QuestionQuestion

SUPPLY CHAIN MANAGEMENT DIVISION

Dear Intern,

Recent news from TM indicates that Union representatives are willing to renew negotiations. Apparently, TM management is willing to make some concessions. However these concessions might impact production prices. Daejo Top Management is particularly worried about TM working conditions. Be sure to address working condition issues in the right manner.

You need to contact all parties (TM management, union representatives, CZE, and Daejo) to put together a potential agreement. Be sure to include the impact of the agreement in the final cost of the Mark X.

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Executive Summary

Daejo Motors’ production of the Mark X has been significantly, adversely impacted by strike action at Tier II supplier, Tijuana Metallica (TM). There is, however, now potential for resolution, with union representatives and TM management willing to negotiate. This report will provide analysis of a possible agreement that would be acceptable to the two sides while minimizing increase in costs with respect to Mark X manufacture.

The methodology used in constructing this report consisted primarily of gathering, sorting, and analyzing the totality of information about the situation. Information was sourced from email communication with TM management, TM union representatives, TM’s primary investor, Daejo executives, and alternate ring producer BFW. Cost calculations were performed using the Calculator Spreadsheet.

The report recommends that Daejo prompt TM management to grant the union’s salary-increase demand, in exchange for the union relinquishing all other demands; the new collective bargaining agreement must be approved by Daejo.

BFW’s new order incentives should be further improved by negotiation and then accepted; Daejo must, as soon as possible, replace an increasing proportion of the 80% of ring supply currently produced by TM (though not solely with production by BFW).

TM’s hyper-activist investor must be marginalized....
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