Hello there.

I need help with question no 3 only.

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CLOSING CASE Productivity Improvement at United Technologies Corporation In 2007, George David, the long-time CEO of quality also hurt demand because customers were United Technologies Corporation (UTC), re less likely to buy products from a company with a tired. He could look back upon a very impressive poor reputation for quality 15 years at the helm of a company, during which The solution to these problems at Otis in time revenues tripled while net profits went up ten cludedi designing elevators so that they were fold. Today, UTC is a $60 billion per annum diver easier to manufacture, which led to fewer errors sified manufacturing enterprise whose businesses in the assembly process reconfiguring the manu include jet engine maker Pratt & Whitney, air facturing process and empowering factory-floor conditioning business Carrier, and Otis Elevators. employees to identify and fix quality problems. A major source of the profit surge over the last For example, by changing the placement of el 15 years has been productivity improvements. evator parts, and allowing assembly line workers At the heart of these improvements is a pro to access them more easily, Otis took $300 off gram known as Achieve Competitive Excellence the cost of each elevator, which led to worldwide (ACE). This program was the result of collabora annual savings of $27 million. In addition, the tion between George David and a Japanese qual production processes was streamlined, requir- ity consultant, Yuzuru Ito, who at one time was ing fewer steps, less reaching and movement for a quality expert at Matsushita, the Japanese con workers, and easier access to parts all of which sumer electronics giant. David recruited Ito in or boosted productivity der to figure out why Otis' elevators performed so ACE evolved out of the experience at Otis and poorly compared to those from rival Mitsubishi. was subsequently rolled out company wide. The Otis products required a building owner to call a main thrust of ACE is built around the belief that mechanic an average of 40 times per year, while every person should be involved with continuous Mitsubishi's elevators required service only 0.5 improvement, from top executives to the most times a year. What to uncovered was a range of junior workers. ACE"pilots" are production-line problems including poor design, poor manufactur workers who learn a quality improvement process ing practices, and a lack of quality control inside in just days, and then are empowered to implement Otisfactories. Ito explained to David how poor and lead their work groups through that process. quality damaged employee productivity, because They learn to pinpoint potential problems, ranging time was wasted building defective products. Poor from fundamental design flaws in a product, such as misplaced bolts, to a co-worker's fatigue from staying up with a newborn all night. As the program was implemented across the company, the results were impressive. At Carrier, the number of employees decreased by 10%, the square footage assigned to manufacturing was reduced by 50%, and, despite these decreases, production increased by 70%. At Pratt & Whitney, dramatic improvements in the quality of jet engines were registered. The average time between part failure in a jet engine went from 2,500 hours to 170,000 hours-huge improvement resulting from better design and manufacturing processes. Customers noticed these quality improvements, and increased their purchases of United Technologies Corporation products, driving forward revenues and profits." stions 1. How did poor quality at United Technologies' Otis unit damage the company's financial performance and competitive position? 2. Why do you think quality was so poor at Otis? 3. What did UTC learn by repairing the quality problems at Otis? How did it leverage this learn ing to improve the performance of the entire corporation? 4. What general principles about competitive ad- vantage and strategy can be drawn from this case