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You have been approached by the senior managers of Lartor, a high-tech company, to advise them on whether to outsource the production of a range of new electronic video products that are currently under development to foreign manufacturers or whether to establish a foreign subsidiary to manufacture its own. While keeping manufacturing costs low is important, quality product is very important as well and specifications will need to be tailored to suit the needs of many different countries.
1. What forces in the environment will be the most important to analyze to decide which is the best manufacturing option?
2. What kind of management and information system will you need to make sure Lartor has sufficient control over cost and quality?
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The objective of the question is to make you scan the environment in context of outsourcing of production of a new range of video products that are currently being developed. You are required to balance the two issues of environment factors while ensuring that the quality is up to the mark so that the company remains competitive globally. You have been asked two specific questions one about the forces in the environment which will be relevant to you and second the kind of management and information systems which will be needed to suit the requirement of Lartor.
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<br>There are some assumptions that the question makes; first the question makes an assumption that there are some global environmental factors that need to be considered. This is not the case in outsourcing. These factors vary from country to country, continent to continent and time-zone to time-zone. For instance in a developing country cheap labor force may be plenty but labor trouble may be plenty. Again the management information systems will vary from time-zone to time-zone. For instance where the day starts after night fall in the USA the use of telephone will reduce and more of e-mailing will be important. Also the question assumes that it has a choice regarding establishing its own company or importing the goods. There are laws in several countries against multinationals establishing branches and the choice becomes irrelevant. So the selection of the country becomes the most ...
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