Proper Business Case Essay Research Paper Overview

Proper Business Case Essay, Research Paper

Overview regarding the current situation of AWC Inc.

The company that will be analyzed in this report is that of AWC Inc. AWC Inc., is an aluminum manufacturing company located in Southwestern Ontario. The company has been around since 1950, and was founded by Mr. Jim MacDonald, father of the current president Mr. Alex MacDonald. AWC specializes in the fabrication of aluminum windows, doors, storefronts, and curtain wall products. AWC has 100 committed staff with 45 in production, and 55 in the offices. The company is well known for the high quality of it s products and their competitive prices. AWC Inc. is facing a decision regarding air treatment in the welding portion of the plant, as new government regulations are introduced to the industry. Currently there is a recession in the construction industry, and it is projected to last another three years. Buying the air cleaning equipment would devastate the companies profits and cash flows. Fines are ever-present, however highly unlikely. The air cleansing equipment is between $240,000 and $400,000.

SWOT analysis of the current issue

Strengths with respect to the current issue are.

- Quality design and competitive prices.

- Popularity of the new aluminum doors.

- Extremely committed employees.

- Experienced and family owned (since 1950).

- Not located where neighbors would complain ( near cement quarry).

Weaknesses of AWC Inc. with regard to the issue are.

- no current ventilation systems.

- Alex MacDonald has limited experience (1 year running company).

- Limited money to spend due to 3% profit margins on normal contracts.

- Contemplating costly second shift for welding line.

Opportunities for AWC Inc. too look at externally.

- AWC can earn up to 20% on specified contracts.

- Interest in commercial aluminum doors (high volume).

- free trade agreement with U.S. (tariff free contract opportunities).

- One third of it s competitors are out of business.

- Fines are highly unlikely.

Threats externally to AWC Inc.

- Cost of cleaning equipment devastating to cash flow, and profits.

- Government regulations (Inspectors snooping around).

- U.S. competition (new), local competition (37 firms in Southwestern Ontario).

- Recession in the construction industry could last up to three years.

- up to $500,000 fine for non-compliance.

Lets Identify The Problem

The problem that AWC faces is that of compliance. Shall the company comply with the regulations, and face the possibility of going bankrupt, or, do nothing and face possible fines. The problem has been caused by increased public awareness of industrial pollution. The concern of the government is to improve worker safety. The emissions caused by welding have been linked to health concerns associated with the tiny particles of metal released in the emissions. The government studies have concluded that this is a cancer risk and as dangerous as, smoking a whole pack of cigarettes as one government official put it. There is some questions as per the legitimacy of these studies however. Alex s father has advised him that the government is not likely to come down hard on AWC, in light of the local economy performing poorly as of late.

The local officials would fear losing 100 jobs, and a company that provides honest work to the local citizens. The risk of non-compliance appears to be considerably low at this time.

Alternatives to AWC s current problem

The three most viable solutions for resolving this issue are.

- Acquiring a ventilation system and proper licensing (starting cost $240,000).

- Acquiring a recirculating filtration system, licensing & training, (startup cost $400,000)

- Status Quo, no new system in the current period.

It is truly a shame that there is no clear alternative to the problem at this point. Which ever one is chosen, there will be definite questions to be answered about AWC s future.

Criteria upon which a decision will be made.

The three most important criteria to AWC Inc. are.

- Financial Stability

- Job Security for employees

- Maintaining current production.

Financial stability is obviously the top priority in this case. The solution must be cost effective in order to insure that AWC survives the impending recession. Job security is also important. Being a family business, nurturing long term relationships with employees is key.

The company must also be able to maintain the current production, and efficiency that will be paying the bills. The company is at a very fragile state in light of the recession.

Decision Matrix (Analysis of the Alternatives) -Table Form

Beneath is a matrix comparing the three Alternatives ,to the decision Criteria.

Financial Job Security Production

Ventilation Medium Medium Medium

Recirculation Worst Worst Worst

Status Quo Best Best Best

Analysis of the Alternatives based on the three criteria

Alternative one is a Ventilation system, venting fumes outside of the plant. This system would satisfy health and safety regulations,

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