Description
The pharmaceutical industry went through many changes in the 1990s and the early 21st century. The North American Free Trade Agreement (NAFTA) made a significant impact on Canadian manufacturing. The trade barriers were removed, and the company began to question whether it was cost-effective to keep manufacturing products in Canada with higher labor costs and much higher taxes. In addition, the 245 acres of land at which the facility was located was near a prime residential area and within a mile of Lake Ontario just outside of Toronto. The land alone was worth over $7,000,000.
Analyze whether or not the company should continue manufacturing in Canada or if it should move back to the United States. This requires research into transportation cost estimates from Colorado to Toronto. It also requires analyzing the impact on company image by shutting down a facility in Canada.
Draft your recommendation to management.
Include the following with your recommendation:
- The estimated costs and benefits of shutting down the Canadian facility or keeping it open
- financial
- nonfinancial
- Create a 12-month based action plan
Deliverable Length: 1000-1500 words. APA Format. Please include in-text citations and references
Explanation & Answer
Attached.
Running head: EFFECTIVE PRODUCTION AND OPERATION
Effective Production and Operation
Name
Institution
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EFFECTIVE PRODUCTION AND OPERATION
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Effective Production and Operation Management
Due to the changes that the pharmaceutical industry has undergone through in recent past,
it is prudent for a company dealing with pharmaceutical products to consider their area of
operations in order to lower costs. Pharmaceutical companies need to consider factors such as
labor costs, taxation, transportation cost and other expenses on resources such as land (Brown &
Bessant, 2013). This paper seeks to make a recommendation on whether the company should
shift its manufacturing from Canada to the United States of America based on estimates of
transport costs and the impact of shutting down the company plant in Canada would have on the
image of the firm.
The major aim of every company is to reduce operation in order to maximize its profit
margins. The cost of operations can be reduced by considering several factors such as labor cost,
taxes and transport cost among others. Globalization has made it possible for companies to shift
their manufacturing to foreign countries where the cost of production is much lower compared to
the home country. Globalization has brought changes such as lowering trade tariffs, elimination
of trade barriers in the international trade environment has made it better for the company to
conduct business in foreign countries (Jack, 2014). The exchange obstacles that existed before
globalization have been eliminated making trade ea...
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