A small family owned business that they started in 1976 with four family members is Albatross Anchors. Now Albatross Anchors now employees one hundred and thirty.
The building sits on 12 acres in a small town. We know that the adminidtravie offices are disorganized, dirty and are un inefficiently. The plant is old worn, dirty and not up to date with the new technology and it does not meet all US safety and environmental standards. In 1989 Albatross Anchors started fabricated snag hook anchors to be able to compete internationally.
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 of Production:
Albatross has manufacturing costs set at $8.00 per pound for bell/mushroom anchors and $11.00 per pound for snag hook anchors. Even though they charge the same as their competitors, Albatross Anchors is experiencing a profit of 35% less. The losses seem to be caused by inefficiencies, and have affected the profit margin. B) Economies of Scale in material purchasing:
In 1989 when Albatross Anchors starting manufacturing the snag hook, they needed new equipment. When the did that they did not expand the building, now both anchors have to share the one building. Since the different anchors have a different process for manufacturing, it takes 36 hours to switch out, so there is some downtime and during this down time they are still taking orders, materials are still ordered and received. Albatross is still incurring cost with no output. Albatross operates on a batch production level, meaning the volume is low. If Albross is a wholesale
