Case Analysis LOGITECH With Answers

Mia Therese U. Arias Angelica Ballesteros Angelica Bernardo Maria Lou Atioan Carmelo Alvendia 4-AOM CASE ANALYSIS: LOGITECH

I.

Title of the Case “Logitech”

II.

Time Context Monday, January 7, 2014

III.

Viewpoint Logitech’s Top Management

IV.

Statement of the Problem How can Logitech expand their production / operations while minimizing their cost?

V.

Objectives 

To find a strategic plan on where they will locate their manufacturing plant to maximize their profit and minimizing their costs.



To be able produce a higher quantity of goods to capture a larger market.



To be able to create a better designed product that will compete with other computer peripheral producing companies.

VI.

Areas of Consideration Strengths 





Largest producer of











Dependence on

Opportunities 

Innovate

Threats 

Intense

computer mice.

the suppliers of

products and

competition

Known as the

the raw

services.

can lower

epitome of modern

materials.

Opportunities

Logitech’s

global corporation.

for Logitech to

profits.

Technological

expand and

innovator in personal

increase

number of

computer

market share.

potential

Opportunities

customers

First company to

of producing

because of

introduce a mice that

new products

bad economy.

used infrared

and services.

peripherals. 

Weaknesses









Decreasing

Political Risk

tracking.

of

First to introduce

governments

wireless mice and

can quickly

keyboards.

change

Continuous

business rules

innovation.

that

High brand

negatively

recognition.

affect

Has low production

Logitech’s

cost. 

business.

Has an effective R&D facility.



Ergonomics design of products is being considered.



China has qualified people at the manufacturing plant.



Logitech engages in location economies by choosing the best locations for each of its operational actives.

VII.

Alternative Course of Action (ACA) ACA 1 Construct a new manufacturing plant in Mexico A. Advantages 

Easy and fast transport of finished goods (computer peripherals) in the United States.



Shipping cost is low and fast.



Cheap labor cost.



Skilled workers



Political risk associated with the country is minimal.

B. Disadvantages 

Higher labor cost than in other Asian countries.



Mexico has employment laws that impose strong penalties on companies for laying off employees.



Real estate cost are rising.

ACA 2 Construct a new manufacturing plant in Vietnam A. Advantages 

Cheap labor cost than in China.



Skilled workers.



Cheap transportation cost.

B. Disadvantages 

Low labor Productivity.



Struggles in supporting and accommodating large-scale investment projects.



Low logistics infrastructure (airports, major ports, railroads and railways).

ACA 3 Expand the manufacturing plant in China A. Advantages 

The company will have a lower cost of production due to low labor cost in China.



Demand of products will be met easily because of the expansion.



Higher production volume.

B. Disadvantages 

Transportation cost is high.



Electricity rates are rising.



Increase of corporate income tax rate.

VIII. Recommendation/Conclusion Categories

ACA1

ACA 2 Construct a

ACA3 Expand the

Construct a new

new manufacturing

manufacturing plant in

manufacturing

plant in Vietnam

China

plant in Mexico Cheap labor cost

4

5

5

Strategic

5

4

4

Skilled workers

4

3

5

Lenient

3

5

4

5

4

4

21

21

22

Location

government barriers Transportation cost Total:

Legends: 5 being the highest – 1 being the lowest

The chosen Alternative course of action is ACA3 Expand the manufacturing plant in China. ACA 3 got the highest total rate which is 22. The result is based upon the proponents rating on the criteria in the decision matrix. Though expansion is costly, the return on investment of the new facilities will increase the revenue. The expansion does not only focus on the production capacity, but will also expand product line which is gaming products. IX.

Plan of Action Person-in-Charge Top management

Period 1 to 2 Years

Activity Expand the manufacturing plant in China.

R & D,

6 months to 1 year

Production/Operations.

Expansion through innovating gaming products (such as mouse for gamming, joysticks, keyboards).



Propose the ACA to the top management.



Once approved, the project will be implemented.



Intensive research and formulation of innovative new gaming products from the R & D department.



Innovate the features of existing gaming products.



Production of the new and innovated gaming products.



Effective marketing strategies to increase sales.