Implementation, Strategic Controls, and Contingency Plans
Ingalls Shipbuilding does not have a strong stable future if current projections and no strategies are developed for the near future. According to the US Navy, over the next five years 10 units are in the budget for Ingalls’ market share and Bath Iron Works will certainly fabricate a portion of those products (“Navy Force Structure and Shipbuilding Plan,” 2014). Therefore, a strong strategy is required and implementation of the strategy is the only hope for Ingalls Shipbuilding to remain in business for another 75 years. Below is an implementation plan to be executed within the next year.
The execution team is diverse across the company gaining support as execution occurs. The budget is set and an action plan is detailed. Ingalls Shipbuilding has a challenge ahead. Employee retention during a declining market and outdated facility could put the company out of business. But the hard work of a diverse implementation team executing an innovative strategy could be the hope the company needs. A set budget, schedule, and plan are the groundwork to begin gaining confidence in employees and investors. The risks are described and contingencies provided.
Implementation, Strategic Controls, and Contingency Plans Essay Example
The only remaining action is the sound of the gun to begin the race. Implementation, Strategic Controls, and Contingency Plans Ingalls Shipbuilding does not have a strong stable future if current Department of Defense (DoD) budgets remain the same. The company only focuses on the budgeted ships and does not develop strategies where growth could be influenced. According to the US Navy, for the next five years 10 ships will be fabricated and Bath Iron Works will certainly fabricate a portion of those products (“Navy Force Structure and Shipbuilding Plan,” 2014).
Therefore, a strong strategy is required and implementation of the strategy is the only hope for Ingalls Shipbuilding to remain in business for another 75 years. Below is an implementation plan, controls, and contingency plans for a recommended increased product line strategy. Implementation Plan The company will begin implementing the recommended strategic plan to increase product lines in 2014. The implementation plan will sustain current company objectives but also focus on the employees.
Functional tactics, actions items, milestones, tasks and ownership, resource allocation, and recommended organizational change management is described below. Risks are not absent from the implementation plan and are discussed in the following section. Objectives Ingalls Shipbuilding has four objectives that are the core to current and future success. Safety, quality, cost, and schedule are the priorities. Any future strategies must contain these objectives. A recommended future objective for the company is a new focus on people. The objective of the recommended strategy is to increase annual quantity of units over the next five years.
The increase in quantity should equate to at least a 25% increase in revenue. Functional Tactics Three functional tactics required to accomplish the implementation are the following customer shaping, financial investments, and employee training. The DoD makes decisions based upon taxpayers and people that elect them into office. Therefore, Congressmen must answer to their constituents for decisions and actions. Ingalls must help DoD understand the need for more US Navy ships. This customer shaping is the only way to allocate more defense spending and building additional ships. Ingalls must consider upgrading facility sites.
If the new product lines are contracted a facility capable of fabricating the structures must be state of the art. The investment to upgrade facilities also helps Ingalls remain cost competitive within the industry. Employee retention and training is another functional tactic critical to the implementation plan. Employees are available for hire but it takes 12 to 18 months to develop an engineer into a seasoned engineer. It takes 12 to 24 months to train and certify craftsmen. Therefore, one or two years may pass before the workforce could function to a degree of confidence to execute the work.
Maintaining the workforce is expensive and at times seen as unnecessary. This functional requirement is critical for market entry of new product lines. Action Items Ingalls Shipbuilding understands the objectives and functional requirements. However, the action items, time, and cost to execute become a new challenge. The below action items are recommended to implement the strategy and minimize risk. Resource Commitment: Ingalls must commit the resource to customer shaping, training, and employee retention. Employee Benefits: The Company should consider and perform a cost benefit analysis for offering better benefits for employees.
Communication: Leaders and executive must gain employee trust and confidence and communicate the execution strategy and share the expected results. Cost Analysis: Finance will develop an investment plan spread over the projected timeline and secure capital investment to fund the plan. Milestones and Deadlines Milestone Estimated Completion Date (ECD) Customer Shaping October 2014 Revised Employee Benefit Offers December 2014 Communication Plan Final June 2014 Cost Analysis Complete July 2014 Capital Investment Approved August 2014 Facility Upgrade Begins October 2014 New Product Lines Captured January 2015 Tasks and Task Ownership
Customer Shaping: Business Development Organization (Director Responsible) Employee Benefit Offer: Human Resources Organization (Vice President Responsible) Communication Plan: Communications Department (Director Responsible) Cost Analysis: Finance Department (Vice President Responsible) Capital Investment: CFO Facility Upgrades: Facilities (Director Responsible) Resource Allocation The “Indeed” (2014) website comments from employees confirms the uncertainty felt by many current employees. Employees hear the news reports about defense budget cuts and they see peers leaving during voluntary reductions in force.
Devoting the right team to strategy execution is important. Ingalls must commit no fewer than 25 individuals across the execution value stream to sufficiently implement the plan. Organization Change Management Change is never easily executed. A recent study showed, “approximately 90 percent of respondents (employees of companies implementing significant change) believed the change in their organization was affecting them at least moderately “(“Resistance to organizational change: the role of cognitive and affective processes,” 2001, p. 376). Change management is best executed with a well develop plan.
Below is a recommended organization change plan. The above plan addresses key requirements of an organizational change program. Training on new processes affected by the change is necessary. However, a reward system is a technique to encourage employees to accept the change. A recommended reward system for employees will be timely execution of training, passing the exit exam on the change, and a free online training course of their selection. Key Success Factors The key to success of the implementation of the recommended strategy is at least a 25 percent increase in revenue for the company after five years.
In order to reach this expected result of the strategy the below activities are required. Increased Product Line: Ingalls must increase production by 3. 5 units annually. New Ship Designs: Ingalls must invest in new product lines for domestic and foreign navy markets. Site Wide Upgrades: Ingalls must upgrade the facility with more automation, more covered construction areas, and must incorporate mobile technology. Budget The budget for the implementation plan is not to exceed $100 million dollars. Below is a breakdown of how the implementation strategy is divided. Customer Shaping / Business Development: 20%
Employee Benefit Offer / Human Resources: 25% Communication Plan / Communications Department: 2. 5% Cost Analysis / Finance Department: 2. 5% Capital Investment & Facility Upgrades / Facilities: 50% Forecasted Financials Forecasted Financials Assets Beginning Period Strategy Complete $Billions Cash & Short Term Investments 1,043. 00 1303. 75 Receivables – Total 1,293. 00 1,616. 25 Inventories – Total 311 340 Total Current Assets 2,676. 00 2,676. 00 Net Property, Plant & Equipment 1,897. 00 1,964. 00 Total Assets 6,225. 00 7,900. 00 Liabilities Accounts Payable 1,051. 00 1,177. 00 Debt in Current Liabilities 79 65
Total Current Liabilities 1,392. 00 1,402. 00 Long-Term Debt 1,700. 00 1,743. 00 Total Liabilities 4,704. 00 5,344. 00 Stockholder’s Equity Minority Interest NA NA Preferred Stock NA NA Common Stock 1 1 Retained Earnings 236 155 Treasury Stock -120 -57 Total Stockholders’ Equity 1,521. 00 1901. 25 Total Liabilities and Stockholders’ Equity 6,225. 00 7,245. 25 Risk Management The major risk for implementation of the recommended strategy is maintaining an experienced workforce. When a company is downsizing and executing layoffs, seasoned employees get nervous and could decide to seek employment in a more stable market.
Ingalls must develop and execute a manning plan to sustain during a manning decline because a manning increase is expected with the recommended strategy. The risk that customer shaping will not be effective will significantly impact the plan to increase the quantity of units. The DoD budget for US Navy ships must increase or Ingalls must shape the customer to award more ships to Ingalls verses competitors. Lack of corporate approval for capital investment for facility upgrades is yet another risk for the implementation plan.
Without improving the facility and incorporating technology to lower product cost, Ingalls will not remain cost competitive. When entering a new market, price is a major consideration. Contingency Plan The cost of training and developing employees to understand the business, customers, and products is not a welcome requirement of a strategy. Communication will be important to assure employees the company has a future and to retain leaders and high quality employees. Ingalls must create trust with employees and convenience them the strategy and implementation will be successful.
Ingalls should have a dual effort to increase production volume. The customer shaping should not only occur domestically but also internationally. If the company is able to sell the same design to both domestic navy and an international navy the risk of not increasing the product line decreases. Finally, the finance department must develop an accurate and extremely detailed return on investment for a $50 million facility upgrade. For any company to risk such a large investment management must know the opportunity to increase volume and return the investment is a low risk.
Conclusion Ingalls Shipbuilding has a challenge ahead. Employee retention during a declining market and outdated facility could put the company out of business. But the hard work of a diverse implementation team executing an innovative strategy could be the hope the company needs. A set budget, schedule, and plan are the groundwork to begin gaining confidence in employees and investors. The risks are described and contingencies provided. The only remaining action is the sound of the gun to begin the race. References