Cost Scenario Case Study Example | Topics and Well Written Essays - 750 words

Cost Scenario - Case Study Example Balance 30,000 may be outsourced to the OEM at US$14. Here again, the variable cost has to be reduced to US$5. Lisa Morgan will forfeit the larger part of her bonus, but she will receive some bonus for running the factory at capacity. ClearHear appears to be losing out due to underutilization of capacity. ClearHear must work on costing based on volumes so that they have clear prices to offer on voluminous orders like the present order. There is maximum risk potential when the order is outsourced. The OEM has good track record on delivery and has won several quality awards for its manufacturing processes. However, once the order is outsourced to this OEM, the risk potential exists until the goods are delivered. Internally too, there is risk potential due to decrease in the amount of variable cost. Nevertheless, due to the volume of the order, there is the possibility of reducing the variable cost without compromising quality. In my opinion, Option 2 is the best alternative solution. This is the only option for ClearHear to get the job done through a reliable OEM at a cost it cannot manufacture the cell phones. The problem of acting against the company's statement of values exists in this option. ... It would be better if the variable cost can be reduced further to US$4. In option 2, the order is outsourced to an OEM. The OEM is reliable and has its own manufacturing facilities. The OEM is as good as ClearHear, or even better, where production is concerned. Risk Analysis There is maximum risk potential when the order is outsourced. The OEM has good track record on delivery and has won several quality awards for its manufacturing processes. However, once the order is outsourced to this OEM, the risk potential exists until the goods are delivered. Internally too, there is risk potential due to decrease in the amount of variable cost. Nevertheless, due to the volume of the order, there is the possibility of reducing the variable cost without compromising quality. Risk factor can happen through any unforeseen event, acts of God, contingencies, etc. Recommendation of the best alternative solution In my opinion, Option 2 is the best alternative solution. This is the only option for ClearHear to get the job done through a reliable OEM at a cost it cannot manufacture the cell phones. The problem of acting against the company's statement of values exists in this option. However, this has to be balanced against cutting down on variable costs and increasing risk of encountering loss in the event the variable cost cannot be brought down to US$5 (Opportunity Cost). Outsourcing is valuable and valid and this option must be exercised when other options fail to satisfy the business needs. The business exists to make profits. It does not make sense to reject the order due to inability to hold on to company's statement of values. It is possible to keep the employees working by securing orders where the prices do not have to be slashed (Cost Concepts). Conclusion There is

E-Business Case Study Essay Example | Topics and Well Written Essays - 4000 words

E-Business Case Study - Essay Example The internet that has now emerged and matured, presents a paradigm shift in its very ideation. The infrastructure has acquired a business character, a transcontinental personality and a vending framework of wide-ranging, business, educational, scientific and personal data. Now its use covers real-time computer conferencing, audio broadcasting, video broadcasting, real time telephony and of course real-time business. E-business in its simplest form can be described as doing business in electronic form. Electronic business is the extensive use of computers, communication technology, networking technology and computerized data to perform business processes. In other words, e-business is any system of suppliers, distributors, or customers that use the Internet as the basis for their operations. It can range from using e-mail to communicate with customers and/or conduct business to a web page promoting a company, from a full e-commerce retail site to the integration of procedures and proc esses using Internet based technology. It takes its cue from terms like e-mail, e-commerce, e-governance etc. The term "e-business" was coined by Lou Gerstner, CEO of IBM. Today leading online stores and companies have moved beyond the ‘one-size-fits-all’ approach to internet relationship. It is an electronic commerce application used for B2B or B2C. Online shopping has become popular mainly because of its speed and ease of use. Initially users were mostly computer literates, but now the universality of access marks a paradigm shift in e-business operations. E-business is more than just e-commerce. It involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and cooperating with business partners. Now the internet e-business portals greet each customer by name and present targeted information and services that correspond to each visitor's unique preferences and requirements. This type of personalized attraction increases customer loyalty, enhances revenue for the company and helps in establishing a valuable database of customers. The internet may be changing the way we do business, but it hasn't altered the fundamentals of human nature. People still respond to personalized services. They want to be treated as individuals and they appreciate intelligent assistance in finding products and services that meet their unique needs. Businesses that understand their customers and cater to their individual preferences benefit in two k ey ways. In the short term, they increase the sales potential of every customer interaction. In the long term, they establish a more loyal customer base. Corporate investments in e-commerce sales and marketing applications continue to climb steadily. With a personalized e-business solution, a company can customize the online experience for every visitor who comes to its internet, extranet, or intranet site. The process is relatively straightforward. Visitor information is accumulated through a registration process and by observing online behavior. Patterns can be analyzed and compared. Market segments can be defined and reliable predictions can be made about the products or services that interest a particular individual or group. Based on this analysis, a unique combination of information and promotions are presented to each user. The click stream behavior of each visitor can be monitored and feedback gathered accordingly. Personalized services can improve efficiency and communication throughout the e-business value chain. Companies can also push targeted content depending on the user's business role and personal preferences, further adding value to the user and strengthening the key business objectives. As is the case with the p ersonal business-to-consumer environment, in this case also the tangible and intangible benefits are quite comprehensible. Information flow can be optimized, so that right information gets to the right person at the right time delivering the right content.