Otis Trains Case Analysis
Bassem Basta
Supply Chain
20th January 2015
Case Analysis
Otis Toy Train
Case Analysis
The Background of Otis, it was a landmark Toy Train Company in early 20th century. In 1950’s gained major popularity among children, 1960’s-1980’s was the company’s peak. In 1990’s customer preference changed to gaming consuls, so Otis Trains had to change their target market. In response changed their product. Otis faced some problems, for instance, they didn’t adapt to advancements in technology: as a result the business suffered. Radical change due to disruptive innovation and electronic gaming, which led to changing their product and target market. At first it was not successful and then they made their product much more detailed, creating a niche market and plus increasing labor costs. In addition, they were in situation where they only approached by one company JLPTC. They were offered a lower cost of manufacturing by 40 to 60 percent per unit. Moreover JLPTC would work closely with Otis designers. And because of increased labor costs this is the practical solution, I would suggest that the company does decide to go but needs to take certain precautions. Of course there are risks, for example, costs would be risky in the customs, taxes, duties, hiring a third party, freight, damaged goods, logistics. Also the risk would be shared in quality control: appealing, packaging, durability, originality. Reliability and communication would be in risky in that situation, reliability: trust , design security, work ethic, contracts, long term relationship, as for communication: lack of transparency due to distance and new relationship. In recommendation, for costs, I would recommend hiring 3PL to handle transportation of products from JPLTC to Otis. Quality, probably create a branch office in china to maintain standard. Reliability, through contracts and legal terms JPLTC must abide to Otis standards. Also in communication, will be creating an outpost branch office in
Supply Chain
20th January 2015
Case Analysis
Otis Toy Train
Case Analysis
The Background of Otis, it was a landmark Toy Train Company in early 20th century. In 1950’s gained major popularity among children, 1960’s-1980’s was the company’s peak. In 1990’s customer preference changed to gaming consuls, so Otis Trains had to change their target market. In response changed their product. Otis faced some problems, for instance, they didn’t adapt to advancements in technology: as a result the business suffered. Radical change due to disruptive innovation and electronic gaming, which led to changing their product and target market. At first it was not successful and then they made their product much more detailed, creating a niche market and plus increasing labor costs. In addition, they were in situation where they only approached by one company JLPTC. They were offered a lower cost of manufacturing by 40 to 60 percent per unit. Moreover JLPTC would work closely with Otis designers. And because of increased labor costs this is the practical solution, I would suggest that the company does decide to go but needs to take certain precautions. Of course there are risks, for example, costs would be risky in the customs, taxes, duties, hiring a third party, freight, damaged goods, logistics. Also the risk would be shared in quality control: appealing, packaging, durability, originality. Reliability and communication would be in risky in that situation, reliability: trust , design security, work ethic, contracts, long term relationship, as for communication: lack of transparency due to distance and new relationship. In recommendation, for costs, I would recommend hiring 3PL to handle transportation of products from JPLTC to Otis. Quality, probably create a branch office in china to maintain standard. Reliability, through contracts and legal terms JPLTC must abide to Otis standards. Also in communication, will be creating an outpost branch office in