TIM

Qizhang Chen TIM 105 Midterm 11-3-2018 Work Schedule

Read and Brainstorm ing

Work on SPSP

Define the problem

Plan the treatment

Execute the plan

Draw diagra ms

Check work

Learn and Gen

Saturday Saturday Saturday Sunday Monday Mon Mon Mon

Problem 1 1. Structured Problem-Solving​: ​Use the structured problem-solving approach to solve the following problem: “improve the existing cell-phone”. 1. ​Define​ the problem:

Develop an integrated business, technology, product/market, and competitive strategy for Microsoft in the next 3 years.

● Sub-problem 1: Build a written statement of the framework. ● Sub-problem 2: Apply the framework to Microsoft’s technology and products, perform

analysis, draw conclusions and make recommendations. ● Sub-problem 3: Make a structured report including 3-5 recommendations. ● Sub-problem 4: Identify 3-5 strategic initiatives taken by Microsoft since 1995 and

compare these to your recommendations in 3. 2. ​Plan the treatment of the problem, i.e., the way in which you going to structure your analysis of the given information in order to solve the problem. Define the process (logical set of steps) for solving the problem by carefully addressing the following questions:

● What information is available for solving the problem? ○ Microsoft 1995 case study from class website ○ Competitive strategy handout from class website ○ Group project phase 1 as an example

● What assumptions need to be made to make the solution process manageable? ○ Who am I?

■ Business Analyst hired by Microsoft ○ Who is the solution for?

■ For the CEO, CIO of Microsoft

● Create a plan for solving each sub-problems: Sub-problem 1:

● Go to class website and find the three-stage framework. ● Revise the framework into Microsoft based. ● Finish the framework

Sub-problem 2: ● Apply the framework to Microsoft’s technology and products, perform analysis,

draw conclusions and make recommendations. Sub-problem 3:

● Make a structured report including 3-5 recommendations. Sub-problem 4:

● Identify 3-5 strategic initiatives taken by Microsoft since 1995 and compare these to your recommendations in 3.

3. ​Execute​ the plan: 1. Sub-problem 1:

Stage 1: Company Analysis 1. Establish the business goals and objectives (ROI, %market share, revenue, and growth

aspirations). 2. Determine the technology strategy and product market strategy for the company. 3. Define the overall development goals and objectives to align business goals, technology, and

market strategies. 4. Develop the functional evolutionary maps of the markets and industry in which the company is

embedded. Create functional maps (time-based evolutionary maps) for technology, product market, and manufacturing strategy of the firm. These maps will be useful in the process of assessing and creating competitive strategy.

Stage 2: Industry Analysis 1. Perform the structural analysis of the industry in which the company is either an active

competitor, or a new entrant, or a substitute. 2. Determine the existing competitive strategy of the company within the industry. 3. Determine the relationships between the company and the other players in the industry.

Stage 3: Assessment and Evolution of the company’s strategy within the relevant markets and industries

1. Using the functional maps of the overall markets and industry in which the company is embedded, as well as the company specific functional maps, assess the evolution of the company’s competitive strategy.

2. Decide on what the company’s future competitive strategy should be, and the corresponding technology strategy, product market strategy, and manufacturing strategy.

2. Sub-problem 2:

Stage 1:Company Analysis 1. Establish the business goals and objectives (ROI, %market share, revenue, and growth

aspirations). (Based on 1993 marketshare scorecard) a. ROI: $953/$633=151% b. Based on the graph, annual market of 1993 is 57% c. Net Revenue of 1993 is $3753

2. Determine the technology strategy and product market strategy for the company. a. Technology Strategy:

i. Provide their customer to have a GUI operating system. ii. Before doing Windows, Microsoft develop applications for Apple, which is a

word-processing and spreadsheet software. iii. Bundling Windows on new computers to reduce distribution and manufacturing

cost. iv. Developed several applications with Windows such as Microsoft office,

including Word, PPT, Excel, Mail, etc. v. Improve the compatibility and performance of their operating systems, such as

Windows 95, they made Windows 95 much more good looking, and easier for other firms to write softwares.

b. Product Market Strategy i. Made Windows better looking and easy-to-use.

ii. Differentiate Strategy for different customers, such as Windows for family, Window for business, business computing, etc.

iii. Bundling Windows software inside the Operating system, such as IE, Microsoft Office, Mail, etc.

iv. Put customer as the first position, persist to make the best operating system for customers.

3. Define the overall development goals and objectives to align business goals, technology, and market strategies.

a. Build better Operating Systems based on customer needs. i. Better looking

ii. Easier to use iii. Smarter system (Artificial Intelligence) iv. More convenience for other firm to develop software on Windows.

b. Develop more Operating systems on different device, other than PC, such as Phones, tablets watch, etc.

c. Develop more software applications bundling with Windows. d. Being larger market share of the whole market.

4. Develop the functional evolutionary maps of the markets and industry in which the company is embedded. Create functional maps (time-based evolutionary maps) for technology, product market, and manufacturing strategy of the firm. These maps will be useful in the process of assessing and creating competitive strategy.

Stage 2: Industry Analysis

1. Perform the structural analysis of the industry in which the company is either an active competitor, or a new entrant, or a substitute.

a. Porter six forces analysis: ■ Structured map for Operating System industry in 1990s

■ Perform a six forces analysis of the Industry/market structure

■ Threat of New Entrants F2 (Low) The theatre of new entrants in the OS industry is low because several big companies had already huge market share, and their product is quite developed, it is hard for new companies to enter this market. So its low.

■ Impact of Buyers F5 (Medium) The buyers’ power is medium not high is because OS is crucial for PC industry, a PC would not work well without a operating system. So demand of operating system from computer manufacturers and individual buyers are high. So the impact of buyers is medium.

■ Suppliers F4 (Low) Supplier power is low. This is because at that time, there is not many suppliers for an operating system. Basic supplier for this is the pc, which is supported by IBM. Workers need PCs to build the system. So the force of suppliers is low.

■ Threat of Substitutes F3 (low) At that time, the only substitute of operating system is another system called DOS, which is also developed by Microsoft. This is low because Windows is another upgrade of DOS, so the force of Substitutes is low.

■ Threat of Competitors F1 (Medium-High) Threat of competitors is medium to high because there are several competitors in this market, some of them like apple, are the inventor of GUI operating system. Windows need to be better to gain more market share, so the threat of competitors is medium-high.

■ Complementors F6 (Low) Force of complementors is low because the only complementor of Windows is MS-DOS. MS-DOS is gradually removed from microsoft and people are using new operating system, so the force of complementors is low.

2. Determine the existing competitive strategy of the company within the industry. a. By corporate with the PC companies, bundling their operating systems to the computers b. Microsoft developed windows which is easier to use and better compatibility. c. The Windows is stabler and faster compare to other operating systems. d. Microsoft’s differentiated strategy toward various customers also bring them huge profit. e. Always focus on real customer needs and build what customer want. f. Predict the market trend and develop before any competitors.

3. Determine the relationships between the company and the other players in the industry. a. See porter analysis above.

Stage 3: Assessment and Evolution of the company’s strategy within the relevant markets and industries

1. Using the functional maps of the overall markets and industry in which the company is embedded, as well as the company specific functional maps, assess the evolution of the company’s competitive strategy.

a. The revolution of Operating system, especially Windows showed that microsoft build a entire new stuff for customers, and they are alway leader of the market. Even though they failed on their early GUI operating system OS/2, they proceed success later on Windows 3.0 and Windows 95.

b. In the progress developing operating systems, microsoft always focus on customer demands, they tried to make their operating system easier and stabler. They want all PCs in this world can have Windows as their operating system.

c. Another reason that Microsoft become successful is that their technology strategy and market strategy. By bundling their OS into new PCs, they reduce the distribution and manufacturing cost, and let more customers know their product either. Furthermore, they build lots of applications in their system, such as Microsoft Office, Internet Explorer, etc. These applications make people using computer easier and learned faster.

2. Decide on what the company’s future competitive strategy should be, and the corresponding technology strategy, product market strategy, and manufacturing strategy.

a. Microsoft should keep developing more and better operating systems in the future to maintain their market share. They will still hold this market share in the future.

b. Microsoft can build operating system for different devices, such as phone, tablets and even watchs. Since different devices will need different kinds of operating systems. They can also make some hardware which is perfectly compatible with their operating system.

c. Microsoft can focus on some future technology, such as cloud computing, artificial intelligence, networking, etc. These technology will need compatibility with their operating system, and will bring them huge revenues.

3. Sub-problem 3: Make a structured report including 3-5 recommendations. ○ Done, see above.

4. Identify 3-5 strategic initiatives taken by Microsoft since 1995 and compare these to your recommendations in 3.

○ Future version of windows, including windows 98, windows 2000, windows ME, they follow my first future strategy. In the future, Microsoft developed Windows XP, Windows Vista, Windows 7…

○ Microsoft build several phone operating system which is called window phone. Windows phone is used on several phone brand such as HTC, Nokia known as Lumia series.

○ Microsoft also made some new hardware devices, such as Surface, a tablet laptop produced by Microsoft. The surface laptop is half tablet half laptop, and it is perfectly compatible with window 10.

4. ​Check​ your work · Is the work correct in every detail?

From my perspective, the work is correct.

· Are my assumptions reasonable? My assumptions are reasonable and appropriate.

· In terms of the things I know, do the results make sense? The result might be little subjective, but I think it is reasonable and make sense.

5. ​Learn​ and Generalize · What have I found out? What does the result mean? · How may the result be affected by my assumptions? · Are the results good enough to act on, or must I refine the solution?

I learned the history of Microsoft and their operating systems, especially windows. I learned how microsoft treat with customer needs and build their product. By comparing with microsoft products nowadays, I found out how microsoft develop and how their technology strategy changed. These knowledge make me know more about microsoft.

Problem 2

Step 1​: Define the problem What decision should the firm make to earn the max profit Sub-problem 1: Do the 6-step Decision Analysis for each project Sub-problem 2: List costs and EMVs for each project Sub-problem 3: Pose the optimization problem with 95M budget Sub-problem 4: Solve the problem and list ROI

Step 2​: Plan the treatment of the Problem:

● What information is available? ○ There are five projects in the SCM. ○ The probabilities are in the potential development project table. ○ The total budget is $95M. ○ Each project is done by separate team and each project is independent.

● Assumption needed? ○ I am the CEO of this software company. ○

Step 3​: Execute of the plan Sub-problem 1​: Do the 6-step Decision Analysis for each project Project E1: Step 1: Building blocks

Step 2: Create a Influence Diagram

Step 3: Convert the ID from previous step into a Decision Tree (DT) by including all of the appropriate branches for the “Decision” and “Uncertain event” blocks

Step 4: Fold back the DT to obtain (Calculate) payoff associate with each choice in the decision blocks

Step 5: Summary:

Decision: “Yes” Do feasibility study EMV for E1: $49.7M Step 6: Perform a sensitivity analysis to determine the robustness of your decision changes in the nominal value of the input parameter

1. Development probability decrease by 10% a. Development probability = 0.88

i. (60)(0.88)+(-10)(0.12)=$52.68 ii. (52.68)(0.85)+(-0.75)(0.15)=$44.67M, Still yes

Project E2: Step 1: Building blocks

Step 2: Create a Influence Diagram

Step 3: Convert the ID from previous step into a Decision Tree (DT) by including all of the appropriate branches for the “Decision” and “Uncertain event” blocks

Step 4: Fold back the DT to obtain (Calculate) payoff associate with each choice in the decision blocks

Step 5: Summary:

Decision: “Yes” Do feasibility study EMV for E2: $59.78M Step 6: Perform a sensitivity analysis to determine the robustness of your decision changes in the nominal value of the input parameter

2. Development probability decrease by 10% a. Development probability = 0.8

i. (75)(0.8)+(-10)(0.2)=$58 ii. (58)(0.9)+(-0.75)(0.11)=$52.08M, Still yes

Project P1: Step 1: Building blocks

Step 2: Create a Influence Diagram

Step 3: Convert the ID from previous step into a Decision Tree (DT) by including all of the appropriate branches for the “Decision” and “Uncertain event” blocks

Step 4: Fold back the DT to obtain (Calculate) payoff associate with each choice in the decision blocks

Step 5: Summary:

Decision: “Yes” Do feasibility study EMV for P1: $188.94M Step 6: Perform a sensitivity analysis to determine the robustness of your decision changes in the nominal value of the input parameter

3. Development probability decrease by 10% a. Development probability = 0.8

i. (250)(0.8)+(-25)(0.2)=$195 ii. (195)(0.9)+(-1.25)(0.15)=$175.33M, Still yes

Project P2: Step 1: Building blocks

Step 2: Create a Influence Diagram

Step 3: Convert the ID from previous step into a Decision Tree (DT) by including all of the appropriate branches for the “Decision” and “Uncertain event” blocks

Step 4: Fold back the DT to obtain (Calculate) payoff associate with each choice in the decision blocks

Step 5: Summary:

Decision: “Yes” Do feasibility study EMV for P2: $305.35M Step 6: Perform a sensitivity analysis to determine the robustness of your decision changes in the nominal value of the input parameter

4. Development probability decrease by 10% a. Development probability = 0.65

i. (450)(0.65)+(-25)(0.35)=$283.75 ii. (283.75)(0.7)+(-1.25)(0.3)=$198.25M, Still yes

Project R&D: Step 1: Building blocks

Step 2: Create a Influence Diagram

Step 3: Convert the ID from previous step into a Decision Tree (DT) by including all of the appropriate branches for the “Decision” and “Uncertain event” blocks

Step 4: Fold back the DT to obtain (Calculate) payoff associate with each choice in the decision blocks

Step 5: Summary:

Decision: “Yes” Do feasibility study EMV for R&D: $350.98M Step 6: Perform a sensitivity analysis to determine the robustness of your decision changes in the nominal value of the input parameter

5. Development probability decrease by 10% a. Development probability = 0.7

i. (650)(0.7)+(-83.33)(0.3)=$430 ii. (430)(0.7)+(-4.5)(0.3)=$299.65M, Still yes

Sub-problem 2: List costs and EMVs for each project EMV and cost for each project: E1: Cost: $10M EMV: $49.7M E2: Cost: $10M EMV: $59.78M P1: Cost: $25M EMV: $188.94M P2: Cost: $25M EMV: $305.35M R&D: Cost: $83.3M EMV: $350.98M

Sub-problem 3: Pose the optimization problem with 95M budget Integer-programming optimization problem: We want to Max the EMV; Max EMV = 49.7E1+59.78E2+188.94P1+305.35P2+350.98R&D 10E1+10E2+25P1+25P2+83.3R&D <= 95 Actually, type code below into ​Lingo​, then we can solve the problem. (Learned from ECON 115) Max = 49.7*E1+59.78*E2+188.94*P1+305.35*P2+350.98*R&D; 10*E1+10*E2+25*P1+25*P2+83.3*RD <= 95; E1>0; E2>0; P1>0; P2>0; RD>0; Not sure if this can be extra point, give me some extra credit if it work lol. Sub-problem 4: Solve the problem and list ROI By looking at the table, I will do as much as P2, so three of P2= 3*25=$75M 95-75=$20M Use $20M to do two of E2, 20 = 2*10 The profit will be 450*3+75*2= $1500M ROI for each project:

E1 497%

E2 597%

P1 752%

P2 1221.4%

R&D 421.3%

I just Realized that I did not add the previous cost into the second one, so for this question I use second cost as my total cost, because it's so difficult for me and no time to change all of the graph and result, Sorry abt that.​ If there is any cash left in my budget, I will make the cash

into maintenance of the system, since for a new system, it may have lots of bug and error, maintenance is important. After that, I will share the cash with employees by stock, which will let employees feel like they are small owners of the company, then they will put more effort on the job, it is good for the company. Step 4​ of SPSP: Check your work: · Is the work correct in every detail?

The points in the table is my opinion, which is subjective. Other work in this problem should be correct. · Are my assumptions reasonable?

My assumptions are reasonable and appropriate. Step 5 of SPSP: Learn​ and Generalize

I learned how to make decision when there is 5 projects in a company, and I have to choose the most beneficial one. It is luck that I can use knowledge from ECON-115, a lingo program will easily fix this problem. I learned how to make decision while there are several factors that impact the result. By using 6-steps decision analysis and ROI, it is easier for a manager to make decision for a company.

Problem 3

Schedule ● Review the homework (5 minutes) ● Brainstorm (5 minutes) ● Work on structure problem solving (120 minutes) ● Define the problem (5 minutes) ● Plan the treatment of the problem (10 minutes) ● Execute the plan (30 minutes) ● Check your work (10 minutes) ● Learn and generalize (20 minutes) ● Total time (250 minutes)

Step 1 of SPSP: Define the Problem: House of Quality for EXbox

● Sub problem 1: Identify the competitors in game console market and do a FAST diagram for this game console.

● Sub problem 2: List key customer needs and product specification ● Sub problem 3: List the steps of HOQ and implement the process to create the HOQ

● Sub problem 4: Benchmark the EXbox against 2 competing products. ● Sub problem 5: Develop a list of target specifications for customer needs, and a list of

target technical specifications for the EXbox. Step 2 of SPSP: Plan:

● What information is available for solving the problem? ○ Online information for game consoles in 1990s ○ Class 1 page “car door” handout ○ Previous work in group project.

● What assumptions need to be made to make the solution process manageable? ○ Who am I?

■ Manager of product development group of EXbox ○ Who is the solution for?

■ For EXbox to determine how they should enter the market. ● Create a plan for solving each sub-problems:

○ Sub-problem 1: ■ Identify the competitor and products ■ Dissect one product ■ Make a FAST diagram for this product

○ Sub-problem 2: ■ Identify the consumer needs and product specification ■ List the consumer needs and product specification

○ Sub-problem 3: ■ List all the HOQ process for a product ■ Implement the process to create the HOQ for EXbox

○ Sub-problem 4: ■ Benchmark EXbox with competing products

○ Sub-problem 5: ■ Develop a list of target specification for EXbox ■ Develop a list of target technical specification for EXbox

Step 3 of SPSP: Execute: Sub-problem 1:

● Identify the competitor and products Competitors for this market in 1990s is:

○ Sony (PlayStation) ○ Nintendo (nintendo 64) ○ SEGA (SEGA Saturn)

● Dissect one product: Sony Playstation and make a FAST diagram for this product ○ Understand how the product works ○ Identify the primary or main function of the product, and place it on the extreme

right of the diagram. ○ Systematically ask “why” and “how” questions and organize the answers with: ○ “Whys” on the right. ○ “Hows” on the left. ○ Stop when we reach the level of subsystems (that are relevant).

<--How FAST Diagram Why -->

Sub-problem 2: List the consumer needs and product specification

Primary Secondary Tertiary

Game Play

1. Smoothly Game performance

1a. Good CPU and memory 1b. Good graphic card

2. Good Sound 3. Good Visual

Experience

1c. Stable Connection with electric. 2a. Good Sound Card 2b. Nice Speaker 3a. Compatible with good monitors

Multiple Users 1. Capable to connect one or more controllers

2. Multiple players can play in one game

1a. Multiple controllers can be connected to console

2a. Game are compatible for multiple players

House of Quality: HOQ (6 STEPS)

Step 1: Make a structured and prioritized list of the customer needs for the intended product based on market research. Assess the importance of each need using the convenient scale.

Customer Needs Importance Scale (1-10)

Performance 8/10

Graphic 10/10

Sound 6/10

Game Compatibility 9/10

Price 8/10

Ease of Install 7/10

Step 2: Make a list of the technical metrics and assess the importance of each metric using a convenient scale.

Technical Metrics Importance Scale (1-10)

CPU performance (GHz) 8/10

RAM performance (Mb) 7/10

Graphic (Benchmarking) 10/10

Game Compatibility (# of games) 8/10

Price ($) 6/10

Step 3: Correlate customer needs and the technical metrics (engineering requirements) using

a convenient scale. The result is called a correlation matrix.

Step 4: There are dependencies between the technical metrics.

4a. ​Correlate the technical metrics to each other using a convenience scale.

Technical Metric Scale

(TM)

CPU performance

(GHz)

RAM Performance

(Mb)

Graphic Performance (Benchmark

ing)

Game Compatibility (# of games)

Price ($)

CPU performance

+ + +

RAM Performance

+- + +- + +

Graphic Performance

+ + +

Game Compatibility

+ + + + +-

Price + + + +- +

+ : Strong Positive Correlation

+- ​: Weak Positive Correlation - : Strong Negative Correlation

Blank : No Correlation

4b. ​Place “Half” of the matrix on top. Updated HOQ:

Step 5: Benchmarking

Assess a set of competing products from the viewpoint of the customer on the functionality of the laptop(customer benchmarking), and from a technical engineering viewpoint (technical benchmarking) and engineering units of measurement for the technical benchmarking.

Sub problem 5: Develop a list of target specifications for customer needs, and a list of target technical specifications for the EXbox.

a. Target for customer needs: i. Low cost (8/10)

ii. Better Performance(10/10) iii. Better Sound (6/10) iv. Ease of Installation (7/10) v. How many games (9/10)

vi. Online Community (8/10) b. Technical metrics:

i. Compatible Games: (1000+) ii. Low Cost ($600)

iii. Easy of Installation (HDMI Connection) iv. RAM (8Gb+)

Step 4​ of SPSP: Check your work: · Is the work correct in every detail?

The points in the table is my opinion, which is subjective. Other work in this problem should be correct. · Are my assumptions reasonable?

My assumptions are reasonable and appropriate. Step 5 of SPSP: Learn​ and Generalize

I learned the process of making a House of Quality for a specific product. What should we value the quality of a product. I also learned the history of the game console, by value the game console in 1990s, I found the difference between game console now and old game consoles. From this midterm, I also learned how to manage the time and finish the work well. The process is tough, but the process of learning is meaningful, Thanks XD