The California-Illini Manufacturing Company's (CI)
Q1. What is the firm's competitive strategy? Does the strategy seem appropriate?
In the strictest sense, competitive strategy refers to how a company can gain a competitive advantage through a market while finding a distinctive way of competing. California-Illini Manufacturing Company is able to compete in the Global industry because they are handmade tillage and cultivating tools and they are American made; they use expensive metal pieces and are hand metal forged, along with using manual electric arc welders. There is in most every market the opportunity for handmade products, for example Lamborghini cars are hand made vehicles, which are more expensive, but because of the extensive
Q5. Is the new (PCIC) manager on the right track with the smaller lot sizes?
Yes, the PCIC manager is on the right track.
Now the company has a big problem：Inventories increased by 24% and net profits continued to deteriorate. The current level of processing job lots 6.000 is a main reason to cause this problem. It produced large batches when the demand is not that high. So it is an effective way to solve the problem by reducing the processing job lots. But the big change from 6000 to 100 or 150 cannot make sure the stability of the company. It needs to be reconsidered. By managing the constraints, they are not over producing and building inventory levels for products that won't sell.
Q6. What steps is the PCIC likely to take now?
The final goal is to increase the profits. The most important things are to improve operations and increase sales volume. Firstly, reduce the processing job lots and control lead times. The company should not produce and build inventory levels for products that won't sell. They should provide the high quality productions to customers as soon as possible. Secondly, restore domestic sales. As reported that domestic volume decreased by 11.5%. The company should find the reasons and get back the domestic share. Thirdly, open up new international markets.
Q7. What type of cost system should be used at CI?
CI should implement a cost system that would be flexible and adhere to the changing market situations and that would be the ABC cost