A combination of privately incorporation and the purchase of new equipment and facility. Purchasing the new equipment and facility for $13 million with the acquired capital attributable to incorporation would give back Jones’ competitive advantage. The incorporation will give the funds and the upgrade will solve the problem. SWOT analyzing in the implementation will assess the industry and environment in which they operate. The no change scenario is when management does not change any aspect of the business.
Fred Jones’ business would continue as it is, without acknowledging any problems in the company. They would continue on with their ignorance of the organizational environment. As projected by the company accountant, the firm will expand for the next two to three years at which point, expansion will no longer be possible due to equipment restrictions. If Jones loses his three managers then, this forces him to search for new, and possibly less experienced managers or to take on even more managerial roles and functions.
If the company continues at this state, many problems will arise for the formidable paperweight entity. When the operating capacity is reached (2-3 years), any further increase in productivity would greatly decrease the operating efficiency of the current plant. This would stall the business causing the competitors to move ahead of Jones’ company. By not changing anything at Jones’ firm, the company will continue to be run with emphasis only on sales. This pathway would ignore other aspects of efficiently and effectively running the business such as research & development, marketing, and planning.
Key aspects to overtake the competition such as new products, lower costs, and expansion would become obliterate therefore, keeping the company at a stand still. Jones has a great company in his hands, with a solid and trusted brand name. Unfortunately, with no action taken to deal with the competition the paperweight firm will fall behind. Given the advantages and disadvantages, this alternative would not be the best selection because it does not solve the primary problem or any of the satellite problems. Facility and Equipment Upgrade With the threat of technologically advancing competition, Jones’ organization must evolve.
The competition has automated equipment that cuts the costs of producing paperweights by 4/5ths. It is necessary for Jones to buy this equipment for a cost of $5 million in order to keep up with competitors. Also, Jones’ lease on his current factory building expires this year. He faces a dilemma between which of the two facilities he should choose. The best value choice would be to buy the current factory for $1 million, but there’s a problem that eliminates this choice. This problem being that there would be a great decrease in working efficiency when the peak operating capacity is reached.
Although a newly built factory that could accommodate the new equipment costs $8 million, in the long run it would be the best choice. Upgrading to the best equipment and facility is crucial if Jones’ business should adapt to an ever-changing task and general environment. Then new machinery will improve the company standing in its general environment, specifically in the technology sector. ‘Technological change can make established products obsolete overnight, but it may also create a host of new opportunities for designing, making, or distributing new and better kinds of goods and services.
Managers must move quickly to respond to such changes if their organization is to survive and prosper. ‘? Through this technological advantage, Jones’ company can improve itself and become more aggressive with competition in the task environment. Choosing this alternative would prove to be costly, but it would solve the satellite of when the peak operation level is reached, any further increase in productivity and greatly decrease the operating efficiency of the current plant, and put a severe strain on the old equipment.
This is because the new factory has no production ceiling and the new equipment would not strain. Since Jones’ company has a lack of monetary funds this alternative would be impossible to do without some source of extra revenue. The rest of the satellite problems would not be solved. Given the pros and cons this alternative solves the primary problem and two of the satellite problems but it does not solve the other secondary problems. Therefore, this alternative would not work by itself, but if combined with the following alternative this combination may prove to be the best solution for Jones.
