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IMAGINATIVE TOYSI . P R O B L E M S T A T E M E N T How will Imaginative Toys meet the demands of its consumers?I I . A R E A S O F C O N S I D E R A T I O N A. P R O C E S SP L A N N I N G The process used to manufacture the three product lines

couldbe replicated easily. All three processes were labor intensive,withplastic parts molding being the only skilled position.B.PHYSICAL FACILITIES MANAGEMENT G e r a l d K r a m b , t h e f o u n d e r o f t h e c o m p a n y , a n d h i s s ta f f researched two alternative locations for expansion. One was in amaquiladorain Nogales, Mexico and the second was in Europe.C . P E R S O N N E L M A N A G E M E N T S ince the o rgan iza t ion i s l abor-intensive, labor cost should betaken into consideration. Also theavailability of labor and howpeople in a certain location act towardswork. Where to get the workers should be considered.I I I . A L T E R N A T I V E C O U R S E S O F A C T I O N A. Locating to the US old site wou ld only mean expansion. Doingthis wouldput much less pressure on the companys alreadythinmanagement s t ruc ture . Bes ides , there was not any sui tablespace to be found anymore.B. Locating in Mexico could mean shipping if ever skilled labor isnotavailable. On the other hand, the improving trade relationsand theprojected relaxation of tariffs and duties made thisana t t r ac t ive a l t e rna t ive . Labor cos t a l so cou ld be subs tan t i a l ly reduced. Labor/Manpower is not a problem here.C. Locating in Europe would give comparable labor cost to those inSeattle buttransportation cost would be 10-15% higher ontoyssh ipped back to the US mar ke t . The p ro je c ted s ing le -marke tp rogram made th i s a l t e rna t ive a t t r ac t ive ; t h i s i s des ignedto bring free movement by people, goods, capital and services to theEuropean community by January 1, 1993D. Locating on both Mexico and Europe might be conceivable. SinceMexico got themanpower and Europe got the facilities, joiningthe tw o wou ld be gre ati f a n d o n l y i f t h e s a l e s p r o j e c t i o n sa r e a c t u a l l y h e l d b e c a u s e b y t h e n t h e d e m a n d w o u l d s u p p o r t a three-plant network.E. The company may acqu i re new mach ine r i e s fo r the loca t ion . The

y may ou t source and f ind the cheapes t mach ine r i e s tha t cou ldrender the same quality of work. Maintenance is the keyhere.F.

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Imaginative Toys, on the other hand, may buy spare parts andassemblenew customized machineries for their toys, of coursewith the help of theirtechnicians. Since it is said that innovationof a con t inu ou s k ind i s one o fthe key to the ir suc ces s, so why not make the machines morespecialized so it can render highquality toys right away?G.

If Europe location is considered, reducing the transportationcostf o r t h e m e a n t i m e i s a n e c e s s i t y . T h e p r o c e s s o f manufacturing/producing such toys shall be str ictly monitoredesp eci al l y t hos e o f whic h t hat wil l b esh ip ped ba ck t o t he US . They should be minimal for the first two years.H. The company can offer willing current employees jobs when theym ove t o a

cer tai n l oca t io n. Thi s i s a via ble opt ion sin ce i t can save time andtraining costs because the employees arealreadyf a m i l i a r w i t h t h e p r o c e s s . I n r e t u r n , t h e c o m p a n y c a n o f f e r incentives and other benefits.I. Since the job does not necessarily require a skilled position, thecompanycould train new employees for the job.In choosing the locat i on t hough , th e com pany shoul d co ns ide r th em in im um wage rates of the alternatives, if not the labor cost.J. Imaginative toys can hire willing current skilled employees forthe addedcapacity then hire qualified applicants for the routinely job. This way, the companycould ensure the quality of work theiremployees shall render.K. If the company shall choose Mexico, shipping possibilities shallberemo ved. T hey sh ould f ind a sk i l led labor er t o per f orm t heplasticmolding. In this case, the company shall use product plantstrategy wherein entireproducts or product lines are produced inseparate plantsL. Whether in Mexico or in Europe, the company may focus more onscientific andtechnical people as potential employees andlookfo r a reas wi th h igh concen t ra t ions o f tho se types o f worke r senable to optimize quality assurance of products as well as theworkersthemselves and their productivity.M. Language is an issue among personnel when locating to a foreigncountry. Theofficial language of Mexico is Spanish while Belgiumhas three offi ciallanguages, Dutch, French and German. Mostpeople here are bilingual whichmakes it easier for the companyto overcome the communication barrier.N. I f t he company loca ted in bo th Mex ico and Europe , t heycan perform a demand leading strategy. They can accommodate neworunexpected demand; provide quick response and deliverytoc u s t o m e r s , l o w o v e r t i m e f o r t h e e m p l o y e

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e s a n d l o w s ub co nt ra ct in g co st . T he b ad s id e i s t ha t t he rema y be a h i gh cost of unused capacity.I V . R E C O M M E N D A T I O N I n p e r f o r m i n g a l o c a t i o n d e c i s i o n , w e s h a l l w e i g h t h e p o t en t i a l b e n e f i t s a n d t h e p o t e nt i a l p r o b l e m s t o b e a b l e t o e n su r e

th a t we would not incur significant losses. The most viable alternative for thecompany is to locate in Europeand these are the reasons:1.Since the facilities are already present, the personnel shall behired fromBrussels, training cost would not be that highanywayf o r t h e j o b d o e s n o t r e q u i r e m u c h s k i l l , e x c e p t th e p l a s t i c molding of course. With the language differences, s inceEngl ish i s a un ive r sa l l anguage and mos t peop le the re t ake i t a sth e i r second language, it would not be that hard to hire people for the job. Unlikein Mexico where Spanish is the official language, thereare but few who speaksEnglish fluently. On the other hand,thec o m p a n y c a n a l s o s e n d s o m e o f i t s w o r k e r s w ho m i t h a s convinced to move to a foreign country and must make sure thattheemployees they send abroad are familiar with local customsan d ha ve areasonab le f ac i l i t y wi th the l anguage o f the hos tcoun t ry toel iminate culture shock and to be able to converseproperly.2.It is often advantageous to produce labor-intensive products inco un t ri eswit h low wage rat es l ik e in Mex ico but the pro ble mhere is that theproductivity and quality of work may be so muchlower tha t the effecti ve cos t ofthe product is higher. Since thekeys to success in the company werecontinual developmentof innova t ive p rodu c t s and a h i gh l eve l o f p rod uc t

quality, t h e y should be risk-averse because the quality of their product mustnotbe jeopardized.3.The stability of a countrys government is a major factor too. InMexico,

less than one-fifth of its labor force belongs to a union;the m ajority ofwhich are controlled by the government.Rathe rthan be ing aggress i ve advoca tes fo r worke r s , Me x ican un ion sh a v e t y p i c a l l y p l a y e d a c r u c i a l r o l e i n s u p p

o r t i n g t h e go ve rnm en t -domin ated Ins t i tu t i onal Revolu t iona ry Par t y. Indoing so, the unionsare noted for their levels of corruptionands u b o r d i n a t i o n t o g o v e r nm e n t i n f l u e n c e . W hi le t h e s e rv i ce econ omy is gr ow in g ra pi dl y in Be lg iu m , th e country remains heavilyindustrialized, importinggreat quantitieso f r a w m a t e r i a l s t h a t a r e p r o c e s s e d m a i n l y f o r

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e x p o r t . S u c h i n d u s t r y g i v e s B e l g i u m o n e o f t h e h i g h e s t g r o s s d o m e s t i c products in the world, despite its relatively smallpopulat ion.4.Climate should be considered too because this can bea g re a tperil to the operations of the company also to the productivity of itsworkers. Brussels climate is humid and mild as compared to Mexicos high

temperature with moderate to low rainfall.5.S ince Europe i s one to two yea r s beh ind the U .S . marke t i na trendy business such as toys, it is just rational to target them aspotent ia lconsumers. By January 1, 1993, the company will beable to conduct fullaccess to the European Community, which of course will entitle them to a muchbigger market share. Besides,the European Economic Area is the largest free-trade zone in theworld, which means that it can give the company accessto theEuropean coun t r i e s wh ich a re i t s members . I n con t ra s t t otheNor th Amer ican F ree Trade Agreemen t (NAFTA) , the w o r l d s second largest free trade area which were composed of Canada,Mexico and theUnited States.V . A C T I O N P L A N TIME FRAME

A quarter of a yearACTIVITIES Renovation of facilityHiring of personnelStart of operationPERSONS INVOLVED Gerald KrambWorkersEXPECTED RESULT

A m u ch b e t t e r o r gan i za t ion wi t h ave rye ffec t ive added capac i ty y i e ld ing h igh

profits through satisfying and meeting up with the demands of its consumers