Management Skills (Scenario) Gavin Clayton Is Vice-President of Product Development at Canadian Aircraft

question 39

Multiple Choice

Management Skills (Scenario)
Gavin Clayton is vice-president of product development at Canadian Aircraft Manufacturing (CAM) . The company specializes in smaller civilian aircraft for commuter airlines and corporate executives. Gavin is trying to decide if the company should proceed in its plans to produce a new larger scale aircraft. He knows that the new aircraft supports the corporate strategy and will enhance their competitive position in the industry. As a former engineer with years of experience in aircraft design and production, he also knows that his company has the skills and capability to produce the new aircraft. In fact, he believes that the new larger aircraft will result in scale economies for CAM—allowing it to produce more profitable aircraft with roughly the same labour resources. Unfortunately, this could be a sore point with the labour union that represents the aircraft assembly workers. While Gavin has always maintained a good relationship with these workers, he knows they are suspicious of management's motives. If the workers perceive the new larger aircraft as a management ploy to increase worker productivity, they will resist the change. Management will definitely have to get the support of the union before they implement the new production plans. Gavin gazes out his window and ponders how best to proceed with the situation.
-Assuming that the goal of CAM is to be profitable,producing the new larger aircraft should make the company ________.

• A)equally effective but more efficient
• B)equally efficient but more effective
• C)equally efficient and effective
• D)more efficient but less effective

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Definitions:

Variable Cost

Costs that fluctuate in direct proportion to changes in production volume or activity levels.

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales.

Capacity

The maximum amount that something can contain or produce.

Labour Costs

The total expenditures for hiring employees, including wages, benefits, taxes, and any other costs associated with employing labor.