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Lenzing AG: Expanding in Indonesia
Description
In 1994, Lenzing AG, the world's largest rayon manufacturer, is deciding whether to expand production in South Pacific Viscose, its Indonesian subsidiary. Indonesia is a booming market for rayon, but management still has some concerns about the expansion. First, for the plant to remain successful, Lenzing's downstream customers--textile producers--must also remain in Indonesia. Second, despite being located in an area of tropical forests, the Indonesian plant has no local access to wood pulp, its most critical input. Finally, with the expansion, Lenzing would be increasing its exposure in a country that remains politically and economically uncertain.
Learning objective:
Exposes students to a range of issues surrounding expansion in a foreign country. In particular, it pushes them to consider how expansion at a particular site affects the company's competitive position with regard to both its upstream suppliers and downstream customers.
Subjects Covered:
Competition; Developing countries; Expansion; International operations; Logistics; Multinational corporations; Plant location; Production
Setting:
•Geographic:Indonesia
•Industry: Apparel
•Industry: Textiles
•Event Year Begin:1990
•Event Year End:1990
http://hbsp.harvard.edu/
In 1994, Lenzing AG, the world's largest rayon manufacturer, is deciding whether to expand production in South Pacific Viscose, its Indonesian subsidiary. Indonesia is a booming market for rayon, but management still has some concerns about the expansion. First, for the plant to remain successful, Lenzing's downstream customers--textile producers--must also remain in Indonesia. Second, despite being located in an area of tropical forests, the Indonesian plant has no local access to wood pulp, its most critical input. Finally, with the expansion, Lenzing would be increasing its exposure in a country that remains politically and economically uncertain.
Learning objective:
Exposes students to a range of issues surrounding expansion in a foreign country. In particular, it pushes them to consider how expansion at a particular site affects the company's competitive position with regard to both its upstream suppliers and downstream customers.
Subjects Covered:
Competition; Developing countries; Expansion; International operations; Logistics; Multinational corporations; Plant location; Production
Setting:
•Geographic:Indonesia
•Industry: Apparel
•Industry: Textiles
•Event Year Begin:1990
•Event Year End:1990
http://hbsp.harvard.edu/
23 pages, ebook
First published January 1, 2008
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