Question : The diagnosis of the company within its sector (700 words) INTERNATIO
ID: 371899 • Letter: Q
Question
Question : The diagnosis of the company within its sector (700 words)
INTERNATIONAL JOURNAL OF CASE STUDIES IN MANAGEMENT HEC Volume Issu June 20 Market Expansion at ems electronics Case prepared by Professor Dietmar STERNAD Michael Velmeden, managing director of ems electronics gmbh,2 headquartered in Klagenfurt, Austria, was just returning from a visit to China with a German customer in the automotive supplier industry. The customer's company had built a new facility in China for which it required the same engineering and manufacturing services for electronic components as cms electronics had previously supplied for its main production site in Europe. The Austrian electronics company had no facility in Asia, however. Velmeden therefore recommended that cms electronics manage the entire project for the customer, including the engineering, but outsource manufacturing to a local service provider. The proposed model had functioned well with another customer. Velmeden and his customer visited two factories owned by the proposed subcontractor, one in Shenzhen and the other north of Shanghai. The customer seemed impressed by the production facilities but somewhat skeptical about the idea of having his electronic manufacturing services (EMS) provider subcontract to a different service providerExplanation / Answer
Production alliance with third-party contractors is not a new business strategy in the current era.Many leading companies like Apple also used many parts of their gadgets such as mobile base through subcontracting. In this case cms has to evaluate the situation more precisely and based on multiple factors. In-house production would be more costly in host countries if there is no equivalent customer base to captivate it. thus instead of going for a sub contractor the company can go ahead with strategic alliances with other electronic companies in Asia or other regions so that the facilities can be used along with following their technical standards.This will be good for both companies like GE has joint venture and alliance with Bharath heavy electrical and Wipro in India for their Health care business. This will give good Outlook to the customers as well because they will get the original quality and precision of the branded company.This will reduce the overall.transportation cost as well.