The paper “ Terror Tubes - Reasons Why Growth in Market May Not Lead to Significant Increase in Profits” is an engrossing variant of the case study on business. Expansion of business through access to new markets and new products is generally expected to result in increased profits. In the case study of Terror Tubes, an expansion of its market through the introduction of standardized tubes as an addition to its existing portfolio of customized exhausts supplies to motor racing and ‘ hot rod’ and ‘ rev head’ market segments failed to lead to a significant increase in profits.
In the case study, the organization faced various challenges resulting in reduced profits margins outcome despite growth in sales. These challenges brought to the fore various salient issues in production management such as the issue of perceived quality difference affecting the prices customers are willing to pay for customized products over standardized products reduced competitiveness resulting from poor strategies or lack of strategies tying organizations production processes to organizations strategic objectives, inability to manage and forecast demand, and organizations capability to manage capacity and meet demand in its operations (Gardner, 2006).
Accordingly, the growth of new markets, the introduction of new products, and a growth in sales may not be necessarily accompanied by increased profits. Terror Tubes Company is involved in providing custom-made exhaust pipes to the motor racing industry, “ hot rods, ” and “ rev heads” streetcars. In addition, the organization has embarked on producing standardized exhaust systems and has entered into a contract to supply Super Car with specialized exhaust systems. The new contract and increasing demand for standardized products have resulted in challenges in the process of planning, production among other challenges.
Consequently, the organization is forced to make ad hoc decisions on the daily operations of the organization such as the time to start producing, the quantity to stock, the employees to carry out production, the amount of time to invest in producing particular products among other decisions.
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