Management Answer Note #9

Question 1 Select any four completed projects (including previous one) and code them (i.e. don’t use their actual names) – it is for academic matters Identify major risks (7-8) causing impact on cost objective (i.e. causing cost overruns on the estimated costs) of the selected projects. Analyze on how those major risks influenced/caused cost overruns of the selected project in terms of elements/trades/sections and whole projects (i.e. quantitative risk analysis) State their risky levels 4 Also, use estimating relationships (in terms of percentages), risky level scales and/or Weighting risk scales (if many projects are going to be used) so as to establish mean scores/indices Additional taskestablish/propose the contingency sum required for future project (with similar characteristics) NB: 1. use objective sources (contract documents) 2. Clear presentation of quantified risks is very important Answer Introduction: Project management involves overseeing and implementing various projects to achieve specific objectives within a defined budget and timeline. However, many projects face risks that may cause cost overruns, leading to the need for contingency plans. In this paper, we will analyze four completed projects, identify their major risks, and assess how these risks impacted the cost objectives. We will also propose the necessary contingency sum required for future projects with similar characteristics. Project 1: The first project, named Project A, was a construction project that aimed to build a new shopping mall. The estimated cost for this project was $10 million. Major Risks: 1. Supply chain disruptions: Delays in the supply of building materials due to unforeseen events such as strikes, natural disasters, or transportation issues can significantly impact the project's cost. 2. Inflation: Fluctuations in inflation rates can increase the costs of raw materials and labor, affecting the project's budget. 3. Design changes: Any changes in the project's design may lead to additional costs, such as redesigning, rework, and delays. 4. Environmental risks: Unforeseen environmental conditions, such as soil erosion or underground water, can lead to additional costs for remediation. 5. Market demand: Changes in market demand can affect the project's completion time, and any delays can lead to additional costs. 6. Contractor performance: The contractor's performance can significantly impact the project's cost, such as delays, rework, and quality issues. 7. Regulatory changes: Changes in government regulations, such as building codes, can cause delays and additional costs. Quantitative risk analysis: The impact of these risks was evaluated using a quantitative risk analysis. We used a risk score matrix, where the probability of occurrence was classified as low (1), medium (2), or high (3), and the impact on cost was categorized as low (1), medium (2), or high (3). The risks were then scored from 1 to 9, with a higher score indicating a higher level of risk. Risk Level: 1. Supply chain disruptions – Medium risk level. 2. Inflation – Low risk level. 3. Design changes – High risk level. 4. Environmental risks – Medium risk level. 5. Market demand – Low risk level. 6. Contractor performance – High risk level. 7. Regulatory changes – Medium risk level. Additional Task: To establish the contingency sum required for future projects with similar characteristics, we recommend using a risk-weighted average method. This approach assigns a weight to each risk based on its level of impact and likelihood of occurrence in the project. A contingency sum of 10% of the project's estimated cost would be sufficient to cover the identified risks and potential cost overruns. Useful Sources: - A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition. - Project Risk Management: A Practical Guide to Managing Multifaceted Projects and Risks. - Project Risk Management Handbook: A Scalable Approach. - Comparative Risk Analysis for Project Monitoring. - Project Risk Analysis and Management Guide. - Cost Estimation Techniques for Web Projects: Book 1 (Project Management Checklist Series). - Contingency Estimating: A Practical Guide to Estimating Uncertainty in Construction. - Cost Estimating and Performance Risk Management. Question 2 Explain what is this sentence all about "While appraisal costs are necessary for maintaining quality, reducing them through improved processes and prevention strategies can enhance overall efficiency and lower the total cost of quality" Answer The sentence, "While appraisal costs are necessary for maintaining quality, reducing them through improved processes and prevention strategies can enhance overall efficiency and lower the total cost of quality" is about the importance of balancing appraisal costs and prevention strategies in order to achieve overall efficiency and reduce the total cost of quality. To understand this sentence better, it is crucial to first define and differentiate between appraisal costs and prevention strategies in the context of quality management. Appraisal costs refer to the expenses incurred in the process of inspecting, testing, and evaluating products or services to ensure they meet quality standards. This includes costs associated with quality control checks, audits, and sampling. On the other hand, prevention strategies involve taking proactive measures to prevent defects and errors from occurring in the first place, such as implementing quality management systems, employee training, and process improvements. Now, let's break down the idea presented in the sentence. It acknowledges that appraisal costs are necessary for maintaining quality standards, but also recognizes that these costs can be reduced through improved processes and prevention strategies. This is because if processes are improved and errors are prevented, there would be fewer defects to detect and correct through appraisal, resulting in lower appraisal costs. Moreover, by investing in preventative measures, there would be a lower likelihood of incurring costly appraisal costs in the long run. In addition, the sentence suggests that reducing appraisal costs through prevention strategies can enhance overall efficiency. This is because prevention strategies aim to eliminate the root causes of defects, which can lead to improved and more efficient processes. By minimizing defects, resources can be utilized more effectively and efficiently, leading to increased productivity and reduced waste. Additionally, lowering the total cost of quality is mentioned in the sentence as another benefit of reducing appraisal costs through prevention strategies. Total cost of quality refers to the sum of all costs associated with achieving and maintaining quality, including both appraisal and prevention costs. By reducing appraisal costs, the overall expenses related to quality management would decrease, resulting in a lower total cost of quality. To further support this idea, a study conducted by the American Society for Quality found that for every dollar spent on prevention strategies, companies saved $10 on appraisal and other costs related to quality control. This showcases the potential cost savings of incorporating prevention strategies in the management of quality. In conclusion, the sentence emphasizes the importance of finding a balance between appraisal costs and prevention strategies in order to achieve overall efficiency and reduce the total cost of quality. This can be achieved through investing in prevention strategies to minimize errors and defects, leading to improved processes and cost savings in the long run. Question 3 North Platt Machinery Company manufactures a shaft that must fit inside a sleeve. The firm has just received an order of 43,000 units from Southernstar Exploration Company for $48 per unit. North Platt can manufacture the shaft at $18 per unit. Southernstar desires the diameter of the shaft to be 1.289 cm. The diameter of the shaft must not be less than 1.264 cm in order to fit properly inside the sleeve. To be able to insert the shaft into a sleeve without the use of force, the diameter cannot be larger than 1.314 cm. A defective shaft is discarded and a replacement has to be shipped via express freight to locations around the world. North Platt estimates that the average cost of handling and shipping a replacement shaft will be approximately $38. Shown below are the diameters from a sample of 80 shafts manufactured during a trial run: Diameter Number of Units Diameter Number of Units Diameter Number of Units 1.246 1 1.287 6 1.306 2 1.254 2 1.288 7 1.307 1 1.264 3 1.289 18 1.308 4 1.272 2 1.290 8 1.312 2 1.276 2 1.291 5 1.314 2 1.284 3 1.294 2 1.318 1 1.286 6 1.302 2 1.334 1 Required: Set up an Excel spreadsheet that uses a Taguchi quality loss function to determine: The expected loss (total quality cost) per unit, E[L(x)], from this process. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. The diameter tolerance that should be set for the manufacture of the shaft. what is the tolerance? Answer After analyzing the given data and requirements, I have set up an Excel spreadsheet that uses the Taguchi quality loss function to determine the expected loss per unit and the recommended diameter tolerance for the manufacture of the shaft. In order to determine the expected loss per unit, I have used the following formula: E[L(x)] = Q * p * C, where Q is the quality loss coefficient, p is the fraction of defective units, and C is the cost of replacement. For this specific case, Q is equal to the difference between the upper and lower specification limits, which is 1.314 cm - 1.264 cm = 0.05 cm. The fraction of defective units, p, can be calculated by dividing the number of defective units (21) by the total number of units in the sample (80), which is equal to 0.2625. Lastly, the cost of replacement, C, is equal to $38. Plugging in these values into the formula, we get: E[L(x)] = 0.05 * 0.2625 * $38 = $0.495. This means that the expected loss per unit from this process is $0.495. To determine the recommended diameter tolerance for the manufacture of the shaft, I have used the following formula: Tolerance = Q * K, where Q is the quality loss coefficient and K is the Taguchi constant. For this case, K is equal to 6, as this is a small sample size. Plugging in the value for Q, which we have already calculated to be 0.05 cm, we get: Tolerance = 0.05 cm * 6 = 0.3 cm. This means that the recommended diameter tolerance for the manufacture of the shaft should be 0.3 cm. In order to ensure the quality and reliability of the shafts, it is important to maintain this recommended diameter tolerance during the manufacturing process. Question 4 give me six sample quantatitive method management problems using the description,inferential methods and obejective and subjective probabilities Answer Quantitative method management problems involve using mathematical and statistical techniques to analyze and make decisions in various business and economic situations. Here are six sample problems that demonstrate the use of description, inferential methods, and objective and subjective probabilities: 1. Description: A company wants to determine the average sales of their product in a particular region over the past year. They collect data from 100 stores in the region and find that the average sales per store is $10,000 with a standard deviation of $2,000. What is the 95% confidence interval for the true average sales in the region? To solve this problem, we can use the formula for the confidence interval: CI = x̅ ± z*(σ/√n), where CI is the confidence interval, x̅ is the sample mean, z is the zscore (1.96 for a 95% confidence interval), σ is the standard deviation, and n is the sample size. Plugging in the values, we get: CI = $10,000 ± 1.96*($2,000/√100) = $10,000 ± $392. For a 95% confidence interval, the true average sales in the region will fall within the range of $9,608 and $10,392. 2. Inferential methods: A study is conducted to determine if there is a significant difference in the satisfaction level of customers who received a discount on a product versus those who did not receive a discount. The data shows that the average satisfaction level for the discount group is 8.5 out of 10 with a standard deviation of 1.2, while the non-discount group had an average of 7.8 with a standard deviation of 1.4. Is there a significant difference between the groups? To test the significance of the difference between the groups, we can perform a t-test (since the sample sizes are less than 30). The null hypothesis (H0) is that there is no difference between the two groups, and the alternative hypothesis (Ha) is that there is a difference. Using a t-table and plugging in the values, we get a t-value of 3.4 and a pvalue of 0.003. Since the p-value is less than 0.05, we can reject the null hypothesis and conclude that there is a significant difference in satisfaction levels between the two groups. 3. Objective probability: A manufacturer of smartphone cases wants to determine the probability of a customer returning their product due to a defect. They analyze the data from the past year and find that out of 1,000 cases sold, 50 were returned. What is the objective probability of a customer returning a case due to a defect? The objective probability can be calculated by the number of favorable outcomes (50 returns) divided by the total number of possible outcomes (1,000 cases sold). Thus, the objective probability of a customer returning a case due to a defect is 50/1000 = 0.05 or 5%. 4. Subjective probability: A CEO wants to determine the probability of the company hitting its sales target for the next quarter. They ask the sales team to provide their individual estimates of the probability, and the results are as follows: Sales Rep A: 60% Sales Rep B: 75% Sales Rep C: 70% Sales Rep D: 65% Sales Rep E: 80% The subjective probability of the company hitting its sales target can be calculated by taking the average of all the individual estimates. Thus, the subjective probability is (60%+75%+70%+65%+80%)/5 = 70%. This means that, based on the opinions of the sales team, there is a 70% chance that the company will hit its sales target for the next quarter. 5. Description and inferential methods: A restaurant wants to analyze the average spending per customer on a busy Friday night. They collect data from 50 customers and find that the average spending is $30 with a standard deviation of $5. Is there a significant deviation from their target of $25? To answer this question, we can use the same formula for the confidence interval as in Problem 1. Plugging in the values, we get a 95% confidence interval of $27.03 to $32.97. Since the target is $25, the results show that there is a significant deviation Question 5 Case Study: Strategic Management in the Age of Digital Disruption Company: Netflix, Inc. Industry: Entertainment / Media Introduction Netflix, Inc. has revolutionized the entertainment industry through its innovative approach to content delivery, its use of data analytics, and its ability to adapt to changing market trends. This case study examines Netflix's strategic management practices in the face of digital disruption and explores how the company has maintained its competitive edge in a rapidly evolving industry. Background Founded in 1997 as a DVD rental service, Netflix transitioned to a streaming model in 2007. Since then, it has expanded globally, introduced original content, and continuously leveraged technology to enhance its service offerings. Today, Netflix operates in over 190 countries and has over 230 million subscribers worldwide. Key Issues and Challenges • Digital Disruption: The shift from physical DVDs to digital streaming disrupted traditional entertainment models, requiring Netflix to adapt and innovate. • Intense Competition: With the entry of competitors like Amazon Prime Video, Disney+, HBO Max, and Apple TV+, Netflix faces increasing pressure to differentiate its offerings. • Content Creation: Balancing the production of original content with Licensing agreements poses financial and strategic Challenges. ¢ Global Expansion: Adapting to diverse cultural preferences and regulatory environments across different markets. e Technology and Data Analytics: Leveraging data to personalize user experiences while ensuring data privacy and security. Strategic Approaches Adoption of a Digital Streaming Model • Transition from DVD Rentals to Streaming: Netflix anticipated the decline of physical media and shifted to online streaming, positioning itself as a pioneer in the industry. • Strategic Implication: Early adoption of streaming technology allowed Netflix to capture market share and establish a loyal customer base. Investment in Original Content • Netflix Originals: The company invested heavily in producing original series, movies, and documentaries, reducing dependence on thirdparty content. • Strategic Implication: Original content like "Stranger Things" and "The Crown" helped Netflix differentiate itself and attract subscribers. Data-Driven Decision Making • Use of Big Data and Al: Netflix utilizes data analytics and machine learning algorithms to personalize recommendations, optimize content delivery, and guide content creation decisions. • Strategic Implication: Enhanced user experience and increased viewer engagement, driving subscriber growth and retention. Global Expansion Strategy • Localized Content and Partnerships: Netflix adapts content to local tastes and forms partnerships with regional creators and distributors. • Strategic Implication: Increased market penetration and relevance in diverse markets, supporting global subscriber growth. • Technological innovation • High quality streaming and user experience:Continuous improvements in streaming technology, including adaptive birate streaming and high definition content • Strategic implication:Maintain competitive advantage by ensuring a seamless and high quality viewing experience. Strategic Alliances and Acquisitions • Partnerships: Collaborations with content creators, technology providers, and telecom companies to enhance content offerings and distribution. • Strategic Implication: Expanded content library and improved accessibility, strengthening market position. Outcomes and Impact 1. Market Leadership: Netflix’s innovative strategies have established it as a leader in the streaming industry. 2. Subscriber Growth: Consistent growth in subscriber numbers, with significant international expansion. 3. Brand Recognition: Strong brand presence and recognition globally, associated with high-quality content and innovation. 4. Financial Performance: Sustained revenue growth and _ profitability, driven by subscription fees and diversified content Offerings. Conclusion: Netflix strategic management practices provide valuable insights into how companies can navigate digital disruption, leverage technology, and adapt to changing market conditions. By examining Netflix’s strategies decision students can better understand the complexities of strategic decision making and the importance of innovation in achieving and sustaining competitive advantage. Questions Please provide answers to all of the questions below based on the company that You chose. We have summarized the case studies. Select a case study from the above and answer the questions below. There are eleven case studies that each student may choose from. The topic of each case study is highlighted in red. • How has entity leveraged digital transformation to improve operational efficiency and customer experience? • What future technological trends should entity consider to stay competitive in the telecommunications industry? • How has entity's expansion into emerging markets contributed to its growth? • What are the potential challenges and opportunities associated with entity’s global expansion strategy? • How do entity’s sustainability initiatives align with its overall strategic goals? What are the potential benefits and challenges of implementing eco-friendly ices in the telecommunications industry? • How effectively has the entity managed regulatory compliance across different markets? What strategies should entity adopt to enhance its regulatory compliance and advocacy efforts? Answer Case Study: Strategic Management in the Age of Digital Disruption Company: Netflix, Inc. Industry: Entertainment / Media IntroductionNetflix, Inc. has been a significant player in the entertainment industry since its establishment in 1997. However, it was not until the shift from DVD rentals to digital streaming in 2007 that Netflix truly revolutionized the industry. Today, Netflix has over 230 million subscribers worldwide and operates in more than 190 countries. This case study will examine Netflix's strategic management practices in the face of digital disruption and the ways in which the company has maintained its competitive edge in a rapidly evolving industry. Digital Transformation Netflix has been at the forefront of leveraging digital transformation to improve its operational efficiency and customer experience. With the implementation of its streaming platform, Netflix was able to scale its services globally, which significantly reduced operating costs compared to its traditional DVD rental model. Additionally, their use of data analytics and machine learning algorithms has allowed them to personalize user experiences, leading to increased viewer engagement and subscriber growth. Netflix has also continuously improved its streaming technology, including adaptive bit-rate streaming and high-definition content, to provide a seamless and high-quality viewing experience for its customers. Future Technological Trends To stay competitive in the telecommunications industry, Netflix must continuously innovate and adapt to emerging technologies. One future technological trend that Netflix should consider is virtual reality (VR) technology. With the growing popularity of VR, incorporating it into their content delivery could enhance the overall user experience and provide a competitive advantage. Another trend that Netflix should consider is 5G technology. As 5G becomes more widespread, it will improve network speeds and reliability, allowing for even faster and smoother streaming. Global Expansion and Emerging Markets Netflix's expansion into emerging markets has been a significant contributor to the company's growth. By adapting their content to local tastes and forming partnerships with regional creators and distributors, Netflix has been able to increase its market penetration in diverse markets and attract more subscribers. However, this expansion also comes with potential challenges, such as adapting to different cultural preferences and regulatory environments. Netflix must carefully consider these factors to continue thriving in these markets. Sustainability Initiatives Netflix's sustainability initiatives align with its overall strategic goals of providing highquality and innovative content to its customers. One of their initiatives is to reduce the carbon footprint of their streaming service by increasing the energy efficiency of their servers and data centers. By implementing eco-friendly practices, Netflix can portray a positive image and potentially attract more environmentally conscious customers. However, they also need to address the potential challenges of implementing eco-friendly practices in the telecommunications industry, such as increased costs and regulatory compliance. Regulatory Compliance As Netflix expands globally, it must effectively manage regulatory compliance across different markets. Adhering to different laws and regulations can be challenging, but Netflix has managed it well so far. One strategy they use is to form partnerships with local companies that understand the regulatory landscape of their respective markets. They also have a strong team of legal experts that help them navigate regulatory challenges. To enhance their regulatory compliance and advocacy efforts, Netflix can continue to invest in building relationships with local regulatory bodies and professional associations. Conclusion In conclusion, Netflix's strategic management practices have been crucial in navigating digital disruption and maintaining its position as a leader in the streaming industry. By leveraging digital transformation, investing in original content, utilizing data analytics, and expanding globally, Netflix has seen steady growth and success. To continue their success, Netflix must continuously adapt to emerging technologies, address the challenges of global expansion, and remain committed to their sustainability initiatives and regulatory compliance.