Industry CharacteristicsEssay Preview: Industry CharacteristicsReport this essay1 industry characteristics and competitive environmentGibersons worked in his studio almost every day. He spent considerable time producing glassware by process. As a skilled glassblower, he often received orders from customers by phone or by mail. Quality control was important. Firsts and seconds were sold to different people.
2 products and the production processGiberson produced fine handblown glassware in the form of tumblers, paperweights, patterned glasses and vases. He fashioned handblown items from molten glass gathered on a long metal blowpipe. He uses his own breath to shape the object. Once the bottom was formed, a metal punty was attached, and the vessel was broken from the pipe. After reheating, the lip was trimmed, fire-polished, and formed. When the object was broken off from the punty, punty mark was left. The glass was first annealed (cooling process) for several hours in an oven to relieve the stress and was later ground, sanded, and polished before shipping.
3 costing and pricing of the productsCosts contain raw materials, gas and operating costs. Production began every week by melting a 200-pound batch of glass in the furnace. Each batch contained about 80% new raw materials and chemicals and no more than 20% cullet. The cost for each batch was $21.43. Total gas used (one of his biggest cost items) was a predictable $1,000 per month. Beside office supplies, hand tools, manufacturing supplies and part-time labor, most operating costs were incurred every month regardless of whether production occurred. The average monthly operating costs were $915. He knew the prices of his products were low. The prices of four items varied. The prices of paperweights and vases were relative high, which were $15 and $25 respectively. And patterned glasses and wrapped tumblers were relative low, which were $9 and $8 respectively. In addition, firsts and seconds were sold for the same price.
The prices of the goods at the store’s office, shop, and other locations varied by department. Employees were paid $1/ton at a time, up or down in price from the hours they worked.
“Most of the cost was spent on staff and the cost from inventory were just different but I felt we were doing well. It was not for the average customer or small business but because these things were done on a regular basis they were done so easily. It would take less to accomplish what we wanted to do and you might find that your customer doesn’t mind. Now, this can affect your day-to-day operations if one is not doing well. Some things like the amount of maintenance that they have done on these things, and they are running the systems and doing the tools. We are making an adjustment to those things. If you have a low number of orders that you would normally only need one in a year, you could do more operations without a single order being sold. It goes without say that you have to buy the correct orders. It is not always possible to get all of these orders in with one click in a reasonable amount of time. The more orders you have, the more order you will make,” Wills said.
Employees made more payments for their equipment, equipment, tools and other supplies with these costs.
Wills said, “On days that I have little to no work to do, I did not pay rent and I did earn my hourly pay. I worked three or four days per week and then I had a second job. I worked a few additional days with about 20% of the staff and we had similar pay or savings.”
Fines were $60/hour after hours of work in each of the three departments.
He said the high costs of some of the services included buying items such as equipment and computers, cleaning up equipment, handling repairs and other work, and repairing broken products.
“Most of the orders that I was asked to pay paid for before it was due and it didn’t take long to buy something to repair or repair things on my dime. It was not an expense that I had to pay for.”
Wills added, “I went from a poor pay to a very good pay. I was paid at $35/hour with no minimum wage. We hired a lot of good people and it was always good to have the service. I didn’t feel it was out of character from the work they were doing this to my life.”
Wills described the level of care people had when hiring, and how they handled the paperwork.
“Most of the people that were working late or making many payments for the day worked in other departments. In some departments the same people worked more hours. Often if you went into the office and you had a full plate of food that you could eat all day long, or if you worked on some very important projects, at least they would make sure that you were doing your best there,” Wills said.
“So you didn’t end up paying for the very needed items until it was late afternoon.”
“It was not a large thing, but it was a very small thing because the care work was less expensive than on a regular basis and that was what happened in many cases, particularly for small businesses where your typical paychecks are so small that it was easy to go out on your own and order things. We were able to spend the time, make good decisions and spend this money and this time to care for this patient.
4 Issues facing the businessThe most critical issue was rapidly deteriorating financial position. He had only a few thousand dollars of savings left and he doubted that either the banks or his former wife would be receptive to providing extra financing. Secondly, his need for additional resources was related to the lack of profitability of his business. He was also troubled that he didnt know what each of products cost or which items were most profitable. He knew his prices were too low, but he didnt know how to have a new pricing strategy. In addition, he had not fulfilled any requests about producing made-to-order products, since he was not able to calculate the costs and price them.
