3 Clyde Williams is facing a dilemma. He has successfully built up a small family-owned company, Concrete Solutions
Ltd, manufacturing a range of concrete based products used in making roads, pavements and walkways. The
production technology is very low tech and uses simple wooden moulds into which the concrete is poured. As a
consequence he is able to use low skilled and low cost labour, which would find it difficult to find alternative
employment in a region with high unemployment levels. The company has employed many of its workforce since its
creation in 1996. The company’s products are heavy, bulky and costly to transport. This means its market is limited
to a 30-mile area around the small rural town where the manufacturing facility is located. Its customers are a mix of
private sector building firms and public sector local councils responsible for maintaining roads and pavements. By its
nature much of the demand is seasonal and very price sensitive.
A large international civil engineering company has recently approached Clyde with an opportunity to become a
supplier of concrete blocks used in a sophisticated system for preventing coast and riverbank erosion. The process
involves interlocking blocks being placed on a durable textile base. Recent trends in global warming and pressure in
many countries to build in areas liable to flooding have created a growing international market for the patented erosion
prevention system. Clyde has the opportunity to become the sole UK supplier of the blocks and to be one of a small
number of suppliers able to export the blocks to Europe. To do it he will need to invest a significant amount in CAM
(computer aided manufacturing) technology with a linked investment in the workforce skills needed to operate the
new technology. The net result will be a small increase in the size of the labour force but redundancy for a significant
number of its existing workers either unwilling or unable to adapt to the demands of the new technology. Successful
entry into this new market will reduce his reliance on the seasonal low margin concrete products he currently produces
and significantly improve profitability.
One further complication exists. Concrete Solutions is located in a quiet residential area of its home town. Clyde is
under constant pressure from the local residents and their council representatives to reduce the amount of noise and
dust created in the production process. Any move into making the new blocks will increase the pollution problems
the residents face. There is a possibility of moving the whole manufacturing process to a site on a new industrial estate
being built by the council in a rival town. However closure of the existing site would lead to a loss of jobs in the current
location. Clyde has asked for your help in resolving his dilemma.
Required:
(a) Using models where appropriate, advise Clyde on whether he should choose to take advantage of the
opportunity offered by the international company. (12 marks)
