Free Essay

Holly Manufacturing

In:

Submitted By sweetapple
Words 652
Pages 3
Discuss each single one of the main risk factors that should be allowed for (in addition to WACC) in order to determine the appropriate required return on this capital investment opportunity.

In 2011, China surprisingly has taken over the United States’ position as the world’s largest producer of manufactured goods. Ross (2013) noted that, China’s industrial output had risen to 120% of the US level where in 2007, China’s total industrial production was only 62% of the US level. The huge manufacturing engine boosted the living standards by doubling the country’s GDP per capita over the last decade.

However, manufacturing growth is slowing more quickly than aggregate economic growth. Data from the government shows China's economic growth has weakened in recent years, hitting 7.7 percent in 2013, the lowest level since 1999 (New Straits Times, 2014). Growing concern on China’s manufacturing competitiveness has recently made this country losing some new factory investments to lower-cost locations, such as Vietnam.

There are three risk factors that should be addresses in order to determine the appropriate required return on this capital investment opportunity:

1) Risk of rising labor cost
According to Orlik (2014), as cited from The Wall Street Journal, Chinese private-sector wages rose 14% in 2012, and are set to increase by 10 percent or more in 2014 (Bloomberg News, 2014). This condition is driving more low-cost manufacturers out of the country and boosting consumption, according to analysts at firms including Bank of America Corp (as cited in Bloomberg News, 2014).

2) Risk of foreign-exchange markets
The currency intervention in China has been effectively subsidize their export to United States, and place a tax on imported goods (tariff) on U.S. shipment to China. American Manufacturing organization (2013) reported that China’s currency intervention has contributed to the dramatic increase in the U.S. bilateral trade deficit with China, and on the other hand, China has amassed foreign exchange reserves of more than $3.8 trillion.
Davis (2004) argued that the currency intervention [example: in China and Japan] will affect the flows of supply and demand as its influence to the interest rates. Ikenson (2013) as cited in Forbes, reported that, “…the result of massive currency interventions on the part of some 20 foreign governments, the United States has incurred heavy losses, including the dubious claim that annual trade deficits have been $200 billion to $500 billion.”

3) Risk of the customers’ high expectation in China
According to Customer Service Index (CSI) Study, as cited in the J.D. Power Asia Pacific 2013, “Overall customer satisfaction with after-sales service at authorized dealerships in China declines in 2013, largely due to rising customer expectations toward the service experience.” People in China now are demanding innovative products that require engineering processes and manufacturing capabilities that, unfortunately, many local producers do not yet adequately possess. Eloot, Huang, and Lehnich (2013) stated, “China’s automakers face a similar challenge: consumers perceive their brands as lower in quality, even compared with foreign brands assembled in nearby Chinese factories.”

References

Karel, E., Huang, A., and Lehnich. M. (June 2013). New era of manufacturing in China. McKinsey & Company. Retrieved from http://www.mckinsey.com/insights/manufacturing/a_new_era_for_manufacturing_in_china

Rose, J. (September 2013). Key trends in globalization. Retrieved from http://ablog.typepad.com/keytrendsinglobalisation/2013/09/china-has-overtaken-the-us.html

http://www.nst.com.my/world/china-manufacturing-growth-slows-to-8-month-low-govt-data-shows-1.600810#ixzz32ANbGBc9

http://online.wsj.com/news/articles/SB10001424127887324767004578488233119290670

http://www.bloomberg.com/news/2014-01-06/china-wages-seen-jumping-in-2014-amid-shift-to-services-.html

https://global.vanguard.com/international/common/pdf/currencyrevaluationEN.pdf

http://www.forbes.com/sites/danikenson/2013/01/08/foreign-currency-manipulation-does-not-warrant-washingtons-attention/

http://americanmanufacturing.org/category/issues/china/china-and-currency-manipulation#sthash.CJwv2BBU.dpuf

http://www.jdpower.com/press-releases/2013-china-customer-service-index-csi-study#sthash.ZDICgLhV.dpuf

Similar Documents

Free Essay

Justiication Report

...CHRISTENBURY MASTER ASSOCIATION, INC. ARCHITECTURAL CONTROL COMMITTEE CHRISTENBURY MASTER ASSOCIATION, INC. ARCHITECTURAL DESIGN GUIDELINES Revised 11-8-11 1 CHRISTENBURY MASTER ASSOCIATION, INC. ARCHITECTURAL CONTROL COMMITTEE TABLE OF CONTENTS DESCRIPTION PAGE NO. INTRODUCTION .....................................................................................................................3 NEW, ADDITION, AND/OR REMODELING CONSTRUCTION GUIDELINES ...............5 OUTDOOR STRUCTURE GUIDELINES...............................................................................7 REAR YARD FENCE GUIDELINES ......................................................................................9 PLAY EQUIPMENT GUIDELINES ......................................................................................11 SATELLITE RECEIVER (DISH) GUIDELINES ..................................................................13 GENERAL IMPROVEMENTS, LANDSCAPE & MAINTENANCE GUIDELINES..........14 LIST OF RECOMMENDED PLANT SPECIES ....................................................................19 EXHIBIT A REQUEST FORM 2 CHRISTENBURY MASTER ASSOCIATION, INC. ARCHITECTURAL CONTROL COMMITTEE INTRODUCTION The Architectural Control Committee (ACC) is providing the attached Architectural Design Guidelines (“Guidelines”) in accordance with that Declaration of Covenants, Easements, Conditions and Restrictions (“Declaration”), for purposes of establishing and maintaining exterior...

Words: 5815 - Pages: 24

Premium Essay

Rock and Roll

...When Rock arrived on the music charts in the 1950's, a merging of African-American and White music, it made a huge impact on society. As a general rule I am not heavily into music, but I was drawn to Rock for some inexplicable reason. It is just the music I like. This genre will be difficult to write about because the origin of Rock is unclear; there are traces of Rock's style back into the 19th Century. It is also a very broad subject and I will have to compress a lot of information into as few pages as possible. Be that as it may, Rock is, in my opinion the best music genre on the charts. There is so much information on Rock that I will have to have questions I want to find the answers to about the music. My first question will be, "What instruments are commonly used in a rock band?" This will not be hard to answer as it is a very easy question that has a definite answer. The next question will be, "Who were the first artists to produce Rock music?" This is also an easy question were I will discuss the first Rockers. Continuing on, my next question will ask, "How was the term ‘Rock and Roll' created, and by who?" This may turn out to be a hard question to answer because I am sure there a multiple answers. "Has Rock become more or less popular since its inception?" will be my next question. For this question I will have to look for a survey or poll of some type and present its data. My final question will be, "How has the Music been changed over the years and who changed...

Words: 1530 - Pages: 7

Free Essay

An Analysis of Hotel California and American Pie

...Eagles’ rock epic “Hotel California” is written in a verse/chorus format. It contains four verses, two iterations of the chorus, a coda, and a lengthy guitar solo to end the song. The standard Eagles’ instrumental setup for the song includes drummer Don Henley singing, as well as playing the drums. Joe Walsh, Don Felder, and Glen Frey play guitars, and bassist Randy Meisner plays the bass. All four offer backup vocals during the chorus. It is safe to say that both songs are considered “legendary” rock songs, as they are still very popular today. “American Pie” tells the story of the U.S. in the 1960s, starting on the “day the music died”, referring to the 1959 plane crash that killed musical icons Big Bopper, Ritchie Valens and Buddy Holly. McLean then tells the story of the 60s in the United States via...

Words: 892 - Pages: 4

Free Essay

Case Study

...yourself what world this is in. Blurring the line between the two makes a movie harder to follow unless it’s consistent so it actually can make sense as long as your watching the movie. The Conan Brothers did an excellent job in doing so in Raising Arizona, the blurred line between reality and fantasy makes the movie more enjoyable. There are some scenes where they are so ridiculous you can’t help but laugh, without the use of this style it could have made the movie more serious and may have not been as comical. The Main character Herbert McDunnough (“Hi”) is played by Nicolas Cage who also narrates the entire film. Herbert is a criminal who sticks up grocery stores, he is married to a policewomen named Edwina McDunnough (“Ed”) played by Holly Hunter. The two quickly fall in love after she was taking mugshots of Herbert, the couple get married after Hi proposes to her after his most recent release from prison, the two move into a arizonan mobile home in the desert. They find out Ed is infertile and because of Hi’s criminal record they are unable to adopt. They resort to stealing a child from a locally famous furniture salesman who happens to have quints. Herbert believes anyone with five children wouldn't miss one. Nathan Arizona is the famous furniture salesman and father who puts up a hefty reward for the child's safe return, which draws in the biker from hell (Leonard smalls) this is the only way i can describe the...

Words: 761 - Pages: 4

Free Essay

Piano Techer

...Piano Teacher Most parent believe that participation in extracurricular activities affect a child in a lot of good ways. My parent were no exception. When I was a kid, after school I was always being driven from piano to volleyball to self-defense classes and so on. At the time, I thought I was the world’s busiest teenager. However, after all these years, I can easily see that I have gained some important benefits from those activities. Playing the piano is probably the greatest benefit. In the meantime, it would be a big lie for me to say that my appreciation for playing the piano came immediately. Since the time I was ten years old until I was twelve or thirteen, I absolutely detested Sunday afternoons. Of course by then, it was not called Sunday for me but the torturous “piano day”. I had to practice all the morning before the lesson in the afternoon, and became totally exhausted in the evening. When it was finally over, I had relief as of am incredible amount of weight had been pulled from my shoulders. In those days, I never got to see the importance of having those lessons, practicing for hours, and even playing those tunes. As much as I tried, I could never find a way to enjoy it; it was no more than some never-ending horrible homework for me. But today, I want to thank my teacher for forcing me to appreciate the art of music. Now, I can easily list playing the piano as one of the most refreshing aspects of my life. Whenever I feel sadness, I always have the chance...

Words: 501 - Pages: 3

Free Essay

Every Good Boy

...Talent is often linked to success, and for some that is everything, especially when you grow up a part of getting it is by hard work. The other half is by talents, but how can you obtain success without talents? That is the question that is asked in “Every Good Boy” by David Nicholls. Here we follow a boy with absolutely no abilities at all, trying to find what he is particular good at. So when he gets the opportunity to get a free piano he will do anything to show his talents. The whole story is buildup of the narrator Michael’s flashbacks about his experiences with developing his talents. He constantly compares himself to his siblings which are incredible talented. His only accomplishment was to be “remarkable for being entirely without abilities" he can’t even obtain the nerdy/geeky role, because he is "graceless, charmless, physically and social inept". To make his parent proud, and get on the level of his siblings Michael decides to learn to play the piano. His mother despites this even though mothers are most known for being incredible supportive to their children, but it seems as he is that ungifted that not even she believes in his talents. Michael starts to get some professional instructions by Mrs. Chin, she takes the lack of Michaels progress and abilities as a personally defeat. “Mrs. Chin no longer bothered to correct my errors, sitting there instead with her eyes closed tight, taking the wrong notes as a boxer takes punches” And after playing an extremely horrible...

Words: 482 - Pages: 2

Premium Essay

Buddy Holly Research Paper

...Buddy Holly, Chronological Have you heard the songs "Peggy Sue" and "That'll Be The Day"? Well if you haven't, scoot on over and give a listen. Your life will probably be changed. My music has the groove that people swing for, and the beat that keeps 'em dancing. And by MY music I mean ME, Buddy Holly, the darndest rock artist of the 1900s. So stay right there and listen to my story. I was born in Lubbock, Texas, 1936. I was the youngest of my family and was also the last child. I had two brothers named Travis and Larry. My birth name was Charles Hardin Holley, but my momma thought Charles Hardin was too long for her baby boy, so naturally she called me Buddy. My brothers taught me the basics of guitar at a young age while I also learned to...

Words: 708 - Pages: 3

Premium Essay

Buddy Holly

...Buddy Holly Buddy Holly: An American music icon that died too soon. Buddy Holly was killed in a plane crash in the Midwest when he was just 22 and left behind a wife he loved, and an incredible career that lasted only eighteen months. Charles Hardin Holley was born on September 7, 1936 in Lubbock, Texas. He was the youngest of four siblings and his mother gave him the nickname “Buddy”. The spelling of “Holly” was the result of a misspelling in his first recording contract. He learned to play piano and fiddle at a very early age and his older brothers taught him to play the guitar. His parents were very supportive of his music and even gave him song ideas. His mother once wrote the local newspaper defending rock ‘n’ roll music listened by teenagers. Buddy was a rebellious teenager who loved rock ‘n’ roll. His minister once asked him, “What would you do if you had $10?” The young rocker muttered, “If I had $10, I wouldn’t be here.” (Biography) After high school, he formed a band and started playing country music. He crossed over into rock ‘n’ roll after meeting Elvis Presley; he was his opening act in 1955. That relationship grew and he was very fond of Elvis and was influenced by him greatly. After switching to rock ‘n’ roll, a record company noticed him performing at a local skating rink and signed him. He began recording demos in Nashville. His band was originally called “Buddy Holly and the Three Tunes”, but was switched to “The Crickets” because naming...

Words: 806 - Pages: 4

Premium Essay

Buddy Holly

...Buddy Holly Buddy Holly: An American music icon that died too soon. Buddy Holly was killed in a plane crash in the Midwest when he was just 22 and left behind a wife he loved, and an incredible career that lasted only eighteen months. Charles Hardin Holley was born on September 7, 1936 in Lubbock, Texas. He was the youngest of four siblings and his mother gave him the nickname “Buddy”. The spelling of “Holly” was the result of a misspelling in his first recording contract. He learned to play piano and fiddle at a very early age and his older brothers taught him to play the guitar. His parents were very supportive of his music and even gave him song ideas. His mother once wrote the local newspaper defending rock ‘n’ roll music listened by teenagers. Buddy was a rebellious teenager who loved rock ‘n’ roll. His minister once asked him, “What would you do if you had $10?” The young rocker muttered, “If I had $10, I wouldn’t be here.” (Biography) After high school, he formed a band and started playing country music. He crossed over into rock ‘n’ roll after meeting Elvis Presley; he was his opening act in 1955. That relationship grew and he was very fond of Elvis and was influenced by him greatly. After switching to rock ‘n’ roll, a record company noticed him performing at a local skating rink and signed him. He began recording demos in Nashville. His band was originally called “Buddy Holly and the Three Tunes”, but was switched to “The Crickets” because naming...

Words: 806 - Pages: 4

Premium Essay

Paper

...Holly Manufacturing Case Study Holly Manufacturing Company produces two cello models. One is a standard acoustic cello that sells for $600 and is constructed from medium-grade materials. The other model is a custom-made amplified cello with pearl inlays and a body constructed from special woods. The custom cello sells for $900. Both cellos require 10 hours of direct labor to produce, but the custom cello is manufactured by more experienced workers who are paid at a higher rate. Most of Holly’s sales come from the standard cello, but sales of the custom model have been growing. Following is the company’s sales, production, and cost information for last year: Cello Standard Custom Sales and production volume in units 900 100 Unit Selling Price $600.00 $900.00 Unit costs: Direct materials $150.00 $375.00 Direct labor $180.00 $240.00 Manufacturing overhead* $135.00 $135.00 Total unit costs $465.00 $750.00 Unit Gross Profit $135.00 $150.00 Direct Labor Hours 10.00 10.00 Direct Labor Rate Per Hour $18.00 $24.00 * Manufacturing overhead costs: Building depreciation $ 40,000 Maintenance 15,000 Purchasing 20,000 Inspection 12,000 Indirect materials 15,000 Supervision 30,000 Supplies 3,000 Total manufacturing overhead costs $135,000 Selling...

Words: 767 - Pages: 4

Premium Essay

Danshui Case Study

...Table of Contents INTRODUCTION AND MAIN ISSUES 3 ANALYSIS 4 Qualitative 4 Quanitative 5 Breakeven Point (BEP) 5 Flexible Budget 6 Variances 7 RECOMMENDATION 8 Encourage, motivate, reward and recognize 8 Cellular Manufacturing System 8 Implement new accounting method 9 Extend the contract 9 ACTION PLAN 10 REFERENCES 12 INTRODUCTION AND MAIN ISSUES Danshui was a contract manufacturer that assembled electronic products for companies wishing to save labour costs by locating in southern China. Because of high demand for iPhone 4, Apple had contracted with Danshui to assemble iPhone in Plant No. 2. The contract need Danshui to assemble 2.4 million iPhone in the period between June 1, 2010 and May 31, 2011. Wentao Chen, manager of Danshui Plant No. 2 was worried because in the third month of the contract production was only 180,000 units per month. Suppose to produce 2.4 million iPhone its need 200,000 units per month. After preliminary budget has come out, the company loss of $672,000. The main issue of this case is the break contract between Danshui and Apple. The contract called Danshui to assemble 2.4 million in the period of one year, but Danshui only can produce 180,000 units per months. If Danshui still can produce that amount, it can’t reach 2.4 million in one year. This might happen because Danshui cannot find people to hire, even though they have raised wages by almost 30%. Another reason is they have problem with the...

Words: 2251 - Pages: 10

Premium Essay

Tank Master

...then labour hours. Labour hours Machine hours Standard products (high volume) 2500 3500 Specialised products (low volume) 1500 3000 Total 4000 6500 Difference Budgeted labour rate 42,5 279500/6500=43 -0,5 Budgeted overhead burden 149,825 599300/6500=92,2 57,625 Total Cost 192,325 135,2 57,125 2) As known, the most commonly used allocation base in traditional costing is direct labor hours. We can also see this in the case. But at this point, we may face with some problems such that in this process overhead is increasing while direct labor is decreasing. There is an 1800$ increase whereas 46% increase in the overheads dramatically. Moreover, we see a variance and complexity in the production process. Tankmaster Manufacturing Company is producing to distinct products which are standard and specialised products. While, standard products have a higher labour hours/machine hours ratio (2500/3500), specialized products' ratio is (1500/3000). So, we understand that standard products use more labor force whereas specialized products use more machinery. This indicates that a plantwide overhead...

Words: 444 - Pages: 2

Premium Essay

Manufacturing Essay

...and Personal Computers. With the huge demand for their products, there comes an enormous responsibility for manufacturing the devices in a quick and cost effective matter. With the rapidly growing market of Apple computers and the technology/electronic industry as a whole, Apple eventually had to rethink how they manufactured their products to create the most efficient outcome; the highest revenue with the lowest cost. The competitive nature of the technology industry causes companies to look for a competitive advantage, which will make them much more profitable than their competitors. For the majority of the company’s history, they have been known to manufacture their products in the USA and even prided themselves with building the Macintosh computer which Steve Jobs described as “a machine that is made in America”. In 2004, when the company was not nearly as financially profitable as they are today, they decided their best option was to start manufacturing their products in other countries. The company, who is now a leader in foreign manufacturing, was lagging behind many American companies in terms of manufacturing abroad at that point in time. The majority of their foreign manufacturing takes place in Asia, specifically in China. In the New York Time’s article, “How the U.S lost out on iPhone Work,” Charles Duhigg described Apple’s move to foreign manufacturing from the words of a former Apple executive, “For Mr. Cook, the focus on Asia “came down to two things,”… Factories...

Words: 1270 - Pages: 6

Free Essay

Nothing Special

...TermPaperWarehouse.com - Free Term Papers, Essays and Research Documents The Research Paper Factory Join Search Browse Saved Papers Home Page » Business and Management Steel Industries of Bangladesh In: Business and Management Steel Industries of Bangladesh STEEL INDUSTRIES OF BANGLADESH REPORT ON FOCUS The report “Bangladesh on its way of becoming self sufficient in rod production, export is also a possibility” by Shuvankar karmakar, that was analyzed here, was published in the Daily Prothom Alo, on 17th November, 2012. BACKGROUND Bangladesh Steel industry is emerging as one of the major industrial sectors of the country. It consists of small up to the largest scale of steel melting and re-rolling factories across the country that mostly produce deformed bar rod of different grade (40, 60, 500), angel, channel and coil for the construction industry. Though the history of Steel Industry is not older one but it can make a glorious future. Before 1971 Bangladesh did not have any steel mill and even after the liberation there were only a few steel factories in the country. In 1990s the actual development began in this sector through a revolution. During that period the building constructing agencies or developer companies came forward to build modern infrastructure. Then with the increasing demand, new investors started investing in steel or rod production. In 2012 we have almost 400 mills across the country including Dhaka, Chittagong...

Words: 253 - Pages: 2

Premium Essay

Human Resource

...AC1110568Assignment 01 In the early 1800 clothing was made by hand, families sewed their pants, shirt and dresses using a needle and thread.  But in 1866 Elias Howe changed all that he came up with another way to make clothes.  Elias Howe patented the first practical sewing machine this sewing machine make the industry come back on his original invention made it possible for man production of clothing on a much larger scale that ever been possible with hand stitching. The impact of the sewing machine on the economy is huge. Specifically the sewing machine greatly impacted the textile industry and women. Because women were the ones working in the textile mills they were the ones to use the machine, however some believed that this would infringe on their craft as skilled seamstresses. Others thought this to be a wonder and felt it freed them to pursue other things rather than sit home and sew clothes. In some way the women working with the machines gained a new skill, and were seen as important for the industry. The sewing machine allowed clothing to become a mass produced item which increased the social acceptance of the sewing machine. Besides the commercial sewing machine, the household machine became very popular when it became electric. If you had electric in your home you could have a sewing machine and it was even easier and faster than the hand powered models. The sewing machine also helped other industries grow, for example the need for large quantities of thread...

Words: 726 - Pages: 3