DB Replies - Brilliant Answers

This is what these students wrote about: Utilizing one of the internet search engines, find an organization that has recently been forced to increase or decrease capacity dramatically to align with customer demand. Discuss specifically the key drivers for the change in demand along with the steps that were taken and the expected impact. Be sure to provide any URLs you used as a reference source for your answer. The selected article must provide well-rounded information and address the topic. You must post the annotation in the reference section.

Student 1: David Presley

DB2: Option A

“Google has proposed an investment of at least $880 million in LG Display, in return for it building flexible OLED screens for a future pixel smartphone” (Boxall, 2017). This lucrative investment proposal isn’t necessarily for current demand for a product, but for a future Pixel smartphone. Google clearly anticipates their flagship smartphone to attract a lot of demand, as well as to compete with the Samsung Galaxy S8 which boasts a flexible panel as well. Managing capacity can be very difficult because “A gap between current and desired capacity will result in capacity that is out of balance. Overcapacity causes operating costs that are too high, while undercapacity causes strained resources and possible loss of customers” (Stevenson, 2015, pg. 185). Even though the new Pixel smartphone line for Google has been successful, they were experiencing overcapacity in the early stages until sales began to pick up around the holiday season. Google must be aware of these previous capacity issues, but this investment in LG Display, though expensive, does seem like one that will pay off. These flexible OLED screens “which are currently in short supply” (Boxall, 2017), appear that they will be in high demand due to the success of the Google smartphone line. “Demand for OLED and AMOLED screens isn’t going to slow down in 2017. Apple has been long rumored to be securing OLED panels for the next iPhone, or at least the special edition iPhone X model, and may have already struck a deal with Samsung to supply more than 70 million such screens” (Boxall, 2017). Google has been forced to increase capacity to align with the customer demand in a very large market, the smartphone market. It seems like technology moves fast, but even more so in this market. People have shown they will upgrade their Samsung, iPhone or Pixel smartphone annually, and Google has been proactive in ensuring they continue to keep up with their competitors for their next smartphone release. The expected impact of this investment looks promising, because Google has a large customer base, given that they power Android, which over 81% of all smartphones run on (Vincent, 2017). Google’s popular, affordable Nexus line was discontinued in favor of the new, more expensive Pixel line. They no longer provide an affordable smartphone, but a flagship smartphone that boasts the best specifications and operating system. The investment in LG Display is an expensive one, but the expected impact should pay dividends in their next smartphone release.

References:

Boxall, A. (2017, April 10). Google flexes its wallet, offers LG Display millions to makescreens for Pixel 2. Retrieved from https://www.yahoo.com/tech/possible-google-investment-lg-display-101257174.html

Stevenson, W. J. (2015). Operations management. New York, NY: McGraw-Hill Education.

Vincent, J. (2017, February 16). 99.6 percent of new smartphones run Android or iOS. Retrieved from http://www.theverge.com/2017/2/16/14634656/android-ios-market-share-blackberry-2016

Student 2: Misty Raup 

DB 2- Option A 

Top of Form

         K-Mart has seen a rapid decline in sales over the past two decades. Due to decreased revenues, the chain which includes Sears, has closed hundreds of stores, despite CEO Eddie Lampert’s desire to keep them open to ensure local jobs, (Whabba, 2017). The company has majorly cut back its capacity to offer goods and services in the past several years by shutting the doors on many of its retail outlet stores. In an article on Fortune.com author Phil Wabba elaborates on the drastic changes to the operations. “In the first three quarters of the fiscal year, the company closed 140 Kmart stores, and 30 Sears stores, leaving the chains with 800 stores and 675 stores respectively, before the latest store closing announcements. (A decade ago, there were 1,462 Kmart stores, and 866 U.S. Sears stores.)” (Whabba, 2017).

            According to our text, “The goal of strategic capacity planning is to achieve a match between the long-term supply capabilities of an organization and the predicted level of long-term demand,” (Stevenson, 2015, p.186). As an operating unit includes both plant and employees, the company made strategic decisions to cut back on the stores it operates to better match demand. The first two months of the 2016 holiday quarter saw a decline of same period sales of 12-13% from prior year, (Whabba, 2017). The company did not give up without a fight however.

            In 1993, Kmart attempted to appeal to its customer base with direct mail appeal, distributing colorful flyers in local newspapers, (Engel, 1993). This was following a $3.2 billion renovation designed to give the box stores a more upscale look to better compete with Walmart. But the chain store’s current woes are greater than Walmart. More recently, they have tried to initiate customer loyalty with their membership model incentive program. But they suffer greatly from an even bigger problem, the rise of online shopping competitors, such as giant Amazon.

            According to an article in Appraisal Journal, “Online retailing is undeniable, a huge growth sector that is diverting spending from neighborhood stores and expanding the need for enhanced merchandise delivery services,” (Cavan, 2016). While many retail outlet chains, especially those in smaller market areas, are seeing fierce competition from online ease and convenience, it reasons that the box store business model will be evolving to more distribution warehouse style centers that handle and ship online orders to the same client base who used to frequent the malls and superstores years ago.

References