Foulke Consumer Products, Inc Case Study Solution

Decision Problem

While, demand for the products are increasing rapidly  ever in the Southeast region, and the company has to evaluate the options and weigh up the alternatives. Foulke has acquired Brand a licenses across the country, so the market is saturated and isn’t confined to allocated and limited territories. Orlando plant’s product could be sold in Miami as well as in Lexington. The company has to weigh up the options to decrease the costs and increase its efficiency and production capacity, in order to cater the demands. All plants have different profitability margin, and Lexington was considered ideal among them. Orlando’s plant lacks efficiency,despite of the fact it has more proximity to Miami and it is largest plant in the Southeast region. These problems compelled Foulke for an alternate options, to reduce the delivery costs by expanding production facility or starting new one near the market based areas, such as Miami.

The problem was not related to solving the internal incompetence; it had more to do with catering the demands and increasing the business expansion. The company wants to have asensitivity analysis for probability, by adding and subtracting some variables. We have used solver: an excel tool, which helped us to conduct a sensitivity analysis and helped us to find the optimal points where company is more profitable and where it is incurring least cost. We have identified three alternatives and evaluated them, where they were weighed upon the profitability and cost reduction.

Analysis of Industry and Company

The industry was saturated, with over 800 firms or an increased production of the products, for the wholesale market. While only 1% of these 800 firms controlled the production of 67% products of the industry in the market. The industry is serving $2 billion market.

There was stiff competition among the industry peers and the growth rate of industry wasn’t spectacular either, and we could not see any growth takeoff in the future, because the company had grown overwhelmingly in last decade, i.e. from 1977 to 1987. Foulke Consumer’s sales have increased from $42 million to $600 million. This growth rate is stupendous, so the industry isn’t expected to grow much in future. While, there is growing demand at a constant rate, which will always be there. Foulke Consumers would need to grow and expand, in order to capture the untapped market and cities, while catering the demands of the loyal customers, with cost reduction and cost efficient strategies.

The competition soared to a level where the company tried to seize Foulke consumers for acquiring “Brand A” licenses. Foulke had complied with the rules and regulations and it later settled for $77 million, as this decision was for them and against the company that alleged Foulke Consumers of not complying with the regulations. The company is more concerned with the task to overcome the growing demands for the products and cost efficiency; whereas delivery costs and production costs in certain plants and production facilities need control and management strategies………………………..

 

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