Horizon Consulting

Prepared By: Abdulrahman Aal Hamlan : Bandar Alfaifi 08/14/2012 Prepared For: Mr. de Koning Owner of InnoBus Ltd.

Preface
Legal Note
This report was prepared as a result of work sponsored by InnoBus Ltd. It does not necessarily represent the views of the company, its owner, or its employees. All of them make no warranty, express or implied, and assume no legal liability for the information in this report; nor does any party represent that the use of this information will not infringe upon privately owned rights. This report has not been approved or disapproved by the company nor has the company passed upon the accuracy or adequacy of this information in this report.

Acknowledgments
We thank our colleagues Han-Sung Park and Su Hyeon Lee for external and internal analysis assistance. We thank Dr. Harm-Jan Steenhuis, for providing advice and encouragement as well as valuable support and assistance throughout the project.

Executive Summary
Over the last two years of loosing profit, InnoBus has made clear a need for the company to have an effective decision to solve this problem. Negative impacts of the current operation and strategy (or lack thereof), has further emphasized this need. There are several potential solutions for this type of problem; however decisions for a company of this size should be made through careful analysis.
There are many collaboration tools that could provide significant advantages to InnoBus in its effort to address the need for improved operation. Any potential solution would need to come through a high-scientific analysis that enables the owner of the company (Mr. de Koning) to review, maintain, share and synchronize at any level. In addition to analysis of specific solution, this paper looks at the ways InnoBus can drive various performance measures in general terms relative to collaboration tools.
InnoBus target is to implement an innovative, collaborative, and communication strategic and operation solution. Horizon Consulting will provide through this paper a short and long-term solution of problems that have been addressed throughout careful analysis as well as business plan that InnoBus could implement to come with the current situation.

Table of Contents Preface 2 Legal Note 2 Acknowledgments 2 Executive Summary 3 Table of Contents 4 Introduction 6 Global Problem Definition 7 InnoBus and The Business 7 Main problems 7 External and Internal Environmental Analysis 8 External Environment Definition 8 External Analysis 8 Casual Network Diagram 18 Strategic groups 18 Internal Environment Definition 18 Internal Analysis 18 Casual Network Diagram 23 Strategic Position and Operational Effectiveness 24 Strategic Position 24 Operational Effectiveness 24 Short-Term Plan 25 Diagnosis 25 Guidance Policy 25 Set of Coherent Actions 25 Long-Term Plan 27 Developing Marketing Strategy 27 Selecting Corporate Strategy 28 Justifying the selection 29 Implementing The Strategy 30 Evaluating The Selected Strategy 30 Contingency Plans 30 Business Plan 32 Improving Production Performance: 33 Marketing Strategy For A Mature Industry: 35 Referenses 38 Appendix A : Environmental Profile 40 External Profile 40 Internal Profile 42 Causation Network Diagram 43

Introduction
InnoBus Ltd. Is a Canadian company producing transit city buses for the Canadian and US markets. The company is in serious trouble, expecting major losses during the current year. The bank is asking for immediate payment of all outstanding debts. The market is declining and competition is fierce. In short, the company might be facing bankruptcy soon. We, Horizon Consulting, have been hired by the owner of the company, Mr. de Koning to solve the problem.
First, we will develop a plan for data collection. Our team will do interviews with each key employee in the company to collect more accurate data. Being third party would give the participants sense of trust because we do not have vested interest in the results. After that we are going to analyse these data using accurate models to find the root causes of the problem. Assessing those causes will be beneficially to determine the degree of destructiveness. Third, mapping the relation between the company’s strategic position and operational effectiveness. This would assist us when we discuss the best strategy for the company to come with its operational difficulties. Short-term and long-term strategies will come next. Finally, we will suggest a business plan for the company.
The purpose of this report is to give Mr. de Koning an in-depth analysis of each division of his company. We will work close with him to assess each element of the company’s external opportunities and threats as well as its internal strengths and weaknesses. Identifying aspects of WSOT analysis will assist Mr. de Koning to control and solve the situation effectively. Short and long- term plans are essential at this level to convince the bank of ability that the company can move on and do better in nearest future.

Global Problem Definition
InnoBus and The Business
When we looked at the production capacity and number of employees, we could assume that InnoBus is a small size company. The company’s production capacity is 500 units; however, the largest competitor in term of production capacity is PCVM with 2000 units. Both North American Buses and Blacktop have production capacity up to 1200 units. There are some other competitors who have similar to close production capacity that InnoBus has. For example, Mulder can produce 400 units, Unicorn 350 units, Yodal 350 units, and the smallest manufacturer is MapleBuses with production capacity of 250 units.
The organizational structure of InnoBus is functional structure, which consists of a chief executive officer and a limited corporate staff, with functional line managers in dominant organizational areas such as finance, sales and marketing, engineering, and plant manager. This structure allows for functional specialization (Hitt, Ireland, and Hoskisson, 2009, p. 314).
Turnover rate seems to be high when we consider some facts. Due to lack of orders, InnoBus plans to shot off for first 3 moths of this year and employees will be paid during this period, which consider a voluntary turnover. In addition, the employees do not seem to be motivated and this is a symptom of turnover. One of the causes to turnover is the employee’s dissatisfaction in their present workplace (Campion, 1991).
InnoBus’ mission is not clearly stated; however, we could assume from the company’s operation that InnoBus current goal is to compete in public transit buses. To be able to do so in this highly competitive market, the company tries to reduce its cost by innovating in new technology such as low floor. However, such strategy does not guarantee desired results because investing in new technology requires capital investment, which InnoBus is in shortage of it.

Main problems
As general predicting, InnoBus is facing at the moment many problems. For example, decline in sales, the financial position is weak, 80% of the union employees voted for strike, are and the bank asks for immediate payment of full outstanding indebtedness. These problems are serious. Nevertheless, they look as symptoms of other root causes. It is impossible to predict a bright outlook of InnoBus’ future if it continues operating in the same manner.

External and Internal Environmental Analysis
An integrated understanding of the external and internal environment is essential for firms to understand the present and predict the future (Dacin, Oliver, and Roy, 2007). We are going to give a comprehensive analysis of InnoBus’ external and internal environment. Then we will assess each factor under these categories to identify the root causes of the company’s current situation.
Smith, Arnold, and Bizzell (1991) state that “environmental analysis is one of the most critical elements of strategic planning anf management. Firms that properly analyze the environment are much more likely to succeed that those that do not. Conversely, a major mistake, such as assuming that environmental conditions will not change, is very likely to seriously harm the firm.”
An important objective of analyzing the external environment is identifying opportunities and threats. Opportunities are conditions in the external environment that, if exploited, help InnoBus achieve strategic competitiveness. Threats are conditions in the external environment that may hinder InnoBus’ efforts to achieve strategic competitiveness (Panagiotou, 2003).

External Environment Definition
There are several factors that affect the industry and firms competing within this industry. External environment involves factors that a company will find it very challenging to modify. Most of time external environment drives companies to implement in similar behavior. Smith, Arnold, and Bizzell (1991) differentiate the external environment to macroenvironmental, which is the environment that influence all businesses, and task environment, which is he environment that influence specific business.

External Analysis
Macroenvironmental
The Industry
The bus industry is at a mature stage in the product life cycle. Nevertheless, new technologies in the last 30 years have had a major impact on the industry. For example, in the maturity stage of a product’s life cycle, changes in product design become less common. However, as in the entire transportation industry, technologies have caused the need to adapt to change, which is not entirely easy for large conglomerated companies such as those found in the bus industry. InnoBus was one of the early innovators, but by the mid 1990s, other bus manufacturing companies were beginning to adopt the new technologies as well. The critical factors for profitability and continued advantage will be how well each manufacturer can keep manufacturing costs as low as possible and differentiate itself based on service and quality of product. As the new technologies were being adopted, several manufacturers felt the damage being done to their profit margins, and some went bankrupt due to growing competitive pressures. Additionally, domestic manufacturers were facing irregular ordering from transit authorities, and there was fast growing foreign competition.
Cliff Henke, manager of external affairs for the North American Bus Industry Association describes the bus and coach manufacturing industry challenges and trends that have taken place over the last few decades. In the early 1980s, the United States federal government mandated certain requirements, including a single fuel type (diesel). Also, a single system floor height was the standard specification; however, there were “kneeling systems” developed where there was easier access introduced. Since that time, the industry has been impacted by major technological developments. Articulated buses were introduced for great capacity, and by 1990, a few fleets had incorporated low-floor technology. According to Henke, the low-floor technology was introduced from Dutch bus manufacturer Den Oudsten. Neoplan USA had also begun to offer low-floor buses and licensed the design from a German manufacturer. By 1993, nearly 800 buses in America were being powered by alternative fuels (this did not count electric trolley). Multiplex electrical systems were introduced in the 1990s, which saved weight and were more reliable than original relays. They changed how the electrical systems were designed and manufactured.
According to the North American Bus Association, the new technologies had a major impact. For one, they increased the initial capital costs of new buses, and operations and maintenance had to be changed. The increasing design and manufacturing complexity also added much more cost and which threatened, “to disrupt the industry’s supply change” (Henke, p. 3). Although the new technologies were expected to bring operational improvement, Henke says that there has been little change; in fact, the new technologies required more technical staff. Although there may have been improvements for the transit authorities, the new technologies caused pain for manufacturers. There is more complexity in the final product, and this has caused a greater engineering burden than in the early 1980s. Henke argues that top management must pay attention to the following due to new technologies:
The result is that transit buses are essentially custom built-to-order for each transit property. Aside from the burden placed on manufacturers when each transit property issues its own terms and conditions for the acquisition of buses, many specifications are design-driven and virtually unique to each agency. The proliferation of new technologies further exacerbates this trend. This situation forces OEMs like NABI as well as their suppliers to (1) consume a large amount of staff time engaged in reviewing these solicitations, especially with regard to how the bus can be engineered to meet the specifications; (2) draft so-called Requests for Approved Equals and Clarifications, which seek either clarifications or modification of the specifications; and then (3) try to cost each variable contained therein (Henke 3).
The intense customization causes problems in the supply chain. Because each bus has thousands of details to provide to a particular production run, the ability for the manufacturer to negotiate better terms from suppliers is limited because volumes are reduced when each order is customized. In other words, the customization required by manufacturers in the industry reduces economies of scale. The lack of standardization also causes more types of diagnostic tools to be used, and the amount of training required to use the equipment is increased. Lack of standardization of components and subsystems in transit buses also lead to the electrical systems are also more complex, and there are constantly changing requirements from product changes or component suppliers. The changes due to new technologies have added hundreds of hours of time added for each new bus produced.
Government Regulations
Bus manufacturers are required to follow mandates and specifications put into place by governmental regulations for each country it enters. Some of these requirements are quite challenging. For example, Innobus faced the problem when entering the U.S. market that 60% of buses had to be “American made.”
Ridership Trends
Although there has been growth in certain areas of ridership, there are several trends that have affected ridership in the last few decades. These are: * Growing Sprawl * Growing Auto Use * Growing Congestion in/into Urban Cores * Changing Travel Patterns

Each of these had caused a decline in ridership. For example, as people spread out further away from their job locations, they are relying more on automobiles for transportation rather than transit (Hemily, 2004).
Growing auto use: Between 1977 and 2001, using NPTS/NHTS data as a basis, population grew 30%, but household vehicle trips increased 116% (Hemily, 2004). Work travel had dropped to just under 15% by the late 1990s, which is a challenge to transit since transit it traditionally designed for work commuting.
Task Environment
Competitors:
Using the model of Porter (1980) to go deep into the external comprehensive model of Smith, Arnold, and Bizzell (1991). We will examine each competitor based on the components of Porter’s model. InnoBus’ competitors who are focusing their future goal into producing low floor bus are North American Buses, Yodal USA Corporation, and MapleBuses Corporation. The other competitors are focusing in different goals. For example, Blacktop Industries is willing to design new bus that reduces weight and Mulder Corporation is willing to design new bus that uses alternative fuels. Thus, InnoBus should be aware of the first three competitors because they will extremely affect their market share in this new segment, low floor bus.
Future Goals
Business unit goal
North American Buses’ financial standing is weak due to cash flow problems. Thus their financial goal is to find an equity partner to cover their loan from Ontario Government. The company’s attitude toward the risk, cash flow problems, seems to be effective behavior because they tried to enter new market, low floor bus, which will benefit the company once they got contracts. North American Buses does not have any economical or non-economical organizational values or beliefs that has been stated. For example, they violated the Buy American Act by shipping units to the USA without meeting requirements. In short, North American future goal should be consider by InnoBus because all their efforts are aiming to find partner. If they find one, they could inter the low floor segment shortly.
Yodal USA Corporation’s financial standing is strong due to support from its corporate, Yodal of Austria. The company’s attitude toward the risk is not clear stated. Yodal USA Corporation has economical organizational values or beliefs because they are part of a corporate that tried to expand its market internationally. In short, InnoBus should consider Yodal USA Corporation future goal because their efforts are to enter low floor market.
MapleBuses Corporation’s financial standing is not clearly stated, but we could assume that they are in good situation because they bought FBT, which was owned by Luxor Corporation, and low floor bus design. The company’s attitude toward the risk seems to be ineffective behavior because when the European bus builder that sell the low floor design went bankrupt, MapleBuses Corporation did not attract its engineers to support the R&D department. In short, InnoBus should consider MapleBuses Corporation’s goal because their efforts are toward producing low floor buses.
The corporate partner and business unit goal
North American Buses is not a unit of corporate. However, Yodal USA Corporation seems to have strong financial support from Yodal of Austria because their relationship in not disclosed. In addition, MapleBuses Corporation is a subsidiary of Maple Industries. From the behavior that MapleBuses Corporation operates we could assume the behavior of the mother corporate. For example, MapleBuses Corporation did acquire a bus manufacturing company, FBT, and European low floor bus design. This decision could be made to follow the corporate strategy, which is expanding its business and acquiring high technology.
Portfolio analysis and competitor’s goals
North American Buses does not have a partner, so there is no partner competitor goals should be analyzed. MapleBuses Corporation’s corporate partner does not compete in bus industry. However, Yodal of Austria has clear goal, which is expand its business globally.
Competitors’ goal and strategic positioning
North American Buses, Yodal USA Corporation, and MapleBuses Corporation tried to characterize themselves in new position by entering low floor bus’ segment, so they could gain power by early being in the market.
Assumption:
The competitor’s assumptions about itself:
North American Buses believed they are providing low quality products. This was clear because they ship buses to the USA without meeting requirement, which caused them to violate the Buy Americans Act. The company understands itself as an innovation company because they would produce a new technology, low floor bus, which imported from Europe. In addition to develop this perception, they hire Tom Keeler who left InnoBus two years ago.
North American Buses believed they have strong financial partner. In addition, the company is going straight to enter low floor bus market.
MapleBuses Corporation believed it is providing old design products. This was clear because the company acquired low floor design. In addition, the company knew that it does not have strong R&D department. With the lost of technical support from the European firm, they could loss the opportunity to produce low floor bus.
The competitor’s assumptions about the industry and other companies in it:
North American Buses and North American Buses view the industry as a highly competition industry, so, they tried to open new segment to be able to compete with others.
On the other hand, MapleBuses Corporation views the industry as a highly competition industry, so, they tried to secure their current and future position by investing in urban transit buses. Furthermore, they knew the other competitors are heading to open new segment such as low floor bus, so they acquire European low floor design.
Current strategy:
North American Buses current strategy is not explicit; however, it could be implicit as increasing their cash flow. North American Buses current strategy is not explicit too; however, it could be implicit as entering new market. Nevertheless, Blacktop Industries current strategy is to continue produce urban buses.
Capabilities:
Product:
North American Buses manufactures two main types of transit buses. 22’/26’ buses are targeting at the transport of disabled and 35’/45’ are targeting at the main transit system. Yodal USA Corporation manufactures intercity coaches and urban transit buses one main types of transit buses 35’/45’ that comes with two length, 96” and 102”, and one wide, 60’. MapleBuse Corporation manufactures main types of urban transit buses 40’.
Dealer/distribution:
As all other bus manufacturers, InnoBus’ competitors are aiming to sell its products to public transportation departments.
Operation:
North American Buses located in Canada and has facility in the USA. Yodal USA Corporation located in the USA and manufactured its products by Yodal Austria. MapleBuse Corporation located in Canada.
Research and engineering:
North American Buses is in the process to produce new low floor bus. Yodal USA Corporation is a little bit ahead because it is producing new low floor bus. But, MapleBuse Corporation never really had a strong R&D department.
Overall cost:
The cost of North American Buses products seems high, so they tried to reduce the quality to be able to compete in USA market. The cost of Yodal USA Corporation products of low floor seems high too because they could not sell more than one bus. The cost of MapleBuses Corporation products should be high because the company purchased the assets of FBT, so their fixed cost should be high.
Financial Strength:
North American Buses is facing shortage in cash flow. They are trying to find partner to avoid bankruptcy. Yodal USA Corporation is in healthy shape because of the support from the mother corporate. MapleBuses Corporation seems to have strong financial position with the purchase of FBT and acquire of low floor design.
Organization:
North American Buses is going straight to develop new product while they should cut costs. Yodal USA Corporation is going straight to enter the new market. MapleBuses Corporation is going straight to produce low floor buses and expands its business.
General managerial ability:
There is no clear view how the managers at North American Buses deal with the cash flow problems, but it seems they have a long-term solution by increasing their market share by entering new market then the cash flow. In addition, there is no clear view how the managers at Yodal USA Corporation deal with the low market share of low floor bus. Conversely, Managers at MapleBuses Corporation perform professionally. They knew what are the company’s ability and resource and where is the industry going on, so they act accordingly. For example, the industry is going toward producing new technologies such as low floor buses and liquefied natural gas (LNG) buses, so they acquired European low floor design.
Corporate portfolio:
The corporate is supporting the decision of North American Buses developing new product. The corporate is supporting the decision of Yodal USA Corporation developing its position in the market of low floor bus. The corporate is supporting the decision of MapleBuses Corporation investing more money in acquisition new technology and facilities.
Core capability:
Research and development department is the core capability of North American Buses. The mother corporate of Yodal USA Corporation is giving strong financial support to its subunit. The two core capabilities of MapleBuses Corporation are the support from corporate partner and managerial ability.
Ability to grow:
North American Buses could grow in term of innovation, but that could fail if they do not increase cash flow. Yodal USA Corporation could grow in term of market share, but that could fail if they do not develop strong market strategy. MapleBuses Corporation could grow on the long term because the company invests in new design and new facilities.
Competitor’s response profile:
Offensive move:
Satisfaction with current position:
North American Buses is not satisfied with its current position due to shortage in cash flow and important with finding partner. Yodal USA Corporation is not satisfied with its current position due to shortage in sales. MapleBuses Corporation is not satisfied with its current position, so they move toward low floor segment.
Probable move:
North American Buses is in its direction to produce new innovative product that could produce income. Yodal USA Corporation is in its direction to develop its position because it is being the first in the market. MapleBuses Corporation could invest to attract professional engineers if they struggled with producing low floor bus.
Strength and seriousness of moves:
North American Buses just completed a prototype of low floor design. Yodal USA Corporation already produced low floor bus and sold one of them. MapleBuses Corporation did not show any potential move we could evaluate.
Defensive capability:
Vulnerability:
The shortage of cash flow is the most threat to North American Buses. Yodal USA Corporation is in shortage of sales. The outdated design and loss their engineering supports from Europe are the most threat to MapleBuses Corporation.
Provocation:
Shortage in cash flow could prevent North American Buses from competing in the low floor bus line. Shortage in sales could prevent Yodal USA Corporation from continue producing and competing in the low floor bus line. MapleBuses Corporation has lost its engineering support from Europe, which could prevent the company from competing in the low floor bus.
Effectiveness of retaliation:
Because North American Buses still does not sell any product of low floor bus, they could find it difficult to do so and get the buyer trust. Because Yodal USA Corporation still does not test any product of low floor bus, they could find it difficult to do so and get the buyer trust. Because MapleBuses Corporation still does not act to the lost of engineering support, they could find themselves out of the market.
Packing the battleground:
If North America Buses could not find way to produce cash, they will not consider a big competitor in the market. If Yodal USA Corporation could find way to sell more low floor buses, they will be considering a big competitor in the market. Being second in the market will give them a competitive advantage. If MapleBuses could not find way to attract experienced engineers in low floor design, they will not be considered as a competitor in the market because their design is no longer supported by European Engineers.
Customers:
Customers as Individuals (Micro Perspective):
As we know, these buses are going to be used by people who use public transportation. Thus, their preferences should be take under consideration when designing the bus. For example, low floor bus is aiming to serve disabled as well as normal person. If the time needed to load and unload disable person is long, normal person could not use such buses to save time. People should be able to use these buses immediately and not spend much time to learn how to load and unload. However, all these factors have been tested and the product meets requirements of low floor bus.
Customers as Consumers (Macro Perspective):
People are always heating changes; however, such new technology could be accepted if it marketed appropriately. For example, InnoBus could sell these buses at similar price of traditional buses.
Customers as Group of Buyers:
Because these buses are mainly sell to public transportation, which means making decision is based on group or committee. There are 2 types of bidding systems for ordering namely. First, invitations for a bid in which transit authority invites bus builders and gives them a chance to offer a bid, lowest bid wins. Second, request for proposal (the transit authority asks the bus builders to come up with a bus and a price) in this last one there is more room for negotiation.
Customers as Markets:
Bus industry is not build on one product or design. There are many products and design that represents the customer preferences.
Suppliers:
Vendors of Materials and Equipment:
60% of the bus components are required by customers, so there is no room for negotiation with the suppliers on special parts because they have to be custom made. But for the standard parts vendors approach InnoBus, which means that they have the choice that ultimately gives them some bargaining power.
Financial Community:
The potential creditor perceives InnoBus as an unacceptable record of paying credit and it does not have strong working capital position. Thus, they are not able to extend its necessary debt to pay its obligations.
Labor Supply:
Because manufacturing buses need skilled labor, it is difficult to find a well skilled employee that could work right away.
Potential Entrants:
Barriers to entry are high. Possibility to organize production methods and production line is low. Huge investment should be done in acquiring the appropriate facilities and equipment. Huge chunk of investment and time takes a design of product itself. Therefore it is not an easy approach to establish a competing company.
Substitutes:
Threat of substitutes is low. People can start using airplanes instead of busses for along distance travel, however inside city bus cannot be replaced by other public transport like taxi. Tendency of ordering and renovating old buses will be remaining in the long run.
Environmental Profile
Environmental profile is a summary of the key environmental factors; each factor is listed and evaluated regarding its influence (positive or negative) on the firm and its significance to (or impact on) the firm (Smith, Arnold, and Bizzell, 1991, p. 183). See Appendix A.
Summary of Macroenvironmental Factors * Intense customization of final products. * Unlike truck market, Bus market depends on public funding and has to follow government regulations. * Buses generally have a life of 12 to 15 years. * Highly competitive bus market in the city public transit (40 foot) segment. * Low profit margin due to competitive pricing in 40-foot segment * Recession causes lower orders * Customers are waiting for new emission standards before ordering * Irregular order (i.e. Orders put on hold electric trolley) * A very conservative market; slow to change and accept innovation (unlike the European market) * Customization—customers have different specifications * In the city bus 40-foot segment, so differentiation comes in the form of service, warranties, quality, parts availability, usability of manuals, and training. * Less competition in the electric trolley segment (Innobus is one of the few that develop these) * Declines in work-related commuting * Technologies adding to complexity of design * Profit margins in decline due to challenges of market and global competition
Summary of Task Factors * Competitors’ goal is to enter the low floor segment. * Low floor design meets the individual customer’ requirements. * Difficulties of selling new design to the public due to approval process of new design. * The procedure of making public procurements focuses on price. * Cost of raw materials is often stable among industry due to custom design by buyers. * Barriers to entry are high. * Threat of substitutes is low.
Macroenvironmental Profile
Table in Appendix A.
Task Environment Profile
Table in Appendix A.
Casual Network Diagram
This is InnoBus Casual Network Diagram of external analysis. Opportunities marked by green and threats by red. Please refer to Appendix A.

Strategic groups
InnoBus has a combination of a functional and a divisional structure. This structure is in essence a good and reliable one, but there are some issues that we like to address. Namely the communication, although there is a good communication between all levels of management there is a lack of taking directive actions e.g. the employees complain about unclear instructions, dirty workplace, un-safe work.

Internal Environment Definition
There are several factors that affect the firms and its operational effectiveness. Internal environment involves factors that a company will find it less challenging to modify. Most of time internal environment are different from company to other because of many organizational structures that a company can implement. Smith, Arnold, and Bizzell (1991) differentiate the external environment to macroenvironmental, which is the environment that influence all businesses, and task environment, which is he environment that influence specific business.

Internal Analysis
Before discussing the components of internal analysis in greater detail, we would like to signify the important of this analysis to provide us with solid knowledge regarding the internal factors that influence performance of InnoBus. Doing so will lead us to identify strengths and weaknesses factors that contributed to the situation at Innobus.
Pearce and Robinson (1982) illustrated a comprehensive model to categorize the potential internal strengths and weaknesses factors that companies, consultants, and scholars should consider them all when analyzing the internal environment then focus on those are related to the situation. Smith, Arnold, and Bizzell (1991) also referred to the same model. These key factors are basic capabilities, limitations, and characteristics of InnoBus.
Management
The organization design of the company was flattened a bit when Mr. de Koning took over; however, the system is still hierarchical. As argued by Anderson, the organizational structure of a company is often dictated by the strategies chosen. The organization’s structure can also have an important influence in how it competes, and its daily operations and performance. Currently, Innobus has a functional structure, which is usually found in organizations where there is a single related product or service, high production volume and some vertical integration. These firms tend to expand their operations by penetrating into existing markets, introducing similar products in additional markets or increasing vertical integration. The functional structure tends to have a high level of centralization that provides integration and control over product/market activities or primary activities. The CEO or President does not have expertise in all areas so brings in specialists such as in accounting, marketing, etc. The advantages of the functional structure is that by bringing together specialists into functional departments, a company can improve its coordination and control in each. Decision-making is centralized at the top, which increases an organizational perspective. The functional structure provides for better use of managerial or technology talent because it is focused in one department instead of spread out. However, there are important disadvantages. “The differences in values and orientations among functional areas may impede communication and coordination” (Anderson, p. 312). Edgar Schein of MIT argued that shared assumptions and similar backgrounds can form around functional units, but this leads to “stove pipes” or “silos” in which the departments view themselves as isolated, self-contained units with little need for interaction and coordination with other departments. This erodes communication because functional groups may have not only different goals, but also different meanings of words and concepts” (Anderson, 312). The functional structure also might lead to short-term thinking based on what is best for the functional area, not the entire organization. The functional structure might also overburden the top executives because conflicts tend to be pushed up. Also establishing performance standards across the entire organization is sometimes difficult.
Another way to think of Innobus’ organizational structure is to think of the machine metaphor created by Mintzberg. The machine organization has formal work processes and routine procedures. Tasks are grouped in functional departments and jobs are clearly defined. It has a tight vertical structure with functional lines going all the way to the top where control remains centralized. This type of organization does not seem to fit that well in the bus industry because of the intense customization and the challenges that brings to the engineering department. Nahm et al, (2003) developed a framework to examine the relationships among various factors of an organization based on its structure, ability to make decisions and so forth.

The results of a study using the framework showed that the amount of formality, the number of layers in the hierarchy and the level of horizontal integration have direct and significant effects on decision making and the kind of communication that takes place.
Operations
The company uses an integral manufacturing design, which means that it no longer relies on truck manufacturers for its engines; it is a bit more integrated from the past. However, sixty percent of parts/components come from outside vendors. The inventory management system is relatively primitive, using a two-bin inventory approach. When the first bin is empty, it needs to be refilled. There does not seem to be a systematic method to order parts ahead of time or reduce inventory stockpiles based on predicted need beyond the MRP program for purchasing which checks with each station on a weekly basis. Because of the customization process, the time period between engineering design work and the start of production is six months. There is an average of 3,000 customized design issues for every bus. If production begins too soon, engineers will not have time to properly design the bus, and operations often have to be delayed to reconfigure a design component. This happened with the Chicago contract.
It took around two years for the European design approach to reach its learning curve where employees were trained enough to be proficient in the new methods. A lot of time and investment was made in training engineers, although not nearly as much for the line workers.
Besides engineering delays, the Chicago contract was also delayed due to late delivery of critical component parts. This has been a growing problem in recent years—regular delays from suppliers.
Human Resources
While engineers are highly trained and valued in this organization, the regular employees do not receive nearly as much training. There also seem to be a lot of problems related to communication and job satisfaction (the current strike at Innobus). Additionally, it is highly likely that the company has been plagued by problems related to cross-cultural management. Koning comes from a culture where management has more power distance (Hofstede), and there is a more traditional structure. There are likely differences in perspectives and values, but these cultural issues were not addressed.
Culture is a very important issue related to organizational communication problems. Hofstede defined culture as "the collective programming of the mind which distinguishes the members of one group or category of people from another" (Hedges, 1999, p. 120). Drucker points argue that when there is an integration of people into a common venture, it is deeply influenced by culture. There are significant differences between behaviors and attitudes of employees and managers from different countries. Hofstede developed the following categories, although some have been added later: power distance (from small to large); collectivism versus individualism; femininity versus masculinity, and uncertainty avoidance (from weak to strong).
Because of cultural differences, the following are some common reasons for problems in cross-cultural communication: Assumed similarity; ethnocentrism/denigration of differences; Anxiety/tension; Prejudice; Stereotyping; Comfort with the familiar (Taylor). In communication--sending and receiving messages where people easily understand each other is difficult even when everyone is from the same culture. But when the communicators are from different cultures, the difficulties increase. “In the workplace, poor intercultural communication may result in low morale, lack of teamwork, charges of discrimination, and a host of other discordant behaviors that can negatively affect productivity” (Taylor, 1999, 1).
Although details remain unknown, Koning is an executive from a foreign country, and likely had miscommunication issues, especially with lower-level employees who were at the bottom of the communication hierarchy. There was likely a disconnected, and even though Koning kept employees on during a downturn, they must have felt he did not care about them and did not value them enough. This happens when employees remain in jobs where they have little input into decision making and little empowerment related to how their tasks are performed.
Environmental Profile
Environmental profile is a summary of the key environmental factors; each factor is listed and evaluated regarding its influence (positive or negative) on the firm and its significance to (or impact on) the firm (Smith, Arnold, and Bizzell, 1991, p. 183). See Appendix A.
Summary of Internal Analysis
Managerial
* Functional/machine structure * Hierarchical decision making and communication
Operational Factors * Sixty percent of parts/components come from outside vendors * Integral concept is supposed to reduce reliance on truck industry (rejecting the truck chassis system) yet much of the manufacturing still relies on suppliers (roofs, etc.); also develops standardization * In U.S., the largest market besides Canada, 60% of manufacturing has to be “American Made,” so they opened a branch in Buffalo New York. * Two-bin inventory system * Sometimes production starts before engineers have refined design issues (sometimes have to redesign during production) * MRP program for purchasing * Outlook evaluation for each station (weekly) * Six months before production can start on any order * On-time deliveries have become an increasing problem * Fixed costs of critical parts * More flexibility with less critical parts * Average of 3,000 customer specification of parts have to be customized by suppliers * Original company before Koning took over was very bureaucratic, old-fashioned, conservative * Employees had to be retrained with European design and integral system; introduced low-floor design; took several months for engineers to adjust; * Sometimes a discrepancy between promised delivery and production needs (Chicago order)
Human Resources * No clearly identified human resource department and strategy * Low morale, low loyalty * Employee strike * Communication and cross-cultural issues
Internal Environment Profile
Table in Appendix A.

Casual Network Diagram
This is InnoBus Casual Network Diagram of internal analysis. Strengths marked by green and weaknesses by red. Please refer to Appendix A.

Strategic Position and Operational Effectiveness
The external and internal analysis provides us with solid knowledge of InnoBus opportunities, threats, strengths, and weaknesses factors. Now we are going to distinguish strategic position factors from performance objectives factors to find out whither InnoBus’ decisions that affect its performance objectives would match its strategic decision.
Slack and Lewis (2011) relate the external and internal factors of a company to its operational strategy and performance objectives. We will use this model to identify best matching of InnoBus capability and resource.
Strategic Position

Operational Effectiveness Short-Term Plan
Horizon Consulting would like to present to you a short-term plan that would assist InnoBus to convince the bank to withdraw its request for immediate repayment of the outstanding indebtedness.
Diagnosis
In the Diagnosis we would identify certain aspects of the situation as critical. The other aspects are out of control and cannot do anything of it. For example, high power of suppliers is threat that InnoBus cannot deal with it.
Thus, other critical threats that were the root cause of the problem and we are going to build our short-term strategy on them are: * Raw Material Cost * Technical Efficiency of Facilities * Effective operation control procedures * Employees Satisfaction * Effective Use of Incentives to Motivate Performance
Guidance Policy
Our Guidance through this plan is the market demand, which is the Strategic Positioning that InnoBus should consider. The Strategic Decision should * Rise the product Quality * Eliminate Waste * Minimize Cost
The Main Goal: to make the company attractive to the market. Thus, the bank can approve the plan.
Set of Coherent Actions
Raw Material Cost
Locating new suppliers with better conditions and delivery time can reduce Raw Material Cost and then the product price. The company is focusing on certain number of suppliers and needs to expand this number.
Technical Efficiency of Facilities
In order for InnoBus to eliminate waste of time and material, Technical Efficiency of Facilities should be improved by * Making sure that all parts and materials of assembly process are delivered just-in-time they are needed. * Improving Modular design that allows parts to be upgraded through products life
Effective operation control procedures
The company should improve its operation control procedures effectiveness to eliminate waste and time and reduce cost. by * Reduction in number of parts that are needed to produce * Shorten a number of working stations where processes are repeated or use the same equipment to perform assemble * Painting should be avoided on parts where it is unnecessary
Employees Satisfaction
To increase the product quality and eliminate of waste, InooBus should raise Employees Satisfaction by * Establishing safe and clear working environment.
Effective Use of Incentives to Motivate Performance
Effective Use of Incentives to Motivate Performance would eliminate waste of time and increase quality. * Assembly labor requirements” of Innobus required that production line must have 83 people to make the line operates. In this case this workforce must be 100 percent efficient, this means no talking, no smoking, no other actions not related with production. While each shift has 128 man, which leads to interactions between each others, this lowers the efficiency of production line. * We need to Keep assembly shop motivated with appropriate number of employees so that interactions stop * We should Fire 20 – 30 people at the same time increase the salary of remained workers proportionally. This will motivate the assembly line. Higher output will lead to a decrease of price of a produced item.
Competitive Advantages
Other Competitive Advantages that InnoBus has and will help to make the company more attractive to the market are * Ability to produce a low floor bus while competitors just started building prototypes. And so there is no competition yet. * Being first to start producing low floor bus and have experience over this field.
Long-Term Plan
Developing Marketing Strategy
Analyzing the product life cycle is essential because it can be an appreciated support in developing marketing strategy (Paul Peter et al., 2011). Figure 1 represents the concept of product life cycle. Peter points out that the product is approaching four stages in its life cycle: introduction, growth, maturity, and decline. Following the dimensions of each stage, we can conclude that traditional buses are in the end of maturity stage and approaching decline stage. Basic objectives are to limit costs or seek ways to revive sales and profits. Channels are limited. Promotion is minimal to keep costs down. All these three diminutions are representing decline stage approaches. However, product is to improve quality and add features to distinguish brand from competitors’ brands. Pricing is low, reflecting heavy competition. These two dimensions are representing maturity stage.

Figure 1: Product Life Cycle
Source: Peter (2011) A Preface to Marketing Management

Selecting Corporate Strategy
In order for InnoBus to find a good strategy that would help the company to cope with its current situation, Smith et al. (1991) points out several factors that must be considered.
Industry Strength and Corporate Strength:
We understand that the company is in the weak position comparing to other competitors, either financial or marketing position. Referring to the Planned Business Reports of 1998 and Georgetown Fuel Cell Study of 1998 the USA sales forecast for the next 5 years is growing slowly. Arthur Thompson et al. (1984) suggested that firm in the weak competitive position and slow market growth is more likely to adopt one or more of the following strategies: retrenchment, diversification, divestiture, and liquidation.
Objectives
Mr. De Koning is approaching a growth strategy. This was implicitly determined from his future goals. For example, Mr. Koning transferred the invention technology of low floor design to North America market to open new segment. In addition, he asks the factory planning to increase the factory capacity from 10 bus/week to 50 bus/week by reorganizing locations of production areas. Growth strategy will be a good selection.
Attitude of The CEO
Mr. Koning’s attitude is not explicit; however, we should assess that from his decisions. First, InnoBus CEO is managing to family firms, in Europe and Canada. Every two months Mr. Koning go to the Canadian firm for one week, which means he delegates most of his authority to the President, John Gillis and does not hold the decision to his own. Mr. Koning would be considered a risk lover because he always motivating the company toward producing low floor bus. Low floor bus is a new product that reflects small market segment. A good strategy to implement will be entering new risky segment.
Internal Politics
InnoBus employees at Canadian location form a coalition to strike against the company. If the CEO and managers could not dominate this coalition, the future strategic management process will be affected. The company must solve this problem to insure successful process. One potential strategy is to meet with the union and negotiate their necessities.
Financial Resources
InnoBus is in worst financial position and has very limited recourse of capital. This position will definitely permit its strategy selection. Less expensive strategy will be the best choice among strategies.
Skills
Field theory approach is a useful tool that managers are encouraged to use to develop employees’ skills across several products line. Therefore, managers need to analyze four topics. First, the products made. InnoBus is producing several lines of public transit buses such as 40 ft., 60 ft., electric trolley, and low floor. These many products would assist the company in several segments, but not new market. Thus, the company should take it under consideration. Second, the firm’s customers for these products are mainly the public transit authorities. Using a strategy that focuses on privet segment would make it difficult for the company to run the business immediately. Third, the products sold in both Canada and the USA. However, international market would be difficult for the company to do business in due to the shortage in capital. Future strategy should consider this point. Finally, value-adding skill. The company is working hard to develop its employees, so it sent many employees to Europe for training on the low floor design.
Familiarity With and Commitment to Previous Strategy
The company has experienced loos in sales for the last year, but the previous five years were profitable. Mr. Koning, as we mentioned, focuses on low floor bus and drives the production toward this segment. For example, he sent the engineers to Europe for training and sent 75 European employees to Canada to train them on turn Europe design into North America Design over the period of 2 years. The management attitude toward previous strategy is not obvious, but we could assume that they are very commit to and familiar with the previous strategy. When the company was producing traditional design, they did well. However, they loss sales when they tried to adopt the new technology of low floor. New strategy should consider replace key executives after extended period of poor performance.
Degree of External Dependence
InnoBus is fully dependence on the public transit authorities, which makes the decision- making rang and flexibility slighter. The new strategy should focus on certain product to carry out a full production line.
Competitors’ Reactions
InnoBus is considering a small and weak company whereas some of its competitors are very strong especially in 40 ft. bus product. Thus, the future strategy should assign the company in a segment that reduce the attractiveness of this move. For example, low floor and electric segments have fewer producers.
Stockholders’ Reactions
InnoBus is dealing with customers that are looking for lowest product price, so the new strategy should consider lowering production cost.
Timing
InnoBus is in need to change its future strategy in order to cover this year losses. The bank asked for immediate payment and Detroit Diesel asked for security position. Strategic window will not be longer open, so the company must react as soon as possible.

Justifying the selection
Decline Strategies – (Divestiture Strategy)
As we know, InnoBus is planning to shot off for the first 3 moths of this year to offer the least costly way of rectifying a problem of lack of orders. In addition, InnoBus is encouraged to adopt this strategy due to the change in technology from traditional design to innovational designs such as low floor, LNG, CNG, and electric. Decline strategy will assist the company to cope with its poor management over short-term reactions. This strategy also appropriates because InnoBus low floor and electric segments are more attractive than traditional bus design.
Diversification Growth Strategies – (Horizontal Diversification)
InnoBus is struggling from its current industry and products because of the lack of orders. The market is in the maturation point and approaching the decline point of product life cycle (justification of this finding will come in the developing market strategy section). In addition, the company has technological competitive advantage represented by low floor design, multipack system that saves lots of wiring system in the bus, and glowing of the shall. All of these reasons drive InnoBus to adopt the diversification growth strategy. The company will appeal to the same market (bus market) with new technological product (low floor) to seek growth, which means they should adopt horizontal diversification. Exhibit 1 represents the strategy change grid. Product | Market | Industry | Industry Level | Technology | New | Current | NewOrCurrent | Current | New |
Exhibit 1: Strategy Change Grid for Horizontal Diversification
Source: Smith (1991)

Implementing The Strategy
First, InnoBus should allocate itself in the low floor segment market, which is a new product and will give the company competitive advantage because it is first in the market. Other innovation in the existing products such as multipack system would help the company to reduce its cost.
Second, the company should continue sell its products in the public transit market because it is the largest market, but start concentrating in the low floor and electric segments. Both are low scale segments, but have high marginal.
Third, InnoBus should keep its efforts in the bus industry because they invent new technology that would keep the market growth higher than previous years. This is true due to the product life cycle concept.
Furth, Industry level should not be changed.
Fifth, InnoBus must spend more money in R&D to keep its first position in invention new technologies.

Evaluating The Selected Strategy
Is the strategy consistent with the environment?
Our selected strategy would meet the approaches that Mr. Koning preferred, which is invested in low floor design. This new segment would give the company a competitive advantage.
Is the strategy appropriate in the light of financial, physical, and human resource?
The company will not spend more money to produce low floor bus because they already produced it in the same location with the same human capital.

Contingency Plans
First
Identify Key variable, which is the innovation and R&D.
Second
Establish trigger points, which is turning to contingency plans if the company did not solve its problems within the time frame the bank gave to InnoBus to pay its obligations.
Third
Select the alternative strategy, which is the bankruptcy strategy in this case because they are now in the decline strategy. Business Plan

Backward Vertical Integration (produce as many component parts as possible to reduce from 60% outsourced)
Backward Vertical Integration (produce as many component parts as possible to reduce from 60% outsourced)
High Fixed costs from suppliers (60%) of costs
High Fixed costs from suppliers (60%) of costs
PRODUCTION ISSUES:
High/increased production costs
High/increased production costs

Upgrade inventory management system;
Upgrade inventory management system;
Delays in component deliveries
Delays in component deliveries

Customer dissatisfaction
Customer dissatisfaction

Standardize many of the specifications; convince customers of the desirability and saved costs
Standardize many of the specifications; convince customers of the desirability and saved costs
High number of customer specifications (average of 3,000)
High number of customer specifications (average of 3,000)

Inventory issues, (two-bin system) inventory build up, inefficient ordering
Inventory issues, (two-bin system) inventory build up, inefficient ordering

PROBLEMS SOLUTIONS

Improving Production Performance:
The Balanced Scorecard:

Over the years, several performance measurement tools have been developed to address quality issues. One such performance management method is the Balanced Scorecard approach promoted by Norton and Kaplan (1996, 2000, 2001), especially after Norton and Kaplan included strategy maps with the system. The Balanced Scorecard helps the organization to recognize its value-creating processes and the roles in the organization regarding intangible assets. Norton and Kaplan argue that this modern age of information technology requires new competencies for success. The ability of a company to exploit its intangible assets has become “far more decisive than investing and managing physical, tangible assets” (p. 3). They also argue that the BSC "moves beyond a performance measurement system to become the organizing framework for a strategic management system" (1996, p. 22).

The Scorecard is more than just turning a strategy into action; it is a daily management system (Ghosh and Mukherjee, 2006). To enhance the Scorecard’s effectiveness, Norton and Kaplan created (2000, 2001) a visual map to “see” the strategies in use, showing “how an organization plans to convert its various assets into outcomes” (Norton & Kaplan, 2000, p. 5). They refer to their models as strategy maps which are an illustration of the cause and effect connections between measures and their objectives, also known as key performance indicators as found in the Balanced Scorecard. The chart above is a typical one found in a general for-profit organization.
Another performance measurement tool is Six Sigma, which applies continuous improvement methods, tools and statistics to the organization. The goals of Six Sigma are to improve customer service and quality, reduce errors and increase productivity. An adaptation of Six Sigma is Lean Six Sigma, which combines the ideas of lean manufacturing, and Six Sigma, which focus on quality. Six Sigma is a statistical tool first developed to help reduce errors in manufacturing processes. However, the application of Six Sigma has been widened to any process within an organization that results in output in goods or services. While many people might think that Six Sigma is just a statistical tool, if implemented properly, it would be a much broader management technique.
Mathematically, six sigma refers to the things that fall within plus or minus six standard deviations. Six Sigma uses statistical analysis so that the variations in processes could be reduced. So, the Six Sigma tool is a data based quality measure. With Six Sigma, you-- * Measure – Gather the right data to accurately assess a problem. * Analyze – Use statistical tools to correctly identify the root causes of a problem. * Improve – Correct the problem (not the symptom). * Control – Put a plan in place to make sure problems stay fixed and sustain the gains. Tannenbaum 2009, p. 1)
Fundamentally, then, Six Sigma is a measure of the number of defects in a specific process or operation. In every process, there will be opportunities for a defect to take place. These numbers do not really mean anything without some sort of scale to understand how they translate into acceptable number of errors in a process. Motorola set up the following scale.
Five Sigma = 233 DPMO, or 99.98% defect-free
Four Sigma = 6,210 DPMO, or 99.4% defect-free
Three Sigma = 66,807 DPMO, or 93.3% defect-free
Two Sigma = 308,538 DPMO, or 69.1% defect-free
One Sigma = 691,462 DPMO, or 30.9% defect-free

Heavey (2012) argues that when companies combine both the Balanced Scorecard and Six Sigma, they can “crystallise how a fusion can add further value in comparison to a standalone implementation of either the BSC or Six Sigma” (p. 108).

Marketing Strategy For A Mature Industry:
Concentration Strategy
Smith suggests that as part of a mature industry, Innobus pursue stability, so it should pursue growth non-aggressively through market penetration and product development with the slow introduction of new products (Smith, p. 257).
Improving current products or markets
Product Development
The company should continue to pursue promoting its low-floor bus design. It should also develop further innovations through its integral system and promote the value to customers of more standardization in specifications to reduce costs and add value for them.
Market penetration
Seeking growth through more aggressive marketing strategies. The company needs to develop an aggressive marketing campaign that highlights its innovation in the bus-manufacturing sector. In some market segments, it should also aggressively promote its European characteristics, especially in a market like Quebec that is loyal to European values and qualities. Innobus has many “firsts,” and this should also be emphasized. Additionally, its technology transfer from a highly regarded Dutch firm should be emphasized.
Market Development
Seeking new markets with current products (Quebec, China, Saudi Arabia) Low floor in Quebec. Quebec is more steeped in European tradition. The “European” style bus could be an advantage in this market. Low floor in China and Saudi Arabia (Either through a partnership, joint venture or transfer of technology leasing agreement) Because China is such a huge population; focus on articulated buses, low floor, and Electric Trolley – Quebec and China.
INTEGRATION STRATEGY
Backward vertical integration is attractive in a mature industry if “there is uncertainty regarding availability, cost or reliability of deliveries of future supplies” (Smith, p. 256). The delay in parts delivery was one of the main causes of Innobus failing to deliver their Chicago contract in a timely way. This circumstance could easily be the cause of lost orders; the bus industry is relatively small and news of a failed delivery of a major contract would travel quickly throughout the industry. Backward integration, according to Smith, can be a powerful way to ensure suppliers are committed to quality performance. Sears and Roebuck have been able to control supplier reliability over the years by having part ownership of supplier companies.
The company should also begin manufacturing some of its various critical components instead of outsourcing. For example, the roofs to the buses are manufactured elsewhere. Surely, the Innobus plant has the ability to manufacture these roofs on their own. They should seek to discover how many critical parts could be manufactured on site. This would reduce costs and decrease reliance on outside vendors, who may or may not deliver on time. It appears that the use of outside vendors is deeply entrenched in the bus industry. Innobus has already introduced innovation with its integral system, its low-floor design and multiplex program. Innobus should push hard for changes in the traditional system. It has nothing to lose and much to gain.
HUMAN RESOURCE MANAGEMENT
General HR
Innobus needs to have a paradigm shift in its relations with human resources to a resource-based view of an organization where internal knowledge and skill are seen as an important source of competitive advantage. Another is the human capital theory, which argues that companies need to protect and advance their human resources through training and development. “Competitive advantage is secured when organizations have skills and capabilities that are unique, difficult to replicate and imitate by competitors” (Garavan, 2007, p. 3). Garavan proposes a model of SHRD based on nine characteristics, including: the integration of HRD activities with organization mission and goals, the involvement of line managers in the design and delivery of HRD, the implementation of complementary HRD activities that reinforce the contribution of HRD and the alignment of HRD with organization culture and values.

Additionally, Garavan urges management to not only think of human resources at the organizational level, but to consider the “resources of humans” at the individual level. At the individual level, HR is concerned with developing human potential and emphasizes learning, job satisfaction, career management and individual experience (Garavan, et al, 2004, p. 4). With the individual approach, human resources are viewed as individuals in “search of meaning and fulfillment” (Garavan, et al, 2004, p. 4). * * * * * * * *
Referenses
* Hitt, Michael A., Ireland, R. Duane, and Hoskisson Robert E. (2009) Strategic Management: Competitiveness and Globalization (Concepts and Cases), 8th edition, Mason: South-Western Cengage Learning. * Campion, M. A. (1991) ‘Meaning and Measurement in Turnover: Comparison of Alternative Measures and Recommendations for Research’, Journal of Applied Psychology, Vol. 76, No. 2, pp. 199-212. * Panagiotou, G. (2003) ‘Bringing SWOT Into Focus’, Business Strategy Review, Vol. 14, No. 2, pp. 8–10. * Dacin M. T., Oliver C., and Roy J. P. (2007) ‘The Legitimacy of Strategic Alliances: An Institutional Perspective’, Strategic Management Journal, Vol. 28, No. 2, pp. 169-187. * Arthur A. Thompson, Jr., and A. J. Strickland III, Strategic Management: Concepts and Cases, 3rd ed. (Plano, Tex.: Business Publication, 1984), p. 97. Copyright 1984 Business Publication, Inc. * Peter, J. Paul and Donnelly, H. James, A Preface to Marketing Management, 12th ed. (McGraw-Hill Companies, 2011), p. 88 – 90. * Smith, Arnold, and Bizzell (1991), Business Strategy and Policy, Houghton Mifflin Company. Boston. * Smith, K. Six Sigma for the Service Industry. (2006). Quality Digest. 2(4). p. 3-11. * Garavan, T.N., McGuire, D. & O’Donnell, D. (2004): “Exploring Human Resource Development: A Level of Analysis Approach” Human Resource Development Review, 3(4). p. 417 – 441 * Garavan, T. (2007). A Strategic Perspective on Human Resource Development. Advances in Developing Human Resources. 9 (11). p. 11-30. * Ghosh, S. and Mukherjee, S. (March 2006). Measurement of corporate performance through balanced scorecard: an overview. Vidyasagar University Journal of Commerce Vol. 1, p. 64-67. * Heavey, C. Eamonn Murphy, (2012) "Integrating the Balanced Scorecard with Six Sigma", The TQM Journal, Vol. 24, No. 2, pp. 108 –122. * Kaplan, R. and Norton, David. The Balanced Scorecard. President and Fellows of Harvard College. 1996. * Kaplan, R. and Norton, David. The Strategy Focused Organization. Harvard Business School Press. 2000. * Tannenbaum, K. (2009). Applying Six Sigma Methodology to Energy-Saving Projects. Dow Chemical Company. The Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy. * Smith, G. D., Arnold, D. R., and Bizzell, B. G. (1991), Business Strategy and Policy, 3rd edetion, Houghton Mifflin Company, Boston. * Slack, Nigel and Lewis, Michael. (2011), Operation Strategy, 3rd edetion, Pearson Education Limited, Harlow. * * * * * *
Appendix A : Environmental Profile
External Profile
Macroenvironmental

Environmental Factors | Significance to InnoBus | | Opportunity | Neutral | Threat | Intense customization of final products | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Government regulations | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Buses generally have a life of 12 to 15 years | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Highly competitive in the city public transit (40 foot) segment | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Recession causes lower orders | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Waiting for new emission standards | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Irregular order | +3 | +2 | +1 | 0 | -1 | -2 | -3 | A very conservative market | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Customization | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Pricing is similar across companies in the 40 ft. segment | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Less competition in the electric trolley segment | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Declines in work-related commuting | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Technologies adding to complexity | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Profit margins in decline | +3 | +2 | +1 | 0 | -1 | -2 | -3 |

Task Profile

Environmental Factors | Significance to InnoBus | | Opportunity | Neutral | Threat | Competitors’ goal is to enter the low floor segment | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Low floor design meets the individual customer’ requirements | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Selling new design to the public | +3 | +2 | +1 | 0 | -1 | -2 | -3 | The procedure of making public procurements focuses on price | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Cost of raw materials | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Barriers to entry are high | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Threat of substitutes is low | +3 | +2 | +1 | 0 | -1 | -2 | -3 |

Internal Profile

Environmental Factors | Significance to InnoBus | | Strengths | Neutral | Weaknesses | Functional/machine structure | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Hierarchical decision making and communication | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Sixty percent of parts/components come from outside vendors | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Integral concept | +3 | +2 | +1 | 0 | -1 | -2 | -3 | 60% of manufacturing has to be “American Made,” | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Two-bin inventory system | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Production starts before engineers have refined design issues | +3 | +2 | +1 | 0 | -1 | -2 | -3 | MRP program for purchasing | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Six months before production can start on any order | +3 | +2 | +1 | 0 | -1 | -2 | -3 | On-time deliveries have become an increasing problem | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Fixed costs of critical parts | +3 | +2 | +1 | 0 | -1 | -2 | -3 | More flexibility with less critical parts | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Very bureaucratic, old-fashioned, conservative structure | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Parts have to be customized by suppliers | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Employees had to be retrained with European design and integral system | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Discrepancy between promised delivery and production needs | +3 | +2 | +1 | 0 | -1 | -2 | -3 | No clearly identified human resource department and strategy | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Low morale, low loyalty | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Employee strike | +3 | +2 | +1 | 0 | -1 | -2 | -3 | Communication and cross-cultural issues | +3 | +2 | +1 | 0 | -1 | -2 | -3 |

Causation Network Diagram