finding a location for electronics component manufacturing in asia
1. What advantages and disadvantages does each potential location offer?
Singapore
Advantages: labor relatively cheap, good transport infrastructure and incentives offered to stay.
Disadvantages: increasing labor costs and increasing utility costs.
Hong Kong
Advantages: labor consistently cheap and good transport infrastructure.
Disadvantages: no specific disadvantage has been identified in the case but students should attempt to discuss this further.
Malaysia
Advantages: access to raw materials and natural resources inexpensive labor.
Disadvantages: Concern with frequency of ship visits.
2. What other relevant factors that are not mentioned in the case study might play a role in this decision?
The education of the workforce (both current workforce and future generations) as well as political stability will impact the decision.
3. Why is transportation infrastructure so important in this decision?
Since ACM is reliant on logistics for raw materials and transporting final products to customers, transportation costs (both current and expected development of the costs) will doubtlessly have a large impact on the decision.
4. This is a long-term strategic decision; what factors might change in the next ten to twenty years? How will this influence the decision?
Since the plant will “pay for itself” over a long time horizon, decision relevant costs must be examined not only at their current level but also how this is expected to develop over the horizon. Examples of costs which are likely to change and whose change would make or break the decision would include labor costs, utility costs, raw material costs, transport costs. Also other difficult to forecast developments such as exchange rates and political stability will impact the profitability.
5. Which alternative would you recommend, under which circumstances?
Answers will vary but students should discuss how to approach the problem of selecting the appropriate location. For example, if possible, students should explore the use of factor-rating method for this