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Mr Charlie Root

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Submitted By charlie1234
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Andrew Mitchell's view is that his strategy to transfer production to China has been successful in fulfilling the company's objectives.

The first argument for which I feel is a positive reason why Andrew and his company's move to China is successful is ultimately down to the overall profit being made. In 2005 when he has based in the UK the company had a -50m profit which is obviously a negative figure to have and certainly not one you want to have associated with your business. On the other hand in 2010 when they moved to China the profit rocketed up to 175m, this is a 225m increase in the 5 years time difference. The main reason for the profit going up is down to various reasons. For example, the fixed cost's will be cheaper e.g. rent, lighting and heating as it's abroad and the UK prices are extortionate. The other main reason would be the workers. In a Country like China the workers work for less money, do longer hours and in reality work a lot harder, this can lead to other factors being effected like the increase in labour productivity. Another reason why I I think the transfer to China has been successful is down to the ROCE. In 2005 when in the UK the return on capital employed was -9.24%. A return on capital employed (ROCE) should be as high as possible. A negative ROCE would mean that the firm had made a loss. In the UK, ROCEs are typically between 5% and 15%. This will depend on the sector in which the firm operates. In comparison in 2010 the ROCE was 29.09% (175/602x100) this is once again a huge increase (38.33%( 29.09+9.24) from the previous years which is a clear indication that move to China has been a success. The final reason is that we know China has a “attractive forecast” sales growth of 10% which we know is what Andrew is looking for and supports his marketing strategy of entering new geographical. On the other hand there are some

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