Clear_Hear__Revenue,_Cost_Concept_and_Market_Structure

Clear Hear 1 Running Head: Clear Hear: Revenue, Cost Concept and Market Structure Clear House -Revenue, Cost Concepts and Market Structure Crystal Robinson University of Phoenix-Birmingham Campus January 11, 2009 Clear Hear 2 Introduction Recommendations to Increase Revenue With the growing need for mobile operators to rapidly launch new services and applications, and with increasing pressure for device manufacturers to speed time to market of their latest handsets, Mobile Software Management (MSM) promises new opportunities for the mobile ecosystem to increase revenue, create brand loyalty and improve the mobile user experience. Clear Hear should look towards developing a product that is in high demand by the market. The global market intelligence and advisory firms are finding that Mobile Software Management can create new revenue opportunities for mobile operators, device manufacturers and software developers (Newscom, 2009) Mobile Software Management (MSM) can offer compelling advantages for the mobile ecosystem with the benefit of additional revenue streams in selling applications, software and services as well as improvements in the user experience of mobile devices. These factors, along with giving consumers greater control over personalizing their mobile phones, can all translate into higher consumer satisfaction, resulting in a more dedicated following in the highly competitive mobile market (Stephen D. Drake, 2009). While Clear Hear offers a more advance feature model phone, Clear Hear should conduct a market research to make sure these features are desired by the consumers they are marketing to. If the phone has features that the customer doesn’t use, can’t understand how to use or not interested in using, then this will hurt the sales of the model. Customer want purchase a phone they can use or doesn’t appeal to them. Clear Hear 3 Studies found that owners who send and receive e-mail and text message alerts, take and send photos and videos or download music files on their mobile handsets have an average reported monthly service bill of $77. This compares to a reported average monthly service bill of $63 among owners who do not actively use these features on their cell phones. In addition, customers who most frequently use their cell phones for non-voice applications typically spend nearly twice as much for their current handset than do customers who do not use non-voice applications ($70 vs. $37, respectively). Studies also found, that photo applications—taking, sending and receiving pictures—are particularly popular among wireless owners, as 34 percent of customers report using this feature. This marks a considerable increase from 2005, when only 19 percent of wireless customers reported using photo applications. Speakerphone capabilities are also popular among customers, with 34 percent using this feature—up from 26 percent in 2005. Other handset features that are most frequently used among wireless customers include: send/receive short text messages (26%); gaming (13%); Bluetooth capabilities (11%); download/use ring-back tones (9%); picture messaging/e-mail (9%); surfing the Internet (8%); and instant messaging (8%). As cell phones become more complicated, it’s going to be critical for manufacturers and wireless service providers to educate their customers on how to use these new services and features,” said Parsons. “Making it easier for customers to learn how to operate specific products and services can increase satisfaction as well as promote future purchases of value-added products and accessories (Kirk Parson, 2009) Clear Hear 4 Achieve Ideal Production Level To achieve ideal production levels, Clear Hear should incorporate information technology that can extend the reach of technical experts and better ground high level business decisions in the scientific evaluation of assets. Flex workflow automation systems will take technical productions application at the engineering level and will put them in a computing environment where they can be integrated with business process management systems to create an automated asset level work flow. A. this would produce a more efficient production operation. B. less personnel time required to complete repeatable production task C. better incorporation of uncertain ties into business level decision and D. most important is the increase of overall cell-phone production By using the workflow automation Clear Hear will be able to optimize production and integrate business and technical task into efficient automated workflow. Clear Hear will be able to automate simple, yet time consuming manual steps of cell-phone production. Fixed and Variable Cost and Maximize Profits Clear Hear will use a practical framework that considers two crucial factors: their “current relationship” with their customers, and their “capacity increment” required by the order. The current relationship could be anything from a single transaction to a critical, long-term partnership. The order’s capacity increment could represent a large proportion of the company’s total capacity, or a small one. Clear Hear 5 Clear Hear framework suggests four distinct pricing strategies: * For large chunks of capacity in a long-term partnership relationship, Clear Hear will apply open-book, full-cost pricing. * For small-capacity increments in transactional relationships, yield management will offer a greater profit. * For a small-capacity increment in a long-term relationship (a relatively rare combination), Clear Hear should employ marginal cost pricing. * Although it will be less common for Clear Hear to sell large increments of capacity in a transactional relationship, traditional opportunistic bidding remains the preferred pricing model in such circumstances. Clear Hear understands that Inherent uncertainty makes it impossible to provide precise benchmarks for distinguishing short-term, variable costs from long-term, fixed costs. Clear Hear will use a transactional customer relationships approach to address variable – fixed cost; the customer needs Clear Hear products at the time of order to purchase, however, there is possibility that Clear Hear may never do business with that customer again. Pricing decisions will be made for each order individually, without concern about setting a precedent. In long-term relationships, however, the pricing of individual orders sets expectations for subsequent orders and will be reasonably predictable, enabling Clear Hear offer set price per order allowing the company to maximize profits. Clear Hear 6 Methods to Reduce Cost Cost reduction can result in significant product cost saving, manufacturing cost saving, and life cycle cost saving when implemented as a part of the companies outlined business structure. Clear Hear will the following cost cutting cost reduction strategy to meet its goals and objectives to produce a desired product in a cost effective way (Daniel T Jones, James P. Womack). 1. Cost Reduction: (Jones & Womack) * Practice Concurrent Engineering with early and active participation of manufacturing, purchasing, vendors, etc. * Implement Design for Manufacturability ( DFM ), Design for Lean, and Design for Quality * For dramatic cost reduction - half cost to order-of-magnitude - optimize the concept/architecture phase * To convert ideas, research, or prototypes into viable products, uses commercialization techniques to ensure success. 2. Lean production cost reduction: * Implement Lean Production - technical automation 3. Overhead cost reduction: * Implement Build-to-Order and Mass Customization to build products on-demand without forecasts or inventory 4. Standardization of cost reduction: * Implement Standardization with a practical procedure has been developed to standardize part and materials for new designs 5. Product line rationalization cost reduction: * Design products around standard parts to simplify Supply Chain Management * Standardize parts to focus Supply Chain Management on high-volume, easy to get parts * Rationalize away the most unusual products which have the most usual, hardest-to-get parts * Establish Vendor/Partnerships, which saves more money than low-bidding 6. Supply chain management cost reduction: * Design products around standard parts to simplify Supply Chain Management * Standardize parts to focus Supply Chain Management on high-volume, easy to get parts * Rationalize away the most unusual products which have the most usual, hardest-to-get parts * Establish Vendor/Partnerships, which saves more money than low-bidding 7. Quality cost reduction: * Eliminating quality costs starts with designing in quality * Quality costs in manufacturing can be eliminated with Six-Sigma programs * Rationalizing away unusual products raises net factory quality and avoids wasting quality resources on inherently lower quality products 8. Total cost measurement to support all cost reduction activities: * Implement total cost measurement with the easy-to-implement cost driver approach Clear Hears 8 Conclusion Clear Hear values its customers, even at its owner expense. Clear Hear will do whatever it takes to make them happy. This global marketplace requires a working environment which visibly demonstrates our commitment to our customers and the people who assist us in reaching our business goals and objectives. Clear Hear will foster trust through open communication and consistent actions, share a collective understanding of our company’s success and, with a sense of urgency, combine our best efforts to achieve it. Clear Hear believes in nurturing ownership behavior through clear accountabilities, recognition, rewards and promoting new ideas and new ways of thinking. This is the insight I gain while reviewing this company. Clear Hear 9 References Business Strategy. (2009). The right mix. Retrieved on January 9, 2009, from www.strategy-business.com Drake, Stephens D. (20008). Mobile resources management. Retrieved on January 10, 2010, from Market Overview. Jones, Daniel T, James P. Womack. (2003). Banish waste, create wealth in you corporation. Retrieved on January 10, 2010, from Lean Thinking Parson, Kirk. (2009). White beta model. Retrieved on January 10, 2010, from J.D. Power and Associates Szatny, Michael. (2008). Integrating business and technical workflow to help achieve asset level production. Retrieved on January 10, 2009, from Workforce Automation