Vertical Integration Options for Ray-Ban Glasses
1. You are tasked to build a proposal to convince your CEO and Board of Management that they should consider vertical integration as a future company strategy. To build your proposal, you need specific answers to the following.Recommend a list of at least 3 specific vertical integration options available to “Ray-ban Glasses”. For each vertical integration option you recommend, justify and argue your reasons why you think your recommended options are practical and match “Ray-ban Glasses” existing portfolio and strategy. For each vertical integration option you recommend, justify and argue your reasons why you think your recommended options are advantageous for “Ray-ban Glasses”, and why your Board of Management should invest in your recommended options.Explain potential risks related to each vertical integration option you recommend. For each vertical integration option you recommend: Describe what specific managerial policies and strategies you will implement in “Ray-ban Glasses” to ensure success for your recommended options. Describe what specific managerial policies and strategies you will implement in “Ray-ban Glasses” to ensure risks are managed and minimized for “Ray-ban Glasses” for your recommended options.
2. Select one service or one product offered by “Ray-ban Glasses”: Identify what characteristics define ‘quality’ for this particular product / service; Identify specific techniques and specific tools you will use to improve the quality of this product / service. Explain why the techniques and tools you have identified are suitable to improve the quality of this particular product / service. (6 Marks)
3. JIT, TPS and Lean Operations are all philosophies of continuous improvement. For the product service you selected in Q2, list and briefly describe “Ray-ban Glasses” operations related to this particular product / service. Choose one of the philosophies that you think is most suitable for improving “Ray-ban Glasses” operations specifically for the product / service in Q2. Explain and justify your reasons for why you think your choice of philosophy is correct for this particular product/service.How will you implement your philosophy in “Ray-ban Glasses”?
4. Looking at the specific nature and the characteristics of the industry in which “Ray-ban Glasses” operates, answer and explain the following statement specific to “Ray-ban Glasses” operations:“Competition is no longer between companies but between supply chains”.
Ray-ban can achieve advantage in this rigorous competitive market by implying the vertical integration to its system and this will lead to completion of all the tasks effectively and efficiently. There are three options of vertical integration for Ray Ban. These are Forward Integration. Backward Integration and Balanced Integration. In forward integration, Ray Ban would integrate forward with its distribution channels (Sarac, Absi & Dauzère-Pérès, 2010). In backward integration, Ray Ban would integrate backward with its suppliers. In balanced integration, the company would integrate in a limited manner with both suppliers and distribution channels (Atalay, Hortaçsu & Syverson, 2014). The justification and arguments for each of these options can be discussed as:
Justifications and Advantages of Vertical Integration Options for Ray-Ban Glasses
This integration is matching Ray-Ban existing policies as they always want to serve customers with premium experience. Product Development will help in enriching customers experience with Ray-Ban. The above integration will entice Ray-Ban performance as it gives separate integration for product development via which more customer-oriented products can be designed. The risk involved with this option is the high cost due to expand product designing integration that will lead to increase in existing price (Atalay, Hortaçsu & Syverson, 2014). This risk could be minimized by creating strong advertisements of Ray Ban products. The management policy and approach of initial investment can work here.
Ray-Ban always wanted to expand their market size and with the help of distribution channel, they can cover wholesale, retail and e-commerce market effectively. It will help in keeping the track of logistics which lead to avoidance of shortage. Distribution channel will cover wholesale, retail and ecommerce market that allows Ray-Ban to expand market size. With this integration there would be an increased risk of inventory management and procurement as Ray Ban would have to manage inventory (Rangrang & Shiyu, 2016). The cost of inventory holding can also increase. The risks with this approach can be mitigated with the use of inventory management functions like Just in Time and lean management. The management policy and approach of establishing partnership can work here.
In this case, Logistics department will maintain balance between their existing and new portfolio. Balanced Integration will prove as an advantage in order to run ad campaign that could balance with their product portfolio and also lead to cover all the dimensions of market by keeping track of logistics and distribution simultaneously. The risk involved with this approach is the lack of control and Ray Ban would not have control over its partners, suppliers, etc. This risk can be managed with the use of services from external consultants that would guide the organization with the best practices of balanced integration (Atalay, Hortaçsu & Syverson, 2014). The management policy and approach of partnership is recommended here.
- Its utility defines the quality as this shade can be used by both, male and female. This increase the market size of this product. Frame of this sunglass is made up of metal that embarked the experience of quality premium product. This unisex product has unique styling and shape which act as a silence tool of marketing for this particular product.
- Techniques and tools to improve the quality of this products are -:
- Run strategize ad campaign to tap both men and women.
- Compare sales with Cause and effect diagram.
- Launch production line for smaller frames of the same product.
- Add black and blue color to this product line
- Introduce kaizen for this product.
- Above stated techniques are suitable because-:
- Cause and effect chart will help in evaluate ROI of sales promotions to sales.
- Kaizen will minimize the production time and increase productivity.
- Launching of colors and sizes will help in expanding customer base.
- Ray ban usually follows Forecasting method in their production and same they are doing for Ray-Ban RB3025. In this, Ray-Ban forecast the sales of their products with the help of previous data and experience and manufactures products accordingly. In this a specified number of units have been mentioned before production regardless of the reserves for under production or over production.
- I would like to recommend JIT for this particular product because if we chose to immigrate this product in premium category then by JIT two benefits can be achieved-:
- Save stock storage/stock wastage cost.
- Deliver the premium experience to customers by holding its limited stock.
- With the help of following steps , JIT can be implemented to Ray-Ban Glasses
- Supply Chain Establishment
– Develop strong relationships with suppliers in order to work with them in lieu of on-time delivery and they can help to achieve a tight schedule. Suppose any retailer is facing issues with the product availability and wants to discontinue product franchise then it would result into losses but when good relationships maintained then suppliers can put extra efforts to keep a pace with tight schedule (Razmerita, Kirchner & Nabeth, 2014). - Entice Transparency
– Upfront with customers about the inventory planning and specify time window to meet requirements but condition to retain customer is to provide quality sun glasses. This will help in building the mindset of the customers about the time frame regarding the availability of the products and also acts as a relationship tool in disguise (Macchion, Fornasiero & Vinelli, 2017). - Outsource managerial resources
– To increase the operational efficiency, hire an expert to watch out the activities so that operations and productions can be executed smoothly. This will reduce the chances of failure in SCM and helps in gaining effective results (Roh, Hong & Min, 2014).
This statement is totally apt that now “Competition is no longer between companies but between supply chains”. Ray-Ban biggest competitors are Costa and Oakley. Down to the line all of them are sailing in same boat in terms of prices and marketing which eventually lead in building same customer base category. In this scenario, competitive advantage can be gained by reducing production cost and this is directly dependent on the efficiency of supply chain (Macchion, Fornasiero & Vinelli, 2017). The more any company is able to reduce the production cost, eventually they are widening the window of allocating budget towards advertisement, sales promotion or launching new product line and this will lead to imparting enriching experience to customers over their competitors. The competition is actually between supply chain because effective and efficient use of supply chain helps organization to focus on productivity and reduce cost for consumers. In the glasses industry where Ray Ban operates, there is actually very little product differentiation as consumers are price sensitive. Therefore, supply chain management provides a platform to consumers to actually create a differentiation in the market. With the effective SCM, company can cope with the business conflicts in a better way (Macchion, Fornasiero & Vinelli, 2017). No business runs smoothly and conflicts may lead to issues in the production line and this may create the opportunity for competitors to acquire the market share but with an effective SCM, company can spot an alternative in no time and hence protects their existing customer base.
References
Atalay, E., Hortaçsu, A., & Syverson, C. (2014). Vertical integration and input flows. American Economic Review, 104(4), 1120-48
Macchion, L., Fornasiero, R., & Vinelli, A. (2017). Supply chain configurations: a model to evaluate performance in customised productions. International Journal of Production Research, 55(5), 1386-1399.
Rangrang, B. A. I., & Shiyu, T. A. N. (2016). R&D Mode, Vertical Integration and Innovation Performance of Indigenous Brand in the Introduction Period. Journal of Management, 4 (7), 111 – 114
Roh, J., Hong, P., & Min, H. (2014). Implementation of a responsive supply chain strategy in global complexity: The case of manufacturing firms. International Journal of Production Economics, 147, 198-210.
Razmerita, L., Kirchner, K., & Nabeth, T. (2014). Social media in organizations: leveraging personal and collective knowledge processes. Journal of Organizational Computing and Electronic Commerce, 24(1), 74-93.
Sarac, A., Absi, N., & Dauzère-Pérès, S. (2010). A literature review on the impact of RFID technologies on supply chain management. International Journal of Production Economics, 128(1), 77-95.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
