Albatross Unit 3

Unit three Written Assignment

Carmen L. Lozada

MT435 Operations Management

Kaplan University

February 21, 2011

Albatross Anchor has had the success of growth. Once a small family based business of four, today, it employs one hundred thirty people. The rapid growth of Albatross Anchor’s business has created operational inefficiencies that are currently precluding Albatross from attaining its profit potential. The purpose of this paper is to analyze Albatross’ operational inefficiencies and suggest operational adjustments that will enable Albatross to remain competitive not only in product, but, also in profit with its competitors. In addition, improving efficiencies will alleviate the necessary financial resources that Albatross will need to support future growth (Albatross Anchor Case Study).
Question One
Based on the information presented in the scenario/case study discuss Albatross Anchor’s competitiveness in relation to (please address all items in the below list and provide support for your conclusions):
1.   Cost
a)   Cost or Production:
Currently, although Albatross’ pricing is in line with its competitors, its profit margin can fluctuate to as much as 35% less than its competitors (Albatross Anchor Case Study). The difference in profit margins is attributed to inefficiencies in operations. For example, in 1989, Albatross decided to expand their product line to include snag hook anchors which require a completely different manufacturing process however they did not expand their facilities to accommodate the manufacturing of the two separate types of anchors (Albatross Case Study). As a result, production times increased while production outputs decreased. These inefficiencies in production are a primary cause of the disparity in profit margin and as such leave Albatross at a competitive disadvantage with the competition (McClure, n.d.).
b)   Economies of Scale:
When Albatross decided to expand its product line, it chose a product that...