Situation and Problem Definition
CellTech Generators offers three models of generators, Magnum, Romora and Home Tech, and has built a reputation on its high quality generators, Magnum, which is produced to exacting specifications and is most expensive model. Although the demand for the Magnum and Romora models has been steady, and the demand for Home Tech Model has been growing at 20% per year, the company is unable to produce the profit levels that you had expected and had survived from a near near-bankruptcy situation a few years ego. By end of this year, the lease on the current manufacturing facility will end, and the new manufacturing facility to which you were planning to move manufacturing to does not have the capacity to accommodate all three production lines until sometime in the long run. Company has the option to outsource its production, but quality is a concern especially with Magnum. You have also indicated that owner is thinking to sell the company as it was not meeting the expectations and some other companies has expressed interest because of the CellTech’s reputation.
The background information provided indicates that there are several issues that must be addressed:
1. Profits
You have indicated that business is not generating the expected profit.
2. Capacity
The new manufacturing facility does not have the capacity to accommodate all three production lines of generator until some time in the long run.
3. Outsourcing
You have the option to outsource production of either of your generator model but quality will be the concern.
4. Selling the company
Reputation of company is attracting some other companies to buy CellTech and you are also giving thoughts on i ...