To what extent can improvements in productive flow and product quality lead to an increase in sales and profit?

Thèmes abordés

Productive flow, product quality, impacts on sales and profit, manufacturing, Henri Ford, mass consumerism, labour force, essay, dissertation

Résumé du document

The 19th century industrial revolution, characterized mostly by an intensification of human and economic flows and major technological progress led to major disruptions on both the industrial and social spheres. These gave a trigger to improvements in industrial techniques such as productive flow, mainly represented by H.Ford. The emergence of new competitors (the BRICA countries) as well as new consumer expectations in the 70's also modified industrial objectives and practices, with quality being one of entrepreneurs' main goals.

Extraits

[...] Being already famous in the Asian market, Qoros Auto Co Ltd plans to now expand it globally. High quality coupled with the product's low cost is a revolution in manufacturing thus may soon represent a major threat for Western companies performing on the same market segment. Revolutionary concepts such as the previous example may lead us to wonder how the global market will evolve and what threatened manufacturers will respond to new market features. [...]

[...] However, these new mechanisms, ensured through cost reductions, can in some cases, have opposite effects and thus negative impacts on sales and profit. To what extent can improvements in productive flow and product quality lead to an increase in sales and profit ? This essay explores in a first part how productive flow and product quality improvements can lead to an increase in sales and profit. Limits of these mechanisms will be analyzed in a second part. Productive flow is a product's fabrication process in stages heading one single direction. [...]

[...] Fordist industrial practices, symbol of flow production only belonged to their economical context ; the post war years prosperity and amazing global growth, no market segmentation,fragmentation and no product maturity yet experienced. These met their limits when the global market's conditions required more flexibility, but also when workers started claiming for better working conditions. Also, rising production and productivity are generally positive, however, what is the point of producing more if markets collapse ? Consumer behaviours would tend more towards being careful and saving up than sustaining mass consumerism and replacing products constantly. [...]

[...] We can therefore reckon the productive flow method leads to significant increases in sales and profit. But changing global market structures and new consumer expectations starting from the 1970's showed flow production and the mass standardization of products method weren't enough anymore for firms to keep sales growing and make profits. Firstly because new competitors on markets produced and sold low value added products, which could compete with standardized products. Secondly because market maturity appeared characterized by consumerism saturation ; households already owned everything Consumers' behaviours then became more exigeant and expected more products variety. [...]

[...] However, lowering prices too much, even if they sell more, can have the exact opposite effect than the one intended. Let's take a schematic example of a firm which produced and sold toilet papers rolls in 1960, each one sold 3 pounds in supermarkets, which would make pounds total revenue. In 1980, the firm, choosing a price-competitiveness strategy, would produce and sell of these toilet paper rolls, each one of them sold for 1,25pounds which would result as annual cost. Therefore, producing and selling more doesn't automatically lead to profits. [...]