Ellora Time's Manufacturing Woes


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Case Details:

Case Code : OPER013
Case Length : 10 Pages
Period : 1991 - 2002
Organization : Ellora Time Pvt. Ltd. (Ellora)
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Manufacturing

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Why China?

Ellora and the Patels were not the only ones to succumb to the pressure from Chinese imports. Many manufacturing units in India had to close shop because they could not withstand competition from the extremely cheap Chinese imports. A leading manufacturer of fans, Ortem, closed its manufacturing unit in Delhi after it decided to rely on imports.

Many other companies including consumer electronics major BPL had to either cut back production or sell at prices below the cost of production. Another company manufacturing fans, T-Series closed its plant in Noida, Uttar Pradesh after it realized that it could not compete with Chinese imports.

Bajaj Electricals also began to import fans and toasters from China instead of manufacturing them. A major player in the battery business, Eveready, was forced to close its subsidiary, Eveready Energiser Miniature Ltd., which manufactured miniature batteries...

The China Story

Due to the favorable manufacturing environment, China's growth rate was almost double that of India's during the period 1980-2000. Also, the country attracted higher direct foreign investment than India. China's export volumes were easily five times those of India's and around 40% of these exports were products of multinational companies operating in China.

China's superior performance however was not only due to cheap labour, high productivity and government subsidy issues. It was widely accepted that Chinese firms were often 'ready to try illegal methods to capture a market.'..

What Lies Ahead?

By the end of 2001, Ellora had set up a production base on two acres of land at Ningbo, in Southern China. In addition, it added a separate production line at the Morbi plant. These new capacities were established after the company decided to diversify into the home appliances business. The 200-worker factory in China produced mechanical parts for home appliances...

Exhibits

Exhibit I: Factors Influencing Plant Location
Exhibit II: Comparing Chinese & Indian Manufacturing Environments

 

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