StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Outsourcing Production Services - Assignment Example

Cite this document
Summary
The paper "Outsourcing Production Services" highlights that breaking down production stages and allocating each to different companies enhances efficiency and accountability. Therefore, outsourcing is not a dangerous move in the growth of any company but an added advantage if efficiently done…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.9% of users find it useful
Outsourcing Production Services
Read Text Preview

Extract of sample "Outsourcing Production Services"

The LEGO group company is among the top five toy companies in the world. It is located in a town known as Billund, Denmark. It first came to existence in 1932 under its founder Ole Kirk Christiansen with a vision to inspire children to explore and discover their own creative potential. The company has about 7,000 employees from all over the world and through them, the company makes a net profit of 2.2 billion annually (Larsen et al, 2). Despite the company’s success for over 70 years it faced financial challenges, in 2003 that almost made it bankrupt. The management, therefore, decided to partner with Flextronics, one of the largest electronics manufacturers in the US, to produce on their behalf. However, this decision turned sour and LEGO withdrew its production from Flextronics in 2009.
There are two major reasons behind LEGO’s decision to have 80 percent of their products produced in Flextronics. The first one was the introduction of new toys in the market by its competitors. This influenced the company’s decision to partner because it was during the same period the company had lost confidence in its key product, LEGO brick (Larsen et al, 3). The second reason that triggered partnership was the changes in the global market, as well as, the currency exchange rates in the major importing countries. Through the partnership, the company had aimed at increasing its market shares and producing new products.
The partnership did not last long without challenges which with time led to the end of the relationship between the two companies. The first challenge was ensuring that enough stock is constantly maintained. This was mostly contributed by the errors in forecasting and fluctuation of seasonal demand. In addition, the need to meet consumers’ expectations of large stock within a short period led to overproduction (Larsen et al, 5). The second challenge was the need for change in its retailers. This was a challenge, especially in supply chain management, considering the level of flexibility towards all retailers and smallest outlets.
Although the partnership between the two companies did not turn out as expected, LEGO can use this failure as its strike back in handling supply chain complexity as well as knowledge sharing, flexibility, and coordination (Larsen et al, 10). However, the company has to consider several aspects to achieve these. The first aspect is being open and putting into consideration consumer views. This can be achieved by working closely with the retail shops which in turn reaches the consumer. The second one is coming up with new policies that clearly define the different approaches to retailers. This will help in differentiating the approach towards small and big retail chains. It also not only reduces distribution cost but also gives a totally different perception of demand.

For instance, relocating its production to countries where the cost of production is low. Secondly, the company should put into consideration potential economies of scale and level of production complexity. For example, it can allocate production to many partners where one company does manufacturing, another packaging and another distributes the final product. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Lego Assignment Example | Topics and Well Written Essays - 500 words”, n.d.)
Retrieved from https://studentshare.org/business/1639409-lego
(Lego Assignment Example | Topics and Well Written Essays - 500 Words)
https://studentshare.org/business/1639409-lego.
“Lego Assignment Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/business/1639409-lego.
  • Cited: 0 times

CHECK THESE SAMPLES OF Outsourcing Production Services

Outsourcing as a strategic tool

Later, the Bank of America outsourced its BPO services to Accenture.... The BPO services outsourced by the Bank of America mainly include human resource jobs, which are mainly carried out in the states of Hyderabad, Gurgaon and Mumbai in India.... The bank of America also signed a collaborative outsourcing agreement with JLL and TCC with respect to providing real estate services to the bank which is an instance of domestic outsourcing.... Microsoft leads the industry by introducing new technologies and providing a wide range of services....
6 Pages (1500 words) Lab Report

Outsourcing with Pros and Cons

Due to changing business environments, organisations need to adopt measures to improve the quality of services and greater flexibility in management.... Cost-savings calculations encompass fixed costs, which include capital and administrative overhead; variable costs, which include specific supplies, services, and labour cost for all personnel involved in the manufacture of a product or the provision of a service; and indirect costs for opportunities foregone, which occur organizational knowledgeable workers are not focused on core competencies because they are performing less productive tasks (Spitzer, 1996)....
11 Pages (2750 words) Research Paper

The Outsourcing of Information Services

Assigning various functions, such as accounting production, security, maintenance, and legal work to outside organizations.... Аccording to current literаture, outsourcing is а trend thаt will continue.... outsourcing jobs though hаving mаny cons in it generаlly bring а positive feedbаck for аn orgаnizаtion thаt wishes to expаnd аnd grow.... There аre mаny benefits to outsourcing, including freeing up mаnаgement resources, shаring costs, creаting integrаted networks, building new orgаnizаtion structures, trаining stаff, аnd interfаcing with other informаtion systems....
6 Pages (1500 words) Essay

Bussiness Management and Outsourcing

It proposes company opportunities to reduce labor costs and increase service volumes and a number of traditional services proposed to customers, restructure business and invest in personal growth and development.... This essay focuses on the analysis of the connections of the successful business management and outsourcing, that is one of the main strategic approaches used by modern organizations to reduce production and operating costs, for example it is vividly used by the UK based businesses....
12 Pages (3000 words) Essay

The Risks Associated with Outsourcing

This essay analyzes Outsourcing, that refers to the relocation of jobs and services irrespective of the provider's location and happens when a firm contract a business function with an outside supplier.... Thus, in general terms outsourcing refers to a buyer contracting with an outside supplier for services.... The term 'offshoring' refers to the relocation of jobs and production to a foreign country.... In production units, this would mean maintaining higher levels of stocks to mitigate risks but then this involves higher working capital to be blocked....
4 Pages (1000 words) Essay

Outsourcing Jobs to Foreign Countries

This paper 'outsourcing Jobs to Foreign Countries" focuses on the fact that globalization is the buzzword of our generation.... The globalized economy necessarily allowed the emergence of a new form of economic activity that focuses on labour itself as a commodity – outsourcing.... This research article explains the phenomenon of outsourcing, why it has become an increasingly profitable economic activity for global corporations, what conditions allow for a country to be a destination for outsourcing, and the current debates on the effects of outsourcing....
10 Pages (2500 words) Case Study

Downsizing of International Air Carrier Staff in Global Financial Crisis

With downsizing especially through layoffs and retrenchment organizations tend to learn on outsourcing of their functions and this strategy seemly is becoming a trend even in airline companies where all auxiliary and support functions can be outsourced.... Both outsourcing and downsizing are measures of improving operational efficiency (Cary LC 2000, p 350).... It also examines the benefits of outsourcing to corporate institutions....
10 Pages (2500 words) Term Paper

Issues of Product Costing Are Unimportant for Virtual Organizations That Outsource Production Operations

The paper "Issues of Product Costing Are Unimportant for Virtual Organizations That Outsource production Operations" is a perfect example of a finance and accounting essay.... The paper "Issues of Product Costing Are Unimportant for Virtual Organizations That Outsource production Operations" is a perfect example of a finance and accounting essay.... The paper "Issues of Product Costing Are Unimportant for Virtual Organizations That Outsource production Operations" is a perfect example of a finance and accounting essay....
8 Pages (2000 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us