The paper "Benefits Identification, Realization and Transition - Spark Premium Tyre Brand " is a great example of a management case study. The benefits of the company initiating a number of strategic plans between 2020 and 2040 are enormous. These projects include establishing a tyre manufacturing plant in South Korea, opening warehouses and offices in Australia, purchasing trucks, hiring local employees and ex-pats and importing tyres. The benefits will be evaluated based on financial, customer, internal and learning and growth perspectives. Project goals Benefits Financial Perspective Increased profitability and operating margins Increase in Annual Growth Rate to 8% Increased market share in the tyre industry to 14% Improve the payback period Customer Perspective Attract and retain more loyal customers On-time and efficient product delivery Affordable prices and quality products Excellent customer service ratings Internal Perspective Management plans to control scope and action items Operations Management (Distribution, Import, Risk) Customer Management (Easy Access, Friendly interactions) Regulatory and Social (Environment, Safety and Health, Employment, Community) Innovation (Report feedback to HQ for development) Improve product quality Reduce cost from low-cost corporate strategies Learning and Growth Perspective Human capital development and growth Continuous proficiency development and training Information capital and build-up of knowledge systems Continuous System Upgrade Organizational capital Understanding Culture and change management Leadership and innovation Teamwork From the above benefits, metrics were developed to measure and track the benefits to ensure that they are achieved within the defined timeframes.
The following table shows the metrics of tracking the benefits. Project goals Benefits Metrics Project goals Financial Perspective Profitability and operating margins Annual Growth Rate Market share Payback period Income statements Operating margins Breakeven charts Industry surveys ROI Purchase trucks Open office and warehouse Employ locals and deploy ex-pats Import products Develop manufacturing plant Customer Perspective More loyal customers Timely delivery Affordable pricing and quality Excellent customer service ratings Customer satisfaction surveys Time-to-market data No. of rejects/rework Recruit best skills and expertise Open office and warehouse Import products Internal Perspective Control scope and action items Operations and Customer Management Innovation Improve product quality Reduce cost from low-cost corporate strategies Triple constraints metrics Enterprise Resource management systems (ERP) No.
of scope change Duration of milestones Product lifespan and cycle DIMAIC methods Type of changes in processes and methods Open office and warehouse Development of manufacturing plant Hire the best skills and expertise Import products Learning and Growth Perspective Human capital Development and training Information and knowledge systems Continuous System Upgrade Organizational capital Culture and change management Leadership and innovation Teamwork No. of ex-pats hired and skills base No. of training held Type of system upgrades done Performance management plans Organizational structure adopted Hire local employees Deploy ex-pats Develop manufacturing plant Benefits realization is then monitored so as to maintain a benefits focus on the project.
If adjustments are required, then the project benefits are escalated. From the table above, key benefits are identified. Benefits realization plan The benefits realization plan of planned projects in the company is guided by a number of assumptions. First, management action will be available to monitor and direct the activities to get the intended effects. Second, corrective action will be taken for foreseeable benefits only. Third, management goodwill is consistent until the goals or outcomes are achieved. Finally, funds are available and authorized at the beginning of every milestone. The monitoring process has a payback and as a result, the benefits were assigned monetary values for both financial and non-financial benefits.
This ensured consistency with cost-benefit appraisals and ‘ good practice’ guidance. In this case, a normalized scale was used to compare benefits as shown in the table below. Project Benefit Measure Target Actual Develop a manufacturing plant in South Korea Increase in SPTB market share Industry surveys alongside competitors (Secondary data) 14 18 Open warehouses and offices in major Australian cities Increased operations and customer management Customer satisfaction ratings 7 10 Purchase trucks with trailers Timely delivery of products to customers Turnaround time (min/ton. km) 0.8 1 Hire local employees Development of human resource skills and expertise Performance management system 80 100 Deploy expats from HQ Increased valuable leadership, cultural change and knowledge base No.
of training held 12 15 Import tyres from HQ Reduction in operational and manufacturing costs Return on investment (ROI) 2 3 As shown in the graph above, the benefits were converted into percentages and the benefits realization levels graphs were drawn. Benefits Metrics Percentage Market share Industry surveys 77.70% Operation and Customer management Customer satisfaction ratings 70% Timely product delivery Turnaround time 80% HR skills and expertise Performance management 80% Leadership & knowledge No. of training 86% Reduced costs ROI 67% The graph is as shown below From the graph above, the benefits can be compared. The expected increased in market share, operations and customer management and timely product delivery almost cancel out with the lack of skills and expertise, leadership and knowledge base as well as the capability to engage corporate strategies in reducing costs.
Therefore, it is important to take into consideration the relative importance of each benefit by applying weightings to each benefit. Project weighted average = sum (multiplier × performance) /sum multipliers In this case, increasing skills base and leadership as well as reducing costs becomes a high priority. Reducing costs will be assigned a weighting of 4, skills/expertise and leadership will be assigned a weighting of 3 while operations and customer management will get a weighting of 2.
On the other hand, timely product delivery and market share will each receive a weighting of 1 as shown in the table below. Benefits Performance Weight Computed performance Market share O& C management Timely product delivery HR skills and expertise Leadership & knowledge Reduced costs 77 70 80 80 86 67 1 2 1 3 3 4 77 140 80 240 258 268 75.9% Total 233 14 1063 Overall, the effectiveness of this project stands at approximately 76% benefits realization score. To achieve this score, a quality improvement program will be undertaken as shown in the table below. Project manager Sponsor Report period Report date Distribution Syung Lee SPTB CEO August 2018 15th October 2018 SPTB boards, Board of Directors, Investment committee The project manager will be tasked with coordinating, planning, leading, organizing and directing the project activities to ensure that they adhere to the planned schedule, costs, quality and technical performance.
The sponsor avails funds for the project and monitors the project deliverables and milestones. On the other hand, the investment committee will review the project objectives and determine its financial outcome before submitting reports to the sponsor. The board of directors will communicate and assist the CEO in decision making.