Report Example on Shutting Down Facility: Benefits & Costs to Company

Paper Type:  Report
Pages:  5
Wordcount:  1286 Words
Date:  2023-10-10


If the facility is shut down, certain benefits and costs accrue to the company. It will be both financial and non-financial. Some of the non-financial benefits include the creation of a good public image since it is within a mile of a residential area and it neighbors Lake Ontario this means that in terms of the environment it is safer and better if the company shut down and management has time to re-evaluate current company procedures and general production operations. Non-financial costs include damage to customer relationships due to the shutdown of operations, negative perception by the public in terms of the company being in financial crisis, and any legal actions against the company arising from the decision to cease operations like a breach of contract if any.

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Financial Benefits

Financial benefits include reduced labor costs and taxes paid, additional revenue from the sale of the land, and direct savings resulting from avoidance of a legal lawsuit concerning the operations of the company within a residential area. The financial costs associated with ceasing operations are additional labor costs in terms of severance packages for employees laid off and lawsuits against the company regarding breach of contract. In addition, there may be costs incurred to locate a buyer for the land, transportation costs to be incurred once the operations are based in Colorado, and the loss of big clients to the company.

If the operations are kept open, then the following financial benefits will be realized. Transportation costs will not be incurred, attracting new clients due to stability of tenure of the company, positive image in the eyes of the public by following the relevant environmental provisions, which as a result, may attract investors and reduced production costs (Soltani, Sadiq & Hewage 2017). The financial costs include additional costs incurred in waste treatment and disposal structures, loss of cheap labor, and fewer taxes to be paid and legal actions taken against the company due to violation of environmental provisions. Non-financial costs associated with keeping operations open are the damage of the company's image on environmental grounds and clashes with the environmental authority in Canada while some non-financial benefits include maintained customer relationship, smooth operations within the company as there are no alterations, increased motivation to employees in terms of job security due to stability of the company and good corporate image where they comply with environmental regulations.

Action Plan

Due to the FDA's strict guidelines, transportation of partially manufactured products, drug interactions, and the introduction of sophisticated manufacturing equipment has brought about increased complications. Part of the plan is to make sure that the manufactured products from the company comply in all aspects with the FDA guidelines to avoid any consequences like penalties, impound of the products, and even legal action. Once FDA guidelines are considered, then a major review of the company's management philosophy should be done. Issues such as why the total quality management philosophy is not being implemented correctly should be addressed, and appropriate measures are taken to ensure its effectiveness (Pambreni et al. 2019). The introduction of quality control checks should help remedy the situation, and periodic review of the company functions to monitor the quality standards.

The manufacturing equipment has become more sophisticated, and it comes accompanied by increased fixed costs. The employees should be trained on using the advanced technology in readiness to operate the machine once it has been acquired. Quality has to be maintained. With the increased fixed costs associated with the machine, there has to be an evaluation of the machine, reducing the need for human labor to reduce labor costs and substitute such costs with increased fixed costs. Test of the drugs before they are supplied to clients to ensure that the drugs are safe for use, and they don't have any drastic side effects on the users (Villareal & Fergusson, 2017). It should be emphasized that this step is critical because this would determine whether new products can be released into the market or not. Therefore, a drug test task force should be established whose sole duty is to ensure that drugs from the company reach the threshold before they are delivered to clients.

Once all the above measures have been put in place then, there has to be a structured review system where employee performances can be evaluated regularly, management should invite FDA officials to talk to members of the company on any new developments in rules and regulations and their applications as well as getting client feedback on product quality and customer service. There should be a revival of the classical management theory, where employees are given incentives to increase productivity through bonus schemes. With the eventual use of new equipment, any old equipment needs to be replaced and disposed of. Management should consider forming a policy on the asset replacement cycle to incur the least cost when replacing the equipment. There should be a discussion on the criteria to use to choose which vendor to get the equipment from. Assess the deals with vendors to determine whether additional benefits accompany the purchase like warranties, after-sale services, support services, and regular maintenance checks.

Since the FDA is the regulatory body, in this case, arrangements should be made by management for some of the employees to attend some events organized by the FDA to be able to keep up to date with the regulations and rules as well as gain valuable information that would help the company operate efficiently (Wilkinson et al. 2016). There could be a partnership between the body and the company where some officials can come view the processes in the company and offer professional feedback concerning drug quality and the relevant requirements. As a result of the improvement in technology, the company should consider the possibility of full automation. The advantages include increased quality, reduced deviations in product quality, reduced labor costs, and easy quality control management. The company would benefit from such because making drugs is usually repetitive; hence if programmed into machine language, then a machine could do the work just fine.


Other recommendations include reducing costs of production by scaling down or shutting down some of the operations in foreign countries, such as Canada, where the labor cost and taxes are higher than in the States. The company's effect would be increased profit margins and the company's ability to sustain itself going into the foreseeable future. The FDA highlighted a certain class of clients regarding drug interactions. The elderly, in this case, should be prioritized. All controls should be put to ensure that the drugs delivered to this specific group of clients have no detrimental effects as it would negatively affect the company. A control system should be put in place, and it should be integrated with other systems within the company to make sure that the required standards are maintained, and efficiency and effectiveness in production operations are kept at an optimum. The control system should be checked periodically to ensure that it is well suited to perform the functions it has been designed to do. Regular reports to management should be made regarding such a system.


Soltani, A., Sadiq, R., & Hewage, K. (2017). The impacts of decision uncertainty on municipal solid waste management. Journal of environmental management, 197, 305-315.

Pambreni, Y., Khatibi, A., Azam, S., & Tham, J. (2019). The influence of total quality management toward organizational performance. Management Science Letters, 9(9), 1397-1406. DOI: 10.5267/j.msl.2019.5.011

Villareal, M., & Fergusson, I. F. (2017). The North American Free Trade Agreement (NAFTA).

Wilkinson, M. D., Dumontier, M., Aalbersberg, I. J., Appleton, G., Axton, M., Baak, A., ... & Bouwman, J. (2016). The FAIR Guiding Principles for scientific data management and stewardship. Scientific data, 3(1), 1-9.

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Report Example on Shutting Down Facility: Benefits & Costs to Company. (2023, Oct 10). Retrieved from

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