Capacity Expansion Strategies

Capacity Expansion Strategies - Obsolete technology 4...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Capacity Expansion Strategies Capacity strategy refers to several aspects of capacity management, including the timing of expansion (or contraction), the sizing of facilities and the linkage with marketing/business plans.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Capacity Expansion Strategies Proactive or Aggressive Expansion Reactive or “Wait and See” Neutral
Background image of page 2
3 Capacity Expansion Strategies Aggressive Expansion of facilities wherein capacity is built to exceed projected demand in the short term. Expansion may result in: Economies of scale Faster rate of learning Help the firm reduce cost and compete on price Increase the firm market share Preempt expansion by competitors Minimize the chance of lost sale due to insufficient capacity. Aggressive expansion, has the risk of : Overexpansion
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Obsolete technology 4 Aggressive Expansion Strategy 5 Capacity Expansion Strategies A Wait-and-See strategy typically involves postponing firm commitments to building expensive, new facilities until after demand has already exceeded capacity. It depends on use of short term options to meet any short falls The Waite-and-see strategy reduces the risk of; Overexpansion based on overly optimistic demand forecasts Obsolete technology Inaccurate demand forecast The risk of Wait-and See strategy: Unable to respond to demand It is a short-term strategy The short term options which are utilized, overtime, subcontractors, temporary workers and stock-outs, are costly., 6 Wait-and-See Strategy...
View Full Document

Page1 / 6

Capacity Expansion Strategies - Obsolete technology 4...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online