Universal Motor Company

The management and operation of a business can be a risky and complex endeavor that revolves around new possible varied types of hazards. As a result, unforeseen hazards can either destroy a business or cause significant damage. Nonetheless, risk assessment must be a focus point in corporate management, necessitating the requirement for a risk assessment skilled team of analysts. During the late twentieth century, one of the world’s largest motor corporations was on the verge of bankruptcy. Universal Motor Company was not an exception to the rule when it comes to risks that can potentially destroy a business. Nonetheless, the company was able to mobilize a management team that was able to identify the risks within the firm. Therefore, the endeavor of this paper is to delve into identifying the risks associated with the business under major issues and provide a tentative guideline to solutions formidable to the firm.

Major Problems

One major drawback to the company was the issuing of a standardization regulation by the government on air pollution, especially by the automobile companies. Air pollution becomes a hazardous issue that was foreseen to probably cause environmental degradation in the future if nothing was done. Consequently, with such pressures amounting to the government to force its hand, standardized regulations were imposed. In its evaluation, the government indicated or rather, listed that automobile companies were major participants in the degradation of the environment especially on-air pollution. It specifically mentioned that fuel consumption targets and vehicle emissions standards were not regulated and as such, required controlling. Therefore, the United States of America Federal Government institutionally mandated regulated standards of emissions which indirectly affected the automobile companies. Since Universal Motor Company was a major market share holder, the blow was inevitable. It was delegated to upgrade its engineering controls and equipment such as computers to par standards to minimize air pollution. For instance, the Universal Motor Company was forced to upgrade standards such as intake, spark timing and others to manage engine competence more precisely. Despite these regulations, the auto-industry faced a myriad of issues such as technical design problems which stalled the process of upgrade.

Furthermore, one of the major drawbacks to the Company was the limited supply of engineers proficient in operating the engines and computers. In the 1980s, the world did not foresee the semiconductor market as feasible. Hence, the auto industry did not delve into significant investments into the semiconductor market. In retrospect, the semiconductor market only comprised of 2% of the entire auto industry. Per se, members of the industry did not seek specialization of the service hence, the limited number of specialized professionals.

Another major drawback to the auto industry and the company was the difficulty to make decisions in the upgrade into the semiconductor market. A team of business experts that entailed engineers, quality controllers, supply management and manufacturing professionals, was appointed to design a program which could analyze the semiconductor sector. In such an instance, both primary and tertiary research was done. It was determined under Universal Motor Company’s executive team that it is hard to acquire semiconductor facility or probably procure one with the required components from the results of the research. For instance, through the analysis of the results, it was determined that the make-or-buy issue contained many sub-let matters. Thus, the whole process that entailed designing, production and evaluation of the semiconductors required a broken-down process.

Furthermore, another major limitation to the company was on the valuation of the semiconductors which was considered as critical to the Universal Motor Company experts. All-in-all it was a predetermined condition by the suppliers of the semiconductors to the Company. For example, a semiconductor was retailed within the range of $1 to $3 within the semiconductor market whereas, within the vehicle industry, it was vended from $10,000 to $30,000 (based on 1980s currency on the dollar value). The upside to this was that the semiconductor sold for $1 to $3 could easily cause blips which required the owner to either call rescue or repair the vehicle there. It would cost the owner more than $700. Consequently, customer satisfaction, which was paramount, was unsatisfactory.

Possible Solutions

Possible Solution A: Development of a Manufacturing commodity planning and procurement solution. Manufacturing product and planning supply is a platform that allows manufacturing companies to implement innovative solutions to the volatile commodity prices. One apparent issue with the Universal Motor Company is the outsourcing problem with suppliers of the semiconductors. One possible solution to this is the procurement of portions in bits from more than one supplier. Therefore, it would be more beneficial and cost-cutting to the business if they would implement the use of such innovative technology to mitigate on the procurement of proper and high-quality semiconductors. With the platform, the company would be able to analyze, manage demand as well as budget evaluation such as forecasts, coverage, and procurement on real-time purchases. It would enable them to visualize the commodity needs against targeted quantities and price. It is a means to look beyond the conventional long-term methods of supply contracts with fixed prices for procurement of raw materials as well as employ new ways of prevaricating price volatility as well as fortifying physical supply. The reason is that the traditional methods of accounting and analysis are not able to provide suitability and trading sustenance.

Possible Solution B: Universal Motor Company could opt to buy the semiconductors from one more supplier. It could be that the company can choose to buy either one portion of the semiconductors or all parts from the vendors. However, it may require a prerequisite process of scanning for the right suppliers through a series of price lists. It will depend on the broad range of aspects such as money, quality, reliability, and service. Therefore, those that would match or exceed the expectations and needs of the company are eligible. For example, the business requires the best quality semiconductors; it is only prudent if the company can procure the best from either one or more suppliers. Hence, it is necessary to ensure that the suppliers are in-check and understand the value of the business which enables the business to possess a competitive edge.

Potential suppliers include those who have direct communications with same-level businesses or rather, those who come with recommendations. It may also come from trade associations, business advisors or through exhibitions. These portals serve as the best mediums through which the company may gain the best supplier(s). When this is done, it is prudent if the company goes through the said processes such as identifying the best quotations, comparing with other suppliers based on the work they have done and where possible, meeting the suppliers face to face. Moreover, the company should opt to gain more understanding from providers through the negotiation of terms and conditions. Nonetheless, one thing should be noted, having one supplier may not be the noblest act within the company. The risks should be shared, such as faulty semiconductors or inability to deliver the raw materials on time.

Possible Solutions’ Advantages and Disadvantages

Advantage 1: One of the advantages of using a managing platform for the procurement and pricing strategies is the ability to manage and forecast on the risk associated with suppliers. As mentioned earlier, the team can view or visualize the proponents of the business in real-time. They are, therefore, able to manage project costs which entail possessing the tools necessary in the analysis of the expenditures incurred by the business through procurement of the raw materials. Moreover, the team can report on capabilities of the firm through flexible report availability and intuitive use of the platform. Finally, one of the benefits of the advantage is that the business can execute issues when relying on automated alerts. With alerts, they aid in the team making due of their tasks and taking heed of any problems that are forthcoming or are present during an individual procurement process. As such, it is helpful to a business of complex nature in procurement.

Disadvantage 1: One major problem of the solution in use of the management cost and analysis platform is based on the adaptation to the organizational needs. These packages may face a determinant issue of corporate culture which the business may find it difficult to process during procurement. For instance, knowing what necessary functions are relevant to the firm may impact the decision-making process of the executive team. It may require that the business executives write down a list of functions as well as traits that are regarding ’required’ and ’optional’ suitable to the company.

Advantage 2: The business can identify with each supplier since there is a monitoring system, and each provider is known. Therefore, the company is linked to each critical process within the business such as product development that entails knowledge of the raw materials procured. In the end, the company can maintain an understanding of every process if needed without the need to go through every department singularly.

Disadvantage 2: The key suppliers within the business (mostly external) provide a company with the direct input of the processes, but integration of the suppliers may bring up a mix-up in the resources. It is best to know that the processes within the business provide the goods and the services which make up the fundamental processes within the operation and utility. Hence, it may bring a mix-up with the consumers being unsatisfied and create a product that is limited in the integration of the goods delivered by the suppliers.

Conclusion

The solutions provided within the paper provide the best platform for the business to gain more leverage within the venture market. However, it may require a prompt analysis of both the internal and external factors of the environments that affect the functionality of the business. Therefore, the business may thrive again despite the major holdbacks that have been mentioned earlier on in the paper.