Solution of Chapter 8 Operations Mangement by Jay Heizer

Service location decisions tend to focus on the revenue function, whereas manufacturing/industrial location decisions tend to focus on costs. The service sector uses techniques such as: Correlation analysis Traffic counts Demographic analysis Purchasing power analysis The industrial decision uses: Transportation method Factor-weighting approach Break-even analysis Crossover charts 8. Factors to consider when choosing a country: Exchange rates Government stability Communications systems within the country and to the home office Wage rates Productivity Transportation costsLanguage Tariffs Taxes Attitude towards foreign investors/incentives Legal system Ethical standards Cultural issues Supplies availability Market locations 9. Factors to consider in a region/community decision: Corporate desires Attractiveness of region Labor issue Utilities Environmental regulations Incentives Proximity to raw materials/customers Land/construction costs 10. Site location factors: Size and cost Transpo rtation systems Zoning Proximity of services/supplies needed Environmental impact END-OF-CHAPTER PROBLEMS 8. 1(a)Six laborers each making $3 per day can produce 40 units. b)Eight laborers each making $2. 50 per day, can produce 45 units. (c)Two laborers, each making $64 per day, can make 100 units.China is most economical, assuming transportation costs are not included. 8. 2Malaysia China Montana China is most favorable. 8. 6Atlanta Charlotte Charlotte is better. 8. 7| | Suburb B has the highest rating, but weights should be examined using sensitivity analysis, as the final ratings are all close. 8. 8| | Location| | | Present Location| Newbury| Hyde Park| | Factor| | Wgt| | | Wgt| | | Wgt| | | 1| 40| 0. 30| 12| 60| 0. 30| 18. 00| 50| 0. 0| 15. 0| | 2| 20| 0. 15| 3| 20| 0. 15| 3. 00| 80| 0. 15| 12. 0| | 3| 30| 0. 20| 6| 60| 0. 20| 12. 00| 50| 0. 20| 10. 0| | 4| 80| 0. 35| 28| 50| 0. 35| 17. 50| 50| 0. 35| 17. 5| | | Total Points| 49| Total Points| 50. 50| Total Points| 54. 5| It appe ars that Hyde Park represents the best alternative. 8. 9(a)Chicago = 16 + 6 + 7 + 4 = 33 Milwaukee = 10 + 13. 5 + 6 + 3 = 32. 5 Madison = 12 + 12 + 4 + 2. 5 = 30. 5 Detroit = 14 + 6 + 7 + 4. 5 = 31. 5 All four are quite close, with Chicago and Milwaukee almost tied.Chicago has the largest rating, with a 33. b)With a cutoff of 5, Chicago is unacceptable because it scores only 4 on the second factor. Only Milwaukee has scores of 5 or higher on all factors. 8. 10| Location A| | Factor| Weight| Rating| Weighted Score| | 1| 5| 100| 500| | 2| 3| 80| 240| | 3| 4| 30| 120| | 4| 2| 10| 20| | 5| 2| 90| 180| | 6| 3| 50| 150| | Total weighted score:| 1210| | Location B | | Factor| Weight| Rating| Weighted Score| | 1| 5| 80| 400| | 2| 3| 70| 210| | 3| 4| 60| 240| | 4| 2| 80| 160| | 5| 2| 60| 120| | 6| 3| 60| 180| | Total weighted score: | 1310| | Location C | Factor| Weight| Rating| Weighted Score| | 1| 5| 80| 400| | 2| 3| 100| 300| | 3| 4| 70| 280| | 4| 2| 60| 120| | 5| 2| 80| 160| | 6| 3| 90| 270| | Total weighted score:| 1530|Based on the total weighted scores, Location C should be recommended. Note that raw weights were used in computing these weighted scores (we just multiplied â€Å"weight† times â€Å"rating†). Relative weights could have been used instead by taking each factor weight and dividing by the sum of the weights (i. e. , 19). Then the weight for factor 1 would have been . Location C would still have been selected. . 11| | Site 3 has the highest rating factor, 86. 65, and should be selected. 8. 12(a)The following figure indicates the volume range for which each site is optimal. Site 1 is optimal for production less than or equal to 125 units. Site 2 is optimal for production between 125 and 233 units. Site 3 is optimal for production above 233 units. (b)For 200 units, site 2 is optimal. 8. 13| (a)| | (b)For 5,000 units, Perth is the better option. 8. 14| | V–A: A–B: B–C: 8. 15| (a)| | The total cost equations are: (b)Denv er is preferable over the range from 0–3,570 units.Burlington is lowest cost at any volume exceeding 3,570, but less than 25,000 units. Atlanta is never lowest in cost. Cleveland becomes the best site only when volume exceeds 25,000 units per year. (c)At a volume of 5,000 units, Burlington is the least-cost site. 8. 16| | The proposed new hub should be near (5. 15, 7. 31). 8. 17| | | City| Map Coordinates| Shipping Load| | A| 2, 1| 20| | B| 2, 13| 10| | C| 4, 17| 5| | D| 7, 7| 20| | E| 8, 18| 15| | F| 12, 16| 10| | G| 17, 4  | 20| | H| 18, 18| 20| | | | 120| 8. 19| | The proposed new facility should be near (7. 97, 6. 69).

In the United States, many states Essay

The rescue game, a joint social responsibility, must be approached with a lot of tact and undying resilience. With mortality rates on the high and visible evidences of the cause stirring us in the face, we are left with but one question, just one: who is the real killer? The very undeniable frequent recurrence of death through heart disease has been on the high for long stretches of time, which earlier was solely traceable to tobacco. The earlier discovery though incomplete has led the Government of the United States to impose heavy taxes on the tobacco manufacturing companies. Much of the funds realized from such taxes have helped to project billboards and campaigns against tobacco use. However, of late a more devastating killer of mankind was sighted. This, which had stayed so closely to the bosom of humans and even lured many until it became a delight, suddenly brings out its silent pistol carting the lives of many away. Who may have realized how potentially harmful a seeming sumptuous high-fat diet would have turned out? The facts are however showing by the day in alarming numbers of the heart disease even in non-smokers. I hereby use this medium to vigorously alert the Government to the incumbent dangers and threat to life these die hard life stealer have been and therewith request urgently that a bill be passed to levy high-fat fast food producers with heavy tax duties as was with the tobacco, seeing now this high fat foods even kills more and faster than other possible causes of heart failure. Such funds can then be re-channeled to educate the still ignorant many through the use of advance multimedia projections on lighted digital boards, billboard, newspaper and television.

Jeff Hancock's analysis speech Essay Example | Topics and Well Written Essays - 500 words

Jeff Hancock's analysis speech - Essay Example He provides different types of evidence to back up his claims such as statistical evidence and personal stories that have a bearing on his speech. His transition from one point to another within the speech was very evident, and this made it possible for the audience to keep up with him throughout the speech; this is because he was able to maintain a logical flow of thought that was not confusing to the audience. Jeff’s introduction was effective in that he was able to capture the audience’s attention through a joke and an interactive approach, by throwing them a challenge in question form. The audience demonstrated their familiarity with the topic by readily participating in the challenge, thus granting the speaker a full ear throughout the speech session. In his conclusion, Jeff was able to summarize his main points as well as reiterate his main idea about the topic of his speech; this conclusion was effective in that, not only did it achieve to signal the end of the s peech, but also it did compel the audience to reflect upon the concluded discussions. The speaker’s delivery of the speech was excellent because he struck as a credible source of information to the audience in a number of ways to build his credibility; Jeff starts by citing well-known ancient scholars thus demonstrating his vast knowledge in the topic. He also goes ahead to present different forms of evidence, in addition to, switching between a number of presentation modes such as question-answer, lecture and LCD; all that demonstrates his level of preparedness and research on the topic to the audience. Throughout the speech, Jeff appears poise, confident and professional because he does not rush through his points in a haphazard manner. The speaker performed excellently on his voice control; his choice of tone and intonation was very appropriate for

Lab report Example | Topics and Well Written Essays - 250 words - 5

Lab Report Example a series of experiments that involved mixing the various waste solutions, a mixture of barium sulphate (BaSO4), silver chloride (AgCl), Sodium sulphate (Na2SO4) and Zinc hydroxide (Zn(OH)2) were obtained. All these are useful chemical solids. Sodium sulphate has several uses that include: manufacture of detergents, making textile and glasses and in pulping paper in kraft process. This solid is thus a useful product and can be sold t companies involved in textile, paper and detergent manufacturing. was found that besides it being possible to create useful solids as the one mentioned above, some of the waste solutions could also be recycled and be used for commercial purposes. Sodium hydroxide is one of the components found in the waste solutions and can be used in manufacture of paper, rayons, home cleaners and soaps. Sulphuric acid is another component found in the waste solutions and can be used in petroleum refining, in processing metals and in the production of fertilizers. Waste water can be used for irrigation, drinking or cleaning. Barium chloride, and sulphuric acid was another mixture that was investigated. is another solid that was found the mixture. This is another useful solid that can be utilized in production of medicine as a heart and muscle stimulant and as a water softener. Moreover, it can be used in the manufacture of boiler detergent, caustic soda, pigment, pesticide, stabilizer 4 and polymers. Barium sulphate was obtained by mixing barium hydroxide (Ba(OH)2and sulphuric acid (H2SO4) as shown in the equation below: Silver nitrate has several uses which include making eye drops for children, plating jewelry and wrist watches, in dentistry, making mirrors and explosives. Hydrogen chloride is also useful in that it is used in electroplating, pickling and cleaning metals, as a anti-microbial agent, as a sensitizer in photography, decorating itching of high quality steel and making photochromic glasses. Nitric acid which is one of the end

Womens participation levels in sport and physical activity and how it Literature review

Womens participation levels in sport and physical activity and how it is affected - Literature review Example This paper intends to discuss the participation of women in sports and physical activities. Reasons for why it is affected will also be provided (Alexander 2006, p 24). Recent studies and statistics have proven that the number of women participating in sports and physical activities is low as compared to that of men. Participation is the process of being involved physically in an activity, or being a person who takes part in an activity physically. In a study done, in Australia, on women and men to see the level of their participation in sports and physical activities, the results showed that out of the total population, only 38.7% of the women participated in sports, while 65% of the men participated in sports. However, studies show that today, as compared to the previous years more women are participating in sports (Festle 2007, p 32). There are various reasons why women did not participate in sports in the previous years, for example, lack of time. Women were expected to remain home and take care of their children and home (Festle 2007, 16). For example, a woman would wake up in the morning, prepare her husband for work and start taking care of house chores and the children. These activities denied the women time to spare to do things they enjoy, like sports. Another reason why women did not participate in sports or physical activities was because of the expectations the society had put on them. Women did not take part in sports since it was seen as an activity that only men should participate in, but not women. A woman seen taking part in these activities was seen as a disgrace to the family and society at large, since it was considered masculine (Sportsscotland 2008, p 29). Lack of income was another excuse given for women not participating in sports. Women were not allowed to go out and work; men were expected to work and provide for their families; thus, it was rare for a woman to have money to spend (Joli,

The digital and online marketing strategies adopted by the main UK Essay

The digital and online marketing strategies adopted by the main UK grocery supermarkets - Essay Example This research will begin with the statement that over time, aggregate demand generated for consumer use goods and services has substantially increased in major economies of the world. Higher demand has carved the way for increased production-oriented activities. Furthermore, higher production participation has enhanced the degree of market rivalry between profit-making commercial firms. At this juncture, without the essence of modern cost-efficient marketing activities, a company cannot achieve success in business. The researcher in this assignment is a marketing consultant, responsible for this report that summarizes online and digital marketing strategies implemented by grocery supermarkets of the U.K. The summary will include critical analysis of the strategies, based on a comparative analysis framework. In 2013, it was estimated that net worth of the U.K. grocery market was  £169.7 billion. The surplus value of the industry had increased by 3.7% from 2012 to 2013. It is forecas ted that by 2018, worth of the industry would be  £205.9 billion, along with an annual growth rate of 21.3%. Since the U.K. grocery supermarkets operate in an Oligopolistic market, they are exposed to cut-throat competition. Each profit making company undertakes decisions regarding price and output on the basis of strategic behavior. In the current epoch, the internet has helped in formulating new strategies and business models for firms across several industries. Online shopping or retailing approaches have substantially changed the U.K. supermarket retailing process. These changes are noted in channel coordination and development, business scope, central business model, core processes, buyers’ value creation and online partnerships related to firms. Tesco has started to conduct trade over digital marketplaces from 1994, which was named as â€Å"Tesco Direct†. Later in 2000, the company had launched its official website, Tesco.com. Tesco is considered to be the larg est online U.K. based grocery retailer in the world. The company had invested large sums of money for online marketing purposes. It had conducted advertisement campaigns for internet phones it had sold. The company promoted these internet phones by providing free call facility the owners. Tesco was also the first online grocery retailer, which had initiated home delivery facilities to customers. However, all activities of the company are highly sustainable to the environment.

Childrens Social Work and its Key Issues Essay Example | Topics and Well Written Essays - 6500 words

Childrens Social Work and its Key Issues - Essay Example In relation to this, throughout this essay, I will discuss the implications this has on social worker’s best practice when working with children. I will also be discussing the possible problems that can occur when safeguarding children and examine the complex relationship between putting theory and frameworks into practice and promoting their welfare. As a result of this, I will identify relevant social work and UK legislation and policies when working with children, young people, families and their carers that need to be considered and adhered to. Abuse may consist of a single act or repeated acts. It may be physical, verbal or psychological and can be divided into main categories (Department of Health: No Secrets 2000); such as physical abuse, sexual abuse, emotional abuse, financial or material abuse, discriminatory abuse and neglect (Department of Health, No secrets 2000). Whilst the first three types can be quite easy to describe, the term â€Å"neglect† is a complex phenomenon that is difficult to define, and the lack of clarity on this subject matter has personal implications especially on the children (NSPCC, 2007). This is because it can be so wide-ranging in the description. The Department of Health: Working together to safeguard children (2010) looks at the term neglect as continuously failing to encounter the emotional and physical needs of a child, which can interrupt, change or damage a child’s physical and psychological development and the effects may last well into adulthood. Neglect involves careg ivers or parents simply not providing the basic necessities to a child, not being able to ensure appropriate medical care or treatment is given, not being able to safeguard the child from physical harm, risk and danger and finally being unresponsive to a child’s emotional needs (Howe, 2005). Research has identified that the physical abuse of children and risk factors associated with this has been influenced by other issues such as domestic abuse, parental mental health issues and drug and alcohol problems (Cleaver et al., 1999; Falkov, 1996). Assessing neglect is a substantial responsibility that should be accomplished by the social services department as children are helpless and rely on the intervention of those assigned to support them.

Difference between Group At Risk and Vulnerable Population with Coursework

Difference between Group At Risk and Vulnerable Population with Examples - Coursework Example The group ‘at risk’ in relation to poor health refers to those individuals who remain under a constant threat of facing health-related issues, as they are exposed to certain risks. One of such examples can be illustrated as a person with liver damage, who is being unable to manage regular activities due to the prevailing unfavorable conditions and associated risks (Stanhope & Lancaster, 2014). The members associated with the groups of â€Å"at risk† and â€Å"vulnerable population† often cannot manage their respective activities by themselves. Thus, they need to be advocated by the nurses. It is assumed that the members of the respective groups at certain times fail to advocate themselves due to an augmented level of vulnerability in mitigating the adverse conditions such as lack of education, poverty, homelessness, shortage in basic amenities and exposure to unhealthy conditions among others. From my viewpoint, I think advocating the elders would be the best suitable option. I feel so because elder population groups remain weak to the situations of physical stress and economic failure, which results in causing different health problems (Lillis, LeMone, Lynn & Taylor, 2010).

Journal Article Critques Essay Example | Topics and Well Written Essays - 1500 words

Journal Article Critques - Essay Example The study also established that the concepts between childhood obesity varied significantly from one region to another. There seems to be no consensus on the available body of knowledge on the subject of obesity and overweight in children. The study also acknowledges the difficulties involved in reaching an international consensus regarding the terms to be used in the definition of obesity and overweight among children. According to the study, some general terms have been used in the definition although there seems to specific differences even within the common terms. The study cites the example of Body Mass Index (BMI), which is a standard measure of determining obesity. According to the study, this BMI determines the manner in which a particular study explores the levels of obesity within a particular context. The cit-off point in the BMI has often varied from the percentile points of 85th and 97th. The results from this study illustrate clearly the levels of conflict associated wi th the definition of obesity in children. However, the study seems to develop some points of general consensus between the various issues that tie on the matter of childhood obesity in children. ... hat it seems to anchor its assumptions on some of the already known effects of obesity in terms of how it affects the development of children matters. This may not add new knowledge to the nurse practitioner since the common definitions have been overly exhausted by the research arena. Variations in perceptions seem to attach to the specific aspects as included within the general factors of the definition. However, the broad definitions of obesity, according to the terms of this study, coalesce around some common points. Notably, this study comes out strongly by bringing into perspective some of the problematic issues that are related to the definition of obesity in children. It also makes the point about the need for increased research into the manifestation of obesity in children. This point is drawn from a general concern that the traditional definition of obesity has tended to curve out certain demographic factors while ignoring others. For instance, the term obesity has traditio nally been associated with certain age brackets, and people of some specific socio-economic statuses. On this score, this study challenges some of these assumptions by providing or suggesting an expansion on the frame of reference within which alternative and more comprehensive definitions of childhood obesity could be understood. Therefore, the article becomes an important mind opener and prepares the nurse practitioner for further research into the area of concern. The study conducted by Kumar (2012) sought to explore the prevalence, manifestation, interventions, and common challenges associated with obesity in children. The study identifies childhood obesity as a crisis of public health around the world. The study observes that the prevalence of childhood obesity has been on the rise in

The Ten Commandments Review Essay Example for Free

The Ten Commandments Review Essay Historically, even the ancient civilization flourished under the guidance of an established code of laws called the Code of Hammurabi, During Hammurabi’s rule, back in the time of Abraham of the Bible, he ruled in peace for fifty-five years, and had brilliant achievements, high civilization and extensive literature. But Hammurabi’s Code law was mainly from polytheistic people and purely secular documents erected at a certain place for everyone to see and obey. The Ten Commandments was handed down to Moses direct from the hands of God and it did not only cater to the ethical and moral conduct of the society but it taught them that these moral conduct was based on recognizing that there is God whom they were all accountable to of their conduct towards fellowmen, the society, and to the established institution of humankind. People flourished because of respecting and obeying the Code of Laws which were mainly formulated by same created beings. The Ten Commandments were made by the hands of the Creator Himself. If Moses was alive today, he would surely appear in court with his stuff in his hands and would say â€Å"Thus says the Lord, respect and obey His laws and allow it to be displayed anywhere it could be necessary.† The question about what is threatening about the Ten Commandments should be answered in court too. Today’s generation should not forget that the American nation was founded by people who had deep faith in God; the heritage of American people was rooted in the Christian traditional of the Puritans who maintained their integrity and uprightness in the face of society seemingly loosing its morality during the colonial era. In the article of Warren Richey, clarifying the issue on the case regarding Ten Commandments whether the public display of religious symbol ideas on government property endorses religion may not be appropriated enough to cause alarm on anyone. I would agree with Richey that the issue is actually a â€Å"culture war† between religious conservatives and secular humanists. Richey pointed out that â€Å"conservatives believe the government should be active in promoting morality through promoting religious ideas and themes (Richey on The Christian Monitor). On the other hand, secular humanists are attempting to erase all matters of religion and God from public life. In fact, there was even an attempt recently to remove the maxim inscribed on dollar bills â€Å"In God We Trust.† Taking the issue of separation of powers between church and state, I would agree that at many points, the church should not interfere in the affairs of the state and vice versa. Displaying the Ten Commandments in government and public places is not interfering on government affairs. Anywhere in the world, you will find symbols, themes and ideas displayed in public places in memory of the great things done that merit public display of that particular object. No one questions this display because everyone understood its significance. In this context, everyone should know the heritage of American nation and answer why in the American Constitution and on dollar bills there is an inscription of â€Å"In God We Trust.† Mary Williams stated that Article III of the Constitution declares that â€Å"education and religion shall forever be encouraged.† She further stated that â€Å"the founders saw no conflict in Article one which says, â€Å"No person demeaning himself in a peaceable and orderly manner shall ever be molested in account of his mode of worship.† It was quite clear as Williams had emphasized that â€Å"Supreme Court radically departed from the founders’ religious policy by erecting a â€Å"Wall of Separation† between religion and public orders (Williams). The issue now is no longer on the Constitutionality of displaying the Ten Commandments in the public places nor on the issue of the separation of powers of church and state, but on the humanistic atheistic preferences of the Court system. As Williams stated, even school prayers, Bible readings and other clergy, lead invocations are all forbidden in public places. It means that though displays of Ten Commandments on government and public places was not basically not seen by the founders as unconstitutional but it seems its fate lies in the hands of those who hands judgments, whether we favor it or not. We cannot deny therefore that some aspect had gone wrong. The American society is fast losing the values of which the founders laid down as different movements rise up and gone. It shaped a new American values and culture. That is a liberal culture and consumerist society, placing the good on material things rather than on the blessings of the Almighty God. The flame of the values and religious devotions of the founders was no longer shining as the American society is heading towards the path of being an atheistic country as the article entitled ‘Religion is not Essential to America,’ the US Constitution is a secular document; it begins with â€Å"we the people† and contains no mention of God or Christianity which eliminate concept of religion and faith in God. As we had seen in recent developments, though we may be in favor of the display of the Ten Commandments and other religious symbols and beliefs, but the only that we can do is to express ideas and religious beliefs. Work Cited Williams, Mary.†The Ten Commandments Should Be Publicly Displayed.† Opposing Viewpoints Resource Center San Diego: Greenhaven Press, 2005. (22 July 2007) http://find.galegroup.com/ovrc/infomark.do?contentSet=GSRCtype=retrievetabID=T010prodId=OVRCdocId=EJ3010110254source=galesrcprod=OVRCuserGroupName=lincclin_fccjversion=1.0. Richey, Warren. â€Å"Dispute over Public Display of the Ten Commandments.† Christian Science Monitor (March 2, 2005, n.p.)  © Copyright 2005, The Christian Science Monitor. All rights reserved. â€Å"Religion is Not Essential to America.† Nontract No. 6. Copyright  © by the Freedom from Religion Foundation, Inc. Reproduced by permission

Ford motors and counterfeiting in the chinese automotive industry

Ford motors and counterfeiting in the chinese automotive industry Ford Motor Company (Ford) is an auto company that manufactures and sells autos and parts globally. Similar to many other corporations, Ford has invested manufacturing efforts in China, because China is now the worlds largest auto manufacturer and auto market. Given this huge opportunity, there are numerous companies looking to reap financial profits by producing counterfeit parts. The global counterfeit auto parts market was estimated at $16 billion in 2008  [i]  . For Ford, counterfeiting not only represents lost financial sales but also brand degradation and product liability risks. While robust growth in auto sales may be fueling the fake components market, the battle against manufacturers and distributors of counterfeit auto parts, specifically Ford auto parts is not new. Ford has been waging an ongoing aggressive campaign against counterfeiters since the early 1980s. Despite its efforts, there continues to be a battle as according to the automaker, counterfeit and pirated auto parts remains a problem that is putting the publics safety at risk and costing about $1 billion US annually. Since joining the WTO, the Chinese government has been placing increasing emphasis on intellectual property rights (IPR) to help encourage foreign investment in the country. However the strength of these IP laws and enforcement has not been robust as penalties are weak and do not deter counterfeiters. As Ford continues to invest and grow within China, we propose the following recommendations to address the counterfeiting issue. First, Ford should refine its internal firm strategies through security packaging innovations and a certification process, increasing education to consumers, aligning employee incentives through benefits and penalties, and continuing with the inspections. Next, Ford needs to pursue external political and legal strategies with key stakeholders, such as the industry coalition, insurance partners, the Chinese government, and the WTO. These strategies should focus on aligning incentives to develop more robust policies around counterfeiting penalties and enforcement. 2 Overview of the Counterfeit Automotive Industry in China For decades, piracy and counterfeiting problems have affected the economy. The global market for counterfeit car parts is estimated to be worth approximately $16 billion USD in 2008 (which accounts for roughly 3.2% of the global counterfeit market) and is growing roughly 9-11% per year.  [ii]  As the counterfeiting and piracy market is becoming more and more attractive to organized crime (it offers similar profits with a significantly lower probability of prosecution and penalties), criminals are making significant investments in counterfeiting. Counterfeiting and piracy activities have flourished in developing economies and gradually diminish as emerging markets achieve higher levels of prosperity and global integration. Today, industrial counterfeiting and piracy run rampant throughout emerging markets such as China. It is in fact, the worlds largest offender of IP theft and industrial piracy. According to MEMA, China is responsible for the exportation of 80% of the counterfeit goods seized at U.S. borders.  [iii]  The E.U. also estimates that 5-10% of all replacement auto parts in circulation are counterfeit.  [iv]  Furthermore, a recent study by the Commercial Times found that 56% of auto users in China have found counterfeit parts on their vehicles. Several unique characteristics make the Chinese market distinct from other counterfeiting regions. With Chinas sheer size and growing integration into the global supply chain, counterfeiting and piracy issues originating from this region have become a global problem (affecting not only local Chinese companies but also multi-nationals). Given significant socioeconomic disparities among different regions within China, the progression and convergence towards a middle income will likely be slower, fostering an environment in which counterfeiting and piracy will thrive for the foreseeable future. Furthermore, Chinas customs and traditions have historically accepted industrial piracy further stimulating growth. As the counterfeit market in China grows, increased investment has allowed counterfeiters to strengthen the sophistication of their operation. Counterfeiters now have inside information on new vehicles and specification changes before the new car is even on the market. Counterfeiters can produce exact copies of products, packaging and documentation and sell it under a competing brand name. In 2004, General Motors (GM) filed a lawsuit against Chinas Chery Automobile Company for the alleged piracy of its Spark vehicle to create a replica branded Cherys QQ. GM showed that the two vehicles were nearly identical with respect to exterior body, interior design and key components. (See Exhibit 1). In a study by the U.S. Chamber of Commerce and the Coalition against Counterfeiting and Piracy, counterfeit part sales are costing Ford about $1 billion per year. However, it is the physical dangers and risks associated with using or installing counterfeit parts that may be the most costly. Counterfeit auto parts are a huge consumer safety problem with serious potential to injure auto technicians and end-consumers. In addition to severe financial and safety implications, counterfeiting destroys the brand reputation of legitimate companies. Legitimate companies are often blamed or brought to court to take responsibility for the negative repercussions of counterfeit products. With China surpassing the U.S. to become the worlds largest auto market (achieving sales growth of 46% to 13.6 million), it will be difficult for auto original equipment manufacturers (OEMs) to ignore the Chinese market particularly since by entering the Chinese market, significant advantages may be leveraged (e.g. inexpensive labor, rapidly growing emerging market).  [v]  Currently, roughly 800 foreign auto parts suppliers operate in China, including most of the top 50 multi-nationals. And as the Chinese auto market continues to grow, instances of IP theft are likely to increase as well. It will become even more important for large multi-nationals such as Ford to take action and to protect itself from IP risks. 3 Impact of Counterfeiting and Piracy on Ford Motor Company in China A Background on Ford Motor Company in China Ford began manufacturing autos in the early 20th century. With $146.3 billion in revenues in 2008, Ford is now one of the worlds largest makers of cars and trucks. Its brands include Ford, Lincoln and Mercury and Ford receives more than half of its sales outside of North America.  [vi]   In the Asia-Pacific region, Ford operates under several investment holding companies including Ford Motor (China) Co., Ltd., Ford Motor Research Engineering (Nanjing) Co., Ltd., Ford Automotive Finance (China) Co., Ltd., Changan Ford Mazda Automobile Co., Ltd., Changan Ford Mazda Engine Co., Company and Jiangling Motor (Stock) Co., Ltd. Roughly 9% of 2008 global sales may be attributed to the Asia-Pacific region which includes China. Ford sold slightly more than 300,000 units in China in 2008 and 2009 sales exceeded 440,000 vehicles (annual growth of 32%).  [vii]  In China, Ford has several joint ventures including joint ventures with Jiangling Motors Corp and Changan Ford Mazda Automobile Co. These joint ventures provide it with three shared production platforms in China and also share factories in Nanjing and Chongqing. With China overtaking the U.S. as the worlds largest auto market last year, Chinese auto factories are running at full capacity. According to Ford, the two facilities it has with Changan Automobile Co. will not be able to accommodate expected future demand based on current growth expectations. Accordingly, it plans to open a $490 million factory in Chongqing in 2012, producing up to 150,000 vehicles per year and increasing total capacity to 600,000.  [viii]   B Detailed Assessment of the Political and Legal Issues Relating to the Counterfeit Auto Industry I Overview of the Political Landscape in China Although China has moved from a centrally planned economy to a market-oriented one, the Communist Party of China (CPC) still maintains political power. Having a one-party system makes the CPC susceptible to civil unrest that could threaten its power and, as a result, the CPC has been hesitant to take action that threatens local economies for fear of unrest. But as an emerging country with the worlds third largest economy on the frontier, China is struggling to balance the need to support local economies with a growing need to protect IP rights for both multinationals and domestic firms. Yet despite a reputation for considerable corruption, demonstrated by its 2009 corruption perception index score of 3.6, and a ruling CPC that often ignores counterfeiting since it supports many local economies, China still manages to attract multinationals such as Ford due to its potential for new customers and windfall profits.  [ix]   China and the World Trade Organization (WTO) Admitted to the WTO in 2001, China agreed to implement various measures that would liberalize its trade regime. Among these measures was the WTOs Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement). This agreement guards against counterfeit products by addressing minimum standards of IPRs protection, domestic procedures and remedies for enforcement of these rights, and dispute settlement procedures among WTO members.  [x]  However, despite these IPR protections, counterfeiting still represents about 8% of Chinas $10 trillion economy.  [xi]   To address this growing problem, in 2007 the U.S. asked the WTO to intervene, claiming that Chinas enforcement of IPR laws was so weak that it failed to limit the production of counterfeit products. Specifically, the U.S. argued that weak penalties for infringers and Chinas practice of allowing counterfeiters to sell goods seized by Chinese customs officials, provided that the fake labels were removed, provided little financial incentive for counterfeiters to cease production.  [xii]  In 2009 the WTO ruled that China breached trade rules by ignoring piracy and counterfeiting, yet it upheld Chinas criminal law on IPR; without strengthening Chinas criminal law and enforcement of IPR, it is likely that counterfeiting will continue to be problematic.  [xiii]   Conflicting Incentives for the Chinese Government Despite Chinas laws that aim to protect IPR, the Chinese government faces opposing incentives in cracking down on counterfeiters. Specifically, China must balance the economic benefits local economies enjoy from counterfeit products with the growing need to protect the IPR of foreign and domestic companies.  [xiv]  Because counterfeiting supports many local economies and millions of people, any crackdown on counterfeiting could result in serious economic losses. As this action would not be well-received, Chinese politicians are even less apt to prosecute counterfeiters or focus on strengthening enforcement of IPR laws. On the other hand, China must strengthen these laws and enforcement mechanisms if it hopes to continue attracting multinationals.  [xv]  However, many multinationals are so intent on entering the Chinese market, given its sheer size and potential profitability, that they are willing to operate in an environment with little IPR protection. As a result, the Chine se government has very little incentive to crack down on counterfeiters or greatly strengthen enforcement of IPR laws. Fords Risks in China and its Current Strategies Given this political landscape, Ford faces considerable risk in China. With three assembly plants in China, Ford has already encountered problems with counterfeit parts, claiming that counterfeiting costs the company $2 billion a year in sales.  [xvi]  Exhibit 2 Despite some multinationals willingness to live with Chinas lax IP protection, Ford has taken steps to protect against the growing problem of counterfeit auto parts and vehicles. Specifically, Ford has been using undercover intelligence to identify counterfeit producers and raid Chinese factories.  [xvii]  While these raids have prevented thousands of counterfeit products from entering the market, penalties still remain weak; the few offenders sentenced to prison can reduce their terms for $30 a day.  [xviii]  Despite Fords efforts and commitment to protecting its brand, this weak enforcement discourages any meaningful lawsuits and provides little deterrence to counterfeiters. Ford must develop strategies to work with the U.S. and Chinese governments to better protect against counterfeit products. II Overview of Intellectual Property Rights in China Chinas Current IP Environment Since joining the WTO, the Chinese government has been placing increasing emphasis on IPR to help encourage foreign investment in the country. Most recently, the Chinese State Council established a task force known as the Intellectual Property Executive Conference to look into IP-related issues. Chinas new auto policy released this year stresses the need to protect the intellectual rights of auto companies and bans the sale of auto products that violate these protections. China is also a party to many international agreements to protect IP (including the World Intellectual Property Organization and Paris Convention, among others). For example, China joined the Madrid Protocol in 1995, which requires reciprocal trademark registration for member countries, which now include the United States.  [xix]   The Chinese government has also established special IP courts to handle cases of IPR infringement more efficiently. In addition to having these specialized courts in some cities and provinces, Beijing, Shanghai and Tianjin have also established IP courts within the Intermediate Peoples Court. In 1992, the Supreme Peoples Court established an IP division as well. This increase in the legal systems capacity to handle alleged IP theft has been used to facilitate highly publicized campaigns, including activities such as raids and educational programs. Enforceability of IP Laws China has made significant progress on the legal and regulatory front, but despite stronger statutory protections, IP theft remains a major problem, as evidenced by the widespread existence of counterfeit products.  [xx]  In reality, IP laws are rarely enforced, and it is even rarer that those who are caught stealing, cheating, counterfeiting and pirating go to jail. Because China is a large country with some political decentralization, enforcing IP laws and regulations in China is a major challenge.  [xxi]   Several institutional factors undermine the enforcement of IP laws, including Chinas reliance on administrative instead of criminal measures to combat IPR violations, corruption, local protectionism, limited resources and training available to enforcement officials, and lack of public education regarding the economic and social impact of counterfeiting and piracy. At the most basic level, without adequate education with regard to IPR, there is little awareness that infringement is a crime. Furthermore, the fragmented nature of political authority in China and, more specifically, decentralized corruption exacerbates the lack of enforcement. For example, when counterfeiters have connections with local government or law enforcement officials, this may provide an easy cover for their counterfeiting activity. Local officials may create obstacles during investigations and assist local counterfeiters by letting them hide their production lines in safe places. Chinas fragmented legal system contributes to the problem as well. Protection of IP in China follows a two-track system. The first and most prevalent is the administrative track, whereby an IPR holder files a complaint at the local administrative office. The second is the judicial track, whereby complaints are filed through the court system. However, determining which IP agency has jurisdiction over an act of infringement can be confusing. Jurisdiction of IP protection is diffused throughout a number of government agencies and offices, with each typically responsible for the protection afforded by one statute or one specific area of IP-related law. There may be geographical limits or conflicts posed by one administrative agency taking a case, involving piracy or counterfeiting that also occurs in another region. Chinas courts also have rules regarding the scope of potential orders. In most cases, administrative agencies cannot award compensation to a rights holder. They can, however, fine the infringer, seize goods or equipment used in manufacturing products, and/or obtain information about the source of goods being distributed. China was also required to provide IP remedies through criminal enforcement for commercial scale piracy and counterfeiting, under the enforcement provisions of TRIPs. Chinas laws and regulations stipulate that IP administrative authorities and Customs may transfer egregious IP infringement cases to police and prosecutors for initiating criminal investigation. However, despite these criminal provisions, most IP cases continued to be handled through the administrative system. Foreign rights holders have considerably less success in encouraging criminal prosecution of IPR violations. When jail sentences are handed down, Ford officials in Taiwan say that those few offenders sentenced to prison can reduce their terms for $30 per day. Lawsuits are also often a waste of time, due to local protectionism. In 2003, Toyota lost a closely watched case in China against the countrys biggest private carmaker whose brand logo was nearly identical to Toyotas.  [xxii]  In the end, although interna tional pressure may have succeeded in getting Beijing to establish IPR laws and regulations, the enforcement of IP, as with most policy in China, falls within the domain of Chinas complex bureaucracies and local government officials. Outsourcing vs. Ford manufacturing To operate in China, Ford had to form a joint venture with a quasi-governmental partner: Changan Ford Mazda Automobile Co. in China.  [xxiii]  Fords other partner in China, Jiangling Motors Corp., makes commercial vehicles, including the popular Ford Transit van.  [xxiv]  These joint ventures are one of the biggest risks automakers face as they expand in China due to the danger of IPRs violations. The Chinese made no secret that part of their strategy in forming joint ventures was to begin to learn about the auto industry and how they can produce cars. Ford produces all of their vehicles in their own three plants in the country. However, they now source many of their component parts, which increases the risk of counterfeiting since the company has transferred production of certain parts from their own plants to third-party operations in China and India.  [xxv]  There are other issues that come with operating in a rapidly developing country. In China, factories are at risk of unscheduled shutdowns because of power shortages. Ford also faces political risk. Although the danger of nationalization or outright confiscation of Fords assets may not be high, China may not always have the best interests of foreign multinationals at heart. Despite these concerns, Ford is not shying away from the fast-growing Chinese auto market. Ford currently operates two plants in China, and it broke ground for a $490 million plant in September of 2009. The factory will make the next-generation Focus compact car, which Ford plans to sell globally. Its current plant in Chongqing makes the Ford Focus, Ford Mondeo and Ford S-MAX. Its plant in Nanjing, in eastern China, makes the Ford Fiesta.  [xxvi]   In order to set up operations in China, Ford was also required to establish research and development facilities alongside its manufacturing operations to help build the countrys technical know-how. Ford has taken steps to boost their Chinese design capabilities, which also benefits domestic Chinese companies. For example, Fords China design team is putting its own spin on the upcoming Ford Fiesta (tailored for the Chinese market). Fords Current Strategies Fighting counterfeiters is a key priority at Ford, and it has stepped up countermeasures worldwide. Ford, GM, and DaimlerChrysler formed a global industry network in 2001 to work with law enforcement agencies and governments to strengthen patent and trademark protection laws and impose criminal penalties to prevent counterfeiting.  [xxvii]  The problem is especially acute in the Middle East, where many counterfeit Ford parts made in China are shipped and sold alongside genuine parts.  [xxviii]   Ford admits it was late in its efforts to protect its IPR abroad. However, the company is now very active and has even established its own brand protection team. The unit has led a number of raids, which have led to prosecutions. Ford recently raided a Chinese factory and turned up 7,000 sets of counterfeit brake pads destined for Egypt, each stamped with a replica of Fords blue oval. A legitimate set of pads would cost the equivalent of $47 in Egypt; the phony ones might cost $30.  [xxix]   Furthermore, as a brand Ford is trying to make everything as sophisticated as possible. It has security features in the parts packaging itself and spends time on brand awareness and training exercises so people can better identify fakes. The company says this is critical to long term public awareness and stopping sales of counterfeit products.  [xxx]   III Overview of Product Liability Product Liability All auto manufacturers, including Ford, are exposed to product liability lawsuits related to the sale of autos or parts to the public, especially in litigious countries. Ford has the most exposure in the U.S. given the extremely litigious environment and its large sales. According to the Restatement (Third) of Torts: Products Liability a user or bystander in the U.S. can sue for injuries related to a defect or malfunction of the product, and, in some instances, a defective design or a failure to warn. Even though Ford does not manufacture and sell the counterfeit Ford parts it increases its exposure if the parts are believed to be manufactured by Ford and then cause accidents and injuries. Ford could be sued and incur substantial attorneys fees and possibly even settlement costs. Ford would then have to prove that the product was not manufactured or sold by them, and even if Ford is successful it will still face attorneys fees, damage to its brand, and wasted corporate resources. Product Liability History and Severity Product liability lawsuits can take years to defend, result in millions of dollars of fees and settlements, and severely damage a brand. Ford has faced product liability lawsuits in the past such as the Ford Pinto case in the 1970s that cost it millions and the Ford Explorer rollover related lawsuits in the 2000s. Ford manufactured the Pinto throughout the 70s and due to a faulty gas tank the cars often caught fire during rear-end collisions. The most notable Ford Pinto case (versus Grimshaw) cost Ford $6.5 million in 1981.  [xxxi]  Ford has faced many other product liability lawsuits throughout its history. Fords Current Strategies Ford recognizes its exposure to insurable risks including product liability related to the manufacture and sale of autos and parts. Given the critical nature of risk management Ford maintains a Global Risk Management Committee (GRMC) that makes risk related decisions and is headed by the Chief Financial Officer. Ford chooses to manage and protect against product liability risks through a combination of self-insurance and product liability insurance.  [xxxii]  The self-insurance is typically in the form of a calculated monetary fund setup to may attorneys and claims. The product liability insurance would provide Ford with attorney support and claims/settlement payments in the event of an insurable claim. Ford also has a Sustainability, Environment Safety Engineering (SESE) Team that works to prevent faulty products from being sold and to ensure Ford complies with safety and environmental regulations. They also provide technical analysis to corporate counsel on product liability lawsuits when needed.  [xxxiii]   Finally, Ford has created a Global Brand Protection group to protect consumers from counterfeit products threatening user safety. This group is tasked with: preventing the distribution of and removing counterfeit parts from the marketplace, ensuring that the companys trademarks are used appropriately, and maintaining the integrity of the sale and distribution of original equipment parts.  [xxxiv]   4 Recommendations China has quickly become the worlds largest auto maker, surpassing the US in 2009  [xxxv]  . Due to its immense scale and rapid growth rates, China is an important strategic market for Ford from a production and sales perspective. Despite the political and legal issues and risks Ford faces in China, the company cannot simply withdraw its operations from China. Ford must engage in market and non-market strategies to help manage the counterfeit problem in this market. Recommendation 1: Refine Internal Firm Strategies As mentioned previously Ford has started to invest in internal strategies, such as raids and setting up the Brand Protection Group, to help address counterfeiting. We recommend that Ford continue to refine these strategies as well as incorporate additional internal firm tactics. From a product perspective, Ford has noted that there are security features in the packaging of the auto parts and that consumers should use reputable dealers and repairers, inspect parts and packaging closely in case they spot something and if they are concerned to ask that only original parts are used or call the auto maker.  [xxxvi]  We recommend that Ford continue to invest in its packaging to help dealers, repair shops, and consumers detect fake products. The company could consider implementing a certification program where only legitimate Ford plants and OEMs are able to put a Pre-Approved by Ford label on its products. Additionally Ford needs to employ efforts to minimize spare factory capacity in these production facilities and to increase monitoring from U.S. Ford managers. In conjunction with product-related tactics, Ford needs to educate its customers (e.g. dealers, auto-body shops) and end-consumers and bring this issue to light. Because counterfeiting auto and auto parts drastically affects consumer safety, Fords customers and consumers should have a strong commitment to help prevent counterfeiting once they are aware of the issue. These educational efforts can be spearheaded by the Global Branding Team and be implemented in various public relations and marketing efforts. Most consumers may not be aware that counterfeit autos and auto parts exist and are responsible for associated safety risks. One campaign can highlight how counterfeit auto parts can lead to injuries and fatalities. The campaign can then empower consumers to ask for Ford parts only when having their autos repaired. This will encourage customers to seek out Fords legitimate replacement parts and be wary of counterfeit products. Ford also should implement tactics to educate and incent their employees, critical stakeholders. In conjunction with educating consumers, the Global Branding Team can utilize the same resources to educate its employees. This knowledge can help increase employees commitment to prevent counterfeiting and can also create a culture of pride related to high quality production and safety. Ford ca