Your organization is considering building a new automobile manufacturing plant. The company is considering building their facility in either China or Tennessee (USA). China is a rapidly expanding economic market, Tennessee is situated in a more mature

Question

market in which other car manufacturers are already located. Using this limited information and your knowledge of these two options, China and Tennessee, provide THREE reasonable arguments for each option that relate to supply chain management.

Answer 1

Student's individual arguments should be multi-faceted. They should include an amalgamation of the individual facts listed below. In each case, there are many other arguments possible.

CHINA
1 . Enormous population with an enormous number of young people
2 . Enormous labor pool
3 . Growing economy with relatively few vehicles
4 . Relatively low labor costs
5 . China is now the world's third largest automaker
6 . Low cost Parts/Component suppliers available
7 . Developing supply chain infrastructure
8 . Government's commitment to economic growth

In other words, China has positives in the areas of purchasing, manufacturing, and logistics. In addition, there are large advantages associated with a growing demand which will likely substantiate any/most supply chain investments.

TENNESSEE
1 . Mature market that heavily utilizes vehicles
2 . Strong stable economy relative to all other nations
3 . Experienced and skilled workforce and business management
4 . Well developed supply chain infrastructure
5 . Well developed distribution system
6 . Government's commitment to economic growth
7 . Large number of experienced suppliers

In other words, Tennessee will be more expensive but the risk level is lower from a logistical standpoint and also from an economic standpoint. Also, just like in certain regions of China there are advantages that would be associated with business clusters.