Nova Incorporated: Two sourcing opportunities

Essay by adri_barcaUniversity, Bachelor'sA-, January 2005

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To situate the context, we are in June 2000, one week before NOVA meeting, and John Fisher (NOVA director) receives two important memos following two memos sent to foreigner NOVA's manager in order to communicate them it's necessary to reduce costs and improve RONA (return on net assets). The two memos he receives could be decisive for NOVA future. They are about two sourcing opportunities:

-The first is from NOVA president for Asia Pacific who seeks permission to conduct negotiations that would lead to joint manufacturing and distribution ventures in India and China.

-The second is from NOVA president for South America who request authority to purchase all products for South America from a local Brazilian source.

Nova is an International company which manufacture and distribute display fixture in USA and a bit around the world. NOVA conduct line is to satisfy the customer and to take benefit from the growing markets around the world.

First NOVA's finished goods are made with high quality products that permit offering excellent finished products with a real quality. NOVA take in count differences in the markets and it's why they try to product their goods at a lower costs in order to have the best distribution price for different consumer in different countries. It's the case here for Brazilian and Asian markets where they try to decrease cost to conquer these growing markets. To be more competitive NOVA is thinking about a strategy which could permit to be quicker to deliver its customers, in outsource manufacturing for the studied case in both China and India, and in Brazil.

To study the question of these two outsourcing opportunities, we will see the risks and rewards that would involve these two outsourcing strategies in both China and India,