OPERATIONS MANAGMENT DQ

A company that designs, manufactures, repairs, and provides technical support for mega-capacity, commercial-grade electronic data storage cabinets is considering relocating its manufacturing plant and administrative offices from a small city in the U.S. Midwest. Here are some details about the plan under consideration.

The company is considering moving 75% of its administrative offices to to a similar sized city in the Southern region of the U.S., with the other 25% (specifically, its website management, technical support, and some design engineering functions) being outsourced to a company in India.

The 75% of administrative employees whose functions would not be outsourced to India would be given the choice to voluntarily separate from the company, or to move to the new city and retain their positions. Those who move will retain their current salary levels, but the company will not provide any allowance for moving costs. The 25% of employees whose functions would be outsourced to India would be involuntarily separated (laid off).

The manufacturing and repair operations would be moved to Mexico.

The hourly employees  of the manufacturing plant (all of whom are non-unionized) would be involuntarily separated (laid off). Workers would be hired at lower wages in Mexico, which is anticipated to improve the profitability and, thus, long-term viability and competitive success of the company. Management employees in the manufacturing plant would be given the choice to voluntarily separate from the company, or to retain their positions in the new plant in Mexico at their current salaries, but with no allowance for moving costs.

The executive management team has identified three key managers in the administrative offices and three key managers in the manufacturing plant who are seen as essential in getting the new facilities up and running.

To incentivize these six managers to relocate, they will be offered a special compensation package that includes moving costs, reimbursement for commissions and fees associated with selling their homes, a one-time cash bonus, stock options, and a 10% salary increase.

Approximately 20% of the residents of the city in which the company is currently located are employed by the company. Many others are employed in businesses, such as banks, personal services, restaurants, shopping centers, and supermarkets, which would suffer a decline in business if the company decides to relocate.

Address the following questions in your discussion board post:

1. Does the company have an ethical and/or social responsibility to factor into its decision the impact that its move would have on the city and the U.S. overall? Explain your reasoning.
2. What social costs are incurred when a company moves domestically or overseas?
3. What role do local and national government incentives, laws, and regulations play in a decision like this one?
4. Are there any product quality dimensions related to this decision?

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