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Albar Industries Inc.
Martin Savage, Linfeng Liang, Yu Shen, Ziao Liu
Management 695
Group Project Rough Draft
Firm- Albar Industries Inc.
30OCT17
1
Albar Industries Inc.
Albar History (need Industry history)
Albar Industries Inc. is manufacturer and supplier for automotive and commercial
applications, which offer molded and painted product. This company also supplies internal metal
parts and external automotive plastic parts. (Inc., A, 2017) In 1969, Albar was established in
Rochester by Ed May and Stan Malopolski. However, continued shortly, the Albar moved to
Troy with some growth. In 1984, Albar finally settled in the Lapeer in Michigan. in the early
time, Albar only had 30,00 square foot plant for manufacturing. After 7 years, it had finished 3
additions to expand their plant with total 110,000 square foot. At that time, it only worked for
Tier first molders, unlike now has a direct business with the automotive industry. In 1999, Albar
and Pinnacle Plastic Products had an opportunity to establish a strategic alliance. This strategy
allows albar to have a clear goal, which is to become tier 1 supplier that offer painted and blowmolded parts. After 1 year, General Motors allowed Albar became their Tier 1 business partner.
After this, Albar continued bid the General Motor’s painted blow-molded parts business. As a
result of product quality assurance, Albar also won the cooperation with Chrysler, Ford and
VW’s opportunities. Since that time, Albar created an alliance which supply the injection molded
and painted parts with some well-known companies in the automotive industry. (Albar 2017)
Nowadays, Albar have approximately 400 employees, and its annual sales was between $15 and
$20 million. Until the early 1980s, Ed May began to move the management right to his brother
Ed Larry. Then the company has gradually divided into eight major departments. In addition,
due to Ed May’s entrepreneurship interest, the Albar use its environmental engineering functions
to build environmental technology, environmental consulting, and it develop a real estate
investment and development company. (Liebig, 1994)
Internal Strengths and Weaknesses
The company distinguished parameters may make it more desirable as compared to other
paint manufacturing companies due to the following conditions. Technology, the level of
technology employed in the organization may depend generally on the level of inputs invested.
High quality products require more profound equipment. Innovation, the level of innovation. The
more the company employees are innovative the higher the chance of increased production.
Employee’s performance appraisal. Due to monotony in work places, employees are supposedly
expected to be appraised through, reward, salary increment, promotion and office refurbishment
etc. Geographical position, Albar Company may be well positioned as compared to other
competitors. The geographical surrounding of the company affect the level of income generated.
For instance, the acceptability of the paints in the market define the income levels. More
populated surrounding offer required market niche.
For weaknesses, source of raw materials, the source of raw materials may differ in cost,
distance from the site to factory and quality of the ore. Poor raw material may require more
additives to improve the quality of the finished product. The cost of goods is improved through
proper management of cost of production. Cost of operations, companies pricing level is affected
by the energy, cost of advertisement, labor, and capital employed (Okay, et al pg. 537).
Defectors, many paints ordered may be returned as return-inwards due to; expiration of the
paints from the shelves. Lack of proper information from manufactures label, minimized
production levels, and ineffective trade balance associated to poor customer preference.
Machinery, the machinery used at one particular point affects the level of output. Heat and
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Albar Industries Inc.
friction reduce the efficiency of the tools. Poor maintenance of the machines reduce the adhesive
force required to attract beauty and cohesiveness between surfaces.
Large market share, a company’s share index increase income and reliability due to the
following scenarios; large market share, properly mapped distribution channel, effective market
hypothesis and balance of trade. Customers friendliness, company whose intention is to offer
customer satisfaction always find means of resolving conflicts through proper utilization of
demand and supply schedule. Pricing strategy, the company effectiveness in controlling the price
equilibrium (Okay, et al pg. 539). Price equilibrium is attained through improved selling and
buying procedure. Large consumers may be allowed discount allowable on sale of goods
exceeding parameters. Government rules and regulation, work permit offered by the government
reduce the competitor’s ability to operate in a particular country. Civil servants mitigate entry
levels of the products from other foreign companies to offset trade. Trade benefits, distribution
channel determine the cost of warehousing. In developed countries the distribution cost is
effectively monitored thus reducing the cost of warehousing while in developing countries cost
of warehousing reduce the profit margin.
Competitors firm with large resource base such as capital reduce alabarch market niche.
Creativity in marketing may be inhaled thus reducing the market share greatly. Sovereignty of
competitors, large competitors may reduce the price level through effective monitoring of breakeven point (Dashi, et al pg. 1467). Companies with the aim of attracting more customers may
proactively reduce prices to attract more customers in the even that competition is stiff. Merging
of two companies, where merging occurs, cost of production is reduced thus increasing
marketability of the paint.
External Environment
The Albar industries have made a good name for themselves when it comes to anything
related to painting. Having been on the market for quite some time the company has made ties
with its stakeholders. The impacts it has made has led to it being one of the top companies in the
paint market. Despite having many competitors, the company has managed to stand against them
and win more customers than the competitors. The company has had rough times when
Competitors like American Autocat, Adept, Lakeland and Creative Liquid coatings have made it
go through rough economic times. Although competition is said to be bad, research has proved it
wrong when it comes to Albar industries. On realization that the company was facing stern
competition, it came up with a strategy on how it can outshine the rest of its competitors. Finally,
the company decided that coming up with an alliance of personalities with the same goal will
beat and outshine the competition. The company has heavily relied on older painting methods,
and that has led to the stiff competition it has faced.
The Albar industries company has top paint suppliers in the world. PPG industries,
Axalta and Sherwin-Williams, are its top suppliers. Having had financial ties for some time, the
company has established trust with its suppliers. At one point, the company did not comply with
the terms and conditions of the contract it had signed, and this led to an argument. The argument
made the company lose its trusted customers. They no longer had trust in the company because
of the illegal practices it had chosen to do. As a result, the company board of management
developed a policy that it had to place the interest of suppliers second after the esteemed
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Albar Industries Inc.
customers. The policy has then helped the company come to succeed in its business making it
one of the best paint industries (Bobry &Kaiser, 1996).
To make the company better, the company should take up some recommendations. The
company’s paint lines should be of new technology so as to control the temperature and humidity
in the paint booths. This is a new initiative that many paint companies are using today.
Customers are also attracted to these changes because they are customized to fit their specific
needs, Albar has some of the best paints, but with lack of technology changes, customers are
now moving to the competitor’s side. That means that the application will be of ease and surface
defects will be minimized as a result of the improvement. The company has had to deal with the
shortage of paints amidst high demand. To solve the issue, the company should have larger and
bigger racks of paints whereby they will maximize the availability of market. There should be an
analyst who study the supply and demand patterns in the market, this way; there will be enough
supply to ensure that there is enough paint for all customers in the market. If customers do not
find the paint they are looking for in the market, they will opt for competitors’ products. If the
products are better, customers will not go back to Albar paints, and they will end up building
loyalty with the competitors. To have a better supply, the company should compensate the
suppliers on time to avoid commotion. This helps the company when it is faced with emergent
larger demands of paints. The management should also involve younger managers who bring
new ideas to the table.
Business Level Strategy / Corporate Level Strategy
After connecting with the president and the program manager at Albar, they have helped
us determine that Albar has three main business level strategies along with one corporate level
strategy. They are as follows,
Albar first business level strategy is to continue expansion of Tier 1 level business in the
automotive industry by using Alliance Partner strategy. Strategic alliances are no longer a
business luxury, but have become a necessity to compete in the global market place. No one in
industry is self sufficient any more. These strategic alliances are with injection molders, blow
molders, compression molders and stampers. The way the alliance works is if Albar gets asked to
quote a certain painted part for one of the OEM’s, Albar can go to an alliance partner that molds
or stamps a certain product that is desired and they can quote it together. Also, if one of the
molders or stampers gets asked to quote parts and they need the parts painted, Albar becomes
first choice to either say they are willing to quote or not quote. The crucial part of these alliances
is the fact that Albar currently has only one alliance with a blow molder, an injection molder, and
a compression molder. Therefore, when Albar gets asked to quote business there is no
competition between which molder Albar asks if they want to quote because they all mold
different types of parts.
The second business level strategy for Albar is to incorporate a regional supply strategy.
Being in Lapeer, Albar has situated itself in being only four hours away from twenty-two
original equipment assembly plants. With being so close to multiple assembly plants, Albar must
try and find a way to win/keep business in these key areas. Being regional is good for Albar for
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Albar Industries Inc.
two reasons. One, logistics. To be within a half day driving distance from the assembly plants,
Albar and keep costs down along with shortening turnaround time. If Albar were to win business
let’s say in Germany, the components would have to be painted in Lapeer and shipped either by
boat or by plane and that will take not only time but money, plus there is more risk in the parts
getting damaged. Two, if there is something wrong with the parts at the assembly plant and the
OEM needs support, Albar is driving distance away to help, either with engineering support or
with replacement parts. Having a great connection with the plants will go a long way as well, so
showing up occasionally to make sure the parts are running well can help build a relationship
with the OEM’s which might lead to more business down the line.
The Third and final business level strategy Albar is utilizing is to utilize the Women
Owned Business certification for entry into more Tier 1 business. At the OEM’s they are
required to give a certain percent of business to either minorities or women owned business to
help keep the diversity of where the parts are coming from. Therefore, at the OEM’s there is a
person call the champion, and their job is to hook up minorities and women owned businesses
with the deign release engineers to hopefully quote new business. This exposure is great for
Albar because utilizing the Women Owned Business certification, Albar can now get in front of
the OEM’s more, quote more, and then acquire more business. This business level strategy has a
lot to do with the focus on the big three and their focus to use a certain percentage of women and
minority owned business on their vehicles.
With Albar having three key business level strategies, their corporate level strategy is not
so easily defined. Albar again is a privately-owned company. Albar is owned by the Mays family
and they control everything to do with the future of the organization. After interviewing our two
resources, they have both told us that if a new business strategy was introduced to the Mays
Family they essentially will give the strategy a go/no-go depending on where they would like to
see Albar in the next, 5, 10,15 and 20 years. Having said that and from the experiences they have
witnessed, they believe that the corporate level strategy is to continue as planned, which means
they would like to only see growth from the current three business level strategies. Which means
a succession plan has not be developed yet or if it has, it has not been shared with the President
and the program manager at Albar.
Structure and Control System
Albar is a relatively small organization and with a small organization most of the
structure may come from the customer. Currently Albar has a certified quality and test lab. The
110,000-sq.ft. facility is TS 16949 accredited, which means it can manufacture parts to the
automotive industry. Their test lab is A2LA Accredited with a defect analysis lab, BKY Mac, XRite & MacBeth Color verification.
Utilizing the tools and accreditation, Albar can then go after OEM automotive business.
With trying to acquire new business, Albar has to be malleable when it comes to the control
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Albar Industries Inc.
system and the quality requirement. Because every OEM is different, Albar’s Quality system is
part by part different. One OEM may call out a different test than the other but they will all fall
under the TS 16949 accreditation. As for their enterprise resource planning (ERP) system, Albar
incorporated IQMS two years ago. This system helps with receivables, payables, invoices along
with proper labeling and archives all the data. Orders will come in from the specific systems at
the OEM’s and the estimator at Albar will put them into the IQMS to be manufactured and
invoiced. In the future, Albar has stated that the IQMS has other modules that will be added to
streamline this process and hopefully make the controlling system much more efficient.
As for making sure Albar is on track quarter to quarter, A monthly finical review is
conducted with the senior leadership of the organization and the Mays family. This review
typically goes over scrap percentages, efficiencies, turnover, issues and the overall performance
in the past month while also looking at the initiatives to make sure the next month is on track.
Finally, in this meeting if any new business strategies have been identified, a business case is
brought to the Mays family and they will either go/no-go the new business strategy by the
following month.
Recommendations
After careful consideration, a few recommendations have been established to help Albar gain
new business and possible a new market share in different areas they have either started to
explore or have not explored at all. These recommendations can then be turned into business
cases and brought to the Mays Family to see if they would like to continue the potential new
business strategy. The recommendations we have chosen are, try and win new business with the
military, building and construction, and agricultural markets, update the paint lines with the latest
technology, look at other automotive OEM’s that have assembly plants in the US (Honda and
Toyota in Ohio), and utilize the hydrographics line as an alternative to paint.
New Markets
Update facility
Other Automotive OEM’s outside the Big three
Hydrographics
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Albar Industries Inc.
Resources
Albar.com. (2017). Albar Industries Inc.: Automotive and Commercial paint applications.
[online] Available at: http://www.albar.com/aboutus.htm [Accessed 17 Oct. 2017].
Liebig, J. E. (1994). Merchants of vision: people bringing new purpose and values to business.
San Francisco: Berrett-Koehler.
Inc., A. (2017). Albar Industries Inc.: Private Company Information – Bloomberg. [online]
Bloomberg.com.Availableat:
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=6706761 [Accessed 17 Oct.
2017].
Dashi, H. S., Follies, J. L., Smith, C. E., Tanaka, T., Garrulity, M., Gottlieb, D. J., … Schemer, F. A.
(2015). Gene-environment interactions of circadian-related genes for cardio metabolic traits.
Diabetes Care, 38(8), 1456-1466.
Okay, A., Beauchamp, J. P., Fontana, M. A., Lee, J. J., Peers, T. H., Rietveld, C. A., … & Oskar son, S.
(2016). Genome-wide association study identifies 74 loci associated with educational attainment. Nature,
533(7604), 539-542.
Kaiser, F., & Bobry, H. H. (1996): U.S. Patent No. 5,532,525. Washington, DC: U.S. Patent and
Trademark Office.
7
1. What makes Albar the better choice for painted parts over competitors (internal strengths)?
Fast response. Painted many “last second” projects for different OEM’s.
2. What are some weaknesses that Albar has compared to competitors that could be improved?
Having older paint technology. Most new paint systems have more variable control. Less variation is
processes could potentially improve overall quality/yields.
3. What is Albars business-level strategy?
Work in “partnerships” with different molders. We win/lose the business together.
4. What is Albars corporate level strategy that leadership is trying to pursue?
Create partnerships with specific suppliers. (I.e gasket/molders/paint). Gain Tier 1 programs.
5. What kind of control system is used and does it mesh with the strategy of the company?
Not sure what we are trying to control?
6. Current Competitors?
I do not know.
7. Are there any potential obstacles in the future development?
Old paint line. Possible push for fully robotic paint application (Albar does some hand spraying still)
8. I noticed under the strategic alliances on your website, there is management staff. does that
mean that your staff management is controlled by other companies? If not, do you cooperate
with other companies on the management of your staff?
9. What do you think makes you stand out of other companies?
Friendly, and well connected management. Fast response, and have done many favors/special projects
for OEM/customer engineers who work in paint.
10. According to your company history, your company started as a contract painter, and now you
grow to a supplier of molded / painted parts. In the future, do you plan to enlarge your business
area?
Yes. We are currently developing hydrographic systems for automotive exterior. Hydrographic work can
also get us into other industries other then automotive.
11. Are there any conflicts of interest with your alliance companies and how do you deal with it?
Not that I am aware of.
12. Does your company accept personal orders (online orders)? For example, DIY paint
Nope
13. What are potential obstacles for future development?
Older paint system. See number 7
14. Companies like GM and Ford are large companies, why do you think Albar made …
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