Plant of an Engineering Company Thats Losing Money - Literature review Example

Turn around a plant of an engineering company that’s losing money Review of the business situation: identification of areas of difficulty As a management trainee, the Divisional Director has asked to take charge of the Plymouth unit of the company that has been running poorly and is losing out money in the daily business operations. It has come to knowledge that the company may decide to shut down the operations of the plant’s unit in Plymouth due to the slowdown of the performance of the company in the Plymouth business division. It is thereby necessary to review the business situation of the company and identify the areas of difficulty due to which the business of the engineering division of Plymouth is at the risk of being shut down. The engineering plant in Plymouth is currently losing out money which has been accounted to major areas of difficulty that have been identified in the operation of the engineering plant in Plymouth. The company manufactures chemical pumps for use in pumping a wide range of fluids like the oils, industrial fluids, chemicals, petrol, diesel, etc. The chemical pumps manufactured by the engineering plant of the company in Plymouth have been of poorer quality and a large number of pumps are being sent back by the customers for repairing. This has been eating up productivity time for the engineering plant in Plymouth and the company has been engaging into repetitive work that involved wastage of time and money required for scaling up the production levels. The relationship with the suppliers is also an area of problem (Kozami 46). The suppliers of the Plymouth engineering unit are frequently late in delivering the components and parts of the chemical pump. There have been increasing reluctance of the suppliers in dealing with the company and supplying the parts required to assemble, manufacture and repair the chemical pumps. The third area of problem increases with the dissatisfaction of the customer as they tend to move away due to the extended time required for repairing of the products and the lower quality of products. The machineries and equipments used in the plant have become old and are subject to frequent breakdown. The replacement parts for repairing the machineries have also become difficult to obtain. Although the workforce of the Plymouth plant is skilled, their morale have been down due to the risk of closure of the plant and few workers fear that the management trainee has been sent to the plant for hastening the process of shut down (Bechet 78). All these are major problems that have been identified for the engineering plant in Plymouth. Review of literature: ways to handle problems in short term and long term A review of the literature provides the ways to handle problems in the engineering plant in the short term and long term considering the situational problems due to which the company has been facing major difficulties in its operation with the internal and external stakeholders. The literature review suggests that every engineering plant faces the challenge of maintaining its equipments and machineries with time as they grow older. The engineering plants have also struggled to maintain the quality of its product due to several challenges of finance, relationships with the suppliers, etc. The ability to manufacture high quality products on a sustainable basis, provide repairing services to the customers, maintaining strong relationships with the customers and keeping high morale of the workforce of the engineering plants have determined the success level of the engineering plants (Sekhar 56). The engineering firms have adopted effective ways to ensure that they are able to handle the problems in their manufacturing units in the short term without moving to a position where they could easily run out of funds. In cases where the companies have faced situations in which the workforce have been down in morale, the managers of the engineering plants have held meetings with the workforce where it has explained that there is no reason to worry about their employment till the time they have been performing a productive work looking at the quality as well as the quantity of the products manufactured. By boosting the morale of the workforce, the engineering plants have historically been able to raise their production level, improve the turnaround time for providing repairing services to the customers. The management of relationship with the workforce as well as the customers have been done by the engineering companies with the help of maintain strong relationships and understanding with the suppliers. Looking at the short term resolution of the problems, the engineering firms have chosen new suppliers through the publication of tenders if necessary to restructure the business process. The firms have also controlled the cost at the short term level in comparison to the revenues earned in order to keep themselves in a profitable position. The equipments and machineries which have become obsolete have also been replaced by the management through project finances. The bank loans have been obtained for a long term period and financial management of the business operations have been done in order to keep themselves in a profitable position (Hrebiniak 78). The engineering plants have turned around their business by controlling the damages in the short term and slowly and gradually taking control of the long term business problems. The engineering plants researched on the long term market trends and incorporated necessary changes in the product designs. The modification of the products manufactured by the engineering plants has led to development of product quality and reduction in the repairing and repetitive services to the customers. Critical actions for turnaround: Report to Divisional Director and outcomes expected The report to the divisional director have been presented below which contains the critical actions for turnaround of the business of the engineering plant in Plymouth. The critical actions suggested are in line with the historical actions of the engineering firms that could lead to turn around of the engineering plant in Plymouth. The first and foremost action in the short term requires confidence building measures to be taken by the management to boost the morale of the workforce who are indispensable for manufacturing and repairing work. The sense of fear among the employees needs to be removed which would drive the operations to produce better quality of products. The critical action for turnaround in the short term includes replacement of the older machineries in the Plymouth unit help of project finances (Jauch 37). The provision of good infrastructure could be laid by keeping an eye on the financial management of the company and checking further reduction of funds for the engineering division. The suppliers need to be handled professionally to ensure that there is no delay in the supply of parts of the chemical pump. In cases where intentional reluctance is noticed on the part of the suppliers, the company should take action to choose new suppliers as necessary for restructuring the business relationship. Looking at the market trends of increasing demand for chemical pumps which are more complex and expensive; the company should take action to technically cope up with the market demands. The designs of the necessary modifications for the chemical pumps need to be implemented by the company in order to tap the potential market opportunities (Fortuin 59). The company could also conduct a research on the product specifications of the chemical pumps being sold in the market and the competitive pricing of those pumps. In order to revive the situation of business slowdown and the gradual depletion of funds, the company should look at their available reserves and deposits and offer chemical pumps in the market which are highly cost competitive. Along with cost effective newly designed chemical pumps, the effective pricing mechanisms could stage the path for turnaround of the engineering division of Plymouth. Works Cited Kozami, Azhar. Business Policy and Strategic Management, 2e. India: Tata McGraw-Hill Education, 2002. Print. Bechet, Thomas. Strategic Staffing: A Comprehensive System for Effective Workforce Planning. USA: AMACOM Div American Mgmt Assn, 2008. Print. Sekhar, Satya. Business Policy and Strategic Management. India: I. K. International Pvt Ltd, 2009. Print. Hrebiniak, Lawrence. Making Strategy Work: Leading Effective Execution and Change. USA: FT Press, 2013. Print. Jauch. Business Policy And Strategic Management / 6th Edn. USA: Frank Brothers, 2013. Print. Fortuin, Frances. Strategic Alignment of Innovation to Business: Balancing Exploration and Exploitation in Short and Long Life Cycle Industries. USA: Wageningen Academic Pub, 2007. Print. Read More