(Feedback Systems and Taylor) (Deming and Adam Smith) (Eli Whitney and Ford)

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Class 1 (Feedback Systems and Taylor) – Pages 9-32


1-1 Management feedback systems actually make our decisions for us. That is why it is important that we understand the overall mission (business strategy), view of future and the meaning of financial results of all three systems. One is a failed system, but it is instructive to realize why it failed as this is an economy under strict government control that so many Americans want. The last two are US and Japan – now that you know that there are two feasible strategies, one may be better than the other. That judgement is up to you.


What is the overall mission and meaning of financial results for the defunct Soviet, traditional US, and Japan’s feedback systems? (Add a bit of descriptive material to your answers.)






Traditional US:










1-2 The video compared Stanley and Luigi pizza shops from the point of view of management feedback systems. What were the two management systems and how does their operations reflect these systems?










1-3 If Stanley realizes that Luigi is taking business away from him, will he be psychologically willing to make the change? Why?




This partly explains why there are 70,000 abandoned factories in the US.


1-4 If a supplier offers 90% off for a component that technically works but may reduce quality with a market impact years away, what would be the likely decision of a traditional American manager and the Japanese manager and why?




1-5 The Taylor system of paying more to induce workers to increase their productivity is an obvious cost to the factory owners. But what was its actual cost to the owner and what is the basis of this conclusion?




1-6 What was the Taylor’s view of workers from the point of view of the 1890’s and was he correct for his time?




1-7 Therefore, what was his resulting philosophy towards management?




1-8 What was his central pillar to scientific management with regards to workers?




1-9 Why doesn’t the Taylor system work today?




1-10 On page 14, describe the process by which the Taylor system assures quality.




1-11 What are the cost factors?




1-12 Who totaled up the cost factors and what is its true cost?




1-13 Deming was opposed to inspection for defects, he said we should focus on what?





The traditional tolerance for defects was 1 defect in a thousand will be referred to in the last class as the three sigma system. Motorola practices Six Sigma, which reduces defects to 3 or 4 per million. What is the cost of inspection, rework, scrapping and warranty expenses for Motorola? How does Motorola discover the extremely few bad phones?




You can’t compete against a company that has eliminated the factory within a factory.


1-15 Because US made TV’s had fuzzy pictures compared to the Japanese, they choose to go out of business rather than compete with a better quality product. Thinking about the nature of Taylor workers and Japanese workers – why do you think this happened?




1-16 What is the definition of sustainability?




1-17 Is moving all your manufacturing to a nation whose workers are not paid enough to buy what they make and whose output is to be sold to unemployed US workers a sustainable model and why?




1-18 In the mid-1970s, top executives were paid an average of 30 times the pay of the individual employees, even then the highest in the world. Now it is over 300 times – what are we getting for the extra remuneration we pay top executives today compared to the 1970s? Think of Enron if you want.




1-19 On page 24, your take home pay in real terms has hardly changed in a half-century, yet your productivity has been going up unrelentingly (much from integrating computers into your work). Yet before 1970, pay and productivity went up together. Since 1970 they haven’t. Who is getting the extra money that you’re not getting for the past half-century?




1-20 On page 26, it is noted that US car manufacturers are moving factories to Mexico while Mercedes Benz is building car plants in the US. Why is Mercedes Benz building cars in the US to serve the US market and not in Mexico? Same is true for Japanese and Korean car manufacturers building cars in the US and not in Mexico. Certainly the foreign car manufacturers would make more money building factories in Mexico for cars to be sold to Americans.






Class 2 (Deming and Adam Smith) – Pages 33-47


The Deming Chain Reaction speech is what turned Japan around from making junk that nobody wanted to buy to making quality goods that nearly buried us. At long last we woke up and reacted by essentially copying what the Japanese were doing, which was putting into practice the thoughts of Americans.


2-1 What are the steps making up the Deming Chain Reaction?




2-2 Quality does cost more initially, which is why the Deming Chain Reaction dies before it can be born in America. Why?




2-3 What are the benefits of making better quality products that short-term American managers apparently failed to see?




2-4 If these benefits are equal to the initial cost of quality, what is the net cost of quality?




2-5 Who wrote about this and what is the name of his book?




Ishikawa, head of the Japanese Union of Scientists and Engineers, organized a meeting with top Japanese managers for them to listen to Deming’s Chain Reaction speech. One of these was Toyoda, president of Toyota Motors (difference in names is that Toyoda did not want the company named after him!).


2-6 What was the preference list for Japanese automobile purchasers in the 1930s and 40s?




2-7 What is the irony of this list?




2-8 What did Toyoda do that changed the fate of Japan as an economic power?




2-9 On page 35-36, what is the legacy of Adam Smith (add a bit of descriptive material for each of the 7 factors)?




2-10 We cannot recover from a business depression until what condition is satisfied?




2-11 In 2008 Las Vegas had 50,000 homes not able to be sold and the market collapsed. Recently there has been a recovery in the Las Vegas housing market – from this what can you conclude?




2-12 What is the irony associated with the term “independent businessmen”?




2-13 Free market uses price to direct investments into areas that are in short supply and avoid investing in products that are in plentiful supply – but there is a weakness in the Adam Smith system that is made so apparent in what happened in nearly all industries pg 37-39 and in Southeast Asia (pg 47). What is it?






2-14 On page 40-41, when the ladies were taken off a warehouse floor of about 7,000 workers and put into a small group of about 20-30, productivity started to climb and continued to climb independent of any test being conducted. Why?




2-15 Japan switched over to making quality goods not because making quality goods was a virtue, but because of the situation they found themselves in after World War Two. Why did Japan decide to make quality goods?





2-16 What is it about Matsushita’s speech that will never come from the mouth of an American manager?







2-17 What is privatization?




2-18 In the 1970’s YPF was nationalized by Peron. Describe what happened to YPF when it was nationalized and then again when it was privatized. The purpose of this question is to see what impact nationalization has on a company and how privatization cured the damage done by nationalization. Do not search Google or other outside sources which focuses on current corporate matters.


Class 3 (Eli Whitney and Ford) – Pages 48-58


3-1 Whitney was a victim of copying of his cotton gin in defiance of his patent. But copying is part of business. If a competitor is beginning to do something better than you and you don’t react, what is the consequence?




3-2 What is reverse engineering?




3-3 What is benchmarking?




3-4 What is reengineering?




3-5 In the IBM Credit example for approving credit applications, what does MBWA mean?




3-6 The procedure for approving applications before a change was made within IBM Credit followed the principles of organizing work by whom and how was work organized?




3-7 The procedure that cured the excessive delays followed the principles of organizing work by whom and how was work organized?




3-8 How does Deming relate to benchmarking and reengineering?




3-9 Besides the cotton gin, what are the two principal accomplishments of Whitney?




3-10 Besides the above, what else is Whitney responsible for originating?







3-11 What was the impact of technology, the invention of the cotton gin, on society?




3-12 The government has made contributions to production – with regard to interchangeable parts, what was the government contribution?




3-13 What was the government role in bringing about the computer?




3-14 What was the government role in bringing about the Internet?




3-15 What were the principal contributions of Isaac Singer in the way we conduct business?




3-16 What was the contribution of Cyrus McCormack in the way we conduct business?




3-17 What was Ford’s business strategy?




3-18 How do you know that his business strategy was correct?




3-19 Describe economy of scale.




3-20 Describe the Ford Cycle.




3-21 How did Ford become one of the world’s richest person with a slim profit margin?




3-22 What is Ford’s Operating Philosophy?






3-23 What would he have done if he were a traditional American manager?




3-24 What did Ohno do?




3-25 Describe push manufacturing.




3-26 Describe pull manufacturing.




3-27 What are the three MAJOR contributions of switching from push to pull manufacturing?




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