1. Multimedia University
BMG8014ADVANCED MANAGEMENT
Lecturer: Dr.I.LOURDESAMY
CASES ANALYSES
MEXICAN PLANT
Southren Discomfort
Student Name: Abdulla Saeed Alhamad
Student ID: 1111800065

2. MMU
BMG 8014 ADVANCED MANAGEMENT
Abdulla Alhamad (1111800065)
Southern Discomfort
Mexican Plant
Question: What do you see as the central management issue in the case “Southern
Discomfort”? If you were Jim, What would be your recommendation to Ripon
(CEO)? Justify your decision.
Summary
Jim Malesckowski received a call from his boss, who wanted him to go to Mexico
and determine some figures for their manufacturing company.
Their present plant is in Oconomo, Wisconsin, where they employ 520 people.
Oconomois a small town of just under 9,000 people and jobs are limited, so the
company provides some help to their poor economy.
Jim’s boss is thinking about moving the plant into Mexico where he could cut costs
dramatically, saving the company millions of dollars each year.
The workers of the company are part of a labor union that negotiates wages and duties
with the company.
The union does not want its workers to earn lower wages or become cross-trained to
do many different jobs.
Jim is stuck between a rock and a hard place because his boss wants him to report the
findings in Mexico yet Jim knows if he does then the plant will most likely move into
Mexico.
The company will save a lot of money in production and labor costs if they move but
it will take away 520 full time jobs from the people of Oconomo.
Jim needs to figure out what to tell his boss when he meets with his boss the next day.
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3. MMU
BMG 8014 ADVANCED MANAGEMENT
Abdulla Alhamad (1111800065)
The central management issue
The greatest force that drives the company to look for change is its high operational
cost.
The operational cost in the plant is very high, the company has been incurring losses
instead of making profits; the management is anticipating changes so that the
company will make profits in the future. In order for a company to run successfully, it
should realize some returns from the investment made at the plant. Having invested in
the company, shareholders also expect return for their investment. It is important for
the company to make enough money for the satisfaction of shareholders and the
existence of the company in the market.
One difficult situation the company faces is the unionized labor; the company does
not have a choice of less price labor, the company also faces the problem of having
the current employees performs more duties to reduce cost due to union labor
agreements.
If you were Jim, What would be your recommendation to Ripon (CEO)
The recommendation will be:
1. Opening a new plant in Mexico.
2. Reduce the operations in Oconomo plant by 50% keeping thethird generation
employees only as a preparation for shutting down the plant.
Justification
Analyzing the case of Southern Discomfort, some of the issues facing Malescowski
and Lamprey, Inc. are the high cost of labor, the ability to compete against companies
in the same industry as far as price and the product quality of their goods produced at
that particular facility.
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4. MMU
BMG 8014 ADVANCED MANAGEMENT
Abdulla Alhamad (1111800065)
One of the major issues is that if the company decided to look at the option of opening
a new plant in Mexico and cease operations in the town of Oconomo. This small town
in Wisconsin would suffer greatly the lost of lamprey, Inc. The town has a population
of just over 9,000 people and the plant employs about 520 local workers. Some of the
workers are a third generation employees of Lamprey making Jim feel guilty about
the project.
The reasons Lamprey should move its operations elsewhere that the new location
provides better opportunity to reduce cost, as opposed to expansion of an existing
plant, Lamprey can take advantage of the market conditions in Mexico and the other
movements that will be taking place with the move to be more competitive. There
comes a point when in some situations it costs less to start over in a new more
affordable place than to repair the current facilities. Further, there are newer
machines, new processes and new plant layouts that may improve productivity and
quality of the products.
This entire situation can make a new facility look like the best choice.
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