Celluclear_Wireless

Week 3: CelluClear Wireless Expands Overseas Paper University of Phoenix ECO/GM561 International Economic Prof. John Bayer April 5, 2010 CelluClear Wireless Expands Overseas In today’s world telecommunication has become essential to anybody. The ability to use a telephone on the go has been very popular. By having a cellular phone one can stay in touch with others. Cellular phones come in every shape and size, in this paper I will discuss an issue that CelluClear Wireless is confronting and how to keep in production the company’s two main models and at the same time make use of the factory at full production capacity. “CelluClear Wirelles Corporation is a manufacturer of mobile phones, (UOP Materials, 2009). The company produces two types of cell phones for the market; these are the Alpha and Beta model. Kendra, the developer specialist has an important order for a company called Big Box, which is ordering 100,000 cellular phones. Big Box needs to promote telephone service similar to the Alpha model and is not willing to pay more than $15 per cell phone, (University of Phoenix, 2008). Issues and Concerns CelluClear Wireless can develop new strategies to introduce a new product to better compete with other cell phone companies. The main issue the company confronts is to improve the company's services to keep the company competitive and capable of keeping employees happy and the relationship of the union movement in a positive direction.   CelluClear Wireless has experienced recently a decline in stock prices over the past three years because of the inability of the company to compete with television and telephone companies offering better packages. To keep the company competitive some employee issues such as low moral of strained relations with the union, and lack of expertise need to be solved. Dealing with technology Workers Union can help improve employee morale. The company will need to create strategic alliances with suppliers of satellites and other high technology companies. CelluClear Wireless needs to operate at full capacity, with product lines of the house built on site, and stage of the customer relationships. With this proposal, the company must consider the two production lines at its factory, the beta version, and the fact that CelluClear Wireless is a manufacturer quickly establishing high standards and values for the company and the company’s leaders. Opportunities and Options Kendra Sherman, the business development specialist and Lisa Norman agree that there are decisions to be taken to benefit the company. Kendra Sherman is motivated with an order of 100,000 phones, it has obtained and that the phones are virtually identical to the wireless Alpha model at CelluClear. This Ms. Sherman motivation and enthusiasm revolves around the fact that this order would support the existing order that Big Box, a large chain is running a telephone service provider. Lisa is interested in part because the order would be to use the excess capacity of 70,000 units over the past three months taking in mind this will be based on the management of the plant with total capacity of bonuses based on profitability. With this in mind, Lisa plans that Big Box will not pay more than $15 dollars for the Alpha, which model costs $20, which is $6 per unit less than the company usually sees. According to the text (UOP Material, 2009), “the beta model sells for $ 30 more expensive to produce than the Alpha model.” CelluClear Wireless has a competitor with a proto type of the same model, the Alpha model. The competitor is an original equipment manufacturer (OEM) says the company can do the same model for $14 on their cell phone. CelluClear Wireless has the opportunity to leave the competition for the production of mobile phones and can check CelluClear copyrights and patents in society. If the copyrights and patents have expired, the company could reach OEM and copyright infringement of patents. Among other options is the use of (OEM), this is the original equipment manufacturer and has extensive experience in manufacturing mobile phones and other brands. The OEM says they can produce the units in a short period with a performance identical to the Alpha model. Other options include that CelluClear Wireless and Big Box can produce between 100,000 but this option will not be very viable since CelluClear is the one interested in maximizing capacity. To do this Lisa could use the 70,000 units of excess capacity in Alpha model, then move 30,000 units of beta model to complete the request. An alternative could be to allow CelluClear manufacturers to produce 100,000 units for $14 per unit for sale in Big Box at $15. This would ensure a one dollar profit, after this the variable and the fixed costs need to be evaluated. The last option is to reject the order but at the same time CelluClear would be losing the profit and the opportunity to function at the factory full capacity. After analyzing the situation at CelluClear Wireless, the best option would be to work with equipment for manufacturing the device, this way CelluClear will still be able to work with Big Box and not have to their most profitable unit, which is the beta model. The main key is to understand the company opportunity cost and to maximize it. “Opportunity cost is the value of a resource in its next best use, (UOP Materials, 2009).” In this case CelluClear Wireless opportunity cost is their time. By incrementing production line and meeting the deadline, their opportunity cost of time will increase. The company can use this time to develop new strategies to target customers, to reinvent their key models into a less expensive one and even offer more quality time to their employees. Comparison with VF Corporation VF Corporation is an international powerhouse of clothing with a great diversity of brands and products. “Some of the company’s brands are Nautica, Lee, Vans, Lucy, Jansport, Majestic, 7 for All mankind, The North face and much more, (VFC, 2010).” VF as any other company in the industry has faced competition and capacity control issues. A recent and common issue VF confronts is capacity control. Because VF produces the brands clothing in many factories around the world, mainly in South America they confront problems with capacity because of the factory size and the manpower available to work versus the amount of skilled workers. To solve this issue the company has created capacity constraint reports and vendor inventory reports to know what the factory has in shelf and what needs to produce. In addition, has added a second shift of work at said factories to keep production running and meet deadlines on time. Conclusion CelluClear Wireless needs to consider how to be more profitable and to do this order at the same time. As mentioned before, the Alpha model can be produced at lower cost than what CelluClear Wireless produces it for; the company needs to develop a strategy to reduce costs meaning lower prices for wireless unit that what CelluClear rates are right now. CelluClear can make prices to fall from the potential application of small resources such as manpower, materials and other resources of the production line of their Alpha model. This can be done by adjusting the amount of resources, consider outside vendors and find similar equipment with good quality and lower price. After reducing cost CelluClear Wireless can increase the demand, incrementing the return and benefits for the company and their opportunity cost. References: Gerber, J (2008). International economics (4th ed.). Boston: Pearson. Ch. 3-6 McConnell, C. R. & Brue, S. L. (2005). Economics: Principles, problems, and policies. New York: McGraw Hill/Irwin. University of Phoenix (2009). CelluClear Wireless Goes Global. ECON/GM561 Materials page. University of Phoenix (2009). Opportunity Cost. ECON/GM561 Materials page. VF Corporation (2010). Our Brands. Retrieved April 5, 2010 from http://www.vfc.com/brands