Danshui Plant 2 Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

The results became even worse when thefixed cost of supervision could not be controlled and went up too by US $7,000. These indicate that internal controls of Danshui are weak. Wentao Chen should take measures to control unnecessary internal cost. Apparently, Wentao Chen was wrongto expect that Danshui’s laboris capableof adopting this change in theproductionprocess. Hence, the need to train current labor or to replace it with higher skilled labormust be fulfilled, should Danshui expects to lower down its variable cost in future months.

Considerable external Strategies:

Wentao Chen needs to address the external strategies to improve future results. Sensitive flash memory chips by Samsung has raised a red flag on Danshui’s ability to handle sensitive equipment. Samsung’s agreement for placing an extra protection does increase Danshui’s ability to handling it but Chen must instruct the plant controller to keep a close eye on the usage of these sensitive equipment and must act at instance to resolve the cause instead of waiting for the loss figure to rise.

An effective method to avoid losses is working backwardthrough breakeven strategy. For example: based on budget data, on theproduction of 175,875 units Danshui should have covered all its expenses, and any further production would have resulted in profits. But with actual performance and cost coverage, Danshui could only gainpositive return if it were to produce units in excess of 2,070,000(which is next to impossible considering current performance of Danshui)

Danshui Plant 2 Harvard Case Solution & Analysis

Contract with Apple:

It is clear that Danshui does neither hold the skills nor has the workforce to fulfill its commitment of producing 2.4 million units in 12 months. Therefore, it would be best if Wentao Chen updates its contract with Apple in the light of latest discoveries of Danshui’s performance. Unless Danshui increases the number of labors in plant 2, the best option for Danshui would be to overcome internal drawbacks and change commitment from 200,000 per month to 180,000. Though it isn’t an ideal condition but will atleast save Danshui from the risk of ruining brand image in the market, and will probably secure Danshui from possible penalties for breach of contract (if not updated).............................................

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