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Group No 8, Section C
Submitted to: $$$$
Date of Submission: 25/11/2014
Submitted by:
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Executive Summary
Case let1:
Case let 2:
Holger Company which started out its production by manufacturing small
machine tools later shifted to large machines and automobile parts. The
company suffered a mishap during the Second World War when its
manufacturing facilities were bombed. But it recovered and achieved
impressive growth until the 1980s. By the late 1980s competition was
high and Holger Co was struggling to control its manufacturing costs. It
now wanted to shift its production base from Germany. The company
identified 2 locations based upon different factors. One was at New Castle
in England and the other at Incheon in South Korea. By the late 1980s
Germany had become the hub of machine and automobile manufacturers.
The heightened competition forced Holger to control its manufacturing
cost to stay competitive in the market. As the demand for its raw
materials has gone up, the prices also would have shot up in Germany
which has probably forced Holger Co to shift it manufacturing facility.
Short term problems facing the management are
The
The
The
The
The
Cons
Cons
Criteria
Productivity
Construction Cost
Labour Cost
Proximity to
Customers
Proximity to
Suppliers
Weighted Score
Weighing
Factor
3
2
3
China
70
55
90
Englan
d
85
35
55
India
65
60
75
Mexic
o
70
60
80
France
80
25
45
1.5
50
90
60
50
100
0.5
50
30
55
45
60
640
657.
5
667.5
605
10
690
Based on the given facts, China is the most preferred location for the new
manufacturing facility for the textile facility. Mexico comes second in
terms of the most favoured location for the facility.
Justification:
China has been textile hub for long mainly because of its cheaper labour
cost and its productivity. Because most other textile majors have also set
up their facilities in China, the resources like information and talent are
high in China compared to other nations. Companies always like to locate
near their competitors leading to Clustering. This clustering will
eventually lead to information spill overs, which is beneficial for the
industry.
Labour
Cost
45
50
55
60
65
70
75
80
85
90
95
100
Weighted
Score
605
620
635
650
665
680
695
710
725
740
755
770
2. Illustrate
the
weighted score for
the
numerical
cost by a graph
values
of
the
100 in increments
weighted score of
constant.
What
numerical values
that
it
breaks
weighted score is same as other sites?
sensitivity
of
the
France according to
value of the labour
for
the
numerical
labour cost from 45 to
of 5. Assume the
other sites remain
would have to be the
for France in order
even,
that
is
its
The factor rating for France as Labour Cost changes from 45 to 100 has
been represented in the table given at the side.
The scatter plot formed from the table, has been given below.
Weighted Score
900
800
700
f(x) = 3x + 470
600
500
400
300
200
100
0
40
50
60
70
80
90
100
110
China
73.33
India
62.50
Mexic
o
65.83
So at these values of labour costs will equalise France with other sites.