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Case Questions: Analog Devices Strategy

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Case Questions:

What was Analog Devices' strategy in the second half of the 1980s?

Analog Devices Inc strategized the objectives based on Quality Improvements and Manufacturing cost reduction. ADI was able to achieve this by implementing the control mechanisms like QIP and Scorecards.

Critically evaluate the "half-life" concept, in light of Analog Devices' strategy. What are the potential and limitations of the half-life concept? How would a company develop the half-life for different processes? How is the half-life concept different from the experience curve concept?

The ADI’s strategy in 1986 is based on Quality Improvements and Manufacturing Cost Reduction. The Quality specialist of ADI, Schneiderman believed that if the efficient …show more content…

Which numbers should we believe? Can they be reconciled?

QIP measures only the quality aspects of the production, it ensures that each and every phase of the product manufacturing line is efficiently handled without wastage. However financial system focuses on multiple aspects including quality. Financial system focus on the revenue, Return on Assets etc.

Implementation of excellent quality comes with a cost. The company must decide if it is really worth compromising the quality for revenue. If the quality costs exceeds the expected revenue of the company then the company must abandon implementing quality control mechanism. If otherwise, the quality would contribute to the product value and hence the revenue.

Financial System would give more meaningful measures than QIP as Financial System gives overall health of the organization.

Critically assess the usefulness of the information contained in the corporate scorecard in Exhibit 3 as a way to implement Analog Devices' strategy. What role does each set of measures play in strategy execution? What should be the relative importance of financial versus nonfinancial measures? What additional information would you like to see included in the …show more content…

Since ADI is into technological market, innovation and time are two sides of a coin.

If ADI does not innovate then some other company may innovate and market their product thus decreasing ADIs profit. This section motivates the team to be innovative in performing their tasks.

QIP consists of On-Time Delivery, Cycle time, Yield, Outgoing Defects, Cost, Employee Productivity, Turnover. Parameters like On-time delivery, Outgoing defects are directly related to the customer satisfaction. A miss in these would give rise to decrease in customer satisfaction and they may do their future business with the ADI’s competitors. Factors like Cycle time, Outgoing defects, Cost deals with reducing the cost of production which in turn affects the product pricing.
A product with less price is better placed in the market than with the same product with higher cost. Yield, Employee productivity are directly related to the employee utilization. It shows how well the employees are utilized in the manufacturing cycle. The productivity also includes how innovative the teams

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