RIFT VALLEY UNIVERSITY

CHIRO CAMPUS
DEPARTMENT OF BUSINESS MANAGEMENT
RESEARCH PAPER IDENTIFYING FACTORS AFFECTING
PRODUCTION CAPACITY OF ADDIS ABABA TANNERY SHARE
COMPANY

A SENIOR ESSAY SUBMITTED TO THE DEPARTMENT OF

BUSINESS MGT EDUCATION IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE DEGREE OF ARTS IN
BUSINESS MANAGEMENT (WITH FOCUS AREAS OF
MARKETING)

PREPARED BY: SALHADIN ABDURAHMAN USSO

ADVISOR: BADESA HUNDE

JUNE, 2021

CHIRO, ETHIOPIA

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 ACKNOWLEDGEMENTS

First and foremost, I would like to express my deep and heartfelt gratitude to my advisor, Mr.
Badesa Hunde for his knowledgeable advice, proper guidance and constructive comments
throughout my work. Without his support and advice, the completion of the study would have
been impossible.

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 Abstract

The study specially focuses to find out the determinants or variables that affect the production capacity of
Addis Ababa Tannery Share Company which is found in Addis Ababa City and to suggest a possible
recommendations (solutions). To this end, twenty six employees and ten customers of Addis Ababa
Tannery Share Company participated interviews were conducted with manager of the company.

Qualitative and quantitative methods have been employed in the analysis of the data. The study would try
to assess variable like finance, raw material, technology, worker motivation, competitor action, material
handling skills, employee training and major obstacles of production capacity are briefly examined.

The finding benefits the company to know its weakness and strength in its production system.

For these purpose relevant information will be collected from both primary and secondary sources. The
researcher would select company official using non probability sampling, worker and potential customer
using simple random sampling technique as a target population of the study.

The relevant information would be collected from these respondents through questionnaire and personal
interview. To analyze the data the researcher were used descriptive methods such as percentage and
tabular presentation.

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 Table of Contents
Contents Pages
Acknowledgement ....................................................................................................I
Table of Content .......................................................................................................II
List of Table…………………………………. …………………………………….III
Abstract …………………………………..…………………………………………IV
CHAPTER ONE : INTRODUCTION
1.1. Background of the Study .............................................................................1
1.2. Statement of the Problem ..............................................................................2
1.3. Objective of the Study ..................................................................................3
1.4. Significance of the Study ..............................................................................3
1.5. Delimitation of the Study ..............................................................................4
1.6. Organization of the Study ................................................................................... 4
CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1. Concept of Production .................................................................................5

2.2. Concept of Capacity ......................................................................................5
2.3. General Definition of Capacity .....................................................................6
2.4. Capacity Planning .........................................................................................7
2.5. Production Systems .......................................................................................7
2.6. Basic Types of Production System ..............................................................8
2.7. Production Capacity ............................................................................................ 10
CHAPTER THREE
Research Methodology .............................................................................................16
3.1. Data Source ..................................................................................................16
3.2. Sampling Technique .....................................................................................16
3.3. Data Gathering Tools ....................................................................................16
3.4. Data Analyze & Interpretation Method ........................................................16
CHAPTERFOUR: DATA ANALYSIS AND INTERPRETATION

4.1. Introduction ..................................................................................................................17

4.2. Analysis and Interpretation of Employees’ Responses .................................................18
4.3. Analysis and Interpretation of Customers’ Responses .................................................27
4.4. Analysis and Interpretation of Interview with Manager .........................................31
CHAPTER FIVE: SUMMERY, CONCUSIONS AND RECOMMENDATIONS

5.1. Summaries ……………………………………………………………………………32

5.2. Conclusions ..................................................................................................................33
5.3. Recommendations ........................................................................................................34
Bibliography ………………………………………………………………………………….35.
Appendixes…………………………………………………………………………………….

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 CHAPTER ONE
1. INTRODUCTION
1.1 Background of the study
Tannery is one of the most important sources of income in many countries. It is a flexible
materials made from animal hide and skins. Cattle hide provide the largest source of leather
while goat and sheep skincare are also widely used. Especially lathers are also made from
crocodile hide and alligator, shark and other animal hide.

The process of changing animal hide and skin in to useful lather product is called tanning. In
Ethiopia there are many tanneries located at different places in the country like Addis Ababa
Tannery, Dire Tannery, Modjo Tannery, Batu Tannery and Crystal Tannery Share Company.
Among these tanneries Addis Ababa Tannery is the major one. Addis Ababa Tannery was
established by an Armenian investor as a government company in 1925 G.C for the purpose of
processing crocodile skin. Previously, during imperial and derg regime it was owned and run by
the government. Nowadays, because of the economic policy of the existing government
(EPDRE) was again privatized in 2006 G.C with an initial or set capital of birr 17,309,000
(seventeen million) start its operation. Currently, its capital has reached birr 23, 113, 649, 03.
The company has 310 permanent employees arranged in shifts.

Addis Ababa Tannery is the first Tannery established in East Africa and now categorized among
the leading tanneries found in our country.

Even though the primary purpose for the establishment of Addis Ababa Tannery was to convert
vast potential of the crocodile skin in to semi-finished leather which issued to produce or make
jacket, shoes, belts, bags and hats.

At this time, it is processing hide and skin of animals like sheep’s, goats, and cows to earn better
income in export market and from internal companies that use for processed leathers of Addis
Ababa Tannery S.C as a raw materials.

With regard to market destination, most of the products of the Addis Ababa Tanneries are
exported to China, Italy, India and Argentina. The current six month export sales of the company

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is birr 4, 596, 820, 34 and total local sales of the current six month is birr 18, 537, 051, 90. The
total sales for export and local market for the current six month is birr 23, 133, 872, 24.

The reason why the researcher wants to study factory affecting part of marketing mix is because
all other mix (Price, Promotion and Place) rests their base on the product promotion. That is
producing equality product encourages the settlement of effective price. Once the quality product
is produced, priced effectively, promoting and creating customer awareness becomes an easy
task. After quality product is produced, priced effectively and get customer awareness,
distributing the product when and where customer need arise it also become an easy task. This is
why production is the base for all other marketing mix elements and why the researcher prefer to
focus his study on factors affecting production capacity in case of Addis Ababa Tannery share
company.

1.2. Statement of the Problem

The main purpose of this research is identifying factors affecting production capacity of Addis
Ababa Tannery Share Company.

Every organization should produce its offers in such a way that they met customer requirements.
Product is the first and most basic marketing consideration and also it is the heart of a company
marketing activities. Customer buys a firm’s product in order to satisfy their needs as cost
effective as possible. There are many different factors that can affect the production capacity of
manufacturing companies. Among these finance/ capital, availability of raw materials, customer
demand, machinery and equipment, and competitor’s action are the major one.

When studying in Addis Ababa Tannery S.C the researcher observed certain problems regarding
the development and implementation in its production capacity. No study had been conducted to
identify factors affecting production capacity of Addis Ababa Tannery S.C. Addis Ababa
Tannery was the most reliable private company which provide different tannery product to
domestic and foreign market. Currently, facing greater challenges from it s competitors. As result
of this, it is very essential to analyze the performance and identify factor affecting production
capacity for corrective action. Due to this reason, the study tries to seek answer to the following
basic questions.

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 -Does financial problem exist in Addis Ababa Tannery now?
-Does Addis Ababa Tannery get available raw material at required time and place?
-Does Addis Ababa Tannery use modern technology and equipment in production process?
-Is there any other determinant that affects production capacity of Addis Ababa Tannery
other than listed above?
- How official and workers can best manage the persistent problems that promote better
productivity?
-What are the factors that contribute to the improvement of the production capacity of Addis
Ababa Tannery S.C?

1.3 Objectives of the Study

Tannery products are among the main export items as a source of foreign exchange. The study is
designed to find out factors affecting the production capacity of Addis Ababa Tannery. Moreover
the study was conducted with the aim of certain specific objectives that are going to be attained
at the end of the study like;

-To investigate the existing problems that affects the production capacity of Addis Ababa
Tannery S.C.
-To assess the strength and weakness in the production process.
-To assess and forward the factors that can contribute to improvement of production process.
-To recommend possible solutions based on the findings on the study.

1.4 Significance of the Study

The main purpose of this research is to identify the factors affecting the production capacity of
Addis Ababa Tannery S.C and forward recommendations to improve current problematic
situation in the company and to earn higher income from both internal and external (foreign)
market.

In sum after the finding is carried out, the result can be benefit the researcher and the company in
the following way.

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 -The finding benefits the company to know its weakness and strength in its production
system.
-To give know-how about the factors affecting the production capacity.
-To encourage others in further investigating depending up on this study.

1.5 Delimitation of the Study

There are many tanneries in our country such as Addis Ababa Tannery, Shoa Tannery, Modjo
Tannery, Crystal Tannery and Mesako Global Tannery Share Company. The study would be
conducted only on identifying factors that affect the production capacity of Addis Ababa
Tannery Share Company. There may also be problems on pricing, distributing, and promotion.
But the study is confined only to identifying factors that can affect production capacity of Addis
Ababa Tannery Share Company.

1.6. Organization of the study

The paper organized in a logical sequence and to the ease of the readers’ understanding. The
study contains four chapters, beginning from the introduction part.

Under the introduction part the researcher stated the background of the study, significance of the
study, delimitation of the study and organization of the study.

The second chapter’s deals with the review of related literature that is the view of different
scholars would be presented.

The third chapter consists; Data analysis and interpretation. The last chapter shall discuss;
summary, conclusion and recommendation.

CHAPTER TWO
2. Review of Related Literature

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2.1 Concept of Production

The production concept holds that consumers will favor products that are available and highly
affordable; therefore, Managements should focus on improving production and distribution
efficiency. This concept is one of the oldest philosophies that guide sellers.

The production concept is still a useful philosophy in two types of situations: (1) when the
demand for product exceeds the supply, management should look for ways to increase
production. (2) When the product’s cost is too high, improved productivity is needed to bring it
down. For example, Henry Ford’s whole philosophy was to prefect the production of the model
‘T’ so that its cost could be reduced and more people a car of any color as long as it was black.

For many years, Texas Instrument (TI) followed a philosophy of increased production and lower
costs in order to ring down prices. It won a major share of the American handheld calculator
market using this approach. However, companies operating under a production philosophy run a
major risk of focusing too narrowly on their own operations. (Kotler; 1999).

2.2 The Concept of Capacity

The capacity of a facility is an ambiguous concept. It is not like the capacity a wine bottle which
will hold one liter of wine and no more under any circumstances.

Capacity is a rate of output, a quantity of output in a given time, and it is the highest quantity of
output that is possible during that time. Yet an organization’s capacity is at the same time a
dynamic concept which can be changed and managed. To some extent, it can be adjusted to meet
fluctuating sales levels. (Henedrick; 1980).

i.The unit of output

One problem with the concept of capacity is the unit of output. An automobile tire factory turns
out tires, but tires come in many varieties. A tire factory can turn out more of some kinds and
sizes. So its capacity turns out more of some kinds and sizes. So its capacity when expressed in
the number of tires is ambiguous.

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The matter of production mix is important when planning for the future. Sometimes, when a
company’s top administrations approve plans to spend money for added capacity, they express
the new capacity only in terms of dollars’ worth of sales. They leave in to marketing, production,
and engineering to develop a prospective product-mix break down which eventually becomes the
master production schedule. Then, production and engineering have to calculate the kind and
number of machines needed to produce the expected dollar volume for the mix they anticipate.

II. Time

Time poses another problem. A person talking about capacity is talking about a quantity of
output in a given amount of time, but how much time? Some kind of manufacturing process
requires continuous operation.

Most operation do not operate around the clock; instead, they operate from 8 to 5 daily, Monday
through Friday. Their capacity is regarded as being their normal output in a 40-hours workweek.
But a 40-hour week is not their maximum capacity. It is usually possible to work more hours a
day or more days a week. In most cases, the maximum possible capacity is considerably more
than the 40-hours output. (Hendrick; 1980).

2.3 Generally Accepted Definition of Capacity

i.Design Capacity: The output per unit of time for which plant was designed
ii.Rated capacity: That output per unit of time that the facility is theoretically capable of
producing. (Usually larger than the design capacity due to periodic improvements made
to machine.)
iii.Standard Capacity: The output per unit of time set as an operating “goal” for management,
supervision, and machine operators; can form the basis for budgets. It is equal to rated
capacity less the standard scrap rate, standard personal allowance, standard quality
control allowance, et.
iv.Actual and /or operating capacity: The average output per unit of time over the immediate
past periods of time. This standard capacity + actual scrap, allowance, downtime, etc.

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 v.Peak Capacity: Some output of time (probably something less than related, but more than
standard) that can be obtained by maximizing output, which would probably be done by
increasing labor, eliminating shut downs for breaks, lunch, etc. ( Hendrick,1980).

2.4 Capacity Planning

Capacity planning is concerned in defining the long and short term capacity need of their
organization and determination how those needs will be satisfied.

i.Long-term capacity strategy: is it concerned with accommodating major changes that affect
the overall level of output in the long-term.

Long-term capacity choices are difficult to make because they must be arrived at in the face of
great uncertainty about future demand, future costs, technological change, and competitors’
capacity plans.

What is more, a poor decision by one company can often cause significant long-term losses for
an entire industry.

Since capacity choice have a significant impact on financial performance, almost any well done
financial performance, almost any well done financial analysis of a company’s performance will
include an assessment of long-term capacity.

ii.Short-term capacity strategy- in short term planning, horizon, capacity concern involves the
fluctuation in demand caused by seasonal and economic factors. (Hanna, 2002).

2.5 Production systems

In the most general terms, we define productive system as the means by which we transform
resource inputs to create useful goods and services as output.

This input-conversion-output sequence is useful way to conceptualize productive systems,

beginning with the smallest unit of productive systems, beginning with the smallest unit of
productive activity, which we commonly refer to as an operation. An operation is some steps in
the overall process of producing a product or service that leads to the final output. For example,

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in auto assembly, the operation of installing the right-hand has inputs (the door panel, anchor
pins and other materials, fixtures to hold the door in place while it is being assembled, etc.), the
assembly forward one more step or talking a service oriented example, obtaining a driver’s
license commonly involves the step (operation) of paying a fee.

These step or operation is organized in to appropriate sequence to produce larger systems of

production. The resource inputs may take a wide various raw materials, energy, labor, machines,
facilitates, information, and technology. In service oriented systems, the inputs are likely to be
dominated by labor, but common to manufacturing may also to be important, as in health care
systems, for example. In food service raw materials are an important input. Managing productive
system involves controlling the conversion process and the entire variable that affect its
performance. (Buffa ; 1987).

2.5.1. Basic types of Production Systems

Although all production systems differ somewhat, according to (Hopeman; 1980) there are two
types: one is based on continuous production. Example of intermittent production would be a
custom cabinets shop, a general machine shop, and a building contractor. Example of continuous
production would be petroleum refineries, chemical plants, paper and hardboard plants, and mass
production industries such as automobile and home appliance industries.

Although some companies cannot be strictly classified as one or the other, these two basic types
serve as modeling concerning which certain observation can be made.

The storage costs per unit are usually lower in cont in continuous- production systems, because
the raw materials are stored on briefly, and the goods-in-process inventories move through the
plant very rapidly. Most managers of continuous-process plants also make sure that the finished
products move immediately to the customers so that where house are not overfilled with the
rapidly produced products.

The marketing characteristics of companies using continuous using continues production systems
offer differ from using intermittent-production systems. With intermittent production, the
marketing effort is directed toward getting and filling individual orders for varied products. In

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continues production, the marketing effort is expected in developing distribution channels for the
large volume of output and persuading the customers to accept standardized products.

2.6 Production Capacity

Production capacity is the ability of the firm (company) to produce the products at specified time
period. Many companies do not utilize their capacity fully in production because there are a
number of internal and external factors affecting production capacity. Some of the major factors
are raw materials, customers, product market, technology, material handling, and government
rule and regulation.

Other still believed the production capacity is affected by wage incentive and job evaluation,
research and development (R&D), seasonal employee training and competitions.

Economists also cite a variety of reason for changes in production. Some of the major factor
influencing the drop in the productivity production rate is capital, scarcity of some resource,
Innovation and technology and managerial factors.

Based on the above views the Addis Ababa Tannery S.C also control the current issues through
eliminating these mentioned variables.

3. Technology

Among the above factors, technology which new and improved have a great impact on
production capacity. Technological change is so rapid that it makes today’s market leader
tomorrow’s market follower or challenged the total production system relies on technology as a
strategy for growth expansion and if the firm do not produce products as enough to be
competitive in the market.

Technological force that create new technology as much as possible, it will not produce products
as enough to be competitive in the market. Technological forces that create new technology, new
product, new market opportunities, it perhaps the most dramatic force shaping now our world.
(Hopeman; 1980).

4. Consumer Need

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Companies’ production capacity is also affected by consumer’s need. Companies must
understand consumer need; other wisely compensators who produce similar or related product
interfere with other weakness and got completive advantage. (Drunker; 1884), say that “it is the
customer who determine and gives sunlight to your business. Therefore the business form should
satisfy their customer to be sustainable and profitable”.

A customer-centered company focuses more on customer developments in designing its

strategies. Clearly, the customer –centered company is in better position to identify new
opportunities and set long-run strategies that make sense.

By watching customer needs evolve, that is can decide what customer groups and what emerging
needs are the most important to serve, and then concentrate its resources on delivering superior
value to target customers. In practice, today’s companies must be market-centered companies,
watching blind them to customer focusing. (Kotler; 1999).

5. Research and development (R&D)

The research and development introduce new products, new way of production, reduced costs
and time. Without research and development companies may not know their weakness and
strength, even their position and capacity of production. R&D activities most often focus on the
area of developing new or improved products (product R&D), the discovery of new uses for
products (product-utilization R&D), and developing uses for waste products. From the
production manager’s point of view, the most serious problem related to research and
development activates is that successful R&D projects often initiate changes in production
activities, thereby making it necessary to redesign an existing system or to do design an entirely
new system. Other areas of business research activities include marketing research, human
factors, & behavioral research, work method analysis, and operations research.(Hopeman; 1980).
Marketing research is the systematic gathering, recording and analyzing of data about problems
relating to the marketing of goods and services. (Luck; 1987).

The production manager must rely on research and development for idea concerning new
products, new processes, concerning the improvement of current products. In addition, Research

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and Development often provides answer to questions concerning economical uses of the by-
products and wastage products of production operations. (Hopeman; 1980).

6. Material Handling

Handling material (martial handling) through the production system is another factor affecting
production capacity. Materials must be acquired and then transformed to production during
production process.

Closely related to the problems of plant layout are problems concerning the handling of
materials. The type of layout used will affect the type of materials-handling devices may, in turn,
have an effect on the design of the layout of facilities. To design a production system this
incorporates efficient handling of materials, it is essential that the production manger know the
principles of efficient materials handling and the various materials-handling devices available.
(Hopeman, 1980)

7. Wage incentives and job evaluation

Workers motivation; Adam smith 1970 suggests that “people are primarily motivated by self
interest and maximization of gain especially in relation to economic need; therefore, motivation
is the willingness of an employee to respond to organization relation to economic need and
motivation is also internal and external force that arouse person’s enthusiasm and persistence to
pursue a certain cause of action.

Since wage level have such a heavy impact on the costs of products and services it become
important for the production manager to focus some attention on problems, and choosing the best
system for a given company is the responsibility of the production manager. The correct wage
system can lead to reduced production costs, greater worker motivation, or both. The use of job
evaluation and merit rating techniques will answer several questions? Who should receive pay
raises, and how much should they be? Who should be laid off if a cutback in the work force is
required. (Hopeman; 1980).

According to Hopeman, 1980; wage system on output can be classed as wage incentive systems,
since they provide an incentive the employee to produce at a greater rate of output per hour.

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Some of the increased output per hour is a result of the increased pace of the worker, and some
of it is a result of the elimination of much idle time.

In short, the more the worker produces, the more the worker earns; therefore, the worker is
promoted to increase the rate of output.

8. Training of employee

Besides motivation, training of employee is also influence the production capacity of the
manufacturing company. The organization attempts to provide experience and training which
will help the individual to perform more effectively on the job ‘Aristotle’ said that “what we
have learn to do we warm by doing” then to produce the desired output, one must be familiar
with technology, methods of procedure, polices and the like. In an organization, the capability of
person depends on his ability to work and the type of experience and training he receives.

9. Scarcity of resources

The assumption of abundance is being replaced by the assumption of resource scarcity in the
forward planning of mangers.

Scarcity of some resources such as energy, water and number of materials has also created some
productivity problems. For example as a result of increased energy costs aluminum plants that
once had favorable cost-volume reactions are no longer economical to operate. Emphasis is now
shifting toward the use of renewable resources, such as production of fuel from agriculture or
wastage products.

The stage is set for these series events and they will be played out whether managers are ready or
not. Effective alternatives in the short run will probably be built on (1) passing the increased
costs on to consumers through increased prices until that is no longer tolerated or economically
feasible, (2) finding alternative resources to replace the depleted resource, and (3) engaging in
resource conservation either voluntarily or by government regulation. Clearly, major
reorientation of entire industries that is ahead, driven by resource scarcities. The effective
manager must be cognizant of these shifts and the forces behind them. Often, this analysis must

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be made on a global scale and include social and political variables in addition to economic
considerations. (Hopeman; 1980).

10. Competitors

An organization’s relationship with its competitors, unlike that with most other task players, is
indirect rather than direct and involves adversarial and often aggressive behavior. The company
may modify its pricing or advertising behavior, differentiate its product or service change its
distribution strategy and involve in order gaining a competitive advantage over others.

Completion is part of the business environment surrounding a firm in a free enterprise system.
That the firm should have service objectives with respect to its competitors may seem somewhat
strange; you may ask yourself why one should be obliged to one’s competitors. This obligation
lies manly in the fact that our economy is a competitive economy, and it is up to each business
firm to maintain this environment of competition. Thus, entrepreneurs are expected not to enter
in to collusion on price fixing with their competitors or to act in any un lawful manner toward
their competition, such as adulterating their products or sabotaging their pants. Further,
competition and cooperation go hand; many firms belong to industrial trade associations which
strive to improve the industries and the products and service they produce for customers.
(Hopeman; 1980).

11. Capital/Finance

When designing the production system, decisions must be made concerning the acquisition of
capital equipment, the machines used in the production process. Technical considerations are of
cores, paramount since the equipment acquired should operate within certain specifications and
yield outputs of appropriate quality. In addition, costs will be a factor in deciding which
equipment to buy or lease.

Capital/finance is the factor of production that provides the basic measure of economic costs. To
deal with this, one must consider interest, depreciation, obsolescence, and potential return on
investment, opportunity costs, and the ever present and ever changing tax considerations which
may promote or restrain investments. A poor decision on capital equipment acquisition can lock
the firm in to in efficient operations and high production costs. In those industries where

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technological changes occur rapidly, the wrong equipment choice can lead to premature
obsolesce. (Hopeman; 1980).

12. Product and Marketing

The marketing department constantly influences the management of production by providing

information concerning the following:

13. Sales forecast of future levels of demand. This information is required in order to plan
effectively how much should be produced in the future and to schedule production around
predicted fluctuations in demand.
14. Pertinent data on sales order. This information is central to production management, because
it determines which products or services must be produced, and in what quantities. In a
sense, the sales orders constitute the production manager’s authority to initiate production of
given quantities at given times.
15. Customer quality requirements. The production manger needs this information to plan which
machines, workers tools, processes and many other components of the production system to
use to meet quality requirements.
16. New products and processes. In most companies, mangers get most of their ideas for new
products from customers or competitors. These new product and process ideas can radically
change the production system.
17. Customer feedback of products since the marketing department is the component of the firm
which is in direct contact with the customers; many complaints about the product can be
picked up and carried back to the production department by marketing people. In many
instances, customers may fine characteristics of the product which crate problems in its use.
If marketing can give this information to the production manager who in turn can correct the
problem, it may result in fewer dissatisfied customers and grater sales volume in the long
run.
Although the production manger receives much essential information from the marketing
department, he or she often provides information to marking as well. This information
includes when orders will be completed, when they will be shipped, what levels of

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 quality can be expected from production, materials which can be used and how the
finished product should be sued by the customer. (Hope man; 1980).

18. Managerial Factors

Managerial factor is the ways in which an organization benefits from the unique planning and
managerial skill. The production manger role in the production system is that or decision maker
who is faced with planning and controlling the production processes. It is a difficult and
challenging job, because of the dynamic nature of production systems. The environment is such
that the only constant is change. Even when the production manger gets things running smoothly,
new problems always loom on the horizon: the marketing manger wants a new product
produced; suppliers bring to the firms attention new and better materials and machines; engineers
devise new, improved provides. These sources of information, marketing mangers, suppliers, and
engineers represent components of larger systems. These systems include the entire business
firm and its economic and competitive environment; since the production manger is also a part of
these larger systems, we shall examine his or her role in them. (Hopeman;1980)

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 CHAPTER THREE
Research Methodology
The researcher believes that descriptive study is suitable to indentify the factors that affect
production capacity of Addis Ababa Tannery S.C.

3.1. Data Source

The researcher used both primarily and secondary sources of data to collect information. Primary
data can be obtained company’s officials, workers and customers. Secondary source can be
obtained from company reports, and internet.

3.2. Sampling Techniques

The researcher total population is 310 employees of the company and two local customers of the
company that is, Ramsey shoes Factory and Tikur Abay Shoes Factory. Out of this the researcher
selects 20 employees and 10 respondents from each local customer companies through simple
random sampling. And, the manager of the company by purposive/ Judgmental sampling.

3.3. Data Gathering Tools

To conduct research various data gathering tools can be applied. The researcher prefers
interview, and questionnaire to gather sufficient amount of data.

18.4. Method of Data Presentation and Analysis

The data that would be obtained through the above listed method will be presented and analyzed
method such as percentage and tabulation.

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CHAPTER FOUR

4. Data Analysis and Interpretation

4.1. Introduction

This part of the study deals with the analysis and interpretation of the data obtained through
questionnaire, interview. Frequency and percentages have been used to present results. The
decimal points in percentages have been rounded to the nearest tenth for simplicity. For results of
some items verbal descriptions have been used. A total population on which the study is
conducted is 40 respondents of which 30 (75%) of them are employees of the company and the
remaining ten (25%) are workers of two local customer companies-Ramsey shoe factory and
Tikur Abay shoe factory. Equal number of respondents were taken from both companies, which
is five (12.5%) of respondents from each. From the questionnaire that was distributed for
employees 26 (65%) of them were filled and returned to the researcher while that of customer
filled and returned all questionnaire to the researcher. The respondent’s profiles can be presented
as follows,

Table 4.1 Respondents’ profile

Respondents
No Item Employees Customer
1 Sex Male Femal Total % Male Female Total %
e
2 Age:18-25 4 2 6 23 - 1 1 10
26-35 5 1 6 23 3 1 4 40
36-45 6 4 10 38.46 2 1 3 30
>46 2 2 4 15.38 0 2 2 20
Total 17 9 26 100 5 5 10 100
3 Educational
level: Certificate 11 1 12 46.15 2 1 3 30
Diploma 5 4 9 34.62 3 2 5 50
Degree 4 1 5 19.23 2 0 2 20
Total 20 6 26 100 7 3 10 100
17
Source- using questionnaire

From table 3.1 above, we see that 17 (65.38%) of the employees of the company were males and
the remaining nine (34.6%) of employees are females. This shows that the participation of
females in the production process is limited.

In case of age distribution, those who belong to the age between 18-25 amounts to six (23%), 26-
35 amounts to six (23%), 36-45 amounts to ten (38.46%) and the respondents above 46 years of
age accounts to four (15.38%). This in general shows that the greater shares of company’s
production force are elders and can have more experience of work.

As it is stated in table 1 the certificate graduate outweighs the Diploma and Degree holders by
covering greater share of 12 (46.15% ) while that of Diploma and Degree accounts to nine
(34.62%) and five (19.23%) respectively. This easily shows that as the company doesn’t have
enough number of qualified manpower in production area.

4.2 Analysis and Interpretation of Employees’ Responses

Item 1 asked whether the employees work over time and on holidays and what benefit they gain
if they work over time and on holidays. Accordingly, 19 (73.1%) of them responded yes. The
remaining seven (26.9%) responded “No”.

Table 4.2 Work overtime & on Holyday and type of Reward

No Item Response type No. of respondents in %

respondents
2 Type of reward Bonus 2 7.7
Commission - 0
Overtime payment 12 46.2
Permission on other working 5 19.2
time
Total 19 73.1

As we see from table 3. 2 (item 2) above, none of employees who work overtime and on holidays
responded that they get commission as a reward of working on holidays. From the employees,

18
two (7.7%) responded that there is a bonus payment for working overtime and holidays and 12
(46.2%) of respondent responded there is overtime payment for working overtime on holiday
while Five (19.2% )responded there is other incentive for working overtime and on holidays
like permission on other working time. The researcher generalized from table 3. 2 (item 2) that
are the company gives overtime payment and other incentive for employees that work overtime
and on holidays which in turn increase employees motivation and gain which in turn contributes
the increment of the company’s production capacity. Motivation of industrious worker is one of
the factor that can increase or decrease production capacity.

Item 3 asked respondents whether self motivated workers who can play a great role in production
are encouraged or not. And it is clearly stated that seven (26.9%) of the respondents responded
“yes” which means that industrious workers are motivated by the company. Most 19 (73.1%) of
the respondents responded “No” which means there is no encouragement for self motivated or
industrious worker plays a great role in increasing production capacity and for future expansion
of the company, the researcher conclude that as the company is not gave prior attention for this
industrious workers.

Table 4.3 Industrious Worker and Reward/Motivation

No Item Response type No. of respondents Respondent in %

4 Type of encouragement
Positional promotion 4 15.4
Special prize 1 3.8
Chances for further - 0
education
Financial reward 2 7.7
Total 7 26.9

Based on the figure in table 3.3(item 4) above, respondents that said yes for item number 4 are
Four (15.4%), they said that there is positional promotion for encouragement of self-motivated
workers. One (3.84%) respondents responded that there is special prize and no respondent said
there is a chance for further education. Respondents who responded that there is other
encouragement which is financial gift are two (7.7 %.)

In sum, from table 3.3 the researcher concludes that the company gives encouragement for
industrious workers through positional promotion, special prize, and financial reward. However,

19
there is no chance for further education for industrious workers. As Adam Smith (1970)
suggests; “people are primarily motivated by self interest and maximization of gain especially in
relation to economic need.” Therefore, motivation is the willingness of an employee to respond
to organization in relation to economic need and it is also internal or external forces that arouse
persons’ enthusiasm and persistence to pursue a certain cause of action. Maslow concludes that
the more positive individuals motivation toward the organization, the more effective in his
performance.

The question raised in item 5 is intended to know what type of raw materials the company
mostly uses and to know if there is variation in supply of raw materials since the shortage of
supply of raw material affects the production capacity.

From the (item 5) above, no respondent said that the company use only cattle hide , goat and
sheep skin only, shark and snake skin only or crocodile hide. 18 (69%) respondents’ responded
goat and sheep skin and all respondents 26 (100%) responded that the company uses raw
material of cattle hide and goat and sheep skin together or interchangeably. As the researcher
was orally informed from some employees that there is no shortage of raw materials supply
because the company has its own purchasers from different sites and those purchasers store the
raw materials by drying it. Since the company has its own purchasers from different sites, the
researcher concludes that the company’s production capacity is not currently affected by
shortage of raw materials.

Question 6 asked respondents whether there is material handling problem in the company
because if materials are handled properly and effectively, industrial accidents (risks) are reduced,
resources are effectively utilized and as a result, the company produces effectively, efficiently
and economically by increasing its production capacity. Accordingly, 21 (80.8%) of the
respondents said that there is damaged material during work time at work shop and five (19.2%)
of the respondents responded as there is no damaged material during work time at work shop.

Table 4.4 Material handling and workshop

No Item Response type No. of respondents Respondents in

%
7 Lack of knowledge to use 6 23
20
 Causes for damaged Carelessness - 0
Obsolescence 4 15.4
materials
Others 11 42.3
Total 21 80.8

Source-Survey using questionnaire

Table3. 4 above shows that of the respondent that said there is damaged material at work shop,
six (23%) of them put lack of knowledge to use as a cause for damage. On the other hand, Four
(15.4%) respondents relate the cause to obsolescence’s and the remaining 11(42.3%) of the
respondents relate the causes of the damage to other problems like obsolescence of material
handling skill, problem that result from obsolescence (in efficiency of using old age), lack of
knowledge on how to use the material and lack of care from highest effect to lower effect
respectively.

Regarding material handling, Data (1998) says that by proper handling of supply & products at
time & place, in efficiency & wastage should be reduced. Material handling includes, handling
of raw material, semi-finished material and finished goods through production as well as storage
areas. The purpose of production handling of materials is; to reduce cost; reduce wastage,
increase production capacity, improve working condition and distributions. Therefore, material
handling is an inevitable part of manufacturing plant.

Question 8 asked respondents whether there is formal employee training or not in the company.
Accordingly, 11 (42.3%) of the respondents responded that the company gives them training and
15 (57.7%) of the respondent responded that the company does not give training

Table 4.5 Employee training and its effect on Production

No Item Response type No. of respondents Respondents in %

9 Effect of training Very low 4 15.4
Low 2 7.7
Moderately 2 7.7
Highly 3 11.5
Total 11 42.3

Source-Survey using questionnaire

21
Item 9 in table 3.5, the respondents were asked about the effect of training on production
capacity of the company. Accordingly, they mentioned that the company is giving them
employee training and Four (15.4%) of them said that the effect of training on production
capacity is very low. Two (7.7%) of them rated the effect of training as low and Two (7.7%)
respondents responded it affects moderately. The remaining three (11.5%) responded that giving
training highly affects production capacity.

Based on the figure in table 3.5, 11 (42.31%) of the employees have attended (given training)
and responded there is effect on the production capacity due to the fact that employee training is
important or needed;

 To go with new and latest technology.

 To update their skill concerning production
 To solve problems and customer attraction situations

Maslow (1993) states that training of employee influences the production capacity of the
manufacturing company. The organization attempts to provide experience and training which
help the individual to perform more effectively on the job. To improve production capacity up
grading the qualification and professional competence of the existing experienced employee
through training which helps to familiarize them with new technology and innovation is seen as
the essential requirement in front of many educators and managers.

Table 3.6 Tool of Customer Attraction Mechanisms

No Response type No. of respondents Respondents in %

10 Advertising 13 50
Sales promotion 8 30.8
Large purchase discount - 0
Sample selling 5 19.2
Total 26 100

Source-Survey using questionnaire

Table 3.6 above, indicates the presence of promotional tools the company uses to attract
customer to increase its production through increased sales value and to know the purchasing

22
power customer that can affect the production capacity of the company through buying in large
or small amount of produced products.

As it is indicated in table 3.6, 13 (50%) of the company respondents responded that the company
mostly uses advertising through different media like magazines, advertising on website. Eight
(30.8%) responded the company uses sales promotion. None of the respondents said that the
company gives large purchase discount and the rest five (19.2%) of the respondents give insights
that the company also uses other method of customer attraction mechanisms like sample selling.
Based on these responses the researcher can conclude that the company is using mostly
advertising followed by sales promotion and sample selling respectively as a promotional tool to
attract customers to increase its sales which in turn increase production capacity. Again the
researcher can also conclude that as the company was not giving discount for large purchase as
means to attract customers.

Table 4.7 Machinery of Production /technology usage

No Item Response type No. of respondents Respondents in %

11 Type of Machinery Obsolete 7 26.9
Modern 11 42.3
Both modern & 30.8
traditional/obsolete 8
Total 26 100

Source-Survey using questionnaire

Item number 11 in table 3.7 is designed to know whether the company is accessed or adapt (uses)
modern technology to produce efficiently and effectively.

As it is seen from table 3.7, above, seven (26.9%) of the respondents said that they are using
traditional/obsolete/ machinery in production place. Eleven (42.3%) of the respondents said that
they are using modern machinery in factory and the remaining eight (30.8%) responded that they
are using both modern and traditional /obsolete/ machinery for production process.

Based on the results the researcher can conclude by quoting Armstrong (2004). He says;
“adoption of new technology increases a sense of involvement in broader job, contributes to the

23
economic health of the firm, create higher skill and intelligence on job and the opportunity to
learn, grow production capacity.

Table 4.8 the methods used to identify customer needs and wants

No Response type No. of Respondents Respondents in %

12 Through marketing research 10 38.5
Through direct contact with customer 13 50
Using suggestion box 3 11.5
Others - -
Total 26 100

Source-Survey using questionnaire

The question in table 3.8 was used to identify the methods that are used by Addis Ababa Tannery
in order to understand customers’ needs and wants. From the analysis of the above table half 13
(50%) of the total respondents responded that the organization identify customer needs and want
through direct contact with customer. On the other hand, the rest ten (38.5%), and three (11.5%)
of the total respondents said that the organization identifies customer needs and wants through
marketing research and using suggestions box respectively.

In sum, from table 3.8 the researcher conclude that the company use direct contact with customer
highly to understand its customer’s needs and wants

Table 4.9 the effort made by Addis Ababa Tannery in order to make its product customer
oriented.

No Response type No. of Respondents Respondents in %

13 Setting appropriate price 4 15.5
Increasing quality and quantity 22 84.5
Making easy to handle 0 0
Other - -
Total 26 100

Source- survey using questionnaire

This question is intended to know the effort made by Addis Ababa Tannery in order to make its
product customer-oriented. Based on the above table, 22 (84.5%) of the total respondents
responded that increasing quality and quantity. Four (15.5%) of the respondents responded that

24
the company makes products customer oriented by setting appropriate price. As we can see from
table 3.9 none of workers responded making easy to handle and the organization is not in the
way to use other means to make their product customer oriented.

In sum, from table 3.9 the researcher concludes that the main effort that is made by Addis Ababa
Tannery factory in order to make its product acceptable in the market is increasing quality and
quantity.

Question 14 is intended to assess the product supply of Addis Ababa Tannery to match with the
demand in the market. The result shows that 17 (65.4%) of the total respondents said that the
product supply of Addis Ababa Tannery is much with demand in the market. On the other hand,
nine (34.6%) of the total respondents said that the product supply is “No” because:

- The product capacity of the enterprise is low due to the factory machine and equipment is
out dated, they not produce tannery as expected.
- Absence of enough sales people, the organization can’t distribute the product in all
direction for the customer as needed.

In sum, from question14 the researcher concludes that company product supply is much with the
demand in the market.

Question 15 asked respondents to suggest the key factors that can affect production capacity of
the company. In addition to all the above assessed problems, the respondents are also given
insight to some problems that hinder the production capacity of the company like:

 Electric power interruption

 Delay in transportation of raw materials to production place from purchasing departments
that are found in different locations in the country.
 Workers unpunctuality and absenteeism
 Obsolete machinery and lack of spare parts for the machines in domestic market.
 Absence of quality chemicals needed
 Poor quality of raw materials
 Ineffective management system

25
  Lack of interdepartmental coordinator.

4.3. Analysis and interpretation of Responses from Customers of the

Company

Table 4.10 Reason why customers select Addis Ababa Tannery products

No Response Type No. of Respondents Respondents in %

1 Their lowest price - 0
Their highest quality 5 50
Their selling in every amount 3 30
All of the above 2 20
Others - -
Total 10 100

Source-Survey using questionnaire

The purpose of question in table 4.10 above is to know why customers are attracted to purchase
from Addis Ababa Tannery Share Company and in order to assess the company’s pricing and
quality of predicts which have effects on sales volume that in turn affects production capacity of
the company. Accordingly, none of the respondent said that they prefer to purchase from Addis
Ababa Tannery as a result of only lower price, five (50%) of the respondent said that they prefer
to purchase because of high quality products, three (30% ) of the respondent s responded that
they prefer because of selling in every amount ,While the remaining two (20%) of the
respondents responded that they prefer Addis Ababa Tannery because of the company’s lower
price, selling in different amounts, and high quality of products.

Based on these responses the researcher concludes that customers are attracted because they get
high quality product as they want.

Table 4.11 Purpose/use of company’s product

No Response type No. of Respondents Respondents in %

2 To use as a raw material 7 70
To resale for profit 3 30
To use as it is - 0
All of the above - 0

26
 Others - 0
Total 10 100

Source-Survey using questionnaire

Table 3.11 above indicates whether the company produces semi finished products or finished
product. As it is seen form table 3.11, seven (70%) of the respondents said that they buy the
products to use as a raw material and three (30%) of the respondents responded that they buy for
the purpose of reselling. As the researcher was orally informed from some customers, they resale
the product to shoe shiners and cultural material makers. And based on the table the researcher
can conclude that the company is producing semi-finished leather.

Table 4.12 Type of leather customer mostly purchase from the company

No Response type No. of Respondents Respondents in %

3 Cattle hide only - 0
Goat & Sheep skin only - 0
Goat hiding & cow upper - 0
Crocodile skin - 0
Cattle hide & sheep and goat skin 10 100
Total 10 100

Source-Survey using questionnaire

The figure presented in table 4.12 indicates type of leather customers mostly purchase and the
variation in product purchase. From the above figure in table 3.12, no respondent paid that the
customers use cattle hide only, only goat & sheep skin, goat hiding and cow upper and crocodile
skin.

All the respondents’ ten (100%) responded that customers mostly purchase cattle hide, sheep
skin and goat skin together or inter changeably from the company. Since the two local customers
company has their own purchasers form different tannery factory, the researcher inferred that
customers purchase different tannery product from the Addis Ababa Tannery Factory.

Table 4.13 Amount of production

No Item Response Type No. Of respondents Respondents in %

Yes 5 50

27
4 Enough No 3 30
Rarely we get as we ordered 2 20
amount of
Total 1o 10
production at
any quantity
Reason of not Delay in transportation - 0
In ability to use modern 1 10
obtaining the
means of production
product at
Limited capital - 0
5 desired Having in sufficient number - 0
quantity of qualified workers
All 2 20
Others - -
Total 3 30

Source-Survey using questionnaire

The purpose of item (4 and5) presented in table 3.13, is to assess or to know if the company
produces and supplies enough amounts of products. Accordingly, half of respondents five (50%)
responded that they get the required amount of product when they want, while three (30%) of the
respondents responded that they get rarely as they ordered. Out of these respondents, one (10%)
of them put reason as the company’s inability to use modern means of production and the
remaining, two reasons out that the company has the problem of delay in transportation, inability
to use modern means of production and limited capital.

Item 6 asked customers whether sales persons serve them properly or not. Accordingly, six
(60%) of the respondents responded that they are satisfied from the company’s sales force and
two (20%) of the respondents responded that they are not served well from company’s sales
force and the remaining two (20%) responded that the company’s sales force are serving them to
some extent, i.e. satisfactorily. To some extent well means in the researcher content satisfactory.

Serving customers well can increase sales volume and can also increase client customers for the
company because the dissatisfied customers can spoil the name of the organization and do not
buy again from the company and shift their consumption to other companies loosing customer to
competitors volume which again affects the production capacity.

28
Based on the information in the above table, the researcher concludes that most of the company’s
customers are happy with the sales person of the company.

Question 7 asked customers to what extent they use Addis Ababa Tannery products in
comparison with other tannery products. The responses indicate that six (60%) of the
respondents said that the extent of using Addis Ababa Tannery products, in comparison with
competitors product is high. On the other hand, the rest four (40%) of the respondents responded
that the extent of using Addis Ababa Tannery products, in comparison with other tannery
products is medium. No respondent indicated poor level as the extent of using Addis Ababa
Tannery product. The researcher infer that Addis Ababa Tannery have high acceptance level by
consumer in the market in comparison to competitors product.

Question 8 asked customers to what extent they need Addis Ababa Tannery products.
Accordingly eight (80%) of the total respondents responded that Addis Ababa Tannery products’
acceptance level in the market is high. On the other hand, two (20%) of the respondents indicated
that there is medium level of acceptance. No respondent said that the level of acceptance of
Addis Ababa Tannery products in the market is low. Therefore, the researcher concludes that
Addis Ababa Tannery products have high demand in the market.

4.4 Analysis and Interpretation of Interview with the Manager of Addis

Ababa Tannery Share Company

Question 1. Does your organization give training for employees? If so, how often does your
organization give the training per year and for how many days?

“Yes but it is not constant. We give employee training when the company purchases new
machinery. The duration of the training depends on the completing of using machinery and it
lasts until the workers become aware of how to use it.”

From the response of the manager we understand that the company gives training to employees
when the company purchases new machinery to familiarize the employees with the new
machinery. Training duration is extended until employees are able to operate the machineries.

Question 2. Does your organization have its own transportation vehicle?

29
“Yes, we have our own transportation vehicle that use to the transport raw materials from
different site to production place and that again distributes semi-finished/processed/ lather to
different markets. Again our organization has its own bus that takes workers between their home
and work place. But even if we have our own transportation vehicle we face a delay in
availability of raw materials, distribution of processed materials, and unpunctuality of workers
because of breakage of vehicle on the road.”

The response of the manager indicates that the company has its own transportation services for
raw materials, for finished goods and for workers. Though transportation vehicles are available,
the company faces problems in the transportation of raw materials, distribution of finished goods
and punctuality of workers because of damages on vehicles.

Question 3. Do you get a raw material at a required time and in a required amount? If not,
what do you suggest as a solution for a shortage?

“Yes we get, our company has its own purchasing department that has branches in different
directions of our country making Addis Ababa as a center. From the branches: Woliso, Ambo,
Adama, Fiche & Zeway are the major areas and when necessary the department further extends
agents and enter in to rural villages to collect hide and skin especially on holidays.”

In order to facilitate the provision of raw materials, the purchasing department of the company
has opened branches in some key areas and it also further enters to the remote areas of the
country during holidays.

Question 4. Is there any mechanism to reduce employee fluctuation/turnover/?

“This phenomenon is not as such problematic in our company. The employees that turn over or
that flow are counted by field of work but the turnover is limited in number. If the decisive and
very crucial worker like technical expert is going to flow out, our company encourages him/her
by increasing his/her salaries, giving promotion and if he or she refuse we let him go.”

The manager’s response indicates that the mechanisms that the company uses to reduce
employee fluctuation are increasing salary and giving promotion.

30
 CHAPTER FIVE
Summary, Conclusion and Recommendations
5.1. Summary

This study is basically intended to identify and explain factors influencing production capacity of
Addis Ababa Tannery Share Company, which is important for the success and operation of the
company.

The objective of this study is to find out factors affecting the production capacity of Addis Ababa
Tannery and to forward recommendations to the Company to improve current problematic
situation it faces with regard to production capacity. The study also assesses the strength and
weaknesses in the production process. The total number of sample used for the study was 36, out
of which 26 were employees and 10 customers. Questionnaire designed for employees and
customers and interview questions for the manager of Addis Ababa Tannery Share Company
were used to collect the data needed for the study.

The study is descriptive in design to explore factors affecting production capacity of Addis
Ababa Tannery Share Company. Variables such as motivation for industrious workers,
availability and type of raw materials, material handling skills, employee training, and use of
new and updated technology and major obstacles of production capacity are briefly examined.

Based on the findings of the study the factors that affect the production capacity of Ababa
Tannery Share Company are limited motivation made by the company to employees,
infrastructural problems like electric power interruption and lack of sufficient and quality
chemical needed.

31
The majority of the workers indicated that they haven’t received formal employee training which
is directly related to the production capacity of the company.

5.2. Conclusions

Based on the findings of this research, the researcher finally arrived at the following conclusions:

 The findings indicate that there is a motivational problem within the company which is
manifested in the responses of 19 (73.1%) employees. Absence of motivation in the
company hinders its production capacity. The existing motivational focus of the company
is on positional promotion, special prizes and financial rewards. Besides, respondents
confirmed that though the company’s effort to increase the motivation of workers is not
considerable, motivation still has high effect on the production capacity.
 Since the company has its own purchasers from different areas, the availability of raw
materials needed is found from local markets and this is not affecting its production
capacity.
 This study also reveals that the majority of employees, 21(80.8%), said that the company
has material handling problem mainly due to lack of care for materials lack of know how
to use machineries and old age of the machineries.
 The study indicates that 15 (57.7%) employees have not attended formal employee
training which has direct relationship with the production capacity.
 The study again revealed that the company used different promotional tools like
advertizing, sales promotion, sample selling and large purchase discount to attract
customers and thereby to increase its market share in the total market.
 Most , 23(88.5%) of the employees responded that increasing quality and quantity for the
product is the major effort being made by Addis Ababa Tannery Share Company to
make its product customer-oriented.
 The study also indicates that the company’s product has high level of acceptance in the
market compared to competitor’s products.
 Problem of infrastructure like electric power, provision of sufficient and quality
chemicals needed and delay in transportation of raw materials are also found to affect the
production capacity of the company.

32
5.3. Recommendations

Based on the conclusion drawn from the major findings, the following possible
recommendations are forwarded to the company to improve its performance and to tackle its
operational problems and challenges.

2. The company needs to motivate employees and industrious workers either using monetary or
non-monetary means such as job promotion, giving a chance for further education, special
prize and the like since motivated workers are likely to work wholeheartedly with honesty
and enthusiasm, handle materials carefully so that they contribute for the increase in
production capacity.
3. The company may give either on job or off job training to its employees to increase speed of
production, to use machineries properly, to familiarize employees with the latest technology
and the skills of using new machineries.
4. The company is advised to use the latest available technology in order to increase employee’s
sense of involvement in broader job, to explore the extraordinary flexibility of modern
technology, to develop skills and intelligence of workers on job, to have opportunities to
grow and advance and to be strong competitor in the market.
5. In order to ensure sustainable production, the company needs to have the practice of proper
material handling and adequate spare parts for broken machineries.
6. The purchasing department of the company needs to avoid storing of raw materials in
purchasing sites since leather quality decreases when it is stored for long time. This affects
the production capacity and product quality.
7. The company would increase advertizing, sales promotion, sample selling and the like to
have large market share as well as customers.
8. Finally, it is recommended that it is better if the company gives chance of further education
as a means of increasing skills and motivation of industrious workers.

33
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D. Irwin, Inc Company.

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private limited New Delhi.

Philip Kotler, Gray Armstrong; (1999), Principle of Marketing (8th Edition), Prentice Hall of Private

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Hall of Private Limited New Delhi.

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WWW.answer.com/topic/tanning.

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35