Case Study-Acudrive
Singapore is an essentially global place with all the right connections. including port and airport facilities, and an enterprising and well-educated population. Over 4 million people live on a mcr 620 km2 of an island. Singapore is positioned off the southern end of the Malayan mainland and at the eastern end of the Strait of Malacca, a strait that funnels much of the trade between South and East Asia. Despite being the smallest country in Southeast Asia and without natural resources, it is by far the richest in terns of GDP per capita.
Like Hong Kong further north, with which it competes to be the world's busiest port (each has more than double the traffic of any other port in the world) Singapore has long been an entrepot. collecting goods from countries in its region and exchanging them on global markets. It differs from Hong Kong in dealing with cargoes to and from many countries and in transferring goods to other ships in its harbour. Hong Kong's trade is nearly all to and from interior China.
Singapore has diversified into a high technology manufacturing country within global markets. The strong control exercised by the Singapore government re-directed its economy from port-centered activities toward high tech industry, including high technology and automation. In the 1990's Singapore firms manufactured over 60% of the world's computer disk drives and computer sound cards for many of the leading computer manufacturers. As a transportation and communications hub, Singapore became the regional headquarters of many multinational
corporations and one of the top 10 global city regions. By late 2001, however, Singapore's employment was affected by cutbacks in the U.S. and Japanese technology and financial service companies and multinational corporations. It was extremely vulnerable to recession in the globa economic system.
Growth in the electronics industry r
Acudrive is the largest manufacturer of computer hard drives in the world. It is a privately held corporation operating in Singapore. Acudrive manufactures approximately 8.75 million units annually. The company fared well throughout the slow down in the computer industry in 2000 and 2022Jdowever, it did drive home the fact that the company needs to develop a growl"' strategy that will more effectively accommodate changes mttTe economy. Fortunately throughot 2110 the global economy began a strong rebound and by May of 2003 demand had begun to ncrease.
Acudrive is the major supplier to several computer developers in Japan and the U.S.. therefore, quality and cost are extremely important. New developments typically occur on a daily basis an changes to both product and production must be implemented immediately and without any errors occurring.
At the present time Acudrive has three different production facilities on Singapore that produce all of their components. The three facilities are necessary so that ongoing technological changes can occur without any down time and as a sure backup in case of development failures.
Acudrive has been very successful, and Singapore is held up as a model of what can be accomplished when determination, technology, and entrepreneurship come together. Many Asian nations are pushing to get into the "high tech" field. They see it as a potential source of growth and employment.
You have recently been hired as the Director of Development for Acudrive you have been given an exciting opportunity. Acudrive has a 14-year history of growth and development in Singapore. It has been at the leading edge of technology since its inception in 1992. Fortunately for Acudrive the government of Singapore was moving to encourage and finance growth in the high tech field. Foreign companies that saw the opportunity to outsource expensive computer components have also been supportive of Acudrive.
Glowever. Acudrive's success has also been the catalyst that has attracted strong competition. Initially Acudrive's net revenues were quite reasonable. Over the past '10 years, however, their revenues have decreased markedly due to the rise in competition. Admittedly improvements in production have helped decrease costs so that the return on their investment has kept pace.
Presently Acudrive has an opportunity to get into the VOW technology field. This field is completely new to Acudrive; however, the owners feel very strongly that this technology is going to be the wave of the future and are pushing to convert one of their facilities to VOIP production.
Acudrive is unsure what would be an appropriate course of action. As the new Head of Development, you have been asked by the board of Directors to look at the options and to develop a comprehensive set of alternatives for the company to consider.
You are aware of the following:
1. The value of' land in Singapore has increased some 4,500 percent over the past 10 years. Acudrive's physical holdings have increased in value by a similar amount.
2. Acudrive is among the most trusted names in hard-drives.
3. Labour costs are rising markedly in Singapore.
4. There are no tariffs on your products or materials moving in or out of Singapore.
5. Out sourcing may be an option, however, quality might suffer during the transition.
6. Knowing that each of the APEC nations negotiates trading rules in its own best interests outsourcing could be a solution or a barrier.
7. A loss of customer faith even for a moment could be catastrophic to Acudrive.