KSB Argentina (Klein, Schanzlin and Becker ) (Case Study‪)‬

CASE OVERVIEW Andres Kessen, General Manager of the Argentine subsidiary of the German pump manufacturer KSB AG, is requesting permission from KSB AG headquarters in Germany to allow him to begin manufacturing pumps in Argentina for export to markets elsewhere in the world, primarily Less Developed Countries (LDCs) such as Egypt, Uzbekistan, Venezuela, etc. The pumps produced in Argentina would compete with pumps already produced by KSB manufacturing plants elsewhere in the world. Advantages of the KSB Argentina-produced products would include shorter delivery times (60 days vs. 120/150 days). In addition, use of KSB Argentina's obsolete technologies (not available elsewhere in KSB's system) offer lower manufacturing costs and higher margins. Kessen must decide what arguments he will offer to KSB AG's Board of Directors, in support of his proposal that KSB Argentina be allowed to expand its operations in this way. Kessen believes deeply in the merits of this proposal. However, he knows already that KSB AG's Director in charge of operations in the Americas (that is, the Director to whom he reports) is against the idea, because it would challenge and disrupt KSB AG's existing Global Manufacturing Network, which KSB Argentina (a small subsidiary using obsolete technologies) has not been invited to join.