Ousource Xbox

There are many important strategic advantages that Microsoft can gain though outsourcing Xbox production to Flextronics. First of all, Microsoft in short of enough manufacturing and logistics capabilities to make the Xbox itself and manage a global supplies chain. And also Microsoft is not the company production of hardware production so they may lack of the skills of production too. It would take a long time to set up all stuff for start the production and cost lots of capital to operating. so if the company can find a outsourcing company thus it don't have to worry all of those.

Also outsourcing can help Microsoft achieve the goal just as all other companies wants to which is manufacture the products at a low cost but with very high quality.

Because Flextronics has fast respond of market demand shift and Flextronics is a good cooperation partner of share detailed productions information of schedules, product quality, and inventory with Microsoft on a real-time basis so thus Microsoft still has the control of production the highest quality products.

So thus with the outsourcing, Microsoft get the best option to start the production of Xbox.

The risks that Microsoft takes can be summed up with 6.

Flextronics has the control of all manufacturing thus Microsoft may has less power for cost control. And in reality it is hard for Microsoft to know the actual cost of the materials of productions. Second, Flextronics has the control of all productions thus they may not meet the schedules as they settled which could be influence the production process. Moreover, quality control would be hard for them as they has less power for daily operating, bad quality would influence the brand image. In additional, the effective communication between U.S and Asia could be a barrier.

Microsoft has considered all the risk before the decision made as we can find out in the case it was mansion. Flextronics is a good reputation company that utilized good production strategy and...