Polaris Case Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

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Increase in Labor Costs in Mexico by 20%

In three of the options, Mexico is also a better option as a location for Polari's new manufacturing plant. If the labor cost in Mexico increased by 20% then there is also a point that labor cost in China is also rising. Moreover, if other assumptions are constant then there is another option of saving costs like Capital expenses, equipment moving costs, and setup costs, transportation costs for a Mexican factory. Paying no tariffs and less delivery time can also contribute to deciding for a plant in Mexico.

Factors for Decision Making

Polaris management should consider that most of the demand for their product is from the southern US mainly Texas and California. From Latin Americato Asia, Polaris had begun to increase awareness of its brand. So there are chances of sales growth in China as compared to Mexico.
If the company opens its manufacturing factory in China or Mexico, production and saving cost also matter. China has low labor cost but many other high costs and Mexico has more low-cost options.
Another factor that Polaris management consider is the labor availability. Because of the decreased community colleges & school’s funding, technical labors are hard to find. Young graduates do not want to work in moving locations of Polaris in small towns. Contrarily, well-trained technical staff can easily be found in South America and Asia.

Recommendations

Polaris can go the operations in US as maximum cost-saving is possible. Choosing Mexico will also be a good decision to start a new plant. On the basis of factors, considering all costs, a good decision can be taken...............................

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