Introduction
All organizations including global manufacturing and services organization have some function to perform. Organizations exist in order to achieve objectives and to provide satisfaction to its members (Corporate Document Repository 2009). The management of organizations has changed dramatically due to advancement in technology, globalization, new opportunities of doing business, and the changing customers’ needs. It is frequently documented that a global economy, increased business competitiveness, the move towards more customer-driven markets, advances in scientific knowledge, especially telecommunications and office automation, and the downsizing of organizations have led to a period of constant change in the organizational management and the need for greater organizational flexibility (Mullins 2004).
Therefore, this report describes the management fundamentals and quality management concepts of Backwell IXL Company in regard to its historical background, company structure, strategy, product development, and its specific quality management strategies. Backwell IXL is one of the conventional manufacturing industries in the world, based in Geelong, Australia. Founded in 1858, IXL currently consists of three divisions: foundry, appliances, and manufacturing (IXL Backwell).
History
Backwell IXL was founded in Australia by Ebenezer Backwell in the 1850s. This was at the 22 Aberdeen Street, Geelong West. During those days Ebenezer worked as a blacksmith majoring in stove production. Backwell proceeded with his decision of starting his own business, despite the economic difficulties at that time. His skills enabled him to sustain his business; he was able to produce iron materials for constructors and grave sites, seed drills for farming, and equipments for normal use. These abilities enabled him to obtain an award for a stove representation displayed at the Industrial Exhibition performed in Geelong in 1879 (McLean 2008).
As his business expanded, Ebenezer decided to relocate from his ranted shed at Aberdeen Street. Thus, in 1891 he bought a property at 79 Gheringhap Street; presently taken by Mercure Hotel Geelong. In those days stoves manufactured in Geelong were only custom-made versions of early imported stoves from England. Consequently, Ebenezer incorporated his sons Edwin Walter and Albert Ernest into the company, and by the beginning of 1891 the business started operating as E. Backwell & Son(Hay & McLean 2006). Having established his business operations, Ebenezer introduced the brand name ‘IXL’ (meaning ‘I excel’) for his stove in 1890. By 1893, Blackwell decided to put up his own stove making factory; a decision from his son, Edwin.
Backwell was successful because he had a simple approach in trade, dealt with specific range of products, and was able to re-invest in the business. Carrying on with their fathers business, Edwin and Albert decided to develop the manufacturing and marketing activities of the firm under the name Backwell Bros. Thus, in 1902, they were able to start a foundry at Gheringhap Street. Previously, cast iron components for the IXL stoves were supplied by Evans Eagle Foundry, hence having their own foundry enabled them to diversify their operations. In essence, some of the stoves produced by the company at that time included the three-foot three-inch double oven, two-foot single oven, and 27-inch stove which fitted the chimney brick work. One of the company’s differentiation strategies was that the stoves could be fixed with a circulating water coil for hot water production (Hay & McLean 2006).
As the business grew, Albert and Edwin incorporated agents who could market their products. For instance, Chambers & Seymour was their Melbourne agents together with other hardware stores. However, the period of World War I affected the business since there was little demand for stoves. However, in 1920’s, the post-war housing increased the demand for stoves and the business prospered. One of the major achievements of the Backwell factory is that it was able to acquire electric current in the 1920s, facing off the power obtained from a single-cylinder De Dion Bouton Car engine. In the early 1923, E. Backwell & Son Pty Ltd was registered with an estimated capital of £30,000. The executives of the newly created company were Edwin Walter and Albert Smith, who registered IXL as a brand of the corporation in 1928. At the same period, the name ‘Triumph’ for a new stove product was registered. Interestingly, the same name was used for the two-lamp ‘Tastic’ bathroom appliance, 50 years later (IXL Backwell 2009).
By late 1928, Australia was experiencing periods of Great Depression. However, Backwell Company reduced its expenditure in regard to income, thus diversifying its abilities in producing cast iron stoves. Later, during the period of World War II, the company lost its key leaders; in 1940 Albert Ernest died and followed by Edwin Walter in 1941. Despite this, the company continued with its operations and even supplying stoves to the Australian Army. After the war, demand for stoves increased. Since Backwell manufacturing was a family business, Brian Backwell, son of Albert Leslie joined it in 1952 and Edwin John, brother to Brian joined the company in late 1958. In 1950s the company introduced a slow combustion range: the IXL ‘95’. Later in 1980, IXL ‘Avalon’ was produced. This was due to the fluctuating demand for the stoves. In 1989, ‘Fire bed’ was introduced to enhance the efficiency of open fireplaces. Following this diversification strategy, the company produced new products such as gas and electric stoves and heaters. For instance, in 1984 Brian Backwell developed a wall furnace integrated with add-on cooling to distinguish the IXL product from the gas appliances produced by competitors (McLean 2008).
Furthermore, the introduction of electric heaters in 1970s affected the business and there was need to move into electric appliances. The company managed this challenge and it was able to produce electric cookers like the ‘Cario’. Other electric products invented include the IXL ‘Heated Towel Rail’ (1995), portable fan heater, IXL ‘411’ (1998). As the business continued to grow, in 1997 Brian and Allan Backwell incorporated several personnel in the corporate positions to ensure that the company will survive in future. Family members were involved in the board of directors, Brian being the chairman, Jonathan, Alan, and Robert Backwell. In the period 1996-2003, company revenues increased from $20 million to $50 million, with a lot of profit coming from IXL appliances and the ‘Tastic’ product range. Therefore, in 2006, Charles Sampford and Robert Backwell (Current Chairman) announced a merger in a view to expand the company’s operations (Hay & McLean 2006). Presently, Backwell IXL consists of three divisions: foundry, appliances, and manufacturing.
Structure of Backwell IXL
Backwell IXL is a family business, operating for five generations. The board is made up of non-executive directors and comprises of fifth generation family members. The current chairman is Robert Backwell, with the company having 200 employees (GMC News 2006). According to Weihrich and Koontz (1994), grouping activities and people into departments makes it possible to expand organizations, thus Blackwell XL is organized in three divisions: appliances, foundry, and manufacturing. The appliances division comprises of 150 competitive products such as heaters, coolers, and cookers. The foundry division provides ferrous castings for industries like engineering and mining. The manufacturing department is involved in making metal stampings which are used in automotive and appliance industries (IXL Backwell 2009). These divisions are responsible for all the strategic planning and operational planning. Furthermore, the company comprises of other functional areas such as the internal Engineering Department and on line quality control.
Thus, the organizational structure used by the Blackwell IXL is a divisional structure. The company is based on different divisions as described in the previous paragraph. The advantage of this structure is that it is a logical and time-proven method. It is also the best way of making certain that the power and prestige of the basic activities of the firm will be defended by the top managers. This is important consideration among divisional managers, as they head specific operational areas (Weihrich & Koontz 1994).
Company Strategy
In addition to performing some function all organizations also have some incentive for their existence, and for their operations. The activities of the organization are directed to the attainment of its goals. In order to achieve goals, there must be several rules of action to be followed; these are known as strategies (Mullins 2004). Therefore, Backwell IXL uses diversification and differentiation strategies in a view to meet its goal of increasing the customer base. The has products ranging from appliances products, cookers, heaters and their most acknowledged product ‘IXL Tastic’ range, foundry products and automotive stampings. Currently, over 150 products are distributed to appliance and industrial businesses within Australia and oversee. This concept of diversity in regard to division of operations has enabled the company to realize the customer needs and innovate new ways of developing products through the life cycle approach (McLean 2008). Through product differentiation, the company develops products that are different from those of competitors, so as to have a competitive advantage. For instance, their current ‘Tastic’ range products offers functionality such as bathroom heating, which is differentiated from other products.
Another strategy that Backwell IXL uses is alliance. In 2007, the company merged with Sampford & Staff to form a new company. This was in a view to expand the market share and increase the product range. Thus, Sampford IXL was created through the combination of resources from the IXL Appliances and the Sampford business (IXL Backwell 2009). Other strategies include product re-engineering, reuse of foundry sand, and streamlining of waste systems. Consequently, in seeking growth of revenue, the company mostly relies on IXL Appliances and the ‘Tastic’ product range. These products are local innovations with quality standards, making the company to have a competitive advantage in the domestic business.
Product Development and Quality Management
Backwell IXL uses a life cycle approach to product development. The life cycle design takes a product into four stages; introduction, growth, maturity, and decline. Through this approach, the company manages its products in regard to the changing demands of customers. Thus, Backwell IXL consists of a product development program that deals with analyzing the market requirements and developing programs that are inline with the changing market requirements. More so, the program development program is involved in streamlining the waste system, product-reengineering, and reuse of foundry sand. The various product ranges include heaters, tastics, ventilators, and coolers.
However, the company is faced by several challenges in its business operations. These include: globalization, cheap imports, resources and labour activities, and cost reduction from customers. In response to these problems, the company considers the current and future needs of customers through developing new products, re-engineering the available products, and exporting products. All these strategies are realized through the company’s life cycle approach to product development.
In future, Backwell IXL aims at increasing its proportion of products imported, so as to support its range of appliances in the market. This is a survival strategy for a company facing greater competition (McLean 2008).
However, having a wider market share does not happen without quality management. Quality management ensures that what the company offerings generally meets the desired product qualities. Thus, Backwell IXL manages its quality through the ISO 9000-2000, QS 9000 and ISO 14001. These accreditations show that the company maintains the quality of products generated from a manufacturing firm. Backwell IXL consists of online quality control program that ensures that customers are satisfied with its products (IXL Backwell 2009).
Conclusions and Recommendations
The general conclusion that can be derived from this analysis is that Backwell IXL has been able to stand business challenges for 150 years. The history of the company depicts an example of a company that reinvents itself by the concept of innovation. Starting from manufacturing solid cooking stove and currently manufacturing a range of appliances together with automotive components, the company is in a better position to sustain its business objectives. The company uses a divisional organization structure in which it has three divisions: appliances, foundry, and manufacturing. Furthermore, the company uses diversification and differentiation strategies in order to gain a competitive advantage. This is realized through a life cycle approach to product development and maintaining of high quality products and services.
However, Backwell IXL faces some threats in regard to the changing marketing environment; the company does not take the full potential of electronic business (e-business) and globalization. As per the conclusions, the company should be able to take the advantage of e-business and globalization so as to improve its operations. It is obvious that the company has the ability of incorporating such trends so as to have a competitive edge. E-commerce system will enable the company to: reduce transaction cost, have direct marketing, speed its communication with customers, and enhance telecommuting. Consequently, globalization in regard to opening business in other countries will enable Backwell IXL to have even a wider market share, hence international marketing.
References
Corporate Document Repository, 2009, Structure of an Organisation. Web.
GMC News, 2006, Sustainable Manufacturing, Geelong Business News, Web.
Hay, R & McLean, GA 2006, Business and Industry, Geelong: A History of the Geelong, Geelong Chamber of Commerce.
IXL Backwell, 2009, IXL Innovating Since 1858, Web.
McLean, GA 2008, Innovation and Enterprise, A history of Backwell IXL 1858-2008, Backwell IXL Pty. Ltd, Australia.
Mullins, L 2004, Management and Organisational Behavior, Pitman Publishing, London.
Weihrich, H & Koonz, H 1994, Management, A Global Perspective,Tenth Edition, McGraw-Hill, Singapore.