Timbuk2 was started in 1989 by Rob Honeycutt, a bike messenger whose goal was to make his delivery job easier. By 1996, they had established themselves as a company to watch when it came to customized messenger bags. Timbuk2 introduced lean manufacturing in order to provide customized products, while increasing the quality of their products and reducing waste. Timbuk2 specializes in custom made bags that can be designed by customers.
Introduction
In 2002, Timbuk2 decided to relocate their operations and supply chain to China. Their decision to relocate to China was a business strategy designed to satisfy the needs of the customers and that of an expanding business. This business strategy would have also allowed Timbuk2 to meet the needs of
…show more content…
shareholders. Several factors influenced Timbuk2’s decision to relocate their operations to China. Efficiency.
Timbuk2’s sales continue to increase as a result of their unique business concept. They have also managed to keep a strong database of customers. Timbuk2 pride itself in having bags that can outlast careers, pets or even relationships. Since their debut in 1989, they have refined their production to increase the quality of their product and to be more efficient. Quality, duration and price of their custom-made bags are core values that make up Timbuk2’s company. Therefore, in order to maintain these values and efficiency, Timbuk2 decided to move its operations to China. This is especially important due to an increase in their sales.
Effectiveness. Timbuk2’s current production was made up of 25 workers based in San Francisco. Over the years, their sales continued to increase and as a result, San Francisco’s production line was not as effective in producing quality products at an affordable price and in a timely manner. Relocating production to China provide a much larger production area, enabling the company to increase its effectiveness. Timbuk2 recognized that their effectiveness in producing their bags will have a positive effect on the company’s sales; it will also increase brand loyalty among the
…show more content…
customers. Cost Reduction. Even though Timbuk2’s customers value quality, price is also important to them. The San Francisco’s factory was not able to keep cost down by using the same amount of resources to produce quality products. In order to remain competitive in the market, it is important for businesses to have a low production cost. Relocating their production in China will enable Timbuk2 to employ and produce first class products at a cost much lower than San Francisco. After much research, Timbuk2 discovered that a customized bag will cost around $3.00, plus shipping to produce; this is a huge cost reduction that drastically impacted production. Employee wages also had a great impact; the average monthly salary in China was around $100, which was 1/20 of a monthly salary in the United States. Taking into consideration how much the company will save, Timbuk2 decided to move manufacturing to China. Most importantly, this cost reduction in production enabled Timbuk2 to diversify its products. Literature Review Outsourcing is a practice that has been going on for decades. In order to keep up with the technology, market demand as well as to be cost effective, some companies feel the need to outsource their production to countries such as China, Japan and Indonesia. The decision to outsource comes with benefits and challenges that must be managed by the company in order to positively impact the company’s bottom line, sales and most importantly revenues. In analyzing Timbuk2’s decision to move their manufacturing to China, quality must be examined. Quality can be categorized in different ways: quality in regards to customers’ satisfaction, quality in regards to the product, quality in regards to employees’ performance and quality in regards to cost reduction. Sheopuri and Tapiero defined quality in terms of goods being produced. They believed that the higher the quality of products, the higher the demand of the product will be. In the case of Timbuk2, the quality of their customized bags cannot diminish if they intend to not only retain their customer base, but increase their market share. Case Analysis Competition is driven by the constant change in technology and resources. Therefore in order to remain competitive in business, companies have to continually innovate and reinvent themselves. Their operations have to be designed to not only to be appealing to the customer, but to be cost effective and produce revenues. For reasons similar to the ones stated above, Timbuk2 decided to move their operations to China. A couple of other reasons may have influenced their decision to move their operations to China: - Timbuk2’s growth did not permit the company to continue production in their San Francisco’s plant. This plan had a team of about 25 workers, taking customized orders from a wide range of customers. Even though their production-line was efficient and produced world class products, the growth of the company will negatively impact production in the long-run. - In order for Timbuk2 to remain competitive in the market, cost reduction was of the utmost importance. By moving production to China, cost reduction was felt in several areas. Labor was much cheaper and the workers were able to work longer hours in order to produce new bags, which required a lot more labor time. The plant cost in China was also relatively cheaper than that of San Francisco. By controlling the production cost, Timbuk2 was able to focus on developing their headquarters. Prior to making this decision, Timbuk2 researched the location of the new plant, the suppliers, distributers and employees they will be partnering with in order to continue producing quality bags. Years after production was moved to China, Timbuk2’s management team visits the China factory every one to two months in order to monitor the quality of the products being produced. They also ensure that the working conditions in the factory are favorable. Outsourcing is a double-edge sword in that if not properly monitored, it can negatively impact the organization’s revenues, reputation, sales as well as employees.
Outsourcing in the long-run might negatively impact employees. Timbuk2 may decide to move the company as a whole to China is order to reduce their operational cost. This can be a possibility as a result of technology change and the ever increasing cost of living. Another important area Timbuk2 must pay attention to is their sales and customer base. If their sales decrease, is it due to customer dissatisfaction due to price, quality or diminished interest in the product. Timbuk2 can control the quality of the product by regularly doing product and process
control. Synthesis As companies mature, the pressure to become more efficient and cost effective in their production increases. As a result, decisions are made in order to ensure that organizations’ goals are being met, but not at the detriment of the goods and services being provided. Outsourcing is a business practice that is being used by most companies who mass produce goods. However one of the major concerns of outsourcing is quality. There is an understated stigma that goes along with this practice: the sacrifice of quality over cost. Therefore in order to be effective, Timbuk2 must focus on the following key areas: Selection. Suppliers, contractors and employees must go through a thorough and rigorous process to ensure that they are a great fit with the company’s culture and value. The standards established must align with the United States and not China. Ensuring that the right people are hired from the beginning will eliminate issues such as quality right from the onset. Licensing. Timbuk2 must protect any technology they introduce into the Chinese market as well as any products, technology or knowledge that will be acquired. Although the cost may be high, these costs can be absorbed over the years. Licensing any technology will protect Timbuk2 of any piracy that may occur and eventually protect its product. Management. It is very important for Timbuk2’s management to be present in China. One of the benefits of this presence is a check system on quality. If employees are aware of the importance of quality, they will ensure that the products meet the standards of the consumers. Conclusion Outsourcing is a management decision that not impacts the company’s bottom line, but its employees, revenues and reputation. Although cost continually remains at the forefront of managerial decisions, it should not however come at a cost to the company expected deliverables. Timbuk2 can study companies that have failed in outsourcing such as Mattel Barbie, who had to recall some toys as a result of having defective parts. So far, Timbuk2 outsourcing strategy has benefited the company; the company has not seen a declined in their sales since their move to China. They committed to have a member of the US team travel to China every one to two months in order to ensure that production meets the standards of the company. As long as Timbuk2 continues to be highly involved and monitor their production in China, their customer base will continue to increase.
Looking into a brief history of how the Tim Hortons franchise became what it is today, Tim Horton opened his first restaurant in 1964 in Hamilton Ontario. Tim Hortons had the focus to sell top quality, always fresh product with great value and service. This first store started off with only coffee and two types of doughnuts, Apple Fritter and Dutchie. In 1967, Tim Horton joined with Ron Joyce becoming full partners of the newly formed company. After Horton’s tragic death in 1974, his wife sold her husband’s share of the company which had now expanded into 30 restaurants, to co-owner Ron Joyce for one million dollars. She quickly regretted the decision and tried to overturn afterward, but was unsuccessful in doing so. As of today Ron Joyce has taken the small coffee and doughnut restaurant and transformed it into a multibillion dollar franchise, made up of 4304 ...
Based on analysis, the industry is relatively attractive. Most criteria for Porter’s 5 Forces are low to medium although substitutes are higher than other forces. Coach can manage the high opportunity for a substitute given the hand bag industry as of 2010 is a $28 Billion industry and is growing every year. See Appendix A for a complete analysis of the macro environment and industry environment.
Prior to the start of the Littlefield simulation we developed a strategy based off the first 50 days of data. We made projections of the following elements of data to primarily set up our monitoring framework and to make our decisions – job arrivals rate, inventory levels (reorder point and reorder quantity with supplier’s lead time), overall lead time and machine utilization. In addition we included the interest rate earned on cash as an additional criterion and adopted an opportunistic contract switching approach into our decision framework to maximize the revenue.
Outsourcing simply means acquiring services from an external organization instead of using internal resources (Butler, 2000). By using outsourced resources, organizations can gain a competitive advantage by utilizing contingent staff to accomplish strategic goals without incurring the fixed overhead. By focusing on the leading edge and highly specialized skill sets, outsourcing providers can often offer higher quality services, or at a lower price than the client organization. Typical reasons for outsourcing go beyond simple contingent staffing. Outsourcing providers are able to maintain economies of scale with regard to specialization (...
Protective packaging is sold to organizational customers through select distributor networks via personal selling. Sales commissions for AirCap are set at 2%. Often, manufacturers must have a regional presence to be successfu...
Place: They opened discount factory outlet stores in rural areas and retail stores in urban shopping center. By selling different kind of product in different places help them to meet the different need of the customers. On the other hand, they also sell their product online, where customer can purchase their product at anywhere and anytime. All this make them be able to maximize their gain.
By taking a globalized approach, they are expected to open roughly 300 restaurants in the U.S. alone by the end of 2018. Essentially, Tim Hortons has gained the trust of millions of people in North America by their ethical practices. This disciplined approach of contributing to society has allowed the company to gain a commanding 42% share of the quick service restaurant market in Canada. In this case, it is evident from their positive same-store sales growth in the country for the 22nd consecutive year. Their recent annual report also shows continuing top-line and bottom-line growth, which supports the idea of not only attracting new customers, but retaining the loyal ones as well. Because of this, management is working towards opening more than 800 locations in North America. Generally speaking, Tim Hortons’ economic success is unquestionably correlated with the social conditions that are being
Belk Inc is one of the American mid-range, most sought after and the largest privately owned mainline department store company. It boasts of more than 300 classic fashion department stores mostly found in the southern states. Its outstanding dedication to diligently serving customers has earned it acceptance in sixteen states and sales totaling $3.5 billion in the past year. The rise of Belk has not been easy and its success has been inspired by the overwhelming and ever-swelling market in the southern states of the nation. The first store was established in 1888 by one ambitious man, Henry Belk in Monroe, NC with $750 in savings, a $500 loan, and $3,000 worth of goods taken on consignment. His passion and focus enabled
The Dunkin brand has two major companies Baskin Robins and Dunkin Donuts. For this business analysis I will be focusing in on Dunkin Donuts of the Dunkin Brand. Dunkin Donuts is one of the leading companies in the coffee industry that is growing rapidly each day. Though the coffee is rapidly increasing, can Dunkin Donuts keep up and compete with top rivals?
Outsourcing has been around for many years. In this paper, I will discuss some of the history of outsourcing, the good things about outsourcing, and the bad things about outsourcing. Outsourcing is important because many companies rely on it in order to get many different products and services to their facility on time and in good shape. Outsourcing is a huge part of the business industry today. Any business can be affected by outsourcing.
Over the last 30 years the world has seen drastic changes in the Chinese way of making business. Nowadays, China has opened its businesses to the rest of the world, especially America and Europe (Teagarden & Cai, 2009). As a result, their economy has increased and the evolution of the companies have changed to be from closed doors to be international and multinational (Teagarden & Cai, 2009). This essay will analyze, first of all, how some Chinese companies have had success abroad, looking at the strategy that they applied to expand and to improve their products. Furthermore, this essay will show examples of successful Chinese firms, such as Lenovo and TCL Group, and how they achieve it.
Once a humble trim producer, YKK redefined the accessories market with an exuberant range of products. Backed by unparalleled quality and dedication, YKK has swiftly turned into the number one trims and accessories solution in the world. The same degree of energy and enthusiasm has elevated other items in the accessories family like Zippers, Hook & Loop, buttons, eyelets, aluminum bar, Plastic Parts like buckles, stopper, and zipper puller etc items as the first choice of manufacturers at home and
However, this company consists a lot of brand for their all products. For example, Cocopie, Golbean, Mum’s Bake, Lot100, Koko Jelly,
The first innovative strategy of KFC China is localizing the menu. Trying to sell the same products or services is a typical approach to most foreign expansion for franchise businesses (Bell, 2011). However, one-size fits all approach is not what KFC chooses to implement for their company. According to Shelman, the writer of the case study regarding KFC’s Explosive Growth in China, key success for KFC China is to change the menu to suit Chinese tastes and style of eating. “One of the lessons I take away from this case is that to do China, you have to do China”, says Shelman. KFC localizes their offerings and adapts their existing products to appeal to the Chinese customers’ needs. The menu features Chinese local food like egg and vegetables soup. Examples of innovative products are the Dragon Twister (chicken roll of old Beijing) and the glass jelly milk tea (Zhou...
Consumers have expectations In terms of a good quality product that should be availed at a reasonable price. Consumers don’t only want the business to be socially responsible towards them in this manner of reasonable prices but way beyond this. They should meet the needs of consumers in ways of convenience and appearance. But business should also consider other aspects like environmental impact when packaging is disposed.