Operation Strategy

Case Study: Case title: Are We Ready for an Automotive Plant?

Topics are: Site Selection, Global Strategy, Decision Making

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Operation Strategy
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Authors: Yi-Chia Wu, Joo Y. Jung

Operation Strategy: Summary: The city of McAllen, Texas and its partners have worked on attracting an automotive assembly plant to the region for over fifteen years. Under the North American Free Trade Agreement (NAFTA) provision, this region enjoys the advantages offered by both sides of the Mexican-U.S. border. Even during the economic downturn of 2007 to 2008, McAllen experienced a lower unemployment rate compared to other cities in the United States. One of the primary reasons was its close proximity and economic ties to Mexico. Lower labour cost, a right- to-work state and proximity to Mexico were some of this region’s strengths, while a high illiteracy rate, limited numbers of automotive suppliers and small workforce were among its weaknesses. Based on publicly available data and aggregate score evaluation methods, McAllen is compared to other potential sites. The case addresses a wide range of issue regarding site selection factors within the automotive industry.

(((Questions))) to be answered in the report:

1. What are the most vital factors when an automotive company chooses a site for its manufacturing operation? List and explain all factors you would consider important based on case Exhibits 1 through 8, and provide raw scores for the four potential sites given in the case.

2. Calculate the weight for each of the factors based on your team’s opinion. Justify your answer.

3. Calculate the total scores for each site by using the relative-aggregate score method and rank the four cities.

4. What are the strengths and weakness for the city of McAllen? What are the strengths and weaknesses for the city of Detroit?

5. Are there other factors that decision makers should consider?

6. Suppose you are the team managing a Saudi automotive company. Select two different cities in the Kingdom and conduct a qualitative and quantitative analysis to choose the best location for your manufacturing process. Discuss the advantages and disadvantages of each city. The qualitative and the quantitative analysis should be exhaustive, convincing, represents SA of 2019 and numerically reliable
(use real statistics/numbers for the two selected cities, % of qualified labor, average wages, cost of land, financial governmental incentives, etc.)

The case is to be shared when the writer is assigned.*
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