Mass Co. is a medium-sized semiconductor fabrication plant in Boston, Massachusetts. The company has been in business fo

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Mass Co. is a medium-sized semiconductor fabrication plant
in Boston, Massachusetts. The company has been in business for over
20 years, mainly producing computer chips for auto industry that
are sold exclusively through its distribution network across the
United States. Through the years, it has been gradually expanding
its production capacity and consumer base. However, over the past
20 months, the company has been faced with an unprecedented and
unanticipated increase in demand, which has cleared out all its
storage facilities and exceeded its manufacturing capabilities. At
this time, the demand continues to be extremely high.
The company has an existing storage facility,
specifically designed for long-term storage of unused
chips (controlled climate, humidity, dust, etc.), which can be
converted to a new production line. The new production line would
increase the existing manufacturing capabilities by 50%. However,
this would require a substantial investment in remodeling of the
facility and purchasing of expensive equipment from a producer in
Yokohama, Japan. To proceed with this option, it would be also
necessary for Mass Co. to obtain a loan from a bank and hire
additional staff. It is estimated that it will take at least 12
months for the new production facility to start producing.
Mass Co. leadership is faced with a dilemma. If they don’t
expand the current capacity, they risk losing the market share to
competitors that are more flexible in adapting to higher demand. At
the same time, the expansion is very costly and the long-term
demand is uncertain.
You are hired by Mass Co. as a consultant to help make the right
business decision and to come up with an action plan.
Part A Question:
How would you recommend for Mass Co. to proceed? Should it stay
with the same production capacity or increase it as described
above? Based on the knowledge acquired in the course, please
provide a detailed explanation of the rationale for your
recommendation. Please describe potential challenges Mass Co. could
be facing as a result of your recommendation. State the challenges
and explain how you would recommend Mass Co. to address each of
those challenges.
Part B Question:
As an alternative to internal expansion, Mass Co. was just
presented with an option to acquire a small-sized semiconductor
company overseas. While this acquisition will allow Mass
Co. to increase its existing manufacturing capabilities by 50%
in just 4 months, it will be drastically more expensive than
converting an existing storage facility to a new production
line.
Should Mass Co. consider this acquisition project? Please base
your recommendation on the analysis of the triple constraint and
provide a detailed explanation of the rationale for your
recommendation.