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MGT 216

BUILDING YOUR BUSINESS SKILLS THE ONE-ON-ONE ENTREPRENEUR Goal To encourage you to apply the concept of customization to an entrepreneurial idea. Background Information You are an entrepreneur who wants to start your own service business. You are intrigued with the idea of creating some kind of customized one-on-one service that would appeal to baby boomers, who often like to be pampered, and working women, who have little time to get things done. Method Step 1 Get together with three or four other students to brainstorm ideas for services that would appeal to harried working people. Here are just a few:  A concierge service in office buildings that would handle such personal and business services as arranging children’s birthday parties and booking guest speakers for business luncheons.  A personal-image consultation service aimed at helping clients improve appearance, etiquette, and presentation style.  A mobile pet-care network through which vets and groomers make house calls. Step 2 Choose one of these ideas or one that your team thinks of. Then write a memo explaining why you think your idea will succeed. Research may be necessary as you target any of the following:  A specific demographic group or groups (Who are your customers, and why would they buy your service?)  Features that make your service attractive to this group  The social factors in your local community that would contribute to success FOLLOW-UP QUESTIONS 1 Why is the customization of and easy access to personal services so desirable? 2 As services are personalized, do you think quality will become more or less important? Why? 3 Why does the trend toward personalized, one-on-one service present unique opportunities for entrepreneurs? 4 In a personal one-on-one business, how important are the human relations skills of those delivering the service? Can you make an argument that they are more important than the service itself? EXERCISING YOUR ETHICS: INDIVIDUAL EXERCISE PROMISES, PROMISES The Situation Unfortunately, false promises are not uncommon when managers feel pressure to pump up profits. Many operations managers no doubt recall times when excited marketing managers asked for unrealistic commitments from production to get a new customer contract. This exercise will introduce you to some ethical considerations pertaining to such promises and commitments. The Dilemma You are an operations manager for a factory that makes replacement car mufflers and tailpipes. Your products are distributed throughout the country to muffler-repair shops that install them on used vehicles. After several years of modest but steady growth, your company recently suffered a downturn and shut down 5 percent of the factory’s production capacity. Two supervisors and 70 production workers were laid off. After returning from lunch, you get a phone call from the general manager of King Kong Mufflers, one of the nation’s top three muffler-repair chains, who says the following: I suppose you know that we’re about to sign a contract for your firm to supply us with replacement parts in large volumes, beginning two months from now. Your sales manager assures me that you can reliably meet my needs, and I just want to confirm that promise with you before I sign the contract. This is the first you’ve heard about this contract. While your potential customer is talking, you realize that meeting his needs will require a 20-percent increase in your current production capacity. Two months, however, isn’t enough time to add more equipment, acquire tools, hire and train workers, and contract for supplies. An increase this large might even require a bigger building (which would take considerably more than two months to arrange). On the other hand, you also know how much your firm needs the business. Your thoughts are interrupted when the caller says, “So what’s your production situation insofar as meeting our needs?” The caller waits in silence while you gather your thoughts. QUESTIONS TO ADDRESS 1 What are the underlying ethical issues in this situation? 2 From an ethical standpoint, what is an appropriate response to the customer’s question? What steps should you take in responding to it? Explain. 3 What would you say on the phone at this time to this customer? EXERCISING YOUR ETHICS: TEAM EXERCISE CALCULATING THE COST OF CONSCIENCE The Situation Product quality and cost affect every firm’s reputation and profitability, as well as the satisfaction of customers. This exercise will expose you to some ethical considerations that pertain to certain cost and service decisions that must be made by operations managers. The Dilemma As director of quality for a major appliance manufacturer, Ruth was reporting to the executive committee on the results of a program for correcting problems with a newly redesigned compressor that the company had recently begun putting in its refrigerators. Following several customer complaints, the quality lab had determined that some of the new compressor units ran more loudly than expected. One corrective option was simply waiting until customers complained and responding to each complaint if and when it occurred. Ruth, however, decided that this approach was inconsistent with the company’s policy of being the high-quality leader in the industry. Insisting on a proactive, “pro- quality” approach, Ruth initiated a program for contacting all customers who had purchased refrigerators containing the new compressor. Unfortunately, her “quality-and-customers-first” policy was expensive. Service representatives nationwide had to phone every customer, make appointments for home visits, and replace original compressors with a newer model. Because replacement time was only 30 minutes, customers were hardly inconvenienced, and food stayed refrigerated without interruption. Customer response to the replacement program was overwhelmingly favorable. Near the end of Ruth’s report, an executive vice president was overheard to comment, “Ruth’s program has cost this company $400 million in service expenses.” Two weeks later, Ruth was fired. Team Activity Assemble a group of four students and assign each group member to one of the following roles:  Ruth  Ruth’s boss  customer  company investor ACTION STEPS 1 Before hearing any of your group’s comments on this situation, and from the perspective of your assigned role, do you think that Ruth’s firing is consistent with the company’s desire for industry leadership in quality? Write down the reasons for your position. 2 Before hearing any of your group’s comments on this situation, and from the perspective of your assigned role, what are the underlying ethical issues, if any, in this situation? Write down the issues. 3 Gather your group together and reveal, in turn, each member’s comments on Ruth’s firing. Next, reveal the ethical issues listed by each member. 4 Appoint someone to record main points of agreement and disagreement within the group. How do you explain the results? What accounts for any disagreement? 5 From an ethical standpoint, what does your group conclude is the most appropriate action that should have been taken by the company in this situation? 6
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