Is production important?
For many years it has been common sense in mngmt to consider production as sth that is not strategic,
can be easily outsourced, not relevant if it does not give competitive advantage compared to your
competitors --> but we have now China, which is the "plant of the entire world" --> recent interview of
new CEO of Apple: he was asked why he was producing in China (main supplier is Foxcon) and don't
come back to US! But it is impossible: even if we decided to go for it, it would be impossible, since the
supply chain for electronic products is in China --> no suppliers, no technology!
Now also India is getting a larger and larger part of the manufacturing activity .
It seems to be a good solution that we do not deal anymore with production and we are a more virtual
company, which controls custumer relationship, marketing, innovation and product design - enough to
be ...view middle of the document...
Idea of mutual outsourcing that enables us to see it in a different way.
There is not the possibility to consider production something marginal. Foxcom is a big organization,
which has to be considered a global player in the market --> only one able to produce quality and
quantity --> Apple can do nothing without Foxcon. Production matters!
Production is important even for the companies who have chosen to outsource production. Relationship
is so strong and strategic that should not be thought anymore about bargaining power and strength in
the relationship: forget the concept of bargaining power.
Eg. Porsche now under control of Wolksvagen but breaking system made here in Italy Brembo -->
relationship not anymore as supplier, but cooperative design --> technicians of the two companies share
knowledge of technology.
Foxcon: in trouble for the working conditions of Foxcom
Germany: a model for european countries --> negative interest rate: sign of the strength of this
economy: economically and financially
8% growth of industrial production in DE (26th in the world) --> ONLY developed one!! --> highest labour
wage in the world + social security + highest standard of living --> they produce millions of cars in DE and
largest exporter in the world --> more than China --> it relies heavily on production: costs are not
relevant --> the problem is to manufacture the right product with high process technology, the problem
is not labour cost! a country that has invested a lot in good public management and production plolicy is
a key to success in the world economy.
Not many people would say go for production --> also many professors
Reduce cost -
Increase revenues (quality, performance) -
Operations are very important also for service industry --> main ongoing process of consultancy market:
majority is operations (= production of goods and services). Double effect:
Production as a transformation process of inputs --> people and facilities. We are the inputs of Bocconi
and it has to transform us in sth better.