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Flexit International. Nirmal Kalimireddi John Paul Spiro-Colwell April 13, 2004 MGT 650. Flexit History. The Flexit Company Founded in 1965 Manufacture and sell athletic conditioning & sports equipment Sell to 48 contiguous states
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Flexit International Nirmal Kalimireddi John Paul Spiro-Colwell April 13, 2004 MGT 650
Flexit History • The Flexit Company • Founded in 1965 • Manufacture and sell athletic conditioning & sports equipment • Sell to 48 contiguous states • Current five-year plan includes exporting to Europe and possible offshore production • Three manufacturing plants in the U.S. • Company president: Jim Goodbody, takes pride in company self-sufficiency
Flexit Corporate Goals • Remain a leader in physical fitness product market in the U.S. • Expand domestic market share from 38 to 50% within five years. • Capture at least 10% of European market in five years. • Retain control of operations but consider international alternatives.
An International Twist • Large demand for home athletic equipment in European countries • Flexit currently has no experience in international shipments or doing business in a foreign country • Physique Ltd. chosen as best candidate • Specializes in selling & distributing a full line to all EEC countries and several non-EEC countries • Possible countertrade or export to U.S. with Flexit as distributor
Management Issues • Organization Structure • Two companies have different corporate structures • Flexit managers will take on new tasks • Head of corporate distribution planning must determine best way to get Flexit products to Europe • Two major variables • Globalization • Localization
Question 1 • Are Flexit’s corporate goals realistic for the next five years? • The goals set forth by Flexit seem realistic. • Strengths • Manufacturing and distribution in place to get their products to a shipping center. • If the manufacturing facilities have room to expand the goals should be easily accomplished. • Areas for improvement • Developing products for the European market. • Unlikely that the products that they are currently making will be an exact match for what Europe wants.
Question 2 • Will the existing physical distribution system support the proposed expansion to Europe? • Flexit’s distribution seems to be able to handle the addition of an overseas operation. • Most shipyards have truck and rail access. • Getting the products to the ships is fairly easy. • Need to arrange a contract with a shipping company to get goods to Europe. • Physique will need to be able to receive the products at the dock and feed them into their distribution system.
Question 3 • Which new tasks can be performed by existing resources, and which must be added or contracted out? • Internally handled requirements • Ensure all is in order for the shipment to Europe. • Be sure that their packaging can withstand the long and arduous journey to Europe. • Marketing and development people to develop products focused on the European market. • Externally handled requirements • Transport of goods to Europe • Documentation and associated processing for import to Europe.
Question 4 • What are the benefits and the drawbacks of using an existing distribution channel in Europe? • Benefits: • Physique is established • Distribution and marketing in place. • Very little work required to start selling Flexit products in Europe. • Drawbacks: • Flexit will be tied to Physique • Physique to determine where to focus the distribution of Flexit’s products.
Question 5 • Does the proposed plan have the required flexibility to accommodate expansion for countertrade, import from Europe, offshore production, and subsidiaries in Europe? • The plan handles expansion, counter trade and imports from Europe. • Only require the distribution system to be robust enough to handle an increase in product flow. • One way to Europe, there will not be much more resources required to go the other.
Question 5 – continued • Offshore production does not seem to be handled in this plan. • Plan only handles trade between Europe and the United States. • Offshore production would probably be handled in the Far East. • Transportation systems that both companies use do not extend this far. • Possibility of offshore production in Africa or Eastern Europe. • Subsidiaries are not handled at all.
Question 6 • Is a new organization structure required to support company objectives? What changes do you think should be made? Why? Draw up you recommended new organization chart for Flexit. • A new organization structure would be required. • Limitations of the current structure. • Factory level marketing can not handle a global market. • Factory level manufacturing planning does not fully utilize the total capacity of the company.
Question 6 – continued • Enhancements provided by a new org. structure. • Centralized marketing will be able to produce products aimed at various global markets • Centralized manufacturing planning enables corporate to better utilize the manufacturing plants. • New products are sent the plant that has the best ability to manufacture. • Factory load can be distributed.
Recommendations • Proceed with current plan for expansion • Restructure • Enables Flexit to address global markets. • Enables manufacturing to be more efficient. • Work with Physique to start countertrading.
