Question

There are several strategies that can be used to manage capacity in an organisation. Discuss the advantages and disadvantages of the different strategies.

Answer 1

Before starting the answer let me explain what is capacity? Capacity in simple terms can be defined as the number of goods or services that can be produced within a defined period of time or it can be said as an operation that transforms inputs into outputs within a given period of time. For example How many Pairs of Shoes can be produced in a week by a factory. Therefore several strategies can be applied to manage capacity in an organization. This has both advantages and disadvantages which are explained below.

Advantages

Disadvantages

1. It provides discipline which helps board and senior management to take a step back from day to day business thinking about the future objectives of the organization. 2. It provides a single motto objective for the entire organization to understand and see that all decisions are moving in the same direction. As it is difficult for the Board to know what staff will make a decision and the same is difficult for staff to know what Board decision board will take. Hence strategy provides a vision of future, set objectives, know possible threats and opportunities, understand strength and weaknesses. 3. Enables Measuring Progress by ensuring objectives are met. It helps to understand the ongoing situation and accordingly set objectives in front of the top management. 4. It takes an organizational perspective and looks at all components in order to develop a strategy that is best for the entire organization.

1. It involves taking decisions anticipating future environments and make plans accordingly. In the case of the result doesn’t come out as per the expectation it may invalidate the strategy because the future is uncertain. 2. It can be very expensive as the need to hire external consultants to help in developing the strategy. 3. They are designed to provide organization long term benefits and if in case an emergency arises on an immediate basis, it won’t be helpful as will have to undergo allocation of more resources with respect to people, time and money. 4. It Lacks flexibility. As strategies are already made and costs already incurred. Hence if you need to change any decision it doesn’t provide flexibility.

Hence I would like to conclude by saying that majority of the disadvantages are due to lack of proper application. Hence it is important to see the best decision is taken and see that strategic management process you are using is best as per the needs.