Investing in a New Production Facility the Essay

  • Length: 4 pages
  • Sources: 4
  • Subject: Business - Management
  • Type: Essay
  • Paper: #45418680

Excerpt from Essay :

Investing in a New Production Facility

The automobile industry is increasingly taking advantage of the optimistic automobile market through producing more technologically sophisticated and luxurious motor vehicles. The vehicles despite targeting the wealthy in the society have been received positively by the automobile market. Particularly the four-wheel-drive model has become popular for two major reasons, image and up-country drive particularly on complex landscape. Having identified its personal interest areas, ABC Company has succeeded in determining the viability of their product. Notably, the modified automobile product is like a magical pill that the market has received overwhelmingly. Upon marketing the modified product, the management at ABC realizes that the product has a well established market and hence the need for virtual production. This is in efforts of making sure that the increasing demand by consumers is met. Virtual production ensures that consumer demands are constantly met while respecting their tastes and preferences. This type of production integrates operating systems, computer hardware and stimulation technology with production systems and process.

As a result, the management made the decision of investing in a new production facility that embraces virtual production given the increasing demand of the modified product. Pressures to innovate facilities come from consumers. However, such pressures can be powerful where consumers hold an option of supplier. In the case of businesses consumers and buoyant markets, sales tend to inspire investment in new production facility and equipments in order to boost output. Nevertheless, before setting a new production facility there are negative and positive factors that are worth considering (Heerkans, 2007). Among the negative factors is high labor cost, labor shortage and other aspects of production. Notably, investments in a new production facility entail cash outflows over a period of time after which a series of returns or cash inflow will be realized.

Apparently, with regard to ABC Company and its latest product in the market, investment decisions are economically dependent in the sense that the investment in a new production facility is related to other decisions. Such investments involve complementary investment decision that triggers increased sales of the product (Lock, 2007).

Before investing in a new production facility, the ABC Company's leadership must come to a consensus. They should ensure that there are available resources, services and programs that will enhance the completion of the project. The leadership must came to an agreement that the project will offer a reasonable foundation for introducing strategic goals that aims at improving the company's goals. The objectives of the project should be founded on global needs and costumer's increased demand. Moreover, the leaders should agree that the plan outlines the ways through which the company will accomplish its strategic objectives (Heerkans, 2007). The ABC leadership and its team of experts must concur on how to prioritize the distribution of its personnel, budgetary and other physical resources. With this agreement, the leaders should show assemblage of the basic strategies and procedures that the management will take on in order to tackle the future requirements.

The management should be committed on offering operational flexibility through understanding the amplitudes' of the entire fraternity and empower them in the most correct manner. After accenting to the project, the planning committees should handover the project outline to the company leadership for legitimization. Legitimization is the procedure through which the project will be approved and declared legal by the authority (Lock, 2007). The project plan should then be handed to the company's budgeting and planning council and the board of governors.

After the consensus between the management and the team of experts, culture assessment will be done. The project will require a favorable culture that will promote its implementation. The culture assessment will involve observation and a sequence of interviews with consumers, community and company leader's at all organizational levels (Heerkans, 2007). . Additionally, the changes that need to be adapted in order to improve product quality and service delivery will be highlighted. An analysis of the consumer needs, taste and preferences will be done. Analysis will also focus on highlighting the values of the company. Understanding the company's values helps in ascertaining whether the proposed project plan will side with the values or there is a need for change (Lorenzi & Riley, 2004). The company's values…

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