Business – 9.3 Operations strategy – Operational decisions | e-Consult
9.3 Operations strategy – Operational decisions (1 questions)
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Marketing resources shape capacity planning in two contrasting scenarios:
- 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.
- 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.