Case Study # 1 – Sunspot Inc.
1. What are the most likely benefits of forming strategic supply alliances with Sunspot’s key suppliers? I believe that it is important to realize that a strategic alliance or partnership is solely depended on trust and faith in the relationship between all involved in simultaneous stages should not change or use those stages for their own advantage without consideration of the organization involved. Some of the advantages would be: -
Developing competences and learning form the partners
Suitability and protection of resources is maintained
Developing low cost models hence financial benefit
Each partner can concentrate on different stages of the supply
2. What are the disadvantages or risks of such alliances?
There are some disadvantages in forming strategic supply alliances, for example, the partners must share resources and profits and often skill. This can be critical if business secrets are included in this knowledge. Also, the companies involved may become a competitor one day, if they profited enough from the alliance and grew enough to end the partnership and are able to operate on their own in the same market. There is also the risk that the alliance is uneven, meaning that the decision powers are distributed very uneven, the weaker partner might be forced to act according to the will of the more powerful partners even if it is actually not willing to do so.
3. How can these disadvantages be offset?
In order to offset some of the disadvantages of a strategic alliance, the legal form and contractual terms of need to be carefully thought out and drafted so as to ensure that the intended benefits of the alliance can be achieved without any unforeseen negative consequences. For a limited strategic alliance involving access to a distribution network, for example, the agreement might take the form of a contract without the need to set up a separate vehicle to carry out the agreed actions. If Sunspot Inc. and its alliance partners are using unique skills or intangible assets, it might be advisable to form a separate vehicle such as a joint venture company and the initial contributions of the strategic partners would need to be closely defined and measured. Arrangements for cost sharing or sharing of profits or losses of the alliance would need to be defined in the contract.
Case Study # 2 – The Privileged Fly
1. Discuss the basic inventory problem confronting this firm. The company has decided to operate on low inventories in order to save money, but inventory carrying cost is still over 30 percent a year. The problem with carrying small inventory is that there is less lead time. This is what is driving freight bills up and costing the company money. They do not want to lose their reputation as a reliable supplier, so they are overpaying in freight in order to make the delivery schedule.
2. Air freight bills keep growing both in numbers and in total dollar value of freight transported. What are the factors that have contributed to the development of this situation? Do they reflect efficient or inefficient management of supply, inventories, and production in firms such as this one? Again, I believe that the problem is keeping a low inventory. When inventory is not available, the company has to wait for it to become available, and in order to get it to the customer in time, they have to overpay for faster shipping. I will have to say that I do not blame it solely on Ms. Glass thou, her inventory issues relate directly to the sales forecast, and obviously there is a problem with it if she doesn’t have available what she needs when she needs it. I think there needs to better communication and better supply management. The company doesn’t have to stock up on inventory to be more efficient, they just need to keep the right amount, and that is where the problem lies. 3. What should Joan Glass do?
In my opinion, she should talk to Harold and come up with a better sales...
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