Recommendations for a cost system - APEX Company John Maxwell has just gone public and expanded his container business. Document Preview: APEX Company John Maxwell has just gone public and expanded...

APEX Company

John Maxwell has just gone public and expanded his container business. As a
creative and skilled engineer, John develops technologically advanced machinery and
moulds, which provide APEX with a competitive advantage. Above average profits
come from the technological advantages, but only temporarily as competitor
imitation takes between six months and one year.
John has two tactics for addressing this technology copying. First, he plans and
works towards continuously introducing technological improvements in processes and
products. For example, there is an ongoing goal for production costs to decrease 8
percent a year. Second, APEX stresses new products. For example, there is a
policy that 25 percent of the sales each year must come from products introduced
in the past five years.
APEX is in the plastic products industry, specifically in the rigid packaging
sector. Its products include pop bottles, cosmetic jars, beverage cases, dairy cups and
tubs, food trays, pails, and oil containers. In the industry, there are constant
modifications and improvements in machinery and processes. Technology is
becoming an increasingly important competitive factor in productivity as are product
quality and performance. The industry is being pressed to increase the use of
higher-performance polymer materials, instrumentation, controls and automated
materials-handling techniques in its processing operations. While these technologies
continue to be generally available, they are more demanding in their imple-
mentation, and operation and maintenance, reflecting a greater need for higher
levels of labour and management skills. Such skills are generally scarce. This is not
so with APEX.
APEX is one of the few Canadian organizations that have developed extensive
research and development capabilities. The Canadian market was not large enough.
However, the free-trade agreement with United States, and the reduction in the
tariff barrier that protected Canadian rigid packaging organizations, has forced
APEX to compete in a larger market.
In this larger market, competition is aggressive and persistent. In addition, waste
disposal difficulties with plastics have placed pressure on the industry for solutions.
APEX and its competitors have reduced the amount of plastics used in given
applications and developed means for economically recycling plastic materials.
Additionally, the trade association, the Society of the Plastic...