Free Essay

Cost Reduction Strategies for Manufacturing Unit

In: Business and Management

Submitted By dobus
Words 2408
Pages 10
1

SAVINGS FOR PROFITS
© BY SUBODH KUMAR SINGH

In today’s world when Corporate are struggling for profits and with fierce competition in the market, cost reductions, productivity enhancement and lean organizations have become today’s mantra s for survival.Folllowing are the key area where you can implement cost reduction methods with significant results.

1. Raw material procurement:

2. Logistics- Inbound and Outbound:

3. Warehouse and Stores:

4. Manufacturing Process (Production) :

5.Energy, fuel & Water

2

6.Information Management

7. Finance

8. Human Resources

8. Sales & marketing

3

FEW BASIC IDEAS PROCUREMENT

IT CAN BE DIVIDED INTO TWO MAJOR GROUP

A. PRODUCT

B. SERVICES

Raw material purchases constitute around 60-65% of the cost of product; hence any savings on this front would be significant for profit of the organization.

4

1.

BULK BUYING:

A. The company which has units spread across the geography can negotiate better price when the volumes are high, instead of buying for individual units its recommended to have central buying policy. B. You can negotiate better price if you can put your entire annual consumptions to a vendor and ask him for annual rate contracts. Bulk buying should be supported by bulk handling and storage system.

2. OPPORTUNITY BUYING: Most of

commodities and

raw material has seasonal Cycle

of prices they peak and fall in intervals hence you have to look for the lowest price to buy in bulk and get the price advantage.

5

3

LOCAL VENDORS: Vendors should be located in

close vicinity of the manufacturing area that helps lower freight charges and keeping low inventory. Only when it becomes economical to source from international market .eg crude oil from Middle east, Palm oil from south east Asia .

4. PARTNERSHIP WITH VENDORS: It is highly recommended to have partenership with vendors in

either having equity or technical collaboration so as any savings on their part would be passed on to customer.

4.

E- PROCUREMENT: Putting up Tenders on Internet

and setting up auction for the quantity to wider vendor base. Cutting cost on conventional way of asking tenders etc

6

for the material. In Reverse auction where you ask the higher bidder to supply items. Many companies have fulltime dep’t for e- sourcing.

5.

BUYING FROM TAX EXEMPTED AREA: In

Several countries the federal Government have certain taxexempted area where they allow manufacturers to set up their plants. In common parlance its called Tax holidays. Look out for regions and source material from such places.

6. REMOVING INTERMEDIARIES: Wherever possible buy from the OEM, directly from manufacturer not for any agent, distributors or commission agents.

7

7. NON – BRANDED ITEMS: Look out for non – branded items for non-critical areas as branded items charge premiums for their product.

8 RECYLING AND REUSE OF PACKING ITEM: All items comes into some form of secondary packaging out of which some of the items can be reused or recycled .Ask vendor tot reuse/recycle packing item to recycle or re use them for next items eg pallets, sacks & bottles, trays etc

9 CONVERSIONS: Buying primary material then giving it to processor instead of buying directly from the manufacturer. E.g. CBB conversion in FMCG industry.

8

10. ECONOMICAL ORDER QUANTITY (EOQ): The most basic principle of placing an order is to place an EOQ for material, which would reduce inventory. This figure can be arrived with your ERP software.

11. MAKE AND BUY DECISION: Certain items can be made in house rather than buying from out side .

12. NEGOTIATIONS: The price should always be negotiated with all information with you. Prices are reduced when you are informed and are aware of prices in the market. Always have an alternate quote for items negotiated.

13. INSPECTION: By eliminating inspection at factory and asking vendors to provide materials as per standards and completing inspections at their end we can eliminate delays and manpower used in these kind of activities.

9

14. SCRAP MANAGEMENT : Segregation of scrap generated in a manufacturing unit is important . It has been observed that all scrap are sold as lot to scrap merchant who in turn segregate in different items and sells it at higher rates . You can increase the sale price by asking several vendors to bid for the same lot .

10

13. SERVICES: All organization has certain services to be performed for smooth functioning of unit. E.g. hygiene, security, maintenance, safety & pest control, plumbing and building repair, which can’t by wished away and add cost to operations.

In earlier days of factory operations company employees did these but now savings can be generated if these activities are out sourced.

Critical areas can be negotiated into some form of annual contracts and rest should be kept for call basis services.

11

LOGISTICS Raw material and finished goods are to be transported either into the factory or from the factory to other destination. Transportation charges contribute significantly to cost of product.

MAP ROUTES: By mapping all routes and then decide on the shortest route for both inbound material and out bound material.

IN TRANSIT DAMAGES : Check for In – transit damages report Improve upon the secondary packing and the way boxes are filled into he container

LOADABILITY: Check the load ability of products into containers. i.e. utilizing most of space into container. Load ability is term used for calculation of no of boxes per unit is of container. ANNUAL RATE CONTRACTS FOR TRANSPORTATION : Always go for annual rate contract with transporter .

12

STORE AND WARE HOUSE : SPACE: Racks and shelf or pallets should be arranged in such manner that material could identified and can be loaded or unloaded easily manually or with forklifts . If space is constrain then you can have mezzanine floor or folding racks where the pallets can be kept. Always stack material on pallets; this helps in easy movement of material systematic. Always standardize your stack height so as to avoid any falling of material.

FIFO: Generally the items has to be placed in such a manner that the first in material should be first to move out.

13

LOW INVENTORY: Check all slow moving items or obselete items segregate them and scrap them .Use EOQ for ordering. Having vendor in near factory vicinity helps in maintaining low inventory . As they can be negotiated for volumes. Materials with low lead times can have minimum inventory .

14

PRODUCTION MAJOR AREA OF IMPROVEMENT HAS TO BE IN FOLLOWING AREA

1.LABOUR PRODUCTIVITY.

HANDLING: The handling of product and raw material should be reduced either putting of conveyors or automatic transfer to the machine.

MOVEMENT: To have minimum movement of manpower for getting materials, tools, shifting etc.

REWORK : To have zero defectives and rework as it is nothing but pure waste . The first step towards elimination is to adopt standards like ISO –9000 & GMP or in-house benchmark.

15

PHYSICAL STRESS : Study the positions of worker while working eleminate stress generating position , environment which would help in better productivity .

2.

MACHINE PRODUCTIVITY.

CHANGEOVERS: When you have batch process and have large product mix then you would have change over .To avoid change over time have automated change over or should have ready made spare to be fitted into machine in place.

OEE ( OVERALL MACHINE EFFICIENCY): Overall machine efficiency should be calculated recorded and machine with least efficiency should investigated for improvement. It is highly recommended to go for TPM. A manufacturing plant should always have a schedule maintenance program.

16

PRODUCT :Savings can be generated if the product design / shapes or INGREDIENTS are slightly modified and presented in the same packaging .

PACKAGING : Savings can be generated in primary and secondary packaging Check the cut of length of Wrapper/laminates/sheets and check the product dimension you would see that there are large tolerances provided by manufacturer you can reduce the cut off length hence can have substantially savings .

Avoid excessive packaging.

Secondary packaging like CBB can be checked for their bursting strength and lower ply CBBS can be used for Packing.

17

WASTE REDUCTION : All leakages , spillages should be plugged . Under/overweight of product to be monitored so as to reduce the material variance .check weigher ‘s can be installed for this purpose .

USAGE OF BYPRODUCTS : Certain items which are by product of process can by recycled , reused and sold for some good value .

18

ENERGY Energy plays an critical role in cost of production in some places the cost of electrical and fuel cost are very high for such unit it becomes crucial to adopt energy saving techniques and save energy .

AWARENESS DRIVE : Launch awareness program in the establishment, promoting ideas in house and awarding people / dept for implementing energy saving ideas. Switching of equipment not in use is the best method to reduce electricity consumption.

LIGHTING: Low wattage lighting are now available in ratings of 18/20 watts with good lux ratings and can be retrofitted with minimum cost . You can replace the conventional tubelight with them. Buildings or workplace should be designed in such a way that it have maximum period of sunlight exposure during day time .

19

MOTORS: All manufacturing units have various types of motors. Conduct a study for ratings, current during load and compare with the ratings, you would surprised to find that for most of the places the motors installed have current load below the ratings, these motors can be replaced by energy efficient lower hp motor.

BELT DRIVE: Where ever possible replacing belt drive or chain drive with geared motor would result in savings.

VARIABLE FREQUENCY DRIVE: Add variable frequency drives to variable load application like blowers, Motors, Air compressors.

PUMPS: Check the load/quantity of discharge of pump and compare it with motor rating just by reducing the impeller dia you can save electricity.

20

AIR COMPRESSORS: We can save energy by having VFD installed for motor; reducing intake air temp also reduces the electricity. Detecting leakages in compressed air pipeline also saves energy. Also removing excess bends and dropping s in pipeline layout reduces load on compressor. You can ask comp manufacturer to install motor stop arrangement on no load requirement.

DISCONNECT: Disconnect power to all idle machinery in plant.

AIR CONDITIONING: Proper setting of temperature can results in savings of power. Putting up films on windows can reduce heat load. You can put vapor absorption unit instead of motor driven compressor for Central air conditioning. Spot cooling instead central air conditioning also results in saving

21

COOLING TOWERS: FRP blades could be used instead of aluminum cast blades to reduce load on motor for cooling tower fan s. Thermostat can be installed in cooling towers for unnecessary running of cooling tower when the desired temp has been achieved.

OVENS & FURNANCES: Heat loss from the oven results in increase of fuel consumption hence proper insulation is required for prevention of heat loss. Waste heat can be utilized for preheating air, feed water or general purpose heating. This results in significant saving of power.

FUEL EFFICIENT BURNERS: Conventional burners can be replaced by high-pressure monoblock burners, which are fuel-efficient. ALTERNATE SOURCE: Alternate source of energy can be used to reduce cost of Energy. Solar energy can be utilized for lighting, heating water etc.

22

Wind energy can be used for ventilators Alternate fuel like bio fuel/bio mass gas can be used in some applications. LDO /HSD can be easily replaced by LNG / CNG.

WATER: Water used from municipality sources are charged for some industry they are major component of production like beverages, power plants etc. Replace water-cooled systems to air-cool type eg Air conditioning system. Replace natural draught type cooling tower to forced close type cooling towers.

23

Re cycle wastewater after ETP OR STP to be utilized for gardening or flush system of urinals. Washings to be replaced by mopping to clean the floors. Put sensors in place at bathrooms, urinals etc for conservation of water.

24

INFORMATION TECHNOLOGY: On advent of newer technology and software storage of data, sharing, transferring data have become much easier. Now decisions are made more fast and accurate by installation of ERP software. These software are boon for banking institution etc. By in stalling ERP software like SAP R/3,R/5, BAAN, and ORACLES etc we can save much of our time from locating and analyzing data’s. Package covers modules for Materials management. Production planning. Production records. Finance Module Sales Module. Etc Similarly by installing Internet and intranet facility inter office communications can be improved drastically which have in turn resulted in higher productivity and saved on stationeries eg letter pads, memo etc. HUMAN RESOURCES While doing important jobs like hiring, training, Appraisal etc HR plays important in decisions of outsourcing certain

25

activities which can be done by third party thus reducing manpower and generating savings Activities, which can be outsourced, are 1. Security 2. Catering or canteen services 3. Hygiene 4. Loading and unloading of materials 5. Maintenance (fire fighting, Utilities, Admin, Air conditioning units, Telephones, Computers etc) 6. Building Repairs.

26

ACCOUNTS AND FINANCE Basic contribution of accounts to cost reductions are basically linked to following major activity. BUDGETING: Budgeting is prime function of accounts and finance where things are budgeted for a financial year and activities are then monitored through out the years any negative variance are highlighted in monthly reviews.

COSTING: Prepare or calculate price of product taking into all cost involved in production as well as other overheads. Decides when to increase the price or lower the price of the product.

HANDLING PAYMENTS/SALARIES AND RECEIVABLES FROM SALE: Enter into an arrangement with any reputable bank for disbursement of payments through their channel instead through company Personnel. This results in savings in terms of manpower and delays in manual disbursement.

27

SALES AND MARKETING : ADVERTISEMENT : Instead of huge billboards and tele advertising you should try internet , targeted customer ,inviting customer to the shop floor like school children , setting up effective customer care office .Hirirng outsourced people for marketing after giving them short PRODUCT MIX : Larger product mix eats up own market share hence reducing and focusing few mega brands would generates more profits.

DISTRIBUTION CHANNELS: Distribution channels like AWS and Retailers should be selected in such a way that the products reaches the shelves on shortest Period .

28

Hope you would have got some idea to control or reduce cost & Increase productivity . If you have some doubts I m just email away for your queries . Write to me subodh@shumaonline.com

Regards Subodh

Similar Documents

Premium Essay

Vaibhav

...Analysis: A Way to profit improvement & cost Reduction Learning Objective 1. how to identify the value added activity 2. how to rectify the non –value added activity 3. application in profit planning & cost reduction INTRODUCTION Competitive advantage for a company means not just matching or surpassing their competitors, discovering what the customers want and then profitably satisfying, and even exceeding their expectations. As barriers to inter-regional and international trade are diminishing and as access to goods and services are growing, customers can locate after identification and «the best of what they want, at an acceptable price, wherever it is in the world. Under growing competition and, hence, rising customer expectations, a company's penalty for complacency becomes even greater. A strategic tool to measure the importance of the customer's perceived value is value chain analysis. By enabling companies to determine the strategic advantages and disadvantages of activities and value-creating processes in the market place, value chain analysis becomes essential for assessing competitive advantage. Value analysis or value engineering is one of the most widely used cost reduction techniques. It can be defined as a technique that yields value improvement. It investigates into the economic attributes of value. It attempts to reduce cost through a. design...

Words: 12975 - Pages: 52

Premium Essay

Budget and Forecasting

...with a capacity of 25 units per day, as the likelihood of sales exceeding that mark would have been highly unlikely and understanding that turning a profit is a tall order in the first quarter of any business. Initial budgeting was focused on directing the company’s limited capital toward the opening of the first two locations, New York and Tokyo. As the simulation moved into the 3rd and 4th quarters, it became imperative to budget for factors outside the realm of manufacturing. Each quarter, the ability to direct advertising, marketing research and human resource dollars was a requirement for success. The need to balance adequate staffing needs in relation to production and product demand required the use of multiple research and demand projection budgets. From the onset, my goal was to turn an overall profit during the first 4 quarters of operation. The pro-forma statements give simple to understand metrics of the financial position of Elite Solutions. Each quarter, I was able to ascertain the financial position, specifically regarding net operating cash flow and the cash balance at the end of each period to determine the relative success of each quarters’ activities. B2 My initial approach to the manufacturing process was based primarily on projections of future demand. In the simulation, this is an area I had significant concerns in, especially during the 2nd quarter where operating capacity had skyrocketed. There are a number of strategies available to improve...

Words: 1584 - Pages: 7

Premium Essay

Sippican

...Sippican Corporation Course: B2B Pricing: Negotiation, Calculation, and Strategy Matija Karaula B2B Pricing: Negotiation, Calculation, and Strategy Individual Paper: Activity-Based Costing 1) Defining the problem The main problem of a Sippican corporation was a low pre-tax operating income (1.8%). To solve that problem, a cause had to be found. Sippican reported gross margins of 35% on valves, 5% on pumps and 38% on flow controllers. After looking at a gross margins of the three product lines, one would think that pumps were an issue to work on, and a main cause for a low operating income, because the pump sales accounted for 47,36% of a total sales in March with just 5% operating margin. However, the method of measuring the product profitability had to be questioned. To be more accurate, the method of assigning the overhead costs to each product line was the reason for inaccurate gross margins of the Sippican´s product lines. Exhibit 1 – Result of a wrong overhead cost assignment Wrong assignment of overhead costs Innacurate product profitability Inappropriate product pricing strategy Lower operating income The method of calculating the manufacturing overhead used by Sippican would be accurate if every of their three product lines was of the same or similar complexity. More complex products require more indirect work so one cannot simply assign the overhead costs to the products proportionally to direct labor working hours on each of them...

Words: 2255 - Pages: 10

Premium Essay

American Connector Co Case Study

...reasons: Ø  If DJC sets up manufacturing base in USA, as per the exhibit 7 and exhibit 8 the raw material cost for DJC in USA will drastically reduce. Current Raw material product and packaging cost is 14.89 which will reduce to 8.93 in USA.As the raw material cost is almost half of the total finished goods cost, the raw material cost reduction would be substantial. Cost head | KAWASAKI            ($/1000 Units) | PLANT IN USA | Raw material, Product + Packaging | 12.13+2.76=14.89 |  14.89 * 0.6 =8.93 | ·          Ø  As Sunnyvale’s defect rates are at 26000 PPM of production which is relatively high. The Quality control of DJC is process centric where each process is QC monitored unlike in Sunnyvale its end product inspection. The quality losses of DJC and ACC over total production are 0.7% and 1.6%. So, Quality is one grey zone which needs to be addressed by ACC. Ø  Work in process inventory cost is very high in case of ACC in comparison to DJC. This in turn is reduces connector output per square foot as extra space is required for WIP and finished goods(15.1 of Kawasaki VS. 10.9 of Sunnyvale). Ø  As Kawasaki plant is working for 24hrs/day thus the asset utilisation is maximum and Connector output per employee is very high. (75.4%  of Kawasaki VS. 30.2% of Sunnyvale) Ø  Due to high number of product variations in customer orders of Sunnyvale which is employing batch production system there is frequent changes in product manufacturing lines thus resulting in lower...

Words: 3021 - Pages: 13

Premium Essay

Managining Finantial

...UNIT 13: MANAGING FINANCIAL PRINCIPLES AND TECHNIQUES Table of Contents Task 1: Applying costs concepts to decision making process 2 1.1Explaining the importance of costs in pricing strategy 2 1.2 Designing costing and pricing system 2 1.3 Recommending proposal 4 Task 2 Application of forecasting techniques 5 2.1 Forecasting Techniques 5 2.2 Sources of Funds for the Expansion of ABZ Ltd 6 Task 3 Participating in the Budgeting Process 10 3.1 Selecting appropriate budgetary targets 10 3.2 Preparing Master Budget 11 3.3 Comparing Actual expenditure and income with master budget 12 3.4 Impact of Lack Budget Monitoring Process Policy 12 4.1 Process in Managing Cost Reduction 14 4.2 Potential for the Use of Activity-Based Costing (ABC) 15 5.1 Applying financial appraisal methods 16 5.2 Evaluating and recommending suitable project 16 5.3 Reporting appropriate strategic investment decision 18 Task 5 Interpreting Financial Statements 18 6.1 Analyzing Financial Statements 18 6.2 Applying Financial ratios 18 6.3 Recommending Strategic portfolio management 20 References 21 Task 1: Applying costs concepts to decision making process 1.1Explaining the importance of costs in pricing strategy Cost can be looked upon as one of the most important elements of the process of taking pricing decisions and implementation of pricing strategies. Particularly, companies that adopt cost based pricing strategy, utilizes manufacturing and production costs...

Words: 4987 - Pages: 20

Premium Essay

Solectron

...has been changing constantly. The people have high access to information through the Internet, for instance in Asia-Pacific the Internet access market grew by 18.7% in 2005 to generate total revenues of $30.5 billion. This represents a compound annual growth rate of 24.3% for the five years period spanning 2001-2005 (DataMonitor:2006). The international commercial deregulation offered to countries such as China (China’s economy grew by 10.1% in 2004 and by 10.2% in 2005 – Business Monitor International) the opportunity to explore new markets and to offer labour low costs and high quality products for international markets. On the other hand, and at the same time, the female workers rate is increasing year by year, generating new trends, opportunities and demand for new products. The eminent risk of terrorist attacks brought new concerns for governments and companies in their transactions during the manufacturing process. According to Euro Monitor International, just in the USA 45.07% of the total female population was employed in 2005 from 41.99% in 1990. In response and adaptation to the facts showed above, companies have...

Words: 2775 - Pages: 12

Premium Essay

Toyota

...A Brief Understanding of IBS ‐‐A Case Study of Toyota                              A Brief Understanding of International Business Strategy --A Case Study of Toyota   by Peter LIU, peterliu@acculine‐mfg.com    MSc International Business     P14B45 International Business Strategy Lecturer: Dr Yee Kwan Tang Sponsored by 10 May 2010   Acculine Precision Manufacturing Company Tel: 0086-574-28887315, Fax: 0086-574-28875303, Web: www.acculine-mfg.com, email: info@acculine-mfg.com A Brief Understanding of IBS --A Case Study of Toyota Page 1 / 12 Content  Introduction ........................................................................................................................... 2 Basic Concept of International Business Strategy ................................................................. 2 Brief Background of The World Auto Industry .................................................................... 4 Brief Background of Toyota .................................................................................................. 4 IBS of Toyota ........................................................................................................................ 6 Entry to US Market ........................................................................................................... 7 Americanization as A Way of Localization ...................................................................... 8 Recommendations...

Words: 3709 - Pages: 15

Premium Essay

Chap 6 Cost Leadership

...Chap 6 Cost Leadership Cost Leadership Strategies gaining advantage by reducing its economic costs below all of its competitors. 1. What are the major sources of cost advantages? a. Size differences and economies of scale: Exist when AC(Q)↓=TC(Q)/Q↑, until reach to optimal volume of production * Volume of Production and Specialized machines: Only big volume company has the ability to buy new machines to save cost. * Volume of Production and Cost of Plat and Equipment: Volume↑, per-unit-cost manufacturing operations↓ * Volume of Production and Employee Specialization: Volume↑, employment more specialized, cost↓ * Volume of Production and Overhead Costs b. Size differences and diseconomies of scale: when other firms grow beyond the optimal firm size, a smaller firm (which a level of production closer to the optimal) may obtain a cost advantage. * Physical limits to efficient size * Managerial diseconomies: too large to manage efficiently * Worker motivation * Distance to Market and Suppliers: transportation cost is too expensive and eat up those profit. c. Experience differences and Learning-curve economies: cumulated volume of production greater experience in manufacturing a product or service cost↓ * Learning curve vs economic scale: a) cumulated volume vs the volume at a given point in time and average units cost. b) Optimal volume affects cost per unit vs No optimal volume affects cost per unit *...

Words: 555 - Pages: 3

Premium Essay

Steelcase Industry

...Sigma. 3. Speed: By measuring the number of parts produced in different operations to actual time estimated to complete each part. 4. Cost: The total Man-hours utilized i.e., by measuring the amount of work done in 1 hour, also how much of labour is being used and how much actually be utilized. 5. Action items: The employees were free to suggest new ides to the problems occurring in daily operations on the shop floor by using Improvement Performance Chart. 6. Inventory Information: The supplier will be communicated to the number of products produced as according to demand and according to the information the raw material was supplied to the company in order to maintain a proper inventory. This was done using Systems, Application & Products (SAP). 7. They used X-matrix 8. SMART: Scale of technology, Margin, Agility, Reliability and Trust. * For measuring they used 1. Pereto charts 2. Bar Graphs 3. Control Charts * For production flow they used 1. Heijunka box 2. Kanban System * For Employee involvement 1. Genba walks (for engineers to know what actual situation on the shop floor) Continuous Improvement: Q2. What were the strategic drivers that have pushed Steelcase to improve? Answer: The Strategic drivers that have pushed Steelcase to improve are 1. Inflation: As there was steep reduction in...

Words: 731 - Pages: 3

Premium Essay

Solectron

...represents a compound annual growth rate of 24.3% for the five years period spanning 2001-2005 (DataMonitor:2006). The international commercial deregulation offered to countries such as China (China’s economy grew by 10.1% in 2004 and by 10.2% in 2005 – Business Monitor International) the opportunity to explore new markets and to offer labour low costs and high quality products for international markets. On the other hand, and at the same time, the female workers rate is increasing year by year, generating new trends, opportunities and demand for new products. The eminent risk of terrorist attacks brought new concerns for governments and companies in their transactions during the manufacturing process. According to Euro Monitor International, just in the USA 45.07% of the total female population was employed in 2005 from 41.99% in 1990. In response and adaptation to the facts showed above, companies have been working hard, in order to implement new strategies, in order to increase their competitiveness into the market, to reduce costs and increasing product quality through strategic alliances. One of the important process to manage costs and improving quality is the supply chain management. According to Chopra and Meindl (2004) the objective of supply chain is to...

Words: 2765 - Pages: 12

Premium Essay

Thomas Money Scenario

... In 1940, FGI, known then as Thomas Money Inc., began as a consumer finance company, granting small loans for household needs. Within five years, the company expanded its services, offering business and commercial real estate loans, and business acquisition financing. Six years after its inception, the company made a pivotal decision to diversify its core business by branching into equipment financing. A subsidiary, Future Growth, Inc. was established. FCI capitalized on the rapid growth of the construction and forestry after the end of World War II and purchased a manufacturing company. This allowed the company to build, sell, and finance their own brand of building and forestry equipment. To focus on this new business strategy, the company stopped financing other brands of equipment. These tactical business decisions reaped huge financial rewards. The company's profits steadily increased and never had a reduction in the workforce. Stocks soared from $5 to $85.60 with six stock splits from 1975 to 1998. The Current Economic Condition The downturn in the economy has caused a 30% drop in new home sales. Economists are predicting additional declines in the construction industry in all segments of the industry except for nursing homes and hospitals. Additionally, several forestry states have encountered flooding, fires, and protest from animal activists. These factors have caused a change in the business climate and the company has seen stocks drop sharply to a present value of $35...

Words: 1524 - Pages: 7

Premium Essay

Adms 4900 Final Exam Cheat Sheet

...Internal Analysis Current strategy: (CIBC) Retail banking with trust, offshore and capilat market activities. Invest in new banking system, ICBS. (Barclays) Focus on rationalization along with development of the onshore and offshore busineses. Strengths: Well Established (CIBC) | Only major bank serving the Caribbean, this experience has given the bank strong leadership, expertise, and management skills. In addition, CIBC has 40 branches in 8 countries giving it a strong brand and public image in Caribbean | Effective System (CIBC) | (CIBS) that will enable efficient operations and allow the company to go into new channels | Strong Client Relationship (Barclay) | Strong client relationship building system, targeted to its working client base | Weaknesses: Inefficiency (CIBC) | Current banking system is not fully utilized because investment exceeds scale of operations | Ineffectiveness (Barclays) | BRAINS system is ineffective in facilitating internet and telephone banking, and operations are manually intensive and costly compared to competitors. | Competitive Advantage: (CIBC)Well established since 1920’s, is the only major bank serving the Caribbean as a separate unit, and has an effective and efficient banking system (ICBS).(Barclays) Strong customer relationships which resulted in its market position and maintained its margins. Core Competencies: (CIBC)Market leader in credit card sales, retail banking, offshore and capital market activities....

Words: 8382 - Pages: 34

Premium Essay

Starbucks

...first halfMet • Running into losses, lost its name- Not Met • As the company has sold off its many brands so reduction in market shareNot Met • After drastic losses there’s little relief and there is an increase in EBITDA- Met • Good strategies help the company in recovering from losses- Met • Lots of employees were CEO and Board • Prestige • Increase in Market Share • Revenue and Profit Growth • Strategic Transformation Success Government • Jobs protection • Earnings and Taxation • Major customers • Effective Products • • Innovation • • Stable Margin • • Good deals Employees • • • • Stability of employment Good Values and culture Better Paid Social Security • • removed and hired too i.e protecting the skilled and hardworking employees – Met (for skilled and hardworking employees) Earnings have been increased from the pastMet The increase in revenue shows that the products are effectiveMet Last one to shift its production to overseas – Not Met Shifting of the manufacturing unit to china help the customer in giving them suitable marginsMet The sales had been decreased Not Met Community • Environment Friendly In PB – I am confused whether it will be China production unit ? If so, then it will be Growth of suppliers. Executive team Prestige turn out the best division Assessing the Stakeholder Group: Strategies are set to by taking into consideration the objectives of the key Persons which can be defined by following...

Words: 1646 - Pages: 7

Free Essay

Carbon Footprint

...have been doing their bit in their manufacturing units, their carbon efficient initiatives has ceased to become a mere CSR activity, a movement, or a political leaning. It has transformed into business and economic viability. Today, manufacturers are pushed out of their production silos to consider the entire supply chain and look for new opportunities to erase the carbon footprints effectively – from sourcing to production, to distribution and product afterlife. The need today is for manufacturers to integrate an effective carbon reduction strategy into supply chain to reduce footprint, enhance their corporate image and reap the cost advantage. Attempting to please the ecological police with environmental initiatives and stakeholders with improved savings upon energy consumption, manufacturing companies have come a long way in their energy efficient initiatives. They have come out of their manufacturing facilities’ silos and have started to take an integrated view of their supply chains to erase the most villainous presence of the ‘carbon footprints’. Although manufacturing companies traditionally limited their supply chain optimisation vision to minimising costs to partners in the supply chain and maximising service to the customers, the current scenario is quickly moving to a concept of ‘producer responsibility’ for the carbon footprint of a product manufactured. In other words, the changing nature of global trade is driving the manufacturing firms to examine frequently their...

Words: 534 - Pages: 3

Premium Essay

Emi Assginment

...Statement The Universal Music Group (UMG) announced a pricing initiative designed “to reinvigorate the record business in North America”. UMG’s pricing initiative included a suggested retail price reduction, retailer display space requirements, and abolishment of retailer cooperative allowances and discounts. Therefore, the issues are: • How should EMI respond to UMG’s initiative? • What will the pros and cons of the sales and profit for each alternatives course of action? 2. Industry Overview The worldwide recorded music industry posted sales of $32 billion in 2002. This figure represented a 7% decline in dollar sales and an 8% decrease in unit volume from 2001. The United States is the largest market for recorded music at 39.4% of worldwide sales, followed by Western Europe t 36% and remaining from Asia and Latin America. Most of the sales and unit volume from all continents dropped except Western Europe. The mass downloading from unauthorized file sharing on the Internet, the proliferation of CD burning, competition from other entertainment formats (such as DVD film and new video game console) and poor economic conditions worldwide have contributed to the recent downward sales trend in the recorded music industry. As a consequence, major music companies have shut down CD manufacturing facilities...

Words: 6285 - Pages: 26