Background of the Study
Southern Recreational Vehicle Company, headquartered in St. Louis, Missouri, intends to move its fabrication and assembly operations. The company plans to construct a new facility in Ridgecrest, Mississippi. Southern Recreational Vehicle is a prominent producer of pickup campers and camper trailers. However, the company has encountered five consecutive years of declining profits due to escalating production costs. Labor and raw material expenses have risen notably, alongside utility costs and taxes. Despite higher sales figures, the company now confronts its initial net loss since its establishment in 1982.
When initially considering resettlement, the direction closely examined various geographical countries. Key factors in the resettlement decision included the availability of adequate transportation facilities, state and local tax structures, a sufficient labor pool, positive community attitudes, reasonable site costs, and financial incentives. While multiple communities offered similar incentives, the management of Southern Recreational Vehicle Company was particularly impressed by the efforts of the Mississippi Power and Light Company to attract environmentally friendly, labor-intensive industries. The enthusiasm displayed by state and local officials in boosting the state’s economy by enticing manufacturing companies to relocate within its borders was also noteworthy.
II. Definition of the Problem
The problem can be described as the escalating production costs, swift rise in labor and raw material expenses, aggressive surge in utility charges, mounting transit expenditures, increasing tax burdens, and an unacknowledged net loss from the inception of operations until present.
III. Areas of Consideration (S.W.O.T.)
– The company enjoys a reputable brand recognition for manufacturing pickup campers and camper trailers
– The company is known for delivering superior quality products
– Inadequate management skills
III. Areas of Consideration (S.W.O.T)
- To decrease the production costs
- Favorable status given by the province of Ridgecrest as to payment of revenue enhancements (lower revenue enhancement) and privileges
- Case that might be filed against the company by their old employees (St. Louis, Missouri)
- Problems the company would experience in relocating its executives from a heavily populated industrialized country to a small rural town.
IV. Alternative Courses of Action
– Possible more nest eggs (since Mississippi’s local authorities offers a batch of incentives)
– Possible more net incomes (in relation to nest eggs that the company will acquire)
– Can set the company on path
– Success is unsure
– Environment version will take sometimes on the portion of executives
– Additional costs
2. In order to assist with the “adjustments” of executives before its operation in a new location, the company must provide fiscal aid to its former employees and activities. Advantages of this approach include avoiding labor instances and benefiting the direction of the company. However, a disadvantage is the additional costs involved.
Both options should be pursued. Relocating to another location poses challenges for management in terms of work-related issues as well as the financial assistance and support that the company needs to provide to its former employees. Additionally, it is important to consider relocating to a place that offers government incentives and a favorable location that can help reduce production costs.
VI. Plan of Action
- The company’s human resources department should arrange a meeting with former employees to gather their feelings and thoughts on the sudden decision to shut down and move the company. This will also include the management and executive team who will be relocated to the new work environment. Various activities should be planned to help them familiarize themselves with the new location and their new work arrangements.
- Relocation is the only remaining choice.
VII. Potential Problem: Human relations staff may not reach the same decision as the company’s old employees regarding the benefits and compensation they will receive. This could prevent the company from meeting its expectations.
VIII. Contingent Plan of Action:
- Maintain persistent, changeless, and uninterrupted communication with them until two parties reach an understanding.
- Conduct an internal rating of the company to identify potentially ineffective management skills as the main cause of continuous losses. Utilize a cost-efficient method, and if the issue persists in production operations, continue to use, maintain, and upgrade it.