Operations Strategy for Industry Case Study

I have read and understood the rules on cheating, plagiarism and appropriate referencing as outlined in my handbook and I declare that the work contained in this assignment is my own, unless otherwise acknowledged. No substantial part of the work submitted here has also been submitted by me in other assessments for my degree course, and I acknowledge that if this has been done an appropriate reduction in the mark I might otherwise have received will be made. Halton Materials was founded in 1985 by its current Chief Executive and major shareholder, John Halewood, to manufacture motorcycle Disc Brake Pads (DBP) for the aftermarket.

At that time, almost all motorcycles in the UK originated from the Japanese “big four” manufacturers and consumable spare parts were extremely expensive. John and his business partner, Ian Woolton, saw that there was a market for less expensive, yet still capable, DBP. As motorcycles are long-lasting, the company attempts to supply parts for all popular makes and models up to 20 years old. Intended customers are the smaller independent motorcycle dealers and repair shops as well as the riders who carry out their own servicing.

These customers are supplied via motorcycle aftermarket parts supply dealers and the small number of national retail chains specialising in automotive supplies. The business has grown steadily and its brand “Two-Stop” is now a significant and well-regarded product in the motorcycle parts aftermarket, not only in the UK but also in the major Western European markets. The business has grown steadily as the small machines, much favoured by Mediterranean youth, move from drum to disc brakes.

Following Ian Woolton’s retirement in 1999, John Halewood took full control of the company and his family own 90% of the shares, the remainder being held by other senior employees. Other finance is provided by their bankers in the form of long-term business loans. Turnover had exceeded 5 million (approx. 2 million pads) for the first time last year (2005) and the business made a satisfactory profit, though John was becoming increasingly concerned by competition from low cost Far Eastern suppliers. Financial information for 2005 is displayed in Appendix I.

With the renaissance of motorcycle manufacture in the UK, the company now has its first opportunity to be considered as an original equipment (OE) supplier. Though, initially, this will only add 150,000 pads to the production volume and pricing for OE products is very competitive, there is only one product specification to be produced. More importantly, success in this new venture will open up opportunities in the much larger European OE market. John considers that entry into the OE market will help insulate the company from the growing Far Eastern competition.

However, OE supply will mean tighter product specification, superior product performance, improved quality assurance and more detailed records. A batch of several hundred samples of the company’s proposed DBP design will need to be produced to obtain type approval from the manufacturer. QC procedures and process capability will be audited by the customer’s own technical experts. Organisation The company organisation is shown overleaf. Nowadays, John mainly concerns himself with the overall strategic direction of the company and liaison with external financial providers.

Day-to-day operations are managed by a team consisting of the other four executive directors and Bob Cronton, the Works Manager. If he is available, John chairs the team though normally his son Tony, the Sales Director, takes on this role. Tony expects to take over as MD in two or three year’s time when his father semi-retires though John intends to remain Chairman for the foreseeable future. There are now 49 employees and the company expects to make the jump from small to middle sized company (>50 employees) during 2006.