Strategic Planning - a Case Study
Introduction Clifton Industries Ltd. is a relatively small but independent company within the Berbeck Industries Group. Its purpose is to supply a range of products to aircraft manufacturers and its mission is to manufacture electromechanical products for NA and European markets and electronics products for NA market. As can be seen from the SWOT analysis in Appendix A, the company’s current core competencies are skilled labour and diverse manufacturing capabilities. Clifton’s main products are European electromechanical products (“old OE”) and spares and repairs, but due to predicted decline in future sales of these products, Clifton had begun producing electromechanical products (“new OE”) for the N-American market as well …show more content…
Thus reducing manufacturing complexity through the modular design would allow Clifton to tender successfully in the price-sensitive NA market. This has succeeded so far, but upon examining Exhibits 7 & 9, it can be seen that both modular contracts have been sold at a loss so far! The difference between the estimated profit of the products and the final value to Clifton can be seen in Figure 2 below.
$140.00 Calculated Profit(or Loss) Per Unit $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $0.00 -$20.00 -$40.00 A 463 L 195 Product Ref J 105 Estimated Actual
Figure 2: Profit comparison
The cause of this additional unexpected cost can be put down to lack of experience with the modular design. Both factors of entering a new market & using a new product have compounded the inexperience factor to create a cost greater than that charged for the product. This now creates the need for the reevaluation of the modular design. The modular design has an initial setback in that it will have low margins and even losses in the modular design until significant experience is gained. From the analysis carried out in this section, it can be seen that the NA electromechanical product is a question mark with the potential of being a cash cow if experience is gained quickly and hence the product is manufactured efficiently. The ideal strategy to be used in the manufacture of these products is a cost