OPERATIONS MANAGEMENT ASSIGNMENT

INTEL CASE STUDY

Q. Where should the new facility of Intel Inc. be located?
• Dalian, China
• Chennai, India
• Bangkok, Thailand
• Ho Chi Minh City, Vietnam
Solution: The new facility of Intel Inc. out of the above mentioned four
locations should preferably be situated at Ho Chi Minh City, Vietnam.
Reasons:

 Vietnam is gradually becoming a worthwhile country to invest in

due to good quality of produced goods and logistical ease.

 Most of the raw materials are brought from China and assembled
in Thailand, and it takes weeks to ship those products, while the
China-to-Vietnam route takes less than a week.

 Some of the other driving forces behind the growth of the

semiconductor market in Vietnam are as follows :

 As the labor cost in Vietnam is cheaper than in other Asian

countries, a large number of semiconductor and electronics
companies are attracted to set up their bases in the country.
 With continuous advances in technology, the amount of data
generated on a daily basis is 2.5 quintillion bytes. The data is
stored in a facility called a data center. The market for data centers
is growing at a rapid pace worldwide, with a CAGR of 10%.

 The Southeast Asian countries are considered to have evolving

data center markets due to the exponential growth in consumer
electronics market and internet penetration. Vietnam is one such
market suitable for data centers. The Vietnamese government has
identified ICT as one of the key segments contributing to the
country's development and aims to make it an advanced ICT
country by 2020. This could be an important driver for setting up
data centers in this region. To achieve this target, the government
has allocated USD 8.5 billion to develop ICT during 2010-2020.

 The Vietnamese government is providing subsidies to companies

to make Vietnam an attractive location for foreign companies. In
2012, the Ho Chi Minh City administration initiated a program to
develop a chip-making factory at SHTP by the Saigon Industry
Corporation for a total investment of USD 314.2 million. In June
2015, the Prime Minister of Vietnam agreed to provide a license to
the Saigon Industry Corporation. The project is set for a
preferential tax of 10% for a period of 30 years, tax exemption for
four years, and a 50% tax reduction for nine years.

 Vietnam is also entering into the TPP treaty, which is a landmark

12-nation free-trade deal. This will let Vietnam export its products
free of tariffs to other countries. Vietnam is expected to gain the
 most from this pact, as none of its Southeast rivals have joined it.
The pact eliminates 18,000 different taxes on export and import of
products among these countries.

STORE LOCATION: SALVATORE FERRAGAMO

Q. A leading global luxury goods high end retailer “Salvatore
Ferragamo” wants to enter in India. Identify five cities and probable
locations to set up their store.
Solution: The five cities in India where the global luxury goods high
end retailer Salvatore Ferragamo can consider setting up their store are
as follows:
• Delhi
• Mumbai
• Pune
• Bangalore
• Ahmedabad
Probable Locations & Why?

• DELHI
Reason:

 It has most enriching retail legacy among the Indian cities.

 Delhi, especially the national capital region, remain one of the

strongest market in terms of sales volume for the manufacturers.

 It is also closed to airports, hotels and big shopping malls.

 It is very highly populated city, so automatically more customers

will be there.
  One of the international airport is situated there so foreign travelers
and all will have easy access to the outlet.

• MUMBAI
Reason:

 It has highest retail demand potential but because of lack of

availability of land parcels leading to high ranks act as a dampener
that causes Mumbai to lack behind Delhi.
 It is the dream city of India and it also gives major contribution to
our economy in terms of finance and also in cinema and fashion
world.
 It also has international airports so connectivity of tourists will
have more over there.
 From big flimstars to highly reputed entrepreneurs to India’s
richest personalities resides over there.

• PUNE
Reason:

 It provides the most affordable lands in prime areas among the Tier
I, Tier II cities
 After Mumbai it is the tourists hotspot.
 It has availability of airport along with very high number of
shopping centres and working population.
 Open and rewarding and can be a destination for future customers.
• BANGALORE

Reason:

 Affordable rents in the city compared to Tier I & Tier II cities,

have held the retail to flourish here.
 It is IT hub of the country and as well as robust service sector.
 It has also the facility of seaport at Mangalore which is very nearby
it and a quite number of high end hotels and big shopping centres.

• AHMEDABAD

Reason:

 It is a cash rich city, increased spending on premium high-end

offering from global automaker.
 It is well established for opening new luxury outlets.
 Offers good connectivity with nearby areas and can serve the
demands of nearby markets also.
GLOBAL PHARMACEUTICAL COMPANY

Q. Global Pharmaceutical Company wants to establish a captive

pharmaceutical research centre in India. Identify five cities and
locations to set up their stores.
Solution: The five cities in India where the “Global Pharmaceutical
Company” can consider for opening their research centre are as
follows
• Telangana (Hyderabad)
• Maharashtra (Mumbai)
• Gujarat (Ahmedabad, Vadodra, Ankleshwar)
• Sikkim
• Karnataka (Bangalore)

Probable Locations &Why?

• Telangana (Hyderabad)
Reason:

 The City enjoys the advantage of its location and connects to all
major cities in India through rail, road and air.

 The Hyderabad International Airport (Rajiv Gandhi International

Airport) provides connectivity to major international destinations.
Hyderabad is ranked 3rd amongst top 20 cities in the world to
 become ‘Global Mega Hub’ by 2020. (Source: Doing Business
2011-report published by the World Bank Group).

 The economic growth drivers of the city are knowledge based

industries such as Biotechnology, Pharmaceuticals and IT, ITES.
The city houses several multinational life sciences giants like
United States Pharmacopeia (USP), DuPont, Albany Molecular
Research Inc. (AMRI), Nektar Therapeutics, Sanofi Aventis,
Aptuit-Laurus etc. as well as home grown companies such as Dr
Reddy’s, Aurobindo Pharma, Bharat Biotech etc.

 Hyderabad has a globally competitive research ecosystem

supported by integrated infrastructure facilities. The city houses
several Techno- townships, Hardware Parks, Software Parks,
Apparel Export Parks, Special Economic Zones and Industrial
Promotion Parks.

• Maharashtra (Mumbai)

Reason:

 Number of shipping lines operate in the state, such as sea ports and
inland container depots (ICDs) located in various parts of the state.
The port facilities are well equipped with latest technologies and
state-of-the-art infrastructure. The custom clearance process is
highly automised through Electronic Data Interface (EDI), which
facilitates smooth clearance of import and export shipments.
 Maharashtra ports have the advantage of docking high capacity
vessels as compared to ports in other parts of India. The Custom
House Agents’ (CHA) services available in the state are the best
and the CHAs are updated with the latest changes in rules and
regulations.

 Provides tax benefits to the industry, and as a result, many

companies have decided to set up shops outside Maharashtra to
reap the benefits of excise and tax duties. This has resulted in
Maharashtra losing tax revenues, employment and growth
opportunities.

 Good infrastructure.

 Availability of skilled manpower and ease of doing business. The

state also has the advantage of skilled manpower with so many
pharma graduates passing out of the pharmacy colleges every year.
This skilled manpower supply is essential to maintain the
international standards of manufacturing due to the strict
regulatory guidelines by the regulatory bodies of the world.

 India has the highest number of US FDA approved plants outside

the US and Maharashtra has the highest number of such plants in
India.

• Gujarat (Ahmedabad, Vadodra, Ankleshwar)

Reason:

 Government’s emphasis on Capital Investment Subsidy,

 Interest Subsidy,
 Venture Capital,
 Quality Certification,
 Technology Acquisition,
 Patent Registration and saving in Consumption of Energy &
Water.

• Sikkim

Reason:

 The North-East Industrial and Investment Promotion Policy

(NEIIPP) 2007 provides, Sikkim has been able to offer a host of
tax benefits to the industry.
 Low manufacturing and labour costs
 A pollution – free environment have also proved to be the key
attractions for these pharma companies.
 Sikkim, which offers 100 per cent excise and income tax benefits
in addition to freight subsidy, provides continuous support to set
up new plants with other facilities.
 Apart from pharma companies, ancillary units like packaging,
access to raw materials, components, machinery, have also set up
their base.
• Karnataka (Bangalore)
Reason:

 Presence of exclusive Pharma SEZ, Pharma industrial areas and

R&D Centres
 A well developed ecosystem & ability to produce quality products
make Karnataka an ideal destination for pharmaceutical industries.
 Large number of medical and dental colleges (more than 70)
creating an ecosystem for collaboration on product development
and trials.
 Quality control by means of three established Drug Testing
Laboratories with well published information on the testing results
 Pharma SEZ's, Technology parks, innovation and incubation
centers, Skill development and sector specific research centers
provide ample investment opportunity in this sector.