60. Auto engines have become more complex over the past twenty years, partly as a result of environmental concerns about exhaust contaminants. Engineers have developed two basic approaches to solving the contaminant problem. The first emphasized the catalytic converter, a modification of the auto exhaust system designed to break down pollutants. The second emphasized redesign of the auto engine's combustion process, which adds more than twice the cost of the catalytic converter alone. However, redesigning the combustion process usually results in improved full efficiency. Required: (a) Comment on the strategic advantage of redesigning the combustion process versus simply adding a catalytic converter. (b) What are the ethical questions, if any, that should be addressed in the above decision? Answer may vary Feedback: (a) This illustrates the basic conflict between higher upstream costs with higher downstream benefits versus lower initial cost to meet minimum standards or requirements. The advantage of increased gas mileage and lowered pollution will have to be "sold" to the consumer as beneficial, not only to the auto's owner, but also to society in the form of a cleaner environment. (b) Several ethical issues are involved in this decision. What responsibility does the auto company have regarding a cleaner environment and reduced use of oil, a resource? What responsibility does the auto company have in meeting, if not exceeding, government regulations on pollution control? What responsibility do we as auto buyers have to a cleaner environment and protection of natural resources? Strategic long-range planning would require consideration of options that cost more to produce but generate higher future benefits, even if those benefits do not accrue directly to the manufacturer. Difficulty: 2 Medium Learning Objective: 02-03 Explain how to implement a competitive strategy using value-chain analysis Topic: Ethics Topic: Strategy
60. Auto engines have become more complex over the past twenty years, partly as a result of environmental concerns about exhaust contaminants. Engineers have developed two basic approaches to solving the contaminant problem. The first emphasized the catalytic converter, a modification of the auto exhaust system designed to break down pollutants. The second emphasized redesign of the auto engine's combustion process, which adds more than twice the cost of the catalytic converter alone. However, redesigning the combustion process usually results in improved full efficiency. Required: (a) Comment on the strategic advantage of redesigning the combustion process versus simply adding a catalytic converter. (b) What are the ethical questions, if any, that should be addressed in the above decision? Answer may vary Feedback: (a) This illustrates the basic conflict between higher upstream costs with higher downstream benefits versus lower initial cost to meet minimum standards or requirements. The advantage of increased gas mileage and lowered pollution will have to be "sold" to the consumer as beneficial, not only to the auto's owner, but also to society in the form of a cleaner environment. (b) Several ethical issues are involved in this decision. What responsibility does the auto company have regarding a cleaner environment and reduced use of oil, a resource? What responsibility does the auto company have in meeting, if not exceeding, government regulations on pollution control? What responsibility do we as auto buyers have to a cleaner environment and protection of natural resources? Strategic long-range planning would require consideration of options that cost more to produce but generate higher future benefits, even if those benefits do not accrue directly to the manufacturer. Difficulty: 2 Medium Learning Objective: 02-03 Explain how to implement a competitive strategy using value-chain analysis Topic: Ethics Topic: Strategy
Test-Bank-for-Cost-Management-A-Strategic-Emphasis-6th-Edition-by-Blocher.docx