ellora times case

Topics: Manufacturing, China, Material Pages: 8 (1284 words) Published: December 17, 2013

Q1) Case Brief:

Ellora Time Pvt. Ltd., a company based in Gujarat, India was the world’s largest manufacturer of clocks. Along with clocks, the company also manufactured calculators, telephones, timepieces and educational toys. Ajanta and Orpat were the two Ellora companies with a combined investment of Rs. 2 billion, situated in a place called Morbi, exported their products to over 60 countries. Both Ajanta and Orpat received awards by the GOI for superior export performance throughout the 1990s. Ajanta, an ISO 9002 certified company, received the Best Electronics Industry award many times. Ellora’s products were popular in both Indian as well as export markets because of its manufacturing efficiencies. Around 20% of Ellora’s output was exported. From 1998, Ellora started to import its spare parts, raw materials and components from China instead of Japan, Korea and Taiwan because it offered not just good quality but also cheap prices.

Later in 1999, the Indian Government removed restrictions on import of electronic goods that led to flooding of Chinese goods in Indian markets. Raw materials were charged a duty of 25%, so instead of importing raw materials from China, Ellora began to import parts from China, assemble them at Morbi plant and sell them. As a consequence, Ellora was unable to cope with imports from China that competed directly with its products. The survival of the company was threatened as it faced serious problems. Hence, in early 2001, Ellora decided to move their manufacturing base to China which shocked the corporate world but was seen by Analysts also as a logical decision as it provided cheap labor, high productivity and attractive government subsidies. Ellora’s decision attracted immense media attention because it came at a time when the Indian manufacturing industry faced severe competition from cheap Chinese imports. The 200-worker factory in China produced mechanical parts for home appliances range which includes hair dryers, house heaters, water heaters, water dispensers, electric fans, electric irons, emergency lamps, blenders, toasters, electric kettles, washing machines, air coolers and vacuum cleaners which were to be marketed under the Orpat brand name.

Q2) 18 Factor Analysis:

Following is the analysis of plant location selection at Morbi, Gujrat:

1. Proximity to Markets:
a. 20% of the goods produced were exported and because of availability of nearby sea port transportation cost was reduced. Otherwise, for domestic sales markets the plant was well connected via roads and railways to areas like Rajkot, Vadodara and Mumbai. 2. Proximity to raw materials

3. Infrastructural facilities:
a. Power consumption of plant - 3,000 HP
b. Electricity - Provided by GEB
c. Water facility- nearby river (Macchu)
4. Transportation facilities:
a. Nearby major cities were Ahmedabad – 220 km and Rajkot – 67km b. The plant could be reached via
Road - 8A National Highway and SH 7 Highway
Sea - Kandla - 135 km, Vavania - 91km, Navlakhi – 182 km
Sky – Airport in Rajkot
5. Labor and Wages:
a. Manufacturing plants of ceramic and CFL made semi-skilled labor easily available at reasonable wages. 6. Legislation and Taxation
7. Climatic Conditions:
a. Healthy and dry
b. Temperatures range - 11.2°C - 41.0°C
c. Rainfall - 0.0 to 627.0 (mm/month) - 6 months of very little or no rain d. Dry climate
e. Low humidity
8. Industrial and labor attitude:
a. Semi-skilled labor shows low level professionalism
9. Safety requirements:
a. Stringent safety and security measures taken by the management 10. Community facilities:
f. Schools and colleges available for primary, secondary and higher education g. Medium sized market for daily needs
h. Temple keeps the spiritual balance and peace among the people 11. Community attitudes:
a. Education at all levels and women empowerment encouraged and citizens are law abiding 12. Supporting industries and services:
a. No supporting...
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