system. Also the value includes the value chains of a

company's supplier, the company itself, the firm distribution channels. Capturing

the value generated along the chain is the new approach taken by many

management strategists.

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2.4 Process mapping, describing an organisation

There is a tool that we can use to improve quality: Flow charts are used for a

special process. Flow chart is being used so long that no one knows the real origin

of Flow Charting. A flow chart can be customized to fit in any need or purpose.

That is also why we know flow chart as a unique quality method that can be

improved.

Flow Chart can be defined as "A flowchart is a schematic representation, stepwise

process to show steps as boxes of various kinds, and their order by connecting

these with arrows.

Flowcharts are used in designing or documenting a process or program. There are

4 types of charts that are useful to use when dealing with a process analysis: top-

down flow chart, detailed flow chart, work flow diagram, and a deployment chart.

Each of the flow chart adds different aspects to a process or task.

Working with any chart considers dealing with different processes that should be

under taken into consideration, of the finishing product and the making of the

product.

The chart bellow illustrates a normal process of producing a product as a typical

example.

Notes for the flow chart below:

Step, Processing, Operation (not including in the chart)

Alternative Process

Manual Operation (not including in the chart)

Delay

Decision (Not including in the chart)

Measurement, Quality Check or Inspection

Storage

Handling, Transport or Movement of material

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2.5 Causal model, using the fishbone diagrams

The Fishbone is a diagram that shows the causes of a certain problem. It is known

as one of the 7 tools of quality management, along with the histogram, check sheet,

control chart and flowchart and scatter diagram. It is called a fishbone diagram

because of the shape it has, the side view of a fish skeleton.

The problems in the diagram are often based around a certain category or set of

causes such as the 6 m’s , the 8 p’s or the 4 s’s. The 8 P's :Price, Promotion, People,

Processes, Place / Plant, Policies, Procedures and Product (or Service) The 6 M's

Machine, Method, Materials, Measurement, Man and Mother Nature (Environment)

(recommended for manufacturing industry).

In the context of the video about Morgan Motor Company, the problems are

described as the failure in management that leads to the low production. The

company works with the old-fashion company that fear of change in their

managerial operation. All the cars are made by hand-built but the company has no

investment on new technology to improve their manufacture. In addition to that

they have difficulty with human resource that takes 4 year to train new staff. As a

result, it takes a long time to finish the product and long list waiting on the market.

2.6 The merits of the fishbone diagram

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The fishbone shows the cause of the problem. The structure helps us mostly to

solve the problem. Working in a group allows everybody to take a piece of the

bone to solve the flow. It is easy to manage and every member in the group can

take care of a point to work on it. The use of this is to know the quality and service

of the company and to identify the priority that will help to restructure the value

chain model of the company.

2.7 Summary.

In this chapter we discussed about the merits of the different models. We searched

on the internet about the models of the Value Chain Model of Porter, Process

charts, the fishbone diagram and the Pareto chart. These are models that can be

applied to a company and it is a specific way to do research. Furthermore, it can be

useful in different aspects for conducting a research.

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Chapter 3 Research Design

3.1 Introduction

In this chapter we discuss the research questions and data collection methods.

The sources of evidence used and reliability are assessed.

3.2 The research questions

What are the possible causes that Morgan Motor Company are not productive

enough to keep up with the waiting order list?

Which causes have the highest costs involved?

What are the benefits and side effects of replacing hand work with mechanical

work?

How much time and expense would it save?

How long would training time for each employee be? Would it be more

effective as compared to hand-built training?

3.3 Data collection method

The research questions mentioned above indicate different research strategies.

For establishing the possible causes, benefits and effects, the most probable

approach is adopting a case study. Because the questions are of an explorative

nature and indicates the qualitative data has to be collected.

The two last research questions suggest the nature of information collected qill

be descriptive. Therefore, a survey approach is the most likely suited option here.

Further details on the adopted research strategy and research method used will

separately discussed for the case study and the survey.

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The unit of analysis

The units of analysis are the production process.

The unit of observation

Source of evidence Unit of observation

Interviews Key staff members

Brainstorm session Key staff members

Observation Processes and activities

(For example: the motor setting-up

process)

Company documents Documents and records on the company

production process.

Survey Production process

Case study

This context is an inductive approach and has an explorative nature. An

important principle is that of triangulation1.

In this case we use the combination of following data collection techniques:

- In depth interviewing

- Brainstorm sessions

- Company documents and data bases observation

In depth interviewing

This will be the main technique.

Sampling frame for interviews:

- Employees who directly building the car

- Logistical manager

- Other managers

1 Triangulation refers to the use of different data collection techniques within one study in order to ensure that the data are telling you what you think they are telling you (Saunders, M. et al Research methods for Business students 5th edition p.146). Data collection techniques to be used might be: interviews (one-to-one or one-to-many, brainstorming sessions, focus groups) observation, documentary analysis (also company documents and records) and surveys.

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- Warehouse staff

- Planners

- Potential clients

Sample size for interviews

The rule of the thumb2 for proper sample sizes in case studies is

between 20 and 40.

Sampling techniques for the interviews

Purposive sampling of key staff members involved will guarantee a

wide range of angles and views.

Brainstorming sessions

Brainstorming among key staff members is a widely used technique to

generate ideas on how to improve the productivity of production process.

Survey

We conduct a survey for these questions’ issues:

- How much time and expense would it save?

- How long would training time for each employee be? Would it be more

effective as compared to hand-built training?

Sampling frame

We will do survey on potential customers and company’s employees.

Sample size is set at 5003

Sampling technique: a simple random sample can be adopted

Handling non-response:

Response rate is expected to be very high because the sampling frame

includes mostly employees and managers of company. They have to be

convinced to be involved to find the cause and contribute in the data

collection.

2 Rules on sample size are less strict in case studies compared with experiments and surveys. The researcher should keep on interviewing until he /she reach saturation, which means that informers are not telling anything new. Rule of the thumb is 20 to 40 interviews.3 See sample sizes as described by table 7.1 and chapter 7 in Saunders, et al; Research methods for business students.

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3.4 Reliability of the source used

The source used us reliable because:

The questionnaires are checked by others

The procedures and recording forms have to be tested in several occasions

with the users involved

The staff involved are trained before conducting the survey

The case study use many sources of evidence then interviews backed up with

observations and company documents and records is applied

For each of the data collection methods there are guidelines to be followed

3.5 Summary

Case study and Survey are two main research method applied. Both are sampled

on company’s employees and potential customers.

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Chapter 4 - The Morgan Motor Company

4.1 Introduction

This chapter describes the Morgan Motor Company using the Value Chain Model,

fishbone diagram, Pareto-analysis and process mapping as an important

frameworks.

4.2 General overview of the Morgan Motor Company.

Morgan motor company faces two main problems in the company. The first

problem is that they have a low production capacity which causes a long waiting

list .And the second problem is that the company need more profit from their

product to stay alive for a long term existence of the company.

4.3 The company strategy and long term perspective

The strategy of Morgan motor company is to increase number of car in one week

from 9 car s to 10. And each spare part on car are handmade by their employees.

Long term perspective for Morgan Motor Company is to change their production

method in order to improve productivity and get more market share.

4.4 Process description of Morgan Motor Company

The managing director of Morgan Car Company is Peter Morgan, and his son

Charles Morgan will be the future managing director. They give orders to the

work manager, sales director, development engineer and planning officer. The

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work manager is responsible for the foreman and the stock purchaser. Under the

Foreman are 130 employees that work in the shop.

4.5 The problems at Morgan Motor Company

Morgan motor company faces the most toughing problem is the long waiting lists.

The reason is the fact that they produce only 9 cars a week. Only 9 cars a week is

totally far away from their high demand in the market. The Morgan car company

makes customer waste too much time .For a customer, nobody likes to spend

time on waiting for their favourite product. The company is not able to finish

their order that they receive. The essence of this problem attributes the

production process is slow. They are not able to make enough cars to increase the

demand from the market and even store more customers on the waiting list.

When we see the whole process in the Morgan company, each step is hand-built

that cannot help the company to produce car efficiently. There is no change in

production methods. It cannot boost the productivity of the company.

4.6 Determining priorities

To determine priorities, we have to use the Pareto-analysis. The company should

develop this process for future priority settings. Firstly, the company has to

determine a framework for the area, and then identify problems in an

area .Thirdly, to establish criteria for selecting the final priority areas. And the

fourth part is categorizing problem areas within the framework for the priority

areas. Eventually, the company have to identify areas.

4.7 Summary

The Morgan Company has to adjust their strategy and consider the development

of company in long term perspective.

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Chapter 5 – Conclusion and Recommendation

5.1 Introduction

After looking deeply into the company we found many problems and after analyzing

them we found the consequences of these problems too high to neglect them as it

enables the company for further growth.

Because this is a traditional company where the products are hand-built, a lot of time

goes into the production and the amount of products per year is much lower than any

other automobile manufacturer. The cause for this is the use of technology and the use

of outsourced components from other manufacturers

5.2 Recommendations

The problems that the company is facing can all be related to one another. In order to

improve production and reduce costs the company should undertake the following

steps:

Increase finances. The finances or the lack of it are one of the biggest problems

within the company. A lack of finances narrows the space for a company to play

in the market. Capital from outside or external investments will help the

company to survive and improve all departments to become a serious player in

the market. Searching for sponsors is also an option to increase the finances. it

can also improve the image of the company and make it more famous.

More effective production process. The production process should become

more effective because a delay in one department delays the whole production

process. Implementing the just in time method is a serious option for the

company because this method help reducing the delivery time of the parts build

by other suppliers. What we know from the company is that the structure of the

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production of the cars is very chaos. It takes too much time. By organizing the

structure on a more efficient manner than the company have more time over and

produce more cars.

Improve their production capacity. Production capacity can be increased by

hiring more employees and expanding. A bigger factory with a wider production

line will reduce the delivery time and help the company make more profit.

Use more technology to save time. Building a car completely by hand gives you

a certain image but to enhance a competitive edge, cars will have to be build

faster than the standards set by the company. The company should invest more

in the R&D department. This department is the backbone for the company to gain

a competitive edge since they it doesn’t only focus on solutions for present

internal and external problems but also for opportunities in the future.

Hire more specialized employees. Since all the cars are hand build, the skills of

the employees are very important. Labour is thus one of the biggest issues within

the company. When improving the HR department, better skilled workers will be

hired with the capabilities to meet the set targets.

5.3 Summary

These recommendations should be taken into consideration to help the company reduce

the waiting lists and the late delivery of their cars and eventually increased profits. A

waiting list shows the cars exclusivity and high demand but in this case there is a thin

line between image and lack of production and this must be avoided.

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