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¶ … Operations Decision" Assume hired a managing consultant a company offer advice make a decision shut completely continue operations. It 100 workers produce 6,000 units output month (working 20 days / month).
Operations decisions
Details of the business
Miller Inc. is a manufacturer of a fast moving soap, Socas which is available as a bar of 250g, 500g or 1 kg. The company is named after Michelle Miller who is an industrial chemist who invented the soap. The company's strengths include the seemingly endless funds that the company has from Michelle's father, Turner Miller who is the owner of Turner Pharmaceuticals, which was handed down to him from his father. The other strength of the company is that it has a strong board of directors who have wide experience in the fast moving consumer goods industry and hardworking. However, the company has one major weakness, which is that Michelle has been running it to the ground by being arrogant and not appreciating employees. Consumers love the company's products and over the last five years in which the company has been operating, they have managed to build a large consumer base that is loyal to their products. The soap industry is at a period of growth and there is potential for Miller Inc. To grow their business if they can venture into new and emerging markets. However, there is also steep competition from other companies with strong brands, which presents a threat to the company.
Environmental scan
The PESTLE analysis framework is chosen for conducting an environmental scan of the organization. The identified political factors are increased regulation of the soap manufacturing industry as a result of concerns related to safety of consumers using these soaps. Manufacturers are thus required to meet high production standards for their products. Secondly, the law provides for high minimum wages, which presents an issue of high expenditure on wages by the company. Economic factors identified are the recent recession which has reduced the purchasing power of consumers and stunted the growth of the industry. The economy has also had high rates of inflation, which reduces the dispensable income. The economy is now recovering from the recession and this has created growth in the spending power of consumers.
The identified socio-cultural factors are the values and beliefs of the consumers in high quality products, which create substantial market for the products of Miller Inc. There are no religion or...
In terms of technology, the company largely relies on the internet and social networks as their advertising channels. Other electronic media are also used in advertising and promotion. However, these are not the major focus for the organization. In terms of production, Miller Inc. has not modernized its production systems. Therefore, there is heavy reliance on employees to handle many processes. This requires the company to have a huge workforce.
There are also legal factors that affect Miller Inc. The first is the law that stipulates high minimum wages. This creates a challenge for Miller Inc. since their wage bill is high. Secondly, issues of product safety mean that the company has to comply with in order to keep its certification. These product safety regulations also stipulate standards for product labeling and these increases the expenditure for the company.
The last set of factors are the environmental factors. The soap manufacturing industry is a fast moving consumer goods industry and one of the important issues in soap manufacturing is pollution. The company has to set up good systems for pollution monitoring of effluents and exhaust gases. There are also strict standards for these that the company must adhere to. Waste disposal is also a huge issue since in the manufacturing process, a lot of waste is produced which can be toxic if disposed unsafely.
Financial performance
The cost of unit production at the organization is high at $23.30 per unit and the marginal cost of the last unit is $30. These values are extremely high for the soap manufacturing industry. Even when considering that the products are for the high-end soap industry, the cost of production is still high compared to the price of the unit output at $32. This means that the company is…
References
Banker, R.D., Bardhan, I.R., Chang, H., & Lin, S. (2006). Plant Information Systems, Manufacturing Capabilities, and Plant Performance. MIS Quarterly, 30(2), 315-337. doi: 10.2307/25148733
Fairise, X., & Feve, P. (2006). Labor Adjustment Costs and Complex Eigenvalues. Economic Theory, 29(1), 95-110. doi: 10.2307/25056110
Jayanthi, S., Roth, A.V., Kristal, M.M., & Venu, L.C.-R. (2009). Strategic Resource Dynamics of Manufacturing Firms. Management Science, 55(6), 1060-1076. doi: 10.2307/40539281
Tukker, A. et al. (2008). Sustainable Consumption and Production: A Framework for Action. Brussels.
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