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28 views

IBM Assignment 2 by hemant anant

.

Uploaded by

6ypbp5zshn
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© © All Rights Reserved
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INTERNATIONAL BUSINESS MANAGEMENT

ASSIGNMENT 2
ON
SUMMARY ON CASE STUDY HOW SHOULD WE
DIVERSIFY OUR SUPPLY CHAIN?" BY KRISHNA
PALEPU

Submitted by: Hemant anant


Section: A
Course: BBA (VI Sem)
Enrollment No: A20006421042

The case study titled "How Should We Diversify Our Supply Chain?" by
Krishna Palepu delves into the strategic decision-making process faced
by Kshore, a Chinese appliance manufacturer, regarding the
diversification of its supply chain in response to the challenges posed by
the Covid-19 pandemic.

*Central Issue: *
Kshore, a Chinese appliance manufacturer facing rising production costs
and trade tensions, is contemplating diversifying its supply chain to
reduce risk and improve efficiency. The case study explores the
challenges and opportunities Kshore faces as they consider establishing
manufacturing facilities in Mexico.
*Key Players: *
 Yun Liu: CEO of Kshore
 Keith Smith: COO of Kshore
 Mexico's Finance Minister: Offering incentives to attract foreign
companies

*Background: *
o Kshore is a Chinese appliance maker with a presence in India and
Vietnam but relies heavily on Chinese manufacturing.
o Rising labor costs and potential trade disputes between China and
Western countries are prompting Kshore to explore diversification.
o Their customers, including major retailers like Walmart, are
pressuring them for geographically diverse sourcing to reduce risks
and improve sustainability.
o Kshore has already established a presence in Cambodia, but it's not
enough to meet their 30% target for non-Chinese manufacturing by
2026.

*Considerations for Mexico: *


 Proximity to North American market: Reduced shipping costs and
lead times for serving major customers like Walmart.
 Attractive incentives: The Mexican government offers incentives
to foreign companies to establish manufacturing facilities.
 Labor costs: Potentially lower labor costs compared to China.
 Infrastructure and talent: Concerns about the adequacy of Mexico's
infrastructure and skilled workforce for efficient manufacturing.
 Political stability: Potential for political or economic instability in
Mexico that could disrupt operations.
*Uncertainties: *
 The case study doesn't reveal the specific costs associated with
setting up operations in Mexico compared to China or other
potential locations.
 The effectiveness of Mexico's skilled workforce for Kshore's
specific needs is unclear.
 The long-term political and economic stability of Mexico is not
guaranteed.

*Possible Courses of Action: *


 Expand manufacturing in existing locations (India, Vietnam): A
potentially quicker and less risky option, but might not achieve the
desired level of diversification.
 Explore other Southeast Asian countries: Countries like Thailand
or Indonesia could offer similar benefits to Mexico.
 Proceed with Mexico: The potential benefits of proximity and
incentives could outweigh the uncertainties.

*Additional Points: *
Kshore, led by its CEO Yun Lin and COO Keith South, is confronted
with the need to reevaluate its supply chain strategy due to disruptions
caused by the pandemic. With pressure from customers, including large
retailers like Wainsmart, to reduce risks, costs, and environmental
impact associated with shipping goods internationally, Kshore aims to
explore options for diversifying its manufacturing operations beyond
China.
The narrative unfolds as Yun and Keith embark on a trip to Mexico to
assess the feasibility of establishing manufacturing facilities there.
Mexico offers several advantages, including proximity to key markets
like the United States and Canada, attractive incentives for foreign
investment, and reduced shipping times compared to overseas locations
like China.
However, Keith expresses reservations about the potential challenges of
maintaining quality, affordability, and profitability in Mexico. He raises
concerns about operational efficiency, access to raw materials,
recruitment of skilled labor, and navigating regulatory complexities in a
new market.
The case presents contrasting perspectives from supply chain manager
Chet Lee, who advocates for the benefits of manufacturing in Mexico,
and industrial park manager Carlos, who highlights logistical
uncertainties and the lack of experience among local workers.
Yun seeks advice from colleagues, industry experts, and his wife, Lily,
to gain diverse insights into the decision-making process. Despite the
allure of Mexico's benefits, Yun remains cautious and emphasizes the
importance of conducting thorough analysis and considering long-term
implications for Kshore's supply chain strategy.
After careful deliberation, Yun decides to proceed cautiously and
conduct further evaluation before committing to manufacturing in
Mexico. He recognizes the need to balance potential benefits with
operational challenges and align the decision with Kshore's overarching
strategic objectives.

In summary, the case study underscores the complexity of supply chain


diversification decisions and the importance of considering various
factors, including market dynamics, operational feasibility, and risk
mitigation strategies, to ensure sustainable growth and competitive
advantage in a rapidly evolving business landscape.

________________ THANKYOU_______________________

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