The German company KHS GmbH is a supplier of filling and packaging systems based in Dortmund, Germany. The company offers filling lines for glass and PET bottles, kegs, and cans for the beverage, food, and non-food industries. KHS is a wholly owned by Salzgitter Klöckner-Werke GmbH, Germany.
While the product is selling well the high production costs in Germany mean that the profit margin is small and the firm’s shareholders have requested that management should investigate ways in which the production costs can be reduced.
Management have been investigating moving production to other countries with lower labour costs. Their initial country scan has identified Indonesia as showing promise as possibilities. However, as the products are dedicated to the German market and as the local business partner expects on-time delivery, significantly increased transportation costs have to be taken into account.
1. Summarise briefly, Indonesian economy using available resources. You can use Tables and Charts. Use proper figure and table capture. Discuss the Charts and Tables.
2. Discuss the advantages and disadvantages of establishing a production operation in Indonesia? In particular what risks would the company (KHS) face?
3. Discuss the importance of Cultural differences between Indonesia and Germany and what is the risk for the company due to cultural differences.
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