Marketing Debate

Is Consumer Behavior More a Function of a Person’s Age or Generation? MKT 6661 Strategic Marketing Management Troy University Introduction A heavily debated issue between marketers is what drives consumer behavior? There are two noted positions in this debate, one that believes that age differences are the deciding factors of a consumer’s wants and needs and others make the case that cohort and generation effects are better suited to uncover the consumer’s desires. Marketers have a major responsibility to identify and reach out to the marketplace and find out what influences an individual’s purchasing decisions.Rather these decisions can be sorted based on a group of individuals shared experiences or by simply bunching these individuals into their respective generations but a system has to be in place to provide insight to what is the best way to channel into the consumer’s buying methods. So what’s all the Fuss About? The question that we ar e trying to answer is, is consumer behavior more a function of a person’s age or generation? There has been inclusive research on the driving forces of what drives consumer choice.A pattern has been discovered that people who make similar purchases may also share other specific social-economical similarities. This gives way that there is some background to be learned about these purchasing groups. Cohorts, or Aged-Based Marketing, tend to share a significant number of experiences, goals, and values. (Bidwell 2009) The main principle behind a cohort is that individuals make purchasing decisions based on events that they experienced through their lives, such as their childhood, adolescents, early adulthood and so forth.These events, called defining moments, influence attitudes, preferences, values, and buying behaviors, and these attitudes, values, and buying-behavior motivations for each cohort remain virtually the same throughout their lives. (Bidwell 2009) In contrast to coh orts, on the other side of the debate, the method of evaluating consumer behavior by placing consumers in a group of individuals born and living about the same time. This is the practice of multi-generation marketing. Each generation has unique expectations, experiences, lifestyles, values, and demographics that influence their buying behaviors.Multi-Generational marketing has a broader platform in which individual consumers are placed. Some specifics of these two marketing segments can draw some contrast between the two. To use the cohort model most effective there must be a combination of people’s ages and information about their particular life stages. Some examples of different life stages are empty nesters, retirees, young families, and your careerist. (Bidwell 2009) Most consumers’ life stages are fairly predictable so it provides for their purchasing habits to be predictable.There can be contrast amongst different cohorts as well, depending on the unique events that an individual shared with others in the same cohort. According to Charles D. Schewe, a professor of marketing at the University of Massachusetts at Amherst and consultant to numerous companies, there are seven American cohorts. The first cohort being the Great Depression cohort, born between the years of 1912 and 1921 and represent approximately seven percent of the U. S. population, secondly is the World War II cohort born between the years of 1922-1927 and represent about five percent of the U.S. population, the third cohort is known as the post WWII cohort, this group was born between the years of 1928-1945 and represent about twenty three percent of the U. S. population, next are the Baby Boomers I and Baby Boomers II cohorts, they represent together about forty three percent of the U. S. population and were born between the years of 1946 to 1964, the sixth cohort are the Generation X’ers who were born between the years of 1966 and 1976 and make up approximately twen ty two percent of the U. S. opulation, and lastly there are the N-Gens, born from 1977-1987, and make up twelve percent of the U. S. adult population. ( Bidwell 2009) Though these cohorts span over a number of years they are all linked by a series of events that follow a chronological order. Even though a cohort places consumers in segments based on lifestyles but the time in which these events occurred can have drastic effect on their purchasing choices. Looking at the metrics of generational marketing on surface can resemble age-based marketing very closely.This is not an intentional consequence to be vague in practice or by definition but help narrow the message down that the marketer is trying to relay. Take a look this table that depicts the six U. S. Generations. Generation| Date of Birth| Number| Age (in 2010)| Pre-Depression| Before 1930| 12 MM| 81 and above| Depression| 1930-1945| 28 MM| 65-80| Baby Boom| 1946-1964| 80 MM| 46-64| Generation X| 1965-1976| 45 MM| 34-45| Gener ation Y| 1977-1994| 71 MM| 16-33| Generation Z| After 1994| 29 MM| Less than 16| (Marketing to the Generations 2010)Looking at the table, generation analysis and Cohort effects follow a very similar chronological order and demographics but generation analysis is a much broader form of marketing intelligence. At best we have put a group of consumers at the same place at the same time using this method. By knowing the generation the consumer was born it does help the marketer pin point the most effective way to communicate with the consumer taking a macro overlook of the consumer. Based on what generation a consumer was born in gives insight of how techno savvy or financially conservative, education level the consumer received.Conclusion As I really think about the original question and look for the answer it seems to me that these two methods work in tandem with each other. The bigger picture is understanding the holistic approach to getting your message across the consumer. Cohort i s a much more defined process, in that it outlays the needs of the consumer at different times in their lives but knowing the generation that the consumer helps to point the marketer in the right direction when extrapolating data from individual.Undoubtedly to me both are instrumental in a effective and efficient marketing information system References Bidwell. 25 March 2009 Cohorts: Age-Based Marketing. http://www. bidwellid. com/resources/white_papers/Bidwell_ID_Cohorts. pdf Williams, K; Page,R 2010 Marketing to the Generations http://www. aabri. com/manuscripts/10575. pdf Kotler, P. , & Keller, K. (2012). In K. Keller, & P. Kotler 14th ed, Marketing Management

Postponement

Postponement Strategy Materials Management End Term Project (Term –IV) Date: 15th September 2009 Submitted To: Submitted By: Prof. Vivek Kumar Namrata Agarwal(81031) Prof. Kaushik Paul Neha Gupta(81034) Contents Chapter 14 Introduction4 1. 1 What is Postponement? 4 1. 2 A specific example5 1. 3 Postponement in operation7 Chapter 29 Literature Review9 Chapter 314 When is Postponement Appropriate? 14 3. 1 The Postponement/Speculation (P/S) Matrix14 3. 2 Costs & Benefits of Postponement15 3. 2. 1 More variety15 3. 2. 2 Inventory reduction18 3. 2. 3 Better forecast accuracy19 . 2. 4 Inventory cost reduction20 3. 2. 5 Logistics cost reduction22 3. 2. 6 Improved customer service levels22 3. 2. 7 Increased product development cost23 3. 2. 8 Increased manufacturing cost23 Chapter 424 Case Studies24 4. 1 Automobile Manufacturing: GM24 4. 2 Aircraft Manufacturing: Embraer26 4. 3 Clinical Equipments: Dade Behring29 4. 4 Sports Goods Manufacturing: Reebok32 4. 5 Xilinx34 Chapter 536 Concl usion36 Chapter 638 Future of postponement38 6. 1 Services and postponement38 References40 Chapter 1 Introduction Over the past 2 decades, logistics activities have gained increasing strategic importance for most companies. Fixed costs of production have increased, consumer demands have become more complex and are harder to predict, both in time and place. Technology is rapidly changing and product life cycles have shortened while product range has increased. Now more than ever, companies are faced with the challenge of producing an increasingly large variety of products in a responsive manner while keeping materials and inventory to a minimum. These issues represent significant challenges for companies producing and selling in a variety of international markets. Not only does demand vary from country to country, but products need to be altered for different markets in consideration of differences in language, culture and local standards. Increasingly, companies are using a strategy known as postponement or mass customization to improve customer service and minimize the risks associated with making different products in different countries. This paper presents a framework for understanding postponement and how it can be implemented. Also, with the help of successful case studies potential savings as well challenges in implementation will be highlighted. . 1 What is Postponement? The term postponement refers to delayed decision-making about a product. It is beneficial to delay commitment to product-specific characteristics as late as possible in order to avoid a mismatch between orders and inventory on hand. The length of delay is specific to a product but the common strategic motivation is to gain better information about customer demand by w aiting to customize a product for a particular market or customer. At the point of postponement a standardized module or platform starts to acquire customer or market specific characteristics. Figure 1-1 shows the spectrum of opportunities for postponement that extends from procurement to distribution. The point of postponement can occur as early as the design phase and as late as packaging and distribution. Postponement at the manufacturing stage has arguably the most potential for cost savings in inventory due to risk pooling. Other points of differentiation can occur in the assembly, labeling, packaging, or distribution phases. Some postponement can even occur after the point of sale in the form of service offerings. [pic] Figure 1-1: Possible points of differentiation in the supply chain Postponement enables forecasters to make better predictions about end product demand over time since the standard module is built-to-forecast and the finished product is built to a better forecast or even built-to-order. Lee and Whang [20] observe that shorter the time horizon over which predictions are made, the more accurate the forecast. The benefits are better end product forecasts and the ability to respond quickly to demand signals by holding unfinished goods in inventory awaiting final assembly or customization. Postponement also creates opportunities to lower inventory costs due to risk pooling because goods are kept in unfinished or component form and can be used to assemble more than one type of finished goods. The monetary value of an unfinished good is less because it is not committed to becoming a finished product and lacks the added value gained in final assembly. 1. 2 A specific example Consider a common case of postponement involving a fast food restaurant. Burger King started a trend with the â€Å"have it your way† marketing jingle as a way of advertising the value of getting a customized sandwich – fast! This strategy ensured the customer that each order would be made individually at the time of purchase – not taken from a batch of pre-made products. In a restaurant, ingredients are ordered in aggregate because it is not known what the final customer orders will be. Ingredients that are common to all sandwiches, like buns and lettuce, are ordered based on a total forecast of sales for each type of sandwich. Having a bun and lettuce ready and waiting for final assembly is the â€Å"platform† for the sandwich. The rest of the ingredients, like cheese, meat, and pickles, are components that are specific to each end product. If more of one type of sandwich is ordered or less of another, the total number of buns is not affected by this deviation in demand, however, the amount of cheese would be. It is much less costly to throw out a piece of cheese and use the platform for another order than to throw out an entire sandwich. At Burger King, inventory is managed at the aggregate level. There are four choices of meat and three different types of bun. In addition to buns and meat, there is the choice of cheese, bacon, lettuce, tomato, pickles and onion. In total Burger King can produce 768 different sandwiches as show in Table 1. 1. They know that it is costly to try and predict individual customer’s preferences so they aggregate orders into common platforms which consist of a bun, patty (chicken, beef, fish, or veggie) and lettuce, reducing the options from 768 to 128. Once common components are paired together in a platform, the number of options reduces dramatically because variety is determined by multiplying the number of options together. Once the platform is specified by a customer the rest of the sandwich is made-to-order. Component |Number of Options | |Patty |4 | |Buns |3 | |Cheese |2 | |Bacon |2 | |Lettuce |2 | |Tomato |2 | |Onion |2 | |Pickle |2 | |Total Combinations |768 | Table 1. 1: Sandwich options at Burger King This example illustrates how postponement through platform design and stocking individual components instead of finished goods is able to mitigate the risk associated with producing a wide variety of products. This concept can be applied to more than just food. Examples of products which can benefit from postponement include consumer appliances, automobiles, apparel, and even airplanes. These products have one or more of the following characteristics: high degree of forecast uncertainty, modularity, and high inventory carrying costs. 1. 3 Postponement in operation Operational postponement can be applied in one of two ways – manufacturing and assembly postponement and logistical postponement. Manufacturing and assembly postponement involves the engineering of a product as a module or platform which can take on several different features thereby increasing the variety of end products. The point of postponement can occur as early as the design phase. The intermediate product is stored in inventory and awaits customization. The value added through assembly or manufacturing may be performed at a finishing facility or at a warehouse just before shipping. Manufacturing and assembly postponement involve decisions made while the product is in production. Engineers seek to design a product as a module or platform which can accept different attachments or features in order to transform the appearance and or function to increase product variety. This concept was referred to as a â€Å"vanilla box† by Swaminathan and Tayur [42] because the generic platform is one without any customized value and is therefore the common denominator among a family of different products. Logistical postponement takes into account all other types of postponement involving logistical decisions like packaging, labeling, and distribution. Packaging and labeling postponement traditionally applies to small consumer goods products like razors, batteries, compact disks, film, and snack foods. Large retailers like Wal-Mart and Target require different configurations of packages to accommodate their customer demand and shelf space capacity and to differentiate commodity products. Gillette is well known for their packaging postponement operations. In 1996, Gillette decided to outsource the packaging of their health and beauty items to Sonoco. Bulk quantities of products are sent to Sonoco to await final packaging. Once orders are received appropriate packaging configurations are assembled and shipped to retailers. Manufacturers spend a significant amount of capital and labor trying to satisfy the variability in demand for different configurations for their retailers. However, companies like Gillette, that focus on their core competency, innovating and manufacturing razors and razor blades, push the risk onto their packaging supplier. Sonoco assumes the risk of forecasting for the different retailers which allows Gillette to produce to an aggregate forecast. The benefits for Gillette included a reduction in order fulfillment time from six weeks to one, a 15 percent decrease in packaging inventory, a 10 percent improvement in inventory accuracy, and a 15 percent reduction in packaging costs. Not only does this save Gillette from mismatching demand and configurations, it allows them to focus on engineering, design, and manufacturing of new products instead of packaging. Gillette avoided plant expansion, has a focused factory workforce and is winning favor with retailers by being so responsive. Another example of logistical postponement is the postponement of decisions made about the product during its distribution lead time (from finished product to customer delivery). Whirlpool, a popular manufacturer of household appliances, provides a good example. Customers of Whirlpool include retailers like Sears and Home Depot. Holding inventory of large appliances such as refrigerators and washing machines at local stores is costly because of the high product value and the space taken up in a back storage room. For this reason Whirlpool will send finished goods to a central distribution center and ship directly to the home once a customer order is placed. This method saves the retailer in inventory cost and eliminates additional transportation cost by bypassing the retailer. In addition, it reduces the risk that is inherent in sending a dedicated number of products to individual stores and having to transship orders between retailers. Chapter 2 Literature Review Sources date the idea of postponement as far back as the 1920s and the first use of postponement as a manufacturing strategy as early as the 1950s. Early mention of postponement suggested that costs due to risk and uncertainty were a function of variety and that an efficient means of producing a product is to â€Å"postpone changes in form and identity to the latest point in the marketing flow [and] postpone changes in inventory location to the latest point in time†. In 1965, Louis Bucklin recognized that little had been done in the area of postponement despite its tremendous potential for cost savings. He defined total cost as the sum of inventory holding cost and delivery cost, both of which are a function of delivery time. He argued that â€Å"a speculative inventory will appear at each point in a distribution channel whenever its costs are less than the net savings to both buyer and seller from postponement†. In other words, postponement is not cost effective when there is sufficient information about demand to produce finished goods in mass and store them in inventory. For some products it makes sense to postpone the finishing process by introducing a finishing cost and increasing the delivery time because the product is not readily available from stock. Zinn and Bowersox [50] classified postponement into five distinct types; labeling, packaging, assembly, manufacturing, and time. Labeling postponement assumes that products are standardized until they receive a label distinguishing them by brand. Packaging postponement is best suited for products in which variation is determined by package size. Paint, chemicals, medicine, razors, and many food items sold in bulk are good candidates for packaging postponement. Assembly postponement is applied to products in which variety is based on cosmetic features like cars, iPods, t-shirts, and printers. Hewlett-Packard (HP) provides an excellent example of assembly postponement. Printers designed for different global markets are inherently the same product except for country specific power supply modules, power cord plugs, and instruction manuals. HP makes two types of printers in Vancouver: a US version and a generic version that is customized once it reaches a distribution center in Europe, Asia, or the Pacific based on country specific orders. One benefit is decreased transportation cost because printers are shipped in bulk and are considered †vanilla† until they receive the value-added accessories like language manual and power supply. Manufacturing postponement occurs when parts are shipped to the finishing center from more than one supplier. It has the greatest potential for cost savings in inventory because the value of the product increases through the addition of each successive component. Manufacturing postponement usually results in higher production costs. The increase is due to the capital cost of switching machinery between different types of variety and shipping them to different finishing facilities. Time postponement occurs when finished products are shipped to centralized warehouses closer to the customer than the manufacturing location. The motivation is to increase customer service levels by decreasing customer lead time and to respond quickly to orders by placing inventories closer to the customer without committing to an individual order. |Postponement Type | Potentially Interested Firms | |Labeling |Several brand names | | |High unit value products | | High product sales fluctuations | |Packaging |Variability in package size | | |High unit value products | | |High product sales fluctuations | |Assembly |Selling products with several versions | | |High volume incurred by packaging | | |High unit value products | | |High product sales fluctuations | |Manufacturing |High proportion of ubiquitous material | | |High unit value products | | |High product sales fluctuations | |Time |High unit value products | | |Large number of distribution warehouses | Table 2. 1: Poten tial Utilization of Postponements The final outcome of their research is a framework which serves to assist managers in determining what type of postponement is best for a given product or supply chain structure. Table 2. 1 shows a list of the postponement types and the firms which would benefit from implementing each type of postponement. Swaminathan and Lee [42] go further and identify the factors which influence the costs and benefits of postponement as market factors, process factors, and product factors. Market factors refer to characteristics of demand and uncertainty. Process factors refer to characteristics of operating policy within the firm as well as the external supply chain, such as managerial support and the location of and relationship with suppliers. Product factors refer to the design and characteristics of an individual product such as integral versus modular and inventory carrying cost. They also highlight enablers of postponement such as process standardization, process resequencing (redesigning the assembly process to move value-added processes closer to the customer), and component standardization. Redesigning products with these characteristics makes postponement possible and reduces the risk to the manufacturer by eliminating redundant processes and designing products to be modular and component interfaces to have standard ports for easy assembly. Alvin Lehnerd and Marc Meyer [21] offer a detailed look at the benefit of engineering products to be platforms for a family of different products. The authors define two terms which are the basis for postponement. †¢ Product platform – a set of common components, modules, or parts from which a stream of derivative products can be efficiently created or launched †¢ Product family – a set of products that share common technology and address a related set of market applications These are both concepts that Black and Decker (BD) considered when they started to redesign their line of power tools. In the 1970s BD replaced customized parts with standardized components, interfaces, and connections in order to pool the part inventory and save on component inventory costs. Components included common screws, gears, and the motors which powered 122 different power tools. At a cost of $17 million over three years, BD was able to fully integrate its supply chain, reduce scrap rate from six percent to one percent, reduce failure rate from 11 percent to less than five percent, and reduce the selling price by half while still maintaining a 50 percent margin. BD was also able to reduce the number of suppliers and push its competition out of the market. This is one of the first cases of postponement using product platform design. Product platforms are also common in automotive and aircraft design. Lee, Billington, and Carter [20] discuss Hewlett-Packard’s strategy when it created a single platform for its DeskJet Plus, Deskwriter, Deskwriter Appletalk, and the DeskJet 500 series. A major source of variability for HP was the final shipping destination. HP ships its DeskJet Plus printers to North America, Europe, Asia, and the South Pacific. Each one requires a different power supply module and language manual. Under the â€Å"DC-localization† initiative printers are shipped from the manufacturing center in Vancouver and arrive at a local distribution center (DC) without language manuals or power supply modules. The DC supplies the remaining country specific features and packages the printers for final sale. This allows HP to pool the risk of stocking inventory by destination. Taking the process a step further, HP realized that Vancouver was close enough to the US where it could act as the local DC and hence two different types of printers are produced; US and non-US versions. This example illustrates how postponement is used in multiple ways for a single product. The designers at HP had to create a printer with a generic power supply port which is a form of assembly/production postponement. The local DCs had the job of assembling a final product complete with instruction manual, power supply, and the appropriate packaging material. Robert Stahl and Thomas Wallace [47] propose a framework for implementing postponement by classifying products according to two factors; product complexity – the number of product varieties, and speed – the time from customer order to delivery. This results in four levels of differentiation as shown in Figure 2. 1. [pic] Figure 2. 1: Complexity vs. Speed Matrix [47] Companies in each of the four quadrants have different challenges when adopting a postponement strategy. For example, a company in quadrant B produces a product that has very little variety but takes a long time to produce and deliver to the customer. Wallace and Stahl suggest that a company in this quadrant focus on speed by reducing the lead time from suppliers and expedite the delivery to the customer. They can accomplish this by implementing lean manufacturing initiatives, improving the work flow, and reexamining the location of their suppliers in terms of distance to the customer. This dilemma illustrates the trade-off between cost and service level. One way to take advantage of distant suppliers and still achieve fast delivery is to decouple the production process and hold inventory of intermediate product locally. Chapter 3 When is Postponement Appropriate? Postponement has the potential to lower the total delivered cost of a product. However, postponement does come with its own costs to implement and maintain. The benefits outweigh the costs when postponement is implemented correctly for the right type of product. For products with certain characteristics postponement allows companies to offer more variety, improve forecast accuracy, reduce inventories, and improve customer service levels. With these benefits come the costs of implementation and manufacturing. 3. 1 The Postponement/Speculation (P/S) Matrix Pagh and Cooper (1998) developed a simple but very powerful conceptual model to show the range of postponement strategies that could be adopted by companies. Four generic strategies were identified: full speculation, logistics postponement, manufacturing postponement and full postponement. These were presented in the form of a matrix as shown in Figure 3. | |Logistics | | | |Speculation |Postponement | |Manufacturing |Speculation |The full speculation strategy |The logistics postponement strategy | | | |low production and distribution costs |low production costs | | | |high customer service and high inventory |low/medium customer service and inventory | | | |costs |costs | | | | |high dist ribution costs | | |Postponement |The manufacturing postponement strategy |The full postponement strategy | | | |low distribution costs |low inventory costs and customer service | | | |medium to high production costs, |medium/high production costs | | | |inventory costs and customer service|high distribution costs | Figure 3. 1: The P/S Matrix (Source: Pagh & Cooper, 1998) The strategy of full speculation represents a complete reliance on forecasting, where all differentiating manufacturing operations are performed prior to the product being moved to different markets (‘push’ based system). The strategy of full postponement represents the highest level of delay in the supply chain (‘pull’ based system). As shown by Figure 3. 1, the decision about which strategy to use is essentially a tradeoff between different levels of customer service and inventory, production and distribution costs. 3. 2 Costs & Benefits of Postponement The question arises, when is the postponement strategy appropriate and when it is not? Where should a company position itself on the P/S matrix? In order to determine the most appropriate level of postponement that should be practiced, the benefits and the related costs must be weighed accurately. 3. 2. 1 More variety Having variety allows for a closer match between customer preferences and offered products leading to increased sales and (sometimes) increased prices. The build-to-order strategy pioneered by Dell shows how manufacturing a product according to customer specifications is one way to offer a large variety in a cost effective way. Dell offers enough options for their Dimension 4600C desktop to build over 100 million different computers using combinations of the components listed in Table 3. 1. Parts |Options | |Intel Pentium 4 |5 | |Operating Systems |5 | |Productivity Software |6 | |Memory |8 | |Hard Drive |4 | |Floppy/Storage Device |4 | |CD/DVD Drive |6 | |CD/DVD Software |4 | |Storage Devices and Media |2 | |Keyboards |3 | |Mouse |4 | |Monitor |9 | |Total Combinations |100million | Table 3. 1: Component List and Options for Dell 4600C Just like Burger King, Dell does not stock each of the 100 million varieties. Instead, they wait for customers to place an order before they build a machine. They have perfected this strategy so well that they are able to shape demand and produce popular combinations to forecast. Dell can offer discounts on combinations that are popular because of economies of scale and can carefully encourage customers to choose components that are in-stock using discounts. This strategy allows them to offer a quick turnaround and ensures that customers will not have to wait more than a week for a new product. Figure 3-2 shows a system dynamic loop measuring different factors that affect the number of product variety offerings. There are seven loops in the figure. The reinforcing loops (denoted by a positive arrow) show factors which increase the growth of product variety. The balancing loops (denoted by a negative arrow) show factors which inhibit the growth of variety. [pic] Figure 3-2: Systems dynamic loop showing product variety proliferation Loop one is a reinforcing loop that shows how variety grows because of the need to satisfy individual customers’ needs. The more customers see that their needs can be met, the greater their satisfaction in finding a unique product. This can force their expectations to be greater which narrows down markets even further. Loop two is a balancing loop that shows how a company reacts when it has captured most or all of the market, suppressing the need for innovation and excess product variety. Loop three is a reinforcing loop that shows what happens when there are multiple firms competing for market share. As a company’s customer base increases it continues to innovate and offer more variety as a competitive advantage. Loop four is a reinforcing loop that shows the effect of technology on product variety. Loop five is a balancing loop that suggests that customers will become saturated with information and buy the product which offers them the best value given their search costs (time and information processing). As the number of choices keeps growing, negative aspects of having a multitude of options begin to appear†¦ the negatives escalate until we become overloaded† [38]. When too much variety exists, companies must tradeoff between offering variety and holding inventory. Loop six is a balancing loop which shows how high variety is traditionally associated with higher unit costs. When the unit cost increases, the customer’s willingness to pay for that variety goes down unless the extra cost adds value to the customer, which is the goal of customization. Similarly, in loop seven, as production lead time increases, customer service levels drop and customers are less willing to wait for variety without some compensation in terms of added value. Loops six and seven are opportunities where postponement can change the direction of the loops from balancing to reinforcing negating the traditional trade-off that exists between higher costs and variety with poorer levels of service. Postponement allows for more variety through standardization and holding intermediate product inventory and better customer service though relocating final assembly closer to the customer. 3. 2. 2 Inventory reduction Reduction in inventory under a fixed level of service is another benefit of postponement. When companies increase variety they increase the number of SKUs they must maintain which translates into higher inventory costs. Each SKU is subject to different forecasts and therefore require different levels of safety stock. Safety stock buffers against sudden increases in demand. Holding safety stock ensures better customer service but is also expensive because of inventory holding costs. In a study of the effect of product variety on production-inventory systems, Benjaafar and Kim [8] found that inventory levels increased linearly with variety. They also found that cost was most sensitive to demand variability, capacity constraints, and set-up costs (assuming a fixed cost to switch the production line between products). This highlights the risk associated with having too much variety for products, especially those with high demand variability. Companies can mitigate this risk by standardizing parts, holding more work in process (WIP) inventory, and postponing customization. 3. 2. 3 Better forecast accuracy Delaying the final customization of a product until more information is available allows forecasters to make better predictions of finished product demand. In order to delay customization, however, it is necessary to define what features or components make a product unique. Figure 3-3 shows how postponement reduces the variability of end product demand and saves on total inventory cost. [pic] Figure 3-3: Demand accuracy of postponed and non-postponed operations over time Using Figure 3-3, suppose that coffee mugs come in five different colors. The demand for each color is an independent random variable normally distributed with mean ? i and standard deviation ? i where i = 1†¦ 5 for each of the different colors and ? i = ? ij and ? i = ? ij for all i and j. Total demand for mugs is N( i, v i2). The standard deviation for the demand of white mugs, v i2 , is less than the sum of the standard deviations of the individual demand, v i2, which explains why aggregate forecasts are less volatile. Additionally, forecasts generally improve over time therefore, ? i,T > ? i,t where T > t and ? i,t is the standard deviation in demand of mug i at time t. In this example, assume information about demand gained in the period up until time L/2 reduced the standard deviation of demand for each individual mug by half. Also, assume that at time L/2 the finishing time is equal to the customer’s willingness to wait. The producer is then forced to start painting the mugs at time L/2 to meet the customer demand on time. The variability of demand for mug color is more accurate at this point than it was at the start of the manufacturing process. It makes sense, then, to produce i or 5? uncolored mugs at time zero and then paint them at time L/2 assuming there are no additional switching costs incurred in this two-stage model. 3. 2. 4 Inventory cost reduction The amount of variety also affects inventory levels and hence, cost. The appropriate inventory level for a single SKU during a period of time consists of stocking the expected demand plus safety stock. Safety stock acts as a buffer to avoid stock-outs. Holding more safety stock improves customer service levels, but it comes at a cost. There are many formulas and practices for determining safety stock, however, this simple â€Å"fixed safety factor† approach assumes demand is normally distributed and is commonly used to determine the appropriate level of safety stock, ssi , given a certain level of customer service, ssi = k ? i (3. 1) In equation 3. 1 k is the safety stock factor which is based on a given level of service desired by the producer and _i is the standard deviation of the errors of forecasts over a given period of time. The amount of inventory, hi , to have at the beginning of an order cycle for a single SKU is given by hi = ? i + ssi (3. 2) Assuming that all colors of mugs have the same mean, ? , and standard deviation, ? , of forecast errors, total inventory, H, is a function of the number of varieties, n, H = n(? + ss) (3. 3) Without postponement, inventory cost increases exponentially, not linearly, withn. However, as mentioned above, if orders are aggregated and produced in unfinished form, the total overall variation decreases. For example, assume each mug has the same mean forecast, ? i = 50 and standard deviation or forecast error, ? i = 2 for all i. The company wants to maintain a customer service level of 98 percent which equates to a safety factor of k = 2. 05. A comparison of the amount of inventory required to satisfy the variability in demand at the beginning of the production cycle with and without postponement as variety increases is shown in Figure 3-4. [pic] Figure 3-4: FGI under postponed and non-postponed operations Not only is the amount of inventory less under postponement, the cost to hold a single SKU is also lower because the product is unfinished. There is still the cost of stocking components for the finishing process (paint) but it is less expensive to keep the mug in an uncommitted state and hold the paint in component form. 3. 2. 5 Logistics cost reduction The above mentioned case of postponement illustrates delayed customization involving painting the exterior of a pre-produced standardized good, a coffee mug. Many examples of postponement exist where points of differentiation occur as early as the design phase and as late as product labeling and packaging. A modular product design offers more opportunities for outsourcing non-core processes, like packaging and distribution, to third parties. This can happen both onshore and offshore depending on the location and distance of the end customer. In either case, the manufacturer can save money by shipping products in bulk instead of in packaged form which usually adds extra weight and volume. 3. 2. 6 Improved customer service levels Customer service levels are defined in terms of lead time – how long it takes an order to arrive, and item fill rate – how often orders are filled from inventory on hand. Providing customers with orders quickly can be the result of improvements in manufacturing processes or by repositioning inventory closer to the customer. Customer willingness to wait is a key factor when assessing a product for postponement and determining the location of the postponement point within the supply chain. If customers are willing to wait a long time for a product then there is no benefit from expediting orders or sourcing components or processes closer to the customer even if they can be done cheaper overseas. On the other hand, if customers are only willing to wait, for example, one week, then the supply chain must be structured so that the finishing lead time and delivery time is less than or equal to one week. This breakpoint between initial and finishing lead times is called the decoupling point and separates production into two stages. The length of time for the first stage is not visible to the customer and therefore all options for achieving lower manufacturing costs can be exhausted. The second stage of the supply chain (from intermediate product to delivery) must be structured in a way that offers the customer the highest level of service without sacrificing cost. 3. 2. 7 Increased product development cost Another cost of postponement is the cost of design. If a product does not already have a modular design but meets all of the necessary market characteristics then it is worth researching the cost of redesigning the product for postponement. The benefit of a modular design is the flexibility it creates for other products within a family. However, there is a balance between too much modularity and its effect on product variety. The risk of too much modularity is a lack of differentiation between products. In addition, the cost to switch manufacturing operations between varieties is sometimes responsible for reducing economies of scale that could otherwise result. In terms of cost, product redesign can take engineers months translating into increased research and development costs. 3. 2. 8 Increased manufacturing cost There is a considerable amount of financial investment and commitment required to reconstruct the supply chain to support postponement. Manufacturing cost per unit may increase due to a restructuring of the production process into two or more stages. There should be dedicated areas for postponed activities in a warehouse and easy access to loading docks. If all manufacturing is not done in-house (which is more likely than not) implementation may require additional facilities to support final assembly and distribution. This also requires more labor at a higher skill level to complete kitting, final assembly, and packaging as opposed to the lower skilled labor required for loading, storing, and sorting. Chapter 4 Case Studies The following case studies give detailed information about several companies that have adopted postponement in some capacity. It is worth understanding the motivations and risks that they incurred in order to understand how companies can determine whether their product is a candidate for postponement. Each case provides background on the company and product that is postponed, a description of the supply chain before and after postponement was adopted, the decoupling point between intermediate product and finished good, costs and benefits, and discusses how the supply chain is structured to take advantage of offshore manufacturing and local final assembly. 4. 1 Automobile Manufacturing: GM The auto industry is a prime candidate for postponement for many reasons. First, a car is defined as a modular system of components. This creates opportunity for commonality by producing a platform and adding modular subassemblies customized according to the make and model and ultimately the end user of the vehicle. Second, individually customized vehicles have high forecast variability. As this case points out there are far too many varieties to accurately forecast each combination and there is typically disagreement on the forecast within the different divisions of a company. Third, cars depreciate as soon as they are driven off the lot. New models come out each year which new features, technologies and capabilities. Lastly, high inventory holding cost. It is much riskier to hold a finished vehicle on the showroom floor than to have a partly finished good waiting for final customization because of the high forecast variability for end products and high product obsolescence cost. General Motors (GM) offers a unique look into customization during manufacturing and after the point of sale. By 2004, GM produced 68 different models in North America. There were over 200 facilities constituting 52 percent of their revenues. There were over 600 million combinations when all the different component variations and customer specific preferences (color, interior options) were considered. Forecasting was extremely difficult, considering these many combinations. Different divisions within GM used different methods of forecasting which further complicated the problem and led to excess inventory on the field. Searching for a way to create variety and mass customize beyond the idea of platforms, GM looked at software configuration, entertainment, and aesthetic features as a different way to use postponement. From a software standpoint, each of the systems within a vehicle can also be considered a unique central processing unit (CPU) made up of several electronic control units (ECUs). These include safety systems, engine, and transmission controls. In the 1990s there were only one or two ECUs in a vehicle. Now there are as many as 30-35 per vehicle because software is becoming increasingly essential in automobiles for voice recognition, global positioning systems, and entertainment. Before postponement, GM experienced the effects of product variety proliferation and high inventory costs of stocking ECUs for individual models. The ECUs came to GM in finished form with all of the software pre-loaded. Suppliers charged GM a premium for custom software installation which not only raised the price but also created problems with repair and maintenance. GM decided that they would assume the responsibility for software configuration and postpone the installation until the latest possible point in the assembly process. In order to accomplish this, GM had to redesign both the assembly process and the ECU hardware. In the mid-1990s GM achieved the capability to install custom software for individual orders towards the end of the vehicle assembly process. The ECU now comes from suppliers to GM in a generic form. The hardware is a common platform which can receive customized software in just 81 seconds. GM dealers also had to acquire the capability for flash programming for individual cars at the point of sale as well as after-market upgrades. After realizing that software could be postponed, GM looked at other systems that could be delayed until purchase. They recognized the emergence of the accessory market for vehicles as another way to differentiate and increase revenues. Entertainment systems have become far more sophisticated over the years and offer key differential options on a vehicle. Because of the plug-and-play capability, entertainment systems can be uploaded into the vehicle at the dealer. Another key differentiator is the wheel set. Dealers are very involved in putting specialized wheels on a car to make it more desirable. Through the use of the internet, GM introduced an on-line purchasing website. Customers can log on to GMbuypower. com and point and click their way to the car of their dreams. GM offers a 99 percent guarantee that they will deliver the vehicle within one day of the projected delivery day to a dealer close to the customer. By 2004, about 18 percent of the cars in assembly at GM were custom made and 82 percent were made-to-stock for dealers and showrooms. The goal is to move to 60-80 percent custom orders but the shift is happening in different markets at different rates. GM is experiencing the benefits of postponement through delayed software configuration and customization. In a study to estimate the benefits of postponement, GM, along with MIT and Stanford University, developed a cost model which projected inventory cost savings to be 10-15 percent. Other benefits included maintenance cost savings due to the highly communized ECU hardware and having GM software engineers solve repair issues instead of sending parts back to suppliers. GM’s main goal, however, is to create a more flexible supply chain that can handle higher throughput and is more responsive to immediate demand. 4. 2 Aircraft Manufacturing: Embraer The commercial aircraft production at Embraer provides an example of production and assembly postponement in the airline industry. The motivation for postponement was to focus on â€Å"optimizing cash flow† by creating a flexible supply chain that can provide the right airplane to the right airline company. In other words, the goal is to give customers the ability to change their decision regarding customizable features, or to cancel an order completely, by designing the aircraft to accept these changes as late in production as possible. In response to the changing dynamics within the aircraft industry Embraer differentiates its new family of regional jets based on the number of seats. The new family of regional jets, the Embraer 170, 175, 190 and 195, focuses on a high degree of parts commonality as all four jets have exactly the same cockpit and fly-by-wire systems. Embraer decided to implement postponement in order to make its supply chain more flexible and able to respond quickly to changes in demand. This was evident when a customer, US Air, had to cancel an order for six ERJ 170 aircraft because of financial constraints in October 2004. With the majority of the production complete it was too costly to go back and change any of the customized features and reconfigure it for another airline. Embraer developed a strategy for postponing as much of the high value features, like engine type, software, radar devices, and interior specifications as possible. Not only did it save on costs, the flexibility to change order specifications became an attractive alternative to backing out of an order or having to pay for costly reconfigurations. The current supply chain at Embraer is structured to allow for two postponement points throughout the production cycle as illustrated in Figure 4. 1. The first point occurs roughly one year before delivery to the customer where the platform is differentiated based on product family (170 versus 190 family of aircraft). Six to eight months later it will assume the configurations, engine, software and hardware which distinguish it as a 170 versus a 175 or 190 versus a 195 aircraft. After this point the customer specific features such as seating arrangements, galley configurations, and tail art are added. [pic] Figure 4. 1: Lead time break down of value added components and features Embraer still builds-to-order because of the high cost to hold a finished airplane in inventory. The white tail concept (analogous to a â€Å"vanilla box†) allows the production processes to begin and run in parallel with some of the steps that usually take a long time to complete such as certification for safety, avionics, and entertainment systems. Total lead time for production is usually 24-36 months because of the long lead time for suppliers. Production begins 12 months before delivery and the order is considered 90 percent â€Å"frozen† or unchanging. However, some customers change their mind within the final month of production. Embraer is committed to developing the idea of postponement further within the company. Any flexibility that can be gained through delaying the customization makes Embraer jets more attractive to a customer facing the uncertainties of the aircraft industry. Engine, avionics, interior and galley layout are some of the hardest subassemblies to change and also have the highest value. The white tail concept allows Embraer to have flexible production in its new family of 170/190 aircraft. They do hold some inventory of semi-finished aircraft that await orders from larger companies in the corporate jet market because the orders are more predictable. Embraer represents a company that is practicing postponement and is not seeing huge savings in inventory. Instead they redesigned their process to accommodate the addition of components based on value to the customer and degree of customization. Better service levels and customer satisfaction give Embraer a competitive advantage in a very competitive market. 4. 3 Clinical Equipments: Dade Behring Dade Behring (DB) is an industry leader in clinical diagnostic equipment and reagents. Their customers include over 25,000 hospitals and reference laboratories which require instruments that analyze human fluids such as blood and urine. They have global operations in more than 34 countries and currently deliver products in six main areas: Chemistry, Immunochemistry, Hemostasis, Plasma Protein, Microbiology, and Infectious Disease Diagnostics. DB diagnostic instruments are high value with a retail price ranging from $20,000 to over $200,000. Demand forecasting is a challenge due to long buying cycles ranging anywhere from six months to two years. Forecasts are generally compiled from sales representatives’ predictions. Because of the high cost of the products, the decision making process and financial constraints of the customers, it is somewhat difficult to know when products will be ordered. Additionally, instruments were designed/ configured to local country power requirements which exasperated the forecasting impact. As a result, DB was plagued with less than optimum service levels for some instruments and higher than planned inventories for others. All of these conditions were catalysts for a postponement strategy, which became even more important as a result of an industry-wide European directive. The first postponement strategy involved designing flexible power capability into the Dimension Chemistry/Immunochemistry analyzers that Dade Behring designed and produced. Originally Dimension was offered in either a 110 V or 220 V power versions. To optimally manage inventories of these instruments, DB collaborated with an external supplier to replace the power supply module with a universal power supply. During the redesign phase engineers were able to develop the universal module at a lower cost because of advanced technology which was previously unavailable. The cost to produce the universal module was actually less expensive than supplying two different versions. Then, a second postponement strategy was put into place due to the European IVDD initiative. In 1998, the In Vitro Diagnostics Directive (IVDD) was ublished as the third of three European directives which required medical and diagnostic equipment to come packaged with local language manuals and labeling. The regulation gave 17 countries the right to specify the national language that would come available with each instrument for which they contracted. In total 12 different language manual s were eventually required. The instrument manuals are approximately 350 pages in length and therefore it did not make sense to create a single manual with all 12 languages included nor package 12 different manuals with each instrument. DB initiated the switch to language specific packaging in the industry through the postponement of packaging materials at distribution centers and flexible language capability within the operating software. This is a straight forward process accomplished by marrying a language specific accessory box to the instrument during the shipment process. Shortly after achieving successful packaging operations, DB initiated another postponement strategy in their Chemistry product line. This next strategy was to redesign the product so that it could be configured-to-order at the end of the assembly process. There are currently four variations of the Dimension Chemistry/Immunochemistry Analyzer Series. Dimension is offered as RxL Max Basic and RxL Max HM (heterogeneous model), or as an Xpand Plus Basic and Xpand Plus HM. Through a carefully designed manufacturing process, Dade Behring is able to manufacture a specific model as soon as that specific model is shipped to fill a customer order. This strategy involved the redesign of the manufacturing process so that the analyzer could be configured-to-order at the end of the assembly process. This meant that all of the commonalities between the two different variations of each model would be combined into an intermediate product that would be produced to a forecast, stored as intermediate inventory, and configured-to-order once an order was received. The redesign phase took a team of engineers six months to make changes and train workers on the assembly line. The supply chain as shown in Figure 4. 2 became vastly more efficient and service levels increased dramatically. [pic] Figure 4. 2: Dade Behring supply chain Customer service levels improved and inventory was significantly reduced by eliminating the need to store high value finished goods. Inventory across the supply chain was reduced through a 50 percent reduction in â€Å"buffer† or safety stock. Service levels went from oscillating between 70-100 percent to greater than 98 percent. Once DB was able to improve service time to customers they started looking at their distribution centers and found opportunities to improve distribution strategies, given the improved flow of instruments through the manufacturing process. Because the opportunity cost of a lost sale in this industry is very high, distribution centers would store finished goods as a way to mitigate the risk of instrument shipment delays. However, when service levels improved, DB found that they could eliminate 50 percent of their global buffer inventory by eliminating the stocking of instruments in distribution centers in Asia and Canada, and reducing inventory levels in Latin America. Their primary instrument warehouses in the US and Europe service their global instrument distribution needs. The make-to-order and inventory management strategy provides DB with a decisive advantage in the industry. This is a classic example of the benefits of the successful implementation of postponement. Because of this success, DB was able to continue developing postponement in other lines of instruments. Today, more than 85 percent of instrument production at DB involves some form of postponement compared to less than five percent five years ago. By redesigning the Dimension instruments to be easily adaptable for configuration, DB realized that the product could also be easily de-configured back to the intermediate stage to support the secondary market for instruments. 4. 4 Sports Goods Manufacturing: Reebok As a licensed supplier for the NBA and NHL and principle supplier for the NFL, Reebok knows the difficulties that come with satisfying the demand of a very â€Å"fair weather† crowd. When teams do well more team apparel is demanded. The demand for a player specific jersey is inherently more volatile than for a given team. Meeting customer requirements within a short period of time is a major challenge in the sporting goods industry. Sales of t-shirts and jerseys are not too predictable because Reebok does not know which teams will be â€Å"hot† at the beginning of the season. Demand for jerseys averages 30,000 per week or 1. 5 million each year. The different choices of team name, player name, color scheme, and size makes it extremely difficult to predict demand of an individual item during the pre-season. The idea of postponement in this industry is not new. Images of silk-screen companies working overtime minutes after an NCAA basketball championship game, illustrates the idea of postponement. These manufacturers know that it is better to wait until there is certainty about the outcome of a game before producing apparel with the losing team’s name on it. As a result they keep white or blank shirts on hand ready for printing. At this point in the supply chain it would not make sense to put in an order for finished shirts from scratch to an overseas manufacturer (even if it costs less to make the shirt). The long lead time would mean missing the increase in sales generated within two weeks after a big win. This can be anything from an important mid-season upset, a new player entering the roster, players becoming â€Å"hot†, or the end of season championships. Reebok recognized this as an opportunity to restructure the supply chain to cater to both stable items – finished apparel that is produced to a forecast much earlier in the season, and customized apparel. The difference in the lead time for both of these items is significant. Retailers expect lead time to be 3-12 weeks for the stable items and as little as one week for the â€Å"hot† items. Reebok outsource the cutting and sewing of fabric to contract manufacturers in Central America. Some of the jerseys sent to Reebok are finished meaning that there is a customized team and player name already on the garment. Other jerseys, called â€Å"team finished† jerseys are sent with everything but a player’s name. These go straight to a distribution center that Reebok owns and operates in Indianapolis. The blank or team finished jerseys help satisfy two different types of demand. The first is for the hot players or players who sign with a team late in the pre-season and the second is for the players who have a small, but somewhat predictable demand. [pic] Figure 4. 3: Reebok Supply Chain According to Figure 5. the blank jerseys arrive in the US and are ready for screen printing and embroidering. The decision to have a separate facility in the US is a result of the end customer’s unwillingness to wait. Fans expect to find the jersey they are looking for in a store. There is a chance they will be less likely to want one if they have to wait weeks to get it – especially when an NFL team only plays 16 games per season. At a price of $25 for a long-sleeve t-shirt or $250 for an authentic jersey, the cost of lost sales is greater than the cost to ship, unpack, finish and reship a jersey from a local finishing center. Reebok is a classic example of two-stage production with postponement. They are able to take advantage of lower labor costs for the production of blank jerseys and optimize service levels by souring the final assembly in the US. This also creates local jobs in the areas of textile and silk-screen printing. 4. 5 Xilinx Xilinx is a semi-conductor manufacturer with headquarters in San Jose, CA. The semi-conductor industry is very volatile due to the wide variety of products and short product life cycle. Semi-conductors manufacturers are supplied to OEMs in the telecom, small electronics, and aerospace industries. However, they have a supply chain of their own which requires assembling and configuring wafers of silicon into programmable dies which later become integrated circuits. Their position in this multi-echelon supply chain makes forecasting for specific end product demand costly, impractical, and very inaccurate. In addition, semiconductor manufacturing is quickly becoming a commoditized process. Comparative intellectual and technological benefits that leaders in this industry were accustomed to are now becoming less of a competitive advantage. The focus has shifted from intellectual advantage to supply chain efficiency as a means of differentiation. The life cycle for an integrated circuit is anywhere from six months to two years. During that time new technology will make existing products obsolete. Having long manufacturing lead times cripples a company’s ability to quickly respond to these changes as well as changes in customer specific orders. Having a generic product and creating a postponement point separating a die with generic qualities and one with a specific logic configuration allow them to respond quickly and offer flexibility to their customers. Xilinx began with a combination of both process and product postponement. Product postponement was implemented by redesigning the dies to a certain range of parameters for the different characteristics. For example, there are four major sources of variety in an integrated circuit; speed, number of logic gates, package types, and voltage. Customers can specify generic capabilities and can customize the chip to their specific specifications after the fabrication stage. The amount of variety makes postponement very beneficial. Xilinx can manufacture 200 different dies that can proliferate into over 4,000 different end product combinations. That makes the ratio of generic dies to end products roughly 1:20. The manufacturing process is broken up into two stages. Suppose a certain generic die, A, can be configured to take on 20 different configurations, {A1, A2, A3, †¦ , A20). When a customer requests the specifications, they only need to specify the generic die. Once it is pulled from â€Å"A† inventory, it is customized to a certain degree depending on customer order specifications. This specification can take place at Xilinx for high volume orders or it can be delayed even further so that the point of customization occurs at the customer. Approximately 20 percent fall into the high volume category and the remaining 80 percent are left for customization at the customer. The final customization is a matter of programming the software within the chip. By eliminating this process from the front end (manufacturing) process, Xilinx cut manufacturing lead time from three months to three weeks. Manufacturing usually takes place in Taiwan or Japan and then product sits in inventory at Xilinx awaiting testing. Testing facilities are located in Korea, Taiwan, and Japan. While postponement has reduced inventory and helped Xilinx meet customer requirements with more accuracy and on-time deliveries, it is just the beginning. Postponement within the semiconductor industry will extend far beyond customer configuration capabilities. Chapter 5 Conclusion The case studies presented in this paper come from a wide variety of industries. Each company was successful in implementing postponement for similar reasons, but have seen a wide variety of results. The most common strategic motivation for starting postponement were to improve service level and to reduce inventory holding cost as a result of an increase in product variety. One of the key factors in successful implementation is product modularity. If a product is not inherently modular, a successful postponement strategy requires a redesign of the product or a rethinking of product definition. In the cases of small consumables, the end product is not a razor blade or a disk, but rather a finished configured package destined for a particular retail outlet. The relationship between forecast variability and the decision between a make-to- stock or a build-to-order strategy is also a common factor. Products with stable demand stand to gain little from a postponement strategy because there is little benefit for delaying production when sales are committed. On the other hand, products with high variability gain from postponement because there is no commitment to final configuration until the order is placed. A company should determine the location of variability when deciding to implement postponement. Variability can be caused by product variety, unreliability of customer orders, seasonality, trends, promotional activities, or it can be a result of the supply chain itself. Varia

Mental Health and Social Inclusion

Title: An examination of social exclusion policy and its effect on adults of a working age with serious mental health problems To begin, this essay will briefly define the term social exclusion and its historical background. It will then move on to the political history of social exclusion in the United Kingdom. Particularly the essay will focus on the reasons behind unemployment, and the resulting effect of excluding people from society.The policies around employment and the benefit system will be discussed in some detail, and their consequences on working age adults, including those with serious long term mental health issues. The French socialist government termed the phrase ‘social exclusion’ in the 1980’s; it was used to define a group of people living on the edge of society whom did not have access to the system of social insurance (Room, 1995 citied in Percy-Smith 2000). The concept of social exclusion has been defined in many different ways since then.The European commission defines social exclusion as referring to the â€Å"multiple and changing factors resulting in people being excluded from the normal exchanges, practices and rights of modern society† (Commission of the European Communities, 1993 quoted in Percy-Smith 2000 p. 3). This was a move away from using the term underclass in the UK, which was not an acceptable phrase to some, as it was more related to poverty (Lavallette et al, 2001). The term social exclusion pointed at a much more complicated problem rather than just money, if you were excluded something or someone was excluding you and that could be sorted out.Although for some this new phrase just represented a ‘new’ form of the word poverty (Room, 1995 citied in Lavallette). In the UK the New Labour government set up the interdepartmental social exclusion unit in 1997 (Percy-Smith, 2000). Its aims were to â€Å"to find joined-up solutions to the joined-up problems of social exclusion† (No10 Website, 2004). The social exclusion task force works within a number of government departments such as work and pension, children school and family and the ministry of justice (No10 Website, 2004)The social exclusion unit published a series of reports in 1997 that criticised the way both central and local government had failed deprived groups and areas (Batty, 2002). It found that deprived area’s had fewer basic services such as GP surgeries and that little effort had been made to reintegrate some who had been excluded through unemployment (Batty, 2002). Unemployment is seen as one of the main causes of social exclusion (Percy-Smith, 2000). Being unemployed can have serious effects on a person’s confidence, sense of purpose and motivation (Percy-Smith, 2000).The person who works is seen as a full citizen, paying tax and contributing to society (Baldock et al, 1999). Unemployment can also be linked to mental health; a person is twice as likely to suffer from depressio n if they are not working. (Department of health, 1999). The period since the 1960’s saw a distinct decline in the British manufacturing industry leading to a shift in the type of work available, the service sector and office based jobs replaced the manual jobs and altered the pattern of demand in the labour market. Baldock et al, 1999) The unemployment rate for semi skilled / unskilled workers if four times that compared to managerial / professional workers (Percy-Smith, 2000). Those people who live in area’s with low demand for low skilled workers are highly likely to be unemployed for a very long time, leading to a near permanence in exclusion from the labour market (Percy-Smith, 2000). Welfare to work policies were the answer from the Labour government in 1997, `They set out plans to encourage people back into the labour market.Labour came up with the New Deal family of policies. These where aimed at specific groups. For example young people, adults and new deal fo r people with a disability (Percy-Smith, 2000). One of the results of this policy was to create Job centre plus from a merger of the Employment Service and the Benefits Agency. (Hoben, no date given) The Tories previously had set up the job seekers allowance, which had changed the Insurance-based unemployment benefit. (Baldock et al, 1999).With this allowance you had to prove you were actively seeking employment or you would not get your allowance. People who became unemployed would have to go for an initial interview where an adviser prepares an action plan, then short interviews are conducted every two weeks to review the claimants success at gaining new employment and to look at new job vacancies (Percy-Smith, 2000). New deal gateway is aimed at 18 – 24 year olds who had been out of work for 6 months. This offers subsidised work experience within the voluntary sector or with an employer with a ? 0 a week incentive. Also full time education/training is offered to those who did not have sufficient qualifications up the recognized NVQ level two. Young people also have an allocated personal advisor who offers assistance around job seeking, careers advice and in some circumstances drugs/homelessness advice (Percy-Smith, 2000). Anyone who refuses to take up these incentives will have their benefit cut. As Gordon Brown put it (the then Chancellor of the Exchequer) there will be no option â€Å"to stay at home in bed and watch television† (Baldock et al, 1999 p149).For people aged twenty five and above who have been on job seekers allowance for over six months then become eligible for a different set of measures, before becoming eligible for the ‘New Deal’. This is called ‘restart’. Work trials are offered as well as help with interview techniques and CV’s writing skills. After twelve months if the individual has not found work they attend a five-day ‘job plan workshop’ to assess the individuals job prospe cts. This happens again at eighteen months. If after two years they are still unemployed this is when ‘New Deal’ applies. New Deal’ offers training grants as well as an employment credit similar to that of the new deal gateway of sixty pounds a week and the benefit of a personal advisor. The budget for this was ? 250 million for the three years between 1999 and 2002 (Percy-Smith, 2000) It can be argued that jobseekers allowance forces people back to work or forces them to appear to be looking for work in a desperate attempt to keep their benefit. It can be seen as punitive (Percy-Smith, 2000) and with no option to opt out, and it does not actually increase the amount of jobs available.Without the creation of a sufficient number of jobs, people may lose their benefit, though not through lack of trying (Baldock et al, 1999). Also critics have commented on the cost of the new deal strategy with some say this money could be better used creating more jobs. (Percy-Smit h, 2000) Other arguments against new deal look at the timescale difference between the young people and adult services, it cost a lot less to intervene early when someone becomes unemployed so why wait for two years in the case of the adult new deal. (Percy-Smith, 2000).The new deal policy has been quite effective, particularly at getting young people back into the labour market. However, for people with long term significant mental health problems finding paid work can be very difficult. (Layard, 2005) If social exclusion can be linked to unemployment then for people with mental health issues they are excluded by default, with not only unemployment but with the social stigma associated with their mental health difficulties (Layard, 2005). â€Å"There are now more mentally ill people on incapacity benefit than there are unemployed people on jobseekers allowance† (Layard, 2005 p1).Evidence suggests that work can be very therapeutic for people with mental health problems, but i t seems doctors are sceptical about their patients finding and holding down jobs. (Layard, 2005) The problem gets worse the longer the person is on benefits, and as time passes social isolation increases and motivation decreases (Layard, 2005). Ninety percent of people on incapacity benefit say they would like to return to work but would find it very hard to find a job that pays as much as the benefit they receive (Layard, 2005).However, it has been an underlying trend in welfare policy that low paid work should always be the better option than state handouts. This goes way back to the poor law of 1832 where the workhouse provided the last option for very poor families, providing food and shelter for the exchange of labour. For most of those who lived in these workhouses life expectancy significantly dropped upon entering these desperate places (Higginbotham, 2008). In current times, however, sacrificing benefits and returning to work may mean a compromise in quality of life.People receiving incapacity benefit may also claim housing benefit, council tax benefit, free prescriptions and discretionary loans from the social fund to buy large more expensive items (Alcock, 2003). With all this help in place it is quite easy to see why people with a mental illness are unlikely to want to go back to full time employment and run the risk of losing money. This is known as the benefit trap. There is another problem, people who have been on benefits for a long time lack the right qualifications to join the labour market (Dummigan, 2007), increasing social exclusion.If a mentally ill person wanted to find a job but had little or no skills, the choices are very narrow normally leading to a low wage job, again making it unlikely for the individual to want to come off his/her benefits (Dummigan, 2007). The government has tried to rectify this problem by offering further incentives to get people back to work, such as disability tax credits that offer a tax break should some on e find work but there is limited awareness of the financial incentives to return to work (Percy-Smith, 2000).Pathways to work is a recent government initiative with the aim of getting the recipients of incapacity benefit back to work, the claimant will have to take a personal capability assessment which is used to determine whether or not the person is eligable for the benefit, but will focus on â€Å"what the customer can do rather than what they cant† (Department of work and pensions, 2007).A mandatory work focused interview will also take place eight weeks after making the intial claim followed by a screening tool to establish who will have to have more work focused interviews and those who will be exempt from further manditory participation (Department of work and pensions, 2007). Pathways to work will offer a range of programmes to support the â€Å"customer† in preparing for work with a fourty pounds a week incentive or credit for twelve months if their salary is below fifteen thousand pounds a year (Department of work and pensions, 2007).Pathways to work is currently operating in fourty percent of the country. In an interesting move, the remaining sixty percent of pathway to work providers will be from the public sector leading to critism that the government is privatising the welfare system. The government's chief welfare to work adviser, David Freud, said recently: â€Å"I worked out that it is economically rational to spend up to sixty thousand pounds on getting the average person on incapacity benefit into work, somebody will see a gap in the market and make their fortune. † (Quoted in Vaux, 2008).Some voluntary sector organizations have criticized the rather aggressive approach taken by the public sector organizations in winning the contracts, and feel that the voluntary sector would be in a better position to deliver the contracts (Vaux, 2008). Mind charity has criticized the pathways to work initiative stating it â€Å"place s all the emphasis on the individual to find work†, yet, it said  there  was no obligation on employers to actively recruit people with mental health problems. It would also seem that if you disclose to an employer that you have a mental health problem you are more likely to be sacked before your sane colleagues.Also there is a lack of support in the work place for mental health sufferers, which lead to higher sickness rate, which in turn puts off employers recruiting future pathways to work employees (Lombard, 2008). In the recent action plan on social exclusion â€Å"Reaching out† the government recognizes the need for encouragement in the workplace for recruiting people with mental health issues and supports employer based anti-stigma campaigns. It also states that the government alone cannot address social exclusion, and that the wider community has a role to play.But most of all, the individual must want progress for themselves and those around them (Reaching O ut, 2008). In the last five years mental health services have improved greatly (Layard, 2005) Better treatment and early intervention have empowered people to control their own lives, but though these services have improved the medical condition, mentally ill people still suffer from exclusion from society. The association with dependency that being on benefits brings leads to a segregation (Percy-Smith, 2000). In conclusion, social exclusion is a far reaching problem and not an easy task to overcome.Evidence suggests that the government still identifies the problem with unemployment and poverty, and has taken a great deal of measures in providing policies that aim to get people back into the work place. Unfortunately for some, as has been shown, work is not always a viable or the best option, and people who fall under this category may stay on the boundaries of society due to no fault of their own, or be forced into working at the detriment of their health. The changes around the i ncapacity benefit rules may leave some people worse off than when on benefits and this may increase the chances of a relapse in mental ealth issues, which in turn will make them less employable, continuing the cycle of social exclusion. As we enter another recession and unemployment rises again, this is likely to be a huge focus, and the government will have to rethink existing policies around unemployment. Those who are recently unemployed must be given sufficient support to regain employment to avoid falling into the benefit trap in order to avoid the danger of becoming socially excluded. Bibliography Alcock, P (2003) Social policy in Britain, Basingstoke, PalgraveBaldock J, Manning N, Miller S & Vickerstaff S (1999) Social Policy. Oxford University press, Oxford Lavalette,M & Pratt A (2001) Social Policy a conceptual and theoretical introduction. Sage publications London Percy-Smith, J (2000) Policy responses to social exclusion. Open university press. Oxford Batty, D (2002) Soci al exclusion: the issue explained (Online), available at http://www. guardian. co. uk/society/2002/jan/15/socialexclusion1 (accessed on 28/10/08) Department for work and pensions, (2008) Pathways to work process. (Online) Available at http://www. dwp. gov. k/welfarereform/pathways_process. asp (accessed on 5/12/08) Department of health, (1999) National service framework for mental health, modern standards and service models. (Online) available at http://www. dh. gov. uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_4009598 (accessed on 1/12/08) Dummigan, G (2007) The benefit trap. (Online) available at http://news. bbc. co. uk/1/hi/programmes/politics_show/6403329. stm (accessed on 4/12/08) Higginbotham, P (2008) Poor laws (Online) available from http://www. workhouses. org. uk(accessed on 4/12/08)Hoban,M & Thomas, J (No date given) DW response to welfare to work – discussion paper. (Online) available at http://www. voicefromthewheelchair. co. uk/ pages/dw-response-to-welfare-to-work (accessed on 1/12/08) Layard, R (2005) Mental health: Britain’s biggest social problem? (Online) Available from http://cep. lse. ac. uk/textonly/research/mentalhealth/RL414d. pdf (accessed on 1/12/08) Lombard, D (2008) The replacement of incapacity benefit. (Online), available at http://www. communitycare. co. uk/Articles/2008/10/27/109795/incapacity-benefit-reform-will-leave-some-disabled-people-worse-off. tml (accessed on 5/12/08) Reaching out, (2006) An action plan on social exclusion (Online), available from http://www. cabinetoffice. gov. uk/media/cabinetoffice/social_exclusion_task_force/assets/reaching_out/chapter1. pdf (accessed on 28/10/08) Social exclusion trends show success (2004) Online, available from http://www. number10. gov. uk/page5544 (accessed on 28/10/08) Vaux, G (2008). Pathways to work, to help those unfit for work. (Online), available at http://www. communitycare. co. uk/Articles/Article. aspx? liArticleID=107551&Pr interFriendly=true (accessed on 1/12/08)

How Far Is Macbeth a Gothic Protagonist

How far is Macbeth a gothic protagonist? The gothic protagonist who is seen as the main character tries to overcome human limitations by making acting as god. Within the novel elements of Gothic is seen which is seen highly in the characters as well as other aspects. Shakespeare’s Macbeth consists of the central protagonist who is Macbeth himself. Thus, Macbeth is seemed as a gothic protagonist because he urges for a gothic goal which is often for more power. A gothic protagonist is known to have sharply contrasting qualities within the character.This is seen in Macbeth as we see the contrast between Good and evil which is a strong source of conflict within Macbeth. Macbeth’s character is deeply divided and this conflict works itself out in depth. The first act of the play offers an increasing insight into the complex interaction of good and evil in Macbeth’s mind. The â€Å"noble†, â€Å"valiant† and â€Å"loyal soldier† of the early scenes is tempted by the visions of future personal glory conjured by the witches and comes increasingly under their influence.The battle between these conflicting elements of Macbeth’s character becomes evident immediately after the first of the witches’ prophecies has come true, when he observes â€Å"this supernatural soliciting Cannot be ill, cannot be good†. The proposition that â€Å"Macbeth is a villain in whom there is little to admire† is an inadequate judgement of Macbeth’s character. Macbeth is not consciously and naturally malevolent, and there are many aspects of his character and his downfall which serve to support this.Macbeth was not only a victim of his own actions, but also of the human condition and the extremely powerful forces of both his wife and fate. Throughout the play the audience undoubtedly experiences feelings of horror at Macbeth, but we are also driven, through an understanding of his character, to admiration and sympathy. T his would not be the case if Macbeth was a totally vile and reprehensible villain, and thus the tragedy of Shakespeare’s Macbeth is clear. Macbeth was certainly no villain to begin with.He is introduced to us as a man of great honour, nobility and strength of morals. He is held in high regard by King Duncan, who addresses him as â€Å"valiant cousin, worthy gentleman†- so highly, in fact, that Macbeth is granted a promotion over Banquo (who seems to be of an extremely worthy and loyal character). But there is a fatal difference between Macbeth and Banquo- Macbeth’s ambition and lust for power. He is a man with an unsurpassable desire to advance himself.He himself identifies this quality while he contemplates an action that he is wholly repulsed by; â€Å"I have no spur To prick the sides of my intent, but only Vaulting Ambition which o’erleaps itself, And falls on th’ other. † This â€Å"Vaulting Ambition† is what makes Macbeth vulner able and leads him to commit possibly the most vile deed he can imagine, setting him on a path of destruction. There is a temptation to use the fact that he could comprehend the vileness of his deed as a reason as to why we should condemn Macbeth as even worse a villain.Gothic fiction is a form of literature that includes elements of both horror and romance. Most gothic fiction has things that are supernatural, includes feelings like guilt, sin, madness, settings usually in a castle or in dark caves, mystery, suspense, violence, a damsel in distress, and omens or dark curses. The play â€Å"Macbeth† by William Shakespeare is written in gothic literature, this is evident through an examination of the feelings of guilt, sin, madness, the battle between good and evil and omens and curses that take place throughout the play.Omens, curses, prophecies, supernatural beings, these are all things that are very common in gothic literature. Shakespeare uses these things to make the play seem darker and have more mystery to it. There are three witches in â€Å"Macbeth† and they make prophecies that will alter Macbeth’s future. They predict that three things will happen, one of them being â€Å"The power of man for none of woman born/ Shall harm Macbeth,† 4. 1, 91 & 92. Traditionally, characters in gothic fiction have their future predicted by some supernatural being; they use this knowledge to alter their life. Macbeth is no different.One would think that it is impossible to not be born from a woman, so Macbeth uses this to gain confidence that no one will ever be able to kill him. Later on in â€Å"Macbeth†, after the witches make the prophecy of Macbeth not being killed by man born of woman, he goes to battle with Macduff. Since it is said to be that Macbeth cannot be killed by man born of woman, Macbeth is told â€Å"Macduff was from his mother’s womb/ Untimely ripped,† 5. 8, 19 & 20. After being told this Macbet h decided to go to battle with Macduff and got killed, this shows that the prophecy did alter his life in a way he never saw coming.

PUMA case study Essay

In order to arrive at the correct judgment of what will be puma’s opportunities and threats, let analyze the external environments factors affecting the company basing on the PESTEL and industrial competitive factors using five forces framework. And later when determining the company’s strengths and weakness I will look at the company’s internal capabilities by looking at its value chain, value network and any other competitive factors which gives the company more competitive advantage than rivals. By definition external environmental factors are those factors which have impact on company although the company has either very little or no control at all over those factors. Usually these factors are classified as PESTEL (Political, Economic, Social, Technological, Environmental and Legal). External Political Factors These refer to the following sub-factors:(I)Government stabilityThis has influence to any business. When the government in which Puma operates become unstable politically business will definitely be affected. For example civil wars affect both operations, leisure’s and sports events which are Puma’s business. In our case study we saw that after terrorist attacks of September, 11, 2001 and wars in Afghanstan, geopolitical uncertainty led puma to shift its production from Pakistan to China (Puma case study, 2003). (ii)Foreign Trade Regulations These includes treaties and agreements which must be respected by the member countries and Companies (Czinkota, Rivoli and Ronkainen, 1992).For example General Agreement on Tariffs and Trade(GATT),regulations in respect of monopoly and competition standards, Trade fair Act(1997), Paris conventional for the protection of industrial property, to name but a few. These have impact on Puma since wherever it operates it must adhere to. (iii) Taxation Policy These have impact on Puma’s business because are an expenses which reduce revenue but it can also be used as the barrier to entry to the targeted potential markets. Some government use to fix higher tax to incoming foreign company. Economic Factors These factors have a huge impact on Puma’s business. These are factors like cost of energy, oil, inflation, recession and recovery. For example interest rates(interest on loans and borrowings), inflation and unemployment has got negative impact on business since an increase of one or both of these factors is equivalent to the raise of business running costs at the same time will mean reducing the purchasing power(inflation and unemployment) of the people. GNP Trends can have impact on Puma’s business since a good GNP shows that the per capita income of the people is good. Positive growth trends means increases on people purchasing power which has a positive influence to Puma. People with big disposable income can spend more on the leisure like sports and also buys more of the products as oppose to the people with less disposal income. Sociocultural factors(i)Population demographic; there are arguments that the population is getting older and therefore Puma should starts to focus on the senior people segment in order to remain profitable and for business growth. (ii) Uneven income distribution means there are few people with disposable income (the rich) and the majority have very less purchasing power. It is not therefore a market puma should target. (iii) Lifestyle Changes These have the impact in business and it needs the company to be strategically innovative in order to cope with peoples’ taste/fashion changes to retain and persuade the customers. This is one of the factors making customers switch from one product to the others of the same use. (iv) Attitudes to work and leisureSince Puma operates globally it is possible to meet different societies with different attitudes to work and leisure. Negative attitude to work and leisure will have negative impact to business and positive one will have positive impact to Puma business. Technological FactorsProbably these are the most dramatic forces shaping our destiny which creates whole new markets and destroy others. These are such as;New discoveries/development and speed of technology transferThese makes the products life cycles get short and creates a fierce competition among industries and hence forcing the company to invest more on R&D so as to remain strategically innovative (cost implication to business). Technological factors can lead to both high rate of obsolescence and Increase Company’s budget (through R&D). Environmental factorsMost of the nations and international bodies have been enacting laws to protect the environment (green issues).Companies have been compulsorily required to adhere to these laws; for example the law to internalise pollution, waste remittance and all legislations regarding safety and environment issues. These have significant impact to business like Puma because it reduces revenue. Legal factorsThe company which operates globally must expect different laws in different markets place within its operations. For example employment laws, health and safety regulations and financial regulations. It will also need to know advertising and promotion regulations, pricing regulations and consumer protection legislations. (Brassgton and Pettiti, 2007). Porter’s five forces of competitive strategyWas developed as a way of assessing the attractiveness (profit potential) of different industries. It helps to identify the sources of competition in an industries or sectors (Johnson, scholes and Whittington, 2006).The focus is in the environmental factors influencing this competitiveness; which are as follows;(i) Threats of new entrantsThere are six major sources of barriers to entry which includes economies to scale, capital requirements, and control of distributition channel, customer loyalty, experience and retaliation. (Porter, 1998). To my opinions and with reference to sports industry for more than three decades, threats of entry has a very little influence to Puma. This is because to enter into sports industry you need not only heavy capital and technology but experience and knowledge together with attractive customer base which is the strong barrier to entry. Suppliers Power Suppliers can have power if;(a)There are a concentration of suppliers and they can purchase in big quantities(b)Suppliers have a wide range of customers and can easily switch from one supplier to the other(c)The cost of switching from one Supply another is very high and,(d)If they pose a credible threats of integrating forwards into the industry business. To my opinion these conditions does not apply to Puma and therefore can not be threats because Puma policy on suppliers is such that Puma have no long term relationships with supply and the fact that production, logistics, distribution have been outsourcing surely Puma will be having very few suppliers (mostly not related to production and transport departments). In addition to that it is not possible for those suppliers to integrate backward into industry’s business. Buyers bargaining power According to Johnson, Scholes and Whittington (2006) buyers are likely to have influence on industry’s business if the following condition prevails;(a)There are concentration of buyers and they purchase a big volume(b)The cost of switching a supplier is lower or involves little risks(c)The buyer pose a credible threats to integrate backwards to make the industry’s product. To my views this factor is not a threat to Puma because buyers are scattered all over the world such that they can not have collective bargaining power and the cost of switching from Puma to another suppliers is very big and risks because Puma is among reliable and paying company. The threat of substitutes Substitutes reduce demand for a particular â€Å"class† of product as customers switch to alternative even to the extend that this class of products becomes obsolete (Johnson, Scholes and Whittington, 2006).Looking at the trend of sports industry for more than 40 years you will find that there are always Puma and the big three which dominates the sport industry and each having a very attractive customer base and thus this is a justification that Substitutes is no a threats to Puma. Competitive rivalryRefers to organisations with similar products and services aimed at the same customer group; which for Puma can be Adidas, Nike and Reebok and Fila, Diesel and Prada for football, running, basketball and apparel and accessories respectively. This is not a threat at all since for this factor to be threats the following conditions must prevail; there are must be numerous competitors and are roughly have equal size and power which is not the case for sports industry(Look at Adidas,Nike, Rebook and Prada,diesel and Fila) all have different power and sizes. The other factor is that for the rivalry to take place the markets must be matured but this is not the case for Puma because although the traditional market segment were heading to mature there are several niches which offer attractive growth, and yet analysts expect growth in geographical regions for football especially Europe, Asia and Americans. Opportunities and threats Looking at the environmental factors and the five forces affecting Puma I have noted some of the opportunities and threats for the company;OpportunitiesTrends of accessories/equipments is attractiveIf accessories can be properly managed can be greater opportunity for puma to grow the business. Currently 60% of the total sales are generated from footwear division, but according to experts apparel and accessories categories are showing attractive growth rate .why not Puma utilise this opportunity by providing its customer variety of such products by focusing on both high-value and stylish product and lower priced products so that can get shares from companies like LVHM, Hugo Boss and Prada. In my opinion Puma can start focusing on virgin markets such as Racing especially Horse racing, skateboarding, snowboarding to mention but a few. Alliances and joint venture Although puma has acquired some of the largest companies such as Swedish Tretorn the European third largest manufacturer of Tennis balls, it is not enough. Alliances and joint venture is one of the major opportunities for Puma to both expand geographical markets for its products and at the same time get access to valuable technology and competences. Threats Puma faces both intertype and intertypes competitorsPuma’s internal capabilitiesIf the companies are to achieve competitive advantage by delivering value to customers, they need to understand how that value is created or lost (Johnson, Scholes and Whittington, 2006).Puma’s value Chain has been divided into two; Primary and Support activities. If you consider the primary activities side you must understand that puma is described as Virtualized Company. Its in-house resources and activities such as inbound outbound logistics, operations and Procurement have been outsourced. This gives the company to deal with its core competency more effectively. It does not mean however that the company doesn’t care for the outsourced activities but the management are very careful on the selection of suppliers, logistics providers and producers but also it has a strong information technology infrastructure which helps them to coordinate easily and efficiently. Human resources management Puma with no doubts it has a strong HR by looking at the CEO and his deputy. The CEO being graduate in international business administration and having an ample experience in international business and marketing and worked for Colgate-Palmolive. Also the deputy CEO having an extensive experience in supply chain management and strategy implementation is one of the justifications that the company have strong HR capability. Technology development Puma has a proprietary technology which helps the company in terms of innovation and designing and also in information technology. For example the company due to technological ability developed shudol shoe. One of the technological innovations can also be seen on â€Å"cell technology†. To manage its entire coordination and consolidation from all 80 countries is one of the justifications that Puma is strong technology wise. Marketing and SalesPuma’s strengths come from the best implementation of its strategies in marketing and sales. Puma’s core competencies have been divided into marketing, brand and product management. Brand ManagementOne of the major reasons for puma’s turnaround was the new  positioning of the brand itself (refer to case study).One of the strategies used is sponsorship of either individual player or teams and associated the company with charismatic personalities who proliferate the desired brand perception, recogonition and awareness It has association with biggest names in history of sports such as Pele, Maradona and Cruyff. Recently the CEO, use the technique of associating the company with entertainment professional such as Arnon Milchan (the influential film maker),David Matalon and Peter Chernim these stars making brand appears in several Hollywood production. Apart from sponsoring teams like Jamaica and Cameroon Puma has been organising several events such as Puma street soccer in 1994 and 4SOME competition in 2003 aiming at both displaying puma label and communicating Puma philosophy. By 2003 the brand was so high that super stars like Madonna were proud to wear Puma Product without any compensation. Marketing Puma’s marketing division is responsible for all Puma advertising, promotions, PR and selling. Strong promotion and advertisement helps Puma be known company globally. Management are careful to select a media of advertisement and promotions.Footbal, Basketbal and running cups have become the mega events watched by viewers from across the global. Puma has been sponsoring either individual or teams. As a result these events offer excellent marketing opportunities for the company to create awareness of its brand. It has been fine turning its marketing strategies for football cups from 1960’s when Stars like Pele, Maradona and Cuyff to recent stars like Madonna. Product management Product management at Puma concerned with designing, operating and maintaining good products. This ensures that the company doesn’t only produce but creates a product that people will want to buy. Fistly; the company has a wide range of product which help the company to easily respond to different customers with different levels and interests. For example Puma football, running and basketball and others in accessories and equipments. In terms of technology and also to ensure that it offers customers’ product of high quality Puma has association with engineers and famous designers such as Jil Sander Mihara.For instance Puma innovation was â€Å"Cell technology† which convinced famous athletes to be Puma products such Cameroon National soccer team and Jamaica running professionals. Puma is innovative in each stage of the production for example to develop the new â€Å"Shudol shoes† worked with the team of Jordan Grand prix engineers. From Puma’s internal capabilities the following strengths and weakness have been observed;StrengthsStrong brand-name image/company reputationPuma has a reputation for being a pioneer in sports and the brand has very strong heritage in world football, featuring a glittering list of past brand ambassadors which includes some of the biggest names in the history of the game such as Maradona, Pele and Cruffy.It boasts most of the exiting teams and individuals and as a result of having such sports people as customers creates good atmosphere for Puma to enjoy not only the survival but also the company growth. Attractive customer base Having the association with quality players it gives an image to most of the people that the company have quality as well. As the results puma has loyal customers worldwide. This landmark deal laid a foundation for sports marketing and PR drive which saves and strengthens Puma’s position as one of the best performers on footwear, apparel and accessories for years now. Lower cost base and marketing Focused CompanyPuma is a virtualized company because it has outsourced all production, procurement of materials, distribution and logistics making its working capital just small. This make the company not only have a lower cost base but more importantly focuses in its core competencies. Weakness(i)The virtualized company can have serious strategic weaknesses in the long runPuma mainly depends on partnerships, collaboration and networking. Although virtual can meet and satisfy its customers adequately just like other, there arguments that such an extreme form of outsourcing are likely to result in serous weakness in the longrun, as the company become devoid to core competences and cut off from the learning which can  exists through understanding these activities in house (Johnson,Scholes and Whittington,2006). (ii) PricePuma products’ prices are relatively lower than rivals. This is a weakness because price may bring implication that you product has lower quality because most of customers associates high price with high quality. Therefore if the product is priced lower to some customer it will mean that its quality is lower as well. Secondly it reduces the revenue especially if it is not accompanied by high volume of sales. To determine and propose the optimal strategies for Puma in light of the above SWOT and analysing possible change issues and challenges in implanting the strategies. Having looked at Puma’s strengths and weakness and taking into consideration opportunities and threats the company can encounter. The following are my proposal of what would be the optimal strategies for the company:-A Hybrid strategyUnder this strategy the company seeks to not only provide product or services benefits which are valued by the customers that are different from those of competitors but also provide those products at a lower price than that of competitors. It has both lower price strategy and differentiation strategy. Lower price strategyThis can be a best strategy for Puma given its financial position and market shares as compared to rivals. Also Puma has already some element of this strategy which can be a foundation for the implementation of hybrid strategy. For example Puma’s products have lower price than those of competitors, defenitely is because the company have a low cost base after outsourcing all logistics, production, procurement of materials and distribution.Without lower cost base you can not sustain this because lower price reduce margin which unless you have some where within other portfolio to subsidise your business will be very difficulty to sustain. However lower price strategy alone can not be effective and sometimes is dangerous because is can led to â€Å"price war† as your rivals imitate what you  have done. Thus to be strategically safe it should be accompanied by differentiation. Differentiation seeks to provide products that offer benefits different from that of competitors and that are valued by buyers. In this case Puma can upgrades its product’s quality and add to them appealing attributes than that of competitors. This can be achieved by Puma because the company have been in this line of business for decades now such that it clearly know its strategy customers (what they want ) and it clearly know what are the competitors(what they offer and their strengths).After upgraded the products Puma can sell them at similar price of that competitors. In this occasion Puma will be increasing its market shares as more people will go for its products. In addition to that Puma can use hybrid strategy to enter into the markets where their rivals are well established. If you look at the big three i.e. Adidas, Nike and Reebok you will note that they are more well off in terms of both financial and present in every country than Puma making it difficulty for Puma to grow the business and grab from them the market shares. But entering the market with a superior product and with lower price will help Puma to take market share, divert the attention of the competitors, and establish a foothold from which they could move further (Porter, M, 1998). It should clear however that the best results from implementation of the hybrid strategy depends on the sustainability of the strategy itself. And to achieve this Puma need to work harder in order to achieve more sales volume so that to compensate the reduced margin due to selling products at the lower price. This can be achieved by strategically driving down costs .For example Puma should encourage more e-business which will enable the company to sell more but maintain lower cost base. It will also enable the company to sell across the boundaries with very minimum resources but yet be able to achieve high volume at least cost. Also incorporating the supply chain into the system with a quick delivery time which can be a critical success factor. Change issues and possible challengesDefinitely what is behind hybrid strategy is selling at the lower price than that of competitors and at the same time seeking to provide products that offer benefits different from those of your competitors. To achieve efficiencies and productivity from hybrid strategy Puma will need to make changes on the entire staff within and around the organisation. It will need to change employees ‘attitudes so that to direct efforts and dedication to achieving of the positive results from the operations with least costs. This can only be achieved if the management will inspire the people towards Maximising output subject to minimisation of cost (cost sensitive strategy) and build and maintain the marketing and sales focused team. To achieve lower cost base require real time visibility to cost-critical information for many important decision that impact cost prior to products delivery. This visibility must be immediate available and understood to all who impact costs in the process across the enterprise. Selling at a lower price reduce margin and to compensate the lost margin you need to increase sales volume. You can achieve this by having a skilled and competent sales force because such a sales force can; †¢Effectively persuade customers to buy and hence increase market shares. †¢Reduce time and efforts necessary to sell by increasing the relationships level with customers. †¢Increase competitive ability and strengths by reducing predictability and delivery concise and consistent. Financially the good sale force can have the following positive results;†¢Good team can expand the size of each deal and close more deals. †¢Can decrease selling expenses. When the team doesn’t perform well sales cycles are extended and multiple calls are required to convince customers. †¢Lower recruitment and training cost. †¢Also if you able to sell more with fewer costs associated with sales efforts your margin increase. †¢A good team easily adapt to changesAll these can positively contribute to lowering down the cost base for the best implementation and achievement of the hybrid strategyReferencesBrassington and Pettitt (2007) Principle of MarketingCzinkota, rivoli and Ronkainen (1992) International business (2nd edition) New York, London, sydnet, Tokyo-The Dryden pressJohnson, Scholes and Whittington (2006) Exploring corporate strategy (7th edition) London Prentice Hall. http://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/Competitive_strategyhttp://en.wikipedia.org/wiki/Porter_5_forces_analysishttp://en.wikipedia.org/wiki/PESTELArmstrong. M. (2006). A handbook of Human Resource Management Practice, (10th edn), Kogan Page, LondonGrant, R.M. (2005), â€Å"Contemporary Strategy Analysis†, Blackwell Publishing Ltd., Oxford (U.K.), 2005Hunger, J. David & Wheelen, Thomas L. (2003) â€Å"Essentials of Strategic Management†. New Jersey: Pearson Education Inc.