Opinion Paper Balagny Clothing Group

Problem Statement

After our transfer of operation to China for the manufacturing of our clothing line we have incurred catastrophic losses in our company. Our products are not meeting our current projected deliveries and over stock of late merchandise sitting in our warehouse. Customers are complaining that the fit and feel of our products have diminished since the move. Our products when the do arrive at the port of Los Angeles are backlogged and additional two weeks. This has also brought its own challenges of shorter selling times for our seasonal clothing lines that has negatively affect the projected forecast of savings of 65% compared to our competitors who are located within the US (Ball,2012).

Analysis of relevant information

What we do know is that our labor costs were projected to be at $1.18 compared to $8.65 and this would cut our cost by 85%. This would also keep us from having to utilize Union labor and cut out the regulatory issues having to deal with the government agencies Occupational Safety and Health Administration OSHA, Fair Labor Standards Act (FLSA), and Equal Employment Opportunity Commission (EEOC). This transition has caused high inventories and the company is losing money by cutting costs of inventory markdowns to make room for more shipments to sit at the warehouses. Sales are dropping and are major concerns for our company (Ball, 2012).

I know that a suggestion has been made to move 40% of the production to one of our subsidiaries in Mexico. This intern would put a ban- aid on an existing problem that is staring us in the face. Trying to keep labor cost down is the key for profit margins and trying to stay at or below 4% while maintaining a competitive advantage over our competitors changes have to be made (Ball, 2012).

Although keeping products American made the cost for producing our product in the states would increase our cost and most likely raise our cost to the consumer. One way to identify major problems in our production...