Preview

The Case of the Plant Relocation

Good Essays
Open Document
Open Document
840 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
The Case of the Plant Relocation
The Case of the Plant Relocation
By Karen Musalo Production costs are rising. Your company can make more money for shareholders by relocating your plants to a country with lower labour costs and fewer regulations. You are the chief executive of Electrocorp, an electronics company, which makes the onboard computer components for automobiles. In your production plants, complex hydrocarbon solvents are used to clean the chips and other parts that go into the computer components. Some of the solvents used are carcinogens and must be handled with extreme care. Until recently, all of your production plants were located in the United States. However, the cost of production has risen, causing profits to decline. A number of factors have increased production costs. First, the union representing the workers in your plant waged a successful strike resulting in increased salary and benefits. The pay and benefits package for beginning employees is around $15/hour. A second factor has been stringent safety regulations. These safety procedures, which apply inside the plant, have been expensive in both time and money. Finally, environmental regulations have made Electrocorp's operations more costly. Electrocorp is required to put its waste through an expensive process before depositing it at a special disposal facility. Shareholders have been complaining to you about the declining fortunes of the company. Many of Electrocorp's competitors have moved their operations to less-developed countries, where their operating costs are less than in the United States, and you have begun to consider whether to relocate a number of plants to offshore sites. Electrocorp is a major employer in each of the U.S. cities where it is located, and you know that a plant closure will cause economic dislocation in these communities. You know that the employees who will be laid off because of plant closures will have difficulty finding equivalent positions and that increased unemployment, with its

You May Also Find These Documents Helpful

  • Satisfactory Essays

    You own a company that employs about two hundred people in Maine to produce hockey sticks. Why might you decide to outsource your production to Indonesia? Would closing your plant and moving your operations overseas help or hurt the U.S. economy? Who would be hurt? Who would be helped? Now, armed with answers to these questions, ask yourself whether you would indeed move your facilities or continue making hockey sticks in Maine. Explain your decision. Support your claims with a scholarly source.…

    • 346 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    Northwest Case Study

    • 1457 Words
    • 6 Pages

    Northwest Canadian Forest Products Limited is a company that owns and operates five saw mills in British Columbia and Alberta, Canada. They produce lumber for construction in a few different countries. The President of the company is dealing with a tough situation with one of her mills in Jackson, British Columbia. The mill in Jackson is her least productive mill and she soon has to make a decision that could cost the company a substantial amount of money. She has the choice of either investing 50 million in the weak Jackson mill or to invest more that 50 million in a new mill high demand area. The president has been informed of the many complaints from the managers and supervisors, but nothing seems to be the right solution. The Jackson mill faces many problems with their safety regimen as well as the overall structure of the employees. The mill cannot operate productively internal employee disputes. The president stated that she will not invest 50 million in Jackson unless the new general manager makes some much needed improvement. The president soon needs to make the decision on whether to upgrade the Jackson Mill, or to start a new mill and lay off a large number of workers…

    • 1457 Words
    • 6 Pages
    Better Essays
  • Powerful Essays

    Eco 550 Assignment 2

    • 2003 Words
    • 9 Pages

    For this assignment I have created Greatneck Incorporated, a manufacturer based in northeast Ohio. Greatneck Inc. key competency is its manufacturing of space heaters which is mainly distributes through the big box retail stores such as Wal-Mart, Target, Home Depot, and Lowe’s. Greatneck’s 100 workers produce 6,000 space heaters each month at a price of $32. The plant’s work schedule is for 20 days each month and each worker earns $70 per day while the variable cost for Greatneck is $2000 per day.…

    • 2003 Words
    • 9 Pages
    Powerful Essays
  • Satisfactory Essays

    Peerless Starch

    • 606 Words
    • 3 Pages

    The first plant of the Peerless starch industry was started in Blair during the civil war times. It is one of the highest wages paying plants in the region sporting a five story building supported by two massive towers. The other plants in the region have all shut down and currently Peerless starch is the only active plant in the region and it employs 8000 of the 120000 residents of the Blair. Company has three more plants in Illinois, Oregon and Texas which are not as massive as the one in Blair but they have modern equipment and machinery and running in profit. The three other plants combined employ same number of employees as the Blair plant and now the plant at Blair is running in huge losses and because of which the company as a whole is suffering. Following reasons can be attributed towards the poor performance of the plant…

    • 606 Words
    • 3 Pages
    Satisfactory Essays
  • Better Essays

    Great Lakes Chemical Corporation is a company in the lead additive production market that is motioning towards a transformation of business away from the lead additive market place as the rest of the world around the company, and switch not only the types of products and services available in market place, but also it clientele “developing countries” to switch to using non hazardous environmental products, while a the same time saving the company’s reputation in that what Hitt and Hoskisson (2011, pg 159.) describe “Great Lakes placed a great deal of importance in the well-being of its shareholders and remaining a viable company, but it also wanted to be-and to be seen as-a respectable corporate citizen.” In order for such a transformation to be successful, GLCC needs to conduct detailed research and analysis on what are the internal and external factors such as competition, suppliers, buyers, economies, governments, etc., that are or will affect…

    • 2559 Words
    • 8 Pages
    Better Essays
  • Good Essays

    Alliston Instruments 2

    • 1441 Words
    • 4 Pages

    In 2011 two Asian firms entered the Canadian market in 2011. An Asian competitor made a major sales push by slashing prices in late 2011, cutting dramatically into Alliston’s sales in 2012. This move caused Alliston to lay-off 50 employees their largest layoff in company history. Alliston introduces new products to its line to counter the Asian firm but employees had no interest in working on the new products and preferred the old products to work on. Alliston in late 2012 in an effort to increase efficiency persuaded the union to accept an incentive program in exchange for job security. An individual performance pay plan was implemented with no detailed records to set standards. Standards were based on the estimates of supervisors based on a failed year; this shows that the compensation strategies and practices directly affected the company’s production quality. Supervisors can’t receive the incentive bonus and are making less money than their subordinates causing more pressure on them. Customers are complaining about product price and quality, Alliston’s sales revenue continues to fall. Due to high wastage of raw materials and supplies, labour costs are up and costs per unit are at an all-time high. The other concern is the quality of the products as defective units reach an all-time high.…

    • 1441 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Teamwork and Motivation

    • 265 Words
    • 2 Pages

    Imagine that you are the owner of a small manufacturing company. Your company manufactures a commodity, widgets. Your widget is a clone of a nationally known widget. Your company’s widget, WooWoo, is less expensive and more readily available than the nationally known brand. Presently, the sales are high; however, there are many defects, which increase your costs and delays delivery. Your company has fifty (50) employees in the following departments: sales, assembly, technology, and administration.…

    • 265 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    CASES SHOULD BE DONE BY TEAMS OF UP TO FOUR STUDENTS. EACH CASE WOULD BE PRESENTED AND DEFENDED IN CLASS BY TWO TEAMS. I EXPECT MANY OF YOU TO MAKE CLASS PRESENTATIONS BY UTILIZING POWERPOINT AND/OR OTHER MEANS. THE QUESTIONS BELOW WERE SUGGESETD BY THE AUTHORS AND ADDRESS MAIN THE ISSUES IN EACH CASE, BUT YOU MAY EDIT / CONSOLIDATE THEM IF YOU FIND IT NECESSARY / CONVENIENT IN WRITING UP YOUR CASE.…

    • 350 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    This article is a result of interviewing of dozens of people related to the company or experts sharing their personal view on the subject, including economists, manufacturing experts, technology analysts, academic researchers, competitors and corporate partners, government officials. The main aim of the article is to evaluate reasons and consequences of a decision of Apple Inc. to move the production of its products abroad. The decision was taken in and implemented in common in 2004 and was in line with exodus strategies of other hi-tech companies.…

    • 1353 Words
    • 6 Pages
    Good Essays
  • Good Essays

    Ford Motor Company

    • 1166 Words
    • 5 Pages

    Based on the case study (what would you do?) it listed four options for the Ford company, here are the three criterion the company should use to decide which of the four listed is best and the reasons why each criterion should work and be used. The first rule for testing these 4 options is the reason for being in business to make a profit, which is what the stock holders expect. The next judgment would be to examine the options and weigh the profitability of each or a combination of them. The next standard would be longevity or measuring what options would sustain the Ford Motor company for years to come. Let’s look at option 1 that suggests closing older plants to realign production and sales. The criterion is you don’t want to produce more product than you can sell in this case it is cars. Ford Motor Company has been losing money for years particularly in its North American operations. According to Mandy Bennett’s Ford Motor company 2004 annual report “The Ford Motor Company has had many (Bennett, 2004) disappointments in the past several years”. These criteria should be examined and applied just as Mr. A Mulally (CEO of Ford Motor company) negotiated with labor unions to successfully slash more than 30,000 jobs, and close factories. Ford spent $700 million on severance packages and paid layoff expenditures for union workers. This in turn gave Ford a cash cushion to float on for the time being while working out long term profitable plans. (S Holmes, 2006)…

    • 1166 Words
    • 5 Pages
    Good Essays
  • Better Essays

    Imagine that you are the owner of a small manufacturing company. Your company manufactures a commodity, widgets. Your widget is a clone of a nationally known widget. Your company’s widget, WooWoo, is less expensive and more readily available than the nationally known brand. Presently, the sales are high; however, there are many defects, which increase your costs and delays delivery. Your company has fifty (50) employees in the following departments: sales, assembly, technology, and administration.…

    • 2003 Words
    • 9 Pages
    Better Essays
  • Good Essays

    7. If for competitive reasons, Washburn eventually has to move all its production to China, (a) which specific costs might be lowered and (b) what additional costs might it expect to incur? To answer this question, visit the following website:…

    • 961 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    teamwork and motivation

    • 1326 Words
    • 6 Pages

    Imagine that you are the owner of a small manufacturing company. Your company manufactures a commodity, widgets. Your widget is a clone of a nationally known widget. Your company’s widget, WooWoo, is less expensive and more readily available than the nationally known brand. Presently, the sales are high; however, there are many defects, which increase your costs and delays delivery. Your company has fifty (50) employees in the following departments: sales, assembly, technology, and administration.…

    • 1326 Words
    • 6 Pages
    Powerful Essays
  • Satisfactory Essays

    Managerial Economics

    • 484 Words
    • 2 Pages

    Week 1 Chapter 1: The Fundamentals of Managerial EconomicsFor this week read Chapter 1 and the Headline: Amcott Loses $3.5 Million: Manager Fired.Answer the following questions:Question 1. Page 27Levi Strauss & Co. paid $46,532 for a 110-year-old pair of Levi’s jeans-the oldest known pair of blue jeans-by outbidding several other bidders in an eBay Internet auction. Does this situation best represent: a) Producer-producer rivalry? b) Consumer-consumer rivalry? c) Producer-consumer rivalry?This scenario can best be represented by Consumer-consumer rivalry in such; Levi Strauss & Co was willing to pay the highest price for the scarce good which was the antique blue jean by outbidding other consumer.Top of Form d) Bottom of FormQuestion 2. Page 27What is the maximum amount you would pay for an asset that generates an income of $150,000 at the end of five years of the opportunity cost of using funds is 9 percent?PV=150,000 + 150,000 + 150,000 + 150,000 + 150,000 1 + 0.09 (1 + 0.09)2 (1 + 0.09)3 (1 + 0.09)4 (1 + 0.09)5= $583,447.69 e) What are her accounting profits? Show your work f) What are her economic profits? Show your work!Question 21. Page 32 Brazil points to its shrimp-farming industry as an example of how it can export shrimp in the world market. One decade ago, Brazil exported a meager 400 tons of shrimp. Today, Brazil exports more than 58,000 tons of shrimp, with approximately one-third of that going to the United States. Brazilian shrimp farmers however, potentially face a new challenge in the upcoming years. The Southern Shrimp Alliance- a U.S. organization representing shrimps-producing countries is selling shrimp below “fair market value.” The organization is calling for the United…

    • 484 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Foundation Schools

    • 4532 Words
    • 15 Pages

    Global Communications has fallen on hard times due to increased competition. Global Communications stock price has now dropped more than 50 percent and is now trading at $11 per share (Scenario). The company has very little international presence and has been less than successful on what attempts it has made to enter those markets. In an attempt to increase profitability, the company has separated from the union and created possible issues with other stakeholders. There are other issues that include communication breakdowns, pending layoffs and poor management planning. The union is not happy with the decision that Global Communications has agreed to and has spoken out against the…

    • 4532 Words
    • 15 Pages
    Powerful Essays