Strategic Management Opportunities Which Should Be Used in Albatross Anchor - Case Study Example

? Strategic Management In APA Format Albatross Anchor is an anchor making company which is currently facing quite a few difficulties, the company uses outdated technology which affects the profit and the overall satisfaction of the employees, the company mainly makes ship anchors and can make a lot of profit should they focus on strategic management, the employees have also been unhappy which has triggered a great cause of concern for the company. This paper will throw light upon the strategic management opportunities which should be made use by Albatross Anchor, several recommendations will also be made in this paper to ensure that the company gets maximum profit in the coming months. Strategic Difficulties: Albatross is currently facing several serious problems one of which is limited client base, the company is not doing enough to expand its client base, and this is really important and should happen immediately. An anchor company can supply ships to marine wholesalers, they can supply anchors to marine wholesalers. In addition to this they can also supply steel plates, metal fabrications, plastic injection modeling so on and so forth. Structural steel frames and bases are also included in these services. As far as the case study is concerned, it is known that Albatross only supplies hooks and snags to its clients. Breaking Even: “Break-even analysis is a technique widely used by production management and management accountants. It is based on categorizing production costs between those which are "variable" (costs that change when the production output changes) and those that are "fixed" (costs not directly related to the volume of production).” (Break-Even) The sales volume required by a business to make profits is called a breakeven point; the following answer will present the breakeven point of Albatross. Breakeven point comes into the picture when a pricing strategy is being developed. This pricing strategy can be a part of either the marketing plan or the business plan. The best option between A and B would be selected giving a just explanation. Fixed Cost per unit= Total fixed cost/ Volume of Production In this case it is x=$500,000/5000 X=$10 (Fixed cost per unit in process A) Case B= $12 Anchor and Process Process A Process B a Fixed Cost per Anchor $10 $12 b Total no of Anchors to Attain Break-Even 50000 Units 62500 Units I would recommend process A because the break-even would require only 50000 units whereas in process B it would require 62500 Units. The sooner the break-even is reached the better. So process A is recommended considering that it would take much lesser time to sell 50000 units than 62500 units. One very important long term change would to invest heavily in latest technology, the second long term change would be to buy more land to effectively manage the needs of the company. One short term change would be to access more shipping options; the second option would be to choose the most effective shipping option. The technology that is being used in the company is without a doubt obsolete, they have to invest in new machines. They can never expect growth should they keep using the same obsolete machinery. The company needs to invest in technology; the use of outdated technology can never facilitate growth. New machines will produce better products and at a good speed, this will make the company much better than ever. This will also bring down the cost of production, the old machines require much maintenance, and this would be much different in the case of new machines. Ergonomics: Ergonomics aims at two most important things, they are health and productivity. When an employee is unwell, he will never be able to produce what is expected of him and the organization will suffer because of his lack of productivity. Easy to use machines should be bought by an organization so that the employees never get affected and their productivity is never hampered. The organization must not buy anything that will affect the health of the employees. In this particular case Albatross must ensure that they provide their employees with the best available facilities only then can they turn out to be really useful for the organization. Job satisfaction, morale and productivity will only become a reality when Albatross focuses upon ergonomics. This will lead to a lot of growth in the organization. Cost Management: The current cost of production stands at $ 12 per pound for Bell or Mushroom anchors, the cost is half when it comes to the production of snag hook anchors. The most important problem here is the operational inefficiencies of the company. These inefficiencies bring down the profit margin by 30%, this is whopping and this needs to be rectified. The company cannot afford to lose 30% of their profit; it is high time to sort this out. The receiving area is currently doing double duty, it is responsible for receiving raw material and it is also responsible for sending finished goods to the intended destination. The company will not be able to compete unless they solve their operational difficulties, they need to have a specific area to handle shipping and to receive raw material. This will make the company more competitive. Conclusion Albatross is in a very precarious situation as things stand, the most worrying factor is the 30% profit which gets drained out and on top of that, if the employees do not perform, the organization will be ruined. It is very important to know the strengths and the weaknesses of every employee to be able to motivate him. The goals will only be met should the employees remain motivated all the time and it is very difficult to motivate employees these days. Performance management can come in handy here; it can help Albatross become a really good organization. The right personnel need to be appointed to be able to keep the employees motivated at all times. The company is inflexible according to its case study; there are a lot of things which require attention. The most important of them all being technology, updated technology will make the company more flexible and it will facilitate growth. It is needless to say that this will also make the company flexible in more ways than one. References Break-Even (2010). Introduction to Break-Even. Retrieved from: http://tutor2u.net/business/production/break_even.htm Read More