Identify TWO industries that have highly variable demand patterns and explain how they adjust their capacities. No specific case here for this question. Read the chapter information and the slides. Variable demand can include companies that are seasonal in nature. Tax Season, school season, weather related companies would be examples.
Due to differences existing in products or services of different companies, market demand of some companies may vary periodically, which brings corporate management enormous challenges. For managers, how to develop appropriate strategies to meet changing demands in the case of control costs has a special significance for success of companies. This study takes beer industry and training industry as research objects to explore their variable demand patterns, as well as how they adjust their capacities and resources to meet variable demand.
2.1 Beer industry
Production and sales of beer industry are obviously seasonal, usually the second and third quarters are busy seasons, the first and the fourth quarter sales are slow (Donadini et al., 2016). Under normal circumstances, sales of beer companies of busy seasons account for about 60% of the total sales of a year, while the off-season sales account for only about 40% of a year (Donadini et al., 2016). Considering the variable seasonal demand, managers of beer companies mainly take inventory control and control of labor costs to meet variable demand in the market. The main strategy is taking different types of management modes towards different employees. Employees of beer companies can generally be divided into two kinds, one is employees who are engaged in full-time and more complex work, the other is those who are engaged in low-skilled and temporary work. Regular employees of beer companies are those who generally operate important equipment and machines in the production lines, they are important talents for ordinary operation of beer companies, management of beer companies towards them is usually overtime and undertime strategy. During peak seasons, extending their working hours; in off-season, beer companies will reduce their working hours or provide vacations for compensation for overtime work in busy seasons, which can not only reduce inventory and labor costs, but also avoid the loss of key employees. Beer companies typically employ temporary workers to be responsible for crating and other unskilled work. For these temporary workers, beer companies usually take chase demand strategy. That is, beer companies will temporarily dismiss the temporary, until busy seasons when there is a demand for a large number of workers, the temporary workers will be hired again.
2.2 Training industry
Training institutions dealing with SAT or ACT tutoring for students has a significant school season characteristic in terms of changes in customer demand. During term, there is less demand from students for training; during summer and winter vacations, there will be more students having demand for training (Ismail et al., 2015). The main costs of training institutions are human costs, in off-season, management strategy of training institutions is control of labor costs, as teachers are core competitiveness of training institutions, training institutions can not dismiss teachers casually, because in busy seasons, they still need these professionals to provide customers with professional training services, dismissal of teachers in off-season may not only result in the loss of key employees, but also increase the costs of recruiting new teachers in busy seasons. Therefore, off-season management strategy of training institutions is not dismissing teachers, but keeping certain number of teachers to ensure that there are enough teachers to provide high-quality training services in peak season, at the same time saving labor costs as much as possible. The specific measures include reducing teachers’ working hours, providing paid holidays to teachers, which helps to reduce the costs of salaries paid to teachers, or training institutions provide more training opportunities to help teachers to improve their capacity to better serve customers in high season.
3.0 Conclusion 结论
Cyclical fluctuations and changes in market demand bring enormous challenges to corporate management. For managers, how to develop a right strategy to control costs to meet changing demands is highly significant for enterprises to achieve success.
Different enterprises or organizations have variable demand patterns, different companies adopt different strategies to meet variable demand. Taking beer industry as an example, the main strategies taken include overtime and undertime, chase demand. For training institutions, the main strategy is maintaining resources for high-demand levels.