analyze the case below as follow:
- Problem definition ; what the CEO has to tackle
- Sources of the problem ; internal and external factors
- Strategic options ; 2-3 options to solve the problem
- Strategic choice ; select one option (evaluate framework and reason for choice)
Where should German firm locate new plant? Hans Hundig_ chairman of Schwartzwald AG, a mediumsized but fast-expanding German electronics company, was uncertain what to recommend at a board meeting next day. He had returned from his holiday hoping that the problem of where to locate a new manufacturing plant would be settled. However, he now had news from Brazil which complicated the issue. The major Brazilian supplier of components to the Schwartzwald subsidiary there had been taken over by a US. multinational, which indicated that Schwartzwald contract would not be renewed. Schwartzwald already had marketing companies in ten countries out-side Germany. It also had manufacturing facilities in the UK. and Brazil. it wanted to expand an existing consumer product in a country where labour costs would enable it to compete more effectively with electronics produced in the Far East. One possibility had been to expand in Brazil. But Hundig had also commissioned studies which explored siting a plant favoured Ireland, since that country was also well situated geographically for the intended markets. Just to complicate matters, Schwartzwald also wanted to produce a new sophisticated electronic gadget overseas. This was a departure for the company since, in the past, the more highly "valued added" products had been manufactured in Germany. However, most members of the management board felt that if Schwartzwald were ever to break into the big league, internationally, it had to be prepared to manufacture overseas not only its relatively simple products but also some of its more advanced products. They had recommended this to the supervisory board although they knew that the worker representatives on that board would have preferred to keep the production in Germany. Facing up to three longuterm alternatives On holiday, Hundig had decided on Ireland rather than Brazil for the low-cost product, since the surveys made a convincing case in its favour. The main contender for the new sophisticated product was the U.K., where the product idea had originated and the managing director was keen to expand. Hundig, however, had decided to throw his weight behind those who favoured a more costly incursion into the US. Then came the Brazilian bombshell. The takeover of a supplier meant that the company had lost a major independent source of supply-and gained a formidable competitor. Now, Hundig mused, they were just three long-term alternatives in almost impossible task. Another was to set up an entirely new Brazilian plant to make components. The third was to close down manufacturing there altogether, and treat Brazil purely as a marketing operation. Hundig knew that both the production and marketing directors were against terminating production in Brazil. He was faced, however, with a memo from the nance director which pointed out that building a components plant in Brazil was hardly justied by current turnover. it would be possible to build the projected low labour-cost plant in Brazil, however, under the same roof as a new components plant, and thereby minimize construction costs. But that would mean abandoning his objective first choice, Ireland. To make matters worse, the finance director pointed out that whatever happened in Brazil the extra costs would mean that the company had not the nancial resources to place the new sophisticated product in the U.S., as planned. It would have to be deferred, sited in the U.K., where a subsidiary already existed, or manufactured in Germany. Hundig sighed. Putting it in the U.K. would mean taking a gamble on industrial peace. Manufacturing it in Germany would be something of a climb-down after the arguments that he personally had advanced, on behalf of the management board, to the supervisory board. \"What," he said to himself, \"should I recommend tomorrow?\
