I. Problem :What way of acquiring inventories should Dahlia employ to maximize profit and improve the company’s position?
A. Import all products and continue its high quality and fairly expensive image with middle and upper income family’s clientele. B. Expand its production unit and contend with competitors through lowering of prices to reach a larger market, the mass. C. To formulate a proportionate inventory acquisition with some products imported and some manufactured, to drive away competition and at the same time, maintain its present image, also to reach all brackets of prospective clientele.
III. Advantages and Disadvantages
* Advantages for Alternative A
* Dahlia would be free from hiring more labor.
* Will maintain its present image for quality and pricing. * No overhead costs.
* Smaller units of products are needed to be sold because of its price * Problems about filling their showrooms are rapidly solved.
Disadvantages for Alternative A
* Would turn out costly if not sold two months or more.
* Dahlia would be driven away by competitors because of erratic pricing. * It could not cater to the mass market.
* It will be pinpointed by government for using foreign labor and might affect its credibility.
* Advantages for Alternative B
* Will not incur large cost, even inventory remain idle for quite some time. * The company can now afford to cater the mass market.
* Can now drive the competition.
* Will not violate government’s policy on foreign labor.
Disadvantages for Alternative B
* Will incur large overhead cost.
* Company’s current image might be at stake.
* Has to hire more labor that will boost costs.
* Might incur losses if driven away by erratic pricing.
* Advantages for Alternative C
* Lower risk for the company.
* Will neutralize all costs.
* Will have a larger market....