Operation Management and Digital Age - Case Study Example

Running header: Pencil Student’s name: Instructor’s name: Subject code: Date of submission: CASE STUDY OPERATION MANAGEMENT INTRODUCTION The study seeks to find out the key roles, uses and the emerging issues in the manufacture of pencils in the world and in the developing digital era to the pencils as portrayed by the Faber- Castell Company. The use of pencils can be back dated to many years ago. Many prominent people in the early days developed and continued the use of the pencils. Some of the examples of the prominent people who used the pencil are the once Prussian Chancellor, Otto Von Bismarck, who in his case used the pencil for the purpose of pushing down the tobacco in his smoking pipe. Another person who used the pencil was Vincent van Gogh. In his part, he used the pencil to draw a portrait of a woman who was sewing. All the above listed people recommended that the pencil was a very useful product to use due to its traits of having a marvelous black color and the ease eminent in using them (Johann , 1893). The company has witnessed massive increase in the production units. The company produces about 2.2 billion pencils every year. This is a very high number as compared to that in changing era of the society to digital. The company specializes in the manufacture of pencils, crayons and pens. The company is based in the German Town of Nuremberg CORE COMPETENCIES OF THE COMPANY The core competencies of the company are the provision of value to the customers, promotion of tradition and outstanding quality standards. Other competencies are innovation at the highest levels, creativity and also not forgetting commitment in both the social and the ecological arena. The company has seen to it that this is possible through the production of products at the best qualities and standards. The products are also environmentally friendly and hence not harmful to the users or to the environment. The working conditions of the company are also above the set standards as required of them. The company is able to well develop due to the fact that they produce pencils which are cheap and very affordable to buy even by the people from the poor countries. They are also durable and hence the people are able to be loyal to the consumption of the commodities of the Company. The attributes of that they are cheap, durable and very affordable has made the company to record massive and ever increasing sales levels in the poor and also in the developing countries with low income earners. In the European markets however, the sales level increase by very small margins if any (Faber, 2010). This is attributed to the development and adaptation of technology and computerization in the member countries of the continent. The company has however shifted its attention to the emerging markets and recorded massive levels of revenues from the sales. Some of the emerging markets have not developed technology use and hence they seek the use of the pencils. In order to maintain its sales levels and if possible increase the levels, the company has sought to improve the quality of the pencils they produce. This is in a bid to make sales in the rich world. The Faber-Castell company currently is the largest branded pencil manufacturer in the world. It has emerged to be so since the year 1761. It specializes in the manufacture of pencils and has as a result become the customer favorite company due the perfect products produced. To see to it that these traits were established, several innovations had to be put in place. The first invention was the change in the shape of the pencils from the once cylindrical shape to a hexagonally shaped one. This enabled the pencils have a stable ability once placed on the tables and they could not roll over and fall. The second innovation was the fixation of a rubber eraser on the top of the pencil. This innovation however was termed as a stolen one which led to the company being sued in the Supreme Court a case which was to be later dropped due to the very obvious nature of the case. The third innovation saw the company develop the use of water based environmentally friendly paints. This encouraged the parents of children using them to encourage the use. This was due to the need for the beautification process of the pencils whereby the children preferred the well-developed ones. This was made even more secure for use by the children by the removal of any toxins present in the pencils and the use of chemicals that were not harmful for use by the children. The company also saw to it the hardening of the pencils so that they would not break in case they were dropped by the users. They were also fitted with rubbery dots which enabled the pencils not to fall from the sweating hands of the users. All the improvements led to even more and more sales due to the fact that the customers were more assured of the commitment of the company in the creation of good quality products which are even more durable than the earlier ones produced. SURVIVAL OF THE COMPANY The company has put in place several strategies in order to survive in the very competitive market. I began with the improvement of the quality of the pencils by Faber. This he made possible through refining the clay-graphite process. This was by putting in place a new technology prior to its invention during the 18th century. The graphite in this new process was ground and combined with clay which would be later formed into strips. It was then after being mixed baked. The introduction of this new technology enabled Faber to vary the hardness of the pencils from either soft or hard. The other process he put in place was the modernization of the manufacturing plant in order to ensure a steady quality and in order to increase the levels of the output and also to see to it the improvement of the efficiency in which he undertook these operations. This was done through putting in place a steam powered engine which was able to well drive the planes and all the other mechanized saws. This led to massive reduction in the production costs of the company. Rather than just the production costs getting lower the company were also able to produce more units of produce over a short period of time. High quality output was produced by the company and also in very high numbers. This enabled the process of mass production to be possible in the company. Mass production assisted the company in meeting the ever rising demand for its products and assisted in the elimination of all the trade deficits present in the market. It helped give an assurance to the company that the new markets would get an unceasing supply of its commodities. This led to the formation and the creation of trust from among the consumers to the company and hence product loyalty by the customers was formed. This boosted the performance of the company in the worldwide market and increasing sales was the eminent trait of the company. Through mass production, the company was also well assured that it was able to be a global force in the pencil production industry. Through the increased sales, the company was able to improve the wages of their employees. This enabled them to also be able to retain and hire the best employees as compared to those with the competitors. High quality services were offered by the employees as they were motivated by the high and the improved wage levels. Faber also wanted to differentiate the products of his company from those of his competitors. This he did through the encryption of the terms A.W. Faber on the surfaces of the pencils the company produced. This assisted a lot in that the users and the buyers were able to distinguish the products of the company from those of the other manufacturers. He also specialized in the carved a well beautified sculpture which was taken around all the country and across the European continent. This assisted in the marketing of the products of his company. The people from around the continent became aware of the products and this led to an increase in the levels of the sales. The pencils from his company became a household due to the fact that the traits they possessed were unique from all the rest of the other manufacturers. The company with time was able to open different branches and sales points not only in Germany but also in Europe, Asia, and China and in the United States. Massive transformation was experienced and this led to increased number of employees and also brand knowledge around the world. The company became a dominant force in the competition arena and was thereby able to survive the looming competition from the other industries. The globalization of the products of the company has been very advantageous to the company. This is due to the eminent fact that the company having customers on a global arena is very beneficial in the increment of the levels of the sales. Competing in a global arena gives the company an upper hand as compared to the other competitors who have not embraced globalization. The now increasing new and emerging markets were very essential parts of the expansion strategies of the company as they embraced them and supplied their products to those markets. In the recent past, the company has begun the production of luxury pencils and pens. This is evidenced by the recent production of a pen worth £60,000. The luxury pen has a barrel which has been cast in solid gold and which reflects the fine structure of the ancient wetland oak. The nib which is also made of 18 carats has been given a hand polish in order to ensure that the flow of ink is smooth and even and it has 60 diamonds stuck on its lid. There has also been the production of a pencil labeled the perfect pencil. It sells for £180. It comes with it a rubber on the end which is well protected by a little platinum cap. The tip of the pencil is also kept well from breaking with a well fixed and a well matching lid. It also incorporates a hidden pencil sharpener. This well signifies the shift in focus of the company from the market comprised of young school going children to the well up group and the rich. These are products specially produced for prestige purposes ISSUES AFFECTING PENCILS AND THE CHALLENGES WITH THE DIGITAL AGE Many emerging issues have affected the Company even with the new generation. One of the issues is the proximity of its biggest competitor in the pencil manufacture which is the Staedtler Company. Its proximity and quality output makes it affect the activities undertaken by the Faber-Castell Company. This is because much competition calls for increased innovation which on the other hand means usage of the company resources. This has been much in the digital age due to the fact that even the competitors are able to embrace the new technology and hence bringing about stiff competition to the company. Due to the fact that they are both located in the same town and the fact that they all have a similar target group as the customers, the rivalry is very eminent and the competition tougher. Their target group is the school going children and they all seek ways to entice the children to consume the products of their respective companies. The increased competition leads to the division of customers and hence in turn results to the reductions of profits and of the sales margins. Implementation of effective counter competition strategies has cost the company a fortune and it has made the company to make many sacrifices in order to combat it. The digital age has come up with very many challenges to the existence and the development of the pencil manufacturing company. In the earlier days, the company was the leading producer of the slide rules which were also known as colloquially. They were used to make calculations in fields such as science and engineering (Faber & Faber, 1896). The calculations they would make included multiplication, division, logarithms, trigonometry, roots and powers among others. This went on until the development of the digital era. They were well overtaken by the invention of the electronic calculator. This is because the calculator was more efficient, accurate and fast as compared to the slide rules. The slide rules had short comings such as they could not make addition and subtraction calculations. The calculators which were put into much use in the 1970s were able to perform all the calculations efficiently. The increased use of the scientific calculators led to the obsoleteness of the slide rules which was a great loss to the company since they were in its production line. Another challenge that was brought about by the introduction of the digital era was the invention of the computer aided designs in the 1980s. The computer aided design possessed traits for efficient and better mechanical drawing capabilities which were easier and better as compared to the use of the pencil (Sidaway et al. 1987). The programs in the designs would come up with better output and at faster times as compared to the pencils and hence the market for use of the pencils declined at very high rates. The development of the computer generation has led to the increased use of computers by the children who are even of very small ages. The implementation of computer use even in the school program has led to the reduction of the pencil use and hence reduced sales levels. The children in the recent days are being taught how to read and write using the computers and even they are required to submit their assignment and tasks in typed formats as compared to the earlier days where the assignments were submitted in written formats. All these attributes have led to the massive decline in the use of pencils even in the modern generation. However, the surprise of a well and a proper survival in the digital age is the production of the luxury pencil and the pen. This is due to the fact that the pencil being one of the cheapest commodities in the world, it is hard to believe that it can be given a luxury treatment leave alone so but also in the digital age. This has been so with the introduction of the luxury pencil and the luxury pen. This raises the prospects of survival of the company since with the production of such products; it is assured of continued development even in the digital age. Earning a good market in the high class group of the society, the company is hopeful of excelling beyond limits. This is due to the absence of the earlier aspect of limitation of scope to only the manufacture of very cheap and very affordable commodities. REFERENCES Johann Faber (Nuremberg, Germany). (1893). The pencil-factory of Johann Faber (late of the firm of A.W. Faber) at Nuremberg, Bavaria: Published on the occasion of the world's Columbian exhibition at Chicago A.D. 1893 and dedicated "to all friends and those who appreciate a good lead pencil". Nuremberg: Johann Faber. Faber, C2010, the future of the pencil, Retrieved 22nd May 2013, from; http://www.economist.com/node/17043890 Faber, L. ., & Faber-Castell (Firm). (1896). The manufactories & business houses of the firm of A.W. Faber: An historical sketch: dedicated, by the head of the firm, to his business friends and patrons. Sidaway, I., Hughes, J., Law, A., Fleming, P., Dolan, J., & Mahler, M. (1987). AlbrechDürer water-color pencils from Faber -Castell: Four artists’ creative techniques. Steven age, Herts.: Hawkshead. Read More