Question


GKumar

Which alternative under consideration better in terms of cost, impact and integrity of organization?

You are VP for a large manufacturing company. Your company makes home office furniture and cabinet for home theater systems. Because of the growth in the each product line , the firm has grown substantially each recent years. At te same time, this growth has not gone unnoticed, and several competitor has entered the market in the last two years. Your CEO has instructed you to determine how to cut cost by 10 percent so that prices can be cut by the same amount. So VP feels that this tactics is necessary to retain your market share in the face of new Competition. VP have looked closely at the situation and have decided that there are three different ways you can accomplish the cost reduction. One option is to begin buying slightly lower grade materials, such as wood, glue, and stain. Another option is to lay off a portion of your workforce and then pressure the remaining worker to work harder, As a part of same option employee hired in future will be from lower skill labor pool and may be contract based 3. replace your existing equipment with newer , more efficient equipment. although this require substantial up-front investment. You are certain that lower production cost can be achieved

8 months ago - 0 answers

Best Answer

Chosen by Asker

The options selected are workable but there are risks. 1- You can of course buy lower grade raw materials but it can affect workmanship quality. 2- lay off people this will definitely delay your production and will result to lower output per person. Then again you will also sacrifice workmanship. It may be better to outsource your labor. Get contractual laborers and pay them by the piece they produce but implement tight quality control method. changing to more efficient equipment may not be wise because you are investing additional capital that you will add to your cost. You can actually change your marketing strategy by positioning your product as top of the line products. Try to sell quality not cost. Meaning position your product as high quality product good workmanship tell you market that your company exert a lot of effort to look for the right wood, the right materials and the right design. You do not change your product you change the way your market view your product. And you can maintain your price. Why do you lower your price to follow a VW when all the time your product is a BMW

by HAVOCS

8 months ago

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