Famosa. Global Production Strategy

English , Spanish

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  • Reference: P-1085-E

  • Year: 2006

  • Number of pages: 18

  • Geographic Setting: China, España

  • Publication Date: Feb 15, 2008

  • Source: IESE (España)

  • Type of Document: Case

  • Company: 100 M Euros

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Description

In 2003, Famosa, one of the top ten toy manufacturers in the world, underwent a restructuring process that entailed moving most of its production to China. This restructuring process forced the production manager to rethink the company's entire production strategy and face some fundamental challenges. On the one hand, production in China lowered costs but lengthened delivery times, which reduced flexibility in adapting production to demand. In an industry such as toys, with high seasonality, unpredictable demand and a short product life cycle, much of the company's success depended on its ability to adapt its production plans to cope with this uncertainty. On the other hand, production in China meant establishing relations with new suppliers there and managing those relationships. The case takes a detailed look at the company's new production strategy and poses questions and possible solutions which production management might consider in order to reduce production risks and improve management of suppliers. Among other questions, it asks whether the shift to China was really the best move for the company. The case is relevant to businesses and industries with innovative products with highly seasonable sales and a short life, such as the fashion industry, jewelry and the publishing business, as well as those consumer goods sectors where cost pressure encourages the shift to countries with low production costs. The case is accompanied by a simulation exercise, Famosa - Global Production Strategy (B).

Keywords

Globalization Outsourcing and Subcontracting Production Sales Estimation Suppliers Supply Chain