our product cost is Iebor, end the | ingcompanies aren’ giving our prod | new manufacturing operations. Then hourly wages of the manufacturing | ucts the attention they deserve, there's Mexico. Its closer to home, workiorce in these countries are be- | and they also aren't giving us the in. and aside from distribution costs, tween 5% and 15% of ours. It also formation we need on the features the wage rates are similar to Asia's costs us an additional 20% in trans- that consumers in these markets and many of the other isks would be portation and duties to get our bicy- | want. A sales operation would help minimized. You both feel strongly cles to these markers.” us learn the market even as we're about this, know, but thisisn'ta de- He glanced at Sean quickly and entering it. Setting up a plant first cision we ean make based on enthu continued. "But heres where I dis- | would take too long. We need to be siasn.” Ann crumpled up her sand agree with Sean. I think we need a | over there now, and opening a sales wich wrapper and drank the last of short-term solution. These compa: operation isthe quickest way.” her soda. “Le’s got hack over to the nies have a big lead on us, andthe | "Ann cut in, "Dale has « good exhibits m attending the IT semi more I think about it, the more I point, Sean,’ she said. believe we need to puta direct sales "We've been success . operation in Asia ist.” ful here in large part Would China’s low labor “Dale, you're erazy," Sean said, because our entire op- Pouring himselésomeice water rom eration is in Boulder, COStS Offset the problem of oli’ Atunserapenton is Smpleccomtos #5 poor infrastructure? without a manufacturing plant? I our ovn flexible man know wesource componentsin Asia ufacturingoperetion, and that’s been nar at 1:80. Well schedule a formal row, but we could saveanother 10% a Key factor in our ability to meet meeting on this subject soon. I was of those parts if we were located rapid change in the local market. £0iNg to say next month, but how there. Then we would really be How would we address the chal- about bumping it up two week: bringing Eldora to Asia, If we want Tenges inherent in manuiacturing in Walking back to the convention to ompee here we have fo playa facity halfray run the word) center wth Dale and Sean, Ana foom our greatest strength quality. | Would you consider moving there? alized that she wasn't just frustrat. If we did it your way, you wouldn't And for how long? el because she didn’t know which be selling Eldora bikes. You'd just be “Also, think about our other op- course EDC should pursue, She was selling some product with our label tions. Ifthe biggest issue keeping us concerned that she really dida’t on it. You wouldn't get the quality. | out of these markets right now is know which aspects of the decision ‘You wouldn't build the same kind of cost, then both of You are ignoring a | Were important and which were i reputation we have here. Ik wouldn't few obvious alternatives. Right now, relevant. Should she establish a divi really be EMlora. Over the longterm, only our frame-building operation is sion in China? Ifso, whieh functions {couldn’ work.” automated. We could cut labor costs should she stare with? Manufactur- "We're building bicycles, notrock- significantly by automating more __ ing? Marketing? And what about en- et ships," Dale countered. "here processes. And why are you so bent gineering? Or should she consider a ate lots of companies in Asia that | on China! Frankly, whenTwas there different location? Would China's could provide us with aproduct very | last month touring facilites, alot of | low labor costs offset problems hit saw worried me, Sasedby poor infarcts! ” You know, that day Iwas Growth ad always been vitally Dale, you’re crazy. What ysuietos se important to Eldon both In cree good would an Asian sales Sito" siiy sss arylesw tahoe adn operation do without a insiythereactioas ofthe could attract and etain the most al fe ‘ leant?” retonnelintheplantche ented people. Now i appeared that manufacturing plant? next day, these outages Ain would have to choose between ate common. The roads continued growth and a domestic. sail ifwe gave them our designs | to the facility are in very poor con- only manufacturing strategy that and helped them with their produc- dion, Andwastewaterandecleaning had served her well Ann knew the tion process. We could outsource solvents are regularly dumped un: lant location decision she had Production in the short term, until treated into the waterways. We Made years earlier had been critical wwe made more permanent arrange- could operate differently we locat. 10 the company’s success, and she ments.” He turned to Ann. “We | ed there, but what impact would felt the company’s next move would could even outsource the product that have on costs! be just as ervcial permanently, despite what San says. "Taiwan has a better developed What do we know about building | infrastracture than China. What | URS css are derived from the aie running plant in China! All about making tat our Aslan baset feu! people As won they oe ‘now is we're losing potential And I've heard that Singapore of othetical, and the names us share even as we sithete. The tad- | fers attractive tax aangements to are fctioas om ™ “! HBR cases are derived from the 4 HARVARD BUSINESS REVIEW March-April 1994 ‘This docimerts authored fous on Prot. Siahartn Vrms PCOMHRM}:!Operaons Management: at tins Management tse -New Dai Mm an 2003 o Agr