Expansion of the ITP box & bags division

Abstract

This thesis is completed on the behalf of International Trading Partner’s Box & Bags division. The Box & Bags division manufactures technical textile products in Shanghai. Due to the rising price level in Shanghai, ITP Box & Bags wants the authors to evaluate the possibility of expanding to a different province. The aim of this thesis was to evaluate the profitability of the potential provinces. To be able to find the most profitable province, the authors have chosen four incentives that they assume will affect profitability. To be able to recommend a specific province, the authors have collected data regarding the textile industry development. In order to gather the information, in-depth interviews was conducted and secondary data collected. Through the external analysis the authors gained information about how the textile industry is changing. The analysis indicated that manufactures moved manufacturing to Central regions. Because of this, many of the provinces evaluated was located in Central China. The internal analysis shows that ITP Group is ready for an expansion, based on their financial situation and by having the right set of attitudes. After completing the internal and external analysis, the authors developed a strategic problem definition. The objective was to find the most attractive province based on the incentives; government, costs, cluster and labor. The authors made an evaluation of several potential provinces and through an elimination process narrowed them down to three. The three provinces were evaluated more thorough by using a decision matrix. The most profitable province was chosen. Finally, the authors calculated the costs saved by expanding to the chosen province compared to Shanghai.