RoboCanada Inc.

comments 0

Comment

share

Share

0

Rate

Abrar Khan's picture
Video submissions: 

We are honored to present our analysis of phase 1 scenario 2 of the Zurich Enterprise Challenge.
Recommendation
Based on our analysis, RoboCanada Inc. should establish an assembly and distribution operation in one of
the following three countries - Malaysia, Thailand, or China.
These countries were chosen because they have the lowest risk according to the risk room tool and have
shown consistently decreasing risk over the last 7 years. Compared to the UK and Canada they have higher
political and physical risks and slightly higher business environment risks. These countries would be great
targets for RoboCanada Inc. in order to facilitate increased arbitrage and aggregation.
Since Pakistan is one of the major customers, India had to be excluded from the consideration set due to
existing political unrest between the two countries. Russia was also eliminated early in the process because
of the political instability, which has resulted in wars and trade barriers.
In our analysis we assigned certain weights to the different risks, as we believe all risks cannot be treated
equally. For RoboCanada’s assembly plant, some risks would have a bigger impact than others. Labor
would be an important part of the costs of an assembly plant, hence cost, quality and availability of labor is
an important criteria to be used for the decision making. With these weighted ranking we identified
Malaysia, Thailand and China to be the top three countries.
Risk
mitigation
strategies
Malaysia’s risk is better than most of the averages with exception to Human Rights. That being said, we
would like to mitigate this risk by partnering with a company or consulting with human rights advocacy
groups. This would help RoboCanada conduct periodic human rights audits and keep the overseas
manufacturer consistent.
As for Thailand, there are a few risks to mitigate however; we decided to put a main focus on two. First,
communicating transparency as an essential company mission could mitigate corruption. By being
transparent up front, it would reduce the possibilities for bribery as most of these arrangements are done
under the table.
The other risk would be information infrastructure also requires the company to invest in different
broadband companies in order to increase the broadband capacity and availability of the Internet. This
would be important to keep the flow of information consistent.
China has come out with a lot of risk and we have identified human rights, corruption, and burden of
customs, exchange rate fluctuations and other natural disasters as the major risks. Applying some of the
mitigation plans that have been discussed will help reduce the risks in China as well. Some of the other
plans that we recommend RoboCanada to implement would be to have their assembly plant according to
seismic codes and have raised floor levels, build flood tanks etc.
We also believe that it is important for the company to hire local experts to spearhead the trade operations,
paperwork and compliances, which would greatly reduce the risk at China.
Mitigating these key risk would result in lowering the cost and the impacts of the risk, making them a good
country to invest in.
On entering the new risk values for these countries based on the mitigation plans, we found that there was a
significant shift in the risk room towards the left bottom making them less riskier.
Other
Considerations
The Risk Room is a very useful risk analysis tool that we have used as the primary device in our analysis of
the problem at hand for RoboCanada. That said, there are other factors that should be considered, and due
diligence conducted in, before a final decision can be made. Here are but a sample of concerns.
• The South China Sea is currently under political turmoil and is notorious for piracy.
• IP laws need to be in place to protect RoboCanada’s assets.
• The world is a dynamic place and each location’s relationships with one another is of the utmost
importance.
• Most locations will have different costs associated with different business activities. Some of the costs to
consider are rentals or leases of facilities, manpower, shipping and export/import duties.
Alternatives
We have also put together a list of alternatives for RoboCanada’s consideration, given the risks involved.
RoboCanada could
• Select countries outside the prescribed list to conduct the same analysis using the Risk Room
• Leverage existing relationships and expand in the countries they already have operations in
• Investigate the option of a mobile manufacturing plant that could go from location to location as needed,
or lastly
• Continue with their current operations.
To reiterate, using the Risk Room tool, we have selected Malaysia, Thailand and China as the three top
destinations from RoboCanada’s consideration set of countries.
We have also looked at other possible issues that would impact this decision that needs further due
diligence. And lastly, we have placed other alternatives that could be avenues for success.
Thank you for your time and consideration.