Mabuhay Pumps Company

I. Point of View

This case analysis is taken from the viewpoint of Renzo Quiambao, a licensed mechanical engineer and the Vice President for Manufacturing of Mabuhay Pumps Company (MPC). He is having a thought of what strategy he should apply in the decision making on whether to convince the President, Mr. Benjamin Cheng Jr., to accept Ang Tibay Foundry’s offer to outsource their pump housing services or to just to affirm with the President’s sentiments on employee loyalty and company reputation.

II. Statement of the Problem

“Can outsourcing the production of foundry services brings greater benefits for MPC than continuing their in-house foundry manufacturing?”

III. Areas of Consideration (SWOT Analysis)

Strengths

Weaknesses

Opportunities

Threats

- MPC is one of the market leaders

- Has a built reputation for over 20 years

- Has skilled and loyal employees working in the firm for over 15 years

- In-house foundry manufacturing requires higher cost than the current and past outsourced foundry services offers

- ATF’s offer of their full product line and foundry services

- Cost reduction of 15% if ATF’s offer is accepted

- Projected savings (if offer is accepted) will help finance the future plans of the firm

- Displacement of 21 skilled and loyal employees working in the foundry

- Potential negative impacts on MPC’s reputation for both the employees and public

The areas of consideration include the factors that are most important in weighing the decision Mr. Renzo Quiambao should make on whether to insist his arguments about accepting the offer of Ang Tibay Foundry (ATF) to outsource MPC’s housing production or to accept and stick to the President’s initial decision and reject the proposal in order to retain the company’s reputation. These factors are quality of service, cost, and impact on the company’s reputation.

IV. Alternative Courses of Action

It appears that there will be three available options of strategy for Mabuhay Pumps Company: 1) Accept ATF’s proposal and push through with the outsourcing but transfer their employees to other divisions in order to save their loyalty to their company; 2) Decline ATF’s offer and just focus in making