Description
Wave Master Ltd (WML) (an artificial organization) is a listed company on Australian Securities Exchange (ASX). WML has been one of the major market players in wetsuits and surfboards in Australia. It has built up its reputation by using high-technology on environmental-friendly materials. For example, one series of the surf boards is made from fast growing bamboo and one series of board shorts is made from recycled water bottles.
WML was established by the current Managing Director Mr Bobster Master in 2001. It has a surfboard factory, a research and development unit, warehouses and a distribution centre in Torquay Victoria and distributes its products throughout Australia by way of its own fleet of trucks. It employs 1,100 people locally in Victoria, of which 200 people work in the surfboard factory. All raw materials to make surfboard are sourced within Australia. It sells its products to independent retailers as well as having three of its own shops, one in Torquay, one in Melbourne and one in Sydney.
Whilst at the moment it produces its own surfboards locally, it does not produce its own wetsuits. Rather, it outsources the production of wetsuits to a supply company operating in Greater Dhaka Area, the capital of Bangladesh. The cloth factory building is within the same district where the Rana Plaza factory building collapsed on 24 April 2013. The supply company is known as Hasan Fashions and employs 400 staff of which 95% are women. The owner of the factory, Hasan Malakar, has assured Bobster that the building is very safe.
WML Ltd is currently considering moving some of its production of surfboards to China because of the lower production costs and better bamboo materials there. Ongoing discussions are being held with a company in Fujian Province. This organization’s name is Zhu Ling Company (an artificial organisation) and it is private owned by Ms Jie Chen. Jie also owns a bamboo planation in Wuyi Mountain, where one of the bamboo species— moso bamboo—grows in the planation. WML research team regards that moso bamboo is the best natural materials for surfboard. Its physical properties boast an average breaking tenacity more than two times that of the local bamboo that WML currently uses to produce surfboards. At the moment there is no surfboard in the markets made from moso bamboo.
You are the Chief Financial Controller of WML and you have been recently assigned three independent but related tasks by Bobster.
Question:
Executive summary with short recommendation.
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Implications that particularly relevant to WML if it decides to outsource its bamboo surfboard from China?
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In terms of this Question, you are suggested to consider issues relating to social implications if the local surfboard making worker are made redundant; local bamboos are not used as raw materials, transporting surfboards made in Chinese factory to Australian, and possible negative perceptions from stakeholders. However you are also expected to consider any possible positive outcomes from outsourcing surfboard making. It should be pointed out that in real world issues are often complex and there is no definite right or wrong decisions. The most important skill that you are expected to develop from this assignment is your reasoning skill and application skill. That is, you are expected to justify your arguments.
* should stakeholder theory apply for this answer! not over 1200 words!