Product

The basis of Merton’s Strain Theory lies with Emile Durkheim and his theory of anomie in so far as ‘anomie’ is translated as ‘deregulation’ or ‘normlessness’. Durkheim developed the concept of anomie in his book, Suicide, published in 1897 to refer to the lack of social regulation in modern society as one condition that promotes higher rates of suicide. He believed that individuals possessed an unlimited appetite of aspirations and it was up to society to regulate such an appetite.

According to Durkheim, the appetites were regulated by the ‘collective conscience’ of society; meaning people were bound together by their common morals and beliefs. However, if this mechanism failed or was significantly weakened, anomie would occur. An anomic state would unleash in people limitless appetites that could result in a variety of deviant behaviours. It was after reading Durkheim’s work that “Merton assigned himself the task of discovering what produces anomie” (Hunt, 1961:58)

Robert Merton was a criminologist who applied Durkheim’s definition of anomie to modern industrial societies, with specific emphasis on the United States of America, and redefined the term. According to Merton, anomie is the form that social incoherence takes when there is a significant detachment “between valued cultural ends and a legitimate societal means to those ends” (Akers, 2000:143). Anomie can be separated into two distinct separate categories: macroside and microside. Macroside is caused when society fails to establish clear goal limits and is unable to regulate society members conduct.

It is the microsided category that is more commonly referred to as strain, which focuses its attention on the breakdown of society and the increased levels in deviance, which is associated with this declining change that produces a stronger pressure among society members to commit crime. (Calhoun, 2003). Strain is the pressure that is placed on disadvantaged minority groups, where the lower societal population take any effective means to income and success that they can find even if those means are illegal (Akers, 2000:144), and Durkheim classified two strains of strain: individual and structural.

Individual strain is described as the personally created stress that is attained by the person while they search for a means of meeting the needs they define through their personal expectations. Structural strain applies to members of the society who determine what their needs are based on societal ideas and are constantly battling to achieve these ideals (O’Connor, 2003). Following on from this, when Merton introduced his general strain theory, as aspirations increase and expectations decline, delinquency and the amount of deviant behaviour that occurs increases in effect to these changes.

Merton recognised that certain expectations created by these two general types of strain and went on to identify five specific “modes of adaptation” to tackle these strains (Akers, 2000:144). Merton began his expansion on anomie by stating there are two elements of social and cultural structure. The first structure is culturally assigned goals and aspirations (Merton, 1938:672). These are the things that all individuals should want and expect out of life, including success, money, material possessions etc.

The second aspect of the social structure defines the acceptable mode for achieving the goals and aspirations set out by society (Merton, 1938:673). This is outlined as the acceptable and appropriate way that people get both what they want and what they expect out of life, fro example obeying laws and societal norms, getting an education and working hard through life. It is expected that in order for society to maintain a normative function there must be a balance between aspirations and means in which to fulfil these aspirations (Merton, 1938:673-674).

Balance would then occur as long as the individual felt that he was achieving this culturally desired goal by conforming to the “institutionally accepted mode of doing so” (Merton, 1938:674). Put in other words, there must be an intrinsic payoff, an internal satisfaction in playing by the rules as well as an extrinsic payoff of achieving their goals. It is also an important factor for all social classes to achieve these culturally desired goals through legitimate means, as if they are not, then illegitimate means might be employed to achieve the same goal.

There is however, sometimes a disparity between goals and means with too much emphasis being placed on the goal itself and not the legitimate means by which it is achievable. For some members of the society, there is a lack of opportunity, which leads the individuals to a possible illegitimate way of achieving the goal. This, according to Merton is how crime is bred: – overemphasis on material success and lack of opportunity for such material success leads to crime.

As mentioned previously, to supplement his theory, Merton developed a list of five possible reactions to such a disparity between goals and means. The first of these is the most common – Conformity. An individual facing this reaction accepts the goal alongside the institutionalised means. A second possible reaction would be Innovation. In this case, the individual accepts the goals facing him, but rejects the institutionalised means of attaining them.

Then we have Ritualism, where the goal is rejected because the individual does not believe that it can be achieved but legitimate means are employed. Retreatism is where both the goal and the means are rejected. Merton used the example of the drug addict or alcoholic to demonstrate – people who are in society, but do not take part in the function of that society. The fifth and final reaction is Rebellion. Merton reserved rebellion for the individuals who, when frustrated, would elect to simply adopt a new social order and dispose of the old one.

Marketing Segmentation and Product Positioning MKT 500-Marketing Management Strayer University April 27, 2011 In a rush to produce more and more crops to satisfy growing demand, producers have resort to using a lethal cocktail of pesticides to control disease and insect attack. Do you really know what goes into your food? This is why you need to be informed of the advantages of organic food. The quality of food has definitely gone down since the Second World War.

For instance, the levels of vitamin C in today’s fruit bear no resemblance to the levels found in wartime fruit. Organic food is known to contain 50% more nutrients, minerals and vitamins than produce that has been intensively farmed. You will have to eat more fruit nowadays to make up the deficiency, but unfortunately that means eating more chemicals, more detrimental affects on your health eating something that should be good for all. Also don’t forget about the cocktail of anti-biotic and hormones that cattle and poultry are force fed.

What happens to those chemicals when the animal dies? Digested and stored in human bodies is the answer. If you are as worried as I am about the health of your family then you need to seriously consider converting your family to the organic lifestyle. Organic Food Store SWOT Analysis Strengths Organic food is richer in Vitamins, Minerals, and Fiber and retains the level of nutrients for much longer. You will have more energy through consuming low levels of toxics and chemicals that slow your body down.

Weaknesses People are unaware about organic food There is a rigid mentality of people to adapt to the change in their lifestyle. Opportunities Food habits are changing Standard of living is improving Threats Cost – Organic foods are more expensive than other food items Established competitors: Pizza Hut and McDonalds are creating a threat for Organics Fashion of junk food – Young consumers believe in fashion of junk food by not realizing the side effects it causes later

133 Link manufacturing process and product life cycles Focusing on the process gives a new dimension to strategy Robert H. Hayes and Steven C. Wheelwright Although the product life cycle concept may have value for managers, its emphasis on marketing can make it inadequate for strategic planners. These authors point out that using a process life cycle can help a company choose among its various manufacturing and marketing options. Using the concept of a “product-process matrix,” they show how a company’s position reflects its weaknesses and strengths, and they discuss the implications for corporate strategy.

Mr. Hayes is professor of business administration at the Harvard Business School. He is currently serving as faculty chairman of and teaching at Harvard’s Senior Managers Program in Vevcy, Switzerland. One of his previous articles in HBR is “How Should You Organize Manufacturing? ” (coauthor, Roger W. Schmenner, JanuaryFchruary 1978). Mr. Wheelwright is associate professor of business administration at the Harvard Business School. He is currently teaching in the MBA program and is faculty chairman of Harvard’s executive program on Manufacturing in Corporate Strategy.

One of his previous HBR articles is “Corporate Forecasting: Promise and Reality,” [coauthor, Darral G. Clarke, NovemberDecember 1976). The regularity of the growth cyeles of living organisms has always fascinated thoughtful observers and has invited a variety of attempts to apply the same principles—of a predictable sequence of rapid growth followed by maturation, decline, and death-to companies and selected industries. One such concept, known as the “product life cycle/’ has been studied in a wide range of organizational settings. However, there are sufficient opposing theories to raise the doubts of people like N. K. Dhalla and S. Yuspeh, who argued in these same pages a few years ago that businessmen should forget the product life cycle concept. Irrespective of whether the product life cycle pattern is a general rule or holds only for specific cases, it does provide a useful and provocative framework for thinking about the growth and development of a new product, a company, or an entire industry. One of the major shortcomings of this approach, however, is that it concentrates on the marketing implieations of the life cycle pattern.

In so doing, it implies that other aspects of the business and industry environment move in concert with the market life cycle. While such a view may help one to think back on the kinds of ehanges that occur in different industries, an individual company will often find it too simplistic for use in its strategic planning. In fact, the concept may even be misleading in strategic planning. In this article we suggest that separating the product life cycle concept from a related but distinct phenomenon that we will call the “process life I TJie Product Life Cycle and Internationa!

Trade. Louis T. Wells, |r. , ed. ICambridge, Mass. ; HarvaiiJ University Press, 1D71I, im example. proviJcs evidence from a number of industries that argues for broad application of this concept, 2. N. K. Dhalla and S. Yuspirh, “Forget the Priidutt Life Cycle Cnni;epU” HBR I3nuary-February 197(1, p. 101. 134 Harvard Business Review January-February 1979 cycle” facilitates the understanding of the strategic options available to a company, particularly with regard to its manufacturing function. The product-process matrix

The process life cycle has heen attracting increasing attention from husiness managers and researchers over the past several years. ^ Just as a product and market pass through a series of major stages, so does the production process used in the manufacture of that product. The process evolution typically hegins with a “fluid” process—one that is highly flexible, hut not very cost efficient—and proceeds toward increasing standardization, mechanization, and automation. This evolution culminates in a “systemic process” that is very efficient hut much more capital intensive, nterrelated, and hence less flexible than the original fluid process. Using a product-process matrix, Exhibit I suggests one way in which the interaction of both the product and the process life cycle stages can he represented. The rows of this matrix represent the major stages through whieh a production process tends to pass in going from the fluid form in the top row to the systemic form in the bottom row. The columns represent the product life cycle phases, going from the great variety associated with startup on the left-hand side to standardized commodity products on the right-hand side.

Diagonal position A company [or a husiness unit within a diversified company) can be characterized as occupying a particular region in the matrix, determined by the stage of the product life cycle and its choice of production process for that product. Some simple examples may clarify this. Typical of a company positioned in the upper left-hand comer is a commercial printer. In such a company, each job is unique and a jumbled flow or job shop process is usually selected as being most effective in meeting those product requirements.

In such a job shop, jobs arrive in different forms and require different tasks, and thus the equipment tends to be relatively general purpose. Also, that equipment is seldom used at ioo% capacity, the workers typically have a wide range of production skills, and each joh takes much longer to go through the plant than the lahor hours required by that job. Further down the diagonal in this matrix, the manufacturer of heavy equipment usually chooses a production structure characterized as a “disconnected line flow” process.

Although the company may make a numher of products (a customer may even be able to order a somewhat customized unit), economies of scale in manufacturing usually lead such companies to offer several hasic models with a variety of options. This enables manufacturing to move from a job shop to a flow pattern in which batches of a given model proceed irregularly through a series of work stations, or possihly even a lowvolume assembly line. Even further down the diagonal, for a product like automobiles or major home appliances, a company will generally choose to ake only a few models and use a relatively mechanized and connected production process, such as a moving assembly line. Such a process matches the product life cycle requirements that the automobile companies must satisfy with the economies availahle from a standardized and automated process. Finally, down in the far right-hand comer of the matrix, one would find refinery operations, such as oil or sugar processing, where the product is a commodity and the process is continuous.

Although such operations are highly specialized, inflexible, and capital intensive, their disadvantages are more than offset by the low variable costs arising from a high volume passing through a standardized process. In Exhibit 7, two corners in the matrix are void of industries or individual companies. The upper right-hand comer eharacterizes a commodity product produced by a job-shop process that is simply not economical. Thus there are no companies or industries located in that sector. Similarly, the lower left-hand corner represents a one-of-a-kind product that is made by continuous or very specific processes.

Such processes are simply too inflexible for such unique product requirements. Off the diagonal The examples cited thus far have been the more familiar “diagonal cases,” in which a certain kind of product structure is matehed with its “natural” process structure. But a company may seek a position 3. For example, William ), Abernathy and Philip L. Townscnd, “TechnoloRy, Pioductivity, and Process Changes,” in Tachnalo^icdl Forfcoitinj: iind Social Cbange, Volume VII, No. 4, 1975, p. ^79) Abcmathy and lames Ulierback, “DyQ. mic Model of Process and Product Innovation,” Omega, Volume HI, No. 6, 1975, p. 6i9i Abernathy and Uuerback, “Innovation and the Evolution of Technology in the Firm,” Harvard Business School Working P. iper |HBS 7S->fiR, Revised |unc 197^!. Process life cycles 135 Exhibit I Matching major stages of product and process life cycles Product structure Product life cycle stage I Low volume-low standardization, one of a kind Multiple products low volume Few major products higher volume IV High volume-high standardization. commodity products

Process structure Process life cycle stage Jumbled flow (job shop) Commercial printer Disconnected line Mow (batch) Heavy equipment Connected line flow (assembly line) Automobile assembly IV Continuous flow off the diagonal instead of right on it, to its competitive advantage. Rolls-Royce Ltd. still makes a limited product line of motor cars using a process that is more like a job shop than an assembly line. A company that allows itself to drift from the diagonal without understanding the likely implications of such a shift is asking for trouhle.

This is apparently the case with several companies in the factory housing industry that allowed their manufacturing operations to become too capital intensive and too de- 136 Harvard Business Review January-February 1979 pendent on stable, high-volume production in the early 1970s. As one might expect, when a company moves too far away from the diagonal, it hecomes increasingly dissimilar from its competitors. This may or may not, depending on its success in achieving focus and exploiting the advantages of its niche, make it more vulnerable to attack.

Coordinating marketing and manufacturing may become more difficult as the two areas confront increasingly different opportunities and pressures. Not infrequently, companies find that either inadvertently or by conscious choice they are at positions on the matrix very dissimilar from those of their competitors and must consider drastic remedial action. Most small companies that enter a mature industry start off this way, of course, which provides one explanation of both the strengths and the weaknesses of their situation.

One example of a company’s matching its movements on these two dimensions with changes in its industry is that of Zenith Radio Corporation in the mid-1960s. Zenith had generally followed a strategy of maintaining a high degree of flexibility in its manufacturing facilities for color television receivers. We would characterize this process structure at that time as being stage 2. When planning additional capacity for color TV manufacturing in 1966 [during the height of the rapid growth in the market), however.

Zenith chose to expand production capacity in a way that represented a clear move down the process dimension, toward the matrix diagonal, by consolidating color TV assembly in two large plants. One of these was in a relatively low-cost labor area in the United States. While Zenith continued to have facilities that were more flexible than those of other companies in the industry, this decision reflected corporate management’s assessment of the need to stay within range of the industry on tbe process dimension so that its excellent marketing strategy would not be constrained by inefficient manufacturing.

It is interesting that seven years later Zenith made a similar decision to keep all of its production of color television chasses in the United States, rather than lose the flexibility and incur the costs of moving production to the Far East. This decision, in conjunction with others made in the past five years, is now being called into question. Using our terminology. Zenith again finds itself too far above the diagonal, in comparison with its large, primarily Japanese, competitors, most of whom have mechanized their production processes, positioned them in low-wage countries, and embarked on other costreduction programs.

Incorporating this additional dimension into strategic planning encourages more creative thinking about organizational competence and competitive advantage. It also can lead to more informed predictions about the changes that are likely to occur in a particular industry and to consideration of the strategies that might be followed in responding to such charges. Finally, it provides a natural way to involve manufacturing managers in the planning process so that they can relate their opportunities and decisions more effectively with marketing strategy and corporate goals.

The experience of the late 1960s and early 1970s suggests that major competitive advantages can accrue to companies that are able to integrate their manufacturing and marketing organization with a common strategy. ^ Using the concept We will explore three issues that follow from the product-process life cycle: [1) the concept of distinctive competence, [2) the management implications of selecting a particular product-process combination, considering the competition, and |3) the organizing of different operating units so that they can specialize on separate portions of the total manufacturing task while still maintaining overall coordination.

Distinctive competence Most companies like to think of themselves as being particularly good relative to their competitors in certain areas, and they try to avoid competition in others. Their objective is to guard this distinctive competence against outside attacks or internal aimlessncss and to exploit it where possible. From time to time, unfortunately, management becomes preoccupied with marketing concerns and loses sight of the value of manufacturing abilities. When this happens, it thinks about strategy in terms only of the product and market dimension within a product life cycle context.

In effect, management concentrates resources and planning efforts on a relatively narrow column of the matrix shown in Exhibit 1 on page r35. 4. See “Manufacturing—Missing Link in Corporate Stiatcgy,” by Wickham Skinner, HBR May-June 1969, p. i]6. Process life cycles 137 Exhibit II Expanded product-process matrix Product structure Product lite cycle stage III Low volume —low standardization, one of a kind Process structure Process life cycle stage Multiple products low volume Few major products higher volume IV

High volume-fiigh standardization. commodity products Key management tasks Flexibilityquality • Fast reaction • Loading plant, estimating capacity •Estimating costs and delivery times • Breaking bottlenecks • Order tracing and expediting • Systematizing diverse elements • Developing standards and methods, improvement • Balancing process stages • Managing large, specialized, and complex operations • Meeling material requirements • Running equipment at peak efficiency • Timing expansion and technological change • Raising required capital

Jumbled flow (lobshop) Disconnected line flow (batch) Connected line flow (assembly line) IV Continuous flow Hone Dependabilitycost Flexibility-quality Dependability-cosi dominant competitive mode • Custom design • General purpose • High margins • • • • Custom design Ouality control Service High margins • Standardized design • Volume manufacturing • Finished goods inventory • Distribution • Backup suppliers • Vertical integration • Long runs • Specialized equipment and processes • Economies of scale • Standardized material

The advantage of the two-dimensional point of view is that it permits a company to be more precise about what its distinctive competence really is and to concentrate its attentions on a restricted set of process decisions and alternatives, as well as a re- stricted set of marketing alternatives. Real focus is maintained only when the emphasis is on a single “patch” in the matrix—a process focus as well as a product or market focus. As suggested by Wickham Skinner, narrowing the focus of the business unit’s 138 Harvard Business Review January-February 1979 ctivities and the supporting manufacturing plant’s activities may greatly increase the chance of success for the organization/’ Thinking about both process and product dimensions can affect the way a company defines its “product. ” For example, we recently explored the case of a specialized manufacturer of printed circuit boards. Management’s initial assessment of its position on the m. atrix was that it was producing a lowvolume, one-of-a-kind product using a highly connected assembly line process. (This would place it in the lower left comer of the matrix. On further reflection, however, management decided that while the company specialized in small production batches, the “product” it really was offering was a design capability for special purpose circuit boards. In a sense, then, it was mass producing designs rather than boards. Hence, the company was not far off the diagonal after all. This knowledge of the company’s distinctive competence was helpful to management as it considered different projects and decisions, only some of which were supportive of the company’s actual position on the matrix. Effects of position

As a company undertakes different combinations of product and process, management problems change. It is the interaction between these two that determines which tasks will be critical for a given company or industry. Along the process structure dimension, for example, the key competitive advantage of a jumbled flow operation is its flexibility to both product and volume changes. As one moves toward more standardized processes, the competitive emphasis generally shifts from flexibility and quality (measured in terms of product specialization) to reliability, predictability, and cost.

A similar sequence of competitive emphases occurs as a company moves along the product structure dimension. These movements in priorities are illustrated in Exhibit 11 For a given product structure, a company whose competitive emphasis is on quality or new product development would choose a much more flexible production operation than would a competitor who has the same product structure but who follows a cost-minimizing strategy. Alternatively, a company that chooses a given process structure reinforces the characteristics of that structure by adopting the corresponding product structure.

The former approach 5. “The Focused Factory,” HBR May-June 1974, p. 113. 6. Robert H. Hayes and Roger W. Schmenner, “How Should You Organize Manufacturing? ” HBR January-February iy78, p. 105. positions the company above the diagonal, while the latter positions it somewhere along it. A company’s location on the matrix should take into account its traditional orientation. Many companies tend to be relatively aggressive along the dimension—product or process-where they feel most competent and take the other dimension as “given” by the industry and environment.

For example, a marketing-oriented company seeking to be responsive to the needs of a given market is more likely to emphasize flexibility and quality than tbe manufacturing-oriented company that seeks to mold the market to its cost or process leadership. An example of these two competitive approaches in the electric motor industry is provided by the contrast between Reliance Electric and Emerson Electric. Reliance, on the one hand, has apparently chosen production processes that place it above the diagonal for a given product and market, and the company emphasizes product customizing and performance.

Emerson, on the other hand, tends to position itself below the diagonal and emphasizes cost reduction. As a result of this difference in emphasis, the majority of Reliance’s products are in the upper left quadrant, while Emerson’s products tend to be in the lower right quadrant. Even where the two companies’ product lines overlap. Reliance is likely to use a more fluid process for that product, while Emerson is more likely to use a standardized process. Eaeh company has sought to develop a set of competitive skills in manufacturing and marketing that will make it more effective within its selected quadrants.

Concentrating on the upper left versus the lower right quadrant has many additional implications for a company. The management that chooses to compete primarily in the upper left has to decide when to drop or abandon a product or market, while for the management choosing to compete in the lower right a major decision is when to eater the market. In the latter case, the company can watch the market develop and does not have as much need for flexibility as do companies that position themselves in the upper left, since product and market changes typically occur less frequently during the later phases of the product life cycle.

Such thinking about both product and process expertise is particularly useful in selecting the match of these two dimensions for a new product. Those familiar with the digital watch industry may recall that in the early 1970s Texas Instruments introduced a jewelry line digital watch. This product represented a matrix combination in the upper left-hand quadrant, as shown in Exhibit U. Unfortunately, this line Process life cycles 139 of watches was disappointing to Texas Instruments, in terms of both volume and profitability.

Early in 1976, therefore, TI introduced a digital watch selling for $19. 95. With only one electronic module and a connected line flow production process, this watch represented a combination of product and process further down the diagonal and much more in keeping with TI’s traditional strengths and emphases. Organizing operations If management considers the process structure dimension of organizational competence and strategy, it can usually focus its operating units much more effectively on their individual tasks.

For example, many companies face the problem of how to organize production of spare parts for their primary products. While increasing volume of the primary products may have caused the company to move down the diagonal, the follow-on demand for spare parts may require a combination of product and process structures more toward the upper left-hand corner of the matrix. There are many more items to be manufactured, each in smaller volume, and the appropriate process tends to be more flexible than may be the case for the primary product.

To accomodate the specific requirements of spare parts production, a cohipany might develop a separate facility for them or simply separate their production within the same facility. Probably the least appropriate approach is to leave such production undifferentiated from the production of the basic product, since this would require the plant to p too broad a range of both product and process, making it less efficient and less effective for both categories of product. The choice of product and process structures will determine the kind of manufacturing problems that will be important for management.

Some of the key tasks related to a particular process structure are indicated on the right side of Exhibit U. Recognizing the impact that the company’s position on the matrix has on these important tasks will often suggest changes in various aspects of the policies and procedures the company uses in managing its manufacturing function, particularly in its manufacturing control system. Also, measures used to monitor and evaluate the company’s manufacturing performance must reflect the matrix position selected if such measures are to be both useful and consistent with the corporate goals and strategy.

Such a task-oriented analysis might help a company avoid the loss of control over manufacturing that often results when a standard set of control mechanisms is applied to all products and processes. It also suggests the need for different types of management skills [and managers], depending on the company’s major manufacturing tasks and dominant competitive modes. While a fairly narrow focus may be required for success in any single product market, companies that are large enough can [and do) effectively produce multiple products in multiple markets.

These are often in different stages of the product life cycle. However, for such an operation to be successful, a company must separate and organize its manufacturing facilities to best meet the needs of each product and then develop sales volumes that are large enough to make those manufacturing units competitive. An example of separating a company’s total manufacturing capability into specialized units is provided by the Lynchburg Foundry, a wholly owned subsidiary of the Mead Corporation. This foundry has five plants in Virginia.

As Exhibit U shows, these plants represent different positions on the matrix. One plant is a job shop, making mostly one-of-akind products. Two plants use a decoupled batch process and make several major products. A fourth plant is a paced assembly line operation that makes only a few products, mainly for the automative market. The fifth plant is a highly automated pipe plant, making what is largely a commodity item. While the basic technology is somewhat different in each plant, there are many similarities.

However, the production layout, the manufacturing processes, and the control systems are very different. This company chose to design its plants so that each would meet the needs of a specific segment of the market in the most competitive manner. Its success would suggest that this has been an effective way to match manufacturing capabilities with market demand. Companies that specialize their operating units according to the needs of specific, narrowly defined patches on the matrix will often encounter problems in integrating those units into a coordinated whole.

A recent article suggested that a company can be most successful by organizing its manufacturing function around either a product-market focus or a process focus. * That is, individual units will either manage themselves relatively autonomously, responding directly to the needs of the markets they serve, or they will be divided according to process stages (for example, fabrication, subassembly, and final assembly), all coordinated by a central staff. Companies in the major materials industriessteel companies and oil companies, for exampleprovide classic examples of process-organized manu- 140

Harvard Business Review January-February 1979 facturing organizations. Most companies that broaden the p of their process through vertical integration tend to adopt such an organzation, at least initially. Then again, companies that adopt a product- or market-oriented organization in manufacturing tend to have a strong market orientation and are unwilling to accept the organizational rigidity and lengthened response time that usually accompany centralized coordination. Most companies in the packaging industry provide examples of such product- and market-focused manufacturing organizations.

Regional plants that serve geographical market areas are set up to reduce transportation costs and provide better response to market requirements. A number of companies that historically have organized themselves around products or markets have found that, as their products matured and as they have moved to become more vertically integrated, a conflict has arisen between their original productorganized manufacturing facilities and the needs of their process-oriented internal supply units.

As the competitive emphasis has shifted toward cost, companies moving along the diagonal have tended to evolve from a product-oriented manufacturing organization to a process-oriented one. However, at some point, such companies often discover that their operations have hecome so complex with increased volume and increased stages of inhouse production that they defy centralized coordination and management must revert to a more product-oriented organization within a divisionalized structure. ct line with a manufacturing system—a set of people, plants, equipment, technology, policies, and control procedures—that will permit a relatively high degree of flexibility and a relatively low capital intensity? Or should it prefer a system that will permit lower cost production with a loss of some flexibility to change [in products, production volumes, and equipment) and usually a higher degree of capital intensity? This choice will position the company above or below its competitors along the vertical dimension of our matrix.

There are, of course, several dynamic aspects of corporate competitiveness where the concepts of matching the product life cycle with the process life cycle can be applied. In this article, however, we have dealt only with the more static aspects of selecting a position on the matrix. We will discuss in a forthcoming article how a company’s position on the product-process matrix might change over time and the traps that it can fall into if the implications of such moves are not carefully evaluated. Strategy implications We can now pull together a number of threads and summarize their implications for corporate strategy.

Companies must make a series of interrelated marketing and manufacturing decisions. These choices must be continually reviewed and sometimes changed as the company’s products and competitors evolve and mature. A company may choose a product or marketing strategy that gives it a broader or narrower product line than its principal competitors. Such a choice positions it to the left or right of its competitors, along the horizontal dimension of our matrix. Having made this decision, the company has a further choice to make: Should it produce this prod-

The main problems in supply chain of many industries are the excess of some products and the shortage of others because of unpredictable demands for these products. In this paper, a framework that helps manager to understand the nature of demand for their product and manage their supply chain in line with their product requirements is suggested. The products are classified into two groups according to their demand patterns: Primarily functional products and primarily innovative products. Functional products are defined as the products that satisfy basic needs. The demand for that type of products is stable and predictable.

They have a long life cycle. The competition in the market is fierce due to this stability in demand that results in low profit margins. On the other hand, innovative products are the ones that have clearly unpredictable demands. They may have very short life cycle because of the imitators. But luckily their profit margin is higher compared to the functional products. The supply chain management for the innovative products should clearly be different from the functional products. The managers should determine their product type and follow a supply strategy has a perfect match with their product type.

Otherwise, some problems arise from the mismatch between the type of product and the type of supply chain. The author classifies the functions of supply chain into two groups: physical function and market media function. Physical functions include converting raw material into parts, components and finished good, and also transporting the product. The cost in physical function of supply chain arises from the production, transportation and inventory storage. The market media function, on the other hand, is mostly related to ensuring that variety of products reaching the market place matches what customer want to buy.

The cost in marker media function arises when supply exceeds demand or supply falls shortage. Since the demand for the innovative products is uncertain, the market domination cost for innovative products are dominant. According to their type of product, managers should follow a supply chain strategy that is physically efficient or market responsive. The best matches between supply chain strategy and the product type are efficient supply chain for the functional products and responsive supply chain for the innovative products. In efficient supply for functional products, there are two models introduced: comparative and cooperative models.

In the competitive model of supply chain relations, the retailer and the manufacturer compete through price negations for a bigger profit pie. In cooperative model, the retailer and the manufacturer corporate to cut cost throughout the chain therefore the size of the pie is increased for both of them. One alternative can be using competitive and the cooperative models at the same time. But, in this situation the information sharing between the retailer and the manufacturer seems problematic. In responsive supply for innovative products, the first thing to do is to reduce the uncertainty.

There are three coordinated strategies are suggested in order to reduce, avoid and hedge uncertainty. The first one is to find sources of new data that can serve as leading indicators and also to have different product share common components as much as possible so that the demand for components becomes more predictable. The second one is to avoid uncertainty by cutting lead times and increasing the supply chain’s flexibility. Lastly, once uncertainty is reduced, it can hedge against the remaining residual uncertainty with buffers of inventory or excess capacity.

Manchester Products: A Brand Transition Challenge Recommendation: Here are two companies namely Manchester Products and Paul Logan Furniture Division, both offer furniture in different sectors. Indeed, Manchester Products has been known for office furniture while Paul Logan Furniture Division is selling high-­? end fashionable home furniture. Manchester should co-­? brand the Paul Logan Furniture Division line by using a strategy that makes Manchester an endorser brand (Aaker D. , 2004). In this way the existing product line could now be called Manchester Paul Logan Furniture Division and after two years,

Manchester should introduce a new household furniture brand. Problem statement: The problem that Manchester faces is that of transitioning from one customer segment, which is the office furniture segment to another segment which is the segment of household customers. If we have a look at the exhibit 4, the table highlights clearly the strengths of Paul Logan Furniture Division which are different than the Manchester Products. While the core product is the same, the marketing, branding and distribution techniques will differ. The choice of these strategies and the alternates present problems to the company. As ar as the next issues regarding the different distribution strategies of both the brands are concerned, Manchester follows a push strategy where it manufactures the furniture and sells it online, through retailers, specialty stores as well as through the direct sales force. As far as Paul Logan Furniture Division is concerned, it too follows a push strategy as it designs its products and manufactures them, without addressing specific consumer requirements. Assumptions: The future for Manchester, as a household and an office retailer brand will need to keep in mind that the Paul Logan Furniture Division name annot be used after three years. Another assumption is that furniture chain stores concerns will be satisfied, as Manchester will be able to provide them with products with the endorsed Paul Logan Furniture Division name. This will enable them to have a comfort level developed with Manchester so that once two years have lapsed and the new Manchester brand is introduced, these stores will be willing to carry them, based on a good relationship (Aaker D. A. , 2004). Discussion and analysis: The solution that needs to be undertaken in order to resolve the challenge of brand transition, considering that the company an only use the brand name for three years and the fact that it cannot use it to brand new products indicates that adoption of the Paul Logan Furniture Division brand name is not a sustainable strategy. Therefore, the suggestion given by Lisa regarding delaying the name change is not feasible and would only serve to confuse consumers (Davis, 2000). The suggestion where Gary recommends that all products should be rebranded to Manchester immediately ignores the core reason for the acquisition of Paul Logan Furniture Division. The acquisition was carried out to help Manchester enter the household furniture market nd if the name is not used then the acquisition would, in essence, waste the power of the Paul Logan Furniture Division brand in the consumer market. In so far as the last recommendation is concerned, the gradual change in one or two categories will help in registering the fact that Manchester has the same quality products as Paul Logan Furniture Division, and will help to leverage the acquired brand name better. However, this will be against the core principles as stated by Al and Laura Ries as an immutable law of branding (Ries & Ries, 1998). The law of singularity states that the brand should stand for ne particular image in the mind of the consumer. In as far as the case goes, it has been stated that Manchester has an image of a conservative furniture brand that is mainly ‘corporate’ in its approach, using conservative and elegant designs. Paul Logan Furniture Division has a completely different positioning, and is meant to be a contemporary outstanding furniture brand that is preferred by consumers who are trend setters in way. This target market serves to be a completely different brand persona which is bold and trendy as compared to Manchester’s persona which is serious and elegant. Therefore, none of hese strategies would have worked in the market place, and there was a need for a more comprehensive, and focused strategy that could harness the positive goodwill generated by Paul Logan Furniture Division so that Manchester cold sustain the advantage in the longer run, even after the three years had passed. That is the reason why the fourth strategy of endorsing the Paul Logan Furniture Division brand had to be considered. The marketing communications campaign that is used will need to focus on this endorsement, so that the brand name becomes so entrenched in the consumer’s mind, that even when three years nd and Manchester is relived of the right to use the Paul Logan Furniture Division name, Paul Logan Furniture Division is subconsciously perceived as a Manchester brand (Davis, 2000). As far as pull and push strategies are concerned, the company in case of the Paul Logan Furniture Division brand line should continue to follow a push strategy, with promotional offers and designs that can enhance sales as well as market recognition. However as far as the office furniture division is concerned, the company should also introduce a pull strategy whereby orders are taken from corporate buyers and are customized ccordingly. Implementation: The proposed recommendations have two phases. The first is endorsed product lines while the second is a new product line at the end of two years. In the first scenario the action plan would entail as an immediate step, a board and then a company-­? wide meeting where all employees are brought onto the same page with reference to the strategy proposed of endorsing the brand. The employees need to be reminded that they are brand ambassadors. As far as the sales force is concerned, Paul Logan Furniture Division sales team will have to be instructed to consciously endeavour and call

Paul Logan Furniture Division as Manchester Paul Logan Furniture Division in all verbal, written and online communications. The sales force will have to be briefed and trained in following the company policy. Moreover, some sales people will be permanently placed at larger retail stores to help answer and queries regarding the corporate endorsed brand. Secondly, retailers and distributors will be brought on board, and all their concerns and issues should be answered proactively. Ad and communications campaigns also need to be worked on focusing on Manchester Paul Logan Furniture Division. Once the endorsement trategy ceases to exist, the company will have to have a contingency plan in catering to the situation Moreover as new products cannot bear the Paul Logan Furniture Division name, the company will have to come up with a new brand of household furniture, after two years of using the Paul Logan Furniture Division name. The implementation procedures in this case will include promotional strategies for retailers and wholesalers who will be encouraged to push the product more than the competitor’s products. Implementation is the key to executing a successful brand strategy and these measures will aid in just that.

Product line extension is the practice of using an already established product’s brand name to introduce a new merchandise in the same product category. Kadiyali et al. , (1999) emphasizes that, this happens when a company is introducing a new products that falls under the same category within an already existing brand. The new item may be different from the already existing products in terms of new colors, new flavors, size of packaging, different forms, added ingredients etc (Kadiyali et al. , 1999). It involves adding depth to the current product line thus offering to customers greater choices as well as helping in fighting competition.

Brand extension can be confused with product line extension but they are very different. Brand extension involves a company using an already established brand to introduce new products while product extension is improving launching new products within the already existing product category (Coca-Cola, Vanilla Coke, Diet Coke) (Quelch and Kenny 1994). Firms have different reasons as to why they depend on product line extension as one of their marketing strategies. Some managers takes line extension as a low risk and low cost strategy of satisfying needs of different customer segments by offering various goods which falls under a specific brand.

It is a competitive weapon that managers use to increase control of brands over few shelf space (Kadiyali et al. , 1999). However product line extension has a number of disadvantages. Over-segmenting a product line can have some negative effects on the strategic role of every specific product. To add salt on the injury, line extension can also risks undermining company’s brand loyalty. Researcher have noted that, product line extension in most cases does not increase category demand, while on the other hand, the retailer spends extra self expansion costs as they try to accommodate the new products.

Product line extension can also have some impact on the parent brand. Quelch and Kenny (1994) notes, shift in resources and cannibalization can affect the core brand negatively which can result to weak market position of the parent brand. Moreover, if product line extension results to confusion instead of reinforcing the image of the parent brands in the customers’ eyes then line extension might affect the overall market position of that specific product category (Kadiyali et al. , 1999).

However, cannibalization can be of advantage to the product line if it fights for consumer loyalty thus preventing customers from going for the rival brands. In this case, product line extension helps to fight competition thus maximizing the profitability of the firm. Roedder et al. (1998) studied the negative impact of product line extension which involves the risk of diluting the image of the parent brand.

In their study they noted that if product line extensions are inconsistent in regards to the parent brand image or in one way or the other they happen not to satisfy consumer expectations, the results will be dilution of what the brand name means to the consumers. Researchers are currently investigating brand name dilution in empirical studies. It is now very clear that, under specific conditions, product line extension can destroy consumers’ attitude which involves consumers’ feelings and beliefs towards specific product categories (Loken and John 1993; Sullivan 1990).

Delong and Vijayaraghavan (2002) prepared a case discussion with reference to Cirque du Soleil. The discussion elaborated the product with which Cirque has been offering to their audience, or should we say their customers, since 1984. Accordingly, Cirque is the “first and foremost a circus without animals”. It combined street performers, clowns, acrobats, and gymnasts to enliven and to create a so-called “magic” in their performances. They incorporated Latin-sounding music designed to transcend cultural boundaries.

They were then situated in Montreal and eventually became “the Cirque” that they are right now when they crossed to Los Angeles, thus achieving globalization. Their multimedia expansion in films, through “Alegria”, their first feature film in 1999 and television through “Cirque du Soleil Presents Quidam”, their first television special and their IMAX large-format Sony pictures distributed movie, “Journey of Man” strengthened their brand in presenting their cross-cultural message. Further, the diversification of their commercial activities was intensified through publishing and merchandizing, which led to the opening of their first store in 1998. Hence, as quoted in the case, Mario D’Amico, the executive vice-president of marketing, said that Cirque is not a product company, but rather an “artistic work” company, wherein creativity is at the core.

What is Cirque’s strategy? Through the years, Cirque has not been focusing on what business strategy they will use to market their product. Rather, their continuing approach is to build up their artists, who serve as their frontline in every show that they present. They make their artists’ environment as conducive as it can be, in order for them to maximize their artistic and creative potentials. As quoted in the last few lines of the case, “Murielle Cantin, the casting director, wondered if there was a strategy in place at all, but perhaps Cirque did not need a strategy other than to focus on its artists. That approach had certainly served Cirque well in the past. ”

How has Cirque structured and supported its casts to deliver superior performance? In line with there artists-centered approach, Cirque values its casts as its prized possession. Even during their casting auditions, they uphold two key measures aside from pure talent: “can they continue to develop? ” and “can they be generous in the show? ” This exemplifies how Cirque structures its cast even at their beginnings. Moreover, Martin Dumont, interior tour director of “Dralion”, expressed that Cirque creates the best possible conditions for their artists in order to activate their adrenalin with every performance.

D’Amico also shared that “Cirque is about letting pure artists work the way they want to work; they have something to say, they express themselves. ” Therefore, the aforementioned statements undeniably bring out the best in their artists with every performance. What are the challenges to Cirque’s continued growth or diversification? As Cirque continues to grow and globalize, challenges are inevitable. One of those is the issue on staff and compensation when they had decentralized their profit centers and headquarters into three areas? North America, Europe and Asia.

Since they are growing, they thought that decentralization could be a good action to take but it became a cause of some dissatisfaction on employees’ part. But then again, recentralization to Montreal resolved those issues. Nonetheless, it lessened the urgency to develop overseas market. On the other hand, they also struggled with competition with Cirque Oz in Australia, which even hindered them to get permits. However, Cirque looks at it in a different view. Cirque affirms that they must not work as rivals since they are building the market.

In addition, their growing business status tends to invite people in their company’s upper rank. But Cirque asserts that “they must not kill the soul of Cirque” and since they are a big business making more money, “they must make good decisions as well”. Consequently, Cirque reinvents the circus often to keep the artists’ excitement about their work and to carry on their passion.

Reference

1. Delong, T. J. ; Vijayaraghavan V. (2002). Cirque du Soleil. Harvard Business School Publishing, 67-78.