fp-yong woodworks company

7/28/2019 FP-Yong Woodworks Company

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Yong Woodworks Example

Company history

Yong Chee Wah, a woodworker from Malaysia, immigrated from the small town of

Malacca to Hobart, Australia in 1947 when he was 18 years old. He left a family ofwoodcrafters to start a new life in Australia. In Hobart, he started by working forvarious builders and quickly impressed his bosses and customers by delivering high-

quality work on time. He lived frugally for 15 years and eventually built a customfurniture shop, Yong Woodworks Company (YWC), on a large piece of land.

In its first year of business, YWC employed five carpenters and made no profit.Luckily for Chee Wah, however, the riverside capital city soon developed as a thriving

artsandcrafts centre. Chee Wah became the carpenter of choice for many projects inHobart and surrounding areas, and by 1970, YWC earned profits of AU $1.8 million.

As the fine reputation of YWC spread, market pressures demanded it expand productofferings to include massproduced items. Chee Wah understood the need for change

but insisted that even the massproduced goods be of the finest quality. To ensureconsistency and quality, YWC produced a limited selection of office furniture. By

1975, the company grew to 100 employees and expanded to include two facilities the original craft shop for specialty items and a factory for massproduced office

furniture.

Throughout the 1980s and 1990s, the company grew to 250 employees and thefactory expanded and was run in two shifts. By 1999, manufactured goods accounted

for 75% of sales, and handcrafted products accounted for 25%. Even though YWC'scustom market accounted for a smaller percent of sales, that business division

enjoyed profit margins of nearly 200%, whereas profits for its manufactured goodswere in the 20% to 50% range.

Company cultureChee Wah held a vision for YWC as the premier provider of quality woodwork. Inexchange for helping to build the business, his initial staff received generous

percentages of YWC's profits rather than large salaries. This policy encouraged otherhardworking entrepreneurial workers to join the company. To make employees feel

part of a large and caring family, the company held two large events each year and

celebrated special occasions to bring workers and their families together. In return,workers felt committed to the company and were compelled to give their best

efforts. Even when the company grew and hourly wages replaced profit sharing for

practical reasons, Chee Wah insisted that all employees receive a bonus in profitableyears.

Changes at YWCIn 1999, Chee Wah retired on his 70th birthday and passed the business to his oldestson, Yong Ee Leen, who had worked in the factory during summer breaks from

school and then in the Finance department after he graduated from college. As thenewlyappointed chief executive officer (CEO), Ee Leen decided it was time for YWC to

progress. He saw unlimited potential for mass distribution of YWC's manufacturedproducts. Ee Leen believed YWC should take advantage of the profitable trend to

export mass goods to foreign markets. YWC had been successful at pursuing mostlyhighend homebuilders and elite office supply stores without relying on retail-

distribution channels. But Ee Leen was convinced that the company could more thandouble its sales of manufactured goods if it pursued other retail markets more

aggressively.


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Conflict at YWC

Ee Leen's proposed changes were met with resistance. Ian Condon joined the factory

when the company expanded to two facilities in 1975. His strong work ethic andcommitment to product quality earned him several promotions, leading to his current

role as vice president of manufacturing, a post he has held for the last 10 years. Ianand Chee Wah had enjoyed a very respectful, open working relationship and had

always listened to one another's ideas before making decisions. Ian didn't agree withEe Leen's proposed changes and was against the idea of adding a third shift to make

more products. He resented the idea that YWC should change its winning formula toproduce cheaperquality products. The thought of cheap wood displaying the YWC

logo disgusted him. Ian said, "We've grown into a substantial company by doing

what we do best making and selling highquality furniture. If we start makingthings fast and cheap, we will destroy our reputation a reputation that Chee Wah

spent his entire life building."

Furthermore, Ian thought of Ee Leen as a young entrepreneur who had not provenhimself. "The son is not the father," Ian would think to himself. Ian felt Ee Leen tried

to shorten deadlines without regard to the quality standards that were YWC's

trademark. Their feuding caused rifts between manufacturing and sales. In general,the sales team was thrilled about growth that could increase their commissions, andthey supported Ee Leen. Many of the sales people were young and eager to try new

ventures. According to the vice president of sales, a classmate of Ee Leen's and thedaughter of one of YWC's original worker's, "It's time YWC becomes a progressive,

global company. Manufacturing will have to keep up with sales."

In support of organisational change, Sonali Patel, the vice president of human

resources, insisted that YWC would improve its ability to meet deadlines if thecompensation system were changed. Workers in both facilities were being paid a flat

hourly rate, no matter how much they produced. Raises were based more on tenurethan merit, and bonuses were now given regardless of company profitability. Sonali

claimed that the system did not encourage people to work quickly enough. She

believed employees especially those in the factory should receive a lower hourlywage but receive bonuses and incentives based on company success, as well as thequantity of pieces produced on time that met quality standards. Ian rejected the

proposal. "A new pay structure that values speed over quality will hurt productquality," said Ian. Ee Leen responded, "But we miss so many deadlines. Over 50% of

our factory orders are a week late. That can't be good for business! Our competitiondelivers quality pieces at lower prices in much less time." Ian retorted, "Once we

start to lower our people's pay, we will certainly lose some of our best people. And

this work is not ordinary factory work. It takes skill and experience to do it right."

Ee Leen presented financial analyses of trends he had been studying throughout the

last year. Business projections revealed that YWC would be gradually beaten out by


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Ian was not sure that some of the "oldtimers" could change to selfdirected workteams and new technologydriven processes. He argued that if YWC rushed forward

with technological upgrades, older workers might react by retiring immediately. Mostof the experienced workers had long since built their pensions, and continued

working not out of need for money, but from pride. Not only would the company losevaluable institutional knowledge held by these workers, but manufacturing processes

would be seriously disrupted until new workers could be hired and trained. Customerservice and quality would suffer tremendously.

Ee Leen insisted that his analyses clearly showed that profits on manufactured goods

were slowly decreasing as costs were increasing. If the company refused to change,

it would soon stagnate (at best) or experience massive losses (at worst). Ian insistedthat if changes were made, the company would experience massive disruptions and

losses.

Each side was sure the other was wrong. One thing was certain. If Ee Leen could not

gain Ian's support, his plans would fail. Ee Leen presented his concerns to his father,and Chee Wah responded, "The business is in your hands now, you must solve this

yourself. One piece of advice, do not make an enemy of Ian, he has tremendousinfluence. Perhaps you should hire some specialists to help you think through these

problems?" Ee Leen agreed and has invited your consulting team in to help himresolve these issues.

One of your coworkers already started to complete this proposal for YongWoodworks Company. Unfortunately, he has been called out of the office and needsyou to finish his work. He has provided you with the introduction he has written and

a template to follow. The template (which you would have downloaded at thebeginning of the assignment) will guide you through the necessary steps to produce

a complete proposal for Yong Woodworks Company.

Assignment Guide

While the template provides all the instructions you will need, you may find thefollowing guide and hints helpful as you work through the proposal.

Section 1: Summarise the situation

Briefly summarise the company's history and events leading to the current work

situation. How would you characterise the current state? What is the desired state?This step allows the consulting team to describe to the client that they understandthe client's situation and need.

This is an important first step; if your team incorrectly interprets the situation at thebeginning, the rest of the problemsolving process will be flawed. Much like solving a

math problem, the team must correctly solve each step in the process, starting withthe summary.

Act like a doctor healing a patient. When a doctor treats an ailment, he or she first

asks about the symptoms. Next, the doctor asks questions to identify what is causing

the symptoms, and then treats the source of the ailment. What historical events


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e work


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, people


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, leadership


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In this step, do not solve problems. Simply state what you believe to be true toconvey your understanding of the situation.

Section 2: Define the problemClearly define the nature and scope of key problems faced by YWC. List problems inthe form of problem statements, then provide "symptoms" or evidence to support

your claim that these problems exist. Identifying problems sounds easy. However,appearances can be deceiving and organisational problems may go deeper than the

obvious symptoms. A problem is the difference between the actual state of affairsand the desired state of affairs. To accurately define a problem, you must identify

the current state, and then define the desired state in clear, quantifiable terms. Forexample, the current state of affairs in a factory might be that it only produces 300

chairs a day, but the market demands500. Your problem definition would then be:

Current State: XYZ corp. produces 300 chairs per day

Desired State: XYZ corp. produces 500 chairs per day Gap: XYZ corp. produces 200 less chairs per day than needed

From this example, you can define your problem as: the factory's goal is to produce

200 more chairs per day to keep up with market demand while holding costs

constant.

Section 3: Diagnose and synthesise causesIdentify what is causing problems. Use the 10Question process to diagnose root

causes of the problems identified in Section 2. Next, synthesise causes. Your final listshould comprise only root causes. First, consider the performance problem(s) you

identified in Section 2. Analyse the ways in which work, people, culture, and/or

structure might be causing the performance problem. Use the proposal template toguide you through the process of identifying possible causes.

After you have identified multiple causes, look for root causes. Remember, a root

cause is a cause that (when addressed properly) will close the gaps that you haveidentified. Resolving a cause that is not a root cause may bring about some change,

but it will not bring about complete closure of a gap. For example, if you incorrectlyidentify a person's personality as a root cause of a performance problem, then firing

that person will not necessarily improve your company's performance.

After listing all causes, see if you can further reduce the list by integrating causes

that stem from the same root. For example, you may identify several types of

conflict that all stem from differences in values. Thus, the root cause of thesemultiple types of conflict might be "conflicting or competing values".

Then, test your analysis by asking the following: is this just a rephrasing of thequestions in the template? If so, delete the bullets. If not, leave as is. As a team,

test your cause analysis by asking Is there any other reason this could exist as a problem? Why is this a problem?

What else could explain this?

Have I covered everything?


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Is information missing that will prevent me from fully analysingroot causes? If so, what information do I need?

Do my causes really explain the

problem? Have I listed the basic causes of performancegaps?


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1 List each root cause and generate 12 possible solutions to resolve thecauses you noted in Section 3. In presenting your solutions, be sure to identify

the criteria you used for selecting the solutions.

2 Consolidate your list of causes and solutions, and eliminate repeats bydetermining which solutions address which causes.

3 Begin to plan to implement your solutions. Review the list of solutions.Prioritise the order in which solutions should be implemented and providerationales for your prioritisation system.

Refer to your textbook chapter DecisionMaking and ProblemSolving Processestopic The DecisionMaking Process for information about applying a problem-

solving model. What would you be applying the model to?

1 As a team, discuss and establish criteria to evaluate the effectiveness ofsolutions you will generate. For example, if you generate a list of 10 possible

solutions how will you choose the best solution? Criteria for solutions includefactors such as ease of implementation, cost and time to implement,

acceptability of solution to employees, and effect of solution on the environmentor community. When possible, distinguish criteria that are absolutely necessary

from those that are merely desirable. For instance, you may have a strictmonetary budget but unlimited time. If so, a solution that costs under AU

$10,000 is necessary. Choosing a solution that takes less than three weeks tocomplete is desirable.

2 For each root cause, brainstorm several possible solutions. Teams shouldgenerate as many solutions as possible. Get creative!

3 Review your list of possible solutions and your criteria. Choose thesolutions to meet your necessary criteria (eg, strict budget), and eliminate all the

rest. Then prioritise the remaining solutions according to how they meet yourdesirable criteria (eg, can be completed quickly). For each root cause, present

one or two solutions that meet the needs of the organisation according to yourcriteria.

Section 5: Plan for contingencies

What difficulties do you anticipate in implementing your solutions? How can youmanage those consequences so that the change process is not derailed? Use the

following questions to guide your analysis: What positive and potentially negative consequences can youanticipate?

What types of resistance will you encounter, and how will youmanage it?

What uncertainties will you encounter, and how will you manage it?This section will help you and your client anticipate and plan for the positive andnegative consequences of implementing your solutions plan. Review the problemstatement, root cause analysis and proposed solutions.

Based on everything you have learned in this course, what can you expect to occur

as a result of these changes? For example, what kinds of problems will youencounter if you change the organisational design from one based on divisions to one

focused on customer segments? Any change you propose will meet with resistance.What types of resistance should you anticipate? Who will resist your change? By


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fp-yong woodworks company

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