Business – 9.3 Operations strategy – Operational decisions | e-Consult

Marketing resources shape capacity planning in two contrasting scenarios:

1. Constrained marketing budget: When promotional spend is low, expected demand is modest. The firm is likely to:

   • Maintain a lower production capacity to avoid excess inventory.
   • Use flexible or temporary capacity (e.g., subcontracting) rather than investing in permanent plant expansion.

2. Abundant marketing budget: Aggressive campaigns generate higher sales forecasts. The firm may:

   • Increase permanent capacity through new equipment or additional shifts.
   • Invest in scalable technology that can handle peak demand without compromising quality.

Thus, marketing resources act as a signal that guides whether capacity is kept lean or expanded.