Please answer question in full detail and explanation. Thanks in advance 4. An e
ID: 422119 • Letter: P
Question
Please answer question in full detail and explanation. Thanks in advance 4. An electronics firm is considering how best to supply the world market for microprocessors used in consumer and industrial electronic products. A manufacturing plant costs approximately $500 million to construct and requires a highly skilled work force. The total value of the world market for this product over the next 10 years is estimated to be between $10 and $15 billion. The tariffs prevailing in this industry are currently low. Should the firm adopt a concentrated or decentralized manufacturing strategy? What kind of location(s) should the firm favor for its plant(s)?Explanation / Answer
The firm which has just come up with the pipeline plan to cater to the global market of microprocessors cannot possibly embark upon the decision of putting up a manufacturing plant. That’s a huge cost and can is subjected to trial an error , thus exposed to massive chances of crashing with unbearable loss.
In this stage, the best suited strategy is to adopt a Decentralized manufacturing initiative. By splitting the production across geographies, the company would be incurring the advantage of gripping the local markets per taste and culture. The stress and selection of location has to be in already developed regions of the world where technological advancement prevails and there would be no exorbitant cost in experimental venture.
The decentralization would also be advantageous in terms of accumulation of skilled labour at low cost and also the raw materials at a lowered rates.
Thus they can get hold of low cost geographies to suffice the budgeted investments and also the other target area location should be where prevails technological advancement and thus remains no skip of added research and development. For example, the third world countries could provide cheap labour and the leading technological hubs like US, China could add to the innovation and development