Toyland Rubber Manufacturing, Case Study Example

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Case Study

With the location decided, Patrick To was eager to start the ball rolling. However, as a “foreigner” building a factory in the mainland, he was faced with a lot of uncertainties. What were the things that he needed to tackle? How should he go about setting up a factory in Shanghai?

Since the business is about to be new frontier textile dyeing and bleaching company in the mainland, Shanghai. There are deliberations to consider on the area of strengths and weakness and opportunities and threats for the company. Because, in China, there is a controversy issue on the subject of protection for an infant industry which benefits the company on unit costs that help stabilize the firm’s finance in a long run. For example, In any event, per-unit costs can eventually fall to such an extent that the industry in the Shanghai to become an exporter of the manufacturing goods until the protection period dispersed (Applefield, et al., 2008). In this stance, this is a much-needed plan for the Toyland Rubber Manufacturing, Inc. to incorporate this type of business tactics to prevent from defaults. Due to the fact, in the precedence history of Toyland, the loss of supplier approval contracts across the country of China, which impeded the finance growth. Many china departments refused to sign an agreement contract to purchase the Rubber Roller machinery machines and or refused to be a supplier for the company. However, finance growth is not only the sole problem. The real problem was that customer-purchasing rates were dropped dramatically in which affected the loss of productivity to 200% and HK$24 million dollars in 1995 (Farhoomand, 2003).  Thus, in turn, the loss of productivity affected customers to be disloyal to Toyland’s rubber roller products. An assessment on homogeneous and heterogeneous textile dyeing and bleaching products is much-needed analysis for quality control. Toyland Rubber Manufacturing incorporation’s original mission statement, stated as ‘an emphasis on workmanship and quality control.”  Hence, a continuous quality control shall be maintained for many generations to come. An opportunity for the Toyland Rubber Manufacturing company to upgrade the added-value product features, as a suggestion, for tightening the quality control. As seen in the city of Dongguan, producing the heterogeneous products such as: garments, fur, down feather products, leather goods, plastics, stationery, sporting goods and hardware compared to other textile companies producing one-dimensional product. Toyland Rubber Manufacturing should utilize a conglomerate strategy. A strategy called for the company to set up a factory along with their existing products, with other new heterogeneous products in Shanghai, while the parent company remains in Hong Kong. Of these marketing values in Dongguan, the output value is around 90 percent over than the 80 percent in overall industrial production. Whereas, Hong Kong industrial production output have exceeded at least around 60 percent during the year of 2002. It is being said, that Hong Kong’s textile exports has increased 14 percent to 12 percent between 2010 to 2011 and at the same pace over the same period exports are accounted for more than 98% total of total exports. This is in which is an excellent profile for Hong Kong’s suppliers—They are recognized for the highest quality of dyed and printed fabrics (Hong Kong Trading Development Council, 2012).

As suggested, a subsidiary factory in Shanghai is strongly recommended for the Toyland Rubber Manufacturing, Inc to be the parent company in Hong Kong. It shall be good for the next generation of Patrick To’s grandson to rule Hong Kong. While Patrick To’s three daughters rule Shanghai because of the city’s trendy style that is very appealing to the To ladies. For instance, the skilled-labor are regulated by the municipal government preferential policies which favors small businesses and investors into the foreign direct investment (FDI) to conduct business in Shanghai. Another reason, is that Shanghai has a cosmopolitan character, that the city of Shanghai has the respect for, the world’s prominent textile industry.  Predicting that with the intact business policies in hand, it is much easier for the To ladies to conduct business. Although, it is important for Patrick to consider other tactic methods to overcome the area of weakness such as: skilled-labour department, reinvestment diversification program, and employee development training program. The threat Patrick should be cautious with is the competition with the competitive marketing prices compare to the homogeneous markets.

References

Appleyard, D., Field, A. & Cobb, S. (2008) International Economics, 6th ed. New York, New York. 15: 336-337

Farhoomand, A. (2003) Toyland Rubber Manufacturing: Building A New Factory in Shanghai. University of Hong Kong, Asia Case Research Centre. Hong Kong. Pp. 1-8

Hong Kong Trading Development Council (2012) Textiles Industry in Hong Kong. Retrieved March 28, 2012 from: http://www.hktdc.com/info/mi/a/hkip/en/1X0040EM/1/Hong-Kong-Industry-Profiles/Textiles-Industry-In-Hong-Kong.htm

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