SomPack which is a Turkish manufacturer, had to make a hard decision about its substantial corporate strategy, because in the mid-1990s SomPack realized that China was a threat. China had been making inroads into U.S. Market. The main issue was the labor cost differentials, so SomPack tried to set some ways to reduce labor costs and increase the capacity. The company took a step to product assembly that is the lipstick mechanism and the mechanism was high volume component that has multistep process. They had a machine custom-designed, but the machine was so sensitive to operate and defects occurred. Then, they decided to redesign the parts of assembly to decrease material cost, but it also did not work well. If they would have the workers assemble the parts manually, it would have more cheaply than the machine. SomPack customers used to order large demand and the company was on the top, but the Chinese suppliers started to get those demands. Based on all past experience, company decided to go for low-cost Chinese moulding machines. For SomPack industry, they still found cost differentials of more than fifty percent relative to Turkey. Thus, they were trading a good line to decrease their costs based on cheaper equipment and selective outsourcing, while not decreasing the quality and service of the final product they ensure their customers to any reasonable extent.
Since the mid-1990, SomPack, a Turkish manufacturer of cosmetics packaging products, had been having rough days because of the Chinese suppliers who produce lower-cost and lower-quality goods, as a competitor. SomPack started the job by making injection moulds for plastics products. The company entered the business with mould making for electronics, home products and automotive industries. In 1980`s SomPack started to packaging cosmetics stuffs.
SomPack was famous with their production quality and good customer relations. It was a family-owned group. To make a decision...