Essay on Oxo Case Write-Up

2754 Words Dec 21st, 2012 12 Pages
Abstract: OXO International represents an example of a great company built upon a creative product concept. Instead of doing everything by itself, the company chooses to outsource both the design and manufacture process. By setting up partnership strategically, the company has grew fast and gained reorganization by both customers and professionals. However, as OXO wants to develop products targeting high-end markets with higher price points than standard kitchen gadgets, which requires more complicated product development process, the company is facing the choice of either keeping outsourcing designs or establishing its own design department. Also, if it stays on outsourcing designs, OXO has to choose which partner and in what way it …show more content…
In addition to find better solution for customers, Smart Design also helps to make the solution plausible through interaction with factories.

To support the relationship with Smart Design and to encourage it to generate more and better product ideas, OXO partners with Smart Design in royalty agreement. Instead of paying design fees upfront (typically $50,000 for a relatively simple product), OXO pays a royalty agreement of 3% of the sales for the products they designed. Although OXO is certainly paying much more than a design fee on successful products, it finds a way to motivate and ally with Smart Design. Smart Design needs to take risk of absorbing the cost of unsuccessful products, so it would devote more time and effort in OXO’s projects. At the same time, OXO could have more money flow to support more projects simultaneously. Obviously, Smart Design has done great in understanding of OXO’s concepts and designed products that have strong competiveness in the marketplace. Within term of cooperation, OXO has won several design prizes with the help of Smart Design.

Up to this point, one may question that, what exactly OXO’s function behind all of these partners? Does OXO have limited value in the process and could be easily eliminated? In my opinion, OXO basically plays the following roles in the business:

It acts as an integrator of putting

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