Problem: By the end of 1977, the Managing Director of Indalex Ltd. had to make a decision about the implementation of a new capacity expansion plan for the next several years, taking to the consideration uncertain future demand on the market due to instable economic situation in the U.K. and European Economic Community in general. Competitive priority: In 1961 when Indalex entered the extrusion market, it was the first independent company in the U.K. completely different from its 4 competitors – the four big international companies: Alcan, Kaiser, Reynolds and Alcoa. Indalex’s competitive advantage was based on product quality and flexibility: - offered 7 day service( 8-12 week delivery basis in competing companies); - much better surface finish, and by 1964 installation of the first anodising plant , so the company was able to surface-finish its own extrusions (advantage: customers didn’t need to deal with several suppliers); - highly qualified assistance to customers ( competitors’ customer service was perfunctory); - responsiveness to customers needs ( customers were allowed to specify die changes up to two days before their order was due).
Options available: 1. Increase extruder capacity. Extrusion is the most obvious constrain. With the increased capacity in extrusion, Indalex can satisfy the increasing demand; therefore, the customer relationship will be retained (Indalex’s main competitive advantage). Even with the danger of the uncertain demand due to the economic problems, the demand on the new press could be adjusted by pulling in the subcontracted out jobs. However, new presses are expansive (1,000,000 pounds) and have to be specialized for one or two billet diameters. Plus, more manpower would be needed with the increase of capacity. 2. Add a new anodising plant. By adding anodising operations, management had to