Health Care Manufacturing Inc. Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Analysis of Business Challenge

Qualitative Challenges

HCM had to manage its operational capacity in order to maintain its competitive advantage of providing variable batch order in short time period. Furthermore, moving the kettles from production of small orders batches to the production of large batch orders on immediate basis was another challenge for HCM.

In addition to this, HCM’s warehouse do not have enough capacity to store extra stock of produced for large order to be shipped after sometime, therefore, HCM had to ship the final product immediately after its completion because if it did not, then HCM would not be able to store the finished goods in proper and secure place, consequently, the quality of finished products would be affected.

Highly competitive industry was a great business challenge for HCM and quick response to customer orders was one of the key competition factors. However, HCM was already facing difficulties in moving its kettles from production of one batch to another large batch, which had undermined its competitive advantage. Furthermore, prices and reliability of products were also key drivers of competition.

Research and development of new product was another business challenge faced by HCM because the cosmetic industry was rapidly introducing new products, therefore, HCM also had to heavily spend on research and development activities in order to maintain its market position.

Quantitative Challenges

HCM has unutilized space of 23,000 square feet, which represents around 45% of its total space and this spare capacity can be used for building another warehouse, which will help HCM to manage its inventory storage. Furthermore, HCM has to cut down its research and development expenditure by 59% over the last four years, which could lead to long term failure of business because it would not be able to offer innovative and new products to the market, consequently, HCM it would lose its customers who want innovative products. Moreover, the control over administrative expenses has been a key to increased profitability of HCM, which has been reduced by 28% over the past five year period (Exhibit 3).

Analysis of Background

Current Strategy

Health Care Manufacturing Inc.’s strategy is to manufacture innovative personal care products that offer value for money and it is not directly targeting consumer but it takes orders from other brand owners.

Operation

HCM’s operations were carried out from a single building from product development to dispatch of product to the brand owners. Furthermore, the production process was based on number of consecutive stages; meanwhile, the production facility was flexible enough to produce different products. Furthermore, the availability of raw material was assured after receiving the order and once the raw material was made available then the production process was started by producing a mixture using the raw materials and predetermined recipes developed by HCM’s research and development team. Additionally, the quality of mixture produced and recipes developed was HCM’s competitive advantage. Meanwhile, electric kettles had total capacity to process 40,000 litter of mixture and were capable of producing batches of 20 to 8,000 KGs and in the next step finished mixture was filled, packed and labeled using different equipments and then the products were ready to be dispatched.

Executive Team

Thompson was the key executive at HCM, who had been managing tactical and strategically issues related to marketing and general management of the company. For the meantime his wife, Marie Renault, was looking after financial and marketing issues. Her extensive marketing experience had enabled the organization to establish long-term relations with customers.

Human Resources

Health Care Manufacturing Inc. has highly skilled and efficient personnel staff that is performing HCM’s operations. Further, senior chemist and electro-mechanics had been associated with organization for a long time and have gained excellent knowledge and skills that enable them to develop innovative cosmetic products. In addition to this, cosmetic industry is in short supply of skillful staff, which has given HCM a competitive advantage in the cosmetic industry.

Financial Performance

Sales revenues of HCM has grown by 20% over the last five years and in 2005 it reported revenues of Cdn$5.98 million, however, HCM has not been able to control cost of production, which has grown by 30% over the same period, consequently, its gross profit margin has fallen from 33% in 2002 to 28% in the year 2005. Meanwhile, the operating profit margin has increased 8% in 2002 to 11% in the year 2005, however, the growth in operating profit has been reached by reducing total operating expenses 21%. Furthermore, net profits margin has also grown from 8% in the year 2002 to 9% in the year 2005. Meanwhile, the asset turnover ratio is 1.51 during the year 2005, which has improved by 50% during the five year period. This shows that the organization had been performing very well during the past five years (Exhibit 3)......................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Chinese investment banker performs due diligence on potential acquisition of a Canadian manufacturer of medical devices. Among its objectives is the need to put a value on the acquisition target. Her client independently wealthy investor and chairman of Great Wall Holdings (Great Wall). Great Wall was a private conglomerate with interests in various companies. Investment banker is interested in diversifying its reserves outside of China, and was particularly interested in getting a modest position in the production of health care products in North America. "Hide
by James E. Hatch, Manpreet Hora Source: Richard Ivey School of Business Foundation 12 pages. Publication Date: Mar 06, 2008. Prod. #: 907N12-PDF-ENG