Runaway is a manufacturer of athletic shoes, bags, and sportswear in Europe. It has been maintaining an image of performance indeed, moreover, it is widely regarded as socially responsible. You are the Operations Manager for this organization. Recently you found the costs are increasing. Traditionally, the products have been manufactured in Asian countries such as India, China, Indonesia, South Korea. Though the ease of doing business in those countries has improved, the wage rates have been rising. For example, athletic shoes can be produced in China that were produced in Indonesia. The labour-cost differential between your current suppliers and a contractor who will get the shoes manufactured in China is $1 per pair. Projected next year sales is 10 million pairs. There is no doubt that the Chinese government engages in restriction, remains authoritarian, and is a long way from democracy. What would you do now? Scenario 1: Produce in China. However, you would face potential damage to your commitment to social responsibility. You have little or no control over working conditions, sexual harassment, and pollution. Scenario 2: Do not produce in China. Which country would you select? What would be your factors for selecting a favorable contractor?
Breakeven Analysis
Break Even Analysis is a term used in business, cost accounting and economics. It refers to a point where the total cost incurred becomes equal to the total revenue earned. Break Even Analysis determines the number of units to be sold to earn the revenue required to cover the total costs. Total cost is a sum total of fixed and variable costs.
Process analysis
The term process analysis can be defined as breakdown of production process into different phases that converts inputs into output. A series of routine activities are incorporated using organizational resources with a view to achieve operational excellence.
Runaway is a manufacturer of athletic shoes, bags, and sportswear in Europe. It has been maintaining an image of performance indeed, moreover, it is widely regarded as socially responsible. You are the Operations Manager for this organization. Recently you found the costs are increasing. Traditionally, the products have been manufactured in Asian countries such as India, China, Indonesia, South Korea. Though the ease of doing business in those countries has improved, the wage rates have been rising. For example, athletic shoes can be produced in China that were produced in Indonesia. The labour-cost differential between your current suppliers and a contractor who will get the shoes manufactured in China is $1 per pair. Projected next year sales is 10 million pairs. There is no doubt that the Chinese government engages in restriction, remains authoritarian, and is a long way from democracy. What would you do now?
Scenario 1: Produce in China. However, you would face potential damage to your commitment to social responsibility. You have little or no control over working conditions, sexual harassment, and pollution.
Scenario 2: Do not produce in China. Which country would you select? What would be your factors for selecting a favorable contractor?
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