Case Study: Flextronics International

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Flextronics Case Summary

Flextronics International case study discusses the challenges that the CEO, Michael Marks, faces in a global economy where the technology industry keeps changing at a rapid pace. Flextronics is trying to discover a new identity and not just manufacture a product for customers, but design and sell a phone to potential customers.

Flextronics went from taking the designs from companies and building them, to developing their own designs. Marks needed to decide if creating a phone and bringing it to a customer would hurt relationships with other customers that he “builds” phones for. By doing this, Flextronics would offer a phone exclusively through one customers leaving other clients potentially upset by the decision. The strategy of this is to reduce overall cost of the phone making it attractive to the customer.

Marks was faced with a business decision that would change his company’s future strategy. With increased cost pressure from the competition, Marks needed to make a decision on the company’s future.

Flextronics Case Prep

1.What factors account for the dramatic growth of the electronics manufacturing services (EMS) industry during the 1990's? How would you rate Flextronics' performance during that period?

The EMS growth came from the outsourcing contract work from the communications and computer industries. As the EMS companies were able to leverage suppliers for bulk material buys, it allowed them to offer cheaper products to the OEMs than the OEMs could do in house.

Flextronics performed extremely well in the late 90’s with acquisitions vital to the business plan and solid earnings and sales growth. Just about doubled each year.

2.Does the economic or strategic rationale for the outsourcing of electronics manufacturing differ from that for the outsourcing of design? If so, what is different?

The strategy of outsourcing the manufacturing from the OEMs to EMS allows for less overhead...
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