To do this means that we must find a location that has low labor costs and in close proximity to China. As a result there are several different countries that we have identified which o could meet the needs of the firm and reduce labor costs. The most notable include: India and China. In each of these countries their total labor costs are fraction in comparison with UK. The below tables are illustrating the labor costs for these regions of the world.
Table 3: Labor Cost for India from 2003 to 2007(in U.S. dollars)
Year
Labor Costs
2003
$.81
2004
$.85
2005
$.91
2006
$.95
2007
$1.17
("India's Organized Manufacturing Sector," 2011)
Table 4: Labor Costs for China from 2003 to 2007(in U.S. dollars)
Year
Labor Costs
2003
$.62
2004
$.66
2005
$.73
2006
$.81
2007
$1.06
("Manufacturing in China," 2011)
These different figures are important, because they are showing how the labor costs in China are fairly low in comparison with other areas. The below table is corroborating this fact by highlighting the total costs of labor and other components that are included in these number for the UK over the last two years.
Table 5: UK Labor Costs from 2008 to 2009 (in U.S. dollars)
Indicator
2008
2009
Total Hourly Compensation Costs
$35.75
$30.78
Hourly Pay for Time Worked
$24.55
$21.14
Direct Benefits
$3.69
$3.18
Social Insurance and Labor Taxes
$7.51
$6.46
("United Kingdom," 2011)
These figures are important, because they are showing the costs of labor are higher in comparison with other regions of the world. As a result, this means that Pepe will pay higher costs for running the plant vs. building it in a location that is close to Hong Kong. Therefore, the company should consider the other alternatives of opening the plant in one the locations mentioned above (India or mainland China).
If this kind of approach can be utilized, it will help the company to adapt to a variety of challenges that they are facing. Once this takes place, it means that they will be able to meet the needs of customers and have greater amounts of flexibility in their supply chain. This is the point that the firm can be able to quickly adapt to a host of changes in the marketplace or shifts...
Over the long-term, this strategy will help Pepe to remain a viable competitor. That is able to control their expenditures, when manufacturing the final product.
Look up the companies on the Internet. Are they real?
Both companies are real organizations that have been wrestling with the various challenges identified in the each case study.
What kind of analysis tools can you use from your text to help you support your conclusions with the case?
The kinds of analysis tools that can be used to support our conclusions are through what is known as quantitative research. This is when you are taking specific numbers that were collected and you are applying them to the situation. What makes them so unique for each case study is we are able to take these specific figures and conduct our own projections about the possible financial implications on each firm. Once this occurs, is when we can offer specific insights that will help to determine if a particular strategy is economically viable. This is the point that executives can objectively decide how this will impact their organizations over the short- and long-term. (Hopkins, 2000)
How does the foreign-based firm operate differently than the U.S. based counterparts?
The way a foreign-based firm operates differently from an American one, is based upon how they are able to repatriate a certain percentage of jobs back to the home country. While at the same time, they are focused on government taxes, programs and incentives that could have an impact on their overall bottom line. American-based firms are not as concerned about these objectives. Instead, they are concentrating how they could be able to increase their profit margins. The way that this is achieved is through utilizing techniques that will help to improve the total return to shareholders and reduce costs. This is point that a firm will be able to adjust to changes inside the marketplace.
Bibliography
Carrying Cost of Inventory. (2011). Investopedia. Retrieved from: http://www.investopedia.com/terms/c/carryingcostofinventory.asp
India's Organized Manufacturing Sector. (2011). BLS. Retrieved from: http://www.bls.gov/fls/india.htm
Manufacturing in China. (2011). BLS. Retrieved from: http://www.bls.gov/fls/china.htm
Shouldice Hospital. (n.d.)
United Kingdom. (2011), BLS. Retrieved from: http://www.bls.gov/fls/country/united_kingdom.htm
Beirny, J. (2009). Inventory Turnover. Retrieved from: http://www.vitalentusa.com/learn/turnover.php
Hopkins, W. (2000). Quantitative Research. Sport SCI. Retrieved from: http://www.sportsci.org/jour/0001/wghdesign.html
