The success of the company in most cases depends on the way of developing the company has chosen. Being rather young on the national market, BlueJay Manufacturing is unable to cope with the demand, which has unexpectedly occurred in the situation with our company. The product, which was introduced by BlueJay is in great demand, and in order not to lose the customers’ appreciation the supply of the product should correspond to the level of supply. Being unable to cope with it, the BlueJay Company should design the model of behavior, the business plan, according to which the company will cope with the problem, receive its profit and manage to stay firm in the chosen direction of raised demand.
The following concepts should be investigated as the possibilities for problem-solving. To understand the background of the upcoming evaluation and decision making, the economics of exchange and the economic aspect of the firm should be considered. On the same level with the discussed questions the following issues are going to be analyzed, such as which parts of the company processes may be outsourced without the risks to the manufacturing, what time limitations of the relationships are better to implement and how profitable for the company is to turn to the outsourcing techniques. Furthermore, the economic concepts of life cycle cost analysis, including value and utility are going to be considered with the aim to be sure that the direction, which is chosen, is right and will bring the profit to the company.
Considering the economic aspects of the firm, it should be mentioned that the business has extended and the company has faced the problem of the enormous demand, which the company did not expect. There are two ways out of the current problem, either to continue the manufacturing on the same level and to create the deficit of the products of our company on the market, or to turn for help to other companies and firms through the outsourcing. The first variant will reduce the profit of our company as, being unable to have the product, which is in demand, the customers will shift to other company products and the development for us will be measured. The second variant will make us provide some costs, but at the same time to supply customers with the desired product and to get the raised profit from it, which will be able to cover the costs, spent on the outsourcing services.
Analyzing economics of exchange and its relevance to BlueJay, the definition of the term should be provided. Rational economic exchange is an economic activity, which allows exchanging goods or services between the companies, and the economic interest and profit may be seen for both companies (Sarno & Taylor, 2002). The advantage of the economic exchange is that two companies operate in the relations of the economic ties, which make them provide each other with the services and products, which are of the interest for both companies. Important developments in econometrics and the increasing availability of high-quality data have also been responsible for stimulating the large amount of empirical work on exchange rates” (Sarno & Taylor, 2002, p.1). Implementing the economic exchange in BlueJay, the company will have the profit from the affair, as it will be able to compensate the received services not with cash, but through providing the extra services from its side.
The inability to cope with the demand by providing the relevant supply, the company should turn for help, the outsourcing in the case. To be sure that the decision is relevant and will not reduce the costs of the company, the evaluation of the advantages of outsourcing should be provided about our business. First of all, the auditing responsibilities should be shifted on the company, which is the professional in the sphere with the broad mix of personnel with the high experience, who can cope with the tasks better. Moreover, some changes may be provided for improving the company business according to their advice. In addition, the costs will reduce on hiring the auditors, and the big net of auditing companies may reduce the travel costs, if to choose the nearest office to the company. Furthermore, being not so big company, BlueJay can’t afford the services of the taxation specialist, and as the issue is rather serious, the responsibilities may also be shifted to the other professional company as well as the financial accounting services (Bragg, 2001, p.405).
The main advantage of the outsourcing for BlueJay is the “realizing the same or better service at a lower overall cost” (Kremic, Tukel & Rom, 2006, p.470). At the same time, we should consider the potential risks, which may appear and try to avoid them. The overstating of the benefits of the outsourcing and the lack of methodology in the rather young sphere may create additional difficulties, which should be considered deeply, before deciding on using the outsourced technique (Kremic, Tukel & Rom, 2006, p.470).
Creating the business plan for a long-term period, the company should include a lot of aspects to prognosticate the future costs and incomes, and taking into account the national and world economic situation to predict the marketing and economic behavior in general. The consideration of the life cycle cost analysis should be provided with the aims to be aware of the alternative solutions to the situations, which may appear in the future, especially n the unstable conditions of the world economy and the uncertain position of dollar on the world market.
“Life cycle analysis is a tool that can be used to evaluate the long-term economic merits of alternative design solutions” (Demkin, 2001, p.475). The necessity of the current analysis is that attention is paid to the future costs, which may appear, and the evaluation of the whole business strategy is provided. The operating costs, which are the everyday issues, energy consumption, replacement cycle of components and maintenance, are the costs, which cannot just be added to the full costs, as the effects of future inflation and the value of money would not be considered in the case, and the aberration of the facts will take place.
On the background of the current investigation, the analysis of the market should be provided with the consideration of the political and economical forecasts for the sphere. Moreover, the strategy should be chosen in the relation to the identified techniques of the aim achievement. Moreover, being at the peak of the demand now, the realistic consideration of the position should be provided with the reference to the fact that the economic development of every member of the market relations may never be smooth and plain, and the rises and falls will occur. Analyzing the life cycle of the company development in the long-term period, the peak, recession, trough and recovery phases should be predicted and the behavior during this or that phase should be carefully considered (McConnell & Brue, 2005, p.134). The importance of the forecast and the periods, where different phases will appear, allows for the company to know the periods of the recession and to be ready to change the strategy in the relation to the current situation.
In general, the company politics should be changed to increase the profit and the utility of the business provided. First of all, relating to the current business affairs, and the unexpected rise of the demand, the company should be reoriented in its strategies as the implementation of the previous techniques will lead to the inability to satisfy the customers’ desires. The help from outside should be turned to regarding the economic exchange processes and the outsourcing help. The usage of the products and the services of the other companies through outsourcing will help BlueJay to have high-quality services and to be able to provide the outsourcing companies with the other services, which are in the great interest of them, without the direct cash paying for their help. The turn for other companies will allow BlueJay to shift some responsibilities on them and to make it possible for us to cope with the business volume easier.
Reference List
Bragg, S. M. (2001). Just-in-time accounting: how to decrease costs and increase efficiency. John Wiley and Sons, New York.
Demkin, J. A. and American Institute of Architects. (2001). The architect’s handbook of professional practice. John Wiley and Sons, New York.
Kremic, T., Tukel, O. I., & Rom, W. O. (2006). Outsourcing decision support: a survey of benefits, risks, and decision factors. Supply Chain Management: An International Journal, 11(6), 467 – 482.
McConnell, C. R. & Brue, S. L. (2005). Economics: principles, problems, and policies. McGraw-Hill Professional, New York.
Sarno, L. & Taylor, M. P. (2002). The economics of exchange rates. Cambridge University Press, Cambridge.