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Transworld Auto Parts A Case Solution

Solution Id Length Case Author Case Publisher
1940 906 Words (3 Pages) V.G. Narayanan, Lisa Brem Harvard Business School : 110027
This solution includes: A Word File A Word File

The company has to lower its cost of goods sold in order to sustain the low profit margin. The cost of goods sold should be taken down from 95 percent to 90 percent. The assets should be used at an optimum level, be it current assets or new assets. Asset utilization should be increased from 65 percent to 90 percent in order to function at an optimum level. The cost structure of the company should be re assessed, and it should be minimized. It should not operate above its average cost, and keep the resources safe for the future use of the company.

Case Analysis for Transworld Auto Parts A Case Solution

Trans Auto Parts has learnt quite a few lessons from its luxury and economy divisions which can help the company to work more efficiently in the slow external economy. The company has to realize that luxury division products have been constantly changing their nature and are filtered to economy division due to the advancement in technology and innovation. It is difficult for the manufacturing department to foresee the volumes due to an uncertainty in the market resulting in decreased capacity utilization. Furthermore, the unpredictability of raw materials cause the cost of goods sold to be uncontrollable. The manufacturing department is facing difficulty in production switchovers, and the slow transition phase between different types of products result in low productivity and profit loss for the company. Manufacturing costs are higher in the company resulting in the low profitability and return. The economy division has learnt to avoid suppliers which are below the standard. The division has learnt that in order to achieve the best out of the provided machinery and employee workforce, they have to focus on the training of the staff accordingly. Resources and leadership are the key requirements in the economy division for their maximum productivity achievement.

In order to keep the company focused on the targets and goals assigned, the company uses a particular technique known as balanced scorecard. It’s a strategic tool to review the company’s performance according to a set of pre determined measures such as financial measures, customer related measures, process measurement and learning. The basic purpose of balanced scorecard is to include financial as well as non-financial attributes to measure progress and development. The company has to focus on the longer run goals keeping the short term targets in hand, which is why, BSC is an important tool for the company and its long term goals such as future partnerships and growth. The difference of leading indicators such as non-financial goals and lagging indicators such as financial targets enables the company to focus on each indicator separately. The company learnt the importance of balanced scorecard and strategic planning and performance targets setting for the company.

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