BSBMGT608 Manage innovation and continuous improvement Assessment Task 1

BSBMGT608 Manage innovation and continuous improvement Assessment Task 1

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Task 01 (Written Report): Review performance

and sustainability

Submission details

The Assessment Task is due on the date specified by your trainer. Any variations to this arrangement

must be approved in writing by your trainer.

Submit this document with any required evidence attached. See specifications below

for details.

You must submit both printed copy and soft copy of your answers.

Submit printed copy of required evidences (your answers) to your Trainer with the “Assessment

Cover Sheet” (Filled out and signed appropriately) attached on top of your answers.

Upload the softcopy on the eLearning site with appropriate header and footer (Your name,

student id, unit/subject name, assessment no, page no, etc.)

The Trainer/Assessor may further prompt and question in order to receive answers of appropriate

quality or if further clarification required and to validate authenticity of your submitted work.

Assessment description

Based on the case study provided, you will write a report in which you outline a performance and

sustainability review strategy, evaluate the strategy, analyse performance reports and trends, and

describe how you would seek advice from specialists to identify technological solutions.

Procedure

1. Read the case study ‘AC Gilbert’ in Appendix 1.

2. Analyse the information provided and prepare a report addressing the following six (6) points.

1. Describe the key systems and processes used by AC Gilbert:

a. Supply chain

b. Operational systems

c. Product/service delivery.

2. Analyse the three key systems and processes and develop the elements of your

review strategy: applying your knowledge of quality management and continuous

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improvement theory, develop performance and sustainability measures,

assessment tools and techniques that you would use to evaluate the effectiveness

of the three key systems and processes.

In your report, include if applicable:

a. Lists of key result areas (KRAs)

b. Lists of key performance indicators (KPIs)

c. A description of performance review processes

d. A sample service level agreement.

3. Using the data provided for results up to 1966, for each of the three key systems,

describe how each of your measures, assessment tools and techniques would

monitor performance. Include specific examples or hypothetical cases to test the

effectiveness of the elements of your review strategy. Write an evaluation of the

effectiveness of your review strategy. Suggest improvements to your strategy.

Refer to quality management and continuous improvement theory.

4. Using the data provided for results up to 1966, analyse the variances from plans

and targets for the key result areas (KRAs). Include discussion on performance with

regards to:

a. quality – design/manufacturing

b. sales

c. profit

d. supply chain performance (delivery)

e. business growth – staff and management performance and/or turnover.

5. Discuss trends relevant to the organisation. What trends did AC Gilbert fail to

identify in the late 1950s?

Consider the strengths and weaknesses of the AC Gilbert Company prior to 1960.

Discuss the following in your report:

a. market share

b. reputation

c. stability

d. profit

e. sales

f. ability to adapt to change

g. customer service standards

h. innovation

i. employee performance

j. production and manufacturing.

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Apply creativity skills to identify missed opportunities to improve business

performance. Describe at least one missed opportunity in detail. Include an action

plan for implementing the improvement in your report.

6. Imagine the company did not close in 1967 and has somehow managed to

continue operations until today. Discuss the possible use of advice from specialists.

What specialists could be consulted to advise on and identify new technology or

electronic commerce opportunities? Consider:

a. Internal – engineers, production staff, manufacturing staff, sales personnel,

human resources personnel.

b. External – marketing consultants, advertising experts, engineers or

designers, IT consultants.

3. Submit your report to your assessor as per the specifications below. Ensure you keep a copy of all

work submitted for your records

Task Specifications

You must provide:

● a written report submitted within agreed timeframe.

Your assessor will be looking for:

● reference to, and application of, quality management and continuous improvement theories in

review strategy

● reference to and application of sustainability practices in review strategy

● analytical skills to identify improvement opportunities

● demonstration of creativity skills to think laterally and identify improvement opportunities.

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Appendix 1 – A. C. Gilbert

History 1909–1961

Alfred Carlton Gilbert was an inventor and a toy manufacturer who invented the Erector engineering set.

His original company, The Mysto Manufacturing Company, was founded in 1909 to manufacture the

Erector set. In 1916, Mysto became the A. C. Gilbert Company and gained a reputation for producing

quality toys.

By the 1950s, A. C. Gilbert was one of the leading toymakers in the United States with annual sales

regularly topping $17 million. This was an outstanding achievement for a relatively small company.

In 1961, A. C. Gilbert senior died, leaving the company in the hands of his son, A. C. Junior. At the time

A. C. Junior took over the firm, the company was established as a traditional, reliable and profitable

manufacturer of educational toys.

Product lines and rationale

A. C. Gilbert produced train sets but their most popular lines were chemistry sets, microscopes and their

best seller, the Meccano-like Erector engineering sets that had been popular with children for more

than 50 years.

A. C. Gilbert toys were not cheap. They were high quality, solidly crafted and made to endure. Parts and

packaging were designed to last for many years, with the Erector set packaged in long-lasting metal

boxes. The focus was on educational toys, primarily aimed at boys rather than girls. The company had a

limited range but what they did manufacture was top quality and highly regarded.

Systems and processes

A. C. Gilbert was a small company. The following model demonstrates the systems and processes in

place.

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Design

Toys are designed by a small group of designers who develop the concepts for the products.

Planning

The planning department translates the concepts into designs and determines resource requirements, including raw materials. Planning also projects sales and develops production plans for each product, timeframes for production runs and scheduling of production runs.

Purchasing

Information gained from planning stage used to purchase raw materials for products and packaging from suppliers.

Manufacturing

Produces and packages toys for distribution.

Distribution

Delivers packaged toys to the warehouse for storage.

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Note: These flowcharts have been included for assessment purposes only, and may not accurately reflect the

actual processes in place at A. C. Gilbert.

History 1961–1967

As the 1950s moved into the 1960s, there were huge cultural changes across the world. The fifties

were a very traditional era of family values and morals, conservative and staid. Then came the ‘swinging

sixties’. The sixties were a time of rapid change both technologically and culturally. Old fashioned values

gave way to new moral freedoms.

Where the fifties represented solidarity and familiarity, the sixties embraced change. Everything was

bolder, brighter and more daring. A new young president and rising social activism by youth saw

changes in clothing, music and interests. Young people rebelled against the values of their parents and

embraced a more fast paced, exciting and riskier lifestyle.

Changes to the toy industry

Cultural changes had a huge impact in western toy markets. Barbie and Action Man became ‘must

have’ toys. Girls moved away from baby dolls and cots and wanted dolls that were more grown up,

modern and trendy. They wanted dolls they could dress in the latest fashions and who had exciting

‘careers’, boyfriends and cars of their own. Boys were moving away from the traditional train sets

towards exciting new slot-car racing sets and action figures from popular movies and television shows.

Traditionally, toy advertising had been done via magazine promotions but the sixties brought in a new

phenomenon: television advertising. A hugely powerful medium, TV advertising became increasingly

‘hard sell’, with toys heavily promoted, especially in the lead up to Christmas. Children wanted the latest

and greatest toys that they saw in these advertisements and put pressure on their parents to buy, which

they did.

Retailing of toys during this period reflected a shift in retailing in general. Small, specialty retailers with

experienced and knowledgeable staff were going out of business, replaced by large discount stores

catering for the mass market. The goal of this type of retailer was to turnover stock. Heavily advertised

lines were in demand and that is what they would stock. Cheap was in and giant retailers were after a

quick profit from easily saleable, inexpensive products. They weren’t interested in catering to a niche

market by stocking more expensive, harder to shift lines.

Packaging was bright and colourful in order to attract children growing up in a world of colour TV,

hypercolor clothing and visual stimulation provided by the swinging sixties.

Sales Team

• Take orders

from

customers

Distribution

• Arrange for

delivery of

goods to

purchaser

using contract

transport

Retailers

• Sell the toys

directly to end

user

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Affects on A. C. Gilbert

As a small, traditional company, A. C. Gilbert was slow to react to these changes. It may have been that

they were not aware of the changes or were overly confident that their good name and reputation was

sufficient to continue trading as before. The consequences of this short sightedness soon became

apparent.

1961 (figures approximate)

L/Y Sales Actual sales Difference Profit

$12.6 million $11.5 million ($1.1 million) $20,011.00

This drop in sales was also reflected in a fall in the share price of the company.

Outcomes

As a result of the falling profits and share price, the company became attractive to an opportunistic

businessman, Jack Wrather. Jack Wrather was an independent television producer who had made his

money producing the popular programs ‘Lassie’ and ‘The Lone Ranger’. Jack Wrather wanted to

purchase a successful business and felt that in A. C. Gilbert, he had the opportunity to use his

knowledge of popular entertainment and apply it to the production of toys. He purchased 52% of A. C.

Gilbert for $4 million and immediately set about making his mark on the company. A. C. Junior stayed

on as Chairman but his influence was minimal.

Actions taken by Jack Wrather

● Set a goal to achieve sales of $20 million in 1963.

● Replaced the top A. C. Gilbert executives with his own people.

● Initiated a massive advertising campaign.

● Increased sales staff by 50%.

● Instructed sales staff to adopt an aggressive sales approach.

● Introduced 50 new toy lines, raising the line to 307.

● Changed the focus from traditional boys toys to ranges for pre-school children, dolls and other

toys aimed at girls between the ages of 6 and 14.

● Spent $1 million on changing the packaging for all lines to brighter, more colourful boxes.

Performance report

Year Sales Difference from

previous year

Profit

1961 $11.5 million ($1.1 million) $20,011.00

1962 $10.9 million ($600,000.00) ($281,000.00)

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1963 $10.7 million ($200.000.00) ($5.7 million)

1964 $11.4 million $700,000.00 ($2.6 million)

1965 $14.9 million $3.5 million ($2.9 million)

1966 $12.9 million ($2 million) ($12,872,000.00)

1967 A. C. Gilbert closed 1909–1967

Key milestones

1962:

● Jack Wrather purchased 52% of A. C. Gilbert.

● Replaced existing executives with his own people.

● Increased sales staff by 50%.

● Implemented extensive television advertising.

● Set an organisational goal to achieve sales of $20 million for 1963.

● Company recorded a loss of $281,000.00.

● Introduced 50 new lines in less than 12 months, using existing engineers and production

departments who lacked training and experience in the new product range.

● Repackaged existing lines at a cost of $1 million.

1963:

● Sales and profits down on previous year.

● Anticipated drop in profits due to expansion and cost of establishing new lines.

● Sales fell short of expectations.

● Decline in quality of toys – feedback indicated products poorly made and designed (dolls did not

even come with a change of clothing).

● New range perceived by customers as poor quality and over-priced – not value for money nor

attractive to the target market.

1964:

● Jack Wrather fired most of the top management team he hired two years previously.

● Crisis management lead to multiple changes and dramatic measures being taken and then

changed – often one measure contradicting the previous.

● Jack Wrather hires new CEO – Isaacson.

● Isaacson fires the entire sales team.

● Isaacson makes huge cutbacks in spending.

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● Sales are channelled through independent manufacturer’s reps, which was cheaper than

maintaining an in-house sales force.

● Long-standing relationships soured as the independent reps worked on commission and pushed

sales, with no interest in maintaining or building relationships with customers.

● A. C. Gilbert had built its success on personal service and building relationships – that was

destroyed within 12 months.

● A. C. Gilbert Junior dies and is replaced as Chairman by Jack Wrather. Isaacson assumes the role

of President.

● Prior to Christmas, many of the previous year’s failed products were deleted and 20 new items

introduced.

● Reduced the price of core lines such as the Erector set from $75 to $20 but quality also impacted

– cardboard box instead of metal boxes, and brittle parts instead of sturdy long-lasting parts.

● Sales increased and there was some degree of optimism.

1965:

● Sought to capitalise on popular crazes such as James Bond and The Man from Uncle by

introducing action figures for Christmas.

● Due to internal strife and staff cutbacks, the new lines were not delivered to the stores until after

Christmas.

● Operating on a skeleton workforce.

● Due to lack of staff, A. C. Gilbert is unable to implement changes or introduce new lines quickly

enough to capitalise on trends.

1966

● Increased advertising spending to $3 million.

● Introduced point of purchase display products supplied to dealers free of charge.

● Borrowed $6.25 million, granted on the event that the company made a profit in 1996.

● Company made a loss of $12,872,000.00.

1967

● February – A. C. Gilbert closed its doors after 58 years.

Note: This case study is a true story. You may wish to read more about this organisation or to conduct

additional research online.

Reference material

● Tibballs, G., 1999, Business blunders, ‘A. C. Gilbert: Toy Story’, Robinson Publishing Ltd, pp. 43.