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KL Worldwide Enterprises Inc Putting Information Technology to Work Case Solution
KL Worldwide Enterprises Inc is a multinational organization, and they were producing marketing and distributing footwear, apparel and equipment related to sports. KL started its business in the US, and its core product line, sports equipment, was manufactured in the US, complemented by increasing its capability in Brazil and Singapore. Over the last decade, Singapore and India have become the main hub for manufacturing. Their focus was on e-commerce and KL stores, but their sales were mainly from private labels and third-party retail. This case highlights the managerial and strategic issues faced by KL Worldwide Enterprises. For this organization, information technology is the core competency of its business. 10% of its operating budget is allocated to IT-related expenses. The enterprise was performing pretty well, but in 2005, Chinese companies became a threat and tightened their margin. As a new player entered the e-commerce market, they lost their IT core competency.
Following questions are answered in this case study solution
What are the business drivers and challenges for KL Worldwide Enterprises?
What are the operational and organizational characteristics of KL and how do these help or deter the enterprise from realizing its business objectives?
What are the primary IT enablers for a business such as KL, and how does the current state of its IT rate in terms of addressing corporate needs?
As the CEO of KL, what would be your prioritized list of IT investments? Would your colleagues on the executive committee agree with your selection and prioritization? Why or why not?
How is the Internet leveraged within KL? What needs to change? Where are these opportunities for greater leverage?
What needs to happen with KL’s ERP systems (i.e., Oracle and SAP) to provide a greater ROI in these technologies and to enable the future growth of the enterprise?
Are the supply chains issues at KL primarily cause by inadequate IT or do the associated business processes need to change as well?
Case Analysis for KL Worldwide Enterprises Inc Putting Information Technology to Work
1. What are the business drivers and challenges for KL Worldwide Enterprises?
KL Worldwide Enterprises has a strong brand image. It is known as the world's popular and premium brand whose vision is to manufacture, design and deliver high-quality products worldwide at reasonable prices. It has a strong presence all over the world. Moreover, the enterprise continuously works on extending its business by contracting offshore agents and licensing. Its distribution network not only consists of its own subsidiaries but also third-party integration. It also enhances its product portfolio. It has a great market share and is known as the leader in its industry. They believe in reaching every target market. Those who cannot buy from their store or web can have access to their product from sports retailers. They are adaptable in the sense that they respond to the changing demands of the market promptly.
The company had a competitive advantage in manufacturing and logistics, but it was challenging for them to stand with their vision as they were going global. Product quality and product design were compromised. The sales team was finding it difficult to translate the customer needs and demands into a better product. The real challenge was to convert the concept into a product because numerous stakeholders were involved in it. Furthermore, their IT was one of the main business drivers, making them a world leader in the competitive market. They were leveraging and catering to different markets because of the strong IT infrastructure they had, but in 2005 it became a real challenge as new Chinese e-commerce retailers joined the market and shrunk their profit market. Now there are multiple e-commerce stores that are similar to KL Enterprises.
2. What are the operational and organizational characteristics of KL, and how do this help or deter the enterprise from realizing its business objectives?
United States operational facility was the most capital intensive and former facility center within KL Enterprises, but they had an outdated supply chain management system. It was becoming difficult for them to adopt the latest technology and integrate SAP into their operations effectively. They were facing issues in getting information from their Brazil and Singapore centers regarding their work status. They did not know if the product required additional work or not until the product reached the United States. Moreover, the Indian operational facility center is complicated as there are numerous outsourced services that complement the in-house capabilities of the KL. Technological capabilities were transferring from one generation to another, and it became a hindrance in managing the supply chain and logistics efficiently. When the organization expands into the global market, they have to face government regulations to operate in those countries. KL was going through the same issue while operating in India, as the shift to SAP was slowed because of legal compliance with the government.
Also, the established manufacturing and business processes became the deterrence for KL Enterprises Inc to their business objective. Brazilian enterprise was slow in achieving the desired goal as they were facing issues in connecting with the corporate team in the US. They were not receiving what they wanted regarding production line and delivery requirements even though they were leveraging SAP effectively. The design that was issued and approved by the corporate team in the US did not work in the Brazilian production line as the configuration setting and the designs and production capacities were not aligned. Besides this, it was challenging to communicate between India and Singapore. They had poor coordination because of the outdated system they had in place. It was becoming a challenge to get real-time data on the status of raw materials and finished goods. Communication and coordination are the key element of organizational characteristics, and it was deterring KL from achieving the desired objective.
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