Essay Sample on Reinventing Business Strategies: Decentralized Manufacturing

Introduction

The global market is dynamic and competitive and it has led to managers to rethink their strategies. Customers these days are well informed and will only purchase products that meet their needs. As such companies are producing goods that are highly customized to cater to the needs of the customers. Therefore, decentralized manufacturing occurs when an organization splits its production operations into varying regions (Giannoccaro, 2018). Here the decision-making centers are spread according to the region. The reason why some company employs this strategy is that the customer taste is different in each region. One of the advantages of this strategy is that it gives room for motivation and creativity. Managers are given the freedom to be creative and explore their markets which in turn yields more returns for the company. Furthermore, flexibility is enhanced and crucial decision making is fast.

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The electronic firm should not employ this strategy as there is no varying consumer taste for the microprocessors. All the processors are the same and if regional production plants are created there will be duplication of work which will, in turn, drive up the cost of production. Another reason why the company should not adopt centralized marketing is that the labor required is highly skilled and replicating that in different regions is hard. It will take a lot of resources to train and ensure the workforce is efficient like the parent company.

In concentrated manufacturing strategy, all the activities of production for a product are done in one region. They mostly have a facility where all production and distribution takes place. The cost of production in such an organization is lowered and it is an ideal strategy for a company with limited resources (Giannoccaro, 2018). Most of the time such companies are located where the raw materials are located thus reducing cost. The strategy also gives room for the management to better forecast the customers' needs leading to consistent production.

The electronic firm should apply this strategy firstly because it can function well with limited resources. Microprocessors need highly skilled labor and its production activities should be closely monitored. With this strategy, the management can easily monitor the production process to prevent wastage of resources. Due to the fact that microprocessors are, all the same, there is no need for customer customization. The cost of production will be low as such there prices will be competitive globally. The location that is good for the firm is near the raw materials and where the labor cost is not high. With the advancement in technology, globalization has been enhanced and companies want to increase their customer base and increase their returns.

References

Giannoccaro, I. (2018). Centralized vs. decentralized supply chains: The importance of a decision maker's cognitive ability and resistance to change. Industrial Marketing Management, 73, 59-69. Doi: 10.1016/j.indmarman.2018.01.034