After conducting a SWOT analysis on competitors operations, the Uniform and Linen Leasing Company (U&L) discovered one of their largest and looming threats is in the area of increased operational costs. Some of these expenses are: rising labor wages, worker's compensation, an increased and aging retirement population with pensions and miscellaneous benefits, rising state unemployment insurance, and rising healthcare costs. U&L has decided to expand and open a manufacturing facility in China as part of their strategy to lower these types of expenses. The plant will be used to manufacture uniforms.
Do you agree that opening a new facility in China will alleviate increased operational costs for U&L? Describe benefits and challenges to support your answer.
It is true that the cost of labor and associated labor costs would be cheaper in China, which is why many U.S. based manufacturing companies and other industries are moving operations or opening additional plants in China. The wage structures and benefits structures are completely different than in America. In this country, the wages must be paid at a minimum ...
The solution provides a detailed explanation determining if opening a new facility in China will alleviate increased operational costs for U&L. Benefits and challenges are also provided.