Professional Documents
Culture Documents
It’s 6:00 AM on Monday. The alarm blares, jolting you out of bed. You shuffle
down to the kitchen to grab a cup of coffee. A few gulps and . . . ahhh. Your eyes
start to open and the fog begins to clear. 10:30 AM, time for the weekly staff
meeting. “I feel so groggy,” you think. “I gotta have something to keep me awake
through this one.” You pour yourself another cup of coffee and head for the
conference room. Noon, and you’re chatting with your colleagues at a quick lunch
break. Someone refers to an article in the newspaper about fashion models’
fitness routines. “Honest, it said that those high-priced runway models have to
really watch it on caffeine. The way they keep their energy up is daily exer- cise
and lots of sleep . . . ‘Beauty sleep,’ I’ll bet!” Comments fly about who has time for
daily exercise, getting paid to work out, and so on.
3:30 PM, you’re feeling the mid-afternoon energy slump. You head to the
crowded coffee cart to get another cup. “I really ought to cut down on this stuff,”
you comment to your friend in line. He nods. “I’m a five-cup-a-day guy, myself,” he
confesses. “I just can’t give it up.”
2. What are the three or four most important variables in the case?
The three most important variables in the case is the energy level of
the office worker, their workload and their coffee intake. These three
variables are the main things that affect the problem.
3. What is the behavior of those variables over time? Graph them in the
space below.
The graph above shows the behavior of the three important variables
which are the energy level, workload, and coffee intake. With the graph you
can observe the behavior and relationship each variable has with each
other.
4. What do you observe about the behavior of the variables? For example,
do any of them increase or decrease steadily over time? Are there dramatic
changes (sudden upswings or plunges)? Do any of the variables seem to go
through a cycle, as indicated by up-and-down patterns? Do any of them
hold steady?
The workload of the office employee is steady as it becomes the basis
for the needed energy level of the office worker to proceed with his job on
that day. With the energy level, it follows the flow of the coffee intake which
has sudden upswings when there is intake and plunges when the effect of
the coffee wears off.
AudioMax Corporation was on its way up. During the mid-1980s, the
company enjoyed rapid growth and rising revenues. A manufacturer of special
audio-electronics products, AudioMax served a growing core of clients who were
willing to pay a higher price for better sounding, better quality innovations.
AudioMax’s products were well received because experts said they really did
sound better. Initially AudioMax focused on maintaining a high degree of technical
innovation, and this strategy generated a steady stream of new products.
Meanwhile, the company began losing market strength, partly owing to its
resistance to introducing models with simple cosmetic changes. Because the
company was not introducing enough new products to keep customers interested,
its dealer base began to deteriorate. In 1994, AudioMax had only 230 dealers, half
as many as in1990. Net income skidded sharply after 1991, followed by a heavy
sales slump in early 1993 (Figure 3.4, “AudioMax’s Income Slide”).
AudioMax’s problems persisted. The company cut costs by laying off one-
third of the workforce, but when sales rebounded, it could not rebuild staff fast
enough to meet the new demand.
During the second half of 1994, AudioMax tried to get back on track by
developing and releasing 18 new products. But as these new product lines were
developed, the core products became even more dated.
During 1995, AudioMax saw net income rebound and sales increase over
1994. This time the CEO hoped the quality improvements would make a lasting
difference. But the continuing cycle of ups and downs that followed AudioMax’s
rapid growth suggest an uncertain future for the company.
2. What two variables fed the initial steady growth in demand from
AudioMax’s customers?
The two variables that gave a huge impact to the steady growth of
demand from AudioMax’s customers are the release of new products and its
quality. As customers are willing to pay for AudioMax’s products for its great
quality, they also focus on what’s new or the new products that they can buy.
3. Once AudioMax went public, what variable limited its ability to continue
handling the growth in demand?
After going public, AudioMax failed to meet the customers' growth in
demand as there were limited employees working. The number of
employees was the variable that limited the company to match the demand
as well as to release new products that can eboost more sales and attract
new customers.
4. In the space below, graph the behavior over time of the two variables
you identified in Question 2 and the one from Question 3. Then, add the
behavior over time of two more variables: “Demand” and “Ability to meet
customers’ needs.”
The graph above shows the variables that affect the performance of
AudioMax Corp. The graph shows the relationship between variables and how
they affect each other.
5. What do you observe about the behavior of the variables over time?
Looking at the graph, I can see that customer’s demand follows the
movement of the company’s release of new products, and with the release
of new products the quality also follows. The quality of the products, the
release of new products, and the service quality continues to plunge and
rise.