Assume you own a small US15000000 manufacturing company that

Assume you own a small (US$15,000,000) manufacturing company that makes equipment for the automobile industry. At present, your company only makes metal components. What are the strategic challenges you face? What decisions will you have to make? Where will your profits come from? How will you ensure that stream of profits?

Solution

What are the strategic challenges you face?

Strategic challenge is diversification, instead of only make metal components for automobile industry we can do for other industries like airplanes, trucks or any kind of equipment that needs metal components.

We can also make components for cars that are not metal, we can create a line for plastic components that cars also use in order to increase customers and revenue.

What decisions will you have to make?

Decide which direction to go, looking for new industries or having new equipment for new products.

Decide which is going to be the way we are going to financial our growth, are we asking for a line of credit from the bank?

Are we going to look for investors?

Do we need to change the companies organization?

Will we hire new people to help on the lines or create a second shift?

Where will your profits come from?

From the new line of business we are trying to implement, either from new industries / customers or offering new products to our current customers

How will you ensure that stream of profits?

Before making any kind of investment we need to make a market research, ask our customers if they are willing to buy these kind of products? Ask them what would it take to have a deal with us and start purchasing our new products instead of their current supplier.

Make a deal with the companies to ensure they will buy the new products before implementing the changes into the organization.