16 Do you think that investing in new technology is the best way to improve profitability at PJK? Justify your answer.[6

[BASEL Moderator]

PJK makes a range of luxury sports watches. Each watch is handmade by skilled workers. Quality assurance is important. The Operations Director has been looking at costs and prices as he wants to do a break-even analysis. He is planning to invest in new technology to automate parts of the production process. The Operations Director thinks this is the best way to improve profitability.
16 Do you think that investing in new technology is the best way to improve profitability at PJK? Justify your
answer.[6]
Possible KN Points:
• Reduce labour costs
• Less wastages or errors
• Additional costs e.g. redundancy or training costs
• Impact on employee morale
• Better quality / accuracy
• High initial costs of equipment
• Speed up production
• Might take away their USP
• Or Introduce more efficient working practices e.g. redesign factory layout
• Or use cheaper materials
• Or sell more through increased advertising