from a high reliabilty, high-cost manufacturing stranegy There are many instances where those who recognize the...

 

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from a high reliabilty, high-cost manufacturing stranegy There are many instances where those who recognize the need for change want to embrace it but cannot because they are unable to convince others that the change is necessary. Werther (2003) illustrates this with the example of AT&Ts telephone manufacturing division (Western Electric) following deregulation of the resisted by engineers, managers and assemblers aco telecommunications sector in the USA. Prior to effect on Western Electric's share of the market and convinced senior management of the need to to one that focused on producing low-cost phones Werther reports that this proposed switch was fierce deregulation, consuners had no choice other than to lease their telephones from one of the Bell operating companies (another part of AT&T) These local operating companies were regulated monopolies allowed to earn up to a set maximum return on their assets This regulated monopoly situation encouraged AT&T to pursue a high reliability, high-cost strategy for the manufacture of its telephone instruments. This strategy was attractive for a number of reasons: the company because they believed that the company should remain committed to its traditional policy of producing high-quality if expensive phones Their resistance was so strong that the company was forced to outsource the production of low-cost phones overseas What could senior managers have done to persuade engineers, managers and assemblers to support the required change? 1 The cost of the phones was included as part of the asset base on which the local operating company's returns were calculated. This offered no incentive for them to persuade Western Electric to reduce its RCL STO SEND END manufacturing costs. 2 Western Electric's market was protected from the threat of low-cost phones produced elsewhere because customers had to lease their phones from 2 ac the local Bell company. 3 High-quality, high-cost phones were more reliable. This reduced the cost of repairs and service for the operating company and also reduced the number of complaints to the regulator about the quality of service. All this changed after deregulation. Customers were allowed to purchase and install their own telephones and were attracted to the many low-cost instruments that began to flood the market. This had a dramatic from a high reliabilty, high-cost manufacturing stranegy There are many instances where those who recognize the need for change want to embrace it but cannot because they are unable to convince others that the change is necessary. Werther (2003) illustrates this with the example of AT&Ts telephone manufacturing division (Western Electric) following deregulation of the resisted by engineers, managers and assemblers aco telecommunications sector in the USA. Prior to effect on Western Electric's share of the market and convinced senior management of the need to to one that focused on producing low-cost phones Werther reports that this proposed switch was fierce deregulation, consuners had no choice other than to lease their telephones from one of the Bell operating companies (another part of AT&T) These local operating companies were regulated monopolies allowed to earn up to a set maximum return on their assets This regulated monopoly situation encouraged AT&T to pursue a high reliability, high-cost strategy for the manufacture of its telephone instruments. This strategy was attractive for a number of reasons: the company because they believed that the company should remain committed to its traditional policy of producing high-quality if expensive phones Their resistance was so strong that the company was forced to outsource the production of low-cost phones overseas What could senior managers have done to persuade engineers, managers and assemblers to support the required change? 1 The cost of the phones was included as part of the asset base on which the local operating company's returns were calculated. This offered no incentive for them to persuade Western Electric to reduce its RCL STO SEND END manufacturing costs. 2 Western Electric's market was protected from the threat of low-cost phones produced elsewhere because customers had to lease their phones from 2 ac the local Bell company. 3 High-quality, high-cost phones were more reliable. This reduced the cost of repairs and service for the operating company and also reduced the number of complaints to the regulator about the quality of service. All this changed after deregulation. Customers were allowed to purchase and install their own telephones and were attracted to the many low-cost instruments that began to flood the market. This had a dramatic

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