­CSE 171A/CSE 270A: MOT I:

Important Note: due on Canvas on Tuesday, 11/10/2020, at 8:00AM (Tuesday Morning)

General Instructions for all problems:

1. You must work independently on this examination. Explicitly, working independently means the following: working alone, not consulting with anyone else, not using search engines and/or websites to look for solutions to the problems on the midterm.
2. You must use information and data provided in the problem statements below as the starting point for your solutions. If you use information and data that is not in the problem statements (for example, if the numbers you use in Problem 2 are different from the numbers that are provided in the problem statement), then we would regard this as “irregular” behavior, and give you “0” for the exam score, and request that you meet with us to clarify the irregularity.
3. After you leave the lecture today (Thursday, 5November, 2020), you will be working as a professional, completely by yourself without any interaction (including e-mail) with any other individual, including the instructor and the TAs.The only exception to this requirementis if you have a real emergency, in which case please send an e-mail to Ran Xu (rxu3@ucsc.edu), cc to the instructor (sdesa@ucsc.edu).
4. You are required to create and implement a project plan for completing the midterm. Keep track of your progress,and draw conclusions on how well you are able to follow your project plan. Include your project plan as part of your midterm solution.
5. Create your own “template” for the structured Problem-Solving Process. Then use this Structured Problem-Solving Process for solving all problems on the Midterm.
6. As part of your problem-solving approach, make appropriate assumptions when necessary, and clearly state the assumptions you make. Be sure to revisit these assumptions when drawing conclusions.
7. Be sure to explain everything all your work. To improve readability of your explanations, structure your work with appropriate captions/headings.
8. In addition to headings, all explanatory text must be accompanied by clearly labeled figures, tables, and diagrams as necessary. Also, key points, results, and conclusions should be clearly marked (e.g., highlighted, underlined, etc.)
9. All results, recommendations, and conclusions must be supported by facts (evidence) and/or analysis. To improve readability, include appendices at the end of each problem to show relevant details.
10. Cite all relevant sources of information, including the case study handed out as part of this midterm.

Note: The Microsoft Case Study (required for Problem 1 below) is available on Canvas.

1.        Integrated Technology, Product/Market, and Competitive Strategy for Microsoft (~ 5 hours; 50 points)

First, be sure to read the instructions at the top of this page, and follow them as you work on this problem. Also, read and use the “Microsoft 1995” case study on Canvas as the main source of information for this problem.

It is late 1995 and Microsoft, having heard about your expertise in the management of technology, has hired you to help them develop an integrated business, technology, product/market, and competitive strategy for the next 3 years, namely, 1996-1998.

Microsoft wants you to apply the systematic analytic framework (for which you are famous) in this strategy development task.

1. Before you start on your project Microsoft would like a written statement of your framework, appropriately customized for their organization.

(Hint: The framework might include the following: the three stage framework on Pages 17-19 of the “Lecture Notes on Competitive Strategy” (on the class website); the appropriate functional maps (required in stages 1 and 3) created from the information in the MS case study; aggregate project plan; etc.)

2. Then, they would like you to apply your framework to their (specific) existing and proposed technologies and products (keep in mind that you are doing this work in 1995), performing the necessary fact-based analyses, drawing conclusions, and making appropriate recommendations.
3. Microsoft would like you to provide them with a clearly structured report that must include 3-5 specific (and properly justified) recommendations for what their business, technology, and product/market strategic focus should be for the next year. Your specific and properly justified (with the appropriate maps, facts, and data) recommendations would essentially help the company to decide which products and technologies it should develop, which markets it should target, etc.
4. Now based on some internet research, identify 3-5 strategic initiatives actually taken by Microsoft since 1995 and compare these to your recommendations in 3. Hopefully you came up with better initiatives than those that Microsoft followed, and you can explain why your initiatives are better.

Note: You may use the Internet to obtain suitable revenue/financial information for Microsoft and the markets and industries in which it operated from 1975-1995, if this information is needed as part of your framework, or your problem-solving approach.

2.        Aggregate Project Plan for Enterprise Software (~ 2 hours; 25 points)

Read the instructions at the top of page 1, and follow them as you work on this problem.

In the mid-to-late 1990s, a software giant has decided to diversify its “product portfolio” by venturing into the enterprise software (i.e., CRM, SCM, ERM) space as part of its (business) growth strategy. As a first step in this venture it has acquired a small company that develops and sells “finance/accounting” software for the small business sector. After considerable product/market and technology analysis, five development projects in the Supply Chain Management (SCM) space have been proposed, as follows:

• E1: an enhancement of the existing “finance/accounting” package to include materials management (inventory, etc.) and logistics for the small business sector.
• E2: an enhancement of the existing “finance/accounting” package to include planning and indirect procurement, also for the small business sector.
• P1: a new platform product with functionality similar to E1, but for the medium enterprise sector.
• P2: a platform product for manufacturing companies in the medium enterprise sector. P2 has core functionality similar to E2, and also includes a manufacturing software module.
• R&D: development of a new platform for the future that includes internet-based collaboration for the medium and large enterprise sector. The resulting “breakthrough” product, when commercialized, will have “vertical” capability for “plugging-in” new application software to serve new market sectors, e.g., retail and automotive.

For each project, two decisions need to be made: (1) “Should a technical feasibility (or proof-of-concept) study be carried out?” and (2) “Should the product be developed?” The outcome of the feasibility study and the outcome of the product development effort are uncertain events. The table below shows the cost and the probability of success associated with (1) the technical feasibility (proof-of-concept) study and (2) the product development for each project.

p(TF) = probability of success of the technical feasibility (TF) study.

p(PD) = probability of success of the product development (PD) effort.

The last column of Table 1 shows theprofit for each project in the absence of any risk.Since there are two separate sources of risk, technical feasibility risk, and product development risk, the expected monetary value (emv) or expected profit for each project will be significantly lower than the values in the last column. You will, therefore, as part of your overall solution, need to calculate the emv or expected profit for each project using an appropriate Decision Analysis Process.

Table 1: Potential Development Projects

(All costs and profits in $M)

1. The firm needs to decide on the “best” mix (set) of projects to work on during the next fiscal year. The total capital budget allocated for project spending for the next fiscal year is $93M. Pose the associated integer-programming optimization problem to select the projects whose combination will maximize cumulative expected monetary value (expected profit) without exceeding the total capital budget constraint. Assume that each project is done by a separate team, and that the each project is independent of the other projects.
2. Solve the appropriate integer-programming problem using “table-lookup” in order to determine which projects should be selected in order to maximize cumulative expected profit without exceeding the total capital budget constraint? What is the return on investment (ROI) of each project?
3. How much cash do you have left in your capital budget after you have made your project selections? What would you recommend that management do with this cash? Justify your answer.

3.        House of Quality (HOQ) for video game consoles (~ 3 hours; 25 points)

Carefully study the HOQ process developed in Lecture. While studying the HOQ process, review the 1-page “Car Door” HOQ handout.  It is also highly recommended that you read the following two chapters in U&E, PD&D: “Identifying Customer Needs” and “Product Specifications”.

Note: you are permitted to use the Internet to obtain information relevant to solving this problem. You must clearly cite all sources used, and indicate the information you obtained from each source.

As part of its growth strategy (in the late 1990s), the software giant decides to enter the gaming industry/market with a product (tentatively) called “EXbox”. To this end, you, as part of the R&D/product development group, are asked to perform the following tasks, and then present the results in the form of a carefully structured and written report:

1. Identify the competitors in the video game console market in the 1990s, and the key game console products associated with each competitor? Dissect one of these competitor’s video-game consoles using the Function Analysis System Technique (FAST), and present the results in a FAST diagram. (Be sure clearly to explain your process and its implementation.)
2. Using your FAST diagram and additional internet research if necessary, make a list of the key consumer needs and product specifications for a generic video game console.
3. Provide a step-wise process for developing a HOQ for any product, and then implement this process to create the HOQ for the proposed “Exbox” game console.
4. As part of your HOQ, benchmark the proposed “Exbox” game console against 2 competing products (remember you are working in the late 1990s), both with respect to customer needs and with respect to technical metrics.
5. Develop a list of target specifications for customer needs, and a list of target technical specifications for the proposed “Exbox” game console in the late 1990s.

4.         (CSE270A):  Software for Integer Programming (10 Points)

Write a computer program (in C, Java, or Python) to implement and solve the capital budgeting integer-programming optimization problem in Problem 2 above. Use your program to check the result obtained in Problem 2.

Alternatively, you can attempt to solve this problem using Excel Solver.