Aero_Gear_Q&As - AERO GEAR CASE STUDY Q UESTIONS...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
AERO GEAR CASE STUDY QUESTIONS AND ANSWERS 1. “What kind of company is Aero Gear? What is their competitive position at the time of the case? Are Aero Gear’s product commodity products or are they designed to customer specifications? Aero Gear is a small precision machining company primarily supplying the aerospace industry . Almost all of Aero Gear’s products are unique, produced to specifications provided by their customers. Aero Gear has been experiencing competitive pressure due to three factors. (1) Fierce price competition as engine and jet aircraft manufacturers fought for market share led to increased pressure for cost reductions from their suppliers, including Aero Gear. (2) Local sourcing of significant portions of manufacturing became a precondition for winning engine and jet aircraft manufacturers winning bids from foreign customers. 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Acquiring high paying jobs and acquiring or maintaining precision manufacturing capabilities was increasingly important for the governments making procurement decisions for their national airlines and military. U.S. suppliers must therefore provide a compelling reason why “their” portion of the production should not be outsourced to a foreign supplier. (3) Cost reduction is particularly challenging for Aero Gear because they are located in Connecticut, a state with a relatively high cost of living and high wages. 2. Why did Doug Rose decide to make a transition to lean business practices? What goals did Aero Gear establish for its lean business practices? In traditional batch and queue production settings, improvements in quality or delivery come at a higher cost. With lean, quality, delivery and cost can be improved simultaneously. Aero Gear could offer its customers faster delivery and higher quality at a lower price. They could make up for high labor cost by reducing indirect costs and/or offering better quality and delivery terms. The scope of the case could be expanded to evaluate Rose’s 2
Background image of page 2
the most part Aero Gear’s products are not standard parts, they are custom parts built to customer specifications. Thus a move to higher value-added cannot be achieved simply by moving from standard parts to custom parts. In choosing a lean transformation, Aero Gear is attempting to gain competitive advantage through process excellence. Another strategic approach would be to emphasize relationships with suppliers, partners (especially foreign partners) or customers more than internal processes. Yet another approach would be to consider its position in the value chain. Aero Gear could try to move into design as well as production, designing and producing parts to meet customer’s performance requirements rather than bidding on parts designed by customers. They could put greater emphasis on sub- assemblies rather then producing stand-alone parts. Of course, neither of these alternative suggestions would preclude a lean transformation. 3. Evaluate the Department Performance Report
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/07/2011 for the course BUS 209 taught by Professor Z.gougoumanova during the Spring '11 term at American University in Bulgaria.

Page1 / 15

Aero_Gear_Q&As - AERO GEAR CASE STUDY Q UESTIONS...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online