Effects of Joint Production on Production Costs: Brick Factory Sample

Abstract

Akio Morita, president of Sony emphasized the necessity of joint production with his remarks "No company is an island. In a world where companies are in need of each other should consider ways to work with other firms, if they want to compete in the global market." In the national and international markets, companies that are party to the competition have joint ventures under different names in order to enter different markets, gain cost advantage, share risk and create synergy. One of common types of joint ventures is joint production. Joint production is the production of one or few production processes in an establishment set up in joint with the competitors in the sector in order to reduce production costs. Since competitors carry out one or a few production processes jointly, joint production provides more reduction in production costs in comparison to individualized production costs, and this cost-reducing advantage should have a positive effect on any establishments. Our paper is aimed at examining the feasibility of joint production in brick factories to cut down on production costs and its effect on production costs of Erbaa brick factories in particular. Production processes in brick factories take place in four stages: raw material preparation, pressing, drying and baking. Results of the interviews with factory managers and technical staff, it was found that they could use the advantage of joint production in the raw material preparation stage. For the research, the production costs of the brick factory with 300 tones of tillage capacity per day and the raw material preparation plant with the tillage capacity of 3200 tons per day which can be used by 15 brick factories at different capacity levels were examined. As a result of the research, it is determined that production cost is 6.95 TRY/ ton in case of raw material preparation in individualized factory and production cost is 4.51 TRY / ton in case of joint production.