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Plant Location Puzzle sample essay

d) What are the pros and cons of not manufacturing abroad and staying back local?

EDC’s success is credited to their corporate flexibility and service. They have been able to adapt quickly to changing demand and optimize the time of product introductions. Located within a high demand market segment has also facilitated the winning criteria of service and flexibility.

PROS

* Having the plant in Boulder, a bicycling Mecca, has helped to keep EDC on top of trends and demand changes in the US market. * Keeping its plant on the same campus as its corporate office in Boulder,Colorado as along with keeping all the parts of the company in the same location would contribute greatly to inter-departmental cooperation and ultimately growth like has been seen from the past records * Complete control over the flexible manufacturing operation that would enable it to meet rapid changes in the local market * Their engineers seem to be ahead of the curve in designing new features that the consumers desire. This design knowledge is also the result of the cross functional cooperation which can be attributed to the geographical proximity of the entire staff.

* Communication would be easy and changes in styles and production plans could be made easily.Ex. when orders for cross- bikes which had enjoyed a spurt of popularity began to fall off, Eldora had been able to adjust its production runs with minimal disruptions * If the design function remains in the United States. This will ensure technological advances. EDC should also exploit their joint venture in Italy to gain a larger market share in Europe. Targeting the Far East market requires the design of “simple” bicycles, which can be accomplished in the U. S. * Had built trust and reputation in the United States. Had a pool of employees at all levels with genuine love for bicycles and eagerly pursued knowledge about the industries latest trends and styles. There would never be a shortage of people who would willingly come forth to test prototypes

Cons

* Stagnant market of the U.S-The industry of Bicycles seemed to be reaching a saturation point in the United States * Cost of labor and distribution-Growing Asian markets enjoyed a significant labour and distribution cost advantage. The company produced 30% of the bicycles in the United States but the mass market was growing only at 2% * With the promotion of U. S. business in China, cultural barriers are reduced. The growing Chinese infrastructure will promote low cost automated manufacturing with low labor cost. * EDC’s primary markets represent less that a quarter of the world wide demand-The demand in the markets for the product categories produced by EDC are doubling annually in Asia and the growth rate seems sustainable

* Far away from the Asian markets- They would not be able to sufficiently operate from a location so far away from the emerging markets and tap the potential of the growing economies. They would also not be able to cater to the needs and demands of those consumers sufficiently * Competitive disadvantage-With the two major competitors of EDC one from China and one from Taiwan, catering to the demand of the Asian markets currently they will be at a disadvantage if they stay back local

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