Reference no: EM131176657

Eastern Machine Industries Pte Ltd (EMI) the Company

Mark Tan founded and started EMI more than 20 years ago and the company went from being a small distributor of machine tools to an established machine tools manufacturer and automation service provider with a staff strength of over 200. Operating its headquarters and manufacturing base in Singapore, EMI manufactures and markets its products under the "Elite" brands and their machines are sold to companies across North America, Europe, the Asia Pacific region and China. EMI has a total of 8,500 Elite machines installed worldwide and in Singapore. Some of EMI's customers include Multi-National Companies such as General Electric, Danaher, Valeo and SGX-listed companies such as Meiban, Memtech and Amtek. In the early days of the company, Mark Tan would need to do everything by himself. He would run the financial accounts, source for new customers and push for sales. Mark Tan was a forward-looking man who embraced change and technology. He was a determined man but he was also willing to learn and adapt. Nowadays, EMI places a lot of importance on maintaining its product competitiveness and on protecting the technology employed in its production system. The company embraces new technology and on average, it reinvests 10% of its revenue in R&D and 20% of its employees work in Research and Development (R&D) activities. With ten patents protecting its products, Mark Tan has positioned the company as being technically unique, with a strong R&D division driving its manufacturing activities. To further emphasise the use of the latest technology, EMI has been working closely with research institutes like the National University of Singapore and Nanyang Technological University, as well as with government agencies like A*Star and SPRING Singapore. Building such partnerships and joint ventures allows the company to improve on its R&D as well as its manufacturing capabilities. Thanks to this steadfast attitude towards change, innovation and achievement of results, Mark Tan has been able to differentiate and transform the company.

Company Operations

Peter Chew joined EMI five years ago as a technician after completing his Diploma in Electronics at Nanyang Polytechnic. He worked well as an individual and was soon promoted to an engineer's position. He was known to be a problem solver and would always able to resolve the most difficult and challenging problems. As a firm believer in continuing education, Peter Chew enrolled in a BSc Business degree programme at UniSIM to help him in his work and increase his chances for promotion. For three years, he found that managing work, studies and family commitments was challenging but he graduated with flying colours early this year. Mark Tan was impressed with Peter Chew's perseverance, work attitude and performance. In the middle of this year, he promoted him to the position of manager in charge of a team of engineers and technicians. Peter Chew is now responsible for the team tasked with maintaining the machines and equipment on the production line. The team consists of four engineers and eight technicians. This is the first time that he is managing such a large group of people. Previously he was only responsible for his own work and no one else's. It is a huge challenge for Peter Chew but he knows that he cannot let Mark down. The individual capability and work characteristics of the engineers and those of the technicians are very different. The engineers are knowledgeable and are capable to perform their work. Most times, they are able to complete the tasks that Peter Chew asks of them and Peter has an open communication and good relations with his engineers. They will always work together to resolve any problem and daily issue. On the other hand however, managing the technicians is a challenge. Though the technicians generally are able to do their work, they have an inferiority complex and feel that their status is lower than that of the engineers and managers. They will not volunteer to give suggestions; they will only follow procedures and take cues from their superiors on workrelated matters. Peter Chew wants the engineers to empower the technicians so that the engineers can focus on higher-value activities. However, he is not sure if the technicians are ready to take up additional responsibilities and whether the engineers are willing to relinquish these responsibilities to the technicians.

Value Chain and Control

EMI's success is largely due to Mark Tan's willingness to embrace change and innovation. Being result and goal-oriented, he believes in the value of investing for the long term. Eight years ago, he decided to move the company up the value chain and to provide fully integrated solutions to the customers. These include, designing the solution, manufacturing the machine tool, delivering the final product and providing after-sales service. This was the game changer that differentiated the company from many of the competitors that were still offering only distribution services. Indeed, EMI is one of a handful of local tool manufacturers with such a highly vertically-integrated operation. On this point, Mark Tan elaborated, "In contrast, our competitors are only involved in one part of the whole value chain. By outsourcing the remaining processes, they are sometimes unable to meet customers' demand in a timely and consistent manner. At EMI, we are different. We can provide the whole value chain of services to our customers." Mark Tan is a very hands-on person and he will involve himself in many facets of the company's operations. Having a keen interest in R&D, he will directly work with the team of engineers and technical staff in product development. He believes on the benefits of collaboration to bring results. He is a boss who rewards his employees well for good performance. The last reward was a Japan overseas incentive trip that he gave to his engineers for successfully developing a new machine tools for a key customer. Furthermore, while focusing on the company's financial profitability, Mark relies on rules and procedures to ensure that things are done properly and in accordance with standards and particularly to the satisfaction of the customers. On occasions, his persistence on quality and compliance does put pressure on his staff. His human resource manager, Mary Wang said once: "There is a recent increase in employees' turnover and absenteeism. Staff have commented on the stress and on the lack of autonomy in their job. Though there are meetings to discuss issues, they are usually told what to do and to just follow the instructions and not to make mistakes". Mark Tan acknowledges that there are areas in control management that the company can still improve. He is willing to explore the changes that he could be implemented. Mark Tan trusts Peter Chew, he seeks him out to solicit his feedback about what employees of the ground are saying and to get his views on the changes that he can make to improve the control situation in the company.

Question 3 (1500 words)

(a) Distinguish the control approaches covered in the course and identify the control approach that Mark Tan practices in the company. Justify your answer.

(b) What will be the appropriate control approach that Peter Chew can suggest to Mark Tan? Justify your answer.

(c) Mark Tan has been focusing on financial profitability at EMI, interpret and illustrate how the balanced scorecard can be applied to the company.