Final Decision Exercise-1

Final Decision Exercise-1 - Final Decision Exercise In a...

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Final Decision Exercise In a historic move, Airbus—the European aircraft manufacturer—has decided to outsource the production of a few non-technological component parts for its airplanes. The first of these items to be produced offshore will be airplane seats; they will be produced in a facility to be built and operated by a wholly-owned subsidiary of Airbus. As VP of Strategic Sourcing for this subsidiary, you are responsible for the final decision on the production location. Your staff has narrowed the pool of possibilities to two choices, and upper management has concurred with the recommendations: Vietnam or Senegal. These two locations have been selected because they are both completely capable of sourcing the needed raw materials and components. Your responsibility is to select one of these locations to build the airplane seat production facility. Production of airplane seats involves numerous labor-intensive operations. It will also be helpful if you can hire and train some future managers to reduce expatriate personnel costs in the next few years. The finished seats, which must be shipped back to the main facility in Le Havre, France (major port near Paris), will be a bit bulky but not excessively heavy. There are no tariffs for materials brought into either Vietnam or Senegal when the materials are used for production of products that will be exported. Which of these two locations do you select for building the seat production plant facility? What are the salient issues (criteria) underlying this decision? Use the five steps of decision-making in your analysis. Your paper should be no longer than six pages. A page or two of graphics may be added if desired; but they are not required. You will need to do some research to complete this exercise. Limit your research time to six hours or less. The problem: Which country would I select for building the seat production plant facility? The airplane seats must be produced in either Vietnam or Senegal. Draw materials will be provided within that country. After the production of the airplane seats, they will be exported back Le Havre, France Both Vietnam and Senegal have no tariffs for materials that are used for production of products that will be exported.
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Decision exercise 1. Identify the problem: whether to build the facility in Vietnam or Senegal 2. Identify the criteria a) Profits ( Return on Investment), - Manufacturing cost : wage rates, worker productivity, resource availability, fiscal and monetary policies - Business environment (opportunistic government recruits foreign investment) b) Economic risk - Growth and stability of economy in long term investment ( GDP, inflation rate, unemployment rate, economic freedom, infrastructure, purchasing power parity) - Exchange rate c) Political risk ( support and discourage from government) - Type of government - Legal system - Describe: Executive function, Legislative function, Judicial function - Polity Score - Discuss the Political Risk of your country
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This note was uploaded on 11/22/2011 for the course ENGLISH BUS M 596R taught by Professor Hudgen during the Fall '11 term at BYU.

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Final Decision Exercise-1 - Final Decision Exercise In a...

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