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Business Studies Jan 2011 Q2 Essay

1245 words - 5 pages

Andrew Mitchell believed that the best solution to resolving the dispute over the introduction of new technology was to close the UK factories and move production to a purpose-built factory in China. Do you agree with this view?

When Andrew was first appointed as the new Chief Executive his first decision was to somehow improve efficiency for the business. He decided to do this the best option would be to introduce new technology into the production process as even though it would cause job loses it would improve overall efficiency greatly by making processes be completed quicker. Burkinshaw needed to improve its efficiency as the productivity of the workforce was lower than that of ...view middle of the document...

A benefit that closely links to this is the fact that moving the factories to China shall mean Burkinshaw’s costs are lower as labour costs in countries such as China are a lot lower and they can work their employees for longer periods as working laws are more flexible this means more is produced in one day than in UK factories. Having lowers costs means Burkinshaw can put more money back into the business to help further improve it and give it that advantage over its’ competitors and attracting more customers to them.
On the other hand, Andrew did not seem to recognise that Burkinshaw’s UK factories were a significant source of employment for the region which other than Burkinshaw has little employment opportunities. Therefore many people were made redundant and as many of the workers had worked for Burkinshaw for many years and therefore required a unique set of skills it’d be hard for them to get another job even if they could find one as it would be hard for them to adapt as their skills are unique and can’t be applied to many other places. Despite pressure from local MPs and unions, Andrew would not make any concessions. This therefore left the region, local MPs and unions with a negative bitter feeling(s) towards Burkinshaw they would then produce negative word of mouth which would spread very quickly. As more and more people heard of the bad word of mouth they may consider or move away from using Burkinshaw to one of their competitors as they treat their employees and local region better and fairly. This would mean that Burkinshaw would lose a lot of business and their market share would decrease from 3% whereas their competitors would gain more market share then take back customers from Burkinshaw meaning Burkinshaw’s business would start to go downhill and not make as much revenue.
Secondly, moving to China means that the time it takes to transport goods to the European retailers (their target market) increases from 10 days to 21 days which means if competitors can offer quicker delivery times to the retailers the retailers are likely to swap to competitors as they want the goods as quickly as possible as they need to compete with their retail competitors. This would mean yet again Burkinshaw would lose more customers and inflowing cash into the business. Transport costs would also increases as obviously China is a lot...

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