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Q.1: The Integrated Solution Limited (ISL) is a specialist in providing professional quality I.T. solutions to small and medium-sized enterprises (SMEs) in HK and southern China. There are several factors leading to the success of ISL today. The remarkable achievement of ISL started with its founder and Managing Director, Dr. Ricky LEUNG. Dr. LEUNG personally had in-depth understanding of the needs of manufactures in HK. He recognised that most of imported packages did not provide enough management information to them and no foreign vendors provided MRP system in HK.
That is the gap where ISL successfully comes in. With the strong commitment from Dr. LEUNG, ISL has laid down a company’s motto “ISL is to build quality people, products and relationships” and a mission statement “ISL is to provide quality products and services towards better data integration and information management for manufacturers” that strive to provide excellent products and services to its customers. In this connection, ISL has been very active in improving its products and services through continuous research, service quality improvements, and the changing needs and requirements of customers.
Q2: “The remarkable achievement of ISL shows once again that producing world-class quality is ultimately a matter of the heart – more than the mind … It is companies with such emotional pride in their products and with such heroic hopes for their customers that set the quality standards in every industry around the world” said by Larry Farrel of the Farrel Company.
Quality management has played a significant role in ISL’s success. As mentioned previously, ISL has always commits to become the leader in providing professional quality I.T. solutions for SME’s in Asia Pacific. Quality management has always been their main focus in strategic planning, market positioning, and nearly every aspects. ISL’s efforts in quality management has lets them successfully to built up an image of a total solution company with prestige quality, as the leading supplier of manufacturing software in Hong Kong by successfully differentiate it from its competitors, and is fast to become Hong Kong’s showpiece in innovation and quality.
Actually, Total Quality Management is a strategic weapon, which includes a broad set of processes, which helps ISL to enhance its competitive advantages. It is a basic belief that each day it can become better and that all employees are infected with the enthusiasm and “religion” of improvement. Thus, it accelerates the continuous improvement in products and services, and overall organizational performance. It also helps to develop a “Roadmap” to business excellence which has attained significantly higher performance levels, therefore, driven to their overall success.
Q3: By applying and receiving the HKMA Award, ISL has achieved the following benefits:
1) Gain Competitive Advantage – Sound Reputation & Successfully Differentiate from its Competitors:
ISL received the HKMA award in 1994 for its dedication to quality improvement and customer services. This awards brings the company public recognition for having achieved outstanding standards of quality and for having make a lasting commitment to the process of quality management. Thus, ISL is able to gain many competitive advantages that lead to its success in the IT industry. It not only helps ISL to successfully differentiate from its competitors, but also accelerates the continuous improvement, and gaining prestige reputation from the market.
2) Professional & Productive Work Force – by Empowerment, Teamwork, Recognition & Training :
Being a successful company, human resources, is definitely one of the most valuable resources.. ISL understands that keeping the staff growth means keeping the company growth. So, the Human resources development is also one of the focuses in company’s strategic planning. As quality management lets ISL to realize the important of empowerment and teamwork, therefore, when ISL recruits new employee, they will measure their ability of teamwork, potential for growth and quality awareness instead of measuring their technical skill only.
For the existing employee, ISL also encourage for their involvement. For example, they will have a regular meeting where all employees are welcome to give their own suggestion and opinions. Moreover, the company always tries to strengthen staff’s technical skill and quality awareness through various training or seminar from outside experts. Furthermore, the company also empowers the employee and gives special awards to well-performed staff in order to enhance the employee satisfaction. All these efforts helps ISL to achieve outstanding operational results, such as improve in punctuality, reduce absenteeism due to sickness, lower staff turnover rate, faster technical support response time, better trainer quality, higher maintenance incomes, and faster invoice processing time, etc.
3) Clear Strategic Planning and Leadership :
By applying and receiving the HKMA awards, ISL has benefits from a very clear strategic planning and leadership. It lets Dr. Leung, the company leader, to aware of the importance of quality, but also “pushes” him to make some changes in ISL in order to enforce the quality enhancement, such as restructured the company units to a supportive organization structure, and to form a Quality Committee from senior management to co-ordinate and organize quality efforts. Moreover, the HKMA award program ensures ISL to have a very clear goal in quality and performance. For example, at the beginning of each year, ISL undergoes an annual Extensive Strategic Planning Process to plan for the goal and the actions of the current year base on the customer and staff satisfaction and economic factors. It helps ISL to continuously improving in its quality of services and products and leads to its success.
4) Enhance Customer Satisfaction – by Customer Focus :
ISL has realized that customer satisfaction and a good reputation for quality are vital to the company’s survival. Therefore, it uses many marketing tools such as Product Life Cycle (PLC), Product Space Map and GAP analysis to determine market opportunities, segmentation, moving trends and the market position of its product. It helps ISL to be more efficient and be able to continue to understand more about its customer’s needs and requirements and improve its product and services in order to improve its market position. For example, the amount of repeat sales has grow from 4% to 23% of the total sales from 1992 to 1994. This rapid grow in repeat sales demonstrates that the customer satisfaction of ISL has been improved, and there is pro-active account management and development of long-term relationships with customers in ISL.
5) Profit Maximization and Cost Efficiency :
Quality management also benefits ISL financially by maximizing its profits and lets it spends its cost more efficiency. During the eight years before the company applied for the HKMA award, ISL’s annual sales grow rapidly. For example, the annual growth rates were 50% or above throughout the period from 1987 to 1994. Besides that, since the company embarked on the TQM programme, profitability has also improved. Moreover, the improvement in various aspects, such as the production process, lets ISL to spend its cost more efficiency.
6) Accelerate Continuous Improvement :
The HKMA helps to accelerate the improvement efforts. It helped to set a pace for the quality improvement efforts. It created an accountability that moved the organization faster and further than it could have done on their own. For example, concerning the product improvements, ISL is constantly upgrading it products and services. It also has to keep up its product development programme in order to maintain its competitiveness in the marketplace. Besides that, it also engaged in improving the quality of its internal operations in order to improve in its process. These help to demonstrate ISL’s efforts to accelerate its improvement continuously.
Q.4: The strengths and weaknesses of ISL in the current competitive environment are as follows:
1) Leadership :
* Dr. LEUNG has strongly commitment in promoting quality/products to the industry and to the ISL. For the industry, seminars and articles on Quality Management given by Dr. LEUNG not only educate the public, but also act as outside pressure to push ISL to improve its quality. For the company, he has laid down a company’s motto and mission statement stressing on quality products/services to its customers.
* Furthermore, a quality committee chaired by Dr. LEUNG has been established to co-ordinate company-wide efforts on quality improvement. The terms of reference for the committee are specified, which includes setting up company’s quality standards, developing long- to short-term quality plans, monitoring quality implementation progresses, tackling customer issues, and so froth.
* ISL in 1994 established a 3 levels’ supportive organization structure including front line staff, managers and top management. This organizational structure provides a supportive skeleton from one level to another so as to facilitate the performance of subordinates. ISL also formed the R&D Department focusing on product direction and acting as the catalyst for quality improvement.
? Although Dr. LEUNG from time-to-time participates in public activities, ISL itself and other senior staff have not paid much attention to address their public responsibilities and citizenship.
2) Strategy Planning :
* To improve product/services quality, ISL has introduced an annual Extensive Strategic Planning Process. At the beginning of each year, the Quality Committee meets externally to examine customer satisfaction and review/access impacts from environmental factors, and internally to motive and satisfy ISL staff and minimize waste and unproductive work. ISL also has set up 5 quality and performance goals, including Product Leadership, Quality Leadership, Consultancy, Implementation and Technical Support.
? Human resources plan has not considered. Key performance indicators are also not considered for tracking the progress of action plan, not to say projecting organization’s future performance.
3) Customer and Market Focus :
* ISL has adopted a number of marketing tools such as Product Life Cycle, Product Space Map and Gap analysis to determine market opportunities, segmentation, trends and the market position of its product. To collect information from customers, departments of TS and Sales & Marketing have constantly contact and visits their customers with the aim to explore possible areas for improving its products and services.
? Mechanism has not formulated to handle customers’ complaints promptly and effectively. ISL should group all complaints together and analyze it for further improvement. Moreover, ISL should obtain and analyze information and customer satisfaction about their competitors for benchmarks.
4) Information and Analysis :
* ISL has introduced an integrated management system, PURSUIT, for its operational processes. A SQL tool, FLEXQL is employed to extract data to generate ad-hoc or routine management reports for the departments of Sales, TS and R&D. To effectively use the data, the management adopt the concept of Management-By-Facts and, wherever practicable, make decisions on a factual basis.
* Key performance has been constantly communicated to ISL staff, its customers and suppliers via a wide range of communication channels; Internally ISL rely on weekly colloquium, monthly staff newsletter, departmental meetings, annual report, display boards and emails, while externally they rely on user newsletters, press releases, customer visits and customer surveys.
? A system for ensuring the accuracy, reliability and security of data and information has not in place.
5) Human Resource Focus :
* The management of ISL in 1994 recognized that exchanges of experience and information among staff and managers were informal, and tasks and functions were mainly performed by a single person. In this regard, ISL has introduced a daily Japanese-style morning meeting for reporting work progress, planning of the schedule, seeking assistance from colleagues with relevant experience, and presenting a topic by members on a rotation basis with assessment. Besides, ISL launches a program, Quality in Action (QIA), which based on facts and data and empowered its staff to respond quickly to customer needs.
* All suitable candidates have had at least 2 interviews to judge their competence in interpersonal skills, quality awareness, and so on forth. In addition, TS and the 3D development departments have a work rotation scheme to ensure that everyone receives a mix of job functions.
* ISL provides a company colloquium with attendance of all staff on every Friday morning for brainstorming, team building and training of theories, concepts and tools in quality management. Departmental meeting is another place where customer and operational issues can be resolved. Group sessions are also organized for sharing experiences and new ideas.
* ISL sends staff to external training courses and provides an annual HK$6,000 education allowance to each employee for job-related external training courses.
* ISL has put a system in place to maintain a high level of staff morale. The system consists of communicating changes with feedback, making use the company’s supportive organizational structure, coordinating with top management’s direction, and providing counseling and mediation. ISL also has a Social & Welfare Committee responsible for organization of key annual events. Furthermore, the company put a smoke-free working environment policy in force.
* Three front line departments have its own incentive scheme. Employees have an annual appraisal to determine their pay. Special awards would be given to those who have exceptional performance.
? ISL not places much attention on providing assessment methods or measures, like upward appraisal, to determine employees’ well-being and satisfaction. The company shall also consider formulating a system to ensure safety and health of employees at work.
6) Process Management :
* ISL emphasizes the quality of its development process. All software projects are headed by senior software staff and developed in accordance with a software engineering cycle. Moreover, ISL follows the best practice guidelines in the industry by allocating sufficient time and effort for System Analysis and Final Testing stages. To meet customers’ special needs, ISD also offers a tailor-made software service and develops User Manuals, Technical Manuals, Implementation Guide, and Training Notes & Exercises, and provides Customer Training Programme and Implementation Consultancy Services.
* To promulgate continuous improvement, ISL regularly upgrades its products and services based on the feedback from listening to customers, getting in touch with the marketplace, and valuing input from staff.
* ISL acts as a value-added reseller by organizing marketing and education event, meeting with vendors, and dealing of hardware purchases.
7) Business Results :
* ISL has established a series of services and indicators to focus on customers; Firstly, hotline support logging system has been introduced to gauge the performance of technical hotline support. Secondly, ISL offers a one-day training programme to its customers. Trainees request to evaluate and give feedback for the effectiveness of programme. Thirdly, ISL measures the percentage of purchasing maintenance service and maintenance income to reflect the satisfaction of customers. Finally, ISL conducts full-scale customer satisfaction survey to assess the strengths and weakness of its operation.
* ISL tracks its annual sales, profitability, amount of repeat sales and number of installation sites to measure the results of company and quality and customer satisfactions of customers.
* ISL measures punctuality, absenteeism, staff turnover rate to evaluate staff morale and work attitude. All these indicators move positively since its inception.
? Although ISL has successfully boosted its sales revenue by 50% annually from 87 to 94 with exception of 93, the net profit margin does not grow as much as the sales revenue. It also noticed that the percentage of increment of the sales revenue has been declined from 95 to 97, as compared with the annual growth from 87 to 94.
Q. 5: With the limitation of resources available to ISL, we are of a view that ISL should concrete their efforts to target on Small and Medium-sized Enterprises in both Hong Kong and southern China. ISL should modify its existing products to suit the special needs of the largest manufacturing sectors in Hong Kong and southern China. (i.e.: Toys, Garment, and Electronic Industries.)
1) Products :
Looking ahead, the following products should be provided by ISL to its client. As there is a growing trend for user-friendly software, a new software system with Window/Novell/Web-based application will become a potential product of ISL. In addition, with the growing connection between Mainland China and the Hong Kong Special Administrative Region, industrial undertakings headquartered in Hong Kong and with manufacturing plants scattered in Mainland China are on the increase.
Coupled with this growth, there is an increasing need for such undertaking having an integrated computer system. Development of an effective communication system that facilitates the connection and communication between offices at different locations will be a potential product for ISL. Furthermore, ISL should explore the feasibility of developing an ERP and Global supply chain management software in collaboration with QAD. As QAD has experience in developing such product, it may reduce the product development time and help ISL stay in the forefront and keep in pace with the logistics business proposed in Hong Kong.
2) Services :
On top of its current services, ISL should provide free software to academic institutions for education and promotion purposes. ISL may also provide free-trial software with limited effective date and authority to potential customers and existing customers for evaluation and promotion purposes. Besides that, ISL may regularly organize free training courses to their potential users or customers.
Q. 6: As more and more aggressive competitors (e.g. SAP, MPIX, Minx & Symix) have launched their businesses in Hong Kong and China, ISL should consider the following actions to further improve their quality or services to its customers.
Firstly, it should pursue China market by more empowerment and participating in joint venture or co-operation programmes with China firms. It helps ISL increase/improve its cash flow, distribution channel and technology.
Secondly, it should further improve their software systems in order to maintain their market position. It is noteworthy that some features / functions of ISL’s software systems are far from satisfactory as compared with similar products offered by their competitors. The limited power of Envision is a good illustration of this.
Thirdly, by means of joint venture, ISL should exchange their technical skill with foreign companies. It also allows ISL to exchange its stock shares with various companies for improving cash flow within the company.
Fourthly, in addition to its cooperation programmes with the City University of Hong Kong and the Hong Kong Productivity Council, ISL shall extend it to various Universities in China. As these institutions have first-hand and in-depth understanding of the needs in China, such cooperation programmes not only help ISL develop its products but also can be their executive arms to disturb new software systems to China.
Finally, ISL should set up a website to introduce their company background and new products to all visitors (potential customers) and existing customers. It can also build up FAQ (Frequently asked Questions) to help existing customers to solve common problems. Moreover, as a means of advertising, it can let more people to recognize ISL throughout the world.