Challenges ans Risks of Omega Craft Company - Case Study Example

1. Why is Omega Craft successful with its boats but not its kits car parts? Designing and building fiberglass boats has essentially been Omega Craft’s specialty from the start. Over the years, the company’s consistent quality standards resulted in the cementing of their name as a very successful brand in their product category. When the company started to expand, it took on the production of different fiberglass products-products that were essentially out of their area of expertise. The fact that Omega Craft met with success upon its entering into bath tub, spa and speed boat manufacturing industry, lead to Omega Craft’s further venture into uncharted territory. In my opinion the biggest reason for the problems that the company is facing with its kit car division is the lack of research that went into the planning stages of the product development. Manufacturing fiberglass hulls for boats and making fiberglass parts for a car are two entirely different things and Omega Craft made the mistake that many bigger names had made; they didn’t devise a proper product development strategy and did not test market their fiberglass car components. As a result, the lack of research that went into their car components is evident in the low quality of these products. The boats that the company has been manufacturing have been perfected over the years but the kit car components should have been tested sufficiently before their production was started. The company is also unable to employ standard quality specifications and cost-effective production techniques, which will harm the finances of the company and may cause serious damage in the long run. 2. Would the concept of a virtual corporation be appropriate for the kit car division? Why or why not? A very good option for Omega craft would be to employ vertical dis-integration and look to form a virtual corporation. It would result in a number of benefits for the company. Outsourcing parts of the kit car would mean that the company could be able to provide better products at a better price. Locating manufacturers whose specialty is this particular line of products and working with them will result in improving the final product that the company intends to sell to its customer. The company can carry out extensive research and upon deciding the kind of product that they want, they can get it manufactured from another small scale manufacturer, so that it can maximize their economies by specializing. Given that Omega Craft sets rigorous standard production specifications, this arrangement can give their Kit car parts the needed touch of expertise. The costs will also be certainly less if Omega Craft only looks to manage the supply network, market these kit car components and to uptake sales and post sales services while getting the actual products manufactured by someone else. However this arrangement can be problematic as well. The biggest problems that could be faced would be in location the prospective manufacturers. It is not unlikely that the company may face considerable problem in knowledge transfer once any such manufacturers are selected. The company can also face a number of unforeseen problems, but if the above are dealt with properly, these problems may occur few and far in between. 3. Although Omega Crafts is successful at building fishing boats, what problems will this company probably experience as it expands? Any company- whether it is a manufacturing firm like Omega Craft or a firm offering services- suffers considerable difficulties during the process of expansion. When Omega Craft expands into new product manufacturing and new markets it will face the considerable challenge of maintaining their identity. The company will undoubtedly venture into manufacturing different fiberglass products, and this product development will bring with it an increased risk. The company will only be successful if they retain very high standards of quality and sell these newly developed products at competitive prices. When Omega Craft looks to enter new markets, it will again face the challenge of deciding whether they want to export or set up joint ventures. The company might risk the leaking out of its technology secrets if it decides to get local manufacturers to make their products in new markets and these products may also be not up to the high standard that Omega Crafts desires. On the other hand, exporting will mean increased costs and subsequently high prices which the consumers will not appreciate and resultantly the product sales will suffer. The company will have to devise very rigorous strategies as it expands and it can never make the mistake it made with its kit cars again. Every new market will have to be entered with a fully planned strategy and each product launched after equally rigorous planning. Only then can Omega Craft achieve successful diversification. 4. Consider the risks that Omega Craft is taking and propose some ways in which they could be analyzed. Omega Craft is in the process of its natural curve upwards- the management realizes that there are horizons beyond those that they currently inhabit. The resulting initiatives that will be taken by the company will certainly put it in risk. Omega Craft does not have very big manufacturing set up at the moment and as the company begins to expand it will take on many new projects and start manufacturing many new products. For this purpose, they will have to devise an organizational structure that is based upon product specializations. It would be better for the company if it employs an organizational structure that centers around particular product lines. For this they will have to maintain a single central location that will monitor the progress of all the different lines of productions being carried out. If the company employees this method, the standards of their products will remain consistent. Another added benefit would be that the accountability will be kept in check and product specifications will be met successfully. The company will also face considerable challenge in marketing their products as their size increases. Previously, Omega Craft has not employed a very rigorous set of marketing tools, and before long they will realize that they need to create a successful marketing mix so that their products are more appealing to their target market. Read More