Compiled by Tello Email: Mobile;+27717513144
DISCLAIMER
The assignment pack is centred on AOM4801 notes. It is a product of internal and external
research that includes the study guide, prescribed text books and other authentic external
sources. It is therefore, advised for students not to share it as it is for the benefit of up-to
date paying students for financial intelligence group. For clarity, students are free to call
on the provided number and/ email.
+27717513144 Page 1
, Compiled by Tello Email: Mobile;+27717513144
AOM4801 ASSIGNMENT PACK 3.
3.1.1 Describe the different types of capacity expansion strategies and recommend a
suitable strategy for Eskom to follow in light of their capacity related problem. Justify
your chosen strategy by means of an analysis of that strategies risks and benefits. (8)
Interpretation.
Firstly, the student needs to give a definition of the word capacity expansion.
This can be done through breaking these words in to 2 by firstly defining capacity
with a quoted reference from the prescribed book or any external research sources.
Capacity expansion can be defined as a static change (increase) in markets
and product lines such that the increased demand can be matched by the
number of units being produced, (Collier & Evans, 2017).
The above definition looked into what expansion of capacity mean in general.
Thus students may further explain through differentiating short term and long term
capacity expansion.
In other words, strategies differ according to objectives and internal capabilities that
organisations can manage.
In line with the given above case of Eskom facing challenges of increased demand,
the organisation needs 2 strategies namely:
i) Small capacity increase that match demand.
• This is important in the short-run as demand fluctuates especially from
peak and off-peak periods.
• Thus, Eskom needs to have small incremental progress in its
production capacity to match fluctuating demand.
ii) One large capacity increase.
+27717513144 Page 2
DISCLAIMER
The assignment pack is centred on AOM4801 notes. It is a product of internal and external
research that includes the study guide, prescribed text books and other authentic external
sources. It is therefore, advised for students not to share it as it is for the benefit of up-to
date paying students for financial intelligence group. For clarity, students are free to call
on the provided number and/ email.
+27717513144 Page 1
, Compiled by Tello Email: Mobile;+27717513144
AOM4801 ASSIGNMENT PACK 3.
3.1.1 Describe the different types of capacity expansion strategies and recommend a
suitable strategy for Eskom to follow in light of their capacity related problem. Justify
your chosen strategy by means of an analysis of that strategies risks and benefits. (8)
Interpretation.
Firstly, the student needs to give a definition of the word capacity expansion.
This can be done through breaking these words in to 2 by firstly defining capacity
with a quoted reference from the prescribed book or any external research sources.
Capacity expansion can be defined as a static change (increase) in markets
and product lines such that the increased demand can be matched by the
number of units being produced, (Collier & Evans, 2017).
The above definition looked into what expansion of capacity mean in general.
Thus students may further explain through differentiating short term and long term
capacity expansion.
In other words, strategies differ according to objectives and internal capabilities that
organisations can manage.
In line with the given above case of Eskom facing challenges of increased demand,
the organisation needs 2 strategies namely:
i) Small capacity increase that match demand.
• This is important in the short-run as demand fluctuates especially from
peak and off-peak periods.
• Thus, Eskom needs to have small incremental progress in its
production capacity to match fluctuating demand.
ii) One large capacity increase.
+27717513144 Page 2
