Teco Company

Chapter 16 · Enl'ironmen~ Slralegy. and Multinationality
EXHI BIT 9

Cost stru cture for one kilogram of stick welding electrodes manufactured and sold in Indonesia
Plant running IIfllIl shills, normal labor productMly Plea/ work boosts labor produclMly by 20% PIeCflWork boGlSts labor procjJalvlly by 40%

$1.35

$ 1.35

$1.35

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Ma!a ~als

0.70

0.70 0. 17

0.70 0.14

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0.08

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Direct labor Proltt

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0.08

0.08

0.02 0.35 25.9'"
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0.02 OA'

Gross margin
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Case Study

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TECD Electric & Machinery Co. ltd.
In July 1995 Mr. T. S. Hs ieh. pres ident of TECD El ectric & Machinery Co .. Ltd .. explained that he thought much of th e company's succc:s~ over th e years was due to the "spirit of TECO." The TECO spirit existed because top-level managers hired good people. ran the corporation in a democratic way, encouraged employees to perfonn as a team. and made sure successes were enjoyed not onl y by sharehoklers but also e mployees. the: soc iety. and the cOrp:>ration itse lf. Mr. Hs ieh thought one imponruu factor he lping to create the lECa spirit was a managem ent dec ision to evaluate pc:rfonna nce using I"allle·added. rather than profit. as the primary corpocate measure of s ucccss. Value-ooded was calculated by s ubtract-

ing from sales revenues all payments to outsiders (for exumpl e. suppliers. subcontractors). TECO managers believed thm the: use of value-added focused atte ntion on the right issues