So what are we to do again? In manufacturing, there is almost always greater supply than demand, requiring that a given plant focus on becoming the low-cost producer of its products. Granted, there are also other market differentiators, such as product quality, delivery performance, customer service, technology, etc., but a key business indicator is the ability to produce quality product at the lowest achievable cost for a given targeted market segment. This helps assure greater return on assets for further investment in R&D, marketing and distribution channels, etc., to further improve a company's business success. Consider Figure 1-2, which represents three companies competing in a market where the market price is variable depending upon the state of the marketplace, the economy of a given region, etc. Each manufacturer makes its product(s) for a given unit cost of production that includes fixed costs, variable costs, capital costs, etc. For the purpose of this discussion, we've assumed that these are products of comparable quality for a given specification in the marketplace.

Figure 1-2: Market survivor profile.

Company C is the high-cost producer. One year it may make money, the next year it may lose money, but all in all, it may not survive very long, because it is not generating enough working capital to sustain and grow the business. Given this scenario, it is bound to change, one way or another. It is typically fighting for its very survival, and therefore, it must embark on a course...