Yue Yuen Industrial (Holdings) Ltd. : Site Selection 1) How should the site selection factors listed in the case study be weighed? Are there any further factors which should be added to the list? (1) Site Selection factors – Labour costs of the host country – Population and demographics of the host country – Host country’s physical infrastructure – Presence of suppliers- GDP and economic stability foreign investment .
Exchange rate volatility – Size of the local market – Desirability of the host country – Presence of other labour-intensive manufacturing in the area – Presence of other footwear manufacturers in the region – Amount of foreign investment in the country – Labour laws of the host country (2) Additional factors Financial institution. The risk of pandemics Shortage of essential basics such as clean water and electricity Labour’s education and technical skill level
The host country’s supportive benefits such as tax benefits, preferential interest rates and more flexible infrastructure regulations The host country’s political stability and security .
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2) What could be potential production sites for the company in addition to the four locations mentioned in the case study? (1) Guangdong produced 44% of the industry’s exports, Fujian 23% and Zhejiang 15% as majorities of China’s casual and athletic footwear. (2) Sichuan and Jiangsu and Shanghai are also big business in footwear production.
Which site should the company select for its new manufacturing operations, and why? (1) The company’s selection should be Vietnam (2) The reason why Vietnam should be selected as below The government’s supports such as a combination of tax benefits Low labour cost and highly young workforce Convenient geographical location Dynamic economy and rising domestic consumption Political and economic stability Vietnam was Nike’s second largest producer.