Ratio Analysis of Next Plc

Business Accounts – Assignment I Introduction Next plc is a retailer founded 1864 in the United Kingdom, that not only sells men’s, women’s and children’s wear but also has a home ware department. Their clothes wear are stylish but affordable. Throughout the United Kingdom and Ireland there are over 550 Next stores plus 50 franchises operating in Asia, Europe and The Middle East. This report will analyse and outline the company’s profitability, liquidity, solvency and investment potentials based on 15 ratios.All information is taken from the Next plc 2011 statement. Profitability and Performance The gross profit ratio indicates that Next plc was able to maintain their gross profit. It has decreased insignificantly by 0. 05%. In 2011 the revenue has increased by roughly 47 Million, hence the sales of costs increased proportionally to this. The reason for the increase could be either an introduction of a higher priced product line or merely a purchase of more goods. One reason could be that due to higher demands they had to stock up their inventories.This ratio indicates that the company was able to sustain the same level of costs in year 2011, but also that the trading department successfully negotiated better prices with suppliers. The operating margin has experienced an increase in numbers from 15. 55% to 16. 64%. It seems that Next plc found a way to control their costs more efficiently. On the income statement one can see that the administration costs and distribution costs have reduced. This could be due to cuts in wages or rent. In general, however, it can be said that Next plc improved their cost accounting.This could be an explanation for the increase in the operating margin ratio. The asset turnover ratio has fallen slightly by 0. 05. A reason for this could be slightly higher investments in fixed assets like plant or equipment. All in all though, they have managed to maintain leveraging their assets, but in future the y should try to use their existing assets more effectively. One can see that the return on capital employed ratio has experienced a growth of 3. 28%. Just as for the operating margin, a possible reason for this could be major cuts in administration expenses and distribution costs.This ratio indicates that the company has increased its efficiency at creating profits out of the money they have invested in and basically proves that Next plc knows how to use their funds successfully and control their costs effectively. In general, these ratios indicate that the profitability and performance of Next plc is very positive. Liquidity and Efficiency Liquidity ratios indicate how efficiently a company can pay off its short-term and long-term obligations. The inventory days have increased by 8 days. This shows that they keep hold of their stock for a longer period of time.It seems that the demand for their products has decreased. Trade receivables have increased by 2 days, which means that Nex t plc receives money from their customers slightly later than in year 2010. A possible reason for this is a general rise in unemployment and hence â€Å"limited growths of consumer credit† (Next Plc, 2011). However, receiving money from their customers later than before, the company has managed to pay back their creditors faster in 2011 than in 2010 (trade payable days have decreased by 2 days). This is likely to prove a higher efficiency of balancing costs and revenues on the company’s part.In a wider context approximately 80 days are a relatively long time to repay credits. This could on the one hand demonstrate the creditors’ trust in Next plc and their ability to pay back, but it is also possible that the company simply struggles to pay back credits any earlier. In this case though the trade payable days are probably high due to good negotiations of the purchase department with their suppliers. This assumption is based on the fact that Next Plc has a high am ount of cash. The current and quick ratios have slightly fallen.The current ratio is still above 1, meaning the company does not have any problems meeting their short-term obligations. A reason for this slight decline could be that there has been an increase in their short-term debt. In this case their current liabilities did actually increase. As long as the current ratio, which takes inventories into account, is higher than 1, they do not experience any problems repaying their short-term liabilities. However, the quick ratio is smaller than 1 and has marginally decreased in 2011. Due to this Next Plc might have problems paying off their short-term liabilities if sales decreases in the next years.In general though, they seem to have a rather good ability to generate cash and pay off their obligations. Solvency The gearing ratio seems to be immensely high. This could be due their major savings. It seems that they are buying their own shares back perhaps in order to save up for proje cts like reorganisations or investments. It has decreased by half from 2010 to 2011 probably because they reduced their non-current liabilities. High gearing is supposed to be risky and also results in paying higher interests. Their interest cover has risen by 2, possibly due to the fact that the interest figure has fallen by 1.This means they can pay off their interest roughly three times more than in the previous year. A possible reason for this could be a decline in interest. In general, Next’s interest payments seem to be very safe. They are generating enough revenues to meet interest expenses. Investors Ratios Investor ratios are usually used by investors in order to examine if it is worth investing their money in a company. They monitor these figures over years in order to make a â€Å"right† decision. The earnings per share ratio has increased from 188. 5p to 221. 9p.The reason for this is that the profit after tax has increased in 2011 and the number of ordinar y shares declined by 33. 4. This obliviously results in the earning per share being higher. A reason for the decline in numbers of ordinary shares could be that Next Plc bought back shares. The dividend yield has experienced a growth by 0. 46. This means that investors receive more money than in year 2010. A reason for this is that the current market has not changed over two years, the price remained stable. In 2011 the dividend cover has fallen slightly by 0. 26.A possible reason could be that they have decided to increase the dividends per share in relation to profit after tax. The price/earning ratio has experienced a decline by 0. 021. This shows that in 2011 investors receive their money back slightly quicker compared to 2010. This could be due the decline in numbers of shares; meaning Next Plc could afford to give out dividends faster. Economical position Debenhams plc is one of Next’s main competitors. It can be insightful to examine the economical state of relevant co mpetitors in order to judge a company’s success. Debenhams’ ROCE-ratio shows extremely lower figures than Next Plc. 010 the ROCE was 13. 94% and 2011 12. 34%. First of all, one can see that it has decreased in 2011 and compared to Next plc it is roughly 45% lower in both years. It is crucial to note here that Next plc increased their ROCE whereas Debenhams Plc’s decreased. This shows that Next plc is extremely more efficient in creating profits out of the money they have invested in. Based on the current ratio one can say that Debenhams plc would be struggling to pay off their short-term obligations since it is less than 1 whereas Next Plc would have no problems since theirs is above 1.The interest cover is also much lower compared to Next plc. However, Debenhams plc’s interest cover has increased by circa 3% it is still 17% lower than Next Plc’s. This indicates that Next plc either has greater profits or Debenhams plc has higher interests. All in all, it seems that Next plc was not badly affected by the recession compared to Debenhams plc. Conclusion In conclusion, it can be said that Next plc successfully managed to maintain and even reduce their costs and maximise their profit especially thanks to Next Directory, which has increased by 7. 1%.Although the economical environment is rather weak they could yet overcome these obstacles and make a profitable year in 2010 and even increase their profit in 2011. The general economic situation is likely to suffer from the worldwide consequences of the financial crisis as well as the European Euro crisis in particular. This means that Next plc has to find a way to become more competitive so as to maintain their high profits. For instance, they could invest in marketing to attract more customers and hence increase and sustain sales. The only ratio that they might have to worry slightly about is the quick ratio.But as long as they keep their sales up the current ratio does not seem to be any problem at all. All in all, most of the ratios indicate that Next plc is overall a successful growth company. They proved its competitiveness despite the economical decline in retail and in the consumer price index, which has decreased to 4. 2% from 5. 2%. Especially, when comparing Next plc to its main competitor one can see that they successfully kept their sales up. Generally, the ratios indicate that Next plc has a relatively strong and stable economic success, while controlling their costs effectively.All ratios, especially the dividend yield, prove that the company is a highly profitable company to invest in. Reference List http://www. bbc. co. uk/news/business-15344297 https://fame2. bvdep. com/version-2012113/Report. serv? _CID=63&context=2A6M7EI864H8BPQ&SeqNr=0 http://www. nextplc. co. uk/~/media/Files/N/Next-PLC/pdfs/reports-and-results/2010/2011-03-24a. pdf http://www. nextplc. co. uk/about-next/our-history. aspx http://www. nextplc. co. uk/about-next/business-ove rview. aspx http://www. retaileconomics. co. uk/outlook-for-the-uk-retail-sector-q3-2011/

Does Advertising Affect Effect Our Food Choices

With 11 herbs and spices, it’s finger licking good. Good evening ladies and gentlemen. â€Å"There is no love sincerer than the love for food. † Said Sir George Bernard Shaw. Advertisers buy our love of food with big, flashy, bright adverts. For years, advertising has influenced us. We see them everywhere, on TV, the newspaper, billboards and on the web. Many scientific studies have shown that advertising influences the food we choose.Did you know that the average American child watches 20 000 food adverts a year, 9 out of ten are for fatty high sugar containing foods. The obesity epidemic is related to the rise in advertising. We are digging our graves with our very own forks and knives. Billions of dollars are spent each year on advertising, so that business can get their food onto your plate. This is very profitable. McDonalds spends about 2 billion dollars each year, advertising. Therefore, they control 64% of the United States hamburger market. % of the worldâ€⠄¢s population eats McDonalds every day. Mmm and they are loving it. Like most parents you’re sitting there, feeling completely helpless, knowing how much your precious darlings love the advertised fast foods. You rationalize that this is fresh food, prepared under 5 minutes and miraculously served at room temperature, how convenient is that? You silently wish that you did not know that it is made up of ingredients with more preservatives than an Egyptian mummy.This is the moment of truth. Researchers have shown that if nutritious foods are advertised, people are more likely to choose healthy foods. You have the power to demand responsible advertising. Like Barack Obama once said: It is time to change the way we do business. This will demand new thinking, and a new sense of responsibility. You can protect our future generations. So if music be the food of love , play on!!!

21th Bled eConference eCollaboration Essay

1 Introduction This is not a research paper. Rather, it is a teaching report in which I describe the use of the so called beer distribution game (or beergame) – a logistics and supply chain simulation game – in teaching business-to-business eCommerce. The aim of the paper is twofold: First, I want to demonstrate how the beergame can be used to provide students with a more profound understanding of the reasons why eCommerce technologies are used in contemporary supply chains to exchange information and to facilitate collaboration. Second, I want to share both my experiences and my materials for using the beergame in eCommerce courses with the IS community, i.e. those scholars that teach (business-to-business) eCommerce or supply chain management courses. The beergame is a role-play simulation game in which students enact a four stage supply chain. The task of this supply chain is to produce and deliver units of beer: the factory produces and the other three stages deliver the beer unit s until it reaches the customer at the downstream end of the chain. In doing so, the aim of the players is rather simple: each of the four groups has to fulfil the incoming orders of beer by placing orders with the next upstream party. Since communication and collaboration is not allowed between supply chain stages, the players invaria588 bly create the so called bullwhip effect. With ‘bullwhip’ we refer to the effect that the amount of periodical orders amplifies upstream in the supply chain towards the production end, thus causing a range of operational problems. The bullwhip effect is a well-known phenomenon and a prominent symptom of coordination problems in supply chains. In using the beergame to create the bullwhip effect students experience first hand, not only the problems of lack of information sharing and collaboration in supply chains, but also the main causes for the creation of the bullwhip effect. Henceforth, in introducing eCommerce measures in the later sessions of the course, students can relate to these topics through their own experiences. The paper ties in with a recent discussion on the ISWorld eMail list on â€Å"how to make relevant IS teaching for students with little or no practical experience†. In teaching information systems (IS) and specifically B2B eCommerce we frequent ly experience problems of making relevant those topics for students. The challenge is to get them to appreciate the relevance of IS and also to provide them, not only with a superficial knowledge of the topics, but with a more profound understanding of the reasons why eCommerce technologies are used in practice. Against this backdrop I want to show how the beergame can help demonstrating the role and need of eCommerce technologies in a topic area in which the students not only lack practical knowledge (i.e. with regards to supply chains), but typically also do not have their own frame of reference to be able to relate to the topics we teach. To this end, I will introduce the beergame, demonstrate its use in a classroom setting, present typical results created by playing the game and show how I embed the game in a typical B2B eCommerce syllabus. I begin with introducing the game and the bullwhip effect (in section 2). In section 3, I then describe the application of the beergame in a classroom setting; I give an overview of a beergame session and present typical results. Section 4 demonstrates how typical supply chain problems (and the causes of the bullwhip effect) can be deduced from the beergame experience in order to motivate the introduction of eCommerce measures for improving supply chain coordination. The section is concluded by a synopsis of typical eCommerce topics that can follow the beergame in a typical B2B syllabus (section 4.3). 2 The Beergame In the following I will first give a brief introduction to the bullwhip effect before I introduce the beergame itself, i.e. its history, structural setup and the rules of the game. 2.1 Bullwhip effect as symptom of typical supply chain problems The bullwhip effect is a well-known symptom of typical coordination problems in (traditional) supply chains. It refers to the effect that the amount of periodical orders amplifies as one moves upstream in the supply chain towards the production end (Lee, Padmanabhan & Whang 1997a). Even in the face of stable customer demand small variations in demand at the retail end tend to dramatically amplify upstream the supply chain with the effect that order amounts are very erratic, and can be very high in one week and almost zero in the next week. This phenomenon was discovered and first described by Forrester (1961) who did research into the relationship between ordering and stock keeping patterns using simulation models (Warburton 2004). The term itself was first coined around 1990 when Procter&Gamble perceived erratic and amplified order patters in its supply chain for 589 baby diapers. The effect is also known by the names whiplash or whipsaw effect (Lee, Padmanabhan & Whang 1997a), which refers metaphorically to the visualisation of order patterns moving upstream the supply chain (see figure 3). As a consequence of the bullwhip effect a range of inefficiencies occur throughout the supply chain, e.g. high (safety) stock levels, poor customer service levels, poor capacity utilisation, aggravated problems with demand forecasting, and ultimately high cost and low levels of inter-firm trust (Chopra & Meindl 2001; Lee, Padmanabhan & Whang 1997a). While the effect is not new and a lot of research has been conducted and supply chain projects have been initiated since its discovery, it is still a timely and pressing problem in contemporary supply chains. Various research studies have quantified the effect and estimate that profitability in most supply chains might improve by up to 30% by eliminating the bullwhip effect (Metters 1997; McCullen & Towill 2002). 2.2 Beergame setup and rules Having introduced the bullwhip effect and its implications for the supply chain and its players I will now introduce the beergame, its setup and rules. I begin by providing a brief history of the game before I present the general structure and the rules of the game. 2.2.1 History of the beergame The beergame (or beer distribution game) was originally invented in the 1960s by Jay Forrester at MIT as a result of his work on system dynamics (see Forrester 1957). While the original goal of the simulation game was to research the effect of systems structures on the behaviour of people (â€Å"structure creates behaviour†), the game can also be used to demonstrate the benefits of information sharing, supply chain management, and eCollaboration in the supply chain (Li & Simchi-Levi 2002). A range of different versions of the beergame have emerged over the years. The original beergame was realised as a board game (Sterman 1989). Meanwhile a table version (Ossimitz, Kreisler & Zoltan 20 02) and also computerised simulations (Hieber & Hartel 2003) have been developed. In this paper I predominantly draw on a table version, which I adapted from the so called Klagenfurt design (cp. Ossimitz, Kreisler & Zoltan 2002); the structural setup of the table version is shown in figures 1 and 2. I will briefly discuss advantages and disadvantages of the different game versions in chapter 3.1 where I discuss the administration of the beergame in a classroom setting. 2.2.2 General structure of the game The beergame simulates a supply chain that consists of four stages (retailer, wholesaler, distributer and factory), each of which is played by one or better two or three players (Goodwin & Franklin Sr. 1994). Hence, a supply chain is typically played by 8 to 12 people, while more than one supply chain can be administered in one class at the same time. The task of each supply chain is to produce and deliver units of beer: the factory produces and the other three stages deliver the be er units until it reaches the external customer at the downstream end of the supply chain. In doing so, the aim of the players is rather simple: each sub group has to fulfil the incoming orders of beer. The retailer receives an externally predetermined customer demand and places orders with the wholesaler; the wholesaler sends orders to the distributor, who orders from the factory; the factory finally 590 produces the beer. Hence, orders flow in the upstream direction, while deliveries flow in the downstream direction of the supply chain. An important structural aspect of the game is delay (i.e. time lag) in order to account for logistics and production time. Each delivery (and production order) requires two rounds until they are finally delivered to the next stage. In the structural setup of the game this is represented by two shipping delay fields located in between the supply chain stages as well as at the production end (figure 1). Order flow Delay Delay Delay Delay Factory Factory Distributor Distributor Wholesaler Wholesaler Retailer Retailer Product flow Figure 1: Supply chain setup in the beergame table version Student Outgoing order Play sheet Incoming order Wholesaler Delay Distributor Distributor Outgoing delivery Delay Factory Incoming delivery Student Student Figure 2: Detailed table layout 2.2.3 Rules of the game The game is played in rounds, which simulates weeks. In each round the following steps have to be carried out by the players: 1) receive incoming orders, 2) receive incoming deliveries, 3) update play sheets (outstanding deliveries and inventory), 4) send out deliveries, and finally 5) decide on the amount to be ordered. In doing so, deciding on each round’s order amount is effectively the only decision that players are able to make throughout the game; everything else follows a set of fixed rules. The first rule is that every order has to be fulfilled, either directly (should the players’ inventory be large enough) or later in subsequent rounds. In the latter case, players have to keep track of their backlog (backorder) (Coakley et al. 1998). Secondly, inventory and backlog incur cost – each item in stock costs EUR 0.50 per week, while each item on backlog costs EUR 1.00. Consequently, the primary aim of ea ch subgroup is to keep their costs low. Hence, the optimal strategy for the players is to run their business with as little stock as possible without being forced to â€Å"move into backorder†. Thirdly, players are not allowed to communicate. The only information they are allowed to exchange is the order amount; there is no transparency as to what stock levels or actual customer demand is; only the retailer knows the external demand (Rafaeli et al. 2003). Moreover, the game is based on the simplification of unlimited capacity (in stock keep591 ing, production and transportation) and unlimited access to raw materials at the production end (Hieber & Hartel 2003). 2.2.4 The external demand In playing the game the external demand is predetermined and usually does not vary greatly. In the beginning, the supply chain is pre-initialised with inventory levels (e.g. 15 units), orders (e.g. 5 units) and beer units in the shipping delay fields (e.g. 5 units). In order to induce the bullwhip effect to the supply chain the external demand remains stable for a few rounds (e.g. 5 units for 5 rounds) before it suddenly shows one steep increase (jumps to 9 units) before it remains stable again at this higher level for the remainder of the game (usually 40 to 50 rounds in total). However, the one increase in external demand is enough to induce variance into the supply chain, which will inevitably lead to the creation of the bullwhip effect and to a destabilisation of ordering patterns throughout the supply chain. 3 Using the beergame in class Having described the idea, the structural setup, and the rules of the beergame, I will now discuss the administration of the game in a classroom setting. This is followed by the presentation of typical results generated by beergame applications in eCommerces courses. These results are very useful for deriving the causes of the bullwhip effect in discussions with students in a so-called debriefing session (see section 4). For a session outline of a B2B course that uses the beergame please refer to appendix 2; the experiences shared in the following sections are more or less based on this session outline. 3.1 Administering the beergame 3.1.1 Choosing a beergame version As mentioned above, different versions of the beergame exist for use in classroom settings. The traditional version is a board game in which tokens are physically moved on the board to represent orders and stock. The upside of the board version is that people relate well to moving actual objects. However, there are two downsides: firstly, the board game is too slow, cumbersome and complex to administer; secondly and more importantly, because physical objects are used to represent inventory on the board, people enjoy an unwanted transparency of inventory levels of other supply chain stages and can thus strategically act upon their knowledge of incoming stock. The table version of the beergame was originally developed by a team at the University of Klagenfurt (Ossimitz, Kreisler & Zoltan 2002). It shows several improvements to the original design such as a leaner and more pragmatic approach to moving orders and stock in the supply chain. Essentially this is done by using paper slips on which numbers are written by the players. However, it still shows some administrative overhead such as a bookkeeping p erson that takes stock of all things happening within the supply chain using a computer. While this functions as a built-in safety net in case something goes wrong, it is still a hurdle to the application in a classroom setting and it also slows down the game, which results in long sessions and the students being bored throughout the game. Henceforth, I have adapted the table version and essentially eliminated the bookkeeper in order to achieve a more straightforward progression of the game. The 592 risk however is that students make mistakes in calculating order amounts or stock levels using the paper play sheet. While it helps to start slowly and to doublecheck the play sheet calculations during the first few rounds, in a few of my first beergame applications some people indeed miscalculated stock levels, which led to problems with interpreting the data later on. For this reason, today I use MS Excel and a laptop computer on each table for people to fill in their play sheets; this effectively eliminates the risk and ensures a quick progression of the game (see appendix 1 for a play sheet example). 3.1.2 Schedule of a beergame session The first step in administering the beergame is the preparations of the tables. As is illustrated in figure 2, four fields have to be marked on each table, which is done by fixing to the table 4 sheets of paper using sticky tape. The same is done with the delay fields. Furthermore, cardboard boxes (or plastic cups) and envelopes have to be filled with small paper slips to pre-initialise the supply chain with orders and deliveries. Then, every table has to be prepared with a stack of order and delivery slips that will be used by the players during the game. Finally, paper slips with the external demand progression (see above) have to be prepared that are handed to the retailer groups during the game. Also, for administering more than one supply chain, (student) assistants are needed to help with moving boxes and envelopes during the game. The second step is briefing the students; in doing so I provide a short introduction to the idea of the game, its history, structure, and rules (see above). When playing in more than one supply chain I stress the fact that groups of each stage are competing with one another (e.g. retailer vs. retailer), in order to get the students to take playing seriously. The third step is to start playing some initial trial rounds with the pre-initialised supply chain and to make sure that everyone gets used to filling in play sheets and order/delivery slips. Then, in the fourth step, the speed of playing the game is increased and the game is played for a number of 40 to 50 rounds. The game is then stopped abruptly so that the students do not have time to react strategically to the coming end of the game. The fifth and final part of the session is a short discussion directly after the game, where I ask students how they felt throughout the game and what they think the average customer demand was. The next session after the beergame session is the debriefing session, for which the data that the groups produced throughout the game has to be consolidated, plotted and analysed. Typical beergame results and their creation are presented in the next section; the debriefing session is described in section 4. 3.2 Typical progression and results of a beergame session Every beergame session follows roughly the same scheme, so that the progression of the game shows a recurring pattern. I usually start playing the game at a slow pace for people to get used to moving objects, taking stock and filling in the play sheets. What typically happens during these first few rounds is that people try to get rid of some of the inventory (e.g. 15 units) in order to manage their costs; hence they often only place small orders in the beginning (for an example see weeks 1-7 in figure 3). Consequently, when the customer demand jumps to the higher level in round 6 the supply chain has adjusted to a low demand scenario. After the steep increase many retailer groups tend to wait one or two rounds in order to see if the increase is permanent (as in figure 3). When they then place the first large order they invariably initiate a bullwhip effect that perpetuates through593 out the chain. Typically, the order amount increases with every stage in the supply chain (as in figure 3). What happens then is that the groups move deeply into backorder (see figure 4), because due to the delivery delays it takes quite some time for the beer to move through the supply chain to the retail end. Getting increasingly desperate players often try to send signals and place more large orders; in the end they typically lose track of what they have ordered and order way too much. The consequence is that the supply chain is flooded with beer and the inventories overflow (see weeks 2035 in figure 4). The effect is that people cease ordering entirely; e.g. a lot of very small orders are placed. This is especially true for the higher stages of the supply chain (see table 1). In the end, while the retailer groups often manage to stabilise their business, the higher stages have no idea of the actual customer demand and are left frustrated. Bullwhip Effect 70 60 50 Customer Orders 40 30 20 10 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 Week Retailer Wholesaler Distributor Factory Figure 3: Plot of order distribution, visualising the bullwhip effect Figure 3 shows the order distribution over 40 weeks and a typical bullwhip effect. Figure 4 shows the inventory fluctuation, with negative inventory representing back order. Table 1 finally shows the decrease in customer demand information upstream visualised by the average order amount by the four stages of the supply chain in this example. More importantly, the increase in order fluctuation upstream the supply chain is illustrated by the largest amount having been ordered in each stage and the number of small orders that were placed. This translates into an increase in inventory fluctuation as well. All this information is being used in the following debriefing session to discuss the bullwhip effect, its implications and the reasons for its existence. 594 Out of stock = Serious lack of service level! 200 150 100 Inventory 50 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 -50 -100 -150 Week Retailer Wholesaler Distributor Factory Figure 4: Example of inventory fluctuation (negative inventory = backorder) Key figures Retailer Wholesaler Distributor Factory ∅ order amount (units of beer) 8.33 8.68 8.75 9.95 Largest order amount 25 40 50 60 No of small orders (0-2 units) 4 11 14 18 Inventory fluctuation range 84 81 170 165 Table 1: Example of key figures derived from the beergame 4 Learning from the beergame results Having presented the way in which the beergame is administered and a typical progression of the game and its results, I will now first show how a debriefing session can be used to illustrate supply chain coordination problems and to derive typical causes for the creation of the bullwhip effect. Based on these causes one can then quite easily motivate eCommerce measures and ICT-based supply chain reform initiatives that aim at reducing the bullwhip effect and improving supply chain coordination. 4.1 The debriefing session The debriefing session follows the beergame session (see appendix 2). I usually begin the session with a brief discussion of students’ experiences throughout the game. Typically, the following questions are being discussed: Did you feel yourself controlled by forces in the system from time to time? Or did you feel in control? Did you find yourself â€Å"blaming† the groups next to you for your problems? Did you feel desperation at any time? This discussion typically shows that people indeed were blaming their neighbouring supply chain partners for not doing their jobs right (either not ordering in a 595 sensible way or not being able to deliver); desperation and frustration are common feelings during the last rounds of the game. A first learning from this discussion is that it is the structure of the game (i.e. the supply chain) that causes the behaviour. This is precisely what its inventor (Forrester) intended to achieve and what is referred to as the effects of systems dynamics. A second set of questions can then be discussed in order to reflect upon the beergame itself and its degree of simulating real world conditions: What, if anything, is unrealistic about this game? Why are there order delays? Why are there production delays? Shipping delays? Why have both distributor and wholesalers; why not ship beer directly from the factory to the retailer? Must the brewer be concerned with the management of the raw materials suppliers? Using these questions and by stressing the fact that real-life supply chains are much more complex (a huge variety of products and supply chain partners e xist, as well as complex criss-crossing networks of relationships) the students can quickly be convinced that real-life conditions favour the emergence of the bullwhip to a much greater extent and that the beergame is indeed a good vehicle to simulate the creation of the effect. Having established this necessary bit of legitimisation, the session can then proceed with presenting the beergame results and with identifying the underlying causes. Hence, the next step essentially is to present, for all supply chain groups, the data (table 1) and figures (3 and 4) presented above. In doing so, I typically have a very interactive and lively discussion. I ask what people thought while playing the game and what led them to, for example, place a huge order at a particular point in the game. In discussing the extreme examples, the class usually shares a laugh, which, as a nice by-product, leads to a more casual atmosphere and contributes to setting an open tone for the remainder of the course. I also honour the winning supply chain teams at this point in time. This is also the time where I introduce the concept of ‘cumulated supply chain cost’, e.g. by pointing ou t that the product at the customer end has to earn all (cumulated) costs of all supply chain parties; this insight serves as a first step in establishing the idea of global thinking and chainwide optimization, which essentially requires eCollaboration technologies. At this point in the session one can then either go straight to identifying the causes and effects of the bullwhip effect (see below), or take a little (useful) detour in discussing a teaching case to corroborate the results and to give the results of the beergame some more credibility. In doing so, I use the case of Italian pasta manufacturer Barilla, one of the first documented cases in which a company launched a project to identify the causes of the bullwhip effect and to introduce some countermeasures (see Simchi-Levi, Kaminsky & Simchi-Levi 2003, p. 91). 4.2 Identifying the causes of the bullwhip effect The bullwhip effect, as simulated in the beergame, is mainly caused by three underlying problems: 1) a lack of information, 2) the structure of the supply chain and 3) a lack of collaboration and global optimisation. These three causes can be identified in an interactive session with the students by discussing the beergame experiences and then be corroborated with insights from practice and the literature. 596 4.2.1 Lack of information In the beergame no information except for the order amount is perpetuated up the supply chain. Henceforth, most information about customer demand is quickly lost upstream in the supply chain. Moreover, no other information is being shared. With these characteristics the beergame simulates supply chains with low levels of trust, where only little information is being shared between the parties. Without actual customer demand data, all forecasting has to rely solely on the incoming orders at each supply chain stage. In reality, in such a situation traditional forecasting methods and stock keeping strategies contribute to creating the bullwhip effect (Lee, Padmanabhan & Whang 1997a; Simchi-Levi, Kaminsky & SimchiLevi 2003). Unexpected increases in orders from downstream partners translate into even higher order increases upstream, because when players regard the increase to be permanent and want to avoid running out of stock, they need to update their safety stock levels; hence they place an even larger order. Later, when it turns out that an increase was only temporary, safety stock levels are lowered and players might order nothing for a while, hence contributing to the bullwhip effect. 4.2.2 Supply chain structure The supply chain structure, with its design as separate stages and the long lead times, contributes to the bullwhip effect. The longer the lead time, i.e. the longer it takes for an order to travel upstream and the subsequent delivery to travel downstream, the more aggravated the bullwhip effect is likely to be. With traditional ordering, the point in time where an order is typically placed (the order point) is usually calculated by multiplying the forecasted demand with the lead time plus the safety stock amount, so that an order is placed so far in advance as to ensure service level during the time until the delivery is expected to arrive (Simchi-Levi, Kaminsky & Simchi-Levi 2003). Hence, the longer the lead time is, the more pronounced an order will be as an reaction to an increase in forecast ed demand (especially in conjunction with updating the safety stock levels, see above), which again contributes to the bullwhip effect. 4.2.3 Local optimisation Local optimisation, in terms of local forecasting and individual cost optimisation, and a lack of cooperation are at the heart of the bullwhip problem. A good example for local optimisation is the batch order phenomenon. In practice, ordering entails fix cost, e.g. ordering in full truck loads is cheaper then ordering smaller amounts. Furthermore, many suppliers offer volume discounts when ordering larger amounts. Hence, there is a certain incentive for individual players to hold back orders and only place aggregate orders. This behaviour however aggravates the problem of demand forecasting, because very little information about actual demand is transported in such batch orders. And batch ordering, of course, contributes directly to the bullwhip effect by unnecessarily inflating the orders. This might lead to lower local cost in the short term, but translates into higher overall cost at the chain level. 4.3 eCommerce measures to tackle the bullwhip effect Having identified and discussed the three problem areas with regard to both the beergame and their real-world counterparts, I then present three areas of improvement that directly correspond to the three problem areas: 1) information sharing in terms of electronic data interchange, 2) ICT-enabled supply chain re597 design, and 3) supply chain collaboration for global optimisation (see figure 5). In terms of teaching, these three bundles of eCommerce measures and initiatives can then be briefly introduced in one session (see appendix 3) or in more (technical and organisational) detail in three separate sessions (see appendix 2). In the following sections I give a brief overview of what can be part of those sessions. 1 Information loss upstream the supply chain Without direct communication, forecasting is based on aggregated, inaccurate information. This causes large stock, high cost, poor service levels. Improvement Efficient communication and information sharing 2 Supply chain structure Long lead times lead to increasing variability upstream making planning nearly impossible: large safety stock is required, variability increased. Slow downstream product flow causes poor service levels. Improvement Supply chain redesign: processes, tasks & roles 3 Local optimization Independent planning and local optimization lead to inefficiencies, such as local forecasting, batch ordering, inflated orders, etc. Improvement Cooperation to achieve global optimization Figure 5: Summary of bullwhip causes and areas of improvement 4.3.1 Efficient communication One of the most basic learnings from the beergame is to improve information sharing along the supply chain (e.g. of point-of-sale customer demand data); information sharing is the first step towards more advanced supply chain coordination (Muckstadt et al. 2001). Henceforth, the first step in teaching eCommerce measures is to present the principles and technologies of electronic data interchange. In doing so, I first of all discuss with the students the â€Å"principles of digitally mediated replenishment of goods† by Johnston (1999), essentially a collection of principles for effective inter-organisational electronic data interchange, such as the â€Å"once-only data entry principle† or the â€Å"synchronicity principle†. Based on these fundamental principles I discuss the ways in which traditional document-based ordering can be reformed using electronic data interchange. While these topics might seem to be outdated from a modern information systems perspective, it lays the foundation for a step-by-step increase of complexity that aims at providing the students with a more substantial knowledge of the problems and ideas behind ICT-enabled supply chain reform than can be achieved by a simple presentation of the latest communication technologies. The next step in this endeavour is to introduce technologies that are needed to enable effective inter-firm data interchange and electronic ordering, such as product numbering schemes and automatic product identification technologies. In most supply chains physical products have to be handled; hence ways are needed to attach information to these objects. Consequently, I introduce the following technologies: †¢ Standardised product numbering schemes: Here, the history, proliferation, functioning and impact of numbering schemes such as the Universal Product Code (UPC), the European Article Numbering (EAN) code and more special598 ised codes like for example container codes (SSCC) are introduced. Most of these codes today are administered by the standardisation organisation GS1 (2005). †¢ Automated product identification technologies: The technology with the greatest diffusion in the market is the barcode; while specialised barcodes exist in some industries, the most common one is the UCC/EAN-128 (Coyle, Bardi & Langley 1996). The second, much newer technology to be discussed here is Radio Frequency based Identification (RFID). †¢ Electronic Data Interchange (EDI): EDI is the basis for electronic ordering. Here, traditional EDI standards, such as the UN/EDIFACT, which was jointly developed by ISO and the UN (Coyle, Bardi & Langley 1996), can be discussed, as well as newer techniques such as Internet-based WebEDI and XML-enabled order exchange. In discussions with the students these enabling communication and data exchange technologies can then be related back to the beergame experience in that they 1 ) speed up the order process, thus reducing lead time and 2) enable more sophisticated information sharing of POS data. Moreover, they are the basis for the next step, the ICT-enabled redesign of supply chain structures. 4.3.2 ICT-enabled supply chain reform initiatives The second building block in dealing with the bullwhip effect comprises a range of different supply chain reform initiatives that can be subsumed under the concept of efficient replenishment. As such, two distinct types of measures can be distinguished: 1) inventory management concepts that aim at changing the ways in which actors in the supply chain carry out their roles of stock keeping and ordering and 2) logistics concepts that aim at improving actual material and information flow. Efficient inventory management is based on the idea that suppliers have timely access to POS data and can thus eliminate traditional forecasting and change the way ordering and inventory management is carried out (Lee, Padmanabhan & Wh ang 1997b). Three concepts with increasing degrees of complexity can be distinguished: †¢ Quick Response: The idea behind this concept is for the supplier to become more responsive to changes in customer demand through the sharing of POS data. Retailers still prepare individual orders, but suppliers are better prepared. †¢ Continuous Replenishment: Suppliers continually receive POS data from retailers to prepare shipments at agreed-upon levels. †¢ Vendor Managed Inventory (VMI): Under this initiative the suppliers manage all inventory aspects for their own products at the retailer end. Suppliers decide on shipment levels without any orders from the retail end to be placed. In fact, the retailer has very little to do with the operational aspects in VMI (Waller, Johnson & Davis 1999). The second type of efficient replenishment measures is efficient logistics (see Simchi-Levi, Kaminsky & Simchi-Levi 2003). Here, two main building blocks can be discussed: †¢ Warehousing and delivery concepts: Depending on the kinds of goods that are moved along the supply chain, different kinds of warehousing and delivery can be applied in order to achieve an optimal flow of goods. Cross docking is a concept in which warehouses function as inventory coordination points rather than actual inventory storage points; hence, goods are only re-shuffled 599 between trucks coming in from suppliers and trucks leaving for stores. This instrument can be used for fast selling products. For bulk products central warehousing can be used; while fresh products benefit from direct delivery. †¢ Full-blown just-in-time delivery (JIT): Most commonly found in the automotive industry, ‘just-in-time’ describes a concept, whereby supplier and manufacturer align their logistics and production processes to a degree that no (or very little) inventory is needed. Goods can be directly delivered from the production at the supplier to arrive just in time to be used in production at the manufacturer end (e.g. Johnson & Wood 1996). Changing the way in which inventory is managed means to effectively change the supply chain structure. For example, by implementing VMI the supply chain partners eliminate one stage of ordering, thus eradicating one step in the typical bullwhip chain of events. Moreover, by speeding up product flows using the logisti cs concepts lead time is being reduced, which in turn softens the bullwhip effect. Consequently, all measures discussed in this section can be directly motivated by the beergame. In presenting this block to the students I also point out, for every singly concept, the role of information systems and eBusiness technologies. 4.3.3 eCollaboration: joint planning and global optimisation The third block of eBusiness measures for tackling the bullwhip effect is the most sophisticated one and builds on the first two blocks. Global optimisation of supply chain processes can only be achieved through the collaboration of supply chain partners under a joint initiative. I present the Collaborative Planning Forecasting and Replenishment (CPFR) initiative as an example from the Grocery industry (VICS 2001) and also discuss (sometimes only briefly) joint product development initiatives in the automotive industry. CPFR as a concept builds on and extends concepts such as VMI by aiming at establishing a long-term planning of joint promotion activities. CPFR is based on the observation that a combination of inventory management and logistics concepts (see section 4.3.2 above) can reduce the bullwhip effect for day-to-day deliveries, but that these concepts still can not cope with demand variations induced by promotion activities. Hence, CPFR aims a t jointly planning promotions and to create transparency as to the expected demand increases induced by these promotions. The concept is based on the use of shared eMarketplace infrastructures, which I also discuss in some detail in this section. Again, the application of eCommerce technologies can be nicely illustrated using the beergame. 4.3.4 Summary The discussion of the three building blocks of eCommerce measures culminates in the development and presentation of an integrated model of eCommerce-based supply chain management informed by the key learnings from the beergame. The model is presented in figure 6. Following the line of argument in the last sections, it becomes obvious that the beergame can be used to motivate and substantiate large parts of a typical eCommerce masters course (as in appendix 2). In the next section I draw some final conclusions and briefly reflect upon the use of the beergame in a classroom setting. 600 Supply Chain Reform Initiatives Supply Chain Reform Initiatives Tactics Operations Infrastructure Improvements Improvements Suppy Chain Suppy Chain problems & problems & trade-offs trade-offs Information loss Joint Planning CPFR (promotions, product introduction), Category Mgmt, Production scheduling Collaboration Strategic alliances for global optimization Efficient Replenishment Inventory Management: Quick Response, CRP, VMI, SBT Redesign ICT-enabled supply Chain re-structuring S.C. structure Materials & information flow: Direct delivery, Warehousing, X-docking Local optimization Communication Information sharing, Electronic ordering Efficient Communications Infrastructure, EDI, AutoID, Product numbering, Process simplifications Figure 6: A comprehensive eCommerce and supply chain model 5 Conclusion and outlook I have introduced the beergame and demonstrated its usefulness in teaching B2B eCommerce and supply chain management. To the present day, I have used the beergame mainly in eCommerce masters courses at different Universities in different national contexts. The experiences and also the teaching evaluations have always been positive and very encouraging. While I believe that the beergame, and the way it is embedded in my B2B eCommerce syllabus, works well in providing students with both a profound understanding of the underlying wisdoms of eCommerce, as well as with a good overview of eCommerce measures, there is more to it than that. Playing the beergame is great fun, for the teacher and for the students, and it is always a good experience in itself. As such, the beergame is also very helpful for the general course atmosphere and the creation of positive team dynamics in the group. For the future, we are working on a software version of the beergame, which can be used in a classroom setting in the same interactive role-play style, but avoid some of the still remaining problems of the table version. While software versions today only provide a simulation (instead of role-play) mode and are not built for classroom use, a client-server software version of the game might replace the cumbersome logistics aspects (the moving of boxes) and help in gathering data that can be used for debriefing straight away. Moreover, it would be great to be able to play the beergame with different setups, e.g. with implementing effective sharing of (customer demand and inventory) data in order to demonstrate, in a second round of play, the usefulness of information sharing in reducing the bullwhip effect. To this end, our software will be flexible enough to incorporate such exploration of different supply chain modalities.1 1 For further information please see: http://www.beergame.org. 601 Appendix 1: Beergame play sheet The following table shows the play sheet of a retailer group that was filled in during a beergame session. The ‘incoming order’ column shows the external customer demand with its increase in round 6. During the game the students only have to fill in the white columns – the ‘incoming delivery’ and the ‘incoming order’ are taken from the incoming paper slips, while in the ‘your order’ column the students have to fill in their order decision for the respective weeks. Having done that, the play sheet shows exactly what has to be written on the outgoing order and delivery slips (in the dark columns). All orange columns are calculated automatically, so that students can easily keep track of their inventory and cost progression. After the beergame this data is then put together and consolidated with the data that was collected in the play sheets of the other groups of the same supply chain. It is then plotted to create figures 3 and 4 and table 1 (see above). Week Incoming Delivery Available Incoming Order Your Delivery Backorder Inventory Cost 7,5 15 22,5 30 35 37 40 45 49 52 64 78 86 100 118 137 159 180 201 223 244 265 283 295 303 316 317,5 321 324,5 328 331,5 335 338,5 342 345,5 348,5 351 353 355 357 Your Order Please fill out play slips: Delivery Order 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 5 5 5 5 0 3 2 7 10 10 0 7 15 3 5 8 6 10 9 8 10 9 12 15 13 4 25 13 9 9 9 9 9 9 9 8 8 8 9 9 20 20 20 20 15 13 6 7 10 10 0 7 15 3 5 8 6 10 9 8 10 9 12 15 13 4 25 16 16 16 16 16 16 16 16 15 14 13 13 13 5 5 5 5 5 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 5 5 5 5 5 9 6 7 10 10 0 7 15 3 5 8 6 10 9 8 10 9 12 15 13 4 22 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 3 5 4 3 12 14 8 14 18 19 22 21 21 22 21 21 18 12 8 13 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 15 15 15 15 10 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 7 7 7 7 7 7 7 7 6 5 4 4 4 0 3 2 7 7 12 5 10 10 6 5 7 15 25 15 5 5 6 11 9 9 9 9 9 9 9 9 9 9 9 9 8 8 8 9 9 9 9 9 9 5 5 5 5 5 9 6 7 10 10 0 7 15 3 5 8 6 10 9 8 10 9 12 15 13 4 22 9 9 9 9 9 9 9 9 9 9 9 9 9 0 3 2 7 7 12 5 10 10 6 5 7 15 25 15 5 5 6 11 9 9 9 9 9 9 9 9 9 9 9 9 8 8 8 9 9 9 9 9 9 602 Appendix 2: Syllabus for a beergame-based B2B course The following table gives an overview of how the beergame can be incorporated in a typical (B2B) eCommerce (masters) course (e.g. 12 weeks with 3 hour sessions). The beergame and the subsequent modules can cover up to 6 sessions. After presenting the three blocks with eCommerce improvements, an additional session can be used to discuss management challenges of inter-firm collaboration, covering issues such as trust, managing interfaces, ICT standards etc. Throughout the course, cases from the grocery and the automotive industries might be used for illustration purposes and to facilitate discussions. Depending on the setting, background readings might also be handed out to the students. Sessions (3 hours) Topics / session contents 1. Beergame session a. Introduction to supply chains (why have supply chains?) b. Beergame introduction (setup, structure, rules of the game) c. Playing the game (40-50 rounds) d. Brief discussion afterwards 2. Debriefing a. Discussion of experiences and game setup b. Presentation and discussion of beergame data (results) c. Teaching case Barilla: bullwhip causes [optional] d. Identification of the three main causes of the bullwhip effect e. Short presentation of three areas of improvement and the schedule for the next three sessions 3. Information sharing a. Short discussion: why is information sharing important? b. Principles of electronic data sharing c. Attaching information to physical goods: standardised product numbering, Automated product identification technologies: barcodes, RFID d. Electronic Data Interchange: EDI, WebEDI, XML-based ordering 4. Supply chain reform a. Overview: efficient replenishment initiatives b. Efficient inventory management: Quick Response, Continuous Replenishment, Vendor Managed Inventory (VMI) c. Efficient Logistics: Warehousing, Direct Delivery, CrossDocking d. Just-in-Time Delivery in the automotive industry [Kanban] 5. eCollaboration a. eCollaboration in the supply chain: idea and philosophy b. Collaborative Planning Forecasting & Replenishment (CPFR) c. Joint product development in the automotive industry 6. Management of inter-firm collaboration a. Complexities of supply chain reform initiatives b. The role of trust and social capital in inter-firm relationships c. Interoperability of ICT d. Managing inter-firm interfaces 603 Appendix 3: Session outline for a beergame-based workshop The following table shows a short workshop format based on the beergame. Such a workshop can be incorporated in other (general IS) courses or be a stand-alone event, for example as an executive teaching offering. The workshop is essentially made up of two sessions – the actual beergame session and a combined debriefing and learnings session. As an example industry the Grocery industry can be used to illustrate the application of the eCommerce initiatives and technologies. Sessions (~3 hours) Topics / session contents 1. Beergame session a. Introduction to supply chains (why have supply chains?) b. Beergame introduction (setup, structure, rules of the game) c. Playing the game (40 rounds) d. Discussion of experiences and game setup 2. Debriefing & eCommerce initiatives a. Presentation and discussion of beergame data (results) b. Identification of the three main causes of the bullwhip effect c. Discussion of three areas of improvement: a. Information sharing: Product numbering, AutoID, EDI b. Supply chain reform: Inventory management & logistics concepts c. eCollaboration: CPFR d. Complexities of supply chain reform initiatives 604 References Chopra, S., Meindl, P. (2001): â€Å"Supply-Chain Management†, Upper Saddle River, NJ. Coakley, J. R., Drexler Jr., J. A., Larson, E. W., Kircher, A. E. (1998): Using a computer-based version of the beer game: Lessons learned, Journal of Management Education, Vol. 22, No. 3, pp. 416-424. Coyle, J. J., Bardi, E. J., Langley, C. J. (1996): â€Å"The Management of Business Logistics (6th Ed.)†, St. Paul. Forrester, J. W. (1957): Industrial Dynamics. A major breakthrough for decision makers, Harvard Business Review, Vol. 36, No. 4, pp. 37-66. Forrester, J. W. (1961): â€Å"Industrial Dynamics†, Cambride, MA. Goodwin, J. S., Franklin Sr., S. E. (1994): The Beer Distribution Game: Using Simulation to Teach Systems Thinking, Journal of Management Development, Vol. 13, No. 8, pp. 7-15. GS1 (2005): â€Å"About the EAN/UCC System†, Available: [http://www.ean-ucc.org] (2007-12-13). Hieber, R., Hartel, I. (2003): Impacts of SCM order strategies evaluated by simulation-based ‘Beer-Game’ approach: the model, concept and initial experiences, Production, Planning & Control, Vol. 14, No. 2, pp. 122-134. Johnson, J. C., Wood, D. F. (1996): â€Å"Contemporary Logistics (6th Ed)†, Upper Saddle River. Johnston, R. B. (1999): Principles of Digitally Mediated Replenishment of Goods. Electronic Commerce and Supply-Chain Reform, in â€Å"Electronic Commerce: Opportunities and Challenges†, S. M. Rahman & M. Raisinghani, (eds.), Idea Group Publishing, Hershey, pp. 41-64. Lee, H., Padmanabhan, V., Whang, S. (1997a): The Bullwhip Effect in SupplyChains, Sloan Management Review, Vol. 38, No. 3, pp. 93-102. Lee, H., Padmanabhan, V., Whang, S. (1997b): Information Distortion in a Supply-Chain: The Bullwhip Effect, Management Science, Vol. 43, No. 4, pp. 546-558. Li, M., Simchi-Levi, D. (2002): â€Å"The Web Based Beer Game – Demonstrating the Value of Integrated Supply-Chain Management†, Available: [http://beergam e.mit.edu/guide.htm] (2007-08-25). McCullen, P., Towill, D. (2002): Diagnosing and reduction of bullwhip in supply chains, Supply Chain Management: An International Journal, Vol. 7, No. 3, pp. 164-179. Metters, R. (1997): Quantifying the bullwhip effect in supply chains, Journal of Operations Management, Vol. 15, No. 2, pp. 89-100. Muckstadt, J., Murray, D., Rappold, J., Collins, D. (2001): Guidelines for Collaborative Supply-Chain System Design and Operation, in â€Å"Technical Report of the Cornell University School of Operations Research and Industrial Engineering†, Nr. 1286, Ithaca, NY. Ossimitz, G., Kreisler, B., Zoltan, M. (2002): â€Å"Simulation von Supply-ChainManagement Systemen†, Available: [http://www.uniklu.ac.at/~gossimit/pap/bg_endbericht.pdf] (2007-02-11). Rafaeli, S., Raban, D. R., Ravid, G., Noy, A. (2003): Online Simulations in Management Education about Information and Its Uses, in â€Å"Educating Manag- 605 ers with Tomorrow’s Technologies†, C. Wankel & R. DeFillippi, (eds.), Greenwich, pp. 53-80. Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. (2003): â€Å"Designing & Managing the Supply-Chain (2nd ed)†, Boston, MA. Sterman, J. D. (1989): Modeling Managerial Behaviour: Misperceptions of Feedback in a Dynamic Decision Making Experiment, Management Science, Vol. 35, No. 3, pp. 321-339. VICS (2001): â€Å"Collaborative Planning, Forecasting and Replenishment (CPFR), Version 2†, Available: [http://www.vics.org/committees/cpfr/voluntary_v2/CPFR_Tabs_061802. pdf] (2008-01-07). Waller, M., Johnson, M. E., Davis, T. (1999): Vendor Managed Inventory in the Retail Supply-Chain, Journal of Business Logistics, Vol. 20, No. 1, pp. 183-203. Warburton, R. (2004): An Analytical Investigation of the Bullwhip Effect, Production and Operations Management, Vol. 13, No. 2, p. 150–160.

Analysis Of Foreign Direct Investment And Marketing Management

Foreign direct investment, marketing strategy, management of marketing operations , determinants of FDI, market access Foreign direct investment is the investment that is made by an organization or an individual in a specific country related to the interests in business in the other country. Foreign direct investment takes place when an organization plans to expand its operations in a different country or acquires business assets in a foreign country. Foreign direct investment is attracted by countries which have an open economy and offers skilled workforce to the organization. Foreign direct investments can be of three types which are, vertical, horizontal and conglomerate (Blonigen and Piger 2014). Foreign direct investment can be used by any organization as an international market strategy according to which they can invest in manufacturing or setting up a new factory in a different country. The definition of FDI is also related to the acquisition of interest related to a company in another country. The different ways by which the organization can enter a new market are, construction of facilities in a new market area, acquisitions and mergers, investment in joint venture which is located in a foreign area. Foreign direct investment is made by an organization so that they can access to closed markets which are limited by trade related barriers (Papadopoulos, Hamzaoui-Essoussi and El Banna 2016). The companies can take advantage of the lower costs related to production and labour in the new market areas of the country. This type of investment is important for many industries or companies which demand innovation and access to technology. Investments are made in different countri es so that the organization can enhance its competitive position in the industry (Sheth and Sisodia 2015). The conclusions that are presented in the study are of significance in the academic and practical fields. On one hand, this supports the development of the studies related to future research related to the marketing strategies developed after making investments in the foreign countries. On the other hand, the reasons that are related to the foreign investment related decisions of the organizations are also presented. This study will therefore help in analysing the foreign investments and the strategies related to marketing. Blonigen, B.A. and Piger, J., 2014. Determinants of foreign direct investment.  Canadian Journal of Economics/Revue canadienne d'à ©conomique,  47(3), pp.775-812. Olson, E.M., Slater, S.F., Hult, G.T.M. and Olson, K.M., 2018. The application of human resource   management policies within the marketing organization: The impact on business and marketing strategy implementation.  Industrial Marketing Management. Papadopoulos, N., Hamzaoui-Essoussi, L. and El Banna, A., 2016. Nation branding for foreign direct investment: an Integrative review and directions for research and strategy.  Journal of Product & Brand Management ,  25(7), pp.615-628. Sheth, J.N. and Sisodia, R.S., 2015.  Does marketing need reform?: Fresh perspectives on the future. Routledge.

The automotive industry in For almost the past hundred years the Essay

The automotive industry in For almost the past hundred years the automotive industry has dominated Michigan's economy. How and - Essay Example In addition, in 1990, the city ranked thirteenth amongst largest cities in the United States with a population of about 285,000 residents (Cooney & Yacobucci, 2006). The other thing is that the city was situated along a river, whose water offered power and transportation for outgoing goods and incoming supplies. This paper therefore, seeks to find out why for almost the past hundred years, the automotive industry has dominated Michigan’s economy. In addition, the paper will explore how and why the industry established itself in Michigan, and what have been its effects--positive and negative. From the beginning, Detroit was preferably positioned to be a hub of the automobile industry in the United States. This is based on the fact that the place was squarely located in the heartland of United States—an area that connected many other key regions in the US. For instance, it was linked Pennsylvania, lower New England, Ohio, Illinois and Indiana (McAlinden & Andrea, 1992). W ith these, the required raw materials for production of automobiles were easily transported to the city via rail and the Great Lakes waterways (McAlinden & Andrea, 1992). Furthermore, the coal producing regions of West Virginia and Pennsylvania were directly connected to Michigan and specifically Detroit by rail. Furthermore, the great steel factories of Youngstown, Pittsburgh, Gary, Chicago and Cleveland were just a few miles away from Detroit. The copper and iron mining zones of Minnesota and northern Michigan were reachable without any difficulty by ship (McGinnis, 2005). The other contributing factor was that its centrality at west and east confluence offered auto manufacturers easy access both to the much needed capital and product markets for its unprecedented growth. The contribution of Henry Ford and Dodge was another factor behind the establishment of Michigan as an auto hub (Cooney & Yacobucci, 2006). Before, the coming of Ford, the first auto companies were very tiny oper ations, however, this changed as Ford invented the methods of mass production, along with the advanced assembly line techniques, including vast River Rouge complex, aspects which turned around the scale and scope of auto production in Michigan (McGinnis, 2005). Dodge, on the other hand, set up an enormous Main automobile Plant just close to that of Ford. All these grand automobile plants served to turn Michigan into an American automobile hub. The accessibility of Detroit also brought in enough workers who provided reliable labor for the labor-hungry automobile industry. Potential auto workers from Midwest moved into the area as a result of the declining logging industry. In short, Henry Ford, based in Detroit, Michigan, was responsible for the groundbreaking innovations that were later copied by competitors such as Chrysler, American Motors and General Motors. Each organization set up their headquarters in the Detroit making it the main center for car production not just in America but also world over. Positive impacts of auto industry in Michigan Enhanced Diversity The emergence of the automobile industry completely transformed Michigan and especially Detroit, attracting more than one million new migrants and via its technological aspect and its demographic impact, reshaped the cityscape in different ways. The population of the State changed in diversity (McAlinden & Andrea, 1992). On top of migrants from the hinterlands of Midwest,

Business report Essay Example | Topics and Well Written Essays - 2000 words - 1

Business report - Essay Example In order to get a clearer picture, the SWOT analysis is carried out on the Guardian Newspaper, which is a perfect example for the newspaper industry in the developed world. Lewin’s force filed analysis was then carried out on the impact of the internet on the industry; especially sine is the most significant factor affecting the newspaper industry today. Finally, drawing from the force field analysis, the report discusses the reasons for the continued growth of the industry in India, which is largely due to the low penetration of internet services in the country. Table of Contents Contents Page 1. Executive Summary†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.2 2. Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..4 3. PEST Analysis of the Newspaper Industry†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.4 4. SWOT Analysis of the Guardian Newspaper†¦Ã¢â‚¬ ¦..7 5. Lewin’s Force Field An alysis†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..9 6. Newspaper Industry Success in India†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.11 7. Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..12 8. ... here has been falling circulation in New Zealand, Australia, Latin America, Western Europe, and the US for the last few decades, although there are rising sales, for example, in India. This decline has been hastened by the advent of the web, particularly since most young people now prefer to get their news from the web (The Economist, 2006: p1). This business report seeks to carry out a PEST analysis of the newspaper industry in developed nations, a SWOT analysis for the Guardian Newspaper, which has one of the highest readerships in the UK, and carry out a Lewin’s field force analysis for the impact of the internet on the industry in developing markets. Finally, it will also discuss the reason for continued success of the Industry in India. PEST Analysis of the Newspaper Industry PEST is an acronym that stands for political, economic, social, and technological factors affect the operations of a business. After assessing these factors, business managers, can then identify the factors that pose risks or opportunities to inform their decision-making. It provides the context for the role of the organization in relation to its external environment. It also underpins various other analytical techniques such as scenario planning at micro-level, for example, individual or institutional, or macro-level like UK-wide, EU-wide, or worldwide (Meyer, 2012: p58). Depending on the scale and scope of the analysis, business managers consider the factors that influence changes, factors that will be important in the future, and those important at present. Its benefits to the business include spotting of business opportunities and revealing what direction change is taking in the environment to shape what is happening. Moreover, it helps the business to avoid projects that could end up

The Function of Seduction in Maupassants novels Bel-Ami, Pierre et Essay

The Function of Seduction in Maupassants novels Bel-Ami, Pierre et Jean and Une vie - Essay Example First, the male characters in Bel-Ami and Pierre et Jean use seduction appealing to women in order to be accepted by them because perhaps they do not accept themselves the way they are. George Duroy (Bel-Ami) seduces all the women in the novel because he does not have what Roy (Engendrement du Romanesque) calls the â€Å"ideal self†. It is this lack of self-confidence, the weakness of his ego, that pushes him to seduce. Duroy comes from a modest family which he wants to change by becoming wealthy. Second, male protagonists often use seduction to change their identity, to take one some other identity. . In Bel-Ami, Duroy is frustrated of being part of the lower social rank, so he always tries to dissimulate his poverty from others. For example, when Duroy invites Mme de Marelle to his place, he changes the decor of his â€Å"shabby apartment† in order to hide his poverty. Also, in order to hide his peasant background, Duroy â€Å"forgets† to invite his parents to his wedding with Madeleine Forestier. Similarly in ‘Une vie’, Julien de Lamare disconcerts us by his successive metamorphoses all along the novel. The narrator portrays Julien as a handsome man, a seductor and as someone full of disguise and dissimulation. In fact, we realize that Julien is just a fortune hunter who knows how to play his physical appeal for seducing. Once he marries Jeanne, he drops his mask and reveals his true personality. Third, men use seduction to reach wealth and power. Indeed, in Une Vie, Julien de Lamare comes from a ruined family and that had a great impact on him. Julien will do anything to seduce and marry a rich commoner (Jeanne) in order to regain legitimacy and the glamour of his name (Ball 56). In Bel-Ami, on Madeleine Forestier’s recommendations, Duroy seduces Mme de Marelle and then Mme Walter. One provides him with housing and money while the other makes him chief editor. After Mme de Marelle remark about Mme