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Otis Toy Train

In: Business and Management

Submitted By kelcilo
Words 422
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In the Case of Otis Toy Train and Joyous Luck Prosperity Toy Company, it may not be wise for Otis to go ahead with JLPTC’s proposal. Although increasing labor costs are a large problem for Otis and decreasing these costs by 40-60% may seem appealing, there are many underlying disadvantages to outsourcing that Otis needs to take into consideration. Part of the reason Otis has been so successful is because they are American based. Their headquarters are based in Minnesota and much of their productions facilities are located around that area. Also, many of Otis’s products are based on North American History. Should Otis decide to outsource their production, it is possible that they may lose a good portion of their customer base who takes pride in this purely American product. Otis must also take quality into consideration. Very often when companies decided to outsource their products the quality is downgraded which can upset many loyal customers. With China being so far away, it would be difficult for Otis to monitor the quality of the product during production to make sure it is up to par. Not only will geographical distance be a problem for quality control, but it will also cause many problems with communication. In a company with such a loyal customer base and with such authentic products, it is vital the communication be a number one priority. All aspects of the business should be on the same page at all times. If Otis should outsource to china they will find many problems with communication. Not only will there be a language barrier, but the time difference will also cause frequent problems in communication. JLPTC may also have different corporate values and principals which could hinder many of Otis’s core standards. As you can see it is very important that Otis take all of these issues into consideration. The distance from Otis to JLPTC will…...

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