Is mathematics in business necessary in the decision making process?
Introduction
In this assignment, I am going to show how Mathematics in business is necessary in the decision making process. The business which I have chosen to do my assignment is Corus. Corus is the steel manufacturing industry in Europe.
Corus
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The steel industry has a very long and rich history. It has been able to enjoy wide range of economical, political and strategic importance with its remarkable technological varieties and enterprenuership. The steel has been able to establish itself as the material which is strong, reliable and very durable. In the early days the cost of production of steel was very high so was it’s cost. Hence the steel was only used in those place of situations where other materials were unable to do. But today the situation is different. There are hundreds of steel industries producing millions of tonnes of steel every year. Today the steel has become the integral part of our lives mostly for the construction or as home appliances. Among hundreds of steel producers Corus Group is one of them which operates mainly in Europe.
History of Corus
Corus Group (Currently Tata Steel Europe) which is the largest in UK and second largest steel manufacturing company in Europe, branch of Tata Steel Group of India, one of the ten largest steel producing company in the world (www.tatasteeleurope.com/en/) [Accessed 21st March 2011].The company employs about 42,000 workers around the world. The Corus Long Products (CLP) produces around 4.3 million tonnes of steel products every year. The Corus Group was formed in 6th October 1999 when the British Steel and Koninklijke Hoogovens merged with each other. It was acquired by the Tata Group of Companies on 30th January 2007 with its headquarter establishing in London, England. The Corus has been using its own logo until 27th of September 2010.Though the Corus was acquired by the Tata company no sudden changes were made. Instead it decided to change gradually that is why the visual transition occurred after more than three and half years after being aquired by the Tata Group. It has got the manufacturing companies in England, Scotland, Netherlands and France. The Corus has been in the European market for long time and has got it’s own range of customers. The Corus has been operating mainly in the four major steel plants:
Port Talbot, South Wales
Scunthorpe, North Lincolnshire
Teesside
Ijmuiden in the Netherlands
As any other industries Corus too had go through the high and the low phase since its formation in 1999.The company was not doing well in the market resulting into loss each year until 2004. After the research conducted the reasons the company found were:
Poor deliveries:
The company was unable to provide the materials to the customers on time which led to the dissatisfaction to customers and they moved to other companies to order the products.
Competitiveness:
Being located in the Europe the Corus had the high cost of production where as the steel manufacturing companies from Asia and Africa were much had much low cost of production which led to the more tough competition. The competition was so high that the Corus group had to merge into Tata steel one of the ten largest steel manufacturing company in the world.
High wastages:
The company was not very conscious about the adverse effects of the high wastages until the company applied the Continuous Improvement (CI) method to lift the company back in track in 2004.
Low motivation/morale staffs:
As the company was not doing very well the chances of jobs being cut off were high which led the workers to the job insecurity and low confidence. As the workers were afraid of their jobs would not be recognized by their productivity.
The company was giving importance to those staffs who were working in the company for many years rather than the people who were working for the development of the company, who had great talent. The company would give importance to those staffs who were there for many years rather than the talented ones when jobs were being cut. This led to the blow of the self confidence and very low morale of the workers of the company.
Since then the company decided to apply the Continuous Improvement (CI) method also known as Kaizen method. This method mainly focuses on the following areas:
Focus on making every small improvements:
Functions, systems and procedures:
This process was to look carefully into the functioning machines and revise the systems and manage the procedures.
Decentralization of people to make decisions:
Decentralization in company would give all the workers to share their views and suggestions for the betterment of the company. This can be very useful in boosting the motivation of the employees, they can feel their importance to the company is essential.
Increasing internal capabilities and raising quality:
Meeting customer needs:
To succeed in the business sector one of the most important thing required is to meet the customer needs. Once a company becomes able to meet the needs of the customers then no one can stop a company from being successful though it is very tough and equally challenging to meet the needs of customers everytime.
Minimize wastages
Apply lean production:
Trying to figure out and search the best possible way to manufacture goods can always be helpful for the company. (As there can be many other ways of production but as in the case of Corus Lean Production seems the best way.)
Increase competitive advantage:
Helps you win/get the contracts:
Improvising the product and making it more applicable to the customers can always be helpful. If a company develops a product which has more advantageous features with the same price then a company always has a greater chance to attract the new customers as well as the regular ones.
Lean Production
Helps to reduce waste
For example: Time, money and materials:
One of the most important and essential factor of the production method is to reduce the waste. As the waste itself is wastes the useful material and besides that it takes a lot of time and money to manage It or dump it. So if we become able to minimize wastes it can be more profitable in the long term.
Rise in efficiency leads to few resources requirement:
Using the resources carefully which we can say using the resources efficiently is one of the very important aspect in lean production. This leads to the high output (productivity) with low input.
Profit rises because of the increase in productivity:
When a company is able to reduce the waste and produce more with less input which means the productivity has gone up and for a company to be profitable the productivity always has to be higher.
Just In Time (JIT)
Helps in reducing the costs in raw materials and finished goods:
This is also one of the very important factor to be more efficient with the materials as this Just In Time method is very helpful in reducing the cost of stocks and risk of being outdated if not delivered in time. So manufacturing the goods only when ordered can be very helpful in using the raw materials very wisely and efficiently.
Helpful in meeting the deadlines:
Though it sounds easier but to apply the Just In Time method is very difficult as it is very risky. If the products are not delivered just in time the company has even more risk losing its overall business as it creates a bad publicity in between the customers of company not giving importance to them. But these challenges can be very helpful in meeting the deadlines as it has so many risks attached to it.
The company (Corus) then focused on mnemonic ‘TIM WOOD’ table which helped the employees to focus in their respective areas. The following is the table of the ’TIM WOOD’:
Table 1
http://www.thetimes100.co.uk/downloads/corus/corus_14_full.pdf [Accessed 21st March 2011]
New Product Development
Acquiring new ideas from different sources
Employees, customers, technology and competitors:
If we see as an example for the sustainability of any company most of it would be of its new products or ideas. For the sustainability of any company new ideas are very essential which can be taken from anyone around. Employees of company from lower to higher level, customer feedbacks, technology updates and competitors can teach a lot of lessons too.
Product innovation derives key steps
Research new formula:
The company has to keep on researching the new formula for products as the invention of new formula can bring the success to the company. If company tries to cash in in the old products then the customers might be bored of that product and start searching for the next producer.
Keep testing:
Testing the products is also an important factor of innovation as more you test the more you go closer to finding the defects or the ideas for innovation.
Sampling in small scale:
Though the testing is very important for the innovation the testing should be done very wisely as the testing might end up using a lot of materials, time and money. So the testing should be done in small scale which is also known as sampling.
Product Testing
Small scale testing to be efficient:
To test a big volume product it is not always compulsory that it needs a big amount of raw materials. Normally the prototype of the product can be made in smaller size and tested in different aspects, which becomes more efficient and less costly.
Create prototypes to test effects of different elements
The steel ingredients
Heating
Milling process
Cooling
Additional heating
Creating the whole manufacturing process in small sample/prototypes can always be helpful to test the different elements of manufacturing process.
Computer modeling used to track impact of change of each factor
Outcomes and benefits of Continuous Improvement
Cost efficient:
At the end it helps in producing more with less input.
Waste minimization:
This helps in using the raw materials wisely and efficiently.
Helpful in meeting customers deadlines:
The manufacturer becomes more time efficient.
Above factors help in getting other orders:
Competition can be won by following the above factors.
Helps the other steel industries to improve overall performance:
The whole group of industries can learn the efficient ways of manufacturing and improve the overall performance and productivity.
(The methods mentioned above are written keeping the Corus on mind) (These methods can vary according to the types of companies)
Tata Steel Group’s Profit after tax for Q3 FY’11 at Rs1,003 crores (US$224 million) was around 112% higher than the profit of Rs473 crores (US$106 million) in the corresponding period of the previous year (Q3 FY’10). During the first nine months of the financial year 2010-11 (9M FY’11), the Group recorded Profit after tax (after minority interest and share of profit of associates) of Rs4,807 crores (US$1.08 billion) compared to a loss of Rs4,443 crores (US$994 million) in 9M FY’10, an improvement of Rs9,250 crores (US$2.07 billion).
http://www.tatasteeleurope.com/en/news/news/2011_q3_results [Accessed 22nd March]
The above mentioned financial report is acquired from Tata Steel Industry’s website, which shows the profit of the company after paying the tax has gone up in comparison to the previous year’s time period. It shows that the company had lost US$994 million in previous year but made profit of US$1.08 billion this year compared to previous year.
Conclusion
In the case study of Corus above we can figure out how the decision has to be taken in different types of situation and what kinds of situation can on industry face and how the calculations are done when the company is not doing well. It has helped to analyze the comparisons have to be done to know the company’s status and the decision making can be much easier when research are conducted, data are analyzed and the calculations are done.
So the necessity of mathematics in identifying the statistics to make the decisions in business is very crucial.
Bibliography:
(www.tatasteeleurope.com/en/) [Accessed 21st March 2011].
http://www.thetimes100.co.uk/downloads/corus/corus_14_full.pdf [Accessed 21st March 2011]
http://www.tatasteeleurope.com/en/news/news/2011_q3_results [Accessed 22nd March]
http://www.worldsteel.org/?action=programs&id=53[Accessed 21st March 2011].
http://en.wikipedia.org/wiki/Tata_Steel_Europe[Accessed 21st March 2011].
http://www.thetimes100.co.uk/case-study–overcoming-barriers-to-change–56-382-1.php[Accessed 21st March 2011].
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Is mathematics in business necessary in the decision making process?. (2019, Mar 22). Retrieved from https://phdessay.com/is-mathematics-in-business-necessary-in-the-decision-making-process/
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