Analysis c. How does Wilkerson’s existing cost system operate? Develop a diagram to show how costs flow from factory expense accounts to products. Costing systems help companies determine the cost of a product related to the revenue it generates. Two common costing systems used in business are traditional costing and activity-based costing. Wilkerson is currently using the traditional costing system.
Attempts were made to create automated factories as a means of increasing quality and productivity, however it costs them twice. A new division called Saturn was created to imitate Japanese manufacturing technologies and to produce small cars at the same cost and was kept isolated from other manufacturing units of GM. However the cars produced by Saturn was able to compete with the market and could acquire top ten positions but still it faced a loss of almost $700 million dollar. The reason behind this was tht may they did not have a low cost supply chain or because of the labour costs as they had a tie up with UAW. They even had joint ventures with Toyota called as New United Motor manufacturing Inc.( NUMMI) but this plant was also closed down but again reopened under the control of Japanese management and was able to increase its productivity.
(Cowan, 2014) It recovered only in 2014 and brand value was US$34.9 billion which increased to US$35 billion this year. Toyota’s mechanical errors resulted to fatal accidents while Volkswagen’s deceptive activity may result to death but not immediately, so some people might mistakenly think that VW can recover from severe brand damage. Unfortunately, Toyota’s case was due to human error while that of VW was deliberate deception. VW’s brand identity rests on honesty, fuel economy reliability, efficiency of production, and environmental friendliness, but this image has been wiped off by the scandal. (Helm, et.
Toyota 's success after using TPS brought worldwide attention to lean manufacturing concepts. With the introduction of lean manufacturing into the production process, the management was able to gauge the advantages lean manufacturing brought into the day to day activities when it was implemented for single production line. The benefit of single production line with duplicate resources is that idle equipment could be undergoing a setup for the next product while another product is running. This configuration mitigates flow line downtime that would result from a high product mix because it can drive the need for many different machine setup time iterations. A single line configuration would simplify production line leadership’s responsibilities, staffing level needs would be better understood, preventive maintenance could be done while products are running and this configuration would promote a balanced or equal use approach to equipment utilization.
Every business is continually working towards growing its profits. Through profit maximization, businesses can find the best price levels to achieve its profitability goals. This method allows companies to set different product at prices that return maximum revenue and profitability. Profit maximizing prices are important because they have a positive long-run effect on profit, rather than markdowns, which create excitement but inevitably have a negative long term profit effect. In order to find this equilibrium price, a company must determine its consumer’s price elasticity or price sensitivity (Chapter 14 slides).
The lemons problem was first examined by economist George Akerlof in 1970. Akerlof explored the problem associated with pricing second hand cars, which he called a lemons market – a ‘lemon’ is a derogatory term for a poor quality second-hand car. Since, the buyer doesn’t have all the information, the buyer can solve this problem by doing their research before purchasing the car. The buyer can look into the seller’s reputation, hire a mechanic to inspect the car, look at the car history by using CARFAX and also acquiring
Charismatic Transformation is used to accomplish radical change in a short time frame, with support from the organization’s culture (Brown, 2011). Going back to the Great Recession, The Home Depot observed that their competitor, Lowe’s was still marketing via television ads that encourage consumers to focus on expensive projects such as, roofing, flooring, fences, etc. These types of projects had become unaffordable to consumers during the Great Recession. The Home Depot took a different approach towards marketing to the consumers. The company put its focus on painting or re-painting rooms.
In business, these calculations would be performed as mathematical equations. Therefore, to improve productivity, a company wants to increase the monetary value of the output and reduce the monetary costs of the input. In this equation is fundamental reasoning for outsourcing. If a company can outsource a product, thus lowering production costs, then productivity has improved. However, there will be trade-offs to consider.
Also, this concept stands to benefit substantially in cost reduction from the capital allocation, especially the IT capital inclusion. In addition, for instance, the IT inclusion can not only improve performance, but also deliver consequences such as the effectiveness of business processes, quality improvement, acceleration of the process, etc. Furthermore, the optimization of cost efficiencies with superior performance is crucial for the continued competitiveness of the firm. In this paper, the IT value engineering model concept is analyzed for its feasibility and stages for effective implementation are
Organizations make operational adjustments in order to survive global competition. When profits decrease, a cost reduction is usually suggested in order to return business to a profitable position by merging or acquiring new businesses (Shook & Roth, 2010). In response to a weakness in the current environment, economically, or competitive threats, there is a need for change. Mergers occur when two companies combine their operations and participate as equal partners in order to achieve strategic and business objectives (Sudarsanam, 2003). An acquisition occurs when one company takes over a smaller company and obtains control to determine how the combined operations will be managed (Shook & Roth, 2010).