Outsourcing Case Study

OUTSOURCING Case Study

QUESTION C: “Why Amazon’s Kindle cannot be Made in the United States”

1. Since no US-based manufacturer has the capabilities to produce Kindle at home, Amazon has no choice but to outsource Kindle’s production to Asia. Asia's internal factors are really important for an economy. The most important resource in Asia is its labor force; they have the largest labor force in the world. From a resource-based view, original equipment manufacturers (OEMs) in Asia, for sure, offered compelling low-cost solutions to US firms. The flex circuit connectors are made in China because the US supplier base migrated to Asia. The electrophoretic display is made in Taiwan because the expertise developed from producing flat-panel LCDs migrated to Asia with semiconductor manufacturing. The highly polished injection-molded case is made in China because the US supplier base eroded as the manufacture of toys; consumer electronics and computers migrated to China. The wireless card is made in South Korea because that country became a center for making mobile phone components and handsets. The controller board is made in China because US companies long ago transferred manufacture of printed circuit boards to Asia. The Lithium polymer battery is made in China because battery development and manufacturing migrated to China along with the development and manufacture of consumer electronics and PCs.

2. Amazon designed the Kindle in California. Though the products and chip are still designed in the US, the vast majority of them are manufactured in chip foundries in Taiwan, Singapore, and China, and then packaged somewhere in the region. For PC, US-based firms manufactured and designed PCs first, and then gradually the production and design functions migrated to Asia Today for all the remaining US-owned PC brands, with the exception of Apple, every laptop is not only manufactured but also designed in Asia. In addition, PCs are used for all purposes like playing games,...