You are a management consultant with expertise in operations and marketing and h
ID: 36251 • Letter: Y
Question
You are a management consultant with expertise in operations and marketing and have been asked to make a presentation to a conference for automobile (car) industry managers. Senior managers from all disciplines (including operations, finance, marketing, production and human resources) will attend the conference.
In a briefing from conference organisers, you understand that you will need to cover two areas of particular interest to conference delegates, specifically demand and capacity planning and the marketing implications of 'new generation' cars. Apparently, much research and development has gone into the development of cars that are more environmentally friendly than in the past,particularly with electric, hybrid and lower CO2emission models. What is different about 'new
generation' cars is the use of hydrogen rather than petrol or diesel as fuel. (Hydrogen is burnt in a conventional internal combustion engine but produces no CO2emissions, only water and heat). A further feature of 'new generation' cars is an aim to manufacture car body parts from at least 80% recycled materials. A few companies are due to launch their version of the 'new generation' car in spring of next year.
You conduct further research which indicates some significant facts including those shownbelow:
Companies that have been commercially successful with more environmentally friendly models in the past are those with the strongest brand name.
The automobile industry is highly competitive and globally there is 'overcapacity'. In some countries and at certain times however, there is unfulfilled demand for specialist makes and models. (You are already aware of different planning strategies for dealing with variations in demand and matching production capacity including 'level capacity', 'demand management' and 'chase demand' strategies.)
Explain the implications of different capacity planning strategies.
Explanation / Answer
The implications of operating particular capacity management strategies for automobile producers will be of relevance to several types of manager who will be at the conference including operations managers, finance managers, marketing managers, production managers and human resource (HR) managers.
The need for capacity management
All organisations are capacity-constrained to a degree and so methods of 'balancing' demand and productive capacity is a key challenge in operations management. Capacity and hence supply is fixed by factors largely internal to a particular organisation such as its facilities, systems, technology, human resources and capability, etc. Demand is by comparison less easily controlled by an organisation as it represents a force external. Inevitably there will be fluctuations between these two dimensions of supply and demand. For automobile producers, like any other organisation, effective capacity management is vital. Effective capacity management ensures that customers
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