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Renesas Electronics And The Automotive Microcontroller Supply Chain Case Solution & Answer

Renesas Electronics And The Automotive Microcontroller Supply Chain Case Solution

Cons

The cost of production of the Renesas will increase due to increase in production. As it would be superfluous or increased safety stock rather than an average. Thus, the company will have to bear extra cost, and it will cause a threat of wastage of inventory. Moreover, extra production can be destroyed in the event of the disaster.

Geographical Expansion

Pros

Geographical expansion can benefit Renesas in several ways. Following the adverse situation in Naka, the company can supply from new plant. Thus, there will be a reduction in the threat of failure. Renesas will get an advantage of launching internationally. Furthermore, it will have the opportunity to increase its customers in the international market.

Cons

Renesas will have to be competent in order to compete in the international market. Furthermore, the companies, which have a low-cost strategy, have progressed in countries near to Japan. Therefore, it will be tough for Renesas to lower its cost in the international market due to established competitors in neighboring countries.

Implications

It can be depicted from the Exhibit 2 that the Renesas has two better options in order to control hazards in future. One is of increase in its production; another option is to expand geographically. Since Japan is prone to natural disasters, it is very tough for the manufacturing company to precede its manufacturing in this region. In fact if there will be an increase in its production at the time of disaster, then production will be useless in delivering to customer. Furthermore, it can be destroyed next time. Hence, it is suitable for the Renesas to accept the second alternative to diversify geographically. It can diversify in the nearby countries like North Korea, South Korea, or China. The better option is China’s port that is not as far as Ireland, and the Beijing is to Japan. Renesas thus, will be able to have access to its product during an adverse occasion. Furthermore, it will be able to get cheap labor from Beijing. Thus, it will be able to focus on its price too. Moreover, it will also enjoy the advantage of international expansion. It will get more customers from the international market. Therefore, the expansion will also increase its profitability…………………

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