BSBMGT608

BSBMGT608 Manage innovation and continuous improvement Assessment Task 2

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Task 02 (Portfolio): Develop options for

continuous improvement

Submission details

The Assessment Task is due on the date specified by your trainer. Any variations to this

arrangement must be approved in writing by your trainer.

Submit this document with any required evidence attached. See specifications below

for details.

You must submit both printed copy and soft copy of your answers.

Submit printed copy of required evidences (your answers) to your Trainer with the

"Assessment Cover Sheet" (Filled out and signed appropriately) attached on top of your

answers.

Upload the softcopy on the eLearning site with appropriate header and footer (Your

name, student id, unit/subject name, assessment no, page no, etc.)

The Trainer/Assessor may further prompt and question in order to receive answers of appropriate

quality or if further clarification required and to validate authenticity of your submitted work.

Assessment description

Based on the case study provided, you will develop a performance improvement strategy, brief a

team of peers on the strategy, develop the strategy and encourage innovation within the group

session, and incorporate results of consultation into strategy. You will develop risk and cost-

benefit analyses which you will submit to your assessor for approval.

Procedure

1. Read the case study ‘A. C. Gilbert’ (Appendix 1). Assume no improvements have been made

and the company is still operating in the same way today as when it closed in 1967.

2. Consider the following scenario:

Your manager, as per organisational processes for continuous improvement, has asked you

to develop a performance improvement strategy, brief the management team, develop the

idea with the team, seek the team’s approval and seek final approval from your manager.

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3. Develop a one page performance improvement strategy related to competitiveness.

Include:

a. strategic goals

b. description of proposed process or amendment to current process

c. brief explanation of how proposal will improve performance and competitiveness

d. KRAs, KPIs, targets.

4. Prepare to deliver a 20–30 minute management team briefing and consultation session:

a. distribute your proposed strategies to team (team members may be other learners, or

other group approved by assessor)

b. ask team to consider strategy, including:

i. pros and cons

ii. changes or improvements to strategy

iii. preparing to discuss changes or improvements at team briefing and

consultation session

c. agree time for session (agree time with assessor to ensure assessor can observe

session).

5. Lead session.

a. discuss options and work through group suggestions

b. use creative techniques to generate or develop ideas

c. work through implications of suggestions to trial them

d. encourage group to point out issues or potential problems during trailing

e. if and when applicable, accept failure of ideas and recognise successful ideas.

6. Summarise results of session and seek group’s approval for amended strategy.

7. Incorporate results of session into revised strategy.

8. Develop a risk analysis for strategy.

9. Develop a cost-benefit analysis for strategy.

10. Arrange a time to meet with assessor (as your manager) to discuss strategy, risk and cost-

benefit analyses. Explain costs and benefits. Seek approval for strategy.

11. Submit documents to your assessor as per the specifications below. Ensure you keep a

copy of all work submitted for your records.

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Task Specifications

You must provide a:

● one page performance improvement strategy

● 20–30 minute team briefing and consultation session (team members may be other

learners, or other group approved by assessor)

● revised one page performance improvement strategy

● written risk analysis

● written cost-benefit analysis.

Your assessor will be looking for:

● application of quality management and continuous improvement theories in improvement

strategy

● demonstration of creativity and innovation theories in group consultation

● application of organisational learning principles

● demonstration of cost-benefit analysis

● demonstration of risk management

● analytical skills to identify improvement opportunities

● demonstration of creativity skills to think laterally and identify improvement opportunities

that come from group

● demonstration of learning skills to develop options for continuous improvement

● demonstration of teamwork and leadership skills to lead group session.

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Appendix 1 – A. C. Gilbert

History 1909–1961

Alfred Carlton Gilbert was an inventor and a toy manufacturer who invented the Erector

engineering set. His original company, The Mysto Manufacturing Company, was founded in 1909

to manufacture the Erector set. In 1916, Mysto became the A. C. Gilbert Company and gained a

reputation for producing quality toys.

By the 1950s, A. C. Gilbert was one of the leading toymakers in the United States with annual

sales regularly topping $17 million. This was an outstanding achievement for a relatively small

company.

In 1961, A. C. Gilbert senior died, leaving the company in the hands of his son, A. C. Junior. At the

time A. C. Junior took over the firm, the company was established as a traditional, reliable and

profitable manufacturer of educational toys.

Product lines and rationale

A. C. Gilbert produced train sets but their most popular lines were chemistry sets, microscopes

and their best seller, the Meccano-like Erector engineering sets that had been popular with

children for more than 50 years.

A. C. Gilbert toys were not cheap. They were high quality, solidly crafted and made to endure.

Parts and packaging were designed to last for many years, with the Erector set packaged in long-

lasting metal boxes. The focus was on educational toys, primarily aimed at boys rather than girls.

The company had a limited range but what they did manufacture was top quality and highly

regarded.

Systems and processes

A. C. Gilbert was a small company. The following model demonstrates the systems and processes

in place.

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Design

Toys are designed by a small group of designers who develop the concepts for the products.

Planning

The planning department translates the concepts into designs and determines resource requirements, including raw materials. Planning also projects sales and develops production plans for each product, timeframes for production runs and scheduling of production runs.

Purchasing

Information gained from planning stage used to purchase raw materials for products and packaging from suppliers.

Manufacturing

Produces and packages toys for distribution.

Distribution

Delivers packaged toys to the warehouse for storage.

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Note: These flowcharts have been included for assessment purposes only, and may not accurately reflect

the actual processes in place at A. C. Gilbert.

History 1961–1967

As the 1950s moved into the 1960s, there were huge cultural changes across the world. The

fifties were a very traditional era of family values and morals, conservative and staid. Then came

the ‘swinging sixties’. The sixties were a time of rapid change both technologically and culturally.

Old fashioned values gave way to new moral freedoms.

Where the fifties represented solidarity and familiarity, the sixties embraced change. Everything

was bolder, brighter and more daring. A new young president and rising social activism by youth

saw changes in clothing, music and interests. Young people rebelled against the values of their

parents and embraced a more fast paced, exciting and riskier lifestyle.

Changes to the toy industry

Cultural changes had a huge impact in western toy markets. Barbie and Action Man became

‘must have’ toys. Girls moved away from baby dolls and cots and wanted dolls that were more

grown up, modern and trendy. They wanted dolls they could dress in the latest fashions and who

had exciting ‘careers’, boyfriends and cars of their own. Boys were moving away from the

traditional train sets towards exciting new slot-car racing sets and action figures from popular

movies and television shows.

Traditionally, toy advertising had been done via magazine promotions but the sixties brought in a

new phenomenon: television advertising. A hugely powerful medium, TV advertising became

increasingly ‘hard sell’, with toys heavily promoted, especially in the lead up to Christmas.

Children wanted the latest and greatest toys that they saw in these advertisements and put

pressure on their parents to buy, which they did.

Retailing of toys during this period reflected a shift in retailing in general. Small, specialty retailers

with experienced and knowledgeable staff were going out of business, replaced by large discount

stores catering for the mass market. The goal of this type of retailer was to turnover stock. Heavily

advertised lines were in demand and that is what they would stock. Cheap was in and giant

retailers were after a quick profit from easily saleable, inexpensive products. They weren’t

interested in catering to a niche market by stocking more expensive, harder to shift lines.

Sales Team

• Take orders

from

customers

Distribution

• Arrange for

delivery of

goods to

purchaser

using contract

transport

Retailers

• Sell the toys

directly to end

user

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Packaging was bright and colourful in order to attract children growing up in a world of colour TV,

hypercolor clothing and visual stimulation provided by the swinging sixties.

Affects on A. C. Gilbert

As a small, traditional company, A. C. Gilbert was slow to react to these changes. It may have

been that they were not aware of the changes or were overly confident that their good name and

reputation was sufficient to continue trading as before. The consequences of this short

sightedness soon became apparent.

1961 (figures approximate)

L/Y Sales Actual sales Difference Profit

$12.6 million $11.5 million ($1.1 million) $20,011.00

This drop in sales was also reflected in a fall in the share price of the company.

Outcomes

As a result of the falling profits and share price, the company became attractive to an

opportunistic businessman, Jack Wrather. Jack Wrather was an independent television producer

who had made his money producing the popular programs ‘Lassie’ and ‘The Lone Ranger’. Jack

Wrather wanted to purchase a successful business and felt that in A. C. Gilbert, he had the

opportunity to use his knowledge of popular entertainment and apply it to the production of toys.

He purchased 52% of A. C. Gilbert for $4 million and immediately set about making his mark on

the company. A. C. Junior stayed on as Chairman but his influence was minimal.

Actions taken by Jack Wrather

● Set a goal to achieve sales of $20 million in 1963.

● Replaced the top A. C. Gilbert executives with his own people.

● Initiated a massive advertising campaign.

● Increased sales staff by 50%.

● Instructed sales staff to adopt an aggressive sales approach.

● Introduced 50 new toy lines, raising the line to 307.

● Changed the focus from traditional boys toys to ranges for pre-school children, dolls and

other toys aimed at girls between the ages of 6 and 14.

● Spent $1 million on changing the packaging for all lines to brighter, more colourful boxes.

Performance report

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Year Sales Difference from

previous year

Profit

1961 $11.5 million ($1.1 million) $20,011.00

1962 $10.9 million ($600,000.00) ($281,000.00)

1963 $10.7 million ($200.000.00) ($5.7 million)

1964 $11.4 million $700,000.00 ($2.6 million)

1965 $14.9 million $3.5 million ($2.9 million)

1966 $12.9 million ($2 million) ($12,872,000.00)

1967 A. C. Gilbert closed 1909–1967

Key milestones

1962:

● Jack Wrather purchased 52% of A. C. Gilbert.

● Replaced existing executives with his own people.

● Increased sales staff by 50%.

● Implemented extensive television advertising.

● Set an organisational goal to achieve sales of $20 million for 1963.

● Company recorded a loss of $281,000.00.

● Introduced 50 new lines in less than 12 months, using existing engineers and production

departments who lacked training and experience in the new product range.

● Repackaged existing lines at a cost of $1 million.

1963:

● Sales and profits down on previous year.

● Anticipated drop in profits due to expansion and cost of establishing new lines.

● Sales fell short of expectations.

● Decline in quality of toys – feedback indicated products poorly made and designed (dolls

did not even come with a change of clothing).

● New range perceived by customers as poor quality and over-priced – not value for money

nor attractive to the target market.

1964:

● Jack Wrather fired most of the top management team he hired two years previously.

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● Crisis management lead to multiple changes and dramatic measures being taken and then

changed – often one measure contradicting the previous.

● Jack Wrather hires new CEO – Isaacson.

● Isaacson fires the entire sales team.

● Isaacson makes huge cutbacks in spending.

● Sales are channelled through independent manufacturer’s reps, which was cheaper than

maintaining an in-house sales force.

● Long-standing relationships soured as the independent reps worked on commission and

pushed sales, with no interest in maintaining or building relationships with customers.

● A. C. Gilbert had built its success on personal service and building relationships – that was

destroyed within 12 months.

● A. C. Gilbert Junior dies and is replaced as Chairman by Jack Wrather. Isaacson assumes

the role of President.

● Prior to Christmas, many of the previous year’s failed products were deleted and 20 new

items introduced.

● Reduced the price of core lines such as the Erector set from $75 to $20 but quality also

impacted – cardboard box instead of metal boxes, and brittle parts instead of sturdy long-

lasting parts.

● Sales increased and there was some degree of optimism.

1965:

● Sought to capitalise on popular crazes such as James Bond and The Man from Uncle by

introducing action figures for Christmas.

● Due to internal strife and staff cutbacks, the new lines were not delivered to the stores until

after Christmas.

● Operating on a skeleton workforce.

● Due to lack of staff, A. C. Gilbert is unable to implement changes or introduce new lines

quickly enough to capitalise on trends.

1966

● Increased advertising spending to $3 million.

● Introduced point of purchase display products supplied to dealers free of charge.

● Borrowed $6.25 million, granted on the event that the company made a profit in 1996.

● Company made a loss of $12,872,000.00.

1967

● February – A. C. Gilbert closed its doors after 58 years.

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Note: This case study is a true story. You may wish to read more about this organisation or to

conduct additional research online.

Reference material

● Tibballs, G., 1999, Business blunders, ‘A. C. Gilbert: Toy Story’, Robinson Publishing Ltd, pp.

43.