Case 7-4 Aloha Products (Summary)

ALOHA PRODUCTS Aloha products is an over a century existing coffee seller that deals with a wide range of customers. Top management is regulated by the members of the founding family. Company uses centralized control system where all main decisions regarding purchases, production, sales, marketing and promotion are made on corporate level while plant managers are only responsible for their profit and loss. Also there is centralized preparation of overall financial statement at home offices. This organization has led plant managers to a lack of adequate control over the activities of the managed plant; however, they are still assessed on the performance. This is unfair in view of managers position as even though they have better knowledge what inputs are required for generating highest outputs for the specific plant, they do not acquire any voice in decision process. Also very important to take into consideration what exact strategies company wants to pursuit. As now it is not very clear if they want to be low-cost producer for the broad consumption needs or be high-quality producer targeting specialized customers. If the strategy of the company is to be a low-cost coffee producer, plant managers should be given more freedom and control over the purchase and production activities in their plants. They would be set as profit centers since they would have the responsibility of purchasing and producing. As they are more closely to the whole process, they have more insight what would be the best for the plant. Moreover, in the case of low-quality coffee beans requirements, the plants could have their own purchasing units that would look for opportunistic sales on the current market. Thus, the purchasing departments would not be required to have a deep insight in the complex market of coffee beans. On the other hand, the coffee industry is very sensitive to environmental effects and depends on seasonal harvest. In addition, the complexity of the coffee bean's... Abstract On 28 April 1988, Aloha Airlines Flight 243 experienced structural failure and consequent explosive decompression at 24,000 ft. over the Pacific Ocean while en route from Hilo to Honolulu, HI. The flight crew enacted appropriate contingency procedures and was able to safely land the aircraft at Kahului Airport in Maui. During the event, an 18ft. section of the fuselage skin had separated from the aircraft. The study of this accident and the safety issues identified as a result are classic examples as to why safety programs are so important in the Aerospace Industry; particularly during the Operational Phase of an aircrafts life cycle. Some of the key safety issues identified are the execution of Aloha Airlines maintenance programs and their subsequent oversight by the Federal Aviation Administration (FAA), human factor aspects to include the repair procedures, training, management of, and qualifications of mechanics and inspectors, and the critical oversights during the design phase of the B737 by Boeing Aircraft Group (BAC). Aloha Airlines Flight 243: An Accident Synopsis On 28 April 1988, at 1346, a Boeing 737-200, tail number N73711, operated by Aloha Airlines identified as flight 243 (NTSB, 1989, Pg. i.) suffered a structural failure and explosive decompression at 24,000 ft. The aircraft was on its fifth flight of the day accomplishing the usual short hops between the Hawaiian Islands en route form Hilo to Honolulu. There were two pilots, three flight attendants, a FAA observer in the jump seat, and eighty-nine passengers on board. At the moment of the rapid decompression, a flight attendant was literally sucked out of the fuselage and was never found and presumed dead. Seven passengers and one flight attendant suffered serious injuries. The rest of the souls on board were unharmed aside from the shock of the accident. The flight crew was able to exercise the appropriate contingency procedures and land safely on the island of... Question 1: Evaluate the current control systems for the manufacturing, marketing, and purchasing departments of Aloha Products From the case we can see that Aloha products has a centralized control system. What this means is that the main office or headquarters handled the purchasing, marketing and sales activities of each of the three plants. The problem with this was that the individual plant managers had no control over any of the major activities in their respective production facility. For example the plant managers do not have control over the purchase of the unprocessed green beans this responsibility is left to the special purchasing unit within the company. In addition to this, they also have responsibility for the product mix. Although having a centralized purchasing center is beneficiary in that it saves

costs, the individual production plants are evaluated on the basis of their performance. The company is structured on a cost basis; however the control system is attempting to measure each plant on a profit basis. This type of structure is an unfair way of measuring the performance of the individual production plants. Question 2: Consider the companys competitive strategy, what changes, if any, would you make to the control systems for the three departments? Purchasing department: As mentioned above, the centralized purchasing department is a great strategy to employ when establishing low cost. Requiring each plant to have their own purchasing department would require too many duplicated tasks as well as unnecessary overhead costs involved. Recommendations: 1) Do nothing, leave the purchasing department the way it is now 2) Give each plant their own purchasing department 3) Integrate the central purchasing department as an extension of each plant. Each plant will give their requirements to the purchasing department, thus creating more integration. Each plant will have more control over the inputs needed....