Strategic Alliance Case Solution
- What appears to be the basis for X’s skills in cost management and yield improvement? What would be a metaphor discussed in class that would capture the nature of this knowledge? (10 points)
X has achieved cost management and yield improvement in its manufacturing activities. It has been providing the client with superior quality batteries. There were many reasons that might help it to achieve such competency.
X has started its operations as being a manufacturer of only alkaline batteries that satisfy the basic energy requirement of most of the low and middle end technological and electronic products. Moreover, X works as a vendor and provides batteries to the outsourcer company. Thus it appears that to serve all its clients and the battery market, the company has been running large batches of production. Thus in this way the company achieves economies of scale and lower cost of production. This improves the cost and the simplicity of operations results in higher yield.
From the paragraph 4 information, MECO Company provides its devices to X and allow them to manufacture batteries best suited for them. In this way X recognize the requirement and the needs of the device and make batteries to match such requirement. Thus this increases their capability to provide high quality batteries. X has adopted the strategy of target manufacturing; since it produces the batteries specially designed and develop for the medical devices of MECO.
Another reason that enhances the cost management and yield improvement is that X has set up new manufacturing facility. They have new technology and machinery as well, that is the reason that they might have offered us to have collaborative business. Moreover the culture of the company is to grow and innovate. X produces batteries that come out perfect without any seams, leaks, dents, or irregularities on the surface this suggest that the company has adopted the manufacturing process where the wastage is almost zero. The manufacturing process has input of high quality material. The compound mixture that is formulated is also a perfect combination that produces battery with long lasting usage. The labor market of Asia is a cheaper one that also increases the cost effectiveness.
With the new machinery and manufacturing plant, competitive and committed management and employees, innovative culture, economies of scale, enhanced manufacturing techniques and quality raw material X has achieved cost competency and better yield from its production.
- What might be a reason(s) for the apparent inability of your friend’s company to develop and apply its own yield improvement capabilities in its own battery plant? If it wanted to do so, what must it consider doing? (5 points)
The first apparent disability is that the MECO is a medical devices manufacturer and the battery manufacturing is not the core business of the company. The company has more focused on the device that it produces. Most of the research and innovation was carried on the device development. Management focus and efforts were also on the devices rather on the batteries to support such devices.
It is defined in the case that MECO focus its effort on the design and development of the latest medical device technology, it has more work for making sure that their devices work in a variety of different environments (e.g., climates, temperature, altitude, humidity). Thus it is better to outsource the noncore business to those who can do it competently, giving an opportunity to concentrate on the core business area..................
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