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The textile industry is undergoing an upheaval in some developed countries. Asian competition, particularly following the end of import quotas in the 1990 s and 2000s, has sparked fierce international competition. Production costs are high in western countries compared to those in Asia, the Maghreb, and Eastern Europe, yet prices are fairly low. To survive, firms must decrease their production, logistics, and administration costs. This is why many western firms are looking to offshore production. Despite sluggish economic conditions, 400 million pairs of socks are sold in France each year, suggesting that KindyBis could increase market share if it became more competitive, especially in terms of price. KindyBis is also positioning itself as an online seller, having created a website for the KindyBis brand along with the number one website in France devoted to the sale of socks: www.voschaussettes.fr (yoursocks.fr). Distribution constraints Cost management alone will not ensure survival, however: retaining distributors is crucial. KindyBis's European distributors are international giants: Carrefour is the world's second-largest retailer after Wal-Mart; Tesco is the third largest; and Dcathlon is France's leading sportswear retailer. To minimize inventory, the firm's distributors use the just-in-time inventory system and require short delivery times. KindyBis distributes most of its products to five distribution centres in Paris, Zaragoza, Milan, Munich, and Rotterdam (see table 1). KindyBis manages deliveries by professional carriers to the five distribution centres as indicated below. Truck capacity is not crucial since socks don't weigh KindyBis faces increasing financial challenges. Although its products sell well, growth seems unattainable, with customers seeming to prioritize low prices over quality. Two years earlier, the company had responded to this situation by launching a low-cost, entry-level line of socks. Just one year later, KindyBis withdrew these products, deciding to streamline operations by focusing on the firm's core business: high-end socks. Despite this clear strategic orientation, KindyBis's financial statements showed little improvement. At the last shareholder meeting, the financial director announced that the company would try to increase its profit margin by lowering production costs. Representatives of the French labour unions declared that they were doing everything possible and threatened to strike. While not yet ready to commit to offshoring, KindyBis commissioned a preliminary analysis of possible sites based on three major criteria laid out in its strategic guidelines. First, the plant had to be located in or near continental Europe to facilitate road freight transport. KindyBis has many years' experience managing road transport but has not yet developed expertise with other modes of transport. Another consideration was proximity to distribution markets. Major distributors insist on relatively short delivery times and will no doubt tighten these requirements in the coming years. Finally, KindyBis sought a country where the textile industry already had a strong structural base, allowing it to operate at full capacity. Based on these criteria, three countries were selected: Portugal, Poland, and Turkey. In each of these countries, an industrial suburb was identified based on the company's needs in terms of size (minimum 30,000m2 ), proximity to road transport hubs, and economic importance of the textile industry: those of Krakow (Poland), Istanbul (Turkey), and Lisbon (Portugal). Exhibit 1 shows a compendium of factors related to the countries selected as possible locations. KindyBis recently decided to make a second attempt to launch a new line of low-end socks. The marketing director believed that offshoring would ensure the viability of this strategy since the failure of the first attempt had been attributed to the cost structure of the Beauvais plant. This view was supported by an analysis done by the company's financial controllers. The marketing director
