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Mia Therese U. Arias Angelica Ballesteros Angelica Bernardo Maria Lou Atioan Carmelo Alvendia 4-AOM CASE ANALYSIS: LOGITECH
I.
Title of the Case “Logitech”
II.
Time Context Monday, January 7, 2014
III.
Viewpoint Logitech’s Top Management
IV.
Statement of the Problem How can Logitech expand their production / operations while minimizing their cost?
V.
Objectives
To find a strategic plan on where they will locate their manufacturing plant to maximize their profit and minimizing their costs.
To be able produce a higher quantity of goods to capture a larger market.
To be able to create a better designed product that will compete with other computer peripheral producing companies.
VI.
Areas of Consideration Strengths
Largest producer of
Dependence on
Opportunities
Innovate
Threats
Intense
computer mice.
the suppliers of
products and
competition
Known as the
the raw
services.
can lower
epitome of modern
materials.
Opportunities
Logitech’s
global corporation.
for Logitech to
profits.
Technological
expand and
innovator in personal
increase
number of
computer
market share.
potential
Opportunities
customers
First company to
of producing
because of
introduce a mice that
new products
bad economy.
used infrared
and services.
peripherals.
Weaknesses
Decreasing
Political Risk
tracking.
of
First to introduce
governments
wireless mice and
can quickly
keyboards.
change
Continuous
business rules
innovation.
that
High brand
negatively
recognition.
affect
Has low production
Logitech’s
cost.
business.
Has an effective R&D facility.
Ergonomics design of products is being considered.
China has qualified people at the manufacturing plant.
Logitech engages in location economies by choosing the best locations for each of its operational actives.
VII.
Alternative Course of Action (ACA) ACA 1 Construct a new manufacturing plant in Mexico A. Advantages
Easy and fast transport of finished goods (computer peripherals) in the United States.
Shipping cost is low and fast.
Cheap labor cost.
Skilled workers
Political risk associated with the country is minimal.
B. Disadvantages
Higher labor cost than in other Asian countries.
Mexico has employment laws that impose strong penalties on companies for laying off employees.
Real estate cost are rising.
ACA 2 Construct a new manufacturing plant in Vietnam A. Advantages
Cheap labor cost than in China.
Skilled workers.
Cheap transportation cost.
B. Disadvantages
Low labor Productivity.
Struggles in supporting and accommodating large-scale investment projects.
Low logistics infrastructure (airports, major ports, railroads and railways).
ACA 3 Expand the manufacturing plant in China A. Advantages
The company will have a lower cost of production due to low labor cost in China.
Demand of products will be met easily because of the expansion.
Higher production volume.
B. Disadvantages
Transportation cost is high.
Electricity rates are rising.
Increase of corporate income tax rate.
VIII. Recommendation/Conclusion Categories
ACA1
ACA 2 Construct a
ACA3 Expand the
Construct a new
new manufacturing
manufacturing plant in
manufacturing
plant in Vietnam
China
plant in Mexico Cheap labor cost
4
5
5
Strategic
5
4
4
Skilled workers
4
3
5
Lenient
3
5
4
5
4
4
21
21
22
Location
government barriers Transportation cost Total:
Legends: 5 being the highest – 1 being the lowest
The chosen Alternative course of action is ACA3 Expand the manufacturing plant in China. ACA 3 got the highest total rate which is 22. The result is based upon the proponents rating on the criteria in the decision matrix. Though expansion is costly, the return on investment of the new facilities will increase the revenue. The expansion does not only focus on the production capacity, but will also expand product line which is gaming products. IX.
Plan of Action Person-in-Charge Top management
Period 1 to 2 Years
Activity Expand the manufacturing plant in China.
R & D,
6 months to 1 year
Production/Operations.
Expansion through innovating gaming products (such as mouse for gamming, joysticks, keyboards).
Propose the ACA to the top management.
Once approved, the project will be implemented.
Intensive research and formulation of innovative new gaming products from the R & D department.
Innovate the features of existing gaming products.
Production of the new and innovated gaming products.
