Gulf case Study Example | Topics and Well Written Essays - 500 words

Gulf - Case Study Example The manufacturing process remains a single manufacturing process as it was before introduction of the general furniture for producing both furniture types. The quality of furniture depends on the expertise and skills of individual workers and type of wood used. More focus and priority is on the customized furniture because of their large share of sales despite the increase in sales of the general-purpose furniture. The business grapples with controlling large inventory of general-purpose furniture. Generally, the sales volumes are large but the financials do not indicates tangible profitability. Seemingly, the expansion into the production of the general-purpose furniture by Gulf Creative Ideas was not a sound strategy. The company seems to have not put in place a continuous strategy for reducing the inventory investment while at the same time increasing the performance of the production of its two classes of furniture. What could be the most possible reason for the low levels of profitability against sales in the case of this company is that, by expanding their inventory, costs rise from additional needs. According to Altendorfer (2013), in similar cases the rising costs may always be because of requirements for more storage space, increased costs of labor for the additional units in their procurement and sourcing. Another issue facing Gulf Creative Ideas could be the reluctance of the management to remove the slow moving general-purpose furniture from their product portfolio and this eats up its earnings in the additional costs that increase at faster rates than revenues into the company hence low profitability. The single manufacturing process and additional product line without a strategic sequence for production of the two product lines has led to increased sales volumes within the company but ignored the most important factor, of controlling the inventory, leaving profitability unchecked because of high costs. For this