Integrated Manufacturing Systems

Reading: Developing the Enterprise Concept The Business Plan

Jorge Muoz Acosta

A01332914
September 22, 2016

Analytical Reading 1

Key concepts:

Business: Integration of people, processes and technologies with the aim of fulfilling some
mission.

Strategy: Detailed action plan towards the direction of an enterprise.

External Drivers: all issues in the environment that will affect de decision maker
conceiving business definition.

Internal Enablers: internal aspects that might affect the realization of the enterprise
concept.

Key Processes: Business concept creation, strategy formulation and action plan definition
towards core processes.

Driving forces: Peoples entrepreneurship, leadership, and teamwork.

Core Process: Processes made to deliver products/services according to customers needs.

Mission: Key aspects of what the company is and why it is, and demonstrate how the
company is unique and distinctive.

Vision: What the company will be in the future, where it is going.

Company culture: Values, attitudes, beliefs, policies and customs of the companys people

Competitive strategy: Which industry the company will compete and how a competitive
advantage can be achieved.

Value Chain strategy: How the value chain will be organized by the company (like relation
with customers and suppliers).

Production/service strategy: How the core processes will be organized.

Engineering to order (ETO): Product in the first life cycle stage or a complex product with
unique design.
Make to order (MTO): Demand is unpredictable and all engineering/design are complete
and production process is proven

Assemble to order (ATO): Production strategy adopted when customer lead time is less
than manufacturing lead time.

Resources: Inputs to the value chain (physical, human resources, organizational)

Capabilities: Corporations ability to exploit its resources.

Competency: Integration and coordination of capabilities.

Core competencies: Skills and knowledge shared across business units.

Business plan: Written document that describes the future of a business and what steps it
should follow while going through.

Relationship between the concepts

A business aims towards certain missions determined by the people that are inside the
organization. However, to reach what they are looking for the support on a strategy is
imminent to have optimized results that are achievable on the least time, using the least
resources needed and optimized processes. Its vision should create a guidance and trace
some boundaries in which the growth should oscillate, according to where the enterprise is
seen to be places on the future.

The different decisions that have to be made by the companys drivers can be influenced by
the external and internal drivers. The global market might as well determine a certain
course of action as much as the internal technological capacities to produce goods in order
to cover an expected expanded demand in the future. Not leaving aside, driving forces
provides leadership, entrepreneurship and collaborative work from every part of the
company to achieve certain common goals despite each area and process.

In any value chain, the key concepts identified are the most important ones in order to
formulate a strategy towards the core processes that will allow the company to deliver de
goods expected by customers.

There are three different types of strategies that can be followed: The competitive, the
value chain, and the production/service strategy. This decision will depend on different
factors, including in which industry the company will compete and how a competitive
advantage can be achieved, how the value chain will be organized by the company and how
the core processes will be organized.

After the selection of an optimal strategy, action planned decisions towards production
should be determined according to the type of demand, part of the products life cycle, and
products needed. Depending on it, ETO/MTO/ATO processes are executed according to the
necessities that are identified.

While establishing an action plan, after every strategy is identified and decided, core
competencies selection is now made by analyzing resources, capabilities, and competencies
of the company; every decision made and every course of action defined is consolidated on
a business plan, where the path of the enterprise is traced towards the future.

Synthesis of the article

Peoples immersion is crucial to conceptualize an enterprise which can fulfill the necessities
in the market, as they can see and analyze what the customers want, how they will do it and
how they will deliver it.

Strategy Schools Revised

In order to determine a certain direction by actions planned for the enterprise, different
strategies can be adopted: Strategic decision making (cognitive), achieving a fit between
strength, weakness, threads and opportunities (design), vision as main aspect of an
enterprise (entrepreneurial), culture as enabler of strategy information (cultural), analysis of
industry sectors (positioning), and structured planned processes with certain levels of
decision making (planning), macro/micro power strategy (power), learning processes, life
cycle of processes (environmental), and transformation of the enterprise (configuration).

Framework for Enterprise Concept Definition

Prior external drivers that may influence the company directly are the information flow,
customer centered (desires) organizations, capitalism as drivers (profits), increase of global
market, creation of globalized (worldwide) organizations. The new type of enterprise is
market-driven, and considers the relation customer/supplier as the key for success. The
correct knowledge on government policies and regulations should fulfill the information
needed to develop the enterprise concept.

Value added processes known as core processes are employed to deliver products/services
according to the customer requirements, which includes knowledge, skills, technological
resources and organizational activities to boost human capital.

Entrepreneurship, leadership and teamwork are main drivers to achieve what the company
aims to: First, to create according to a vision, next to lead the course of action and next to
work with different people capable of different things to achieve a common goal.

Methodology for Enterprise Concept Definition

The methodological process developing an enterprise concept are: the creation of a business
concept to define mission, vision and organizational culture; formulation of strategies
(competitive, value chain and production/service); and definition of an action plan to
establish the company to formulate the final business plan.

Creation of a Business Concept: Mission, Vision & Intended Set of Cultural Attributes

In order to define correctly the definition of the companys characteristics and definitions,
such as mission and vision, a SWOT (strengths, weakness, opportunities, threads) analysis
is the best start point to clarify where the company is and where it should be driven.

The mission statement of a company should include the firms customers, its
products/services, markets, technologies, economic objectives, values, beliefs, aspirations
and competitive advantages, concern for its own image and their employees.

In order to create a successful vision, it should at least contain aspirations and objectives,
competences, differentiation from others, or inspirations.

Usually, manuals and policy statements describes the formal part of the organizational
culture. The environment establishes the compliment part which defines a person as part of
the organization.

Development of Strategy: A Decision-Making Process

Three types of analysis to formulate strategies: Of industry and competition, which

analyses external drivers and how they might impact the companys relations with
customers and suppliers. The analysis of the firm concentrates on internal enablers and how
they can be aligned to achieve a goal or a competitive advantage. Last, the analysis of
competitive advantage explores how innovation differentiates the company towards their
equals.

The relation between suppliers, buyers, substitutes, potential entrants and competitors can
be expressed in terms of bargaining power, thread by substitute products and new
entrances, and rivalry with another firms. After this, the strategy will define how the firm
will differentiate and sustain its competitive advantage to outperform its competitors.

Three different types of strategies are presented in the chapter:

Competitive strategy: operational excellence, product leadership and customer

intimacy. Low cost products and low prices sustained by process innovation,
offering standard products but that are differentiated and unique.
Value Chain strategy: making decisions to establish an organizational model that
best exploit potentials and opportunities to add value on their product/services.
Active participation in the value chain will optimize resources and capabilities.
Using a vertical integration direction implies acquisition or merger with another
company to grow; horizontal integration implies growth through acquisition of
 competing firms; collaboration (CNO), a new trend, creates a network of companies
that act jointly to offer value.
Production/Service Strategy: based on product description (criteria required to win
an order in a specific market), customer/supplier characterization (expectations and
requirements) and process definition (performance measures required in execution).
Based on performance measures the strategies can be defined as: Engineering to
order (ETO), product in the first life cycle stage or a complex product with unique
design; Make to order (MTO), where demand is unpredictable and all
engineering/design are complete and production process is proven; Assemble to
order (ATO), adopted when customer lead time is less than manufacturing lead
time; Make to stock (MTS), where customer lead time is less than manufacturing
lead time and the product has a set of configuration and few options, where positive
inventory levels is a priority.

Definition of an Action Plan

Core process selection and design is where internal enablers are evaluated to select/design
the core process depending if the company is already in operation (alignment to exploit the
selected business by the company), if new products are being conceived (existing processes
can be used to deliver new products or to acquire new ones) and if a new enterprise is being
created (exploit business opportunity to implement and operate the company). The basic
core processes are:

Customer driver design (based on specifications)

Co-engineering (supplier capabilities related to product design/engineering)
Supplier/customer relationship management
New product development
Obtaining customer commitment (order confirmations)
Order fulfilment
Customer service

Core competencies selection and development comprise a set of skills and expertise to
deliver exceptional value in products/services to customers. Hierarchically, the core
competences can be described as:

Resources as inputs to the value chain (physical, human resources, organizational)

Capabilities as corporations ability to exploit its resources.
Competency as integration and coordination of capabilities.
Core competencies as skills and knowledge shared across business units.

Business plan preparation is made by a written document that describes the future of a
business and what steps it should follow while going through. It should determine the
objective of the business, identify the resources that will be needed, how they are going to
be obtained and the processes in which they will be succeeded. The BP should have an
executive summary and it should determine clearly its objective.

Conclusions

In order to create a successful enterprise, the first priority and top move is to construct it on
solid ground by defining what it will do, what it will look forward and how the people
connected to it should work and execute towards the company.

The mission of the company will determine its course of action, is the starting point where
an enterprise will be located in a determined sector, offering a certain type of
product/service that will differentiate from other offers and will be the companys signature.
After that, the vision compliments the growth of an enterprise, whose goal would be to
expand and reach different customers.

However, it is crucial to understand the role of each part on the value chain, which goes
from suppliers and ends on the customer. Different type of resources, such as material,
people and information, drives the course of the company inside the boundaries determined
by a business plan, which consolidate the actuals and future forecasts on an enterprises life
cycle.