The Chinese department store’s order would require significant communication with the UK based research and development centre which would take time to develop new ideas for products and cost money as well. The factory is also running at high levels of capacity with capacity utilisation of 95% which is 30% more than the UK factory. Since the factory is running at a higher capacity utilisation level it means that the number of defective products has raised as well as the care for quality has decreased and volume has increased. Andrew is worried this might not give the good impression that is needed from the company as they are trying to sell high quality British products. The amounts of defective products in the Chinese factory are 7.5% and the total output is 10 million units this means that 750K of the produced units is defected. This would put great pressure onto the company in order to reduce the amount of defective products so that they can provide the high quality products to this large department store. If the product has poor quality people will complain to the Chinese department store and in turn this will lead back to Burkinshaw which will ultimately lead less revenue. 2)
Andrew believed that the best decision to resolving the dispute over the introduction of new technology was to close the UK factory overall and move production to China. Without implementing the new technology into the production process Burkinshaw would have a lower productivity of workforce than their competitors. He explained this to the union representatives why the technology had to be implemented due to the business needing to become more efficient due to operating profit at (50) for the year ending 31 December 2005. Andrew wanted to offer an extensive training programme and a pay rise to those workers who would use the new technology. Andrew knew there would be job losses so he offered reasonable redundancy terms to the employees that would have to leave....
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