Assignment 1 – Case report on Sands Corporation

By – SMKGs

1. Situation Analysis
The managers at Sands corporation are facing a dilemma here. To optimize
their profits in the long run, they have to set a new plant at one of the two
shortlisted locations of Kimberly and Hampton.
The corporation already has its major plant in a heavily industrialized area of
Clairmont, which can be counted in as one of its strengths.
The new plant that is required for delivering the government order would be
75,000 sqft plant, smaller than the main plant of Clairmon, but this plant is
going to require specialized machinery for production, different from the
corporation’s other plants.
Also, to make it economically viable, cheap resources like electricity, gas and
water, along with affordable skilled and unskilled labor is required.
Not having skill-trained its labor force comes out as a weakness here for Sands
corporation.
Availability of good transportation and logistics facilities is also a requirement.

2. Problem Statement
Lack of clarity on how various parameters are going to affect the company’s
profitability in the long run.
Uncertainity regarding whether or not the demand for the aircraft parts would
continue in the coming years.
How to ensure availability of skilled labor throughout the production term and
ensure smooth operations.
 3. Parameters/Variables

KIMBERLY HAMPTON
Very near to main plant – cost saving 180 Miles from main plant
Land acquisition cost – around Land acquisition cost – around $3600
$45000
Cheaper electricity, gas and water electricity, gas and water cost around
double
Labor bit expensive than Hampton, Labor bit cheaper than Kimberly,
availability average, higher chances good availability, less chance of
of strikes strikes

4. Solution

Choose Kimberly.
Though the initial cost is much higher, it is intellegible that in the long run,
there will be significant cost saving from resources like electricity, gas and
water, and due to the location’s proximity to the corporation’s main plant.
The recommendation would be to better the relations with labor unions and
skill-train them when and where required by the time the plant gets
constructed.