Labor and capital are costly requirements for a firm like Chrysler Corporation. To expand its product portfolio, the automobile company demands an additional capital. Besides, any slight change in technology in manufacturing its vehicles requires surplus investment. On the same note, hiring both professional and semi-skilled staff who can turn around the production process is still a key overhead for the company. To remain profitable, producing in bulk is necessary (Rubin & Dnes, 2010).
Extending working hours may lead to profit maximization. First, the company will be in a position to enjoy economies of scale. Second, the available human resource pool will be utilized optimally probably without a significant rise in salaries, wages, and other allowances. In the end, the company will have managed to lower its net cost of wages and salaries.
Upward movement in the cost of wages and salaries at Chrysler Corporation has been a major threat to profitability. Cutting down both capital and labor expenditures are the two main measures of sustaining gainful marginal revenue for the firm. However, Chrysler Corporation could not have instituted this production change for its most popular (and profitable) brands owing to some risks that such a plan might pose. To begin with, extending working hours and producing in mass within a very short time may interfere with quality (Samuelson & Marks, 2012). The profitable and popular brands of the company already enjoy a substantial share of the
Customers are also loyal to the brands and any decline in quality may jeopardize the market reputation of the company. Second, bulk production of popular brands might lead to overstocking since most of them are luxury cars with low sales volume (owing to cost) despite high profitability.