Case Detail

Case Summary

Polaris Industries Inc.

Case Number: 5-112-003, Year Published: 2012

HBS Number: KEL725

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Authors: Sunil Chopra; Ioana Andreas; Sigmund Gee; Ivi Kolasi; Stephane Lhoste; Benjamin Neuwirth

Key Concepts

Distribution, Global Strategy, Logistics, Operations Management, Outsourcing, Supply Chain Management

Abstract

In September 2010 Suresh Krishna, vice president of operations and integration at Polaris Industries Inc., a manufacturer of all-terrain vehicles, Side-by-Sides, and snowmobiles, needed to recommend a location for a new plant to manufacture the company’s Side-by-Side vehicles.

The economic slowdown in the United States had put considerable pressure on Polaris’s profits, so the company was considering whether it should follow the lead of other manufacturers and open a facility in a country with lower labor costs. China and Mexico were shortlisted as possible locations for the new factory, which would be the first Polaris manufacturing facility located outside the Midwestern United States. By the end of the year Suresh needed to recommend to the board whether Polaris should build a new plant abroad (near-shored in Mexico or off-shored in China) or continue to manufacture in its American facilities.

Learning Objectives

• Evaluate tradeoffs between different geographic locations when establishing a manufacturing facility (off-shoring, near-shoring, and on-shoring)
• Run a sensitivity analysis on total cost
• Assess the impact of transportation costs, exchange rates, labor cost rates, lead times, and other assumptions on total costs
• Identify qualitative factors to be considered when deciding between non-U.S. facility locations, transportation time variability, consumer perceptions, and cultural difference

Number of Pages: 9

Extended Case Information

Teaching Areas: Operations

Teaching Note Available: Yes

Geographic: Minnesota, United States

Industry: Motorsports

Organization Name: Polaris Industries

Organization Size: Large

Decision Maker Position: VP of Operations and Integration

Decision Maker Gender: Male

Year of Case: 2010