Royal Manufacturing Case Study

Pages: 5 (1323 words)  ·  Bibliography Sources: 0  ·  File: .docx  ·  Level: Master's  ·  Topic: Business

Royal Manufacturing

Industry Analysis

The Royal Manufacturing Corporation operates in the metal fabrication industry. Metal fabrication is a process that requires a vast knowledge ostensibly earned through years of experience in the handling and manipulation of machinery that facilitates the process of metal fabrication. Relative years in business operations is a badge of quality and customer service satisfaction that establishes a niche' of service performance above the competition.

A niche' is important in the metal fabrication industry. Without a niche' there is not a method to identify why a business is in business. Additionally, the metal fabricated products suffer from damages from shipping point a to B. The paint chipping on the product is an industry issue as it affects all players due to factory inventory and shipments made from factory to the construction site.

Increasing competition to Canadian firms were coming via overseas Asian markets to help quench the thirst created by an expanding Canadian economy and rising demand for metal fabrication. The industry was also facing constraints forced upon them by rising costs for energy and raw materials, and potentially from new environmental regulations. A successful metal fabrication company would be able to cut these costs by hedging on the futures of energy and commodities. However, the industry remained marginalized by these threats in aggregate.

Company Analysis

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The marketing prospects for Royal are promising on a global scale though the current operations are limited to the large Canadian cities and the Northern United States. As public facilities such as schools and hospitals remodel and undergo brand new construction, contracts for new business in this regard, remain as strong possibilities due to the known reputation and community relationship.

TOPIC: Case Study on Royal Manufacturing Assignment

To save and reduce operating expenses, the organizational decision was rendered to minimize promotional and advertising expenses. The company operates in this fashion much the way the Sears Roebuck and Company operated circa the late 19th century. Marketing is conducted via catalogues that are directly sent to interested clients of Royal's products by sales agents via inside sales techniques. Royal is a business to business firm and conducts its contracts with either private, non-profit, or governmental agencies.

Production of the lockers, school furniture, toilet partitions, and steel shelving were facilitated with cold rolled sheets procured from warehouses in the area. The inventory of sheets varied in gauge and quality yet the warehouse allowed up to 3 months of credit to Royal at a cost of 12% to 15% higher than steel producers in the region.

The management resources include labour as human capital and machinery as technical capital. In any given ratio, the aggregate total will equal 100% of total available resources. The goal of management is to determine the optimal level of human capital to technical capital for its organization, acquire each in appropriate percentages, and then produce at optimal quantities given the inputs.

At Royal, the human capital is a function of skilled, semi-skilled, and exempt workers. There are approximately 25 total semi-skilled metal fabrication workers employed and approximately 10 white-collared workers employed by the firm.

The financial management of the firm has been questionable given its debt obligation since its inception. Over the three-year period ending in 2004, Royal was responsible for losses totalling 1.44 million. The losses reduced the current ratio from a very healthy 2.3 to 1.1, which is a level at where we are barely expected to meet our short-term financial obligations.

Due to rising operations costs, the operations were financed on credit to earn a profit of $2,940.00. Additionally, the production costs will continue to rise and are not perceived to offset the increase in industry prices. However, the company had only been operating at 50% to 70% of capacity over that 3-year period ending in 2004.

The accounts receivables owed to Royal did increase for December 2004 to 101 days over 77 days from December 2009. This increase in receivables is not a good sign regardless of the reason listed on the journal entry.… [END OF PREVIEW] . . . READ MORE

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https://www.essaytown.com/subjects/paper/royal-manufacturing/3606491.