Q2 A chemical firm is considering how best to supply the world market for sulfuric acid. A manufacturing plant costs approximately $20million to construct and requires a moderately skilled workforce. The total value of the world market for this product over the next 10 years is estimated to be between $20billion and $30 billion range. The tariffs prevailing in this industry are moderate. Should the firm favor concentrated manufacturing or decentralized manufacturing? What kind of location(s) should the firm seek for its plant(s)?
Regarding to a chemical firm to consider how best to supply the world market for sulfuric acid, they have some aspects need to consider about, we will discuss the aspects and advantage of centralize or decentralize. I would tend to chose centralize for the manufacture in this situation. Firstly, regarding to should the firm favor concentrated manufacturing or decentralized manufacturing, (Yenikolopyan et al., 1988) state that the disperse production to the most efficient locations is important, also it’s an advantage of manage the global supply chain efficiently to better match the supply and demand. Moreover, the Six Sigma can apply for the chemical firm to help them to breakthrough in profitability in product and service quality, (Antony and Banuelas, 2002) state that the Six Sigma is a business strategy and a systematic methodology, use of which leads to breakthrough in profitability through quantum gains in product or service quality, customer satisfaction and productivity. This concept of implementing Six Sigma processes was pioneered at Motorola in the 1980s, therefore it is the objective was to reduce the number of defects to as low as 3.4 parts per million opportunities. For the concentrated aspect, (Argote, Turner and Fichman, 1989) centralize can be good but fit the following criteria’s, the fixed costs should substantial, the minimum efficient scale of the production should relevantly high. Regarding to the lecture...
References: Antony, J. and Banuelas, R. (2002). Key ingredients for the effective implementation of Six Sigma program. Measuring Business Excellence, 6(4), pp.20-27.
Argote, L., Turner, M. and Fichman, M. (1989). To centralize or not to centralize: The effects of uncertainty and threat on group structure and performance. Organizational Behavior and Human Decision Processes, 43(1), pp.58-74.
Hamzaoui, L. and Merunka, D. (2006). The impact of country of design and country of manufacture on consumer perceptions of bi‐national products ' quality: an empirical model based on the concept of fit. Journal of Consumer Marketing, 23(3), pp.145-155.
Yenikolopyan, N., Akopyan, Y., Karmilov, A., Nikol 'skii, V. and Khachatryan, A. (1988). Production of highly disperse powder materials based on thermoplastics and thermoplastic blends by elastic-deformation grinding. Polymer Science U.S.S.R., 30(11), pp.2576-2584.
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