Burkinshaw Plc.
1)
The Chinese department store’s order would require significant communication with the UK based research and development centre which would take time to develop new ideas for products and cost money as well. The factory is also running at high levels of capacity with capacity utilisation of 95% which is 30% more than the UK factory. Since the factory is running at a higher capacity utilisation level it means that the number of defective products has raised as well as the care for quality has decreased and volume has increased. Andrew is worried this might not give the good impression that is needed from the company as they are trying to sell high quality British products. The amounts of defective products in the Chinese
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Andrew pays the Chinese workers 50% less than he did with the British workers and only 5% of the employees are in a trade union meaning that there is a less likely chance of a strike occurring. There is also a 40% number of staff that is temporary in the business which means that Andrew can choose to hire and lay off staff during peak periods and when they are not needed. They also have close links to recently graduated university students. The ROCE in China is 3.44% which is a lot better than that of the -9.24% in the UK. The asset turnover in the UK was 1.17 and in China it was 2 which mean that they are selling more of their products in China than they were in the UK. The gearing ratio in China is 50.17% which is average for the business and means that they are not in risk of when the interest rate rise they will lose a lot of revenue. The employees that had been working at Burkinshaw had worked there a long time before hand and had possessed unique skills that would allow them to be in a niche market of handmade pottery products that had been hand made to a high quality standard. In the UK the defective products was only 5.0% which was lower than China by 2.5%. The EU and USA markets had showed more percentage of sales growth in Burkinshaw’s Plc markets than China did in 2005-2010 which would have been a safe bet to go with rather than going to China.
4)
In the UK factories the capacity utilisation was only at 60% which meant they were not using the
The firm is not able to realize economies since they are not able to produce larger orders as easy. They are not able to meet capacity utilization within the plant due to operational inefficiencies.
Suppliers must supply the stock managers with good quality products. If however the products are bad quality
The following is an analysis of the case, Greaves Brewery: Bottle Replenishment. It details the growing beer operation of Greaves Brewery located in the Caribbean island of Trinidad. The purchasing manager for the company, Alex Benson, is uncertain about how many bottles to order from the company’s German glass supplier. His decision is complicated by the possibility of a new bottle design being introduced that would compromise his existing inventory of bottles. Additionally, he is faced with storage limitations and erratic sales, all of which are impacting his decision. He is also concerned about over ordering to avoid issues from an
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And the reason of it was still the cost. Indeed, this former strategices failed to match their product characteristics with their supply priorities. That is, it cannot minimize their product cost. For example, using Japanese suppliers before was twenty to thirty percent more empensive than using Chinese suppliers, not to mention about the trasportation cost. In addition, their original Japanese design was still increasing the cost in China’s factories ----- increase equipment cost cannot make good use of the cheaper labor cost in China; increase producing cost by designing unnecessary function in China.
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Moreover, even though producing in Vietnam would suppose a strong saving in cost in the labor-intensive processes, the risk of mold duplications and counterfeits is high. The imitation of the company’s products would eliminate the differentiation that allows them to charge a much higher price than the local manufacturers (15$ compared to 3$). Also, the company lacks of experience establishing a wholly owned subsidiary in a new country.
The number of defectives item affects the profits. The higher the number defectives the less profit that is made and vice versa.
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