Management 313 Operations Strategy Case Study

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Capacity and Process Technology Strategy Advice for Bonkers Chocolate Factory:
A central aspect of the dynamic problem facing a business in an evolving and competitive industry is the decision about additions to productive capacity. The purpose of this report is to provide strategic advice for the CEO of Bonkers Chocolate Factory (BCF), the U.S division of a multi-national candy company operating in the highly competitive chocolate products market. In late 2001, the main issue facing BCF management involves determining and agreeing on an appropriate strategy for the purchase of extra conching capacity, through the implementation of either new in-house developed conching technology or existing conventional conching technology. Other issues …show more content…

Because of the uncertainty of long-term demand, which could remain constant around forecast demand growth of 25%, the higher cost of new technology may not be sustained by a required higher level of demand. If this occurs, BCF may not be able to operate profitably at a higher level of capacity. (SEE APPENDIX<DIAGRAM 2)(COST/VOLUME/PROFIT).
BCF management have indicated differing functional preferences respectively for either process technology options available for implementation. For the sales vice president (SVP) and marketing vice president (MVP), fears about the new technology not duplicating the taste of existing products is a major barrier to implementing new process technology. For the SVP and MVP the vulnerability BCF would be exposed to i.e. change in product quality, cost and speed market performance objectives not being met, inability to defend existing volume brands, and price competitiveness due to the new process technology’s higher productions costs; is too great a risk to take with unproven new process technology.
Evaluating process technology can be based on three classes of evaluation criteria: * The feasibility of the process technology * The acceptability of the process technology * The vulnerability of the process technology (SEE

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