Kiwi Medical Devices Pvt Ltd Case Study Solution
Question 1.
- Indonesia is much more attractive country to the Kiwi than China, Mexico and Slovakia. Meanwhile, there are 10 categorical factors, which determine that country’s score, relative to the other countries score with same these 10 factors. Meanwhile, these factors are labor costs, labor skill and experience, transportation cost, transportation lead times to/from the factory, Duty rates for the incoming raw materials as well as export of finished products, Political, local taxes, unions strike risk, permits setup cost and Management relocation expenses, life style and safety.
- The score of the Indonesia is much more than the other countries, indicating strong place for the production. Whereas, the score of China is 78.4 and the score of Indonesia is 79.1.On the other hand, the score of Mexico and Slovakia is 73.1 and 59.1 respectively. The score shows overall strength of the country, to where put the production facility of the company over the given 10 different factors.
- The hourly compensation for the workers in Indonesia is $1.07[1], which is low as compared to other countries. Such as China’s hourly compensation is $1.15, Mexico $5.51 and Slovakia $11.79. But, on the other hand it can be determined that, labor skills in the Indonesia is acceptable.In china and other country’s labor skills are very good. Similarly, in this situation Indonesia is attractive.
- Since, it can be determined that, Kiwi has good expertise in producing the medical devices, as compared to other manufacturing companies in the world. Therefore, it is not very difficult for the company, to train the employees and the employees of the Indonesia are acceptable in the terms of the skills. Consequently, it would lead to the strong relationship with the labors, and reduce employee turnover as well.
- The transportation costs from the Indonesia to the US and to Europe is high, indeed costs to the New Zealand and Asia is low. But, on the other hand, the costs from the Mexico to the New Zealand is medium, to Asia low, to Europe medium and to US is low. Meanwhile, from Slovakia to the New Zealand is high, to Asia is low, to Europe is low and to US is high.
- The transports lead times is also very attractive to the company, if it installs production facility in the Indonesia.Given that its lead times are more excellent then other proposed countries, to the desired locations such as Asia, Europe, US and the New Zealand. On the other hand, it can be determined that, company has been investing in production facility. So, it would need good lead time to meet with market demand.
- Consequently, it is important for the company that, it should meet with the market demand. Because, the reasons behind transferring the production facility to another country is also, due to the increasing costs of the labor, high lead times and transportation costs. Whereas, the Indonesia is much favorable country in this sense, if we compare these factors with other countries.
- Meanwhile, the duty rates are also low and attractive for the investment in the Indonesia. Low corruption in the country, good economic freedom and low duty comparable to other countries. Meanwhile, the country also has good global competitiveness, among the other countries. Meanwhile, as compared to other countries, the Indonesia is the attractive and favorable for the company.
- On the other hand, it can be determined that, the management style in the Indonesia is difficult for the Kiwi, as compared to its soft management style. Meanwhile, the permit in the Indonesia is easy and moderate, for building manufacturing production facility. Whereas, the management style of the Mexico, Slovakia is favorable, and China and US is acceptable.
- On the other hand, it can be determined that, the weighted factor model’s higher score indicate strong alternative for the decision. Similarly, the Indonesia has higher score, as compared to the other proposed countries. It indicates that Indonesia is most favorable in given 10 factor model score. Since, there are many complications for the Kiwi to take a look at.
- The labor costs, labor skills, transportation cost, lead time from Indonesia to the other countries and the other form of regulations in the country are also favorable, as compared to other countries regulations. However, it can be determined that, there are many complications and complexities in the market, due to increasing competition in the market globally.
- Consequently, the transferring the production facility of the Kiwi was to benefit from the low cost production and low operations cost from any other given country. However, the company’s aim was to be more competitive in the market, and the company’s policy was to be near to the developed markets. Since, the competitors had moved their production to lowest cost places.
Since, the low cost enable them to compete with the Kiwi in the market, although the Kiwi is one of largest and had long history in the producing the medical devices throughout the world, with dedicated distribution system in 120 countries worldwide..................
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