Report on Marketing Strategy of Rahimafrooz Bangladesh Limited

Report on Marketing Strategy of Rahimafrooz Bangladesh Limited Rahimafrooz Bangladesh limited was established in 1950. As a trading company. Late A. C. Abdur Rahim was the proprietor in this time. From 1954   it was established as a limited company. In the new environment he had to start afresh. He had little capital. His main assets were self-confidence and a strong faith in the Almighty, which carried him through all the difficulties with a remarkable triumph.He finally established a small proprietary trading company named Rahimafrooz & Co, in Chittagong in 1950 which was later incorporated on 15th April 1954, which is now Rahimafrooz (Bangladesh) Ltd. Rahimafrooz   Ã‚  expanded rapidly into various trading items. The major milestones in   Rahimafrooz history can be  summarized as below: Incorporated in 1954 by Mr. A. C. Abdur   Rahim Distributorship of Lucas Battery in 1959 Exclusive distributorship of Dunlop tyre in 1978 Acquisition of Bangladesh operations of Lucas UK in 1980 First producer of industrial battery in 1985Pioneering Solar Power in collaboration with BP in 1985 First ever battery export – to Singapore –  in 1992 Launched Rahimafrooz Instant Power System in 1993 Acquisition of Yuasa Batteries (Bangladesh) Ltd. – in 1994 Attained ISO 9002 certification for RBL operations in 1997 First India office opened in Ahmedabad – in 2000 Awarded â€Å"Bangladesh Enterprise of the Year† in 2001 Attained ISO 14001:1996 for RBL  operations Launched â€Å"Agora† – the first ever retail chain in 2001 Launched Rahimafrooz Energy Service in 2002 – promoting distributed power. Established   Rahimafrooz CNG ltd. n 2003 Awarded â€Å"National Export Trophy† in 2003 Metronet  Bangladesh,  a  fibre  optic  based  digital  solution  provider  for  data  communication,launched in joint venture with Flora Telecom – in  2004 Received McGraw-Hill Platt Global Energ y Award  for Renewable Energy  in 2004 Received the â€Å"   Ã‚  Ashden Award† for Sustainable Energy in 2006 EPZ factory and RAL  two new company developed –  in 2008   1. 1 ORIGIN OF THE REPORT: This project   Ã‚  Report has been prepared as the fulfillment of the partial requirement of B. B. A Program. 1. 2 OBJECTIVE OF THE REPORTOur business courses are designed to help the students learning the technique and acquiring with skills needed effectively in management including planning, organizing, staffing, directing, motivating and controlling, problems in achieving organizational goals in differing managerial environments as a part in different management system. So the prime aim of the regarding report is to diagnosis a company regarding their operations & thus make a nice combination of my four years educational learning. The main objective of the report is marketing strategy of   Ã‚  Rahimafrooz ltd. 1. PURPOSE OF THE REPORT: I take information fo r my report by two purposes. 1. 4 PRIMARY PURPOSE: The Primary purpose of this report is to partially fulfill the requirement of my Bachelor Degree. 1. 5 SECONDARY PURPOSE: Secondary sources include the internal documents like annual report company bulletin other research reports and brochures. 1. 6SOURCE AND METHOD OF COLLECTING DATA:The report is organized by secondary source of data. Various report’s brochure, catalog, articles and journals, projects profile, dealer credit policy, and Rahimafrooz website is used in this regard. 1. LIMITATION OF THE STUDY: Firstly, judging a company’s activity relative to competitor is not an easy task. This study has tried to figure out the key factors that has an effect towards the profitability of the company. Secondly, analyzing the secondary data and comparing it with the primary data was a major problem in making the report. Thirdly, lack of adequate knowledge has a effect in   Ã‚  writing the report properly. Chapter Two Com pany history Founder Late A. C. Abdur   Ã‚  Rahim (1915-1982). Rahimafrooz   Ã‚  Bangladesh Limited A man of strict religious values, yet a believer in progressive dynamism, and dreamer who thought nothing is impossible – Late A C Abdur Rahim overcame numerous challenges and obstacles to become one of the most accomplished entrepreneurs of this country. Born on the 20th of January 1915, he lost both his parents by the time he was seven years of age. Deprived of formal schooling and a typically comfortable childhood, he grew up as a man with strong determination, hardworking diligence, and humane compassion. By the early 1940s, Mr. Rahim started small scale commercial trading on his own. He moved to Chittagong in 1947 and stared afresh with very little capital in hand, but with a whole world of courage and faith.In 1950, he established the small trading concern dealing in various items. This proprietary business was formally incorporated on April 15, 1954 as Rahimafrooz & Co. Till date, Rahimafrooz Group commemorates this as its â€Å"Foundation Day†. The childhood hardship and the struggle in his young years only made Mr. Rahim a strong individual, a faithful human being, and a leader full of compassion and humanity. He was a caring father and an affectionate person throughout his life. Whoever, in his lifetime, came in touch with Mr. Rahim, fondly remembers him as a man of tremendous humility, dignity, and trustworthiness.His   passion for continuously improving himself and his religious and ethical righteousness, and his dedication to please his customers – are still prevalent in today’s Rahimafrooz culture – shaping the Group’s present and its future. Today’s Rahimafrooz is a dream that Mr. A C Abdur Rahim turned into reality. The business growth, the social commitment, and the great diversity in today’s Rahimafrooz are the outcome of one lifetime of hard work and compassion from Mr. Rahim. He br eathed his last on March 14, 1982 in London. But his work and his virtue have kept him alive forever.May Allah grant him with eternal peace. Over the decades, Rahimafrooz has grown in size, scale, and diversity. The Group today has Eight Operating Companies (SBUs), a few other business ventures, and a not for profit social enterprise. As of 2011, the Group currently employs more than three thousand people directly and a further twenty thousand indirectly as suppliers contractors, dealers and retailers. Rahimafrooz operates in four broad segments – Storage Power, Automotive & Electronics, Energy and Retail. We have strengthened our market leadership at home while reaching out to international markets.Ranging from automotive   after   Ã‚  market products, energy and power solutions, to a world class retail chain – the team at Rahimafrooz is committed to ensuring the best in quality standards and living the Group’s five core values – Integrity, Excellenc e, Customer Delight , Innovation and Inspiring People. Rahimafrooz has been a partner in the development journey of this nation for more than fifty-five years now. We set ourselves the highest standards in responsible corporate behavior and our passion for success is aligned with the development of the country.We are committed to playing a leading role in driving growth, prosperity, ethical values and social responsibility. We continue to serve our customers through unparalleled quality excellence and service superiority. Our business success has been complemented by our commitment to the environment, society and community. At Rahimafrooz, We are – ‘enriching lives with your trust’! 2. 1 Aspiration: To be most admire and trusted organization through excelling in everything we do, following ethical business practice and adding value to stake holder. 2. 2 Vision:Be an enterprising group of Taka 2,000 crore by the year 2010 with the diversified business portfolio fo cus on dynamic growth, excellence, innovation, customer delight in enriching our world. 2. 3 Vision 2015: A billion dollar diversified group committed to adding value to all stakeholders and community Value: Integrity in all our dealing Excellence in everything we do Total commitment to customer satisfaction Thinking ahead and taking new initiative 2. 4 Quality policy: We, as a team, totally committed to customer delight through intelligent effort and continuous improvement. 2. Community service: Rahimafrooz regularly contribute personal, monetary and medical help to  people disadvantaged by  natural calamities and  serious illness. Rahimafrooz also makes significant contribution to leading diabetic and cancer hospitals. 2. 6 Achievements of RBL: Asia’s Best Brand  Ã‚  CMO Award 2010 Asia’s Best Employer  Ã‚  Ã‚  Ã‚  Ã‚   SC& FE,  CSR  Ã‚  Award 2008 Brand Leadership  Ã‚  Award 2008 Ashden   Award  Award 2006 National export trophy Award 2001- Chapt er three Strategic business unit (SBU) RBL 3. SBUs (Strategic Business Units): Rahimafrooz (Bangladesh) Ltd. (Group Parent Company)Rahimafrooz (Batteries) Ltd. Rahimafrooz Distribution Ltd. Rahimafrooz Energy Services Ltd. Rahimafrooz Renewable Energy Ltd. Rahimafrooz CNG Ltd. Rahimafrooz Superstores Ltd. Excel Resources Ltd. Rahimafrooz Globatt Ltd. Rahimafrooz service center 3. 1 Rahimafrooz (Bangladesh) Ltd. (Group Parent Company: Rahimafrooz (Bangladesh) Limited (RABL) is the Group Holding and Parent Company including the Group Corporate Center that guides the Strategic Business Units (SBUs). It ensures continuous management innovation, technology adoption, new initiatives, corporate governance and compliance.Rahimafrooz Bangladesh Ltd has imported world famous Dunlop Tire and Tube which is producing in Japan and India. At present Rahimafrooz Bangladesh ltd. Is one of the top most organizations in the country many officer and personnel work hard. From the development of the orga nization Rahimafrooz Bangladesh ltd. is mainly work in four divisions 1. Corporate Division 2. Manufacturing Division 3. Marketing and sales division 4. International division The chairman is the chief executive officer of the organization and the director is the head of every division. Rahimafrooz Bangladesh ltd. has one head office in Motiheel.Two service offices in Dhaka and Chittagong and one factory in Nakhal Para and other is Savar. Regional office is operated by regional manager who has controlled all the sales force and also has responsible for his job to the managing director of head office. Every appointed dealer in the sales center of Rahimafrooz Bangladesh ltd. they always get up great training from the company to serve the customer all over the country there are near about 180 dealers of Rahimafrooz Bangladesh ltd. Often the company organize conference for the dealer and they create the opportunity to exchange their value. . 2 Rahimafrooz Battery Ltd: Rahimafrooz batter y ltd has mainly marketed Rahimafrooz battery. At present Rahimafrooz company has been producing and marketing more than one hundred categories battery. Automotive battery and motor cycle battery are produced by Rahimafrooz Company. This is very popular in the market and also high quality. The Company’s manufacturing plants produce a range of products – automotive, motorcycle, and appliance batteries, Industrial (stationary, deep cycle, traction, VRLA batteries, IPS and UPS batteries, and rectifiers.Lucas and Spark are the leading names in the local automotive battery market while Volta, Optus and Delta are gaining equity as International brands. RBL has a successful story of installing solar power in the remote rural areas of Bangladesh. It has successfully installed more than 10,000 home solar systems in the remote rural areas of Bangladesh. In Bangladesh Rahimafrooz Factory is situated in Nakhal Para. Tejgoan. It is the heist battery production capacity factory. The authority tries their level best but to keep its quality through skill and efficient engineer Plant Capacity: Rahimafrooz has state of the art manufacturing plants.We are equipped with all latest technologies with complete air treatment and lead-recycling management. RBL produces different types of batteries to meet the local and international market. Its capacity in Automotive Battery is 660,000 (N50) units per annum and Industrial Battery is 41 million AH/annum. By the end of 2010, these will increase to 8000,000 (N50) and 120 Million AH respectively. All the products are manufactured following strict quality and environmental standards, and are ensured by international certifications too. Our main product range includes: Automotive battery Motorcycle batteryAppliance battery Deep cycle – Flat plate battery Industrial tubular battery VRLA battery IPS and UPS batteries 3. 3 RAHIMAFROOZ DISTRIBUTION LTD: The company has a huge relation with the market to distribute its produ cts through the network of dealers. It has almost near about 200 dealers, 280 Retailers and 95 Lubricant Dealers across the country for distributing Dunlop   tyre, Lucas batteries, Volta batteries, RZ   tire, BP lubricants and Rahimafrooz instant power system. RDL’s portfolio includes international tyre brands Dunlop and Kenda while it also carries its own brand RZ Tyre and  battery brands Lucas and Spark.RDL is the exclusive franchisee of the world’s leading lubricant brand Castrol. Through Rahimafrooz IPS, UPS and Voltage Stabiliser, the company enjoys clear leadership of the emergency power products market. In addition, it also runs eight automobile service centres in Dhaka and Chittagong. Recently the company has entered the electronic goods market. It distributes and markets various household appliances and electronic goods through RDL’s newly inaugurated electronics retail chain, Ureka and its numerous sales outlets.RDL product portfolio includes the followings: Tyre RDL   markets different tyres for car, bus, truck and auto-rickshaw. It is the sole distributor of DUNLOP in Bangladesh. RZ Tyre is its own premium heavy duty truck/bus tyre fit for Bangladeshi road. It also markets other economy tyres. Automotive RDL markets three major brands of automotive batteries: LUCAS, VOLTA, VOLTA MF (Maintenance Free) and SPARK. All batteries are produced by RBL. Power Back-Up System RahimAfrooz   Ã‚  IPS and Rahimafrooz UPS are two popular power back-up systems marketed by RDL. LubricantRDL is the marketer and sole agent of Castrol, one of the lubricant giants Rahimafrooz solar is started with a  pilot project with the Bangladesh Atomic Energy Commission. Rahimafrooz Solar supplies solar-electricity to the remote villages of Bangladesh. More than 30,000 thousand families are supplied with solar power with help of NGOs and International Organizations. Excel retires limited RBL is the leading tyre retread company in Bangladesh. ERL ha s been serving the industry since 1994 providing  best quality of retreads. Its plant is capable of retreading tyres of  car, bus, and truck.EXCEL RESOURCES LTD Excel Resources Ltd. (ERL) is a leading name for tyre retread. ERL also manufactures and markets emery cloths and abrasive papers. ABOUT RETREAD Retread of tyre is a process whereby new tread rubber is applied on a used tyre casing; if done properly, this process allows similar mileage like new tyres. The process extends longer casing life. Based on the casing, a tyre can be retread up to 3 or 4 times, as long as the casing supports. The retread process is eco-friendly and does not result in environmental pollution.A retread tyre can save up to 50% of new tyre’s cost. Every time you buy and use a retread tyre, you help to conserve Their valuable natural resources and since retread tyres are less expensive than comparable new tyres, one can save money while helping the environment. This is truly a win-win situation 3. 4   Rahimafrooz   Energy Services Ltd. BRAND Rahimafrooz   Energy Services Limited was established in the year 2000 as a standby, captive anddistributed power solution provider. It is a leading name in the diesel generator industry having a customer base of nearly 700.Its clientele comprise of industrial plants, real estates, hospitals, educational institutions, telecoms, supermarkets, corporate houses and government establishments including the Armed Forces. The company is marketing both diesel and gas generators from Pramac Power Engineering, Italy and Spain, and Mitsubishi Heavy Industries Limited, Japan. Rahimafrooz Energy is also providing Rental Power with both diesel and gas generators. Rahimafrooz Energy is the Authorized Distributor of GE Consumer & Industrial Lighting, USA and Exclusive Distributor of Wiring Accessories and Low Voltage Protection Devices from Hager, France in Bangladesh.Located at the heart of Tejgaon Industrial Area, Dhaka Rahimafrooz Energy is equipped with the necessary service facilities and ready availability of stocks for all kinds of organizations and individuals requiring energy related solutions RESL is the Exclusive Distributor of PRAMAC in Bangladesh. It markets diesel generators up to 2500 KVA for multiple users. Its customers comprised of industrial plants, real estates, hospitals, educational institutions, telecom companies, supermarkets, corporate houses and government establishments.Established with the aim of being a provider of standby, captive and distributed power solutions offering 24X7 customer services, the company is now ready to launch three new products which are gas generators, power rentals and electrical accessories. In a short span of five years, Rahimafrooz Energy Services Limited has grown to be a highly reliable energy solution company. PRAMAC generators come up to 2,500 KVA for multipurpose use. Its customers comprised of industrial plants, real estates, hospitals, educational institutions, telecom companies, supermarkets, corporate houses and government establishments. . 5 RAHIMAFROOZ   Ã‚  RENEWABLE ENERGY LTD Transforming the lives of people and lighting up different corners of the country, Rahimafrooz Renewable Energy Ltd. (RRE) has been providing Rahimafrooz Solar solutions for households, agriculture, healthcare, education, rural streets and marketplaces. To date, RRE has lightened up more than 40,000 rural homes in Bangladesh and the Company is endeavoring to do much more in the future. The abundance, inexhaustibility and non polluting nature of solar energy, have made it right alternative for conventional energy sources, which are getting fast exhausted.So far only a small portion of solar energy is being harnessed for use in solar water heating, solar lighting, telecommunications, medical refrigeration and solar water pumping. Working closely with Bangladesh Government’s agencies, NGOs, donor and partner organizations, and international agencies, RRE offers a full rage of solar solutions including home lighting, street lighting, heating systems, water pumps, Photo Voltaic (PV) centralized systems, drip irrigation systems, vaccine refrigeration, support for computer and other electronic systems, and a number of other solutions.More than 60,000 homes already been illuminated with RRE’s solar efforts and the number is always growing. Rahimafrooz Bangladesh Ltd. At first has marketed solar energy by exporting it from England. The following places and the institutions are the user of solar. 1. Hospital and Clinic 2. Irrigation project 3. School, Masjid, Road, Television 4. Telecommunication sector. 5. Railway signal 6. To find out the river way. The Organization where the solar Energy is set up 1. NGO 2. Tea Garden 3. Army cantonment Chittagong 4. Private Organization 3. 6 RAHIMAFROOZ CNG LTD. Rahimafrooz CNG Ltd. RACNG) offers comprehensive solutions for CNG refueling, conversion, conversion centers, and maintenance. The Com pany runs state-of-the-art CNG conversion centers offering 1st to 5th generation conversion, and is setting up a wide country-wide network of refueling stations. It also assists, through equipments, technological know-how, training and marketing, in setting up CNG conversion centers and refueling stations INSTALLATION OF CNG STATION: It helps to setup CNG Fuel Station on a turn-key basis. It also assists in obtaining financial support from the Financial Institution to setting up CNG station.It provides round the clock technical supports and training   CNG CONVERSION: It has its own conversion centers where you can convert your Octane or Petrol driven automobile into CNG. Rahimafrooz CNG offers an innovative and technically advanced system for conversion of all types of vehicles into CNG It is the sole technical and commercial representative of Lo. gas s. r. l. of Italy. All CNG components are given full warranty with necessary technical support. CNG SERVICES: It also provides all types of technical support related to CNG stations, systems and kits to individuals and institutions. 3. 7 Rahimafrooz Superstores LtdRahimafrooz Superstores Ltd. (RSL) made a breakthrough in the urban lifestyles by launching the first retail chain in the country – Agora. With outlets in important locations in Dhaka, and many more coming at key locations in Dhaka and other major cities, Agora is endeavoring to fulfill the everyday needs of the urbanites through fair price, right assortment, and best quality. While Agora mainly focuses on food items – ranging from a wide variety of fish, meat, vegetables, fruits, bakery, dairy, and grocery – it also carries a vast array of other household, grocery, personal care, and various other products.Having started its journey in 2001, Agora is committed to sustaining and growing as the most trusted, loved, and frequented retail chain. Agora outlets: Dhanmodi Gulshan Mogbajar Mirpur 3. 8   Rahimafrooz Globatt Ltd (RGL) Ra himafrooz Globatt Ltd (RGL) is the global wing of Rahimafrooz group. As part of excelling two decades of international market experience and aspiring to become a truly global company, this state of the art Maintenance Free (MF) and Sealed Maintenance Free (SMF) battery manufacturing plant was established in the year 2009. With 2. million unit production capacity per year, RGL is the largest battery export plant in South Asia. In recognition to its quality management system, RGL has received ISO 9001:2008 Certification from Orion Registrar, Inc. , USA. The manufacturing process of RGL ensures highest level of environment sustainability. RGL offers a broad range of maintenance free automotive batteries manufactured according to JIS and DIN standard for a variety of vehicles, ranging from small cars to large commercial vehicles. RGL also manufactures deep cycle battery for inverter application.All these batteries have been designed by one of the leading German company. These batteries are designed for millions of vehicle enthusiasts across Asia & Pacific, Middle East, Africa, Europe and Americas. As the pay off line of  its flagship brand GLOBATT â€Å"Drive Within† illustrates, the battery is winning heart and mind of the consumers around the globe through its unparallel performance. Metro net Rahimafrooz Group, in a joint enterprise, has ventured into the first ever fiber optical commercial networking backbone in Bangladesh Metronet Bangladesh Ltd. (MBL).MBL provides robust data communication services to private sector offices, financial institutions, ATMs, and many other institutions. GreyFab and Asia Tex are two other businesses that manufacture and export textile and terry towels. Rural Service Foundation (RSF) is a not-for-profit social enterprise endeavoring to alleviate poverty and supporting the rural poor. The poverty alleviation model of RSF is based on three basic principles – affordable, replicable, and sustainable. RSF has been helpi ng the rural poor, through programs involving solar home systems, irrigation, bio gas, contract farming, battery powered instant power systems etc.Besides, RSF also runs â€Å"Dhaka Project† which is a home to some 600 urban street children, providing them with shelter, education, food, clothing, and care. Supported by Rahimafrooz. 3. 9 RAHIMAFROOZ SERVICE CENTER : Rahimafrooz Bangladesh Ltd service center is situated in 13 Mahakhali commercial areas in Dhaka. Here the product of Rahimafrooz is sold and servicing also. Here the service is done in modern computerized system. The   Ã‚  complain is also solved and handle from here. and a number of generous donors from home and abroad, RSF has a country-wide network with nearly fifty field offices. . 10 Sales process: Diesel generator: Project 1. Pre-sales meeting: (sale people) Discussion with customer regarding the actual need, the size of the generator, KVA, installation process etc. a)  Ã‚  Ã‚  Ã‚  Ã‚   Inform customer re garding product feature b)  Ã‚  Ã‚  Ã‚  Ã‚   Site visit: evaluate the customer recommended location where generator would be placed c)  Ã‚  Ã‚  Ã‚  Ã‚   Load calculation d)  Ã‚  Ã‚  Ã‚   Site suggestion: Inform customer regarding installation process; provide product recommendation based on site etc. e)  Ã‚  Ã‚  Ã‚  Ã‚   Estimated price rates 1. Offer submission (based on customer requirement)Technical Product list Financial offer Other parties involve with offer submission. (They evaluate the offer) a)  Ã‚  Ã‚  Ã‚  Ã‚   Financial institution/ Bank b)  Ã‚  Ã‚  Ã‚  Ã‚   Consultant c)  Ã‚  Ã‚  Ã‚  Ã‚   Construction contactor 1. Follow up (before sale) a)  Ã‚  Ã‚  Ã‚  Ã‚   Over phone b)  Ã‚  Ã‚  Ã‚  Ã‚   Direct visit 1. Final Negotiation meeting Price Product 1. If accepted   by the customer then work order is issued   Ã‚  Ã‚  Ã‚  Ã‚   schedule date for installation material estimate or list of material material arrangement relevant document Price and mode of paym ent 1. payment (as per work order) 2. re-installation inspection (sale people and installation and service supervisor * customer name and address * package number * capacity * installation place * material list * delivery date 1. delivery/dispatch (store officer 2. installation 3. follow up ( after sales) by the sales people 4. bill collection (accounts and sales people) * description of equipment * model * commissioning date * amount of bill claimed by the RESL 1. A. Corporate: Definition: corporate customers are those customers who buy a bulk amount of products from RESL. It can be Bank, factory, hospital, real estate or industry.Sales process is same 1 to 11 Installation Sources/sales leads are different. B. Individual: Definition: individual customers are those customers who buy one or two products from RESL. It can be Bank, factory, hospital, real estate or industry. Sales process is same 1 to 11 (except work order) 100% payment before delivery sources/sales leads are different 1. B. Referral : Colleague from RDL, RBL and etc Sales lead given by commission agent Sales man of RESL has contact with other company’s sales man   Ã‚  Ã‚  Ã‚  Ã‚   Refer customer to the RESL. Receive commission   from RESL to 11 same processes. Except work order for individual but for corporate (need work order) 1. C. Third party/Contract proposal: Rail way , police buy from third party Third party buy from RESL (supplier of generator)   Ã‚  Ã‚  Ã‚  Ã‚   But all after sales services given by the RESL Sources of sales lead: From colleague like RDL,RBL sales person of other company existing customer Direct call from customer( new or existing customer) Sales lead given by commission agent From bill board Newspaper Related generator company/ similar trend business Consultant Road site Field representativeDirect sale Customer direct come to RESL Project| Corporate| Individual| Third party/contract proposal | Referral|   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   From Existing customerDirect sale  |   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Direct saleFrom bill boardNewspaper  |   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   From bill boardNewspaperDirect saleField representativeRoad siteRelated generator company/ similar trend business|   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   From bill boardNewspaper|   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   From colleague like RDL,RBLsales person of other companySales lead given by commission agentConsultant| Figure #1 3. 11 After sales service: 1. Installation (project and individual/corporate) 2. Service (individual) . I. Emergency service 2. II. Schedule service 3. Service (project) 1. Installation( individual/corporate) a)  Ã‚  Ã‚  Ã‚  Ã‚   Site visit b)  Ã‚  Ã‚  Ã‚  Ã‚   Pre-installation inspection (sale people and installation -service supervisor)   Ã‚  Ã‚  Ã‚  Ã‚   customer name and address package number capacity installation place material list delivery date c)  Ã‚  Ã‚  Ã‚  Ã‚   Material arranged Material bought by the customer (cable) or RESL provide it. d)  Ã‚  Ã‚  Ã‚   Based on that date follow up and confirm that today you have installation date. e)  Ã‚  Ã‚  Ã‚  Ã‚   Which engineer will go for installation (his name, place and date)?This record is in excel sheet f)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Commissioning sheet * Site code * customer name * Package no * Supplier address * Technical terms * Other relevant information * Comments from customer * signed by RESL service engineer and customer 2. Service ( individual ) 1. I. Emergency service (warranty period 1year or running hour1500h) a)  Ã‚  Ã‚  Ã‚  Ã‚   Hot line b)  Ã‚  Ã‚  Ã‚  Ã‚   Call from customer c)  Ã‚  Ã‚  Ã‚  Ã‚   Whether this product is within warrant or not d)  Ã‚  Ã‚  Ã‚   Commissioning sheet cheeked by service coordinator   Ã‚  Ã‚  Ã‚  Ã‚   customer name Package no Supplier address Technical terms Other relevant information Comments from customer igned by RESL service engineer and customer e)  Ã‚  Ã‚  Ã‚  Ã‚   If it is within warranty then free service and prompt( excluding Lub oil fi lter, air filter, fuel filter and culent filter parts) f)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   send engineer to the sight g)  Ã‚  Ã‚  Ã‚  Ã‚   Service sheet sign by engineer and customer with the bill copy, feed back sheet and other material h)  Ã‚  Ã‚  Ã‚  Ã‚   Follow up only for individual (everyday at least 10 calls from excel sheet randomly) i)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Documentation how many times complains come from client. j)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Problems sheet send to Service complain par day——–6 to 10 k)  Ã‚  Ã‚  Ã‚  Ã‚   She only send critical problem to the COOEmergency service for an example>hospital>1) normal problem> normal engineer   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   >2) critical problem> critical enginee r 1. II. Schedule service a)  Ã‚  Ã‚  Ã‚  Ã‚   Hot line b)  Ã‚  Ã‚  Ã‚  Ã‚   Tell Detail information about product( KVA and price rate) c) Offer give by service coordinator of RESL[this is basically gave idea about relevant parts for generator]   Ã‚  Ã‚  Ã‚  Ã‚   Description of material Quantity Price Signature by service engineer d)  Ã‚  Ã‚  Ã‚   If accepted then schedule date e)  Ã‚  Ã‚  Ã‚  Ã‚   Bill collection f)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   AMC service[Dhaka and out   side Dhaka city] Critical A ——–one service—–price range different *   Non Critical —-one service—–price range different * Super Critical —one service—–price range different * Working hour * Payment date * Exclusion * Other applicable terms * Starting date g)  Ã‚  Ã‚  Ã‚  Ã‚   Inform about Servicing after 50h/200h/ or 6month which ever come first ( excluding Lub oil filter, air filter, fuel filter and culent filter parts) h)     Ã‚  Ã‚  Ã‚   Engineer send to the customer with the bill copy, feed back sheet and other material i)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Payment( partially or full) j)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Follow up monthly wise )  Ã‚  Ã‚  Ã‚  Ã‚   All Problems sheet send to (senior officer- customer relation l)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Service complain par day——–10 to 15 m)  Ã‚  Ã‚   She only send critical problem to the COO C. Service (project): Projects are those customers who bought a bulk amount of product. For an example GP bought——560+ diesel generators. 5 people are working as a service coordinator to maintain the service for project. Different people are handling different type project. So, their working style is also different. They have 5projects (GP, Bangla link, Eric son, AKTEL and Motorola. Processes are same but record keeping/documentation is different.Installation (projects): service coordinator Estimated( everything including product, pa rts and etc) given by the project * customer name * Package no * Supplier address * Technical terms * Other relevant information * Comments from customer * signed by RESL service engineer and customer RESL take all estimated   material( material list) for installation to the site If any extra parts or material need then RESL claim extra bill for that Commissioning paper and engineer sign that paper Problems: Service engineers are not identifying the specific problem. Every time new service engineer was coming and telling customer about new problem.Different service engineers are sending for same problem. customer become dissatisfied and for this reason sell will be decline in future Stock out problem Not delivery at proper time Not inform problem to the original sales people by Proper service Place Manpower Branding Promotion Promotion (integrated Marketing communication): RESL was doing Same Promotion for all products. For an example: diesel generator, GE lighting and power renta l. Above the line Through the line Below the line Above the line   | Bill board | Press add| Add Design for bill board | Process of press advertising:Design developed   by RESL with agency Rate (fixed)[on behalf of RESL negotiation with news paper by Agency] a)  Ã‚  Ã‚  Ã‚  Ã‚   Which paper b)  Ã‚  Ã‚  Ã‚  Ã‚   Page number c)  Ã‚  Ã‚  Ã‚  Ã‚   What size d)  Ã‚  Ã‚  Ã‚   Color Quotation send by add agency Work order send by RESL Payment Chapter four Branding 4. 1 Brand: A name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of competition. Brand elements, sometimes called brand identities, are those trademark able devices that serve to identify and differentiate the brand.The main brand elements are brand names, logos, symbols, characters, slogans, jingles, and packages. Brand element choice criteria: 1. MEMORABLE Easily recognized: it is easy to r ecognize because this is already a establish brand (general electric) Easily recalled: easy to recall also 2. MEANINGFUL Fun and interesting Rich visual and verbal imagery 3. PROTECTABLE Legally Competitively 4. ADAPTABLE Flexible Updatable 5. TRANSFERABLE Within and across product categories Across geographical boundaries and cultures The quality parameter: ProductQuality| Generator| Performance| v| Feature| v| Conformance quality| v| Reliability| v|Durability| v| Serviceability| v| Style and design| v| 4. 2 Steps of brand building TARGET MARKET| OTHER VARIABLES| VALUE INNOVATION| VALUE PRICING| VALUE DELIVERY | VALUE PROPOSITION | Brand Elements| STEPS IN BUILDING BRAND| Product Engineering| Creating Differentiation| Five Dimensional Branding| Win – WinSituation| Cost-EffectiveDistribution| Position the brand in the mind of the prospect| Create awareness/ identity of name/ symbol/personality | Position the brand to differentiate from others | Create brand image| Create trus t in the minds of customers, prospects and other stakeholders by maintaining consistency and DEL | BRAND EQUITY| Build awareness to the mind of the prospect. a)  Ã‚  Ã‚  Ã‚  Ã‚   Branded vehicle b)  Ã‚  Ã‚  Ã‚  Ã‚   All Transportation of GE will covered by the GE stickers c)  Ã‚  Ã‚  Ã‚  Ã‚   Sales man will build awareness to the dealer d)  Ã‚  Ã‚  Ã‚   Tell detail about the   brand like GE e)  Ã‚  Ã‚  Ã‚  Ã‚   Provide GE T-shirt to all sales people 4. 3   Experience wheel of Rahimafrooz Chapter Five Supply chain  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   management 5. 1 Function of Physical distribution: Inventory control a)  Ã‚  Ã‚  Ã‚  Ã‚   How much to order? b)  Ã‚  Ã‚  Ã‚  Ã‚   When to order? Warehouse(private) a)  Ã‚  Ã‚  Ã‚  Ã‚   Tejgaon b)  Ã‚  Ã‚  Ã‚  Ã‚   Begun bari c)  Ã‚  Ã‚  Ã‚  Ã‚   Mirpur Material handling )  Ã‚  Ã‚  Ã‚  Ã‚   Maintain the quality of storage b)  Ã‚  Ã‚  Ã‚  Ã‚   Moving right goods at the right ti me to make them available to the right customer. Transportation a)  Ã‚  Ã‚  Ã‚  Ã‚   Own b)  Ã‚  Ã‚  Ã‚  Ã‚   Private Channel structure: Indirect| Intermediary (RESL)| Manufacturer| End user| Level of intensities: Distribution from single outlet (RESL)| Exclusive| Ware house entry process: 1. Normal entry 2. Warranty entry A) Normal entry [which come from direct principle] Entry new products L/C number About product part number and serial number Input to the excel sheet Kept in store Delivery B) Warranty entry Entry Defective productsMatch with the product part number and serial number Input to the excel sheet For Defective products kept in store[ for physical evidence] Delivery Current process (re-placement flow): 5. 2 Target market : The target market is group of customer to whom the company aims its marketing effort. The   target market of the RBL is automobile users   and industries telecommunication, power station, railway   system, electric vehicle, forklift, ship   buoy lighting and solar power system and household for IPS and UPS battery. targeting   board groups of buyers within a specific product/market, such as automobiles.Consider for example, the global market for automobiles. In 2003 the sales   of   the Chevrolet Impala model where 1. 5 million units, In 2005 the sale corolla best selling model has sales of about 300,000 unit . considering automobile market   RBL segmented their markets and develop product like locus. The fragmentation of needs and want in market is creating subgroups of buyers of buyers within the total market, each displaying different customer satisfaction requirements. such  Ã‚   differention provides   and   opportunity for business to design product offerings to meet the needs of customer indifferent market segment.Targeting all people  Ã‚   and also organization in a market is not a typical strategy for RBL. instead, many target one or more segment within the total market. Deciding what people to target is a critically important strategic decision. Customer focus Rbl are focusing on customer. getting to close to customer Rahimafrooz associates   Ã‚  directly   with distribution, retailers and also buyers to know what drives customer satisfaction, identify customer   needs, and use those needs to target market where the business can achieve a sustainable and significant competitive advantage in this field.RBL understand customer preferences and   requirement and offerings superior value RBL developed a centralized customer feedback and query sell total commitment to customer satisfaction â€Å"is one is of their values. listening to what customer say in continual systematic way is a key tool to comprehend their needs and requirement and to satisfy them a achievement excellence in their product and service accordingly. All individuals of Rahimafrooz Group interact with customers and members of the  public everyday and do hear, eceive, or learn about their comment s, complaints, views, etc on the products, services, and dealings of the company A systematic and organized way of managing these feedbacks and queries will surely strengthen their total commitment to customer satisfaction. Strategic Policies Innovative: RBL always   find creative means to achieve their desired results, while  building on the experiences of others. Leaders : RBL aggressively in the forefront of economic development for their target markets; others will use their success  to measure own. Renewals and Growth:RBL focus our efforts and incorporate values into actions that contribute to a positive, effective and  sustainable economic transformation in the  Region. Enterprising  People: RBL find,  embrace  and  support  the  efforts  of  customers, suppliers and employees who are motivated to undertake new or risky paths that result in  personal and  company growth. Enterprising Businesses: RBL attract and engage companies willing to change a nd take risk to achieve sustainable growth, thereby providing increased employment and wealth to the Region. The Region:RBL will serve the broad  geographic area rather than Bangladesh. Strategies Build a support system that will enable the successful execution of resources to innovate superior products. Develop production process based on  the strategic plan  implementation requirements Develop cross-functional team to support  implementation of the  strategic plan. Develop a performance measures tool Develop  a  process  for  continual  feedback  on   progress  from  the  market  and  periodic assessment and  revision of their marketing strategy and plans. 5. 3 How RBL Become Market Leader 1. ive the values Integrity Honest, fair and impartial to all. – e. g. delivering on promises to external and internal customers. Excellence Self  discipline,  personal  responsibility,  overall  commitment  e. g. (a) Taking  personal resp onsibility for delivering the results as planned. e. g. (b)   Finding and  implementing new or  improved solution. Total Customer satisfaction This applies to both  internal and external customers, and must fully  satisfy both. This means those understanding their expectations, and  matching to our  resources/capabilities. Taking new initiativesFinding and implementing new ways of solving or improving issues 2. RESULT  ORIENTED Achieving   Ã‚  targets, taking corrective action, giving  feedback. 3. TEAM  BUILDER Empathic, Compassionate . e. g. (a) Receptive to ideas, complaints, feedback of others and adding positive suggestions (b)  Actively coaching team members for their  development. 4. RECEPTIVE  TO  CHANGE E. g. deriving maximum   Ã‚  benefit from   the new style of supportive training programs rather  than the previous directive style of training. 5. VISIONARY Recognizing the qualities & skills required to aspire to the company’s vis ion e. . Constantly  benchmarking themselves to fulfill aspirations. 6. ENTREPRENEURIAL Proactive, risk-taking, Self-starter, innovative, confident e. g. Constantly strive to improve knowledge of company. 5. 4 SWOT ANALYSIS OF RBL According to the study if the organization strengths, weaknesses, Opportunities and Threats (SWOT) analysis of   Rahimafrooz Bangladesh Ltd is described bellow; Strengths: Excellent cycling ability  high reliability and exceptionally long life Large electrolyte reservoir high tolerance to water loss and minimal maintenance High charging efficiencyLow self discharge, dry pre-charged plates High rate of discharge performance High resistance to adverse mechanical and electrical condition Weaknesses: Expensive than other competitors’ brand Low self discharge Opportunities: Evolution into a â€Å"Plug-in Hybrid† with higher capacity batteries and a drive train designed to operate for extended periods in electric-only mode. spread into other market sectors Increasing awareness of environmental issues likely to keep demand high. licensing of technology to other manufacturers Threats Increasing Global CompetitionLow price batteries offered by China Increasing raw materials price Chapter Six Findings Product Basis Market Share: Rahimafrooz Battery Ltd 27 Feb 2011 †¦ Bangladesh now has a battery market of 0. 6 million units worth Tk 5. 0 billion a year and Rahimafrooz has 75 per cent market share. Rahimafrooz’s     Globatt hits Local Market â€Å"We exported 0. 6 million batteries in the last two years with   Ã‚  Globatt   Ã‚  having 60 per cent share of the total units. Mr. Moin said at present there is a demand of 400 million batteries worldwide while Rahimafrooz exports 0. 5 million units a year. Business DomainsThis section describes Rahimafrooz Group’s businesses according to the four broad segments that its companies operate in. Storage Power: Rahimafrooz Group is the largest manufacturer a nd exporter of automotive and industrial batteries in Bangladesh and has the largest battery export plant in South Asia. Automotive and Electronics: Rahimafrooz Group markets and distributes various automotive after-market products such as automotive batteries, tyres and lubricant as well as electronics ranging from home appliances, power backup systems, lighting products, and electrical accessories.The Group is also one of the leading complete CNG solution providers in the country. Energy: Rahimafrooz Group has a significant presence in the energy sector of Bangladesh and offers a wide range of renewable and conventional energy solutions. Retail: Rahimafrooz Group introduced the first retail chain of superstores in Bangladesh and has played a major role in redefining everyday shopping. After gathering information I can draw the following findings: As it is found that average 75% of market share is obtained by RBL.Most of the dealers claim that they receive their order, but it is no t in   ordering period. Cent percent dealers’ claims that they are dissatisfied with the products of RBL. The Rahimafrooz Group has more than 10 exclusive outlets. Bangladesh’s largest manufacturer†¦distributor of automotive and industrial batteries. Bangladesh-based Rahimafrooz Batteries Ltd (RBL) expects India operations to contribute 10 per cent to the company’s global revenues by 2013. Rahimafrooz IPS & UPS are best in country. RBL is the first producer of industrial battery.It is a leading name in the diesel generator industry having a customer base of nearly 900. RREL is also the pioneer in providing solar-hybrid solutions for Telecom Operators’ BTS towers and solar powered irrigation systems in Bangladesh. Skilled and well-trained team to ensure quality workmanship Excellent after sales service. Rahimafrooz CNG Ltd. (RACNG) is one of the leading complete CNG solution providers in the country Chapter Seven Recommendation Service engineers are not identifying the specific problem. Every time new service engineer was coming and telling customer about new problem.Different service engineers are sending for same problem. customer become dissatisfied and for this reason sell will be declined in future Stock out problem Not delivery at proper time Not inform problem to the original sales people by Proper service Place Manpower Branding Promotion If company solves these problems then it will grow faster. Conclusion No business stays at the top if it doesn’t maintain its performance. Thus it is very important to fulfill the demand of the consumers through competitive advantage.This study has gone through different stages to identify the relations of marketing tools that can affect significantly the market share of Rahimafrooz’s product. Going through, Rahimafrooz’s product also identifies different activities of the competitors because there are also players who have special interest are their market share in the same market. Timeliness of the data is very important. I want to mention that here I learned how to work in professional environment with challenges in the real development world, how to improve coding and design techniques and how to cope with different working Throughout the whole development process.I got the chance to implement my theoretical knowledge of marketing that I learnt over last 4 years from my respected faculty members of ASA University of Bangladesh. Not only that, through report writing I got to know how to compose professional and formal reports for any project or research works. I have taken total marketing strategy of Rahimafrooz Bangladesh Limited. Through this I have tried to give an actual scenario of Marketing Strategy.

The Ethics of Accounting and Finance: Trust, Responsibility, and Control Essay

The stakeholders in this case are Juliette, Katrina, Richard, James Hubert and Greg and all board members of both companies. The expectations they should have in this case are to ensure good accounting practices where reclassification of marketable securities should be done with every stakeholder’s knowledge failure to which it would be unethical. The stakeholders expect that the companies with which they do business are ethically oriented and ensure that their efforts and decisions meet the needs and wants of suppliers, consumers and business partners CITATION Jef12 l 1033 (Jeffery, 2012). The ethical obligations of Positive Accounting Solutions and its CPAs to the stakeholders are responsibility, transparency, honesty, fairness and respect. Transparency is a key component of good accounting in Australia. It involves building reliable relationships with stakeholders and giving them relevant information that they can use CITATION Hof04 l 1033 (Hoffman, 2004). Responsibility in accounting is concerned with building trust between an organization, its stakeholders, customers and the general public. The ethical attribute of responsibility ensures that companies in Australia take into consideration what is in the best interest of all stakeholders both in the short and long term. It is unethical to be profit driven in their ventures. Several ethical issues exist for Juliette, Katrina, Richard and Greg, and Positive Accounting Solutions. Legal and ethical issues are important elements of the general framework and well-being of the accounting industry. They are values and principles that govern an organization and the decisions and actions of individuals within the organization. They give a general guideline on how an organization and its employees should act in the event of a moral dilemma CITATION Hof04 l 1033 (Hoffman, 2004). In this case there was the ethical issue if transparency where Global contractors failed to inform Juliet Forbs and her company of the intended reclassification. This selective reclassification may affect vulnerable audiences in the emerging markets of developing regions of Australia. Such situations occur because the public does not have sufficient information about securities assets ploys. The action by Global contractors is unethical and may lead to a serious breach of ethical guidelines as the perpetrators step on safeguards in the disguise of making more money. It is essential that Hubert follows the ethical guidelines of financial reporting and not let acquiring more possession get in the way of their financial obligations. Hubert, who is more concerned with his company’s financial welfare compared to that of Positive Accounting Solutions and its CPAs is more likely to cause real accounting violations and become a liability to the business partnership CITATION Jef12 l 1033 (Jeffery, 2012). Accounting questions the incorrectness of financial statements through the use of features and indicators that show the degree of openness to risk. It also considers whether the sources of risk reside in corporate areas of accounting estimates and organizational culture. This places an accountant in an ethical dilemma where one wonders whether or not to report accounting violations to the authorities. Although it is the ethical duty of the accountant to report such fraudulent activities, the ethical dilemma lies in the ramifications of the reporting. Corporate officers and senior managers may face criminal prosecution that may lead to imprisonment and fines while the company may receive bad publicity and laying off of workers when the government reviews financial records CITATION Hof04 l 1033 (Hoffman, 2004). It is the responsibility of accountants to serve the best interests of the company that they are providing auditing and accounting services for, investors and society as a whole. This can be done by providing truthful and accurate financial records. Ethical guidelines require that accountants should be honest, concise, accurate and complete while recording financial data to ensure ethics are held to the highest degree. It is also the duty of an accountant to make wise, informed decisions about the future of a company. These decisions gave notable impacts on the companies as demonstrated by Enron. Auditor virtue plays an important role in determining what to do in this case. Auditor virtue bears the responsibility of preventing, detecting and investigating fraud through as system of internal auditing and internal control. Through this, auditors can perform a retrospective control on financial data with an aim of detecting any frauds or omissions and securing the credibility and reliability of financial statements. In this case, auditing is used to show the real picture that is obtained on the securities assets CITATION Jef12 l 1033 (Jeffery, 2012). Auditors have to provide expert evidence at the eventual trial. They utilize an understanding of auditing and accounting standards and procedures, financial reporting systems and business information, litigation processes and investigative and evidence gathering and investigative techniques to perform their work.The accounting rules for valuing so-called securitised assets that were designed using a package of outstanding mortgages came under attack in 2008- 2009 because their operation developed out of their internal dynamics instead of the context from which the public shared its perceptions CITATION Jef12 l 1033 (Jeffery, 2012). Thus, the so called securitized assets became socially irresponsible and their contributions to the market rose from their personal definitions rather than from a reciprocal engagement with the stakeholders. Accounting rules for investments in securities changed following criticisms that the accounting rules were, at least in part, responsible for the financial crisis. Current accounting techniques are run by computers and therefore do not have any inner sense of normality. Scripts and queries in financial statements do exactly what they have been programmed to do and as a result a fraud hypothesis testing approach has been proposed to accommodate this limitation. This approach is a proactive or deductive approach used by accountants in fraud investigations. Accountants obtain a concise understanding of the business processes, environment and controls CITATION Hof04 l 1033 (Hoffman, 2004). This understanding helps them to have a proactive picture and predict the possibility of any frauds occurring. The team of forensic accountants brainstorms the possible frauds that may exist in the business environment that they are investigating and this may result in fifty potential schemes. Once the re has been the identification of possible schemes, the team of forensic accountants outlines how these schemes would show up in the available data. These indicators, often referred to as red flags, are the major indicators of the occurrence of fraud in an enterprise. Given each indicator, the team of forensic accountants looks for corporate databases through the use of queries and scripts by applying accounting principles. Any anomalous transactions are set aside for further investigations and this often perceived as a sample that is to be looked into closely. Accountants analyze the results of the query in order to determine potential explanations for the anomalies which may possibly be weak controls or fraud among other reasons. Once the team has established the potential explanations to be fraud, they follow up on them and conduct further investigations by employing additional queries in order to determine the cause of the anomalies. This hypothesis testing approach has been suc cessfully in quite a number of case studies including university environments, alcohol sales and healthcare in Australia. Once the financial statements have been analyzed, continuous investigation is possible. Unlike the normal testing on historical data, the tests are then programmed into live corporate systems so as to provide progressive monitoring of transactions. This progressive monitoring uses information technology which has been successfully used in several companies. Accounting rules should not be influenced by Political pressure, as was the case with the changes in accounting for investments. It is ethical to maintain the right to the truth while practicing accounting and financial reporting. Those who use financial statements have the right to accurate and truthful information when engaging in investment strategies. Clients have a legal right to receive competent and professional services from accountants who have a legal obligation to perform their responsibilities within the constraints of their skills CITATION Hof04 l 1033 (Hoffman, 2004). It is often argued that most accountants lack ethical ability to recognize and solve ethical dilemmas. This has necessitated the need to include ethics education as a major component of the accounting profession. The development of professional ethics and values should be initiated early in the accounting profession and be emphasized throughout the career. Teamwork and leadership are two important componen ts that must be in alignment so as to provide effective high quality and efficient accounting services. A strategic human resource management model provides guidance to accounting teams and leaders to deliver high-quality services in a timely manner. Accounting operates within a performance measurement that tolerates no errors. Therefore, a state-of-the-art investigation requires scientific leadership working with major stakeholders as a team to provide the best accounting services to a fraud investigation CITATION Hof04 l 1033 (Hoffman, 2004). The new techniques of accounting are significant steps in the right direction and they require leaders with skills and business tools to apply concepts such as efficiency, cost benefit analysis, economies of scale and cost-effectiveness analysis that will measure continuous improvement on a regular basis. Effective leadership is needed to develop, design and implement a solution that would resolve the core competency of an organization. Strat egic leadership in fraud investigations provides quality and timely accounting services to a company. Such leadership brings together a fragmented system consisting of thousands of accountants working within a fragmented system of organizations. Effective teamwork and leadership in accounting shows the way through the development of new innovative fraud investigations for the future CITATION Jef12 l 1033 (Jeffery, 2012). References BIBLIOGRAPHY Hoffman, W. M. (2004). The Ethics of Accounting and Finance: Trust, Responsibility, and Control. New York: Greenwood Publishing Group. Jeffery, C. (2012). Research on Professional Responsibility and Ethics in Accounting. New York: Emerald Group Publishing. Source document

Bae Hbr

In 1992, two years into construction, the project’s top managers recommended inclusion of an airport-wide integrated baggage-handling system that could dramatically improve the efficiency of luggage delivery. Originally contracted by United Airlines to cover its operations, the system was to be expanded to serve the entire airport. It was expected that the integrated system would improve ground time efficiency, reduce close-out time for hub operations, and decrease time-consuming manual baggage sorting and handling. There were, however, a number of risks inherent in the endeavor: the scale of the large project size; the enormous complexity of the expanded system; the newness of the technology; the large number of resident entities to be served by the same system; the high degree of technical and project definition uncertainty; and the short time span for completion. Due to its significant experience implementing baggage-handling technology on a smaller scale, BAE Automated Systems Inc. , an engineering consulting and manufacturing company based in Carollton, Texas, was awarded the contract. Construction problems kept the new airport from opening on the originally scheduled opening date in October 1993. Subsequently, problems with the implementation of the baggage system forced delays in the opening of the airport another three times in seven months. In May 1994, under growing pressure from shareholders, the business community, Denver residents, Federal 1Fred Isaac, Federal Aviation Administration regional administrator, quoted in â€Å"Denver Still Working Out Kinks as Its First Birthday Arrives,† USA Today (February 28, 1996), p. 4b. Fred Renville, United Airlines employee quoted in â€Å"Denver Still Working Out Kinks as Its First Birthday Arrives,† USA Today (February 28, 1996), p. 4b. Assistant Professor Ramiro Montealegre and Research Associate H. James Nelson of the University of Colorado at Boulder, Research Associate Carin Isabel Knoop, and Professor Lynda M. Applegate prepared this case as the basis for class discussion rather than to illustrate e ither effective or ineffective handling of an administrative situation. Some names have been disguised. Copyright  © 1996 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. 1 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System Aviation Administration (FAA) commissioners, and the tenant airlines and concessionaires, Denver mayor Wellington Webb announced that he was hiring the German firm Logplan to help assess the state of the automated baggage system. In July, Logplan issued an 11-page report to the City of Denver that characterized BAE’s system as â€Å"highly advanced† and â€Å"theoretically capable of living up to its promised â€Å"capacities, services and performances,† but acknowledged mechanical and electrical problems that â€Å"make it most improbable to achieve a stable and reliable operation. Logplan suggested that it would take approximately five months to get the complete BAE system working reliably. It also suggested that a backup system of tugs, carts, and conveyor belts could be constructed in less than five months. In August 1994, Mayor Webb approved the construction of a backup baggage system. At the same time, he notified BAE of a $12,000-a-day penalty for not fi nishing the baggage system by DIA’s original October 29, 1993 completion date. Webb also demanded that BAE pay for the $50 million conventional tug-and-cart baggage system. Gene Di Fonso, President of BAE, knew that his company could demonstrate that flaws in the overall design of the airport and an unsystematic approach to project changes had affected implementation of the integrated baggage system. He wondered whether he should just cancel the contract and cut his losses, or attempt to negotiate with the city for the support required to finish the system as specified, despite the severe deterioration in communication and rising hostility. Could the problems with the automated system be overcome with the dedication of additional resources? Given that the system represented a significant departure from conventional technology, would reducing its size and complexity facilitate resolution of the problems that plagued it? And, if the city could be persuaded to accept a simplified system, would the tenant airlines, particularly those with hubbing operations that had been promised more advanced functionality and better performance, be likely to sue? Building the Most Efficient Airport in the World Until about 1970, Denver’s Stapleton Airport had managed to accommodate an ever-growing number of airplanes and passengers. Its operational capacity was severely limited by runway layout; Stapleton had two parallel north-south runways and two additional parallel east-west runways that accommodated only commuter air carriers. Denver’s economy grew and expanded greatly in the early 1980s, consequent to booms in the oil, real estate, and tourism industries. An aging and saturated Stapleton Airport was increasingly seen as a liability that limited the attractiveness of the region to the many businesses that were flocking to it. Delays had become chronic. Neither the north-south nor east-west parallel runways had sufficient lateral separation to accommodate simultaneous parallel arrival streams during poor weather conditions when instrument flight rules were in effect. This lack of runway separation and the layout of Stapleton’s taxiways tended to cause delays during high-traffic periods, even when weather conditions were good. Denver’s geographic location and the growing size of its population and commerce made it an attractive location for airline hubbing operations. At one point, Stapleton had housed four airline hubs, more than any other airport in the United States. In poor weather and during periods of hightraffic volume, however, its limitations disrupted connection schedules that were important to maintaining these operations. A local storm could easily congest air traffic across the entire United States. 3 3According to James Barnes [1993], â€Å"By 1994, Stapleton was one of the top five most constrained airports in the US. There were over 50,000 hours of delay in 1988 and by 1997 the FAA had projected that Stapleton would experience over 100,000 hours of delay per year. † 2 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 The City and County of Denver had determined in the mid-1970s that Stapleton International Airport was in need of expansion or replacement. In July 1979, a study to assess the airports needs was commissioned by the City of Denver to the Denver Regional Council of Governments. Upon completion of the study in 1983, a report was issued saying that, due to its size and geographic location, and strong commitments by United and Continental Airlines, Denver would remain a significant hub for at least one major U. S. arrier. The study recommended expansion of Stapleton’s capacity. Political Situation4 The City of Denver’s 1983 mayoral race precipitated initiatives to improve the airfield infrastructure. Three candidates were vying for mayor: Monte Pascoe, Dale Tooley, and Frederico Pena. Pascoe, a prominent Denver attorney and former State Democratic Party co-chair, seized upon the airport i ssue, forcing other candidates to adopt stronger positions on airport expansion than they might have otherwise. 5 Pena and Tooley, however, drew the highest numbers of votes in the general election, and were forced into a runoff. At the persistent urging of the Colorado Forum (a collection of 50 of the state’s top business executives), Pena and Tooley signed a joint statement committing themselves to airport expansion. Pena won the runoff. Committed by a public promise that could have been enforced, if necessary, by the most highly motivated members of the region’s business leadership, Pena immediately restated his intent to expand Stapleton. The City of Denver and neighboring Adams County began to develop plans for long-term airport development in 1984. In 1985, a new site northeast of Denver was chosen. Consummation of the airport siting issue, however, was left to Adams County voters, which had to vote to permit the City of Denver to annex property therein. The city hired a consulting firm to help organize its resources and its efforts to work through the legal process. The data that was gathered through the master planning and environmental assessment later proved useful for public education. An â€Å"Annexation Agreement† between Adams County and the City of Denver was reached on April 21, 1988. Adams Country voters approved a plan to let Denver annex 43. 3 square miles for the construction of an airport. In a special election on May 16, 1989, voters of Denver endorsed a â€Å"New Airport† by a margin of 62. 7% to 37. 3%. According to Edmond, â€Å"Those two referendums passed largely on the merits of the economic benefits: jobs and sales tax revenues. † Economic Considerations A number of trends and events in the mid-1980s alarmed bank economists and other of the regions business leaders in the mid-1980s. The collapse of oil shale ventures between 1982 and 1986 saw mining employment fall from 42,000 to 26,000 jobs, while service support jobs fell from 25,300 jobs to 13,700. Construction jobs fell from 50,700 to 36,600 jobs, and the value of private construction plummeted from $24 billion to $9. 5 billion. 7 A lackluster economy led many government officials in counties and municipalities as well as in Denver to embark upon an unprecedented policy of massive public construction to save the region from what was regarded in 1987 as an economic free-fall. A $180 million-plu s municipal bond was issued for public improvements, including a new downtown library, neighborhood and major roadway improvements, and a host of overdue infrastructure investments. During the same period, 4Extracted from: Moore, S. T. : â€Å"Between Growth Machine and Garbage Can: Determining Whether to Expand the Denver Airport, 1982-1988,† Annual Meeting of the Southern Political Science Association, Atlanta, Georgia, November 4, 1994. 5Ibid. 6 7 Colorado Business Outlook Forum, University of Colorado School of Business, 1990. Small Area Employment Estimates; Construction Review, U. S. Department of Commerce, 1990 3 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System he Pena administration moved decisively to confront an increasingly aggressive Chamber of Commerce leadership that was promoting airport relocation. The determination of the â€Å"pro-New-Airport† clan was growing. The project was being marketed as a technologically advanced, state-of-the-art structure to draw businesses, import federal capital, and fund the creation of new job s with bonded debts to overcome the short-term decline in the economy. The airport was to become a grandiose project to revive the Colorado economy and a master showcase for the Public Works Department. The entire business community, recalled a member of the Mayors administrative team: The Chamber of Commerce, members of the city council, the mayor, and state legislators, participated in informational discussions with other cities that had recently built airports. [This enabled] everybody to understand the magnitude of the project. So we studied the other two airports that had been built in the United States in the last 50 years and said, Tell us everything that you went through and all the places you think there will be problems. We were not going into it blindly. Forecasts of aviation activity at Stapleton by the Airport Consultant team, the FAA, and others, however, did not anticipate events such as a new phase of post-deregulation consolidation, the acquisition in 1986 of Frontier Airlines by Texas Air (the owner of Continental), significant increases in air fares for flights in and out of Stapleton, and the bankruptcy of Continental. Consequently, the level of aviation activity in Denver was overestimated. Instead of rising, Stapleton’s share of total U. S. domestic passenger enplanements fell 4% per year from 1986 through 1989. 8 The Master Plan The City of Denvers approach to preparing a master plan for the airport was typical. â€Å"One hires the best consultants on airfield layout, noise impacts, terminal layout, on-site roadways, off-site roadways, cost estimating, financial analysis, and forecasting,† observed DIA administrator Gail Edmond. â€Å"They brainstorm and generate as many alternate layouts as possible. † Alternatives were discussed and eliminated at periodic joint working sessions, and a technical subcommittee was organized to gather input from the eventual airport users, airlines, pilots, and the FAA. â€Å"Everybody knows how to begin an airport master plan,† Edmond added. Following a bid, the consulting contract was awarded to the joint venture of Greiner, Inc. and Morrison-Knudsen Engineers for their combined expertise in the fields of transportation and construction. The consulting team, working under the direction of the DIA Director of Aviation, focused first on four elements: site selection; the master plan; the environmental assessment; and developing support by educating the public on economic benefit. The final master plan presented to the city by the team in the fall of 1987 called for the construction of the world’s most efficient airport. It was to be created from the ground up with no predetermined limitations. The plan was to allow the airport to grow and expand without compromising efficiency. Twice the size of Manhattan at 53 square miles, the nations largest airport was to be designed for steady traffic flow in all weather conditions. It was to comprise a terminal with east and west buildings joined by an atrium structure, three concourses, an automated underground people mover, and five parallel 12,000-foot-long runways on which as many as 1,750 planes could take off and land daily. Its flow-through traffic patterns would allow planes to land, taxi to concourse gates, and take 8 Furthermore, when selling the project to voters, planners at one point forecast up to 36 weekly flights to Europe by 1993. The number recorded in 1993, however, was four. The number of passengers departing form Denver was to rise from 16 million in 1985 to some 26 million by 1995. The 1994 figure, however, was about the same as the number of passengers in 1985, or half of Stapleton’s capacity. 4 Purchased by Ashley Matcheck ([emailprotected] om) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 off again all in one direction. The ultimate buildout, projected for the year 2020, was to include up to 12 full service runways, more than 200 gates, and a capacity of 110 million passengers annually. Estimated cost (excluding land acquisition and pre-1990 planning costs) was $2 billion. By the end of 1991, the estimated cost had incr eased to $2. 66 billion. Plans called for the projects completion by the fall of 1993. In September 1989, Federal officials signed a $60 million grant agreement for the new airport, which was to be financed in multiple ways—by issuing revenue bonds and securing federal grants— supplemented by a sizable investment by the city [county of Denver 1991]. Estimated federal grants for the new airport originally totaled $501 million. Portions of these were forthcoming from the FAA, for federal fiscal year 1990 in the amount of $90 million and for federal fiscal year 1991 in the amount of $25 million. The remainder of the $501 million letter of intent was to be received on an annual basis through fiscal year 1997. The revenue bonds assumed the â€Å"Date of Beneficial Occupancy† (DBO) to be January 1, 1994, with bond repayments to begin on that date. At that time, the city determined that DIA would meet the DBO no later than October 31, 1993. A member of the Mayor’s administrative team described the approach. What we did was plan the DBO date and then we planned an extra six months just in case there was a lag in the opening, which, in essence, allowed us to create stability in the market. The other thing we did was that we conservatively financed and filled every reserve account to the maximum. So we borrowed as much money as we could at the lower interest rate and were able to average the debt cost down, not up, as we thought it would be. A Build-Design Project By the time construction began at DIA in November 1989, a transfer of authority was taking place in the City of Denver. Wellington Webb was elected the new mayor. According to one of his assistants, the Pena administration had announced that the airport would be operational in October 1993. â€Å"This was a build-design project, which means that we were building the airport [while] we were designing it,† he explained. Because of the delays early on in the project, we had to accelerate construction immediately. There was a lot of pressure and too many players. This was an airport built by committee. We had regular meetings to straighten things out, but it didn’t always work. † Although the Webb administration inherited the airport project without a commitment on the part of the major carriers, the support and input of concerned airlines were absolutely key, not only financially but also in terms of input on overall airport layout, scope, and capacity, and supporting systems such as fueling and baggage handling. Denver launched the DIA program without specific commitments from either of Stapleton airports two major tenant airlines, United and Continental, which together accounted for more than 70% of existing passenger traffic. Continental committed to the new airport in February 1990, United in December 1991. Fundamental changes were made to the airport layout plan and facilities (some already under construction) to accommodate the operational needs of these carriers. The Webb administration followed the predecessor administration’s emphasis on assuring that the project’s greatest beneficiaries would be local businesses. The desire was to involve as many individual firms as practicable and to use Denver area talent. It was reasoned that local talent was easily accessible to the program management team (PMT), knew Denver building codes and practices, and had available the necessary professional labor pool to accomplish the design in accordance with the demanding schedule. In addition, existing law stated that 30% minority-owned firms and 6% women-owned firms had to participate in a public works program. The result was a contracting philosophy that maximized opportunities for regional businesses and the local workforce to compete for the work. At least five of 60 contracts awarded for the design of DIA went to Denverarea firms. These 60 design contracts generated 110 construction contracts. Eighty-eight professional service contracts also had to be coordinated. Many local firms had to be hired and the program was 5 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System chopped up into many small projects. Involvement totaled 200 to 300 firms and reached 400 during the construction phase. Five different firms designed the runways, four the terminal. The citys emphasis on encouraging everyone to compete and yet be part of the project increased the potential for interface and coordination problems. Denver’s flat economy led the administration to keep construction money within the city. Although this benefited the city, it introduced an additional burden on administration. As many as 40-50 concurrent contracts involved many interrelated milestones and contiguous or overlapping operational areas. The estimated daily on-site work force population exceeded 2,500 workers for a 15 to 18-month period beginning in mid-1991 and peaked at between 9,000 and 10,000 in mid-1992. Adding to the human resource coordination problems was a forecasted 4,000 deliveries daily. Construction volume for six months in mid-1992 exceeded $100 million per month. The prolonged period of assessment and negotiation prior to final approval of the project, and the financial plan selected (which required that bond repayments begin on January 1, 1994), pressured the PMT to push the project ahead at all cost. Because the project had to assume the characteristics of a â€Å"fast-track† project early in the construction startup, the compressed design period precipitated a more dynamic construction effort han might be anticipated for a competitively bid, fixed price program. Reliance on a design/build method for the project was, according to one DIA official, unusual because projects this complex normally happen during separate stages. For example, you need to finish up the site selection before you begin the master planning. † Moreover, communication channels between th e city, project management team, and consultants were neither well defined or controlled. If a contractor fell behind, a resident engineer who reported to one of the area managers said, the resident engineer would alert the contractor and document this. The resident engineer would document what would have to be done and what additional resources were necessary to get back on schedule and finish the contract on time. As a public agency it was enormous, the amount of documentation that we did. I don’t know how many trees we cut down just for this project. The resident engineer had about five to eight 12-drawer filing cabinets of documentation and this was nothing compared to what the area manager had. It was just incredible. There were at least four to six copies of everything. The scheduling manager described the evolution of the tracking system that was used. One of the biggest problems we had was keeping track of all the changes. So we developed a database system that was installed at each one of the resident engineer’s trailers and each contract administrator was then charged with keeping that system up to date and feeding us disks, which we would then merge together periodically to produce an integrated report. But every party had developed their own tracking system before the start of the project. That worked well for each group, but there was no way to take each one of these divergent systems and combine it into one, comprehensive report. So when we introduced the change tracking system everybody said, fine, that’s wonderful, and I’ll update it when I get to it and when I get time. It took three years to implement the tracking system. Project Management In a fast-moving, ever-changing environment such as the development of a new airport, the management structure must be able to rapidly produce engineering alternatives and the supporting 6 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 ost and schedule data. 9 But because DIA was financed by many sources and was a public works program, project administrators had to balance administrative, political, and social imperatives. 10 The City of Denver staff and consultant team shared leadership of the project and coordinated the initial facets of DIA design. â€Å"The initial thought, reflected one staff member, was that the city staff would do their thing and the consulting staff do theirs and later we would coordinate. It became evident within a very short time that we were doing duplicate duties, which was inefficient. Finally the city decided to coordinate resources. † The city selected a team of city employees and consultants and drafted a work scope document that clearly separated the city’s from the consultants’ responsibilities. The elements the city did not delegate to consultants included ultimate policy and facility decisions, approval of payments, negotiation and execution of contracts, facilitation of FAA approvals, affirmative action, settlement of contractor claims and disputes, selection of consultants, and utility agreements. The city delegated some elements such as value engineering, construction market analysis, claim management, on-site staff and organization, and state-of-the-art project control (computerized management of budget and schedule). Exhibit 1 depicts the DIA management structure. The program management team became the organization dedicated to overseeing planning and development for the new airport. Headed by the associate director of aviation, the team was partially staffed by city career service employees. To add experience and capability, the city augmented the PMT with personnel from the joint venture of Greiner Engineering and MorrisonKnudsen Engineers, the consulting team. Observed one program management team member, â€Å"This working partnership of the City of Denver and consulting joint venture team developed into a fully integrated single organization, capitalizing on the best to be offered by all participants, and optimizing the use of personnel resources. † DIA’s operational project structure comprised five different areas subdivided into smaller units. The working areas were: site development (earthmoving, grading, and drainage); roadways and on-grade parking (service roads, on-airport roads, and off-airport roads connecting to highways); airfield paving; building design (people-mover/baggage-handler, tunnel, concourses, passenger bridge, terminal, and parking); and utility/special systems and other facilities (electrical transmission, oil, and gas line removal and relocation). An area manager controlled construction within each area. Area managers were responsible for the administration of all assigned contracts and, in coordination with other area managers, for management of the portion of the overall site in which their work took place. United Airlines’ Baggage System From the public’s perspective, the â€Å"friendliness† of any airport is measured by time. No matter how architecturally stimulating a new airport structure, the perception of business or leisure travelers is often registered in terms of efficiency in checking luggage at the departure area or waiting to claim a bag in the arrival area. The larger the airport, the more critical the efficient handling of baggage. Remote concourses connected by underground tunnels present special problems for airport planners and operators because of the great distances passengers and baggage must travel. The purpose of an airport being to move passengers as efficiently as possible, moving bags as quickly is 9 The DIA project used the so-called fast-tracking method, which made it possible to compress some activities along the critical path and manage the construction project as a series of overlapping tasks. 0 These included considerations such as affirmative action, local participation, neighborhood concerns, civic pride, input from the disabled community, art, secondary employment benefits of contract packaging, concern for the environment, and political interest. 7 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System part and pa rcel of that responsibility. Rapid transport of frequent flyers accomplishes very little if bags are left behind. DIAs Concourse A, which was to house Continental Airlines, was situated some 400 meters, and United Airlines’ Concourse B nearly 1,000 meters, north of the main terminal. Concourse C, home to other carriers including American, Delta, Northwest, America West, and TWA, sat parallel to the other two concourses more than 1,600 meters north of the main terminal. The initial project design did not incorporate an airport-wide baggage system; the airport expected the individual airlines to build their own systems as in most other American airports. 1 United Airlines, which in June 1991 signed on to use DIA as its second-largest hub airport, proceeded to do just that. Needing an automated baggage handling system if it was to turn aircraft around in less than 30 minutes, United, in December 1991, commissioned BAE Automatic Systems, Inc. , a world leader in the design and implementation of material handling systems, to develop an automated baggage handling system for its B Concourse at D IA. The contract, which included engineering and early parts procurement only, was valued at $20 million; and the task was estimated to be completed in two and one-half years. We began working at DIA under a contract directly with United Airlines, recalled Di Fonso. Obviously, United Airlines has experience with airports. They concluded that the schedule had gotten totally out of control from the standpoint of baggage and they acted to serve their own needs, basically to protect themselves. We contracted with United and were already designing their portion of the system before the city went out for competitive bidding. BAE was founded as a division of Docutel Corporation in 1968. Docutel, which had developed the Telecar (a track-mounted automated baggage system), constructed an automated baggage system for United Airlines at San Francisco airport in 1978. When Docutel ran into financial difficulties during this installation, United asked Boeing, a major supplier of its aircraft, to take over the company. Boeing agreed and the new company, a wholly-owned subsidiary dubbed Boeing Airport Equipment, completed the San Francisco installation. In 1982, Boeing sold the company to its senior management, which renamed it BAE Automated Systems. In August 1985, BAE became an operating unit of Clarkson Industries, a wholly-owned subsidiary of London-based BTR plc. BTR plc (formerly British Tire and Rubber), was a $10 billion conglomerate with global interests in building, paper and printing products, and agricultural and aircraft equipment. In 1994, BAEs 365 employees worked on projects across the United States and in Europe and Australia. In-house engineering, manufacturing, and field support capabilities enabled BAE to develop, design, manufacture, install, and support every project it undertook from start to finish. BAE also provided consulting, engineering, and management services for airport projects and a variety of material handling applications. With sales of $100 million in 1994, up from approximately $40 million in 1991, BAE accounted for 90% of U. S. baggage sorting equipment sales. Between 1972 and 1994, the company had successfully designed, manufactured, and installed nearly 70 automated baggage handling systems (worth almost $500 million dollars) at major airports in the United States, in New York, Dallas-Fort Worth, Chicago, San Francisco, Atlanta, Miami, Newark, and Pittsburgh. It had also installed systems in Vancouver and London and was selected, in 1992, as a consultant to the $550 million main terminal for the New Seoul Metropolitan Airport in South Korea. BAE was a very self-contained, integrated company structured along two business lines: manufacturing and engineering. Its approximately 200,000 square foot manufacturing facility was capable of producing nearly all of the components required by BAE systems save motors, gearboxes, and bearings. The engineering department was structured according to major projects. Each project was assigned a project manager who reported directly to the company president. 1 Rifkin, G. : â€Å"What Really Happened at Denver’s Airport,† Forbes, SAP Supplement, August 29, 1994. 8 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 Implementing an Integrated Baggage-Handling System BAE had already commence d work on Uniteds baggage system when the PMT recognized the potential benefits of an airport-wide integrated baggage system. Moreover, as one DIA senior manager explained, â€Å"airlines other than United simply were not coming forward with plans to develop their own baggage systems. Airport planners and consultants began to draw up specifications and the city sent out a request for bids. Of 16 companies contacted, both in the United States and abroad, only three responded. A consulting firm recommended against the submitted designs, on the grounds that the configurations would not meet the airport’s needs. BAE was among the companies that had decided not to bid for the job. BAE had installed the Telecar system at a number of other airports and the basic technologies of the Telecar, laser barcode readers, and conveyor belt systems were not new. What was new was the size and complexity of the system. A grand airport like DIA needs a complex baggage system, explained Di Fonso , Therefore the type of technology to be used for such a system is the kind of decision that must be made very early in a project. If there is a surprise like no bidders there is still time to react. At DIA, this never happened. Working with United Airlines, we had concluded that destination-coded vehicles moving at high speed was the technology needed. But quite honestly, although we had that technology developed, its implementation in a complex project like this would have required significantly greater time than the city had left available. A United project manager concurred: â€Å"BAE told them from the beginning that they were going to need at least one more year to get the system up and running, but no one wanted to hear that. † The City of Denver was getting the same story from the technical advisers to the Franz Josef Strauss Airport in Munich. The Munich Airport had an automated baggage system, but one far less complex than DIA’s. Nevertheless, Munich’s technical advisors had spent two years testing the system and the system had been running 24 hours a day for six months before the airport opened. Formulating Intentions As BAE was already working on United’s automated baggage handling system and enjoyed a world-wide reputation as a superior baggage system builder, Denver approached the company. BAE was asked to study how the United concept could be expanded into an integrated airport system that could serve the other carriers in the various concourses. BAE presented the City of Denver with a proposal to develop the â€Å"most complex automated baggage system ever built,† according to Di Fonso. It was to be effective in delivering bags to and from passengers, and efficient in terms of operating reliability, maintainability, and future flexibility. The system was to be capable of directing bags (including suitcases of all sizes, skis, and golf clubs) from the main terminal through a tunnel into a remote concourse and directly to a gate. Such efficient delivery would save precious ground time, reduce close-out time for hub operations, and cut time-consuming manual baggage sorting and handling. Although an automated system was more expensive initially than simple tugs and baggage carts, it was expected that it would reduce the manpower which was required to distribute bags to the correct locations. Bags unloaded from an aircraft arriving at a particular concourse would barely be touched by human hands. Moved through the airport at speeds up to 20 mph, they would be waiting when passengers arrived at the terminal. To prove the capability of its mechanical aspects, and demonstrate the proposed system to the airlines and politicians, BAE built a prototype automated baggage handling system in a 50,000 square foot warehouse near its manufacturing plant in Carrollton, Texas. The prototype system convinced Chief Airport Engineer Walter Slinger that the automated system would work. [The City of Denver] approached us based on one core concept, recalled Di Fonso. They wanted to have a fully integrated, airport-wide baggage system. The city 9 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System had two major concerns. First, they had no acceptable proposal. Second, United was probably going to go ahead and build what it needed and the rest of the airport would have been equipped with something else. Di Fonso continued, When we arrived on the scene, we were faced with fully defined project specs, which obviously in the long run proved to be a major planning error. The city had fallen into a trap, which historically architects and engineers tend to fall into as they severely underplay the importance and significance of some of the requirements of a baggage system, that is, arranging things for the space into which it must fit, accommodating the weight it may impose on the building structure, the power it requires to run, and the ventilation and air conditioning that may be necessary to dissipate the heat it generates. In April 1992, BAE was awarded the $175. 6 million contract to build the entire airport system. According to Di Fonso, company executives and city officials hammered out a deal in three intense working sessions. We placed a number of conditions on accepting the job, he observed. The design was not to be changed beyond a given date and there would be a number of freeze dates for mechanical design, software design, permanent power requirements and the like. The contract made it obvious that both signatory parties were very concerned about the ability to complete. The provisions dealt mostly with all-around access, timely completion of certain areas, provision of permanent power, provision of computer rooms. All these elements were delineated as milestones. Denver officials accepted these requirements and, in addition, committed to unrestricted access for BAE equipment. Because of the tight deadlines, BAE would have priority in any area where it needed to install the system. Di Fonso elaborated, When we entered into the contract, Continental Airlines was still under bankruptcy law protection. The city was very concerned that they would be unable to pay for their concourse. They only contracted for about 40% of the equipment that is now in concourse A, which was the concourse that Continental had leased. Beyond that, concourse C had no signatory airlines as leaseholders at the time. The city, therefore, wanted the simplest, most elementary baggage system possible for concourse C. The outputs and inputs were very, very crude, intentionally crude to keep the costs down because the city had no assurance of revenue stream at that point in time. The city did not get the airlines together or ask them what they wanted or needed to operate. The approach was more along the lines of we will build the apartment building and then you come in and rent a set of rooms. Project Organization and Management No major organizational changes to accommodate the new baggage system were deemed necessary, although some managerial adjustments were made on the DIA project. Design of the United baggage system was frozen on May 15, 1992, when the PMT assumed managerial responsibility for the integrated baggage system. The direct relationship with BAE was delegated to Working Area 4, which also had responsibility for building design efforts such as the people-mover, airside concourse building, passenger bridge main landside building complex and parking garage, and various other smaller structures. The area manager, although he had no experience in airport construction, baggage system technologies, or the introduction of new technologies, possessed vast experience in construction project control management. BAE had to change its working structure to conform to DIAs project management structure. Di Fonso explained, 10 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 There was a senior manager for each of the concourses and a manager for the main terminal. The bag system, however, traversed all of them. If I had to argue a case for right of way I would have to go to all the managers because I was traversing all four empires. In addition, because changes were happening fast at each of these sites, there was no time to have an information system to see what is concourse A deciding and what is concourse B deciding. We had to be personally involved to understand what was going on. There was no one to tie it all together and overlap all these effects because the basic organization was to manage it as discrete areas. It was pandemonium. We would keep saying that over and over again. Who is in charge? For the first two years of the project, Di Fonso was the project manager. The project was divided into three general areas of expertise: mechanical engineering, industrial control, and software design. Mechanical engineering was responsible for all mechanical components and their installation, industrial control for industrial control design, logic controller programming, and motor control panels, and software design for writing real-time process control software to manage the system. At the time the contract with BAE was signed, construction had already begun on the terminal and concourses. Substantial changes had to be made to the overall design of the terminal and some construction already completed had to be taken out and reinstalled to accommodate the expanded system. Installation of the expanded system was initially estimated to require more than $100 million in construction work. Walls had to be removed and a new floor installed in the terminal building to support the new system. Moreover, major changes in project governance were taking place during the baggage system negotiations. In May 1992, shortly after the baggage system negotiations commenced, the head of the DIA project resigned. The death in October 1992 of Chief Airport Engineer Slinger, who had been a strong proponent of the baggage system and closely involved in negotiations with BAE, also exerted a significant impact on the project. His cooperation had been essential because of the amount of heavy machinery and track that had to be moved and installed and the amount of construction work required to accommodate the system. His replacement, Gail Edmond, was selected because she had worked closely with him and knew all the players. Her managerial style, however, was quite different from Slinger’s. A Public Works manager recalled his first reaction to the change: â€Å"[The airport] is not going to be open on time. † A United Airlines project manager summarized Edmond’s challenge thus: Slinger was a real problem solver. He was controversial because of his attitude, but he was never afraid to address problems. He had a lot of autonomy and could get things done. Gail was in a completely different position. Basically, she had a good understanding of how the project was organized and who the key players were, but didn’t know much about the actual construction. Also, the city council didn’t give her anywhere near the autonomy and the authority that Slinger had and she had to get approval from the council on just about all decisions. They really tied her hands and everyone knew it. Di Fonso echoed the project managers assessment: Walter [Slinger] understood that one of the things we had to have was unrestricted access. I think he clearly understood the problem the city was facing and he understood the short timeframe under which we were operating. He was the one that accepted all of the contractual conditions, all the milestones of the original contract. He really had no opportunity to influence the outcome of this project, however, because he died within months after the contract was signed. I think Gail 11 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 96-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System did an excellent job [but] she was overwhelmed. 12 She just had too much. The layers below focused inward, worrying about their own little corners of the world. â€Å"Not only did we not get the unrestricted access that was agreed upon,† Di Fonso emphasized, â€Å"we didn’t even have reas onable access. † Ten days after Slinger’s death, a BAE millwright found a truck from Hensel Phelps, the contractor building Concourse C, blocking her work site. She asked someone to move the truck or leave the keys so it could be moved. According to a BAE superintendent, â€Å"she was told that ‘This is not a BAE job and we can park anywhere we please: is that clear? ’† Elsewhere, BAE electricians had to leave work areas where concrete grinders were creating clouds of dust. Fumes from chemical sealants forced other BAE workers to flee. Di Fonso pleaded with the city for help. â€Å"We ask that the city take prompt action to assure BAE the ability to continue its work in an uninterrupted manner,† he wrote. â€Å"Without the city’s help, the delays to BAE’s work will quickly become unrecoverable. 13 To further complicate matters, the airlines began requesting changes to the system’s design even though the mechanical and software designs were supposed to be frozen. â€Å"Six months prior to opening the airport,† Di Fonso recalled, â€Å"we were still moving equipment around, changing controls, changing software design. † In August 1992, for example, United altered plans for a transfer system for bags changing planes, requesting that BAE eliminate an entire loop of track from Concourse B. Rather than two complete loops of track, United would have only one. This change saved approximately $20 million, but required a system redesign. Additional ski-claim devices and odd-size baggage elevators added in four of the six sections of the terminal added $1. 61 million to the cost of the system. One month later, Continental requested that automated baggage sorting systems be added to its west basement at an additional cost of $4. 67 million. The ski claim area length was first changed from 94 feet to 127 feet, then in January 1993, shortened to 112 feet. The first change added $295,800, the second subtracted $125,000, from the cost. The same month, maintenance tracks were added to permit the Telecars to be serviced without having to lift them off the main tracks at an additional cost of $912,000. One year later, United requested alterations to its odd-size baggage inputs—cost of the change: $432,000. Another problem was the city’s inability to supply â€Å"clean† electricity to the baggage system. The motors and circuitry used in the system were extremely sensitive to power surges and fluctuations. When electrical feedback tripped circuit breakers on hundreds of motors, an engineer was called in to design filters to correct the problem. Although ordered at that time, the filters still had not arrived several months later. A city worker had canceled a contract without realizing that the filters were part of it. The filters finally arrived in March 1994. A third, albeit disputed, complication related to Denver’s requirement, and city law, that a certain percentage of jobs be contracted to minority-owned companies. The City of Denver had denied BAE’s original contract because it did not comply with hiring requirements, where upon BAE engaged some outside contractors in lieu of BAE employees. Di Fonso estimated that this increased costs by approximately $6 million, a claim ejected by the Mayors Office of Contract Compliance. Then, in September 1993, BAE’s contract negotiations with the City of Denver over maintenance of the system resulted in a two-day strike of 300 millwrights that was joined by some 200 electricians. BAE negotiated with Denver for maintenance workers to earn $12 per hour on certai n jobs that the union contended should be worth $20 per hour. As a result, BAE lost the maintenance contract. 12 In addition to her role as Chief Airport Engineer, Edmond kept her previous responsibilities as Chief of Construction and Acting Director of Aviation. 3 Rocky Mountain News, January 29, 1995 12 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 Project Relations Much of the effort for implementing the baggage system was directed within one of the four working areas. The relationship with the management team was very poor, recalled Di Fonso. The management team had no prior baggage handling competence or experience. This was treated as a major public works project. The management team treated the baggage system as similar to pouring concrete or putting in air-conditioning ducts. When we would make our complaints about delays and access and so forth, other contractors would argue their position. The standard answer was, Go work it out among yourselves. . . . With contractors basically on their own, this led almost to anarchy. Everyone was doing his or her own thing. Another perspective was offered by a project manager from Stone Webster, a consultant to the PMT, reflecting on the work done by BAE: â€Å"This contractor simply did not respond to the obvious incredible workload they were faced with. Their inexperienced project management vastly underestimated their task. Their work ethic was deplorable. †14 PMT management insisted that access and mechanical issues weren’t the problem. They were running cars in Concourse B all summer (1993), Edmund observed. The problem was that the programming was not done and BAE had full control of the programming. †15 Lawsuits and a Backup Baggage System In February 1993, Mayor Webb delayed the scheduled October 1993 airport opening to December 19, 1993. Later, this December date was changed to March 9, 1994. Everybody got into the panic mode of trying to get to this magical date that nobody was ready for,† a senior vicepresident for BAE recalled. In September 1993, the opening was again postponed—this time until May 15, 1994. In late April 1994, the City of Denver invited reporters to observe the first test of the baggage system, without notifying BAE. Seven thousand bags were to be moved to Continentalâ€℠¢s Concourse A and United’s Concourse B. So many problems were discovered that testing had to be halted. Reporters saw piles of disgorged clothes and other personal items lying beneath the Telecar’s tracks. Most of the problems related to errors in the system’s computer software, but mechanical problems also played a part. The software that controlled the delivery of empty cars to the terminal building, for example, often sent the cars back to the waiting pool. Another problem was â€Å"jam logic† software, which was designed to shut down a section of track behind a jammed car, but instead shut down an entire loop of track. Optical sensors designed to detect and monitor cars were dirty causing the system to believe that a section of track was empty when, in fact, it had held a stopped car. Collisions between cars dumped baggage on tracks and on the floor; jammed cars jumped the track and bent the rails; faulty switches caused the Telecars to dump luggage onto the tracks or against the walls of the tunnels. After the test, Mayor Webb delayed the airport’s opening yet again, this time indefinitely. â€Å"Clearly, the automated baggage system now underway at DIA is not yet at a level that meets the requirements of the city, the airlines, or the traveling public,† the mayor stated. The city set the costs of the delay at $330,000 per month. Recognizing that his reputation was staked on his ability to have a baggage system performing to a point at which the new airport could be opened, Mayor Webb engaged, in May 1994, the German firm Logplan to assess the state of the automated baggage system. In July, Logplan isolated a loop of track that contained every feature of the automated baggage 14 15 Forbes, ASAP Supplement, August 29, 1994. Forbes, ASAP Supplement, August 29, 1994. 13 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System ystem and intended to run it for an extended period to test the reliability of the Telecars. Jams on the conveyor belts and collisions between cars caused the test to be halted. The system did not run long enough to determine if there was a basic design flaw or to analyze where the problems were. Logplan recommended construction of a backup baggage system, and suggested using Rapistan Demag, a firm it had worked with in the past. Construction of a backup system was announced in August 1994. The system itself cost $10. million, but electrical upgrades and major building modifications raised the projected cost to $50 million. In the meantime, the City of Denver, as well as many major airlines, hired legal firms to assist with negotiations and future litigation. â€Å"We will have enough legal action for the rest of this century,† a city administrator mused. The City of Denver had to communicate with such parties as the United States Federal grand jury, Securities Exchange Commission, and the General Accounting Office. The federal grand jury was conducting a general investigation concerning DIA. The SEC was investigating the sale of $3. 2 billion in bonds to finance DIA’s construction, and GAO the use of Congressional funds. Di Fonso, reviewing Mayor Webb’s letter and requests that BAE pay a $12,000-a-day penalty for missing DIA’s original October 29, 1993 completion date, as well as assuming the costs of building the $50 million conventional tug-and-cart baggage system, summed up the situation thus: We have gotten to the point with the city that literally we are not talking to each other. Consultants recommended a backup baggage system, and the minute that the decision was made, the city had to defend it. We are left out in limbo. 14 Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012 396-311 -15- Exhibit 1 Organization Chart Acting Associate Director of Aviation Denver International Airport City Attorneys Contract Compliance DIA Coordinator Tenant Facilities Administrative Assistant Marketing/Public Information Manager Planner Program Manager Computer Systems Administration Deputy Program Manager Airline Specialty Systems Environmental Engineer Contracts Risk Management Financial Manager of Design Contract Administration Administrative Assistant Manager of Project Controls Architectural Supervisor Engineering Supervisor Document Control Contracts Staff Clerical Staff MIS Schedule Cost Estimating Project Managers Support Staff Manager of Construction Project Controls Support Staff Safety Manager Senior Project Engineer QA/QC Manager Employee Relations Area 12 Manager Area 3 Manager Area 4A Manager Area 4B Manager Area 5 Manager Construction Support Staff Source: City and County of Denver, Colorado, Airport System Review Bonds, Series 1991D, October 1991. Purchased by Ashley Matcheck ([emailprotected] com) on April 11, 2012