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Eldora Case

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Submitted By sdwillie
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Eldora is in an unfamiliar and awkward position. Having spent assets and years developing production facilities locally in Colorado they are faced with a future where the majority of growth will take place in Asia where several of their parts suppliers are already located. Capturing a significant portion of this growth is their first strategic objective. Because their competitors are relocating manufacturing to developing economies, Eldora is faced with allowing manufacturing cost to become a competitive disadvantage, and avoiding this is a second objective. Finally they greatly benefit from their relationship with the Italian manufacturer Rinaldi because it not only provides valuable intelligence but also access to European markets. Maintaining this relationship is the third strategic objective. In short Eldora needs to find a way to succeed in the growing Asian market while keeping their manufacturing costs competitive without damaging their relationship with Rinaldi. In order to achieve these objectives, Eldora should strongly consider one of two options. Either they should move only their manufacturing to reduce labor costs or they should move their marketing and product development teams along with manufacturing. The reason to move all three departments is because it allows Eldora to maintain their competitive advantage of a lean, flexible manufacturing system created by the proximity of those three departments. Modern communications reduce the inefficiency of maintaining distant operational centers but it isn’t eliminated. Eldora would likely be better served by physically separating manufacturing from the other two departments and off-shoring manufacturing without making any unnecessary changes to the marketing and engineering departments. While their manufacturing system may have given them a competitive advantage, their true core competency…...

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