Nirmal Kalimireddi John Paul Spiro-Colwell April 13, 2004 MGT 650 Flexit International Nirmal Kalimireddi John Paul Spiro-Colwell April 13, 2004 MGT 650

Flexit History The Flexit Company Founded in 1965 Manufacture and sell athletic conditioning & sports equipment Sell to 48 contiguous states Current five-year plan includes exporting to Europe and possible offshore production Three manufacturing plants in the U.S. Company president: Jim Goodbody, takes pride in company self-sufficiency

Flexit Organization Chart

Flexit Corporate Goals Remain a leader in physical fitness product market in the U.S. Expand domestic market share from 38 to 50% within five years. Capture at least 10% of European market in five years. Retain control of operations but consider international alternatives.

An International Twist Large demand for home athletic equipment in European countries Flexit currently has no experience in international shipments or doing business in a foreign country Physique Ltd. chosen as best candidate Specializes in selling & distributing a full line to all EEC countries and several non-EEC countries Possible countertrade or export to U.S. with Flexit as distributor

Physique Ltd. Organization Chart

Management Issues Organization Structure Two companies have different corporate structures Flexit managers will take on new tasks Head of corporate distribution planning must determine best way to get Flexit products to Europe Two major variables Globalization Localization

Question 1 Are Flexit’s corporate goals realistic for the next five years? The goals set forth by Flexit seem realistic. Strengths Manufacturing and distribution in place to get their products to a shipping center. If the manufacturing facilities have room to expand the goals should be easily accomplished. Areas for improvement Developing products for the European market. Unlikely that the products that they are currently making will be an exact match for what Europe wants.

Question 2 Will the existing physical distribution system support the proposed expansion to Europe? Flexit’s distribution seems to be able to handle the addition of an overseas operation. Most shipyards have truck and rail access. Getting the products to the ships is fairly easy. Need to arrange a contract with a shipping company to get goods to Europe. Physique will need to be able to receive the products at the dock and feed them into their distribution system.

Question 3 Which new tasks can be performed by existing resources, and which must be added or contracted out? Internally handled requirements Ensure all is in order for the shipment to Europe. Be sure that their packaging can withstand the long and arduous journey to Europe. Marketing and development people to develop products focused on the European market. Externally handled requirements Transport of goods to Europe Documentation and associated processing for import to Europe.

Question 4 What are the benefits and the drawbacks of using an existing distribution channel in Europe? Benefits: Physique is established Distribution and marketing in place. Very little work required to start selling Flexit products in Europe. Drawbacks: Flexit will be tied to Physique Physique to determine where to focus the distribution of Flexit’s products.

Question 5 Does the proposed plan have the required flexibility to accommodate expansion for countertrade, import from Europe, offshore production, and subsidiaries in Europe? The plan handles expansion, counter trade and imports from Europe. Only require the distribution system to be robust enough to handle an increase in product flow. One way to Europe, there will not be much more resources required to go the other.

Question 5 – continued Offshore production does not seem to be handled in this plan. Plan only handles trade between Europe and the United States. Offshore production would probably be handled in the Far East. Transportation systems that both companies use do not extend this far. Possibility of offshore production in Africa or Eastern Europe. Subsidiaries are not handled at all.

Question 6 Is a new organization structure required to support company objectives? What changes do you think should be made? Why? Draw up you recommended new organization chart for Flexit. A new organization structure would be required. Limitations of the current structure. Factory level marketing can not handle a global market. Factory level manufacturing planning does not fully utilize the total capacity of the company.

Question 6 – continued Enhancements provided by a new org. structure. Centralized marketing will be able to produce products aimed at various global markets Centralized manufacturing planning enables corporate to better utilize the manufacturing plants. New products are sent the plant that has the best ability to manufacture. Factory load can be distributed.

Recommendations Proceed with current plan for expansion Restructure Enables Flexit to address global markets. Enables manufacturing to be more efficient. Work with Physique to start countertrading.

New Organization Structure

Thank you.