ZITCONG SUMMER 2023 .ZitCong Inc*. is a Taiwanese owned multinational corporation. It has been operating in Taiwan for the past 27 years. Its main office is in Taipei. Its main line of business is marketing of second hand vehicles from Europe, Japan and South Korea.
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TMAS 5130 Course Learning Assessment Case Study : ZITCONG SUMMER 2023 .ZitCong Inc*. is a Taiwanese owned multinational corporation. It has been operating in Taiwan for the past 27 years. Its main office is in Taipei. Its main line of business is marketing of second hand vehicles from Europe, Japan and South Korea. Such vehicles are completely overhauled. The company lives with the mission of providing the transportation needs and conveniences of the riding public. It is also engaged in the marketing of vehicle parts from abroad. It is registered in the Securities and Exchange Commission as Zitkong Inc. For the fiscal year 2001, it has registered an asset of $ 420 million, gross revenue of $ 215 million, net income of $ 14 million and payables amounting to $ 176 million. For the year 2015, its asset has ballooned to $ 680 million, gross revenue of $ 198 million, net income of $ 2.7 million and liability $ 178 million. Its top management is composed of mainly Taiwanese nationals. It imposes a corporate culture of professionalism and consumer first service. For the year 2002, it is on top of competition in its line of business with respect to complaints and litigation. On February 1998, Alilea Jao, an inventory clerk, was pinned by a truck hawler during her duty. The management declared it as an accident. The employee died on the spot. Her family was paid $ 125 thousand. Five months thereafter, series of accidents involving 9 of its sold vehicles happened. Eleven fatalities were registered. Investigators cited mechanical breakdown specifically break failures as the caused of the accidents. The cases are still under court proceedings. On November 2000, two Arab investors infused funds in the company. Twenty days after, some Taiwanese stockholders sold their stocks of Zitcong as a reaction to the entry of other nationals. Thereafter, Zitcong became a multicultural company of Taiwanese, Arab, Japanese, Korean, Australian and Singaporean
The start of the first quarter of 2001 was welcomed with a labor strike. The labor union asked for the implementation of minimum wage and guaranteed security of tenure. For the entire labor force, forty two percent of the total working force are casual. Seventeen percent are permanent and the rest are contractual. Eight months after, the National Labor Relations Commission decided in favor of the workers. Heavy fines paid by Zitcong to the government for violating labor laws. On May 26, 2001, the company achieved an ISO 4200 accreditation, the highest confirmation in the industry. ISO 4200 covers facility security and safety. Eighty eight days after, ISO 9006 on environment protection was achieved by Zitcong. Before the end of 2001, the company’s second warehouse where there was stockpile of Japan motor parts got burned and as consequence two in-house workers died. The cause of the fire was faulty electrical wiring. Until now, suppliers of the motor parts have not been paid due to an unknown reason. Coincidentally, during the fire investigation, authorities discovered traces of illegal stockpiling of toxic used crude oil. No case was filed against Zitcong. Zitcong management tried to settle the issue through compromise and under the table agreement. Also on the same period, the company gave the permanent employees their 13th and 15th month pay. Zitcong was enlisted in the Taiwanese Stock exchange making its securities officially offered, listed and traded. The initial price was $ 2.50 per share. On February 2002, a Zitcong manager was stabbed to death by the husband of his secretary when they were caught flagrente delicto in carnal situation. On the same month eighteen sold vehicles suffered major accidents due to brake malfunctioning. The Chairman of the Board, who owns the majority of stocks, of the company resigned as an honorable act of mea culpa. He was succeeded by his son – a fresh college graduate from Harvard University. On July 2002, the corporation decided to get vertical by engaging in bus operations in Bangkok, Thailand. A month after, the management announced that the company is also embarking in food business – Taiwanese dishes as the main drawing charm. On March 2003, it absorbed two of its biggest competitors thus benefiting from the additional
assets of $ 220 million, network of clients and experience. However, $ 250 million was added to its liabilities. To offset this, the company filed a $ 400 million loan from several banks. Only ANZ Bank and Standard Chartered didn’t turn down the application for loans. However, initial screening and investigation showed that Standard Chartered is not keen on granting the loan. In 2010, Zitcong bought minority shares of a locally based Airline in Vietnam. Since then, Zitcong has been trying to gain majority ownership of the company. In 2014, the company decided to boost its vertical business invasion by engaging in motor parts manufacturing to remedy its defective parts products. It also transferred to its new exclusive office building in Licheng where its housing project for its employees and officers are being constructed. In 2014, the Earning Per Share (EPS) of Zitcong is $ 2.70. Its per share value is $ 268.65. Likewise, the transport industry is on the boom but it is facing challenges of heavy government regulation in the next few years. The average per share value of stock in TWSE is $ 306.95 and the standard deviation is $37.65. In 2015, the per share value of stock in TWSE reached $ 330 and the standard deviation is believed to reach $ 40. By 2017, the cases of crashes and malfunctions of its converted vehicles went as high as 13%. Zitcong was still facing litigations and civil claims. Furthermore, customers who had negative experiences with Zitcong’s vehicles were furious and launched social media groups that continuously assail Zitcong’s product credibility and poor customer service. In spite of this , Zitcong vehicles still have high market demand and strong sales because of its low prices and affordable payment packages. Since 2018, the management of Zitcong hired Six Sigma experts as consultants to reduce the defects to less than 6 %. Below is the record of the ratio of defective vehicles produced in Zitcong from 1997.
By June of 2019, another fire gutted the second warehouse of Zitcong. It was the same warehouse that burned in 2001 and coincidentally, the causes of the fire were the same. One died in that incident and two more suffered permanent disability injury. This time, the City of Taipei sued Zitcong on behalf of the victims and for violations of city’s ordinance on fire and safety for industrial companies. The compensation for the victims was granted in an out of court settlement of the case.
Anecdotal Information: A report by the Taipei Fire Bureau for the June 19, 2019 fire incident in Zitcongs warehouse # 2 provided the following findings as quoted “Yesterday, a devastating or massive or serious fire accident took place in the 2nd warehouse of Zitcong Inc. In Chemin St. Baua District in Taipei. It was a 2 floor 14000 square meters building. After meeting several workers from the factory it was known that smoke engulfed the whole building at 1pm and people of the building were found to have panicked getting out.” “Some of the workers believed that the fire originated from the storage of flammable chemical supplies through a possible short circuit. Odor of burning wires was sensed before the incident. Unfortunately, the fire extinguishing system in the building was poorly setup and maintained. Adding up, the sprinkles were very few and limited. The fire extinguishers were also small, sometimes expired and not working, and scarce. As a result of unreliable fire alarm system and poor firefighting capability the fire spread rapidly in the warehouse. Somebody also testified that there was a big bang in the west wing of the warehouse where an old unused generators and deposit of diesel are being kept. About 100 workers and 20 officers of the factory started running to and from to save their lives. The staircase of the building was so narrow and there was no emergency escape route. As a result, 2 workers died and multiple employees were injured in the fire and the stampede.” Additional information: Fire Brigade and Civil Defense personnel reached the spot after half an hour. They brought the fire under control after a relentless effort of six hours. Almost half of the building was consumed by the fire. The city government has formed a committee to investigate the conflagration. Some of the initial findings of the causes of the fire were worn out wiring, toxic chemicals and unsupervised flammable materials and inefficient fire alarms, Two years after, an anonymous email sent to Fire Brigade and Civil Defense Department claimed that the fire in Zitcong was intentional but no details of the identity of the culprit was given. Getting back to management because of unfair labor practices was the motive according to the email. By the end of 2019, Zitcong’s company’s assets almost doubled from 10 years ago. It’s net profit also have tripled. It’s tax contribution to the city and its social involvement in the community’s welfare and prosperity were very significant to that extent that the city was cautious and hesitant to politically and administratively sanction its violations.
At the start of 2020, Zitcong’s business in Thailand had an issue with its labor union. Bus and taxi drivers of Zitcong accused the company of low salary, unpaid overtime and long hours of work. An initial study made by the delegates of the head office presented that poor and manual work scheduling, lack of time management and tracking of bus trips, lack of leadership and poor implementation of company policies as the main causes of the labor unrest in Thailand. By March of 2020, the dreaded Covid 19 plagued the world in a massive global scale. Almost no country was spared by the pandemic. Businesses of Zitcong suffered financial losses because of work stoppage and disruption in its operations. Intermittently, Zitcong operated when the policies on lockdowns were eased out. Part of the Zitcong conglomerate is a restaurant business in the Zhongzheng District named Aquatic Taste. It has become one of the popular restaurants near the bayside. Its busy hours are between 11:30 AM to 1:30 PM and 5:30 onwards of weekdays, and all day of weekends. The store opens from 10 AM to 1 AM everyday. During the hype of the Covid pandemic the restaurant was less active due to lockdowns and partial openings. After the pandemic and everything has return to normal, the restaurant administrator of Aquatic Taste ponders on what changes he could initiate in his restaurant to minimize wastes and work flow disruption. He looked at the restaurant layout below and his critical mind started looking for areas to improve efficiency.
Last year, 2022, the transportation business of Zitcong in Thailand embarked on water taxi business in Bangkok with locked contract clientele. It was a financial gamble for Zitcong as competition was tough and it rely on a managerial partner company to run the taxi business. It is expected that Zitcong will have a breakeven not until after 3 years. On the onset of 2023, the Board of Directors of Zitcong tackled a possible venture on investing in blockchain and NFTs. Because of the market uncertainty and volatility, about 40% of the shareholders of the company threatened to sell their shares and reinvest it somewhere. To avoid a possible major break-up from its shareholders, the Board abandoned its plan. Instead, it proposed to increase its investment exposure in the airline company in Vietnam from 10% to 20% which was ratified in its shareholders annual general meeting (AGM) last May. Questions 1. Assuming that you are a consultant, and you were commissioned by Zitcong to identify two major problems and provide solutions and course of action in its car conversion
business in Taiwan. Prepare a minimum of 5 to maximum of 8 pages proposal on how to solve and manage the problem which must include: A. An identification of the problem discussing the nature of the problem and its impact on the company. It must be the most concerning problem of Zitcong B. Make a root cause analysis about the problem using the data in the case. You may also make assumptions which are based on normal happening in an industry. You must use the root cause analysis tool taken in class. C. Create a SWOT analysis for the Zitcong business that relates to the problem presented D. The solution should be based on research facts. The solution must be SMART (Specific, Measurable, Attainable, Realistic and Timebound). You may also use any of the tools of six sigma or lean six sigma in your solutions. You can also use the DMAIC model as basis of your proposal. Provide a citation of your references. (50 % of Paper Course grade). E. The proposal should also discuss the manner of intervention in and closure of the consultancy project. 2. If you are the administrator of the restaurant, what will be your best two ideas to improve efficiency or innovate the work/process flow in the restaurant. Discuss the mechanics of those ideas. Your ideas must be based on the context of lessons taken in class about innovation and the lean system. Lastly, add a third idea from the standpoint of a diner/customer. Explain briefly how your idea will complement with the first two. Each idea should be at least 1 page and substantiated by the tools of lean sigma that address any of the 7 wastes. The maximum page for the answer is 4. (30 % of Course Paper grade) 3. Create a business model canvas for the car conversion business of Zitcong. You may supplement or make assumptions on missing information according to what is typical in the industry. You may use the business model canvas provided in class or through the link below. Then provide a one page description or discussion of the business model canvas that you have created (20 % of Course Paper grade). https://sarep.ucdavis.edu/sites/g/files/dgvnsk9171/files/inline-files/business-model-canvas_0.docx
Guidelines. 1. Submit a word file with only your answers on it. It must have a cover page with your name, course and instructor’s name. Use arial 11 font, 1.5 space and normal margin. Do not include any full data or information from the case (this file) as it will be read by turnitin.com as match data, hence it will receive a high similarity index thus a plagiarism alert. 2. Submit your paper by Monday. August 14 at 9 PM. Late submission will not be accepted. Make sure that your submission will not be in draft mode. 3. Your submission will course through verification and authenticity process and a plagiarism case will be filed to the student if the paper is found to have a high level of similarity from
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