CHINA DOLLS
Overview
Haute Couture Fashions Sdn Bhd need to adjust their business strategy, as China textile industry becoming a potential threat to it as its two major customers are now thinking of outsourcing to China for its lower operating cost. The management need to decide whether to move its operation to China or exit from contract manufacturing activity and stand on its own new created brand. It is recommended for Haute Couture Fashions Sdn Bhd to move their operations wholly by itself to China and halt their current local operations, to secure its existing customers, and attract new potential customer in the long run. Although it might seems as a big investment in the short term, but in the long term period, Haute Couture Fashions would enjoy the profit made by this big investment of today.
Problems
The management of Haute couture Fashions Sdn Bhd needs to make quick adjustment to their existing business strategy due to the emergence market of China in the textile industry. Many of the manufacturers from European and American market are changing their contract manufacturer to China due to its potential low operating cost. In the short term period, Haute Couture Fashions Sdn Bhd, HCF might lose its two major clients, which made up 44.2% of its sales annually. On the other hand, if no changes being implemented, in the long run, HCF might suffer even more, when all of its clients follow those steps, outsourcing to China. Potential alternative decision to be made by HCF management:
1) Expand operation to China, and maintain current factories operations to create own brand name.
2) Move all of HCF operations to China, and close down current operations.
3) Exit from contract manufacturing activity and create own brand name using existing factories and employees.
Issues
One of the main causes of the problem might be due to the