Electrosteel Castings Limited Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Electrosteel Castings Limited Case Study Help

Expansion into Europe

The European market was stable and possess strong growth. Currently, the company established a little market and earned an experience of local taste and preference.

Advantages

It has been estimated that the production for the coming year would be 30,000 DIP tons. The selling price would be the market selling price, which is $600 per ton. Furthermore, the project cost would be approximately $400,000 for the sales office construction. Moreover, the material cost would remain same with the assumption that the other manufacturing expense would be 10% of the annual sales. The labor cost would be ten times high as compared to cost in Vietnam. The analysis represents that the project is viable because of its positive NPV of $30,049,619.

Another option is to build a new manufacturing plant, which would cost approximately $2,373,000 with respect to its production capacity of 30,000 tons. All other things will remain same with the inclusion of a transportation saving cost, which is 15% of total sales. The analysis represents that the project is viable because of its positive NPV of $36,269,878. (See appendix 3)

Another option is to build a new manufacturing plant only with finishing facility, which would cost approximately $1,837,000 with respect to its production capacity of 30,000 tons. All other things will remain same, with an inclusion of a transportation saving cost, which is 11% of total sales. The analysis represents that the project is viable because of its positive NPV of $36,672,731. Thus, it is concluded that the third option of building a manufacturing plant is only viable with finishing facility that would generate greater returns as compared to other options, because of its positive NPV.

Disadvantages

It would be difficult for the company to expand its operations in France because of some challenging operating issue such as the labor cost was too high in France as compared to Vietnam, which was ten times higher. In addition to this, the threat of competition was too high and the language was also different.

Recommendations

After analyzing all the situation with the help of qualitative and quantitative analysis, it is recommended that the establishment of new manufacturing plant only with the finishing facility in France would be a viable option as compared to having expansion in Vietnam, because it will yield high positive NPV and would enable the company to produce more units. Furthermore, the company could earn transportation saving because of manufacturing plant near to the France port. In addition to this, the market was diverse and a hub of the global business, it will enable to company to attract greater number of customers.

Conclusion

It is concluded that Electrosteel is the largest manufacturing company in India and yielding a sustained growth from decades. The FDI’s would provide a threat of competition for the company and it would loss its potential growth. Thus, Das decided to expand its operations globally. The analysis represent that the most viable option is having an expansion in France by building finishing facility near France port. This option will yield high positive NPV and would enable the company to produce more units............................

This is just a sample partical work. Please place the order on the website to get your own originally done case solution.