Evaluation group t_bunting_wezell_dkaser_aprice_jwierzbicki
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  • However, this is not a locked scale. If Big Planes makes the investment in operations the intent would be long-term with expansion over a 5 to 10 year period. Target would be original 60,000 sq. ft. of space for 180 to 200 employees but have ability to handle projected growth to more than 85,000 sq. ft. and about 400 employees over a 5-10 year period.
  • Current environment calls for aggressive protection of business through diversification. To serve that need, Big Planes is targeting a location that offered inexpensive raw materials, had access to a diversely educated pool of employees, and was in a location that was not already saturated with airplane manufacturers, to aid in the growth expected within the host country’s market.
  • There is a strong “relationship” business culture. Ie: We only give you our business if we know you and Big Planes doesn’t have those established relationships. The concern is that we would either need to hire people who have those (and how would we find out if they did) or figure out some way to buy those relationships. The educational environment is one of “pass the test” not “comprehend the material”, which would be a detriment to Big Planes. All China Federation Trade Union (ACFTU) has 230 million members and considered to be low to medium for level of CBA, but unity is high to medium. Confucianism: Senior or superior people are viewed with reverence by their juniors. This might pose a problem if we have young executives and old workers since that contradicts the concept of Confucianism. Also, this raises concerns over “male” considerations over females. China portrays their country as: An educated and skilled workforce able to meet the technological demands of Big Planes at a highly competitive cost Having invested vast resources to updating their infrastructure to aid in shipping and import/export to draw international business An economic advantage to Big Planes since the suggested location is in a Special Economic Zone (SEZ) **This was in the slide. Not sure it is necessary and also we need to keep the presentation consistent as we introduce all of the countries. Brazil/Mexico did not have an overview blurb. AP
  • -Staffing and workforce There are ready and willing applicants available for all levels of need within Big Planes. -Facility – SEZ India has the necessary facilities and is proposing to locate our next Big Planes location in a Special Economic Zones to support a low cost initiative. -Shipping to EU is easy from the locations in India and this will create a new hub for Big Planes for manufacture. -IT support will enable further shaping and improvements in systems management with the existing link and network India already has with many U.S. companies. ** Once again – didn’t see this as completely relevant, but it is still here in case you need to verbally address it. According to a recent article in The Economist, “ India has some of the hardest working bureaucrats in the world, but it’s administration has an abysmal record of servicing the public.” Recent unannounced inspections revealed that 25% of teachers and 40% of public sector medical workers could not be found at work. The Indian government has since implemented computerized control measures to remedy the much publicized attendance problem of government employees. India’s Civil Service: Battling the Babu Raj. The Economist. Mar. 6 th , 2008.

Evaluation group t_bunting_wezell_dkaser_aprice_jwierzbicki Evaluation group t_bunting_wezell_dkaser_aprice_jwierzbicki Presentation Transcript

  • Presented by Evaluation Group Bunting, T. Ezell, W. Kaser, D. Price, A. Wierzbicki, J. October 6, 2011 RPF Evaluation Group Project for Central Michigan University Dr. Patricia Kelley MSA 604
  • Manufacturing Operations Expansion Strategy RFP Review and Results October 2011
  • Agenda
    • Big Planes Overview
    • Mexico
    • Brazil
    • China
    • India
    • RFP Result
    View slide
  • Customer footprint overlay to market view Big Planes Industries 2011 Sales orders are spread among 49 customers and 22 countries on five continents and have accumulated more than 4.5 million flight hours. View slide
  • Big Planes- RFP requirements support Multi-year plan
    • Overview: Big Planes is considering a contract to build plane parts to reduce cost of components, establish supply chain that is reliable to meet production schedules, maintain existing standards, and reduce risk by finding a location that would be suitable for disaster recovery as well as to establish new market for aircraft.
    • Facility and human resource specifications:
    • RFP submission from countries that can provide a facility with 60,000 sq. ft.
    • the ability to employ a competent staff 150 employees on all levels
  • Big Planes- RFP requirements (Continued)
    • For success Big Planes is looking for:
      • Available workforce to pull a competent and educated staff, particularly people with degrees and advanced degrees in engineering and technology fields
      • Availability to expand business in both the private (commercial airline industry) as well as the defense/security sector
      • Staffing ability to achieve high standards in customer service. Customer Service is of the utmost importance in order to provide round-the-clock customer support, maintenance, modification of aircraft, and informational services
      • Staffing for a financial division at any location (off-shore or on-shore) so Big Planes can offer financing for merchandise (big airplanes)
  • Big Planes- RFP Review
    • Mexico
            • Advantages
            • Disadvantages
            • Rankings (Grading against rubric)
          • Brazil
            • Advantages
            • Disadvantages
            • Rankings (Grading against rubric)
          • China
            • Advantages
            • Disadvantages
            • Rankings (Grading against rubric)
          • India
            • Advantages
            • Disadvantages
            • Rankings (Grading against rubric)
          • RFP Winner
            • Advantages
            • Disadvantages
            • Rankings (Grading against rubric)
    Mexico- Overview
  • Mexico- Highlights
    • Advantages
    • Mexico ended 2010 with just over 12% of the U.S. import market, its largest share to date
    • Chinese workers, whose wages are rising, are leading more companies to build factories in Mexico
    • During the first 11 months of 2010 and for the first time since China entered the World Trade Organization in 2001 and became an exporting superpower, Mexico posted a bigger gain in U.S. market share than its Asian rival
    • Foreign direct investment in Mexico is growing and Mexico's government estimates FDI could be up to US $22-billion in 2011
    • Disadvantages
    • Due to the exportation of jobs to Mexico, U.S. wages were suppressed and U.S. jobs were lost
    • Mexico’s employee pool is lacking in terms of education and training
    • High turnover/attrition rate, which adds costs to our Operating Plan
      • Mexico: Ranking/graded 64
      • Understanding of the requirement (10%): 6% Did not discuss high quality standards or brand name recognition.
      • Country suitability, stability, and business-friendliness (20%): 16% NAFTA makes it a trade friendly nation, but concerns about recent violence are not addressed and not enough explanation of "ghost unions“.
      • Proposed location and workforce capabilities (25%): 18% Manufacturing employees available, but no real data suggesting high end engineers or technical staff available.
      • Cultural suitability and compatibility (25%): 5%   Last paragraph of their RFC basically talks themselves out of being culturally compatible.
      • Cost (20%): 19% Wages are cheaper and NAFTA assists in making import/export of products cheaper.
    Mexico- Rankings
            • Advantages
            • Disadvantages
            • Rankings (Grading against rubric)
    Brazil- Overview
  • Brazil- Highlights
    • Advantages
    • Location
      • Close to U.S. (near-shoring)
      • Biggest, most industrial city in South America
      • 80% of The Fortune 500 list has subsidiaries in this country
    • Economy
      • Stable
      • Growing
      • Low unemployment
    • Lower wages (not included in mid-level management)
    • Immense natural resources
    • Strong industrial development
    • Hydroelectricity (60% of all energy in Brazil)
  • Brazil- Highlights
    • Disadvantages
    • Unskilled and uneducated workforce
    • Inadequate infrastructure
      • Adequate air infrastructure, but that raises the question of how Big Planes will export parts from Brazil to the U.S.
    • Cultural differences
      • Slow pace
      • Very easily offended (emotional)
      • Brazilian culture dictates one has to be very detailed in giving direction of wants and needs because Brazilians will do no more than asked
    • Higher cost of living
    • High corporate taxes
      • Brazil: Ranking/graded 76
      • Understanding of the requirement (10%): 10% Intro and overview appeared to express a good understanding of Big Planes needs.
      • Country suitability, stability, and business-friendliness (20%):   15% Our own research shows that Brazil is not an easy country in which to set up a business, Brazil also has a major aircraft manufacturing business with which Big Planes would have to compete – embraer.
      • Proposed location and workforce capabilities (25%): 18% Sao Paulo is a decent location, but lack of qualified workforce is a concern.
      • Cultural suitability and compatibility (25%): 18%  Brazil does not seem like a good cultural match.  Women are not a large part of the workforce, language is a barrier as the language of the country is Portuguese, and Brazilians are reportedly offended very easily.
      • Cost (20%): 15% No real cost savings in salaries, no info on cost of materials for manufacturing, cost of electricity is lower due to use of hydroelectricity.
    Brazil- Rankings
            • Advantages
            • Disadvantages
            • Rankings (Grading against rubric)
    China- Overview
  • China- Highlights
    • Advantages
        • China has easy shipping access via deep water ports
        • There are low taxes and overhead
        • Great infrastructure
        • China has a stable government
        • With access to 13 bordering countries, China is in a great location
        • China is the largest goods exporter in the world
        • Proposed location in a Special Economic Zone
    • Disadvantages
      • There is a strong “relationship” business culture
      • The educational environment is one of “pass the test” not “comprehend the material”, which would be a detriment to Big Planes
      • All China Federation Trade Union (ACFTU) has 230 million members and considered to be low to medium for level of CBA, but unity is high to medium
      • Confucianism
  • China- Rankings
      • China: Ranking/graded 87
      • Understanding of the requirement (10%):  10% Successfully reiterated the needs of Big Planes.
      • Country suitability, stability, and business-friendliness (20%): 18% Very business friendly with Special Economic Zones, but have concerns regarding unrest that is a result of change from the old economic system of the past to the new market system.
      • Proposed location and workforce capabilities (25%):  23% China has a well-educated workforce in order to staff the engineering and technical aspects of aircraft manufacturing addressing quality and productivity needs of Big Planes, Inc.
      • Cultural suitability and compatibility (25%):  18% Concern over relationship based business practices, concern regarding gender issues which were not discussed.
      • Cost (20%): 18% Cost does appear to be less with regards to salaries and less local taxes (SEZ).
            • Advantages
            • Disadvantages
            • Rankings (Grading against rubric)
    India- Overview
  • India- Highlights
    • Advantages
    • Staffing & Workforce
        • India’s labor force is growing at roughly 2.5% per year so Big Planes will not have issues finding workers
        • Mumbai’s labor force consists of around 6.2 million total workers
    • Facility –Special Economic Zone
        • Navi SEZ (NMSEZ) have multiple facilities already constructed that meet these requirements (60,000 – 85,000 sq ft), so no turnaround time would be required.
        • Pricing ranges widely and includes various options, including leasing for a minimal of 10 year terms.
    • Shipping
    • IT support
    • Disadvantages
    • Mumbai has an attrition rate of 50-55%, which is VERY high and Big Planes will need mitigation plans as the cost to hire is a loss to knowledge capital.
      • India: Ranking/graded 93
      • Understanding of the requirement (10%): 10%
      • Country suitability, stability, and business-friendliness (20%): 18% SEZ, stable power grids, unions and policies to improve labor productivity
      • Proposed location and workforce capabilities (25%): 23% Mumbai, Maharashtra is the financial capital of the country, has SEZ, housing issues being addressed but there are issues, average age of workforce is 25, well-educated and technically trained.  Ability to provide technical and engineering support very important in aircraft industry
      • Cultural suitability and compatibility (25%): 24% English is the main language in schools, multi-ethnic culture like US
      • Cost (20%): 18% Costs appear lower for staffing and property purchase.  Also, there are multiple means of transportation to decide which is the best/most economical form (roads, planes, ships)
    India- Rankings
  • Global Strength and Perspective Asia EMEA North America Latin America Australia/ New Zealand New location: expand/sustain business over 5-10 years Global Deployment RFP Ranking 64 76 87 Mexico: Ranking/graded 64 Brazil: Ranking/graded 76 China: Ranking/graded 87 India: Ranking/graded 93 Result: India WINS the bid 93 Big Planes Multi- year plan: service customers in 22 countries Mexico Brazil China India *Global Deployment of those customers supports the new location needs to be outside of the US
  • RFP Results- India!
    • Thank you everyone for all of your hard work and effort. We greatly appreciate your added effort with the additional Best and Final Offer request. After much deliberation, Big Planes Industry has decided to award our expansion contract with India.
    • Congratulations to India!
  • Meet the Evaluation Team
    • Team Leader Jeaninne Wierzbicki
    • Area Subject Matter Experts (SME)
        • Company SME Terri Bunting
        • Mexico SME Wandella Ezell
        • Brazil SME Ashley Price
        • China SME Debra Kaser
        • India SME Jeaninne Wierzbicki
        • RFP decision Group Collaboration
  • Resources
    • Adler, I. (1999). Let's get physical. Business Mexico , Retrieved September 9, 2011 : http://0-proquest.umi.com.catalog.lib.cmich.edu/pqdweb?index=0&did=46510591&SrchMode=2&sid=2&Fmt=6&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1291861856&clientId=45540
    • Boeing. (2011). Boeing:Boeing in Brief Home. Retrieved September 6, 2011 from http://www.boeing.com/companyoffices/aboutus/brief.html
    • Castillo, R. D., & Zalenski, J. (2008). Is your organization culturally competent? Nonprofit World , 26 (6), 18-21. Retrieved from: http://0-proquest.umi.com.catalog.lib.cmich.edu/pqdweb?index=0&did=1623859921&SrchMode=2&sid=1&Fmt=3&VInst= PROD&VType =PQD&RQT=309&VName=PQD&TS=1291861626&clientId=45540
    • Corella, R. (2008). Mexican Customs Labor (Vol. 12, pp.17-22). Latin American Operation
    • Embraer. (2011) Retrieved September 9, 2011 from http://www.embraer.com/en-US/ConhecaEmbraer/EmbraerNumeros/Pages/Home.aspx
    • Gannon, M. J., & Pillai, R. (2010). Understanding global cultures: Metaphorical journeys through 29 nations clusters of nations, continents, and diversity (4th ed.). Thousand Oaks: SAGE Publications, Inc.
    • Kaplan, S., & Cunningham, C. (2010, Summer). Eight quick tips for improving global cross-cultural communications. The Diversity Factor (Online) , 18 (2), pp. 1-6.
    • Lombardo, D. a. (2009, June 1). Offshore manufacturing raises industry questions. In Aviation International News . Retrieved September 8, 2011, from http://www.ainonline.com/news/single-news-page/article/offshore-manufacturing-raises-industry-questions-21027/
    • Oppmann, P. (2011). Boeing rolls out 787 dreamliner after years of delay. Retrieved September 9, 2011 from http:// articles.cnn.com/keyword/boeing
    • Ortiz, R. (2007). A Division of Motor Corporation (Vol. 9, pp. 9-14). Mexico City: Speak Products
    • Willis, K., & Yan, F. (2011, September 7). China’s jet needs soaring: Boeing . In The Globe and Mail . Retrieved September 7, 2011, from http://www.theglobeandmail.com/report-on-business/international-news/asian-pacific/chinas-jet-needs-soaring-boeing/article2156193/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source= Home&utm_content =2156193
  • Thank you October 6, 2011 RPF Evaluation Bunting, T. Ezell, W. Kaser, D. Price, A. Wierzbicki, J Central Michigan University Dr. Patricia Kelley MSA 604