Transworld Auto Parts

Christine Lam BA 453 Case instruct Transworld Auto part November 11, 2012 Company Overview Transworld Auto Parts ( badger) is a layer 1 manufacturer of original and after-market parts for simplistic machinemobile producers many(prenominal) in the United States and abroad. TAP focuses on manufacturing in two core result lines electronics and interiors. Apart from that, it as hearty as discovers its node-centered breakdowns into four variants luxury, prudence, mid-priced, and truck. TAP also serves in terzetto main geographic markets including North America, Europe, and Asia.Problem Definition Which of the two balanced wag approaches better illust range how Transworld Auto Parts can improve their ROCE by 8% given the current economical downturn? Situational Analysis Transworld Auto Parts belongs in the automobile manufacturing industry. This industry is very susceptible to industry trends and changes because more than of the industrys receipts sales depends on th e external surroundings which affects both(prenominal) consumer and supplier behavior. During 2008 when the economy experienced a global recession, many auto murderrs such as Chrysler and General Motors were on the brink of insolvency due to the decay in car sales.Utilizing the PESTEL framework to better substantiate the macro-environment, the recession reflects economic factors in the external environment which can influence the industry. The recession unnatural consumers in the sense that they possessed less disposable income, causing them to be less inclined to purchase new cars during this time. However, other aspects of the external environment can benefit firms within this industry. For example, with the rising automobile production in Asia, many suppliers can consider global expansion and developing sales in international markets.Many car manufacturers in Asia possess low chore costs and a great demand in local markets, so suppliers within the industry have this opport unity to expand. Not unless is it serious to consider the industry and external environment in which TAP operates in, it is also important to analyze its internal resources and capabilities in order to better understand the fraternity. TAP currently has operations in four different customer-centered divisions luxury, economy, mid-priced, and truck. However, TAP decided to only focus on improving their luxury and economy division because these two divisions will allow TAP to compete ggressively and produce the most profit, according to their research. Each of the separate divisions is cared by a separate manager and supporting staff. This allows Ellen Bright, CEO of TAP to distinguish results from each division and form her own board of directors to make strategic decisions. TAP flourishes with this ranked structure because it allows the company to micromanage each separate divisions positiveness for the company and for it to implement any changes when necessary.Strategy Aft er Bright decided to get by the other two divisions, each manager from the luxury and economy division respectively were assigned to create a balanced take in peak to describe their documentals on how to improve their division and what must be do to achieve their parent companys target goal of an 8% return on capital employed (ROCE). Eckhardt, president of the luxury division presented a balanced score account that was simple yet with rivet objectives for each aspect of the balanced score card.For example, the pecuniary perspective contained 4 main goals increase ROCE, increase cash in flow, increase revenue, and increase gross margin. The customer perspective simply include improve customer enjoyment, manage innovation, and initiation customer R&D partnerships. Similarly, the process perspective included two main goals reduce cranky materials cost and maintain case leadership. Lastly, the learning and growth perspective only included one objective increase employee eng agement. On the other hand, Kwon, president of the economy division took a more complex and descriptive approach with the balanced score card.He went into point in time about each of the four perspectives and proposed very particularized, action-oriented goals. He had similar financial perspective objectives, but each of the other perspectives contained about four or five different objectives. For example, the learning and growth perspective contained six objectives go over buyers on low cost procurement, enhance electronic interchanges with customers and suppliers, transform work force into JIT/lean experts, make JIT/lean a priority for all workers, light up IT to support TQM and JIT, and enhance workforce capabilities in TQM.Both approaches of the balanced score card aim to attain similar overall goals. Below are some pros and cons for each approach Luxury variance- Pros focusing goals in broad chunks make it easier to attain, with attainable goals employees are happier, crea ting healthier company morale Cons too simple without specifically stating what actions must be taken in order to follow objectives, might cause confusion among employees Economy Division- Pros very detailed with specific measures and actions on how to achieve objectives Cons may seem to expect too often from employees, which makes goal appear to be and discourage employeesAction Plan After analyzing both approaches to the balanced score card, the economy division presented a more well thought out and action specific think to reach the companys target goal. The most important factors to consider when analyzing balanced score cards are * Does it describe and link? * Does it provide incentives and balances? * Does it predict and excogitation? Kwon did a great job describing each objective and linking it to other perspectives of the BSC. This in turn created specific goals which are measurable.The objectives he proposed included both financial and non financial goals creating an ov erall balance. Lastly, his balanced score card plans for not only short term objectives but also long term objectives which helps plan for the companys future success. In conclusion, Kwon had a better approach to the balanced score card and Bright should promote Kwon to the COO position. cecal appendage A Revised Balanced Score Card for Luxury Division Objectives Measures Financial perspective Increased ROCE ROCE Increase Cash Flow Year-to-date cash flow from operating activities Increase Revenue Year-to-date revenueIncrease realize Margin Gross Margin % Customer Perspective Improve customer satisfaction global market share Be low-cost provider of quality % of components with prices lower than competitors Manage innovation of products number of new products introduced, customer surveys Create customer R&D partnerships number of customers with whom TAP partners with Be highest quality provider customer surveys Process Perspective Reduce raw materials cost cost of raw materials with respect to % of revenue Eliminating defect rates track number of defectsImprove supplier base number of suppliers, ratings of each supplier Better inventory/demand forecasting % reduction in inventory carrying costs Improve manufacturing efficiency reduction in unscheduled downtime, % reduction in labor hours per part Learning and Growth Perspective Increase training of employees number of certified employees Increase employee engagement satisfaction surveys Aligning IT support % increase in IT spending Managing tools employee uses employee survey