Product details

TEMSA, a manufacturer of different size coaches and light trucks, is going through a major crisis due to the economic recession in the country. There are inventories of both finished vehicles and WIP (work in progress) and the expected domestic demand in the next year is extremely low (50 units). To cut expenses the company may need to stop production and lay off personnel. Rigorous evaluation of the alternative strategies that will help the company survive the situation is needed. Since the domestic demand is almost zero TEMSA needs to target more stable markets like Europe. However, TEMSA works under the Mitsubishi license, which presents restrictions. An alternative is to consider entering the European market independently from Mitsubishi. TEMSA already had a favourable experience in Europe with its midi-bus Euro Prestij. It may consider marketing Safari, a new TEMSA brand coach, in Europe but making such a move independently from Mitsubishi presents a challenge. This case aims to highlight the main aspects of a resource based operations strategy that will lead TEMSA to survive the crisis in the short run and reach and operate in more stabilised markets in the long run.