StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

P3 IP1 - Essay Example

Comments (0) Cite this document
Summary
AUTOEDGE CASE STUDY ABSTRACT AutoEdge is a supplier of engineers and transmission parts in USA which has in recent past shifted its production to the South Korean market for the cost advantage. After five years of profits, the company’s product has reached to the point where it is not meeting the desired quality standards…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95.5% of users find it useful
P3 IP1
Read TextPreview

Extract of sample "P3 IP1"

AUTOEDGE CASE STUDY AutoEdge is a supplier of engineers and transmission parts in USA which has in recent past shifted its production to the South Korean market for the cost advantage. After five years of profits, the company’s product has reached to the point where it is not meeting the desired quality standards. Hence, the report herein outlines the potential cost variances that will originate from the taking back the production to home location. It also draws on to costs in case company continues in foreign market and finally its financial implications on the stakeholders. INTRODUCTION AutoEdge is a leading supplier of the engines and transmission parts to the leading auto-manufacturer of the USA. Established in 1976, the company has long history of well established brand which contributes in the purchase decision of the auto-buyers. Five years back decision of the company to shift the production to South Korea for cost advantage has now called for the revision as the products have failed to clear the quality test. The company’s is now available with the option to move back the production to USA. Therefore, underlying report is an assessment of the short and long term fixed and variable cost in case of shifting the production, cost and financial risks to stakeholders to be borne in case of continuing operations in South Korea. DATA COLLECTION SOURCE Businesses are affected by combination of costs (Arnold, 2008; Mankiw, 2009). Understanding of impact of these costs on taking back manufacturing from South Korea to USA is necessary. SHORT RUN LONG RUN FIXED Opportunity cost, sunk cost, rent, utilities, net change in costs due to regulation difference of both countries Infrastructure and facilities cost (in USA after establishment) VARIABLE Setup cost, transportation and inventory cost, union, labor productivity, overtime cost, production network expertise Direct labor, overhead, union, operations cost, technology, quality management, All these cost have been identified from general economic perspectives. Related information is taken from the various sources defining the working habits of the South Korean market and the USA market (Kramer, 2013). DISCUSSION OF FINDINGS Moving back to USA will require assessing the above mentioned factors. For instance, according to the research the workers in South Korea are more productive nearly 14% than USA workers. Hence, the cost of direct labor is expected to increase. Men in South Korea can be regarded as stronger as compared to USA as men in SK are trained for two months which have positive impact on productivity (Kramer, 2013). Also in South Korea there can be high parity of salaries which also offers competitive advantage over labor. Contrary, it is also noticeable that daily grocery expense in South Korea is much higher than that of USA and so the major portion of labors’ earning is expected to contribute to food requirement. In such case, the direct labor cost is expected to undergo much variation in USA as the daily expenses are lower and will provide labors an opportunity to enhance their standard of living which will have incremental effect on the labor cost. This dominant impact will, however, will have nullifying impact from the savings in terms of saving from transportation, technological safety from leakages, closeness with actual market, expected ease on regulation such as taxes by the government in order to increase the contribution in jobs from the manufacturing sectors. Hence, benefits in the long run are much more than short term cost pressures that will rise from shift. Staying in SK will have short term positive implications in terms of saving but long term cost will be much higher. It will not only affect the market share but heavy loss to brand name will require much more cost to revive. The associated features of AutoEdge brand being quality, dependability, and reliable products are already at stake. Despite fact that production in SK has also provided Auto Edge with the profitability in past five years, the outsourced product may have been consistently fallen and the current situation is the final reflection that product quality has declined to the level for cost saving that it is now unable to provide desired standard quality. The share price of the company has already dropped down to from $51 per-share stock has fallen to $4 per share. Though, decline in price is also attributed to the termination of the CEO, the ultimate concern of investors has originated from declining value that market associates with the share. Hence, in case if the company continues performing in the SK it may lack to attract further finance for investment or if the case worsens it may end up in the withdrawal of investments (BBC, 2013). CONCLUSION AutoEdge is on the stage where top level management is required to take strategic imperatives that enable the company to turnaround the company model from cost efficiencies dominant model to the more emphasis on the quality that was once the identity of the company product. Furthermore, the cost assessment has also revealed that despite short term benefits can be generated from foreign market the long term benefits are more centered in setting up manufacturing unit in proximity to market under direct supervision and control. This proposition is also justified companies of USA bringing back business from China as the cost parity has continued to decline (BBC, 2013). References Arnold, R. (2008). Economics. Mason, OH: South-Western Cengage Learning BBC. (2013). Risk management. http://www.bbcworldwide.com/annual-review/annual-review-2013/governance/risk-management.aspx Kramer, J. (2013). The Kimchi-ite: 10 more differences between South Korea and the rest of the world. Retrieved November 3, 2013, from http://www.gadling.com/2013/03/22/the-kimchi-ite-10-more-differences-between-south-korea-and-the/ Mankiw, G. (2009). Principles of Economics. Mason, OH: South-Western Cengage Learning. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“P3 IP1 Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
P3 IP1 Essay Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/macro-microeconomics/1490372-p3-ip1
(P3 IP1 Essay Example | Topics and Well Written Essays - 750 Words)
P3 IP1 Essay Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/macro-microeconomics/1490372-p3-ip1.
“P3 IP1 Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1490372-p3-ip1.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF P3 IP1

IP1

...?Running Head: SCOPE OF PRACTICE The Scope of Practice of an Obstetrician Gynecologist School The Scope of Practice of an Obstetrician Gynecologist As a nursing or records staff in a hospital, one needs to know the scope of practice of health care practitioners. The scope of practice of practitioners varies according to their specialization and hospital or service systems. This paper defines the term scope of practice and illustrates its meaning using the scope of practice of an obstetrician gynecologist. Several websites offer their definition of the term scope of practice. Anderson (n.d.) defines scope of practice as the actions, activities, and procedures permitted by law for a specific profession. Practitioners’ organizations... Head:...
2 Pages(500 words)Essay

Economics P3 Assignment

...? Economics Economics More than often, the Federal controls its economy through Federal Reserve as it influences its economy through monetary policy tools that include open market operations, the discount rate, and the reserve requirements. This is because, the state has control over the Federal reserve’s in its bank. When, the Federal Reserve influences its discount rate, open market operation and reserve requirement on depository institutions, it affects the demand for and supply of balances that these institutions hold at the Federal Reserve Banks. Short-Term Interest Rates In most cases, the Federal Reserve use either contractionary or expansionary money policy to influence the short-term interest rates of fund... Economics Economics More ...
5 Pages(1250 words)Essay

P2 IP1

... Analysis and discussion of the four different types of market structures Although there are a litany of different businesses that operate within the current environment, each of these invariably operate within one of the four basic types of market structures. Accordingly, these market structures can be defined as follows: monopoly, oligopoly, monopolistic competition, and pure competition. The overall importance of understanding and define each of these market structures rests in the fact that complete understanding and analysis of how firms within such structures operate is required as a function of making the business or firm more competitive; regardless of what market structure it exists within (Averitt, 1995). Accordingly... Analysis and ...
5 Pages(1250 words)Essay

P4 IP1

...? AutoEdge Company Analysis al Affiliation: AutoEdge Company Analysis After reviewing the financial ment of the business for the duration of six years, it has come to my attention that the company has a negative NPV; $35.39. Net Present value (NPV) refers to the value obtained when the difference between present value of future cash flows and the total value invested is calculated. When the value of NPV is zero, it means that the project yields the amount invested plus the interest is supposed to accrue. On the other hand, positive NPV means that the business has excellent returns. But when the net present value is a negative value, then the investment has bad returns. Therefore, when a company is experiencing zero or positive NPV...
3 Pages(750 words)Essay

BUS IP1 Unit 5

...? BUS IP1 Unit 5 BUS IP1 Unit 5 Given that the current exchange rate for one US dollars is equal to eighty euro’s, one million Euro is equal to US$12500. This means that if I won one million Euros, then I have US$ 12500. If this amount is to be left in Irish banks, the total interest per year would be calculated as follows (4/100*1000000) = 40, 000. This means that the total interest earned for one year in the Irish bank will be 40,000 Euros. This means that at the end of the year I will have 1,040,000 Euro. This amount translates into US$ 13000. If on the other hand I choose to take the money to the US banks, then I will earn interest of (2/100*12500). This gives an interest of US$ 2500 for that particular year. The total amount that I...
3 Pages(750 words)Essay

Ip1 personnel and organization policy

...Personnel selection affiliation Personnel selection Personnel selection refers to the activities involved in the pickingof a new member of staff for a new or existing position in an organization (Huffcut, 2010). This process is significant in an organization since it is responsible for selecting a team to achieve an organization’s goals. While selecting personnel, three criteria are used to evaluate the effectiveness of candidates. Muchinsky (2012) points out that the criteria are ability tests, knowledge tests and personality tests. The three tests are effective enough to effectively pick the most suitable candidate for a position. However, the tests are based according to the position up for recruitment and the type... selection...
1 Pages(250 words)Research Paper

IP1 Diversity in the Workforce

...Topic: Diversity in the Workforce TABLE OF CONTENTS INTRODUCTION ……………………………………..……..…………..................................3 1.1 Statement of the problem ………………………………………………..…………………3 1.2 Purpose of the restructure ……………………………………………….….…………...…3 1.3 Objective of the restructure….…………………………………………………………..…3 CURRENT ANALYSIS ………………………………………………………………………4 1.1 Current statistics……………………………………………………………………………4 1.2 Recent trends……………………………………………………………………………….4 1.3 1.1 Forecasts about the changing general population………………….…………………..4 LEGISLATION COVERING THESE TYPE ISSUES……………………………………….5 CONCLUSION ……………………………………………………………………………….5 REFERENCES………………………………………………………………………………..6 INTRODUCTION Racial segregation and ethnicity are among the leading...
2 Pages(500 words)Research Paper

P3 : Describe the social implications of business ethics facing a selected business in its different areas of activity M2 : Assess the social implications of business ethics facing a selected business in its different areas of activity

...SOCIAL IMPLICATIONS OF BUSINESS ETHICS and SOCIAL IMPLICATIONS OFBUSINESS ETHICS P3 Diverse and dynamic factors influence business operations from time to time. Among the most influential factors are social issues in the community or societal setting. In particular, Wal-Mart continues to face a number of critical social implications due to alleged discrimination in its human resource management. Discriminatory practices in any given business could threaten both short-term and long-term prospects (CQ Researcher, 2009). racial and/or gender discriminatory practices at Wal-Mart prompts workers and labour unions to protest against the retailer’s poor working environments for employees. In addition, employee turnover is a critical social...
1 Pages(250 words)Essay

Waste en P3

...ESSAY: TIME MANAGEMENT: VALUE ADDED AND WASTE PRODUCED Reflection paper two From the time log, it is d that the student have a lot of time to spent in a day. Out of all the time available for spending in the day, it is realized that, the student uses very little time actively. Much of the time is wasted. Just after the student has driven to school, there is a lot of free time in the afternoon till the moment the student prepares to bed. This time interval is not located for any activity. I consider this time interval from 11:00 am to 11:30pm as the amount of time used to produce waste because the student has not added any value to himself by utilising the amount of time well. To get the percentage amount of time used to produce... TIME...
1 Pages(250 words)Essay

Program capstone IP1

... Functions of Management Theory. Management refers to the development of bureaucracy that derives its importance from the need for tactical planning, co-ordination, directing and controlling of large and complex decision creation process. Essentially, therefore, management entails the acquisition of management competence, and effectiveness in the following key areas: solving of problem, administration, human resource management, and organizational leadership. For an organization like Microsoft Corporation, these theories are being used to manage the firm and they include the following: Planning as practice of theory of managements, used by many organizations like Microsoft Corporation, involves selecting missions and objectives... Functions...
2 Pages(500 words)Essay

Ip1 managing high performance

...Theory X and Y Management Styles Introduction Theory X is a domineering style of management. It adopts that an ordinary individual hates work and needs to be pushed around and directed by a supervisor in order to execute his or her duties. Additionally, theory Y is a participative style of management. It views individuals as responsible, self-compelled as well as self-controlled with an accepting attitude that naturally merges with the organizational objectives (McGregor, 2006). The chart indicating the percentage of the pros and cons of theory X and Theory Y No one particular style of management is best suited in all circumstances. Any large organization has many employees representing diverse personalities. Therefore... X and Y Management...
1 Pages(250 words)Research Paper

IP1 management report

...MANAGEMENT REPORT Planning As part of the core planning strategies, Dell Inc. uses cross-functional decision-making, which enhances coordination and combination, compasses hierarchical limits, and decreases the generation process duration in new item production in operation management(Dell, 2015). The uniting of individuals from distinctive fields that comes from this approach enhances critical thinking and lead to an intensive decision making. The groups cultivate a soul of collaboration that can make it simpler to accomplish client fulfillment and corporate objectives in the meantime. Business choices frequently require the information of individuals in more than one practical region(Dell, 2015). This prompts a superior... REPORT Planning...
2 Pages(500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic P3 IP1 for FREE!

Contact Us