You Are The Operations Manager Of A Large Manufacturing Comp

You Are The Operations Manager Of A Large Manufacturing Company That P

You are the operations manager of a large manufacturing company that produces widgets. Your widgets currently sell for $100 each. Your current cost to produce these widgets is $80.00 each. You have proposed a series of changes to the operations process that would reduce the cost to produce a widget to $64.00. The marketing manager of your company has proposed a marketing campaign that she believes will increase sales of the widget by 50%. The financial officer of the company has proposed a project which will enable the company to restructure their financing and reduce finance costs by 50%. The Board of Directors is meeting next week to decide which proposal to accept (They are only going to support one of the three proposals). If you were a member of the Board, which of the above proposals would you support? Please provide your reasoning as to why you would support this proposal. If you were asked to present to the Board the case for making changes to the operations process, what would be your main talking points? Provide a scenario where you would recommend the Marketing proposal. Provide a scenario where you would recommend the Finance proposal. 4 PARAGRAPH MINIMUM. 2 SCHOLARLY REFERENCES MINIMUM.

Paper For Above instruction

The decision-making process for a manufacturing company contemplating operational improvements, marketing strategies, or financial restructuring necessitates a thorough analysis of potential benefits, costs, and the strategic alignment with the company's long-term goals. As a member of the Board of Directors, selecting the most advantageous proposal requires weighing immediate profitability against long-term sustainability, market positioning, and financial health. This paper discusses the rationale for supporting each proposal, emphasizing the operational cost reduction strategy, and providing scenarios where the marketing campaign or financial restructuring would be preferable.

From an operational perspective, reducing the production cost from $80 to $64 per widget represents a compelling opportunity to increase profit margins. Currently, with a selling price of $100 and a cost of $80, the profit per unit is $20. Post-reduction, the profit margins increase to $36 per unit, assuming sales volume remains constant. This increase in profitability is significant because it enhances resilience against market fluctuations, offers room for competitive pricing, and supports further investments in innovation or quality improvement. Furthermore, lower production costs bolster the company's ability to compete in price-sensitive markets and can lead to sustained growth. The primary talking points when advocating for operational improvements include cost efficiency, profitability enhancement, and long-term competitive advantages backed by lean manufacturing principles (Womack & Jones, 2003; Heizer & Render, 2016).

In contrast, the marketing proposal aims to boost sales volume by 50%. If the sales volume currently is, for instance, 10,000 units, a 50% increase would elevate sales to 15,000 units. Given the selling price of $100, this could substantially increase total revenue, which is particularly advantageous if the company is operating near capacity or seeking to expand its market share. A scenario where this proposal makes sense is when the market exhibits growth potential, and consumer demand is underexploited. Investing in marketing can also prepare the company for future expansions by establishing brand recognition. However, it is important to consider the additional costs of marketing campaigns and whether the increased sales volume will be sustainable once the campaign concludes (Kotler & Keller, 2016).

On the other hand, the finance restructuring proposal offers a reduction in financing costs by 50%. If the company's current interest payments are substantial, this could translate into significant savings, improving net income and cash flow. For example, a company with high debt levels might benefit immensely from lower interest expenses, freeing up capital for operational investments or strategic initiatives. An ideal scenario for supporting this proposal would be a company with high leverage and a volatile market environment where lowering financial costs reduces risk and increases financial stability (Modigliani & Miller, 1958; Ross, Westerfield, & Jaffe, 2019). Such restructuring also enhances the company's creditworthiness, potentially leading to better borrowing terms in the future.

References

• Heizer, J., & Render, B. (2016). Operations Management (11th ed.). Pearson Education.
• Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.). Pearson Education.
• Modigliani, F., & Miller, M. H. (1958). The Cost of Capital, Corporation Finance, and the Theory of Investment. The American Economic Review, 48(3), 261-297.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2019). Corporate Finance (12th ed.). McGraw-Hill Education.
• Womack, J. P., & Jones, D. T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Free Press.