Guangdong Battery Company and Southwest Autotronics Coalition Report

1. Guangdong Battery Company and Southwest Autotronics Coalition Report Compiled by Team E

2. INTRODUCTION • This is a compilation of Team E evaluations of issues discussed by Mr.. Zhang and Mr.. Hatcher that they felt required greater study prior to contract negotiations. The ultimate goal of Team E is to identify the answer to each issue and develop a harmonious plan to optimize GBC/SA profits and goodwill in the markets and communities GBC/SA will impact. This is a collection of our humble opinions and our quantifiable data for each issue. The following table lists the issues as they are addressed.

3. INTRODUCTION • ISSUES • 1. Simulation of Guangdong Battery Company Production Costs for the proposed new battery. • 2. A consolidation of the calculations of the expected values for the proposed new battery. • 3. The optimal solution for Guangdong Battery Company distribution and factory construction. • 4. Evaluation of environmental and ethical issues pertaining to locations of plant construction and responsible handling of chemical by-product disposal. • 5. Evaluation of cultural matters VP Jennifer Gonzales must educate herself on prior to entering contract negotiations. • 6. Suggestion to type of organizational structure GBC/SA should enter into. • 7. Evaluation of communication technology and structure to use in optimizing information flow between globally dispersed management, production, and sales locations. • 8. Estimated Southwest Autotronics battery sales for 1997 in Latin America.

4. 1. GBC New Battery Production Estimates

5. 1. GBC New Battery Production Estimates

6. 2. GBC New Battery Production Estimate

7. 3. Minimization of Total Cost for Distribution and Factory Construction. The total distribution and factory construction costs for GBC would be $860,000.00. The optimum solution arrived at is the construction of only one plant at Shaoguan. The construction of this plant with a projected capacity of 40,000 batteries combined with the 30,000 batteries produced at Yanpu meets the combined demand of 70,000 batteries for Guangzhou, Hong Kong, and Macao. Production of batteries for markets in South America would require a reevaluation of constructing new factories or the expansion of the Yanpu and Shaoguan factories. Total Construction and Transportation Cost $ 860,000.00

8. 4.Discuss the environmental and ethical issues raised.

9. 5. Discuss cultural matters that Jennifer Gonzales will face upon her visit to Yanpu. What advice does she need in order to be successful?

10. 6. If SA buys a 50% equity interest in GBC, what type of organizational structure should GBC adopt? • The Equity Method should be used for accounting for GBC/SA assets. The 50% equity SA holds in GBC stock will be reflected in SA’s accounts with appropriate notation. • The organizational structure of GBC should convert to a board of directors with GBC and SA managers as members of the board. A set of board of directors procedures should be established prior to implementation and is a key administrative factor to be discussed in negotiations.

11. 7. Given evolving technologies, what advice can you give regarding methods of communication between GBC and SA?

12. 8. Estimated Southwest Autotronics battery sales for 1997 in Latin America.

13. 8. Estimated Southwest Autotronics battery sales for 1997 in Latin America.

14. 8. Estimated Southwest Autotronics battery sales for 1997 in Latin America. As a check to the exponential smoothing method, the moving averages and weighted moving averages methods were used. The resulting forecasts for 1997 battery sales were 65,550 when the moving averages method was used, and 65,565 with the data weighted .47 for the more distant year and .53 for the more recent year when the weighted moving averages method was used. The exponential smoothing method resulted in a forecast of battery sales of 65,562. We believe the forecasts are valid with a variance of ±12 batteries.