Outsourcing Compulsion Harvard Case Solution & Analysis

The vast majority of U.S. companies are currently abroad for more than just a desire for new markets, lower labor costs and greater efficiency in the search. The United States is dysfunctional distribution system has been turned on its head, distributors wrest control of strategic prerogatives producers to capture a disproportionate share of the cost of products supplying company. Megadistributors, as Wal-Mart Stores Inc and Home Depot Inc. ultimately profit from their suppliers and manufacturers earn little or nothing to sell their own products. Megadistributors not only control the supply of their products to consumers, but also have tremendous power over their internal processes. Cut off from the ability to control the distribution and sales, these manufacturers must pursue the cheapest materials, in particular, work, an adequate margin and maintain shareholder value. There is some hope: In the high growth rates in emerging markets around the world, manufacturers still have the ability to directly affect what happens to their products after they enter the distribution chain. However, the authors warn, the window is closing fast. "Hide
by Andrew R. Thomas, Timothy J. Wilkinson Source: MIT Sloan Management Review 7 pages. Publication Date: 01 Oct 2006. Prod. #: SMR218-PDF-ENG

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