International Strategies – Review of Article from Cnn Money – Why We Left Our Factories in China
Essay Preview: International Strategies – Review of Article from Cnn Money – Why We Left Our Factories in China
Report this essay
Abstract
This paper will discuss Sheridan Prassos (2011) article “Why we left our factories in China” and how this pertains to globalization as well as what international strategy was being utilized by Sleek Audio. It will also evaluate Krywko familys business plan forward for trying to eliminate the globalization factor of the business and just maintain a local American made product. This is a new development from the plummeting economy, companies are pulling out of their international locations to take advantage of local production since the American people are eager for a job and are willing to work for less at this time.
International Strategies
Why We Left Our Factories in China
Sleek Audio once was a part of globalization movement, which is defined as “the strategy of pursuing opportunities anywhere in the world that enable a firm to optimize its business functions in the countries in which it operates” (Hitt et. al., 2009). The company was competitive advantage for foreign marketing called foreign branching. This is where a separately located strategic business unit is directly responsible for fulfilling the operational duty assigned to it (Hitt et. al., 2009), in the case of Sleek Audio it was their manufacturing department (Prasso, 2011).
Since the company was recently suffering from low quality products, too much travel, communication problems, shipping delays, rising costs in China and a million dollar ruined shipment of 10,000 units, they decided to get out of China and move all manufacturing back to the US (Prasso, 2011). This is often known as reshoring which is where small businesses decide that China is a hassle and that they want to bring their operations closer to home (Prasso, 2011). The Krywko family also had the problem of only having local managers; they were not able to financially afford someone from the US to be on site as a full time manager which was a deficit (Prasso, 2011).
Once Sleek Audio was transitioned back to the US they saw that they had more control over the quality of the products and hardly any waiting on production (Prasso, 2011). Even with the higher costs, both Mark Krywko and his son agree that even though China seems like a tremendous costing saving it really isnt because there are hidden costs, delays, and shipping costs (Prasso, 2011).
So in this case globalization and foreign branching was not the best option. Does this mean that there will be less globalization happening for small businesses because of the additional costs due to delays, shipping, and quality issues? I believe that there will be some movement back to American made products as the costs in China rise and the US decline. Small businesses benefit from keeping small communities employed and happy, as well as being able to say it is an American