If a company is pursuing a strategy to produce branded footwear at a low cost re
ID: 339594 • Letter: I
Question
If a company is pursuing a strategy to produce branded footwear at a low cost relative to any other rival firm, then it should regularly review the plant and production cost benchmarking data in each year's Footwear Industry Report to determine whether it has achieved the lowest possible total manufacturing costs per branded pair produced at each of its production plants gauge whether its efforts to reduce total manufacturing costs per branded pair produced have been more/less successful than other companies pursuing much the same outcome and to learn what areas of plant operations may warrant further actions to reduce costs determine whether it should spend more/less on TQM/Six Sigma programs at one or more plants, and/or make maximum use of overtime at each plant to improve cost efficiency and/or build additional plant capacity. Odetermine whether to (1) invest in one or more plant upgrade options, (2) close down a particular plant, or (3) sell some of the plant capacity at one or more plants determine whether it should close down whichever plant has the highest total manufacturing costs per branded pair producedExplanation / Answer
If a company is pursuing a strategy to produce branded footwear at a low cost relative to any other rival firm, then it should regularly review the plant and production cost benchmarking data in each year’s Footwear Industry Report to gauge whether its efforts to reduce total manufacturing costs per branded pair produced have been more/less successful than other companies pursuing much the same outcome and to learn what areas of plant operations may warrant further actions to reduce costs.
Explanation:
When a firm is pursuing low cost strategy the firm should eliminate or bypass some of the cost producing activities and perform the value chain activities more cost effectively than rivals. The footwear company needs to check the Footwear industry report to analyze whether they have become successful in reducing costs than the rivals through their low cost strategies or to identify other areas in the plant operations that would help them to reduce cost and gain competitive advantage over rivals.
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