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October 24, 2009

Entrepreneurship and New Venture Creation Exercise 6

Your Great Uncle died and left you a company that you have neither the time nor inclination to run – hence you want to sell. Set out the options for which type of buyer might be interested and the differences in likely value that they might place on the business. Conclude by deciding which buyer you hope will buy it and describe why.

This situation is special for me because a have lived a similar experience with a old bread factory of my family. This company was founded by my grandfather and his brother. The firm grew with a lot of effort and difficulties but was able to create several little shops of sell bread. Over time the next generation had the opportunity of follow with the business but not all members had the opportunity of be proprietary of the shops although they were proprietary of the factory. For a lot of years nobody said nothing because the second generation was essential to the growth of the company in the origin hence they was the managers of the company. When arrived the time of retired, everybody launched his hands to the neck of managers and theirs descendant because they wanted to follow with the factory in order hold the value added to theirs shops.

With this situation the company fall its profit and every year the situation was worse because the investment and maintenance greatly decreased due to everybody wanted get dividends. With this situation several options was evaluated by each member of the whole family. Below I will show some of the main option that was exposed

  • Siphoning cash. This option meant continue with the current situation. And obviously, that will be the worst option because nobody earns enough.
  • Transfer of ownership in family firms. With this option the company follows in hands of the family and retains its values if the buyer is one family member. I and the rest of the family could see how the illusion of the previous family generation continues alive. The knowledge of the market and capabilities are safe but the problem is that the price of sell will be below of market price, and not all owners can be agree with this option.
  • Partial harvest and exit. To analyze this option is important to say that the company had the location of its main asset in Madrid city centre and there was a lot of sellers with intention of make a new building of luxury apartments. With this option the family could divide the money and could move the business outside of the city centre with the investment of the parts of the family interested on it.
  • Acquisition for another company of the sector. It important to remark that the company had several employees working on it, some of them were of the family and not only at management level. Also it is important remark that the value added for the shops was that the bread was made with a traditional methods and near of the point of sell with high degree of acceptance between the customers. With the merge or acquisition the new company can increase the efficiency using economy of scale strategies, recover the morale of the employees, and hold the confidence of the customers.
  • Management Buy in. The option of find a group of people in order to manage the company was discarded from the outset because everybody considered that the knowledge of the market and situation with the shops was important and to lose the management will mean to lose the company. In my opinion likely nobody thought that some of the profit troubles were due to the restrictions in take decisions according with family interests over of the aspects of business.
  • Management Buy Out. This option was the same that transfer the ownership to some family member. That would be really very good option in order to continue with the activity but the market price of the main asset of the company, the location in city centre, was too high and the company would need a big restructure with a great investment and financing.

At the end the option chose was a mix between some of then, because the company was sold to a builder for a high price even over market price and some members of the family carry on an agreement with him to keep the ground floor and continue with partial business but not with the manufacture.

The acquisition might have been a good option but loosing the ownership and the management of company.

In my opinion the 'partial harvest and exit' alternative was very good option, but not the loss of manufacturing that was the origin of company. My recommendations was follow th Partial harvest and exit but continuing with the production activity in another place outside the downtown and managed by me.


Andrew Burke (2009). ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

October 23, 2009

Entrepreneurship and New Venture Creation Exercise 1

Examine an industry that you are familiar with, and assess the nature of the start-ups in that industry. Give examples of no more than four of these start-up firms and allocate them to Bhide’s categories. Why might this matter to an incumbent firm?

All firms have a natural evolution like any living things, some day are created after growth, research the mature and finally died and / or transform. Depending of the first phases of the each business and follow the Bhide’s theory there are four types of business that are: marginal business, promising start-up that can follow evolution in VC-backed start-up or corporate initiatives and the last type y the revolutionary ventures.

The main factors that affect to the type of business are the Investment and Uncertainly. Investment refer to the irreversible commitment of fund, reputation or other resources that the individual or firm undertaking the initiative makes with the expectation or earning a return and the uncertainly refer to unmeasurable and unquantifiable risk (Frank Knight, 1921).

I have some knowledge about the IT industry but to illustrate this exercise I would like to give some examples in other sector as are the retail industry mainly the bakery and diary sectors.

The companies which levels of investment and uncertainly are low, belongs to the marginal business. Some examples are mobility sellers of diary products. One example of company with promising start-up could be DANONE that is a company that started to operate in Spain at the middle of the last century, and now is a very big multinational and is example of corporate venture. It started with a low level of investment and with high degree of uncertainly. BIMBO is an example of company that started to operate in Spain at the middle of the last century with a medium-high level of investment and uncertainly because it was a company that started with capital of Mexican investors and could be an example of the type of VC-backed start-ups.

About the revolutionary ventures type of business is complicate to identify it in this industry because it is very mature market and is very is difficult to launch a venture that ensures a high level of profits. But companies as DANONE can launch a unit of new healthy products. Using its knowledge in the market, the possibilities of inversion monetary, resources and technology can be a example of revolutionary venture with high profit.

As conclusion I would like to remark the importance that each company knows its type of business. These types or archetypes can help us build a compressive map of the typical features of entrepreneurial activity and the entrepreneur can be ready to learn of previous experiences.


Andrew Burke (2009). ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

Amar Bhidé (1999), 'The Origin and Evolution of New Businesses'. The Oxford University Press.

October 22, 2009

Entrepreneurship and New Venture Creation Exercise 5

Your business is bringing out a new product which adds on to an existing product, that you already produce. You are keen to ensure that the take up of the add-on product is high, but your manager needs to be assured that you are aware and mindful of anticompetitive practices. Set out the arguments you would give to your manager concerning what the business can and cannot do in this context.

Competition and antitrust laws have increased in importance in most economies and could provoke several limitations in the company strategy. In order to give an opinion about this issue is important to consider the laws that governed in the country's development activity and the environment in which it operates. International agreements like GATT let that the governments of different countries will be coordinated.

Some articles of the law has the intention of void agreements which enable monopolistic behaviours although there are several exception when the target of the initiatives are focused in aspect like enhance efficiency or promote the innovation.

To determinate if the new product can fall in anticompetitive practices is important to study external factors related with the impact in the market, suppliers, consumers and competitors. Also the internal factors as the profit can be a very influence factor if with the launch of the new product the company can increase its profit due to raise prices inordinately.

In the other hand any company has many responsibilities with its stakeholders and even its employees. And those are reasons to fight or even be on the boundaries of the law or the interpretation of laws.

I would like to mention an example of monopolistic behaviour as are the case of Microsoft and its well know browser called Internet Explorer. This product is given away with purchase of the operating system avoiding that the customers can acquire other browser. In this case the dominant position of Microsoft in the operating system market is used to prevent competition entry in the market by ensuring the monopoly of market.

Te argument to follow ahead with the new product is that in the market there are others products with similar characteristics, so the company does not practice monopolistic position in the market. The launch of this product is a bet based on the use of technology and innovation in order to get important levels of profit in free competition.


Andrew Burke (2009). ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

October 21, 2009

Entrepreneurship and New Venture Creation Exercise 2

There is a committee that considers strategic developments on the basis of business plans. It is concerned that it may be too risk averse and requires some new guidance on evaluating business plans. Having worked through the PORES how would you advise the committee?

First to all it is important to remark that I once that the first Business Plan has been done, a lot of troubles can be identify and manage. As said Delmar and Shane to write a business plan helps entrepreneurs to increase theirs capability, but does less true that before to make a business plan could be very important to make a PORES analysis. Through of this kind of analysis it is possible to identify the profit opportunity and the capability to exploit it reducing the risk of failure and maximize profit potential.

With the PORES analysis I can provide to the committee a list of key assumption that I can check and verify if them are correct. From an external point of view there are several aspects that inside of the company can always look like correct but really aren’t.

For these reason it is necessary to review the following: the initial conditions that provoked the new venture; validate the studies realized about the market identifying the buyers, suppliers, and competitors; analyze the resources that are necessary and check if the kind of resources are available or is required a specific skills that can increase the costs. With all of these characteristics that I can provide will be important to add a dynamic point of view because statics aspect are not enough to validate a business. The dynamic aspect should be studied over all characteristics that a business plan cover as are check if the new idea was consequence of solve a problem or is something that appear after to see a vision or strategy. That usually occurs in development of software because a lot of people forget the labour of IT architects that always try to be according with the enterprise architecture. I can to determinate if the study of market have been done thinking in the new competitors or the growth possibilities of the new venture and if have been done a macro economic analysis identifying the risk (i.e. the increase of interest) and creating a mitigation plans.

Once that the key assumptions have been identified and checked with this model we can to review the profitability of each one and try to analyze if the best strategy to exploit it has been chosen.


Andrew Burke (2009. ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

Entrepreneurship and New Venture Creation Exercise 3

Discuss an idea for a new product that will create a new industry niche. To convince others of your idea you need to set out the likely scenario for how the new niche will develop in terms of competition, numbers of firms and how firms compete over time.

Idea background

Some of the most routine labours that are not very much recognized are the home cleaning. In the latest years all the adults’ members of the family (usually the parents) are working almost all day, without too much time to enjoy of theirs children. Some people have the possibility of outsourcing the clean services of his home, but not all of them. Also in the latest years have been a lot of advanced in the clean products that increase its efficiency and decrease its price hence the parents can have more free time to enjoy with his family and can save money, even if they buy clean services.

Then we have studied the idea of launch a new product to the market of clean product's that let to the cleaners to clean the glasses more efficiently, and even forgot that they must to clean the glasses. We are talking about of the automatic cleaner of window glasses. It is device that is put in the window and automatically it starts to clean and stops according with the schedule parameters.

Factors of Industry Evolution

There are several factors that have influence in the decision of launch a new product, its strategy, performance and its exit strategy, some of them are the macroeconomic situation, the regional variation and the industry evolution. According with the industry evolution there are three topics that are important to analyze with more detail to be clear that these will not are problematic during the life of product and we will be ready to launch the appropriate response if that appear. These three factors are the barriers of entry, the minimum efficient scale and the competitive process and business shakeouts.

First to explain with a little bit of detail over these topics is necessary remark that the region where initially will be launched will be Spain. Although now in terms of macroeconomic situation is not the best moment, we think that in Spain the weather is not bad during a lot of time of the year and there are a lot of hours of sun light each day. That is a important factors to clean the glasses of the windows.

  • Barriers of entry

The new product is a technological product and required a lot of investment, hence money and financial resources. For these reason the main barrier could be the switching cost, because the price of the product will be more expensive that a simple rag and bucket. Nonetheless the situation can change with appropriate level of advertisement explaining to the customer the benefits in long terms.

  • The minimum efficient scale.

Only a few companies can develop the technology to make the product. It is a product differentiation that needs specific components. The new product will have the company patent in order to fight against the copies.

  • The competitive process and business shakeouts.

About the competitive process we have already explained some aspects in the last two paragraphs. We can think that if there are specific components, we can have troubles with the suppliers, but there is not problem because the raw components are very common (‘circuits’) but has a specific firmware made by the company.

In order to be prepared for a shakeout, some of the best solution is to sell the patent but another can be use the infrastructure available in develop new products with similar technology.

As conclusion in the follow table we can see the evolution of the new product over the time identify the most important characteristics:

Barriers to Entry


Competitive process

Market Entry

The switching cost

Almost all markets will be for us, but the customers are low.

Use generic components.

Market Development

Avoid the temporary.

Create Patent to avoid the increase the number of companies that can copy the technology.

Continuous marketing plan.


Sell the patent.

Use the technology for other products.

Sell the patent.

Use the technology for other products.

Sell the patent.

Mature Phase

Hold the patent for all derivates products and evolutions.

Use the economy of scale.

Create a secondary market with the spare parts.


Andrew Burke (2009. ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

George S. Day. ‘Strategies for Surviving a Shakeout’, Harvard Business review March-April 1997.

October 19, 2009

Entrepreneurship and New Venture Creation Exercise 4

There is the opportunity to lead a new team that will introduce a new (or substantially amended) service. Conduct a self-assessment exercise as suggested in the notes and outline how your sectoral, managerial and personal skills match the service.

The quality of the people involved in a new venture is most important than the strength of he business idea. The key to effectiveness to carry on any task is the combination of ability and effort. With the self-assessment we can assess whether a individual has the ability to perform the task required for profit exploitation and has the enough motivation to do this.

To carry on the self assessment there are three steps that should be performed, these are: study the own life experience, a formal audit of business sector managerial and personal skills, and at the end seeks to identify important goals in one’s life. I am going to focus on developing the analysis of the step two, identifying my strengths and weaknesses to respond aspects of Sector Skills, Management Ability and Personal attributes.

Personals Skills



Sector skills

Wide experience but not deep experience in sectors different to Public sector.

My experience started from technological areas to functional areas. For these reason I have an inclination to technology 

Experience in IT services as IT Architect and Project Manager.

Experience in Public Sector, developing citizen services. Some experience in Telco, Utilities and Financial.

Experience in big companies. I work at IBM for almost ten years and I was four years in Lucent Technologies.

Management ability

No experience as people manager.

No experiences in management of departments.

Experience as Project Manager in a medium size IT projects for almost seven years.

Personal Attributes

No very strict with the staff.

Needs a lot of data in order to take decisions with the intention of please everyone.

Honest with the managers and staff.

Responsible with my goals and projects.

Always try to innovate.

In order to identify fits and gaps I am going to use the Belbin’s (1984) managerial profiling of people’s managerial styles. Through of this framework, I have answered seven questions in order to identify which one is the most appropriate profile for me.

Belbin’s team role profiles

Figure.1. Belbin’s team role profiles.

The result of the test show that I fit better with the Coordinator profile and Completer finisher. Both are very good profiles in order to carry on the launch of the new service, but would be convenient that the team have some profile with creativity and team builder.

Personal Aspirations

I have lived in a family with own business and for a lot of time I have thought to avoid the familiar business and follow my own way in a big company. Nonetheless it is difficult to forget the intention to create your own company, mainly because is a way to satisfy a lot of aspirations as are be able to carry on a firm, create employment, etc… Currently I am working in IBM and is a company that can help me to get my own goals, because it's a company where I can get the knowledge, experience and networking necessary to create a company or to have the opportunity of manage a department where carry on the goals aimed at developing technologies and products that make life easier for others.


Andrew Burke (2009. ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.

Belbin Web Site:



June 07, 2009

Human Resource Management Lesson 8 Exercise

1.- With reference to your own business experience, critically evaluate the idea that there is a business case for family friendly working practices.

In my experience I am and I have been in corporations where there are implemented in high degree the family friendly working practices, IBM is a example where there are a lot of programs to promote this practices, like IT facilities to work from home, flexible timetable, part-time options, sabbatical year, agreements with nurseries etc… But I have also known another kind of jobs and another sectors where the use of these kind of practices is quite complex. Obviously in the most of the occidental countries there are some directives and laws focused to guarantee a minimum of policies (i.e. parental leave), in this sense and depending of the degree of socialization of these countries can help to the workers with different weight (i.e. in the Nordic countries the social helps are higher than in other European countries as Spain) but in my opinion the governments has the responsibility to encourage such practices for companies seeking to implement it.

Some of the main arguments found in the policy statements of different countries (UK, Spain, etc..) are focused to explain that the performance of employees who have difficulty balancing the demands of work and family show symptoms of demotivation hence decreases in theirs productivity. There are other important benefits to the organization like for example the financial performance, labour productivity, and decrease of days of absence. With this picture to address such a business case could be a good plan to increase the benefits of the company although not always is possible to get it.

Currently the companies where have been implemented these practices has a common characteristics like are: it are in large organisations, mainly in public sector, lower degrees of competition, existence of trade unions, larger proportions of women, etc. All these common characteristics can be seen as negative points because looks like that not all companies are ready to implement these practices, although there are some research (Harris and Foster, 2005 p.9) that demonstrate that small firms could operate in highly informal and flexible way.

Using these kind of practices give a lot of benefits for employer and for the employee but each company should analyze what types of benefits they want to reach and make a profile of options about the family friendly working practices in order to fit it with theirs needs, for example if one company wants to reduce the labour turnover can implement practices like job-share, flexi-time or working at or from home.

As conclusion I would like to express my opinion about this issue, because as employee this topic affect directly to my own life. I think that the implementation of these practices some times can be a trick because the companies offer a several opportunities to use some of these practices, but at the moment that someone uses some of them can have some difficulties to promotion. Another situation that I have experimented is that before to work in companies with these practices I had a personal life, but after with the use of these practices is complicate to separate the job and the family and now the job is another member of the family.


Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Flexibility Web Site.

Family-friendly employment: who's doing what and why: http://www.flexibility.co.uk/issues/WLB/rowntree1.htm

Human Resource Management Lesson 7 Exercise

1.- What implicit expectations do you and the employees you manage/work with have of your employer?

My expectation and the expectations of the majority of my peers and the people that is managed by me in my current project are the following:

  • Reward, Some of the main expectation for me and for a lot of people of my environment is to have a fair reward to the contribution of each one. But don’t only refer to the money; refer to rewards that include recognition.
  • Career Plan, although somebody can consider it as rewards, I think that it isn’t because create a career plan for the employees is beneficial for both employer and employees.
  • Knowledge, maintain the level of knowledge is essential to “no manual” jobs, because is the force and value of the organization.
  • Visibility, I think that is very important to know why things occur inside of the company. A lot of decisions about my daily work could be easier to understand with more information.
  • Satisfaction with the job because it fits perfectly with the expectative, for example to have a non-routine work and satisfaction for a job well done. These characteristics are very complicated to reach but in my opinion is the base of the performance of the employees.

In conclusion, my expectation is that the employer complies with the psychological contract and I try to have enough value in the market in order to be able of defending the contract even try to getting better. In these sense this kind of contract is more relational than transactional contract (Rousseau and Parkes 1993, Marchington and Wilkinson 2005, p.34).

2.- Analyse how and why these expectations might be different from the implicit expectations in another organisation with which you are familiar.

I am going to refer to the expectation in companies that operate in different sectors and jobs with nature of Service Shop process against the nature of the process of my current job that is Professional Services. (Slack et al. ,p. 108). These kinds of contracts are more transactional than relational

In jobs with nature of Service Shop, the expectations are similar for those related with the rewards and some about the career plan but understanding only as progression in responsibility and rewards. There are additional expectations as are: job security and fixed working hours. In conclusion this kind of contract is more transactional than relational.

3.- How convincing do you find the idea of the psychological contract as a theoretical framework for understanding the employment relationship?

The concept of psychological contract is really recent, Herriot, Carole and Pemberton in 1995, Guest in 1998 and Denise Rousseau in 2001 are some examples that showed interest in the psychological contracts following the original studies of Argyris in 1960 but currently this concept is a highly followed in organizations. In my opinion these kinds of definitions or studies appear as result of analysis of the real life, and step to step the cycle continues because the new managers and employees are aware of these analyses and they provoke the evolution of the behaviour of employees and employers.

I think that this concept is a framework that could be very useful to understand the employment relationship, it can help us to know how think each side of the psychological contract. Meet the expectation and obligations of each side are important to feel satisfaction and job security. Nonetheless the expectations of each side can change depending of the personal situations (ages, kind of job, etc...) or stages of life (Hall, 1976), in this sense the ability to tackle challenges and the timing to do the things can change along the time, being a cause of break the relation and the psychological contract.


Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Corbett, M. (2007) Organisational Behaviour Lessons Notes, Warwick Business School. 2007

Human Resource Management Lesson 6 Exercise

1.- Thinking about an organisation that you know well, evaluate the extent to which it conforms with the LO model.

There are several definitions of Learning Organizations (LO) and some of them try to summarize the nature of LO in a shorts words, I like the definitions of Peter Senge (1990: 3):

“…organizations 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 are continually learning to see the whole together.”

This definition looks like that speaks about subjective issues but there are some aspects that indicate if a organization has LO or not. I going to base my analysis on my personal experience in the company that I have spoken before, Lucent. As is a American Company has got several points similar to IBM then it will be interesting to compare both.

To analyse how Lucent fits into an LO model I'll focus my analysis on the approach of the work of Senge (1990), Argyris and Schon (1996), Argyris (1991), and Schon (1983), analysing the following five aspects: Personal mastery, Mental models, Building shared vision, Team learning, Systems thinking.

  • Personal mastery: In my experience the degree of personal commitment was high and one of the main reasons was because I was younger than the median of my department. I think that the commitment is related with the opportunity to promote and the positions of Lucent were quite frozen.
  • Mental models: This point was developed moderately in Lucent because frequently there were pictures with different messages in the meetings rooms in order to learn a specific culture.
  • Building shared vision: This characteristic was very well implemented in the company because the managers towards periodical meetings with the team and there was a lot of corporative meetings in order to go in the same direction.

  • Team learning: Some of the more important things in the company is to share the knowledge, in Lucent some times the departments was very independents and individualistic.
  • Systems thinking: Act as a system is complicated, and understood all the relations between departments too, but in Lucent was very well defined the goals of each, although with the problems of a big company.

As summary the degree of LO in Lucent was good because was a big company but this opinions have been done comparing with IBM in order to have one point of reference.

Five characteristics of Senge for Lucent

2.- What changes would need to take place within the organisation to make it a learning organisation?

Some of the main problems that I have identify is the lack of involvement of the human resources department, because the main weak point is the personal mastery and the team learning and these was due to the lack of a individual career plan and the lack in the incentives to the manager and employees in order to satisfy the sharing knowledge.

3.- To what extent do you think these changes are a) feasible and b) desirable?

I think these changes are desirable because against of a traditional organization LO offers several benefits for example: maintaining levels of innovation and remaining competitive, being better placed to respond to external pressures, etc …About if it is feasible I only see possible to make a plan of incentives or programs to increase the team learning.

Speaking about the developing the career plans to increase the motivation of employees, in my opinion I think that is not feasible because there are a lot of barriers. Surely will be more feasible that the involve of the human resource department increases in the promoting the LO culture because until this moment the learning issues was delegated in lines of business and I think that with the involve of the HR department a lot of efforts can be dedicated to the develop a real carrier plans that help to increase the motivation and commitment of the employees.


Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Web Site: ‘peter senge and the learning organization’, http://www.infed.org/thinkers/senge.htm

Wikipedia, ‘Learning organization‘, http://en.wikipedia.org/wiki/Learning_organization

Human Resource Management Lesson 5 Exercise

1.- To what extent do you think that the employment relationship is necessarily based on conflict between employers and employees who have competing interests?

In my opinion the relationship between them should be mutual agreement in which both parties have something to offer although the conflicts always appear when there are relations between two or more parties. It’s very complicated to find an equilibrium point where all parties win, in fact these conflict are minimized only in organization where there are only one party as are the associations of employees (cooperatives).

In a conventional organization each party try to increase its benefits, from the point of view of employees they want to find employment security, quality, motivation, satisfaction, and certain level of reward. From the point of view of employments the aspect more important is the performance which one is a function of motivation and ability according to the Vroom studies (1964). But these aspects aren’t the only because are influenced by the external context (political, economics …) and by the internal aspects (employee capabilities and needs, levels of rewards or benefits …) in several ways.

The state of the economy and the markets modifies the rates of unemployed hence decrease the feeling about the employment security and after the motivation and performance decreases. With these circumstances the employment tries to find solutions complying with legal aspects and with the approval of the trade unions. This argument can be a cycle infinitely and each step is a situation of conflict between parties.

I think that would be good avoid the conflicts but it would be in a imaginary world where every variable would be constant. In a real world is usually to have conflicts where the fighting and bargaining power of each side are focused to increase their own interest. If we see the classification or topologies of conflicts in inter-group relation that are: fight, game and debate (see Wilson. 1999, p 178), the best is to move towards the game or debate topologies and avoid the fight.

2.- What factors influence the extent to which the employment relationship is harmonious or conflictual?

There are several factors that influence in the relationship and the most important in my opinion can be grouped in internal factors and external factors, theses groups can be analyzed at individual level or group level.

As external factors the most important are the status of the economy and legal-political situation, the power of the trade unions and the type of sectors where the company operate. As internal factors some of the most notable are the influence of employee relation decisions, employment security and flexibility, level of benefits that the company hope to reach, grade of commitment of employees and alignment with the company goals.

Depending of the style of management (Purcell, 1986) of each organization the relationship can be more harmonious or conflictual, if the style is consultative the relation will be intensive but in harmony, in opposite will be with traditional style because the degree of relation is low this situation leads to more ups and downs in the relationship even interventions with the trade unions.


Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Corbett, M. (2007) Organisational Behaviour Lessons Notes, Warwick Business School. 2007

Robert H. Rosenfeld & David C. Wilson (1999), ‘Managing Organizations’ (2nd edn), Mc Graw Hill

Vroom, V.H., and P. Yetton (1973) Leadership and Decision Making, University of Pittsburgh Press, Pittsburgh.

Purcell, J. (1986), "Employee Relations Autonomy Within a Corporate Culture", Personnel Management, February.

Human Resource Management Lesson 4 Exercise

1.- Thinking about organisations you are familiar with (it must not be IBM), what mechanisms and procedures have different organisations used for employee involvement and to give employees voice?

The organization that I have chosen to these questions is Lucent Technologies again. I was working in it for almost four years in IT department and I know several initiatives that were launched in order to change the way of doing the things using the new technologies and process optimization. The process which one I am going to speak was called in Lucent as Order Management System (OMS). With this process Lucent tried to increase the productivity, the customer satisfaction, decrease the time to market and minimize the storage capacity.

The initiative started from the CEO and top management of every LoBs (lines of business) involved. The implementation was carry on from the IT department and this department was the leader of the initiative. Lucent is an international company, but this initiative was undertaken only in the region of Europe ( EMEA -Europe Middle East and Africa). Although the solution is at EMEA level and each country should be consistent with the decision taken, there are some degree of independence related with the local aspects as are the issues related with the human resources and sales.

The implementation of the process was done with the use of the ERP of SAP v3 and the success of the new process depended on the acceptance of the employees about the configuration of the ERP for them. Linking with the style of management (based in Purcell, 1986) described in the previous lessons, we can see that the common style used was a consultative or constitutional (depending of department) and is a company where the opinion of employees is much important.

The IT department established several actions to gain the employee involvement, that following the structure described by Marchington and Wilkinson (2008, p.405) can be classified as task-centered and direct. These actions are the following:

  • Task participation and teamworking

The first step adopted was to create a several groups in each country composed by IT members and business members. These groups were divided again, following the different phases of the project as was the phases of business requirement, develop and deployment.

  • Downward communication

Each week the responsible of the project introduced the news in a common repository with the progress of project and one email was sent to the responsible of each department. Each manager and its expert users could use the repository to make their own comment about the progress achieved and expressing theirs needs.

  • Upward problem solving

In order to talk about the comments received and to solve the problems found, had meetings every two/three months in different Europe city. The goal of these meetings was to refine the business requirements of the new system (OMS) with the knowledge of the end users of each country and configure the next steps of project.

2.- How effective were each of these voice mechanisms in a) giving employees an effective voice at work and b) adding value to the organisation?

If we see the actions taken looks like very good options to involve all employees and to have a solution with the convenience of all parts involved in the process. But in fact the project suffered a lot of troubles and even one change of name in order to recover the confidence of the employees participating.

Some of the main troubles was that the employees had a lot of mechanism to give specifications, comments and feedback, but their feeling was that nobody had asked opinion to them before choose the tool (the ERP of SAP) and this situation created barriers and opposition from the beginning.

The introduction of the new system was planned to add value to the company in one year after implementation, but in fact was needed several years more because the adaptation of some groups of end users was more complicated due to they showed apathy in the learning.

3.- Account for any variation in effectiveness of different mechanisms.

At the beginning was very complicated to gain employee involvement and commitment, and it was necessary to develop another intermediate system in order to decrease the time to adopt the system in the entire EMEA region.


Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Purcell, J. (1986), "Employee Relations Autonomy Within a Corporate Culture", Personnel Management, February.

June 06, 2009

Human Resource Management Lesson 3 Exercise

1.- Reflecting on your own experience as an employee and as a manager, to what extent do you think pay motivates or demotivates employees, why?

Thinking about my experience in several international companies and the knowledge in a familiar little company, there are several factors that have influence in the motivation of employees. Depending of the social-economical situation, the age and family situation, there are other factors different to the pay that can change along the time depending of the change of these situations. Following the Pyramid of needs (Maslow, 1943), to satisfy each stage more incentives that the money are necessary.


Figure.1. Maslow's Hierarchy of Needs

The first years in work life, when one is young, single and without family the money factor is not the main. The teamwork, improve the knowledge and good environment in the work are aspect important to satisfy needs, obviously always that the physiological needs are covered.

The things change when increase the familiar and job responsibilities because is need to satisfy several factors as are the familiar needs, in this case the increase of money help to satisfy the basic needs and for several years is motivating, but after if there aren’t another factors, the activity can fall into the monotony and pay is not enough to motivate.

Other way to explain the factors that can motivate to someone is through a Process Theory that define the motivation as a rational cognitive process occurring within the individual, and one of those theories is the Vroom's Expectancy Theory based three aspect like are the expectancy to get very good awards if you work harder; the valence is the importance for each one to have expectancy and this aspect is personal, social and cultural, because there are some social factors that force to increase the importance of to have expectations; the last aspect of the theory is the instrumentality is the belief that if you work to generate some output, part of this output has something for you, and in this sense could be exist the satisfaction to create something and the possibility to receive awards for it.

In my opinion the remuneration is not demotivating, but in several situations of the working life is not enough. There are a lot of systems to motivate and some examples are to take education (i.e. MBA) or to establish a career plan with stages of certification.

2.- Thinking about pay systems that you have experienced, which have been the most effective? Why?

My first job in the family company was a ‘manual’ job where the pay system was hourly rate. But in the rest of my jobs, after finish my university studies, I started to have a ‘non-manual’ job with performance-related pay (PRP) system. In the different jobs with PRP system that I have got the appraisal systems have been different even in the same company but in different periods of time the appraisal systems have been different.

The common factor in all the appraisal systems is that in all of them the percentage of pay related to the own work is low and the rest of the percentages depending the result of the company, division and the own group. I think that the period in which one I have got more motivation was when the degree of personal percentage was higher and when the goals were clearly defined. I think that the best method is when everybody knows the rules of game and the goals are complicated but reachable. I can say this because in some of my jobs the agreement was made directly with my manager and the conditions of it were very fuzzy and nobody else was participant in the agreement. Now in IBM, the situation is different because the conditions of the agreement and the string of approvals are right, but in this case the failure is in the mechanisms to get the measures of evaluation the conditions of the agreement.


Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Corbett, M. (2007) Organisational Behaviour Lessons Notes, Warwick Business School. 2007

Vroom, V.H., and P. Yetton (1973) Leadership and Decision Making, University of Pittsburgh Press, Pittsburgh.

Abraham Maslow Web Site:


Human Resource Management Lesson 2 Exercise

1.- Reflecting on your own work experience, and with reference to the theoretical models discussed in Lesson 1, how would you characterise the role of the HR function in an organisation that you are familiar with?

I am familiar with one company where I was working for four years since 1996 to 2000. The company was Lucent Technologies Inc. (it was bought by Alcatel in 2006) and I worked in its IT department in Spain.


Figure.1. Lucent Technologies Logo from 1996 when it born after spun off from AT&T..

Lucent was a very large company originated by AT&T division, and after several years of very good results, in 1999 Lucent began its decay. Several events related with the labour situation of the employee happened in this period and in order to understand the HR function we are going to review the external and internal context of the company. In relation with the external context the main characteristics are the following:

·        Political and Economic context: In 1996 the conservative party won the elections and did several important changes in the political and economic aspect of the country. The rates of unemployment, with almost 25%, decreased quickly and Spain joined in the UE due to the success results.

  • Legal context: In this period the government faced to the reformation law to free up the labour market in order to facilitate the employment although against the right of the employees, in opinion of Unions.
  • Labour Markets: Its was a period of a very high economic growth, with high inflation rates and where one of the better competitive advantage of the country, that was the low salaries, changed because the salaries started to be not as competitive as before in relation with other countries of East of Europe. During this period Spain lost its competitive advantage (cheap labour market) and started a transformation that until today is needed.
  • Business Sector: The industry sector of telecommunications showed a very big explosion in 1996 to 2001 with the mass use of internet. But in the sector of the internet infrastructure, the crisis appeared some year before, and at the end of 1998 the sales decreased because all customers already had expended a lot of money in hardware to communications and came the time to develop business applications. Lucent started several changes to reduce cost through optimisation of its process and des-invest in some countries as Spain and other mature European countries.
  • Location: Using the model of culture of Fons Trompenaars (1993) the dimensions that best fits with the Spanish culture can be Particularistic, Collectivistic, Emotional and Ascriptive. In case of Lucent is a world wide company but important to know these characteristic in order to understand the behaviour of the managers and no managers employees in Spain.

In relation with the internal context the main characteristics are the following:

  • Management style: The style of management in Lucent is very different of the most of the Spanish companies, in Spain is known as typical American management style. Attending the Purcell's classification (1986) the management style can be classified as collectivistic and in the middle between consultative and constitutional depending of the department because almost the middle of the workers in Spain worked at the production plant. It’s important to remark that in the production department unions were very powerful in this sector.

Management Style

Figure.2. Big picture of booking of school books process.

  • Internal structure: The internal structure was different to the production workers and for the office workers. For the fist the structure was a vertically, but for the rest of them was a matrix structure. Although the general structure was multi-divisional or M-Form structure where each division or department had high degree of independence.

One of the main functions of the HR Manager was managing the Payroll Systems, and due to the new reorganization of the processes and the intention of use outsourcing of some departments several actions was taken in order to negotiate the different conditions with the employees and unions. To complete all the actions by the HR Manager were needed the support of CEO, and this happened because the HR Manager was changed by the CEO before undertaken the reorganization. Following the typology of the HR functions described by Storey (1992) this kind of HR model we can be classified as Change-Makers.

2.- Why do you think HR played this role in the organisation?

With the new external factors and mainly with the factor of economic situation in the Sector, the strategy of the company changed and Lucent started a hard change process. This process started making outsourcing of several departments as was the Quality department, IT and some production areas, even some functionality in the HR department changed and for make it was needed to have the commitment of the HR manager in order to implement difficult decisions and negotiations.

Typology of HR functions

Figure.3. Typology of HR functions.

3.- What are the strengths and weaknesses of this role in the context of the organisation?

The main strengths of the role were to implement the decision of the CEO with ‘Iron hand’ in order to reduce its main production cost. The labour of HR Manager should address the constraints correctly, as are the Spanish law, union force, the directive company at world wide level without reduce the productivity of the departments not involved in the changes.

The main weaknesses in the management of the HR manager was the ability to maintain the employee morale and productivity during the negotiation process in order to maintain the same knowledge and people after outsourcing.


Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Purcell, J. (1986), "Employee Relations Autonomy Within a Corporate Culture", Personnel Management, February.

November 02, 2008

Operations Management Lesson 2 Exercise

Take two processes with different volume and variety characteristics. Profile these processes and establish the process choice and layout decisions they have taken. Critically appraise the design decisions taken.

We are going to describe two process, first of all is a process booking and packing service of school books in a very well known big shopping company in Spain, called El Corte Ingles. 

Box Book

The second is the process  of a modern bakery dedicated to manufacture of frozen dough.


Processes Profile

We are going to see its profiles following the ‘four Vs’ model from Slack et al. With the following result for each of them:

Booking of School Books process:

    • Volume: This process has a very peak volume at the start of the academic year, because is a temporal service. For this reasons is difficult to the systematisation of the activities, both in the store and in the warehouse, nonetheless the process in the warehouse could be reach high degree of automatic with the use of techniques used for others types of products, through robots can increase the effectiveness of picking process.  This factor is medium.

    • Variety: This aspect offers several possibilities because there are a lot of schools, years and families, then the configuration of the pack could variate a lot but under bounds. This factor is high or medium high.

      • Variation of demand:As we have commented before, this process is temporal depending of the start date of the academic year but it also depends on the consumer level, because that kind of service is more expensive than buy the books separate. This factor is medium-high.

      • Visibility: Part of the process is in front of the customer because in the step of take requirements, sale and delivery should be with interaction of them. Another part of the process is in the warehouse and there is a low level of visibility. Medium-low.

      Manufacture of Frozen Dough process:

        • Volume: This is a high volume process, thus it allows to systematisation of the activities needed to perform it. 

          • Variety: This factor is low because the types of product elaborated are very well defined, only with when a new product is launched the process can suffer a little modification.

          • Variation of demand:In this case the demand of this kind of products are very constant for captive customers, and only can change when there are expansions plans. This factor is medium-low.

          • Visibility: All this process are done without visibility of the customers. Low level.

          The following figure shows the profile of both processes:


          Processes Design

          To evaluate the design of these two processes we can consider the Volume-Variety requirements, Process Types and Process Layouts aspects.

          Booking of School Books process:

            • Volume-Variety requirements:As we have seen are medium requirements of volume and medium-high of variety. But this relation could change due to the variety depends of the volume.

            • Process Types:the natural type is the “service shop” but as it is a mix between services and products in the warehouse process the type is “batch” or “jobbing” due to dificulty of picking process.

            • Process Layouts:The part of the process related with the service is “functional” layout, and the part related with the warehouse could be “cell”.

            Manufacture of Frozen Dough process:

              • Volume-Variety requirements:In this case there are high degree of volume and low of variety and we could move thru the ‘Natural’ line of fit of the ‘product-process’ matrix.

                • Process Types:its type is clearly “continuous” because is a process very easy and with high volume.

                • Process Layouts:In this case the type of layout is also quite clear because is a classic manufacture type hence is Product layout.

                The following figure tries to summarised what have been exposed above:



                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

                El Corte Ingles. 


                Corporative web site:   http://www.elcorteinglescorporativo.es

                Commercial web site: http://www.elcorteingles.es/

                Bakery Sector

                Berlys S.A. web site: http://www.berlys.es/

                BIMBO S.A. web site: http://www.bimbo.es

                SARA LEE BAKERY INC. web site. http://www.saraleebakery.com

                November 01, 2008

                Operations Management Lesson 3 Exercise

                This is a good time to complete a process map of your own and comment upon the findings. If you work in an area with high levels of contact with customers, you should think about extending the analysis into a service blueprint, which will define degrees of visibility of the process.

                I have chosen one of the process described in the blog of lesson 2, this is the process of the booking and packing service of school books in a very well known big shopping company in Spain (El Corte Ingles). The activities that cover this process was implanted in Spain several years ago, but in the last years the strong competence of hypermarkets have forced to the company to redesign the activities and treat it as process. 

                The main blocks of the process are shown in the following figure:

                 Big Picture Booking Process

                Each of these boxes are composed of several sub tasks (or sub-processes) and in the following figure are shown with more detail:


                As it can be seen above, these flows describe the process of the service, but it is a service with some degree of product because one part of the service is to create a pack through a manufacture process. In the production phases are include the reception of material, in this case are books, and the picking and packing of them. Is important to remark that in its face of service is where there are defined some indicator of performance (KPIs) in order to know in which point of the process there are bottleneck or lost of efficiency. 

                In terms of visibility, a very big part of the process has a low and medium visibility to customers.  For this type of services, is very important the interaction with the customer in order to reach accuracy with his requirements. In the reception is very important too the interaction, mainly when could be have some trouble in the process of packing. In adition is important to get the feedback of the customer and harvesting process.


                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

                El Corte Ingles. Web site (http://www.elcorteingles.es/)

                Operations Management Lesson 8 Exercise

                Process map a process (or use one you have already compiled earlier) and assess each process step to decide whether or not each step adds value from a Lean thinking perspective. Pay particular attention to delays and to quality checking points. Assess the throughput efficiency of the process. Is a demand-pull or Kanban system used to control flow?

                We are going to take the process of the booking and packing service of school books in a very well known big shopping company in Spain (El Corte Ingles), this process have already been defined in the others chapters (2,3 &4).

                This process can be classified as a ‘pull’ style production control because the process does not start until a customer makes his purchase order with previous selection of “Bill of Materials” (his books or items). 

                “Lean systems use ‘pull’ style production control, where downstream departments announce their requirements to upstream operations.” (OM Study Notes)

                ECI process - Booking books

                Each step of the process flows as follows:

                1. In the previous step to specifications phase, the company searches and receives the list of books required by the public school and the most important private schools for children from 3 to 17 years old.

                2. In the specification phase a saleswoman speak with the customer in order to determinate the school and years of his children. In this moment the saleswoman can reach an agreement with the customer and start the process through launching a order to the warehouse. In this step is important to remark as a lean thinking characteristic that depending of the date of booked or purchase order the customers have discount in price or no.  And only it is possible to make a order one month before the delivery of books.

                3. The responsible of filter the orders in the warehouse, approves or refuses the orders and after the orders are dispatched to specifics areas. In the case of booked orders of books is a pick and pack books area.

                4. Every day ERP system is verified by the responsible of this area in order to determinate the number of orders that can be completed the next days and launch the orders to the providers of books if the quantity per each provider is enough. In this point the system tries to increase the efficiency of the workers through of concentration of continuous days dedicated to do the packing.  One of the main measures against the stop the chain of packing is determinate the number of books remaining to complete the pack and establish a threshold from which the pack can be done assuming this situation.

                5. Once the group of pack is ready these are distribute to the stores the next step is make the notice and deliver to the customer and finally close the sale. In this case if the pack is complete the sale can be closed when is paid but if the pack is incomplete the process can be launch again.

                From a lean thinking perspective the process we can say that is well defined, mainly for these reasons: the orders are launching when is needed, there are a specific levels of quality thinking in the completeness of the pack and finally the process tries to delete the waste in order to minimising the cost. Nonetheless the company could enhance this process in the following points:

                Waste elimination

                We have already said that is almost right but the process can be waste when there are problems in the reception of books and is impossible to complete the pack with the level of quality required. Another point is when the pack is incomplete, because cause duplication effort in the sales and production phase.

                Employee involvement

                Sometimes the delivery process can be better if the notice to mobile or telephone will be done  without forget to anybody. The employee involvement should help this company to enhance the throughput efficiency of the process and the customer satisfaction.

                Continuous improvement

                The company has some service levels agreements described in its proceses but this aspect can improve something. Some of them are the state of the books, the completeness or accuracy of the pack.

                As we have comment the process looks efficient (for me is complicated to access at company data but in general terms is one of the more efficient Spain companies). We have commented too that until there aren't enough stock level the packing process don't start, that mode of management is appropriate for a Kanban system.


                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

                El Corte Ingles. Web Site (http://www.elcorteingles.es/)

                Operations Management Lesson 7 Exercise

                Take a look at a material processing operation. What types of stock control methodologies (re-order point, MRP, ERP etc.) are used? Comment on the possible reasons for the choice of method. If you can, conduct a sample Pareto (80/20) analysis of stock levels and stock usage (by value). How effective is the stock management?

                I will explain this blog based on my own experience with a factory bakery traditional and the knowledge of the process in the current manufactories. The activity of the bakery plant is based in a continuous process that only stops weekends and twice a year to maintenance activities. This is the typical layout of a current bread plant:


                The main blocks of the process are Material intake, Production and Shipping. In all this process there are two main warehouse that are for the inputs and for the outputs. In this Blog we are going to see the inventory management choose in the material intake and shipping phase.
                In order to hold the production line and satisfy the levels of demand the factory holds two inventories with very different characteristic. The first of them is the input inventory which one works under the Material Requirement Planning (MRP) pattern, and the second one is  the output inventory that works with the Reorder Point (ROP) pattern.
                Each ingredient in the baking process have their own requirements when it comes to receiving and storage. For flour, for instance, the demands are to empty tanker trucks with as little dust as possible, record amounts exactly, and make intermediate storage in the silos transparent. All other ingredients must be recorded quickly and accurately, stored and managed appropriately, especially regarding expiration dates. For these reasons the use of MRP are justify, in this way they can hold fresh the ingredients.
                The Output inventory follow the ROP pattern and when the stock level of the some kind of products reach the re-order point, the order to production stage is launched. The intention of adopt this method is to hold a constant the demand of production, that is only possible with the current style in the bakery process because the final output is frozen bread and is possible to hold a safety stock in the freezers.
                If  we see the linking of the items of the input and output inventories with the stock control ABC or pareto analysis, we has the following relation:

                A.- High Value Items: this can of item corresponding with the items of input inventory, although really only will be need for some of them.
                B.- Medium Value Items: currently there are no items in this category, but will be good to have a better distribution of the items independently of the I/O inventories.
                C.- Low Value Items: in this class are the output items, although some of then could be classified as medium value.


                Finally my suggestion is that the stock management efficiency can improve if there are a different styles of inventory management per each type of ingredients (in the input inventory) and per each type of final product (in the output inventory).


                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School
                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

                Backery Sector
                BIMBO S.A. web Site (www.bimbo.es)
                SARA LEE BAKERY INC. web Site. ( www.saraleebakery.com)

                Operations Management Lesson 6 Exercise

                Find extreme or good examples of the following practices and justify the reasons for their adoption:

                • Level Capacity Management

                The telephone network is  a good example of level capacity demand. The network are designed to satisfy very big capacity for a huge areas of population. The traffic of data varies a lot during the hours of the day and during the days of week. There are moments with a low traffic and others with almost “traffic jam”.

                Now in Spain are increasing the use of ADSL lines due to the increasing of population and the currently needs. For these reasons the limits of capacity can be reach easily in a high demand hours although in others hours be fine.


                • Chase Capacity Management

                We can consider a fast food restaurant close to cinema and business centre. As most of fast food restaurants, managing sales capacity is really difficult, the most sales occur during the lunch time or at the exit of cinema in week end. One of the main characteristic of this type of business is that their product must be fresh when are sold and it is not possible to produce large amounts during periods of low demand to be warehoused and sold during periods of high demand.

                For these reason the restaurant use the variation in the labour to adjust the capacity and respond to the variability of demand. The variation of the labour is done through of the arrange the working times to adjust the capacity and the use of part-time and temporary employees.

                • Yield Management

                We can consider the bank sector that in some of theirs services as open account, debts/credit cards or deposits follow a yield management strategy get the maximum revenue possible with demand fluctuations.

                They launch specific marketing campaigns during Summer or Christmas in orden to get customers before the spendings in holidays or gifts. Other example is the offer of young card during the start of the students’ seasons to capture as much of them as possible to do the paid to the school or university.


                Some of the characteristics of this type of business is that always doing market studies in order to better understand customer behaviour and launch new attractive ‘bank services'

                • Queue Design

                We can see some examples in the airport (i.e. Barajas in Madrid) where we can see a lot of kind of queues. I am going to explain the queue of check in.


                This queue has differents configurations depending the volume of people. Normally is one queue one server for each trip but if the flow of people increase new server are include with only one queue. At the moment that the stewardess or assistants appreciates that there are very different type of people then they open a new queue and change the design to one queue per server and several servers. 

                Other kind of queue are when this service is offered by internet. In this case we are in front of a new casuistic because in this kind of services there are dependency of the technical infrastructure. At technical level we are speaking of the same configuration that before (1 or N queues or threats and 1 or N servers or processors) but from end user point of view they are in a race in order to put first in the queue.


                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London




                Back Sector




                Operations Management Lesson 5 Exercise

                The IT Sector has a distinctive pattern of levels of integration. For one section of IBM BCS, write about the advantages and disadvantages of having an integrated supply chain. Comment on your impression of the levels of market force that apply to your chosen section.

                In IBM BCS most of its projects are focus in technology consulting and this kind of services are possible with own consultants as main raw material. In this kind of professional services the supply chain start searching the proper resources depending on cost constraints, type of skills and availability of resources.

                To analyse the advantages and disadvantages I am going to describe the different sources of resources in IBM GBS, that are the following:

                • IBM local resources: This kind of source is the primary option because the main target of all delivery organization in IBM BCS is to hold high levels of utilisation rates in its employees.

                • IBM Global Delivery Resources: that is the second level of prioritisation in the resource allocation process. The GD has different models, but although at the beginning of use this source the priority was over the offshore, currently the prioritisation is in this order nearshore, offshore and in the last onsite. The offshore has sense when is need a big mass of skills consultant to support projects around the world. And the onsite is right when is needed a very specific skills.

                • Other IBM Locations:In cases where is needed a very specific skills the next source of resources are others IBM locations, first to all in the same country or region  and after GD onsite.

                • Subcontractors: This source has been one of the main sources but now the prioritisation is in GD always after the local resources. Only when there are not available locally and there are local limitations to use IBM Global Delivery, the source of resources is to subcontract.

                As we can see with this kind of sources, the processes of get it are different and each one has its advantages or disadvantages. The main disadvantage is the prioritisation of locally resources because is difficult to apply the market force, the advantage, of the use of the local resources, is the speed, the commitment, and the skills because this chsaracteristic are complicate to find outside.

                Currently the customers are not familiarising with the use of Global Delivery resources even with subcontracted resources, for this reason the company should hold a important number of local resources and with consequent high degree of integration supply chain. The strategy of IBM GBS is to increase the use of Global Delivery in order to apply the market force and get better services with its subcontractors. 



                Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

                Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

                IBM Global Services – Global Business Services




                Operations Management Lesson 4 Exercise

                For a product or service of your own choice, complete a QFD matrix that relates customer requirements to design characteristics

                We are going to treat the process of the booking and packing service of school books in one of the most famous department stores in Spain, it is the El Corte Ingles.

                El Corte Ingles

                Now we are in the phase of the service design and we need to define the characteristics of the service. Some of these characteristics will be compared in the QFD Matrix with others competitor as Careforur, a international hypermarket, and with “La Casa del Libro”  traditional bookstore in Madrid.

                After get multiples ideas and see the accuracy of it in term of feasibility, acceptability, and vulnerability criteria, the preliminary design has be done. Now we are going to evaluate this design and try to identify the gap between the  assessment of the customer’s needs and the specification of components in order to improve the design. For do that we are going to use the Quality function deployment (QFD) tool, listing and prioritizing the main features.


                The QFD tool lets us to think in  ideal features rather than simply focusing on narrow technical specifications. For this process we will attend the characteristics at the first level analyzing of the “whats” and “hows” aspects.

                The Whats

                • Box Shape: to avoid breakages and to make easy the transportation for the end users is a factor very important. The goal is that each user could bring his pack with a handle.  

                • Reusability: will be desirable the reuse of the box for example to keep the books of others years

                • Price: in an competition market is a very important factor, although the end users know that is a service with value added.

                • Communication: a good communication with the customer when is available the pack of books is desirable factor. 

                • Completeness: some times the pack is not complete because some books are not in stock and to complete the pack is need wait some weeks to receive it of the provider.

                • Accuracy: critical factor is to delivery the books that really corresponding with the school.

                • Delivery Speed: this a desirable factor and will be a advantage competitive.

                The Hows

                The way to answer to customers’ requirements is cover with following aspects:

                • Identification end users needs: The value added is to know the list of books corresponding for each schools, in this way the only requirement is to ask about the name and course of the each student (i.e. each children). 

                • SMS Technology: in order to satisfy the communication and delivery speed requirement the use of SMS technology will be the solution.

                • Sector/Industry Knowledge:a big retailer has enough knowledge about how explain the process to its customers, thought customer care point and call centres.

                • Warehouse: to have a warehouse with a very good process of picking and packing is essential to completeness.

                • Cardboard box: the books will be safe with a packing in a removable cardboard box and after transport its the cardboard box can be saved or reused for keep others books.

                The QFD Matrix

                All of this has been summarized in the following figure



                • Walley, P. (2008)  Operations Management Study Notes, Warwick Business School
                • Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London
                • El Corte Ingles. 



                • Carrefour



                • Case del Libro