Identify one further example of adaptive creativity and explain its importance to the business that developed it.

$$\begin{array}{|l|l|} \hline \textbf { Adaptive creativity examples } & \textbf { Innovative creativity examples } \\ \hline \text { Cameras in mobile phones } & \text { VolP (e.g. Skype) } \\ \hline \text { ATMs } & \text { Online banking and insurance } \\ \hline \text { iPad mini } & \text { iTunes } \\ \hline \text { Airbus A380 } & \text { Jet airliners } \\ \hline \text { Flat beds in business class } & \text { Low-cost airlines } \\ \hline \end{array}$$

TRG is a company listed on the Karachi Stock Exchange. The business takes controlling stakes in firms offering services to other businesses - such as web- and phone-based customer service centres $-$ and prepares them for rapid expansion. It has operations in Lahore, Karachi, the Philippines and Morocco. The company's decision to base its head office in Lahore, Pakistan was based on a number of factors:

• large pool of English-proficient graduates

• well-organised capital market giving opportunities to raise the finance needed

• land costs $30 \%$ less than India or the Philippines

• wages $60 \%$ less than the USA

• government willing to offer incentives, a $15$-year tax 'holiday' and willing to invest in IT infrastructure.

There were some initial problems:

• cultural differences

• lack of general management experience among the graduates - they had to be trained in this

• lack of support organisations, such as specialist personnel recruitment firms or training institutes, as TRG were one of the first businesses in this industry in the country.

Analyse two ways a 'large pool of English-proficient graduates' in Pakistan might be a benefit to TRG.

Explain the ‘transformation process’ in a manufacturing business that you have studied.

Explain two problems that a flower retailer would have to deal with by changing to JIT stock management.

Zara's ability to quickly bring the latest designs to its stores rests on its unique business model.

The headquarters of Zara, the company that introduced the idea of fast fashion two decades ago, operates a highly centralised design, manufacturing and distribution system. The building is officially known as 'the Cube'. It is central command for a fashion business built on an unconventional idea: speed and responsiveness are just as important as cost. Zara is famous for its ability to deliver newly designed clothes to stores quickly and in small batches. Twice a week, at precise times, store managers order clothes, and twice a week, on schedule, new garments arrive. For Zara, its supply chain is its competitive advantage.

Zara's factories in Spain and those it uses in Portugal, Morocco and Turkey produce its trendiest clothes. The relative proximity to northern Spain, where Zara is based, means transportation is quick and low cost - important for 'fast fashion'. Zara executives have invested in high-tech equipment and extra capacity that allows their factories to accommodate sudden production increases or changes in styles - something few Asian manufacturers would be able to do.

Just outside the Cube is the company's $465000$-square-metre main distribution centre. The company produces about $450$ million items a year for its $1770$ stores in $\$86$ countries. Some $150$ million garments pass through the centre to be inspected and sorted. Whether a shirt is made in Portugal, Morocco or Turkey it still goes to Spain before being shipped to a store. Beyond the distribution centre are the $11$ Zara-owned factories. Every shirt, sweater and dress made there is sent directly to the distribution centre via an automated underground monorail. There are $200$ kilometres of track. Across the surrounding Galicia region are many subcontractors, some of which have worked for Zara since it was founded in $1975$.

Explain two reasons why Zara’s supply chain might give it a competitive advantage.

Evaluate the decision of an airline to outsource the maintenance of its aircraft.

State three types of stocks that are likely to be held by a chocolate manufacturer.

Sunburst Bakeries is a supplier of all kinds of bread and cakes to leading supermarkets. It has a huge factory that makes the entire range of products - no finished items are bought in from other bakers. Production facilities are split into three main areas. Different production methods are used in these three areas. The demand patterns for three of the best-known Sunburst products are very different. Standard loaves are bought by supermarkets every day, all year round. There is some variation in demand through the seasons - but very little. Large, family-sized cakes are mainly bought at weekends - whereas doughnuts are most often bought midweek for children's lunch boxes. Finally, the business is famous for its handmade wedding cakes, each one to a different design. There have been rumours among the workers that one section of the factory that uses batch production might be converted into flow-line production.

Analyse two factors that affect the type of production method Sunburst chooses for different types of product.

Explain how team-working has led to a rise in productivity at Ambi-Rad.

Yukai Resort in the famous Gero Onsen hot spring area of Japan is part of a luxury Japanese hotel chain which performs lean hotel operations. Lean production helps the hotel offer great value to its customers, reduce cost and remain competitive in the competitive hospitality industry. The standard hotel rate in the Gero Onsen hot spring area is US$\$180$ per person per night including all meals. At Yukai Resort, the price for the same offering is US$\$91$ $-$ every day of the year, regardless of high/ low season.

All hotel duties are shared by all employees. They are all trained to be multi-skilled. This has allowed the resort to operate with minimal staff and reduce costs overall while maintaining high quality. For instance, the receptionists, in their free time, will go to areas needing assistance; perhaps the kitchen or laundry. Dinner and breakfast are buffet style, which reduces staffing requirements. Employees are also active in lean management or lean kaizen efforts. The manager leads weekly kaizen circles.

Employee engagement is the key. Cost minimisation is an obvious benefit. For workers, this system allows them to gain experience in all aspects of hotel operations and gives them direct input in improvement activities. It is not only empowering and motivating but also excellent in terms of career development.

Explain how the application of lean production has allowed Yukai Resort to keep its price at $\$91$ per room.

The Kuala Lumpur branch of FatBoy Trims had the worst record of all of the company's branches for customer satisfaction. The number of complaints received at head office about this branch and the quality of its haircutting and styling services had been much greater than for any other location. Revenue is low and the number of repeat customers had fallen to $15 \%$ of total customers. A rival business nearby, which charged at least $30 \%$ more, was always full. The revenue per customer was also low as high-value services - such as colouring and tinting - were avoided by customers. A new manager had just been appointed to the branch and she immediately set about establishing quality targets for each stage of the 'customer experience'. These included:

• maximum time for phone to ring

• maximum waiting time for appointment

• maximum waiting time between hair wash and when cutting begins

• all customers to be offered refreshments

• minimum time spent by stylists with each customer

• feedback forms completed by $20 \%$ of clients; stylists to discuss answers with client.

Each employee was given responsibility for at least one of these targets. A record had to be kept of the branch's success at meeting these targets. At first, branch costs increased as an additional worker was recruited to help meet the quality standards. After two months, the number of repeat clients had reached $36 \%$ and the branch was able to reduce its advertising expenditure. After four months, revenue had risen by $38 \%$. The branch reached third place in the company league table for customer satisfaction.

Analyse two ways how improving the quality of its product can increase FatBoy Trims’ revenue.

Analyse two ways in which the location of a retail shop could affect its competitiveness.

MFLEX, the leading global maker of high-quality advanced circuit boards to the electronics industry, has leased a $35000$-squaremetre factory in Johor Darul Takzim, Malaysia. It has purchased new manufacturing equipment for the plant and employed $125$ workers, which will mean a considerable increase in capacity and scale of operation for the company. Directors hope that, within two years, the rate of capacity utilisation of the new factory will be $90 \%$. This expansion follows a decision by the directors to make more components rather than buy them in from external suppliers. The factory will allow the business to respond more rapidly and flexibly to just-in-time demands from its customers. MFLEX will also expect its suppliers to be able to deliver materials and components on a JIT basis and it has signed exclusive deals with certain suppliers and is connected to them by computer link to speed up ordering.

Rapid inflation in Malaysia, as in other countries, is forcing some businesses to rethink their use of JIT manufacturing systems. With rising costs of industrial materials and components and much higher charges for transport, some operations managers are looking again at whether the 'no buffer stock' policy of the JIT method with frequent small orders being delivered is actually costing more than a large stock-order policy.

Outline two criteria MFLEX needs to meet in order to use JIT stock management successfully.

Gillette believes that continuous new product development resulting from extensive R&D is necessary to differentiate itself from competitors. True to its corporate slogan of 'innovation is Gillette', the company has introduced some of the most successful and widely acclaimed innovative products in the consumer products industry. Its product range, protected by trademarks, includes brands such as Sensor, SensorExcel, Mach3 and Gillette for Women Venus.

The company's oblective is to generate $40 \%$ of its sales from products launched within the last five years. One reason for Gillette's strong focus on new product development is due to competition successfully learning to copy its products very quickly. For example, Schick (part of Warner-Lambert, later taken over by Pfizer but known as Wilkinson Sword in many parts of the world) had imitated Gillette's Trac II twin-blade razor within five months of the product's launch.

New product launches have added to the brand value of Gillette. It has succeeded, in some markets, in making razors less of a commodity product - which consumers just buy on price and convenience considerations - but a differentiated branded consumer product that customers will pay a premium price for.

Analyse two reasons why Gillette continues to spend large sums on R&D even in a global downturn.