Power Electronics is an electronics manufacturer based in Vermont which specializes in assembling different components into the final product. Components for Power’s electronics are bought from local manufacturers. The customer base of Power’s consists of wholesale, retail, and consumers. Currently at Power Electronics, components are purchased from local manufacturers which have resulted in Power Electronics needing to raise its pricing. If trends keep going how they are currently, Power will soon be priced out of the market. Power Electronics must find a means to cut costs in order to stay viable in today 's electronics market. This paper will analyze a few methods to help cut costs. There are a few ways Power Electronics can source …show more content…
This would result in Power Electronics being able to cut the price of the finished product by 20% resulting in Power Electronic’s products become more competitive in today’s market. When dealing with employees and vendors in a foreign market, Power Electronic’s management must take cultural differences into account. A foreign culture often guides holiday times, acceptable time off requirements, behaviors, and other habits in society. In some markets due to national holidays, management may need to procure products in advance because of temporary facility closures. Management can no longer just plan for holidays celebrated in the United States, but they must become globally minded when planning business transactions. Not all nations are as developed as the United States. The lack of development may cause problems for Power Electronic’s management. Management must research the country of interest. For example, some countries have a different communication infrastructure that 's not up to par. There are some countries that lack 4g cellular service. Poor cell phone service can result in vendors being less available when away from their places of business. If communication is not as readily available, management must plan ahead and order components earlier. Another issue that can arise from outsourcing mentioned by Forbs.com is time zones. In-house management must clearly specify time zones for product delivery or product manufacture completion dates and times.
If the company we outsource with has some sort of issue with its equipment or is running behind schedule it will delay our orders and reflect poorly upon our company. If we choose not to do anything we will continue running at inefficient levels costing us more and more money as time goes on.
Chester chose to enter the sensor industry in 2016 as the niche cost leader. Our mission is to providing trustworthy products to our customer base. Our goal is to offer these products at a cutting edge price, with low overhead, at a high volume. By focusing on the Traditional and Low End segment of the market, Chester’s ability to achieve our mission made it possible to gain market share. Many aspects went into the logistics of the supply chain in order to carry out our operation. While the cost leader strategy is not always an opportune circumstance for the traditional segment, it allows us to offer lower prices to entice customers to purchase our products over other companies in the industry.
If the outsourcing company will not do the proper testing then may be the product quality will decrease.
The framework used in this note is organized around the estimates of industry demand, market share, costs, and performance. All data
If the public sees that a company is not consistent on deadlines the public will begin to distrust that company. After careful consideration, we have determined that the best possible options would be to minimize outsourcing at this time, especially dealing with key components. In addition, it is strongly recommended to hire more trusted management with experience and communication skills and place them in the key problem areas so that productivity is increased and the functions stay consistent and on time.
Outsourcing is a method used by many corporations in which their products are manufactured in foreign countries often for cheaper labor.This method method of productions has it’s pros and cons.
Finance and accounting continue to be apprehensive about cash flow demands and financial activity for major company endeavors. HR understands that any change can have substantial impact, especially on morale. DMC is also dealing with the ever-changing nature in the electronics industry. Responding to market forces has always been difficult due to the nature of the product and large investments required for advancement in technologies. Rising development costs and decreasing margins become immediate priorities. Innovation is not an option, rather it is a requirement for preserving a competitive advantage. Growing market share is a slow process that happens to companies who adapt quickly.
However, as a new member with a new product, electronic product in North American market, the reputation is also an important attribute. Especially, quick delivery time is a key attribute for this company, due to the demand of quick delivery in all markets. Moreover, the manufacturing process of the new product, electronic product, on which our company will definitely focus, has a lot demands. Such as, technology, innovation and quick delivery time even the ability to make the product be the first one appearing in the market (other company, which is developing the same product, may become our competitive opponents). Especially, technology is predicted to play the most important role in the manufacturing process. On the other hand, the traditional cost system has a lot of limitations. Traditional costing system focuses on the cost reduction and the efficiency, particular the products with relatively few standardized components; Clifton, however, produces a wide range of airplane components. In addition, nonfinancial aspects of
"A one-day increase in responsiveness is huge in outsourced manufacturing", says Robert Meshew, IT Systems group program manager in the Microsoft Home and Entertainment division. "It means you have the time to respond to problems, potentially saving thousands of dollars in unnecessary air freight and expediting costs".
The stiff competition leads to customers having strong bargaining power. Customers can choose the product based on cost, quality, availability, and performance specifications. This is evident as switching costs are low for customers as it is as easy as choosing General Electric products over Emerson products. Emerson must continuously enhance its position in these dimensions to create and enhance its name in global marketplaces, and
While it lessens the burden on organizations, reducing and shifting the cost and risk of its IT operation, security and management issues to an external service provider or vendor, outsourcing any portions of an organization's Information System has significant risks that can sometimes become detrimental to the outsourced organization. According to the Commission on Government Outsourcing, "when outsourcing an organization exposes itself to significant risks in terms of security, accuracy, and completeness of information (Holroyd City Council, 2008)". Comprised in the rest of this document is an
Cultural issues different customers in the global market have different culture and this calls for a different strategy to handle their needs
Industry is expected to grow from $20B in 2010 to $44B in 2014. Although demand was consistently strong and expected to grow 22% in 2012, margins were constantly squeezed due to pricing pressures and manufacturer sought to reduce costs wherever possible. Industry was sometimes prone to supply shortages, so fast, flexible manufacturing practices were critical in meeting customer demand.
Each country has its unique ways of communicate, act, think, or behave and managers should need to identify and recognized these differences to bridge the gaps between cultures for real communication to take place (Global Strategic Management, 1999). The language barrier is one of the biggest obstacles PPQ Parts manager will have to face when doing business in international markets. Language is one of the contexts in which the company should do adequate research before entering a foreign market, especially when the foreign language is a different one. Keeping an open mind and sensitivity to these differences can lead to better channels of communication and understanding for both parties. Cultural issues are present in all aspects of global activities, including selling to foreign customers, buying materials overseas, working with vendors, and setting up operations. Other issue that the company may face is complying with foreign government regulations and labor requirements. A company looking to set up manufacturing facilities in a foreign country may also face difficulties in making an effective transfer of core technologies, poorly trained local workers, financial restrictions, and a lack of inputs and supplies that meet the necessary quality standards. It is necessary that PPQ Parts managers identify and learn these regulations if they don’t want the company to get involved in any
Because of the extremely intricate and sophisticated nature of manufacturing semiconductors, a competitor should expect high initial capital requirements to build facilities needed for production. Cost to build a new semiconductor fab has gone up from $200 million in 1985 to $3 Billion in 2004. Incumbent companies have capabilities to design newer generations of semiconductors with greater amounts of memory and processing abilities that make older generations obsolete. Older generations tend to drop half their amount in price one year after a new model is reduced (exhibit 6). The United States