Naoto Kan, Finance Minister of Japan

The dollar surged against the Japanese yen in the aftermath of the resignation of increasingly out-of-favor Prime Minister Yukio Hatoyama and his deputy. The likely successor is thought to be Finance Minister Naoto Kan, who is thought to prefer a weaker yen, which would benefit Japan’s exporters. The yen slipped to beyond ¥92.00 per dollar for the first time in two weeks.


Whos is Kan? He was also the leader of the Democratic Party of Japan (DPJ), the largest opposition party in the Diet, from 2002 to 2004. Kan was also Minister for Health and Welfare for a time in the 1990s. He is regarded as a possible successor of Yukio Hatoyama, who announced his resignation as Prime Minister of Japan and DPJ leader and the resignation of his backer in the party, Ichiro Ozawa, on June 2, 2010. A party meeting on succession is scheduled June 4. Foreign Minister Katsuya Okada is considered another possible successor to Hatoyama.

Born in Ube City, Yamaguchi Prefecture as the son of businessman, Kan graduated in 1970 from the Tokyo Institute of Technology, and opened a patent office in 1974. He actively engaged in civic movements for years and achieved a seat in the lower house in 1980 as a member of Socialist Democratic Federation (SDF) through a grassroots environmental campaign. He gained national popularity in 1996 when as health minister he exposed the minister's responsibility for the spread of tainted blood. At that time, he was a member of a small party forming the ruling coalition with the Liberal Democratic Party (LDP). His action was completely unprecedented and was applauded by the mainstream media and the public. Kan also wrote a best-selling book Dai-jin (lit. minister) in which he writes that ministers should answer to the Emperor.

On January 6, 2010, he was picked by Yukio Hatoyama to be the new Finance Minister, assuming the post in addition to deputy prime minister.In his first news conference, Kan announced his priority was stimulating growth and took the unusual step of naming a specific dollar-yen level as optimal to help exporters and stimulate the economy. "There are a lot of voices in the business world saying that (the dollar) around ¥95 is appropriate in terms of trade," he said.Hatoyama appeared to rebuke Kan. "When it comes to foreign exchange, stability is desirable and rapid moves are undesirable.

A model for team-based organizational performance

A model for team-based organizational performance.(Themes: Teams and New Product Development)

Author: Forrester, Russ ; Drexler, Allan B.

On the Side Benefits of Filing

We developed the team-based organization performance model as a result of going through some files in our consulting practice. As we looked through the files and recalled the companies in them, the model gradually emerged. What follows is a tidied-up version of our discovery, with the names of the companies and identifying details changed to respect their privacy.

The Wheelwright Information Services File

Wheelwright Information Services collects technical information and provides it to clients to use as a basis for research and development, technological investment, and other decisions. The Wheelwright database has more than 41 million records, and the company responds to more than three million requests for information annually. It conducts two gigantic operations: collecting and recording information, and responding to requests for information through various media from clients.

For most of its history, Wheelwright was a traditional hierarchical organization, organized by function and geographic region. Its operations are highly automated, with extraordinary standardization across work groups, extremely detailed production measurements, and close controls - a classic production system. In the early 1990s, a manager in the Systems Development Section deliberately introduced work teams into his organization, quickly achieved both reductions in costs and improvements in customer satisfaction, and was designated as a champion of the team concept to replicate his success throughout the organization. During the course of implementing this plan, we were called in to help. What we found was that Wheelwright had created some promising elements of a team-based organization, but hadn't found a good fit for them.

The impetus for change rested on the premise that what worked well in one environment would work as well in a much different environment, albeit in the same company. The major work of the organization didn't on the face of it involve much interdependence among group members. The whole culture of the organization was autocratic, with emphasis on central management, top-down decision making, and uniformity of practice. There was little interest in giving greater power to the groups to be relabeled as teams. The entire compensation system was highly sensitive to production and focused exclusively on how individuals performed in relation to their standards.

Our work with Wheelwright Information Services, through consultation and training of the staff designated to implement the change, consisted largely of sorting through these fundamental issues about forming a team-based organization, getting the needed parts in place, and building the support systems required. From this and similar work with other clients, the team-based organization performance model took shape. As shown in Figure 1, each element of the model is represented by a sphere labeled with the name of the element and the quality that results from handling it well. The sphere is bracketed by two sets of three features of the element. One set, the Keys, gives the focal points of attention and action to master the element. The other set, the Offkeys, describes the conditions that tend to result when the element or one of the Keys is not handled effectively.

Formation,(1) the first element, involves establishing the teams an organization needs and the setting in which they will work, and giving them the support they need to contribute to the organization most productively. The objective is to give teams the grounding they require to be successful, to shape the contours of the organization in ways that are friendly to teams, and to provide the kind of environment where teams can prosper, grow, and produce. The product of effectively managing formation issues is balance in the organization. Teams and other work units are in proportion, they fit together, make sense as a whole, have everything they need, and not much of what they don't.

Keys to Formation

Composition

The first concern for an organization is whether it has the pieces in place that it needs - teams formed where they can best do the work to be done, clear charters for each of them, and the right people on the right teams.

Coherence

This quality exists when all of an organization's parts hang together well. They fit and form a whole that is complete, internally consistent, and has what the organization needs to achieve its purposes. Some of the fits that have to be attended to are: between the best work processes that can be achieved and the use of teams as an organizational unit; among individual teams as they play their part in the work process; between the organization's philosophy of management, as practiced more than as espoused, and policies and practices related to the use of teams; and between team ownership or responsibility for work and members' involvement in decision making, control of resources, and other uses of power. Perhaps the greatest challenge facing an organization moving to a team basis is achieving a goodness of fit among all of its elements, systems, and dynamics.

Development and Contents of a Performance Plan

Most of us are used to thinking of performance management focused on the employee, rather than the organization, groups, etc. Therefore, when first reviewing the steps to develop a performance plan, it may be best to use the example of employee performance management as done below. The reader should keep in mind that these steps might be followed in performance efforts focused on the entire organization or some subsystem of the organization.

In the example below, the focus -- or domain -- of the performance management process is an employee. The employee is a machine operator; consequently, application of performance management in this example is rather straightforward for clarity in the example. Most applications are not this straightforward.

1. Review organizational goals to associate preferred organizational results in terms of units of performance, that is, quantity, quality, cost or timeliness
Organizational goals are often established during strategic planning. Performance management translates these goals to results, which typically are described in terms of quantity, quality, timeliness or cost. Results are the primary products or services desired from the focus of the performance process. Examples are a percentage increase in sales, extent of impact on a certain community, etc. Goals should be "SMART" (an acronym), that is, specific, measurable, acceptable, realistic to achieve and time-bound with a deadline. For example, an overall goal may be to increase the organization's profit by 30% by the end of the next fiscal year. An associated strategy (or sub-goal), among others, may be to increase profit of the Catalog Department by 50% over the next fiscal year.

2. Specify desired results for the domain -- as guidance, focus on results needed by other domains (e.g., to internal or external customers)
For example, the operator's results are high-quality, printed images for the internal customer, the Catalog Department. This aspect of performance management is sometimes called "goal setting", particularly when the focus of the performance process is on employees. Goals should be "SMART" and challenging.

3. Ensure the domain's desired results directly contribute to the organization's results
Aligning results with organizational results is another unique aspect of performance management process. Do the employee's results directly contribute to the results of the organization? What organizational goals? How? For example, do the prints directly contribute to the desired profit increase of 50% of the Catalog Department? How? Is there anything else the operator could be doing that would be more productive for this goal? Should a job analysis be done to verify efficiency?

4. Weight, or prioritize, the domain's desired results
A weight, or prioritization, is often in the form of percentage-time-spent, or a numeric ranking with "1" as the highest. For example, the employee's results might be weighted as follows:
a) 80% of his time over an 8-hour period, Monday through Friday over the next fiscal year, to be spent running the machine
b)10% of this time in training
c)10% of this time in a Quality Circle.

5. Identify first-level measures to evaluate if and how well the domain's desired results were achieved
Measures provide information to evaluate accomplishment of results. Measures are usually specified in terms of quantity, quality, timeliness or cost. For example, measures for the operator might be the number of prints over some time interval, a certain grade on a test during his training and attendance recorded on attendance sheets to his Quality Circle. Identifying which measures to take is often the toughest part of the performance management process. You have to look at the appropriate level or domain in the organization, its desired results, and consider what are the most valid, reliable and practical measurements to use. With complex and rapidly changing domains, it often helps to identify outcome and driver measures, and patterns of effects. More about these terms in Performance Measurement, which is also referenced back in Basic Overview of Performance Management.)

6. Identify more specific measures for each first-level measure if necessary
For example, regarding the operator's measure for operating his machine, he may have to produce at least 500 high-quality prints an hour for eight hours, Monday through Friday during the fiscal year. High-quality means no smears or tears. The Director of the Catalog Department evaluates whether the operator made this goal or not.

7. Identify standards for evaluating how well the domain's desired results were achieved
Standards specify how well a result should be achieved. For example, the operator "meets expectations" if the Director of the Catalog Department agrees that the operator produced 500 high-quality prints an hour for eight hours, Monday through Friday during the fiscal year. If he produces 600, he "exceeds expectations", 700 is "superior performance", 400 is "does not meet expectation", etc.

8. Document a performance plan -- including desired results, measures and standards
The performance plan describes the domain's preferred results, how results tie back to the organization's results, weighting of results, how results will be measured and what standards are used to evaluate results. Developing the plan is often the responsibility of the head of the domain (in this example, the employee's supervisor). However, the plan should be developed as much as possible with participants in the domain.

Operations Management

Operations management in process, manufacturing, and service organizations; Operations strategy and policy; Product and service design and development; Manufacturing and service systems design; Technology management for operations; Multi-site operations management; Capacity planning and analysis; Operations planning, scheduling and control; Project management; Human resource management for operations; Work design, measurement, and improvement; Performance measurement and productivity; Quality management; Purchasing/sourcing systems; Materials and inventory management; Logistics, transportation, distribution, and materials handling; International and comparative operations; Operations information management; Regulatory and environmental issues in operations.

Your house is so underwater!!!

You bought at the peak of the market. You put next to nothing down. (Maybe you even took out one of those 105% LTV loans to cover closing costs.) Now prices are falling, falling, falling, and you are underwater on your mortgage. Deep underwater, where the strange sea creatures dwell.

If it’s any comfort, you are not alone. Here’s what Zillow.com, the real estate website, says today:

“Of homeowners nationwide who purchased when U.S. home values peaked in 2006, one out of every two (51.6%) now owes more on their mortgage than their home is currently worth.”

You’re in better shape if you bought before or after the 2006 peak in prices. Here’s the percentage of homes that are underwater on their mortgages based on when they were bought, according to Zillow:

2003 7%
2004 16%
2005 42%
2006 52%
2007 45%

Las Vegas may look dry, but from the point of view of homeowners, it’s deep underwater. Zillow says that buyers in 2006 posted a median downpayment of just 2%, and since then, home values have fallen 25 percent year-over-year, so 89.9% of homeowners now owe more than their home is worth.

Stockton, Calif., is worse: 95.8%. No wonder it’s known (unofficially of course) as the Foreclosure Capital of the U.S.A.

Major U.S. stock indexes closed solidly lower

Major U.S. stock indexes closed solidly lower Wednesday as investors grappled with crude oil topping $123 per barrel for the first time and a mixed bag of economic reports. The spike in oil prices was depressing transportation issues along with the broader market. It occurred even though the Energy Dept. said crude and oil inventories rose in the U.S. last week.

Finance and homebuilding stocks were taking a hit from news of a 1% drop in the National Assn. of Realtors’ March index of pending home re-sales. Finance stocks also were affected by reports the SEC is scrutinizing the liquidity of investment banks it supervises.

Investors also weighed earnings reports from Disney (DIS) and Cisco Systems (CSCO), and news that Qatar Airways is seeking compensation from Boeing (BA) for delays in shipment of 787 aircraft.

Yahoo (YHOO) shares were lower amid indications Microsoft (MSFT) chairman Bill Gates was closing the door on a further offer to acquire the Internet portal.

There was little reaction to a report that nonfarm productivity rose by a more than expected 1.9% in the first quarter.

Bonds rose as stocks fell. Gold fell as the dollar index rose.

On Wednesday, the Dow Jones industrial average dropped 206.48 points, or 1.59%, to finish at 12,814.35. The broader S&P 500 index fell 24.90 points, or 1.76%, to close at 1,392.57. The tech-heavy Nasdaq composite index shed 44.82 points, or 1.79%, to end the session at 2,438.49.

Along with the Street's oil-fueled inflation worries, Wednesday's sell-off in the stock market reflects profit taking following big gains from the Apr. 15 lows, says S&P MarketScope.

After a brief holiday, volatility returned to the market Wednesday, with losses accelerating in the final hour. “The lack of any short covering by this late in the session indicates the bears are in firm control of the market,” said S&P technical analyst Chris Burba in a note.

“Ironically, the latest jump in oil prices has put stocks back under pressure and pulled [bond] yields down to session lows, despite the inflationary implications that continue to haunt the Fed,” says Action Economics.

The combination of oil prices approaching $124 per barrel and hawkish remarks on May 6 by Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, spurred renewed concerns among investors about the inflation risk and the likelihood that the Fed will have to raise interest rates to fight it, says Diane Dercher, chief economist at Waddell & Reed Financial in Overland Park, Kan.

“I think the market is perhaps overreacting to that risk as far as what the central bank’s reaction to inflation will be in near term,” she says. Fed Chairman Ben Bernanke said on Tuesday that he remains focused on the downside risk that the housing slump poses to the U.S. economy, which suggests he’s not close to raising rates anytime soon.

If anything, rising energy prices are acting to depress economic growth, putting a strain on consumers’ purchasing power but not being passed through to wages and not feeding the inflation wage price spiral, she says. The U.S. imports more than half of the oil it consumes and those imports increased to a record 3.24% of gross domestic product in the first quarter of 2008, surpassing the prior peak of 3.22% of GDP set in 1980, Dercher says. With oil prices now over $120, she thinks that will continue to impose a drag on economic growth and doesn’t see a risk of interest rates rising over the next six to 12 months.

(Bussiness Week)

FACILITY LOCATION

• The need to produce close to the customer due to time-based competition, trade agreements, and shipping costs.

• The need to locate near the appropriate labor pool to take advantage of low wage costs and/or high technical skills.

The problem of facility location is faced by both new and existing businesses. Criteria that influence facility location include proximity to customers, business climate, total costs, availability and quality of infrastructure, quality of labor, suppliers, other available facilities, free trade zones, political risk, government barriers, trading blocs, environmental regulations, the host community and finally competitive advantage.

The evaluation of alternative regions, sub-regions, and communities is termed macro analysis, while the evaluation of specific sites in the selected community is termed micro analysis. Techniques used to support macro analyses include factor-rating systems, linear programming, and center of gravity method. A detailed cost analysis would accompany each of these methods and they must be related to business strategy.

Factor-rating systems are the most widely used location techniques as they combine diverse factors in an easy-to-understand format. The transportation method is a special linear programming method while the center of gravity methods is another popular location solution method that focuses on minimizing shipping costs and distances.

While it is usually less expensive to establish a service facility than a manufacturing facility, service facilities have unique issues to consider. When choosing a location for a service facility it is important to maintain close contact with the customer. Frequently, regression models are used to assist with site selection.

The criteria for selecting appropriate locations have evolved beyond the singular focus on minimizing cost or distance. Today a number of quantitative and qualitative issues impact location decisions. A company's long-term success depends on its managers' ability to make a comprehensive synthesis of the various dimensions of the multifaceted location problem.

Source: Operations Management: Chase, Jacobs, Aquilano.