Unicon Operation Strategy

In: Business and Management

Submitted By Mqwert
Words 2193
Pages 9
Executive Summary
The Government of the Peoples Republic of China (PRC) in 1997 introduced a housing project with the intention of creating an opportunity for affordable housing in Hong Kong (HK). Hong Kong was recognized as having one of the most important ports in the country with a growing middle class. The project would cover a 90 block radius by 1998.
Unicon, given an opportunity to complete this project for the PRC, faced a big challenge. The capacity of the project was 90 blocs. The company has only been able to complete a 7 block per year radius. The total capacity of the industry itself was 20 blocks per year.
Demand for 2 of its 4 products - precast concrete facades & slabs, which are in current production, is in high demand for the Hong Kong market. These 2 products already represent close to 54% of the sales of Unicon.
The fact that the total capacity of the industry is 20 blocks per year clearly indicates that competition will be entering the Hong Kong market. Unicon, in fact, already expects a minimum of 5 new competitors to enter the HK market for construction suppliers. There are currently already 4 competitors in the HK market.
Unicon needs to move fast to be able to stay ahead of the competition entering the market. The opportunity for expansion is great.
Based on our evaluation, we recommend that Mr. Li:
• Work on the blanket approval with the HKHA to short cut the approval process;
• Re-organize the company structure by moving from “make to order” to “make to stock” between interior walls, facades and slabs to support the demand for these product;
• Implement changes in production - introduce a second shift to solve the problem of the 2.5 hours morning set up in order to support our strategic operational plan.
To implement these recommendations, we have considered an strategy of 0-6 months while our 5 year long-term…...

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Unicon Operation Strategy

... “make to order” to “make to stock” between interior walls, facades and slabs to support the demand for these product; • Implement changes in production - introduce a second shift to solve the problem of the 2.5 hours morning set up in order to support our strategic operational plan. To implement these recommendations, we have considered an strategy of 0-6 months while our 5 year long-term implementation plan will provide Unicon with strategic positioning amongst its competitors to ensure it captures the “white space” in the market. We are confident that we can deliver a strong operational strategy and partner with the People’s Republic of China and the Hong Kong Housing Authority to align our goals and objectives.   ISSUE IDENTIFICATION Short Term (Tactical Issues) Capacity Shortage The HKHA forecasted that 90 blocks would be tendered next year. This would require precast materials for construction. Unicon has currently the capacity to manufacture sets of facades and slabs for 7 blocks per year. Total current industry capacity was estimated at only 20 blocks per year. “The company operated a single shift that ran between 8:00am and 6:00pm with a 1-hour lunch break from noon until 1:00pm. The plant operated a regular production schedule from Monday to Saturday, plus overtime every other Sunday. Labour costs were 30% of the total revenue, while material costs were approximately 40%. The balance was for plant overhead and profit” (Source: Unicon Case Report,......

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