Essay on Outsourcing Innovation

Submitted By stacey0420
Words: 3665
Pages: 15
Open Document
OUTSOURCING INNOVATION
First came manufacturing. Now companies are farming out R&D to cut costs and get new products to market faster. Are theygoing too far?
As the Mediterranean sun bathed the festive cafés and shops of the Côte d'Azur town of Cannes, banners with the logos of Motorola,Royal Philips Electronics, palmOne, and Samsung fluttered from the masts of plush yachts moored in the harbor. On board, top execshosted nonstop sales meetings during the day and champagne dinners at night to push their latest wireless gadgets. Outside the city'sconvention hall, carnival barkers, clowns on stilts, and vivacious models with bright red wigs lured passersby into flashy exhibits. Foranyone in the telecom industry wanting to shout their achievements to the world, there was no more glamorous spot than the sprawling3GSM World Congress in Southern France in February.
Yet many of the most intriguing product launches in Cannes took place far from the limelight. HTC Corp., a redhot developer ofmultimedia handsets, didn't even have its own booth. Instead, the Taiwanese company showed off its latest wireless devices alongside partners that sell HTC'smodels under their own brand names. Flextronics Corp. demonstrated several concept phones exclusively behind closed doors. And Cellon International rented adiscrete threeroom apartment across from the convention center to unveil its new devices to a steady stream of telecom executives. The new offerings included theC8000, featuring eyepopping software. Cradle the device to your ear and it goes into telephone mode. Peer through the viewfinder and it automatically shifts intocamera mode. Hold the end of the device to your eye and it morphs into a videocam.
HTC? Flextronics? Cellon? There's a good reason these are hardly household names. The multimedia devices produced from their prototypes will end up on retailshelves under the brands of companies that don't want you to know who designs their products. Yet these and other littleknown companies, with names such asQuanta Computer, Premier Imaging, Wipro Technologies, and Compal Electronics, are fast emerging as hidden powers of the technology industry.
They are the vanguard of the next step in outsourcing - of innovation itself. When Western corporations began selling their factories and farming out manufacturingin the '80s and '90s to boost efficiency and focus their energies, most insisted all the important research and development would remain in-house.
But that pledge is now passé. Today, the likes of Dell, Motorola, and Philips are buying complete designs of some digital devices from Asian developers, tweakingthem to their own specifications, and slapping on their own brand names. It's not just cell phones. Asian contract manufacturers and independent design houseshave become forces in nearly every tech device, from laptops and high-definition TVs to MP3 music players and digital cameras. "Customers used to participate indesign two or three years back," says Jack Hsieh, vicepresident for finance at Taiwan's Premier Imaging Technology Corp., a major supplier of digital cameras toleading U.S. and Japanese brands. "But starting last year, many just take our product. Because of price competition, they have to."
While the electronics sector is furthest down this road, the search for offshore help with innovation is spreading to nearly every corner of the economy. On Feb. 8,Boeing Co. said it is working with India's HCL Technologies to codevelop software for everything from the navigation systems and landing gear to the cockpitcontrols for its upcoming 7E7 Dreamliner jet. Pharmaceutical giants such as GlaxoSmithKline and Eli Lilly are teaming up with Asian biotech research companies ina bid to cut the average $500 million cost of bringing a new drug to market. And Procter & Gamble Co. says it wants half of its new product ideas to be generatedfrom outside by 2010, compared with 20% now.
Competitive Dangers
Underlying this trend is a growing
Show More

Related Documents: Essay on Outsourcing Innovation

Outsourcing Security

I would like to choose outsourcing security because the guaranteed benefits of outsourced security are so attractive and the possible risks of outsourcing are considerable. Outsourcing of information systems function has become a regularly picked alternative of providing information services. Outsourcing is a practice used by a different company to reduce costs by transferring portions of work to outside supplier rather than completing it internally. According to McMillan in his article The Benefits…

Words 1156 - Pages 5

Feed R&D or Farm It Out Essay

customers associate RLK with high-end audio-video design, pumping money into R&D would increase their brand equity as well as to live up to consumers’ expectations of their highly innovative products. c. However, RLK’s competitors are downsizing and outsourcing R&D and exploiting on the cost advantages. If RLK decides to invest more money into R&D and should the new product stall on launch,…

Words 1667 - Pages 7

Business: Quality Management Essays

Outsourcing – disadvantages and advantages • Outsourcing involves taking to market those internal business processes and activities that can be done better and at lower cost when given to external vendors. • The term ‘outsourcing’ is often called business process outsourcing (BPO) and captures a range of outsourced business processes including: - finance and accounting outsourcing (FAO) - knowledge process outsourcing (KPO) - legal process outsourcing (LPO). • The outsourcing decision should…

Words 825 - Pages 4

Organizational Design Essay example

structure. Topics such as the importance of shared information, the role of stakeholders in for-profit versus non-profit organizations, the advantages and disadvantages of employee development, and the methods for evaluating effectiveness and outsourcing are all essential elements for managers to consider when establishing organizational design and structure. In a learning organization the culture is one that strives to empower individuals to succeed for the sake of the organization. In order…

Words 2364 - Pages 10

ACFT MANUF OPS MGMNT Essay

the trend towards outsourcing intensified. This led to complicated supply chains on a global scale, which we will introduce later in this analysis. 1.2 Competitive strategies The aircraft industry is intensely competitive. These century following deregulation saw many attempts at innovation, some of which were adopted for a time, proved successful, and then were replaced by refinements and subsequent innovations. Evolutionary forces were driven by technological innovation, innovative business…

Words 928 - Pages 4

Outsourcing Research Paper

Jacob Drenth Per. 3 Outline I. Thesis Statement: There are numerous advantages of outsourcing; such as companies can focus on their core works, reduce their production costs, and save time to increase productivity. II. Large corporations outsource many of the components of their products from external suppliers. A. Sun Microsystems used a form of outsourcing so that they were able to expand their company and prosper in a free enterprise system. (Andrea 23) 1. In 2000 Sun Microsystems had a…

Words 706 - Pages 3

Open Source Software Essay

His survey and interviews focused on two main areas. The first involved asking both the CIO’s and the CAO’s what they believe differentiates open source from commercially developed software. The second had to do with presenting a concept of outsourcing the integration and maintenance of the open source systems to a third party, asking if they would be interested, what services they would need, and what price would be reasonable. (van Rooij, 2007, pg 437.) The survey results for the first question…

Words 1023 - Pages 5

Procurement and Case Study Essays

About this report | 2 | | II. Introduction a- Outsourcing b- Benefits c- Risks d- Reasons e- Case study 1 Korean bank and IBM f- Case study 2 Apple and outsourcing g- Outsourcing in real economy h- The Apple China connection i- Bibliography | 33455611121314 | About this report This report will summarize the observation, findings and discussion about the outsourcing core reasons, why companies go for outsourcing and what are the risks involves as well as the benefits…

Words 3276 - Pages 14

Mgu/400 Assignment 2

Introduction The idea of outsourcing is the contracting or subcontracting of activities to free up cash, personnel, time, and facilities for activities in which a company holds competitive advantage. In this paper the researcher will discuss and analyze the benefits/downsides of creating manufacturing operations outside the US. The researcher will discuss the topics of just in time manufacturing, strategic alliances, successful/unsuccessful outsourcing, companies and questions the researcher…

Words 2203 - Pages 9

Why The World Is Flat?

When Friedman claims that the world is flat, he refers to the global competitive field being leveled. In his effort to write about outsourcing, he discovered that outsourcing was just one dimension of many on how the world has been globalized. For over many years there was a massive investment in technology which created a platform where intellectual work and capital could be easily delivered from anywhere (Friedman 2). Therefore, increased the availability of technology and information to developing…

Words 797 - Pages 4