Eliminate the Middleman

Case Study - Eliminate the Middleman

Problem Identification

In the case study , the focal point is the company USTech which has been outsourcing its manufacturing to a Taiwanese company Taisource . Over the period of time , as the relationship between the two companies has developed , Taisource has achieved competency in its field pertaining manufacturing products of high quality as required by USTech . However Taisource has also started to expand its operations to China where it is taking advantage of the economies of scale as well as the lower cost based operations provide in

the Chinese region . This is giving way to the highlighted problem for USTech , as with the increase\se expertise of the market as well as the access to product information , manufacturing details as well as the string establishment of Taisource , the company has become a viable competitor for USTech in China

The issues that are being faced by the USTech Company relate to the facts that the company has been relying on Taisource for the production of its products . However the low margins for products in the US market are forcing the company to look at alternative methods of operations aside form outsourcings . The board has suggested the company to also look at expanding operations to China where the manufacturing facility would be having advantages in terms of labor , utility costs etc . This strategy involves ending the long term business relationship with strength and the knowledge gained by Taisource over the period of time presents it as a future rival for the USTech Company in the Chinese market . The report therefore strives to identify the solutions to these problems as depicted in the case and how they are feasible for the USTech Company in terms of costs , future market dynamics and current trends being depicted in the market

Analysis

The USTech Company is facing extensive competition problems in the US as the other two player in the market Caltech and Textech who were both providing similar innovative products at high prices are now offering innovative and diverse products at reduced prices , therefore taking away a significant share of the USTech target market . The company as a result is forced to reduce the cots of production for its products . As mentioned the company out sources its production to a Taiwanese company call Taisource which manufactures the products in Taiwan as well as in Japan while carrying out R D activities and for USTech as well

Another problem that is faced by the company is that the company cannot continue to outsource its operations to Taisource . This is because Taisource has become a potential future threat for the USTech . The company has extensive operations in Taiwan and is seeking to operate independently in China as well . This enabled Taisource to use the innovative technology of production as well as the product innovations that it has worked on for USTech in to provide competitive and similar products as that of UStech to the Taiwanese and the Chinese market . This can cost USTech...