RECOMMENDING A SOLUTION

As Krishna reviewed the data for each option, he knew he needed to consider qualitative as well as quantitative factors to find the best solution for Polaris. Should he recommend keeping production in the United States, or should he recommend siting a new plant in either Mexico or China?

Discussion Questions

$1.$ Which location provides Polaris the greatest cost advantage? Calculate the present cost of the three locations using a $10$ percent discount rate.

$2.$ Would your recommendation change if the foreign exchange rate increased or decreased by $15$ percent?

$3.$ What other factors should be considered in making this decision?

$4.$ Calculate a weighted scoring model. Decide on qualitative factors that you think are important in this decision, e$.$g$.$ location near R&D$,$ quality, loss of intellectual property, and currency risk. Then how much weight you would attach to factors such as present cost and each of the other factors to total $100$ percent. Then assign a score $(1$ to $10)$ to each factor for each of the three locations. Calculate a total weighted score by multiplying the weight times the factor score and adding over all factors for each location.

$5.$ Which of the three locations do you recommend and why?