Albatross Anchors Case Study #1

1330 Words6 Pages
Introduction Albatross Anchor is a small, family owned business currently facing many operational challenges due to the inefficiencies of their facilities and the way they process orders. They are facing many challenges with technology, current floor plan, and outdated equipment. The prices of the anchors the produce and sell are comparable to what competitors are selling them for, but Albatross Anchor is not able to increase their profit margin. I am a Senior Consultant for KU Consulting. Our company specializes in revamping manufacturing facilities ensuring they meet US safety and environmental standards. We understand the importance of producing high quality anchors in an environment that’s conducive to do so in. In today’s competitive market, it is vital to stay abreast of the latest and greatest technology within anchor manufacturing. KU Consulting can assist in your efforts. Question 1 Based on the information presented in the scenario/case study discuss Albatross Anchor’s competitiveness in relation to (please address all items in the below list and provide support for your conclusions): 1. Cost a) Cost of Production: Albatross Anchor’s current manufacturing costs are $8.00 per pound for mushroom/bell anchors and $11.00 per pound for snag hook anchors. They charge the same per unit price as their competitors do but since all departments are housed under one building, there are operation inefficiencies which can decrease profit margins; Albatross Anchor has a cost disadvantage compared to competitors. b) Economies of Scale: factors that cause the average cost of producing something to fall as the volume of its output increases (Economies of Scale and Scope). There are two types of economies of scale: internal, which are cost savings that accrue to a company regardless of the industry, market, or environment in which it operates;
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