Production analysis and strategy - Essay Example

Production Analysis In our company’s production strategy we made an initial lump sum investment in lean manufacturing during the first quarter. This had the very strategic advantage of reducing set up costs for our plant. After the initial investment we followed up with progressive investments aimed at increasing our overall production capacity over the rest of the year. Lean manufacturing was expensed on the income statements whereas production capacity was capitalized and as such in the first quarter we had to make some losses. When we able to make at least thirty thousand units every day, our production strategy was diverted to other initiatives to ensure profitability; we commenced carefully controlling prices, intensified marketing & product promotion and more importantly also concentrated on repaying our loan.
Improvements in the lean manufacturing were particularly useful when we needed to switch production and therefore expended some significant amounts on the strategy. There were very few changeovers; we switched to the production of 500g varieties. Lean manufacturing also played an advantageous role by allowing the exploitation less competitive areas quicker than the other companies. We also spent a lot on production which translated to a high capacity in production; eventually this was one of our greatest competitive edge as compared to the other firms in the market place. When competition started cutting into our margins, we were able to maintain volumes in sales thanks to our strategies of continued diversification, investment in marketing & product promotion and strategic pricing. We therefore maintained a steady production and sales volumes despite the entry of other firms in the market.
A critical factor in our strategy was production capacity; a steady and increasing production capacity gave us the much needed economies of scale. We managed therefore to spread costs through higher production capacities with net effect of reduced cost of production. With the increasing production capacity and reducing costs of production our team should be able to keep up with customer demands and also venture into new markets. Strategic gaps can be seen more especially with the decreasing production capacities of team D and this is therefore a potential markets for future entry.
In the framework of VRIN analysis, our production capacity proved to have a very high value as it presented us with a unique opportunity to venture into underserved markets. We therefore were in a position give value to customers by ensuring their demand is met to the fullest and also gained a competitive advantage of being available for the customer. The option was of investing in production capacity was available to all teams initially but we chose to begin with lean manufacturing and grow the capacity over time; we therefore moved steadily from losses and maintain firm growth. The strategy was somehow slow as the team that went on and invested heavily in production capacity from the word go was able to gain market dominance right away and maintain the same throughout the simulation. It is therefore clear that high production capacity was not an intrinsically rare or inimitable factor and we could have as well invested here initially and dominated the market from the initial point. We therefore need to keep investing in production do more promotions and more importantly diversify as much possible.
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