M19/3/BUSMT/SP1/ENG/TZ0/XX
Section A
1(a) Changes in operations management altered how RDM deals with the HR department,
since the HR department now has to recruit new employees with a different skill set. The
marketing department has to change its tactics now as well, as RDM no longer sells to the
mass market. RDM now serves a niche market and this requires a different strategy for
marketing. The marketing department is now also dealing with the customers to help in
customizing their products.
(b) Changes to production affected the employees of RDM the most. RDM employed
roughly 500 people and was the largest single employer in Lobjanec, and with the switch to
automation most of these employees were made redundant due to their jobs ceasing to
exist. Thus, the interests of these employees would have been to have RDM keep their job
places. The shareholders of the business also have to invest more money in the business
since automation is capital intensive. Thus, shareholders will be more interested in the
returns of their investments.
2(a) Jan's democratic leadership style is motivating to employees, as they get to have a
stake in decision making and to have their thoughts be heard. This boosts the morale of the
workforce and brings about job satisfaction. However, such a leadership style ca delay
decision making due to more people being involves in the process of decision making. This
can push back the business in times of emergency when quick decision making is needed.
(b)
3(a) In 1949 following the communist takeover, RDM changed from being a privately owned
business to a state-owned business. This meant that RDM owners could no longer gain
profit from the business since they hold no power over the business. Then Following the
velvet revolution, when communism collapsed, RDM changed back to privately owned and
with Adriana taking over the CEO of RDM. When Adriana become CEO, she added
healthcare devices to their product portfolio. This was as the baby boomer generation was
soon to reach retirement age increasing the demand for the health care devices.
(b) Before introducing automation, RDM had a large unionized labour force. This meant
that methods to motivate employees would've been limited to extrinsic motivation
methods, such as fringe benefits or wages. This is as mass production requires repetitive
jobs and has no room for creativity or improvement in their skills. These jobs are usually
low-skilled jobs by which the employees would be extrinsically motivated. After introducing
automation, RDM changed its labour force to bring a highly skilled and educated workforce
that would be more motivated by intrinsic factors, which increases job satisfaction. Extrinsic
factors such as financial pay will not motivate the employees, as they are already highly paid
since they are highly skilled and they are not as easily available for recruitment. According to
Daniel pink's theory, intrinsic factors include autonomy, mastery, and purpose. These
employees will have to feel they are part of a bigger cause to fulfill purpose. This is fulfilled
by the strong corporate social responsibility RDM shows when sourcing their materials and
caring for the environment. To fulfill autonomy, workers have to have some choice in their
jobs, which is fulfilled by Jan's democratic style.
Section B
4(a) A specific location could be chosen for production when considering the availability,
quality and cost of labour in a location and the infrastructure of a location.
(b)(i) payback period = 64,000,000/ 16,000,000
= 4 years
(ii) ARR = (80,000,000 – 64,000,000)/5/64,000,000) x 100
= 5%
(c) One form of financial motivation that RDM could use is profit related pay which involves
linking profit that RDM makes with the salaries payed to their employees in the form of
annual bonuses. Profit related pay is used to strengthen employee loyalty and to foster
team spirit, this could improve the efficiency of RDM. Another form of financial reward is
performance-related pay which rewards workers or teams that reach a certain target. This
may motivate employees to reach more targets increasing the efficiency of which RDM
could design products for their customers and increase revenue.
(d) Option 1 provides RDM with more autonomy on the layout and the function of the
factory. This means that RDM would have complete control on everything regarding the
building of the factory and the function of the factory until RDM decides to forfeit the
factory without a predetermined time limit. This would allow RDM to increase its
production capacity and achieve its goal of accessing more lucrative markets. However, the
cost of this decision would be very high especially since the cost of the land in this area is
high. Also, to raise such finance RDM may have to first change from private limited to public
limited to raise share capital for the factory. This could expose RDM to a drastic change
regarding ownership since it was a family business since its founding in 1873, so Jan risks
control being lost to a takeover from other competitors. Also, location A is in an
economically depressed area, which could mean that the infrastructure of the location isn't
of high quality which could present hardships while operating the factory since it's very
highly automated. This also means that it would be harder to recruit highly skilled
employees for the factory since its highly automated.
Option 2 would be less costly for RDM since RDM only has to pay the cost of the equipment
which is 6,000,000 dollars only making the cost considerably less than the cost of
investment for option 1. This means that RDM may be able to raise the capital required
from the profits of the business or from loan capital without risking loss of control to other
competitors in the same industry. Also, RDM would get to fulfill it goal of increasing its
production capacity to be able to reach lucrative markets. However, RDM will have to pay
an ongoing cost of 150,000 dollars yearly for the twenty engineers that would train ZI
employees, which could lower the liquidity of the business since it's an ongoing payment
RDM would have to pay. Also, this means that twenty of RDM's employees would no longer
contribute any work to RDM since these employees would be busy with transforming ZI's
factory. This means that RDM may have to employ more employees to fill the vacant job
roles in RDM which also increases the costs of RDM. Moreover, by having RDM employees
train and help transform ZI's factory to an automated one, RDM would be giving up its
competitive advantage to ZI since it's considered a competitor.