Assignment:
Jim Davis of the ABC Electronic Components Company was struggling with strategies to address foreign competition entering the US domestic market. He recognized from the company specific analysis, that he recently completed, that these competitors represented a substantial threat to all the US components companies. Specifically the competitors can match the US companies strength for strength and they had fewer weaknesses.
Jim recognized that to compete they must be more efficient and cut costs. At the least Jim concluded that ABC must be able to absorb a 25-27% cut across the board in all the ABC divisions. He could not think of any other way to cut his costs.
He was especially concerned about the cost of manufacturing compared to the foreign competitors. The cost of iabor was about 45% higher in the US than overseas. One possible solution to some of his concerns would be to do a joint venture with one of the foreign companies and this would give him some long term security. Or he could think about starting up his own manufacturing operations in Mexico to drive down his manufacturing costs.
In a global environment the world changes quickly so his strategies must always be changing to adapt and keep pace. If nothing else that at least gave him job security.
- Comment on its positive and negative aspects.