Flextronics Case Analysis Team Member: Kerry Cunningham, Feng Hu, Tian Tian, Shuo Zhang Nov. 5th 1. Cause of McCuster’s Dilemma Several organizational factors haves contributed to McCuster’s dilemma: First, the Flextronics’s decision makers failed to appropriately evaluate the ability and condition of the organization in bidding for Xbox project and assigning tasks. While it is enticing that this project would bring about good reputation as well as substantial financial gain, decision-makers should consider more than financial benefit1.
Managers are paid to make good decisions not risky decisions or conservative decisions1: Flextronics decision makers was too optimistic about the project so that they promised Microsoft the IT solution Flextronics did not have yet despite the fact that it was Flextronics first global project and first foray into sophisticated software. This promise has put Flextronics in risks since now it has trouble coming up with the IT solution.
Although group and external pressures (social, political, economic) impact the alternatives we select and biases we have in decision-making1, in Flextronics case, Flextronics could gain cutting edge and good fame from the succeed of the project, and many parties are closely watching this project, decision makers still needs to be objective when making decisions While Xbox project needs the two facilities designated to work closely, decision makers assigned the project to Mexico facility and Hungary facility, two groups that are both geographically and relationally distant.
This decision has led to ineffective communication between the two facilities. Second, Flextronics’s CEO’s over stress on culture decentralization and the fact that Flextronics’s acquisition led to culture acquisition caused lack of communication1 and trust1 between facilities. Lack of Communication has led to different systems in two facilities. The two plants function separately and have their own respective cost control, this leading to conflict about which system to adopt.
If the Hungary facility has communicated with the headquarter about which system to adopt in the first place, the headquarter would probably have suggested Hungary facility to adopt Datasweep like Mexico facility did, and Flextronics would not have this dilemma at all. Now that the facilities are having problem in switching system, they still refuse to trust each other’s system, they are even unwilling to communicate with each other about the system. This lack of trust and communication has worsened Flextronics’s situation. 2.
Criteria in Decision Evaluation The most prior criterion in decision evaluation is whether the ultimate decision enables Flextronics to make profits in the long run. Since profit enables enterprises to survive and developlast. Profit is also the reason for the establish profit oriented enterprises. However, in individual tasks such as Xbox project, the priority may be developing cutting edge and enhance reputation rather than financial gain, but this project would be valueless if it cannot bring about financial benefit in the long run.
The second most important criterion is customer satisfaction. In this case, customer satisfaction means whether Flextronics produces Xbox in good quality, right quantity, with reasonable price, and in timely manner. Flextronics also needs to meet Microsoft’s requirement in system adoption and production control. As Microsoft is an important customer and the project’s success could bring about substantial benefit for Flextronics, it is important to stick to the contract with Microsoft. Another important criterion would be whether the ultimate decision leads to good team work.
Now that the Hungary facility and Mexico facility have inconsistency in production and refuse to compromise, decision makers need to come up with a solution to involve the two facilities in close cooperation, which is the key to success in launching Xbox in two markets at the same time. As good teamwork in Xbox would lead to enhanced work efficiency and good example for future projects, it is important for decision makers to let the two facilities willingly reach an agreement. 3. Actions to Take In order to satisfy the criteria mentioned above, Mr. McCusker should take the following actions before he reaches a decision.
First of all, in order to make sure the company can benefit from this project, he need make comprehensive analysis on every aspect including costs, potential profit, customer satisfaction and future influences on market share of all those three possible scenarios. The first decision alternative is putting Datasweep in both Mexico and Hungary. This fits to both the philosophy of Mark, the CEO of Flextronics and the requirement of Microsoft. Moreover, Datasweep is a scalable solution over Visual Factory, thus facilitating future projects on a global view.
On the other hand, the cost is a big issue. Besides, the uncertainty to operate the new system may disorder the normal operation for Hungarian for a period of time. Well, decision-makers should consider more than financial benefit1. As this is a global project, McCusker should view it as a whole. If this solution does meet the criteria of the company, those two branches should share the total cost and profit. Furthermore, the Mexico factory should send some engineers who are familiar with Datasweep to Hungarian to make it operate well as soon as possible.
Because the Xbox will be built first in Mexico, there is still some time for Hungary to adopt the new system. In this case, Flextronics will become more and more global-orientated and get ready for tremendous future projects. However, there is still some uncertainty exists, because the management team in Hungary is self-important. They are quite unwilling to switch and would only do so if the CEO commanded. They may have some psychological issues which will have bad effects on carrying on the project. The second one is to set up Visual Factory in Mexico.
It will save a lot of money, which is a big issue in this industry. This system has been well self-customized by the Hungarian team and they believe that they have already discovered and fixed most of the bugs. But the fatal defect is that Visual Factory has no credibility outside of Hungary. It is extremely hard to convince Microsoft and the executives and IT team of Flextronics to trust this new system. Moreover, because of the build of Xbox starting from Mexico, time is another critical issue. The third option is allowing each branch uses their own software system. This will benefit both plants without any risk.
Nevertheless, there is also a fatal drawback of this option that is it can hardly meet the basic requirement of Microsoft for a single software platform. What’s more, it lacks global synergies which will be a barrier for Flextronics to develop in the long run. The second action McCusker should take is talking to Michael Marks, the CEO of Flextronics, putting all three options and all the pros and cons of them according to the comprehensive analysis and asking for his advice and even help. In this case, this is indeed needed, though it is not recommended to refer to boss for help.
Because this is a global project which need close cooperation of the big two branches, it’s hard for McCusker, the project manager, to deal with those senior executives. Furthermore, Humphrey Porter, president of Central Europe, and his team even claimed that they would switch to Datasweep only if Michael Marks ask to do so as an order. In this case, without the approval of Michael Marks, it’s useless for McCusker to reach any decision. The third one is to hold a conference with all the key people including Humphrey Porter, Matt Ryan, Jim McCusker, Mike Webb, Robert Dykes and Michael Marks.
Because one of the biggest problems of Flextronics is lack of communication, this conference will help those key people in this project to know the situation better and build trust and familiarity among them1. After they consider and discuss all the pros and cons of every option face to face without any communication barrels, they stand a good chance to reach an optimal decision. A good teamwork among different branches would also benefit a lot for the future development of Flextronics as a global company.