Biddy's Bakery

Biddy's bakery

Explain the challenge Elizabeth faced in meeting her capacity needs. What she should have considered before moving into the larger facility?

The maximum output a facility can achieve is termed as Capacity. Capacity planning is crucial to achieve the desired objectives. At initial phases, the business faced loss, but as time passed it was successful in attracting new customers who were faithful. The growth capacity was over estimated by Elizabeth which resulted in unutilized spare capacity and unnecessary expenditure which was a drain on resources. Inappropriate planning might result in idle/spare capacity or capacity shortage both of which are undesirable (Reid & Sanders, 2010, Pg. 316).

This additional expenditure of relocating to a new facility could have been avoided if the growth potential of business was predicted. Strategic management decisions incorporating the effect of business growth potential might have prevented this inefficiency (Stokes & Wilson, 2010). Experts could have been hired to analyze capacity shortages and recommend appropriate plan of action. Elizabeth could have considered analyzing the market demand for baked goods before purchasing additional space.

Determine what is wrong with the proposal made by the team of the business students and why.

The primary business activity of the Biddy's Bakery was the production of different types of baked goods (cakes, pastries, cookies etc.) and catering them to the general public and restaurants. Business students suggested the production of McDoogle pie in large volumes and their sale to grocery chain stores. The proposal is contradicting with what the objective of business is. The idea proposed by business students cannot be endorsed as it is diverting the original purpose of existence of Biddy's bakery. Furthermore, there is a wide variety of other products that are being made which may help to utilize the current spare capacity. So, accepting students' proposal is likely to ...