Amazon’s objectives are the attempt to produce the Kindle with low price, high reliability, high functionality, and design elegance. Amazon hopes to able to compete with competitors and turns the Kindle into a digital library for everyone. A fact that Amazon decides to outsource almost its products in Asia is Amazon's strategy. Building Amazon's own production facilities enables to increase costs and decrease its competition while its priority is low price.
2. How did Amazon choose its suppliers? What does your response tell you about finding optimal suppliers? How does today’s almost instantaneous communication facilitate Amazon’s production strategy? What risks does Amazon incur as a result of its decision to outsource to foreign suppliers?
Amazon chose its suppliers based on their considerable expertise, and they had to be efficient and reliable manufacturers. For example, designing was fulfilled in a lab in California, where is seen as the high R&D expertise. I think finding an optimal supplier is not easy. Maybe Amazon shows requirements based on its objectives to challenge the suppliers, and then which suppliers prove to meet the requirements will be chosen. In the next step, Amazon will negotiate with chosen suppliers about cost of production because low price is its important goal. Today’s almost instantaneous communication helps Amazon catch instant information from production to sale, as well as control the transmission of materials and products from a point to another point in its production and distribution chain. The risks can be late deliveries and poor qualities because its suppliers can be affected by human resources or other changes in their country.
Closing Case: The Rise and Fall of the Indian Automobile Industry
1. What are the attractions of India as a base for producing automobiles both for domestic sale, and for export to other nations?
India is a large country and developing, so it has a potential big domestic market for all goods, including cars. It also has a labor force with high skills, productivity, and low price in comparison with a labor force of other developed nations. The labor force contributes to the automotive field not only to manufacture, but also to design automobile. The features are the attractions of India to produce automobiles for domestic and export market.
2. Both Hyundai and Nissan made their investments in the southern Indian city if Chennai. What is the advantage to be had by investing in the same region as rivals?
The investments of rivals, Hyundai and Nissan, in Chennai have advantages. For example, they create a chain of the automotive manufacturers and parts suppliers with high quality and low cost to supply for the rivals. The competition fosters to create a proficient workforce to contribute to the companies. For example, engineers and suppliers are attracted to the region to create it stronger.
3. What are the drawbacks of basing manufacturing in a country such as India? What other locations might be attractive?
In the area of India, the poor road and traffic are an effect of manufacturing automobile because it causes the practice of the just-in-time difficulty to implement. The failure of the just-in-time leads to the local parts suppliers to be difficult to follow the same high-quality standards, a common requirement of automobile manufacturers. The companies could avoid some of these drawbacks by finding a production location where the infrastructure is better developed, however, the companies may also be burdened with higher costs.
4. If Hyundai, Nissan, their suppliers and other automobile companies continue to make investments in the Chennai region of India, how might this region evolve over time? What does this suggest about manufacturing location strategy?
When automobile companies continue to invest in Chennai in India, the region can develop into the Detroit of India, where many global automobile companies present at here and have the network of suppliers and supporting industries established well. These factors can change over time, so the manufacturing location strategy should consider the importance of the country factors in the choice of production location. Consequently, the companies should continually reevaluate their manufacturing strategy.
