This is an excellent case to address the characteristics of process-oriented vs. repetitive vs. product-oriented production.
1. Matthew Yachts is profitable, thanks to its custom-designed yachts. Its management experience appears to have competitive advantage in custom-designed yachts, hence the higher profit margins. However, since the demand for the “fixed” design is growing, expansion into this area, with its repetitive-oriented layout and procedures (see Table 7.2 and Figure 7.1 in text), may be warranted.
2. Establishing a separate facility with its own labor force, costing, and procedures may be a good move. Particularly if this can be done at a low production level that will allow maintenance of production even in periods of recession (or high federal luxury taxes).
1. Some of the opportunities and disadvantages of selling books over the Internet are summarized here:
Large variety of books
Downward price pressure
Inability to browse
Aggregation (major benefit is for low-volume books)
No retail outlets, only warehouses
No cashiers required
Each customer order is picked and packed
Higher outbound transportation costs
Instant knowledge of customer preferences and tastes
Track customer history (purchases) and make recommendations to the customer
2. The benefits of using the Internet for book sales are significantly larger now that books can be downloaded online. Amazon is able to ship some products over the Internet, saving the final shipping cost but changing the nature of its business. Amazon will be software intensive rather than book and warehouse intensive.
3. Other downloadable products are software and music. In