Free Essay

Rouge Trader Case Study

In: Business and Management

Submitted By dhearossa
Words 2069
Pages 9
1) Summarise the movie

Barings Bank adalah bank dagang tertua di Inggris dan bank pribadi Ratu Elizabeth. Setelah menjadi raksasa di industri perbankan, Barings dibuat bangkurt oleh trader nakal di kantor Singapura. Nick Leeson, dipekerjakan oleh Barings untuk mendapatkan keuntungan dari peluang arbitrase risiko rendah antara kontrak derivatif dari Singapura Mercantile Exchange dan Jepang Osaka Exchange. Sebuah skandal terjadi ketika Leeson meninggalkan kerugian $ 1,4 miliar pada neraca Barings 'karena spekulasi derivatif yang tidak sah, menyebabkan kematian bank berusia 233 tahun ini.

Bagaimana Nick Leeson Menjadi Superstar Barings Bank

Nick Leeson dibesarkan di Watford pinggiran London dan bekerja untuk Morgan Stanley setelah lulus dari universitas. Tak lama setelah itu, Leeson bergabung Barings dan dipindahkan ke Jakarta, Indonesia untuk menata ulang back-office yang melibatkan £ 100 juta dari sertifikat saham. Nick Leeson meningkatkan reputasinya dalam Barings ketika ia berhasil memperbaiki situasi dalam 10 bulan.

Pada tahun 1992, setelah sukses awalnya, Nick Leeson dipindahkan ke Barings Securities di Singapura dan dipromosikan menjadi manajer umum, dengan kewenangan untuk mempekerjakan trader dan staf back office. Pengalaman Leeson dengan perdagangan terbatas, tapi ia mengambil ujian yang memenuhi syarat dia untuk berdagang di Singapura Mercantile Exchange (SIMEX) bersama tradernya. Menurut Istilah Risiko:
"Leeson dan trader nya memiliki wewenang untuk melakukan dua jenis perdagangan:

1. Bertransaksi berjangka dan opsi pesanan untuk klien atau untuk perusahaan lain dalam organisasi Barings 2. Perbedaan harga arbitraging antara Nikkei berjangka yang diperdagangkan di SIMEX dan pertukaran Osaka Jepang.
Arbitrase adalah strategi risiko inheren rendah dan dimaksudkan untuk Leeson dan timnya untuk mengumpulkan serangkaian keuntungan kecil, daripada keuntungan spektakuler. "

Sebagai manajer umum, Nick Leeson mengawasi perdagangan dan fungsi back office, menghilangkan pemeriksaan yang diperlukan dan saldo lazimditemukan dalam organisasi perdagangan. Selain itu, manajemen senior Barings 'berasal dari latar belakang merchant banking, menyebabkan mereka meremehkan risiko yang terlibat dengan perdagangan, sementara tidak memberikan setiap individu yang bertanggung jawab langsung kepada Nick Leeson & Runtuhnya aktivitas perdagangan Barings Picture Bank pemantauan Leeson ini (eRisk). Disebabkan oleh kurangnya pengawasan, Nick Leeson segera mulai berspekulasi yang tidak sah di Nikkei 225 indeks saham berjangka dan obligasi pemerintah Jepang . Perdagangan ini adalah perdagangan langsung atau taruhan directional di pasar. Strategi yang sangat berpangaruh ini dapat memberikan keuntungan yang fantastis atau kerugian yang menghancurkan kontras dengan perdagangan arbitrase relatif konservatif yang Barings berniat untuk dituju oleh Leeson

Nick Leeson membuka rekening trading rahasia yang bernomor "88888" untuk memfasilitasi perdagangan diam-diam nya. Dia kehilangan uang dari awal. Leeson Meningkatkan taruhan-nya tetapi hanya membuat dia kehilangan lebih banyak uang. Pada akhir 1992, akun 88888 merugi sekitar GBP 2mm. Setahun kemudian, ini telah kehilangan hingga GBP 23mm. Pada akhir tahun 1994, akun Leeson ini 88.888 telah kehilangan total GBP 208MM. Manajemen Barings tetap tidak menyadari.

Sebagai pedagang, Leeson memiliki nasib yang sangat buruk. Pada pertengahan Februari 1995, ia telah mendapatkan animo yang sangat besar pada Nikkei dan 85% dari bunga terbuka dalam waktu JGB . Pada tahun 1995 ia hanya membuat taruhan yang buruk. Fakta bahwa ia begitu tidak beruntung pada tahun tersebut, Nick Leeson menderita kerugian karena pasar terus turun. Pada Januari 1995, sebuah gempa kuat mengguncang Jepang, menjatuhkan Nikkei 1000 poin sementara menarik Barings lebih parah. Sebagai pedagang berpengalaman, Leeson panik membeli bahkan lebihbanayka membeli kontrak masa depan Nikkei dengan harapan memenangkan kembali uang yang sudah ia hilangkan. Anehnya, Nick Leeson efektif berhasil menghindari kecurigaan dari manajemen senior melalui penggunaan licik nya nomor rekening 88.888 untuk menyembunyikan kerugian, sementara ia membukukan laba dalam rekening perdagangan lainnya. Pada tahun 1994, Leeson memanipulasi £ 28.550.000 keuntungan palsu, mengamankan reputasinya sebagai trader handal dan mendapatkan bonus untuk karyawan Barings .Meskipun mengalami kerugian rahasia yang sangat besar Leeson hidup sangat mewah ia menyewa apartemen $ 9.000 per bulan dan mendapatkan bonus sebesar £ 130.000.

Kerugian besar yang masih harus dibayar oleh Nick Leeson adalah karena judi keuangan saat ia ditempatkan pada posisi trading, dikarenakan tidak memperhitungkan resiko kerugian. Setelah runtuhnya Barings, kemarahan di seluruh dunia terjadi, mengutuk penggunaan derivatif. Keenaran, Bagaimanapun,derivatif berbahaya seperti kisah Nick Leeson dan Kegagalan Barings Bank Nick Leeson ditangkap dan diadili di Singapura serta dihukum karena penipuan. Dia dijatuhi hukuman enam setengah tahun di penjara Singapura. Dia menderita kanker, dan, sementara dipenjara, menulis otobiografi yang disebut "Rogue Trader," merinci perannya dalam skandal Barings bank. Nick Leeson dibebaskan dari penjara pada Juli 1999 untuk perilaku yang baik..

2) Explain how can it happen?

Ada banyak hal yang dapat di telaah mengapa hal tersebut dapat terjadi. Pertama, Nick nelson merupakan orang yang sangat diberi kepercayaan oleh pihak baring’s bank. Dia diberi kebebasan dalam tugasnya di Singapore sebagai general manager dan meangani perdagangn saham di OSE dan SIMTEX. Karena wewenang yang diberikan oleh baring’s bank tersebut sehingga baring;s bank mengalami kerugian. Kemudian dia menutupi kerugian tersebut dengan akun eror 88888. Kemudian dia melakukan perdagangan illegal yang mengatasnamakan Baring’s Bank yang membuat kerugian bank tersebut semakin besar. Tetapi nelson memberikan laporan palsu sehingga dia anggap sebagai trader terbaik di asia untuk baring’s bank karena motif agar diberikan uang bonus. Nick tidak memikirkan resiko apa saja yang akan terjadi atas perbuatannya tersebut. Sehingga terkuak perbuatan ilegalnya yang merugikan Baring’s Bank. Auditor Barings Bank akhirnya menemukan penipuan yang dilakukan Leeson ketika ia sedang liburan di malaysia.

Ada beberapa kondisi yang mendukung atau memungkinkan terjadinya penggelapan oleh Leeson, sesuai hasil kesimpulan Badan yang dibentuk oleh Bank Sentral UK, untuk menyelidiki skandal Barings, antara lain:

1. Manajemen puncak Barings kurang paham soal bisnis proprietary (transaksi untuk kepentingan sendiri). Jika auditor dan manajemen puncak Barings memahami bisnis trading, mereka pasti tahu bahwa mustahil bagi Leeson memperoleh laba sebesar yang dia laporkan, jika tak mengambil risiko yang lebih besar pula. Dan semestinya manajemen puncak dan auditor mempertanyakan darimana asal laba tersebut. Kurangnya pengetahuan Barings tentang bisnis trading memang beralasan mengingat kebanyakan manajer senior Barings memiliki latar belakang merchant banking. Para anggota Assets and Liability Committee (ALCO), yang memantau risiko pasar, menyatakan kepeduliannya soal besaran posisi yang diambil Leeson, tapi kemudian merasa nyaman dengan pikiran bahwa eksposure Barings atas risiko pasar relatif kecil karena Leeson melakukan hedging atas posisi tersebut.

2. Tidak ada mekanisme Checks and Balance internal. Manajemen Barings melanggar aturan penting dalam bisnis trading, yaitu membiarkan Leeson melakukan settlement atas transaksi yang dilakukannya sendiri. Hal ini terjadi karena Leeson memegang wewenang di dealing desk dan back office. Secara singkat seharusnya back office melakukan pemeriksaan yang diperlukan untuk mencegah transaksi tidak sah dan meminimalisasi potensi penipuan dan penggelapan. Karena Leeson mengontrol back office dan karena Barings tidak memiliki unit independent untuk mengecek keakuratan laporan Leesons, maka laporan tentang risiko pasar yang dihasilkan oleh unit manajemen risiko Barings menjadi tidak akurat.

3. Pengawasan karyawan yang lemah. Leeson belum pernah memiliki lisensi untuk melakukan transaksi sebelum penugasannya ke Singapura, namun aktifitasnya hanya mendapat sedikit pengawasan dan tidak ada individu khusus yang secara langsung bertanggung jawab memantau strategi transaksi Leeson. Selain itu, Leeson banyak melakukan transaksi yang sebetulnya di luar wewenangnya, seperti pembelian dan penjualan opsi.

4. Kurangnya jalur pelaporan yang tegas. Transaksi illegal Leeson mungkin terfasilitasi oleh kekisruhan yang disebabkan adanya dua garis pelaporan: satu ke London untuk transaksi proprietary, dan ke Tokyo untuk transaksi yang dilakukan atas nama nasabah.

5. Prosedur kontrol Barings sangat jelek. Ini terlihat ketika menutup kerugian dari posisi yang dibuat secara illegal oleh Leeson. Kantor Pusat tidak mewajibkan Leeson membedakan antara variasi margin yang diperlukan untuk menutup posisi sendiri dan transaksi atas nama nasabah. Barings juga tidak memiliki sistem untuk mengkonsolidasikan dana yang diminta Leeson dengan posisi yang dia laporkan. Apabila Kantor Pusat di London telah menggunakan program penetapan margin yang disebut Analisis Risiko Portfolio Standard (Standard Portfolio Analysis of Risk) untuk menghitung margin, Kantor Pusat akan menyadari bahwa jumlah uang yang Leeson minta jauh lebih besar daripada aturan margin yang ada di SIMEX.

6. Tidak ada batasan transaksi. Barings tidak menetapkan batasan untuk posisi transaksi proprietary Leeson karena merasa tidak menanggung risiko pasar untuk transaksi arbitrase. Memang transaksi arbitrase hanya terpapari risiko pasar yang sangat kecil, tetapi transaksi tersebut mengandung risiko dasar dan risiko settlement. Risiko dasar terjadi jika harga di dua pasar tidak selalu bergerak bersamaan atau dengan laju yang sama, sedangkan risiko settlement terjadi karena pasar yang berbeda memiliki sistem settlement yang berbeda, sehingga hal ini bisa menciptakan risiko liquidity dan pendanaan. Risiko funding terjadi, berasal dari penemuan, bahwa banyak posisi dibiarkan tidak dihedging. Risiko funding ini juga yang menenggelamkan Metallgesellschaft, sebuah perusahaan manufacturing Jerman pada tahun 1993. Kisah mengenai Barings dan Metallgesellschaft menunjukkan perlunya sebuah institusi memberi perhatian lebih besar pada kebutuhan pendanaan sementara untuk posisi yang sudah di hedged, maupun yang hanya setengahnya di hedged. Manajer senior Barings terus mendanai aktivitas Leeson karena mereka mengira bahwa mereka membayar margin untuk posisi yang sudah di hedged, padahal mereka mereka sebenarnya merugi pada transaksi langsung. Metallgesllschaft di sisi lain, menolak memberikan pembiayaan sementara karena mereka mengira menderita rugi di kontrak yang sebenarnya di hedged. Kedua insiden ini menggambarkan perlunya manager senior lebih paham tentang posisi hedging. 7. Terpapari risiko kredit. Implikasi risiko kredit ditunjukkan dari pencairan dana tambahan ke nasabah, yang digunakan untuk memenuhi margin call. Namun departemen kredit tidak mempertanyakan mengapa Barings meminjamkan lebih dari USD 500 juta ke nasabahnya untuk bertransaksi di SIMEX, dan hanya menghasilkan return 10 persen. Juga tak jelas yang dimaksudkan Leeson untuk dibiayai, namun kerugian Barings akan sangat signifikan jika nasabah ini mengalami wanprestasi. Komite Kredit di bawah pimpinan George Maclean bersikeras bahwa menjadi kebijakan Barings untuk membiayai transaksi margin oleh nasabah sampai bisa ditagih. Tapi tak ada batasan jumlah dana tambahan per nasabah. Nasabah yang meminjam dana dengan cara ini jelas tidak menjalani proses persetujuan kredit.

3) Is there anything related to the risk management procedure? If yes, what was the risk management failure?

Permasalahan yang terjadi dalam film “Rouge Trader” ini sangat berkaitan dengan gagalnya pihak Baring’s Bank dalam melakukan prosedur manajemen risiko. Manajemen risiko adalah suatu proses mengidentifikasi, mengukur risiko, serta membentuk strategi untuk mengelolanya melalui sumber daya yang tersedia.

Bangkrutnya Baring’s Bank merupakan contoh dari risiko operasi yaitu kelemahan dalam system informasi atau kontrol internal. Hal ini terjadi karena kurangnya kemampuan pihak manajemen puncak Baring’s Bank dalam mengantisipasi, memanajemen serta menentukan setrategi yang sesuai terhadap risiko yang akan terjadi. Seperti yang dijelaskan dalam pernyataan soal nomor 2 mengenai berbagai penyebab bangkrutnya Baring’s Bank, yang membuktikan bahwa prosedur manajemen resiko yang dilakukan oleh pihak Baring’s Bank masih sangat minim.

Beberapa hal yang membuktikan gagalnya Baring’s Bank dalam melakukan prosedur manajemen resiko yaitu, kurangnya kewaspadaan Baring’s Bank dalam merekrut pekerja, yang dibuktikan dengan posisi manajemen puncak yang diisi oleh orang-orang yang kurang memahami tugasnya (kebanyakan manajer senior Barings yang memiliki latar belakang yang tidak sesuai dengan pekerjaannya saat ini) serta mempekerjakan dan mempercayakan tugas besar pada karyawan yang belum memiliki lisensi (Nick Lesson). Selain itu, tingkat pengawasan yang dilakukan top manajemen Baring’s Bank terhadap bawahannya (Nick Lesson) masih dinilai sangat kurang yang mana menyebabkan terjadinya berbagai tindakan illegal yang merugikan. Hal-hal terebut merupakan bukti bahwa Baring’s Bank gagal dalam memanajemen resiko, serta ketidakmampuannya dalam menentukan strategi yang sesuai untuk mengantisipasinya, sehingga resiko yang begitu fatal dapat terjadi yaitu bangkrutnya Baring’ Bank.

4) If you can turn back time and avoid this bankruptcy, how to prevent this problem to be appeared (acted as a bank stakeholder / top management)?

• Pengendalian Etika

Perusahaan harus bisa menerapkan nilai-nilai etika perusahaan (profesionalisme, kejujuran, objektivitas, keadilan, tanggung jawab, kompetensi, kerahasiaan, integritas, kredibilitas) pada semua karyawannya baik di pusat maupun di cabang untuk mencapai goal congruence. Nilai -nilai etika perusahaan ini harus diwujudkan dalam aturan tertulis (code of conduct) maupun tidak tertulis, yang memberi arahan bagi setiap karyawan perusahaanuntuk bertindak.

• Pengendalian Akuntansi

a. Menetapkan prosedur dan kebijakan Sistem Pengendalian (SPI) yang efektif. Karena apabila suatu SPI suatu perusahaan sudah efektif, akanmemperkecil terjadinya kecurangan. Prosedur dan kebijakan SPI inimeliputi: ada pemisahan fungsi, terutama pemisahaan tugas antara pelaksana dan manajemen risiko; adanya prosedur otorisasi, termasuk otorisasi terhadap semua akun yang dibentuk dan pencatatan, sertamengadakan rekonsiliasi menyeluruh; adanya penetapan wewenangdan tanggung jawab yang jelas serta pengawasan terhadap karyawandalam hal strategi transaksi yang dilakukan mereka; menetapkan jalur pelaporan yang jelas.

b. Meningkatkan proses internal checking antara ING Barings Bank di Singapore dengan ING Barings yang ada di London.

c. Menetapkan batasan transakasi yang dilakukan setiap trader untuk meminimalisir tingkat risiko yang mungkin terjadi.

d. Kasus Barings juga menunjukkan bahwa manajer puncak juga harus memiliki pengetahuan tentang lini bisnis yang dilakukan setiap anak perusahaannya. Dalam kasus ini manajer Barings harus memahami bisnis trading yang dilakukan Lesson sehingga manajer puncak bisamenganalisis laba yang dihasilkan oleh Lesson berasal dari mana.Oleh karena itu diperlukan training untuk manajer senior…...

Similar Documents

Premium Essay

Case Study

...Sasha Fedkevich Ch. 1 Mini Case Study a) Corporate finance is important to all managers because they need to understand the value of doing business in a corporate world. From marketing to operations, managers must be able to identify only those projects which will bring value to the investors. b) Organizational forms a company might take on as it evolves are: a. Proprietorship i. Advantages: 1. Ease of formation 2. Subject to few regulations 3. No corporate income taxes ii. Disadvantages: 1. Limited life 2. Unlimited liability 3. Difficult to raise capital to support growth b. Partnership i. Advantages 1. Similar to proprietorship ii. Disadvantages 1. Similar to proprietorship c. Corporation i. Advantages: 1. Unlimited life 2. Easy transfer of ownership 3. Limited liability 4. Ease of raising capital ii. Disadvantages: 1. Double taxation 2. Cost of set-up and report filing c) Corporations go public and continue to grow by issuing an IPO and by borrowing from banks, issuing debt, or selling additional shares of stock. Agency problems are the differences between the goals of managers and shareholders where managers sometimes act in their self interest when they act as the agent of the corporation. Corporate governance is a set of rules that control the company’s behavior towards its managers, employees, shareholders. ......

Words: 808 - Pages: 4

Premium Essay

Case Study

...Butler Lumber Case Management Accounting Case (1) Financial Planning: Butler Lumber Valuation 1. Although Mr Butler has seen an increase in his sales for the last few years, there are a few reasons why he needed a loan from the bank to keep his operations going.       1) Shortage of Cash: Despite good profits, Mr. Butler had experienced a shortage of cash from 1988 to 1990. During this period of time, there was a decrease in cash reserves, as well as in inventory turnover, indicating that Mr. Butler’s money had been tied up in his inventory. This can be resolved by working on his receivables turnover ratio, which decreased from 1988 to 1990, as seen in Appendix A.       2) Debt Consolidation: In late 1988, Mr. Butler took a loan of $70,000 that carried an interest rate of 11%. The annual interest payable to the bank compounded to his cash shortage problem.       3) Expansion of operational business: Additional investments in working capital and inventory purchases will be required to keep up with the company’s increasing sales volume. 2. As illustrated in Appendix B, assuming that 1991 sales volume will be $3.6 million, Butler Lumber will only need a loan of roughly $333,600.00 to finance the expected expansion in sales. The company’s estimate of the loan requirements is inaccurate. 3. In the first quarter of 1990, sales were $698,000, approximately 25.91% of the yearly revenue. Based on this ratio, we estimate that Butler Lumber Company will generate......

Words: 3590 - Pages: 15

Free Essay

Case Study Case Study Case Study

...This case study is an excellent example of how different types of parties can be brought together in a large scale transaction and how the original energy of those early meetings can be lost over time. I imagine that when Anthony Athanas was purchasing those old piers back in the 1960s many, if not all, of his colleagues, friends, and family members told him that he was off his rocker. I’m sure Athanas was looking at this land as his family’s ticket to financial prosperity and somewhat of a legacy that he could leave to his descendants for years and years to come. One of the items I wish the case would have divulged is the amount of money that Athanas had invested in the properties. For me this information would have given an insight to his net worth and how much he had riding on this investment. I assume it was substantial given his actions later in the process. Twenty years later Athanas’ dreams came true and all those naysayers were more than likely green with envy. The amount of pride Athanas’ had in his investment at that moment had to have been insurmountable. Being approached by a big time real estate development company and their extremely wealthy client, Hyatt Corporation, must have made Athanas feel larger than life and made him feel like something he isn’t, which is a developer himself. The case doesn’t give much insight into whether Athanas had any representation or anyone consulting him throughout the process. From the beginning, I saw this as matchup...

Words: 1190 - Pages: 5

Premium Essay

Trader Joe's Case Study

...Velma Lewis Instructor: Kellie Erich Principle of Mgt. & Org. Behavior 8/30/2013 Trader Joe’s Case Study Trader Joe’s Personal Touch Case Questions Answers Management Process 1. Ans. Planning and Organizing: In 1958, “Trader Joe’s,” started like any other convenience store chain. In 1967, founder “Trader,” Joe Coulombe, renamed the store to of course, “Trader Joe’s. He had the concept of offering a one-of-a-kind foods at below average prices in twenty odd states. They offer a laid-back enthusiastic consumer service. It was more of a cozy and intimate feel than that of the big spacious “Whole Foods,” chains. Joe’s has a faux- nautical theme, his management crew and crew members are to wear a loud tropical-print shirt. Leading and Controlling: “Trader Joe’s,” limits it stock and selling quality products at low prices. Joe’s sell twice as much per square foot, than other supermarkets. Most retail-mega stores, like “Whole Foods” carry between, 25,000 to 45,000 products. Whereas, Trader Joe’s stores carries only; 1,500 to 2,000 products. The scarcity benefits both Trader Joe’s and its customers. It is suggested by David Rodgers of DSR Marketing Systems expect Trader Joe’s model toward a smaller store size to include excessive competitive floor space, development costs, and the aging population. 2. Ans. It would probably be political and economic change. It would not be able to operate effectively if or when the government of other countries has a negative impact on the...

Words: 437 - Pages: 2

Premium Essay

Trader Joe's Case Study

...Case Study: Trader Joe’s In 1958, Trader Joe’s first began as a small convenience store named Pronto Markets. Trader Joe’s didn’t receive their Trader Joe’s name until 1967 when they opened up a store in Pasadena. Mr. Coulombe had transferred his stores into an oasis of value and started putting innovative, hard-to-find foods in the Trader Joe’s name. By doing this Trader Joe’s was able to cut costs and save you money. In 1979, Mr. Coulombe sold the Trader Joe’s chain to the Albrecht’s, own about 9,000 Aldi markets in the United States, Europe, and Australia. “Value” is a concept that both Mr. Coulombe and the Albrecht’s take very seriously. Value not only means providing great prices on great products—no sales, no gimmicks, no special shopping clubs to join, no reward cards required for sales, but also by buying directly from suppliers whenever they can by rotating the “not-so-popular” products from the shelves to make room for something different. At Trader Joe’s their philosophy is great food plus great prices equals’ value. To help contribute to that philosophy, Trader Joe’s believes in promoting from with-in. Trader Joe’s believes that it nurtures its employees with a promote-from-within philosophy, and its employees earn more than their counterparts at other chain grocers. Outlet managers are highly compensated, partly because they know the Trader Joe’s system inside and out because managers are hired only from within the company. Future leaders are......

Words: 801 - Pages: 4

Premium Essay

Trader Joe's Case Analysis

...------------------------------------------------- UGBA 115: Competitive Strategy Trader Joe’s Midterm Case Analysis ------------------------------------------------- Jean Carlo Hoyos The Industry The grocery industry in the United States is currently an attractive industry (a.k.a. profitable). This attractiveness derives from the relative low threat of new entrants, low supplier and buyer powers, and low threat of substitutes. The main factors driving these results are the low concentration of suppliers and buyers, the significant barriers to entry due to high up-front investment costs (for infrastructure and distribution channels) and scale economies, low availability of substitutes, and the threat of retaliation from incumbents (by lowering price, for example). However, it is important to note that there is a heated rivalry among incumbents due to low seller concentration, high price sensitivity from consumers, dynamic price changes and strong exit barriers. Refer to Exhibit 1 for a detailed observation of the forces influencing the industry’s attractiveness. The industry offers opportunities and poses threats in several areas. In the economic environment, the rising oil prices increases costs in the supply chain and/or distribution channels. In contrast, the several free-trade agreements with different countries open the doors for a variety of products from abroad at potentially lower prices or higher quality. Also, the proliferation of high end and......

Words: 1820 - Pages: 8

Premium Essay

Ford's Rive Rouge Plant Case Study

...The Ford’s River Rouge Plant Case Study By: William Perry University of Memphis World Class Manufacturing Concept TECH 7404 The Beginning 2,000-acre stretch of bottomland along the Rouge River. The Beginning The Rouge had its own railroad with 100 miles of track and 16 locomotives. A scheduled bus network and 15 miles of paved roads kept everything and everyone on the move. The Beginning • Henry Ford started out in 1915 by buying twothousand acres along the Rouge River west of Detroit. • 90 miles of railroad track both inside and out, and 120 miles of conveyor belts connected the facilities. • the original Rouge complex was a mile-and-a-half wide and more than a mile long. • The multiplex of 93 buildings totaled 15,767,708 square feet of floor area. Initial Plans • The Rouge River property was not earmarked for any particular use. Ford had considered turning the land into a large bird sanctuary. • Undersecretary of the Navy Franklin D. Roosevelt engaged Henry Ford to build boats. The Ford’s River Rouge Plant Originally created to produce only coke, smelt iron, and build tractors. Change of Plans • Ford shifted its final assembly line from Highland Park to the Rouge. • The Rouge becomes the most fully integrated car manufacturing facility in the world. • The Rouge employed more than 100,000 people. • 1 new car rolled off the line every 49 seconds. Complex contained every element needed to produce an automobile • • • • • • Blast furnaces A......

Words: 374 - Pages: 2

Premium Essay

Case Analysis: Trader Joe's

...Case Analysis: Trader Joe's Problem Trader Joe's offers products aimed at sophisticated consumers interested in finding good bargains. It has expanded with this demographic for years, and it's assumed that the expansion will continue in the following five years. It is better for Trader Joe's to keep current demographic, but it has limited selection of products. For example, some customers are complaining that Trader Joe's doesn't have coke, so they have to go somewhere else to get it. Analysis Trader Joe's has had success in the past with a demographic of well-educated customers. Trader Joe's stores are fairly small are typically located near colleges. They offer products that cannot usually be found anywhere else. Most of the products are very healthy and organic. However, some things have changed and now there is competition. For example, Wal-Mart has adopted a small business strategy to compete with small stores. This is a big threat for Trader Joe's because Wal-Mart has many customers and has a large variety of products. Whole Foods Market also competes and provides natural and organic food. It maybe harder for Trader Joe's to keep current customers or attract new clients. Trader Joe's should have a wide selection of products to attract customers and gain market shares. Alternative Trader Joe's could survey what new products its customers would prefer to have, and allow customers leave feedback on what products they like. Since the stores are small and it's......

Words: 434 - Pages: 2

Free Essay

Case Study

...Case Study #1 – Trader Joe’s: Managing Less with More Due Date: No later than 9:40 AM Thursday, February 7, 2013 Remember the importance of deadlines, both in and out of class. Please do not ask to hand in the assignment past the due date. If you miss this one for some reason, there will be another. Thanks! ------------------------------------------------- Directions (use this as a checklist): * Read Chapter 1 thoroughly * Read both cases. One is about Trader Joe’s and the other is about Chobani Greek Style Yogurt. * Answer each of the four questions with significant thought and further research. Rushing through this the last minute will show loud and clear. * Your paper should be a total of 1,600 words (more is fine) and typewritten double spaced with 1” margins. * Please use no larger than 11 point font (this helps conserve paper). * Please conserve paper and fill each page (similar to the second page) * Please check for spelling and grammar * Please edit thoroughly. Any sloppy and haphazard papers will not earn full credit. * Each answer (if you want to divide 1,600 words by 4 questions, this should be 400 words for each answer, but you can decide how you want to allocate your words). * Remember that you can print (do so 48 hours in advance) in Cloud Hall 111. * Get started this week. I think you’ll find that managing your time is as important as managing any other precious resource. * Have a great time! I......

Words: 2669 - Pages: 11

Free Essay

Case Study

...Olaes, Chelsea Shane B. BA4FM-A Case Study 1, Creating the International Trade Organization Page 1 of 1 The US State Department presented a charter for the creation of International Trade Organization (ITO) together with the World Bank & International Monetary Fund which were created at the Bretton Woods Conference. Those institutions would compromise a comprehensive system for the management of international economic affairs. The proposed ITO was also designed to address a wide variety of international economic issues. Before the ratification of ITO, many groups opposed it because they rejected the underlying principle of freer trade which lower the living or environmental standards. Another powerful set of opponents from the opposite side of the political spectrum were so-called perfectionist who objected to the ITO on the grounds that it would not go far enough in liberalizing world markets. They were especially concerned that the United States would be held to a higher standard than the rest of the world. IMF & WB are two international institutions which are necessary to address future economic issues and so forth. The purpose of IMF was to monitor the new exchange rate mechanism, to provide liquidity when necessary and to encourage countries to move toward free currency convertibility for current account transactions. While the World Bank’s role was to finance post war reconstruction in devastated economies and thereby to promote long term economic......

Words: 347 - Pages: 2

Premium Essay

Case Study Trader Joe Keeping It Fresh

...Trader Joe's Keep Things Fresh Leslie Taylor Embry Riddle Aeronautical University Organizational Behavior MGMT 317 Dr. Dwayne Thomas June 6, 2015 Trader Joe's Keep Things Fresh 1. How does Trader Joe’s design jobs for increased job satisfaction and higher performance? Trader Joe’s success with their employee’s is based on hiring individuals who are “ambitious and adventurous, enjoy smiling and have a strong sense of values” (Uhl-Bien, Schermerhorn Jr., & Osborn, 2013, p. 98). Trader Joe’s employees’ exhibit job satisfaction and higher performance because they are compensated very well in their earnings, benefits and professional growth opportunities. Employees’ that are based in California stores “can earn almost 20 percent more than counterparts at supermarket giants Albertsons or Safeway” (Uhl-Bien et al., 2013, p. 98). 2. In what ways does Trader Joe’s demonstrate the importance of each responsibility in the management process: planning, organizing, leading, and controlling? Management promotional opportunities are given solely to employees from within the company. To ensure managers are running the business from both the company expectations and the customer expectations, training programs are made available to crew members that guide in the planning and leading of future managers. It is most important that managers keep the customer focus in leading crew members for customer satisfaction. 3. Describe the methods that show Trader Joe’s knows the......

Words: 695 - Pages: 3

Premium Essay

Trader Joe's Case

...Final Exam – Trader Joe’s Case Study 1. Supermarket Industry Analysis In 2013, the traditional supermarket industry is unattractive because of: a) Existence of powerful substitutes in the form of large discount retailers (Wal-Mart, Target), warehouse clubs (Costco, Sam’s Club, BJ’s, and pharmacy chains (CVS, Walgreen’s) that have increased emphasis on grocery sales. * Because increased traffic leads to increased sales of higher margin items in retail stores, there is growing attractiveness for retail stores to enter grocery industry * Retail leaders such as Wal-Mart and Target run highly efficient operations. Coupled with a large volume sale philosophy, both are able to take market share from traditional supermarkets through significant price cuts. As such traditional supermarket share has dropped in last year from 67% to 51% with the growth of retailers participating in grocery sales * Lack of differentiation across products and brands gives consumers a high degree of bargaining power because they incur little to no switching costs between rival competitors and brands (see below) and because of the growth of substitutes. Customers who want to do all their shopping both retail and grocery supplies either in small volume purchases or in bulk have many options to choose from (Wal-Mart vs Schnuck’s vs CVS vs Costco) b) Strong competitors across all segments of supermarkets, which can be broken down into traditional, premium, and discount......

Words: 2155 - Pages: 9

Free Essay

Trader Joe's Case

...Trader Joe’s Case Study Management Issues – After reading the case a couple of times, I think that Trader Joe’s may only have a couple of issues. One issue that I think may be their largest is the fact that they choose to have small stores. People feel cramped and they tend to become agitated, than in return can rub off on other customers and their employees. I think they can have a slightly larger store, keeping the same amount of products. This would make the store have more room in the isles and for people to move around more easily. The other issue I found could be their locations. They tend to have locations that are out of the ordinary and a place people would not normally go grocery shopping. This tends to turn most people off from shopping at certain locations. Discussion Questions 1. I believe Trader Joe’s uses the management process in many different ways. Planning- Most supermarkets carry upwards of 45 thousand different products, while Trader Joe’s only carries about 4 thousand. This gives people a lesser variety but a greater chance of buying the product. It is less of a chore to pick between 4 different brands than 12. When they have a product that is not making a profit or not enough profit, they remove it from their inventory and bring in something new. They also use customer feedback for this process as well, which keeps their customers satisfied and coming back to their stores. Another way of planning for Trader Joe’s is their marketing. They spend......

Words: 930 - Pages: 4

Premium Essay

Case Write-Up Trader Joe's

...down costs is one of the few levers which allows the control of the, already low, profit margins. What are the key sources of Trader Joe’s competitive advantage? Trader Joe’s competitive advantage consists of two main drivers: The company’s unique approach to cut down costs and the unconventional marketing and customer communication strategy. Trader Joe’s is able to cut down its cost in a number of ways. Firstly, the company regularly adjusts and alters its product mix, not only to attract and entertain customers, but to get rid of poor selling items. The frequent introduction of new innovative products helps to keep customer interest high and at the same time enables the company to switch its lowest performing products. The downside of this approach is that a portion of customers may react negatively to the discontinuation of a certain product and the fact that Trader Joes, with this concept, cannot offer one-stop shopping like the majority of traditional supermarkets with their higher SKU amount and permanent product mix does. Secondly, Trader Joe’s sources its products itself and thus effectively cuts out the middleman. The company buys its mostly unique products directly from small and big vendors which also enables the firm to have a close eye on product quality and, via major batch sizes, is able to offer those products at a low price. Thirdly, Trader Joe’s stores are small and located in non-prime locations, which holds fixed operating costs at bay. Furthermore, the......

Words: 919 - Pages: 4

Premium Essay

Trader Joe's Case Study

...Trader Joe’s is a privately owned American specialty grocery store chain that specializes in private labeling and providing a unique and fun shopping experience for their customers. The chain comes from humble beginnings as a convenience store in southern California. Joe Coulombe founded the first store in 1958, but at that time it was called Pronto Markets and it was a convenience store in the greater Los Angeles area. In 1967, the name was changed to what we know it as today by Joe himself. This is when he also decided to change the direction of the business away from convenience store products into more of a grocery supplier (“Our Story”). This change was sparked by the rise of the 7-11 convenience stores. Coulombe was worried that those stores would put him out of business so he decided to take a different route and venture into the world of the grocery store (Moskin). The store is known for its’ hawaiian shirt clad employees and the fun, beach and tiki theme that plays heavily into the decor of the store. Coulombe has said that he was inspired while he was sitting on the beach trying to decide how to best handle the new 7-11 competition (Seattlepi). That is where his ideas of tiki torches and hawaiian t-shirts were born. He changed the focus of the store towards low priced gourmet items without any frills to keep it simple. He made his stores small to help keep prices low (Seattlepi). The concept of making the shopping experience a fun and tropical adventure is where......

Words: 3275 - Pages: 14