I’m working on a management writing question and need an explanation and answer to help me learn.

Read the case and answer the question at the end in no more than a page.

Panettone has become a national symbol of the Italian Christmas. The light and fluffy, dome-shaped, confection is dotted with sultanas and candied citrus peel, and is the Italian Christmas cake. Traditionally made in Milan, about 40 million of them are consumed throughout Italy over the holiday period. Now, they are becoming popular around the world. Over a million are exported to the USA, while an endorsement from Delia Smith, a celebrity chef, caused a surge in demand in the UK with a well-publicized recipe for trifle made with panettone. This boost to production is good news for the big Italian manufacturers, but although volumes are higher, the product is still seasonal, which poses a problem for even the experienced Milanese confectioners. Smaller, ‘artisan’ producers simply squeeze a few batches of panettone into their normal baking schedules as Christmas approaches. But for the large industrial producers which need to make millions for the Christmas season it is not possible.

And no panettone manufacturer is larger than the Bauli Group. It is one of the foremost manufacturers of confectionery in Europe. Founded over 70 years ago, and in spite of its mass production approach, it has a reputation for quality and technological improvement. The company’s output of panettone accounts for 38 per cent of Italian sales. The key to its success, according to the company, is in having ‘combined the skill of homemade recipes with high technology [and] quality guaranteed by high standards that are unattainable in craftsman production, but that can only be reached by selecting top quality raw materials, by thousands of tests and checks on the entire production line and the production process’. In fact, the company says that its size is an advantage. ‘High investment in research and technology allow us to manage natural fermentation and guarantee a uniform quality that artisanal bakeries find hard to achieve.’

In fact, although Bauli has diversified into year-round products like croissants and biscuits, it has acquired a leadership role in the production of products for festive occasions. Seasonal cakes account for over 50 per cent of its turnover of around €420 million. And so successful has it been in its chosen markets that in 2009 it bought Motta and Alemagna, the two big Milanese brands that pioneered the manufacture of panettone.

So how does Bauli cope with such seasonality? Partly it is by hiring large numbers of temporary seasonal workers to staff its dedicated production lines. At peak times there can be 1,200 seasonal workers in the factory, more than its permanent staff of around 800. It also starts to build up inventories before demand begins to increase for the Christmas peak. Production of panettone lasts about four months, starting in September. ‘Attention to ingredients and the use of new technologies in production give a shelf-life of five months without preservatives’, says Michele Bauli, Deputy Chairman, who comes from the firm’s founding family. Temporary workers are also hired to bake other seasonal cakes such as the colomba, a dove-shaped Easter treat, which keeps them occupied for a month and a half in the spring.

Which methods is Bauli using to reconcile capacity and demand? Explain. Give examples of other companies and the methods they use to reconcile capacity and demand (give an example for each method).