Taracare, Inc. operates as a single factory in Ensenada, Mexico, where it fabricates and assembles a wide range of outdoor furniture for the U.S. market, including chairs, tables, and matching accessories. Taracares primary production activities include extruding the aluminium furniture parts, bending and shaping the extruded parts, finishing and painting the parts, and then assembling the parts into completed furniture. Upholstery, glass tabletops, and all hardware are purchased from outside suppliers.

Jorge Gonzales purchased Taracare in 2001. Before that, Jorge had distinguished himself as a top sales rep of outdoor furniture for the western region of one of the leading national manufacturers. However, after spending 10 years on the road, Jorge wanted to settle down and spend more time with his family back in Mexico. After searching for a couple of months, he came across what he believed to be an ideal opportunity. Not only was it in an industry that he had a great deal of knowledge about, but he would be his own boss. Unfortunately, the asking price was well beyond Jorges means. However, after a month of negotiation, Jorge convinced Jesus Garza, Taracares founder, to maintain a 25 percent stake in the business. Although Jesus had originally intended to sell out completely, he was impressed with Jorges knowledge of the business, his extensive contacts, and his enthusiasm. He therefore agreed to sell Jorge 75 percent of Taracare and retain 25 percent as an investment.

Jorges ambition for Taracare was to expand it from a small regional manufacturer to one that sold to major national retailers. To accomplish this objective, Jorges first initiative was to triple Taracares sales force in 2002. As sales began to increase, Jorge increased the support staff by hiring an accountant, a comptroller, two new designers, and a purchasing agent. By mid-2005, Taracares line was carried by several national retailers on a trial basis. However, Taracare was having difficulty both in meeting the deliveries its sales reps were promising and in satisfying the national retailers standards for quality. To respond to this problem, Jorge hired Alfredo Diaz as the new manufacturing manager. Before accepting Jorges offer, Alfredo was the plant manager of a factory that manufactured replacement windows sold by large regional and national retailers.

After several months on the job, and after making little progress toward improving on-time delivery and quality, Alfredo scheduled a meeting with Jorge to discuss his major concerns. Alfredo began:

"I requested this meeting with you, Jorge, because I am not satisfied with the progress we are making toward improving our delivery performance and quality. The bottom line is that I feel Im getting very little cooperation from the other department heads. For example, last month purchasing switched to a new supplier for paint; and although it is true that the new paint costs less per gallon, we have to apply a thicker coat to give the furniture the same protection. I havent actually run the numbers, but I know it is actually costing us more, in both materials and labour. Another problem is that we typically run a special promotion to coincide with launching new product lines. I understand that the sales guys want to get the product into the stores as quickly as possible, but they are making promises about delivery that we cant meet. It takes time to work out the bugs and get things running smoothly. Then there is the problem with the designers. They are constantly adding features to the product that make it almost impossible for us to produce. At the very least, they make it much more expensive for us to produce. For example, on the new Destiny line, they designed table legs that required a new die at a cost of 250,000 pesos. Why couldnt they have left the legs alone so that we could have used one of our existing dies? On top of this, we have the accounting department telling us that our equipment utilization is too low. Then, when we increase our equipment utilization and make more products, the finance guys tell us we have too much capital tied up in inventory."

a. Identify the competitive dimensions that are applicable for Taracares operations, and discuss how the company performed in those dimensions

b. Identify the major problems in Taracares operations which have threatened the companys competitiveness as follows:

- Provide the detailed analysis the symptoms and the root causes of the problems, the parts (departments) of the company that are involved in the problems, and the impacts of the problems on the companys competitive dimensions and business performance (i.e. sales and profit) - Show any potential links between different problems, causes and impacts (e.g. one problem could impact on more than one competitive dimension). - Use of heading/subheading for each problem to structure your answer in this section.

c. Based on your analysis on b), offer recommendations to solve the problems with the purpose of improving the companys operations and business performance. In doing so, give your attention on the following:

- Show the link between the solutions and the problems clearly. - Differentiate between short-term (quick fix) actions which are needed to address immediate problems from long-term actions which you propose for improvement.